Yatsen Holding Limited

2025 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, Operator. Please note that discussion today will contain four losing 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 Irrigation 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 specialty and this discussion. A general discussion of the risk factors that could affect Yahoo'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 local information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. We see the earnings release issued earlier today for a definition of non-GAAP financial measures and a reconciliation of GAAP to the non-GAAP financial results. Joining us today on the call from Yasen's senior management are Mr. Zifeng Huang, our founder, chairman, and CEO, and Mr. Zonghao 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 Yat-Sung Investor Innovation's website at ir.yat-sungglobal.com. I'll now turn the call over to Mr. Sun Tzu-Huang, who is GoTag David.

Thank you, Irene, and thank you, everyone, for joining Yat-Sung's second quarter 2025 earnings conference call today. I will begin with a brief macro overview and a summary of our financial results, followed by an update on how our R&D driven initiatives have supported the healthy development of our brand portfolio. China's beauty industry saw another modest quarter. According to the adjusted data published by the National Bureau of Statistics, beauty sales increased by 2.6% year-over-year, falling short of the 5.4% growth in total retail sales of consumer goods. Specifically, during May and June, the key promotion period around the June 18 shopping festival, beauty sales rose by 4.4% in May but declined by 2.3% in June. Despite the uncertain environment, we stayed focused on educating our R&D-driven strategy. Anchored in our vision of becoming a world-class pioneer in beauty innovation, we have continued expanding our international innovation network, attracting top global R&D talent, and deepening collaborations across industry, academia, and research institutions. These efforts have laid a solid foundation for both product innovation and brand equity, which in turn supported the rebound in our financial performance. Building on the momentum that began in the fourth quarter of 2024, we delivered year-over-year revenue growth and achieved non-gap profitability for the third consecutive quarter. In the second quarter of 2025, Total net revenues grew by 36.8% year-over-year, significantly exceeding our previous guidance. Revenues from skincare brands increased 78.7% year-over-year, given by an 88.1% growth in the combined revenue from our three major skincare brands, Kellanik, Dr. Wu, and Yves Long. Our color cosmetics brands also delivered year-over-year growth of 8.8%, with perfect direct brand back on the growth trajectory. As operating leverage began to take effect, coupled with our efforts to improve efficiency in our operations and marketing spend, we narrowed our net loss margin to 1.8% from 10.8% for the prior year period. and achieved a non-GAAP net profit margin of 1.1% for the second quarter of 2025, as compared with non-GAAP net loss margin of 9.4% for the prior year period. Let me now walk you through some brand and product highlights powered by our solid R&D infrastructure. Galenix posted strong results, supported by a robust product highlights and effective product marketing. Our No.1 VC Serum continued to lead sales while our upgraded Brightening Micro Mask, featuring the brand's micro-perfusion and active anchor technology, ranked No.1 among premium single-use masks on both Tmall and JD during the June 18 period. The No.2 VA Serum also received increasingly positive feedback, particularly on Douyin, In addition to online growth, we began expanding Galactic's offline presence, opening experience stores in Guangzhou, Shanghai, Wuhan, and Shenzhen by the end of June. These stores are designed to strengthen brand visibility and deepen consumer engagement. Dr. Wu also benefited from a more diverse and balanced product portfolio. Its Purifying Renewal Excellence Corner formulated with a gentle acid complex effectively adjusted to antioxidant and brightening ease of oily and acne prone skin. This product resonates strongly with its targeted consumers and reinforce the brand positioning as a leader in professional skin renewal. The second quarter also marked a key milestone for Cervidaris. Since the launch of the BioLip Essence Lipstick in September 2023, Cervidare embraced a new philosophy of makeup skinification. Building on this, we introduced the third-generation biotech technology and applied it to facial makeup. The new BioFace Essence Foundation provides a flawless finish while supporting the skin barrier. We also launched the translucent blurring setting powder powered by the smart lock technology to control oil, combat oxidation, and reduce downness. These innovations played a key role in putting pocket diaries back on its growth path. As our commitment to R&D remains central to our long-term strategy, we continue to strengthen our capabilities and presence in the scientific community. In May, we participated in the 2025 China Cosmetic Science and Technology Conference in Yunnan as a guest speaker, and I joined a roundtable discussion on emotional skincare at the 2025 International Cosmetic Innovation Conference in Shanghai. In June, I will join laboratory with Regine Hospital on world's latest innovation at the 30th International Council of Nurse Congress in Helsinki, Finland. We are also proud of our ongoing social responsibility initiative. During the second quarter of 2025, our Create a Beautiful Life program, launched in partnership with the China Women's Development Foundation, celebrated the graduation of its first 2025 cohort in Guizhou. Now in its fifth year, the program provides free professional makeup training for low-income women, helping them pursue new opportunities in employment and entrepreneurship. Meanwhile, Dr. Wu has entered the third year of his campus charity tour, promoting scientific skincare education and raising skin health awareness among university students across China. In summary, we are beginning to see tangible results from our long-term focus on R&D. We remain committed to nursing our friends and delivering exceptional products to our customers. With that, I will now turn the call over to our CFO, Zhonghao Yang, to discuss our financial performance. Thank you, everyone.