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| Jumia Announces $100 Million Share Offering to Accelerate Growth and Enhance Logistics Amid Market Volatility Image credit: brandatk |
Jumia's New Share Offering
African e-commerce giant Jumia is set to raise approximately $100 million by selling 20 million American depositary shares, as reported by TechCrunch. Despite a volatile market, this at-the-market transaction leverages strong recent results. Jumia’s share price, initially around $5.70, dropped to $4.90 after the announcement, possibly due to shareholder concerns over dilution and global carry trades.
Fund Allocation and Business Expansion
CEO Francis Dufay, overseeing his first secondary share sale, stated that the funds will accelerate Jumia’s business growth. The new capital will enhance the company’s supply chain network, particularly logistics for smaller cities, and expand overall network reach. Additionally, investments will be made in technology, focusing on marketing and vendor solutions to drive growth and expedite the company’s path to profitability.
Financial Position and Customer Growth
Jumia’s financial report for Q2 2024 shows a cash position of $92.8 million, a decrease from $120.6 million in Q4 2023 and $101.5 million in Q1 2024. The funds from the new share offering will improve liquidity and support initiatives such as customer acquisition, product assortment, and vendor retention. Jumia’s active customer base has remained around two million, indicating potential for significant growth in markets with over 600 million people.
Revenue and Order Trends
Orders increased by 7% year-over-year to 4.8 million, attributed to a diversified product assortment. However, Jumia’s gross merchandise volume (GMV) and revenue declined by 5% and 17% year-over-year to $170.1 million and $36.5 million, respectively. These declines are partly due to currency devaluation in key markets like Egypt and Nigeria, although GMV in constant currency grew by 35%, and revenue increased by 15%.
Profitability and Currency Impact
Jumia’s adjusted EBITDA loss decreased by 10% to $16.3 million, and operating loss reduced by 8% to $20.2 million, driven by cost-saving initiatives. The company also reported a 27% year-over-year decrease in loss before income tax from continuing operations to $22.5 million. CEO Dufay emphasized the importance of this metric due to currency volatility and its impact on finance costs, providing a comprehensive view of the company’s financial health amidst market fluctuations.
Jumia continues to navigate market challenges while focusing on growth and efficiency. The new share offering aims to strengthen its financial position, enhance logistics, and support its expansion strategy across Africa and beyond.
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