So-Young International, Inc. Sponsored ADR Class A Stock

Ladies and gentlemen, thank you for standing by for So-Young's Second 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.

Thank you, operator, and thank you, everyone, for joining So-Young's Second Quarter 2026 Earnings Conference Call. Joining the call today are Mr. Xing Jin, our Founder, Chairman and CEO; and Ms. Shannon Shen, our CFO. Before we begin, please refer to the safe harbor statement in our earnings release, which applies to this call and we will be making forward-looking statements. We will also discuss non-GAAP financial measures. Reconciliations between GAAP and non-GAAP measures are included in today's earnings press release.

Please also note, all figures mentioned in this call are in RMB, unless otherwise stated. With that, I'd like to turn the call over to Mr. Xing Jin.

[Foreign Language].

[Interpreted] Hello, everyone, and welcome to today's earnings call. In Q2 2026, we continue to expand our aesthetic treatment business, guided by our scale and efficiency backed by our ever-improving medical capabilities, a uniform delivery framework and wider AI adoption. The business enhanced its operational ability and delivered a robust performance. Its Q2 revenue reached RMB 330 million, up roughly 130% year-over-year, beating the upper end of guidance by about 5%. As a result, group revenue achieved a quarterly record, growing 33% year-over-year to about RMB 510 million (sic) [ RMB 505.2 million ]. With better operating efficiency, net loss attributable to the company narrowed by 37% year-over-year to RMB 22.7 million.

[Foreign Language].

[Interpreted] Now turning to the key business developments in Q2. The dual engine approach delivered clear results this quarter. So-Young Clinic kept a healthy pace of expansion while operating quality improved. By the end of Q2, So-Young Clinic expanded into 18 cities with 65 centers in total. The larger footprint improved accessibility. More importantly, it reinforced brand awareness and captured consumer mind share, driving continued growth in treatment volume and user base. On treatment volume, verified visit exceeded 165,000 in Q2, up 145% year-over-year. Verified aesthetic treatment performed were above 362,000, up 134% year-over-year. On the user front, active users reached over 250,000 (sic) [ 255,000 ] by the end of June.

In particular, the number of Level 3 and both core members exceeded [38,000]. The quarterly rate of core members remained robust, reflecting high user regard for our quality. New customers count also grew quarter-over-quarter with over 50% of them being referrals. This lowers blended acquisition costs while building a loyal, high-quality user base, which in turn positions us to boost user LTV and retention. Meanwhile, both the volume and mix of public domain new customers rose confirming that our full channel acquisition playbook works.

[Foreign Language].

[Interpreted] Profitability also improved as we refined operating workflows and tightened resource coordination. As a result, in Q2, the number of profit centers rose to 47 with 51 generating positive operating cash flow. Gross margin of the aesthetic treatment business improved by about 3.8 percentage points year-over-year to 28.1%. This outcome validates our management approach.

[Foreign Language].

[Interpreted] Healthy growth of our aesthetic treatment business relies on a robust supply chain and enriched product lineup. In late April, Miracle Collagen, our joint product with Jinbo Biopharmaceuticals, launched to a warm reception with over 66,000 units sold to date. In June, we rolled out WeMed CoPack. It adopts self-cross-linking technology to create a gel texture without a cross-linking agent. WeMed CoPack helps build eye and face areas while promoting ongoing collagen regeneration for a natural look. Our partnership with Jinbo goes beyond a traditional buyer and vendor relationship. It is a move towards product co-creation, case development and long-term value alignment. Going forward, we plan to extend this model to more domestic and international medical device and treatment partners. This collaboration model will cover consumer insights, product definition, indication development, physician training, uniform protocols post-launch evaluation and continuous intervention, bringing advanced technology from R&D to real-world use at a faster pace.

[Foreign Language].

[Interpreted] Also introduced beauty version of Miracle PLLA. It uses a better calibrated PLLA microparticle diameter to improve injection outcomes. Beyond the collagen category, we are also expanding the product portfolio to meet diverse anti-aging demand.

[Foreign Language].

[Interpreted] Furthermore, we continued to enhance our uniform medical delivery capabilities. First, we expand our physician team to meet growing market demand. As of June 30, 2026, the number of full-time physicians increased to around 280. On top of that, we have kept physician capabilities and treatment workflows aligned. This is made possible by our medical R&D and training center treatment guidelines, video audits and other training and quality control mechanisms we have in place. In Q2, we partnered with leading upstream manufacturers, including Allergan and Jinbo to deliver 9 specialized training workshops, effectively enhancing our physicians' expertise and clinical skills. We also completed 12 regular training sessions as part of our new physician initiative.

By assessing theoretical knowledge and hands-on skills, we ensure our newly onboarded physicians are well prepared to deliver uniform and safe clinical care. Additionally, build a national command and control center, we coordinate medical workflows end-to-end to further elevate the user experience.

[Foreign Language].

[Interpreted] Finally, we are integrating AI with medical aesthetics to unlock innovative test for expansion. Under the constraints of medical safety, user privacy and data compliance, we believe AI's core value lies in empowering physicians, keeping delivery quality consistent and breaking the industry's ceiling on scale.

This approach will ultimately bring premium medical care for more consumers. Right now, our focus is on the data foundation, which powers service quality, user experience and upstream R&D enablement. Leveraging our years of industry data and capabilities across med platform, user operations and clinical practices, we are now building a real-world database and clinical AI infrastructure tailored for the industry. For example, our clinics launched a user-facing virtual medical dispensing platform and dual screens that treatment SOPs in real time, both have effectively boosted user trust.

[Foreign Language].

[Interpreted]Looking ahead, the principles of transparency, uniform delivery and accessibility will continue to guide us. We remain focused on building a premium medical service framework and deepening customer trust. We believe that as we expand ongoing refinement of our operating framework will drive continued gains in operating efficiency and margins. This will unlock greater economics of scale across our clinic chain. Meanwhile, we will further diversify our supply chain, advance AI-powered digital capabilities and deliver a more competitive product portfolio. We are confident that these initiatives will drive high-quality growth for our aesthetic treatment business.

[Foreign Language].

[Interpreted] Now I will hand over to our CFO, Shannon Shen, for a deep dive into Q2 financials, after which we will move to Q&A session.

Thank you, Qiao, and thank you, everyone, for joining our call today. It's my great pleasure to walk you through So-Young's second quarter 2026 performance. On behalf of the management team, I will now share with you our latest operational progress across 3 key dimensions: growth, efficiency and organizational effectiveness. Please note that all financial data will be presented in RMB terms, unless otherwise noted. First, in the second quarter of 2026, our aesthetic treatment business exceeded RMB 330 million in revenue, growing approximately 130% year-over-year and marking its 10th consecutive quarter of triple-digit year-over-year revenue growth. Not only has this propelled our total revenues to an all-time high with a 33% year-over-year increase.

But it has also enabled our aesthetic treatment business to achieve favorable economics of scale. Behind this clear upward growth trajectory and our rising brand momentum is our scaled capacity to deliver high-quality products and services. For digital natives, we offer wonderful product value that aligns with their consumption patterns, aesthetic preferences and online purchasing habits, thereby driving sustainable growth characterized by high frequency and high retention. While sustaining rapid top line growth, we remain unwavering in our commitment to growth quality and long-term sustainability with a laser focus on strengthening unit economics. We recently have raised our aesthetic centers capacity utilization benchmark by 50%, reflecting elevated expectations for per store revenue, labor productivity and sales per square meter.

Through operational excellence, streamlining customer flow to reduce redundant waiting period, optimizing dynamic staffing, leveraging intelligent inventory management, we expect to drive meaningful margin expansion at aesthetic centers. Going forward, our expansion strategy will be more disciplined and market responsive. We will dynamically calibrate our opening cadence based on regional utilization levels, enabling us to sustain high revenue growth while striking an optimal balance between scale and profitability. We prioritize sustainable growth over pure top line expansion. In the second quarter of 2026, we delivered a 37% year-over-year improvement in profitability.

Rapid expansion places extraordinary demand on organizational capabilities. Best-in-class organizational excellence is fundamental to sustaining high growth over the long term. To that end, we have made systematic investments in organizational infrastructure with a particular focus on compliance and user experience. We continue to advance end-to-end visibility across treatment workflows to enhance transparency and reinforce trust. Furthermore, we have closed the loop on user feedback. This cross-functional coordination enables us to maintain acute market sensitivity and continuously elevate service delivery quality and user satisfaction even as the business scales rapidly.

The company stands at a pivotal inflection point, pursuing high growth and operational efficiency in parallel, while advancing scale and profitability in lockstep. 10 consecutive quarters of triple-digit revenue growth validate our market acumen and execution discipline. This continuous refinement of center level unit economics, together with our market responsive expansion strategy ensures that our growth remains high quality and sustainable. Complementing this, our systematic investments in organizational capabilities provide the bedrock for long-term value creation.

Next, let's dive into each business segment. Revenues from aesthetic treatment services reached RMB 331.4 million, exceeding the upper end of guidance for the sixth consecutive quarter. The rollout of our loyalty program and systematic treatment protocols creates a 3 to 5 percentage points deferral between service delivery and recognized accounting revenue. Today's service generated future membership benefits -- while this tempers near-term reported revenue, it builds a deferred revenue base that underpins long-term growth. Net of this deferral impact, revenue still grew approximately 103%.

Looking at aesthetic centers data as of June 30, we operated 65 So-Young clinics across 18 major cities, reflecting a net addition of 11 centers during the quarter. Among them, 47 centers were profitable and 51 centers generated positive operating cash flow during the quarter, reflecting a net addition of 6 and 3, respectively, from last quarter. We also achieved same-store sales growth of 52%, substantially improved from 14% in the prior year period.

Turning to our other segments. Revenues from information and reservation services were RMB 87.9 million, down 35% year-over-year, primarily due to the decrease in the number of medical service providers subscribing to our information services. Sales of medical products and maintenance services revenues were RMB 73.9 million, down 2.8% year-over-year, primarily due to the decrease in order volume for medical equipment. Other services revenues were RMB 12 million, down 48.2% year-over-year due to a lower insurance brokerage revenue. Cost of revenues was RMB 282.4 million, up 53% year-over-year, driven primarily by the expansion of our branded aesthetic centers.

Total operating expenses were RMB 266.5 million, up 10.4% year-over-year. Specifically, sales and marketing expenses were RMB 153.5 million. From aesthetic treatment service perspective, our comprehensive customer acquisition cost remains at a healthy level, accounting for less than 10% of the revenue, coupled with strong user retention. Our overall customer acquisition model maintains sustainable. G&A expenses were RMB 88.6 million, up 12.5% year-over-year, reflecting the continued expansion of our branded aesthetic centers. R&D expenses were RMB 24.4 million, down 21.7% year-over-year, driven by continued improvements in staff efficiency.

Moving forward, we will continue to deepen AI integration across our operations, streamlining workflows and driving efficiency gains in R&D, clinical diagnosis and treatment and beyond. Income tax benefits were RMB 2.5 million compared with income tax expenses of RMB 1.9 million in the prior year period. Net loss attributable to So-Young was RMB 22.7 million, which narrowed by 37% compared with RMB 36 million in the prior year period. Non-GAAP net loss attributable to So-Young was RMB 21 million compared with RMB 30.5 million in the prior year period. Basic and diluted loss per ADS were both RMB 0.22 compared with RMB 0.35 in the prior year period.

As of June 30, 2026, our cash and cash equivalents, restricted cash and term deposits and short-term investments totaled RMB 848.2 million. Turning to our outlook. Please allow me to remind everyone that this contains forward-looking statements, which include risks and uncertainties that are beyond our control and could cause the actual results to differ materially from our predictions. Based on our current estimates, we expect revenues from aesthetic treatment services to be between RMB 352 million and RMB 362 million, representing year-over-year growth of 91.7% to 97.2%.

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

[Operator Instructions] The first question today comes from Jinpeng He with Citic.

[Foreign Language].

[Interpreted] Firstly, congratulations on the company's continued strong performance and impressive growth in the second quarter. So I have a question regarding the collaboration with Jinbo. So the collaboration is generating great momentum with innovation -- innovative partnership model. So what have both parties liked and what are the benefits?

[Foreign Language].

[Interpreted] We are pleased to have reached a reliable mutually beneficial partnership with Jinbo as medical aesthetic demand moves towards natural restoration, tissue regeneration and long-lasting outcomes. The recombinant human rights collagen will have a long lifespan. A developing upstream relationship with Jinbo, therefore, benefits our long-term growth.

[Foreign Language].

[Interpreted] More importantly, we are using real-world data to drive product and supply chain decisions. We analyze connections between user age, skin condition, treatment details, post-treatment reaction, feedback and repurchasing behavior. From there, we can pinpoint which products, which population area and treatment combination. This helped us optimize doctor training, procurement decision and inventory planning, which greatly reduces buying guesswork and excess inventory. It also lets upstream manufacturers move out of a closed R&D environment and integrate their products based on actual clinical insights. This enhances our operational efficiency and leverage in joint research, product innovation and partnership.

[Foreign Language].

[Interpreted] Going forward, we will extend this data feedback, co-creation model to more quality partners at home and abroad. In the past, many viewed downstream clinics only as distribution channels. Today, we are transforming our extensive clinic network into the industry's innovation infrastructure. By leveraging real-world consumer demand, hands-on experience and treatment outcomes to deliver R&D, we aim to accelerate technology innovation and product integration, ultimately delivering value to more consumers.

The next question comes from Jian Wang with GF Securities.

[Foreign Language].

Congratulations on the outstanding performance. Management mentioned a few AI initiatives. Could you elaborate more on how AI is being applied in the business? Where do you see the biggest value and future direction?

[Foreign Language].

[Interpreted] Medical aesthetics is a highly medical field with a low tolerance for error. It relies heavily on individual expertise. The core value of AI lies in transforming experience-driven hard-to-reproduce procedures into uniform visible and traceable offerings. This approach also helps distribute premium medical resources to lower-tier cities, which helps address imbalances in medical delivery.

[Foreign Language].

[Interpreted] In practice, our current focus is applying AI to product authentication, back-office quality control and data foundations and governance. QR code authentication verifies medicine and device traceability immediately, mitigating counterfeit-related concerns and building trust. End-to-end transparency builds the users' confidence in care and overall experience. We also use AI to break down top physicians experience into database. We then embedded it into our SOPs, case libraries and post-treatment feedback modules. That accelerates physicians development, aligns quality across centers and identifies irregularities in real time, lifting overall quality and customer experience.

[Foreign Language].

[Interpreted] In Q4 this year, we will roll out our first generation of fully intelligent centers, initiating widespread AI deployment across our network. We aim to replicate our high-quality medical delivery and operating capabilities via AI. Given our industry leadership and early mover advantage in digital infrastructure, we are confident that driven by AI, we can lead the industry into a new phase of high-quality growth.

The next question comes from Nelson Cheung with Citibank.

[Foreign Language].

We observed that the aesthetic center gross margin has improved this quarter. Would you walk through what are the key drivers for the improvement? And what are your future plans for gross margin expansion in the future?

Thanks Nelson. This is Shannon. [Foreign Language].

[Interpreted] Our gross margin increased by 3.8 percentage points year-over-year and 1 percentage point quarter-over-quarter, an excellent result that demonstrates a clear trend of sustained improvement, particularly considering our pace of opening 11 new centers in Q2. The gross margin improvement mainly reflects our dual engine of scale and efficiency approach to center operation and management.

[Foreign Language].

[Interpreted] For the center operation, we continue to enhance per center revenue per square meter, revenue per bed and labor productivity. We raised our initial bed capacity utilization benchmark by 50%. In other words, if the original plan assumed each bed could accommodate 10 treatments per day, we have now increased that target to 15. We are restructuring our service workflows around this new benchmark to reduce customer wait times. This not only improves the user experience, but also fully unlocks the operating leverage of our centers, thereby boosting both gross margin and operating profit. With a maturing operating framework, mature centers take a growing share of our footprint. Ramp-up periods of our new centers are getting shorter and making positive contributions to gross margin.

In Q2, 47 centers achieved center level profitability and 51 generated positive operating cash flow.

[Foreign Language].

[Interpreted] For the supply chain, our expansive network give us more buying power as our network expands procurement cost advantage from larger volumes are being unlocked at a faster pace. With that leverage, we deepened collaborations with upstream partners to gain price competitive deal. Exclusive OEM agreements and tiered procurement contracts also gave us priority partner rights in the high demand categories. Meanwhile, the momentum of our blockbuster products proves our capability in building blockbusters while further increasing our appeal to upstream manufacturers. We will keep pushing existing blockbusters. And over the next 2 years, we have a robust pipeline of new products to help us improve gross margin.

[Foreign Language].

[Interpreted] Meanwhile, backed by a central operations platform and AI, we can allocate resources and manage equipment, warehousing and customer operations more precisely, driving better per-center economics.

[Foreign Language].

[Interpreted] In short, with continued optimization of upstream costs and percent operating efficiency, we are confident about ongoing gross margin improvement. We will keep leveraging our economics of scale, deepen upstream collaboration and broaden AI adoption to drive high-quality growth.

The next question comes from Daisy Chen with Haitong.

Congratulations on the decent results with high-quality growth this quarter. My question is about our profitability. What are the core levers for the loss reduction this year? And how do you plan to move towards the group level profitability?

[Foreign Language].

[Interpreted] Thank you, Daisy. To sum up, our core lever for loss reduction this year, in one word, it is focus. We are focused on the main track of our clinic business and on profitable operations.

[Foreign Language].

[Interpreted] First, from an operating portfolio perspective, our POP and injectable sales business continue to generate profits and operating cash flow. Our clinic business is in a high growth phase and remains in a strategic investment stage. This represents a well-balanced business mix. On the one hand, we remain solid profit levels for our existing profitable business. On the other hand, we keep improving the operational efficiency of our clinic business to drive its overall profitability. Meanwhile, we scale back investment in other loss-making business through store closures, disposals and reduced capital allocation so that group resources can be increasingly focused on these 2 priorities.

[Foreign Language].

[Interpreted] The breakeven point for our clinic is relatively clear. On our current cost base, fixed cost can be anchored based on the number and pace of new store openings. Contribution margin depends on scale growth, the rate of gross margin improvement and consumer acquisition efficiency. Our clinic business has maintained a high growth rate of over 30% for the past 10 quarters. Gross margins have been rising and customer acquisition efficiency keeps improving. We expect to see substantial continued improvement in clinic gross margins in Q3 and Q4 of this year.

With operating leverage in fixed costs being diluted by scale effects plus the upcoming peak business season in autumn and winter, overall profitability for the clinic segment is very near and achievable target.

[Foreign Language].

[Interpreted] Second, on cost optimization, back-office resources will also follow the same focus principle mentioned above. We will concentrate on key business and critical tasks through standardized operations, digital management and AI enablement, we will boost capabilities and efficiency to continuously drive cost reduction and operational improvement.

[Foreign Language].

[Interpreted] Footprint expands, brand awareness and consumer mind share have taken root. Referrals now account for over 50% of new customers. On top of that organic traffic, we will prioritize ROI and the core metrics to refine brand marketing investment.

[Foreign Language].

[Interpreted] Taken together with continued revenue growth, operating efficiency gains and a leaner expense profile, we are confident in group level profitability going forward. Thank you.

This concludes our question-and-answer session and today's conference call. Thank you for joining us today. You may now disconnect.

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.

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.

[Foreign Language]

[Interpreted] Hello, everyone, and welcome to today's earnings call.

[Foreign Language]

[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.

[Foreign Language]

[Interpreted] now let's take a closer look at our recent progress across a few core areas.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

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.

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

[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?

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

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

[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?

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

Our next question comes from Daisy Chen with Haitong Securities.

[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?

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

[Foreign Language]

[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.

Our next question comes from Jessie Xu with CICC.

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.

[Foreign Language]

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

[Foreign Language]

[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.

[Foreign Language]

[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.

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.]

Ladies and gentlemen, thank you for standing by for So-Young's Fourth Quarter and Full Year 2025 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.

Thank you, operator, and thank you, everyone, for joining So-Young's Fourth Quarter and Full Year 2025 Earnings Conference Call.

Joining me today on the call is Mr. Xing Jin, our 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 renminbi unless otherwise stated.

At this time, I'd like to turn the call over to Mr. Xing Jin.

[Interpreted]

In 2025, China's medical aesthetic industry went through 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 breakthroughs 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 influence and seize opportunities.

We are pleased to see these choices are reflected in our financial results. The total revenue was RMB 461 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 live 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 our 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 the center 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. These improvements reinforced the user trust.

By 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 passed 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 career path, enabling physicians to quickly achieve top-tier performance and our physician team's expertise deepens and user word-of-mouth grew, we expect per 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 repurchase 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. Third, we will continue to build on our supply chain, enhance value journey 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 III 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 tier procurement prices.

On our product layout in Q4, we launched a lighter version Miracle PLLA version 3, which lowers the customers' barrier to trail. We are also the exclusive distributor of Xihong Biopharma HA solution, now approved for marketing in China, which expands our portfolio. For BBL treatment, we improved brand influence and conversion through IP, co-branding and immersive experiences.

In Q4, we partnered with [ The Little Prince IP ] and launched the Youth [ Planet ] Timeless Radiance campaign. The campaign leveraged multiple channels and formats, including celebrity treatment experience, pop-up events and in-store visits by bloggers on RedNote. Our corporate wins generated about 2 million on-site visits and total exposure on RedNote 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 remained a core engine for our aesthetic center business.

Meanwhile, our brand influence have been fully validated in off-line scenarios. To date, we have successfully established a presence in high-end shopping malls nationwide including Beijing Hopson One, Guangzhou ICC Mall, Hangzhou Kerry Centre, Jinan Henglong Plaza 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 dual 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, but our ambition is to go 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 real value will earn long-term recognition from the market.

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

Thank you, Xing and thank you, everyone, for joining us today. I'm Sha Zhang, 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 aesthetic center network fundamentally reshaped our business profile, and we are pleased with where we are today.

Total fourth quarter revenues reached RMB 460.7 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 pillars. 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 per 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 center development phase. Our 17 mature phase centers generated RMB 142.5 million in revenue or roughly RMB 8.4 million per center. Our 19 growth phase 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 16 mature phase centers, 39 centers generated positive operating cash flow. As centers move through their development cycle, profitability has consistently followed. This gives us confidence in the financial trajectory of our newer centers.

Turning 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 50.6% 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 36.7% 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 supporting 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 long-lived assets charge of RMB 19.7 million based on our annual long-lived asset 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.

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 branded aesthetic center expansion.

Looking ahead, the fourth quarter of 2026, we expect aesthetic treatment services revenue to be between RMB 268 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 center network has crossed the 50 center milestone.

In 2026, we will shift our focus from pure 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 Instructions]

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

[Foreign Language] Let me briefly translate myself. I'm [indiscernible] from Citic 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 sources of further margin expansion?

[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 a plan to enhance gross margin. First, we will continue optimizing the pace of center openings and the ramp-up efficiency of new centers. Upfront investments into new centers can create short-term margin pressure and license approval timing in our industry is often unpredictable.

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 shorten the 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 Xihong Biopharma, China Medical System, Sihuan Pharmaceutical and Solta Medical. This guarantees reliable supply and ongoing cost optimization.

Looking ahead, we will strengthen bargaining power with our partners and convert more high-quality upstream manufacturers into long-term partners. At the same time, we will continue advancing our blockbuster strategy. In the fourth quarter, our 4 major products accounted for over 37% of revenue as our core offerings grew. The procurement cost prices will become more pronounced. Third, we will refine our seasonal promotions. Seasonal campaigns 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 purchases among core members. We aim to transform short-term traffic into customers' LTV. This will drive gross margin.

Your next question comes from [ Jian Wang ] with GF Securities.

This is [ Jian 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?

Sorry to interrupt 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.

[Interpreted]

From an industry perspective, while China's medical aesthetic market in second-tier cities have reached relative maturity, they lag behind 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 second tier cities such as Wuhan Tiandi Center and Changsha Center generated an average sales per square meter of RMB 7,000 per month. Among the opening in second-tier cities, Ningbo Raffles center and Suzhou Suyue Plaza stood out. These centers have maintained robust revenue growth with industry-leading CAGR. For example, Suzhou Suyue Plaza broke RMB 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.

We believe that the fundamental advantage of a chain model lies in reduced transaction costs and enhanced brand trust through scale and accessibility. At present, most players in second tier cities are single center operators without meaningful density. Based on how we involved in first tier cities and So-Young's live trust grows, customers will tend to purchase 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.

[Foreign Language] 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?

[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 seized 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, The Little Prince 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.

Your next question comes from the line of [ Daisy Chen ] with [ Haitong International ].

[Foreign Language]

I'll translate myself.

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?

[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 science-backed 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 center profitability and provide strong momentum for our long-term growth.

Thank you. 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.

Ladies and gentlemen, thank you for standing by for So-Young's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] 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.

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.

[Interpreted] Hello, everyone, and welcome to today's earnings call. In Q3, we continued to advance the strategic build-out of our branded aesthetic business, while in the foundation of early 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. We remain confident that these revenues will stabilize in Q4.

Since launching So-Young's clinic large 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 large 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 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 right 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 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 therefore rose to 46%. We also deepened cooperation with platforms such as further improving brand exposure and user conversion through targeted advertising and content setting. 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 and level 3 and above grew by over 10,000, up 40% quarter-over-quarter. These core numbers 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 related purchases.

We continue to refine our products, focusing on premium products with repeat purchase rates at word-of-mouth. In Q3, we optimized our 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 A1 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 offer 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 network, building a 60% client framework, including our clients, lead control supervision, internal audit, medical service delivery and information security department. This reinforces across the medical service process. In Q3, we completed 55 centers inspections and emergency drills. By the end of the third quarter, our physician team exceeded 150 recognized by counteractive large medical chamber-wise nationwide. All doctors have completed ownerships or training at public hospitals and post 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 stay online published a special commentary noting that So-Young is starting an example for the rational development of the industry through discplined operations, pricing and compliance management. We believe the industry landscape is shifting from marketing-driven to just driven. We will continue to uphold transparency of standardization and inclusive access to build a service system that truly boost customer guarantee.

We continued to strengthen our medical aesthetic supply chain. In Q3, shipments of USP 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 comp declined by RMB 80 million quarter-over-quarter. GMV for verified medical aesthetic services was around RMB 260 million with per capita incentive GMV rate up % 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 reach 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 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.

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 esthetic 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 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 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 models 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 Instructions]

The first question comes from Hai Jingpang with Citic Securities.

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

[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 skills, 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 open cases 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 balance, progressing on a quarterly basis to ensure every new center quickly enter still 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 right equity. At the same time, we will also systematically establish a presence in second-tier cities with a mature consumer base to validate our experience for long-term expansion.

The next question comes from Stacy Chen with Haitong International.

[Interpreted] 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 they had this quarter. So could you explain more about the membership system for the aesthetic center business and how we come back to the membership operations?

[Interpreted] The membership system is core to aesthetic centers operations each time, a user company visit, a recon 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 hired center visit frequency and greater flexibility to select additional services with annual lending 2.5x higher than the average, making them the good driver for aesthetic center. During Q3, contributed a high double-digit percentage of our aesthetic center business revenue with a repurchase rate of nearly 70%. We provide tiered and service touch points based on individual user consumption patterns, which ensures they continuously perceive brand value and received positive reinforcement for the bolstering repaid trust rates.

In Q3, our membership operations made solid progress. Users with verified business increased by nearly 40,000, 36% quarter-on-quarter, including over 10,000 new core members up 40% quarter-over-quarter.

Additionally, we've also enhanced repaid 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 leases from repeat customers searched 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. .

The next question comes from Nelson Cheung with Citi.

We will move on to James Wang with GS Securities.

[Interpreted] And my question for me 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?

[Interpreted]

PLLA version 3 was an important upgrade on the supply chain. In China's medical aesthetic market, PLLA to almost released as an injectable for shipping. Before launching, we conducted research in South Korea and from that domestically enacted adopt a more standardized and safer skin bolster technique after multiple rounds of testing, we launched in terms of products, it's ultramicro with 5,000 features, including ultrasmall ultrafine, ultra-proactive across safe and longevity, these features make the product the best rate for. Moreover, with a overall performance upgraded medical 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 pinpoints to capture user mind share, we adopted American more suitable for skin busters and introduced the concept of ultra microspheres to take the lead in the segment. We also released 2 versions Marico 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 demand arrival is expected in late November. We will continue to drive market penetration rate for Maric PLLA version 3, converting users more efficiently and increasing ARPU and user loyalty.

Market feedback shows that Marico PLLA version 3 is receiving a high attention. We implemented an online purchase limit of 1 per per user. From these purchase, we can say that about 56% of users paid the Pro version priced at RMB 4,999, reflecting the trust replacing our brand and product. In the next year or 2, the PLLA that we have been working on expected to receive approval for launch, which should reduce procurement by several times.

Over medical PLLA version 3 is not just a product upgrade, it's an important part of supply chain construction as well cluster 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 customers. Simultaneously, we will leverage our variable marketing products, doctors and channels to differentiated areas and solid our broad load.

The next question comes from Nelson Cheung with Citi.

[Interpreted] I will translate my question and congratulations on a solid quarter. With the expanding expense account, how do we ensure the safety and compliance of the entire chain system? And how is the internal quality control mechanism work? .

[Interpreted] Safety is our top priority. We have built a tailored 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 the thoughts. On the treatment side, we only offer medical aesthetic treatment with clear mechanism and solid user feedback for avoiding potential risks. On the personnel side, we implement regular qualification assessments with an acceptance rate of around 10%. 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 lead doctors based on their qualification levels. We conduct regular online and offline infections as part of our cost control, ensuring reliable medical service across all centers.

If there is any user feedback or dispute, we had it at headquarters with increased response team composed of key departments, including, 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 AI tools. We aim to forecast cost efficiency and ensure consistent medical service quality and user safety for growth out as the business continues to grow rapidly.

The next question comes from Jenny Zhu with CICC..

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

[Interpreted] We believe the first priority now is to expand our user base standing short improvement of operating profit as it scales. As the operating model grandly much worse, we are confident profitability will improve.

On the cost side, we continue to operate 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 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 daily operations will be further diluted.

On the revenue side, as users increasingly proud resource and professionals, they are willing to spend on premium treatment, coupled with medical expense operations of the related trajectory, leveraging our broad base strategy, have gradually concentrated on a strong number of SKUs, 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.

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

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]