Release Date: August 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue of RMB407.4 million exceeded the top end of guidance.
- Non-GAAP net profit increased by 43.1% year-over-year to RMB22.2 million.
- Revenue from the sales of medical products and maintenance services grew by 22.6% year-over-year.
- The number of verified customers increased by 85% quarter-over-quarter, with a repeat purchase rate exceeding 50%.
- Customer satisfaction improved significantly, reaching 4.97 out of 5.
Negative Points
- Total revenues decreased by 1.1% year-over-year.
- Information services and other revenues fell by 6.6% year-over-year.
- Reservation services revenues dropped by 16.9% year-over-year.
- Cost of revenues increased by 3.1% year-over-year, driven by higher costs associated with the sales of cosmetic products.
- The macroeconomic environment remains challenging, with soft consumer confidence and discretionary spending.
Q & A Highlights
Q: Can management share more color on the trends seen in July and August from consumers and advertisers, and how So-Young plans to adapt to these changes?
A: (Xing Jin, CEO) The medical aesthetic industry is not performing as expected due to weak consumer confidence and discretionary spending. However, the market for light medical aesthetic services is expanding. We plan to begin franchising our chain of clinics in the second half of the year to adapt to these changes and capitalize on new opportunities.
Q: What is the outlook for the POP business and any new strategies?
A: (Xing Jin, CEO) The POP business remains vital, focusing on high-quality institutions, leading doctors, and premium SKUs. We aim to simplify customer decision-making and increase transaction value. Our chain of clinics will create strong synergies with the POP business, maximizing customer satisfaction and commercial value.
Q: What factors might constrain the expansion of the clinical chain, and how does So-Young address these constraints?
A: (Xing Jin, CEO) Factors include site selection, licensing, staff recruitment, and operational costs. We have improved efficiency, reducing the average time to open new clinics. Our strong brand, customer acquisition capabilities, and supply chain initiatives position us well to address these constraints. We plan to open over 20 clinics by the end of 2024 and launch a franchise model.
Q: How does So-Young's upstream sector differentiate itself from competitors, and what are the strategic plans for this year?
A: (Xing Jin, CEO) We leverage our unique ecosystem and full category advantage to create synergies with existing business lines. Our integrated approach allows us to rapidly build market competitiveness for new products. We plan to expand our team to 100 members by the end of the year and launch new products targeting popular segments.
Q: Can you provide insights into the expected trend for gross margins going forward?
A: (Hui Zhao, CFO) Near-term macroeconomic risks may constrain consumer spending, impacting gross margins. While traditional services enjoy high margins, the increasing share of medical product sales and promotional activities in our clinics are affecting overall margins. However, as our supply chain capabilities strengthen and clinics mature, we expect gross margins to improve.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
