Core Insights - Yatsen Holding Ltd. is evolving from a trend-savvy startup into a global innovation leader in the beauty tech industry [1][2] - The company aims to redefine beauty through a combination of agile operations and long-term strategic thinking [2] Company Overview - Founded in 2016, Yatsen initially gained attention with its brand Perfect Diary and has since expanded to 11 brands across various market segments [3][4] - The brand portfolio includes Galenic, EVE LOM, and Dr.Wu, reflecting a strategy to meet diverse consumer needs with innovative products [4] Market Dynamics - The Chinese beauty market is valued at over RMB 400 billion and remains fragmented, allowing room for agile innovators like Yatsen to grow [5] - Despite macroeconomic challenges, Chinese consumers are willing to pay for products that deliver real value [5] Product Innovation - Yatsen's Biolip Essence Lipstick combines high-performance color with skincare benefits, showcasing the company's focus on innovation [5][6] - The company has pivoted towards skincare and R&D, investing over $80 million in research and filing over 240 patents [7] Financial Performance - Yatsen has resumed profitable growth, with a focus on disciplined brand building and product innovation [8] - The company allocates 3% of its revenue to R&D, positioning it among global leaders in innovation spending within the beauty sector [7] Strategic Positioning - Yatsen has insulated itself from global supply chain disruptions by sourcing most components domestically [10] - The company emphasizes delivering high value rather than just competing on price, recognizing that consumers are more price-sensitive post-COVID [11] Competitive Advantage - Yatsen's unique combination of local insights and global scientific ambition differentiates it from multinational competitors [12] - The company is exploring neuroscience applications in skincare, indicating a commitment to long-term innovation [13] Capital Strategy - Yatsen has completed a $200 million share buyback to reinforce investor confidence and align with shareholder interests [14] - The company is positioned to capture long-term market share in a fast-evolving industry through its science-led product pipeline and profitable operating model [15]

VIE Structure and Financial Contributions - The VIE structure contributed 8.7%, 5.4%, and 4.9% to total revenues for the years ended December 31, 2022, 2023, and 2024, respectively[27]. - The VIE received net debt financing of RMB75.0 million and RMB25.5 million (US$3.5 million) from the WFOE for the years ended December 31, 2023 and 2024, respectively[43]. - The WFOE received RMB217.8 million, RMB64.1 million, and RMB31.1 million (US$4.3 million) from the VIE for the years ended December 31, 2022, 2023, and 2024, respectively[43]. - The VIE may transfer cash to the WFOE by paying service fees, but no service fees were paid by the VIE to the WFOE for the years ended December 31, 2022, 2023, and 2024[44]. - The company did not charge any service fees from the VIE for the years ended December 31, 2022, 2023, and 2024, resulting in no service fees paid during these periods[60]. - The VIE contributed 4.9% of the company's revenues in 2024, highlighting its importance to overall financial performance[69]. - The company relies on contractual arrangements with a Variable Interest Entity (VIE) for operations in China, which contributed 4.9% of its revenues in 2024, posing risks if these arrangements are deemed non-compliant with PRC regulations[210]. - There are substantial uncertainties regarding the interpretation of PRC laws, which could affect the enforceability of the company's contractual arrangements with the VIE[211]. - The company may face severe penalties or be forced to relinquish interests in operations if its agreements with the VIE do not comply with PRC regulations[208]. - The PRC tax authorities may scrutinize the contractual arrangements with the VIE, potentially leading to material tax consequences if deemed not on an arm's length basis[221]. Financial Performance and Position - Total net revenues for the company were RMB3.71 billion in 2022, RMB3.41 billion in 2023, and RMB3.39 billion (US$464.9 million) in 2024[70]. - The net loss attributable to Yatsen Holding Limited's shareholders for the year ended December 31, 2024, was RMB 708,174 thousand, compared to a net loss of RMB 747,763 thousand in 2023[50]. - The company reported a net loss before income tax expenses of RMB 713,307 thousand for the year ended December 31, 2024[50]. - The income tax benefit for the year ended December 31, 2024, was RMB 3,086 thousand, indicating a slight improvement from previous years[50]. - Total shareholders' equity as of December 31, 2024, was RMB 3,052,031 thousand, reflecting a recovery from the previous year's deficit[52]. - The company incurred a net loss of RMB821.3 million in 2022, RMB750.2 million in 2023, and RMB710.2 million (US$97.3 million) in 2024[88]. - The company recorded goodwill impairment of RMB403.1 million (US$55.2 million) in 2024, primarily due to weaker operating results than expected[173]. - The company has limited business insurance coverage, which may expose it to significant costs and operational disruptions[181]. - The company has experienced negative cash flows and may require additional cash resources for future investments or acquisitions, impacting its liquidity[155]. Cash Flow and Investments - Cash and cash equivalents as of December 31, 2024, totaled RMB 817,395 thousand, with short-term investments at RMB 539,130 thousand[52]. - For the year ended December 31, 2024, net cash provided by operating activities was RMB 42,546 thousand, while net cash used in investing activities was RMB (1,316,051) thousand[54]. - For the year ended December 31, 2023, net cash used in operating activities was RMB (107,442) thousand, while net cash provided by investing activities was RMB (260,487) thousand[56]. - Positive cash flows from operating activities were RMB136.2 million in 2022, while negative cash flows were RMB107.4 million in 2023 and RMB243.7 million (US$33.4 million) in 2024[88]. - The company reported a net cash used in financing activities of RMB (394,226) thousand for the year ended December 31, 2024[54]. Operational Challenges and Market Conditions - The company faces significant risks including competition in the beauty industry, which could adversely affect market share and financial condition[69]. - The beauty industry is highly competitive, with significant pressure from both domestic and international players[74]. - The company anticipates challenges in executing its growth strategy and achieving revenue growth in the future[70]. - The company may face difficulties in introducing new products that appeal to consumers, impacting future revenue growth[69]. - The company faces challenges in launching new products due to rapidly changing consumer preferences and the need for timely market responses[80]. - The growth of the beauty products market in China is uncertain and may not meet expectations, potentially affecting the company's business prospects[106]. - Economic downturns may adversely affect consumer discretionary spending, impacting demand for the company's products[131]. - Rising international political tensions could materially affect global economic conditions and the demand for the company's products[205]. Regulatory and Compliance Risks - The company is subject to potential fines between RMB1 million to RMB10 million for non-compliance with the CSRC regulations, which could adversely affect its business[35]. - The company must navigate complexities related to international operations, including legal compliance, local market adaptation, and competition from local providers[130]. - The amended PRC Company Law, effective July 1, 2024, imposes stricter capital contribution requirements, creating uncertainty regarding compliance and potential financial obligations[180]. - The company is exposed to significant legal and financial risks due to potential security breaches, which could harm its reputation and customer trust[146]. - The company has not been involved in any formal investigations regarding cybersecurity by the Cyberspace Administration of China as of the date of the report[136]. Supply Chain and Production Risks - The company relies on third-party manufacturers and logistics providers, which may engage in noncompliant practices, potentially disrupting operations and harming reputation[161]. - Supply chain disruptions may arise from shortages of raw materials and ingredients, leading to delays in product deliveries and increased costs[117]. - The market prices for certain raw materials have been volatile, and significant increases may not be recoverable through sales price adjustments, negatively impacting financial results[119]. - The company relies on a limited number of ODM/OEM and packaging supply partners, with the top five partners accounting for a significant portion of purchases in 2022, 2023, and 2024, exposing the company to risks if any partner fails to meet standards[112]. Customer Relations and Brand Management - The company must maintain a satisfactory consumer experience to protect its brand reputation, which is influenced by product quality, customer service, and compliance with ethical standards[101]. - The company is dependent on consumer perception and brand recognition, which are critical for maintaining market position in a competitive environment[100]. - Negative publicity related to KOLs and brand ambassadors can adversely affect the company's reputation and business outcomes[110]. - The company’s ability to provide superior customer service is essential for retaining customers and maintaining brand loyalty, with potential risks from high turnover rates among customer service representatives[105]. Data Security and Privacy Compliance - The company collects and processes customer data to analyze changing consumer preferences, but faces risks related to data security and compliance with privacy regulations[133][137]. - The company has taken measures to comply with PRC laws on data security and personal information protection, including updating privacy policies and establishing a data compliance management structure[134][141]. - The PRC government has implemented new regulations regarding cybersecurity and data protection, which may increase compliance costs and operational challenges for the company[138][139]. - The company may be subject to data protection laws in jurisdictions outside of China, such as the European Union General Data Protection Regulation, which imposes strict requirements on data processing and could impact operations[143][144]. Share-Based Compensation and Management - The company recorded share-based compensation expenses of RMB340.9 million, RMB77.5 million, and RMB91.2 million (US$12.5 million) for the years ended December 31, 2022, 2023, and 2024, respectively[184]. - The share-based compensation expenses in 2023 were lower compared to 2022 and 2024, primarily due to a reversal of RMB109.4 million from unvested awards forfeited by a former executive[184]. - The company has established a 2022 Share Incentive Plan, allowing for the issuance of shares amounting to 1.5% of total outstanding shares as of December 31, 2022, with annual increases for the first two fiscal years starting January 1, 2024[183]. International Expansion and Market Adaptation - The company has started to expand globally, beginning in Southeast Asia, and has acquired Galénic and Eve Lom, which have operations in Europe and the U.S.[128]. - The company faces significant risks and costs associated with international expansion, including regulatory, economic, and political risks, as well as challenges in brand recognition and compliance with local standards[129][130].

Financial Data and Key Metrics Changes - Total net revenues for Q4 2024 increased by 7.1% year-over-year to RMB 1.15 billion from RMB 1.07 billion in the prior year period [24] - Gross margin for Q4 2024 increased to 77.8% from 73.7% in the prior year period, driven by higher gross margin products [10][25] - For the full year 2024, total net revenues decreased by 0.6% year-over-year to RMB 3.39 billion from RMB 3.41 billion [34] - Net loss for the full year 2024 was RMB 710.2 million, a decrease from RMB 750.2 million in the prior year [36] Business Line Data and Key Metrics Changes - Combined revenues from clinical and premium skincare brands grew by 3% year-over-year, while color cosmetics revenues increased by 16.4% in Q4 2024 [9][10] - Skincare revenues grew by 0.7% year-over-year for the full year 2024, with skincare brands accounting for 41.1% of total net revenues [11] - Color cosmetics revenues saw a modest decline of 0.3% year-over-year for the full year 2024 [11] Market Data and Key Metrics Changes - The overall beauty retail sales in China declined by 1.5% year-over-year in Q4 2024, contrasting with total retail sales of consumer goods which grew by 3.8% [8] Company Strategy and Development Direction - The company is focusing on balancing revenue growth between skincare and color cosmetics, with skincare expected to be a stable growth engine [44][49] - Strategic initiatives include enhancing brand equity, refining product and channel mix, and investing in R&D for sustainable growth [13][18] - The company aims to improve operational efficiencies and strategically allocate resources for long-term growth [22] Management's Comments on Operating Environment and Future Outlook - Management noted that headwinds in the beauty market will persist, with intensified price competition and more rational consumer purchasing decisions [44] - The company expects total net revenues for Q1 2025 to be between RMB 788.8 million and RMB 866.2 million, reflecting a year-over-year increase of approximately 2% to 12% [38] Other Important Information - R&D expenses represented 3.2% of total net revenues for the full year 2024, highlighting the company's commitment to innovation [18] - The company achieved its lowest full-year net loss and non-GAAP net loss since 2020 [12] Q&A Session Summary Question: Future profitability expectations for 2025 and resource allocation between categories - Management acknowledged the positive Q4 performance and emphasized the importance of maintaining and improving gross margin growth while balancing growth and profitability [44] - Skincare is expected to remain a key stable growth engine, while color cosmetics, particularly Perfect Diary, are anticipated to contribute to sustainable growth [45][49]

Core Viewpoint - Yatsen Holding Limited reported solid performance in Q4 2024, achieving year-over-year revenue growth despite challenges in the beauty market, driven by the recovery of its Perfect Diary brand and growth in skincare brands [3][4][6]. Financial Performance - Total net revenues for Q4 2024 increased by 7.1% to RMB1.15 billion (US$157.3 million) from RMB1.07 billion in the prior year [4][6]. - Gross profit for Q4 2024 rose by 13.0% to RMB893.0 million (US$122.3 million), with a gross margin of 77.8%, up from 73.7% in the prior year [4][6][13]. - Operating expenses decreased by 3.5% to RMB1.28 billion (US$175.9 million), with a reduction in the operating expense ratio to 111.8% from 124.0% [5][6]. - The net loss for Q4 2024 decreased by 23.4% to RMB378.8 million (US$51.9 million) from RMB494.5 million in the prior year [10][15]. - Non-GAAP net income for Q4 2024 was RMB107.0 million (US$14.7 million), compared to a non-GAAP net loss of RMB93.7 million in the prior year [11][16]. Yearly Overview - For the full year 2024, total net revenues decreased by 0.6% to RMB3.39 billion (US$464.9 million) from RMB3.41 billion in the prior year [12][15]. - Gross profit for the full year increased by 4.1% to RMB2.62 billion (US$358.6 million), with a gross margin of 77.1%, up from 73.6% [13][15]. - The net loss for the full year decreased by 5.3% to RMB710.2 million (US$97.3 million) from RMB750.2 million in the prior year [15][16]. Operational Efficiency - Fulfillment expenses for Q4 2024 were RMB63.5 million (US$8.7 million), with a decrease in the fulfillment expense ratio to 5.5% from 5.8% [7]. - Selling and marketing expenses for Q4 2024 were RMB690.6 million (US$94.6 million), with a decrease in the ratio to 60.1% from 66.9% [7]. - General and administrative expenses for Q4 2024 were RMB100.1 million (US$13.7 million), with a decrease in the ratio to 8.7% from 14.8% [7]. Future Outlook - For Q1 2025, the company expects total net revenues to be between RMB788.8 million and RMB866.2 million, representing a year-over-year increase of approximately 2% to 12% [19].

Core Viewpoint - Yatsen Holding Limited, a leading beauty group based in China, is set to release its unaudited financial results for Q4 and the full year ending December 31, 2024, on February 25, 2025, before U.S. market opening [1]. Financial Results Announcement - The financial results will be discussed in a conference call scheduled for February 25, 2025, at 7:30 A.M. U.S. Eastern Time [2]. - Access to the conference call will be available through various toll-free numbers for the U.S., international, and Mainland China listeners, along with a conference ID [2]. Replay Information - A replay of the conference call will be available one hour after the live call, accessible until March 4, 2025, through specified phone numbers [3]. Company Overview - Yatsen Holding Limited, founded in 2016, has launched and acquired several beauty brands, including Perfect Diary, Little Ondine, and DR.WU, and is recognized for its flagship brand, Perfect Diary, which is a leading color cosmetics brand in China [4]. - The company engages with customers through both online and offline channels, maintaining a strong presence across major e-commerce and social platforms in China [4].

Financial Data and Key Metrics Changes - Total net revenues decreased by 5.7% year-over-year to RMB677 million from RMB718.1 million [24] - Gross profit increased by 0.2% to RMB513.8 million, with gross margin improving to 75.9% from 71.4% [25] - Net loss for the third quarter was RMB121.1 million, down from RMB197.9 million, with net loss margin improving to 17.9% from 27.6% [30] Business Line Data and Key Metrics Changes - Net revenues from skincare brands rose by 3.6% year-over-year, while revenues from color cosmetics brands fell by 10% [8][24] - Research and development expenses totaled RMB25.3 million, representing 3.7% of net revenues, up from 3.4% in the prior year [29] Market Data and Key Metrics Changes - The beauty retail sales in China declined by 5.5% year-over-year, contrasting with a 2.7% growth in total retail sales of consumer goods [7] - Online beauty sales were sluggish, with Tmall reporting a drop in color cosmetics and skincare sales, while Douyin experienced modest double-digit growth [7] Company Strategy and Development Direction - The company is focusing on optimizing its revenue mix by prioritizing higher-margin products and expanding skincare brands [11] - Significant investments in R&D are being made to enhance product development capabilities [13] - The company aims to streamline its organizational structure to reduce costs and improve profitability [12][19] Management Comments on Operating Environment and Future Outlook - Management remains optimistic about adapting to challenges in the beauty industry, with a focus on innovation and sustainable practices [21] - The company expects total net revenues for Q4 2024 to be between RMB1.07 billion and RMB1.18 billion, indicating a potential year-over-year increase of approximately 0% to 10% [32] Other Important Information - The company has maintained an MSCI ESG rating of A, reflecting strong performance in sustainability initiatives [20] - The Perfect Diary brand has reentered the top 20 color cosmetic brands on Tmall and Douyin [17] Q&A Session Summary Question: Performance during Double 11 festival and plans for product development and channel expansion - Management reported that performance during the Double 11 festival was in line with expectations, with strong sales from brands like Galenic and Perfect Diary [35] - Plans for product development include launching new products and expanding channels, including new offline stores for Galenic [35] Question: Insights on new product offerings and growth strategies - Management emphasized the importance of R&D investments and the positive early indicators from new product launches, particularly for Perfect Diary [37]

Core Viewpoint - Yatsen Holding Limited reported a 5.7% year-over-year decline in total net revenues for Q3 2024, primarily due to challenges in the beauty industry, but showed growth in its skincare segment and improved gross margins [2][3][4]. Financial Performance - Total net revenues for Q3 2024 were RMB 677.0 million (US$ 96.5 million), down from RMB 718.1 million in the same period last year [2][4]. - Revenues from Skincare Brands increased by 3.6% to RMB 267.9 million (US$ 38.2 million), representing 39.6% of total net revenues, up from 36.0% [2][4]. - Gross margin improved to 75.9% from 71.4% year-over-year, driven by higher sales of premium products [5]. - The net loss for Q3 2024 was RMB 121.1 million (US$ 17.3 million), a reduction from RMB 197.9 million in the prior year [12][13]. Operating Expenses - Total operating expenses decreased by 12.0% to RMB 655.2 million (US$ 93.4 million), representing 96.8% of total net revenues, down from 103.6% [6]. - Fulfillment expenses were RMB 50.4 million (US$ 7.2 million), a decrease from RMB 56.0 million, accounting for 7.4% of total net revenues [7]. - Selling and marketing expenses were RMB 494.4 million (US$ 70.4 million), slightly down from RMB 511.7 million, but increased as a percentage of total revenues to 73.0% [8]. - General and administrative expenses significantly decreased to RMB 85.0 million (US$ 12.1 million) from RMB 151.8 million, now 12.6% of total net revenues [9]. Business Outlook - For Q4 2024, Yatsen expects total net revenues to be between RMB 1.07 billion and RMB 1.18 billion, indicating a potential year-over-year increase of approximately 0% to 10% [15]. Cash Flow and Balance Sheet - As of September 30, 2024, the company had cash, restricted cash, and short-term investments totaling RMB 1.31 billion (US$ 186.5 million), down from RMB 2.08 billion at the end of 2023 [14]. - Net cash used in operating activities for Q3 2024 was RMB 175.9 million (US$ 25.1 million), compared to RMB 163.4 million in the prior year [14]. Management Commentary - The CEO highlighted the ongoing challenges in China's beauty industry but noted the solid performance of key skincare brands, emphasizing a commitment to enhancing brand equity and optimizing cost structures for future growth [3][4]. - The CFO reiterated confidence in the company's strategy, citing steady growth in skincare revenues and improved margins despite overall revenue declines [3].

Core Viewpoint - Yatsen Holding Limited, a leading beauty group based in China, is set to release its unaudited financial results for Q3 2024 on November 20, 2024, before U.S. market opening [1]. Financial Results Announcement - The financial results will be discussed in a conference call scheduled for November 20, 2024, at 7:30 A.M. U.S. Eastern Time [2]. - The call can be accessed via multiple toll-free numbers for the U.S., international, Mainland China, and Hong Kong [2]. Company Overview - Yatsen Holding Limited was founded in 2016 and has launched and acquired several brands, including Perfect Diary, Little Ondine, and DR.WU [3]. - Perfect Diary is recognized as one of the leading color cosmetics brands in China based on retail sales value [3]. - The company engages with customers through both online and offline channels, maintaining a strong presence across major e-commerce and social platforms in China [3].

Group 1 - Yatsen Holding Limited (NYSE: YSG) maintains a Buy rating due to a favorable growth outlook for the Chinese beauty market [1] - The company's R&D and marketing strategies are viewed positively, contributing to the sustained Buy rating [1] - The research service Asia Value & Moat Stocks focuses on identifying value investment opportunities in Asia, particularly in the Hong Kong market [1] Group 2 - The service emphasizes deep value balance sheet bargains and wide moat stocks, targeting investments that are undervalued relative to their intrinsic value [1] - Monthly updates and watch lists are provided to assist investors in tracking potential investment opportunities [1]

Yatsen retained its MSCI ESG Rating of A in 2023, once again earning notable recognition from MSCI, a leading provider of critical decision support tools and services for the global investment community. Among other significant achievements, Yatsen outperformed industry averages in key areas, including product packaging and waste management, product carbon footprint, and chemical safety, demonstrating excellence in green and low-carbon initiatives.Mr. Jinfeng Huang, Founder, Chairman and Chief Executive Off ...