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spk08: Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Yenji's third quarter 2023 earnings conference call. With us today are Mr. Shang Li Xiao, Chairman and Chief Executive Officer, Mr. Yi-Ching Sui, Senior Financial Director, and Ms. Kay Liu, Investor Relations Director of the company. As a reminder, this conference call is being recorded. Now, I would like to hand the conference over to our first speaker today, Ms. Kay Liu, Investor Relations Director of Yenji. Please go ahead, ma'am.
spk07: Hello, everyone. Welcome to our third quarter 2023 earnings call. Before we start, please note that the call will come forward-looking statement within the meaning of the private security litigation movement. Reform Act of 1995 that are based on our current expectations and current market operating conditions and relate to events that involve known or unknown risks, uncertainties, and other factors of the industry. These forward-looking statements can be identified by terminologies such as will, expect, anticipate, continue, or other similar expressions. For detailed discussion of these risks and uncertainties, please refer to our related documents that file with USCCC. Any forward-looking statement that we make on this call are based on assumptions as of today, and are expressly qualified in the entirely by cautionary statement, risk factors, and details of the company filing with SEC. Yunji does not undertake any obligation to update this statement except as a quite inapplicable law. With that, I will now turn over to Shangyue Xiao, Chairman and CEO of Yunji.
spk03: Hello, everyone. Welcome to Yunji's third quarter of the financial phone call in 2023.
spk00: Hello, everyone. Welcome to the third quarter 2023 earnings poll.
spk04: The third question is traditionally an off-peak season for e-commerce. We took this opportunity to further develop and strengthen our business foundations and continue to iterate on both the marketing and product fronts.
spk01: We focused on a number of initiatives, including fine-tuning our market positioning, advancing development of new products, strategically adjusting the structure of our product offerings, and optimizing our supply chain capabilities. In addition, we ramped up our marketing and hosted events to highlight product origins and unveil new products, laying the groundwork for our promotional sales in the fourth quarter. Notably, during September, our private label team relocated to a new office building with enhanced product display and presentation areas, allowing us to more effectively showcase our private label brands to our partners.
spk04: We continue to reflect on the positioning of Yunji. Yunji and Yunji's free brand have a very high return rate. Since so many users and service providers still choose to stay in Yunji, Guided by our ongoing strategic development, we conducted a comprehensive evaluation of UNG's market positioning. Both UNG and our private label brands
spk01: have consistently maintained high repeat purchase rates. This positive trend has promoted us to reflect on how can we further enhance the value we deliver to our users and our service managers. Operating within a competitive market landscape, we remain firmly committed to offering high quality, competitively priced products that deliver outstanding value to our users. We believe that these commitments will generate higher revenues and strengthen our brand image, paving the way for our sustainable growth.
spk04: During this year's W11 Shopping Festival, major e-commerce platforms engaged in aggressive discounting and extended their promotions over the course of a month by using a variety of creative approaches.
spk01: We chose to try a different course. opting for a more straightforward promotional approach over a shorter timeframe. For example, we successfully attracted and engaged users by leveraging product same day, direct discounts, and multi-item offers. These strategic focus enable us to coordinate our marketing efficiently and more precisely target dominant users, effectively drawing them back to our platform.
spk04: We proposed a strategy to increase the supply of hardwares in the last quarter. We achieved good results in hardwares, especially in food products. At the end of August, Xie Xie card gift cards and Xie Li He became the popular choice for everyone's Mid-Autumn National Day gift party. With no headwinds, it maintained a stable daily sale. Then at the end of the week, in just a month, we sold more than 400,000 Xie in total, with sales of more than 13 million yuan.
spk01: During our previous earning call, we outlined our strategic initiative to enhance our supply chains and capitalize on consumers' growing appetite for seasonal purchases. Our approach has yielded impressive results, particularly in the food category. For example, by the end of August, our crab vouchers and crab gift boxes had emerged as go-to gifting choices for the mid-autumn festival and a national day holiday. Importantly, we have successfully generated stable levels of daily sales without significant promotional spending. In the space of just one month, we sold over 400,000 crops, generating revenue in excess of 13 million RMB. 接下来我为大家分享一下云集自由品牌的进展。
spk04: Beauty is our base, and health is our second line of sight. The cloud of free brands with both beauty and health is trying to cross the line between the two. This makes our single product unique and hard to copy. In September, our makeup brand, PS, released a Sagi-based lip balm. It was sold out within an hour on the day of the sale. The community shouted loudly at the disappearance of the anti-corruption campaign. Sagi has always been recognized by users as one of the products of our health care free brand, Baiyueshan. While Sagi Rencun Gao can attract and be bought by Sagi Chinese users who have received rich education, it can attract and be bought by Sagi Chinese users who have received rich education. After the successful experiment of Rencun Gao, we have set up a Chinese medicine remodeling studio inside, which will bring about the revival of Chinese medicine culture in the past few years. After that, we will launch more cross-border combined products such as Chinese medicine masks.
spk01: Now I'd like to share some updates on Vinci's private label brands. While beauty remains our core focus, healthcare has emerged as a strong secondary area. This dual focus on beauty and health opens up exciting opportunities to explore cross-category collaboration, allowing us to create highly unique and differentiated products. For example, in September, Our beauty brand, P&S, launched a sea buckthorn leaf balm that was an instant hit, selling out within an hour on its launch day. The leaf balm's popularity sparked strong demand within our community groups for a further round of sales. Sea buckthorn has proved to be a popular ingredient for our health brand, the Baiyuesheng, following its launch. the lip balm has garnered a devoted following across both beauty and health categories, demonstrating the potential of a cross-category collaboration. Building on the success of the lip balm and aligned with the resurgence of a traditional Chinese medicine culture, we've established a herbal skin care studio and intend to introduce more cross-category products. such as the TCM face mask, to cater to the evolving preferences of users.
spk04: Finally, I would like to turn to a critical component of our success, our dedicated service managers.
spk01: They choose UNG because we offer a unique opportunity to strike a balance between their professional and family lives. Our innovative flash sales strategy empowers the service manager to build mega-heated products or brands in a short time frame, often within an hour. This allows them to rapidly generate sales and then return to their personal lives, freeing up time for self-improvement and to spend with their families. In terms of personal development, we continue to prioritize the continuous learning and growth of our service managers. As part of this commitment, we launched a new education and training program in the third quarter. This initiative will not only refine their skills, but also foster broader thinking and cultivate more diverse interests. ultimately helping to create a more fulfilling family life.
spk04: With that, I will turn it over to Mr. Cui, our Senior Financial Director, to go through the financial results.
spk02: Thank you, Shangrui. Hello, everyone. Before I go through our financial results, please note that all numbers start in the following remarks in RMV terms, and all categories and percentage changes are year-over-year basis, unless otherwise noted. During the third quarter of 2023, our operations remained relatively stable, and we used the opportunity to reinforce our core operational process. Key to this efforts have been the enhancement of our inventory management practice. We now have a robust, comprehensive strategy that covers our private label's product development, sales scheduling, and the management of stock inflows and outflows. At the same time, we actively monitor different product categories weekly or monthly basis to ensure inventory is kept at optimal levels. This strategic Focus on inventory management has been instrumental in optimizing our use of assets and effectively managing cash flow. We believe this new approach lays a solid foundation for our sustainable development within a constantly shifting dynamic market. Now, let's take a close look at our financials. Total revenues were $145 million compared to $215 million 39 million a year ago. Revenues from sales of merchandise were 140 million and the revenue from our marketplace business was 29 million. The changes were primarily driven by ongoing refinement to our products range across all categories. This coupled with the optimization of our supplier and the merchant network resulting in a shorter impact on sales. Despite these challenges, our growth margin remained relatively solid at 45.7%. This was due to attendant customer loyalty towards our private labels and our effective product coaching strategy. Now let's take a look at our operating expense. Fulfillment expense was 26 million compared to 37 million a year ago. This was primarily driven by a decrease in warehousing and logistics steaming from lower merchandise sales and reduced personal costs due to staffing structure optimization. Sales and marketing expense was $30 million compared to $47 million a year ago. This was primarily a result of a decline in member management fee and decreased business promotion expense. Technology and content expense were $14 million compared to $17 million a year ago The decrease were mainly due to a reduction in personal cost resulting from staffing structure optimization. General and administrative expense were $28 million compared to $38 million a year ago. This was mainly due to a decline in share-based compensation expense. Total operating expense in the third quarter decreased to $98 million from $139 million in the same period of 2022. Loss from operations was $30 million compared to $18 million a year ago. Net loss was $35 million compared to $38 million a year ago, while adjusted net loss was $34 million compared with $30 million a year ago. Basic and diluted net loss per shares attributed to ordinary shareholders was both $0.02 compared with $0.02 in the same period of 2022. Turning to liquidity, as of September 13, 2023, we had a total of $555 million in cash and cash equivalents, restricted cash and short-term investment on our balance sheet, compared to $669 million as of December 31, 2022, our liquid assets were sufficient to cover our payable obligations, and we did not hold any long-term bank loans or debits on our balance sheet. Looking ahead, we will continue to proactively explore investment opportunities with the aim of enhancing our supply chain capabilities. To summarize, we took crucial steps towards Achieving our long-term strategic goals during the third quarter, our diligent efforts to enhance our inventory management mechanism and our decision to a sustainable and effective asset management approach were integral to this process. Going forward, we will continue to drive ongoing effective improvements ensuring that our company remains resilient and adaptable. This approach positions us to effectively meet future challenges and seize opportunities as we navigate the ever-changing economic landscape. This concludes our prepared remarks for today. Operator, we are now ready to take questions. Thank you.
spk08: We will now begin the question and answer session. To ask a question, you may press star and 1 on your touch-tone song. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. 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. The first question today comes from Ethan Yu with First Trust. Please go ahead.
spk06: Thanks for taking my question. Thank you for accepting my question. I would like to ask if Mr. Xiao's health care company has a more detailed plan and location to share. Could you show us more color on the specific plans and the domestic positioning for our health business segment?
spk04: Thank you. Thank you. Yunji Health is Yunji's long-term strategy for the next 10 to 20 years. It can be understood as the second curve of Yunji. In the next 20 years, 6.2 billion Chinese will be over 60 years old. Thank you for your question. EMG Health is EMG's forward-looking strategy
spk01: for the last 10 to 20 years. And in the last 10 to 20 years, and we know that in China, we are going to have 620 million Chinese people over 60 years old and above. And you can take it as our secondary curve. And 95% of our consumers are women, among which 86% of them are mothers, a key characteristic of this group. Is there a key focus on health, particularly as the primary guardian of the well-being of the both elderly family members and the children?
spk04: 汽车的市场不缺SUV,但是汽车的市场缺6座的SUV。 中国线上线下不缺超市,但是我们认为面向未来20年缺健康的超市。
spk01: Actually, in China's car industry, we do not lack different models of SUV, but we lack the SUV with six seats. Similarly, in China's health industry, we do not lack the online and offline supermarkets, but in the next 20 years in China, we lack the health supermarket. 云集健康类似于健康领域的三母会员店。
spk04: It contains both healthy food and functional food. It focuses on family health scenarios and gathers different brands and different types of health products to meet the individual needs of different family members for health. Many people understand that health is a healthy diet. In fact, the health we promote is a healthy lifestyle. For example, sunscreen, hair care, and cleaning in the nursing field are all enclosed in a healthy lifestyle.
spk01: Yunji Health can be likened to a Sam's Club for the health domain, including the healthy food, also those, you know, food that are focused on health, and with a primary emphasis on household scenarios, or like those functional food. It gathers diverse health products from various brands and categories to meet the personalized health needs of different family members. While many associate health with dietary choices, we advocate for a healthy lifestyle encompassing aspects like the sun protection, skin care, hair care, and cleanliness. Minji aspires to be a comprehensive health steward for all aspects of life.
spk04: Thank you for your question.
spk05: Thank you for your question. I have no more questions. Thank you.
spk08: As there are no further questions at this time, I'd like to hand the conference back over to management for closing remarks.
spk07: 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 has now concluded.
spk08: Thank you for attending today's presentation. You may now disconnect.
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