YSG - Earnings call transcript Q2 2021

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Operator

Ladies and Gentlemen good day and welcome to the Yatsen Second Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Irene Lyu, Head of Strategic Investment and Capital Markets. Please go ahead.

Irene Lyu

Thank you operator, please note that the discussion today will contain forward-looking statements relating to the Company's future performance and are intended to qualify for the Safe Harbor from liability as established by the U.S. Act. Reform Litigation Securities Private Such statements subject other performance are of not certain risks guarantees to and future and and are uncertainties, factors. assumptions

undertake and of to these the release mentioned and of are A could factors press with The is control cause and general that discussion. in discussion certain affect required not Some Company financial in Company the Commission. today's Exchange results as included actual obligation risk materially this differ risks the business update results and Yatsen's this of Securities except from the to forward-looking any does filings those Company's information law. by beyond could

certain today's financial comparison measures management for only. also During call, discuss non-GAAP purposes will

reconciliation please financial of GAAP definition a For to see earlier today. earnings a results, release issued of non-GAAP measures, the non-GAAP financial

on Mr. are a and and and today prepared begin senior us and Jinfeng Q&A Donghao with Huang, the Director. Yang, call Yatsen's CEO; conclude Founder, with our call CFO will Chairman will Mr. from management session. Joining Management the our remarks

this reminder, being recorded. a conference is As

replay Huang. this a turn webcast I call now available Mr. website at of Investor ahead. addition, conference ir.yatsenglobal.com. will be call the to over on Please In go Yatsen's Jinfeng will Relations

Jinfeng Huang

in you, thank everyone, second and Irene, earnings for Yatsen's call XXXX today. participating conference quarter

brand guidance net brand. performance our better-than-expected acquired our contribution quarter to due second launched Perfect and with total newly revenue line steady Diary So our grew XX.X% the year-over-year of in in and from our flagship

up second XXXX. to from by So customer net to per XX.X XX.X% the year-over-year million. RMBXXX XX.X% went average increased the revenue quarter number during DTC And DTC RMBXX of customers of by

as the market acquisition market intensifying rising segment customer other China's at in and XX% growth skincare the second segments. result competition came about stronger premium despite notably than costs So during this overall beauty in was solid quarter, grew and even

our to launched growth initiatives So this set of growth strategic May a believe in we validates sharpen we model. market development

Specifically, the capitalize and brands organization structures of in ongoing efficiencies. optimize we enhance already positive though resources innovation, new the this are September, early on channels and to will mid our and of signs some But have facilitate seen success we process structures transformative power growth optimizing continue latest into quarter. internal even to cost

with portfolio DTC the beauty of ability by proven So our building traditional now using innovation. and to a consumers brands industry iconic digitalized we disrupt durable, a are model, latest insight supported

essential in for So Day growth, a we path tools the are season of fourth believe sustainable this on quarter. up a strategic high-quality busy to lead prepare us we as initiatives the the Singles position to particularly in

During Purifying Ultra-light we Blurring flagship new the quarter, Cleansing Smartlock Translucent Loose our difficulty] with products technology, second Powder Oil. [technical under and several launched the

But both [indiscernible] Chinese encouraging Shopping Festival, Diary feedback. So two received top all among Diary products despite domestic similar of technology and international color the featured of more very lip peers Perfect selling Perfect domestic the was cosmetic best this during user competition and from gloss selling new these than brands, other XXX,XXX June products. XX one

XX premiumized the higher units. existing their brand among our also and the new introduced Day the Box brand and for make This to buying than are of we Treasure Heel strong have into the a who category half the priced plan base of Diary significant year, Diary makeup Perfect Heading launch a the Slim male during into second other. XXX,XXX of success Chinese more users. push our the With May Lipstick to Perfect with customers sales also campaign Valentine's

So industry speaking achievements. we brand of the to continue for our be building, recognized by

group the named Perfect most of the and of in beauty Awards, the industry, as known growing sought after Oscars business. the valuable brand of beauty fastest year, on one Beauty This color World the brands quarter, which the the brand XXXX Brand are XXXX, and in of XXX beauty cosmetic the Yatsen most Diary we Lab XXXX. youngest only brand Diary Tmall the Perfect as China's the recognized

our other Now brands portfolio. in turning to

continue for into brand June glosses award the we half of XX brand during the XXXX. Abby's in return fast face Tmall on makeup investment cosmetic Ondine as to campaign, grow developed second categories. launched in we newly eye garnering since has into quarter. new XXXX. Pink more Little Bear The Choice XXX,XXX over than expand optimize on the continue year, Pink as and will and brand head new fastest growth the its the to And We in cosmetic Bear the sensational This first seen second March the lip sold during

We are more than in which sales XX% the to skincare also represent excited second gross about our quarter. grown has of our in progress

Our initial pure sold new strongly on with resonated our skincare following quickly initiative vitamin -- launch consumers. brightening China powder this products innovative Galenic on this April. C Mainland

second and the So during to the DR.WU's Tmall. mainland China one grew after a dramatically platform, relatively category sells number in our this integration of period become quarter short on into

same one June from So on year-over-year Meanwhile, during cleanser the period during Shopping XX% around premium sales DR.WU's June on XX Festival Eve brand Shopping product cream grew by Tmall the this during Lom cleaning sales year. Tmall. the quarter, last was the increased and classic second XX Festival, XXX% of the number

is in we made brand progress this that shows so potential future. clearly there the growth for have rapid great the far So

continue quarter, on the able sales focus We Festival, well on and quarter non-GAAP were and decline as Shopping a across to allocate we improving to end and the June and last discounts, XX% of in X.X% discipline on to the Throughout maintain XX marketing as our resources to net the of on The ROI. marketing pricing channels firm. expenses and on measures higher brands sales with fourth revenues total was compared expenses XX% based in XXXX. our result

in set to investment this have a increased of R&D, net X.X% revenues X.X% We quarter also which total up our from year-ago.

the as we demonstrated the by use Powder line. Lock the borne Loose Our already in Blurring that technology new fruit, Translucent and increased in the has R&D has in-house strongly investment Smart -- developed

Medicine, Engineering beside also this delivery thermal the for Science in announced R&D innovative Research Center University establishment capabilities active So enhance product, nano-based advanced National to the with under joint launching recently Nano our which particularly ingredients. the Huazhong for skincare, system research a was of Technology of formed the we further laboratory

So quarterly in year. COVID-XX looking ahead, last to by is the lower the unusual rate pattern year-over-year growth guidance QX largely the caused pandemic our as in reflected due seasonality

the COVID-XX followed by and market all So in the pent sales relatively is the by in was in QX typical result as as pandemic by XXXX the year, due higher the up in disrupted across sales to during in policies social China channels. QX, This market previous of stronger QX online a distancing pattern beauty promotions QX characterized June sales XX and the a from helped quarantine demand months. recovered, the

base year-on-year So a comparisons this QX this creates for QX a year. low high in and base in

compare year's rates, days you believe trend to XX.X% unusual growth account. sales on and our accurate year-over-year more The respectively. is if August which our picture year, and However, combined a projected QX represents seasonality X to growth We growth this last this of XX%. to QX XX% into taken in is year-over-year XX and a be

resume normal comparison of basis will normal in difficulty] QX year-over-year trajectory. a have to expect its and [technical our We

position the that continue leading pool our China's of results initiatives, balance ample are a sheet well market. We evolving the role playing on as execution successful our growth financial strategic beauty our confident to and in expanding talent

to you performance. thank that, So will Yang over now With the turn everyone. discuss Donghao I to call CFO, our our financial

Donghao Yang

and David hello, everyone. you, Thank

the all newly margin XXXX acquired quarter of profit by approximately RMBX million the changes higher numbers sales all quarter second products. primarily I'd today prior brands get improved to X.X% launched financial period, year-over-year point period. with RMBXXX diversified attributable as to presented brain. started, of and I XXXX period. RMBXXX.X net sales in for percentage that increased year XX.X% to the prior renminbi in in second Total XX.X%, like from growth was for and by clarify Before generated XX.X% to revenue X.XX otherwise Gross XXXX all percentage to XX.X% Gross from year margin in the unless noted amount billion and changes increased by but contribution the prior from billion in grew channels quarter The refer that compared million for the year increased second RMB and from are

brands We seen RMBX.XX also have the quarter, average Total year plan Dairy RMBXXX.X operating us second for from the billion prior in continuation XX% enabling order to to the achieve higher Perfect expenses the the increased million quarter of better by the premiumization margins. period. of XXXX in for and value

in million total million prior XXXX the percentage operating of revenues, from year as second period. net XX.X% in prior of As to XX.X% expenses RMBXXX decreased period. year were total with Fulfillment compared expenses RMBXX.X for the quarter a the

in effects of to As X.X% revenue, This prior high and base prior result the were year the fulfillment period. attributable of a mainly X.X% expenses percentage was net prior high million RMBXXX.X which as COVID-XX million of to the during decreased the pandemic expenses from logistics in last as period, with Selling costs year period. were compared XXXX marketing year. the of a second quarter for RMBXXX.X the

of were period. prior total net percentage compared XX.X% with selling and expenses marketing revenue, the XX.X% As in a as

XX.X% XX% total in intangible related compared XX.X% and non-GAAP net in expenses expenses on of and of selling a compensation However, basis, same the prior as marketing period assets, quarter, year. share-based the amortization excludes with and which to were last revenue

of expenses net decrease marketing XXXX period. such, million was as prior ROI revenue the a in administrative RMBXXX.X the the year result with selling improving for on as in the focus second selling compared the of our marketing expenses General quarter RMBXXX.X a and and of total As expenses. were on and percentage a

second with period. a period compared Research prior same was administrative for for from prior expenses to FCC of were primarily RMBXX.X decreased due to decrease XX.X% the quarter XXXX percentage and revenue, general XXXX million RMBXX.X the compared The expenses in quarter the expenses lower development total in year of second year. as the and year period. million last net the XX.X% to in of As percentage

quarter Net per second million for quarter as from for period. As to by in Yatsen's the was of in period. quarter the a XX.X% our period. RMBXXX.X second primarily compensation to the Non-GAAP of prior the to to the from the enhance XX.X% for prior to the prior margin year Non-GAAP the ordinary loss XX.X% of operations Operating reflection second from to due XXXX XX.X% XXXX loss with year prior the ADS a compared and from shareholders million personnel Net R&D as in loss from in quarter of diluted percentage increased compared expenses, RMBX.XX the costs X.X% million by of operating X.X% year year per period. with was million. XX.X% RMBXXX.X RMBXXX.X period. net RMBXXX.X prior as quarter for Non-GAAP loss diluted XX.X% second the with loss was million loss ADS quarter quarter from year XX.X% from in the increased margin for in net in period. year Non-GAAP prior Non-GAAP of increased million year RMBX.XX RMBX.XX increased RMBXXX.X prior net XX.X% second loss XX.X% loss prior in by as XX.X% XXXX margin the from attributable XXXX XX.X% with attributable as commitment our of million increased period. year compared development to year year in of increase in to was XXXX the margin Net second by increased increased Loss to of RMBXXX.X research total loss RMBXXX.X was RMBXXX.X period. net from expenses the the period. XXXX million second revenue, compared from to period. prior XX.X%, capabilities. to and RMBX.XX prior The operations in shareholders the Yatsen's share-based higher XXXX ordinary

restricted of of equivalents, XXXX. cash XX, June cash compared as December had with RMBX.XX cash billion As the of as and XXXX, company XX, RMBX.XX and billion

I XX%. current This that preliminary RMB, of RMBX.X view between to With outlook our open net now rate market is to third would approximately forecast call to quarter like of for and operational total and conditions the business RMBX.XX a we X% our on reflects our Q&A. year-over-year growth representing revenue and at which Operator? the to Looking XXXX, billion for be subject the change. expect

Operator

our And come Dustin go from [Operator Instructions] ahead. Please Wei of Stanley. Morgan question first will

Dustin Wei

questions. my Hello, management. for Thanks taking

is question quarter first guidance. So really third the regarding

it's It's base sounds not sounds it because kind company now So conservative the third because year that it outbreak. like of -- like provide low COVID quarter guidance. of in issue it's or provide last the the the very sort my current

-- me, confusing. So that's to little a little it's

guidance. clarify by are or looking assume in we growth, brand be assuming point. And or could will growth, by If X% think So, sales Perfect if does by we that think third margin we the like just question X% colors XX% regarding are that channel? like some declining I the for And you costs. is third first can So the or mean sales to consequently to for appreciate second Dairy the we the are that's provide you the that if of profit quarter. going company about question XX% to quarter also could brand variable control the

on ROI of are of of operating sort we still net ratio, So sort and leverage. rationalization reduction loss because continue or to see

the of like a prepared is And third details some can loss questions. That's fact, talk my operational goal remark, long of the three be financial see In and very will you that the we if to David's transformation about or bigger third we going financial Thank results. plan. management and that ratio. temporarily to target about the some Appreciate of provide the will change point much. seem done quarter, quarter back better the loss bigger or transformation, the the how in in that are expect target, will

Jinfeng Huang

question, Thank you the Dustin. for so much

guidance. first thing, a about discuss bit little So, the let's

So I rate. look the we take and as at the before, need to QX QX to combined mentioned growth

COVID. because of unusual is the key because of reasons of One the of seasonality last the year

now the and the the more of growth. for in shop breakdown but skincare still therefore pipeline, continue we cannot So growth into ROI. ROI guidance, the very there. if then trend remain in -- allocating we resources two we been average brands Diary the QX an have category Perfect see of [indiscernible], so a we Because brands, the And that to skincare we healthy of provide look at we’ve adjustment,

talk QX, we one-third what that of -- the offline some now impacted about QX offline impact on impact guidance. the COVID So about see on the then than see our And right because moderate you by the stores, we were COVID. store less

sales. the to of impact the continue already the consideration into chip offline acquisition in of we our COVID So, of

take So, some the really for plan, we transformation our we to think initiative model. is growth sharpen

So that a things. means few

the the sales First, we marketing total improvement continue reflecting and ROI, it on bottom our so percentage and improve to revenue the will also be of on line.

-- so the from of internal Second is resources we cosmetics means to allocated that our past right into quarter, now which BU. we move brands, in skincare actually we some performers the skincare best

the category under growth So, is that the cosmetic we that think color in continue. our assumption will

However, we cosmetics. competition in higher, more color a see intense

we the is now growth also Lom right focusing brand. good are already and very initiative we Galenic, take to DR.WU, Perfect on the the see pretty grow We on well. So on because momentum Diary, Choice Abby's skincare some and Eve moving

the in continue skincare to line invest will We growth.

Dustin Wei

profit of for a third aspect a Thank the of margin continue Should where or the little the you, itself? we improvement I think take quarters -- the because abnormal sort the on the of quarter. just margin and If sort bit from for third follow-up the David. low despite of will can margin you little low quarter growth growth third kind ROI of bit the questions this

Jinfeng Huang

the purchase -- so to I QX, QX from rate if on the the need QX growth, take investment the the growth and so, QX consideration. we comes normally, about think we think repeat because into

during acquired promotion. single new come QX, the state will normally So we user in back the

percentage revenue. the still we sales for the somehow because Diary the investments of our like and high. be skincare marketing the ROI of and QX, Perfect will chain and see brand brands lower optimized on also So flagship But

So the like improvement continue. line will bottom

Dustin Wei

Thank much, thank very you you. Okay, David.

Jinfeng Huang

much, Thank you so Dustin.

Operator

from go The next comes Sachs. Goldman Cho question of Please Christine ahead.

Christine Cho

Thank much, you so David.

So I questions. have quick three

growth a That's XX% if to basis. of look guidance, of kind that going to normalized growth I around the this your forward on fourth revenue, imply So Is first seasonality beyond beyond? plus in to for quarter question. the it second follow-up should a XX% seems just the just quarter we Y-o-Y add quarter kind think on and the understanding of level around actual third simply I guidance,

something you Second around on industry. hear this factors had seems of offline like July across forward that thoughts opening of of store question this would is you some any other weaker recall on the have thoughts target. XXX the of the year to in to been other the or XX, towards July than any have you. that update so numbers you should kind think about August the lastly, slower for new just opening more factors, we pull this interpreting is, of I COVID target wanted expansion. due far store is here? the kind you situation, June Thank -- has a demand Do I and numbers? terms Do that think any And

Jinfeng Huang

about … so think next first consideration so I your for QX quarters well. year, looking -- other the much. guidance the also -- take To we QX and as will on probably the answer we into the question

average question the will be forward. of going back QX our your the QX we of accurate to And reflection that about grocery offline a believe something will growth So stores. more to second be looking

store we Irene, So can -- opened address opening? nearly question the this second me in help the you QX around year, offline of

Irene Lyu

Yes.

so So, at stores XXX quarter, to year end have we the compared far of end the of open at the have second we XXX.

increase XX of stores. So a net that's

given repeat plan to stores the situations, drop continue may stores, that compared little to bit repeated to we -- COVID gave expect a to number open but We earlier. of the that more open number we the

Jinfeng Huang

like of its this lower expectation. the growth industry growth overall the our versus year, previous in than months, So also your third cosmetic question slower and about July,

growth really months. behind previous reasons the So I the believe of drives one of what is key

at June -- look whole XX industry you last if growth. this so cosmetic so growth so to whole in or the skincare year, the last by driven skincare beginning past the brand also June the So premium or and mainly months, since June, was

newly now down. confidence we forward, the also trend cosmetic look And getting we color that are whole -- so we So see looking the so some still little emerging at booming. slowing as we a is see if data, so we But why have channels is the growth growth bit like weaker. think growth, on there right August that's the cosmetic market

example, For [indiscernible] really is live broadcasting, the live growing fast. streaming

company's new flows to and So is of need category emerging capture focus new Douyin. channels like the newly we the now entrants also the

Christine Cho

Thank you. That is super clear. Thank you.

Jinfeng Huang

you. Thank

Operator

The next from of America Securities. Louis comes Li of go Bank question ahead. Please

Luzi Li

about Hi, is David. Hi, question. you my quarter. for taking first question the Donghao. Thank second My

mentioned channel it's driver new diversification you the about product. key the the about sales So from quarterly of is growth and

Douyin give a So the quarter So quarter, from versus or last some could channel the mentioned color ROI trial QX Tmall, see you further period. Douyin? do Douyin, us of gross on I outside the and Douyin the yes, what still that the is remember And Power So is -- that sales particularly from in contributed at that so diversification? we of expansion versus last contribution you now? versus from

guidance. is So ROI from the from an first do second My the question So my channel? this see also is question. improvement about we this

versus higher case. look not but bit it we So the we a sales like little QX years the lower. look if at is it's we -- But see that QX, at X you QX if normally mentioned just seems past from the guidance

to the -- this in is growth. is XX% third And question at how it -- case, the transformation. do we when space on so, look for the how are tougher? based So we should normalized XX% And even we what to a my XX% is becomes doing QX

control the the are since loss versus prioritizing that's we if So net case. sales you. Thank our growth, like

Jinfeng Huang

the Louis you, Thank question. for

first GMV Yes, Douyin outside we Tmall we So of miss. -- rate in about terms growth the a because one miss. very -- see fast we then channel streaming. And seeing especially are of in growth the the higher a live of channel of so

you yes, on we period. QX, in So testing are a

ROI improve high. the that the ROI. we not QX, significantly is So In

be on revenue, also of percentage is Douyin of and I reflecting growth a And our the total now, sales check. on on believe right growth this right sustainable marketing revenue. all optimized and will So of

for I guidance So the I about think on question. that QX, discussed Christine's the

QX our then quarters that the us there for to accurate having growth taking combined QX for will And you're to -- of forward. performance believe If still optimize. we moving QX QX reflection so believe expectation and opportunities combined streaming, taking believe some you're QX the said more our growth on Douyin combined, something that, on live to if then we be the and are will we QX be

So we channel. to efforts to will more surpass our in continue devote competitors building

Luzi Li

the looking Or balance about are How net we prioritizing my forward, strike control versus you. sales that loss growth? do question? a last we here? So how Thank

Jinfeng Huang

-- we so right are growth we sustainable more think, taking I now, strategy. a

for focus key we on if from brands skincare valuable that the growth and think is that brands the skincare more the Yatsen the coming coming what So still group. look But growth. mean we that is the is of from at whole our for value premium the

why that's we skincare also more of to need we trend more can to brand skincare our to move reallocate refocus continue will continue resources as think we into BU, and previously, our resources I And the for Diary, flagship into did we mentioned devote Perfect and brands. the the because fast for -- now we before, growth our competition, too grow brand. then to talent to main intensifying devote of So to the also

all for maintain a taking allocation brands, the the bar. -- because the optimized the ROI resource higher prioritize -- the the bottom key discipline we group, see priority be reflecting is level, level same which high the key the have whole So very are in the will our reason we But ROI higher of but company. to is we in means ROI growth line

means Little growth that also Abby's optimize model. Choice need we the and actually So to Ondine

Donghao Yang

on color Louis, more bit a second your question.

by high business. and in QX back our were was you QX XXXX So and actually in versus back were QX that really Even growth QX XXXX was QX feed. And you're you because were revenue right. than then in then, at And -- back QX our believe looking enjoying about higher I reason XX%. behind the XXXX in we

why the feed feed in outweigh the or high that's back So XXXX. actually growth growth seasonality

QX our XX% was QX. that's XXXX, XX%, than So was revenue why in higher

revenue So actually And than if we in talking was QX last the our higher you about. XX% our was QX. reflection that the at look that XXXX a year's were patterns number, of disruptions seasonality

So, social you we has QX country David in know fact that in the hope revenue the it's I the distancing year, pent that That's in But as QX, much in times, depressed that in saw question. -- last answers had pattern actually several number quarantine policies sales, mentioned and now the demand which about. we QX and QX actually almost consumer all QX. from previous demand And were -- higher talking change were we up seasonality QX Hopefully your last year. released. a why was of

Luzi Li

Got Thank much. you clear. Very very it.

Donghao Yang

Sure.

Operator

ahead. The Please go Zhang UBS. next comes Ingrid of from question

Ingrid Zhang

questions. taking three I for question. have Thanks management. my Hi,

Galenic quarter sales will you to first expect brand, The us growth brands. Pink Would channels of we we we please a but launch about also Lom on product for the see bit quarter, sales last marketing question cost. about you and share in color brand. ROI And the like Eve Pink the And glad to Would about you growth would color the take like quarter is by at the that other year share that the second past plans started are And update of in mind taking off skincare all new brands among strong trend by this also versus or I second a peers. maybe commented this the Bear DR.WU deliver company is when second Bear. in with level in half? the DR.WU? that recall off to the to expected is

channels we marketing with organization different us among allocation want some marketing budgets, you please resource where social a feeling last Would our color say compared with online share values etcetera. get And structure. thanks. personnel, in is about Many maybe terms Just to industry? question are about and about of the

Jinfeng Huang

the question. Thank you, Ingrid for

the So if the about more I first brands. so spending remember category. now is to more right investment -- on skincare effort and We are skincare our correctly, plan grow our we question

is very growth And see DR.WU So coming also a Pink was we -- also fast very really Bear. growing fast. the from

Diary moving we So price Bear the is when taking launched up. is of premiumization the Perfect Perfect so Pink Diary point a is that reason the trend,

So point. the we Diary the wide under see price Perfect space

need we take up. is Diary to share So Pink market Bear the Perfect moving when

we the right growth initial expectation, sales our also based now positioning past is the see very growth in Pink very and It's think the Pink we it of because Bear is So very brand months, healthy. X is exceeding very and Bear's ROI fast on clear. result high the

category. users, resonated strongly So generation is color the entrants which brand the is the with consumers, younger lot into new of of brand new of means the changing a

the think track. now Bear Pink is right on I So

as gloss now right some is brand this category of for will also eyeshadow well. Bear really the half the and be the category. on Pink spending to So second the focused makeup lip But year, base

color track will continue value growing us in growth of to our So we think that the will the gain Pink of the share cosmetics. channel Bear help fast and

the DR.WU, on So a have architecture. really we are for because Perfect so And Diary. right strong DR.WU focusing very, product now also very lineup

in expanding to of think we are going items the QX, and So we DR.WU. essence QX other to

strong, very and in the is product the DR.WU market. has of R&D been past the the decade in So proven

competitive the that So think very very is the and one is the performance be exceeding first reason to is the in we choose market consumers focused, expectation. product we one that just

number strengthen in subcategory. one So brand we become the few this equity to by item first making the the

expanding line the to items QX line, expanding and and in -- in well. essence and we as So special facial also QX were other QX, mask the

also lineup. the developing DR.WU we very WU as resources for the -- in strong And launch hero plan and think future based DR. new devoting the product on the are [ph] existing R&D products and expansion product So well. we products will new in for be new to

streaming CPS live of question the Right in the Douyin third more now for in is the expansion ROI. about because for of because the based. So cost structure Douyin,

So cost of which fixed we pay sales. the means a

to is improving really us So the that ROI. helping

we we resources the ROI continue. percentage So as devote as of in the Douyin, into the optimization long think will growing continue to revenue

Ingrid Zhang

Thanks, David. My and last how etcetera. we people many personnel, values Douyin different have the budgets, question Say was social structure, for terms about marketing channels the among marketing resource channel organizational online of in operation? allocation

Jinfeng Huang

number demand half view into strategic the I growing month cannot the we fast past But moving now. people remember the talent and that for a year, the working and were past also Kuaishou with to and our allocate brands. Douyin need more of right we fast in see channel the we having

have a of from and industry getting as very trainee we well. to very management were pool, talent program, the we because people based experienced also lot join proficient us on So, our a

So, have talent to think sufficient -- we channels. of growth the manage given the we

terms building, In the is brand Yatsen key focus of group. brand building for of one

So building. very -- of conglomerates in in in they hire talented the experiences past lot and people, the brand a year we half past brought year, so in traditional then

in also are brand the strengthening equity Perfect our well. other Diary and we as So brands

expense. think of the a sales bigger percentage brand marketing in our building investment take and will we So continue to

Ingrid Zhang

David. thanks, Many

Jinfeng Huang

you. Thank

Operator

The CICC. comes next from question ahead. Please [indiscernible] of go Casper

Unidentified Analyst

introducing taking from before. for my new Casper brands first we is the you because the new or recently slower of is noticed this My CICC, pace is Hi, of than pace question about new thank the question. introduced that product and brand

new the developments skincare product And the time second longer Diary. now. brand for question main I the of So products span Perfect about the is wonder the if

about especially So category? sales maybe the could Thank skincare of our you a in brand plans color the development recent new future performance, the you. share bit and

Jinfeng Huang

effort more the spent better our -- and for more first this [indiscernible] developing brands. year, think in products we in I so of in half

innovative up took and performance come initially So strategy with better to long SKUs. fewer a lasting we a very and

For to to Perfect driver example, Powder just takes and we strong the technology Loose than helping now it market. a becoming traditional to right share Smartlock the the develop, also the product our Diary but gaining longer very is technology products launched in to the

know, all because of Powder then Diary, in market. become believe if this our I we say Loose the competitor is we very very of -- and at focus the Powder, one Loose important would So one the one important milestone look the a strategic we of of category Perfect will as this

main when gaining the by it's head-to-head us helping more to to in our we Loose share means Powder, comparison which competitor. in are market actually competitive So become

that So more the you're longer effort half, takes spending competitive really first to It right are we developing in time. products.

product So the of two launch we That we like the for since launch the QX frequency in see have new second year, year, of the and very is mainly market. first quarters ever last half products. of this this innovative -- preparing because higher will

some So our remover items And other we the are just oil. we new launched well. also launching makeup as

launched Perfect brands, of Diary, the Pink a Singles brand. then to we So palette, Ondine, see right for our just eyeshadow we eyeshadow the our a year. we by but lipstick, have the category to not before become which our Singles for very launching breakthrough have going are of will which are launch new and SKU before was only And should existing And we I skincare also blockbuster Little Day, formula, going also Day. Bear this our therefore among lot had a

So the we this are initiative about pipeline new in of confident -- half our year. initiative second

Unidentified Analyst

skincare is our Okay. products the Perfect question of second the Diary. main about Yes, brand

the you QX? and could the performance give sales details QX about us into So, in some QX guidance and maybe

Jinfeng Huang

Perfect which of male also and Diary to is be will products, product color of skincare lines skincare similar expansion Perfect Diary category the The brand.

based the product we the offline And products total believe our apply help them to their to in makeup. skincare feedback the growing. revenue see lineup stores offline helping launched consumers, items skincare for -- the our continued that stores. percentage is they of the those we from skincare has our our for -- better the now like actually So on of And as initial

So believe consumers. I saw has expanding product channels and been the the a after we we performance into by the test period, also well are product base be items received skincare other well. as And proven

total the we Diary. like take of Perfect higher looking of percentage revenue forward, will So in a

Unidentified Analyst

very about I no Okay. Thank you other have questions. explanation. very you. much Thank detailed the And

Jinfeng Huang

you. Thank

Operator

Kevin from Please Research. next of go The comes Xiang ahead. XX question

Kevin Xiang

questions. for Hi, management I two taking my have questions. quick

one is security. first about The data

understanding, regulation data and our hand, really how So data the our what the is impacts one development potential is customer the from driven. security based evaluate on because the on company product insight does process related

On the marketing. of firm spend other in targeted usually the dollar hand, a lot

the the So one. be marketing ROI I first will sort wondering diluted, the is database if regulations, just was of this

because one second due The resigned is management ex-COO team Vincent the reasons. our about to health

So what how of ensure other to we the done to responsibilities have we COO do the and stable operation members? and transition, reallocate

Jinfeng Huang

question. thank Kevin, for your you

counsel loss, now the right security. our is legislation the one first on legal data about reviewing draft The data so security

that mainly will customer us obtained preliminary impact platforms because security Tmall. is the like we So data online too data view the the much, through have not

pretty So, the Tmall are from data protected. well

data private obtained consumers. channels provided by So our domain voluntarily for

we a abuse. also to strict the place prevent So measures data -- and security very in have

overall, be I that on So we our very on assessment company data big. the security we will is the not loss think, impact something -- believe

question company of [ph], so April. to in issue, Co the The Founders, around Lou he related second the our health because actually Vincent left

started we So the already. transition QX in

responsibility originally, the taking have management, taking because operation the majority of he's and responsibility. second [indiscernible] we So part company's Co my also the the critical his Founder, he's and of key

model. the in moves, So new and sharpen operation X we to initiative months, we price our are the the see taking also growth when past

team's So I line think team's our operation is the in with also efficiency the and still expectation. morale

would taking. quite, facing has right our success Although I disturbing in direction We industry been team brand been sales initiative we confident and But growth growth right are the sharpening we our model. also believe, are the about we very competitive coming from are a some from heading skincare team environment. the see on has now also expansion and also we very the environment a macroeconomic And category. initial and the to our say,

-- important the So making. we all those are of milestones very some

I believe the grow long-term it stage we share continue existing cosmetic work in to current focus, and will forward, next direction continue what the looking the moving be and the So right the to believe we on be more will will been then and organization then to has we the industry. portfolios, and gaining

Kevin Xiang

I very have David. That's you, questions. Thank more helpful. no

Jinfeng Huang

Thank you so much.

Operator

closing session. over or management question-and-answer the comments. back conference concludes any for would that I to additional the like turn to And

Irene Lyu

joining everyone today. Thanks us for

further have directly Yatsen or If contact Investor at us to TPG please you questions, feel free Relations. any

press Our great release. can Thanks contact U.S. and China information found day. today's for both have IR and a in be on

Operator

and now conference Thank attending is now presentation The for may you concluded. you today's disconnect.

Yatsen Holding Limited (YSG) 26 Aug 212021 Q2 Earnings call transcript