BEIJING, Nov. 20, 2023 /PRNewswire/ — So-Young International Inc. (Nasdaq: SY) (“So-Young” or the “Company”), the largest and most vibrant social community in China for consumers, professionals and service providers in the medical aesthetics industry, today announced its unaudited financial results for the third quarter ended September 30, 2023.
Third Quarter 2023 Financial Highlights
Total revenues were RMB385.3 million (US$52.8 million[1]), an increase of 19.2% from RMB323.3 million in the same period of 2022, in line with previous guidance. Net income attributable to So-Young was RMB18.3 million (US$2.5 million), compared with net income attributable to So-Young of RMB2.3 million in the third quarter of 2022. Non-GAAP net income attributable to So-Young[2] was RMB9.5 million (US$1.3 million), compared with non-GAAP net income attributable to So-Young of RMB9.9 million in the same period of 2022.
Third Quarter 2023 Operational Highlights
Average mobile MAUs were 3.1 million, compared with 3.9 million in the third quarter of 2022. Number of medical service providers subscribing to information services on So-Young’s platform were 1,397, compared with 1,704 in the third quarter of 2022. Total number of users purchasing were 146.3 thousand while the aggregate value of medical aesthetic treatment transactions facilitated by So-Young’s platform was RMB530.4 million.
Mr. Xing Jin, Co-Founder and Chief Executive Officer of So-Young, commented, “Our business remained resilient and delivered solid financial and operational results during the quarter despite macroeconomic headwinds and the effects of seasonality. Total revenues were RMB385.3 million, an increase of 19.2% year-over-year and in line with our previous guidance. While our existing POP business and So-Young Prime continue to make solid progress, our supply chain business really stood out during the quarter as we ramp up investment into it. During the quarter, revenue from our supply chain business was RMB75.2 million, accounting for 19.5% of total revenue and increasingly contributing to our bottom line. Looking ahead, we will push ahead with our strategic transformation and strengthen synergies between our business segments to solidify our leadership position.”
Mr. Hui Zhao, Chief Financial Officer of So-Young, added, “Our profitability continued to improve thanks to effective cost controls and our focus on driving high-quality growth. Net income attributable to So-Young International Inc. was RMB18.3 million, compared with RMB2.3 million in the same period last year. With a solid platform to sustainably build off of now firmly in place, we are confidently allocating more resources towards high-quality growth ventures such as So-Young Prime and our supply chain business to take advantage of these opportunities and keep a healthy cash reserve and further improve our financial performance.”
[1] This press release contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) solely for the convenience of the reader. Unless otherwise specified, all translations of Renminbi amounts into U.S. dollar amounts in this press release are made at RMB 7.2960 to US$1.00, which was the U.S. dollars middle rate announced by the Board of Governors of the Federal Reserve System of the United States on September 29, 2023.
[2] Non-GAAP net income/(loss) attributable to So-Young is defined as net income/(loss) attributable to So-Young International Inc. excluding share-based compensation expenses attributable to So-Young International Inc. See “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release.
Third Quarter 2023 Financial Results
Revenues
Total revenues were RMB385.3 million (US$52.8 million), an increase of 19.2% from RMB323.3 million in the same period of 2022. The increase was primarily due to the increase in revenues generated by So-Young Prime and sales of medical products.
Information services and other revenues were RMB285.9 million (US$39.2 million), an increase of 24.1% from RMB230.5 million in the same period of 2022. The increase was primarily due to an increase in revenues generated by So-Young Prime. Reservation services revenues were RMB24.1 million (US$3.3 million), a decrease of 18.8% from RMB29.7 million in the same period of 2022. The decrease was primarily due to the operating strategy which gave higher subsidies to end users. Sales of medical products and maintenance services[3] revenues were RMB75.2 million (US$10.3 million), an increase of 19.2% from RMB63.1 million in the same period of 2022, primarily due to an increase in sales of cosmetic injectables.
Cost of Revenues[4]
Cost of revenues were RMB142.6 million (US$19.5 million), an increase of 51.7% from RMB94.0 million in the third quarter of 2022. The increase was primarily due to an increase in costs associated with So-Young Prime. Cost of revenues included share-based compensation expenses of RMB0.4 million (US$0.1 million) during the third quarter of 2023, compared with RMB2.0 million in the corresponding period of 2022.
Cost of services and others were RMB103.5 million (US$14.2 million), an increase of 74.2% from RMB59.4 million in the third quarter of 2022. The increase was primarily due to an increase in costs associated with So-Young Prime. Cost of medical products sold and maintenance services were RMB39.1 million (US$5.4 million), an increase of 13.0% from RMB34.6 million in the third quarter of 2022. The increase was primarily due to an increase in costs associated with the sales of cosmetic injectables.
[3] In the first nine months of 2023, in light of the better monitoring business development of upstream supply chain, the Company grouped the revenue generated from sales of cosmetic injectables and sales of equipment and maintenance services into one line item, which is renamed as sales of medical products and maintenance services.
The sale of cosmetic injectables was previously reported in line item of information services and others. The information services and others for prior periods and the nine months period ended September 30, 2022 have also been retrospectively updated. The amount reclassified from information services and others to sales of medical products and maintenance services are RMB5.2 million for the third quarter of 2022 and RMB16.0 million for the first nine months of 2022.
[4] In the first nine months of 2023, the previous line item cost of revenues was separated into two line items, which are cost of medical products sold and maintenance services and cost of services and others. Cost of medical products sold and maintenance services primarily consists of expenditures relating to medical products and maintenance services, and the remaining cost of revenues is reclassified into cost of services and others. The cost of medical products sold and maintenance services and cost of services and others for prior periods and the first nine months of 2022 have also been retrospectively reclassified.
Operating Expenses
Total operating expenses were RMB244.7 million (US$33.5 million), an increase of 3.4% from RMB236.6 million in the third quarter of 2022.
Sales and marketing expenses were RMB143.8 million (US$19.7 million), an increase of 15.3% from RMB124.8 million in the third quarter of 2022. The increase was primarily due to an increase in expenses associated with branding and user acquisition activities. Sales and marketing expenses for the third quarter of 2023 included share-based compensation expenses of RMB0.5 million (US$0.1 million), compared with RMB0.7 million in the corresponding period of 2022. General and administrative expenses were RMB50.2 million (US$6.9 million), a decrease of 16.0% from RMB59.8 million in the third quarter of 2022. The change was primarily due to the reversal of share-based compensation expenses, partially offset by an increase in payroll costs associated with the expansion of administrative employees to support our business upgrade and new strategic businesses. General and administrative expenses for the third quarter of 2023 included the reversal of share-based compensation expenses of RMB11.2 million (US$1.5 million), compared with share-based compensation expenses of RMB4.5 million in the corresponding period of 2022. Research and development expenses were RMB50.6 million (US$6.9 million), a decrease of 2.7% from RMB52.0 million in the third quarter of 2022. The decrease was primarily attributable to improvements in staff efficiency. Research and development expenses for the third quarter of 2023 included share-based compensation expenses of RMB1.5 million (US$0.2 million), compared with RMB0.4 million in the corresponding period of 2022.
Income Tax Benefits
Income tax benefits were RMB2.2 million (US$0.3 million), compared with income tax benefits of RMB16.5 million in the same period of 2022.
Net Income/(loss) Attributable to So-Young International Inc.
Net income attributable to So-Young International Inc. was RMB18.3 million (US$2.5 million), compared with a net income attributable to So-Young International Inc. of RMB2.3 million in the third quarter of 2022.
Non-GAAP Net Income/(loss) Attributable to So-Young International Inc.
Non-GAAP net income attributable to So-Young International Inc. was RMB9.5 million (US$1.3 million), compared with RMB9.9 million non-GAAP net income attributable to So-Young International Inc. in the same period of 2022.
Basic and Diluted Earnings per ADS
Basic and diluted earnings per ADS attributable to ordinary shareholders were RMB0.18 (US$0.02) and RMB0.18 (US$0.02), respectively, compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB0.02 and RMB0.02, respectively, in the same period of 2022.
Cash and Cash Equivalents, Restricted Cash and Term Deposits, Term Deposits and Short-Term Investments
As of September 30, 2023, cash and cash equivalents, restricted cash and term deposits, term deposits and short-term investments were RMB1,405.4 million (US$192.6 million), compared with RMB1,585.3 million as of December 31, 2022.
Business Outlook
For the fourth quarter of 2023, So-Young expects total revenues to be between RMB380.0 million (US$52.1 million) and RMB400.0 million (US$54.8 million), representing a 16.9% to 23.0% increase from the same period in 2022. The above outlook is based on the current market conditions and reflects the Company’s preliminary estimates of market and operating conditions, as well as customer demand, which are all subject to change.
Non-GAAP Financial Measures
To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this press release presents non-GAAP income/(loss) from operations and non-GAAP net income/(loss) attributable to So-Young International Inc. by excluding share-based compensation expenses from loss from operations and net income/(loss) attributable to So-Young International Inc., respectively. The Company believes these non-GAAP financial measures are important to help investors understand the Company’s operating and financial performance, compare business trends among different reporting periods on a consistent basis and assess the Company’s core operating results, as they exclude certain expenses that are not expected to result in cash payments. The use of the above non-GAAP financial measures has certain limitations. Share-based compensation expenses have been and will continue to be incurred in the future. All these are not reflected in the presentation of the non-GAAP financial measures, but should be considered in the overall evaluation of the Company’s results. The Company compensates for these limitations by providing the relevant disclosure of its share-based compensation expenses in the reconciliations to the most directly comparable GAAP financial measures, which should be considered when evaluating the Company’s performance. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure is set forth at the end of this release.
Conference Call Information
So-Young’s management will hold an earnings conference call on Monday, November 20, 2023, at 7:00 AM U.S. Eastern Time (8:00 PM on the same day, Beijing/Hong Kong Time). Dial-in details for the earnings conference call are as follows:
International: +1-412-902-4272
Mainland China: 4001-201203
US: +1-888-346-8982
Hong Kong: +852-301-84992
Passcode: So-Young International Inc.
A telephone replay will be available two hours after the conclusion of the conference call through 23:59 U.S. Eastern Time, November 27, 2023. The dial-in details are:
International: +1-412-317-0088
US: +1-877-344-7529
Passcode: 8166313
Additionally, a live and archived webcast of this conference call will be available at http://ir.soyoung.com.
About So-Young International Inc.
So-Young International Inc. (Nasdaq: SY) (“So-Young” or the “Company”) is the largest and most vibrant social community in China for consumers, professionals and service providers in the medical aesthetics industry. The Company presents users with reliable information through offering high quality and trustworthy content together with a multitude of social functions on its platform, as well as by curating medical aesthetic service providers that are carefully selected and vetted. Leveraging So-Young’s strong brand image, extensive audience reach, trust from its users, highly engaging social community and data insights, the Company is well-positioned to expand both along the medical aesthetic industry value chain and into the massive, fast-growing consumption healthcare service market.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the Financial Guidance and quotations from management in this announcement, as well as So-Young’s strategic and operational plans, contain forward-looking statements. So-Young may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about So-Young’s beliefs and expectations, are forward-looking statements. Forward looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: So-Young’s strategies; So-Young’s future business development, financial condition and results of operations; So-Young’s ability to retain and increase the number of users and medical service providers, and expand its service offerings; competition in the online medical aesthetic service industry; changes in So-Young’s revenues, costs or expenditures; Chinese governmental policies and regulations relating to the online medical aesthetic service industry, general economic and business conditions globally and in China; the impact of the COVID-19 pandemic to So-Young’s business operations and the economy in China and elsewhere generally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release, and So-Young undertakes no duty to update such information, except as required under applicable law.
For more information, please contact:
So-Young
Investor Relations
Ms. Vivian Xu
Phone: +86-10-8790-2012
E-mail: [email protected]
Christensen
In China
Mr. Eric Yuan
Phone: +86-10-5900-1548
E-mail: [email protected]
In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: [email protected]
SO-YOUNG INTERNATIONAL INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except for share and per share data)
As of
December 31,
September 30,
September 30,
2022
2023
2023
RMB
RMB
US$
Assets
Current assets:
Cash and cash equivalents
694,420
438,604
60,116
Restricted cash and term deposits
14,908
15,890
2,178
Trade receivables
36,006
62,338
8,544
Inventories, net
120,480
115,176
15,786
Receivables from online payment platforms
14,787
32,067
4,395
Amounts due from related parties
33,382
21,099
2,892
Term deposits and short-term investments
875,955
950,860
130,326
Prepayment and other current assets
126,889
182,261
24,981
Total current assets
1,916,827
1,818,295
249,218
Non-current assets:
Long-term investments
227,959
252,371
34,590
Intangible assets
169,280
151,160
20,718
Goodwill
540,693
540,693
74,108
Property and equipment, net
116,184
111,912
15,339
Deferred tax assets
64,739
66,855
9,163
Operating lease right-of-use assets
62,898
36,949
5,064
Other non-current assets
99,293
154,166
21,130
Total non-current assets
1,281,046
1,314,106
180,112
Total assets
3,197,873
3,132,401
429,330
Liabilities
Current liabilities:
Taxes payable
74,580
62,082
8,509
Contract liabilities
110,159
113,768
15,593
Salary and welfare payables
72,532
75,223
10,310
Amounts due to related parties
5,895
765
105
Accrued expenses and other current
liabilities
224,589
273,923
37,545
Operating lease liabilities-current
50,285
32,726
4,485
Total current liabilities
538,040
558,487
76,547
Non-current liabilities:
Operating lease liabilities-non current
20,972
5,806
796
Deferred tax liabilities
30,993
25,603
3,509
Other non-current liabilities
—
1,025
140
Total non-current liabilities
51,965
32,434
4,445
Total liabilities
590,005
590,921
80,992
SO-YOUNG INTERNATIONAL INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(Amounts in thousands, except for share and per share data)
Shareholders’ equity
Treasury stock
(232,835)
(354,278)
(48,558)
Class A Ordinary shares (US$0.0005 par value; 750,000,000
shares authorized as of December 31, 2022 and September
30, 2023; 73,065,987 and 68,843,320 shares issued and
outstanding as of December 31, 2022, 73,561,708 and
63,742,584 shares issued and outstanding as of September
30, 2023, respectively)
236
237
32
Class B Ordinary shares (US$0.0005 par value; 20,000,000
shares authorized as of December 31, 2022 and September
30, 2023; 12,000,000 shares issued and outstanding as of
December 31, 2022 and September 30, 2023)
37
37
5
Additional paid-in capital
3,043,971
3,062,624
419,768
Statutory reserves
29,027
29,027
3,978
Accumulated deficit
(346,618)
(342,839)
(46,990)
Accumulated other comprehensive income
4,107
31,210
4,278
Total So-Young International Inc. shareholders’ equity
2,497,925
2,426,018
332,513
Non-controlling interests
109,943
115,462
15,825
Total shareholders’ equity
2,607,868
2,541,480
348,338
Total liabilities and shareholders’ equity
3,197,873
3,132,401
429,330
SO-YOUNG INTERNATIONAL INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except for share and per share data)
For the Three Months Ended
For the Nine Months Ended
September
30, 2022
September
30, 2023
September
30, 2023
September
30, 2022
September
30, 2023
September
30, 2023
RMB
RMB
US$
RMB
RMB
US$
Revenues:
Information services and others
230,478
285,937
39,191
638,623
795,100
108,978
Reservation services
29,733
24,140
3,309
102,702
80,724
11,064
Sales of medical products and maintenance services
63,092
75,217
10,309
191,403
231,639
31,749
Total revenues
323,303
385,294
52,809
932,728
1,107,463
151,791
Cost of revenues:
Cost of services and others
(59,405)
(103,484)
(14,184)
(199,328)
(291,503)
(39,954)
Cost of medical products sold and maintenance services
(34,623)
(39,119)
(5,362)
(105,762)
(115,199)
(15,789)
Total cost of revenues
(94,028)
(142,603)
(19,546)
(305,090)
(406,702)
(55,743)
Gross profit
229,275
242,691
33,263
627,638
700,761
96,048
Operating expenses:
Sales and marketing expenses
(124,781)
(143,844)
(19,715)
(373,734)
(394,276)
(54,040)
General and administrative expenses
(59,847)
(50,242)
(6,886)
(187,033)
(204,097)
(27,974)
Research and development expenses
(51,998)
(50,597)
(6,935)
(194,021)
(158,531)
(21,728)
Total operating expenses
(236,626)
(244,683)
(33,536)
(754,788)
(756,904)
(103,742)
Loss from operations
(7,351)
(1,992)
(273)
(127,150)
(56,143)
(7,694)
Other income/(expenses):
Investment income
493
647
89
3,997
10,869
1,490
Interest income
10,061
12,130
1,663
18,607
38,023
5,211
Exchange gain/(losses)
24
103
14
(515)
(1,051)
(144)
Impairment of long-term investment
(7,945)
—
—
(7,945)
—
—
Share of losses of equity method investee
(9,106)
(3,822)
(524)
(11,008)
(10,692)
(1,465)
Others, net
(781)
9,887
1,355
7,600
18,474
2,532
(Loss)/income before tax
(14,605)
16,953
2,324
(116,414)
(520)
(70)
Income tax benefits
16,486
2,191
300
18,542
7,240
992
Net income/(loss)
1,881
19,144
2,624
(97,872)
6,720
922
Net loss/(income) attributable to noncontrolling interests
429
(839)
(115)
1,045
(2,941)
(403)
Net income/(loss) attributable to So-Young International Inc.
2,310
18,305
2,509
(96,827)
3,779
519
SO-YOUNG INTERNATIONAL INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(Amounts in thousands, except for share and per share data)
For the Three Months Ended
For the Nine Months Ended
September
30, 2022
September
30, 2023
September
30, 2023
September
30, 2022
September
30, 2023
September
30, 2023
RMB
RMB
US$
RMB
RMB
US$
Net earnings/(loss) per ordinary share
Net earnings/(loss) per ordinary share attributable to ordinary shareholder –
basic
0.03
0.24
0.03
(1.17)
0.05
0.01
Net earnings/(loss) per ordinary share attributable to ordinary shareholder –
diluted
0.03
0.24
0.03
(1.17)
0.05
0.01
Net earnings/(loss) per ADS attributable to ordinary shareholders – basic (13
ADS represents 10 Class A ordinary shares)
0.02
0.18
0.02
(0.90)
0.04
0.01
Net earnings/(loss) per ADS attributable to ordinary shareholders – diluted (13
ADS represents 10 Class A ordinary shares)
0.02
0.18
0.02
(0.90)
0.04
0.01
Weighted average number of ordinary shares used in computing earnings/(loss)
per share, basic*
82,946,796
76,842,709
76,842,709
82,578,596
78,001,149
78,001,149
Weighted average number of ordinary shares used in computing earnings/(loss)
per share, diluted*
83,027,281
77,210,781
77,210,781
82,578,596
78,402,636
78,402,636
Share-based compensation expenses included in:
Cost of services and others
(2,007)
(418)
(57)
(7,303)
(1,635)
(224)
Sales and marketing expenses
(670)
(533)
(73)
(6,342)
(2,850)
(391)
General and administrative expenses
(4,521)
11,164
1,530
(14,684)
(10,400)
(1,425)
Research and development expenses
(428)
(1,454)
(199)
(7,498)
(3,636)
(498)
* Both Class A and Class B ordinary shares are included in the calculation of the weighted average number of ordinary shares outstanding, basic and diluted.
SO-YOUNG INTERNATIONAL INC.
Reconciliation of GAAP and Non-GAAP Results
(Amounts in thousands, except for share and per share data)
For the Three Months Ended
For the Nine Months Ended
September
30, 2022
September
30, 2023
September
30, 2023
September
30, 2022
September
30, 2023
September
30, 2023
RMB
RMB
US$
RMB
RMB
US$
GAAP loss from operations
(7,351)
(1,992)
(273)
(127,150)
(56,143)
(7,694)
Add back: Share-based compensation expenses
7,626
(8,759)
(1,201)
35,827
18,521
2,538
Non-GAAP income/(loss) from operations
275
(10,751)
(1,474)
(91,323)
(37,622)
(5,156)
GAAP net income/(loss) attributable to So-Young International Inc.
2,310
18,305
2,509
(96,827)
3,779
519
Add back: Share-based compensation expenses
7,626
(8,759)
(1,201)
35,827
18,521
2,538
Non-GAAP net income/(loss) attributable to So-Young International Inc.
9,936
9,546
1,308
(61,000)
22,300
3,057