Perfect Corp. enters into a definitive agreement to go private, reports improved profits

AI/AR technology company Perfect Corp. announced that its previously disclosed plans to go private are going forward. Perfect Corp. has entered into a definitive Agreement and Plan of Merger with ProjectNY, an exempted company with limited liability incorporated under the laws of the Cayman Islands controlled by Alice H. Chang (“Merger Sub”), pursuant to which, and subject to the terms and conditions thereof, Merger Sub will merge with and into the company and becoming a privately held company. Chang is the founder and CEO of the company.

Each ordinary share of the company issued and outstanding immediately before the Effective Time, other than the Excluded Shares, the Continuing Shares and the Dissenting Shares, each as defined in the Merger Agreement, will be cancelled and cease to exist in exchange for the right to receive US$2.00 in cash per share without interest.

Perfect Corp. improves profitability as AI subscriptions offset licensing decline

Perfect Corp. reported stronger profitability for the second quarter of 2026 as growth in its AI-powered consumer subscription business helped offset declining licensing revenue, while the company continued shifting toward standardized SaaS offerings for beauty and fashion brands.

Revenue for the quarter ended June 30 was essentially flat at $16.3 million, as gains from YouCam mobile app and web subscriptions balanced a 25% decline in legacy licensing revenue. The company said licensing is expected to become an increasingly smaller part of its business as it focuses on recurring subscription revenue.

Despite flat sales, profitability improved significantly. Gross profit increased 7.4% to $13.2 million, lifting gross margin to 80.9% from 75.3% a year earlier. Perfect attributed the improvement to greater operational efficiency as it transitions from customized software projects to standardized AI and API-based solutions.

Operating results also strengthened. The company nearly eliminated its operating loss, reporting a $0.1 million operating loss compared with a $1.5 million loss in the second quarter of 2025. Net income climbed to $1.3 million, up from $0.2 million a year earlier, reflecting improved margins, cost controls and gains on financial liabilities.

For the first six months of 2026, revenue increased 5.9% to $34.3 million, while gross profit rose 12.7% to $27.9 million. The company posted $1.4 million in operating income, compared with a $1.6 million operating loss during the first half of 2025, and net income increased 45.3% to $3.6 million.

Operating cash flow declined for both the quarter and first half, primarily because of lower contract liabilities and higher tax payments, although the company maintained positive cash generation. Perfect ended the quarter with $125.6 million in cash and cash equivalents, or $177.1 million including time deposits and U.S. Treasuries.

Chang said the company remains focused on expanding both its consumer and enterprise businesses through AI innovation, particularly in generative and agentic AI applications.

While financial performance improved, key business metrics softened. Active YouCam subscribers declined 14.6% year over year to 820,000, which the company attributed to increased competition in AI-powered mobile apps. The number of enterprise key customers also fell from 139 to 113, reflecting customer downgrades in subscription spending.

In other Perfect Corp. news, the company launched AI MV in YouCam Video (v1.63.0), a new feature that turns any song into a fully produced music video in minutes. With just a song and a simple prompt, the AI generates a complete, scene-by-scene music video, with no cameras or video production budget required, the company said.

AI MV offers three MV styles, each designed for a different visual creative direction:

• Storytelling: AI generates matching scenes and storylines based on your lyrics, making the music video more emotional and story-driven, presenting the MV visuals that best fit the song through cinematic narrative scenes.
• Singing: Your virtual artist lip-syncs the full track on stage, keeping the spotlight on the singer’s performance from start to finish.
• Hybrid: Combines singing visuals with storytelling scenes, switching between shots to build a more visually rich MV, giving creators a music video with both singer moments and narrative visuals.

“The gap between a song and an actual music video used to be time, money, and a video production team. AI MV eliminates all three,” said Alice Chang, founder, chairwoman & CEO of Perfect. “Whether it’s a singer’s performance in the spotlight, a story-based music video, or any wildly imaginative creative music video, AI MV can create it in minutes.”

AI MV is available on both iOS and Android.