Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Perfect Corp.'s earning conference call. [Operator Instructions] Please note that today's event is being recorded. I will now turn the conference over to the first speaker for today, Mr. Rick Lee, VP of IR of the company. Please go ahead, sir.

All right, thank you, Ellie. Hello, everyone, and welcome to Perfect Corp.'s earnings call. With us today are Ms. Alice Chang, our Founder, Chairwoman and CEO; Mr. Louis Chen, our EVP and CSO; and Ms. Iris Chen, VP of Finance and Accounting. You can refer to our second quarter 2023 financial results on our IR website or in the Form 6-K we filed with the SEC earlier. You can later access a replay of this call on our IR website shortly after the conclusion of this call. For today's call, management will provide their prepared remark, first, and then we will host a Q&A session. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also apply to this call, as this call may contain forward-looking statement regarding Perfect Corp.'s performance, anticipated plans, operational result and objectives. Forward-looking statement are based on management's expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied on our call today. Perfect Corp. undertake no obligation to update any forward-looking statement, except as required by law, after the date of this call. Please note that all numbers stated in the following management prepared remark are in U.S. dollar terms. And we will discuss non-IFRS measures today. Without further ado, I will now turn the call to our first speaker today, our CEO, Ms. Alice Chang.

Thank you, Rick. Hi, everyone. Welcome to Perfect Corp.'s 2023 Second Quarter Earnings Conference Call. Today, I'm happy to share with you how Perfect Corp., a pioneer in AI and AR solutions for the beauty and fashion, is driving innovation and shaping the future for beauty tech, skin tech and in fashion tech. For the second quarter of 2023, we generated $12.7 million in total revenue, representing year-over-year growth of 11.9%. The double-digit growth is -- mainly come from our AR/AI cloud solutions and the mobile beauty app subscription services. In addition, we managed to improve our net income on an adjusted basis to $1.1 million in the second quarter of 2023 from $0.6 million in the same period of 2022, reflecting a margin of -- improvement of 2.7%. Perfect Corp. has been an AI pioneer since its inception, utilizing AI and machine learning in 2015 for real-time make-up virtual try-ons. With over 50% our -- of our R&D developers specializing in AI, we continuously harness the latest AI advancement to push the boundary of beauty and fashion. Over the years, we have expanded our AI applications, including face shape detection for foundation matching, real-time-live hair color virtual try-ons, advanced selfie skin care diagnosis using AI deep learning models and the incorporation of AI GAN technology for various video effects. In the second half of 2022, we introduced generative AI to beauty tech, such as AI avatars which allows each user to create his or her own digital twin. Now in 2023, we proudly unveil our range of innovative generative AI products, including AI fashion, AI hairs and more to come. At Perfect, we are committed to utilizing the most advanced AI and AR technologies and provide continuous support to our 3 key growth pillars: beauty tech, skin tech and…

Thank you, Alice. Before I go into the detail of our financial results, please note that all comparisons are on a year-over-year basis; and that the reporting period is the second quarter of 2023 versus the comparable period of 2022; and that, on top of the IFRS measures, we will also discuss non-IFRS measures to provide greater clarity on the trends in our actual operations. For the second quarter of 2023, our total revenue increased from USD 11.3 million in the same period of last year to USD 12.7 million, representing a year-over-year growth of 11.9%. Our AR and AI cloud solution and subscription revenue, which now contributes 86.7% of our total revenue, grew by 16.3% year-over-year, showing strong growth momentum in our core business. Meanwhile, [ legacy ] licensing revenue for physical stores, which now accounted for 10.9% of our total revenue, increased by 6.2%. This trend not only resonate with our continuous focus on prioritizing online services but also underscore customer inclinations to directly [ source ] into our AR cloud solutions and subscriptions. Regarding customer order extension and acquisition trends during the second quarter. Renewal rate for existing subscription has remained strong and healthy, demonstrating continued customer engagement with our platforms. Additionally, as the macro economy showed signs of recovery, our effort in acquiring new customer have shown improvements. We remain cautiously optimistic about the long-term growth potential that they bring to our business. Among our revenue sources, AR/AI cloud solution and subscription revenue grew by 16.3% to USD 11 million, representing 86.7% of our total revenue in the second quarter of 2023, mainly due to solid demand of our online virtual try-on solutions for brand customers and robust growth in our mobile beauty app subscriptions. Our mobile beauty app active subscribers have surged by 63.3% year-over-year,…

[Operator Instructions] We have a question from Clarke from -- we have a question from Timothy Zhao from Goldman.

I think I have a question about your full year revenue guidance. I think the guidance is quite helpful and which implies the revenue growth in the second half to be, I think, by my calculation, close to 20% year-on-year compared to single-digit growth in the first half. I was wondering if management could further elaborate the drivers behind the revenue acceleration into the second half. And then also I think a related question is that I noticed the brand customers actually increased quite a lot in the second quarter, to over 600 in June, but it seems that revenue growth and contract liability growth lagged behind a little bit. Wondering if you could help us understand what is the customer paying behavior of those newly acquired customers and when we can see more revenue contribution from these new customers.

Thank you, Timothy, yes. So we have seen certainly more demand for the brand customers [ for all sizes ]. And as we have seen, typically when the customer started to join our platforms, initially they will start with more reasonable orders. And over time, you grow with more upsell and cross-sells, so we do see the -- some healthy sign that are more clients; or the need for digital beauty solutions, for beauty tech, fashion tech and skin tech, coming to their solution. That's how you saw the increase of total brand customers to over 600 now for the first time. And certainly that will be encouraging signs for us to continue to work with those customers so they understand our solution and grow to be a bigger spender over the time. In term of the business outlook guidance, certainly the company, as we grow and, again, more maturity in our business and more robust business model, we also feel important to share visibility and then transparency with the market. As well we certainly have seen indicators from both the online solutions, as I said, playing but also the mobile app subscription that is growing very, very, very fast that are showing a strong confidence to the company that second half of the year will be performing much better than the first half of the year, therefore generating the guidance that we are putting forward at this time.

We have our second question from Clarke Jeffries from Piper Sandler.

I just wanted to, I mean, maybe dig into the subcomponent of AR and AI cloud solutions. Louis, could I confirm with you what AR and AI cloud solutions are growing at right now? And I -- maybe as a follow-up to the prior question: It seems like the subscription business is growing quite well in terms of active users maybe growing in excess of 30%, maybe by my math. And so just could you just remind us, what are the dynamics of AR and AI cloud solutions that seems to be accelerating in the second part of the year, I would assume, based off of that guidance?

Yes, Clarke. So the AR/AI cloud solutions includes all our beauty tech, skin tech solutions that are online, so mostly are helping brand on e-commerce journey, [ so consumers ] and virtual try-on or skin diagnoses, so other -- these type of solutions; but also includes mobile app subscription for the premium subscriptions where the consumer are downloading our family of beauty apps and opt in to unlock premium features, including some of these new generative AI features. So both certainly continues to grow as we see these patterns. In this last quarter, the mobile app subscriptions, certainly it was coming from a lower base, but it's growing very rapidly. I think we have seen quarter after quarter hitting record-high number of active subscribers, and this time with over 60% active subscriber increase. So that's certainly giving management confidence that the trends seem to be very strong demand for the remaining of the year, but I think, because of these 2 primary drivers, that we are driving our model for the whole year revenue projection.

Certainly. Maybe a follow-up is the SKU count and the brand count are both growing quite well. Do you anticipate some of those SKUs and brand counts to see an inflection in monetization that you would expect the AR and AI cloud solutions to accelerate off of business you've already won and will start to build in terms of revenue contribution through -- over the coming year? Does that make sense?

Right. So as I explained earlier, I think the brand customer business typically take a few years to grow into scale and maturity. I think we've seen already from end of last year and early this year that, the leads, the funnel that we are developing is actually much larger and wider, although it was taking longer to -- it was a very prolonged sales cycle. I think we are certainly passing through this process after 6, 9 months working on this deal; and are starting to see some more capitalizing on these results. Certainly these are the baseline where we want to grow our future business with, but I -- once the customer are with us and they have their initial SKUs on the platforms, then we open up opportunity to do more omnichannel cross-sells to them, all right; once they have the SKU digitized on our systems, be able to take that into different e-commerce and e-tailers or their own dot-com presence. In short, each of these represent opportunity to monetize by increased of -- subscription revenue towards the brands, so yes, you are right. I think we see a good recovery from number of new brands and number of SKU that keep joining in these platforms. And also we also see more categories are being added here. We have been working on the beyond beauty category for 12, 18 months now. And we are starting to see, as I report in our last quarter, that we now have over a dozen jewelries or watches brands already on the systems. And each quarter, as they pass, there are more SKUs that are also being injected through these new partnerships and new client categories.

[Operator Instructions] As there are no further questions at this time, I would like to hand the conference back to the management for the closing remarks. Thank you.

All right, thank you, Ellie. Thank you, everyone, again for joining our call today. Have a good one. Thank you.