Q1 2025 So-Young International Inc Earnings Call

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Operator: Ladies and gentlemen, thank you for standing by for So-Young's first quarter 2025 earnings conference. At this time, all participants are in listen-only mode.

Speaker Change: Ladies and gentlemen, thank you for standing by for so Young's first quarter 2025 earnings conference call. At this time all participants are in listen only mode. After management give their prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded.

Operator: As the board of management give their prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded.

Mona Qiao: I would now like to turn the meeting over to your host for today's call, Ms. Mona Qiao. and Xing Jin Thank you, operator, and thank you, everyone, for joining So-Young's fourth quarter 2025 earnings conference call. Joining me today on the call is Mr. Xing Jin, our co-founder, chairman, and CEO, and Mr. Nick Zhao.

Speaker Change: We'll now I'd now like to turn the meeting over to your host for today's call Ms. Mona Chao.

Mona Chao: Please proceed Mona.

Mona Chao: Thank you operator, and thank you everyone for joining us for our fourth quarter 2025 earnings Conference call. Joining me today on the call is nice too.

Mona Chao: <unk>, our co founder Chairman and CEO and Mr. Next Chao Sappho. Please note that the discussion today will contain forward looking statements made under the safe Harbor information so as private.

Mona Qiao: Please note that the discussion today will contain four looking statements made under safe harbor provisions of U.S. private securities and the Litigation Reform Act of 1995. Four looking statements are subject to risks and authenticates that may cause actual results to differ materially from our current expectations. Potential risks and authenticates include but are not limited to those outlined in our public filings with SEC, including our annual report on Form 20-F. So-Young does not undertake any obligation to update any four looking statements except as required under applicable law.

Mona Chao: Surety and stay and litigation Reform Act of 1995 forward looking statements are subject to risks and alternatives that may cause actual results to differ materially from our current expectations.

Mona Chao: Additional risks and opportunities include but are not limited to those outlined in our public filings with the SEC, including our annual report on form 20-F.

Mona Chao: One does not undertake any obligation to update any forward looking statements, except as required under applicable law.

Mona Qiao: Finally, please note that, unless otherwise stated, all figures mentioned during the conference call are in RMB.

Speaker Change: Finally, please note that unless otherwise stated all fingers Minsheng Sterling conference call are in RMB at this time I'd like to turn the call over to Mr. <unk>.

Xing Jin: At this time, I'd like to turn the call over to Mr. Xing Jin. Hello, everyone. Welcome to today's financial telephone conference.

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Xing Jin: In the first quarter of 2025, we achieved a total revenue of 2.97 billion yuan, which is worth 33,133.8 million yuan in net loss. Nagapco has invested a net loss of 3,148.1 million RMB Mainly because we continue to increase our investment in the self-managed chain business We believe that these investments will lay a solid foundation for the company's long-term growth Hello everyone and welcome to today's conference call. In the first quarter of 2025, we recorded total revenues of $297.3 million. Net loss attributable to So-Young was $33.1 million and non-GAAP net loss attributable to So-Young was $31.5 million.

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Speaker Change: Hello, everyone and welcome to today's conference call in the fourth or I'm trying to 'twenty five we recorded total revenues of $397 3 million net loss attributable to Sony outward 33.1 million and non-GAAP net loss attributable so yeah. So if you want my recap.

Xing Jin: Primarily driven by increased investment to expand our aesthetic centers, we believe these investments are laying a solid foundation for our long-term growth. In the first quarter, we will continue to firmly promote the vertical integration strategy of the entire industry chain. Accelerating chain business in the layout of key cities Our Qingyi Meilianshou brand, Xinyang Youth Clinic, is located in the core business circle of the first and second-tier cities in China At present, we are continuing to improve the density of existing city stores so that consumers can easily and conveniently find our clinic With a high-quality and high cost-effectiveness standardized service system we continue to attract high-end and high-yearly users At present, chain business has gradually become the core growth engine of the group We effectively reduce the cost of marketing and customer acquisition through the whole-industry chain strategy and control the cost of purchasing from the source With the appearance of the scale effect of the future chain the overall operating cost is expected to fall further In the fourth quarter, we continued to execute our vertical integration strategy and expanded our network of athletic centers in key cities.

Speaker Change: Primarily driven by increased investments to expand our aesthetic center. We believe basically my son's are laying a solid foundation for our long term goals.

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Speaker Change: And your first quarter continued to be kind of a vertical integrity checks.

Speaker Change: And expanded our network of academic centers in key cities over.

Xing Jin: Our branded athletic center, So-Young Clinic, operates exclusively in core commercial areas across China's first and second-tier cities. We are increasing store density in these markets to make our centers more accessible and convenient by offering high-quality, cost-effective and standardized services. We are acquiring a loyal and recurring customer base. So-Young Clinic is gradually becoming our main group driver. We are also reducing customer acquisition and procurement costs through our vertical integration and expect to improve cost efficiency further as we scale.

Speaker Change: Friday's Astra Tech Center.

Speaker Change: Clinics alkermes exclusively core commercial areas across China, first and second tier cities, we aren't crazy Staunton to stay in this market is to make our centers.

Speaker Change: And convenience by offering high quality cost effective understand our dice service as we are acquiring a loyal and recurring customer base. So young clinic is gradually becoming over a main.

Speaker Change: Main growth driver, we are also reducing customer acquisition and procurement cost. So I have a vertical integration and expect to improve cost efficiency as we scale.

Speaker Change: So I mean to do things that you saw or maybe easier to where you will find that shouldn't quote.

Xing Jin: 下面具体分享一下我们一季度业务发展情况 In terms of joint business, as of the first quarter, we have opened 23 Xinyang Youth Headquarters stores in Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Chengdu, Wuhan, Chongqing, Changsha, and nine core cities. In March, 18 stores have achieved a monthly operating cash flow, and 16 stores have achieved a monthly profit. In the first quarter, joint business revenue reached 9,882.7 million RMB. Return on investment increased by 21.6%, and the same amount increased by 551.4%. The number of people who paid for the joint sales exceeded 45,500. Return on investment increased by 18.5%, and the same amount increased by 87.3%, 874.3%.

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Xing Jin: The number of service points paid by He Xiao has exceeded 92,900 times. The return has increased by 14% and the total has increased by 989.4%. The overall satisfaction of the chain is maintained at 4.98 points, 5.5 points, which fully reflects our pursuit of service and appointment ability.

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Xing Jin: Next, we plan to continue to close the store layout in the existing core city and expand the scale of operation. As of the end of Q1, we operate with 23 So-Young Clinic centers in 9 major cities, including Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Chengdu, Wuhan, Chongqing, and Changsha. Among them, 18 centers have achieved positive monthly operating cash flow, and 16 centers are profitable on a monthly basis in March. Value from our aesthetic center business reached 98.8 million, Total number of verified paid aesthetic treatments performed surpassed 92,900, up 14% quarter-over-quarter, and 989.4% year-over-year. Customer satisfaction remains high at 4.98 out of 5, reflecting our commitment to maintaining the highest level in service delivery.

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Speaker Change: I think the Q1 'twenty.

Speaker Change: 20th greatest around clinics center in nine major cities, including Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Chengdu, Chongqing, Shanghai among them 18.

Speaker Change: Sometimes have achieved close to most of the operating cash flow and 16 thing.

Speaker Change: And I'll say basis and much value from our aesthetics franchise business reached 19, $8 8 million up 21, 6% quarter on quarter and 551, 4% year over year total very funds paid visits exceeded 45000, 518.5% CT.

Speaker Change: Oh corner and 874, 3% year over year total number of verified paid after that take treatment has performed the past 92 slot filled in my hands right at 14% quarter on quarter, and 918, nine 4% year over year customer satisfaction remains high as full.

Speaker Change: My eight auto five reflecting our commitment to maintaining the highest level in service delivery going forward. We plan to further expand our national account increased so it's interesting in existing cities.

Xing Jin: Going forward, we plan to further expand our network and increase store dentistry in existing cities.

Xing Jin: In the first quarter, we held a series of brand events around the theme of Natural Energy Season and collaborated with artists to hold offline exhibitions in Shenzhen and Beijing and to achieve a second-hand spread through online cards and other forms to further expand brand influence In the Natural Energy Experience Zone, consumers have the opportunity to experience the popular clean beauty projects such as Glow-in-the-dark skin, ultrasonic anti-aging, etc. and provide full-length science and technology explanations by professional doctors to allow consumers to learn more about beauty and feel the natural and healthy aesthetic concept advocated by the brand to break the stereotype of cold and technological in the beauty industry In addition, we continue to optimize the clean beauty service project and lower some of the long-term trends according to market feedback to improve the focus of the trends We are also cooperating with the international high-end skin care brand, Shureka, to provide a joint treatment plan.

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Xing Jin: At the same time, through marketing resources, and sales incentives, we can increase the income ratio of new self-controlled products.

Xing Jin: 提升连锁的毛利水平 In Q1, we launched a natural energy-efficient brand campaign with offline pop-up events featuring artists in Shenzhen and Beijing. These offline events were complemented by online sign-up activities to broaden drive engagement and reach. Each event also featured an experience, though, allowing customers to try popular light medical aesthetic services like IPL and ultrasound-based anti-aging treatments with licensed doctors on site to explain the science behind the treatments. This interactive approach helped demystify the overall technical nature of the medical aesthetic industry and reinforced our value proposition of natural, healthy beauty. We also optimized service offerings and concentration them in our branded aesthetic centers, while also removing certain treatments with low demand based on our user feedback.

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Speaker Change: That's why the campaign made online poker event, featuring our artist Infringer I'm thinking this.

Speaker Change: This offline events were complemented by online sign up activities to broaden five engagement reach each given cultural featured an experienced so allowing customers to try popular large medical aesthetic services like IPL and ultrasound faced anti aging treatments with license talked her phone sorry.

Speaker Change: To explain the science behind the treatment.

Speaker Change: These interactive up showed how they manage to find all the little technical nature of the medical aesthetic industry and reinforce our value proposition of natural healthy beauty. We also optimized our service offerings and concentrations on me out were blinded Athletic center, while also removing a onetime treatment.

Speaker Change: The amounts based on our user feedback to further expand our portfolio when you partner with premium skincare black screen suitable to launching you called treatment solutions. Additionally, we allocated our additional marketing resources and cement is south eastern tips to both the revenue contribution from <unk>.

Xing Jin: To further expand our portfolio, we partnered with premium skincare brand SkinCeuticals to launch new co-treatment solutions. Additionally, we allocated additional marketing resources and implemented sales incentives to boost revenue contribution from our proprietary products. This was done to improve overall growth margins for our aesthetic centers.

Speaker Change: On a pro powertrain products they source downstream trouble around gross margins Flabbergasted athletic centers.

Xing Jin: In terms of upstream business, we continue to promote eco-friendly EMEI supply chain construction of all products and promote a comprehensive layout of self-built industrial chain, self-sale and exclusive agent products. As of the end of the first quarter, the number of real estate agency customers we serve has accumulated more than 1,500, and the number of real estate shipments is about 27,900, which is nearly 14% higher than the growth. On the upstream, we advanced our comprehensive medical aesthetics supply chain, focusing on products developed in-house and through exclusive partnerships. As of Q1, the number of institutions we served with supply chain solutions for injectables grew to over 1,500.

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Speaker Change: On the upstream we are amongst our comprehensive suite of medical aesthetic supply chain smokers focusing on product developed in house and so exclusive partnerships as of Q1, the number of institutions to be served.

Speaker Change: <unk> train solutions for Injectables, which over 1500 shipments of tea reached approximately 27900 units in Q1.

Xing Jin: The shipment of elasticity reached approximately 27,900 units in Q1, up roughly 14% year-over-year.

Speaker Change: Roughly 14% year over year.

Xing Jin: Community e-commerce business is a traditional business of the group. It still plays an important role in the group's overall strategy, and continues to provide profit and traffic foundation for the group. At the same time, it also provides joint support for chain and upstream business. In the first quarter, the verification of e-mail GMV was about 300 million yuan, and the total amount of e-mails collected per capita increased by 4%. Our prop business, which remains a foundational pillar, continues to contribute profits and traffic while supporting the growth of our athletic centers and upstream business. In Q1, GMV for verified medical athletic services reached approximately 300 with per capita in-store GTV growing by 4% year-over-year.

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Speaker Change: Our Pas business, which remains a found on me.

Speaker Change: Foundational pillar continues to contribute coffees and traffic well off the protein the girls Oh, our athletic centers and upstream business in Q1 Jam leaf or Mary five medical aesthetic services reached approximately 300.

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Xing Jin: In the future, we firmly believe that the Chinese market will be developed by the Chinese-U.S. partnership and will create a national brand with differentiated competitiveness. As we have done in the past few quarters, we are committed to increasing the number and density of QIMEI chain stores to form a large-scale effect. In addition, in April this year, I myself raised the total value of about 4.09 million U.S. dollars in Xinyang stock, fully showing my confidence in the company's long-term development.

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Xing Jin: Looking ahead, we see significant long-term potential for our aesthetic center business in China. We aim to build a differentiated, nation-wide light medical aesthetic chain with strong brand recognition. Over the past few quarters, we have scaled both store count and density. In April, I personally increased my shareholding in So-Young by approximately USD 4.1 million, reaffirming my confidence in our long-term goal.

Speaker Change: So can we say that kind of a sense of long term potential for our us that takes the entire business in China. We aim to build a differentiated nationwide large medical has that changed.

Speaker Change: But recognition over the past few quarters, we have scaled both store count and a density in April I personally increased my shareholding. So yeah, I must say USD full point to buy them in them.

Speaker Change: My confidence in our long term goals.

Xing Jin: Currently, the growth of e-commerce business in the community is facing a certain ceiling. We believe that building an e-commerce chain brand that has the ability to create freedom and control is the key path to achieve sustainable growth in the next stage. XinYang is based on the successful experience of the 3M model in the retail industry. In the field of e-commerce exploration, the development path of free products plus high cost-effectiveness plus strong supply chain control. The key to the success of 3M is that we have achieved quality control and cost control through some free products. In doing so, we have created a very attractive product that attracts users to shop.

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Xing Jin: This model has not only effectively increased per capita consumption, but also enhanced user connectivity. In the e-commerce industry, we believe that high-value and low-price services also have the ability to attract customers.

Xing Jin: As our legacy pop business approaches its natural growth setting, we believe the key to our next phase hinges on developing our aesthetic center business with full control over the supply chain. Drawing inspiration from the Sam's Club retail model, we are pursuing a strategy centered on preparatory products, value for money pricing, and end-to-end supply chain management. Sam's Club's success was built on exclusive, high-quality products that are tightly controlled for quality and cost. These products not only attract customers, but also drive higher average spending and customer loyalty. In the medical aesthetic sector, we believe that high quality preparatory products and services at fair prices have similar potential.

Speaker Change: That's my first language business approaches its natural growth setting we believe the key to our next great. Thanks, I'll give options that extend had business with full control over the supply chain Joy and inspiration from the Sam's club retail model, we are pursuing a strategy centered on preparatory products.

Speaker Change: Thank you for them.

Speaker Change: Any pricing and end to end supply chain management Sams club success would be with all its closer of high quality products that are tightly controlling fault.

Speaker Change: Cost these projects not only attract customers, but also drive higher average.

Speaker Change: Average spending and customer loyalty in the medical aesthetic sector, we believe that high quality of pro powertrain products and services and fair prices have similar potential.

Xing Jin: XinYang wants to be the mother of E-MeiJie For this, we have built a complete industrial chain capability including a deep integrated supply chain and have our own products Through the lock-in of acquisitions and agency rights in the past few years we have all the rights and exclusive agency rights of our own upstream equipment and real-time products In the next two to three years, we expect to launch more products and expand our product library to provide users with more cost-effective products. In the future, XinYang will continue to develop an industrial chain with a strong supply chain system and high-quality product services to provide a safer and more efficient system for consumers.

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Xing Jin: We aim to become the Sam's Club of the medical and statics industry.

Speaker Change: Aimed to become sounds cargo and medical aesthetics industry over the past few years, they were built into our capabilities and Christine vertical upstream integration and preparatory products through acquisitions and long term partnerships now with our exclusive distributor, which came out of cold did I say signs injectables.

Xing Jin: Over the past few years, we've built end-to-end capabilities, including vertical upstream integration and proprietary products, through acquisitions and long-term partnerships. Now on our exclusively distributed k-medical devices and injectables, we expect to bring several new products to market in the next two to three years, offering our customers even greater value. We will continue to deepen our supply chain capabilities and improve service quality to deliver a safer and more effective medical aesthetic experience.

Speaker Change: We expect to bring several new products to market in the next two to three years offering our customers even greater value. We will continue to deepen our supply chain capabilities improve service quality to the labor is safer and more effective medical aesthetic experience.

Xing Jin: Now please introduce the financial results of the first quarter, and then we will have a Q&A session.

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Nick Zhao: Now I'll hand over to our staff, 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.

Speaker Change: Now I'll hand over to our staff.

Speaker Change: Who will walk through the financial results followed by the Q&A session.

Speaker Change: Hello. This is Nick please note that all amounts quoted are in RMB. Please also refer to our earnings release for detailed information of our comparative financial covenants.

Nick Zhao: Please also refer to our earnings release for detailed information about our comparative financial performance year-over-year basis. Total revenues during the quarter were RMB 297.3 million, in line with our guidance, and down 60.6% year-over-year, primarily due to a decrease in the number of medical service providers subscribing to information services on our platform. Information, Reservation Services, and Other Revenues for RMB 142.9 down 34.1% year-over-year, primarily due to a decrease in the number of medical service providers subscribing to information services on our platform. Aesthetic Treatment Services revenues reached RMB 98.8 million, a remarkable 551.4% year-over-year increase, primarily due to the expansion of our aesthetic center business.

Speaker Change: Year over year basis.

Speaker Change: Total revenues during the quarter were RMB $297 3 million in line with our guidance and down 66% year over year, primarily due to the decrease in the number of medical service providers subscribing to information services on our platform.

Speaker Change: Mission Reservation services and other revenues RMB $142 nine.

Speaker Change: A 34, 1% year over year, primarily due to a decrease in the number of medical Oh medical service providers.

Speaker Change: Ascribing to information.

Speaker Change: Our platform.

Speaker Change: Athletics treatment services revenues reached RMB 98, 8 million a rig marketable 551, 4% year over year increase primarily due to the expansion of our aesthetic center business.

Nick Zhao: Sales of medical products and maintenance services for RMB55.6 million down 35.7% year-over-year, primarily due to a decrease in order volume for medical equipment. Cost of revenues for RMB 151.4 million, up 29.1% year-over-year, primarily due to the expansion of our aesthetic center. and more... Cost of information, reservation services, and others, RMB 40.7 million, down 34.1% year-over-year, primarily due to a decrease in cost of services associated with So-Young Prime. Cost of aesthetic treatment services, for RMB 80.3 million, up 547.6% year-over-year, primarily due to the expansion of our aesthetic center. Cost of medical products sold and maintenance services for RMB 30.4 million down 29.4% year-over-year, primarily due to a decrease in costs associated with the sales of medical equipment.

Speaker Change: Sales of medical products, and the maintenance and services were RMB 55, 6 million down 35, 7% year over year, primarily due to a decrease in order volume for medical equipment.

Speaker Change: Cost of revenues were RMB $151 4 million up 29, 1% year over year, primarily due to the expansion of our aesthetic send her business.

Speaker Change: Within cost of revenues cost of information reservation services and others RMB 47, maybe down 34, 1%.

Speaker Change: Yeah, primarily due to a decrease in cost of services associated with it so young prime cost of aesthetic treatment services for RMB 83 million up 547, 6% year over year, primarily due to the expansion of our aesthetic center.

Speaker Change: Cost of medical products sold and the maintenance and services were RMB 30, formerly <unk>.

Speaker Change: 29, 4% year over year, primarily due to a decrease in costs associated with the sales of medical equipment.

Nick Zhao: Total operating expenses were RMB 189.3 million, down 20.4% year-over-year. Sales and marketing expenses were RMB103.4 million, down 8.7% year-over-year, primarily due to a decrease in expenses associated with branding and user acquisition activity. G&A expenses, or RMB 53.7 million, down 36.7% year-over-year, primarily due to a decrease in share-based compensation expense. RMB expenses, or RMB 23.1 million, down 18.9% year-over-year, primarily attributable to improvements to staff efficiency. Income tax benefits for RMB 1.6 million compared with the income tax benefits of RMB 2.6 million in the same period of 2024. Net loss attributable to So-Young International Inc. was RMB33.1 million compared with a net loss of RMB21.2 million during the same period last year.

Speaker Change: Total operating expenses were RMB, 189, 3 million down 24% year over year.

Speaker Change: Sales and marketing expenses were RMB $103 4 million down eight 7% year over year, primarily due to a decrease in expenses associated with our branding and the user acquisition activity.

Speaker Change: G&A expenses were RMB $53 7 million down 36, 7% year over year, primarily due to a decrease in share based compensation expenses.

Speaker Change: R&D expenses were RMB $23 1 million down 18, 9% year over year, primarily attributable to improvements too and staff efficiency.

Speaker Change: Income tax benefit of RMB, one 6 billion compared with income tax benefits of RMB, two 6 million in the same period of 2024.

Speaker Change: Net loss attributable to <unk> International Inc. Was RMB 33, why many compatible with a net loss of RMB 21, two and then during the same period last year non.

Nick Zhao: Non-GAAP net loss attributable to So-Young International Inc. was RMB 31.5 million, in fact with non-GAAP net income attributable to So-Young International Inc. of RMB 4.5 million during the same period. Basic and diluted losses per ADS are attributable to ordinary shareholders for RMB0.32 and RMB0.75.

Speaker Change: non-GAAP net loss attributable to so internationally was RMB 31 5 million deadweight.

Speaker Change: With non-GAAP net income attributable to <unk> International Inc of RMB.

Speaker Change: During the same period.

Speaker Change: Basic and diluted losses per ads attributable to ordinary shareholders for <unk>.

Speaker Change: M D C O clock speed to RMB.

Speaker Change: Respectively, compared with basic and diluted loss per ads attributable to ordinary shareholders of RMB two upon two one and RMB zircon to one respectively. During the same period of 2024, we have maintained a robust cash position with a cash and cash equivalents restricted cash and term.

Nick Zhao: We have maintained a robust cash position, with cash and cash equivalents, restricted cash and term deposits, term deposits and short-term investments totaling RMB1.1 billion as of March 31, 2025.

Speaker Change: Deposits temperature of houses and short term investments totaling RMB, one 1 billion as of March 31st 2025.

Nick Zhao: Moving to our outlook, for the second quarter of 2025, we expect aesthetic treatment services revenues to be between RMB 120 million and RMB 140 million, representing a 337.3% to 410.1% increase from the same period in 2025. This outlook reflects our strategic vision. to prioritize long-term value creation over short-term financial optimization as we continue to invest in expanding our branded aesthetic center network and refining our vertically integrated business model. Inspired by Sam's Club, our approach is anchored by control of the supply chain, proprietary product development, and standardized service delivery. This already has an impact, demonstrating its potential to improve customer retention, lower customer acquisition costs, and enhance operational consistency.

Speaker Change: Moving to our outlook for the second quarter of 2025, we expect aesthetic treatment services revenues to be between RMB 120 million and RMB 140 million, respectively, representing a 337, 3% to 400 and a 10 point.

Speaker Change: 1% increase from the same period in 2024.

Speaker Change: This outlook reflects our strategic vision.

Speaker Change: To prioritize long term value creation over the short term financial optimization as we continue to invest in expanding.

Speaker Change: Our branded Athletic Center network and refining our vertically integrated business model is.

Speaker Change: Inspired about Sam's club our approach is anchored by control of the supply chain proprietary toy product development and standardized service delivery. This is already half the impact demonstrating its potential to improve customer retention.

Speaker Change: And lower customer acquisition costs and enhance operational consistency.

Nick Zhao: We believe this model will be instrumental in redefining cost-effectiveness in the medical aesthetics sector, helping us better address the expectations of increasingly rational and quality-conscious customers. Looking ahead, as we deepen execution across our self-operated and partner networks, we expect this model to support more resilient margins and greater scalability across markets.

Speaker Change: Believe this model will be instrumental in redefining cost effectiveness in the medical aesthetics sector, having us better address the exact ah patients of increasingly rational and quality conscious customers.

Speaker Change: Looking ahead as we deepen execution of course of self operated and partner networks, where you expect this model to support more resilient margins and greater scalability across market.

Nick Zhao: This concludes our key remarks.

Speaker Change: This concludes our call.

Speaker Change: He remarks.

Operator: I will now turn over the call to the operator and open the call for QA. Operator, we are ready to take.

Speaker Change: I'll turn over the call to the operator and open the call for Q&A.

Speaker Change: We are ready to take questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone. If you are using a speakerphone, please pick up your handset before pressing the button.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Speaker Change: Anytime you question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Yibing Li: And your first question comes from Yibing Li with Guotai Haitong Security. Please go ahead. Okay, thank you for the opportunity. Good evening, management. I am Li Yibing, an analyst at Guotai Haitong. I would like to ask about the youth clinic.

Li: And your first question comes from <unk>, Li with growth, Hi, Hi Tong Securities.

Speaker Change: Please go ahead.

Speaker Change: Yeah.

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Xing Jin: I would like to ask the management, what is the difference between our Xinyang Youth Clinic and traditional medical institutions like Meilai and Yixing? Let me translate myself. Good evening, management. Thank you for taking my questions. And I would like to ask about So-Young Clinic. How is it different from the traditional medical institutions like Meilai and Yixing? Thank you. Hello, thank you for your question. The model of So-Young International Clinic is different from that of other medical institutions. In general, So-Young International Clinic is more like a hotel model. There are many kinds of products and large units.

Speaker Change: We named management. Thank you for taking my questions and I would like to ask about so young clinics, how is it different from the traditional medical institutions like May lie and E stock. Thank you.

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Xing Jin: It is highly dependent on celebrity doctors and consultants. The cost is high and the consumption is low. So-Young International Clinic is more like a fast-food model. There are many kinds of products and small units. There are many places to go. It is highly dependent on celebrity doctors and consultants. The cost is low and the consumption is high. Our aesthetic center business is fundamentally different from traditional models by the likes of MyLike and EF Tech. In short, these institutions, if by dialing a professional model, they offer a broader range of services, require larger clinics, rely heavily on star doctors and consultants, and generate higher per-customer spend but with less frequency.

Speaker Change: She on children's issues. These are showing quite a ton more ships.

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Speaker Change: Our central business is fundamentally different from traditional model by they're like Oh, My like E F E.

Speaker Change: In short these institutions, if my dining operational model at all for a broader range of services require larger clinics rely heavily on star doctors and consultants and generate higher per customer spent battery life's frequency. In contrast, our clinics use is fast.

Xing Jin: In contrast, our clinics use a fast, casual model. Our model offers more focused services, require less clinic space, and are available in more locations, depend less on individual doctors, and generate lower per-customer spend but with higher frequency. Specifically, in terms of skin type differences, medical institutions such as Melalee are more complete in their projects. They include surgery on double eyelid, rhinoplasty, rhinoplasty, and rhinoplasty, as well as skin, anti-aging, hair removal, body shaping, straightening, hair loss, and other projects. In these institutions, the core demand of users is to change the appearance. And Xinyang Youth Clinic focuses on skin type, anti-aging, and does not provide other high-risk projects such as surgery.

Speaker Change: Casual model I'm, a model offers more focused services require a less clinics face and arm.

Speaker Change: And mark locations.

Speaker Change: Depend less on individual doctors and generate lower per customer spent actually at higher frequency.

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Xing Jin: The core demand of users is to maintain and fight against aging. Most specifically, one service offering, MyLock and AESTA provide a broader range of procedures including surgical treatments such as double eyelid surgery, rhinoplasty, breast augmentation, and liposuction. They also offer services like skin care, anti-aging, hair removal, body contouring, hair transplants, and intimate care. Their customers primarily seek visible transformative changes. In contrast, our clinics exclusively focus on non-surgical anti-aging treatments. They do not offer surgeries or other high-risk procedures. Our customers mainly seek maintenance and rejuvenation services. Second, there is a difference in customer price and consumer quality.

Speaker Change: Oh last person I think clay why somebody suffering my like I guess time provide a broader range of procedures.

Speaker Change: Surgical treatments Sunshine and stop all I made the surgery rhinoplasty breast augmentation and liposuction. They also offer services like skincare anti aging hair removal body contouring hair transplants and intimate care their customers' primary stake visible transformative change.

Speaker Change: Contrast, our clinics exclusively focus on non surgical anti aging treatment they do not offer.

Speaker Change: These are high risk procedures, our customers maintain safe Martinez and rejuvenation in services.

Dr. Joshua itself, if you send us E mail.

Xing Jin: Melody Chan's customer price is higher, while users' consumer quality is lower. For So-Young International Inc., the average unit price is around 1,000 yuan, while users' unit consumption is around 2,000 yuan. For medium-sized users, they spend 6 to 8 times a year. Two, per customer spend and visit frequency. Monalake and Yifster generate high per customer spend, but with lower frequency. Our treatments, on the other hand, are priced around RMB 1,000, but with higher frequency. Typical customer spend is roughly RMB 2,000, with loyal customers visiting six to eight times per year. Three, the difference between the area and the number of stores.

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Speaker Change: To her customer spend and visit frequency my mic and he has to generate high her customers. Thanks to a lower frequency IRA treatments.

Speaker Change: At a price around RMB, one something about to meet higher frequency chemical customers. Some days roughly RMB 2000 loyal customers visiting six to eight times per year.

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Speaker Change: So plenty of energy has shut down its E.

Xing Jin: Melody Chan usually has one store in a city. The area of the store is usually more than 8,000 square meters. The average area of XinYang Youth Clinic is between 400 and 500 square meters. We have several stores in a city. For example, we have six stores in Beijing. At the end of this year, we will have ten stores. In the future, we expect to have 30 stores in Beijing. Our opening strategy is to define beauty and anti-aging as high-level care. So convenience is very important. We are looking for the feasibility of beauty clinics. Three, store size and expansion strategy.

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Speaker Change: Well then just one kind of until you see you may remember it comes right database called Jean Paul Yeah. So your pending phase Antonio while military charter shouldn't matter, we guaranteed a culture.

Speaker Change: Every store size and expansion strategy my like Andy is term typically alkermes, one large flagship cleaning her stay tuned also exceeding 8000 square meters inside in contract or a clinic, our smaller emerging from 400 to 500 square meters and a more widely.

Xing Jin: MyLike and Yester typically operate one large flagship clinic per city, often exceeding 8,000 square meters in size. In contrast, our clinics are smaller, ranging from 100 to 500 square meters, and are more widely distributed across the city. For example, we currently operate six aesthetic centers in Beijing and plan to expect 10 by the year end. Looking ahead, we see potential to grow to 30 locations in Beijing. This collides with our positioning of medical aesthetic treatments and a high-frequency maintenance service, where convenience and accessibility are critical, similar to beauty standards.

Speaker Change: Beauty is of course the safety for example, we currently operate six athletic Suntrust in Beijing as clients, we expect tenant by the year end looking ahead, we see potential to grow to 30 locations and pacing these life.

Speaker Change: Well I mean, our positioning on medical aesthetic treatments and a high frequency and attentive service.

Speaker Change: Their convenience and access accessibility.

Speaker Change: Great.

Speaker Change: Critical similar to beauty fathom.

Speaker Change: Yes.

Xing Jin: Fourth, user experience. Melody Chan is a purely offline organization, and the services we provide are focused on the offline market. While So-Young International is an Internet-based organization, we believe that good user experience includes both offline delivery as well as online experience before and after the treatment. Therefore, we have developed a special So-Young Youth App and operated a million private female communities. Users can fully understand various projects, treatment methods, and products before the treatment. You can make an appointment online at a transparent discount price. You can view your skin test report on the app after the treatment.

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Xing Jin: You can compare photos before and after the treatment. You can also get after-treatment care information in real-time. For user experience, MyLike and ESR operate exclusively through offline channels. In contrast, leveraging our strong internet DNA, we offer a hybrid experience that combines in-person treatment with a comprehensive digital platform. Through the So-Young Clinic app and our extensive online female private domain community, users can explore treatment options, compare services, and make purchases and bookings online at transparent and cost-effective prices. After treatment, customers can review skin test results, view before and after photos, and receive timely care instructions, all conveniently accessible through the app.

Speaker Change: Well it was their experiments my like anti F or operate exclusively offline channels. In contrast, leveraging our restaurant and Tarnovsky I E. We offer a hybrid experience that combines in person treatment with a comprehensive digital platform. So are they still young clinic and all of our <unk>.

Speaker Change: They've all my female perhaps filming community users can explore treatment options compare services and make for Chinese based on okay. So online ads Trust parents as closely factory prices after treatment customers can't reveal the skin test to resource our view before and after photos and at risk.

Speaker Change: They have timely.

Speaker Change: Current infections, all conveniently accessible through the App.

Xing Jin: There is a big difference in the product. Organizations like Melalee only cover the medical delivery part of the industry chain. However, Xinyang has set up an upstream supply chain since 2021, and has a flagship laser and a rich injection product pipeline. And because of the layout of the upstream supply chain, XinYang Youth Clinic can provide users with high cost-effective medical services. Five Product Supply Chains Mai-Rai and Esther focused on the service delivery phase of the Vanyu chain. In contrast, we have built upstream supply chain capabilities in 2021. This is highlighted by the acquisition of High America Laser as an extensive pipeline of injectable products.

Yeah.

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Speaker Change: Five contracts the plan changed my life, and yes turf Wilker founder service delivery phrase Oh man camps. In contrast, we have viewed upstream supply chain capabilities.

Speaker Change: And what they say is highlighted by the acquisition of Evercore.

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Xing Jin: This allows us to offer highly effective services. In conclusion, the model of XinYang Youth Center is more standardized, and therefore more expandable. We all know that the key to the chain is the scale effect, and XinYang Youth Center has an obvious advantage in this regard. In summary, our aesthetic sector business was defined using a highly standardized model that's ideally positioned to be expanded. As we all know, the key to successful chain operations lies in scale, and this is where we clearly have an advantage. Thank you.

Speaker Change: As to offer highly effective services.

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Speaker Change: Summary, our aesthetics business.

Speaker Change: Mind using highly standardized model that's ideal in a position to be expanded as we all know the K two successful channel operation in size and scale. As this is where we clearly have an advantage.

Speaker Change: Oh sure sure. Thank you.

Speaker Change: Oh.

Nelson Chung: And your next question comes from Nelson Chung with Citibank. Please go ahead.

Speaker Change: And your next question comes from Nelson Cheung with Citibank. Please go ahead.

Nelson Chung: Good evening, Manager Chen. Thank you for accepting my question. My question is about the scale of our power generation. As our power generation scale is getting bigger and bigger, Will CapEx have more opportunities in the future? I don't know if our current model is healthy enough to maintain the status quo. So let me translate the question in English.

Nelson Cheung: Hey, Huntington Watson health.

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Speaker Change: We don't have kept let's see if we can.

Speaker Change: Well, Bill, which Andrew just before you go.

Speaker Change: Any way to do that because one Thailand.

Speaker Change: So let me translate the question in English has mentioned and for taking my question at the clinic network growth. We kept has become a burden for the company is based on a model sustainable. Thank you.

Nelson Chung: Thanks, management, for taking my question. As the clinic network grows, will CapEx become a burden for the company? Is this model sustainable?

Xing Jin: Thank you.

Xing Jin: Hello, thank you for your question. We value the healthiness of our company's business, and we push for the expansion of our capacity under a controllable rhythm. We also stick to the principle of saving, winning, and stabilizing, to ensure the sustainable flow of cash. We place great emphasis on the health of our business. While we continue to carefully expand our network, we remain prudent in managing CAPEX to ensure a financial sustainable model. Currently, we expect to open around 30 new clinics per year. Each new athletic center is carefully selected for its location and ability to achieve profitability, which helps us keep overall cost within a manageable range.

Speaker Change: And how concerned are you that she was.

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Speaker Change: We place great emphasized how the health of our business, while we continue to carefully expand our network, we remain prudent in managing capex to ensure it financial a sustainable model.

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Speaker Change: Currently we expect to open around 30, new cleaning per year, each new athletic Sunshine carefully selected twice location and ability to achieve perfect topology, which helps us keep overall cost within a manageable range.

Speaker Change: He used to answer for me as I typically watch them or more so the loyalty you. Finally, youll tell you quite a short quarter forgot Qi Hello, gentlemen, do you need to maybe if I may.

Xing Jin: At the same time, we are actively planning to roll out a franchise model. This will help accelerate our geographic reach and network density while reducing CAPEX pressure, In addition, we see that the operating efficiency of existing stores is constantly improving. By the first quarter, most stores have achieved cash flow conversion. As the scale effect gradually increases, the operating cost of stores has further decreased. We have confidence in the long-term profitability of the chain business. Operational efficiency is also improving. As of Q1, the majority of our athletic centers have achieved positive operating cash flow. With increasing economics of scale and further dilution of fixed costs, we are confident in the long-term profitability of our athletic centers.

Speaker Change: Yeah, John you saw plenty of Capex you Ali.

Speaker Change: I realized you shouldn't changes have caused an impact that's useful.

Speaker Change: The same time, we are actually planning to roll out a franchise model will help accelerate our geographic reach and network expenses.

Speaker Change: While reducing capex pressure, having to wait for the asset light fashion.

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Speaker Change: Susan.

Operational efficiency is also improving as of Q1, the majority of Lamar athletic sometimes have achieved positive operating cash flow.

Speaker Change: With increasing economics of scale and further dilution of fixed costs. We are confident in the long term profitable and I've seen a lot of our aesthetics franchise.

Xing Jin: Thank you.

Speaker Change: Sure sure. Thank you.

Speaker Change: Yeah.

He Jinpeng: And your next question comes from He Jinpeng with SIDIC. Please go ahead. Thank you for the opportunity to ask this question. I am He Jingpen from Zhongxin Securities. I have two questions to ask the company.

Speaker Change: And your next question comes from XI Jinping with Citic. Please go ahead.

Speaker Change: Yeah.

Speaker Change: Okay, and just with you and Oh scheduling Gen trend up I can put more what should be any or don't go in peace.

Xing Jin: First, how does Qi Zhi Jiguang better coordinate with the company's main business? Hello, thank you for your question. After the complete management of the flag mechanism, XinYang's management team has integrated high-efficiency resources in product strategy, organizational coordination, and talent coordination, improving the speed of R&D and product landing, creating a top-level support system for XinYang with high-efficiency coordination and market orientation. With the full integration of Wuhan Miracle Laser, we have efficiently consolidated product, talent, and organizational processes to improve R&D capabilities. This positions Wuhan Miracle Laser as a market-oriented upstream platform that creates strong synergies to support our growth model.

Speaker Change: Okay.

Speaker Change: Sure sure sure.

Speaker Change: Yeah, you can go how does she is holding up well. So let me briefly translate for myself and thank you for saying. Thank you management for taking my question. So two questions here the first days.

Speaker Change: Our medical laser creates more synergy with the company's core business.

Speaker Change: Oh gosh you needed here.

Speaker Change: But I thought you said, you're going to chime in as you would hope Xiang Guan in town sites, having children. So just you're at home in touch at home.

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Speaker Change: With the full integration.

Speaker Change: Eric laser we have efficiently consolidated product talent and organizational processes to improve our M. D capabilities based positions, how narrow glaser and in market oriented upstream platform that creates strong synergies to support our growth model.

Speaker Change: Okay.

Xing Jin: As China's leading light and electrical equipment provider, the autonomous R&D advantage of QiShiJiguang not only provides high-quality and high-cost self-reliance equipment support for XinYang's chain business, such as popular project equipment such as nuclear super-lighting paper, as well as R&D support for new product pipelines, but also can replace some high-priced imported devices, effectively reduce the investment and operating costs of single-unit equipment, assist chain business, promote equipment standardization and service consistency, and accelerate the expansion of chain business. I'm the leading provider of aesthetic laser devices in China. Wuhan Medical Laser's proprietary R&D capabilities allow us to supply our aesthetic centers with high-quality, cost-effective equipment, such as our flagship Youth IPL project.

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Speaker Change: Is it relating provider aesthetic laser devices in China, while my uncle, He says preparatory RMB coupled Iot.

Speaker Change: Allow us to supply our aesthetics, sometimes made high quality cost effective equipment, such as our flagship youth IPL project.

Xing Jin: With other new products in the pipeline, this not only reduces reliance on high-cost imported devices, but also supports consistency across our centers, further accelerating its expansion. In addition, Qi Zhi Jiguang has a unique advantage in serving the long-term market. Compared with traditional equipment manufacturers focusing on serving the top medical institutions, Qi Zhi Jiguang has accumulated services for more than 5,000 institutions, covering a large number of small and medium-sized medical institutions. When facing long-term market institutions in the market, they have a wide range of channels and operating experience.

Speaker Change: The other new products in the pipeline this not only reduces weight reliance on high cost imported devices, but also supports consistent across all of our centers further accelerating.

Speaker Change: Expansion.

Speaker Change: So that she's the chief wound size, which always is helpful on that.

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Xing Jin: With the continuous expansion of the Xinya chain store, both sides will jointly explore the 2B2C model, realize the co-innovation of the equipment and service end, further improve user experience and business efficiency, to build a more competitive industrial wall. Wuhan Miracle Laser also holds a unique advantage in serving China's long-tailed aesthetic market. While most manufacturers focus on the leading institutions, Wuhan Miracle Laser has served over 5,000 clients, with deep experience and broad distribution among small and medium-sized clinics. As our athletic center network grows, we aim to jointly explore a 2B2C model integrating devices and services delivery to improve user experience, business efficiency, and ultimately build a more competitive ecosystem.

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Speaker Change: Uh Huh medical laser also holds a unique advantage in serving China launch how aesthetic market well most manufacturers small cofounder, leading institutions, one or quantities or has served over 5000 clients with deep experience and broad distribution of Masimo.

Speaker Change: In medium sized clinics and sabra after that takes center, that's what growth we aim to jointly explore a to be Tuesday model.

Speaker Change: Hum devices and services delivery to improve user experience.

Speaker Change: Patients and ultimately build a more competitive ecosystem.

Speaker Change: Yeah.

Xing Jin: Thank you.

Speaker Change: Sure sure.

Speaker Change: Thank you.

Daisy Chen: And your next question comes from Daisy Chen with Hightower.

Speaker Change: And your next question comes from Daisy Chen with high Tang.

Daisy Chen: Oh, sorry, it'll be a follow-up from Heejin Pen. I still have the second question. It's about the trade war. So how would the ongoing trade tensions between China and America maybe impact the company's business as The impact of the trade war on the U.S. industry is mainly reflected in the change in cost structure and the adjustment of the market competition pattern. We believe that the direct impact on Xinjiang is very limited, and at the same time, it also creates a window for us to further strengthen supply chain integration and domestic substitution layout. Trade tensions primarily affect the athletic industry in two ways, change in cost structures and shifts in the competitive landscape.

Speaker Change: Oh, sorry, it'll be a follow up from <unk> pen.

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Speaker Change: There you go to Asia.

Speaker Change: Yeah.

Speaker Change: It's about a trade war and if so how is the ongoing trade tensions between China and America, maybe impacts the company's status I think.

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Speaker Change: Trade tensions primarily a factor they ask that take industry in two ways change in cost structures and shifts in the competitive landscape for.

Xing Jin: For So-Young, the direct impact is limited, but we also see this as an opportunity to strengthen our domestic supply chain and support import replacement. We think that the trade war has little impact on the actual cost of our chain business. Among the main projects provided by XinYang JunQin Clinic, only the hot-horse projects use imported equipment and consumables from the United States, and the relative income ratio is less than 10%. Even if in the future, due to the increase in tariffs, the mid-range price will rise, we also have the ability to provide similar services through alternative color products, thereby guaranteeing a customer experience.

Speaker Change: Yeah, the direct impact is limited.

Speaker Change: Also say, there's an opportunity to strengthen our domestic supply chain and support in poetry replacement.

Speaker Change: Well not really.

Speaker Change: Are you talking to a woman damn sure Yeah Awards home buying Blender should you Vishal vishal.

Speaker Change: Xi'an changes, usually you won't let you I saw him as well.

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Paul: Sure Paul So cohort you mentioned yet.

Xing Jin: From the cost perspective, the impact on our aesthetics center business is minimal. Only one of our main offerings uses U.S. imported equipment and consumables. Dermage, which accounts for less than 10% of total revenue at our aesthetic center. If tariff drive price is higher, we are well positioned to pivot to alternative products that offer similar results without compromising user experience. In comparison, the trade war has a more obvious impact on the upstream industrial chain. The Chinese flagship companies have imported a number of products, including the U.S. Saturn company, and the Gwangju BBL. If the tariffs in the future are further upgraded, it may have a negative impact on the sales of such products.

Paul: From a cost perspective, the impact of our aesthetics and how business is minimal only one of our main offering uses U S imported equipment and consumables.

Paul: Thermage, which accounts for less than 10% of total revenue at Harvard Athletic centers.

If tariffs drive prices higher we are well positioned to pivot to alternative products that offer similar results without compromising user experience.

Paul: Okay.

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Xing Jin: That said, the impact on the upstream may be higher. Wuhan Miracle Laser currently distributes several imported devices, including Cyton's VBL. tariff increases could affect the pricing and sales volume of this product. We believe that the industrial transformation brought by the trade war is more of a structural opportunity rather than a negative impact for Xinjiang. We will continue to play the overall industrial chain integration advantage and continue to promote the upgrade of the domestic and US supply chains.

Speaker Change: That's that they impact holiday upstream maybe higher how America. These are currently distributing several important to divide facing clothing.

Speaker Change: C B L treatment.

Speaker Change: Tariff increases to the fact that the pricing and sales volume of these products.

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Xing Jin: In conclusion, we see this as opportunities rather than threats. We will continue leveraging our vertical integrated capability to upgrade China's domestic aesthetic supply chain Xie Xie.

Speaker Change: In conclusion with cities and overtime rather than a threat.

Speaker Change: We will continue to leverage our vertical integrated capability to Apple glass, China uptake aesthetic supply chain and steward of our high quality cost effective solutions to consumers.

Daisy Chen: Thank you. And your next question is from Daisy Chen with Haitong, please go ahead. I have a question for Guan Yicheng. We see that the company has a good ability to control the cost, and the cash flow is very sufficient. I would like to ask the company how to plan in the future on how to optimize the investment and cost, and whether the overall financial situation can be improved. Thanks management for taking my question, we see that the company has a very good ability on cost and expense control in Q1, and we also noted that the cash balance is sufficient.

Speaker Change: Thank you.

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Speaker Change: And your next question is from Daisy Chen with Hite Tang. Please go ahead.

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Speaker Change: Oh, well I got a bunch of worldwide workforce.

Speaker Change: And that whole hog somebody you want Oh, Yeah, then I would ask you about that.

Speaker Change: Oh Sacramento him for taking that question Ali we feel that the company has a very good I'll be that'd be uncle.

Speaker Change: On Cogs and expense control in Q1, and also Nokia back with our cash balances.

Daisy Chen: So my question is, can management please elaborate more on the company's future investment plan and also the cost reduction plan, and do you expect further improvements in the overall financial performance?

Speaker Change: So my question management.

Speaker Change: I mean, it's not like more out about that.

Speaker Change: So it would hurt them back at par and they're also now cost reduction plan and.

Speaker Change:

Speaker Change: But in the overall financial performance. Thank you.

Xing Jin: Thank you. We are encouraged by the early results our athletic center business is generating. And we remain confident in its mid- to long-term profitability. In March, 18 centers have already achieved positive monthly operating cash flow. Among them, 16 centers are profitable on a monthly basis, demonstrating the viability and efficiency of our business model. In the future, we will continue to maintain a steady pace of store-to-store expansion, to control the annual store-to-store operation within a reasonable range, and to actively promote the preparation of the investment model in order to realize the expansion route of lighter assets.

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Speaker Change: We are encouraged by the early results of our aesthetic center business is generating and remain confident is medium to long term profitability in March 18th centers have already.

Speaker Change: <unk> achieved two monthly operating cash flow among them 16 centers are profitable on a monthly basis domestic retail my ability and efficiency of our business model.

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Speaker Change: Fortunately for the annuity going forward, we will maintain and neither the pace of stuff Overrated aesthetic center expansion and we will carefully manage you all kind of in a disciplined manner.

Xing Jin: Going forward, we will maintain a measured pace of self-operated aesthetic center expansion and will carefully manage new openings in a disciplined manner. Meantime, we are actively preparing the launch of a franchise model to enable lighter, scalable growth. At the same time, we are also improving the cost-effectiveness and capacity improvement of the chain business through the optimization of products and strengthening cooperation with the upstream, improving the single-storey sales performance, and so on. Recently, we have also invested more resources to support the growth of free product sales, which will further enhance our profitability. In addition, we are optimizing our offering mix, deepen upstream collaboration, and enhancing efficiency at the clinic level to further improve cost control and growth margin.

Speaker Change: Meantime, we are actively preparing the launch of a franchise model to enable long term scalable growth.

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Speaker Change: In addition, we are optimizing our I'll offer a mix dependent upstream collaboration any housing efficiency at the clinic level to further improve cost control and gross margin. We have also increased investment in growing our preparatory product lines, which will further support margin margin.

Xing Jin: We have also increased investment in growing our proprietary product lines, which will further support margin expansion. Overall, we remain focused on sustainable high-quality growth, supported by financial discipline and a structural optimization across our core business lines.

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Speaker Change: The actual optimization across our core business lines.

Speaker Change: Thank you.

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Speaker Change: Okay.

Xing Jin: This concludes our question and answer session.

Speaker Change: This concludes our question and answer session.

Operator: and today's conference call. Thank you for attending today's presentation.

Speaker Change: And today's conference call.

Speaker Change: You for attending today's presentation you may now disconnect.

Operator: You may now disconnect. © The Ultimate Parody Site!

Speaker Change: Yeah.

Mike: Thank you Mike.

Mike: Okay.

Mike: [music].

Mike: Yeah.

Mike: [music].