Yatsen Q4 Earnings Call Highlights

Yatsen (NYSE:YSG) reported fourth-quarter and full-year 2025 results that management said reflected a return to growth and improved profitability, driven primarily by its skincare portfolio amid an increasingly competitive beauty market in China.

Market backdrop and strategic focus

Founder, Chairman, and CEO Jinfeng Huang said China’s beauty industry “maintained an upward trajectory throughout 2025,” citing adjusted National Bureau of Statistics data showing beauty retail sales growth of 8.2% in the fourth quarter—described as the highest quarterly growth rate of the year—and 5.1% growth for the full year, a rebound from a decline in 2024.

Huang added that the recovery came with “intensified competition, particularly during major shopping festivals.” He said the company remained focused on three core initiatives during 2025:

• Driving R&D-led product innovation
• Strengthening brand equities across its multi-brand portfolio
• Improving overall profitability

Fourth-quarter results: revenue growth led by skincare

CFO Donghao Yang said fourth-quarter 2025 total net revenues increased 20.1% year over year to RMB 1.38 billion, up from RMB 1.15 billion in the prior-year period. The increase was attributed primarily to a 51.9% rise in skincare brand revenue, partially offset by a 9.1% decline in color cosmetics brand revenue.

Huang highlighted that skincare brands accounted for 61.1% of total net revenues in the fourth quarter and said the company recorded net income under both GAAP and non-GAAP measures for the period.

Gross profit rose 20.0% to RMB 1.07 billion, while gross margin was 77.7%, largely flat versus 77.8% a year earlier, according to Yang. Total operating expenses decreased 15.6% to RMB 1.08 billion, and as a percentage of revenue fell to 78.6% from 111.8%.

Costs, profitability, and goodwill impairment comparison

Yang detailed cost movements in the quarter, including fulfillment expenses of RMB 77 million (5.6% of revenue), compared with RMB 63.5 million (5.5% of revenue) in the prior-year period. Selling and marketing expenses increased to RMB 893.8 million from RMB 690.6 million, rising to 64.8% of revenue from 60.1%. Yang said the increase was “primarily driven by higher traffic acquisition costs amid intensified competition during the Double Eleven shopping festival.”

General and administrative expenses declined to RMB 74.4 million from RMB 100.1 million, falling to 5.4% of revenue from 8.7%, which Yang attributed to lower payroll and share-based compensation expenses and the leverage effect of higher revenue. Research and development expenses increased to RMB 38.8 million from RMB 26.3 million, rising to 2.8% of revenue from 2.3%, driven by higher payroll expenses from increased R&D headcount.

Yang also noted there was no goodwill impairment in the fourth quarter of 2025, compared with a RMB 403.1 million impairment in the prior-year period, and said no impairment indicators were identified as of Dec. 31, 2025.

On the bottom line, Yang reported a fourth-quarter operating loss of RMB 12.7 million versus RMB 390.7 million a year earlier, with operating loss margin improving to 0.9% from 34.0%. Net income was RMB 3.0 million, compared with a net loss of RMB 378.8 million in the prior-year period, with net income margin of 0.2% versus a net loss margin of 33.0%.

On a non-GAAP basis, income from operations was RMB 11.8 million versus RMB 93.2 million in the prior-year period, while non-GAAP net income was RMB 41.2 million versus RMB 107.0 million.

Full-year 2025: return to growth and narrower loss

For the full year, Yang said total net revenues increased 26.7% to RMB 4.3 billion from RMB 3.39 billion, driven by a 63.5% increase in skincare brand revenues and a 1.9% increase in color cosmetics brand revenues. Huang said DR.WU and Galénic were primary drivers of performance and that skincare brands contributed 53% of total net revenues for the year.

Full-year gross profit rose 28.4% to RMB 3.36 billion from RMB 2.62 billion, and gross margin increased to 78.2% from 77.1%, which Yang attributed primarily to a higher mix of higher gross-margin products.

Yang reported a full-year operating loss of RMB 185.8 million compared with RMB 824.9 million in the prior year, and said the operating loss margin improved to 4.3% from 24.3%, “primarily because there was no impairment of goodwill for the full year of 2025.” Full-year net loss narrowed to RMB 92.4 million from RMB 710.2 million, with net loss margin improving to 2.2% from 20.9%.

On a non-GAAP basis, full-year net income was RMB 8.4 million, compared with a non-GAAP net loss of RMB 128.2 million in the prior year, translating to a non-GAAP net income margin of 0.2% versus a non-GAAP net loss margin of 3.8%.

Product pipeline, brand positioning, liquidity, and outlook

Huang credited Yatsen’s “established R&D infrastructure” and described efforts including proprietary ingredient development, open collaboration, and the use of AI in areas such as molecular structure prediction. He pointed to Galénic product launches during 2025, including the VB Serum introduced in September, which he said became a top seller and won the Breakthrough Repairing Serum of the Year at the 2025 Cosmo Beauty Awards. He also highlighted a December launch, the Couture Révélation Cellulaire Reviving Cream, which he said uses active anchor penetration technology to deliver the company’s patent anti-aging ingredient Lumiskin.

In discussing brand positioning, Huang said DR.WU leveraged its clinical skin renewing heritage and trends in medical aesthetics to launch a PDRN serum designed to address demand for “clinic impaired results” at home, adding that DR.WU was recognized as an annual growth breakthrough brand from Douyin.

On liquidity, Yang said cash, restricted cash, and short-term investments totaled RMB 1.05 billion as of Dec. 31, 2025, compared with RMB 1.36 billion as of Dec. 31, 2024. Net cash used in operating activities was RMB 69.4 million in the fourth quarter, compared with net cash generated of RMB 202.2 million in the prior-year period. For the full year, net cash used in operating activities was RMB 94.7 million versus RMB 243.7 million in the prior year.

During the Q&A session, management said it aims to improve net profit margin by growing skincare faster than color cosmetics, citing higher margins typically associated with skincare, and by benefiting from operating leverage as the top line grows. Management also emphasized continued investment in R&D as central to expanding the skincare portfolio.

For the first quarter of 2026, Yang provided revenue guidance of RMB 958.6 million to RMB 1.08 billion, representing expected year-over-year growth of approximately 15% to 30%, noting the outlook reflects current and preliminary views and is subject to change.

About Yatsen (NYSE:YSG)

Yatsen Holding Limited (NYSE: YSG) is a Shanghai-based beauty and personal care company founded in 2016. The firm operates as a digital-first cosmetics provider, designing, developing and marketing its own brands to a primarily Chinese consumer base. Since its inception, Yatsen has focused on leveraging data analytics and social media engagement to drive product innovation and brand awareness.

The company’s core portfolio includes Perfect Diary, a color-cosmetics brand offering lipsticks, eyeshadows, foundations and related accessories; Little Ondine, which specializes in nail lacquers and nail care products; Winona, a sensitive-skin skincare line; and Abby’s Choice, which features targeted skincare treatments.