Yatsen Announces First Quarter 2024 Financial Results

Conference Call to Be Held at 7:30 A.M. U.S. Eastern Time on May 22, 2024

GUANGZHOU, China, May 22, 2024 /PRNewswire/ — Yatsen Holding Limited (“Yatsen” or the “Company”) (NYSE: YSG), a leading China-based beauty group, today announced its unaudited financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Highlights

Total net revenues for the first quarter of 2024 increased by 1.0% to RMB773.4 million (US$107.1 million) from RMB765.4 million for the prior year period.

Total net revenues from Skincare Brands[1] for the first quarter of 2024 increased by 0.1% to RMB245.3 million (US$34.0 million) from RMB245.1 million for the prior year period. As a percentage of total net revenues, total net revenues from Skincare Brands for the first quarter of 2024 were 31.7%, as compared with 32.0% for the prior year period.

Gross margin for the first quarter of 2024 was 77.7%, as compared with 74.3% for the prior year period.

Net loss for the first quarter of 2024 was RMB124.9 million (US$17.3 million), as compared with net income of RMB50.7 million for the prior year period. Non-GAAP net loss[2] for the first quarter of 2024 was RMB83.8 million (US$11.6 million), as compared with RMB25.8 million for the prior year period.

Mr. Jinfeng Huang, Founder, Chairman and Chief Executive Officer of Yatsen, stated, “In the first quarter of 2024, we continued to build on the growth trajectory initiated in the fourth quarter of 2023. Amid a relatively mild season, we achieved 1.0% year-over-year revenue growth. As we move into the second quarter, we will remain committed to strengthening our current hero products’ market position and further expanding our product portfolio.”

Mr. Donghao Yang, Director and Chief Financial Officer of Yatsen, commented, “We marked a good start to the year with revenue growth in the first quarter. Our gross margin increased again by 3.4 percentage points year over year to 77.7%. As a result of increased investments in the Douyin platform and new product launches, as well as efforts in brand equity building across our portfolio, our operating expenses increased as a percentage of total net revenues. Going forward, we will continue to balance the need to capture market opportunities with cost optimization.”

First Quarter 2024 Financial Results

Net Revenues

Total net revenues for the first quarter of 2024 increased by 1.0% to RMB773.4 million (US$107.1 million) from RMB765.4 million for the prior year period. The increase was primarily attributable to a 3.2% year-over-year increase in net revenues from Color Cosmetics Brands,[3] combined with a 0.1% year-over-year increase in net revenues from Skincare Brands.

Gross Profit and Gross Margin

Gross profit for the first quarter of 2024 increased by 5.7% to RMB600.9 million (US$83.2 million) from RMB568.7 million for the prior year period. Gross margin for the first quarter of 2024 increased to 77.7% from 74.3% for the prior year period. The increase was primarily driven by an increase in sales of higher-gross margin products.

Operating Expenses

Total operating expenses for the first quarter of 2024 increased by 31.7% to RMB758.7 million (US$105.1 million) from RMB575.9 million for the prior year period. As a percentage of total net revenues, total operating expenses for the first quarter of 2024 were 98.1%, as compared with 75.2% for the prior year period.

Fulfillment Expenses. Fulfillment expenses for the first quarter of 2024 were RMB51.4 million (US$7.1 million), as compared with RMB51.9 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for the first quarter of 2024 decreased to 6.7% from 6.8% for the prior year period.

Selling and Marketing Expenses. Selling and marketing expenses for the first quarter of 2024 were RMB539.2 million (US$74.7 million), as compared with RMB459.0 million for the prior year period. As a percentage of total net revenues, selling and marketing expenses for the first quarter of 2024 increased to 69.7% from 60.0% for the prior year period. The increase was primarily due to increased investments in the Douyin platform, in line with the growing revenue contribution from Douyin, as well as the Company’s investments in new product launches and building brand equity across its portfolio.

General and Administrative Expenses. General and administrative expenses for the first quarter of 2024 were RMB140.1 million (US$19.4 million), as compared with RMB40.7 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for the first quarter of 2024 increased to 18.1% from 5.3% for the prior year period. The increase was primarily attributable to the exceptionally low general and administrative expenses recorded in the prior year period as a result of the reversal of recognized share-based compensation expenses of RMB109.4 million due to the forfeiture of unvested awards granted to the Company’s former chief technology officer upon his resignation.

Research and Development Expenses. Research and development expenses for the first quarter of 2024 were RMB27.9 million (US$3.9 million), as compared with RMB24.2 million for the prior year period. As a percentage of total net revenues, research and development expenses for the first quarter of 2024 increased to 3.6% from 3.2% for the prior year period. The increase was primarily attributable to higher personnel costs, reflecting the Company’s commitment to enhancing its research and development capabilities.

Loss from Operations

Loss from operations for the first quarter of 2024 was RMB157.7 million (US$21.8 million), as compared with RMB7.2 million for the prior year period. Operating loss margin was 20.4%, as compared with 0.9% for the prior year period.

Non-GAAP loss from operations[4] for the first quarter of 2024 was RMB107.0 million (US$14.8 million), as compared with RMB62.4 million for the prior year period. Non-GAAP operating loss margin was 13.8%, as compared with 8.1% for the prior year period.

Net Loss/Income

Net loss for the first quarter of 2024 was RMB124.9 million (US$17.3 million), as compared with net income of RMB50.7 million for the prior year period. Net loss margin was 16.1%, as compared with net income margin of 6.6% for the prior year period. Net loss attributable to Yatsen’s ordinary shareholders per diluted ADS[5] for the first quarter of 2024 was RMB1.16 (US$0.16), as compared with net income attributable to Yatsen’s ordinary shareholders per diluted ADS of RMB0.42 for the prior year period.

Non-GAAP net loss for the first quarter of 2024 was RMB83.8 million (US$11.6 million), as compared with RMB25.8 million for the prior year period. Non-GAAP net loss margin was 10.8%, as compared with 3.4% for the prior year period. Non-GAAP net loss attributable to Yatsen’s ordinary shareholders per diluted ADS[6] for the first quarter of 2024 was RMB0.78 (US$0.11), as compared with RMB0.24 for the prior year period.

Balance Sheet and Cash Flow

As of March 31, 2024, the Company had cash, restricted cash and short-term investments of RMB1.89 billion (US$261.4 million), as compared with RMB2.08 billion as of December 31, 2023.

Net cash used in operating activities for the first quarter of 2024 was RMB121.8 million (US$16.9 million), as compared with RMB20.2 million for the prior year period.

Business Outlook

For the second quarter of 2024, the Company expects its total net revenues to be between RMB858.6 million and RMB901.5 million, representing a year-over-year increase of approximately 0% to 5%. These forecasts reflect the Company’s current and preliminary views on the market and operational conditions, which are subject to change.

Exchange Rate

This announcement contains translations of certain Renminbi (“RMB”) amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ were made at a rate of RMB7.2203 to US$1.00, the exchange rate in effect as of March 29, 2024, as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. The Company makes no representation that any RMB or US$ amounts could have been, or could be, converted into US$ or RMB, as the case may be, at any particular rate, or at all.

Conference Call Information

The Company’s management will hold a conference call on Wednesday, May 22, 2024, at 7:30 A.M. U.S. Eastern Time or 7:30 P.M. Beijing Time to discuss its financial results and operating performance for the first quarter 2024.

The replay will be accessible through May 29, 2024, by dialing the following numbers:

A live and archived webcast of the conference call will also be available on the Company’s investor relations website at http://ir.yatsenglobal.com/.

About Yatsen Holding Limited

Yatsen Holding Limited (NYSE: YSG) is a leading China-based beauty group with the mission of creating an exciting new journey of beauty discovery for consumers around the world. Founded in 2016, the Company has launched and acquired numerous color cosmetics and skincare brands including Perfect Diary, Little Ondine, Pink Bear, Galénic, DR.WU (its mainland China business), Eve Lom and EANTiM. The Company’s flagship brand, Perfect Diary, is one of the leading color cosmetics brands in China in terms of retail sales value. The Company primarily reaches and engages with customers directly both online and offline, with expansive presence across all major e-commerce, social and content platforms in China.

For more information, please visit http://ir.yatsenglobal.com/.

Use of Non-GAAP Financial Measures

The Company uses non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) attributable to ordinary shareholders and non-GAAP net income (loss) attributable to ordinary shareholders per diluted ADS, each a non-GAAP financial measure, in reviewing and assessing its operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company presents these non-GAAP financial measures because they are used by the management to evaluate operating performance and formulate business plans. Non-GAAP financial measures help identify underlying trends in its business, provide further information about its results of operations, and enhance the overall understanding of its past performance and future prospects. The Company defines non-GAAP income (loss) from operations as income (loss) from operations excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions and (iii) impairment of goodwill. The Company defines non-GAAP net income (loss) as net income (loss) excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions, (iii) revaluation of investments on the share of equity method investments, (iv) impairment of goodwill and (v) tax effects on non-GAAP adjustments. The Company defines non-GAAP net income (loss) attributable to ordinary shareholders as net income (loss) attributable to ordinary shareholders excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions, (iii) revaluation of investments on the share of equity method investments, (iv) impairment of goodwill, (v) tax effects on non-GAAP adjustments and (vi) accretion to redeemable non-controlling interests. Non-GAAP net income (loss) attributable to ordinary shareholders per diluted ADS is computed using non-GAAP net income (loss) attributable to ordinary shareholders divided by weighted average number of diluted ADS outstanding for computing diluted earnings per ADS.

However, the non-GAAP financial measures have limitations as analytical tools as the non-GAAP financial measures are not presented in accordance with U.S. GAAP and may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure. Reconciliations of Yatsen’s non-GAAP financial measure to the most comparable U.S. GAAP measure are included at the end of this press release.

Safe Harbor Statement

This announcement contains statements that may constitute “forward-looking” statements which are made pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. The Company may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs, plans, outlook and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, which include but not limited to the following: the Company’s growth strategies; its future business development, results of operations and financial condition; its ability to continue to roll out popular products and maintain popularity of existing products; its ability to anticipate and respond to changes in industry trends and consumer preferences and behavior in a timely manner; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of its products and services; its ability to integrate newly-acquired businesses and brands; trends and competition in and relevant government policies and regulations relating to China’s beauty market; changes in its revenues and certain cost or expense items; and general economic conditions globally and in China. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:

Yatsen Holding Limited
Investor Relations
E-mail: [email protected] 

Piacente Financial Communications
Hui Fan
Tel: +86-10-6508-0677
E-mail: [email protected] 

In the United States:

Piacente Financial Communications
Brandi Piacente
Tel: +1-212-481-2050
E-mail: [email protected] 

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SOURCE Yatsen Holding Limited