Q1 2025 Perfect Corp Earnings Call

Good morning, and good evening, ladies and gentlemen, thank you for standby and welcome to the perfect Corp's first quarter 2025 earnings conference call.

Please note that all lines have been placed on mute to prevent any background noise.

We'll be hosting a question and answer session after management's prepared remarks.

If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to read a question. Please press star followed by the number one again.

Please note that this event is being recorded.

Speaker Change: I'll now turn the conference over to the first let's say today, Mr. Jenner Shaw, our director of the company. That's go ahead.

Yeah.

Jenner Shaw: Thank you and Hello, everyone welcome to perfect Corp's first quarter 2025 earnings call.

Alice Chen: With us today are Ms, Alice Chen founder Chairwoman and Chief Executive Officer Mr.

Louis Chen: Mr. Louis Chen.

Alex: Executive Vice President and Chief Strategy Officer, Alex <unk>, Vice President of Finance and accounting.

Louis Chen: You can refer to our first quarter 2025 financial results.

Louis Chen: IR website or in the form 6K, we filed with the SEC.

Louis Chen: <unk> of this call will also be available on our website shortly after its conclusion.

Louis Chen: For today's call management will provide prepared remarks, followed by a question and answer session.

Louis Chen: Before we continue I would like to refer to our safe Harbor statement in our earnings press release.

Louis Chen: This call may contain forward looking statements regarding performance anticipated plans, our regional results and objectives.

Louis Chen: Forward looking statements are based on management's expectations and are subject to numerous risks and uncertainties.

Louis Chen: That could cause actual results to differ materially from those expressed or implied call today.

Louis Chen: Perfect Corp undertakes no obligation to update any forward looking statements, except as required by law. After the date of this call.

Louis Chen: Please note that all numbers stated in management's prepared remarks are in U S. Dollar.

Louis Chen: We will also discuss non <unk> measures today.

Speaker Change: I will now turn the call to our second speaker.

Speaker Change: Our <unk> our CEO.

Louis Chen: Yeah.

Louis Chen: Thank you Jamie and welcome to Perfect Corp, 2025 first quarter earnings Conference call. Let me start by providing some financial highlights then share some exciting developments.

Louis Chen: After a strong end to 2024, we started the first quarter of 2025 with a double digit growth.

Louis Chen: In line with our revenue guidance for 2025.

Louis Chen: Total revenue grew by 12, 1% year over year to 16 million.

Louis Chen: Net income for the same period was $2 $3 million.

Louis Chen: An increase of 264% year over year and the adjusted net income increased 33, 3% to $2 million compared to the first quarter of 2024.

Louis Chen: The continuous growth in revenue and a positive net income is primarily driven by the strong performance of our mobile app subscription business within the a I E. Our cloud solutions sector.

Louis Chen: Even under current micro economy uncertainties.

Louis Chen: The first quarter of 2025.

Louis Chen: Our operating cash flow generate a net inflow of $4 $3 million and our balance sheet remains very strong with over $164 $6 million in cash and cash equivalents.

Louis Chen: This results are testimony to the company robust business model as well as our agility to navigate under the fast changing world and its global economy.

Louis Chen: Uncertainty.

Louis Chen: Our a b to C mobile app as it has maintained a strong growth with a number of active paying subscribers also at 973002 end of the first quarter of 2025, an increase of seven 9% compared to 902000 subscriber.

Louis Chen: <unk> for the first quarter of 'twenty four.

Louis Chen: Alright, you can mobile absolutely continue to evolve with our plans to update it.

Speaker Change: Teachers enhancement powered by cutting edge generative AI teachers for image in the video creation waste.

Speaker Change: We recently unveiled a new mobile App called you Kim AI chat could you features personal AI assistant.

Speaker Change: This users with a wide range of topics, including fashion saving so the ethane travel writing financial otherwise this anymore beyond this specialized AI assist there.

Speaker Change: <unk> also delivered a powerful AI tool capable of generating images as well as summarizing photos websites and Youtube video just to name a few of its popular features.

Speaker Change: By merging convenience and personalization.

Speaker Change: Kim AI chat App will feel the growing demand for similar digital interaction.

Speaker Change: This app leverages multiple words right now a I L. L. M models, such as Chad <unk> and the four O Mimi.

Speaker Change: Before diving into our <unk> performance I would like to provide additional updates of the post acquisition of why not the.

Speaker Change: The integration of both teams.

Pablo: Pablo I think mostly.

Pablo: With our operations cultures in our strategy goals align them locally.

Pablo: This process will position us well into the new growth opportunities and to further enhance our market position as we work to expand our addressable market.

Operator: Good morning, and good evening, ladies and gentlemen.

Jimmy Xia: Thank you for standing by and welcome to the Perfect Corps first quarter 2025 earnings conference call. Please note that all lines have been placed on mute to prevent any background noise. We will be hosting a question and answer session after management's prepared remarks. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to revert a question, please press star followed by the number one again. Please note that today's event is being recorded.

Pablo: This first phase of integration our global sales team have started to engage with our new clients and the prospects to explore additional contract opportunity.

Pablo: With emphasis on geographic expansion and product expansion, particularly weeding the shoes vertical.

Pablo: Our b to B O operations, we continue to deepen market penetration in beauty and fashion segments.

Pablo: Our platform now post over 801 branch clients with over 891000 Skus. This increases are contributed by organic growth and the consolidating the newly acquired Walnut client base and the shoe backs related skus for ETE.

Jimmy Xia: I will now turn the conference over to the first speaker today, Mr. Jimmy Xia, IR director of the company. Please go ahead. Thank you. And hello, everyone. Welcome to Perfect Corp's first quarter 2025 earnings.

Jimmy Xia: 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 Miss Iris Chen, Vice President of Finance and Accounts.

Pablo: Oh.

Pablo: We are making very good progress in expanding our unique offering with AI powered in diagnostics.

Pablo: Which extend across aesthetic clini dermatology, saying her skincare facilities less spa and wellness centers.

Jimmy Xia: You can refer to our first quarter 2025 financial results on our IR website or in the form 6K we filed with SEC. A replay of this call will also be available on our website shortly after its conclusion.

Pablo: During the first quarter.

Pablo: Our AI looking analysis solution with one of the largest beauty retailer in the U S.

Jimmy Xia: For today's call, management will provide our prepared remarks, followed by a question and answer session.

Pablo: No user can scan their phase with the smartphones, allowing the app to deliver skiing analysis in second and they received a personal lives a four step skiing routine and products tailored to their specific needs offering our AI screening solutions to a wider global aldea.

Jimmy Xia: Before we continue, I would like to refer to our safe harbor statement in our earnings press release. This call may contain forward-looking statements regarding performance, anticipated plans, original results, and objectives. Forward-looking statements are based on management's expectations and are subject to numerous risks and uncertainties. That could cause actual results to differ materially from those expressed or implied in our call today. Corp undertakes no obligation to update any forward-looking statement except as required by law after the date of this call.

Pablo: That's been our priority and this partnership will open the use case two newly yourself on North American users.

Pablo: Additionally, our you came online editor source API enables seamless integration of perfect AI features into client software.

Pablo: Brian developers can now embed advanced photo portrait.

Jimmy Xia: Please note that all numbers stated in Management's prepared remarks are in U.S. dollar, and we will also discuss non-IFRS measures today.

Pablo: Video editing generative AI and who are offering end user reach full featured image editing exterior and so waiting or a product.

Alice Chang: I will now turn the call to our second speaker, Alice Chang, our CEO. Thank you, Jimmy, and welcome to Perfect Corp's 2025 First Quarter Earnings Conference Call. Let me start by providing some financial highlights, then share some exciting developments. After a strong end to 2024, we started the first quarter of 2025 with a double-digit which was in line with our revenue guidance for 2025. Total revenue grew by 12.1% year-over-year to $16 million. The net income for the same period was $2.3 million, an increase of 264% year-over-year. And the adjusted net income increased 33.3% to $2 million compared to the first quarter of 2024.

Pablo: During the first quarter of the year, we added a I hear style and the skiing analysis API and made a refinement to subscription plan and the subscription part of the model.

Pablo: In conclusion.

Pablo: Despite the global economic uncertainty, we continue to experience growth in the first quarter of 2025, driven by increased revenue improved operational efficiency and strong financial performance.

Pablo: Our growth strategy for <unk> remains on track focusing on expanding our a b to C revenue with the introduction of our newer generative AI functions and to drive higher premium subscription plans to increase the value of our subscription.

Pablo: On the enterprise side, we are focusing on fully integrating the Walmart team and the product and their product into our budget.

Alice Chang: The continuous growth in revenue and the positive net income is primarily driven by the strong performance of our mobile app subscription business. Within the AIAR cloud solution sector, even under current microeconomic uncertainties. The first quarter of 2025, we saw our operating cash flow generate a net inflow of $4.3 million, and our balance sheet remains very strong with over $164.6 million in cash and a cash equivalent. All these results are testimony to the company robust business model as well as our agility to navigate under the fast-changing world and its global economic uncertainty. Our B2C mobile app business has maintained a strong growth with a number of active paying subscribers of 973,000 to end of the first quarter of 2025, an increase of 7.9% compared to 902,000 subscribers for the first quarter of 2024.

Pablo: Lending our presence in beauty skincare shoes in the fashion market exploring cross selling opportunities diversifying our product and service offers.

Pablo: Training leadership accelerating revenue growth and maximizing long term shareholder value lastly.

Pablo: Lastly, with the rise of a more efficient and cost effective AI models specializing in the civic functionality evercore.

Pablo: <unk> is well positioned to benefit from evolving needs of clients and prospects. Thanks to our strong track record expertise and deep integration in the U D in the fashion industry.

Pablo: With that I have concluded my remarks, and I will now pass the call over to Luis who will discuss our financial details with you.

Luis: Thank you Alex.

Luis: Please note that the open Nashville comparisons are on a year over year basis.

Luis: The reporting periods is the first quarter of 2025 versus the comparable period in 2024.

Luis: On top of international financial reporting standards.

Luis: If I ask measures.

Alice Chang: Our UK mobile app suite. continue to evolve with plans, updates, and AI features enhancement, powered by cutting edge generative AI features for image and video creation. We recently unveiled a new mobile app called Ucam AI Chat, which features personal AI assistants to assist users with a wide range of topics, including fashion, dating, social science, travel, writing, financial advice, and more. Beyond this specialized AI assistant, the app also delivers powerful AI tools capable of generating images, as well as summarizing photos, websites, and YouTube videos, just to name a few of its popular features. By merging convenience and personalization, you can AI Chat app fulfills the growing demand for similar digital interactions.

Luis: We will also discuss non ifr ias measures to provide greater clarity on the twins in our operation.

Luis: In the first quarter of 'twenty, five or total revenue increased to $16 million from $14 3 million for the same periods in 2024, representing a year over year increase of 12, 1%.

Luis: Growth came from the continued growth of our cloud solutions and mobile application business.

Luis: AI and <unk>.

Luis: And subscription revenue grew 13, 3% to $14 1 million compared to $12 4 million from the year ago period, which represented 88% of total revenue in the quarter.

Luis: This growth is attributed to the continuous expansion of our mobile PDF accretion and the positive momentum for our own like skin diagnosis solution as well as our virtual try on business.

Luis: Licensing revenue increased by one 5% in the first quarter of 2025 to $1 6 million compared to $1 6 million. During the same period. Since you said before the licensing revenue will gradually become immaterial.

Alice Chang: This app leverages multiple world-renowned AI LLM models, such as Chat GPT 4.0 and 4.0 Mini.

Luis: It continues to be spaced out and replaced by the new AI cloud.

Luis: Subscription revenue model.

Luis: Gross profit for the first quarter of 2025 grew by 11% to $12 $5 million with gross margin of 77, 9% compared to $11 2 million and gross margin of 78, 3% for the same periods in 2024.

Alice Chang: Before diving into our B2B performance, I would like to provide additional updates on the post-acquisition of Wana. The integration of both teams is progressing smoothly, with our operations, cultures, and strategy goals aligning similarly. This process will position us well and to leverage new growth opportunities and further enhance our market position as we work to expand our addressable markets.

Luis: The small decrease in gross margin was primarily due to the increase in third party payment processing fee based with the digital distribution partners, such as Google and Apple due to the increase in our mobile application revenue.

Luis: The total operating expenses for the first quarter, often do 75 increased by 2% to $12 6 million.

Alice Chang: At this first phase of integration, our global sales team have started to engage with the new clients and the prospects to explore additional contract opportunities with emphasis on geographic expansion and product expansion, particularly within the shoes vertical. In our B2B operations, we continue to deepen market penetration in beauty and the fashion segment. Our platform now hosts over 801 brand clients with over 891,000 SKUs. These increases are contributed by organic growth and consolidating the newly acquired Walnut client base and the new Backstreet-related SKUs for VTOs. We are making very good progress in expanding our unique offering with AI powered skin download.

Luis: Compared to $12 4 million for the same period last year. The increase was mainly due to the increase in R&D expenses.

Luis: Mostly offset by the decrease in G&A expenses.

Luis: Going into detail for operating expenses sales and marketing expense for the fourth quarter of 2025 were $7 4 million compared to $7 2 million. During the same period of 2024, an increase of two 6%.

Luis: These increases were largely due to the increase in marketing and advertising costs related to our mobile apps and cloud computing as well as one off sales and marketing expenses.

Luis: Research and development expense was $3 three $3 6 million for the first quarter opening 75 compared to $3 million. During the same period of 2024, an increase of 17, 5%.

Alice Chang: which extends across aesthetic clinics, dermatology centers, skin care facilities, mass spa, and awareness centers.

Luis: The increase resulted from additional R&D head count for new product development and wondering if that related puts them Neil Cole.

Luis: General and administrative expenses decreased by 21, 6% to $1 7 million for the first quarter of 2025 compared to $2 2 million. During the same period of 2020 for the decrease were mainly due to the decrease of corporate insurance premiums as well as savings from external professional services.

Alice Chang: During the first quarter, we launched our AI Skin Analysis solution with one of the largest beauty retailers in the US. Now, users can scan their face with a smartphone, allowing the app to deliver skin analysis in seconds, and receive a personalized four-step skin routine and product tailored to their specific needs. Offering our AI Skin solution to a wider global audience has been our priority, and this partnership will open the use case to millions of North American users. Additionally, our Ucam Online Editor SaaS API enables seamless integration of perfect AI features into client software. Brain developers can now embed advanced photo, portrait, and video editing, generative AI, and more, offering a user a rich, full-featured image editing experience within our product.

Luis: Net income was $2 $3 million for the first quarter opened five compared to a net income of <unk> 6 million. During the same period of 2024, an increase of 264%.

Luis: The positive net income was supported by continued revenue growth and effective cost control.

Luis: These results represent a net income margin of 14 threep with them for the first quarter of 2025. The company continues to deliver good profitability to invest in developing a complete line of audio video creativity and enhancement solutions for both consumers and enterprises.

Luis: Excluding noncash share based compensation non cash valuation gain and loss of financial liability. The adjusted net income was $2 million for the first quarter of 'twenty five compared to adjusted net income of $1 5 million in the same period of 24, an increase of 33, 3%.

Alice Chang: During the first quarter of the year, we added AI hairstyle in the Skin Analysis API and made refinement to subscription plan and the subscription credit model.

Luis: This also represented an adjusted net income net margin of 12, 6% for the first quarter of 2025.

Alice Chang: In conclusion Despite the global economic uncertainty, we continue to experience growth in the first quarter of 2025, driven by increased revenue, improved operational efficiency, and strong financial performance. Our growth strategy for 2025 remains on track, focusing on expanding our B2C revenue with the introduction of a newer generative AI function and to drive higher premium subscription plans to increase the value of our subscriptions.

Luis: As of March 31, 2025, the company held $164 6 million in cash and cash equivalents.

Luis: Six months deposit compared to $165 9 million as of December 31, 2024.

Luis: We had a positive operating cash flow of $4 3 million in the first quarter of 2025 compared to $3 5 million. During the same period in 2024th the positive cash flow demonstrated the companys continued ability to generate continuous cash flow to support each business operations and growth strategy.

Alice Chang: On the enterprise business side, we're focusing on fully integrating the Walmart team and the product and their product into our business, expanding our presence in beauty, skincare, shoes, and the fashion market, exploring cross-selling opportunities, diversifying our product and service offers, strengthening leadership, accelerating revenue growth, and maximizing long-term shareholder value. Lastly, with the rise of a more efficient and cost-effective AI model, specializing in specific functionality, Perfect Core is well-positioned to benefit from evolving needs of clients and prospects, thanks to our strong track record, expertise, and a deep integration in the beauty and the fashion industry.

Luis: On the mobile App business from our UK mobile App subscribers was 903000 by the end of the first quarter of 2025 compared to 1 million by the end of 2024 years.

Luis: Although the number of subscriber has some expected decrease in revenue from the ERF accretion continued to grow strongly.

Luis: This decrease in equity subscribers was expected as we continue to perform pricing optimization initiatives as well as introducing higher price point new subscription plan.

Luis: Presenting a significant increase in revenue per active users.

Luis: Our enterprise customer base had a net increase of 59 rent coin since the end of last quarter, achieving a total of 800 and the more rain clients with over 891000 Skus for makeup skincare eyewear watches jewelry scar shoes apparel and fashion products as of March 31 'twenty.

Louis Chen: With that, I have concluded my remarks and will now pass the call over to Louis, who will discuss our financial details with you. Thank you, Alice. Please note that all financial comparisons are on a year-over-year basis, and the reporting period is the first quarter of 2025 versus the comparable period in 2024. And that, on top of the International Financial Reporting Standard, or IFRS, measures, we will also discuss non-IFRS measures to provide greater clarity on the trends in our operations. In the first quarter of 2025, our total revenue increased to $16 million from $14.3 million for the same period in 2024, representing a year-over-year increase of 12.1%.

25.

Luis: Further expansion in these metrics highlight the inclusion of one month coinbase as well as ongoing growth in customer penetration excuse suspension.

Luis: In the first quarter with record number of customers with over 148 down from 151 at the end of December 'twenty 'twenty four.

Luis: This reduction was due to a few unexpected U S coins contract churn due to the rising financial challenges in the macroeconomic environment.

Luis: In the first quarter of 2025.

Luis: In our cloud solutions and mobile App subscription business continues to drive our growth.

Luis: As previously mentioned one is the integration process that will help us grow our business and the additional development of technology will strengthen our core competencies and expand our total addressable market.

Louis Chen: the growth came from the continuous growth of our AI, AR cloud solutions and mobile app subscription. AI and AI cloud solution and subscription revenue grew 13.3% to 14.1 million, compared to 12.4 million from the year ago period, which represented 88% of total revenue in the quarter. This growth is attributed to the continuous expansion of our mobile beauty app subscription, and the positive momentum for our online skin diagnosis solution, as well as our virtual trial on bit. Licensing revenue increased by 1.5% in the first quarter of 2025 to $1.6 million, compared to $1.6 million during the same period of 2024.

Luis: Even with the uncertainties in today's macroeconomic environment. We are still excited about the opportunities that are ahead of our b to C and b to B business lines.

Luis: Our offering can help bring clients increased customer engagement increased basket size as well as create savings by decreasing return rates are.

Luis: Our suite of you can continue to deliver value through fun interactive features with a focus on Ginnie I powers photo and video functionality as well as other innovative new AI capabilities.

Luis: Our 2025 guidance remains intact total revenue year over year growth is expected to range from 13 to 14, 5%. These four cases based on the company's current assessment of the market and operational condition and management will monitor our business progress and provide updates to offer better clarity to the market.

Louis Chen: The licensing revenue will gradually become immaterial as it continues to be phased out and replaced by the new AI-AR subscription revenue model. Gross profit for the first quarter of 2025 grew by 11.4% to $12.5 million, with gross margin of 77.9% compared to 11.2 million and gross margin of 78.3% for the same period in 2024. The small decrease in gross margin was primarily due to the increase in third-party payment processing fees paid to digital distribution partners such as Google and Apple due to the increase in our mobile app subscription revenue. The total operating expenses for the first quarter of 2025 increased by 2% to $12.6 million.

Luis: That concludes my prepared remarks, operator, please open up the call for questions.

Luis: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star on you touched on phone and your first name a pump that you had this been range should you wish to Edmar. Please press star followed by the number one again.

Luis: You are using a speakerphone please lift the handset before pressing amey keeps.

Luis: Yeah.

Our first question comes from the line of Lisa Thompson from Zacks. Please go ahead.

Louis Chen: Compared to $12.4 million for the same period in last year, the increase was mainly due to the increase in R&D expenses, but was mostly offset by the decrease in G&A expenses. Going into detail for operating expenses, sales and marketing expense for the first quarter of 2025 were 7.4 million compared to 7.2 million during the same period of 2024, an increase of 2.6%. This increase were largely due to the increase in marketing events and advertising costs related to our mobile apps and cloud computing, as well as one of Delta's marketing efforts. Research and development expense were $3.6 million for the first quarter of 2025, compared to $3 million during the same period of 2024, an increase of 17.5%.

Luis: Hi.

Speaker Change: Great to see another great quarter.

Speaker Change: Coming out can you talk first off about your launch of the new chat.

Speaker Change: Chat up.

Speaker Change: Where did you launch it and how is it being received.

Speaker Change: Are they ask just a lunch locked a lot last month and this is the app on the Apple store App store, Apple App store and Google play user can get downloaded from the App store and at that that this is a integrating all the AI.

Speaker Change: Send that into one and also adding.

Some of our strengths like image are at 18, eight by AI and AR also summarized in the all kinds of different AI towards into one app.

Louis Chen: The increase resulted from additional R&D headcounts for new product development and wellness-related personnel costs. General and administrative expenses decreased by 21.6% to $1.7 million for the first quarter of 2025, compared to $2.2 million during the same period of 2024. The decrease were mainly due to the decrease of corporate insurance premiums, as well as savings from external professional services. Net income was $2.3 million for the first quarter of 2025, compared to a net income of $0.6 million during the same period of 2024, an increase of 264%. The positive net income was supported by continued revenue growth and effective cost control.

Speaker Change: When it was launched in all countries in all languages.

Speaker Change: Yeah, just a release to the App store with.

Speaker Change: Eight languages support.

Speaker Change: It can be downloaded over the wall.

Speaker Change: Okay, Alright, that's ahead of schedule, because I thought you're only going to do a couple of countries.

Speaker Change: Hum.

Speaker Change: We move fast [laughter], Okay. Let me ask you a question that the Wanna acquisition now.

Speaker Change: No I thought that you had said that they were going to add about 20 key customers.

Speaker Change: But if they did then you must have lost a lot of customers in Q1.

Louis Chen: These results represent a net income margin of 14.3% for the first quarter of 2025. The company continues to deliver good profitability to invest in developing a complete line of audio video creativity and enhancement solution for both consumers and enterprises. Excluding non-cash share based compensation, non-cash valuation gain and loss of financial liability, the adjusted net income was $2 million for the first quarter of 25 compared to adjusted net income of $1.5 million in the same period of 24, an increase of 33.3%. These also represent an adjusted net income net margin of 12.6% for the first quarter of 2025.

Or did they not add 'twenty.

Luis: Hi, This is luis.

So the only acquisition that adds a little bit over 1000 of the key customers are out there are the integration.

Luis: And you are right.

Luis: He also has suffered some law.

Luis: For our beauty business as I mentioned in my remarks.

Luis: Or are they at the beauty clients often the key customer accounts.

Luis: Okay, Alright, I was wondering about that.

Luis: And just the last question is when.

Luis: When you talk look at future acquisitions.

Luis: Are you going to have to be trying to find new verticals that youre not in or is there any opportunity out there to say scoop up some of the competitors that maybe do like try ons for eyeglass because is there a shakeout out there in any categories. What do you think.

Louis Chen: As of March 31st, 2025, the company held $164.6 million in cash and cash equivalents and six-month deposits, compared to $165.9 million as of December 31st, 2024. We had a positive ovarian cash flow of $4.3 million in the first quarter of 2025, compared to $3.5 million during the same period in 2024. The positive cash flow demonstrated the company's continual ability to generate continuous cash flow to support its business operation and growth strategy. On the mobile app business front, our UK mobile app active subscribers was 973,000 by the end of the first quarter of 2025, compared to 1 million by the end of 2024 year.

Luis: Think about acquisitions going forward.

Luis: I think our priority has been it's been an arcane through acquisition accelerating our methods market penetration in the core business that we are there isn't too much other competitors that are we seeing just word for doing acquisition, we very much have a better product a more complete services. So I think we.

Luis: We are winning dog from just organic growth of about four newer categories newer verticals.

Luis: Acquisition could help.

Luis: Wait to open nutrition, especially in enterprise.

Louis Chen: Although the number of subscribers had some expected decrease, the revenue from the app subscription continued to grow strongly. This decrease in active subscribers was expected as we continue to perform pricing optimization initiatives, as well as introducing higher price point new subscription plans, representing a significant increase in revenue per active subscriber. Our enterprise customer base has a net increase of 69 brand clients since the end of last quarter, achieving a total of 801 brand clients with over 891,000 SKUs for makeup, skincare, eyewear, watches, jewelry, scarves, shoes, apparel, and fashion products as of March 31st, 2025. The further expansion in these metrics highlight the inclusion of one-off client base as well as ongoing growth in customer penetration in SKU systems. In the first quarter, perfect core number of key customers was 148, down from 161 at the end of December 2024.

Luis: Clients that are typically take long time to penetrate.

Luis: So again options are all available about all key priority has been to spending attain rather than just taking all competitors.

Luis: So what verticals are left out there.

Luis: I think on the shopping I think generally in the fashion space. If you are a lot of other thing of course, we have technology to grow our internally, but I think most importantly, he's the luxury business.

Luis: The retailers a lot of Dana a few not a fully digitized or using bto technologies, but I think it's been inclined potentially will be a bigger priority rather than just acquiring them because they sell a part of the market education and getting aboard a marquee clients.

Luis: Okay, great. Thank you so much that's all my questions.

Luis: Thank you again should you have a question.

Speaker Change: Press Star followed by the number one.

Louis Chen: This reduction was due to a few unexpected US client contract churns due to the rising financial challenges in the macroeconomic environment. In the first quarter of 2025, AI and AR cloud solutions and mobile app subscription business continue to drive our growth. As previously mentioned, one-off integration process will help us grow our business, and the additional development of AI technology will strengthen our core competencies and expand our total addressable market. Even with the uncertainties in today's microeconomic environment, we are still excited about the opportunities that are ahead of our B2C and B2B business lines. Offering can help bring clients increase customer engagement, increase basket size, as well as create savings by decreasing return rates.

Luis: Yeah.

Speaker Change: Our last question comes from the line of Pat Mackin from Noble capital markets. Please go ahead.

Pat Mackin: Hey, Thanks for taking my questions are for someone to ask about the Tijuana acquisition, and how that relates to or impacts the sales process when.

Pat Mackin: When you when you go to a potential b to B clients I'm wondering.

Pat Mackin: Having a more full lineup.

Pat Mackin: Lineup of services for them.

Pat Mackin: More complete list of categories now that you've acquired.

Pat Mackin: Acquired Wanna.

Pat Mackin: How does that are you.

Pat Mackin: <unk> seen any.

Pat Mackin: Notable positive impacts as far as being able to provide more fully for a potential clients needs.

Louis Chen: Our suite of Ucam apps continue to deliver value through fun, interactive features, with a focus on Gen AI-powered photo and video functionality, as well as other innovative new AI capabilities.

Speaker Change: Just wondering you know early results kind of what Youre seeing there and how it maybe makes the sales process easier for for your your salespeople.

Louis Chen: Our 2025 guidance remains intact. Total revenue year over year growth is expected to range from 13 to 14.5%. This forecast is based on the company's current assessment of the market and operational conditions, and management will monitor business progress and provide updates to offer better clarity to the market.

Pat Mackin: Hi, Pat, but it's very positive feedback we heard from the client.

Speaker Change: Again, they are having a full complete solution.

Pat Mackin: At save a lot of their integration efforts.

Pat Mackin: So I think this is one of the strains in synergy we try to view that is not just one product company, but he used a whole platform of solutions, especially with our global sales team global customer service team also be able to support those clients across the different geographies.

Louis Chen: That concludes my prepared remarks.

Operator: Operator, please open up the call for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star on your touchtone phone and you'll hear a prompt that your hand has been raised. Should you wish to withdraw, please press star followed by the number one again. If you are using a speakerphone, please leave the handset before pressing any key.

Pat Mackin: It's something that a standalone, one I wouldn't be able to do it now.

Pat Mackin: Now a part of that part of the group we.

Pat Mackin: We are able to bring the total value to the clients certainly more and more clients are looking at offering multi category integration services and do you want to work with one company one platform. So they will get more familiar either from a you know sweep creation process.

Pat Mackin: The Olympic process, so that will come as additional synergy, but I think the most important one is the probability that we are able to upgrade their existing technology to even better because of our decade long with research and more engineering resources. So will you be able to pick the one solution.

Lisa Thompson: Our first question comes from the line of Lisa Thompson from Zacks. Please go ahead. Hi, great to see another great quarter coming out.

Alice Chang: Can you talk first off about your launch of the new AI Chat app? Where did you launch it and how is it being received? The app just launched last month, and this is the app on the Apple App Store and Google Play. Users can just download it from the App Store. As I said, this is integrating all the AI assistants into one, and also adding some of our strengths, like image editing by AI, photo summarizing, and all kinds of different AI tools into one app. when it was launched in all countries and all languages. Yeah, just release to the app stores with the languages support.

But also to interview and shake new technology in there to upgrade with <unk> Genuity AI or other new I'll read them on the development. So although in general I think the strategy that we met all of the ECR been executed well and so far the market feedback has been also a strong and positive.

Speaker Change: Thanks, and then I was also wondering with with regard to the.

Pat Mackin: B to C.

Speaker Change: Monetization strategies, where you know where you are.

Speaker Change: Maybe talk a little bit with different with different ways to monetize the apps and cost structures for four subscribers. I was just wondering if there's if you could give any more color there as far as the types and the types of things you were trying and kind of what the feedback youre getting from the consumer is.

Speaker Change: Yeah.

Speaker Change: Our market, our recent market research and looking at.

Alice Chang: It can be downloaded over the world.

Speaker Change: Other.

Speaker Change: Competitory alternative product there we noticed that there is a room to optimize all price points.

Alice Chang: Okay, all right, that's ahead of schedule because I thought you're only going to do a couple of countries. Um We move fast.

Speaker Change: Originally we were charging around $79 a year for the subscription and now we are introducing a much higher premium subscriber subscription fees.

Louis Chen: OK, let me ask you a question about the Juana acquisition. Now, I thought that you had said that they were going to add about 20 key customers. But if they did, then you must have lost a lot of customers in Q1. Or did they not add 20?

Speaker Change: Feature at $79 per year, so it's a significant increase.

Speaker Change: Increase in ASP.

Speaker Change: <unk> is that driven by adding new Genuity AI features.

Speaker Change: Some of those are very advanced and very fun and cool. So the early results show that consumers are willing to upgrade from the original plan into these new airplanes and those are also.

Louis Chen: Hi, this is Luis. So the owner acquisition did add, you know, a little bit over a dozen of the key customers after the integration. And you are right, you know, we also have suffered some loss for our beauty business, as I mentioned in my remark, for the other beauty clients from the key customers. Okay, all right. I was wondering about that.

Speaker Change: Part of the contribution in revenue and increase in the ASP.

Speaker Change: We will continue to do such type of optimizations and depending on the market need to two segments.

Speaker Change: Part of the line of different subscription plan and keep optimizing no doubt.

Great. Thanks, so much for for all the color. That's all that's all I had congrats again on the quarter.

Louis Chen: And just the last question is, when you talk, look at future acquisitions, is, are you going to have to be trying to find new verticals that you're not in? Or is there any opportunity out there to say, scoop up some of the competitors that maybe do like try-ons for eyeglass? Is there a shakeout out there in any categories?

Speaker Change: Yeah.

Speaker Change: We have our last question from the line of <unk> Shah from Sidoti. Please go ahead.

Speaker Change: Hi, congratulations on another great quarter I, just wanted to ask about the Warner acquisition and if you can just talk a little bit about the competitive landscape that is that in the industry in the shoe market and the handbag space.

Louis Chen: What are your thinking about acquisitions going forward? I think our priority has been spending our time through acquisition, accelerating our methods of market penetration. In the core business that we are, there isn't too much other competitors that we think is worth doing acquisition. We very much have a better product, more complete services. So I think we are winning that from just organic growth. But for newer categories, newer verticals, acquisition could help accelerate our penetration, especially in enterprise clients that typically take a long time to penetrate. So again, options are available, but our key priority has been spending the time rather than just taking our competitors.

Speaker Change: I think one of you Ethan.

Isn't too much competitor in their bag space I think one that has probably the best solution.

Speaker Change: There is still room to improve.

Speaker Change: The shoes market, one that's really leading in that industry are we the number two brand, especially in the top luxury segment also covering more than a dozen of top she was brands in.

Speaker Change: So there are a few competitors.

Speaker Change: But in a much smaller scale that are out there and again perfect Corp.

Speaker Change: Not a shadow of competition, we think we have great technology to make these solution even lead to a better I think of course the worldwide macroeconomic challenges.

Louis Chen: So what verticals are left out?

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

Speaker Change: Is slowing down some of these new adoption by key coins. They are waiting to see what is going to be your new cost structure. How they are going to invest in digital and we suddenly youll be ready to support our clients when they should be.

Speaker Change: It's coming.

Speaker Change: But again, we are not waiting we are doing a lot of integration and improvement of the technology through our in house development team and I think when the market.

Operator: So I think spending time potentially will be a bigger priority rather than just acquiring them because they are part of the market education and getting more key clients. Great. Thank you so much. That's all my questions. Thank you. Again, should you have a question, can you press star followed by the number one?

Speaker Change: Better clarity and open up that we'd be ready to ticket.

Speaker Change: Alright, and switching sides and asking a little bit about the b to b clients.

Speaker Change: Following up on another question like you've lost a lot of key brand customers.

Speaker Change: Can you tell us like what that like any color on what the conversation with clients are looking like with respect to the macroeconomic conditions in the U S right now.

Pat Nacken: Our last question comes from the line of Pat Nacken from Noble Capital Markets. Please go ahead. Hey, thanks for taking my questions.

Speaker Change: Certainly, yes, we lost a little bit more than what we expected none of them were no big tier one clients about their where they say medium sizes.

Louis Chen: First, I wanted to ask about the WANA acquisition and how that relates to or impacts the sales process. When you go to a potential B2B client, I'm wondering, you know, having a more full lineup of services for a more complete list of categories, now that you've acquired WANA, are you seeing any notable positive impacts as far as being able to provide more fully for a potential client's needs? Just wondering, you know, early results, kind of what you're seeing there and how it maybe makes the sales process easier for your salespeople.

Speaker Change: Claims I think most of those be bad I gave us is not the trend because of competition, but mostly the churn because the financial pressures that they have for management to cut on the call because where there is a tariff or other concerned are they want to be prepared and be ready to save some costs in there.

Speaker Change: K through these difficult economic times.

Speaker Change: So that is something that we don't we may try to regain those customers once the situations get better about so far I don't think there's anything that the management is to Oh don't worry about of course, we will you start to see those claims go but so far it hasnt not been the VIP to be clients. It has been just.

Louis Chen: Hi Pat. It's very positive feedback we heard from the client. Because again, they're having a full complete solution. It saves a lot of their integration effort, right. So I think this is one of the strengths and synergy we try to build. That is not just one product company, but it's a whole platform of solutions, especially with our global sales team and global customer service team. So we're able to support those clients across the different geographies. That is something that alone I wouldn't be able to do it. And now as part of the perfect group, we are able to bring this total value to the client.

Speaker Change: More of the small regional brands.

Speaker Change: Right.

Speaker Change: And my last question is about the capital allocation strategy and what is that any change in that and then it was about $160 million in cash on hand, right now so what's the plan for the cash is going to be like.

Speaker Change: I think the current under the current environment holding on the Kashi is actually not a bad thing I think a lot of deal activities in the market has been very much on hold and set them aside and we still are we will remain to seed capital is there to support our growth.

Louis Chen: Certainly more and more clients are looking at offering multi-category integration services. And they want to work with one company, with one platform. So they will get more familiar either from, you know, creation process to analytic process. So that will come as an additional synergy. But I think the most important one is the capability that we are able to upgrade the existing technology to even better because of our, you know, decade-long of research and more engineering resources. So we'll be able to take the one solution as is, but also to infuse and shift new technology in there to upgrade with a Genevit AI or other new algorithm under development.

Speaker Change: Ah I think growing organically I'll keep priority, especially with the BTC business going very strongly that's why we launched a new app. We are launching a lot of updates and upgrades to our existing app subscription and this is part of the use of the capital to.

Speaker Change: To invest in R&D to investing in market MMA steel in our radar.

Speaker Change: I think for the time being I would be a little bit more selective into looking what are the options in the market under the current environment.

Speaker Change: Thank you so much and congratulations on a great quarter again.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Thank you.

Louis Chen: So also in general, I think the strategy as we map out is being executed well. And so far the market feedback has been also strong and positive. Thanks.

Speaker Change: As there are no further questions at this time.

Speaker Change: To hand, the conference back to the management for closing remarks.

Speaker Change: Thank you once again for joining the call today. If you have any further questions. Please feel free to contact us directly or through our IR website. We look forward to speaking to everyone next time, Thank you and goodbye.

Louis Chen: And I was also wondering, with with regard to the B2C monetization strategies, where you know, where you are, maybe toying a little bit with different with different ways to monetize the apps and cost structures for, for subscribers. I was just wondering if there's if you could give any more color there as far as the types, the types of things you're trying and kind of what the feedback you're getting from the consumer is. Our market, recent market research and looking at other competitor alternative product there, we noticed that there's a room to optimize our price point.

Speaker Change: That concludes our conference call for today. Thank you for joining and you may now disconnect.

Louis Chen: Originally, we're charging around $39 a year for the subscription. And now we're introducing a much higher premium subscription with newer feature at $79 per year. So it's a significant increase in ASP. Of course, that is driven by adding new generative AI features. Some of those are very advanced and very fun and cool. So the early results show that consumers are willing to upgrade from their original plan into this newer plan. And that's also part of the contribution and revenue and increase in ASP.

Pat Nacken: We will continue to do such type of optimizations and depending on the market needs to segment different product line or different subscription plans and keep optimizing on that. Great. Thanks so much for all the color. That's all. That's all I had. Congrats again on the quarter. Thank you.

Aashi Shah: We have our last question from the line of Aashi Shah from Sudoti. Please go ahead. Hi, congratulations on another great quarter. I just wanted to ask about the Warner acquisition and if you can just talk a little bit about the competitive landscape that is there in the industry in the shoe market and the handbags, please. I think from our view, there isn't too much competitor in the backspace. I think Warner has probably the best solution that is there. There's still room to improve. The shoes market, Warner's clearly leading in that industry with a number of brands, especially in the top luxury segment.

Louis Chen: So covering more than a dozen of top shoes brands in there. So there are a few competitors, but in a much smaller scale that are there. And again, Perfect Corp, we are not shy of competition. We think we have great technology to make the solution even better. I think, of course, the worldwide macroeconomic challenges is slowing down some of these new adoption by key clients. They are waiting to see what is going to be their new core structure, how they're going to invest in digital. And we certainly will be ready to support our clients when that decision is coming.

Louis Chen: But again, we are not waiting. We are doing a lot of integration and improvement of this technology throughout in-house development teams. And I think when the market offers better clarity and open up, we'll be ready to Right.

Louis Chen: And switching sides and asking a little bit about the B2B clients, following up on another question, like you've lost a lot of key brand customers. Can you tell us like what the like any color on what the conversation with clients are looking like with respect to the macroeconomic conditions in the US right now? Certainly, yes, we lost a little bit more than we expected. None of them were, you know, big tier one clients, but they were these medium sizes clients. I think most of those people that gave us is not the churn because of competition, but mostly the churn because the financial pressures that they had from management to cut on the cost, because, you know, whether it's a tariff or other concern, they want to be prepared and be ready to, you know, save some costs and navigate through these difficult economic times.

Louis Chen: So that is something that, you know, we may try to regain those customers once the situation gets better. But so far, I don't think there's anything that the management is too, you know, worried about. Of course, we are sad to see those clients go, but so far, it hasn't not been the VIP, the big clients. It has been just more of the small regional brands. Right.

Louis Chen: And my last question is about the capital allocation strategy. And what is there any change in that? And there's about 160 million in cash on hand right now. So what the plan for the cash is going to be like? I think the current under the current environment, holding on the cash is actually not a bad thing. I think there are a lot of, you know, deal activities in the market has been very much on hold. And that's them as I and we. So we remain to see I mean, the capital is there to support the growth.

Louis Chen: I think growing organically is our key priority, especially with the B2C business growing very strongly. That's why we launched a new app. We are launching a lot of updates and upgrades to our existing app subscription. And this is part of the use of capital to invest in R&D, to invest in market. MMA is still in our radar. But I think for the time being, I will be a little bit more selective into looking what are the options in the market under the current environment.

Operator: Thank you so much and congratulations on a great quarter again. Thank you.

Operator: As there are no further questions at this time, I'd like to hand the conference back to the management for closing remarks. Thank you once again for joining the call today. If you have any further questions, please feel free to contact us directly or through our IR website. We look forward to speaking to everyone next time. Thank you and goodbye. That concludes our conference call for today.

Operator: Thank you for joining and you may now disconnect.