Yunji Inc. (“Yunji” or the “Company”) (NASDAQ: YJ), a leading membership-based social e-commerce platform, today announced its unaudited financial results for the first quarter ended March 31, 2021.
First Quarter 2021 Highlights
- Total revenues in the first quarter of 2021 were RMB675.4 million (US$103.1 million), compared with RMB1,649.2 million in the same period of 2020, primarily due to the Company’s focus on upgrading its strategy of carefully curating products through the implementation of its megahit product pool initiative to refine its product selections across all platform categories, which is in line with the Company’s long-term growth plan. During the refinement process, the Company made adjustments to optimize its selection of suppliers and merchants across its platform, which caused sales decreases in both its marketplace business and merchandise sales.
- Repeat purchase rate in the twelve months ended March 31, 2021 was 80.6%.
Mr. Shanglue Xiao, Chairman and Chief Executive Officer of Yunji, said, “During the first quarter, we continued to pave the way for our long-term and sustainable growth by upgrading our product curation strategy. More specifically, this involved launching our megahit product pool initiative to introduce more products with strong repurchase potential and customer appeal as well as refining our product selections across all of our platform categories. Our progress on the product side and prioritization of lasting growth over short-term sales improvements have already garnered positive feedback from our loyal members and service managers. Looking ahead, as we continue to position our platform as the go-to location for members to purchase high-quality and cost-effective products, our service managers will be more motivated to receive additional benefits through sharing and engagement. We remain confident that such efforts will lead to more win-win relationships between our ecosystem participants as well as the healthy growth and development of our platform over the long run.”
“As we continued to upgrade and enhance our portfolio of product offerings, we also remained focused on improving our cost structures, achieving better operating efficiency, and maintaining a healthy financial profile. Going forward, we will stay disciplined in cost management while our new and improved product curation strategy will continue to fuel our long-term growth, allowing us to form more mutually beneficial partnerships with suppliers and thus generate greater shareholder value.” said Mr. Chengqi Zhang, Vice President of Finance of Yunji.
First Quarter 2021 Unaudited Financial Results
Total revenues were RMB675.4 million (US$103.1 million), compared with RMB1,649.2 million in the same period of 2020. This decrease was primarily due to the Company’s decision to upgrade its strategy of carefully curating products starting from the first quarter of 2021. As part of these upgrades, the Company launched its megahit product pool initiative, which focused on introducing more products with strong repurchase potential and customer appeal, and refined product selections across all product categories on its platform. During the refinement process, the Company made adjustments to optimize its selection of suppliers and merchants across its platform, which caused sales decreases in both its marketplace business and merchandise sales.
- Revenues from sales of merchandise, net decreased by 60.4% to RMB571.9 million (US$87.3 million) from RMB1,445.9 million in the same period of 2020.
- Revenues from the membership program were nil, compared with RMB25.1 million in the same period of 2020. From January 2020 until the end of March 2021, the Company allowed any user to become a member and enjoy membership benefits free of charge for one year by simply registering for an account on the Yunji app. The Company continued to grant free membership benefits to such members during the first quarter of 2021. As a result, there was no membership revenue in the first quarter of 2021, while membership revenues in the first quarter of 2020 were all from the deferred revenue of prior paying members. The Company has ceased allowing users to become members free of charge since April 1, 2021.
- Revenues from the marketplace business were RMB95.4 million (US$14.6 million), compared with RMB158.1 million in the same period of 2020.
- Other revenues decreased by 59.6% to RMB8.1 million (US$1.2 million) from RMB20.1 million in the same period of 2020.
Total cost of revenues decreased by 61.7% to RMB439.4 million (US$67.1 million), or 65.1% of total revenues, from RMB1,148.0 million, or 69.6% of total revenues, in the same period of 2020. The decrease was mainly attributable to the decline in merchandise sales, which recognize revenues on a gross basis. Total cost of revenues was mainly comprised of those costs related to the sales of merchandise revenue in the first quarter of 2021.
Total operating expenses decreased by 47.8% to RMB272.7 million (US$41.6 million) from RMB522.9 million in the same period of 2020.
- Fulfillment expenses decreased by 53.0% to RMB64.8 million (US$9.9 million), or 9.6% of total revenues, from RMB138.1 million, or 8.4% of total revenues, in the same period of 2020. The decrease was primarily due to: (i) reduced warehousing and logistics expenses due to lower merchandise sales, and (ii) reduced personnel costs due to staffing structure refinements.
- Sales and marketing expenses decreased by 61.7% to RMB96.3 million (US$14.7 million), or 14.3% of total revenues, from RMB251.7 million, or 15.3% of total revenues, in the same period of 2020. The decrease was mainly due to the decreases in member management fees and business promotion expenses.
- Technology and content expenses decreased by 35.3% to RMB37.5 million (US$5.7 million), or 5.6% of total revenues, from RMB57.9 million, or 3.5% of total revenues, in the same period of 2020. The decrease was mainly due to the reduction in personnel costs as a result of staffing structure refinements.
- General and administrative expenses decreased by 1.5% to RMB74.1 million (US$11.3 million), or 11.0% of total revenues, from RMB75.2 million, or 4.6% of total revenues, in the same period of 2020, primarily due to a decrease in share-based compensation expenses.
Loss from operations was RMB19.8 million (US$3.0 million), compared with RMB6.1 million in the same period of 2020.
Financial income, net was RMB20.5 million (US$3.1 million), compared with financial loss, net of RMB9.8 million in the same period of 2020, primarily due to a gain of RMB15.9 million (US$2.4 million) from the fair value change of equity securities with readily determinable fair value in the first quarter of 2021, compared with a loss of RMB23.4 million from the fair value change of equity securities with readily determinable fair value in the same period of 2020.
Net loss was RMB4.0 million (US$0.6 million), compared with RMB13.2 million in the same period of 2020.
Adjusted net income (non-GAAP) was RMB17.1 million (US$2.6 million), compared with RMB26.1 million in the same period of 2020.
Basic and diluted net loss per share attributable to ordinary shareholders were both nil, compared with RMB0.01 in the same period of 2020.
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.
The Company will host a conference call on Thursday, May 27, 2021, at 7:00 AM Eastern Time or 7:00 PM Beijing/Hong Kong Time to discuss its earnings.
In advance of the conference call, all participants must use the following link to complete the online registration process. Upon registering, each participant will receive important details for this conference including the call date and time, a unique registrant ID, and a set of participant dial-in numbers to join the conference call.
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
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.