Yatsen (NYSE:YSG) reported first-quarter 2026 revenue growth that management said reflected continued momentum in its skincare portfolio, even as higher marketing spending and platform traffic costs contributed to wider losses.
The Guangzhou-based beauty company said total net revenues rose 22.5% year over year to CNY 1.02 billion, up from CNY 833.5 million in the prior-year period. Chief Financial Officer and Director Donghao Yang said the increase was primarily driven by a 58.5% year-over-year rise in net revenues from skincare brands, partially offset by a 5% decline in net revenues from color cosmetics brands.
Founder, Chairman and Chief Executive Officer Jinfeng Huang said the results demonstrated “ongoing resilience” in Yatsen’s multi-brand strategy amid a competitive domestic beauty market. Citing China’s National Bureau of Statistics, Huang said beauty retail sales grew 5.9% year over year in the first quarter, while combined sales across Tmall, Douyin and JD.com also rose at a single-digit pace.
Skincare Momentum Drives Revenue Growth
Huang said Yatsen’s strategic shift toward skincare continued to support revenue growth and gross margin expansion. The company’s gross profit increased 24.3% year over year to CNY 819.2 million, while gross margin rose to 80.2% from 79.1% a year earlier, according to Yang.
Management highlighted several product and brand initiatives during the quarter. Huang said Galénic’s new Couture Révélation Cellulaire Revitalising Cream “was an instant hit” and sold out shortly after launch. He also said Dr. Wu expanded its PDRN series with the Ageversal Sodium DNA Hydroluminous Mask and Ageversal Advanced Rejuvenate Eye Cream, while another launch expanded the portfolio with a Renewal Intensive Treatment for the eye area.
Huang said Yatsen continued to increase research and development spending as part of its focus on product innovation. R&D expenses rose to CNY 39.4 million from CNY 22.6 million a year earlier, representing 3.9% of total net revenues versus 2.7% in the prior-year period. Yang attributed the increase primarily to higher payroll expenses tied to increased R&D headcount.
Huang also pointed to Dr. Wu’s fourth Acne Research Fund project, launched in March, and the brand’s April release of a white paper on Chinese dermatological research and skin renewal. He said the publication was based on clinical expertise and skin insights and helped reinforce the brand’s dermatology credentials.
Marketing Costs Weigh on Profitability
Despite revenue growth and a higher gross margin, Yatsen’s losses widened as operating expenses rose. Total operating expenses increased 32.5% year over year to CNY 918.1 million, or 89.9% of total net revenues, compared with 83.2% a year earlier.
Selling and marketing expenses were the largest cost component, rising to CNY 737.2 million from CNY 553.8 million. As a percentage of total net revenues, selling and marketing expenses increased to 72.2% from 66.4%. Yang said the increase was driven by investments to broaden consumer awareness and build long-term brand equity for core brands, as well as higher traffic acquisition costs on Douyin.
Fulfillment expenses rose to CNY 61.1 million from CNY 51.8 million, but fell as a percentage of revenue to 6.0% from 6.2%, which Yang attributed to improved logistics efficiency. General and administrative expenses increased to CNY 80.3 million from CNY 64.9 million and remained largely flat as a percentage of revenue at 7.9%.
Loss from operations was CNY 99.0 million, compared with CNY 34.1 million a year earlier. Operating loss margin widened to 9.7% from 4.1%. Non-GAAP loss from operations was CNY 84.6 million, compared with CNY 14.9 million in the prior-year period.
Net loss totaled CNY 61.9 million, compared with CNY 5.6 million a year earlier. Net loss attributable to ordinary shareholders per diluted ADS was RMB 0.64, compared with RMB 0.06 in the prior-year period. On a non-GAAP basis, Yatsen reported a net loss of CNY 57.3 million, compared with non-GAAP net income of CNY 7.1 million a year earlier.
Management Emphasizes Brand Building and Channel Mix
Huang said Yatsen remains focused on three strategic priorities: R&D-led innovation, strengthening brand equity and improving overall profitability. He said the company would “dynamically adjust” its channel mix, streamline operating expenses and seek greater operating leverage from fixed costs.
During the question-and-answer session, CICC analyst Manqi Huang asked about skincare portfolio expansion and competition from foreign high-end skincare brands. Management said Yatsen would continue expanding around proven “hero product families,” citing Galénic’s anti-aging cream and growth from its snow algae facial moisturizer cream. For Dr. Wu and Yuesao, management said the company would build complete routines around science, efficacy and consumer demand.
On competition, management said the high-end skincare market remains intense but argued Yatsen has a differentiated position through global heritage, scientific credibility, local consumer insights and fast execution. Management also said the company is using AI and data tools to improve consumer insights, content production, customer relationship management and marketing return on investment.
CITIC Securities analyst Lin Zhang asked about Dr. Wu’s growth. Management said Dr. Wu has benefited from a higher B2B channel mix, including professional and offline channels, which provides a better balance between growth, traffic costs and profitability. Management said it hopes to selectively apply lessons from Dr. Wu to other skincare brands.
Cash Position and Second-Quarter Outlook
As of March 31, 2026, Yatsen had cash, restricted cash and short-term investments of CNY 934.2 million, down from CNY 1.05 billion at the end of 2025. Net cash used in operating activities was CNY 90.0 million, compared with net cash generated from operating activities of CNY 23.8 million in the prior-year period.
Huang also said Yatsen completed the first tranche of a private placement of convertible notes and warrants on May 31, 2026, following a March 11 announcement. He said participating investors included himself, Cha Capital and Hillhouse.
For the second quarter of 2026, Yatsen expects total net revenues of CNY 1.2 billion to CNY 1.3 billion, representing year-over-year growth of approximately 10% to 20%. Yang said the forecast reflects the company’s current and preliminary views on market and operating conditions and remains subject to change.
About Yatsen (NYSE:YSG)
Yatsen Holding Limited (NYSE: YSG) is a Shanghai-based beauty and personal care company founded in 2016. The firm operates as a digital-first cosmetics provider, designing, developing and marketing its own brands to a primarily Chinese consumer base. Since its inception, Yatsen has focused on leveraging data analytics and social media engagement to drive product innovation and brand awareness.
The company's core portfolio includes Perfect Diary, a color-cosmetics brand offering lipsticks, eyeshadows, foundations and related accessories; Little Ondine, which specializes in nail lacquers and nail care products; Winona, a sensitive-skin skincare line; and Abby's Choice, which features targeted skincare treatments.
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