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If there was one recurring theme that defined the past year for Jahez group, over several of its business verticals, it was that of a sustained and harmonious symmetry between growth and profitability. We managed to maintain more than satisfactory levels of profitability exceeding the targeted Adj. EBITDA margin range from net revenue at 10.2%, with a year-on-year net profit margin increase of nearly 110%, alongside steady topline growth in 2023. Which is demonstrating the enduring reliability of our business model nearly seven years since our inception as a tech start-up. In fact, the Group continued its growth trajectory during last year after having rapidly expanded its operations on the back of a triumphant IPO in 2022.
At the Group level, overall financial performance for the year marked a significant positive trend in 2023 with orders count exceeding 12x of the orders realized during 2019. We met and, in some cases, surpassed our targets and earnings guidance for the year both at topline and bottom line levels, exceeding SAR 7 billion in gross order value (GOV) and SAR 5.1 billion in gross merchandise value (GMV).
Our Gross revenue for 2023 stood at SAR 1.9 billion, indicating a sustainable growth of 14.8%. Our platforms operating within the Kingdom, recorded a notable rise in their EBITDA margins during the reporting period as well as improved unit-economics despite market competitiveness and price pressure, as the result of a strategic focus on balancing growth and profitability and delivery cost optimization.
Revenue Growth in 2023 was driven by delivery fees growth at 5.5%, the material increases in commission revenues of 29% as well as the other revenues by 27% mostly through the additional revenue streams brought by more recent acquisitions and investments.
The year’s PNL structure reflected a slight increase in gross profit at the group level due to better optimization of costs and economy of scale, and sales and marketing ratios remained low compared to industry standards, reflecting a commitment to intelligent and targeted spending. These measures contributed to our impressive 10.2% Adj. EBITDA margins in an industry where practically all players are still making their first positive periods.
| Indicator | 2019 | 2020 | 2021 | 2022 | 2023 |
| Revenue (SAR ‘000) | 158,529 | 459,306 | 1,159,568 | 1,602,477 | |
| Number of orders (millions) | 7.0 | 19.5 | 51.6 | 69.0 | |
| Average order value (SAR) | 71.1 | 72.6 | 64.8 | 62.2 | |
| Average commission/ order (SAR) | 6.7 | 7.7 | 7.5 | 7.7 | |
| Gross Order Value (GOV) (SAR ‘000) | 631,862 | 1,887,706 | 4,524,826 | 6,071,081 | |
| Gross Merchandize Value (GMV) (SAR ‘000) | 497,477 | 1,418,096 | 3,342,531 | 4,291,296 |
Looking back on our performance during 2023, perhaps nowhere was this running theme of increased profitability amid steady growth more pronounced than in our logistics operation, which went from a loss-making venture to overcome the challenges in record time. A concerted and continuous effort to grow this vertical resulted in a quick transition to profitability with improved margins, from SAR -29.2 million in 2022 in Adj. EBITDA to gains of some SAR 23.8 million as of end of 2023.
The costs incurred over the business’ somewhat steep learning curve are now paying off, and increased stability and productivity are also anticipated in the coming years as the logistics sector grows bigger and becomes ever more profitable and used by the Group as a winning asset securing a sustainable source of the drivers supply with a very competitive costs.
Among other key verticals, the quick commerce platforms Blu Store and PIK continued the expansion. Blu Store expanded its services to over 70 countries. While its contribution to the Group at large remains relatively small, Blu’s substantial growth and outstanding performance during 2023 showcase the immense potential of our partnership with the Al Hilal Club and promises significant growth impact across different revenue streams and market segments.
Though PIK faced certain challenges, the platform ends the year having initiated a number of measures to grow and scale up. Initiatives are already in place to manage the performance and also to refine its business model, with a sharp focus on retailer adoption, communication and relationship management.
Meanwhile, Co, our cloud kitchen business, branched out to an innovative cloud shelving vertical during 2023 in a timely and strategic move to offer optimized storage spaces to our restaurant and merchant partners, showcasing the business unit’s adaptability and versatility. The objective of this exercise is to maximize revenue and productivity per square meter. The cloud shelves serve as micro fulfillment centers to Jahez’s food and non-food platforms alike as well as to other e-commerce platforms in the market. This is anticipated to generate additional revenue by combining our cloud kitchen and shelving spaces and our logistics capabilities as a packaged product for e-commerce platforms across the region.
It must also be noted that 2023 marked some ramp up losses for the Group in the Gulf Cooperation Council (GCC) markets driven by the expansion strategy and market share gain, amounting to some SAR -72 million at the Adj. EBITDA level.
Our Bahrain and Kuwait operations over the last year have positioned us competitively in those important markets with a clear path to profitability in the near term.
Our approach to dynamic pricing and cost optimization in the Kingdom, which continues to yield positive results, will also enable further expansion locally and regionally as well as vertical growth while returning considerable profits. I am happy to note that efforts to capture market share from our fierce competition in the GCC are already proving successful.
The year also marked a number of key acquisitions, venture capital investments and partnerships, translating our aspiration to build an ecosystem around our core, the on-demand services. The most recent of these acquisitions, Sol, aims to elevate the procurement experience for our restaurant partners and offer increased opportunities for growth.
In terms of market growth, driven by digital adoption and changing demographics, the Saudi market continues to expand, which has allowed for more room for growth for Jahez. Jahez’s number of merchant partners also increased during the reporting period, while our reliance on delivery partners shifted towards our own fleet with the aim of increased productivity.
As we move into 2024, the Group has its sights set on enhancing existing markets, and achieve more growth, particularly in the platforms and logistics verticals.
The synergies that we’re creating across different segments of our business and also through new investments continue to create more value for our customers and shareholders. We are currently developing new investment ideas that will add to these synergies and create increased value for all while building an ecosystem contributing in enhancing customers lifestyle and empowering businesses. Our ability to achieve growth while remaining profitable sets Jahez Group apart in our industry, and with renewed vigor and focus, we plan to deliver more to our valued stakeholders in the upcoming years.
Heni Abdul Hakeem Mohamed Jallouli
Chief Financial Officer