Yunji Announces Third Quarter 2022 Unaudited Financial Results

Rhea-AI Summary

Yunji Inc. (NASDAQ: YJ) reported Q3 2022 revenues of RMB238.9 million (US$33.6 million), a significant decrease of 45.4% year-over-year, primarily due to reduced consumer spending and ongoing product refinement strategies. The gross margin improved to 49.4%, up from 43.2% in Q3 2021. The company recorded a net loss of RMB38.2 million (US$5.4 million) compared to a net income of RMB61.4 million the prior year. Despite these challenges, management emphasized a focus on cost control and operational efficiency moving forward.

Positive

• Gross margin improved to 49.4% from 43.2% year-over-year.
• Total cost of revenues decreased by 51.4%, indicating enhanced operational efficiency.

Negative

• Revenues decreased by 45.4% compared to Q3 2021.
• Net loss was RMB38.2 million, a stark contrast to net income of RMB61.4 million in Q3 2021.

HANGZHOU, China, Nov. 29, 2022 /PRNewswire/ -- Yunji Inc. ("Yunji" or the "Company") (NASDAQ: YJ), a leading membership-based social e-commerce platform, today announced its unaudited financial results for the third quarter ended September 30, 2022^[1].

Third Quarter 2022 Highlights

• Total revenues in the third quarter of 2022 were RMB238.9 million (US$33.6 million), compared with RMB437.9 million in the same period of 2021. The decrease was primarily due to the Company's continued strategy to refine its product selection across all categories and optimize its selection of suppliers and merchants, causing near-term decreases in sales, and a decline in consumers' willingness to spend on discretionary products in the third quarter of 2022, compared with that in the same period of 2021^[2].
• Repeat purchase rate^[3] in the twelve months ended September 30, 2022 was 78.7%.

Mr. Shanglue Xiao, Chairman and Chief Executive Officer of Yunji, said, "The challenging macro environment and ongoing strict pandemic control measures continued to act as headwinds during the third quarter of 2022. Nevertheless, we strengthened and enhanced our platform infrastructure by remaining focused on executing our product curation strategy while proactively fine-tuning our operating strategy. In addition, we further optimized our sales channels by leveraging big data analysis to improve our services. We continued to add value to our customers by providing increased support to our service managers to ensure that they always provide professional and in-depth service to our customers. Furthermore, we cultivated our vertical offerings by increasing the proportion of healthcare products with high repurchase rates and affordably-priced, high-quality products in our product mix."

"In the third quarter of 2022, we further improved our gross margin to 49.4% compared with 43.2% in the same period of 2021. At the same time, we continued to optimize our cost structure to improve operational efficiency. Going forward, we aim to maintain a healthy balance sheet by retaining our sharp focus on cost controls and cash flow management." said Mr. Peng Zhang, Yunji's Vice President of Finance.

Third Quarter 2022 Unaudited Financial Results

Total revenues were RMB238.9 million (US$33.6 million), compared with RMB437.9 million in the same period of 2021. This decrease was primarily due to (i) the Company's continued strategy to refine its product selection across all categories and optimize its selection of suppliers and merchants, causing near-term decreases in sales, and (ii) a decline in consumers' willingness to spend on discretionary products in the third quarter of 2022 compared with that in the same period of 2021^[2].

• Revenues from sales of merchandise were RMB196.9 million (US$27.7 million), compared with RMB365.5 million in the same period of 2021.
• Revenues from the marketplace business were RMB38.1 million (US$5.4 million), compared with RMB64.7 million in the same period of 2021.
• Other revenues were RMB3.9 million (US$0.5 million), compared with RMB7.7 million in the same period of 2021.

Total cost of revenues decreased by 51.4% to RMB120.9 million (US$17.0 million), or 50.6% of total revenues, from RMB248.6 million, or 56.8% of total revenues, in the same period of 2021. The decrease was mainly attributable to the decline in merchandise sales, for which revenues are recognized on a gross basis. Total cost of revenues was mainly comprised of the costs related to the sales of merchandise in the third quarter of 2022.

Total operating expenses decreased by 28.5% to RMB138.5 million (US$19.5 million) from RMB193.8 million in the same period of 2021.

• Fulfillment expenses decreased by 9.1% to RMB36.9 million (US$5.2 million), or 15.4% of total revenues, from RMB40.6 million, or 9.3% of total revenues, in the same period of 2021. The decrease was primarily due to (i) reduced warehousing and logistics expenses due to lower merchandise sales, and (ii) decreased service fees charged by third-party payment settlement platforms.
• Sales and marketing expenses decreased by 21.5% to RMB47.0 million (US$6.6 million), or 19.7% of total revenues, from RMB59.8 million, or 13.7% of total revenues, in the same period of 2021. The decrease was mainly due to (i) the reduction in personnel costs as a result of staffing structure refinements, and (ii) a decrease in member management fees, partially offset by an increase in private label promotion expenses.
• Technology and content expenses decreased by 41.7% to RMB16.6 million (US$2.3 million), or 7.0% of total revenues, from RMB28.5 million, or 6.5% of total revenues, in the same period of 2021. The decrease was mainly due to (i) the reduction in personnel costs as a result of staffing structure refinements, and (ii) reduced cloud services costs.
• General and administrative expenses decreased by 41.4% to RMB38.0 million (US$5.3 million), or 15.9% of total revenues, from RMB64.8 million, or 14.8% of total revenues, in the same period of 2021, primarily due to (i) reduced personnel costs as a result of staffing structure refinements, (ii) lower professional service fees, and (iii) a decrease in share-based compensation expenses.

Loss from operations was RMB17.9 million (US$2.5 million), compared with income from operations of RMB17.6 million in the same period of 2021.

Financial income, net was RMB0.3 million (US$0.04 million), compared with financial loss, net of RMB30.1 million in the same period of 2021, primarily due to an increase in interest income, partially offset by interest expense and loss from fair value changes of equity securities investments.

Net loss was RMB38.2 million (US$5.4 million), compared with net income of RMB61.4 million in the same period of 2021.

Adjusted net loss (non-GAAP)^[4] was RMB29.6 million (US$4.2 million), compared with adjusted net income of RMB76.3 million in the same period of 2021.

Basic and diluted net loss per share attributable to ordinary shareholders were both RMB0.02, compared with basic and diluted net earnings per share attributable to ordinary shareholders of RMB0.03 in the same period of 2021.

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses adjusted net income/(loss) as a supplemental measure to review and assess operating performance. The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company defines adjusted net income/(loss) as net income/(loss) excluding share-based compensation.

The Company presents adjusted net income/(loss) because it is used by management to evaluate operating performance and formulate business plans. Adjusted net income/(loss) enables management to assess operating performance without considering the impact of share-based compensation recorded under ASC 718, "Compensation-Stock Compensation." The Company also believes that the use of this non-GAAP measure facilitates investors' assessment of operating performance.

This non-GAAP financial measure is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. The non-GAAP financial measure has limitations as an analytical tool. One of the key limitations of using adjusted net income/(loss) is that it does not reflect all items of income and expense that affect the Company's operations. Share-based compensation has been and may continue to be incurred in Yunji's business and is not reflected in the presentation of adjusted net income/(loss). Further, this non-GAAP measure may differ from the non-GAAP information used by other companies, including peer companies, and therefore its comparability may be limited.

The Company compensates for these limitations by reconciling the non-GAAP financial measure to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. Yunji encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.

For more information on the non-GAAP financial measures, please see the table captioned "Reconciliation of Non-GAAP Measures to the Most Directly Comparable Financial Measures" set forth at the end of this press release.

Conference Call

The Company will host a conference call on Tuesday, November 29, 2022, at 7:00 A.M. Eastern Time or 8:00 P.M. Beijing/Hong Kong Time to discuss its earnings. Listeners may access the call by dialing the following numbers:

International:	1-412-902-4272
United States Toll Free:	1-888-346-8982
Mainland China Toll Free:	4001-201203
Hong Kong Toll Free:	800-905945
Conference ID:	Yunji Inc.

A telephone replay of the call will be available after the conclusion of the conference call for one week.

Dial-in numbers for the replay are as follows:

United States Toll Free	1-877-344-7529
International	1-412-317-0088
Replay Access Code	8403978

Safe Harbor Statements

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "confident," "potential," "continue" or other similar expressions. Among other things, the quotations from management in this announcement, as well as Yunji's strategic and operational plans, contain forward-looking statements. Yunji may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Yunji's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Yunji's growth strategies; its future business development, results of operations and financial condition; its ability to understand buyer needs and provide products and services to attract and retain buyers; its ability to maintain and enhance the recognition and reputation of its brand; its ability to rely on merchants and third-party logistics service providers to provide delivery services to buyers; its ability to maintain and improve quality control policies and measures; its ability to establish and maintain relationships with merchants; trends and competition in China's e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of China's e-commerce market; PRC governmental policies and regulations relating to Yunji's industry, and general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Yunji's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Yunji undertakes no obligation to update any forward-looking statement, except as required under applicable law.

About Yunji Inc.

Yunji Inc. is a leading social e-commerce platform in China that has pioneered a unique, membership-based model to leverage the power of social interactions. The Company's e-commerce platform offers high-quality products at attractive prices across a wide variety of categories catering to the day-to-day needs of Chinese consumers. In addition, the Company uses advanced technologies including big data and artificial intelligence to optimize user experience and incentivize members to promote the platform as well as share products with their social contacts. Through deliberate product curation, centralized merchandise sourcing, and efficient supply chain management, Yunji has established itself as a trustworthy e-commerce platform with high-quality products and exclusive membership benefits, including discounted prices.

For more information, please visit https://investor.yunjiglobal.com/  

Investor Relations Contact

Yunji Inc.
Investor Relations
Email: Yunji.IR@icrinc.com
Phone: +1 (646) 224-6957

ICR, LLC
Robin Yang
Email: Yunji.IR@icrinc.com
Phone: +1 (646) 224-6957

YUNJI INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except for share and per share data, unless otherwise noted)
		As of
		December 31, 2021		September 30, 2022
		RMB		RMB		US$
ASSETS
Current Assets
Cash and cash equivalents		567,204		318,625		44,792
Restricted cash		62,528		36,943		5,193
Short-term investments		380,052		214,995		30,223
Accounts receivable, net (Allowance for credit losses of RMB7,225 and RMB13,812, respectively)		118,166		135,182		19,004
Advance to suppliers		59,437		57,459		8,077
Inventories, net		84,500		79,291		11,147
Amounts due from related parties		2,532		1,193		168
Prepaid expenses and other current assets (Allowance for credit losses of RMB4,791 and RMB4,692, respectively)		430,717		430,386		60,503
Total current assets		1,705,136		1,274,074		179,107
Non-current assets
Property and equipment, net		12,842		162,153		22,795
Long-term investments		381,401		416,057		58,488
Deferred tax assets		17,497		8,643		1,215
Operating lease right-of-use assets, net		5,420		1,819		256
Other non-current assets (Allowance for credit losses of RMB488 and RMB474, respectively)		227,674		141,920		19,951
Total non-current assets		644,834		730,592		102,705
Total assets		2,349,970		2,004,666		281,812

 

 

YUNJI INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(All amounts in thousands, except for share and per share data, unless otherwise noted)
		As of
		December 31, 2021		September 30, 2022
		RMB		RMB		US$
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable		254,839		153,958		21,643
Deferred revenue		105,752		18,605		2,616
Incentive payables to members[5]		265,612		225,994		31,770
Member management fees payable		15,570		12,505		1,758
Other payable and accrued liabilities		202,786		154,585		21,731
Amounts due to related parties		15,630		9,810		1,379
Operating lease liabilities - current		5,571		3,439		483
Total current liabilities		865,760		578,896		81,380
Non-current liabilities
Operating lease liabilities		3,123		1,218		171
Deferred tax liabilities		2,572		-		-
Total non-current liabilities		5,695		1,218		171
Total Liabilities		871,455		580,114		81,551

 

 

YUNJI INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(All amounts in thousands, except for share and per share data, unless otherwise noted)
		As of
		December 31, 2021		September 30, 2022
		RMB		RMB		US$
Shareholders' equity
Ordinary shares		70		70		10
Less: Treasury stock		(44,228)		(77,863)		(10,946)
Additional paid-in capital		7,342,344		7,326,390		1,029,928
Statutory reserve		14,019		14,019		1,971
Accumulated other comprehensive (loss)/income		(15,664)		78,355		11,015
Accumulated deficit		(5,818,645)		(5,917,284)		(831,839)
Total Yunji Inc. shareholders' equity		1,477,896		1,423,687		200,139
Non-controlling interests		619		865		122
Total shareholders' equity		1,478,515		1,424,552		200,261
Total liabilities and shareholders' equity		2,349,970		2,004,666		281,812

 

 

YUNJI INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
(All amounts in thousands, except for share and per share data, unless otherwise noted)
		For the Three Months Ended						For the Nine Months Ended
		September 30, 2021		September 30, 2022				September 30, 2021		September 30, 2022
		RMB		RMB		US$		RMB		RMB		US$
Revenues:
Sales of merchandise, net		365,467		196,928		27,684		1,409,436		724,518		101,851
Marketplace revenue		64,689		38,074		5,352		248,237		127,640		17,943
Other revenues		7,702		3,889		547		26,304		13,263		1,865
Total revenues		437,858		238,891		33,583		1,683,977		865,421		121,659
Operating cost and expenses:
Cost of revenues		(248,581)		(120,933)		(17,001)		(1,058,467)		(481,008)		(67,619)
Fulfilment		(40,571)		(36,885)		(5,185)		(155,523)		(128,866)		(18,116)
Sales and marketing		(59,842)		(46,998)		(6,607)		(217,644)		(155,841)		(21,908)
Technology and content		(28,537)		(16,640)		(2,339)		(98,432)		(64,392)		(9,052)
General and administrative		(64,840)		(38,000)		(5,342)		(181,796)		(100,937)		(14,189)
Total operating cost and expenses		(442,371)		(259,456)		(36,474)		(1,711,862)		(931,044)		(130,884)
Other operating income		22,116		2,669		375		41,687		20,195		2,839
Income/(loss) from operations		17,603		(17,896)		(2,516)		13,802		(45,428)		(6,386)
Financial (loss)/income, net		(30,064)		302		42		(1,783)		(22,709)		(3,192)
Foreign exchange gain/(loss), net		58		(11,295)		(1,588)		(1,019)		(19,008)		(2,672)
Other non-operating income/(loss), net		110,484		(2)		-		118,886		2,061		290
Income/(loss) before income tax expense, and equity in loss of affiliates, net of tax		98,081		(28,891)		(4,062)		129,886		(85,084)		(11,960)
Income tax expense		(29,982)		(9,042)		(1,271)		(40,945)		(13,447)		(1,890)
Equity in loss of affiliates, net of tax		(6,745)		(313)		(44)		(14,601)		(1,642)		(231)
Net income/(loss)		61,354		(38,246)		(5,377)		74,340		(100,173)		(14,081)
Less: net income/ (loss) attributable to non-controlling interests shareholders		511		(7)		(1)		306		(223)		(31)
Net income/(loss) attributable to YUNJI INC.		60,843		(38,239)		(5,376)		74,034		(99,950)		(14,050)

 

 

YUNJI INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME (CONTINUED)
(All amounts in thousands, except for share and per share data, unless otherwise noted)
		For the Three Months Ended						For the Nine Months Ended
		September 30, 2021		September 30, 2022				September 30, 2021		September 30, 2022
		RMB		RMB		US$		RMB		RMB		US$
Net income/(loss) attributable to ordinary shareholders		60,843		(38,239)		(5,376)		74,034		(99,950)		(14,050)
Net income/(loss)		61,354		(38,246)		(5,377)		74,340		(100,173)		(14,081)
Other comprehensive income/ (loss)
Foreign currency translation adjustment		4,149		45,955		6,460		(8,595)		94,019		13,217
Total comprehensive income/(loss)		65,503		7,709		1,083		65,745		(6,154)		(864)
Less: total comprehensive income/(loss) attributable to non- controlling interests shareholders		511		(7)		(1)		306		(223)		(31)
Total comprehensive income/ (loss) attributable to YUNJI INC.		64,992		7,716		1,084		65,439		(5,931)		(833)
Net income/(loss) attributable to ordinary shareholders		60,843		(38,239)		(5,376)		74,034		(99,950)		(14,050)
Weighted average number of ordinary shares used in computing net earnings/(loss) per share, basic and diluted		2,141,585,609		2,068,653,859		2,068,653,859		2,139,142,265		2,108,265,844		2,108,265,844
Net earnings/(loss) per share attributable to ordinary shareholders
Basic		0.03		(0.02)		-		0.03		(0.05)		(0.01)
Diluted		0.03		(0.02)		-		0.03		(0.05)		(0.01)

 

 

YUNJI INC.
NOTES TO UNAUDITED FINANCIAL INFORMATION
(All amounts in thousands, except for share and per share data, unless otherwise noted)
		For the Three Months Ended						For the Nine Months Ended
		September 30, 2021		September 30, 2022				September 30, 2021		September 30, 2022
		RMB		RMB		US$		RMB		RMB		US$
Share-based compensation expenses included in:
Technology and content		1,100		1,072		151		3,781		3,236		456
General and administrative		12,517		7,269		1,022		37,298		18,668		2,624
Fulfillment		809		94		13		594		924		130
Sales and marketing		482		252		35		1,177		60		8
Total		14,908		8,687		1,221		42,850		22,888		3,218

 

 

YUNJI INC.
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE FINANCIAL MEASURES
(All amounts in thousands, except for share and per share data, unless otherwise noted)
		For the Three Months Ended						For the Nine Months Ended
		September 30, 2021		September 30, 2022				September 30, 2021		September 30, 2022
		RMB		RMB		US$		RMB		RMB		US$
Reconciliation of Net income/(loss) to Adjusted Net income/(loss):
Net income/(loss)		61,354		(38,246)		(5,377)		74,340		(100,173)		(14,081)
Add: Share-based compensation		14,908		8,687		1,221		42,850		22,888		3,218
Adjusted net income/(loss)		76,262		(29,559)		(4,156)		117,190		(77,285)		(10,863)

 

 

 

1. This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB7.1135 to US$1.00, the exchange rate in effect as of September 30, 2022 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System.

2. According to the National Bureau of Statistics of China.

3. "Repeat purchase rate" in a given period is calculated as the number of transacting members who purchased not less than twice divided by the total number of transacting members during such period. "Transacting member" in a given period refers to a member who successfully promotes Yunji's products to generate at least one order or places at least one order on Yunji's platform, regardless of whether any product in such order is ultimately sold or delivered or whether any product in such order is returned.

4. Adjusted net income/(loss) is a non-GAAP financial measure, which is defined as net income/(loss) excluding share-based compensation expense. See "Reconciliation of Non-GAAP Measures to the Most Directly Comparable Financial Measures" set forth at the end of this press release.

5. As of September 30, 2022, the decrease in incentive payables was mainly due to derecognition of long-aged payables to inactive members starting this year.

 

 

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SOURCE Yunji Inc.

FAQ

What were Yunji's revenue figures for Q3 2022?

Total revenues were RMB238.9 million (US$33.6 million) for Q3 2022.

How did Yunji's gross margin change in Q3 2022?

Yunji's gross margin improved to 49.4% in Q3 2022, up from 43.2% in the same period of 2021.

What was the net loss reported by Yunji for Q3 2022?

Yunji reported a net loss of RMB38.2 million (US$5.4 million) for Q3 2022.

Why did Yunji's revenues decline in Q3 2022?

The decline was mainly due to a reduced consumer willingness to spend on discretionary products and a strategic product selection refinement.

What are the expectations for Yunji moving forward after Q3 2022?

Yunji aims to maintain a healthy balance sheet by prioritizing cost controls and operational efficiency.