Infosys Q2 2024 Earnings Call Transcript

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August 23, 2024

There are 5 speakers on the call.

Operator

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to UG's Second Quarter 2024 Earnings Conference Call. With us today are Mr. Sheng Li Zhao, Chairman and Chief Executive Officer Mr. Yiquing Hu, Senior Financial Director and Ms.

Operator

Kaye Liu, Investor Relations Director of the company. As a reminder, this conference call is being recorded. Now, I would like to turn the conference over to our first speaker, Ms. Kaye Liu, IRD of Yuuji. Please go ahead, ma'am.

Speaker 1

Hello, everyone. Welcome to our Q2 2024 Earnings Call. Before we start, please note that this call will contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our current expectations and current market operating conditions and related investments involve known and unknown risks, uncertainties and other factors of Yunxi and its industry. These forward looking statements can be identified by terminologies such as will, expect, anticipate, continue or other similar expressions for a detailed discussion of these risks and uncertainties, please refer to our related documents filed with the U. S.

Speaker 1

SEC. Any forward looking statements that we make on this call are based on assumptions as of today and are expressly qualified entirely by cautionary statements, risk factors and details of the company's filings with the SEC. Binxi do not undertake any obligation to update these statements except as required under applicable law. With that, I will now turn over to Shanghui Xiao, Chairman and CEO of Yunxi.

Speaker 2

Hello, everyone. Welcome to Yingying's 2nd quarter 2024 Earnings Call. MinJi has been operating for 9 years. During this time, we have seen our users grow from new parents to those welcoming a second child or entering new life stages. Our goal is to be long term partner for our users, supporting the health of their families.

Speaker 2

In light of China's Asian population and the theory economy, we are looking to expand our user base further. Now let's discuss some of our ongoing initiatives. As part of our initiatives to provide our users with a holistic health solution, we plan to extend our presence into offline communities and establish wellness spaces, bringing our healthcare products directly to consumers. In July, we opened our 1st offline store focusing on traditional Chinese medicine and wellness. This marks a new chapter for us in the health sector.

Speaker 2

The offline store will strengthen the connection between our online and offline services and lay the groundwork for expanding our customer base. We aim to create a word-of-mouth network based on low communities offering retail services and expand our target customers' groups to those aged 41 to 55. These demographic values personal connections and can help us attract quality customers

Speaker 3

through referrals.

Speaker 2

In addition to our offline expansion, we plan to increase more organic grain and health products. We remain committed to our product selection criteria. We do not offer mediocre products or attempt to be or encompassing platform. Instead, we carefully choose quality products at reasonable prices and ensure value for our users. This approach allows our service managers to earn a fair profit margin.

Speaker 2

Since our funding, we have focused on Kobi and follow an extensive but curated product selection strategy. We use data driven metrics to evaluate and adjust our product launch cycles based on our user feedback. Additionally, we emphasize product traceability. Beyond our private label brands, we will visit the origins and factories of the key partner brands, especially in food and health. We encourage our managers to lead teams in these feasibility efforts to understand the production processes of quality products.

Speaker 2

Personally, I visit various regions across the country multiple times each month to share my experience and build trust with our users and service providers. Moving on to another important area, our beauty business. In the beauty sector, our private label brand, SuYee, Ren Xue celebrated its 14th anniversary. Over the years, SuYe has grown alongside our loyal users. Our product development continues to focus on anti aging solutions where we strive to create exceptional products.

Speaker 2

Anti aging is a high end sector that has our technology and raw materials. We have developed a comprehensive product line, including UV resistant sunscreens, collagen supplements and eye care products, we are forming a complete anti aging metric to meet users' diverse needs. Another key number of the focus for us is marketing innovation. We are also innovating in our marketing efforts. We are combining our technology and AI development with short video content creation.

Speaker 2

Genital content no longer works in the short video era. We believe that creating unique content is key to driving traffic. We are seizing this opportunity to explore new avenues in our short video projects. Our goal is to nurture talent by teaching users how to create original content. We provide AI support and share marketing skills to help them become distinctive content creators.

Speaker 2

As in time, we are enhancing our service capabilities to offer content creators more resources and useful tools. While the While the challenges remain, we are committed to our launching strategic goals, we are focused on improving our operations and adapting to the evolving market landscape. With that, I will turn the call over to Mr. Cui, our Senior Financial Development to go through the financial results.

Speaker 3

Okay. Thank you, Shawn Rui. Hello, everyone. Before I go through our financial results, please note that all numbers stated in the following remarks are in R and D terms and all comparisons and the percentage changes are on a year over year basis unless otherwise noted. During the Q2 of 2024, we encountered some market dynamics that influenced our operations.

Speaker 3

However, our current financial positions allow us to support our strategic initiatives as we regularly assess the profitability of both new and existing business lines, making thoughtful adjustment in response to market changes. This approach help us maintain a stable financial position in a shifting business landscape, while we continue to refine our inventory management protocols, which contribute to a gross margin of 46.6%. We are also focused on optimizing our product range and supplier network to better align with customer preferences. As we move forward, we will continue to pursuing growth opportunities prudently while ensuring our financial stability. Now, let's take a close look at our financials.

Speaker 3

Total revenues were $106,000,000 compared to $167,100,000 a year ago. Revenues from sales of merchandise were $83,000,000 and the revenues from our marketplace business were $21,100,000 The changes were primarily driven by softer consumer confidence and ongoing adjustment to our product range across all categories. Additionally, the optimization of our supplier and the merchant network contribute to a short term impact on sales. Despite these changes, our gross margin remained relatively strong at 46.6%. This strength is attributed to continued customer loyalty towards our product labels and our effective product creation strategy.

Speaker 3

Now let's take a look at our operating expense. Fulfillment expense were $20,700,000 compared to $29,900,000 a year ago. This was mainly due to low warehousing and logistics costs resulting from decreased merchandise sales as well as reduced the purchase costs from staffing optimization. Sales and marketing expense decreased to $21,700,000 from 30 $3,400,000 a year ago. This was primarily a result of a decline in member management fee.

Speaker 3

Technology and the content expense were $12,200,000 compared to 14 $300,000 a year ago. This was largely due to lower personnel costs from staffing optimizations and a reduction in service service costs. General and administrative expenses were 18 $700,000 compared to $33,200,000 a year ago. This was mainly due to a reduced allowance for credit loss and a lower personal cost from staffing adjustments. Total operating expense in the Q2 decreased to $73,300,000 from $110,800,000 in the same period of 2023.

Speaker 3

Loss from operations were 20 $3,100,000 compared to $11,800,000 Net loss were $11,900,000 compared to $41,500,000 while adjusted net loss was $9,700,000 compared with $39,800,000 a year ago. Basic and diluted net loss per share attributed to ordinary shareholders were 0 point 0 $0.01 compared to 0 point 0 $2 in the same period of 2023. Turning to liquidity. As of June 30, 2024, we had a total of $324,500,000 in cash and cash equivalents, restricted cash and short term investments on our balance sheet compared to RMB551.9 million as of December 31, 2023. Our liquidity assets were sufficient to cover our payable obligations and we do not hold any long term bank loans or debits on our balance sheet.

Speaker 3

In addition, we are dedicated to making the most of our working capital and as market managing our assets to better support our operations. Looking ahead, we remain committed to enhancing our operational efficiencies and adapting our strategy to navigate the evolving market landscape. We believe that our ongoing improvement in inventory management and cost optimization will position us favorable for future growth. As we continue to innovate and refine our product offerings, We are confident in our ability to regain movement and driving long term value for our shareholders. This concludes our prepared remarks for the operator.

Speaker 3

We are now ready to take questions.

Operator

We will now begin the question and answer session. Our first question comes from Ethan Yu with First Trust China. Please go ahead.

Speaker 4

Hi, good evening. Thanks for taking my question. I have a question about our business operation. Mr. Xiao just mentioned that you have participated in numerous product traceability efforts.

Speaker 4

Could you share more color from this experience and how will these insights be applied to our product selection and operation at

Speaker 2

Thank you for your question. I have been traveling across the country almost every week for transactability. In fact, there are many good merchants and supply chains in China, especially for high demand and high repurchase rate products like meat, alts and dairy. However, we cannot simply rely on inspection reports, historical sales data and various promotional materials to confidently introduce those merchants to our platform. Only more authentic, cost effective and healthy products, which are better suited to the physique of the Chinese people, can bring real value to our users.

Speaker 2

This requires our team to explore any experience personally. This generates sharing material from Yunji's traceability activities can gain more consumer trust. Additionally, along with offline traceability, we can host more offline salons and tasting events, leveraging the advantages of face to face communication to acquire loyal customers. With such offline alone and offline traceability activities, we are going to create the products that are going to go to the deep part of the consumers. And those products and the related materials are going to encourage the consumers to buy on our platform.

Speaker 2

Thank you for your question.

Speaker 4

Great, thanks. I have no more questions. Thanks.

Operator

As there are no further questions at this time, I'd like to hand the call back over to management for any closing remarks.

Speaker 1

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. Bye.

Operator

The conference is now concluded. Thank you for attending. You may now disconnect.

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Earnings Conference Call
Infosys Q2 2024
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