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Perfect Corp. (NYSE:PERF) reported a solid fourth quarter with revenues of $18.1 million, up 14%, and an excellent year, with revenues of $69.2 million, up 15%. The company improved operating margins, and if you take out the $2 million write-down of goodwill on its 2025 acquisition, it swung from a $3.1 million operating loss in 2024 to a profit of $237,000. It has $172 million in cash or $1.69 per share, and in no way belongs at a negative enterprise value as it is growing, profitable, and cash flow positive. The B2B business is struggling with beauty industry woes, but the B2C app business more than makes up for it with its rapid growth. In theory, the beauty industry should be investing in e-commerce by using more products from Perfect Corp., as that is the part of the business that is growing, but instead, it is bemoaning its troubles in physical stores and just putting off spending in general.
The company has put forth conservative guidance of revenue growth of 8-12% for 2026, below 2025, as it does not expect to raise prices this year as it did last year, and also due to the uncertainty about what will happen to the AI market in general. Math suggests that the company should actually accelerate revenues, as the B2C business, which is over 70% of sales, should grow faster than the company’s average of 15%.
In the fourth quarter, gross margins actually improved, despite the increase in low-margin B2C. In 2026, the company has two challenges to profits: growing gross margin dollars despite lower margins from B2C and an uphill tax rate. It throws off cash, which it has been partially deploying in R&D, and sales and marketing.
Mobile subscriber numbers decreased 10% year over year and also decreased sequentially to 908,000. Despite the decline in subscribers, revenues increased as ASPs rose. Premium pricing had been $39 a year in 2024, but Perfect Corp. raised prices in January of 2025. The company now offers a higher pricing tier at $79 annually for those wanting more usage and even higher features. While ASPs could go higher, it all depends on customer usage and competitors’ pricing, as the company does not plan to raise prices this year.
Cash and equivalents increased $6.7 million to $172 million or $1.69 per share during the year. As the company intends to stay profitable and cash flow positive, it is considering the possibility of issuing cash dividends in the future. As a profitable AI-based SaaS company, we believe it deserves an EV-to-sales multiple of at least 2.4 times 2026 sales and a stock price of $3.10.
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