The following is a summary of the So-Young International Inc. (SY) Q2 2024 Earnings Call Transcript:

Financial Performance:

• So-Young International reported Q2 2024 total revenue of RMB 407.4 million, surpassing the upper end of their guidance.

• Non-GAAP net profit increased by 43.1% year-over-year to RMB 22.2 million.

• The gross margin reflects stabilized yet lower levels due to the shift in revenue structure towards medical product sales with inherently lower margins compared to traditional services.

Business Progress:

• New business segments, specifically in medical products and maintenance, grew by 22.6% year-over-year contributing significantly to overall revenue.

• Launched 14 operational clinics in key cities, focusing on medical aesthetic services with plans to begin franchising in H2 2024 to expand footprint.

• Enhanced operational efficiency and customer engagement through the use of private domains which saw an increase to 810,000 uses, marking a 14% quarter-over-quarter growth.

Opportunities:

• Positioned to capitalize on the growing medical aesthetic market through strategic integration of upstream and downstream business segments, targeting an increase in market share and brand strength.

• Expanding the clinical chain through a new franchising model to rapidly broaden market presence and leverage standardized service models.

Risks:

• The soft recovery in consumer spending poses a near-term challenge impacting the discretionary spending which could affect the demand for medical aesthetic services.

• The ongoing macroeconomic challenges and uncertainties might influence the pace of clinic openings and the scaling of new business initiatives.

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