Perfect Corp. this month announced plans to become publicly traded through a merger with a blank-check company. The proceeds from the deal will be used to support its expansion beyond providing augmented reality (AR) and artificial intelligence (AI) technology for beauty and fashion brands.
Perfect is best known for making software that enables virtual try-ons of makeup and hair coloring, working with beauty brands including Madison Reed, Clinique, Tarte and Estée Lauder. It also publishes the YouCam suite of photo editing apps that let people try on new looks in selfies that they can post on social media.
"Our platform is very difficult for competitors to replicate and creates a high barrier to entry," a Perfect spokesperson said by email. "As a result, we have been able to secure exclusive multi-year, multi-country contracts with top beauty giants, as well as build a highly engaged consumer base for our platform."
Perfect seeks $335 million in gross proceeds as part of its merger with a publicly traded special-purpose acquisition company (SPAC). Such deals have become common alternatives to traditional IPOs because they have fewer regulatory requirements. A SPAC is a publicly traded shell company that raises money with the purpose of merging with a private firm to take it public. More than 600 SPAC listings last year raised a total of $145 billion, or almost twice as much as in 2020, according to Nasdaq.
Expanded AR and AI applications
With the fresh round of financing, Perfect plans to expand its AR and AI applications for the beauty and fashion industries while advancing its technology for product try-ons, facial diagnostics and digital consultations. The company has worked with cosmetics brands such as Estée Lauder and beauty-supply retailers such as Sally Hansen on virtual demonstrations of their products.
Beauty and fashion brands have been among the earliest adopters of AR and AI technologies to demonstrate their products more effectively through mobile screens. Recognizing the marketing and sales potential for the tech, beauty giant L'Oréal in 2018 acquired AR company ModiFace to expand into virtual try-ons of makeup and hair color with in-house expertise. ModiFace's 3D facial recognition software gives L'Oréal and its brands the ability to offer simulations of beauty products on photos or videos.
Creating immersive and engaging digital experiences has become a bigger priority for retailers and brands amid the continued growth in online, mobile and social commerce. With many consumers staying home and shopping online during the pandemic, these interactions provide crucial touch points with brands at all levels of the purchase funnel.
"It's harder to get consumers' attention. Augmented reality has been a really helpful technology for consumers during the pandemic because they're reluctant to visit physical stores," John Harmon, senior analyst at Coresight Research, said in an interview. "The technology can really bridge the gap."
AR demonstrations, virtual stores in metaverse environments and livestreamed shopping are key areas for growth as retailers seek to engage consumers outside of stores and malls, he said.
"It's harder to get consumers' attention. Augmented reality has been a really helpful technology for consumers during the pandemic because they're reluctant to visit physical stores. The technology can really bridge the gap."
Senior analyst, Coresight Research
E-commerce retail sales in the U.S. rose 9.4% from a year earlier to $218.5 billion in 2021's fourth quarter, the Census Bureau estimated. The growth rate wasn't as fast the 15% gain for total retail sales, but that increase was a major rebound from the pandemic's significantly negative effect on in-store shopping during 2020's holiday season.
Consumer demand for flexibility to shop while they're at home or on the go will push brands and retailers to increasingly make the experience more appealing with AR tools. Providing cohesive interactions across in-store and online channels are more possible than ever with computer-generated imagery that people can access through different connected devices, according to Perfect.
The expectation of entertaining experiences with brands, the need for convenience and personalization and greater awareness of environmental sustainability and personal hygiene all support the growth of AR in the beauty and broader retail spaces, a spokesperson for Perfect said by email.
Just after announcing it seeks to go public, Perfect also introduced a way to make AR-powered non-fungible tokens (NFTs), the one-of-a-kind digital assets that exist on a blockchain. NFTs provide a way to demonstrate the authenticity and ownership of digital collectibles.
"As the retail world embraces the metaverse, AR technology will be essential to create personalized and immersive experiences," Alice Chang, Perfect's founder and CEO, said in a statement.
Beauty and fashion brands can use Perfect's software to create and sell NFTs, opening up another source of revenue for both companies. Consumers also can personalize their digital experiences and interactions among their favorite brands.
"With this solution, consumers will be able to try assets across multiple beauty and fashion categories, including makeup looks, watches, jewelry, glasses, nail art and more," according to an announcement from Perfect. Its NFT solutions "enable beauty and fashion brands to meet their customers where they already are."