[Management View]
Total revenue for the quarter was RMB 378.7 million, marking a 7% decrease year-over-year, largely due to a decline in platform information services. Aesthetic treatment services revenue surged 426.1% year-over-year to RMB 144.4 million, surpassing the high end of management's guidance. The branded aesthetic center business became the leading revenue segment for So-Young International, marking a milestone in its multiyear strategic transition. Management confirmed that 19 out of 20 centers operating at least three months became operating cash flow positive in June 2025, indicating a shift toward center-level profitability.

[Outlook]
For the third quarter of 2025, So-Young expects aesthetic treatment service revenues to be between RMB 150 million and RMB 170 million, representing a 230.5% to 274.6% increase from the same period in 2024. The company plans to open around 10 new aesthetic centers in Q3 2025 and targets 50 centers by the end of 2025, with initial franchise pilots planned for Q4.

[Financial Performance]
Total revenue declined 7% year-over-year, mainly due to a decrease in the number of medical service providers subscribing to information services. Information and reservation services revenue fell 35.6% year-over-year. Net loss attributable to So-Young International was RMB 36 million for the quarter, reversing from net income of RMB 18.9 million in the same period last year. Other services revenue dropped 64% year-over-year.

[Q&A Highlights]
Question 1: So we are particularly interested in the expansion plan of your [indiscernible]. Can you provide any details on what the plan would look like this year and next year? And what's the current progress and strategy for our franchise model?
Answer: We aim to grow the number of centers to 50 by the end of this year with a large portion already opened and more than 10 planned to open in the second half. In key cities such as Beijing, we expect to reach 10 centers by year-end 2025. Next year's expansion plan will be finalized in Q4 this year, though initially, we anticipate new openings will match or exceed 2025 levels. Long term, we target to achieve 1,000 centers within 8 to 10 years. Franchising is not our immediate focus due to manageable CapEx and shorter payback periods of self-operated centers. However, we plan to pilot 2 to 3 franchise centers in Q4 this year.

Question 2: How does the management's view of the growth potential of the Chinese medical aesthetics market? And in this highly competitive market, how will you adapt to the challenge of the new player entering?
Answer: We remain optimistic about the prospects of China's medical aesthetic market. Compared with mature overseas markets such as South Korea, China's current penetration remains below 5%, indicating substantial growth potential. The light medical aesthetic sector in China represents a fundamentally distinct model versus traditional plastic surgery. Our analysis forecasts that the penetration rate of light medical aesthetic chains in China will reach 30% in the future, and So-Young is poised to achieve roughly 25% market share. We believe that sustainable low-cost customer acquisition, diversified upstream supply chain network, and organizational competence in operating a large-scale physical network are essential for success.

Question 3: What is the outlook for the customer acquisition cost and marketing expenses in the future? And regarding the cost structure, can management share your views on the future trend of the consumables and the share of your cost structure?
Answer: So-Young ranks among the industry leaders in customer acquisition efficiency. Currently, our average customer acquisition cost is only a few hundred RMB with over 70% of new customers coming from low-cost private domain traffic and referrals from existing customers. Long term, sustainable low-cost acquisition hinges on accumulated brand influence. We will launch localized marketing initiatives in key cities to enhance brand visibility and improve marketing efficiency. We are also optimizing cost structure by increasing the proportion of self-controlled offerings used in our aesthetic centers. The scaling of our network will significantly enhance our bargaining power in procurement and drive further reductions in consumable costs.

Question 4: Do we expect any bottlenecks when recruiting doctors in the future? And do we rely heavily on center managers?
Answer: There are about 40,000 doctors in China's medical aesthetics sector, and we continue to see doctors moving from public hospitals into this sector. We have established a tiered diagnosis and treatment system that matches treatment to doctors based on their level. We are also building regional training centers to provide structural support for their professional growth. Regarding center managers, our organizational structure naturally reduces reliance on them. We operate on an online appointment booking and on-site service verification model. Management of marketing, product management, pricing, and recruitment of doctors and nurses are handled by our dedicated center operations platform.

Question 5: What factors will differentiate So-Young's product strategy and planning from others in the future?
Answer: Our product strategy focuses on anti-aging treatments with all treatments developed around this core theme to ensure consistency across our entire portfolio. We emphasize overall cost effectiveness and make sure each treatment delivers a healthy gross margin. We continue to advance our blockbuster strategy, focusing on the treatment level rather than individual products. We will closely monitor changes in market demand and competitive trends to introduce new products that address customer demand in a timely manner.

Question 6: Can management provide any updates on future development plans for the POP business?
Answer: Our POP business has always been a segment with relatively high gross margins and net margin. While revenue has fluctuated this quarter, it remains a key pillar of the group's profitability. We will maintain strict cost controls to preserve its healthy margins. As our aesthetic center network continues to expand, we will actively promote synergies between the POP and aesthetic center business. We plan to establish a more refined merchant classification and rating mechanism on our platform to improve traffic monetization efficiency and create new incremental growth for the POP business.

[Sentiment Analysis]
The tone of the management was confident and optimistic, emphasizing strategic growth and operational efficiency. Analysts showed interest in expansion plans, market potential, and cost management, reflecting a positive outlook on the company's future performance.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|--------|---------|---------|------------|
| Total Revenue | RMB 378.7 million | RMB 407.4 million | -7% |
| Aesthetic Treatment Services Revenue | RMB 144.4 million | RMB 27.4 million | +426.1% |
| Net Loss | RMB 36 million | Net Income RMB 18.9 million | - |
| Information and Reservation Services Revenue | RMB 135.2 million | RMB 210 million | -35.6% |
| Other Services Revenue | RMB 23.2 million | RMB 64.4 million | -64% |

[Risks and Concerns]
Total revenue declined 7% year-over-year, mainly due to a decrease in the number of medical service providers subscribing to information services. Information and reservation services revenue fell 35.6% year-over-year. Net loss attributable to So-Young International was RMB 36 million for the quarter, reversing from net income of RMB 18.9 million in the same period last year. Other services revenue dropped 64% year-over-year.

[Final Takeaway]
So-Young International's Q2 2025 earnings call highlighted the company's strategic shift towards its branded aesthetic center business, which has become the leading revenue segment. Despite a decline in total revenue and a net loss for the quarter, the company demonstrated strong growth in aesthetic treatment services and operational efficiency. Management remains confident in their expansion plans and market potential, with a focus on sustainable low-cost customer acquisition and product innovation. The company's robust cash reserves and strategic initiatives position it well for future growth and long-term value creation for shareholders.