Yatsen Holding Limited

Yatsen reported second-quarter 2026 total net revenue of RMB 1.14 billion, up 5.1% year over year from RMB 1.09 billion. Gross profit was RMB 843.8 million, down 0.8% year over year, and gross margin fell to 73.9% from 78.3%. Operating loss was RMB 131.9 million versus RMB 55.5 million a year ago; non-GAAP operating loss was RMB 112.1 million versus RMB 20.4 million. Net loss was RMB 90.8 million, and diluted ADS loss attributable to ordinary shareholders was RMB 0.97, compared with RMB 0.19 last year. For Q3 2026, the company expects revenue of RMB 898.6 million to RMB 998.4 million, implying year-over-year growth of approximately 0% to a decline of 10%.

The CEO framed the quarter as continued strategic progress in a difficult industry, emphasizing that skincare is now the company’s core growth engine and accounts for 71.5% of revenue. He said the company is deliberately shifting its mix toward higher-quality, more sustainable growth, while continuing to invest in R&D, brand building, and product innovation. He also highlighted ongoing portfolio optimization in color cosmetics and the use of AI to improve productivity and operating efficiency.

The CFO said Q2 revenue rose to RMB 1.14 billion, with skincare up 40.4% and color cosmetics down 35.8% because of proactive portfolio optimization and SKU rationalization. He pointed to gross margin pressure from higher inventory provisions in color cosmetics, noting the decline to 73.9% from 78.3%, while selling and marketing expense rose to 70.7% of revenue due to brand-building investment and higher Douyin traffic costs. Cash, restricted cash, and short-term investments were RMB 1.06 billion at June 30, 2026, versus RMB 1.05 billion at year-end 2025, and operating cash flow was a use of RMB 78 million. He guided Q3 revenue to RMB 898.6 million to RMB 998.4 million.

The main analyst question focused on skincare channel expansion and rising online traffic costs. Management said it plans to diversify beyond Tmall and Douyin into more B2B and offline channels, including JD, Vipshop, PDD, offline distribution, duty free, professional channels, boutique stores, and OTC/drugstore channels. They said the goal is to reduce dependence on expensive online traffic, improve profitability, and selectively apply Doctor Wu’s higher-B2B-mix model to other skincare brands.