So-Young(SY) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q3 2023 were RMB 390 million, representing a 19% year-over-year increase and aligning with previous guidance [4] - Net income attributable to So-Young was RMB 18.3 million, compared to RMB 2.3 million in the same period last year [4][18] - Non-GAAP net income attributable to So-Young was RMB 9.5 million, slightly down from RMB 9.9 million in Q3 2022 [18] - Basic and diluted earnings per ADS were RMB 0.18, compared to RMB 0.02 in the same period last year [18] - Total cash and cash equivalents as of September 30, 2023, were RMB 1.4 billion, down from RMB 1.6 billion as of December 31, 2022 [19] Business Line Data and Key Metrics Changes - Revenue from So-Young Prime increased significantly, with fulfilled orders growing by 23% sequentially during the quarter [8] - Online GMV for the face contouring category grew by 40% year-over-year, while GMV for all surgical categories grew by 11% quarter-over-quarter [7] - Revenue from the supply chain business reached RMB 75 million, a 19% year-over-year increase, accounting for 20% of total revenue [11] Market Data and Key Metrics Changes - The medical aesthetics market in China is expected to continue expanding, with user penetration rates still low, particularly in markets beyond first-tier cities [12] - Total retail sales of consumer groups during the first 10 months of 2023 increased by 69% year-over-year, indicating a recovering economy [28] Company Strategy and Development Direction - The company is focusing on high-end service users and adapting its community POP business to cater to this segment [5][27] - So-Young Prime is being adjusted to serve user growth and improve the quality-to-cost ratio of products [8][27] - The supply chain business is positioned to capture opportunities in the rapidly expanding light medical aesthetics market [9][11] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the medical aesthetics market for 2024, despite occasional impacts from market volatility [28] - The company plans to continue investing in acquiring high-quality users and institutions to create long-term value [28] - Management highlighted improvements in operating efficiency as a key factor in maintaining profitability [31] Other Important Information - The company has been exploring new business models beyond traditional Internet models to enhance value creation [34] - A flagship clinic has been established to test management systems in real-time, achieving profitability within three months [9] Q&A Session Summary Question: Progress of So-Young Prime and expectations for Q4 and 2024 - Management reported that fulfilled orders for So-Young Prime grew tenfold compared to the same period last year, with a focus on improving service experience and expanding product categories [22][23] Question: Marketing expenses expectations for Q4 and next year - Management emphasized improving advertising efficiency and user conversion rates, with plans to maintain careful management of marketing costs [24] Question: Expectations for the medical aesthetics market in Q4 and 2024 - Management anticipates a gradual popularization of high-tier users and continued growth in light medical aesthetics, adapting business strategies accordingly [26][27] Question: Future margin trends - Management indicated a focus on revenue growth and diversification of revenue streams, with confidence in maintaining profitability [31] Question: Future competitive landscape and positioning - Management is exploring new business models and focusing on high-quality service experiences to differentiate from competitors [34][35]