So-Young (SY) Q4 2025 earnings review
Top-Line Reverses to Growth, But the Cost is Heavy Margin Compression
So-Young has officially crossed its strategic inflection point. Total Q4 revenue grew 25% YoY to RMB460.7M, marking a clear reversing trend from the steep declines seen early in the year. The driver is entirely the physical 'So-Young Clinics', which saw revenue explode 205% YoY to RMB248.1M, soundly beating guidance. However, transitioning from an asset-light online marketplace to an asset-heavy clinic chain is taking a severe toll on profitability. Gross margins compressed from 58% to 44%, and the non-GAAP net loss widened to RMB93.4M as the high-margin legacy platform continues to bleed revenue.
🐂 Bull Case
Management successfully hit its year-end target, reaching 49 fully operational clinics. 39 of these generated positive quarterly operating cash flow, proving that the unit economics of the individual centers can work once ramped up.
The tiered membership program is working. Core members grew by 39% sequentially in Q4, contributing over 80% of aesthetic service revenues with an 80%+ quarterly repurchase rate.
🐻 Bear Case
The traditional online platform (Information & Reservation Services) fell 27% YoY. This was supposed to be the 'foundational pillar' funding the new clinic rollout, but it is drying up faster than the clinics can generate bottom-line profit.
Gross margins collapsed to 44.4% from 58.5% a year ago. The structural reality of operating physical clinics means So-Young's days as a high-margin internet platform are over.
⚖️ Verdict: ⚪
Neutral. The execution of the clinic rollout is undeniably impressive, and top-line growth has returned. However, the widening net losses, deteriorating gross margins, and shrinking legacy business make this a high-risk transition story until total company profitability can be proven.
Key Themes
Aesthetic Centers Are Now the Unrivaled Core Business
The physical clinic rollout is accelerating. Aesthetic treatment services revenue hit RMB248.1M (+205% YoY), comfortably exceeding the high end of Q4 guidance (RMB226M). It now represents 54% of total company revenue, up from just 22% a year ago. With 49 centers operational (48 direct, 1 franchise), So-Young has successfully built the leading light medical aesthetics chain by scale in China.
Rising Sales & Marketing Costs Contradict 'Low-Cost' Narrative
Throughout 2025, management touted their ability to acquire customers cheaply via 'private domain traffic' and referrals, keeping CAC in the 'RMB 100 range'. Yet, Q4 Sales & Marketing expenses spiked 26% YoY to RMB168.7M. This indicates that as the clinic network expands, the company is being forced to spend heavily on traditional branding and user acquisition to fill capacity.
Legacy Supply Chain & Platform Contraction
The legacy businesses are decelerating across the board. Information and reservation services fell 27% YoY to RMB125.7M due to fewer subscribing medical providers. Sales of medical products (upstream supply chain) dropped 20% YoY to RMB69.3M. This dual collapse is placing immense pressure on the new clinic business to carry the entire company's valuation.
Aggressive Center Ramp-Up Dynamics
Data released on center maturity reveals the financial strain of expansion. While the 17 'Mature' centers (over 12 months) generated an impressive RMB8.4M average revenue in Q4, the 13 'Ramp-up' centers (0-3 months) generated only RMB1.3M on average. The heavy weighting of centers in the 'Growth' phase (19 centers) explains the current drag on consolidated margins.
Other KPIs
Decelerating. Gross margin collapsed from 58.5% in 24Q4 to 44.4% in 25Q4. This is a structural shift, not a one-off. Cost of aesthetic treatment services surged 190% YoY to RMB189.0M, consuming the vast majority of the segment's revenue and permanently lowering the company's gross profitability ceiling.
Decreasing. Down from RMB 1.25 billion at the end of 2024. The company burned through roughly RMB 317 million in cash across FY25, primarily to fund the aggressive build-out of the 49 branded aesthetic centers. While the balance sheet remains healthy, the cash burn rate requires the clinics to achieve corporate-level profitability soon.
Guidance
Accelerating. The midpoint of RMB 273.0M implies an astonishing 176% YoY growth against Q1 2025 (which was RMB 98.8M) and a 10% sequential increase over Q4 2025. This is highly bullish, as Q1 is typically a seasonally slower quarter due to the Lunar New Year holiday, indicating that center maturity and core member retention are driving strong organic volume.
Key Questions
Sales & Marketing Contradiction
Sales & Marketing expenses rose 26% YoY this quarter. How does this reconcile with the management narrative of acquiring customers at a low cost ('RMB 100 range') via private domain traffic? Are customer acquisition costs rising as you saturate your existing app user base?
Gross Margin Floor
With gross margins compressing to 44.4% this quarter, what is the long-term, steady-state gross margin target for the company once the 50 clinics are fully mature, and how will proprietary product integration lift this floor?
Legacy Platform Stabilization
Information and reservation services fell another 27% YoY. At what revenue run-rate do you expect this legacy platform business to finally bottom out and stabilize?
Franchise Strategy Ramp
You currently have 48 directly operated centers and only 1 franchised location. Given the heavy CapEx and cash burn seen in FY25, how aggressively will you pivot to the franchise model in FY26 to achieve your 1,000-store long-term vision without draining the balance sheet?