Financial Data and Key Metrics Changes - Total net revenues for Q3 2025 increased by 47.5% year-over-year to RMB 998.4 million, up from RMB 677 million in the prior year [11] - Gross profits rose by 51.9% to RMB 780.5 million, with gross margin increasing to 78.2% from 75.9% [11][12] - Net loss narrowed to RMB 70.4 million, improving the net loss margin to 7% from 17.9% in the prior year [16] Business Line Data and Key Metrics Changes - Skincare brands saw a significant revenue increase of 83.2% year-over-year, contributing 49.2% of total revenue [4][11] - Revenues from color cosmetics brands increased by 25.2% year-over-year [11] - Operating loss decreased to RMB 83.6 million from RMB 141.3 million in the prior year, with an operating loss margin of 8.4% compared to 20.9% [15] Market Data and Key Metrics Changes - The beauty market in China is showing signs of recovery, particularly in the skincare category, which is driving overall industry growth [4] - The company observed strong performance from its premium skincare brands during the Double 11 shopping festival, indicating competitive positioning against foreign high-end brands [22] Company Strategy and Development Direction - The company is focused on building a competitive brand portfolio anchored in R&D and innovation, aiming for sustainable growth and profitability [4][10] - There is a commitment to optimizing product and channel mix to enhance gross margins and marketing ROI [30] - The company plans to continue investing in innovation while balancing growth with profitability [5][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving profitability in the fourth quarter and emphasized the importance of R&D and product innovation for sustained growth [23][28] - The company anticipates total net revenues for Q4 2025 to be between RMB 1.32 billion and RMB 1.49 billion, reflecting a year-over-year increase of approximately 15% to 30% [18] Other Important Information - The company had cash, restricted cash, and short-term investments of RMB 1.16 billion as of September 30, 2025, down from RMB 1.36 billion at the end of 2024 [17] - Net cash used in operating activities for Q3 2025 was RMB 126.8 million, an improvement from RMB 175.9 million in the prior year [17] Q&A Session Summary Question: Performance during Double 11 Festival and competition from foreign brands - Management indicated that overall performance during Double 11 was in line with expectations, with some brands exceeding them. They noted increased competition from foreign high-end brands, which are struggling with price cuts [21][22][23] Question: Sustaining skincare business growth and improving profitability - Management highlighted R&D, product line expansion, and brand awareness as key drivers for sustaining skincare growth. They also emphasized product and channel mix optimization for improving profitability [27][28][30] Question: Future expenses and competition in online channels - Management expects stable general and administrative expenses with operational leverage as revenue grows. They view ongoing competition as manageable through continued focus on R&D and brand building [34][40]

Financial Data and Key Metrics Changes - Total net revenues for Q3 2025 increased by 47.5% year-over-year to RMB 998.4 million, up from RMB 677 million in the prior year [11] - Gross profits rose by 51.9% to RMB 780.5 million, with gross margin increasing to 78.2% from 75.9% [11][12] - Net loss narrowed to RMB 70.4 million, improving the net loss margin to 7% from 17.9% in the prior year [16] Business Line Data and Key Metrics Changes - Skincare brands saw a significant revenue increase of 83.2% year-over-year, contributing 49.2% of total revenue [4][11] - Color cosmetics brands experienced a 25.2% year-over-year revenue increase [11] - Perfect Diary's base makeup category exceeded 40% of total sales, reflecting strong performance [9] Market Data and Key Metrics Changes - The beauty market in China is showing signs of recovery, particularly in the skincare category, which is driving overall industry growth [4] - The company observed increased competition from foreign high-end brands during the Double 11 shopping festival, with some brands struggling due to deep price cuts [22][23] Company Strategy and Development Direction - The company is focused on building a competitive brand portfolio anchored in R&D and innovation, aiming for sustainable growth and profitability [4][10] - There is a commitment to optimizing product and channel mix to improve gross margins and marketing ROI [30] - The company plans to continue investing in innovation while balancing growth with profitability [5][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching profitability, emphasizing the importance of balancing growth and profitability [23] - The company expects total net revenues for Q4 2025 to be between RMB 1.32 billion and RMB 1.49 billion, representing a year-over-year increase of approximately 15% to 30% [18] Other Important Information - The company had cash, restricted cash, and short-term investments of RMB 1.16 billion as of September 30, 2025, down from RMB 1.36 billion at the end of 2024 [17] - Net cash used in operating activities for Q3 2025 was RMB 126.8 million, an improvement from RMB 175.9 million in the prior year [17] Q&A Session Summary Question: Performance during Double 11 Festival and competition from foreign brands - Management indicated that overall performance during Double 11 was in line with expectations, with some brands exceeding them. They noted significant competition from foreign high-end brands, which are facing challenges due to price cuts [21][22][23] Question: Sustaining skincare business growth and improving profitability - Management highlighted R&D as a key driver for skincare growth, along with product line expansion and improved marketing ROI. They emphasized the importance of optimizing product and channel mix for profitability [27][28][30][31] Question: Future expenses and competition in online channels - Management expects stable general and administrative expenses with operational leverage as revenue grows. They believe that continued investment in R&D and brand building will help navigate fierce online competition [34][40]

Financial Data and Key Metrics Changes - Total net revenues for Q3 2025 increased by 47.5% year-over-year to RMB 998.4 million, up from RMB 677 million in the prior year [11] - Gross profits rose by 51.9% to RMB 780.5 million, with gross margin increasing to 78.2% from 75.9% [11][12] - Net loss narrowed significantly to RMB 70.4 million, improving net loss margin to 7% from 17.9% in the prior year [16] Business Line Data and Key Metrics Changes - Skincare brands saw a remarkable revenue increase of 83.2% year-over-year, contributing 49.2% to total revenue [4][11] - Color cosmetics brands experienced a 25.2% year-over-year revenue increase [11] - Operating loss decreased to RMB 83.6 million from RMB 141.3 million, with operating loss margin improving to 8.4% from 20.9% [15] Market Data and Key Metrics Changes - The beauty market in China is showing signs of recovery, particularly in the skincare category, which is driving overall industry growth [4] - The company noted strong performance in e-commerce channels, with specific products gaining traction during the Double 11 shopping festival [22] Company Strategy and Development Direction - The company is focused on building a competitive brand portfolio anchored in R&D and innovation, aiming for sustainable growth and profitability [4][10] - There is a commitment to optimizing product and channel mix to enhance gross margin and marketing ROI [29] - The company plans to continue investing in innovation while balancing growth with profitability [5][10] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching profitability, highlighting the balance between growth and profitability as a long-term goal [23] - The company anticipates total net revenues for Q4 2025 to be between RMB 1.32 billion and RMB 1.49 billion, reflecting a year-over-year increase of approximately 15% to 30% [18] Other Important Information - The company had cash, restricted cash, and short-term investments of RMB 1.16 billion as of September 30, 2025, down from RMB 1.36 billion at the end of 2024 [17] - Net cash used in operating activities for Q3 2025 was RMB 126.8 million, an improvement from RMB 175.9 million in the prior year [17] Q&A Session Summary Question: Performance during Double 11 Festival and competition from foreign brands - Management indicated that overall performance during Double 11 was in line with expectations, with some brands exceeding them. They noted significant competition from foreign high-end brands, which are struggling with price cuts [20][22][23] Question: Sustaining skincare business growth and improving profitability - Management emphasized the importance of R&D and product innovation as key drivers for sustaining skincare growth. They also highlighted product mix optimization and customer engagement as strategies for improving profitability [27][29] Question: Future expenses and competition in online channels - Management stated that general and administrative expenses are expected to remain stable, with operational leverage as revenue grows. They acknowledged fierce competition in online channels but expressed confidence in their growth strategy driven by R&D and brand building [34][40]