VERO - Earnings call transcript Q2 2024

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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2024 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 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.

We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise. include in certain accounting accordance GAAP. also are measures principles will calculated not which call references financial to that or This generally accepted generally measures. non-GAAP We these financial to refer as the Reconciliations non-GAAP of presented accordance on press GAAP to with our the earnings measures available our issued financial to website. in in those are release calculated most measures Investor and comparable today portion Relations

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

Rajiv Kanishka De Silva

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

an our of cover agenda will with prepared we during what me Let remarks. start

begin with will months. recent quarter progress in operating review developments of several update our brief Hemanth operating and a on our key results I second in then an share will areas.

provide in-depth end. questions. Then our agenda open you financial let's that quarter balance at Following as mind, that, call started. for condition the with get sheet well in our Domenic review second we financial as an With will and results quarter your of will

release press detailed in are modestly deliver pleased to for today, As our second the we issued quarter outlined call. first earnings we expectations revenue exceeded that quarter on our

restructuring we second to by decreased only improvement U.S., a quarter, the executed results XX% continued the last mid-single-digit during in to reflect declines basis, XX% encouraged in quarter, activities posted business year. on strategic are year-over-year. revenue U.S. of in particularly business decrease related Sales reflecting total the our While the the the impacts the U.S. year-over-year underlying our customers year-over-year we in trends Outside a

as by impacted patterns our key markets our international partners in were ordering U.S. results revenue had from we expected. new Additionally, distribution fluctuations in all

whole, strategy as represents That the goal we company's the continued are We this remains of of impacted trends While our improvement focus the macroeconomic headwinds, profitability believe resources working. are be underlying sector business. challenging. is in the operating business markets the by by aesthetic the U.S. further which the a improvement pressuring continues to long-term to our encouraged evidence environment we've on growth profile with said, opportunity high and the enhancing implemented in

impact higher pressures, adoption I financing throughout and operating strategy to the close over lengthen. The Customer especially XXXX rates business. deals to my time to case commitment positive credit our customer systems This environment. our execution and to enthusiasm tighter with me high continue appropriate. is energy continues markets of interest balance give challenging continued the ASP the continued of expectation team's is results and despite improving that our where proud am for solid systems confidence

wanted Hemanth, Before key progress in update the I quarter I our an call initiatives. the of turn a of notable to on to provide with made over to few X respect strategic second areas

sustainable profitability out call flow and our this of long-term I growth. a will progress few solid call. the the First, front. to and we on cash our But flow the important initiative to wanted remain profile path QX strategic our the later on performance underscore enhance Domenic highlights to discuss business accelerate in cash on to focused recent

view are we revenue participants sector cash that the headwinds the in our XX% achieved growth a used over as the continued operations given particularly reduction to impressive in last We year-over-year, facing which year. aesthetic

the we represents evidence clearest believe that that to making with this performance progress are important strategic to respect this continue We initiative.

Management, towards lenders restructure from financing. transactions our secure debt versus Loan on Lending XX, largest On City Program National Madryn of Bank Main MSLP reflecting strategic undisclosed initiative the material as for or quarter of amount. to our company's bridge Florida one we April Asset obligations call, an Loan our multiple Second, first company's discussed the Street progress announced and and investors,

the as with up of our debt $X financing Following MSLP for close a principal liquidity we into Agreement Madryn May announced near-term Security the debt of to And amount aggregate million an in Loan entered equity to XX, on Loan and purchase, support to requirements. which half a These total we XX our the of in net a of to of $XX.X million compared a $XX exchange, outstanding as million. XXXX over December facilitated reduction XX, borrowings $XX to resulted outstanding first in reduction of in debt approximately transactions XX% million XXXX. June

long-term with has them that prospects Concept's further with execute as demonstrated to to and are our Venus plan. transactions forward our we We these Madryn look commitment pleased engagement continued strategic

June by that above the notified minimum on that Market to with compliance. has X, The NASDAQ to served Venus we equity company regained bring were the equity continued transaction Stock we debt Third, the Madryn listing requirement. Concept announced stockholders'

who Varghese, on I an our initiatives. like to update over turn to call related progress will would Hemanth? now to recent Dr. other share Hemanth the

Hemanth Varghese

Rajiv. Thanks,

As commercial engagement, as XXXX customer outlined as product earnings were in our strategy, restructuring well last and on development call, we programs our our focused initiatives. on regulatory

share recent of progress in our color a these little each areas. me Let on

near-term First, runway productive. to our cash and continue management restructuring, on cost progress has well reduction our protecting and cash focus initiatives been

the of our significant as strategy part reduction expenses restructuring our delivered turnaround months. year-over-year, XX in operating the a activities we we've Specifically, last over corporate executed reflecting XX%

the early XXXX. As next such future contouring important that resources on system priority efforts and our part understand of initiatives pipeline to high we're advance regulatory of strategic focused This our includes our new allocating clearance body in to support to it's this our certain will growth. effort, commercialization projects, also as that product

Robotics cash on in and path difficult highly the has Our like AI.ME delay operations strategic our including R&D platform. resulted flow the sustaining focus breakeven accelerating to company's decisions, initiatives, to compelling

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

financial will be business overall an flexibility, look growth. our core product investment expanded to of we stabilize which strategy, R&D to new security revenue enhance and to and essential forward returning component program development our continue long-term an and we As the

Second, to our simplify continues progress reduce infrastructure our international rationalize as well. costs and efforts the to organization

this several distribution part to As initiative, and strategy. partners align we of new new to international our existing with continue engage

Importantly, we coming XXXX. remain on growth track to in and in return to the completed months to U.S. be substantially our repositioning international ready outside the with

our second continued efforts launches. quarter, drive respect Third, clearances we secure during execute to progress successful the and with regulatory new to to commercial

X. receive secured is in medical receipt we TGA Pro Versa in on Pro In Specifically, customers we April clearance The system Australia this announced favorably. market from the treatments. and Canada. a launch Pro its license for feedback to June, our continues global Venus market best-in-class capabilities positive device of regarding initial Versa multimodal Versa to progressing in in Venus Venus important

positive are our pleased AI pleased company-wide leaders in our program Venus aesthetics and rebranding the early they at tools the aesthetic feedback are practitioners the of the the the our The in their science, to practice attendance our Venus with significant which market initiative, we we represents increase practice on enhancing programs. see events, in our with response best-in-class from grow our network field encouraging enhancement We've reminder, bring need knowledge, and learn a focus together participants programs. a been popularity physician from education of and how Fourth, businesses. and NEXThetics physician as about and to a to AI NEXThetics empowering technologies professionals support and example great behind development by NEXThetics

June. including of in the held we've first event registrants thousands Since March, our Texas hosted date, in was which Houston, launching gathering to largest in

the ahead of New will remainder Atlanta, United to across upcoming States expand and City, Minneapolis. Dallas continue in Phoenix, with NEXThetics Looking to the events XXXX, events York

turn for of a to financial quarter and Domenic? Domenic With over that, end. the review sheet our balance let call second at quarter results me

Domenic Penna

Hemanth. Thanks,

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

The by products a partially driven revenue, XX% decrease a by in in X% products by was decrease increase decrease other revenue total a systems revenue was offset in increase The X% product and in category in decrease X% lease services revenue. a revenue.

last legacy to a XX% The the revenue of demonstrated change XX% over in percentage derived this Prime programs, second model internal Note, in period. total our subscription the and approximately was in lease the months. prior quarter compared of year represents trend XXXX XX from the Venus the company's systems

in of XXXX a percentage lease cash total declined our revenue prioritizing fiscal to programs sales system approximately in on XXXX. from to XX% of in focus resulted QX year derived year has fiscal overall the XX% in XXXX XX% from internal systems low Our

As higher represent. the revenue driver discussed initiative quality our system of recent improvements generation given a the calls, in key strategic of has been our this in investor cash cash sales significant

of priority for strategy For company. this the doubt, avoidance remains a

the the sales We of than is different to in realize believe it profile materially quality forward. very important company's That our lease XX% be revenue and cash, higher to lease continue in that to any mix system history. company's XX% said, in time the prioritize cash going revenue is mix the at sales appropriate system XXXX and

in a Venus capital to program differentiator we to to third-party and this America. new Concept Prime, adoption. a well challenging structured has has in this the January, in-house North for new been has equipment macro has Specifically, lending and represents the offer marketplace customers current mind, subscription very introduced system access with With our financing option ability in replaced program, Prime Prime the the tightened so Venus during competitive given in legacy environment. help which In capital. Venus valuable Venus received environment,

Importantly, the bad our and program. significantly by screening practices, which assessment customer a legacy adherence has in subscription debt characterized versus is credit risk expense consistent tiered Venus to of lower resulted strict program monitoring trends, payment each for Prime

sales sales, of a unique systems continue of are competitors. Prime differentiator we While of from very key from with we program to as XX% total have target coming cash lever cash Venus the revenue pleased our favor system a to roughly our

to international the tighter revenue $XX.X second the a accelerated to profit second impacted to Gross markets review decrease quarter direct of our XX.X% of financial and million of effects lending from a by and revenue driven million. negatively of in which unprofitable was sales The the U.S. in or practices, compared margin markets. revenue for gross $X.X international rest XXXX. exit equipment to XX% the results the both P&L. due of third-party in primarily the change XX.X% Gross in Turning markets of profit decreased quarter was across capital

markets direct by or of or this margins the also The decrease unprofitable operating on from exit $X.X administrative improved and million in operating Total $X the and marketing are primary change XX% artist was management company expenses. has to selling a efficiencies. margin expenses systems in $XX.X While our expenses improvement, million million. the driven contributors manufacturing through general XX% or expenses, total of XX% a of decrease primarily and in $X.X million decreased

costs XXXX. Second administrative general down activities year-over-year. and The approximately XXXX or second expenses was expenses $X.X million loss and of improve operating quarter the restructuring of $X.X exchange extinguishment related and million, to to interest of pretax net $X.X of for transaction of $X.X Net $XX.X due to and designed income quarter the compared GAAP, quarter million compared in was May other by of million in to of extinguishment X% debt company's operations were second cost structure approximately driven include XXXX. total debt XXXX. a The primarily the $X.X the expenses to as in interest loss year-over-year noncash the million on $XX.X other debt-to-equity result change Madryn with a million million

interest million increased and $X.X higher of $XX share loss also per to prior The period. XXXX of noncash or for on to the EBITDA other of for or second to foreign $X.X $X.XX by per million. loss the driven net million Net for of XXXX. share Adjusted of a million expense compared and of second $X.X exchange million net was to $X.X a quarter increase noncash outstanding quarter in $X.XX gain expenses stockholders attributable was year-over-year year X% the the second second XXXX loss quarter in interest loss quarter borrowings compared

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

balance to Turning the sheet.

used as As cash in June XXXX. million, obligations operations of company of of decrease and cash equivalents $XX and a June XX, cash months year-over-year. Cash compared December and total to was million, X XX% had respectively, XXXX, used million of $X.X $XX.X ended the debt for $X.X approximately million million $X.X XX and the

in cash of the challenging used continued very in reducing improvement proud are operating despite the We operations our environment.

a in XXXX the XX% cash continuing operations when strong we delivered XXXX fiscal year used cash performance Specifically, reduction in the important months X by this have towards XX%. we in used over in of our reduced operations strategic first initiative

in during second was driver capital more respect to period. the decrease the change quarter, used capital With with from of the in year-over-year strong cash generated of working the million largest performance $X.X than operations cash working in

our working particularly tied improvement, proud in accounts notable capital While up are multiple items reduction receivable. of contributing in we are to the cash

expense. in resulted debt enhanced collections of profile enhance to Prime efforts Our specifically the lower of the quality and credit in our Venus bad has internal lease customers program better programs, our

profile further growth the profitability to goals we year foundation to our strategy build requisite We remain on the focused cash of and business our to support the right in believe intently come. flow of enhancements have the and

in release, company press outlined time. interested maximize active As the providing parties value, year given not with this guidance evaluation with is our investors full our and ongoing alternatives XXXX lender, financial to the existing strategic various dialogue of and company's shareholder at the

For million. total ending X modeling revenue purposes, September $XX XX, for the least of XXXX, company at the expects months

I'll that, your operator call the open With questions. Operator? the over to the to for call turn

Operator

[Operator is Marie Instructions] from Thibault The from first BTIG. question

Marie Thibault

of if looks the macroeconomic ask And going certainly sustainable like something take you selling a OUS, here part that of second meant I into new on just was ordering was will level stabilizing longer patterns. then there settle stable of wondered some I distribution think my now, outlook. question elaborate at if a that to is long kind those of with mention cycles. to despite by on that wanted sort how distributors, we can of sort And on revenue some you Wondering routine, forth? are is partners. U.S. first the patterns It relatively you ordering the of that there what is new

Rajiv Kanishka De Silva

of getting Sure. Marie, is approaching are And U.S. performance the of year. it's stability, cautiously should versus and to and a we a you half we point pointed where think year think as lower by at I look as encouraged into point to the we flattish are business. be the a optimistic the declining last of growing out, it we back much I that rate

span look, as of our the think, diversity benefit this is despite helping environment. that points. procedures, that is certainly some I price we And of the of in products different know, environment you of very full spectrum diverse us that likely credit in because, types have tight a different portfolio

plays And the most Venus more Prime in also obviously, the Prime because role is probably for helpful U.S. program Venus than markets. of

when I'm U.S. on view to the it add that's can So done. and Hemanth probably

to of because has signing taken time On the process probably subs. great so distribution a of unprofitable go start we then the selling, to just and what up new bunch winding the OUS was place. right on do we got intentionally our sure markets, want partners, terms the and make we sign down want distributors progress made And we right in in didn't distributors

gone the last course So that of on few has over the months.

XXXX of it's distributors wrong, be kind actually of again, should first a in if a to. referring bit terms guess, little order, in it continue that by just year. XXXX. when add done all the with their kind is the more we Hemanth, I'm in you before will signing do of this new My lumpy place anything correct is state. back Hemanth, half and be of be -- My is what half second up is of have that be this to that? There lumpiness view which we -- steady me were little our the they And to will to

Hemanth Varghese

our starting a region on that done can each you No, to approach partners think taken look different in proper new for market. When look you as We what at past. a really partners, the said that -- Rajiv grow in in distribution mentioned, second, products was I it our we've well.

actually for markets. a So registering cases, products those first they're in of time the our lot in

India, look time. having at we're the products like registered first you markets our If for

market. were actually of sales the each those grow have in contracts new growth. in additional minimums, there's These true some things minimums, contractual process, get those only meaning So partnerships, once we'll essentially but your up registration to incentives approved, are they'll hit your not have

those take So what bit patterns right? a are of little ordering time,

starting market, before then we year. are positive board go as we've entering trends have You first the on But end markets that the them are we grow. that we of complete with hoping and brought mentioned, order your in approvals potentially -- ones additional the for across the we to And to from regulatory new the into seeing going board.

On the think the us broad honestly our does attractively core very and positioned have. U.S., I the well, really products, compete and noncore I have We let and a both and think challenges breadth base. all customer with the target portfolio Rajiv of said we of this we physicians we're within even it uniquely market portfolio that with with

Marie Thibault

quick useful Very detail. A here. Okay. follow-up

$X shrink, cash of you've sort in to job the outlook capital of to couple of Any think and the balance cash quarters cash equivalents a sheet, about here how usage? working improvements. should think usage the about Your million done your for way on in with runway nice about we cash terms continues and next

Rajiv Kanishka De Silva

Yes.

can add Let to me and start Domenic it.

there because seasonality, are spends reaching the So to guess Fourth may that know, steady is that an like Marie. bit a I similar things though we for is to you because of third as have best businesses. that, generally some we're state, be will incur. have quarter, going quarter uptick and My somewhat are think our of a quarter little R&D

then to a flow And growth in there how there. the of it how focused be improvement to line we pace breakeven is our half impact quarter. getting moving we get company are cash So those into but going might some think function of fourth right the the trajectory the and are the revenue the into XXXX. XXXX, still will we I as And product really on and introductions new Domenic? look in second of are

Domenic Penna

Yes.

towards are some We'll be more in will think we the Rajiv But consistent quarter, the not I with it burn. burn but continued fourth in burning seen QX see there quarter what fourth well. said some QX, in much we've or generally less.

Operator

next from is from Thomas The McGovern Group. Maxim question

Unknown Analyst

my question sheet. first So debt is the balance on on remaining the

quarter, debt So following kind balance the on your in debt-to-equity in did sheet. experience addressing what of $XX approaches remaining to this million just you guys curious the strategic the

Rajiv Kanishka De Silva

Yes.

think you thank through pleased belief our constructive investment a sign their its is Madryn. helping the in and of the question. feel been company the continued options. their obviously, So the And potential. partnership for very had that strategic with company we've We very with They've continued in

as structure answer is capital discussion the is ideal a to third work that's our on we to be about would of We quarter. look a what stakeholders, of of over don't we which work and like continue forward. the Madryn a expect yet, that Madryn course sustainable other as well that and shareholders definitive company. part think with remaining with certainly what continue the to there towards And but discussion million should ongoing certainly, going We ongoing largest debt $XX for is the have

Unknown Analyst

a Got more color. on second And you. level. of kind just my I appreciate question is high that

changed you you as maybe of revisiting And discuss a of forward kind markets? plan? know of strategic some kind what's it. you're are what kind with talking your You of do improve expansion yourselves on markets. you the level, international about approach higher in last the to hope entered international touched And reestablishing these time from to upon you move if strategic I briefly on could But guys just you how

Rajiv Kanishka De Silva

that you pick want to up? Sure. Hemanth, do

Hemanth Varghese

this lot of had as might in Yes. profitable direct of while weren't before Sure. business legacy revenue, again, a The infrastructure, of lot was restructuring. and lot direct a of talked markets. we was At -- the markets, a overall in those high about have we level, generating part meaning a in Venus been we've we and generally

focused And where thing so markets profitable. in as restructuring, part we the of presence with did was remain we we first direct a the are

like for and markets. Australia and direct So strong and sense us you to Mexico Those profitable. are and Those we're look at Israel, grow. very markets continue to make maintain

subscale In market distribution to doesn't actually any other partner, this is or markets What presence not with us a just done has and And found to make distribution sense that where either we're strong again, partner it products. time. partner at that our partners. just wants we've we're not, a strong in -- introduce

over to we're discussions And to in year as areas new where transition were continue to and existing around so into in Asia mentioned, direct distributors. we and And done in what strong been we've both expand markets, India, the I markets past of Southeast that has way. number a

market. the our ones with more So and more I'd that different grow new partnerships of of strict a well previously, incentive introduce structures from in minimums say of terms kind and products into we're as I before, described kind to with commitment as entering had and and the more to we as are purchase distribution

your real that answer So Does and a commercial partnership. question? marketing

Unknown Analyst

absolutely. I questions. to the time, open and Yes, can I guys appreciate the call up you further taking

Operator

currently are participation. does today. no our showing conference additional participants the queue. for That your for conclude in We you Thank

Venus Concept (VERO) 13 Aug 242024 Q2 Earnings call transcript