Jumia, has unveiled its Q2 2023 financial results, revealing a substantial 28.1% reduction in its customer base as the impact of inflation takes a toll on its major operating markets, including Nigeria, Ghana, and Egypt.
The company’s active consumer count witnessed a year-on-year plunge of 1 million, falling from 3.4 million in the same period last year to 2.4 million in Q2 2023. Jumia’s Gross Merchandise Value (GMV), the total value of goods sold on its platform, also faced a notable decline of 25.1%, slipping from $271.1 million in Q2 2022 to $202.3 million in Q2 2023.
As per the financial report, the number of product orders placed on the platform experienced a substantial reduction of 36.5%, plummeting from 10.3 million orders in Q2 2022 to 6.5 million in the corresponding period this year.
Navigating Toward Loss Reduction
Despite grappling with falling revenue and dwindling customer figures, Jumia Group’s CEO, Francis Dufay, remained optimistic about the company’s journey towards minimizing losses. Reflecting on the Q2 financials, Dufay stated:
“We remain steadfast in achieving our overarching objective of loss reduction and progress towards profitability. In the second quarter of 2023, both Adjusted EBITDA and Operating losses recorded a 66% year-over-year decrease, marking the lowest loss levels in over 4 years.
“Given this substantial progress, we are updating our Adjusted EBITDA loss projection for the entirety of 2023 to a range of $90-100 million, down from the previous range of $100-120 million.
“Amidst challenging macro conditions, we’re maintaining discipline and focus, intensifying our efforts in efficiency. When compared to Q2 2022, Fulfillment Sales & Advertising expenditures have declined by 50% and 74%, respectively.
“Our actions aimed at reducing overhead costs are yielding results, evident in the decrease of General & Administrative expenses, excluding share-based compensation, by a third year-over-year, reaching a 4-year low at $17.7 million.”
Navigating an Unfavorable Landscape
Acknowledging the severe impact of inflation in Nigeria, Ghana, and Egypt, Dufay lamented the erosion of purchasing power for consumers in these markets, ultimately resulting in reduced spending.
“The usage performance has been significantly influenced by the challenging operating environment, characterized by unprecedented levels of inflation that have impacted both consumer spending and sellers’ ability to source goods. In response, we are actively enhancing our platform to secure improved supply and pricing, all while offering a more convenient experience for both consumers and sellers.
“We remain optimistic about the long-term growth prospects of our markets and our capacity to seize these opportunities profitably,” Dufay asserted.
Jumia highlighted that the average inflation rate across its footprint reached 14.1% in June 2023, with Ghana and Egypt registering peaks of 42.5% and 35.7%, respectively. In Nigeria, inflation scaled an 18-year peak, hitting 22.8% in June 2023.