Welcome to SBC Medical Group Holdings. It trades on the NASDAQ under the symbol SBC, and headquartered in Irvine, California, and Tokyo, Japan, owns and provides management services and products to cosmetic treatment centers. Happy to welcome the head of investor relations, Hikaru Fukui. Welcome back to the conference, Hikaru. Happy to have you again.
Thank you, Anna. Good afternoon. I'm Hikaru Fukui, head of IR of SBC Medical Group Holdings. Thank you very much for joining our conference call today. Despite your busy schedule, I will now walk you through our results for the third quarter of 2025, the progress of our businesses, and our capital policy. First, I would like to touch on our growth structure. SBC primarily provides comprehensive management support services to franchise clinics with focus on aesthetic medicine.
We generate income through franchise fee while aesthetic medicine remains our primary area of focus. Our franchise clinics have expanded their offering to include a comprehensive range of specialized medical services, including orthopedics, ophthalmology, hair loss treatment, and infertility treatment. This diversification allows us to meet a broader spectrum of customer needs, enhance customer retention, and further strengthen our position.
Next, I would like to explain our current situation of the medical clinics. The annual number of customers continues to increase steadily and has now expanded to approximately 6.5 million. Meanwhile, amid intensifying competition in the domestic market, the average revenue per customer visit temporarily declined, but turnaround has already begun. I have provided more detail on this on the next page. The graph on the left shows the quarterly trend of average spend per customer.
As you can see, thanks to initiatives such as pricing and promotion strategy optimization and our multi-brand strategy in the dermatology segment, which has successfully captured high spending customer groups, the overall average revenue per customer visit is clearly showing a sign of recovery. We intend to sustain this positive trend by accurately capturing customer needs and continuing to provide high-quality, high-satisfaction services. Next, I would like to touch on our financial performance.
Sales have been declined through the second quarter due to business restructuring and the division of franchise fee, but have since bottomed out, supported by an increase in point-related revenue. Additionally, the decline in listing-related costs, including share-based compensation expense, contributed to a turnaround in both operating income and net income. From here, we aim to place the company firmly back on a sustainable growth trajectory. Next, I would like to update our business situation.
Our first step in entry into Thailand is through a partnership with Blessed Asia. We have entered into a continuing agreement with Blessed Asia Corporation, a company with more than 10 years of experience and a network of more than 20 pharmacies and clinics, mainly in Thailand. By deepening our collaboration with Blessed Asia, we will accelerate our full-scale entry into Thailand's rapidly growing aesthetic markets.
Recently, we announced a commencement of a tender offer to acquire a majority stake in WAKU, which engaged in R&D for regenerative medicine and skincare products with the goal of making it a sustainable subsidiary. By combining the strengths of both companies, we aim to enhance the speed and innovation of our R&D, the expanded new treatment, and the unique services offering in clinical areas such as AGA and orthopedics.
Through this initiative, we seek to strengthen the group's overall competitiveness and achieve sustainable growth for both companies. Next, our financial foundation. We maintain a sound and robust financial base with sufficient cash and deposits. To further accelerate growth, building a strong relationship with financial institutions is essential. Recently, we utilized bank financing for our working capital purposes. Our ample liquidity will continue to be actively deployed for strategic investment, including both organic growth and M&A in Japan and overseas.
Finally, capital policy. We recognize the liquidity of our share is still low, making it difficult for many institutional investors to trade. To address this, we will work on improving supply and demand and pursue measures such as new share issuance and potential sales of shares held by our CEO. This will help create a more investment-friendly environment for a broader range of investors. That concludes my presentation. Thank you very much for your attention.
Wonderful. Thank you so much, Hikaru. Talk a little bit about how does SBC see revenue, gross margin, and operating profit growing from Q2 of 2026 on during 2026?
Thank you very much, Anna. We believe that the most important parameter in focusing for financial performance is fundamentally the number of franchise locations. We intend to maintain a 10%-15% growth rate for the time being. Therefore, assuming the same conditions and no individual extraordinary factors, we expect our total revenue to grow at a similar rate as the baseline. On the other hand, with respect to gross margin and operating profit margin, we don't currently anticipate any change in profitability.
Good. Wonderful, and talk a little bit about your competitors and what differentiates SBC.
Yes. In the Japan aesthetic medical market, we hold an overwhelming market share of approximately 25%, giving us strong advantages in revenue scale, number of customers, and brand trust, and overall, we place the highest value on customer satisfaction. Our goal is to provide services that exceed the price customers pay and turn them into long-term funds of SBC. We believe this philosophy is related in our 72% repeat visit rate. We also take great pride in the quality of our employee education and training programs. These high-quality training efforts attract strong talents and directly translate into excellent customer services. We believe this is a significant competitive advantage that can't be easily duplicated by other competitors.
And so why is now the right time for SBC?
Yeah. We believe we have returned to a sustainable growth trajectory after completing our business restructuring initiatives and revising our fee structure to build a renowned, more sustainable organization. As mentioned earlier, we have been seamlessly implementing various initiatives to win in the increasing competitive market, and our average customer spend has begun to increase. Our franchise performance generally lags behind that of our medical corporation's partners. While fluctuation may occur, we are confident about future performance. By continuing to drive highly satisfactory services to our customers, we aim to drive improvement in customer spend and overall profitability.
What are your priorities for capital allocation?
Yeah. Our highest priority continues to be growth investment. This includes expanding our existing businesses as well as investing in new areas and markets where we currently lack coverage. Domestically, we are exploring opportunities not only in aesthetic medicine but also across broader medical fields. Internationally, we have made progress in Singapore and now are evaluating our opportunity in Thailand and other neighboring countries in Asia. The U.S. market is the largest and remains one of our most important opportunities for future expansion and growth, and we will continue to carefully assess our opportunity as we advance our global strategy.
What is the progress on your U.S. business development efforts?
Yeah. Our U.S. team continues to explore opportunities in areas that strongly align with SBC's strengths and offer meaningful scalability. Examples include the medical spa sector as well as upstream businesses that could later expand into other regions. We also recognize the need to deepen our understanding of the U.S. market that we plan to move forward carefully, potentially beginning with minority investments to manage risk while building market knowledge.
What new steps is SBC Management envisioning to increase share trading liquidity in 2026?
Yeah. As you rightly pointed out, improving share trading liquidity is one of the most important things for expanding our base of potential investors. At present, our CEO, Yoshiyuki Aikawa, holds approximately 90% of the total outstanding shares, and we believe it is essential to increase the free float and further diversify our shareholder base. We intend to proceed with appropriate measures while carefully considering any potential impact on the share price.
Perfect. Do you have any closing remarks for our viewers today?
Yeah. Thank you very much for everybody. Yeah. We are trying to improve our business activity in order to achieve our vision to be the world's biggest medical group in the world. Thank you very much for your attention. We are trying to increase our visibility in the capital markets. So should you have any questions or requests or something, please contact me. Thank you very much for today.
Thank you so much, Hikaru. Thank you, SBC, for joining us, and we look forward to seeing you again real soon. All right, everyone, stay with us. We'll be right back with our next.