So-Young International Inc.

Ladies and gentlemen, thank you for standing by for SoYoung's third quarter 2025 earnings conference call. At this time, all participants are in 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. Mona Chow. Please proceed, Mona.

Thank you, operator, and thank you, everyone, for joining Soyang's third quarter 2025 earnings conference call. Joining me today on the call is Mr. Xinjing, our founder, chairman, and CEO, and Mr. Nick Zhao, CFO. Before we begin, please refer to the safe harbor statement in our earnings release, which applies to this call and will be making forward looking statements. Please also note that we will discuss no-gap measures today. which are more thoroughly explained and reconquered to the most comparable measures reported under GAAP in our earliest release on our investor relations website and financed with SEC. At this time, I'd like to turn the call over to Mr. Xinjing.

Hello, everyone. Welcome to today's financial phone call meeting. In the third quarter of 2025, we will continue to firmly promote the strategic layout of offline joint business. The long-term investment in the chain direction has also gradually turned into stable business results. In the third quarter, the company achieved a total income of RMB3.87 billion, of which the chain business income of RMB1.84 billion. The share price increased by 305%, breaking the leading 8% of the top line, and leading the group's overall income to achieve the same growth. Hello everyone and welcome to today's earnings call.

In Q3, we continued to advance the strategic build-out of our private and central business. while deepening the foundation of its development as operating systems. Our long-term investments in the aesthetic center businesses are increasingly translating to stable operating results. Total revenue for the quarter was RMB 387 million, including RMB 184 million from the aesthetic center business. up 305% year-over-year, and approximately 8% above the high end of our guidance. This performance also filled our yearly year top line growth momentum. This quarter, net loss attributable to Soyoung increased, mainly due to a sequential decrease of RMB 31 million in revenue from business other than the aesthetic center business. We remain confident that this revenue will stabilize in Q4.

Since the launch of Xinyang Youth Clinic last year, we have continued to improve the standardization system and digital management, and continuously improve the efficiency and service quality of our stores. After a year of construction, Xinyang Youth Clinic has developed into the largest store in the United States. Currently, the total number of stores has reached 42 stores, of which only 41 are joint stores. The goal of 50 stores throughout the year is to steadily advance the project. By the end of September, Xinyang Youth Hospital has accumulated over 600,000 service personnel, and is the 1st in the list of the most popular Chinese and American chain brands in the country. Next, we will continue to expand the chain map at a rhythmical pace. In a higher standard service system and a deeper brand foundation, we will promote business to achieve healthy and sustainable growth.

Since launching Soyang Clinic Light Medical Aesthetic Chain last year, we have continuously enhanced its standardization at digital management while improving center level efficiency and service quality. After one year, our brand now operates the largest number of centers nationwide among light medical aesthetic chains with a total number of 42 centers as of today, including 41 directly operated centers and one franchise center. We remain on track to reach our year and target 50 centers. As of September 30, cumulative service visits exceed 600,000, reckoning first among mass market chambers in China in terms of service volume. Going forward, we will continue to expand our aesthetic center network in a disciplined manner and drive healthy sustainable growth through a higher standard system and deeper-bred equity.

Next, I would like to share with you the development of our business in the third quarter. Our business has continued to grow for the first half of the year. Our income in the third quarter reached RMB1.84 billion, which increased by 27% and increased by 305%. We have further strengthened our core position in the company's business structure. By the end of September, Xinyang Youth Hospital has entered 10 cities, and the number of stores has reached 39. The efficiency of door stores continues to improve 20 stores in the third quarter realized the power supply profit Among them, out of the 14 stores in the mature period 100% achieved quarterly power supply profit A total of 29 stores in the third quarter realized the current trend The size and service volume of the chain business is also constantly expanding Until the end of September, Xinyang Youth Clinic has more than 130,000 active users In the third quarter, the number of joint sales people exceeded 89,800 times, which increased by 33%, which increased by 280%. The number of joint sales service points exceeded 194,700, which increased by 26%, which increased by 296%. In terms of new customer growth, the reputation effect continues to show. The customer efficiency continues to lead the industry, and the cost of human resources and customers remains low, which has decreased. Now let's move on to our Q3 operational highlights.

Our aesthetic center business builds upon the strong growth momentum. In Q3, revenue reached RMB 184 million, up 26% quarter-to-quarter and 305% year-over-year, further solidifying its role as the core of our business. As of September 30, Soyang Clinic operates 39 centers across 10 cities. Operational efficiency continued to improve, with 20 centers achieving center-level profitability in Q3, including all 14 mature centers. In addition, 29 centers generated positive operating cash flow during the quarter. The scale of users and service volume are also expanding. As of September 30, total number of active users of Soyang Clinic exceeded 130,000. Total number of verified treatments visit surpassed 89,800 in the quarter, up 33% quarter-to-quarter and 280% year-over-year. The total number of verified aesthetic treatments performed surpassed 194,700, up 26% quarter-to-quarter and 296% year-over-year. New customers continued to grow driven by word-of-mouth referrals since our customer acquisition efficiency remains industry-leading levels. Our per capita CAC remains at a low level at decreased quarter-to-quarter. In Q3, the proportion of new customers acquired via referrals rose to 46%. We also deepened cooperation with platforms such as MateOne. further improving broad exposure and user conversion through targeted advertising and content selling. New customers from public domain channels increased 38% quarter-to-quarter with continued optimization in public domain customer acquisition costs.

用户运营层面,我们升级了会员体系, 通过分层运营,权益激励与个性化服务, 有效提升用户年度和生命周期价值。 We have upgraded our membership system during the quarter.

So tiered operations, benefits, incentives, and personalized services will increase user retention and customer lifetime value. In Q3, call members defined as users at level 3 and above grew by over 10,000, up 40% quarter-to-quarter. These call members continued a high double-digit percentage of revenue and nearly 70% quarterly report transfer rate. Customer satisfaction score remain at a high level of 4.99 out of 5. Our user structure continues to evolve to higher loyalty and repeat purchases.

品箱运营方面,我们持续迭代大单品策略, 聚焦高复购高口碑的优质项目, 打造更具效率的增长体系。 三季度,我们优化了单品矩阵, 集中资源优化重点项目的精细化运营。 At the end of September, we foretold the launch of QIJITONGYAN 3.0. The market is very optimistic about this upgrade. The pre-sale performance is very hot. In the case of a limited purchase of one unit per user, the pre-sale sales of more than 1,300 units in two days. In addition, in the light electricity project, XinYang, as the national general agent of BBL products, has made BBL the largest unit with the highest penetration rate in the third quarter. We continue to refine our products, focusing on premium products with repeat purchase rates at word of mouth.

In Q3, we optimized our faster product portfolio and doubled down on refined operations for key offerings. By the end of September, we pre-announced the launch of Miracle PLLA version 3, which delivered robust pre-sale performance with over $1,300 completed within two days, under a one-order per customer limit. For energy-based device treatments, As the exclusive distributor of BBL treatments in China, we made BBL our highest penetration block faster offerings in Q3, and we will continue to drive its growth in Q4. Overall, revenue contributions from block faster products rose to over 30%, and these core offerings continue to unlock growth momentum. We are opening greater room for synergies with supply chains.

While continuing to expand, we have always placed medical quality and regulatory safety at the forefront. In the third quarter, the group fully upgraded the security, regulatory and quality control system, forming a six-level regulatory system composed of the Security Regulatory Department, the Control Department, the Supervisory Department, the Internal Procuratorate Department, the Medical Service Delivery Department and the Information Security Department. Fully enhance the standardization and traceability of the entire medical service process. In the quarter, we have completed a total of 55 door-to-door inspections and emergency accident monitoring to promote the normalization of the system. At the same time, we insist on the full-fledgedization of doctors and the regularization of operations. By the end of the third quarter, the New York medical team has expanded to more than 150 patients, and the number of patients has not reached the top of the country. All doctors have a background in public health, hospital internship or compensation. Through unified training and assessment, We ensure that every store can provide a reliable medical service experience.

As our business expands, we continue to prioritize health care quality and procedural compliance. In Q3, we fully upgraded our quality control framework, building a 16-day compliance framework including compliance, need control, supervision, internal audit, medical service delivery, and information security departments. This reinforces traceability across the medical service process. In Q3, we completed 55 center inspections and emergency drills. By the end of third quarter, our physician team exceeded 150, recognized by Count and Mount, Latt Medical Aesthetic, Chamberlain's, Nationwide. All doctors have completed internships or training at public hospitals and passed our unified training and assessments. ensuring a consistent and reliable medical service experience across every center.

我们的实践也得到了主流媒体的认可。 10月,人民网在专题评论中指出, 新养通过规模化、标准化运营, 以透明价格和合规管理, 为医美行业的理性发展提供了示范。 我们相信行业竞争正在从营销驱动迈向信任驱动。 XinYang will continue to uphold the principles of transparency, standard and generalization, and build a truly safe service system for consumers.

Our business practices received recognition from mainstream media. In October, People's Daily Online published a special commentary noting that XinYang is setting an example for the rational development of the industry through disciplined operations, transparent pricing, and compliance management. We believe the industry landscape is shifting from marketing-driven to trust-driven. We will continue to uphold trust-driven standardization and inclusive access to build a service system that truly puts customers at ease.

In terms of upstream business, we continue to strengthen the ecosystem of all products in the U.S. supply chain. In the third quarter, more than 59,800 new products were exported.

We continued to strengthen our medical and static supply chain. In Q3, shipments of U.S. state exceeded 59,800 units, up about 53% quarter-to-quarter.

Due to the combined impact of seasonal factors and industry prosperity, in Q3, revenue of POP declined by RMB

18 million quarter-to-quarter. GMOE for verified medical aesthetic services was around RMB 260 million. With per capita incentive GTV up 6% year-over-year, we continue to optimize the content recommendation and traffic distribution mechanisms to improve conversion efficiency.

In the future, we will continue to use 1,000 power chains as our long-term goal. to steadily advance the layout of core systems and key business circles, and to continue to improve the standardization and digital management system, and to improve the industry standards of medical delivery and user experience. We believe that the real competitive advantage comes from long-term interest and trust accumulation. Xinya will use a more stable rhythm and more professional medical ability to promote the green and medical industry to become mature and create long-term value for shareholders.

Looking ahead, we will continue pursuing our long-term goal of 1,000 centers, expand build-out in core cities and commercial hub, while further elevating standardized and digital management to raise the bar for service delivery and user experience. We believe our durable competitive advantage comes from long-term commitment and accumulated trust. we will drive the large medical aesthetic industry towards maturity with more measured pace and more professional capabilities, creating long-term value for shareholders. Now I'll hand over to our staff of 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 of our comparative financial performances on a year-over-year basis. Total revenues during the quarter were RMB $386.7 million, up 4% year-over-year, primarily due to our business expansion of the branded aesthetic center. Aesthetic treatment services revenues reached RMB $183.6 million, showing 304.6% year-over-year, once again exceeding the high end of our guidance. This was primarily driven by the robust business expansion of our branded aesthetic centers. Information and reservation services revenues were RMB 117.2 million, down 34.5% year-over-year, primarily due to a decrease in the number of medical service providers subscribing to information services on our platform. Revenues from sales of medical products and maintenance services will RMB 67 million, down 25% year-over-year, primarily due to a decrease in the order volume of equipment. Revenues from other services will RMB 18.9 million, down 67.6% year-over-year, primarily due to a decrease in revenues from Soyang Prime. Cost of revenues will RMB 203.8 million, up 43.4% year-over-year, primarily due to the business expansion of our branded aesthetic centers. Within cost of revenues, cost of aesthetic treatment services will RMB 140.1 million, up 333.2% year-over-year, primarily due to the business expansion of our branded aesthetic centers. Cost of information and reservation services were RMB 12.9 million, down 44.7% year-over-year, which was in line with the decrease in revenue generated from information and reservation services. Cost of medical products sold and maintenance services were RMB 35.6 million, down 18.3% year-over-year, primarily due to a decrease in costs associated with the sales of medical equipment. Cost of other services were RMB 15.2 million, down 64.6% year over year, primarily due to a decrease in costs associated with Soyang Prime. Total operating expenses were RMB 255.6 million, up 13.6% year over year. Sales and marketing expenses were RMB 130.7 million, up 13.8% year over year, primarily due to the increase in expenses associated with the branding and use acquisition activities for our aesthetic centers. G&A expenses, or RMB 88.6 million, up 26.7% year-over-year and 12.4% quarter-over-quarter, primarily due to the one-time accrual of approximately RMB 5.8 million year-end bonuses. and the business expansion of our branded aesthetic centers. R&D expenses, or R&B, 36.3 million, down 9.6% year-over-year and up 16.5% quarter-over-quarter. The year-over-year decrease was primarily due to improved staff efficiency while the sequential increase was due to the one-time accrual of approximately RMB 3.6 million year-end bonuses and continued investment in miracle laser products, particularly in clinical trials. Income tax expenses were RMB 1.1 million compared with RMB 2.1 million in the same period of 2024. Net loss attributable to Soyang International Inc. was RMB 64.3 million compared with a net income attributable to Soyang International Inc. of RMB 20.3 million during the same period last year. Non-GAAP net loss attributable to Soyang International Inc. was RMB 61.6 million compared with non-GAAP net income attributable to Soyang International Inc. of RMB 22.2 million during the same period of 2024. Basic and diluted losses per ADS attributable to ordinary shareholders were RMB 0.64 and RMB 0.64 respectively, compared with basic and diluted earnings per ADS attributable to ordinary shareholders of RMB 0.2 and RMB 0.2 respectively during the same period of 2024. As of September 30, 2025, our cash and cash equivalents restricted cash, and term deposits. Term deposits and short-term investments, or RMB 942.8 million, primarily due to an increase of investment in branded aesthetic centers. Looking ahead to the fourth quarter of 2025, we expect aesthetic treatment services revenues to be between RMB 216 million and RMB 226 million, representing a 165.8% to 178.1% increase from the same period in 2024. This outlook reflects our confidence in the strong growth momentum of our branded aesthetic center business. As we near the 50 center milestone, we have also seen continued improvement in center level profitability and operating cash flow demonstrating our model's scalability and operational efficiency. Going forward, we will pursue disciplined expansion while maintaining our focus on operational excellence and cost optimization to drive sustainable and quality growth. These efforts will reinforce the financial resilience of our aesthetic center business and create enduring value for our shareholders. This concludes our key remarks. I will now turn over the call to the operator and open the call for QA. Thank you.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. 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. The first question comes from Hai Jingpeng with Cytic Securities.

Please go ahead. So, okay, let me briefly translate for myself. Thank you for taking my question. This is He Jingpeng from CT Securities. So, first of all, congratulations on the company's continued rapid expansion of the chain clinics. So, could you share more about the opening plans for next year, including your original strategy and the expected pace for the new clinic openings by quarter? Thank you.

Hello, thank you for your question. At the end of this year, we expect to reach the size of 50 stores. At this stage, our core policy strategy is to set a good foundation. The focus is to improve customer efficiency and realize the accumulation of user size. Next year, as we expand the scale, we will enter a new stage of development, relying more on digitalization and AI capabilities to promote the standardization and repeatability of the service process, and truly break through the bottlenecks of the scale expansion in the light industry. to establish support for the further more extensive layout. Next year, the number of new stores will be consistent with the previous communication and will not be lower than 35. The overall opening and closing rhythm will try to maintain a relative balance, and the season will be steadily promoted to ensure that each new store can quickly enter the stable operation according to the designated process. In the area strategy, the first-tier cities are still the focus. These cities have a lot of demand. By the end of 2025, we will reach 50 centers.

Our goal is to lay a solid foundation focusing on improving customer acquisition efficiency and growing user base. As the business scales, we will enter a new stage of development, relying more on digitalization and AI capabilities to replicate service processes. This will drive breakthroughs in the bottlenecks the industry often faces, providing support for a broader build-out in the following obstacles. following up stage. The number of new centers to be opened next year will remain consistent with previous plans and will not be less than 35. We will keep the overall pace of center opening balanced, progressing on a quarterly basis to ensure every new center quickly enters the operation phase following its establishment. Our focus will remain on fourth-tier cities since they have strong demand and high potential, which will help us quickly build up regional density and amplify broad equity. At the same time, we will also systematically establish a presence in second-tier cities with a mature consumer base to validate our model and gain experience for long-term expansion.

Thank you.

Thank you.

Okay, thank you for answering.

The next question comes from Stacy Chen with Haitong International. Please go ahead.

Thank you for the question. First of all, I would like to congratulate the company on its rapid growth in the third quarter. I will check with myself. First of all, congratulations to the management for achieving such a rapid growth even during the off-season quarter. I noted that you have released the core member data this quarter. So could you explain more about the membership system for the SAP Center business and how we conducted the membership operations? Thank you.

Hello, thank you for your question. The member system is a very core part of the joint operation. Users will leave a record every time they come to the store. to help us establish a clear division system to identify high-value users who have experienced continuous use many times. Our membership levels range from L1 to L8. Among them, users with levels above L3 are our core members. Their power supply frequency is higher, and their service extension is stronger. Their annual consumption is 2.5 times the average level, which is the main driving force for long-term growth of our joint business. The third quarter, The membership system is core to accept expenses operations.

Each time a user completes the visit a record is created, which helps us build a clear tiered membership system from level one to eight and identify high value users with multiple visits and ongoing engagement. Level three and above are defined as core members. They have higher center visit frequency and greater flexibility to select additional services with annual spending 2.5 times higher than the average. making them the good driver for aesthetic center. During Q3, they contributed a high double-digit percentage of our aesthetic center business revenue with a reputations rate of nearly 20%. We provide tiered benefits and service touchpoints based on individual user consumption patterns, which ensures they continuously perceive brand value and receive positive reinforcement. for their boasting repeat purchase rates.

In Q3, our membership operations made solid progress.

Users with verified visits increased by nearly 40,000. up 36% quarter-of-quarter, including over 10,000 new core members, up 40% quarter-of-quarter.

In addition, we are also continuously promoting the value operation of old customers. In the third quarter, the old customer's income reached 1.2 billion yuan, which increased by 32%. In the joint income ratio, it reached 65%. The number of old customers and delivery people increased by more than 4 times, reaching 50,000 people. Additionally, we've also enhanced repaid customer value operations.

Specifically, repaid customer revenue reached RMB 120 million in Q3. up 32% quarter-to-quarter, accounting for 65% of aesthetic treatment service revenues. Verified treatment basis from repeat customers surged over four times year-over-year to 50,000, while our pool also increased. These metrics all exceeded our targets. Going forward, we will focus on conversion of highly active users and extending the life circle of high value users.

Thank you. The next question comes from Nelson Chuang with Citi. Please go ahead. Nelson is your line muted? Nelson do you want to check if your line is muted? We will move on to James Wong with GS Securities. Please go ahead, James.

Okay. 各位管理层好。 我是广发证券的分析师张旺。 其实今年在三季度看到整个投研真产品管线换新之后, 大家都非常期待我们在自有供应链和新品迭代这一块。 也想请这个公司介绍一下从9月底上线之后的集体投研3.0, How is the Miracle PLLA 3.0 selling since its end of September launch? And what is new compared to the previous version? And what's the plan for promoting it?

Hello, thank you for your question. QIJI TongYan 3.0 is an important upgrade of our supply chain this year. In the mainstream trend of the Chinese and American markets, TongYan is still mainly based on the injection type. Before the product was launched, we did a deep research in South Korea and found that the mainstream market in South Korea used a more standardized and safer blood light method. After many tests and comparisons, we launched QIJI TongYan 3.0. From the characteristics of the product, it has super smooth, super solid, super fine, super fine, super fresh fire, five characteristics. From safety, effect, maintaining the cycle, the three dimensions guarantee that it is actually the most suitable product for using water and light hitting. Qiqi Tongyan 3.0, while the effect is fully upgraded, the pricing is also competitive, bringing consumers a high-quality and high-performance experience.

Maricopa PLLA version 3 was an important upgrade on the supply chain. In China's Maricopa specialty market, PLLA is still mostly used as an injectable for shipping. Before launching, we conducted research in South Korea and found that domestic markets there adopt a more standardized and safer skin booster technique. After multiple rounds of testing, we launched 3DEM. In terms of products, Its ultra-micro CS comes with 5K features, including ultra-smooth, ultra-solid, ultra-fine, ultra-pure, and ultra-active. Across safety results and longevity, these features make the product the best fit for skin boosters. Moreover, with its overall performance upgraded, Miracle PLLA version 3 is also more compactively priced, offering consumers a high-quality yet value-for-money experience.

Based on the market situation and user demand, we have made a follow-up upgrade based on the promotion strategy. First of all, in terms of customer satisfaction, we have chosen the more suitable for Snowflake's copper salt material, tree salt, and launched the super micro ball concept to compete for the track. Next, we have further reduced the threshold of consumer decision-making. In terms of specifications, we have divided it into two types, Qiji Copper Salt 3.0 and Qiji Copper Salt 3.0 Pro, to match users with different needs and budgets. In guarding the promotion, we made upgrades based on the market landscape

and user pinpoints. To capture user mind share, we adopted 2TM, a Miracle More suitable for skin boosters, and introduced the concept of ultra microspheres to take the lead in the segment. We also released two versions, Miracle PLLA version 3 and version 3 Pro, to address different users' needs and budgets, thereby lowering the decision threshold for users. The first batch of 5,000 units was fully sold out within a short time. The mass arrival is expected in late November. We will continue to drive market penetration rate for Miracle PLLA version 3, converting users more efficiently and increasing our pool and user loyalty.

In terms of market feedback, Miracle PLLA 3.0 is very hot. So we adopted the online shopping mode. Each user can only purchase one unit, of which about 56% of users bought the Pro version for 4,999 yuan. This shows the user's trust in our brand and products. It is expected that in the coming year, TongYuanZhen, which we previously deployed, will be on the market. At that time, TongYuanZhen's purchase price will be a few times lower than it is now.

Market feedback shows that Miracle PLLA version 3 is receiving high attention. We implemented an online purchase limit of one purchase per user. From these purchases, we can see that about 56% of users picked the pro version priced at RMB $4,999. Reflecting the trust they placed in our product, In the next year or two, the PLLA that we have been working on X-Frame is expected to receive approval for launch, which should reduce procurement by several times.

In general, QGIS 3.0 is not just a product upgrade. It is also an important practice in the construction of supply chain and large single product strategy. Future mainstream products will also take the same approach. We will continue to deepen the vertical integration of supply chain and further improve the controllability and safety. We will continuously transform upstream manufacturers into cooperative suppliers. We will use our own advantages in the marketing, product, and medical channels to create differentiated barriers and continue to build a solid brand.

Overall, Miracle PLL version 3 is not just a product upgrade. It's an important part of supply chain construction as a blockbuster strategy. We will adopt the same approach for future categories. We will continue to deepen the vertical integration of our supply chain, further enhance safety, and continuously convert upstream manufacturers into long-term supply partners. Notaneously, we will leverage our real-time marketing products, doctors, and channels to build differentiated areas and solid our black nodes. Thank you.

The next question comes from Nelson Cheng with Citi.

Please go ahead. How do we ensure the safety and compliance of the entire chain system and how does the internal

This is our top priority. We have built a six-tailor compliance framework covering compliance,

risk control, supervision, internal audit, medical service delivery, and information security department. And we will continue to make this framework more refined and systematic.

At the beginning, we insist on high-standard selection. At the end, we only do safe and mature, mechanism-clear, feedback-stable clean and beauty projects. From the beginning, avoid potential risks, We adhere to high standards and resources.

On the treatment side, we only offer six mature medical aesthetic treatments with clear mechanisms and solid user feedback to avoid potential risks. On the personnel side, we implement regular doctor's qualification assessments with an acceptance rate of around 10%. All doctors are also required to complete pre-employment training and regular emergency drills to ensure the highest professional service and emergency response capabilities.

In the delivery of medical services, we promote a doctor-division treatment strategy based on doctor-level matching treatment projects. At the same time, through online and offline regular inspections, we improve the self-control of the coverage and execution density to ensure that the medical service output of each store is reliable.

Medical service delivery, we implement a tiered diagnosis that matches treatments with doctors based on their qualification levels. We conduct regular online and offline inspections as part of our quality control, ensuring reliable medical service across all centers.

如果出现用户反馈或纠纷,总部将统一受理。 If there is any user feedback or dispute,

We handle it at headquarters with a crisis response team composed of key departments, including user experience, PR, JR, and legal. Currently, our average response time is under two hours, with the issue resolution completed within two days. The compliance rate is below 1%.

In the future, we will continue to adhere to the safety and compliance guidelines, and through digitalization and AI construction, Let quality control be more efficient to ensure that all stores can maintain the same quality and user safety while developing at high speed.

Going forward, we will continue to uphold the highest standards of safety and compliance with digital and AI tools. We aim to enhance quality control efficiency and ensure consistent medical service quality and user safety across all centers as the business continues to grow rapidly. Thank you.

The next question comes from Jenny Zhu with CICC. Please go ahead.

Thank you for the question. We think the most important thing at this stage is to expand the user size.

We believe the first priority now is to expand our user base and ensure the improvement of operating process as it scales.

As the operating model gradually matures, we are confident profitability will improve.

The company's pre-purchase channel structure continues to consolidate our advantage in the cost of goods. In addition, we also have a lot of room for decline in the cost of goods. For example, we have recently upgraded the QGIS 2.0 to version 3.0. With the continuation of the new product, it will strengthen our up-to-date cost performance and continue to optimize the cost structure. In the future, with the digitalization, AI construction, and the corresponding main line of scale, the fixed cost of chain daily operations will also be further diluted.

On the cost side, we continue to optimize the structure of our customer acquisition channels, including referrals from existing customers and both public and private domain traffic, continuously consolidating our advantage in customer acquisition costs. In addition, there is a significant room to lower consumable costs. For instance, we recently upgraded Miracle PLLA from version 2 to version 3, as the new product is more useful. It will strengthen our bargaining power with upstream partners and further optimize our cost framework. In the future, with the gradual realization of digitalization, AI, and economic self-scale, the fixed cost in data operations will be fully diluted.

From the income aspect, in the future, as users increase their efficiency and professionalism, the consumer interest in high-quality projects is also increasing, and the cost-effectiveness is gradually emerging. In addition, we continue to introduce high-quality medical products, optimize the structure of existing products, and maintain a healthy growth trend. On the other hand, thanks to the continuous promotion of large-scale products, our treatment volume gradually increased to a small number of SKUs. In the third quarter, the top nine products have contributed more than 30% of their income and are constantly improving. This is a solid foundation for us to further improve the space of profit through free customized products in the future. After reaching a certain scale with our core members, we will focus on the improvement of the core member LTV to further boost the profit rate. So we believe that the profit-making ability of the chain business has a great hope to steadily increase on the existing basis.

On the revenue side, as users increasingly prioritize resource and professionalism, they are willing to spend on premium treatments coupled with a full range of high-quality medical and service orders operations of the IPv6 trajectory. Leveraging our blockbuster strategy, have gradually concentrated on a number of SKUs, with the value share of blockbuster projects increasing. The top nine products contributed over 30% of value in Q3. This leaves a solid foundation to further improve our profit margin through proprietary customized products. Once the number of aesthetic centers and verified treatment visits reach a center level, we will focus on enhancing LTV of core members, further driving profit margin. Therefore, we believe there is great potential for the profitability of the aesthetic center business to increase from its current base. Thank you, operator.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.