Q4 2022 So-Young International Inc Earnings Call
Speaker 2: Ladies and gentlemen, thank you for standing by for So Young's fourth quarter and full year 2022 earnings conference call.
Speaker 2: At this time, all participants are in a listen-only mode.
Speaker 2: After management's prepared remarks, there will be a question and answer session.
Speaker 2: We do ask you to limit yourself to one question during the Q&A session.
Speaker 2: As a reminder, today's conference call is being recorded.
Speaker 2: I would now like to turn the meeting over to your host for today's call, Ms. Vivian Hsu. Pleased to see you, Ms. Hsu.
Speaker 3: Thank you, thank you, operator, and thank you for joining Solon's fourth quarter and full year 2022 earnings conference call. Please note that the discussion today will contain forward-looking statements made under the same harbor provisions of the U.S. private securities.
Speaker 3: and the Latigation Reform Act of 1995.
Speaker 3: Four looking statements are subject to risks and uncertainties that may cause actual results to deform materially from our current expectations.
Speaker 3: Potential risks and uncertainties include, but are not limited to those outlining our public findings with the SEC.
Speaker 3: including our annual report on Form 20F.
Speaker 3: So YAN does not undertake any obligation to update any forward-looking statement except as required under applicable law. Please also know that, unless otherwise stated, all figures mentioned during this conference call are in R&B.
Speaker 3: Joining us today on call is Mr. Xin Jin, our Co-founder, Chairman and CEO , and Mr. Nick Cao, Senior Vice President of Finance.
Speaker 3: At this time, I would like to turn the call over to Mr. Xin Jin. Testes.
Speaker 4: Hello everyone, thank you for joining So Yang's fourth quarter and full year 2022 earnings call.
Speaker 4: Thank you for your attention.
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Speaker 4: Thank you for your attention.
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Speaker 4: Thank you for your attention.
Speaker 3: 2022 was a remarkable year for all of us at Sohyang. Despite multiple external helpings, we have successfully stabilized our core business and substantially improved our profitability.
Speaker 3: In the fourth quarter, I missed the most severe challenges of the past three years as the 2019 pandemic seriously disrupted the operation of many medical-aesthetic institutions.
Speaker 3: While the slowdown of the Chinese economy made consumers more cautious, we managed to achieve a quarterly revenue of 325 million in line with our prior guidance.
Speaker 3: In the meantime, we significantly scale up our profit with non-GAAP net income of $38.8 million. We have continued to make strides since reaching break-even in the third quarter, thanks to our optimized cost structure and improved efficiencies.
Speaker 3: As of the end of 2022, our cash balance remained at close to $1.6 billion, which provides us with sufficient financial assurance to explore new business growth opportunities in the year ahead.
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Speaker 3: Next, I'd like to share some market trends we observed during the past year. In the future, we will look in these directions as we continue to invest resources.
Speaker 3: seize opportunities presented by change and build new pillars of revenue for our business.
Speaker 4: Thank you.
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Speaker 3: First, Chinese medical statistics user base is struggling upgrading as the ratio of non-surgical user continue to increase.
Speaker 3: Second, user demands are evolving with high value users showing increased demand of premium one-stop medical settings. Next slide. Next slide.
Speaker 3: Finally, along with the long-term trend of consumption upgrading China, the middle-class metaphysics customer group is expanding, the growing middle-class demographic in China, and particularly urban middle-class females in the first and second tier cities.
Speaker 3: have formed the medical settings consumption habits.
Speaker 3: characterized by increased volume and frequency of consumption.
Speaker 3: Meanwhile, we have observed several important differences between the middle-class consumers and traditional medical aesthetics consumers.
First, these consumers generally have higher level of education and are more cautious with their choice of medical services.
They are more attuned to 50 factors including the maturity and reliability of the system.
service, doctors and institutions qualifications, and product compliance.
Second, the many consumer anti-aging, steam management and shape management products with higher frequency.
Third, they look for rational prices, not simply purchase cheapness, but they don't want to be charged an IQ tax.
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Fourth, the value serves as quality and delivery.
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Based on these changes in the market and meeting the needs of the consumer group, leveraging the resources and capabilities we have accumulated through the years, we launched So Yung Prime Business at a small scale in first and second tier cities in the third quarter of 2022.
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Suyam Prime is our self-operated as-a-flight service platform for non-surgical medical aesthetics.
First, based on the big data gathered on our platform, which shows those most popular treatments of Lyme medical ascetic service for middle-class consumers, we invited experts to create an upgraded treatment plan with standardized operating procedures for treatments and service.
So Yang is responsible for pricing and sales.
Second, we screen institutions that meet our standards and train and assess their operating teams and doctors before allowing them into the So Yang Prime service network.
These institutions are responsible for providing exclusive treatment rooms and a standardized service to So Yum Prime customers. We have stationed staff in these institutions to welcome So Yum Prime customers and ensure a high quality service experience.
throughout the treatment.
Finally, we procure and certify the live medical settings equipment and the consumables used in treatments.
Injections and other consumables are stored in the genium medicine cabinet placed in each institution and medical substance take out the check each item in front of the cup.
Injections and other consumables are stored in the genie medicine cabinet placed in each institution and medical substance take out the check each item in front of the customer.
Thank you for watching.
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Enabled by innovation in the live medical aesthetic service model, quality control of service delivery and our scale advantage in operations, user acquisition and supply chain, Sooyoung Prime provides users with premium, genuine and low-priced live medical aesthetic service.
Thank you for watching.
For desired cooperation, please wear by a gloves Thank you for watching.
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Upon review at a small scale on August 1 last year, So Yum! Prime has quickly worn recognition among users. So Yum! Prime's user satisfaction, average order value, and the repeated purchase rate were all significantly higher than our existing power business.
As of the date, users' visits to institutions have continued to grow every month, even at the end of 2022 when national-wide COVID-19 infections peaked, as well as during the Chinese New Year.
Next, I would like to outline our business plan and objectives for 2023.
So I hope you have a very practical mind when going deeper in time for our multi lineman army services throughout the bi lobbyist process!
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First, we will continue to strengthen and develop our existing community commerce, i.e. pop business, leveraging our established advantage in community operations, user operations, and doctor resources. We will continue to strengthen and develop our existing community commerce, user operations,
We always aim to enhance user trust, increase user engagement, and build a trustworthy professional platform.
After nine years of development, our POP business has accumulated enriched beauty diary content, transparent trading information, innovative user products and tools, and a tremendous volume of industry information. It has also boosted the efficiency of the metal aesthetic industry at scale.
accumulated a high sticky user base, numbering the tens of minutes, and enabled numerous institutions to achieve significant growth and sound returns through operation with So Yang. And these will become cornerstones for our development and transformation in scale.
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So, I hope you will enjoy this video. If you have any questions, please leave them in the comments. Also, please subscribe to my channel. Thank you for watching.
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Secondly, we will continue to focus on expanding So Yang Prime's market penetration building on our experience in last year. Through optimizing the products on the supply side and growing our network of cooperating institutions.
we will improve our capability to deliver standardized services.
attract more customers and drive repeated purchases.
So Yarn Prime is our key deployment in the industrial Internet. It will comprehensively integrate production factors in the industry.
reconstructed.
relationships of the players in supply chain, increase efficiency, lower costs, and ultimately benefit consumers.
It covers a broader and deeper range than pure internet business.
and will solve the industry issue at a deeper level and construct higher barriers to entry.
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We hope you have a great day. Happy new year. We hope you will be able to join us. We hope you will join us. We hope you will be able to join us. We hope you will join us.
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and the industry's business. Looking to 2023, external conditions are moving in a positive direction for the industry and our business.
and the institutions are gradually returning to normal operation. In the long run, there is still large room for growth in Chinese medical aesthetic consumption, particularly for light medical aesthetics.
Our new business direction will help us diversify our revenue streams and build a healthier business model.
Operationally, we will continue our highly efficient marketing strategy, strictly control our expense, refine our operation, and seek profitable growth. With persistence in the near term and confidence in the long term, we will continue to put you there first.
and remain committed to becoming the most trusted medical settings travel.
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Now let me invite our Senior Vice VP of Finance Nick to review the financial results for the fourth quarter before taking your questions.
Hello, this is Nick. I will now take some time to go through the financials for the fourth quarter and the full year 2022. Please be reminded that all amounts quoted here will be in RMB. This also refers to our earnings release for detailed information about comparative financial performances on a year-over-year basis. For the fourth quarter of 2022, total revenue was RMB 325.1 million.
compared to RMB 449.5 million in the corresponding period of 2021. In line with our previous guidance, the decrease was primarily due to a decrease in average revenue for paying medical service providers. The decrease was primarily due to one COVID-19 control measure and the surge in COVID-19
Reservation services and other revenues were R&D $233.9 million, down 32.1% year-over-year. Reservation services revenues were R&D $26.0 million, down 37.2% year-over-year. Skills and equipment and maintenance service revenues were R&D $3.0 million, down 32.2% year-over-year.
which were from Wuhan Miracle Laser System Inc. with RMB 65.3 million compared with RMB 63.8 million in the same period of 2021.
Cost of revenues for RMB is $88.2 million, down 30.6% year-over-year.
The decrease was primarily due to our cost optimization errors and efficiency improvement programs.
Total operating expenses were RMB 212.6 million, down 42.8% year-over-year.
Sales and marketing expenses were around $98.4 million, down 35.6% year-over-year, primarily due to decreasing expenses associated with branding and user acquisition activities.
GNA expenses for RMB 73.2 million, down 14.8 percent year-over-year. The change was primarily due to a decrease in share-based compensation expenses, partially offset by an increase in payroll costs and professional service fees.
R&D expense of R&D 41.1 million down 39.2% over year, primarily due to a decrease in Jews perohatt
The income tax benefit to RMB is $2.4 million compared with income tax expenses of RMB $10.1 in the fourth quarter of 2021.
Net income attributable to So Yang International Inc., or RMB, 31.3 million, compared with a net loss attributable to So Yang International Inc. of RMB, 27.7 million in the fourth quarter of 2021. When average unemployment
Net gas net income attributable to the SoYa International Inc., which excludes the impact of share-based compensation expenses and impairment of goodwill and intangible assets attributable to SoYa International Inc. or RMB 38.8 million compared with RMB 38.8 million compared with RMB 38.8 million compared with RMB 38.8 million compared with RMB 38.8 million compared with RMB. So, you can see the difference in the difference in the difference in the difference in the
in the same period of 2021. Basic and diluted earnings per ADS attributable to ordinary shareholders will earn the 0.29 and 0.29 respectively compared with basic and diluted losses per ADS attributable to ordinary shareholders will earn the 0.26 and 0.26.
respectively during the fourth quarter of 2021. For the full year of 2022, total revenues were RMB 1.26 billion, down 25.7% year-over-year. Within total revenues, information service revenues were RMB 888.5 million.
down 31.9% year-over-year. Reservation services revenues were RMB 128.7 million, down 53.4 million percent year-over-year. Sales and equipment and maintenance service revenues were RMB 240.7 million. Cost of revenues were RMB 393.3 million.
19.9% over year, due primarily to the consolidation of Wuhan miracles.
Total operating expenses were RMB 967.4 million, down 30.8 percent year-over-year. Net loss attributable to Sohyang International Inc. were RMB 65.6 million compared with net loss of RMB 8.4 million in the fiscal year 2021. Net loss attributable to Sohyang International Inc.
or RMB 22.2 million compared to net loss of RMB 139.5 million in fiscal year 2021. Basic and diluted losses per ADS attributable to ordinary shareholders were RMB 0.61 and 0.61 respectively compared with basic and diluted losses.
losses per ADA attributable to ordinary shareholders of R&D 0.08 and 0.08 respectively in fiscal year 2021.
With regard to some items on our key balance sheet, we held adequate liquidity in this quarter. As of December 31, 2022, we had a total cash and cash equivalent, restricted cash and term deposit, term deposit and short-term investments in the
of RMB 1.6 billion compared with RMB 1.8 billion as of December 31, 2021.
For the first quarter of 2023, we expect total revenues to be between RMB 290 million and RMB 310 million. The above outlook is based on our current market conditions that reflect the company's preliminary estimates.
of markets and operating conditions and the customer demand. This concludes our key remarks. I will now turn the call to the operator and open the call for Q&A.
and operating conditions and the customer demand. This concludes our key remarks. I will now turn the call to the operator and open the call for Q&A.
Yes, ma'am. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone.
If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys.
If at any time your question is addressed and you would like to withdraw your question, please press star 1 and 2. We do ask you please limit yourself to one question.
Today's first question comes from Thomas Chung at Jeffries.
comes from Thomas Chong at Jeffries. Please go ahead.
Thank you for taking my question. Can you share with us about your marketing strategies and expectations for the future?
Thank you for your attention.
Thank you. As the market gradually recovers, we will bring back our marketing strategy compared to 2022. Yet, we will still emphasize efficiency and accuracy and make adjustments based on market conditions.
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In addition to our existing marketing strategy, we will also focus on private dominant operations in efforts to increase user engagement and repurchase rates.
In 2022, we attempted private domain operations for So YAN Prime and developed an effective conversion path with private domain clients contributing over 90% of So YAN Prime orders.
We hope you enjoyed this video. Please subscribe to our channel.
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We will continue to optimize community content and our innovative user tools to generate moreNick is the bell number selected.
up-net user traffic.
But as we mentioned before, competition in the medical sector industry is no longer merely for traffic. Professional platforms need a profound understanding of users and industry to provide a good service experience and meet customer demands. Thank you.
Thank you. And our next question today comes from Nelson Chung at Citi. Please feel ahead.
don't need a driver now. So let me translate myself. Thanks management for taking my question. My question is regarding management view regarding the recovery trajectory of the medical aesthetic industry in 2023 and the growth driver for Solian this year. Thank you.
Thank you. So, this is the first session. We will now take questions from the audience. If you have any questions, please post them in the comments section. If you have any questions, please post them in the comments section. Thank you.
We still hold cautiously optimistic outlook for 2023, mainly depending on the recovery pace of the overall consumption environment and the mad-receptive market. At the same time, we do see the marketing spend from institutions lagging behind the recovery on the user side.
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First, on the unit side, we see regional differences in the recovery of the metathenics market.
Due to the impact of the epidemic in the past few years and especially consideration of the surge in COVID-19 infections at the end of last year, a large number of treatment orders were backlogged.
Therefore, in the Tier 1 and Tier 2 cities, user orders have rebounded directly since the beginning of this year and have already recovered to the level of the same period of 2021. In third and fourth tier cities, user orders have recovered to the 2022 level but not yet to the 20, 25 and PCpar Variable DateBrien, June 22.
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On the institutional side, we see that they are still cautious when budgeting their market spent mainly because of two factors.
First, because user orders in first and second tier CTS rebounds rapidly post-infection, institutions do not need to spend a lot on marketing at this stage.
Second, the overall turbulence of the past few years has made institutions more cautious about spending. But overall, we do see institutions spending gradually recovering.
Thank you.
Thank you.
Thank you. And our next question today comes from Chloe Wei at CICC. Please go ahead.
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First question is about could you please revisit some of the things that you were thinking about as far as the business volume in the short to medium time view say in the next three to five years? And also can you give us just an update around
maybe how you are thinking about the competitive landscape. Thank you. Anyhow, we hope you enjoyed this presentation. We hope you enjoyed the presentation. And thank you very muchists for listening to this presentation.
As a new growth driver, Sohyang Prime's trajectory will mainly depend on the development of the non-surgical market, which will continue to expand in line with the growth of the middle-class female population.
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cooperate with more institutions, enrich the product portfolio, boost the number of service outlets, ensure high quality service delivery, and improve the user penetration rate and repurchase rate.
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Non-surgical medical settings users are used to consume daily cosmetic and skincare products, which is an area of expertise for the numerous small and medium institutions. But small and medium institutions are usually weak in equipment.
SKU design, service delivery, and brand awareness. Suiyuan Prime forms a network ensuring service delivery of high standards by empowering these institutions. In addition to benefiting small and medium institutions, this initiative could serve large medical, care settings.
aesthetical user group and increase convenience for consumption for them. That makes us distinctive from our competitors.
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Therefore, only by connecting the supply chain and the upstream, midstream and downstream can we expand the medical, aesthetic industry, addressable market and provide users with a better service experience, building a safe and secure environment for customers and driving the overall growth of the industry.
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For the second question, with environmental uncertainties in disease and consumption demand recovery, there is plenty of space in the medical settings market and industry outlook is clear.
I hope you enjoyed the video. Please subscribe to my channel. Thank you for watching. See you in the next video. Please subscribe to my channel.
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We believe the metal asset industry is driven by the supply side and that is where we will put more emphasis in the future.
We will also integrate the core production advantages we have accumulated in terms of institutions, doctors and users.
also integrate the core production advantages we have accumulated in terms of institutions, doctors and users.
for service quality and service delivery, and provide users with a premium experience. These comprehensive capabilities will enable us to build a strong competitive barrier, compared with the pure Internet model. We will be able to solve issues at a deeper level and create more differentiation from our competitors.
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In the past few years, we have provided users with transparent and trusted information platforms through our community comments.
business, boosting the efficiency of the metal settings industry at scale. In the future, we will continue to optimize our community content, innovative new user tools, leverage the scale advantage of the internet, and provide a second complement of resources for offline service.
We believe our integration capabilities across industrial chain and our investment in the service delivery experience will benefit users and drive the sustainable development of the whole industry.
We believe our integration capabilities across industrial chain and our investment in the service delivery experience will benefit users and drive the sustainable development of the whole industry. Thank you. 1 1 1 1 1 1 1 1 1 1 1 1 1
Thank you. And our next question tonight comes from Hugo with Hightong Securities. Please go ahead.
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Thank you for asking. For questions, first, as we mentioned in our prepared remarks, user demands are evolving. Middle-class medical settings consumers have different demands from the traditional consumption groups, as they focus more on quality, safety, genie products and the rational prices.
Demand for such high order values of SQUs have increased. For example, SQUs in those photoelectric and injection categories with average order value over 5000 RMB are highly popular among users.
Thank you for your attention.
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Secondly, as the market recovers, we believe the surgical market which was pursued in the past few years will experience a wave of consumption as the economy recovers and travels.
Also, with the rebound in outbound travel, users will rush to develop overseas market for medical settings consumption.
Thank you, that's all. Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
We are now approaching the end of the conference call. Thank you for your participation in today's conference. You may now disconnect. Have a good day. Thank you..