Yunji Inc.

Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Yunji's first half 2026 earnings conference call. With us today are Mr. Shanglue Xiao, Chairman and Chief Executive Officer, and Ms. Nan Song, 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 meeting 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 invoke known or unknown risks, uncertainties, and other factors of ENG and its 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 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 cautionary statements, risk factors, and details of its filing with the SEC. The company does not undertake any obligation to update these statements, except as required under applicable law. With that, I will now turn the call over to Mr. Shanglue Xiao, Chairman and CEO of Yunji. Please go ahead, sir.

Hello, investors, analysts, and friends. Thank you for your continued support and attention to Yunji. In the first half of 2026, the market environment was still challenging, but we adhered to the strategic positioning Hello everyone, welcome to ING's earnings course. Thank you for your continued interest and support. The market environment remains challenging in the first half of 2026, but we stayed firmly committed to our strategic positioning as a leader in organic living.

advancing our products and experience through energy strategy as we continue to deepen our presence in the organic health living market. I will now walk you through the company's financial performance and strategic execution.

Let me begin by sharing some financial highlights.

which reflect our proactive approach to optimizing our structure and improving quality and efficiency.

上半年公司总收入为人民币9630万元,同比有所下滑。 这是我们主动优化产品组合清退低效第三方商家带来的结构性调整。 现阶段资源商品在整体销售额中的占比逐步提升到70%, 其中只有品牌的销售额占到56%。 Total revenue for the first half was 96.3 million RMB compared with 158.3 million RMB in the first period last year. This reflects the structural adjustment from our proactive efforts

to optimize the merchandise mix, including discontinuing relationships with certain third-party merchants whose offerings did not meet our enhanced product standards. While this affected our near-term revenue, we believe it has strengthened our merchandise mix in support of our long-term strategy. Self-operated merchandise now accounts for approximately 70% of the total sales, of which private label products account for 56%. Private label products with high margins are increasingly becoming the core support for our revenue, while our exponential initiatives such as supply chain traceability continue to strengthen customer engagement and maintain stable customer retention, supporting improved profitability and long-term development.

同时,毛利率水平保持稳健,亏损收在成效显著。 本期综合毛利率维持在41%左右。 At the same time, our growth margin remained resilient and our losses narrowed significantly.

Gross margin for the period held steadily at approximately 41% and the net loss for the first half narrowed to 72.4 million RMB, a substantial improvement compared with the same period last year. This reflects our continued display in cost management and operational efficiency as we directed resources toward high retention, high margin private label products, and toward enhancing the user experience. We remain confident in our path to improve the profitability.

接下来让我来向大家介绍上百年的业务开展情况。 Let me walk you through our business progress in the first half.

我们的战略核心是打造有机健康,有机食品和美妆护肤产品矩阵, 并向钥匙同源产品衍生,配合产品与体验双引擎, 赋能云集有机健康生态。 Our strategy rests on two engines, product and experience. On the product side, we continue to build out our organic health, organic food, and beauty and skincare metrics, with food and medicine homology products as a growing focus within organic health. Together, our product and experience dual-engine approach powers Inc.'s organic health ecosystem.

In the organic health segment, we continue to grow in the big health field. The focus is to set up a key union track, in line with the health needs of modern families. Our first star product in the key union track is golden tea. The product was officially launched in the fourth quarter of 2025, relying on the quality and delicate processing process of the original production land after being read by the sky, and the market feedback after the launch is far exceeding expectations, and quickly becomes a key union product line sponsor. In our organic health segment, we continue to deepen our presence in the broader health and wellness market with a particular focus on food-managing homology products that address the health needs of the modern families in China. Our first flagship product in this category is

is a Polygonic 20, which launched in the first quarter of 2025. Supported by premium origin sourcing, genuine quality, and refined processing techniques, the product received market feedback that exceeded our expectations. It quickly became a key growth driver of our food medicine homology product line. In the first half of 2026, and Li Ge-nei Shen-ti delivered rapid sales growth and successfully validated a complete growth model. This demonstrates that our product strategy for entering the Chinese wellness and health market has a long-term market potential.

In the organic food section, we integrate the organic concept into the user's one-day, three-day meal scene, especially the most important breakfast of the day, and open the daily high-end consumption scene. As a flow input cut-off,

In our organic food segment, we have integrated our organic philosophy into consumers' daily meal occasions, particularly breakfast, the most important meal of the day. By capturing a high-frequency daily consumption occasion, we have established an effective customer acquisition channel together with our organic house product. These are forms of complementary product portfolio that balances high and low frequency consumption patterns and short and long-term consumption cycles.

In the makeup section, we still insist that consumers provide high quality makeup products. In the current market environment, rational consumers prefer high quality products. The brand positioning has been in line with this trend for a long time, so it has been recognized by consumers. In our beauty segment, we remain focused on offering customers high-quality, high-value skincare and beauty products. In the current market environment, increasingly rational consumers

Thank you for joining us. has continued to receive positive feedback from consumers and achieved 29% sequential sales growth in the first half of this year.

全链路溯源体验是云集区别于传统货架式电商的核心竞争力 也是云集构筑用户粘性护身盒的重要抓手 溯源让品质不再是抽象的概念 而是用户可感知可验证的真实体验 上半年我们持续加大供应链溯源相关投入 所有的动作围绕着强化用户信任 . . . . . This proves that our strategy of building a digital experience and enhancing the user experience is efficient and feasible. It is worth our long-term persistence.

End-to-end supply chain traceability experience is a core competitive advantage that sets Wingy apart from traditional e-commerce platforms. This is also a key method in building our customer loyalty. Our traceability experience turns product quality from an abstract concept into something users can see and verify for themselves. In the first half of 2026, we continued to increase our investment in supply chain traceability experience, with all of our initiatives focused on strengthening user trust and improving repurchase conversion. In total, we conducted approximately 30 traceability events during a period, and these events collectively delivered strong sales conversion. For example, a traceability event for our Bai Yue Shan Birch Sap product held on April 13th drove the product's first-half sales up 128% year-over-year and 146% compared with the second half of 2025. Similarly, a traceability event for Bai Yue Shan Wolfberry Peru held on June 17th drove the product's first-half sales up 13% year-over-year and 366% compared with the second half of 2025. These results confirm that our traceability experience strategy is effective in strengthening user engagement, reinforcing our confidence in pursuing this approach over the long term.

In the future, we will continue to optimize product verification, upgrade the health layout, and increase the key to the health track. We will support the high-power, high-sufficiency single-seater, from the root source optimization to the profit structure, Looking ahead, we will continue to refine our product metrics, expand our food medicine terminology offerings,

and a channel more resources into high margin, high repurchase items to support a continued margin improvement. At the same time, we will continue to strengthen our differentiated experimental offerings to build user trust and a durable brand mode. We will also maintain our discipline in cost management, carefully evaluating our asset and expense structure to ensure resources are allocated in support of our long-term strategic priorities. Ultimately, our goal is to provide better organic health living solutions for families across China and to create greater social value.

感谢各位的持续关注和支持,面对复杂的市场环境,我们对既定战略方向充满信心,将继续以用户价值为核心,平衡增长与盈利,推动公司实现长期可持续发展。

Thank you for your continued interest and support. Despite a complex market environment, we remain confident in our strategic direction and we will continue to put user value at the center of our approach as we balance growth and profitability to drive the company's long-term sustainable development.

This concludes my prepared remarks for today.

I will now hand it over to Ms. Nan Song, our senior financial director, to walk you through the financial details.

Thank you, Shanglue. Hello, everyone. Before I go through our financial results, please note that our numbers stated in the following remarks are in RMB terms, and our comparisons and percentage changes are on a year-over-year basis. Otherwise noted. In the first half of 2026, the market environment remained challenging. As Song Wei outlined, we stay firmly committed to our strategic position as a global leader in organic living. Advancing our products and experience, due to our strategic support by our relevant financial position, we remain disciplined in cost management and made timely adjustments to adapt to these conditions. Now let's take a close look at our financials. Total revenues were $96.3 million compared to $158.3 million in the same period a year ago. Revenues from sales of merchandise were $82.4 million, and revenues from our marketplace business were $13.7 million. The change in our total revenues for the period was primarily driven by softer consumer spending amid a broader macroenvironment in China. Together with our choice to stay aligned with the organic health philosophy guiding our business as part of the effort, we also proactively accepted certain did not align with our standard filters, sharpening our merchandise mix in support of our private label and organic housing priorities. Given this strategic decoration, we had a anticipated this effect on our revenue backdrop for the period. And we continue to believe it represents the right long-term path for the business. On the cost side, total cost of revenues decreased by 31.9% to RMB 56.8 million, primarily due to the low merchandise sales which are recognized on a growth basis, excluding the impact of direct recognition of incentive payables to inactive members, which carries no associated cost of revenue. Our growth margin remained resilient at 41% during the period. This is supported by our continued focus on selecting premium high retention categories together with our provider-level products. Now let's take a look at our operating expenses. Fulfillment expense decreased to $10.3 million from $28.6 million in the same period a year ago. The decrease was primarily driven by lower or Hotting and Logistics Expenses resulting from reduced merchandise sales. Together with long personal costs from staffing, structure, refinement, sales and market expenses were 39.5 million compared to 50.1 million in the same period a year ago. The change is primarily due to long-term management fees and reduced business promotion Technology and content expenses were $12.4 million compared to $15.3 million in the same period a year ago. This was mainly due to the reduction in personal costs as a result of continued staffing structural reform. General and administrative expenses decreased to $47.5 million from $93.4 million in the same period a year ago. The decrease was mainly driven by reduction in loss for credit loss on the third-party low receivable and partially offset by increasing impediment for property and equipment. Our executive plan extended across nearly every category this period, with year-over-year reduction Black team both as more merchandise space and our ongoing staffing and cost efficient measures. As a result, totally operating expenses in the first half of 2026 decreased to $109.7 million from $139.4 million in the same period of 2025, a 38.8% reduction. respectively, lost from operation levels significantly to $39.4 million from $100.4 million in the same period a year ago. This expense display supports our continued progress toward profitability, even as revenue faster pressure from the software environment disappeared earlier. Net loss was 72.4 million compared with 100.7 million a year ago, while adjusted net loss was 72.3 million. Compared with 100.5 million a year ago, the year-over-year level of both net loss and adjusted net loss reflects our expected strength together with our continued focus on stressing customer engagement and maintaining a stable and Xiaoxiang Liu. with structural cash and short-term investment on our balance sheet. Compared to $216.1 million as of December 31, 2025, we maintained sufficient liquidity to meet our payable obligations while continuing to optimize working capital and manage our assets efficiently in support of our operations. Looking at the first half as a whole, in the ghastly and strongly-argued environment, we made future progress on cost display and narrowed our loss on a year-over-year basis. This reflector will continue execution of the subjective priorities shown in the outline. Our discipline in cost management and our focus on organic health and provide label products. Our solid financial position continues to support these priorities and will remain a discipline in how we manage costs and allocate in support of our strategic position as a leader in organic health living. Looking forward, we will remain focused are improving our operation margin as we balance growth and profitability in support of the company's long-term sustainable development.

This concludes our prepared remarks for today. Thank you. Operator, are you listening?

That brings us to an end of today's call. Thank you for attending, you may now disconnect