Vipshop Reports Unaudited Third Quarter 2022 Financial Results
Conference Call to Be Held at 7:30 A.M. U.S. Eastern Time on November 22, 2022
GUANGZHOU, China, Nov. 22, 2022 /PRNewswire/ -- Vipshop Holdings Limited (NYSE: VIPS), a leading online discount retailer for brands in China ("Vipshop" or the "Company"), today announced its unaudited financial results for the quarter ended September 30, 2022.
Third Quarter 2022 Highlights
Mr. Eric Shen, Chairman and Chief Executive Officer of Vipshop, stated, "In the third quarter, we demonstrated strong profitability through careful execution of our proven business model. Despite that the topline recovery was held back by macro and pandemic headwinds, our customer trend improved month by month. While adapting to external uncertainties, we focused on pushing ahead with initiatives to reinforce our business strengths for the long run. We continued to enhance our merchandising capabilities, adding more diverse and high-quality brand partners to expand our product offerings and capture the emerging consumer trends, which in turn helped us gain better customer traction. With our technology upgrade, we further enhanced our capabilities to serve both brand partners and customers through digitalized merchant platform and personalized recommendations, respectively. Looking ahead, we are committed to offering exceptional values on a wide array of branded quality products to win new customers and elevate the trust and loyalty of existing ones."
Mr. David Cui, Chief Financial Officer of Vipshop, further commented, "Our revenues for the third quarter were in line with our expectation, with an increasing contribution from active Super VIP customers. Through further optimization of operations, we also achieved meaningful growth in profit and margins on a year-over-year basis. Meanwhile, we continued to steadily execute our share repurchase program, with US$257.6 million of our ADSs being repurchased during the quarter, to preserve shareholder value. We are confident in maintaining quality and sustainable growth in the long term."
Third Quarter 2022 Financial Results
Total net revenues for the third quarter of 2022 were RMB21.6 billion (US$3.0 billion), as compared with RMB24.9 billion in the prior year period, primarily attributable to soft consumer needs for discretionary categories amid a challenging macro environment with the COVID-19 resurgence in China.
Gross profit for the third quarter of 2022 was RMB4.7 billion (US$658.3 million), as compared with RMB4.8 billion in the prior year period. Gross margin for the third quarter of 2022 increased to 21.7% from 19.4% in the prior year period.
Total operating expenses for the third quarter of 2022 decreased by 13.9% year over year to RMB3.7 billion (US$514.2 million) from RMB4.2 billion in the prior year period. As a percentage of total net revenues, total operating expenses for the third quarter of 2022 decreased to 16.9% from 17.0% in the prior year period.
INCOME FROM OPERATIONS
Income from operations for the third quarter of 2022 increased by 47.6% year over year to RMB1.1 billion (US$159.9 million) from RMB770.8 million in the prior year period. Operating margin for the third quarter of 2022 increased to 5.3% from 3.1% in the prior year period.
Non-GAAP income from operations for the third quarter of 2022, which excluded share-based compensation expenses, increased by 47.6% year over year to RMB1.6 billion (US$219.2 million) from RMB1.1 billion in the prior year period. Non-GAAP operating margin for the third quarter of 2022 increased to 7.2% from 4.2% in the prior year period.
Net income attributable to Vipshop's shareholders for the third quarter of 2022 increased by 168.4% year over year to RMB1.7 billion (US$237.1 million) from RMB628.4 million in the prior year period. Net margin attributable to Vipshop's shareholders for the third quarter of 2022 increased to 7.8% from 2.5% in the prior year period. Net income attributable to Vipshop's shareholders per diluted ADS for the third quarter of 2022 increased to RMB2.70 (US$0.38) from RMB0.92 in the prior year period.
Non-GAAP net income attributable to Vipshop's shareholders for the third quarter of 2022, which excluded (i) share-based compensation expenses, (ii) impairment loss of investments, (iii) investment loss(gain) and revaluation of investments excluding dividends, (iv) reconciling items on the share of equity method investments, and (v) tax effects on non-GAAP adjustments, increased by 55.0% year over year to RMB1.6 billion (US$224.2 million) from RMB1.0 billion in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders for the third quarter of 2022 increased to 7.4% from 4.1% in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS for the third quarter of 2022 increased to RMB2.56 (US$0.36) from RMB1.50 in the prior year period.
For the quarter ended September 30, 2022, the Company's weighted average number of ADSs used in computing diluted income per ADS was 623,699,624.
BALANCE SHEET AND CASH FLOW
As of September 30, 2022, the Company had cash and cash equivalents and restricted cash of RMB16.2 billion (US$2.3 billion) and short term investments of RMB3.4 billion (US$478.0 million).
For the quarter ended September 30, 2022, net cash generated from operating activities was RMB724.6 million (US$101.9 million), and free cash flow, a non-GAAP measurement of liquidity, was as follows:
Share Repurchase Program
During the quarter ended September 30, 2022, the Company repurchased US$257.6 million of its ADSs under its current US$1 billion share repurchase program, which is effective through March 2024. As of September 30, 2022, the Company has an un-utilized amount of US$565.3 million under this program.
For the fourth quarter of 2022, the Company expects its total net revenues to be between RMB30.7 billion and RMB32.4 billion, representing a year-over-year decrease rate of 10% to 5%. These forecasts reflect the Company's current and preliminary view on the market and operational conditions, which is subject to change.
The Company's business is primarily conducted in China and the significant majority of revenues generated are denominated in Renminbi. This announcement contains currency conversions of Renminbi amounts into U.S. dollars solely for the convenience of the reader. Unless otherwise noted, all translations from Renminbi to U.S. dollars are made at a rate of RMB7.1135 to US$1.00, the effective noon buying rate on September 30, 2022 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on September 30, 2022, or at any other rate.
Conference Call Information
The Company will hold a conference call on Tuesday, November 22, 2022 at 7:30 am US Eastern Time, 8:30 pm Beijing Time to discuss the financial results.
All participants wishing to join the conference call must pre-register online using the link provided below.
Registration Link: https://register.vevent.com/register/BIed5ad04451d64e4d9a7a23731f0c0488
Once pre-registration has been completed, each participant will receive dial-in numbers and a unique access PIN via email. To join the conference, participants should use the dial-in details followed by the PIN code.
A live webcast of the earnings conference call can be accessed at https://edge.media-server.com/mmc/p/emyjt2e8. An archived webcast will be available at the Company's investor relations website at http://ir.vip.com.
About Vipshop Holdings Limited
Vipshop Holdings Limited is a leading online discount retailer for brands in China. Vipshop offers high quality and popular branded products to consumers throughout China at a significant discount to retail prices. Since it was founded in August 2008, the Company has rapidly built a sizeable and growing base of customers and brand partners. For more information, please visit https://ir.vip.com/ .
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as Vipshop's strategic and operational plans, contain forward-looking statements. Vipshop may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Vipshop's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Vipshop's goals and strategies; Vipshop's future business development, results of operations and financial condition; the expected growth of the online discount retail market in China; Vipshop's ability to attract customers and brand partners and further enhance its brand recognition; Vipshop's expectations regarding needs for and market acceptance of flash sales products and services; competition in the discount retail industry; the potential impact of the COVID-19 to Vipshop's business operations and the economy in China and elsewhere generally; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Vipshop's filings with the SEC. All information provided in this press release is as of the date of this press release, and Vipshop does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Use of Non-GAAP Financial Measures
The condensed consolidated financial information is derived from the Company's unaudited interim condensed consolidated financial statements prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"), except that comparative consolidated statements of income and cash flows for the period presented and detailed footnote disclosures required by Accounting Standards Codification 270, Interim Reporting ("ASC270"), have been omitted. Vipshop uses non-GAAP net income attributable to Vipshop's shareholders, non-GAAP net income attributable to Vipshop's shareholders per diluted ADS, non-GAAP income from operations, non-GAAP operating income margin, non-GAAP net margin attributable to Vipshop's shareholders, and free cash flow, each of which is a non-GAAP financial measure. Non-GAAP net income attributable to Vipshop's shareholders is net income attributable to Vipshop's shareholders excluding (i) share-based compensation expenses, (ii) impairment loss of investments, (iii) investment loss(gain) and revaluation of investments excluding dividends, (iv) reconciling items on the share of equity method investments, and (v) tax effects on non-GAAP adjustments. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS is computed using non-GAAP net income attributable to Vipshop's shareholders divided by weighted average number of diluted ADS outstanding for computing diluted earnings per ADS. Non-GAAP income from operations is income from operations excluding share-based compensation expenses. Non-GAAP operating income margin is non-GAAP income from operations as a percentage of total net revenues. Non-GAAP net margin attributable to Vipshop's shareholders is non-GAAP net income attributable to Vipshop's shareholders as a percentage of total net revenues. Free cash flow is net cash from operating activities adding back the impact from internet financing activities and less capital expenditures, which include purchase and deposits of property and equipment and land use rights. Impact from internet financing activities added back or deducted from free cash flow contains changes in the balances of financial products, which are primarily consumer financing and supplier financing that the Company provides to customers and suppliers. The Company believes that separate analysis and exclusion of the non-cash impact of (i) share-based compensation, (ii) impairment loss of investments, (iii) investment loss(gain) and revaluation of investments excluding dividends, (iv) reconciling items on the share of equity method investments, and (v) tax effects on non-GAAP adjustments add clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses these non-GAAP financial measures for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance without the effect of (i) share-based compensation expenses, (ii) impairment loss of investments, (iii) investment loss(gain) and revaluation of investments excluding dividends, (iv) reconciling items on the share of equity method investments, and (v) tax effects on non-GAAP adjustments. Free cash flow enables the Company to assess liquidity and cash flow, taking into account the impact from internet financing activities and the financial resources needed for the expansion of fulfillment infrastructure, technology platform and Shan Shan Outlets. Share-based compensation expenses have been and will continue to be significant recurring expenses in its business. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company's net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. One of the key limitations of free cash flow is that it does not represent the residual cash flow available for discretionary expenditures.
The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Vipshop Holdings Limited Reconciliations of GAAP and Non-GAAP Results" at the end of this release.
Investor Relations Contact
Tel: +86 (20) 2233-0732
Email: [email protected]
SOURCE Vipshop Holdings Limited
Brave New World, Part 2: The Metaverse
Conference Boxed Lunches - For Paid Conference Pass Holders, Exhibitors, Sponsors, Speakers, Press