Yatsen Holding (NYSE:YSG) released first-quarter financial results and hosted an earnings call on Tuesday. Read the complete transcript below.
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<h2>Summary</h2>
Yatsen Holding reported a 22.5% year-over-year increase in total net revenues for Q1 2026, driven by a 58.5% rise in skincare brand sales, despite a 5% decline in color cosmetics revenues.

The company emphasized its commitment to R&amp;D-led product innovation, increasing R&amp;D expenses to 3.9% of net revenues, and highlighted significant product launches and scientific initiatives.

Yatsen Holding's strategic focus remains on strengthening brand equity, optimizing profitability through cost management, and expanding their product portfolio, especially in skincare, while facing intense competition from foreign brands.

<h2>Full Transcript</h2>
OPERATOR
Ladies and gentlemen, good day and welcome to the Yatsen Holding first quarter 2026 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Irene Liu, Vice President Head of Strategic Investment and Capital Markets. Please go ahead. Thank you.

Irene Liu (Vice President Head of Strategic Investment and Capital Markets)
Operator. Please note that 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. private securities litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the Company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect Yatsen Holding's business and financial results is included in certain filings of the Company with the securities and Exchange Commission. The Company does not undertake any obligation to update this forward looking information except as required by law. During today's call, management will also discuss certain non GAAP financial measures for comparison purposes only. Please see the earnings release issued earlier today for a definition of non GAAP financial measures and a reconciliation of GAAP to non GAAP financial results. Joining us today on the call from Yasin Senior Management, our Mr. Chin Song, our founder, chairman and CEO and Mr. Dong Ho Yang, our CFO and Director. Management will begin with prepared remarks and the call will conclude with a Q and A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yatsen Holding's investor relations website@ir.yaksenglobal. i'll now turn the call over to Mr. Please go ahead sir.

Chin Song (Founder, Chairman, and CEO)
Thank you Irene hello everyone and thank you for joining our first quarter 2026 earnings conference call. Going into this year, we delivered top line growth that met our previous guidance range and demonstrated ongoing resilience of our multi brand strategy. Our financial and operational highlights this quarter further show that Yatsen Holding is navigating the market with a clear strategic vision. Looking at the macro environment. According to the National Bureau of Statistics VLT (Visual Light Technology), retail sales grew by 5.9% year over year in the first quarter of 2026, reflecting the stable yet highly competitive domestic beauty market. Looking closely at the online channels, the combined sales across Tmall, Douyin and Digital.com also recorded a single digit year over year growth. Against this market backdrop, our strategic rebalancing has yielded highly encouraging results. Our total net revenues stayed on a steady growth trajectory growing by 22.5% year over year for the first quarter. More importantly, this growth was primarily propelled by the sustained upward momentum of our skincare brand which experienced another substantial year over year growth of 58.5%. Driven by this favorable shift toward our skincare offering, our growth margin continued its year over year expansion and reached a historical milestone of 18.2%, reinforcing the structural health of our business model. Throughout the first quarter we remained strictly committed to our core strategic initiatives. Specifically, we continued to to drive R and D led product innovation, strengthen brand equity across our multi brand portfolio and position our business for long term profitability optimization. In the following session, I would like to share our key progress across each of these three strategic pillars. Our first pillar is driving R and D LED innovation which remains the ultimate engine behind our sustainable growth. In the first quarter, we consistently set up our R and D investment with R and D expenses as a percentage of total net revenues increasing further to 3.9%. This ongoing commitment allowed us to broaden our scientific initiatives. For instance, Dr. Wu launched the fourth Dr. Wu Acne Research Fund project in March, bridging online and offline dermatological efforts to tackle a series of specialized research topics. In April, the brand marked another milestone with the release of the White Paper on Chinese Dermatological Research and skin renewal leveraging 48 years of clinical expert types and skin insights. This publication of officially defines a multi ingredient, multi target and full layer steam renewable management framework, further solidifying the brand authority in dermatology. On the product front, our advanced R and D system has successfully powered a series of highly market ready solutions during the first quarter. Galanis New Cultural Revelation Cellularity Reviving Cream with an instant heat Starting out soon after it's developed notable expanded its successful PDRN series with the introduction of two new breakthrough products, the Age Verso Sodium DNA Collagen Hydroluminous Mask and the Age Verso Anti Wrinkle Collagen Eye Cream. Meanwhile, Evelon also expanded its product portfolio by launching the Renewable Intensive shipment designed specifically for the dedicated eye area. These launches underscore our enhanced efficiency in extending existing series into new categories and broader efficacy. Our second pillar is strengthening brand equity through our portfolio through ESPRIT led communication and strategic brand activity. In March, glenniq made a high profile appearance at amwc, the Aesthetic and Anti Aging Medicine World Congress in Monaco. This world class presentation further reinforced glennik Times scientific credentials and solidified its core consumer mile share in cellular level anti aging skin care. Furthermore, in April, Galani announced the appointment of Fan Cheng Chen as a new brand ambassador, a move that has amplified its brand revenue and consumer awareness. Our third pillar is improving overall profitability. So during the first quarter our selling and marketing expenses as a percentage of total net revenues experienced an increase as a result of both the continued investment in building our core brands and the elevated industry wide traffic acquisition costs on the Douyin platform. However, our commitment to long term profitability optimization remains unwavering. More forward, we will dynamically adjust our channel mix, streamline our operational expenses and unlock greater operational leverage for our fixed costs. This initiative will ensure that our top line expansion efficiently translates into further margin improvement, paving the way of sustainable profit centric growth. Finally, I would like to provide an important update regarding our recent financing transaction. Following our announcement on March 11, we are pleased to note that we successfully completed the first change of the private placement of convertible notes and warrants on May 21, 2026. In addition to myself and Chasta Capital, we are delighted to welcome Hugh House as a key participating investor in this offering. This successful closing served as a powerful treatment attachment to our long term investors. Steady past confidence investments, strategic direction and further value management shares this exact same confidence and we are fully energized to deliver sustained value for our shareholders in the quarters to come. With that, I will now turn the call over to our CFO Dong Ho Yang to discuss our financial details.

Dong Ho Yang (Chief Financial Officer and Director)
Thank you David and hello everyone. Before I get started, I would like to clarify that all financial numbers presented today are MMB amounts and all percentage changes refer to year over year changes unless otherwise noted. Total net revenues for the first quarter of 2026 increased by 22.5% to 1.02 billion from 833.5 million for the prior year period. The increase was primarily due to a 58.5% year over year increase in net revenues from skin care brands, partially offset by a 5% year over year decrease in net revenues from COVID cosmetics brands. Gross profit for the first quarter of 2026 increased by 24.3% to 819.2 million from 659.1 million for the prior year period. Gross margin for the first quarter of 2026 increased to 80.2% from 79.1% for the prior year period. Total operating expenses for the first quarter of 2026 increased by 32.5% to 918.1 million from 693.2 million for the prior year period. As a percentage of total net revenues, total operating expenses for the first quarter of 2026 were 89.9% as compared with 83.2% for the prior year period. Fulfillment expenses for the first quarter of 2026 or 61.1 million, as compared with 51.8 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for the first quarter of 2026 decreased to 6% from 6.2% for the prior year period. The decrease was primarily due to further improvements in logistics efficiency. Selling and marketing expenses for the first quarter of 2026 were 737.2 million as compared with 553.8 million for the prior year period. As a percentage of total net revenues, selling and marketing expenses for the first quarter of 2026 increased to 72.2% from 66.4% for the prior year period. The increase was primarily driven by investments in broadening consumer awareness and building long term brand equity of our core brands, coupled with higher traffic acquisition costs on the Douyin platforms. General and administrative expenses for the first quarter of 2026 were 80.3 million as compared with 64.9 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for the first quarter of 2026 were 7.9% as compared with 7.8% for the prior year period. Remaining largely flat. Research and development expenses for the first quarter of 2026 were 39.4 million as compared with 22.6 million for the prior year period. As a percentage of total net revenues, research and development expenses for the first quarter of 2026 increased to 3.9% from 2.7% for the prior year period. The increase was primarily driven by higher payroll expenses resulting from a rise in research and development. Headcount loss from operations for the first quarter of 2026 was 99 million as compared with 34.1 million for the prior year period. Operating loss margin was 9.7 million as compared with 4.1% for the prior year period. Non GAAP loss from operations for the first quarter of 2026 was 84.6 million as compared with 14.9 million for the prior year period. Non GAAP operating loss margin was 8.3% as compared with 1.8% for the prior year period. Net loss for the first quarter of 2026 was 61.9 million as compared with 5.6 million for the prior year period. Net loss margin was 6.1% as compared with 0.7% for the prior year period. Net loss attributable to Yatsen Holding's ordinary shareholders for diluted ads in the first quarter of 2026 was 0.64 RMB as compared with 0.06 RMB for the prior year period. Non GAAP net loss for the first quarter of 2026 was 57 point as compared with non GAAP net income of 7.1 million for the prior year period. Non GAAP net loss margin was 5.6% as compared with non GAAP net income margin of 0.9% for the prior year period. Non GAAP net loss attributable to Yeltsin's ordinary shareholders were diluted. IDS for the first quarter of 2026was 0.6 RMB as compared with non GAAP net income attributable to Yeltssen's ordinary shareholders per diluted ADS of 0.07 RMB for the prior year period. As of March 31, 2026, the Company had cash, restricted cash and short term investments of 934.2 million as compared with 1.05 billion as of December 31, 2025. Net cash used in operating activities for the first quarter of 2026 was 19 million as compared with net cash generated from operating activities of 23.8 million for the prior year period. Looking at our business outlook for the second quarter of 2026, we expect our total net revenues to be between 1.2 billion and 1.3 billion, representing a year over year increase of approximately 10% to 20%. These forecasts reflect the company's current and preliminary views on the market and operational conditions which are subject to change. With that, I would now like to open the call to Q and A operator.

OPERATOR
Thank you. We will now begin the question and answer session. To ask a question, you may press Star then one on your telephone keypad. To remove yourself from cue, please press Star then two. And for the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English and our first question today comes from Maggie Huang with cicc. Please go ahead.

Maggie Huang (Analyst)
Well, thanks for taking my question. This is Maggie Huang from cicc. I have two questions about my first question. We've seen a rapid growth of our skincare brands in this quarter. So could management share with us how to expand our product portfolio of skin care brands going forward? And my second question is that how do we view the competition from foreign brands especially in high end skin care market? That's my two questions. Thank You.

Chin Song (Founder, Chairman, and CEO)
Thank you. We will continue to expand around proven Hero product families. So in quarter one galactic new anti aging cream was a great success and sold out shortly after launch. We also saw significant growth from Galaniq no algae facial moisturizer cream. So these results give us more confidence that Galanique can expand from Hero serums into a broader anti aging skincare routine. For Dr. Wu and YPR Long, we will follow the same logic. Build complete routines around proven science, strong efficacy and a clear consumer demand. For a second question regarding the competition from high end foreign brands. Competition is very intense but we believe we have a differentiated position. So our skincare brands combine global heritage, strong scientific credibility, local consumer insight and very fast execution. Galanique is a very good example. We are building the brand around cellular level anti aging supported by successful product launches and stronger brand communication. We are also using AI and data tools to improve consumer insights, content production, CRM and marketing roi. So this helps us to compete more efficiently, not just spend more. Thank you.

OPERATOR
Thank you. And as a reminder, if you would like to ask a question, please press Star then one on your telephone keypad. Our next question today comes from Lynn Zone. It's CITIC Securities. Please go ahead.

Lin Zhang (Analyst)
Thank you for taking my question. I'm Lin Zhang from CITIC Securities. My question is that we have noticed Dr. Wu is growing really fast. So could you please share with us the key drivers of the growth? Thank you.

Chin Song (Founder, Chairman, and CEO)
Well, Dot Wu is a very important case for us. So the brand has delivered strong growth while maintaining a healthier profitability profile. So one reason is its higher B2B channel mix including professional and offline channels which give us the brand a better balance between growth, traffic, cost and profitability. So this is a model we want to learn from and selectively apply to other skincare brands. Stronger signs, more professional credibility, more balance the channel makes and a better marketing efficiency. Those are some of the key drivers. We summarize both of them. Thank you.

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

Chin Song (Founder, Chairman, and CEO)
Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Yeltsin directly. Our contact information for IR in both China and US can be found in today's press release. Thank you and have a great day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.

Yatsen Holding (NYSE:YSG) reported a 22.5% year-over-year increase in Q1 2026 net revenues, driven by a 58.5% rise in skincare sales, despite a 5% decline in color cosmetics. The company is focusing on R&D-led innovation, increasing R&D expenses to 3.9% of net revenues, and aims to strengthen brand equity and optimize profitability amidst competition. The earnings call highlighted the company's strategic vision and commitment to product innovation.

- Yatsen Holding reported a 22.5% increase in Q1 2026 net revenues, primarily due to a 58.5% rise in skincare brand sales, although color cosmetics revenues fell by 5%.  
- The company is focusing on R&D-led innovation, with R&D expenditures rising to 3.9% of net revenues, while aiming to strengthen brand equity and optimize profitability amidst competitive pressures.  
- Yatsen expects Q2 2026 net revenues between 1.2 billion and 1.3 billion, reflecting an anticipated year-over-year increase of 10% to 20%.

Transcript: Yatsen Holding Q1 2026 Earnings Conference Call