This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk00: Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to UNG's first quarter 2024 earnings conference call. With us today are Mr. Shang Liu Xiao, Chairman and Chief Executive Officer, Mr. Yeqing Cui, Senior Financial Director, and Ms. Ke 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 the UNG. Please go ahead, ma'am.
spk01: Hello, everyone. Welcome to our first quarter's 2024 earnings call. Before we start, please note that the call will contain forward-looking statements within the meaning of Private Security Litigation Reform Act of 1995 that are based on our current expectations and current market operation conditions and relate to events that involve known or unknown risks, uncertainties, and other factors of UNG and this 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 document filed with the US SEC. Any forward-looking statement that we make on this call are based on assumptions as of today, and are expressly qualified in entirely by cautionary statement, risk factors, and details of the company filing with SEC. Yunji do not undertake any application to update this statement expected to be required on the applicable law. With that, I will now turn over to Shangyue Xiao, Chairman and CEO of Yunji.
spk03: Hello, everyone. Welcome to Yunji's first financial phone call in 2024.
spk05: Hello, everyone. Welcome to Renji's first quarter, 2034.
spk03: The first quarter is traditionally an off-peak season for e-commerce.
spk05: we see the opportunity to further refine our operations, allow us to maintain a solid growth margin. As consumers' appetites for pursuing better lives intensify, we are laser-focused on driving high quality growth by stabilizing average order values and gaining deeper insights into our core users' consumption preferences.
spk03: In May this year, we celebrated the 9th anniversary of Yunji with our service providers, partners and employees. In this anniversary, we announced some new projects that make people happy. For example, in order to provide customers with a healthy solution for the whole life cycle, we plan to build an offline community, create a community health space, and let Yunji health products have the opportunity to directly reach consumers. At the same time, these new projects will create more full-time and full-time jobs.
spk05: In May, I celebrated UNG's ninth anniversary alongside our service managers, planners, and employees. During the festivities, we unveiled several exciting new initiatives. One such initiative is our plan to provide our users with a holistic health solution. To realize this, we will extend our presence into offline communities and establish wellness spaces, bringing our health care products directly to consumers. These initiatives are set to generate both part-time and full-time employment opportunities, nurturing individual entrepreneurship through our top-tier retail services.
spk03: In the makeup and oil products sector, we are continuing to launch new products that are suitable for the market. Our private label beauty brands Suye and P&F continue to roll out new products that prove to be mad hits. These products are specially formulated with ingredients
spk05: that are tailored for mature skin, mirroring the effectiveness of the leading Western beauty brands. In terms of marketing, we are actively expanding our partnerships across a variety of external channels these years. Our approach includes creating engaging content on diverse content platforms, leveraging the power of short video platforms, and harnessing influencer marketing on live streaming platforms.
spk03: In the field of health, we will continue to combine advanced manufacturing technology, natural nourishment and raw materials to enrich the health of Yunji. From the food section of the residential families to serving the country's people from passive medical care to health. At the same time, Yunji will continue to innovate and improve the service experience of the local community, land the application of AI, and further advance the professional and comprehensive training system.
spk05: In the healthcare sector, we will continue to realize cutting-edge manufacturing technology and natural ingredients with medicinal properties to create products that further enrich our health supermarket metrics. Our goal is to transition Chinese families from a reactive approach to healthcare to a proactive one that emphasizes daily dietary enhancements. At the same time, we will continue to innovate and enhance the value community service experience and deploy advanced AI applications. In addition, we will further evolve our training system to cultivate professional health nutritionists who provide value-added services beyond our product. Our mission is to ensure that every family has access to a professional health advisor.
spk03: While apparel has historically been a less prominent sphere for net, we have seen increasing demand from users and service managers for a broader range of products in this category.
spk05: With the emergence of the short video trend, we see a golden opportunity for Yunji's apparel category to become an integral component of our beauty segment. This year, we've embraced integration of short videos and live streaming, hosting weekly live streams on Yunji's official channel. While our primary focus is on apparel, we also feature our beauty and food categories to bolster Yunji's image as a beauty brand, this approach allows us to infuse a sense of fashion into our offerings while ensuring they remain practical.
spk03: Currently, all industries are facing new changes and challenges. We say that the industry of new consumption is the same. We believe that opportunities and challenges are possible. With the spirit of entrepreneurship, as a food e-commerce company that has worked for nine years in the micro-economy industry, we will quickly follow the development trend of food e-commerce. In the recent half-year of video content creation and live streaming exploration, we are gradually searching for a business model that fits Yunji's business fund. That is to train the team leader of the video number to carry out high-quality, large-scale content production and release. In order to make delivery easier, make communication more efficient, Yunji will adapt to the new era and give the service provider new skills. You can start a business with a mobile phone. We recruit a number of people who have become video number leaders. Every industry is currently grappling with changes and challenges, and the new consumption industry in which we operate is no exception. However, we firmly believe that
spk05: Where challenges exist, opportunities also thrive. At WeNG, we harness our entrepreneurial spirit, leverage our nine-year experience in the realm of social e-commerce within the WeChat ecosystem, and keep our fingers on the pulse of video channel trends. Over the past six months of exploring content creation and live streaming on video channels, we have gradually developed a business model that fully aligns with ING's entrepreneurial DNA. Our focus is on nurturing leaders in video channels who can produce and distribute high-quality content on a large scale. To streamline product promotion and make communication more efficient, we equip our service managers with new skills, enabling them to kick-start business with nothing more than a mobile phone. We recruit aspiring ordinary people to become video channel leaders, providing them with training in creating product promotional short videos and live streaming, and helping them stay updated with new capabilities. Our video channel leader incubation program, which was piloted in the first quarter, is set for a more extensive rollout in the second quarter. 微信圖文時代創造了雲集,短視頻時代將給大家帶來一個更加生動高效的雲集。
spk03: We hope to be a partner for users to achieve a healthy and beautiful life.
spk05: The WeChat Community event created the community and now the advent of the short video event promises to enrich VNG with greater vibrancy and efficiency. We aspire to be the trusted partner that empowers our users to lead a healthy and beautiful life.
spk03: I will turn the call over to Mr. Cui, our senior financial director, to go through the financial results.
spk02: Thank you, Sean. Hello, everyone. Before I go through our financial results, please note that all numbers that are in the following remarks are in R&D terms, and all comparisons and percentage changes on a year-over-year basis, unless otherwise noted. During the first quarter of 2024, our operations remained relatively steady as we continued to bolster the core process underpinning our operations. Refinements to our inventory management protocols enable us to sustain a consistent level of gross profit. inventory management remains a strategic focal point. We will be monitoring our assorted product categories on a weekly or monthly to optimize stock level. By doing so, we enhance utilization of our assets while more effectively managing our cash flows. At the same time, we are actively making our cash flow management more efficient. Now let's take a close look at our financials. Total revenues were 128 million compared to 179 million a year ago. Revenues from sales of merchandise were 102 million and the revenue for our marketplace business was 24 million. The 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 shorter impact on sales. Despite these changes, our gross margin remained relatively solid at 49.4%. This was due to sustained customer loyalty towards our private labels and our effective product creation strategy. Now let's take a look at our operation expense. Fulfillment expense was 2 million compared to 27 million a year ago. This was primarily driven by a decrease in warehousing and logistics expense due to lower merchandise sales and reduced the total cost resulting from staffing structure optimization. Sales as a marketing experience decreased to 26 million from 13 million a year ago. This was primarily a result of a decline in member management fee partially offset by an increase in business promotion expense. Technology and contact expense were 13.3 million compared to 13.4 million years ago. The decrease were mainly due to reduced service cost. General and administrative expense were 14.9 million compared to 15.2 million years ago. This was mainly due to the reduction in personal cost resulting from staff Structural refinement partial sets are increased in the allowance for credit loss. Total operation expense in the first quarter decreased to $76 million from $85 million in the same period of 2023. Loss from operations were $9 million compared to income from operation of $1 million a year ago. Net income was $4 million compared with the net loss of 23 million years ago, while adjusted net income was 3 million compared with adjusted net loss of 27 million years ago. Basic and diluted net income per share attributable to ordinary shareholders were bolder compared with basic and diluted net loss per share of 0.01 in the same period of 2023, turning to liquidity as of March 31, 2024. We have a total of $505 million in cash and cash equivalents, restricted cash, and short-term investments on our balance sheet, compared to $552 million of December 31, 2023. Our liquidity assets is sufficient to cover our payable obligations, and we do not hold 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. To sum up, the first quarter makes important progress on the road to realizing our long-term strategy goals, our ongoing improvements in inventory management, along with our dedication to sustainable and effective access management. We are pivotal to this advancement. Moving forward, we will focus on further enhancing our efficiency and to strengthen our company's resilience and adaptability. Our strategy positions are to effectively address future challenges and seize emerging opportunities in the evolving examiner landscape. This concludes our prepared remarks for today. Operator, we are now ready to take questions.
spk00: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star 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. Our first question is from the line of Ethan Yu from First Trust Group. Please go ahead.
spk04: Hi, Yiming. Thank you for accepting my question. Just now, Mr. Xiao mentioned the short videos and live broadcasts of our company. Can you share in detail the differences between these platforms and other platforms? Hi, good evening. Thanks for taking my question. The management just mentioned our progress in short video and live streaming. Could you share more details about how we differ from other platforms in this area?
spk03: Thank you. 谢谢您的提问。 Thank you for your question. We use low-price, low-quality products to sell fresh goods and drinks.
spk05: Firstly, we will select every commodity of an oil category and ensure they are cost-effective. We do not resort to selling low-price, low-quality clearance items to draw traffic.
spk03: In fact, while we are short-video content creators, we are also many product developers. Secondly, we are not only content creators, but also developers of numerous commodities. Our team engages from the inception of the product project, actively participating in the traceability of the origins
spk05: production and selection of packaging materials. This hands-on approach creates us with a deeper understanding of the commodities and a more tangible grasp of the entire commodity chain compared to other content producers.
spk03: In addition, from the most critical human point of view, Yunji's short-term strategy, whether in terms of production or distribution, is based on the number of people. to assist individual entrepreneurs and make our content more inclusive.
spk05: At the most critical human level, WinG's short video strategy encompassing both content production and distribution is rooted in an ordinary people-centric approach, facilitating individual entrepreneurship and rendering our content more accessible.
spk03: This is the biggest difference between us and other platforms.
spk05: And also, all these have been differentiated us from other competitors. Thank you for your question.
spk04: Okay, got it. Thank you.
spk00: Thank you. 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.
spk01: 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.
spk00: Thank you. This conference is now concluded. Thank you for attending.
Disclaimer