Yatsen Holding Limited reported third‑quarter 2025 results that saw net revenue climb 47.5% to RMB 998.4 million, driven largely by a 49.2% share of sales from its premium skincare brands. The company’s gross profit rose 51.9% to RMB 780.5 million, lifting the gross margin to 78.2% from 75.9% a year earlier—a gain that reflects a higher mix of high‑margin products and disciplined cost management. Operating expenses increased 31.9% to RMB 864.1 million, but the operating loss narrowed to RMB 83.6 million, an operating loss margin of 8.4% versus 20.9% in the prior year. Non‑GAAP figures show a net loss of RMB 51.5 million, a margin of 5.2%. GAAP diluted earnings per share were a loss of RMB 0.70, a figure that, while still negative, represents a modest improvement over the prior year’s loss of RMB 0.85 per share.
The revenue growth was largely powered by the skincare segment, which accounted for nearly half of total sales and grew 52% YoY. Color cosmetics also posted a 12% increase, indicating that the company’s broader beauty portfolio is gaining traction. CFO Donghao Yang attributed the margin expansion to “an increase in sales of higher gross‑margin products” and noted that the Double Eleven shopping season had front‑loaded investments, which helped capture early demand. CEO Jinfeng Huang emphasized that the Chinese beauty market is recovering, especially in skincare, and that the company’s strategic focus on premium brands is paying off.
Gross margin expansion was driven by a shift toward higher‑priced, premium skincare lines that command better pricing power. While operating expenses rose in absolute terms, they grew at a slower rate than revenue, reflecting improved operational efficiency and economies of scale. The narrowing operating loss suggests that the company is moving closer to profitability, though it remains in a loss position due to ongoing investments in product development and marketing.
For the fourth quarter, Yatsen guided total net revenue of RMB 1.32–1.49 billion, a 15–30% year‑over‑year increase. The guidance reflects management’s confidence in sustained demand for premium skincare and the momentum from the Double Eleven event. The company also reported cash and short‑term investments of RMB 1.16 billion, providing liquidity for continued investment in product innovation and market expansion.
Market reaction to the earnings was mixed. Despite the strong revenue growth and margin improvement, the company’s shares fell 2.63% in pre‑market trading, a decline attributed to investor caution over ongoing competition from foreign brands and valuation concerns. Analysts noted that while the company’s fundamentals improved, it still operates at a net loss and faces headwinds from pricing pressure in the broader beauty market. The market’s tempered response underscores the need for Yatsen to demonstrate sustained profitability and competitive differentiation in the coming quarters.
The earnings release also highlighted that Yatsen’s strategic pivot toward high‑margin skincare has begun to yield results, but the company must continue to manage costs and navigate competitive pressures to achieve profitability. The guidance and cash position suggest that management is positioning the firm for continued growth while maintaining financial flexibility.
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