• Total Net Revenues (Q4 2024): RMB1.15 billion, up 7.1% year-over-year.
• Color Cosmetics Revenue Growth (Q4 2024): 16.4% year-over-year increase.
• Gross Profit (Q4 2024): RMB893 million, up 13% year-over-year.
• Gross Margin (Q4 2024): Increased to 77.8% from 73.7% in the prior year period.
• Total Operating Expenses (Q4 2024): Decreased by 3.5% to RMB1.28 billion.
• Net Loss (Q4 2024): RMB378.8 million, with a net loss margin of 33%.
• Non-GAAP Net Income (Q4 2024): RMB107 million, with a non-GAAP net income margin of 9.3%.
• Total Net Revenues (Full Year 2024): RMB3.39 billion, a decrease of 0.6% year-over-year.
• Gross Profit (Full Year 2024): RMB2.62 billion, up 4.1% year-over-year.
• Gross Margin (Full Year 2024): Increased to 77.1% from 73.6% in the prior year period.
• Net Loss (Full Year 2024): RMB710.2 million, with a net loss margin of 20.9%.
• Non-GAAP Net Loss (Full Year 2024): RMB128.2 million, with a non-GAAP net loss margin of 3.8%.
• Cash, Restricted Cash, and Short-term Investments (End of 2024): RMB1.36 billion.
• Net Cash Generated from Operating Activities (Q4 2024): RMB202.2 million.

• Warning! GuruFocus has detected 3 Warning Signs with YSG.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Yatsen Holding Ltd (NYSE:YSG) reported a 7.1% year-over-year increase in total net revenues for the fourth quarter of 2024, aligning with their guidance.
• The company's gross margin improved significantly to 77.8% in Q4 2024 from 73.7% in the prior year period, driven by higher sales of high-margin products.
• Color Cosmetics revenues increased by 16.4% in Q4 2024, primarily due to the recovery of the Perfect Diary brand.
• Yatsen's non-GAAP net income margin improved to 9.3% in Q4 2024, compared to a non-GAAP net loss margin of 8.7% in the prior year period.
• The company successfully reduced total operating expenses by 3.5% in Q4 2024, contributing to improved profitability.

Negative Points

• Despite the positive quarterly performance, Yatsen Holding Ltd (NYSE:YSG) experienced a 0.6% decline in total net revenues for the full year 2024.
• The beauty industry in China remained subdued in 2024, with total beauty retail sales declining 1.5% year-over-year in Q4.
• Yatsen's net loss for Q4 2024 was RMB378.8 million, although this was an improvement from the prior year period.
• Impairment of goodwill for Q4 2024 was RMB403.1 million, primarily due to weaker-than-expected operating results for the Eve Lom brand.
• The company's cash, restricted cash, and short-term investments decreased to RMB1.36 billion as of December 31, 2024, from RMB2.08 billion the previous year.

Q & A Highlights

Q: With the performance in Q4, how should we expect profitability in 2025? Also, what is the strategy for different categories, given that Color Cosmetic brands grew faster than skincare in Q4? A: Jinfeng Huang, Founder, Chairman, and CEO, explained that the beauty market will face persistent headwinds, leading to intensified price competition and more rational consumer purchase decisions. To balance growth and profitability, Yatsen aims to maintain and improve gross margins through brand equity strengthening and R&D investment. Skincare will be the key stable growth engine, contributing over 40% last year, with robust growth from brands like GALANIC, Dr. Wu, and Eve Lom. For Color Cosmetics, the transformation of Perfect Diary has shown significant outcomes, and the focus will be on high growth, high repeat purchase, and competitive products for sustainable growth. The strategy involves enhancing skincare and makeup growth while improving operational efficiency.

Q: How will Yatsen allocate resources between Color Cosmetic and skincare categories, and which will be the more important growth driver in the future? A: Jinfeng Huang emphasized the importance of focusing on competitive products in the market. Yatsen will continue to drive growth for high-performing products and launch new ones with good market momentum. For example, GALANIC is expanding its portfolio from Vitamin C to Vitamin A, and Perfect Diary is expanding from lip to base makeup. Dr. Wu is expanding its benefits space from acne removal to early age anti-aging and brightening. The strategy is to balance skincare and makeup, devoting resources to fast-growing categories with long-term sustainability.

Q: What are the key initiatives to improve profitability? A: Jinfeng Huang highlighted that Yatsen has made significant progress in improving profitability. The company optimized marketing expenditures, streamlined general and administrative expenses, and expanded into offline distribution channels, which require fewer traffic expenses. Moving forward, Yatsen will continue to enhance operational efficiencies and strategically allocate resources for long-term growth.

Q: Can you elaborate on the strategic transformation of Perfect Diary? A: Jinfeng Huang noted that Perfect Diary made significant progress in its strategic transformation in 2024, driven by a refreshed product lineup. The bile essence lipstick and its second-generation version were top performers, achieving leading positions in sales rankings across multiple platforms. The product's innovative design and formulation received international recognition, including the MUSE Design Awards and the French Design Awards.

Q: What role does R&D play in Yatsen's growth strategy? A: Jinfeng Huang stated that scientific innovation is a key driver for growth in both skincare and Color Cosmetics brands. R&D expenses represented 3.2% of total net revenues for 2024, underscoring Yatsen's commitment to innovation and product development. Notable highlights include the third appearance at the IFSCC conference and pioneering anti-aging research featured in leading scientific journals.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.