Yatsen Holding Limited

Ladies and gentlemen, good day and welcome to the Jackson First Quarter and 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 in Capital Markets. Please go ahead.

Thank you, Operator. Please know that discussion today will contain four useful 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 security mitigation 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 necessarily from those mentioned in today's press release and this discussion. A general discussion of the risk factors that could affect Yasmin'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 form of 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 Yahoo's senior management are Mr. Jingfeng Huang, our founder, chairman, and CEO. and Mr. Donghao Yang, our CFO and director. Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yassin's investor relations website at ir.yassinglobal.com. I will now turn the call over to Mr. Donghao Yang. Go ahead, sir.

Thank you, Irene, and thank you everyone for participating in Yasen's first quarter 2025 earnings conference call today. I will begin with the macro overview and our key financial results, followed by insights into our key strategy initiatives and operational highlights. Sunlight's beauty market saw modest growth in the first quarter of 2025, According to the China National Bureau of Statistics, beauty retail sales rose 3.2% year-over-year, slightly trailing the 4.6% year-over-year growth in total retail sales of consumer goods. Online beauty sales reflected a similar trend. Combined beauty sales on Tmall and Douyin recorded low double-digit year-over-year growth, the Women's Day Shopping Festival delivering moderate performance. In terms of channels, Douyin outperformed Timor in both skincare and color cosmetics categories. Despite a soft market environment, we delivered results in line with our guidance. Total net revenues increased by 7.8% year-over-year. Remarkably, our net revenues from skincare brands rose by 47.7% year-over-year, driven by a 58% year-over-year increase from our clinical and premium skincare brands, including Delauney, Dr. Wu, and Yves Long. On the profitability front, for the first quarter of 2025, our overall growth margin increased to 79.1% from 77.7% for the prior year period, given by the greater contribution from higher margin products. We also reduced our net loss margin by 15.5 percentage points to 0.7% from 15.1% in the prior year. through more strategic marketing spending and streamlined general and administrative expenses. Notably, we achieved a non-GAAP net income of RMB 7.1 million, representing a significant turnaround from the non-GAAP net loss of RMB 83.8 million for the prior year period. Our solid performance for the first quarter marked another milestone in our strategic transformation, which particularly progressed on two key fronts, accelerating the growth for our skincare brands and optimizing our cost structure to prepare us for profitable growth. Now let me walk you through the key performance highlights this quarter that reflect the accomplishments we have achieved. Starting with skincare, our portfolio continued to show strong momentum. Primarily driven by Glanik and Dr. Wu, our skincare brands delivered year-over-year revenue growth of 47.7%. Glanik saw another quarter of steady growth. Its number one vitamin C serum was the best-selling product in the premium vitamin serum category in often these live streaming rooms, while the Secret The Excellence Active Cream ranked among the top six anti-aging creams on Tmall in terms of retail sales value in the first quarter. The Michael Mark series also contributed to the brand's strong performance. In May, we hosted an offline event in Yunnan, China, to officially launch the upgraded Rejuvenating Micro Mask, which recently obtained the Special Cosmetic Registration Certificate for whitening products. At the event, we also announced renewed actress Du Lingcheng as the brand ambassador for the mask series. We aim to further elaborate that are mixed awareness and recognition through continued product innovation and targeted marketing efforts. Dr. Wu also delivered robust revenue growth in the third quarter, supported by a broader product portfolio and a more balanced channel mix. We collaborated with a wide range of celebrities and KOLs to promote diverse products including the Purifying Renewal Essence Toner, the Suncare UV Protect Whitening Lotion, and the newly launched Targeted Acne Cleaning Serum. This approach helped us drive revenue growth on both Tmall and OE. In addition to strong sales performance, we remain committed to scientific research and collaboration. In March, we launched the third Sokobu Acne Research Fund project, led by 14 renowned dermatologists from top institutions. Since its inception in 2023, the project has reached over 20,000 doctors and received more than 350 clinical research proposals. We look forward to the insights this fund will bring to the field of anti-acne treatment. While continuing to invest in product development and brand building to boost revenue growth, we also made meaningful progress in improving profitability. Selling and marketing expenses as a percentage of total net revenues narrowed to 66.4%. from 69.7% for the prior year period. The improvement was primarily due to more strategic marketing spending, particularly offset by higher traffic expenses as a result of growing revenue contribution from the Douyin channel. More notably, general and administrative expenses as a percentage of total net revenues were 7.8%, bound by 10.3 percentage points from 18.1% a year ago. These improvements reflected our sustained cost management and provide a solid foundation for our long-term growth. Lastly, I would like to highlight a few milestones at the corporate level. Our global R&D center in Shanghai which we inaugurated last year, was officially accredited by the China National Accreditation Service for conformity assessment, placing it among the top tier of global testing institutions. This accreditation, alongside the CNAS recognition received by our RMD Center in Guangzhou back in 2022, demonstrates our continued commitment to excellence in beauty research. Also in April, we were invited by the China Show of Bloomberg and engaged in an in-depth interview on the topic of the future of beauty driven by technology. This opportunity reinforced our strategic focus on R&D as a core competitive advantage. Before I pass the call to Dong Hao, I would like to provide an update that our board of directors has approved a new share repurchase program under which we may repurchase up to 30 million worth of our ordinary shares over the next 24 months commencing on May 15, 2025. This further demonstrates our confidence in Yasen's future potential. To conclude, while market conditions remain complex, we are encouraged by the progress we have made in executing our strategic transformation. We remain focused on delivering innovative and efficacious products, building strong brand equity, and driving operational excellence, all of which we believe will position us well for long-term sustainable growth. With that, I will now turn the call over to our CFO, Donghao Yang, to discuss our financial performance. Thank you, everyone.