So-Young International, Inc. Q1 FY2025 earnings call

• In Q1 2025, total revenues were RMB297.3 million with a net loss. Primarily driven by investments in expanding aesthetic centres. • Continued vertical integration and expanded network of aesthetic centres. So-Young clinic operates in first and second tier cities' commercial areas, increasing store density. • By end of Q1, there were 23 So-Young clinic centres in nine major cities. Aesthetic centre business revenue reached RMB98.8 million, up 21.6% QoQ and 551.4% YoY. Verified paid visits exceeded 45,500, up 18.5% QoQ and 874.3% YoY. Verified paid aesthetic treatments performed surpassed 92,900, up 14% QoQ and 989.4% YoY. • Launched natural energy event brand campaign, optimized service offerings, partnered with SkinCeuticals. • Upstream comprehensive medical aesthetic supply chain advanced, with over 1,500 institutions served with injectables supply chain solutions, shipments of elastic units up ~14% YoY. • POP business contributed profits and traffic, with GMV for verified medical aesthetic services at RMB300 million.

In the first quarter of 2025, total revenues were RMB297.3 million. Net loss attributable to So-Young was RMB33.1 million, and non-GAAP net loss was RMB31.5 million. The aesthetic centre business generated revenue of RMB98.8 million, accounting for approximately 33.1% of total revenues. The POP business had GMV for verified medical aesthetic services reaching approximately RMB300 million.

• Expect aesthetic treatment services revenues for Q2 2025 to be between RMB120 million and RMB140 million, representing 337.3% to 410.1% increase from same period in 2024. • Prioritize long-term value creation, invest in expanding branded aesthetic centre network and refining vertically integrated business model, inspired by Sam’s Club model.

• Trade tensions between China and the US may impact cost structures and competitive landscape. Direct impact on aesthetic centre business minimal, but upstream may be affected by tariff increases on imported devices.

Q: How is So-Young Clinic different from traditional medical institutions like Mylike and Yestar?

A: So-Young's aesthetic center business uses a fast casual model. It focuses on non-surgical anti-aging treatments, requires less clinic space, is more widely distributed, depends less on individual doctors, has lower per customer spend but higher frequency compared to traditional institutions like Mylike and Yestar which offer broader services, have larger clinics, rely more on individual doctors, and have lower visit frequency.

Q: Will CapEx become a burden as the clinic network grows?

A: The company places great emphasis on business health, plans to open around 13 new clinics per year, carefully selects locations for new centres to ensure profitability, and is actively planning to roll out a franchise model to reduce CapEx pressure while improving operational efficiency as most aesthetic centres have achieved positive operating cash flow.

Q: How does Miracle Laser create synergy with the company's core business?

A: After integrating Wuhan Miracle Laser, it has consolidated product, talent, and processes to improve R&D capabilities. It supplies high-quality cost-effective equipment to So-Young's aesthetic centres, serves China's long tail aesthetic market, and aims to explore a 2B2C model to improve user experience and business efficiency.

Q: How do trade tensions impact the company?

A: Trade tensions primarily affect through change in cost structures and shifts in competitive landscape. Direct impact on So-Young's aesthetic centre business is limited, but it sees an opportunity to strengthen domestic supply chain. Upstream may be more affected with tariff increases on imported devices, but it views this as an opportunity to upgrade China's aesthetic supply chain.

Q: Can management leverage the cash balance for future investment and cost reduction?

A: Encouraged by early results of the aesthetic centre business, the company will maintain a measured pace of self-operated aesthetic centre expansion, prepare to launch a franchise model, optimize offerings, deepen upstream collaboration, and enhance clinic efficiency to further improve cost control and gross margin.