Good morning. The next presentation with MicroCap, now presenting Perfect Corp. with Jimmy Xia. He is the Investor Relations Director.
Good morning. My name is Jimmy Xia, the IR Director of Perfect Corp. Our management aren't able to make it because we have earnings next week, for 1Q 2025. The numbers or information we're providing is for as late as Q4 of last year, 2024. Who are we? We are an AI/AR tech software company. We were founded in 2015, based out of Taiwan, Taipei City. As of the most recent reported period, we had over 350 professionals, approximately 50% are R&D professionals. The majority of our team are located in our headquarters in Taiwan. We listed on the NYSE October 2022. We have quite a few different offices around the world, with North America, EU, and APEC.
Now, the reason why we have these offices around the world is from a revenue distribution point of view, approximately, it will fluctuate, but approximately 50% of revenue stems from the U.S., approximately anywhere from 25-30% from EU, and the rest from APEC, most notably Japan. Again, we are based out of Taiwan. Now, what do we do? I am going to skip because we have a lot of pages, so I am not going to go through each slide. What do we do? We provide software and services. What is unique about us is that we have a B2B and a B2C business. I mentioned that we have about half of our professional R&D. What they do is that we create one engine. The heart of our B2B and B2C is actually done at the same time. We do not separate the R&D process.
As a result, our services, there's quite a few of overlap. When you see the functionality, you'll see that, oh, what's available for B2B with our enterprise client, like Shiseido, like Estée Lauder, or Amazon, is very similar to what you can see on the apps itself. Again, the B2B business is a software business. We sign typically annual contracts with, let's say, an Estée Lauder of the world, typically one-year contract. That's priced based on a few main factors. Number one is the module, as in if it's a virtual try-on for a lipstick or eyelash or frames for your glasses or watch. Each one is a module. The more you utilize, the more you'll have to pay. Number two is geographic distribution.
If you are a smaller client that only sells in the U.S. versus a larger multinational that sells in 40 or 80 regions around the world, that obviously cost will differ. The third is the number of SKUs, SKUs. The more units of products you're trying to sell through our platform, then obviously the more you'll pay. Again, one is the number of modules. Number two is the geographic distribution, and number three is the SKUs. On the B2C side, it's a totally different animal. We sell, or we have on iOS or Android Play, a facet of apps under the YouCam brand, Y-O-U-C-A-M. They are freemium apps, as in you yourself can download right now. It is free to download. You have a free trial with full access for seven days. At the end of seven days, you lose the premium functionality.
In order to regain that, typically it is between $3-$5 per month per app. By the way, we have about anywhere from five to seven at any given time, or approximately $39 per year per app. That is why the B2B and B2C are very, very uniquely different, but at the same time, it flows perfectly. Here is an example of our brand clients. As you can see, these are quite large clients around the world, like Estée Lauder, Ulta, and so on and so forth. As of the end of 2024, we are working with over 700 brand clients and over 800,000 SKUs. If you look historically, the chart, the beginning of the red starts in the first quarter of 2021, right?
If you look at from 2021 to the end of 2024, the growth for the number of brand clients, as well as the number of SKUs that are on our platform, has grown tremendously. What's unique about it is that, as mentioned before, we have virtual try-on. We can develop it internally. We can also gain different functionality through M&A. That's exactly what we did in the first quarter of this year. Officially, it was announced at the end of December last year, but it closed this year, our acquisition of WANNA. WANNA was a software partner within FARFETCH that provided also virtual try-on through AI/AR technology for handbags, for jewelry, for shoes, for scarves, and for clothing. Everything besides watches and jewelry, we internally at Perfect, we did not do. There is very little overlap in the product and services.
As a result, we're able to have quite synergetic in terms of this M&A, synergetic transaction. If you look at WANN A itself, it was founded in 2018. Again, shoes, bags, watches, and scarves are what they do. That is quite a good complement to our set of products and service offerings, as well as client base. Their brand clients are also very big luxury brands that are around the world. Here's a few of the examples. Based on what I just said, again, Perfect's virtual try-on technology stems from our bread and butter, which is makeup, our jewelry, skin analysis. There's eyewear, there's watches, just other forms of jewelry, like necklace or bracelets or rings and watches, as well as nails. Plus WANNA's sneakers, apparel or clothing, scarf, and bag. This is a really great way for us to create synergy through M&A.
A little more detail on the YouCam apps. As I mentioned before, it's under the YouCam brand. These are the apps as available as of the end of 2024. Once earnings come out for next week, there's going to be additional updates to provide to the investment community. Now, YouCam Makeup and YouCam Perfect are two of our larger apps, both in terms of user plus subscriber base, as well as obviously revenue generation. Now, each one has its own unique functions. There are some overlapping elements because of AI/AR technology, but each one has its unique target audience. For example, YouCam Makeup, it's exactly what it sounds like, a makeup side. Just like on the B2B side with clients, you can try on different lipstick, different eyeshadow, or blush on your face without doing any of it in person. You can change your skin tone.
You can smooth out any blemishes. You can try on hair color or hairstyle, as well as reshape your face or body. This is for an individual that is, let's say, very active on social media. You want that type of technology out there to help you post a better picture of yourself. YouCam Perfect as well. It's photo editing. That's the pure focus of it. Of course, there are elements that are overlapping with YouCam Makeup, such as the body tuner. It adds on to the AR avatar, AR selfie, and such. Again, this is very, very popular amongst mainly female audience. Probably 70% of our app users are female audience that uses photo and video editing for their social media afterwards. If you look at the growth, the beginning of this chart is second quarter of 2020 till the most recent of fourth quarter of 2024.
You saw the growth very, very quickly from just over 200,000 paying subscribers to over 1 million end of last year. Again, as I mentioned before, at the end of last year, typically users are paying either $39 per year or anywhere from $5-$7 per app per month for the apps. The majority of our paying subscribers are paying probably 90% on an annual basis because the mathematics just work as an active user. I'm going to quickly skip this because there's a lot of overlapping what I said before in terms of makeup, in terms of hair, in terms of nails, and so on and so forth. Here is a great example of the type of service we provide. This is on the Walmart app.
As a user, you pick a product you want to try on virtually. You're allowed for a front-facing view of your smart camera. If you look at her lips at any time, if you change a product or a color, it shows up immediately. It's real to life, right? You can see from this example, it engages the end users, the consumers, much, much better than a non-virtual try-on product. It decreases return rate because what you see is what you get, right? There's a lot of problems with online purchases because it's not exactly how you see or saw it online, right? Of course, from an ESG perspective, because you're no longer using samples, no more plastic waste. That helps on many fronts from our brand client's point of view. Here's another example of Amazon for nails, right?
At any time, you just click on a different style, different color, it shows up immediately. This is obviously the back-facing camera of your smart device. Here is Sephora USA, North America technically. This is a skin analyzer. Within five seconds, it will analyze your skin, provides you with detailed recommendations based on what they detect, what we detect of how you can resolve. Based on the results, it recommends products for you to add to cart to purchase and to use. It will give you a description of what you should use or when you should use and how to use. Another example here is from the Estée Lauder company, the MAC. There is a whole set of makeup, not just lipstick. This is everything from eyeshadow to blush to lipstick.
On the right, if you look once the video starts, it teaches you step-by-step tutorial of what you should use, which product. If you look at the bottom, once it shows up, the product you should use, as well as a brush to help you apply for it, apply onto your face. Each step of the way teaches you how to and which to purchase in the cart. Another example, this is through our advertising, right? This is somebody that's reading an article on whichever news source. This is through Google. You can do virtual try-on through the advertisement. The same with the Cartier watch, the same with the Sally Hansen. We work with different partners strategically around the world. Google, YouTube, Snap, as well as in our APEC partners. A quick look at our financials.
By the way, as of today, we're probably at $170 million market cap, but we have $160 million plus cash with no debt, to give you an idea. Our revenue grew at about 12.5% top line last year. Again, next week, we'll have our first quarter earnings. Bear with us. You'll see there's a slight decrease in gross margin. The main reason is that as we expand our B2C business, because B2C margins are a little bit lower, Apple tax, Google tax, versus our software business, which is much higher margin. As the percentage of revenue from B2C increases, our margin will see a slight decrease. Mainly, as an example, when we first listed in the end of 2022, approximately 25%-30% of revenue stemmed from B2C. End of 2023, it was 50%. End of 2024, it was 60% from B2C.
As that time and the amount changes, that's what's causing the margin change. Net income and margin adjusted. We generate cash, obviously, positive cash flow in 2023, 2024. The guidance for this year is anywhere from 13%-14.5%. This was provided, again, end of 2024 earnings. The growth for the company. Now, as I mentioned before, we're working with over 700 brand clients, but that universe is only approximately a third or a quarter of what's potentially out there, obviously big or small, right? Just organically to grow within the brand count is definitely something that we can do. As I mentioned before, virtual try-on for makeup and all the other elements has been our bread and butter. Over the past two and a half, three years, we've really moved into skincare. Skincare AI is something that we're moving into very, very quickly.
That has been, from a B2C growth perspective, the fastest growing portion of our B2B revenue. We will continue to move in the fashion jewelry space, as well as our B2C apps, right, through GenAI technology. Based on the one example from the WANNA purchase, M&A, we will continue to look for purchase or M&A that are synergetic in nature to our business. It is very unique because we are in the beauty and fashion space and AI/AR space, and we generate cash. That is very different. We still have some time. Questions? Please.
Thinking about the cash, the WANNA acquisition, I am just on an enterprise value basis, it seems like based on the cash you generate and do a market cap after cap, like buying back the stock, being really attractive here.
Yes.
How are you guys thinking about that?
Historically, we have used buyback and tender.
For example, we utilized in the year 2023, $51 million and change on buyback plus tender combined. In 2024, we also had insider buying. Alice, our Founder and CEO Chair, she purchased her own money in 2024 shares. Of course, now the use of cash for acquisition with WANNA took place in the first quarter of this year. Please. Right. B2B is a software. I think of no different than Salesforce, for example. We typically sign an annual contract. That's, again, that's based off of the number of modules they use or the geographic distribution, as well as the number of SKUs they want in our system. We have something called key customers. Key customers are anyone that pays us over $50,000 a year.
Once you surpass that threshold, you'll allocate it, let's say, a project manager or a specialist to help you with the whole process. Versus if you're not a key customer, it's more like a plug and play. Yes. The churn rate for B2B and B2C are obviously quite different, right? The B2B is very, very low. I believe we're at retention rate like 90+% on the B2B side. Because we are the dominant player in the space, our customers don't really go to other players because either they're too small. Again, we're at over 300 professionals. We are the dominant player. It's hard for them to go backwards on a technology or service offering, right? The B2B churn rate is typically the market average, which is obviously much higher than the B2C.
Sorry, the B2C churn rate is market average, which is higher than B2B. Yes, sir.
Is that important or is the product already built out enough where it's lower priority?
Historically, because we were founded in 2015, we have not had an acquisition prior to or closed an acquisition until this year, so a decade before our first full acquisition, right? The reason why we didn't do it is because we found that our technology has been superior to our competitor. Instead of buying them out for on a premium, why not develop it internally and basically eat their lunch, right? That was our mindset from the very, very beginning. The reason why we didn't for the WANNA acquisition is because there are technologies out there that WANNA had that we didn't have the time or the resources allocated to that.
For example, handbags and scarves, and especially apparel like clothing, is something that takes a lot more effort and energy and resources than virtual try-on for products that goes on your face. Going forward, if we should utilize our cash on hand for M&A, that will most likely be the case too. It has to create synergy where it's not something that we have to kind of build from scratch, right? It has to be a plug and play. Yes, sir. Right. The major investor concern right now, the first question is, how do we use our cash, right? That was one concern. Another concern is, I think from many points of view, most of the people I see right now, you're a stranger. You've never seen, I've never seen your face before.
I think that's the situation with the market where as a one under $200 million market cap company based out of Taiwan in a very niche market, most investors had never heard of our story. When I was brought on board about a year and a half ago, that was the goal to really bring our story out there to investors like yourself that are interested in a small microcap company that have potential. By the way, we're real. We have cash on hand. We generate cash for an AI/AR company. It's very different from probably many of the names that are out there here today. Yes, sir. You had a question?
Skincare company to get in there and be at the top of the list because this is kind of like the.
As of now, on the pure B2C side, we have not sold products on our B2C app. What we do is we do help our B2B clients create at least this element within their app. Still today, our true B2C apps do not have other companies' products because there are quite a lot of conflicts, obviously, potentially out there. Right now, we're generating cash from on the B2C side, which is just pure subscription. By the way, we've been testing different pricing over the past few quarters and few years. For example, in 2023, it was probably at $19, $20, $25, and we raised it all the way up to $39 at the end of, by the middle of 2024. Next week, we'll have more information to disclose about more recent numbers. Sorry.
We have used, let's say, micro influencers, but we're not big on advertising through that channel. On the, I'm assuming you're asking about B2B, right? Oh, sorry, the B2C element, right? Because historically, we started as an app company where we didn't have B2B to begin with. It's been over a decade. Right now, I think our MAU at like over 11, 12 million, but we really focus on the subscriber number, as in the paying users, not the people that are just downloading and then using the free functionality, right? That's why we don't focus as much on the social media presence as much. We do have certain search engine optimization. At the end of the day, not as much, no. Sorry, question? Okay. The future, we're investing a lot of money on R&D and sales and marketing. That's right now, right?
The future is in AI. We all know that, right? What we've been doing is reinvesting back into the company. We most likely will continue to reinvest back into the company for the near future until our, for example, let's use the term AI agent, is ready for our B2C, sorry, B2B clients. In the near term, we will continue to reinvest in the company because we still believe this technology is still very, very new, right? Especially with the entrance of OpenAI, the DeepS eek of the world. Once we have a true AI agent that can be deployed on your app or on brand client's website or what have you, this is a game changer potentially. That will cost a lot more time, energy, and money in terms of developing new technology to really keep up, if not be more advanced of our competitors.
That will continue to be until something changes.