Perfect Corp. Class A: Positive Growth Amid Challenges

Perfect Corp. Class A ((PERF)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for Perfect Corp. Class A painted a generally positive picture, highlighting strong growth in revenue and active subscribers, alongside strategic acquisitions and market expansion. However, the company also faced some challenges, such as a significant decline in licensing revenue, ongoing difficulties in the B2B market, and a decrease in gross margin due to increased costs.

Double-Digit Revenue Growth

Perfect Corp. reported an impressive 12.5% year-over-year revenue growth for the full year 2024, reaching $60.2 million. This growth was primarily driven by the robust performance of the mobile app subscription business under AI/AR cloud solutions.

Increase in Active Paying Subscribers

The company saw a 14.3% increase in active paying subscribers for its mobile app business, totaling over 1 million by the end of 2024, up from 879,000 at the end of 2023. This growth underscores the increasing demand for Perfect Corp.’s offerings.

Strategic Acquisition of Wanna

Perfect Corp. completed the acquisition of Wanna from Farfetch, a strategic move that expands its market reach in the fashion sector. This acquisition is particularly significant for virtual try-on services for shoes, handbags, scarves, and clothes.

B2B Expansion and New Markets

The company made strides in the B2B sector by deepening market penetration in skincare and makeup segments and expanding to aesthetic clinics. Perfect Corp. reached 732 brand clients with over 822,000 SKUs onboarded, marking a significant expansion into new markets.

Strong Cash Position

Perfect Corp. ended 2024 with a strong cash position, holding $165.9 million in cash and cash equivalents. This financial health positions the company well for future investments and growth opportunities.

Decrease in Licensing Revenue

Despite overall growth, licensing revenue saw a sharp decline of 72.2% in Q4 2024, dropping to $0.5 million from $1.8 million in the same period of 2023. This decline highlights a challenging area for the company.

Challenges in B2B Market

The B2B market remains a challenging environment for Perfect Corp., with clients cautious about spending due to economic factors like tariffs and inflation. This caution has impacted the company’s B2B growth.

Gross Margin Decline

Perfect Corp. experienced a decline in gross margin, which fell to 74.1% in Q4 2024 from 81.3% in the same period of 2023. This decrease was primarily due to increased third-party payment processing fees.

Forward-Looking Guidance

Looking ahead, Perfect Corp. provided guidance for 2025, projecting total revenue growth between 13% and 14.5% compared to 2024. The company remains optimistic about sustained growth, driven by continued investment in AI technology and strategic expansions, despite the challenges faced in the B2B segment and the decline in gross margin.

In conclusion, Perfect Corp.’s earnings call reflected a positive sentiment with notable growth in revenue and subscribers, strategic acquisitions, and market expansion. However, challenges such as declining licensing revenue and a tough B2B market were also evident. The company’s strong cash position and forward-looking guidance suggest optimism for continued growth and success in the coming year.