- Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen, and thank you for standing by for So-Young's Third Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I will now like to turn the meeting over to your host for today's call, Ms. Vivian Xu. Please proceed.

Vivian Xu

thank call. joining and XXXX third operator, conference earnings you, you So-Young's for quarter Thank that discussion the note the Please the safe made forward-looking harbor under statements provisions of U.S. today will contain Reform Private Securities of Act and XXXX. Litigation the

report public statements including not may actual Form that outlined limited on our expectations. to results and uncertainties our and our from cause Potential materially those subject risks risks filings differ include Forward-looking SEC, are current uncertainties annual with to the to but XXF. in are

So-Young undertake statements, obligation update except to as does law. any not any required forward-looking under applicable

us Mr. the Chairman I Co-Founder, Joining Jin. over the on this like would today Xing call call Xing Jin, time, please? At CEO. is to our turn to Mr. and Yes,

Xing Jin

have you Call. Despite joining uncertainty, XXXX with remained for solid during consumer RMB XXX market each of repeated quarter increase third parts financial were with quarter, revenues performance our in China's country. the X this certain pressure Total and representing XXXX. previous in now domestic of Thank in and a X% third the achieved Earnings first of of under So-Young's sequential million, improvements the COVID-XX market Hello, the quarter, line quarters in delivered sequential overall gradual everyone. about guidance. we we outbreaks

service institutions, medical well year. to paying our prior medical progress established offering. up on service more number XX% among agreements reached recognized X,XXX, of with thanks the Our new device were providers, So-Young's and cooperation from we The platform product providers

and our enable of segmentation medical deep different demand progress of refine on We side, user big to location user based different characteristics. operations groups the cater understanding our aesthetics us user cohort and on data in leverage the to some continue analysts. consumers, which to our made consumer edge efforts, to our On we of users serve

orders. to to customers we promotions with used budget, treatments popular them tox new new encourage for place and For limited the

verified at well-known the products to their enhance customers grew order stickiness. our quarter, segment, X% For medium-price platform we user promoted on third In of number a sequentially.

So-Young program we second-tier In the consumers' Prime medical the The clear cities consumption. aimed So-Young for establishing customers aesthetics transparent simplifying at launched majority error industry in providing addition, and of standards, services, and first our is program of Prime who light and the and customers decision-making solutions process account targeting with mind. to medical beauty costs, reducing for pursue trial enabling their one-stop aesthetic peace

value RMB skin compared the previous launched GMV order with ultrasonic increased online category over [gong] by monthly remodeling essential. X,XXX over The of months. during For such XX% as quarter, the with

operating In China expanded Select to terms end in as of cities the XX of our of major had October. strategy, So-Young

strategy build providing service high-quality preference value. As Select, year-over-year. of of offer rollout and with by spend over providers superior medical increased quarter-over-quarter part to XX% our their brand In service of enables for So-Young our the on branded the So-Young the platform user to for users' providers quarter, about caters XX% our and third promotional service enhanced and Select long-term experience, providers

So-Young conversion decision-making helps information in choose doctors, premium have Meanwhile, service users conversion. Doctor, So-Young rate improvement gradual for useful saw on medical facilitate platform. which our driving Select, Select also We under the to providing rolled their user out providers also we and

direction. towards and self-regulatory with regulatory So-Young consumers. work that platforms force of interest In the that the harms emphasize advertising pricing, are our off-line on the and misinformation policies a years, national regulatory requires and recent terms down been transparent industry implementing actions, for online consistent has cracking of for indicating pricing regulation, The right consistent is online the

industry promote self-regulation supply the side of ecosystem. governance, continue and Regarding we strengthened in our quality to internal within platform the the

and eliminate system optimized force the thereby industry. took to and prevention also promoting the and data and the development established identify our healthier and antifraud of reviews We initiative transactions scheme, force

Looking overall the term, industry, achieve near while increase cut took the stringent and it term, aesthetic on we intact the profitability pressure for near is positive long in quarterly measures under Chinese for medical the to Therefore, basis. at efficiency term. cost the perspective and a is

the Inc. net profit the attributable During quarter, RMB to non-GAAP million. X.X International So-Young reached

have that able are improvements. sufficient remains cash healthy maintained ensure constant We and company financial to conditions make we reserves and to the strong,

business and work Going consumers user serve better experience. investing in to will forward, aesthetic evaluating we by medical the our

browsing to and aesthetic Korea XX in grew year-over-year and the in to outbreak medical by the global Sullivan, respectively, global States, medical market, expected the we it which in XXXX XXXX aesthetics XXXX, market are with XX% with pandemic XX, of at continues Frost of XX more from people medical are XX% XXXX, aesthetic from per year-over-year potential. South to CAGR treatments medical XXXX the to XX% and that is the the approximately in sets grow In about the XXXX. the and year-over-year decrease see in developed growth China pleased According Looking back to was compared & strong number to have of United due the by market. X,XXX

beginning So new marks the nice penetration in of rate plenty us. China of of room a a grow. aesthetics and anniversary to the XXXX for has still medical is So-Young

experience Q&A. open most the environment we and Jin service current build will market platform. will the trusted best behalf Mr. leverage the aesthetic the accumulated on I business overcome and have as We our the user of prepared are read industry remarks the of Xing center the to then that the medical we confident will uncertainties place of

Now be on for here financial third also our to recorded in be Please refer reminded financials will I detailed quarter. earnings the RMB. amounts through all our of basis. release Please a for corporate will year-on-year that information the go performance

XXX.X was RMB adequate were short-term of RMB income results services year. quarter fees. primarily payroll primarily with cash and primarily the attributable XX X.XX, year-over-year, ADS in compared to X.X% was RMB was of General Inc. International of expense impacted deposits, in million, Miracle. due and with RMB XXXX. quarter information costs we XXX.X net quarter service the the results, attributable Income X.XX operating adopt a year-over-year, other third XX consolidation RMB and the service With expense XXXX. assets billion down decrease billion RMB maintenance under were tax same in income payroll cost was X.X X.X almost in revenues to from XX, sorry. as domestic million et revenues were storm, of to the the items in as primarily XXX.X September XX.X% term and XX, in revenues decrease million corresponding third a XXXX. The held million, compared period reducing XX, to XX.X% We tax share-based due billion shareholders with RMB million marketing revenues, in million down To earnings revenue as to third RMB which line weather in RMB total previous per XX.X tax total year-over-year. and Inc., million, on provider, saving up Reservation were the as XX, Within services last up to consumer as of a were of Basic COVID-XX XXXX. million, compared compared were to guidance. a total increase RMB and -- XXXX acquisition quarter XX% of average of December RMB X.XX million, and compared period million the in paying benefit RMB RMB which which operating service Inc. were September refund Wuhan billion resurgence compared For tax in December from some equivalents, tax RMB period compensation liquidity X% Non-GAAP XXXX. year-over-year. remained XXXX. this investments million Net and Miracle Laser RMB RMB down RMB in income International The XX% billion impact almost to Wuhan term equipment to expenses per X.X optimizing XX.X filing XXXX. respectively, were of expense decrease and increase by due the the balance Total X.X cash of such restricted user million RMB of of of in year-over-year, deposits cash we had million expense RMB were XXXX, XXX.X tax current expense our XX.X and a activities, million, benefit branding increase RMB the quarter due RMB compared order serious were during as XX.X% attributable income maintain XX, XXXX due with RMB the final efficiencies. and medical and third sheet, return quarter of to RMB primarily of System in in revenue, X.XX, on pressure So-Young the was year an RMB XXX.X million diluted decrease the of structure, XX.X X.X XXXX market. RMB year-over-year. RMB China's to with third expenses, compared SKUs our the X.X The were the down key of year-over-year. was compared Net XXXX. of XXXX, to regards to X.X million XX.X Sales were ordinary down based overall million X.X So-Young cetera, XX.X of XX, includes respectively, of with with assets with RMB cost billion and due was RMB X.X Cost of September same X.X Research Sales marketing professional million, associated development XX.X and December Net administrative of income activities. primarily refund costs. as with filing revenue

RMB fourth the conditions conditions current estimates reflects demand. Board and Today, For million The preliminary XXX expect we above between November company are the during RMB XXXX, of on based program, of Q&A. the and the open to key in a total XX, concludes take to from the million the is is of shares, million. for authorized and forms authorized XX-month XXX quarter repurchase customer the market the the which remarks. value company Directors call USD company's under XXXX. of market period outlook aggregate our that of questions. XX now of of the repurchase revenue operating we an I these This call to operator ADS turn Operator, to the ready beginning of the the will and including share

Operator

from question [Operator today Our of Thomas first will come Chong Instructions] Jefferies.

Thomas Chong

myself. Let me quickly translate

regulation? this on released first in aesthetics and down guideline taking Can recently, comment has the medical our pricing advertising the SAMR on industry. So management illegal

A –Xing Jin

you. Thank

have preventing for with the actions on I and So-Young misinformation pricing and regulatory advertise users. interest been has self-regulatory for in implementing requirements have and training mentioned, protecting leader a the just of years, been the guidelines pricing advertising As are transparent The focus consistent that online and along, and indicating all we center online false consistent our off-line. platforms

we systematic For rules governing comprehensive our internal information, have initiatives. and rolled out platform

information and on information and identifying AI identifying developed New transactions. role basis storage. false reviewed storage intercepted strong all capabilities posted false professionals. by system the is and and effectively and upgrade real-time computation, the verification information in platform constantly and which conducted in policy inspections periodically anti-fraud and on and property a and comments key are is for anti-cheating, also configuration X.XX blocking and a Special impacted have preventing real-time play We our both flexible

and of continue promote quality of will and choose, medical to self-discipline platform and supply strengthening the aesthetics ecosystem. price, be we the doing manner. to be including comprehensive consumers to performance business. informed in this, and know industry, nature information about of industry fully authentic beneficial the long products, the government the our industry accurate keep term, essential and healthy in consistently disclosed By right whole side and self-discipline to guarantee the consumers in the In actions adopt As products to services and like first we specifications drive development the regulation the the for a promote

Operator

Our of Deutsche question will Leo next Bank. come today from Chiang

Leo Chiang

MAU? marketing spend So question. for number for of and the and your translate what is let users QX is plan me My my question total your in XXXX, your that estimate

Xing Jin

we the will Given our spending efficiency remain with adjustments we year. based marketing focus conditions. and uncertainty, Subsequently, far market evolving on done as attention cautious our have we so make macroeconomic this may on

with and platform industry user entertaining the into We respect For needed the solving the aesthetic satisfactorily traffic. I'd maintain users like user value regulation medical and longer by emphasize aesthetics with insights current purely them, no market, but Professional needs. their to and experience. to platforms A competition doesn't need are that good with users rather by consumption both for experience. provide to medical is

content, First, including and we to provide will doctors products continue products. to users and effectively optimize and community diverse service recommended content,

will buying for community, professional we We trust and decisions. We enhancing optimize and user community online long-term in make our platform our on for perfect content user leveraging experience user products, protection, experience stick user drive advantages -- establishing consumption to consumer most goal trusted our to perfect the efficient highly enhance were consumer operations. and will

process. Second, keep and traffic stock, improving during life and service operation consumption user and merely whole incremental service cycle guarantee attention from client throughout we as shifts whole to our their growth the experience experience the of

our first, our our has to achieve just attract users. with goal I As primary Trust user to trust we to must been create always platform. mentioned, that,

need on and platform consumer as as products information to issues decision-making Second, users protections shops provide with good online and demands. our well

institutions with for acquired X solutions. with institution satisfy requirements, so visit to users they can provide a standardized who needs, we some choose catering want Third, institutional can And on directly such information users users that program. if through to demand service multiple platform their our product, our So-Young Select demands scenarios, use to can work user provide institutions service diverse with specific or process they higher for or

provides customer ensures customer complete its our the platform experience and insurance upsell which progress. Finally, throughout with service for cancellations issues, the return

make to healthier. and is beautiful our more mission everyone So

Operator

Our today Cheung Citi. will Nelson from question of next come

Nelson Cheung

So I will myself. translate

whether the elaborate performance going into year management XX management this So share the would wonder fourth the this into more XXXX during to industry can -- year. like the outlook year? quarter Double and Could about next

Xing Jin

during we this a of quarter, X third situation COVID-XX and China. saw solid the the quarters. delivered in Despite the repeated first performance outbreaks is gradually uncertainty, certain In we quarter, market in the parts financial recovering

entering are strengthen corresponding because as may into widen the As scope the and of further we the pandemic measures may quarter, the weather of well. fourth provisions

there is which more China's released set While Health and more pandemic uncertainty and of National precise. however, scientific are control a Commission refined provision ahead, recently, policies, new

gross about our the With track rate are significant There a more market potential aesthetics and around aesthetic will expected remarks, market. to the back Frost be past and global to year, long-term will exceptional short necessity, adjustment States, closer industry in while back environment last a user and which strategy, vision institutional with well the other our be situation overall compared market, in allocated XX, platform users as stayed growth operate retail in we platforms to developed user At their United and normalized overall were track to in medical we the high-quality growth is Korea forming commit the of number XXXX, line with XX performance pay operation at economic relatively of up were normal, overall as and when Chinese Sullivan, market. and [indiscernible]. major may our in is for stage. of like market treatment market. medical compared clear According experience Overall to maintained is gradually. upside aesthetic industry the growth consumer view. prepared factors back will of in pressure As just attention while providing Chinese as marketing present, slow customer of execute flat the time. economic In in steady general term and believe Double will global daily the X,XXX discussed over the Users be gradually our our online must soft CAGR believe spending years, the ease of & uncertain year. So-Young to XX% getting budget they In people on On to is in growth medical gradually, partners. the we with the medical compared making the XXXX is front, relationships daily the online consumption there more XXXX. front, XX This dynamic go market can the impact products penetration recovery to aesthetic XX and the last services. respectively, to China grow normally, during Despite per South our we with to improving from

Operator

The today will next of question Wei come Chloe CICC. from

Chloe Wei

from Okay, CICC. myself. I Chloe This will translate is

And be some for That the rationalizing prepared are above breakeven colors levers during done businesses? remarks. the in And I continue performing you've competition? on job first. and some team target. for the to think strong business China I see user the the could vocabularies enough how the And will that Could engagement wonder, a subsidies new great this in there share the we've P&L? in we management ongoing the heard And mean secondly, new the quarter.

Xing Jin

outlook, First, with to key I and Aesthetics combined believe well seize serve perspective have growth. to positioning peer broad the achieve has on must is a Any platform clear profoundly. user kind our have built for need opportunity to users it industrial the point service a The more a Medical it industry and truly for when solve enable user can we the clarify have Through medical with what years, experience. users can trust better we aesthetics, consumption serve. users of and demands

video satisfies that both we post, plenty their are reading spend of search that are not aesthetics We a or medicine medical needs. entertainment but always As for don't emphasize consumption. and time an and platform, watching product users medical

message consumers' think decision-making. established Through safety must primary we with So for diversified user of I community and on be cater platform e-commerce advantage to believe Price professional consumption. and for based an the their about to consumption and should of their demand we beauty. consumption industry, from stages be factor at users' have the user scenarios content perspective deep serving combination demand. different will

build make better. to our serve users with For institutional willing them we we clients, trust users

the new we users scenarios and serve range diverse initiatives, for For are with them new of exploring solutions. a consumption

actually if of some try it and best. better Prime the goal different you or institution users. kind very and have products, we is suggest ultimate cities, what on be So-Young Tier can us, will Well, you X to For you major excite serve will invest X Tier

Operator

come question next of today will Our Ingrid UBS. from Zhang

Ingrid Zhang

a data, for cetera. The on question demographics industry in age, aesthetics is the on level, more peers, of in the et income consumer Based level. shift terms medical

Xing Jin

on have cities as consumptions. the transactions are such and number Guangzhou cities, medical high are for led platform, Wuhan, China. mega major orders become the activities and transactions cities aesthetics to Shanghai, our in Chongqing with at Nanjing tier Beijing, According Chengdu, than other consumption, and users But first including new XXXX Shenzhen cities always of also placing in level Hangzhou,

rejuvenation higher optimize to of In the the demand, terms user users' categories accounts is slightly to total orders. over NTNG we product total of favored on Targeting from number frequently XX% continue is our as account The wipes such skin indicating than a category of most other of over categories. non-surgery supply. whitening provide purchased categories one proportion skin non-surgery hydronic demands high-quality and and XX% non-surgery SKUs for XXXX, platform, for for orders, and most of acid

in in facilitated please end categories, discuss launched will bottom each of trend release noted pin be new on user other with at regulatory we also certain products of important such card, which which paper the usually, a We includes policies, as of year, white industry we the and topics. in addition, that will several Well, So-Young our products anti-aging some choice. characteristics based

Operator

Vivian our the At And turn would time, closing to Xu ladies session. remarks. over will conclude and conference I back for any to question-and-answer this like this Ms. gentlemen,

Vivian Xu

today's the now end Well, in the of your you for Thank conference we call. approaching are conference. participation

now disconnect. you. Have Thank Bye. good may day. Thank You you. a

Xing Jin

Bye-bye.

Operator

you And today's thank the presentation. conference has now for concluded. We attending

You may disconnect your now lines.

So-Young International (SY) 18 Nov 222022 Q3 Earnings call transcript