Yatsen's Q4 2024 Results: A Mixed Bag of Revenue Growth and Profitability Improvement

Yatsen Holding Limited (NYSE: YSG), a leading China-based beauty group, announced its Q4 and full year 2024 financial results on February 25, 2025. The company reported mixed performance, with total net revenues increasing by 7.1% to RMB1.15 billion (US$157.3 million) in Q4 2024, while full year revenues slightly decreased by 0.6% to RMB3.39 billion (US$464.9 million). Despite the revenue growth in Q4, Yatsen's full year results showed a slight decline, indicating ongoing challenges in the beauty market.

Yatsen's Q4 and full-year 2024 results reveal a company making meaningful progress in its strategic transformation despite operating in China's challenging beauty market. The 7.1% year-over-year revenue growth in Q4 represents a significant turnaround from previous quarters, driven primarily by the recovery of Perfect Diary and modest growth across skincare brands. The most compelling development is Yatsen's dramatic profitability improvement. The company achieved non-GAAP net income of RMB107 million in Q4 with a 9.3% margin, compared to a loss in the prior year period. This represents a potential inflection point in the company's financial trajectory, driven by three key factors:

1. Gross margin expansion to 77.8% (up 410 basis points year-over-year) through improved product mix.
2. Selling and marketing expense reduction to 60.1% of revenue (down from 66.9%) through more efficient marketing.
3. General and administrative expense reduction to 8.7% of revenue (down from 14.8%) through headcount optimization.

However, the RMB403.1 million goodwill impairment related to Eve Lom signals continuing challenges in scaling premium skincare acquisitions to meet initial growth expectations. This underscores the difficulty in executing the company's premiumization strategy in a competitive market. The cash position decline to RMB1.36 billion from RMB2.08 billion year-over-year is also concerning, particularly as operating cash flow for the full year was negative. While Q4 generated positive operating cash flow of RMB202.2 million, investors should monitor whether this improvement is sustainable or seasonal.

Yatsen's 2-12% revenue growth guidance for Q1 2025 suggests management sees continued momentum in their core business despite seasonal factors that typically make Q1 weaker. This confidence likely stems from the recovery trajectory in color cosmetics and stable performance in skincare. For investors, the key question remains whether Yatsen can maintain its operational improvements while returning to consistent top-line growth. The achievement of non-GAAP profitability represents meaningful progress, but sustainable GAAP profitability will require addressing underperforming assets and further optimizing the brand portfolio.