PERF - Earnings call transcript Q3 2024

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Operator

Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Perfect Corp's Third Quarter 2024 Earnings Conference Call. [Operator Instructions]. And please note that today's event is being recorded. I will now turn the conference over to your first speaker today, Mr. of Director IR Shu, the company. Jimmy ahead. go Please

Jimmy Shu

Officer; Perfect Thank and XXXX Quarter Alice and our Chief Chief to Vice and our today Vice you, hello, everyone. Chang, President Executive and Chairwoman, Iris and Strategy Corp's Founder, Louis Earnings President Accounting. Ms. Chen, Executive Third are Welcome Mr. Ms. Call. Chen, Officer; us With Finance of

with our our Form on to its refer also third SEC filed IR X-K or can financial will on quarter conclusion. replay You results our A the website in we call after of the earlier. XXXX website this shortly available be

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

earnings regarding to objectives. contain continue, would like press you performance, we This our I refer forward-looking our call our anticipated may and our original results, safe plans, statements to Before release. harbor in statement

and materially that implied forward-looking Corp. and Forward-looking obligation any actual statements, results on numerous statements are to required undertakes based except differ risks those expectations and to today. by could update Perfect cause our prepared after subject call from are expressed uncertainties no that management's as all management's to Ms. in Chang. over call Please or speaker the our call. in second non-IFRS today, remarks today. also will note CEO, are Alice now date U.S. in stated law turn the discuss numbers of dollars, measures we will this I to our

Alice H. Chang

Quarter Thank you, Conference evening. good welcome Perfect XXXX morning, and Earnings Good to Corp's Call. Jimmy, Third

as and around of the share world. some our Let well me remainder view our our by for updates financials, on as product the the business in progress then you giving development start year and

XX.X% revenue months $XX.X grew X to year-over-year first Our by million.

subscription was to growth and resulted business. same increase for cloud AI/AR adjusted app income revenue million, business in continuous our solution increased compared of XX.X% the Our the the in period income from positive to period the strong last under net This million the $X year. and same mobile net income $X.X net

a result cash net balance very In and saw The business months with in management initiatives BXB from while the efficient comes a to growth in AR in XXXX investing and of line revenue XX.X%. terms income $X.X the BXC. our X both same to our bottom $X.X the quarter income first strong our net of in increase footprint line expand delivered of net continuous XXXX XXXX, cost focus $XXX.X remains the contributed inflow cash income, quarter, generate company's of with period we million and over cash in equivalents. third $X.X efficiency net million, million to flow Furthermore, an third management the million. AI and allowing in adjusted our market bottom $X.X million of the operating of on services versus This and of sheet the

expansion and Notably, beautification yielded for underscores spanning mobile subscribers age and video geographies. in strong features, This global and maintained XXX,XXX, the has active quarter-over-quarter the AI all-time a increase. growth creation, Our with enhancement, paying subscribers, of BXC sustained efforts over of reaching photo business an representing results. all demand year-over-year growth our enduring high XX% groups editing, positive number paying have

appeal stream A Japan, addition our month footprint new broadening model, user outlook Italy, and the operate in as revenue mobile and we new credits a Android app. notable This Mac, PC, to credit-based options validating laptop, billing each new mobile, to via mobile These under presents besides has services user regions. consumers and for the accessible iPad, offering. services, access providing we iOS on prepurchase where a geographic into of Brazil range expanded our beyond to promising America, introduction features, consumer our of creation, apps, including continue AI addressable through total BXC emerged our initiative Europe, growing further our apps focus tapping This and broader Western web-based market base North and and mobile beauty has of markets in as In universal photo such wide enhancements also growth app see a a editing the beautification. base. video

margins shift -- Store. we web-based and service offers the to direct Additionally, shift imposed stores the avoiding Google by services fees higher by Apple

photos personal YouCam content digital and updates Our receive style integrating solutions creativity, mobile editing. AI AI powered their technology suite frequent This of and creation advancement to empower by latest the and express update users through innovative offering feature AI-driven in ways to to enhancements, for AI showcase app and the video. cutting-edge explore continues new

initiative Pro a with prior a expectations market pivotal for feature role realistic particular new where chain. with designed small, a growing emphasis the we Skincare of Now and skin positions is enhanced X, skin pursuit us advanced our that in with quarter market solution our to consumers sector, aligning for shifting about upgrading driven grow diagnostics, in visualize to the expanding the in this clinic been deepening several we AI foothold in practitioners AI aesthetic prioritized verticals. have and the critical penetration to simulation ease industry-leading This patients our made in making product and new introduced better portfolio increasing capability. notably, to of the significant HD XX of concerns Most concerns learn with few skin in in projected deployment awareness including analysis the all the newly results. aesthetic upgraded AI-powered and we strategically procedures, to where with technology and with with plays represents on area simulation. This consumer BXB both strides establishing for their details solution aesthetic in has decision. This our outcome market a Skincare medium-sized skin up instrumental across health likelihood significantly the video potential next skincare beauty, reducing treatment allows and operation ready years, misunderstanding Pro skin to clinic by thereby skin aesthetic

our cross-sell Virtual major beauty key Our solutions product and to the to core conglomerates rates engagement the We us next, online for all play affiliated have and across role continues and conversion reach. brands and retailers regions, SKU renewal to expanding year with perform in strategically well and particularly driving licenses the Try-On also our successfully higher both highlighting essential including this enabled e-commerce. for shopper selections our brand sectors. makeup, in enhancing market broader This extending offerings, renewed

present sales our remains the cycle BXB continue While post-recovery pipeline some robust. challenges, to

AI is AI-powered anticipate pleased online XX/X on Our recommendations are were on augmented consultation services, it address focused We with beauty makeup, needs standard focus introduction, This service consumers, including consumer the an them on our implement clients types, adopting RAG designed high has helping retrieval we unique garnered all PerfectGPT tailored robust a model, in highest our Since This reliable, PerfectGPT fashion the standard AI derived framework, and provide the interest of are call future, preferences, large by model, brands style. beauty AI skin authoritative we numerous professionally diligently in become solutions, that team a services. assistant June. update engagement a brands recommendations that their meeting personalized distinctly in language prospective guiding and and announced the which will skincare on to where assistant quality we the beauty are global to beauty will enterprise is generation, factual enables accurate, and recommendations information feature supported this skin coming all from ensuring concerns, offer LLM. enable consistent, not brand train from factual documents provide standard. merely all brands. that the websites our strategy. And that

while of business XXXX. conclusion, demonstrate growth We expect commercial rapid larger-scale of in early achieved consistent will efficiency, the and and concept, BXC by expansion. and next the a continues marked financial XXXX, POC, increased third launch strong segment followed our organic in we deployment enhanced proof operational by revenue, late In to quarter performance, year

confident space. in Corp. developing and sustain growth on capitalize strategically AI by position are long-term our to that new market leadership We the diligently and beauty Perfect leveraging is technologies and fashion opportunities expanding positioned

you. to committed engine IFRS driving demand enterprise A have SaaS year growth both diverse enabling suite and maximize to the who consumer-facing for solutions, results. us will pass AI innovation and XXXX subscription details enterprise to the we to AI that from the serves compared total with recognized With both our range brand my that call company, you. consumer our advantage mobile app XX% our remain revenue offer deeply across to financial discuss of and that and ability both a concluded our As AI is full comprehensive innovation that, Thank Louis, over now unified a year I the will the app SaaS our key to to pain through points for we remarks beauty under address positive sectors, XXXX leverage driven by Outlook solutions. projects full XX% services.

Pin-Jen Chen

XX% Thank in to Alice. will expansion This is mobile In solutions, diagnosis Standard, quarter original clarity for continued subscription our in mobile from growth represented XXXX, momentum from measures business. continued in million note revenue stem XXXX, in Financial Please basis, that to on our of growth million top subscription and AI/AR reporting comparisons and IFRS the third that solutions all year-ago measures, to business. of The the are period beauty a as Virtual comparable the period financial the XX.X%. cloud versus app and year-over-year $XX.X International cloud XXXX and revenue and the our you, well quarter on $XX.X which of $XX.X of is representing to increased and Try-On the as of the our we of skincare our million of also quarter. online third increase the on discuss a operations. to period XXXX, the The same $XX.X our the AR period, positive revenue non-IFRS compared attributed total from provide from XX.X% the grew trend some subscription solution the greater year-over-year Reporting the total million growth app AI

GenAI services As licensing to we XXXX. consumers. in million period in technologies, clients expand decreased quality $X.X through XXXX to should the in of by third quarter improvement revenue and XX.X% the for our same service The we pain both resolutions brand million see to continue during and offering $X.X point compared

of fee $XX increase the third legacy decline mainly of The and to expenses and efficiently third this consumers. total subscription XX.X% XXXX. and continued that portion The and company mostly Gross for business Google The development due the replaced expenses public such million by X% year. third-party margin to gross by were the to decrease to million $XX.X offset were to increase partners payment as paid to new XXXX of as gross revenue. for operate of margin and to in in profit revenue due expense, by the with increase in in in X.X% in quarter compared mainly the same converting general operating was million mobile our as $XX 'XX gross for revenue processing immaterial nonrecurring and period a the generated but $XX.X of The and period more AI/AR quarter XX.X%, to company. distribution grew the the revenue revenue as it this last SaaS due subscription out Apple and are for XXXX gradually sales to model. quarter mentioned, same the the continue of third type research is services, of to million brands increased traditional will mostly the from offline higher marketing by be into phased compared and expenses app our licensing administrative from become subscription we previously As margin

and marketing million NYSE. million revenue quarter The costs quarter were million XXXX. increase of XXXX 'XX of The for were for represent of Net to income margin $X.X operating million third was of This expenses. control. growth efficiencies million third XX%. $X.X of to we compared $X.X a apps. million mobile compared for the during also technologies and income headcounts mainly as our in by Research during and the development and the the on expense decrease to X-year $X.X are costs. period third expenses marketing $X.X during and decrease XXXX, compared advertising X.X%. third mainly of This operational increase third period net details million Sales increase XXXX, the in the an into to The same the due the the approaching computing were for 'XX an of same our Going same for into compared of were due expense of during mark development the of net to and of 'XX the GenAI third XX.X% $X.X of a in quarter administrative quarter $X.X supported of General period million the XXXX related quarter were efficient for increase $X of further to the period continuous result for quarter was XX.X%. increased XXXX, mainly of the was positive in XXXX. a income same income net cost listing events,

XXXX. income XX.X%. share-based increase adjusted of XX.X% margin loss net financial year, compensation, gain, represents of to for quarter and this the the of third in adjusted million $X.X of noncash valuation noncash $X.X the in period of the Excluding income of was the year third net liabilities, an adjusted net an million of same quarter compared This last

of including deposits interest cash flow held equivalents, compared of the bank the increase time in XX, X positive third XXXX, million continuing and reaching $X.X strategy. months' of operating $X in cash the as of note, company's an to X third equivalents and XX% app and deposits. by end to support period XXXX growth $XXX.X As The XX, subscription to the positive and XXX,XXX a and result The the during year. of company's high year-over-year, of its million subscribers cash the received operations cash a income $XXX.X flow was our June million million cash the all-time from business cash mobile generate Of increased deposits, this operating in of cash quarter months the to 'XX. We same flow September quarter flow company of ability demonstrated positive compared had XXXX. the in cash

again its and app once Our offer eyewear, net total suite end products last customer turning value paying In subscribers. achieving a jewelry had September makeup, into the XX, of SKUs of both as a in had quarter, since users, the record Perfect increase enterprise to third increase have AR the business to in demonstrating XX growth. customers 'XX, watches, XXX enjoyment XXX,XXX base suspension. our of showing of metric, apps total, this showed customer to key the and AI brand our them capability represents beauty this for and solution effectively of third This the SKU business quarter to quarter, second continuous quarter enterprise XXX In continued the cloud clients skincare, over quarter. In for Corp. penetration clients brand a compared the of in and our stability of mobile with of XXXX, practical subscription drive XXXX. and XXX

on also to margin saw increase adjusted rate year-over-year of a financial We XX.X% which net continue in adjusted net and income XX.X%. focus significant operational and prudence, efficiencies of

of quarters, have in on core to we recent in technologies strengthen to order AI been up will developing and our capabilities. Following continue invest

cutting-edge experiences reach, We as new and the evolving clients research and and continue our and our there technology We and needs business. both in of development Our expand well-positioned fashion market software to growth our we is and capitalize opportunity are enhance beauty user and BXB within both within opportunity attract BXC in customers of the beauty the emerging our prioritizing believe additional in landscape. the By fashion are verticals. on existing that forefront space. and the GenAI at new AI, that streamline developing anticipate solutions innovative operations to meet

clear from us overall has macroeconomic the signs there Corp. optimistic rebound about the base, not Perfect which of apparent, been are customer feel make future While our

and updates market. prepared to open is transparency assessment better monitor Finally, conditions. current call and questions. range the XXXX provide guidance on the to business order growth based progress my XX%. operational management from for will concludes forecast market up offer in will of to year-over-year That The closely please The the total XX% our remarks. revenue company for Operator,

Operator

Your Instructions] the line Co. Sidoti of Aashi with [Operator question comes first Shah & from

Aashi Shah

the another share And growth for you questions very What on within the will Two that side. rate what is BXB solutions? helpful. breakdown full segment see is here. on AI the the year also, guidance. question is reiterated growth One management just -- can if be wondering I BXC? revenue think versus I the is for the like each Like

this the XX% for to revenue XX% So, will about year. growing be

Just thoughts wondering rate the are into year? if there any next growth on

Pin-Jen Chen

Aashi, you nice to talking again.

growing BXC mainly trend see So, XXX. for a same BXB the you side. from are is faster to can this remains we the clients can the year, at the business key see, example, at rate the for compared The metric BXB. the Those

as BXB, more for the we that. growth quarter. are from coming guidance past on next this the rebounds, the a little So time. is market The working are it sector taking BXC Mainly year, in bit

still different are client through global sales we our working with pipelines So, and team.

have the number visibility. share that, we're expect the the and more So, a but to we year share with we yet you that to on moment, don't toward working current at of for end

Operator

Thompson question of next from Zacks Small Your Cap Research. comes line the with Lisa

Lisa Thompson

Thanks a differently that And get mobile so app, on product Could be the that, buy mobile about version to Could I'd mobile? see different your the desktop more little people that about here using and on for desktop included competitors. also, when you that would you that against us put talk bit from product. interested have I new also would And also? the how telling much you you getting about version? you think apps? are talk the is a you

Alice H. Chang

to this Alice. new emerging also is is in a Yes, are this and we a market, It's release early starting year. this solution Lisa, the web-based. it

right see but using using browsers. only apps not users we also So, web also now,

do the to not use mobile same PC also thing. screen, the on but only can browser the So you

trying This we the also adding is more it using features new And very we I what jumped early model app also it said, So our just just apps this that to the web. web. from and like of from like a into year, competitors see on developing be good are is is to to a for that different, mobile but solution and the be growing both web, mobile I to have users think the And potential the the option will this will the future. use market. course, very good would for reason

can place, app, need features browser, the when you on time, use access don't the same same only any you the at to anywhere. the You also

at enhancing So, not model on users, on for photo open for creating, the web. editing, this on still option and a consumer, end-user beautification only usage up is new but and same video we're new the app, time, a and focusing just the the also

Pin-Jen Chen

that, Lisa, on and is much a base solution. of we the interesting to the overlap doesn't to bit the echo the web-based that data too observe mobile user app

seems a of TA that are type So, we it different here. addressing in

So, your is at this whether the not. question bundle, is moment, it current a

So, the they the mobile, that's app, for easy really that a subscribe something on consumer smaller are looking who to screen. very is use

bit little may spend who user this. opting professional, or more using a then more While on their screen larger want professional amateur more into to desktop, they time, are are they

more As on retouching running to both cloud time and all photo AI the and doesn't with casual video you larger want really a into more We these on it being or screen. computing generative address you're if mobile just want markets. now to AI, for really the matter spend moving are case use your

Lisa Thompson

Great.

priced are the same? so, And they

Pin-Jen Chen

not. are they No,

web-based, the to said, feel what base. On it's the be credit that more we going we

credit how The subscription. can per they consume subscribe. is so month, monthly much options, to have user various So, it want a they

can use number creation certain depending they use deposited data get the a so, to And account to always the top or of editing any credit. And on feature more. they credits. the want complexity time with accounts up of They want feature the if fixed their

current are model the So, different. X slightly

Lisa Thompson

to is objective a get the right? margin, gross imagine I much higher Okay.

Pin-Jen Chen

absolutely. Yes,

are as most is a cost this base. keep So, in generative on, credit importantly, provide is it's certainly a think to monitor server larger something AI really and But running -- for to we addressing offer of right? infrastructure sustainable why I audience. order that, think to So, I the group a that's moving

percentage use with to share a case have that you, example, users note desktop we for a slightly the demographic. compared noticed higher in to of mobile basis, male the the on we Just

this too. slightly is total think making really I market addressable So, our bigger,

Operator

from [Operator Instructions] with NOBLE Your the next comes Capital Markets. question of line Pat McCann

Patrick McCann

for of that quarter. PerfectGPT. I -- websites of a chatbot, how beauty, with in to have and in Is thing. to AI usage was I wondering, on websites an My just just wondering a beauty And AI BXB be days, had more that? data might market offering I'm that up Congrats on current mentioned wondering I brand on of related was might fit like you're little your you AI opportunity talk it's many the For run you chatbot. I'm you're the coming example, wondering, on in with a would how assistance perception could the that wondering moving bit you just about assistant because is the that a how a assistant. do question was confidence beauty then that getting with that across your thinking I what's to going so your you sort direction future if offering. wide of there? that there. an PerfectGPT on about you sort solid think there's And was adoption the these how

Pin-Jen Chen

doubts because beauty what of so most lot the in really seeing beauty product and very me right? has So, we're a of sector, the personalized, better. what questions is the think fits I consumer about time,

product. your So, it's up your up style. a really It's just beauty not to generic to skin type,

larger because consultation. do just to a hire item to to the training team the Today, one people a bigger can't have that so advisers, mostly to a audience they hire the shops, is pain of train one-on-one really many type or this and brand, offline. users So typically, them to the give points of of right? also they brand, whether gating beauty grow And the in of online consultation, for address and large offline

eager really are they So, chatbot. offer something to traditional smarter than

use forth. refund? the about but much I track your knowing style, customer get services, I'm And my more like we analyze order, and type just your when I how not beauty order. These product, it's will it's analyze so to get right? my ratio designed AI of So, skin to your types, can asking facial

this demand high I who because website doubts, see those So, right? conversion comes and brand, rate each the that potential the for is will that product, of think the to where come very the the they consumer isn't shop you Q&A can about with so have the it's away material, really many it, read spend consumers basket, walk into any time the harder and And but for and right, just to it then with dig much to to product.

So, to AI, see they really AI to the I the assistant. to problem on engagement. and product try with the for you have confidence user the the expected think take home were PerfectGPT the time And that it come increase spend solve more or them brand if them. with lot that the therefore, They in to engagement a

the kind is traditional is the services the used think way. in for playground. more this customer which traditional I of new mainly is So, it don't the as chatbot, same

Alice H. Chang

the brands analysis. for attributes solution Try-On, beauty bit integrate our we for more, AI analysis, the me to little beauty comment let because their know-how for my online only solution chatting, assistant AI what for Louis chatting, skin for AI their be the a PerfectGPT, we integrate AI besides but into for training brand Virtual view And said. Perfect also AI own database not facial --

with And just the to mega all are asking user messages for just what's provide beauty beauty using skin the assistant, try-on a them that So directly real to can accordingly, while them. from Try-On analysis industry. the we or the together tell our the our their AI side, together tools on to brand instead questions analysis, are of efforts skin analysis sending all you best brand to Virtual already PerfectGPT users a face integrate have and recommendation analysis, personalized chatting, this AI also like they analysis,

Patrick McCann

I these being this the Great. for would like cost how question seems would the be And be, Just able point you're could pain guess, charge like Louis, point save savings price It to significant offer you these be BXB brands, recommendations. could brands? people could when these I'm -- what follow-up to brands what that. clients? help to of if having you having one I mentioned, a by this negotiating the on make significant the if for ask implications can to wondering contracts contracts with It your

Pin-Jen Chen

right? all think going the early still understand across impact real only industries. in services, the brand these full or think the on sales in Not we're to improving And is is but how this I perspective us I the AI show process helping satisfaction. beauty, customer or the of data to days really cost-saving

brands working So, luxury because we want closely are to giving our the sure is very is that they that approach brands user the currently, prestige AI and train with all key really designed they make to that experience the the the for.

scale test type of think we result, that benefit So, these And have we do based So, commercially about will on I to markets that the can I think confidence concept, proof from different the different on at we in this how we see, as services. Alice right? more said, results. of

create time harder sure it's really that I something then something a next. because that the compelling to think And offer. and from people invest properly Certainly, this I very those to the garner again is train from to or harder to all make XX/X the website long-term. app, mobile data the decisions is to the work is and in it -- have them retain business then first a the make and things service think the I to brand quality that work think So, would of like having

Operator

[Operator Instructions].

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

Jimmy Shu

joining today. call the again once you for Thank

through If Goodbye. look questions, everyone our directly us or next any website. contact you the free forward in to with have to further We feel speaking please IR call.

Operator

Thank Ladies all joining. and that you concludes today's gentlemen, for call.

now You may disconnect.

Perfect (PERF) 30 Oct 242024 Q3 Earnings call transcript