Yunji Inc.

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Eugene's fourth quarter 2024 earnings conference call. With us today are Mr. Shenglu Xiao, Chairman and Chief Executive Officer, along with Mr. Ye-Ti Choi, Senior Financial Director. 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 risk 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 US 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 Mr. Shenglu Xiao, Chairman and Chief Executive Officer of UG. Please go ahead, sir.

大家好,欢迎大家来到云集2024第四季度财报电话会。 Hello everyone, welcome to UG's first quarter 2024 earnings call.

回顾过去一年的经营。 At the same time, facing the future, we will continue to adhere to organic health as an important strategic goal for urgent future development. In 2024, the company's overall labor rate increased by 49.4%, and the user recovery rate maintained a high of 71.9%. Behind these numbers is the consumer's trust in the health and life vote we voted for. But more importantly, it is our special innovation to new management. In the past year, we have strengthened the organizational structure of the company,

Looking back at our operations over the past year, while focusing on the future, we continue to firmly position organic house as the key strategic objective for our future development. In 2024, our overall gross margin improved to 49.4%, while our user repurchase rate maintain a strong 71.9%. Behind these numbers lies the trust our consumers have placed in us through their votes for healthy living. But more important than numbers is our complete operational alignment. Over the past year, we have enhanced 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.

今年3月,我们完成了云集健康业务和云集健险业务的合并。 这项重大的业务合并让我们可以更好地为用户提供可信赖的健康生活解决方案。 用真溯源、真体验、真分享、夯实信任链条,让有机健康走进亿万家庭。 In the field of organic health strategy, the organic health products of free brands gradually gained the trust of users. For example, Jinqiu Yishengjun in the first quarter of 2024 and the first quarter of 2025 received nearly 5 million yuan and 6 million yuan in sales. In addition, the new Qingran coffee launched in March this year gained the high recognition of consumers as soon as it was listed. It only lost more than 500 yuan in sales in half a month.

This March, we completed the consolidation of an all-house business and a VNG select business. These significant moves enable us to better provide trusted, healthy living solutions for our users, strengthening our trust chain through true traceability, authentic experiences, and genuine sharing, bringing organic health to millions of households. Under our commitment to our organic health strategy, our private label organic health products have gradually earned user trust. For example, our ProBioDisc bonus achieved sales of nearly 5 million RMB in the first quarter of 2024 and over 6 million RMB in the first quarter of 2025. Additionally, our new light swimming coffee, launched at the end of March this year, immediately gained high consumer recognition, generating sales of over 5 million RMB in just half a month after its launch.

我们还将继续发力打着树叶品牌。 经过2024年和今年第一季度的努力, 我们完成了从品牌话语体系到品牌视觉体系的全面战略升级, 秉承让前沿科技互呼走进大众生活的品牌使命。 We'll see you next time. We will continue to strengthen our private label brand, Suye.

Through our efforts in 2024 and the first quarter of this year, we have completed a strategic upgrade from Suye's messaging to its visual identity. Upholding the brand mission of bringing advanced skincare technology into your daily routine, Suye 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 Suye, we are building complete product lines around our flagship innovations, to deliver exceptional value and drive growth. In 2024, we launched our Suya Pro S-Wing Firming Series, a premium yet affordable line that generated over 20 million RMB in total sales, a testament to the strong demand for high-value skincare solutions. Building on this success, we are expanding this series in 2025 with the launch of Suya Pro S-Wing Firming Essence Lotion, a highly competitive flagship product. This new addition will further enhance the both-wheeling series, solidifying its position as a go-to choice for customers seeking advanced skincare without premium price tags.

确定我们振奋的是私运中的茶疗养生体验项目, 健身茶疗项目。 This is a new model of tea treatment in 2025, which is built by Yunji. It includes a 80-minute experience including tea, national studies, meditation, and deep meditation. The new tea treatment project has achieved a lot of performance in the private sector. More than 150 tea users participated in the first batch. 91% of users participated in the high-end courses. Moreover, some users participated in the tea treatment and health courses for hundreds of days in a row. In April of this year, we plan to recruit 1,000 tea users. We are thrilled to introduce our new business initiative,

for 2025, the Jianxing Tea Therapy Program, a unique wellness experience designed to deliver exceptional value while promoting holistic health. This meticulously crafted 18-minute program combines tea tasting, traditional Chinese studies, meditation, and stretching lessons, offering participants a deeply enriching wellness journey. During its trial phase, The program achieved remarkable success, with 91% of its first 150 participating tea enthusiasts pretending for frequent sessions. Some users even attended morning tea courses for 100 consecutive days, highlighting the program's ability to build strong user loyalty and engagement. This April, we plan to recruit 1,000 tea enthusiasts to join the program. On March 20, the Dianxin Tea Therapy Program will officially launch, and by June, we aim to train and onboard 100 skilled tea therapists. By combining high-margin products 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.

新的一年,云集将继续聚焦全球有机生活的引领者的定位, 至于有机健康食品,健康科技护肤品。 在过去一年,大幅降低运营成本的技术上, 持续优化产品结构,打造超级单品, 将产品矩阵向高毛利高速购物, Thank you very much.

In 2025, Minji remains committed to its vision as the global leader in organic living, focusing on delivering high-value organic health foods and great 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. Our strategy centers on shifting towards high margin, high repurchase rate products to enhance profitability and achieve break-even. Beyond product sales, WinG is evolving into a service experience platform, embracing the promising opportunities of the silver economy. Our innovative tea 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.

我今天的分享就到这里,下面欢迎我们的财务总监, 财务高级总监崔叶青为大家分享财务的情况。 With that, I will hand it over to Mr. Cui, our senior financial director, to go through the financial results.

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 RMB terms. and all comparisons and percentage change on year-over-year basis unless otherwise noted. During the first quarter of 2024, 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. However, These long-term strategic cost-saving measures were partially offset by increase in near-term expense, including several costs which affect our bottom line. Despite these changes, these actions represented critical progress toward building a more efficient operational framework for the future. Now, let's take a close look at our financials. Total revenue were $197.1 million compared to $149.1 million a year ago. Revenues from sales and merchandise were $75.5 million and the revenues from our marketplace business were $19.4 million. 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 shorter impact on sales. Despite these changes, our gross margin remained relatively strong at 48.3%, mainly due to continued 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 $16.4 million compared to 24.8 million a year ago. This decrease was mainly due to reduced 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 market expense were 38.2 million compared to 28.5 million a year ago, The increase was primarily due to an increase in business promotion expense. Technology and contact expense were $8.5 million compared to $12 million a year ago. This was largely due to the reduction in personal costs as a result of staffing structure refinements and reduced server costs. General and administrative expense were 71.1 million compared to 44.5 million a year ago. This was mainly due to several payments from our staff. Restrictions on employment charges on long-lived assets. Total operation expense in the first quarter increased to 126.2 million from 109.8 million. In the same period of 2020, loss for operation was compared to 39.5 million a year ago. Net loss was 85 million compared with 65.9 million a year ago, while adjusted net loss was 84.5 million compared with 65 million a year ago. Basic and diluted net loss 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 December 31, 2024, we had a total of $242.8 million 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 smartly managing our assets to better support our operations. In summary, as we enter 2025, we will maintain financial discipline while investing strategically to drive sustainable growth and improve profitability. The restrictions undertaken in 2024 has provided us with a more streamlined operation foundation. 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 disciplined approach to cost management coupled with our effective product curation strategy will enable us to navigate the current market conditions and position us for improved performance in the future. This concludes our prepared remark for today. Operator, we are now ready to take questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're 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. And now the time will pause momentarily to assemble our roster. And your question will come from Megan Wang, investor. Please go ahead, ma'am.

Hello. Thank you for accepting my question. 是否可以进一步介绍一下即将上线的践行茶疗项目? Can you provide more color about the upcoming践行T3P project?

谢谢您的提问。 我来简单介绍一下我们的践行茶疗项目。 我们即将于5月份推出的践行茶疗项目。 出发点是为了让我们的用户能够为他们提供产品加 Thank you for your question.

Let me share more about our Jianxing Tea Therapy product. And this project is going to be launched in May, and it aims to It allows our users to enjoy a space where people can calm their minds, calm down their body and soul, and embrace a healthy lifestyle. And what makes this unique is our production plus the ritualized service model, which creates a complete experience, not just a tea, but a journey towards wellness.

Taiyan is a very important historical heritage for our Chinese people. 我们的静心茶经过我们精心的挑选, 最终选择了荣获多国有机认证的五一山高山云雾有机红茶, 远自五一山脉传统的产区, 色泽乌黑油润,茶汤柔顺干净。 Tea itself holds deep cultural significance for us as the Chinese people.

For Jingting tea, we carefully selected a world-winning organic black tea from Wuyi Mountain, It is certified organic by multiple countries and 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 tea therapy ritual, which is an 18-minute experience divided into three parts, 20 minutes of traditional stretching,

40 minutes of tea tasting and meditation with Dianxing tea, and 20 minutes of sharing instructions with fellow participants. 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 classical studies. to help participants achieve self-awareness and inner harmony.

通过整个的茶疗仪式,可以让我们的茶友, 气血通畅,五行驱逐,格物自知, 达到增强体力,清心脑力和滋养心力的效果。 健心即是自良知,为善取恶是格物自善者自良知。 我们用茶疗,祝福过往,归于当下, 追求更多人的幸福。

Through this ritual, partisans can improve blood circulation and gain insights into themselves, all while boosting physical strength, refreshing their minds and nourishing their hearts. The name Jianxing itself refers to this philosophy. It means achieving innate knowledge of the good. 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.

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.