THE WHAT?  Yatsen Holding Limited, a leading China-based beauty group, has released its unaudited financial results for Q1 2024. The company reported a 1.0% increase in total net revenues to RMB773.4 million (US$107.1 million) from RMB765.4 million in the same period last year.

THE DETAILS  Gross margin for the first quarter rose to 77.7%, up from 74.3% in the prior year, driven primarily by higher sales of high-margin products. However, total operating expenses surged by 31.7% to RMB758.7 million (US$105.1 million), largely due to increased investments in the Douyin platform and new product launches.

This expenditure resulted in a net loss of RMB124.9 million (US$17.3 million), compared to a net income of RMB50.7 million in Q1 2023. The non-GAAP net loss was RMB83.8 million (US$11.6 million), up from RMB25.8 million in the previous year.

THE WHY?  Despite a slight increase in revenues and improved gross margins, Yatsen’s substantial investments in marketing and new product development led to significant net losses for the quarter. As the company continues to expand its product portfolio and strengthen its market position, it remains committed to balancing growth opportunities with cost optimization. The financial results highlight the challenges and strategic choices Yatsen faces in navigating the competitive beauty industry.