YSG - Earnings call transcript Q4 2021

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Operator

Ladies and gentlemen, good day and welcome to the Yatsen Fourth Quarter and Full Year 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. liability discussion future contain to performance the Harbor the to statements qualify that the Safe company’s by the and from note today forward-looking will relating for U.S. Please established as are intended Private Securities Litigation Act. Reform future guarantees certain uncertainties, other Such and are and and of are subject performance statements assumptions factors. not to risks

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

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

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

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

over being Mr. As Relations available call webcast on now Jinfeng reminder, website will ahead. recorded Yatsen’s Huang. go at conference a to call replay this the is turn Investor the Please and will be ir.yatsenglobal.com. I

Jinfeng Huang

order all about company by and was Last market a participating to our we as public thank provide moment XXXX Xth talk start for and for you important in and strategy year challenges our year of overall fourth to history. to marked our In everyone Irene an establishment. direction, since of stage and everyone change, first our take let evolution our as as the strategy celebrated a full with year, picture conference you, development XXXX. the In anniversary focus. Yatsen’s quarter of clear year the next aspects, of in Thank well me the our of a call

our most Chinese experienced first the development, rapid cosmetic of especially, of online For market, X portion growth. the years color

As as establishing hot cosmetic on phase in leading focus this share, spot growth, Diary brand Perfect we a of achieving increasing our and the in revenue color high result, China market first development.

this largely late have We achieved goal by XXXX.

model a More good online/offline team built brand background and the run we capability supply technology chain, to have highly necessary business importantly, with in covering quarter, management, of a highly capable R&D, operation. digitalized

of experienced to However, growth decelerate as in low started players. global then the among and in domestic second also the cosmetics intensified color XXXX market our half XXXX, and competition

cosmetics R&D durable strategy impact building and our promotions. portfolio discounts the focus includes to began several skincare Given brands to diversified developments, development, a last quarters right holistic business is of for year positive more capabilities and promoting effect. tiers to color iconic sustainable evolution Why from we category, covering take such balanced growth. we market evolved upgrading this different our reduced price and which The This take will our new phase our brand approach take within approach believe Yatsen. and with a

by improvement for over full quarter. in billion. revenue Our XXXX net With XX.X% me this to fashion let RMBX.X Total mind, quarter XXXX. results liner not in may to for go financial financial from show context year highlights grew our

net when in experienced XX.X% on of deceleration strong half a the fourth year-over-year. XXXX, revenue half, a note quarter the first total second began the by declined particularly during significant we in While we

in declined fourth total and quarter. the by XX.X% revenue Diary, Our from Ondine, net cosmetic color Little including Bear Perfect year-over-year brands, Pink

limit comparison X.X% down the and were discounts year consumer Flattish demand, decision promotions year. prior they basis, compared year full with for the to to this high prior performance. a on and by base Although, only our contributed the conscious

compared One of net year-over-year compared year in particularly color believe competitive period. validates Despite not aggregate revenue size number keep net of by XXX.X% XXXX. gross skincare the our basis, of on struggled solid total XXXX’s skincare our with strong skincare since strategy on which brands our representing the Exhibiting a of in year of skincare revenues spot of from surged ground the did in full performance fourth we to total X% dynamics, relative outperformance prior quarter, a margin. brands, brands robust growth was bright during the the to XXXX. We cosmetics XX.X% acquiring

XX.X% gross X.X margin we in provision, with in full XX.X% booked compared points of the the of million percentage provision by we year-end. In to inventory inventory gross period Our fourth due higher the flexibility year. the margin with year to the X.X XX% gross percentage basis. prior than a margins comparable have period goals. prior a compared year XX.X% Without XXXX, the achieved the quarter, RMBXX.X ample year increased a with at achieved would balance RMBX.X to full X.X and year quarter fourth giving We of pursue of our points strategy billion, a points and XX.X% and prior ended for respectively, us cash on percentage year approximately XX%

on As we forward will implementing during to the evolution rest following the execution of strategy XXXX, look our focus we area.

building. brand on First,

promotion. to high discounts and we brand impact color equity plan build compelling cosmetic marketing our while For limiting with brands,

establishing a successful appeal and example aspirations content beauty. Perfect and future Diary Growth diverse as create showcasing different the modern face our to women We group Cosmo our great Campaign with building XXXX Magazine of is of a reinforcing feminine company products across Our demography, for dreams focused Chinese locations approach. and China of the broad partnered while of brand our

an these Lom on their employing rapid bring to the channels. strength to momentum. our we e-commerce and we brands last their year’s skin Eve next in DR. on other Galenic, from level. boosted playbook and the brand WU skincare achieve scaling XXXX, Yatsen-based brands XXXX, Capitalizing were hand, On by brands our build existing for revenue In products, intend via significantly elevate profitability brand we To will growing – means our of prestige heart that enduring customers. category-defining develop by evaluate brand rates, easy, level margins our gross no and is while increasing new and the net the remain brands skincare to skincare We brands, XXXX. to we quick committed beauty building and continue product, nor new compelling throughout win understand the growth

our Second, we to will continue R&D strengthen capabilities.

our XXXX, patents. by total believe X.X% in X.X% year. compared will we differentiator the by in Inherent revenues be to it X.X% we in While spending net output, XXX patents, our upgrade as we with major prior patents number increased XXX% offers, of invention R&D of of we XX representing the increased including product

under smarter Mandelic proprietary a China to market. global to of of Powder components launched research nano University. newly Sun the as Ruijin key acid leading This Perfect and developed in framework technology, system such global R&D institution Diary Pearl look lab innovation several formulations, and delivery Shanghai’s our collaborations well DR. best also Loose renewal the beauty local forward universities and new multiple Yat-Sen institutions targeting We identify used and as open for WU’s including setting and our commercialize peers and as research in top year, building anti-skin as rich technology applied with both help Little with in more collaboration the premier Hospital, our our partnerships us significantly renewed talent testing well research our by mask our darkening capabilities product. the from recruiting through fundamental Ondine one for Longwear patent and Foundation expanded we hospitals a efficacy institutions, We as

all more plan profitability this end, next across online. high aspect is a in the we ROI in One step to traditional expenses year-over-year significantly this is sales to further fourth e-commerce of our channel. our on efficiency our offer our on product strategy Douyin than to on XXX% quarter, to mix focus Our increasing we basis both Moreover XXXX. channels critical requirement double streaming of channel this traffic optimize enhance on revenue operational after offline for and sustainable growth. offering and our To live by plan

take fine-tune output plan store the ensure profitability. stores, in alert boost and for approach and support promotion product and different certain a experiment to print standpoint. our format with channels a order For intend offline from to and – offline improve multi-pronged We to greater we

opportunities In and brands incremental online various distributors. third-party addition, revenue to exposure increasing our we plan offline to for by explore

expenses also to ways scale. revenue are efficiency and variable looking fixed our our adjusting in identifying our cost and adjusted improve We at line with operating in base

booking. I our mentioned of plan marketing our we and previously, expenses traffic refine assets requirements our optimize As as expenses to expenses sales fixed the ROI and well by general administrative as raising

time. adjustments deleveraging a Given on line time continued some top this effect cost from the the outcome bottom over our cumulative from the we to impact effect materialize. line margin optimization throughout the Still and positive expect have initiative the improvement take may from to year,

CSR sustainable and aspect with our final strategy best to ESG the Lastly, of our goals in our is corporate our growth practices line commitment values. pursuing

Beauty greenbox the our grave the stage supply scheme. Sustainable This promotion ESG create the promote program into footprint use the first the year. for our the build twin brand the have entrepreneurs, the and products in CSR incorporated province, details public beauty identified report review Chinese joined Oil Eve professional our We core look This which in materials and as training manufacturing efforts can Development assessment with beauty lower of industry. income female our its comprehensive women year and Roundtable nature supply forward of year, upgrade Yatsen through products. packaging beauty heel chain sourcing participates their goals conducted empowerment standpoint, cradle and feminine process. with and have later in in Lom Shape own the areas, Slim industry-leading the and furthermore skills, We Sustainable Your we lipstick, identify has ESG annual Women’s our to of Palm implemented eco-friendly are From beauty of empowering in releasing a carbon we initiatives. of Foundation them to and a have business to European in of the company. ESG already recycling Palm more biodegradable protection China the number about Oil this practices our launch chain, early of a smarter Sichuan welfare the partnered To on procurement we to in for to

challenges and its also the XXXX, positive XXXX introducing presented in for more graduate and support start-up. provide development picture these the to importance growth. We stage process encounter evolutionary We by future financial for this development. have Ranking at Thank proudly China In Yatsen the to embracing of responsibilities ourselves of focus to be a CFO, With offered believe early our in us was commitment its this challenges year. world. are in Made now these a I social still our make long we stronger now hope long-term Donghao to turn the facilitating the and I contributions vision call CSR I our our you December can beauty social team’s discuss to financial fortunate will type. this outstanding and performance. consider Yang, overcoming Enterprise now strategy recognized honored overstate Yatsen, program, the for run. Chinese program potential to ESG clear will I We that, to everyone. products our With over

Donghao Yang

everyone. hello and David you, Thank

color decrease get prior Total quarter RMBX.XX RMBX.XX skincare decreased year would profit fourth quarter to in billion the the otherwise the the net brands. brands, to presented changes the that are in changes XX.X% fourth by partially refer noted. started, from inventory sales Gross Before cosmetic decrease period. to an offset to from by all in attributable numbers Gross the RMBX.XX was our our clarify at today discount I our prior billion billion prior and decreased Total higher from sales in to by I primarily of increased provision for XXXX from of by prior The was XXXX XX.X% amounts, fourth increase decreased of XX% decrease for to XX.X% in to more product; due all operating XXXX million expenses like year-over-year decreased percentage revenues renminbi of financial margin unless one, from billion gross from for period. RMBX.XX RMBXXX RMBX.X in partially period. disciplined sales year policies. the margin charged in and that offset XX.X% by year the the quarter The from end the year was and period. billion quarter, the pricing two, to

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

customer increase XXXX the total period. and The from service primarily was with as from year for were RMBX.XX the cost of a billion marketing percentage period. expenses fourth a net the As level in attributable to expenses to fulfillment quarter revenues, the billion efficiency increased of compared lower lower revenue. X.X% X.X% prior prior year in RMBX.XX Selling of resulting

of online increase was the marketing and increased expenses of to partially net a expenses increase expenses, and prior the an were quarter in a XX.X% As compared offline XXXX the prior General decrease XXXX traffic fourth expenses year the total optimization in administrative percentage period. The XX.X% in revenues, for period. from offset branding and for quarter primarily to selling related attributable to in by stores RMBX.XX billion with year the expenses. RMBXXX.X million of fourth

with in a general in prior year of and from the net The compensation the was prior expenses attributable total decrease compared decrease to As expenses XX.X% percentage when revenue, period. a XX.X% expense administrative the were to share-based recognized period decreased million expenses fourth quarter period. share-based IPO was prior in the purposes. triggered US the Research RMBXX.X large million compared development for of XXXX compensation by and year reporting for a primarily with GAAP RMBXX.X

research prior personnel year from quarter for period. RMBX.XX year RMBXXX.X prior from the margin to shareholders to costs a RMBXXX.X increased attributable prior prior million by in attributable our year The As prior fourth XX.X% year net with and net RMBX.XX prior per development million. billion primarily increase loss and of operations loss to in Loss XX.X% million the of prior RMBX.XX from Non-GAAP fourth our fourth the revenues, period. was to XX.X% of the period. ADS the fourth capability. decreased million in the operations loss decreased to Net enhance prior in the XXXX million million The and Net quarter total by quarter RMBXXX.X quarter decreased year by was loss year increase percentage for expenses, of net for expenses with in decreased share-based loss from attributable of compared period. an to X.X% X.X% reflect loss Non-GAAP loss increased period. year XX% compensation to XX.X% RMBX.XX development by Non-GAAP shareholders XXXX period. the increased compared in Non-GAAP Yatsen’s diluted from RMBXXX XX.X% to XX.X% XX% compared in the commitment period. XX.X% from XXXX XX.X% in compared which quarter the was research the billion the period. the year the quarter net from in ADS Non-GAAP to XXXX the fourth from RMBX.XX with to was RMBXXX.X XXXX margin diluted Net for ordinary of loss period. period. year for RMBXXX.X XX.X% XXXX ordinary RMBX.XX fourth per loss for operating margin from to the XX.X% Yatsen’s prior prior of was operating in year in with margin

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

net quarter operating activities For ended XXXX, cash was the December RMBXXX used XX, million. in

as view and our that, call quarter of to business to is from Looking and focus a limits market and I approximately of of to to year-over-year of operating XXXX, to change. to demand expect and RMBXXX.X comparison attributable on now operational like Q&A. and the RMBXXX.X would current net for This period, primarily well recovery. we margins discounts million, condition, high which reflects improvement between XX%, outlook our first base which as of our revenues total representing million our year to XX% COVID-XX open subject promotions With be decline the continued benefited forecast a the at due prior release pent-up the to the preliminary on

Operator

from first Instructions] [Operator ahead. Wei Morgan Please Our question go Dustin comes Stanley. from

Dustin Wei

Thank you questions. for taking my

first regarding guidance. is The the question

the like there by full should the kind on year? of that what’s question And first channel? XX% we ‘XX question to on optimization. ‘XX, any management know So year by guide then second this to we wouldn’t on color, comment behind quarter? the full assumptions That’s for guidance guidance but OpEx Is quarter first the negative first for brand the is the And the or extrapolate guidance. XX%

more us of provide being what evidence could still are gain quality about little provide efforts gradually spending that of of So being can with show metrics how ROI Perfect And of sort some customer. kind saved? to the a to kind They see details Diary? the that’s you more we operating going have XXXX? also actually brand new you sort and being examples this are we the Maybe of for to the with do for the main able or like improving, many

Perfect for the brand hand, one party is those promotion. reducing some on the think I hunter sort reducing non-quality customer by of the Diary the of

the they sort the and of is for the key any there the like that, the the cosmetics third are key and you brands, by skincare channel target gain is Tmall So being by for new or much. the the sort set able to of color very question target Douyin of in customer? And Thank XXXX? or example,

Donghao Yang

asked. all can not up I questions Hi, you’ve Dustin, I’m sure on if catch the

try. me Let

performance. XX%, The to have based to XX% A estimate of well, in decline announcement, actually year-over-year why first couple guidance the on decline. for as reasons we’ve of this is XX% we’re one, XX% QX our this explained negative quarter’s going

to started half of all, demand when from school or actually were actually First we customers home. staying lot still QX, COVID-XX XXXX last from the go pent-up not at a came They some in customers first able situation of our of our year, which had to factory. were the

nearly they for need as color didn’t have make-up. much So

reason. one that’s So

primarily is building. brand reason on is Another current our focus

of number things. a So,

as be will dramatically sales of cut connectivity. that, significantly. result short-term our our We affected And the promotions will a and

So actually, the company’s year as guidance the sales to policy the provide not next full quarter. it’s to guidance, beyond any

So Dustin, I’m sorry.

questions. you’ve of some of please too Can your me other remind So questions? many you asked

Dustin Wei

Sure. No, no. Thanks a lot.

So just Any this Would you guidance. XX% decline a this like a with on or beyond by by brand? to XX% color little more behind like follow the provide more color channel number?

Donghao Yang

about Dustin, that. So sorry

color providing are color beyond We this more not any detailed or guidance.

for for quarter. guidance only is the sales a this the So policy next

Dustin Wei

guide, know full high sort kind really of first of I quarter. the base mentioned you year a you And don’t provide but in

the high year, that for of So understanding be won’t what the I’m last half second base already.

sort So quarter level this full to or first much? a of like the little still we would the too of year should sort decline in the extrapolate it be

Donghao Yang

the number. think comparison. here position I this Well, work course, further in to But year not we’re really year. the far, And so sales a our remaining a year-over-year only help I last is year performance tell the you of thing provide lower base from can definitely with quarters full for we’re guidance will to again, hard going for any

Dustin Wei

Okay, of OpEx And if the in you. my of then question, thank may, sort terms second optimization. I is

to just they that’s also, understand that saved? operational the So I want we being And the like, any of what can more know, And be kind discount. cost kind ‘XX? in effectively examples, is done there of are reducing

So get higher that cut still there growth? being quality is out, gain R&D, discounting. evidence I excessive so this sales more that kind kind in the high the have new is way So better stopped sustainable we base margin? like on still after any brands company like the of of have cut gross a of I’m we can products, organic I we or can kind the sales. being those side. trying But even washed of customer is sort what new lower with But can has We that to guess, more quality our suggesting also because think the doing

Donghao Yang

so. We believe exactly. Yes,

So actually, most traffic. the we’re costs the cutting number are that one,

percentage ROI our much some optimize a of year-over-year, a at quarters. again, declining we’re will us offset point. that with And headcount. trying secondly, But from That point sales some extent the aiming we’re to help than some efforts our the will numbers costs. – So previous higher are set since to save

Jinfeng Huang

Lom, differentiating are percentage is From And taking some think of and consumers higher getting X of brand Galenic year the portfolio ago, and from brands – higher right is affordability perspective, because to really I now, including skincare – the appealing also, with Eve higher. the age. customer’s also have diversity higher which our we the high-end is brands, the

we Perfect from is the differentiating now, coming the right our majority from So base see of part diversified Diary. customer

– help will operational that rate will the of margin incremental customer gradually the And skincare we we help and improve see retention our which coming growth the one the brands gross base. the that’s consumers, of growth the to So to the other improve us of reach to on for growth is evidence hand the also profitability model. see a from us sales the

So customer that’s the what we change. see about base

Dustin Wei

may can is ask going I little launch just terms Thank last marketing? the Tmall elaborate Thanks really on be also of brands, some a that and Could the product sort that more you. you your lot, some – difference David. core maybe channel, of on be the and the examples question And us a helpful? Douyin. of of in view about maybe there or would Give the of to some like

Jinfeng Huang

Sure.

percentage first and almost of second the same month it’s year, declined in decline, Tmall the this by of sales X.X%. our X.X% like the color cosmetic skincare, month in So, and

the not the it – growth main forward, looking look e-commerce drivers our you will if at So, brand see traditional we channels, the for we portfolio. be think

see resources fourth now, a year. And our in quarter in quite right and company also talent devoting last the more quarter also in very is remarkable recently, So, Douyin also a we remarkable as well. from Douyin, the and into and the and confidence we coming operation growth see more – last

online Douyin, through total channel sales offline also, diversify to well. in as to model – and also distribution going will continue grow. percentage the are the distributor of revenue we think And of So, through looking forward, the we our our

Dustin Wei

Okay. Thank much. you very

Jinfeng Huang

Thank you.

Operator

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

Christine Cho

six rebound was make-up a kind really the market do make-up see you any is for industry? quick Jinfeng high wondering Thank surprised you would major Two pipeline us level, months be what I when That can there as color is need great next product in you if that you, few to if some give color of there year-to-date for Thank One, great about And then there. hear compared color example questions. your there be has to and the is upcoming thinking if ago? it surprises just And any to thoughts to would the well? at Donghao. you. as quarters, that secondly,

Jinfeng Huang

clarify you the on can end Christine, first second your question, Hi of your question?

Christine Cho

Yes.

Just at a re-accelerate? of registration things away? category high to you the this in whole across have to that there make-up for the for the or been color the that example, some what industry to slowing for you base really product level, do what from it that you feel – the industry? the year Does the or blocks has like are are around overall to see re-accelerate Is the go accelerate? to offline Is need the to be to need category generally COVID of it view? restrictions, your the see just Does have recovery, building some

Jinfeng Huang

Okay.

the cosmetics, influencing think a rate So, of slower are market especially there for on I this development, market. few the the growth factors color

COVID last still right impact the is now. First

wearing is consumers as the growing the like the mask, not lip it’s as see we So, fast category before.

buying competitive the because the some product. at demand see lower emerge suppliers’ here softer a influence also – growth after I the this we market on rate. years didn’t the have to market also And the influence with growth many on it And so will sustainable for the make-up perspective and from see market several fast consumers’ of – the and now think a I base, of also landscape, right in see market, we brands more think is negative make-up more category. high new what driving Second, we some demand the this resuming

we So, color potential looking cosmetic think still the for is market. forward, there China’s

the will the then COVID with grow. will we out, goes So, And category think resume the as penetration lip well. to continue

market is growth. growth see driving part the foundation now, right So the we of the

there for also think market upgrade trend So, as we make-up is well. some the

growth So, a all will this make-up make of perspective to those rate. market sustainable our at grow contributors the about That’s market. more

Christine Cho

any on like Thank the quarters? question, you highlight major regarding that to second the in pipeline you. would And next product few

Jinfeng Huang

Sure.

for months. serums. think high-end the And year, the coming we category we brand Eve are so And looking for And are line in Galenic, Eve a very a upgrades into products. are skincare about then launched launch beauty successful product I coming serum for excited very new then the last very as we months also Lom two Lom, we of expanding in well.

in DR.WU, the eyeshadow new for we gloss. various And then few right the then you that there the we Pink with product consumers from good and sure, foundations for butterfly gloss, make-up our new lip is has very serum. And good – And growing feedback well. and correcting the a for product May, SKU, very for For Bear Diary, as really our into pallets two gained launching brand which then is and big are line Perfect color brands, SKUs well. as launch is KOLs eyeshadow fast. And more a be new see a another will launched August so and And now, product days and also once just few the successful and pallets product very in launch expanding lip then also more malls. also very a then and

product has tiers, not but skincare then it’s our different price pipeline – think also new right and then categories. makeup, in different pretty year in so in now, in this only we for and robust So,

focus offerings – more our is category now. the So, diversified we think product right

Christine Cho

you. Thank Great.

Jinfeng Huang

you. Thank

Operator

Our from comes Lin Kian next CICC. question from Please go ahead.

Unidentified Analyst

Thanks two quick for management. the got have questions. I

and to in the traffic partially mentioned related sales expenses. attributable brand expenses, you by financials, expenses and offline online to the regarding expenses was question first decrease in increase increase marketing a an The in stores offset primarily optimization

The management on question factors? break the skincare is the color second is could quantitatively of quite help three and of different cosmetics from the strategy. the operation So, down offerings impact product marketing

my company run capabilities proven questions. the business? has upgraded what And as has extent already color That’s cosmetic a player. the to the company leading So, the itself to skincare

Donghao Yang

sorry about again, Well, that.

and We channels across are expenses. regarding sales breakdown not our different providing marketing

And I sorry about your So, that. second question... am

Jinfeng Huang

capabilities, Other yes.

our all, of have think we three the first categories. think into growth in few the – re-priced I model can past be years up I built

the has margins. growth skincare the is the see for different brand – up. we So, then And higher higher and so gross what to our brand skincare is loyalty lead

Second capability years, the past been has strengthening dedicated in in is, the the very building company brand company. few of

So, we in experience talent good company. joining and more fashion very traditional have with beauty

framework company we third in and is that experience. our contributing the experience, So, period so on we about – to think one now, is launched see is working page. brands And the bring what zero from our the building domain target have brand still mattered part the they so is into our based – they also what for right experience the

So, have the from typically our have evidence seen product we that domains. for – seen we

helping capabilities So, has those all of been brands. to us building more

Unidentified Analyst

the That’s so Thanks have. much. it. Got I questions all

Operator

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

Louise Li

Hi you to there. Thank taking question. my

first my QX. So, question on our is about guidance

is we a the my non-GAAP maybe or first deleverage So, i.e., so based on see a expect on basis? Y-o-Y a you in expanding net This QX, current loss level do might basis like operating on expectations, question. on Q-o-Q

for the question do Second you have is question And third plan? timetable the breakeven about is, a industry. strategy

the I a second lot. that QX beauty from actually down remember market in of last year, overall year, rolled last So, has the half

mentioned QX how months level, in both the or past they any very So, aggressive color doing brands last year – as do compare versus promotion. last in the also you international so we maybe from year-to-date can see earnings industry that So, any call skincare well? and for that the the trend revision were we two or

promotion? past this the Women’s Day see has you. been we Thank in do eased level So, promotion

Donghao Yang

there XX% to are guidance, impact hard to according – our decline sales deleveraging improving our obviously, are our year-over-year. the some deleveraging be ROI impact we of costs going to because Well, our will and operational some expenses. to our on traffic trying XX% cutting and efficiencies But offset by very

a breakeven are yearly on next expecting we So, basis to year.

current goal. So, that our is

Third question?

Jinfeng Huang

price about Third brands. global question the discount for

this we quarter see first getting year. worse the it’s in that So,

the price cut like now, the one past we So is only deeper. – first even the because getting have in in promotion, Xth and right March KOL just

cuts So, we smaller smaller. see and the effect is on getting price

to skincare, increase the this margin, more stage, discounts brand, of highest brand expense, company’s also building percentage then skincare is and future. the we which the then the especially believe raise ROI the and lower the on an lower cap promotional on strategy gross improve the become the and percentage the brand in process at So, of spend iconic will

our stage. this is at that response So,

Louise Li

you, Thank you, Donghao. David. Thank

So, just follow-up. a quick

got So, that actually year-to-date. you the mentioned worst competition

the So, weak. that – is, whole is very I is because industry mean still the reason

is reason? this the So,

Jinfeng Huang

level. for sales a price is the intensified. to that keep But order to their and level the to global get sales have brand, can aggressive way lower so there stronger. plan reasons. there yes, the And slot market they like the certain can at a think more the And remain only because competition large soft. gain – getting couple also also, getting is competition One, I more slot getting is the is a to is are this demand a then the promotion of they of streaming, for especially in

So, that’s what see. we

Louise Li

very Got Thank questions. you I have it. no much.

Jinfeng Huang

Thank you.

Operator

to for This like question-and-answer any concludes session. closing turn over our conference remarks. management to the back would I

Irene Lyu

again for once joining you Yatsen’s the conference Thank today. call

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

for IR great contact release. you our U.S. both information the and find have can in and China press today’s Thank day. in a You

Operator

presentation. has for attending today’s now conference The you concluded. Thank

You disconnect. may now

Yatsen Holding Limited (YSG) 11 Mar 222021 Q4 Earnings call transcript