The halo of Perfect Diary fades, and Yatsen Holding has difficulty telling new stories.

Recently, Yatsen Holding Limited, the parent company of the makeup brand Perfect Diary, released its financial report for the first half of 2025 and the second quarter.

According to the financial report, in the first half of 2025, Yatsen's revenue was 1.92 billion yuan, a 22.4% increase compared to 1.568 billion yuan in the same period of 2024. The net loss was 25.08 million yuan, while the net loss in the same period of 2024 was 210 million yuan. Among them, in the second quarter of 2025, Yatsen's revenue was 1.09 billion yuan, a 36.8% increase compared to 795 million yuan in the same period of 2024. The net loss was 19.5 million yuan, while the net loss in the same period of 2024 was 85.5 million yuan.

The most notable change in the financial report is the significant narrowing of Yatsen's net loss. In response, Yang Donghao, director and chief financial officer of Yatsen, pointed out that "as the operating leverage begins to take effect, coupled with our continuous optimization of operating efficiency and marketing expenditure, the company is still expected to achieve profitable growth."

However, there are hidden worries behind this improvement. The narrowing of Yatsen's loss is largely achieved by controlling costs and optimizing operating efficiency, rather than a fundamental improvement in profitability. Although the short - term results of the cost - control strategy are immediate, when the intensity reaches the bottleneck, the sustainability of this strategy will face multiple uncertainties. Whether Yatsen can achieve profitable growth remains unknown.

The Second Growth Curve Struggles to Shoulder the Burden

Perfect Diary was founded in March 2017. In the early days, by collaborating with a large number of beauty KOLs and conducting intensive product promotion and recommendation on social media platforms such as Xiaohongshu and Douyin, Perfect Diary quickly accumulated high popularity and was even hailed as "the pride of domestic brands." In November 2020, Yatsen, which achieved a sharp increase in performance through Perfect Diary, successfully listed on the New York Stock Exchange, becoming "the first domestic beauty stock."

However, as the growth rate of the makeup industry slows down and the traffic dividend gradually fades, Yatsen has encountered development bottlenecks.

2019 was the peak period of Yatsen's performance. In that year, its revenue was 3.031 billion yuan, a year - on - year increase of 377%. The net profit was 75 million yuan, a year - on - year increase of 287%. But after Yatsen successfully entered the capital market, its performance began to change significantly.

From 2020 to 2021, Yatsen's revenue was still in a period of rapid expansion, reaching 5.233 billion yuan and 5.84 billion yuan respectively, with year - on - year growth rates of 72.6% and 11.6% respectively, showing signs of slowing down. During the same period, due to the one - time equity incentive expenses for listing and the surge in marketing expenses, Yatsen turned from profit to loss, with net losses of 2.688 billion yuan and 1.541 billion yuan respectively.

After entering 2022, Yatsen's revenue entered a downward phase. From 2022 to 2024, its revenue was 3.706 billion yuan, 3.415 billion yuan, and 3.393 billion yuan respectively, with year - on - year growth rates of - 36.5%, - 7.9%, and - 0.6% respectively. The net losses in the same period were 815 million yuan, 750 million yuan, and 710 million yuan respectively, and it has been in the red for five consecutive years.

Yatsen's overall decline in performance is closely related to its makeup business. From 2019 to 2021, the revenue from the makeup business increased from 3.031 billion yuan to 5.84 billion yuan. In 2022, the revenue from the makeup business decreased by 57.7% year - on - year to 2.47 billion yuan, the largest decline in history, and then continued to decline to 2 billion yuan in 2024. The proportion of makeup business revenue in total revenue also decreased from 100% in 2019 to 58.9% in 2024.

However, Yatsen did not sit idle. In 2022, Huang Jinfeng, the founder, chairman, and CEO of Yatsen, pointed out in an internal meeting that 2022 was a very crucial "transformation year" for Yatsen. Facing the uncertainties of the external environment, Yatsen needed to focus on "self - sufficiency" and launch the "second entrepreneurship" strategy.

Since Yatsen entered the skincare business, this business has developed very rapidly and is regarded as the "second growth curve." Yatsen first independently incubated the skincare brand "Wanzixinxuan," and then successively acquired three skincare brands, Galénic, EVE LOM, and DR. WU, to build a skincare brand matrix.

The skincare business has indeed achieved remarkable results. In the second quarter of 2025, the skincare business increased by 78.7% year - on - year to 580 million yuan, and the proportion of skincare business revenue in total revenue increased to 53.5%. The revenue contribution rate in a single quarter reached a record high, indicating a fundamental change in Yatsen's revenue structure.

However, although the skincare business has played an important supporting role in Yatsen's revenue, due to the slow conversion of growth momentum, it is still difficult to fill the revenue gap left by the shrinkage of the makeup business in the short term. In addition, the Chinese skincare market is crowded with international skincare brands such as Estée Lauder and L'Oréal, as well as domestic skincare brands such as Proya, Bloomage Biotechnology, and Pechoin. It is not easy for Yatsen to gain a share from these competitors, and the long - awaited performance inflection point has not arrived.

Marketing Expenses Erode Profit Margins

Yatsen thrived on marketing but also suffered because of it.

In the early days, Perfect Diary quickly opened up the market through the star and KOL recommendation model. From 2018 to 2020, Yatsen successively signed 18 stars to endorse Perfect Diary and carried out high - density promotion across the network in cooperation with KOLs and KOCs. Yatsen's prospectus shows that Perfect Diary cooperated with more than 15,000 KOLs.

The cooperation with stars and KOLs directly increased Yatsen's marketing expenses. From 2018 to 2020, Yatsen's marketing expenses increased rapidly from 309 million yuan to 3.412 billion yuan, an increase of more than 1004% in just two years.

Marketing expenses effectively drove the high - speed growth of performance. After tasting the growth dividend, Yatsen gradually increased its marketing investment. From 2021 to 2024, its marketing expenses were 4.006 billion yuan, 2.33 billion yuan, 2.231 billion yuan, and 2.269 billion yuan respectively, accounting for more than 60% of the revenue. In the second quarter of 2025, Yatsen's marketing expenses were 722 million yuan, a year - on - year increase of 32.6%, accounting for 66.5% of the revenue, far exceeding the industry's average level of 45% - 55%.

However, under various marketing campaigns, consumers have gradually become aesthetically fatigued with the overwhelming advertisements, their acceptance has continued to decline, and they are no longer easily convinced by marketing slogans. In addition, competitors have emulated Yatsen's marketing strategy, making it increasingly difficult for Yatsen to acquire customers.

For example, in 2021, Yatsen's marketing expenses reached 4.006 billion yuan, a year - on - year increase of 17.4%, accounting for as high as 68.6% of the revenue, setting a record high. However, its revenue only increased by 11.6% to 5.84 billion yuan. It can be seen that the increase in marketing expenses is no longer able to bring corresponding revenue growth.

When the high marketing expenses can no longer drive Yatsen's high - speed performance growth, they gradually become the biggest drag on performance. As Yatsen's revenue enters a downward channel and its profitability is continuously under pressure, the high marketing expenses further squeeze the already limited profit margins, resulting in Yatsen being in the red for five consecutive years.

The long - term loss has shaken the confidence of the US stock market in Yatsen. In February 2021, Yatsen's stock price once reached $25.47 per share, corresponding to a market value of more than $16.3 billion. However, in April 2022 and November 2023, Yatsen received delisting warning letters from the New York Stock Exchange twice due to the continuous slump of its stock price. As of the close of the US stock market on September 23, Yatsen's stock price has fallen by 63.7% from its peak to $9.24 per share, lower than the issue price of $10.5 per share, and more than $15 billion in market value has vanished.

How to effectively reduce marketing expenses and increase profit margins while maintaining market share has become an urgent problem for Yatsen to solve.

Reputation Takes a Nosedive

Over - reliance on marketing has also had a negative impact on Perfect Diary's brand image. In recent years, Perfect Diary has frequently been involved in reputation crises.

On the consumer service platform Hei Mao Complaint, when searching with the keyword "Perfect Diary," the number of relevant complaints is as high as 785. The reasons for complaints include product quality problems, lack of after - sales service, false advertising, and causing allergies. For example, a consumer complained that after using a whitening mask purchased on the Perfect Diary mini - program, they had an allergic reaction. After reporting it to the Perfect Diary customer service, the customer service refused to compensate on the grounds of "individual differences." Another consumer said that they saw a blogger recommend Perfect Diary lip gloss on a short - video platform, so they bought two lip glosses in the "rotten tomato" color from the Perfect Diary online flagship store. As a result, they got cheilitis after using them a few times.

In addition, on social media platforms such as Xiaohongshu and Weibo, many consumers have shared negative experiences of using Perfect Diary products and questioned the authenticity of its product quality and brand promotion. For example, some consumers said that Perfect Diary's makeup products generally have problems such as rough powder quality, poor durability, and serious color difference. Some consumers also complained that Perfect Diary's lipsticks are "drying and peeling" and "the color is very different from the promotional pictures," and some shades make the lips look dirty and do not enhance the complexion. On Bilibili, some UP owners even commented that Perfect Diary is "a domestic brand that deceives" and "puts all efforts into marketing and little into product quality," and these comments have received a lot of approval.

In the highly competitive beauty market, brand image is an important factor in attracting consumers and building brand loyalty. Perfect Diary's frequent reputation crises have not only led to a continuous decline in consumer trust but also caused irreversible damage to its brand image.

Currently, Yatsen is in a crucial transformation period. If it cannot break the inherent "marketing - for - growth" model, its "loss" nightmare will continue, and it will even face the dual crises of user loss and market marginalization.

This article is from the WeChat official account "DoNews." Author: Zhang Yu. Republished by 36Kr with permission.