Perfect Corp. Q4 FY2023 earnings call

• Strong Q4 and full-year results: Q4 2023 revenue up 27.6% YOY to $14.1M, full-year 2023 revenue up 13.1% YOY to $53.5M. Net income positive for both periods. - Growth drivers: Momentum in AI/AR cloud solutions and subscription services. B2B secured major license renewals with beauty, skincare, jewelry brands. Increased demand for skin and skincare diagnosis products, accelerated adoption of jewelry and fashion virtual try-on. - Mobile app business: Robust Q4 with 45.7% YOY increase in mobile beauty app active subscribers. Leveraged Gen AI for premium features in YouCam suite, driving app installations and premium subscriptions. - AI strategy: Centered on 4 pillars - beauty AI, skin AI, fashion AI, gen AI, which will drive core business moving forward.

Fourth quarter 2023 revenue grew 27.6% year-over-year to $14.1 million. Full year 2023 revenue increased by 13.1% year-over-year to $53.5 million. AR/AI cloud solutions and subscription revenue in Q4 2023 was $12.0 million, an increase of 25% compared to the same period in 2022. Full year AR/AI cloud solutions and subscription revenue was $44.8 million in 2023, up 21.2% from 2022. Mobile beauty app active subscribers surged 45.7% year-over-year to over 879,000 by the end of Q4 2023. AR/AI cloud solutions and subscription revenue contribution to top line expansion, while mobile app segment contributed to premium subscribers conversion.

• Management expects total revenue recognized by IFRS for full year 2024 to range from 12% to 16% year-over-year. - B2C is expected to grow faster than B2B in 2024, with B2B recovering from early 2023 challenges. - Skin AI, generative AI, fashion AI, and beauty AI pillars are key to sustaining growth in 2024.

Q: Can you share color into the revenue growth breakdown between B2B and B2C business and the outlook for 2024 segments? And what is the outlook for profit and profit margin for 2024?

A: B2C continues strong, expected to grow faster than B2B but B2B is recovering. Gross margin expected to stabilize around 80%-81% as B2C growth leads to slight margin impact from third-party fees but no big change expected.

Q: Are you increasing investment in enterprise sales capacity and your top investment priorities? And outlook for cash flow?

A: Top priority is having solutions ready for web and online subscriptions to capitalize on enterprise demand recovery. Cash flow expected to remain positive as operating cash flow was $13.6M in full year 2023 and is managed with strong discipline due to contractual nature of business.