Analysis: Jumia’s profitability since IPO

Jumia's profitability has been a constant subject since its initial public offering (IPO) in 2019. Investors and stakeholders worry over the pan-African e-commerce platform's adjusted EBITDA and operational losses every time it reveals its quarterly financials.

Since becoming public, Jumia has improved its results in a number of important e-commerce indicators, including orders, revenue, user base, and gross merchandise value (GMV). JumiaPay (its recently acquired license to handle payments for third-party firms in Egypt and Nigeria) and its logistics unit have also increased the company's monetization prospects. However, the road to profitability remains difficult for it, possibly even more so as it moves into the quick commerce (q-commerce) market, according to TechCrunch.

While Jumia's financial statistics over the last few years have shown gradual and steady growth, the company's ongoing losses are a source of concern. A few investors believe that the e-commerce firm is still years away from becoming profitable, and it's easy to see why.

Jumia lost €182.7 million (about $204.5 million) in adjusted EBITDA in 2019. (Adjusted loss of roughly $136.3 million). The company declared in its 2020 earnings reports that it made significant progress on its path towards profitability, with an adjusted EBITDA deficit of €119.5 million (about $136.3 million adjusted loss). Jumia's adjusted EBITDA losses reached $196.7 million by the end of 2021, up 44 percent from the previous year.

During an interview with TechCrunch, Co-CEO Jeremy Hodara reaffirmed this, citing the company's reduced losses in Q4 2020. He said the company will endeavor to keep making profits through increasing corporate efficiency and providing new growth opportunities.

Jumia Technology has teamed with United Parcel Service (UPS) to extend its delivery services for customers and businesses across Africa in order to increase profitability. UPS will be able to use Jumia's network to provide a wider selection of delivery options to its clients, such as door-to-door parcel delivery and pickup with a different payment options.

The partnership will begin with Nigeria, Kenya, and Morocco, with intentions to expand to Ghana and the Ivory Coast, and then to the rest of Africa where Jumia operates.

According to Renzo Bravo, UPS's head of strategy for the Indian subcontinent, the Middle East, and Africa, the alliance will allow Atlanta-based UPS to expand its footprint in many African nations and capitalize on an expected surge in online retail. He added that by 2025, Africa's online trading may reach over $180 billion, enabling commercial growth not only throughout the continent, but also between Africa and the rest of the world.

Co-CEO Jumia, Sacha Poignonnec said, “We have this vast, untapped market opportunity both on the e-commerce and payment fronts, and in this context, we really want to establish Jumia as the go-to destination for consumers, and we want to develop JumiaPay into a payment and fintech champion on the continent over the next few quarters.”

Jumia's shares increased by 7.8% after the announcement. Consumers can now access a wider selection of financial and digital services through Jumia.

Jumia is hiring, see all open jobs on Hubforjobs.com