Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by for So-Young's Second Quarter 2023 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, Ms. Vivian XU. Please proceed, Ms. XU.

Vivian XU

thank earnings everyone conference and second joining operator, XXXX quarter call. you, you for for So-Young's Thank

Joining me Nick today Jin, our on this call Chairman CEO; is and and Mr. Zhao, Co-Founder, CFO. Mr. Xing

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

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

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

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

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

Xing Jin

call. everyone. Language] So-Young's for [Foreign Hello, earnings Thank you XXXX joining second quarter

into regain with range non-GAAP loss last of upper XXXX. RMB year-over-year solid the million XX.X quarter metrics a of XXX with beginning So-Young during new attributable the same operational and million, to XX.X% both compared during million high during financial profitability, our RMB net steadily. improving momentum Total exceeded This RMB the of quarter, climbing a to guidance, to year. increasing growth income continue revenue the since our of translates the We period with XX.X quarterly

now on restoration procedures. aesthetic promising regular seen during starting challenges a you during has accelerated pandemic made with medical Let was operations probably it The spending the business. the but we of me business quarter, increase among of quarter. of in walk the aesthetic significant gradual institutions pace resurgence faced confidence through driven by the medical in at our the POP during progress the This community e-commerce controls China

revenue by providers XX%, The and XX% service information medical and number increased of sequentially service respectively. approximately subscribing

to support information facilitate have have services towards process. customer simply diversified, requiring product shifted As gradual additional sentiment real-time their customized and beyond our a seeking acquiring and pricing back services details. and interaction users preferences the recovery, the decision-making makes among Demand

our products. to Turning

and also greater and medical user to operations their significantly specific different So-Young and algorithms for identify aesthetic improve recommendations speed user overall allow optimized acquisition enhancing These improving efficiency on to customer by with conversion and institutions the fine-turning target the and tweaks behavior. based users We accuracy, app in-app experience, rates. particularly demographics

At the acquired and our user significantly reach of creates has effect WeChat powerful us community the services through for and time, same communities. such channels user to combination our own as other content high-quality public our the and broaden allowed network the improve accounts

more we continue brand ahead, strategy, our continue services. premium high-quality will to diversified to Looking our as content, we tools execute acquire users practical with and

hot terms our squarely of of network nonsurgical of our We'll and premium continue medical strengthen as SKUs, FotonaXD build the body segment the services, such on remains controller and promotion to doctors focus a this procedures. in solution. aesthetic In

also We June. in launched campaign a eye seasonal beautiful

these are by looking year-over-year, medical support GMV procedures and their we product enrich Online enhance nonsurgical XX% for bookings initiatives, their institutions respectively. brand To and to increased XX% equity and offerings. closely with

partnership in have and a doctors on doctors premium public we eye with with the premium as For surgical esteemed content leveraging act list. where we for relationship program health services, procedures, recently broad strong the launched create and hospital ambassadors

is increase surgeries, to that We are demand. category awareness high surgical working in together interest, and of eye a content

rollout recommended and which testing preference Our approach AI-powered with tools, the studies, eye includes in-depth real-life analysts the latest shapes. trends in eye case coupled of user

move will progress Prime. to the So-Young I on Now of

solution, steadily So-Young Prime aesthetic size scale its As has nonsurgical expanded proprietary since in and August. launch in medical one-stop last

operational XXX experience medical is we doctors partnered the cities, efficiency proposition now put, in user have its So-Young quality the a and institutions. value institutions over of of So-Young end unique quarter, user of with collaborating progress experience. ensuring and made operation, which the Prime's seamless second XXX As XX is in Simply Prime over and reflects enhancing

doctors, qualifications user orders products, is to to is quarter increased ensure strategic ability increasingly want plans through screening that From and accurately sequentially the we the Fulfilled the experience and of to So-Young flawless. contribute and to uncertainty the the diagnosis during their Prime XX% of their treatment revenue.

Prime So-Young the it cognitive much has While of still demonstrated so development. have already potential, in stages is that we early

and to significant made procedures. medical aesthetic of is its room brand but of have We as strengthen plenty there premium still a professional reputation progress, light

In and solidify of with want uniqueness the specialization expanding have with our association, doctors close and platform. we broadening addition to product the respected to our categories, partnership

light reiterated in future multiple -- As is segment service we sorry, medical times critical iterated growth. the have aesthetic our recent quarters, for

both user experience, operating products So-Young its high-quality of meticulous and a Prime model services. to unique and online off-line through guarantees creation

it to by to So-Young our I Lastly, dynamics, on research revenue of chain streams -- is time the ideal upstream would across includes value along a aesthetics like chain years deeper business, products. which After develop believe Wuhan the touch industry understanding offering supply for of an its developed Miracle. medical new we aesthetical industry

distribution Wuhan revenue tap the our medical of in rights laser to accounting XX% bottom XXXX million, month, year, for Last increasingly business [Elevess] XX% distribution expanded as filler brand the securing year-over-year, and face quarter, further into XX-year HA Miracle products. the secured chain injectable by from for increase we exclusive their from the [indiscernible] our supply and market of Korea total contributing for exclusive an During XX.X new fillers. first to rights we a was We line. revenue RMB upstream acquired step. Last

in confident explore to significantly on so enhance success to based upstream We are portfolio their have medical only light appeal they And moving users and the our we segment. product far, begun will with partnerships. opportunities by aesthetic these just

pace, We resources position the see these long-term the high-quality strongly our legacy allocate in which business. chain In opportunities confidently the tremendous new growth industry recovery ventures up So-Young ventures pace future and new puts its create. summary, as the business and us Prime our believe of pick supply a such will continues to towards to growth of reflect

carefully operations throughout to enhancing customer remainder shareholders. all strategies, value of be acquisition the and the create performance for growth, focus high-quality improving further year managing financial channels, refining consistently Our costs our will the driving

turn to before the second call our Nick, your results questions. now taking review for over will the I the financial CFO, quarter to

Hui Zhao

this Hello, is Nick.

Please a be reminded on that be refer will in amounts basis. all for our also quoted financial our release Please comparative information RMB. earnings here about performance to year-over-year detailed

the XXX.X revenues Prime. generated RMB Total per up the So-Young guidance. the and were end exceeding increase paying to XX.X% medical during in average by of other The revenues quarter high revenue due provider and year-over-year increase service primarily was our million,

upstream chain break to presentation some business. to like better I I'd development revenues our financial supply quarter made down further, this Before of the statement illustrate changes strategic we reflect

Starting this injectable in now previous aesthetic sales medical quarters, the quarter, renamed of with products sales is and services. revenues And maintenance the is had of from drugs, which included been and sales other item revenues. and of now maintenance line revenue combined in new services equipment services medical information the

primarily services service XX.X% mind, RMB an and revenues average in in this generated RMB by Prime. year-over-year users. were RMB of higher XX.X% With which Reservation operating primarily paying and due the up services information medical to So-Young million, per strategy, sales end due injectable primarily revenues were revenue increase XX.X services both and up increase million, to decreased XX.X% subsidies to year-over-year, year-over-year, other to revenues provider medical in gives drugs. of other XXX.X Sales products XX.X by driven an revenues million, equipment maintenance and

again, to primarily also an due financial up I the were XXX.X XX.X% increase Cost year-over-year. increase and before million, of associated cost to was The RMB Prime Miracle. applied revenues changes Once with revenues. cost mentioned of reporting So-Young Wuhan in

were primarily revenues, of million, associated million, an XX.X% services due RMB with with increase in to cost year-over-year, Wuhan Prime. maintenance of products in services RMB up sold primarily to and year-over-year, were Within cost cost Miracle. an XX.X So-Young Cost up increase due XXX.X associated XX.X% and of medical others costs

year-over-year. branding Total primarily acquisition and XX.X% XXX.X expenses increase RMB RMB million, were user an in to XXX.X expenses activities up expenses and operating marketing XX.X% Sales with associated up were year-over-year, due million,

down the expenses due were expenses and new were were million, R&D our million year-over-year business increase million, support RMB XX.X costs RMB efficiency. X.X in to million in second Income payroll X.X G&A to of tax employees associated XX.X% businesses. strategic upgrade XXXX. expansion due with an with improvements year-over-year, up XX.X in RMB benefits staff to the benefits of of RMB quarter XX.X% tax primarily compared income administrative

XX.X period in RMB RMB of So-Young net Net of million Non-GAAP same last attributable the compared net the compared non-GAAP So-Young to XXXX. was net period loss income loss million loss attributable million RMB XX.X attributable with XX.X during to were million to X.X So-Young same with year.

and respectively, X.XX the loss diluted diluted RMB ordinary shareholders ADS to loss shareholders compared and RMB basic respectively, to attributable during period RMB per and with per and X.X ADS X.XX, were RMB XXXX. X.X, of attributable ordinary of same Basic

Net restricted RMB in quarter this cash investments RMB cash net million. quarter term million. increase deposits, and is short-term operating XX.X activities and this inflow cash cash is in from equivalents, And XX.X

XX, total hand, billion of as of have deposits December RMB XXXX. and XXXX, investments and We restricted X.X with cash X.X short-term and June ample billion with of on equivalents, cash term as XX, cash term cash compared RMB deposits,

company's based current conditions be above expect XXX For market RMB demand. our conditions estimates of preliminary the The the customer million that million. XXXX, we and third quarter total between market and to XXX revenue operating is and reflect of RMB outlook on the

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

to ready you. are take We questions. Thank

Operator

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

Thomas Chong

questions. the management we medical in where the the the net we in my the And in Thanks for growth the I is sequential the market QX? both second question of a revenue in major half? evening. My And basis. should half? Language] good and Hi. about Where behind driver losses is the have second questions. the question profitability and in [Foreign expect significant trend taking about aesthetic my reason what's do on two expect second narrowing trend significant to year-on-year QX first for

Xing Jin

Thomas. Thanks, Language] [Foreign

Let me soon. translate and you get back to

regain were the allowing was to us better Total XXX both XXXX. over RMB the early So and QX year-over-year and XX% an new high results trajectory. million, expected, revenue quarterly of growth since a a increase sequentially than

promote summer launched and user among slimming QX community On others. eye seasonally popular June, by number increased demand. deals, campaign for contouring, including XX% SKU eye by the purchasing we a year-over-year to beautiful in from strong and leveraging result, of wrinkles content GMV products increased a our The in year-over-year reflecting users anti-age, XX% and front, the as

has information sentiment services improved front, products as increased it the and overall institutional gradually the marketing. spending On on

for and operational and acquisition institutions user we algorithms quarter, our During user the efficiency. improve optimized infrastructure help to recommendations

XX% by compared from we the last Lastly, Prime Revenue it's about begin from of revenue. benefit total only also impressive same an to diverse period upstream to of stream contribute XX% see increased Having to ago, revenues. revenue. chain supply contributing to So-Young increasing year our year, launched increasingly one business

the and -- QX gaining gradually to the the second half momentum overall forward market line trending year, of marketing environment, Looking in will trend and aesthetic upwards. we this consumption with medical believe

the continue infrastructure to build uncertainties maintain momentum adjust Despite At chain. downstream we us value upstream both market to and time, allow the according dynamics. growth and will in of develop and will volatility will the strategy that same to market, expand and our we

Hui Zhao

Thank you.

down and impact net our the in profit is XX% -- and loss -- The increase over increase revenue operational and by profit operating the combined the loss efficiency. non-GAAP the narrowed the GAAP think sequentially. of in to operational net year-over-year narrowing the in due our improvement net mainly I of

the basis, last of in and the a million million quarter loss income the million loss of On compared XX.X of of net XX.X XX.X half were RMB to period the and million profitable, RMB RMB year. in XX.X income net non-GAAP we year XXXX of a during of first with RMB a same

Looking continue more revenue, shareholders. you. grow improve and to our operating company create profit forward, efficiency Thank the and for we

Operator

go Securities]. you. And our Thank Please next with Guoyuan Xing from ahead. question [Li comes today

Unidentified Analyst

this the question and What's taking management trend? one would say about I evening, like profitability Language] good for in And my on MAU. to estimate I have [Foreign quarter. first for the growth and congratulations improved thanks the momentum future Hi, MAU question.

Xing Jin

by mainly rates other MAU also increased year-over-year. [Foreign these three Thank GMV users So-Young increased is by Traffic conversion demand year-over-year, XX% private you. and the purchasing growing, improving. while on from Language] channels. domains In QX, is of our platform app, from sources: generated number With gradually operational XX%

to that are We confident traffic will grow. continue

metrics MAU going the disclosed which So-Young the reflects is earnings in traffic the Firstly, to expected continue app, release primary forward. from source being

and media user organic traffic to like engagement improving operations more content We through attract will community with continue the tools. innovative

experience for Prime traffic we will the this are and we So-Young we gotten as conversion, those business from and to well. other domain, Secondly, leverage user apply to from strategies private have developing improve

cautious from traffic when we channels, marketing. approach comes For and maintain our it other will to spending

We in are placing while, rates operations on Douyin, content rolling at and leverage to Red content an our same out through of competitive Little more the on more broadcasting. time, emphasis acquiring Kuaishou Book, live conversion drive users advantage

links direct That's conversion to all. to user to attempt our Thank in expand introduce also channels you. the will We channels. platform

Operator

Thank you. today Please go question Katrina ] [ And our Zhou from Citigroup. next comes ahead. with

Unidentified Analyst

half [ the us year? management asking Hi, Cheung. the more in the about quarter second on share Katrina Prime Nelson taking of for Can Language] Citi is ] behalf thanks the and the from [Foreign questions. second with my This So-Young trend of in progress management of

Xing Jin

been So-Young year has August. one It last question. just launch your for Prime the you of since Thank

we operational With a history users. strategies adjust building Prime process past covers scale. the one operational now large XX one Over for experience So-Young number the Prime of So-Young year, into service to year over behind and of us, streamlined a cities, premium providing XXX while institutions out the

a upon medical over professional fulfilled has So-Young word nonsurgical significant aesthetic in and strengthening still aesthetic sequentially, in QX In by in of launched is established institutions, collaboration began building size users, share generated by and with series campaigns one-stop a among contributing gain to of development. early through the medical increasingly we QX, reach. this of QX each brand Prime mouth. revenue and nonsurgical a So-Young promotional QX stages sound In and XX% of increased towards So-Young As its recognition Prime platform as expanded revenue. mile steadily solution, Prime year, orders We

of Looking in to operational half quality its the grows Prime continue strengthen brand strictly and services on forward professional platform the medical participating nonsurgical it this access size, to the So-Young image. -- second assesses will and efficiency of of as year, aesthetic institutions improve institutions

We exploring costs, operating to are supply synergies our product along partnerships improving efficiency various chain operational segments. build opportunities business the reduce also upstream with establishing to and between players

Operator

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

Chloe Wei

my question. thanks taking Okay, for management

give on? question trends gross us my on in So for Nick. Language] is decrease and as reason the you so color And as the well some year-over-year the margin could going [Foreign for the as

Hui Zhao

gross services changes question. gross revenue Thanks Okay. the our was our reservation information QX and margin XXXX, to sales lower and for reservation The maintained medical mix. in decrease and margin. mainly services in due than our maintenance of In is information high services. The margin for products

business the still of lower stage gross early So-Young Our Prime with development margin. in is a

Prime addition, in decrease gross In this launched quarter, margin. in during campaign promotional a So-Young for we've resulting

medical promotional as the at short of and products invest In expect we sales remain services. margins term, level to to similar So-Young maintenance approximately we in Prime's gross and continue expand activities

scale, improving again. gross you. So-Young As at Prime we efficiency build will chain margin Thank and operational supply for capabilities improvements our begin

Operator

you. Thank

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

disconnect, day. may a You now good have and

So-Young International (SY) 21 Aug 232023 Q2 Earnings call transcript