Q3 2022 Yunji Inc Earnings Call
Speaker 2: Good morning and good evening ladies and gentlemen. Thank you for standing by and welcome to UNG's third quarter 2022 earnings conference call.
Speaker 2: With us today are Mr. Shangmue Zhao, Chairman and Chief Executive Officer, Mr. Peng Zong, Vice President of Finance, and Ms. Kay Liu, Investor Relations Director of the company. As a reminder, this conference call is being recorded.
Speaker 2: Now I would like to hand the conference over to our first speaker today, Ms. Kay Lu, IRD of UNG. Please go ahead, ma'am.
Speaker 3: Hello everyone. Welcome to our third quarter 2020 earnings call. Before we start, please note that this call will contain a forward-looking statement within the meaning of the Private Security Legal Education Reform Act of 1995 that is based on our current expectations and current market operation conditions and related events that involve unknown risks, uncertainties, and other factors of the industry. This forward-looking statement can be identified by the terminology such as will, expect, anticipate, continue, or other similar expressions. For the detailed discussion of these risks and uncertainties, please support our latest document with USA Today.
Speaker 3: Any forward-looking statement that we make on this call are based on assumptions as of today, and they are especially qualified in the entirely by cautionary statements, risk factors, and details of the company's filing with SEC. Ying-Chi did not allocate any application to update this statement as required on the applicable law. With that, I will now turn over to Zhang Ruizhou, Chairman and CEO of Ying-Chi. Thank you for your attention.
Speaker 3: Hello everyone welcome to WingJi's third quarter 2022 opening this morning.
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Speaker 3: We once again faced a volatile and uncertain micro-environment during the third quarter. Against this backdrop, we dedicated ourselves to improving our capabilities while reinforcing the needs of sustainability.
Speaker 5: We launched a variety of initiatives including enhancing our service provision, augmenting our private label product development process and optimizing our inventory structure. This timely and agile response has elevated our resilience and put us on the path to sustainable high quality growth. Coming up next on WUSA Penability, a pediatrician on 60.
Speaker 5: In addition, we took advantage of the e-commerce sector's usual third quarter off-season to further evolve our innovative technology and upgrade our services. As in time, we depend our exploration of e-commerce potential by focusing on our Medicaid products and driving the use of short videos as our main consumer marketing tool.
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Speaker 4: We hope you enjoyed this video. If you have any questions, please leave them in the comments section. We will be happy to answer any questions you may have. We will be happy to answer any questions you may have. We will be happy to answer any questions you may have. Thank you for watching.
Speaker 5: Let's take a look at our production selection strategy. Consumers are switching away from well-known global labels and are approaching a more diverse range of trends. We responded to these emerging trends by realigning our production selection strategy to focus on high-quality domestic brands and competitive prices.
Speaker 5: in various streaming channels. Through continual analysis of our core users' consumption habits and pricing preferences, we have maintained a relatively high repurchase rate, despite the current micro headway.
Speaker 5: Furthermore, by refining the details and accuracy of our product descriptions, we foster the mindset of carefully considering purchase decisions, allowing us to successfully maintain a low product return rate.
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Speaker 4: If you have any questions, please feel free to contact me.
Speaker 5: On the marketing side, entrepreneur-oriented has always been one of our core values, especially when it comes to empowering women to launch businesses and enhance their lives through self-improvement. In the current environment where employment prospects are uncertain, we further invest in our service managers by developing innovative features.
Speaker 5: that make sharing increasingly convenient, efficient, and fun. Furthermore, we reinforce their competence in their chosen career by encouraging them to work hard and earn more. As a result of these initiatives, our service managers' sales conversion rates have steadily increased.
Speaker 4: Thank you very much.
Speaker 4: I—I'm adding some more major information, We hope to see you again soon.
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Speaker 5: Turning to our marketing promotions, following the in-depth preparation during the third quarter, we officially launched our Engie Dynamic Showcase for Service Managers. The showcase runs traditional graphical marketing content and language framing, creating short promotional videos for featured products. By integrating this innovative marketing tool with our...
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Speaker 4: If you like this video, please subscribe to our channel. Also, please like and subscribe to our channel. See you next time.
Speaker 5: RINGI Dynamic Showcase plays a key role in helping our sales managers to sharpen their focus on serving our users. The showcase features a wide product selection, supporting our private labels, our range of gourmet food, and trending market products from the top 100 live streaming channels.
Speaker 5: Our service managers can, as 4D showcase products, choose those they are interested in and I synchronized them with my showcase function. Our innovative one-click function allows service managers to effortlessly generate product-related content to share with users or on social media. On the other hand, our technological innovation improves service managers' Hello tutorials.
Speaker 5: and increase user engagement time.
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Speaker 5: This year the impact of the COVID-19 will probably be the most severe we have seen since the pandemic began. This is especially true when it comes to our fulfillment services. In the near term, the situation remains severe and the turbulence will weigh on consumption and microcosm. Among these challenges, there are also reasons for...
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Speaker 5: The driving force behind the development of our private label brands has always been our users' desire for a healthy and beautiful life. We have made substantial progress in developing our private labels and their popularity continues to grow. Doing a return to the W11 Swapping Festival.
Speaker 5: They were the most in-demand brands in the cosmetics and healthcare categories on our platform. Our healthcare brand introduced a slew of new offerings, including liver and kidney care products, augmenting our product metrics to better satisfy the healthcare needs of our users. For example, our friends at Mina, Liv, and Taboyz.
Speaker 5: garnered over 10 million R&D sales in a single day during their initial and follow-up rounds of the sales.
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Speaker 5: We have continued to innovate and integrate in our gourmet food category by introducing more flavors and a wider choice of products. These unique offerings range from family staples...
Speaker 5: such as rights to translate queer for business banquets, allowing us to capture the full spectrum of the user's demand. To better satisfy users' diverse food preferences, we have expanded our domain food private label product metrics. Our offerings now include well-known products such as European style bread and other items that our service managers promote.
Speaker 5: and introduced to our users. For example, Baiyue Shan freeze-dried sea box-form powder with originally a niche healthy food, largely unknown to our users. Thanks to our promotional efforts, it became a sensation, generating over 5 million RMB in sales during the launch date.
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Speaker 5: During the third quarter, I was have empowered private label Surya. Surya really is the 12th anniversary. Since 2016, Surya has partnered with a Dutch company to research peptides and then develop a wide variety of
Speaker 5: of anti-aging products that better meet people's skincare needs. Notably, these products contain professional ingredients significantly found in medical aesthetics. We were delighted to see that Surya generated over 21 million RMB in sales during its anniversary month, showing highly used demand for quality products.
Speaker 5: that deliver innovative and effective anti-aging solutions. SOHEA has become the go-to choice for women's anti-aging products and it cornerstones often our private label beauty brand strategy.
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Speaker 5: Looking ahead, we are confident that the current challenges will be translated. As I just mentioned, we see clear reasons for optimism, and we were encouraged by Internet's reinstalling optimised COVID-19 controls. People will always want a better life and we stand ready to serve more and more families going forward. With that, I will turn the call over to Mr Zhang for our private...
Speaker 6: otherwise noted.
Speaker 6: During the third quarter, we faced a volatile micro-environment and ongoing pandemic controls, both of which presented challenges to our business. In response, we further refined our product selection and optimized our relationships with suppliers, sacrificing near-term sales while building a solid foundation for our company's long-term success.
Speaker 6: Our repeat purchase rate remains stable at 79% and we once again improve our growth margin. Beyond this, operating expenses and total cost of revenues both decline as we continue to optimize the cost structure of our business. We finished the quarter in a healthy cash position and this combined with our persistent focus on efficient operations as well.
Speaker 6: allow us to continue to weather on predictable markets.
Speaker 6: Going forward, we will continue to reward our shareholders through Share5x.
Speaker 6: Now let's take a closer look at our financials. Total revenue was 239 million compared to 438 million a year ago.
Speaker 6: Revenues from sales of merchandise were $197 million and revenues from our marketplace business were $38 million. This decrease was primarily due to the company's continued strategy to refine product selection across all categories and optimize the selection of suppliers and merchants.
Speaker 6: causing near-term decrease in sales. Consumers' willingness to spend on discretionary products in 2022 has also declined compared with that in the same period of 2021.
Speaker 6: Despite these challenges, we improved our gross margin to 49.4% compared to 43.2% a year ago as a result of sustained customer loyalty to our private labels and the effective product curation strategy.
Speaker 6: Now let's take a look at our operating expenses.
Speaker 6: Fulfillment expenses were 37 million compared to 41 million a year ago. This was primarily due to reduced warehousing and logistics expenses due to lower merchandise sales and decreased service fees charged by third-party payment settlement platforms.
Speaker 6: Sales and marketing expenses were 47 million compared to 60 million a year ago. This was mainly due to the reduction in personnel costs as a result of staffing structure refinements and a decrease in member management fees. These reductions were partially offset by increase in private label promotion expenses.
Speaker 6: Technology and content expenses were 17 million compared to 29 million a year ago.
Speaker 6: The decrease was mainly due to the reduction in personnel costs as a result of staffing structure refinements and reduced cloud service server costs.
Speaker 6: General administrative expenses were 38 million.
Speaker 6: compared to 65 million years ago.
Speaker 6: This was primarily due to reduced personnel costs as a result of refinements to our staffing structure, lower professional services and a decrease in share-based compensation expenses.
Speaker 6: Total operating expenses in the third quarter decreased to 139 million from 194 million in the same period of 2021. We recorded a loss from operations of 18 million compared to an income from operations of 18 million a year ago. We recorded a loss from operations of 18 million a year ago.
Speaker 6: Net loss was $38 million compared with net income of $61 million a year ago, while adjusted net loss was $30 million compared with adjusted net income of $76 million a year ago.
Speaker 6: Basic and diluted net loss per share attributable to ordinary shareholders were both
Speaker 6: compared with basic and diluted net-in-ownings per share attributable to ordinary shareholders of 3 cents in the same period of 2021. Moving on to liquidity, as of September 30, 2022, we had a total of $571 million in cash and cash equivalents, restricted cash and short-term investments on our balance sheet, compared to $645 million as of 2020.
Speaker 6: June 30, 2022. Our liquid assets were sufficient to cover our payable obligations and we did not hold any long-term bank loans or debts on our balance sheet.
Speaker 6: Despite the persistent challenges of today's macro environment, we are confident that our efforts to optimize costs, refine our business model, improve product curation, and ensure high quality service for our users will serve us well now and into the future. We have made steady progress in our quest for long-term stable growth and we will continue to adjust our business strategies to offer maximum value to our shareholders.
Speaker 7: Peace.
Speaker 2: To withdraw your question, please press Start and 2.
Speaker 2: When asking a question, please state your question in Chinese first and then repeat your question in English for the convenience of everyone on the call.
Speaker 2: Today's first question comes from Ethan Yu at First Trust China. Please go ahead.
Speaker 4: Q and A. Let me make a quick translation. Thanks for taking my question. Actually there has been a lot of good news about China.
Speaker 8: using the COVID policies. Could you comment on this trend and tell us more about what measures will the company do to grab this opportunity of a possible recovery in consumer in private consumption? Thank you.
Speaker 4: Thank you.
Speaker 4: Thank you for your attention.
Speaker 4: So, thank you very much for your attention.
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Speaker 5: Thank you for your question. The recovery of the epidemic has an uncertainty and uncertainty. First of all, in terms of uncertainty, we believe that the most difficult time of the epidemic is about to pass. In terms of the uncertainty, as a comprehensive e-commerce platform, WNG has a wide customer base from the first tier cities such as Beijing, Shanghai and Guangzhou.
Speaker 4: We hope you enjoyed the video. Please like and subscribe to our channel. Thank you for watching. Please subscribe to our channel.
Speaker 5: From the supply chain side, the supply chain of our private label is relatively easy to grasp. And we will fully address the production and marketing strategies of various categories according to the recovery situation. For the third party supply chain as a highly creative platform.
Speaker 4: our high quality best seller pool can quickly adapt to the market changes.
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From the perspective of the market habit, I think that after three years of the epidemic, consumers' panic will not fade away so quickly and the stocking demand for the necessities may still exceed the demand for these discretionary products in the short term. In addition, global economic depression these years are not only affected by the epidemic, but also affected by the pandemic.
such as climate change and international relations. In the long run, we still believe in users' yearning for a better life. We will enhance our business and management capabilities and maintain a healthy financial position to cope with the challenges and opportunities ruled by the microenvironment.
Thank you.
Thank you.
Thank you, Sanjay. Thank you. I have one more question. Thank you.
Thank you. And ladies and gentlemen, as there are no further questions at this time, I'd like to hand the conference back to the 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. Thanks, bye.
This conference is now concluded. Thank you for attending. You may now disconnect.