Q2 2022 Yunji Inc Earnings Call
Good morning and good evening, ladies and gentlemen. Thank you and welcome to Yunji's second quarter 2022 earnings conference call. With us today are Mr. Shang-Lu Zhao, Chairman and Chief Executive Officer, Mr. Peng Zhang, Vice President of Finance, and Ms. Kay Liu, Investor Relations Director of the company. Now I would like to hand the conference over to our first speaker today, Ms. Kay Liu, IRD of Yunji. Go ahead, ma'am.
Hello everyone. Welcome to our second quarter 2020 earnings call. Before we start, please note that this call will contain a forward-looking statement within the meaning of the private securities integration rules from Act of 1995 that are based on our current expectations and current market operation conditions and relate to events that involve known or unknown risks, uncertainties, and other factors of the industry.
These four OTP statements can be identified by the terminology such as will, expect, anticipate, continue or other similar expressions. For a detailed discussion of these risks and uncertainties, please refer to our related document file with USSTC.
Any forward-looking statement that we make on this call will be based on assumptions as of today and are expressly qualified entirely by the cautionary statements, read factors, and details of the company filing with SEC. CNC does not undertake any application to update this statement, except as required under applicable law.
With that, I will now turn over to Zhang Ruizhao, Chairman and CEO of Yingtze.
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During the second quarter, we successfully navigated through the authenticity and the volatility brought about by the challenging microspectrum. Wide-threaded research of the pandemic and related control measures affected a number of major cities across China. In the face of these highways, we retained our focus on optimizing our platform user experience. While upholding our...
Furthermore, we optimize our inventory structure by transferring products between warehouses to ensure they are ready, available to people, and delivered to users.
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We hope to see you in the next video.
As in China, our supply side was also affected by the micro-headwind to a certain extent. to a certain extent. In the same products could not be released from cousins or shipped out from factories in those regions severely affected by the pandemic.
Unfortunately, this meant that its products were not available for purchase on our platform during the original expanded promotional period. Since June this year, the situation has going to be improved and our supply and cross-border logistics chains have both graduated from coverage. Our private label product inventory has now been delivered, securing sufficient stock for merchandise sales during the NASA's year quarters. Furthermore, we have taken pre-amateur measures to mitigate production costs.
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During the first half of this year, we adhered to our strategy of developing exclusive private label products, actively enrich our product's offering, and developed a variety of fresh user-centric products. Our Big Health brand continues to contribute to the diversification and arrangement of the product category. During the first half of 2020, we developed more than 10 original dual products for wave Stripe And
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We carried out fresh content marketing and brand development initiatives for our travel-able skincare brand Suyin. As part of these efforts, we appointed our popular Chinese female celebrity as the brand spokesperson for our new product line, containing ingredients used in metotherapy treatments. In addition, Suyin's marketing team produced a number of engaging short videos.
This video successfully boosted online and offline brand awareness and attracted beauty lovers from both our own and third-party platforms. We are confident that these augmented traffic flows will serve as a solid foundation for future product commercialization. During three years, 12th anniversary celebrations will launch a number of new skincare products that contain ingredients used in medical aesthetics under the three-year brand, generating over 21 million RMB sales during the year.
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Food is another strategic focus within our private label brand metrics. Our original brand concept for Gumei Ring-ji was to enable our users to enjoy delicious food from all over the world without having to leave their homes. This concept was also visually illustrated and amplified in our food categories through video marketing content. China is a vast country with abundant resources.
and each region possesses its own unique cuisine. We updated our social media accounts on a weekly basis, with videos themed around sharing a dish from a hometown. This theme is designed to involve viewers of North Asia with hometown tastes, while stimulating their interest in delicious food from diverse locations. Currently, each shot video on our Google mailing to official account third-party platforms.
We see this around 1 million views constantly. We will continue to invest in content development on our own and third-party platforms. We are confident that our controlling marketing content will substantially improve brand awareness and create a decent value in the near and long term. Thank you for your attention.
We hope you will continue to be a part of the community. Do you show up in the connecting center?
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Meanwhile, the pandemic has ruled about certain changes in consumer behavior and mindset. Faced with uncertain micro-environment, consumers are increasingly cautious with personal expenditures. As a result, market demand for discretionary products has declined. As a social e-commerce platform that maintains close relationships with its users, we aim to provide a valuable and trustworthy service.
We will now proceed to the next session. Please be seated. The session will begin in three minutes. Thank you all for your attention and for your attention. Please remain standing until the next session. Thank you for your attention and for your attention. Please remain standing until the next session.
We upgraded service provision in our healthcare category community groups by piloting nutritional consulting service, where users are provided with professional advice and feedback. For these pilot services, we designated professional nutritionists to cover each community group and organize the nine live streaming group closets with a team of professionals and sports experts. During this period, 90.6% of the trial users...
Looking ahead, in order to deliver ever higher levels of service to our users, we will increase investment in the development of service managers during the second half of this year. Having implemented various strategic initiatives to reduce costs, improve operating efficiency and develop private label brand products over the past year, our growth margin has improved significantly.
Thank you, Xiong Yu. Hello everyone. Before I go through our financial results, please note that all numbers stated in the following remarks are in RMB terms, and all comparisons and percentage changes are on a year-over-year basis unless otherwise noted.
During the quarter, we were once again faced with the resurgence of COVID-19 and associated lockdown measures in Shanghai and across the country. Compared to the same period last year, our repurchase rate remained relatively stable at 79% and our growth margin improved even in the face of these headwinds. We intensified our focus on optimising cost structures and developing our private labour plan.
enabling our business to navigate safely through the present micro uncertainties. Furthermore, we invested in our fulfillment partner base to ensure the delivery of products even within areas under strict pandemic control measures.
Our cash position remains strong enough for us to successfully steal through the current market downturn and adverse economic environment. We will continue to reward our shareholders through share buybacks.
Now let's take a closer look at our financials. Total revenue was 284 million compared to 571 million a year ago. Revenues from sales and merchandise were 237 million and revenues from our marketplace business were 42 million. This decline in revenues was primarily the result of continued COVID outbreaks, particularly during April and May.
The pandemic-related lockdowns disrupted our supply chain.
with our third-party suppliers, merchants and logistics service providers being particularly effective.
Consumers' willingness to spend was also impacted, with uncertain macro conditions.
fastening desire among consumers to save rather than spend. These factors combine to create merchandise shortages.
logistical delays and stagnating consumer demand, all of which negatively affected our operations during the first half of 2022.
Their continued impact depends upon the future direction of the pandemic, and though we are seeing signs that the worst of the pandemic is behind us.
We will remain vigilant and respond nimbly to further developments.
Despite these challenges, we improve our growth margin to 40.6% compared to 35.1% a year ago as a result of sustained customer loyalty to our private labels and effective product duration strategy.
Now let's take a look at our operating expenses.
Fulfillment expenses were 43 million compared to 50 million a year ago. This was primarily due to lower warehousing and logistics costs resulting from a reduction in the quantity of merchandise sold, as well as reduced service fees from third-party payment settlement platforms. These savings offset the heightened logistic costs that resulted from us maintaining our supply chain flexibility during the pandemic lockdown period.
Sales and marketing expense were 58 million compared to 61 million a year ago, mainly due to the decrease in member management fee, which was partially mitigated by an increase in private label promotion expenses.
Technology and content expenses were $24 million compared to $32 million a year ago. The decrease was mainly due to the reduction in personnel costs as a result of staffing structural refinements and reduced silver costs.
General and administrative expenses were 32 million compared to 43 million a year ago. This was primarily due to reduced personnel costs as a result of refinements to our staffing structure and professional service fees.
Total operating expenses in the second quarter decreased to 157 million from 187 million in the same period of 2021.
We recorded a loss from operations of 30 million compared to an income of 16 million a year ago. Net loss was 25 million compared with net income of 17 million a year ago, while adjusted net loss was 17 million compared with adjusted net income of 24 million a year ago. Basic and diluted net loss per share attributable to ordinary shareholders were both one cent. Compared with basic and diluted net earnings per share attributable to ordinary shareholders, the total net loss was 25 million.
in the same period of 2021. Moving on to liquidity, as of June 30, 2022, we had a total of 645 million in cash and cash equivalents, restricted cash and short-term investments on our balance sheet. Compared to 743 million as of March 31, 2022, the decrease was partially caused by cash used in our share repurchase program. Our liquid assets were sufficient to cover our payable obligations and we did not hold any
Similarly, 7 million. Furthermore, our board of directors has approved an extension of the repurchase program for another six months. We intend to continue to be...
optimistic in repurchasing shares when we view our stock price as disconnected from the underlying fundamentals of the business.
While we face significant macro challenges in the first half of 2022, we are confident that our resilient and flexible business model, updated supply chain, improved product curation and optimized cost structure will power growth regardless of future opportunities. We have achieved solid progress and we expect to carry the optimized cost structure into the post-pandemic year.
which we believe will bring long-term value to our shareholders.
This concludes our prepared remarks for today. Operator, we are now ready to take questions.
Thank you. We will now begin the question and answer session.
To ask a question, you may press store, then one on your touch tone phone.
If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. When asking a question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone on the call.
At this time, we will pause momentarily to assemble our roster.
Again, if you have a question, that's star one.
Our first question comes from Ethan Yu from First Trust China. Please go ahead.
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Thanks for taking my question as present. Including the past June 18 promotion, GMVs via short videos and live streaming are growing rapidly.
Could you share some colors of views on this trend? Thank you.
Thank you for your question.
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Live streaming is not a new format and we have done a lot of at times.
For us, line streaming is more like accountant marketing than direct sales, especially for private label promotions. Marketing comes in many forms, and we believe that highest value groups and supply chains are the cornerstones of sales.
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In fast content marketing, it is what Lingjie has been doing since establishment, and we have focused on this area a lot. Actually, either the photos or articles, they are the important channels for us to deliver the information. We have a group of modern users and service managers who love to share shopping experience. That is also a kind of content sharing, mind-screening and shopping news.
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Rimsky-Gumay-Rinsky's official account on third-party platforms has grown rapidly. The account outputs in three interesting content every week and has many short videos and with videos around one living use constantly. Later, we will also try to organize live TV sales on these accounts to promote private label products and the Rimsky-Gumay-Rinsky's blasted i4e supply chain.
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So we hope that these high quality content and efficient live streaming could bring more value to our platform and users. Thank you. Thank you.
Again, if you have a question, please press star, then 1.
If there are no further questions at this time, I'd like to hand the conference back to management for closing remarks.
Thank you for joining us today. Please do not hesitate to contact us if you have any further questions. And we're looking forward to talking with you next quarter. Bye.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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