Greetings and welcome to all our value shareholders and investors. First of all, I would like to express my sincere appreciation to all our value shareholders and investors for joining us today for APR's Earnings Presentation for the First Quarter of 2025. Today's earnings presentation will proceed as follows. I will first provide an overview of our first quarter results in Korean, followed by full explanations in English. A Q&A session is also prepared after the English presentation, so we kindly ask our investors to take note of the order of proceedings. Lastly, please note that the financial results presented today have been prepared for the convenience of investors and are based on our internal data. As our external auditor's review has not yet been completed, these figures are subject to change once and after the external audit. Additionally, any forward-looking statements made during this presentation may change due to the changes in the market conditions and modifications of our strategic directions. Now, I will begin with APR's earnings presentation for the first quarter of 2025 in Korean.
[Non-English content] Thank you for listening. This concludes with the earnings presentation of APR first quarter 2025 in Korean. Next, I will proceed with the English. Please note that the Q&A session will be held after the English presentation. We kindly ask for your patience until then. Thank you.
Now let me begin with the review of our first quarter results for 2025. Please refer to page three. Overall sales trend. In the first quarter of 2025, APR recorded a consolidated revenue of KRW 266 billion, setting a new record for the highest quarterly sales in our business history. Notably, we achieved this performance by surpassing the traditionally strong fourth quarter results, continuing our solid growth momentum. This outstanding performance was driven by the enhanced brand recognition and strong growth in global markets, underpinned by the excellent quality and competitiveness of our products. Please refer to page four. First quarter results. In the first quarter of 2025, APR recorded a consolidated revenue of KRW 266 billion, representing a 79% YoY growth. Operating profit reached approximately KRW 55 billion, a 97% growth from the same period last year. We recorded a record high quarterly revenue and also doubled our quarterly operating profit compared to the previous year, demonstrating both strong growth and improved profitability. Please refer to page five. First quarter results by division. In the first quarter, the cosmetic division recorded revenue of KRW 165 billion, delivering a robust 152% YoY growth. Following the previous quarter, we continue to maintain triple-digit growth. In particular, our flagship brand Medicube achieved explosive growth, with cosmetic sales expanding by 203% YoY, driven by increasing demand in global regions. The beauty device division continued to grow across global markets, recording approximately KRW 91 billion in revenue, marking a 36% YoY growth. Meanwhile, the others division recorded revenue of KRW 10 billion, a 40% decline compared to the same period last year, mainly due to the strategic downsizing of our fashion brand NERDY. Please turn to page six. First quarter results by regions. Following the strong growth observed in the fourth quarter of 2024, overseas business regions continued to drive our performance in the first quarter as well. Overseas sales reached KRW 190 billion, representing a remarkable 186% YoY growth. As a result, the proportion of overseas sales has risen significantly from 44% in the first quarter of 2024 to 71% for the first quarter of 2025. We will provide further regional details on the following page. Please refer to page seven. First quarter results by regions. We witnessed strong demand across all overseas markets, leading to rapid sales growth. We strengthened our global competitiveness through simultaneous expansions in both developed and emerging beauty markets. Breaking it down by regions, Korea recorded sales of approximately KRW 77 billion, representing a 7% YoY decline. While the beauty division maintained stable sales, the fashion division underwent a decline, resulting in overall negative growth. The United States achieved record-breaking quarterly sales of approximately KRW 71 billion, a 187% YoY increase. Since entering the U.S. market, consistent customer reviews and proven product efficacy have fueled organic, consumer-driven viral marketing, leading to further growth in brand awareness and sales. Japan recorded sales of KRW 29 billion, representing a 198% YOY growth. During the Qoo10 Mega Wari event held in March, we achieved record high sales. Furthermore, we expanded our sales channels to offline across the country, securing new growth drivers. The Greater China regions, including China, Hong Kong, and Taiwan, recorded sales of KRW 28 billion, a 39% YoY growth, driven by steady market expansion. The others region continued their rapid growth, achieving sales of approximately KRW 61 billion, an explosive 442% growth compared to the previous year, driven by expanding global demand. Please refer to page eight. Strengthen global brand presence. With increasing customer purchases fueled by outstanding product quality, we have significantly enhanced our brand presence across both online and offline channels globally. An increasing number of our products are ranking highly on key e-commerce platforms, such as Amazon in the United States and Qoo10 in Japan. Moreover, through our pop-up stores and offline retail partnerships, we have strengthened our customer relations and observed a strong customer preference for our products in offline environments as well. Lastly, please refer to page nine for our summarized consolidated financial statement. This financial summary is provided for your reference. Thank you for listening. This is the end of the English presentation of APR's earnings for the first quarter of 2025. Now we may begin the Q&A session. Thank you.
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Now Q&A session will begin. Please press star one. That is star and one, if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two. That is star and two on your phone.
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The first question will be provided by Eun-jeong Park from Hana Securities. Please go ahead with your question.
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I have four questions. First, I would like to know about the loss from the fashion business. Second, I'm curious about the profitability of each beauty device product. And third, how were marketing and logistics expenses executed? Also, how was the marketing budget allocated between the U.S. and Japan? Fourth, within the others category, is it possible to distinguish between Europe and B2B?
Regarding your first question about the operating loss on the fashion and apparel division, NERDY. The first quarter operating loss for NERDY is around KRW 3 billion. Starting from this year, we've been ordering minimal volume for our upcoming SKUs. We are also shrinking the absolute number of SKUs for our fashion and apparel businesses. For that reason, we are expecting that the actual revenue for our fashion and apparel business will shrink, and along with that, our operating loss will also get smaller as well. For the second question about the operating profit margins for our cosmetics and devices, as of now, for today's presentation, we did not prepare that data, so we will not be able to deliver it as of now, but we will be able to deliver it maybe after the disclosures for the first quarter of 2025. For the third question regarding the expense structures, especially for our marketing expenses and transportation expenses, for this quarter, we spent about 18% for the marketing expense and 9% for transportation expense. If we look at the marketing expense compared to the previous year, 2024, our marketing expense has been reduced about 2%p, and the transportation expense remains at a similar level. Regarding the marketing and transportation expense by region, especially for the U.S. and Japan, we will not be able to deliver that detailed information as of now. For the last question regarding our B2B sales, especially in the European regions, the major sales for our other regions are generated by B2B sales, over 90%. Starting from February, we've started generating sales from the European regions, and we are expecting that the actual sales volume for our E.U. will get bigger as time goes by. Thank you. Next questions, please.
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The following question will be presented by Heejin Lim from Citi. Please go ahead with your question.
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I have a few questions. First, regarding U.S. sales, which month showed the strongest performance for cosmetics devices in Q1? Would there have been any impact from tariffs in this regard? Second, for Japan, by the end of Q1, how much progress has been made towards the goal of opening 8,000 stores within the year? Third, regarding B2B, is there any data on B2B sell-through? Lastly, was there any impact from accelerating shipments ahead of tariff implementation? Has there been any fundamental improvement in logistics costs?
Regarding the first questions about our export data towards the United States. As of now, it's quite hard to deliver on our monthly export data towards the U.S. In terms of sales trends in the U.S., month by month, our sales trend in the U.S. is getting better. There has been Amazon promotions back in March this year, during the first quarter. For that reason, among the first three months, January, February, and March, the sales for March recorded the highest sales among the three months. I don't think that there has been some big bulk of purchase to prepare for any of the tariff issues, because we are seeing that there has been some strong sales trends that are continuing into the current second quarter. For the second questions about the number of the offline stores that APR has been expanding in Japan. As of now, we've entered under 1,000 offline stores. This number is increasing as well. We've been experiencing some big increments in the demands for our products globally, so we are having some difficulties to meet up a minimal number of SKUs to be entered in offline stores. Once this can be settled down, we will be able to accelerate our expansion through the offline stores. For the third questions about the sell-through data for B2B. As of now, we will not be able to deliver our sell-through data, but in terms of sales trend for the B2B sales, we've been increasing our sales trends globally, and these sales trends are strong at the moment as well. For the fourth question, regarding the transportation expenses and the logistics fee, there has been some percentage reductions compared to the previous year. One of the key factors is that there has been some reduction, especially on our logistics using the airplane, air cargo. We don't think that that's one of the major factors, but the major factor would be that we've made a big shipment prior, back in the fourth quarter last year, to mitigate any of the tariff issues that can be imposed this year. That will be the more significant driver. Next questions, please.
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The following question will be presented by Hyun Jin Park from Shinhan Investment & Securities. Please go ahead with your question.
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I have three questions. First of all, B2B sales have been increasing significantly, so I'm wondering if they're directly related to the lower proportion of marketing expenses. Also, how do you plan to allocate marketing spend in Q2? Secondly, could you briefly share B2B sales trends in April and May so far? Additionally, I'd like to understand the proportion of sales in U.S. dollars and the impact of FX. Is the recent increase in financial income due to the strong dollar? Lastly, regarding your annual guidance of 17% to 18%, do you have any plans to revise it upwards?
Regarding the first question about any direct relationship between the increments in the B2B sales with the improvements in the marketing expenses, I believe that there are not much direct relationship between the two. Rather than that, I believe that there has been some leverage effect that directly affects the reductions in our expenses. The reason is that we are not executing our marketing expenses on specific marketing campaigns or specific detailed or specialized marketing campaigns. Rather than that, we are executing the marketing campaigns to increase our global brand awareness, and the focus is to increase our brand awareness as well. For that reason, I don't think there has been a direct relationship between the B2B sales increments and the marketing expenses. The second question is about our strategies to improve our marketing expenses. Regarding the question, as I mentioned in the previous earnings presentations, we are preparing to execute a similar marketing expense rate compared to our previous year 2024, which is roughly around 20% from the sales. For the third question about the sales proportions for B2B in April and May, the sales portions within our total sales are increasing month by month. For the fourth question about our exposures to the U.S. dollar, most of the generated sales from U.S. dollar will be generated from the U.S. regions. As you can see from our IR materials, as of the first quarter, from our total sales, the U.S. takes about 27% from our total sales, which is roughly around KRW 71 billion. These sales will be purely from U.S. dollars. Other than that, our sales, in terms of currencies, are very well diversified by regions — for example, Japan, China, or other countries. For the fifth question, whether there has been any positive effects from the exchange rate, we don't think that we will be experiencing some sales reductions because of the decline in the U.S. dollar exchange rate, because, as I mentioned previously, most of our sales currencies are well diversified across many different countries, and the U.S. takes about 27%, but the rest is well diversified by other countries, for example, Korea, Japan, China, et cetera. The impact will be very minimal. For the sixth question about our increasing financial income for the first quarter, whether this increment was actually derived from the increments in the exchange rate — actually, the financial income was generated from the increments in the interest rate. As of the first quarter, we've earned about KRW 4 billion in financial income. For the last question regarding whether there will be some modifications, the upward modifications on the current guidance, given the external uncertainty, such as U.S. tariff policies, we currently have no plans to revise our guidance upward. Our strong first quarter performance was very encouraging, and based on this momentum, we are confident in achieving our initial guidance. Thank you. Next question, please.
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The last question will be presented by Eun-jeong Park from Hana Securities. Please go ahead with your question.
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I have a few questions. Firstly, could you share the Q1 device sales in the U.S., Japan, and Korea? Secondly, what's your outlook for device sales from Q2? Also, could you briefly share recent sales trends in the U.S. and Japan and your Q2 outlook? Additionally, the sales of Greater China region have. Have there been any changes in consumer trends or strategies?
Regarding the first question about the sales volume for our home use beauty devices: for the first quarter, we sold about 590,000 units. In terms of the regional breakdown, it is difficult to deliver such detailed information. For the second question about the outlook, our overview of the second quarter covers both cosmetics and home beauty devices. As you said, the sales trends on both cosmetics and devices are strong at the moment. At the same time, relatively during the first quarter, the sales trend for devices seems to have weakened relatively compared to cosmetics. I still believe that there has been some strong and positive synergies between the two. We are quite optimistic about the strong growth that can be sustained in the coming time as well. For the overall outlook on our second quarter's sales, as of now, our sales trends are very good. Even though the second quarter is considered to be the off-season, our monthly sales are improving. Personally, I am expecting that we will be able to achieve optimistic sales for the second quarter as well. The last question is about the Greater China region. The Greater China region is not the first priority region in terms of business strategies and directions. It is true that the sales trends are improving, following the first quarter and also the second quarter.
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Once again, I would like to express my profound gratitude to all shareholders and investors for joining our earnings presentations. Every one of us in APR will continue to strive for sustained growth through constant and endless efforts. We kindly ask for your continued interest, encouragement, and support. Thank you for listening, and this is the end of the earnings presentations for the first quarter of 2025. Thank you.