Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jumia Technologies AG (JMIA, Financial) reported a 6.9% year-over-year increase in orders and a 4.9% sequential increase in Q2 2024.
- GMV in constant currency grew by 35% year-over-year, indicating strong underlying business performance despite currency devaluations.
- The company achieved a significant reduction in quarterly cash burn from $19.1 million in Q1 2024 to $8.7 million in Q2 2024.
- Jumia's logistics network expansion, including new warehouses in Nigeria and Morocco, is expected to enhance supply chain management and operational efficiency.
- The company reported a 46% 90-day repurchase rate from new customers in Q1 2024, demonstrating improved customer retention strategies.
Negative Points
- Revenue in USD declined by 17.2% year-over-year in Q2 2024, impacted by currency devaluations in key markets like Nigeria and Egypt.
- GMV in USD decreased by 5% year-over-year due to currency fluctuations, affecting the top-line performance.
- Average Order Value (AOV) for physical goods decreased by 7.1% year-over-year, attributed to a shift in category mix.
- The company experienced lower corporate sales in Egypt, impacting overall revenue.
- Liquidity position decreased to $92.8 million in Q2 2024 from $120.6 million in Q4 2023, indicating a reduction in cash reserves.
Q & A Highlights
Q: Can you discuss the sustainability of your GMV growth and whether it will come from more countries or higher growth in existing ones?
A: Francis Dufay, CEO: We are pleased with the continued acceleration in usage KPIs, including a 7% year-over-year growth in orders and 35% GMV growth in local currency. We believe this growth is sustainable as we roll out similar actions across all markets, particularly in smaller cities. Our strategy is working, and we expect continued growth across countries.
Q: There seems to be a decline in your marketplace commission rate quarter-on-quarter. Can you explain the drivers behind this and your expectations for the future?
A: Francis Dufay, CEO: We have kept our commissions stable to incentivize sellers and enhance our value proposition. Antoine Maillet-Mezeray, EVP Finance and Operations: The quarter-on-quarter decline is mainly due to corporate sales in countries like Egypt. We intend to keep our GP1 stable and focus on capturing more value in corporate channels without increasing monetization to maintain vendor participation.
Q: There was an increase in sales and marketing spending quarter-on-quarter. How should we view this going forward, especially with your capital raising?
A: Francis Dufay, CEO: The increase in marketing spend this quarter was to support our second-largest commercial event, the Anniversary Sale. With the capital raising, we aim to accelerate customer acquisition, which may involve increased marketing spend. We believe we can grow our customer base significantly across Africa.
Q: How do you plan to manage your cash utilization and what are your expectations for profitability?
A: Antoine Maillet-Mezeray, EVP Finance and Operations: We have been disciplined with cash utilization and plan to continue this approach. The additional equity from the offering will strengthen our balance sheet and support growth. We aim to reduce losses and accelerate progress towards cash efficiency and profitable growth.
Q: Can you provide more details on your logistics strategy and its impact on fulfillment costs?
A: Francis Dufay, CEO: Our logistics network, which includes third-party providers and local entrepreneurs, is vital for growth. We have expanded our logistics footprint outside major cities, reducing fulfillment costs. This strategy allows us to reach underserved communities and expand our market while maintaining low operating costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
