So-Young International Inc. (NASDAQ:SY) Q2 2022 Earnings Conference Call August 16, 2022 7:30 AM ET

Company Participants

Vivian Xu – Investor Relations

Min Yu – Chief Financial Officer and Director

Conference Call Participants

Thomas Chong – Jefferies

Nelson Cheung – Citi

Leo Chiang – Deutsche Bank

Chloe Huang – CICC

Operator

Good morning, ladies and gentlemen, and thank you for standing by for So-Young's Second Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. After the management's prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded.

I would now like to turn the meeting over to your host for today's call, Ms. Vivian Xu. Please proceed.

Vivian Xu

Thank you, operator, and thank you for joining So-Young's second quarter 2022 earnings conference call. Please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities and Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to those outlined in our public filings with the SEC, including our annual report on Form 20-F. So-Young does not undertake any obligation to update any forward-looking statements, except as required under applicable law. Joining us today on the call is Mr. Min Yu, our CFO.

At this time, I would like to turn the call over to Mr. Min. Thank you.

Min Yu

Thank you all for joining our second quarter 2022 earnings conference call. Since the beginning of 2022, we have faced many challenges from the external environment, including the macro environment and particularly the resilience of COVID-19 in multiple cities across China, which had a negative impact on business activities and the consumer sentiment. According to data from the National Bureau of Statistics of China, total sales of consumer goods in the first half of 2022 decreased by 0.7% year-on-year. While the situation further weakening in the second quarter when total sales of consumer goods decreased by 4.6% year-over-year.

In Q2, the resurgence of COVID-19 affected the top four medical aesthetics consuming cities by GMV with Beijing, Shanghai, Guangzhou and Shenzhen. Total GMV for the four cities from our platform in the second quarter of 2022 decreased by 71% year-over-year. We were actively adapting and adjusting the operation strategy of second and third-tier cities, driving the revenue contribution of emerging cities to make up for the decline. As a result, in the second quarter, total revenue reached RMB309 million, an increase of 3% from Q1. At the same time, we further increased the number of SKUs on our platform to optimize the online transaction experience with more transparent pricing and attractive incentives for end users, particularly as a way to make up for the decline in surgical GMV due to travel restrictions and safety risk considerations under the epidemic.