Q2 2021 So-Young International Inc Earnings Call
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Good morning, ladies and gentlemen, and thank you for standing by for so young second quarter 2021 earnings conference call. At this time all participants are in a listen only mode. After the management's prepared remarks, there will be a question and answer session as a reminder.
Today's conference call is being recorded I would now like to turn the meeting over to your host for today's call Ms. Vivian Xu.
Proceed.
Thank you operator, and thank you for joining us OEM second quarter 2021 earnings conference call. Please note that the discussion today will contain forward looking statements made under safe Harbor provisions of the U S Private securities and the litigation Reform Act of 1995.
Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.
Potential risks and uncertainties include but are not limited to those outlined all the public filings with the SEC, including our annual report on form 20-F.
And does not undertake any obligation to update any forward looking statements.
Sept as required under our people.
Joining us today on call are Mr. Xing Jin Oh, well.
<unk> co founder Chairman and CEO and Mr. <unk> our CFO.
At this time I would like to turn the call over to Mr. Xing Qi cash please.
That's right.
Our Union DRG dual Thai baht, there Holly.
Thank you all for joining our earnings call for the second quarter of 2021.
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We are very pleased to report another strong quarter revenue grow to RMB 452 million.
And of our guidance of RMB 415 minutes.
Increase of 38% from the same period of 2020.
Non-GAAP net income attributable to <unk> International Inc reached RMB.
74 million, an increase of 145% from the second quarter of 2020.
Average mobile M a R.
10 million up 48% year over year total number of users purchasing reservation services.
244, 45000 up 44% compared with the same period of 2020.
The number of paying medical service providers on our platform was 4899.
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Quarter of last year during the quarter the number of users from purchasing reservation services in dental treatments.
Approximately 120% year over year to about $8014.0
The number of professional dental institutions, our platform grew to 2950 <unk>.
Creasing by the more than three times from the same period of last year.
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In the second quarter, we announced the acquisition of a controlling interest in Wuhan Miracle laser systems.
First in medical laser company listed on the National Equities exchange and quotations are AE exchange in China.
The acquisition will further enhance our competitive advantage in the MAU surgical aesthetic segment and allow us to explore new collaborations opportunity with upstream equipment.
And medical dropped providers.
Hi, Miracle is mainly engaged in R&D production sales and agent service for lasers, and other photo electric medical and aesthetics equipment. It has more than 10 product lines, including both self owned and licensed.
Well, Hi, Miracle covers the broadest range of projects among total electric manufacturers.
And is able to self diversified skied of different end users.
According to the as reported results the revenue for the first half of 2021 increased by 119% year over year and net profit attributable to <unk> medical for the first half of 2021 increased by 252% year over year.
Our solid results and a new strategy.
<unk> have enabled us to consistently improve our operations to meet the increasing changing demand from our end users and business partners and expand our market share.
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Innovative technologies in medical aesthetics are driving an increasing awareness of aesthetic treatments and surface Mount consumers.
Notably the popularity of non surgical procedures to maintain healthy appearance on promote anti aging benefits is constantly growing.
Second quarter <unk>.
Revenue contribution of our non surgical business increased to 46% of all the total revenue.
40% in the second quarter last year.
Our reservation orders from now surgical procedures increased by 40% year over year and the reservation of orders from non surgical procedures accounted for 70% of total orders.
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Moving over to our operational strategy.
Firstly, leveraging our community content and advantaged new media resources will continue to develop and launch fresh and highly successful products.
The second quarter, we have been stepping up efforts to recommend core products with good word of mouth to users on our platform.
Including Fatone afford the photo rejuvenation heartbeat and experiential.
Which resulted in year over year increase.
Increase of over a 100% for online orders.
Online orders for Daytona 40, even increased by 500% year over year.
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And now surgical product side, we continue to optimize the online transaction experience increasing the number of skus on our platform and provided a more transparent and attractive prices.
We also launched an online consumer protection project, such as in advanced compensation and medical beauty insurance.
At the end of June over 140000, Nonsurgical Skus will available on our platform increase of 41% compared with the same period last year.
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Secondly, we continue to stress injury standardization of non surgical procedures and enhanced our measurement and control our products and equipment to optimize user experience.
Strategic investment in <unk>.
Not only expand our service network or institutional clients, but Phoenix.
Oh, sorry, extrusion, our clients, but also improve our fulfillment service and ensure that we are able to offer authentic products to customers.
With acquisition, our service in announced surgical categories will become more diversified creating a competitive moat in the long term.
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Lastly to ensure our users are guaranteed only authentic products and don't have to worry about safety issues.
<unk> team and the services, we will continue to depot.
Deepen our cooperation with our network of medical device manufacturers in order to consistently screen drops medical device and service providers.
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We continue to develop more popular categories, such as dental services by walking with institutional clients, we connected users with institution and offer them Premier dental services by bringing a standardized system to enhance the service quality of these institutions.
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On the regulatory front.
Over the past few months regulatory authorities and.
Have expressed their views and opinions on various matters, such as antitrust data security and medical aesthetics advertising and easier to use.
<unk> policies and guidance for multiple industries, we have taken this opportunity to reflect on our practice and our role as an industry leader and engage in self reflection and introspection.
First Apple since our inception, we have established a street.
Stringent review and approval process for our doctors and institutions as well as conducted rigorous review mechanism for content and service offering our platform in.
In addition, following the guidance easier to bypass.
It's easier to buy.
Regularity bodies at various levels, we have established internal review process and continue to improve the online information we provided medical aesthetic services.
At the same time, we have also been actively engaged in the self discipline of China's medical aesthetics industry by promoting platform governance, and assisting our institution partners with compliance audits.
And promoting a standardized and ordinary orderly development of the medical aesthetics industry.
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To summarize we believe the Chinese medical aesthetics industry is we're on the track of steady growth.
As a leader in the industry, we have the responsibility to make industry are better by promoting industry standards and providing authentic and truly valuable services for our users looking forward, we will leverage our competitive advantage in content in content technology and our large user.
And continue to focus our efforts on user acquisition and expand our online presence.
<unk> into other segments of the industry.
By making use of medical aesthetics as an entry point.
<unk> will be viewed as the trusted.
Medical aesthetics and medical care platform in China.
So I mean to them and that therefore, you need to sell but you told us I wish him home, so home and John Choi.
Let me in Wyoming to give us an overview of our results for the quarter and.
Before the the operator will open the of QA.
Thanks Kash, please be reminded that all amounts quoted here will be RMB. Please also refer to our earnings release for detailed information of our comparative financial performance on a year over year basis.
For the second quarter 2021, total revenues were RMB 400 to $459.0 million up 37, 7% year over year.
From RMB $330.0 million.
And exceeded the high end of our prior guidance of RMB $450 million. The increase was primarily due to an increase in average revenue per paying medical service provider. The number of paying medical service providers on the platform was what 4899, an increase of 31, 3%.
From 3735.
In the second quarter of 2020.
The total number of medical service providers subscribing to information services on <unk> platform was 2236 during the quarter.
Increase of eight 8% from 2000.
<unk> 56 in the second quarter of 2020 within total revenues information services revenue were RMB 360 million up 53, 8% year over year from RMB, three or $239.0 million.
Reservation services revenues were RMB $100.0 million a decrease of two 8% from RMB $100.0 million in the second quarter of 2020 cost of revenues were RMB $66.0 million.
14, 9% year over year from RMB $57 million in the second quarter of 2020.
Cost of revenues and included share based compensation expenses of RMB, $11.0 million compared with RMB 6 million in the second quarter of 2020 total operating expenses were RMB $339.0 million up 16, 7% from RMB 287 formula in a second.
2020.
Sales and marketing expenses were RMB $213.0 million up 11, 6% from RMB $187.0 million a year ago.
Primarily due to increase in payroll costs associated with the expansion of marketing employees.
Sales and marketing expenses, including share based compensation expenses of RMB, one 6 million compared with RMB, one 6 million in the corresponding period of 2020.
General.
And administrative expenses were RMB 50, $761.0 million up 13, 3% from RMB $57.0 million a year ago.
Primarily due to increase in payroll costs associated with expansion of administrative employees.
General and administrative expenses included share based compensation expenses of RMB, seven 2 million compared with RMB <unk> $16.0 million in the corresponding period of 2020.
Research and development expenses were RMB $73.0 million up 37, 9% from RMB $55.0 million a year ago. The increase was primarily attributable to increase in payroll costs associated with expansion of our research and development employees.
Research and development input.
Expenses from the second quarter of 2021 included share based compensation expenses.
<unk> $9.0 million.
Compared with RMB $8.0 million in the corresponding period of 2020 <unk>.
Income tax expenses were RMB, $12.0 million compared with RMB $10.0 million in the second quarter of 2020 net income attributable to <unk> International Inc. Was RMB 57, 6 million compared with net income attributable to Soya International Inc of RMB $3.0 million the second quarter of 2020.
Non-GAAP net income attributable to <unk> International Inc. Was RMB $80.0 million compared with RMB $31 million in non-GAAP net income attributable to <unk> International Inc. In the same period of 2020.
Basic and diluted income per ads attributable to shareholders will be zero point of <unk> 54.
And <unk> zero point of 53, respectively.
Compared with RMB zero, two and 0.0.
Zero two respectively during the same quarter.
During the second quarter of 2020.
Now for our balance sheet as of June 32021, we had a total cash and cash equivalents restricted cash and term deposits time deposits and short term investments of the.
Two point 26 billion compared with RMB 268 billion as of December 31, 2020.
For the third quarter of 2021, so we don't expects total revenues to be between.
RMB 430 million to RMB $450 million, representing a 66.
66.6% to 69, 7% increase from the same period in.
In 2020.
The above outlook is based on the current market conditions and reflects the company's preliminary preliminary estimates over the market and operating conditions and customer demand.
This concludes our prepared remarks, I will now turn the call to the operator and open the call for Q&A, operator, we are ready to take questions.
Thank you we will now begin the question and answer session.
You wish to ask a question. Please press star one on your telephone keypad and wait for your name to be announced if you wish to cancel your request. Please press the pound or husky if.
If you ask a question in Chinese please repeat it in English immediately and one person is allowed to ask one question at a time.
If you want to ask more than one question. Please join the queue again.
And your first question comes from Thomas Chong of Jefferies. Please ask your question.
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Now I'll return they myself what other companies will regarding the recent changes on the aggregate advertising guidelines are regulating the.
<unk> Medical center.
Where you show the five to stay administration for market regulation and how it will affect the company's business moving forward. Thank you.
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Thank you, we noticed that documents easier to buy it with clarity also eighty's since the beginning of this year has mainly been focused on supervising the practice of medical institutions in the medical aesthetic sector.
That such supervision.
Captive to their long term and healthy development of the entire industry.
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The humor.
And as the intent Internet medical aesthetics information service platform.
Our inception, we have established.
Review and approval process for our doctors and institutions, we partner with as well as content and product reveal Mckenna.
A quick build on governance across our platform and drive to a club, adding noncompliant activities.
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In terms of having medical information featured on our platform.
In order to cooperate with OEM medical institutions are required to submit their state easier to business license category infusion practice license and other documents.
By government authorities.
As well as past, our internal review and a verification. We also require doctors to provide quantification separate case and verify practice license before inflammation can be published on our platform.
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In terms of publishing content.
Products and services, we have built a rigorous information display system equipped with race control and Antifraud system.
Formation displayed by institutions Master first and meet our strict requirements and we have two additional review procedures, one automated and the other by manual inspections.
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We have also a professional team that closely monitors state policies.
And the standards in real time, which we then compile compile to optimize our platforms fabrication system and the standardization process.
We also have a strict set of.
Violation inflammation risk control model elaborate.
Because our professional internal risk control management and platform governance.
I think that this should be the operational strengths that differentiate us from our peers.
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Last may we initiated a self discipline campaign for Chinese China's medical aesthetics industry to promote platform governance.
Regarding the drop the Carlin.
Guidelines.
Fibrillary King advertising the medical aesthetics sector is Europe IV S. EMR, we will provide our feedback through appropriate channels.
Pre mice of protecting the legal rights and interest of consumers.
So a positive and constructive feedback we aim to create a void for medical aesthetics professionals and at the same time provide a better service to our customers and promote.
Regulated and already have arrangements for the development of the industry.
Postal EMEA really Jim Glen Yeung.
Shooter title attrition, Joe Joe Shan Shan Jugal, Joe Chang <unk> field.
Pro forma forecast.
You guys recently since <unk> acquired other pharmaceuticals.
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So that's all good.
John.
<unk> city chance or your guidance on icon he answer there.
Sure, it's all hertz issues using higher solution weight of impact challenge to kind of show either.
Meanwhile, we also believe that with strict regulation and further execution of specific rules.
I'll fly medical institutions are required to enhance their service capability and medical level, not blindly pursue traffic growth in marketing and user acquisition and even cheated consumers with fake all fashion.
Institutions will be more cautious selecting marketing channels also the Eva enforcement of guidance.
Also clarifies that online platform operators duties to perform contract ended do that diversification.
And governors online.
Platform combines will be enhanced.
This regard as the first mover in the industry to start and to continuously steps self discipline. We believe that we all will be benefited by the regulation in the long run.
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Sure.
In the long term, we believe that as the regulations, we approve new highly conductive to the housing department of industry.
So yes, we are committed to adhere to all regulation and it will continue to further improve our internal review mechanic to full compliance and irregular south governance.
Lead by example, we will remain proactive proactive in.
Intercepting medical aesthetics promotional information that guidance.
Comply to the rules.
In order to offer authentic information and online services and promote better care in the medical aesthetics industry.
So for this year.
Thank you that's all.
Our next question comes from Nelson Cheung of Citi. Please ask your question.
Yes.
As I said already consistent with if you would hope with humans.
China.
The whole when he said when you consider.
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Just Cisco.
Do you think that goes with it.
Yes.
The homeless people who come to us.
We send them to set up the whole hiring like assuming that when you just said.
When you mentioned about it just is it when you said that you thought.
Yeah.
So let me first take the subject English.
Transmission revenue.
Taking my question. So my question is regarding to the business profit.
As I shared our views are related to the impact of Covid.
Like a business and can you share more details about the growth trend going into the second half of this year and my second question is related to that progress.
So we havent passed the XY pad yep. Thank you.
So she bought you're saying issues either in Asia or somehow.
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<unk> to his home suite to go to even to inside <unk> hundreds are now shipping.
In July and August in China faces, a double impact of COVID-19.
Resurfacing in a few cities any damages from flooding disasters operations of matter infusions.
Adversely affected in the first year and second tier cities, such as Shanghai, COVID-19, Energen Jo.
And as the situation got under control medical institutions were able to resume operations and to return to their regular growth trend.
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<unk> net income profile.
Looking to the.
Looking to the business grows in the second half of this year firstly policies in particular regulation for medical aesthetics advertising required institution to conduct salary inspection first in the near term and.
Paul on quantified.
Products and treatments from their offerings.
Meanwhile, the enforcement guidelines also set clear requirements for online platform operators to fulfill their duties imposed by laws.
As a result institutions will be more cautious about the marketing in the near term.
Southern Europe, So you finish or show them, where you had to put on puzzle.
Polyol socially somewhere you also the future song women's artificial Sean.
Tissue to do two things.
Centaur towards us.
Sure.
In the second half of this year to take advantage of the rising popularity of non surgical payments. We will continue to implement our established a strategy to grow the nonsurgical categories.
The penetrate and expand market share, while maintaining our strength in medical category.
Graham as second tier two priority, but it's okay.
You will full guidance Youll show you the SEC towards essentially over time.
Guys you go sure Josh Orca towards adults Hawaii biologically.
The initial <unk> zones on this issue.
As of the end of August so are we on pause has extended its not work too.
36 cities.
11, Q1, and the number of institutions increased from 95 to over 100.
The number of verified August. So we has also increased by 40% in Q2 compared to Q1.
That's all thank you.
Your next question comes from from Leo Chiang of Deutsche Bank. Please ask your question.
Punishing the ones that you have.
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Jean Marc.
Let me translate myself. So thanks management for taking my question. My question is regarding to competition and then Scott.
Can management share the latest competition landscape.
Recently, thank you.
Yes.
On the sitcom format.
In June we should no longer term zone.
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Hormones autoimmune JJ Youll courts, <unk> justice other channels on the accordion.
Four questions <unk>, so those <unk> due to higher yields.
At current level of market competition, we believe it is no longer a purely about competing for user traffic.
But whether platform can really address a pinpoint for users and improve user experience.
The perspective of both regulation and a better user experience platform must be professional at all times and have in depth knowledge of the industry.
Sure, it's official cell module, overdone, telco or media tissue Zhao County officials on the EU decision.
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This is all favorable.
Hum.
The popularity of non surgical category, increasing demand, we will continue to strengthen the operational nonsurgical category and implement our established strategy to expand our market share on top of growing our in time medical aesthetics user base.
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For loans in the email all year.
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So right now the high you go to Europe.
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Core Dah finally, you met your goal.
Meanwhile, we are.
Lansing, our cooperation with other platform to empower the entire medical aesthetics industry.
For instance that we partner with J D Dot com pure established JD housing medical aesthetics channel. So that consumers can experience and have easy access to professional and premier medical aesthetic services.
Besides that we also work with auto Navy to connect with other 1000 institutions and established a consumer service for medical aesthetics users.
A map platform.
So impasse has also achieved more strategic cooperations with like a little Red book Pimco to acquire <unk> and Weibo and we hope to explore popular achievements in medical aesthetics build a premier Charlotte after next products and expand our service scope.
Continuing powering more institutions.
Just issue that's all thank you.
Your next question comes from the line of Vincent Yu from Needham and company. Please ask your question.
Yeah.
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So Tom what should I also want to.
So it's a good sort of the whole message you want that demand that you could do.
It will be harder.
Ill conclude by Asia.
Management. Thank you for taking my question I have two questions. One is to follow up on that.
Impact on the regulation. So my question is not.
It's more focused on how the regulation.
Impacts that the traditional.
The industry structure and the.
The traditional packet practices in this industry and how we should view this as a potential opportunity and second question is on the.
<unk>.
Physician, how shall we say.
Think about the strategy behind this.
What kind of cooperation we will have.
Between.
The manufacturing company and the.
Institution clients and also what kind of monetization model we are.
Hoping to see.
Yes. Thank you.
Yeah.
Uh huh.
Tim on the brokerage side.
So you do lose on that Sheila.
Oh, the U shape of growth on the Xinjiang.
Timeline Conlow University of Leeds.
Great.
So the gentleman in the Georgetown <unk> Chico you've shown to us.
Roger do you also when it goes out.
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Josh I would tell you our team she should assume growth.
As soon as Hangzhou some time.
So some key assumptions.
Chico.
Out of a hole.
First we believe that is a regulation of action against the non compliant practice and a strict regulatory requirements will benefit as a healthy tobacco alcohol industry in the long run with tightening of regulation local regulation with further clarify ended detail too.
Detailed the approval system and process for institution and adapters.
Meanwhile, usage, especially specifications for trucks and equipment that will be strengthened.
More effective potentially protect protection for manufacturers and institution, producing distributing and using genius and authentic products.
Sure.
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Beyond entry compliance we are seeing is that a street correctly, <unk>, where to some extent drive institutional space level from their marketing cost profit mechanization to internal operation SaaS to improve service quality, besides educating consumers to distinguish and so.
<unk> services.
Institution to retain clients with good service and Skus.
It's Joe Shan Wong survival lung by focused only on cosmic acquisition, and ignoring management and service quality.
Susana <unk> Guan John Chang to 670.
The issue <unk> Honda, Belgium, <unk> somewhat simple on this way.
<unk> based on Nintendo switch and Giuliano.
<unk> tightened the market of regulation has SEC and image.
Has significantly driving effect on standardization and going online for the entire medical aesthetics market, particularly the non surgical and medical aesthetics market.
<unk> therefore anywhere.
Yes.
I will try to answer your questions about our acquisition of Newco laser.
As mentioned earlier in the course of his remarks.
Previous part.
The medical Melissa you see.
<unk> is one of the biggest.
Manufacturer for laser.
Medical Machineries in China, and we think of the synergies.
Going forward between the.
The platform is so young and the cooperation with the manufacturers with branded manufacturers like medical.
We will have a new complete service experience for our users on the platform.
Same time, we can make sure the services taken by the customers will have a very consistent.
Experience.
It also will have certain.
Cost saving effect.
We will provide a platform customers directly to the clinics or hospitals, who have.
Miracles.
Medicine.
Instruments or equipment.
<unk> directly and we will share the revenues between that and it will be a showcase.
<unk> for us.
For the for the cooperations with upstream.
Manufacturers in medical aesthetics service industry.
Going forward, we will see further cooperations with other branded manufacturers.
Two provides.
Consistent and the.
Of course, the consistent screening drugs and medical devices and service providers to our customers.
At the same time.
Millercoors itself is a very well run business.
They're helping listed in the.
The.
But the and EDI exchanging in China for almost six years.
Being highly compliant in terms of financial control and internal control.
They have been experiencing.
Of course in the industry as a whole has been.
Has been hit by the COVID-19, 2020, but they have been recovered quite well in the first half of this year and we feel very positive for us going forward.
<unk>.
In the.
To be acquired by us and our cooperation with adding more.
Elements for our business in the going forward.
That's it thanks.
Thank you.
Our next question comes from the line of Chi Chi.
From CIBC. Please ask your question.
Alright, thank you.
Well anytime in general whether to do that sometimes you have to Hong Kong.
Townsend.
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I'm, not sure, which well I guarantee you always know going to Samsung and Nokia.
Whole bunch you sure.
Thanks management for taking my question and congrats on your strong outperformance, we noticed that the absolute value of selling and marketing expenses have declined sequentially can you. Please comment on any marketing and promotion trends in the second half of this year. Thank you.
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We are planning to execute a more targeted branded plasma need to strengthen brand awareness among our users.
At the same time, we will leverage the advantage of our platform and conduct the performance based marketing answer parties platforms with premium content to establish our brand as professional medical aesthetics platform.
So once you're in an icon.
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Social ecosystem.
Solar PV Youtube credits how corp. After numerous initiatives.
For the full year, we forecast that our sales and marketing expense.
<unk> expense as a percentage of our revenues will remain largely stayed.
Stable and no more than 50%.
Oh Wow, that's out of the queue.
Thank you.
There are no further questions. This concludes today's conference call. Thank you for participating you may now all disconnect.
Yeah.
Thank you.
[music].
[music].
[music].
Good morning, ladies and gentlemen, and thank you for standing by for so Young's second quarter 2021 earnings conference call.
At this time all participants are in a listen only mode. After the management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded.
I would now like to turn the meeting over to your host for today's call Ms. Vivian Xu. Please proceed.
Thank you operator, and thank you for joining us OEM second quarter 2021 earnings conference call. Please note that the discussion today will contain forward looking statements make a safe harbor provisions of the U S Private securities and the litigation Reform Act of 1995.
Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.
Risks and uncertainties include but are not limited to those outlined in our public filings with the SEC, including our annual report on form 20-F.
<unk> does not undertake any obligation to update any forward looking statements.
Sept as required under our people.
Joining us today on call are Mr. Xing Jin.
Our co founder Chairman and CEO and Mr. <unk> our CFO.
At this time I would like to turn the call over to Mr. Xing Qi cash please.
Thank you Danielle.
Our Union TRT talk how about you hopefully.
Thank you all for joining our earnings call for the second quarter of 2021.
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We are very pleased to report another strong quarter revenue grow to RMB 452 million.
And I guess of RMB 450 minutes.
Increase of 38% from the same period after 2020.
Non-GAAP net income attributable to Sony out International Inc reached RMB.
74 minutes increase of 145% from the second quarter of 2020.
Average of mobile and means for 10 million up 48% year over year total number of users purchasing reservation services were 244, 45000 up 44% compared with the same period of 2020.
The number of paying medical service providers, our platform was 4899.
Sweet.
1% from the second.
What else last year during the quarter the number of users from purchasing reservation services in dental treatments will approximately 120% year over year to about $8014.0, and is a member of professional dental institutions, our platform grow to 2000.
950.
Increasing by the more than three times from the same period of last year.
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In the second quarter, we announced the acquisition of a controlling interest in Wuhan Miracle laser systems.
The first medical laser company listed on the National Equities exchange and quotations O N E exchange in China. The acquisition will further enhance our competitive advantages and they know surgical aesthetic segment and allow us to explore new collaborations opportunity.
Hi, Miracle is mainly engaged in R&D production cells and agents of its four lasers and other photo electric medical aesthetics equipment. It has more than temporary deadlines, including both self owned and licensed.
Well have a miracle covers the broadest range of projects among total electric manufacturers.
And is able to solve diversified skis.
Different end users.
According to the as reported results.
Revenue for the first half of 2021 increased by 119% year over year and net profit attributable to high medical for the first half of 2021 increased by 252% year over year.
Our solid results and a new strategy strategy have enabled us to consistently improve our operations to meet the increasing changing demands from our end users and business partners and expand our market share.
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Innovative technologies in medical aesthetics are driving an increasing awareness of aesthetic treatments and a surface Mount consumers.
Notably the popularity of now surgical procedures to maintain healthy appearance on promote anti aging benefits is constantly growing.
Second quarter.
Revenue contribution of our non surgical business increased to 46% of all the total revenue.
40% in the second quarter last year.
Our reservation orders from now surgical procedures increased by 40% year over year and the reservation of orders from non surgical procedures accounted for 70% of total orders.
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Moving over to our operational strategy.
Leveraging our community content and advantaged new media resources.
We'll continue to develop and launch fresh and highly successful products.
Second quarter, we have been stepping up efforts to recommend core products with good word of mouth to users on our platform.
<unk> hundred 40 photo rejuvenation hockey and experiential.
Which resulted in an.
Increase of over 100% for online orders.
All my orders for photon a 40, even increased by 500% year over year.
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On the non surgical product side, we continue to optimize the online transaction experience increasing the number of skus on our platform and provided a more transparent and attractive prices.
We also launched an online consumer protections project, such as in advanced compensation and medical beauty insurance.
At the end of June over 140000, <unk> Skus will available on our platform and increase of 41% compared with the same period last year.
Q2 tissues shown long official Belgium.
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Secondly, we continue to stress injury standardization of non surgical procedures and.
Enhanced our measurement and control our products and equipment to optimize user experience.
<unk> investment in <unk> will.
We will not only expand our service network our institutional clients.
Clinics.
Sorry, extrusion, our clients, but also improve our fulfillment service and ensure that we are able to offer authentic products to customers with.
With acquisition our service in the non surgical categories will become more diversified creating a competitive moat in the long term.
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Lastly to ensure our users are guaranteed only authentic products and don't have to worry about safety issues.
Our <unk> team and the services, we will continue to depot.
Deepen our cooperation with our network of medical device manufacturers in order to consistently screen drops medical device and service providers.
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<unk> to develop a more popular categories, such as dental services by walking with institutional clients, we connected users with institution and offer them Premier dental services by bringing a standardized system to enhance the service quality of disease institutions.
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On the regulatory front.
Over the past few months regulatory authorities and.
Have expressed it <unk> and opinions on various matters, such as <unk> data security and medical aesthetics advertising and easier to a series of policies and guidance for multiple industries. We have taken this opportunity to reflect on our practice and our role as an industry leader.
And engage in self reflection and introspection.
First Apple since our inception, we have established a shrinkage.
<unk> review and approval process for our doctors and institutions as well as conducted a rigorous review mechanism for content and service offering our platform.
In addition, following the guidance easier to buy.
So it's easier to buy.
Regularity bodies at various levels, we have established internal review process and continue to improve the online information we provided medical aesthetic services.
At the same time, we have also been actively engaged in the self discipline of China's medical aesthetics industry by promoting platform governance, and assisting our institution partners with compliance audits.
And in promoting a standardized and orderly orderly development of the medical aesthetics industry.
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To summarize we believe the Chinese medical aesthetics industry is where on the track of steady growth.
The leader in the industry, we have the responsibility to make industry are better by promoting industry standards, and providing authentic and truly valuable services for our users.
Looking forward, we will leverage our competitive advantage in content in content technology, and our large user base and continue to focus our efforts on user acquisition and expand our online presence into other segments of the industry.
By making use of medical aesthetics as an entry point. So we all will be billed as their trusted.
Medical aesthetics and medical care platform in China.
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Thank you.
Let me in Wyoming to give an overview of our results for the quarter.
In.
Before the operator will open the of QA.
Thanks Kiss please be reminded that all amounts quoted here will be RMB. Please also refer to our earnings release for detailed information of our comparative financial performance on year over year basis.
For the second quarter 2021, total revenues were RMB 400 to $459.0 million up 37, 7% year over year.
From RMB $330.0 million.
And exceeded the high end of our prior guidance of RMB 450 million. The increase was primarily due to an increase in average revenue per paying medical service provider the number of paying medical service providers on our platform with 4899.
<unk> of 31, 2% from 3735.
The second quarter of 2020.
The total number of medical service providers subscribing to information services also younce plethora was 2236 during the quarter.
Increase of eight 8% from Tucson.
<unk> 56 in the second quarter of 2020 within total revenues information services revenue were RMB 360 million up 53, 8% year over year from RMB, three or 234 five minutes.
Reservation services revenues were RMB $100.0 million a decrease of two 8%.
On the you said $100.0 million in the second quarter of 2020, corporate revenues were RMB $66.0 million of <unk>.
14, 9% year over year from RMB $57 million in the second quarter of 2020.
Cost of revenues and included share based compensation expenses of RMB, three 8 million compared with RMB 6 million in the second quarter of 2020 total operating expenses were RMB $339.0 million up 16, 7% from RMB 287 formula in a second.
2020.
Sales and marketing expenses were RMB $213.0 million up 11, 6% from RMB $187.0 million a year ago.
Primarily due to increase in payroll costs associated with the expansion of marketing employees.
Sales and marketing expenses, including share based compensation expenses of RMB, $7.0 million compared with RMB, one 6 million in the corresponding period of 2020.
General.
And administrative expenses were RMB 50, $761.0 million up 13, 3% from RMB $57.0 million a year ago.
Primarily due to increase in payroll costs associated with expansion of administrative employees.
General and administrative expenses included share based compensation expenses of RMB, seven 2 million compared with RMB <unk> $16.0 million in the corresponding period of 2020.
Research and development expenses were RMB $73.0 million up 37, 9% from RMB $55.0 million a year ago. The increase was primarily attributable to increase in payroll costs associated with expansion of our research and development employees.
Research and development input expenses from the second quarter of 2021 included share based compensation expenses.
<unk> $9.0 million.
Compared with RMB $8.0 million in the corresponding period of 2020 income tax expenses were $12.0 million compared with RMB $10.0 million in the second quarter of 2020 net income attributable to <unk> International Inc. Was RMB 57, 6 million compared with net.
Income attributable to <unk> International Inc of RMB, $3.0 million the second quarter of 2020.
Non-GAAP net income attributable to <unk> International Inc. Was RMB $80.0 million compared with RMB 31 million in non-GAAP net income attributable to Sony all internationally and in the same period of 2020.
Basic and diluted income per ads attributable to our shareholders will be zero point of <unk> 54.
<unk> zero point of 53, respectively.
Compared with RMB, 0.2, and 0.02, respectively during the same quarter.
During the second quarter of 2020.
Now for our balance sheet as of June 32021, we had a total cash and cash equivalents restricted cash and term deposits time deposits and short term investments of the.
Two point 26 billion compared with RMB 268 billion as of December 31, 2020.
For the third quarter of 2021, so we now expect total revenues to be between.
RMB 430 million to RMB $450 million, representing a 66.
66.6% to 69, 7% increase from the same period in 2020.
The above all the key is based on the current market conditions and reflects the company's preliminary preliminary estimates for the market and operating conditions and customer demand.
This concludes our prepared remarks, I will now turn the call to the operator and open the call for Q&A, operator, we are ready to take questions.
Thank you we will now begin the question and answer session.
Do you wish to ask a question. Please press star one on your telephone keypad and wait for your name to be announced if you wish to cancel your request. Please press the pound or husky.
If you want to ask more than one question. Please join the queue again.
Your first question comes from Thomas Chong of Jefferies. Please ask your question.
Pardon the pun guess I'll walk if he wants.
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You talked about.
No I would say myself well other company will regarding the recent changes on the aggregate advertising Guy nice recreating the.
Realty medical sector, which were issued by the state administration for market regulation and how it will affect the company's business moving forward. Thank you.
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Since the beginning of this year have mainly been focused on supervising the practice of medical institutions in the medical aesthetic sector.
That such supervision is conductive to their long term and healthy development of the entire industry.
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Good humor.
And as the intent internet of medical aesthetics information service platform.
Our inception, we have established.
Review and approval process for our doctors and institutions, we partner with as well as content and product reveal Mckenna.
A quick build on governance across our platform and strive to club, adding noncompliant activities.
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<unk> a few transactions.
In terms of having medical information featured our platform in order to cooperated with so young medical institutions are required to submit their state issued a business license.
Infusion practice license and other documents.
Easier to buy governance authorities.
As well as passed our internal review and a verification. We also require doctors to provide quantification 60 case and verified practice license before inflammation can be published on our platform.
So sanctions can email <unk> com.
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In terms of publishing content Pas.
And the services, we have built a rigorous information display system equipped with race control and Antifraud system.
Information displayed by institutions Master first and meet our strict requirements and we have two additional review procedures, one automated and the other by minor inspections.
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Hi, Julie Assortments <unk> Hydro Yosef.
We have also a professional team that closely monitors state policies.
<unk> tenders in real time, which we then compile compile to optimize our platforms verification system and the standardization process.
We also have a strict set of what a violation information risk control model elaborate.
Because our professional internal risk control management and platform governance.
We think that this should be the operational strengths that differentiate us from our peers.
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Last may we initiated a self discipline campaign for Chinese China's medical aesthetics industry to promote platform governance regarding the drop the carlin.
Guidelines on February 10 at advertising the medical aesthetic sector is Europe IV S. EMR.
We will provide our feedback through appropriate channels.
Pre minds of protecting the legal rights and interest of consumers.
Through a positive and constructive feedback we aim to create a void for medical professionals and at the same time provide a better service to our customers and to promote regular.
Regulated and ordered a <unk> for the development of the industry.
Closer or EMEA, Jim Glen Yeung.
Shuja <unk> position yellow, Joe Shan Shan Shan.
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George one of your entire Copa hopefully the city chunks of your guidance on icon.
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Sure, it's all hertz issues using higher solution with a few challenges.
Turning to kind of show either.
Offline medical institutions are required to enhance their service capability and medical level, not blindly pursue or traffic growth in marketing and user acquisition and even cheated consumers with fake all fashion.
Institutions will be more cautious and selective marketing channels also the Eva enforcement guidance.
Also kind of a fight that all of that platform operators duties to perform contract ended do that diversification.
And the governors online.
<unk> combines will be enhanced.
In this regard as the first mover in the industry to start and continuous days steps self discipline. We believe that just so we all will be benefited by the regulation in the long run.
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In the long term, we believe that as the regulation as we approach new highly contracted through the housing department of industry.
So we all we are committed to adhere to all regulation and it will continue to further improve our internal review Mccann isn't to full compliance and irregular self governance.
Lead by example, we will remain proactive proactive in.
Intercepting medical aesthetics promotional information that doesn't.
Comply to visitors.
In order to offer authentic information and online services and promote backup care in the medical aesthetics industry.
Sure.
Yeah. Okay. Thank you that's all.
Yes.
Our next question comes from Nelson Cheung of Citi. Please ask your question.
As I said already consistent with if you want the whole question, even if you do see that.
China the whole what did you say when you consider where that you would've thought.
Oh, just the system you just showed you think they stay close to that.
Uh huh.
But I think we will come back to talk about it sends out she said.
And when it goes to that when he says.
So this is what you're.
Sounds good.
So I think if you do.
Yeah.
So let me translate in English.
Transmission revenue for taking the question. So my question is regarding to the business profit conversion.
I share your views are related to the impact of Covid.
And can you share more details about the growth trends going into the second half of this year and my second question is related to that program.
So we havent passed the XY pad yep. Thank you.
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In in July and August in China faces, a double impact of COVID-19.
Resurfacing in a few cities and the damages from flooding disasters.
<unk> a matter of institutions was adversely affected in their first year and second tier cities, such as Shanghai, COVID-19 Energen Joel.
As the situation got under control medical institutions were able to resume operations and returned to their regular growth trend.
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Mutual Rialto, while unlocking hygiene She foundation in Shanghai, China.
Glenn Chin Chico congestion synergies and profile.
Looking to the.
Looking to the business grows in the second half of this year firstly policies in particular regulation for medical aesthetics advertising required institution to conduct a salary inspection first in the near term and.
Paul on quantified.
Products and shipments from their offerings.
Meanwhile, the enforcement guidelines also set clear requirements for online platform operators to fulfill their duties imposed by laws.
As a result institutions will be more cautious about the marketing in the near term.
So you finish or Shanghai Pudong puzzle.
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Tissue to do two things.
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Sure.
In the second half of this year to take advantage of the rising popularity of now surgical payments, we will continue to implement our established a strategy to grow the nonsurgical categories.
The penetrate and expand market share, while maintaining our strength in local category.
Guaymi Silicon chips is priority <unk> for guidance Youll see towards under essentially over time.
Full guidance, you're going to shorten our social worker towards adults Hawaii biologically.
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As of the end of August So we're on pause has extended its not work too.
36 cities.
11, Q1, and the number of institutions increased from 95 to over 100.
The number of verified August. So we has also increased by 40% in Q2 compared to Q1.
Interstitial system.
That's all thank you.
Your next question comes from from Leo Chiang of Deutsche Bank. Please ask your question.
Finally, I want to say Oh.
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Let me translate myself. So thanks management for taking my question. My question is regarding to competition and then Scott can.
Can management share the latest competition landscape.
Recently, thank you.
No change at all on the sitcom format.
I think we should slow down the gene.
Our especially our team here.
<unk> just to show the change on the accordion.
For questions <unk>.
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Some of the larger.
At current level of market competition, we believe it is no longer a purely about competing for user traffic.
But whether platform can really address a pinpoint for users and improve user experience from the perspective of both regulation and a better user experience.
One must be professional at all times and have in depth knowledge of the industry.
Sure. It's official some weird overdone Hugo EMEA tissue Georgetown officials on the EU.
So this young woman TD with Sandy side Proton <unk> 70 that you may sell the engine is a strong quarter.
Thats helpful.
Hum.
The popularity of non surgical category, increasing demand, we will continue to strengthen the operational nonsurgical category and implement our established strategy to expand our market share on top of growing our in time medical aesthetics user base.
Porsche Omega Psi, Portland, Xiao Shang you cheat Hoffman.
Could you walk for loans and the EMA have yet.
So it's a long term content Jimbo Genco you mentioned.
The self insured side to launch on <unk>, clearly you're corridor at Sarnia youll to humans yet.
So why you go to.
<unk> heard that Hula tower <unk> co Gen tie the human Yahoo shopping at Endo.
<unk>, Hi, Hojo Penndot to acquire so label shows on cellular module soon watching a show of hands.
Dodge and caution to the shrinkage of the.
Finally, when a unit yugo.
Meanwhile, we are strengthening.
Strengthening our cooperation with other platform to empower the entire medical aesthetics industry avoid.
For instance that we partner with J D. Dotcom peer established J D housing medical aesthetics channel, so that consumers can experience and have easy access to professional and premier medical aesthetic services.
Besides that we also worked with auto Navy to connect with other 1000 institutions and established a consumer service for medical aesthetics users.
A map platform.
So we don't pass has also achieved a more strategic cooperations with like a little Red book, <unk>, and Weibo and we hope to explore popular achievements in medical aesthetics build a premier shortlist of select products and expand our service scope.
Continuing powering more institutions.
Jurisdictions, that's all thank you.
<unk>.
Your next question comes from the line of Vincent Yu from Needham and company. Please ask your question.
Yeah.
So are there other one time Apple with Jacob Thank you Jake.
Yes, we are trying to get you to know whats been <unk>.
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Both of them in the short and the whole year, two which is that going to Asia.
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Particularly if you can give us.
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Yes sure.
Sure sure.
You want me to start on what should I also want to say.
Hey, Jacob could it be hope, we'll miss you on demand that you book.
Jay.
Sure.
All of them quite frankly.
Since management. Thank you for taking my question I have two questions. One is to follow up on the <unk>.
Impact on the regulation. So my question is not.
It's more focused on how the regulation.
<unk>.
But the traditional.
The industry structure and the.
The traditional packet practices.
Industry and how we view this as a potential opportunity and second question is on the.
Hum.
Addition, how shall we say.
Think about the strategy on this position what kind of cooperation we will have.
Between.
The manufacturing company and the power.
Institution clients and also what kind of monetization model we are.
Hum.
Hoping to see.
Yes. Thank you.
Yeah.
Hum.
Tim on the.
Great. Thank you.
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Tanger, Longhorn, though university of Leeds.
The whole project.
Sure Jim on the Georgetown <unk> Chico you've shown to us.
Roger do you also when it goes out.
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Doug how do you all have seen she should assume gratifying.
He says Hangzhou sometime.
So some key assumptions.
She thought.
Out of a hole.
First we believe that as a regulation action against the Noncompliant practice and.
Strict regulatory requirements, where benefit as a healthy tobacco alcohol industry in the long run with tiny of regulation local regulation will further clarify and a detailed too.
Detailed approval system and process for institution and adapters.
Meanwhile, usage, especially specifications for drugs and equipment will be strengthened.
More effective potential protect protection for manufacturers and institution, producing distributing and using genius and authentic products.
Sure.
Vishal on Condor, Yeah, sure Jim will lead to each other.
Some do some chosen Chico T zones whole <unk> initiative to Gulf water now.
I will tell you shove it can be a hudson.
<unk>, she all homegrown HIFU, how tissue Sionko Cook.
<unk> has.
Chosen whore, Cook, which almost to the Guangzhou Fukuoka, Jonathan <unk> Shipowners, Hangzhou Shanghai, though.
Beyond entry compliance we are seeing is that our streak of regulation. We are to some extent drive institutional space level from their marketing cost customer acquisition to internal operations set to improve service quality, besides educating consumers to distinguish and <unk>.
<unk> services.
Institution to retain clients with good service and Skus.
It's Joe Shan Wong survival lung by focusing only on cosmic acquisition, and ignoring management and service quality.
This is heng Chen Guangdong Zhejiang.
<unk> hundred 70.
Traditionally <unk> Honda, Belgium, <unk> somewhat simple while they go this way.
Based on Nintendo switch and Giuliana.
Right in a market of regulation has silicon image.
Has significantly driving in fact standards.
Standardization and going online for the entire medical aesthetics market, particularly the non surgical and medical aesthetics market.
Going to settle in Q2, therefore, you mean bioequivalence.
Yes.
I will try to answer your questions about our acquisition of Newco lasers.
As mentioned earlier in the remarks.
Previous part.
Medical Malaysia used.
<unk> is one of the biggest.
That's a four laser are met.
Medical Machineries in China, and we think of the synergies.
Going forward between the.
The platform is so young and the cooperation with the manufacturers with branded manufacturers like medical.
We will have a new complete service experience for our users on the platform and at the same time, we can make sure the services taken by the customers will have a very consistent experience.
It also will have certain.
Cost of saving effect.
Like we will.
Right.
Platform customers directly to the clinics or hospitals, who have.
Hum miracles.
Medicine.
Instruments or equipment.
And we will share that.
Revenues between that.
And it will be a showcase attempt for us.
For the for the cooperations with upstream.
Manufacturers in medical aesthetics service industry.
Going forward, we will see further cooperations with other branded manufacturers.
To provide a.
Consistent and the.
Of course.
The consistent screening drugs and medical devices and service providers to our customers.
At the same time a.
Miracles itself is a very well run business.
They are helping listed in the.
<unk>.
The.
But.
<unk> exchange in China for almost six years.
Being highly compliant in terms of financial control and internal control.
They have been experiencing.
Of course in the industry as a whole has been it has.
Has been hit by the COVID-19, 2020, but they have been in the.
Covered it quite well in the first half of this year and we feel very positive for us going forward.
Growth.
In.
To be acquired by Us and our cooperation with adding more elements for our business in the going forward.
Okay. That's it thanks.
Thank you.
Our next question comes from the line of Chi Chi.
From CIBC. Please ask your question.
Okay.
Giovanni Tom Gentile, and let's do that sometimes you have to Hong Kong.
Uh huh.
Oh My God now argued torturing yourself in the marketing and the <unk> Rochelle shops.
I'm, not sure, which well I guarantee you always have gone.
The whole bunch you sure. Thanks management for taking my question and congrats on your strong outperformance, we noticed that the absolute value of selling and marketing expenses have declined sequentially can you. Please comment on any marketing and promotion trends in the second half of this year. Thank you.
Uh huh.
Southern.
Illinois diodes <unk>.
So she was on the universe as a whole posted at <unk>.
We use it on their own sites, Hitachi salons to encourage or shovel telephone.
Surely in China, you mentioned higher does it yourself.
We are planning to execute a more targeted branded PRASM ended to strengthen brand awareness among our users.
At the same time, we will leverage the advantage of our platform and conduct the performance based marketing on third party platforms with premium content too is that establish our brand as professional medical aesthetics platform.
So once you're in an icon.
Keith.
Social assistance.
Solar PV Youtube liquidity, how core passenger solutions here.
For the full year.
Forecast that shelf.
Sales and marketing expense.
Expense as a percentage of our revenues will remain largely.
Our stable at no more than 50%.
Oh Wow.
That's all thank you.
Thank you.
Yeah.
There are no further questions. This concludes today's conference call. Thank you for participating you may now all disconnect.