Yunji Q4 2024 Earnings Call Transcript

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April 21, 2025

There are 3 speakers on the call.

Operator

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Eugene's Fourth Quarter twenty twenty four Earnings Conference Call. With us today are Mr. Shenglau Shao, Chairman and Chief Executive Officer along with Mr. Yatie Choi, Senior Financial Director.

Operator

As a reminder, this conference call is being recorded. 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 the company's current expectations and current market operating conditions and relate to events that involve known or unknown risks and uncertainties or other factors of Eugene and its industry. These forward looking statements can be identified by the terminologies such as will, expect, anticipate, continue and other similar expressions. For a detailed discussion of these risks and uncertainties, please refer to the company's related documents filed with the U. S.

Operator

SEC. Any forward looking statements that the company makes on this call are based on assumptions as of today and are expressly qualified in the entirety by the cautionary statements. Risk factors and details of the filings with the SEC, the company does not undertake any obligation to update these statements except as required by applicable law. With that, I would now like to turn the call over to mister Shanglu Shao, Chairman and Chief Executive Officer of UG. Please go ahead, sir.

Speaker 1

Hello, everyone. Welcome to Yunji's First Quarter twenty twenty four Earnings Call. Looking back at our operations over the past year, while focusing on the future, we continue to firmly position organic health as the key strategic objective for our future development. In 2024, our overall gross margin improved to 49.4%, while our user repurchase rate maintained a strong 71.9%. Behind these numbers lies the trust our consumers have placed in us through their votes for healthy living.

Speaker 1

But more important than numbers is our complete operational realignment. Over the past year, we have influenced our organizational structure, improved operational efficiency, and optimized our business layout. These changes will serve as the starting point for us to move forward with greater agility in 2025. This March, we completed the consolidation of an OHUS business and a Yingji select business. These significant move enable us to better provide a trusted healthy living solutions for our users, strengthening our trust chain through traceability, authentic experiences and a genuine sharing, bringing organic health to millions of households.

Speaker 1

Under our commitments to our organic health strategy, our private label organic health products have gradually earned user trust. For example, our Pro by Audis bonus achieved sales of nearly RMB5 million in the fourth quarter of twenty twenty four and over RMB6 million in the first quarter of twenty twenty five. Additionally, our new Life Living Coffee launched at the March year immediately gained high consumer recognition, generating sales of over RMB5 million in just half a month after its launch. We will continue to strengthen our private label brand, Sooye. Through our efforts in 2024 and the first quarter of this year, we have completed a strategic upgrade from messaging to its visual identity, upholding the brand mission of bringing advanced skincare technology into your daily routine.

Speaker 1

Soye is dedicated to offering premium quality products at accessible prices, aspiring to become a world class leader in skincare and the proud representative of China's innovation in beauty. At this year, we are building complete product lines around our flagship innovations to deliver exceptional value and drive growth. In 2024, we launched our three year pro ethylene farming series, a premium yet affordable line that generated over RMB20 million in total sales, a testament to the strong demand for high value skin care solutions. Due to our latest success, we are expanding this series in 2095 with the launch of Zuyue Proethylene Farming Enzymes solution, a highly competitive flagship product. This new addition will further enhance the BOSS welding series, solidifying its position as a go to choice for customers taking advanced and skin care without a premium price tag.

Speaker 1

We are thrilled to introduce our new business initiative for 2025, the Jianxin Tea Therapy Program, a unique wellness experience designed to deliver exceptional value while promoting holistic health. This meticulously proxied eighty minute program combines tea tasting, traditional Chinese studies, meditation, and stress gene lessons, offering participants a deeply enriching wellness journey. During its trial place, the program achieved remarkable success with 91% of its first one hundred and fifty participating tea enthusiasts pretending for frequent sessions. Some users even attended morning tea courses for one hundred consecutive days highlighting the program's ability to build a strong user loyalty and engagement. This April, we plan to recruit 1,000 key enthusiasts to join the program.

Speaker 1

On March 20, TianXin Tea Therapy Program will officially launch. And by June, we aim to train and onboard 100 skilled tea therapies By combining high margin approach with an immersive and engaging experience, these initiatives strengthen the appeal of our organic health offerings while fostering deep customer loyalty and satisfaction. It serves as a pivotal step in our evolution from a traditional transaction platform to a dynamic insurance ecosystem. In 2025, Minji remains committed to its vision as the global leader in organic living, focusing on delivering high value organic households and growing advanced skincare products. By leveraging significant cost reductions achieved last year, we will continue optimizing our product lineup to create products that offer exceptional value for money.

Speaker 1

Our strategy centers on shifting towards high margin, higher repurchase rate products to enhance profitability and then achieve breakeven. Beyond product sales, FinGi is evolving into a 32 experience platform, embracing the promising opportunities of the silver economy. Our innovative T therapy wellness courses will serve as the cornerstone for building health focused communities. This program unites product sales, cultural experiences, and social engagement into a cohesive ecosystem, a tree of life where every branch nurtures growth and connection. In the future, we will continue to stimulate product innovation, enhance core competence, and create greater social value for Chinese families.

Speaker 1

With that, I will hand it over to Mr. Cui, our Senior Financial Director to go through the financial results.

Speaker 2

Thank you, Shao Ren. Hello, everyone. Before I go through our financial results, please note that all numbers starting in the following remarks are in RMB terms, and all comparisons and the percentage change are on a year over year basis unless otherwise noted. During the first quarter of twenty twenty four, we maintain our focus on optimizing our cost structure while adapting to involving market dynamics. We took the average steps to refine our staffing structure and increment cost reductions in areas such as fulfillment and technology.

Speaker 2

However, these long term strategic cost saving measures were partially offset by increasing near term expense, including several severance costs, which affect our bottom line. Despite the change, these actions represented criminal progress toward building a more efficient operational framework for the future. Now let's take a close look at our financials. Total revenue were $197,100,000.0 dollars compared to $149,100,000 a year ago. Revenues from sales and merchandise were 75,500,000.0 and the revenues from our marketplace business were 19,400,000.0.

Speaker 2

These changes were primarily driven by ongoing refinements to our product range across all categories. This coupled with the optimization of our supplier and the merchant network results in a short term impact on sales. Despite these changes, our gross margin remained relatively strong at 48.3 percentage, mainly due to continue the customer loyalty towards our private labels and our effective product creation strategy. Now let's take a look at our operating expense. Fulfillment expense were 16,400,000.0 compared to 24,800,000.0 a year ago.

Speaker 2

This decrease will mean due to reduce the staff costs as a result of staffing structure requirements, reduced warehousing and logistics expense due to lower merchandise sales, and lower service fee charged by third party payment settlement platforms. Sales and marketing expense were 38,200,000.0 compared to 28,500,000.0 a year ago. The increase was primarily due to increase in business promotion expense. Technology and content expense were 8,500,000.0 compared to 12,000,000 a year ago. This was largely due to the reduction in personal costs as a result of staffing structure refinements and reduced server cost.

Speaker 2

General and administrative expense were 71,100,000.0 compared to 44,500,000.0 as well. This was mainly due to severance payments from our staff restructuring and impairment charges on long lived assets. Total operation expense in the first quarter increased to 126,200,000 from $109,800,000 in the same period of 2020. Loss from operation was $77,700,000 compared to 70 compared to $39,500,000 a year ago. Net loss was $85,000,000 compared with $65,900,000 a year ago, while adjusted net loss was $84,500,000 compared with $65,000,000 a year ago.

Speaker 2

Basic and diluted net loss per share attributed to ordinary shareholders were both 0.04 compared to 0.03 in the same period of 2023. Turning to liquidity, as of 12/31/2024, we had a total of hundred and $42,800,000 in cash and cash occurrence, restricted cash and short term investments on our balance sheet. We are dedicated to making the most of our working capital and as far as managing our assets to better support our operations. In summary, as we enter 2025, we will maintain financial discipline while strategically to drive sustainable growth and improve profitability. The restructuring undertaken in 2024 has provided us with a more streamlined operation foundation.

Speaker 2

We will continue to be prudent with our capital allocation focusing investment on categories that demonstrate potential for sustainable growth and improve the profitability. We believe this deep line approach to cost management coupled with our effective product curation stage will enable us to navigate the current market conditions and position us for improved performance in the future. This concludes our prepared remarks for today. Operator, we are now ready to take questions.

Operator

Thank you. We will now begin the question and answer session.

Speaker 2

Session.

Operator

Session. will come from Megan Wang, Investor. Please go ahead, ma'am.

Speaker 1

Can you provide more color about the upcoming JCP therapy project? Thank you for your question. Let me share more about our Jianxin T therapy product. And this project is going to be launched in May, and then it aims it to is to allow our users to enjoy a space and where people can calm their minds, conduct their body and soul, and embrace a healthier lifestyle. And what makes this unique is our production plus the virtualized service model, which creates a complete experience, not just a tea, but a journey

Speaker 1

Tea itself holds deep culture significance for us as the Chinese people. For Xing Xing Tea, we carefully selected a world winning organic black tea from Wuyi Mountain. It is certified organic by multiple countries and it comes from the traditional production area of Wuyi Mountain. The tea has a beautiful glossy black appearance and brews into a smooth, sweet infusion that embodies quality. The real magic lies in the TA therapy ritual, which is an eighty minute experience divided into three parts: twenty minutes of traditional stretching, forty minutes of tea tasting and meditation with dancing tea, and twenty minutes of sharing instructions with fellow participants.

Speaker 1

This isn't just about drinking tea, it is about self healing through classical culture and finding joy in daily moments. The program even integrates a professionally designed curriculum based on Chinese classic studies to help participants achieve self awareness and inner harmony. Through these ritual participants can improve blood circulation and gain insights into themselves, all while boosting physical strength, refreshing their minds, and nourishing their hearts. The name TianXin itself refers to this philosophy. It means achieving innate knowledge of the good.

Speaker 1

In essence, it is about removing negativity and embracing positivity to live a more fulfilling life. Finally, this project isn't just about personal wellness, it also strengthens our community and drive sales of our organic health products. It is a holistic approach that connects people to health, culture and happiness. Thank you for your question.

Operator

As there are no further questions, this will conclude our question and answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.

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Earnings Conference Call
Yunji Q4 2024
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