So-Young International Inc.

Ladies and gentlemen, thank you for standing by for SoYoung's second quarter 2026 earnings conference call. At this time, all participants are in a 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 would now like to turn the meeting over to your host for today's call, Ms. Mona Qiao. Please proceed, Mona.

Thank you, operator, and thank you, everyone, for joining Soyang's second quarter 2026 earnings conference call. Joining the call today are Mr. Xing Jin, our founder, chairman, and CEO, and Ms. Shen Wusheng, our CFO. Before we begin, please refer to the safe harbor statement in our earnings release, which applies to this call and will be making for a looking statement. We will also discuss non-GAAP financial measures, Reconcilations between GAAP and non-GAAP measures are included in today's earnings price release. Please also note all fingers mentioned in this call are in RMB, unless otherwise stated. With that, I'd like to turn the call over to Mr. Xing Jin.

Hello, everyone. Welcome to today's press conference. In the second quarter of 2026, we will continue to implement the two-wheel drive strategy, continue to grow in offline joint operations, rely on continuous professional medical capabilities, a well-standardized standardization of delivery systems and intelligent applications. The scale of joint operations has been continuously improved, and the performance of the industry has remained strong. In this quarter, the income of joint operations reached 3.3 billion yuan, which is about 130% of the growth. Hello everyone and welcome to today's earnings call.

In Q2, 2026, we continue to expand our aesthetic treatment business. Guided by our dual images of skill and efficiency, backed by our ever-increasing medical capabilities, a uniform delivery framework, and wider AI adoption, the business enhanced its operational ability and delivered a robust performance. Its Q2 revenue reached RMB $330 million, up roughly 130% year-over-year, beating the upper end of guidance by about 5%. As a result, group revenue hit a quarterly record, going 33% year-over-year to about RMB 510 million. With better operating efficiency, net loss attributable to the company narrowed by 37% year-over-year to RMB 22.7 million.

Let me share with you the core business progress of the second quarter. In this quarter, the double-wheel drive strategy has shown significant results. While Xing Yang Youth Clinic is maintaining a good pace of expansion, the management quality is also improving steadily. As of the second quarter, Xing Yang Youth Clinic has entered 18 cities. The total number of stores has reached 65. The scale has not only increased the availability of services, but also effectively occupied the user's mind by strengthening the brand business. As a result, the drive service volume and many more. In terms of the number of services, the number of joint sales of the second quarter has surpassed 16.5 million times, with a growth of 145%. The number of joint sales service points has exceeded 36.2 million, with a growth of 130%. In terms of user size, the number of active users has surpassed 250,000 at the end of June, with the number of core members of L3 and above exceeding 7.8 million. The recovery rate of core members in this quarter is still at an excellent level. It reflects the high recognition of users for the quality of the chain's medical delivery. In terms of new customers, the number of new customers in this quarter continues to grow. The new customer ratio contributed by the old generation has stabilized at more than 50%. Not only has it effectively reduced the cost of comprehensive delivery, but it has also helped us to build a high-year-old high-quality customer base. Now turning to the key business developments in Q2, the DoorNG approach delivered clear results this quarter. SoYang Clinic kept a healthy pace of expansion while operating quality improved.

By the end of Q2, Suyang Clinic expanded into 18 cities with 65 centers in total. The larger food point improved accessibility. More importantly, it reinforced blood awareness and captured consumer mind share, driving continued growth in treatment volume and user base. On treatment volume, verified visits exceeded 165,000 in Q2, up 145% year-over-year. Verified aesthetic treatment performed were above 362,000, up 134% year-over-year. On the user front, active users reached over 250,000 by the end of June. In particular, the number of Level 3 and above co-members exceeded 78,000. The quarterly per chance rate of co-members remained robust, reflecting high user regard for our quality. New customers count also grew quarter to quarter with over 50% of them being referrals. This lowered blended acquisition cost while building a loyal high quality user base which in turn positions us to lift user LTV and retention. Meanwhile, both the volume and mix of public domain new customers use confirming that our full channel acquisition playbook works.

In addition, the operating capacity of the store is also continuing to improve. By systemically optimizing the operation process and strengthening the resource coordination, the operating efficiency of the store has been effectively improved. In addition, the number of stores that realize the power supply of the store has increased from 47 to 51. The overall operating rate of the chain business is increased by about 3.8%, reaching 28.1%. These results have proven the effectiveness of our management measures.

Percent of profitability also improved as we refined operating workflows and heightened resource coordination. As a result, in Q2, the number of profitable centers rose to 47, with 51 generating positive operating cash flow. Growth margin of the aesthetic treatment business improved by about 3.8 percentage points year-over-year to 28.1%. These outcomes validate our management approach.

In June, we launched Vimei VUCO again. It adopts a self-collecting technology. In the case of a non-collecting technology, it can represent the ground of the gel, and can help fill areas such as the eye area and the central surface of the face, and continue to generate contact to make the feeling more natural. Our cooperation with Jingbo Biomaterials represents the up-and-down of industrial chain from traditional supply-and-resource relationship, to further move towards product co-creation, scene construction, and Long-Term Value Systems. In the future, Xing Yang will expand this cooperation model to more domestic and foreign pharmaceutical and equipment companies. We will surround consumers to survey product definition, adapt to product development, train doctors, standardize operation, evaluate after listing, and continue to treat, open cooperation, and accelerate advanced technology from the R&D end to the real consumption period.

and many more. A healthy growth of our aesthetic treatment business relies on a robust supply chain and enriched product line-up. In late April, Miracle Collagen, our joint product with Jinbo Biopharmaceutical, launched to a warm reception with over 66,000 units sold to date. In June, we rolled out Waveco. It adopts soft cross-laking technology to create a gel texture without a cross-laking agent. VivQo helps fill the eye and mid-face areas while promoting ongoing collagen regeneration for a natural look. Our partnership with XingBo goes beyond a traditional buyer and vendor relationship. It is a move toward product co-creation, case development, and long-term value alignment. Going forward, we plan to extend this model to more domestic and international medical device and treatment partners. This collaboration model will cover consumer insights, product definition, indication development, physician training, uniform protocols, post-launch evaluation, and continuous intervention. Bring advanced technology from R&D to real-world use at a faster pace.

In addition, we have also launched the QIJITONGYAN GUILTY version to improve the dormitory effect with a more reasonable PLLA microarray. We also introduced beauty version of Miracle PLLA.

It uses a better collaborated PLLA micro particle diameter to improve injection outcomes. Beyond the collagen category, we are also expanding the product portfolio to meet diverse anti-aging demands.

At the same time, we continue to improve Xing Yang's standardization of medical care. First, we continue to expand the size of the medical team to meet the market demand for daily growth. As of June 30, 2026, Xing Yang Youth Hospital's full-time medical team is about 280. Second, we rely on medical research and development training centers and other continuous improvement training facilities and medical training systems. and others. We continue to promote the uniformity and regulations of the doctor's level and the treatment process. In the second phase, the company cooperates with AIRJEN, Jingbo Biopharmaceuticals, and other upstream manufacturers to carry out nine specialized trainings to improve the level of clinical doctors' academic and practical training. At the same time, we will complete twelve training courses on the normalization of new drugs. Through systematic theory and practical assessment, For the more, we continued to enhance our uniform medical delivery capabilities. First, we expand our physician team to meet growing market demand.

As of June 30, 2026, the number of full-time physicians increased to around 280. On top of that, we have kept physician capabilities and treatment workflows aligned. This is made possible by our medical R&D and training center, treatment guidelines, video audits, and other training and quality control mechanisms we have in place. In Q2, we partnered with leading upstream manufacturers, including Allergan and Jingbo, to deliver nine specialized training workshops, effectively enhancing our physicians' expertise and clinical skills. We also completed 12 regular training sessions as part of our new physician initiative. By assessing theoretical knowledge and hands-on skills, we ensure our newly onboarded physicians are well prepared to deliver uniform and safe clinical care. Additionally, SEAL, the National Command and Control Center, will coordinate medical workflows end-to-end to further elevate the user experience.

In the future, we will actively promote the deep integration of artificial intelligence and the medical-medical industry. Exploring new ways to scale innovation, we believe that in order to ensure medical safety, user privacy, and data compliance, the core value of AI lies in supporting doctors, and many more. In order to stabilize the quality of services and break down the bottlenecks of the industry, we will eventually bring together a wider range of consumers. At this stage, our focus is on the data foundation of HANCHI to continue to improve the quality of medical services and user experience, as well as to provide strong support for energy-saving upstream research and development, and rely on the data of the medical beauty industry that has been accumulated for many years. The data center, the online user service capability, We are building a real-world database in the field of medical cosmetics and treatment of smart base facilities. For example, we have launched a face-to-face user-friendly visualization specification system in our store, and a dual-screen that can simultaneously show the treatment of SOP, which effectively enhances the user's trust.

Finally, we are integrating AI with medical aesthetics to unlock an innovative task for expansion. Under the constraints of medical safety, user privacy, and data compliance, we believe AI's core value lies in empowering physicians, keeping delivery quality consistent, and breaking the industry's ceiling on scale. This approach will ultimately bring premium medical care to more consumers. Right now, our focus is on the Data Foundation, which powers service quality, user experience, and upstream R&D enablement. Leveraging our years of industry data and capabilities across made platforms, user operations, and clinical practices, we are now building a real-world database and clinical AI infrastructure tailored for the industry. For example, our clinics launched a user-facing virtual medical dispensing platform and those screens that display treatment SOPs in real time, both have effectively boosted user trust.

In the future, Xing Yang will continue to uphold the principle of transparency, standardization and generalization, to build a high-quality medical service system and consumer trust, to continue to expand the scale effect and platform influence. As the standardized operating system continues to be optimized, will continue to improve their operating efficiency. The operating profit rate will also continue to improve and further release the large-scale economic leverage of the chain mode. At the same time, we will further deepen the diversified layout of the public chain and AI digitized applications, provide a more competitive product combination, increase the high-quality growth of the chain business, and build the foundation.

Looking ahead, the principles of transparency, uniform delivery, and accessibility will continue to guide us. We will be focused on building a premium medical service framework and deepening customer trust. We believe that as we expand ongoing refinements of our operating framework will drive continued gains in operating efficiency and margins. This will unlock greater economics of scale across our clinic chain. Meanwhile, we will further diversify our supply chain, advance AI-powered digital capabilities, and deliver a more competitive product portfolio. We are confident that these initiatives will draw high-quality goods for our aesthetic treatment business.

Now, I'll hand it over

Thank you to our staff of Shannongshun for a great dive into Q2 financials, after which we will move to Q&A session.

Thank you, TS, and thank you everyone for joining our call today. It's my great pleasure to walk you through Soyoung's second quarter 2026 performance on behalf of the management team. I will now share with you our latest operational progress across three key dimensions, growth, Thank you for your attention. and the consecutive quarter of triple-digit year-over-year revenue growth. Not only has this compiled our total revenues to an all-time high with a 33% year-over-year increase, but it has also enabled our aesthetic treatment business to achieve feasible economies of scale. Behind this clear upward growth trajectory and our rising brand momentum is our scaled capacity to deliver high-quality products and services. For digital natives, we offer run-of-account product value that aligns with their consumption pattern, aesthetic preferences, and online purchasing habits, thereby driving sustainable growth characterized by high frequency and high retention. While sustaining rapid top-line growth We remain unwavering in our commitment to growth quality and long-term sustainability, with a laser focus on strengthening unit economics. We recently have raised our aesthetic-centered capacity utilization benchmark by 50%, reflecting elevated expectations for personal revenue, labor productivity, and sales per square meter. Through operational excellence, streamlining customer flow to reduce redundant waiting period, optimizing dynamic staffing, leveraging intelligent inventory management. We expect to drive meaningful margin expansion at Aztec centers. Going forward, our expansion strategy will be more disciplined and market responsive. We will dynamically calibrate our opening cadence based on regional utilization levels enabling us to sustain high revenue growth while striking an optimal balance between scale and profitability. We prioritize sustainable growth over pure top-line expansion. In the second quarter of 2026, we delivered a 37% year-over-year improvement in profitability. Directed expansion places extraordinary demand on organizational capabilities. Best-in-class organizational excellence is fundamental to sustaining high growth over the long term. To that end, we have made systematic investments in organizational infrastructure with a particular focus on compliance and user experience. We continue to advance end-to-end visibility across treatment workflows to enhance transparency and reinforce trust. Furthermore, we have closed the loop on user feedback. This cross-functional coordination enables us to maintain acute market sensitivity and continuously elevate service delivery quality and user satisfaction, even as the business scales rapidly. The company stands at a pivotal inflection point, pursuing high growth and operational efficiency in parallel. while advancing scale and profitability in lockstep. Ten consecutive quarters of triple-digit revenue growth validate our market acumen and execution discipline. This continuous refinement of center-level unit economics together with our market-responsive expansion strategy ensures that our growth remains high-quality and sustainable. Complementing this, our systematic investments in organizational capabilities provide the bedrock for long-term value creation. Next, let's dive into each business segment. Revenues from aesthetic treatment services reached $331.4 million, exceeding the upper end of guidance for the fifth consecutive quarter. The rollout of our loyalty program and systematic treatment protocols creates a three to five percentage points deferral between service delivery and recognized accounting revenue. Today's service generated future membership benefits. While this tempers near-term reported revenue, it builds a deferred revenue base that underpins long-term growth. Net of this deferral impact, revenue still grew approximately 103%. Looking at aesthetic centers data as of June 30th, we operated 65 Seoul Young Clinics across 18 major cities, reflecting a net addition of 11 centers during the quarter. Among them, 47 centers were profitable and 51 centers generated positive operating cash flow during the quarter, reflecting a net addition of 6 and 3 respectively from last quarter. We also achieved same-store sales growth of 52%, substantially improved from 14% in the prior year period. Turning to our other segments, revenues from information and reservation services were $187.9 million, down 35% year-over-year, primarily due to the decrease in the number of medical service providers subscribing to our information services. Sales of medical products and maintenance services revenues were 73.9 million, down 2.8% year-over-year, primarily due to the decrease in order volume for medical equipment. Other services revenues were 12 million, down 48.2% year-over-year, due to a lower insurance brokerage revenue Cost of revenues was $282.4 million, up 53% year over year, driven primarily by the expansion of our branded aesthetic centers. Total operating expenses were $266.5 million, up 10.4% year over year. Specifically, sales and marketing expenses were $153.5 million, From aesthetic treatment service perspective, our comprehensive customer acquisition cost remains at a healthy level, accounting for less than 10% of the revenue. Coupled with strong user retention, our overall customer acquisition model maintains sustainable. G&A expenses were $88.6 million, up 12.5% year-over-year. reflecting the continued expansion of our branded aesthetic centers. R&D expenses were 24.4 million, down 21.7% year-over-year, driven by continued improvements in staff efficiency. Moving forward, we will continue to deepen AI integration across our operations, straightlining workflows and driving efficiency gains in R&D, clinical diagnosis, and treatment and beyond. Income tax benefits were 2.5 million compared with income tax expenses of 1.9 million in the prior year period. Net loss attributable to so young was 22.7 million which narrowed by 37% compared with 36 million in the prior year period. Net loss attributable to so young was 21 million compared with 30.5 million in the prior year period. Basic and diluted loss for ADS were both 0.22 compared with 0.35 in the prior year period. As of June 30, 2026, our cash and cash equivalents, restricted cash and term deposits, and short-term investments totaled 800 and 48.2 million.

Turning to our outlook,

Please allow me to remind everyone that this contains forward-looking statements, which include risks and uncertainties that are beyond our control and could cause the actual results to differ materially from our predictions. Based on our current estimates, we expect revenues from aesthetic treatment services to be between $352 million and $362 million, representing year-over-year growth of 91.7% to 97.2%. That concludes my prepared remarks. I'll play the round already for the Q&A section. Thanks.

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. The first question today comes from Jinping He with Citix. Please go ahead.

Hello, Mr. Jin, Ms. Shen, and all the audience. I'm He Jingpeng from Zhongxin Chuan. Thank you for this opportunity. Thank you, management, for taking my questions. and firstly, congratulations on the company's continued strong performance and impressive growth in the second quarter. So, I have a question regarding the collaboration with Jingguo. So, the collaboration is generating great momentum with an innovative partnership model. So, what have both parties like and what are the benefits? Thank you.

Hello, Mr. Jing. Thank you for your question. We are very happy to have achieved this kind of stable and reliable strategic cooperation with Jingbo. We believe that with the consumer logic of each user turning to natural restoration, reorganization, and long-term effects, the re-organized collagen protein will definitely be a product with a very long life cycle. Therefore, it is very beneficial to Xing Yang's long-term development to establish a stable supply chain relationship with Jingbo.

We are pleased to have reached a reliable, mutually beneficial partnership with Xinbo. As medical aesthetics demand moves toward natural restoration, tissue regeneration, and long-lasting outcomes, the component humanized collagen will have a long lifespan. A dependably upstream relationship with Xinbo, therefore, benefits our long-term growth.

More importantly, in our cooperation, created a new way of using real-world data to reverse product and service decision-making. We have analyzed the age, skin condition, treatment part of the consumer, use quantity, doctor's operation method, and the satisfaction and recovery of post-reaction, all of them. Based on these analysis results, we can more accurately judge the people, parts, and treatment combination that are suitable for the product. In order to optimize the doctor's training, Thank you.

More importantly, we are using real-world data to drive product and supply chain decisions. We analyze connections between user age, skin condition, treatment details, post-treatment reaction, feedback, and repatriation behavior. From there, we can pinpoint which products fit which population, area, and treatment combination. This helps us optimize doctor training, program decision, and inventory planning which greatly reduces buying guesswork and excess inventory. It also lets upstream manufacturers move out of a closed R&D environment and integrate their products based on actual clinical insights. This enhances our operational efficiency and builds leverage in joint research, project integration, and partnerships.

In the future, we will use this data-based, co-created model and so on. In the past, people may think that downstream institutions are just channels for selling products. But now, we hope to scale up Xingyang's medical service network and build a foundation for product innovation. With the real demand for consumption, we can develop and promote technical innovation and product reception with the help of real-time experience and therapeutic effects, which will also benefit more consumers.

Going forward, we will extend this data feedback co-creation model to more quality partners at home and abroad. In the past, many viewed downstream clinics only as distribution channels. Today, we are transforming our extensive clinic network into the industry's innovation infrastructure. By leveraging real-world consumer demand, hands-on experience and treatment outcomes to deliver R&D, We aim to accelerate technology innovation and product integration, ultimately delivering value to more consumers. Thank you.

The next question comes from James Wong with GF Securities. Please go ahead.

Hello, everyone. I'm Zhang Wang from Guangfa. Congratulations to the company for its outstanding performance in the second quarter. In fact, we can see that more cities around the world are opening new windows, and more friends are doing projects in our movie industry. Actually, we just talked about some AI-related issues. Could you please share with us how AI is involved in business and where it is located, and which aspects of our future development and value will it bring? This is James from GF Securities. Congratulations on the outstanding performance. Management mentioned a few AI initiatives. Could you elaborate more on how AI is being applied in the business? Where do you see the biggest value and future direction? Thank you.

Hello, Zhang Wang. Thank you very much for your question. In our medical industry, I think there are several special attributes. It is based on strong medical attributes, Medical aesthetics is a highly medical field with a low tolerance for errors.

It relies heavily on individual expertise. The core value of AI lies in transforming experience-driven, hard-to-perceive procedures into uniform, visible, and treatable offerings. This approach also helps distribute premium medical resources to lower tier cities, which helps address imbalances in medical delivery.

will use the AI to control data infrastructure and data governance. For example, the AI can remove consumers' false concerns, strengthen trust, and improve consumer safety and overall experience. For example, we can use AI to structure and analyze the treatment experience of excellent doctors, In practice, our current focus is applying AI to product authentication

Back-Office Quality Control and Data Foundations and Governance. QR code authentication verifies medicine and device traceability immediately. Mitigating counter-stress related concerns and building trust. End-to-end transparency raises the user's confidence in their care and overall experience. We also use AI to break down top physicians' experience into database. We then invalidate will integrate it into our SOPs, case libraries, and post-treatment feedback modules. That accelerates new physicians' development, aligns quality across centers, and identifies irregularities in real-time, lifting overall quality and customer experience.

In the fourth quarter of this year, we will officially launch the first-generation full-sense power supply, and launch the large-scale landing application of AI tools in power supplies. In Q4 this year, we will rule out our first generation of fully intelligent centers, initiating widespread AI deployment across our network.

Thank you. The next question comes from Nelson Chang with Citibank. Please go ahead.

So let me translate in the English. Thanks management for taking my question. We observed that the aesthetics center goals margin has improved this quarter. to walk through what are the key drivers for the improvement and what are your future plans for gross margin expansion in the future.

Thank you. Thanks, Nelson. This is Shannon. 我来回答一下你的问题。 我们在这个季度的毛利同比提升了3.8个pp, 环比也提升了一个pp。 Our growth margin increased by 3.8 percentage points year-over-year and 1 percentage point quarter-of-quarter.

An excellent result that demonstrates a clear trait of sustained improvement. Particularly consider our pace of opening 11 new centers in Q2. The growth margin improvement mainly reflects our dual energy of scale and efficiency approach to center operation and management.

We continue to increase the income of the door, bed, bed, and staff. We have increased the standard of the bed's saturation by 50%. That is to say, if in our original plan, each bed can complete 10 treatment points a day, we have now increased the number to 15 treatment points. And according to the new standard to plan the door service process, and many more. In this way, we can reduce the client's waiting time and make the user experience better. At the same time, we can also fully release the energy leverage of the store and increase the strength and energy leverage of the store. And as we standardize the maturity of the operating system, the proportion of mature stores is actually continuously improved. The period of expansion of new stores is also gradually shortened. These are also actively contributing to the strength. As I just mentioned in the Pre-Pair Remarks, in the second quarter,

For this center operation, we continued to enhance percent of value per square meter, value per bed, and labor productivity. We raised our initial bed capacity utilization benchmark by 50%. In other words, if the original plan assumed each bed could accommodate 10 treatments per day, We have now increased that target to 15. We are restructuring our service workflows around this new benchmark to reduce customer wait times. This not only improves the user experience, but also fully unlocks the operating leverage of our centers, thereby boosting both gross margin and operating profits. With a maturing operating framework, mature centers take a growing share of our footprint. The ramp-up periods of our new centers are getting shorter and making positive contributions to groups' margins. In Q2, 47 centers achieved center-level profitability and 51 generated positive operating cash flow.

At the end of the supply chain, we rely on the scale effect to strengthen the supply and demand capabilities. With the continuous expansion of the door-to-door network of Xinyang Youth Centers, the cost advantage brought by the scale purchase is accelerating. and many more. Thanks to this scale advantage, our cooperation with the upstream manufacturers continues to evolve, and we can also obtain a more competitive purchasing price. We have also obtained priority rights in terms of the high demand for medical cosmetics in the form of the OEM cooperation and the purchase agreement of the JT Group. At the same time, the launch and hot sales of these large items also proved the ability of Xinyang to create large items, which will further enhance our attraction to upstream manufacturers. For the supply chain, our expensive networks give us more bargaining power.

As our network expands, procurement cost advantage from larger volumes are being unlocked at a faster pace. With that leverage, we deepen collaborations with upstream partners to gain price-competitive deals. Exclusive OEM agreements and tiered procurement contracts also gather priority partners' rights in the high-demand categories. Meanwhile, the momentum of our blockbuster projects proves our capability in building blockbusters while further increasing our appeal to upstream manufacturers. We will keep pushing existing blockbusters, and over the next two years, We have a robust pipeline of new products to help us improve growth margin.

Meanwhile, backed by a central operations platform and AI, we can allocate resources and manage equipment, warehousing, and customer

and many more, driving better presenter economics. In short, with continued optimization of upstream costs and percent of rating efficiency, we are confident about ongoing growth margin improvement. We will keep leveraging our mix of skill, deepen upstream collaboration, and broaden AI adoption to drive high-quality growth.

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

Good evening, Mr. Jin, Mr. Xia, thank you for accepting my question. Congratulations to the company for continuing to achieve high-performance growth in this quarter. My question is about the profit and loss situation at the group level. I would like to ask Mr. Guan Li Cheng what is the core driver of the group's low-pricing level this year and how to steadily promote the group to the profit and loss direction. Good evening, Jin Zong, Xiang Zong. Thank you for taking my question. Congratulations on the decent results with the high quality goals this quarter. My question is about our profitability. What are the core levers for the loss reduction this year? And how do you plan to move toward the group level's profitability? Thank you.

Thank you, Daisy. Thank you, Daisy. To sum up, our core level for loss reduction this year in one word, it is focus. We are focused on the main track of our clinic business and profitable operations. The current sales of bubble and real estate are continuously contributing profits and positive cash flow. The chain of chain businesses of the Youth Institute is still in a strategic investment stage at a high-speed growth stage. This is actually a relatively ideal cash combination. On the one hand, we want to ensure that the profit level of existing profit businesses is stable. On the other hand, we want to continue to improve the operational efficiency of chain businesses and promote chain businesses to achieve overall profits. From an operating portfolio perspective, our pop and injectable sales business continue to generate profits and operating cash flow. Our clinic business is in a high growth phase and remains in a strategic investment stage.

This represents a well-balanced business mix. On the one hand, we remain solid profit levels for our existing profitable business. On the other hand, we keep improving the operation efficiency of our clinic business to drive its overall profitability. Meanwhile, we scale back investment in other loss-making business through store closures, disposals, and reduced capital allocations. so that group resources can be increasingly focused on these two priorities.

连锁业务的盈亏平衡点是相对清晰的。 在现有的成本结构下,固定成本是可以根据开店的数量和节奏进行锚定的。 那么边际贡献的部分取决于连锁业务的规模增长, 锚力的提升速度以及获客的效率。 连锁业务在过去的十个季度维持了超过130%的一个高增速, 锚力率也是在不断提升的。 The break-even point for our clinic is relatively clear. Under our current cost base,

and others. Fixed costs can be anchored based on the number and pace of new store openings. Contribution margins depend on scale growth, the rate of growth margin improvement and consumer acquisition efficiency. Our clinic business has maintained a high growth rate of over 130% for the past 10 quarters. Growth margins have been rising and customer acquisition efficiency keeps improving. We expect to see substantial continued improvement in clinic growth margins in Q3 and Q4 of this year. With operating leverage kinking in, fixed costs being diluted by scale effects, plus the upcoming peak business season in autumn and winter, overall profitability for the clinic segment is a very near and achievable target.

Secondly, in terms of cost optimization, Second, on cost optimization, back office resources will also follow the same focus principle mentioned above. We will concentrate on key business and critical tasks. Through standardized operations,

We will boost capabilities and efficiency to continuously drive cost reduction and operational improvement.

随着新养青春诊所门店规模的扩大,品牌认知度和用户心智已经建立,老代型列店贡献的新客战比已经持续稳定在50%以上。 As the footprint expands, brand awareness and consumer mindshare have taken root.

The followers now account for over 50% of new customers. On top of that organic traffic, we will prioritize ROI as the core metrics to refine brand marketing investment.

This concludes our question and answer session and today's conference call.

Thank you for joining us today you may now disconnect