E-commerce giant Jumia is undergoing a strategic overhaul as it seeks to improve profitability. During the recent earnings call, CEO Francis Dufay outlined a plan to transition the company to an asset-light model. This involves leasing rather than owning warehouses, with Egypt and Ivory Coast earmarked for the new approach.
The shift appears to be paying off. Jumia’s second-quarter losses narrowed significantly to $20.2 million, a substantial improvement from the previous quarter’s $38 million. Revenue for the period reached $36.5 million.
JumiaPay, the company’s financial services arm, also reported positive growth. Transaction volume hit $1.9 million, fueled by increased usage for delivery payments and successful cashback promotions.
The company’s financial health is further solidified by cash reserves of $45.1 million and total liquid assets of $92.8 million, with 67% held in USD to mitigate currency fluctuations. Customer engagement also remains strong, with 2 million active users.
While these developments are encouraging, Jumia’s stock price experienced a decline following the earnings announcement. However, it’s important to consider the company’s recent performance. After reporting a 71% cost reduction in Q1, Jumia’s shares surged by 150% year-to-date, peaking at $14.56 in July.
Jumia’s pivot towards an asset-light model and improved financial performance indicate a concerted effort to achieve long-term sustainability in the competitive African e-commerce market.
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