Q3 2023 Perfect Corp Earnings Call

Okay.

Speaker 1: Good morning and good evening ladies and gentlemen. Thank you for standing by and welcome to Perfect Corps's earning conference call. At this time all participants are in a listen mode only. We will be hosting a question and answer session after the management prepared remarks.

Good morning, and good evening, ladies and gentlemen, thank you for standing by and welcome to Perfect Corp's Earnings Conference call. At this time all participants are in listen mode. Only we will be hosting a question and answer session. After the management's prepared remarks. Please note that today's.

Speaker 1: Please note that today's event is being recorded. I will now turn the conference over to the first speaker for today, Mr. Rick Lee, Vice President of IR of the company. Please go ahead, sir.

Event is being recorded I will now turn the conference over to your first speaker for today, Mr. Rick Lee Vice President of I R. A D company. Please go ahead Sir.

Thank you Robin Hello, everyone welcome through perfect Copes Q3 earnings call.

Speaker 2: Thank you, Ellie. Hello, everyone. Welcome to the perfect course to three earnings call. With us today, I'm Miss Ellie Chan, founder, Chairwoman, and Chief Executive Officer. Mr. Ruiz.

With us today are mixed.

Chen founder chairwoman and Chief Executive Officer Mr.

Mr. Luke Chen our executive Vice President and Chief Strategy Officer, and Mrs. Irene Chang.

Speaker 2: Detective Vice President and Chief Strategy Officer I'm Mrs. Ira Chen, VP of Finance and Accounting

Finance and accounting who.

Speaker 2: You can refer to our third quarter, 2023 financial results on our website or in the form of CSK, which I was ACC earlier. You can later assess a replay of this call on our website, should it be after the conclusion of this call.

You can refer to our third quarter financial results.

Our web site or in the form of 6K, we filed with the ACC earlier, who can lead to access a replay of this call on our website. Shortly after the conclusion of this call for todays call management will provide their prepared remarks, we will host a Q&A session before we continue I would like to be.

Speaker 2: For today's call, measurement will provide the prepared remark first. Then we will host a Q&A session.

Speaker 2: Before we continue, I would like to refer you to our safe harbor statement in our early press release. It is also a private list call, but this call may contain a whole working statement regarding current recovery.

Refer you to our Safe Harbor statement in our earnings press release.

Those are our priorities call, but this call may contain forward looking statements regarding co.

Perfect Corp's performance anticipated plan operational results and objectives.

Speaker 2: performance, anticipated plan, operational results, and objectives. boards cloud- November 24, 2012

Forward looking statements are based on management's expectations.

Speaker 2: And I subject to a number of weeks and uncertainties that could cause actual results to differ maturity from those expressed or imply our code today. Perfect code, undertake no obligation to update any boardwork and statement. It's not also required by law after the date of...

That's subject to a number of risks.

Certainties that could cause actual results to differ materially from those expressed or imply call today perfect Kohl undertakes no obligation to update any forward looking statement.

By law after the date of this call.

Speaker 2: We know that all numbers stated in the following measurements prepare remark by the US dollar turn and we will discuss no IFI's measures today. We'd offer to do, but we now turn the call to our first speaker today. Our CEO is at the

Please note that all numbers stated in the following management's prepared remark.

In U S dollar terms and we will discuss no.

Majors today, we don't want to do I will now turn the call to our first speaker today, our CEO Eric Chen.

Speaker 3: Hi everyone, thank you, Rich. Welcome to Perfect Corps of 2023, their quarter earnings call. We have some exciting news to share today. So we get started in the third quarter of 2023, our growth momentum from quarter two persisted. We thought in total revenue of $14.5 million.

Everyone. Thank you Lee.

Welcome to the perfect Cogs targets on <unk> third quarter earnings call, we have some exciting news to share today.

L. A we get started.

The third quarter of Tony <unk>, our growth momentum from quarter, two persisted, resulting in total revenue of $14 5 million.

Speaker 3: This marked a 13.2% increase in revenue compared to the same period of last year and a 14.7% increase compared to the previous quarter. The primary drivers of this quarter relate from our AIAR cloud solutions for enterprise brand business C2B and the subscription services for our mobile BDF business B2B.

This marks a 13, 2% increase in revenue compared to the same period of last year and a 14, 7% inquiry.

Year to the previous quarter.

The primary drivers of this quarter.

Our AI AI cloud solution for enterprise Brambles.

And the subscription services for all mobile beauty business B to C.

Speaker 3: We have seen very promising new developments in our AI-Sync here solutions and AI-Sync here style for brands. And other innovative app features powered by Gen AI, which I will elaborate more shortly, for the bottom line, are a net income for the third quarter of 2023 was positive. Sending at $3.5 million from an adjusted basis and a $2.7 million when adjusted.

We have seen very promising new developments in our AI solution.

I hear style for Brett.

All other innovative app features powered by <unk>, which I will elaborate more shortly.

Bottom line, our net income for the third quarter of 173 was positive at $3 $5 million from an adjusted basis and are.

$2 7 million when adjusted.

Speaker 3: underscoring our accompaniment to effective cost management while growing top line

Underscoring our commitment to effective cost management supply growing topline revenue overall.

Speaker 3: Overall, we are very encouraged by our continuing top line growth and improvement in profitability as a result of our continuous effort to optimize our business in both C2B and

Overall, we are very encouraged by our continued top line growth and improvement in profitability as a result of our continuous effort to optimize our business in both <unk> and <unk>.

Speaker 3: Our strategy is development. Development, focusing in generative AI, has already shown a strong demand from both brand customers and consumers.

Our strategic Debottlenecking Ebola.

<unk> focus in generative AI has already shown a strong demand from both brand customers and consumers.

Speaker 3: Genitive AI unlock many new possibilities in digital images, media, beauty tech, screen tech, and a fashion tech. So from use this cases.

I unlocked many new possibilities in digital imaging.

Judy attack skincare, and the fashion chat usage cases.

Speaker 3: This new use cases will extend our reach into one of the bigger total addressable markets.

This new use cases.

Our reach into the bigger total addressable market.

Speaker 3: In a rapidly involving digital landscape, your brands are investing more and more into digital transformation. Perfect, it's well positioned to help our brand partners with the latest in generative AI model. In addition to a complete line of beauty tech, skin tech, and fashion tech offering.

Rapidly evolving digital landscape, where brands are investing more and more into digital transformation.

So it is well positioned to help our brand partners with the latest in generative AI models.

Addition to a complete line of duty tax gain and the fashion Tech offering.

Speaker 3: And only our consistent grow out of a wide range of innovative features driven by Gen A.I. technology has maintained the strong growth of our mobile app of Sushim Business.

Finally, our <unk> rollout of a wide range of innovative features driven by Gen. AI technology has maintained the strong growth of our mobile.

Cobalt app subscription business.

Operator: Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Perfect Corp's earning conference call. At this time, all participants are in a listen mode only.

Speaker 3: This new AI teachers have not only drawn a new mobile app installation, but also effectively converted users into premium subscribers.

This new AI teachers have not only draw a new mobile app installation, but also effectively converted users into premium subscribers perfect is ready to Pepsi Lux capital light on this.

Operator: We will be hosting a question and answer session after the management prepared remarks. Please note that today's event is being recorded.

Speaker 3: Perfect is ready to capture the light on this new opportunity. And we are positioning ourselves.

This new opportunity.

We are positioning ourselves as the beauty beautiful AI company for both <unk> and <unk>.

Speaker 3: That's the beauty. Beautiful AI company for both B2B.

Operator: I will now turn the conference over to the first speaker for today.

Rick Lee: Mr. Rick Lee, Vice President of IR of the company, please still ahead sir. Thank you, Alice.

Speaker 3: Now let's shift to our focus to new operational outcomes of the third quarter and discuss our most recent advancement.

Now, let's shift to our focus to your operational outcomes of the third quarter and discuss our most recent advancement.

Ellie Chan: Hello everyone and welcome to Perfect Corp's two-three earnings call. With us today, I'm Miss Ellie Chan, founder, Chairwoman and Chief Executive Officer. Mr. Ruiz Chan, our Executive Vice President and Chief Strategy Officer, and Mrs. Avery Chan, Chief Executive Officer of Finance and Accounting.

The third quarter.

Speaker 3: On the B2B site, we see two or several signs of all new and renewals with VUDE grade. Some of these included up-to-date opportunities, such as expanding their skew offerings, and extending to additional companies.

On the <unk> side, we seek to order several sizable new and the renewals with beauty great.

Some of which included upsell opportunities such as expanding their SKU offering and extending to additional countries.

Rick Lee: You can refer to our third quarter, 2023, financial results on IR website or in the form of CISK, which filed with ACC earlier. You can later assess a replay of this call on our website, shortly after the conclusion of this call. But today's call, measurement will provide the prepared remarks first that we will host a Q and A section.

Speaker 3: This renewal not only underscores the growing reliance of this brand on our solution to meet their evolving needs, but also reaffirm our leadership in the field of color cosmetics, which continues to be a very key differentiator and a core competence for our company.

Renewables not only underscores the growing as Eli yourself did France, our solution to meet their evolving needs, but also reaffirm our leadership in the field of color cosmetics could you continuous to be a very key differentiator and a core competency for our company.

Speaker 3: To that point, we have continued to bring forth our only channel strategy through the expansion of strategic alliance with various distribution channels.

So that Frank we have continued to reinforce our omnichannel strategy through the expansion of strategic alliance with various distribution channels, all beauty skincare and the fashion product.

Rick Lee: Before we continue, I would like to refer you to our safe harbor statement in our early press release, which also our price will be called. But this call may contain forward-looking statements regarding serving corporations' performance and dissipated plan operational results in objectives. Forward-looking statements are based on major modifications and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or imply our call today.

Speaker 3: Team here, and fashion products. To ensure comprehensive coverage of all customer touch points, for example, we team up with two free, a key player in global travel retail to provide both in-store and web-based virtual mega-trial experiences for 16 2D brands in airports across 27 countries worldwide.

Through our comprehensive coverage of all customer touch points.

Example, we came up with do free a key player in global travel retail to provide both in store and web based virtual make us file experiences or 15, Judy brands in airports across 27 countries worldwide.

Rick Lee: Perfect call from the take no obligation to update any forward-looking statements, in fact also required by law after the date of its call. Ruiz know that all numbers stated in the following measurements prepared remark are in U.S, dollar terms and we will discuss no IFI's measures today. We'd offer the do.

Speaker 3: Additionally, we are very excited to announce our partnership with.

Additionally, we are very excited to announce our partnership with Walmart the worlds largest retailer who initially offer like our virtual try on experience for more than 1400 beauty products.

Speaker 3: The word is the retailer to initially offer a makeup version of Client experience for more than 1,400 beauty products in the Walmart mobile app.

Rick Lee: I would now turn the call to our first speaker today.

Our mobile App.

Speaker 3: This level of integration is made possible thanks to our existing relationship with over 600 global reds.

All of the integration.

Ellie Chan: Our CEO is at a chance.

Possible, thanks to our existing relationship with over 600 global brands.

Ellie Chan: Hi everyone. Thank you, Ruiz. Welcome to the perfect call of the 2023 third quarter earnings call. We have some exciting news to share today. So when you get started, in the third quarter of 2023, our growth momentum from two quarter two persisted. We thought in the total revenue of 14.5 million dollars. This marked a 13.2 percent increase in revenue compared to the same period of last year and a 14.7 percent increase compared to the previous quarter.

Speaker 3: Enable in the effortless distribution of this brand, virtual product offerings across diverse retail platforms.

Enable in the effortless distribution of this brand virtual product offerings across diverse retail platform as we look to the future. It is clear our virtual trial technology, becoming essential for all beauty and fashion brands and retailers engaged.

Speaker 3: As we look to the future, it is clear that virtual trial technology becoming essential for all beauty and fashion brands and retailers being engaged with customers in the delivering personalized shopping experiences for all.

In with customers and just delivering personalized shopping experiences for all.

Speaker 3: In the third quarter, a significant highlight was the accelerated penetration of skin care marks.

In the third quarter, but never come to highlight to us.

Celebrated penetration of skincare market.

Ellie Chan: The primary drivers of this quarter relate from our AIAR cloud solutions for enterprise brand business B2B and the promising new developments in our AI-sync-hear solutions and AI-hear style for brands and other innovative app features powered by Gen AI which I will elaborate more shortly. For the bottom line, our net income for the third quarter of 2023 was positive. Sending at $3.5 million on an adjusted basis and a $2.7 million when adjusted.

Speaker 3: marked by notable increase in new deal flow from the skin care sector. We believe the skin care industry is going through a transformational change to adopt more digital technology and to offer consumer with a user-friendly and objective-driven diagnosis results.

Marked by notable notable increase in new deal flow on the skincare sector. We believe the skincare industry is going through a transformational change to adopt more digital technology into all of our consumer with a user friendly and objective Cleveland South northeast.

As a result.

Speaker 3: our AI skin care technology. The skinquishes itself by delivering an umpire law AI powered skin analysis that encompasses 14 different skin concerns in real time. Providing users with comprehensive and instantly back on their skin progress.

Alright.

Thank you our technology.

Tim question itself, delivering an umpire law AI powered analysis that encompass is 14 different skin concerns in real time.

Users, we come up with comprehensive instant feedback on their skin Parkway.

Speaker 3: Secondly, we have introduced a new range of subscription plans tailored specifically for small and mid-sized businesses.

Secondly, we have introduced a new range of pushing plant tailored specifically for small and mid size screen. Thank you break in that spot on our website.

Ellie Chan: On the scoring, our commitment to effective cost management while growing top line revenue. News. Overall, we are very encouraged by our continuous top-line growth and improvement in profitability as a result of our continuous effort to optimize our business in both C2B and B2C. Our strategy of development, development, focused in generative AI as our addition, a strong demand from both brand customers and consumers. Candidative AI unlocks many new possibilities in digital imaging, media, beauty tech, skin tech, and a fashion tech, different uses cases.

Speaker 3: The next part on our website. This expanded strategy on clean tier enables us to engage with a larger potential customer base of all sizes.

It's extended strategy here enables us to engage with a larger potential customer base of all sides of it.

Speaker 3: are providing tiered subscription plans. We not only.

Vikings tiered subscription plan.

Not only.

Speaker 3: make our skin care technology more accessible, but also streamline the sales process. This approach will

Like our skincare technology more accessible but also streamline the sales process.

Approach as well.

Speaker 3: lead to a larger install base for our AI skin care service.

Me too.

Larger.

A larger installed base for our AI skincare services.

Speaker 3: Another new use case we launched in the market is our generative AI hairstyle. Very new. We upgraded our AI hairstyle solution.

Other new use case, we launched in the market is our generative AI your style.

Ellie Chan: These new use cases will extend our reach into one of the bigger total addressable markets. In a rapidly evolving digital landscape, where brands are investing more and more into digital transformation. Perfect, it's world position to help our brand partners with the latest in generative AI models in addition to a complete line of beauty tech, skin tech, and fashion tech offerings. And only our consistent growth out of a wide range of innovative features driven by Gen. A.I, technology has maintained the strong growth of our mobile app, such as business.

We knew we upgraded our AI hairstyle solution.

Ellie Chan: This new AI features have not only drawn a new mobile app installation, but also effectively converted users into premiums of fibers. Perfect, it's ready to capture lots, capture the light on this new opportunity. And we are positioning ourselves as the beauty beautiful AI company for both B2B and for B2C.

Speaker 3: by replacing the previous generation AI model to the latest diffusion generative AI model, and the result is amazingly good.

Replacing the previous generation AI model, because the latest infusion generative AI model and everybody thought is amazingly good the real really them of the hairstyle images is Dol hyper realistic and the generative style variation.

Speaker 3: The realism of the hairstyle images is now hyper-realistic and the generated style variations unlock more choices for consumers to visualize more hairstyles to choose from.

More choices for consumers to visualize more hangar styles do choose to call.

Speaker 3: Under the Hairstyle AI development, we announced our partnership with Tresme and Unilever Brands of hair products to offer AI hairstyle generation for their consumers to try on. And the possibility is ever-expanding. We are also targeting broader hair brand markets, such as wig visualizations and hair extensions with the latest generative AI upgrade.

How do the hairstyle AI development, we announced our partnership with Trust me and you.

New Labour brands, all payer product to offer AI hairstyle generation for their consumer to try out and the possibility is ever expanding we are also targeting broke their hair bread market.

The weak visualization and now here he extinction with the latest generators they are upgrades.

Speaker 3: This is a testament to the versatility and the broad applicability of our GenAI-powered virtual try-on technology, demonstrating their potential to cater to a diverse range of market

This is a path to lunch to diverse fallow Chi most agility and abroad, absolutely ability of origin AI powered virtual try on technology and less trading their potential to cut well.

Ellie Chan: Now let's shift to our focus to new operational outcomes of the third quarter, and discuss our most recent advancement. In the third quarter, on the B2B site, we see two or several signs of all new and renewals with beauty great. Some of which included up to the opportunities, such as expanding their skew offerings, and extending to additional countries. This renewal not only underscores the growing reliance of this brand and our solution to meet their evolving needs, but also reaffirm our leadership in the field of color cosmetics, which continues to be a very key differentiator and core competence for our company.

Caters to a diverse range of market needs.

Speaker 3: Another cutting-edge AI innovation we just launched in third quarter is in high-quality automated 2D to 3D skew conversion technology for jewelry and watch CTOs for to try out. This result can quickly enlarge the total numbers of skews of our jewelry brand customers they can offer on their website in a cost-effective and speedy way.

Another cartoon H AI innovation, we just launched in third quarter is in high quality automated to date to three D. SKU called Virgin technology with jewelry and the watch T. G O virtual try out.

This resolved can quickly enlarged the total numbers.

Of our jewelry brands customers.

They can offer on their web site in a cost effective and Mr. D D wave.

Speaker 3: This new 2D to 3D technology can help us expand to a broader jewelry and watch trial market.

This new two D. Two three D technology can help us expand to a broader jewelry and watch try out market.

Ellie Chan: To that point, we have continued to bring forth our only channel strategy through the expansion of strategic alliance with various distribution channels of beauty team here and fashion products. We ensure comprehensive coverage of all customer touch points. For example, we team up with two free key players in global travel retail to provide both in-store and web-based virtual makeup triumph experiences for 15 beauty brands in airports across 27 countries worldwide. Additionally, we are very excited to announce our partnership with Walmart, the world's largest retailer to initially offer makeup virtual triumph experience for more than 1,400 beauty products in Walmart mobile app.

Speaker 3: Now let's let's shift focus to our B2C mobile beauty apps.

Now, let's let's shift focus to our B to C mobile duty apps isn't it.

Speaker 3: We had another strong quarter for our app business.

We had another strong quarter for our App business.

As Albert Densify, I, 62% 62, 5% year over year increase in.

Our our mobile apps captive supply birth to a 835000.

Speaker 3: This sustained growth, very strong growth, serves as a testament to the increasing demand and market expansion in the realm of photo, video, and camera applications, including image and video creation, beautification, and enhanced

Dan's growth very strong growth first as a testament to the increasing demand and market expansion in a room, a photo or video and a camera applications, including our image in the video creation unification and enhancement.

Speaker 3: With our suite of UPM apps, we are diversifying our product offerings and expanding our avenues for monetization.

With our suite to offer you came up we are diversifying our product offering and expanding our avenues for monetization.

Ellie Chan: This level of integration is made possible thanks to our existing relationship with over 600 global brands. We enable in the effortless distribution of this brand virtual product offerings across diverse retail platforms. As we look to the future, it is clear that virtual triumph technology becoming essential for all beauty and fashion brands and retailers being engaged in with customers in the delivering personalized shopping experiences for all.

To fully capitalize on the App market expansion train we have implemented the following our strategy first our team created a very rich roadmap of premium features for subscribers we can.

Speaker 3: To fully capitalize on the app market expansion trend, we have implemented the following strategies. First, our team created a very rich roadmap of premium features for subscribers. We introduced multiple AI-driven premium features by GenAI, such as AI avatar, AI fashion, AI hairstyle, AI selfie, and more and more to come.

Interest you yourself multiple AIG them senior teachers by J D. I forget the avatar, Yeah, Sasha hairstyle healthy at more and more into call.

Speaker 3: Offering our mobile users with a wide range of photo and video beautification and enhancement solutions, we have a very

Offering our mobile users with a lag but why is what they want you also photo Nemesio beach vacation enhancement solutions.

Ellie Chan: In the third quarter, a significant highlight was the accelerated penetration of skin care markets marked by notable increase in new deal flow from the skin care sector. People with a skin care industry is going through a transformational change to adopt more digital technology and a two-offer consumer within a user-friendly and objective driven thousand of this result. Our AI skin care technology distinguishes itself by delivering an unparalleled AI powered skin analysis that encompasses 14 different skin concerns in real time, providing users with comprehensive and instant feedback on their skin progress.

We have in a very active roadmap.

Speaker 3: include AI in all of our products and services. It will transform the whole industry with the power of beautiful AI.

To include AI in all of our quarter and our services.

And it will transform the whole industry with the power of a beautiful way.

Speaker 3: Second, we have strengthened our cross-promotion initiatives across our suite of mobile apps, and executed marketing programs to increase our app discoverability to new users. This consumer app market is very large and a growing market. More and more global consumers are opting to pay subscriptions for premium features.

Because we have a tender or a cross promotion initiated across all the suite of mobile apps and the athlete that's came to marketing progress.

Increase of App, just tolerability to new users.

Customer this consumer market.

Very large and growing market more and more global consumers are opting to pay subscription for premium features.

Speaker 3: I'm hoping it's a focusing to gain more market share in.

Perfect and so focusing to gain more market share I E did you see.

<unk> mobile App isn't it.

Speaker 3: Third, we have extended our B2C monetization opportunities by introducing new apps, like our new app, Ucam AI Pro. It is a Gen AI tool app, Gen AI app, for AI text to image creation and more other Gen AI features collection.

Ellie Chan: Secondly, we have introduced a new range of subscription plants tailored specifically for small and mid-sized skin care brains, the next part on our website. This expanded strategy of skin care enables us to engage with a larger potential customer base of all sizes. It's a providing tiered subscription plan. We not only make our skin care technology more accessible, but also streamlines, the field process is approached with the two larger install base for our AI skin care services.

Third we have expended the RFP to see monetization of origin.

And a T are introducing a new off like our new App you can AI pro is a journey I tore asked Jenny I apps for AI tactical in nature ratio and the more other Jennie O teachers collection.

Speaker 3: This new app has a very rich roadmap to include many of our future Gen AI innovations from our perfect lab.

This new App has a very rich roadmap to include many of our church and AI innovation from our perfect lapse.

Speaker 3: We have also optimized our mobile app subscription prices, maintaining our competitiveness while increasing our revenue in several markets.

We have also optimized our mobile apps, which implied price at maintaining our competitive fitness, while increasing our revenue in several market.

Speaker 3: Collectively, this effort has been instrumental in driving the impressive expansion of our mobile app.

Collectively this effort has been instrumental in driving the impressive expansion of our mobile app.

Ellie Chan: Another new use case we launched in the market is our generative AI tier style. Very new. We upgraded our AI tier style solution by replacing the previous generation AI model to the latest diffusion generative AI model. And the result is amazingly good. The realism of the hairstyle images is not hyper realistic. And the generative style variations unlock more choices for consumers to visualize more hairstyle to choose from. From to the hairstyle AI development.

Speaker 3: We are committed to sustaining this effort to enhance the visibility and the reputation of our UCAM apps in the mobile app sector, while positioning ourselves favorably for future expansion.

We are committed to sustaining this effort to enhance the visibility and the reputation of argue kept us in a mobile app sector, well positioning us ourselves favorably for future expansion.

Speaker 3: In summary, our third quarter was robust.

In summary.

Our third quarter. Once you go bust featuring double digit revenue growth and the positive net earnings our observation, but just that we have.

Speaker 3: featuring double-digit revenue growth and the positive net earnings. Our observations suggest that we are well-positioned to meet the revenue growth targets we shared in Q2, quarter two. Consequently, we reaffirmed our projected revenue growth for 2022.

Our well positioned to meet our revenue growth target, we shared in Q2 quarter to.

Ellie Chan: We announced our partnership with TrustMate and Unilever Brands of Hair Products to offer AI hairstyle generations for their consumers to try out. And the possibility is every 20. We are also targeting growth their hair brand market address week visualization and the hair extension with the latest generative AI upgrade. This is a testament to the versatility and the broad absolute capacity of our Gen. A.I, power virtual trial technology demonstrating their potential to cut to cater to a diverse range of market needs.

Consequently, we see we have four affirm all our project projected revenue growth for Taki-taki Street, which is expected to range from 11, 5% to 14, 5% year over year comparison to 'twenty to 'twenty two.

Speaker 3: which is expected to range from 11.5% to 14.5% year over year in comparison to 2022. With that, I have now concluded my remarks and we'll be handling the call over to Luis who will discuss our financial details with you. Thank you.

That I have now concluded my remarks, and then we'll be handling the call over to Luis who will discuss our financial details with you.

Thank you Allie.

Speaker 4: Before I go into the details of our financial results, please note that all comparisons are on a year-over-year basis and that the reporting period is the third quarter of 2023 versus the comparable period in 2022. And on top of the IFRS measures, we will also discuss non-IFRS measures to provide greater clarity on the trend in our actual operation.

Before I go into the details of our financial results. Please note that all comparisons are on a year over year basis.

Ellie Chan: Another cutting age AI innovation we just launched in third quarter is in high quality automated two days to three days of new conversion technology for jury and watch VTO for to try out. This result can quickly enlarge the total numbers of views of our jury brands customers. They can offer on their website in a cost effective and the speedy way, and this new 2D to 3D technology can help us expand to a broader jury and watch trial markets.

They're reporting periods is the third quarter of 2023 versus the comparable periods in 2022.

On top of the Ifr if measures. We will also discuss non I've heard as measures to provide greater clarity on the twin actual operations.

Speaker 4: For the third quarter of 2023, our total revenue increased to $14.5 million U.S. dollars from $12.9 million in the same period of last year, representing a year-over-year double-digit growth of 13.2 percent.

For the third quarter of 2023 total revenue increased to $14 5 million U S dollars from $12 9 million in the same period of last year.

Presenting a year over year double digit growth of 13, 2%.

Speaker 4: Among our revenue sources, they are AI cloud solution and subscription revenue, which is constitute 78.3% of our total revenue, through by 24.8% to 11.4 million in the third quarter of 2021.

Oh no revenue sources.

Our AI cloud solution itself, because your revenue, which constitute 78, 3% of our total revenue grew by 24, 8% to 11 4 million in the third quarter of 2023.

Ellie Chan: Now let's shift focus to our B2C mobile beauty app business. We had another strong quarter for our app business and as evidence by 62 percent 62.5 percent year over year increasing in our mobile app active subscribers to 835,000. This extends growth, very strong growth, such as the testament to the increasing demand and market expansion in the room of photo, video and camera applications, including an image in a video creation, notification and enhancement. With our suite of the UPM app, we are diversifying our product offering and expanding our avenues for monetization.

Speaker 4: This expensive expansion can be attributed to the strong demand of our online virtual try-on solutions among our customers and the robust growth in our mobile beauty app subscription.

This is Steve expansion can be attributed to the strong demand all my virtual try on solutions, a marine customers and their robust grew up in a mobile beauty subscription.

Speaker 4: In the current quarter, we have successfully renewed contract with prominent beauty brands, with some renewal offering after opportunities to expand school offering and extend deployment to cover more regions. We are also acquired several new customers in this quarter, including warm.

Current quarter, we have successfully renewed contract with them.

Then beauty brands with some renewed offering us the opportunity to expand SKU offering and then deploy them into cover more regions. We also acquired several new customer wins this quarter, including Walmart.

Speaker 4: Notably, our mobile beauty app business active subscriber has been surged by 62.5% year-over-year, reaching an all-time high of over 835,000 at the end of the third quarter of 2021.

I believe all of our beauty business.

It sounds great, but has been serious by 52, 5% year over year, reaching an all time high of over 835000 at the end.

The third quarter of 2023.

Speaker 4: This significant expansion underscores the increasing demand for photo and video editing applications and the widespread acclaim of our innovative generative AI features within our suite of mobile beauty apps.

A significant expansion in this quarter, increasing demand for photo and video editing application and the widespread acclaim innovative generated feature within our suite of mobile beauty App.

Ellie Chan: So to fully capitalize on the app market expansion trend, we have implemented the following strategy. First, our team created a very rich roadmap of premium features for subscribers. We introduced multiple AI driven premium features by Geniei, such as AI avatar, AI fashion, AI hairstyle, AI selfie, and more and more to come. Offering our mobile users with a wide range of photo and video beautification and enhancement solutions. We have a very active roadmap to include AI in all of our product and services. We will transform the whole industry with the power of beautiful AI.

Ellie Chan: Second, we have strengthened our cross-promotion initiative across all the suite of mobile apps. And as it is executed, marketing programs increase of active coverability to new users. This consumer app market is very large and growing market. More and more global consumers are opting to paying subscription for premium features. I'm perfectly self-focused to gain more market share in C2C mobile app business. Third, we have extended our B2C monetization opportunities.

Speaker 4: These premium AI features not only expand our mobile beauty app user base, but also capture the attention of enterprise users, resulting in a growth synergy between our mobile app and enterprise operations that may bring more revenue streams into our app.

These premium features not only a spin or mobile app user base.

Captured the attention of enterprise users consulting growth synergy between our mobile App and enterprise operation that may bring more revenue stream into our business.

Speaker 4: I think the revenue, which is now mostly from the traditional offline services, decreased by 13.6% from $3.3 million to $2.8 million, representing 19.5% of our total revenue, compared to 25.5% of total revenue in the third quarter of 2022.

I think the revenue, which is now mostly for on the traditional offline services.

Kris by 13, 6% from $3 3 million to $2 8 million, representing 19, 5% of our total revenue compared to 25, 5% of total revenue in the third quarter of 2022.

Speaker 4: The lower revenue contribution from licensing, not only online with management expectations, but also underscore customer continuous elevated interest for online services rather than legacy offline offers.

The lower revenue contribution from our licensing only online we managed transportation, but also underscore customer continuous elevated interest all my services rather than legacy offline offering.

Speaker 4: And the gross profit was $11.8 million US dollars, while gross margin was 81.2% compared to 85.3% for the same period of last year. This change in gross margin primarily stemmed from the higher platform fee paid to third-party distribution platforms, Apple and Google, which can be attributed to the company's suspension for its mobile app.

And the gross profit was $11 8 million U S dollars.

Margin was 81, 2% compared to 85, 3% for the same period of last year.

This change in gross margin, primarily steam from the higher platform fees paid to third party distribution platforms, Apple and Google, which can be attributed to the company as pension excretion for its mobile App business.

Speaker 4: compared to the 18.6% gross profit margin for the second quarter of 2023. For that, the third quarter was 81.2%, showing a quarter-over-quarter improvement.

Compared to the $18 six gross profit margin for the second quarter of 2023.

Without the third quarter was 81, 2% showing a quarter over quarter improvement.

Ellie Chan: Introducing a new app like our new app UPM AI Pro. It is a Geniei tool app, Geniei app, or AI text image creation, and more other Geniei features collection. This new app has a very rich roadmap to include many of our future Geniei innovations from our perfect app. We have also optimized our mobile app subscription price prices, containing a complex evidence where increasing our revenue in several markets. Collectively, this effort has been instrumental in driving the impact that expansion of our mobile app is made. We are committed to sustaining this effort to enhance the visibility and the reputation of our UPM app and our mobile app sector, by positioning our self-favorably for future expansion.

Speaker 4: Total operating expenses increased by 13.3% to $12.7 million from $11.2 million for the same period of last year.

Total operating expenses increased by 13, 3% to $12 7 million from $11 2 million for the same period of last year.

Speaker 4: To break down operating expenses, sales and marketing expense were $6.4 million, representing 44.3% of our total revenue, compared to $6.1 million and 47.8% of total revenue during the same period last year.

To break down operating expenses.

Marketing expenses were $6 4 million, representing 44, 3% of our total revenue compared to $6 1 million and 47, 8% of total revenue during the same period last year.

Speaker 4: 4.9% year over year change while primarily due to the increase in marketing and user acquisition cost.

The four 9% year over year change was primarily due to the increase in marketing and user acquisition call.

Speaker 4: Research and development expenses were $3 million, representing 20.9% of total revenue, compared to $2.6 million and 19.9% of total revenue during the same period last year. The 18.9% year-over-year change was resulted from an increase in R&D headcount expenses.

Research and development expenses were $3 million, representing 29% of total revenue.

<unk> to $2 6 million and 19, 9% of total revenue during the same period last year.

The 18, 9% year over year change was resulted from the increase in R&D headcount expenses.

Speaker 4: General and administrative expense was $3.2 million, representing 21.8% of total revenue, compared to $2.5 million and 19.3% of total revenue during the same period last year. The 28.1% year-over-year change was primarily due to an increase in public company-related costs.

General and administrative expense was $3 2 million, representing 21, 8% of total revenue compared to $2 5 million and 19, 3% of total revenue during the same period last year.

Ellie Chan: Thank you for your attention.

Ellie Chan: In summary, our third quarter was to go bust between double state revenue growth and the positive net earnings. Our observations, such as that, we are will position to meet the revenue growth target we shared in Q2, quarter two. So, sequentially, three weeks before a firm, our project projected revenue growth for 2023, which is expected to range from 11.5% to 14.5% year-over-year in comparison to 2022.

28, 1% year over year change was primarily due to an increase in public company related costs.

Speaker 4: The change in expense category signifies a major increase in spending, a necessary step as a business spends, and seeks to grow our revenue. Looking ahead, we will maintain cautious oversight and implement effective expense control measures to ensure that our spending remains responsible and aligned with our growth objectives.

The change in its been category didn't play a major increase in spending and necessary step as a businessman seek to grow our revenues looking ahead, we will maintain cautious oversight implement effective expense control measures.

Our spending remains responsible and align with our growth objectives.

Net income was $3 5 million for the third quarter of 2023 compared to the net income of $1 6 million during the same period of 2022.

Speaker 4: Net income was $3.5 million for the third quarter of 2023, compared to the net income of $1.6 million during the same period of 2022, showing a 126.7% year-over-year increase in our bottom line.

Luis: With that, I have now concluded by Rick Mark, and we will be handling the call over to Luis, who will discuss our financial details with you. Thank you, Alice. Before I go into the details of our financial results, please note that all comparison are on a year-over-year basis, and that the reporting period is the third quarter of 2023 versus the comparable period in 2022. And that on top the IFRS measures, we will also discuss non-IFRS measures to provide greater clarity on the trend in our actual operations.

126, 7% year over year increase in our bottom line.

Speaker 4: Excluding non-cash share-based compensation for an exchange impact and one-time non-recurring costs associated with our D-SPAC deal, adjusted net income was $2.7 million for the third quarter of 2023 compared to adjusted net income of $2.3 million in the same period of 2022.

Excluding noncash share based compensation foreign exchange impact and onetime nonrecurring costs associated with our lease back deal. Adjusted net income was $2 7 million for the third quarter of 2023 compared to adjusted net income of $2 3 million in the same period of 2022.

Speaker 4: Turning into our balance sheet, as of September 30, 2023, our company held 201.3 million in cash and cash equivalent and six-month time deposits, compared to 198 million as of June 30, 2023, reflecting a 3.3 million or 1.7% quarter-over-quarter increase. The company cash position remains sound and healthy.

Turning into our balance sheet.

Our September 32023, our company held 201 3 million in cash and cash equivalents in six months time deposits.

Luis: For the third quarter of 2023, a total revenue increase to 14.5 million US dollars from 12.9 million in the same period of last year, representing a year-over-year double-digit growth of 13.2%. Among our revenue sources, they are a cloud solution and subscription revenue, which is constitute 78.3% of our total revenue, grew by 24.8% to 11.4 million in the third quarter of 2023. This is very steep expansion, can be attributed to the strong demand of all my budget tri-owned solutions, among marine customers, and the robust growth in our mobile beauty F subscription.

Third to $198 million as of June 32023.

Reflecting a $3 3 million or one 7% quarter over quarter increase the company cash position remains sound and healthy.

Speaker 4: In total, our customer base has a net increase of 26 new brand clients since the end of last quarter, achieving a total of 627 brand clients with over 678,000 SKUs for makeup, skincare, eyewear, and jewelry products as of September 30, 2021.

In total our customer base has a net increase of 26. He will bring clients is the end of last quarter, achieving a total of 627 embraer clients.

Over 678000, Skus for makeup skin care eye wear and jewelry product.

September 32023.

This quarter, we grew our key customer for 163 at the end of last quarter to 169.

Luis: In the current quarter, we have recently renewed contract with prominent beauty brands with some renewal offering after opportunities to expand school offering and extend deployment to cover more regions. We are also acquired several new customers in this quarter, including Walmart. Notably, our mobile beauty app business, active subscriber has been searched by 62.5% year-over-year, which in an all-time high of over 835,000 at the end of the quarter of 2023. This significant expansion underscored the increasing demand for photo and video editing applications, and the widespread acclaim of our innovative, generative AI feature within our suite of mobile beauty app.

In addition, not only came from no new wins, but more beauty and fashion brands, but also benefited from our successful penetration into skincare jewelry and here market in the last quarter.

Speaker 4: In the third quarter of 2023, our total revenue has consistently exhibited strong growth, primarily driven by the impressive momentum in our AI and AR cloud solutions and mobile app subscriptions, for premium features and AI-powered apps, including the newly launched Ucam AI Pro. Furthermore, our unwavering commitment to operational efficiency has resulted in a noteworthy uptick in our gross profit, showcasing our dedication to maintain a balance between revenue expansion and profitability.

In the third quarter of 2023 total revenue has consistently exhibited strong growth primarily driven by the impressive momentum.

Our cloud solution and mobile App subscription for <unk>.

<unk> features that AI powered app, including the newly launched you can be a pool for.

Furthermore, our unwavering commitment to operational efficiency has resulted in a noteworthy uptick in our gross profit showcasing our dedication to maintain a balance between revenue expansion and profitability.

Speaker 4: Concurrently, we have continual investment in talent acquisition and technology innovation.

Luis: These premium AI features not only span our mobile beauty app user base, but also capture the attention of enterprise users, resulting in a growth energy between our mobile app and enterprise operations that may bring more revenue stream into our business. I think in revenue, which is now mostly from the traditional offline services, decreased by 13.6% from 3.3 million to 2.8 million, representing 19.5% of our photo revenue, compared to 25.5% of photo revenue in the third quarter of 2022.

Currently we are continuing our investment in talent acquisition and technology innovation.

Speaker 4: Despite a rise in operating expenses, our net income remains to a pass. We firmly believe that our position within the thriving I.I. industry equips us to seize the opportunities ahead and deliver sustainable value to our shareholders. That concludes my prepared remarks. Operator, this opens up for a call for questions.

Right, a rising operating expenses or net income three banks will.

Firmly believe that our position we've been describing I industry.

To seize the opportunities ahead and deliver sustainable value to our shareholders.

That concludes my prepared remarks, operator, let's open up for call for questions.

I will now open or we will now begin the question and answer session.

Speaker 1: I will now open, or we will now begin the question and answer session. If you'd like to ask a question, please press star and number one on your telephone keypad. That's star and number one on your telephone keypad. Our first question comes from Clark Jeffries from Piper Sadler. Your line is now open. Thank you. Thank you. Thank you.

If you'd like to ask a question. Please press star and number one on your telephone keypad, that's far and number one on your telephone keypad.

Luis: The lower revenue contribution from licensing, not only online, we manage the expectation, but also on the scorecard from our continuous elevated interest for online services, rather than legacy offline off. Ring. In the growth profit was $11.8 million US dollars. Our growth margin was 81.2% compared to 85.3% for the same period of last year. This change in growth margin primarily seemed from the higher platform fee pay to third-party distribution platforms, Apple and Google, which can be attributed to the company's suspension of tuition for its mobile app business.

Your first question comes from Clark Jefferies from Piper Sandler Your line is now open.

Speaker 5: Hello. Thank you for taking the question. A couple here. You know, Lewis, you mentioned some renewals and some large customers or renewals of opportunities. Wondering if you could speak to the spending trends in the top, say, five customer cohort. I know that was nearly a third of the business last year. If you want to get an update on how your spend with the largest customers have changed year over year and then maybe a follow up is.

Hello, Thank you for taking the question.

A couple here.

Louis you mentioned, some renewals with large customers or renewals of opportunities wondering if you could speak to the spending trends in the top.

Five customer cohort I know that was nearly a third of the business last year I just wanted to get an update on how your spend was the largest customers has changed year over a year.

Luis: Compared to the 18.6% growth profit margin for the second quarter of 2023, for that the third quarter was 81.2% showing a quarter of a quarter improvement. Total operating expenses increased by 13.3% to 12.7 million on 11.2 million for the same period of last year. To break down operating expenses, still the marketing expense were 6.4 million, representing 44.3% of a total revenue compared to 6.1 million and 47.8% of total revenue during the same period of last year.

And then maybe a follow up is we've seen pretty promising brand and SKU growth at nearly 30% year over year, but brand revenues are maybe a little bit disconnected from that any expectation on whether we could see brand revenue accelerate here over the coming quarters.

Speaker 5: You know, we've seen pretty promising brand and skew growth at nearly 30% year over year, but brand revenues are maybe a little bit disconnected from that. Any expectation on whether we could see brand revenue accelerate here over the coming quarters, know that licensing versus cloud revenue is a dynamic here, but hoping you could comment on any other factors that might play out such that brand and skew growth would match revenue growth going forward. Thank you.

Licensing versus cloud revenue as a dynamic here, but hoping you could comment on any other factors that might.

Play out such that brand and SKU gross would match revenue growth going forward. Thank you.

Speaker 4: Thank you, Clarex, for the question. So we have seen the renewal for the large customer have been very, very healthy in this year. So I think the majority is not all of the large customer has renewed their license with us on time. So I think that is a strong testament that they've featured the functionality, the license is essential to their business. So they continue to offer the BVTEC and SCINTEC or fashion tech solution that we provide.

Thank you for your questions. So we have seen the renewal for the large customers have been very very healthy and this year. So I think the majority if not all of the large customer has renew.

Luis: The 4.9% year over year changed, while primarily due to the increase in marketing and user acquisition costs. Research and development expenses were 3 million, representing 20.9% of total revenue, compared to 2.6 million and 19.9% of total revenue during the same period of last year. The 18.9% year over year changed, what resulted from the increase in R&D headcount expenses. General and administrative expense for 3.2 million, representing 21.8% of total revenue, compared to 2.5 million and 19.3% of total revenue during the same period of last year.

There are license we filed on time, so I think that is a strong testament that I'm.

To be sure the functionality the license is essential to their business. So they continues to offer the beauty tech and Fintech or fashion Tech solution that we provide.

Speaker 4: I think from that perspective, we remain quite confident about the result for this year and also for next year as the renewals are mostly 2023-2024.

From that perspective, we remain quite confident about the result for this year and also for next year as they renew or mostly 2023 2024.

Speaker 4: I think in terms of a larger acceleration in the brand business, if that was your question, I think ultimately you come from the future possible adaption of new innovations such as chain AI and other beauty tech solutions that we bring to the market.

I think in turn all of our larger acceleration in the Brent basis. If that's what your question I think ultimately you come from.

Luis: The 28.1% year over year changes, what primarily due to an increase in public company related costs. The change in expense category, signify a measure increase in spending, a necessary step as a business plan to grow our revenue. Looking ahead, we will maintain cautious oversight, implement effective expense control measures, to ensure that our spending remains responsible and online with a growth objective. That income was 3.5 million for the third quarter of 2023, compared to the net income of 1.6 million during the same period of 2022, showing a 126.7% year over year increase in our bottom line.

The future of possible adoption of newer innovation, such as you're in AI and other beauty tech solution that we bring to the market.

Speaker 4: I think the first half of the year was particularly more challenging for brands into looking into additional spending.

In the first half of <unk> was particularly challenging for brands into looking into additional spending and the good news is they are spending their current assisting a license.

Speaker 4: The good news is they are spending their current existing license as is, so there's not much impact in there. Renewal rate and churn rate has been very, very well positive.

They've known bunch of impacting their renewal rates and churn rate has been very well positive.

Speaker 4: And then again, you know, we'll remain very cautiously optimistic. We have been introducing quite a lot of new solutions, especially in the GNI space to the brand.

And then again.

We remain very cautiously optimistic.

We have been introducing quite a lot of new solutions, especially in the Jennie O space with the brand.

Speaker 4: and look forward to materialized out into a better deal, the bigger deals for next year.

Look forward to your materialized out into a better deals the bigger deals are for next year.

Luis: Excluding non-cash share-based compensation for the exchange impact, and one-time non-recurring costs associated with this fact deal, adjusted net income was 2.7 million for the third quarter of 2023, compared to adjusted net income of 2.3 million in the same period of 2022. Turning into our balance sheet, as of September 30, 2023, our company held 201.3 million in cash and cash equivalent and six months in deposit, compared to 198 million as of June 30, 2023, reflecting a 3.3 million or 1.7% quarter of a quarter increase.

Speaker 4: We certainly will encourage brands to onboard more SKUs and more tariffs.

We certainly will you encourage brand to a more and more skus.

And more territories. So I think the acceleration also is going through a pension to more distribution channel as well.

Speaker 4: So I think the acceleration also is going through expansion to more distribution channels, as I'll deal with Walmart or Amazon, allow our brain partners to distribute their skills broader.

We've all model with Amazon, but all our brand partners to distribute their skus broader so suddenly they are.

Speaker 4: So certainly the investment that we believe that in the long term is going to pay off and accelerate our revenue. Once there's a massive scale of views across all touch points and you transform the way that you shop online forever.

<unk> always believed in the long term is going to pay off and accelerated our revenue once the data massive scale of skus across all touch points and transform the way that Youtube shop online flavor.

Luis: The company cash position remains down and healthy. In total, our customer base has a net increase of 26 new-brained clients in the end of last quarter, achieving a total of 627-brained clients. We offered 678,000 SKUs for makeup, skincare, eyewear, and jewelry products as of September 30, 2020.

[noise] you very much.

Okay.

Speaker 1: Our next question is going to come from Timothy Zhao from Goldman Sachs. Your line is now open.

Our next question is comes from Timothy Zhao from Goldman Sachs. Your line is now open.

Speaker 6: Great, thank you, Matt, for taking my question. Two questions here. One is on the, I think you have a new breakdown. Just wondering if your management can share what is the growth for each segment within the AI solutions, i.e. What is the growth?

Great. Thank you management for taking my question two questions here one is on the revenue breakdown just wondering do you feel the Mexican cashier.

Luis: Lee. In this quarter, we grew up heat customer, 163 at the end of last quarter, 169. The additional only came from a new wind for more beauty and fashion brands, but also benefit from a successful penetration into skin care, jewelry and hair market in the last quarter. In the third quarter of 2023, a total revenue has consistently achieved its strong growth, primarily due even by impressive momentum in our AI, AIR cloud solution and mobile app subscription.

The growth for each segment, we've seen the AI AI solutions I E. What is the.

Oh.

Speaker 6: growth rate like for the revenue to be, versus to see I think that would be very helpful. And secondly, I think it seems that you reiterate the four year guidance, I think the revenue will be growing at around 11.5 to 14.5% for this year. Just wondering if there's any source of the growth rate into next year. Should we expect a faster growth rate, as you mentioned, I believe earlier this year, there's a delayed sales cycle or extended sales cycle because of microenvironment. Just wondering how that has changed.

Grocery like half of the revenue to be emphasis to see I think that'll be very helpful. And secondly, I think I think it seems that you reiterate our full year guidance.

The revenue will be growing at around $11 five to 14, 5%. This year, Chris wondering if theres any source of the growth rate into next year should we expect a faster growth rate as you mentioned I believe earlier this year to yourself delay.

Luis: For premium features and AI power apps, including a newly launched UKAM AI Pro. Furthermore, our ongoing commitment to operational efficiency has resulted in a noteworthy uptick in our growth profits showcasing a dedication to maintain a balance between revenue expansion and profitability. Concurrently, we have continued our investment in talent acquisition and technology innovation. Despite our rights and operating expenses, our net income remains robust. We firmly believe that our position within the thriving AI industry equip us to seize the opportunities ahead and deliver sustainable value to our shareholders.

Delayed sales cycles tend to sell cycle because of macro environment I'm just wondering how that has changed since then thank you.

Speaker 4: Thank you, Timothy, for the question. As we remain quite confident about our yearly guidance for these years as we express.

Thank you Timothy for the question Yeah, we remain quite confident about our yearly guidance for this year as we are spread.

Speaker 4: everything seems to be moving based on our plan. Certainly, the macro is still challenging to predict a more longer term.

Everything seems to be moving you know based on our plan.

Certainly you know the macro is still challenging to predict a more longer term.

Speaker 4: In our department, we are working internally to better understand each client.

Another form and we are working internally to better understand each clients a funnel there and how we look into the next year. So that is not something that we have been able to complete the area. We are in the process as soon as we have done we certainly shared our brother publicly about view for 2024.

Luis: That concludes my preparing remarks.

Operator: Operator, let's open up for a question. I will now open or we will now begin the question and answer session. If you'd like to ask a question, please press star and number one on your telephone keypad. That's star and number one on your telephone keypad.

Speaker 4: uh, uh, final and how we look into the net here.

Speaker 4: So that is not something that we have been able to complete here, we are in the process.

Speaker 4: As soon as we have that, we certainly share broader publicly about the U42024. I think if we look at the industry is moving in a positive direction, I think the digital transformation across all sectors is a trend and it's non-stopping.

I think if we look at the industry is moving in a positive direction right I think the digital transformation across all sectors.

Clark Jeffries: Our first question comes from Clark Jeffries from Piper Shedler. The line is now open. Hello. Thank you for taking the question. A couple of here. You know, Lewis, you mentioned some renewals at large customers or renewals of opportunities. Wondering if you could speak to the spending trends in the top, say, five customer cohort. I know that was nearly a third of the business last year. Do you want to get an update on how your spend as the largest customers have changed year over year?

It is a trend and it's not stopping.

Speaker 4: So in certain categories go faster and other are a little bit challenging such as creating 3D SKUs takes more time to enable more brands, more SKUs in a short period of time. That is something that for example, but Alice mentioned about our 2D-2-3D conversion is going to help. We believe that is going to help and potentially change the way that industry typically operates.

Southern category go faster than the other or a little bit more challenging such as creating Swedish skus. It takes more time.

<unk> to enable more brands more SKU in a short period of time, but that is something that for example, but I always mention about <unk> is really conversion is going to help we believe that's going to help and potentially change the way that industry typically operate.

Speaker 4: quality, you know, the name of the company calls perfect, why we want to deliver that perfection to the client.

Quality.

The name of the company called perfect why we want to deliver that protection to the to the clients.

Clark Jeffries: And then maybe a fall-up is, you know, we've seen pretty promising brand and skew growth at nearly 30% year over year. But brand revenues are maybe a little bit disconnected from that. Any expectation on whether we could see brand revenue accelerate here over coming quarters. Know that licensing versus cloud revenue is a dynamic here. But hoping you could comment on any other factors that might play out such that brand and skew growth would match revenue growth going forward. Thank you.

Speaker 4: You know, be able to create automatically more skills. I think you accelerate that and then have frequently you of course generate more revenue for us

You'll be able to create automatically more skus I can you accelerate that.

And then subsequently of course generate more revenue for us.

Speaker 4: In turn, all of the segments, I think the skincare segment component is the one that is growing both in the funnel that we receive.

Nintendo of this segment I think skincare segment, a couple and then is the one that is growing.

Both in the in the funnel that we receive.

Speaker 4: across different geography. I think we see a lot more demand for skin tech.

Across different geography, I think we see a lot more demand for skin tag relatively compared to other of core color cosmetic remain our core competence and remained I'll keep pipe category. There right. It's about a little over half of our revenue coming from color cosmetic skincare after investing in D. C for three or four years now.

Speaker 4: relatively compared to other of core color cosmetic women of core competence

Speaker 4: and remain a key category there, right? It's about a little bit over half of our revenue coming from color cosmetic. But I think skincare after investing in these two, four, three, four years now.

Luis: Thank you, Clark, for the question. So we have seen the renewal for the large customer and have been very, very healthy in this year. So I think the majority is not all of the large customer has renewed other license we've had on time. So I think that is a strong testament that the future, the functionality, the license is essential to their business. So they continue to offer the beauty tech and skin tech or fashion tech solution that we provide.

Speaker 4: We finally see some, you know, a good moment, moment, moment, moment.

We finally see some good more movement for a blended of all sizes not only the top global skincare brands. While we also noticed a lot of regional or local brief beauty brands skincare brands are.

Speaker 4: For branded off sizes, not only the top global skincare brands, but we also notice that a lot of regional or local beauty brands at skincare brands.

Speaker 4: Also study to adopt the skin diagnosis

So starting to adopt the high skin diagnosis.

We do see of course is growing much much stronger we saw a number or at least a paying subscriber has grew.

Speaker 4: B2C of course is growing much stronger. We saw a number of actors that paying subscribe have grew, you know, over 60% which is very, very encouraging. They still a lot of room to grow in that market. It's a huge market. You know, we are kind of a lay comer in that market but it's a lot of room for us to grow. You know, similar, passionately type of app, you know, they are in a much bigger scale. So we just can't market shares quarter after quarter from them.

Luis: I think from that perspective, we remain quite confident about the result for this year and also for next year as the renewal are mostly 2023, 2024. I think in turn of a larger acceleration in the brand business, if that was your question, I think ultimately you come from the future possible adaption of new innovations such as NAI, another beauty tech solution that we bring to the market. I think the first half of the deal was particularly more challenging for brands into looking into additional spending.

You're already at 60%, which is very very encouraging they do a lot of room to grow in that market is a huge market.

We are kind of a late comer in that market, but it's a lot of room for us to grow.

Similar question Ali type of App. They are in a much bigger scale. So are we just gaining market shares a quarter after quarter from them.

Speaker 4: The AI segment is very promising although it is new. So from the revenue contribution in this quarter, it is still relatively small. But I think this is where, for looking, we're always looking for new innovations that generate consumer interest. So we are devoted and investing quite a lot in the development for GenNI. So in our role, I think we have more than a dozen product in GenNI. Some are already launched and some will be coming out very soon into the market. It's. A. FINE and design that really are working from gen broader EQ real quick.

The AI segment is very promising although EDA Hugh so from a revenue cut.

<unk> in this quarter easy skew relatively small, but I think this is where we're looking we're always looking for new innovations that will generate consumer interest.

Luis: I think the good news is they are spending their current existing license as is, but they've known much impact in their renewal rates and generally has been well, very well positive. And then again, you know, we remain very cautiously optimistic. We have been introducing quite a lot of new solutions, especially in the GNI space to the brand and look forward to materialize that into a variety of the bigger deals for next year.

We are devoted and investing quite a lot in the development for G&A.

Well, maybe I think we have more than a dozen rod is in G&A I know some already launched that some will be coming out very soon into the market.

Great. Thank you guys.

Thank you Tim.

Luis: We certainly will encourage brands to onboard more skills in the more territories. So I think that acceleration also is going through a tension to more distribution channel, the deal with Omar or with Amazon allow our brand partner to disview their skills broader. So certainly they are, you know, investment we believe that in the long term is going to pay off and accelerate our revenue. Once there's a massive scale of views across all touch points and you transform the way that users shop online forever. Thank you very much.

Speaker 1: Our next question comes from Ryan Schwartz from Openheimer. Your line is now...

Our next question comes from Brian Schwartz from Oppenheimer. Your line is now open.

Okay.

Hi, Good morning. This is Camden <unk> sitting in for Brian Schwartz. Thank you for taking my question thinking about 2024, and your go to market and sales organization do you anticipate any adjustments in terms of the investment cadence or just how should we be thinking about the sales and marketing.

Speaker 7: Hi, good morning. This is Camden Lovey sitting in for Brian Schwartz. Thank you for taking my question. Thinking about 2024 and your go-to-market and sales organization, do you anticipate any adjustments in terms of the investment cadence or just how should we be thinking about the sales and market?

Heading into next year on the back of the Walmart partnership and the indie brand opportunity. Thanks.

Speaker 7: heading into next year on the back of the Walmart partnership and the Indie brand opportunity.

Hi, Ken.

Speaker 4: I can, I think for our enterprise sales process, right, it's the same formula we have been playing for years. I think still only, you know, the work of mouth is there and as we get more brands starting to adapt, the sales cycle seems to be getting a little better compared to all of this year. I think that's a good news.

I think for our enterprise sales process right. It's the same formula we have been playing for years I think certainly the woeful Mohit theater, unless we get more brands starting to adopt the sales cycle seems to be getting a little bit better compared to early this year I think that's a good news.

Timothy Zhao: Our next question is going to come from Timothy Zhao, from Golden Impact. Your line is now open. Great, thank you, Magma, for taking a question. Two questions here. One is on the, I think your revenue breakdown. Just wondering if your Magma can share what is the growth for each segment we see in the AI solutions, i.e, what is the growth rate like for the revenue to be versus to see, I think that would be very helpful.

Speaker 4: Of course, now we are addressing a broader market to go to new verticals like you know watches and juries and potentially you know others as well. So the investment I think for a spend perspective for next year, you know, we certainly want to increase and invest in R&D. I think that is a very worth it to do invest.

Of course, now we are addressing a broader market to go to new verticals like watches and jewelry and potentially others as well so the investment I think for the expense perspective for next year.

We certainly do want to increase and invest in R&D I think that it is easy area very worthy to invest.

Speaker 4: On the field marketing side, I think we remain more cautious. I think our global team is capable of delivering and spending our business for these new adjusting categories. So we are not looking at much increased internal sales marketing head counts, for example. But engineering development that is certainly remain a core competence that we need to invest now in creating this new raw map. I'll try to address our broader market for 2024.

Timothy Zhao: And secondly, I think it seems that you reiterate the four year guidance. I think the revenue will be growing at around 11.5 to 14.5% for this year. Just wondering if there's any source of the growth rate into next year. Should we expect a faster growth rate, as you mentioned, I believe earlier this year, the delayed sales cycle or extended sales cycle because of my career environment, just wondering how that has changed since then.

On the sales and marketing side I think we will remain cautious I think our global team.

Is capable of delivering and spending a basis for this new adjusting categories. So we are not looking at a much increased internal sales and marketing head count for example, but engineering development that is certain to remain a core competence that we need to invest now in creating this new role, Matt I'll try to address a broader market for 2024.

Timothy Zhao: Thank you. Thank you, Timothy, for the question. As we remain quite confident about our yearly guidance for these years as we spread, I think everything seems to be moving based on our plan. Certainly, you know, the macro is still challenging to predict a more longer term. In other form, and we are working internally to better understand each kind of funnels and how we look into the next year. So that is not something that we have been able to complete here. We are in the process.

Speaker 4: So, I think as I said in our remark, we always look into our top lines, you know, a trend and when we are controlling our expenses, to make sure that we are also delivering a positive profitability to investors, shareholders.

So I think as I said, you know remind we always look into our top line.

And when we are controlling our expenses to make sure that we are also delivering a positive profitability to investors shareholders.

Speaker 7: Perfect, thank you so much. And then just one follow up question. If we were to think about the emerging industries and verticals that you guys are going after with VTO and beauty tech, is there, if you were to stack rank, maybe your top three new categories in terms of gross catalyst, how would you define those categories or which ones are most likely to contribute to 2024 and 2024?

Perfect. Thank you so much and then just one follow up question. If we were to think about the emerging industries and verticals that you guys are good.

Or with the Eto and beauty Tech is there if you were to stack rank, maybe your top three new categories in terms of gross catalyst, how how would you define those categories or which ones are.

Luis: As soon as we have that, we certainly share broader publicly about the new opportunity 24. I think if we look at the industry is moving in a positive direction. I think the digital transformation across all sectors is a trend and it's non-stopping. So in certain categories go faster and other are a little bit more challenging, such as creating 3D SKUs takes more time to enable more brands, more SKU in a short period of time.

Most.

Likely to contribute to 2024 and 2020.

Speaker 4: I think we still want to play around our target customer, our primary target customer, always the female shoppers.

Oh, I think we certainly want to play around our target customer primary target customer are always the female shoppers, but when we think about our roadmap and business expansion and we think about what shoppers is always special female they're shopping online what are the categories that they really need to try.

Speaker 4: So when we think about our romance and business expansion, we think about what, you know, shoppers, you know, special female that are shopping online. What are the categories that they really need to try before they buy? And I think that will generate the most of the value. That is why years ago we started with makeup and then they're not spending too much time in the watches.

Luis: That is something that, for example, but I always mention about our 2D to 3D conversion is that we believe that is going to help and potentially change the way that industry typically operates. Our quality, you know, as our name of the company calls perfect, we want to deliver that perfection to the clients, you know, be able to create automatically more SKUs. I think you accelerate that and specifically, of course, you generate more revenue for us.

Before they buy and that generate the most value add is why years ago. We started with makeup and then there's always spending into jewelry and watches.

Speaker 4: So if you think about non-linear, I think accessories, apparel, anything that you can wear on your body, on your face, on your hand, on your body, will be certainly in a radar. And the rest are sure we are certainly working on many of these aspects.

If you think about the other line I think accessories apparel, but anything that you can wear on your body on your face on your hand, and nobody will be certainly in our radar and rest assured we are suddenly working on many of these aspects, but we also are cautious data we want to deliver the protection, but we don't want to rush in the market.

Luis: In terms of the segment, I think the skincare segment component is the one that is growing both in the funnel that we receive, you know, across different geography. I think we see a lot more demand for skin tech relatively compared to other. Of course, color cosmetic, we men are core competence and we men are key category there, right? It's about a little bit over half of our revenue coming from color cosmetic.

Speaker 4: But we also are cautious that we want to deliver the perfection. So we don't want to rush in the market. We, you know, I'm finished product or something that is not ready for prime time.

Finished product or something that is not ready for prime time, so whenever we come to market that we really while consumer and the brands to offer something that they have never seen before.

Speaker 4: So whenever we come to the market, we really wow. The consumer and the brands to offer something that they have never seen before. And I think that is a remain in our solid belief on how we approach the market. I've been.

<unk> remain in a solid belief on how we approach to the market place pension.

Speaker 4: So I think in the world of way, I think AR commerce we just won't be living in dark. In one new area that is going to take a little bit more significance is certainly in our generative AI.

So I think in the board away I think e-commerce, a strong believer in duck and one new area that is going to take a little bit more significance is suddenly in a generative AI right. So that is something data what possible before these technology assisted and now with the power of January I think there is a lot of potential.

Luis: But I think skincare, you know, after investing in these 3 or 4 years now, we finally see some, you know, a good move, move, move, move, movement for branded off sizes, not only the top global skincare brands. We also notice that a lot of regional or local beauty brands at skincare brands also started to adapt. They had skin diagnosis segments. A bit to see of course is growing much stronger. We saw a number of actors that paying subscribe have grew, you know, over 60%, which is very, very encouraging.

Speaker 4: Right, so that is something that was not possible before the technology assisted. And now with the power of January AI, I think there's a lot of impotentials. For example, we talk about the hair style generation with trust men, the unique liver brain. It's just one of the examples of how we're able to already create real use cases that bring real business benefits to the brain by harnessing the power of January . And that will remain in our core focus for now.

For example, we can talk about the hair styler generation with <unk>.

First mandate of Unilever brain diseases. One of example of how we're able to already create real use cases that bring real business benefits to the brand by your partners in the power of Jennie O.

Luis: They still a lot of room to grow in that market is a huge market. You know, we we are kind of a late camera in that market, but it's a lot of room for us to grow. You know, similar, particularly type of app, you know, they are in a much bigger scale. So we just any market shares quarter after quarter from them. The AI segment is very promising although it is new.

And that will remain a core focus for now.

Perfect. Thank you so much.

Thank you Ken.

Luis: So from the revenue contribution in this quarter, it is still relatively small. But I think this is where for looking, we are always looking for new innovations that generate consumer interest. So we are devoted and investing quite a lot in the development for general AI. So in our room, I think we have more than a dozen products in general AI.

Luis: You know, some are already launched and some will be coming out very soon into the market.

Yes.

Speaker 1: Again, if you'd like to ask any questions, please press star and number 1 on your telephone keypad. That's star and number 1 on your telephone keypad.

Again, if you'd like to ask any questions. Please press star and number one on your telephone keypad, Scot and number one on your telephone keypad.

And there are no further questions at this time I'd now like to hand back the conference over to the management for closing remarks.

Speaker 1: As there are no further questions at this time, I'd love to hand back the conference over to the management for closing remarks.

Camden Lovey: Hi, good morning. This is Camden Lovey sitting in for Brian Schwartz. Thank you for taking my question.

Alright, Thank you everyone for joining our call today.

Speaker 2: All right, thank you, everyone, for joining our call today. Wish you have a good day.

Luis: Thinking about 2024 and your go-to-market and sales organization, do you anticipate any adjustments in terms of the investment cadence or just how should we be thinking about the sales and marketing line heading into next year on the back of the Walmart partnership and the indie brand opportunity? Thanks. Hi, Ken. I think for our enterprise sales process, right, it's the same formula we have been playing for years. I think still only the world of mouth is there and as we get more brands starting to adapt, the sales cycle seems to be getting a little better compared to already this year.

You have a good day.

Alright. Thanks.

Thank you.

Okay.

Luis: I think that's a good news. Of course, now we are addressing a broader market to go to new verticals like watchers and jurors and potentially others as well. So the investment, I think for the expense perspective for next year, we certainly want to increase and invest in R&D. I think that is a very worth it to invest in. From the sales marketing side, I think we remain more cautious. I think our global team is capable of delivering and spending our business for this new adjustment categories.

Luis: So we are not looking at much increase in terms of sales marketing head counts, for example, but engineering development that is certainly remain a core competence that we need to invest now in creating this new raw map. I'll try to address a broader market for 2024. So, I think as I said in our remark, we always look into our top lines, you know, a trend and when we are controlling our expenses to make sure that we are also delivering a positive profitability to invest their shareholders. Perfect. Thank you so much.

Luis: And then just one follow-up question. If we were to think about the emerging industries and verticals that you guys are going after with VTO and beauty tech, is there if you were to stack rank, maybe your top three new categories in terms of gross catalyst. How would you define those categories for which ones are most likely to contribute to 2024 and 2025? I think we certainly want to play around our target customer, our primary target customer always the female shoppers.

Luis: So, when we think about our raw map and business expansion, we think about what, you know, shoppers, you know, special female that are shopping online. What are the categories that they really need to try before they buy? And I think that will generate the most value. That is why years ago we started with makeup and then they are not spending too much in the watches. So, if you think about online, I think accessories, apparel, anything that you can wear on your body, on your face, on your hand and your body will be certainly in a radar.

Luis: And the rates are sure we are certainly working on any of these aspects. But we also are cautious that we want to deliver, you know, the perfection. So, we don't want to rush in the market. We, you know, unfinished product or something that is not ready for prime time. So, whenever we come to the market, we really wow consumer and the brands to offer something that they have never seen before. And I think that is a remain in our solid belief on how we approach the market expansion.

Luis: So, I think, you know, in the world of way, I think AR commerce, we just won't believe it in that. In one new area that is going to take a little bit more significance is certainly in our generative AI. So, that is something that was not possible before the technology assisted. And now with the power of generative AI, I think there's a lot of potential. For example, we talk about the hair style generation, how we trust men, the unique liver brand.

Luis: It is just one example of how we are able to already create real use cases that bring real business benefits to the brand by harnessing the power of generative AI. And that will remain in our core focus for now. Thank you so much. Thank you.

Operator: Again, if you'd like to ask any questions, please press star number one on your telephone keypad. Let's start number one on your telephone keypad. As there are no further questions at this time, I'd love to hand back the conference over to the management for closing remarks. Alright, thank you everyone for joining our call today. Wish you have a good day. Bye-bye.

Operator: Thank you.