Yatsen Holding Q2 Revenue Up 37 Percent

Yatsen Holding(NYSE:YSG) reported results for the fiscal second quarter ended June 30, 2025, on August 21, 2025, posting total net revenues (GAAP) of RMB1.09 billion, up 36.8% year over year, and achieving a non-GAAP net profit margin of 1.1% compared to a prior-year non-GAAP net loss margin of 9.4%. The company’s three major skincare brands achieved 88.1% growth in their combined revenue. Management raised full-year revenue guidance to $778.6 million to $880.1 million, suggesting anticipated year-over-year growth of 15% to 30%.

Yatsen’s margin expands as operating efficiency improves

Gross margin (GAAP) increased from 76.7% to 78.3%, while operating expenses as a percentage of revenue dropped from 93.7% to 83.4%, with general and administrative expenses falling 7.3 percentage points. The company reversed net cash outflows by posting $77.7 million in net cash generated from operations, compared to negative $148.2 million for the prior year.

"As operating leverage began to take effect, coupled with our efforts to improve efficiency in our operations and marketing spend, we narrowed our net loss margin to 1.8% from 10.8% for the prior year period and achieved a non-GAAP net profit margin of 1.1% for the second quarter of 2025 as compared with a non-GAAP net loss margin of 9.4% for the prior year period."
-- Jinfeng Huang

Sustained efficiency gains are transforming the business model and bolstering the investment case for long-term earnings inflection.

Skincare revenue surges, portfolio diversification accelerates growth

Revenue from the three leading skincare brands rose by 88.1% year over year.

"Revenues from brands increased 78.7% year over year, driven by an 88.1% growth in the combined revenue from our three major skincare brands, Calanique, Doctor Wu, and Yiflon. Our color cosmetics brands also delivered year-over-year growth of 8% with Perfect Diaries brand back on the growth trajectory."
-- Jinfeng Huang

Rapid growth in skincare is diversifying the company’s revenue base and reducing reliance on color cosmetics, supporting a more balanced and resilient business model.

R&D investment underpins product innovation and competitive moat

While participation at the China Cosmetic Science and Technology Conference highlighted its focus on scientific advancement, the company’s R&D center in Shanghai and joint laboratory partnerships reinforce its capacity for differentiated product launches and brand equity development.

"for the last four, five years, we've been one of the most aggressive players in the cosmetics industry to invest heavily in R&D. So now we've built a very, I would say, best-in-class R&D team and R&D infrastructure. If you look at our lab, our R&D center in Shanghai is one of the world-class facilities. So that's how we view where to drive our future growth and especially to win the competition against the players in the industry."
-- Donghao Yang, CFO

Ongoing R&D investment is strengthening the company’s innovation pipeline and competitive positioning, which is critical for sustaining growth in a highly competitive market.

Looking Ahead

Management forecasts net revenues of $778.6 million to $880.1 million, representing year-over-year growth of 15% to 30% (GAAP basis), but cautions that market and operational conditions may affect outcomes. Profitability improvement is expected to be gradual, led by premiumization, marketing efficiency, and operating leverage, with further investment prioritized for high-growth brands not yet at market saturation. No concrete quantitative guidance was given for margins or earnings beyond these revenue projections.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,052%* — a market-crushing outperformance compared to 183% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of August 18, 2025

This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.