Q2 2020 Inmode Ltd Earnings Call
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Good morning, and welcome to the in my second question Twentytwenty Earnings Conference call.
All participants will be in listen only mode should you need assistance P. signal conference specialist by pressing star Keith <unk>.
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Now to tend to come friends Bakken Miri Segal of and that's I. All please go ahead.
Thank you operator, and good day to everybody I would like to welcome all of you too.
Second quarter 2020, <unk> financial results conference call.
We just on the line today are Mr., most chemise Wafi chairman of the board and CEO Dr., Michael Kreindler co founder and CEO Mr., yet your Malka CFO Dr. spirit that Doris CMO and Mr. Shaquille Connie President of North America.
Before we begin.
I'd like to remind our listeners that certain information provided on this call may contain forward looking statements and safe Harbor statement outlined in todays earnings release also pertains to these calls if you have not received a copy of the release. Please view each investor relations section of the.
Company's website.
Changes in business competitive technological <unk> regulatory and other factors could cause actual results to differ materially from those expressed by the forward looking statements made today, our historical results are not necessarily indicative of future performance.
As such we can give no assurance as to accuracy of our forward looking statements and assumes no obligation to update then except as required by law.
Well show, we begin to cope with the business update and pass it over to Shaquille at Cagny modes, President of North America discussed our North American operations, followed by your Mouska Emotes CFO with an overview of the financials. We'll then open the call for the question and answer session.
I'll now hand over the cold to Mr., most chemise Rafi in most feel well share. Please go ahead.
Thank you Mary and thanks to all too well joining now.
Oh second quarter 2020 financial results.
Before we stop I would like to congratulate him on family and all the phone vessels today, what sort of breaking one meal anniversary as a public company exactly a year ago. This week, we did close I emailed IPO.
And do so I mean call, we will discuss the impact over 19 pandemic porno business our strategy during the crisis and I'll outlook going forward with me on according to data you might have got CFO Mr. Shaquille O'neal President of North America, and we would have Dr. Michael.
Climbed in the call founder and CEO and Dr. Voskuhls Duals LCR Chief Medical officer available during the Q1 night.
The second quarter 2020 animal generated revenue of 30 million Toby point 8 million dollar at 21% decrease from second quarter of 2019.
$8.6 million net income on a GAAP basis, and 10.1 million on net income on a non-GAAP basis basis in Q2 2020, we'd be why approximately 53% fall you whats whatever new form our subject got caught phones in.
Gauge in minimally invasive and some del <unk> ablate discrete.
46% for more recently introduced ballpark, you really have sleep platform and only 1% from traditional nasal and noninvasive our slot.
I'll pull my knowledge, you minimally invasive surgical technology, and hence we technology has been well accepted by doctoral student to Corona Vivus crisis due to the fact that day, Oh clinic based procedure not hospital base and maintain social distancing, we believe that seems to.
Kurt Warner violence is here to stay for the new future based on technology. We've continued to be our main growth engine and we will continue to develop additional implication for them.
Our business says the full impact on the global shutdown caused by the coal Cobiz 19 in mall.
Well and May of this year as electric surgical procedure all did worldwide. It's always out autofocus. The most close down though clinics and I'll be honest people kept show new business was at the stand still doing the beginning of Q2 2020, well don't twice.
[laughter], you know and the screen and now compared to those decided corporate debt organization. We saw this time as an opportunity to invest you know organization for the future and we decided not to.
Downsize I'll operation in fact, we continue to walk business than usual.
The manufacturing regulatory in marketing and position all says as best we can best recorded for the eventually down for a moment business.
Which we outlined in our key initiative last quarter as.
As we mentioned.
We took steps to enhance all marketing themselves that's all.
Ben relationship would position and potential cost customer expedite, though on the activity investing though infrastructure and it does get off marketing and selling program. That's wouldn't more seems like physician interest in both minimally invasive enhanced fleet gotbaum Islam they'll be covering today.
For those clinics.
Women Telstar customer relationship and keep employee engagement high we trained all stock sell stuff and all Clive physician to our newly developed it also platform in will involve university. Once again, our decision to retain I'll walk so and invest in Darryl.
Professional development was driven by how long until approach to our organization.
We knew that it that poor we'd downside sequence that have some marketing we've been will set us back both financially and Texas. We want electing says we come back online worldwide. It's worth dissipated in the beginning of June the market began to reopen India.
Like state, allowing elective surgery across many states as well as elective surgery coming back into National Harvey doing the Muslim Joan we we Cabo significantly we said, it's close to three Corbett 19 level.
In total R&D pipeline, we will continue to develop new platforms, then indication and glad to introduce new problems in the 2020, Antonio probably forcing 2021, well continuing I'll I'll, yes, they would be to develop minimally invasive good equal baseball feed your mainly.
[laughter] Dedic surgery, yeah, they try to call a genes and ophthalmology.
And the guidance, we expect about revenue for the Fournier 2000, and why did they wouldn't be between $156 million to $160 million and we intend to maintain gross margin of 84 to 8% to 6%.
Lastly throughout this crisis, we have taken go to kill fall employees worldwide and have a follow on local and regional guideline to prioritize the health and welfare well follow employee and customer.
Now I would like to turn the call it over to Mr., Kayla kidney, who will go and give you won't get that it's going out activity in North America in the North American markets Kim.
Thank you much and Hello, everyone.
During the quarter, we decided to keep all over North American sales team in place month for low or lay off any of our employees in order to train our top quality talent for the post pandemic market.
Involved in new sales program to improve our sales teams marketing tools and sharpen their messaging well the deepen their product expertise through remote University platform. These sales and marketing efforts were aimed at strengthening our brand positioning us for successes business activity open forget.
We anticipate the needs of physicians post cobot with regard to attracting consumers back into the into the clinic, we understood that patients would be resistant to treatments that required hospitalization in an effort to remain safe and socially just therefore, we promoted or two main categories minimally invasive hands free technologies, both which are in office.
Cedars, maintaining social distancing the majority of our marketing in the month in June was focused on these two technologies, which ultimately enabled us to achieve the sales volume that we did.
The demand that we've seen in June and July confirms our original sops that the market would be uniquely attractive to indulge minimally invasive and hands free technologies. Your interest in our technologies that we saw in the first half into your translated into record sales for the month of June, which we were able to capture you to vigorous preparation.
During the height of dependent.
We're proud of our actions throughout the cobot 19, pandemic and our ability to navigate the uncertainties, we were able to maintain the health and welfare of our employees and customers while positioning ourselves for successes the industry began its recovery. Additionally, our continued work on the regulatory side was fruitful as well in June we received.
Canada certification from evolve tone, which now makes the evolved Canada's first and only all in one hands free device consisting of three unique remodeling technologies trim tight and Tony.
Looking into the second half and 2020, we are optimistic and as such are preparing ourselves for some of the launch of a new platform.
We expect this new platform to become a significant contributor and 2021 now lumpy handover the call to your to review our financial results in detail there.
That's a good good day everyone.
Total revenue in the second quarter of 2020 constructed 21% to $50.8 million music gross margin over 85% on a GAAP basis did decline was primarily due to the impact of Corbett 19 in we should the U.S. markets had minimal activity doing Dick let me extend the athree.
And to me.
And then it could mean mode continued to gain traction in international markets is international revenue growing 10% year over year.
GAAP operating expenses in the second quartile 2020, totaling approximately 18 million dog.
1.3% decrease from the second quarter 2019.
Sales and marketing expenses decreased 8.6% in the second quarter 2020, compared to the second quarter printing 19.
On in non-GAAP basis, operating expenses totaled approximately 17 million dog in the second quartile 2020, compared to operating expenses of $17.8 billion into second quarter of 2019 and decrease of 4.8%.
GAAP operating margin was 26% into second quarter 2020, compared to 41% into second quarter 2019.
Non-GAAP operating margin in the second quarter, 2020 was 30% compared to 42% into second quarter 2019.
This decrease was primarily attributable to the fact that this insight killing a pre an estimate was interrupted by Cobiz 19, and there's any exact sales and marketing expenditures did not translate into same doing those month.
GAAP diluted earnings pressure in the second quartile 2020, with 21 cents compared to 45 cents diluted share in the second quartile 2019.
Non-GAAP diluted earnings per share in the second quarter, 2021, 24 cents compared to 45 cents. So they need to chair in the second quarter 2019.
We completed the second quarter with a strong balance sheet as of June 30 years 2020, the company had cash and cash should be feeling like a bit securities and the proceeds of $203.4 million out of which $70 million net proceeds raised the data you know boost 2019.
And.
During the quarter, it's part of our when you should do you have to stress enough supply chain, we increased though even two weeks, where they quit love it required by GAAP business continuity plan, you know the twin shoe uninterrupted delivery times in future quarters.
Additionally, we recognize the high doesn't usually only counting secret bran buttons since the merger with you for revenues were generated towards the end of the quarter and collected on in July.
On the kids Snow front, despite the negative impact from core was 19, the company managed to generate $1.3 million from operating activities for the second quarter 220 20.
There are we kind of caught back to Moshe.
Thank you hey, thanks very much.
With that we were pleased to tech any any question though.
We will not begin the question and answer session to ask the question may pre salt I'm going on your telephone keypad.
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At this time, we will pause momentarily to assemble our roster.
On the first question is from a line of my pay Lucky B.S. Please go ahead.
Hi, Good morning, everyone. Thank you for taking the question.
So the first question I wanted to ask you was about your assumptions for the year, you've been able to give guidance in guidance for flat to slight growth, which is a lot better than other companies in terms of the visibility you're giving so I just wanted to understand two things. One is you mentioned June.
Was close to pre covert levels are you still seeing good trends and in July and then what gives you the competent to be able to put out that that forecast.
Oh, Hi, Matt This is more share a thank you for joining us.
Yes, you're right a month ago few weeks ago.
When we when we publish the problem and it wasn't as as.
We said that the our revenue will not be less than last year.
Last year revenue, one was one 100 than $56 million okay.
We decided to be more precise.
So far in the first six months would be $71.4 million in revenue.
And in order to be.
On the 160, a when they do make a addition, not a $90 million a I live as it is a bit less than $90 million from what we see right now in a and a in a full knowledge to make the cannot energy and the revenue that we generated in the months so far in the months of.
We believe that will be above one other than 56, So we decided to give the range of 156 to 160, and we hope to gave the better range or better estimate after the third quarter. As you know some are the South corridor, which is July August and September.
Usually spend though is the strong month, but what we discovered this year July was relatively much stronger than any July that wherever we have a that we had in the past. So we believe that we would make the number.
Oh above the $156 million that a that we did last year and this is the reason why we decided to be more precise and give a range instead of saying that we will be at least as last year.
[noise] gosh, if they mostly for that and.
My follow up question would be you've been seeing it seems like a lot of traction with the hands free devices I was hoping getting maybe cover that in more detail and just talk about how the value proposition is resonating versus the competition and the outlook for those for the remainder of the year.
Okay, I would suggest that should be able to stop.
The answer and then Spiro, we'll give you some of the Green <unk> clinical evidence that we see so far which is also will enhance the answer okay separately.
Yes, sure I'm, saying that Ah. Thanks for your question. So basically what we've seen is with everything going on you know we initially as we've talked about on the last call. We thought there'd be some pent up demand Luckily that was fulfilled we didn't see that and we see a more and more as Moshe you mentioned July was was one of our record months as well.
So we have seen a flow and from June to July and apart. It back is the and screen technology that you're talking about so whereas with evoke evoke was it's one of a kind, but there's nothing really else out there for it and there are some people that want to handle that were you know one third of the face in spring, we'll talk about that shortly but when it comes to be you've.
Bob where we've seen a lot of traction as well is because we're able to trim Titan and tone all on one modality rather than a position having.
To go out and spend three $400000 a multiple pieces of equipment along with the decision that we made them a consumable side of things I'm not really having one there it's definitely giving us a one up a industry wide we feel that no. Other competitors are still out there selling I don't know what they're doing right now, but as far as we go a we've seen.
We've seen success in both products somebody evoke has actually been going very well received initially there was a bit of a light crude with everything going on and now we've seen a lot of our positions really want to want to embrace and bring this into their practice.
Got it.
Sure.
I'm, just a jump in and Sperle here regarding evoking I agree with shock, 100%, but they have to explain this not just a fish tightening device.
Depending on specialty whether you're plastic surgery dermatologist to heart aggressive you Wanna get it's actually remodel the fat.
And position at the way you want something lower one third sakes.
Depending on the number of treatments are able to.
We modeled that spot removed that entitled the skin and that's something that coolsculpting not being able to too. So that's like a big big deal differentiator.
The case that you do not want to have any fat loss are you not you know the mistakes or you want to able to change the positioning of the device and actually get what you want so it's close to my simple to different types faces in what you're trying to achieve and this is in plastic surgery. This is definitely one of those revolutionary type things, which.
No faces the same and having a device. It has the first utility of what's your folks pads and that ability was given to us of course by Michel Michael Klein, Dell and modifying the treatment. According to what you want to get is a big big deal. So this is not a one size fits all and that's a big differentiator when it comes to the competition what's been.
In the past. So you can you can now that you can tighten skin. It to preserve that you can tighten skin, depending on what you're trying to do so that's resonating big time onset depending on the specialty we're selling about what they're comfortable with and their training.
Ours evolve is concerned.
No no shack brought this up and I know, it's supposed to Bulls is a big big deal not just be natural gas, but but traditionally noninvasive devices.
Look at the numbers in the past usually give you about a 25% difference from before you have to procedure done so 25% difference from before and after is not necessarily you know a result, you want it right home about because it's not comparable to surgery of course, right, however, 25% isn't different.
Oh, what we've seen is because of these numbers in the past with 25% patients tend to come back and not be necessarily depending of course on patient choice did not come back, but not necessarily a 9.1 warrant right. So in the past if they want to have work done then the doctor would have to do an extra procedure and he would have to pay.
For extra disposable in order to get that patient happy.
So because of moshe's guidance initiatives guidance, we decide and because of the cold they realize that a lot of practices were shut down not using disposables has also allowed on the clinical level to achieve that result in other words. They should comes in as five or six treatments and once a little more done to achieve what they want that's not a problem.
That only cost a little more time to the doctor, but it's not money out of its pocket. So they're very quick to be able to get that patient to the result, they want by anymore treatments on and that's critical second aspect. That's critical obviously, we are very familiar with tightening were very familiar with heat, but when it comes to eat a mass into muscle the biggest just reentry.
Sure Matt is in the past right muscle we know that.
Essentially yeah matches.
Very very different in different types of machines, yeah message CMS. The muscle does not know the difference whether it's been which weighed stimulate it's an all or nothing of that there's enough muscle fibers get together and either contract or they don't contract. So well be able to do is be looked really closely as a t. heating the muscle prior to treatment.
And being able to heat the muslin looking at the literature and looking at what's out there with the professional athletes that the training environment, which is he prone a hot environment Hot yoga as you, probably probably know all being sort of things increase muscle performance, so by increasing muscle performance or increasing the ability of the muscle that gets drawn.
Longer and to be able to lift bigger weights and actually performed better. So we have the ability to create the muscle and then do the M.S., that's a big big differentiator because increases performance versus other companies are able to do that well, it's a big barrier of entry right not other companies are able to to actually pre eat the muscle.
We are able to do because of our building our comfort level with the RF that we have hopefully that answers your question goes to devices.
Yeah, it's nice color. Thanks for your own they check maybe I'll sneak one more in here youve given some t. there's on the the pipeline and talked about new platforms coming this year next year could you offer any additional thoughts on those are they line extensions are they totally new yet any anything that would help us understand how to think about.
Contribution in the model.
Well, a math, we have basically a whole new platforms on the R&D pipeline.
I want to wouldn't be introduced to the market in the next a until the end of the year.
ER and another two next year.
No I don't want that we're going to lounge, one of them like next week.
Which again, it's a powerful follow surgical platform I don't want to get more information like I want to keep it for the lounge.
ER and the other to me are one for the job called these markets one for the N. team. All good then one for the and one for the ophthalmology market.
All of them all clinical base or you know up we'll see Jos a platforms.
Oh, all of them, Oh, I'm basically oh.
Actually private money and not codes only in those man.
Individual class calls.
And they all based on the same bike Paul RF technology.
Actually and ER, and a minimally invasive and and noninvasive, but there will be unique.
Moving on so still an unmet need all for them and hopefully there will be well accepted.
We did sell or some kind of focus room with some customers who ask dr.. It's about the feature that we want to go didn't dose drop bombs and.
And now we don't believe that a that they wouldn't be well except that as the other <unk> portfolio fall Finland.
Great. Thanks, a lot further color thanks, guys.
Thanks, Matt.
The next question [laughter] do with Barclays. Please go ahead.
Hi, Thanks for taking my question I just wanted to follow up on a one of the comments you need in the prepared remarks, just around the accounts receivable.
Mention that you did see increased receivable swayze ended the quarter in good make some collection heading into July is there any way to just kind of quantify data favorite turned to a more normalized level in July.
Sure no, let's first the thinks that they keep in perspective, and we went up from two weeks Dsos two three weeks. So it didn't look very very good number.
As you know are usually around the corner revenue tends to its spread more evenly but the reason to cool I mean, the in Prague, We know says almost in a pretty than me. Most of the revenue came in June and we did see in connection with majority or read and return to the.
Come on stream and backing into that.
Okay, that's nothing that that you're seeing in terms of concerning trends that customers are still.
Going coming in class, Okay, Great and then you did get clear I'm, sorry in China could you just remind us how large of a market opportunity you expect that be and I would assume that's probably something that maybe be more meaning policy and look out you know over the longer term.
Yeah, Yeah, Oh excuse me okay, yes.
We received a I see of D.A. approval.
Oh for or my body typeface type a hand pieces and platform.
Which we now stops to market in China.
To that plastic surgery in hospital.
At the same time, we received a C of the airport will allow for a in malls are already noninvasive like craft format and plan only we have not yet to receive called a hair removal or with the laser over the IP and we're still in the process. It's a it's a long.
Crosses actually in China, but we decided that this to see if FDA approval is good enough to styled into market. We do have now.
A company as you know a joint venture in China in Wanzhou, a which is only for marketing integration.
We are we opened an office a with a with a partner wouldn't be exclusive to stick with those a in a in Beijing. The company that they establish wouldn't be called a anymore, but again, the or would be a started to dual marketing activity. We had a great opening.
And less than a month ago, a wood with many doctors online and many doctors in a in a into hard.
In the end a in day event, a they already solved I can tell you twice glasforms, even before they started very.
Very optimistic that team is what a dedicated the team is doing only mode now knocking it out to send any other products Oh and the outdoor brand a and hopefully a this year, we will do in China are over a in between one and $2 million.
Because we just started and we're looking forward next year to expand the operation you cannot cobble, China I wouldn't want the student, though so we fuel direct.
I have to divide the concrete into tell we totally each show we totally is the fun.
In the same and and and also in China, the different market. The hospital market. The clinic market, which is now being developed and the spot market, which is the biggest market.
But the spot market is not doing minimally invasive.
And maybe not a deep ablative lindale fall, we need to customize some of our portfolio to the Chinese spot market like hailing move out of a skin rejuvenation.
Our skin tightening the bus with noninvasive outlets odd devices than what don't get twice now the market in China I stopped at a different than the market into Westland wall as follows a steady Ken as follows up a who's doing what ER and the where most of the minimally invasive surgical procedure right now.
I'll being done in the hospitals and not into stopped all clinic, although we see some development.
And some doctoral saw opening a the owner clinic and small hospital a dynamic in China is very interesting. We have an office we have an office it on crown and we have a base in Beijing, and we have a basin wanzhou. So although we do not cover being Kyle the entire.
Country, but at least in the main says is we wouldn't have presence a in ER and that would be developing the next six months 2021, we see at Wolf engine in China.
Thanks, very much congrats on a quarter.
Thank you.
The next question isn't covers a kind of Cogen unity. Please go ahead.
Great. Thank you for taking the questions I'm, sorry, just wanted to follow up a little bit on just the overall trends that you're sitting the market. Obviously it seems like June July had terrific bounce backs.
In the gross margins were were strong so maybe just help us understand what the ordering patterns from positions looked like we see more bundling or more purchasing maybe a vote and evolve rather than one system alone and then just overall you know Spiro if you could give us a sense of what you're seeing as far as the hell.
Or demand from from patients in particular are coming into practices I'd be very helpful.
Hey College, you'll handle first for me question, then I'll toss it over to Spiro. So in terms of trends, we definitely saw you're you're absolutely right. We did see some some major bundling opportunities. The one thing we did coming out of the endemic you know obviously, there's a lot of psychological impact on both patients physicians everyone in general right. So the winner.
Additionally, we decided to take is we didn't want to be that company that went out there and just try and you know. These these clinics are recovering they're trying to get their cash flow back. We wanted to do the right thing and make sure that we cater to there to their needs. So if someone was was in a position financially where they want to capitalize on certain incentives. Yes of course there were some.
Bundles and bundle activity going on 100%, but two of them actually go quite nicely and we have an incentive program internally to take care of our reps on that but also when it comes down to what what the actual positions were looking for and what they were looking to treat many of them as I mentioned before did respond very very well to the social distances.
Side of things and being able to get a treatment done while being left in a room without having to worry about much. So I'll, let let spiro kinda talk about the patient demand and what that kind of looks like there.
Right now as you know I'm a practice you plastic surgeon New York City. So I'm not just speaking for all the doctors that I know talk to across the country, but also for what we're seeing in New York, which to be honest, we were quite surprised that it into following the pattern of everybody else because it was hit so hard.
Here is here is a bottom line the patient demand you know cold happened during high season for what is considered plastic surgery high season, which is usually from January till July.
And the fact that middle of Oh, the spring when everyone wants to get ready for summer, especially for body contouring procedures more so than face. This demand came out it came out in July very very very strong initially in June to specifically for New York start ramping up at this has been the busiest july than I've ever seen in 18 years of practice.
So the same demand it was across the country is also occurring in the city like New York and that is.
Little surprising I didn't expect it to be occurring in New York, specifically, just because of the different factors involved there having said that Oh, we have a huge network of doctors that we speak to every single one of them and it's been hard to get them on the phone to be honest the demands there the pick however, what's more stand.
We need to prediction early on that we thought the demand it'd be just like what happened in a way.
Patient demand was still there, but not for the big cost procedures required hospitalization, a different price range and more office space and sure enough demand is just the right along those lines, it's for minimally invasive procedures.
The hospitalization aspect, there's still people are still gunshot you know there's still worried about it the I think until the vaccine comes out there not gonna be wanting there's you know those huge procedures. The require overnight stays are required long amounts of anesthesia. So it falls right into our sweet spot.
We've been advocating all along so there's still coming in and they want aside from the fillers and the botox and all those things they still want minimally invasive procedures any want a habit done over the weekend and they want to have an average of a two hour procedure in the office under local so in most positions are doing extremely well a couple.
The fact that now the in low dockers Abel Colgan ecosystem and no patient leaves the office because you have to noninvasive, which actually has a man covers event and they will no longer Dr is no longer have to align other companies older technologies, the controlling that ecosystem, Chris no into sales pitch, but actually happens in there.
Real world, So far the plastic surgeon no seeing peaches, and I really didn't see before it was losing before because there were just get scared. The habit. So you know there can interpret step one and he said.
Is that those patients that want to take it to the next level.
Jumping to fully invasive plastic surgery squared up they're going into the base. If so it's an ecosystem that self sustainable in feeding itself and I think that is part of the big success that we've been seeing with her products. So we are exactly where we need to be and demand has not slowed down what's the clinics are booked till so.
Through September which is really unusual, especially during these months returns to taper off that's not the case, so hopefully tell that answered your question.
It does thank you very much and then you check you talked about you'll continue to invest in the commercial team over the course of quarter I. Just wanted to have you made incremental hires from a sales head count perspective, and just the overall you know kind of your talent you are attracting from it from a distribution perspective.
Yeah sure Great question. So we are now a roughly around 140 people for North American distribution.
We did hire some additional headcount, but we're able to pick up from some of new competitors that we're contracting.
What we were very selective with which from partners. We obviously, we recruited from but also the level of talent. So we did have some you don't see people that they'll sell off your there, but couldn't make it oddly enough to remove the intense training, but we had during the locked down we were able to actually see some people just step up in rights offerings.
People, though just weren't going to make ups are really helped us get an idea of who's doing what and again I mentioned this before on the last call them you know on the day to day, it's really hard to to get this kind of training in place and we were very very bullish on the fact that once the training was done we would come out stronger than we ever were and looking at.
June July and I anticipate will continue moving forward.
We're we're starting to see the fruits of our labor there.
Great. Thank you very much for taking the questions of course.
Well I can tell you had a question please press star and one on your telephone keypad.
The next question, it's Jack Jancin, if that piece God.
Thank you. Good morning, guys. So just a couple of follow up questions here for me if I could Ah first on the yen aside and being able to preheat the muscle or that was new to me. So thanks for that update on that but any IP around that or is that just more the design of your system in company No just wondering how oh that how sustainable that advantage could be.
Versus competitive systems.
All right well Oh, Okay, I left I, let us feel we're also also on sort of question, but yes, we have oh, we have especially a mess up a lot of GE. We just loved the same us BTL another totally love the same as BTL and the other company that a infant formula.
Familiar with that a that doing god the doing game Matt.
Although it's the same molecular muscle simulation, but we're doing it differently than the other and we believe that Oh devices or it's better for the technology point of view, although we will not get right now into how do a soft through a combination and what exactly what we're doing a bit.
This is protected.
But to answer your question, yes, we do have something which is different than what the others.
This is Michael could engine.
The boat they'd be.
This new technology lives and one years old. So we do have a patent application. There's just no one should combine niamh.
M.S. and to a cheap.
In Houston Bijan units are two different <unk> race, but because it's on there was it provides both uni gold stocks.
You don't have for yet you should button.
All right Jeff.
Hey, just application.
Yes.
Yeah understood, but maybe help maybe help us understand.
Size that evolve the boat market I mean, obviously, we know a neat am I RF subdermal market, you're maybe 10% penetrated in the aesthetic market still have a lot of room to go there I'm assuming on the of all the bulk does that go into the same kind of aesthetic and plastic offices is it going to a other offices that increase even your market.
Opportunity beyond just Fedex and plastics, just help US you know I'm sure the penetration, they're extremely low right now and huge opportunity, but how do we think about sizing that total addressable market. Thanks.
Yeah, I know as regards sometime we.
Yeah, we've barely scratched the surface as you said, we have a lot of runway for penetration, but we when you're looking at it we have seen kind of a combination of what we were defined as core and non core both being part of this means because it's so easy to add into the practice patients like it there's an immediate feeling of heat so.
They know that it's working it's not just something you Strabane and there's no result, we get before and after is now coming in on a regular basis that are actually very very impressive. So when it comes down to who were going after or you know as you know we primarily focused on positions at least in North American market. We're doing the exact same thing, but we've seen.
You know interest from everyone from your plastic surgeons dermatologist more traditional market snick surgeons them too you know family practice doctors or would you wait times, depending on what they're looking at doing and what kind of fits into their practice, but the same thing is it does not change and that's the fact that managed care is still not really.
It's not really doing what it needs to for a lot of these positions and so many of them are just looking for a different ways to increase revenue streams and they have their patient base you, but they werent years and years to build so why not feed off and so I do think going into your question. There's a very very well like I said women's scratched the surface, but there's a lot.
<unk> the Tam on this thing is is big and we're seeing and grow more and more day by day, which is nice to see so I think that'll be sustainable for the next few years for sure.
Alright, great one mall.
Yeah I.
I think we've already.
No. Yeah. This is more share the Vulcan evolve outside U.S.
As you May now one to process off Oh registering a this up two platforms in many countries.
We haven't seen recently the clearly the C clearance for Europe.
Which we start to market in different countries in Europe.
All right now a majority of the of the revenue off of Vulcan evolve came from U.S. and are also a little bit from Canada.
But ah we see a lot of potential in Asia, Europe, and South America, well, just scratching dad them at the beginning its very embryonic, though they'll fold the golf would come from Dell is wide and no just from North America, everybody wants to try and everybody like if we decided not to.
Market. These two platforms outside the U.S. to spot market, but the only two doctors.
To keep us a into high priced and with high value a and that's and that's exactly what we will do a in the next six months and also 21.
All right that's great. Thank you and last question for you all know shade Justice you talk about the spot market in China.
Only thought on that as you go in with some of those noninvasive products to does that at all impact your gross margin outlook going forward you still feel comfortable in that mid eightys or higher gross margin, even as maybe some of those noninvasive products or start to grow a little bit in the portfolio. Thanks.
No I don't think its would affect the gross margin a us since the Chinese market is not 40% of fall business, you're right. When you said to the spot market prices are lower than when you said to the medical market, but I, but basically we will adjust and customize the product of course.
The only sold at cost would be would be a will enable us to exercise to show the 85%.
AH Yes, you know out for example in China I won the prestigious would show very attractive to doctors is to do a drug delivery and what developing we'll see just like using a tour.
To create some panelists into that be down less than two the liberal drive into it drug device combination, it's not that very expensive to put use machine, but there was a big market for it in China for widening the skin instead class a and therefore I don't I'm not afraid that their dad the gross margin.
We'll go down a because we will not said I'll, probably will not set all product into cheap price, though many chip product in China in the Chinese market, but the Chinese Gulf they'll send the Chinese.
Medical stop I would prefer to buy an Israeli high technology product. If you give them some kind of 14 station and and ER and they appreciate that.
Eventually when the Chinese markets would be very B., I would say above 20 $30 million year, Oh, we will start developing products to this market and we were customize it accordingly to we've got to make that to make sure that well experienced the same goes for <unk>.
[noise] understood very helpful. Thank you guys.
[noise] next question is from Sephora can tally of Oppenheimer. Please go ahead.
Okay, alright, thanks for taking my questions great quarter I'm, just two questions here, we didn't notice on the install figure mentioned on the color in the press release, we closed before I get that your numbers for U.S. and international.
And then international growth and some percent was really impressive is there anything driving that growth at that kind of Brazilian says it is it any differences in direct in direct market any particular geography product mix any color there would be helpful. Thank you.
Oh, Yes, hi, I'm sorry, welcome to the won't come on Board hope to see you healing in that you know office next week.
I will give you all down so but that will answer your question.
Outside U.S. Oh, we have some subsidiary is in some countries and the west our exclusive distributors, we have subsidiaries in France.
Which we just established during the call Big crisis.
Okay, and Spain in Asia, we have some kids only in Australia, India, which we just established and also an office in Hong Kong.
All the west our exclusive distributor, yes, there was a difference between the way we recognize revenue between distribute those sensitivities subsidiaries, we recognize the for value and a and with distributors, we recognized the class what price.
Now the combination of all the direct and a and ER and the classical pricing to distribute though the average is 85% to 86% gross margin.
No price you Europe and Asia.
Our are a little bit less than what we can sell in the in North America, even the distributor.
And ER and therefore and again there was another issue, which is the exchange rate off all Collin C.
We said, we sell in euro and we're selling daus and we sell in Canadian dollars and we sell in Australian dollars, we sell in different Collin safe and again were trying to get a much like we're trying to minimize that exposure as far as as follows policy on our revenue.
Cognition, but it's also been also in effect.
The growth outside the U.S., Oh Foster, there's a big bend the U.S. because in the outside the U.S. We started after we started in the U.S.
And it still got sometimes to get a pools and we're still getting register registration in full in them in different countries and if this right that this drives the growth.
I would say that a the growth in a in a in outside the U.S. I wouldn't be at least 10% higher than the golf in the U.S. in the next coming he has and this is because I'm not saying that the North America, where or what the mature market. We will continue to grow but Ah. That's you know as you can see.
C. In the last few yeah, Oh, well for the except in 2020 was about $50 million deal and we hope that are starting 2000 and 2021, we will go back to those type of number of combination between North America and ER and.
ER and outside the U.S., we have outside U.S., we have full growth engine, which we believe we will see that leaves US next year one is China.
The second one is proceeding well.
Which is a big market for us when we were just started we just we seemed done visa regulation in Brazil few months ago, and we already shipped five system to them, but unfortunately, because there is nothing a good shape as far as ER Corona crisis decent, but this wouldn't be the second Wolf engine.
The third World engine will be Kinda give me a India, India can be a growth very very strong market. Once again that would overcome the cooling of iOS and this is why we decided to establish a substantially a in India, India. They have 40.
6000, Janet crowded and we were and wind and a and they don't have good product there.
Well go all the companies or have some base due in minimally invasive we stopped selling shot in now in India and we believe that's would be the Ford Wolfman golf engine. So so this is also important and the fourth one will be completed around Oh, France and Spain.
Which again well in a very early stage there, but this is also will be a growth engine for us. So between those four engines and the rest of the conclude including UK, Australia, a and and and the other exclusive distributor dose. We believe that are the outside U.S. market.
Ah wouldn't be a would be a big success next to.
Good answer the question.
Yeah, Yeah, very clear, but just a number on the installed base.
Yeah. So its 56 5600 globally.
Okay.
Okay and candidate.
3200, and those are in the U.S.
Okay, Yes.
Okay.
Your might you might want to take a look at a presentation. The corporate presentation and we have made it not more and you can get let's ask you have one thing to mention though [noise].
Okay, Okay, I'm, maybe I missed that okay. Thanks.
And this concludes that question on session.
Tend to conference back over to Mushy N Rocky for any closing remarks.
Oh, Thank you operator, [noise] again, thanks for joining us today.
It was a very tough quarter for us I would say the toughest whatever had.
Or two months out of the out of this quarter a basically all business was on stand stand a we saw the little bit in April and very little in May.
But to do the fact that we kept the organization a full and we did not downsize it once the markets start to open in the months of June.
It was like a bullet train oral fell salespeople a you know he discrete and we made a 30 almost $31 million most of it into mass of doing most of it in the Muslim June. So we thought it was encouraging and big success demands of July was also surprising and good and.
Before we believe that we would we will continue to see a regenerating the momentum that we had a pre coffee 19 crisis again, I'm thinking all for joining and hope to see where again within three months.
Thank you.
The conference has now concluded thank for attending today's presentation you may now disconnect.
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