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Date

Monday, Nov. 17, 2025 at 7:30 a.m. ET

Call participants

  • Founder, Chairman, and CEO — Jinfeng Huang
  • Chief Financial Officer and Director — Donghao Yang
  • Head of Investor Relations — Irene Lyu

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Takeaways

  • Revenue Growth -- Total net revenues increased by 47.5% year-over-year to RMB 998.4 million, surpassing the high end of prior guidance.
  • Skincare Segment Performance -- Net revenues from skincare brands rose by 83.2% year-over-year and accounted for 49.2% of total revenue, highlighting a significant category shift.
  • Gross Profit and Margin -- Gross profit grew by 51.9% to RMB 780.5 million, with gross margin improving to 78.2% from 75.9% last year, driven by a higher mix of premium products.
  • Net Loss Reduction -- Net loss narrowed to RMB 70.4 million, with net loss margin improving to 7% from 17.9% in the prior year period.
  • Operating Expenses -- Total operating expenses increased by 31.9% to RMB 864.1 million, but declined as a percentage of net revenue to 86.5% from 96.8% in the prior year period.
  • Marketing Efficiency -- Selling and marketing expenses rose to RMB 682.3 million, but their ratio declined to 68.3% from 73% of net revenue. Investments were front-loaded for the Double Eleven season.
  • Cash Position -- As of September 30, the company held RMB 1.1 billion in cash, restricted cash, and short-term investments, up from RMB 1 billion at year-end 2024.
  • Cash Flow -- Net cash used in operating activities was RMB 126.8 million, an improvement from RMB 175.9 million last year, primarily due to working capital timing.
  • Business Outlook -- Management guides fourth quarter net revenue between RMB 1.32 billion and RMB 1.49 billion, reflecting anticipated 15%-30% year-over-year growth.
  • Gross Margin Optimization -- CFO Donghao Yang attributed improvement to "an increase in sales of higher gross margin products."
  • Double Eleven Performance -- CFO Donghao Yang commented, "the Double Eleven performance for the whole company is generally in line with our expectations. Of course, some of the brands are exceeding our expectations."
  • R&D Commitment -- CEO Jinfeng Huang cited R&D as a primary driver for skincare growth and innovation, with expanded new product launches planned.
  • Channel Leadership -- The company's flagship makeup brand achieved the number one ranking among makeup brands on the WeChat video channel, indicating strong digital channel momentum.
  • Brand Portfolio Strategy -- Management reiterated focus on building a competitive and resilient brand portfolio, with sustained investment in product innovation supporting category and margin upgrades.

Summary

The company's skincare brands achieved substantial revenue growth and now represent nearly half of total sales, signaling a pronounced strategic pivot in category mix. Investments in R&D and innovation contributed to successful hero product launches and strengthened brand differentiation across premium and mass channels. Improved operating leverage was evident as expense ratios declined despite higher absolute spending. Near-term marketing investments were targeted around key seasonal events. Brand-level performance highlights included notable e-commerce leadership and recurring product adoption gains. The balance sheet showed increased liquidity, coupled with disciplined inventory and cash flow management heading into the higher-revenue holiday quarter.

  • Management stated they expect operating cash flow to improve as "improved investments convert into revenue in the fourth quarter."
  • Jinfeng Huang forecasted "further improvement to be driven by a higher skincare mix, ongoing gross margin optimization, and greater marketing efficiency."
  • Management emphasized the ongoing challenge from foreign high-end brands engaged in "very big out-of-pocket price promotions" during Double Eleven, but stated their high-end brands "are still keeping a very strong momentum by balancing the price promotion."
  • CEO Jinfeng Huang identified brand expansion, customer base growth, and channel mix improvement as critical future drivers of sustained growth and profitability.

Industry glossary

  • Double Eleven: Major e-commerce sales festival in China, also known as Singles' Day, critical for retail revenue peaks.
  • Hero Product: A top-selling, flagship item within a brand's portfolio that drives strong consumer engagement and repeat purchases.
  • RMB: Renminbi, the official currency of the People's Republic of China.
  • ADS: American Depositary Share, representing shares of a foreign company traded on a U.S. exchange.
  • PO Series/VC Serum/AVA Serum/VB7: Product lines and SKUs under the Galani brand, as referenced in the transcript.
  • Mandeliic Acid Category: A specialized skincare segment led by Doctor Wu in the China market, focused on products using mandelic acid as an ingredient.
  • CIM: Customer Information Management, indicated as a driver of improved marketing ROI in the transcript.

Full Conference Call Transcript

Irene Lyu: Thank you, operator. Please note that discussion today will contain forward-looking statements relating to the company's future performance, and our intent to qualify for the safe harbor and 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 Holding Limited's business and financial results is included in certain filings of the company with the Securities Exchange Commission.

The company does not undertake any obligation to update its forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes. 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 Holding Limited's senior management are Mr. Jinfeng Huang, our Founder, Chairman, and CEO, and Mr. Donghao Yang, our CFO and Director. Management will begin with their 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 Holding Limited'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: Hello, everyone. Thank you for joining our third quarter 2025 earnings call. The beauty market in China continues to show signs of recovery in the third quarter, particularly in the skincare category, which remained robust and supported overall industry growth. Amid this improving backdrop, we remain focused on executing our long-term strategy to build a competitive, resilient brand portfolio anchored in R&D and innovation. Through disciplined execution, we delivered our fourth consecutive quarter of revenue growth, with total net revenues increasing by 47.5% year over year and exceeding the high end of our guidance. Our momentum continues to be driven by strong growth from skincare and sustained performance of our hero product engine, rather than short-term promotions.

Our skincare brands grew by 83.2% year over year and reached 49.2% of total revenue, making another step forward in our category upgrade strategy and reinforcing our transformation toward a more sustainable, margin-accretive portfolio. Meanwhile, our net loss narrowed meaningfully as a result of the improved gross margin, optimized operating efficiency, and a more disciplined resource allocation. Net loss margin improved significantly from 17.9% in the prior year period to 7% this quarter, demonstrating the continued progress in our profitability trajectory. These results reflect the strength of our brand as well as our commitment to distinct execution. Looking ahead, our priority is to continue progressing toward profitability in a disciplined and sustainable way.

We expect further improvement to be driven by a higher skincare mix, ongoing gross margin optimization, and greater marketing efficiency. While we will continue to invest in innovation and hero products, we remain disciplined in balancing growth with profitability. Now let me share some brand and product highlights during this quarter. Galani delivered strong momentum and remained one of the fastest-growing premium skincare brands. The brand's PO series continued to perform well, with the number one VC Serum and the number two AVA serums ranking among the top-selling serums across major e-commerce platforms.

The newly introduced number three VB7, launched in mid-September to further build up the brand's ABC cellular level skincare framework, quickly became one of the brand's best-selling items on Douyin. We are also seeing encouraging signs of regimen adoption, with more consumers purchasing multiple products within the series, supporting stronger customer lifetime value. Doctor Wu recorded healthy growth during the quarter, supported by strong performance from its core categories. In September, Doctor Wu unveiled its first anti-aging product in the UK, leveraging decades of clinical expertise in skin renewal.

The newly launched TDI N Serum gained strong traction across e-commerce platforms, driven by its innovative formula featuring a high concentration of active ingredients and a patent penetration technology, underscoring the brand's ability to build trust through clinically validated innovation. In China, Doctor Wu continued to lead the mandelic acid category across online platforms. In addition, Doctor Wu presented its research at the ninth Annual Academic Conference of the Dermatology Committee of the Chinese Non-Government Medical Institution Association, further demonstrating the brand's commitment to clinically grounded innovation and strengthening its leadership in renewal-focused skincare. Our flagship brand, Fabulare, also continued to make progress following the successful launch of the Translucent Blurring Setting Powder and BioPhase Essence Foundation.

The brand focused on streamlining its core product assortment, improving hero product quality, and enhancing overall product experience under the makeup unification concept. Several of these hero products delivered performance above expectations, driving Perfect Diary's base makeup category to exceed 40% of total sales and supporting a more sustainable and distinct recovery. In the third quarter, COVID-19 also excelled in new channel performance and achieved the number one ranking among makeup brands on WeChat video channel, reflecting the brand's strengthened competitiveness and growing consumer IND and innovation have consistently served as the cornerstone of our product development and brand building. We are committed to advancing scientific research to strengthen our long-term competitiveness.

During the quarter, we participated in the IFCC Congress for the fourth consecutive year. This time, 11 of our papers were shortlisted by the IFCC, covering topics from molecular mechanism, clinical translation to AI algorithm, and emotion skincare. This work highlights our full chain capabilities, from fundamental science to technology translation and clinical validation, and it directly supports future hero highlights across our brands. As we finish the third quarter, we are pleased to see continued progress in both growth and operational improvement. We remain confident that our strategic focus on R&D, together with disciplined execution and a sharper resource allocation, will enable us to deliver sustainable long-term growth.

At the same time, we will remain highly disciplined in capital allocation, prioritizing investments that strengthen our core brands and innovation capabilities while creating long-term value for shareholders. Thank you. I will now turn the call to Donghao Yang.

Donghao Yang: Thank you, Jinfeng, 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 2025 increased by 47.5% to RMB 998.4 million from RMB 677 million for the prior year period. The increase was primarily due to an 83.2% year-over-year increase in net revenues from skincare brands combined with a 25.2% year-over-year increase in revenues from color cosmetics brands. Gross profit for 2025 increased by 51.9% to RMB 780.5 million from RMB 513.8 million for the prior year period. Gross margin for 2025 increased to 78.2% from 75.9% for the prior year period.

The increase was primarily driven by an increase in sales of higher gross margin products. Total operating expenses for 2025 increased by 31.9% to RMB 864.1 million from RMB 655.2 million for the prior year period. As a percentage of total net revenues, total operating expenses for 2025 were 86.5% as compared with 96.8% for the prior year period. Fulfillment expenses for 2025 were RMB 61.8 million as compared with RMB 50.4 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for 2025 decreased to 6.2% from 7% for the prior year period. The decrease was primarily driven by fulfillment costs optimization coupled with the leveraging effect of higher total net revenues in 2025.

Selling and marketing expenses for 2025 were RMB 682.3 million as compared with RMB 494.4 million for the prior year period. As a percentage of total net revenues, selling and marketing expenses for 2025 decreased to 68.3% from 73% for the prior year period. The third quarter included a portion of our planned upfront investments for the Double Eleven shopping season. These investments typically elevate selling and marketing ratios in the short term but support revenue acceleration and stronger brand equity in the fourth quarter and beyond. Excluding these seasonal effects, we continue to see improving marketing efficiency driven by a higher skincare mix and more disciplined spending across channels.

General and administrative expenses for 2025 were RMB 80.2 million as compared with RMB 85 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for 2025 decreased to 8% from 12.6% for the prior year period. The decrease was primarily driven by lower share-based compensation expenses coupled with the deleveraging effect of higher total net revenues in 2025. Research and development expenses for 2025 were RMB 39.8 million as compared with RMB 25 million for the prior year period. As a percentage of total net revenues, research and development expenses for 2025 increased to 4% from 3.7% 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 2025 was RMB 83 million as compared with RMB 141.3 million for the prior year period. Operating loss margin was 8.4% as compared with 20.9% for the prior year period. Non-GAAP loss from operations for 2025 was RMB 60.6 million as compared with RMB 98.5 million for the prior year period. Non-GAAP operating loss margin was 6.1%, as compared with 14.5% for the prior year period. Net loss for 2025 was RMB 70.4 million as compared with RMB 121.1 million for the prior year period.

Net loss margin was 7%, as compared with 17.9% for the prior year period. Net loss attributable to Yatsen Holding Limited's ordinary shareholders per diluted ADS for 2025 was RMB 0.7 as compared with RMB 2.2 for the prior year period. Non-GAAP net loss for 2025 was RMB 51.5 million as compared with RMB 76 million for the prior year period. Non-GAAP net loss margin was 5.2%, as compared with 11.3% for the prior year period. Non-GAAP net loss attributable to Yatsen Holding Limited's ordinary shareholders per diluted ADS for 2025 was RMB 0.5 as compared with RMB 0.77 for the prior year period.

As of September 30, 2025, the company had cash, restricted cash, and short-term investments of RMB 1.1 billion as compared with RMB 1 billion as of December 31, 2024. Net cash used in operating activities for 2025 was RMB 126.8 million as compared with RMB 175.9 million for the prior year period. The operating cash flow was primarily due to working capital movement, including inventory positioning and receivables timing ahead of Double Eleven. These are seasonal and planned effects. We expect operating cash flow to improve as these improved investments convert into revenue in the fourth quarter and as we continue to optimize inventory efficiency and marketing ROI.

Looking at our business outlook for 2025, we expect our total net revenues to be between RMB 1.32 billion and RMB 1.49 billion, representing a year-over-year increase of approximately 15% to 30%. 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, begin the question session. If you would like to withdraw your question, please press star then 2. For the benefit of all participants on today's call, if you wish to ask your question, please immediately repeat your question in English. Our first question will come from Maggie Huang with CICC. Please go ahead.

Maggie Huang: Thank you for taking my question. This is Maggie Huang from CICC. Firstly, congratulations on beating our revenue guidance. I have two questions. My first question is about our performance during the Double Eleven festival. Is that in line with our expectations? Have we observed any change in the competition from foreign high-end brands? My second question is, how do we expect the profitability of the fourth quarter and the next year? Thank you.

Donghao Yang: Well, I think first of all, the Double Eleven performance for the whole company is generally in line with our expectations. Of course, some of the brands are exceeding our expectations. Having said that, I think we are very happy to observe that not only the existing hero SKUs are doing well, but some of the newly launched products have gained very strong momentum during the Double Eleven Shopping Festival, which will contribute to further growth potentials in coming quarters. Those products we already mentioned in the earnings call.

Going back to your question about the challenges and competition coming from the foreign high-end brands, we did observe a very big challenge and competition during the past Double Eleven Shopping Festival. Some of the high-end brands are struggling with very big out-of-pocket price promotions. We did see that with our R&D supporting some of our new product launches, those products are still gaining very strong momentum. Looking forward, I think the competition during the Double Eleven Shopping Festival will load some of the pantry for some of the foreign high-end brands, which means it will hurt their long-term growth.

Having said that, I am happy to see that our high-end brands are still keeping a very strong momentum by balancing the price promotion. We are focusing on promoting some of the new SKUs. Going back to the Q4, I think we are on the right track to reach profitability, and that is our long-term goal. We are seeing the balance of growth and the right track for profitability.

Maggie Huang: Okay, got it. It's very clear. Thank you very much. I have no more questions.

Donghao Yang: Thank you.

Operator: The next question will come from Lucia Zhang with CP Securities. Please go ahead.

Lucia Zhang: Thank you for taking my question. This is Lucia Zhang from CP Securities. I also have two questions. The first one is, we can see that the skincare business of the company has achieved rapid growth this year. From which efforts should we make efforts to sustain the growth maybe in the last quarter and next year? The second question is about profitability. In which aspects will the company make efforts to continuously improve profitability? Thank you.

Jinfeng Huang: Well, going back to the fundamental drivers for our skincare business, I think the number one thing is about R&D. The beauty market has always been driven by further and better innovation. We are very happy to see that with our R&D growth engine, we can launch a very strong pipeline this year and also for the coming years as well. The second thing we can think of is with our expansion for our skincare portfolio, including the benefit expansion and product line expansion, we see further link sales for our product portfolios, which can help us drive further marketing ROI. The third thing is our skincare brand.

I think overall, for the three major skincare brands, we still have a pretty far potential to reach their optimized revenue level. During this process, as we continue to drive brand awareness and continuously drive the customer base, we still have the potential to grow our existing skincare brand. Last but not least, I think for us, we focus on launching some new products on some of the key channels. In the future, we will expand into other channels and drive a better channel mix. With that, I think we will contribute to the sustainable driver for the allocation.

Going back to your questions about how we can continuously improve, I think as we said many times before, the product mix optimization and the channel mix optimization can help us drive the gross margin and further ROI on the marketing expenses. The second one is as we focus more on the customer CIM and product link sales, this will help us to further drive better ROI on the marketing expenses. The third thing is very important. For some of our brands, those brands are reaching what we call the optimized threshold. In the future, as the brands' revenue scale grows, we will see further leverage on the true branding expenses ROI.

Those are some of the things we see as very important to drive continuous improvement for profitability.

Lucia Zhang: Thank you. That's really helpful and clear.

Operator: The next question will come from Jennifer Wong with Hightower Securities. Please go ahead.

Jennifer Wong: Hi. This is Jennifer Wong from Hightower Securities. Congratulations on the company's great performances. Could you please introduce and give us some colors on expected expenses of the company in the future? Could you please share how you view the increasingly fierce competition in the online channel? Thank you for your answers.

Donghao Yang: Bob, can you help me to clarify what you mean by expenses?

Jennifer Wong: Like, general expenses, operating expenses, etc., just generally speaking.

Donghao Yang: Okay. Well, if you look at our financial statements, we see pretty stable G&A expenses in the past quarters. But having said that, I think moving forward, as the scale of our total revenue grows, we will see some operational leverage on the general and administrative expenses. We will continue to invest in some of what we think short-term wise, we will categorize as expenses, but we see it more like an investment, including R&D and branding dollars to really build up the brand equity. Those are some of the areas that we focus on. What was your second question?

Jennifer Wong: Oh, that's how do you view the ongoing sales competition on the online channel? How do you think our company is going to face such a situation? Thank you for your answers.

Donghao Yang: I think as we said before, when we are looking at the beauty market, there are so many players. One of the reasons that we can continuously and also accelerate our growth is mainly driven by some of the investments we have devoted to R&D in the past few years and also our continuous commitment to brand building. We did something right before, which is why we are getting the growth today. If we are looking at the competition, as long as we continue to focus on what we have done right, we will see more and more robust product lineup and better innovation coming.

We will see higher brand awareness so that we can get more operational and brand building optimization. We will see some of the operational efficiency improving by our product mix and channel mix optimization. We will see some organizational growth, but we focus on the cornerstones of our product innovation, customer focus, CIM, etc. As long as we focus on doing the right thing, we think in the future, we will achieve long-term sustainable growth results. Thank you.

Jennifer Wong: Thank you for your kind response. We are very much looking forward to seeing the company's rapid growth.

Donghao Yang: Appreciate it. Thank you.

Operator: And this concludes our question and answer session. I would like to turn the conference back over to management for any additional or closing comments. Please go ahead.

Irene Lyu: Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Yatsen Holding Limited 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 has now concluded. Thank you for attending today's presentation. You may now disconnect.