On November 17, Yatsen Holding Limited (NYSE: YSG), parent company of Perfect Diary, released its Q3 2025 financial results. While revenue grew 47.5% year-over-year—marking the fourth consecutive quarter of growth—investors reacted negatively, sending shares tumbling 20.32% after the report.
The market is scrutinizing the sustainability of Yatsen’s turnaround story. Despite revenue growth from a low base, the company remains burdened by persistent losses and heavy marketing spending. This signals a shift in investor sentiment: mere top-line expansion no longer suffices; clear profitability timelines and healthy growth structures now take precedence.
**Five Years of Losses Exceeding $6 Billion** Since its 2017 debut with Perfect Diary, which quickly became a leading domestic makeup brand, Yatsen enjoyed rapid capital inflows, going public on the NYSE in November 2020. However, post-IPO performance faltered, with 2020 revenue growth slowing sharply and net losses hitting $2.69 billion. The slump continued, with annual revenues declining from $5.84 billion in 2021 to $3.39 billion in 2024. Cumulative net losses from 2020 to 2024 surpassed $6 billion, including a $710 million loss in 2024. Though Q1-Q3 2025 revenue rose 30.2% to $2.92 billion, profitability remains elusive.
Investor patience has worn thin. The 20% stock plunge post-earnings underscores that revenue growth alone fails to impress without a path to profitability. Yatsen’s high marketing costs—68.3% of revenue in Q3 2025, up year-over-year—remain a drag. Historically, marketing expenses have exceeded 60% of revenue since 2021, far above industry peers.
**Galénic Leads Turnaround, But Perfect Diary Fades** The skincare segment, particularly the premium brand Galénic, drove Q3 growth with an 83.2% revenue surge, now contributing 49.2% of total sales. Galénic’s "ultra-premium + limited-edition" strategy has been pivotal, achieving milestones like topping TikTok’s beauty sales during 618 and Double 11 promotions. However, other acquired brands (DR.WU, EVE LOM) and in-house label Abby's Choice lag behind.
Meanwhile, Perfect Diary, once Yatsen’s flagship, has lost its dominance. Absent from both Tmall’s Top 20 and TikTok’s Top 10 makeup lists during Double 11 2025, the brand’s decline reflects waning competitiveness and overreliance on marketing and influencer partnerships.
Yatsen’s struggles mirror broader challenges for traffic-driven consumer brands: as online growth plateaus, product differentiation becomes critical—a lesson Perfect Diary’s fall exemplifies.
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