YSG - Earnings call transcript Q2 2024

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Operator

Ladies and gentlemen, good day, and welcome to the Yatsen Second Quarter 2024 Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Irene Lyu, Vice President, Head of Strategic Investment and Capital Markets. Please go ahead.

Irene Lyu

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

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

a today's see for During purposes. definition financial comparison certain management earlier discuss non-GAAP today issued and also of call, measures non-GAAP a non-GAAP for financial financial results. will reconciliation the of GAAP release to earnings Please measures

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

conference a As this is reminder, recorded. being

a Yatsen's addition, will Investor replay call webcast on In of Relations available ir.yatsenglobal.com. be conference this website at

Huang. ahead. go Mr. Please turn now Jinfeng I'll call over to the

Jinfeng Huang

Conference XXXX and key on macro And moving Irene. I the update. financial strategy, Earnings Quarter you, thank start Thank quarter. the brand before Second with participating you, to metrics for our overview Yatsen's will everyone, and environment of quarter an in

the [indiscernible] June. National sales start [indiscernible], to adjusted [indiscernible] of of in XXX Statistics, EANTiM Bureau has and data decline May, to second published Festival the early retail [indiscernible] quarter. China's significant Festival According year-over-year China's cancellation XXX the in due ] by of the of followed [ likely by a rebounded expectations. beauty Shopping industry

X.X% decreased sales the quarter, total [indiscernible] of market For [indiscernible] sales full by retail retail overall by [indiscernible] X.X% the second year-over-year. grew year-over-year, goods consumer

online muted. beauty In sales addition, remained

beauty While significantly the lower Douyin in growth the growth combined in Tmall year-over-year prior and sales second year rate the quarter, period. was than recorded

performance profit revised DR.WU the to X% while our revenue, XXX.X from year-over-year. quarter expectations. in million, were revenues July. and revise revenues guidance revenue revenues impacted brands market net flat [indiscernible] China's our Eve Total year-over-year, Net The line second by year-over-year in X.X% basically were from reflecting beauty our with of grew for Galénic, our Skincare RMB decline, combined Lom a

increased strategy continues Color by Cosmetics product the XX.X% net the line, Diary as to new well due revenues lineup. its Biolip build the The brand primarily performing year-over-year, product [indiscernible] ongoing flagship Perfect to Essence brand brand. the is transformation [indiscernible] of

to prior margin gross margin XX.X% overall increased profitability period, contribution to On increased an gross year products. XX.X% our the for the thanks side, from from high

margin loss from net points also the narrowed to Our by year period. XX.X% XX.X% prior for X.X%

strength mainly for events year-over-year to investments our loss due net net in a loss result quarter. our in to growing increased margin, equity of X.X% The the to in the in non-GAAP was period. channel prior from and sales in as X.X% Our margin increase marketing to see expenses non-GAAP contribution trapping the higher year second brand Douyin's however,

will in our we building the path. we and for losses Given investments structure to in optimizing transformation will remain mix industry on cost are our sustainable where of the our and the channel R&D strategy in [indiscernible] brand a we maintain and our challenges year. growth focused the remainder plan, Meanwhile, reduce

Douyin gained an but loans a quarter. only being by [indiscernible] for shipment the second diverse renewable contribution. the featured product the successfully platform room, the our [indiscernible] another These Skincare revenue also boosting by delivered brand on expenses quarter, live in Our after steady increasingly oil not products, during and significant performance streaming a visibility [indiscernible]

[indiscernible] sales mask. experienced Galénic growing its also recuperating from micro

including also cushion [indiscernible] and while the and wearing brands products, quarter, [indiscernible] long compact translucent continued [indiscernible] Our to develop brought the foundation, market. in the Little launch Ondine products [indiscernible] [indiscernible] [indiscernible] introduced standout pen powder second

a Also, Gold Essence Category product. brand Award lipstick [indiscernible] our a Personal as in and repositioning [indiscernible] [indiscernible] the Biolip the Beauty Care effective showcasing award, hero and curing

XXXX brand quarter included Science Technology of Cosmetics across opportunities we of participated as our The in host Academic also -- related the portfolio, well brand and building as the second China Yatsen made XXth Symposium. a Conference

Association Shanghai report [indiscernible] region China of the with of in University Fragrance, [indiscernible] research cosmetic collaboration [indiscernible] During and and Medicine. School released labor the industry the event, scientific of hospitals

On the ambassador during the collaboration with quarter. major and GQ, Bali new swimming KOLs. brand a world Skincare [ Yifei in its Ms. brand, Galénic actors several also ], Zhang brand event in champion, featuring announced as Galénic the held

field skin's shipments Furthermore, Asian on collaborated serum DR.WU advancement in the event needs. firming to of new demonstrates participated latest the in widely focusing and the Dermatological XXth unique, industry representative [ efficacy. Asia, attended in Asia anti-wrinkle most anti-agent with in ] DR.WU top to dermatology and the experts Congress, present anti-aging retinal

better development With provide brand. will Center X,XXX I update hub launch up space, Shanghai, R&D square marking for and technological global May was support first of and R&D officially share wrap and the robust on on for before operational XX, the completion Global advancement. Yatsen's R&D, to Yatsen a successful So Innovation [indiscernible] inaugurate proud nearly I'm national that R&D meters beauty in product

quarter second macro the challenging perspective. a from conclusion, In was

focused margin and mix and remain will while channel development. driving optimization, we factors We our impacting product our loss cost advancing can control, in efficiency the on continued through improvement

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

Donghao Yang

hello, David, and you, Thank everyone.

amounts to that Before I I all otherwise get started, changes, presented unless percentage to changes today noted. numbers refer clarify and like would renminbi all year-over-year are in financial

year-over-year the XXX.X revenues net year Cosmetics The from for revenue by XX.X% primarily X.X% of prior for decrease decrease second from period. segment. XXX.X to to million net Color the million was Total quarter decreased XXXX due to RMB RMB

Gross year of for prior in increase period. million profit [indiscernible] quarter period. from X% XXXX second year second higher These margin from increased an were decreased quarter XXX.X for by RMB million XX.X% XX.X% to for by gross comp. driven to of sales primarily Gross of prior the XXXX the RMB the for XXX.X the margin

Total operating expenses X.X% XXX.X quarter RMB decreased XXXX year the prior period. of by to for the XXX.X second from million million RMB for

quarter net of of prior percentage revenue, expenses year the compared As were period. a XX.X% XXXX for for second with operating as XX.X% total total the

year as RMB Fulfillment expenses for were XXXX compared RMB for period. XX.X of second million the million XX.X with the quarter prior

the in decreased to total of efficiency. of products revenues, for our period. XXXX average from price of the due X.X% as was logistics improvement expenses year for second As decrease quarter to fulfillment as net well selling increase overall The percentage an in primarily X.X% a prior further

as expenses second XXX.X year XXX.X were XXXX with million compared for the for marketing of million the prior RMB quarter and Selling RMB period.

across growing in as product As to Douyin and a due expenses marketing increased brand The new XX.X% our quarter percentage line the to XX.X% for increased revenues, equities portfolio. of is increase the investments as the our XXXX and for from primarily net revenue selling of with prior from total second year contribution launches investments in period. Douyin well building the in platform,

the XXX.X General as million and prior XXX.X were the quarter for period. compared expenses for million with year administrative second XXXX RMB RMB of

portion revenue, period. of for reduction administrative general [indiscernible] result second of of decreased for a year attributable conversations the total uninvested and As percentage recognized the to XX% a expenses a former to quarter expenses the was service decrease XXXX as to from employees. certain in net primarily the awards XX.X% of prior The of [indiscernible] reversal to due

The the development prior RMB compared were XXXX year of million for and XX.X expenses quarter million period. second [indiscernible] as XX.X for the with RMB

primarily year May the to X% As XXXX, center on period. to [indiscernible] Shanghai revenue, of for was XX, quarter the a our [indiscernible] the second the of percentage XXXX. global total The for innovation increase of from net increased X.X% commencement R&D in development attributable operations of prior

] the operating period. prior XX% margin year compared the XXX.X with [ for loss of year as RMB RMB Operating was as second million prior Last the for quarter with period. for XXX.X time XX.X% million compared XXXX was

of Non-GAAP Non-GAAP XX.X loss RMB as second prior period. operating compared million period. was the for loss year quarter with with compared million XX.X% as was from operations year RMB margin for XXXX XXX.X prior X.X% the the for

for of XX.X% loss X.XX second period. for the quarter to million to the for attributable RMB RMB decreased Net shareholders quarter with ordinary second million loss prior XXXX by XX.X XX.X% margin [indiscernible] compared from Yatsen's was year RMB Net period. of year for the loss as compared prior XX.X% the for X.XX RMB XXXX with the XXX.X diluted for as Net prior was period.

period. Non-GAAP Yatsen's year the prior the period. the for loss for X.X% XXXX to was for period. of as the diluted XX.X net the margin as RMB net the Non-GAAP second of loss with was loss for year compared X.XX was XXXX XX.X for prior with RMB quarter quarter EPS year ordinary attributable RMB X.X% with million compared second X.XX shareholders, Non-GAAP RMB million prior compared

the to million as XXXX, June RMB quarter as we and X.XX operating million XXXX for used prior cash of compared second As of portfolio of period. RMB XX, cash, year billion RMB XX, X.XX with was in compared December had Net restricted XXXX. activities XXX.X at RMB as investments XX.X for billion the cash

our third the of XXXX, year-over-year with market to for XX%. expect million, XXX.X and Looking RMB be a X% approximately representing at business we forecasts on XXX.X to reflect total revenue quarter RMB preliminary net of subject operational the and our conditions, million views outlook our the between These [indiscernible]. and firm decrease

call would open the Operator? I like now that, Q&A. to With to

Operator

from Our -- is first question. Instructions] Huang Maggie CICC. This CICC. question from Maggie comes with Huang [Operator

Maggie Luyao Huang

questions. I have X

is The Color first development and channel product for Cosmetics brands, is respectively? our plan question for expansion that, and Skincare what

question. balance And revenue half our that, strategy year profitability? and my second how promotion growth the in is the and is to of what my That's our question second

Irene Lyu

Thank for question. you, Maggie, the

So for the question development [indiscernible] first strategy. channel on

mix. and So product our channel mix [indiscernible] our also

for have for and robust the Skincare new product the product second side. side, our On a Color very the of half pipeline we year, both

half list listed pipelines, continue of side, also new have have to [indiscernible]. on DR.WU example, in the And a and will and year. active Color later new we very products, for for products new including number this of have for functional a new products of foundation So we and launched skincare Galénic

And then top channels talking channels, of high been TV [ terms very about [indiscernible]. in currently have more expanding of into ] on we

of increasing by weighting the future. TV growth profitability the and in also better concentration mix the more channel, So we'll have or the for a room

Donghao Yang

Okay.

will until your [indiscernible] strategies. promotion the ] For our so have for year, think and now of a half and few the other XX focus Irene second primarily there the from the be X will end terms don't [ substantial product the on I of year, end channel [ optimizing of second in strategy until of events just the question, promotion mentioned. changes mix as -- the we ] mix

in value, be the profitability achieving And of terms revenue recovering is on I the second half year, and at of focusing we're positive. more going loss to profitability think

terms as possible. meantime, But product going of In to can in growth aggressive terms profitable be profitable a that so and revenue to be mix, we [indiscernible]. in in of development and the more going revenue, fast grow be our we're channel focusing new at revenue we're as

Operator

our over for conference session. the back remarks. question-and-answer to I'd Thank concludes you. closing turn like management to This

Irene Lyu

today. again once joining you Thank for us

or Piacente feel directly any to at Financial questions, If free please further have contact you Yatsen Communications. us

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

Operator

you. presentation. for call. today's conference We you attending all This today's concludes Thank thank

lines, wonderful have You your a may and day. disconnect now

Yatsen Holding Limited (YSG) 20 Aug 242024 Q2 Earnings call transcript