Yatsen Holding Ltd. ((YSG)) has held its Q4 earnings call. Read on for the main highlights of the call.
Yatsen Holding Ltd.’s recent earnings call conveyed a mixed sentiment, reflecting strong growth in certain segments and improved profitability, particularly in the fourth quarter, attributed to strategic product launches and enhanced cost efficiency. However, the overall financial health was impacted by a slight decline in full-year revenues and significant goodwill impairments.
Fourth Quarter Revenue Growth
The company reported a 7.1% increase in total net revenues for the fourth quarter of 2024, reaching RMB 1.15 billion. This growth was primarily driven by a notable 16.4% increase in revenues from color cosmetics brands, showcasing the company’s successful strategies in this segment.
Improved Profit Margins
Yatsen achieved a significant improvement in its profit margins during the fourth quarter of 2024. The gross margin increased to 77.8%, up from 73.7% in the previous year, while the net loss margin improved to 33% from 46.1%, indicating enhanced operational efficiency and cost management.
Skincare Segment Achievements
The skincare segment continued to perform well, contributing 41.1% to the full-year total net revenues. Notably, the Galénic brand received industry accolades and maintained a strong market position, underscoring the company’s strength in this area.
Innovative Product Launches
Yatsen’s commitment to innovation was evident with the successful launch of Perfect Diary’s BioLip Essence Lipstick, which achieved leading sales positions. Additionally, the company’s R&D initiatives led to significant scientific contributions, reinforcing its competitive edge.
Cost Efficiency Measures
The company implemented effective cost efficiency measures, resulting in a 3.5% decrease in total operating expenses for the fourth quarter. Strategic marketing spending further improved profitability, highlighting Yatsen’s focus on optimizing operational costs.
Overall Revenue Decline for Full-Year
Despite the quarterly growth, Yatsen experienced a 0.6% decline in total net revenues for the full year of 2024, primarily due to challenges in the color cosmetics segment. This decline reflects the broader market challenges faced by the company.
Goodwill Impairment
The earnings call revealed a significant goodwill impairment of RMB 503.1 million for the fourth quarter of 2024, an increase from RMB 354 million in the prior year. This was attributed to weaker operating results, impacting the company’s financial health.
Decrease in Cash Reserves
Yatsen reported a decrease in cash reserves, with cash, restricted cash, and short-term investments totaling RMB 1.36 billion as of December 31, 2024, down from RMB 2.08 billion a year earlier. This decline raises concerns about the company’s liquidity position.
Forward-Looking Guidance
Looking ahead, Yatsen projected first-quarter 2025 revenues to range between RMB 788.8 million and RMB 866.2 million, indicating an anticipated year-over-year increase of 2% to 12%. The company remains optimistic about its growth prospects, particularly in the skincare segment, which saw a 0.7% increase in revenues for the full year.
In summary, Yatsen Holding Ltd.’s earnings call highlighted a positive outlook in certain segments, with strong fourth-quarter growth and improved profitability. However, challenges remain, as evidenced by the decline in full-year revenues and significant goodwill impairments. The company’s forward-looking guidance suggests cautious optimism, with expectations of continued growth in the coming quarters.