Jumia Technologies AG Q1 FY2025 earnings call

Management Statement and Operational Highlights:

• Enter 2025 with mandate to reduce losses, drive efficiency. Materially reduced losses but focus on closing profitability gap.
• Accelerating usage trends and positive end-user GMV growth in March, but pressured by currency headwinds and corporate sales decline in Egypt.
• Laser-focused on margin expansion and financial discipline. Executing cost-cutting initiatives in logistics, fulfillment, technology, G&A.
• Gross profit margin increased by moderately raising marketplace take rates.
• Country-level operations: Strengthened international seller relationships, expanded into upcountry regions, launched Jumia Deliveries logistics platform.
• Key markets: Ivory Coast, Nigeria, Kenya showing strong growth; Egypt in restructuring with focus on affordability.

Segment Performance:

• Ivory Coast: Physical goods orders grew 25% year-over-year, GMV grew 4% and 8% in constant currency. It stands as the leading market by GMV with strong consumer engagement.
• Nigeria: Physical goods orders grew 22% year-over-year, GMV increased 18% Y/Y and 46% in constant currency. Maintains a clear leadership position with substantial growth runway.
• Kenya: Physical goods orders grew 36% year-over-year, GMV increased 44% and 25% in constant currency. Well-positioned for sustained growth.
• Egypt: Physical goods orders down 15% Y/Y, GMV decreased 69% in USD and 54% in constant currency, impacted by corporate sales decline and currency devaluation.
• Order markets portfolio: GMV grew 17% and 23% in constant currency, physical goods orders up 24% Y/Y. Markets like Ghana saw 65% GMV growth Y/Y.

Guidance:

• Raised physical goods orders growth range to 20%–25% from 15%–20%.
• Full year 2025 loss before income tax expected to be $50M–$55M, improved from prior $65M–$70M.
• 2026 loss before income tax forecasted at $25M–$30M. Targeting profitability on loss before income tax basis in Q4 2026 and full year profitability in 2027.
• Second quarter anticipates continued momentum with physical goods orders growth 20%–25%, double-digit top line growth, and further loss reduction.

Risks:

• Currency headwinds affecting profitability.
• Volatility in corporate sales, especially in Egypt due to macroeconomic dynamics.
• Competition from international players like Temu, with potential regulatory challenges in African markets.

Q: Brad Erickson asked about the disconnect between orders and GMV due to corporate sales, volatility of B2B, use of cash for inventory, supply tailwinds, logistics expansion, and bridging cash burn gap.

A: Francis Dufay responded that corporate sales are high-value with few orders, B2B is more volatile than B2C. Cash burn due to working capital for inventory ahead of campaigns. Supply shift from Asia helps but may increase competition. Logistics expansion is timely with developed tools, and cost savings from tech contracts will reduce cash burn.

Q: Tracy Kivunyu asked about competition from Asian players, international orders as percentage of GMV, monetization of Jumia delivery business, profitability of subsidiaries, and contributors to customer growth.

A: Francis Dufay stated competition from Asian players faces regulatory challenges. International orders' GMV percentage not disclosed but lower due to lower value items. Jumia delivery is higher margin, lower volume. Scale drives profitability in markets, and customer growth driven by improved product, prices, supply, and up-country expansion.