Ladies and gentlemen, good day, and welcome to the Yatsen First Quarter 2026 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Irene Liu, Vice President, Head of Strategic Investment and Capital Markets. Please go ahead.

Thank you, Operator. Please note that discussion today will contain four losing statements relating to the company's future performance and are intended to qualify for a safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of 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. A general discussion of the risk factor that could affect Yassin'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 forelooking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. Please see the earnings release issued earlier today for a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. Joining us today on the call from Yasun Senior Management are Mr. Jin-Sung Huang, our founder, chairman, and CEO, and Mr. Do-Haw Yang, our CFO and director. Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yassin's Investor Relations website at ir.yassinglobal.com. I'll now turn the call over to Mr. Zinfo Wong. Please go ahead.

Thank you, Irene. Hello, everyone, and thank you for joining our first quarter, Going into this year, we delivered top line growth that met our period guidance range and demonstrated ongoing resilience of our multi-brand strategy. Our financial and operational highlights this quarter further showed that YASAN is navigating the market with a clear strategic vision. Looking at the macro environment, according to the National Bureau of Statistics, built retail sales grew by 5.9 percent year-over-year in the third quarter of 2019, reflecting a stable yet highly competitive domestic future market. Looking closely at the online channels, the combined sales across Timor, Lowin, and JG.com also recorded a single-digit year-over-year growth. Against this market backdrop, our strategic rebalancing has yielded highly encouraging results our total net revenues stayed on a steady growth trajectory growing by 22.5 percent year over year for the more importantly this growth was primarily sustained upward momentum of our skincare breath which experienced another substantial year-over-year growth of 58.5 So given by this variable shift toward our skincare offering, our growth margin continued its year-over-year expansion and reached a historical milestone of 18.2%, reinforcing the structural health. Throughout the first quarter, we remained strictly committed to our core strategic initiatives. We continued to drive R&D-led product innovation and equity across our multi-brand portfolio and position our business for long-term profitability optimization. In the following session, I would like to share our key progress across each of these three strategies. Our first pillar is driving R&D-led innovation, which remains the ultimate engine behind our sustainable growth. In the first quarter, we consistently set up our R&D investments. With R&D expenses as a percentage of total net revenues increasing further to 3.9%, His ongoing commitment allowed us to broaden our scientific initiatives. For instance, Dr. Wu launched the fourth Dr. Wu Acne Research Fund project, bringing online and offline dermatological experts to tackle a series of successful lives. In April, the brand marked another milestone with the release of the White Paper on Chinese dermatological research, and skin renewal. Leveraging 48 years of clinical expertise and skin insights, this publication officially defines a multi-ingredient, multi-target, and a full-layer skin renewal management framework, further solidifying the brand of authority in dermatology. I will advance on this series of highly market-ready solutions. During the first quarter, Delaney's new Couture-Revelation Cellulary Reviling Cream was an instant hit, starting out soon after it was developed. Dr. Bull expanded its successful PDRN series with the introduction of two new breakthrough products, the Age Verso Sodium DNA Collagen Hydro-Luminous Mask and the Age Verso N-Colid anti-winkle collagen eye cream. Its launch also expanded its product portfolio by launching the Renewal Intense Treatment designed specifically for the dedicated eye area. This launch is underscore our enhanced efficiency in expanding existing series into new categories and a broader aspect. The second pillar is strengthening brand equity through our portfolio through Aspery Lab communication and strategic brand activities. In March, Galenic made a high point at the AMWC, the aesthetic and anti-agent medicine world congress in Monaco. This world-class presentation further reinforced Galenic's scientific credentials and solidified its core consumer mile share in cellular-level anti-agent skin care. Furthermore, in April, Galani announced the appointment of Fan Chen Chen as a new brand ambassador, a move that has amplified its brand resume and consumer awareness. The third pillar is improving overall profitability. During the first quarter, a percentage of total net revenues experienced an increase. as a result of both the continued investment in building our core brand and the elevated industry-wide traffic acquisition cost on the Douyin platform. Our commitment to long-term profitability optimization remains unwavering. Moreover, we will dynamically adjust our channel mix, streamline our operational expenses, and unlock greater operation. This initiative will ensure that our top-line expansion efficiently translates into further margin improvement, paving the way of sustainable profit-centric growth. We provide an important update regarding our recent financing. We are pleased to know that we successfully completed the first change of the private placement of convertible notes and warrants on May 21, 2026. In addition to myself and TrustSar Capital, we are delighted to welcome Hugh House as a key participating investor in this offering. This successful closing serves as a power to our long-term investors' steady-fast confidence, investments, strategic direction, and further value. Management shares this exact same confidence, and we are fully energized to deliver sustained value for our shareholders in the quarters to come.

With that, I will now turn the call over to our CFO, Dong Haoyang, to discuss our financial Thank you, David, and hello, everyone. Before I get started, I would like to clarify that all financial numbers presented today are URMNB amounts, and all percentage changes refer to year-over-year changes, unless otherwise noted. Total net revenues for the first quarter of 2026 increased by 22.5% to $1.02 million from $833.5 million for the prior year period. The increase was primarily due to a 58.5% year-over-year increase in net revenues from skincare brands, partially offset by a 5% year-over-year decrease in net revenues from color cosmetics brands. Gross profits for the first quarter of 2026 increased by 24.3% to $819.2 million from from $659.1 million for the prior year period. Gross margin for the first quarter of 2026 increased to 80.2% from 79.1% for the prior year period. Total operating expenses for the first quarter of 2026 increased by 32.5% to $918.1 million from $693.2 million for the prior year period. As a percentage of total net revenues, total operating expenses for the first quarter of 2026 were 89.9%, as compared with 83.2% for the prior year period. Fulfillment expenses for the first quarter of 2026 were $61.1 million, as compared with $51.8 million for the prior year period. As a percentage of total net revenues, fulfillment expenses for the first quarter of 2026 decreased to 6% from 6.2% for the prior year period. The decrease was primarily due to further improvements in logistics efficiency. Selling and marketing expenses for the first quarter of 2026 were $737.2 million as compared with $553.8 million for the prior year period. As a percentage of total net revenues, selling and marketing expenses for the first quarter of 2026 increased to 72.2% from 66.4% for the prior year period. The increase was primarily driven by investments in broadening consumer awareness and building long-term brand equity of our four brands, coupled with higher traffic acquisition costs on the DOLIN platforms. General and administrative expenses for the first quarter of 2026 were $80.3 million, as compared with $64.9 million for the prior year period. As a percentage of total net revenues, general and administrative expenses for the first quarter of 2026 were 7.9%, as compared with 7.8% for the prior year period, remaining largely flat. Research and development expenses for the first quarter of 2026 were $39.4 million as compared with $22.6 million for the prior year period. As a percentage of total net revenues, research and development expenses for the first quarter of 2026 increased to 3.9% from 2.7% for the prior year period. The increase was primarily driven by higher payroll expenses, resulting from a rise in research and development headcount. Loss from operations for the first quarter of 2026 was $99 million, as compared with $34.1 million for the prior year period. Operating loss margin was $9.7 million, as compared with 4.1% for the prior year period. Non-GAAP loss from operations for the first quarter of 2026 was $84.6 million as compared with $14.9 million for the prior year period. Non-GAAP operating loss margin was 8.3% as compared with 1.8% for the prior year period. Net loss for the first quarter of 2026 was $61.9 million, as compared with $5.6 million for the prior year period. Net loss margin was 6.1%, as compared with 0.7% for the prior year period. Net loss attributable to Yeltsin's ordinary shareholders for diluted ADS for the first quarter of 2026 was 0.64 RMB as compared with 0.06 RMB for the prior year period. Non-GAAP net loss for the first quarter of 2026 was $57.3 million as compared with non-GAAP net income of $7.1 million for the prior year period. Non-GAAP net loss margin was 5.6%, as compared with non-GAAP net income margin of 0.9% for the prior year period. Non-GAAP net loss attributable to YATSEN's ordinary shareholders for diluted ADS for the first quarter of 2026 was 0.6 RMB, as compared with non-GAF net income attributable to Yatsin's ordinary shareholders per diluted ATS of 0.07 RMB for the prior year period. As of March 31, 2026, the company had cash-restricted cash and short-term investments of $934.2 million as compared with $1.05 billion as of December 31, 2025. Net cash used in operating activities for the first quarter of 2026 was $19 million as compared with net cash generated from operating activities of $23.8 million for the prior year period. Looking at our business outlook for the second quarter of 2026, we expect our total net revenues to be between $1.2 billion and $1.3 billion, representing a year-over-year increase of approximately 10% to 20%. These forecasts reflect the company's current and preliminary views on the market and operational conditions, which are subject to change. With that, I would now like to open the call to Q&A. Operator?

Thank you. We will now begin the question and answer session. To ask a question, you may press star than 1 on your telephone keypad. To remove yourself from Q, please press star than 2. And for the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. And our first question today comes from Maggie Huang with CICC. Please go ahead.

Well, thanks for taking my question. This is Maggie Huang from CICC. I have two questions about my first question. We've seen a rapid growth of our skincare brands in this quarter. So could management share with us how to expand our product portfolio of skincare brands going forward? And my second question is that how do we view the competition from foreign brands, especially in high-end skincare market? That's my two questions. Thank you.

We will continue to expand around proven hero product formulas. So in quarter one, Galanik's new anti-aging cream was a great success and sold out shortly after launch. We also saw significant growth from Galanik's no-algae facial moisturizer cream. So these results give us more confidence that Galanik can expand from hero serine into a broader anti-aging skincare routine. For Dr. Wu and Yves Long, we will follow the same logic, build complete routines around proven science, strong efficacy, and clear consumer demand. For a second question regarding the competition, competition is very intense, but we believe we have a differentiated position. So our skincare brands combine global heritage, credibility, local consumer insights, and And Delaney is a very good example. We are building the brand around cellular-level anti-aging, supported by successful portal launches and stronger brands. We are also using AI and data tools to improve consumer insights. CIM and MIT. This helps us to compete more efficiently, not just...

And as a reminder, if you would like to ask a question, please press star, then 1 on your telephone keypad. Our next question today comes from Lin Zhang at CITIC Security. Please go ahead.

Thank you for taking my question. I'm Ling Zhang from CITIC Securities. My question is that we have noticed Dr. Wu is growing really fast. So could you please share with us the key drivers of the growth?

Dr. Wu is a very important case for us. So the brand has delivered strong growth while maintaining a healthier profitability profile. So one reason is higher B2B channel mix, including professional and offline channels, which give us the brand a better balance between growth, shopping cost, and profitability. So this is a model we want to learn from and selectively apply to other skincare brands. Stronger science, more professional credibility, more balanced channel mix, and a better... Those are some of the key drivers.

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.

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

Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.