5 Takeaways From Jumia's November Presentation That Shows Long-Term Opportunity

Jumia Technologies JMIA is an African e-commerce company that covers a population of 600 million people. A November presentation laid out the company’s turnaround efforts and plans for future growth that are summarized below.

Jumia E-commerce: Jumia has 6.7 million annual active customers and had over 28 million orders placed through its platform over the last year.

Jumia’s third-party sellers cover 90% of the platform items with 110,000 active sellers part of the Jumia ecosystem.

Seventy-eight percent of African online customers bought on Jumia in the last 12 months and 88% of that total made additional purchases in the same period.

Related Link: Citron Explains Change Of Heart On Jumia Technologies, $100 Price Target

JumiaPay: One of the key assets for Jumia could be its JumiaPay fintech platform, as about 34% of the company’s transactions are completed via JumiaPay.

A slide in the Jumia presentation compares Jumia to other winning stocks that have shown that e-commerce being strong driving online payment adoption. The companies mentioned on the slide are eBay EBAY with Paypal PYPL, MercadoLibre MELI with Mercado Pago, Alibaba Group BABA with AliPay, and WeChat with WeChat Pay owned by Tencent Holdings TCEHY.

JumiaPay revenue was up 74% year-over-year in the first nine months of 2020.

Jumia Logistics: Jumia owns its own logistics business, which powers its e-commerce platform. Jumia said its logistics business is the technology and data-driven answer to Africa’s logistics challenges.

The business is seen as a key competitive barrier for other companies in the region. The logistics business covers 20 million packages with 50% delivered to primary cities, 25% to secondary cities and 25% to rural locations.

Business Shift Could Pay Off: Over the last year, Jumia has transformed its operations to focus on profitability.

Jumia exited three underperforming countries and exited its travel business. Gross profit margins were up 514 basis points in the third quarter year-over-year.

Jumia reported its first ever breakeven quarter before G&A in the third quarter. Adjusted EBITDA is also improving each quarter of fiscal 2020 compared to fiscal 2019 that saw the losses get bigger each sequential quarter.

Growth Opportunities: Jumia laid out future growth saying the long-term goal is to “maximize value creation potential of each asset” and says it could carve out JumiaPay and Jumia Logistics into standalone businesses.

The plan also calls for Jumia to expand into the countries of Ethiopia, DR Congo and Angola with respective populations of 105 million, 81 million and 30 million.

Price Action: Shares of Jumia are down 4% to $29.06 on Tuesday after hitting a new 52-week high of $33.42. Shares are up 348% year to date.

Disclosure: The author has a long position in JMIA.