Sonendo Inc. Q1 2023 Earnings Call
Good afternoon, and welcome to <unk> first quarter earnings Conference call.
Sean Ballparkish.
We will be for sure taking our question and answer session towards the end of today's call.
As a reminder, this call is being recorded for replay purposes.
I'd now like to turn the call it the worst of snap on the Gilmartin group for a few introductory college.
Thanks, operator, good afternoon, and thank you for participating in today's call. Joining me from <unk> are beyond Berg time, President and CEO and Michael what CFO .
Earlier today <unk> released financial results for the quarter ended March 31, 2023, a copy of the press release is available on the company's website.
Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Any statements made on this call that relate to expectations or predictions of future events results or performance are forward looking statements.
All forward looking statements, including those relating back to our operating trends and future financial performance.
Impact of COVID-19 on our business.
Expense management expectations for hiring growth in our organization.
Our kit opportunity revenue guidance.
<unk> expansion and product pipeline development are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements for a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our most recent annual report on Form 10-K filed March eight 2023 with the securities and exchange.
Commission and available on Edgar and in other public reports filed periodically with the SEC.
This conference call contains time sensitive information and is accurate only as of the live broadcast on May nine 2023.
And endo disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
And with that I will now turn the call over to Bjorn.
Thanks, Luisa and good afternoon, everyone and thank you for joining us today for this call I will start by providing some opening comments and business highlights.
Following my commentary, Mike will provide additional detail regarding our financial results before we open the call to Q&A.
We had a solid start to the year as we continue to move forward with our commercial priorities strategic execution plans, our team delivered 19% year over year growth for total revenue of $10 7 million in the first quarter.
These results were driven by increased adoption of our clean technology and higher overall procedure instrument revenue.
In the first quarter, we achieved a key milestone surpassing over 1000 consoles and our installed base.
This comes on the heels of another significant achievement in December last year.
Being over 1 million patients treated with the general the procedure.
We are thrilled with the strides we are making to revolutionize root canal therapy and believe both achievements signaled the increase in clinical adoption and market acceptance of our innovation and technology.
As of March 31, gentleman race, ending installed base was approximately 1005 units.
<unk> to approximately 853 units as of March 31, 2022.
In the first quarter, we sold 38 gentlemen consoles.
Following the launch of our next generation <unk> four console last October we.
We've seen strong interest from existing doctors as well as prospective customers, particularly those in higher volume practices.
This has led to higher mix of <unk> systems relative to the G III system and higher Asps.
The <unk> launch is progressing well and our sales team reports that the demand pipeline remains strong.
To support the expected growth in <unk> four we're working to transfer Assembly from our third party partner travelled Laguna Hills facility, where we currently assembled three console.
We believe that this will give us.
More oversight in the initial launch stages of the G four and enable greater control of our supply chain and manufacturing.
Additionally, co locating product development and Caso Assembly will facilitate iterative improvements and efficiencies that we think will produce margin growth and product improvement benefits in the near term.
This will allow us to accelerate responses to end market feedback as well as to ensure a timely delivery and installation, while maintaining customer satisfaction with our products.
As for procedure instrument sales, we saw sales for third quarter totaling $5 7 million, representing a 32% increase year over year.
While we're encouraged by the significant jump in consumables, we believe that this figure will normalize somewhat in the second quarter.
Some customers purchase a surplus of inventory ahead of the price increase that was effective February one.
We were pleased to see a considerable increase to our gross margin improving sequentially from 27% in the fourth quarter of 2022% to 31% in Q1.
The increase was driven by playful pi conversion rates among our customers.
Benefits of our new PR pricing program and operating efficiencies in our consumable production lines.
We continue to scale the company towards a single procedure instrument will be able to recognize further growth in our gross margin profile.
We remain committed to improving this metrics throughout 2023 and beyond.
Mike will provide more color in his later comments.
Relating to our focus on improving gross margins and operational improvements we are thrilled to welcome John Goll. This month to the <unk> team in this role as Vice President operations.
John brings with him incredible experience in the Med Tech space with over 20 years, So combined global manufacturing and supply chain operations at companies, such as Abbott vascular and Boston scientific including earlier time spent at American medical systems.
John's strong leadership will be pivotal to growing gross margins and he has a proven track record and supply chain optimization and installed base performance support last week, we had the privilege of hosting meetings at the American Association of ended office in Chicago.
And we are encouraged by the excitement coming out this leading industry conference attendees were able to have hands on experience with both the <unk> and clean for products in our test drive stations.
Never booth customers, who were able to perform a gentleman procedure on and extract it tooth and connect the full benefits of the combined offering many for the first time.
We are always pleased with the reception we get at the AAN Conference. It serves as an important reminder of our fundamental commercial strategy with our focus on and adopted performed rich in all therapy for the majority of their treatments.
Based upon current market penetration there is still significant runway to sell into the 5000 and adopting practices in the United States and Canada.
They represent key leaders in the specialty and we will continue to invest in clinical training and education and support of these clinicians.
At the same time, we also recognize the market opportunity that exists with the general practitioners are performing approximately 75% of all root canals and U S and Canada, we have.
<unk> begun the initial stages of a measured rollout to GPS or perform a high volume a root canal treatment within their practice.
This commercial strategy will expand further into the second half of this year.
As our sales team built out the pipeline of early adopters.
As we begin introducing general wave to these coalitions, we're seeing positive reception to both the clinical outcomes and value propositions.
As a part of our program in developing this professional network.
We've begun hosting educational seminars with kols and establishing best practices among GPS to capitalize on the efficiency gentlemen can bring to their practice.
We look forward to ramping up our GP strategy throughout 2023 and are committed to maintaining a high level of service and support both GPS and then adopters alike.
Before we move into a more detailed look at our financial performance I'd like to provide some commentary around the macroeconomic environment and the near term implications, we foresee for the business.
Over the last several quarters, we've highlighted the macro pressures in the inflationary environment are creating uncertainty around our capital sales.
Sales cycle.
Practitioners are lengthening the time it takes to choose to invest in capital equipment as evidenced by console placements in the first quarter.
And while this has been the historic cycle for Endo, where in the first quarter lags to proceed in the fourth quarter as a result of year end tax incentives, we believe that given the current market environment. Some of this hesitancy may extend into Q2.
As you look at our customer base, we see that the purchasers are typically small business owners, rather than large hospital systems for multi site ambulatory surgery centers more common in other med Tech specialties.
Therefore, our customers' decision process is in many ways more personal than a large corporation weighing in more consumer based mindset than one might see with other med tech capital equipment businesses.
However, we do expect some of these dynamics to lessen in the back half of the year, particularly as interest rates normalize and then the DOCSIS and GPS are able to fully appreciate the efficiencies recognized by investing in our technology.
Our sales team maintains a robust pipeline of high quality leads and despite some of the macro pressures. The capital side is facing I believe solander remains in a strong position to seize upon some significant growth opportunities before us.
We have the benefit of leveraging several growth catalysts in the next 12 to 18 months and we anticipate that between clean flow adoption rates expanding our presence to the general practitioner and clean flow interior regulatory clearance.
We are poised to capture further market share all.
I'll discuss each of these initiatives briefly before asking Mike to review our financial performance for the quarter.
As we've highlighted before clean <unk> adoption is a pivotal strategy to improve our margin profile boosting revenue.
The use of a single procedure instrument across all cases allows for increased efficiency in the Operatory and.
And for our new pricing model incentivize higher utilization.
Greensville also incorporates fewer components and is significantly less costly to manufacturer, which directly contribute to an improvement on the bottom line.
Still anticipate full conversion from the legacy procedure instruments.
To clean so by mid 2020 for our sales team remains committed to driving adoption and in the first quarter approximately 53% of <unk> unit sales were clean flow.
Sequential improvement over the fourth quarter of 2022, where that figure was 47%.
As for the GP Rollouts, we believe this opportunity opens a significant addressable market for <unk> <unk> over 50000 dentists in the United States and Canada that do not refer out the majority of their routes in all cases.
We only need to capture a fraction of this market segment to considerably increase revenues over the next 24 to 36 months.
By highlighting the efficacy and efficiency of the Jamba system within the GP cohort, we believe the value proposition becomes highly evident.
We have received outstanding feedback from the initial high volume accounts that have started using <unk>.
And believe this trend will continue.
As addressed earlier in my prepared remarks, we plan to implement a measured and strategic rollout to the GP space in order to maximize oversight and ensure the same level of quality and service that some endo is associated with in the endodontics space.
And finally, we're very much looking forward to the commercialization of Arbor clean for Pi for anterior teeth in the middle of this year the ability.
To perform a root canal on any tooth with a single procedure instrument is a meaningful development for doctors and has the ability to further increase the efficiency of their practice.
Anterior teeth represent approximately 20% to 25% of <unk> cases.
While we currently have a procedure instrument for anterior teeth, we believe.
We will be able to capture more of this part of the market through clean flow.
With one single pie, our economies of scale greatly improve that we will be able to enjoy even further margin inflection.
We will provide further details on our commercial strategy for interior procedures on the future call.
We're excited about the many growth opportunities ahead of us and I am proud of our team's hard work and dedication thus far.
With that.
I will turn the call over to Michael What's some lenders chief financial officer to discuss our quarterly performance numbers.
Mike.
Yeah.
Thanks Pat.
We mentioned <unk> total revenue for the first quarter 2023 was $10 7 million compared to $9 million for the first quarter of 2022 and.
An increase of 19%.
Growth in the quarter was primarily in our product segment with growth of 20% driven by increased procedure instrument sales as well as other products segment revenue.
In the first quarter Genworth console revenue was $2 million compared.
Compared to $2 $1 million in the first quarter of 2022.
We sold 38 consoles in the quarter with 19 customers, who upgraded from existing G III systems.
<unk> and a net increase of 29 two on installed base.
Average selling price for the generally console was roughly $66000.
Unrelated to upgrades to <unk>, four and with higher ASP attributable to the favorable chief for mix.
We attribute the decline in console revenue, however, modest to the macro economic impact on the decision making process as previously discussed and extra console revenue to grow for the full year 2023.
Turning to procedure instrument Pi revenue was $5 7 million compared.
Compared to $4 3 million in the first quarter of 2022.
An increase of approximately 32%.
<unk> revenue growth was driven primarily by the general way of increased installed base.
Procedure instruments sold and an approximate 9% increase in average selling prices compared to the prior year period.
Precision instruments sold in the quarter totaled approximately 80600.
In the quarter, we did note that our sales exceeded our utilization at the field level attributable to our customers buying in at a lower price during the month of January .
Our estimates that approximately 6% to 8% of Q1 <unk> sales out will be reflected in lower demand during Q2 and Q3.
Total other product related revenue was $1 million in the quarter.
Total software revenue for the first quarter was $2 million compared to $1 $8 million in the first quarter of 2022, an increase of 12%.
<unk> continues to perform well and gave favorable traction and group practices.
Gross margin for the first quarter of 2023 was 31% compared to 25% in the first quarter of 2022.
This increase was driven by improvements in <unk> adoption rates, along with increased procedure instrument asps as.
As well as operating efficiencies gained as clean from a production increased offset somewhat by higher initial unit cost of the chi for console.
We are very pleased with this positive inflection both year over year and sequentially and margins as we are seeing further efficiencies with our consumables production line and conversion to the clean flow instrument.
Moving margins continues to be a focus for us in 2023.
Total operating expenses in the first quarter of 2023 were $18 2 million comp.
Compared to $16 $8 million in the same periods of the prior year.
Increases were different primarily by higher expenses relating to our commercial expansion and related revenues and higher general and administrative costs relating to stock based compensation recruiting and legal expenses offset partially by lower R&D spending.
Loss from operations was $14 $8 million in the first quarter of 2023 compared to $14 $6 million in the first quarter of 2022.
Net loss was $15 4 million for the first quarter of 2023 compared to $15 $5 million in the first quarter of 2022.
Our cash and cash equivalents and short term investments as of March 31, 2023 were approximately $74 9 million long term borrowings remained at $40 million.
As noted in our earnings release during April of this year subsequent to Q1, and we received $3 2 million of the $4 4 million of the employee retention credit recognized in 2022.
As for 2023 financial guidance.
We are maintaining our initial estimate of annual revenue between $48 $51 million for the full year.
And while it is not our practice to provide quarterly guidance in light of the dynamic macroeconomic environment. We believe it would be helpful to provide some parameters around the second quarter 2023.
For Q2, we are expecting revenue to range between 11, and $11 4 million and for gross margin to be in line with Q1, as we ramp up production of our <unk> console.
These figures reflect our most recent analysis of the sales cycle environment and underlying economic concerns amongst our customers.
At this point I'd like to open up the call for questions.
Thank you.
Asked a question. Please press star followed by one will tell us.
If you would like to withdraw your question. Please press star followed by check.
When <unk> asked the question patient shortly a device on Egypt.
Our first question today comes from Jon Block with Stifel. Your line is open.
Yeah.
Hey, guys. This is Tom Stefan on for John Thanks for the questions I wanted to start off with the full year guidance.
<unk> there was some shifting in the phasing of sales by one inch collectively I think there's a little short of our estimate yet you maintained the full year 'twenty three guidance. So I guess can you elaborate a bit on how comfortable you are with the two H implied.
<unk>, which is a bit steeper than we previously thought.
John you called out potential easing of the macro uncertainty, but I guess what are some of the key to each considerations, we should be thinking about.
Yeah, Hi, Tom.
Johan.
If you look before Covid I would say the trade shows has more of an impact in the sales cycle throughout the year and.
And one of the things that we've noticed after COVID-19 is that trade shows the impact of trade shows are more muted.
Dental companies have found more efficient ways to sell and I think that's especially true for <unk> is that we've figured out how to sell outside these dental conventions and specifically for example, running professional education events.
And found.
More efficient way.
Base to sell.
And if you look in the pipeline of what we have we have a very strong pipeline of deals.
And so we're very pleased with how the pipeline is forming.
<unk>.
And that pipeline is.
<unk> is increasing now as we're starting to look at the GPS.
So we do recognize the macroeconomic backdrop that we talked about.
<unk> remarks.
But because of the strengthening of the pipeline that is why we are in.
The continued strengthening of the pipeline that's why we continue to main the overall guide for the year.
I think the thing that we're continuing to be very much on top of is how we continue to activate sales pipeline is large and we're continuing to now activate sales through education and continue to awareness.
And as we get closer to the end of the year. We do expect the end of the year tax incentives that we.
We see too.
Sure.
To play through so demand continues to be healthy pipeline continues to be healthy.
To be very very excited about the long term growth story, we just wanted to.
Informed the market and inform everyone of just the fact that we do believe that.
Trade shows have less of an impact in our sales cycles and Thats why you will see that Q1 Q2, and Q3 are more more in line as opposed to Q2 being slightly higher than.
We traditionally have seen before COVID-19.
That makes sense. Thanks, and then my second question is just on the gross margin.
Very strong in the quarter and I. Appreciate the drivers you mentioned, maybe if you can just elaborate on the sustainability of those factors you called out and then.
Once we get past the $123, 31% gross margin that youre expecting.
What can we think about exiting the year, maybe once the manufacturing transition is completed just given we saw a clean 400 bps of sequential growth this quarter.
Hi, Tom It's Mike I'll take the start that question and then I'll, let John add any color commentary as well.
So yes, we are very pleased with how we exited Q1, 31% we were able to drop largely the price increase that we achieved with Pis and then Additionally, you got some favorability from our consumable production line.
Albeit somewhat offset by the <unk>.
Our unit cost of the <unk> console.
So.
For.
Q2, we're expecting that dynamic to continue we are starting to ramp up Q4.
G for production.
And as you indicated in your remarks as well we tend to exit Q1.
In the first half roughly.
Roughly 31%.
I think in terms of guidance for the year without giving a specific number we're working on is we believe there's further cost improvements that we'll experience through in sourcing of <unk>. So we think that will gave us favorability that we'll be able to push the number up further and then additionally around clean flow adoption.
We expect that to ramp up we have ramped up from Q4 to Q.
One from 47% to 53%. So we expect that improvement and then we still have.
The price increase for.
That will take full effect.
And in quarter. So we have a lot of positive momentum going into the second half of the year that we think will help us trend.
North of that 31% and a favorable for us.
And Tom driving margin of course, very high priority for US, we're really excited to have John Mccoy.
Being on boarded now heading operations. This is what he has done in his previous life.
And some of his key priorities and key opportunities for US like Mike mentioned is of course, managing material cost negotiations supplier cost et cetera, driving operational leverage and obviously as a whole as a company we will continue to convert customers to clean so so.
That's definitely something that's fob all over as we continue to go forward.
Thanks for the color.
Thank you Tom.
Our next question comes from Treasury accounting from Piper Sandler Your line is open.
Okay.
Hey, Mike This is Joe on for Jason Here I appreciate you taking the questions.
Can you compare the success or feedback from this year's conference versus you first of all you had last year. This year you have <unk> to showcase but last year was the coming out party for clean flow. So just trying to get a sense. If there was a.
Notable difference in one year versus the other around the coffers.
Yes. Thank you for the question.
We're really super excited about this year is a I would say first we had a very busy booth.
Rate activity level on the show floor.
I would also say that we had a very very professional team representing us.
But most important I would also say.
We clearly see that and we clearly believe that we have the best technology available for Endodontics and also the best option for patients.
So for myself.
For my family and people that I know.
Not in this environment.
Anyone do anything else, but djellaba, if I need to read cannot procedure, so really taking endodontics to a new level.
Second I would say that this year's AE, we clearly see we continue to change the conversation at endodontics.
Instead of talking about what files.
Talking about what filed to use that we've seen.
If you go back five years, if you go back 10 years.
Entire convention, just not talking about how to file less and how to clean and disinfect. These root canals.
And I'm proud to say that some endo has.
Really initiated and led these conversations and we will continue to do so going forward.
And maybe another third observation I would say about this year is a is that.
We had a number of different investors come in and speak to us and talk to us during the show.
And one of the things I heard from them was that there's this pattern recognition they have seen the.
So I would say that this.
This year is a last year is a very very successful we just see the impact on the business less now after COVID-19 than we did in a pre COVID-19 environment and that goes back to my.
Prior comments.
Great. Thanks, John I appreciate the thoughtful answer and then what's been the early feedback regarding the push into the GP channel are there any early lessons to draw from and can you say, whether theres been any evidence of your core endo doctors being unhappy with this expanded selling focus.
Yes, the push into the GP channel I think its going very well.
Like we've talked about earlier, we continue to be very much focused on the endodontist.
Okay.
This is something that we've been focused on all along.
We really wanted to.
The all over that we still have less than 20% penetration into the endodontics space.
So this will continue to be a significant focus for us.
And at this point in time, we also have the key kols in the endodontics supporting us.
So that is that's why the timing. We believe is so good to really start moving or to the GP space on focusing on that as well.
Like we've talked about in prior commentaries GPS to roughly about 75% of all endodontics procedures.
So we're still in the early stages, it's going well, we're building out the tools to drive education and awareness.
We clearly see that the GP the pipeline and the Gp's basis, increasing so this should drive continued to help drive further growth in the second half of the year.
With regards to any blow back that youre talking about in the <unk> field, we have not seen that and I think maybe one of the things that's unique for some endo is that our messaging to the endodontist in our messaging to the GPS.
We are not in conflict with each other in other words, if we have both endodontist and GPS in the same room, we can continue to have the conversation with both.
Both both parties, if you will without them being in conflict with each other now.
Ford ended office, we're talking to them about obviously treating their own patients that are that are being referred to them by the GPS.
Whereas when we're selling to GPS, we're selling to the high volume GPS that are substantially keeping all of their cases in house.
And obviously that stuff that's not in conflict with the Endodontist.
A very significant extent I would say that the.
US educating and driving awareness in the rest of the GP space, meaning the gp's that are.
Referring out to a lot of the rate cases that actually benefits our providers because if a GP knows ultimately about <unk>, although you buy the unit or they will refer to some of the offer stone with both instances in both things of course help us but there is no conflict I think in the storytelling.
And the positioning that we have to both the Endodontist energy piece.
Great really appreciate that John .
Thank you Joe.
Yes.
Our next question comes from Nathan Rich with Goldman Sachs. Your line is open.
It happened in Q2, so that we think that that step down in PDI sales out will happen from Q1 to Q2 on that impact when.
When you look at consoles.
The dynamic that you're talking about with the trade and trade up.
Don't offer any and we don't we won't continue to offer any trade in a trade up special programs moving forward, we have done that in Q4, and we had some of those.
Deals move over from Q4 into Q1, but it's not something we're actively looking at today. So you'll look at something Thats a little cleaner. If you will in Q2, we will have a straightforward ASP, we still expect the asps to land somewhere in the mid <unk>.
So that's mid to low 60 something to put into.
The models for ASP on consoles and then for volumes as Peter indicated when you look at Q1, and Q2 and Q3.
Slight variations there, but not as much as we've seen in the past so Q2 will be a little bit more than Q1, and then Q3 will be someplace in between Q2 and Q.
One so I hope that helps.
Yes, no that's great I appreciate the color there.
And then I guess.
As we think about the rollout of <unk> and bringing the assembly in house.
How does that change your ability to supply the market and I guess can you help us think about kind of capacity too.
Roll this out to the GP channel in terms of the number of consoles that.
You'd be in a position to place I.
I guess is that a limiting factor at all just in terms of the pace of that rollout.
Yes, that's a good good question and maybe let me give you a little bit more color on why we're bringing manufacturing back in house. So obviously previously before <unk> had the manufacturing team Harrison Endo focused exclusively on G. III.
But in order for us to get <unk> up and running we used an OEM manufacturers.
Help us great manufacturing plants, where construction's lay out the line.
Et cetera, and this same OEM manufacturer has helped US manufacturer differs first few units.
We've previously on prior calls we've talked about expecting a 50 50 split between <unk> three and <unk> four today, we are seeing a higher demand.
For <unk>.
<unk> III, which is good and I think Thats also the rationale for your question about starting to ask about and really double clicking on G. Four demand here.
So in order to utilize.
Manufacturing team Harrison Endo, we've decided to bring G. Four manufacturing back in house.
<unk> laid out the entire manufacturing line here <unk>.
We're ramping up production with the team that are making G. Three units.
And.
OEM supplier with social based here in California, what's expensive so by moving manufacturing and houseware savings some margin dollars and we're also bringing manufacturing close to our R&D team.
And I think that's really important because in the early ramp of manufacturing it's important to have manufacturing close to R&D closer to customers distribution quickly iterate anything that needs to be.
Be done and I think also know of course that gets.
You talked about the early having John here in house heading operations. This is really going to be key for us to help drive this going forward. So we feel that we have.
Nate we feel we have sufficient supply here supply to market, we have a great team here internally to help drive.
Drive manufacturing here and we feel that we have sufficient capacity.
To not just supply <unk> to the Endodontist Endodontist community, but also to the GP channel as well.
Great. Thank you.
Thank you Nick.
Okay.
Our next question comes from Erin Wright at Morgan Stanley . Your line is open.
Hi, Thanks.
So you highlighted the macro environment again impacting capital equipment purchasing how.
How would you characterize it now is it getting better or worse and how.
How would you characterize the sales cycle duration right now.
Sure.
<unk>.
Install base target for the year.
So I was just curious how many placements were associated with GP was that material at all I get it.
It's a measured approach, but just curious if you could break that out.
So erinn I'll take part of that Mike can fill in some more detail here. So I would say that the capital equipment environment for US is the same we have not seen a worsening.
From from prior quarter, So I would say that it's stable.
We've previously talked about we have a strong pipeline the pipeline is growing but to your point the sales cycle duration is slightly longer in this environment given the macro overlay.
And I'll have Mike comment on some of the console numbers for four towards the end of this year.
With regards to the GP numbers I would say that initially like we have previously communicated.
The impact of GPS in the first half of this year is going to be less youre going to start seeing some more of that this year. The way to think about the growth in this year right as we're continuing to call on them to DOCSIS Theres, a significant opportunity for us available available.
In the specialty field, where here, we have less than 20% of the market. So that will continue to grow and that will continue to be a key focus for us and then GPS will be.
Provide upside if you will as we continue to drive into the second half of this year.
Yes.
Just to continue on the GP install base comment I guess, just going backwards in here.
Questioning so for GPS right now that that is less than 10% of our installed base.
We had a.
Certain installed base of GPS that we had started out with when we first launched in 2018 and they've stuck with us on this towards this process and now we're starting to add to it but as it becomes more meaningful.
We can start to give more color on it.
The second question on our installed base for yearend. So last year, we placed 176 consoles for.
For the year and implied in the guidance that we've given is to increase that installed base. So it.
It is our goal of course to grow that installed base to help grow pies and just expand the general is full.
<unk> footprint in the market.
Okay.
Yep.
Our next question comes from Michael Cherny with Bank of America. Your line is open.
Great. Thank you. This is Dan Clark on for Mike just one from US appreciate the color you guys gave on your customers taking more of a consumer based mindset around macro.
Would you say there is a difference between al and Gpus are sort of looking at macro and will consider all different.
Michael.
Okay.
It's a good question and I think you're spot on in your framing here is that our customers are taking more of a consumer mindset because they are smaller.
They're smaller sole proprietors and theyre, making a purchasing decision about should I do something from a business or should I do something from a home.
Things. So that's I think a very very good framing.
I think it's a little bit early to give too much insight into <unk> versus <unk> at this point in time.
We are in general in general that we have some anecdotal early results that indicate that GPS are perhaps a little bit more business minded and some other decisions.
And are looking at this from an ROI perspective, I would also say that.
The early.
Experience is that we have seen with installing GP units jumbo consoles in the GP office.
We're seeing that the value proposition resonates.
Very well and we are also seeing that resonate probably more in the GP office then.
And then Endodontics office.
As you can all as you can kind of reflect upon going to the dentist rights <unk> will be working on multiple patients and multiple activities at the same time or in the DOCSIS will be substantially all focus on one patient doing a <unk> procedure.
I think with we're seeing is that in.
GPS because they can actually continue to work on multiple patients while doing a <unk> procedure.
<unk> value prop resonates quite a bit so.
That's our that's the rationale for <unk>.
<unk> perhaps.
Being a little bit more open to acquiring capital equipment.
At this time.
Yeah.
Great. Thank you.
Thank you Tim.
This concludes our Q&A.
Beyond <unk>, <unk>, President and CEO for any final remarks.
Well. Thank you operator, we appreciate everyone's time today and thank you for your interest in some endo have a great rest of your day. Thank you.
And gentlemen, todays call is now concluded.
Thank for your participation you may now disconnect your lines.
Yes.
Yeah.
Yeah.
Yes.
Yes.