By Lisa Thompson
NYSE: PERF
READ THE FULL PERF RESEARCH REPORT
Perfect Corp. (NYSE: PERF) reported Q1 revenues of $17.9 million, up 12%. The company improved both gross margins and operating margins, showing an operating margin of 8.2% (9.9% without the credit loss charge) versus a loss of 1.0% last year. It now has $176 million in cash or $1.73 per share.
Mobile subscriber numbers decreased 12% year over year and sequentially to 864,000. Despite the decline in subscribers, revenues increased as ASPs rose. The company is now generating incremental revenues from virtual points, which is similar to mobile minutes—the customer can buy extra usage above and beyond what comes with a subscription. Other revenues, which include revenues from virtual points, rose to $ 1.0 million in Q1 versus $ 0.3 million last year.
As of March 31, 2026, Perfect Corp. had 866 brand clients, with over 989,000 SKUs for makeup, haircare, skincare, shoes, bags, eyewear, watches, and jewelry products, as well as 118 key customers. The decline in the number of Key Customers year over year, as well as sequentially, was primarily due to customer churn in North America.
Gross margin improved to 81.9% from 77.9% a year ago due to operational efficiencies as the company reduced its use of customized software.
Total operating expenses for the March quarter increased to $13.2 million from $12.6 million in the same period of 2025, but included a one-time write-off for a cancelled contract of $307,000. Excluding that, write-off expenses were $12.9 million.
The operating profit was $1.5 million, versus a loss of $157,000 last year. Without the write-off, there would have been an operating profit of $1.8 million. The company earned $1.4 million in interest income, down from $1.6 million last year, due to lower short-term interest rates. Pretax earnings were $2.8 million versus $2.5 million last year. The company paid $481,000 in taxes compared to $192,000 last year. Net income was $2.4 million compared to $2.3 million last year. This resulted in an EPS of $0.023 flat with the previous year. Shares outstanding this quarter were again 102 million.
Balance Sheet and Cash Flow
On March 31st, Perfect Corp. had $176 million in cash and equivalents, 6-month time deposits, and US Treasuries. This equals $1.73 per share. It had $133 million in working capital and no debt. Not including changes in working capital, the company had an operating cash flow and a free cash flow of $2.1 million in the quarter.
Going Private Proposal
In March, Perfect Corp. received a preliminary non-binding letter that proposes a going-private transaction for $1.95 in cash per ordinary share from CyberLink International Technology Corp. and Alice H. Chang and her controlled entities. Alice Chang, the CEO, controls 66.6% of the voting power. Ms. Chang and CyberLink together own over 53% of the company’s Class A and B shares.
The board has established a special committee of independent and disinterested directors for the purpose of evaluating and considering the proposal, and announced the appointment of a financial advisor and legal counsel to the special committee to assist in its evaluation.
Given the process, we expect that the deal could be expected to close by the end of the year or early 2027.
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