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spk03: Good morning, ladies and gentlemen, and thank you for standing by for Soyoung's first quarter of 2021 earnings conference call. At this time, all participants are 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 the host for today's call, Ms. Vivian Xu. Please proceed.
spk01: Thank you, operator, and thank you for joining Soyang First Quarter 2021. Please know that the discussion today will contain forward-looking statements made under the paper provisions of the U.S. Private Securities and the 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 outlying our public findings with the SEC. Including our annual report on Form 20F, Soyang does not undertake any obligation to update any forward-looking statement except as required under applicable law. Joining us today on the call are Mr. Xin Jing, our co-chairman and CEO, and Mr. Ming Yu, our CFO. At this time, I would like to turn the call over to Mr. Xinjing. Case, please. 感谢大家参加新养2021年第一季度财报电话会议。 2021年第一季度,我们以稳健的业绩开局, 收入达3.6亿人民币,超过业绩指引上限近3000万元, 相比去年同期大增97%, 移动端平均MAU达839万,
spk00: Thank you all for joining our morning call for the day of 2021.
spk01: We are very pleased to kick start the year with solid results for the first quarter of this year, with revenue of RMB 360 million, almost RMB 30 million above the top of our guidance, and up 97% from the first quarter of 2020. Average mobile MAUs were 8.39 million, up 101% year over year. and the number of paying media service providers on our platform was 4,702, up 43% from the first quarter of 2020. The industry continues its recovery during this quarter. We have seen increasing level of interest from our end users, as well as an increase in interactive activity across our platform.
spk00: In the first quarter, we continued to implement a planned strategy to increase the conversion rate and flow rate. At the same time, we will further expand the network of high-quality medical institutions that are covered by the platform. On the user side, we will continue to strengthen user trust, improve user reliability, and establish a trustworthy professional community as our primary goal. We will continue to strengthen the unique value proposition of faith differentiation by providing better user experience.
spk01: During the quarter, we continue to execute on our strategy to increase conversion and retention rates while further expanding our network of high-quality medical service providers. On the user front, we always make it a top priority to ensure the reliability and professionalism of our community in order to increase user trust and user engagement. We reinforced and depreciated our unique value propositions by working to improve user engagement and retention, by providing better user experience, and by reinforcing quality content that drives efficient decision-making.
spk00: Talking about our long-term strategy, first of all, as a community platform with medical attributes, we continue to strengthen the real control of content. In addition to the support of audit agencies and doctors, we have also strengthened
spk01: In terms of our immediate strategy, first, we are reinforcing the authenticity of our community in terms of medical nature. Besides verifying the qualification of institutions and doctors, we have also made improvements to our verification procedures. for user reviews of treatments sold on our platform, removing fake reviews.
spk00: and smart algorithm to analyze user behavior, to quickly and accurately recommend users, and to make decisions on online support surgery and non-surgical projects. At the same time, professional prior consultation and perfect post-sales services ensure that users' experience from online to offline is more perfect because of platform security. In our ecosystem, it is no longer a simple flow from users to institutions. Second, we continue to improve user experience and strengthen our digital capabilities.
spk01: Through deepening cooperation with existing institutional partners and forming relationships with new ones, we are able to offer a wide range of authentic authentic and high-quality products to end users. Our robust technology and intelligent algorithms analyze user behavior to make fast and accurate recommendations and help decision-making online for both surgical and non-surgical procedures. In the meantime, our professional pre-sales consolidation and upsell service improve user experience from online to offline due to the guarantees on our platform. In our ecosystem, Soyang is not just playing the role of transaction facilitator between users and institutions. We are also building a closed-loop system that connects all stakeholders, including users, consultants, medical product manufacturers, doctors, and institutions, maximizing benefits to each of them.
spk00: Third, through brand exposure and market promotion, we continuously improve customer efficiency, At the beginning of 2021, we cooperated with Zhejiang Satellite TV for the New Year's Eve party and participated in the production of the Hunan Satellite TV variety show, which was very exciting. It caused a wide range of topics among our users and expanded the user awareness of XinYang brands. At the same time, our excellent self-media content and collaborative content materials were posted on short videos and other new channels, bringing more accurate traffic to the platform. We found that users on XinYang platform Third, we are improving user acquisition efficiency, primarily through brand exposure and marketing.
spk01: Earlier this year, we partnered with Zhejiang TV in this New Year's Gala Show and Hunan TV in a variety show called Journey of Love. These events became hot topics among users and elevated the Soyang brand profile. Meanwhile, we created original short video programs which were broadcast on new media channels, bringing target users to our platform. As a result, we witnessed consistent improvement of user activities in terms of time spending, interaction, consultation, and booking, which led to optimizing the structure of our user base. During the Slim Festival in March 2021, daily average GME for treatments in body shaping categories grew by 25% compared with the results of 2011 last year.
spk00: More and more institutions are taking effective investment methods to measure the standard. Improving差异化竞争 to acquire more market share. At the same time, the target of customers is also more inclined to customer quality from the number of customers. The users and brand advantages established by XinYang have been constantly invested in the past, and have gradually played a huge role. As the platform's credibility deepens, more users rely on the recommendation and memorandum of the XinYang platform to carry out consumption decisions. We have launched XinYang每次卡产品 since the fourth quarter of last year. In the past six months, XinYang每次卡严选项目从7个增加到37个和共95家机构在11个城市落地。除了在用户中受到欢迎和关注,以美机构也从稳定高质量的用户表现中看到了投放效果。
spk01: Moving on to monetization, since the beginning of the year, we have been pleased to see that the whole industry has gradually returned to a normal and healthy growth track. Institutions have adopted more performance-based marketing strategy to acquire users, shifting their focus from quantity to better quality of customers. Our previous investment in cultivating our social community and branding has paid off under this succumb status. Because of their growing trust in the SoYang platform, more users made purchase decision based on our recommendations and endorsements. One great example was SoYang Pass. Since it was launched in Q4 last year, over the past six months, the number of selected products in SoYang Pass program have increased from seven to 37, and now cover 95 institutions 11 cities. Soyang passed through the attention of users and became very popular. Institutions were also impressed with this performance in terms of attracting end users. Going forward, we will fine-tune the whole process of distribution, aiming to allocate quality and compatible traffic to customers with stronger demand for performance and greater market potential. We will also further improve user acquisition efficiency while focusing on increasing user retention, content consumption, and monetization efficiency.
spk00: Next, Yu Min will introduce the financial situation of this quarter. After that, we will start the Q&A session.
spk01: Demi invited me to give the overview of the quarter before Vivian will open up the Q&A.
spk05: Thanks, Cass. Please be reminded that all amounts quoted here will be in RMB. Please also refer to our earnings release for detailed information of our comparative financial performance on a year-over-year basis. For the first quarter of 2021, total revenues were on $360 million, up 97% year-over-year from $182.6 million, and significantly above our guidance, as mentioned. The increase was primarily due to an increase in the number of paying medical service providers. The number of paying medical service providers on Soyang's platform were 4,702, an increase of 42.7% from 3,295 in the first quarter of 2020. Within total revenues, information service revenues were RMB 277.8 million, up 120.5% year-over-year from RMB 126 million. The increase was mainly due to an increase in average revenue per paying medical service provider. Reservation services revenues were RMB 81.8 million, an increase of 44.7% from RMB 56.5 million in the first quarter of 2020. The increase was primarily due to an increase of 123.3% in the number of purchasing users. Cost of revenues were RMB 52.4 million, up 21.5% year-over-year from RMB 43.1 million, Cost of revenues included share-based compensation expenses of RMB 4.3 million compared to RMB 2.2 million in the first quarter of 2020. Total operating expenses were RMB 367.3 million, up 97.6% from RMB 186 million in the first quarter of 2020. Sales and marketing expenses were RMB 242.4 million, up 122.1% from RMB 109.1 million a year ago, primarily due to increasing in the expenses associated with marketing and user acquisition activities, especially branding expenses. Sales and marketing expenses included share-based compensation expenses of RMB 2.3 million compared with RMB 0.7 million in the corresponding period of 2020. G&A expenses were RMB 55.2 million, up 62.5 percent from RMB 34 million a year ago, primarily due to an increase in payroll costs associated with the expansion in the number of administrative employees. G&A expenses included share-based compensation expenses of RMB 7.2 million compared with RMB 8.3 million in the corresponding period of 2020. Research and development expenses were RMB 70 million, up 63%. The increase was primarily attributable to an increase in payroll costs. Research and development expenses for the first quarter of 2021 included share-based compensation expenses of RMB 5.1 million compared with RMB 3 million in the corresponding period of 2020. Income tax benefits was RMB 4.3 million compared with RMB 4.3 million in the first quarter of 2020. Net loss was RMB 46.3 million compared with a net loss of RMB 36 million in the same period of 2020. Non-GAAP net loss was RMB 27.4 million compared with a non-GAAP net loss of RMB 21.6 million in the same period of 2020. Basic and diluted loss per ADS attributable to ordinary shareholders were RMB 0.42 and RMB 0.42 respectively, compared with RMB 0.34 and RMB 0.34 respectively during the first quarter of 2020. Now for the balance sheet. As of March 1, 2021, we had total cash and cash equivalents Restricted cash and term deposits and short-term investments of RMB 2.6 billion compared with RMB 2.7 billion as of December 31, 2020. For the second quarter of 2021, Soyang expects total revenues to be between RMB 430 million and RMB 450 million, representing a 31% to 37.1% increase from the same period of 2020. The above overlook is based on the current market conditions and reflects the company's preliminary estimates of market and operating conditions and the customer demand. This concludes our prepared remarks. I will now turn the call to the operator and open the call for Q&A. Operator, we are ready to take questions.
spk03: Thank you. Yes, as a reminder, to ask a question, You will need to press Par 1 on your telephone, and to withdraw your questions, please press the pound or hash key. Please stand by while we compile the Q&A roster. And if you ask a question in Chinese, please repeat it in English immediately. One person is allowed to ask one question at a time. If you want to ask more than one question, please join the queue again. Once again, it is Par 1, your question. First question comes from the line of Thomas Chong of Jefferies. The line is open. Please go ahead.
spk06: Thank you, Ms. Chong, for accepting my question. My question is about the growth strategy that we are operating with our users this year. Can you share with us? In addition, can you share with us the trend rate of our users and how we should look at it in the future? And this year's MAU, Thanks, management, for taking my questions. The management talks about how we are going to operate our doses in 2021. and how we are going to better monetize our users as well as the trend. If possible, can management share about the MAU target as well as our marketing strategies? Thank you.
spk05: Okay. I will be answering these questions. Our user growth strategy in 2021 won't change compared to 2020. We will still be focused on expanding our user base and increase our penetration in terms of our targeted user base. For the last part of your question, as you said, what's your MAU, what's our MAU target and the guidance? And I think although we never provide that guidance in the in the previous quarters, but we still see positive increase in terms of our MAU. For the first quarter, average MAU is around $8.4 million. And going forward, we expect our MAU, at the end of the year, still we are seeing around 40% growth. That's our target. For what's our strategy and how we're going to spend our sales marketing budget, as you can see, in the first quarter result, we did have bigger or larger than normal or previous quarters spending in sales marketing. Excluding those payrolls, we have around 192 million RMB spent on the customer acquisition. Within that, we have around 102 have been focused on branding, which we associated with the TV shows, as mentioned earlier in the previous quotes. And we also, in terms of promoting our Slim Festival in March, we did spend a large campaign offline with Focus Media. So that's the extra expanding compared to the first quarter of last year, same period of last year. and even more than fourth quarter of 2020. In terms of 2020, fourth quarter of 2020, we spent around half of that for branding expenditure. But if that means we can't or we will spend more than usual or our budget is much more than previous years for sales marketing or customer acquisition, the answer is no because we have very strict budgeting policy for sales marketing is around customer acquisition. Our budget is around like 40% of total revenue. That's the general rule in the previous years. And although we spent more in terms of branding in the first quarter, but going forward, we have already planned our branding expenditure for second quarter, third quarter, and fourth quarter. And mainly, as you can see in the previous 2020 and 2019, we will have more spending in branding for third quarter every year, but relatively lower in terms of second quarter and fourth quarter for this year. We just have earlier spending to dedicate to promotion our March Slim Festival, and that's the case. And going forward, we will still... as to spend half our budgeting sales and marketing on branding and half of that on traffic acquisition. And it won't have consistent, large amounts of sales and marketing spending, like first quarter of this year, which is more than 60% for the next few quarters. It will come down to the normal level. That's the... That's for budget side or expenditure side. And for the... Do we have any focus on, like, customer conversion and what's the monetization strategy and going forward for the ROIs of our traffic acquisition? For that part of the question, we think in 2020, we did see a large growth of MAU. But we also suffered by the COVID-19 impact and we see the conversion is relatively lower compared to previous years. So the efficiency looks lower than previous years. But now we do see the recovering trend and the conversion and the conversion trend for our paying customers are closing or coming back. to the regular level, which we will be very positive for that side as well, and seeing consistent customer conversion improvement in the next few quarters. That's my answer.
spk03: Thank you. Our next question comes from the line of Leo Chiang of Deutsche Bank. The line is open. Please go ahead.
spk04: Thanks for taking my questions. My question is that what is the proportion of marketing expense and the trend for institutional which is spending on so young platform? You are observing? Okay, thank you.
spk00: The market share of online e-commerce service platforms is constantly increasing, from less than 2% in 2015 to 13% in 2019. So we can see that the market share of online e-commerce service platforms is still expanding. From the perspective of the institutional investment of XinYang platform, we see more institutional customers establish cooperation with us, The number of paid institutions in the first quarter has increased by 43%, reaching 4,702. This is due to our precise customer volume and the brand trust we have established with the users. In addition, with the improvement in the ability of the institutions to operate, we see that the investment behavior of the institutions is getting more and more mature. They are heading towards better ROI performance and more stable customer channels. Okay, so first, according to France and Salomon report,
spk01: The takeoff online customer acquisition spending by medical aesthetic service industry in China was about 20% in the past five years. The percentage of total customer acquisition spending on all online medical aesthetic service platform has continued to increase from less than 2% in 2015 to 13% in 2019. the market share of the online platform is continuously expanding. And secondly, in terms of the number of institutions at our platform, we have formed a partnership with more institutions. In the first quarter, we could see that the number of pain medical service providers on our platform was up more than 40%, get to the number of more than 4,700. thanks to our target user base and our strong brand recognition among users. And lastly, we think that with improvements in institutions' operation capabilities, we see that their spending behavior is also growing mature as they turn to customer acquisition channels with better ROI performance. In order to reduce overall customer acquisition cost, Those institutions are also testing new ways to put their allocation of marketing, also improving their own capabilities. We believe that as long as our performance is better than the peers in the market, our to our contribution of value in the industry is increasing institutions will maintain their preference for so young when they allocating their spendings. Thank you.
spk04: Thank you.
spk03: Thank you. Our next question is from Shiki Gay of CICC. Please go ahead.
spk02: I noticed that we have recently signed a cooperation contract with Bloom Mage Biology. So could you provide more detailed direction for future cooperation with upstream manufacturers or the suppliers? Thank you.
spk00: Indeed, on May 6, we signed the only comprehensive strategic cooperation agreement with Huaxi Biomarkers to obtain the light needle product. XinYang will fully support the two major strategic goals of Huaxi Biomarkers. One is the free form of uric acid, and the other is the landing of the Future Medical Cooperation Alliance. In the future, XinYang will become a strategic partner of Huaxi Biomarkers to address and manage downstream medical institutions. Thank you.
spk01: Going forward, we will continue to strengthen cooperation with medical product manufacturers to have better control over our user experience. So let me elaborate one event we just incorporated. We just entered an inclusive comprehensive strategic cooperation agreement with Bromage Phytoc for its skin booster products. If you see the according to the agreement we will partnership partner with roommates and help the latter on two strategic strategic initiatives one is Hyaluronic acid program and one is creating the future medical aesthetics alliance We think that we will became the strategic partners to help each and manage medical and aesthetic service providers and also we think that in several ways we will provide comprehensive support, including product R&D and new product training. In addition, we have also developed a package solution for its hyaluronic acid program. So as the largest metal aesthetics platform in China, Soyang will maintain our leadership in the industry and enable efficient connections between consumers and the business.
spk03: Thank you. Next question is from the line of Vincent Liu of Needham and Company. Please go ahead.
spk07: Thank you, Mr. Guan. Good evening, Mr. Guan. I have two questions. The first one is that the medical activity in the beginning of the year is also active and growing. Mr. Guan also mentioned the rise of consumerism. So I would like to know more about the changes in the trend of surgery and non-surgery, and how we can gain a stronger competitive advantage in the medical sector. Thank you for taking my question. I have two questions. The first question is about the trends on the two categories of the medical aesthetic market. The medical aesthetic market has been active since the beginning of the year with significant growth. You also mentioned strong demand on the consumer side. Can you share more details about the trends for surgical and non-surgical treatments, respectively, and how do we gain competitive edge in the light synthetic category. And for the surgical treatments, have we returned to our normal state compared to the 2020? And then my second question is about the Soyang Pass. Can you give us more color on Soyang Pass? How much revenue contribution can we expect to see and how many target cities we are planning to enter this year? Thank you.
spk00: Hello. The medical market is recovering in general. We can see that the consumer interest and interest of the users are increasing. In the first quarter, the monthly activity of the faith platform reached an average of 8.4 million. It continues to maintain a growth trend of more than 100%. At the same time, we can see that in addition to content consumption, our users are staying in the market in some areas such as the product marketing industry. and the interaction with institutions and doctors on the platform have increased significantly compared to the same period last year. From a specific category, we see that the number of orders for surgeries is gradually recovering. In fact, the number of orders has already recovered to the level before the epidemic, but the level of GMV has not reached the level before the epidemic. The number of orders for non-operators continues to maintain a strong trend of growth. During the sales festival in March this year, Especially in the products that inject beauty products. Compared to last year's Double 11, the average growth of Japanese GMV is more than 62%. In fact, the products that inject skin beauty products are more popular now. And then we also see that this year, whether it is the medical materials and mechanical manufacturers that are on the market, or the institutions that are on the market, they are all increasing the fight against the retail market. Um,
spk01: First, the metal aesthetics market as a whole is under healthy recover. We see that the users' willingness to purchase and the interest keep increasing. So if you see the number that during the first quarter, MEU, our platform reached 8.4 million and maintain a very good rate of the growth. So addition to the content consumption, Our user average time spent and the interaction with institutions and doctors both increased significantly year over year. And your question is on the surgical booking. We could see that the surgical booking are gradually recovering and the number of reservations has returned to the level before the epidemic. Yet the total GMB is still a bit behind on that. Non-surgical bookings kept a strong momentum. We can see that during the Slim Festival in March, daily average GMB for injections treatments increased by 62% compared with the double 11 last year. So we still see that the injection skin care and the anti-aging remain most popular treatments to users on our platform. We could see that the competition among non-surgical sector is intensified this year for both upstream manufacturers to the downstream institutions. In contrast, the consumer side can't fully understand and evaluate service, those service like the effect and the risk behind that, aiming to solve pain points of consumers This year, we will continue to leverage the age of our platform in content and community construction and also enhance consumer protection and optimize user experience on our platform.
spk00: 轻衣美方面的竞争策略主要是以下这么几条。 第一就是完善线上商品的用户体验,加强平台和用户之间的信任,包括增加SQO的供给。 including perfecting our product database, strengthening the standardization of service products, and some specific quantity descriptions. The third is to perfect the payment and sales protection system. In terms of medium and low price projects, we are strengthening the number of SKUs and the leading advantages in terms of price, strengthening the leading advantages in terms of SKU generation and product range. In terms of high-end price projects, we use some to optimize the service, to improve the quality of the service, and to increase the number of high-end users. In addition, we strengthen the link between the community, the number of users, and the participation of users by enhancing the link between the community, the number of users, and the participation of users by enhancing the link between the community, the number of users, and the participation of users by enhancing the link between the community, the number of users, and the participation of users by enhancing the link between the community, the number of users, and the participation of users by enhancing the link between the community, the number of users, and the participation of users by enhancing the link between the community, the number of users, and the participation of users by enhancing the link between the community, the number of users, and the participation of users by enhancing the link between the community, the number of users, and the participation of users by enhancing the link between the community, the number of users by enhancing the link between the community, the number of users by enhancing the link between the community, the number of
spk01: And we first of all to improve the online user experience for product units and enhance user trust on our platform. So we do it in three ways. One is of course increasing the total SKU supply. And we also, secondly, we also refine our product library enhancing standardization, and improving description of service and SKUs. And third, we refine payment and up-to-sales warranty systems to protect the whole user experience. So you could see that we separate our non-surgical treatments in, first of all, is for those low-end product lines. We reinforce our leading position in both number of SKUs and pricing system, as well as the regional and also the categories coverage. For the mid to the high-end product line, we could see that the Soyang parts are widely recognized by our users, and we successfully to improve the performance of promised contract terms, which could focus in to acquire those new to high-end customers group. And second, sorry, and later we enhance cooperation with upstream manufacturers through our metrics of SOYA Ambassador Program, PUGC, and the new media content. It is in the effort to increase content supply and user engagement for non-surgical treatments. Lastly, enhance the customer recognition of our expertise in non-surgical through some like the shopping events, some shopping events like the anti-aging festival and the slim festival, as well as market campaigns. That's all. Thank you.
spk00: is a strategic business layout in the field of clean and beautification. So this product, we are actually still in a core business polishing period. In fact, it is mainly polishing from these stages. The first one is in terms of selection. Meizuka will hold this selection meeting regularly, and then fine-tune the selection and polish each item. In terms of standardization of non-hand products, we have actually achieved an expansion from 0 to more than 30 items. and constantly strengthen and strengthen the standardization and transparency of products in the flying hand field. The second aspect is in terms of travel. In this aspect, we are actually very satisfied with the progress. We can see that the rate of investment of each product card is about the same as the rate of investment of non-each product card on the platform. So it shows that the entire customer experience is still very good. The third part of polishing is actually in the whole and the user experience of online purchase and reservation. We are still doing a deep transformation in this area. We hope to have a huge leap forward with the existing platform model. So in these areas, we are still polishing. So whether it's at the B or C end, we actually don't have a quantity. At the B end, we actually started operating officially from October last year. Currently, it covers 11 cities. The cooperating institutions are more than 90. Referring to your question about the Soyang Pass, since the launch last October, Soyang Pass program has now expanded to 11 cities with more than 90 institution partners.
spk01: In terms of the product selection, we regularly hope to select products for our Soyang Path program and consistently optimize our SKUs, especially for the non-surgical product standardization. We have expanded our standardized category to 30+. So this allows us to establish standards and strengthen transparency in the non-surgical sector. Meanwhile, in terms of the order fulfillment, we saw the complaints rate for the products under the Soyang Pass program largely below those on our main apps for the reservation products. At the revenue level, since the Soyang Pass have not scaled up yet and did not contribute a meaningful revenue, At this moment, we still give the subsidy to our end users, so we did not separate a different line for disclosed more detailed number on the revenue level of Soyang Pass. But we are generally saying that the total take rate for the Soyang Pass program was higher than other products. Thank you. Thank you.
spk03: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating.
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