Vipshop : Q1 2023 Financial Results

Vipshop Reports Unaudited First Quarter 2023 Financial Results

Conference Call to Be Held at 7:30 A.M. U.S. Eastern Time on May 23, 2023

Guangzhou, China, May 23, 2023 - 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 March 31, 2023.

First Quarter 2023 Highlights

• Total net revenues for the first quarter of 2023 increased by 9.1% year over year to RMB27.5 billion (US$4.0 billion) from RMB25.2 billion in the prior year period.
• GMV1 for the first quarter of 2023 increased by 14.0% year over year to RMB48.5 billion from RMB42.6 billion in the prior year period.
• Gross profit for the first quarter of 2023 increased by 17.9% year over year to RMB5.9 billion (US$859.8 million) from RMB5.0 billion in the prior year period.
• Net income attributable to Vipshop's shareholders for the first quarter of 2023 increased by 69.6% year over year to RMB1.9 billion (US$270.7 million) from RMB1.1 billion in the prior year period.
• Non-GAAPnet income attributable to Vipshop's shareholders2 for the first quarter of 2023 increased by 45.8% year over year to RMB2.1 billion (US$301.3 million) from RMB1.4 billion in the prior year period.
• The number of active customers3 for the first quarter of 2023 increased by 4.0% year over year to 43.8 million from 42.2 million in the prior year period.
• Total orders4 for the first quarter of 2023 increased by 10.8% year over year to 184.4 million from 166.4 million in the prior year period.

Mr. Eric Shen, Chairman and Chief Executive Officer of Vipshop, stated, "We started 2023 with solid business momentum as we continued to execute our merchandising strategy diligently and effectively. Our abundant and diverse assortments at great value caters well to consumer appetite for discretionary spending

1. "Gross merchandise value (GMV)" is defined as the total Renminbi value of all products and services sold through the Company's online sales business, online marketplace platform, Shan Shan Outlets, and other offline stores during the relevant period, including through the Company's websites and mobile apps, third-party websites and mobile apps, Shan Shan Outlets, and other offline stores, which were fulfilled by either the Company or its third-party merchants, regardless of whether or not the goods were delivered or returned. GMV includes shipping charges paid by buyers to sellers. For prudent considerations, the Company does not consider products or services to be sold if the relevant orders were placed and canceled pre-shipment and only included orders that left the Company's or other third-party vendors' warehouses.
2. Non-GAAPnet income attributable to Vipshop's shareholders is a non-GAAP financial measure, which, for the periods presented in this press release, is defined as net income attributable to Vipshop's shareholders excluding (i) share-based compensation expenses, (ii) investment loss (gain) and revaluation of investments excluding dividends, (iii) reconciling items on the share of equity method investments, and (iv) tax effects on non-GAAP adjustments.
3. "Active customers" is defined as registered members who have purchased from the Company's online sales business or the Company's online marketplace platforms at least once during the relevant period.
4. "Total orders" is defined as the total number of orders placed during the relevant period, including the orders for products and services sold through the Company's online sales business and the Company's online marketplace platforms (excluding, for the avoidance of doubt, orders from the Company's offline stores and outlets), net of orders returned.

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along with a rebound in social activities post the pandemic. In the first quarter, we focused more on building our strategic and long-term capabilities in merchandise expansion, customer engagement and service excellence that truly differentiate us. We are reinforcing our value-for-money perception across our merchandise offerings to keep Vipshop top-of-mind among customers. In addition, we are positioned to expand the base of high-value customers and Super VIP members. We are confident about our goal to stay on quality and consistent growth path for the long term."

Mr. David Cui, Chief Financial Officer of Vipshop, further commented, "We are pleased to deliver a strong set of first quarter results. The revenue rise was driven by healthy customer growth with increased spending. Profitabiliy was exceptionally strong because of sales increase and efficiency gains. In addition, we continued to proactively return value to shareholders, with a new share repurchase program in place after we fully utilized the remaining amount under the previous US$1 billion program during the first quarter. Looking ahead, we believe we are in a great shape to achieve solid topline expansion while sustaining healthy profitability."

First Quarter 2023 Financial Results

REVENUES

Total net revenues for the first quarter of 2023 increased by 9.1% year over year to RMB27.5 billion (US$4.0 billion) from RMB25.2 billion in the prior year period, primarily attributable to the growth in active customers and spending driven by the recovery in consumption of discretionary categories.

GROSS PROFIT

Gross profit for the first quarter of 2023 increased by 17.9% year over year to RMB5.9 billion (US$859.8 million) from RMB5.0 billion in the prior year period. Gross margin for the first quarter of 2023 increased to 21.4% from 19.8% in the prior year period.

OPERATING EXPENSES

Total operating expenses for the first quarter of 2023 increased by 4.2% year over year to RMB4.1 billion (US$591.4 million) from RMB3.9 billion in the prior year period. As a percentage of total net revenues, total operating expenses for the first quarter of 2023 decreased to 14.7% from 15.4% in the prior year period.

• Fulfillment expenses for the first quarter of 2023 increased by 5.2% year over year to RMB1.8 billion (US$259.7 million) from RMB1.7 billion in the prior year period. As a percentage of total net revenues, fulfillment expenses for the first quarter of 2023 decreased to 6.5% from 6.7% in the prior year period.
• Marketing expenses for the first quarter of 2023 increased by 10.2% year over year to RMB836.9 million (US$121.9 million) from RMB759.3 million in the prior year period. As a percentage of total net revenues, marketing expenses for the first quarter of 2023 was 3.0%, which stayed flat as compared with the prior year period.
• Technology and content expenses for the first quarter of 2023 increased by 0.6% year over year to RMB392.8 million (US$57.2 million) from RMB390.4 million in the prior year period. As a percentage of total net revenues, technology and content expenses for the first quarter of 2023 decreased to 1.4% from 1.5% in the prior year period.

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• General and administrative expenses for the first quarter of 2023 decreased by 0.7% year over year to RMB1.0 billion (US$152.6 million) from RMB1.1 billion in the prior year period. As a percentage of total net revenues, general and administrative expenses for the first quarter of 2023 decreased to 3.8% from 4.2% in the prior year period.

INCOME FROM OPERATIONS

Income from operations for the first quarter of 2023 increased by 54.8% year over year to RMB2.0 billion (US$289.1 million) from RMB1.3 billion in the prior year period. Operating margin for the first quarter of 2023 increased to 7.2% from 5.1% in the prior year period.

Non-GAAP income from operations 5 for the first quarter of 2023, which excluded share-based compensation expenses, increased by 50.6% year over year to RMB2.3 billion (US$333.4 million) from RMB1.5 billion in the prior year period. Non-GAAP operating income margin6 for the first quarter of 2023 increased to 8.3% from 6.0% in the prior year period.

NET INCOME

Net income attributable to Vipshop's shareholders for the first quarter of 2023 increased by 69.6% year over year to RMB1.9 billion (US$270.7 million) from RMB1.1 billion in the prior year period. Net margin attributable to Vipshop's shareholders for the first quarter of 2023 increased to 6.8% from 4.3% in the prior year period. Net income attributable to Vipshop's shareholders per diluted ADS7 for the first quarter of 2023 increased to RMB3.16 (US$0.46) from RMB1.61 in the prior year period.

Non-GAAP net income attributable to Vipshop's shareholders for the first quarter of 2023, which excluded

1. share-basedcompensation expenses, (ii) investment loss (gain) and revaluation of investments excluding dividends, (iii) reconciling items on the share of equity method investments, and (iv) tax effects on non- GAAP adjustments, increased by 45.8% year over year to RMB2.1 billion (US$301.3 million) from RMB1.4 billion in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders8 for the first quarter of 2023 increased to 7.5% from 5.6% in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS9 for the first quarter of 2023 increased to RMB3.52 (US$0.51) from RMB2.09 in the prior year period.

For the quarter ended March 31, 2023, the Company's weighted average number of ADSs used in computing diluted income per ADS was 588,062,755.

BALANCE SHEET AND CASH FLOW

1. Non-GAAPincome from operations is a non-GAAP financial measure, which is defined as income from operations excluding share-based compensation expenses.
2. Non-GAAPoperating income margin is a non-GAAP financial measure, which is defined as non-GAAP income from operations as a percentage of total net revenues.
3. "ADS" means American depositary share, each of which represents 0.2 Class A ordinary share.
4. Non-GAAPnet margin attributable to Vipshop's shareholders is a non-GAAP financial measure, which is defined as non- GAAP net income attributable to Vipshop's shareholders, as a percentage of total net revenues.
5. Non-GAAPnet income attributable to Vipshop's shareholders per diluted ADS is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to Vipshop's shareholders, divided by the weighted average number of diluted ADS outstanding for computing diluted earnings per ADS.

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The Company also announced today that it has appointed Mr. Mark Wang as its chief financial officer, effective May 24, 2023. Mr. Wang will succeed Mr. David Cui, who has decided to resign from this position for personal reasons.

Mr. Eric Ya Shen, Chairman and Chief Executive Officer of Vipshop, said, "On behalf of the board of directors and management team of the Company, I would like to thank David for his contributions and tireless work at Vipshop over the past three years, and wish him all the best in his future endeavors. I would also like to warmly welcome Mark to the Company. His extensive experience in finance and accounting will make him a great addition to the Vipshop team."

Mr. David Cui said, "It has been a valuable experience working at Vipshop. I would like to thank the board of directors of the Company, Eric and the investment communities for your trust and support. Together, we have witnessed Vipshop's solid achievements. I believe the Company has built a strong foundation and financial position that will support its long-term growth strategy."

Prior to joining Vipshop, Mr. Wang served as the chief financial officer of Benlai Group, an online fresh grocery player in China, from April 2021 to November 2022. From October 2017 to March 2021, Mr. Wang served as the vice president in the finance department of Xiaomi Corporation (HKEX: 1810). Prior to that, Mr. Wang worked at Changyou.com Limited as a finance director from July 2014 to September 2017. From April 2013 to June 2014, Mr. Wang was a senior manager in the finance department of Huawei Technologies Co., Ltd. Prior to that, Mr. Wang served as a tax manager at PricewaterhouseCoopers Consultants (Shenzhen) Co., Ltd. from August 2006 to April 2013. Currently, Mr. Wang has also served as an independent director of Beijing Kingsoft Office Software, Inc. (SSE: 688111) since April 2022. Mr. Wang received a bachelor degree in finance from Beijing International Studies University.

Business Outlook

For the second quarter of 2023, the Company expects its total net revenues to be between RMB27.0 billion and RMB28.2 billion, representing a year-over-year increase of approximately 10% to 15%. These forecasts reflect the Company's current and preliminary view on the market and operational conditions, which is subject to change.

Exchange Rate

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 RMB6.8676 to US$1.00, the effective noon buying rate on March 31, 2023 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 March 31, 2023, or at any other rate.

Conference Call Information

The Company will hold a conference call on Tuesday, May 23, 2023 at 7:30 am U.S. Eastern Time, 7:30 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/BIa7b0f3c3d71c4ae9a4e24610c98c4ab5

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