Good morning, ladies and gentlemen. Thank you for standing by for So-Young's First Quarter 2021 Earnings Conference Call. At this time, all participants are in 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, Mr. Mona Qiao. Please proceed.
Thank you, operator, and thank you for joining So-Young First Quarter 2021 Earnings Conference Call. Please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause the 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. Joining us today on the call are Mr. Xing Jin, our co-founder, Chairman, and CEO, and Mr. Min Yu, our CFO. At this time, I would like to turn the call over to Mr. Xing Jin. Please, continue.
[Foreign language]
Thank you all for joining our earnings call for the first quarter of 2021. We are very pleased to kickstart 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 the quarter. We have seen increasing level of interest from our end users as well as an increase in interactive activity across our platform.
[Foreign language]
During the quarter, we continued 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 appreciated our unique value proposition by working to improve user engagement and retention by providing better user experience and by reinforcing quality content that drives efficient decision making.
[Foreign language]
In terms of our medium-term 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.
[Foreign language]
Second, we continue to improve user experience and strengthen our digital capabilities. Through deepening cooperation with existing institutional partners and forming relationships with new ones, we are able to offer a wide range of 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 consultation and after-sales service improve user experience from online to offline due to the guarantees on our platform. In our ecosystem, So-Young is not just playing the role of transaction facilitator between user 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.
[Foreign language]
Third, we are improving user acquisition efficiency, primarily through brand exposure and marketing. In early this year, we partnered with Zhejiang TV in this New Year's Gala show, and Hunan TV in a variety show called A Journey for Love. These events became hot topics among users and elevated the So-Young 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 GMV for treatments in body shaping categories grew by 25% compared with the results of Double 11 last year.
[Foreign language]
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 these circumstances. Because of their growing trust in the So-Young platform, more users made purchase decisions based on our recommendations and endorsement system. One great example was So-Young Pass. Since it was launched in Q4 last year, over the past six months, the number of selected products in So-Young Pass program have increased from 7- 37, and now cover 95 institutions and 11 cities. So-Young Pass drew the attention of users and became very popular.
Institutions were also impressed with this performance in terms of attracting end users.
[Foreign language]
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.
[Foreign language]
Let me invite Min Yu to present the financial results for this quarter before, media will open up for the Q&A.
Thanks, [Cass. Please be reminded that all amounts quoted here will be 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 RMB 360 million, up 97% year-over-year from RMB 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 So-Young'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 an increase 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% 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 increased 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 benefit 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 31, 2021, we had total cash and cash equivalents, restricted cash and term deposits, term deposits, and short-term investments of RMB 2.6 billion, compared with RMB 2.7 billion as of December 31st, 2020. For the second quarter of 2021, So-Young expects total revenues to be between RMB 430 million and RMB 450 million, representing a 31%-37.1% increase from the same period of 2020. The above outlook is based on the current market conditions and reflects the company's preliminary estimates of 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. Yes, as a reminder, to ask a question, you will need to press star one on the telephone, and to withdraw your question, please press the pound or hashtag key. Please standby as we compile our Q&A roster. 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, you just press one for your question. First question comes from the line of Thomas Chong of Jefferies. Your line is open. Go ahead.
[Foreign language] Thanks. Thanks for taking my question. Can you share with us your user growth in 2021? Can you share with us the user monetization rate and how we should view the trend in the future? What is the MAU target for 2021? What is the trend of market utilization in the future? Thanks for management for taking my questions. Can management talks about how we are going to operate our users 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.
Okay. I will be answering this question. 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 our MAU target and the guidance, I think although we never provide that guidance in the previous quarters, we still see positive increase in terms of our MAU. For the first quarter of average MAU is around 8 million, 8.4 million. 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 expand our sales marketing budget?
As you can see, in the first quarter results, we did have a bigger or larger than normal or previous quarters spending in sales and marketing. Excluding those payrolls, we have around RMB 192 million spent on the customer acquisition. Within that, we have around RMB 102 million have been focused on branding, which we associated with the TV shows, as mentioned earlier in the previous quotes. We also, in terms of promoting our Slim Festival in March, we did spend a large campaign offline with Focus Media. That's the extra spending 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.
If that means 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 40% of total revenue. That's the general rule in the previous years. Although we spent more in terms of branding in the first quarter, going forward, we have already planned our branding expenditure for second quarter, third quarter, and fourth quarter. 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 an earlier spending to dedicate promotion our March Slim Festival, that's the case.
Going forward, we will still to spend half our budgeting sales and marketing on branding and half of that on traffic acquisition. It won't have consistent large amount of sales 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 for budget side or expenditure side. For do we have any focus on customer conversion and what's the monetization strategy and going forward for the allies of our traffic acquisition?
For that part of the question, we think in 2020, we did see a large growth of MAU. We also suffered by the COVID-19 impact. We see the conversion is relatively lower compared to previous years. The efficiency looks lower than previous years. Now, we do see the recovering trend 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 a consistent customer conversion improvement in the next few quarters. That's my answer.
Thank you. Our next question comes from the line of Leo Chiang of Deutsche Bank. Line is open. Please go ahead.
[Foreign language] 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 available. Okay. Thank you.
Okay. First, according to Frost & Sullivan report, the takeoff online customer acquisition spending by medical aesthetics 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. 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 paying medical service providers on our platform was up more than 40% to the number of more than 4,700, thanks to our target user base and our strong brand recognition among users.
Lastly, we think that with improvement 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 contribution of value in the industry is increasing. Institutions will maintain their preference for So-Young when they are allocating their spendings. Thank you.
Thank you.
Thank you. Our next question is from Shiqi Ge of CICC. Please go ahead.
[Foreign language] Thanks management for taking my question. I notice that we have recently signed a cooperation contract with Bloomage Biotechnology. Could you provide more detailed direction for future cooperation with upstream manufacturers or suppliers? Thank you.
[Foreign language]
Going forward, we will continue to strengthen cooperation with medical product manufacturers to have better control over our user experience. Let me elaborate one event. We just entered an inclusive, comprehensive strategic cooperation agreement with Bloomage Bio for its skin booster products. According to the agreement, we will partner with Bloomage and help the latter on two strategic initiatives. One is hyaluronic acid program and one is creating the Future Medical Aesthetic Alliance. We think that we will become the strategic partners to help each and manage medical and aesthetic service providers. Also, we think that in several ways we will provide comprehensive support like including product R&D and new product training. In addition, we have also developed a package solution for its hyaluronic acid program. As the largest medical aesthetics platform in China, we will maintain our leadership in the industry and enable efficient connection between consumers and business.
Thank you. Next question from the line of Vincent Yu of Needham & Company. Please go ahead.
[Foreign language] Hi management, thanks 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. Management 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 a competitive edge in the life category? For the surgical treatments, have we returned to a normal state compared to 2020? My second question is about the So-Young Pass. Can management give us more color on So-Young Pass? How much revenue contribution can we expect to see and how many target cities we are planning to enter this year? Thank you.
[Foreign language]
First, the medical aesthetics market as a whole is under healthy recovery. We see that the users' willingness to purchase and their interest keeps increasing. If you see the number that during the first quarter, MAU on our platform reached 8.4 million, and maintaining a very good rate of growth. In addition to the content consumption, our user average time spent and the interaction with institutions and doctors both increased significantly year-over-year. Your question is on the surgical booking. We could see that the surgical booking gradually recovering and the number of reservations has returned to the level before the epidemic. The total GMV is still a bit behind of that. Non-surgical bookings kept a strong momentum. We can see that during the Slim Festival in March, daily average GMV for injection treatments increased by 62% compared with the Double 11 last year.
We still see that the injection, skincare, and anti-aging remain the 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 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 edge of our platform in content and community construction, and also enhance consumer protection and optimize user experience on our platform.
[Foreign language]
We first of all, to improve the online user experience for product units and enhance user trust on our platform. We do it in three ways. One is, of course, increasing the total SKU supply. Secondly, we also refine our product library, enhancing standardization and improving description of service and SKUs. Third, we refine payment and after-sales warranty systems to protect the whole user experience. You could see that we separate our non-surgical treatments. 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 So-Young Pass are widely recognized by our users and we successfully improve the performance of promised contract terms, which could focus in to acquire those mid to high-end customers group. Later we enhance cooperation with upstream manufacturers through our matrix of So-Young Ambassador Program, P UGC and the new media content. It is in an 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 shopping events like the Anti-aging Festival and the Slim Festival, as well as market campaigns. Thank you.
[Foreign language]
Referring to your question about the So-Young Pass. Since the launch last October, So-Young Pass program has now expanded to 11 cities with more than 90 institution partners. In terms of the product selection, we regularly hold event to select products for our So-Young Pass program and consistently optimize our SKUs, especially for the non-surgical product standardization. We have expanded our standardized category to 30 plus. This allow us to establish standards and discretion, transparency in the non-surgical sector. Meanwhile, in terms of the order fulfillment, we saw the complaint rate for the products under the So-Young Pass program largely below those on our main apps for the reservation products. At the revenue level, since the So-Young Pass have not scale up yet and did not contribute a meaningful revenue, at this moment we still give the subsidy to our end users.
We did not separate a different line for disclose more detailed number on the revenue level of So-Young Pass, but we are generally saying that the total take rate for the So-Young Pass program was higher than other products. Thank you.
[Foreign language]
Thank you. Yes. Ladies and gentlemen, this is conclude today's conference call. Thank you for participating.