Q3 2022 Yunji Inc Earnings Call Dec 1, 2022 (Thomson StreetEvents) — Edited Transcript of Yunji Inc earnings conference call or presentation Tuesday, November 29, 2022 at 12:00:00pm 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, women and gents. Thank you for standing by, and welcome to Yunji’s Third Quarter 2022 Earnings Conference Call. With us right now are Mr. Shanglue Xiao, Chairman and Chief Executive Officer; Mr. Peng Zhang, Vice President of Finance; and Ms. Kaye Liu, Investor Relations Director of the corporate. As a reminder, this conference call is being recorded. Now, I want to hand the conference over to our first speaker right now, Ms. Kaye Liu, IRD of Yunji. Please go forward, ma’am. ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [2] ——————————————————————————– Hello, everybody. Welcome to our third quarter 2022 earnings call. Before we begin, please word that this call will comprise 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 identified and unknown dangers, uncertainties and different elements of Yunji and its business. These forward-looking statements might be recognized by the terminologies akin to will, anticipate, anticipate, proceed or different comparable expressions. For the detailed dialogue of these dangers and uncertainties, please consult with our newest paperwork filed with U.S. SEC. Any forward-looking statements that we make on this call are based mostly on assumptions as of right now and are expressly certified within the entirety by cautionary statements, threat elements and particulars of the corporate submitting with the SEC. Yunji don’t undertake any obligation to replace this assertion besides as required beneath relevant regulation. With that, I’ll now flip over to Shanglue Xiao, our Chairman and CEO of Yunji. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [3] ——————————————————————————– (overseas language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [4] ——————————————————————————– [Interpreted] Hello, everybody. Welcome to Yunji’s third quarter 2022 earnings this morning. We as soon as once more confronted a risky and unsure macro surroundings throughout the third quarter. Against this backdrop we devoted ourselves to enhancing our capabilities whereas reinforcing our enterprise sustainability. We launched a range of initiatives, together with enhancing our service provision, augmenting our non-public label product growth course of and optimizing our stock construction. This well timed and agile response has elevated our resilience and product on the trail to sustainable high-quality progress. In addition, we took benefit of the e-commerce sector’s traditional third quarter off season to additional evolve our progressive know-how and improve our companies. As in time, we deepen our exploration of e-commerce potential by specializing in our (inaudible) merchandise and driving the use of quick movies as our foremost shopper advertising software. Let’s check out our product choice technique. Consumers are switching away from well-known international labels and are buying a extra various vary of traits. We responded to those rising traits by realigning our product choice technique to give attention to high-quality home manufacturers at a aggressive costs and market merchandise in voice (inaudible) channels. Through continued evaluation of our core customers consumption habits and pricing preferences, we’ve got maintained a comparatively excessive repurchase charge regardless of the present macro headwinds. Furthermore, by refining the main points and accuracy of our product descriptions, we fostered the mindset of a fastidiously thought-about buy selections, permitting us to efficiently preserve a low product return charge. On the advertising facet, entrepreneur oriented has all the time been one of our core values, particularly in terms of empowering girls to launch companies and improve their lives by self-improvement. In the present surroundings the place employment prospects are unsure, we’re additional investing in our service managers by growing progressive options that make sharing more and more handy, environment friendly and enjoyable. Furthermore, we strengthened their confidence of their chosen profession by encouraging them to work arduous extra. As a end result of these initiatives, our service managers’ gross sales conversion charges have steadily elevated. Turning to our advertising promotion, following the in-depth preparation throughout the third quarter, we formally launched our Yunji Dynamic Showcase for service managers. The showcase mix conventional graphical advertising content material and dwell streaming creating quick promotional movies for featured merchandise. By integrating this progressive advertising software with our platform service assure, we ship affordably priced, high-quality merchandise to clients, whereas offering manufacturers with a low-cost resolution to advertise their merchandise extra effectively and precisely. Yunji Dynamic Showcase performs a key function in serving to our service managers to sharpen their give attention to serving our customers. The showcase encompasses a huge product choice (inaudible) our non-public labels, our vary of Gourmet meals and trending market merchandise from the highest 100 dwell streaming channels. Our service managers can ask for the showcase merchandise, select these they’re taken with and synchronize them with My Showcase operate. Our progressive [One Create] operate permits service managers to usually domestically generate product associated content material to share with customers or on social media. On the opposite hand, our technological innovation improves service managers’ effectivity by giving them time and vitality. On the opposite hand, it makes it simpler for them to generate gross sales, permitting service managers and the younger entrepreneurs to spice up their incomes by our platform. We are assured about Yunji Dynamic Showcase leveraging of the quick video advertising will pressure the customers’ sharing conduct and enhance consumer engagement time. This 12 months, the influence of the COVID-19 will most likely be probably the most extreme we’ve got seen for the reason that pandemic started. This is very true in terms of our achievement companies. In the close to time period, the scenario stays extreme, and the turbulence will weigh on consumption and the macro economic system. Amid these challenges, there are additionally causes for optimism and alternatives for progress. We nonetheless hear many optimistic voices, and our customers proceed to worth their well being, they like to eat scrumptious and a nutritious meals, and can all the time get pleasure from cultivating hobbies. The driving pressure behind the event of our non-public label manufacturers has all the time been our customers design for a wholesome and a stupendous life. We have made substantial progress in growing our non-public labels, and their reputation continues to develop. During a current Double 11 buying competition, they had been probably the most in-demand manufacturers within the cosmetics and well being care classes on our platform. Our well being care model launched a slew of new choices, together with liver and kidney care merchandise, augmenting our product matrix to quite fulfill the healthcare wants of our customers. For instance, our pals (inaudible) garnered over RMB 10 million gross sales in a single day throughout the preliminary NFO providing of the gross sales. We have continued to innovate and combine in our Gourmet meals class by introducing extra flavors and a wider selection of merchandise. These distinctive choices vary from household tables akin to rice to (inaudible), enterprise banquets permitting us to seize the complete spectrum of consumer demand to higher fulfill customers’ various meals preferences. We have expanded our Gourmet meals non-public label product matrix. Our choices now embody well-known merchandise akin to European fashion model and novel objects which are our service managers promote and introduce to our customers. For instance, (inaudible) freeze dried (inaudible) foam powder with an initially area of interest wholesome meals, largely unknown to our customers. Thanks to our promotional efforts, it grew to become a sensation, producing over RMB 5 million in gross sales throughout the launch day. During the third quarter, our tech empowered non-public label, SUYE celebrated its twelfth anniversary. Since 2018 SUYE has partnered with a Dutch firm to analysis (inaudible) after which develop all kinds anti-aging merchandise that higher meet folks’s skincare wants. Notably, these merchandise comprise skilled components notably present in medical aesthetics. We had been delighted to see SUYE generated over RMB 21 million in gross sales throughout its anniversary month exhibiting excessive consumer demand for high quality merchandise and ship progressive and efficient antiaging options. SUYE has develop into the go-to selection for ladies’s anti-aging merchandise and is a cornerstone of our non-public label magnificence model technique. Looking forward, we’re assured that the present challenges will likely be translatory. As I simply talked about, we see clear causes for optimism, and we had been inspired by elevating and optimize COVID-19 controls. People will all the time need a greater life, and we stand able to serve an increasing number of households going ahead. With that, I’ll flip the call to — over to Mr. Chengqi Zhang, our Vice President of Finance, to undergo the monetary outcomes. ——————————————————————————– Chengqi Zhang, Yunji Inc. – VP of Finance [5] ——————————————————————————– Thank you, Shanglue. Hello, everybody. Before I am going by our monetary outcomes, please word that every one numbers acknowledged within the following remarks are in RMB phrases, and all comparisons and proportion adjustments are on a year-over-year foundation until in any other case famous. During the third quarter, we confronted a risky macro surroundings and ongoing pandemic controls each of which introduced challenges to our enterprise. In response, we additional refined our product choice and optimized {our relationships} with suppliers, sacrificing near-term gross sales whereas constructing a strong basis for our firm’s long-term success. Our repeat buy charge remained secure at 79%, and we as soon as once more improved our gross margin. Beyond this, working bills and complete value of revenues each declined as we proceed to optimize the associated fee construction of our enterprise. We completed the quarter in a wholesome money place. And this, mixed with our persistent give attention to environment friendly operations, will enable us to proceed to climate an unpredictable market. Going ahead, we are going to proceed to reward our shareholders by share buybacks. Now let’s take a better have a look at our financials. Total income had been RMB 239 million in comparison with RMB 438 million a 12 months in the past. Revenues from gross sales of merchandise had been RMB 197 million as revenues from our market enterprise had been RMB 38 million. This lower was primarily as a result of firm’s continued technique to refine product choice throughout all classes and optimize this choice of suppliers and retailers, inflicting near-term lower in gross sales. Consumers’ willingness to spend on discretionary merchandise in 2022 has additionally declined in contrast with that in the identical interval of 2021. Despite these challenges, we improved our gross margin to 49.4% in comparison with 43.2% a 12 months in the past in consequence 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 37 million in comparison with RMB 41 million a 12 months in the past. This was primarily on account of lowered warehousing and logistics bills on account of decrease merchandise gross sales and decreased service charges charged by third-party fee settlement platforms. Sales and advertising bills had been RMB 47 million in comparison with RMB 60 million a 12 months in the past. This was primarily as a result of discount in personnel prices in consequence of staffing construction refinements and the lower in member administration charges. These reductions had been partially offset by enhance in non-public label promotion bills. Technology and content material bills had been RMB 17 million in comparison with RMB 29 million a 12 months in the past. The lower was primarily as a result of discount in personnel prices in consequence of staffing construction refinements and lowered cloud service — server prices. General and administrative bills had been RMB 38 million in comparison with RMB 65 million a 12 months in the past. This was primarily on account of lowered personnel prices in consequence of refinement to our staffing construction, decrease skilled service charges and a lower in share-based compensation bills. Total working bills within the third quarter decreased to RMB 139 million from RMB 194 million in the identical interval of 2021. We recorded a loss from operations of RMB 18 million in comparison with revenue from operations of RMB 80 million a 12 months in the past. Net loss was RMB 38 million in contrast with web revenue of RMB 61 million a 12 months in the past, whereas adjusted web loss was RMB 30 million in contrast with adjusted web revenue of RMB 76 million a 12 months in the past. Basic and diluted web loss per share attributable to bizarre shareholders had been each RMB 0.02 in contrast with primary and diluted web earnings per share attributable to bizarre shareholders of RMB 0.03 in the identical interval of 2021. Moving on to liquidity. As of September 30, 2022, we had a complete RMB 571 million in money and money equivalents, restricted money and short-term investments on our steadiness sheet in comparison with RMB 645 million as of June 30, 2022. Our liquid property had been ample to cowl our payable obligations and we didn’t maintain any long-term backlogs or debt on our steadiness sheet. Despite the persistent challenges of right now’s macro surroundings, we’re assured that our efforts to optimize prices, refine our enterprise mannequin, enhance product curation and guarantee high-quality service for our customers will serve us effectively now and into the long run. We have made regular progress in our quest for long-term, secure progress, and we are going to proceed to regulate our enterprise methods to supply most worth to our shareholders. This concludes our ready remarks for right now. Operator, we at the moment are able to take questions. ================================================================================ Questions and Answers ——————————————————————————– Operator [1] ——————————————————————————– (Operator Instructions) Today’s first query comes from [Ethan Yu] at First Trust China. ——————————————————————————– Unidentified Analyst, [2] ——————————————————————————– [Interpreted] Let me make a fast translation. Recently, there was rather a lot of excellent news about China easing the COVID insurance policies. Could you touch upon this pattern and inform us extra about rather a lot what measures will the corporate do to seize this chance of a doable restoration in shopper — in non-public consumption? ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [3] ——————————————————————————– (overseas language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [4] ——————————————————————————– [Interpreted] Thank you to your query. The restoration of the epidemic has an uncertainty and a certainty First of all, in phrases of certainty, we imagine that probably the most tough time of the epidemic is about to pop. In phrases of the uncertainty, as a complete e-commerce platform, Yunji has a large buyer base from the primary tier cities, akin to Beijing, Shanghai and Guangzhou to distant areas akin to Xinjiang and Inner Mongolia. We imagine that the restoration of consumption is not going to be explosive, however an oddly gradual, uneven restoration based mostly on areas and product classes. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [5] ——————————————————————————– (overseas language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [6] ——————————————————————————– [Interpreted] From the provision chain facet, the provision chain of our non-public label is comparatively simple to know. And we are going to flexibly regulate the manufacturing and advertising methods of numerous classes in line with the restoration scenario. For the third-party provide chain as a extremely curated platform, our (inaudible) bestseller pool can rapidly adapt to the market adjustments. ——————————————————————————– Shanglue Xiao, Yunji Inc. – Founder, Chairman & CEO [7] ——————————————————————————– (overseas language) ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [8] ——————————————————————————– [Interpreted] From the attitude of the market habits, I believe that after 3 years of the epidemic, customers’ plans is not going to fade away so rapidly, and restocking demand for the requirements should still exceed demand for the discretionary merchandise within the quick time period. In addition, international financial melancholy this 12 months usually are not solely affected by the epidemic, but in addition elements akin to local weather change and worldwide relations. In the long term, we nonetheless imagine in customers craving for a greater life, we are going to improve our enterprise and administration capabilities, and preserve a wholesome monetary place to deal with the challenges and alternatives dominated by the microenvironment. ——————————————————————————– Operator [9] ——————————————————————————– And women and gents, as there are not any additional questions at the moment, I’d like at hand the conference again to the administration for closing remarks. ——————————————————————————– Kaye Liu, Yunji Inc. – IR Director [10] ——————————————————————————– Thank you for becoming a member of us right now. Please don’t hesitate to contact us when you have any additional questions, and we’re trying ahead to speaking with you subsequent quarter. Thanks. Bye. ——————————————————————————– Operator [11] ——————————————————————————– This conference has now concluded. Thank you for attending. You might now disconnect. [Portions of this transcript that are marked [Interpreted] had been spoken by an interpreter current on the dwell call.]
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