Perfect Corp. Q1 FY2025 earnings call

• Financial highlights: Total revenue grew 12.1% y-o-y to $16 million, net income increased 264% y-o-y to $2.3 million, adjusted net income up 33.3% to $2 million. Operating cash flow had a net inflow of $4.3 million, and balance sheet was strong with over $164.6 million in cash and cash equivalents.
• B2C: YouCam mobile app had 973,000 active paying subscribers, and a new app called YouCam AI Chat was launched, leveraging AI LLM models like ChatGPT4o and 4o mini.
• WANNA integration: Integration of teams is progressing smoothly, with global sales team engaging new clients and prospects, especially in the shoes vertical.
• B2B: Enterprise customer base had 801 brand clients with over 891,000 SKUs. Launched AI skin analysis solution with a large U.S. beauty retailer, and YouCam Online Editor SaaS API enabled integration of AI features into client software.

Total revenue for the first quarter of 2025 was $16 million, a 12.1% year-over-year increase. The AI/AR cloud solutions and mobile app subscription business contributed $14.1 million, which was 88% of total revenue. Licensing revenue was $1.6 million, 10% of total revenue. Gross profit for the quarter was $12.5 million with a gross margin of 77.9%. The B2C mobile app business had 973,000 active paying subscribers by the end of the first quarter, a 7.9% increase from the prior year. The enterprise customer base had 801 brand clients with over 891,000 SKUs as of March 31, 2025.

• Total revenue year-over-year growth is expected to range from 13% to 14.5%, based on current market and operational conditions. Management will monitor business progress and provide updates.

• Macroeconomic uncertainties could impact business performance.
• Some U.S. clients experienced contract churn due to financial challenges in the macroeconomic environment.
• Competition in certain verticals like shoes and handbags, though WANNA is leading in some areas but there's room for improvement.

Q: Can you talk about the launch of the new AI chat app? Where did you launch it and how is it being received?

A: The app launched last month on Apple Store and Google Play, with 8 languages supported and can be downloaded worldwide.

Q: Regarding the WANNA acquisition, you thought you'd add 20 key customers but lost some. What's the situation?

A: WANNA acquisition added over a dozen key customers, but there was loss of some beauty clients due to macroeconomic challenges.

Q: Thoughts on future acquisitions?

A: Priority is expanding TAM through acquisition, especially in newer verticals like luxury retail which are not fully digitized.

Q: About B2C monetization strategies?

A: Introduced higher premium subscription at $79 per year with new Generative AI features, and early results show consumers are willing to upgrade.

Q: Competitive landscape in shoe market and handbags?

A: WANNA is leading in shoes, especially top luxury segments, with some competitors but Perfect Corp has better technology.

Q: B2B clients lost key customers due to macroeconomic conditions?

A: Lost medium-sized clients due to financial pressures from management cutting costs, and may regain them when conditions improve.

Q: Capital allocation strategy?

A: Holding cash for now, with priority on organic growth, using cash for R&D and market investment, being selective with acquisitions under current environment.