Yatsen Q1 2026 Earnings Call Transcript

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May 26, 2026

Key Takeaways

  • Positive Sentiment: Yatsen reported first-quarter revenue growth of 22.5% year over year to CNY 1.02 billion, led by strong skincare demand while color cosmetics declined modestly.
  • Positive Sentiment: Skincare revenue rose 58.5% and helped push gross margin to a record 18.2%, highlighting the company’s ongoing shift toward a higher-quality product mix.
  • Negative Sentiment: Operating profitability weakened as total operating expenses rose 32.5% and selling and marketing costs climbed to 72.2% of revenue, driven by brand investment and higher Douyin traffic costs.
  • Negative Sentiment: The company posted a net loss of CNY 61.9 million and used CNY 90 million in operating cash flow, showing that top-line growth has not yet translated into profitability.
  • Neutral Sentiment: Management said it will keep expanding skincare through hero product families, especially around Galénic and Dr. Wu, and expects Q2 revenue growth of 10% to 20%. The company also completed the first tranche of its convertible notes and warrants financing, including participation from Hillhouse.
AI Generated. May Contain Errors.
Earnings Conference Call
Yatsen Q1 2026
00:00 / 00:00

Transcript Sections

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Operator

Ladies and gentlemen, good day, and welcome to the Yatsen First Quarter 2026 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
Irene Lyu
VP, Head of Strategic Investment and Capital Markets at Yatsen

Thank you, operator. Please note that 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. Private Securities Litigation 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 forward-looking 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
Irene Lyu
VP, Head of Strategic Investment and Capital Markets at Yatsen

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 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. The call will conclude with a Q and A session. As a reminder, this conference is being recorded. A webcast replay of this conference call will be available on Yatsen's investor relations website at ir.yatsenglobal.com. I'll now turn the call over to Mr. Jinfeng Huang. Please go ahead, sir.

Jinfeng Huang
Jinfeng Huang
Founder, Chairman, and CEO at Yatsen

Thanks, Irene. Hi, everyone, and thank you for joining our first quarter 2026 earnings conference call. Going into this year, we delivered top-line growth that met our period guidance range and demonstrated ongoing resilience of our multi-brand strategy. Our financial and operational highlights this quarter further show that Yatsen is navigating the market with a clear strategic vision. Looking at the macro environment, according to the National Bureau of Statistics, beauty retail sales grew by 5.9% year-over-year in the first quarter of 2026, reflecting a stable yet highly competitive domestic beauty market. Looking closely at the online channels, the combined sales across Tmall and Douyin, and JD.com also recorded a single-digit year-over-year growth. Against this market backdrop, our strategic rebalancing has yielded highly encouraging results. Our total net revenues stayed on a steady growth trajectory, growing by 22.5% year-over-year for the first quarter.

Jinfeng Huang
Jinfeng Huang
Founder, Chairman, and CEO at Yatsen

More importantly, this growth was primarily propelled by the sustained upward momentum of our skincare brand, which experienced another substantial year-over-year growth of 68.5%. Driven by this favorable shift toward our skincare offering, our gross margin continued its year-over-year expansion and reached a historical milestone of 18.2%, reinforcing the structural health of our business model. Throughout the first quarter, we remained fiercely committed to our core strategic initiatives. Specifically, we continued to drive R&D-led product innovation, strengthen brand equity across our multi-brand portfolio, and position our business for long-term profitability optimization. In the following section, I would like to share our key progress across each of these three strategic pillars. Our first pillar is driving R&D-led innovation, which remains the ultimate engine behind our sustainable growth.

Jinfeng Huang
Jinfeng Huang
Founder, Chairman, and CEO at Yatsen

In the first quarter, we consistently stepped up our R&D investments, with R&D expenses as a percentage of total net revenues increasing further to 3.9%. This ongoing commitment allowed us to broaden our scientific initiatives. For instance, Dr. Wu launched the fourth Dr. Wu Acne Research Fund project in March, bringing online and offline dermatological experts to tackle a series of specialized research topics. In April, the brand marked another milestone with the release of the white paper on Chinese dermatological research and skin renewal. Leveraging 48 years of clinical expert trials and skin insights, this publication officially defines a multi-ingredient, multi-target, and a full-layer skin renewal management framework, further solidifying the brand's authority in dermatology. On the product front, our advanced R&D systems have successfully powered a series of highly market-ready solutions.

Jinfeng Huang
Jinfeng Huang
Founder, Chairman, and CEO at Yatsen

During the first quarter, Galénic's new Couture Révélation Cellulaire Revitalising Cream was an instant hit, selling out soon after its debut.

Jinfeng Huang
Jinfeng Huang
Founder, Chairman, and CEO at Yatsen

Dr. Wu expanded its successful PDRN series with the introduction of two new breakthrough products, the Ageversal Sodium DNA Hydro-Luminous Mask, and the Ageversal Advanced Rejuvenate Eye Cream. Meanwhile, this launch also expanded its product portfolio by launching the Renewal Intensive Treatment, designed specifically for the dedicated eye area. These launches underscore our enhanced efficiency in expanding existing series into new categories and broader equities. Our second pillar is strengthening brand equities through our portfolio through expert-led communication and strategic brand activities. In March, Galénic made a high profile appearance at the AMWC, the Aesthetic and Anti-Aging Medicine World Congress in Monaco. This world class presentation further reinforced Galénic's scientific credentials and solidified its core consumer mindshare in cellular level anti-aging skincare.

Jinfeng Huang
Jinfeng Huang
Founder, Chairman, and CEO at Yatsen

Furthermore, in April, Galénic announced the appointment of Fan Chengcheng as the new brand ambassador, a move that has amplified its brand resonance and consumer awareness. Our third pillar is improving overall profitability. During the third quarter, our selling and marketing expenses as a percentage of total net revenues experienced an increase as a result of both the continued investment in building our core brands and the elevated industry-wide traffic acquisition costs on the Douyin platform. Our commitment to long-term profitability optimization remains unwavering. Moving forward, we will dynamically adjust our channel mix, streamline our operational expenses, and unlock greater operational leverage from our fixed costs. These initiatives will ensure that our top-line expansion efficiently translates into further margin improvement, paving the way of sustainable profit-centric growth. Finally, I would like to provide an important update regarding our recent financing transaction.

Jinfeng Huang
Jinfeng Huang
Founder, Chairman, and CEO at Yatsen

Following our announcement on March 11th, we are pleased to note that we successfully completed the first tranche of the private placement of convertible notes and warrants on May 31st, 2026. In addition to myself and [Cha Capital, we are delighted to welcome Hillhouse as a key participating investor in this offering. This successful closing serves as a powerful testament to our long-term investors' steadfast confidence in Yatsen's strategic direction and further value. Management shares this exact same confidence, and we are fully energized to deliver sustained value for our shareholders in the quarters to come. With that, I will now turn the call over to our CFO, Donghao Yang, to discuss our financial details.

Donghao Yang
Donghao Yang
CFO and Director at Yatsen

Thank you, David, and hello everyone. Before I get started, I would like to clarify that all financial numbers presented today are unified amounts and all percentage changes refer to year-over-year changes unless otherwise noted. Total net revenues for the first quarter of 2026 increased by 22.5% to CNY 1.02 billion from CNY 833.5 million for the prior year period. The increase was primarily due to a 58.5% year-over-year increase in net revenues from skincare brands, partially offset by a 5% year-over-year decrease in net revenues from color cosmetics brands. Gross profit for the first quarter of 2026 increased by 24.3% to CNY 819.2 million from CNY 659.1 million for the prior year period. Gross margin for the first quarter of 2026 increased to 80.2%, from 79.1% for the prior year period.

Donghao Yang
Donghao Yang
CFO and Director at Yatsen

Total operating expenses for the first quarter of 2026 increased by 32.5% to CNY 918.1 million from CNY 693.2 million for the prior year period. As a percentage of total net revenues, total operating expenses for the first quarter of 2026 were 89.9%, as compared with 83.2% for the prior year period. Fulfillment expenses for the first quarter of 2026 were CNY 61.1 million as compared with CNY 51.8 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for the first quarter of 2026 decreased to 6%, from 6.2% 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 2026 were CNY 737.2 million as compared with CNY 553.8 million for the prior year period.

Donghao Yang
Donghao Yang
CFO and Director at Yatsen

As percentage of total net revenues, selling and marketing expenses for the first quarter of 2026 increased to 72.2%, from 66.4% for the prior year period. The increase was primarily driven by investments in broadening consumer awareness and building long-term brand equity of our core brands, coupled with higher traffic acquisition costs on the Douyin platform. General and administrative expenses for the first quarter of 2026 were CNY 80.3 million, as compared with CNY 64.9 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for the first quarter of 2026 were 7.9%, as compared with 7.8% for the prior year period, remaining largely flat. Research and development expenses for the first quarter of 2026 were CNY 39.4 million, as compared with CNY 22.6 million for the prior year period.

Donghao Yang
Donghao Yang
CFO and Director at Yatsen

As a percentage of total net revenues, research and development expenses for the first quarter of 2026 increased to 3.9%, from 2.7% for the prior year period. The increase was primarily driven by higher payroll expenses resulting from a rise in research and development headcount. Loss from operations for the first quarter of 2026 was CNY 99 million, as compared with CNY 34.1 million for the prior year period. Operating loss margin was 9.7%, as compared with 4.1% for the prior year period. Non-GAAP loss from operations for the first quarter of 2026 was CNY 84.6 million, as compared with CNY 14.9 million for the prior year period. Non-GAAP operating loss margin was 8.3%, as compared with 1.8% for the prior year period. Net loss for the first quarter of 2026 was CNY 61.9 million, as compared with CNY 5.6 million for the prior year period.

Donghao Yang
Donghao Yang
CFO and Director at Yatsen

Net loss margin was 6.1%, as compared with 0.7% for the prior year period. Net loss attributable to Yatsen's ordinary shareholders per diluted ADS for the first quarter of 2026 was RMB 0.64, as compared with RMB 0.06 for the prior year period. Non-GAAP net loss for the first quarter of 2026 was RMB 57.3 million, as compared with non-GAAP net income of RMB 7.1 million for the prior year period. Non-GAAP net loss margin was 5.6%, as compared with non-GAAP net income margin of 0.9% for the prior year period. Non-GAAP net loss attributable to Yatsen's ordinary shareholders per diluted ADS for the first quarter of 2026 was RMB 0.6, as compared with non-GAAP net income attributable to Yatsen's ordinary shareholders per diluted ADS of RMB 0.07 for the prior year period.

Donghao Yang
Donghao Yang
CFO and Director at Yatsen

As of March 31st, 2026, the company had cash, restricted cash, and short-term investments of CNY 934.2 million, as compared with CNY 1.05 billion as of December 31st, 2025. Net cash used in operating activities for the first quarter of 2026 was CNY 90 million, as compared with net cash generated from operating activities of CNY 23.8 million for the prior year period. Looking at our business outlook for the second quarter of 2026, we expect our total net revenues to be between CNY 1.2 billion and CNY 1.3 billion, representing a year-over-year increase of approximately 10%-20%. These forecasts reflect the company's 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 and A. Operator?

Operator

Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. To remove yourself from queue, 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. Our first question today comes from Manqi Huang with CICC. Please go ahead.

Manqi Huang
Manqi Huang
Analyst at CICC

Well, thanks for taking my question. This is Manqi Huang from CICC. I have two questions. About my first question, we've seen a rapid growth of our skincare brands in this quarter. Could management share with us how to expand our product portfolio of skincare brands going forward? My second question is that how do we view the competition from foreign brands, especially in high-end skincare markets? That's my two questions. Thank you.

Jinfeng Huang
Jinfeng Huang
Founder, Chairman, and CEO at Yatsen

Thank you, Manqi. We'll continue to expand around proven hero product families. In quarter one, Galénic's new anti-aging cream was a great success and sold out shortly after launch. We also saw significant growth from Galénic's snow algae facial moisturizer cream. These results give us more confidence that Galénic can expand from hero serums into a broader anti-aging skincare routine. For Dr. Wu and [Yuesao], we'll follow the same logic. Build complete routines around proven science, strong efficacy, and clear consumer demand. For the second question regarding the competition from high-end foreign brands, competition is very intense, but we believe we have a differentiated position. Our skincare brands combine global heritage, strong scientific credibility, local consumer insights, and very fast execution. Galénic is a very great example. We are building the brand around cellular-level anti-aging, supported by successful product launches and stronger brand communication.

Jinfeng Huang
Jinfeng Huang
Founder, Chairman, and CEO at Yatsen

We are also using AI and data tools to improve consumer insights, content production, CIM, and marketing ROI. This helps us to compete more efficiently, not just to sell more. Thank you.

Operator

Thank you. As a reminder, if you would like to ask a question, please press star then one on your telephone keypad. Our next question today comes from Lin Zhang at CITIC Securities. Please go ahead.

Lin Zhang
Lin Zhang
Analyst at CITIC Securities

Thank you for taking my question. I'm Lin Zhang from CITIC Securities. My question is that we have noticed Dr. Wu is growing really fast. Could you please share with us the key drivers of the growth? Thank you.

Jinfeng Huang
Jinfeng Huang
Founder, Chairman, and CEO at Yatsen

Well, Dr. Wu is a very important case for us. The brand has delivered strong growth while maintaining a healthier profitability profile. One reason is its higher B2B channel mix, including professional and offline channels. Which give us the brand a better balance between growth, traffic cost, and profitability. This is a model we want to learn from and then selectively apply to other skincare brands. Stronger science, more professional credibility, more balanced channel mix, and better marketing efficiency. Those are some of the key drivers we summarized for Dr. Wu. Thank you.

Operator

Thank you. That concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments.

Irene Lyu
Irene Lyu
VP, Head of Strategic Investment and Capital Markets at Yatsen

Thank you once 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

Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

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