Yunji (YJ) Q4 2025 earnings review
Aggressive Cost Cuts Narrow Losses, But Core Margins Contradict the Turnaround Story
Yunji's strategic pivot to private-label organic health products and the deliberate scale-back of its marketplace business continues to pressure the top line. H2 2025 revenue came in at RMB158.7 million, remaining Stable sequentially but down 14% YoY. Despite revenue contraction, aggressive operating expense reductions—specifically a 65% drop in G&A and a 60% drop in fulfillment—helped narrow the net loss by 72% YoY to RMB32.6 million. However, the company is shrinking its way to a smaller loss. A severe 940 bps compression in gross margins directly contradicts management's narrative that the pivot to private-label products would yield a high-margin profile.
🐂 Bull Case
Total operating expenses plummeted 43.8% YoY in H2 2025. By rightsizing its staffing and optimizing logistics, Yunji successfully reduced its net loss to RMB32.6 million, down from RMB115.1 million a year ago.
The 12-month repeat purchase rate sits at a highly stable 69.7%. This indicates that while the overall user base may be shrinking, the remaining core shoppers are highly engaged with the platform's private-label offerings.
🐻 Bear Case
Total cost of revenues surged to 58.4% of total revenues in H2 2025, up from 49.0% a year ago. This implies gross margins fell to 41.6%, undermining the strategic rationale that private-label health products would drive higher profitability.
Marketplace revenues dropped 35% YoY to RMB22.1 million as management deliberately scaled back the segment. With overall revenues down 14% YoY, the company has yet to find a growth floor.
⚖️ Verdict: 🔴
Bearish. Cost-cutting has effectively slowed the cash burn, but the core engine is sputtering. The severe compression in gross margin explicitly contradicts the promised benefits of the company's multi-year strategic pivot to high-margin health labels.
Key Themes
Gross Margin Compression Contradicts the Pivot Strategy
Management has repeatedly cited the pivot toward "organic health" and private-label products (like SUYE beauty and Jianxin Tea Therapy) as a high-margin strategy. However, the data reveals a Reversing trend in core profitability: cost of revenues jumped from 49.0% of sales in H2 2024 to 58.4% in H2 2025. This 940 bps deterioration suggests that either product input costs are soaring, or significant discounting is required to move inventory.
Aggressive Operating Expense Optimization
Cost efficiency is Accelerating. Total operating expenses dropped 43.8% YoY to RMB112.4 million in H2 2025. Fulfillment expenses fell 60.2% (RMB13.3M) due to lower volume and staffing optimizations, while G&A plunged 65.5% (RMB33.5M) primarily due to lower impairment charges and improved staffing allocations. This aggressive restructuring is the sole reason the net loss narrowed.
Intentional Scale-Back of Marketplace Business
The shift away from a third-party marketplace is Decelerating total growth. Marketplace revenue was RMB22.1 million in H2 2025, a 35% drop from RMB34.3 million in the same period last year. Management confirms this is a deliberate strategy to focus on private labels, but it leaves a massive revenue hole that merchandise sales (down 6% YoY) are failing to fill.
Sales & Marketing Bucks the Cost-Cutting Trend
Unlike other expense lines, S&M is Accelerating, increasing 6.4% YoY to RMB52.6 million in H2 2025. This was driven by a strategic shift in resource allocation from broad online traffic acquisition toward offline and private-domain initiatives, signaling a heavier reliance on hyper-local community leaders to drive private-label volume.
Extremely Sticky Core User Base
The 12-month repeat purchase rate remains Stable at 69.7%. While overall transaction volume is down, nearly 70% of transacting members are repeat buyers, demonstrating the loyalty generated by curated private labels and wellness services.
Macroeconomic Weakness Sapping Demand
While internal restructuring is partially to blame for lower sales, management has continually cited soft consumer confidence in China as a persistent headwind. The macroeconomic environment remains a Decelerating factor for discretionary spending on premium health and beauty products.
Other KPIs
Total liquidity (comprising cash and cash equivalents of RMB 109.6M, short-term investments of RMB 83.8M, and restricted cash of RMB 22.8M) provides a cushion, but requires tight monitoring. With net losses continuing and a massive RMB 600.0M expected capital expenditure for the new Hangzhou headquarters, capital allocation risk is exceptionally high.
Reversing positively. The H2 2025 adjusted net loss narrowed significantly from RMB 114.0 million in H2 2024, proving that despite top-line deterioration, management has successfully aligned the cost structure with the smaller scale of the business.
Guidance
The company provided an update on its new office building construction in Xiaoshan District. With land acquisition already completed (RMB 176.6M), total project costs are guided at RMB 600.0M. Management intends to fund this through cash on hand and bank financing. Given the current liquidity sits at roughly RMB 216.1M, securing favorable bank financing will be critical to avoiding a liquidity crunch.
Key Questions
Gross Margin Contradiction
Cost of revenues increased from 49.0% to 58.4% of total sales in H2 2025 despite your ongoing shift toward high-margin private-label health products. What specific input costs or pricing actions drove this 940 bps compression, and when should we expect margins to reflect the private-label premium?
S&M ROI Timeline
Sales and marketing expenses grew by 6.4% YoY due to a shift toward offline and private-domain initiatives, yet total revenues declined 14%. How much lead time do these offline initiatives require before they generate a positive return on investment and stabilize the top line?
Headquarters Financing
With the total expected cost of the new Hangzhou headquarters at RMB 600 million and current liquid assets around RMB 216 million, what is the exact mix of debt vs. cash you plan to use, and have you secured the necessary bank financing commitments?