So-Young Reports Unaudited Third Quarter 2023 Financial Results

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." 

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.

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: ir@soyoung.com 

Christensen

In China
Mr. Eric Yuan
Phone: +86-10-5900-1548
E-mail: eric.yuan@christensencomms.com 

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: linda.bergkamp@christensencomms.com