111 (YI) Q2 2024 earnings summary

Executive summary

• Achieved operational profitability for the second consecutive quarter, with income from operations of RMB3.3 million versus a loss of RMB41.4 million a year ago, despite macroeconomic and regulatory challenges.

• Revenue was RMB3.4 billion (US$471.2 million) in Q2 2024, down 1.5% year-over-year, reflecting a resilient performance amid industry headwinds.

• Focused on digital transformation, AI, and technology to enhance efficiency, reduce costs, and improve customer satisfaction.

• Expanded supply chain capabilities and partnerships, including the Kunpeng logistics network and new alliances with pharmaceutical companies.

• Positive operating cash flow for two consecutive quarters, with RMB93.3 million generated in Q2 2024.

Financial highlights

• Net revenues for Q2 2024 were RMB3.4 billion, down 1.5% year-over-year; gross segment profit was RMB207.6 million, flat year-over-year.

• Income from operations reached RMB3.3 million, compared to a loss of RMB41.4 million a year ago; non-GAAP income from operations was RMB8.5 million.

• Net loss narrowed to RMB2.1 million from RMB45.4 million last year; non-GAAP net income was RMB3.1 million.

• Operating expenses decreased to RMB204.3 million, with fulfillment, sales, G&A, and technology expenses all declining as a percentage of net revenue.

• Cash and equivalents stood at RMB615.5 million as of June 30, 2024.

Outlook and guidance

• Confident in sustaining profitability for 2024 if market conditions remain stable, with a long-term goal to reduce operating expenses ratio below 5% as revenue scales.

• Continued focus on operational efficiency, digital transformation, AI, and expanding product offerings and partnerships to drive growth.

• Management expects further cost reductions and efficiency gains, with savings to be reinvested in innovation and market expansion.