ACCESS Newswire
17 May 2022, 16:19 GMT+10
Continued growth acceleration in Q1 2022
Orders increased by 40% year-over-year
GMV increased by 27% year-over-year
Revenue increased by 44% year-over-year
LAGOS, NIGERIA / ACCESSWIRE / May 17, 2022 / Jumia Technologies AG (NYSE:JMIA) ('Jumia' or the 'Company') announced today its financial results for the first quarter ended March 31, 2022.
Results highlights for the first quarter 2022
'We kicked off 2022 with very strong growth momentum, closing the first quarter with the highest GMV and Order growth rates of the past 9 quarters, up 27% and 40% year-over-year respectively. In parallel with accelerating usage growth, we continued driving platform monetization, with revenue growing by 44% year-over-year, which was also a 9-quarter high,' commented Jeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers of Jumia.
'We remain focused on taking the business forward on our path to profitability, driving faster usage growth with improved levels of marketing efficiency. Sales & Advertising expense per Order and as % of GMV decreased sequentially, both reaching their lowest levels in the past 4 quarters, at $2.0 per Order and 7.5% of GMV respectively. We are executing on our strategy with discipline and consistency. Our focus continues to be on making Jumia a compelling destination for the everyday needs of African consumers and a growth engine for sellers and businesses in Africa and beyond.'
FIRST QUARTER 2022- BUSINESS HIGHLIGHTS
1. GROWTH ACCELERATION INITIATIVES
In the first quarter of 2022, we continued executing on our growth acceleration strategy building upon the momentum of the second half of 2021, continuing to scale the business towards profitability.
The key levers of our growth acceleration plan remain consistent:
We have outlined below relevant developments in the first quarter of 2022 with respect to each one of these levers.
Marketing
Assortment, pricing and shipping
Technology: Platform enhancements
2. JUMIAPAY UPDATE
3. MONETIZATION UPDATE
Logistics services to third parties
Advertising
4. IMPACT
Environment
1. Minimizing environmental impact through the reduction of carbon emissions, waste and offering customers pre-owned and refurbished goods.
Social
2. Providing convenience, accessibility and affordability to consumers.
3. Empowering sellers, partners, and communities by lowering the barriers to entry, providing training, access to funding and participating in initiatives to drive economic and social development.
4. Building an engaged, inclusive, and diverse workforce.
Governance
5. Operating with strong governance and ethical standards.
SELECTED OPERATIONAL KPIs
1. Marketplace KPIs
2. JumiaPay KPIs
Overall, 34% of Orders placed on the Jumia platform in the first quarter of 2022 were completed using JumiaPay, compared to 37% in the first quarter of 2021, although we increased JumiaPay Transactions penetration as % of Orders across the Jumia e-commerce and food delivery platforms. The growth in JumiaPay Transactions in our e-commerce and food delivery platforms outpaced the growth of JumiaPay app Transactions. As JumiaPay penetration is 100% on the JumiaPay app, the reduced share of JumiaPay app in the Transactions mix led to a decline in the overall JumiaPay Transactions penetration as % of Orders.
SELECTED FINANCIAL INFORMATION
Revenue
To support usage growth, we deployed more consumer incentives in the form of promotional discounts, which are accounted for as revenue deductions. Strategic use of consumer incentives on selected products or categories helps us drive conversion and is a core part of our growth acceleration strategy. Revenue is presented net of consumer incentives, which reached $7.2 million in the first quarter of 2022 compared to $2.1 million in the first quarter of 2021. Consumer incentives related to First Party revenue reached $1.1 million in the first quarter of 2021, compared to $0.4 million in the first quarter of 2021.
As we move past the initial phase of promotions ramp-up launched in the second half of 2021, the efficiency of our promotional investments is improving. The ratio of consumer incentives as a percentage of revenue improved sequentially from 18% in the third and fourth quarters of 2021 to 15% in the first quarter of 2022.
Gross Profit
Gross profit reached $27.7 million in the first quarter of 2022, up 13% year-over-year and up 19% on a constant currency basis, supported by the marketplace revenue growth. Gross profit is net of consumer incentives, which we consider as growth investments and which increased from $2.1 million in the first quarter of 2021 to $7.2 million in the first quarter of 2022.
Fulfillment Expense
Fulfillment expense reached $24.3 million, up 42% year-over-year and up 50% on a constant currency basis, as a result of Orders accelerating by 40% over the same period. Fulfillment expense includes both the costs associated with Jumia platform Orders and the costs associated with our logistics-as-a-service packages which reached 3.5 million in the first quarter of 2022, compared to 0.8 million packages in the first quarter of 2021.
Sales and Advertising Expense
Sales and Advertising expense reached $18.8 million in the first quarter of 2022, up 94% year-over-year and 99% on a constant currency basis. The increase in marketing investments is a core lever of our growth acceleration strategy and was implemented across marketing channels. We also rebalanced our marketing investment mix with an increased share of offline media and video advertising to drive awareness and activation. In the first quarter of 2022, 49% of our Sales & Advertising expense was allocated to online marketing campaigns, 37% to offline media and video advertising and 15% to staff costs. In the first quarter of 2021, offline media and video advertising accounted for only 16% of the Sales & Advertising spend, with online marketing campaigns and staff costs representing 60% and 24% respectively.
While we continued ramping-up our marketing investments in the first quarter of 2022 on a year-over-year basis, we did so at a slower pace compared to the second half of 2021 when Sales & Advertising expense was up 185% year-over-year. This is driving an improvement in marketing efficiency with Sales & Advertising expense per Order decreasing by 27% from $2.8 per Order in the second half of 2021 to $2.0 per Order in the first quarter of 2022.
Technology and Content Expense
Technology and Content expense reached $13.0 million in the first quarter of 2022, up 56% year-over-year and 62% on a constant currency basis. We continue investing in our technology backbone particularly through technology headcount increases to support the growth of our e-commerce and payment activities.
General and Administrative Expense
General & Administrative expense, excluding SBC, reached $30.1 million in the first quarter of 2022, up 23% on a year-over-year basis and 30% on a constant currency basis. This trend was mostly attributable to an uptick in staff costs as we strengthened the management team in selected areas in the second of half of 2021 to support the long-term growth of the business. On a sequential basis, General & Administrative expense, excluding SBC, decreased by 6% in the first quarter of 2022 compared to the fourth quarter of 2021.
Operating loss
Cash Position
GUIDANCE
We expect continued year-over-year GMV growth acceleration, building upon the momentum of the second half of 2021.
We expect to spend between $50 million and $55 million in Sales & Advertising in the first half of 2022.
For the full year 2022, we expect Adjusted EBITDA loss of $200 million to $220 million. On a quarterly basis, we believe the peak of Adjusted EBITDA losses was reached in Q4 2021. Starting from 2023, we expect to begin decreasing the Adjusted EBITDA losses on a year-over-year basis.
In an effort to further increase our consumer reach and reduce delivery times, we intend to undertake logistics capacity expansion and upgrades and expect to incur capex between $15 million to $25 million during the full year 2022.
The above forward-looking statements reflect our expectations as of May 17, 2022 and could be subject to change and involve inherent risks which we are not able to control. These risks include but are not limited to new potential disruptions caused by COVID-19, any global supply chain issues, the broader economic impact of the ongoing Russia-Ukraine conflict as well as political and economic conditions across countries where we operate.
CONFERENCE CALL AND WEBCAST INFORMATION
Jumia will host a conference call today, May 17, 2022 at 8:30 a.m. U.S. Eastern Time to discuss Jumia's results. Details of the conference call are as follows:
US Toll Free: 888-506-0062
International: 973-528-0011
UK Toll Free: 0800 520 0845
Entry Code: 975565
A live webcast of the earnings conference call can be accessed on the Jumia Investor Relations website: https://investor.jumia.com/
An archived webcast will be available following the call.
(UNAUDITED)
Consolidated statement of comprehensive income as of March 31, 2021 and 2022
(UNAUDITED)
Consolidated statement of financial position as of December 31, 2021 and March 31, 2022
(UNAUDITED)
Consolidated statement of cash flows as of March 31, 2021 and 2022
Forward Looking Statements
This release includes forward-looking statements. All statements other than statements of historical facts contained in this release, including statements regarding our future results of operations and financial position, industry dynamics, business strategy and plans and our objectives for future operations, are forward-looking statements. These statements represent our opinions, expectations, beliefs, intentions, estimates or strategies regarding the future, which may not be realized. In some cases, you can identify forward-looking statements by terms such as 'may,' 'will,' 'should,' 'expects,' 'plans,' 'anticipates,' 'could,' 'intends,' 'targets,' 'projects,' 'believes,' 'estimates', 'potential' or 'continue' or the negative of these terms or other similar expressions that are intended to identify forward-looking statements. Forward-looking statements are based largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements involve known and unknown risks, uncertainties, changes in circumstances that are difficult to predict and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statement, including, without limitation, the risks described under Item 3. 'Key Information-D. Risk Factors,' in our Annual Report on Form 20-F as filed with the US Securities and Exchange Commission. Moreover, new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We caution you therefore against relying on these forward-looking statements, and we qualify all of our forward-looking statements by these cautionary statements.
The forward-looking statements included in this release are made only as of the date hereof. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor our advisors nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. Neither we nor our advisors undertake any obligation to update any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations, except as may be required by law. You should read this release with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.
Non-IFRS and Other Financial and Operating Metrics
Changes, percentages, ratios and aggregate amounts presented have been calculated on the basis of unrounded figures.
This release includes certain financial measures and metrics not based on IFRS, including Adjusted EBITDA, as well as operating metrics, including Quarterly Active Consumers, Orders and GMV. We define Quarterly Active Consumers, Orders, GMV, Total Payment Volume, JumiaPay Transactions and Adjusted EBITDA as follows:
Quarterly Active Consumers means unique consumers who placed an order for a product or a service on our platform, within the 3-month period preceding the relevant date, irrespective of cancellations or returns.
We believe that Quarterly Active Consumers are useful indicators of the adoption of our offering by consumers in our markets.
Orders corresponds to the total number of orders for products and services on our platform, irrespective of cancellations or returns, for the relevant period.
We believe that the number of orders is a useful indicator to measure the total usage of our platform, irrespective of the monetary value of the individual transactions.
Gross Merchandise Value ('GMV') corresponds to the total value of orders for products and services, including shipping fees, value added tax, and before deductions of any discounts or vouchers, irrespective of cancellations or returns for the relevant period.
We believe that GMV is a useful indicator for the usage of our platform that is not influenced by shifts in our sales between first-party and third-party sales or the method of payment.
We use Quarterly Active Consumers, Orders and GMV as some of many indicators to monitor usage of our platform.
Total Payment Volume ('TPV') corresponds to the total value of orders for products and services for which JumiaPay was used including shipping fees, value-added tax, and before deductions of any discounts or vouchers, irrespective of cancellations or returns, for the relevant period.
We believe that TPV, which corresponds to the share of GMV for which JumiaPay was used, provides a useful indicator of the development, and adoption by consumers, of the payment services offerings we make available, directly and indirectly, through JumiaPay.
JumiaPay Transactions corresponds to the total number of orders for products and services on our marketplace for which JumiaPay was used, irrespective of cancellations or returns, for the relevant period.
We believe that JumiaPay Transactions provides a useful indicator of the development, and adoption by consumers, of the cashless payment services offerings we make available for orders on our platform irrespective of the monetary value of the individual transactions.
We use TPV and the number of JumiaPay Transactions to measure the development of our payment services and the progressive conversion of cash on delivery orders into prepaid orders.
General and administrative expense, excluding SBC, corresponds to the General & Administrative ('G&A') expense excluding share-based payment expense ('SBC'). We use this metric to measure the development of our G&A costs exclusive of the impact of SBC which is mainly a non-cash expense, influenced, in part, by share price fluctuations.
Adjusted EBITDA corresponds to loss for the period, adjusted for income tax expense (benefit), finance income, finance costs, depreciation and amortization and further adjusted for share-based payment expense.
Adjusted EBITDA is a supplemental non-IFRS measure of our operating performance that is not required by, or presented in accordance with, IFRS. Adjusted EBITDA is not a measurement of our financial performance under IFRS and should not be considered as an alternative to loss for the period, loss before income tax or any other performance measure derived in accordance with IFRS. We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other companies, because not all companies and analysts calculate Adjusted EBITDA in the same manner. We present Adjusted EBITDA because we consider it to be an important supplemental measure of our operating performance. Management believes that investors' understanding of our performance is enhanced by including non-IFRS financial measures as a reasonable basis for comparing our ongoing results of operations. By providing this non-IFRS financial measure, together with a reconciliation to the nearest IFRS financial measure, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives.
Management uses Adjusted EBITDA:
Items excluded from this non-IFRS measure are significant components in understanding and assessing financial performance. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation, or as an alternative to, or a substitute for analysis of our results reported in accordance with IFRS, including loss for the period. Some of the limitations are:
Due to these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these and other limitations by providing a reconciliation of Adjusted EBITDA to the most directly comparable IFRS financial measure, loss for the period.
The following table provides a reconciliation of loss for the period to Adjusted EBITDA for the periods indicated:
Constant currency data
Certain metrics have also been presented on a constant currency basis. We use constant currency information to provide us with a picture of underlying business dynamics, excluding currency effects.
Constant currency metrics are calculated using the average monthly exchange rates for each month during 2021 and applying them to the corresponding months in 2022, so as to calculate what our results would have been had exchange rates remained stable from one year to the next. Constant currency information is not a measure calculated in accordance with IFRS. While we believe that constant currency information may be useful to investors in understanding and evaluating our results of operations in the same manner as our management, our use of constant currency metrics has limitations as an analytical tool, and you should not consider it in isolation, or as an alternative to, or a substitute for analysis of our financial results as reported under IFRS. Further, other companies, including companies in our industry, may report the impact of fluctuations in foreign currency exchange rates differently, which may reduce the value of our constant currency information as a comparative measure.
The following table sets forth the constant currency data for selected metrics.
CONTACT:
Safae Damir
Head of Investor Relations
[email protected]
Abdesslam Benzitouni
Head of PR and Communications
[email protected]
SOURCE: Jumia Technologies AG
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