So-Young(SY -16.32%) reported second quarter 2025 results on August 15, 2025, highlighting aesthetic treatment service revenue grew 426.1% year-over-year to RMB 144.4 million, reaching its highest segment contribution. Despite this growth, the company posted a non-GAAP net loss of RMB 30.5 million as it accelerated aesthetic center expansion and deepened investment in proprietary product development. The summary below analyzes the most material long-term strategic implications arising from the earnings call.

So-Young accelerates branded aesthetic center expansion

The company operated 29 aesthetic centers as of June 2025, with 13 centers achieving monthly profitability and 19 generating positive operating cash flow in June. Branded centers are expected to reach 50 by year-end, with over 10 slated to open in the second half of the year. Management signaled a historic shift in the business model as this segment overtook other revenue streams for the first time, indicating a multi-year transition inflection point.

"Revenue from aesthetic center business reached RMB 144 million, surpassing the upper end of our guidance and making it our largest revenue contributing segment for the first time. This marks a critical inflection point in our multiyear strategic transition, ushering in a new phase with clear growth drivers and a more mature business model. As of today, our So-Young Clinic live medical aesthetic chain has grown to 33 centers. Due to rapid network expansion and ongoing investments, we recorded a net loss attributable to So-Young of RMB 36 million and a non-GAAP net loss of RMB 30.5 million in the second quarter."
-- Xing Jin, Co-Founder, Chairman and CEO

This milestone underscores a high-growth, asset-driven model but entails short-term margin compression as the company front-loads center rollout and absorbs upfront operating losses from new sites.

So-Young leverages unique customer acquisition and cost controls

A repeat purchase rate exceeding 60% for the aesthetic center business was reported, customer satisfaction of 4.99/5, and customer acquisition cost in the RMB 100 range. Over 70% of new users are sourced from low-cost private domain, referral channels, and not paid external platforms.

"Currently, our average customer acquisition cost remain in RMB 100 range with over 70% of new customers coming from low-cost private domain traffic and referrals from existing customers. Benefiting from improved operating efficiency, the gross profit margin of our aesthetic treatment services expanded by around 5 percentage points sequentially."
-- Xing Jin, Co-Founder, Chairman and CEO

Efficient customer acquisition and high satisfaction scores support the company's ability to scale profitably while maintaining strong brand loyalty and margin improvement.

So-Young develops proprietary upstream products for margin advantage

The company shipped approximately 39,100 units of Elasty injectable and served over 1,600 supply chain institutions, with additional in-house collagen products and new device launches targeted for upcoming years. Exclusive China distribution rights for sought-after treatments such as Medical PLLA and skin boosters provide pricing autonomy and further compress input cost as center volume rises.

"For light-based treatments, we offer medical lasers self-developed [indiscernible] and hold exclusive distribution rights for the premium American BBL treatment with new devices such as picosecond lasers and radiofrequency microneedling in the pipeline. Additionally, after entering the upstream injectable segment a few years ago, we have been collaborating with upstream manufacturers to launch new products, including blockbuster products such as skin boosters and PLLA. The skin boosters are expected to receive approval in Q4 this year. Both products carry exclusive China distribution rights, granting us brand positioning wise and pricing power."
-- Xing Jin, Co-Founder, Chairman and CEO

This strategy enables So-Young to minimize procurement costs as it scales toward its long-term plan for 1,000 centers, supporting both margin expansion and supply chain control.

Looking Ahead

Management guided for aesthetic treatment service revenues of RMB 150 million to RMB 170 million in Q3 2025, representing 230.5% to 274.6% year-over-year growth, tied to their plan of reaching 50 branded centers by year-end. They plan to pilot 2 to 3 franchise centers in Q4 2025 to evaluate the long-term role of franchising versus self-operated expansion. No explicit guidance was provided for company-wide profitability inflection, but leadership reiterated confidence in gradually achieving durable operating leverage via standardized expansion and product innovation.