Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by for So-Young's Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded.

I would now like to turn the meeting over to your host for today's call, Miss. Vivian Xu. Please proceed Miss Xu.

Vivian Xu

thank XXXX joining earnings and and fourth operator, year full conference you, you So-Young's for quarter Thank call.

U.S. Harbor Please will note XXXX. of Safe Act contain today and the provisions forward-looking statements Litigation that made under of the Reform Private Securities discussion the the

results are statements actual risks materially from that may and Forward-looking differ uncertainties our to cause subject to current expectations.

filings XXF. annual include but those our public to report are outlined our including Form limited uncertainties with not and SEC, risks Potential on the in

So-Young any under forward-looking law. mentioned unless undertake call does except Please statements, all conference stated that any not are update to obligation in note as figures applicable required this otherwise RMB. during also

Nick on Joining President Jin, is Vice Co-Founder, Zhao of the Finance. Xing Mr. Mr. [ph] call us Senior Chairman today our and and CEO

time, I please? over to Jin. turn like Xing Mr. would the to At call Yes, this

Xing Jin

Language] [Foreign

joining Thank XXXX call. you everyone. full and Hello year for fourth earnings So-Young’s quarter

Language] [Foreign

we economy and while of it’s as medical consumers institutions manning seriously the in line a severe the million profitability. stabilized fourth a the improved us made our amidst RMBXXX guidance. [Indiscernible] managed In cautious Chinese the slowdown of remarkable prior year disrupted operation more to aesthetics achieve years of three past revenue co-business of COVID-XX substantially our most like the macroeconomic all began XXXX quarter was for and So-Young. had of challenges the at Despite successfully quarterly our with

significantly million. we our meantime, net RMBXX.X the In of with scaled up profit non-GAAP income

efficiencies. have the and our breakeven cost third in to quarter. since improved to strides organized reaching We Thanks structure continued make

with new financial billion balance opportunities remained the business which year assurance our to As of provides close at cash our the to end growth ahead. in explore XXXX RMBX.X sufficient us of

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to for business year. I’d the continue we like of directions revenue presented and future look In past observed market the our as to in we resources, by we change invest seize [Indiscernible] these Next, will trends during opportunities some share

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Chinese of roughly is to as operating ratio aesthetic First medical continue a [Indiscernible] non user base increase.

batter high users aesthetics amount users. premium Second of user with increased the [Ph] showing with are demands medical evolving

Finally, China class along class upgrading in particularly increased second [Indiscernible] with is medical middle and urban demographic the have long-term of formed the in habit expanding China, tier in by middle the the class and deviced first a middle aesthetics aesthetics consumption have consumption. of females growing cities medical volume and consumption customer trend

consumers Meanwhile we have between and several consumers. observed the class medical important aesthetics differences middle traditional

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their higher of factors reliability consumers maturity of are choice these more each They patient qualification institutions more level attuned services. generally medical to compliance. aesthetics and and service, cautious doctors and First, have and aesthetics of product the with are the including

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shape Second the consumer products with higher management management anti-aging, remaining steel frequency. and

[Foreign Language]

to they want be Third, cheapness, not and for simply tax. purchase prices look but don't they charged IQ rational

[Foreign Language]

value of and Fourth, service the delivery. quality

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the business Based the on and group, these and So-Young of quarter scale launched market tier resources Prime changes we through the accumulated years in small the of the consumer the second leveraging third we in have and capabilities at first needs cities in meeting a the XXXX

Language] [Foreign

platform a Prime our for flight as self-operated aesthetics. service So-Young medical is non-surgical

and invited standardized First, operating medical upgraded based live middle for aesthetics of service. service gathered our big shows an those consumers. popular class plan with most platform, treatment on the which data We for to treatments procedures experts treatments create

sales. So-Young for pricing is responsible and

providing are responsible operating doctors our their and for Prime them meet Second, and are standards Prime [Indiscernible] service service before network. exclusive training These the So-Young a and customers. So-Young teams institutions institutions allowing exclusive, standardized assesses into with and to

the service and ensure welcome institutions high a the stationed throughout experience have So-Young We these treatment. customer quality staff in Prime

cabinet other consumables customer. of each placed medical item used in take in genie procure institution medicine front medical check treatments, each light the and in equipment the the we and aesthetics in and a Finally, and injections out consumables the substance certify as stored

Language] [Foreign

the by model, and Prime premium, of medical in So-Young light service Junior service. providers, supply provides Enabled and chain, the in price advantage user medical user quality and asset innovation line operations, control acquisition our service scale with delivery low aesthetics

[Foreign Language]

Upon last small among year scale review won users. So-Young quickly against Prime at -- has recognition

Prime were business. pump satisfaction, order higher average So-Young repeated rate significantly our the purchase user existing value repeated and all than

one grow national As month. of institution continued end of have visit New the infections the to users well Year. at as Chinese as every during wide to the date COVID-XX Even XXXX

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like would I our Next outline to and XXXX. for objectives plan business

Language] [Foreign

boosted the scale, achieve it in-efficiency at These base become industry products existence adapter content, - and resources. sounds trust, engagement tremendous transparent advantage [Ph] So-Young. our millions sticky build our medical and cornerstones It information, the accumulated Beauty with to growth. user platform. professional develop always We information. return community enable in and trade user nine to strengthen trustworthy industry and raised continue the and community XXs will established aim operations, accumulated will institutions business And increase user development, in tools years comp of also numerous volume transformation Diary a our a leveraging we After significant to user numbering user has and business our and First, scale. has the development aesthetic operations innovative for operations enhance of of high and through

Language] [Foreign

Prime Second penetration, of side so network we focus supply and growing our the Through products market on the last we on on cooperating institutions. continue expanding, our experience year. to optimizing building in

our improve customers and attract capability deliver more services, drive standardized will We purchases. repeat to

lower production It covers range than players will to the supply So-Young admittedly higher factors deeper barriers and key of chain, our increasing construct deeper in business benefit solve consumers. the it internet issue Prime in entry. costs at level a broader industry and is the industrial It and efficiency, deployment and integrate the industry pure a will in Internet. relationships reconstructed comprehensively

[Foreign Language]

are In institutions for room and Chinese to growth gradually Looking to operation. business, industry light consumption, in external positive still for particularly the they returning medical for large the XXXX are in a medical aesthetics. normal moving conditions run, long aesthetics our are directions and the

profitable build our we direction business healthier new and term strictly growth. help the our to medical trusted in operation model. will strategy platform. we Our and a business and the will in term our efficient continue persistence first will the us most becoming Operationally, highly near With streams the and remain continue refine confidence to long user put marketing control expense, our seek revenue diversify and committed aesthetics

[Foreign Language]

VP Vice Now Finance invite quarter financial Senior for the taking Nick me the before let our results review to questions. your fourth of

Nick Zhao

financial XXXX. that here all and now go on to information earnings will our RMB. to take year-over-year Please Hello, amounts be time performances this also the the release full financials Please be will reminded quoted basis. about year a Nick. through for some is detailed fourth I refer for comparative quarter

guidance. medical two, For line XXXX, of to the China, previous providers service with to period of in one, of offline control the was the revenue provider. our primarily limited corresponding a XXXX paying major were decrease fourth with average areas due revenue RMBXXX.X total consumer due surge per and million market. and quarter service COVID-XX overall pressure Chinese matters the on the to in people COVID-XX decrease decrease in primarily The cases, in was to compared million The RMBXXX.X in especially

equipment total million service XX.X% down were year-over-year. XX.X% Inc. which total maintenance of RMBXX.X same Miracle the of and XXXX. RMBXX.X with period Reservation within Wuhan down were in revenue, revenues million, the million -- million were information services Sales year-over-year. and services from Laser revenue RMBXXX.X RMBXX.X revenue Within System revenue, other the were compared

efficiency XX.X% improvement year-over-year. million, cost RMBXX.X down of due The were programs. Cost in revenues our to were and primarily matter the decrease optimization

Total associated user and down year-over-year, activities. with were decrease branding and million, expense acquisition marketing RMBXXX.X primarily were expense XX.X% year-over-year. to XX.X% down due operating in a Sales RMBXX.X expense million,

XX.X% increase expenses change to G&A down primarily a based fees. offset decrease payroll in professional by and service was expenses, year-over-year. share were costs due million an RMBXX.X compensation partially in The

expense down expenses compared costs. with were of tax RMBXX.X XX.X% R&D year-over-year, tax quarter in fourth million benefit in RMBXXX Income due income RMBXX.X a were primarily million to payroll XXXX. were decrease the million

XXXX. million with RMBXX.X net to in international attributable in quarter million loss of a RMBXX.X income attributable compared of the fourth So-Young to Net So-Young International were

the expenses and assets compared International with compensation of intangible to XXXX. Non-GAAP RMBXX.X which million net RMBXX.X excludes same million in share were income of attributable So-Young Inc. So-Young impairment goodwill based of impact to period attributable and Inc, International the

per losses respectively fourth diluted diluted quarter earnings ordinary were respectively, RMBX.XX shareholders XXXX. Basic attributable per ADS to and the ADS and were RMBX.XX and of and to RMBX.XX RMBX.XX during with basic ordinary shareholders attributable compared

year full XXXX, XX.X% RMBX.XX the total were For billion year-over-year. down revenues

RMBXXX.X million, Miracle. million, revenue, to equipment million. and million, were Within XX.X% were revenues the due and RMBXXX.X year-over-year, total XX.X% revenue Reservation of revenues, other service year-over-year. Wuhan revenues down down services Cost of were XX.X% services consolidation were RMBXXX.X Sales and year-over-year. information maintenance primarily up RMBXXX.X

Total were RMBXX.X Net were with year in Inc. XX.X% down loss million, to million fiscal RMBXXX.X International of compared XXXX. operating the net RMBX.X expense million, loss year-over-year. So-Young attributable

ADS Non-GAAP RMBX.XX year respectively, fiscal XXXX. and were in attributable diluted year of XXXX. Inc., losses RMBX.XX Basic So-Young a ordinary net with in ordinary compared International loss to fiscal and income and to per losses RMBXX.X were basic RMBX.XX, compared million X.XX million to ADS shareholders attributable RMBXXX.X attributable to of diluted and net shareholders per respectively, RMB

quarter. on held key With this regards in some balance sheet, items we our liquidity to adequate

short-term restricted term billion As RMBX.X RMBX.X of XXXX. XX, and deposits, of billion with December as cash investments equivalents, deposits December XX, XXXX cash we term and had total cash and compared of

RMBXXX of quarter conditions of market and outlook customer revenue the is million. expect The the preliminary reflects XXXX, demand. based between first company's million estimates total on the we to current above RMBXXX and conditions the that the For and market operating

the Q&A. operator I key our call concludes remarks. the This turn and to open the call now for will

Operator

from Please Thomas first at Instructions] ahead. Jefferies. [Operator comes Today's question Chong go

Thomas Chong

[Foreign Language]

you. marketing Can taking us base in the for management about your you my expected XXXX? and questions. strategies with Thank share user Thanks

Xing Jin

[Foreign Language]

you. Thank

and we up we still compared As the and efficiency then to XXXX. market conditions. strategy will recovers gradually on will accuracy our adjustments Yet market emphasize the based marketing make ramp

[Foreign Language]

will and for existing orders. conversion increase Prime attempted operations with off So-Young a In our efforts we paths also active private in Prime So-Young developed marketing and the repurchase In engagement rates. over to private XX% domain we to our addition XXXX, on clients dominant operations focus contributing private strategy dummy user private,

[Foreign Language]

before competitions optimize to to traffic. for immediate user users Professional user and as continue tools need of in aesthetics the no and to we industry good profound But our mentioned industry will and We merely more longer a generate organic provide a medical demands. platforms content experience understanding is service [Indiscernible]. innovative community customer

Thomas Chong

Thank you.

Operator

Cheung you. our And Citi. go at from Nelson Please next today Thank comes ahead. question

Nelson Cheung

[Foreign Language]

three growth the driver Thanks And questions. is for recovery my management view stage this regarding of in Thank the medical for regarding XXXX. So-Young industry you. question My management taking year. aesthetics

Xing Jin

Language] [Foreign

pace Recover the the the a hold environments side. we the behind the mainly aesthetics of outlook still institutions We cautiously on do market. for spend optimistic from user same medical marketing on the recovery At the overall XXXX time, consumption depending lagging and see

[Foreign Language]

see on logged. epidemic the infections level. and Therefore aesthetics in the last differences of to and consideration have especially Tier to rapidly user the past same market. the user to number In so at we but First a year and in of regional user the recovery one, third rebounced period the year, XXXX the cities beginning side, cities, last of in two yet the in recovered recovered few of of years, medical XXXX the to impact treatments not orders large already Tier end XXXX. the orders the of the back Due COVID-XX level year, of orders surge the have since level this Tier of fourth have were the

[Foreign Language]

factors. their spent, they're budgeting side when institution cautious because we see the two mainly of market On that still

and a the do second rebounced first because orders to the lot tier rapidly on at induction, need this here First, spend post marketing in institutions cities not stage.

institution turbulence the do but more years overall few of spending about the overall, gradually institutions see past spending we made recovering. has Secondly, cautious

Nelson Cheung

you. Thank

Operator

Please you. at from our And go comes Wei Thank question ahead. Chloe next today CICC.

Chloe Wei

Language] [Foreign

Thank you.

say three far you're things give in Thank So business to in competitive how just to also, my do the about you. first And an medium you're short years? as as landscape? volume you question that is maybe can of the some please next thinking about the the update revisit thinking about around could us you five term, the

Xing Jin

Language] [Foreign

will the As will the with depend a new population. of growth class -- to Prime of growth driver, the with continue market, on development So-Young in a expand which trajectory female middle line the non-surgical mainly

[Foreign Language]

the quality repurchase supply on rate. rate boost enrich of We the will institutions, product network more user expand outlets corporate number service portfolio service and with the and improve ensure side, delivery the the penetration high

Language] [Foreign

products, skincare are design, used users aesthetics to SQ awareness. a cosmetic, medical cosmetic and Non-surgical institutions medium is But an and numerous and brand expertise service and medium institutions. usually weak which delivery of small the daily for equipment. consume area small

So-Young these delivery service Prime empowering forms ensuring by and institutions. now high of work standard

benefiting distinctive from initiatives group aesthetical and and addition large aesthetics, increase In for them. user could small consumption to makes us for medium convenience these serve our institutions, competitors. That medical

[Foreign Language]

supply addressable user growth better Therefore, expand midstream a a market the only downstream customers connecting for environment driving industry can upstream, chain secure the building and a the by we and aesthetics with safe the service medical provide and experience and overall linked of industry. and

[Foreign Language]

market question environmental consumption medical the space in their there and demands is second the industry is indices clear For plenty uncertainties with the aesthetics recovery of and outlook

[Foreign Language]

more emphasizing driven is the future. supply industry that where side. put we is And by aesthetic will the medical the believe We

users, have user and delivery, accumulated standards compared terms and a internet premium barrier experience. of a and with also We doctors will we in enable capabilities us core service for integrate strong advantages quality institutions, with provide model. These competitive comprehensive will to pure set a production the build service

solve our competitors. will deeper be level able issues We a and differentiation at more create from to

Language] [Foreign

years, past information and our with we have few the user transparent provided platform. In trusted

boasting business, complement optimize a the aesthetic tools efficiency to the internet content, the e-commerce the medical community we continue provide offline delivery. second In leverage industry will service user and of community for scale. resources new our innovative of that So advantage of scale our at future,

with other Of platforms. we may course, also cooperate traffic

Language] [Foreign

experience delivery users benefit drive the and investment capabilities integration our sustainable industry. the in service betterment believe industrial of and the will chain our We whole across

Chloe Wei

you Thank

Operator

our And today Please next Securities. you. from with [Indiscernible] question Thank ahead. comes Hugo go

Unidentified Analyst

[Foreign Language]

consumption user end question the on Thank mathematic will the demands for you opportunity. is My end the after Thank the you. in COVID-XX. changes

Xing Jin

[Foreign Language]

demands are aesthetics Thank our as demands medical question consumer the you middle user class group. the prepared different traditional in we for asking. from consumption mentioned remarks first, In evolving have

and they high demand focus have quality, more increased. As rational certain on prices, [Ph] SQ safety, products values for Jeanne order

For in popular highly photo example value are average and among over users. electric those order RMB, SQs categories injection XXXX with

Language] [Foreign

and Secondly, as wave economy for we the few the surgical consumption was years the past market recovers market, it as of recovers we in believe travels. experienced the which a skewed

[Foreign Language]

will Also with market bad, a the rebound to users in outbound overseas the consumptions. travel medical for rush aesthetics bad

That’s you. Thank all.

Operator

to to session. for the and gentlemen, Ladies this like remarks. over concludes any conference turn question-and-answer closing our I’d management back

Vivian Xu

of participation you the your in We the today’s end are Thank not conference. approaching conference call. for

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

So-Young International (SY) 21 Mar 232022 Q4 Earnings call transcript