Yunji Inc. ($YJ)

Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Yunji's Second Half 2025 Earnings Conference Call. With us today are Mr. Shanglue Xiao Chao, Chairman and Chief Executive Officer; and Mr. Nan Song, Chief Financial -- or 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 solely on the company's current expectations and current market operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors of Yunji 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 U.S. 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 it over to Mr. Shanglue Xiao, Chairman and CEO of Yunji. Please go ahead, sir.

[Interpreted] Hello, everyone, and welcome to Yunji's earnings call. Thank you for your continued interest and support. Yunji has remained committed to a strategic positioning of becoming a global leader in organic healthy living while making steady progress in the organic and healthy living market. In the second half of 2025, we continue to refine our premium product strategy, further strengthen customer loyalty and actively explore and expand our sales channels. Now let me walk you through the company's financial performance and strategic execution. In the second half of 2025, the company achieved total revenue of around RMB 159 million, excluding the impact of the revenue recognized from long-aged incentive payables to inactive members. Merchandise sales revenue was RMB [ 128 ] million, up near [ 16% ] compared to the second half of 2024. Meanwhile, the company's net loss significantly narrowed from RMB 115 million in the same period of 2024 to RMB 33 million, representing a 70% reduction. This was driven by the combined impact of our product strategy, operational efficiency improvements and disciplined financial management. In terms of the user operations, the company maintained a high purchase -- repurchase rate of 59.7%, which not only reflects the users' high recognition of Yunji's products and services but also serves as the core foundation for the company's study development. decent results reflect the growing effectiveness of our disciplined product selection and operational execution with the quality and efficiency of the company's development continuing to improve. In the second half of '25 we firmly continued [indiscernible]. First, we continue to advance our health strategy, further integrating organic food with the health sector and building a distinctive portfolio of the food and medicine [ ology ] product. By closely aligned with the China's National Health strategy and precisely addressing consumers' health-focused needs, our organic food and health products have continued to earn the trust of consumers. In 2025, 5 of the company's organic food and health products, and each generated sales of over RMB 10 million, including the Yangcheng Lake Harry craft the probiotic bolus, lighter slimming coffee, India organic milk and [indiscernible] power. As consumer awareness of -- and the demand for health and wellness continue to grow, we further expanded out our portfolio of food and managing hemology products. One example is in the poly...

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Okay. So with -- so one example is in the Polygon tent, which we launched in the fourth quarter of 2025 with its natural and health-focused advantages, the [ Polygone ] quickly became one of our most popular products, supported by premium ingredients and refiner processing techniques. The [ Jason Polygone tent ] achieved rapid sales growth, mainly is a new highlight within our healthy living business. As of the end of December 2025, sales of this product had visited an RMB 18 million. In the future, we will continue to enrich the food and medicine hemology product categories and further improve the health and wellness product metric to meet users' diversified health consumption needs. We developed a tailored value for money strategy for [ Solan ], closely along with today's more rational consumer spending trends. And this has helped the brand steadily strengthen its market position to meet consumers' core demand for quality products at attractive prices. We have introduced a range of [ flagship ] so products and product bundles that have been well recognized in the market over the years. In 2025, sales pursues polypeptide series increased by 20% year-over-year, while sales of the derived cleaning moves increased by 32% year-over-year sales on the pro lane firmers also increased by 26% from RMB 20.7 million in 2024 to RMB 26.2 million in 2025. So as strong performance confirms the forward-thinking nature of our value for money strategy and laid a solid foundation for further market expansion. At the same time, we created and differentiated competitive advantages through [ the bar and show ] services. gradually transforming from our product sales platform into a product plus experience platform for enhancing your engagement and loyalty we have created of comprehensive supply chain treatability experience, allowing users to participate in the verification of product quality throughout the process. rainfall has from the source through organic standards and building deep pricing brand. For example, in October 2025, we organized the buying [ Shane dry the bacon ] powder traceability tool when we organized the members to video the [ Qinghai Bakong ] production area members to directly witness the entire process from organic cultivation to scientific processing of a [ wild bacon ] this transparent and traceability model has continually strengthened and distress in our products. Participation in these traceability programs has grown steadily attracting an increased number of members. In addition, we continue to enhance our key therapy experience services, laying a solid foundation for broader consumer recognition of the food medicine [ chronology ] products. and supporting the expansion of our offerings in this category. Today, our experience services to expand the full product journey from run and supply chain fracability, that validates product quality to an interactive services. such as TCB. The antenna experience design, not only handsets user participation and brand trust but also use emotional connections between users and the platform. We believe this will serve as a core competitive strength as we continue our transition towards a product plus experience platform. As we continue to strengthen our core business, we remain [ madly ] aware that is a constant priority for any company. In the second half of 2025, while consolidating our existing user base, we actively explore diversified customer acquisition channels taking to balance growth with the efficiency and as for the company's sustainable development. We efficiently activated existing users, so a series of targeted operational initiatives. For example, in one campaign, we then repurchased invitations to over 50,000 dormant users and 44.87% of those users subsequently placed the order on the platform. These targeted initiatives delivered a strong activation and conversion results, fully unlocking the commercial value of our existing user base. In the first half of 2026 we extended the existing user activation strategy, focusing on launching the [ Super Wednesday ] campaign. Through our dedicated entering point in our APP, we are featuring a curated selection of the products, and the campaign has already driven a 25% increase in daily active users compared with normal days. In addition, we put greater emphasis on expanding our offline channels. In 2025, we entered 9 new cities through our local delivery model and added more than 4,000 new community leaders. These community leaders help us attract a large number of high lority, high-value quality users, accumulating valuable user assets for the company's long-term development. As we look back on the second half of 2025, we made steady and solid programs. Looking ahead to the first half of 2020 our priority are clear. In a year ago, Yunji will remain committed to its strategic positioning as a global leader in organic living with the product and appearances saving as our dual growth engines and with efficiency and growth as our core priorities, we will continue to contribute to the healthier and more organic lifestyles for families in China. For the financial omotenashi Finantia. This concludes my prepared remarks for today. With that, I will hand it over to Mr. Nan Song, our Senior Financial Director to go through the financial results.

Thank you, Shanglue. Hello, everyone. Before I go through our financial results. Please note that all numbers stated in the following remarks are in terms and all comparisons and the percentage [ of changes ] on our year-over-year basis unless otherwise noted. Throughout 2025, we operate in our challenge and an uncertain market environment nevertheless, supported by our relevant financial position. We continue to advance our street [ floaters ] over [ Goleta ] talk to our users while remaining disciplined in cost management and making family adjustment to adapt to dynamic market conditions. Now let's take a closer look at our second half 2025 financials. Total revenues were RMB 158 million compared to RMB 183.8 million a year ago. Revenues from sales of merchandise were $136.4 million. The figure includes the impact from the revenues recognition of low agent insightive salable to negative members, including this impact, our measured sales grew by [ 0.16% ] compared to the same period of 2024, reflecting the health growth of our core business and demonstrating the effect tens of our strategic focus on organic health and products and provide levels. Revenues from our market blend business were RMB 22.1 million. The change in total revenue was the premiere line our deliberate decision to scale back the marketplace business while refining our product hopefully across all categories and optimizing our selection of [ par ] and the merchant. Digital might [ choose trien ] our market position for tenable growth. On the cost side, total cost of revenues increased by 3% to RMB 92.7 million, primary due to higher merchandise sales which are recognized on our growth business, our gross margin remains revelant during the period. This was supported by Jon customers' loyalty to our provide label products Together with our effective product curation date, which focus on selecting and promoting [ mommhigh-retaining ] categories across our ingot portfolio. Now let's take a look at our operating expenses in the second half of 2025. Fulfillment expenses decreased from RMB 3.6 million a year ago. The decrease was primarily due to lower personnel costs, driven by a more optimized allocation of staffing. Sales and marketing expenses were RMB 42.6 million compared to RMB 49.5 million a year ago. This is primarily due to our fish of promotional efforts from online to offline China and provide normal instruments reflecting our admixing approach that then make the allocation resources better on market conditions and the customers' engagement effectiveness. Technology and content expenses was RMB 13 million compared to RMB [ 20.1 ] million a year ago. This was mainly due to the reduction in personnel cost as a lot of staffing structure remaining refinement. General and administrative expense decreased to RMB 33.5 million from RMB 96.9 million a year ago. The decrease was mainly driven by lower impairment online level assets other than goodwill allows for graded losses and reduce their personnel costs resulting from a reduction in handcart. Our expense ejective optimization demonstrated the fragmentive of our refined management approach while we strategically elected in sales and marketing for offline China development, again component of our customers. Coronation [ Jitse ], we achieved event reduction across other expense categories -- as regard, total operating expenses in the second half of 2025 decreased to RMB 112.4 million from RMB [ 200.1 ] million in the prior year period, a 44% reduction corresponding loss from operations narrowed satiety to RMB 43 million from RMB 103.9 million a year ago. This disciplined expense management reflected continuous improvement in operating efficiency and our progress towards growth visibility. Net loss was $32.6 million compared with $115.1 million a year ago, while adjusted net loss was $32.5 million compared with $114 million in the per year period. The continued net of losses reflects the strengthening of our strategic focus on organic health and our effect of offering bad experience to our users rather than simple operating as an e-commerce transitory platform. Basic and diluted net loss per surreal to ordinary share hold both narrowed to [ 1.02 ] from [indiscernible] in the same period of 2024. Turning to quarterly as of December 31, 2025 we had a total of RMB 216.1 million in cash and cash contest cash and the short-term investment on our balance sheet compared to RMB 242.8 million as of December 31, 2024. Our liquid assets remained sufficient to cover our variable obligation at the same time, we continue to focus on optimizing working capital and manage our efforts decision to support our operations. To summarize, in 2025, this bank will overall market growth core consumer sentiment and increasingly selective lending behavior. We continue to deliver steady improvement in our growth fit first month, this reflecting the resilience of our business as well as tens of our disciplined product selecting and operational execution. Our solid financial position continues to support our long-term strategy through audits while our continued focus on results, integrating and expression assetization and has greater are important for in driving this improvement. Looking forward, we will remain focused on but growth towards breakeven and the future driving our overall financial position while providing the flexibility to navigate an bank and market development to support sustainable long-term growth. This concludes our prepared remarks for today. Thank you.

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