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  Title	PERFECT CORP. Perfect : Fourth Quarter 2024 Transcript
  ID	7361950
  External ID	7589208794
  Author	Unknown
  Published Date	Feb. 28, 2025, 8:28 a.m.
  Summary	February 28, 2025 at 09:15 am EST TRANSCRIPT Perfect Corp. Full Year 2024 Earnings Conference Call TOTAL PAGES: 18 CORPORATE SPEAKERS: Jimmy Xia Perfect Corp. Full Year 2024 Earnings Confe
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  URL	https://www.marketscreener.com/quote/stock/perfect-corp-146043603/news/perfect-fourth-quarter-2024-transcript-49201148/
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  Content	February 28, 2025 at 09:15 am EST TRANSCRIPT Perfect Corp. Full Year 2024 Earnings Conference Call TOTAL PAGES: 18 CORPORATE SPEAKERS: Jimmy Xia Perfect Corp. Full Year 2024 Earnings Conference Call Perfect Corp.; Investor Relations Director Alice Chang Perfect Corp.; Founder, Chairwoman and Chief Executive Officer Louis Chen Perfect Corp.; Executive Vice President and Chief Strategy Officer PARTICIPANTS: Patrick McCann Noble; Analyst Lisa Thompson Zacks Investment Research; Analyst Aashi Shah Sidoti; Analyst PRESENTATION: Operator^ Good morning. And good evening, ladies and gentlemen. Thank you for standing by. And welcome to Perfect Corp.'s Fourth Quarter 2024 and Full Year 2024 Earnings Conference Call. (Operator Instructions) Please note that today's event is being recorded. I will now turn the conference over to your first speaker today, Mr. Jimmy Xia, IR Director of the company. Please go ahead. Jimmy Xia^ Thank you. Hello, everyone. Welcome to Perfect Corp.'s fourth quarter 2024 and full year 2024 earnings call. With us today are Ms. Alice Chang, our Founder, Chairwoman and Chief Executive Officer; Mr. Louis Chen, our Executive Vice President and Chief Strategy Officer; and Ms. Iris Chen, Vice President of Finance and Accounting. You can refer to our fourth quarter 2024 and full year 2024 financial results on our IR website or in the Form 6-K we filed with the SEC earlier. A replay of this call will also be available on our website shortly after its conclusion. Perfect Corp. Full Year 2024 Earnings Conference Call For today's call management will provide our prepared remarks followed by a question and answer session. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release. This call may contain forward-looking statements regarding performance, anticipated plans, our original results and our objectives. Forward-looking statements are based on management's expectations and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our call today. Perfect Corp. undertakes no obligation to update any forward-looking statements, except as required by law after the date of this call. Please note that all numbers stated in management's prepared remarks are in U.S. dollars. And we will also discuss non-IFRS measures today. I will now turn the call over to our CEO, Ms. Alice Chang. Alice Chang^ Thank you, Jimmy. And welcome to Perfect Corp.'s 2024 fourth quarter earnings call. Let me start by giving you some updates on our financials and our progress in product business development around the world in 2024 and share our view for the year of 2025. First of all, we completed the full year 2024 with double-digit growth in revenue as anticipated by our guidance. The total revenue grew by 12.5% year-over-year to $60.2 million. The bottom line net income for the same period was $5 million and the adjusted net income increased 18.6% to $8.3 million compared to 2023. This continuous increase in revenue and the positive net income is mainly due to strong growth within our mobile app subscription business under AI/AR cloud solution business. Full year 2024, our operating cash flow generated a net inflow of $13 million, and our balance sheet remains very strong with over $165.9 million in cash and cash equivalents. Perfect Corp. Full Year 2024 Earnings Conference Call Our B2C mobile app business has maintained very strong growth with the number of active paying subscribers continuing to breach all-time records with over 1 million to end 2024. It is a 14.3% increase compared to 879,000 subscribers at the end of 2023. This sustained growth in paying subscribers, highlighting the ongoing global demand of AI-powered photo and video editing, creation, enhancing and beautification features appealing to all age groups and the regions. As previously mentioned, we have seen positive momentum from our North American and Western Europe markets, as well as developing markets in Brazil. Our YouCam mobile app suite continue to evolve with frequent updates and feature enhancements powered by cutting-edge generative AI for image and video creation. Among the most popular innovations, our Gen AI Hair experiences have become a major hit within our user community. These features including AI hair style, hair lengthening, hair wavy, hair volume, hair color and more provide ultra realistic seamless previews, transforming how consumers and retailers make style decisions. Beyond hair transformation, our AI technology extends to other exciting innovations such as the AI face swap, AI face expression, AI photo enhance, video enhance and more, delivering next-level creativity and personalization to our growing user community. Beyond our mobile apps, we are also expanding our web-based generative AI solution with YouCam Online Editor. Consumer now can enjoy the latest AI innovation, not only through their mobile app, but also via a web browser on their laptop and PC ensuring a seamless and accessible experience across the platform. We are focused on harnessing the power of Gen AI to deliver engaging new features from text, image, audio and video that is becoming an integral part of the premium subscription offering for our B2C users on app and on web. By integrating state-of-the-art models and algorithms, we aim to create immersive personalized experience that go beyond traditional functionality, driving deeper user engagement and loyalty. Our strategy in B2C app and web involves a continuous R&D to refine generative AI content model and enabling features such as AI enhancement in photo and video, as well as AI creation personalized image and video. Through this relentless innovation, coupled with a robust user feedback and deep data analytics, we strive to deliver subscription-based service that offer clear tangible value, positioning us Perfect Corp. Full Year 2024 Earnings Conference Call as a leading provider for cutting-edge image and video Gen AI solutions in consumer market. Before I go to our B2B performance, I want to go over the recent acquisition of Wanna from Farfetch and its impact on Perfect Corp. The transaction was completed in early January, and we anticipate spending the next six to 12 months, seamlessly integrating Wanna into our teams. Wanna's core competence gives us access to new markets and customers within luxury brands, where it offers virtual try-on services for shoes, handbags, scarves and clothes. This acquisition perfectly aligned with our AI service offering to brand partners and will expand our total addressable market beyond our current reach. Together with Perfect Corp., we will strengthen our competitive position in the beauty and fashion space, leveraging our synergistic solution, enhanced capabilities and experienced team members. In our B2B business in 2024, we have prioritized deepening market penetration in skincare and makeup segment. We reached over 732 brand clients with over 822,000 SKUs onboarded in our platform. We continue to make significant steps in expanding our portfolio with AI-powered skin diagnostics. Beyond core beauty and skincare brands, we have actively expanded into new markets and reaching aesthetic clinics, dermatology clinics, skincare centers, med spas and wellness centers, broadening our reach and impact to the industry. We continue to see strong demand in the skin diagnostic sector from brands, retailers, clinics and med spa. Our AI-powered skin analysis detects up to 15 major concerns in HD, providing personalized treatment and product recommendation tailored to each user's unique skin profile. The technology has enabled precise treatment measure, tracking progress with before and after comparison to showcase improvement. By combining advanced diagnostics with data-driven insights, our solution enhances client engagement, trust and long-term loyalty in the evolving world of AI-driven skincare. Perfect Corp. Full Year 2024 Earnings Conference Call Our makeup virtual try-on solution remains as the global leader, delivering strong results for brand customers. We have secured key licenses renewal with top beauty conglomerates and retailers, proving our impact on boosting online engagement in e-commerce conversion rate. While the B2B sales cycle has its challenges, our pipeline remains strong, and we remain focused on helping enterprise clients adopt AI-driven solutions to elevate consumer engagement and digital experiences. On the fashion tech side of our business, we continue to make strong progress in luxury fashion tech with luxury brands, particularly in watches and jewelry VTO. In January 2025, we acquired Wanna from Farfetch to accelerate our B2B growth with flagship brands and retailers. This strategic move expands our 3D VTO solutions to shoes, bags, clothes and scarves, enhancing digital shopping experience and reshaping how brands engage with customers in the era of AI-powered fashion retail. Additionally, our new web-based AI service, YouCam Online Editor SaaS API integrate Gen AI technology for advanced image and video editing. While initially we designed for beauty and fashion professionals, it has gained traction across diverse industries, significantly expanding our total addressable market. The SaaS API is simplified web and mobile app development, handling complex processing without requiring server maintenance from the clients. Its flexibility makes it suitable for business of all sizes with new clients spanning like convenience store chain, telecom carrier and mobile phone companies. In conclusion, we achieved a solid business growth throughout 2024, highlighted by increased revenue, enhanced operational efficiency and strong financial performance. We are confident that Perfect Corp. is positioned strategically to capitalize on expanding market opportunities and sustain long-term growth by continuously developing new technologies and leveraging our leadership position in beauty and fashion space for our consumer from our app, web, as well as our B2B enterprise brand clients. Perfect Corp. Full Year 2024 Earnings Conference Call Our strategy for long-term growth in 2025 and beyond focuses on deepening our presence in the beauty, fashion and skin segment and expanding into new segments, exploring cross-sell opportunities, broadening our product service offerings, strengthening of leadership, accelerating revenue growth and maximizing long-term shareholder value. Driven by the positive demand for both our mobile beauty app subscriptions and enterprise SaaS solution, our outlook for the full year 2025 projects total revenue growth recognized under IFRS to range from 13% to 14.5% compared to the full year 2024 results. With that, I have concluded my remarks and will now pass the call over to Louis, who will discuss our financial details with you. Thank you. Louis Chen^ Thank you, Alice. Please note that all financial comparisons are on a year-over-year basis, and the reporting period is the fourth quarter of 2024 versus the comparable period in 2023 and are on top of the International Financial Reporting Standard measures. We will also discuss non-IFRS measures to provide greater clarity on the trends in our operations. In the fourth quarter of 2024, our total revenue increased to $15.9 million from $14.1 million for the same period in 2023, representing a year-over-year increase of 12.4%. Full year revenue increased 12.5% to $60.2 million in 2024 from $53.5 million in 2023. The growth came from the continuous growth of our AI and AR cloud solutions and mobile app subscription business. The AI/AR cloud solutions and subscription revenue grew 25.4% to $15.1 million compared to $12 million from the year ago period, which represent 95% of total revenue in this quarter. The growth is attributed to the continued expansion of our mobile beauty app subscription and the positive momentum from our online skin diagnosis solutions, as well as our virtual try-on business. Licensing revenue decreased by 72.2% in the fourth quarter of 2024 to $0.5 million compared to $1.8 million during the same period of 2023. The licensing revenue will gradually become immaterial as it continues to be phased out and replaced by the better business model of recurring subscription revenue model. The gross profit for the fourth quarter of 2024 grew by 2.5% to $11.8 million with gross margin of 74.1% compared to $11.5 million and gross margin of 81.3% for the same period in 2023. Full year gross profit was $46.9 million in 2024 and gross margin of 78% compared to $43.1 million in 2023 with gross margin of 80.6%. The Perfect Corp. Full Year 2024 Earnings Conference Call decrease in gross margin was primarily due to the increase in third-party payment processing fee paid to digital distribution partners such as Google and Apple due to the increase in our mobile app subscription revenue. The total operating expense for the fourth quarter of '24 decreased by 3.6% to $12.2 million compared to $12.7 million for the same period last year. The decrease was primarily due to the lower R&D expenses and G&A expenses in the fourth quarter of '24. Full year operating expense increased 2.7% to $50.1 million in '24 compared to $48.8 million in 2023. This increase was mainly due to the increase in sales and marketing expenses, R&D expenses and also offset by a decrease of G&A expenses. Going into more detail on operating expenses. The sales and marketing expense for the fourth quarter of '24 were $6.9 million compared to $6.7 million during the same period of 2023, an increase of 3.6%. The full year sales and marketing expense increased 9.7% to $28.2 million in '24 compared to $25.7 million in 2023. This increase were largely due to increase in marketing events, advertising costs related to our mobile apps and cloud computing costs. Research and development expenses were $2.8 million for the fourth quarter of 2024 compared to $3 million during the same period of 2023, a decrease of 8.3%. The decrease were from the streamlining certain R&D process and benefiting from expense savings. Full year R&D expense increased 4.7% to $12 million for 2024 compared to $11.5 million in 2023. This increase resulted from increase in R&D headcount and related personnel costs. General and administrative expenses decreased by 41% to $1.8 million for the fourth quarter of 2024 compared to $3 million during the same period of 2023. Full year G&A expenses decreased by 26.6% to $8.5 million compared to 11.6% in 2023. The decrease were mainly due to the increased operational efficiency as we march into the third year mark of the listing on NYSE. Net income was $1.1 million for the fourth quarter of 2024 compared to the net income of $1.4 million during the same period of 2023. Full year net income was $5 million for 2024 compared to $5.4 million in 2023. The positive net income was supported by continued revenue growth and effective cost control. This result represent a net margin -- net income margin of 8.3% for the full year 2024. Excluding noncash share-based compensation, noncash valuation gain and loss of financial liabilities, the adjusted net income was $2.3 million for the fourth quarter of 2024 compared to the adjusted net income of $2.1 million in the same period in 2023, an increase of 8.2%. Full year adjusted net income was $8.3 million in 2024 Perfect Corp. Full Year 2024 Earnings Conference Call compared to $7 million in 2023, an increase of 18.6%. This represents an adjusted net margin of 13.8% for the full year 2024. As of December 31, 2024, the company held $165.9 million in cash and cash equivalents and six months deposits compared to $163.2 million as of December 30, 2024. We had a positive operating cash flow of $3.3 million in the fourth quarter of 2024 compared to $3.1 million during the same period of 2023. For the full year, operating cash flow was $13 million in 2024 compared to $13.6 million in 2023. The positive cash flow demonstrates the company's continued ability to generate continuous cash flow to support its business operations and growth strategy. On the mobile app side and business metrics, our mobile app subscription business was growing and the active subscriber increased 14.3% year-over-year, reaching an all-time high of over 1 million by end of 2024. Our YouCam suite of beauty app has demonstrated its ability to provide both enjoyment and value to users, successfully converting them into paying subscribers. Our enterprise customer base had a net increase of 24 brand clients since the end of last quarter, achieving a total of 732 brand clients with over 822,000 SKUs for makeup, skincare, eyewear, watches and jewelry products as of end of last year. The further expansion of these metrics highlights the ongoing growth in the customer penetration and SKU expansion. In the fourth quarter, Perfect Corp. stayed at the 151 key customers, the same at the end of the previous quarter, demonstrating the stability of our enterprise business in this quarter. In summary, in the fourth quarter of 2024, our AI and AR cloud solution and mobile app subscription business continued to drive our growth. Throughout the year, we remain focused on operational efficiencies and financial discipline, resulting in an 18.6% year-over-year in full year adjusted net income and adjusted net margin rate of 13.8%. As mentioned by Alice, we will continue to invest in the growth of our business through the development of AI technologies, both organically and through M&A opportunities to strengthen our core competencies, our commitment to advancing Gen AI position us as the industry leaders, empowering our consumers and Perfect Corp. Full Year 2024 Earnings Conference Call enterprise clients with tools that outperform current solutions and redefine what's possible in user engagement and personalized services. Our purchase of Wanna from Farfetch significantly enhanced Perfect Corp. market reach, allowing us to tap into new customer segments and geographies that were previously out of scope. By integrating Wanna's established customer base, product offerings and distribution channels, we can rapidly expand our footprint and drive growth across untapped markets. Additionally, this transaction strengthened our competitive positioning by broadening our product portfolio to increase brand visibility and position us to better serve a wider range of industries. We are excited about the opportunities that are ahead of our B2C and B2B business lines by continuing to invest in AI innovations, expanding our market presence and building on our strong foundation. We are confident that we will sustain growth well into the future. Finally, our 2025 guidance for total revenue year-over-year growth will range from 13% to 14.5%. This forecast is based on company current assessment of the market and operational conditions, and management will closely monitor business progress and provide updates in order to better offer transparency to the market. With that, concludes my prepared remarks. Operator, please open up the call for questions. Operator^ (Operator Instructions) And your first question comes from the line of Pat McCann with NOBLE. Patrick McCann^ I was wondering -- I noticed you -- certainly you highlighted the growth in the brand clients. And my question had to do with the B2B side of the house. I'm wondering what the situation is with your enterprise clients as far as their ability to potentially start to spend more money on services such as yours. What's the situation with the B2B, especially given that it has the higher margins? And will that -- would you anticipate a return to growth there in 2025? Attachments Original document Permalink Disclaimer Perfect Corporation published this content on February 28, 2025 , and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on February 28, 2025 at
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