Q3 2023 Yatsen Holding Ltd Earnings Call
Speaker 1: Ladies and gentlemen, good day and welcome to the Yatsen Third Quarter 2023 earnings conference call.
Ladies and gentlemen, good day and welcome to the Yadkin third quarter 'twenty 'twenty earnings Conference call.
Today's conference is being recorded.
Speaker 1: time I would like to turn the conference over to Irene Liu, Vice President, Head of Strategic Investments and Capital Markets. Please go ahead.
At this time I would like to turn the conference over to Irene Lu Vice President head of strategic investments and capital markets. Please go ahead.
Thank you operator. Please note the discussion today will contain forward looking statements.
Speaker 2: Thank you, operator. Please note the discussion today will contain four voting statements relating to the company's future performance and are intended to qualify for the safe harbor from liability established by the U.S. private security litigation reform act.
They just showed a couple few scripts a formula.
Intended to qualify for the safe Harbor from liability established.
Established by the U S private Securities Litigations Reform Act.
Such statements are not guarantees of future performance and are.
Speaker 2: such statements are not guarantees of future performers and are subject to certain risks and uncertainties, assumptions and other factors.
Subject to certain.
And 70 selfish and other sectors.
Speaker 2: Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion.
Some of these lists of young couples who fall fall could cause actual results to differ materially from those mentioned in today's press release.
Gotcha.
Speaker 2: The general discussion of the risk factor could affect Yatting's business and financial results if included in certain filings of the company with the Securities and Exchange Commission.
General discussion of the risks that could affect <unk> business and financial results for food It and start some filings of the company with the Securities and Exchange Commission.
Speaker 2: The company does not undertake any obligations to update this for-look information except as required by law.
The company does not undertake any obligation to update the forward looking information except as required by law.
Speaker 2: During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. Please see the earnings release issued earlier today for a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results.
During today's call management will also discuss certain non-GAAP financial measures for comparison purposes only.
Please see the earnings release issued earlier today for a definition of non-GAAP financial measure and a reconciliation.
GAAP and non-GAAP financial results.
Speaker 2: Joining us today on the call from Yasen's senior management team are Mr. Jinfeng Huang, our founder, chairman, and CEO , and Mr. Donghao Yang, our CFO and director.
Joining us today on the call from Yahoo, 's Senior management are Mr from profile, our founder Chairman and CEO and Mr. Joe How young our CFO and director Nash.
Speaker 2: Management will begin with prepared remarks and the call will conclude with a Q&A session.
National will begin with prepared remarks, and the call will conclude with a Q&A session.
Speaker 2: As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will also be available on Yasen Investor Relations website at ir.yasenglobal.com.
A reminder, this conference is recorded.
In addition of Westinghouse replay of this conference call will also be available Oh, yes.
Investor Relations website.
Our thoughts and global.
Speaker 2: I will now turn the call over to Mr. Kim Jong-Kwang.
I'll now turn the call over to Mr. Since a while.
Sir.
Speaker 3: Thank you, Irene, and thank you, everyone, for participating in Yaksan's 3rd Quarter 2023 Earnings Conference Call today.
Thank you Irene and thanks.
One for participating in <unk> third quarter 293.
<unk> conference call today.
In the third quarter of 2023.
Speaker 3: China's building industry remained in the mild recovery phase that began as the country emerged from the pandemic earlier this year.
The industry remains in the model the recovery phase.
Again as the country emerged from the pandemic earlier this year.
Speaker 3: According to the National Bureau of Statistics of China, total retail sales of consumer goods grew by 4.2 percent year over year.
According to the National Bureau of Statistics, all China.
Although retail sales of consumer.
Consumer goods grew by four 2% year over year.
Speaker 3: and the total beauty retail sales increased by 2.6% year-over-year.
And the total beauty retail self <unk>.
Great.
Two 6% year over year.
Speaker 3: both representing deceleration in year-over-year growth rate from the second quarter.
Representing a deceleration in year over year growth rate from the second quarter.
Speaker 3: Online beauty sales showed a similar pattern in the third quarter.
All I V O T cells showed a similar pattern in the third quarter.
Speaker 3: For both color cosmetics and skin care, combined total sales on T-more and SoYin recorded a slower growth rate than in the second quarter of 2020.
For color cosmetics and skin care.
<unk> told us that was on T mall and the Celgene.
Recorded a slower growth rate than in the second quarter of 'twenty to 'twenty three.
Speaker 3: Amid uncertainties in consumer demand, Yaftan remained committed to its strategy transformation plan.
Amid uncertainties in consumer with Ya man, Yes, I remain committed to its strategy transformation plan.
Speaker 3: we continuously strive to build strong brand equity based on superior product performance and consumer satisfaction.
We continuously strive to build a strong brand equity based on superior product performance and consumer satisfaction.
Speaker 3: For the third quarter of 2023, we recorded total net revenue of RMB 718.1 million in line with our previous guidance.
For the third quarter olefin phase III, we recorded total net revenue of RMB 718, one one medium in line with our curious guidance.
Speaker 3: Net revenue from our skincare brand declined by 4.1% year-over-year, mainly attributable to our strategy decision to phase out the AB's Choice brand.
Net revenue for all of our skincare brand declined by four 1% year over year, mainly attributable to our strategy decision to phase out the a b Detroit friends.
Speaker 3: Our clinical and premium skin care brands, including Gelenic, Dr. Wu, and Yif Long, delivered another solid performance, recording 7.4% year-over-year growth, in combined with net revenue.
Our clinical and premium skincare brands, including that I need.
And he's long delivered another solid performance recording seven 4% year over year growth in combined with net revenues.
Speaker 3: and a further increasing debt contribution to total net revenues as compared with the prior year period.
And a further increasing gas contribution.
It'll net revenues as compared with the prior year period.
Speaker 3: Net revenues from color cosmetics brands decreased by 21.5% year-over-year, primarily due to the decline in perfect diary sales as a result of the timing of new product launches near the end of the third quarter and the closure of underperforming offline stores.
Net revenue from color cosmetic friends.
<unk> five turn to one 5% year over year, primarily due to the decline in salaries cells. As a result of the timing of new product launches near the end of the third quarter.
And the closure of underperforming offline stores.
Speaker 3: The number of perfect diaries of blind stores totaled 123 as of the end of the third quarter, compared with 198 a year ago.
The number of paper diaries offline stores totaled 123 at the end of the third quarter compared with 198 a year ago.
Net revenues for only two one thing and the team there continues to grow at both brands raised their brand awareness among targeted consumers.
Speaker 3: Net revenues from Little Ondine and Pinbear continued to grow as both brands raised their brand awareness among targeted consumers.
Speaker 3: Yeltsin's growth margin improved to 71.4% in the third quarter from 68.9% in the prior year period.
Gross margin improved to seven 171, 4% in the third quarter from 58, 9% in the prior year period.
Speaker 3: due to the rising contribution from higher growth margin skincare brands and ongoing cost optimization across our brand portfolio.
Due to the rising contribution from higher gross margin. Thank you, Brian and ongoing cost optimization across our brand portfolio.
And that loose and the non-GAAP net lose margin expanded to 27, 6% and 81, 1% respectively.
Speaker 3: Net Lose and the Non-Gap Net Lose Margin expanded to 27.6% and 80.1% respectively.
Speaker 3: as we increase investment in the private diary brand upgrade and preparation for the Double 11 Shopping Festival.
We increased investment in the private diary, Brent upgrades and in preparation for that.
11 shopping festival.
Turning now to our brands and a part of.
Speaker 3: And during the third quarter of 2023, we repositioned the Perfect Diary brand, carrying out a series of campaigns with refreshed visual identities and new product launches.
During the third quarter of 2073, we position the Bogota rebrand carrying all a serious all campaigns with the refreshed visual identity and new product launches.
Speaker 3: The brand new hero product, Violet Essence Lipstick, leverages our exclusive Violet technology, which creates a vibrant color.
The brand new hero products.
Holy essence, lipstick Leverages, our exclusive boldly technology, which are crazy I buy.
Speaker 3: bionic sebum film upon application to protect the lip's fragile skin barrier.
Bionic Seebohm film.
All applications to protect the leap reptile seen barrier.
Speaker 3: BioLift's strong efficacy in lip line reduction was validated by the prestigious Regene Hospital and the SGS testing agency.
Bartlet strong efficacy.
Mid line reduction was validated by the prestigious reaching hospital and the S. E. T. S has seen agency.
Speaker 3: Our two other color cosmetics brands, Little Ondine and PinBear, both formed a co-branding partnership with popular IPs that deeply resonated with young consumers.
Our two other color cosmetics brand litho on Dana team there both formed co branding policy with popular Ips that deeply rapidly with young consumers.
Speaker 3: For our skincare brand, we continued to engage deeply in brand building, further cultivating each brand's distinctive audience.
Well I would think it Brian we continue to engage deeply in brand building further cultivating each brands distinctive audience.
Speaker 3: Galainique marked its 45th anniversary with a gala celebration that hosted an array of celebrities, media, and scholars in Paris.
He's got a neat marked is forty-five anniversary with a gala celebration the hosted an error rate of celebrities media in the quarter in Paris.
Speaker 3: The brand also officially announced its scientific research cooperation with Hospital St. Louis.
The brand also officially announced its scientific research cooperation with hospital San Louis.
Speaker 3: a well-known dermatology hospital in Paris and established Galenic Dermatology Research Foundation.
Well known dermatology hospital in Paris, and establish the gladney cause some apology research Foundation.
Speaker 3: In addition, Dr. Wu celebrated his 20th anniversary.
In addition.
Ooh celebrated its 10 year anniversary.
Speaker 3: Its reputation as a high-quality clinical brand and a pioneer in the use of a mandelic acid continued to strengthen as the brand was honored as Asia's leading mandelic-based skincare brand by UMONI.
Its reputation as a high quality cleanly co brand and a pioneer in the use of a metastatic as it continued to strengthen.
Brian was honored as Asia, leading metallic ace ER in hip right by you in Washington.
Speaker 3: the world's top independent provider of market research and industry analysis.
The word pop independent provider of market research and industry analysis.
Speaker 3: Furthermore, Yif Long introduced renowned singer and actor Xiao Zhan as his brand ambassador.
Furthermore, as long, it's a deal without singer and actor Shoutout as these brand ambassadors.
Speaker 3: to increase brand awareness and establish a broader customer base.
To increase brand awareness and establish a broader customer base.
Moving on to R&D.
Speaker 3: R&D expenses as a percentage of revenues were 3.4%.
R&D expenses as a percentage of revenues were $3 four 4%.
Speaker 3: In September , Yasen and Galanib Brand attended the IFSCC conference in Barcelona, Spain, and presented a scientific paper on the brand patent snow algae peptide.
In September you had been and the Clinique brand attended the a I F. F C C Congress.
The loan are paid and there were and have presented a scientific paper.
Brent pattern no alky peptides.
Speaker 3: At the conference, Galenic also announced that it has entered into strategy cooperation with the global peptide leader, Lubiso, to jointly research new ingredients, collaborate on anti-epileptic
And the conference call and they also announced that it has entered into strategy Corporation with the global pet tied either.
Lucas So she was jointly researched new ingredients.
Collaborate on anti aging quite a research.
Speaker 3: and expand the extent of the lab's research and development boundaries.
And expand <unk> open lab research and development boundaries.
Speaker 3: Before handing the call over to Donghao, I would like to provide an update on our share repurchase program.
Before handing the call over to Don Hall, I'd like people why an update on our share repurchase program.
Speaker 3: As announced earlier today, our Board of Directors has approved and authorized a change to the size and term of our share repurchase program, increasing the aggregate value of shares that may be repurchased under the share repurchase program from US$150 million to US$200 million.
As announced earlier today, our board of directors has approved and authorized a change to the size and it's hurt them off of our share repurchase program.
Increasing the aggregate value of shares that may be repurchased under the share repurchase the purchase program.
You.
Wonder if its 50 median too you have to bother with Colombia medium.
Speaker 3: and extending the effective term of the Shared Repurchase Program through November 19, 2025. This further demonstrated our
And extending he effective term off the share repurchase program through November 1970, 75.
This further demonstrates it.
Our confidence in that sense talk about.
Speaker 3: To summarize, China's building market is still in the process of a modest recovery this year. Looking forward, we will continue to adapt flexibly and are confident in our resources and ability to advance our strategy transformation plan.
[noise] will summarize and find out where the market is still in the process of a modest recovery. This year looking forward, we will continue with us that flexibility.
And our confidence in our resources and ability to do that.
Hence our strategy the transformation plan.
Speaker 3: With that, I will now turn the call over to our CFO , Donghao Yang, to discuss our financial performance. Thank you, everyone.
With that I will now turn the call over to our CFO somehow Yung who'll discuss our financial performance. Thank you everyone.
Okay.
Speaker 4: Thank you, David, and hello, everyone. Before I get started, I would like to clarify that all financial numbers presented today are in NMNB amounts. And all percentage changes refer to year-over-year changes, unless otherwise noted.
Thank you, David and Hello, everyone before I get started I would like to clarify that all financial numbers presented today are in and then Vietnam.
All percentage changes refer to year over year changes unless otherwise noted.
Speaker 4: Total net revenues for the third quarter of 2023 decreased by 16.3%.
Total net revenues for the third quarter of 2023 decreased by 16, 3%.
Speaker 4: to $718.1 million from $857.9 million for the prior year period. The decrease was primarily attributable to a 21.5% year-over-year decrease in net revenues from color cosmetic brands combined with a 4.1% year-over-year decrease in net revenues from skincare brands.
It was several hundred and $18 1 million from $857 9 million for the.
Prior year period. The decrease was primarily attributable to a 21, 5% year over year decrease in net revenues some color cosmetics brands combined.
With a four 1% year over year decrease in net revenues from skincare brands.
Gross profit for the third quarter of 2023 decreased by 13, 3%.
Speaker 4: Gross profits for the third quarter of 2023 decreased by 13.3%.
Speaker 4: to $512.8 million from $591.3 million for the prior year period. Growth margin in the third quarter of 2023 increased to 71.4 percent from 68.9 percent for the prior year period. The increase was driven by
512.8 million from 591.3 million.
Prior year period.
Gross margin in the third quarter of 2023 increased to 771, 4% from 68.9% for the prior year period.
The increase was driven by.
Speaker 4: First, increasing sales of higher growth margin products from skincare brands.
First increasing sales of higher gross margin products from skin care brands and.
Speaker 4: Secondly, more disciplined pricing and discount policies, and thirdly, cost optimization across all of our brand portfolios.
Secondly, more disciplined pricing and discounting policies and thirdly cost optimization across all of our brand portfolio.
Speaker 4: Total operating expenses for the third quarter of 2023 decreased by 13.1%.
Total operating expenses for the third quarter of 2023 decreased by 13.1%.
Speaker 4: to $744.3 million from $857 million for the prior period.
Several hundred and 44 3 million from 867 million for the prior year period.
Speaker 4: As a percentage of total net revenues, total operating expenses for the third quarter of 2023 were 103.6% as compared with 99.9% for the prior period.
As a percentage of total net revenues total operating expenses for the third quarter of 2023.
103.6.
Perfect as compared with 99.9% for the prior year period.
Speaker 4: So, total expenses for the third quarter of 2023 were $56 million as compared with $63.8 million for the prior year period.
Expenses for the third quarter of 2023 for 56 million as compared with 63 8 million for the prior year period.
Speaker 4: As a percentage of total net revenues, fulfillment expenses for the third quarter of 2023 increased to 7.8 percent from 7.4 percent for the prior year period.
As a percentage of total net revenues.
So so many senses for the third quarter of 2023 increased to 7.8% from seven 4% for the prior year period.
Speaker 4: The increase was primarily attributable to the deleveraging effect of lower net revenues in the third quarter of 2023.
The increase was primarily attributable to the deleveraging effect of lower net revenues in the third quarter of 2023.
Selling and marketing expenses for the third quarter of 2023 were 511.7 million as compared with $564 8 million for the prior year period as.
Speaker 4: Selling and marketing expenses for the third quarter of 2023 were $511.7 million as compared with $564.8 million for the prior year period.
Speaker 4: As a percentage of total net revenues, selling and marketing expenses for the third quarter of 2023 increased to 71.3 percent from 65.8 percent for the prior period.
As a percentage of total net revenues selling and marketing expenses.
Eric.
Third quarter of 2023 increased to 71, 3%.
From 65, 8%.
Year period.
Speaker 4: The increase was primarily attributable to increased investment in the Perfect Diary brand upgrades and preparations for the Double Eleven Shopping Festival.
The increase was primarily attributable to increased investments in the perfect diary, Brian upgrades and preparations for the double 11 shopping festival.
Speaker 4: General and administrative expenses for the third quarter of 2023 were $151.8 million as compared with $194.5 million for the prior year period.
General and administrative expenses for the third quarter of 2023, or 151 8 million as compared with 194.5 million for the prior year period as a percentage of total net revenues general.
Speaker 4: As a percentage of total net revenues, general and administrative expenses for the third quarter of 2023 decreased to 21.1 percent from 22.7 percent for the prior year period.
<unk> and administrative expenses for the third quarter of 2023 decreased to 21.1% from 22.7% for the prior year period.
Speaker 4: The decrease was primarily attributable to a reduction in compensation corresponding to a decrease in general and administrative headcount.
The decrease was primarily attributable to a reduction in compensation corresponding to a decrease in general and administrative head count.
Research and development.
Speaker 4: expenses for the third quarter of 2023 were $24.7 million as compared with $33.9 million for the prior period.
Expenses for the third quarter of 2023, or $24 7 million as compared with $33 9 million for the prior year period.
Speaker 4: As a percentage of total net revenues, research and development expenses for the third quarter of 2023 decreased to 3.4 percent from 3.9 percent for the prior period. The decrease was primarily attributable to our efforts to maintain research and development expenses at a reasonable level relative to total net revenue.
As a percentage of total net revenues.
Research and development expenses for the third quarter of 2023 decreased to three 4% from 3.9% for the prior.
Year period, the decrease was primarily attributable to our efforts to maintain research and development expenses.
At a reasonable level relative to total net revenue.
Speaker 4: Loss from operations for the third quarter of 2023 decreased by 12.9% to $231.5 million from $265.7 million for the prior year period.
Loss from operations for the third quarter of 2023 decreased by 12, 9%.
$231.5 million from 200, $265 7 million for the prior year period.
Speaker 4: Operating loss margin was 32.2% as compared with 31% for the prior period.
Operating loss margin was 32.2% as compared with 31% for the prior year period.
Speaker 4: non-gas loss from operations for the third quarter of 2023 increased by 1.2 percent to $164.6 million from $162.6 million for the prior year period.
non-GAAP loss from operations for the third quarter of 2023 increased by 1.2% say $164 6 million from $162 6 million for the prior year period.
Speaker 4: non-GAAP operating loss margin was 22.9% as compared with 19% for the prior period.
non-GAAP operating loss margin was 22.9% as compared with 19%.
Prior year period.
Speaker 4: Net loss for the third quarter of 2023 decreased by 6.1% to $197.9 million from $210.7 million for the prior year period.
Net loss for the third quarter of 2023 decreased by six 1%.
Hundred and 97.9 million from $210 7 million for the prior year period.
Speaker 4: net loss margin was 27.6% as compared with 24.6% for the prior period.
Net loss margin was 27, 6% as compared with 24, 6% for the.
Prior year period.
Speaker 4: net loss attributable to ordinary shareholders for diluted ADS for the third quarter of 2023.
Net loss attributable to yes, and fortinet shareholders per diluted ads for the third quarter of 2023.
What is your point.
Speaker 4: with 0.36 as compared with 0.37 for the prior period.
36, as compared with <unk> 37 for the prior year period non-GAAP net loss for the third quarter of 2023 increased by 3% to 132 million from 126 5 million for the prior year period.
Speaker 4: Non-GAP net loss for the third quarter of 2023 increased by 3% to $130.2 million from $126.5 million for the prior period. Non-GAP net loss margin was 18.1% as compared with 14.7% for the prior period.
non-GAAP net loss margin was 18, 1% as compared with 14.7% for the prior year period.
Speaker 4: non-GAP net loss attributable to Yatsen's ordinary shareholders for diluted ADS for the third quarter of 2023 was 0.24 as compared with 0.22 for the prior year period.
non-GAAP net loss attributable to.
Ordinary shareholders.
Diluted EPS for the third quarter of 2023 zero point 24.
Paired with zero point 22 for the prior year period.
Speaker 4: As of September 30th, 2023, we had cash, restricted cash, a short-term investment of 2.24 billion RMB, as compared with 2.63 billion RMB as of December 31st, 2022.
As of September 30th 2000.
43, we had cash restricted cash and short term investments of.
Two points.
4 billion RMB as compared with two point 63 billion RMB as of December 31, 2022.
Net cash used in operating activities.
Speaker 4: Net cash used in operating activities for the third quarter of 2023 was $163.4 million.
Third quarter of 2023 was $163 4 million.
Speaker 4: with net cash generated from operating activities of $21.8 million for the prior year period.
Third with net cash generated from operating activities of 21 8 million for the prior year period.
Speaker 4: Looking at our business outlook for the fourth quarter of 2023, we expect our total net revenues to be between $1.01 billion and $1.06 billion, representing a 0% to 5% increase year over year.
Looking at our business outlook for the fourth quarter of 2023.
We expect our total net revenues to be between.
1.01 billion, and 1.06 billion, representing 8% to 5% increase year over year. These.
Speaker 4: These forecasts reflect our current and preliminary views on the market and operational conditions.
These forecasts reflect our current and preliminary views on the market and operational conditions, which are subject to change.
Speaker 4: which are subject to change. With that, I would now like to open the call to Q&A. Yes. Thank you.
That I would now like to open the call for Q&A.
Yes. Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Speaker 1: To ask a question, you may press star, then 1 on your touch-tone phone.
Speaker 1: If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, press the button on the screen.
If you are using a speakerphone please pick up your handset before pressing the keys.
Your question. Please press Star then two.
Speaker 1: For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. At this time, we will pause momentarily to assemble the roster.
For the benefit of all participants on today's call. If you wish to ask your question to management in Chinese He's immediately repeat your question in English.
At this time, we will pause momentarily to assemble the roster.
Yeah.
And the first question comes from Unquiet, along with C. I C C.
Yeah.
Speaker 5: Well, thanks for taking my question. This is Maggie Huang from CICC. I have two questions. The first one is regarding the new products of Perfect Diary. We're seeing the launch of BioLip Essence Lipstick and also foundations in Q3. So is there any feedback we've got from the customers, and how should we expect on their performance in next year? This is for the first question. And my second question is about our guidance. We've guided a positive revenue growth for Q4, which is an encouraging signal. So behind this guidance, could management give us more color on your expectation for both skin care and color cosmetic sectors in Q4? And what are the key drivers for us to achieve that goal? That's my question. Thank you.
Well. Thanks for taking my question. This is Maggie Kwan from D. C. I have two questions. The first one is regarding the new pillar banks all perfect diary, let's sing the lungs of BIOLASE Aspen stake and also foundations in Q3. So is there any feedback we got from the past two months and how we should expect.
One day, a postponement in next year, they're just for the first question and my second question is about our guidance, we guided a positive revenue growth for Q4, and which is an encouraging signal there'll be tried this guidance cause management to keep us more color on your expectation for both skin care.
And kind of cosmetic sector in Q4, and like what are the key drivers to achieve that goal and that's my questions. Thank you.
[noise]. So yeah. Thank you for the question, let me take the first one for a perfect various new let's take long.
Speaker 2: So yeah, thank you for the question. Let me take the first one. For a perfect diary, it's new lipstick.
Speaker 6: which is the bio-essence lipsticks. After it launched in the end of September , we have received very positive feedback from our users as they enjoyed a very strong advocacy from the lipsticks.
She is a bile acids, let's say I'll pay launched in end of September we have received very positive feedback from our users as they enjoyed a very strong advocacy from the let's say basically our philosophy is to have a various perfect makeup look combined with any level of access.
Speaker 6: Basically, our philosophy is to have a very perfect make-up look combined with a lot of
Speaker 6: skin level efficacy benefits from the lipstick.
Benefit from less sick.
Speaker 6: So that's number one, and then secondly, the user profile also started to shift.
So that's number one and then secondly, the user profile also starts to ship.
Speaker 2: after our brand upgrade and also the new launch.
After our brand upgrade and also the new launch historically, our consumers are most like most insurance needs and also our young consumers from the lower tier cities, but then I've heard we're launching new products and the planned upgrade even that's all price points that we won't see and one.
Speaker 2: Historically, our consumers are mostly Gen Zs.
Speaker 6: and also young consumers from the lower tier cities. But then after we launched this new product and the brand upgrade.
Speaker 6: Given that our price point starts to increase and with new local benefits, we start to see more high-value consumers coming to buy our lipstick.
Noodles and benefit we start to see a more high value consumers coming through by our mythic I'm.
Speaker 2: including, for example, the sophisticated young mom and also the upper middle class.
Clothing for example, so sophisticated young moms and also the upper Middle class and also since the launch we have seen.
Speaker 6: And also, since the launch, we have seen very positive ranking performance on both Simo and Douyin. So, the launch of this lipstick was only at the end of September , so it hasn't really contributed to much of the Q3 performance. But in Q4 and W11, we continue to see this product to gain market share.
A very positive ranking performance on both small and so.
Launched office mistake was only at the end of September so haven't really hard to get as much of the Q3 or four that slipped into Q4 in double 11.
You can see the product to gain market share.
Yeah.
Speaker 4: Yeah, and your second question, I think, Irene, is...
And your second question I think I read that are.
Speaker 4: I already covered part of the answer for your question. We launched our new product for book diary towards the end of, mid to end of September , Q3.
I already covered so that's you know part of the answer for your question you know, we launched our new product.
Towards the end of our mid to end of September Q3.
Speaker 4: And the sales contribution from those new products was started to...
And the.
Sales contribution from those.
New products are we've started to.
Speaker 4: on our P&Ls starting in Q4. So that's one reason. One other reason is
So on our on our P&L.
And in Q4, so that's one reason and one other reason as you know.
Speaker 4: You know, Q4 has traditionally been a strong season for our skincare products. And if you look at our
Q4 has.
So this has really been a strong season for our skin care products and.
Look at our you know.
Speaker 4: skin care products and the three main skin care brands that have been growing really fast in the past many quarters, and we are expecting
<unk> products and.
The main three main skincare brand.
Had been growing really fast.
In the past many quarters and we are expecting.
Speaker 4: a strong growth from those skincare brands. Going off, you know, with the slowdown of the decline, sales decline of Perfect Diary brand and strong growth from those other skincare brands. That's why, you know, we are expecting.
Our strong growth from those prepaid brand so all in all.
With that with the slowdown of the decline sales decline a sort of diary Ryan.
And the strong growth.
From those other skin care brands.
That's why you know we are expecting.
Speaker 4: a strong quarter in Q4, and therefore, you know, we give the guidance of 0 to 5% year-over-year growth. As you know, you know, in the past almost two years, you know, the sales of the company have been...
A strong quarter in Q4.
Uh huh.
And therefore, you know we gave the guidance of zero to 2.25% year over year.
Our growth.
You know you're in the in the in the past almost two years you know the sales of the company had been.
Speaker 4: declining and hopefully, you know, that decline has bottomed out and we do expect ourselves to
Declining and hopefully you know that the client has bottomed out and we do expect our sales too.
Speaker 4: start to gain traction and the uh, uh, the people who...
Hard to gained traction.
And the foreseeable future.
Yeah.
Got it that's very helpful. Thank you very much and I have no more questions.
Speaker 5: I got it. That's very helpful. Thank you very much, and I have no more questions.
Thank you and once again. Please press Star then one if you would like to ask a question.
Speaker 1: Thank you. And once again, please press star, then 1 if you would like to ask.
Yeah.
And once more as a reminder, star then one will allow you to ask a question.
Speaker 1: But once more as a reminder, star then one will allow you to ask.
Okay.
Yes.
Okay.
Speaker 1: Alright, this concludes the question and answer session. I would like to return the call to Irene Liu for any closing comments.
Alright. This concludes our question and answer session I would like to turn.
Colorado, our IMU for any closing comments.
[noise]. Thank you once again for joining US today, if you have any other further questions. Please feel free to contact us directly for at <unk> financial Communications, our contact information for IR in both China and the U S can be found in today's press release.
Speaker 2: Thank you once again for joining us today. If you have any other further questions, please feel free to contact us at Yasen directly or at PSM Financial Communications. Our contact information for IR in both China and the U.S. can be found in today's press release. Have a great day.
Great day, Thank you.
Okay.
Speaker 1: Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Thank you. The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
Okay.