Business Context and Reporting Period
Jumia Technologies AG, a German stock corporation listed on the NYSE under JMIA, operates an e-commerce marketplace, logistics network and JumiaPay payment platform across 11 African countries. This Form 20-F covers the fiscal year ended December 31, 2023, including fourth-quarter results. The financial statements are prepared under IFRS and reported in U.S. dollars.
Jumia closed its Jumia Food delivery business in all markets by the end of December 2023. Comparative results were re-presented to classify the business as discontinued operations.
Key Financial Metrics
| Metric | FY 2023 | FY 2022 | Change |
|---|---|---|---|
| Revenue | $186.4 million | $203.3 million | -8.3% |
| Gross profit | $107.1 million | $118.2 million | -9.4% |
| Gross margin | 57.5% of revenue | 58.1% of revenue | Down modestly |
| Gross profit as % of GMV | 14.3% | 12.7% | Improved |
| Operating loss | $73.3 million | $201.8 million | Improved 63.7% |
| Loss from continuing operations | $99.3 million | $213.1 million | Improved 53.4% |
| Net loss | $104.2 million | $238.3 million | Improved 56.3% |
| Adjusted EBITDA loss | $58.2 million | $182.1 million | Improved 68.0% |
| Operating cash flow | $(73.0) million | $(240.2) million | Outflow reduced 69.6% |
| Cash and cash equivalents | $35.5 million | $71.6 million | Down $36.1 million |
| Liquidity, including term deposits and other financial assets | $120.6 million | $227.4 million | Down $106.8 million |
| Lease liabilities | $6.1 million | $13.8 million | Down 56.1% |
Jumia reported no external borrowings; borrowings primarily represent lease liabilities. Accumulated losses were approximately $2.1 billion at year-end, and total equity declined to $68.7 million from $174.2 million.
Fourth-Quarter 2023 Results
| Metric | Q4 2023 | Q4 2022 | Change |
|---|---|---|---|
| Revenue | $59.4 million | $60.6 million | -2.0% |
| Gross profit | $37.1 million | $37.3 million | -0.5% |
| GMV | $233.3 million | $252.4 million | -7.6% |
| Orders | 6.6 million | 6.9 million | -4.3% |
| Adjusted EBITDA loss | $0.6 million | $44.1 million | Substantial improvement |
| Operating loss | $4.5 million | $44.7 million | Substantial improvement |
Q4 was Jumia’s strongest quarter in 2023 on Adjusted EBITDA, approaching break-even. The improvement reflected lower fulfillment, marketing and general and administrative expenses, although usage indicators remained below the prior year.
Operating Performance and Material Changes
- Annual Active Customers declined 22% to 5.7 million, orders declined 22% to 21.3 million, and GMV declined 20% to $749.8 million.
- Revenue from marketplace activities declined 15.0% to $97.8 million, while first-party sales increased 5.7% to $86.4 million. Commissions increased to $46.7 million, but fulfillment, marketing and advertising, and value-added services declined.
- Fulfillment expense fell 42.8% to $43.9 million, and fulfillment expense per order declined to $2.06 from $2.79.
- Sales and advertising expense fell 67.9% to $21.5 million, with expense per order declining to $1.01 from $2.43.
- Technology and content expense decreased 20.8% to $41.5 million, while general and administrative expense decreased 39.1% to $74.4 million.
- General and administrative expense benefited from an $18.6 million release of tax provisions. Excluding that release and share-based compensation, management reported general and administrative expense of $87.8 million.
- Foreign exchange losses and fair-value losses on financial assets increased finance costs to $31.5 million. Fair-value losses on financial assets measured through profit or loss were $13.6 million, and those assets were fully disposed of during 2023.
- JumiaPay transactions declined to 8.4 million from 9.7 million, and TPV declined 25% to $192.2 million. JumiaPay transactions as a percentage of orders increased to 39.5% from 35.3%.
- The cancellations, failed deliveries and returns rate increased to approximately 25% of GMV and 20% of orders, compared with approximately 23% and 16%, respectively, in 2022.
- Headcount declined by 1,403 employees, or 32%, during 2023, contributing to lower staff costs. Year-end employment was 2,915 full-time equivalents.
- Cash flow from investing activities was positive $62.5 million, primarily reflecting the sale or maturity of financial investments. Capital expenditures were $2.3 million.
Guidance, Outlook, Commentary and Risks
Management did not provide a specific numerical revenue, EBITDA or cash-flow forecast in the filing. It stated that the current operating plan is intended to move the business toward profitability through fundamentals-led growth, cost discipline and balanced monetization.
- Management expects lower staff costs in 2024 following the organizational restructuring and expects to maintain lower marketing expenses, while shifting spending toward CRM, search engine optimization and local offline channels.
- Jumia plans to improve fulfillment economics by consolidating logistics providers, optimizing routes and warehouses, reducing packaging costs and moving into larger warehouses in several countries.
- Management expects to continue investing in technology, data, security and user experience, while prioritizing initiatives with immediate efficiency or customer benefits.
- Inflation and currency conditions remain significant risks. December 2023 core CPI increases were reported at 34% in Egypt, 29% in Nigeria and 23% in Ghana. The Egyptian pound and Nigerian naira experienced further devaluations in early 2024.
- The company expects elevated inflation to continue through 2024, which could pressure consumer spending, seller sourcing and reported U.S.-dollar results.
- Management stated that available liquidity and projected cash flows were sufficient for at least the next 12 months, but the financial statements also state that Jumia expects to continue generating losses and may require additional funding.
- Jumia had a material weakness in internal control over financial reporting as of December 31, 2023, relating to insufficient personnel resources for timely execution of user-access controls. Management and the auditor concluded that internal control over financial reporting was not effective.
- Tax provisions declined to $15.3 million, but the filing identifies approximately $20.6 million of additional possible tax uncertainty for which no provision was recorded because an outflow was not considered probable. The filing also discusses potential German corporate income tax exposure in the upper-single-digit to low-double-digit euro millions.
- Ernst & Young completed the 2023 audit and is expected to cease serving as auditor after the 2024 annual general meeting. The company selected Mazars, subject to shareholder appointment.
Most Important Facts for Investors to Verify
- Whether the sharp reduction in Adjusted EBITDA loss and near break-even Q4 result can be sustained without further damaging customer, order and GMV trends.
- The amount and timing of additional capital that may be required given continuing losses, negative operating cash flow and liquidity of $120.6 million at year-end.
- Progress in remediating the remaining material weakness in user-access controls and whether additional control deficiencies or restatements arise.
- The sensitivity of liquidity, revenue and equity to further Nigerian naira and Egyptian pound devaluations, inflation and exchange-control restrictions.
- Whether higher cancellations, failed deliveries and returns can be reduced, particularly for cash-on-delivery orders.
- The outcome of tax audits, German tax discussions and other possible tax claims, including the disclosed $20.6 million of unprovided possible exposure.
- Whether the closure of Jumia Food and reduced marketing investment improve long-term unit economics while allowing the core marketplace to regain active customers and GMV growth.
- The comparability of Adjusted EBITDA and other non-IFRS metrics with those of competitors, as Jumia’s definitions may differ.