Title

Presentation

So-Young International Inc. beats earnings expectations. Reported EPS is $-0.07, expectations were $-0.10487.

Operator: Ladies and gentlemen, thank you for standing by for So-Young’s First Quarter 2026 Earnings Conference Call. [Operator Instructions] 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.

Mona Qiao: Thank you, operator, and thank you, everyone, for joining So-Young’s First Quarter 2026 Earnings Conference Call. Joining me today on the call is Mr. Xing Jin, Founder, Chairman and CEO; and Ms. Zhang Sha, VP of Finance. Before we begin, please refer to the safe harbor statements in our earnings release, which applies today’s call as 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. Please also note, all figures mentioned in this call are in RMB. And this time, I’d like to turn the call over to Mr. Xing Jin.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] Hello, everyone, and welcome to today’s earnings call.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] entering 2026, China’s medical aesthetic industry continues to evolve with demand becoming more [ retained ] and supply continue to grow. Large-scale operational capabilities and a uniform delivery framework have become the key mode for top players to achieve high-quality growth. We capitalized on this by expanding our aesthetic center business and advancing our dual engine of scale and efficiency initiative. As a result, we achieved robust performance. In Q1, total revenue reached RMB 433 million, up around 46% year-over-year. Revenue from our aesthetic center business reached RMB 282 million, up around 186% year-over-year.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] now let’s take a closer look at our recent progress across a few core areas.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] The So-Young Clinic continued to lead So-Young’s light medical aesthetics chain market, ranking #1 by center count treatment volume and user base. Our operational efficiency and profitability also continued to improve.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] In terms of center footprint, as of today, So-Young Clinic has expanded into 17 cities with 59 centers in total. That is a net add of 10 centers compared to year-end 2025. On treatment volume in Q1, verified treatment visit exceeded 148,000, up 172% year-over-year. The number of verified treatment performed was over 325,000, up 164% year-over-year. Our active user base expanded further reaching over [ 310,000 ] by March end. Within that, the number of Level 3 and above core members exceeded 63,000. Core members maintained a high quarterly repurchase rate as we further our [ LTV, ] driven by excellent user experience and [ positive ]. The proportion of new customers from referrals rose to 52% in Q1. In addition, by enhancing platform partnerships and content marketing, new customers acquired through public domain continued to grow while our overall CAC remained well under control.

We also enhanced brand awareness and drove conversion by deepening partnerships with renowned artists. For example, we launched Disney co-branded products in major commercial areas nationwide for our medical collagen product line. This campaign is attracting active participation from potential customers and generated remarkable results. On top of that, we invited famous Chinese actress, [ Fan Bingbing ], and popular Thai actress [ Mai ], to experience and endorse our collagen products.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] Moreover, we continue to improve our per center economic model through standardized operations, we accelerated the ramp-up of new centers as we refine our product portfolio and customer acquisition. Our per center operational efficiency improved steadily. In Q1, the number of profitable centers rose to 41 and 48 centers generated of operating cash flow. Aesthetic center business gross margin reached 27%, reflecting continued operating efficiency gains.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] This year, we will continue expanding our center footprint and broadening access. We will focus on major Tier 1 cities. As economics of scale take effect, new centers ramp faster and operational efficiency improves further, we expect per center revenue to keep climbing and the chain’s financial model to improve meaningfully.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] Next, let’s turn to So-Young’s professional medical delivery capabilities and reputation building. The long-term development of medical aesthetic chain business relies on high-quality medical service delivery. To this end, we continue to build core competitiveness across the physician team, diagnosis and treatment quality and user experience. By March end, our full-time physicians reached about 230, up 9% from year-end 2025, maintaining industry leadership. We have also been enhancing physician capabilities and digitalizing operations to elevate the user experience and ensure consistent medical practice.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] In Q1, we established the So-Young Clinic medical R&D and training center and [indiscernible] control center. Focusing on medical research and training, the R&D center [indiscernible] have labs for energy-based devices, injectables, [indiscernible] and testing. This enables us to thoroughly evaluate products and devices in the market. As upstream product offerings continue to diversify, this capability keeps us grounded in clinical fundamentals, not marketing claims. We evaluate products based on [indiscernible] determining whether they are safe, effective and appropriate. From these filings, our R&D team developed treatment [indiscernible] SOP. Meanwhile, the training center is now fully operational. All physicians joining So-Young Clinics must complete intensive comprehensive training at the center and pass all assessments before practicing.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] [indiscernible] control center is the brain of our clinic chain operations. [indiscernible], the safety and compliance office closes the loop on compliance. It allows headquarters to remotely monitor safety and compliance in our clinics, receive offline alerts and coordinate emergency responses. It enables real-time integration to ensure medical safety. The user experience of this managed user journey, service design and complaints, any user feedback is immediately escalated to headquarters for action, which helps us continuously improve our medical workflows. In addition, the operations office tracks operating data across centers nationwide to keep operations healthy.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] Thanks to our professional medical team, excellent treatment quality and reliable premium services, we continue to [ cement ] our foundation of user trust and reputation. Looking ahead, we will harness So-Young’s brand influence and wide market presence to attract more outstanding physicians. That will further enhance our medical delivery capabilities and service quality, reinforcing reputation and brand momentum. In turn, this creates a positive flywheel for long-term business growth.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] Now moving to our supply chain. We remain committed to diversifying and reinforcing our supply chain. The multi-dimensional [indiscernible] upstream partnerships we aim for win-win outcomes while driving health industry build. In April, we announced our partnership with Jinbo Biopharmaceutical through joint development, both parties will leverage their respective advantage to pool resources and create revenue. The partnership grants us exclusive right to Jinbo’s new products, [ WeiYiMei ColPact ]. On that basis, we launched our Miracle Collagen, offering 4 scenario anti-aging solutions using recombinant collagen for head and face. This is our 20th green label product. Their launch further reinforced our Green Label system, one that focused on compliance, on traceability and price transparency, while allowing us to optimize products based on our user feedback.

By connecting directly with upstream partners and using reverse customization, we are improving supply chain efficiently and meeting user needs better. We also launched enhanced collagen, which combines [ hydro ] and collagen type 17 to address [ spring ] dermal irritation. The upbranded [ Sakura ] skin booster version 2 further enriched our offerings through deep supply chain collaboration and accelerated rollout of proprietary products. Our blockbuster strategy is unlocking group momentum. Revenue from blockbuster products reached to 41% in Q1, driven by robust demand for BBL, thermage and other things.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] In closing, I’d like to emphasize that as [indiscernible] industry enters a new phase of high-quality, inclusive group, companies with standardized medical delivery capabilities, scalable operating efficiency and a powerful supply chain will be real positioned for the future. Market leadership advantage will become increasingly evident. With full industry chain capabilities built over years, we have developed a unique competitive edge. Looking ahead, we will firmly advance our 1,000 centers goal. While maintaining a measured expansion pace, we will continue optimizing our operating and financial performance. We aim to create value for users and shareholders and to drive industry’s long-term development.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] now I’ll hand it over to our VP of Finance, Zhang Sha, to walk through the financial results followed by the Q&A session.

Unknown Executive: Thank you, Xing, and thank you, everyone, for joining us today. I’m Zhang Sha, Vice President of Finance. I will walk you through our first quarter 2026 financial results. For additional details on our first quarter performance, please refer to the earnings release issued earlier today. Unless otherwise noted, all amounts are in RMB. We started the year of strongly with a robust Q1 performance. Total revenue for the quarter grew 45.6% year-over-year to RMB 432.8 million, driven by the — driven by the sustained growth momentum in our branded aesthetic center business. We are also encouraged that our supply chain is not only supporting our chain operations, but also fuel growth in our upstream supply chain business.

Let’s dive into each business segment. Revenue from aesthetic treatment service increased to RMB 282.4 million, up 185.8% year-over-year, and [ is citing ] the high end of our guidance for the fourth consecutive quarter. This segment accounted for over 65% of total revenue during the quarter. Its gross margin expanded by 8.4 percentage points year-over-year and 3.3 percentage points quarter-over-quarter. We are pleased to see our core growth driver continue to gain traction in both revenue and profitability as we execute our dual-engine [indiscernible] focused on scale and efficiency. As of March 31, we operated 54 So-Young Clinics across 16 major cities, reflecting our net addition of 5 centers during the quarter. Now breaking down revenue by center phase.

Our [indiscernible] mature phase centers generated are RMB 150 million revenue or roughly RMB 7.5 million per center. Our 23 growth phase center contributed RMB 109.5 million or roughly RMB 4.8 million per center. The [indiscernible] ramp-up business center contributed to roughly RMB 22.9 million or roughly RMB 2.1 million per center. It’s worth mentioning that average revenue per center for this in the ramp-up fees saw significant growth, both year-over-year and quarter-over-quarter. They clearly validate how our increasingly standardized operations are effectively [indiscernible] team their ramp-up trajectory. In the meantime, average revenue per mature phase center remains solid and well above the level seen in ramp-up and growth fee centers.

In terms of profitability, 41 centers were profitable and 48 centers generated positive operation cash flow during the quarter, reflecting a net addition of [ 15 and 9, ] respectively, from last quarter with a robust pipeline steadily transitioning into maturity. Alongside our ongoing scale expansion and operating efficiency enhancement, we are confident in our ability to continue driving revenue growth and improving our profitability profile of this segment. Turning to our other segments. Information and reservation services revenues were RMB 8.3 million, down [ 34% ] year-over-year, primarily due to the increase in the number of medical service providers subscribing to our information services. Sales of medical products and maintenance service revenues were RMB 57.1 million, up 2.8% year-over-year, driven by an increase in order value for medical products.

Other services revenues were RMB 2.9 million, down 39.3% year-over-year due to lower insurance broker revenue. I will now walk you through our financial [indiscernible] revenue in more details. Cost on revenue were RMB 251 million, up 65.8% year-over-year, driven primarily by the expansion of our branded aesthetic centers. Breaking that down by segment, cost of aesthetic treatment service was RMB 205.8 million, up 156.4% year-over-year. Cost in the information and reservation service was RMB 6.4 million, down 72.5% year-over-year. Cost of medical products sold and maintenance service was RMB 30.4 million, down 0.1% year-over-year. Cost of other services was RMB 8.4 million, down 51.6% year-over-year. Total operating expenses was RMB 239.7 million, up 26.6% year-over-year and more notably growing at [indiscernible] pace than total revenues.

Sales and marketing expenses was RMB 130.8 million, up 33.7% year-over-year. The increase was mainly driven by higher branding and user acquisition spending as well as higher payroll costs to support our branded aesthetic centers. G&A expenses were RMB 84.5 million, up 42.5% year-over-year, with [indiscernible] the continued expansion of branded aesthetic centers. R&D expenses was RMB 24.3 million, down 24.2% year-over-year, driven by improved staff efficiency. Income tax benefits were RMB 0.8 million compared with RMB 1.6 million in the prior year period. Net loss attributable to So-Young was RMB 49.2 million compared with RMB 33.1 million in the prior year period. Non-GAAP net loss attributable to So-Young was RMB 46.6 million compared with RMB 31.5 million in the prior year period.

Basic and diluted loss per ADS was RMB 0.48 compared with RMB 0.02 in the primary year period. As of March 31, 2026, our cash and cash equivalents, restricted cash and term deposits, term deposits and short-term investments totaling RMB 880 million compared with RMB 936.4 million as of year-end 2025. The decrease reflects strategic capital allocation to accelerate the expansion of our branded aesthetic center and fuel the next phase of growth. Turning to our outlook Q2. Given our continued confidence in the branded aesthetic center business, we expect aesthetic treatment service revenues to be between RMB 307 million and RMB 317 million, representing year-over-year growth of 112.6% to 119.5%. Looking at 2026, we are advancing key initiatives across supply chain optimization, medical delivery excellence and operational efficiency.

Together, these efforts will strengthen our leadership position, drive sustainable growth and support a clear path to profitability. This concludes my remarks. Operator, we are now ready to begin the Q&A session.

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Operator: [Operator Instructions] Our first question comes from [ Jin Peng He ] with Citic.

Unknown Analyst: [Foreign Language] I’m [ Jin Peng He ] from Citic Securities. So I have a question about the medical aesthetic industry. So we’re seeing the industry has experienced a slow down in overall growth and also intensified competition in the past 2 years. So under this background, what are the development status and consumer characteristics in China’s medical aesthetic industry? And looking ahead, what opportunities do you see?

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] So we remain bullish on [ light ] medical aesthetic in China, while the broader market is [indiscernible], structural opportunities remain. As of 2025, China’s medical aesthetics market had exceeded RMB 317 billion. Light medical aesthetic captures nearly 80% of the market, overtaking surgical treatment as the mainstream choice. This segment also has leading growth potential globally.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] So this internal structural change is driven by evolving consumer habits in the following areas. First, medical aesthetic conception is evolving from changing appearance to anti-aging. People now want to look younger, not to become someone else. Second, consumers are becoming more rational, they will pay a premium for better technologies, but not marketing hype. Third, medical aesthetic is gaining rising popularity. Second- and third-tier cities now match first-tier cities in both ARPU and consumer awareness. We believe this new demand is difficult for traditional clinics to meet as they focus on the affluent with [indiscernible] services, prepaid card requirements and large single city centers. What’s needed is what we offer, convenient, standardized affordable and premium services through a clinic chain.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] Overall, the industry has entered a new phase, more device supply, greater price transparency and fiercer yet more mature competition. Upstream supply has been accelerating since 2025, particularly how categories like PLLA and collagen. We’ve already seen more than 10 Class III certificates approvals in each category, and we expect more to come eventually reaching the same level of diversified anti-aging products. For So-Young, that means more product choices, better procurement costs and enhanced user experience.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] In this environment, medical aesthetic clinics [indiscernible] connecting upstream manufacturers and consumers will [ fade ] only if they can’t deliver effective affordable, safe and reliable products and services. In 2026, we expect competition to remain intense across the industry. Weaker players will continue to exit and survivors will need differentiated positioning. In our case, So-Young Clinic is positioned like a [indiscernible] medical aesthetics known for consistency, affordability and accessibility. Combined with our established supply chain and diversified customer acquisition channels, this gives us a competitive edge over traditional high-end and single-store private centers. As we scale, our advantage will compound.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] Looking ahead, China’s medical aesthetic market is forecast to exceed RMB 600 million by 2030, making it the world’s most promising market in this industry. We believe [indiscernible] treat biggest opportunity lies in network expansion through uniform services. China’s market capacity can accommodate thousands clinic chain brands. So-Young is confident in becoming one of them.

Operator: Our next question comes from [ James Jang ] with GF Securities.

Unknown Analyst: [Foreign Language] This is [ James Jang ] from GF Securities. My question is we can say that the purchase rates among core member is very high, indicating a strong user stickiness. Can you help us understand whether there is still upside potential for high-value users’ annual spending or where you grow ARPU through [indiscernible] expansion? Which blockbuster products can we expect?

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] Yes, indeed, we are making strong repurchasing and consumption stickiness among core members. This gives us a solid foundation to grow user value over time.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] Going forward, we will increase ARPU in 2 ways. First, we will provide dedicated services for core members at Level 3 and above. Further [indiscernible] personalized services, we will enhance brand value. Combined with curated SKUs, this allows us to meet our users’ diverse and evolving light medical aesthetic needs while increasing lifetime value. Second, we will continue expanding our mid- to high-end offerings while promoting coordinated diagnostics and bundled complementary treatment solutions. This will meaningfully boost ARPU.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] For blockbuster products, popular treatments like thermage and BBL have been strong drivers of ARPU. New products launched with upstream partners are also gaining traction. Our skin booster [indiscernible] biopharma and collagen products with Jinbo Biopharmaceutical have shown strong market reception and sales momentum. These new products enrich our mid- to high-end product portfolio while also driving with [indiscernible] behavior and ARPU. They are definitely something to look forward to.

Operator: Our next question comes from Daisy Chen with Haitong Securities.

Kewei Chen: [Foreign Language] I’ll translate myself. Could management in average more [ talent ] reserve and organizational capability building, like how is the reserve of high-quality doctors? And what unique mechanism that the company resolved for the [indiscernible] retention of the professional talent?

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] We have always said that premium services are defined by high-quality medical delivery. This is critical for earning user trust and driving consumption, which is why talent development is so central for us.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] It all starts with rigorous hiring and training standards. As China’s largest light medical aesthetic, So-Young continues to attract high-quality doctors with physician team keeping expanding. We now have about 230 full-time physicians. All hires undergo rigorous selecting and we require every physician to complete theoretical and hands-on training and assessments before practicing. As mentioned in our remarks, our physician training center and R&D center in Beijing headquarters are now up and running. These facilities further strengthen our already high standards for skills and treatment consistency across our network.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] In terms of talent retention, we have built a multilayer long-term retention mechanism. Our physician turnover rate is currently in line with the industry average. First, on performance incentives, we offer competitive commission linked to treatment volume to reward high performers. Second, we designed clear progression path for physicians at different levels. For instance, doctors and [ PT 2 ] level or above can receive customized training through our deep collaboration [indiscernible] partnerships like [ Allergan ]. We also help them do professional influencers through live streaming visibility and other [indiscernible] building opportunities. Additionally, we have a real defined promotion ladder from in-clinic physician to regional physicians and ultimately to master group physicians.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] Meanwhile, as an international company, So-Young has established a comprehensive talent incentive system. We offer equity plans to core and outstanding employees by aligning individual growth with company development. Employees share the benefits of our success, fostering both division and a deeper sense of volume. We are confident that So-Young’s brand awareness, robust training system and diversified talent retention mechanism will continue to underpin a solid pipeline of quality physicians and other outstanding talents, further reinforcing our medical delivery capabilities.

Operator: Our next question comes from Jessie Xu with CICC.

Unknown Analyst: So could you walk us through what innovations the company has introduced in restructuring traditional clinical service model? And what are the specific changes in the roles and positioning of physicians and consultants.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] We are driving innovation through 2 main paths, upgrading our diagnosis and treatment systems, and advancing our physician-led initial consultation policy.

Xing Jin: [Foreign Language]

Thomas Chong: [Interpreted] On the systems front, we are working with experts to categorize users skin types by their underlying causes. This work enables us to build templates and create treatment guidance that ensure standard services. We also plan to upgrade skin detectors, integrating big data and AI to enable automatic treatment recommendations. We believe these initiatives will help us automate our diagnosis and treatment process, boosting operational efficiency across our clinics.

Xing Jin: [Foreign Language]

Mona Qiao: [Interpreted] In parallel, we are rolling out institution-led [indiscernible] policy, where doctors are involved from the very first customer visit to provide professional in-person consultations. Under this model, the rule of consultant shifts from leading consultation to supporting the doctor in diagnosis and treatment. This adjustment highlights the medical nature of our services, which will enhance customer trust and improve conversion. We have highlighted this policy in selected clinics. In future, we plan to have 100% new customers consulted by a physician with physician-led consultation gradually expanding to returning customers.

Operator: This concludes our question-and-answer session and today’s conference call. Thank you for joining us. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

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