Jumia revenue slumped in Q2 amid a currency crisis in Africa

Jumia (NASDAQ: JMIA) the biggest e-commerce company in Africa, published mixed results even as the company’s headwinds continued. The company’s quarterly active customers dropped by 28.1% in Q2 to 2.4 million.

Its orders slumped from over 10.3 million in Q2’22 to 6.5 million, leading to a major slump of its gross merchandise value (GMV) to $202.3 million. As a result, total revenue dropped from over $57.3 million to $48.5 million. 

On a positive side, the company published encouraging operating loss figure and boosted its guidance. Its operating loss narrowed from $67.7 million to $23.3 million, helped by its cost-cutting measures. It also boosted its adjusted EBITDA loss guidance for the year.

The biggest challenge for Jumia is that its operating markets are not doing well. As I wrote here, the Nigerian naira has plunged to a record low. The same is true for other countries like Ghana and Kenya. 

A devaluing currency means that Jumia’s merchants are paying less to import from countries like China and Turkey. At the same time, they need to hike prices in an already challenging environment. In a statement, Jumia’s CEO said:

“Usage performance continued to be affected by the difficult operating environment with record levels of inflation impacting consumers’ spend as well as sellers’ ability to source goods.”

All these challenges explain why the Jumia stock price has tumbled this year. The shares plunged to $3.70 on Monday, and are now about 94% below its all-time high.