Yatsen Holding Limited (YSG): History, Ownership, Mission, How It Works & Makes Money

Yatsen Holding Limited (YSG) is known for its Perfect Diary brand, but is its pivot to premium skincare defintely paying off for investors?

The Q3 2025 results suggest a powerful strategic shift, with total net revenues soaring 47.5% year-over-year to approximately US$140.2 million, largely driven by the skincare portfolio, which jumped an impressive 83.2% and now accounts for nearly half-49.2%-of their total revenue.

As a seasoned analyst, I see a company narrowing its net loss by 41.9% in a tough market, so how exactly does this Direct-to-Consumer (DTC) model work, and what does their mission to create a new world of beauty mean for your portfolio? We need to understand the mechanics of how Yatsen Holding Limited truly makes money.

Yatsen Holding Limited (YSG) History

You want to understand the foundation of Yatsen Holding Limited, a company that essentially rewrote the playbook for beauty in China, and you need to know how they got from a startup idea to a multi-brand powerhouse. The quick takeaway is that Yatsen Holding Limited was built on a digitally native, color cosmetics brand, Perfect Diary, which was a massive, fast-burn success, but the company's long-term survival now hinges on a strategic, costly pivot to science-backed, higher-margin skincare brands.

Given Company's Founding Timeline

Year established

Yatsen Holding Limited was established in 2016.

Original location

The company started in Guangzhou, China, a major hub for commerce and manufacturing.

Founding team members

The company was co-founded by Jinfeng Huang (who serves as Chairman and CEO), Yuwen Chen, and Jianhua Lyu.

Initial capital/funding

While the specific seed funding for the 2016 launch is not public, the first major capital injection came later. The company raised a gross total of approximately $616.9 million from its Initial Public Offering (IPO) on the New York Stock Exchange in November 2020.

Given Company's Evolution Milestones

Given Company's Transformative Moments

The single most transformative decision for Yatsen Holding Limited was the shift away from being a pure-play, trend-driven color cosmetics company-a model that led to its early unicorn valuation-to a diversified, science-focused beauty group.

The original success was built on Perfect Diary's agility, using social media key opinion leaders (KOLs) and a fast-fashion approach to makeup. But honestly, that model proved to be capital-intensive and less sustainable, leading to a stock price drop of over 98% from its 2021 peak.

Here's the quick math on the pivot's impact, based on the latest 2025 data:

• The Skincare Brands segment drove the recovery, with net revenues increasing by 83.2% year-over-year in the third quarter of 2025.
• Total net revenues for Q3 2025 increased by 47.5% to RMB998.4 million (approximately $140.2 million USD), signaling a clear top-line acceleration.
• This shift also improved gross margin to 78.2% in Q3 2025, up from 75.9% in the prior year period, because premium skincare products naturally carry higher margins than mass-market color cosmetics.

What this estimate hides is that the company is still navigating financial challenges, reporting a net loss of RMB70.4 million (approximately $9.9 million USD) in Q3 2025, even though that loss has narrowed significantly. The company is defintely betting big on R&D and premium acquisitions like Eve Lom to build a Mission Statement, Vision, & Core Values of Yatsen Holding Limited (YSG).

Yatsen Holding Limited (YSG) Ownership Structure

Yatsen Holding Limited's ownership structure is built around a dual-class share system, a common setup for technology and founder-led Chinese companies, which concentrates voting control in the hands of its founders despite a large public float.

This means that while a significant portion of the equity is publicly traded, key decisions are defintely steered by a small group of insiders. This structure is crucial for understanding the company's long-term strategic direction. Exploring Yatsen Holding Limited (YSG) Investor Profile: Who's Buying and Why?

Yatsen Holding Limited's Current Status

Yatsen Holding Limited is a publicly traded company, listed on the New York Stock Exchange (NYSE) under the ticker symbol YSG. As of November 2025, the company operates with a market capitalization of approximately $559.33 million.

The company remains a China-based beauty group, focused on its brand portfolio, which includes Perfect Diary and its high-growth skincare segment. For Q3 2025, the company reported total net revenues of RMB 998.4 million (US$140.2 million), showing a strong 47.5% year-over-year increase, so the growth strategy is clearly gaining traction.

Yatsen Holding Limited's Ownership Breakdown

The dual-class structure means that the equity ownership percentages below do not directly correlate to voting power. Individual insiders, particularly the CEO, hold shares with superior voting rights, allowing them to maintain control over the company's governance and strategy.

Here's the quick math on the equity breakdown as of the most recent filings, which show a strong insider concentration of power:

Yatsen Holding Limited's Leadership

The leadership team is a mix of company founders and seasoned executives from major global consumer goods and finance firms, which is exactly what you want to see for a growth company pivoting toward profitability.

• Jinfeng Huang: Founder, Chairman of the Board of Directors, and Chief Executive Officer (CEO). He is the central figure, appointed in 2016, and his significant insider ownership aligns his interests directly with the company's expansion.
• Donghao Yang: Director and Chief Financial Officer (CFO). He joined in November 2020 after serving as CFO at Vipshop Holdings Ltd. (NYSE:VIPS), bringing deep public company financial experience.
• Jing Cheng: Chief Scientific Officer (CSO). Appointed in March 2023, she brings over 25 years of R&D experience from companies like Estee Lauder Companies (NYSE:EL), which is critical as Yatsen focuses on product innovation.
• Irene Lyu: Head of Strategic Investments & Capital Markets. She is frequently involved in investor communications, including the Q3 2025 earnings call, managing the company's relationship with the financial community.

This core team is responsible for steering the company's strategy, particularly the shift toward a higher-margin skincare segment, which drove 83.2% year-over-year revenue growth in Q3 2025.

Yatsen Holding Limited (YSG) Mission and Values

Yatsen Holding Limited's core mission is to redefine beauty discovery for a global audience, a purpose that is now deeply intertwined with its strategic pivot to become a world-class pioneer in beauty science and innovation.

You're looking at a company that is intentionally shifting its cultural DNA from a fast-fashion cosmetics model to a research and development (R&D)-driven beauty group, and you can see this in their numbers. For example, their Skincare Brands revenue shot up 83.2% year-over-year in the third quarter of 2025, hitting RMB 490.8 million (US$68.9 million) and representing 49.2% of total net revenues. That's a massive change in focus, and it's defintely working.

Given Company's Core Purpose

The company's core purpose goes beyond just selling makeup; it's about building a multi-brand platform that empowers customers through product quality and a direct-to-consumer (DTC) connection. This is the foundation for their long-term growth, which is why you see them investing heavily in brands like Galénic, DR.WU, and Eve Lom.

Official Mission Statement

Yatsen Holding Limited operates with a dual-focus mission that reflects its origins and its new strategic direction. The original, broader mission focuses on the customer experience, while the more recent statement highlights the commitment to scientific leadership.

• Create an exciting new journey of beauty discovery for consumers around the world.
• Help shape the future of beauty-responsibly, collaboratively, and globally.

To be fair, the second mission, stated by the CEO in November 2025, shows where the real capital is flowing-into R&D and scientific rigor. This focus is what drove the company's gross margin up to 78.2% in Q3 2025.

Vision Statement

The company's vision is a clear roadmap for its strategic transformation, moving from a China-centric color cosmetics leader to a global, technology-driven powerhouse. This is a tough pivot, but the Q3 2025 non-GAAP net loss narrowing to RMB 51.5 million (US$7.2 million) shows they are getting closer to profitability.

• Become a world-class technology-driven beauty pioneer.
• Establish a competitive and resilient brand portfolio anchored in R&D and innovation.
• Build a future where global research, global talent, and global markets intersect.

What this estimate hides is the continued investment needed to fully realize this vision, but the consistent revenue growth-total net revenues increased 47.5% to RMB 998.4 million (US$140.2 million) in Q3 2025-suggests the market is buying into the shift. If you want to dive deeper into the ownership structure financing this vision, check out Exploring Yatsen Holding Limited (YSG) Investor Profile: Who's Buying and Why?

Given Company slogan/tagline

Yatsen Holding Limited does not use a single, universal company slogan, preferring to let its diverse brand portfolio speak to different consumer segments. Still, the underlying message across its brands, including Perfect Diary and Eve Lom, is consistent.

• Emphasize innovation and quality in product offerings.
• Promote a sense of empowerment and self-expression through beauty.
• Focus on beauty for the modern Chinese consumer.

The core values that drive this messaging are customer-centricity, integrity, and innovation, which guide everything from product development to their direct-to-consumer strategy. They are trying to build trust with a high-quality product, not just a flashy ad.

Yatsen Holding Limited (YSG) How It Works

Yatsen Holding Limited operates as a digitally native, multi-brand beauty group, primarily in China, by using a Direct-to-Consumer (DTC) business model to rapidly develop, market, and sell products across color cosmetics and high-growth skincare segments.

The company delivers value by leveraging a data-driven platform that quickly identifies emerging beauty trends and translates them into new products, which are then promoted through highly engaging social media campaigns with Key Opinion Leaders (KOLs).

Given Company's Product/Service Portfolio

Given Company's Operational Framework

Yatsen's operational framework is built on speed and digital integration, allowing it to move from trend identification to product launch faster than traditional beauty giants. Here's the quick math: this agile process is key to maintaining a high gross margin, which hit 78.2% in the third quarter of 2025.

• DTC Digital-First Distribution: Sell directly to customers through major Chinese e-commerce platforms like Tmall and JD.com, plus social content channels like Douyin (China's TikTok) and WeChat. This cuts out traditional retail middlemen, so they keep more margin.
• Agile Product Development: Use real-time consumer data from social platforms to inform product development, allowing them to launch new products quickly to capitalize on fleeting trends. They maintain a high quality compliance rate of 99.5% with their manufacturing partners.
• R&D Investment: The company is defintely leaning into science, opening a new Global Innovation R&D Center in Shanghai in 2024. This focus is visible in their R&D costs-to-sales ratio, which rose to 3.7% in Q2 2024.
• Supply Chain Optimization: Focus on streamlining the supply chain and enhancing digital capabilities to support an annual production capacity of 120 million units across their network of 7 certified manufacturing partners.

You can see the direct impact of this shift on their bottom line; for more on that, check out Breaking Down Yatsen Holding Limited (YSG) Financial Health: Key Insights for Investors.

Given Company's Strategic Advantages

The competitive edge for Yatsen Holding Limited comes down to a few core, hard-to-replicate assets that traditional brands struggle to match.

• Multi-Brand Ecosystem: Own a diverse portfolio of brands (e.g., Perfect Diary, Galénic, Eve Lom) spanning mass, masstige, and premium price points. This strategy allows them to capture different consumer segments without cannibalizing their own sales.
• Skincare-Driven Profitability: The strategic pivot to higher-margin skincare brands is paying off, with the segment's revenue surging by 83.2% year-over-year in Q3 2025. This focus on premium, science-backed products like those from DR.WU is driving overall gross margin improvement.
• Data-Fueled Digital Marketing: A superior ability to leverage big data and analytics to personalize marketing and product offerings. This hyper-targeted approach, which uses an extensive network of Key Opinion Leaders (KOLs), builds a loyal community and drives a higher conversion rate than traditional advertising models.
• Financial Agility: The company reported a Q3 2025 net loss of RMB 70.4 million (US$ 9.9 million), but this represents a 41.9% narrowing from the previous year, showing operational efficiencies are taking hold. They're getting leaner while still growing the top line.

Yatsen Holding Limited (YSG) How It Makes Money

Yatsen Holding Limited makes money by designing, developing, and selling a diverse portfolio of beauty and personal care products, primarily through a digital-first, multi-brand strategy across its Skincare and Color Cosmetics segments in the China market. The core of their financial engine is a strategic shift toward premium, higher-margin skincare products, which is currently driving significant revenue growth and improving overall profitability metrics.

Yatsen Holding Limited's Revenue Breakdown

The company's net revenues for the third quarter of 2025 totaled RMB 998.4 million (approximately US$140.2 million), marking a 47.5% year-over-year increase. The revenue mix shows a near-even split between their two main segments, with Skincare Brands rapidly gaining ground to nearly half the total.

Business Economics

The economic fundamentals for Yatsen are currently defined by a successful strategy to upgrade their product mix, moving from high-volume color cosmetics to higher-value skincare, which directly impacts margins. This shift is defintely the story here.

• Margin Improvement: The gross margin for Q3 2025 rose to a strong 78.2%, up from 75.9% a year prior, primarily because skincare products carry a higher margin than color cosmetics.
• Pricing Strategy: The company employs a multi-brand strategy, allowing for differentiated pricing. Brands like Perfect Diary focus on mass-market digital engagement, while acquired brands such as Galénic and Eve Lom target the premium segment, supporting the higher average selling price (ASP) needed for margin expansion.
• R&D as a Cost Driver: Yatsen is actively investing in long-term product differentiation; research and development (R&D) expenses increased to 4.0% of total net revenues in Q3 2025, up from 3.7% in the prior year. This is a crucial, non-negotiable cost for sustaining the premium skincare push.
• Distribution Efficiency: A digital-first model keeps a lid on traditional retail overhead. For example, their flagship brand, Perfect Diary, is excelling in new channels like the WeChat video channel, which helps improve marketing efficiency by being closer to the consumer.

To be fair, the long-term success of this model hinges on the continued strength of the premium skincare portfolio, which you can read more about in our Mission Statement, Vision, & Core Values of Yatsen Holding Limited (YSG).

Yatsen Holding Limited's Financial Performance

Yatsen's Q3 2025 results show a clear trend toward operational improvement, even as they remain in a net loss position. They are demonstrating operating leverage by growing revenue faster than operating expenses.

• Revenue Momentum: Total net revenues hit RMB 998.4 million (US$140.2 million) in Q3 2025, representing the fourth consecutive quarter of year-over-year growth.
• Loss Narrowing: The net loss for Q3 2025 narrowed significantly by 41.9% year-over-year to RMB 70.4 million (US$9.9 million), driven by both the higher gross margin and improved operating efficiencies.
• Liquidity Position: As of September 30, 2025, the company maintained a solid cash position, with cash, restricted cash, and short-term investments totaling RMB 1.16 billion (US$162.6 million).
• Forward Outlook: Management is projecting continued strong growth for Q4 2025, with revenue guidance set between RMB 1.32 billion and RMB 1.49 billion, an expected year-over-year increase of 15% to 30%.

Here's the quick math on the narrowing loss: the net loss margin dropped from 17.9% in Q3 2024 to just 7.0% in Q3 2025, showing real progress toward breakeven.

Yatsen Holding Limited (YSG) Market Position & Future Outlook

Yatsen Holding Limited is executing a critical pivot, shifting its core business from mass-market color cosmetics to higher-margin, science-backed skincare, which is the key to its future profitability. This strategy is paying off in the near term: total net revenues for Q3 2025 surged by 47.5% year-over-year to RMB 998.4 million (US$140.2 million), driven almost entirely by its skincare portfolio.

The company projects continued growth, with total net revenues for Q4 2025 expected to be between RMB 1.32 billion and RMB 1.49 billion, representing a year-over-year increase of 15% to 30%. This trajectory confirms the market is responding to the focus on clinical efficacy and premiumization, but the challenge remains converting top-line growth into consistent net income. You can learn more about the strategic foundation of this shift in the Mission Statement, Vision, & Core Values of Yatsen Holding Limited (YSG).

Competitive Landscape

Yatsen Holding operates in a bifurcated market: a highly competitive domestic segment and a premium segment dominated by international players. The company's strategy is to leverage its Direct-to-Consumer (DTC) expertise to build its acquired premium skincare brands like Galénic and Eve Lom, directly challenging the foreign giants in the high-margin space.

Opportunities & Challenges

The path forward is clear: double down on skincare and ruthlessly manage costs. Here's the quick math: the Q3 2025 gross margin was a healthy 78.2%, but selling and marketing expenses still consumed 68.3% of net revenues. That's where the operational leverage needs to kick in.

Industry Position

Yatsen Holding is positioned as a leading domestic beauty group undergoing a major strategic transformation from a high-growth, high-marketing color cosmetics player to a more sustainable, R&D-focused multi-brand skincare house. The company is defintely moving in the right direction, achieving a significant narrowing of its net loss to RMB 70.4 million in Q3 2025, a 41.9% improvement year-over-year.

• The company's focus on clinical skincare, including brands like DR.WU and Galénic, aligns with the broader consumer trend favoring functional beauty and clinical efficacy in China.
• While the overall China beauty market is projected to reach US$78 billion in revenue by 2025, Yatsen's ability to capture a larger share hinges on its R&D investment, which was 3.3% of total net revenues in Q2 2025.
• The market is clearly rewarding efficiency: the gross margin improved to 78.2% in Q3 2025, primarily due to the increased sales of these higher-gross-margin products.

The next step for Yatsen is proving it can maintain this growth while driving down the sales and marketing percentage to achieve consistent GAAP profitability.