So-Young International ((SY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for So-Young International presented a mixed sentiment, reflecting both significant achievements and notable challenges. While the company showcased impressive growth in its aesthetic treatment services segment, it also faced hurdles with overall revenue decline and net losses. This dual narrative of positive growth indicators and negative financial results paints a complex picture for the company’s current standing and future prospects.
Aesthetic Treatment Services Revenue Growth
Aesthetic treatment services have been a bright spot for So-Young, with revenues increasing by 46% quarter-over-quarter and a staggering 426% year-over-year, reaching RMB 144 million. This significant growth underscores the company’s successful focus on expanding its aesthetic services, which remains a key driver of its business strategy.
Expansion of Aesthetic Centers
The company has been actively expanding its footprint, operating 29 aesthetic centers by the end of June and planning to reach 50 centers by the end of the year. This aggressive expansion strategy highlights So-Young’s commitment to scaling its operations and enhancing its market presence.
High Customer Satisfaction and Repeat Purchase Rate
Customer satisfaction remains a cornerstone of So-Young’s success, with a high score of 4.99 out of 5 and a repeat purchase rate exceeding 60%. These metrics indicate strong customer loyalty and satisfaction, which are crucial for sustaining long-term growth.
Improved Gross Profit Margin
The gross profit margin for aesthetic treatment services improved by approximately 5 percentage points sequentially. This improvement reflects enhanced operational efficiency and cost management, contributing positively to the company’s financial health.
Strategic Launch of New Treatments
So-Young has strategically expanded its medical aesthetics portfolio by introducing new treatments like Medical PLLA, Mermaid Skin Booster, and BBL Hero. These innovations have increased the average revenue per user (ARPU) and strengthened the company’s competitive edge in the market.
Overall Revenue Decline
Despite the growth in aesthetic services, So-Young’s total revenues fell by 7% year-over-year to RMB 378.7 million. This decline is primarily attributed to a decrease in medical service providers subscribing to information services, posing a challenge to the company’s revenue streams.
Net Loss Attributable to So-Young
The company reported a net loss of RMB 36 million and a non-GAAP net loss of RMB 30.5 million, contrasting with net income in the same period last year. This shift to net losses highlights the financial pressures from rapid network expansion and ongoing investments.
Decline in Information and Reservation Services Revenue
Revenue from information and reservation services decreased by 35.6% year-over-year, indicating significant challenges in this segment. This decline suggests a need for strategic adjustments to revitalize this part of the business.
Decrease in Medical Product Sales
Sales of medical products and maintenance services dropped by 28.1% year-over-year, reflecting a decrease in order volume. This downturn in product sales further underscores the financial challenges facing So-Young.
Forward-Looking Guidance
Looking ahead, So-Young has set ambitious targets, planning to open around 10 new aesthetic centers in the third quarter and aiming for a total of 50 centers by year-end. The company projects aesthetic treatment service revenues to be between RMB 150 million and RMB 170 million in the third quarter, marking a substantial increase over the previous year. These forecasts reflect So-Young’s optimism and strategic focus on expanding its core business.
In conclusion, So-Young International’s earnings call revealed a mixed sentiment, with significant growth in aesthetic treatment services juxtaposed against challenges in overall revenue and net losses. The company’s strategic expansion and high customer satisfaction are positive indicators, but financial hurdles remain. Investors and stakeholders will be keenly watching how So-Young navigates these challenges while capitalizing on growth opportunities in the coming quarters.