NYSE:PERF
READ THE FULL PERF RESEARCH REPORT
Revenue growth accelerated slightly from Q2 to Q3 2024 at Perfect Corp (NYSE:PERF). It reported $16.1 million in revenues up 10.8% year over year. This is despite a 13.4% decline in licensing and advertising as the company moves away from those revenue streams. According to its Q2 filing, B2C revenue outpaced B2B in the first half of 2024, growing 43% and comprising 59.4% of sales for that period. If it continues to be more than 50% of sales, revenue growth should accelerate. On a non-IFRS basis, earnings continue to grow much faster than revenues, and this quarter’s EPS increased 43%. We look forward to 2025 and beyond as Perfect Corp.’s PerfectGPT AI Assistant platform could be a boon to revenues as it brings so much value to customers. It can replace many of the functions of a salesperson at a store as well as bring online shopping to a new level. The payback could be huge for brands, and once it has been piloted and shown to work, Perfect Corp. could earn high margins on this product, which will integrate with all its other offerings. While many companies can use AI for shopping help, none have the in-depth knowledge and databases in the beauty industry, creating a formidable moat for potential competitors.
Management believes the first companies that will be using PerfectGPT will be prestige brands and it could be testing by early next year. It is talking to the largest customers as they are the most likely to want to be leading edge and can afford the effort. Typically new products take up to two years from the initial look to full deployment so we expect PerfectGPT to have a bigger impact in 2026 and beyond.
While B2B has not picked up as much as expected, the industry is consumer-driven, and any improvement in consumer spending will benefit Perfect Corp. The facial segment continues to grow the fastest of the B2B but most customers are smaller than beauty companies and it takes more of a sales effort to generate the same amount of revenue. Going forward we look for an uptick in consumer spending as well as some announcements of companies starting PerfectGPT trials to accelerate revenues.
As a SaaS provider to businesses and consumers, we believe PERF stock should be valued on an enterprise value-to-sales basis versus its peers. Using the comparable table below we see an average of 4.9 times EV to 2024 estimated calendar year sales for this group with a range of 2.1 times to 7.1 times. We believe a conservative value would be half that average at 2.45 times giving Perfect Corp. a market value of $312 million or $3.07 per share.
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