In the recent earnings call, Yunji (NASDAQ:YJ) Inc. (ticker symbol undisclosed) discussed its financial performance for the second quarter of 2024. The company reported total revenues of RMB106 million, a decrease from RMB167.1 million in the previous year. Despite market headwinds and adjustments to their product range, Yunji maintained a strong gross margin of 46.6%. Expenses across various departments decreased due to cost optimization efforts, leading to a net loss of RMB11.9 million, an improvement from a net loss of RMB41.5 million in the same period last year. The company highlighted its strategic initiatives, including expanding into offline retail and enhancing product offerings, especially in the health sector.
Key Takeaways
- Total revenues for Q2 2024 stood at RMB106 million, down from RMB167.1 million year-over-year.
- Gross margin remained robust at 46.6%.
- Operating expenses saw a significant reduction, contributing to a lower net loss of RMB11.9 million compared to RMB41.5 million in Q2 2023.
- The company opened its first offline wellness store, focusing on traditional Chinese medicine.
- Yunji aims to attract customers aged 41 to 55 through community-based word-of-mouth networks.
- The company emphasized product quality and traceability, especially in food and health products.
- Yunji's private label beauty brand, SUYE, continues to grow, with a focus on antiaging products.
- Marketing strategies are being innovated, with a focus on short video content and AI development.
- Yunji's financial position remains stable, with sufficient liquidity to cover obligations and no long-term debt.
Company Outlook
- Yunji plans to extend its presence in offline communities with wellness spaces.
- The company is committed to a curated product selection strategy, focusing on quality and value.
- Yunji is exploring new marketing avenues such as short video content creation to drive traffic and nurture talent.
Bearish Highlights
- The company experienced a decline in total revenues due to softer consumer confidence and ongoing adjustments in product range.
- There was a short-term impact on sales due to optimization of supplier and merger network.
Bullish Highlights
- Gross margin remained strong despite revenue decline, thanks to loyalty towards product labels and effective product creation strategy.
- Operating expenses decreased significantly across fulfillment, sales and marketing, technology and content, and general and administrative departments.
Misses
- Yunji reported a net loss, although it was an improvement over the previous year's figures.
Q&A Highlights
- CEO Shanglue Xiao emphasized the importance of product traceability and the potential for offline events to build consumer trust and loyalty.
- The company's efforts in product traceability are expected to generate more consumer trust and encourage purchases on the platform.
Yunji's financial director, Yeqing Cui, provided a detailed analysis of the financial results, noting that the company's strategic initiatives are supported by a stable financial position. He also highlighted the company's focus on operational efficiencies and adapting to market changes. The management concluded the call with an open invitation for further questions and a look forward to the next quarter's discussion.
InvestingPro Insights
Yunji Inc .'s recent earnings call shed light on its financial performance, revealing both challenges and strategic responses to the current market environment. To provide further context on the company's financial health and stock performance, here are some key insights based on real-time data from InvestingPro:
InvestingPro Data:
- Market Cap: Yunji Inc. currently has a market capitalization of 12.7 million USD, reflecting the company's size and investment scale within the industry.
- Price / Book Ratio: With a Price / Book ratio of 0.08 as of Q1 2023, the company is trading at a low multiple, suggesting that its market value is relatively modest compared to its book value.
- Revenue Growth: The company experienced a significant revenue decline of 40.49% in the last twelve months as of Q1 2023, indicating challenges in sales performance during this period.
InvestingPro Tips:
- Stock Performance: Yunji's stock has taken a substantial hit over the last week, with a price total return of -14.98%, highlighting recent volatility and investor concerns.
- Cash Position: Despite the revenue challenges, Yunji holds more cash than debt on its balance sheet, suggesting a degree of financial stability and liquidity that may support its ongoing operations and strategic initiatives.
These InvestingPro Tips and data points offer a snapshot of Yunji's financial landscape and market perception. For a deeper dive and to access more InvestingPro Tips, investors can visit https://www.investing.com/pro/YJ, where additional insights are available. Currently, there are 11 more tips listed on InvestingPro that can provide further guidance on Yunji's stock and financial status.
Full transcript - Yunji Inc (YJ) Q2 2024:
Operator: Good morning, and good evening, ladies and gentlemen. Thank you for standing by and welcome to Yunji's Second Quarter 2024 Earnings Conference Call. With us today are Mr. Shanglue Xiao, Chairman and Chief Executive Officer; Mr. Yeqing Cui, Senior Financial Director; and Ms. 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 Yunji. Please go ahead, ma'am.
Kaye Liu: Hello, everyone. Welcome to our Second Quarter 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 relate to events that involve known and unknown risks, uncertainties and other factors of the Yunji's 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 US 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 SEC. Yunji do not undertake any obligation to update these statements, expect as required under applicable law. With that I will now turn over to Shanglue Xiao, Chairman and CEO of Yunji.
Shanglue Xiao: [Foreign Language] Hello, everyone. Welcome to Yunji's Second Quarter 2024 Earnings Call. [Foreign Language] Yunji has been operating for nine years. During this time, we have seen our users grown from new parents to those welcoming second child or entering new life stages. Our goal is to be a long-term partner for our users, supporting the health of their families. In light of China's aging population and the zero economy, we are looking to expand our user base further. [Foreign Language] 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 health care products directly to consumers. [Foreign Language] In July, we opened our first offline store, focusing on traditional Chinese medicine and wellness. This marks a new chapter for us in the health sector. The offline store will strengthen the connection between our online and offline services and lay the ground work for expanding our customer base. We aim to create a word-of-mouth network based on local committees offering retail services and expand our target customers' groups to those aged 41 to 55. This demographic values personal connections and can help us attract quality customers through referrals. [Foreign Language] 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 product or attempt to be or encompassing platform. Instead, we carefully choose quality products, set reasonable prices and ensure value for our users. This approach allows our service managers to earn a fair profit margin. [Foreign Language] Since our funding, we have focused on quality and followed an expensive 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 brand, 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 traceability efforts to understand the production processes of quality products. Personally, I visit various regions across the country multiple times each month to share my experience and build trust with our users and the service providers. [Foreign Language] Moving onto another important area, our beauty business. In the beauty sector of our private label brand, SUYE, recently celebrated its 14th anniversary. Over the years, SUYE has grown alongside our loyal users. Our product development continues to focus on antiaging solutions, where we try to create exceptional products. Antiaging is a high-end sector that has our technology and raw materials. We have developed a comprehensive product line, including UV resistance sunscreens, collagen supplement and eye care products. We are forming a complete antiaging metrics to meet users' diverse needs. [Foreign Language] Another key number of 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. General 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. As in time, we are enhancing our service capabilities to offer content creators, more resources and useful tools. [Foreign Language] While the challenges remain, we are committed to our long-term 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 Director to go through the financial results.
Yeqing Cui: Okay. Thank you, Shanglue. 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 second quarter of 2024, we encountered some market dynamics that influenced our operations. 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 adjustments 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. Total revenues were RMB106 million compared to RMB167.1 million a year ago. Revenues from sales of merchandise were RMB83 million and the revenues from our marketplace business were RMB21.1 million. The changes were primarily driven by softer consumer confidence and ongoing adjustments to our product range across all categories. Additionally, the optimization of our supplier and merger 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. Now let's take a look at our operating expense. Fulfillment expense were RMB20.7 million compared to RMB29.9 million a year ago, this was mainly due to low warehousing and logistics costs resulting from decreased merchandise sales as well as reduced personal cost from staffing optimization. Sales and marketing expense decreased to RMB21.7 million from RMB33.4 million a year ago. This was primarily a result of a decline in member management fee. Technology and content expense were RMB12.2 million compared to RMB14.3 million a year ago. This was largely due to lower personnel costs from staffing optimizations and a reduction in server service cost. General and administrative expense were RMB18.7 million compared to RMB33.2 million a year ago. This was mainly due to a reduced allowance for credit loss and lower personnel costs from staffing adjustments. Total operating expense in the second quarter decreased to RMB73.3 million from RMB110.8 million in the same period of 2023. Loss from operations were RMB23.1 million compared to RMB11.8 million a year ago. Net loss was RMB11.9 million compared to RMB41.5 million a year ago, while adjusted net loss were RMB9.7 million compared with RMB39.8 million a year ago. Basic and diluted net loss per share attributed to ordinary shareholders were both RMB0.01 compared to RMB0.02 in the same period of 2023. Turning to liquidity. As of June 30, 2024, we had a total of RMB324.5 million in cash and cash equivalents, restricted cash and short-term investments on our balance sheet compared to RMB561.9 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. In addition, we are dedicated to making the most of our working capital and smartly 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 improvements 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 moment and driving long-term value for our shareholders. This concludes our prepared remarks for today. Operator, we are now ready to take questions.
Operator: We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Ethan Yu with First Trust China. Please go ahead.
Ethan Yu: 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. Could you share more color from this experience? And how will these insights be applied to our product selection and operation at Yunji. [Foreign Language]
Shanglue Xiao: [Foreign Language] Thank you for your question. [Foreign Language] I've been traveling across the country almost every week for product traceability. In fact, there are many good merchants and the supply chains in China, especially for high demand and high repurchase rate products like meat, eggs and diary. [Foreign Language] 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. This requires our team to explore and experience personally. This generates sharing material from Yunji's traceability activities can gain more consumer trust. [Foreign Language] Additionally, along with offline traceability, we can host more offline loans and taking events, leveraging the advantages of a face-to-face communication to acquire loyal customers. [Foreign Language] Within such offline loan and offline traceability activities, we are going to create the products that are going to go to the deep part of the consumers. [Foreign Language] And those products and the related materials are going to encourage the consumer to buy on our platform. [Foreign Language] Thank you for your question.
Ethan Yu: [Foreign Language] 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 the management for any closing remarks.
Kaye Liu: 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.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.