So-Young(SY) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were CNY 297.3 million, down 60.6% year over year, primarily due to a decrease in the number of medical service providers subscribing to information services [14] - Net loss attributable to So Young was CNY 33.1 million, compared to a net loss of CNY 21.2 million in the same period last year [17] - Non-GAAP net loss attributable to So Young was CNY 31.5 million, compared to non-GAAP net income of CNY 4.1 million during the same period in 2024 [17] - Basic and diluted losses per ADS were CNY 0.32, compared to CNY 0.21 in the same period of 2024 [18] - Cash and cash equivalents totaled CNY 1.1 billion as of March 31, 2025, indicating a robust cash position [18] Business Line Data and Key Metrics Changes - Revenue from aesthetic treatment services reached CNY 98.8 million, a remarkable 551.4% year over year increase, primarily due to the expansion of the aesthetic center business [15] - Total verified paid visits exceeded 45,500, up 18.5% quarter on quarter and 874.3% year over year [7] - Total number of verified paid aesthetic treatments performed surpassed 92,900, up 14% quarter on quarter and 989.4% year over year [7] - Cost of aesthetic treatment services was CNY 80.3 million, up 547.6% year over year, primarily due to the expansion of the aesthetic center business [16] Market Data and Key Metrics Changes - The aesthetic center business is gradually becoming the main growth driver, with 18 centers achieving positive monthly operating cash flow and 16 centers being profitable on a monthly basis as of March [6] - The company aims to build a differentiated nationwide light medical aesthetic chain with strong brand recognition [10] Company Strategy and Development Direction - The company is pursuing a vertical integration strategy and expanding its network of aesthetic centers in major cities [5] - A franchise model is being planned to accelerate geographic reach and network density while reducing capital expenditure pressure [32] - The company aims to develop proprietary products and control the supply chain, inspired by the Sam's Club retail model [11][19] - The focus is on high-quality proprietary products and services at fair prices, aiming to become a leading player in the medical aesthetics industry [12] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the aesthetic center business, emphasizing the importance of maintaining a sustainable financial model [32] - The company views trade tensions as an opportunity to strengthen its domestic supply chain and support import replacement [41] - The outlook for Q2 2025 expects aesthetic treatment services revenues to be between CNY 120 million and CNY 140 million, representing a 337.3% to 410.1% increase from the same period in 2024 [18][19] Other Important Information - The company has allocated additional marketing resources and implemented sales incentives to boost revenue contribution from proprietary products [9] - The number of institutions served with supply chain solutions for injectables grew to over 1,500 as of Q1 [9] Q&A Session Summary Question: How is So Young Clinic different from traditional medical institutions like Meilai and Istar? - The aesthetic center business uses a fast casual model, offering focused services with higher frequency and lower per customer spend compared to traditional models [23][24] Question: Will CapEx become a burden for the company as the clinic network grows? - The company emphasizes careful management of CapEx and plans to open around 30 new clinics per year while exploring a franchise model to reduce CapEx pressure [32][33] Question: How does the Miracle Laser create more synergy with the company's core business? - The integration of Wuhan Medical Laser improves R&D capabilities and supports the growth model by supplying high-quality, cost-effective equipment to aesthetic centers [35][36] Question: How will ongoing trade tensions impact the company's business? - The direct impact is limited, but the company sees it as an opportunity to strengthen its domestic supply chain and pivot to alternative products if necessary [41][43] Question: Can management elaborate on the company's future investment plan and cost reduction plan? - The company remains focused on sustainable growth, optimizing offerings, and increasing investment in proprietary product lines to support margin expansion [45][46]