Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue grew by 13.5% year over year to $28.2 million in the first half of 2024.
- Net income increased by 185% year over year to $1.4 million.
- Adjusted net income rose by 26.2% to $2.8 million compared to the first half of last year.
- Strong growth in AI-AR cloud solutions and mobile beauty app subscriptions.
- Operating cash flow generated a net inflow of $5.5 million in the first half of 2024.
Negative Points
- Licensing revenue decreased by 49.8% in the second quarter of 2024.
- Gross margin decreased from 80.6% to 79.3% due to higher third-party payment processing fees.
- Total operating expenses increased by 0.7% to $12.4 million.
- Sales and marketing expenses rose by 7% due to increased marketing events and advertising costs.
- Research and development expenses increased by 7.5% due to additional headcounts and related personnel costs.
Q & A Highlights
Highlights from Perfect Corp (PERF, Financial) Q2 2024 Earnings Call
Q: Can you discuss the outlook for the second half of the year, considering macroeconomic concerns and election impacts?
A: Louis Chen, EVP & Chief Strategy Officer: We achieved 13.5% growth in the first half, within our annual guidance of 12%-16%. Q2 was slower due to seasonality, but brand renewals were strong. We expect to maintain performance in the second half, with potential for higher growth if macro conditions improve.
Q: Are brands allocating more funds to AI initiatives, and what are you hearing from the market?
A: Louis Chen, EVP & Chief Strategy Officer: Many beauty enterprises are setting up AI committees and budgets for pilot projects. We are developing tailor-made AI solutions to help beauty consumers discover products and try new looks, which is promising for future growth.
Q: What is the typical profile of key customers, and how do you convert brand clients into key customers?
A: Louis Chen, EVP & Chief Strategy Officer: Key customers are typically multinational beauty brands or groups with multiple brands. We start with small pilots and demonstrate results to encourage broader adoption, leading to higher revenue and key customer status.
Q: Can you provide insights into the growth of monthly active subscribers and churn rates?
A: Louis Chen, EVP & Chief Strategy Officer: We see consistent growth in annual subscriptions, indicating high user commitment. While we haven't disclosed specific churn rates, the trend is positive across multiple countries, driven by continuous innovation and premium features.
Q: What are the top growth categories for the second half of 2024, and what are the catalysts?
A: Louis Chen, EVP & Chief Strategy Officer: Skincare shows strong growth due to past investments. Makeup remains robust but grows slower. Jewelry and watches have promising momentum, with many pilots converting to full deployments. B2C mobile apps also continue to expand.
Q: How do you see the impact of AI for e-commerce on your business?
A: Louis Chen, EVP & Chief Strategy Officer: Our AI solutions focus on personalized recommendations, enhancing e-commerce platforms by understanding user preferences. This technology supplements existing platforms, increasing conversion rates and basket sizes.
Q: Can you discuss the impact of cost efficiency initiatives on margins and the outlook for sustainable margins?
A: Louis Chen, EVP & Chief Strategy Officer: B2B margins are high, over 90%, due to in-house technology development. B2C margins are lower due to distribution fees from Apple and Google. Overall, margins may slightly decrease but remain strong. New verticals like med spa clinics show high demand for our solutions.
Q: What is the M&A environment like, and are you considering acquisition opportunities?
A: Louis Chen, EVP & Chief Strategy Officer: M&A is part of our growth strategy. We are actively looking for opportunities, especially as valuations become more reasonable. We will share any developments with the market when ready.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
