Yatsen revenue jumps 22.5% as skincare expansion widens net loss

Yatsen Holding (NYSE:YSG) reported a 22.5% increase in first-quarter revenue, driven by accelerating consumer demand for its skincare portfolio, though aggressive promotional spending and higher research outlays widened its net loss.

The Guangzhou, China-based beauty company announced Tuesday that its unaudited net revenues for the three months ended March 31, 2026, rose to RMB1.02 billion ($145.2 million), up from RMB832.4 million in the corresponding prior-year period.

The top-line expansion landed near the upper bound of the company's previously issued guidance range.

The quarter signaled a definitive structural shift toward higher-margin premium products.

Revenue from Yatsen's Skincare Brands surged 58.5% year-over-year to RMB574.2 million, accounting for 56.2% of total net revenues.

This expansion helped lift the company's consolidated gross margin to 80.2%, up from 75.4% in the first quarter of 2025.

However, the revenue gains and improved gross profitability were offset by escalating customer acquisition costs and operational outlays.

Total operating expenses jumped 32.5% year-over-year, driven primarily by intensified selling and marketing campaigns across domestic e-commerce networks, alongside expanded research and development spending.

Consequently, Yatsen’s net loss widened to RMB61.9 million ($8.8 million) for the first quarter, compared to a net loss of RMB50.1 million in the prior-year period.

On a non-GAAP basis—which excludes share-based compensation and asset amortization—the company reversed into a net loss position after tracking near breakeven in late 2025.

The increased operating costs led to RMB90 million cash outflow from operating activities during the quarter.

Reflecting these operational demands, Yatsen’s total balance of cash, restricted cash, and short-term investments softened to RMB934.2 million as of March 31, 2026, down from RMB1.05 billion at the close of the preceding fiscal year.

Meanwhile, management issued an optimistic top-line forecast for the upcoming quarter, indicating that current market momentum has carried into the spring.

For the second quarter of 2026, Yatsen expects total net revenues to fall between RMB1.20 billion and RMB1.30 billion, representing a projected year-over-year growth rate of approximately 10% to 20%.