Good morning, ladies and gentlemen, and thank you for standing by for So-Young's second quarter 2021 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 will now like to turn the meeting over to your host for today's call, Ms. Vivian Xu. Please proceed.
Thank you, operator. Thank you for joining So-Young's second quarter 2021 earnings conference call. Please know 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 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 call are Mr. Xing Jin, our Co-Founder, Chairman and Chief Executive Officer, and Mr. Min Yu, our CFO. At this time, I would like to turn the call over to Mr. Xing Jin. Xing, please.
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Thank you all for joining our earnings call for the second quarter of 2021. Thank you all for joining our earnings call for the second quarter of 2021. We are very pleased to report another strong quarter. Revenue grew to RMB 452 million, exceeding the high end of our guidance of RMB 450 million, an increase of 38% from the same period of 2020. Non-GAAP net income attributable to So-Young International Inc. reached RMB 74 million, an increase of 145% from the second quarter of 2020. Average mobile MAUs were 10 million, up 48% year-over-year. Total number of users purchasing reservation services were 245,000, up 44% compared with the same period of 2020. The number of paying medical service providers on our platform was 4,899, up 31% from the second quarter of last year.
During the quarter, the number of users from purchasing reservation services in dental treatments grew approximately 120% year-over-year to about 14,800, and the number of professional dental institutions on our platform grew to 2,950, increasing by more than three times from the same period last year. In the second quarter, we announced the acquisition of a controlling interest in Wuhan Miracle Laser Systems, the first medical laser company listed on the National Equities Exchange and Quotations, or NEEQ, exchange in China. The acquisition will further enhance our competitive advantage in the nonsurgical aesthetic segment and allow us to explore new cooperation opportunities with upstream equipment device and medical drug providers. Wuhan Miracle is mainly engaged in R&D, production, sales, and agent service for lasers and other photoelectric medical aesthetics equipment. It has more than 10 product lines, including both self-owned and licensed owned.
Wuhan Miracle covers the broadest range of products among photoelectric manufacturers and is able to solve diversified skin needs of different users. According to its reported results, the revenue for the first half of 2021 increased by 119% year-over-year, and net profit attributable to Wuhan Miracle for the first half of 2021 increased by 252% year-over-year. Our solid results and new strategy have enabled us to consistently improve our operations to meet the increasing changing demand from our end users and business partners, and expand our market share.
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Innovative technologies in medical aesthetics are driving an increasing awareness of aesthetic treatments and service among consumers. Notably, the popularity of non-surgical procedures to maintain healthy appearance or promote anti-aging benefits is constantly growing. In the second quarter, the revenue contribution of our non-surgical business increased to 46% of our total revenue, up from 40% in the second quarter last year. The reservation orders from non-surgical procedures increased by 40% year-over-year, and the reservation orders from non-surgical procedures accounted for 70% of total orders.
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Moving over to our operational strategy. Firstly, leveraging our community content and advantages in new media resources will continue to develop and launch fresh and highly successful products. In the second quarter, we have been stepping up efforts to recommend core products with good word of mouth to users on our platform, including Fotona4D, photorejuvenation, Hearty, and essential, which result in a year increase of over 100% for online orders. Online orders for Fotona4D even increased by 500% year-over-year.
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On the non-surgical product side, we continue to optimize the online transaction experience, increasing the number of SKUs on our platform and provided more transparent and attractive prices. We also launched an online consumer protection project, such as in advance compensation and medical beauty insurance. At the end of June, over 140,000 non-surgical SKUs were available on our platform, an increase of 41% compared with the same period last year.
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Secondly, we continue to strengthen the standardization of non-surgical procedures and enhanced our management and control of products and equipment to optimize user experience. The strategic investment in Wuhan Miracle will not only expand our service network for institutional clients but also improve our fulfillment service and ensure that we are able to offer authentic products to customers. With acquisition, our service in the non-surgical categories will become more diversified, creating a competitive moat in the long term.
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Lastly, to ensure our users are guaranteed only authentic products and don't have to worry about safety issues on aesthetics treatment and services, we will continue to deepen our cooperation with our network of medical device manufacturers in order to consistently screen drugs, medical device and service providers.
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We'll continue to develop more popular categories such as dental services. By working with institutional clients, we connected users with institutions and offer them premier dental services by bringing a standardized system to enhance the service quality of these institutions.
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On the regulatory front. Over the past few months, regulatory authorities have expressed their views and opinions on various matters such as antitrust, data security and medical aesthetics advertising, and issued a series of policies and guidance for multiple industries. We have taken this opportunity to reflect on our practice and our role as an industry leader, and engage in self-reflection and introspection. First of all, since our inception, we have established a stringent review and approval process for all doctors and institutions, as well as conducted rigorous review mechanism for content and service offered on our platform. In addition, following the guidance issued by regulatory bodies at various levels, we have an established internal review process and continue to improve the online information we provided of medical aesthetics services.
At the same time, we have also been actively engaged in the self-discipline of China's medical aesthetics industry by promoting platform governance and assisting our institution partners with compliance audits, and promoting a standardized and orderly development of the medical aesthetics industry.
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To summarize, we believe the Chinese medical aesthetics industry is well on the track of steady growth. As a leader in the industry, we have the responsibility to make industry better by promoting industry standards and providing authentic and truly valuable services for our users. Looking forward, we will leverage our competitive advantages in content, technology and our large user base, and continue to focus our efforts on user acquisition and expand our online presence into other segments of the industry. By making use of medical aesthetics as an entry point, So-Young will be built as the most trusted medical aesthetics and medical care platform in China.
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Let me invite Min to give us an overview of our result for the quarter before the operator will open the QA.
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 year-over-year basis. For the second quarter 2021, total revenues were RMB 451.8 million, up 37.7% year-over-year from RMB 328.2 million. Exceeded the high end of our prior guidance of RMB 450 million. The increase was primarily due to an increase in average revenue per paying medical service provider. The number of paying medical service providers on the platform was 4,899, an increase of 31.2% from 3,735 in the second quarter of 2020. The total number of medical service providers subscribing to information services on So-Young's platform was 2,236 during the quarter, an increase of 8.8% from 2,056 in the second quarter of 2020.
Within total revenues, information services revenue were RMB 360 million, up 53.8% year-over-year from RMB 234.5 million. Reservation services revenues were RMB 91.9 million, a decrease of 2.8% from RMB 93.7 million in the second quarter of 2020. Cost of revenues were RMB 58.8 million, up 15.9% year-over-year from RMB 50.7 million in the second quarter of 2020. Cost of revenues included share-based compensation expenses of RMB 3.8 million, compared with RMB 6 million in the second quarter of 2020. Total operating expenses were RMB 335.4 million, up 16.7% from RMB 287.4 million in the second quarter of 2020. Sales and marketing expenses were RMB 206.7 million, up 11.6% from RMB 185.2 million a year ago, primarily due to an increase in payroll costs associated with the expansion of marketing employees.
Sales and marketing expenses included share-based compensation expenses of RMB 1.6 million, compared with RMB 1.6 million in the corresponding period of 2020. General and administrative expenses were RMB 56.5 million, up 13.3% from RMB 49.8 million a year ago, primarily due to an increase in payroll costs associated with the expansion of administrative employees. General and administrative expenses included share-based compensation expenses of RMB 7.2 million, compared with RMB 14.2 million in the corresponding period of 2020. Research and development expenses were RMB 72.1 million, up 37.9% from RMB 52.3 million a year ago. The increase was primarily attributable to an increase in payroll costs associated with the expansion of research and development employees.
Research and development expenses from the second quarter of 2021 included share-based compensation expenses of RMB 3.6 million, compared with RMB 6.2 million in the corresponding period of 2020. Income tax expenses were RMB 11.1 million, compared with RMB 2.8 million in the second quarter of 2020. Net income attributable to So-Young International Inc. was RMB 57.6 million, compared with net income attributable to So-Young International Inc. of RMB 2.1 million in the second quarter of 2020. Non-GAAP net income attributable to So-Young International Inc. was RMB 73.7 million, compared with RMB 30.1 million in non-GAAP net income attributable to So-Young International Inc. in the same period of 2020. Basic and diluted income per ADS attributable to our shareholders were RMB 0.54 and RMB 0.53 respectively, compared with RMB 0.02 and RMB 0.02 respectively during the second quarter of 2020. Now for our balance sheet.
As of June 30, 2021, we had a total cash and cash equivalents, restricted cash and term deposits, and short-term investments of RMB 2.26 billion, compared with RMB 2.68 billion as of December 31, 2020. For the third quarter of 2021, So-Young expects total revenues to be between RMB 430 million-RMB 450 million, representing a 66.6%-69.7% increase from the same period in 2020. The above outlook is based on the current market conditions and reflects the company's preliminary estimates of the market and operating conditions and 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.
Thank you. We will now begin the question-and-answer session. If you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. If you ask question in Chinese, please repeat it in English immediately, and 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. Your first question comes from Thomas Chong of Jefferies. Please ask your question.
[Non-English content] Now I will translate myself. What are the company's view regarding the recent changes on the advertising guidelines regulating the beauty medical sector, which were issued by the State Administration for Market Regulation? How it will affect the company business moving forward? Thank you.
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Thank you. We noticed that documents issued by regulatory authorities since the beginning of this year have mainly been focused on supervising the practice of medical institutions in the medical aesthetic sector. We believe that such supervision is conducive to their long-term and healthy development of the entire industry.
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As an Internet medical aesthetics information service platform, since our inception, we have established a strict review and approval process for all the doctors and institutions we partner with, as well as content and product review mechanisms. We are committed to build strong governance across our platform and strive to curb any non-compliant activities.
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In terms of having medical information featured on our platform, in order to cooperate with So-Young, medical institutions are required to submit their state-issued business license, medical institution practice license and other documents issued by governance authorities, as well as pass our internal review and verification. We also require doctors to provide their qualification certificates and verified practice license before information can be published on our platform.
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In terms of publishing content on products and services, we have built a rigorous information display system equipped with risk control and anti-fraud systems. Information displayed by institutions must first meet our strict requirements. We have two additional review procedures, one automated and the other by manual inspections.
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We have also a professional compliance team that closely monitors State policies and standards in real time, which we then compile to optimize our platform's verification system and standardization process. We also have a strict set of violation information risk control model library. Because of professional internal risk control management and platform governance, we think that this should be the operational strength that differentiates us from our peers.
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Last May, we initiated a self-discipline campaign for China's medical aesthetics industry to promote platform governance. Regarding the draft Guidelines on regulating advertising in the medical aesthetic sector issued by the SAMR, we will provide our feedback through appropriate channels on the premise of protecting the legal rights and interests of consumers. Through positive and constructive feedback, we aim to create a voice for medical aesthetics professionals, and at the same time provide better services to our customers and promote a regulated and orderly environment for the development of the industry.
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Meanwhile, we also believe that with strict regulation and further execution of specific rules, offline medical institutions are required to enhance their services capability and medical level. Not blindly pursue traffic growth in marketing and user acquisition, and even cheat consumers with fake or special aids. Institutions will be more cautious selecting marketing channels. The enforcement guidance also clarifies that online platform operators' duties to perform contract and do the verification, and governance online platform compliance will be enhanced. In this regard, as the first mover in the industry to start and continuously establish self-discipline, we believe that So-Young will be benefited by the regulation in the long run.
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In the long term, we believe that the regulations will prove to be highly conductive to the healthy development of the industry. For So-Young, we are committed to adhere to all regulations, and will continue to further improve our internal review mechanism to full compliance and regular self-governance. To lead by example, we will remain proactive in intercepting medical aesthetics promotional information that doesn't comply to the rules. In order to offer authentic information and online services and promote better care in the medical aesthetics industry.
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Okay, thank you. That's all.
Our next question comes from Nelson Cheung of Citi. Please ask your question.
[Non-English content] So let me translate myself into English.
Thanks management for taking my question. My question is regarding to the business prospect. Can management share your views related to the impact of COVID-19 on your business? Can you share more details about the group trend going into second half of this year? My second question is related to your progress on your So-Young Pass, the SY Pass. Yeah. Thank you.
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In July and August, China faced the double impact of COVID-19 resurfacing in a few cities and the damages from flooding disasters. Operations of medical institutions were adversely affected in the 1st-tier and second-tier cities such as Shanghai, Chengdu, Nanjing, and Zhengzhou. As the situation got under control, medical institutions were able to resume operations and return to their regular growth trend.
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Looking to the business growth in the second half of this year. Firstly, policies, in particular regulations for medical aesthetics advertising, required institutions to conduct self-inspection first in the near term and pull unqualified products and treatments from their offerings. Meanwhile, the enforcement guidelines also set clear requirements for online platform operators to fulfill the duties imposed by laws. As a result, institutions will be more cautious about marketing in the near term.
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In the second half of this year, taking advantage of the rising popularity of non-surgical treatments, we will continue to implement our established strategy to grow the non-surgical categories, further penetrate and expand market share while maintaining our strength in the surgical category.
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As of the end of August, So-Young Pass has extended its network to 36 cities from 11 in Q1, and the number of institutions increased from 95 to over 160. The number of verified orders on So-Young Pass also increased by 40% in Q2 compared to Q1.
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That's all. Thank you.
Your next question comes from Leo Chiang of Deutsche Bank. Please ask your question.
[Non-English content] Thanks management for taking my question. My question is regarding to competition landscape. Can management share the latest competition landscape you have observed recently? Thank you.
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At current level of market competition, we believe it is no longer purely about competing for user traffic, but whether platform can really address the pain point for users and improve user experience. From the perspective of both regulation and better user experience, platform must be professional at all times and have in-depth knowledge of the industry.
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As the popularity of non-surgical category increases in demand, we will continue to strengthen the operation of non-surgical category and implement our established strategy to expand market share, on top of growing our entire medical aesthetics user base.
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Meanwhile, we are continuously strengthening our cooperation with other platforms to empower the entire medical aesthetics industry. For instance, we partner with JD.com to establish JD Health Medical Aesthetics channel so that consumers can experience and have easy access to professional and premier medical aesthetics services. Besides that, we also worked with AutoNavi to connect with other 1,000 institutions and established a consumer service for medical aesthetics users on the Amap platform. So-Young Pass has also achieved more strategic cooperations with Little Red Book, Pinduoduo, Kuaishou, and Weibo, and we hope to explore popular treatments in medical aesthetics, build a premier shortlist of select products, and expand our service scope to continue empowering more institutions.
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That's all, thank you.
Your next question comes from the line of Vincent Yu from Needham & Company. Please ask your question.
[Non-English content] Thank you, management. Thank you for taking my question. I have two questions, one is to follow up on the impact on the regulation, so my question is more focused on how the regulation impacts the traditional industry structure and the traditional practices in this industry, and how we view this as a potential opportunity.
Second question is on the acquisition. How should we think about the strategy behind this acquisition? What kind of cooperation we will have between this manufacturing company and our institution clients? Also, what kind of motivation model we are hoping to see for the future? Yes, thank you.
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We believe that the regulation action against the non-compliant practice and strict regulatory requirements will benefit the healthy development of the whole industry in the long run. With tightening of regulations, local regulation will further clarify and detail the approval system and process for institution adopters. The usage specifications for drugs and equipment will be strengthened, forming more effective protection for manufacturers and institutions producing, distributing and using genuine and authentic products.
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Beyond entry compliance, we are seeing that the stricter regulations will to some extent drive institutions to raise the level from their marketing customer acquisition to internal operations so as to improve service quality. Besides educating consumers to distinguish and select services, institutions need to retain clients with good service and skills. An institution won't survive for long by focusing only on customer acquisition and ignoring management and service quality.
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Tighten market regulation has significant driving effect on standardization and going online for the entire medical aesthetics market, particularly the non-surgical medical aesthetics market.
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Yes. I will try to answer your questions about our acquisition of Miracle Laser. As mentioned earlier in the case remarks, in the previous part, Miracle Laser is one of the biggest manufacturer for laser medical machineries in China. We think the synergies are going forward between the platform at So-Young and the further cooperation with branded manufacturers like Wuhan Miracle will have a new complete service experience for users on the platform. At the same time, we can make sure the services taken by the customers will have a very consistent experience. It also will have certain cost saving effect, we will provide our platform customers directly to the clinic or hospitals who have Wuhan Miracle's medicine instruments or equipment directly, and we will share the revenues between that. It will be a showcase attempt for us for the further cooperations with upstream manufacturers in medical aesthetic service industry.
Going forward, we will see further cooperations with other branded manufacturers to provide consistent and, of course, the consistent screening drugs and medical devices and service providers to our customers. At the same time, Wuhan Miracle itself is a very well-run business. They have been listed in the NEEQ exchange in China for almost six years, being highly compliant in terms of financial control and internal control. They have been experiencing, of course, the industry as a whole has been hit by the COVID-19 in 2020, but they have recovered quite well in the first half of this year. We feel very positive for its going forward growth after being acquired by us and our cooperation, we're adding more elements for the business going forward. Okay. That's it. Thanks.
Thank you.
Our next question comes from the line of Queenie Ye from CICC. Please ask your question.
[Non-English content] Thanks, management, for taking my question. Congrats on your strong performance. We noticed that the absolute value of sales marketing expenses have declined sequentially. Can you please comment on any marketing and promotion trends in the second half of this year? Thank you.
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We are planning to execute more targeted brand placement to strengthen brand awareness among our users. At the same time, we will leverage the advantage of our platform and conduct performance-based marketing on third-party platforms with premium content to establish our brand as professional medical aesthetics platform.