Jumia Technologies AG — FY2020 Form 20-F Summary
Business context and reporting period
Jumia operates a pan-African e-commerce platform comprising a marketplace, logistics services and JumiaPay. The filing covers the fiscal year ended December 31, 2020, with quarterly information including the fourth quarter. Financial statements are prepared under IFRS in euros. Jumia operated across 11 African countries and had 6.8 million Annual Active Consumers at year-end.
Key financial and operating metrics
| Metric | FY2020 | FY2019 | Change |
|---|---|---|---|
| Revenue | €139.6 million | €160.4 million | Down 13.0% |
| Gross profit | €92.8 million | €75.9 million | Up 22.3% |
| Gross margin | 66.5% | 47.3% | Up 19.2 percentage points |
| Operating loss | €149.2 million | €227.9 million | Improved 34.5% |
| Net loss | €161.0 million | €227.1 million | Improved 29.1% |
| Adjusted EBITDA loss | €119.5 million | €182.7 million | Improved 34.6% |
| Operating cash flow | $(98.5) million | $(182.6) million | Outflow reduced 46.1% |
| Cash and cash equivalents | €304.9 million | €170.0 million | Up €134.9 million |
| Total liquid means | €305.9 million | Not clearly provided | |
| Lease liabilities | €10.9 million | €9.2 million | Up €1.7 million |
Revenue declined primarily because first-party revenue fell 45.6% to €44.2 million as Jumia shifted toward third-party marketplace activity. Marketplace revenue increased 19.6% to €93.8 million, including commissions of €34.6 million and fulfillment revenue of €32.4 million.
Gross profit less fulfillment expense improved from a €1.5 million loss in 2019 to a €23.5 million profit in 2020. Fourth-quarter revenue was €41.8 million, gross profit was €27.9 million, operating loss was approximately €40.0 million and Adjusted EBITDA loss was €28.3 million.
- Annual Active Consumers increased from 6.1 million to 6.8 million.
- Orders increased from 26.5 million to 27.9 million.
- Reported GMV decreased from €1.10 billion to €836.5 million; adjusted 2019 GMV was €1.03 billion after perimeter and improper-sales adjustments.
- JumiaPay Transactions increased from 7.6 million to 9.6 million, while TPV increased 58% to €196.4 million.
- Digital-payment penetration of orders increased from 28.7% to 34.5%.
- Cancellation, failed-delivery and return rates improved from approximately 30% to 25% of GMV and from 22% to 16% of orders.
- Share-based compensation was €21.6 million, including €10.4 million related to the cash-settled 2020 virtual restricted stock unit program.
Material changes versus the prior comparable period
- Jumia reduced first-party sales and increased reliance on its higher-margin marketplace model, lowering reported revenue but improving gross profit and margins.
- Fulfillment expense declined 10.4% to €69.3 million following logistics improvements, including a shift from cost-per-package to cost-per-stop pricing, cross-border shipping improvements and fulfillment-center staff savings.
- Sales and advertising expense declined 42.0% to €32.5 million through more targeted performance marketing and lower promotional intensity.
- General and administrative expense declined 20.0% to €115.7 million, or 12.3% excluding share-based compensation, reflecting overhead rationalization and the prior portfolio optimization.
- Finance costs increased to €14.0 million from €2.6 million, primarily due to foreign-exchange losses on U.S.-dollar bank deposits.
- Cash increased substantially following the December 2020 equity offering, which generated approximately $231.4 million, or €194.3 million, net proceeds. Shares outstanding increased to 179,259,246.
- Employees declined from 5,050 to 4,067 full-time equivalents, reflecting cost-discipline measures.
Liquidity, debt and capital resources
Jumia had €304.9 million of cash and cash equivalents and €1.0 million of term deposits at December 31, 2020. Management stated that existing liquidity and expected operating cash flows should fund working capital, capital expenditures, corporate needs and planned expansion for at least the following 12 months. The company remains loss-making and expects to require additional funding over time.
The filing states that Jumia has no external borrowings; reported borrowings primarily comprise lease liabilities of €10.9 million. Lease-related cash outflows were €5.3 million in 2020. The company does not hedge its foreign-currency exposure.
Outlook, management commentary, risks and unusual items
- Management’s strategy is to balance usage growth, platform monetization and cost efficiency, with a stated objective of progressing toward breakeven and eventual profitability.
- Priorities include expanding marketplace usage and seller participation, increasing JumiaPay adoption, developing Jumia Logistics as a service for third parties and maintaining cost discipline.
- The filing provides no specific revenue, EBITDA or profitability guidance for 2021. It states that the company expects continued losses while investing in and rebalancing the business.
- COVID-19 disrupted international and local supply chains, reduced discretionary spending, increased operating complexity and caused a temporary shutdown of the South African fulfillment center during April 2020.
- Material risks include continued operating losses, negative operating cash flow and dependence on future financing; political and regulatory uncertainty; currency volatility; underdeveloped logistics and payment infrastructure; competition; fraud, cybersecurity and technology disruptions; and reliance on third-party carriers and payment providers.
- Jumia recorded €32.2 million of provisions for liabilities and other charges, including €30.0 million for tax risks. A further €9.2 million of possible tax exposure was disclosed without a provision.
- The company accrued a $5 million shareholder litigation settlement, with $1 million expected to be funded by insurance; the settlement was placed in escrow in January 2021 and remained subject to court approval at filing.
- Jumia disclosed a material weakness in internal control over financial reporting related to accounting adjustments, including income taxes, share-based compensation and contractual commitments. Disclosure controls were also deemed ineffective as of December 31, 2020.
- Additional contingencies include Nigerian capital-importation certificates for approximately €29.8 million of funds transferred to Nigeria, unresolved tax matters, bank guarantees of €0.9 million and a supplier commitment of approximately $23 million over three years.
Most important facts for investors to verify
- Whether improved gross profit, fulfillment economics and Adjusted EBITDA trends are sustained without further reductions in consumer incentives or marketing.
- The cash-burn rate and expected liquidity runway after the December 2020 equity raise, including the timing and terms of any future financing.
- Progress toward remediation of the material weakness and effectiveness of financial-reporting controls in subsequent filings.
- The ultimate resolution and cash cost of tax audits, VAT and withholding-tax matters, including the disclosed possible €9.2 million exposure.
- The sustainability of GMV and order growth after the 2020 mix shift and the effect of continued reductions in first-party sales.
- Foreign-exchange sensitivity, particularly the company’s unhedged exposure to the Nigerian naira, Kenyan shilling and other operating currencies.
- Whether the shareholder litigation settlement received final court approval and whether additional related claims arise.
- Regulatory licensing and compliance requirements for JumiaPay, lending, data protection and e-commerce operations in each country.