Africa’s e-Commerce Unicorn Jumia’s Results Show That The Company Is Past Peak Losses And Ready For Profitability

Africa’s e-commerce titan Jumia announced on Wednesday that it was past peak losses and is ready for profitability. The company also announced plans to increase focus on promotions, and marketing as well as plans to cut cost – all in a bid to attain profitability status and be able to maintain it. Although the company reported a huge quarterly loss, its shares were up over 15 percent following the announcement.

For the second quarter ended June 30th, the company reported an adjusted loss before interest, tax, depreciation, and amortization of $57.2 million, up from the $41.6 million reported in the same period last year.

Jumia failed to reveal when it expects to begin to make a profit. The company, however, did say that achieving the goal would entail a combination of measures such as cutting costs at warehousing by reducing consumption of packaging, increasing marketing efforts, promotional discounts, etc.  Speaking in a recent interview, the company’s Chief Executive Officer Sacha Poignonnec said that “There is not … a silver bullet that will suddenly make it profitable.” This suggests that the company expects profitability to be attained in a gradual and steady manner.

Total orders increased 35 percent YoY in the second quarter. The company saw a rise in customers’ demand for beauty and cleansing products. The company still envisages a full-year adjusted EBITDA loss of between $200 million and $220 million. It, however, reduced its full-year capital expenditure guidance to between $10 million and $15 million from a range of $15 million to $25 million.

Active customers grew 25 percent to 3.4 million in the second quarter. Total revenue for the second quarter was up 42.5 percent to $57.3 million.

Amazon recently announced its plans to come into several African markets including Nigeria and South Africa where Jumia is the leading brand. Jumia’s CEO seems unbothered by the information. “If they were to enter those markets, it would be a great validation of the attractiveness of e-commerce in Africa,” the CEO said.

Jumia is currently present in 11 African countries and is the leading online marketplace and e-commerce brand in Africa. It also provides food delivery, logistics, and payments services.

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