Perfect Corp.

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Perfect Corp's earning conference call. At this time, all participants are in a listen mode only. 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 the first speaker for today, Mr. Rick Lee, Vice President of IR of the company. Please go ahead, sir.

Thank you, Ally. Hello, everyone, and welcome to Perfect Corps' Q3 earnings call. With us today are Ms. Ally Chen, Founder, Chairwoman, and Chief Executive Officer, Mr. Louis Chen, our Executive Vice President and Chief Strategy Officer, and Mrs. Iris Chen, VP of Finance and Accounting. You can refer to our third quarter 2023 financial results on our IR website or in the form of 6K, which filed with ACC earlier. You can later assess a replay of this call on our IR website shortly after the conclusion of this call. For today's call, management will provide their prepared remarks that we will host a Q&A section. Before we continue, I would like to refer you to our Steve Harper statement in our earnings press release, which is also a press release call. This call may contain forward-looking statements regarding public corporations' performance, anticipated plan, operational results, and objectives. Forward-looking statements are based on measurement expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied on our call today. Perfect Cope 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 the following measurements prepared remarks are in U.S. dollar terms, and we will discuss no IFRS measures today. Without further ado, I will now turn the call to our first speaker today, our CEO, Ms. Alice Chen.

Hi, everyone. Thank you, Rick. Welcome to PerfectCorp 2023 third quarter earnings call. We have some exciting news to share today. So we get started. In the third quarter of 2023, our growth momentum from quarter two persisted, resulting in a total revenue of $14.5 million. This marked a 13.2% increase in revenue. compared to the same period of last year, and a 14.7% increase when compared to the previous quarter. The primary drivers of this quarter we made from our AI AR cloud solutions for enterprise brand business B2B and the subscription services for our mobile beauty app business B2C. We have seen very promising new developments in our AI skincare solutions, and AI hairstyles for brands. Other innovative app features powered by GenAI, which I will elaborate more shortly. For the bottom line, our net income for the third quarter of 2023 was positive, standing at $3.5 million on an unadjusted basis and a $2.7 million point adjusted. underscoring our commitment to effective cost management while growing top-line revenue. Overall, we are very encouraged by our continued top-line growth and improvement in profitability as a result of our continuous effort to optimize our business in both B2B and B2C. Our strategic development focus in generative AI, has already shown a strong demand from both brand customers and consumers. Creative AI unlocks many new possibilities in digital imaging, video, beauty tech, skin tech, and fashion tech, different usage cases. These new use cases will extend our reach into an even bigger total addressable market. In a rapidly evolving digital landscape, where brands are investing more and more into digital transformation. Perfect is well positioned to help our brand partners with the latest in generative AI models, in addition to a complete line of beauty tech, skin tech, and fashion tech offerings. Finally, our consistent rollout of a wide range of innovative features driven by GenAI technology has maintained the strong growth of our mobile app subscription business. This new AI features have not only drawn a new mobile app installation, but also effectively converted users into premium subscribers. Perfect is ready to capitalize on this new opportunity, and we are positioning ourselves as the beautiful AI company for both B2B and for B2C. Now let's shift to our focus to operational outcomes of the third quarter and discuss our most recent advancements. In the third quarter, on the B2B side, we secured several sizable new and renewals with beauty grid, some of which included up-sale opportunities, such as expanding their few offerings and extending to additional countries. This renewal not only underscores the growing reliance of this brand on our solution to meet their evolving needs, but also reaffirm our leadership in the field of color cosmetics, which continues to be a very key differentiator and a core component for our company. To that front, we have continued to reinforce our omni-channel strategy through the expansion of strategic alliance with various distribution channels of beauty, skincare, and fashion products to ensure comprehensive coverage of all customer touchpoints. For example, we teamed up with DoFree, a key player in global travel retail, to provide both in-store and web-based virtual makeup try-on experiences for 15 beauty brands in airports across 27 countries worldwide. Additionally, we are very excited to announce our partnership with Walmart, the world's largest retailer, to initially offer make-up virtual try-on experience for more than 1,400 beauty products in Walmart mobile apps. This level of integration is made possible thanks to our existing relationship with over 600 global brands. enabling the effortless distribution of this brand's virtual product offerings across diverse retail platforms. As we look to the future, it is clear that virtual triumph technology is becoming essential for all beauty and fashion brands and retailers in engaging with customers in delivering personalized shopping experiences for all. In the third quarter, A significant highlight was the accelerated penetration of skin care markets, marked by notable increase in new deal flow from the skin care sector. We believe the skin care industry is going through a transformational change to adopt more digital technology and to offer consumer with an user-friendly and objective-driven diagnosis result. Our AI skincare technology distinguishes itself by delivering an unparalleled AI-powered skin analysis that encompasses 14 different skin concerns in real time, providing users with comprehensive and instant feedback on their skin progress. Secondly, we have introduced a new range of substitution plans tailored specifically for small and mid-sized skin skincare brands. on our website. This expanded strategy of skincare enables us to engage with a larger potential customer base of all sizes. By providing tiered substitution plans, we not only make our skincare technology more accessible, but also streamline the sales process. This approach will lead to larger install base for our AI skin care services. Another new use case we launched in the market is our generative AI hairstyle, very new. We upgraded our AI hairstyle solution by replacing the previous generation AI model to the latest diffusion generative AI model, and the result is amazingly good. The realism of the hairstyle images is now hyper-realistic, and the generated style variations unlock more choices for consumers to visualize more hairstyles to choose from. Under the Hairstyle AI development, we announced our partnership with Transmate, a Unilever brand of hair products, to offer AI hairstyle generations for their consumers to try on. And the possibility is ever-expanding. We are also targeting broader hair brand markets, such as the wig legalization and the hair extension with the latest generative AI upgrade. This is a testament to the versatility and the broad applicability of our GenAI-powered virtual try-on technology, demonstrating their potential to cater to a diverse range of market needs. Another cutting-edge AI innovation we just launched in third quarter is in high-quality automated 2D to 3D SKU conversion technology for jewelry and watch BGO virtual tryouts. This result can quickly enlarge the total numbers of SKUs of our jewelry brands' customers they can offer on their website in a cost-effective and speedy way. This new 2D to 3D technology can help us expand to a broader jewelry and watch tryout market. Now let's shift focus to our B2C mobile beauty app business. We had another strong quarter for our app business. As evidenced by 62%, 62.5% year-over-year increase in our mobile app active subscribers to 835,000. This sustained growth, very strong growth, serves as a testament to the increasing demand and market expansion in the realm of photo, video, and camera applications, including image and video creation, beautification, and enhancement. With our suite of Ucam apps, we are diversifying our product offerings and expanding our avenues for monetization. To fully capitalize on the app market expansion trend, we have implemented the following strategies. First, our team created a very rich roadmap of premium features for subscribers. We introduced multiple AI-driven premium features by GenAI. such as AI avatar, AI fashion, AI hair style, AI selfie, and more and more to come. Offering our mobile users with a wide range of photo and video beautification and enhancement solutions. We have a very active roadmap to include AI in all of our products and services. It will transform the whole industry with the power of beautiful AI. Second, we have strengthened our cross-promotion initiative across our suite of mobile apps and executed marketing program to increase our app discoverability to new users. This consumer app market is very large and growing market. More and more global consumers are opting to pay subscription for premium features. Our purpose is focusing to gain more market share in B2C mobile app business. Third, we have expanded our B2C monetization opportunities by introducing a new app, like our new app, UCAM AI Pro. It is a GenAI tool app, GenAI app for AI text-to-image creation and more other GenAI features collection. This new app has a very rich roadmap to include many of our future Gen AI innovations from our perfect lab. We have also optimized our mobile app subscription prices, maintaining competitiveness while increasing our revenue in several markets. Collectively, this effort has been instrumental in driving the impressive expansion of our mobile app business. we are committed to sustaining this effort to enhance the visibility and the reputation of our UCAM app in the mobile app sector, by positioning ourselves favorably for future expansion. In summary, our third quarter was robust, featuring double-digit revenue growth and positive net earnings. Our observations suggest that We are well positioned to meet the revenue growth target we shared in Q2, Quarter 2. Consequently, we reaffirm our projected revenue growth for 2023, which is expected to range from 11.5% to 14.5% year over year in comparison to 2022. With that, I have now concluded my remarks, and we'll be handling the call over to Louis, who will discuss our financial details with you.