NYSE:PERF
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Perfect Corp (NYSE:PERF) reported another solid quarter of revenue and earnings growth. It reported $13.9 million in revenues up 10% year over year. The loss of licensing revenue has been a drag on revenue growth as the company transitions away from that business model. The company expects a much stronger second half as pilots from products introduced last year (such as facial analysis, jewelry, and watches) turn into rollouts. In addition, app revenue continues to outpace B2B and has now crossed over the 50% mark which should cause an acceleration of growth. Even more positive is that earnings continue to grow much faster than revenues and this quarter’s EPS increased 55% aided somewhat by the Q4 stock buyback.
The most exciting development during the quarter was the introduction of Perfect Corp.’s PerfectGPT AI Assistant platform that could revolutionize the sales process and replace many of the functions of a salesperson at a store as well as bring online shopping to a new level. This product uses AI to solve a customer’s problem and provide advice when shopping. Through conversation, it can understand the customer’s needs and recommend solutions such as makeup matching, hairstyle recommendations, and even outfit advice. The main reason to go to a store to try on is fit and the second is advice. When at Sephora, we want advice from the salesperson to pick a foundation or lipstick. At Warby Parker, we want to know what the latest style is and want the hipster clerk to say—“Yes! That’s the frame for you!” AI Assistant will be able to do this without human intervention saving retailers and brands money and providing online capabilities never previously available.
While AI is being used for a variety of applications—some do well and others don’t. One of the most successful applications to date has been customer service with which companies have achieved excellent ROI. We believe PerfectGPT AI Assistant can do this for the sales function. We believe many other companies are working on this application, but none have the in-depth experience, knowledge of the industry, or the database of SKUs and brands that are required to turn advice into sales. Perfect Corp is way ahead of the pack and we look forward to brands adopting this new product and seeing the results they achieve. Management indicated that almost all brands and retailers are in the process of evaluating how AI can be used in their business with some further along than others. They believe the first companies that will be using PerfectGPT will be prestige brands and it could be in use by Q4 of this year. 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 2025 and beyond.
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