Perfect Corp. Reports Q1 2025 Revenue Growth of 12.1% Despite Churn in North American Client Base

Perfect Corp., a leading artificial intelligence (AI) and augmented reality (AR) company serving the beauty and fashion industries, has released its unaudited financial results for the first quarter of 2025, ending March 31. Despite facing macroeconomic challenges, particularly in North America, the company reported strong financial performance, reflecting its strategic focus on growth and cost management. Key Financial Highlights Revenue: Total revenue for Q1 2025 was $16.0 million, marking a 12.1% increase from $14.3 million in the same period of 2024. Gross Profit: Gross profit was $12.5 million, up 11.4% from $11.2 million in Q1 2024. The gross margin slightly decreased to 77.9% from 78.3%, primarily due to higher third-party payment processing fees paid to digital distribution partners like Google and Apple, which increased as a result of growing subscription revenue for the YouCam mobile app and web services. Operating Expenses: Total operating expenses rose by 2.0% to $12.6 million from $12.4 million in Q1 2024. This increase was mainly attributed to higher research and development (R&D) and sales and marketing expenses, which were partly offset by a decrease in general and administrative costs. Net Income: Net income surged by 264.0% to $2.3 million from $0.6 million in Q1 2024. This substantial increase was driven by steady revenue growth, effective cost control, and an uptick in financial gains related to outstanding warrants. Adjusted Net Income (Non-IFRS): Adjusted net income, which excludes one-off transaction costs, non-cash equity-based compensation, and non-cash valuation gains/losses of financial liabilities, grew by 33.3% to $2.0 million from $1.5 million in Q1 2024. Business Overview As of March 31, 2025, Perfect Corp.'s cumulative customer base expanded to include 801 brand clients and over 891,000 digital stock keeping units (SKUs) across makeup, haircare, skincare, eyewear, watches, and jewelry products. This represents growth from 732 brand clients and 822,000 digital SKUs as of December 31, 2024. However, the number of key customers slightly decreased from 151 to 148, primarily due to financial challenges among North American clients. Market Expansion and Strategic Initiatives Alice H. Chang, the Founder, Chairwoman, and CEO of Perfect Corp., emphasized the company's resilience and continued performance growth despite economic volatility. "By leveraging market opportunities and expanding our total addressable market, we are not only attracting new clients but also laying a strong foundation for sustainable, long-term growth," she stated. The company's efforts to enhance user experience and expand its portfolio of AI and AR solutions are seen as pivotal in achieving this growth. Liquidity and Capital Resources Perfect Corp. maintained a robust cash position, with cash and cash equivalents stable at $128.3 million (or $164.6 million including 6-month time deposits of $36.3 million) as of March 31, 2025, compared to $127.1 million (or $165.9 million including time deposits and money market funds) as of December 31, 2024. The company recorded a positive operating cash flow of $4.3 million in Q1 2025, up from $3.5 million in the same period of 2024, highlighting its operational efficiency and financial stability. Business Outlook for 2025 Given the positive momentum in YouCam mobile apps and web subscriptions, as well as increasing demand for enterprise SaaS solutions, the company projects a 13.0% to 14.5% year-over-year total revenue growth for 2025 compared to 2024. This forecast is subject to market and operational conditions but underscores Perfect Corp.'s confidence in its strategic direction. Conference Call Perfect Corp. will host an earnings conference call on April 28, 2025, at 8:00 p.m. Eastern Time (April 29, 2025, at 8:00 a.m. Taipei Time) to discuss these financial results. Participants can register in advance using the provided link to receive dial-in details and access PIN. Evaluation by Industry Insiders Industry analysts praise Perfect Corp. for its ability to navigate macroeconomic headwinds while maintaining healthy financial indicators. The robust cash flow and strategic growth in digital SKUs indicate a solid foundation for future expansion. Additionally, the company's commitment to environmental sustainability and social responsibility enhances its reputation and aligns with evolving consumer values. About Perfect Corp. Founded in 2015, Perfect Corp. is headquartered in Taipei, Taiwan, with a presence in New York, San Francisco, Tokyo, Osaka, London, Shanghai, Suzhou, and Chongqing. The company develops AI and AR technologies to transform the beauty and fashion industries, offering a range of solutions from consumer-facing apps like YouCam to enterprise-level tools for enhancing customer engagement and driving sales. Perfect Corp. continues to innovate, leveraging cutting-edge technologies to create personalized and engaging shopping experiences while adhering to ethical standards and sustainability practices. For more information, visit https://ir.perfectcorp.com.