Jumei International Holding Limited (JMEI)

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Jumei International Holding Ltd. (JMEI)

Q3 2015 Earnings Conference Call

November 20, 2015 8:00 AM ET


Sterling Song - Director of Investor Relations

Leo Chen - Founder, Chairman and Chief Executive Officer

Mona Gao - Co-Chief Executive Officer

Yusheng Zheng - Co-Chief Executive Officer


George Meng - Goldman Sachs

Binnie Wong - Merrill Lynch

Xiao Wang - 86Research

Wendy Huang - Macquarie

Alice Cai - HSBC

Henry Guo - Summit Research

Thomas Chong - Citigroup

Evan Zhou - Credit Suisse

George Meng - Goldman Sachs



Ladies and gentlemen, thank you for standing by and good evening. Thank you for joining Jumei's Third Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there'll be a question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the conference over to your host for today's conference call, Mr. Sterling Song, Director of Investor Relations. Please go ahead, Mr. Song.

Sterling Song

Thank you, operator. Good morning, everyone. I'm, Sterling Song, very pleased to be with you today. Joining today on the call are Leo Chen, Founder, Chairman and CEO of Jumei; Ms. Mona Gao and Ms. Yusheng Zheng, two Co-CFOs of Jumei.

First, I will remind you about forward-looking statements. Our conference for today may include forward-looking statements made under the Safe Harbor provisions of the Private Securities Litigation Reform Act. Although we believe that the expectations reflected in our forward-looking statements are reasonable as of today, those statements are subject to risks and uncertainties that could cause the actual results to differ dramatically from those projected. There can be no assurance that those expectations will prove to be correct.

Further information about this and other risks are included in our filings with the Securities and Exchange Commission. The company doesn't assume any obligation to update any forward-looking statements as a result of new information, future events, changes in market conditions or otherwise, except as required by law.

Now with that, I'd like to turn the call over to Leo Chen. Leo, please.

Leo Chen

Thank you, Sterling. Good morning, and good evening, everyone. Thank you for joining our third quarter earnings call today. We're pleased to report a strong top line growth in the third quarter, as we doubled our net revenues on a year-over-year basis. Our merchandising sales net revenue grew 121% year-over-year. Our customer purchase frequency continued to grow significantly, increasing 45% to 2.9 orders per customer from 2 during the same period last year.

Our performance was driven by strong continued growth in Jumei Global business, and a rapidly shifting transaction [indiscernible] in China as consumers upgrade their product peripherals and expectations. During the quarter, we particularly focused our marketing efforts on mobile.

We saw mobile application download increased 54% year-over-year. Mobile per transaction as a percentage of total GMV increased to 78% compared to 57% in the third quarter of last year. Another important factor driving user interest on our platform is our ability to recruit new renowned brands to Jumei Global.

This past quarter, we ended Shiseido and KOSÉ. This is notable because this is the first time that these brands have currently authorized a fourth quarter e-commerce company in China to parade their products. This also means that in addition through products customers by our domestic platform.

Going forward, new products through our authorized brands will be able to be launched simultaneously in Japan and in Jumei Global. We think child consumers are going to love this because it will be the first time that we can be in synch with the latest trends in the home markets of each brand. Were also pleased of considerate efforts to improve customer experience with how much is published Jumei Global as a premier cross-border e-commerce platform in China.

In the third quarter, we experience margin pressure, most of which would be temporary. I'll let Mona discuss the financials - our guidance in a moment. But before I pass the floor to her, I will point out that, we are confident that we'll return to profitability in the fourth quarter.

Now, I will hand it over to Mona. Mona, please.

Mona Gao

Thank you, Leo. In the past quarter, we made efforts to optimize Jumei Global's inventory, so, that SKU-by- SKU inventory days are optimized. As a result, we've lowered prices for certain skin care SKUs such as sunscreens and select SKUs for food and wellness products. While this impacted our third quarter gross margin, we expect the impact will be temporary. Starting from the fourth quarter, our overall gross margin should be closer to our second quarter levels.

Fulfillment comp as a percentage of net GMV increased sequentially in the third quarter. Part of the increase was due to the continued increase in Jumei Global.

In the third quarter, Jumei Global accounted for 57% of our merchandising sales net GMV and 51% of our total net GMV, up from the previous quarters. But 1.5 to 2.0 percentage points of the cost was due to one-off events such as relocating and consolidating cross border-related warehouses and consequently into warehouse shipments of inventory.

Now, moving on to our quarterly financial highlights. Before I go through the numbers, I would first like to point out that we changed our reporting for currency in the third quarter. Starting on July 1, we changed our reporting currency from United States dollars to Chinese renminbi.

The change was simply made to better reflect the true underlying performance of our business and to improve investors' ability to compare our financial results with other publicly-traded companies in the industry.

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