Perfect Corp. (NYSE:PERF) Q1 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reveals strong financial performance with a 12.5% revenue growth and a healthy net income margin. The acquisition of WANNA has enhanced market reach, and the launch of a new AI chat app indicates innovation. However, the Q&A highlighted some customer churn and vague acquisition plans. Despite these concerns, the overall sentiment is positive due to strategic growth initiatives, a new premium subscription model, and strong cash reserves, suggesting a likely stock price increase in the short term.

Key Financial Performance

Total Revenue $16 million (12.1% increase year-over-year) driven by growth in AI/AR cloud solutions and mobile app subscriptions.

Net Income $2.3 million (264% increase year-over-year) supported by revenue growth and effective cost control.

Adjusted Net Income $2 million (33.3% increase year-over-year) reflecting strong operational performance.

Gross Profit $12.5 million (11.4% increase year-over-year) with a gross margin of 77.9%, slightly down from 78.3% due to increased payment processing fees.

Operating Cash Flow $4.3 million (22.9% increase year-over-year) demonstrating continued ability to generate cash flow.

Active Subscribers 973,000 (7.9% increase year-over-year) despite a decrease from 1 million at the end of 2024, attributed to pricing optimization initiatives.

Total Operating Expenses $12.6 million (2% increase year-over-year) mainly due to increased R&D expenses, offset by decreased G&A expenses.

Sales and Marketing Expense $7.4 million (2.6% increase year-over-year) due to higher marketing and advertising costs.

Research and Development Expense $3.6 million (17.5% increase year-over-year) due to additional headcounts for new product development.

General and Administrative Expenses $1.7 million (21.6% decrease year-over-year) due to lower corporate insurance premiums and savings from external services.

Cash and Cash Equivalents $164.6 million, slightly down from $165.9 million as of December 31, 2024.

You have reached the limit Upgrade to access full content

Get started

Operating Highlights

New Product Launch: Unveiled a new mobile app called YouCam AI Chat, featuring personal AI assistance for various topics and powerful AI tools for image generation and summarization.

AI Features Enhancement: YouCam mobile app suite continues to evolve with planned updates and enhancements powered by Generative AI.

AI Skin Analysis Solution: Launched AI skin analysis solution with a major U.S. beauty retailer, allowing users to receive personalized skincare routines.

Market Expansion: Integration of WANNA is progressing smoothly, focusing on geographic and product expansion, particularly in the shoes vertical.

B2B Market Penetration: Deepening market penetration in Beauty and Fashion segments, with over 801 brand clients and 891,000 SKUs.

Operational Efficiency: Operating cash flow generated a net inflow of $4.3 million, with a strong balance sheet of over $164.6 million in cash.

Subscriber Growth: Active paying subscribers increased by 7.9% to 973,000, despite a slight decrease in total subscribers due to pricing optimization.

Strategic Shift: Focus on integrating WANNA team and products, exploring cross-selling opportunities, and diversifying product offerings.

You have reached the limit Upgrade to access full content

Get started

Risk or Challenges

Macroeconomic Uncertainty: Despite strong financial performance, the company acknowledges ongoing macroeconomic uncertainty which could impact future growth.

Competitive Pressures: The company faces competitive pressures in the AI/AR cloud solutions and mobile app subscription market, necessitating continuous innovation and adaptation.

Supply Chain Challenges: There are potential supply chain challenges related to the integration of WANNA and the expansion of product offerings, particularly in the beauty and fashion sectors.

Client Contract Churn: The company experienced unexpected contract churn from a few U.S. clients due to rising financial challenges in the macroeconomic environment.

Regulatory Issues: The company did not explicitly mention regulatory issues, but the nature of their business in AI and cloud solutions may expose them to future regulatory scrutiny.

You have reached the limit Upgrade to access full content

Get started

Guidance & Outlook

Mobile App Growth: The B2C mobile app business has maintained strong growth with 973,000 active paying subscribers, a 7.9% increase year-over-year.

New Product Launch: Launched YouCam AI Chat, featuring personal AI assistance and advanced AI tools for image generation and summarization.

WANNA Integration: Integration of WANNA is progressing smoothly, focusing on geographic and product expansion, particularly in the shoes vertical.

AI Skin Analysis Solution: Launched AI skin analysis solution with a major U.S. beauty retailer, enhancing user engagement and expanding market reach.

Enterprise Expansion: Continued market penetration in Beauty and Fashion, with 801 brand clients and 891,000 SKUs.

Revenue Growth Guidance: Total revenue growth is expected to range from 13% to 14.5% year-over-year for 2025.

Net Income Margin: Net income margin for Q1 2025 was 14.3%, with an adjusted net margin of 12.6%.

Cash Flow: Positive operating cash flow of $4.3 million in Q1 2025, demonstrating strong financial health.

You have reached the limit Upgrade to access full content

Get started

Shareholder Return Plan

Share Repurchase Program: The company has not announced any share repurchase program during the call.

You have reached the limit Upgrade to access full content

Get started

Key Q&A

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

A:The app just launched last month, and this is app on the Apple Store app store – Apple’s app store and Google Play. User can just download it from the app store. And as I said, this is integrating of all the AI assistant into one and also adding some of our strengths like image editing by AI and photo summarized and all kinds of different AI tools into one app.

Q:When it was launched in all countries in all languages?

A:Yes, just released to the app stores with eight languages support. It can be downloaded over the world.

Q:I thought that you had said that they were going to add about 20 key customers, but if they did, then you must have lost a lot of customers in Q1 or did they not add 20?

A:The WANNA acquisition did add a little bit over a dozen of the key customers after the integration. And you are right, we also have suffered some loss for our beauty business as I mentioned in my remarks for the other beauty clients from the key customer accounts.

Q:When you talk – look at future acquisitions is are you going to have to be trying to find new verticals that you’re not in or is there any opportunity out there to say, scoop up some of the competitors that maybe do like try-ons for eyeglasses because – is there a shakeout out there in any categories? What is your thinking about acquisitions going forward?

A:I think our priority has been expanding our TAM through acquisition, accelerating our methods market penetration. In the core business that we are, there isn’t too much other competitors that are we think it’s worth for doing acquisition. We very much have a better product, more complete services. So I think we are winning that from just organic growth. But for newer categories, newer verticals, acquisition could help and accelerate our penetration, especially in enterprise clients that are typically take long time to penetrate.

Q:So what verticals are left out there?

A:I think on the shopping, I think certainly in the fashion space, there is still a lot of other things. Of course, we have technology to grow internally, but I think most importantly is the luxury business, the luxury retailers, a lot of them are still not fully digitized or using VTO technologies.

Q:When you go to a potential B2B client, how does the WANNA acquisition impact the sales process?

A:It’s very positive feedback we heard from the client, because again, they’re having a full complete solution. It saves a lot of their integration efforts, right? So I think this is one of the strengths and synergy we try to build that is not just one product company, but it’s a whole platform of solution.

Q:Can you give any more color on the B2C monetization strategies?

A:Our recent market research and looking at other competitor alternative product there, we noticed that there’s a room to optimize our price point. Originally, we were charging around $39 a year for the subscription, and now we are introducing a much higher premium subscription with newer feature at $79 per year.

Q:Can you talk a little bit about the competitive landscape in the shoe market and handbags?

A:I think our view, there isn’t too much competitor in the bag space. I think WANNA has portrayed probably the best solution, there’s still room to improve the shoes market.

Q:Can you tell us about the conversation with clients regarding the macroeconomic conditions in the U.S. right now?

A:We lost a little bit more than what we expected. None of them were big Tier 1 clients. But they say medium sizes clients. I think most of those feedback that gave us is not the churn because of the competition, but mostly the churn because the financial pressures that they have from management to cut on the cost.

Q:Is there any change in the capital allocation strategy?

A:I think under the current environment, holding on the cash is actually not a bad thing. I think there are a lot of deals, activities in the market has been very much on hold.

Q:Review of Unclear Management Responses

A:Management's response lacked clarity on the specific number of customers lost in Q1 and the exact impact of the WANNA acquisition on the sales process. Additionally, there was vague language regarding future acquisitions and the competitive landscape in the luxury business.

You have reached the limit Upgrade to access full content

Get started

Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

PERF Transcript

Perfect Corp. (NYSE:PERF) Q1 2025 Earnings Call Transcript

Positive4-29

Perfect Corp. (PERF) Q1 2025 Earnings Call Transcript

Unknown4-29

The earnings call summary and Q&A indicate mixed signals. Financial performance shows growth, but the loss of beauty clients and increased expenses raise concerns. The new AI chat app launch is positive, but management's vague responses about future acquisitions and macroeconomic impacts suggest uncertainty. The acquisition of Wanna and the strong cash position are positives, but the lack of clear guidance tempers enthusiasm. Overall, the sentiment is neutral, suggesting minimal stock price movement in the short term.

Perfect Corp. (PERF) Q4 2024 Earnings Call Transcript

Unknown2-27

The earnings call presents mixed signals. While there is growth in revenue and subscribers, the gross margin decline and cautious B2B outlook are concerns. The Q&A reveals uncertainties in B2B spending and competitive landscape. Despite optimistic guidance, the financial health shows slight declines in net income and cash flow. The lack of clear guidance on acquisition impact further tempers sentiment. Overall, the positive elements are balanced by uncertainties, suggesting a neutral stock price reaction.

Perfect Corp. (PERF) Q3 2024 Earnings Call Transcript

Positive11-2

The earnings call highlighted strong financial performance with revenue and adjusted net income growth, and a positive cash flow. Despite competitive pressures and a lack of a share buyback program, the company shows promising growth in AI solutions and a new B2C revenue stream. The Q&A section revealed confidence in market opportunities, although management was vague about future growth rates. Overall, the positive financial metrics and strategic focus on AI and B2C expansion suggest a likely stock price increase of 2% to 8%.

PERF Report

Frequently Asked Questions

Where does this earnings call transcript come from?

All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.

How soon is the transcript available after the earnings call ends?

Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.

Is the transcript edited or altered in any way?

No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.

Why do some answers appear as “Unclear” or “Inaudible”?

When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.

Who creates the AI Summary and Key Q&A highlights shown above the transcript?

They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.