Yatsen Announces First Quarter 2022 Financial Results

Conference Call to Be Held at 7:30 A.M. U.S. Eastern Time on May 24, 2022

GUANGZHOU, China, May 24, 2022 /PRNewswire/ -- Yatsen Holding Limited ("Yatsen" or the "Company") (NYSE: YSG), a leading Chinese beauty company, today announced its unaudited financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights

  • Total net revenues for the first quarter of 2022 decreased by 38.3% to RMB891.0 million (US$140.5 million) from RMB1.44 billion in the prior year period.
  • Total net revenues from Skincare Brands[1] for the first quarter of 2022 increased by 68.5% to RMB182.7 million from RMB108.4 million in the prior year period. As a percentage of total net revenues, total net revenues from Skincare Brands for the first quarter of 2022 increased to 20.5% from 7.5% in the prior year period.
  • Gross margin for the first quarter of 2022 was 69.0%, compared with 68.6% in the prior year period.
  • Net loss for the first quarter of 2022 decreased by 8.7% to RMB291.4 million (US$46.0 million) from RMB319.0 million in the prior year period. Non-GAAP net loss[2] for the first quarter of 2022 decreased by 33.6% to RMB155.6 million (US$24.5 million) from RMB234.3 million in the prior year period.

"We remain focused on executing our strategy of building our brands, investing in R&D and pursuing sustainable growth in the first quarter of 2022," stated Mr. Jinfeng Huang, Founder, Chairman and Chief Executive Officer of Yatsen. "We have already observed early progress, including the growing skincare business and narrowing net loss and non-GAAP net loss. Although the pandemic continues to negatively impact our business, including our offline stores and supply chain, we are working hard to transform Yatsen and optimize operations during these challenging times."

"Due to the soft industry-wide demand for color cosmetics and COVID-19 resurgences in major cities impacting the sales from our offline stores, our net revenues declined by 38.3% in the first quarter of 2022," commented Mr. Donghao Yang, Director and Chief Financial Officer of Yatsen. "Nevertheless, our gross margin in the first quarter reached 69.0%, our net loss decreased by 8.7% year-over-year to RMB291.4 million, and our non-GAAP net loss decreased by 33.6% year-over-year to RMB155.6 million. The improvements in net loss and non-GAAP net loss indicate that our strategic transformation is on track, though we continue to face a harsh business environment heading into the second quarter."

First Quarter 2022 Financial Results

Net Revenues

Total net revenues for the first quarter of 2022 decreased by 38.3% to RMB891.0 million (US$140.5 million) from RMB1.44 billion in the prior year period. The decrease was primarily attributable to the 45.6% decrease in net revenues from our Color Cosmetics Brands[3], partially offset by the 68.5% increase in net revenues from our Skincare Brands.

[1] Include net revenues from Abby's Choice, DR. WU (its mainland China business), Galénic, Eve Lom and other skincare brands.

[2] Non-GAAP net loss is a non-GAAP financial measure. Non-GAAP net loss is defined as net loss excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions and (iii) tax effects on non-GAAP adjustments.

[3] Include net revenues from Perfect Diary, Little Ondine, Pink Bear and other color cosmetics brands.

Gross Profit and Gross Margin 

Gross profit for the first quarter of 2022 decreased by 38.0% to RMB614.5 million (US$96.9 million) from RMB991.6 million in the prior year period. Gross margin for the first quarter of 2022 increased to 69.0% from 68.6% in the prior year period. The increase was primarily attributable to our continuous efforts to improve our gross margin, including through (i) increasing sales from our higher-gross margin products, and (ii) optimizing strategies in pricing, discounts, and promotions.

Operating Expenses 

Total operating expenses for the first quarter of 2022 decreased by 30.9% to RMB922.5 million (US$145.5 million) from RMB1.33 billion in the prior year period. As a percentage of total net revenues, total operating expenses for the first quarter of 2022 were 103.5%, as compared with 92.4% in the prior year period.

  • Fulfillment Expenses. Fulfillment expenses for the first quarter of 2022 were RMB73.9 million (US$11.7 million), as compared with RMB92.7 million in the prior year period. As a percentage of total net revenues, fulfillment expenses for the first quarter of 2022 increased to 8.3% from 6.4% in the prior year period. The increase was primarily attributable to a decrease in the economies of scale of our fixed fulfillment expenses, partially offset by certain cost-saving initiatives related to fulfillment assets instituted during the first quarter of 2022.
  • Selling and Marketing Expenses. Selling and marketing expenses for the first quarter of 2022 were RMB604.7 million (US$95.4 million), as compared with RMB1.04 billion in the prior year period. As a percentage of total net revenues, selling and marketing expenses for the first quarter of 2022 decreased to 67.9% from 72.1% in the prior year period. The decrease was primarily attributable to our continuous efforts to optimize the efficiency of our marketing spending, partially offset by the expenses related to the closure of certain offline experience stores.
  • General and Administrative Expenses. General and administrative expenses for the first quarter of 2022 were RMB208.1 million (US$32.8 million), as compared with RMB172.3 million in the prior year period. As a percentage of total net revenues, general and administrative expenses for the first quarter of 2022 increased to 23.4% from 11.9% in the prior year period. The increase was primarily attributable to the increases in salaries and share-based compensation expenses.
  • Research and Development Expenses. Research and development expenses for the first quarter of 2022 were RMB35.8 million (US$5.6 million), as compared with RMB27.7 million in the prior year period. As a percentage of total net revenues, research and development expenses for the first quarter of 2022 increased to 4.0% from 1.9% in the prior year period. The increase was primarily attributable to the increases in personnel costs, raw materials, equipment, and share-based compensation expenses, reflecting our commitment to enhancing our research and development capabilities.

Loss from Operations

Loss from operations for the first quarter of 2022 decreased by 10.3% to RMB308.0 million (US$48.6 million) from RMB343.3 million in the prior year period. Operating loss margin was 34.6%, as compared with 23.8% in the prior year period.

Non-GAAP loss from operations[4] for the first quarter of 2022 decreased by 34.1% to RMB170.1 million (US$26.8 million) from RMB258.3 million in the prior year period. Non-GAAP operating loss margin was 19.1%, as compared with 17.9% in the prior year period.

[4] Non-GAAP loss from operations is a non-GAAP financial measure. Non-GAAP loss from operations is defined as loss from operations excluding share-based compensation expenses and amortization of intangible assets resulting from assets and business acquisitions.

Net Loss

Net loss for the first quarter of 2022 decreased by 8.7% to RMB291.4 million (US$46.0 million) from RMB319.0 million in the prior year period. Net loss margin was 32.7%, as compared with 22.1% in the prior year period. Net loss attributable to Yatsen's ordinary shareholders per diluted ADS[5] for the first quarter of 2022 was RMB0.46 (US$0.07), as compared with RMB0.50 in the prior year period.

Non-GAAP net loss for the first quarter of 2022 decreased by 33.6% to RMB155.6 million (US$24.5 million) from RMB234.3 million in the prior year period. Non-GAAP net loss margin was 17.5%, as compared with 16.2% in the prior year period. Non-GAAP net loss attributable to Yatsen's ordinary shareholders per diluted ADS[6] for the first quarter of 2022 was RMB0.25 (US$0.04), as compared with RMB0.37 in the prior year period.

Balance Sheet and Cash Flow

As of March 31, 2022, the Company had cash, cash equivalents and short-term investments of RMB2.97 billion (US$467.8 million), as compared with RMB3.14 billion as of December 31, 2021.

Net cash used in operating activities for the first quarter of 2022 decreased by 77.7% to RMB104.1 million (US$16.4 million) from RMB466.1 million in the prior year period.

Business Outlook

For the second quarter of 2022, the Company expects its total net revenues to be between RMB808.3 million and RMB960.8 million, representing a year-over-year decline of approximately 37% to 47%, primarily due to (i) continued industry-wide softening of color cosmetics demand, and (ii) the continued negative impact of COVID-19 on our offline experience stores, online order fulfillment capabilities and supply chain. These forecasts reflect the Company's current and preliminary views on the market and operational conditions, which are subject to change.

Exchange Rate

This announcement contains translations of certain Renminbi ("RMB") amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ were made at a rate of RMB6.3393 to US$1.00, the exchange rate in effect as of March 31, 2022, as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. The Company makes no representation that any RMB or US$ amounts could have been, or could be, converted into US$ or RMB, as the case may be, at any particular rate, or at all.

[5] ADS refers to the American depositary shares, each of which represents four Class A ordinary shares.

[6] Non-GAAP net loss attributable to ordinary shareholders per diluted ADS is a non-GAAP financial measure. Non-GAAP net loss attributable to ordinary shareholders per diluted ADS is defined as non-GAAP net loss attributable to ordinary shareholders divided by the weighted average number of diluted ADS outstanding for computing diluted earnings per ADS. Non-GAAP net loss attributable to ordinary shareholders is defined as net loss attributable to ordinary shareholders excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions, (iii) tax effects on non-GAAP adjustments, (iv) accretion to preferred shares, and (v) deemed dividends to preferred shareholders due to modification of preferred shares.

Conference Call Information

The Company's management will hold a conference call on Tuesday, May 24, 2022, at 7:30 A.M. U.S. Eastern Time or 7:30 P.M. Beijing Time to discuss its financial results and operating performance for the first quarter 2022.

United States (toll free):     +1-888-346-8982
International:                      +1-412-902-4272
Mainland China (toll free):  400-120-1203
Hong Kong (toll free):         800-905-945
Hong Kong:                        +852-3018-4992
Conference ID:                   5131932

The replay will be accessible through May 31, 2022, by dialing the following numbers:

United States:                    +1-877-344-7529
International:                      +1-412-317-0088
Conference ID:                   5131932

A live and archived webcast of the conference call will also be available on the Company's investor relations website at http://ir.yatsenglobal.com/.

About Yatsen Holding Limited

Yatsen Holding Limited (NYSE: YSG) is a leading player in China's beauty market with a mission to create an exciting new journey of beauty discovery for consumers in China and around the world. Founded in 2016, the Company has launched and acquired multiple color cosmetics and skincare brands including Perfect Diary, Little Ondine, Abby's Choice, Galénic, DR.WU (its mainland China business), Eve Lom and Pink Bear. The Company's flagship brand, Perfect Diary, is one of the top color cosmetics brands in China in terms of online retail sales value. Leveraging its digitally native direct-to-customer business model, the Company has built core capabilities which enable it to launch and scale multiple brands quickly while offering a wide selection of products to a growing variety of customers. The Company reaches and engages with customers directly both online and offline, with expansive presence across all major e-commerce, social and content platforms in China.

For more information, please visit http://ir.yatsenglobal.com/.

Use of Non-GAAP Financial Measures

The Company uses non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) attributable to ordinary shareholders and non-GAAP net income (loss) attributable to ordinary shareholders per diluted ADS, each a non-GAAP financial measure, in reviewing and assessing its operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company presents these non-GAAP financial measures because they are used by the management to evaluate operating performance and formulate business plans. Non-GAAP financial measures help identify underlying trends in its business, provide further information about its results of operations, and enhance the overall understanding of its past performance and future prospects. The Company defines non-GAAP income (loss) from operations as income (loss) from operations excluding share-based compensation expenses and amortization of intangible assets resulting from assets and business acquisitions. The Company defines non-GAAP net income (loss) as net income (loss) excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions and (iii) tax effects on non-GAAP adjustments. The Company defines non-GAAP net income (loss) attributable to ordinary shareholders as net income (loss) attributable to ordinary shareholders excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions, (iii) tax effects on non-GAAP adjustments, (iv) accretion to preferred shares, and (v) deemed dividends to preferred shareholders due to modification of preferred shares. Non-GAAP net income (loss) attributable to ordinary shareholders per diluted ADS is computed using non-GAAP net income (loss) attributable to ordinary shareholders divided by weighted average number of diluted ADS outstanding for computing diluted earnings per ADS.

However, the non-GAAP financial measures have limitations as analytical tools as the non-GAAP financial measures are not presented in accordance with U.S. GAAP and may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure. Reconciliations of Yatsen's non-GAAP financial measure to the most comparable U.S. GAAP measure are included at the end of this press release.

Safe Harbor Statement

This announcement contains statements that may constitute "forward-looking" statements which are made pursuant to the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "likely to," and similar statements. The Company may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission ("SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs, plans, outlook and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, which include but not limited to the following: the Company's growth strategies; its future business development, results of operations and financial condition; its ability to continue to roll out popular products and maintain popularity of existing products; its ability to anticipate and respond to changes in industry trends and consumer preferences and behavior in a timely manner; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of its products and services; its ability to integrate newly-acquired businesses and brands; trends and competition in and relevant government policies and regulations relating to China's beauty market; changes in its revenues and certain cost or expense items; and general economic conditions in China. Further information regarding these and other risks is included in the Company's filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:

Yatsen Holding Limited
Investor Relations
E-mail: ir@yatsenglobal.com

The Piacente Group, Inc.
Emilie Wu
Tel: +86-21-6039-8363
E-mail: yatsen@thepiacentegroup.com

In the United States:

The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
E-mail: yatsen@thepiacentegroup.com

 

 

 

YATSEN HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share, per share data or otherwise noted)






December 31,



March 31,



March 31,




2021



2022



2022




RMB'000



RMB'000



USD'000


Assets













Current assets













        Cash and cash equivalents



3,138,008




1,692,641




267,008


        Short-term investment



-




1,272,574




200,744


        Accounts receivable



355,837




226,637




35,751


        Inventories, net



695,761




584,112




92,141


        Prepayments and other current assets



366,191




350,358




55,268


        Amounts due from related parties



60




60




9


Total current assets



4,555,857




4,126,382




650,921


Non-current assets













        Investments



350,380




368,081




58,063


        Property and equipment, net



245,314




184,712




29,138


        Goodwill



869,421




852,493




134,477


        Intangible assets, net



745,851




714,679




112,738


        Deferred tax assets



2,000




1,938




306


        Right-of-use assets, net



422,966




355,876




56,138


        Other non-current assets



80,220




73,236




11,553


Total non-current assets



2,716,152




2,551,015




402,413


Total assets



7,272,009




6,677,397




1,053,334















Liabilities, redeemable non-controlling interests and shareholders'
equity (deficit)













Current liabilities













         Accounts payable



240,815




55,933




8,823


         Advances from customers



20,680




17,105




2,698


         Accrued expenses and other liabilities



370,531




256,227




40,419


         Amounts due to related parties



13,967




9,923




1,565


         Income tax payables



16,747




15,704




2,477


         Lease liabilities due within one year



214,843




195,525




30,843


Total current liabilities



877,583




550,417




86,825


Non-current liabilities













        Deferred tax liabilities



124,450




118,930




18,761


        Deferred income-non current



56,180




52,319




8,253


        Lease liabilities



206,303




161,943




25,546


Total non-current liabilities



386,933




333,192




52,560


Total liabilities



1,264,516




883,609




139,385


Redeemable non-controlling interests



338,587




339,924




53,622


Shareholders' equity (deficit)













        Ordinary Shares (US$0.00001 par value; 10,000,000,000 ordinary
        shares authorized, comprising of 6,000,000,000 Class A ordinary
        shares, 960,852,606 Class B ordinary shares and 3,039,147,394
        shares each of such classes to be designated as of December 31,
        2021 and March 31, 2022; 1,938,303,919 Class A shares and
        758,869,844 Class B ordinary shares issued; 1,789,239,887 Class
        A ordinary shares and 737,513,429 Class B ordinary shares
        outstanding as of and December 31, 2021;  1,978,303,919 Class A
        shares and 718,869,844 Class B ordinary shares issued;
        1,829,239,887 Class A ordinary shares and 697,513,429 Class B
        ordinary shares outstanding as of and March 31, 2022)



173




173




27


        Treasury shares



(22,330)




(22,330)




(3,522)


        Additional paid-in capital



11,697,942




11,823,760




1,865,152


        Statutory reserve



21,352




21,352




3,368


        Accumulated deficit



(5,782,169)




(6,073,084)




(958,005)


        Accumulated other comprehensive income (loss)



(255,780)




(304,664)




(48,059)


Total Yatsen Holding Limited shareholders' (deficit) equity



5,659,188




5,445,207




858,961


        Non-controlling interests



9,718




8,657




1,366


Total shareholders' (deficit) equity



5,668,906




5,453,864




860,327


Total liabilities, redeemable non-controlling interests and
shareholders' equity (deficit)



7,272,009




6,677,397




1,053,334


 

 

 

YATSEN HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except for share, per share data or otherwise noted)






For the Three Months Ended March 31,




2021



2022



2022




RMB'000



RMB'000



USD'000


Total net revenues



1,444,465




890,954




140,545


Total cost of revenues



(452,899)




(276,408)




(43,602)


Gross profit



991,566




614,546




96,943


Operating expenses:













       Fulfilment expenses



(92,718)




(73,863)




(11,652)


       Selling and marketing expenses



(1,042,062)




(604,726)




(95,393)


       General and administrative expenses



(172,319)




(208,129)




(32,832)


       Research and development expenses



(27,740)




(35,810)




(5,649)


Total operating expenses



(1,334,839)




(922,528)




(145,526)


Income (loss) from operations



(343,273)




(307,982)




(48,583)


       Financial income



14,045




8,103




1,278


       Foreign currency exchange losses



(3,596)




(2,632)




(415)


       Income (loss) from equity method investments, net



7,142




(2,330)




(368)


       Impairment loss of investments



-




(4,416)




(697)


       Other non-operating income



7,474




17,654




2,785


Income (loss) before income tax expenses



(318,208)




(291,603)




(46,000)


       Income tax (expense) benefit



(786)




223




35


Net loss



(318,994)




(291,380)




(45,965)


       Net loss attributable to non-controlling interests and redeemable
       non-controlling interests



1,656




465




73


Net loss attributable to Yatsen's shareholders



(317,338)




(290,915)




(45,892)















Shares used in calculating earnings per share (1):













      Weighted average number of Class A and Class B ordinary shares:













      —Basic



2,526,453,776




2,526,753,316




2,526,753,316


      —Diluted



2,526,453,776




2,526,753,316




2,526,753,316


Net income (loss) per Class A and Class B ordinary share













       Net income (loss) attributable to Yatsen's ordinary shareholders
       —Basic



(0.13)




(0.12)




(0.02)


      Net income (loss) attributable to Yatsen's ordinary
      shareholders—Diluted



(0.13)




(0.12)




(0.02)


Net income (loss) per ADS (4 ordinary shares equal to 1 ADS)













      Net income (loss) attributable to Yatsen's ordinary
      shareholders—Basic



(0.50)




(0.46)




(0.07)


      Net income (loss) attributable to Yatsen's ordinary
      shareholders—Diluted



(0.50)




(0.46)




(0.07)











































For the Three Months Ended March 31,




2021



2022



2022


Share-based compensation expenses are included in the operating


RMB'000



RMB'000



USD'000


expenses as follows:













      Fulfilment expenses



904




1,523




240


      Selling and marketing expenses



11,839




22,355




3,526


      General and administrative expenses



66,619




94,983




14,983


      Research and development expenses



1,504




6,957




1,097


Total



80,866




125,818




19,846


 

(1)  Authorized share capital is re-classified and re-designated into Class A ordinary shares and Class B ordinary shares, with each Class A ordinary share being entitled to one vote and each Class B ordinary share being entitled to twenty votes on all matters that are subject to shareholder vote.

(2)  The intangible assets resulting from assets and business acquisitions include assets relating to selling and marketing such as trademarks and customer relationships, and therefore the amortization of such is allocated to selling and marketing expenses.

 

 

 

YATSEN HOLDING LIMITED

UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(All amounts in thousands, except for share, per share data or otherwise noted)







For the Three Months Ended March 31,




2021



2022



2022




RMB'000



RMB'000



USD'000


       Income (loss) from operations



(343,273)




(307,982)




(48,583)


       Share-based compensation expenses



80,866




125,818




19,846


       Amortization of intangible assets resulting from assets and business
       acquisitions



4,130




12,083




1,906


Non-GAAP income (loss) from operations



(258,277)




(170,081)




(26,831)


       Net income (loss)



(318,994)




(291,380)




(45,965)


       Share-based compensation expenses



80,866




125,818




19,846


       Amortization of intangible assets resulting from assets and business
       acquisitions



4,130




12,083




1,906


       Tax effects on non-GAAP adjustments



(324)




(2,084)




(329)


Non-GAAP net income (loss)



(234,322)




(155,563)




(24,542)


       Net income (loss) attributable to ordinary shareholders of Yatsen



(317,338)




(290,915)




(45,892)


       Share-based compensation expenses



80,866




125,818




19,846


       Amortization of intangible assets resulting from assets and business
       acquisitions



3,736




11,831




1,866


       Tax effects on non-GAAP adjustments



(296)




(2,084)




(329)


       Accretion to preferred shares



-




-




-


       Deemed dividends to preferred shareholders due to modification of
       preferred shares



-




-




-


Non-GAAP net income (loss) attributable to ordinary shareholders
of Yatsen



(233,032)




(155,350)




(24,509)


Shares used in calculating earnings per share:













       Weighted average number of Class A and Class B ordinary shares:













       —Basic



2,526,453,776




2,526,753,316




2,526,753,316


       —Diluted



2,526,453,776




2,526,753,316




2,526,753,316


Non-GAAP net income (loss) attributable to ordinary shareholders
per Class A and Class B ordinary share













       Non-GAAP net income (loss) attributable to Yatsen's ordinary
       shareholders—Basic



(0.09)




(0.06)




(0.01)


       Non-GAAP net income (loss) attributable to Yatsen's ordinary
       shareholders—Diluted



(0.09)




(0.06)




(0.01)


Non-GAAP net income (loss) attributable to ordinary shareholders
per ADS (4 ordinary shares equal to 1 ADS)













       Non-GAAP net income (loss) attributable to Yatsen's ordinary
       shareholders—Basic



(0.37)




(0.25)




(0.04)


       Non-GAAP net income (loss) attributable to Yatsen's ordinary
       shareholders—Diluted



(0.37)




(0.25)




(0.04)


 

 

View original content:https://www.prnewswire.com/news-releases/yatsen-announces-first-quarter-2022-financial-results-301553573.html


Source: Yatsen Holding Limited Related Stocks: NYSE:YSG
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