Yatsen (YSG) Q4 2023 earnings summary

Executive summary

• Q4 2023 revenue returned to growth, up 6.7% YoY to RMB1.07bn; FY revenue fell 7.9% to RMB3.41bn as skincare gains partly offset color cosmetics weakness.

• Gross margin expanded in both periods, while the Q4 goodwill impairment drove a sharp increase in reported operating and net losses.

Financial highlights

• Q4 gross profit rose 10.6% YoY to RMB790.1m; FY gross profit edged down 0.2% to RMB2.51bn.

• Q4 operating expenses rose 67.7% to RMB1.33bn, or 124.0% of revenue, including RMB354.0m of goodwill impairment; FY operating expenses were RMB3.43bn.

• Q4 reported net loss was RMB494.5m vs. RMB55.0m; FY net loss narrowed 8.7% to RMB750.2m from RMB821.3m.

• Adjusted for specified non-GAAP items, Q4 net loss was RMB93.7m vs. net income of RMB34.7m; FY non-GAAP net loss narrowed 34.6% to RMB296.1m.

• Diluted loss per ADS was RMB0.91 in Q4 vs. RMB0.09; FY diluted loss per ADS was RMB1.36 vs. RMB1.37, while non-GAAP FY loss per ADS was RMB0.53 vs. RMB0.76.

Outlook and guidance

• Q1 2024 revenue forecast: RMB765.4m–RMB803.7m, implying ~0%–5% YoY growth; estimates reflect preliminary views and may change with market and operating conditions.

• Management cited continued brand innovation and sustainable growth as priorities; Q4 revenue growth exceeded prior guidance.