Earnings call transcript Q1 2023

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2023 Earnings Conference Call for Venus Concept Inc. At this time, all participants have been placed in a listen-only mode. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay.

Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our most recent 10-Q and our annual report on Form 10-K filed with the Securities and Exchange Commission.

Such factors may be updated from time-to-time in our filings with the SEC, which are available on our website. to result or events, of obligation statements our or no a as new undertake publicly revise update forward-looking otherwise. We information, future measures in may are GAAP. accepted call also references or certain This include accounting principles not with accordance financial calculated the generally to that

on non-GAAP calculated available refer generally today and of release accordance GAAP are those presented our portion as to earnings the issued measures. Reconciliations non-GAAP in Investor We measures financial most in our press these of to Relations financial the comparable measures with website.

turn now like Venus call would sir. Rajiv I Mr. go De Please Chief to of the Officer over Executive to ahead Silva, Concept.

Rajiv De Silva

Thank and Business Officer, earnings Chief and by operator, first our and welcome I'm by Concept's Chief Officer, Innovation call Venus quarter conference Della Domenic our today you, Financial XXXX President Penna; everyone joined and Dr. to call. on Varghese. Hemanth the

we summary earning remarks. a of brief Let we our in of we with during and our notable provide Hemanth what agenda recent a including with cover begin developments to weeks. progress our prepared to me strategic strategy, intend will an call, review revenue term by cash evolve intermediate how breakeven. look at our to implementing plan as will our results then unveiled will recent our QX start accelerate flow of I last path in

your in financial first of today's year reaffirmed Domenic we our an end will our review guidance as review sheet quarter call well open a the Then financial release. our which results, then and provide with for will condition as you questions. balance press of XXXX financial we at in-depth

mind, agenda let's get started. in that With

million. quarter QX morning, than results release reflect results quarter exceeded expectations the $XX.X seen initiatives quarter provided would driven the year clear, strategic you To is the notable delivered we we and while the by earnings we prior revenues our This total our in first XXXX, prior in have As of of call, revenue on the be stronger issued on of our market. These U.S. press result demand this quarter. our fourth declines outlined expected first versus direct call. in a

encouraged well that of signs executing our well and transformational is is early we founded. are team by strategy the Our evidence

We growth. are quality transitioning to activities, cash exiting a series markets higher restructuring accelerate implementing in the direct sustainable certain flow to revenues company term business which to operations expected to together profile and and long and unprofitable the profitability the the of are cash of enhance international path

end, that initiatives towards there of evidence believe progress is To we early these in strategic key QX.

pleased year prior we and XX% cash to First, period. to systems subscription represented total compared system XX% are sales of sales in that report the

in of Our QX cash XX% compared mix sales period. XX% progress towards U.S. prior initiative more the system year at U.S. evident, systems represented to of in subscription and total which looking this when even the sales in the

sales represent. QX. improvements system sales system this given quality to year-over-year XX% significant expected, increased cash growth fueled the U.S. of revenue higher generation, And in in Cash as our customers cash

reported for improve revenue of results as efforts our international to Our also our impacting quality are well. markets revenue

our in going As less We profitability international future. improvement forward. markets profitable driver States those believe to and opportunity United a key be interests company, like the the to our that our and important in call, discussed QX higher U.S. resources markets markets divesting continue are we with distributors to reinvesting of customers the on partner our will while transitioning the profitable outside less represent in international smaller

activities our progress. continue Finally, to restructuring

in delivered million our than XX% expenses in year-over-year. and reduction the simplifying We a cost rightsizing $X savings representing We are the operating business, non-GAAP reducing organization. more

operations, growth. drove represents and flow profile which a each we cash goal Our these the in the evidence are enhancing and to used on of clearest in QX business sustainable our right-track in we the of of reduction towards profitability believe cash the areas progress accelerating XX% long-term that path in the

other discuss. that briefly I two to developments important are wanted There

the symbol, our announced with increase under that on split the at company's of implement the on shares NASDAQ reverse May shareholders stock the release to XX on to market. began annual company's opening listing the basis press authority continued the company's XX, price consolidation discretionary granted Board capital the was on market the on the X:XX ratio. XXXX. stock we and the on First, capital May trading NASDAQ common company's stock XX, meeting the The Directors via of trade of the May held special common The a market shareholders split-based to reverse of VERO, a requirements compliance bid for split-adjusted existing reason regain of a

company's stock institutional we private convertible difficult a announce preferred Concept. entered a Partners that Healthcare price up with EW purchase despite stock investor environment maximum release Venus Second, EW investors via morning to proceeds pleased were to for in Partners financing a is of we have gross equity recent in Healthcare -- for months, and of this agreement into largest the million. of one stock $X voting placement the original press

intermediate valuable We with the in execute placement objectives. their to capital private confidence strategic our appreciate to This term provides continued company. us near

on positive work debt enhance term a further company, While term foundation remain obligations and our for goals. our maximizing longer for to we as manage is to highly focused intermediate the company's capital resources to securing our equity capital achieving near this we the

million cost cash flow half of savings a reduction $XX in XXXX outlined As company's million annual of second to our achieving and strategic beginning call, in breakeven our on pre-tax targeted $XX in QX by the total of XXXX. originally plan structure a the

initiatives path XXXX without are We objectives. series to impacting cash evaluating of incremental breakeven a flow in our to our XXXX accelerate

Hemanth? well of would in of our plan the Hemanth implementation path our we Varghese, the accelerate our as early new on XXXX. Dr. introduced over as flow are progress who I like some in an call will initiatives update to potential to strategic on turn cash the now evaluating to QX call, to recent our share breakeven

Hemanth Varghese

Rajiv. Thanks,

implementing on call, a QX begun that main plan is six we've our strategic As discussed pillars. transformational

First, the business, rightsizing organization. simplifying infrastructure, reducing international our rationalizing costs by the and

Second, been reliance reducing use our model. on the sales of significantly subscription we've

maintaining the markets. on our market mix and focusing primary as international an of U.S. Third, in optimal and direct presence distributors

key Fourth, centric energy portfolio better building a and based with more support of segmentation market leveraging approach segment. robust and our broad and robotic systems in devices non-core customer customer core to

future energy with over based Fifth, stable time strategy support with more development a portfolio primary and rejuvenate robotics and driver in focus the continue will targeted innovations to product investment features new our that phased revenue profile. artificial R&D as technologies on key growth a and a recurring intelligence also to

M&A robotics, position and our property development for leveraging inorganic as pipeline, Six, expertise opportunities as exploring M&A. for by future and innovative strategic in medical well and robotics partnerships strategic platform intellectual a development R&D the provide aesthetic development business growth to through business consolidation

our we've and focus over progress operations. As transitioning Rajeev our a considerable and of subscription XG, already operating reducing U.S. earlier, expenses initiatives cash corporate prioritizing including revenues our and strategy several operational dramatically key sales, described of business on infrastructure performance sustained through our cash transformation against through quality in rightsizing made burn our of improvement

patients. joining provide be high talented I this impressed continue priorities. addition, like Venus of our treatment on past Concept supporting in technologies I'd by organization. advancing outcomes to R&D employees, and caliber to tools to R&D their have We're to new practices bringing brief customers and with for to with aesthetic improve new committed innovative market the update services our In a October, Since we product pipeline and

our to revenue product strategy growth. long technology forward, an sustained strategy committed of continuous innovation. be component of essential creation through And development term leadership and remain We our value going our new will

Amy, discussed robotics current two introduce received clearance which our A resurfacing. product market development to called past new skin contouring for we've to Astera our As previously, next brand aesthetic generation December XXX-K fractional products body new platform, in this is XXXX. plan and

Robotics our medical technology aesthetics well-established our The believe potential to aesthetic R&D the treatment robotics and medical critical maximizing revolutionize be continue business the platform to We our to Amy between synergy capability. paradigms. has Amy will pioneering that

advisory full our will We in establishing board final leading of partners are for a support medical launch. that of the commercial preparation process physician

response time accelerating financing difficult thereby bring focused our both financial providing to At and business our for cash long the and to a on plan flow environment, security sustaining flexibility operations, we're also investment to in this and growth. term breakeven

our options to profitability robotics such, expanded thinking we are evolved programs the some program the performance As programs have based in we core business R&D of R&D can and an to our energy R&D exploring concurrent before strategy. business better investment support leveraging our of stabilize and fully further that devices phase with on and scope

for our by explore provided the to continue We investment. growth opportunities remain programs our expand value excited very and by R&D capacity we'll to option current

our In intelligence forward in addition, more progress in leveraging to exciting discussions R&D partnering development on we're robotics We look providing in of engaging non-dilutive funding. actively potentially a and a future new interested sharing potential valuable range for artificial team expertise of source programs growth with updates our calls. and parties

financial turn let balance of the for first that, results With a March Dominic? over as me sheet and XX. call to of our review quarter Dominic

Domenic Della Penna

Thanks, Raymond.

revenue decrease all XX% was by offset a in otherwise XX% year-over-year systems basis. year-over-year by quarter the category For in on increase a on The year-over-year growth X% revenue was revenue. in a and total by are $XX.X items decrease million revenue, decrease revenue, my a GAAP in by prepared of We reported XX% in by the decrease services United noted, avoidance unless a results revenue, a XXXX remarks decrease in year-over-year, XX% States products decrease total of revenue on XX% XX% of revenue a in decrease product revenue. partially and focus region for basis an lease driven the driven in doubt, the reported international company's will GAAP down related

was revenue results gross review sales $X.X to first on P&L. to quality in in million. exiting decreased our a The the rightsizing of and markets, quarter and the million direct of rest financial the deemphasizing strategic States XX% driven United of in change the decline year-over-year across by primarily by unprofitable profit international and/or markets. subscription the by $XX.X decision to profit or revenue Gross driven Turning focus

to a to our was currencies most prior in Gross depreciating in of was quarter for to Adjusting $X.X the exchange a million these primarily headwind are margin U.S. compared XX.X% factors, due revenue the The of of the result XXXX. gross foreign margins period. change relative first above dollar. as slightly gross XX.X% margin year

Total XX% in and of decrease a The in $X.X decreased total driven a $X.X operating change sales general in or operating decrease expenses, or million to million of million. expenses and expenses. by $XX.X XX% $X.X was million marketing expenses or and administrative X%

cost include structure. to to expenses First administrative company's operations restructuring activities the related and designed quarter GAAP cost of XXXX general and improve

the compared related was restructuring $X.X costs operating XXXX. operating million activities, non-GAAP first The $X.X or of the Excluding to to $X.X million million quarter in loss XX% our year-over-year. total declined expenses

interest year of million X the first first of Venus loss prior a for prior share quarter in per our Note, in were reverse for Other of XXXX balance $X.X of $X.X Net stock share or to the calculations million owing first on write-down the to share subsidiary. expenses split. XXXX. and XX compared million attributable $X.XX $X.X or sale compared includes of expenses the of subsidiaries loss in XXXX. million per of the to disposal a periods to Russia the $X.X quarter $X.XX Difficulty] of Net stockholders first net to per [Technical current the and our reflect quarter was loss other quarter XXXX $XX,XXX related from

$X.X for million EBITDA million the compared loss of to quarter for XXXX XXXX. the $X.X first was quarter Adjusted first of

have a net reconciliation earnings press loss of release. in provided reminder, EBITDA As to we a GAAP our full adjusted our loss

equivalents had cash and $XX.X company December million $XX.X As debt and total million $X.X XX, million million of March of the XXXX, compared respectively, XXXX. to $XX.X obligations of XX, approximately cash of and as

a used three improvements working $X.X in The operations to and efforts capital XX% otherwise for significant result of million, in benefits by cash credit and credit market. months as to was XX expense year-over-year. in operations driven screening in cash the March our focus to restructuring flow on bad plan was used cash our tighten a and improvement initiative the decrease practices in our debt used cash ended challenged sales, including Cash an generation reduction tracing a system

purchase during agreement stock the of $X.X the common and XXXX activities equity by Cash our used million in and operating investing the cash quarter was of with Capital. first to pursuant of period by financing from sale proceeds activities offset Lincoln driven from partially issuance in Park

our to review Turning guidance. a of

guidance period. representing approximately we in $XX detailed revenue revenue the $XX range As company total the decrease million in press the year December a for to our ending to full year-over-year. expect the of X.X% XX, our continues XX XXXX The XXXX X.X% for to range release, in reaffirmed million,

for While we outlook the considerations providing guidance for are in the we evaluating profitability not full for are year the for XXXX. providing formal use our following XXXX, modeling

at range growth to in in of in full complete XXXX, to continues in the half transition we of decline by low XXXX, offset the total of year revenue declines X.X% our revenue guidance the as the First, half revenues. revenue assume second of year-over-year the first end quality

decline revenue XXXX. more for XXXX sales than system full to to shift XX% year is full system This approximately partially year cash we of a sales of growth expect represent compared cash systems, sales in We and XX% increase will expected subscription expect mix total for in revenue in the year-over-year. result in million expected by lease approximately which high-teens the offset $XX of to

Despite subscription total decline net we cash the in and an expected expect generation. improvement in revenue, systems

guidance business this related the to for aforementioned reflects strategic also in revenue revenue international of million total are we year. year-over-year approximately implementing XXXX our impact $X changes Our

strategic the be total year-over-year our a changes cash impacts from growth the believe system revenue Excluding basis. prioritizing would year, this certain markets XX% and international sales we normalized in on

second Second, range year be that $XX assumption our will includes revenue total the the $XX full revenue million XXXX to guidance our million. of in quarter

of relatively our we flat to in margins million. expect expense range of approximately guidance $X.X restructuring now revenue expense performance of in $XX better range, year continue $XX $XX end XXXX on based expect GAAP million the low and our severance compared Note, updated expected GAAP the expenses. gross QX, we than million to operating at Third, range to expenses full non-operating prior to includes $XX other operating of this guidance million million approximately

million approximately better than The updated GAAP bad non-cash with in of of compared guidance also prior range expense. expense expenses operating guidance from to approximately million range includes driver largest coming our $X the $XX expected change debt

reduction activities initial non-operating a by guidance early $XX Excluding in target $X $X non-cash million February expense for our million down expect benefits This items in reflects driven from expenses, to expense cash operating our or to by the $XX million press the million prior we target aforementioned is cash and XXXX range. now approximately million our $X investments from the X% restructuring in partially of strategic to X% initiatives. announced year-over-year, release R&D offset

our to more cash and continue finally, of million. revenue than expense interest across XXXX expected Fourth, in we modeling expect operations approximately now a $X of in P&L use result are supporting to for And some reduction our XX% the our guidance total year-over-year. of from

the operator, questions. call Operator? that open will With we to now your

Operator

Instructions] question. Cohen [Operator you. first Jeff your question you. Thank Thank our with will come proceed Ladenburg. And from Please with

Destiny Hance

questions. Hey. actually This for is Thank for on our taking you Destiny Jeff.

bit commented about the a you drivers in resulted that that the call? the in on the Can saw that of Just higher beginning talk U.S. some more you a few demand you here. the ones at quick of

Rajiv De Silva

high question. really Yes. Thank Rajeev. is expectation. Hi, versus Destiny. you This the demand Yeah. It's for a

we As you had So expected. U.S. found cash from we with saw push the more the one system we was of lot higher And were consummation was can our previously than sales, a successful results, moving versus than subscription cash a strategy, we our in right? ratio being you have imagine, that higher the anticipated parts in what U.S. for our primary

our of driver success. the was that So

Destiny Hance

Got it.

you what can't course? kind And then like mentioned high evaluating a too cetera., What of that potential at you. does and acquisition, some you also partner et the heard of know kind there. you are or level, moment, I detail. at look of Okay. I efforts Thank much M&A give

Rajiv De Silva

Yeah, Sure. Destiny.

business, I be the we having. results encouraged continue that's to we're aspiration as effort. reset the realistic early XXXX clear, now to I that really right? are Just for our the right by It’s think And a forward-looking we we are have think transformation priorities

program. element partnering business Now our is development particularly R&D on is high of around minds the that one our

not going to what that's see from you're scale So M&A. likely us, large

that foresee something We're being that some a present great open way, but If company. term minded. come ideas in unless we public we're not Now the themselves. very opportunities always our said, near that's

Destiny Hance

Okay. Got it.

the area. in partnering we're So R&D

one, mentioned on terms last timing, maybe clinical first little in more Okay. I'm and Astera. in then and clear. then, you I'm development if second bit one the development wondering talk And what is then of And like, granularity for pipeline? you And give of status the where half? call okay. timing, half, more can last us, XXXX a the about little Can you you a

Rajiv De Silva

have you his I'm give to Hemanth perspective. going

of that I of And to think phasing Astera projects. remain our the through in – one well we're we, of one are investment Amy, of phase. and about both course, trying of both is these planning as in the very as both excited things work the

So we there some like, to to what programs, the add remain do, in terms to is both but exactly certainly they looks anything timing of uncertainty still committed that? Hemanth

Hemanth Varghese

think process. occur, very on be said give able in still Rajiv more planning phase I said, coming We it. more but largely but when moving and in as development provide well. We'll ’XX, both timing they go information to guidance as the both in of can't you them along see are along, No, along we could well that are

Rajiv De Silva

call When able topic. on provide to we this to be on update another next earnings expect our

Destiny Hance

until the back in questions. much call. Okay. next you Thank jump very Excellent. queue. Then hang our I'll I'll just on taking for

Rajiv De Silva

Destiny. you, Thank Great.

Operator

and Thank today. you. no Thank in our day. that remaining and participation, currently showing a We a wonderful queue you conclude Instructions] for questions for are have [Operator your conference does

Rajiv De Silva

you Thank Great. much. very

Venus Concept (VERO) 15 May 232023 Q1 Earnings call transcript