Yatsen (YSG) Q2 2026 earnings summary

Executive summary

• Net revenues rose 5.1% year-over-year to RMB 1.14 billion, driven by a 40.4% surge in skincare brands, which now comprise 71.5% of total net revenues, offsetting a 35.8% decline in color cosmetics.

• Gross margin declined to 73.9% from 78.3% due to higher inventory provisions in color cosmetics.

• Net loss widened to RMB 90.8 million (margin 8.0%); non-GAAP net loss was RMB 99.4 million (margin 8.7%).

• Strategic focus on R&D, brand building, and channel diversification supported growth and consumer engagement.

• Ms. Wang Li (Li Wang) appointed as Co-CFO, bringing extensive industry experience.

Financial highlights

• Gross profit decreased 0.8% year-over-year to RMB 843.8 million; gross margin dropped to 73.9% from 78.3% year-over-year.

• Operating loss widened to RMB 131.9 million (margin -11.5%); non-GAAP operating loss was RMB 112.1 million (margin -9.8%).

• Net cash used in operating activities was RMB 78 million, compared to net cash generated of RMB 77.7 million in the prior year period.

• Cash, restricted cash, and short-term investments stood at RMB 1.06 billion as of June 30, 2026.

• Selling and marketing expenses increased to RMB 807.6 million, 70.7% of net revenues, driven by investments in skincare brand awareness and higher traffic acquisition costs.

Outlook and guidance

• Q3 2026 net revenues expected between RMB 898.6 million and RMB 998.4 million, representing a year-over-year decrease of approximately 0%-10%.

• Management remains focused on operational discipline, marketing efficiency, and cost structure optimization amid dynamic market conditions.

• Strategic investments in marketing and brand equity for core skincare brands are expected to continue.

• Focus remains on expanding premium skincare and optimizing the color cosmetics portfolio.