Yatsen Announces Fourth Quarter and Full Year 2021 Financial Results

GUANGZHOU,China,March 10,2022 -- Yatsen Holding Limited ("Yatsen" or the "Company") (NYSE: YSG),a leading Chinese beauty company,today announced its unaudited financial results for the fourth quarter and full year ended December 31,2021.

Fourth Quarter and Full Year 2021 Highlights

Total net revenues for the fourth quarter of 2021 decreased by 22.1% to RMB1.53 billion (US$239.8 million) from RMB1.96 billion in the prior year period. Total net revenues for the full year of 2021 increased by 11.6% to RMB5.84 billion (US$916.4 million) from RMB5.23 billion in the prior year period.

Gross margin for the fourth quarter of 2021 was 65.0% compared with 66.3% in the prior year period. Gross margin for the full year of 2021 was 66.8% compared with 64.3% in the prior year period.

Gross sales[1] for the fourth quarter of 2021 decreased by 17.2% to RMB1.88 billion (US$295.0 million) from RMB2.27 billion in the prior year period. Gross sales for the full year of 2021 increased by 13.1% to RMB6.84 billion (US$1.07 billion) from RMB6.05 billion in the prior year period.

[1] Gross sales refer to the total value of all orders for products and services placed and shipped,regardless of whether the goods are returned. Calculation of gross sales includes shipping charges paid by customers to the Company.

"The fourth quarter was a challenging quarter,marked by soft consumer demand and intense competition in the color cosmetics segment," stated Mr. Jinfeng Huang,Founder,Chairman and Chief Executive Officer of Yatsen. "Despite the challenges,we increased our topline and gross margin on a full-year basis,driven by the significant growth of our skincare brands. We reaffirm our commitments to pursue brand-building,R&D investments and sustainable growth as the core pillars of our strategic transition in 2022."

"We managed to achieve 11.6% growth in total net revenues for the full year 2021,despite recording a 22.1% decline in total net revenues over the fourth quarter," commented Mr. Donghao Yang,Director and Chief Financial Officer of Yatsen. "Our full year gross margin increased by 2.5 percentage points to 66.8%,compared with 64.3% for the prior year,on the back of greater discipline in pricing and promotions. Looking forward,we will remain highly focused on improving operating margin,optimizing our cost structure and investing in branding and R&D to ensure our long-term success. With a cash balance of approximately RMB3.1 billion at the start of the year of 2022,we have sufficient liquidity and flexibility to pursue our strategic goals."

Fourth Quarter 2021 Financial Results

Net Revenues

Total net revenues for the fourth quarter of 2021 decreased by 22.1% to RMB1.53 billion (US$239.8 million) from RMB1.96 billion in the prior year period. The decrease was primarily attributable to the decrease in sales from our color cosmetics brands,partially offset by the increase in sales from our skincare brands.

Gross Profit and Gross Margin

Gross profit for the fourth quarter of 2021 decreased by 23.7% to RMB993.0 million (US$155.8 million) from RMB1.30 billion in the prior year period. Gross margin for the fourth quarter of 2021 decreased to 65.0% from 66.3% in the prior year period. The decrease was primarily attributable to an inventory provision that was charged at the end of the quarter,partially offset by (i) increased sales from our higher-gross margin products,and (ii) enhanced discipline in pricing,discounts and promotions.

Operating Expenses

Total operating expenses for the fourth quarter of 2021 decreased by 47.3% to RMB1.49 billion (US$234.6 million) from RMB2.83 billion in the prior year period. As a percentage of total net revenues,total operating expenses for the fourth quarter of 2021 were 97.8%,as compared with 144.5% in the prior year period.

Fulfillment Expenses. Fulfillment expenses for the fourth quarter of 2021 were RMB123.1 million (US$19.3 million),as compared with RMB144.7 million in the prior year period. As a percentage of total net revenues,fulfillment expenses for the fourth quarter of 2021 increased to 8.1% from 7.4% in the prior year period. The increase was primarily attributable to the lower customer service cost efficiency resulting from a lower level of revenue.

Selling and Marketing Expenses. Selling and marketing expenses for the fourth quarter of 2021 were RMB1.08 billion (US$169.4 million),as compared with RMB1.38 billion in the prior year period. As a percentage of total net revenues,selling and marketing expenses for the fourth quarter of 2021 increased to 70.7% from 70.3% in the prior year period. The increase was primarily attributable to the expenses related to offline stores optimization and an increase in branding expenses,partially offset by a decrease in online traffic expenses.

General and Administrative Expenses. General and administrative expenses for the fourth quarter of 2021 were RMB248.7 million (US$39.0 million),as compared with RMB1.29 billion in the prior year period. As a percentage of total net revenues,general and administrative expenses for the fourth quarter of 2021 decreased to 16.3% from 65.6% in the prior year period. The decrease was primarily attributable to a decrease in share-based compensation expenses compared with the prior year period,when a large share-based compensation expense triggered by the IPO was recognized for U.S.-GAAP reporting purposes.

Research and Development Expenses. Research and development expenses for the fourth quarter of 2021 were RMB43.3 million (US$6.8 million),as compared with RMB25.6 million in the prior year period. As a percentage of total net revenues,research and development expenses for the fourth quarter of 2021 increased to 2.8% from 1.3% in the prior year period. The increase was primarily attributable to the increases in personnel costs,raw materials,equipment,and share-based compensation expenses.

Loss from Operations

Loss from operations for the fourth quarter of 2021 decreased by 67.3% to RMB501.8 million (US$78.7 million) from RMB1.53 billion in the prior year period. Operating loss margin was 32.8%,as compared with 78.2% in the prior year period.

Non-GAAP loss from operations[2] for the fourth quarter of 2021 increased by 25.3% to RMB360.9 million (US$56.6 million) from RMB288.0 million in the prior year period. Non-GAAP operating loss margin was 23.6%,as compared with 14.7% in the prior year period.

Net Loss

Net loss for the fourth quarter of 2021 decreased by 69.0% to RMB475.1 million (US$74.6 million) from RMB1.53 billion in the prior year period. Net loss margin was 31.1%,as compared with 78.1% in the prior year period. Net loss attributable to Yatsen's ordinary shareholders per diluted ADS[3] for the fourth quarter of 2021 was RMB0.75 (US$0.12),as compared with RMB4.04 in the prior year period.

Non-GAAP net loss[4] for the fourth quarter of 2021 increased by 17.8% to RMB336.3 million (US$52.8 million) from RMB285.4 million in the prior year period. Non-GAAP net loss margin was 22.0%,as compared with 14.5% in the prior year period. Non-GAAP net loss attributable to Yatsen's ordinary shareholders per diluted ADS[5] for the fourth quarter of 2021 was RMB0.53 (US$0.08),as compared with RMB0.72 in the prior year period.

[2] Non-GAAP loss from operations is a non-GAAP financial measure. Effective from the first quarter of 2021,non-GAAP loss from operations is defined as loss from operations excluding share-based compensation expenses and amortization of intangible assets resulting from assets and business acquisitions,and non-GAAP loss from operations for the prior year period presented in this document is also calculated in the same manner.

[3] ADS refers to the American depositary shares,each of which represents four Class A ordinary shares.

[4]Non-GAAP net loss is a non-GAAP financial measure. Effective from the first quarter of 2021,the non-GAAP net loss is defined as net loss excluding (i) share-based compensation expenses,(ii) amortization of intangible assets resulting from assets and business acquisitions and (iii) tax effects on non-GAAP adjustments,and non-GAAP net loss for the prior year period presented in this document is also calculated in the same manner.

[5]Non-GAAP net loss attributable to ordinary shareholders per diluted ADS is a non-GAAP financial measure. Effective from the first quarter of 2021,non-GAAP net loss attributable to ordinary shareholders per diluted ADS is defined as non-GAAP net loss attributable to ordinary shareholders,divided by the weighted average number of diluted ADS outstanding for computing diluted earnings per ADS,and non-GAAP net loss attributable to ordinary shareholders per diluted ADS for the prior year period presented in this document is also calculated in the same manner. Effective from the first quarter of 2021,non-GAAP net loss attributable to ordinary shareholders is defined as net loss attributable to ordinary shareholders excluding (i) share-based compensation expenses,(ii) amortization of intangible assets resulting from assets and business acquisitions,(iii) tax effects on non-GAAP adjustments,(iv) accretion to preferred shares,and (v) deemed dividends to preferred shareholders due to modification of preferred shares,and non-GAAP net loss attributable to ordinary shareholders for the prior year period presented in this document is also calculated in the same manner.

Full Year 2021 Financial Results

Total net revenues for the full year of 2021 increased by 11.6% to RMB5.84 billion (US$916.4 million) from RMB5.23 billion in the prior year,primarily attributable to the increase in sales from our newly acquired and launched skincare brands,partially offset by a slight decline in sales from color cosmetics brands.

Gross profit for the full year of 2021 increased by 15.9% to RMB3.90 billion (US$611.8 million) from RMB3.36 billion in the prior year. Gross margin for the full year of 2021 was 66.8% compared with 64.3% in the prior year. The increase was primarily attributable to (i) increased sales from our higher-gross margin products,discounts and promotions.

Loss from operations for the full year of 2021 was RMB1.62 billion (US$254.9 million),as compared with loss from operations of RMB2.68 billion in the prior year.

Non-GAAP loss from operations for the full year of 2021 was RMB1.05 billion (US$165.1 million),as compared with non-GAAP loss from operations of RMB779.5 million in the prior year.

Net loss for the full year of 2021 was RMB1.55 billion (US$242.8 million),as compared with net loss of RMB2.69 billion in the prior year. Net loss attributable to Yatsen's ordinary shareholders per diluted ADS for the full year of 2021 was RMB2.44 (US$0.38),as compared with RMB19.12 in the prior year.

Non-GAAP net loss for the full year of 2021 was RMB981.8 million (US$154.1 million),as compared with non-GAAP net loss of RMB785.4 million in the prior year. Non-GAAP net loss attributable to Yatsen's ordinary shareholders per diluted ADS for the full year of 2021 was RMB1.55 (US$0.24),as compared with RMB3.77 in the prior year.

Balance Sheet and Cash Flow

As of December 31,2021,the Company had cash and cash equivalents and restricted cash of RMB3.14 billion (US$492.4 million),as compared with RMB5.73 billion as of December 31,2020.

For the quarter ended December 31,net cash used in operating activities was RMB250.0 million (US$39.2 million). For the full year ended December 31,net cash used in operating activities was RMB1.02 billion (US$160.1 million).

Business Outlook

For the first quarter of 2022,the Company expects its total net revenues to be between RMB866.7 million and RMB938.9 million,representing a year-over-year decline of approximately 35% to 40%,primarily due to (i) high base of comparison to the prior year period which resulted from release of the pent-up demand due to the COVID-19 recovery,(ii) the softer-than-expected industry-wide color cosmetics sales,and (iii) continued focus on operating margin improvement and limits on discounts. These forecasts reflect the Company's current and preliminary views on the market and operational conditions,which are subject to change.

Exchange Rate

This announcement contains translations of certain Renminbi ("RMB") amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise noted,all translations from RMB to US$ were made at a rate of RMB6.3726 to US$1.00,the exchange rate in effect as of December 30,2021 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. The Company makes no representation that any RMB or US$ amounts could have been,or could be,converted into US$ or RMB,as the case may be,at any particular rate,or at all.

Conference Call Information

The Company's management will hold a conference call on Thursday,2022 at 7:30 A.M. U.S. Eastern Time or 8:30 P.M. Beijing Time to discuss its financial results and operating performance for the fourth quarter and full year 2021.

United States (toll free):

+1-888-346-8982

International:

+1-412-902-4272

Mainland China (toll free):

400-120-1203

Hong Kong (toll free):

800-905-945

Hong Kong:

+852-3018-4992

Conference ID:

6529026

The replay will be accessible through March 17,2022 by dialing the following numbers:

United States:

+1-877-344-7529

International:

+1-412-317-0088

Conference ID:

6529026

A live and archived webcast of the conference call will also be available on the Company's investor relations website at http://ir.yatsenglobal.com/.

About Yatsen Holding Limited

Yatsen Holding Limited (NYSE: YSG) is a leading player in China's beauty market with a mission to create an exciting new journey of beauty discovery for consumers in China and around the world. Founded in 2016,the Company has launched and acquired multiple color cosmetics and skincare brands including Perfect Diary,Little Ondine,Abby's Choice,Galénic,DR.WU (its mainland China business),Eve Lom and Pink Bear. The Company's flagship brand,Perfect Diary,is one of the top color cosmetics brands in China in terms of online retail sales value. Leveraging its digitally native direct-to-customer business model,the Company has built core capabilities which enable it to launch and scale multiple brands quickly while offering a wide selection of products to a growing variety of customers. The Company reaches and engages with customers directly both online and offline,with expansive presence across all major e-commerce,social and content platforms in China.

For more information,please visit http://ir.yatsenglobal.com/.

Use of Non-GAAP Financial Measures

The Company uses non-GAAP income (loss) from operations,non-GAAP net income (loss),non-GAAP net income (loss) attributable to ordinary shareholders and non-GAAP net income (loss) attributable to ordinary shareholders per diluted ADS,each a non-GAAP financial measure,in reviewing and assessing its operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company presents these non-GAAP financial measures because they are used by the management to evaluate operating performance and formulate business plans. Non-GAAP financial measures help identify underlying trends in its business,provide further information about its results of operations,and enhance the overall understanding of its past performance and future prospects. The Company defines non-GAAP income (loss) from operations as income (loss) from operations excluding share-based compensation expenses and amortization of intangible assets resulting from assets and business acquisitions. The Company defines non-GAAP net income (loss) as net income (loss) excluding (i) share-based compensation expenses,(ii) amortization of intangible assets resulting from assets and business acquisitions and (iii) tax effects on non-GAAP adjustments. The Company defines non-GAAP net income (loss) attributable to ordinary shareholders as net income (loss) attributable to ordinary shareholders excluding (i) share-based compensation expenses,and (v) deemed dividends to preferred shareholders due to modification of preferred shares. Non-GAAP net income (loss) attributable to ordinary shareholders per diluted ADS is computed using non-GAAP net income (loss) attributable to ordinary shareholders divided by weighted average number of diluted ADS outstanding for computing diluted earnings per ADS.

However,the non-GAAP financial measures have limitations as analytical tools as the non-GAAP financial measures are not presented in accordance with U.S. GAAP and may differ from the non-GAAP information used by other companies,including peer companies,and therefore their comparability may be limited. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure,all of which should be considered when evaluating performance. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure. Reconciliations of Yatsen's non-GAAP financial measure to the most comparable U.S. GAAP measure are included at the end of this press release.

Safe Harbor Statement

This announcement contains statements that may constitute "forward-looking" statements which are made pursuant to the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "likely to," and similar statements. The Company may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission ("SEC"),in its annual report to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Statements that are not historical facts,including statements about the Company's beliefs,plans,outlook and expectations,are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement,which include but not limited to the following: the Company's growth strategies; its future business development,results of operations and financial condition; its ability to continue to roll out popular products and maintain popularity of existing products; its ability to anticipate and respond to changes in industry trends and consumer preferences and behavior in a timely manner; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of its products and services; its ability to integrate newly-acquired businesses and brands; trends and competition in and relevant government policies and regulations relating to China's beauty market; changes in its revenues and certain cost or expense items; and general economic conditions in China. Further information regarding these and other risks is included in the Company's filings with the SEC. All information provided in this press release is as of the date of this press release,and the Company does not undertake any obligation to update any forward-looking statement,except as required under applicable law.

For investor and media inquiries,please contact:

In China:

Yatsen Holding Limited

Investor Relations

E-mail: ir@yatsenglobal.com

The Piacente Group,Inc.

Emilie Wu

Tel: +86-21-6039-8363

E-mail: yatsen@thepiacentegroup.com

In the United States:

The Piacente Group,Inc.

Brandi Piacente

Tel: +1-212-481-2050

E-mail: yatsen@thepiacentegroup.com

YATSEN HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands,except for share,per share data or otherwise noted)

December 31,

December 31,

2020

2021

2021

RMB'000

RMB'000

USD'000

Assets

Current assets

Cash and cash equivalents

5,727,029

3,138,008

492,422

Restricted cash

6,363

-

-

Accounts receivable

419,317

355,837

55,839

Inventories,net

616,808

695,761

109,180

Prepayments and other current assets

304,641

366,191

57,463

Amounts due from related parties

14,370

60

9

Total current assets

7,088,528

4,555,857

714,913

Non-current assets

Investments

34,862

350,380

54,982

Property and equipment,net

285,297

245,314

38,495

Goodwill

20,596

869,421

136,431

Intangible assets,net

189,090

745,851

117,040

Deferred tax assets

597

2,000

314

Right-of-use assets,net

536,710

422,966

66,373

Other non-current assets

152,058

80,220

12,588

Total non-current assets

1,219,210

2,716,152

426,223

Total assets

8,307,738

7,272,009

1,141,136

Liabilities,mezzanine equity and shareholders' equity (deficit)

Current liabilities

Accounts payable

466,705

240,815

37,789

Advances from customers

6,228

20,680

3,245

Accrued expenses and other liabilities

411,944

370,531

58,142

Amounts due to related parties

11,814

13,967

2,192

Income tax payables

18,686

16,747

2,628

Lease liabilities due within one year

215,300

214,843

33,714

Total current liabilities

1,130,677

877,583

137,710

Non-current liabilities

Deferred tax liabilities

1,557

124,450

19,529

Deferred income-non current

-

56,180

8,816

Lease liabilities

311,910

206,303

32,373

Total non-current liabilities

313,467

386,933

60,718

Total liabilities

1,444,144

1,264,516

198,428

Redeemable non-controlling interests

-

338,587

53,132

Shareholders'equity (deficit)

Ordinary Shares (US$0.00001 par value; 10,000,000

ordinary shares authorized,comprising of 6,000

Class A ordinary shares,960,852,606 Class B ordinary

shares and 3,039,147,394 shares each of such classes to be

designated; 1,736,321,157 Class A shares and 960,606

Class B ordinary shares issued; 1,586,957,585 Class A

ordinary shares and 939,496,191 Class B ordinary shares

outstanding as of December 31,2020; 10,938,303,919 Class A shares and 758,869,844

Class B ordinary shares issued; 1,789,239,887 Class A

ordinary shares and 737,513,429 Class B ordinary shares

outstanding as of and December 31,2021)

173

173

27

Treasury shares

(12)

(22,330)

(3,504)

Additional paid-in capital

11,165,697

11,697,942

1,835,662

Statutory reserve

20,051

21,352

3,351

Accumulated deficit

(4,240,134)

(5,782,169)

(907,348)

Accumulated other comprehensive income (loss)

(97,265)

(255,780)

(40,137)

Total Yatsen Holding Limited shareholders' (deficit)

equity

6,848,510

5,659,188

888,051

Non-controlling interests

15,084

9,718

1,525

Total shareholders' (deficit) equity

6,863,594

5,668,906

889,576

Total liabilities,redeemable non-controlling interests

and shareholders'equity (deficit)

8,136

YATSEN HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands,per share data or otherwise noted)

For the Three Months Ended December 31,

For the Year Ended December 31,

2020

2021

2021

2020

2021

2021

RMB'000

RMB'000

USD'000

RMB'000

RMB'000

USD'000

Total net revenues

1,961,598

1,527,903

239,761

5,233,170

5,839,973

916,419

Total cost of revenues

(660,588)

(534,881)

(83,935)

(1,145)

(1,941,177)

(304,613)

Gross profit

1,301,010

993,022

155,826

3,364,025

3,898,796

611,806

Operating expenses:

Fulfillment expenses

(144,715)

(123,054)

(19,310)

(425,052)

(434,018)

(68,107)

Selling and marketing expenses

(1,378,407)

(1,079,724)

(169,432)

(3,412,159)

(4,005,589)

(628,564)

General and administrative expenses

(1,286,130)

(248,706)

(39,027)

(2,142,973)

(941,347)

(147,718)

Research and development expenses

(25,610)

(43,314)

(6,797)

(66,512)

(142,086)

(22,296)

Total operating expenses

(2,834,862)

(1,494,798)

(234,566)

(6,046,696)

(5,523,040)

(866,685)

Income (loss) from operations

(1,533,852)

(501,776)

(78,740)

(2,682,671)

(1,624,244)

(254,879)

Financial income

5,292

10,877

1,707

14,313

45,658

7,165

Foreign currency exchange

income (losses)

(2,038)

6,178

969

(2,774)

(1,751)

(275)

Income (loss) from equity

method investments,net

(170)

(1,127)

(177)

(293)

5,978

938

Impairment loss of investments

-

(1,375)

(216)

-

(1,375)

(216)

Other non-operating income (expenses)

(2,089)

13,537

2,124

(10,020)

27,775

4,359

Income (loss) before income

tax expenses

(1,532,857)

(473,686)

(74,333)

(2,681,445)

(1,547,959)

(242,908)

Income tax (expense) benefit

1,653

(1,391)

(218)

(6,970)

921

145

Net income (loss)

(1,531,204)

(475,077)

(74,551)

(2,688,415)

(1,038)

(242,763)

Net loss attributable to non-

controlling interests and

redeemable non-controlling

interests

608

1,881

295

608

6,304

989

Net income (loss) attributable

to Yatsen's shareholders

(1,530,596)

(473,196)

(74,256)

(2,687,807)

(1,540,734)

(241,774)

Accretion to preferred shares

(65,304)

-

-

(242,209)

-

-

Deemed dividends to preferred

shareholders due to modification

of preferred shares

-

-

-

(1,054,220)

-

-

Net income (loss) attributable

to ordinary shareholders of Yatsen

(1,595,900)

(473,256)

(3,984,236)

(1,774)

Shares used in calculating

earnings per share:

Weighted average number of

Class A and Class B ordinary

shares:

—Basic

1,579,407

2,959,105

2,105

833,714,126

2,526,833,201

2,201

—Diluted

1,201

Net income (loss) per Class A

and Class B ordinary share

Net income (loss) attributable to

Yatsen's ordinary shareholders—Basic

(1.01)

(0.19)

(0.03)

(4.78)

(0.61)

(0.10)

Net income (loss) attributable to

Yatsen's ordinary shareholders—Diluted

(1.01)

(0.19)

(0.03)

(4.78)

(0.61)

(0.10)

Net income (loss) per ADS (4

ordinary shares equal to 1

ADS)

Net income (loss) attributable to

Yatsen's ordinary shareholders—Basic

(4.04)

(0.75)

(0.12)

(19.12)

(2.44)

(0.38)

Net income (loss) attributable to

Yatsen's ordinary shareholders—Diluted

(4.04)

(0.75)

(0.12)

(19.12)

(2.44)

(0.38)

For the Three Months Ended December 31,

For the Year Ended December 31,

2020

2021

2021

2020

2021

2021

Share-based compensation expenses

are included in the operating

expenses as follows:

RMB'000

RMB'000

USD'000

RMB'000

RMB'000

USD'000

Fulfillment expenses

2,947

2,073

325

2,947

13,122

2,059

Selling and marketing expenses

54,332

20,640

3,239

54,332

80,558

12,641

General and administrative expenses

1,184,585

103,845

16,296

1,841,409

418,823

65,722

Research and development expenses

1,900

4,441

697

1,900

17,937

2,815

Total

1,243,764

130,999

20,557

1,900,588

530,440

83,237

(1) Authorized share capital is re-classified and re-designated into Class A ordinary shares and Class B ordinary shares,with each Class A ordinary share being entitled to one vote and each Class B ordinary share being entitled to twenty votes on all matters that are subject to shareholder vote.

YATSEN HOLDING LIMITED

Unaudited Reconciliations of GAAP and Non-GAAP Results

(All amounts in thousands,

2020

2021

2021

2020

2021

2021

RMB'000

RMB'000

USD'000

RMB'000

RMB'000

USD'000

Income (loss) from operations

(1,852)

(501,776)

(78,740)

(2,671)

(1,244)

(254,879)

Share-based compensation expenses

1,764

130,999

20,557

1,588

530,440

83,237

Amortization of intangible assets resulting

from assets and business acquisitions

2,075

9,925

1,557

2,630

41,573

6,524

Non-GAAP income (loss) from operations

(288,013)

(360,852)

(56,626)

(779,453)

(1,052,231)

(165,118)

Net income (loss)

(1,204)

(475,077)

(74,551)

(2,415)

(1,038)

(242,763)

Share-based compensation expenses

1,524

Tax effects on non-GAAP adjustments

(46)

(2,102)

(330)

(185)

(6,749)

(1,059)

Non-GAAP net income (loss)

(285,411)

(336,255)

(52,767)

(785,382)

(981,774)

(154,061)

Net income (loss) attributable to ordinary

shareholders of Yatsen

(1,900)

(473,196)

(74,256)

(3,236)

(1,734)

(241,774)

Share-based compensation expenses

1,237

Amortization of intangible assets resulting

from assets and business acquisitions

1,886

9,670

1,517

2,441

40,493

6,354

Tax effects on non-GAAP adjustments

(46)

(2,059)

Accretion to preferred shares

65,304

-

-

242,209

-

-

Deemed dividends to preferred

shareholders due to modification of

preferred shares

-

-

-

1,220

-

-

Non-GAAP net income (loss)

attributable to ordinary shareholders of Yatsen

(284,992)

(334,629)

(52,512)

(784,963)

(976,550)

(153,242)

Shares used in calculating earnings per

share:

Weighted average number of Class A and

Class B ordinary shares:

—Basic

1,201

Non-GAAP net income (loss)

attributable to ordinary shareholders

per Class A and Class B ordinary share

Non-GAAP net income (loss) attributable

to Yatsen's ordinary shareholders—Basic

(0.18)

(0.13)

(0.02)

(0.94)

(0.39)

(0.06)

Non-GAAP net income (loss) attributable

to Yatsen's ordinary shareholders—Diluted

(0.18)

(0.13)

(0.02)

(0.94)

(0.39)

(0.06)

Non-GAAP net income (loss)

attributable to ordinary shareholders

per ADS (4 ordinary shares equal to 1

ADS)

Non-GAAP net income (loss) attributable

to Yatsen's ordinary shareholders—Basic

(0.72)

(0.53)

(0.08)

(3.77)

(1.55)

(0.24)

Non-GAAP net income (loss) attributable

to Yatsen's ordinary shareholders—Diluted

(0.72)

(0.53)

(0.08)

(3.77)

(1.55)

(0.24)

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