Jumia(JMIA) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA loss reached its lowest level in five quarters at $45.5 million, down 13% year-over-year [13] - Adjusted EBITDA loss as a percentage of GMV dropped below 20% at 18.9% [13] - Revenue reached $50.5 million, up 18% year-on-year and up 33% on a constant currency basis [29] - Gross profit increased by 29% year-on-year, reaching $33 million, with a gross profit margin of 13.7% of GMV [36] Business Line Data and Key Metrics Changes - Active consumers reached 3.1 million, up 3% year-on-year [20] - Orders increased to 9.4 million, up 11% year-on-year [21] - GMV reached $240.7 million, up 1% year-on-year and up 14% on a constant currency basis [22] - Marketplace revenue reached $32.2 million, posting its fastest year-on-year growth rate in nine quarters [32] Market Data and Key Metrics Changes - The Nigerian Naira, Egyptian Pound, and West African CFA depreciated by 5%, 14%, and 13% respectively against the dollar [23] - JumiaPay TPV reached $66.6 million, up 3% year-on-year [26] - JumiaPay Transactions reached 3 million, down 1% year-on-year [27] Company Strategy and Development Direction - The company aims to enhance business focus by discontinuing underperforming projects and reallocating resources to high-value initiatives [51] - The strategy includes driving sustainable long-term growth by mastering e-commerce fundamentals such as selection, price, and convenience [58] - Cost discipline is emphasized, with plans to optimize logistics and marketing costs while improving operational efficiency [63] Management's Comments on Operating Environment and Future Outlook - Management noted a softening of usage growth trends due to a challenging macroeconomic environment, including inflation and currency depreciation [25] - The company remains confident in its long-term growth potential in Africa, citing attractive demographic and digitization dynamics [74] Other Important Information - The company suspended its full-year 2022 GMV growth guidance due to market volatility [46] - Cash utilization for the quarter was $62.2 million, a 5% decline compared to Q2 2022 [45] Q&A Session Summary Question: Impact of scaling back initiatives on GMV - Management believes scaling back certain initiatives will not meaningfully harm the top line and will allow teams to focus on more impactful projects [77] Question: Details on commission rate increases - Management emphasized the need to create value for vendors and sellers, indicating a cautious approach to take rate increases to avoid hindering supply growth [78][79] Question: Areas for potential reductions in operating expenses - Management is reviewing all cost lines, with a focus on G&A and logistics efficiency, aiming for significant savings across the board [81][83] Question: Softer usage trends and their persistence - Management acknowledged the impact of macroeconomic factors on usage trends, noting that these trends are observed across all markets [86][87] Question: Product mix and take rates - Management clarified that while they are scaling back first-party growth in some areas, they are still focused on developing higher ID categories like consumer electronics [89][90] Question: Cash burn reduction timeline - Management indicated that cash burn is influenced by CapEx, working capital movements, and EBITDA, with plans to reduce CapEx in the coming quarters [92]