Jumia reports narrowing losses and adopts asset-light delivery model

Jumia’s CEO, Francis Dufay, is taking further steps to streamline operations, as revealed in the company’s recent earnings call. The e-commerce giant is transitioning to an asset-light model for its delivery services, with plans to set up new leased warehouses in Egypt and Ivory Coast, moving away from the model of owning such facilities.

The latest financial disclosures from Jumia indicate a narrowing of losses to approximately $20.2 million, a significant improvement from the $38 million loss reported in the preceding quarter. The company’s revenue stood at $36.5 million for the second quarter.

JumiaPay, the company’s transaction processing arm on its e-commerce platform, also showed promising results, with transactions hitting the $1.9 million mark. This uptick is attributed to the growing embrace of JumiaPay for delivery payments and the successful implementation of cashback promotions during the quarter.

Jumia’s financial resilience is further bolstered by its cash reserves of $45.1 million and total liquid assets amounting to $92.8 million. To safeguard against currency volatility, 67% of these assets are held in USD. The company also reported a healthy customer engagement, with 2 million active users in the quarter, thanks in part to effective search engine optimization (SEO) and customer relationship management (CRM) initiatives.

Despite the announcement of these cost-reduction measures and a positive financial trajectory, Jumia’s stock experienced a notable decline, ending the day at $4.89, down from $10.59 on Monday. However, it may be prudent to observe the stock’s performance over time. Following the Q1 earnings call, which reported a 71% reduction in costs, Jumia’s shares saw a dramatic 150% year-to-date increase, reaching a peak of $14.56 in July 2024.