YSG - Earnings call transcript Q3 2024

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Operator

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

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

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

As is a reminder, being this conference recorded.

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

Jinfeng Huang

of sharply quarter for significantly and followed industry thank beauty to into beauty by total Conference significant and with strategy and overview retail by declined overall for year-over-year with Irene, by grew X.X% sales Statistics, third market. a Third Earnings Bureau start retail the from metrics, data our faced lagging the while updates Call key third According on the our China's you, of Thank will sales XXXX goods in insights X.X%. financial brands sales National in consumer challenges and the adjusted our you, retail I products. China's everyone, participating Yatsen's today. Quarter macro beauty quarter,

Notably, retail our in Online fourth skin delivered sales, net third sales modest in decreased Total month we color reported September while drop year-over-year year-over-year cosmetics with of June. sluggish revenues guidance. line were since the by and double-digit in also a beauty marked care a beauty both consecutive quarter. Douyin challenging X.X% results the declines growth. Despite sustained in year-over-year. Tmall sales market,

our color brand, from its product is Perfect brands Dr. by fell care brands year-over-year Diary, sales revenues line its our rose However, a due which care Wu year-over-year, Galenic, XX% XX.X% largely channel decreased in transformation strategic by driven to the a cosmetic optimize net Eve brands, increase including Lom. Conversely, undergoing and revenues skin premium and mix. revamp from by net skin year-over-year, X.X% and to clinical from

On a the quarter, profitability in high-margin in from gross XX.X% products. front, contribution by to driven higher overall the third the up year our period, margin prior XX.X% improved from

marketing spending loss in points strategic and optimized prior by and X.X% to net percentage our from reduced year XX.X% also We general the expenses. margin administrative through X.X

and involves color sustainable drive like capabilities. revenue margins, introducing with quarter third is by optimizing products growth. the cosmetics This supported One of higher our initiative which to color our our growing on advanced expanding a more skincare during transformation, new gross Next, prioritizing I would our strategic provide to products. higher-margin by the key we R&D progress mix brands

efforts sustainable structure revenue our will to streamlined foundation improve to growth. leverage general our administrative are to enhance also and a expenses, once profitability. Operationally, long-term the to as organizational boost solid return net refining have our provide profitability We setting for we operating cost ability stage These reduce and structure recover. for growth revenue

R&D serum substantial made revenues. investments As research efficacious part anchor solution to provides we clinical sun consistent representing also high-level This proven of of product and #X development with million, in totaling The investment our in improved top in skin new Lipstick skin the offers biotech seller transformation the technology September, our XX.X active capability, the new products. In X.X% category third the A and spectrum leveraged week improve technology. texture the of Launched that the develop net retail launched RMB of products. value highly during featuring quarter first to multi-protection our us in innovative R&D The Biolip protection. significantly on our UV has full expenses reduce [indiscernible] strategic upgraded quarter, wrinkles. high-quality second-generation initiatives, enabling became Essence lipstick vitamin sales terms Douyin several October. Galenic care Perfect the Diary launched late a and third

Double before has our are of driven year, Diary cosmetic XX sales the report and the well festival, Douyin. MicroMask pleased combined XX Perfect in the brands, of the end products. At For we hero mentioned the as results color existing positive shopping other products our to we by offerings Tmall and October, entered launched the terms across top brands including throughout Galenic on Vivinfant as

University serum in performed Galenic Therapy at dedication during #X among participated highlighting with in festival, Light European our presented Yellow streaming leading on melasma. products XXrd on Academic cream we and rejuvenating skin innovations in Rhinology the experts Lom where of Eve In ranking treating live strongly showcasing research September groundbreaking Li's Dermatology relieving of premium a room the international and effectively care. benefits Eve serum Amsterdam with among #X in Austin on #X within imported the daily skin emotional Lom This underscores for clinical Tmall. Furthermore, Congress vitamin and C Oxford, summit Galenic dermatological latest whitening collaboration science. Meanwhile, our hosted addition, global stress products to care conjunction the of anti-wrinkle Galenic in our emotional

our made optimize the to In in efforts of we quarter. cost also our progress terms structure, significant third

net RMB XX.X% closer of or revenues million to our reducing By of levels, cost improvement period. quarter the for of growth. administrative and RMB revenues, substantial XX.X% representing were net prior expenses XX year goal for we XXX.X moving from fixed are million, general a sustainable our the Our

like Lastly, provide our governance to year and update an marking commitment and social initiatives. our third released of I report, environmental, depending sustainability. XXXX on transparency consecutive recently to our ESG We would

are and to and maintain rating safety. We carbon reflecting key our footprint strong proud our management, MSCI including several ESG packaging in product chemical of performance product A, areas, waste

and enhance excellence while to our on remain the that challenges, initiatives we confident and ability face continues well leader dedication we optimistic as continues industry. In building innovation, adapt revenue about are thrive. positioned industry Our the sustainable and to practices, position the our we conclusion, our green beauty to With to achieve in in year-over-year responsible are a in quarter. to low-carbon fourth focus brand growth beauty

to Additionally, turn quality I in over the that, call everyone. engagement Yang, will our With CFO, our and you, to will consumer enhance commitment progress. Thank discuss financial now loyalty Donghao long-term brand our our given performance.

Donghao Yang

everyone. Thank David, and you, hello,

a the prior the Before from margin the otherwise million for period. to XX% revenues I to quarter clarify all million due net prior for net that for in noted. Total was million from in XXX.X year year primarily year-over-year financial today for X.X% cosmetics skincare year was XXXX profit revenues increase would XXXX of get RMB to revenues XX% brands, XXX.X driven by to year-over-year the RMB by XXX.X percentage XXXX unless changes Gross The the partially for from by RMB a RMB prior to increased the brands. Gross prior are in from period. to million period. for higher X.X% presented net XXX.X all sales expenses for XXXX year-over-year decrease the of XX.X% products. Total million third XXX decreased numbers increased by to quarter million color by refer period. an third XX.X% third for changes of renminbi I of decrease from margin X.X% increase like started, amounts, operating RMB offset RMB primarily of the from year XXX.X quarter decreased The gross quarter third increase in and

revenues, operating XXXX XX.X Expenses the compared million XX year year for as RMB of expenses prior the XX.X% the percentage of XXX.X% RMB the total net prior third million XXXX of quarter period. a As for for with were for total as with were compared quarter third period. Fulfillment

efficiency. Selling XXXX as percentage period. of a As compared to X.X% year the due for of logistics to selling price with RMB X.X% XXX.X the prior as the decreased net from expenses period. for for of the for XXXX million RMB third total the further prior quarter an well in and third in XXX.X as products overall million revenues, marketing was year Fulfillment Expenses of primarily were average increase improvements our quarter decrease The

from contribution Douyin, a expenses RMB as and million for period. XX% the to for investment increase selling third revenues, expenses XXXX net prior third expenses were period. strategic lower the prior our RMB of result of total offset As compared The marketing quarter administrative partially year revenue line XXX.X the increased to the a percentage XX year in XX.X% as of due by increased primarily marketing of growing the spending. General marketing more for with platform the and Douyin quarter with million XXXX from in for was

expenses was the resulting a for The year general from decreased administrative prior general primarily XXXX administrative XXXX million compensation million third were As and of for to in and percentage XX.X RMB RMB with expenses development the quarter XX.X% XX.X% the net to quarter period. revenues, XX.X expenses. Research lower prior reduction a third attributable the total decrease for of compared payroll share-based of and lower expenses from and headcount for period. as year

third RMB million million was for of compared XXX.X compared RMB year with as the was was Yatsen's was prior XX.X% prior year XX.X operating loss the year prior prior XX.X% the quarter third for Non-GAAP as prior per was the with to XXX.X XX.X loss per As expenses with attributable million from Non-GAAP year of for loss RMB RMB RMB period. the diluted of the compared total for was research compared as period. as prior million to Non-GAAP to The quarter with Yatsen's million with XXXX year XXX.X the of for shareholders for compared for RMB Net of effect prior the attributable year of prior total development as million was the Net third loss year the period. the was was loss lower ADS for the margin period. compared operations loss as ordinary RMB period. for the year with X.X% margin in period. quarter the with year quarter the as for to the period. Net and million margin increase shareholders XX.X% XXXX from million net revenues, compared revenues loss a the third of compared was XX.X% ADS for X.XX quarter quarter third quarter for RMB quarter the period. XX.X% for year RMB RMB of year third diluted period. Non-GAAP X.XX X.XX XX.X% prior of RMB XXX.X net Non-GAAP of net ordinary attributable Operating X.XX with XXXX. Loss XXXX third increased percentage XXXX loss period. primarily as XX.X% with third XXXX loss compared for for prior for prior operations XXX.X X.X% compared net net with the for deleveraging XXXX as RMB was as the margin from period. for XX.X% XXXX XXX.X

we As third operating of short-term for XXX.X in December as XX, billion activities RMB and the year XX, of period. RMB cash, with had compared cash restricted RMB XXXX. the with XXX.X X.XX quarter million billion X.XX of investments Net used XXXX, prior compared of was XXXX RMB as for cash September as million

we fourth XXXX, representing X.XX open the X% to operational year-over-year Q&A. X.XX current change. views and our conditions, to I are call net the now Operator? revenues that, and XX%. billion, our total billion expect preliminary on at forecasts to between for outlook subject and increase market RMB a be reflect Looking business RMB quarter approximately These to the of would which to With of like our

Operator

Instructions] [Operator

comes first Maggie Huang with The question CICC. from

Maggie Luyao Huang

This is two Maggie Huang from questions. CICC. I have

Double during with performance is our for question about for in our my That's development that second expectation? is plans the the And line product and about is two one And channel expansion first questions. year. festival. XX next our The

Donghao Yang

right. very All thank you question. Maggie, your for much

question. first your take me Let

much think brands during Double I pretty line the pretty Most we have well expectations. our of in with have festival, in done our line expectations. performed with our XX

line a well-known also your question, lot pretty second KOLs our Galenic our I for with through well Well, in brands. we product all -- have to pretty Diary For development next product example, plan channel -- what good some Perfect brand, expectations very year? made of our our sold expansion performed well. And plan next for we the year, very new development and for -- is our think and

now trying to also, year budgeting I annual channels Tmall next and work put for will development top plans more of hard develop to very drive continue we're like product Douyin. growth think channels. So our to to together as new to our And we process. Channel through part try new we're going expansion,

to to for the business example, explore going open stores For the feasibility our Galenic, opportunities new of we're in offline some offline channels.

Jinfeng Huang

Yes.

Okay.

in areas, expectations. the think evaluation Double on shared promotion before, So my with performance objective. some in line And what XX Donghao was in exceeding I we're our build to our is overall about our

to progress. our brands new launch. momentum I and XX sales we think goals very Double we if to go our If Double based judging the criteria But leveraging are up before, for quite a think know. our for product for we I strategic improve is the event, significant all, also with the on of made all sales first XX have to we strategy as important catch deeper So

Here examples. are some

we during a Perfect good our the to have year, target Austin So has rooms, Lipstick and Biolip then Li's powder. Diary in -- this for sales gained event. promotion brands also the loose pretty streaming to joined live And the achieve the have four momentum

very our loose Tmall on from Perfect opportunity XX category. And so has to a also promotion, lip brands, important then for to As powder category provide for category expand we sales the all during and to makeup a Diary Galenic our think Douyin. face the know, is Double category pretty brand balanced I

and market whitening -- category expand helped new to serum, has the A anti-aging growth and much So brand bigger from Galenic is space also category from perspective. category, products, benefit purely for the launched the which to future which the the Vitamin whitening than size

I thing the the another is want optimizing to on highlight There's investments. ROI

next margin price gross think I price hero QX. the are for for release are very we promotion, controlling in products. quarter, disciplined to this the during -- our our in we selling going But

momentum the gross XXX balanced to selling we good us keeping in a Austin RMB one maintain the For also provides two our This are live RMB and Li's with lipstick, streaming for scenario with XXX lipstick. for very sales improvement. while a on margin

in I the from line the our think transformation I think XX with is strategic expectations. perspective, Double

Your back question, Again, the new talk second about offerings. product going to the guidelines. transformation

see launched those on And in we some And years. very we to to are devote past have of indicators market. been then one good we important areas investing early few see happy based the products key making. think performance, And on new I on the the So -- some the we key we are are committed based launching on products R&D. then that we R&D in the are efforts have we based the is been the progress robust indicators, to

some happy in and early new growth. us which for and we also very products, the the and gross to As -- growth regain then before, brand's the brands, And clinical to see lipstick other also improve for skin those then the our will results helps foundations the care the momentum sustainable for [indiscernible] we brand the provide are mentioned some launched Lipstick future products, Biolip I and margin.

answer. that's So I the the of on -- want add points Donghao's to some

Operator

the conference And to closing for question-and-answer to that turn concludes like remarks. the any would over Irene back session. I

Irene Lyu

you for us again once joining Thank today.

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

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

Operator

The has for Thank concluded. you attending. now conference

disconnect. now may You

Yatsen Holding Limited (YSG) 20 Nov 242024 Q3 Earnings call transcript