• Total Revenue: $16 million, a 12.1% increase year-over-year.
• Net Income: $2.3 million, a 264% increase year-over-year.
• Adjusted Net Income: $2 million, a 33.3% increase year-over-year.
• Operating Cash Flow: Net inflow of $4.3 million.
• Cash and Cash Equivalents: $164.6 million as of March 31, 2025.
• Gross Profit: $12.5 million with a gross margin of 77.9%.
• Total Operating Expenses: $12.6 million, a 2% increase year-over-year.
• Sales and Marketing Expenses: $7.4 million, a 2.6% increase year-over-year.
• Research and Development Expenses: $3.6 million, a 17.5% increase year-over-year.
• General and Administrative Expenses: $1.7 million, a 21.6% decrease year-over-year.
• Active Paying Subscribers: 973,000, a 7.9% increase year-over-year.
• Brand Clients: 801, with over 891,000 SKUs.

• Warning! GuruFocus has detected 4 Warning Signs with PERF.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Perfect Corp (NYSE:PERF) reported a 12.1% year-over-year revenue growth, reaching $16 million in Q1 2025.
• Net income increased by 264% year-over-year to $2.3 million, demonstrating strong profitability.
• The company achieved a net inflow of $4.3 million in operating cash flow, maintaining a robust balance sheet with $164.6 million in cash and equivalents.
• The B2C mobile app business saw a 7.9% increase in active paying subscribers, reaching 973,000 by the end of Q1 2025.
• The integration of Wanna is progressing smoothly, enhancing market position and expanding the addressable market, particularly in the shoes vertical.

Negative Points

• The number of key customers decreased from 151 to 148 due to contract churns amid macroeconomic challenges.
• Gross margin slightly decreased to 77.9% from 78.3% due to increased third-party payment processing fees.
• The number of active subscribers for the YouCam mobile app decreased slightly, attributed to pricing optimization initiatives.
• Some medium-sized B2B clients were lost due to financial pressures and cost-cutting measures in the macroeconomic environment.
• The competitive landscape in the shoe and handbag markets remains challenging, with macroeconomic conditions affecting new client adoption.

Q & A Highlights

Q: Can you talk about the launch of the new AI chat app? Where was it launched and how is it being received? A: The app launched last month on Apple's App Store and Google Play. Users can download it globally. It integrates AI assistants and features like image editing and photo summarization. The app is available worldwide with language support.

Q: Regarding the Wanna acquisition, did it add the expected number of key customers, or was there a loss in Q1? A: The Wanna acquisition added over a dozen key customers. However, we also experienced some loss in our beauty business, as mentioned in the remarks, due to churn from other beauty clients.

Q: Are future acquisitions focused on new verticals or competitors in existing markets? A: Our priority is expanding our team for market penetration. There aren't many competitors worth acquiring in our core business. For new verticals, acquisitions could help accelerate penetration, especially with enterprise clients.

Q: How does the Wanna acquisition impact the sales process for B2B clients? A: The acquisition provides a complete solution, saving clients' integration efforts. It allows us to support clients globally, offering multi-category integration services. This synergy enhances our technology and market feedback has been positive.

Q: Can you provide more details on B2C monetization strategies and consumer feedback? A: We are optimizing price points, introducing a premium subscription at $79 per year, up from $39. This includes new AI features. Early results show consumers are willing to upgrade, contributing to revenue growth.

Q: What is the competitive landscape in the shoe and handbag markets post-Wanna acquisition? A: In the bag space, there isn't much competition. Wanna leads in the shoe market, especially in luxury segments. We are improving technology and ready to support clients when the market stabilizes.

Q: What are the conversations with B2B clients regarding macroeconomic conditions in the US? A: We lost some medium-sized clients due to financial pressures, not competition. They are cutting costs due to economic concerns. We aim to regain these clients when conditions improve.

Q: What is the capital allocation strategy with $160 million in cash on hand? A: Holding cash is strategic in the current environment. We focus on organic growth, investing in R&D and market expansion. M&A is on our radar, but we are selective given current conditions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.