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• Total Net Revenues: Decreased by 5.7% to RMB677 million from RMB718.1 million in the prior year period.

• Net Revenues from Skincare Brands: Increased by 3.6% year-over-year.

• Net Revenues from Color Cosmetic Brands: Decreased by 10% year-over-year.

• Gross Margin: Improved to 75.9% from 71.4% in the prior year period.

• Total Operating Expenses: Decreased by 12% to RMB655.2 million from RMB744.3 million in the prior year period.

• Fulfillment Expenses: RMB50.4 million, decreased to 7.4% of total net revenues from 7.8% in the prior year period.

• Selling and Marketing Expenses: RMB494.4 million, increased to 73% of total net revenues from 71.3% in the prior year period.

• General and Administrative Expenses: RMB85 million, decreased to 12.6% of total net revenues from 21.1% in the prior year period.

• Research and Development Expenses: RMB25.3 million, increased to 3.7% of total net revenues from 3.4% in the prior year period.

• Net Loss: RMB121.1 million, with a net loss margin of 17.9%, improved from 27.6% in the prior year period.

• Cash, Restricted Cash, and Short-term Investments: RMB1.31 billion as of September 30, 2024.

• Net Cash Used in Operating Activities: RMB175.9 million, compared to RMB163.4 million in the prior year period.

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

Release Date: November 20, 2024

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 3.6% year-over-year increase in net revenues from skincare brands, driven by a 10.5% increase in clinical and premium skincare brands.

• The company's overall gross margin improved to 75.9% in the third quarter, up from 71.4% in the prior year period, due to a higher contribution from high-margin products.

• Yatsen Holding Ltd (NYSE:YSG) reduced its net loss margin by 9.7 percentage points to 7.9% from 27.6% in the prior year through strategic marketing spending and optimized general and administrative expenses.

• The company made substantial investments in R&D, with expenses totaling RMB25.3 million, representing 3.7% of net revenues, enhancing its capability to develop new high-quality products.

• Yatsen Holding Ltd (NYSE:YSG) maintained its MSCI ESG rating of A, reflecting strong performance in areas such as product packaging, waste management, and chemical safety.

Negative Points

• Total net revenues decreased by 5.7% year-over-year, primarily due to a 10% decrease in net revenues from color cosmetics brands.

• The beauty industry in China faced significant challenges, with beauty retail sales declining by 5.5% year-over-year in the third quarter.

• Net revenues from the Perfect Diary brand fell by 10% year-over-year, as the brand undergoes a strategic transformation.

• Cash, restricted cash, and short-term investments decreased to RMB1.31 billion as of September 30, 2024, from RMB2.08 billion as of December 31, 2023.

• Net cash used in operating activities increased to RMB175.9 million for the third quarter of 2024, compared to RMB163.4 million for the prior year period.