Technology

ATRenew Inc. Reports Unaudited Third Quarter 2024 Financial Results

Published

2 hours ago

November 20, 2024

SHANGHAI, Nov. 20, 2024 /PRNewswire/ — ATRenew Inc. (“ATRenew” or the “Company”) (NYSE: RERE), a leading technology-driven pre-owned consumer electronics transactions and services platform in China, today announced its unaudited financial results for the three months ended September 30, 2024.

Third Quarter 2024 Highlights

Total net revenues grew by 24.4% to RMB4,051.2 million (US$577.3 million) from RMB3,256.8 million in the third quarter of 2023.Income from operations was RMB24.9 million (US$3.5 million), compared to a loss from operations of RMB28.1 million in the third quarter of 2023. Adjusted income from operations (non-GAAP)[1] was RMB104.0 million (US$14.8 million), compared to RMB73.8 million in the third quarter of 2023.Number of consumer products transacted[2] was 9.1 million compared to 8.2 million in the third quarter of 2023.

Mr. Kerry Xuefeng Chen, Founder, Chairman, and Chief Executive Officer of ATRenew, commented, “We are delighted to report that our total net revenues reached RMB4.05 billion in the third quarter of 2024, representing a robust year-over-year growth of 24.4%. We are particularly encouraged by the widespread adoption of our consumer electronics trade-in services, which provide consumers with a seamless experience and competitive pricing. Our AHS stores maintain their industry-leading position, serving as the preferred destination for users to recycle reusable consumer products and purchase quality-assured, value-for-money pre-owned electronic devices.”

Mr. Rex Chen, Chief Financial Officer of ATRenew, added, “The third quarter marked another milestone in our path to enhanced profitability, as we achieved positive GAAP income from operations and our non-GAAP income from operations exceeded RMB100 million for the first time. These results reflect our successful initiatives to optimize operating expenses and the diminishing impact of amortization expenses from historical acquisitions. We also demonstrated our commitment to shareholder returns by repurchasing over US$12 million of our shares during the quarter. Looking ahead, we remain focused on driving operational efficiency and delivering sustainable value to our users and shareholders.”

[1]. See “Reconciliations of GAAP and Non-GAAP Results” for more information.

[2]. “Number of consumer products transacted” represents the number of consumer products distributed to merchants and consumers through transactions on the Company’s PJT Marketplace, Paipai Marketplace and other channels the Company operates in a given period, prior to returns and cancellations, excluding the number of consumer products collected through AHS Recycle; a single consumer product may be counted more than once according to the number of times it is transacted on PJT Marketplace, Paipai Marketplace and other channels the Company operates through the distribution process to end consumer.

Third Quarter 2024 Financial Results

REVENUE

Total net revenues increased by 24.4% to RMB4,051.2 million (US$577.3 million) from RMB3,256.8 million in the same period of 2023.

Net product revenues increased by 25.6% to RMB3,672.2 million (US$523.3 million) from RMB2,924.0 million in the same period of 2023. The increase was primarily attributable to an increase in the sales of pre-owned consumer electronics both through the Company’s online and offline channels.Net service revenues increased by 13.9% to RMB379.0 million (US$54.0 million), compared to RMB332.8 million in the same period of 2023. This increase was primarily due to an increase in the service revenue generated from PJT Marketplace and multi-category recycling business.

OPERATING COSTS AND EXPENSES

Operating costs and expenses were RMB4,028.1 million (US$574.0 million), compared to RMB3,307.5 million in the same period of 2023, representing an increase of 21.8%.

Merchandise costs were RMB3,242.8 million (US$462.1 million), compared to RMB2,611.0 million in the same period of 2023, representing an increase of 24.2%. This was primarily due to the growth in product sales.Fulfillment expenses were RMB347.3 million (US$49.5 million), compared to RMB287.7 million in the same period of 2023, representing an increase of 20.7%. The increase was primarily due to (i) an increase in personnel costs and logistics expenses as the Company conducted more recycling and transaction activities compared with the same period of 2023, and (ii) an increase in operation center related expenses as the Company expanded its store networks in the third quarter of 2024.Selling and marketing expenses were RMB315.3 million (US$44.9 million), compared to RMB299.5 million in the same period of 2023, representing an increase of 5.3%. The increase was primarily due to (i) an increase in advertising expenses and promotional campaign related expenses, and (ii) an increase in share-based compensation expenses. The increase was partially offset by a decrease in amortization of intangible assets and deferred cost resulting from assets and business acquisitions as the maturity of some intangible assets and deferred cost in the third quarter of 2023.General and administrative expenses were RMB69.3 million (US$9.9 million), compared to RMB69.8 million in the same period of 2023, representing a decrease of 0.7%, primarily due to a decrease in share-based compensation expenses. The decrease was partially offset by an increase in other personnel cost.Technology and content expenses were RMB53.4 million (US$7.6 million), compared to RMB39.4 million in the same period of 2023, representing an increase of 35.5%. The increase was primarily due to an increase in personnel costs in connection with the ongoing maintenance of the Company’s operation centers and system.

INCOME (LOSS) FROM OPERATIONS

Income from operations was RMB24.9 million (US$3.5 million), compared to a loss from operations of RMB28.1 million in the same period of 2023.

Adjusted income from operations (non-GAAP) was RMB104.0 million (US$14.8 million), compared to RMB73.8 million in the same period of 2023.

NET INCOME (LOSS)

Net income was RMB17.9 million (US$2.6 million), compared to a net loss of RMB44.2 million in the same period of 2023.

Adjusted net income (non-GAAP) was RMB90.1 million (US$12.8 million), compared to RMB47.6 million in the same period of 2023.

BASIC AND DILUTED NET INCOME PER ORDINARY SHARE

Basic and diluted net income per ordinary share were RMB0.11 (US$0.02), compared to basic and diluted net loss of RMB0.27 in the same period of 2023.

Adjusted basic and diluted net income per ordinary share (non-GAAP) were RMB0.56 (US$0.08) and RMB0.55 (US$0.08), compared to RMB0.30 and RMB0.29 in the same period of 2023.

CASH AND CASH EQUIVALENTS, RESTRICTED CASH, SHORT-TERM INVESTMENTS AND FUNDS RECEIVABLE FROM THIRD PARTY PAYMENT SERVICE PROVIDERS

Cash and cash equivalents, restricted cash, short-term investments and funds receivable from third party payment service providers were RMB2,350.5 million (US$334.9 million) as of September 30, 2024, as compared to RMB2,854.4 million as of December 31, 2023.

Business Outlook

For the fourth quarter of 2024, the Company currently expects its total revenues to be between RMB4,740.0 million and RMB4,840.0 million, representing an increase of 22.4% to 24.9% year-over-year. This forecast only reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change.

Recent Development

On August 29, 2024, ATRenew announced an improvement in its Environmental, Social and Governance (ESG) score as assessed by S&P Global’s Corporate Sustainability Assessment in 2024, placing it in the 93rd percentile among its global RTS retailing industry peers. This is primarily attributable to ATRenew’s commitment to ESG, particularly greater transparency in its climate strategy, human capital management, and business ethics.

During the third quarter of 2024, ATRenew repurchased a total of approximately 4.9 million ADSs for approximately US$12.1 million under its current share repurchase program which authorizes the Company to repurchase up to US$50 million worth of its shares (including ADSs) through June 27, 2025. As of September 30, 2024, the Company had repurchased a total of approximately 8.2 million ADSs for approximately US$20.1 million under this share repurchase program.

Conference Call Information

The Company’s management will hold a conference call on Wednesday, November 20, 2024 at 07:00 A.M. Eastern Time (or 08:00 P.M. Beijing Time on the same day) to discuss the financial results. Listeners may access the call by dialing the following numbers:

International:

1-412-317-6061

United States Toll Free:

1-888-317-6003

Mainland China Toll Free:

4001-206115

Hong Kong Toll Free:

800-963976

Access Code:

3668505

The replay will be accessible through November 27, 2024 by dialing the following numbers:

International:

1-412-317-0088

United States Toll Free:

1-877-344-7529

Access Code:

3972162

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at ir.atrenew.com.

About ATRenew Inc.

Headquartered in Shanghai, ATRenew Inc. operates a leading technology-driven pre-owned consumer electronics transactions and services platform in China under the brand ATRenew. Since its inception in 2011, ATRenew has been on a mission to give a second life to all idle goods, addressing the environmental impact of pre-owned consumer electronics by facilitating recycling and trade-in services, and distributing the devices to prolong their lifecycle. ATRenew’s open platform integrates C2B, B2B, and B2C capabilities to empower its online and offline services. Through its end-to-end coverage of the entire value chain and its proprietary inspection, grading, and pricing technologies, ATRenew sets the standard for China’s pre-owned consumer electronics industry. ATRenew is a participant in the United Nations Global Compact, and adheres to its principles-based approach to responsible business.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.0176 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of September 30, 2024.

Use of Non-GAAP Financial Measures

The Company also uses certain non-GAAP financial measures in evaluating its business. For example, the Company uses adjusted income from operations, adjusted net income and adjusted net income per ordinary share as supplemental measures to review and assess its financial and operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation, or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. Adjusted income from operations is loss from operations excluding the share-based compensation expenses and amortization of intangible assets and deferred cost resulting from assets and business acquisitions. Adjusted net income is net loss excluding the share-based compensation expenses and amortization of intangible assets and deferred cost resulting from assets and business acquisitions and tax effects of amortization of intangible assets and deferred cost resulting from assets and business acquisitions. Adjusted net income per ordinary share is adjusted net income attributable to ordinary shareholders divided by weighted average number of shares used in calculating net loss per ordinary share.

The Company presents non-GAAP financial measures because they are used by the Company’s management to evaluate the Company’s financial and operating performance and formulate business plans. The Company believes that adjusted income from operations and adjusted net income help identify underlying trends in the Company’s business that could otherwise be distorted by the effect of certain expenses that are included in loss from operations and net loss. The Company also believes that the use of non-GAAP financial measures facilitates investors’ assessment of the Company’s operating performance. The Company believes that adjusted income from operations and adjusted net income provide useful information about the Company’s operating results, enhance the overall understanding of the Company’s past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP financial measures is that they do not reflect all items of income and expense that affect the Company’s operations. The share-based compensation expenses, amortization of intangible assets and deferred cost resulting from assets and business acquisitions and tax effects of amortization of intangible assets and deferred cost resulting from assets and business acquisitions have been and may continue to be incurred in the Company’s business and is not reflected in the presentation of non-GAAP financial measures. Further, the non-GAAP measures may differ from the non-GAAP measures used by other companies, including peer companies, potentially limiting the comparability of their financial results to the Company’s. In light of the foregoing limitations, the non-GAAP financial measures for the period should not be considered in isolation from or as an alternative to income from operations, net income, and net income attributable to ordinary shareholders per share, or other financial measures prepared in accordance with U.S. GAAP.

The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measures, which should be considered when evaluating the Company’s performance. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliations of GAAP and Non-GAAP Results.”

Safe Harbor Statement

This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to” and similar statements. Among other things, quotations in this announcement, contain forward-looking statements. ATRenew may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about ATRenew’s beliefs, plans and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: ATRenew’s strategies; ATRenew’s future business development, financial condition and results of operations; ATRenew’s ability to maintain its relationship with major strategic investors; its ability to facilitate pre-owned consumer electronics transactions and provide relevant services; its ability to maintain and enhance the recognition and reputation of its brand; general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in ATRenew’s filings with the SEC. All information provided in this press release is as of the date of this press release, and ATRenew does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Investor Relations Contact

In China:
ATRenew Inc.
Investor Relations
Email: ir@atrenew.com

In the United States:
ICR LLC.
Email: atrenew@icrinc.com
Tel: +1-212-537-0461

ATRENEW INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share and otherwise noted)

As of December 31,

As of September 30,

2023

2024

RMB

US$

ASSETS

Current assets:

Cash and cash equivalents

1,978,696

1,347,338

191,994

Restricted cash

210,000

132,000

18,810

Short-term investments

410,547

630,123

89,792

Amount due from related parties, net

89,592

218,771

31,175

Inventories

1,017,155

678,026

96,618

Funds receivable from third party payment service
providers

253,107

241,047

34,349

Prepayments and other receivables, net

567,622

754,617

107,532

Total current assets

4,526,719

4,001,922

570,270

Non-current assets:

Long-term investments

467,095

558,221

79,546

Property and equipment, net

148,223

159,236

22,691

Intangible assets, net

270,631

100,496

14,321

Other non-current assets

80,411

149,115

21,249

Total non-current assets

966,360

967,068

137,807

TOTAL ASSETS

5,493,079

4,968,990

708,077

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Short-term borrowings

349,931

307,291

43,789

Accounts payable

532,293

105,314

15,007

Contract liabilities

119,715

81,571

11,624

Accrued expenses and other current liabilities

465,123

478,145

68,135

Accrued payroll and welfare

146,371

148,945

21,224

Amount due to related parties

78,032

116,255

16,566

Total current liabilities

1,691,465

1,237,521

176,345

Non-current liabilities:

Operating lease liabilities, non-current

22,495

80,366

11,452

Deferred tax liabilities

67,658

42,099

5,999

Total non-current liabilities

90,153

122,465

17,451

TOTAL LIABILITIES

1,781,618

1,359,986

193,796

TOTAL SHAREHOLDERS’ EQUITY

3,711,461

3,609,004

514,281

TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY

5,493,079

4,968,990

708,077

ATRENEW INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands, except share and per share and otherwise noted)

Three months ended September 30,

Nine months ended September 30,

2023

2024

2023

2024

RMB

US$

RMB

US$

Net revenues

Net product revenues

2,923,970

3,672,239

523,290

8,135,824

10,383,813

1,479,682

Net service revenues

332,787

378,999

54,007

956,386

1,095,264

156,074

Operating (expenses) income (1)(2)

Merchandise costs

(2,611,018)

(3,242,843)

(462,101)

(7,188,902)

(9,181,300)

(1,308,325)

Fulfillment expenses

(287,704)

(347,270)

(49,486)

(822,913)

(985,325)

(140,408)

Selling and marketing expenses

(299,491)

(315,293)

(44,929)

(933,835)

(990,607)

(141,160)

General and administrative expenses

(69,826)

(69,302)

(9,875)

(203,794)

(215,671)

(30,733)

Technology and content expenses

(39,430)

(53,396)

(7,609)

(131,905)

(153,391)

(21,858)

Other operating income, net

22,640

1,751

250

32,512

23,082

3,289

Income (loss) from operations

(28,072)

24,885

3,547

(156,627)

(24,135)

(3,439)

Interest expense

(2,186)

(3,615)

(515)

(5,498)

(12,332)

(1,757)

Interest income

11,083

8,686

1,238

24,658

20,611

2,937

Other (loss) income, net

(4,428)

(6,719)

(41,305)

(5,886)

Income (loss) before income taxes and share
of loss in equity method investments

(23,603)

30,003

4,277

(144,186)

(57,161)

(8,145)

Income tax benefits

10,047

5,949

848

33,607

24,536

3,496

Share of loss in equity method investments

(30,632)

(18,069)

(2,575)

(48,449)

(53,028)

(7,556)

Net income (loss)

(44,188)

17,883

2,550

(159,028)

(85,653)

(12,205)

Net income (loss) per ordinary share:

Basic

(0.27)

0.11

0.02

(0.99)

(0.53)

(0.08)

Diluted

(0.27)

0.11

0.02

(0.99)

(0.53)

(0.08)

Weighted average number of shares used in
calculating net income (loss) per ordinary
share

Basic

161,338,983

161,405,774

161,393,190

162,011,110

Diluted

161,338,983

164,258,720

161,393,190

162,011,110

Net income (loss)

(44,188)

17,883

2,550

(159,028)

(85,653)

(12,205)

Foreign currency translation adjustments

(5,676)

(7,093)

(1,011)

15,897

(7,183)

(1,024)

Total comprehensive income (loss)

(49,864)

10,790

1,539

(143,131)

(92,836)

(13,229)

ATRENEW INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) (CONTINUED)

(Amounts in thousands, except share and per share and otherwise noted)

Three months ended September 30,

Nine months ended September 30,

2023

2024

2023

2024

RMB

US$

RMB

US$

(1) Includes share-based compensation
expenses as follows:

Fulfillment expenses

(5,362)

(3,021)

(430)

(17,910)

(15,992)

(2,279)

Selling and marketing expenses

(5,165)

(12,220)

(1,741)

(13,266)

(56,792)

(8,093)

General and administrative expenses

(19,239)

(13,854)

(1,974)

(56,182)

(45,924)

(6,544)

Technology and content expenses

(5,218)

(3,657)

(521)

(15,649)

(13,611)

(1,940)

(2) Includes amortization of intangible assets
and deferred cost resulting from assets and
business acquisitions as follows:

Selling and marketing expenses

(66,412)

(46,263)

(6,592)

(222,337)

(169,154)

(24,104)

Technology and content expenses

(482)

(130)

(19)

(1,446)

(981)

(140)

Reconciliations of GAAP and Non-GAAP Results

(Amounts in thousands, except share and per share and otherwise noted)

Three months ended September 30,

Nine months ended September 30,

2023

2024

2023

2024

RMB

US$

RMB

US$

Income (loss) from operations

(28,072)

24,885

3,547

(156,627)

(24,135)

(3,439)

Add:

Share-based compensation
expenses

34,984

32,752

4,666

103,007

132,319

18,856

Amortization of intangible assets
and deferred cost resulting from
assets and business acquisitions

66,894

46,393

6,611

223,783

170,135

24,244

Adjusted income from operations
(non-GAAP)

73,806

104,030

14,824

170,163

278,319

39,661

Net income (loss)

(44,188)

17,883

2,550

(159,028)

(85,653)

(12,205)

Add:

Share-based compensation
expenses

34,984

32,752

4,666

103,007

132,319

18,856

Amortization of intangible assets
and deferred cost resulting from
assets and business acquisitions

66,894

46,393

6,611

223,783

170,135

24,244

Less:

Tax effects of amortization of
intangible assets and deferred cost
resulting from assets and business
acquisitions

(10,047)

(6,972)

(994)

(33,607)

(25,559)

(3,642)

Adjusted net income (non-
GAAP)

47,643

90,056

12,833

134,155

191,242

27,253

Adjusted net income per
ordinary share (non-GAAP):

Basic

0.30

0.56

0.08

0.83

1.18

0.17

Diluted

0.29

0.55

0.08

0.80

1.16

0.17

Weighted average number of
shares used in calculating net
income per ordinary share

Basic

161,338,983

161,405,774

161,393,190

162,011,110

Diluted

166,112,358

164,258,720

167,609,332

165,040,389

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SOURCE ATRenew Inc.

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Pool Cleaning Champion Setting a New Global Benchmark for Intelligent Pool Care

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For more information about Beatbot’s comprehensive range of pool cleaning solutions, please visit Beatbot’s official website.

About Beatbot

Beatbot is a technology brand redefining smart pool care and is dedicated to the global robotization of swimming pool environments. Founded by industry experts with over 10 years of experience in leading home robotics companies, the company is growing rapidly, with offices in multiple countries and a strong R&D team, taking up 70% of the workforce. Pioneering core technologies like brushless water pumps, AUV spatial locomotion, sonar laser SLAM, and space mapping navigation algorithms, Beatbot has secured numerous patents and pioneered industry-first innovations. The company currently holds over 160 patents (granted and under application), including 65 patents for inventions.

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Bollywood legend Sherlyn Chopra is the new MelBet ambassador

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MUMBAI, India, Nov. 20, 2024 /PRNewswire/ — International iGaming company MelBet is pleased to announce the collaboration with Sherlyn Chopra – one of India’s famous and glamorous actresses. As a brand ambassador, Sherlyn would be involved in creating exclusive content and promoting MelBet in international markets.

Sherlyn Chopra is known for her significant success in the film and television industry. Her work, including her role in the psychological thriller, Red Swastik, made her popular in India. Sherlyn is actively involved in showbiz and continues to expand her horizons by doing popular web-series, music albums, short films, launching glamour and style apps and other creative projects.

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About MelBet

MelBet is an international iGaming company founded in 2012. During this time, the brand has earned the trust of more than 1,000,000 players who built successful strategies for bucking the odds on sports and the casino. Every day, players have access to over 1,000 sporting events with the highest odds on the MelBet platform. The brand’s clients regularly participate in numerous profitable promos, receiving bonuses and valuable prizes.

Photo: https://mma.prnewswire.com/media/2561680/MelBet_Sherlyn_Chopra.jpg

View original content to download multimedia:https://www.prnewswire.com/in/news-releases/bollywood-legend-sherlyn-chopra-is-the-new-melbet-ambassador-302311239.html

Technology

Yatsen Announces Third Quarter 2024 Financial Results

Published

13 minutes ago

November 20, 2024

Conference Call to Be Held at 7:30 A.M. U.S. Eastern Time on November 20, 2024

GUANGZHOU, China, Nov. 20, 2024 /PRNewswire/ — Yatsen Holding Limited (“Yatsen” or the “Company”) (NYSE: YSG), a leading China-based beauty group, today announced its unaudited financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Highlights

Total net revenues for the third quarter of 2024 decreased by 5.7% to RMB677.0 million (US$96.5 million) from RMB718.1 million for the prior year period.Total net revenues from Skincare Brands[1] for the third quarter of 2024 increased by 3.6% to RMB267.9 million (US$38.2 million) from RMB258.5 million for the prior year period. As a percentage of total net revenues, total net revenues from Skincare Brands for the third quarter of 2024 were 39.6%, as compared with 36.0% for the prior year period.Gross margin for the third quarter of 2024 increased to 75.9% from 71.4% for the prior year period.Net loss for the third quarter of 2024 was RMB121.1 million (US$17.3 million), as compared with RMB197.9 million for the prior year period. Non-GAAP net loss[2] for the third quarter of 2024 was RMB76.6 million (US$10.9 million), as compared with RMB130.2 million for the prior year period.

Mr. Jinfeng Huang, Founder, Chairman and Chief Executive Officer of Yatsen, stated, “China’s beauty industry encountered significant challenges in the third quarter, with beauty sales declining year over year for four consecutive months from June to September. Against this backdrop, our three major clinical and premium skincare brands, including Galénic, DR.WU and Eve Lom, delivered another solid performance, bolstering our skincare segment overall. Going forward, we will continue to execute our development strategy, enhancing brand equity and product mix while further optimizing our cost structure to drive growth and profitability.”

Mr. Donghao Yang, Director and Chief Financial Officer of Yatsen, commented, “Our third quarter total net revenues declined by 5.7% year over year in line with our previous guidance. However, our three major skincare brands together continued to grow steadily, with combined net revenues increasing by 10.5% year over year. Furthermore, we improved our gross margin to 75.9% from 71.4% in the prior year period, while narrowing our net loss margin and non-GAAP net loss margin to 17.9% and 11.3%, respectively. We remain confident in our strategy and execution capabilities, and committed to propelling the Company’s sustainable development.”

Third Quarter 2024 Financial Results

Net Revenues

Total net revenues for the third quarter of 2024 decreased by 5.7% to RMB677.0 million (US$96.5 million) from RMB718.1 million for the prior year period. The decrease was primarily due to a 10.0% year-over-year decrease in net revenues from Color Cosmetics Brands,[3] partially offset by a 3.6% year-over-year increase in net revenues from Skincare Brands.

Gross Profit and Gross Margin

Gross profit for the third quarter of 2024 increased by 0.2% to RMB513.8 million (US$73.2 million) from RMB512.8 million for the prior year period. Gross margin for the third quarter of 2024 increased to 75.9% from 71.4% for the prior year period. The increase was primarily driven by an increase in sales of higher-gross-margin products.

Operating Expenses

Total operating expenses for the third quarter of 2024 decreased by 12.0% to RMB655.2 million (US$93.4 million) from RMB744.3 million for the prior year period. As a percentage of total net revenues, total operating expenses for the third quarter of 2024 were 96.8%, as compared with 103.6% for the prior year period.

Fulfillment Expenses. Fulfillment expenses for the third quarter of 2024 were RMB50.4 million (US$7.2 million), as compared with RMB56.0 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for the third quarter of 2024 decreased to 7.4% from 7.8% for the prior year period. The decrease was primarily due to an increase in the overall average selling price of the Company’s products, as well as further improvements in logistics efficiency.

Selling and Marketing Expenses. Selling and marketing expenses for the third quarter of 2024 were RMB494.4 million (US$70.4 million), as compared with RMB511.7 million for the prior year period. As a percentage of total net revenues, selling and marketing expenses for the third quarter of 2024 increased to 73.0% from 71.3% for the prior year period. The increase was primarily due to increased investments in the Douyin platform, in line with the growing revenue contribution from Douyin, partially offset by lower marketing expenses as a result of the Company’s more strategic marketing spending.

General and Administrative Expenses. General and administrative expenses for the third quarter of 2024 were RMB85.0 million (US$12.1 million), as compared with RMB151.8 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for the third quarter of 2024 decreased to 12.6% from 21.1% for the prior year period. The decrease was primarily attributable to lower payroll expenses resulting from a reduction in general and administrative headcount and lower share-based compensation expenses.

Research and Development Expenses. Research and development expenses for the third quarter of 2024 were RMB25.3 million (US$3.6 million), as compared with RMB24.7 million for the prior year period. As a percentage of total net revenues, research and development expenses for the third quarter of 2024 increased to 3.7% from 3.4% for the prior year period. The increase was primarily attributable to the deleveraging effect of lower total net revenues in the third quarter of 2024.

Loss from Operations

Loss from operations for the third quarter of 2024 was RMB141.3 million (US$20.1 million), as compared with RMB231.5 million for the prior year period. Operating loss margin was 20.9%, as compared with 32.2% for the prior year period.

Non-GAAP loss from operations[4] for the third quarter of 2024 was RMB98.5 million (US$14.0 million), as compared with RMB164.6 million for the prior year period. Non-GAAP operating loss margin was 14.5%, as compared with 22.9% for the prior year period.

Net Loss

Net loss for the third quarter of 2024 was RMB121.1 million (US$17.3 million), as compared with RMB197.9 million for the prior year period. Net loss margin was 17.9%, as compared with 27.6% for the prior year period. Net loss attributable to Yatsen’s ordinary shareholders per diluted ADS[5] for the third quarter of 2024 was RMB1.22 (US$0.17), as compared with RMB1.81 for the prior year period.

Non-GAAP net loss for the third quarter of 2024 was RMB76.6 million (US$10.9 million), as compared with RMB130.2 million for the prior year period. Non-GAAP net loss margin was 11.3%, as compared with 18.1% for the prior year period. Non-GAAP net loss attributable to Yatsen’s ordinary shareholders per diluted ADS[6] for the third quarter of 2024 was RMB0.77 (US$0.11), as compared with RMB1.19 for the prior year period.

Balance Sheet and Cash Flow

As of September 30, 2024, the Company had cash, restricted cash and short-term investments of RMB1.31 billion (US$186.5 million), as compared with RMB2.08 billion as of December 31, 2023.

Net cash used in operating activities for the third quarter of 2024 was RMB175.9 million (US$25.1 million), as compared with RMB163.4 million for the prior year period.

Business Outlook

For the fourth quarter of 2024, the Company expects its total net revenues to be between RMB1.07 billion and RMB1.18 billion, representing a year-over-year increase of approximately 0% to 10%. These forecasts reflect the Company’s current and preliminary views on the market and operational conditions, which are subject to change.

Exchange Rate

This announcement contains translations of certain Renminbi (“RMB”) amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ were made at a rate of RMB7.0176 to US$1.00, the exchange rate in effect as of September 30, 2024, as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. The Company makes no representation that any RMB or US$ amounts could have been, or could be, converted into US$ or RMB, as the case may be, at any particular rate, or at all.

[1] Include net revenues from Galénic, DR.WU (its mainland China business), Eve Lom and other skincare brands of the Company.

[2] Non-GAAP net loss is a non-GAAP financial measure. Effective from the fourth quarter of 2023, non-GAAP net loss is defined as net loss excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions, (iii) revaluation of investments on the share of equity method investments, (iv) impairment of goodwill and (v) tax effects on non-GAAP adjustments. Non-GAAP net loss for the prior year period presented in this document is also calculated in the same manner.

[3] Include Perfect Diary, Little Ondine, Pink Bear and other color cosmetics brands of the Company.

[4] Non-GAAP loss from operations is a non-GAAP financial measure. Effective from the fourth quarter of 2023, non-GAAP loss from operations is defined as loss from operations excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions and (iii) impairment of goodwill. Non-GAAP loss from operations for the prior year period presented in this document is also calculated in the same manner.

[5] ADS refers to American depositary shares, each of which represents twenty Class A ordinary shares, effective from March 18, 2024. Prior to that date, each ADS represented four Class A ordinary shares. Unless otherwise stated, the current ADS ratio has been applied retrospectively to all periods presented in this document.

[6] Non-GAAP net loss attributable to ordinary shareholders per diluted ADS is a non-GAAP financial measure. Non-GAAP net loss attributable to ordinary shareholders per diluted ADS is defined as non-GAAP net loss attributable to ordinary shareholders divided by the weighted average number of diluted ADS outstanding for computing diluted earnings per ADS. Effective from the fourth quarter of 2023, non-GAAP net loss attributable to ordinary shareholders is defined as net loss attributable to ordinary shareholders excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions, (iii) revaluation of investments on the share of equity method investments, (iv) impairment of goodwill, (v) tax effects on non-GAAP adjustments and (vi) accretion to redeemable non-controlling interests. Non-GAAP net loss attributable to ordinary shareholders per diluted ADS for the prior year period presented in this document is also calculated in the same manner.

Conference Call Information

The Company’s management will hold a conference call on Wednesday, November 20, 2024, at 7:30 A.M. U.S. Eastern Time or 8:30 P.M. Beijing Time to discuss its financial results and operating performance for the third quarter 2024.

United States (toll free):

+1-888-346-8982

International:

+1-412-902-4272

Mainland China (toll free):

400-120-1203

Hong Kong, SAR (toll free):

800-905-945

Hong Kong, SAR:

+852-3018-4992

Conference ID:

6604822

The replay will be accessible through Wednesday, November 27, by dialing the following numbers:

United States:

+1-877-344-7529

International:

+1-412-317-0088

Replay Access Code:

6604822

A live and archived webcast of the conference call will also be available on the Company’s investor relations website at http://ir.yatsenglobal.com.

About Yatsen Holding Limited

Yatsen Holding Limited (NYSE: YSG) is a leading China-based beauty group with the mission of creating an exciting new journey of beauty discovery for consumers around the world. Founded in 2016, the Company has launched and acquired numerous color cosmetics and skincare brands including Perfect Diary, Little Ondine, Pink Bear, Galénic, DR.WU (its mainland China business), Eve Lom and EANTiM. The Company’s flagship brand, Perfect Diary, is one of the leading color cosmetics brands in China in terms of retail sales value. The Company primarily reaches and engages with customers directly both online and offline, with expansive presence across all major e-commerce, social and content platforms in China.

For more information, please visit http://ir.yatsenglobal.com.

Use of Non-GAAP Financial Measures

The Company uses non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) attributable to ordinary shareholders and non-GAAP net income (loss) attributable to ordinary shareholders per diluted ADS, each a non-GAAP financial measure, in reviewing and assessing its operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company presents these non-GAAP financial measures because they are used by the management to evaluate operating performance and formulate business plans. Non-GAAP financial measures help identify underlying trends in its business, provide further information about its results of operations, and enhance the overall understanding of its past performance and future prospects. The Company defines non-GAAP income (loss) from operations as income (loss) from operations excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions and (iii) impairment of goodwill. The Company defines non-GAAP net income (loss) as net income (loss) excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions, (iii) revaluation of investments on the share of equity method investments, (iv) impairment of goodwill and (v) tax effects on non-GAAP adjustments. The Company defines non-GAAP net income (loss) attributable to ordinary shareholders as net income (loss) attributable to ordinary shareholders excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from assets and business acquisitions, (iii) revaluation of investments on the share of equity method investments, (iv) impairment of goodwill, (v) tax effects on non-GAAP adjustments and (vi) accretion to redeemable non-controlling interests. Non-GAAP net income (loss) attributable to ordinary shareholders per diluted ADS is computed using non-GAAP net income (loss) attributable to ordinary shareholders divided by weighted average number of diluted ADS outstanding for computing diluted earnings per ADS.

However, the non-GAAP financial measures have limitations as analytical tools as the non-GAAP financial measures are not presented in accordance with U.S. GAAP and may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure. Reconciliations of Yatsen’s non-GAAP financial measure to the most comparable U.S. GAAP measure are included at the end of this press release.

Safe Harbor Statement

This announcement contains statements that may constitute “forward-looking” statements which are made pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. The Company may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs, plans, outlook and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s growth strategies; its future business development, results of operations and financial condition; its ability to continue to roll out popular products and maintain popularity of existing products; its ability to anticipate and respond to changes in industry trends and consumer preferences and behavior in a timely manner; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of its products and services; its ability to integrate newly-acquired businesses and brands; trends and competition in and relevant government policies and regulations relating to China’s beauty market; changes in its revenues and certain cost or expense items; and general economic conditions globally and in China. Further information regarding these and other risks is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

In China:

Yatsen Holding Limited
Investor Relations
E-mail: ir@yatsenglobal.com

Piacente Financial Communications
Hui Fan
Tel: +86-10-6508-0677
E-mail: yatsen@thepiacentegroup.com

In the United States:

Piacente Financial Communications
Brandi Piacente
Tel: +1-212-481-2050
E-mail: yatsen@thepiacentegroup.com

YATSEN HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share, per share data or otherwise noted)

December 31,

September 30,

2023

2024

RMB’000

USD’000

Assets

Current assets

Cash and cash equivalents

836,888

503,075

71,688

Restricted Cash

21,248

–

Short-term investments

1,218,481

805,851

114,833

Accounts receivable, net

198,851

208,285

29,680

Inventories, net

352,090

438,419

62,474

Prepayments and other current assets

303,841

431,583

61,500

Amounts due from related parties

20,200

7,181

1,023

Total current assets

2,951,599

2,394,394

341,198

Non-current assets

Investments

618,752

628,355

89,540

Property and equipment, net

64,878

72,315

10,305

Goodwill, net

556,567

571,129

81,385

Intangible assets, net

671,396

638,079

90,926

Deferred tax assets

1,375

1,426

203

Right-of-use assets, net

114,348

129,303

18,426

Other non-current assets

27,100

25,728

3,666

Total non-current assets

2,054,416

2,066,335

294,451

Total assets

5,006,015

4,460,729

635,649

Liabilities, redeemable non-controlling interests and
shareholders’ equity

Current liabilities

Accounts payable

105,691

70,781

10,086

Advances from customers

41,579

31,604

4,504

Accrued expenses and other liabilities

391,217

392,448

55,923

Amounts due to related parties

9,431

14,832

2,114

Income tax payables

17,946

19,112

2,723

Lease liabilities due within one year

45,464

47,484

6,766

Total current liabilities

611,328

576,261

82,116

Non-current liabilities

Deferred tax liabilities

111,591

111,972

15,956

Deferred income-non current

30,556

18,401

2,622

Lease liabilities

67,767

83,042

11,833

Total non-current liabilities

209,914

213,415

30,411

Total liabilities

821,242

789,676

112,527

Redeemable non-controlling interests

51,466

49,737

7,087

Shareholders’ equity

Ordinary Shares (US$0.00001 par value; 10,000,000,000 ordinary
shares authorized, comprising of 6,000,000,000 Class A ordinary
shares, 960,852,606 Class B ordinary shares and 3,039,147,394
shares each of such classes to be designated as of December 31,
2023 and September 30, 2024; 2,030,600,883 Class A shares and
666,572,880 Class B ordinary shares issued as of December 31,
2023, 2,096,600,883 Class A shares and 600,572,880 Class B
ordinary shares issued as of September 30, 2024; 1,487,546,132
Class A ordinary shares and 666,572,880 Class B ordinary shares
outstanding as of December 31, 2023, 1,370,591,808 Class A
ordinary shares and 600,572,880 Class B ordinary shares
outstanding as of September 30, 2024)

173

Treasury shares

(864,568)

(1,066,199)

(151,932)

Additional paid-in capital

12,260,208

12,263,026

1,747,467

Statutory reserve

24,177

3,445

Accumulated deficit

(7,345,153)

(7,669,093)

(1,092,837)

Accumulated other comprehensive income

60,200

76,710

10,933

Total Yatsen Holding Limited shareholders’ equity

4,135,037

3,628,794

517,101

Non-controlling interests

(1,730)

(7,478)

(1,066)

Total shareholders’ equity

4,133,307

3,621,316

516,035

Total liabilities, redeemable non-controlling interests and
shareholders’ equity

5,006,015

4,460,729

635,649

YATSEN HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except for share, per share data or otherwise noted)

For the Three Months Ended September 30,

2023

2024

RMB’000

USD’000

Total net revenues

718,125

677,016

96,474

Total cost of revenues

(205,325)

(163,191)

(23,255)

Gross profit

512,800

513,825

73,219

Operating expenses:

Fulfilment expenses

(56,025)

(50,412)

(7,184)

Selling and marketing expenses

(511,706)

(494,357)

(70,445)

General and administrative expenses

(151,830)

(85,046)

(12,119)

Research and development expenses

(24,739)

(25,338)

(3,611)

Total operating expenses

(744,300)

(655,153)

(93,359)

Loss from operations

(231,500)

(141,328)

(20,140)

Financial income

30,319

7,722

1,100

Foreign currency exchange gain

1,800

12,825

1,828

Loss from equity method investments, net

(6,655)

(6,510)

(928)

Other income, net

8,780

6,239

889

Loss before income tax expenses

(197,256)

(121,052)

(17,251)

Income tax expenses

(654)

(4)

(1)

Net loss

(197,910)

(121,056)

(17,252)

Net loss (income) attributable to non-controlling interests and
redeemable non-controlling interests

1,371

(11)

(2)

Net loss attributable to Yatsen’s shareholders

(196,539)

(121,067)

(17,254)

Shares used in calculating loss per share (1):

Weighted average number of Class A and Class B ordinary shares:

Basic

2,173,360,208

1,986,538,509

Diluted

2,173,360,208

1,986,538,509

Net loss per Class A and Class B ordinary share

Basic

(0.09)

(0.06)

(0.01)

Diluted

(0.09)

(0.06)

(0.01)

Net loss per ADS (20 ordinary shares equal to 1 ADS) (2)

Basic

(1.81)

(1.22)

(0.17)

Diluted

(1.81)

(1.22)

(0.17)

For the Three Months Ended September 30,

2023

2024

Share-based compensation expenses are included in the
operating expenses as follows:

RMB’000

USD’000

Fulfilment expenses

767

252

Selling and marketing expenses

9,485

2,289

326

General and administrative expenses

42,635

23,743

3,383

Research and development expenses

763

109

Total

52,911

27,047

3,854

(1) Authorized share capital is re-classified and re-designated into Class A ordinary shares and Class B ordinary shares, with each
Class A ordinary share being entitled to one vote and each Class B ordinary share being entitled to twenty votes on all matters
that are subject to shareholder vote.

(2) Effective from March 18, 2024, the Company changed its ADS to Class A Ordinary Share ratio from one ADS representing
four ordinary shares to one ADS representing twenty ordinary shares. The historical and present income (loss) per ADS have
been adjusted retroactively for all periods presented to reflect this change.

YATSEN HOLDING LIMITED

UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(All amounts in thousands, except for share, per share data or otherwise noted)

For the Three Months Ended September 30,

2023

2024

RMB’000

USD’000

Loss from operations

(231,500)

(141,328)

(20,140)

Share-based compensation expenses

52,911

27,047

3,854

Amortization of intangible assets resulting from assets and
business acquisitions

13,956

15,779

2,248

Non-GAAP loss from operations

(164,633)

(98,502)

(14,038)

Net loss

(197,910)

(121,056)

(17,252)

Share-based compensation expenses

52,911

27,047

3,854

Amortization of intangible assets resulting from assets and
business acquisitions

13,956

15,779

2,248

Revaluation of investments on the share of equity method
investments

3,227

3,266

465

Tax effects on non-GAAP adjustments

(2,430)

(1,586)

(226)

Non-GAAP net loss

(130,246)

(76,550)

(10,911)

Net loss attributable to Yatsen’s shareholders

(196,539)

(121,067)

(17,254)

Share-based compensation expenses

52,911

27,047

3,854

Amortization of intangible assets resulting from assets and
business acquisitions

13,701

15,385

2,192

Revaluation of investments on the share of equity method
investments

3,227

3,266

465

Tax effects on non-GAAP adjustments

(2,430)

(1,559)

(222)

Non-GAAP net loss attributable to Yatsen’s shareholders

(129,130)

(76,928)

(10,965)

Shares used in calculating loss per share:

Weighted average number of Class A and Class B ordinary shares:

Basic

2,173,360,208

1,986,538,509

Diluted

2,173,360,208

1,986,538,509

Non-GAAP net loss attributable to ordinary shareholders per
Class A and Class B ordinary share

Basic

(0.06)

(0.04)

(0.01)

Diluted

(0.06)

(0.04)

(0.01)

Non-GAAP net loss attributable to ordinary shareholders per
ADS (20 ordinary shares equal to 1 ADS) (1)

Basic

(1.19)

(0.77)

(0.11)

Diluted

(1.19)

(0.77)

(0.11)

(1) Effective from March 18, 2024, the Company changed its ADS to Class A Ordinary Share ratio from one ADS representing
four ordinary shares to one ADS representing twenty ordinary shares. The historical and present income (loss) per ADS have
been adjusted retroactively for all periods presented to reflect this change.

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SOURCE Yatsen Holding Limited