Yatsen Holding Ltd (YSG) 2021 Q1 法說會逐字稿

Ladies and gentlemen, good day, and welcome to the Yatsen First Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Irene Lyu, Head of Strategic Investments and Capital Markets. Please go ahead.

女士們，先生們，美好的一天，歡迎來到 Yatsen 2021 年第一季度收益電話會議。今天的會議正在錄製中。現在，我想將會議轉交給戰略投資和資本市場主管 Irene Lyu。請繼續。

Thank you, operator. Please note the discussion today will contain forward-looking statements relating to the company's future performance and are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act.

謝謝你，運營商。請注意，今天的討論將包含與公司未來業績相關的前瞻性陳述，旨在符合美國私人證券訴訟改革法案規定的免責安全港條款。

Such statements are not guarantees of the future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and this discussion.

此類陳述不是對未來業績的保證，並受某些風險和不確定性、假設和其他因素的影響。其中一些風險超出了公司的控制範圍，可能導致實際結果與今天的新聞稿和本次討論中提到的結果大相徑庭。

A general discussion of the risk factors that could affect Yatsen's business and financial results is included in certain filings of the company with the Securities and Exchange Commission. The company does not undertake any obligation to update this forward-looking information, except as required by law.

對可能影響 Yatsen 的業務和財務業績的風險因素的一般性討論包含在該公司向美國證券交易委員會提交的某些文件中。除法律要求外，公司不承擔任何更新此前瞻性信息的義務。

During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today.

在今天的電話會議上，管理層還將討論某些非 GAAP 財務措施，僅供比較之用。有關非 GAAP 財務指標的定義以及 GAAP 與非 GAAP 財務結果的調節，請參閱今天早些時候發布的收益報告。

Joining us today on the call from Yatsen's senior management are Mr. Jinfeng Huang, our Founder, Chairman and CEO; and Mr. Donghao Yang, our CFO and Director. Management will begin with prepared remarks, and the call will conclude with a Q&A session.

今天，我們的創始人、董事長兼首席執行官黃金峰先生應中成高級管理層的電話加入了我們的行列；以及我們的首席財務官兼董事楊東浩先生。管理層將從準備好的發言開始，電話會議將以問答環節結束。

As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yatsen's Investor Relations website at ir.yatsenglobal.com.

提醒一下，這次會議正在錄製中。此外，Yatsen 的投資者關係網站 ir.yatsenglobal.com 將提供本次電話會議的網絡直播重播。

I will now turn the call over to Mr. Jinfeng Huang. Please go ahead, sir.

我現在將電話轉給黃金峰先生。請繼續，先生。

Thank you, Irene, and thank you, everyone, for participating in Yatsen's first quarter 2021 earnings conference call today.

謝謝 Irene，也謝謝大家今天參加 Yatsen 2021 年第一季度財報電話會議。

Starting off the year on a solid note, Yatsen achieved 42.7% year-over-year growth in total net revenues in the first quarter, supported by a healthy growth of our Perfect Diary brand, and a robust performance of Little Ondine, Abby's Choice and other brands in Yatsen's portfolio.

開年伊始，中仙第一季度總淨收入同比增長 42.7%，這得益於我們的完美日記品牌的健康增長，以及 Little Ondine、Abby's Choice 和Yatsen 產品組合中的其他品牌。

So during the quarter, the number of DTC customers increased 11.6% year-over-year to 9.6 million, while revenue per DTC customer also increased by 24.5% from approximately RMB 99 to RMB 123 per customer. So we ended the quarter with gross margin of 68.6%, an improvement of approximately 7 percentage points compared to 61.7% in the first quarter last year.

因此，本季度，DTC 客戶數量同比增長 11.6% 至 960 萬，而每位 DTC 客戶的收入也增長了 24.5%，從每位客戶的約 99 元人民幣增加到 123 元人民幣。因此，我們在本季度結束時的毛利率為 68.6%，與去年第一季度的 61.7% 相比提高了約 7 個百分點。

So we went into the year with a clear execution plan to optimize our brand's performance, expand our product portfolio and enhance our core capabilities. A key focus has been on the flagship Perfect Diary brand, particularly to upgrade its positioning and price point from mass to higher-end mass market in order to further expand its growth potential. So we are set out to achieve this through more disciplined pricing and discount policies, which successfully raised Perfect Diary's average selling price, average order value and gross profit margin during the quarter.

因此，我們進入這一年時制定了明確的執行計劃，以優化我們品牌的表現、擴展我們的產品組合併增強我們的核心能力。重點一直放在旗艦完美日記品牌上，特別是將其定位和價格點從大眾市場升級到高端大眾市場，以進一步擴大其增長潛力。因此，我們著手通過更嚴格的定價和折扣政策來實現這一目標，這成功地提高了完美日記在本季度的平均售價、平均訂單價值和毛利率。

At the same time, we continued to introduce new products that excite and delight our customers, such as the new -- red new Perfect lip gloss line as well as the slim film lipstick gift packs, which were designed for the Chinese New Year holiday season and the Valentine's day.

同時，我們不斷推出令客戶興奮和愉悅的新產品，例如專為農曆新年假期設計的全新——紅色新完美唇彩系列以及纖薄唇膏禮盒裝和情人節。

These new products, complemented by the launch of a number of Perfect Diary skincare products in our offline stores in early May, represents refinement and premiumization of the Perfect Diary product line this year. So going forward, we have further plans to launch new products in existing and new categories, including base makeup, color content men's and men's skincare in an effort we've done throughout the year to capture higher wallet share from our customers. Overall, we see further room for ASP and AOV improvement, new product rollout and category expansions to drive operating results of Perfect Diary brand throughout this year.

這些新品，加上5月初在我們線下門店推出的多款完美日記護膚品，代表了今年完美日記產品線的精細化和高端化。因此，展望未來，我們進一步計劃在現有類別和新類別中推出新產品，包括底妝、彩妝男士和男士護膚品，這是我們全年所做的努力，以從客戶那裡獲得更高的錢包份額。總體而言，我們認為 ASP 和 AOV 的進一步提升空間、新產品推出和品類擴展將推動完美日記品牌全年的經營業績。

We are also making continued progress towards our multi-brand strategy as we introduce new brands. With the Perfect Diary brand shaping up, we see the need to attract and capture new entrants in color cosmetics market, especially Gen Z and Gen A, who are more price sensitive. Hence, we launched the Pink Bear brand in mid-March, designed with the distinct young girl brand persona with an initial focus on providing high-value for money products in high-volume categories for Gen Z and Gen A consumers. With the introduction of the lip gloss products, Pink Bear has achieved encouraging results during its first month of launch.

隨著我們推出新品牌，我們也在朝著多品牌戰略不斷取得進展。隨著完美日記品牌的形成，我們看到有必要吸引和俘獲彩妝市場的新進入者，尤其是對價格更敏感的 Z 世代和 A 世代。因此，我們在 3 月中旬推出了 Pink Bear 品牌，該品牌以鮮明的年輕女孩品牌形象設計，最初的重點是為 Z 世代和 A 世代消費者提供大批量類別的高性價比產品。隨著唇彩產品的推出，粉紅熊在推出的第一個月就取得了令人鼓舞的成績。

Our masstige color cosmetic brand, Little Ondine, also experienced robust year-over-year growth in the quarter, powered by several well received product launches, such as the crossover with Pop Mart and Chinese popstar, Huang Zitao, as well as the new vinyl record eyeshadow palette, which was introduced in the late March. Given Little Ondine's unique street fashion brand positioning, it's further upside is expected to be lower than that of Perfect Diary, which we aim to develop further as a super-brand within the group.

我們的大眾彩妝品牌 Little Ondine 在本季度也實現了強勁的同比增長，這得益於多款廣受歡迎的產品發布，例如與 Pop Mart 和中國流行歌星黃子韜的跨界合作，以及新的黑膠唱片record 眼影盤，於 3 月下旬推出。鑑於 Little Ondine 獨特的街頭時尚品牌定位，其進一步上升空間預計將低於完美日記，我們旨在進一步發展為集團內的超級品牌。

As Little Ondine has already become a top-selling color cosmetic brands in China's online market, for its next stage of growth, we plan to optimize the investment level in this brand with increased focus on sustainable growth going forward. One notable change we saw was the increasing diversity and the balance of our channel mix compared to the first quarter of 2020, which boosted the sales contribution from nontraditional e-commerce channels, such as various short video and TV platforms as well as from our experience stores.

由於小歐黛已經成為中國線上市場最暢銷的彩妝品牌，針對其下一階段的增長，我們計劃優化對該品牌的投資水平，更加註重未來的可持續增長。我們看到的一個顯著變化是，與 2020 年第一季度相比，我們的渠道組合更加多樣化和平衡，這提高了非傳統電子商務渠道（例如各種短視頻和電視平台）以及我們的經驗的銷售貢獻商店。

We have adopted an omnichannel strategy to serve our customers at every touch point. As of end of March 2021, we had a total of 245 experience stores, already having achieved a significant scale, covering key cities and regions. We aim to open approximately 100 stores throughout rest of the year.

我們採用全渠道戰略，在每個接觸點為我們的客戶提供服務。截至2021年3月底，我們共有245家體驗店，已形成規模，覆蓋重點城市和地區。我們的目標是在今年餘下時間開設約 100 家門店。

In addition to our color cosmetics portfolio, we are excited about the expansion of our range of skincare brands, which saw the addition of DR.WU's Mainland China business and Eve Lom in the first quarter. Along with Galénic and Abby's Choice, we now have 4 skincare brands with different positioning and consumer bases.

除了我們的彩妝產品組合，我們對護膚品牌範圍的擴大感到興奮，第一季度增加了 DR.WU 的中國大陸業務和 Eve Lom。除了 Galénic 和 Abby's Choice，我們現在擁有 4 個具有不同定位和消費者基礎的護膚品牌。

As part of our efforts to ensure smooth transition and integrations of the Galénic and DR.WU Mainland China business in the first quarter, our team was focused on putting in place the right management team and incentive structure to rejuvenate each brand's product and positioning, to accelerate e-commerce and to optimize supply chains.

作為確保 Galénic 和 DR.WU 中國大陸業務在第一季度順利過渡和整合的努力的一部分，我們的團隊專注於建立正確的管理團隊和激勵結構，以振興每個品牌的產品和定位，加速電子商務和優化供應鏈。

The team has identified few products that resonate with the new generation of consumers and witnessed some early success for these relaunches, such as Galénic new VC Serum and DR.WU's metallic ethnic series.

該團隊已經確定了一些能引起新一代消費者共鳴的產品，並見證了這些重新推出的一些早期成功，例如 Galénic 新 VC 精華液和 DR.WU 的金屬民族系列。

Since the year long transition was completed at the end of the first quarter, we remain in the early stage of integration process, which will span over the second quarter. We believe that over time, we will have significant room to apply our disruptive DTC model and core platform capabilities to our newly acquired brands as we help them to realize their full potential.

由於長達一年的過渡在第一季度末完成，我們仍處於整合過程的早期階段，該階段將跨越第二季度。我們相信，隨著時間的推移，我們將有很大的空間將我們顛覆性的 DTC 模型和核心平台功能應用於我們新收購的品牌，因為我們幫助他們充分發揮潛力。

With 4 brands acquisitions since mid-2019, our strategy, investment and capital market teams has developed its core capabilities of sourcing, executing and integrating new brands through these experiences and has continued to improve and upgrade.

自 2019 年中期以來，我們的戰略、投資和資本市場團隊通過這些經驗發展了 4 個品牌收購、採購、執行和整合新品牌的核心能力，並不斷完善和升級。

We have since 2020 started to see a number of high-quality brands emerge and become available globally. And we are continually seeking to identify potential attractive additions to our portfolio. We believe our success in acquiring Eve Lom is a testament to our rising reputation as a serious high-quality consolidator of global beauty assets. We plan to leverage this unique window of opportunity to add to our portfolio in a prudent and cost-effective manner.

自 2020 年以來，我們開始看到許多優質品牌出現並在全球範圍內銷售。我們一直在尋求為我們的產品組合尋找潛在的有吸引力的補充。我們相信，我們成功收購 Eve Lom 證明了我們作為全球美容資產的認真高質量整合者的聲譽不斷提高。我們計劃利用這個獨特的機會窗口，以審慎且具有成本效益的方式增加我們的投資組合。

Aside from operational improvements and M&A, continued investments in our core infrastructure and the capabilities are also our central focus. We have increased R&D spending during the quarter to almost 2% of total net revenues compared to 1.2% in the same period last year. So the build-out of our Guangzhou manufacturing hub and research center in the form of a joint venture with Cosmax is on track, with construction having started in late March. As of end of the first quarter, we held a total of 75 global registered patents, including 36 invention patents.

除了運營改進和併購之外，對我們核心基礎設施和能力的持續投資也是我們的核心重點。我們在本季度將研發支出增加到淨收入總額的近 2%，而去年同期為 1.2%。因此，我們與科絲美詩以合資企業的形式建設廣州製造中心和研究中心的工作正在按計劃進行，建設工作已於 3 月下旬開始。截至一季度末，我們共持有全球註冊專利75件，其中發明專利36件。

Our open lab R&D architecture, which encompass our internal R&D division as well as collaboration with the network of outside OEM and R&D partners, such as Sensient Technologies, [Peer Pop], Huazhong University of Science and Technology and et cetera. We enhance our capabilities and abilities to develop unique active ingredients, formulations and innovative packaging and application solutions.

我們的開放實驗室研發架構，包括我們的內部研發部門以及與外部 OEM 和研發合作夥伴網絡的合作，例如 Sensient Technologies、[Peer Pop]、華中科技大學等。我們增強了我們開發獨特的活性成分、配方和創新包裝和應用解決方案的能力。

Finally, we would like to provide an update on our international business, where our progress in certain markets, such as Southeast Asia, have exceeded our expectations. So even though overseas sales represent a relatively small part of our overall sales in the first quarter of 2021, it is worth noting that we have already become one of the top-selling brands in the online cosmetic categories in fast-growing consumer markets, such as Mainland Malaysia, Singapore and the Philippines.

最後，我們想介紹一下我們國際業務的最新情況，我們在某些市場（例如東南亞）的進展超出了我們的預期。因此，儘管海外銷售額在我們 2021 年第一季度的整體銷售額中所佔比例相對較小，但值得注意的是，我們已經成為快速增長的消費市場中在線化妝品類別中最暢銷的品牌之一，例如如馬來西亞大陸、新加坡和菲律賓。

We are inspired by the success enjoyed by other Chinese DTC companies such as Shein and Anchor in overseas market. We have already started to learn from these leaders and may accelerate our overseas business in the future.

我們對其他中國 DTC 公司（如 Shein 和 Anchor）在海外市場取得的成功感到鼓舞。我們已經開始向這些領導者學習，未來可能會加速我們的海外業務。

Thank you, everyone. With that, I will now turn the call over to our CFO, Donghao Yang, to discuss our financial performance.

謝謝大家。有了這個，我現在將把電話轉給我們的首席財務官楊東浩，討論我們的財務業績。

Thank you, David, and hello, everyone. Before I get started, I would like to clarify that all financial numbers presented today are in renminbi amounts and all percentage changes referred to year-over-year changes, unless otherwise noted.

謝謝你，大衛，大家好。在開始之前，我想澄清一下，除非另有說明，否則今天提供的所有財務數據均為人民幣金額，所有百分比變化均指同比變化。

Total net revenues for the first quarter of 2021 increased by 42.7% to RMB 1.4 billion from RMB 1 billion for the first quarter of 2020, primarily attributable to the increases in the number of DTC customers as well as revenue per DTC customer during the period.

2021 年第一季度的總淨收入從 2020 年第一季度的 10 億元人民幣增長 42.7% 至 14 億元人民幣，這主要是由於 DTC 客戶數量以及在此期間每個 DTC 客戶的收入增加。

Gross profit for the first quarter of 2021 increased by 58.8% to RMB 991.6 million from RMB 624.4 million for the first quarter of 2020.

2021 年第一季度的毛利從 2020 年第一季度的人民幣 6.244 億元增長 58.8% 至人民幣 9.916 億元。

Gross margin improved by approximately 7 percentage points to 68.6% in the first quarter of 2021 compared to 61.7% in the same period of 2020 on the back of more disciplined pricing and discount policy.

在更嚴格的定價和折扣政策的支持下，2021 年第一季度的毛利率從 2020 年同期的 61.7% 提高了約 7 個百分點至 68.6%。

On the business end, we saw increased sales generated from higher-margin brands and through experience stores. We have also creatively premiumized our product offerings enabling us to achieve higher average order value and better margin outcomes.

在業務端，我們看到利潤率較高的品牌和體驗店的銷售額有所增加。我們還創造性地優化了我們的產品供應，使我們能夠實現更高的平均訂單價值和更好的利潤率結果。

Total operating expenses for the first quarter of 2021 were RMB 1.3 billion compared to RMB 800.3 million for the first quarter of 2020. As a percentage of total net revenues, total operating expenses increased to 92.4% from 79.1% for the first quarter of 2020.

2021 年第一季度的總運營費用為人民幣 13 億元，而 2020 年第一季度為人民幣 8.003 億元。占淨收入總額的百分比從 2020 年第一季度的 79.1% 上升至 92.4%。

Fulfillment expenses for the first quarter of 2021 were RMB 92.7 million compared to a RMB 107.1 million for the first quarter of 2020. As a percentage of net revenues, fulfillment expenses decreased from 10.6% in the first quarter of 2020 to 6.4% in the first quarter of 2021. The decrease in percentage was primarily due to the normalization of logistics expenses compared to the first quarter of 2020 during which logistics expenses were higher due to the impact from COVID-19.

2021 年第一季度的履約費用為人民幣 9270 萬元，而 2020 年第一季度為人民幣 1.071 億元。履約費用占淨收入的百分比從 2020 年第一季度的 10.6% 下降到第一季度的 6.4% 2021 年季度。百分比下降主要是由於與 2020 年第一季度相比物流費用正常化，在此期間，由於 COVID-19 的影響，物流費用較高。

Selling and marketing expenses for the first quarter of 2021 were RMB 1 billion compared to RMB 556.9 million for the first quarter of 2020. As a percentage of total net revenues, selling and marketing expenses were 72.1% compared to 55% in the prior year period. The increase was primarily due to investments in promotions and consumer awareness building for the newer brands and testing of the effectiveness of new traffic acquisition channels.

2021 年第一季度的銷售和營銷費用為人民幣 10 億元，而 2020 年第一季度為人民幣 5.569 億元。銷售和營銷費用占淨收入總額的百分比為 72.1%，而去年同期為 55% .這一增長主要是由於對新品牌的促銷和消費者意識建設的投資，以及對新流量獲取渠道有效性的測試。

General and administrative expenses for the first quarter of 2021 were RMB 172.3 million compared to RMB 124.1 million for the first quarter of 2020. As a percentage of total net revenues, general and administrative expenses for the first quarter of 2021 decreased to 11.9% from 12.3% for the first quarter of 2020. The decrease in percentage was primarily due to increased economy of scale resulting from a higher level of revenue.

2021 年第一季度的一般和行政費用為人民幣 1.723 億元，而 2020 年第一季度為人民幣 1.241 億元。占淨收入總額的百分比，2021 年第一季度的一般和行政費用從 12.3% 下降到 11.9% % 為 2020 年第一季度。百分比下降主要是由於收入水平較高導致規模經濟增加。

Research and development expenses for the first quarter of 2021 were RMB 27.7 million compared to RMB 12.2 million for the first quarter of 2020. As a percentage of total net revenues, research and development expenses for the first quarter of 2021 increased to 1.9% from 1.2% for the first quarter of 2020. The increase was primarily due to an increase in personnel costs and share-based compensation expenses as a reflection of our commitment to enhance our R&D capabilities as a sustainable source of competitive advantage.

2021 年第一季度研發費用為人民幣 2770 萬元，而 2020 年第一季度為人民幣 1220 萬元。占淨收入總額的百分比，2021 年第一季度研發費用從 1.2% 增加到 1.9% % 為 2020 年第一季度。增加的主要原因是人員成本和基於股份的補償費用的增加，這反映了我們致力於增強我們的研發能力作為競爭優勢的可持續來源的承諾。

Loss from operations for the first quarter of 2021 was RMB 343.3 million, representing operating loss margin of 23.8% compared to loss from operations of RMB 176 million or operating loss margin of 17.4% for the first quarter of 2020.

2021 年第一季度的運營虧損為人民幣 3.433 億元，運營虧損率為 23.8%，而 2020 年第一季度的運營虧損為人民幣 1.76 億元或運營虧損率為 17.4%。

Non-GAAP loss from operations for the first quarter of 2021 was RMB 258.3 million, representing non-GAAP operating loss margin of 17.9% compared to non-GAAP loss from operations of RMB 113.7 million or non-GAAP operating loss margin of 11.2% for the first quarter of 2020.

2021 年第一季度非美國通用會計準則運營虧損為 2.583 億元人民幣，非美國通用會計準則運營虧損率為 17.9%，而 2021 年第一季度非美國通用會計準則運營虧損為人民幣 1.137 億元，非美國通用會計準則運營虧損率為 11.2% 2020 年第一季度。

Net loss for the first quarter of 2021 was RMB 319 million, representing net loss margin of 22.1% compared to net loss of RMB 191.7 million or net loss margin of 18.9% for the first quarter of 2020. Non-GAAP net loss for the first quarter '20 was RMB 234.3 million, representing a net loss margin of 16.2% compared to non-GAAP net loss of RMB 129.4 million or 12.8% of net loss margin for the first quarter of 2020.

2021 年第一季度淨虧損為人民幣 3.19 億元，淨虧損率為 22.1%，而 2020 年第一季度為淨虧損人民幣 1.917 億元或淨虧損率為 18.9%。 20 季度為 2.343 億元人民幣，淨虧損率為 16.2%，而 2020 年第一季度非美國通用會計準則淨虧損為 1.294 億元人民幣，占淨虧損率的 12.8%。

Net loss attributable to Yatsen's ordinary shareholders per diluted ADS for the first quarter of 2021 was RMB 0.5 compared to net losses attributable to Yatsen's ordinary shareholders per diluted ADS of RMB 4.6 for the first quarter of 2020.

2021 年第一季度每股攤薄 ADS 歸屬於中成普通股股東的淨虧損為 0.5 元人民幣，而 2020 年第一季度每股攤薄 ADS 歸屬於中成普通股股東的淨虧損為人民幣 4.6 元。

Non-GAAP net loss attributable to Yatsen's ordinary shareholders per diluted ADS for the first quarter of 2021 was RMB 0.37 compared to non-GAAP net loss attributable to Yatsen's ordinary shareholders per diluted ADS of RMB 0.92 for the first quarter of 2020.

2021 年第一季度，非美國通用會計準則歸屬於中成普通股股東的每股攤薄美國存託股淨虧損為 0.37 元人民幣，而 2020 年第一季度非美國通用會計準則歸屬於中成普通股股東的每股攤薄美國存託股淨虧損為人民幣 0.92 元。

As of March 31, 2021, the company had cash and cash equivalents and restricted cash of RMB 4.3 billion compared to RMB 5.7 billion as of December 31, 2020.

截至 2021 年 3 月 31 日，公司擁有現金和現金等價物以及受限制現金 43 億元人民幣，而截至 2020 年 12 月 31 日為 57 億元人民幣。

Looking at our business outlook for the first quarter of 2021, we expect -- looking at our business outlook for the second quarter of 2021, we expect our total net revenues to be between RMB 1.49 billion and RMB 1.54 billion, representing a year-over-year growth rate of approximately 50% to 55%. This forecast reflects our current and preliminary view on the market and operational conditions, which is subject to change.

看看我們對 2021 年第一季度的業務展望，我們預計——看看我們對 2021 年第二季度的業務展望，我們預計我們的總淨收入將在 14.9 億元人民幣至 15.4 億元人民幣之間，與去年同期相比年增長率約為50%至55%。該預測反映了我們對市場和運營狀況的當前和初步看法，可能會發生變化。

With that, I would now like to open the call to Q&A. Operator?

有了這個，我現在想打開問答環節。操作員？

(Operator Instructions) Our first question today comes from Dustin Wei with Morgan Stanley.

（操作員說明）我們今天的第一個問題來自摩根士丹利的 Dustin Wei。

My first question regarding the guidance for the second quarter. It seems like it suggests that 3% to 7% quarter-on-quarter growth versus the first quarter. And I feel it seems weaker than normal seasonality for cosmetics. So is there sort of adjustment going on with like some strategy change or so management intends to be conservative? So first question regarding the guidance.

我的第一個問題是關於第二季度的指導。這似乎表明與第一季度相比環比增長 3% 至 7%。而且我覺得它似乎比化妝品的正常季節性要弱。那麼是否有某種調整正在進行，比如一些戰略變化，或者管理層打算保守？所以第一個關於指導的問題。

Second question is that given the competition on color cosmetics seems to become more intense, so is there any strategy change for the management sort of in terms of allocating more marketing resources to the skincare rather than color cosmetics? And is that kind of part of the reason that our sales growth is slightly sort of lower than previously?

第二個問題，鑑於彩妝的競爭似乎越來越激烈，那麼管理層是否有策略上的改變，將更多的營銷資源分配給護膚品而不是彩妝？這是我們的銷售增長略低於以前的部分原因嗎？

And third question is regarding the net losses in the second -- in the first quarter. So that net loss sort of the ratio is slightly higher than fourth quarter last year. I think that's mainly because of higher selling and marketing. So is there any further elaboration of that? And how should we look at that ratio for the full year?

第三個問題是關於第二季度——第一季度的淨虧損。因此，淨虧損的比率略高於去年第四季度。我認為這主要是因為更高的銷售和營銷。那麼有沒有進一步的說明呢？我們應該如何看待全年的這一比率？

So for the quarter-over-quarter growth, I think the first thing we want to clarify is, right now, our brand portfolio has been changing dramatically. So we had 3 brands last year, but now we have 7 brands, and then skincare now we have 4. So you're right, so when we are thinking about the resource allocation for the coming quarters, we may allocate more resources into the skincare growth. And the skincare growth might not be as dramatic as color cosmetic. However, we think the growth of skincare, especially the luxury sectors of the skincare category is more sustainable. And this might influence the bottom line as well.

因此，對於環比增長，我認為我們首先要澄清的是，目前，我們的品牌組合一直在發生巨大變化。所以去年我們有 3 個品牌，但現在我們有 7 個品牌，然後護膚品現在有 4 個。所以你是對的，所以當我們考慮未來幾個季度的資源分配時，我們可能會分配更多資源到護膚品的增長。護膚品的增長可能不如彩妝那麼顯著。然而，我們認為護膚品的增長，尤其是護膚品類的奢侈品行業更具可持續性。這也可能影響底線。

So for the second thing about the competitiveness of the color cosmetic market, so if we look at the Euromonitor data, so last year, Yatsen as a company was ranked as #5, and then so -- in 2019. In 2020, the company was ranking at #4. But if you look at the growth rate, the 2020 over 2019 growth rate as the -- based on the same database and Yatsen was growing at over 30%, while the #1, #2 was declining and the #3 was just growing at digit.

所以關於彩妝市場競爭力的第二件事，如果我們看 Euromonitor 的數據，那麼去年，Yatsen 作為一家公司排名第五，然後是 - 在 2019 年。在 2020 年，該公司排名第 4。但如果你看一下增長率，2020 年比 2019 年的增長率——基於同一個數據庫，Yatsen 的增長率超過 30%，而#1、#2 正在下降，而#3 剛剛增長數字。

So if we look at the overall color cosmetics, we think we still have a high growth potential, and we will work to continuously to expanding our brand in color cosmetics. And we will continue to invest to grow our existing brands, including Perfect Diary, until we become the #1 company in terms of value share in color cosmetics market.

所以如果我們看整個彩妝，我們認為我們仍然有很高的增長潛力，我們將繼續努力擴大我們在彩妝領域的品牌。我們將繼續投資發展我們現有的品牌，包括完美日記，直到我們成為彩妝市場價值份額第一的公司。

So your third question is about the increase in sales and marketing. So in the first quarter this year, because we newly acquired a couple of the skincare brands, at the early integration stage, the investment on brand building and also cleaning the inventory for the distributor will be the 2 core things that we need to do.

所以你的第三個問題是關於銷售和營銷的增長。所以在今年第一季度，因為我們新收購了幾個護膚品牌，所以在早期整合階段，品牌建設的投資和經銷商清理庫存將是我們需要做的兩件核心事情。

So the investment for some of our newly acquired brand, for example, we just announced the brand ambassador for Galénic in the first quarter. And then we believe the investment in strengthening the brand equity and then improving the brand awareness will be reflected in the growth in the coming quarters for our skincare brands.

所以對於我們新收購的一些品牌的投資，例如，我們剛剛在第一季度宣布了 Galénic 的品牌大使。然後我們相信，在加強品牌資產和提高品牌知名度方面的投資將反映在我們護膚品牌未來幾個季度的增長中。

Yes. And one other thing I want to add is, in Q1, we spent some money testing the effectiveness of new traffic acquisition channels, such as Douyin, Kuaishou and some others to figure out the best most efficient cost-effective ways to acquire traffic and market a product. And on top of that, we are trying to put in place a more disciplined approach to ROI optimization. So now we're allocating our resources to maximize our ROI to allocate resources across different brands, and now we have 7 of them to make sure that we have the highest return on our investment.

是的。還有一件事我想補充的是，在第一季度，我們花了一些錢來測試新的流量獲取渠道的有效性，比如抖音、快手和其他一些渠道，以找出最好的、最具成本效益的獲取流量和市場的方式。一個產品。最重要的是，我們正在嘗試採用一種更加規範的 ROI 優化方法。所以現在我們正在分配我們的資源以最大化我們的投資回報率來分配不同品牌的資源，現在我們有 7 個品牌來確保我們獲得最高的投資回報。

So going forward -- you just mentioned in Q1, our non-GAAP net loss is like 16%. Going forward, we do expect our net loss to come down. And we are actually more confident about our future prospects of profitability going forward, as now we're building a sizable and sustainable skincare business.

所以展望未來——你剛剛在第一季度提到，我們的非 GAAP 淨虧損約為 16%。展望未來，我們確實預計我們的淨虧損會下降。事實上，我們對未來的盈利前景更有信心，因為現在我們正在建立一個規模龐大且可持續的護膚業務。

So if I can just have a follow-up on that? So are we still sort of aiming for like breakeven or even better profitability for 2022, given the change of the focus towards more like skincare?

那麼我是否可以對此進行跟進？那麼，考慮到人們對護膚品的關注點發生了變化，我們是否仍希望在 2022 年實現收支平衡甚至更好的盈利能力？

Well, now we are actually not in a position to give guidance, right, on profitability or 2 years from now. But as I said earlier, we're now even more confident about our future prospect of turning this business profitable.

好吧，現在我們實際上無法就盈利能力或 2 年後提供指導，對吧。但正如我之前所說，我們現在對將這項業務扭虧為盈的未來前景更有信心。

(Operator Instructions) The next question comes from Luzi Li with Bank of America.

（操作員說明）下一個問題來自美國銀行的 Luzi Li。

So my first question is also on the guidance for Q2. So I recognize that Q2 basically is the easiest base -- has easiest pace, if you look at the last year. So is it fair to say in Q2, maybe it's likely the best quarter in terms of the run rate -- gross run rate? This is my first question.

所以我的第一個問題也是關於第二季度的指導。所以我認識到 Q2 基本上是最簡單的基礎——如果你看看去年的話，它的步伐最簡單。那麼可以公平地說，在第二季度，就運行率而言，它可能是最好的季度——毛運行率？這是我的第一個問題。

And second question is, if you look at the DTC growth, DTC channel growth, so in the past, we actually see the number of DTC customers grow faster than the up value. So -- but in this quarter, in Q1 of this year, we actually see the higher ASP growth than the number of customers. So are we going to see the similar trend in the future? Or it's just like one-off?

第二個問題是，如果你看一下 DTC 的增長，DTC 渠道的增長，那麼在過去，我們實際上看到 DTC 客戶數量的增長速度快於向上價值。所以 - 但在本季度，今年第一季度，我們實際上看到平均售價增長高於客戶數量。那麼我們會在未來看到類似的趨勢嗎？或者它就像一次性的？

And if this is the case, so how can we achieve the higher ASP in future, particularly for the Perfect Diary? So you just mentioned that we achieved some brand upgrade for Perfect Diary brand. So are we seeing the discount rate -- lower discount rates or we have a higher ASP for the newly launched products and then we give the similar level of discount? So this is my second question.

如果是這樣的話，那麼我們未來如何才能達到更高的平均售價，尤其是完美日記呢？所以你剛剛提到我們對完美日記品牌做了一些品牌升級。那麼我們看到的是折扣率——較低的折扣率，還是我們對新推出的產品有更高的平均售價，然後我們提供類似水平的折扣？所以這是我的第二個問題。

And my third question is also on the margin side. So for the Q1, we do see the higher selling and distribution ratio. But my question is, like, whether this is more about the newly acquired brands or new brands? Or we actually see quite similar ratio for different brands? So if we purely look at Perfect Diary, how is the trend versus last year same time?

我的第三個問題也是關於保證金方面的。因此，對於第一季度，我們確實看到了更高的銷售和分銷比率。但我的問題是，這更多是關於新收購的品牌還是新品牌？或者我們實際上看到不同品牌的比例非常相似？那麼如果單純看完美日記，跟去年同期相比走勢如何呢？

Okay. So for your first question, let's discuss about the Q2 guidance about the growth. So if we look at the brand portfolio we're having right now and then also we just launched a new skincare brand, so this brand, so there's like -- it has a price point that's lower than Perfect Diary. But this brand, it has a very young growth of brand equity to attract the new category engines.

好的。所以對於你的第一個問題，讓我們討論一下關於增長的第二季度指導。因此，如果我們看看我們現在擁有的品牌組合，然後我們剛剛推出了一個新的護膚品牌，那麼這個品牌，就像——它的價格低於完美日記。但是這個品牌，它有一個非常年輕的品牌資產增長來吸引新的品類引擎。

So the brand is targeting the young and Gen Z and Gen A consumers, who are newly adopting the color cosmetic products. So the reason we do that is that we are right now upgrading the Perfect Diary product portfolios with 2 things. One thing is for existing products, we will have more distinct discount and promotion. And then for our newly launched products, we are trying to catch up the upgrade and the premiumization share of the consumers. So that's why we can see an increase in gross margin of the -- in the first quarter.

因此，該品牌的目標客戶是年輕的 Z 世代和 A 世代消費者，他們是新採用彩妝產品的人群。所以我們這樣做的原因是我們現在正在用兩件事來升級完美日記的產品組合。一件事是對於現有產品，我們將有更多不同的折扣和促銷。然後對於我們新推出的產品，我們正在努力趕上消費者的升級和高端化份額。所以這就是為什麼我們可以看到第一季度毛利率增加的原因。

So having said that, so Little Ondine in the quarter 2 last year had a very dramatic growth. So this year, we are also thinking about adjusting the investment level for Little Ondine as well. So for the second quarter, we believe the growth reflects our change in the resource allocation with more focus on skincare brands, with more focus on adjusting the investment model for Little Ondine and Abby's Choice, with more focus on price up and also the premiumization of Perfect Diary. So that's why we think the growth will have some impact on the bottom line for the second quarter.

話雖如此，去年第 2 季度的 Little Ondine 有了非常顯著的增長。所以今年我們也在考慮調整小昂丁的投資水平。所以對於第二季度，我們認為增長反映了我們在資源配置上的變化，更多地關注護膚品牌，更多地關注調整 Little Ondine 和 Abby's Choice 的投資模式，更多地關注價格上漲以及高端化完美日記。所以這就是為什麼我們認為增長會對第二季度的利潤產生一些影響。

And we believe the shift of the growth model will be more sustainable and more -- will become more robust in the coming quarters. So that's my answer for the first question about the Q2 guidance.

我們相信增長模式的轉變將更具可持續性，並且在未來幾個季度將變得更加強勁。這就是我對有關第二季度指南的第一個問題的回答。

For the second one, the DTC customer growth versus the ARPU growth. You're right, if you look at the absolute percentage, we can see in the Q1 that the average revenue per customer, the growth, is higher than the DTC customer growth. So if you look at the brand portfolios right now, and then so Galénic and Eve Lom, they are -- the price point of both brands are in the premium skincare sectors. And then even for DR.WU, the brand is on masstige skincare price tier. And for Perfect Diary, the brand is moving up to the high end of the mass market.

對於第二個，DTC 客戶增長與 ARPU 增長。你是對的，如果你看絕對百分比，我們可以在第一季度看到每個客戶的平均收入增長高於 DTC 客戶增長。因此，如果您現在查看品牌組合，那麼 Galénic 和 Eve Lom 就是——這兩個品牌的價格點都在高端護膚品領域。然後即使是 DR.WU，該品牌也處於 masstige 護膚品價格等級。而對於完美日記來說，品牌正在向高端大眾市場邁進。

Having said that, which means the ARPU, the average revenue per customer growth will be continue to -- because of the resource allocated and invest in both masstige and premium skincare brands and also the masstige color cosmetic Little Ondine and also Perfect Diary.

話雖如此，這意味著 ARPU，每個客戶的平均收入增長將繼續——因為資源分配和投資於大眾和高端護膚品牌以及大眾彩妝 Little Ondine 和完美日記。

So -- but we think it's also very important to capture a significant share of the new engines in color cosmetics. So we believe the launch of Pink Bear is a very important strategy move to capture the new engines with higher value-for-money products. And then -- so right now, based on the monthly run rate of Pink Bear, we are quite happy to see the early stage results, which the Pink Bear is playing a very important strategy role to take the empty space when Perfect Diary is moving up. So looking forward, we think that both the DTC customer and also the ARPU will continue to grow. But each of the brands will play different roles in driving the growth of these 2 figures.

所以 - 但我們認為在彩妝新引擎中佔據很大份額也非常重要。所以我們認為粉紅熊的推出是一個非常重要的戰略舉措，以更高性價比的產品捕捉新引擎。然後——所以現在，根據粉紅熊的月運行率，我們很高興看到早期的結果，粉紅熊在完美日記移動時扮演著非常重要的戰略角色，佔據了空白空間向上。所以展望未來，我們認為 DTC 客戶和 ARPU 都將繼續增長。但每個品牌在推動這兩個數字的增長方面將扮演不同的角色。

So about -- your third question about the margin growth. So right now, the gross margin in the first quarter over last year was -- is over -- is like 7%. So -- because right now, the growth mainly -- the gross margin mainly coming from 2 things. One thing, as I mentioned before, is the improvement -- the increase of the skincare brands. So the skincare brands' revenue as a percentage of Yatsen's revenue has been increasing. And then because of those skincare brands, the gross margin is higher. So that's why we see the gross margin incremental here.

那麼 - 關於利潤率增長的第三個問題。所以現在，去年第一季度的毛利率是——已經結束了——大約是 7%。所以——因為現在，增長主要是——毛利率主要來自兩件事。正如我之前提到的，一件事是改善——護膚品牌的增加。因此，護膚品牌的收入佔逸仙收入的百分比一直在增加。然後因為那些護膚品牌，毛利率更高。所以這就是我們在這裡看到毛利率增量的原因。

And then for Perfect Diary, our flagship brand, in the first quarter, we launched some new quarters with higher gross margin. For example, the slim lipstick is capturing like higher market share in the first quarter. And therefore, that product is becoming the top-selling product in lipstick category, but the gross margin of that product is higher than the other products of Perfect Diary. So we think the launch is not a direct price up of existing products. It's coming from more disciplined promotion and also new products to capture -- new product new innovation, providing more value to consumers.

然後對於我們的旗艦品牌完美日記，在第一季度，我們推出了一些毛利率更高的新季度。例如，纖薄的唇膏在第一季度佔據了更高的市場份額。因此，該產品正在成為口紅類產品中的暢銷產品，但該產品的毛利率高於完美日記的其他產品。因此我們認為此次推出並不是現有產品的直接價格上漲。它來自更有紀律的促銷和新產品的捕獲——新產品新創新，為消費者提供更多價值。

And then -- another thing I want to add up here. So private -- what we call the premiumization strategy for brands, we need to have some reason for consumers. So that's why we are consistently improving our R&D expenses. As long as we have better products, better innovation and consumers, they are -- they have very high willingness to pay for those better products and the new products. So that, we think how we can adjust the risk of the premiumization of the brand.

然後——我想在這裡補充的另一件事。如此私密——我們稱之為品牌高端化戰略，我們需要為消費者提供一些理由。因此，這就是我們不斷提高研發費用的原因。只要我們有更好的產品、更好的創新和消費者，他們就會非常願意為這些更好的產品和新產品買單。所以，我們思考如何調整品牌高端化的風險。

Just one follow-up. So in terms -- so you just mentioned that in the rest of the year, maybe we will see a better margin profile, given our strategy shift. So in this case, so are we looking for non-GAAP net profit narrowed versus last year or we're still seeing a similar level?

只是一個跟進。所以就條款而言 - 所以你剛剛提到，在今年餘下的時間裡，考慮到我們的戰略轉變，也許我們會看到更好的利潤率。所以在這種情況下，我們是在尋找與去年相比縮小的非 GAAP 淨利潤，還是我們仍然看到類似的水平？

Sorry, as I said earlier, we're not in a position to give guidance on profitability for the rest of the year. But I said earlier, as we are trading out of our existing brands and introducing more luxury skincare brands with higher margins, we are more confident on the profitability of our business going forward.

抱歉，正如我之前所說，我們無法就今年剩餘時間的盈利能力提供指導。但我之前說過，由於我們正在出售現有品牌並引入更多利潤率更高的奢侈護膚品牌，我們對未來業務的盈利能力更有信心。

Maybe I can just add one thing here is the change reflects our resource allocation -- reallocation among the brands, among our portfolios. So our resources, we'll invest in the skin care category and also continuously invest in the new brands of the color cosmetics. So that's why we think this will impact our bottom line. But sorry about that, we are not going to give you any guidance on this one.

也許我可以在這裡補充一件事，那就是變化反映了我們的資源分配——品牌之間、我們產品組合之間的重新分配。所以我們的資源，我們會投入護膚品類，也會不斷投入彩妝的新品牌。所以這就是為什麼我們認為這會影響我們的底線。但是很抱歉，我們不會在這方面給你任何指導。

The next question comes from Christine Cho with Goldman Sachs.

下一個問題來自高盛的 Christine Cho。

So 2 questions. So one, could you -- is it possible to give us a rough sense of the sales contributions from your own organic brands versus the newly acquired brands, both in terms of this quarter as well as the implied in your second quarter guidance?

所以2個問題。那麼，您能否 - 是否可以粗略地了解您自己的有機品牌與新收購品牌的銷售貢獻，無論是本季度還是第二季度指導中的暗示？

And then secondly, David, you mentioned that -- in your remarks that nontraditional channel sales contributions have increased this quarter, including the short videos and TV in experience stores, should we expect this trend to continue going forward? And also, would it be possible for you to elaborate on your strategy in these new channels? And then lastly, a quick one is, is there any update on the repurchase rate that you can share with us?

其次，大衛，你提到——在你的評論中，非傳統渠道的銷售貢獻在本季度有所增加，包括體驗店中的短視頻和電視，我們是否應該期望這種趨勢繼續向前發展？另外，您能否詳細說明您在這些新渠道中的策略？最後，一個快速的問題是，您是否可以與我們分享有關回購率的最新信息？

Okay. So first one, about the organic brands. So if you -- I cannot clarity here. So even with the brands we acquired, in terms of the growth, we still invest a lot in the new acquired brands. So if you're talking about the revenue split between existing brands, no matter if it's incubated or the brands that come from last year or the newly acquired brands, the percentage-wise of the newly acquired brands was still relatively small in the total percentage of the revenue.

好的。所以第一個，關於有機品牌。所以如果你 - 我不能在這裡澄清。因此，即使我們收購了品牌，就增長而言，我們仍然對新收購的品牌進行了大量投資。所以如果你在談論現有品牌之間的收入分配，無論是孵化品牌還是去年的品牌或新收購的品牌，新收購品牌的百分比在總百分比中仍然相對較小的收入。

But what we do is, we invest in the new brands and we capture the growth. So until now, I would say that the main growth driver of this company still comes from the organic growth, no matter if it's existing brands, incubated brands or even the acquired brands. So that's about the first -- your first question.

但我們所做的是，我們投資於新品牌並抓住增長。所以直到現在，我想說這家公司的主要增長動力仍然來自有機增長，無論是現有品牌、孵化品牌還是收購品牌。這就是第一個問題——你的第一個問題。

And we're quite happy about even our flagship brands like Perfect Diary's growth in the first quarter because we see we had growth of Perfect Diary mainly coming from the newly launched masstige lipstick products or the category expansion into like the color contact lens and also the skincare products as well.

我們對第一季度完美日記等旗艦品牌的增長感到非常高興，因為我們看到完美日記的增長主要來自新推出的大眾口紅產品或類別擴展到彩色隱形眼鏡和護膚品也是如此。

So your first question -- the second question is about the nontraditional channels, for example, the TV or the short video or -- you're right, we see the trend will continue because right now, in the first quarter, as mentioned by Donghao before, we spent some resources in testing the new platforms. For example, as we all know, for some of the short video and also the live broadcasting, the apps as they are devoting a lot of resources in building up their e-commerce part of the business, which means in terms of GMV, we see a significant growth potential for those apps and newly emerged platforms.

所以你的第一個問題 - 第二個問題是關於非傳統渠道，例如電視或短視頻 - 你是對的，我們看到趨勢將繼續，因為現在，在第一季度，正如東浩之前，我們花了一些資源來測試新平台。舉個例子，眾所周知，一些短視頻，還有直播，APP因為他們在電商業務上投入了大量的資源，也就是說在GMV方面，我們看到這些應用程序和新興平台的巨大增長潛力。

So this is something that we spent a lot of time in the first quarter to study, to see what will be the impact for brands in the future. So in the traditional business model, we have brand building platforms, social media platform, and we have the transactional-based e-commerce platforms, like mainly Alibaba and et cetera.

所以這是我們在第一季度花了很多時間研究的事情，看看未來會對品牌產生什麼影響。所以在傳統的商業模式中，我們有品牌建設平台、社交媒體平台，我們有基於交易的電子商務平台，比如主要是阿里巴巴等。

But now we see some of the newly emerging players in this market, they capture both part of the -- of it. So they can help you to build brands and that they can help you to complete the transaction. So it means a lot for brands. So that's why we had some test in the first quarter by working together with the top level management of those platforms.

但現在我們看到這個市場上的一些新出現的參與者，他們佔據了它的兩個部分。所以他們可以幫助你建立品牌，他們可以幫助你完成交易。所以這對品牌來說意義重大。因此，這就是為什麼我們在第一季度通過與這些平台的高層管理人員合作進行了一些測試。

And we are very happy to see some early-stage results coming from the test. So looking forward, we think our resource -- our growth outside of the traditional e-commerce platform will continue to lead -- to play as the growth driver for Yatsen as well. So for your third question about repurchase rate, Irene, do you want to share?

我們很高興看到測試的一些早期結果。因此，展望未來，我們認為我們的資源——我們在傳統電子商務平台之外的增長將繼續領先——也將成為 Yatsen 的增長動力。那麼對於你關於回購率的第三個問題，艾琳，你想分享嗎？

Yes. So for repurchase rate, we have been seeing similar levels in the past. So previously, I think in both -- when we were IPO-ing and also in the annual report, we mentioned the repurchase rate over a 12-month period has been -- they seeing around 40%. And then recently, in this quarter, we didn't disclose the actual number, but the level has been in the similar level.

是的。因此，對於回購率，我們過去一直看到類似的水平。所以之前，我認為在我們首次公開募股和年度報告中，我們都提到了 12 個月期間的回購率 - 他們看到了 40% 左右。然後最近，在本季度，我們沒有透露實際數量，但水平一直處於類似水平。

The next question comes from [Jenny Zhu] with CICC.

下一個問題來自中金公司的[Jenny Zhu]。

Hello? Can you hear me? Yes, this is Jennin from CICC. I've got 2 questions. The first one is what's our specific plan on the skincare business this year? And how will we allocate the resources, say, the marketing and the labor, the team, the talent?

你好？你能聽到我嗎？是的，我是中金公司的Jennin。我有兩個問題。第一個是我們今年在護膚業務上有什麼具體的規劃？我們將如何分配資源，比如營銷和勞動力、團隊、人才？

The second question is, as we're testing the new traffic acquisition channels, such as Douyin you mentioned, could you further elaborate what we did? And how was the performance so far?

第二個問題，我們正在測試新的流量獲取渠道，比如你提到的抖音，你能進一步詳細說明我們做了什麼嗎？到目前為止的表現如何？

Well, for the skincare growth, so we think the acquisition of Eve Lom is a very important milestone of the company. So we -- so when we are entering into the skincare category, we -- it takes some time for us to improve our understanding of the category and also the -- to test whether the company's core capability can be able to applied into the skincare category. So based on the early stage in the results in the past few months, we are very glad and confident that the -- so our business model is working in both color cosmetics and skincare.

那麼，對於護膚品的增長，我們認為收購 Eve Lom 是公司非常重要的里程碑。所以我們 - 所以當我們進入護膚品類別時，我們 - 我們需要一些時間來提高我們對該類別的理解以及 - 測試公司的核心能力是否能夠應用於護膚品類別。因此，基於過去幾個月的早期結果，我們非常高興和有信心——所以我們的商業模式在彩妝和護膚品領域都有效。

So going back to some of the brands we are like investing in, and then we see a very clear growth path for those brands. For example, DR.WU, so we repositioned the brand and focused on very specific benefit categories -- or benefit space for the brand. And then we strengthened the brand equity and then focused on a couple of the few SKUs. So if we look at the growth of DR.WU in Tmall, it's actually very consistent and a remarkable growth. So this brand has been selling in payers live broadcasting in March and April, and we see the result was quite impressive.

所以回到我們喜歡投資的一些品牌，然後我們看到這些品牌的增長路徑非常清晰。例如，DR.WU，所以我們重新定位了品牌並專注於非常具體的利益類別——或品牌的利益空間。然後我們加強了品牌資產，然後專注於少數幾個 SKU。因此，如果我們看一下 DR.WU 在天貓的增長，它實際上是非常穩定且顯著的增長。所以這個品牌在三四月份一直在付費直播賣，我們看到效果還是很不錯的。

And then this month, we are continuing to invest in the brands, in Douyin, with the top KOLs -- actually tonight. And so in June, this brand is going to have a big promotion working with the top KOLs focusing on the June 18 promotion event, we will see continuous progress on the DR.WU sales in masstige skincare category. So we think marketing-wise, we -- our team has been devoting a lot of resources in understanding the market landscape, understanding the heritage of the brand equity and also while we position the brand to be better communicating to our core customer base.

然後這個月，我們將繼續在抖音上與頂級 KOL 一起投資品牌——實際上是在今晚。因此在6月份，該品牌將與頂級KOL一起進行大促銷，重點是6月18日的促銷活動，我們將看到DR.WU在masstige護膚品類的銷售持續增長。因此，我們認為在營銷方面，我們 - 我們的團隊一直投入大量資源來了解市場格局，了解品牌資產的傳統，同時我們將品牌定位為更好地與我們的核心客戶群進行溝通。

And then in terms of the team integration, we are also very happy to see that when we acquired those brands, no matter it's Eve Lom or Galénic, and we see the new talents of those teams has been play an important -- playing increasing role in Yatsen. So they have been large fold and also very experienced in this skincare sector, so we are very happy to work with them on R&D, on formulary development and also on some new channels globally. So we see the integration is going on quite well. And we think the deposition of the assets is not the brand, but also the talent we get from the assets.

然後在團隊整合方面，我們也很高興看到當我們收購這些品牌時，無論是 Eve Lom 還是 Galénic，我們都看到這些團隊的新人才發揮了重要作用——發揮越來越大的作用在逸仙。因此，他們在這個護膚領域的規模很大，也非常有經驗，所以我們很高興與他們在研發、配方開發以及全球一些新渠道上合作。所以我們看到整合進行得很好。而我們認為資產沉澱的不是品牌，而是我們從資產中得到的人才。

So going back to your second question about the new traffic acquisition. We are testing in a few of the nontraditional platforms. In the first quarter, if you look at the live broadcasting of Douyin, we see -- we think they are very interesting models of that. For example, we know for live broadcasting there are, let's say, 2 types. One type is leveraging the KOLs, another type is you will have the live broadcasting in your own flagship stores. And we think the growth of the -- your own broadcasting is a very good methodology to communicate with your core consumers, your brand story, your R&D story, your formulary priority and also the knowledge in skincare and also makeup.

那麼回到關於新流量獲取的第二個問題。我們正在一些非傳統平台上進行測試。在第一季度，如果你看抖音的直播，我們會看到——我們認為它們是非常有趣的模式。例如，我們知道直播有兩種類型。一種是藉助KOL，另一種是你將在自己的旗艦店進行直播。而且我們認為——您自己的廣播的增長是一種很好的方法，可以與您的核心消費者、您的品牌故事、您的研發故事、您的配方優先級以及護膚和化妝方面的知識進行交流。

So this is the newly emerged channel. And then we think the growth of live broadcasting in Douyin will play an increasing role in the sales. And we also think Kuaishou is a very interesting platform. So with the IPO of Kuaishou, we see the GMV growth was quite remarkable. And there are a few top KOLs emerging in Kuaishou as well. And then we are working basically with all of them to explore the growth of the live broadcasting Kuaishou.

所以這是新出現的渠道。然後我們認為抖音直播的增長將在銷售中發揮越來越大的作用。而且我們也認為快手是一個非常有趣的平台。因此，隨著快手的 IPO，我們看到 GMV 的增長非常顯著。快手也出現了一些頂級KOL。然後我們基本上和他們所有人一起探索直播快手的增長。

And then -- so there are also other interesting, well, change happened in the first quarter. So we think behind -- so we are very excited about the change. And we are very happy that we tested in the first quarter. So even with some -- we made some mistakes in the testing, but somehow, while we made those mistakes early. So now with the model like the finalized, we are ready to move on, and then with the new emerging channels. And then we think they will play a bigger -- they will be taking a bigger share of the total e-commerce landscape.

然後 - 第一季度還發生了其他有趣的變化。所以我們在背後思考——所以我們對這一變化感到非常興奮。我們很高興我們在第一季度進行了測試。所以即使有一些——我們在測試中犯了一些錯誤，但不知何故，我們很早就犯了這些錯誤。所以現在有了最終確定的模型，我們準備繼續前進，然後是新出現的渠道。然後我們認為他們將發揮更大的作用——他們將在整個電子商務領域佔據更大的份額。

The next question comes from Ingrid Zhang with UBS.

下一個問題來自瑞銀的 Ingrid Zhang。

I have 2 questions. The first is, Yatsen has been very strong in terms of faster product launch, leveraging our strong consumer insights. With the new cosmetics regulation coming into effect this -- in May, could you share with us the potential impact on our business?

我有兩個問題。首先是，利用我們強大的消費者洞察力，Yatsen 在更快的產品發布方面一直非常強大。隨著新的化妝品法規於今年 5 月生效，您能否與我們分享對我們業務的潛在影響？

The second question is, we start out as a very strong company in mass masstige segment and particularly in color category. Now we acquired new 2 premium, 2 prestigious skincare brands. Could you share a bit with us our plan to grow these new skincare brands?

第二個問題是，我們一開始是一家非常強大的公司，在大眾市場領域，尤其是在彩色領域。現在我們收購了 2 個新的高級、2 個著名的護膚品牌。您能否與我們分享一下我們發展這些新護膚品牌的計劃？

Okay. So first one about the regulation change of the -- in the beauty industry. So this is nothing new because we have been discussing this like in the past 1 year. And then so ever since maybe May or June last year and then -- so we were invited by the government to discuss the potential impact of the law. So we knew that it's going to happen, and we had a very solid plan together with our external partners and then we consistently communicate with the officials in the related government departments. So right now, we didn't anticipate challenges from the implement of the new rule.

好的。所以第一個關於美容行業的監管變化。所以這並不是什麼新鮮事，因為我們在過去一年中一直在討論這個問題。然後從去年 5 月或 6 月開始，然後——所以我們應政府邀請討論該法律的潛在影響。所以我們知道它會發生，我們與外部合作夥伴一起制定了一個非常可靠的計劃，然後我們不斷地與相關政府部門的官員進行溝通。所以現在，我們沒有預料到新規則的實施會帶來挑戰。

So going back to your first question about the speed to the market. Well, speed to the market is what we believe is still the core capability of the company. But it doesn't mean we are jumping ahead of any like necessary or lower reinforced necessary step of the product launch. So we have a very strict quality control. And also, we have very strict benefit test for our partners as well. So we believe our existing the SOP and our existing companies like Sensient is helping us to benefit from the launch of the new law.

所以回到你關於上市速度的第一個問題。好吧，我們認為快速進入市場仍然是公司的核心能力。但這並不意味著我們在產品發布的任何類似必要或較低的強化必要步驟之前跳躍。所以我們有非常嚴格的質量控制。而且，我們對我們的合作夥伴也有非常嚴格的福利測試。因此，我們相信我們現有的 SOP 和我們現有的公司，如 Sensient，正在幫助我們從新法律的推出中受益。

So we believe the main purpose of the law is actually to have a better regulated market, but mainly targeting on some what we call the low end or the niche brands, who are not that -- having a strict compliance with the law reinforcement. So that's about the first question.

因此，我們認為該法律的主要目的實際上是為了擁有一個更好的監管市場，但主要針對一些我們稱之為低端或利基品牌的品牌，這些品牌並非如此——嚴格遵守法律強化。這就是第一個問題。

Well, so premium skin care brands, very interesting. When we launched the VC Serum, this product is really like a very high price, with health -- and then the label price was RMB 750. And we -- at the very beginning, we were quite concerned about the price point. But when we sell this product and now it's basically stock count for maybe in the coming 2 months or something, and then we attract a new set of consumers, who are not that price-sensitive, but more focused on the benefit and instant effect of the skincare products.

嗯，這麼高級的護膚品牌，很有意思。當我們推出 VC Serum 的時候，這個產品的價格真的很高，有健康——然後標籤價格是 750 元。而我們——在一開始，我們非常關注價格點。但是當我們銷售這個產品時，現在基本上是在未來 2 個月左右的庫存清點，然後我們吸引了一批新的消費者，他們對價格不那麼敏感，但更關注利益和即時效果護膚品。

So this gives us some confidence when we are targeting into the premium skincare sector. And this product, so a lot of my friends, they use it. And it's -- the benefit is amazing. And then basically, you've got a very shiny skin over 1 night like a dose usage.

因此，當我們瞄準高端護膚品領域時，這給了我們一些信心。而這個產品，我的很多朋友都在使用它。它的好處是驚人的。然後基本上，您在 1 晚內獲得了非常閃亮的皮膚，就像劑量使用一樣。

So this reinforce our belief that we need to consistently and heavily invest in R&D. As long as we have better technology and superior products, price point is not something the consumers -- for some set of the consumers, the key concern is your benefit instead of the price. So if we -- going back to the fundamental for us to win in premium or win in skincare, we strongly believe that R&D is the core of the winning formula.

因此，這強化了我們的信念，即我們需要持續大量投資於研發。只要我們擁有更好的技術和優質的產品，價格點就不是消費者的東西——對於某些消費者來說，關鍵的關注點是您的利益而不是價格。因此，如果我們——回到我們贏得優質產品或贏得護膚品的根本，我們堅信研發是製勝法寶的核心。

While on top of that, and then because of our large consumer base, it's easy for us to get a subset of the consumer base, who have the high willingness to pay for premium skincare products. So that gives us some leverage when we are expanding -- when we are launching new products or new brands at early stage. But that's just for the early stage.

最重要的是，由於我們龐大的消費者群，我們很容易獲得一部分消費者群，他們非常願意為優質護膚產品付費。因此，當我們在擴張時——當我們在早期推出新產品或新品牌時，這給了我們一些影響力。但這只是早期階段。

Looking forward, we believe it's the product benefit or the product quality will play that definitionally role in whether you can win in this market. So that's how we think about the premium skincare brand growth.

展望未來，我們相信產品效益或產品質量將在您能否贏得這個市場中發揮決定性作用。這就是我們對高端護膚品牌增長的看法。

The next question comes from Kevin Xiang with 86Research.

下一個問題來自 86Research 的 Kevin Xiang。

I have 2 quick questions. The first 1 is about the offline business. So could you please give us more color on the progress and the recovery of our offline experience stores in the first quarter and second quarter?

我有 2 個快速問題。第一個是關於線下業務的。那麼能否請您詳細介紹一下我們第一季度和第二季度線下體驗店的進展和恢復情況？

And then my second question is also about the offline, but it's about the distributor model because we've noticed that while some brands, such as Perfect Diary, Little Ondine and Abby's Choice have collaborated with popular offline cosmetic chain stores Hit in Chinese region, so how should we think about the role of this offline distributor model in the long run?

然後我的第二個問題也是關於線下的，但它是關於經銷商模式的，因為我們注意到，雖然一些品牌，如完美日記、Little Ondine 和 Abby's Choice 已經與中國地區流行的線下化妝品連鎖店 Hit 合作，那麼從長遠來看，我們應該如何看待這種線下經銷商模式的作用呢？

All right. Okay. Thanks for the question. I'll take your first one. Well, currently, we have about 245 offline stores. And we do have a plan to open another 100 stores during the rest of the year. And the stores are doing quite well. And from a standalone business perspective, it is already profitable. So that's about our offline business. And the second question?

好的。好的。謝謝你的問題。我要你的第一個。那麼，目前，我們有大約 245 家線下商店。我們確實計劃在今年剩下的時間裡再開 100 家店。而且商店做得很好。而且從獨立業務的角度來看，它已經盈利。這就是我們的線下業務。第二個問題？

To build on the first question, so the reason we are driving like a higher revenue per square meters for the -- for our offline stores, so we drive this mainly leveraging our category expansion into skincare and also some like foundations. So we launched some interesting products purely for offline. For example, the essence and also the pre-makeup lotion and also the moisturizer as well. And then also -- so we also have some like sunshine protectors for our like foundations for offline stores as well.

基於第一個問題，所以我們推動線下商店每平方米收入增加的原因，所以我們推動這一點主要是利用我們的品類擴展到護膚品以及一些類似粉底的產品。所以我們推出了一些純粹針對線下的有趣產品。比如精華液，還有妝前乳，還有潤膚霜。然後 - 所以我們也有一些類似的防曬霜，用於線下商店的類似基礎。

So we see the very specific set of the product, which is more fit with the -- meets with the needs of our offline consumers. It's playing like -- it's taking a higher percentage of the revenue in our offline stores. And for those subset of the products, they have higher repeat purchase rate, higher gross margin and a better net profit. So that's why we were very happy to see that our offline stores are making money for now.

所以我們看到了一組非常具體的產品，它更適合——滿足我們線下消費者的需求。它的作用就像——它在我們的線下商店中佔據了更高比例的收入。而對於這些子產品，他們有更高的重複購買率、更高的毛利率和更好的淨利潤。所以這就是為什麼我們很高興看到我們的線下商店現在正在賺錢。

So for the second question, the reason why we -- as a DTC company, why do we need to work with Hit? So if you look at Perfect Diary, so Perfect Diary has still a very strong infrastructure, as we can see, for the offline like stores network. But if you look at our newly acquired brands, economy -- economically, it's not making sense for each of the brand to expand offline stores similar to Perfect Diary.

那麼對於第二個問題，作為一家 DTC 公司，我們為什麼需要與 Hit 合作？所以如果你看看完美日記，那麼完美日記仍然有非常強大的基礎設施，正如我們所看到的，對於線下實體店網絡。但是如果你看我們新收購的品牌，經濟——從經濟上來說，每個品牌都像完美日記一樣去拓展線下門店是沒有意義的。

So for example, for Little Ondine, we have planned to open a one offline store in [10 Weihai] in Shanghai. So it's a place for the fashion people, adults, so very cool people. But when we are thinking that whether Little Ondine should expand like another 200, 300 stores in China? We think the economy model might not work. So that's why we need to work with 1 distinctive partner, which can capture some of our brands and listed them in the offline stores environment.

所以比如小奧丁，我們計劃在上海的【威海10】開一家線下店。所以它是時尚人士、成年人以及非常酷的人的聚集地。但是當我們在想Little Ondine是否應該像在中國再擴張200、300家門店那樣？我們認為經濟模式可能行不通。所以這就是為什麼我們需要與 1 個獨特的合作夥伴合作，它可以捕獲我們的一些品牌並將它們列在線下商店環境中。

We choose it because the channel can help brands to enhance the brand equity and they mainly focus on driving the consumers, like the service experience, and they can deliver the brand message to consumer quite well. And then -- and also for our brand portfolio, the expansion in the -- based on the retailers model is helping us to reach more to be -- to reaching more consumers with lower costs. So that's the reason we are working with one partner right now.

我們選擇它是因為渠道可以幫助品牌提升品牌資產，而且他們主要專注於驅動消費者，喜歡服務體驗，他們可以很好地將品牌信息傳遞給消費者。然後 - 對於我們的品牌組合，基於零售商模型的擴展正在幫助我們達到更多 - 以更低的成本接觸更多的消費者。這就是我們現在與一個合作夥伴合作的原因。

But having said that, it's the early stage experience, experimental. So we will see what the results come back and then we'll have like more knowledge or to decide whether it should be a good move or not.

不過話雖如此，這是早期的體驗，實驗性的。因此，我們將看到返回的結果，然後我們將獲得更多知識或決定它是否應該是一個好的舉措。

And that concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments.

問答環節到此結束。我想將會議轉回管理層以徵求任何其他或結束意見。

Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Yatsen directly or TPG Investor Relations. Our company information for IR in both China and the U.S. can be found on today's press release. Have a great day. Thank you.

再次感謝您今天加入我們。如果您有任何其他問題，請隨時直接聯繫 Yatsen 或 TPG 投資者關係部。我們在中國和美國的 IR 公司信息可以在今天的新聞稿中找到。祝你有美好的一天。謝謝。

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

本次會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。