Earnings call transcript: Perfect Corp Q4 2024 sees AI-driven growth

Perfect Corp (PERF) has reported its financial results for the fourth quarter of 2024, highlighting a 12.4% year-over-year increase in revenue to $15.9 million. The company’s stock price experienced a minor decline of 1.04% during regular trading hours, closing at $1.91. According to InvestingPro analysis, the stock appears undervalued at current levels, despite falling 21% in the past week. The firm continues to focus on AI innovations and strategic acquisitions to bolster its market position.

Key Takeaways

• Revenue for Q4 2024 increased by 12.4% year-over-year.
• Launch of new AI-powered features enhanced product offerings.
• Acquisition of Wanna expands fashion technology capabilities.
• Stock price decreased by 1.04% following the earnings release.
• Strong growth in North American and Western European markets.

Company Performance

Perfect Corp has demonstrated robust financial performance with a total revenue of $60.2 million for the year 2024, marking a 12.5% increase compared to the previous year. The company’s strategic focus on AI-driven solutions and the acquisition of Wanna have strengthened its position in the beauty and fashion virtual try-on market. The firm has also expanded its customer base, with active mobile app subscribers increasing by 14.3% to 1 million.

Financial Highlights

• Total (EPA:TTEF) Revenue: $60.2 million in 2024 (12.5% YoY growth)
• Net Income: $5.0 million in 2024
• Adjusted Net Income: $8.3 million (18.6% increase)
• Operating Cash Flow: $13.0 million
• Gross Margin: 78% for full year 2024 (down from 80.6% in 2023)

Outlook & Guidance

Perfect Corp projects revenue growth of 13% to 14.5% for 2025, with B2B sales anticipated to constitute 30-40% of total revenue. The company plans to continue its investment in AI technologies and expand its market presence and product portfolio.

Executive Commentary

Alice Chang, CEO of Perfect Corp, emphasized the company’s strategic positioning, stating, "We are confident that Perfect Corp is strategically positioned to capitalize on expanding market opportunities." She also highlighted the focus on AI, noting, "AI is the whole focus of R&D this year and I think it’s for the next five to ten years."

Risks and Challenges

• Economic Uncertainties: The B2B market faces challenges due to economic uncertainties, potentially affecting enterprise spending.
• Gross Margin Decline: The decrease in gross margin from 80.6% to 78% reflects increased B2C revenue contribution, which may impact profitability.
• Competitive Pressure: While currently a leader in its niche, the company must navigate increasing competition in the AI-driven beauty and fashion tech space.

Q&A

During the earnings call, analysts inquired about the integration of Wanna and its impact on the company’s fashion tech offerings. Executives reiterated the strategic value of the acquisition, positioning Perfect Corp as an augmented reality powerhouse in the fashion and beauty virtual trial market. Concerns about enterprise spending were addressed with cautious optimism, acknowledging the challenges but emphasizing strategic growth initiatives.

Overall, Perfect Corp continues to leverage its technological advancements and strategic acquisitions to drive growth, despite facing some market challenges. For deeper insights into Perfect Corp’s valuation, financial health, and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.

Full transcript - Perfect Corp (PERF) Q4 2024:

Conference Operator: We will be hosting a question and answer session after the management’s prepared remarks. Please note that today’s event is being recorded. I will now turn the conference over to first speaker today, Mr.

Jamie Shah, IR Director of the company. Please go ahead.

Jamie Shah, IR Director, Perfect Corp: Thank you. Hello, everyone. Welcome to Perfect Corp’s fourth quarter twenty twenty four and full year twenty twenty four earnings call. With us today are Ms. Alice Chang, our Founder, Chairwoman and Chief Executive Officer Mr.

Louis Chen, our Executive Vice President and Chief Strategy Officer and Ms. Iris Chen, Vice President of Finance and Accounting. You can refer to our fourth quarter twenty twenty four and full year ’20 ’20 ’4 financial results on our IR website or in the link or in the Form six ks we filed with SEC earlier. A replay of this call will also be available on our website shortly after its conclusion. For today’s call, management will provide our prepared remarks followed by a question and answer session.

Before we continue, I would like to refer you to our safe harbor statement in our earnings press release. This call may contain forward looking statements regarding performance, anticipated plans, our original results and our objectives. Forward looking statements are based on management’s expectations and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our call today. Perfect Corp. Undertakes no obligation to update any forward looking statements except as required by law after the date of this call.

Please note that all numbers stated in management’s prepared remarks are in U. S. Dollars and we will also discuss non IFRS measures today. I will now turn the call over to our CEO, Ms. Alice Chang.

Alice Chang, Founder, Chairwoman and CEO, Perfect Corp: Thank you, Jimmy, and welcome to Perfect Corp twenty twenty four fourth quarter earnings call. Let me start by giving you some updates on our financials and our progress in product business development around the world in 2024 and share our view for the year of 2025. First of all, we completed the full year 2024 with double digit growth in revenue as anticipated by our guidance. The total revenue grew by 12.5% year over year to $60,200,000 The bottom line net income for the same period was $5,000,000 and the adjusted net income increased 18.6% to 8,300,000 compared to 2023. This continuous increase in revenue and the positive net income is mainly due to strong growth within our mobile app subscription business under AIAR cloud solution business.

Full year 2024, our operating cash flow generated a net inflow of $13,000,000 and our balance sheet remains very strong with over $165,900,000 in cash and the cash equivalent. Our B2C mobile app business has maintained very strong growth with a number of active paying subscribers continuing to breach on time records with over 1,000,000 to end twenty twenty four. It is a 14.3% increase compared to 879,000 subscribers at the end of twenty twenty three. This sustained growth in paying subscribers highlighting the ongoing global demand of AI powered photo and video editing, creation, enhancing and verification features appealing to all age groups and the regions. As we mentioned, we have seen positive momentum from our North American and the Western Europe markets as well as developing markets in Brazil.

Our UK mobile app suite continues to evolve with frequent updates and the feature enhancement powered by cutting edge generative AI for image and video creation. Among the most popular innovations, our Gen AI hair experiences have become a major hit within our user community. These features including AI hairstyle, hair lengthening, hair wavy, hair volume, hair color and more provide ultra realistic stimulus previews, transforming how consumers and the retailers make style decisions. Beyond hair transformation, our AI technology extends to other exciting innovations such as the AI face swap, AI face expression, AI photo enhance, video enhance and more, delivering next level creativity and personalization to our growing user community. Beyond our mobile apps, we are also expanding our web based generative AI solution with UCAM online editor.

Consumer now can enjoy the latest AI innovation not only through their mobile app, but also via web browser on their laptop and the PC, ensuring a seamless and accessible experience across the platform. We are focused on harnessing the power of GenAI to deliver engaging new features from text, image, audio and video that is becoming an integral part of the premium subscription offering for our B2C users on app and on web. By integrating state of the art models and algorithms, we aim to create immersive personalized experience that go beyond traditional functionality driving deeper user engagement and the loyalty. Our strategy in B2C app and the web involves a continuous R and D to refine generative AI content model and enabling features such as AI enhancement in photo and video as well as AI creation personalized the image and the video. Through this relentless innovation coupled with the robust user feedback and the deep data analytics, we strive to deliver subscription based service that offer clear, tangible value, positioning us as a leading provider for cutting edge image and video Gen AI solutions in consumer market.

Before I go to our C2B performance, I want to go over the recent acquisition of Wanna from Farfetch (OTC:FTCHQ) and its impact on PerfectCore. The transaction was completed in early January and we anticipate spending the next six to twelve months, similarly integrating Lana into our team. Lana’s core competence gives us access to new markets and the customers within luxury brands, where it offers virtual try on services for shoes, handbags, scarves and the clothes. This acquisition perfectly aligns with our AI service offerings to brand partners and will expand our total addressable market beyond our current reach. Together with Perfect Corp, we’ll strengthen our competitive position in the beauty and fashion space, leveraging our synergies, logistics solutions, enhanced capabilities and experienced team members.

In our business B2B business in 2024, we have prioritized deepening market penetration in skin care and the makeup segment. We reached over seven thirty two brand clients with over 822,000 SKUs onboarded in our platform. We continue to make significant steps in expanding our portfolio with AI powered skin diagnostics. Beyond core beauty and the skin care brands, we have actively expanded into new markets and the region aesthetic clinics, dermatology clinics, skin care centers, mass bars and awareness centers, broadening our reach that impact to the industry. We continue to see strong demand in the skin diagnosis sector from brands, retailers, clinics and mass spa.

Our AI powered skin analysis detects up to 15 major concerns in HD, providing personalized treatment and product recommendation tailored to each user’s unique skin profile. The technology has enabled precise treatment measure, tracking progress with before and after comparison to showcase improvements by combining advanced diagnostics with data driven insights, our solution enhances client engagement, trust and a long term loyalty in the evolving world of AI driven skincare. Our makeup virtual try on solution remains as a global leader, delivering strong results for brand customers. We have secured key licenses renewal with top beauty conglomerates and retailers, proving our impact on boosting online engagement in e commerce conversion rate. While the B2B sales cycle has its challenges, our pipeline remains strong and we remain focused on helping enterprise clients adopt AI driven solutions to elevate consumer engagement and the digital experiences.

On the fashion tech side of our business, we continue to make strong progress in luxury fashion tech with luxury brands, particularly in watches and the jewelries BTO. In January 2025, we acquired WANNA from Farfetch to accelerate our B2B growth with fashion brands in the retailers. This strategic move expands our three d BTO solution to shoes, bath, clothes and scarves, enhancing digital shopping experience and reshaping how brands engage with customers in the era of AI powered fashion retail. Additionally, our new web based AI service, YouCan online editor, soft API, integrate Gen AI technology for advanced image and video editing. While initially we designed for beauty and fashion professionals, it has gained traction across diverse industries, significantly expanding our total addressable market.

The SaaS API is simplified web and mobile app development, handling complex processing without requiring server maintenance from the clients. Its flexibility makes it suitable for business of all sizes. With new clients spanning like convenience store chain, telecom carrier and mobile phone companies. In conclusion, we achieved a solid business growth throughout 2024, highlighted by increased revenue, enhanced operational efficiency and a strong financial performance. We are confident that Particorp is a position strategically to capitalize on expanding market opportunities and sustain long term growth by continuously developing new technologies and leveraging our leadership position in beauty and fashion space for our consumer from our app, web as well as our B2B enterprise brand clients.

Our strategy for long term growth in 2025 and beyond focuses on deepening our presence in the beauty, fashion and the skin segments and expanding into new segments, exploring cross sell opportunities, broadening our product service offerings, strengthening of leadership, accelerating revenue growth and maximizing long term shareholder value. Driven by the positive demand for both our mobile beauty app subscriptions and the enterprise disaster solution, Our outlook for the full year 2025 project’s total revenue growth recognized under IFRS to range from 13% to 14.5% compared to the full year’s 2024 results. With that, I have concluded my remarks and will now pass the call over to Louis, who will discuss our financial details with you. Thank you.

Louis Chen, Executive Vice President and Chief Strategy Officer, Perfect Corp: Thank you, Alex. Please note that all financial comparison are on a year over year basis and the reporting period is the fourth quarter of twenty twenty four versus the comparable period in 2023 and that on top of the international financial reporting standard measures. We will also discuss non IFRS measures to provide greater clarity on the trends in our operations. In the fourth quarter of twenty twenty four, our total revenue increased to $15,900,000 from $14,100,000 for the same period in 2023, representing a year over year increase of 12.4%. Full year revenue increased 12.5% to $60,200,000 in 2024 from $53,500,000 in 2023.

The growth came from the continuous growth of our AI and AR cloud solutions and mobile app subscription business. The AI, AR cloud solution and subscription revenue grew 25.4% to $15,100,000 compared to $12,000,000 from the year ago period, which represent 95 percent of total revenue in this quarter. The growth is attributed to the continued expansion of our mobile beauty app subscription and the positive momentum from our online skin diagnosis solution as well as our virtual try on business. Licensing revenue decreased by 72.2% in the fourth quarter of twenty twenty four to $500,000 compared to $1,800,000 during the same period of 2023. The licensing revenue will gradually become immaterial as it continued to be phased out and replaced by the better business model of recurring subscription revenue model.

The gross profit for the fourth quarter of twenty twenty four grew by 2.5% to $11,800,000 with gross margin of 74.1% compared to $11,500,000 and gross margin of 81.3 for the same period in 2023. Full year gross profit was $46,900,000 in 2024 and gross margin of 78% compared to $43,100,000 in 2023 with gross margin of 80.6. The decrease in gross margins was primarily due to the increase in third party payment processing fee paid to digital distribution partners such as Google (NASDAQ:GOOGL) and Apple (NASDAQ:AAPL) due to the increase in our mobile app subscription revenue. The total operating expense for the fourth quarter of twenty twenty four decreased by 3.6% to $12,200,000 compared to $12,700,000 for the same period last year. The decrease was primarily due to the lower R and D expenses and G and A expenses in the fourth quarter of twenty twenty four.

Full year operating expense increased 2.7% to $50,100,000 in 2024 compared to $48,800,000 in 2023. This increase was mainly due to the increase in sales and marketing expenses, R and D expenses and also offset by a decrease of G and A expenses. Going into more detail from operating expenses. The sales and marketing expense for the fourth quarter of twenty twenty four were $6,900,000 compared to $6,700,000 during the same period of 2023, an increase of 3.6%. The full year sales and marketing expense increased 9.7% to $28,200,000 in 2024 compared to $25,700,000 in 2023.

These increases were largely due to increase in marketing events, advertising costs related to our mobile apps and cloud computing costs. Research and development expenses were $2,800,000 for the fourth quarter of twenty twenty four compared to $3,000,000 during the same period of 2023, a decrease of 8.3. The decrease was from the streamlining certain R and D process and benefiting from expense savings. Full year R and D expense increased 4.7% to $12,000,000 for 2024 compared to $11,500,000 in 2023. This increase resulted from an increase in R and D headcount and related personnel costs.

General and administrative expenses decreased by 41% to $1,800,000 for the fourth quarter of twenty twenty four compared to $3,000,000 during the same period of 2023. Full year G and A expenses decreased by 26.6% to $8,500,000 compared to 11.6% in 2023. The decrease were mainly due to the increased operational efficiency as we march into the third year mark of the listing on NYSE. Net income was $1,100,000 for the fourth quarter of twenty twenty four compared to the net income of $1,400,000 during the same period of 2023. Full year net income was $5,000,000 for 2024 compared to $5,400,000 in 2023.

The positive net income was supported by continued revenue growth and effective cost control. This result represent a net margin net income margin of 8.3% for the full year 2024. Excluding noncash share based compensation, noncash valuation gain and loss of financial liabilities, the adjusted net income was $2,300,000 for the fourth quarter of twenty twenty four compared to the net adjusted net income of $2,100,000 in the same period in 2023, an increase of 8.2. Full year adjusted net income was $8,300,000 in 2024 compared to DKK 7,000,000 in 2023, an increase of 18.6%. This represents an adjusted net margin of 13.8% for the full year 2024.

As of 12/31/2024, the company held $165,900,000 in cash and cash equivalents in six months deposit compared to $3,200,000 as of 12/30/2024. We had a positive operating cash flow of $3,300,000 in the fourth quarter of twenty twenty four compared to $3,100,000 during the same period of 2023. For the full year, operating cash flow was $13,000,000 in 2024 compared to 13,600,000 in 2023. The positive cash flow demonstrate the company’s continued ability to generate continuous cash flow to support its business operation and growth strategy. On the mobile app side and business metrics, the mobile app subscription business was growing and the active subscriber increased to 14.3 year over year, reaching an all time high of over $1,000,000 by end of twenty twenty four.

Our YouCan suite of beauty app has demonstrated its ability to provide both enjoyment and value to users, successfully converting them into paying subscribers. Our enterprise customer base had a net increase of 24 brand clients since the end of last quarter, achieving a total of seven thirty two brand clients with over 822,000 SKUs for makeup, skincare, eyewear, watches and jewelry products as of the end of last year. The further expansion of these metrics highlights the ongoing growth in the customer penetration and SKU expansion. In the fourth quarter, PerfectCorps stayed at the 151 key customers the same at the end of the previous quarter, demonstrating the stability of our enterprise business in this quarter. In summary, in the fourth quarter of twenty twenty four, our AI and AI cloud solution and mobile app subscription business continued to drive our growth.

Throughout the year, we remain focused on operational efficiencies and financial discipline, resulting in an 18.6% year over year in full year adjusted net income and adjusted net margin rate of 13.8%. As mentioned by Alex, we will continue to invest in the growth of our business through the development of AI technologies, both organically and through MMA opportunities. To strengthen our core competencies, our commitment to advancing G and AI position position us as the industry leaders, empowering our consumers and enterprise clients with tools that outperform current solutions and redefine what’s possible in user engagement and personalized services. Our purchase of Wanna from Farfetch significantly enhanced perfect core market reach, allowing us to tap into new customer segments and geographies that were previously out of scope. By integrating Wanna’s established customer base, product offerings and distribution channels, we can rapidly expand our footprint and drive growth across untapped markets.

Additionally, these transactions strengthen our competitive positioning by broadening our product portfolio, increase brand visibility and position us to better serve a wider range of industries. We are excited about the opportunity that are ahead of our B2C and B2B business lines. By continuing to invest in AI innovation, expanding our market presence and building on our strong foundation, we are confident that we will sustain growth well into the future. Finally, our 2025 guidance for total revenue year over year growth will range from 13% to 14.5%. This forecast is based on company’s current assessment of the market and operational conditions, and management will closely monitor business progress and provide updates in order to better offer transparency to the market.

With that concludes my prepared remarks. Operator, please open up the call for questions.

Conference Operator: Thank you. We will now begin the question and answer session. And your first question comes from the line of Pat McCall with Noble. Please go ahead.

Pat McCall, Analyst, Noble: Hey, thanks for taking my question. I was wondering, I noticed you certainly you highlighted the growth in the brand clients and my question had to do with the B2B side of the house. I’m wondering what the situation is with your enterprise clients as far as their ability to potentially start to spend more money on services such as yours. What’s the situation with the B2B, especially given that it has the higher margins? And will that would you anticipate a return to growth there in 2025?

What should we look for there? And then I guess sort of the follow-up to that would be, how does the B2B revenue play into your 13.5% to 14.5% growth guidance for 2025?

Louis Chen, Executive Vice President and Chief Strategy Officer, Perfect Corp: Thank you, Pat. So the B2B market, I would say, it still remains challenging. Last year, certainly on the previous year, we had challenges from inflation and costs. Most recently, we start hearing clients certainly worry about potential tariffs that may come later in the year. So they are certainly cautious to understand what exactly will be the impact to their financials that may turn their spending plans.

So the pipeline remains very solid. The interest from the B2B brands are still there. They are investing. They want to be more digital. This is where we play the role.

However, we understand that they are not yet ready to write a big check. So we see that the renewal rate for the business continues to be healthy. So they will continue to use what they are already using, but the expansion to be have a more accelerated growth, I think it still remain to be proven. And we will be vigilant about the market and how the world economy will play. And this certainly may affect their cost structure from that perspective.

But the good news is we are spending our time right into newer markets. So our total addressable whether it’s client groups or it’s market, geography is expanding again partially because of the one acquisition as we are spending into newer categories that we were not previously present or only starting to get into the market and that potentially contribute in the growth. The guidance that we have provided certainly is based on current visibility. We didn’t want to just have a big talk and have overly optimistic without seeing the markets moving. So we are cautiously optimistic about that since there’s no really real competition in the segment that we are.

We remain a solid leader in this space. So I believe that once the market opens and probably bounce stronger consumption, it might drive more revenue in there. The total guidance for 2025, we expect that the B2C revenue is growing faster than the B2B continuously for the last year or two. So we expect that the B2B revenue may be somewhere between 30% to 40% of the total revenue in this year pursuant to our guidance model.

Pat McCall, Analyst, Noble: Great. Thank you.

Conference Operator: And your next question comes from the line of Lisa Thompson with Zacks Investment Research. Lisa, please go ahead.

Lisa Thompson, Analyst, Zacks Investment Research: Hi. Let me just follow-up on your last answer. If you thinking that next year B2B is going to be 30 to 40%, what was it last year?

Louis Chen, Executive Vice President and Chief Strategy Officer, Perfect Corp: So last year, I see it was 40% ish, plus a reminder we are finishing our auditing with the audit service. So the V2C part has become the bigger part of the whole business in 2024.

Lisa Thompson, Analyst, Zacks Investment Research: And in looking at what your kind of earnings plan is for the year, Do you think that you’re going to be able to reduce operating expenses to keep in line with the reduction in gross margin because of that and then come out kind of the same as you did last year?

Louis Chen, Executive Vice President and Chief Strategy Officer, Perfect Corp: I think we are still investing and I think we’re still relatively smaller scale to stop investing. So I think the opportunity is quite big there. The expenses in the net income is positive. The operating income is virtually almost breakeven. So that’s not really our key concern, especially with the capital that we have to invest in the growth.

I think now with expansion into newer categories, coming out with new product, especially in AI innovation. We will continue to invest, noting that we will increase any significant differences between what our expense model has been in the previous few years. So in a nutshell, I think we will try to run the model with financial discipline to make sure that it’s not creating financial pressures, but at the same time, continue to invest in AI development, research and growing the R and D team.

Lisa Thompson, Analyst, Zacks Investment Research: Ken, I just have one question on Wanna. Can you talk about that landscape as far as competition? I know you dominate beauty. What does it look like in the fashion landscape?

Louis Chen, Executive Vice President and Chief Strategy Officer, Perfect Corp: Yes. So Wanda is certainly been the leader in the fashion space. They have more than two dozen big logos, big names such as Valentino, Balenciaga, Louis Vuitton, Gucci and more. So I think there’s not really much competition after we acquire Wanna. So after the integration, we really become the AIAR powerhouse for fashion and beauty virtual trial market.

There may be a few other smaller start ups that are in the shoes market or only doing certain watches market, but not in the scale and reach that can compete with us. So I think the strategic merger really created opportunity to become the one shop for the luxury brands, especially for the top luxury brands. They rely on global team. They rely on bigger, more established organization to provide services to them. And I think Wanna was part of the Farfetch, which is again, it’s a great company, great group.

And now part of Perfect Corp, a more established global leader in technology. We are confident that we can give extra runway for this business to grow and really become a dominant player across both beauty and fashion.

Lisa Thompson, Analyst, Zacks Investment Research: Great. Thank you for those answers.

Conference Operator: And your next question comes from the line of Ashley Shah with Sidoti.

Ashley Shah, Analyst, Sidoti: Great. Thank you so much for taking my question and congrats on a very solid fourth quarter results. I have one of the questions regarding gross margin. Gross margin declined six percentage quarter over quarter. I understand the year over year decline because the B2C part is higher, but like the B2C business is more.

But why did we see a six percent decline quarter over quarter? And like if you can just give us what the key drivers behind this compression draw? Yes, I think

Louis Chen, Executive Vice President and Chief Strategy Officer, Perfect Corp: the fourth quarter, the good news is the B2C was growing at a faster pace than we expected. So the overall revenue contribution from B2C versus B2B in the fourth quarter was much higher than we expected. And that’s how the overall gross margin has a bigger dip. I think it’s not expected, it was not expected, but I think it’s really more maybe a one time thing because the fourth quarter, the shopping season was driving good sales, whether people getting new smartphones or they are downloading new apps or they are subscribing new apps. And we have seen this pattern typically in off seasonality patterns.

The quarter four will have that impact because the B2C is bigger. Just this year, it was a lot more bigger and growing faster than we expected. On the other hand, B2B continues to be challenging in quarter four, right? So the revenue contribution from B2B was slightly lower than we expected. That also contributed to the drop in the gross margin.

For the 2025 full year, I think we expect that may gradually come up slightly.

Ashley Shah, Analyst, Sidoti: Okay. But it does not go back to 2023 levels?

Louis Chen, Executive Vice President and Chief Strategy Officer, Perfect Corp: Correct, correct. Yes. I think in 2023, our B2B business was about half of the total business. I think for this year, as I said earlier, we expect the B2B business to be more challenging. And if the B2C continues to grow really quick fast and the B2B contribution may drop to, let’s say, 30% or maybe over 30%.

Ashley Shah, Analyst, Sidoti: Right. Okay. And just another question relating to the acquisition, like if you can give us the time line for the full integration? And also regarding the revenue split, like, you said the revenue growth, like, the revenue guidance for is 13% to 14.5%. If you can just break down how much of that growth is expected to come from the acquisition and how much is the organic growth?

Louis Chen, Executive Vice President and Chief Strategy Officer, Perfect Corp: So the deal just closed like forty, forty five days ago. So team is going through extensive integration work across all different departments. So we expect that will continue to happen in the first half of the year, meaning that the go to market together as one team, as one platform will happen later in the year. And with that, again, we try to do as soon as we can from sales marketing perspective, from product development, from customer service, customer success. So if we are able to move very quickly on this, the revenue may be the contribution of that new acquisition might come in earlier or in more meaningful way in this year.

The guidance that we have given them, we started with a quite conservative look into what the business are as is and how that contribute. Again, Wanna is a smaller start up, right? They are about 30 employees. They have good brand clients like twenty, twenty plus. In contrast, we have like 700, right?

So that gives you a perspective about the size of the acquisition. So it’s not going to have a tremendous change overnight, but it’s much more the new value that we can unlock after the integration is done. And then gradually as this process march toward and we may adjust our guidance depending on the market.

Ashley Shah, Analyst, Sidoti: Great. And just one more if we have the time. Like strategically, where do you see increasing your investments going into the new year? Like to take advantage of the adoption of AI? Like where do you where are you on where are your top investment priorities from an incremental dollar perspective?

Alice Chang, Founder, Chairwoman and CEO, Perfect Corp: AI is especially generated by AI is all our focus right now from R and D side. So you can see the evolving of a new AI model every month. It’s excited. And recently the open model to the world. So I think this is a great opportunity for you know, the application services on top of this big models.

So by saying that R and D, no matter is the headcount or some of the server training, GPU, all these things are the main focus. Of course, digital marketing is still important, especially for B2C. If not buying apps, then all the effort we put is in digital marketing to attract all the worldwide app users to come to us. So AI is the whole focus of R and D this year and I think it’s for the next five to ten years. But the speed of investments, I can see is fast and because the whole ecosystem evolves so fast.

We’ll pay very high attention to the market. And Recent development of the market I think is a very, very pro to service providers like us.

Ashley Shah, Analyst, Sidoti: Thank you.

Conference Operator: And our next question again from Lisa Thompson with Zacks Investment Research. Lisa, please go ahead.

Lisa Thompson, Analyst, Zacks Investment Research: Hi. I just wanted to ask again about, whatever happened to AI assistant and if you think that’s going to be a big driver for your mobile apps? Talk about where you are with

Alice Chang, Founder, Chairwoman and CEO, Perfect Corp: that. Thank you. Yeah. AI assistant is the one we are developing, since last half of I mean, last second half of last year, we try to bridge branch them into B2B for the brand to use and the B2C. For B2C, there’s AI assistant agent, co pilot.

We will launch that in our app before second quarter of this year to try the market. I think that’s the future. Everybody needs it. And it’s a pay by service kind of business model. And for B2B brands, we have a perfect GPT and now ready for POC.

We did have brands doing POC trying to doing POC with us. And again, brands, their movement to this new AI, especially generative AI, the speed is not as fast. So we saw POC may take may start before end of this year when testing, doing validation, B2C part will be faster. We will make the same agents, beauty agents, editing agents to our apps before second half of this year.

Lisa Thompson, Analyst, Zacks Investment Research: Great. I look forward to that. Thank you so much.

Alice Chang, Founder, Chairwoman and CEO, Perfect Corp: Thank you.

Conference Operator: As there are no further questions at this time, I’d like to hand the conference back over to Mr. Jamie Shah. Jamie?

Jamie Shah, IR Director, Perfect Corp: Thank you once again for joining the call today. If you have any further questions, please feel free to contact us directly or through our IR website. We look forward to speaking to everyone again in our next call. Goodbye.

Conference Operator: This concludes today’s conference call. Thank you all for joining. You may now disconnect.

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