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

Financial Data and Key Metrics Changes - Total revenues for the quarter 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 on the platform [16] - Net loss attributable to So Young was CNY 33.1 million, compared to a net loss of CNY 21.2 million during the same period last year [20] - 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 of 2024 [20] - Basic and diluted losses per ADS attributable to ordinary shareholders were CNY 0.32, compared to CNY 0.21 during the same period of 2024 [21] - Cash and cash equivalents totaled CNY 1.1 billion as of March 31, 2025, indicating a robust cash position [21] 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 [17] - Total verified paid visits exceeded 45,500, up 18.5% quarter on quarter and 874.3% year over year [8] - Total number of verified paid aesthetic treatments performed surpassed 92,900, up 14% quarter on quarter and 989.4% year over year [8] - Customer satisfaction remains high at 4.98 out of 5, reflecting the commitment to maintaining high service delivery standards [9] Market Data and Key Metrics Changes - The aesthetic center business is gradually becoming the main growth driver, with 23 centers opened in nine major cities, including Beijing and Shanghai [7] - 18 centers have achieved positive monthly operating cash flow, and 16 centers are profitable on a monthly basis as of March [7] Company Strategy and Development Direction - The company is pursuing a vertical integration strategy and expanding its network of aesthetic centers in key cities, focusing on high-quality, cost-effective, and standardized services [6] - The strategy is inspired by the Sam's Club retail model, emphasizing proprietary products, value-for-money pricing, and end-to-end supply chain management [13][22] - The company aims to build a differentiated nationwide light medical aesthetic chain with strong brand recognition [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 robust cash position and careful management of capital expenditures [21][36] - The company expects aesthetic treatment services revenues for Q2 2025 to be between CNY 120 million and CNY 140 million, representing a 337.3% to 410.1% increase from the same period in 2024 [21][22] - Management views trade tensions as an opportunity to strengthen the domestic supply chain and support import replacement, with minimal direct impact on the aesthetic center business [45][46] Other Important Information - The company has allocated additional marketing resources and implemented sales incentives to boost revenue contribution from proprietary products, aiming to improve overall gross margins for aesthetic centers [11] - The number of institutions served with supply chain solutions for injectables grew to over 1,500, with shipments of elasticity reaching approximately 27,900 units in Q1, up roughly 14% year over year [11] Q&A Session Summary Question: How is So Young Clinic different from traditional medical institutions like Meilai and Istar? - The aesthetic center business operates on a fast casual model, offering focused services in smaller clinics with higher visit frequency, contrasting with traditional models that require larger spaces and generate higher per customer spend but with less frequency [26][27][28] 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, with a focus on profitability and the potential rollout of a franchise model to reduce CapEx pressure [36][37] 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, reducing reliance on imported devices [40][41] Question: How will ongoing trade tensions impact the company's business? - The direct impact is limited, with only a small portion of offerings relying on U.S. imports. The company sees this as an opportunity to enhance the domestic supply chain and pivot to alternative products if necessary [45][46] Question: Can management elaborate on future investment plans and cost reduction strategies? - The company remains focused on sustainable growth, optimizing service offerings, and enhancing efficiency at the clinic level while increasing investment in proprietary product lines to support margin expansion [50][52]