Q1 2026 Yatsen Holding Ltd Earnings Call

May 26, 2026

Operator: Ladies and gentlemen, good day, and welcome to the Yatsen Q1 2026 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Irene Lyu, Vice President, Head of Strategic Investment and Capital Markets. Please go ahead.

Speaker #2: Please go ahead. Thank you, operator. Please note that discussion today will contain forward-looking statements relating to the company's future performance, and our intent is to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act.

Irene Lyu: Thank you, operator. Please note that discussion today will contain forward-looking statements relating to the company's future performance and are intended to qualify for the safe harbor from liability as established by the US Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. 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 this discussion. A general discussion of the risk factors that could affect Yatsen's business and financial results is included in certain filings of the company with the Securities and Exchange Commission. The company does not undertake any obligation to update this forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only.

Speaker #2: Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, assumptions, and other factors. 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 this discussion.

Speaker #2: A general discussion of the risk factors that could affect Yatsen's business and financial results is included in certain filings of the company with the Securities and Exchange Commission.

Speaker #2: The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only.

Speaker #2: 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.

Irene Lyu: 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. Joining us today on the call from Yatsen senior management are Mr. Jinfeng Huang, our Founder, Chairman, and CEO, and Mr. Donghao Yang, our CFO and Director. Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yatsen's investor relations website at ir.yatsenglobal.com. I'll now turn the call over to Mr. Jinfeng Huang. Please go ahead, sir.

Speaker #2: Joining us today on the call from Yatsen's senior management are Mr. Jinseong Hwang, our founder, chairman, and CEO, and Mr. Donghao Yang, our CFO and director.

Speaker #2: Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yatsen's investor relations website at ir.yatsenglobal.com.

Speaker #2: I'll now turn the call over to Mr. Jinseong Hwang. Please go ahead, sir.

Speaker #3: Thank you, Irene. Hello, everyone, and thank you for joining our first quarter 2026 earnings conference call. Going into this year, we delivered top-line growth that met our previous guidance range, and demonstrated ongoing resilience of our multi-brand strategy.

Jinfeng Huang: Hey there, Irene. Hello, everyone. Thank you for joining our Q1 2026 Earnings Call for info. Going into this year, we delivered online growth that met our period guidance range and demonstrated ongoing resilience of our multi-brand strategy. Our financial and operational highlights this quarter further show that Yatsen is navigating the market with a clear strategic vision. Looking at the macro environment, according to the National Bureau of Statistics, beauty retail sales grew by 5.9% year-over-year in Q1 2026, reflecting a stable yet highly competitive domestic beauty market. Looking closely at the online channels, the combined sales across Tmall, Douyin, and JD.com also recorded a single-digit year-over-year growth. Against this market backdrop, our strategic rebalancing has yielded highly encouraging results. Our total net revenues stayed on a steady growth trajectory, growing by 22.5% year-over-year for Q1.

Speaker #3: Our financial and operational highlights this quarter further show that Yatsen is navigating the market with a clear strategic vision. Looking at the market environment, according to the National Bureau of Statistics, beauty retail sales grew by 5.9% year over year in the first quarter of 2026.

Speaker #3: Reflecting a stable yet highly competitive domestic beauty market. Looking closely at the online channels, the combined sales across Tmall, Lvyin, and JD.com also recorded a single-digit year-over-year growth.

Speaker #3: Against this market backdrop, our strategic rebalancing has yielded highly encouraging results. Our total net revenues, based on a steady growth trajectory, grew by 22.5% year over year for the first quarter.

Speaker #3: More importantly, this growth was primarily propelled by the sustained upward momentum of our skincare brand, which experienced another substantial year-over-year growth of 58.5%. So, given this favorable shift toward our skincare offering, our gross margin continued its year-over-year expansion and reached a historical milestone of 18.2%, reinforcing the structural health of our business model.

Jinfeng Huang: More importantly, this growth was primarily propelled by the sustained upward momentum of our skincare brand, which experienced another substantial year-over-year growth of 58.5%. Driven by this favorable shift toward our skincare offerings, our growth margin continued its year-over-year expansion and reached a historical milestone of 18.2%, reinforcing the structural health of our business model. Throughout Q1, we remained fiercely committed to our core strategic initiatives. Specifically, we continued to drive R&D-led product innovation, strengthen brand equity across our multi-brand portfolio, and position our business for long-term profitability optimization. In the following section, I would like to share our key progress across each of these three strategic pillars. Our first pillar is driving R&D-led innovation, which remains the ultimate engine behind our sustainable growth.

Speaker #3: Throughout the first quarter, we remained strictly committed to our core strategic initiatives. Specifically, we continued to drive R&D-led product innovation, strengthen brand equity across our multi-brand portfolio, and position our business for long-term profitability optimization.

Speaker #3: In the following session, I would like to share our key progress across each of these three strategic pillars. Our first pillar is driving R&D-led innovation, which remains the ultimate engine behind our sustainable growth.

Speaker #3: In the first quarter, we consistently stepped up our R&D investments. R&D expenses, as a percentage of total net revenues, increased further to 3.9%.

Jinfeng Huang: In Q1, we consistently stepped up our R&D investments, with R&D expenses as a percentage of total net revenues increasing further to 3.9%. This ongoing commitment allowed us to broaden our scientific initiatives. For instance, Dr. Wu launched the fourth Dr. Wu Acne Research Fund project in March, bringing online and offline dermatological experts to tackle a series of specialized research topics. In April, the brand marked another milestone with the release of the white paper on Chinese dermatological research and skin renewal. Leveraging 48 years of clinical expert trials and skin insights, this publication officially defines a multi-ingredient, multi-target, and a full-layer skin renewal management framework, further solidifying the brand authority in dermatology. On the product front, our advanced R&D system has successfully powered a series of highly market-ready solutions.

Jinfeng Huang: In Q1, we consistently stepped up our R&D investments, with R&D expenses as a percentage of total net revenues increasing further to 3.9%. This ongoing commitment allowed us to broaden our scientific initiatives. For instance, Dr. W launched the fourth Dr. Wu Acne Research Fund project in March, bringing online and offline dermatological experts to tackle a series of specialized research topics. In April, the brand marked another milestone with the release of the white paper on Chinese dermatological research and skin renewal. Leveraging 48 years of clinical expert trials and skin insights, this publication officially defines a multi-ingredient, multi-target, and a full-layer skin renewal management framework, further solidifying the brand authority in dermatology. On the product front, our advanced R&D system has successfully powered a series of highly market-ready solutions.

Speaker #3: This ongoing commitment allowed us to broaden our scientific initiative. For instance, Dr. Wu launched the fourth Dr. Wu Acne Research Fund project in March, reaching online and offline dermatological experts to tackle a series of specialized research topics.

Speaker #3: In April, the brand marked another milestone with the release of the white paper on Chinese dermatological research and skin renewal. Leveraging 48 years of clinical experts' ties and skin insights, this publication officially defines a multi-ingredient, multi-target, and four-layer skin renewal management framework.

Speaker #3: Further solidifying the brand authority in dermatology. On the product front, our advanced R&D system has successfully powered a series of highly market-ready solutions. During the first quarter, Galanese's new Couture Revelation Cellularity Reviving Cream was an instant hit.

Jinfeng Huang: During the Q1, Guerlain new Couture Revolution Cellular Reviving Cream was an instant hit, selling out soon after its debut. Dr. Wu expanded its successful PDRN series with the introduction of two new breakthrough products, the Ageversal Sodium DNA Collagen Hydro-Luminous Mask, and the Ageversal Anti-Wrinkle Collagen Eye Cream. Meanwhile, YSL also expanded its product portfolio by launching the Renewal Intensive Treatment, designed specifically for the dedicated eye area. These launches underscore our enhanced efficiency in extending existing series into new categories and broader expertise. Our second pillar is strengthening brand equity through our portfolio through expert-led communication and strategic brand activities. In March, Guerlain made a high-profile appearance at AMWC, the Aesthetic and Anti-Aging Medicine World Congress in Monaco. This world-class presentation further reinforced Guerlain scientific credentials and solidified its core consumer mind share in cellular-level anti-aging skincare.

Speaker #3: Selling out soon after its debut, Dr. Wu expanded its successful PDRN series with the introduction of two new breakthrough products: the AgeVerso Sodium DNA Collagen Hydroluminous Mask and the AgeVerso Anti-Wrinkle Collagen Eye Cream.

Speaker #3: Meanwhile, this launch also expanded its product portfolio by launching the Renewal-Intense Treatment, designed specifically for the dedicated eye area. This launch underscores our enhanced efficiency in expanding existing series into new categories and broader efficacy.

Speaker #3: Our second pillar is strengthening brand equity through our portfolio. Through expert-led communication and strategic brand activities, in March, Galanese made a high-profile appearance at the AMWC, the Aesthetic and Anti-Aging Magazine World Congress.

Speaker #3: In Monaco, this world-class presentation further reinforced Galanese's scientific credentials and solidified its core consumer milestone in cellular-level anti-aging skincare. Furthermore, in April, Galanese announced the appointment of Fan Chengchen as the new brand ambassador.

Jinfeng Huang: Furthermore, in April, Guerlain announced the appointment of Fan Chengcheng as the new brand ambassador, a move that has amplified its brand resonance and consumer awareness. Our third pillar is improving overall profitability. During the Q1, our selling and marketing expenses as a percentage of total net revenues experienced an increase as a result of both the continued investment in building our core brands and the elevated industry-wide traffic acquisition costs on the Douyin platform. However, our commitment to long-term profitability optimization remains unwavering. Moving forward, we will dynamically adjust our channel mix, streamline our operational expenses, and unlock greater operational leverage from our fixed costs. These initiatives will ensure that our top-line expansion efficiently translates into further margin improvement, paving the way of sustainable, profit-centric growth. Finally, I would like to provide an important update regarding our recent financing transaction.

Speaker #3: A move that has amplified its brand resume and consumer awareness. Our third pillar is improving overall profitability. So, during the first quarter, our selling and marketing expenses percentage of total net revenues experienced an increase.

Speaker #3: As a result of both the continued investment in building our core brand and the elevated, industry-wide traffic acquisition cost on the Douyin platform, our commitment to long-term profitability optimization remains unwavering.

Speaker #3: Moving forward, we will dynamically adjust our channel mix to streamline our operational expenses and unlock greater operational leverage for our fixed costs. This initiative will ensure that our top-line expansion efficiently translates into further margin improvement, paving the way for sustainable, profit-centric growth.

Speaker #3: Finally, I would like to provide an important update regarding our recent financing transaction. Following our announcement on March 11, we are pleased to note that we successfully completed the first tranche of the private placement of convertible notes and warrants on May 21, 2026.

Jinfeng Huang: Following our announcement on 11 March 2026, we are pleased to note that we successfully completed the first tranche of the private placement of convertible notes and warrants on 21 May 2026. In addition to myself and Chucks Ga Capital, we are delighted to welcome Hillhouse as a key participating investor in this offering. This successful closing serves as a powerful testament to our long-term investors' steadfast confidence in Yatsen strategic direction and further value. Management shares this exact same confidence. We are fully energized to deliver sustained value for our shareholders in the quarters to come. With that, I will now turn the call over to our CFO, Donghao Yang, to discuss our financial details.

Speaker #3: In addition to myself and Chasta Capital, we are delighted to welcome Hill House as a key participating investor in this offering. This successful closing serves as a powerful testament to our long-term investors' steadfast confidence in Yatsen's strategic direction and further value.

Speaker #3: Management shares this exact same confidence, and we are fully energized to deliver sustained value for our shareholders in the quarters to come. With that, I will now turn the call over to our CFO, Dong Haoyang, to discuss our financial details.

Speaker #2: Thank you, David. And hello, everyone. Before I get started, I would like to clarify that all financial numbers presented today are in RMB amounts, and all percentage changes refer to year-over-year changes unless otherwise noted.

Donghao Yang: Thank you, Jinfeng Huang, and hello, everyone. Before I get started, I would like to clarify that all financial numbers presented today are CNY amount, and all percentage changes refer to year-over-year changes unless otherwise noted. Total net revenues for Q1 2026 increased by 22.5% to CNY 1.02 billion from CNY 833.5 million for the prior year period. The increase was primarily due to a 58.5% year-over-year increase in net revenues from skincare brands, partially offset by a 5% year-over-year decrease in net revenues from color cosmetics brands. Gross profit for Q1 2026 increased by 24.3% to CNY 819.2 million from CNY 659.1 million for the prior year period. Gross margin for Q1 2026 increased to 80.2% from 79.1% for the prior year period.

Speaker #2: Total net revenues for the first quarter of 2026 increased by 22.5% to $1.02 billion from $833.5 million for the prior year period. The increase was primarily due to a 58.5% year-over-year increase in net revenues from skincare brands, partially offset by a 5% year-over-year decrease in net revenues from color cosmetics brands.

Speaker #2: Gross profit for the first quarter of 2026 increased by 24.3% to $819.2 million from $659.1 million for the prior-year period. Gross margin for the first quarter of 2026 increased to 80.2% from 79.1% for the prior-year period.

Speaker #2: Total operating expenses for the first quarter of 2026 increased by 32.5% to $918.1 million from $693.2 million for the prior year period. As a percentage of total net revenues, total operating expenses for the first quarter of 2026 were 89.9%, as compared with 83.2% for the prior year period.

Donghao Yang: Total operating expenses for Q1 2026 increased by 32.5% to CNY 918.1 million from CNY 693.2 million for the prior year period. As a percentage of total net revenues, total operating expenses for Q1 2026 were 89.9%, as compared with 83.2% for the prior year period. Fulfillment expenses for Q1 2026 were CNY 61.1 million, as compared with CNY 51.8 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for Q1 2026 decreased to 6% from 6.2% for the prior year period. The decrease was primarily due to further improvements in logistics efficiency. Selling and marketing expenses for Q1 2026 were CNY 737.2 million as compared with CNY 553.8 million for the prior year period.

Speaker #2: Fulfillment expenses for the first quarter of 2026 were $61.1 million, as compared with $51.8 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for the first quarter of 2026 decreased to 6.0% from 6.2% for the prior year period.

Speaker #2: The decrease was primarily due to further improvements in logistics efficiency. Selling and marketing expenses for the first quarter of 2026 were 737.2 million, as compared with 553.8 million for the prior year period.

Speaker #2: As a percentage of total net revenues, selling and marketing expenses for the first quarter of 2026 increased to 72.2% from 66.4% for the prior-year period.

Donghao Yang: As a percentage of total net revenues, selling and marketing expenses for Q1 2026 increased to 72.2% from 66.4% for the prior year period. The increase was primarily driven by investments in broadening consumer awareness and building long-term brand equity of our core brands, coupled with higher traffic acquisition costs on the Douyin platform. General and administrative expenses for Q1 2026 were CNY 80.3 million as compared with CNY 64.9 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for Q1 2026 were 7.9% as compared with 7.8% for the prior year period, remaining largely flat. Research and development expenses for Q1 2026 were CNY 39.4 million as compared with CNY 22.6 million for the prior year period.

Speaker #2: The increase was primarily driven by investments in broadening consumer awareness and building long-term brand equity of our core brands, coupled with higher traffic acquisition costs on the Douyin platforms.

Speaker #2: General and administrative expenses for the first quarter of 2026 were $80.3 million, as compared with $64.9 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for the first quarter of 2026 were 7.9%, as compared with 7.8% for the prior year period.

Speaker #2: Remaining largely flat. Research and development expenses for the first quarter of 2026 were $39.4 million as compared with $22.6 million for the prior year period.

Speaker #2: As a percentage of total net revenues, research and development expenses for the first quarter of 2026 increased to 3.9% from 2.7% for the prior year period.

Donghao Yang: As a percentage of total net revenues, research and development expenses for Q1 2026 increased to 3.9% from 2.7% for the prior year period. The increase was primarily driven by higher payroll expenses resulting from a rise in research and development headcount. Loss from operations for Q1 2026 was CNY 99 million as compared with CNY 34.1 million for the prior year period. Operating loss margin was 9.7% as compared with 4.1% for the prior year period. Non-GAAP loss from operations for Q1 2026 was CNY 84.6 million as compared with CNY 14.9 million for the prior year period. Non-GAAP operating loss margin was 8.3% as compared with 1.8% for the prior year period. Net loss for Q1 2026 was CNY 61.9 million as compared with CNY 5.6 million for the prior year period.

Speaker #2: The increase was primarily driven by higher payroll expenses resulting from a rise in research and development headcount. Loss from operations for the first quarter of 2026 was $99 million, as compared with $34.1 million for the prior year period.

Speaker #2: Operating loss margin was $9.7 million, as compared with 4.1% for the prior year period. Non-GAAP loss from operations for the first quarter of 2026 was $84.6 million, as compared with $14.9 million for the prior year period.

Speaker #2: Non-GAAP operating loss margin was 8.3%, as compared with 1.8% for the prior-year period. Net loss for the first quarter of 2026 was $61.9 million, as compared with $5.6 million for the prior-year period.

Speaker #2: Net loss margin was 6.1% as compared with 0.7% for the prior year period. Net loss attributable to Yatsen's ordinary shareholders for diluted ADS for the first quarter of 2026 was RMB 0.64, as compared with RMB 0.06 for the prior year period.

Donghao Yang: Net loss margin was 6.1% as compared with 0.7% for the prior year period. Net loss attributable to Yatsen's ordinary shareholders per diluted ADS for Q1 2026 was RMB 0.64 as compared with RMB 0.06 for the prior year period. Non-GAAP net loss for Q1 2026 was RMB 57.3 million as compared with non-GAAP net income of RMB 7.1 million for the prior year period. Non-GAAP net loss margin was 5.6% as compared with non-GAAP net income margin of 0.9% for the prior year period. Non-GAAP net loss attributable to Yatsen's ordinary shareholders per diluted ADS for Q1 2026 was RMB 0.6 as compared with non-GAAP net income attributable to Yatsen's ordinary shareholders per diluted ADS of RMB 0.07 for the prior year period.

Speaker #2: Non-GAAP net loss for the first quarter of 2026 was $57.3 million, as compared with non-GAAP net income of $7.1 million for the prior year period.

Speaker #2: Non-GAAP net loss margin was 5.6%, as compared with non-GAAP net income margin of 0.9% for the prior year period. Non-GAAP net loss attributable to Yatsen's ordinary shareholders for diluted ADS for the first quarter of 2026 was RMB 0.6, as compared with non-GAAP net income attributable to Yatsen's ordinary shareholders for diluted ADS of RMB 0.07 for the prior year period.

Speaker #2: As of March 31, 2026, the company had cash, restricted cash, and short-term investments of $934.2 million, as compared with $1.05 billion as of December 31, 2025.

Donghao Yang: As of 31 March 2026, the company had cash, restricted cash, and short-term investments of CNY 934.2 million as compared with CNY 1.05 billion as of 31 December 2025. Net cash used in operating activities for Q1 2026 was CNY 90 million as compared with net cash generated from operating activities of CNY 23.8 million for the prior year period. Looking at our business outlook for Q2 2026, we expect our total net revenues to be between CNY 1.2 billion and 1.3 billion, representing a year-over-year increase of approximately 10% to 20%. These forecasts reflect the company's current and preliminary views on the market and operational conditions, which are subject to change. With that, I'll now like to open the call to Q&A. Operator?

Speaker #2: Net cash used in operating activities for the first quarter of 2026 was $19.0 million, as compared with net cash generated from operating activities of $23.8 million for the prior year period.

Speaker #2: Looking at our business outlook for the second quarter of 2026, we expect our total net revenues to be between $1.2 billion and $1.3 billion, representing a year-over-year increase of approximately 10% to 20%.

Speaker #2: These forecasts reflect the company's current and preliminary views on the market and operational conditions, which are subject to change. With that, I would now like to open the call to Q&A.

Speaker #2: Operator?

Speaker #1: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. To remove yourself from the queue, please press star then two.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. To remove yourself from queue, please press star then two. 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. Our first question today comes from Maggie Huang with CICC. Please go ahead.

Speaker #1: And 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.

Speaker #1: And our first question today comes from Maggie Huang with CICC. Please go ahead.

Speaker #3: Well, thanks for taking my question. This is Maggie Huang from CICC. I have two questions. About my first question, we've seen a rapid growth of our skincare brands in this quarter.

Maggie Huang: Well, thanks for taking my question. This is Maggie Huang from CICC. I have two questions. About my first question, we've seen a rapid growth of our skincare brands in this quarter. Could management share with us how to expand our product portfolio of skincare brands going forward? My second question is that how do we view the competition from foreign brands, especially in high-end skincare markets? That's my two questions. Thank you.

Speaker #3: So could management share with us how to expand our product portfolio of skincare brands going forward? And my second question is, how do we view the competition from foreign brands, especially in the high-end skincare market?

Speaker #3: Those are my two questions. Thank you.

Speaker #4: Thank you, Maggie. We will continue to expand around proven hero product families. So in Q1, Galanic's new anti-aging cream was the great success.

Jinfeng Huang: We will continue to expand around proven hero product families. In Q1, Galénic new anti-aging cream was a great success and sold out shortly after launch. We also saw significant growth from Galénic Snow Algae Facial Moisturizer Cream. These results give us more confidence that Galénic can expand from hero serums into a broader anti-aging skincare routine. For Dr. Wu and Eve Lom, we'll follow the same logic, build complete routines around proven science, strong efficacy, and clear consumer demand. For the second question regarding the competition from high-end foreign brands, competition is very intense, but we believe we have a differentiated position. Our skincare brands combine global heritage, strong scientific credibility, local consumer insights, and very fast execution. Galénic is a very great example. We are building the brand around cellular-level anti-aging, supported by successful product launches and stronger brand communication.

Speaker #4: And it sold out shortly after launch. We also saw significant growth from Galanic's no-algae facial moisturizer cream. So this result gives us more confidence that Galanic can expand from hero serums into a broader anti-aging skincare routine.

Speaker #4: For Dr. Wu and Yip Long, we will follow the same logic. Build complete routines around proven signs, strong efficacy, and a clear consumer demand.

Speaker #4: For a second question regarding the competition from high-end foreign brands, competition is very intense. But we believe we have a differentiated position. So, our skincare brands combine global heritage, strong scientific credibility, local consumer insights, and very fast execution.

Jinfeng Huang: Our skincare brands combine global heritage, strong scientific credibility, local consumer insights, and very fast execution. Galénic is a very great example. We are building the brand around cellular-level anti-aging, supported by successful product launches and stronger brand communication. We are also using AI and data tools to improve consumer insights, content production, CRM, and marketing ROI. This helps us to compete more efficiently, not just spend more. Thank you.

Speaker #4: Galanic does a very good example. We are building the brand around cellular-level anti-aging, supported by successful product launches and stronger brand communication. We are also using AI and data tools to improve consumer insight, content production, CIM, and marketing ROI to help us compete more efficiently, not just spend more.

Jinfeng Huang: We are also using AI and data tools to improve consumer insights, content production, CRM, and marketing ROI. This helps us to compete more efficiently, not just spend more. Thank you.

Speaker #4: Thank you.

Speaker #1: Thank you. And as a reminder, if you would like to ask a question, please press star then one on your telephone keypad. Our next question today comes from Lin Zong at CITIC Securities.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star then one on your telephone keypad. Our next question today comes from Ling Zhang of CITIC Securities. Please go ahead.

Speaker #1: Please go ahead.

Speaker #5: Thank you for taking my question. I'm Lin Zong from CITIC Securities. My question is that we have noticed Dr. Wu is growing really fast.

Ling Zhang: Thank you for taking my question. I'm Ling Zhang from CITIC Securities. My question is that we have noticed Dr. Wu is growing really fast. Could you please share with us the key drivers of the growth? Thank you.

Lin Zhang: Thank you for taking my question. I'm Ling Zhang from CITIC Securities. My question is that we have noticed Dr. Wu is growing really fast. Could you please share with us the key drivers of the growth? Thank you.

Speaker #5: So, could you please share with us the key drivers of the growth? Thank you.

Speaker #4: Well, Dr. Wu is a very important case for us. So the brand has delivered strong growth while maintaining a healthier profitability profile. One reason is its higher B2B channel mix.

Jinfeng Huang: Well, Dr. Wu is a very important case for us. The brand has delivered strong growth while maintaining a healthier profitability profile. One reason is higher B2B channel mix, including professional and offline channels. Which give us the brand a better balance between growth, traffic cost, and profitability. This is a model we want to learn from and selectively apply to other skincare brands. Stronger science, more professional credibility, more balanced channel mix, and better marketing efficiency. Those are some of the key drivers we summarized for Dr. Wu. Thank you.

Speaker #4: Including professional and offline channels, so which gives us as a brand a better balance between growth, shopping cost, and profitability. So this is a model we want to learn from, and that's relatively applied to other skincare brands.

Speaker #4: Stronger signs, more professional credibility, a more balanced channel mix, and better marketing efficiency—those are some of the key drivers we summarized for Dr. Wu.

Speaker #4: Thank you.

Speaker #1: Thank you. And that concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments.

Operator: Thank you. That concludes the question and answer session. I would like to turn the conference back over to management for any additional or closing comments.

Speaker #6: Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Yatsen directly. Our contact information for IR in both China and the US can be found in today's press release.

Jinfeng Huang: Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Yatsen directly. Our contact information for IR in both China and the US can be found in today's press release. Thank you, and have a great day.

Irene Lyu: Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Yatsen directly. Our contact information for IR in both China and the US can be found in today's press release. Thank you, and have a great day.

Speaker #6: Thank you, and have a great day.

Speaker #1: Thank you. And that concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Operator: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.