Is Perfect Diary's parent company going to change its approach?

Domestic cosmetics company Yatsen E-commerce recently announced a $120 million convertible bond financing arrangement after releasing its Q4 2025 and full-year earnings. Chinese business reporters note that, while achieving its first annual Non-GAAP net profit since going public, Yatsen E-commerce is quietly adjusting its strategic direction. For this makeup-focused company, its skincare business—primarily driven by overseas acquisitions—has now surpassed makeup as its largest revenue source; after completing multiple brand acquisitions, it now aims to use the funds to further acquire global resources.

Yatsen E-commerce told Chinese business reporters that although the revenue share of its skincare business is increasing, the company remains committed to a dual-driven development strategy of makeup and skincare, not transitioning into a solely skincare company. After this financing, the company plans to further increase investment in R&D innovation and global expansion, steadily advancing its overseas growth strategy.

01 / First time achieving annual Non-GAAP profit

According to financial data, in 2025, Yatsen E-commerce achieved its first positive annual Non-GAAP net profit since its IPO in 2020, reaching 8.4 million yuan. Under GAAP accounting standards, it still recorded a net loss of 92.4 million yuan. (GAAP is a standardized, mandatory accounting standard, while Non-GAAP is a supplementary metric adjusted by the company to better reflect core operational performance.)

Additionally, financial data shows that at the end of 2025, Yatsen E-commerce’s cash and short-term investments totaled approximately 1.05 billion yuan, down over 300 million yuan from the beginning of the year. Following the release of these results, its stock price declined for two consecutive days. Notably, after releasing Q4 and full-year 2025 results, Yatsen E-commerce announced a key financing: a private placement of approximately $120 million in convertible preferred notes (hereinafter referred to as convertible bonds). The subscribers include the company’s founder, Chairman, and CEO Huang Jinfeng, along with external investors (Xincheng Capital).

According to Yatsen E-commerce’s announcement, the convertible bond will be issued in two equal tranches, with warrants to purchase Class A common shares of the company. The annual coupon rate is 1.5%, and the initial conversion price is set at $4.63 per ADS (American Depositary Share), a 20% premium over the volume-weighted average price during the five trading days prior to the signing of the warrant purchase agreement.

Yatsen E-commerce stated that the funds raised will mainly be used for future product R&D, global supply chain integration, overseas market expansion, strategic acquisitions, and other corporate purposes.

Another notable data point from the financial report is that, from a business structure perspective, Yatsen E-commerce’s current skincare business is primarily driven by acquired overseas brands. In 2025, skincare revenue surpassed makeup, becoming its largest income source. Does this mean that the company, which initially gained market share through the Perfect Diary makeup brand, is completing a strategic shift? Yatsen E-commerce responded that it still maintains a dual-driven strategy of makeup and skincare, not transitioning into a solely skincare company. In 2025, its makeup business generated 2.02 billion yuan in revenue. Among them, the Perfect Diary biomimetic lipstick series sold over 7 million units, contributing nearly 1 billion yuan in sales.

02 / From “Buying Brands” to “Buying Resources”

Yatsen E-commerce started during the online makeup boom, but its approach has changed over the past few years. From acquiring overseas skincare brands like Dr. Wu, Galénic (France), and Eve Lom to building its own R&D centers and factories, the company’s investments are shifting from brand acquisitions to upstream industry chain development.

The recent fundraising further confirms this shift. Yatsen E-commerce said that after this financing, it plans to further increase investment in R&D innovation and global expansion.

The introduced Xincheng Capital also has a presence in the beauty supply chain, having invested in packaging manufacturer Akeylon and having experience in biopharmaceutical investments. Yatsen E-commerce stated it will leverage Xincheng Capital’s extensive experience in cross-border M&A and post-investment integration to steadily advance its overseas expansion.

Yatsen E-commerce founder, Chairman, and CEO Huang Jinfeng said during the earnings call, “This year, we have consistently adhered to three core strategies—driving product innovation through R&D, strengthening brand asset value across our multi-brand portfolio, and improving overall profitability.”

Market analysts suggest that from starting with makeup, then surpassing in skincare, and now continuing to invest in overseas markets, Yatsen E-commerce is completing its third transformation. Since going public on the NYSE in 2020, the company has experienced significant stock price fluctuations and strategic adjustments. Whether this recent financing and performance can support continued full profitability and positive operating cash flow remains to be seen, and Chinese business reporters will continue to monitor.

When buying skincare or makeup products, which do you value more? Share your thoughts in the comments~

Author | Reporter Ma Jia

Cover | Visual China Group

Editor | Li Monan, Fu Haowan

Proofreader | Zhang Bin

Reviewer | Peng Tingting