Jumia’s venture into accelerated commerce could be slowing the road to profitability – Meczyki.Net

Q-Commerce is known for its tough unit economics and thin margins. Why is Jumia doing drama?

profitability has been An ongoing theme for Jumia since it went public in 2019. Every time the pan-African e-commerce platform releases its quarterly financials, investors and tech stakeholders note its adjusted EBITDA and operating losses.

While the company’s financial results have shown slow and steady growth over the years, Jumia’s continued losses are a recurring cause for concern. Some investors who spoke to Meczyki.Net believe the e-commerce giant is light years away from achieving profitability, and it’s not hard to understand their approach.

Jumia’s adjusted EBITDA during 2019 was €182.7 million. at the loss of (about $204.5 million). In its 2020 financials, the company said it has demonstrated meaningful progress on its path to profitability, improving its adjusted EBITDA loss to a loss of €119.5 million (approximately $136.3 million adjusted loss) that year.

Co-CEO Jeremy Hodara reiterated this in an interview with Meczyki.Net, referencing the company’s lower losses in Q4 2020. “We will try to do this every quarter. We want to go about this by improving the efficiency of the business and opening new avenues for growth,” Hodara said. But by the end of 2021, Jumia’s adjusted EBITDA loss $196.7 million . ended onAn increase of 44% over the previous year.

Although the e-commerce company started 2021 well, narrowing losses slightly in the first quarter, it reverted to its old way of executing aggressive advertising, which it slowed during the pandemic. As the company increased its GMV, orders, quarterly active customers and revenue in subsequent quarters, its losses increased, particularly in Q4, when it reached $70 million, a year-over-year increase. The year was a growth of 107%.

The company’s other co-CEO, Sacha Poignonek, told Meczyki.Net in an interview last month that Jumia doesn’t plan to lose more than $70 million in future quarters.

“We are stabilizing our marketing and investment levels,” he said. “There will be some ups and downs here and there, but we will reduce our losses from the peak we did in Q4.” Jumia is projected to lose more than $220 million this year, which will surpass the 2021 number.

Jumia has expanded its results with several e-commerce metrics that have mattered since going public: orders, revenue, user base, and GMV. The company has improved its monetization approach with Zoomiapay (fintech recently licensed to process payments for third-party businesses in Egypt and Nigeria) and its logistics arm. Yet its path to profitability remains difficult, perhaps even more so as it enters Q-commerce territory.