Yatsen Announces Third Quarter 2024 Financial Results

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].