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DATE
Tuesday, May 20, 2025 at 7:30 a.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Eric Ya Shen
Chief Financial Officer — Mark Wang
Chief Operating Officer — Jessie Zheng
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TAKEAWAYS
Total Net Revenues: Total net revenues of RMB26.3 billion for Q1 2025.
Gross Profit: Gross profit of RMB6.1 billion for Q1 2025.
Gross Margin: Gross margin of 23.2% for Q1 2025.
Total Operating Expenses: a 1.6% year-over-year decrease.
Fulfillment Expenses: Net income attributable to shareholders of RMB1.9 billion for Q1 2025; Represented 7.2% of revenue for Q1 2025.
Marketing Expenses: Marketing expenses of RMB732.1 million for Q1 2025.
Technology and Accounting Expenses: Technology and accounting expenses of RMB449.1 million for Q1 2025.
General and Administrative Expenses: General and administrative expenses of RMB950.8 million for Q1 2025.
Operating Margin: 8.7%.
Non-GAAP Income from Operations: Non-GAAP income from operations of RMB2.6 billion for Q1 2025, down from RMB3.1 billion; Non-GAAP operating margin of 10.0% for Q1 2025, compared to 11.1% in Q1 2024.
Net Income Attributable to Shareholders: RMB1.9 billion for Q1 2025.
Net Margin: 7.4%, compared to 8.4% for Q1 2024.
Non-GAAP Net Income: Non-GAAP net margin of 8.8% for Q1 2025 versus 9.3% in Q1 2024.
Cash, Cash Equivalents, and Restricted Cash: Cash, cash equivalents, and restricted cash of RMB28.9 billion as of March 31, 2025; Short-term investments of RMB192.3 million as of Q1 2025.
Capital Return: Over $400 million returned to shareholders year to date, including $250 million as dividends and more than $150 million in share repurchases.
Revenue Guidance for Next Quarter: Expected total net revenues of RMB25.5 billion to RMB26.9 billion for Q2 2025, reflecting a year-over-year decrease of approximately 5% to 0%.
Super VIP (SVIP) Membership: Active SVIP customers increased by 18% in Q1 2025 and now represent 51% of online spending.
Apparel Category Performance: Achieved positive growth in the apparel category.
Return Rate: Return rates show overall stabilization in policy with low single-digit increases each year.
Trading Program Contribution: Management expects the trading program to contribute around 1% of our total GMV, indicating minimal financial impact.
REIT Initiative Update: Application for the Ningbo Shenzhen Outlet REIT has been submitted for review and approval by regulators.
Hong Kong Listing: Management is closely following changes in the capital market developments and evaluating the option of a Hong Kong listing internally.
SVIP Growth Outlook: Management stated, 'We have strong confidence that we can continue to achieve double-digit growth for SVIP customers for the full year of 2025.'
SUMMARY
Vipshop Holdings Limited operates in a challenging discretionary spending environment, recorded declines in revenue, profit, and margins for Q1 2025, yet maintaining healthy cash reserves and continuing its shareholder return program. Super VIP membership remains a core pillar of growth strategy, with double-digit increases in the customer base and SVIP representing 51% of online spending in Q1 2025. Management expects growth to resume in the second half of 2025, and projects comparable net margins for the full year, indicating confidence in stable profitability. Strategic investments target exclusive merchandise offerings, AI-driven customer experience enhancements, and expansion of outlet and REIT businesses.
Eric Ya Shen stated, We see the apparel category achieved positive growth in the first quarter.
Management indicated plans to further differentiate and expand SVIP member benefits, including travel-related privileges introduced in the second quarter.
Gross profit (GAAP) declined to RMB6.1 billion in Q1 2025, alongside prudent increases in customer and brand investment and organizational restructuring to align with growth priorities.
Management confirmed minimal direct exposure to U.S. tariff risks and is leveraging domestic supply opportunities as export goods shift to China markets.
Marketing efficiency remains a focus, with current and planned spending levels not expected to pressure margins.
AI is being applied across operations to enhance product recommendations, review summaries, and generate targeted marketing content for multiple platforms.
Return rates increased modestly and continue to be tightly managed, remaining below dramatic increases seen at competitors.
For the full year 2025, management maintains its commitment to return no less than 75% of non-GAAP FY2024 net income to shareholders through dividends and buybacks.
INDUSTRY GLOSSARY
SVIP (Super VIP): Vipshop Holdings Limited’s premium membership program, offering exclusive deals and privileges to high-frequency, high-value customers.
GMV (Gross Merchandise Value): Total value of merchandise sold over a given period via the company’s online platforms, prior to deductions such as returns.
REIT (Real Estate Investment Trust): A financial structure enabling the pooling of real estate assets, such as outlet malls, for public investment and strategic capital raising.
Full Conference Call Transcript
Eric Ya Shen: Good morning and good evening everyone. Welcome and thank you for joining our first quarter 2025 earnings conference call. Our first quarter results came in largely as expected. We continue to make progress on our path to return to growth. Our team stayed ahead of our trend to offer more unique and quality off-price seasonal items that were more relevant to customer preference. We see the apparel category achieved positive growth in the first quarter. Super VIP membership is extending its double-digit growth. In the first quarter, active SVIP customers increased by 18% from a year ago and accounted for 51% of our online spending. This hardcore cohort of customers shows clear strength in terms of sales and revenue growth.
We are keeping a close eye on the broader customer trend. We still see customers choose more willingness to spend on family and seasonal essentials, and they are gradually catching up on spending in most discretionary categories. We remain anchored to the value proposition of discount retail for brands, certainly upon our long-standing merchandising strategy. We are also making changes throughout the organization in how we align with growth priorities, operate in greater synergy, and drive unique compelling customer value. Our teams are restructured in a way that is more aligned and efficient so that they can act with speed to turn potential into growth.
We will highlight the strategic priorities to grow the share of brand supply at exceptional value, to invest in customer engaging initiatives that drive traffic, frequency, and multi-category purchases, and to speed up technology advancement that's driven value creation for business. Starting with merchandising, we are focused on the brand and the products where we have made the biggest differences for customers. It's key factors in driving traffic and customer growth. That's why we believe in the power of merchandising capabilities, which we are leveraging to quickly adapt to trends across fashion apparel, athleisure, and family lifestyle categories, continuously giving customers more reasons to stay here.
One of the best examples is our made-for-Vipshop Holdings Limited business, which continued to outperform in the first quarter. A total of more than 200 brands joined this program by the end of March. We work closely with brand partners in transforming customized offerings based on customer insights and changing trends. We are moving fast to deliver a more compelling brand of quality and value. We also have the prominent channel medical Vipshop Holdings Limited. We expect it to become the go-to place for customers to discover affordable on-trend products that they cannot find anywhere else. In the first quarter, we also unveiled more unexpected high fashion selections to keep customers coming back to see what's new.
Customers were overjoyed with some of the best deals they got, such as Beverage Coach, and more, or through the invite-only private sales. We are trying to gain traction with customers as a place for flash sales and treasure hunting. Turning to customers, we aspire to bring together the best of what they want in a unique shopping experience on top of the compelling alloy product offering. Customers know that we stand behind what we sell. That's why our SVIP customers are clearly growing more attracted to our platform because of our affordable and reliable nature. We have plans to make the loyalty program bigger and better. We are focused on how we could further differentiate it.
For example, our customers are often family shoppers who love travel. So new in the second quarter, SVIP members receive more relevant and rewarding life privileges, such as gold card upgrades for Changlong, SIM card, and hotel accommodations at the store. We are also increasing the power of AI throughout the customer experience in many ways. We will improve our AI-powered algorithm to enhance the logic behind the search and recommendations. We are leveraging general AI to create high-impact enterprises, including smart mix-and-match content that makes product pages more compelling and automated customer review summaries that highlight key insights to help shoppers.
We will also apply AI to customer service handling product inquiries, personal-related recommendations, and potentially acting as a smart shopping assistant. Also, by leveraging general AI, we generate targeted marketing creatives for diverse platforms and audiences, helping enhance customer acquisition efficiencies. So we will continue to invest in opportunities for long-term success. We look to set ourselves apart, provide more than what customers expect, and build a unique experience against a backdrop of ongoing uncertainty. I'm confident in our teams who have navigated through several years of volatility to keep pace with customer trends, double down on the execution of our strategy, and regain growth track.
At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results.
Mark Wang: Thanks, Eric Ya Shen, and hello, everyone. In the first quarter, we obtained solid profitability despite sales pressure due to muted sentiments on discretionary spending. As we prudently increased investment in building customer and brand momentum to seize growth opportunities, margins softened modestly compared with a year ago, still held up healthy within our expectations. It underscored our capacity to drive operational efficiency, built on years of efforts in refining internal management. As Eric Ya Shen mentioned, we are driving important themes within the organization for our long-term success. It will be an enhanced mindset across the business to fund growth synergy and efficiency opportunities we can take to the bottom line.
We will remain focused on executing these strategic priorities with greater agility while maintaining discipline. Turning to our shareholder return program, our full-year 2025 commitment remains unchanged, returning no less than 75% of the RMB9 billion full-year 2024 non-GAAP net income to shareholders. Year to date, we have returned over $400 million to shareholders, which includes approximately $250 million in annual dividend distribution and over $150 million in share repurchase. Now moving to our detailed quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented below are in renminbi, and all the percentage changes are year-over-year changes unless otherwise noted.
Total net revenues for the first quarter of 2025 were RMB26.3 billion, compared with RMB27.6 billion in the prior year period. Gross profit was RMB6.1 billion compared with RMB6.5 billion in the prior year period. The gross margin was 23.2% compared with 23.7% in the prior year period. Total operating expenses decreased by 1.6% year over year to RMB4.0 billion from RMB4.1 billion in the prior year period. As a percentage of total net revenues, total operating expenses were 15.3%, compared with 14.8% in the prior year period. Fulfillment expenses decreased by 4.8% year over year to RMB1.9 billion from RMB2.0 billion in the prior year period.
As a percentage of total net revenues, fulfillment expenses were 7.2%, which remained stable as compared with that in the prior year period. Marketing expenses increased by 6.0% year over year to RMB732.1 million from RMB690.9 million in the prior year period. As a percentage of total net revenues, marketing expenses were 2.8%, compared with 2.5% in the prior year period. Technology and accounting expenses decreased by 6.8% year over year to RMB449.1 million from RMB481.9 million in the prior year period. As a percentage of total net revenues, technology and accounting expenses were 1.7%, which remains stable as compared with that in the prior year period.
General and administrative expenses increased by 2.3% year over year to RMB950.8 million from RMB929.1 million in the prior year period. As a percentage of total net revenues, general and administrative expenses were 3.6% compared with 3.4% in the prior year period. Income from operations was RMB2.3 billion, compared with RMB2.8 billion in the prior year period. Operating margin was 8.7% compared with 10.0% in the prior year period. Non-GAAP income from operations was RMB2.6 billion, compared with RMB3.1 billion in the prior year period. The non-GAAP operating margin was 10.0% compared with 11.1% in the prior year period. The net income attributable to Vipshop Holdings Limited shareholders was RMB1.9 billion, compared with RMB2.3 billion in the prior year period.
Net margin attributable to Vipshop Holdings Limited shareholders was 7.4% compared with 8.4% in the prior year period. Net income attributable to Vipshop Holdings Limited shareholders per diluted ADS was RMB3.67, compared with RMB4.18 in the prior year period. Non-GAAP net income attributable to Vipshop Holdings Limited shareholders was RMB2.3 billion, compared with RMB2.6 billion in the prior year period. Non-GAAP net margin attributable to Vipshop Holdings Limited shareholders was 8.8% compared with 9.3% in the prior year period. Non-GAAP net income attributable to Vipshop Holdings Limited shareholders per diluted ADS was RMB4.43, compared with RMB4.66 in the prior year period.
As of March 31, 2025, the company had cash and cash equivalents and restricted cash of RMB28.9 billion and short-term investments of RMB192.3 million. Looking forward to the second quarter of 2025, we expect our total net revenues to be between RMB25.5 billion and RMB26.9 billion, representing a year-over-year decrease of approximately 5% to 0%. Please note that this forecast reflects our current preliminary view of the market and operational conditions, which is subject to change. With that, I would now like to open the call to Q&A.
Operator: Thank you. One on your telephone and wait for your name to be announced. Please standby while we compile the Q&A roster.
Operator: Thank you. We'll now take our first question. First question is from Thomas Chong from Jefferies. Please go ahead.
Thomas Chong: Thank you for taking my question. My question is about the recent consumer sentiment. Can management comment about the monthly GMV trend so far we are seeing in Q2, given a lot of events happening like tariff, macro headwinds, etcetera? And how should we think about the revenue and the earnings outlook for the full year 2025? And my second question is about the upcoming campaign. Can management comment about the latest sentiment and how the event is different from last year or similar to last year from an industry perspective? Thank you.
Eric Ya Shen: Okay. Regarding your first question, consumer sentiment. I think in the past few months, we do see signs of improvement in overall consumption sentiment. After a muted start in January and February, actually, we do see some marginal improvement in March in terms of sales and into the second quarter, April plus later date, we see actually even better sales momentum. And for the 2025 full-year outlook, we maintain our view that we are going to regain growth track in the second half in the third quarter or the fourth quarter after a negative 5% to 0% growth trend in the first half.
And on margins, we have a good demand of our overall profitability because of our disciplined investment and also management. So we maintain our view on margins as well. We believe that on a full-year basis, our net margins will be largely comparable as we had achieved in 2024. And in terms of the second half June 18th promotion, actually, you may have noticed that the promotion has been quite lengthy. It lasted for a month, and consumers are growing accustomed to these promotions and subsidies. Everything is readily available. They actually don't have to stockpile anything, but they do look for value when they look at some deals.
So they are still responding to promotions if these meet their shopping needs in terms of family and seasonal essentials. But the overall trend becomes quite normalized for everybody. So from Vipshop Holdings Limited, we just focus on providing unique quality and off-price, value-for-money deals for consumers. Thank you.
Operator: Thank you. We'll now take our next question. This is from Alicia Yap from Citigroup. Please go ahead.
Alicia Yap: Hi. Thank you, Jessie. Thanks, management, for taking my question. I have questions related to the tariff. Understand that our business does not have a direct collaboration with the cross-border sales and also the tariffs. But just wonder if some of these excess supply from apparel that's supposed to aim for the export market were temporarily diverted to the domestic market in April or the last couple of months. That actually attracted away some of the user demand to the competitor site. Second quick question is that just wondering if management has any view about potential secondary listing in Hong Kong? Thank you.
Eric Ya Shen: Let me translate. In terms of the tariff question, we have very limited exposure to it. And we do have a very limited amount of directed purchase from the US market, mostly healthcare products or non-US origin products. But overall, the exposure is very small. And in terms of export companies trying to divert their export goods to the domestic market, we do see that because in April, we have already started to work with these apparel companies trying to see the possibilities to help them gain access to our customers on Vipshop Holdings Limited.
But it takes time because there are a lot of different standards for export versus domestically manufactured products in terms of brand trademark and quality certification, etcetera. We believe over time, export companies, especially those with quality supply chain capabilities, will choose the market as one of the options for them to bring a wider base of consumers within China. And we are trying to grab any opportunities arising from that in terms of getting access to quality brand supply, etcetera. But it takes time.
Mark Wang: Okay, Alicia, thanks for your question regarding the Hong Kong listing. We have been closely following changes in the capital market developments and evaluating the option of a Hong Kong listing internally. So we will keep the market posted if there's any progress. Thank you.
Operator: Thank you. We'll now take our next question. This is from Wei Xiong from UBS. Please go ahead.
Wei Xiong: Thank you, management, for taking my questions. I have two questions. The first one is regarding our SVIP program. We can see the SVIP member growth has been very steady over the past few quarters. Can we please update our strategy here to further drive the SVIP growth going forward? And do we have any goal for the second half and next year? And second, just a quick one. Could management update the competitive landscape change you have seen over the past few weeks and over the past few months amid the macro uncertainty for the e-commerce competition? Thank you.
Eric Ya Shen: First off, SVIP customers, we do see very solid momentum in the growth of SVIP customers. It has expanded to double-digit growth for several quarters and it continues to be so in Q1 and Q2 to date. We have strong confidence that we can continue to achieve double-digit growth for SVIP customers for the full year of 2025. We are also working on a lot of initiatives to drive the SVIP customer growth, especially in terms of merchandising. We are trying to provide more unique exclusive off-price product offerings through invite-only private sales to attract more SVIP customers. By doing so, we believe that we will increase the retention of the SVIP customers as well.
We believe that over time, SVIP contribution in terms of online spending will grow from the current 51% to even a higher level in the foreseeable future. In terms of industry dynamics, it's a very hypercompetitive environment. We believe that the only way for Vipshop Holdings Limited to survive, compete, and win in this e-commerce space is to remain anchored to the value proposition of discount retail for brands. Although there are a lot of business models in terms of how to sell the products, including live streaming platforms or shelf-based e-commerce, the long-term factors that drive consumers in terms of where they choose to shop have always been great merchandise, great prices, and great services.
We will continue to deepen our initiatives to enhance the flywheel from merchandise to value to customer engagement. We believe that by remaining highly focused on this retail brand, we will gradually become the online outlet and the gateway for consumers to access discount product offerings. We believe we have the capabilities and the capacity to continue to win in this market. Thank you.
Operator: We will now take our next question. This is from Jialong Shi from Nomura. Please go ahead.
Jialong Shi: Good evening, management. I have three questions. The first question is, what is the latest trend in shopping frequency and ARPU trend for Super VIP members? The second question is, what is the latest trend for your return rate? And third and last question is, despite all these challenges for the e-commerce industry, does management still maintain the previous capital return guidance for this year? Thank you.
Eric Ya Shen: Okay. First, let me translate your questions. In terms of SVIP operating metrics, it has been quite stable. ARPU has seen a small decline because of the dilutive impact from new SVIP customers who need time to ramp up their spending. But if we look at the two-year cohort of SVIP customers, the ARPU decline is much smaller. We are trying to leverage more unique and exclusive merchandising to increase loyalty, frequency, and cross-category purchase opportunities for SVIP customers. We see a lot of potential there because many of our SVIP customers are family shoppers who look to shop across categories for the whole family.
It's just a matter of time for us to optimize our personalized recommendation and translate this cross-category purchase potential into growth. In terms of return rates, overall, the return rate has been stabilized. In the past quarter, it has increased by a little over two percentage points. We have a very stable return policy for customers, and in the past six to seven years, we have adhered to that policy. That's why our return rate has moderated over time to a low single-digit increase every year, rather than dramatic increases seen on some other platforms.
Mark Wang: Okay, Jialong. Regarding your third question, let me give you a full picture. Though we are facing short-term pressure and dynamic industry changes, we have a solid business model with discipline in operations and solid execution. We are confident that we can achieve relatively stable and healthy profit and cash inflow. We have returned over $3 billion to shareholders since April 2021, in the form of buybacks and dividends. Year to date, we have returned over $400 million to shareholders, which includes approximately $250 million in annual dividend distribution and over $150 million through our buyback program.
I would like to emphasize that for 2025, as we mentioned before, we are going to return no less than 75% of our full-year 2024 non-GAAP net income to shareholders in discretionary share repurchase and dividend distribution. Thank you.
Operator: Thank you. We'll now take our next question. This is from Eddy Wang from Morgan Stanley. Please go ahead.
Eddy Wang: Thank you, management, for taking my questions. I have two questions. First is about the trading policy. I noticed that we have a channel on the app which is focused on the trading program. So just wondering what kind of sales and incremental sales or GMV actually come from the trading program. And how should we expect this benefit in the second quarter and the second half? Second question is, I just noticed that we have issued a REIT for the online. Is there any kind of change in the strategy after we get the funding from the REIT? Thank you.
Eric Ya Shen: So first, on the trading program, the trading program covers home appliances, which is not a strong fit for Vipshop Holdings Limited. Consumers don't buy home appliances on Vipshop Holdings Limited. They just don't have that kind of mindshare. So in total, we expect any contribution from the trading program will be around 1% of our total GMV. So it's not going to have a meaningful impact on our financial performance.
Mark Wang: Okay, Eddy, thanks for your second question regarding the Shenzhen REIT program. The outlet business in China is huge and fast-growing. The outlet business is a long-proven and profitable offline business, which positions itself as a discount retail for brands. Vipshop Holdings Limited is also a leading online discount retail for brands. So definitely, we have huge synergies with the outlet business, not only from the partner side but also from the user side. At the end of last quarter, we have 20 outlet stores. We are one of the largest outlet groups in China.
The underlying asset, Ningbo Shenzhen Outlet, has been in operation for 14 years and is one of our best and most popular outlets in the Shenzhen Group. We have submitted the REIT application documents to the China Securities Regulatory Committee and the Shanghai Stock Exchange for their review and approval. The REIT could be regarded as a financing platform. We can respond by enrolling more outlet products into the REIT, and the funds can be used to reinvest into new outlet projects and the merger and acquisition of existing projects, which will help us to extend our outlet business efficiently. Thank you.
Operator: Thank you. We'll now take our next question. This is from Roger Duan from Barclays. Please go ahead.
Roger Duan: Thank you, management, for taking my question. My question is on sales, marketing, and margins for this year. Management previously mentioned that we want to have GMV return to positive growth in the second half of the year while also maintaining a quite stable margin profile for the remainder of the year. So my question is on how should we think about your marketing campaign cadence and the balance between spending on marketing and maintaining a margin profile for the year. Thank you.
Eric Ya Shen: In terms of marketing spend, our marketing spend has been very measured, and we are going to continue that for the rest of the year. If you look at our numbers, in 2024, as a percentage of total revenue, it was 2.7%, and in Q1, it was 2.8%. For the full year, we believe it will be within 3%. We continue to evaluate the effectiveness of our marketing initiatives from a lot of perspectives, essentially the LTV side. We don't believe that marketing spend is the only way to drive customer growth. We believe a combination of merchandise value and services will help drive customer growth.
If you look at our Q1 and Q2 growth in new customers, they are growing nicely. So we actually don't spend so much on marketing. Of course, we are trying to diversify our marketing channels, including branding through TV sponsorship and targeted marketing on a lot of external channels, and we are also expanding partnerships with major media outlets. We are trying to look for the most valuable channels for us to invest in that can have the best ROI and also have sustainable growth in high-quality customers. So, basically, we have a very good command of our marketing spend, and we don't think it's going to be a drag on our margins. Thank you.
Operator: Due to time constraints, that concludes today's Q&A session. At this time, I will turn the conference back to Jessie Zheng for any closing remarks.
Jessie Zheng: Thank you for taking the time to join us today. If you have any questions, please do not hesitate to contact our IR team. We look forward to speaking with you next quarter.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.