VERO - Earnings call transcript Q4 2023

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Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2023 Earnings Conference Call for Venus Concept Inc. [Operator Instructions] 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 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. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise. This call will also include references to certain financial measures that are not calculated in accordance with the generally accepted accounting principles or GAAP. these financial to refer generally as measures. non-GAAP We issued measures most accordance portion comparable of press GAAP those turn calculated of the call financial non-GAAP release earnings now our in Reconciliations our measures website. I Investor like to and over available to in on would today the are to Relations with the presented Mr. Chief Officer of Concept. Rajiv Venus Executive De Silva, sir. ahead, go Please

Rajiv Kanishka De Silva

Venus call Concept's I'm Thank by Fourth Hemanth XXXX Operating everyone, you, operator, Officer, Call. the and Officer, Earnings and President Financial joined Chief to on Penna; by today welcome, our Conference Dr. Della and Quarter Domenic Varghese. our Chief

in-depth QX Let our update the on what Hemanth key your I XXXX fourth then we year-end notable with of sheet a an me in operating the Then well financial in we prepared condition recent of press initiatives several XXXX will of a outlook remarks. share strategy. today's an will will our start turnaround agenda let's will begin months. cover quarter our our agenda brief for Then and will outlined results our review developments with provide started. balance as financial an call financial as our at results questions. With release. and QX in in that Domenic and during with corporate you review progress of of mind, overview open our get

today, the management, navigating I'm primary all XXXX. press cash our in by our issued to goal shift of achievement. than and burn in difficult resilience we cash contributed achieved of elements of pleased through year reducing a shown this to in transition. by more seen reductions; have capital working organization Key release proud cost would strategy, you transformation our of sales; that are As we our XX%

In X% $XX.X and year-over-year down fourth million quarter-over-quarter. million up or $X.X we of delivered revenue million, of total or quarter XXXX, the $X.X XX%

system restructuring our international softer-than-expected macroeconomic credit in due revenue sales of to in tighter the results and conditions Our accelerated reflect certain and activities impact fourth quarter markets, the U.S. markets. by

we customers' macroeconomic pressure on a our higher what is longer capital the are rate equipment to to affecting as much and new to interest finance discussed deals whole recent Similar continue ability headwinds while earnings aesthetic to purchases our sector taking close. calls,

initiatives revenue the Our to outside results last continued impacted we year. strategic the be by executed U.S.

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

that with our the the Despite we initiatives and efforts signs the strategic remain continuing have business plan encouraged in our we by are progress We are the challenging key reposition well turnaround to XXXX. focus to made operational on environment, and operating pleased in strategic founded.

systems in pleased we are that XXXX. to fiscal cash total report year fiscal year First, compared XXXX sales XX% subscription and of sales represented XX% system for to

higher priority XXXX, period. year-over-year year the customers to XX% Cash mix strategic cash towards sales of the system U.S. which to total on of execution increased represented XXXX even system our the quality prior cash strong which fiscal at subscription transition in and XX% more the in compared U.S. this systems evident in team's in to is Our revenues. sales progress to sales looking year XX% initiative reflects the U.S. company

profitability the certain optimize operational growth profile. expected. our in those markets reminder, in to and our in activities opportunity commercial certain strategy trends markets in XXXX Second, international company's international our of to resources enhance way was high to resulted our and longer-term one of headwinds priorities By growth and as key restructuring markets in reinvest have strategic to

and having restructuring U.S. having markets with distributor in transitioning target outside and with markets Our smaller of in identified, direct included distributors new the to the operations partner profitable key markets be With growth expect winding return and XXXX. our well early down and this international less our majority partners activities for markets to positioned key international up in year. our we that, of the by up signed a to running key in

our macroeconomic executing is challenges. a we more unexpected Finally, of the than while represented despite team these environment headwind well had contemplated,

cash reduce by importantly, than operations mentioned, XX%. I more primary for strategic XXXX company the achieved objective As used its to in

the that in the our on track strong cash resulted company and of that growth. Two the represents objective we from wanted Specifically, reduction profile continued decision accelerating NASDAQ with a our flow XXXX, used NASDAQ profitability or We NASDAQ subject that Market, other are other noteworthy briefly to XX, Listing towards the I and on of in to believe items the this the clearest On team's towards Panel evidence the business conditions. right sustainable March discuss. demonstrating goal XX% on enhancing received long-term Rule XXXX. operations strategic execution we May XX, certain granting to our Capital for we and announced request cash XXXX(b) in compliance listing path the before a Hearings in the

the Board is for also all strategic maximizing on of that authorized This Directors We options stakeholders focused January had of on company's underway. announced company. XX for effort currently value the exploration

this explore company would update time. I is in update well this the our restructuring our improve the of as pipeline and the an progress important As recent at profile programs, new value company with product to Dr. the a to initiative engaging rebranding share company-wide with inflection parties an which like financial as of with part Hemanth? longer-term forward initiatives providing on and will to look initiative, its avenues lenders shareholders creation. who in strategic point the We Hemanth over Varghese, our call to recent marked to turn turnaround. appropriate now view an external effort, on existing to

Hemanth Varghese

Rajiv. Thanks,

against we've turnaround in last our earnings discussed several progress corporate our initiatives As strategy. made of considerable call, key

we're little where progress. a share color making notable me Let

First, The containment or protect expectations. the our targeted and to accelerate are the initiatives implemented of cost cost in management runway. reduction our designed of breakeven near-term cash has to progressing path second year helped ahead incremental flow our cash to cash half at initiatives

Second, and are reduce international world. key simplify international the our infrastructure, we in efforts with rationalize are the well costs and new mix ongoing several to presence to direct organization to distribution around optimal our align of as progressing distribution strategy. Discussions with our the partners partners endeavor international new existing markets establish and

introduction the momentum U.S. resulted product efforts on of expectations U.S. platform, United and Multiple new are new pleased partnerships of in international After track clearance our in announce advance multi-application We be recent which our to our under were X. to pleased has distribution and Pro, our were receiving of in November December certain us XXXX. Fourth, new Versa return the the two substantially in signing to product Kingdom to strong outside we launch expansion negotiation, to India. agreements in XXX(k) the international commercial ahead months. announce network ready to of are growth new distribution with with projects repositioning in new the on complete the on exclusive pipeline September, Venus

to Venus on Pro to pleased announce market European Versa Union in are system CE the XX. from We Certification DEKRA February Mark B.V.

very initiative rebranding we're last October. from with Finally, excited company-wide the feedback our early

Intelligence, our commitment earnings discussed or Venus As and to last call, growing technologies towards our build brand, emerging partnering focusing Aesthetic AI, Venus our services customizable captures with strong smarter practices global and and customers on on treatments.

can staying by of on Rather, innovation uncover the leverage of data we fuel company. growing next total the we from connected delivering customers know devices recovery. Further, are technologies. a We not business want performance, and moment that that the want more our deliver enters start real-time product just to best-in-practice device our are patient our network performance focused customers, across than the post-treatment to the the connected clinic practice generation meaningful meeting we insights aesthetic to device performance to define we to to

the in announce program Venus were physician launched To and customer NEXThetics we a AI excited a NEXThetics education to need let new balance are and and series me by to our focus sheet the their is the under of that, call for a we empowering represents how year-end results example field in our they quarter knowledge, to businesses. With aesthetics on as turn Domenic? NEXThetics with events rebrand. program enhancing practice March. end, great grow and XXXX. training tools that Domenic over review education financial of fourth support professionals of enhancement our of

Domenic Penna

Hemanth. Thank you,

on noted, otherwise on items on For and prepared the the focus a company's for doubt, my of XXXX unless fourth reported will are all growth-related quarter basis, a results the GAAP basis. of year-over-year remarks avoidance

decrease driven was revenue. or million decrease international revenue a year-over-year by revenue million, in The of region decrease by revenue $XX.X $X.X We in United reported year-over-year a States total and XX% XX% in total year-over-year. XX% down

to XX% in access capital. unprofitable X Our products product international driven impacted decrease category business direct macroeconomic as The products year a was customer impacted a XX% period quarter decrease by was company's revenue and services systems by decision XX% other exit the in the XX% that prior XXXX. X% decrease markets subscription quarter revenue, in as and revenue increase model to the revenue derived in to by revenue. increase headwinds a in well general total lease in partially past the revenue third a was compared total of fourth of percentage and from in approximately the systems X% by the year XX% The offset company's in of XXXX in

$X.X XX% margin the reduced of The from to compared of and markets of primarily in in of improved million. write-offs compared the primarily a the XXXX. decreased profit decrease revenue revenue international margin results direct to revenue period. to margin the was in a to was to our our previous million P&L. The by in gross the XX.X% rest review driven management quarter Gross change accelerated or XX% gross profit fourth financial was Turning markets. Gross $XX.X across for inventory due change unprofitable due exit to of fourth when quarter

$X primarily to quarter restructuring million $X million expenses expenses million activities expenses development in $X.X extinguishment research total quarter $X.X million general $X.X partially foreign a compared of change million or The the attributable $X.X administrative and disposal in XXXX. operating by total The of XXXX year or quarter quarter a The and costs by million XXXX. loss fourth expense $X.X in share Total and and operating $X.X operating was higher to quarter to XX% prior loss designed GAAP by decrease a per loss the and for to was loss million both compared subsidiaries XXXX related debt to a $X.XX company's and the expenses; was XXXX. Net of the million and XX% fourth on in on other of expenses. Fourth driven decrease for loss reductions $X.X interest of expenses; to decrease offset driven $XX.X share XX% $XX.X were $X.XX of in stockholders million. to primarily or of and in million include per net structure. administrative of and $X.X cost the interest a of exchange other change of or year-over-year expenses interest $X.X of to marketing million million loss compared noncash operating improve or in for expenses selling net approximately loss general of and decreased compared operations fourth the million period. Net fourth was XX% or

X% the year-over-year compared the for of fourth of $X.X million for of $X.X quarter loss fourth adjusted improved loss to XXXX. XXXX EBITDA to EBITDA quarter Adjusted million

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

to Turning sheet. balance the

XXXX. ended company months used XX to operations used as quarter-over-quarter. XX% primarily the cash partially working debt $X.X capital use decrease of working December the was XX, a from activities investing equivalents driven performance strong The decrease cash million in XXXX. Cash cash had $X.X operations December during XXXX, $XX.X of X of of used XX, period. Cash offset generated XX% $X.X an in from more and $X.X cash cash XXXX capital was decrease year-over-year million with by fourth million, year-over-year million the than quarter million in in the cash in the operating million $XX.X of in for December sequential of fourth on senior sale by of and tranche the activities million, total net period, of was XX, placement, proceeds use in by of cash multi-tranche $X.X and private which obligations from and compared million and XXXX stock and $XX.X and the from the financing the occurred As approximately October preferred respectively, driven in

The of release, lenders parties the not I'll turn given to with guidance with year the revenue ending alternatives X financial full your and our total investors value, existing call March strategic providing open at least active review XXXX months the of to a evaluation at million. With ongoing various that, financial outlook company's XXXX, for our XX, press Turning for company shareholder this to in Operator? of the to time. and operator call questions. over the outlined the $XX.X is XXXX, dialogue as expects maximize for the company interested

Operator

[Operator Instructions] from is coming first Marie BTIG. Today's of question Thibault

Marie Thibault

well here I to as question about as wanted the OUS ask QX outlook. a the outlook

of pressures, you forecast, what For that in the can macro what is of that U.S. give outlook. a of included went OUS assumptions? forecast just us QX, terms picture kind more If environmental being in into detailed your and

Rajiv Kanishka De Silva

I'll start. to have add let me Sure. Domenic it. Marie,

the first is is revenue over, can So look, at the as this quarter point recognition. right? you uncertainty And imagine, only

are some built through what we've in reflect what our international would seeing into our are we've to the the we conservatism markets say are to orders, fact business number I outside in in pickup recognition we revenue new also need So that we a still the procedures. But that hair we seen the encouraged distributors first seeing placing quarter by is that that go U.S. in

markets. return indicators the goes early to the we that to year of the for remainder the depending something on all XXXX is in can So aspire certainly growth that how international

an quarter. that saw And terms in given the see year not strategic in In full the giving guidance -- but headwinds environment, of fourth certainly, we in U.S. to we the would the second not year. the U.S., the until at see our to half obviously, we improvement of for the we're, this macroeconomic at that point in process, least continue expect

Marie Thibault

are evaluation strategic And also on narrowed and managing helpful. in you meantime? cash of there options you're how the tell of very the that us being That's can the ideas down? or Anything Okay. terms is anything then on options in flow timeline

Rajiv Kanishka De Silva

it Sure. process the to hand That's only the over management probably talk of Domenic Again, part I'll I strategic concrete start, Look, can I to evaluation to is statement the the make. cash want ongoing. question. about

until As you some can imagine, to to difficult come with processes, interim these types provide conclusion, of updates. you it's

obviously, coming yet. discussions company. I'm progress the a the there's process I not be update And those definitive we quarter. in have company's to process where outcome to explore around financial am that talking months that not able series will are hopeful say includes it working conclude of to is a following, this is our the the should which improve I that external some multiple But making, certainly -- ongoing. It second But by initiatives. we're the interest in a One, profile. -- with is the that lenders shareholders, least the to a can We're pathways parties but increase is at expressed we a and encouraged make who the existing also is with in progress

our mix enhance do cash also also I cash to is company's we subscription turn the ways small improving that has over in before bit of big Domenic, And you management been as strategic we of by to to to initiative a part and saw, encouraged clearly continue the focused topic, and deal acutely were cash to first our look are for bring on And of on a maintaining well. versus we're a quarter, profile And liquidity this as the able probably in we and this sales helpful. quarter little which the profile. cash

cash me you anything add just else let Domenic, to the want question. see to that, with if So

Domenic Penna

Sure.

in our saw to you we reduce Marie, burn. fourth think, the quarter, continued I

focus to cash what on But we're lines XXXX. we'll along did sorry, that continue We expenses year-on-year, same to quarter bit XXXX. expect going heavy in to of overall fourth a of continue company is all in burn we've demonstrate to challenging The because the first in throughout we quarter. -- first the in very I some a public But being is decent results. XXXX improving our quarter think the relation got

will challenges this good of in fairly question but is The U.S. compared other thing your versus QX, we international are relation I very that actually in remain had last business, that to year earlier terms many U.S., to outcome the in the in point there out in a year quarter-over-quarter U.S.

So we're it's where the starting right to signs pointed see certainly in direction.

in headwinds had, us we International in U.S. in the of QX. particular, year, the performance. signed better as in having we well, benefit than of half we that we U.S. to encouraged in the a some I would but had expect are we terms say, overall performance, by the we saw the distributors, of what Notwithstanding that in second had up what

Operator

[Operator next Instructions] Cohen The is Jeffrey from coming of Ladenburg. question

Jeffrey Cohen

this questions business from anticipated end Number secondly, for launches, trends you've if little the one, quarters of you and year? you bit any Aime mind. could couple you talk then about and A don't and this about few a over there talk hair experienced? could And the et cetera, past timelines

Rajiv Kanishka De Silva

want questions? you field those do X to Hemanth,

Hemanth Varghese

respect with Aime, and opportunity going continue on with about we management able have and we're to do excited discussed, doing R&D cash creating to investments. what been be we've as With the we the of pretty Aime be to to

of the body XXXX. targeting this the We mentioned have system year, in early we'd energy-based prioritized Pro for we're products that that like the part Versa in

potential one we launch back to end XXXX Aime time the sure at at terms want so into in be make or would timing. correctly. is of we do this of And year best It

spending time gotten straight. we've everything make to we're sure the So

Rajiv Kanishka De Silva

And the hair next business, part. the Hemanth, was

Hemanth Varghese

had macroeconomic QX affected gets being Again, by probably expensive business, say will our was as most hair with as environment. especially our the we are little strong well. the our seeing strong we mentioned, on business when as turnaround robot hair report rebounded most Domenic whole, outlook of systems, a business I 'XX But Hair environments, ARTAS some I trends in a type ultimately looks XXXX. And tough financing tougher. think QX,

Operator

additional conference today. Instructions] for in currently participation. Thank are This our no queue. showing for participants [Operator does conclude We you your

Rajiv Kanishka De Silva

Thank you.

Venus Concept (VERO) 1 Apr 242023 Q4 Earnings call transcript