VisionSys AI Inc.

Second-quarter 2023 total net revenue was RMB 545 million, down 16% from RMB 649 million a year ago, but up 42% sequentially. Gross profit was RMB 278.5 million and gross margin was 51.1%; cost of revenues was RMB 266.3 million, down 2.2% year over year. Operating loss was RMB 6.8 million, compared with operating income of RMB 48 million in the prior-year quarter and an operating loss of RMB 58.8 million in Q1. Net income was RMB 8.3 million, boosted by a RMB 26.8 million disposal gain from the college collaboration-related business carve-out; diluted income per ADS was RMB 0.67 and non-GAAP diluted income per ADS was RMB 0.75. For the first half, net loss narrowed to RMB 41.6 million and non-GAAP net loss to RMB 39.6 million. Cash, cash equivalents and restricted cash were RMB 368.1 million at June 30, 2023, down RMB 5.9 million from year-end 2022; operating cash outflow was RMB 20 million and capex was RMB 11.6 million. Management did not provide formal next-quarter or full-year revenue/EPS guidance on the call.

Nancy Ying Sun said the quarter reflected easing external uncertainty, better customer acquisition, and stronger delivery in the core STEAM business. She emphasized a more focused strategy: cutting out the college collaboration-related business, improving financial health, and concentrating on To-C IT professional and STEAM education. Her tone was optimistic but measured, noting that IT professional education may need more time to recover while management adapts course offerings to digital transformation and AI demand.

Xiaobo Shao walked through the improvement in operating results, highlighting the sequential 42% revenue rebound, the decline in operating loss to RMB 6.8 million, and gross margin of 51.1%. He attributed lower costs to headcount reduction, lower rent and depreciation from center closures, and lower G&A due to the prior-year class action provision, while noting R&D rose 21.9% to RMB 15.7 million to support operating system improvements. He also pointed to RMB 76.6 million received from the sale of two buildings, RMB 20 million of operating cash outflow, and RMB 368.1 million in cash and restricted cash at quarter end.

The main analyst question asked what drove the quarter-over-quarter improvement besides the better operating environment. Nancy answered that the lift came from improved social mobility and lower customer acquisition/delivery costs, more youth events like challenges, competitions and camps that supported word-of-mouth, and favorable policy support for programming and STEAM education. Management framed the market as stabilizing with improving momentum, but they also reiterated that the adult professional education business is recovering more slowly.