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So-Young Reports Second Quarter 2020 Unaudited Financial Results

So-Young International Inc.
·19 min read

BEIJING, Aug. 27, 2020 (GLOBE NEWSWIRE) -- 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 three months ended June 30, 2020.

Second Quarter 2020 Financial Highlights

  • Total revenues were RMB328.2 million (US$46.5 million1), an increase of 15.2% from RMB285.0 million in the same period of 2019, in line with our previous guidance.

  • Net income was RMB2.1 million (US$0.3 million), compared with a net income RMB29.3 million in the same period of 2019.

  • Non-GAAP net income2 was RMB30.1 million (US$4.3 million), compared with a non-GAAP net income of RMB102.2 million in the same period of 2019.

Second Quarter 2020 Operational Highlights

  • Average mobile MAUs were 6.8 million, an increase of 173.7% from 2.5 million in the second quarter of 2019.

  • Total number of users purchasing reservation service were 170,553 and the aggregate value of medical aesthetic treatment transactions facilitated by So-Young’s platform was RMB939.6 million.

  • Number of paying medical service providers on So-Young’s platform were 3,735, an increase of 18.3% from 3,157 in the second quarter of 2019.

Recent Updates

  • In May, So-Young launched the So-Young Charity Fund and the first phase sized up to RMB10 million in total. Together with the China Plastic and Aesthetic Association, the Company continued to provide support for doctors, information, funds, education, psychological counseling among other support for people who have been injured by medical accidents or congenital deformities.

Mr. Xing Jin, Co-Founder and Chief Executive Officer of So-Young, commented, “Despite ongoing weaker-than-normal consumer sentiment and restrictions on general mobility in parts of China as a result of the outbreak of COVID-19, we made significant progress in expanding our vibrant community of users and medical aesthetic professionals and driving traffic through our platform. We grew our community to an average of mobile MAUs of 6.8 million, an increase of 173.7% year-over-year from 2.5 million during the same period of 2019.”

Mr. Jin added, “We focused on two core initiatives to drive our user growth and engagement during the quarter. First, we made great progress in increasing the trust between users and our platform by rolling out the preferred doctor lists, what we call “Emerald Doctor Lists.” Second, we expanded our community of users and medical aesthetic professionals through consistent content upgrades, including optimizing our live video diagnosis service and launching the “So-Young Ambassador” project, which generated a warm response within our community. Looking ahead, as our platform continues to provide an open, diversified and trustworthy ecosystem for our users and medical aesthetic professionals, we firmly believe that we can further increase our market share in the medical aesthetics industry over the long term.”

“We continued to focus our resources on enhancing our community’s stickiness and elevating the So-Young brand to expand our addressable market,” commented Mr. Min Yu, Chief Financial Officer of So-Young. “In terms of commercialization, we officially launched a membership service for small-to-medium service providers during the quarter. Combined with our existing services and aligned operations, we are confident that we will be able to maintain our healthy growth momentum and generate long-term value for our shareholders.”

Second Quarter 2020 Financial Results

Revenues

Total revenues were RMB328.2 million (US$46.5 million), an increase of 15.2% from RMB285.0 million in the same period of 2019. The increase was primarily due to increases in number of paying medical service providers which gradually recovered operation after the COVID-19 pandemic becomes better controlled in China.

  • Information services revenues were RMB234.5 million (US$33.2 million), an increase of 10.6% from RMB212.0 million in the same period of 2019. The increase was mainly due to increases in average revenue per medical service provider. Total number of medical service providers subscribing to information services on So-Young’s platform were 2,056.

  • Reservation services revenues were RMB93.7 million (US$13.3 million), an increase of 28.4% from RMB73.0 million in the same period of 2019. The increase was primarily due to successful conducting the 6.6 Shopping Festival in June, which captured most users with interests in medical aesthetic consumption.

Costs of Revenues

Costs of revenues were RMB50.7 million (US$7.2 million), an increase of 1.9% from RMB49.8 million in the second quarter of 2019. Cost of revenues included share-based compensation expenses of RMB6.0 million (US$0.8 million) during the second quarter of 2020, compared with RMB6.8 million in the corresponding period of 2019.

Operating Expenses

Total operating expenses were RMB287.4 million (US$40.7 million), an increase of 27.8% from RMB224.8 million in the second quarter of 2019.

  • Sales and marketing expenses were RMB185.2 million (US$26.2 million), an increase of 75.0% from RMB105.8 million in the second quarter of 2019. The increase was primarily due to an increase in expenses associated with marketing campaigns and user acquisition initiatives. Sales and marketing expenses for the second quarter of 2020 included share-based compensation expenses of RMB1.6 million (US$0.2 million), compared with RMB4.5 million in the corresponding period of 2019.

  • General and administrative expenses were RMB49.8 million (US$7.1 million), a decrease of 25.9% from RMB67.3 million in the second quarter of 2019. General and administrative expenses for the second quarter of 2020 included share-based compensation expenses of RMB14.2 million (US$2.0 million), compared with RMB45.4 million in the corresponding period of 2019. The decrease in share-based compensation expenses was primarily due to recognition of share-based compensation expenses during the second quarter of 2019 related to historical employee options granted, which were contingent upon the completion of the Company’s initial public offering.

  • Research and development expenses were RMB52.3 million (US$7.4 million), an increase of 1.3% from RMB51.7 million in the second quarter of 2019. The increase was primarily a result of costs associated with increased hiring to support product development, which is in line with the Company’s strategy of strengthening its technology and big data analysis capabilities. Research and development expenses for the second quarter of 2020 included share-based compensation expenses of RMB6.2 million (US$0.9 million), compared with RMB16.1 million in the corresponding period of 2019.


Income Tax Expenses

Income tax expense was RMB2.8 million (US$0.4 million), compared with a RMB10.8 million income tax expense in the same period of 2019, primarily due to the decrease in taxable income during the second quarter of 2020.

Net income

Net income was RMB2.1 million (US$0.3 million), compared with a net income RMB29.3 million in the second quarter of 2019.

Non-GAAP net income

Non-GAAP net income, which excludes the impact of share-based compensation expenses was RMB30.1 million (US$4.3 million), compared with RMB102.2 million non-GAAP net income in the same period of 2019.

Basic and Diluted Earnings per ADS

Basic and diluted income per ADS attributable to ordinary shareholders were RMB0.02 (US$0.00) and RMB0.02 (US$0.00), compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB0.22 and RMB0.21 in the same period of 2019.

Cash and Cash Equivalents, Restricted Cash and Term Deposits and Short-Term Investments

As of June 30, 2020, the Company had cash and cash equivalents, restricted cash and term deposits and short-term investments of RMB2,883.2 million (US$408.1 million), compared with RMB2,844.0 million as of December 31, 2019. The increase was primarily due to the cash generated from operating activities during the second quarter.

Business Outlook

For the third quarter of 2020, So-Young expects total revenues to be between RMB340 million (US$48.1 million) and RMB370 million (US$52.4 million), representing a 12.4% to 22.3% increase from the same period in 2019. The above outlook is based on the current market conditions and reflects the Company’s preliminary estimates of market and operating conditions, and customer demand, particularly in view of the potential impact of the COVID-19, the effects of which are difficult to analyze and predict, 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 from operations and non-GAAP net income by excluding share-based compensation expenses from income from operations and net income, 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 and 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 Thursday, August 27, 2020, at 7:30 AM U.S. Eastern Time (7:30 PM on the same day, Beijing/Hong Kong Time). Participants can register for the conference call by navigating to http://apac.directeventreg.com/registration/event/1179314.

Once preregistration has been completed, participants will receive dial-in numbers, an event passcode, and a unique registrant ID.

To join the conference, please dial the number you receive, enter the event passcode followed by your unique registrant ID, and you will be joined to the conference instantly.

A telephone replay will be available two hours after the conclusion of the conference call through 9:59 AM U.S. Eastern Time, September 4, 2020. The dial-in details are:

International:

+61-2-8199-0299

US:

+1-646-254-3697

Passcode:

1179314

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: Eyuan@christensenir.com

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@christensenir.com


As of

December 31,
2019

June 30,
2020

June 30,
2020

RMB

RMB

US$

Assets

Current assets:

Cash and cash equivalents

884,676

1,574,120

222,802

Restricted cash

16,509

16,003

2,265

Trade receivables

26,110

39,288

5,561

Receivables from online payment platforms

13,429

16,359

2,315

Amounts due from related parties

5,815

10,573

1,497

Term deposits and short-term investments

1,942,860

1,293,093

183,025

Prepayment and other current assets

67,628

49,326

6,983

Total current assets

2,957,027

2,998,762

424,448

Non-current assets:

Long-term investments

45,980

42,878

6,069

Intangible assets

726

42,289

5,986

Property and equipment, net

32,341

31,838

4,506

Deferred tax assets

35,208

37,708

5,337

Operating lease right-of-use assets

144,488

135,398

19,164

Other non-current assets

14,184

14,651

2,074

Total non-current assets

272,927

304,762

43,136

Total assets

3,229,954

3,303,524

467,584

Liabilities

Current liabilities:

Taxes payable

65,605

39,145

5,541

Contract liabilities

93,725

96,873

13,711

Salary and welfare payables

100,676

90,414

12,796

Amounts due to related parties

2,620

2,300

326

Accrued expenses and other current liabilities

166,088

226,159

32,012

Operating lease liabilities-current

37,799

44,276

6,267

Total current liabilities

466,513

499,167

70,653

Non-current liabilities:

Operating lease liabilities-non current

120,803

111,383

15,765

Deferred tax liabilities

-

9,072

1,284

Total non-current liabilities

120,803

120,455

17,049

Total liabilities

587,316

619,622

87,702

Shareholders equity:

Class A Ordinary shares (US$ 0.0005 par value;
750,000,000 shares authorized as of December 31, 2019 and June 30, 2020; 69,371,718 and
69,962,924 shares issued and outstanding as of December 31, 2019 and June 30, 2020, respectively)

221

224

32

Class B Ordinary shares (US$ 0.0005 par value;
20,000,000 shares authorized as of December 31, 2019 and June 30, 2020; 12,000,000 shares issued and
outstanding as of December 31, 2019 and June 30, 2020)

37

37

5

Additional paid-in capital

2,799,336

2,842,132

402,278

Statutory reserves

10,562

10,562

1,495

Accumulated deficit

(259,251

)

(293,778

)

(41,582

)

Accumulated other comprehensive income

91,733

124,725

17,654

Total shareholdersequity

2,642,638

2,683,902

379,882

Total liabilities and shareholders equity

3,229,954

3,303,524

467,584



For the Three Months Ended

For the Six Months Ended

June 30, 2019

June 30, 2020

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2020

RMB

RMB

US$

RMB

RMB

US$

Revenues

Information services

212,004

234,512

33,193

354,556

360,524

51,029

Reservation services

72,981

93,708

13,264

136,482

150,250

21,267

Total revenues

284,985

328,220

46,457

491,038

510,774

72,296

Cost of revenues

(49,803

)

(50,744

)

(7,182

)

(86,220

)

(93,843

)

(13,283

)

Gross profit

235,182

277,476

39,275

404,818

416,931

59,013

Operating expenses:

Sales and marketing expenses

(105,800

)

(185,182

)

(26,211

)

(181,298

)

(294,299

)

(41,655

)

General and administrative expenses

(67,305

)

(49,849

)

(7,056

)

(92,133

)

(83,804

)

(11,862

)

Research and development expenses

(51,669

)

(52,325

)

(7,406

)

(83,014

)

(95,122

)

(13,464

)

Total operating expenses

(224,774

)

(287,356

)

(40,673

)

(356,445

)

(473,225

)

(66,981

)

Income/(loss) from operations

10,408

(9,880

)

(1,398

)

48,373

(56,294

)

(7,968

)

Other income/(expenses):

Investment income

1,192

2,814

398

3,472

5,789

819

Interest income

10,392

11,785

1,668

15,843

25,377

3,592

Exchange (losses)/gains

(4,278

)

(27

)

(4

)

2,018

36

5

Share of losses of equity method investee

-

(1,395

)

(197

)

-

(3,147

)

(445

)

Others, net

22,322

1,619

229

23,262

(7,026

)

(994

)

Income/(loss) before tax

40,036

4,916

696

92,968

(35,265

)

(4,991

)

Income tax (expenses)/benefit

(10,762

)

(2,776

)

(393

)

(17,789

)

1,522

215

Net income/(loss)

29,274

2,140

303

75,179

(33,743

)

(4,776

)

Accretions of convertible redeemable preferred shares to redemption value

(12,880

)

-

-

(50,219

)

-

-

Net income/(loss) attributable to ordinary shareholders of the Company

16,394

2,140

303

24,960

(33,743

)

(4,776

)


For the Three Months Ended

For the Six Months Ended

June 30, 2019

June 30, 2020

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2020

RMB

RMB

US$

RMB

RMB

US$

Net income/(loss) per ordinary share

Net earnings/(loss) per ordinary share attributable to ordinary shareholder - basic

0.29

0.03

0.00

0.63

(0.42

)

(0.06

)

Net earnings/(loss) per ordinary share attributable to ordinary shareholder - diluted

0.27

0.03

0.00

0.57

(0.42

)

(0.06

)

Net earnings/(loss) per ADS attributable to ordinary shareholders - basic
(13 ADS represents 10 Class A ordinary shares)

0.22

0.02

0.00

0.48

(0.32

)

(0.05

)

Net earnings/(loss) per ADS attributable to ordinary shareholders - diluted
(13 ADS represents 10 Class A ordinary shares)

0.21

0.02

0.00

0.44

(0.32

)

(0.05

)

Weighted average number of ordinary shares used in computing earnings/(loss)
per share, basic*

56,496,834

81,489,978

81,489,978

39,893,887

81,303,153

81,303,153

Weighted average number of ordinary shares used in computing earnings/(loss)
per share, diluted*

60,744,127

83,677,136

83,677,136

43,703,139

81,303,153

81,303,153

Share-based compensation expenses included in:

Cost of revenues

(6,827

)

(5,986

)

(847

)

(7,109

)

(8,196

)

(1,160

)

Sales and marketing expenses

(4,527

)

(1,583

)

(224

)

(5,013

)

(2,303

)

(326

)

General and administrative expenses

(45,424

)

(14,198

)

(2,010

)

(50,090

)

(22,535

)

(3,190

)

Research and development expenses

(16,144

)

(6,172

)

(874

)

(16,675

)

(9,167

)

(1,298

)

* 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.



For the Three Months Ended

For the Six Months Ended

June 30, 2019

June 30, 2020

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2020

RMB

RMB

US$

RMB

RMB

US$

GAAP income/(loss) from operations

10,408

(9,880

)

(1,398

)

48,373

(56,294

)

(7,968

)

Add back: Shared-based compensation expenses

72,922

27,939

3,955

78,887

42,201

5,974

Non-GAAP income/(loss) from operations

83,330

18,059

2,557

127,260

(14,093

)

(1,994

)

GAAP Net income/(loss)

29,274

2,140

303

75,179

(33,743

)

(4,776

)

Add back: Shared-based compensation expenses

72,922

27,939

3,955

78,887

42,201

5,974

Non-GAAP net income

102,196

30,079

4,258

154,066

8,458

1,198


__________________________________________________________________________________________________________________________________________________

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 7.0651 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 June 30, 2020.

2 Non-GAAP net income is defined as net income excluding share-based compensation expenses. See “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release.