Shares of African e-commerce company Jumia, plunged 20% yesterday despite relatively strong financial results in the company’s Q3 earnings report.
Jumia’s business model depends on e-commerce adoption throughout Africa.
The company posted $42.7 million in revenue — although that figure is +8.5% year on year (YoY), analysts and investors both anticipated something bigger.
In other words, Jumia’s financials suggest that African e-commerce adoption is not happening as fast as investors had hoped. Jumia reported 7.3 million active customers in Q3, a 7% increase YoY.
However, the company also spent $24 million in just Q3 on marketing, so lower-than-anticipated revenue could also represent Jumia’s unsuccessful marketing efforts.
Additionally, Jumia’s adjusted loss basically doubled as the company reported adjusted losses of 93% before interest, tax, depreciation, and amortization. On the bright side, the e-commerce company’s total number of orders increased 28% YoY.
Jumia Co-CEOs Jeremy Hodara and Sacha Poignonnec commented:
“Our growth acceleration strategy initiated at the end of the second quarter of 2021 is starting to pay off. We are making investments in Sales & Advertising and Technology to further enhance consumer education, brand consideration as well as the relevance and convenience of our platform… We are more than ever confident about the strong growth potential of our markets and our ability to build a growing business across e-commerce and fintech activities.”