Yatsen Holding Limited

Ladies and gentlemen, good day and welcome to the Yat-Sen fourth quarter and full year 2025 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Sophia Peng, investor relations manager. Please go ahead.

Thank you, operator. Please note the 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 Yesen'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 its 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 Yesen Senior Management are Mr. Jingfeng Huang, our founder, chairman, and CEO, and Mr. Dong Haoyang, 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 Yesen's investor relations website at ir.yesenglobal.com. I will now turn the call over to Mr. Jingfeng Huang. David, please go ahead, sir.

Thank you. Hello, everyone. Thank you for joining Yesen's fourth quarter and the full year 2025 earnings call. I will start with a macro overview and our key financial performance, followed by an overview of our operational highlights under our key strategy initiatives over the past year. China's beauty industry maintained an upward trajectory throughout 2025. According to the adjusted data from the National Bureau of Statistics, beauty retail sales grew by 8.2% in the fourth quarter, the highest quarterly growth rate of the year. For the full year 2025, beauty retail sales grew by 5.1%, rebounding from the decline in 2024. While the market demonstrated robust recovery, the landscape was also marked by intensified competition particularly during major shopping festivals. Against this backdrop of growing yet highly competitive market, we successfully executed our strategy initiatives to capitalize on the industry's upward momentum. Our total net revenue grew by 20.1% year-over-year for the fourth quarter, performing in line with our previous guidance and significantly outpacing the industry average. More importantly, this growth was driven by our skincare brands, which accounted for 61.1% of our total net revenues in the fourth quarter. Our profitability also marked an improvement recording net income under both gap and non-gap measures for the fourth quarter. For the full year 2025, we also achieved a solid recovery in both revenue and profitability. Total net revenue returned to a growth trajectory, increasing by 26.7% year-over-year to RMB 4.3 billion. Both our color cosmetics and skincare brands delivered year-over-year growth, with Dr. Wu and Galanit serving as the primary drivers of this robust performance. For the full year, skincare brands contributed 53% of our total net revenues. On the bottom line, we narrowed our full year net loss margin to 2.2% from 20.9% in the prior year. while delivering a non-GAAP net income margin of 0.2%. This non-GAAP profitability turnaround is the direct result of our enhanced growth margin, optimized operation efficiencies, and a positive operating leverage from our top-line growth. Our robust performance demonstrated the long-term value of our strategy transformation Throughout the year, we remained steady fast in our commitment to three core initiatives. Driving R&D-led product innovation, strengthening brand equities across our multi-brand portfolio, and improving our overall profitability. I would now like to delve in deeper into these key focus areas. First, we leveraged our established R&D infrastructure to fuel a pipeline of innovative products. Given by proprietary ingredients development, open collaboration, and application of AI in areas such as molecular structure prediction, our system efficiently translates cutting-edge technology into mark-ready solutions. Our high-growth brands have all benefited from this refined R&D ecosystem, with Galanix as a prime example. In September, Galanix launched the VB Serum, further strengthening the brand's ABC cellular-level skincare framework. The product saw a rapid surge in sales, becoming one of Galanix's top sellers and winning the Breakthrough Repairing Serum of the Year. at the 2025 Cosmo Beauty Awards. In December, Galinic introduced another flagship innovation, the CO2 Revelation Cellular Reviving Cream. Utilizing the brand's active anchor penetration technology, it delivers our exclusive patent anti-aging ingredient, LumiSkin, deep into the skin to achieve significant firming and lifting effects. With these launches, Galenic has established a comprehensive presence across key skincare categories, including serums, creams, and a mask. We believe that our expanded product portfolio could not only optimize our channel mix by providing more offerings across different platforms, but also increase customer lifetime value by encouraging broader regime adoption. Second, we continue to focus on deepening the value and the market positioning of our brands. With a portfolio that spans from mass to premium and from color cosmetics to skincare, we possess a unique, comprehensive view of the beauty industry. This allowed us to precisely adjust the evolving needs of diverse consumer segments. For example, by leveraging Dr. Wu's decades of expertise in clinical skin-renewing treatments and capturing the latest trends in medical aesthetics, the brand launched the PDRN Serum, This product is designed to meet growing consumer demand for clinic-impaired results from the comfort of home. Driven by these deep consumer insights, DotaWoo experienced robust growth over the past year and was recognized as the annual growth breakthrough brand from Douyin. This success has further solidified DoSW's brand authority and awareness in the skin-renewing segment, effectively translating market momentum into long-term brand equity. Third, we remained dedicated to enhancing our profitability and operational excellence. We see clear opportunities to further improve profitability across several dimensions. To begin with, we are optimizing our product mix by prioritizing products with higher growth margins. Channel-wise, we plan to maximize marketing efficiency through data-driven customer relationship management and a more stringent return on investment discipline. Why are we allocating spend toward higher return platforms? Beyond our front-end operations, we are also optimizing operational workflows to drive cost optimization. Lastly, as our top line continues to grow, we expect to gain operational leverage across our fixed expenses. So collectively, these initiatives boost our confidence in delivering steady margin expansion while sustaining our growth momentum. In summary, 2035 was a pivotal year. Our R&D breakthroughs, deep consumer insights, and enhanced operational efficiency have returned us growth and optimized our profitability. Moving forward, we will stay committed to long-term driving brand equity through innovation, and delivering a quality policy-centric growth. Thank you. I will now turn the call to Dong Han.