Shares of Jumia Technologies (JMIA 12.47%) were taking a dive today after the African e-commerce company posted disappointing results in its second-quarter report. Revenue fell even as investors were hopeful that the pandemic would give a jolt to the company's performance as it has with other e-commerce stocks.
As of 10:47 a.m. EDT, the stock was down 28.1%.
Jumia's revenue declined 10% in the quarter to 34.9 million euros, but that was actually better than analyst estimates of an 18.7% decline in revenue. That drop is misleading also as it's a function of Jumia's transition to a third-party marketplace from a direct-selling platform. Marketplace revenue increased 38.2% to 23.6 million euros, a sign that the strategy is seeing success, but gross merchandise volume, or the total value of goods sold on the platform, fell 13.2% to 228.3 million euros.
Annual active customers rose 40% to 6.8 million, showing the company is reaching more customers during the pandemic, but orders in the quarter rose just 8%, also to 6.8 million.
Further down the income statement, the company made progress as gross profit increased 38% to 23.3 million euros, and gross profit after fulfillment expense reached a record 6 million euros, compared to a loss of 0.7 million euros in the quarter a year ago. It also narrowed its operating loss by 44% to 37.6 million euros.
In addition, its JumiaPay digital payment platform was a bright spot as total payment volume rose 106% to 53.6 million euros.
Co-CEOs Jeremy Hodara and Sacha Poignonnec said the company had made significant progress on its path to profitability, adding, "We are navigating these uncertain times of COVID-19 pandemic with strong financial discipline and operational agility which positions us to emerge from this crisis stronger and even more relevant to our consumers, sellers and communities."
In its outlook, the company said it expects substantial uncertainty from the COVID-19 pandemic and saw continued softness in GMV, though it remains confident it can trim its adjusted EBITDA loss from 2019 to 2020.
Jumia bulls have likened the company to other e-commerce winners like Amazon and MercadoLibre and, with its leadership position in Africa and initiatives in payments and logistics, the company does have some similarities to those stocks. However, Jumia is much smaller and faces challenges distinct to Africa.
Given the decline in revenue and GMV, it's not surprising to see today's sell-off. The company still has a lot to prove.