SoYoung Reports Q3 2019 Financial Results: Mobile MAU Surges 143.8% Year-over-Year, Revenue Exceeds RMB 300 Million, and Feng Tang Joins Board of Directors

VCBeat (WeChat ID: vcbeat) learned at the earliest that on December 5, Beijing time, So-Young Inc. (NASDAQ: SY) released its financial report for the third quarter of 2019.

The third-quarter report shows that as of September 30, 2019, So-Young Technology achieved operating revenue of RMB 302.4 million, a year-on-year increase of 79.6%, exceeding the high end of the Q3 revenue guidance issued in its Q2 financial report; it realized a net profit of RMB 31.6 million, with Non-GAAP net profit amounting to RMB 40.49 million, compared to a net loss in the same period last year.

In terms of business operations, in the third quarter of 2019, the total value of medical aesthetic service transactions facilitated by the SoYoung platform reached RMB 976.2 million, representing a year-on-year increase of 74.7%. The number of paying medical institutions was 3,230, up 33.6% from 2,418 in the same period last year. The number of medical institutions subscribing to information services stood at 2,104, a 51.5% increase from 1,389 in the same period last year. The number of paying users reached 172,500, a year-on-year growth of 60.2%.

Notably, in the third quarter of 2019, SoYoung’s mobile average monthly active users (MAU) reached 3.42 million, a significant year-on-year increase of 143.8%; the MAU for the first and second quarters of this year were 1.93 million and 2.47 million, respectively.

In terms of the key metric of active users, So-Young Inc. has achieved breakthrough growth since its IPO. This not only indicates that both online penetration and population penetration in China’s medical aesthetics market are accelerating, but also suggests thatUser Growthis the strategic focus and long-term corporate goal of So-Young Inc. following its initial public offering.

Mr. Jin Xing, CEO of So-Young, stated, “Leveraging the advantages of our platform, robust quality, and high user stickiness, we have once again delivered outstanding performance, with third-quarter revenue exceeding the upper end of our guidance range. Benefiting from continuously enhanced user experience and rich content, the scale of our user community has continued to expand, driving an 86.8% year-over-year surge in information service revenue. Our efficient customer acquisition services, unique branded marketing, and ability to improve operational efficiency all underscore the distinctive value of our platform, consistently supporting the comprehensive business development of medical aesthetics service providers on the platform. Our average monthly active users (MAU) on mobile and total number of paying users also continued to rise rapidly, increasing by 143.8% and 60.2% year-over-year, respectively, this quarter. The Company will continue to deepen its engagement in the medical aesthetics services industry, remaining committed to expanding its user base and enhancing user quality. Looking ahead, we firmly believe that the growth potential of the medical aesthetics services industry remains substantial, and our strong strategic execution will enable the Company to seize opportunities and create long-term value for our shareholders.”

Mr. Yu Min, Chief Financial Officer of So-Young, added, “The Company’s revenue for the quarter increased by 79.6% year-over-year to RMB302.4 million, exceeding the Company’s guidance. We have continued to focus on the strategic execution of monetizing our platform services, which has not adversely affected our user base or engagement—key factors in enhancing user experience and expanding our user scale. While we are fully aware of the competitive landscape, we remain confident that our differentiated platform and technological innovations will continue to improve operational efficiency while expanding our user community and leveraging network effects. By continuously diversifying our revenue streams and scaling the So-Young platform, we aim to further strengthen the Company’s profitability in the future.”

SoYoung Technology also announced in a public filing that,Feng Tang Officially Joins the Board of Directors as a DirectorFeng Tang currently serves as Senior Managing Director and Head of Healthcare at CITIC Capital. He previously held the positions of Chief Executive Officer of China Resources Medical Holdings Company Limited and General Manager of the Strategy Management Department at China Resources (Group) Co., Ltd. Prior to joining China Resources Group, Feng Tang was a Global Director Partner at McKinsey & Company. He holds an MBA from Goizueta Business School at Emory University in the United States and a Doctor of Medicine (M.D.) degree from Peking Union Medical College in China.

“Mr. Feng Tang’s professional expertise and extensive experience in the healthcare industry and corporate strategic planning will help So-Young achieve rapid and steady growth. I look forward to working closely with him in the future,” said Jin Xing, CEO of So-Young.

China has tens of millions of medical aesthetics consumers, but the online penetration rate of medical aesthetics consumption remains relatively low. Moreover, medical aesthetics consumption in lower-tier cities is still in its nascent stage, indicating that leading internet companies like So-Young have substantial room for growth.

Based on its performance in the quarters following its public listing, increasing the penetration rate among medical aesthetics consumers and achieving rapid user growth have become SoYoung’s strategic priorities and long-term objectives.

For example, in the second half of 2019, So-Young began to launch large-scale advertising campaigns in office buildings and elevators, covering more than 100 cities. This indicates that So-Young has moved from the brand-building phase to the brand-expansion phase, breaking through niche circles and expanding beyond the core urban areas (outside the “Fifth Ring Road”) to rapidly capture consumer mindshare.

Meanwhile, SoYoung continues to advocate for scientific and rational consumption concepts and professional knowledge in medical aesthetics through its community, new media matrix, and social media platforms, ultimately reinforcing its brand positioning of “For Medical Aesthetics, Use SoYoung” and strengthening user awareness.

DaliCreating a Medical Aesthetics E-Commerce Festival, marking another significant market-level initiative since So-Young’s IPO. In June, September, and November, the company launched the “Double Eyelid Festival,” “Pi Pi Festival,” and “Asian Medical Aesthetics Carnival,” respectively. Focusing on entry-level and seasonal procedures, these campaigns leveraged promotional strategies such as free treatments for new users at RMB 199 and 50% off site-wide, combined with engaging community interactions, to rapidly cultivate online medical aesthetics consumption habits among new users.

“We will continue to hold the Medical Aesthetics E-Commerce Festival. We believe that in the future, the medical aesthetics sector, and even the broader consumer healthcare industry, will see the emergence of phenomenal brands akin to Alibaba’s Double 11,” said Jin Xing.

“Our goal is not merely to serve as a traffic gateway for the medical aesthetics industry, but to become the ‘operating system’ of this sector. This requires us to restructure the industrial chain, making key links more efficient and cost-effective,” Jin Xing has stated on multiple occasions. Similar to consumer behavior in medical aesthetics, there is still significant room for improvement in the digitalization of the medical aesthetics industry. As an internet platform rooted in the industry’s foundation, achieving healthy and sustainable development is inseparable from a robust industrial ecosystem.

On one hand, So-Young is exploring how to better serve users in the medical aesthetics industry by launching"Chiyan Medical Selection" Brand, targeting Chinese consumers with high-quality medical aesthetics demands, screening the best medical aesthetic resources and providing one-stop concierge services. It is reported that "Chi Yan Medical Selection" has established the most rigorous doctor selection mechanism in the field of medical aesthetics, with a total of 117 dimensions, known as the "Michelin Guide of the medical aesthetics industry."

“Chiyan Medical Selection” is a wholly-owned subsidiary of So-Young. It was launched for beta testing in January 2019 and officially released to the public on November 20. The team now comprises nearly 200 members, providing services in 29 core cities across China, as well as in Japan and South Korea.

On the other hand, an industry consensus holds that physicians, as a core element of the sector, will increasingly move to the forefront. In 2019, the number of “Million-Revenue Physicians” (referring to doctors whose gross merchandise value [GMV] on the SoYoung platform exceeded RMB 1 million) increased by 70% year over year. These physicians share common traits: strong professional expertise and proficiency in leveraging internet tools to communicate with medical aesthetics consumers.

Nearly every aesthetic medicine physician harbors an entrepreneurial dream, yet the barriers to entry in the healthcare industry are exceptionally high. Securing the necessary licenses is challenging, and substantial time and effort must be devoted to management and operations. Consequently, rather than enhancing their productivity, physicians often experience a decline.

In addition to providing doctors with a suite of operational tools and display platforms online, So-Young has also begun to complete its service loop offline. On November 22, So-Young, in joint investment with the Doctor Entrepreneurship Support Platform and Regal Medical Group, co-founded China’s first platform-based shared hospital for medical aesthetics—Union Lige Second Medical Aesthetic Hospital(hereinafter referred to as "Regent Second Hospital") officially announced its commencement of operations.

Lige Second Hospital holds all necessary licenses and certifications and features comprehensive facilities. It provides doctors with access to spaces including laboratories, consultation rooms, operating rooms, non-surgical medical aesthetics procedure rooms, and inpatient wards, along with nursing and anesthesia team services, charging physicians based on duration of use.

In the United States, there are more than 5,500 Medicare-certified shared medical hospitals, saving $40 billion annually in healthcare expenditures. Similarly, shared medical models hold immense potential in China.

Jin Xing believes that the future trend is as follows: “Each major city in China will have several shared surgical platforms capable of handling the surgical volume currently undertaken by four to five thousand small and medium-sized clinics. Unlike these smaller clinics, such shared surgical platforms centralize medical services, leverage informatization, and ensure traceability and trackability. This will significantly compress the space for gray-market aesthetic medicine operations, thereby promoting the healthy development of the industry.”