African e-commerce giant Jumia recently revealed its cost cuts helped reduced its fourth quarter (Q4) losses by 47%, compared to last year, as its revenue is showing signs of profitability.
Jumia recorded a revenue of $66.5 million in the fourth quarter (Q4) of 2022, up 7% on a year-over-year basis and 23% on a constant currency basis. This revenue increase was reportedly driven by strong growth in the marketplace revenue, which was up by 27% year-over-year or 45% on a constant currency basis.
As part of its streamlining efforts, Jumia reduced headcount among managerial roles by 60% in Dubai and undertook overall headcount reductions that resulted in more than 900 position terminations across its 11 markets, which affected 20% of its staff.
On the monetization front, despite an increasingly challenging macro backdrop, Jumia recorded massive gross profit growth, which was up 22% year-over-year. Marketplace revenue reached an all-time high of $41.2 million as a result of proactive measures taken to support commissions and advertising revenue, which both reached record highs during the quarter.
Jumia’s CEO Francis Dufay disclosed that the company implemented different strategies to accelerate growth and profitability, and they are already seeing encouraging signs of success.
In his words, “In the fourth quarter of 2022, we started implementing our strategy to accelerate our path to profitability and further strengthen our fundamentals. While the fourth quarter results only reflect a fraction of the actions we are taking, we are seeing early signs of success and remain focused on execution.
“We remain more than ever confident about the growth opportunity across our markets and are making fundamental improvements to our consumer value proposition which will help us drive sustainable long-term growth”.
Despite recording a revenue of $66 million for the fourth quarter (Q4), Jumia recorded a full-year loss of $207 million and a fourth-quarter loss of $49.2 million in the earnings report.
However, Investors King understands that the e-commerce giant is already delivering on its strategy to minimize losses and accelerate progress toward profitability, with a major focus on enhanced cost discipline as well as accelerating monetization.
