Jumia Technologies AG: FY2021 and Q4 2021 Summary
Reporting period: Annual Report on Form 20-F for the year ended December 31, 2021, filed April 29, 2022. The filing reports under IFRS in U.S. dollars. Q4 figures are unaudited. Jumia operates a pan-African e-commerce marketplace, logistics platform and JumiaPay payment ecosystem across 11 countries.
Key Financial and Operating Metrics
| Metric | FY2021 | FY2020 | Change |
|---|
| Revenue | $177.9 million | $159.4 million | +11.7% |
| Gross profit | $110.5 million | $106.0 million | +4.3% |
| Gross margin | 62.1% | 66.5% | Down |
| Operating loss | $240.9 million | $170.3 million | +41.4% loss |
| Net loss | $226.9 million | $183.7 million | +23.5% loss |
| Adjusted EBITDA loss | $196.7 million | $136.3 million | +44.3% loss |
| Operating cash flow | $(171.2) million | $(112.4) million | Higher outflow |
| GMV | $990.6 million | $955.5 million | +3.7% |
| Orders | 34.0 million | 27.9 million | +22.0% |
| Annual Active Consumers | 8.0 million | 6.8 million | +17.0% |
| JumiaPay TPV | $263.3 million | $224.3 million | +17.4% |
| JumiaPay transactions | 12.1 million | 9.6 million | +26.0% |
Q4 2021
| Metric | Q4 2021 | Q4 2020 |
|---|
| Revenue | $62.0 million | $49.3 million |
| Gross profit | $33.7 million | $33.0 million |
| Gross margin | 54.4% | 66.9% |
| Operating loss | $84.7 million | $47.5 million |
| Adjusted EBITDA loss | $70.0 million | $33.8 million |
| Orders | 11.3 million | 8.1 million |
| GMV | $330.1 million | $274.6 million |
| Quarterly Active Consumers | 3.8 million | 3.0 million |
Material Changes Versus the Prior Period
- Revenue growth was driven primarily by first-party sales, which rose 29.2% to $65.1 million, particularly in FMCG and grocery. Marketplace revenue increased only 1.0% to $108.2 million.
- Commissions declined 10.6% and fulfillment revenue declined 1.6%, largely because consumer incentives increased from $8.5 million to $25.2 million and reduced reported revenue.
- Sales and advertising expense more than doubled to $81.9 million, while technology and content expense increased 23.3% to $39.2 million. These investments supported stronger consumer, order and GMV growth but materially widened operating losses.
- Fulfillment expense increased 12.1%, below the 22.0% increase in orders, indicating reported fulfillment efficiencies. The cancellations, failed deliveries and returns rate improved to approximately 22% of GMV from approximately 25% in 2020.
- Everyday product categories increased to 64% of GMV from 57% in 2020 and 44% in 2019. Almost 90% of items sold remained supplied by third-party sellers.
- Gross profit increased, but gross margin declined because the revenue mix shifted toward first-party sales and consumer incentives increased.
Cash, Liquidity and Debt
- Liquidity was $512.8 million at December 31, 2021, comprising $117.1 million of cash and cash equivalents and $395.7 million of term deposits and other financial assets.
- Cash and cash equivalents declined from $373.9 million at year-end 2020, primarily because $400.0 million was invested in financial assets and operating cash outflow was $171.2 million.
- Financing cash inflow was $334.2 million, including approximately $341.0 million of net proceeds from the March 2021 equity offering. The company has primarily financed operations through equity issuances.
- The filing states that Jumia had no external borrowings; reported borrowings consist principally of lease liabilities totaling $12.5 million, including $3.9 million current and $8.6 million non-current.
- Management stated that existing liquidity and expected operating cash flows should cover anticipated needs for at least the next 12 months, although the company expects to require additional funding in the future.
Outlook, Commentary, Risks and Unusual Items
- Management’s strategy is to accelerate consumer adoption, expand everyday categories, develop JumiaPay and monetize advertising and logistics services while improving unit economics and moving toward profitability.
- Jumia increased consumer incentives, marketing and technology spending in 2021 and stated that it expected to continue investing in marketing and information technology in 2022.
- Jumia Logistics shipped 8.3 million packages for more than 1,400 clients in 2021. JumiaPay was available in eight markets, and the company planned to expand off-platform payment processing in Egypt.
- In Nigeria, a regulatory requirement led JumiaPay to change its card-processing model beginning in March 2022, negatively affecting the payment experience and volumes. Jumia obtained a final payment solution service provider license on April 28, 2022.
- Jumia disclosed an early-2022 cybersecurity incident involving limited data access. The investigation was ongoing, and the company could not yet determine the full extent of the breach.
- Material risks include continuing losses, negative operating cash flow, dependence on external financing, currency volatility, inflation, political and regulatory instability, logistics infrastructure constraints, fraud, cybersecurity, competition and evolving payment-service licensing requirements.
- Tax provisions totaled $47.0 million at year-end, including $34.2 million for tax risks and $12.8 million for uncertain income-tax positions. Management also identified approximately $12.4 million of additional possible tax exposure for which no provision was recorded because an economic outflow was not considered probable.
- The company committed to pay $23 million to a service supplier, including $21 million upfront; $7 million had been paid by December 31, 2021, with additional $7 million payments scheduled for January 2022 and January 2023.
- Jumia settled previously disclosed IPO-related securities litigation for $5 million paid in January 2021, with $1 million funded by insurance proceeds.
- Management and the auditor reported an adverse conclusion on internal control over financial reporting because of a material weakness relating to insufficient accounting expertise to evaluate complex share-based payment arrangements. The financial statement audit opinion itself was unqualified.
Most Important Facts for Investors to Verify
- Whether higher consumer, marketing and technology investments translate into sustainable order growth, improved monetization and lower losses.
- The company’s cash burn, liquidity runway and timing or terms of any future equity or other financing.
- The sustainability of positive gross profit after fulfillment expense and the effect of first-party sales and incentives on margins.
- Progress toward remediating the material weakness in internal control over financial reporting and the accuracy of share-based compensation accounting.
- The outcome of tax audits, VAT and withholding-tax disputes, including the $47.0 million provision and additional possible exposures.
- The operational and financial impact of Nigeria’s JumiaPay licensing changes and the company’s broader ability to obtain and retain payment licenses.
- The final scope and consequences of the early-2022 cybersecurity incident.
- Exposure to currency devaluation, inflation, supply-chain disruption, political instability and the Russia-Ukraine-related effects on African markets.
