Q1 2021 Yunji Inc Earnings Call
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Good morning, and good evening, ladies and gentlemen, thank you and welcome to <unk> first quarter 'twenty 'twenty, 1 earnings conference call.
With us today are Mr. Shang, Hsiao, Chairman and Chief Executive Officer.
T Jang Vice President of Finance and MS <unk> <unk> Investor Relations director of the company.
Now I would like to hand, the conference over to your first speaker today, Ms. Kayla I R. D. F E N G. Please go ahead ma'am.
Hello, everyone welcome to our first quarter comes on you on earnings call before we start. Please note that this call will contain forward looking statements within the meaning of the private securities timber.
From acts of 1995 that are based on our current expectations and current market operating conditions and relate to events that involve known and unknown risks uncertainties and other factors.
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These forward looking statements can be identified by terminology such as world expects anticipates continued on that.
Then on expression for detailed discussion of these risks and uncertainties. Please refer to our latest documents filed with U S. S E T.
Any forward looking statements that we make on this call on based on assumptions as of today and the <unk>.
Our expense recorded in the entirety by close on these statements risk factors and details of the company filing with SEC limited does not undertake any obligation to update these statements is that as it required on our playskool.
With that I will now turn over to Sean who itself chairman and CEO of income.
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Hello, everyone and welcome to <unk> first quarter 'twenty 'twenty 1 earnings call.
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Celebrated our sic corporate anniversary on May 16th.
And during this year celebration, featuring the theme trying to perform and turned over a new leaf through in house strategy on.
Introduced our newly out of any business strategy to our employees and service managers.
In today's fiercely competitive e-commerce industry in China. The top players have already established certain advantages through economies of scale with value is focusing on board faster better and more cost effective.
As a leading membership based e-commerce platform, we continue to send our focus on product.
Election, and refinement to better implement our supply chain differentiation strategy and provide customers with a more convenient e-commerce experience.
We don't pursue and discipline in the short term sales growth.
That we focus on cultivating a mega heat product quote by introducing quality products with greater appeal and better product market fit for our members.
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To execute this new components of our strategy.
The abolition of the special working groups for our magazine product supply chain.
By our executive President Eric Yes, This working group work force.
To elaborate on the team's exceptional capabilities in business development content creation and product presentation, 2 periods popular products optimally presented them to consumers and produce and distribute associated content to customers.
For a comprehensive targeted sales approach.
By the end of 'twenty 'twenty, 1 we aim to develop a portfolio of mega hit products covering a variety of categories featuring economical premium quality products.
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In terms of our differentiated supply chain, we believe the potential of our primary vertical markets and cowed cosmetic.
Cosmetics and food products present, the greatest opportunities.
These 3 categories strongly aligned with the demand from our from our user base and provide them with additional membership value.
Between our service managers to ensure they are knowledgeable and experienced with products industry verticals empowering them to attract more customers through professional in depth service.
Meanwhile, we will also continue to develop new products that accurately target our key markets via our private label brands and joint venture brand initiatives.
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Several of our private labels include our cosmetic brands still alive and P&L, our foot brands link back in at March checks, and our help supplement brands, including smart life and beauty.
As of March 31st 2021 hour on weight loss on demand Smart life achieved 19, Jordan 75 million RMB in total sales.
It took only a year from its launch for us to grow on it's not like ramp to a billing RMB himself.
In the past few years, our private label brands successfully developed many popular products that are highly praised and endorsed by our members.
So this magnitude products, we will be able to provide members with a more innovative anyhow.
Commerce experience. Furthermore, we are able to extend the commercial lifecycle for successful products in health cosmetics and food verticals by releasing additional product versions with new or enhanced features.
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In addition to our longstanding categories of strength would you also increased efforts in product review and development 4 categories. We are using a relatively large such as maternal and infant care as well as household products.
Our household products brands. The meeting of home provides users with daily necessities, such as paper towels toiletries and cleaning products. We also host periodic promotions for this fast moving consumer goods.
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Regardless of the product categories product quality and safety are non negotiable when selecting products introduced on our platform.
A significant number of our users on mothers, who take care of their whole family. So we will continue to provide products that the whole family can safely consumed.
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We are also acutely aware that today's consumers are dealing with significant information overload.
All of the information they are bombarded with daily is complex and lengthy this shaped our approach to content development. So that we can present concise and valuable product content that stands out and easily captures the attention of consumers.
Our net status to help our service managers optimized product content production and share e-commerce experiences by leveraging multiple content forums, including images and short form videos. This will ensure that aesthetic content stream is accessible on external platforms to promote our differentiated supply chain.
And products broadening our brand influence.
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We believe that our service managers on some of our most valuable assets, we execute training intends to provide service managers with a means to enhance their marketing skills establish their own brand influence and live a better life through improving their financial means will.
We will also continue to diversify umpqua offline and online educational content offerings to provide service managers with additional opportunities to improve.
We envision a future where our service managers are multi talented group that can push sales attract new users and professionally serve at manage customer groups.
With that.
I will turn the call.
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With the finish on your daughter niche Shamil warm in the toe for loans.
Moving to me that definitely hotel religion call with that I will turn the call over to our CFO Rex Chen to go through our financial results in the first quarter.
Second was on mute Hello, everyone before I go through our financial results. Please note that all numbers stated in a following remarks from India.
On a for the first quarter on countries Honeywell, while all comparisons on the percentage change.
Year over year basis, unless otherwise noted.
Starting in 'twenty, 1 we are committed to enhancing our supply chain depreciation strategy to include our new markets.
<unk> put that curation strategy and further development of our private label products.
We are focusing on the lifetime value of our customers on the low longer SaaS. Jamie. We also remain committed to effective cost control and we further refined our membership on measurement at this time on in house, our employee structure.
Our decision to forego short term sales gains favorable maus tangible growth cause fluctuations in our quarterly sales. We believe these efforts will further drive our progress towards healthy profitability in the long run.
Now, let's take a closer look at our financials for this quarter.
In the first quarter of 2021, our total revenue was $675 million compared to $1 billion, depending on the 49 million a year ago revenues from sales merchandise, while 500 on a 7.2 million and the revenue from marketplace business, where 95.
On purpose mentioned the decline in total revenue was mainly due to our decision to improve our.
Per doctor corrosion strategy by implementing our Medicaid product programs initiated at the end.
<unk> here focused on introducing products with stronger repurchase substantial and the growth customer appeal.
Margin in the first quarter of 2021, or so 2.5% compared to 30% a year ago. The improvement in gross margin was due to our supply chain depreciating strategy.
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Turning to our operating expense.
Fulfillment expense in the first quarter with 221 was $65 million compared to 100 on the 7 to 8 million a year ago. The decrease was mainly attributable to reduced the warehouse and logistics expenses, which resulted from our improved logistical efficiency lower merchandise sales and the reduced.
Personnel costs from stock senior restructure refinanced loans.
On the marketing expense in the first quarter of 2021 were $96 million compared to 251 million a year ago.
As a percentage of total revenue sales and marketing expense in the quarter decreased to 14% Brown, 15% a year ago, Let's increase was in line with our long term growth strategy and it was mainly due to our reduction in membership management fee as we improve our men member measurement day.
Additionally, under the cruise promotion expenses.
Technology on accountant expense in the first quarter of 2021 was 38 million or 5.6% of total revenue compared to.
$58 million on 3 fronts.
<unk> of per per revenue.
The decrease was mainly due to a decrease in personnel costs as we further refined our staff structure.
General and administrative expense in the first quarter of 2021 was 74 million compared to $75 million.
Goal, mainly due to the decrease in share based compensation expenses.
Overall in the first quarter with plenty of Chartwell total operating expense decreased to 273 million and a loss from operations was 10 <unk> million net loss was $4 million compared to $13 million goal on that.
Adjusted net income in the first quarter of 'twenty 'twenty, 1 on $117 million compared with 26 million.
Basic and diluted net loss per share attributable to other ratio in the first quarter of transit on well what Bose.
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Finally, let's take a look at our cash on the liquidity position as.
As of March 30 ton Hitachi on what we had a total of 1.2 billion in cash cash equivalent restricted cash and short term investments on our balance sheet.
We will actively explore further investment opportunities in high potential emerging brand.
Looking ahead, we will commit to executing our supply chain differentiation strategy by upgrading our method is per.
Durations at Penn and the developing private level per fab to widen our economic moat and improve our profitability assets.
At the same time, we will remain disciplined on our cost control and allocate our resources to areas, where which are in line with our long term growth objectives.
While we recognize the intense level of competition in the industry. We're also pleased that the strategies. We now have in place will serve as a solid bedrock for our substantial growth and the expansion going forward.
This conclude our prepared remarks for today operator, we are now ready to take questions.
As a reminder to ask a question you will need to press star 1 on your telephone to it.
Draw your question press, the pound or hash key.
When asking a question. Please state your question in Chinese first then immediately repeat your question in English for the convenience of everyone in the call.
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Once again, if you wish to ask a question at Star and the number 1 on your telephone keypad.
Your first question comes from the line of even year on first Trust group incorporated please ask your question.
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I would translate for myself I have a few questions. The first question is about our private label business in connection with the rapid growth.
Of our marketplace business.
The 15th market strategy for our private label products.
In addition could you please give us some comments on the differentiation between us and other private stable income are correct.
Net life.
In total income.
Et cetera.
And my second question is about the membership system.
Have noted that the membership seat has been adjusted from the RMB 398 to 119 line.
And the reason day beyond that the company also has a theory soft enrollment incentive and a new metric.
Our membership systems, we are wondering about the company's exploration on innovation on the membership enrollment system and what's our strategy to improve the college shop on amendments.
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Thank you for questions from Mr. Joseph <unk>, and I will take your questions.
First question for our private labels will be more focused on these 2 categories that is powered products and cosmetics because these 2 categories of products more share.
Share range and recommendation.
Users.
If people want to buy some how products if they're on new if there are no shopping corridors, perhaps don't know they don't know what to buy.
And for our cosmetics most of the cosmetics offline and people go by this cosmetic products.
Department stores.
And all of these products have share.
Hoping purely price even if it is a very luxury brand.
So we can see that on a shocking collaborators are very necessary. So in this day in this and we'd like to leverage our advantage.
Service managers.
Community.
This is very different from our genes.
On what they sell the most.
Selling a SaaS it is.
And their net profit is very low.
In this area that competition is morpheus.
So we hope that.
We can further leverage our advantage in community.
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Buying our advantage.
And further enhance.
Professional knowledge of our service manager.
In the future. We also hope to make further use of our strength in our own platforms.
And we also work to.
These settle in some major e-commerce platforms, such as Tmall and other video e-commerce platforms.
So after we have.
We have more traffic on our own platform.
On Lake, but our move to other major e-commerce platforms.
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And thank you for a second question. It is very good question.
We believe that we still have much room to explore further enhance the value of our members.
After our evaluation we found that.
We decided to lower the benchmark.
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Yes.
Because we want to attract more users and.
Based on that.
No.
Devote more time and energy.
Ensure that our users can GAAP.
Our recommendation the best products.
And so that they can repeat purchase.
Compared lead to enhance the quality of our members. We believe that sits on the enhance the value of our members.
It's more important.
We have reflected on the value our members in the past.
Regardless, Costco and Sam's as our.
Examples.
We also tried to over 5000 <unk> products to recommend to our members. That's after 2 to 3 years of practice without that.
Our consumers need more selective more refined recommendation.
So from this year, we plan that in the next 5 years would you recommend.
And then products to our consumers in a more targeted and more refined weighted will recommend mega mega hit products to them.
In the future.
Lounge daily recommendations.
And would you select the top 1 product from 1000 products.
So that our consumers and users can get a more refined recommendation.
We will also learn from the good practices from other platforms such as.
<unk> training.
We hope that.
We will.
Quickly recognized and introduce the products.
The products are introduced by the top streamers top 100, streamers and to share them to our members.
In doing so we will help our members to save time.
We'll have more choices of economical and quality products.
So I believe in this way I will further enhance the value of our members and attract more.
Quality members.
That's all.
Okay.
Okay.
Once again, if you wish to ask a question. Please press star 1 on your telephone and wait for your name to be announced.
Okay.
As there are no further questions at this time I'd like to hand, the conference back to the management for the closing remarks.
Thank you for joining us today, please do not hesitate to contact us. If you have any further questions and we look forward to talking with you next quarter.
Sure.
This concludes today's conference call. Thank you for participating you may now disconnect.
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