So-Young (SY) Q4 2025 Earnings Call Transcript

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DATE

March 25, 2026, 7:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Xing Jin
• Vice President of Finance — Hui Zhao

TAKEAWAYS

• Total Revenue -- RMB 451 million, representing 25% year-over-year growth and setting an all-time quarterly high for the company.
• Aesthetic Center Revenue -- RMB 248 million, showing 205% year-over-year growth and surpassing the high end of previously issued guidance by approximately 10%.
• Quarterly Verified Treatment Visits -- Exceeded 125,000, a 178% increase compared to the previous year.
• Total Verified Aesthetic Treatments Performed -- Surpassed 289,400, up 168% on a year-over-year basis.
• Aesthetic Centers Opened -- 49 medical aesthetic centers operational at year-end, ranking first nationwide by count; 10 net new centers opened during the quarter.
• Profitability Progress -- 25 centers achieved profitability and 39 centers generated positive operating cash flow during the quarter.
• Active Users -- Over 170,000 active users as of quarter end, highlighting ongoing expansion of So-Young’s consumer base.
• Full-Time Physician Team -- 211 physicians employed at year end, up 41% from the end of Q3, all with public hospital backgrounds and qualified through internal certification, with more than half holding attending physician or higher status.
• Product Mix/Blockbuster Products -- Four major products contributed over 37% of revenue in the quarter with sequential growth, underpinning core business momentum.
• Information and Reservation Service Revenue -- RMB 125.7 million, down 27% year over year, attributed to a decline in medical service provider subscriptions.
• Medical Product and Maintenance Revenue -- RMB 69.3 million, reflecting a 20% drop year over year due to lower medical equipment order volumes.
• Other Services Revenue -- RMB 17.7 million, marking a 41% decrease year over year, primarily due to reduction in So-Young Prime revenues.
• Cash and Short-Term Investments -- RMB 936.4 million at year-end, down from RMB 1,253.2 million last year, reflecting capital deployment for center expansion.
• Net Loss Attributable to So-Young -- RMB 108.8 million, reduced from RMB 607.6 million in the prior year period; Non-GAAP net loss was RMB 93.4 million vs RMB 53.2 million last year.
• Revenue Breakdown by Center Phase -- 17 mature phase centers generated RMB 102.5 million (approximately RMB 8.4 million per center), 19 growth-based centers contributed RMB 89 million (approx. RMB 4.7 million per center), and 13 ramp-up phase centers delivered RMB 16.6 million; mature center average revenue is nearly twice that of growth phase centers.
• Guidance for Q4 2026 Aesthetic Treatment Services -- Revenue expected between RMB 258 million and RMB 278 million, forecasting year-over-year growth of 171%-181%.
• Planned Expansion -- At least 35 new centers to be opened in 2026, with a strategic shift toward balancing scale with heightened profitability focus.
• Center Economics in Second-Tier Cities -- Mature centers reported average monthly sales per square meter of RMB 7,000; one center (goudaSuzhou Su Plaza) surpassed RMB 1 million in monthly revenue within three months of opening.
• Customer Acquisition Cost (CAC) -- Maintained below 10% of revenue for the full year, with management crediting referral model and strategic brand partnerships for the efficiency.

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RISKS

• Declining Revenue in Non-Core Segments -- Information and reservation services revenue dropped 27% year over year, medical product and maintenance revenue fell 20%, and other services revenue decreased 41%, each due to declines in demand or provider participation as cited by management.
• Decrease in Cash Reserves -- Cash and equivalents declined to RMB 936.4 million from RMB 1,253.2 million, primarily reflecting capital deployment for center expansion, which may reduce financial flexibility.
• Widening Non-GAAP Net Loss -- Non-GAAP net loss increased to RMB 93.4 million from RMB 53.2 million, highlighting ongoing profitability challenges despite scaling revenues.
• Goodwill Impairment -- Recorded impairment of goodwill and long-lived assets totaling RMB 19.7 million, indicating management-acknowledged asset value concerns.

SUMMARY

So-Young International (NASDAQ:SY) reported record quarterly revenue, propelled by rapid scaling of its branded aesthetic center business, which crossed the 50% revenue contribution threshold for the first time. Management announced aggressive expansion plans for 2026, including the addition of at least 35 new centers and a strategic shift to prioritize profitability alongside growth. Notably, average revenue per mature center was nearly double that of growth-phase centers, providing visible operating leverage as the network matures. Profitability improvements were evident as 25 centers reached break-even, yet material losses from legacy segments persist and cash reserves decreased, reflecting sustained investment intensity.

• Management emphasized a multi-tier compliance framework, data security achievements including TIA certification, and a broad supplier network as strategic differentiators.
• Center performance in second-tier cities equaled or approached first-tier city metrics, signaling scalability outside premium urban markets and an ability to leverage cost advantages.
• Customer acquisition cost efficiency was highlighted, with the ratio consistently under 10% and attributed to referral incentives and co-branded campaigns with global IPs such as Little Print and Disney.
• Guidance for the next quarter anticipates continued momentum in core revenue, forecasting 171%-181% year-over-year growth from aesthetic treatment services.

INDUSTRY GLOSSARY

• ADS (American Depositary Share): A U.S.-traded security representing shares in a foreign company, used by So-Young International for its NASDAQ listing.
• BBL (BroadBand Light): A cosmetic phototherapy treatment leveraging light energy for skin rejuvenation, referenced as a flagship service offering.
• CAC (Customer Acquisition Cost): The total marketing and operational expense incurred to acquire one new customer, used explicitly as a key efficiency benchmark by management.
• LTV (Lifetime Value): The projected cumulative revenue attributed to a customer throughout their engagement period with the company, highlighted as a driver of profitability improvements.
• NMPA (National Medical Products Administration): The regulatory authority for medical devices and products in China, cited regarding Class II device market entries.
• TIA (Trusted Information Assurance): An industry-recognized certification for data security, achieved by So-Young as a point of differentiation in compliance and user trust.

Full Conference Call Transcript

Xing Jin: [Interpreted]

China's medical aesthetic industry structural adjustments as upstream capacity expanded and consumers become more value driven. Return to value has become the common theme. For institutions pursuing scaled and repeatable models, this offers a critical window to build long-term edge. In Q4, we continued to improve our investment and make progress in 3 directions. First, delivering scale breakthrough stand and operational improvements in our aesthetic center business; second, reinforcing medical service delivery capabilities to build a long-term trust-driven mode; and third, building our supply chain barriers to enhance brand and seize opportunities. We are pleased to see these choices are reflected in our financial results.

The total revenue was RMB 451 million in Q4, up around 25% year-over-year, hitting a record high for quarterly revenue. Revenue from our aesthetic center business reached RMB 248 million, up over 205% year-over-year and about 10% above the high end of guidance. Our aesthetic center business has become our largest revenue contributing segment and growth engine with So-Young Clinic becoming the largest medical aesthetic chain in China by a number of centers. Now let me walk you through our progress in Q4 and our 2026 deployment, focusing on our aesthetic center business. -- our aesthetic center business has recently achieved 2 milestones. The first is our center footprint.

By year-end 2025, we have opened 49 medical aesthetic centers, ranking first nationwide among all tiers by center count. The second is the treatment volume. In Q4, verified treatment visits exceeded 125,000, up 178% year-over-year. Verified aesthetic treatment performed exceeded 289,400, up 168% year-over-year. As of December end, our total active users surpassed 170,000. The growth in both treatment volume and user base validates the market demand and ongoing recognition from consumers.

As we scale, center level operational efficiency continues to improve. In Q4, 25 centers achieved profitability and 39 centers generated positive operating cash flow. In 2026, we will accelerate the expansion, opening at least 35 new centers. We will deepen density in core cities, including Beijing, Shanghai, Guangzhou and Shenzhen, while also expanding our presence in second-tier cities. As our operations mature, we are confident in further improving profitability while maintaining expansion and driving the overall profitability at an early date.

Second, we are enhancing our medical service delivery capability to build a long-term trust-driven mode. In Q4, we enhanced our service across 3 dimensions: physician team, compliance framework and data security. The improvements reinforced the user trust.

Year-end 2025, our full-time physician team expanded to 211, up 41% from the end of Q3, ranking first nationwide among our peers by physician count. In terms of quality, all our physicians have a public hospital background and pass our regular internal certification before practicing. Over half of them hold attending physician qualifications or hires. On average, our team possesses over 6 years of clinical experience and those with a year or more and So-Young have delivered over 6,200 treatments per physician, reflecting our solid clinical capabilities.

In 2026, we will launch a new physician initiative to accelerate recruitment and build talent pipeline. The program will provide industry-leading hands-on practice, systematic training and clear care path, enabling physicians to quickly achieve top-tier performance and our physician team's expertise deepens and user wordfmouth growth, we expect her physician productivity to grow, driving continued improvement in profitability. On compliance, we established a 6-pillar compliance framework and a regular inspection mechanism. With digital software, we deliver full process traceability of medical services.

On data security, So-Young is the first in the industry to obtain the TIA certification, setting a benchmark for the industry. Our ongoing investments are reflected in user behavior. Core members have a quarterly rate of 80% and their average annual spending is around 16,500. The growing user trust is the foundation of our low-cost sustainable growth. we will continue to build on our supply chain, enhance and seize market opportunities.

As of Q4, we worked with 18 top-tier domestic suppliers and have procured nearly 1,400 devices. For injectables, we have 42 top-tier upstream partners with a cumulative procurement of over 700,000 units -- in 2025, the upstream supply expanded sharply. The NMPA issued over 50 certificates for Class II medical devices, up over 60% year-over-year. For So-Young, this delivers a broader product portfolio, more durable procurement cost and enhanced user experience. Backed by the China's largest light medical aesthetic chain, we continuously enhance our supply chain layout capabilities. We have also built long-term partnerships with core suppliers and established a volume price linkage mechanism, securing the industry's best procurement prices.

On our product layout in Q4, we launched a light version Merle PLLA version 3 printing, which lowers the customers' barrier to trail. We are also the exclusive distributor of [indiscernible] Biopharma's HP solution, now approved for marketing in China, which expands our portfolio. For BPL treatment, we improved bra influence and conversion through IP co-branding and immersive experiences. In Q4, we partnered with [indiscernible] and launched the Youth [indiscernible] Radiant campaign. The campaign leveraged multiple channels and formats, including celebrity treatment experience, pop-up events and in-store visits by bloggers on notes. Our corporate wins generated about 2 million on-site visits and total exposure on that note exceeded 40 million.

This online and offline synergy reinforced our brand awareness and lead sales conversion for BBL, aligning brand building with revenue.

Our product integration, new products launches and market activities reflect our commitment to the blockbuster strategy. In Q4, this blockbuster products delivered strong results contributing over 37% of revenue with sequential growth and remain a core engine for our aesthetic business.

Meanwhile, our brands have been fully validated in off-line scenarios. To date, we have successfully established a presence in high-end shopping malls nationwide including Beijing H1, Guangzhou ICC Mall, Hangzhou Care Center, and so on. These premium shopping malls reinforce our brand recognition and help us reach target customer groups. Finally, let me share our outlook for the future. As the industry gradually shifts back to a regional quality-driven path, value distribution is being reset. We believe that in the long run, the industry will be led by the closest consumers and capable of delivering the most trusted services.

For So-Young, 2026 is a turning point. We are moving from scale first to a engine of scale and efficiency. Our aim is not only to open centers, but also to prove the model is profitable as we expand. Our systematic capabilities over the past 2 years give us great confidence that our ambition is to beyond that. As our center network, supply chain and medical service delivery create a flywheel, we will lower access barriers and let more consumers enjoy safe, transparent and inclusive services while delivering sustainable returns to shareholders. We believe companies that create value will earn long-term recognition from the market.

Now I'll hand it over to our VP of Finance, Ms. Hui Zhao, to walk through the financial results, followed by the QA session.

Hui Zhao: Thank you, [indiscernible], and thank you, everyone, for joining us today. I'm [indiscernible], Vice President of Finance. On behalf of our CFO, I will walk you through our fourth quarter 2025 operating and financial results. For additional details on our fourth quarter and full year performance, please refer to the earnings release we issued earlier today. Unless otherwise noted, all amounts are in RMB. 2025 marked a transformational year for So-Young. The rapid scaling of our branded extent extended network fundamentally reshaped our business profile, and we are pleased with where we are today.

Total fourth quarter revenues reached RMB 46.7 million, up 24.8% year-over-year. This was driven by continued expansion of our branded aesthetic center business. As of year-end, our cash position stood at RMB 936.4 million, providing solid runway to fund our expansion plans while preserving financial flexibility.

Let me now walk you through performance by business segment. Our branded aesthetic center business sits at the core of our growth with our platform and upstream supply chain businesses serving as complementary dealers. Together, they form an integrated value chain across the medical aesthetics industry. Revenues from aesthetic treatment services reached RMB 248.1 million, up 205.3% year-over-year. This has been our largest revenue segment since Q2 and this quarter, it crossed the 50% revenue contribution threshold for the first time.

Also, this marks our third consecutive quarter of exceeding the high end of our segment guidance. This strong performance was driven by both continued network expansion and improving cost center economic. As of December 31, we operated 49 So-Young clinics across 15 major cities, reflecting a net addition of 10 centers during the quarter.

Now breaking down revenue by central development phase. Our 17 mature phase centers generated RMB 102.5 million in revenue or roughly RMB 8.4 million per center. Our 19 growth-based centers contributed RMB 89 million or roughly RMB 4.7 million per center. The 13 ramp-up phase centers contributed RMB 16.6 million Notably, average revenue per center nearly doubles as centers progressed from growth phase to maturity. With 19 centers currently in the growth phase, we see a clear built-in revenue growth driver as these centers continue to mature.

And for their profitability, 25 centers achieved profitability during the quarter, including 15 mature phase centers generated positive operating cash flow as intense move through their development cycle, profitability has consistently followed. This gives us confidence in the financial trajectory of our newer centers.

Turn to other statements. Information and reservation services revenues were RMB 125.7 million, down 26.8% year-over-year, primarily due to a decrease in the number of medical service providers subscribing to information services on our platform. Sales of medical products and maintenance services revenues were RMB 69.3 million down 19.9% year-over-year, primarily due to a decrease in the order volume for medical equipment.

Other services revenues were RMB 17.7 million, down 40.7% year-over-year, primarily due to a decrease in revenues from So-Young Prime. I will now walk you through our financials below revenue in more detail. Cost of revenues was RMB 255.9 million, up 67.2% year-over-year, primarily driven by the expansion of our branded aesthetic centers to break this down further. Cost of aesthetic treatment services was RMB 189 million, up 189.9% year-over-year. Cost of information and reservation services was RMB 10.1 million, down 5.6% year-over-year. Cost of medical products sold and maintenance services was RMB 41.6 million down 4% year-over-year. Cost of other services was RMB 15.3 million, down or 7% year-over-year.

Total operating expenses were RMB 327.7 million compared with RMB 815.2 million in the same period of 2024.

Excluding the impact of goodwill impairment charges in both periods, total operating expenses increased moderately year-over-year, reflecting continued investment in scaling our aesthetic center business. Sales and marketing expenses were RMB 168.7 million, up 25.8% year-over-year. This was primarily driven by branding and user acquisition investments according branded aesthetic center growth.

G&A expenses were RMB 101.9 million, up 3.5% year-over-year due to the business expansion of the branded aesthetic centers. R&D expenses were RMB 37.4 million, down 12.4% year-over-year due to improved staff efficiency. We also recorded an impairment of goodwill and longest assets charge of RMB 19.7 million based on our annual [indiscernible] impairment assessment. Income tax benefit amounted to RMB 0.6 million compared with income tax expenses of RMB 2.1 million in the same period of 2024.

The net loss attributable to So-Young was RMB 108.8 million compared with RMB 607.6 million in the same period of 2024. Non-GAAP net loss attributable to So-Young was RMB 93.4 million, compared with RMB 53.2 million in the same period of 2024. Basic and diluted loss per ADS improved to RMB 1.08 compared with RMB 5.92 in the same period of 2024.

As of December 31, 2025, our cash and cash equivalents restricted cash and term deposits, term deposits and short-term investments totaled RMB 936.4 million compared with RMB 1,253.2 million as of December 31, 2024. The decrease primarily reflects our accelerated investment in brand aesthetic center expansion.

Looking ahead, the fourth quarter of 2026, we expect aesthetic treatment services revenue to be between RMB 258 million and RMB 278 million, representing year-over-year growth of 171.2% to 181.3%. This guidance reflects our confidence in the sustained momentum of our branded aesthetic center business. As of today, our standard network has crossed the 50 center milestone.

In 2026, we will shift our focus from peer network expansion towards balancing growth with profitability improvement. We plan to add no fewer than 35 new centers in 2026, while leveraging our expanding scale to improve gross margins and drive efficiency gains across the network.

This concludes my remarks. Operator, we are now ready for the Q&A session.

Operator: [Operator Instructions]

Our first question comes from [indiscernible] with Citi Securities.

Unknown Analyst: [Interpreted]

Let me briefly translate. I'm [indiscernible] from Citi Securities. So firstly, congratulations on the accelerating growth in Q4. And we are glad to see that there is improving gross margins in the aesthetic centers business and service business. So I have a question regarding the gross margin prospects. So could you share more about the gross margin plan and source further margin expansion.

Xing Jin: [Interpreted]

Thank you for your question. We believe that 3 core factors shape margin performance. The pace of center openings, consumable costs and seasonal promotions. Based on these factors, we have planned to enhance gross margin. First, we will continue optimizing the pace of center openings and the ramp-up efficiency of new centers. Upfront investments to new centers can create short-term margin pressure and license approval timing in our industry is often predictable.

Going forward, we aim to adopt a more even cadence throughout the year combined with our integrated operating system. This accelerates each center's path to efficient operations and short-term ramp-up cycle. For 2026, new openings will represent a smaller share of total centers compared to last year. This will reduce margin dilution of concentrated new center investments. Meanwhile, the proportion and profit contribution from mature centers will rise, driving the overall gross margin levels.

Second, we will optimize consumable costs. Currently, we have built deep collaborations with upstream partners, including [indiscernible] Biopharma, China Medical System [indiscernible] Farm and [indiscernible] Medical. This guarantees reliable supply and ongoing cost optimization.

Looking ahead, we will strengthen empower with our partners and convert more high-quality upstream manufacturers in 2 long-term partners. At the same time, we will continue advancing our broad faster strategy. In the fourth quarter, our 4 major products accounted for over 37% of revenue as our core offering through the procurement cost panties will become more pronounced. Third, we will refine our seasonal promotions. Digital accounting remains a critical channel for user base expansion, customer conversion and building long-term user assets.

Going forward, we will optimize our product mix and integrate campaigns more deeply with the membership system, targeting repeat transit among core members. We aim to transform short-term traffic into customers' LTV. This will drive gross margin.

Operator: Your next question comes from John Wong with GF Securities.

John Wang: This is John Wang from Guangfa Securities. Congratulations to the company on this outstanding performance. My question is about the development of So-Young Clinic in second-tier cities. And I would like to know whether the current operating performance of these centers has met management's expectations. Could management also share some operational updates on the several representative centers?

Operator: Ladies and gentlemen, the line for the management has been disconnected. Please stay connected while we reconnect the line for the management. Thank you for patiently holding, ladies and gentlemen. The line for the management has been reconnected. Yes, please go ahead.

Xing Jin: [Interpreted]

From an industry perspective, while China's medical aesthetic market in second-tier cities have reached relative maturity, they like to have first-tier cities in medical service delivery capabilities and operational standards. We ensure that our centers in second-tier cities deliver the same level of medical service quality as is in first tier cities. Based on our operational track record, centers in second-tier cities are also growing well, both the traffic and per customer treatment are rising, and the revenue per center is close to first tier levels.

As of December, mature centers in secondary cities such as Wuhan Tiandi Center and Changshu Center generated an average sales per square meter of RMB 7,000 per month. Among the opening in second-tier cities, [indiscernible] stood out. These centers have maintained robust revenue growth with industry-leading CAGR. For example, goudaSuzhou Su Plaza broke 1 million in monthly revenue with 3 months since opening, proving that our model works in second-tier cities. In terms of profitability, mature centers in second-tier cities enjoyed slightly higher margins due to lower staff payroll and rental expenses compared to the first tier cities.

[Interpreted]

We believe that the fundamental advantage of a chain model line in reduced transaction costs and enhanced brand trust, scale and accessibility. At present, most players in secondary cities are single center operators without meaningful density. Based on how we involved in both tier cities and So-Young's live trust grows, customers will tend to push out multiple treatments per visit. Looking ahead, we believe the process improvement, resource synergy and traffic management will drive continued gains in our second-tier centers and economics of scale will take effect across our network. We are confident that this will lead to stronger profitability and market competitiveness in second-tier cities.

Maggie Huang: And let me translate my question. This is Maggie Huang from CICC. Congratulations for our excellent performance. And we would like to know whether the competitive advantages in customer acquisition costs has been maintained amid its continued scaled expansion. And could management also share the customer acquisition strategy for 2026?

Xing Jin: [Interpreted]

Our edge in customer acquisition cost has been preserved and further strengthened. During the quarter, we opened a significant number of new centers and seize the opportunities brought by major shopping campaigns, including Double 11 and Double 12, bringing a new quarterly record for new customers. For the full year, our average CAC remained below 10% of revenue, a highly competitive benchmark in this industry. We sustained this advantage primarily through our customer referral model. Through our membership system and differentiated benefits, we will incentivize existing high-value users to refer new customers. This will not only lower CAC, but also improve the quality and retention rate of new users.

Second, we will continue to optimize the mix of our public and private domain customer acquisition channels and enhance their LTV through refined operations. Meanwhile, we will continue to roll out co-branding initiatives with the world's top IP. Recently, we launched co-branding programs with 2 renowned IP, Little Print and Disney. Through brand storytelling, we reached a broader customer base and resonated with users emotionally, further amplifying our brand equity. As our footprint expands and user base grows, we anticipate further reductions in tax.

Operator: Your next question comes from the line of David Chang with Haipeng International.

David Chang: [Interpreted]

I'll translate my question. Thank you management for taking my question.

My question is about the user growth and the membership operations, especially for core members. Could management share the specific measures you will take to improve the LTV of core members going forward?

Xing Jin: [Interpreted]

For our core members, Level 3 and higher members continue to show solid growth momentum. Our user service show that core members still have significant room for growth in their annual medical aesthetic budgets, laying a foundation for us to boost user LTV. This quarter, revenue contribution from core members and their quarterly return rate both exceeded 80% with new core members surpassing 14,000. Consumer performances are shifting towards efficiency and clinical capabilities. Against this background, we will focus on, first, expanding our product portfolio. We will introduce more comprehensive product offerings, including standardized side treatments and mid- to high-end services. We expect this to elevate user value.

Second, we will further optimize our membership system by offering differentiated benefits and service touch points so as to realize tiered user segmentation and provide corresponding services. This will strengthen co- members' perception of our brand value, building a positive feedback loop, which will drive their loyalty. These measures will lead to improved presenter profitability and provide strong momentum for our long-term growth.

Operator: This concludes our question-and-answer session, and this concludes our conference for today. Thank you for attending today's presentation. You may now disconnect.

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