Ladies and gentlemen, thank you for standing by for So-Young's fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode. After management gives their prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I will now like to turn the meeting over to your host for today's call, Ms. Vivian Xu. Please proceed, Ms. Xu. Thank you, Operator, and thank you everyone for joining So-Young's fourth quarter and the full year 2023 earnings conference call. Joining me today on the call is Mr. Xing Jin, our co-founder, chairman, and CEO, and Mr. Nick Zhao, CFO. Please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risk 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 statement except as required under applicable law. At this time, I would like to turn the call over to Mr. Xing Jin. Xing, please. 大家好，欢迎参加今天的财报电话会议。尽管市场环境充满挑战，我们的业务仍然保持坚挺，且新业务表现出非常好的增长潜力。四季度营收同比增长20.1%至人民币39.06亿元，其中传统业务即信息服务及其他的同比增速为15.8%，新业务即销售医疗产品及维修服务的同比增速为50.6%。得益于对成本的精细把控，2023年全年归属于新阳国际的净利润达人民币2128万，相比2022年亏损6555万元大幅提升。2023年的环境在许多方面相比疫情期间更具挑战性。在此背景下，我们的财务表现更显突出，展示了我们在不断变化的消费者行为和市场条件下表现出的强韧性和适应力。 Hello everyone, thank you for joining the call today. Despite the challenging market conditions, our business remained resilient as the new ventures we are developing continue to demonstrate significant growth potential. Total revenues increased by 20.1% year-over-year to CNY 319.6 million during the quarter. Our legacy business reflected in revenues from information services and others increased by 15.8%, while new businesses reflected in revenues from sales of medical products and maintenance services increased by 50.6% during the quarter. By carefully managing costs, we regained profitability with net income attributable to So-Young International Inc. of CNY 21.3 million in 2023, a significant turnaround from a net loss attributed to So-Young International Inc. of CNY 65.6 million last year. In many ways, last year presented an even more challenging situation than the COVID-19 pandemic did. In this context, our financial results for the year are even more impressive and a testament to our resilience and adaptability in the face of evolving consumer behaviors and market practice. 回顾2023年，在竞争加剧的市场环境下，我们依然保持了稳健的增长。增长背后的原因是新阳与其他平台的差异化竞争。我们看到不管是大的团购电商平台还是短视频平台，都在用价格竞争吸引价格敏感人群，但我们认为医美的主流消费群体更看重医美的品质。这个群体的消费人次只占13%，但贡献了51%的销售额。在高端项目方面，新阳一直拥有巨大的传统优势。在2023年，我们进一步巩固和维持了这种优势，通过定制化项目、高客单项目，一方面满足了高端用户的需求，一方面帮助机构获得更好的利润。未来我们将继续执行这一策略，与更多优质医生机构更紧密地合作。 Looking back at 2023, it's evident that our differentiated strategy was key to maintaining stable growth. While e-commerce platforms and short-form video platforms prioritized the pricing of products to attract budget-cautious low-to-mid-tier users, we prioritized premium service to attract high-tier users seeking quality services. This segment, representing only 13% of frequent users, drives 51% of market volume. We've consistently maintained a strong competitive advantage with the segment given our premium products and services. Throughout the year, we further strengthened this advantage by offering high-tier users the personalized services they required for high-quality procedures, which also drives support the profitability of the partner institutions we cooperate with. Moving forward, we remain committed to the strategy as we build stronger relationships with more high-caliber doctors and institutions. 我们在优享取得了惊喜的进展。上线至今，新阳优享累计为合作机构输送客流达20万人次，为合作机构创造的收益累计达1亿元，累计节省营销获客成本1.2亿元。2023年下半年，我们测试了从合作店模式迭代升级为连锁店模式，在公司总部的二楼建立了青衣美诊所样板店，运营成果卓越。去年下半年，样板店月收入增长13.8倍，月收入增长13.8倍，月复合增长率为71%，并且从正式运营的第三个月实现了收支平衡，利润率持续稳健增长。我们正在加速把更多合作店转换为连锁店，目前有多家连锁店正在建设过程中，第一批连锁店已经在近期投入正式运营。我们预计今年将在六七个城市建设连锁店，并在下半年探索加盟连锁。 So-Young Prime made significant progress throughout the year with over 200,000 clinics visit facilitated, generating over CNY 100 million in revenues for partner institutions. This translates to significant user acquisition cost savings of roughly CNY 120 million. To further optimize our model, we piloted operations for a chain of clinics by establishing a model clinic for Light Medical Aesthetics procedures on the second floor of our headquarters last summer. The results have been impressive. This clinic has been exceptional growth, with steadily expanding margins and monthly revenue increasing 13.8 times during the second half of this year, a CAGR of 71%. Equally as important, it hit break-even after only three months of formal operations. Building on this success, we are now actively expanding our network by turning partner institutions into a chain of clinics. Several are already under construction, with the first ones already operational. We plan to open clinics in 6-7 cities throughout 2024, and we'll explore franchise opportunities in the later half of this year. 最后，供应链业务通过与其他业务板块协同，向医美供应链上游拓展，不断创造机遇。区别于传统上游厂商单一的研发、生产、销售供应链模式，充分发挥我们在C端用户群中的口碑和品牌优势，以及B端机构网络覆盖能力，迅速建立起新产品市场竞争力。目前我们拥有七个针剂产品布局，一个研发中心和两条生产线。我们在积极向上游拓展选择产品、合作伙伴以及合作方式时，一贯坚持谨慎和安全的态度。我们坚信在一个健康的市场下，培育开发我们的产品是长期可持续发展和拥有定价能力的关键。 Our supply chain business also continues to create opportunities for us by leveraging synergies with our other businesses to expand upstream along the medical aesthetic supply chain. Distinct from the traditional upstream R&D production supply chain model used by manufacturers, we are able to add further value by leveraging our institutional network and extensive consumer reach. This allows us to spot emerging trends and quickly bring new products to market, and rapidly make them competitive. To date, we have seven injectable products available on the market, one R&D center, and two robust production lines. We approach each relationship with care by adopting a cautious and safe approach. Developing a healthy market for our products is key to long-term sustainability and pricing power. 与韩国品牌Elastity的合作就是一个很好的例子。我们对Elastity的定位是终端进口玻尿酸，并严格筛选优质机构进行合作。通过这一政策，2023年出货量增长598%，超过12万支。严选的750多家机构合作机构获益明显，500多家核心机构营收增长20%。单场合作一个单品业绩可达200万元。2024年，我们将上市新型号的Elastity，并将推出新的抗衰产品。目前我们已布局七个产品，包括胶原蛋白、童颜针等，覆盖了当下热门的上游赛道。医美上游领域需要较多的前期积累，通过三年的准备，我们整个产品管线和销售团队以及整个平台的协同越来越成熟。随着我们越来越多的产品获得销售许可证，预计上游业务将产生非常好的持续性收入和利润增长。 Our cooperation with Korean brand Elravie is a perfect example. We positioned their hyaluronic acid program as a mid-market product, and through the careful selection of partner institutions, we distributed to grow sales significantly last year. Shipments of this product increased nearly 600% with over 120,000 medical injections sold thus far. More than 750 select partner institutions also gained from this, with 500 of our core institutions seeing revenue increase by 20% last year as a result. A single SDU can generate revenue of CNY 2 million for them in one campaign. We plan to add a new Elravie product to our portfolio this year and are looking at other opportunities in the anti-age category. Our current portfolio of seven products addresses demand across various segments within the highly demanded collagen category, including PLA and others. Building a strong upstream presence along the medical aesthetics supply chain requires strategic investment and lead time. Through three years of focused efforts, we have built stronger synergies between our product development pipeline, sales team, and our platform. As we secure additional product certifications, we are confident in our ability to consistently generate incremental revenue and profit growth over the long term. 我们正处在新旧业务转型的关键期，各项新业务都取得了突破，成长迅速，但仍处在势能累积的过程中。预计在未来几个季度将逐渐显示出对收入的显著贡献。 We are currently undergoing a strategic business transformation with a strong focus on the development and growth of our new ventures. While these new initiatives are making promising progress and generating rapid growth, they are still in their investment phase. We are confident that these new businesses will become significant contributors to revenue in the coming quarters. 中国医美市场仍然在朝着正确的战略方向前进，拥有巨大的增长潜力。随着行业标准化进一步推进，我们的全面垂直一体化能力和竞争优势将会更加明显。我们将继续调整业务，实现板块之间以及与机构、医生和产品的更大协同。这一战略将建立更加多样化、可持续的收入来源、良好的利润表现，并最终为我们的股东创造更大的长期价值。 The medical aesthetics sector in China still presents significant growth potential. It's all adopting the right strategy. As the industry moves towards greater standardization, our comprehensive vertically integrated capabilities and competitive strengths are set to become increasingly evident. We will continue to adjust the business to create greater synergies between our business and institutions, doctors and products. This strategy focus will allow us to build more drivers and build more diverse and sustainable revenue sources and a solid profit structure, ultimately delivering long-term value to our shareholders. 下面请我们的CFO Nick介绍四季度的财务情况，之后我们将开始QA环节。 I will now turn the call over to our CFO Nick to review the financial results for the fourth quarter before taking your questions. Nick, please. Hello, this is Nick. Please be reminded that all amounts quoted here will be in CNY. Please also refer to our earnings release for detailed information of our comparative financial performance on a year-over-year basis. Total revenues during the quarter were CNY 390.6 million, up 20.1% year-over-year, and in line with our guidance. The increase was primarily due to the increase in revenues generated by So-Young Prime and the sales of cosmetic injectables. Information services and other revenues were CNY 268.1 million, up 15.8% year-over-year, primarily due to an increase in revenues generated by So-Young Prime. Reservation services revenues decreased 20.7% year-over-year to CNY 20.6 million, primarily due to the operating strategy which gave higher subsidies to end users. Sales of medical products and maintenance service revenues were CNY 101.9 million, up 50.6% year-over-year, primarily due to an increase in sales of cosmetic injectables. Cost of revenues were CNY 137.6 million, up 56.0% year-over-year. The increase was primarily due to an increase in costs associated with So-Young Prime and the sales of cosmetic injectables. Within cost of revenues, cost of services and others were CNY 94.1 million, up 73.6% year-over-year, primarily due to an increase in costs associated with So-Young Prime. Cost of medical products sold and maintenance services were CNY 43.6 million, up 28.1% year-over-year, primarily due to an increase in costs associated with sales of cosmetic injectables. Total operating expenses were CNY 257.8 million, up 21.3% year-over-year. Sales and marketing expenses were CNY 126.2 million, up 28.3% year-over-year, primarily due to an increase in payroll costs and expenses associated with branding and user acquisition activities. G&A expenses were CNY 86.7 million, up 18.4% year-over-year, primarily due to an increase in payroll costs associated with the expansion of administrative employees to support our business upgrade and new strategic businesses. R&D expenses were CNY 45.0 million, up 9.6% year-over-year, primarily attributable to an increase in payroll costs. Income tax benefits were CNY 10.8 million, which was primarily due to the impact of additional deductions for research and development expenditures, compared with income tax benefits of CNY 2.4 million in the fourth quarter of 2022. Net income attributable to So-Young was CNY 17.5 million, compared with a net income of CNY 31.3 million during the same period last year. Non-GAAP net income attributable to So-Young was RMB 35.3 million, compared with RMB 38.8 million non-GAAP net income attributable to So-Young in the same period of 2022. Basic and diluted earnings per ADS, attributable to ordinary shareholders, were RMB 0.18 and 0.18 respectively, compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB 0.29 and 0.29 respectively during the same period of 2022. For the full year 2023, total revenue were RMB 1.5 billion, up 19.1% year-over-year. Within total revenues, information services and other revenues were RMB 1.1 billion, up 22.2% year-over-year. Reservation services revenues were RMB 101.3 million, down 21.3% year-over-year. Sales of medical products and maintenance services revenues were RMB 333.5 million, up 28.7% year-over-year. Cost of revenues were CNY 544.3 million, up 38.4% year-over-year, primarily due to an increase in costs associated with So-Young Prime and the sales of cosmetic injectables. Total operating expenses were CNY 1.0 billion, up 4.9% year-over-year. Net income attributable to So-Young International Inc. were CNY 21.3 million, compared with net loss of CNY 65.6 million in the fiscal year 2022. Non-GAAP net income attributable to So-Young International Inc. was CNY 57.6 million, compared to net loss of CNY 22.2 million in the fiscal year 2022. Basic and diluted earnings per ADS attributable to ordinary shareholders were CNY 0.21 and 0.21 respectively, compared with basic and diluted losses per ADS attributable to ordinary shareholders of CNY 0.61 and 0.61 respectively in fiscal year 2022. We have ample cash on hand with total cash and cash equivalents, restricted cash, and term deposits. Term deposits and short-term investments of RMB 1.3 billion as of December 31st, 2023, compared with RMB 1.6 billion as of December 31st, 2022. The decrease was primarily due to share repurchases of RMB 125.6 million in 2023 and an RMB 111.3 million increase in term deposits with the maturities longer than one year. I'd like to reiterate that our new businesses are currently in a critical phase of development as we support them in their early stages of growth. They are critical pieces to the foundation we are building for future growth and recognize that we are just at the start of this journey. We, however, are extremely confident that they will increasingly contribute to revenue growth in the quarters ahead. With this in mind, for the first quarter of 2024, we expect total revenues to be between RMB 290 million and RMB 310 million. The above outlook is based on the current market conditions that reflect the company's preliminary estimates of market and operating conditions and the customer demand. This concludes our key remarks. I will now turn the call to the operator and open the call for QA. Operator, we are ready to take questions. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Katrina Chu of Citigroup. 谢谢管理层接受我的提问。我的问题是，进入2024年，公司会如何看待2024年整体的一个医美市场以及2024年一季度的一个医美市场的情况？谢谢。 I'll translate myself. Thanks, management, for taking my question. My question is about the overall outlook of the medical aesthetic market in 2024 and also the market landscape of the medical aesthetic market in the first quarter of 2024. Thank you. 你好，谢谢你的提问。国家统计局公布了2月份的消费数据，我们能看到今年1到2月份的社会消费品零售总额同比增长6.7%。同时，信仰平台上的医美消费数据也在呈现持续修复的态势。随着经济的持续恢复以及我们产业化转型战略的稳步推进，我们对2024年以及未来的医美消费市场保持乐观。 According to data from National Bureau of Statistics of China, retail sales of consumer goods are gradually recovering, increasing of 6.7% year-over-year in January and February 2024. Consumption data from our medical aesthetics platform is also reflecting this trend, with a gradually improving microeconomic environment and our differentiated strategy taking hold. We remain optimistic about the growth perspective of the medical aesthetics industry in 2024 and over the long term. 我们观察到，随着中国医美市场的日趋成熟，用户结构性变化所带来的医美消费诉求和消费习惯也在发生巨大的改变。用户的成熟度在提升，医美市场也由低频高客单向高频高质和多元化倾斜。由此，不论是在以导流为主的医美电商平台市场，还是面向终端消费者的上游和机构端，单纯以价格战低价引流，既无法达到吸引优质用户的目标，甚至会降低自身产品的价值定位，继而失去更大的消费市场。 The Chinese medical aesthetics industry is maturing. Structural changes in consumer behavior are driving tremendous shifts in demand. As consumers mature, the market is trading away from low frequency and high transaction value towards high frequency, high quality, and diversification. As a result, e-commerce platforms and medical institutions are shifting their focus upstream and towards acquiring diverse traffic. Competing on pricing will no longer be an option to attract premium users. The old model will lower the value proposition of products and services and lead to a smaller shelf, wider market. 2024年，面对目标市场的变化，我们将在夯实专业医美平台的基础上，聚焦于三大业务板块的精耕细作，升级社区电商业务，采取与竞对差异化的运营策略，增加高端定制服务满足头部用户的医美需求。信仰优享着力为腰部用户提供最优性价比。同时，我们的上游业务将支持以上两种平台和用户群体，抓住轻医美市场的机遇，提升利润空间。 In 2024, these market shifts will continue. As a result, we will focus on refining our three businesses and further consolidate the positioning of our platform in the market. We will do this by upgrading our community proper business and adding high-end customized services, tapping into top-tier users by adopting a differentiated operating strategy from our peers. So-Young Prime will focus on offering the best quality-to-cost ratio for mid-tier users, and our upstream business will support both of these platforms and user groups, capturing opportunities in the Light Medical Aesthetics market and expanding margins. 谢谢。 Thank you. Our next question comes from Wei Han of FDT Securities. 唉，关律师你好。我这边想请教一下，就是我们如何看待近期医美直播被喊停这个事件，还有就是我们接下来如何判断这个市场监管的一个走势。 I'd like to ask, what are your thoughts on the recent suspension of medical aesthetics live broadcasting, and where do you think the regulation trend will go forward? Thank you. 唉，你好，谢谢你的提问。我们认为医美行业目前还是处在强监管的态势，监管对新的营销模式可能会有个观察期。一旦新模式触犯了医疗广告法的边界，还是会被叫停的。我们认为医美营销仍是会被严格限定在少数渠道以及监管认可的方式，例如搜索引擎、医美电商等。这个趋势对我们来说是间接有利的，更加凸显我们原有营销渠道的优势。 The medical aesthetics market continues to be regulated strongly. For any new marketing models that are deployed, regulators will require an observation period where they can stop any behavior that breaks the medical ad law. We believe medical aesthetics marketing will continue to be restricted to a few channels approved by regulators, such as search engines and e-commerce. This regulatory trend actually benefits us indirectly, as the value proposition of our existing legal marketing channels becomes more pronounced. 我们一直坚信，只有健康的市场才是企业长期发展并不断产生价值的根本。未来我们更多会在供给侧深耕，同时整合我们在机构、医生、用户等积累的核心生产优势，打造履约标准和服务标准，为用户提供高质量的服务体验。这些综合能力建立了我们强大的竞争壁垒，相比单纯的互联网模式，可以解决更深层次的问题，与其他竞对形成差异化竞争。 We maintain our belief that a healthy market is a foundation for long-term growth and value creation for companies. We will focus our attention on the supply side of the market going forward by integrating the core production advantage we have accumulated in terms of institutions, doctors, and users. This will also allow us to set standards for service quality and delivery, ensuring users receive a premier experience. These comprehensive capabilities will enable us to build a strong competitive barrier. Unlike the pure internet business model, we are in a position to solve issues at a deeper level, creating a differentiated model from our competitors. 谢谢。 Thank you. Next, we have a question from Chloe Wei of CICC. 唉，管理层你们好，就是感谢你们接受我的提问。对，我的这个问题其实是有关信仰优享的。那我想问一下管理层可不可以就它的这个，比如说对于这个 P&L 的财务端的影响，做出一些 color 的 share，然后同样的就是我们会如何去期待这个业务在 2024 年对这个财务的贡献。对，然后另外一方面就是我们投资人其实也非常的关心说，就是整个优享的这个在不同城市的扩张的策略。所以说就是我们也想看到，就是说如果 2024 年我们会有更多的这个 chain clinics，那么我们要如何去看待就是我们扩张的这个节奏以及这个前期的投资。 So let me translate myself. So my question is concerning So-Young Prime. Could management maybe share some more about the P&L contribution, revenue and margins, and what we have in 2023 and what we should expect in 2024? Also, could management share some color on the playbook in different cities in China? Since we are looking at more chain clinics in operation by the end of 2024, how should we expect the pace and investments? Thank you. 你好，谢谢你的提问。2023 年信仰优享从开拓到逐步成型，我们从最初的模式探索到规模增长，以轻资产高效运营的模式完成了优享从 1.0 到 2.0 的迭代，在轻医美爆发的巨大浪潮中抢占了先机。 Last year, So-Young Prime completed his strategic transformation into an exercise highly efficient platform and operational models, which helped us to take the lead in the surgery and Light Medical Aesthetics sector. 去年 8 月开始的优享连锁店的模式是对合作店模式的一次升级。我们组建了诊所运营团队，结合自有供应链在产品供给开发和创新的优势，推进轻医美机构标准化管理体系。在正式运营的三个月内就实现了单店的盈亏平衡。这一结果既反映出新氧在医美用户中的高口碑，也使我们对连锁店的推广有了坚定的信心。 The model clinic we opened last August is a logical next stop of our previous cooperation with institutions and products. We gathered an experienced clinic operating team to promote the development of a standardized management system for light medical aesthetics institutions that takes advantage of our supply chain innovative capabilities. Our model clinics could break even after only three months for formal operation, which reflects our strong reputation among medical aesthetics users and strengthens our confidence to begin exploring franchising opportunities. 24 年在现有合作店的基础上，我们会在全国六个城市新开十多家信仰自营的连锁店。开店的进度我们会依据财务盈利模型的严格测算和前期市场调研，并以市场变化为最终的考虑。 In 2024, we plan on opening more than 10 clinics in six cities nationwide. Each location has been selected based on data from our cooperation with institutions, strict operational requirements, probability, and deep market research. 谢谢。 That's all. Thank you. The next question comes from Joey Tan of Jefferies. 管理层晚上好，感谢接受我的提问。我是来自 Jefferies 的 Joey，代表 Thomas Chong 提问。我的问题是管理层能否与我们分享对上游供应链的展望？谢谢。 Let me translate myself. This is Joey from Jefferies on behalf of Thomas Chong. My question is, can management share with us the outlook for the upstream supply chain business? Thank you. 你好，感谢你的提问。在 2024 年的爱拉斯提会有新的产品型号上市，上游也会增加新的抗衰产品。从 2025 年开始，在当下热门的再生赛道，我们会有多款新产品陆续上市，包括胶原蛋白、童颜针。我们已经对这个赛道进行了布局。我们在医美的上游领域通过前面三年的积累，整个产品管线和销售团队以及整个平台的协同已经打磨起来。我们预计产品种类会增加，我们上游这块的收入和利润预计将会有非常好的持续增量。 Thank you for the question. We plan to launch a new body product in 2024 and also add a new anti-age product source through our supply chain business. In addition, from 2025, in the light demanded collagen category, we will launch various products, including PLLA, which will establish a strong presence for us in this vertical. With three years of operational experience, the synergies between our product development pipeline, sales team, and platform are now rapidly strengthening. We expect to add more products and continuously generate incremental revenue and profit growth from the supply chain business. 谢谢。 Thank you. Next, we have a question from Eve Li from Haitong Securities. 管理层晚上好，非常感谢这个提问的机会。我这边有一个小问题，主要是关于毛利率这一块想请教一下。我们的毛利率同比下降的原因是什么？以及是否方便展望一下未来的毛利率的趋势？ Let me translate myself. Thank you and good evening, management. I'm here to have a question about the profit margin, and I would like to know what's the reason for the year-over-year decrease in gross margin and where will margins trend going forward? Thank you. 好的，谢谢你的问题。我来回答一下这个问题。我们现在毛利的降低主要是我们收入结构的变化导致的。我们传统的信息服务和预约服务的毛利还是保持了比较高的水平。我们的上游的医疗，就是医美产品的销售毛利也比较稳定，但是低于信息服务和预约服务的毛利。此外，优享和今年第四季度发力的连锁，虽然业务进展速度比较快，但该业务还处于早期投入阶段，所以毛利率相对较低。我们相信随着我们在医美产业链布局的逐步落实，我们在各个业务板块预计持续为平台贡献利润。同时，随着上下游板块协同效应的逐步显现，整体利润水平在中长期会持续改善。 Okay, I will translate myself. The decrease in gross margin was mainly due to the changes in revenue mix. In Q4 2023, our sales of information and reservation services maintained high margins compared to those for sales of medical products and maintenance, which were lower, while revenue from new business such as So-Young Prime have already demonstrated their potential. It is still in the early stages of development with lower gross margin. As we strategically expand our presence along the medical aesthetic value chain, each of those new businesses are expected to increasingly contribute to our bottom line. As the synergies created by our presence both upstream and downstream strengthen, the profitability of our business overall is expected to improve in the mid to long term. Thank you. We are now approaching the end of the conference call. Thank you for your participation in today's conference. You may now disconnect. Have a good day.