Venus cept (VERO) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Q3 2024 total revenue was $15 million, down$ 2.6 million or 15% year-over-year, driven by a 23% decrease in US revenue and flat international revenue [28] - Gross profit decreased $2.3 million or 19% to$ 9.9 million, with gross margin at 66.1% compared to 69.2% in Q3 2023 [34][35] - Net loss attributable to stockholders was $9.3 million or$ 1.28 per share, compared to $9.1 million or$ 1.64 per share in Q3 2023 [39] - Cash used in operations decreased 25% year-over-year to $3.1 million, with a 40% reduction over the first nine months of 2024 [41] Business Line Performance - US system sales saw cash deals increase to 76% of total system sales in Q3, up from 69% last year and 67% in the first half of 2024 [12] - Lease revenue declined 23% year-over-year in the US and 39% overall, reflecting the strategic shift towards cash system sales [12] - International sales to distributors increased nearly 60% in Q3, driven by demand from new and existing partners in APAC and EMEA [9] Market Performance - US market faced macroeconomic headwinds, including customer financing pressures, high interest rates, and tighter credit markets [11] - International markets showed signs of recovery, with sales flat year-over-year and new product registrations in key markets like Australia and India [8][10] - Strength observed in Australia, Mexico, and Hong Kong, while Canada faced similar challenges to the US due to tight credit markets [48] Strategic Initiatives and Industry Competition - Company focused on enhancing cash flow profile, reducing cash used in operations by 25% year-over-year and 40% over the first nine months of 2024 [14][41] - Debt restructuring efforts reduced total debt obligations to$ 34.6 million, down 25% from June 2024 and 54% from December 2023 [15][40] - New body platform targeting Q1 2025 launch in the US, with regulatory submissions completed and additional features designed to enhance workflow [26] Management Commentary on Operating Environment and Future Outlook - Management acknowledged persistent macroeconomic headwinds affecting the aesthetic capital equipment market, particularly in the US [11][19] - Optimistic outlook for 2025, with expectations of continued demand from new distribution partners and upcoming product launches [10][22] - Company expects Q4 2024 revenue of at least $17 million and targets sustained cash flow breakeven by the back end of 2025 [42][57] Other Important Information - NASDAQ granted an additional 180-day extension until April 7, 2025, to regain compliance with the minimum bid price requirement [17] - New distribution partnerships in India, Taiwan, and Colombia expected to contribute to growth, with potential for increased orders in Q4 2024 [49][53] Q&A Session Summary Question: Prime Program Revenue Mix - Company expects cash system sales to remain in the 70% to 75% range, with in-house financing accounting for 25% to 30% of total system sales [45][46] Question: New Body Platform Details - New body platform is a next-generation energy-based system, not related to the delayed AI.ME program, with a targeted US launch in Q1 2025 [47] Question: International Market Strength - Key markets showing strength include Australia, Mexico, and Hong Kong, with new distribution partnerships in India expected to drive growth [48][49] Question: Revenue Contribution from New Markets - New distributors in markets like India may take a quarter or more to start regular ordering, with potential for increased contributions in Q4 2024 and 2025 [51][53] Question: Demand Environment by Product Category - Higher-priced products, such as the Robot in the hair business, face longer selling cycles due to tight credit markets [55][56] Question: Cash Flow Outlook - Company targets sustained cash flow breakeven by the back end of 2025, with Q4 2024 expected to be a strong quarter for cash flow [57] Question: Debt Reduction Plans - Company continues to work with lender Madryn to reduce debt, with no specific target yet but a focus on maintaining a manageable debt level [59][61]