Financials

Financials — what the numbers say

Yatsen reports in Renminbi (RMB / ¥); figures throughout this page are RMB unless explicitly tagged "US\$". USD translations follow Yatsen's own convenience rate of RMB 6.9931 = US\$1.00 used in its FY2025 press release [1].

How to read this company

Yatsen is a China-listed-in-the-US beauty group holding two distinct portfolios: Color Cosmetics Brands (Perfect Diary, Little Ondine, Pink Bear) and Skincare Brands (Galénic, DR.WU, Eve Lom) [5]. The financials only make sense if you read them as two businesses moving in opposite directions inside one P&L: Color Cosmetics (anchored by Perfect Diary) collapsed from RMB 4.87 billion in FY2021 to RMB 1.97 billion in FY2023 before stabilising; Skincare grew from RMB 0.86 billion in FY2021 to RMB 2.28 billion in FY2025 — and crossed 53% of revenue in 2025, the first time it has been the larger segment [14]. Every margin, cash-flow and balance-sheet number on this page is the residual of that mix shift.

Three reader notes that recur throughout:

• GAAP vs Non-GAAP matters here. Yatsen's GAAP results swing on two goodwill impairments on the Eve Lom reporting unit (RMB 354.0 million in FY2023, RMB 403.1 million in FY2024) and on share-based compensation and intangible amortization from prior acquisitions. Management's non-GAAP series strips these out [6]. Both views are quoted below; non-GAAP is the cleaner read on the operating turnaround.
• No debt — but no buffer either. Yatsen carries no interest-bearing debt; total liabilities of RMB 846 million are entirely working-capital and lease items [7]. Resilience is therefore about cash, not interest cover.
• ADS arithmetic. Yatsen's NYSE listing trades as ADSs where 1 ADS equals 20 ordinary shares. Per-ADS figures (and the analyst-quoted EPS of US\$0.19 average for FY2025) are 20× the per-ordinary-share line in the financials [8].

The arc — collapse and recovery, in one chart

The post-IPO peak was RMB 5.84 billion in FY2021 — driven by Perfect Diary's heavy performance-marketing model. Revenue then fell 36.5% in a single year to RMB 3.71 billion in FY2022 as Perfect Diary's customer-acquisition economics broke and Yatsen retreated from the offline footprint, closing roughly 130 of its 294 experience stores [9] [10]. Two further years of revenue erosion (around -7.9% in FY2023, -0.6% in FY2024) followed before the +26.7% rebound in FY2025 — the first growth print since 2021 [11] [1].

What is unusual — and the most important fact on this page — is that gross margin expanded every single year through the revenue drawdown, from 64.3% in 2020 to 78.2% in 2025 [10] [12] [11]. That is the signature of a deliberate mix shift — away from low-margin color cosmetics promotion and toward premium and clinical skincare — not a cyclical squeeze. Management has framed the move as a "strategic transformation" since 2022 [5]; the gross-margin chart is the cleanest piece of evidence that the framing is real.

The segment mix — skincare crosses 50%

Color Cosmetics (essentially Perfect Diary) fell 59% from peak to trough (RMB 4.87 billion in FY2021 to RMB 1.97 billion in FY2023) and has stabilised at roughly RMB 2.0 billion — flat in absolute terms for three years [14]. Skincare grew 2.7× in four years (RMB 0.86B to RMB 2.28B), aided by Galénic's anti-aging launches and DR.WU's "skin-renewing" positioning, both highlighted by management as the FY2025 growth engines [13]. For FY2025, Skincare segment loss-from-operations was just RMB 30.7 million on RMB 2.28 billion of revenue — close to break-even — versus a RMB 448.7 million segment loss in FY2024 that included nearly the entire RMB 403.1 million goodwill impairment booked on Eve Lom [14]. Color Cosmetics still ran a RMB 59.4 million segment operating loss [14].

This matters because the bullish thesis lives entirely inside the skincare segment. Skincare delivered 63.5% YoY growth in FY2025 versus just 1.9% for Color Cosmetics [1], and management has explicitly told investors that the path to better net margins runs through skincare's structurally higher gross margins relative to color [15].

Earnings quality — non-GAAP narrowly positive for the first time since IPO

FY2025 hit two milestones in the same year: GAAP net loss narrowed 87% from RMB 710 million to RMB 92 million, and on a non-GAAP basis Yatsen recorded its first net income since IPO — RMB 8.4 million (US\$1.2 million) [1]. The GAAP operating loss compressed from -24.3% of revenue in FY2024 to -4.3% in FY2025 — driven roughly half by the absence of the FY2024 Eve Lom impairment (RMB 403 million) and half by genuine operating leverage as revenue grew 26.7% against more disciplined G&A [11] [16].

The gap between GAAP and non-GAAP is shrinking — roughly RMB 88 million of non-GAAP adjustments in FY2025 versus RMB 697 million in FY2024 — because the recurring add-backs (SBC of RMB 59.0 million, intangible amortization of RMB 42.7 million) are both declining and no impairment was booked [1]. That is the right direction: the quality of the narrowing loss is improving, not just the optics.

A reader caution: management disclosed RMB 14.6 million of prior-period out-of-period adjustments taken in Q4 2025 to correct sales-return and inventory-receipt errors, RMB 7.4 million of which related to prior years [17]. Small in dollar terms relative to consolidated results, but worth knowing when reading the Q4 print.

Cash conversion — still negative, but the gap is closing

The cash story is less flattering than the P&L story. Operating cash flow has been negative for three straight years — RMB -107 million (FY2023), RMB -244 million (FY2024), RMB -95 million (FY2025) — even as net loss narrowed [3]. The FY2024 GAAP loss was huge but operating cash use was relatively limited because RMB 403 million of the loss was a non-cash goodwill impairment; in FY2025 the cash use is closer to the (much smaller) net loss because the non-cash cushion has disappeared.

Within FY2025 operating cash flow, two working-capital headwinds offset the narrower loss: inventories grew by RMB 125.1 million and prepayments and other current assets grew RMB 89.1 million [3]. Both are consistent with a business actively buying inventory for new skincare launches — inventories on the balance sheet rose from RMB 386 million at end-FY2024 to RMB 509 million at end-FY2025 [7] — but they are also the reason free cash flow remains deeply negative even as the income statement approaches break-even.

Capex is not the problem: it has run at RMB 44–59 million annually for three years, just 1.0% of FY2025 revenue [18]. This is a capital-light business — what would change the cash picture is non-GAAP operating income turning solidly positive, not a capex cycle ending. The Q4 2025 transcript shows the CFO explicitly anchoring future margin recovery to (i) faster skincare growth at higher gross margins and (ii) operating leverage on relatively fixed G&A [15].

Balance sheet — no debt, declining cash, shrinking asset base

Liquidity has halved twice over since FY2022. Total cash plus short-term investments fell from RMB 2.59 billion at end-FY2022 to RMB 1.36 billion at end-FY2024 to RMB 1.05 billion (US\$150.7 million) at end-FY2025 [2] [1]. The drivers, in order, are (i) cumulative buybacks of roughly US\$202 million across four authorizations [19], (ii) negative operating cash flow each year since 2023, and (iii) goodwill impairments (non-cash but which signal deteriorating prior acquisitions). FY2025 saw a marked deceleration of all three pressures — buybacks dropped to RMB 111 million from RMB 405.8 million the prior year [20] — so the rate of liquidity decline is now substantially slower.

The balance sheet has no interest-bearing debt at all. Total liabilities are RMB 846 million, consisting of working-capital items (accounts payable RMB 149M, accrued expenses RMB 349M), lease liabilities (RMB 176M short plus long), deferred tax liabilities (RMB 108M), and miscellaneous items — none of which carry interest exposure [7]. The current ratio is 3.6× [21] and management states existing cash is "sufficient to meet our current and anticipated working capital requirements and capital expenditures for at least the next 12 months" [2].

But the shareholders' equity line — and total assets — keep shrinking. Equity fell from RMB 4.72 billion at end-FY2022 to RMB 3.01 billion at end-FY2025 [7]; accumulated deficit reached RMB 8.14 billion — larger than equity itself, because IPO additional paid-in capital is still RMB 12.3 billion [7]. Goodwill has been written down from RMB 857 million (FY2022) to RMB 155 million (FY2024 onwards) [14]. For a beauty group that grew partly by acquisition (Galénic, DR.WU, Eve Lom), this matters: the acquired skincare brands have not earned back their purchase price under U.S. GAAP. Importantly, no impairment indicators were identified at end-FY2025 [22] — but the FY2023 and FY2024 impairments are evidence that management has been willing to mark these down when warranted.

Capital allocation — the buyback story (and the convertible pivot)

Yatsen has run four successive share-repurchase programs since November 2021, totalling US\$200 million of authorisation under the original framework — initially US\$100 million, raised twice (to US\$150 million in August 2022 and to US\$200 million in November 2023) — plus a new US\$30 million authorisation approved on May 16, 2025 [19]. Through February 28, 2026, Yatsen had repurchased 40.2 million ADSs for US\$202.2 million [19].

A buy-side reader should hold two thoughts about that record. First, the buybacks have been price-accretive on the surface — Yatsen has retired a meaningful portion of the ADS float at average prices well below the FY2021 peak. Second, they have been funded entirely out of pre-existing IPO cash, not out of operating cash flow, because operating cash flow has been negative. Returning IPO equity to shareholders while the underlying business is running cash losses is a defensible signal of capital discipline relative to organic-growth misadventures — Yatsen could have spent the cash on more low-return marketing or acquisitions — but it is not the same thing as a sustainably-funded buyback at, say, a mature consumer staple. The Q1 2026 financing now makes that explicit.

The May 2026 financing change. Yatsen completed the first closing of a private placement of convertible notes and warrants totalling approximately US\$120 million (around RMB 829 million at the Q1 2026 reference rate) on May 21, 2026, with participation from Trustar Capital, Hillhouse, and founder/CEO Jinfeng Huang himself [4]. This is the first material external financing since IPO and notably comes after the FY2025 non-GAAP turnaround, not before — i.e. funded from a position of relative choice rather than necessity. Three implications: (i) liquidity effectively roughly doubles, (ii) Yatsen now has interest-bearing convertible debt on its balance sheet for the first time, and (iii) founder participation alongside two name-brand institutional investors is a meaningful inside signal — but the convertible structure also means future dilution upon conversion.

Quarterly trajectory — the Q1 2026 wobble

The quarterly view shows two important wrinkles the annual chart hides. First, Q4 has become the revenue-and-profitability quarter — Q4 2025 delivered RMB 1.38 billion (+20.1% YoY) and RMB 3.0 million of GAAP net income, the first GAAP-profitable quarter since IPO [1]. Selling-and-marketing intensity does spike in Q4 (Singles' Day / Double 11), but operating leverage and skincare mix carried the quarter to break-even.

Second — and the most important number on this page — Q1 2026 stepped back into materially wider losses. Revenue grew 22.5% YoY but operating loss widened from RMB 34 million (Q1 25) to RMB 99 million (Q1 26), with operating-loss margin going from -4.1% to -9.7% [4] [23]. The CFO attributed this to deliberate brand-equity investment behind Galénic, DR.WU and Eve Lom plus higher Douyin traffic-acquisition costs — selling and marketing rose to 72.2% of revenue from 66.4% the prior year [23]. Gross margin continued to expand to 80.2% — a record — so the mix-shift story is intact, but the profitability inflection from FY2025 is not yet sustained on a run-rate basis. The Q2 2026 outlook is RMB 1.20–1.30 billion, +10–20% YoY — a decelerating top-line guide [4].

Peer positioning — and the genuine peer caution

USD-converted from peer reporting currencies using mid-2026 spot rates from the staged peer dataset; gross margin and growth left blank where not in the peer JSON to avoid misleading single-period reads.

Yatsen is the smallest by market cap in this peer set by an order of magnitude. Its US\$295 million equity value sits below every Chinese A-share peer — Proya alone is roughly 12× larger — and is dwarfed by EL (US\$31B) and L'Oréal (US\$221B equivalent). The relevant operating comparisons are the Chinese A-share peers, all of which run higher revenue, materially higher operating margins, and are GAAP-profitable. Proya reported FY2025 net income of RMB 1.50 billion on RMB 10.6 billion of revenue [24]; Botanee and Jahwa are similarly profitable. Yatsen's gross margin (78.2%) is in the same ballpark as global prestige operators, but its operating-margin gap to A-share peers is the real comparable benchmark — and it is still negative.

A caution the auto-screened peer set raises: EL, L'Oréal and Shiseido are global prestige beauty leaders with very different business models (multi-thousand-product portfolios, owned brick-and-mortar prestige, travel-retail, B2B salon, fragrance). The closer business analogs are Proya, Botanee and Jahwa — all China-based, digitally-led, multi-brand, with mass-to-masstige positioning [25]. The most-cited domestic challenger to Perfect Diary — Florasis / Hua Xi Zi — is private and not in the indexed set.

Standard year-wise statements table

Sources: FY2025 income-statement, cash-flow and balance-sheet detail confirmed to the FY2025 annual report [3] [14] [2]; FY2020 and FY2021 revenue, gross margin and operating data to the FY2022 annual report [10] [26]; pre-FY2022 cash-flow lines omitted to avoid restated-basis comparisons. Net debt is zero in every year — Yatsen has no interest-bearing debt outstanding through FY2025 [7].

Valuation context

Yatsen's ADSs trade at roughly US\$3.18, with a mean consensus target of US\$6.73 — implying analysts see the equity as materially mispriced, but consensus rests on a thin two-analyst sample. The same dataset shows FY2026 EPS consensus of around US\$0.19 per ADS (essentially the FY2025 print) and FY2027 of around US\$3.78 — but the FY2027 figure is from only two analysts and reflects a step-function profitability assumption that has yet to be earned.

Conventional multiples are difficult to anchor: Yatsen has no GAAP EPS to capitalise (P/E is meaningless on losses), and EV/EBITDA is distorted by negative EBITDA after share-based comp. The cleaner anchors are:

• EV/Sales. Equity ≈ US\$295M, cash plus ST investments ≈ US\$151M, no debt → EV ≈ US\$144M. Against US\$614.6 million FY2025 revenue, that is EV/Sales of around 0.24× [1]. For comparison: Proya trades on roughly 2× sales; EL on roughly 2×; L'Oréal on roughly 5×; even the troubled Shiseido on around 0.9×. Yatsen trades at a deep discount to every beauty peer in the set on a sales basis.
• Price-to-cash. Equity ≈ US\$295M vs cash plus ST investments of US\$151M means roughly half the equity value is liquid balance sheet.
• Price-to-book. Equity book ≈ US\$430M; market cap US\$295M, so P/B around 0.7× — trading below book value.

These data points all point in the same direction: the market is pricing in continued losses and execution risk on the skincare pivot. They do not, by themselves, settle whether the stock is cheap — Yatsen's history of value destruction (RMB 8.1 billion accumulated deficit against RMB 12.3 billion of paid-in capital) [7] is the reason for the discount. Multiple expansion requires proof of sustained non-GAAP profitability — which Q1 2026 failed to extend.

What this all adds up to

Yatsen passes some financial-quality tests and fails others.

• Quality of growth. High quality. The 26.7% FY2025 revenue rebound came entirely from skincare at gross margins above 78%, not from a one-time price action or low-margin volume push [1].
• Quality of earnings. Mixed. FY2025 non-GAAP net income of RMB 8.4 million is the first positive print since IPO and the GAAP/non-GAAP gap is narrowing — but operating cash flow remains negative because of working-capital build, and Q1 2026 stepped back into wider losses.
• Balance-sheet strength. Adequate, not strong. Zero interest-bearing debt and a 3.6× current ratio [21] are real positives; against that, liquidity has fallen about 60% since FY2022 and the May 2026 convertible-note raise demonstrates management's awareness that the runway needed reinforcing.
• Returns on capital. Poor on a multi-year basis (ROE -2.7% in FY2025, -23.2% in FY2024) but trending in the right direction. Accumulated deficit exceeds shareholders' equity, which is the financial fingerprint of the prior cash-burn era.
• Capital allocation. Disciplined in form, costly in substance. The cumulative US\$202 million of buybacks at low prices is shareholder-friendly in isolation — but funded out of dwindling IPO cash, not earnings. The new convertible reverses the direction.
• Valuation. Statistically inexpensive on sales and book metrics, fair-to-rich on FY2025 non-GAAP earnings (P/E on US\$0.19 ADS EPS around 17×), and only attractive if FY2026 follows the FY2025 trajectory rather than the Q1 2026 one.

The first financial metric to watch is non-GAAP operating margin on a trailing-12-month basis. Yatsen got to -2.0% for full-year 2025 [1] but Q1 2026 widened it to -8.3% [4]. The investment debate is whether the FY2025 print or the Q1 2026 print is the better forecast of FY2026. Every other line on this page — cash, equity, accumulated deficit, valuation — is a residual of that one number.

References

1. Yatsen Holding Limited — Q4 FY2025 Earnings Release (Form 6-K Exhibit), Highlights and Income Statement — p.1
2. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 5.B Liquidity and Capital Resources — p.132
3. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 5.B Operating Activities Cash Flow Detail — p.133
4. Yatsen Holding Limited — Q1 FY2026 Earnings Release (Form 6-K Exhibit), Highlights, Outlook and Convertible Financing — p.1
5. Yatsen Holding Limited — Q4 FY2025 Earnings Release, About Yatsen and Skincare Brands footnote — p.8
6. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 5.A Impairment of Goodwill and Loss from Operations — p.131
7. Yatsen Holding Limited — Q4 FY2025 Earnings Release, Condensed Consolidated Balance Sheets — p.4
8. Yatsen Holding Limited — Q4 FY2025 Earnings Release, Statements of Operations and Per-ADS Detail — p.4
9. Yatsen Holding Limited — FY2022 Annual Report (Form 20-F), Item 5.A Customers and Offline-Store Footprint — p.123
10. Yatsen Holding Limited — FY2022 Annual Report (Form 20-F), Item 5.A Revenue History and COVID Impact — p.124
11. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 5.A Year-over-Year Results FY2025 vs FY2024 — p.129
12. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 5.A Gross Profit and Gross Margin Commentary — p.128
13. Yatsen Holding Limited — Q4 FY2025 Earnings Call Transcript, CEO Opening Remarks on Galenic and DR.WU — p.2
14. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 5.A Segment Information by Brand — p.127
15. Yatsen Holding Limited — Q4 FY2025 Earnings Call Transcript, CFO Q&A on Margin Path — p.5
16. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 5.A Year-over-Year Results FY2024 vs FY2023 — p.130
17. Yatsen Holding Limited — Q4 FY2025 Earnings Release, Out-of-Period Adjustment Footnote — p.5
18. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 5.B Material Cash Requirements and Capex — p.134
19. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 3.D Share Repurchase Program History and Aggregate Repurchased — p.69
20. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 5.B Financing Activities Cash Flow Detail — p.133
21. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 5.B Liquidity Statement and Working Capital Adequacy — p.132
22. Yatsen Holding Limited — FY2025 Annual Report (Form 20-F), Item 5.A Impairment Indicators Year-End 2025 — p.129
23. Yatsen Holding Limited — Q1 FY2026 Earnings Release (Form 6-K Exhibit), Operating Expense Detail and Selling and Marketing Ratio — p.2
24. Proya Cosmetics Co., Ltd. — FY2025 Annual Report, Management Discussion / Brand Portfolio — p.11
25. Proya Cosmetics Co., Ltd. — FY2025 Annual Report, Business Model and Brand Portfolio — p.11
26. Yatsen Holding Limited — FY2022 Annual Report (Form 20-F), Item 5.A Gross Profit and Operating-Expense Table FY2020 to FY2022 — p.126