Yunji's total revenue drops 32% to $158.3 million, while focusing on organic health strategy and aiming for improved profitability in 2025.

OPERATOR - (00:01:53)

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to the Yunji first half 2025 earnings conference call. With us today are Mr. Shang Lu Xiao, Chairman and Chief Executive Officer and Mr. Nan Song, Senior Financial Director. As a reminder, this conference call is being recorded. Before we start, please know that this call will contain forward looking statements within the meanings of the Private Securities Litigation Reform act of 1995 that are based on the company's current expectations and current marketing 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 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 other 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. Shang, chairman and CEO of Yunji. Please go ahead, sir. Apologies, ladies and gentlemen, we seem to have disconnected with our speakers. Please hold while we reconnect. Ladies and gentlemen, we've reconnected with our speaker line. Please proceed with the presentation.

Shang Lu Xiao - Chairman and Chief Executive Officer - (00:05:18)

Hello everyone and welcome to Yunji's first half 2025 earnings report. Thank you for your continued interest and support. Over the past six months, we have remained firmly anchored to our organic health strategy. While overall market conditions and a weakened consumer confidence have led to a slight decline in our total revenue. We believe that staying committed to organic health is the right strategy and represents an important opportunity for Yunji's future development.

UNKNOWN - (00:06:08)

Where are you?

Shang Lu Xiao - Chairman and Chief Executive Officer - (00:06:36)

And we have a center on our strategy on organic health, positioning Yunji Organic Milk as our flagship product to shape our brand image in this space. The product achieved an RMB 5 million in sales at launch, helping establish Yunji's health focused brand awareness among consumers. Building on this 30%, we will gradually expand the concept from this foundation additionally will serve as an important tool for Yunji's expansion, helping us better penetrate the retail market. Develop through community leaders.

UNKNOWN - (00:07:27)

Dan.

Shang Lu Xiao - Chairman and Chief Executive Officer - (00:08:06)

Over the past six months, our other major products have also performed exceptionally well. Lined lemon coffee achieved sales of over 10 million RMB probiotics bolus reached nearly 7 million. Well freeze drying, Sea box, Thorn powder and herbal each generated more than 5 million RMB in sales. This success comes from our organic health strategy and our scientific weight management product selection both align closely with the National Health Agenda outline in Healthy China 2030, a government initiative that sets long term goals to improve public health and healthcare by 2030 this month. Our approach sustainable in the long term and holds tremendous development potential. Moving forward, we will continue to expand our brand influence through an integrated organic health concept and continually optimize our product mix. Our beauty brand Suye offers high value products that align closely with the consumer preferences in today's market. Its approach of combining major products with high impact promotion has achieved positive market feedback. The Suye Pro Xilin Firming Essence lotion generated over 4 million RMB in sales and launch and more than 32 of the buyers being returning dormant users. The entire Suye Pro Ziling firming series including creams, lotion and essences generated sales exceeding 10 million RMB. In terms of channels and brand development, we are actively expanding public domain channels, upgrading our TMALL infrastructure, establishing partnership with top influencers for live streaming sales and enhancing WeChat channels content. Currently, our WeChat channel transaction volume ranks higher than 92 percent of our peers. As we expand our public domain sales, we will continue monitoring market expenses and constantly improving cost efficiency. Our Ginseng tea therapy business is currently in the incubation phase. Thanks to the strong growth potential and customer loyalty of the Tea Therapy program, we successfully reached our goal of building a 100% tea therapist team in the first half of the year with frequent users maintained a solid 50% participation rate. More notably, participants in the TCRP program have gradually expanded from existing members to asthma high network individuals. At present, external members brought in through the program account for nearly 15% of all participants, creating significant opportunities for further business growth. Meanwhile, the T Therapy program will help Yunji further establish our organic health image and provide quality traffic for our organic health products. In the first half of 2025, over 90% of TE therapy users purchased our main products, effectively supporting sales of our other health products. The rapid growth of an in San retail is posing new challenges for community retail group leaders. Under this trend, community group leaders are more inclined to increase private domain e commerce and connect with the source suppliers. Therefore, in the future we will focus on expanding our community group leader channels placing organic foods in Community Group leaders stores. This will not only empower community group leaders but also allow more people to conveniently enjoy our organic products, ultimately achieving mutual benefits and win win results. With that, I will hand over to Congress Nan Song, our senior Financial Director to go through the financial results.

Nan Song - Senior Financial Director - (00:14:22)

Thank you, Son Li. Hello everyone. Before I go through our financial results, please note that all numbers detailed in the following remarks are in RMB terms and all comparisons and percentage changes are on year over year basis unless otherwise noticed. During the first half of 2025, market uncertainties still posed challenges to our operations. Even so, our foundation position allowed us to continue advancing our strategic initiatives. We continuously assess the flexibility of both new and existing business lines and make timely adjustments to adapt to shifting market conditions, ensuring we're meeting a redline financial foundation while driving ongoing improvements. Now, let's take a close look at our foundation. Total revenue were 158.3 million compared to 233.8 million a year ago. Revenues from sales of merchandise were 131.7 million and revenues from our marketplace business were 24.5 million. The changes were primarily due to softer consumed confidence and our ongoing strategy to refine product selection across all categories and optimization our supply and merchant basis which affected sales. Despite these challenges, our growth margin remained relative solid at 47.3%. This was due to sustained customer loyalty toward our product levels and our effective product curation due to that of such high margin, high rotation categories within our integrated portfolio. Now let's take a look at our operating expenses. Fulfillment expenses decreased to 20.6 million from 42.6 million a year ago. This was from mainly driven by lower warehousing and logistics costs from reduced merchandise sales with as well as lower and personal expenses. Foreign staffing, structural refinement sales and marketing expenses were 50.1 million compared to 47.5 million a year ago. This was primarily due to high member management from growing the membership space and increased personal cost to support into markets. Partially offset by lower, advertising expenses, technology and content expenses were 15.3 million compared to 25.5 million a year ago. The decrease was mainly due to a reduction in personal cost resulting from staffing structure optimization. General and Administrative expenses were 93.4 million compared to 33.5 million a year ago. The increase was maintained due to a high allowance for credit costes. Partly offset by law, professional service expenses and personal costs including the one time cost G&A expenses increased by 35.6% reflecting the result of our expenses optimization effect. Total operating expenses in the first half of 2025 were 179.4 million compared to 149.1 million in the same period of 2024. Loss from operation was 100.4 million compared to cost of operating of 32.4 million a year ago. Net cost was 100.7 million compared with net cost of 8 million a year ago, while adjusted net cost was 100.5 million compared with adjusted net cost of 6.7 million a year ago. Basic and diluted net cost to ordinary shareholders were both 0.05 compared with basic and diluted net income per share of new in the same period of 2024. Turning to recorded as of January 2025 we had a total of $217.1 million in cash and cash equivalent exact cash and short term investment on our balance sheet compared to 242.8 million as of December 31, 2024. Our liquid assets provide adequate coverage for our payable obligation. In addition, we are dedicated to making the most of our working capital and smarter merging our assets to best support our operations to summary during the first half of 2025, we continue to optimize our cost structure while ensuring efficient capital. Along cushioning. We remain committed to maintaining financial display and driving improvement profitability while supporting long term sustainable growth. Our continued focus on cost integration together with our commitment to asset utilization play a key role in achieving this improvement. Looking ahead, we will concentrate on continuously improve our growth margin, aiming to achieve break even and strengthen our overall financial position. With the strategic focus, we are well prepared to manage future headwinds and capture growth opportunities in an evolving market environment. This concludes our prepared remarks for today. Thank you.

OPERATOR - (00:21:58)

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