Q2 2021 Venus Concept Inc Earnings Call
[music].
Please standby.
Good morning, ladies and gentlemen, and welcome to the second quarter of 2021 earnings conference call for Venus concept.
At this time, all participants have been placed in listen only mode.
Please note. This conference call is being recorded and recording will be available on the company's website for replay.
Before we begin I would like to take unless you 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.
Those identified in the risk factors section of our most recent annual report on Form 10-K, and 10-Q 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.
The call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP.
We generally refer to these as non-GAAP financial measures reconciliations.
Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP RV.
Our available in our earnings press release issued today on the Investor Relations portion of our website.
I would now like to turn the call over to Mr. Tom Sarafina, Chief Executive Officer of Venus concept. Please go ahead Sir.
Thank you operator, and welcome everyone convenience concepts second quarter of 2021 earnings Conference call.
I'm pleased to be joined today on the call with our Chief Financial Officer, Domenic della Penna, and Chad Zaring, our chief commercial officer.
Let me start with a brief agenda of what we will be covering during our prepared remarks, I will start with an overview of our better than expected revenue results in the second quarter, including an update on how our business trends continued to improve during the period, which gives us further confidence in our 2021 revenue guidance, which we increased in our press release this morning Chad.
We'll then discuss our strong system shipments results in the second quarter and how we believe it was a direct result of both improving overall system adoption trends, particularly in North America and strong execution of our targeted commercial strategy.
I will then provide a brief update of our continued progress in the area of new product development, and then Domenic della Penna, who will provide you with a more in depth review of our quarterly financial results, our balance sheet and financial condition and our updated guidance for the full year of 2021.
Then we will open up the call for your questions.
With that in mind, let's get started with a review of our second quarter revenue performance and overall business trends.
We reported GAAP revenue of $25.8 million up 52% year over year exceeding the expectations. We provided in our Q1 call, which assumed a growth of 40% to 45% year over year.
We are very encouraged by our second quarter revenue performance and believe it reflects the improving system adoption and procedure trends were experienced during the quarter.
Importantly, our second quarter growth both reflects both the continued improvement in our static and hair restoration procedure trends and the pace of system adoption. We are very encouraged by the strong execution of our global sales team in the quarter. The team was also able to substantially increase the qualified pipeline of new prospects.
Cross the full product portfolio, which gives us confidence in our increased revenue growth expectations for the balance of 2021.
Diving deeper into our growth performance and improving trends, we experienced in the second quarter.
Q2 sales increased 14% on a quarter over quarter basis, driven by 50% growth in revenue from sales of our subscription systems and 17% sequential increase in total leases and systems revenue.
Our systems shipped systems shipped increased 8% sequentially in Q2, reflecting continued improvement in the capital equipment environment.
System shipments under the subscription model increased 32% on a quarter over quarter basis in Q2 and represent more than 52% of our total global shipments in the period.
As discussed on prior calls the flexibility we have in our commercial model with unique pricing and payment options via our industry first subscription model is an incredible lever.
That we have which differentiates us from our competitors importantly, this lever really empowers our commercial team to work with customers to identify not only the right technologies for their practices, but also the right business model for each clinic, depending on their needs.
With respect.
To the improving procedure trends, we experienced in the second quarter.
Our real time Iot data on our devices gives us strong visibility into the active device trends for a large portion of our medical aesthetics installed base. This average usage for system data reflects improving consumer activity demand for our product procedures during the second quarter.
In terms of the procedure trends for our hair restoration customers in the second quarter.
We are very encouraged by the continued improvements in utilization trends among our hair restoration customers as global procedures on our artist systems increased 37% year over year in the second quarter.
Importantly, this global procedure growth was fueled by an impressive growth in North America, where procedures increased 67% year over year in Q2.
Artist customers in North America performed the largest number of procedures in the second quarter in the last four years.
We believe the strong procedure growth in our U S hair restoration business in Q2 was driven by a combination of an improving procedure environment during the quarter and strong execution by our commercial team towards our key strategy to Reengage with U S customers, who have artist systems that we believe have been underutilized.
We have made a concerted effort to engage with artist customers throughout North America over the last 18 months and we could not be happier with the results. We look forward to continued strong utilization in the hair restoration systems part of our business going forward.
I'm going to ask Chad to provide an update to our second quarter performance on the system side of the business Chad.
Thanks, Tom.
The second system sales results reflect improving system adoption trends in certain key markets around the world and strong execution of our commercial strategy.
As you recall from earlier discussions we've spent the past 12 months restructuring our global commercial strategy to divest our interest in smaller and less profitable markets and reinvesting those resources and higher opportunity markets like North America and key direct countries in EMEA.
Those efforts reflected positive Q2 system revenue trends strip.
Stripping out the effects of Covid and comparing Q2.2021 system revenue to pre COVID-19 levels in Q2.2019.
We were up 10% and 25% in North America, and EMEA, respectively.
Turning to a brief update on our Venus Bliss, we are happy with the continued strong market response to our differentiated noninvasive fat in body contouring platform.
Global sales of Bliss increased 85% year over year in the quarter.
<unk> offers a significant clinical and financial opportunity to the customers and patients that we serve and the feedback we're receiving from the field continues to support these key points of differentiation.
As expected the investments in both our commercial team and in our marketing strategy continued to drive strong adoption of Bliss. We continued our Bliss Road show in Q2, a multi city tour aimed at increasing the pipeline for Bliss in driving market development and consumer awareness. We also launched our Bliss University Master class and focus the attention.
One of our practice enhancement team to helping customers develop successful programs with the technology we.
We are also quite thrilled with the positive response from our customers prospects and patients on our collaboration with Venus Williams for the Venus Bliss.
We expected that adding Venus Williams as a global brand ambassador for the Venus Bliss would create significant brand awareness with consumers and provide significant patient lead generation given her global recognition and appeal.
The initial response from the market following the announcement has exceeded all of our expectations.
We have experienced a significant increase in visits to both our b to B and D to C. Websites. This initiative has also engaged our prospects and it accelerated the sales process.
Since the announcement Bliss sales in North America have increased 64% year over year, and we have been especially pleased with the adoption trends we've seen from existing <unk> customers. As a result of this collaboration our customers are excited to capitalize on this partnership with our brand branded assets growing their Venus Bliss utilization on overall.
Ill patient base, notably these key investments in our Bliss marketing strategy combined with strong execution of our sales team resulted in global sales of bliss, increasing more than 122% quarter over quarter in Q2.
We remain very confident that we have a product that customers want and the right strategy to drive continued adoption and utilization and expect strong revenue contributions from this product throughout 2021.
With respect to our second strategic product line hair restoration sales of artists and near graph are up 90% year over year. During the first half of 2021 and the qualified pipeline is up over 100% year over year, our new commercial strategy is maximizing the opportunity of having the most comprehensive hair restoration solutions.
<unk> offering available today with artisan near graph, we have an end to end portfolio of minimally invasive solutions unique from any competitor in the $4.1 billion hair restoration market.
We are seeing notable success with our customer targeting strategy as well and are driving strong new customer adoption, among dermatologists and plastic surgeons, we expect to see accelerating growth trends in our hair restoration business as we move through 2021, as we leverage our improved targeting strategy of these core doctors as well as large national accounts.
Also exploring key partnerships with nationally recognized brands to drive procedure adoption with that let me turn the call back to Dom.
Thanks, Chad.
Summarize our second quarter results.
We delivered better than expected growth fueled by improving utilization trends and strong system adoption, particularly in North America.
Our second quarter leases and systems revenue resulted results combined with a strong qualified pipeline. We are actively managing today were the primary drivers of the increase in our full 2021 guidance, which now calls for total revenue in the range of $102 million to $107 million, representing an increase of approximately 31% to 37% year.
Over year we.
We are very confident in our outlook for 2021 based on our belief that we have the right product portfolio and the right commercial strategy, which has us extremely well positioned for future success.
Over the near to intermediate term.
Most importantly, the longer term outlook for the company is equally compelling as we continued to make progress in our new product development. We are pleased to announce Amy or AI me the new commercial brand name for <unk> for the development project for our next generation robotic technology for medical aesthetics applications. We.
We wanted a name that embodies the innovation and science of artificial intelligence AI with the personalization of an aesthetic procedure.
We feel Amy will resonate well with consumers.
On the AI driven robotic treatment that is personalized for me.
We are very excited about prospects of the amey device and robotic non surgical procedure that will potentially disrupt the skin tightening of directional lifting market.
We completed our feasibility and safety studies on a handheld device, which included 50 patients and 90 treatment zones across six different body sites.
In early June the first patient was treated robotically with Amy and to date seven patients have been treated on multi multi parts of the body, including the arms behind <unk> and most recently the face.
We are finalizing commercial design and our prototyping to look and field design options.
We will also continue to make progress in preparation for our full human clinical trial.
We have identified three clinical investigator sites and expect to enroll up to 60 patients with enrollment currently expected to begin early in the fourth quarter, we intend to submit to the FDA as soon as possible upon completion of the study, which depending on the pace of enrollment is expected to be done by the end of Q1.2022.
We are also excited by the prospects of our new product introductions, including the Venus Fury, which recently received regulatory clearance from health Canada. In Q2, we have also submitted for five 10-K clearance for the Venus Freedom. The trade name of this technology in the U S market and we expect potential regulatory clearance in Q4 of this year.
Lastly, we are also making excellent progress in our efforts to expand the Venus Bliss portfolio of systems and products.
Specifically, the Venus Bliss smacks, a new device that not only includes fat reduction and skin tightening capabilities, but also muscle stimulation technology for body contouring and Tony This device addresses the three most in the NAND body contouring procedures request of today all in one workstation. We expect this new device to have a lift.
Approximately $250000 and contributing gross margins above current company averages.
We intend on adding a modest but important utilization fee of approximately $100 per treatment.
Importantly, we estimate that the ROI.
33 weeks, which we expect will be extremely compelling and our clinicians to our clinician customers and compares nicely to the current 28 week ROI that Venus Bliss customers experienced today based on the visibility we have of our Iot data platform.
We are still targeting FDA submission in late Q3, which keeps us on track for potential clearances by the end of 2021 and a commercial launch full commercial launch in early 2022.
With that let me turn the call over to Domenic della Penna, who will provide a detailed review of our second quarter financial results and discuss our balance sheet and financial condition Domenic.
Thanks, Tom given Diamond Chad detailed review of our revenue results I will begin with a review of our financial performance across the rest of the P&L for the avoidance of doubt unless otherwise noted my prepared remarks. This morning will focus on the Companys reported results for the second quarter of 2021 on a GAAP basis and all grow.
Related items are on a year over year basis.
Gross profit increased $6.8 million or <unk>, 57% to $18.7 million gross margin was 72, 5% compared to 70% of revenue for the second quarter of 2020 the.
The increase in gross margin is primarily driven by higher sales of Venus consumables and improved revenue mix of systems sales sold under our subscription program, primarily tracing to Venus Bliss.
Total operating expense decreased $3.5 million or 17% to $17.2 million. The decrease in total operating expenses was driven by a decrease of $6.8 million or 46% and general and administrative expenses.
Which reflects a positive $3.2 million bad debt recovery, and a 2 million $2.8 million gain on forgiveness of government assistance loans, partially offset by an increase of $5.6 million or 123% and sales and marketing expenses and an increase of zero point $5 million or 29% and R&D.
<unk> expenses compared to the second quarter of 2020.
Excluding the gain on forgiveness of government assistance loans and bad debt expense recoveries in Q2, our normalized total operating expenses were $23.2 million up $1.1 million or 5% quarter over quarter. This sequential increase reflects targeted commercial investments and inflationary pressure.
<unk> both of which we expect will continue in the second half of 2021 total operating income increased $10.3 million or 117% to $1.5 million.
Net income attributable to stockholders increased $13.5 million or 103% to 0.4 million non.
Non-GAAP adjusted EBITDA increased $3.2 million or 117% to 0.5 million. We have provided a full reconciliation of our GAAP net income to adjusted EBITDA in our press release this afternoon.
Turning to the balance sheet as of June 32021, the company had $23.1 million of cash and cash equivalents and total debt obligations of approximately $77.7 million compared to $34.3 million and $79.6 million, respectively. As of December 31, 2020.
The change in cash for the three months ended June 32021 was driven primarily by <unk>.
$4 million of cash used in operating and investing activities.
Set partially by <unk> 1 million of cash provided from financing activities. We.
We are pleased with our improving cash performance during the first half of 2021, our cash used in operations in the first six months of 2021 declined 51% year over year, driven primarily by a reduction in our net loss and a 47% decline in cash used in working capital compared to the prior year.
Period.
Turning to a review of our guidance as detailed in our press release. This afternoon, we updated our revenue guidance for the full year 2021 period the.
The company now expects total revenue for the 12 months ending December 31, 21, 2021, and the range of $102 million to $107 million, representing an increase of approximately 31% to 37% year over year.
While we are not providing formal profitability guidance for full year 2021, we would like to offer the following considerations for modeling purposes.
First we continue to expect our gross margins to be in the range of 68% to 70% in 2021. This represents an increase of approximately 200 basis points versus the prior guidance range driven by the strong gross margin performance in the first half of 2021.
Second we continue to expect GAAP operating expenses of approximately $88 million, representing a 26% decrease year over year. Importantly, this represents approximately $92 million to $94 million of normalized operating expenses in 2021, which excludes certain items that impacted our.
GAAP operating expenses in 2020, and 2021, including noncash goodwill impairment incremental bad debt expense and recoveries that forgiveness of government assistance loans and the non operating non recurring items related to retention and severance and other legal expenses, which together represent.
Approximately $2.3 million of costs and expenses last year.
All of these items were detailed in our non-GAAP adjusted EBITDA reconciliation tables in 2020.
Third we expect our interest expense to be approximately $4.5 million, given the lower borrowing costs and debt obligations compared to the prior year.
Fourth we expect to noncash G&A of $5 million and noncash stock compensation of approximately $2.5 million.
Fifth we continue to expect our weighted average shares outstanding to be approximately $55 million.
With that operator, we will now open the call to your questions operator.
Thank you.
If you'd like to ask a question. Please signal by pressing star one on your telephone keypad.
If you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. We do ask that you limit yourself to one question and one follow up.
If you'd like to ask additional questions. We invite you to add yourself to the queue again by pressing star one.
And our first question will come from Marie Thibault with BTG.
Great. Good morning, Thank you for taking the questions and congrats on the nice results here.
I guess I'd like to start with.
The impact of Covid.
It's nice to not hear too much discussion of it on the prepared.
Comments that I would like to hear a little bit about.
The impact you saw in your various geographies and where do you feel that your customers are in terms of the recovery trajectory.
Yes, good morning, Murray and thanks for the question.
Look we watch the news like everybody else Ironically enough I think that for them.
For the most part our customers have learned to live in this COVID-19 environment.
The reason we are not overly concerned about it at this particular point in time is there are two data points that are providing a very high level of confidence for us first of all the continued growth in our qualified pipeline in qualified pipeline is defined as a 50% or greater likelihood of closure in a given quarter.
That pipeline continues to grow.
Very nicely and secondly, as we look globally to our system utilization through our internet of things activation on our devices. We continue to see trends where customers are still treating patients above.
Above and beyond what they were doing pre COVID-19. So this this these two data points have given us.
Fairly strong sense of confidence to the back half of 2021.
Okay, that's helpful and encouraging.
Maybe a question I guess for for Chad I wanted to get an update on the U S sales force if I recall correctly.
You were undertaking some hiring efforts and I'd love to hear where head count stands and then on the Bliss news and the boost from Venus Williams.
Sure.
How how long you think that boosts our interest my last maybe some details on how long your partnership with her.
Continues in and.
<unk>.
Any more details on kind of the outlook with that would that marketing initiative. Thank you.
Sure Yeah, Hey, good morning, Murray. Thank you for the questions first off the sales force expansion in the U S has actually gone very well we've communicated in North America, we'd be at 70 people.
By the end of Q3, and we're ahead of schedule.
We have done some dramatic overturns and changes and now increases to the U S. Salesforce and I'm very pleased with the level of Onboarding and training.
And the impact that our new reps or haven't so we're ahead of pace on that and we're we're optimistic that we'll be able to fill out the team.
Regarding Venus Williams, we're actually believe given that we're in this rapid.
Store base expansion of Venus Bliss, we think the impact can persist for some time.
We're in a multiyear agreement.
But as we bring new clinics on and open up we're still in the position of opening up new markets and so those clinics are very interested in how they can utilize the impact of Venus Williams as a brand ambassador to grow their own volume from a b and C level and we have a fair number of activities planned for.
Sure and into next year. So we think that impact is going to persist for some time.
Right.
Just to add sorry to jump in but just to add one more thing around the Venus Williams that we should consider.
The numbers and the increase in sales activity and so on since we announced we announced Venus Williams relationship in March but it was just recently late in Q2 that the actual <unk>.
<unk> materials to support the clinics.
Use of the images brand et cetera, really only started late in the quarter. So to your question about how long we can sustain this we believe that we have at least another 12 to 16 months of run rate runway with her in terms of helping us promote and grow the Venus Bliss business.
And by the way.
We will also extend the Venus Bliss Max as well.
Oh, Okay very helpful. All right I'll jump back in queue. Thanks for taking the questions.
King.
The next question is from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
Oh, Hi, John Chad Dominic how are you.
Good morning, how are you doing Joe good morning, and good morning.
Just trying to stick to two so.
You talked a little bit about the margins. It looks like you had a very strong quarter on the margin side and I'm just curious about the pull through.
<unk> previous shrinking in the high <unk> and now it looks like perhaps low seventies.
Okay. So I'll, let domenic della Penna addressed up initially.
Sure. Thanks for the question, Jeff Sorry, we had a good result on margins in Q2.
Certainly we had good mix on the system side with with Bliss, having a good.
A good contribution in.
In addition, we're seeing very.
Decent results on our consumables business, which also has a margin that is in the sort of the higher end of that range.
So to the extent that we're continuing to fuel that growth that's certainly helped us.
Our view is that we've been a bit conservative in terms of the outlook in Q3 and Q4 on the gross margin side, but there is also regional considerations to consider.
In APAC for example, does not have <unk>.
Margins quite as high as North America. So it really depends on how the mix evolves over the next few months, but there is a bit of a hedge in that given the regional component as well.
But again the system side was quite strong due to bliss and consumables are performing very well.
Just to add to that a little bit just that given the very rapid ROI on the current Venus Bliss platform as Youll recall that I mentioned 28 weeks on average for the customers who are buying our devices. We felt it was appropriate to take a price increase on the <unk>.
Bliss.
On an ASP basis, and we feel that that did resonate nicely without any pushback really from the customers in Q2, when we expect that will continue in Q3, and Q4, which ultimately given the the mix the product mix ultimately that will help us maintain our.
Improving margins.
Okay got it and then secondly for me I guess for Don Richard could you walk us through and give US an update kind of on your international footprint at any commentary there from the quarter and back half of the year. Thank you.
Yes, I'll, let Chad touch on.
I'll answer part of it first of all one of the areas that we do still see some significant challenges in Latin America.
Obviously COVID-19 is still is still an issue in markets like Brazil.
Good news is that Mexico has been pulling out of it very nicely and that happens to be our biggest market in our definition of Latin America, Chad, perhaps you can talk about the strategic decisions. We made in EMEA, which we think will bode well as we go forward and continue that disproportionate growth there as well.
Yes, sure Tom as I mentioned, the last 12 months we've divested.
Our interest in less profitable or less revenue opportunity markets, we reinvested in North America, and EMEA, that's growing quite well with the 10% to 25%.
Q2, 'twenty, one versus Q2.19 system sales growth in North America and EMEA.
Outside the U S. We're actually encouraged by the markets we are focused on the.
The key direct markets Australia.
Mexico, Germany, the UK, Spain, France, we recently brought in a new sales executive in Q2 with significant industry experience in EMEA.
He has already made some significant changes to the sales team is expanding the sales team and key direct markets.
So that we can garner more market share in our key countries. We are focused on.
So again, we consolidated reinvested in North America and EMEA.
And then in the markets, where we're focused we're focused on the same kind of strategy of expanding the sales force in driving the adoption of our strategic products.
Got it thanks for taking the questions.
Thanks, Jeff.
Next question is from the line of Jon Block with Stifel. Please proceed with your questions.
Perfect. Good morning, guys nice quarter I have got a small a small handful and GDP, maybe I'll start with you just on maybe some clarification. So I just want to make sure. The government assistance was backed out of EBITDA calc I believe but the bad debt recovery was no.
I just wanted to see if that's correct and then maybe the tack on would just be for artist is that still expected to be roughly 25% of company revenues for this year.
Yes. So on your first question you are correct.
The government assistance loan we consider a complete one time item in the area of bad debt recovery.
We believe there is a possibility of more of that recovery happening in the balance of the year.
We can bank on that but we feel that there is that possibility because we've provided for a bunch of accounts in 2020 that we identified as risky given that the accounts were shut down and so on.
But with the reopening we had some some positivity so there could be some positive results that happen in the future we don't know for sure.
And that's why we wanted to to continue to show it as part of operating expense and not backing it out.
And for artists and for artists.
25% is approximately in the range it could vary by quarter, but overall on an annualized basis, that's still a number that we.
We think is fair and representative.
Okay perfect. Thanks for that and then Dom Max certainly seems exciting we just curious what the approach is going to be with the existing bliss accounts from a trading perspective and would you do that out of the gate or would you wait a little while and try to service brand new accounts first.
I'll start and then I'll ask my final one after after that.
Sure No I think that the strategy is twofold number one obviously, we think that having a a three in one solution will be very very appealing to new customers and we think that the price range given the competitive pricing of Standalone systems is really fair and achievable given the.
The history, we have with the Bliss on its own. So the approach would be really twofold number one for customers that are in the top 10, 20% performance again remember we can target these customers directly because of our real time data gathering as to how well theyre doing it may not be.
A trade in program it'll be an add on simply because they can have two treatment rooms going instead of just one because I remember you can only use the device on one patient at a time. So this will give them flexibility to toggle back and forth between rooms by adding muscle stimulation and so on we do intend to have a fairly aggressive trade in program.
But given where we believe our Cogs will land on this product.
Better than average margins that we'll experience on the typical sale of a bliss Max It does give us room to do some pretty aggressive trade ins for those who are very successful with the bliss, but that may not necessarily go to a second room option.
Got it.
And last one maybe a little bit long in two part, but first you've got great visibility from your Iot data we've heard from other companies in aesthetics. Some docs are taking.
Well deserved vacations after a very difficult 18 months I'm just curious as we get into the middle of August what are you seeing here in the third quarter do you expect maybe pronounced seasonality hey, the market's okay. Youre just seeing some guys go on vacations. Unlike last year and then Chad maybe for you the last one.
Bless was that move to or now sold under the subscription program I just wanted to clarify that and if so what led to the change. Thanks guys. Yeah. So I'll answer the first one and Chad you can answer the second one.
Unlike our competitors our information is definitive it's not anecdotal.
So the truth of the matter is we can see what's going on globally.
Whether well deserved or not we're just not seeing any trend of doctors are taking time off in fact, I think that there.
Relishing the increased traffic at the clinic level and taking full advantage of it.
Second reason I can say that with a high degree of confidence is that we look at our performance. So far in Q3, we are well ahead in terms of our tracking at this stage compared to last year. So we feel pretty confident in the fact that the clinics aren't going to shut down for a couple of weeks in August or whenever simply because I believe that based on our <unk>.
Data points that we have.
We're able to see very clearly what's going on in real time on any given day any given week Chad, perhaps you can touch on the on the Bliss question.
So could you repeat slightly when you asked the second part could you repeat that please.
Sure I'm sorry.
Artisan Bliss were not sold into a subscription.
I thought it seemed like Bliss is now being sold in a subscription model. So I'm just curious if.
If that's the case or not.
We reserve it for special occasions, where we do a modified subscription for Bliss if necessary.
What the client needs, but with a higher.
Upfront license fee so.
So we try to use it in specific situations.
But artists we continue to take on a cash only basis.
Okay I can follow up with you guys. Thanks.
Great. Thanks, Joe.
Our next question comes from the line of Suraj Kalia with Oppenheimer. Please proceed with your questions.
Good morning, Don dominant Chad can you hear me all right.
We can suraj. Good morning, good morning, Suraj I hope, everyone is safe and healthy.
So Tom let.
Let me start out with our micro level question.
I'd ask you to quantify that.
Bliss performance of the quarter, that's more specifically what kind of collateral material that youre talking about that would yield a net positive impact of the Serena Williams collaboration.
Well first of all <unk>. Thanks for the question, we're not going to get specific into products we have.
<unk> been pretty consistent in our approach.
Excuse me, we do know that as we reported or our global sales were up 85% year over year, we continue to see very strong.
Market response.
Collectively we think that the bliss and the artist system will represent consistently.
Around 50% of our total business that we do.
The investment strategies that we've made as it relates to.
Venus Williams and so on as I mentioned earlier, we signed and prepared or recorded I guess, if you will all of the digital media assets et cetera et cetera.
Venus in late Q1, and basically throughout Q2, we continued to protect them and make these assets available to our customers. So.
Specifically things like in clinic.
Marketing materials and clinic videos in clinic sorry.
Social social media, Influencers et cetera, using levinas brand with Venus Williams.
We have just initiated a global contest.
Venus Williams sort of leading the charge and that asking people to share their best venous stories.
Our competition, if you will in terms of clinical results and so on that we continue to experience very nicely with the Venus Bliss. So it's a plethora of different.
Materials that our customers can use not only for us in the <unk> area for our sales organization, but also for a b to C. Given her global appeal quite frankly last but not least one of the things that we're really excited about is that there is a new movie that is coming out.
Called King Richard.
Comes out early November I believe that as will Smith acting as the Venus and Serena Williams is that in the evolution of these two sisters coming from comp into the world stage. So we think all of this stuff combined will continue to create a very compelling reason for the choice that we made with <unk>.
And so far from our customer.
Population she has been extremely well received.
Got it.
One high level question, and Chad I'll throw one your way Saddam.
As we come out of Covid.
How would you characterize the competitive landscape U S versus O U S.
What is driving shifts if any.
And also what procedure category are you seeing the most competitive activity U S versus O U S and Chad if I could quickly throw it in there and thanks for taking my questions guys. Jed Hum you guys have been working on Robo corridor now Amy I hope I pronounced that correctly for some time.
Now.
Would you characterize it.
Based on your field information currently how would you characterize the low hanging fruit.
Our global core gentlemen.
Hi, Chad.
To address both those questions and then you can add certainly sure.
The first part when it comes to the competitive landscape. We've all been around this industry. A long time that is not softening I mean, theres always going to be a lot of competition in this in this industry, which is one of the reasons why we made the decision to acquire a robotic company to create a whole new category, which we believe we are accelerating beyond what our.
Spectation, where specifically as we look at the global footprint. There is no question that outside of North America. There is a tremendous amount of competition simply because there is lower barriers to entry. So in other words, not an FDA process and so on.
No.
The categories that we see a lot of competition and obviously vary by region. For example in EMEA. The category of Fat reduction is extremely competitive because there's multiple players compared to North America, where really there is a handful of serious players.
So that's one of the reasons why we also redirected our energies to North America, because we believe that we have a very compelling argument to make when it comes to our competitors and how we compete against them.
To your second question.
We'll respectfully say, we haven't been working on mobile core a longtime Amy.
In fact, it's basically just over a year and if you look at any evolution of our product EBIT forget robots for a second the typical product takes two to two and a half years from idea to commercialization to come to market. We feel that we're ahead of schedule given the fact that we've been able to already treat humans.
In feasibility trials animal trials and have actually got the robot now treating people.
Out of the gate, so I think that we're quite pleased with where we are.
We've accelerated this project, we've put some real effort into it.
The fact that we already had the baseline robot that was used that thats used in hair restoration, we felt that that gave us a very significant head start if you will to the next generation and we don't see any reason why that will slow down in any shape or form down the road.
Yes, suraj the only thing I'd add is to your question is.
And.
In prior discussions we've talked about expanding the artist's installed base rapidly to the core market of derm and plastics. So we see Amy as a as an evolution of that because of a total robotic strategy for the office to create further distance between the core market and the differentiation.
From the med spa that theyre trying to offer a higher level of clinical service and I'll come to the patients. So we see it as a great entre to go back to the installed base and talk to them about the next.
<unk> robot.
Thank you.
Thank you.
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The next question is from the line of Anthony Vendetti with Maxim Group. Please proceed with your questions.
Thanks.
So just wanted to focus on the two products that that account for about 50% of your business.
Bliss and artists first on Bliss.
If you can correct me, if I'm wrong Dom the chat the bliss product the Standalone Venus Bliss product does not have a consumable correct.
That's correct.
And the Venus Bliss, Max you mentioned, approximately 250, K and we'll have a.
A consumable of $100 a treatment is that is that going to be $100 a treatment for any one of the.
Ah.
Treatment that it will offer because it'll be a three in one right it'll be fat reduction body tightening and muscle stem is that correct.
That's correct Anthony.
I'll share with you how we're looking at this as we look at the Venus versa, we introduced a.
Treatment called Tri Bella few years ago, which was basically a one hour treatment that included.
Basically IPL radiofrequency.
Fractional resurfacing. This try Bella procedure was extremely well received and really drove a lot of the business that we did for the versa. We feel we're going to do the exact same thing for the body.
So the virtuous for the face that.
Venus Bliss snacks will be for the body and it'll be the same type of scenario, where we have a one hour treatment protocol approximately 25 minutes of 520 minutes muscle stem to 'twenty, five and 10 minutes of contouring.
Our initial calculations are that on average based on our current Iot data on the Venus Bliss, we should be able to achieve an average of about six treatments a week per clinic.
In combination therapies and that would translate we're only going to have the $100 charge on the muscle stimulation portion.
The of the technology now this will not be a throwaway disposal. This will be a utilization activation code for lack of a better word.
On that particular element of the device. So it's a very high margin.
<unk> opportunity for us, which we think will be quite compelling in future years with the sale of the Venus Bliss Max.
Yeah.
Okay. Yeah. That's helpful. So the the 100 dollar treatment is only on the muscle fundamental components correct correct.
And and when you were talking about the trade in.
Tom.
Yeah.
You can't just.
Just want to make sure I'm correct. Once you can't just add.
The muscle stem <unk>.
Component to our current Bliss.
It would require a trading is that correct.
Well, we haven't we haven't finalized that yet Anthony.
For sure we will not be able to do the upgrade in the field.
That doesn't preclude us from saying that he will take the bliss back do it in house.
Send it back right now the plan is not to do that because we don't think that we need to do it.
Because as I said earlier the average return on investment is 28 weeks on our Bliss user base. So most customers by the time the Venus Bliss Max will come out will not only have paid for the device, but also covered their cost.
Operator time, and so on so I think that the financial.
Modeling that we can do and the and the opportunity we can present to our customers is quite compelling. So I don't think that we're going to get a lot of that I think that what's really going to happen is more as I said earlier, we can go to the top 20% of customers who are generating a very significant amount of revenue and simply say, it's time to add a second treatment room, because <unk> got so much business.
And by the way if patient a there was originally treated on the bliss on its own once muscle stimulation you can put them into room number two.
And do that sort of standalone there.
So at this point, we're not not upgrading per se the device, it's not off the table, but we just don't feel it's necessary to do so.
As opposed to just selling them a second device and then taking full advantage of the utilization.
Opportunity on the muscle stem.
Okay, Great. That's helpful. And then on artist I just wanted to see if I was correct on this did you say.
The best utilization quarter.
Ever or in the last 18 months I just want to expand our four years last four years.
Utilization quarter in the last four years, Okay, obviously, you've made lots of improvements too.
To do that.
<unk> brought down the cost of goods sold.
<unk> completely revamped the protocol.
Is there any anything.
Anything else other than other than getting that message out there I know there was an effort to bring down the treatment times, so that a practitioner could potentially do two of these procedures in a day are you at that point, yet or are you still you are still working towards that.
So we.
We spent the last year focusing predominantly on the implantation feature to improve it and right now we've got it to a place where a doctor can harvest approximately 1000 follicles, an hour and he can implant between three and 400 follicles per hour. Okay. So the total treatment time.
Plus or minus right now is around five hours to do a typical 2000 follicle procedure, what we're working on to help further improve the platform now that we've been able to find our cadence if you will and the implantation is to get the implantation feature up to six to 700.
Per hour, which will ultimately dramatically improve the time from start to finish on the procedure. The goal here is to get the procedure down to four hours again, using the <unk>. The typical 2000 follicle transplant as the baseline.
And we don't think we're that far away from that but it's still going to take some time to make sure that.
Everything that we're doing in the algorithms the software the cartridges that hold the follicles for the implantation part of it are going to be reproducible at every single clinic that uses the implantation feature in the device.
Okay, Great that's very helpful. Thanks.
Thanks very much so.
Ill turn it back.
Thanks Anthony.
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