So-Young International Inc.

Ladies and gentlemen, thank you for standing by for So Young's first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After management give 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. Mona Chow. Please proceed, Mona.

Thank you, operator, and thank you everyone for joining So Young's fourth quarter 2025 earnings conference call. Joining me today on the call is Mr. Xin Jing, our co-founder, chairman, and CEO, and Mr. Nick Jaff, staff of OPE. Please note that the discussion today will contain four looking statements made under the applicable law. Finally, please note that unless otherwise stated, all figures mentioned during the conference call are in RMB. At this time, I'd like to turn the call over to Mr. Xin Jing. Hello, everyone, and welcome to today's conference call. In the fourth quarter of 2025, we recorded total revenues of 297.3 million. Net loss attributable to So Young was 33.1 million. And non-GAAP net loss attributable to So Young was 31.5 million, primarily driven by increased investment to expand our athletic centers. We believe these investments are laying a solid foundation for our long-term growth. In the fourth quarter, we continued to vacuum time of water-gold integrity and expanded our network of athletic centers in K cities. Our branded athletic centers, So Young Clinic, operates exclusively in core commercial areas across China's first and second tier cities. We are increasing store density in these markets to make our centers more special and convenient. By offering high-quality, cost-effective, and standardized services, we are acquiring a loyal and recurring customer base. So Young Clinic is gradually becoming our main growth driver. We are also reducing customer acquisition and procurement costs through our vertical integration and expect to improve cost efficiency further as we scale.

We are also increasing our customer acquisition and procurement costs through our vertical integration and expect to improve cost efficiency further as we scale. and expect to improve cost efficiency further as we scale. calculate a total of 0. Советcoin supplies can provide 12- visitals.

As of the end of Q1, we operated 23 so-called clinic centers in nine major cities including Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Chengdu, Wuhan, Chongqing, and Changsha. Among them, 18 centers have achieved positive monthly operating cash flow and 16 centers are profitable on a monthly basis in March. Value from our athletic center business reached 98.8 million, up .6% -to-quarter, and .4% -over-year. Total verified paid visits exceeded 45,500, up .5% -to-quarter, and .3% -over-year. Total number of verified paid athletic treatments performed surpassed 92,900, up 14% -to-quarter, and .4% -over-year. Customer satisfaction remains high at 4.98 out of 5, reflecting our commitment to maintaining the highest level in service delivery. Going forward, we plan to further expand our network and increase store identity in existing cities.

In the first quarter, we have launched a series of brand events around the theme of the Natural Energy season. We have co-hosted an online quick-share exhibition in Beijing and Shenzhen, and we have implemented a second-time broadcast in online card-calling, which further expands the brand's influence. In the Natural Energy Experience Zone, consumers have the opportunity to experience the popular e-commerce project, and professional doctors provide comprehensive scientific explanations to help consumers understand e-commerce, and experience the natural and healthy aesthetic concepts that brands advocate, and break the cold and technological impression of the e-commerce In addition, we continue to optimize the e-commerce service project. According to market feedback, we have lowered the price of some of the regular products, and increased the focus of the products. In

Q1, we launched a Natural Energy Event-wide campaign with offline pop-up events featuring artists in Shenzhen and Beijing. These offline events were complemented by online sign-up activities to broaden site engagement and reach. Each event also featured an experience zone, allowing customers to try popularized medical aesthetic services like IPL and ultrasound-based anti-agen treatments with licensed doctors on site to explain the science behind the treatments. This interactive approach helped demystify the overall technical nature of the medical and aesthetic industry, and reinforced our value proposition of natural, healthy beauty. We also optimized service offerings and concentration them in our branded aesthetic centers, while also removing symptom treatments with low demand based on our user feedback. To further expand our portfolio, we partnered with premium skincare brands, skin suitables, to launch new cold treatment solutions. Additionally, we allocated additional marketing resources and implemented sales incentives to boost revenue contribution from our proprietary products. This was done to improve overall growth margins for our aesthetic centers.

On

the upstream, we advanced our comprehensive medical aesthetic supply chain, focusing on products developed in-house and through exclusive partnerships. As of Q1, the number of institutions we served with supply chain solutions for injectables grew to over 1,500. The number of customers we served with in-house and in-house products was about 1,500. The shipment of elastic reached approximately 27,900 units in Q1, up roughly 14% year over year. Our POP business, which remains a fundamental pillar, continues to contribute profit and traffic while supporting the growth of our aesthetic centers and upstream business. In Q1, GMV for Verified Medical Aesthetic Services reached approximately 300 million, with per capita installed GTV growing by 4% year over year. Looking ahead, we see significant long-term potential. For our aesthetic center business in China, we aim to build a differentiated nationwide light medical aesthetic chain with strong brand recognition. Over the past few quarters, we have scaled both store count and density. In April, I personally increased my shareholding in Soyang by approximately USD 4.1 million, reaffirming my confidence in our long-term growth.

We believe that building a brand with a high quality and high control of aesthetic chain is the next step to achieve sustainable growth. The success of the new product model in the retail industry is the key to the success of the new product model in the aesthetic field, with high-quality products, high cost-effectiveness and strong supply chain control. The key to the success of the new product model is that it has achieved quality control and cost control, thus creating attractive products that attract users to the store. This model not only effectively increases the consumption of people, but also strengthens the user's connectivity. In the medical industry, we believe that high-quality and low-cost services also have strong supply chain capabilities.

As our legacy for business searches its natural growth style, we believe the key to our next phase hinges on developing our aesthetic center business with full control over the supply chain, drawing inspiration from the Sam's Club retail model. We are pursuing a strategy centered on proprietary products, value for money pricing, and -to-end supply chain management. Sam's Club's success was built on exclusive high-quality products that are tightly controlled for quality and cost. These products not only attract customers, but also drive higher average spending and customer loyalty. In the medical aesthetic sector, we believe that high-quality proprietary products and services and fair prices have similar potential.

We aim to

become Sam's Club of the medical aesthetic industry. Over the past few years, we will build N-shaped and high-quality products that will be able to deliver a safe and more efficient service. We are also working on the -to-end capabilities, including vertical upstream integration and proprietary products through acquisitions and long-term partnerships. We now own our exclusively distributed chemical devices and injectables. We expect to bring several new products to market in the next two to three years, offering our customers even greater value. We will continue to deepen our supply chain capabilities and improve service quality to deliver a safer and more effective medical aesthetic experience. Now I'll hand over to our staff, Nick, who will walk through the financial results followed by the Q&A session.

Hello, this is Nick. Please note that all amounts are quoted in RMB. Please also refer to our earnings release for detailed information about our comparative financial performance on a -over-year basis. Total revenues during the quarter were RMB 297.3 million in line with our guidance, and down .6% -over-year, primarily due to a decrease in the number of medical service providers subscribing to information services on our platform. Information reservation services and other revenues were RMB 142.9, down .1% -over-year, primarily due to a decrease in the number of medical service providers subscribing to information services on our platform. Aesthetic treatment services revenues reached RMB 98.8 million, a remarkable .4% -over-year increase, primarily due to the expansion of our aesthetic center business. Sales of medical products and maintenance services were RMB 55.6 million, down .7% -over-year, primarily due to a decrease in order volume for medical equipment. Cost of revenues were RMB 151.4 million, up .1% -over-year, primarily due to the expansion of our aesthetic center business. Within cost of revenues, cost of information reservation services and others were RMB 40.7 million, down .1% -over-year, primarily due to a decrease in cost of services associated with SoYang Prime. Cost of aesthetic treatment services for RMB 80.3 million, up .6% -over-year, primarily due to the expansion of our aesthetic center business. Cost of medical products sold and maintenance services were RMB 30.4 million, down .4% -over-year, primarily due to a decrease in costs associated with the sales of medical equipment. Total operating expenses were RMB 189.3 million, down .4% -over-year. Sales and marketing expenses were RMB 103.4 million, down .7% -over-year, primarily due to a decrease in expenses associated with branding and user acquisition activities. T&A expenses were RMB 53.7 million, down .7% -over-year, primarily due to a decrease in share-based compensation expenses. RMD expenses were RMB 23.1 million, down .9% -over-year, primarily attributable to improvements in staff efficiency. Income tax benefits were RMB 1.6 million, compared with income tax benefits of RMB 2.6 million in the same period of 2024. Net loss attributable to Soyang International Inc. was RMB 33.1 million, compared with net loss of RMB 21.2 million during the same period last year. Non-GAAP net loss attributable to Soyang International Inc. was RMB 31.5 million, compared with non-GAAP net income attributable to Soyang International Inc. of RMB 4.1 million during the same period of 2024. Basic and diluted losses per ADS attributable to ordinary shareholders for RMB 0.32 and RMB 0.32 respectively, compared with basic and diluted losses per ADS attributable to ordinary shareholders of RMB 0.21 and RMB 0.21 respectively during the same period of 2024. We have maintained a robust cash position with cash and cash equivalents, restricted cash and term deposits, term deposits and short-term investments totaling RMB 1.1 million as of March 31, 2025. Moving to our outlook, for the second quarter of 2025, we expect aesthetic treatment services to be used in the future. and the capital and the capital revenues to be between RMB 120 million and RMB 140 million representing .3% to .1% increase from the same period in 2024. This outlook reflects our strategic decision to prioritize long-term value creation over short-term financial optimization as we continue to invest in expanding our branded aesthetic center network and refining our vertically integrated business model. Inspired by Sam's Club, our approach is anchored by control of the supply chain proprietary product development and standardized service delivery. This already has an impact, demonstrating its potential to improve customer retention, lower customer acquisition costs and enhance operational consistency. We believe this model will be instrumental in redefining cost effectiveness in the medical aesthetic sector, helping us better address the expectations of increasingly rational and quality conscious customers. Looking ahead, as we deepen execution across our self-operated and partner networks, we expect this model to support more resilient margins and greater scalability across markets. This concludes our key remarks. I will now turn over the call to the operator and open the call for QA. Operator, we are ready to take questions.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. And your first question comes from Yibing Li with Guotai Hightong Securities. Please go ahead.

Thank you for the opportunity to ask questions. Good evening, I am Li Yibing, an analyst at Guotai Hightong Securities. I would like to ask about our youth clinic. I would like to ask the operator what is the difference between our youth clinic and traditional beauty and beauty institutions. Let me translate myself. Good evening, management. Thank you for taking my questions. I would like to ask about the youth clinic. How is it different from the traditional medical institutions like Meilai and Eastar? Thank you.

Our aesthetic center business is fundamentally different from traditional models by the likes of Meilai and Eastar. In short, these institutions, if by dialing operational model, they offer a broader range of services, require larger clinics, rely heavily on -to-date doctors and consultants, and generate higher per-customer spend but with less frequency. In contrast, our clinics use a fast casual model. Our model offers more focused services, require less clinic space, and are available in more locations, depend less on individual doctors, and generate lower per-customer spend but with higher frequency. Most specifically, while service offerings, Meilai and Eastar provide a broader range of procedures including surgical treatments such as double eyelid surgery, and They also offer services like skin care, anti-aging, hair removal, body contouring, hair transplants, and intimate care. Their customers primarily seek visible transformative changes. In contrast, our clinics exclusively focus on surgical and anti-aging treatments. They do not offer surgeries or other high-risk procedures. Our customers mainly seek maintenance and rejuvenation services.

2.

Per-customer spend and visit frequency. Meilai and Eastar generate high per-customer spend but with lower frequency. Our treatments on the other hand are priced around RMB 1,000 but with higher frequency. Typical customer spend is roughly RMB 2,000 with loyal customers visiting 6 to 8 times per year.

3. Single-customer spend and the difference in the number of customers. Meilai and Eastar are usually in a city, a large store. 4. Single-customer spend and the difference in the number of customers. Meilai and Eastar are in a city, a large store. 6. Single-customer spend and the difference in the number of customers.

7. Single-customer spend and the difference in the number of customers. 8. Single-customer spend and the difference in the number of customers. 9. Single-customer spend and the difference in the number of customers. 10. Single-customer spend and the difference in the number of customers. 11. Single-customer spend and the difference in the number of customers. 11. Single-customer spend and the difference in the number of customers. 12. Same-customer

spend and the different number of customers. 13. Services provide online service.

For user experience, MyLite and EF-3 operate exclusively through offline channels. In contrast, leveraging our strong Internet DNA, we offer a hybrid experience that combines in-person treatment with a comprehensive digital platform. Through the SoYang Clinic app and our extensive online female private domain community, users can explore treatment options, compare services and make purchases and bookings online at transparent and cost-effective prices. After treatment, customers can review skin test results, view before and after photos, and receive timely care instructions, all conveniently accessible through the app. Yesterday, we focused on the service delivery phase of the value chain. In contrast, we have built upstream supply chain capabilities in 2021. This is highlighted by the acquisition of Pan-American laser as an extensive pipeline injectable product. This allows us to offer highly effective services. In summary, our aesthetic sector business was defined using a highly standardized model that's ideally positioned to be expanded. As we all know, the key to successful chain operations lies in scale, and this is where we clearly have an advantage. Thank

you. And your next question comes from Nelson Cheung with Citibank. Please go ahead.

So let me translate the question in English. Thanks, Benjamin, for taking my question. As the clinic network grows, will CAPS become a burden for the company? Is this model sustainable? Thank you.

We place great emphasis on the health of our business. While we continue to carefully expand our network, we remain prudent in managing CAPS to ensure a financial sustainable model. Currently, we expect to open around 30 new clinics per year. Each new aesthetic center is carefully selected for its location and ability to achieve profitability, which helps us keep overall cost within a manageable range. At the same time, we are actively planning to roll out a franchise model. This will help accelerate our geographic reach and network density while reducing CAPS pressure, having the weight for the asset-wide expansion. Operational efficiency is also improving. As of Q1, the majority of our aesthetic centers have achieved positive operating cash flow. With increasing economics of scale and financial stability, and further dilution of fixed costs, we are confident in the long-term profitability of our aesthetic centers.

Thank you.

Thank you

for the

opportunity to ask this question. I am He Jingpan from the Center for Central Places. I have two questions for you. First, how does Qizhi Jiguang cooperate better with the company's main business? Let me briefly translate for myself. Thank you, management, for taking my question. I have two questions here. First is, how does Miracle Laser create more synergy with the company's core business?

With

the full integration of Miracle Laser, we have efficiently consolidated product talent and organizational processes to improve R&D capabilities. This positions Wuhan Miracle Laser as a market-oriented upstream platform that creates strong synergies to support our growth model. As the leading provider of aesthetic laser devices in China, Wuhan Miracle Laser's proprietary R&D capabilities allow us to supply our aesthetic centers with high-quality, cost-effective equipment, such as our flagship Youth IPL project. With other new products in the pipeline, this not only reduces reliance on high-cost imported devices, but also supports consistency across our centers for their accelerating expansion.

In addition, Qizhi Jiguang has a unique advantage in the service long-term market. Compared to traditional social enterprise, it focuses on service -to-head facilities, and Qizhi Jiguang has more than 5,000 facilities to serve. It covers a large number of medium-sized facilities. When facing long-term market facilities, it has a wide base of channels and operating experience. As the new R&D network continues to expand, both sides will explore the 2B2C model together to achieve the collaboration and innovation of the equipment and service end, further improving user experience and business efficiency, and building a more competitive one-way industrial cycle.

Wuhan Miracle Laser also holds a unique advantage in serving China's long-term aesthetic market. While most manufacturers focus on the leading institutions, Wuhan Miracle Laser has served over 5,000 clients with deep experience and broad distribution among small- and medium-sized clinics. As our aesthetic center network grows, we aim to jointly explore a 2B2C model, integrating devices and services delivery to improve user experience, business efficiency, and ultimately build a more competitive ecosystem. Thank you.

Your next question comes from Daisy Chen with Hightong. Sorry, it will be a follow-up from Hejing Pen.

I have a second question. How would the ongoing trade tensions between China and America impact the company's business? Thank you.

Hello. Trade tensions primarily

affect the aesthetic industry in two ways. Change in cost structures and shifts in the competitive landscape. For Soyang, the direct impact is limited, but we also see this as an opportunity to strengthen our domestic supply chain and support import replacement. From the cost perspective, the impact on our aesthetic center business is minimal. Only one of our main offerings uses U.S. imported equipment and consumables. Thermage, which accounts for less than 10% of total revenue at our aesthetic centers. If tariffs drive prices higher, we are well positioned to pivot to alternative products that offer similar results without compromising user experience.

Compared to the U.S., trade tensions have a more significant impact on the upper-right industry chain. The company has also been the ambassador for several imported products from the American Saitama company, Guang Zi Nuff BBL. If the tariff war continues, the sales of these products may have a negative impact. That

said, the impact on the upstream may be higher. Our American laser currently distributes several imported devices, including Saitama BBL treatment. Tariff increases could affect the pricing and sales volume of these products.

We believe that the trade war has brought about a structural change in the industry. For the new-comers, it is more of a structural opportunity, not a negative impact. We will continue to play the role of a comprehensive industry chain, and continue to promote the upgrade of the domestic and American supply chain. In

conclusion, we see this as opportunities rather than threats. We will continue leveraging our vertical integrated capability to upgrade China's aesthetic supply chain and deliver high-quality, cost-effective solutions to consumers.

Thank you.

Thank you.

And your next question is from Daisy Chen with Haitong. Please go ahead.

Thank you, Mr. Director. We see that the company has a good financial control and a good cash flow. We would like to ask the company how to plan the future investment and cost optimization, and whether it can make a comprehensive financial improvement. Thanks for taking my question. We see that the company has a very good ability on cost and expense control in Q1. We also noted that the cash balance is efficient. My question is, can management please elaborate more on the company's future investment plan and also the cost reduction plan? And do you expect further improvements in the overall financial performance? Thank you.

We are encouraged by the early results our aesthetic center business is generating and remain confident in its -long-term profitability. In March, 18 centers have already achieved positive monthly operating cash flow. Among them, 16 centers are profitable on a monthly basis, demonstrating the viability and efficiency of our business model.

We will continue to maintain a steady and consistent -to-door flow, and keep the annual direct -to-door flow in a reasonable range. At the same time, we will actively promote the preparation of the home mode to achieve a more sustainable and affordable expansion.

Going forward, we will maintain a measured pace of self-operated aesthetic center expansion, and we will carefully manage new openings in a disciplined manner. In the meantime, we are actively preparing the launch of a franchise model to enable lighter, scalable growth.

At the same time, we are also promoting the cost optimization and profit improvement of our chain business by optimizing the quality of the product, strengthening the cooperation with upstream, and improving the efficiency of single-celled people. In the near future, we will also invest more resources to support the growth of free products and sales, which will further enhance our profitability.

We will also improve cost control and growth margin. We have also increased investment in growing our proprietary product lines, which will further support margin expansion.

Overall,

we remain focused on sustainable, high-quality growth, supported by financial discipline and structural optimization across our core business lines.

Thank

you.

This concludes our question and answer session and today's conference call. Thank you for attending today's presentation. You may now disconnect.