So-Young International Inc. (NASDAQ:SY) Q3 2025 Earnings Call Transcript

So-Young International Inc. (NASDAQ:SY) Q3 2025 Earnings Call Transcript November 17, 2025

So-Young International Inc. beats earnings expectations. Reported EPS is $-0.09, expectations were $-0.12979.

Operator: Ladies and gentlemen, thank you for standing by for So-Young’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 Qiao. Please proceed, Mona.

Mona Qiao: Thank you, operator, and thank you, everyone, for joining So-Young’s Third Quarter 2025 Earnings Conference Call. Joining me today on the call is Mr. Xing Jin, 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 today’s call, and we will be making forward-looking statements. Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under GAAP in our earnings release on our Investor Relations website and filings with SEC. At this time, I’d like to turn the call over to Mr. Xing Jin.

Xing Jin: [Interpreted] Hello, everyone, and welcome to today’s earnings call. In Q3, we continued to advance the strategic build-out of our branded aesthetic centers business, while deepening the foundation of its development and operating systems. Our long-term investments in the aesthetic center businesses are increasingly translating to a 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 fueled our year-over-year top line growth momentum. This quarter, net loss attributable to So-Young increased, mainly due to a sequential decrease of RMB 31 million in revenue from business other than the aesthetic center business.

Q&A Session

We remain confident that these revenues will stabilize in Q4. Since launching So-Young’s clinic live medical aesthetic chain last year, we have continuously enhanced its standardization at digital management while improving central level efficiency and service quality. After 1 year, our brand now operates the largest number of centers nationwide among live medical aesthetic chains with a total number of 42 centers as of today, including 41 directly operating centers and 1 franchise center. We remain on track to reach our year-end target 50 centers. As of September 30, cumulative service visits exceeded 600,000, ranking among mass market chain brand 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 brand equity.

Now let me walk you through our Q3 operational highlights. On the branded aesthetic center business builds upon the strong growth momentum. In Q3, revenue reached RMB 184 million, up 26% quarter-on-quarter and 305% year-over-year, further solidifying its role as the core of our business. As of September 30, So-Young 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 volumes are also expanding. As of September 30, total number of active users of So-Young clinic exceeded 130,000. Total number of verified treatment visit surpassed 89,800 in the quarter, up 33% quarter-over-quarter and 280% year-over-year with total number of verified aesthetic treatment performed surpassed 194,700, up 26% quarter-on-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 capital sales remains at a low level and decreased quarter-on-quarter. In Q3, the proportion of new customers acquired via referrals rose to 46%. We also deepened cooperation with platforms such as Meituan, further improving brand exposure and user conversion through targeted advertising and content selling. New customers from public domain channels increased 38% quarter-on-quarter with continued optimization and public domain customer acquisition costs. We have upgraded our membership system during the quarter. So tiered operations benefits, incentives and personalized services, we increased user retention and customer lifetime value.

In Q3, core members defined as user at level 3 and above grew by over 10,000, up 40% quarter-over-quarter. These core members continued a high double-digit percentage of revenue and nearly 70% quarterly repurchase 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. We continue to refine our blockbuster products, focusing on premium products with repeat purchase rates at word-of-mouth. In Q3, we optimized our blockbuster product portfolio and double down on refined operations for key offerings. By the end of September, we preannounced the launch of Miracle PLLA version 3, which delivered robust presales performance with over 1,300 orders completed within 2 days.

Under a one order per customer limit. For energy-based device treatments as they exclusive distributor of BBL treatment in China, we made BBL, our highest penetration blockbuster offerings in Q3, and we will continue to drive its growth in Q4. Overall, revenue contributions from blockbuster products rose to over 30%. And this core offerings continue to unlock growth momentum, we are opening greater room for synergies with supply chain. 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 60% client framework, including our clients, risk control supervision, internal audit, medical service delivery and information security department.

This reinforces traceability across the medical service process. In Q3, we completed 55 centers inspections and emergency drills. By the end of third quarter, our physician team exceeded 150 ranking first by count among live medical aesthetic chamber-wise nationwide. All doctors have completed internships or training at public hospitals and passed our unified training and assessment, ensuring a consistent and reliable medical service experience across every center. Our business practices received recognition from mainstream media. In October, People’s Daily online published a special commentary noting that So-Young is starting 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 transparency standardization and inclusive access to build a service system that truly puts customer at ease. We continued to strengthen our medical aesthetic supply chain. In Q3, shipments of Elasty exceeded 59,800 units, up above 63% quarter-over-quarter. Due to the combined impact of seasonal factors and industry prosperity in Q3, revenue of POP declined by RMB 80 million quarter-over-quarter. GMV for verified medical aesthetic services was around RMB 260 million with per capita in center GTV rate up 6% year-over-year. We continue to optimize the content recommendation and traffic distribution mechanisms to improve conversion efficiency.

Looking ahead, we will continue pursuing our long-term goal of 1,000 centers, expanding buildout 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 live 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 CFO, Nick, who will walk through the financial results followed by the Q&A session.

Hui Zhao: 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 a 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 were RMB 67 million, down 25% year-over-year primarily due to a decrease in the order volume of medical equipment. Revenues from other services were RMB 18.9 million, down 67.6% year-over-year, primarily due to a decrease in revenues from So-Young Prime. Cost of revenues were 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 were 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 So-Young 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 user acquisition activities for our aesthetic centers. G&A expenses were RMB 88.6 million, up 26.7% year-over-year and 12.4% quarter-over-quarter, primarily due to the onetime accrual of approximately RMB 5.8 million year-end bonuses and the business expansion of our branded aesthetic centers.

R&D expenses were RMB 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 onetime accrual of approximately RMB 3.6 million year-end bonuses and the 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 So-Young International Inc. was RMB 64.3 million compared with net income attributable to So-Young International, Inc. of RMB 20.3 million during the same period last year. Non-GAAP net loss attributable to So-Young International, Inc. was RMB 61.6 million compared with non-GAAP net income attributable to So-Young 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 and short-term investments were 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 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 aesthetics 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.

Operator: [Operator Instructions] The first question comes from Hai Jingpang with CITIC Securities.

Hai Jingpang: [Foreign Language] So okay, let me briefly translate myself. This is Hai Jingpang from CITIC Securities. So first of all, congratulations on the company’s continued rapid expansion of the chain clinics. So could you share more about the openings plans for next year, including your original strategy and expected pace for the new clinic openings by quarter?

Xing Jin: [Interpreted] 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 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 repurchase rate potential, which will help us quickly build up regional density and amplify brand 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 game experience for long-term expansion.

Operator: The next question comes from Stacy Chen with Haitong International.

Stacy Chen: [Foreign Language] I will translate myself. First of all, congratulation to the management for achieving such rapid growth even during the off-season quarters. I noted that you have released the core member data this quarter. So could you explain more about the membership system for the aesthetic center business and how we conduct the membership operations?

Xing Jin: [Interpreted] The membership system is core to aesthetic centers operations each time, a user companies visit, a record is created, which helps us build a clear tiered membership system from Level 1 to 8 and identify high-value users with more committed and ongoing engagement. Level 3 and above are defined as core members. They have higher center visit frequency and greater flexibility to select additional services with annual spending 2.5x 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 repurchase rate of nearly 70%. We provide tiered benefit and service touch points based on individual user consumption patterns, which ensures they continuously perceive brand value and received positive reinforcement, further bolstering repeat purchase rates.

In Q3, our membership operations made solid progress. Users with verified business increased by nearly 40,000, up 36% quarter-on-quarter, including over 10,000 new core members up 40% quarter-over-quarter. Additionally, we’ve also enhanced repeat customer value operations, specifically repeat customer revenue reached RMB 120 million in Q3, up 32% quarter-over-quarter, accounting for 65% of aesthetic treatment service revenues, verified treatment visits from repeat customers surged over 4 times year-over-year to 50,000, while ARPU also increased. These metrics all exceeded our targets. Going forward, we will continue — we will focus on conversion of highway active users and extending the life circle of high-value users.

Operator: The next question comes from Nelson Cheung with Citi. We will move on to James Wong with GS Securities.

James Wong: [Foreign Language] My question for company is how is the Miracle PLLA 3.0 are starting since its end of September launch and what is new compared to the previous version and what’s the plan for promoting it?

Xing Jin: [Interpreted] Miracle PLLA version 3 was an important upgrade on the supply chain. In China’s medical aesthetic market, PLLA is still mostly used as an injectable for shipping. Before launching, we conducted research in South Korea and found that the medical practice there adopt a more standardized and safer skin booster technique after multiple rounds of testing, we launched [indiscernible] in terms of products, its ultra microsphere comes with 5 key features, including ultra smoot ultra solid, ultra fine, ultra pure and ultra active across safety results and longevity, these features make the product the best fit for [indiscernible]. Moreover, with a overall performance upgraded Miracle PLLA version 3 is also more competitively priced offering consumers a high-quality yet value-for-money experience.

Regarding the promotion, we made upgrade based on the market landscape and user pain points, to capture user mind share, we adopted [indiscernible] a miracle more suitable for skin boosters and introduced the concept of ultra microspheres to take the lead in the segment. We also released 2 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 ARPU and user loyalty. Market feedback shows that Miracle PLLA version 3 is receiving a high attention.

We implemented an online purchase limit of 1 purchase per user. From these purchases, we can say that about 56% of users paid the Pro version priced at RMB 4,999, reflecting the trust they place in our brand and product. In the next year or 2, the PLLA that we have been working on upstream is expected to receive approval for launch, which should reduce procurement cost by several times. Overall, Miracle PLLA version 3 is not just a product upgrade, it’s an important part of supply chain construction and blockbuster strategy. We will adopt the same approach for future categories. We will continue to deepen the vertical integration of our supply chain, further enhanced safety and continuously convert upstream manufacturers into long-term supply customers.

Simultaneously, we will leverage our advantage in marketing products, doctors and channels to differentiated areas and solid our brand moat.

Operator: The next question comes from Nelson Cheung with Citi.

Nelson Cheung: [Foreign Language] Congratulations on a solid quarter. With the expanding aesthetic center count, how do we ensure the safety and compliance of the entire chain system? And how is the internal quality control mechanism work?

Xing Jin: [Interpreted] Safety is our top priority. We have built a 6-pillar complaint 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. We adhere to high standards and resource. On the treatment side, we only offer safe, mature medical aesthetic treatment with clear mechanism and solid user feedback to avoid potential risks. On the personnel side, we implement regular doctors’ qualification assessments with an acceptance rate of around 10%. All doctors are also required to complete preemployment training and regular emergency drills to ensure the highest professional service and emergency response capabilities.

Medical service delivery, we implement a tiered diagnosis that matches treatment 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. If there is any user feedback or dispute, we handle it at headquarters with crisis response team composed of key departments, including user experience, PR, GR and legal. Currently, our average response time is under 2 hours with issue resolution completed within 2 days. The compliance rate is below 1%. Going forward, we will continue to uphold the highest standards of safety and compliance with digital and AI tools. We aim to further enhance cost control efficiency and ensure consistent medical service quality and user safety across all centers as the business continues to grow rapidly.

Operator: The next question comes from Jenny Xu with CICC.

Jenny Xu: [Foreign Language] I will repeat it in English. So how does the management view the potential for improving the profitability of the aesthetic center business in the future?

Xing Jin: [Interpreted] We believe the first priority now is to expand our user base and ensuring improvement of operating profit as it scales. As the operating model gradually matures, we are confident profitability will improve. 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 the consumable costs. For instance, we recently upgraded Miracle PLLA from Version 2 to Version 3 as the new products, 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 economics of scale, the fixed cost in data operations will be further diluted. On the revenue side, as users increasingly prioritize resource and professionals, they are willing to spend on premium treatment, coupled with offering long-term high quality medical aesthetic products, operations of the existing [indiscernible] trajectory, leveraging our blockbuster product strategy, treatment volume have gradually concentrated on a strong number of SKUs, with the revenue share of blockbuster products increasing. The top 9 products contributed over 30% of revenue in Q3. This lays a solid foundation to further improve our profit margins through proprietary customized products. Once the number of aesthetic centers and verified treatment visits reach a central level, we will focus on housing the 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.

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