Perfect Corp. Q3 FY2024 earnings call

• Financials: First nine months revenue grew 12.5% YOY to $44.3 million, net income $3.9 million, adjusted net income up 23.2% to $6 million. Third quarter net income $2.5 million, adjusted net income $3.2 million, up 20.6% YOY.
• B2C: Active paying subscribers for mobile app reached 977,000, up 17% YOY; growth in new markets like Brazil and Italy; new B2C web-based services with credit-based billing model, higher margins by avoiding app store fees.
• B2B: Prioritized deepening market penetration in verticals; AI-powered skin diagnostics expanded, Skincare Pro introduced for clinics; Virtual Try-On product performing well; PerfectGPT service launched in June, expected commercial POC early next year and larger-scale deployment late 2025, using RAG framework for accurate recommendations.

In the third quarter of 2024, total revenue increased to $16.1 million from $14.5 million in the same period of 2023, a 10.8% year-over-year growth. The AI/AR cloud solutions and mobile app subscription business grew 17.9% to $13.4 million, representing 83% of total revenue in the quarter. Licensing revenue decreased 14.5% to $2.4 million. The B2C mobile business had active paying subscribers reach an all-time high of over 977,000, a 17% year-over-year increase. The enterprise customer base had a net increase of 22 brand clients since the end of last quarter, with 708 brand clients and over 806,000 SKUs as of September 30, 2024, and 151 key customers in the third quarter, stable from the second quarter.

• Full-year 2024 total revenue growth recognized under IFRS is projected to range from 12% to 14% compared to 2023. - Guidance for next year is still being worked on, with focus on working through client pipelines and global sales teams, expecting to share more towards the end of the year.

Q: On revenue breakdown by segment (B2B vs B2C growth) and next year's growth guidance.

A: B2C growing faster than B2B currently; key clients for B2B remain at 151; guidance for next year is being worked on with focus on client pipelines.

Q: About desktop version of services vs mobile, pricing, and gross margin.

A: Web-based is a new usage model, not a bundle with mobile; not priced the same, web-based is credit-based; objective is to get higher gross margin, with web-based addressing a larger audience including more male users.

Q: About PerfectGPT, market opportunity, and fit with B2B offering.

A: PerfectGPT addresses the personalized nature of beauty consultations, helping brands increase user engagement and conversion; it integrates with brands' know-how and Perfect AI solutions for Virtual Try-On, skin analysis, etc.; still early days to understand full impact on contracts, working with key brands on proof-of-concepts to gauge commercial benefits.