Pan Africa e-commerce platform Jumia has released its financial report for the first quarter of 2019. The report covers the company’s operations in various sectors conducted primarily online across 14 African countries. The report shows Jumia’s Gross Merchandise Volume (“GMV”) grew by 58 percent to €240 million in Q1 of 2019 on a yearly basis, on the back of strong marketplace growth, leading to a 102% increase this quarter in Marketplace revenue on a yearly basis.
The gross profit margin as a percentage of GMV increased from 5.6 percent in the first quarter of 2018 to 6.5 percent this quarter, as a result of the increased GMV monetization rate. Marketing and advertising cost has paled from 7.2% of GMV in the first quarter of 2018 to 5.1% in the first quarter of 2019.
The CEO of Jumia Nigeria Juliet Anammah stated that the decision to cut down marketing and advertising cost was because the brand has created a strong awareness in its various markets over the years. She also stated that, to sustain its efforts in remaining in the minds of people, it has put in place tactical measures such as its JForce initiative, which is targeted at demographics that lack access to the internet.
Jumia generates revenue from sales commission it charges independent merchants that are connected to buyers on its platform. There are plans to increase monetization value by offering analytics services to registered merchants in the future. The site is host to 81,000 active sellers with 4 million online shoppers spread across 14 African countries.
The company is making great strides as it secured a €50 million investment from payment technology giant Mastercard. Also, in February Jumia announced its new partnership with technology company Xiaomi on smartphone penetration in Africa.
Citron Research report
According to a recently released publication by Citron Research, Jumia has been accused of fraud and misleading investors into buying shares in its IPO at the NYSE. The company has issued a rebuttal and is considering legal actions against the research company. In the wake of the report, Jumia’s share has declined by nearly 50 percent of its peak value. Jumia maintains it did not mislead investors and it stands by the prospectus it issued one month prior to its NYSE IPO launch.
Citron Research was banned in 2016 in the Hong Kong stock exchange by a tribunal for market misconduct in connection with the publication of a research report on Chinese property developer China Evergrande Group and ordered its founder Andrew Left to repay HK$1.6 million – around $206,000 at the exchange rate at the time – in profits made while shorting the stock.
“Some recent allegations were made about Jumia on the basis of selected, biased or unverified facts with what appears to be a clear objective of damaging Jumia.
We held our earnings call on Monday May 13th and we published our first quarter results, which we are very pleased with, and provided information to demonstrate those recent allegations are wrong. We encourage you to download our results and access the transcript of the call, both of which are publicly available.
We stand by the disclosures we made in our prospectus, which accurately describe our business and the related risks in all material respects. We are very excited about the future and our prospects. We will not be distracted from executing on our strategy and carrying out our mission by people who seek to create doubt to profit at our Company’s expense.
In March, BCG published a report explaining that online marketplaces had the potential to create 3 million new jobs across the African continent by 2025. We very much believe in the positive impact of technology, and of Jumia, for the continent, and we look forward to continuing to create positive impact in the future”