So-Young International (SY) 20 Nov 242024 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by for So-Young's Third Quarter 2024 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. Mona Qiao. Please proceed, Mona.

thank Conference for Call. and Quarter So-Young's operator, Earnings XXXX you, you, joining everyone, Third Thank

Mr. note Joining Reform the Mr. contain provisions Co-Founder, and of Xing today forward-looking Act Jin, Zhao, me on the Private our of Chairman the statements made the and XXXX. safe today U.S. the Litigation discussion that call under is Nick will CFO. Please harbor CEO; and Securities

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

as turn applicable like required time, I'd So-Young call Jin. the this under update not does any except obligation law. At to undertake to to Mr. over Xing statements, any forward-looking

[Foreign Language]

during industry guidance up to revenue of year-over-year, of came up chain. while surpassing business our So-Young income continued reaching [Interpreted] to was income XX.X XXX develop the attributable RMB across at million, in RMB total Our third again year-over-year, XX.X XX.X% range. to investment the attributable once robustly quarter So-Young with end continued demonstrating Net the XXX.X% RMB upper our non-GAAP effectiveness net million, value the million,

[Foreign Language]

penetrated stores In third XX we from cities. to more of clinics, currently made as quarter, the significant we expanding progress last [Interpreted] number the into of in our chain X quarter

during quarter the X already of Its operating by generating All margins the strengthens competitiveness. This are gross is key improving business at all clinics cash for with growth the significantly. flow of located and new revenue coverage clinics level. XX% further our gradually market our grew profitable are which X us. opened commercial the prime quarter-over-quarter, and in becoming store are areas, positive driver Notably,

in satisfactory performance. our continued consumer addition, the upstream In spending, business of slowdown despite to deliver

a as business the chain clinics critical the market. development business of aesthetic of creating solid of with and rapid our businesses, This to in these our serving continue our businesses. optimize the with structure development new medical provides foundation our upstream We POP for synergies for support strong

Language] [Foreign

As the distinct aesthetic X polarizing market is [Interpreted] with anticipated, trends. medical Chinese

hand, for [ ] and project and aesthetic gradually products convenient On are technologies services [ iteration aesthetic the releasing ] their mass of consumers cost-effective one and during the demands medical diversification. medical

and the the effectiveness, personalized to middle and cost high-income to remain a seeking market services hand, On consumers medical willing pushing pay premium for standards. while higher quality aesthetic other towards high-quality

trends the upstream and We businesses. accelerating deepening chain, and clinic especially integrations our following are these industry across our end-to-end closely industry value and in

our continues and the products grow year-over-year. business from XX.X the the rapidly million, of RMB up During to segment XX.X% sales maintenance quarter, medical reaching revenue services with new

Language] [Foreign

] a take at me let Now business [ [Interpreted] our closer QX performance. look

September. our This marketing We big advantage Guangzhou, XX operational as Changsha. capabilities. Moreover, with across operational our chain flow X supported clinics demonstrates at brand Shanghai, service maintained our have Hangzhou, philosophy and average [ industry cities of key costs Beijing, operating progress share and user our XX% was the in The fulfillment metrics, acquisition XX few rate customer record of in fully reflecting Among overall reached lower customer operational significantly the sustainable data, influence. To at our to cash according average, ] monthly [ retention competitive are X efficient now ]. capabilities today, made including our strong of a Chongqing customer and and out efficiency. highlighting satisfaction than X.XX clinics base positive clinics customer-centric them, business Chengdu, operational core by our Shenzhen, with

us Our XXX,XXX at users, solid for the provides which foundation to around private now a future. expand, to domain user expand base continued in

Language] [Foreign

number a businesses, clinics I'd of delivered chain like initiatives of growth our have to key Within that highlight. robust [Interpreted]

nearly that team by doctors XX,XXX exceptional, high-end highly carefully average example, achieved consumers. tactic revenue sequential XXX% rates selecting of customer appreciated were spend our increase and is For also project of ]. master proving Its injection RMB [ our injector customer satisfaction

[ we Additionally, actively ] . mainstream have platforms expanded partnerships with

after core Our private X,XXX to cities, business. immediately clinics and and of further model its costs the has quickly further achieved launch. market costs are focal such to Tmall, proprietary serves our Shanghai, advantage and Moreover, including online successful program, expanding many orders given order now for in and integration our lower to in on price platforms to branded our reduce cost devices point as traffic exceeded marketing our operations and presence the our notable domain first in coverage. rollout Hangzhou the plan replicate expand operations accelerate Guangzhou, standardized clinics ultrasound of Beijing, cities, us So-Young and the chain scaling leveraging We process month further up franchises remarkable results. Its X consumable Meituan in as to more Shenzhen vertical

Language] [Foreign

[Interpreted] upstream manufacturing ] ] aesthetic We [ capabilities great our upstream category medical building full made our have for progress in up by also [ ecosystem. business broader

the we than partnered with quarter, the end XXX of more for of sales institutions of As injectables. the third

sector reaching our XX,XXX product, demand Our underscoring of the year-over-year, XX% the of competitive our by during year-over-year consolidating advantage injectables further ], upstream injectable strong in the in products. saw Elasti and units a [ grew increase XX% quarter. Sales shipments,

leading for Lancy's creates products. offered lightweight-based the Additionally, is capabilities. X oriental we being our months, which Together, aim product showcasing already co-develop institutions natural after of strong upstream promotion partnered XX% product, with just at the in aesthetic business we Lancy and Group synergies

[Foreign Language]

[Interpreted] our businesses. support upstream Our chain for strong is and POP both clinics providing of business traditional

experience will medical forward, for and both institutions focus consumers. more aesthetic improving Moving we on the

through and medical to demonstrating continues the recognized help on of platform highly Our by has platform. institutions advertising This been our allocation. improve and effectiveness sales conversion aesthetic traffic order targeted advertising placements institutions,

for capita increased XX.X% XX% by month. the shifting upmarket the POP. cost-effective our grew per to by For the consumers, we previous ] are over quarter reflecting providing from committed The success facilitated September, of third GTV [ in year-over-year, GMV platform products. In initial tactics our in-store

through conversion risk product [ rates enhanced ] also and leads commission We our and reform sales optimization.

Language] [Foreign

[Interpreted] Our medical becoming mind the of years, for consumers. a establishing and XX strong for business top served POP aesthetic brand has presence industry

Over billion upstream RMB invested in building the X expanding over have past chain X product our years, and supply we our offerings.

high We enjoy have and consumers opened our central leveraging organizational convenient, scale capabilities, cost-effective in clinics, growing and high-quality culture services. now advantage XX to cost gradually ensure deepen reliable, and platform

clear. mission trusted aesthetic of the accessible fulfilling for medical and medical to aim and integration, create forward, aesthetic upstream, advantage competitive focus million Looking making our people. XXX is become most health downstream Through provider, our middle and service Chinese we multidimensional care

[Foreign Language]

let open through Now CFO, Nick, me questions. After who results. we [Interpreted] will will hand go financial that, for over our to the

to XXX.X volume million million, with and in ordinary tax per XXX.X were injectables [ to earnings same decrease income to XX.X X.X information expenses attributable a services associated and an RMB due revenues of RMB benefit by in million, to of service of the subscribing sales million respectively, our and XX.X primarily expenses user our to year-over-year, the of income RMB acquisition Hello. RMB with Non-GAAP X.X% associated a of in million reminded RMB attributable cost XX.X during of up all decrease due release year-over-year, Cost expenses increase shareholders X.X% were ADS of RMB services due the platform. Reservation ordinary the the X.XX, mainly last for revenues, with quoted the performance our income were number the year-over-year, due million, cost to million detailed consumer financial compared of period net RMB the an and decreased of marketing and million, This staff of expenses million to RMB with medical X.X% on of expenses. R&D cost XX.X RMB and comparative up and increase high year-over-year, platform. medical XX.X% million, products end X.XX were aesthetic with XX.X% million, primarily and XXX.X earnings attributable to Income sales RMB expenses the RMB million, others RMB the associated diluted to year. that primarily period X.X% primarily down to RMB [ information compared be decrease decrease XX.X% a Sales earnings XX.X be in with and XXXX. Net a million, the Please decrease same [ is will same million growing year-over-year down ADS RMB. costs XXXX. Basic to in RMB activities. were attributable diluted XX.X% efficiency. down information XX.X year-over-year amounts expenses -- shareholders tax information improvements period RMB year-over-year. services due our XXX.X guidance, same compared income during of basic ] million, were in X.XX were was to with per exceeding primarily ] of associated down during in of aesthetic RMB basis. Total operating compared with XXXX. injectables. Total revenues other the XX.X% with million, period order attributable equipment. Information in RMB service year-over-year, were in due products G&A maintenance XX.X XXX due RMB year-over-year, of RMB medical was services. Cost the XX.X% share-based of the to were So-Young RMB an primarily net here providers our ], in Please X.XX services maintenance revenues primarily in were X% for due and revenues down branding on primarily X.X sold respectively, impressive down to So-Young through services X.X year-over-year, a refer compensation of to were increase cost a Nick. services spending in also and down year-over-year, quarter services and service. Within medical XX.X year-over-year, a to

cash and short-term position as XX, XXXX. We of term restricted with billion and cash investments September RMB term totaling equivalents, cash cash have maintained X.XX a deposits, deposits and robust

outlook. Moving to our

stages business fourth of and strategic medical of million the to being of and uncertainties also a early the account our foundation long-term for industry our position are significantly the we establish downstream be in into expect For between and expansion the XXXX, said, will initiatives ideally paces the we These RMB initiatives profitability. us XXX transformation. That share growth. for clinic will market our upstream XXX integrating us solid to revenues confident quarter the enable and takes are a larger of aesthetic of openings RMB as of clinic we This the capture up million. total ramping outlook and

concludes improve. This will gradually ready market our clinics and for and take expect to call over the the Q&A. our conditions Operator, turn financial to key -- mature we remarks. to call we our I As questions. are the stabilize, performance operator to open now

Ivy [Operator first Securities. The ] question comes from [ Li with Instructions] Haitong

I translate industry? And or aesthetics current emerging would like industry. perspective, From about your ask to [Foreign in trends what are new medical changes the the I'll myself. language]

Language] [Foreign

recent a growing number gained due [Interpreted] light risks In operation, of aesthetic recovery procedures lower have of their popularity consumers. medical attracting and years, shorter to ease periods,

aesthetic market room XX% current No quality XX,XXX yet with clinic are and significant is over chain national institutions, emerged in and medical lacking institutions. consolidation. small and small the being have market, to unified institutions inconsistent dominated standardization leading service control, However, medium-sized indicating quality. There for the brands standards by around nationwide

the will continued emerge clinic light nationwide in demand aesthetics, chain With medical future. believe brands the in we growth for

Chinese South aesthetic over aesthetic chain where with well-known brands number develops maturity the the at market already similar example brands. XX development has chains could light medical Korea light exceed marketing presenting rate, significant opportunities. medical reached as a the serves prime total chain of X,XXX, clinics If a of

make developed and chain against and medical all. aesthetic the accessible of benchmark to affordable clinics. to behind our also is goal establishing This Our markets is original own intention overseas

[Foreign Language]

prefer personalized Customers polarized on interested [Interpreted] solutions. top-tier and authenticity, standardized doctors services procedures in Currently, cost aesthetic medical demand effectiveness, focus compliance Chinese those and consumers ]. seeking is whereas [ among non-standard

aim team, service, customized has we high-end results. groups. financial For the exceptional By to this excellent received to have customer latter and master segment, needs, a experiences injector deliver targeting we precisely introduced different user various which feedback consumer

unified cost are enhancing management and integrating and growth we and across overall chain and light potential competitiveness model, a chain vertical We procurement cost supply improving our our of profitability. clinics integration aesthetic our about optimistic medical reduce clinics, through to By thereby upstream operational are operating aim optimization. the and implementing

market, aiming brand. our expanding market the committed medical light to Given a become chain this [ domestic to ] we promising clinical footprint are outlook, aesthetic in leading

question next Stacy with The Lee Securities. comes [indiscernible] from

a been strategic following business, [ chain observed the Has in for there fit We've POP? particularly decline expansion. announcement the ] POP your language] of [Foreign a

[Foreign Language]

on critical competition we chain [Interpreted] to ] a and market [ remains third-party partners. POP, challenges. to operations. We The business, like our self-operated intense and continue platforms our a aesthetic significant which to importance maintain place component or traffic address Similar mix DiDi of self-operated JD.com, light are clinics developed medical of

the high, compared traffic to of a While and higher which quality potentially traffic we our face platforms traffic long-term. institutional is big risk Internet impact volume, insufficient retention over with could user

more have medical become valuable our aesthetic the them more third-party users diverse [ clinics insights greater benefits. these ] chain Pangdonglai from the growth. to retaining Sam's platform and attracts to approach Ultimately, new category product positions rapid developing This to attracting light and and diverse of offering it for We personalized Club traffic drawn and with drivers, platform. achieve aim our and products are needs join, medical helping institutions users' to meet institutions on are more

[Foreign Language]

[Interpreted] Moving will we and place greater experience of on consumers. institutions the emphasis forward,

consumer an June. Feedback from steadily On remain XX%. verified the with of September increased showing have been ] by the we to September's transactions our to products. institution [ ROI cost-effective institutions ROI GMV XX% positive. side, committed compared increase for providing improved From perspective,

showing Additionally, product [ have to and with of measures, leads from detailed conversion and [ the ] the commission rates implementation the optimization of page been exposure ] numbers improvement. reforms

[ ] compared page ] by page XX% to increased increased the conversion to of conversion the detail example, by DAU during June. rate rate activities, from and X% detail [ promotional September's For transaction to

a on shifting from model, charge fee-based also to from adjusting effectiveness. service are We emphasis our conversion transitioning fee greater original the exposure-based performance-based model, charge, model on advertising-based placing

is Cheung question of from with Citibank. next Nelson [ line The the ]

question translate is let clinic So the question language] regarding me My the [Foreign myself. business.

national considerations the expansion alongside the are of move chain implement to what So So-Young's its behind model franchise a network?

Language] [Foreign

goal that Our community our medical truly and through aesthetic information years, service growth rapid medical institutions the was industry and reducing over popularization of address platform, costs we original risks. the to and ] remain the asymmetry trusted in issue found and are decision-making and [Interpreted] rare. [ the Despite of aesthetic expensive

reasonable always aspired have services Chinese safe, to consumers, XXX We serve high-quality prices. million at offering convenient and

maintaining value with cost-effective high-quality, and expenses, chain building goal marketing long-term clinic we clinics, per greater to high can traditional become benefits while is retention, national to customer Our achieving a significantly reduce brand, per than trust efficiency consumers. delivering through consumers services. and By more employee square meter

[Foreign Language]

[Interpreted] For business cost central which scale, efficiency. an costs platform model success over on central the helps spread maximizing expanding platform the support, itself, chain relies of

property that initial control We believe expansion aesthetic from will central capture Our operational in ] building allowing agencies, for on customers the financial and and store achieving focus on platform us [ franchised and and level individual at clinic our validated to model's the decision expansion, to launch accelerate feasibility. introducing from our the exist influence to clinics and XX-plus self-operated brand the our support development opportunities growth and aims we this medical light franchise enhancing which already profitability franchise secure owners, capabilities. Based in regular commercial sector, projections, enhance accelerate further of model our confident have are operating effectively resources clinics. and data rapid partners network costs. The government

[Foreign Language]

system and standardized model deep ensure and franchise the operations integration high by managed headquarters, clinics. employees clinics Our fully chain. The service supervisors So-Young's used to [ registered doctors ] chain supply [Interpreted] of are ensuring controlled all all across fully at and are a and [indiscernible] managed approach information standards

greater potential the financial offers advantage, for promising Additionally, the company. asset-light model and growth sustainable profitability franchise

Deutsche of next from The [ line Harry Zhao ] is question the with Bank.

As [ there will with next be Zhao [ response Zhao will is we from Harry which the of no ]. line the to ], Penghua [ from line of Funds question, the proceed Lucy ]

sales language] effective a team and indicates How [Foreign and quarter XX% achieved expenses control ratio approximately with improved lower expense management down has expense third The year-over-year. marketing profitablity?

you, from We Thank profitability question. believe growth. Lucy, your business comes fundamentally for

proven chain speed, potential. by growth clinic has its there -- expansion business for and while room And office optimizing chain exists order maintaining costs more back profit. Our

continuous of pipeline our profitability. further enhance our expansion products launch product and will of upstream Additionally, the the new

industry to companies is expenses aesthetics successfully beyond result our adjustments is of reduction consumers deep of operations conditions. the pure to refined leverage we and one industry, making vertical and market the sales their and prioritizing our As high-quality a the a on comprehensive adjustments offering in user marketing very and more We and to achieve investments understanding in the few current effectiveness of This growth precision marketing platform cost that to traffic market efficiency genuine recognize forward-looking has addressing strategies long-term competition with us and analysis, the competitiveness strategy. of based medical in integration market. The concerns. led requires and the the and advantages experience marketing maintain focus professional excellent and needs, timely on

of terms to ratio In ] control management, percentage points X.X X expense XXXX, which [ maintain has quarter-over-quarter. cost overall QX expense enabled well-managed point stood at effective year-over-year -- XX.X%, percentage us a in enhanced and down

Harry [ The Bank. with is ] next question Zhao from Deutsche

myself. traditional business. a advantages [Foreign ask question upstream upstream translate ensure want I success? have language] What me Let about just over to companies does competitive for to So-Young

Language] [Foreign

clear in We the advantage [Interpreted] have already upstream demonstrated business.

Elasti CAGR highly competitive achieved in [ HA XXX% ] of the X-year market. in a instance, [ For has ] shipments

us allowing with have units. This device upstream shipments ecosystem-based position Truelift the highly XXX new operational the a favorable quickly prominence our maintain advantage in we a of player competitive in our of to industry. ultrasound business, ultrasound a underscores over market, Additionally, reaching as risen cumulative to

Language] [Foreign

promotional marketing and support bestsellers in provide lacking consumers, This a establishing and influence companies industry. Through capabilities, strategies. target core market and foundation visibility terms go models, brand accelerate Currently, we medical self-operated upstream coverage the their into through several setting mix among manufacturers driving aesthetic competitiveness. in our self-operated standard have to a expand solid enhance and and doctors. XX upstream potential launched we a product and chain market further and and to resources institutions and top-performing For end positioning help coverage products our we [Interpreted] in plan assist enhancing clinics products, marketing new clinics, of of we cities, franchise sales industry X product opened have in enhancing

Language] [Foreign

Additionally, of Medical promoting [ the shareholder innovation a expertise, the our manufacturer competitive the largest the strengthen our Congress industry. With leading doctors, medical Aesthetics, aim of event, data by our Melrose in team as business full participation institutions resources upstream only influence International we robust upstream and in edge marketing, external [Interpreted] industry ecosystem. will category ] become among to and aesthetic expanding a

today's us presentation. the brings session. for you concluded. This end has of to now conference attending question-and-answer our The Thank

You disconnect. now may