Yatsen Holding Limited (NYSE:YSG) shares fell nearly 12% in premarket trading on Monday after the China-based beauty company reported fourth-quarter results that came in below earnings expectations.
The company posted adjusted earnings per ADS of $0.07 for the quarter, missing analyst forecasts despite delivering improved profitability compared with the prior year.
Fourth-quarter revenue rose 20.1% year over year to RMB1.38 billion ($197.3 million), up from RMB1.15 billion in the same period last year.
Growth was primarily driven by strong performance in the Skincare Brands segment, where revenue jumped 51.9% to RMB842.8 million. This gain was partly offset by a 9.1% decline in revenue from Color Cosmetics Brands.
Despite returning to profitability, earnings disappointed investors. Yatsen reported net income of RMB3.0 million ($0.4 million), compared with a net loss of RMB378.8 million in the fourth quarter of 2024. Adjusted net income totaled RMB41.2 million ($5.9 million), down from RMB107.0 million a year earlier.
“We are pleased to conclude 2025 with solid performances, demonstrating the long-term value of our strategic transformation,” said Founder, Chairman and Chief Executive Officer Jinfeng Huang.
For the full year 2025, total net revenue increased 26.7% to RMB4.30 billion ($614.6 million), compared with RMB3.39 billion in 2024. The company reported adjusted net income of RMB8.4 million ($1.2 million) for the year, versus an adjusted net loss of RMB128.2 million in 2024.
Operating expenses in the fourth quarter declined 15.6% to RMB1.08 billion. However, selling and marketing costs rose to 64.8% of revenue from 60.1%, largely due to higher traffic acquisition expenses during the Double 11 shopping festival. Gross margin remained stable at 77.7%.
For the first quarter of 2026, Yatsen expects total net revenue to range between RMB958.6 million and RMB1.08 billion, representing year-over-year growth of 15% to 30%. The midpoint forecast of RMB1.02 billion indicates continued momentum in revenue expansion.