Q2 2022 Yunji Inc Earnings Call Aug 25, 2022 (Thomson RoadEvents) — Edited Transcript of Yunji Inc earnings conference call or presentation Thursday, August 25, 2022 at 11:30:00am GMT TEXT model of Transcript ================================================================================ Corporate Participants ================================================================================ * Chengqi Zhang Yunji Inc. – VP of Finance * Kaye Liu Yunji Inc. – IR Director * Shanglue Xiao Yunji Inc. – Founder, Chairman & CEO ================================================================================ Presentation ——————————————————————————– Operator [1] ——————————————————————————– Good morning and good night, girls and gents. Thank you, and welcome to Yunji’s Second Quarter 2022 Earnings Conference Call. With us immediately are Mr. Shanglue Xiao, Chairman and Chief Executive Officer; Mr. Chengqi Zhang, Vice President of Finance; and Ms. Kaye Liu, Investor Relations Director of the corporate. Now I wish to hand the conference over to our first speaker immediately, Ms. Kaye Liu, IRD of Yunji. Please go forward, ma’am. ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [2] ——————————————————————————– Hello, everybody. Welcome to our Second Quarter 2022 Earnings Call. Before we begin, please observe that this call will include forward-looking statements throughout the which means of the Private Securities Litigation Reform Act of 1995 which are based mostly on our present expectations and present market working situations and relate to occasions that contain recognized or unknown dangers, uncertainties and different components throughout the business. These forward-looking statements will be recognized by the terminologies equivalent to will, anticipate, anticipate, proceed or different related expressions. For an in depth dialogue of these dangers and uncertainties, please discuss with our associated paperwork filed with U.S. SEC. Any forward-looking statements that we make on this call might be based mostly on assumptions as of immediately and are expressly certified completely by the cautionary statements, danger components and particulars of the corporate’s submitting with the SEC. Yunji don’t undertake any obligation to replace this assertion besides as required below relevant regulation. With that, I’ll now flip over to Shanglue Xiao, Chairman and CEO of Yunji. ——————————————————————————– Chengqi Zhang, Yunji Inc. – VP of Finance [3] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [4] ——————————————————————————– [Interpreted] Hello, everybody. Welcome to Yunji’s Second Quarter 2020 Earnings Call. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [5] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [6] ——————————————————————————– [Interpreted] During the second quarter, we efficiently navigated via the uncertainties and the volatility caused by the difficult macro backdrop, widespread resurgences of the pandemic and associated management measures affecting a quantity of main cities throughout China. In the face of these headwinds, we retained our give attention to optimizing our platform’s consumer expertise whereas upholding our social duty to make sure customers obtained excellent achievement providers and well timed supply of the [urgent free media] orders. We nimbly and proactively deployed our logistic sources. For instance, in some (inaudible) attain our specific supply service to these suppliers equivalent to (inaudible) Express who service remained unaffected by the pandemic. Furthermore, we optimized our stock construction by transferring merchandise between warehouses to make sure their prepared — availability for supply to customers. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [7] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [8] ——————————————————————————– [Interpreted] And in time, our provide facet was additionally affected by the macro headwinds to a sure extent. [And due to that,] merchandise couldn’t be launched from course of or shipped out from factories in these areas severely affected by the pandemic. Unfortunately, this upkeep — these merchandise weren’t accessible for buy on our platform through the initially deliberate promotional interval. Since throughout this 12 months, the state of affairs is significantly improved and our provide and cross-border logistics chains have each steadily recovered. Our non-public label product stock has now been delivered, securing ample inventory for merchandise gross sales throughout the previous couple of quarters. Furthermore, we have now taken preemptive measures to mitigate the potential future COVID-related provide chain disruptions by growing our stock to the non-public label merchandise and the cross-border merchandise. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [9] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [10] ——————————————————————————– [Interpreted] During the primary half of this 12 months, we adhered to our technique of creating unique non-public label merchandise, actively (inaudible) our merchandise and provides and developed a range of contemporary user-centric merchandise. Our [big health] model continues to contribute to the diversification and association of the product class. During the primary half of 2020, we developed greater than 10 authentic merchandise for weight administration, skincare and physique revitalization below our non-public label. This modern product is scheduled to be launched in [succession on] our platform. Meanwhile, we upgraded our product system with constructive outcomes. Our second era fruit and vegetable product sweet reaching the milestone of 5 million gross sales inside 1 minute and 10 million gross sales inside 20 minutes upon its launch on June 14, 2022. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [11] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [12] ——————————————————————————– [Interpreted] On the price margin entrance, we carried out contemporary content material advertising and marketing and model growth initiatives for our private-label skincare model SUYE. As half of these efforts, we appointed a well-liked Chinese feminine superstar because the model’s spokesperson for our new product line containing elements utilized in mesotherapy therapy. In addition, SUYE’s advertising and marketing workforce produced a quantity of partaking brief movies. These movies efficiently increase the net and off-line model consciousness and attracted magnificence lovers from each our personal and third-party platforms. We are assured that this augmented site visitors flows will function a strong basis for future product commercialization. During SUYE’s twelfth anniversary celebration, we launched a quantity of the brand new skincare merchandise that include elements utilized in medical aesthetics below the SUYE model, producing over RMB 21 million gross sales through the and stock celebration promotion. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [13] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [14] ——————————————————————————– [Interpreted] Food is one other strategic focus inside our non-public label model metrics. Our authentic model idea for Gourmet Yunji was to allow our customers to get pleasure from scrumptious meals from all around the world with out having to go away their house. This idea can also be visually illustrated and amplified in our meals class brief video advertising and marketing content material. China is an unlimited nation with plentiful sources and every area possess its personal distinctive delicacies. We replace our social media account on a weekly foundation with video (inaudible) exhibiting a dish from my hometown. This factor is designed to contain viewers’ nostalgia with hometown style whereas innovating their curiosity in scrumptious meals from a number of areas. Currently, every brief video on our Gourmet Yunji official account on third-party platforms obtained round 1 million views continually. We will proceed to put money into content material growth on our personal and third-party platforms. We’re assured that our [controlling] advertising and marketing content material will considerably enhance model consciousness and create a [significant] worth within the close to and long run. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [15] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [16] ——————————————————————————– [Interpreted] Meanwhile, the pandemic has caused sure modifications in client conduct and mindset confronted with an unsure macro surroundings. Consumers are more and more cautious with private expenditures. As a consequence, market demand for discretionary merchandise have declined. As a social e-commerce platform that maintains shut relationships with its customers, we intention to supply a priceless and reliable sellers. That it’s the expectation. As in time, we frequently try to supply extra engaging providers to encourage clients. As such, we have now enhanced our personal vendor system whereas launching extra value-added providers. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [17] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [18] ——————————————————————————– [Interpreted] We upgraded the service provision in our well being care class’s neighborhood teams by piloting our dietary consulting service the place customers are supplied with skilled recommendation and suggestions. For these [power service], we designated skilled nutritionists to cowl every neighborhood group and arrange the 9 stay streaming group courses with a workforce of professionals and sports activities consultants. During this era, 90.6% of the trial customers had been efficiently retained and so they engaged with the nutritionists every day. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [19] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [20] ——————————————————————————– [Interpreted] Looking forward, to be able to ship ever increased ranges of service to our customers, we are going to improve funding within the growth of service managers through the second half of this 12 months, having applied numerous strategic initiatives to cut back prices, enhance working effectivity after which develop non-public label model merchandise over the previous 12 months. Our gross margin has improved considerably. This improved gross margin allows us to extend service managers’ revenue as an incentive to reward excellent efficiency. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [21] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [22] ——————————————————————————– [Interpreted] With that, I’ll flip the ground over to Mr. Chengqi Zhang, our Vice President of Finance, to undergo the monetary outcomes. ——————————————————————————– Chengqi Zhang, Yunji Inc. – VP of Finance [23] ——————————————————————————– Thank you, Shanglue. Hello, everybody. Before I’m going via our monetary outcomes, please observe that each one numbers acknowledged within the following remarks are in RMB phrases and all comparisons and proportion modifications are on a year-over-year foundation, except in any other case famous. During the quarter, we had been as soon as once more confronted with the resurgence of COVID-19 and related lockdown measures in Shanghai and throughout the nation. Compared to the identical interval final 12 months, our repurchase fee remained comparatively secure at 79%, and our gross margin improved. Even within the face of this headwind, we intensified our give attention to optimizing value construction and creating our non-public label model, enabling our enterprise to navigate safely via the current macro uncertainties. Furthermore, we invested in our achievement associate base to make sure the supply of merchandise even inside areas below strict pandemic management measures. Our money place stays robust sufficient for us to efficiently stir via the present market downturn and hostile financial surroundings. We will proceed to reward our shareholders via share buybacks. Now let’s take a better take a look at our financials. Total income had been RMB 284 million in comparison with RMB 571 million a 12 months in the past. Revenues from gross sales of merchandise had been RMB 237 million and revenues from our market enterprise had been RMB 42 million. This decline in income was primarily the consequence of continued COVID outbreaks, notably throughout April and May. The pandemic-related lockdowns disrupted our provide chain with our third-party suppliers, retailers and logistics service suppliers being notably affected. Consumers’ willingness to spend was additionally impacted with unsure macro situations, fostering need amongst customers to avoid wasting moderately than spend. These components mixed to create merchandise methods, logistical delays and a stagnating client demand, all of which negatively affected our operations through the first half of 2022. Their continued influence relies upon upon the long run path of the pandemic. And although we’re seeing indicators that the worst of the pandemic is behind us, we are going to stay vigilant and reply nimbly to additional growth. Despite these challenges, we improved our gross margin to 40.6% in comparison with 35.1% a 12 months in the past consequently of sustained buyer loyalty to our non-public labels and the efficient product curation technique. Now let’s check out our working bills. Fulfillment bills had been RMB 43 million in comparison with RMB 50 million a 12 months in the past. This was primarily resulting from decrease warehousing and logistics prices ensuing from a discount within the amount of merchandise bought in addition to lowered service charges from third-party cost settlement platforms. These financial savings offset the heightened logistic prices that resulted from us sustaining our provide chain flexibility through the pandemic lockdown interval. Sales and advertising and marketing expense was RMB 58 million in comparison with RMB 61 million a 12 months in the past, primarily because of the lower in member administration payment, which was partially mitigated by improve in non-public label promotion bills. Technology and content material bills had been RMB 24 million in comparison with RMB 32 million a 12 months in the past. The lower was primarily because of the discount in personnel prices consequently of staffing construction refinements and lowered server prices. General and administrative bills was RMB 32 million in comparison with RMB 43 million a 12 months in the past. This was primarily resulting from lowered personnel prices consequently of refinements to our staffing construction {and professional} service charges. Total working bills within the second quarter decreased to RMB 157 million from RMB 187 million in the identical interval of 2021. We recorded a loss from operations of RMB 30 million in comparison with an revenue of RMB 16 million a 12 months in the past. Net loss was RMB 25 million in contrast with internet revenue of RMB 17 million a 12 months in the past, whereas adjusted internet loss was RMB 17 million in contrast with adjusted internet revenue of RMB 24 million a 12 months in the past. Basic and diluted internet loss per share attributable to odd shareholders had been each RMB 0.01 in contrast with fundamental and diluted internet earnings per share attributable to odd shareholders of RMB 0.01 in the identical interval of 2021. Moving on to liquidity. As of June 30, 2022, we had a complete of RMB 645 million in money and money equivalents, restricted money and short-term investments on our stability sheet in comparison with RMB 743 million. As of March 31, 2022, the lower was partially attributable to money utilized in our share repurchase program. Our liquid property had been ample to cowl our payable obligations, and we don’t maintain any long-term financial institution loans or debt on our stability sheet. On March 17, 2022, we introduced our 2022 share repurchase program. As of June 30, 2022, we have now repurchased over 6 million American depository shares, representing over 60 million Class A odd shares from the open market with money move and mixture quantity of roughly RMB 7 million. Furthermore, our Board of Directors has authorized an extension of the repurchase program for one more 6 months. We intend to proceed to be opportunistic in repurchasing shares once we view our inventory worth as disconnected from the underlying fundamentals of the enterprise. While we confronted important macro challenges within the first half of 2022, we’re assured that our resilience and versatile enterprise mannequin, up to date provide chain, improved product curation and optimized value construction will energy development regardless of future uncertainties. We have achieved strong progress, and we anticipate to hold the optimized value construction into the post-pandemic 12 months, which we imagine will deliver long-term worth to our shareholders. This concludes our ready remarks for immediately. Operator, we at the moment are able to take questions. ================================================================================ Questions and Answers ——————————————————————————– Operator [1] ——————————————————————————– (Operator Instructions) Our first query comes from [Ethan Yu] from First Trust China. ——————————————————————————– Unidentified Analyst, [2] ——————————————————————————– (international language) At current, together with the previous June 18 promotion, GMVs by way of brief movies and stay gaming are rising quickly. Could you share us some coloration or views on this development? ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [3] ——————————————————————————– (international language) Thank you on your query. ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [4] ——————————————————————————– [Interpreted] Live streaming is just not a brand new format, and we have now accomplished loads of it up to now (inaudible). For us, stay streaming is extra like a content material advertising and marketing than direct gross sales, particularly for personal label promotions. Marketing is available in many types and we imagine that high-value teams and the provision chain are the cornerstones of gross sales. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [5] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [6] ——————————————————————————– [Interpreted] Marketing is what Yunji has been doing since institution, and we have now centered on this space loads. Actually, both the pictures or articles, they’re the essential channels for us to ship the knowledge. We have a gaggle of [mall] customers and repair supervisor who like to share buying expertise. That can also be a form of content material sharing. Live streaming and brief movies make sharing extra vivid. We are greater than welcome to, as for stay streaming and brief movies, as a sharing methodology to ring fence the content material and buying expertise to customers. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [7] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [8] ——————————————————————————– [Interpreted] Previously in May, the official account on third-party platforms has grown quickly. The account provides attention-grabbing content material each week and has many brief movies, receiving round 1 million views confidently. Later, we may even attempt to arrange stay streaming gross sales on these accounts to advertise non-public label merchandise and Yunji’s deluxe and high-quality provide chain. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [9] ——————————————————————————– (international language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [10] ——————————————————————————– [Interpreted] So we hope that these high-quality content material and environment friendly stay streaming may truly deliver extra worth to our platform and customers. ——————————————————————————– Operator [11] ——————————————————————————– (Operator Instructions) There are not any additional questions at the moment. I’d like handy the conference again to administration for closing remarks. ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [12] ——————————————————————————– Thank you for becoming a member of us immediately. Please don’t hesitate to contact us if in case you have any additional questions, and we’re trying ahead to speaking with you subsequent quarter. Bye. ——————————————————————————– Operator [13] ——————————————————————————– The conference has now concluded. Thank you for attending immediately’s presentation. You might now disconnect.
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