Q1 2024 Perfect Corp Earnings Call
Operator: Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to the Perfect Corps Earnings Conference Call. At this time, all participants are in a listen-only mode. We will be hosting a question-and-answer session after management's prepared remarks. Please note that today's event is being recorded. I will now turn the conference over to the first speaker today, Ms. Jennifer Wu, IR Manager of the company. Please go ahead.
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 a listen only mode. We will be hosting a question and answer session. After minutes management prepared remarks. Please note that today's event is being recorded.
I will now turn the conference over to the first speaker today, Ms. Jennifer will IR manager of the company. Please go ahead.
Jennifer Wu: Thank you. And hello, everyone.
Jennifer Wu: Welcome to Perfect Cokes' Earning Call. With us today are Ms. Alice Chang, our Founder, Chairwoman, and Chief Executive Officer; Mr. Louis Chen, our Executive Vice President and Chief Strategy Officer; and Ms. Eric Chen, Vice President of Finance and Accounting. You can refer to our first quarter 2024 financial results on our IR website or in the form 6K we filed with ABC earlier. You can later access a replay of this call on our website shortly after the conclusion of this call.
Jennifer: Thank you and Hello, everyone welcome to prevent clubs are low cost.
Jennifer: Today, I'll Miss Alice child.
Jennifer: Chairwoman and ship is that getting officer Hassan.
Louis Chen: Louise Chen.
Louis Chen: Decorative vice President and Chief strategy Officer and Ms.
I would tell you that's president of openness and accounting.
Louis Chen: You can refer to our first quarter total HIV for financial results.
Louis Chen: Putting the 6K, we filed with MPC earlier.
Louis Chen: We got a letter as a replay of this call on our website. Shortly after the conclusion of this call.
Jennifer Wu: For today's call, management will provide its prepared remarks first, and then we will host a question and answer session. Before we continue, I would like to refer you to our Safe Harbor Statement under our Earnings Presidency. This also applies to this call, as this call may contain forward-looking statements regarding PREPARE CODE's performance, anticipated plans, operational results, and objectives. Such forward-looking statements are based on management expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied on our call today. Corp undertakes no obligation to update any forward-looking statements except as required by law after the date of this call. Please note that all numbers stated in the following
Louis Chen: Today's call management will provide their prepared remarks first and then we will hold a question and answer session.
Louis Chen: We continue.
Louis Chen: Like to refer you to our Safe Harbor statement, and then perhaps it would be.
Louis Chen: Also apply to this call and this call may contain forward looking statements regarding preclinical format.
Louis Chen: A petty plans.
Louis Chen: We should all result objective.
Louis Chen: Forward looking statements are based on management's expectations and are subject to a number of weeks uncertainties that could cause actual results to differ materially from those expressed or implied I'll call today.
<unk> undertakes no obligation to update any forward looking statements, except as required by law. After the date of <unk>.
Louis Chen: It's called.
Please note that all numbers stated in the following management prepared remarks are in U S. Dollar terms and we looked at golf hybrids measure today.
Alice H. Chang: Thank you, Jennifer. And welcome to Perfect Corp's 2024 First Quarter Earnings Conference Call. We have some exciting news to share today. So let's get started.
Louis Chen: Further Ado I will now turn the call to our first speaker today CEO Ms Alice Chen.
Alice H. Chang: Thank you, Jennifer and oil come to perfect core plus 224 first quarter earnings conference call.
Alice H. Chang: Have some exciting news to share today, so let's get started.
Alice H. Chang: Leveraging our advanced AI capability, we started 2024 with a robust first quarter. Our first quarter revenue grew by 17.7% year over year to $14.3 million. And our net revenue was positive, point $6 million. The double-digit increase in revenue and a positive net income were driven by the strong growth of our AI, AR, cloud solutions, and subscription services for both our mobile business, app business, and our enterprise. Both business clusters have benefited from our superior AI technology and contributed to our top line expansion and profitability improvement. Plus, our operating cash flow had a net inflow of $3.5 million due to our sound business model.
Alice H. Chang: Leveraging our advanced AI capability, we started 2024 with a robust first quarter. Our first quarter revenue grew by 17, 7% year over year to $14 $3 million and our net revenue was positive.
Alice H. Chang: $6 million.
Alice H. Chang: The double digit increase in revenue and a positive net income was driven by the strong growth of our AI.
Alice H. Chang: Our cloud solution to subscription services.
Alice H. Chang: So far our mobile business, our business and our enterprise business.
Alice H. Chang: Both business clusters of benefit from our superior technology and have contributed to our top line expansion and the profitability improvement.
Alice H. Chang: Plus our operating cash flow had a net net inflow also $3 $5 million due to ourselves.
Alice H. Chang: In this quarter, we continue to invest in our beauty AI strategy, including beauty AI, skin AI, fashion AI, and GenAI across both of our consumer and enterprise businesses. For our consumer app business, we leveraged our new GenAI technology to launch more innovative features in Ucam's suite of mobile apps in quarter one, attracting more users to our apps and converting more users into subscribers. For our enterprise business, we have renewed our contract with many big clients and brought in several new brands to offer a virtual try-on service. We also saw ongoing and strong momentum in our new AI screen tier diagnosis product. And we expect this trend will expand and grow.
Auto.
And this quarter, we continue to invest in our ability AI strategy, including Judy AI Qing AI fashion AI in the journey.
Across both of our consumer and enterprise business.
Alice H. Chang: Well, our consumer App visitors, we leverage of EOG and AI technology to launch more innovative features you can suite of mobile apps in quarter one.
Alice H. Chang: Attracting more users to our apps in the converging more users into subscribers.
For our enterprise business, we have renewed contracts with many of the clients and abroad in several new brands for makeup virtual try on services.
Alice H. Chang: We also saw ongoing.
Alice H. Chang: Strong momentum in our new AI screening tier down all of its product and we expected this trend.
Alice H. Chang: Furthermore, new clients from the luxury jewelry and watch industries are integrating our jewelry and fashion VTO offerings into their digital offerings. This new development shows our sustained effort to extend our coverage into different verticals and address some larger markets. It also reflects the various avenues we have got to increase with potential.
Alice H. Chang: <unk> growth.
Alice H. Chang: More new clients from luxury jewelry, you can watch industry for integrating our jewelry and fashion bto offering into their digital offerings.
Alice H. Chang: New development showed our sustained efforts to extend our coverage into different verticals.
Alice H. Chang: The address some larger markets.
Alice H. Chang: They also reflected the.
Various avenues, we have got to increase visits potential.
Alice H. Chang: As we are committed to keep investing resources in AI advancement, we are able to deliver products and services that continuously strengthen our unique position in beauty AI, in-care AI, and fashion AI. Now, let's shift our focus to operational outcomes and discuss our most recent events.
Alice H. Chang: We are committed to keep investing resources in AI advancements.
Alice H. Chang: We are able to deliver products and services that continuously strengthen our unique position in beauty AI or AI into fashion AI.
Alice H. Chang: Now, let's shift to shift our focus to operational outcomes and to discuss our most recent news events.
Alice H. Chang: We saw another robust quarter for our B2C mobile beauty app business, evidenced by the 30% year-over-year increase in our mobile beauty app active subscribers to a historically high of over 902,000. Continuous growth in active subscribers is reflected in the rising demand for mobile apps that enable users to edit, enhance, and beautify their photos and videos. As self-expression and creativity become increasingly important, consumers expect more personalized and diverse experiences from mobile apps. Our family of YouCan apps is able to offer unique and high-quality digital outputs, leveraging advanced technology like generative AI for photos and videos.
Alice H. Chang: We saw another robust quarter for RFP to see mobile Judy up visited.
Alice H. Chang: Well done by the 30% year over year increase in our global beauty up active subscribers.
Alice H. Chang: Well historically high.
Alice H. Chang: Uh huh.
Alice H. Chang: 902000 <unk>.
Alice H. Chang: The continuous growth in the active subscriber reflected in the rising demand for mobile apps that enable users to add it in time and the beauty five year photos and videos.
Alice H. Chang: As a self expression and the creativity become increasingly important consumers expect more personal life and a diverse <unk> from mobile app.
Alice H. Chang: Our family of apps is able to offer you need a high quality digital output leveraging advanced technology like generative AI proposals and videos.
Alice H. Chang: This new set of gen-AI features, including AI editing and beautification for photos and videos, empower our users to freely and creatively express themselves on social media and to create high-quality, ultra-personalized photos and videos generated or edited by YouCan suite of apps. The key appeal of the UChem family app is advanced AI and AR technology to help users to solve real life challenges and explore more creative ideas.
Alice H. Chang: This new said Alpha gene AI features including.
<unk> beautiful Judy indication for photos and videos.
Alice H. Chang: Power power users to freely and creatively express themselves on social media and to create a high quality Ottawa personalize the photos and videos generated or added by <unk> suite of apps.
Alice H. Chang: Appeal of the <unk> family up is advanced AI and our technology.
Alice H. Chang: To help users to solve real life challenges.
Alice H. Chang: For more creative ideas.
Alice H. Chang: These offerings allow users to beautify, edit, and enhance photos and videos, as well as virtually try on makeup and hairstyles. Additionally, users can also experience and create their unique and diverse styles in photos or videos and artwork to unleash their creativity by leveraging the latest AI technology. As users become satisfied with the quality of our product, our apps, we continue to use it, use our app, making UKM family apps an integral part of their daily life.
Alice H. Chang: Its offerings allow users to purify Abbott and.
Alice H. Chang: And enhance total video as well as virtually try on makeup and hairstyle users.
Alice H. Chang: Users can also experience and create.
Alice H. Chang: Unique in a diverse styles.
Speaker Change: So those are the deals in our work to release.
Speaker Change: Our creativity.
Speaker Change: Leveraging the latest AI technology.
Speaker Change: But the users become.
Speaker Change: That is why with the quality of our product our apps the continuing to users use our app, making new camo, Emily apps and integral part of their daily life.
Alice H. Chang: Moreover, we offer a complete line of online AI editing tools on our website and through our Ucam suite of mobile apps that leverage advanced AI capabilities to enhance photos, videos, and generate AI artwork, such as AI enhance for photo and video, AI colorization, AI color correction, AI lighting, AI figures, and AI characters. Our product strategy centers on integrating AI across our entire offering to edit, beautify, and enhance photo and video so that in one second, it can easily transform user experience and self-user's real-time problems and meet evolving needs from a broader user base. While at the same time, maximizing the return on our R&D investment.
Speaker Change: Moreover, we offer a complete line also online.
Speaker Change: <unk> tool on our website.
Speaker Change: And through our <unk> mobile app at the leverage advanced AI capabilities to enhance photos ceo's agenda.
Speaker Change: <unk> IR work.
The AI in hen.
Photo and video AI Colorization AI color correction.
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Our product strategy centers are integrating AI across our entire offering to edit building by an intense photo and video.
Speaker Change: One second and easily transform user experience itself users of real time problems and to meet the evolving needs from a broader user base.
Speaker Change: While at the same time maximize the return on our R&D investments are.
Alice H. Chang: A key strength of ours is the ability to leverage the same AI engine to power both our consumer mobile business and our enterprise cloud business. This allows us to fully monetize innovation across different sectors in our B2C and B2B sectors. Our unique AI-driven approach, combined with a commitment to ongoing innovation, positioned us to significantly expand market penetration by unlocking AI's transformative potential. Now, let's shift focus to our B2B business.
Speaker Change: A key strength of ours is that leaves us to leverage the same AI aging.
Speaker Change: Our both our our consumer mobile business and our enterprise businesses.
Speaker Change: Yes.
Speaker Change: This allows us to fully monetize innovation across different sectors in RMB, two <unk> and <unk> sectors.
Speaker Change: Our unique AIG, but an approach combined with our commitment.
Ongoing innovation positioned us to significantly expand the market penetration by <unk>.
Speaker Change: King AI transformative potential.
Speaker Change: Now, let's shift focus to RMB to be business.
Alice H. Chang: This quarter, in our B2B sector, we focused on deepening the penetration in new verticals to provide AI skincare analysis products and brands during the fashion virtual try-on business, while at the same time defending the adoption of our makeup CTOs by more brands in the region. Specifically, we got several new wings for our beauty interior jewelry solutions within our B2B sector. Let's demonstrate the growth demands from our comprehensive solution and superior technology from clients in different industries and sectors.
Speaker Change: This quarter in RMB to be sector, we focused on deepening the penetration the new vertical to provide AI <unk> dialysis product.
Speaker Change: And Julian no fashion virtual try ons business, while at the same time expanding the adoption of our makeup CTO to more brands in the region.
Speaker Change: Specifically, we got several new wing for our beauty skincare jewelry solutions.
Speaker Change: Within our <unk> sector.
Speaker Change: This demonstrates the growth demands.
Speaker Change: From our comprehensive solution.
Speaker Change: Dan.
Speaker Change: <unk> technology from clients in different industries and sectors.
Alice H. Chang: Moreover, we successfully secured a major license renewal with key beauty, skin care, and jewelry brands and retailers. This renewal reflects the increasing trust this brand placed in our solutions to address their evolving requirements, highlighting our leadership in the VTO salute offering. We also capitalize on this opportunity by cross-selling to their sister brands and offering additional services, including expanding SKU selections and expanding brand presence into new geographies. The strong momentum in revenue growth in this quarter reflected the recovery in the sales cycle and the pipeline expansion of our enterprise business.
Speaker Change: Moreover, we successfully secured one major license renewal with key beauty skincare in the jewelry brands and the retailer.
Speaker Change: Renewal underscore the increasing truck this brand's placed in Florida.
Speaker Change: Our solutions to address their evolving requirements and the highlight of our leadership in bto salute offering.
Speaker Change: We also capitalized on this opportunity by cross selling to their sister brands and offering additional services, including extending SKU selections and expanding brand presence.
Speaker Change: Into new geographies.
Speaker Change: The strong momentum in revenue growth in this quarter reflected the recovery in the sales cycle and our pipeline expansion.
Speaker Change: Our enterprise business.
Alice H. Chang: Firstly, for our beauty AI, we remain a leader in the industry, and we continue to innovate. Beauty AI has always been the core of our business. In this quarter, we have renewed contracts with all major existing clients and brought in several new brands for make-up VTO, a virtual try-on service. Furthermore, we continue to innovate and expand the capability of our makeup offering. We have added metallic textures to the eyeshadow VTO and the shimmer texture to the eyebrow VTO.
Speaker Change: Firstly for our beauty AI, we remain a leader in the industry.
Speaker Change: We continue to innovate Judy.
Speaker Change: Judy AI as always been the core of our business in this quarter, we have renewed contracts with all major existing clients.
Speaker Change: And abroad in several new brands for makeup bto virtual trial services.
Speaker Change: Furthermore, we continue to.
Speaker Change: <unk> and expand the capability of our makeup offerings.
Speaker Change: We have added metallics touches to ICI, though eto and is she more texture to eyebrow video.
Alice H. Chang: These new textures for makeup not only allow brands to provide more try-on options to their clients but also further strengthen our market leadership in the makeup VTO sector. Secondly, for our skin AI test, In this first quarter, we saw strong momentum for our skin diagnostics products from both existing and new customers. As people become increasingly conscious about their skin health, we aim to capitalize on this trend. By providing AI solutions, notably, we gained significant traction in new market segments, such as MedSpot, Affinity Clinics, and dermatology practices.
Speaker Change: This new test shirt will make up not only allows brands to provide more options to their clients.
Speaker Change: But also further strengthen our market leadership in makeup eto sector.
Speaker Change: Candidly or our skin AI tech.
Speaker Change: In this first quarter, we saw strong momentum for our diagnostic products from both existing and new customers.
Speaker Change: People will become increasingly cautious about their skin health, we aim to capitalize on this trend.
Speaker Change: By providing AI solution, notably weekend significant traction in new market segments, such as masks boss authority Clinique and the dermatology practices.
Alice H. Chang: This professional institution leverages our AI technology to deliver real-time and a demologist-verified screen diagnosis, results, and scores to their clients and patients. A key differentiator for our screening service is our cutting-edge and unique, High Definition AI Diagnosis that offers a comprehensive approach to understand individual pain conditions with super high precision. Allowing users to visually change their skin after skin treatment with a very easy to see AR overlay precisely positioned on the location of the actual skin concern and with a measurable skin score.
Speaker Change: This professional institutions leverage our AI technology.
Speaker Change: Deliver real time and are demolished.
Speaker Change: The Malawi.
Speaker Change: Verified skin diagnosis resort in the scores to their clients and patients.
Speaker Change: The key differentiators for our skiing coverage since our accounting H and the unique high definition AI all melted and offers a comprehensive approach to understand individual team conditions in Super high procedures.
Allowing users to visually change their scheme after skin treatments with a very easy to.
Speaker Change: Overlaid precisely position on the location of the scheme actual skin culture.
And with a measurable gain scored.
Alice H. Chang: Using advanced AI, our skin diagnosis solution can detect and evaluate up to 14 T-skin concerns, providing patients with a detailed data-driven assessment of their unique skin health profile. The third key driver of our skin business success this quarter came from our self-service offering, a new product, Skincare Pro, which gains robust momentum, particularly among aesthetic clinicians and medical staff. This is an iPad-based in-depth analysis.
Speaker Change: <unk>.
Speaker Change: Advanced AI or a skin diagnosis.
Speaker Change: Solution can detect and evaluate up to 14, Keith being concerns.
Speaker Change: <unk> patients with the detailed data driven SaaS months of their unique skin health profile.
Speaker Change: Third key driver of our skin business, let's add this quarter came from our self service offering.
Speaker Change: The new product.
Speaker Change: Skincare pro which again robust momentum, particularly among a fairly clean needs in the medical staff.
Speaker Change: This is an iPad based analysis.
Alice H. Chang: [inaudible] It serves as a consultation tool for clinics to engage with their clients, and with the newly added CRM data module, it can improve customer retention, where it keeps track of each individual customer's progress during treatment. Skincare Pro enabled this business to deliver personalized data-driven skin consultations to their clients and patients in a very cost-efficient and easy way. Furthermore, we recently developed and integrated a comprehensive customer relationship management (CRM) system with our Skincare Pros, allowing skincare professionals to better manage customer profiles for skin health reports in cloud-based consoles and compare before-after results.
Speaker Change: Sure.
Speaker Change: Consol patient tool for Clinique.
Speaker Change: Engage with their clients and with the newly added CRM Fellow module video and improve customer retention.
Speaker Change: Keep track of each individual customers progress during treatment.
Speaker Change: Skincare parole enabled this business to do.
Speaker Change: Lee Bird personalized data driven skin consultation to their clients and patients.
Speaker Change: A very cost efficient and the easy way.
Speaker Change: Furthermore, we recently developed an integrated comprehensive customer relationship management CRM system, with our skincare pro allowing skincare professionals to better manage customer profile.
Speaker Change: We're seeing health reports in cloud based.
Speaker Change: Also in the comp here before after resolved.
Alice H. Chang: This integration represents a significant shift in how personalized skincare is delivered, ensuring a more personalized and efficient patient experience. By similarly integrating and upgrading our AI-powered skin analysis, trial analysis, and emulation tools, as well as providing science-based Skin Care Experience that supports data-informed decisions and drives unparalleled patient engagement and satisfaction.
Speaker Change: This integration represents a significant shift in how personalized skincare is delivered ensuring a more personalized and efficient patient experience.
Speaker Change: I assume unless integrating and upgrading our AI powered skiing analysis.
Speaker Change: Losses in the emulation tools.
Speaker Change: As well as providing clients face gained.
Speaker Change: <unk> that supports data informed decision and to drive Unparallel patient engagement.
Alice H. Chang: Since AI and AR adoption among skin care industries is at a very early stage, we believe there is a large untapped market for us to serve and grow. Firstly, for our AI Fashion and Jewelry VTO, another highlight of the quarter was the celebrated market adoption of our VTO solution for watch and jewelry. We saw several new wins in the renewal of prestige and luxury brands, making good progress with our VTO offerings in this category.
Speaker Change: Section.
Speaker Change: And the ADR adoption amongst skincare industry. It is very early stage, we believe there is a.
Speaker Change: Larch.
Speaker Change: Path to market for us to serve and grow.
Speaker Change: Firstly for our Ci fashion and jewelry bto another highlight of the quarter was the.
Celebrated market adoption of RV Geo solution.
Alice H. Chang: We first began expanding into a Jewelry and Watch VTO at the start of 2023, and we are thrilled to see our efforts paying off as more deals have been confirmed and more use cases for products that have been launched in the market. In particular, we saw renewals and upsells from some luxury jewelry brands this quarter. We believe the superior AI technology and professional service the brand clients experience and working with us make them willing to renew the contract and purchase more services. In this quarter, we have partnered with an European luxury jewelry group and watch group to provide jewelry and watch VTO for three luxury brands within the group.
Speaker Change: Watch and jewelry, we saw several new wins and the renewal of prestige that luxury brands.
Speaker Change: Looking good progress of <unk> offerings in this category.
Speaker Change: We first began expanding into jewelry and the watch CTO at the start of the <unk> 23.
Our CEO to see our efforts paying off as.
That's more deals to have being confirmed.
Speaker Change: And the more use cases for products that have been launched in the market.
Speaker Change: <unk>, we saw renewed Williston upsells.
Speaker Change: Luxury to rebrand this quarter, we believe the superior AI technology.
Speaker Change: Professional service the brand clients.
Alice H. Chang: Leveraging our cutting-edge AI technology, the sophisticated texture and the radiant reflections of the jewelry can be faithfully portrayed on the screen, providing users with an immersive, true-to-real, true-to-life shopping experience. Though the case is still at its stage of a POC, we believe that this new wing not only confirms the trust in our AI technology by this high-end brand but also unlocks the chances to get more new logos onto our SaaS platform for jewelry, accessories, and watches.
Speaker Change: And working with us made them willing to renew the contract and the purchase more services.
Speaker Change: And this quarter, we have partnered with and European luxury jewelry grew and watch group too.
Speaker Change: Provide jewelry and the watch CTO for three luxury brands within the group leveraging our cutting edge AI technology.
Speaker Change: So fifth dictated pasture in the radiant reflections of the jewelry can be faithfully portrayed on the screen.
Alice H. Chang: Increasing numbers of jewelry and watch brands using our video and AI technology indicates that the demand for this interactive shopping experience is on the rise. The unique and leading function of our products allows brand clients to increase user engagement time and reduce our return rate. Given the robust demand for jewelry and watches, we will continue to deepen our penetration in this sector and further grow our business in different and new categories and regions.
Speaker Change: Adding users and immersive due to Rio <unk> two lives shopping period.
The case is the deal.
Speaker Change: The stage of a POC, we believe that this new win not only.
Speaker Change: Firm the trough in our AI technology by this high end brands.
Speaker Change: Also have lots of chances to get more new logos onto our SaaS platform for jewelry accessories and watches.
Speaker Change: The increasing numbers of jewelry and the watch brands using Aro Bto and AI technology indicate that the demand for this interactive shopping experience is on the rise.
Alice H. Chang: We have made good progress in our AI-powered hair solution too, in the first quarter. This quarter, we added a new AI hair type analysis technology that can quickly identify hair texture, thickness, and curl patterns by simply taking a picture of a user's hair. This AI technology accurately classifies hair into nine distinct types across 10 categories, from straight, wavy, to extremely curly, and delivers precise and personalized recommendations tailored to each unique hair type.
Speaker Change: You need and the leading function of our products allow brand client to increase user engagement time to reduce our return rates TV given.
Speaker Change: The robust demand for jewelry and the watch video we will continue to deepen our penetration in this sector and to further grow our business in the front and the new categories in the region.
Speaker Change: We have lost.
Alice H. Chang: This new innovation on AI hair complements our full range of AI hair solutions, which include our hair color VTO, AI hairstyle generation, AI wig, hair wig generation, and hair extension. This industry-leading solution enables hair care brands and retailers to provide customers with a more personalized shopping experience.
Speaker Change: We have made good progress in our AI powered haier solution too.
Speaker Change: In the first quarter.
Speaker Change: In this quarter.
Speaker Change: We added a new AI tier type analysis technology that can be quickly identify peer texture thickness and accrual pattern by simply taking a picture of users here.
Alice H. Chang: To sum up, we delivered strong business performances in the first quarter of 2024, with double-digit revenue growth and a positive bottom line. Not only did the momentum in our mobile app business remain robust, but our enterprise business also gained success in expanding services into new verticals. This positive indicator is a suggestor that we are in a real position to capitalize on the growing market opportunities for AI in beauty, skin, fashion, and generative AI.
The AI technology accurately classified here into <unk> existing distinct tight across 10 categories.
Speaker Change: Straight wavy to extremely cold Lee can deliver precisely personalize the recommendations tailored to each unique here type.
Speaker Change: This new innovation on AI tier complements our full range of AAR here solutions, which include our air caller, Bto, AI hairstyle generation, AI weak or weak generation and hair extensions.
Alice H. Chang: We'll continue growing our AI and AR-powered business. Driven by the good demand for both our mobile app subscription and enterprise stock solution, we reiterate our outlook for the full year 2024 projecting total revenue growth recognized under IFRS to range from 12% to 16% compared to the full year 2023 result. With that, I have now concluded my remarks, and we'll be handing the call over to Louis, who will discuss our financial details with you. Thank you.
Speaker Change: This industry, leading solution for here enable hair care brands and the retailers to provide customer with a more customized shopping experience.
Speaker Change: To sum up we delivered strong business performances in the first quarter of 2024 with double digit revenue growth and positive bottom line.
Speaker Change: Not only did the momentum in our mobile app business to remain robust.
Speaker Change: Enterprise business also again success in expanding services into new verticals. This.
Louis Chen: Please note that all financial comparisons are on a year-over-year basis, and the reporting period is the first quarter of 2024 versus the comparable period in 2023, and are on top of the International Financial Reporting Standard, IFRS, measures. We will also discuss non-IFRS measures to provide greater clarity on the trends in our actual operations.
Speaker Change: This positive indicators so gesture.
Speaker Change: We are well positioned to capitalize on growing market opportunity for AIA <unk> fashion generative AI.
Speaker Change: We'll continue growing our AI powered business.
Louis Chen: As Alice mentioned, in the first quarter of 2024, our total revenue increased to $14.3 million USD from $12.1 million for the same period in 2023, representing a robust year-over-year growth of 17.7%. This strong performance was mainly due to the strong growth momentum of our AI and AR cloud solution and subscription business. Among our revenue sources, AI and AR cloud solutions revenue was $12.4 million in the first quarter of 2024, an increase of 19.6% compared to the same period in 2023.
Driven by the good demand for both our mobile App subscription.
Speaker Change: Enterprise SaaS solutions.
Speaker Change: We reiterate our outlook for the full year 2020 for projecting total revenue growth recognized under Ifr Ias to range from 12% to 16% compared to the full year 2023 resource.
Speaker Change: With that I have now concluded my remarks and.
Speaker Change: And I will be handling the call over to Luis who will.
Luis: Discuss our financial details with you. Thank you.
Luis: Thank you Alex.
Luis: Please note that all financial comparisons are on a year over year basis in.
Louis Chen: The continuous expansion can be attributed to the robust growth in the mobile beauty app subscription and the strong demand for our online virtual try-on solution among brand customers, especially with the addition of new categories that now serve in the diagnosis, jewelry, and fashion markets and the growing popularity of our Gen AI technology and editing features for photo and video.
Luis: In the reporting period, the first quarter of 2024 versus the comparable periods in 2023.
Luis: Paul Bulcke to international financial reporting standards.
Luis: Farha asked measures.
Luis: He will also discuss non <unk>.
Luis: It measures provide greater clarity on the trends in our actual operations.
Luis: As Alex mentioned.
Luis: First quarter of 2024, our total revenue increased to $14 $3 million.
Louis Chen: Notably, our mobile app active subscriber has surged by 30% year-over-year, reaching an all-time high of 902,000 by the end of the first quarter of 2024. Such strong momentum underscores the growing interest in our suite of mobile beauty apps from both users and subscribers. The licensing revenue, which is mostly generated from our traditional offline services, increased by 7.1% in the first quarter of 2024 to $1.6 million, compared to $1.5 million during the same period of 2023.
<unk> 1 million for the same periods in 2023.
Luis: Representing a robust year over year growth of 17, 7%.
Luis: This strong performance was mainly due to the strong growth momentum of our AI and cloud solution and subscription business.
Luis: No revenue sources.
Luis: Our cloud solution.
Luis: Revenue was $12 4 million in the fourth quarter of 2024, an increase of 19, 6% compared to the same period in 2023.
Luis: The new expansion can be attributed to the robust growth in our mobile beauty app subscription and the strong demand for online virtual try on solution among brand customers, especially with the addition of new categories now serve opened our northeast jewelry, especially in markets and the growing popularity of our Ginnie technology editing features.
Louis Chen: Gross profit for the first quarter of 2024 grew by 16.9% to $11.2 million with a gross margin of 78.3% compared to gross profit of $9.6 million and a gross profit margin of 78.8% for the same period in 2023. The decrease in gross margin was primarily a result of the increase in third-party payment processing fees paid to digital subscription distribution partners such as Google and Apple due to the increase in mobile app subscription revenue.
Luis: Photo and video.
Luis: Notably our mobile App active subscriber surged by 30% year over year, reaching an all time high of 902000 by the end of the first quarter of 2024.
Luis: As Joe momentum underscored the growing interest in our suite of mobile beauty app from both users and subscribers.
Luis: The licensing revenue, which is mostly generated from our traditional offline services.
Luis: Increased by seven 1% in the fourth quarter of 2024 to $1 6 million compared to $1 5 million during the same period of 2023.
Luis: Gross profit for the first quarter of 2024.
Luis: $16 nine for Tim.
Luis: $11 2 million with gross margin of 78, 3% compared to gross profit of $9 6 million and gross.
Louis Chen: The total operating expenses for the first quarter of 2024 increased by 11.8% to $12.4 million compared to $11.1 million for the same period last year. The increase was primarily due to higher sales and marketing expenses that occurred in the first quarter of 2024. To break down operating expenses, sales and marketing expenses for the first quarter of 2024 were $7.2 million, compared to $6 million during the same period of 2020, an increase of 19%.
Luis: The margin of 78, 8% for the same period in 2023.
Luis: The decrease in gross margin was primarily a result of the increase in third party payment processing fee.
Luis: <unk> still got great distribution partners, such as Google and Apple due to the increase in our mobile App subscription revenue.
The total operating expenses for the fourth quarter, often do the new four decreased by 11, 8% to $12 4 million.
Compared to $11 1 million.
Luis: <unk> last year the.
Luis: The increase was primarily due to the higher sales and marketing expenses occurred in the first quarter of 2024.
To breakdown of operating expenses sales and marketing expense for the first quarter attendees in before with $7 2 million compared to $6 million. During the same period of 2003, an increase of 19%.
Louis Chen: And this was due to an increase in marketing and user acquisition costs. The research and development expenses were 3 million for the first quarter of 2024, compared to 2.6 million during the same period of 2023, an increase of 15.4%. An increase in additional R&D headcounts and related personnel costs. General and administrative expenses were $2.2 million for the first quarter of 2024 compared to $2.4 million during the same period of 2023, a decrease of 9.9%. The decrease mainly came from a lower direct and officer insurance premium.
Luis: Due to an increase in marketing and user acquisition call.
Luis: The research and development expenses were $3 million for the first quarter of <unk> 74, compared to $2 6 million. During the same period of 2023, an increase of 15, 4%.
Luis: Please.
Luis: Additional R&D headcount and related personnel costs.
Luis: General and administrative expenses were $2 2 million for the first quarter of tenders and before compared to $2 4 million. During the same period of 2023, a decrease of nine 9%.
Luis: Decreased mainly came from the lower director and officer insurance premiums.
Louis Chen: Net income was 0.6 million for the first quarter of 24 compared to 0.7 million during the same period of 2023, a decrease of 9.4%. The positive net income in this first quarter was supported by continuous revenue growth and effective cost control. Excluding the non-cash share-based compensation, the non-cash valuation gain and loss for financial liabilities, and one-time non-recurring costs associated with our DSEC deal, the adjusted net income was $1.5 million for the first quarter of 2024, compared to adjusted net income of $1.3 million in the same period of 2023, an increase of 14.5%. These represent a sound margin rate of 10.6% in the first quarter of 2024.
Luis: Net income was <unk> 6 million for the fourth quarter of 94 compared to a net income of <unk> 7 million during the same period of 2023.
Luis: Greece of nine 4%.
Luis: The positive net income in this first quarter was supported by continued revenue growth and effective cost control.
Luis: Excluding the noncash share based compensation, the noncash valuation gain and loss for financial liability and one time nonrecurring cost associated to these type deal. The adjusted net income was $1 5 million for the.
Luis: First quarter of 2024 compared to adjusted net income of $1 3 million in the same period of 2023, an increase of 14, 5%.
Luis: <unk> represent a sound margin rate of 10, 6% in the first quarter of 2024.
Louis Chen: Looking at our balance sheet, as of March 31, 2024, our company held $157.3 million in cash, cash equivalents, and six-month time deposits, compared to $154.2 million as of December 31, 2023. The increase in cash and cash equivalents, including six-month time deposits, was a result of the positive operating cash flow and the interest income received from the company's bank deposit. We had positive operating cash flow of $3.5 million in the first quarter of 2024, compared to $3.8 million during the same period of 2023.
Luis: We can add on the balance sheet as of March 31, 2024, our company hail $157 3 million in cash cash equivalents and six months time deposits compared to $154 2 million as of December 31, 2023.
Luis: The increase in cash and cash equivalents, including six months time deposit of <unk>.
Luis: Dolphin the positive operating cash flow and the interest income received from the company's bank deposits.
Luis: Had positive operating cash flow of $3 5 million in the fourth quarter of 2024 compared to $3 8 million during the same period of 2023.
Louis Chen: Negative cash flow demonstrated the company's ability to generate efficient cash flow to support its business operation and growth. In total, our customer base had a net increase of 21 brand clients since the end of last quarter, achieving a total of 666 brand clients with over 745,000 skews for makeup, skincare, eyewear, and jewelry products as of March 31, 2024. This was yet another record quarter for these metrics, showing a continuous increase in customer penetration and skewed expansion.
Luis: Positive cash flow demonstrated the companys ability to generate.
Luis: <unk> cash flow to support this business operation and the growth.
Luis: In total.
Luis: Beth is a net increase of 21, Glenn clients since the end of last quarter, achieving a total of 666, great clients. We overcame 145000, skus or makeup skin care and jewelry product as of March 31 2024.
Luis: This is yet another record quarter for this metric joined the continued increase in customer penetration and SKU expansion.
Louis Chen: More brands and products are leveraging Perfect Console to operate the various different submodules subscribed from Perfect. In the first quarter of 2024, our total revenue has consistently exhibited strong growth, primarily driven by the continued momentum in our AI and AR cloud solutions and mobile app subscription earnings from premium features and AI-powered apps. Despite a very mild rise in expenses, our net income remained positive. We continue our investment in talent acquisition and technology innovation to expand our core competencies in acting as a transformative tool that reinvents how products are showcased and consumed.
Luis: Well Brandon product leveraging on perfect console to operate the various different soft module subscribed from perfect.
Luis: In the first quarter, if there's any for our total revenue has consistently exhibited strong growth primarily driven by the continued momentum in our AI and cloud solutions and mobile App distribution earnings from premium features and AI powered app.
Luis: By the very mild rising expenses, our net income remained positive.
Luis: We continue our investment in talent acquisition and technology innovation, that's been a core competency.
Luis: And as a transformative tool the reinvent how product showcase in tissue.
Louis Chen: We firmly believe that our position within the thriving industry equips us to remain at the forefront of revolutionizing our beauty and fashion brands engaged with the audience. Finally, we reiterate our 2024 guidance that total revenue year-over-year growth will range from 12% to 16% under RFIS. This forecast is based on companies' current assessments of the market and operational conditions, and management will closely monitor business progress each quarter and update our guidance periodically to offer better transparency to the market. With that, my prepared remarks. Operator, please open up for questions.
We firmly believe that our position within the <unk> industry with us to remain at the forefront of revolutionizing beauty and fashion brands engage with the audience.
Luis: Finally, we reiterate our 2020 for guidance.
Luis: Total revenue year over year growth will range from 12% to 16%.
Luis: This forecast is based on Companys current assessment of the market and operational condition and management will closely monitor the business progress each quarter.
Luis: <unk> guidance theoretically volcker better transparency to the market.
Speaker Change: With that concludes my prepared remarks, operator, please open up for questions.
Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Your first question comes from the line of Brian Schwartz with Oppenheimer. Your line is open. Yeah, hi, thanks.
Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: I would like to withdraw your question simply press Star one again.
Your first question comes from the line of Brian Schwartz with Oppenheimer. Your line is open yes.
Brian Jeffrey Schwartz: Yeah, hi, thanks for taking my questions this afternoon or evening where you're at. I had a couple.
Brian Jeffrey Schwartz: Yes, hi, thanks for taking my questions. This afternoon or evening, where you're out ahead a couple.
Brian Jeffrey Schwartz: The first one was around the skew growth in the quarter because it looked very strong. And I was just wondering if the expansion in skews is coming all from the core beauty segment? Or is the expansion being spread evenly across some of those newer ones, like fashion and the skin segments too?
Brian Jeffrey Schwartz: First one was around.
Brian Jeffrey Schwartz: The SKU growth in the quarter, because it looked very strong and I was just wondering if the expansion in skus is that coming all from the core beauty segment or is the expansion.
Brian Jeffrey Schwartz: Being spread evenly across some of those newer like fashion in the skin segments too.
Alice H. Chang: Yes, Brian, this is Alice. Thanks for the questions. Because we expanded to new verticals, jewelry, and skin analysis. So it's quite spread out, split between three different verticals.
Brian Jeffrey Schwartz: Yes, Brian this is Alex thanks for the questions.
Alex: Expanded to new verticals.
Speaker Change: The jewelry Spo analysis.
The.
Speaker Change: <unk> are split between three different.
Alice H. Chang: Makeup is still the biggest one. They have more skills than jewelry, especially luxury jewelry. They don't have too many skills like makeup. And skincare also, they do have new skills on our consoles. But still, makeup has the biggest part. And the rest of the split between skincare and jewelry.
Speaker Change: Nicole.
Speaker Change: US steel the biggest one they have a more skus.
Speaker Change: Jewelry, especially luxury jewelry, we don't have too many skus like makeup and skincare also.
Speaker Change: We do have new skus in our call so let's deal maker.
Speaker Change: The biggest part and the rest of the escalade between skincare in the jewelry.
Brian Jeffrey Schwartz: Okay, and then my next question, I wanted to ask you that now that a recovery is happening in the enterprise business, how are you thinking about expanding your sales capacity? Did you add any sales reps in Q1? And what are your plans for hiring more sales reps this fiscal year?
Speaker Change: Okay and then my next question I wanted to ask.
Speaker Change: Now that the recovery is happening in the enterprise business.
Speaker Change: How are you thinking about.
Speaker Change: Expanding your sales capacity did you add sales reps in Q1, and what are your plans for hiring more sales reps this fiscal year.
Alice H. Chang: Yes, for B2B sectors, especially our soft business model, the lead time to acquire new customers is not immediately like B2C. So it takes time.
Speaker Change: Yes for a b to b sectors, especially our software business model.
Speaker Change: The lead time to acquire new customers.
Speaker Change: It's not immediately like DTC.
Speaker Change: So it takes time.
Alice H. Chang: So we keep our sales, sales talent in each of the business units, not growing too much from now. And since we see growth in our skincare channels and the fashion jewelry channels right now, we will specifically increase some, a few sales capability in the business units. And so overall, we will keep growing, but not too much, and still serve the same group and the growth of B2B growth.
Speaker Change: We keep our sales.
Speaker Change: Talent in each of the business units not growing too much from now.
Speaker Change: We see the growing in skincare channel at the end of fashion jewelry channels right now so we'll look to slowly increase as well.
Speaker Change: You built a capability in the business units.
Speaker Change: So while we're always we will keep increase but not too much since deal.
Speaker Change: Semgroup and the growth.
Speaker Change: <unk> growth.
Brian Jeffrey Schwartz: Okay, and then Alice, can you talk about, or Louis, you know, the decline that's happening in the key customer count? You know, I think the commentary in the press release is that there's some financial distress from those customers. I guess the question is just kind of looking forward, you know, is it your sense that that has bottomed out, that the more distressed customers that you had, those are, you know, kind of churned out, and there's more financial stability among that customer cohort moving forward.
Speaker Change: Okay, and then Alex can you talk about or Louis the decline thats happening in the key customer accounts.
Alex: I think the commentary in the press release is Theres some financial distress from those customers I guess the question is just kind of looking forward is it your sense that that has bottomed.
Alex: That.
Alex: The more distressed.
Alex: Customers that you had those are kind of it has been churned out in <unk>.
Alex: And theres more financial stability.
Alex: Among that that customer cohort moving forward.
Louis Chen: Hi Brian, this is Louis. I think, you know, the macro setting has impacted some of those smaller customers. We look into, as you know, the majority of our enterprise clients are on annual-based contracts. So upon expiration of the contract, typically, they'll renew on a year-to-year basis. What we noticed in this quarter is that many of those, you know, not-so-big clients, didn't have their following year budget approved by their management, mostly mainly because of the overall financial pressure that they are under.
Hi, Brian This is luis.
The macro setting has impacted some of those smaller customer.
Luis: Look into the you know a majority of all enterprise client they are on annual base contracts.
Luis: Upon the expiration of the contract typically they'll renew on a year to year basis, while we notice in this quarter is many of those.
So be clients.
They didn't have the following year budget approved by their management, mostly mainly because of the overall financial pressure that they are getting so we sold some of those customer non renewing those agreements at the end of each period, we still don't lead management.
Louis Chen: So we saw some of those customers not renewing those agreements at the end of this period. We certainly, in management, are very alert to the trend. I don't think it is significant. It doesn't contribute a material part of the revenue, but it is certainly something, you know, sad to see some of these customers not renewing their contracts. So the company is doing its best to acquire more customers so we can, you know, kind of net, you know, that impact out.
Luis: Very vigilant about the trend I don't see it as something.
Luis: Significant it doesn't contribute material part of the revenue bodies, assuming something set to see some of these customer non renewing those so the companies doing our effort to acquire more customers. So we can kind of net.
Luis: That impact out.
Speaker Change: Okay, and then my last.
Speaker Change: Most of the.
Louis Chen: Most of the decrease, from what I observed, are not big customers but more medium-sized customers. When they face financial difficulties, they need to drop out, not because they don't like this engagement of users, but because they just have a very difficult financial situation. And the size is just a little bit more than the threshold 50k, the kind of the median size of rank that we saw in the first quarter.
Speaker Change: The decrease from what I observed or not the customers but.
So more medium sized customers.
Speaker Change: And they take financial difficulties.
Speaker Change: <unk> drop off not because they don't like this.
Speaker Change: Engagement of users because they just are helpful.
Speaker Change: Very difficult financial situation.
Speaker Change: The size is just a little bit more than the thresholds teekay.
Speaker Change: Those kind of a medium size of the offering that we saw.
Brian Jeffrey Schwartz: And my final question, Louis, is about the G&A expense because it came in a lot lower than I had forecasted. And as I think about, you know, my model moving forward, is this the right level for the G&A expense as we think about our models here moving forward? Thanks again for taking the question. You're welcome.
Speaker Change: In the first quarter.
Speaker Change: Thank you and my final question. Louis I, just wanted to ask you about the G&A expense because it came in a lot lower than I had forecast to that and as I think about my model moving forward is this the right level for.
Speaker Change: For the G&A expense as we think about our models here moving forward. Thanks again for taking the questions.
Louis Chen: You're welcome. I think we always run a very, you know, agile and slim team, you know, for our big office and our GNA. You know, in the past few quarters, certainly there was more cost as a newly listed company, you know, just for governance, compliance, and related different, you know, auditor or external counsel services. As the company matures, getting more mature as a public company, some of these costs will be reduced
Speaker Change: Youre welcome.
Speaker Change: We always run a very agile and <unk> were all back office and G&A.
Speaker Change: In the last few quarters are telling me it was a more cost as a newly listed company.
Speaker Change: As for governance compliance and related different auditor.
Speaker Change: Console services as the company matures getting more mature as a public company. Some of these costs will be reduced.
Louis Chen: As I mentioned, in my remark, the DNO insurance premium has been reduced, the company has been performing pretty well in the market, and so forth. So I think, you know, we always try to maintain, you know, a slim and, you know, lower cost GNA. So I think what you see in this quarter is certainly not a one-off situation. But the market, you know, can change quickly. But at the core, we focus more of our investment in R&D development, certainly expanding in sales marketing outreach, while trying to be really nimble and effective in the GNA.
Speaker Change: I mentioned in my remarks.
Speaker Change: Insurance premiums has been with US the company has been performing pretty well in the market and so forth. So I think we owe it to them.
Speaker Change: We maintain low.
Speaker Change: A cough G&A. So I think what you see in this quarter certainly is not a one off situation, but the market can change quickly.
Speaker Change: The quarter, we focus more of our investment into R&D development, certainly spending our spending in sales marketing outreach, while try to be really nimble and effective in the G&A.
Operator: Once again, ladies and gentlemen, if you have a question, it is star number one. As there are no further questions at this time, I'd like to hand the conference back to management for closing remarks.
Speaker Change: Once again, ladies and gentlemen, if you have a question it is star one.
Speaker Change: As there are no further questions at this time I would like to hand, the conference back to management for closing remarks.
Alice H. Chang: Thank you again for joining our call today. Have a good one, and I look forward to seeing you online next time.
Speaker Change: Thank you again for joining our call today have a good one and look forward to seeing you outline next time.
Speaker Change: Thank you.
Speaker Change: Thank you.
Operator: This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: This conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: Please wait; the conference will begin shortly.
Speaker Change: Please wait the conference will begin shortly.
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