So-Young International’s Earnings Call: Growth Amid Challenges

So-Young International ((SY)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call of So-Young International Inc. painted a picture of mixed sentiments, highlighting both significant achievements and notable challenges. The company showcased remarkable growth in aesthetic treatment services and strong user engagement, buoyed by successful product launches. However, these positive developments were tempered by declines in reservation services revenue and medical product sales, alongside an increased net loss, indicating areas of concern for the company.

Recognition and Industry Shift

So-Young International has been acknowledged by People’s Daily for its exemplary role in the industry, particularly in supply operations, transparent pricing, and compliance management. This recognition underscores a broader industry shift from marketing-driven to trust-driven practices, positioning So-Young as a leader in setting new standards.

Significant Increase in Aesthetic Treatment Services Revenue

The company reported a substantial 304.6% year-over-year increase in aesthetic treatment services revenues, reaching RMB183.6 million. This impressive growth is attributed to the expansion of branded aesthetic centers, reinforcing So-Young’s stronghold in the market.

Strong Membership Growth and User Engagement

Membership operations have seen a significant uptick, with verified user visits increasing by nearly 40,000, marking a 36% rise quarter over quarter. Additionally, the addition of over 10,000 new core members, up 40% quarter over quarter, has contributed to a high double-digit percentage of aesthetic center business revenue.

Successful Launch of Miracle PLA Version 3

The launch of Miracle PLA version 3 has been a resounding success, with the initial batch of 5,000 units selling out quickly. A massive restock is anticipated, driven by the product’s significant upgrades and competitive pricing, which have resonated well with consumers.

Future Expansion Plans

Looking ahead, So-Young plans to expand its footprint by reaching 50 centers by 2025. The company is focusing on customer acquisition efficiency, digitalization, and AI capabilities to drive further growth and operational efficiency, setting the stage for sustained success.

Decline in Reservation Services Revenue

Despite the positive strides in other areas, reservation services revenues saw a decline, dropping to RMB117.2 million, a 34.5% decrease year over year. This downturn is attributed to a reduction in the number of medical service providers on the platform, presenting a challenge that the company needs to address.

Decrease in Medical Products Sales

Sales of medical products and maintenance services also faced a downturn, with revenues falling to RMB67 million, a 25% decrease year over year. This decline is primarily due to a decrease in order volume of Bangkok equipment, highlighting a need for strategic adjustments in this segment.

Increased Net Loss

Financial challenges were evident as the company reported a net loss of RMB64.3 million, compared to a net income of RMB20.5 million in the same period last year. This increased net loss underscores the financial hurdles that So-Young needs to overcome.

Forward-Looking Guidance

In its forward-looking guidance, So-Young International outlined ambitious growth targets and strategic plans. The company reported total revenues for the quarter at RMB386 million, a 4% year-over-year increase. Aesthetic treatment services revenues are expected to grow significantly, with projections for 2025 set between RMB216 million and RMB226 million. The company plans to open at least 35 new aesthetic centers, focusing on fourth and second-tier cities, while emphasizing digitalization and AI to enhance service delivery and user experience.

In summary, the earnings call of So-Young International Inc. reflected a dual narrative of robust growth in certain areas and challenges in others. While the company has made significant strides in aesthetic treatment services and user engagement, declines in reservation services and medical product sales, coupled with an increased net loss, present hurdles that need to be addressed. Nonetheless, with ambitious expansion plans and a focus on digitalization, So-Young is poised to navigate these challenges and continue its growth trajectory.