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Jumia Technologies Ag (NYSE: JMIA)
Q4 2023 Earnings Call
Feb 15, 2024, 8:30 a.m. ET
Key Highlights from the Earnings Call
- Company Transformation
- Financial Performance
- Strategic Shifts
- Market Positioning
A Year of Transformative Mettle
Operator
Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia’s results conference call for the fourth quarter and full year 2023. At this time, all participants are in a listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. With us today are Francis Dufay, CEO of Jumia; and Antoine Maillet-Mezeray, executive vice president, finance and operations. We’ll start by covering the safe harbor. We would like to remind you that our discussions today will include forward-looking statements.
Actual results may differ materially from those indicated in the forward-looking statements. Moreover, these forward-looking statements may speak only to our expectations as of today. We undertake no obligation to publicly update or revise these statements. For a discussion of some of the risk factors that could cause actual results to differ from the forward-looking statements expressed today, please see the Risk Factors section of our annual report on Form 20-F as published on May 16, 2023, as well as our other submissions with the SEC.
In addition, on this call, we will refer to certain financial measures not reported in accordance with the IFRS. You can find reconciliations of these non-IFRS financial measures to the corresponding IFRS financial measures in our earnings press release, which is available on our Investor Relations website. With that, I will hand over to Francis.
Francis Dufay — Chief Executive Officer
Thank you. Welcome, everyone, and thanks for joining us today. 2023 has been a transformative year for Jumia. Upheavals on the global stage had a significant impact on African economies and its people.
High inflation rates and currency depreciations have led to scarcity of supply and have adversely impacted the purchasing power of consumers. These have been very challenging times for tech and retail businesses across the whole continent. Against that unsettling backdrop, we embarked on a fundamental transformation of our company in order to rapidly improve our financials and establish a stronger foundation for e-commerce business. This transformation obviously came with a painful short-term impact as we discontinued activities with poor growth prospects, stopped expensive marketing practices, and radically streamlined our organization.
Positive Momentum in Financials
These bold and early decisions have paid off in 2023, yet we still have some way to go. We closed 2023 in a much stronger position, looking at both financials and business fundamentals. Our adjusted EBITDA loss for the full year of ’23 decreased to $58.2 million versus $182.1 million in ’22 and steadily improving quarter after quarter. Our loss before tax from continuing operations for the full year of ’23 decreased to $98.6 million from $206.2 million in ’22.
Most importantly, we saw a reduction in the pace of the decrease of our liquidity from $227.4 million in 2022 to $106.9 million in 2023, leaving us with a liquidity position of $120.6 million at the end of 2023. Although GMV for the full year of ’23 declined by 20% and orders by 22% year over year. We have undergone a deep transformation of the company. We believe that this transformation will enable us to achieve growth again during 2024 with improved unit economics and lower cash utilization.
Strategic Shifts and Market Adaptation
We believe that we can meet these goals in 2024, thanks to the lessons we learned in 2023, particularly in two key areas. First, we have seen that efficiency and better unit economics do not come at the expense of future growth. We believe that Jumia is now a much leaner, more agile, and more focused company. We have reevaluated our portfolio and made tough decisions regarding business activities that did not bring the right value.
Recently, we discontinued our food delivery operations as we concluded that the growth prospects did not justify the complexity it created. We believe our focus on resources will be better invested in our physical goods business, where we see more opportunity for revenue growth and higher margins. We have achieved savings across the whole organization by shrinking general and administrative expenses, as well as significantly improving operational efficiency. We believe that these changes are enabling better output and laying the foundation for growth in ’24.
We experienced positive year-over-year growth in GMV of physical goods in five of our 11 operating countries over the full year of ’23, accelerating over the second half, while significantly improving our unit economics. Overall, year-over-year GMV growth trends are improving quarter after quarter, and we expect to be back to GMV and orders growth in 2024.
Second important lesson, that we’ve learned. I think we have proved that we can grow without disproportionate marketing spend.
Based on our experience across 11 operating countries for over 10 years, at Jumia, we believe that there is a lot of demand from African customers. However, this demand remains fully served due to inconsistent supply and prices across different countries and cities. Our mission at Jumia is to bridge this gap between brands and suppliers on the one hand and customers on the other hand. We are committed to building better supply in our priority categories, which are Phones, Electronics, Home and Living, Fashion and Beauty, by working closely with local and international sellers and global brands.
