So-Young (SY) Q2 2025: Aesthetic Center Revenue Jumps 381% as Network Hits 33 Locations

August 15, 2025 | By EarningsIQ Research

So-Young’s offline aesthetic centers became its largest revenue driver, marking a decisive business model inflection point. Despite a headline revenue decline, the company’s rapid expansion and operational metrics in its clinic network signal a strategic pivot toward higher-margin, recurring business. Management’s aggressive expansion targets and cost discipline set the stage for a multi-year chain growth story, though near-term losses and platform softness remain key watchpoints.

Summary

• Chain Model Inflection: Offline aesthetic centers overtook legacy platform as largest revenue source, validating chain-led strategy.
• Operational Leverage Emerges: Rapid network expansion drove sharp volume growth, improved margins, and high repeat rates.
• Expansion Ambition Sets Pace: Management targets 50 centers by year-end and 1,000 long term, signaling a high-growth runway.

Performance Analysis

So-Young’s Q2 marked a structural shift as aesthetic center revenue surged and became the company’s top segment for the first time, reaching RMB 144 million and outpacing information services and product sales. This 381% year-over-year growth in visits and 458% growth in procedures reflect the rapid rollout and traction of the Xin Yang Clinic chain, now at 33 locations, up from 20 a year ago. However, total company revenue declined 7% year-over-year to RMB 379 million, as the legacy platform business continued to contract, weighed by fewer subscribing medical service providers and softer product sales.

Network expansion and upfront investment drove a net loss of RMB 36 million, reversing last year’s profit, but operating metrics showed clear improvement: 19 of 20 mature clinics turned operating cash flow positive in June, 13 were profitable on a monthly basis, and gross margin in the aesthetic segment expanded by about 5 percentage points sequentially. Customer acquisition costs remained low, with over 70% of new customers sourced via referrals and private traffic, supporting sustainable growth. Repeat purchase rates above 60% and customer satisfaction near 5.0 underscore the chain’s ability to drive recurring revenue.

• Chain Revenue Surpasses Platform: Aesthetic center revenue became the largest segment, overtaking legacy information services for the first time.
• Clinic Network Drives Volumes: Verified treatment visits soared 381% YoY, with user base now above 100,000 and high repeat engagement.
• Losses Reflect Scale Investment: Net loss widened on upfront expansion, but operating metrics and margin trends improved in the core chain business.

The company’s robust cash position (RMB 999 million) provides ample runway for continued network investment, though the legacy platform’s decline and near-term losses remain central risks to monitor as the business transitions to its new model.

Executive Commentary

Strategic Positioning

1. Chain-Led Model Overtakes Platform

So-Young’s decisive pivot from an online platform to a physical chain operator is now realized, with aesthetic centers eclipsing the legacy business in revenue contribution. This marks a business model milestone, positioning the company for recurring, higher-margin growth as network effects and operational leverage take hold. The chain model, centered on standardized, branded clinics, is now the primary engine for future value creation.

2. Operational Efficiency and Cost Structure

Customer acquisition efficiency is a standout advantage, with costs in the low hundreds of yuan and over 70% of new users sourced from referrals and private traffic. This low-cost funnel, combined with high repeat rates and customer satisfaction, supports profitable scaling. The company is also increasing the share of self-developed and exclusively distributed products in its clinics, which should drive further gross margin improvement and procurement leverage as the network expands.

3. Product and Brand Differentiation

The product strategy is focused on anti-aging and blockbuster treatments, with a curated portfolio designed to maximize ARPU and repeat business. New launches like Miracle PLLA and BBL Hero, along with exclusive distribution rights for premium injectables, reinforce the clinic’s unique positioning. Aggressive brand campaigns and influencer partnerships have driven high visibility and engagement, particularly among young, beauty-conscious women.

4. Expansion Roadmap and Franchise Model

Management’s ambition is clear: 50 clinics by year-end, pilot franchise centers in Q4, and a long-term target of 1,000 locations within 8 to 10 years. The company is also preparing to enter additional tier-one and core tier-two cities, with a measured approach to franchise rollout based on pilot performance. The robust cash position and improving maturity of digital management systems underpin this aggressive expansion plan.

5. Platform and POP Business Synergy

While the legacy platform is declining, management is working to drive synergy between the offline chain and the online POP (third-party marketplace) business. The plan is to leverage the clinic network’s traffic to enhance platform monetization, using refined merchant classification and user behavior data to match customers with high-quality POP merchants, aiming for incremental growth and improved profitability from the platform segment.

Key Considerations

This quarter’s results highlight a critical inflection in So-Young’s business model, but also surface the challenges inherent in scaling a capital-intensive chain in a competitive, evolving market. The following factors will shape the company’s trajectory in coming quarters:

Key Considerations:

• Clinic Network Scale-Up: Execution on aggressive expansion plans, both company-owned and franchise, will determine future growth and margin realization.
• Margin Leverage from Product Mix: Increasing use of self-developed and exclusive products should further improve gross margins and reduce procurement costs as the network grows.
• Platform Revenue Transition: Legacy information services and product sales remain in decline, requiring successful synergy and monetization of traffic from the new chain model.
• Sustainable Customer Acquisition: Continued success in low-cost, referral-driven customer acquisition is essential to maintaining margin and supporting network utilization.
• Regulatory and Talent Risks: Expansion depends on availability of qualified doctors and compliance with evolving medical regulations, both of which could constrain growth or add cost.

Risks

Near-term losses and platform revenue declines highlight the risk of execution missteps as So-Young transitions to a capital- and labor-intensive chain model. Regulatory scrutiny, competition from new entrants, and potential bottlenecks in recruiting qualified doctors could slow expansion or pressure margins. The pace and effectiveness of franchise rollout, as well as the ability to maintain high customer satisfaction and repeat rates at scale, are also critical uncertainties for investors to monitor.

Forward Outlook

For Q3 2025, So-Young guided to:

• Aesthetic treatment service revenue of RMB 150 million to RMB 170 million, up 230.5% to 274.6% YoY

For full-year 2025, management reiterated its target:

• 50 total aesthetic centers by year-end

Management highlighted several factors that will shape results:

• Continued rapid expansion in both tier-one and tier-two cities
• Further margin improvement as self-developed products scale and digital management matures

Takeaways

So-Young’s Q2 marks a structural business model inflection, with the chain-led approach now fully in the driver’s seat. Investors should monitor:

• Clinic Network Execution: The ability to open, ramp, and profitably operate 50+ clinics in 2025 will be the primary determinant of medium-term value creation.
• Margin and Cost Structure: Ongoing improvements in customer acquisition, product mix, and operational efficiency are key to offsetting upfront losses.
• Platform Monetization and Franchise Rollout: The pace of legacy platform stabilization and successful franchise pilots will shape the next phase of growth and risk profile.

Conclusion

So-Young’s Q2 2025 results confirm a strategic pivot from platform to chain, with operational and financial metrics in the clinic network validating the model. While near-term losses and legacy declines remain, the company’s execution on network expansion and margin leverage will define its long-term trajectory.

Industry Read-Through

So-Young’s rapid shift from online platform to offline chain is emblematic of a broader trend in China’s medical aesthetics sector, where standardized, branded clinics are capturing share from fragmented incumbents. The company’s focus on low-cost acquisition, repeat business, and product exclusivity highlights the importance of operational discipline and supply chain integration in driving profitability. For peers and potential entrants, the results underscore both the opportunity and the capital intensity of scaling a national clinic network. Investors across consumer health and services should watch for similar transitions from digital to physical, and for the competitive advantage conferred by proprietary product access and brand-driven customer loyalty.

SY Consumer Discretionary Medical Aesthetics Omnichannel Clinic Network Platform Transition Franchise Customer Acquisition