Earnings call transcript Q3 2022

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Cutera, Inc.

Third Quarter 2022 Results Conference Call. [Operator Instructions]

forward-looking includes today discussion statements. The guidance reflect These of not forecast purposes. financial expectation current aspects forward-looking limited of any but statements certain including, the or business, modeling management's company's for provided to, future

Forward-looking nature, and its statements is, change. dynamic are information subject on that based by to current

Forward-looking new regulatory expand products productivity statements into statements and improvements additional guidance, among financial others, and plans include, geographies. regarding approvals to introduce

statement to in identify may statements, encourage the forward-looking today. safe refer harbor press For words that our you we earlier release to

All those forward-looking updated and Form Securities section Factors are uncertainties, statements the subject to Commission our risk entitled on and risks our in XX-K including with Exchange in as Form filed factors XX-Q described and filed. Risk subsequently

to which the to place forward-looking reflect statements date expectations. results may not on new obligation differ undertakes the of forward-looking events you speak or unanticipated as are update or reliance statements, from reflect made. current they Cutera management's to occurrence materially Future information, to of no undue also events. Cutera any only publicly cautions circumstances

will as release. not from non-GAAP into but financial discuss to Please to of be particularly prescribed to, the we a these when earnings along complete by refer in performance period results measures underlying with, facilitate our These period. measures, greater measures financial non-GAAP basis. measures to reconciliation results We the from measures GAAP. GAAP considered operating should addition, In believe on an financial and analysis results more Cutera's can including ongoing transparency adjusted non-GAAP comparing operations, alternatives

ahead. of conference over Cutera. turn that, With Please Dave to the to Mowry, like I CEO go would

David Mowry

XXXX welcome Third Quarter afternoon, to Thank you, Earnings Good and operator. Cutera's Call.

our update. are Financial join you Chief is that With Officer. Seth, Rohan able this to glad on today's are call me for us We

pass business XXXX the before the view as During I our segment provide highlights operational and with health indicators to other referencing thoughts leading greater of the detail to fundamentals performance. on me updated who on financial you back call comments as with on the to a will results well of market final call the third of our will few then XXXX Rohan sharing handing underlying I make the our quarter guidance will of financial first our well before the as our call, some business. as provide you Cutera's

Following turn then the our the up over we who prepared will questions. the your will then to to call operator open remarks, call

our environment discussion conditions high-level plans. heard participants. operate. the believe regards market indicators leading traffic, market in Starting alert macroeconomic We and should observations which the occur. the set amount impacting of review economic broader us calibrate scheduling first vigilant customers, environment ourselves and treatment the which rely that appointment We patient the and upon with market to overall practice we our business of future of we speculation aesthetic remain rates continues to metrics potential to some in observers a and will appropriate, certain the they our have Cutera inform and metrics, help cancellation we and from given seems including qualitative disruptions clinical to other regularly from in

capital both typical remains through the well strong, a the and business third customer our of we that that trends August growth rates as September, our with equipment for product strong Indeed, and earnings in second in volumes for continued our Cutera seasonality. noteworthy consumable even as during sales these year-over-year indicated sales. core we and performance quarter enabling light that August, early quarter procedure In steady call, believe treatment were demand underlying capital

indicators we in and as full to confidence into in equipment our the current saw continue core rates track XXXX. with the instilling and prior volumes capital XXXX, view as third is remain cues, in fourth metrics year Practice results. quarter same also intact rates bring the move performance as of the patient treatment we these that unchanged the of deeper the rates at Looking cancellation consumable we appointment quarter such quarter from run mostly rates

final on health this Southern from Cutera A being of comes CUCF. Clinical our our consideration weekend. business data annual held point for in University is or Forum, California the This coming

already their This XX% Our more watermark from admission has for This XXXX enrollment XXX requirement up year. interest than own of especially of their cover any the telling is and non-faculty the expenses. to pay in level attendees. CUCF for high is of eclipsed light previous customers

The would business second-largest line consumer our putting top reduced yen. lower significant has moderate U.S. devaluation well the of dollar, Japan well market yen's the the from Sticking North pressure behind to of some be I with the lost company. XXXX, on Cutera the not significantly demand yen mention from our of weakening Japan results revenues the the of rates performance dramatic Japan economic has represents Since overall for of remiss the in the versus macroeconomics, Japan. as Japanese America. XX% ongoing beginning of currency dampening within with exchange regional its value effects rapid financial creating as as approximately as from environments the

top profitability. source this revenue, absorb our the our to impact have growth have business some on other impact to has we we in devaluation on line unable from been While caused this to been full offset able areas additional that

looking other and areas sociopolitical remain being watchful We're or in by impacted challenges. Japan macroeconomic also beyond

working our and as exposure. partners on deal to markets deliveries We current our unwanted as avoid them addressing well across are receivable scheduling with to distribution keep proactively accounts

the British current European conflict remain extent trends the business and exposure areas. pound. regions increasing these in ongoing on and we the many of based the these few in Ukraine the Euro of vigilant pressure our a and upon to light for countries in we Additionally, harbor Nevertheless, concerns

Third news, turning to Now some Cutera's positive XXXX performance. quarter

driven million, currency representing XX% approximately by capital on sales. was total a strong product constant quarter and consumable was $XX.X During This the revenue third period, result for growth the basis.

were X commercial product with America quarters bolstered from than our belt. contribution in our results limited North the further Our of procedure product, new million now and of AviClear $X by more our under acne release

Specific market to business fundamentals benefited over this third XX% equipment of North third the slower posting delivered quarter. currency XX% growth capital first underlying equipment, the a quarter quarter mentioned, sequential posted over equipment America second previously we the XXXX, of seasonally XXXX. growth capital currency constructive in and constant from capital for constant growth

growth and currency efforts, sales equipment ongoing process in growth also development the of contributions as international capital reflecting XX% strong delivered geographies. constant of International team equipment direct each currency sales capital constant from noteworthy of sales improvements was year-over-year continued our each regions the

to in period. Recurring combination service a This of skin reflects revenue, care within from product, price performance on the the care of A XXXX. defined by prebuying skin decrease significant as up prior consumable AviClear. activity a basis, in decline offset excluding field care constant quarter sales increase when $XX.X strong the million portion third an consumable year product skin was currency XX% and period, led announced was AviClear the

now acne. Shifting to

and been are commercial patients. As performance quarters and the the we well customers able as have gather pleased to limited business our into as the mentioned their we from two our earlier, with learnings are of release

activity XXXX, in additional of of XXX we quarter the active third as momentum period. placement our commitment our actual slightly the placements During gained previous outpaced

volumes million. units XXX. XXXX, throughout steadily expanded than the active third over of ramped have active we would plan the in total patient number actually of to At XXX close period XXX AviClear as $X devices procedure field treating revenues the patients approximately had quarter, Our generating over quarter greater of the the new

fourth to an units remain active fiscal greater the Moving than XXX in quarter additional exiting active year committed to to base XXXX. XXXX, period our plan AviClear of we XXX installed devices increasing the and adding

me financial some color let that, the With over Rohan call to to performance. our turn on additional provide

Rohan Seth

Thank you, Dave.

discussing earnings want I A in our in and my to is non-GAAP results. review I GAAP our of some be to encourage As to review the We results prepared this non-GAAP release. I included with readers GAAP listeners non-GAAP contained release. will as that conjunction reconciliation in complete note earnings metrics remarks,

XXXX, revenue for quarter million million X%. third same the approximately the Total to an of period $XX.X representing compared $XX.X in was for increase

meaningful constant revenue was we currency currency growth approximately continued quarter, face our foreign the During headwinds and XX%. to

segment Based for on currency. by yen, negative the impacted XX% face in currency in that particularly future. we foreign exchange XX% challenges currency skin down was fluctuation rates, constant foreign down current expect ongoing Our as the foreseeable continue care from reported to will and we

in a of have expense and quarter cash result in mentioned from are continuing losses XXXX our line mark-to-market are hedged statement churn positions foreign reflected we income and the our in projected the of As our XX% exchange last or hedge other and expanded the third of Japan flows immaterial. markets, the from as XQ I the income the through these hedges of and end gains quarter,

equipment of was currency constant the million, American revenue $XX.X third North over XX% quarter revenue in increased from up of Third XXXX. reported up quarter quarter million capital the International the XX% prior year. $XX.X as for and equipment capital XX% third

and as global prior year $X.X in driven reported the as revenue and AviClear constant by and million, down XX% as as down of as Recurring XX% currency X% skin reported consumables, lines and care product million, the currency. in X% decrease well revenue, constant constant $X.X X% down in revenue our reported as currency. over was of down XX% in The services down down quarter, defined skincare third was service, million $XX.X

high. skin reported the product by in our as of up XXXX XX% growth the stocking in up price constant partially These care XX% tally abnormally mentioned, were Due offset QX graph declines results were in increase ahead customers excluding September AviClear, currency. XXXX. Dave As to and in consumables

million points of period decrease margin Non-GAAP XXX last of year. to gross was approximately representing fiscal compared a third with XXXX the profit for basis $XX.X gross a of the XX.X%, quarter same

third improvement basis year. acne impact a XX.X%, the impact point Excluding basis headwinds, non-GAAP quarter due to over exchange prior the XXX margin the gross from the XX point have been XXX basis an foreign and point in approximately would program

and inflationary offset them well quarter, cost initiatives with able experience base. improvement as While ongoing chain we did were our supply continued during fixed the macroeconomic leverage as pressures to cost of we

in sales the operating expenses period last million the non-GAAP for compared period year. same Non-GAAP within Total number XXXX sales driven $X.X last continued million year, our compared in expenses million higher for and driven were to were XXXX related for marketing same $X.X with $XX.X R&D million clinical for of are $X.X to Non-GAAP compared of $XX.X million quarter in AviClear. to for studies. third million of $X.X XXXX $XX.X additional the third for associated year, $XX.X and expenses AviClear. to last million quarter were by this expenses as quarter million Included period commissions, AviClear in by increased the same increased third travel expansion force, as the expenses well investments the

expenses Finally, the $X.X non-GAAP our million in XXXX G&A for same quarter an by last million compared driven of period in the expansion were year, headcount. $X.X third to

For quarter a to was profit operating $X.X XXXX, the third non-GAAP $X period. of prior refer income, which to compared we the of a year loss in adjusted EBITDA million of million as our

our decline investment of on anticipated, basis. a most year-over-year AviClear EBITDA driver in As was the significant

of Excluding quarter and year $X.X third have acne been adjusted EBITDA program impacts the of prior over exchange of million. million, $X.X $X.X foreign headwinds million would the for XXXX

OpEx, R&D. with our XX% is marketing As the with in non-GAAP in mentioned which had I spending we on and most embedded remainder of million investments of $X.X sales the in program, acne earlier,

to there no or tax position. Finally, changes significant were material our

relatively million Turning ended investments second compared sequential this at our to with $XX and We million but million of of to decrease $X $XXX.X supplier sheet. end our securities the parts given needed of high nature the now the suppliers, Embedded increased the in for cash in marketable to million production, volume commitment couple the million quarter. we've our the of $XX value-added to within of quarter and quarters inventory product advances portfolio. or a necessary secure next $XXX.X made balance low

anticipate in now investing release an accelerate positive plan million North our additional release, commercial the $XX month American commercial QX. we full and in to this light our In findings limited of

part a business lower As arrangement, commitment inflow much model requires heavier compelling fees a financial reminder, our financial higher upfront significantly AviClear which revenue over trades the is on a for of one innovative procedure life the but This our a accordingly. capital device.

required pathway investments to cash structure of to course will active achieve treatment from placements. year capital generation base adequate With XXXX, overall we the the the capital the Over mind, to in the installed and clear outpaced the established consumption at earlier we our we expense, a cash in and new move ensure funding revenues had in and this goals.

to to for turn update the our you full call on I an of like with I Dave, XXXX. back year the outlook Before over would provide

headwinds third quarter core encouraged we the with are noted we faced business. previously be by also continue While our results, exchange in foreign to

guidance We are company million. million reiterating total for to of XXXX revenue $XXX $XXX the

We expect upper a to the unprecedented in the be than $XX impact exchange foreign of absorbing to growth end Britain Europe, of Japan, and our XX%. foreign more entirety exchange million, headwinds full be revenue XX% to Australia. at The guidance rate these expected implying of despite of is currency declines constant year

trend the Moving on the ahead and in given launch are and investments the have quarter limited making we EBITDA. earlier unfavorably fourth in accelerating sales release, favorable November marketing of to Per full and and from our FX XXXX. worsened adjusted continue North quarter. during necessary to Dave's comments pressures third commercial findings early our American AviClear

light adjusted all to be year $XX breakeven negative million. in we full year than previous projections, now our are impacts $X guidance these revising factors, EBITDA EBITDA In our considering In range to expect of full of to more on million. the be adjusted we FX of

the over Dave. back to call With will now I that, pass

David Mowry

I the outcome you, about momentum clear, what acne about during performance the focus a frankly, lies with always To our Thank as by be am for our pleased strategic product. the of ahead XXXX. was third bigger by demonstrated am Cutera. has only encouraged Rohan. never quarter still much It continued on been business. for a more I But

transformation business of and AviClear true The AviClear are model enabling Cutera. our device

are medical engaging their our derms group. we space effectively expanding core and in customer First,

new long-term growth to a expect market expansive Second, what of a more accessed total we and procedure. addressable with we be recession-resistant

accelerate more revenue interests to Third, margins are can we how of And that have line gained changes model we profile and aligning the Cutera's into of shift and that our these evolution sight have to visibility. to the of will procedural finally, channels begun improving financial practice. include with

performance the we on us are factors, AviClear during for release Based confident of impact expanding a validate to ability upon our of launch to product. full American and critical the the North commercial see and AviClear now limited these in

expect through the new participation the new product. Going the indications, acne time our of to grow continue forward, AviClear and market inclusion of geographies of over expansion customer to addition by the we channels treatment serviced

portfolio time scalable innovative better X.X over an our the to core delivered right team introductions fulfilling goals. deliver has The XX positioned with exciting, upon to an us business been our product new at Cutera Aviclear, Beyond the as one next be with and as years an never we months. exceptionally people, processes for new product busy next will be work

the With to questions. the and your to Operator? that, open call operator call like over to I'd turn the

Operator

[Operator Instructions] Jon Our Block question first of comes Stifel. from

Jonathan Block

launch talk just first the early question, the AviClear running with boxes Maybe, changes our ahead are full And Dave, thoughts. maybe your of this what about month.

tack any we early then XXXX? on as thoughts sales maybe enter a for around rep I'll utilization box will follow-up. as So then my are And there, high-level every part have their AviClear of per now And it wait quota? there

David Mowry

and for questions, thanks Great those. Jon,

let very not I I of out terms of far think get want in be people expectations, in careful to front too us. to

to knows, and box, we've time there's I as it few kind everyone lead said that a times, As of of box. you activation a place the a think that

and installed, bring not up the bit to make staff enroll train certain with boxes have to have to have we sure validate and office, to careful And that to access be how administrative still quite and to that be and active use then clinical while these become patients want of back the to how show be the going through start sure we They boxes to move kind to back to overnight. show think and get place we these to may understand on to product, it be make broadly effectively entire a process. and to these active. efficiently. on to have the more So they functions then then up we There's sales the they team almost very customers

in we've patients time always the thing practices a and talked new about bring then on. can cases, last these lead when And of have they is, them most

careful So to activation the looking at of and while are start want a broadly, impact that trigger impact. are more probably quarter first boxes new be pulling now just quarter to we bit a I a are the fourth those they boxes placing of more little than

think release. expecting start what the broadly limited are like to regards to knowing In we've we what to commercial we proven expect, ourselves to more during

these at also other there. to place utilization way to we that So so But harms in to thoughtful look a like boxes very, that the going we do want be other are boxes. not long-term of places are out opportunities and to very the

it utilization, think a a we So that you placing very kind give that a X think number month, would so support a don't I'm number of patients going about volume patients that to or going but at to in be to a target new to not around seeing we of be aren't of clinics I kind right? want broad of manner it more

So need ramp. to of many them

them already of are Some there.

use in need how Some and deploy to it their practice. them to of learn it

So to be there's still of done. that quite bit work needs a

execute like, takes to we understand in we think reason launch now and what full I because is the what think work kind know moved I those things. now we looks upon that of it

Jonathan Block

question. of Got it. a second it. helpful, Very segue maybe Got good to Dave. my sort And

from talk XX a results. good mean you reps past I we're believe of amount a the obviously I where hired are seeing over you the months. about can you standpoint, If sales infrastructure

on and go infrastructure Do infrastructure -- talk for plans But into specialized a the I'm capital to full and 'XX. drive sales the reps? more Do 'XX. ahead support boxes is AviClear you XQ ramping sure XXX you about in Maybe launch. now Your any need need force from capital AviClear phenomenal you utilization standpoint standpoint was that? year just exiting to because want then an this properly in

David Mowry

Yes.

Another my way. I that answer guess great this couch I would the around way is question question.

provide expanded customer need customers base those that going with those things. different an have as about customers, different customers We servicing And and to surrounding to we're need think support. we different

we scaling, scaling to of number we of So not have think the just same. as think just more about the about

we're each bringing making from I the than the might help things have need. I we limited that Like a practitioner med to those accounts. what of support and to that different be sure in said to talent aesthetic earlier, what We think the and right right right do release, an about commercial need the locations different might think derm understand may

think things. we So we those understand

to X.X we add I managers grow targets. around the a everyone to not they a think accounts I I able XX scale hit you're continue sure into we we need to continue as what We're point last -- -- to at forward. those keep those. people we keeping number where right, utilization years. move of And and of I call think to number only a of just look to we going people year, new they're add, key think accounts them the existing helping before but make we did that to with told we And kind of continue their account the them over think pace

our add practice. productivity of act more part those each as be will in increase. better greater So it's for to placements And drive and balancing we'll or boxes we hope effectivity need the likely of that 'XX, to the

Operator

Fitzgerald. Our Chen comes next Louise Cantor of from question

Unidentified Analyst

on the congrats is quarter. for on This Louise, Wayne and

two us of from two maybe us. So --

commercial And the months have the early And latest thoughts you and it's us opportunity outside approved the know with What But about market to and sales? physician for you too America? discuss I North have probably received a First, since this. your then your plan limited peak AviClear on of are bit what's far? release. could got so only provide feedback X been

David Mowry

didn't take time. you Boy, any

out I and been You those are appreciate on I couple will we the prepared But in question, points we're don't that to get think Wayne, carry to That's front a of that. you of I'm going tell right for great physician yet. it. a has feedback Look, phenomenal.

think that have of I physician users. there's a interviewed folks number

be were and the XX-month commentary the continues We the just meeting exceptionally data. X-month clinical strong. think continues follow-up, we to fall to our outstanding which over where I released show was at improvement

as outcomes, and are the they exceptionally physicians I more needs more to be understanding we're So clinical and coming to of of part the proud this practice think evolve. onboard their

think practice out help sure being practice to package treat with effectively. still we're as That without their it out pleased normal cycles them Many how need patients do put derms, figure can still we them them make to a half I said, patient that. into hour that of we So how figure to to being put in treatment flow. that and to X-minute disrupted we allows treat have together that their we

So to work work and earlier, continue have to that. do, to to some going through Jon we we're as I said

talk getting prepared think is a kind I to yet. to something I think So of to volume, don't peak we're

So that bit. I'll huge is do there us. that out a carry demand for think I a on that's there little

a be more we I insights able really think opportunity, to going think more take I achieve with to gain the it's a lot and number. for insights, we'll share evolve there's us And peak while community. as to investment that of but

a those decisions further. outside think think many and to comment yet. have look countries not the mention I'm support. we we to both we and line, America, we and with Dan around through we're But I you Plants, I of and at world. continue going that right we're time to point, the think greatest the where an Chairman, at right the myself for and both expansion and where to terms North evaluate can we've contribution, Rohan traveled have position And opportunity that will for tell that any bottom top willing And In the in make our at even on opportunity don't

Operator

Inc. of question next comes [Operator Instructions] George Stephens from Sellers Our

George Sellers

great hearing and of after some and this want from patient quarter. stages, at younger severity. teenager demographics acne this I and severe maybe feedback early any feedback they're a the just population Are some AviClear the physicians you're on at with in more the follow-up in age maybe have that and from targeting point the on stage? these acne or terms you to they going physicians Congrats

David Mowry

a to George, types be audience great to I'll all and really careful state that first approved question. it's all in stipulate the severities. skin is for AviClear

So for the mild, moderate are that a and see get at X all where outcomes those types the severe XX and, clarity skin X, same through types and people outcome across using skin we been frankly, rather relatively these rewarding categories. remarkable quite AviClear. And months, achieving it's

women That be demographics, higher see said, geographies, we in I for think professional in a certain young propensity treated. certain to

I speaking, isotretinoin. are are associated that folks with to these more opposed probably the contraindications think, generally

have I'll birth defect with concerns about, obviously You say, isotretinoin.

point be By probably the adolescent I contraindication token, concerns a in see up. of have high drug. evolution. a at that or in There's their times that they're their of little treatment. on bit of three we on previously suburban And on teenage have the consumption more to it and parents two environments the same the challenges alcohol for think or propensity while You children people frustrated taking fed been with more

is. the we to So demographic to kind just what #X it I not careful want think lump be of into

improvement. for opportunities results full are stipulate basically there's think I we coverage, that treated see rather and dramatic certainly all the a see folks

med favor of patient where the I practices practices population. in the But versus the derm certain of kind change a are one aesthetic where may to of going are other. not drive demographics over kind we're So think

George Sellers

issues of the a of this That's how context concerns the Okay. you are to cost doing given the And weakening impact in for helpful. in underlying guess are the sort patient consumer? a you and and market. economic sort some treatment, I mitigate to of of backdrop potential next the deterioration And the of then year the about for expectations thinking of and what

David Mowry

bit quite of I think do it's reductions, And of is the on that feel through that we is a that than question. effort a lot come or wrinkle just the cetera, a we you recognize acne lift I'd believe and do of our kind That first something et probably this at all, that more tell like part. there's always brow And given to their the priced I recession-resistant customer. us is backdrop a to a for obviously right I while device great that work time this recession. the opportunity all we said, market we hard going data and a Nevertheless, And recession-proof, physicians in price we've allow more think not to that's procedures pressures. had and certain we've market-based, them to our way think our as procedure be been bit to indicated. economic of little the in physicians, obviously is

But some other beyond things. that, we've done

taken our that finance maybe step this, plan You part through North But we of the national to we CareCredit. one launched be out a help may recall were out have in just new the we'll rolling And further. program with we've that came when full of Rohan financing I that speak physicians able America. can program as kind that launch to

Rohan Seth

other be, expect lot that this though recession-resistant more, that a thank will Yes. And you, do treats. procedures even said than the it pay its patient very aesthetic conditions medical Dave. rightly No, that we given

So and George, financing, finance to to will your to patient value the this weeks program month a months that patients the going, helping answer program, launching that question on here this XX our this in will at procedure finance to And market we're be one be this in steps that shareholders. of can the the our partnership think unlock period a with us of for we over $XX create CareCredit. allow upcoming a in

David Mowry

treatment for amazing really an is exclusive we as were arrangement establish this What's that Yes. will. to if in segment, you able us this

lock folks. thoughts happy only competitively to does some really out for not the extending -- what to it we're some differentiate also about patients, and this or but having it So us

been well it's think with happy be the crafted I with partnership and establishing So couldn't we're CareCredit.

Operator

This concludes Mr. closing like remarks. the for the to back over I to question-and-answer any conference turn would Mowry session.

David Mowry

like would from to some support I Ariel. Thank got comments. people we've appreciate you, leave is the with you I What final just all today.

company. all, of future you not We're for to the Cutera. what what We thank XXXX your for at catching here want All time. we're holds that look in full in more the to interest look excited continued up forward on an best. excited be the and really support results giving First our of to later and forward could update you with February for and I doing year in

Operator

today's call. concludes This conference

You participating, day. Thank lines. pleasant for you a may have disconnect your and

Cutera (CUTR) 3 Nov 222022 Q3 Earnings call transcript