Ladies and gentlemen, thank you for standing by for So-Young's Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After management gives their prepared remarks, there will be a question-and-answer session. 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 go ahead, Mona.

Thank you, operator, and thank you, everyone, for joining So-Young's fourth quarter 2024 earnings conference call. Joining me today on the call is Mr. Xing Jin, our Co-Founder, Chairman and CEO; and Mr. Nick Zhao, CFO. Please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with SEC, including our annual report on Form 20F. So-Young does not undertake any obligation to update any forward-looking statements, except as required under applicable law. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. At this time, I'd like to turn the call over to Mr. Xing Jin.

[Foreign Language] [interpreted] Hello, everyone, and welcome to today's conference call. In the fourth quarter of 2024, our total revenue during in the quarter was RMB369.2 million. Net loss attributable to So-Young was RMB607.6 million, while non-GAAP net loss was RMB53.2 million. The fluctuation in our bottom line was primarily driven by a onetime goodwill impairment charge of RMB540 million for our subsidiary, [Wuhan Miracle] (ph), as well as our continued investment in the self-operated aesthetic center network. During the quarter, we continued to undertake our vertical integration strategy, leveraging our extensive user base [Technical Difficulty] and upstream supply chain capabilities to drive the rapid expansion of our aesthetic centers. Our So-Young Clinic officially launched with a refreshed bright identity that is focused on providing high quality, cost effective light medical aesthetics and anti-aging solutions. The bright refreshing is to make medical aesthetics more accessible and empower Chinese consumers to individually pursue aesthetic freedom. The continued high growth of our aesthetic center network demonstrates the viability of its business model and growth potential. Moving forward, we will continue investing in the business to establish it as a new growth engine for the group. Now let me give you a closer look at our quarterly performance. In Q4, we have opened 19 So-Young Clinics across nine core cities, including Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Chengdu, Wuhan, Chongqing and Changsha, all of which are fully operational. Among them, 11 aesthetic centers have achieved positive monthly operating cash flow in December. Our customer satisfaction remains at an industry leading 4.98 out of 5. Revenue from our aesthetic center business surged to RMB81.3 million during the quarter, up 79% quarter-over-quarter and 702% year-over-year. We recorded over 38,000 verified paid visits. Total number of verified paid aesthetic treatments surpassed 81,500. As of the end of…

Hello, this is Nick. Please be reminded that all amounts quoted here will be in RMB. Please also refer to our earnings release for detailed information about our comparative financial performances on a year-over-year basis. Total revenues during the quarter were RMB369.2 million, down 5.5% year-over-year, primarily due to the decrease in revenue generated by So-Young Prime. Information, reservation services and other revenues were RMB201.5 million, down 27.7% year-over-year, primarily due to a decrease in revenue generated by So-Young Prime. Aesthetic treatment services revenues reached RMB81.3 million, a remarkable 701.6% year-over-year growth increase, primarily due to the expansion of our aesthetic center business. Sales of medical products and maintenance services were RMB86.2 million, down 15.2% year-over-year, primarily due to a decrease in order volume for medical equipment. Cost of revenues was RMB153.1 million, up 11.2% year-over-year, primarily due to the expansion of our aesthetic center business. Within cost of revenues, cost of information, reservation services and others were RMB44.5 million, down 48.2% year-over-year, primarily due to a decrease in costs associated with So-Young Prime. Cost of aesthetic treatment services were RMB65.2 million, up 702.3% year-over-year, primarily due to the expansion of our aesthetic center business. Cost of medical products sold and maintenance services were RMB43.3 million, down 0.5% year-over-year, primarily due to a decrease in costs associated with the sales of cosmetic injectables. Total operating expenses were RMB815.2 million, up 216.2% year-over-year. Sales and marketing expenses were RMB134 million, up 6.2% year-over-year, primarily due to a increase in payroll costs. G&A expenses were RMB98.4 million, up 13.6% year-over-year, primarily due to an increase in professional service fees and allowance for credit losses. R&D expenses were RMB42.8 million, down 5% year-over-year, primarily attributable to improvements in staff efficiency. Impairment of goodwill was RMB540 million, primarily due to an impairment assessment related…

Yes, sir. Thank you. We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Nelson Cheung with Citibank. Please go ahead.

[Foreign Language] So let me translate the question into English. Thanks management for taking our question. My question is related to the POP business and what are the latest developments in merchant support and empowering on your platform during the industry consolidation period? Thank you.

[Foreign Language] [interpreted] As industry consolidation accelerates, market concentration is inevitable. Large chain institutions are gaining greater market share due to their economics of scale, brand influence and standardized service models. For many specialized medical aesthetic institutions on other platforms, a differentiator is key to highlighting their unique technical expertise, specialized services and product offerings. With these differentiators, they can increase their pricing power and secure a solid foothold in a fiercely competitive market. We continue to optimize our platform business by empowering aesthetic institutions across multiple dimensions, deepen partnerships, reinforcing platform capabilities and improving the user experience. These efforts help institutions navigate market cycles, capitalize on opportunities and achieve sustainable business growth. For institutions, we continue to strengthen partnerships with top tier and specialized medical aesthetic institutions, fostering closer collaborations through tailor made solutions that empower them to ensure that they maintain their leadership in a competitive market through a segmentation strategy that targets different cities, institutions and service offerings. We optimize our supply structure to better match market demand and supply, improving the overall efficiency of our platform. In terms of operations, we are [indiscernible] to refine management practices, leveraging user behavior data to optimize subsidy plan. Additionally, we continue to enhance the user journey on our app, shorten decision making times and improving conversion rates. Furthermore, [indiscernible] good product initiative will provide personalized recommendations for medical aesthetics products and services, further enhancing user satisfaction while increasing transaction value. On the user side, we are continuously strengthening our private domain operations, expanding our user base through private domain marketing and influencer driven referrals. These efforts enhance our user engagement, unlock customers' LTV and help medical aesthetic institutions reach a broader audience and drive more growth. Driven by these initiatives, we have achieved notable results at this period. Meanwhile, in terms of annual framework agreements, we are making strong progress in both volume and progress. Further validating the effectiveness of our strategy. Looking ahead, we will continue to enhance our platform ecosystem, strengthen collaboration with institutions and improve the user experience, fostering the long term sustainable development of the industry. Thank you.

Thank you. And our next question today comes from Ivy Li with Haitong Securities. Please go ahead.

[Foreign Language] Let me translate myself. We are glad to see that So-Young has opened 19 aesthetic centers as of Q4. So how does the company adapt its strategies and operations for centers at different stages of development? Thank you.

[Foreign Language] [interpreted] We implement differentiated operational strategy [indiscernible] at various phase of development to ensure they can reach their optimal performance, while continuously building brand influence and enhancing [indiscernible]. For aesthetic centers in the ramp up phase, which lasts about three months from [indiscernible]. The main goal is to build, provide awareness and ensure that target customers within five kilometer radius recognize So-Young's aesthetic centers. We follow SOPs while building the team, providing comprehensive training and strict assessment of doctors, nurses and consultants to ensure service quality at every stage. With 12 years of industry experience, So-Young has built a private domain community of 1 million users for service [indiscernible] initial customers and significantly lowering market costs. At this point, we focus on delivering an outstanding experience to initial customers, minimizing waiting times, improving customer reviews and quickly building an extraordinary high quality aesthetic center image through major portal platform like [indiscernible]. This effort helps strengthen our online reputation and establish a solid foundation for long term customer acquisition and retention. As aesthetic centers enter the growth phase, which was from the fourth month to the 12th month after opening, the focus shifts from brand building to optimizing operational efficiency with an emphasis on service quality and customer retention. We strengthened repeat customer engagement and referral programs to maximize customer lifetime value while gradually balancing operational efficiency to improve financial performance. To this point, most aesthetic centers have established a stable business foundation and are able to generate several consecutive [indiscernible]. [indiscernible] aesthetics centers reached their maturity phase 12 months after the opening. They focus most to long-term customer lifecycle management and service controlled optimization to ensure sustained business growth. At this phase we implement customer segmentation based on churn frequency, spending levels, past service records and other data. We then develop tailored service [indiscernible] of different customer groups. By adopting this segmented operational plan, we can enhance customer loyalty and effectively increase customer lifetime value. Through this real structured strategies, we can ensure that our branded aesthetic centers at different [indiscernible] progressively, achieve their operational goals and continuously strengthen our brand influence and competitiveness in the market. Through these well-structured strategies, we can ensure that our branded aesthetic centers at different phase grow progressively, achieve their operational goals and continuously strengthen our brand influence and competitiveness in the market. Thank you.

[Foreign Language] Let me translate myself. Can us aesthetic centers business maintain growth? Thank you.

[Foreign Language] [interpreted] In my view, So-Young's aesthetic center network has the capability for sustained growth. From a market wide perspective, there are currently over 20,000 medical aesthetic institutions in China, but the penetration rate of chain clinics remains extremely low, with no single brand exceeding 100 locations, representing just a 1% market share. This leaves ample room for expansion. The development of South Korea's medical aesthetic industry serve as a valuable reference as the sector is highly developed with chain brands collectively holding a market share exceeding 10%. Healthcare's case demonstrates that as customer awareness and acceptance of medical aesthetics grow, the chain model can leverage brand influence, economics of scale and a professional service system to capture a larger market share. So-Young's chain model presents a highly competitive and differentiated edge in the domestic market. Currently, most traditional institutions follow a restaurant model where operations rely heavily on a [filthy] (ph) doctors, similar to how restaurants rely on seasoned chefs. If these doctors leave, the institution suffers a decline in sales volume, loss of customer trust and damage to its market reputation, making it highly vulnerable to risks. In contrast, So-Young's aesthetic centers adopt a fast food model, where the cost trend lies in the establishment and expansion of a uniform service system. Every aspect of operations from customer reception, medical procedure protocols to product selection standards is thoughtfully designed and standardized. This uniform approach offers multiple advantage. First, it ensures that regardless of which So-Young aesthetic center a customer raises, they receive a consistent high quality and reliable medical aesthetic experience, significantly enhancing customer satisfaction and brand loyalty. Second, it reduces dependency on individual doctors' proficiencies, prohibiting institutions from being overly affected by staff turnover, thereby improving operational stability and reducing risk. Lastly, this highly standardized model creates a solid foundation for rapid scaling and replication, ensuring long term growth. Thus, we are confident we can maintain a leading position in this highly competitive market going forward. Thank you.

Thank you. And our next question today comes from Jim Peng with CITIC Securities. Please go ahead. Hello, Jim, your line is open. Please proceed.

[Foreign Language] Okay. So let me just briefly translate for myself. So I am Jim Peng from CITIC Securities. Thank you for taking my question. So I have one question about the company's upstream business. So as we can see, we have acquired like the Miracle Laser in China and we have multiple partnerships with the upstream companies. So what is our strategy for our the upstream business in general? Thank you. That's my question.

[Foreign Language] [interpreted] Recently, we successfully completed the full integration of our subsidiary, Miracle Laser, a leading provider of medical aesthetic laser devices in China with strong technical expertise and market advantage. This move is part of So-Young's upstream business and long term planning. To optimize resource integration and in house business synergies, Miracle Laser has now been incorporated into So-Young's upstream business unit with a focus on integrating key talent and reinforcing team collaboration. In the medical aesthetic laser segment, Miracle Laser will serve as the core foundation, driving product upgrades and innovation to meet market demand and enhance our technology and product portfolio. As the upstream business continues to expand, our product resources will further empower aesthetic centers, driving sustainable growth of the company. Based on this, our upstream business will focus on several key strategies in the future. First, we will enhance the R&D of high end and best-selling products by conducting in-depth market research, analyzing customer behavior and staying ahead of industry trends. We will invest heavily in R&D to build a series of innovative high quality medical aesthetic products tailored to market needs. This will enable us to meet growing need for premium and personalized aesthetic solutions. Additionally, we will ensure a seamless integration between the Miracle Laser and So-Young teams, leveraging the unique model of both sides to establish a highly efficient and collaborative working model. This will enhance the overall expertise and action oriented capabilities, creating a solid talent foundation to support the growth of upstream business. Following the team integration with the combined resources and enhanced capabilities, we will focus on providing So-Young's aesthetic center with a highly quality and more stable product supply. From expanding products variety and ensure delivery to strengthen quality assurance, we aim to empower our aesthetic center network and enhance its service quality and competitiveness. This effort will drive So-Young's continued growth in the upstream sector. Thank you.

Thank you. And our next question today comes from Harry Zhao with Deutsche Bank. Please go ahead.

[Foreign Language] Just let me translate by myself. Thanks for the management for taking my questions. Management just gave the guidance of 2025 revenue guidance and could the management share more insights into the company's financial outlooks in the future? Thank you.

Thank you, Harry, for your question. Looking ahead, we are committed to driving sustainable and high quality growth through the execution of our vertical integration strategy. We have successfully established a full value chain covering both upstream supply chain capabilities to downstream aesthetic treatment services, which creates synergies across our business units. This diversified and balanced model lays a strong foundation for long term financial stability and operational resilience. From a financial perspective, while near term profitability may be impacted by the pace and scale of our new aesthetic center expansion, this business is critical to transitioning towards sustainable high quality growth. We recognize that different business units are at different stages of development. Some high growth initiatives, such as our aesthetic center business, have just begun to scale and improve operational efficiencies after the success of pilot projects. With healthy cash flow and a disciplined capital allocation approach, we will continue to invest in strategic initiatives that reinforce our market leadership, while maintaining a prudent approach to cost management. Our focus remains on balancing growth with profitability, enhancing financial resilience and ultimately driving long term value for our shareholders. Thank you.

Thank you. And ladies and gentlemen, this concludes today's question-and-answer session and today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.