Q2 FY2026
Filed Sep 2, 2026Yatsen reported 5.1% total net-revenue growth, led by 40.4% Skincare Brands growth, while gross margin declined and net loss widened.
Skincare Brands grew 40.4% and represented 71.5% of total net revenues, supporting 5.1% total revenue growth, but Color Cosmetics Brands revenue declined 35.8%, gross margin fell to 73.9%, operating loss widened to RMB131.9 million, and operating cash flow turned negative.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total net revenuesGAAP | RMB1.14 billion (US$168.3 million) | – | 5.1% |
| Gross profitGAAP | RMB843.8 million (US$124.4 million) | – | (0.8%) |
| Gross marginGAAP | 73.9% | – | – |
| Total operating expensesGAAP | RMB975.7 million (US$143.8 million) | – | 7.7% |
| Total operating expenses as a percentage of total net revenuesGAAP | 85.4% | – | – |
| Fulfillment expensesGAAP | RMB56.1 million (US$8.3 million) | – | – |
| Fulfillment expenses as a percentage of total net revenuesGAAP | 4.9% | – | – |
| Selling and marketing expensesGAAP | RMB807.6 million (US$119.0 million) | – | – |
| Selling and marketing expenses as a percentage of total net revenuesGAAP | 70.7% | – | – |
| General and administrative expensesGAAP | RMB74.8 million (US$11.0 million) | – | – |
| General and administrative expenses as a percentage of total net revenuesGAAP | 6.6% | – | – |
| Research and development expensesGAAP | RMB37.3 million (US$5.5 million) | – | – |
| Research and development expenses as a percentage of total net revenuesGAAP | 3.3% | – | – |
| Loss from operationsGAAP | RMB131.9 million (US$19.4 million) | – | – |
| Operating loss marginGAAP | 11.5% | – | – |
| Non-GAAP loss from operationsnon-GAAP | RMB112.1 million (US$16.5 million) | – | – |
| Non-GAAP operating loss marginnon-GAAP | 9.8% | – | – |
| Net lossGAAP | RMB90.8 million (US$13.4 million) | – | – |
| Net loss marginGAAP | 8.0% | – | – |
| Net loss attributable to Yatsen’s ordinary shareholders per diluted ADSGAAP | RMB0.97 (US$0.14) | – | – |
| Non-GAAP net lossnon-GAAP | RMB99.4 million (US14.7 million) | – | – |
| Non-GAAP net loss marginnon-GAAP | 8.7% | – | – |
| Non-GAAP net loss attributable to Yatsen’s ordinary shareholders per diluted ADSnon-GAAP | RMB1.06 (US$0.16) | – | – |
| Six-month total net revenuesGAAP | RMB2,163,166 thousand | – | – |
| Six-month gross profitGAAP | RMB1,663,008 thousand | – | – |
| Six-month loss from operationsGAAP | RMB230,845 thousand | – | – |
| Six-month net lossGAAP | RMB152,756 thousand | – | – |
| Six-month non-GAAP net lossnon-GAAP | RMB156,691 thousand | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Skincare BrandsLed by the robust performance of its clinical and premium skincare brands, including Galénic, DR.WU and Eve Lom. | RMB816.1 million (US$120.3 million) | – | 40.4% |
| Color Cosmetics BrandsThe color cosmetics segment faced structural headwinds amid heightened competition, and the Company is taking decisive actions to streamline its color cosmetics portfolio and refocus resources on high-growth skincare brands. | not reported | – | (35.8%) |
third quarter of 2026 outlook
- Revenuebetween RMB898.6 million and RMB998.4 million
- Noteyear-over-year decrease of approximately 0% to 10%
What drove it
- A 40.4% year-over-year increase in net revenues from Skincare Brands more than offset a 35.8% year-over-year decrease in net revenues from Color Cosmetics Brands.
- Skincare Brands represented 71.5% of total net revenues, compared with 53.5% for the prior year period.
- Fulfillment-expense leverage was primarily attributable to further improvements in logistics efficiency.
- Selling and marketing expense increased due to strategic investments in consumer awareness and long-term brand equity for core skincare brands, coupled with higher traffic acquisition costs on the Douyin platform.
- General and administrative expense declined primarily due to lower share-based compensation expenses.
Concerns
- Gross margin decreased to 73.9% from 78.3%, primarily due to higher inventory provisions in the color cosmetics business associated with brand portfolio optimization and SKU rationalization.
- Selling and marketing expenses increased to 70.7% of total net revenues from 66.5%.
- GAAP net loss widened to RMB90.8 million from RMB19.5 million, while non-GAAP results moved from net income of RMB11.5 million to a net loss of RMB99.4 million.
- Net cash used in operating activities was RMB78.0 million, compared with net cash generated from operating activities of RMB77.7 million for the prior year period.
- Third-quarter total net-revenue guidance calls for a year-over-year decrease of approximately 0% to 10%.
What to watch
- Skincare Brands growth and its share of total net revenues following the 71.5% mix level in the second quarter.
- The pace of Color Cosmetics Brands portfolio streamlining, SKU rationalization, and the associated inventory provisions.
- Selling and marketing efficiency, including traffic acquisition costs on the Douyin platform.
- Gross-margin recovery after the second-quarter decline to 73.9%.
- Third-quarter total net revenues relative to the guided range of RMB898.6 million to RMB998.4 million.
Balance sheet and cash flow
- Cash, restricted cash and short-term investments as of June 30, 2026: RMB1.06 billion (US$155.6 million), as compared with RMB1.05 billion as of December 31, 2025.
- Cash and cash equivalents as of June 30, 2026: RMB710,286 thousand (US$104,683 thousand), as compared with RMB765,379 thousand as of December 31, 2025.
- Restricted cash as of June 30, 2026: RMB4,667 thousand (US$688 thousand), as compared with RMB42,117 thousand as of December 31, 2025.
- Short-term investments as of June 30, 2026: RMB340,545 thousand (US$50,190 thousand), as compared with RMB246,008 thousand as of December 31, 2025.
- Convertible notes as of June 30, 2026: RMB408,654 thousand (US$60,228 thousand), as compared with RMB0 as of December 31, 2025.
- Total assets as of June 30, 2026: RMB3,924,669 thousand (US$578,425 thousand), as compared with RMB3,846,982 thousand as of December 31, 2025.
- Total liabilities as of June 30, 2026: RMB1,254,289 thousand (US$184,859 thousand), as compared with RMB846,342 thousand as of December 31, 2025.
- Total shareholders' equity as of June 30, 2026: RMB2,669,043 thousand (US$393,369 thousand), as compared with RMB2,999,303 thousand as of December 31, 2025.
- Net cash used in operating activities for the second quarter of 2026: RMB78.0 million (US$11.5 million), as compared with net cash generated from operating activities of RMB77.7 million for the prior year period.
Analysis
Yatsen delivered modest top-line growth in the second quarter, with total net revenues increasing 5.1% to RMB1.14 billion. The revenue mix continued to shift materially toward skincare: Skincare Brands revenue increased 40.4% to RMB816.1 million and accounted for 71.5% of total net revenues, compared with 53.5% in the prior year period. This growth more than offset a 35.8% decline in Color Cosmetics Brands revenue, which management attributed to structural headwinds amid heightened competition.
Profitability weakened despite revenue growth. Gross profit declined 0.8% to RMB843.8 million and gross margin fell to 73.9% from 78.3%, primarily because of higher inventory provisions in color cosmetics tied to portfolio optimization and SKU rationalization. Total operating expenses rose 7.7% to RMB975.7 million, faster than revenue, and represented 85.4% of total net revenues versus 83.4% a year earlier.
The main operating-cost pressure came from selling and marketing expense, which rose to RMB807.6 million and 70.7% of total net revenues from 66.5%. The Company cited investment in awareness and long-term brand equity for core skincare brands and higher traffic acquisition costs on Douyin. Fulfillment expense declined to RMB56.1 million and 4.9% of revenue as logistics efficiency improved, while general and administrative expense declined to RMB74.8 million, primarily due to lower share-based compensation expense.
Losses widened across GAAP and non-GAAP measures. GAAP loss from operations was RMB131.9 million, with an 11.5% operating loss margin, compared with RMB55.5 million and 5.1% in the prior year period. GAAP net loss was RMB90.8 million, compared with RMB19.5 million, while non-GAAP net loss was RMB99.4 million after non-GAAP net income of RMB11.5 million in the prior year period. Operating cash flow also reversed to RMB78.0 million of cash used in operating activities from RMB77.7 million of cash generated.
The balance sheet showed RMB1.06 billion of cash, restricted cash and short-term investments as of June 30, 2026, compared with RMB1.05 billion at December 31, 2025, alongside RMB408,654 thousand of convertible notes that were not present at year-end. For the third quarter, management expects total net revenues between RMB898.6 million and RMB998.4 million, representing an approximate year-over-year decrease of 0% to 10%. The guidance keeps the focus on whether skincare growth and channel execution can offset continued pressure in color cosmetics while marketing spending and gross margin are being optimized.
Management, verbatim
As we further optimized our brand portfolio and distribution channels, our skincare portfolio maintained its strong growth momentum — now representing over 70% of total revenues — led by the robust performance of our clinical and premium skincare brands, including Galénic, DR.WU and Eve Lom.
Jinfeng Huang, Founder, Chairman and Chief Executive Officer of Yatsen
We delivered modest top-line growth in the second quarter of 2026, with net revenues increasing 5.1% year over year.
Donghao Yang, Director and Chief Financial Officer of Yatsen
Not in the filing
stated, not guessed- Prior-quarter comparisons for reported Q2 metrics
- Color Cosmetics Brands absolute revenue
- Free cash flow
- Capital-return information, including share repurchases and dividends
- Third-quarter gross-margin guidance
- Third-quarter operating-expense guidance
- Third-quarter tax-rate guidance
- Previous-release outlook for comparison with actual results
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.