Yatsen Q1 2025 Earnings Report

Yatsen EPS Results

• Actual EPS: -$0.01
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Yatsen Revenue Results

• Actual Revenue: $114.86 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Yatsen Announcement Details

• Quarter: Q1 2025
• Date: 5/16/2025
• Time: Before Market Opens
• Conference Call Date: Friday, May 16, 2025
• Conference Call Time: 7:30AM ET

Yatsen (NYSE:YSG) Holding Limited is a China-based beauty and personal-care company that develops, markets and sells cosmetics and skincare products. Its portfolio includes color cosmetics, skincare, cleansing products and other personal-care items, offered through e-commerce platforms, retail channels and branded stores.

The company is best known for Perfect Diary, a cosmetics brand positioned for younger consumers. Yatsen has also operated or developed additional brands, including Little Ondine, Pink Bear and Abby’s Choice, and has expanded its portfolio through international skincare and beauty brands such as Galénic and Eve Lom.

Founded in 2016, Yatsen primarily serves consumers in China while using digital marketing, online retail and social-commerce channels to reach customers. The company completed an initial public offering on the New York Stock Exchange in 2020 under the symbol YSG.

Yatsen Q1 2025 Earnings Call Transcript

Key Takeaways

• Total net revenues rose 7.8% year over year in Q1 2025, driven by a 47.7% increase in skincare brand sales.
• Overall gross margin improved to 79.1% and net loss margin narrowed to 0.7%, with the company achieving a non-GAAP net income of RMB7.1 million versus a loss of RMB83.8 million a year ago.
• Management reduced selling and marketing expenses to 56.4% of revenues and general and administrative expenses to 7.8%, reflecting an optimized cost structure.
• The Board approved a new share repurchase program of up to USD 30 million over 24 months, demonstrating confidence in Yatin’s future potential.
• Q2 2025 revenue guidance of RMB 810.4 million to RMB 889.9 million implies a 2%–12% year-over-year increase, reflecting continued market momentum.

Presentation

[Operator]

Ladies and gentlemen, good day and welcome to the Yatsen First Quarter and Earnings Conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Irene Lyu, Vice President, Head of Strategic Investment and Capital Markets. Please go ahead.

[Irene Lyu, VP and Head of Strategic Investment at Yatsen Holding Limited]

Thank you, Operator. Please note that the discussion today will contain forward-looking statements relating to the company's future performance and are intended to qualify for the safe harbor from liability as established by the U.S. Cybersecurity Mitigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect Yatsen's business and financial results is included in certain filings of the company with the Securities and Exchange Commission. The company does not undertake any obligation to update this information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only.

[Irene Lyu, VP and Head of Strategic Investment at Yatsen Holding Limited]

Please see the earnings release issued earlier today for a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. Joining us today on the call from Yatsen's senior management are Mr. Jinfeng Huang, our Founder, Chairman, and CEO, and Mr. Donghao Yang, our CFO and Director. Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yatsen's investor relations website at ir.yatsenglobal.com. I will now turn the call over to Mr. Jinfeng Huang. Please go ahead, sir.

[Jinfeng Huang, Founder, Chairman, and CEO at Yatsen Holding Limited]

Thank you, Irene, and thank you, everyone, for participating in Yatsen's First Quarter 2025 Earnings Conference call today. I will begin with a macro overview and our key financial results, followed by insights into our key strategic initiatives and operational highlights. Highlight beauty markets for modest growth in the first quarter of 2025. According to the China National Bureau of Statistics, beauty retail sales rose 3.2% year over year, slightly trailing the 4.6% year over year growth in total retail sales of consumer goods. Online beauty sales reflected a similar trend. Combined beauty sales on Temu and Douyin recorded low double digits year over year growth. The Women's Day Shopping Festival delivered moderate performance. In terms of channels, Douyin outperformed Temu in both skincare and color cosmetics categories. Despite a soft market environment, we delivered results in line with our guidance. Total net revenues increased by 7.8% year over year.

[Jinfeng Huang, Founder, Chairman, and CEO at Yatsen Holding Limited]

Remarkably, our net revenues from skincare brands rose by 47.7% year over year, driven by a 58% year over year increase from our clinical and premium skincare brands, including Galanik, Dr. Wu, and Yvelon. On the profitability front, for the first quarter of 2025, our overall gross margin increased to 79.1% from 77.7% for the prior year period, driven by the greater contribution from higher margin products. We also reduced our net loss margin by 15.5 percentage points to 0.7% from 15.1% in the prior year through more strategic marketing spending and streamlined general and administrative expenses. Notably, we achieved a non-GAAP net income of RMB 7.1 million, representing a significant turnaround from the non-GAAP net loss of RMB 83.8 million for the prior year period.

[Jinfeng Huang, Founder, Chairman, and CEO at Yatsen Holding Limited]

Our solid performance for the first quarter marked another milestone in our strategic transformation, with particular progress on two key fronts: accelerating the growth for our skincare brands and optimizing our cost structure to prepare us for profitable growth. Now, let me walk you through the key performance highlights this quarter that reflect the accomplishments we have achieved. Starting with skincare, our portfolio continued to show strong momentum. Primarily driven by Galanik and Dr. Wu, our skincare brands delivered year-over-year revenue growth of 47.7%. Galanik saw another quarter of steady growth. Its number one vitamin C serum was the best-selling product in the premium vitamin serum category in Aspen Lee's live streaming room, while the Secret De-Excellence Active Cream ranked among the top six anti-aging creams on Temu in terms of retail sales value in the first quarter. The MicroMask series also contributed to the brand's strong performance.

[Jinfeng Huang, Founder, Chairman, and CEO at Yatsen Holding Limited]

In May, we hosted an offline event in Yunnan, China, to officially launch the upgraded rejuvenating MicroMask, which recently obtained the special cosmetic registration certificate for whitening products. At the event, we also announced renewed actress Du Linchen as the brand ambassador for the Mask series. We aim to further elaborate Galanik's awareness and recognition through continued product innovation and targeted marketing efforts. Dr. Wu also delivered robust revenue growth in the first quarter, supported by a broader product portfolio and a more balanced channel mix. We collaborated with a wide range of celebrities and KOLs to promote diverse products, including the Purifying Renewal Essence Toner, the Sun Care UV Protect Whitening Lotion, and the newly launched targeted Acne Cleaning Serum. This approach helped us drive revenue growth on both Temu and Douyin. In addition to strong sales performance, we remain committed to scientific research and collaboration.

[Jinfeng Huang, Founder, Chairman, and CEO at Yatsen Holding Limited]

In March, we launched the third Dr. Wu Acne Research Fund project, led by 14 renowned dermatologists from top institutions. Since its inception in 2023, the project has reached over 20,000 doctors and received more than 350 clinical research proposals. We look forward to the insights this fund will bring to the field of anti-acne treatment. While continuing to invest in product development and brand building to boost revenue growth, we also made meaningful progress in improving profitability. Selling and marketing expenses as a percentage of total net revenues narrowed to 56.4% from 59.7% for the prior year period. The improvement was primarily due to more strategic marketing spending, particularly offset by higher traffic expenses as a result of growing revenue contribution from the Douyin channel.

[Jinfeng Huang, Founder, Chairman, and CEO at Yatsen Holding Limited]

More notably, general and administrative expenses as a percentage of total net revenues were 7.8%, down by 10.3 percentage points from 18.1% a year ago. This improvement reflected our disciplined cost management and provided a solid foundation for our long-term growth. Lastly, I would like to highlight a few milestones at the corporate level. Our global R&D center in Shanghai, which we inaugurated last year, was officially accredited by the China National Accreditation Service for Conformity Assessment, placing it among the top tier of global testing institutions. This accreditation, alongside the CNAS recognition received by our R&D center in Guangzhou back in 2022, demonstrates our continued commitment to excellence in beauty research. Also, in April, we were invited by the China Show of Bloomberg and engaged in an in-depth interview on the topic of the future of beauty driven by technology.

[Jinfeng Huang, Founder, Chairman, and CEO at Yatsen Holding Limited]

This opportunity reinforced our strategic focus on R&D as a core competitive advantage. Before passing the call to Donghao, I would like to provide an update that our board of directors has approved a new share repurchase program under which we may repurchase up to RMB 30 million worth of our ordinary shares over the next 24 months, commencing on May 15, 2025. This further demonstrates our confidence in Yatsen's future potential. To conclude, while market conditions remain complex, we are encouraged by the progress we have made in executing our strategic transformation. We remain focused on delivering innovative and efficacious products, building strong brand equity, and driving operational excellence, all of which we believe will position us well for long-term sustainable growth. With that, I will now turn the call over to our CFO, Donghao Yang, to discuss our financial performance. Thank you, everyone.

[Donghao Yang, CFO and Director at Yatsen Holding Limited]

Thank you, David, and hello, everyone. Before I get started, I would like to clarify that all financial numbers presented today are in RMB amounts, and all percentage changes refer to year-over-year changes unless otherwise noted. Total net revenues for the first quarter of 2025 increased by 7.8% to RMB 833.5 million from RMB 773.4 million for the prior year period. The increase was primarily due to a 47.7% year-over-year increase in net revenues from skincare brands, partially offset by a 9.9% year-over-year decrease in net revenues from color cosmetics brands. Gross profits for the first quarter of 2025 increased by 9.7% to RMB 659.1 million from RMB 600.9 million for the prior year period. Gross margins for the first quarter of 2025 increased to 79.1% from 77.7% for the prior year period. The increase was primarily driven by an increase in sales of higher gross margin products.

[Donghao Yang, CFO and Director at Yatsen Holding Limited]

Total operating expenses for the first quarter of 2025 decreased by 8.6% to RMB 693.2 million from RMB 758.7 million for the prior year period. As a percentage of total net revenues, total operating expenses for the first quarter of 2025 were 83.2% as compared with 98.1% for the prior year period. Fulfillment expenses for the first quarter of 2025 were RMB 51.8 million as compared with RMB 51.4 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for the first quarter of 2025 decreased to 6.2% from 6.7% for the prior year period. The decrease was primarily due to further improvements in logistics efficiency. Selling and marketing expenses for the first quarter of 2025 were RMB 553.8 million as compared with RMB 539.2 million for the prior year period.

[Donghao Yang, CFO and Director at Yatsen Holding Limited]

As a percentage of total net revenues, selling and marketing expenses for the first quarter of 2025 decreased to 66.4% from 69.7% for the prior year period. The decrease was primarily due to the company's more strategic marketing spending combined with the selective closure of offline stores. General and administrative expenses for the first quarter of 2025 were RMB 64.9 million as compared with RMB 140.1 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for the first quarter of 2025 decreased to 7.8% from 18.1% for the prior year period. The decrease was primarily attributable to lower share-based compensation expenses as a result of using the graded vesting method over the vesting term of the company's awards and lower payroll expenses resulting from a reduction in general and administrative headcount.

[Donghao Yang, CFO and Director at Yatsen Holding Limited]

Research and development expenses for the first quarter of 2025 were RMB 22.6 million as compared with RMB 27.9 million for the prior year period. As a percentage of total net revenues, research and development expenses for the first quarter of 2025 decreased to 2.7% from 3.6% for the prior year period. The decrease was primarily due to lower lease expenses resulting from more favorable terms under a lease agreement renegotiated during the first quarter of 2025 and lower share-based compensation expenses. Loss from operations for the first quarter of 2025 was RMB 34.1 million as compared with RMB 157.7 million for the prior year period. Operating loss margin was 4.1% as compared with 20.4% for the prior year period. Non-GAAP loss from operations for the first quarter of 2025 was RMB 14.9 million as compared with RMB 107 million for the prior year period.

[Donghao Yang, CFO and Director at Yatsen Holding Limited]

Non-GAAP operating loss margin was 1.8% as compared with 13.8% for the prior year period. Net loss for the first quarter of 2025 was RMB 5.6 million as compared with RMB 124.9 million for the prior year period. Net loss margin was 0.7% as compared with 16.1% for the prior year period. Net loss attributable to Yatsen's ordinary shareholders for diluted EPS for the first quarter of 2025 was RMB 0.06 as compared with RMB 1.16 for the prior year period. Non-GAAP net income for the first quarter of 2025 was RMB 7.1 million as compared with Non-GAAP net loss of RMB 83.8 million for the prior year period. Non-GAAP net income margin was 0.9% as compared with Non-GAAP net loss margin of 10.8% for the prior year period.

[Donghao Yang, CFO and Director at Yatsen Holding Limited]

Non-GAAP net income attributable to Yatsen's ordinary shareholders for diluted EDS for the first quarter of 2025 was RMB 0.07 as compared with non-GAAP net loss attributable to Yatsen's ordinary shareholders for diluted EDS of RMB 0.78 for the prior year period. As of March 31, 2025, we had cash and short-term investment of RMB 1.28 billion as compared with RMB 1.36 billion as of December 31, 2024. Net cash generated from operating activities for the first quarter of 2025 was RMB 23.8 million as compared with net cash used in operating activities of RMB 121.8 million for the prior year period. Looking at our business outlook for the second quarter of 2025, we expect our total net revenues to be between RMB 810.4 million and RMB 889.9 million, representing a year-over-year increase of approximately 2% to 12%.

[Donghao Yang, CFO and Director at Yatsen Holding Limited]

These forecasts reflect our current and preliminary views on the market and operational conditions, which are subject to change. With that, I would now like to open the call to Q&A. Operator.

[Operator]

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. The first question today comes from Maggie Huang with CICC. Please go ahead.

[Maggie Huang, Analyst at China International Capital Corporation Limited]

Thank you for taking my question. This is Maggie Huang from CICC. Firstly, congratulations on achieving Non-GAAP net income in this quarter. I have two questions. My first question is how do we plan to promote the new products of Perfect Diary and Galanik, especially the foundation products of Perfect Diary and the anti-aging products of Galanik? My second question is about our performance of this June 18th shopping festival up to now. Is that in line with our expectation? Those are my two questions. Thank you.

[Irene Lyu, VP and Head of Strategic Investment at Yatsen Holding Limited]

Thank you, Maggie, for the question. For your first question regarding the Perfect Diary and the Galanik new product, we think product innovation and efficacy are the most important in driving consumers' repeat purchase and favorites. Basically, right now, all our product pipelines are really with strong product innovation and are backed by very strong R&D capability, deep consumer insights, and very strong consumer communication. Right now, for Perfect Diary and Galanik, so far, we have seen very good initial achievement results from the consumer feedback in terms of the facial makeup product and the anti-aging product, which is the foundation and also our VA serum. Once we receive more positive feedback from the consumers and fine-tune our consumer communication, we can begin to enlarge our channel distribution and also further build these products into the serial product.

[Donghao Yang, CFO and Director at Yatsen Holding Limited]

All right. Let me take your second question. It is still a bit too early for us to predict our overall performance for this June 18th festival. But so far, so good. I think the sales so far is pretty much in line with our expectations. Thank you.

[Maggie Huang, Analyst at China International Capital Corporation Limited]

It's very clear. Thank you very much. I have no more questions.

[Operator]

Once again, if you would like to ask a question, please press star, then one, to join the question queue. Press star, then one, to ask a question.

[Irene Lyu, VP and Head of Strategic Investment at Yatsen Holding Limited]

Thank you again for joining us today. If you have any further questions, please feel free to contact us at Yatsen directly. Our contact information for IR in both China and the U.S. can be found in today's press release. Thank you and have a great day.

[Operator]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Jinfeng Huang, Founder, Chairman, and CEO
• Donghao Yang, CFO and Director
• Irene Lyu, VP and Head of Strategic Investment

Analysts

• Maggie Huang, Analyst at China International Capital Corporation Limited