Yunji, Inc. Sponsored ADR Class A Stock

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 meaning 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 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 the call over to Mr. Shanglue Xiao, Chairman and CEO of Yunji. Please go ahead, sir.

[Interpreted] Hello, everyone. Welcome to [Technical Difficulty]

Thank you for your patience. You may restart the presentation.

[Interpreted] Hello, everyone. Welcome to Yunji's earnings call. Thank you for your continued interest and support. The market environment remained 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 dual-engine 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 our strategic execution.

Let me begin by sharing some financial highlights, which reflect our proactive approach to optimizing our structure and improving quality and efficiency.

Total revenue for the first half was RMB 96.3 million compared with RMB 158.3 million in the first (sic) [ same ] 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 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 accounted for 56%. Private label products with higher margins are increasingly becoming the core support for our revenue, while our experiential initiatives such as the supply chain traceability continue to strengthen customer engagement and maintain stable customer retention supporting improved profitability and long-term development.

At the same time, our gross margin remained resilient and our losses narrowed significantly. Gross margin for the period held steadily at approximately 41% and a net loss for the first half narrowed to RMB 72.4 million, a substantial improvement compared with the same period last year. This reflects our continued discipline 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 improved profitability.

Next, let me walk you through our business progress in the first half. 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 skin care matrix, with food and medicine homology products as a great focus within organic health. Together, our product and experience dual-engine approach powers Yunji's organic health ecosystem.

In our organic health segment, we continue to deepen our presence in the broader health and wellness market with a particular focus on food and medicine homology products that address the health needs of the modern families in China. Our first flagship product in this category is Polygonatum tea, 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 and quickly becoming a key growth driver of our food and medicine homology product line.

In the first half of 2026, Polygonatum tea delivered rapid sales growth and successfully validated our complete growth model. This demonstrates that our product strategy for entering the Chinese wellness and health market has a long-term market potential.

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 health product. This forms a complementary product portfolio that balances high and low frequency consumption patterns and long-term consumption cycles.

In our beauty segment, we remain focused on offering customers high-quality, high-value skin care and beauty products. In the current market environment, increasingly rational consumers favor products that deliver high value with affordable price and Yunji's long-standing brand positioning aligns closely with this trend. As a result, this brand has continued to earn consumer recognition and maintain a stable market position with segment sales broadly stable compared with the same period last year. At the same, certain products have stood out. SUYE [ Skincare Condensing Essence ] Oil, launched in the second half of 2025, has continued to receive positive feedback from consumers and achieved 29% sequential sales growth in the first half of this year.

End-to-end supply chain traceability experience is a core competitive advantage that sets Yunji 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 continue 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 the period, and these events collectively delivered a strong sales conversion. For example, a traceability event for our Baiyueshan birch sap product held on April 13 drove the product first half sales up 128% year-over-year and 146% compared with the second half of 2025. Similarly, traceability event for Baiyueshan wolfberry puree held on June 17 drove the product 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.

Looking ahead, we will continue to refine our product metrics, expand our food and medicine homology offering and channel more resources into high-margin, high-repurchase items to support continued margin improvement. At the same time, we will continue to strengthen our differentiated experiential offerings to build user trust and a durable brand moat.

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 a better organic health living solutions for families across China and to create greater social value.

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 over to Mr. 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 all numbers stated in the following remarks are in RMB terms and all comparisons and percentage changes are on a year-over -- otherwise noted. In the first half of 2026, the market environment remained challenged. As Shanglue outlined, we stay firmly committed to our strategic position as a global leader in organic living, advancing our products and experience dual-engine [indiscernible] supported by our resilient financial position. We remain disciplined in cost management and made timely adjustment to adapt to these conditions.

Now let's take a closer look at our financials. Total revenues were RMB 96.3 million compared to RMB 158.3 million in the same period a year ago. Revenues from sales of merchandise were RMB 82.4 million (sic) [ RMB 82.5 million ] and revenues from our marketplace business were RMB 13.7 million. The change in our total revenues for the period was primarily driven by softer consumer spending amid a broader macro environment in China. Together with our choice to be aligned with the organic health philosophy guiding our business. As part of the effort, we also proactively exited certain [indiscernible], sharpening our merchandise mix in support of our private label and organic health priorities. Given this strategic direction, we had anticipated this impact on our revenues 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 lower merchandise sales which are recognized on a gross basis, excluding the impact of the recognition of incentives payable to inactive members which carries no cost of revenue, our gross margin remained resilient at 41% during the period. This is supported by our continued focus on selecting premium, high retention categories together with our private label products.

Now let's take a look at our operating expenses. Fulfillment expense decreased to RMB 10.3 million from RMB 20.6 million in the same period a year ago. The decrease was primarily driven by lower warehousing and logistics expense resulting from reduced merchandise sales. Together with lower personnel cost from staffing structure refinement, sales and marketing expenses were RMB 39.5 million compared to RMB 50.1 million in the same period a year ago. The change is primarily due to low member management fees and reduced business promotion expenses.

Technology and content expenses were RMB 12.4 million compared to RMB 15.3 million in the same period a year ago. This was mainly due to the reduction in personnel costs, a result of continued staffing structure refinements. General and administrative expense decreased to RMB 47.5 million from RMB 93.4 million in the same period a year ago. The decrease was mainly driven by reduction in allowance for credit loss [indiscernible] receivable and partially offset by an increase in impairment for property and equipment.

Our expense discipline extended across nearly every category this period, with year-over-year reduction reflecting both a small merchandise base and our ongoing staffing and cost-efficient measures. As a result, total operating expenses in the first half of 2026 decreased to RMB 109.7 million from RMB 179.4 million in the same period of 2025, 38.8% reduction. Consequently, loss from operations narrowed significantly to RMB 69.4 million from RMB 100.4 million in the same period a year ago. This expense discipline supports our continued progress towards profitability, even as revenues faced pressure from the softer environment described earlier.

Net loss was RMB 72.4 million compared with RMB 100.7 million a year ago, while adjusted net loss was RMB 72.3 million compared with RMB 100.5 million a year ago. The year-over-year narrowing of both net loss and adjusted net loss reflect our expense discipline together with our continued focus on [ addressing ] customer engagement and maintaining stable customer retention. Basic and diluted net loss per share attributable to ordinary shareholders were both narrowed to RMB 0.04 from RMB 0.05 in the same period of 2025.

Turning to liquidity as of June 30, 2026, we have total of RMB 242.1 million in cash and cash equivalents, restricted cash, and short-term investments on our balance sheet compared to RMB 216.1 million as of December 31, 2025. We maintained sufficient liquidity to meet our payable obligation. We will continue to optimize working capital and manage our asset efficiently in support of our operations.

Looking at the first half as a whole, even against a challenging market environment, we made further progress on cost discipline and narrowed our loss on a year-over-year basis. This reflects our continued execution of [indiscernible] strongly outlined, our discipline in cost management and our focus on organic health and private label products.

Our solid financial position continued to support these priorities and we'll remain disciplined in how we manage costs and [ allocate ] in support of our strategic position as a leader in organic health living.

Looking forward, there will remain focused on improving our operating 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.

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

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 its 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 continued 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 [ 0.16% ] 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 69.7%, 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 steady development. These 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 2025 we firmly continued to cultivate our core business segments and achieved the phased progress.

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 homology 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 Yungcheng Lake Hairy Crabs the probiotic bolus, lighter slimming coffee, Qingziyang organic milk and Baiyueshan [indiscernible] power.

As consumer awareness of -- and the demand for health and wellness continues to grow, we further expanded our portfolio of food and medicine homology products. One example is in the poly...

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[Technical Difficulty]

Okay. So with -- so one example is in the polygonatum tea, which we launched in the fourth quarter of 2025 with its natural and health-focused advantages, the polygonatum tea quickly became one of our most popular products, supported by premium ingredients and refiner processing techniques. The [indiscernible] polygonatum tea 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 exceeded RMB 18 million.

In the future, we will continue to enrich the food and medicine homology 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 SUYE, closely aligned 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 SUYE products and product bundles that have been well recognized in the market over the years. In 2025, sales of SUYE's polypeptide series increased by 20% year-over-year, while sales of the [ derived ] cleaning mousse increased by 32% year-over-year, sales on the Pro-Xylane Firming [indiscernible] also increased by 26% from RMB 20.7 million in 2024 to RMB 26.2 million in 2025. SUYE's strong performance confirms the forward-thinking nature of our value for money strategy and lays a solid foundation for further market expansion.

At the same time, we created a differentiated competitive advantages through the experiential services. Gradually transforming from our product sales platform into a product plus experience platform, further enhancing user engagement and loyalty. We have created a comprehensive supply chain traceability experience, allowing users to participate in the verification of product quality throughout the process, reinforce health from the source through organic standards and building deep trust in brand.

For example, in October 2025, we organized [indiscernible] powder traceability tool where we organized the members to visit the Qinghai [indiscernible] production area members to directly witness the entire process from organic cultivation to scientific processing of a [indiscernible]. This transparent and traceability model has continually strengthened members' trust in our products. Participation in these traceability programs has grown steadily attracting an increased number of members. In addition, we continue to enhance our T-therapy experience services, laying a solid foundation for broader consumer recognition of the food medicine homology products. And supporting the expansion of our offerings in this category.

Today, our experience services span the full product journey from front-end supply chain traceability, that validates product quality to [indiscernible] and interactive services such as the T-therapy. The end-to-end experience design, not only enhances 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 toward a product plus experience platform.

As we continue to strengthen our core business, we remain mildly aware that growth 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, seeking to balance growth with the efficiency and support the company's sustainable development. We efficiently activated existing users, so a series of targeted operational initiatives. For example, in one campaign, we sent 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 expanded the existing user activation strategy, focusing on launching the [ Super Wednesday ] campaign. Through our dedicated entry 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 helped us attract a large number of hilarity, 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 progress. Looking ahead to the first half of 2026 our priorities 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 experiences serving 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.

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 RMB terms and all comparisons and the percentage changes are on a year-over-year basis unless otherwise noted.

Throughout 2025, we operate in a challenging and uncertain market environment. Nevertheless, supported by our resilient financial position. We continue to advance our strategic priorities of [ premium ] to our users while remaining disciplined in cost management and making timely adjustment to adapt to dynamic market conditions. Now let's take a closer look at our second half 2025 financials. Total revenues were RMB 158.7 million compared to RMB 183.8 million a year ago. Revenues from sales of merchandise were RMB 136.4 million. This figure includes the impact from the revenues recognition of long-aged incentives payables to inactive members, including this impact, our merchandise sales grew by [ 0.16% ] compared to the same period of 2024, reflecting the health growth of our core business and demonstrating the effectiveness of our strategic focus on organic health and products and private labels.

Revenues from our marketplace business were RMB 22.1 million. The change in total revenues was the primarily driven by our deliberate decision to scale back the marketplace business while refining our product offering across all categories and optimizing our selection of supply and merchants. [ Digital group ] [indiscernible] our market position for sustainable growth.

On the cost side, total cost of revenues increased by 3% to RMB 92.7 million, primarily due to the high merchandise sales, which are recognized on a growth basis. Our gross margin remained resilient during the period. This was supported by strong customers' loyalty to our private label products Together with our effective product curation strategy, which focus on selecting and promoting premium high returning categories across our integrated portfolio.

Now let's take a look at our operating expenses in the second half of 2025. Fulfillment expenses decreased to RMB 13.3 million from RMB 33.6 million a year ago. The decrease was primarily due to lower personnel costs, driven by a more optimized allocation of staffing resources, sales and marketing expenses were RMB 42.6 million compared to RMB 49.5 million a year ago. The change is primarily due to our shift of promotional efforts from online to offline channel and provide normal initiatives reflecting our agile making approach that dynamic make the allocation resources based 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 result of staffing structure remaining refinement. General and administrative expenses 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, a lower allowance for credit losses and reduced their personnel costs resulting from a reduction in hand cost.

Our expenses objective optimization demonstrated the flex of our refined management approach while we strategically invested in sales and marketing for offline channel development, again component of our customers. Acquisition [ strategy, we achieved expenses reduction across other expense categories. As a result, 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 correspondingly loss from operations narrowed efficiently 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 profitability. Net loss was RMB 32.6 million compared with RMB 115.1 million a year ago, while adjusted net loss was RMB 32.5 million compared with RMB 114 million in the prior year period. The continued narrowing of losses reflects the strengthening of our strategic focus on organic health and our effect of offering [ better ] experience to our users rather than simply operating as an e-commerce transaction platform. Basic and diluted net loss per share attributable to ordinary shareholders hold both narrowed to [ RMB 0.02 ] from [ RMB 0.06 ] 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 equivalent 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 payable obligation at the same time, we continue to focus on optimizing working capital and managing our efforts efficiently to support our operations.

To summarize, in 2025, the backed by market growth cautious consumer sentiment and increasingly selective spending behavior. We continue to deliver steady improvement in our growth performance this reflecting the resilience of our business as well as the effectiveness of our disciplined product selecting and operational execution. Our solid financial position continues to support our long-term strategic priorities while our continued focus on resource, integration and efficient asset utilization and has played an important role in driving this improvement.

Looking forward, we will remain focused on progress growth towards breakeven and the further strengthening our overall financial position while positioning the flexibility to navigate an dynamic 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.

Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the Yunji's First Half 2025 Earnings Conference Call. With us today are Mr. Shanglue 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 note that this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on the company's current expectations and current market and 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 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. Shanglue Xiao, Chairman and CEO of Yunji. Please go ahead, sir.

[Interpreted] Hello, everyone and welcome to Yunji's First Half 2025 Earnings Call. Thank you for your continued interest and support.

Over the past 6 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.

And we have centered our strategy on organic health positioning [ Youjiang ] 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 success, we will gradually expand the concept from this foundation. Additionally, [ Youjiang ] milk will serve as an important tool for Yunji's expansion, helping us better penetrate the retail market developed through community leaders.

Over the past 6 months, our other major products have also performed exceptionally well. [indiscernible] slimming coffee achieved sales of over RMB 10 million. Probiotic bolus reached nearly RMB 7 million, while freeze-dried sea buckthorn powder and [indiscernible] each generated more than RMB 5 million in sales. This success comes from our organic health strategy and our scientific weight management product selection, both aligned closely with the national health agenda outlined in Healthy China 2030, a government initiative that sets long-term goals to improve public health and health care by 2030. This marks our approach sustainable in the long term and holds tremendous development potential. Moving forward, we will continue to expand our brand influence, fully 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 promotions has an achieved positive market feedback. The SUYE PRO-XLANE FIRMING ESSENCE LOTION generated over RMB 4 million in sales at launch and more than [ 32 ] of the buyers being returning dormant users. The entire SUYE PRO-XLANE FIRMING Series, including creams, lotion and essences generated sales exceeding RMB 10 million. In terms of the channels and brand development, we are actually 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% of our peers. As we expand our public domain sales, we will continue monitoring market expenses and constantly improving cost efficiency.

Our Jianxin Tea Therapy business is currently in the incubation phase. Thanks to the strong growth potential and the customer loyalty of the tea therapy program, we successfully reached our goal of building a 100% tea therapy team in the first half of the year where the frequent users maintained a solid 50% participation rate. More notably, participants in the tea therapy program have gradually expanded from existing members to [indiscernible] high net worth individuals. At present, our channel members booking through the program account for nearly 15% of often all participants, creating significant opportunities for further business growth. Meanwhile, the tea 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 the tea therapy users purchased our main products, effectively supporting sales of our other health products.

The rapid growth of internet retail is posing new challenges for our community retail group leaders. Under this trend, community group leaders are more inclined to embrace private domain e-commerce and connect with the store 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 Ms. 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 RMB terms and all comparisons and percentage changes are on a year-over-year basis unless otherwise noted. During the first half of 2025, market uncertainties still posted challenges to our operations, even though our financial position allowed us to continue advancing our strategic initiatives. We continue to assess the profitability of both new and existing business lines and make timely adjustments to adapt to shifting market conditions, ensuring we're meeting our leveraged financial foundation while driving ongoing improvements.

Now let's take a close look at our financials. Total revenue were RMB 158.3 million compared to RMB 233.8 million a year ago. Revenues from sales of merchandise were RMB 131.7 million and revenues from our marketplace business were RMB 24.5 million. The changes were primarily due to softer consumer confidence and our ongoing strategy to refine product selection across all categories and optimization our supply and merchant bases, which affected our sales. Despite these challenges, our gross margin remained relative solid at 47.3%. This was due to sustained customer loyalty towards our promised levels and our effective product curation trait that emphasis high margin. High [indiscernible] within our integrated product portfolio.

Now let's take a look at our operating expenses. Fulfillment expenses decreased to RMB 20.6 million from RMB 42.6 million a year ago. This was primarily driving by lower warehousing and logistics costs from reduced merchandise sales with [indiscernible] personnel expenses for staffing structure [indiscernible] sales and marketing expenses were RMB 50.1 million compared to RMB 47.5 million a year ago. This was primarily due to high member management fees from growing the membership base and increased personnel cost to support expansion into markets, partially offset by lower advertising expenses. Technology and content expenses were RMB 15. 3 million compared to RMB 25.5 million a year ago. The decrease was mainly due to a reduction in personnel costs resulting from staffing structure optimization.

General and administrative expenses were RMB 93.4 million compared to RMB 33.5 million a year ago. The increase was mainly due to a high allowance for credit losses, partly offset by lower professional service expenses and personnel costs. Excluding the onetime loss, G&A expenses decreased by 35.6%, reflecting the result of our expenses optimization effect. Total operating expenses in the first half of 2025 were RMB 179.4 million compared to RMB 149.1 million in the same period of 2024. Loss from operations was RMB 100.4 million compared to loss of operating of RMB 32.4 million a year ago. Net loss was RMB 100.7 million compared with net loss of RMB 8 million a year ago, while adjusted net loss was RMB 100.5 million compared with adjusted net loss of RMB 6.7 million a year ago. Basic and diluted net loss per share attributed to ordinary shareholders were both RMB 0.05 compared with basic and diluted net income per share of -- in the same period of 2024.

Turning to recorded as of [ January ] 30, 2025, we had a total of [ RMB 217.1 million ] in cash and cash equivalent expected cash and short-term investment on our balance sheet compared to [ RMB 242.8 million ] as of December 31, 2024. Our liquid assets provide adequate coverage for our payable obligation. In addition, we are [indiscernible] to making the most of our working capital and [indiscernible] managing our assets to best support our operations. To sum up, during the first half of 2025, we continue to optimize our cost structure while ensuring efficient capital allocation. We remain committed to maintaining financial discipline and driving improved profitability while supporting long-term sustainable growth. Our continued focus on [indiscernible] integration together with our commitment to efficient asset utilization play a key role in achieving this improvement.

Looking ahead, we will concentrate on continuously improve our gross margin, aiming to achieve breakeven and strengthening our overall financial position with a strategic focus, where we are prepared to manage future [indiscernible] and capture growth opportunities in a evolving market environment. This concludes our prepared remarks for today. Thank you.

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

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]