Q4 2023 InMode Ltd Earnings Call
[music].
Operator: Good day, and welcome to Inmode's fourth quarter and full year 2023 earnings conference call. All participants will be in listen-only mode.
Good day and welcome to in the fourth quarter and full year 2023 earnings conference call.
All participants will be in listen only mode.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, press star then 1 on your telephone keypad.
Should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions.
That's a question press Star then one on your telephone keypad.
Operator: To withdraw your question, please press star and then 2. Please note, this event is being recorded. I would now like to turn the conference over to Mary Siegel of MSIR. Please go ahead.
To withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Mary Segal of M. S. IR. Please go ahead.
Mary Siegel: Thank you, operator, and everyone for joining us. Welcome to Inmode's fourth quarter and full year 2020. Before we begin, I would like to remind you that certain information provided on may contain the Safe Harbor Statement, Outline. Today's earnings release also pertains to those who did not receive a copy of the release; go to the investor relations section, the company, changes in business, competitive, technological, regulatory, and other factors cause actual results, period, and those expressed by the forward-looking statement. The historical results are not necessarily... I'll see you next time.
Thank you operator, and everyone for joining us today welcome to in mountain fourth quarter and full year 2023 earnings call before we begin I would like to remind our listeners that certain information provided on this call may contain forward looking statements and the safe Harbor statement out.
Find in today's earnings release also pertains to this call. If you have not received a copy of the release. Please go to the Investor Relations section of the company's website.
Changes in business competitive technological 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 the accuracy of our forward looking statements and assume no obligation to update them, except as required by law.
Mary Siegel: Thank you. Take care. Bye. Bye, and the Acura Silver, no obligation to update, accept as required. With that, I'd like to pass the call over to Moshe Mizrahi, Chairman and CEO. Share, please
With that I'd like to pass the call over to MS Shimmies, roughly chairman and CEO Moshe. Please go ahead.
Moshe Mizrahi: Thank you, Miri, and to everyone for joining us. With me today are Dr. Michael Quindle, our Co-Founder and Chief Technology Officer, Yair Malka, our Chief Financial Officer, Shaquille O'Connor, our President of North America, and Raphael Liekerman, our VP of Finance. Following our prepared remarks, we will all be available to answer your questions. The second half of 2023 presented challenges for Inmode, for the aesthetic industry as a whole, and for the surgical aesthetic sector in particular. In the fourth quarter, we revised our guidance for the first time in the history of the company due to the increased impact of the industry slowdown. This resulted in a 5% year-over-year decline in Q4 revenue, which amounted to $126.8 million.
Thank you Mary and to everyone for joining us with me today, Dr. Michael Klein, our cofounder and Chief Technology Officer, Phil Yeah ear, Malka, our Chief Financial Officer, Shakil Lakhani, our president in North America, and one for Andy come on Oh VP final.
Following our prepared remarks, we will all be available to answer your question.
The second half of 2023 presented challenges for even mode for the aesthetic industry is all and to the aesthetic and to the surgical aesthetic sector in particular in the fourth quarter, we revised our guidance for the first time in the history of the company do today.
Due to the increased impact of the industry slowdown.
This resulted in a 5% year over year decline in Q4 revenue, which amounted to $126.8 million. However, we're pleased to have grown our full year revenue to a record of 492.
Moshe Mizrahi: However, we are pleased to have grown our full-year revenue to a record of $492 million, reflecting an 8% increase compared to the full year of 2021. We take pride in being the only company in the industry that consistently generates over $100 million per quarter, demonstrating growth even in the face of a challenging year. Moreover, we keep our gross margin, the highest in the industry, strong and steady at 84% for both Q4 and a full year. All while maintaining our established price structure for the platform and for the consumer. As previously mentioned, over 80% of the platform sales are facilitated through leasing agreements. Higher interest rates and longer lending approval cycles have impacted Inmode's overall growth rate. This macroeconomic environment has also affected patients who are more sensitive to the price of their static treatment, resulting in lower underlying demand for our minimally invasive treatment. To address these challenges, we are in the process of establishing an approval program with financial institutions to improve and expedite the credit decision process.
Dollars.
Reflecting an 8% increase compared to the full year of 2021 we take pride in being the only company in the in the industry that consistently generate over $100 million build quarter demonstrating growth even in the face of it.
Yeah.
However, we keep our gross margin the highest in the industry strong and steady at 84% for both Q4 and the full year, all while maintaining our established price structure for the platforms and for the consumable.
Previously mentioned over 80% of the platform says Oh facilitated the tool leasing agreement higher interest rate and long ago leave the logo lending approval cycles have impact as in mode. Overall growth rate. This macroeconomic environment is also effect.
The effective patient while more sensitive to the price of the aesthetic treatment, resulting in lower underlying demand for our minimally invasive treatment.
To address these challenges we're in the process of establishing a proven program with financial institution to improve and expedite the credit decision process.
Moshe Mizrahi: In some cases, we directly leverage our strong balance sheet to support physicians by providing financing options ourselves. Additionally, capitalizing on this slower year and our robust balance sheet, in 2023, we expanded our R&D activity by hiring more engineers and recruiting training professionals. Also, we increased our sales team in our subsidiaries, expedited international expansion, and increased investment in worldwide regulatory pathways. During 2023, we introduced two successful new platforms, Envision for the ophthalmology market and Define for the health-free aesthetic market, which is the next generation of EVOX. We are encouraged by the results from the soft launch of our Envision platforms last year, and we expect Envision to expand outside the U.S. during 2024. Inmode continues to innovate, bringing new and exciting products to the market.
In some cases, we directly leverage our strong balance sheet to support physician by providing financing option ourself.
Additionally, capitalizing on this slower year and our robust body that will both balance sheet in 'twenty to 'twenty three we expanded our R&D activity by hiring more engineers and recruiting training professional also we increased our sales team in all subsidiaries.
But I did international expansion and increased investment in worldwide regulatory pathway.
During 2023, we introduced two successful new platforms and vision for the ophthalmology market and define for the hands free aesthetic market, which is the next generation of people.
We are in college by the results from the soft launch of our envision platforms last year, and we expect and vision to expand outside the U S doing 'twenty 'twenty four and more.
<unk> continues to innovate, bringing a new and exciting product to the market in 2024, we plan to launch two new platforms offering significant improvement in technology and energy levels, along with the new technology for minimally invasive treatment and for Morpheus eight.
Moshe Mizrahi: In 2024, we plan to launch two new platforms, offering significant improvements in technology and energy levels, along with new technology for minimal invasive treatment and for more fused aids. Finally, we remain committed to supporting all customers, distributors, employees, and salespeople worldwide regarding the situation in Israel. We would like to reiterate that we have established a contingency plan with sufficient inventory globally, including in Israel, the U.S., and in Europe.
Finally, we remain committed to supporting all customers distributors employees salespeople worldwide regarding the situation in Israel.
We could like we would like to date.
Date that we have established a contingency plan with sufficient inventory globally, including in Israel in the U S and in Europe. We continue to closely monitor the situation and are pleased to report that we are conducting business as usual now I would like to.
Shaquille O'Connor: We continue to closely monitor the situation and are pleased to report that we are conducting business as usual. Now I would like to turn the call over to Shaquille, our president in North America. Challenges in North America during the fourth quarter, despite the headwinds of lower platform sales, we're reporting a 20% increase in consumable and service sales. Consumables and service revenue accounted for 16% of total Q4 revenue.
Turn the call over to Shaquille, our president in North America Shaquille.
Yeah.
Challenges in North America during the fourth quarter, despite the headwinds of lower platform sales.
We're reporting a 20% increase in consumable and service sales in Q4 consumables consumables and service revenue accounted for 16% of total Q4 revenues.
Yair Malka: As Moshe mentioned, we are pleased with the successful launches of Envision and Declat. Both platforms have made significant progress in North America, gaining traction among practices and patients. Considering the anticipated slower market demand this year, we've implemented changes within our sales team in North America. We've also adjusted our infrastructure to position ourselves for accelerated growth and market conditions. Lastly, I'd like to thank our entire North American team for their continued support. I'll now hand over the call to Yair for a review of the financial results. Yeah, you're, Thanks, Shaquille, and hello everyone.
Moshe mentioned, we are pleased with the successful launches of envision and acquire.
Both platforms have made significant progress in North America, getting traction amongst practices practices and patients.
Considering the anticipated slower market demand this year, we've implemented changes within our sales team in North America, we've adjusted our infrastructure to position ourselves for accelerated growth when market conditions improve.
Lastly, I'd like to thank our entire North American team for their continued hard work I'll now hand over the call to you for review of the financial results in more detail.
Thanks, <unk> and Hello, everyone. Thank you for joining us.
Yair Malka: Thank you for joining us. Starting with total revenue, Inmode generated $126.8 million in the fourth quarter of 2023, with a gross margin of 84% on a gap basis. For full year 2023, revenue totaled a record $492 million, an increase of 8% compared to 2020. Nangab Gross margins remain the highest in the industry and within our target range at 84% for both the fourth quarter and the full year of 2023.
Starting with total revenue emo generated $126 $8 million in the fourth quarter of 2023 with a gross margin of 84% on a GAAP basis for full year 2023 revenue totaled a record $492 million.
An increase of 8% compared to 2022.
non-GAAP gross margin remained the highest in the industry and within our target range at 84% for both the fourth quarter and the full year of 2023.
Yair Malka: In Q4 and for the full year of 2023, our minimally invasive technology platforms accounted for 83% of total revenue. For the full year of 2023, consumables accounted for 16% of revenue, an increase from 13% in 2022. Moving to our international operations, fourth-quarter sales outside the U.S. accounted for $46 million, or 36% of sales, a 9% increase compared to Q4 last year. For a full year of 2023, sales outside the U.S. accounted for $184.2 million, or 37% of sales, an 18% increase compared to 2022. Inmode now operates in a total of 96 countries.
Q4, ending the full year of 2023, Oh minimally invasive technology platforms accounted for 83% of total revenues for the full year of 2023 consumables accounted for 16% of revenue an increase from 13% in 2022.
Moving to our international operations fourth quarter sales outside the U S accounted for $46 million or 36% of sales.
And 9% increase compared to Q4 last year for.
For full year of 2023 sales outside the U S accounted for $184 $2 million or 37% of sales.
An 18% increase compared to 2022.
And now operates in a total of 96 countries and won't got a global contributors Asia and Europe, where prime were the primary drivers fueling our growth rate.
Yair Malka: Among our global contributors, Asia and Europe were the primary drivers fueling our growth rate. To support our operations and growth, we currently have a sales team of more than 256 direct reps and 82 distributors worldwide. Gap operating expenses in the fourth quarter were $55.3 million and $215.7 million for the full year, a 5% and an 18% increase year-over-year, respectively.
Support of operations and gross we currently have a sales team.
More than 256 direct reps and 82 distributors worldwide.
GAAP operating expenses in the fourth quarter were $55 $3 million and $215 7 million for the full year.
At 5% and then an 18% increase year over year, respectively.
Yair Malka: Sales and marketing expenses increased slightly to $49.5 million in the fourth quarter compared to $47 million in the same period last year. Sales and marketing expenses for the full year of 2023 were $193 million, compared to $160.6 million for 2022. For 2023, NAMGAP operating expenses were $194.1 million, compared to $160.4 million for 2022. Gap operating margin for Q4 and for 2023 was 40%. NAMGAP operating margins for the first quarter and for full year 2023 were 45%, compared to 50% and 49% for the first quarter of 2022 and full year 2022. And $2.30 in 2023 compared to $1.89 in 2022. Nangab diluted earnings per share for this quarter were $0.71 compared to $0.78 per diluted share in the fourth quarter of 2022.
Sales and marketing expenses increased slightly to $49 5 million daus in the fourth quarter compared to $47 million in the same period last year.
Sales and marketing expenses for the full year of 2023, where Honda and $93 million compared.
Compared to $160 6 million for 2022. These increases are attributed to hiring more sales representatives, increasing our presence in the U S and globally.
Next we look at share based compensation, which decreased to $6 $3 million in the fourth quarter of 2023, and $23 6 million daus in the full year of 2023.
non-GAAP basis operating expenses were $49 5 million daus in the quarter compared to a total of $46 $1 million in the same quarter of 2022, representing a 7% increase.
For 2023, non-GAAP operating expenses were $894 1 million.
Compared to $164 million or 2022.
GAAP operating margin for Q4 and for 2023 was 40%.
non-GAAP operating margins for the fourth quarter and for full year, 2023 was 45% compared to 50% and 49% for the fourth quarter of 2022 and full year two in 2022.
GAAP diluted earnings per share for the fourth quarter was 64 cents compared to 44 cents per diluted share in Q4 of 2022.
And $2.30 in 2023 compared to $1.89 in 2022.
non-GAAP diluted earnings per share for this quarter were 71 cents compared to 78 cents per diluted share in the first quarter of 2022.
And $2.57 for 2023 compared to $2.42 for 2022.
Yair Malka: Once again, we ended the quarter with a strong balance sheet. As of December 31, 2023, the company had cash and cash equivalents, marketable securities, and deposits of $741.6 million. Before I turn the call back to Moshe, I'd like to reiterate our guidance for 2024, non-gap gross margins between 83% and 85%, non-gap income from operations between $217 million and $222 million, and non-gap earnings per dilute share between $2.53 and $2.57. I will now turn the call back to Moshe. Thank you, Yair. Thank you, Shaquille.
Once again, we ended the quarter with a strong balance sheet as of December 31st 2023, The company had cash and cash equivalents marketable securities and deposits of $741 $6 million. This quarter in will generated $61 $2 million from operating activities.
Before I turn the call back to Michelle I'd like to reiterate our guidance for 2020 for.
Revenues between $495 million and 505 million, though.
non-GAAP gross margins between 83% and 85% non-GAAP income from operations between $217 million and $222 million.
non-GAAP earnings per diluted share between $2 53 and $2.57.
I will now turn over the call back to Moshe.
Yeah.
Thank you. Thank you Shaquille operator, we're ready for Q&A. Please.
Thank you we will now begin the question and answer session to ask a question Press Star then one on your telephone keypad. If at anytime in your question has been addressed and you would like to withdraw your question Press Star then two.
Yeah.
Our first question today comes from Matt and mix it with Barclays. Please go ahead.
Operator: Operator, we're ready for Q&A, please. Thank you. We will now begin the question and answer session. To ask a question, press star then one on your telephone keypad.
Hey, good morning, Thanks, so much for taking the question.
And appreciate all the color I wanted to maybe start off with just.
You could talk a little bit about what you're assuming in your current 2020 or a revenue guide.
And what kind of indications have you seen.
Operator: If at any time your question has been addressed and you would like to withdraw your question, press star then two. Hey, good morning. Thanks so much for taking the question. And I appreciate all the color.
Remember in early January the trajectory of some of the major.
Major factors driving your your current outlook for 2024.
Yeah. Thank you. Thank you for the question.
As you can see we try to be this is Michel we tried to be very conservative.
What's happened in the six in the last six months of 2023 are in the macroeconomics, where the interest rate with a with all the leasing our problems that we are the tweet in con encounters.
Moshe Mizrahi: I wanted to maybe start off with just, We don't know what will happen during the quarters of 2024. We read a lot of microeconomic studies and research, and we understand that it might get better in the second half of the year. And therefore, we have decided to be very conservative in the guidance.
It's continuing in Q1, it's not over yet.
We didn't know when what would happen during the quarter of 'twenty 'twenty four we read a lot of what microeconomics are you know our studies and research.
And we understand that it might be better or it might get better in the second half of the year.
And therefore, we have decided to be very conservative in the guidance, we want to meet the guidance and not and not a change it like we did in the last six months in the last three months of 'twenty 'twenty four 'twenty to 'twenty three.
Moshe Mizrahi: We want to meet the guidance and not change it like we did in the last three months of 2023. What we see in December and January is the continuation of the situation that exists in the last six months of 2023. We don't see any positive signs yet in the terms and the obstacles that we saw in the last six months of 2023. And therefore, we will not change it until we are absolutely sure that we can meet the guidance that we will give. I don't know if I answered your question, but that's the situation currently. Yeah, no, that's not helpful.
What we see in December and January is continue the situation.
<unk> that exist in the last six months of 'twenty to 'twenty three we don't see any positive sign yet are in the in the in the terms and the obstacles that are that we saw in the last six months of 2023, and therefore I mean are we will that we will not change it until we will will be up.
Absolutely sure that we can meet the guidance that we will give I don't know if I answer your question, but but that's that's the situation currently.
Yeah, No that's helpful.
Moshe Mizrahi: And then secondly, you mentioned a couple of new platforms that you're launching this year. You know, if we are going to think about sort of the cadence for the year and the potential for things to stabilize and start to improve, you know, what kind of factor might those play? Are those a back-end loaded effect?
And then secondly, you mentioned.
A couple of new platforms that you're launching this year.
If we are going to think about sort of the cadence through the year and the potential for things to sort of stabilize and start to improve.
What kind of factor you know, Mike the play or those are backend loaded effect in any any additional color that you can share.
Moshe Mizrahi: And any additional color that you can share on those or any other actions you're able to take to sort of offset some of the market dynamics you're describing? Thank you. Okay. Basically, the two platforms that we will introduce in 2024 are our second generation technology for minimal invasive lipolysis, the RFAL, Radio Frequency Assisted Lipolysis, and the Morpheus 8 technology. These are basically the two main lines of the surgical part of our portfolio. We have developed a very unique and, I would say, breakthrough technology for a new minimal invasive technique to be able to do plastic surgery with one incision point, with revolutionary hand pieces, and we have improved dramatically the performance of the Morpheus 8, which is, as everybody knows, one of the biggest brand names in the medical aesthetic.
On those or any other actions, you're able to take to sort of offset some of the market dynamics you're describing.
Okay.
Basically the two platforms that we will introduce it in 'twenty 'twenty four.
Our second generation technology for the minimally invasive is the hours Seattle radio frequency assisted lifeboat licenses and the Morpheus eight technology. These are basically the two main line of the surgical the surgical part of our portfolio.
We have developed a very unique and very I would say a breakthrough technology for new minimally invasive to be able to do plastic surgery with one incision point with evolutionarily hand pieces and we have improved dramatically dramatically there.
The performance of the mall, if you say to which is everybody you know one of the biggest brand name in the medical aesthetic both will come during the year when the final tuning of completing the R&D are the studies and AR and the regulation for them we will introduce.
Moshe Mizrahi: Both will come during the year when we have finalized the final tuning of completing the R&D, the studies, and the regulations for them. We will introduce them to the market, not in Q1, but I would say more like the end of Q2, the beginning of Q3, and we believe that they will add to our revenue in the second half of the year. Of course, taking into consideration the fact that the situation, the macroeconomics, and the situation in the last six months of 2024 will get better. As far as R&D is concerned, we're not slowing down. There's no slowdown in R&D anymore. We continue to develop business as usual, and we will continue to bring two new platforms, two new indications, either in the aesthetic field or in ophthalmology, women's health with Empower.
Them to the market not in Q1, but I would say more like end of Q2, beginning of Q3, and we believe that they will they will add to our revenue in the second half of the year of course, taking into consideration is that a situation the.
Makes and AR and AR and the situation in the last six months of 'twenty 'twenty four will get better as far as that one D. We're not slowing down there is no slowdown and in R&D and even more we continue to develop business as usual and we will be we will continue to bring two new platforms to new.
Indication are either I and aesthetic field or in the ophthalmology women health would empower our we have currently a pipeline of more than five major new platforms that we would bring to the market in the next few years.
Moshe Mizrahi: We currently have a pipeline of more than five major new platforms that we will bring to the market in the next few years. This is our bread and butter here in Israel, and we will continue to develop products and bring new stuff to the doctor and to the patient. Very helpful. Thanks so much for the call. Our next question is for Matt Taylor with Jeff.
Man I mean this is that this is our bread bread and butter here in Israel and and we will continue.
To develop products and bring new to the dark green new starts to the doctor and to the patient.
Very helpful. Thanks, so much for the color.
Yeah.
Our next question.
It is from Matt Taylor with Jefferies.
Hey, Good morning. This is Mike Sarcone on for Matt Taylor and thank you for taking my question.
Moshe Mizrahi: This is Mike Sarcona from Matt Taylor, and thank you for taking my question. So, just to start, a follow-up on the guidance question. You talked about it from the macro perspective and, you know, some of the newer systems slated for 2024, but could you give any color on how you're thinking about contribution from Envision and the new DEFINE system as you think about 2024? Yes, yes. But first, I want to say something, Matt. You know, the macroanalyst of Jeffrey's was the only one who predicted that the economy would start to slow down in the third quarter of 2023. And he was absolutely right. I read his microeconomics study and research at the beginning of the year, and he was quite right.
Just to start off.
Follow up on on the guidance question, you talked about it from a macro perspective and some of the newer system slated for 2024. So could you give any color on how youre thinking about contribution from envision and the new define system as youre thinking about 2024.
Yes, yes.
First I want to say something Matt are you know are the macro analyst of Jefferies.
That was the only one new [laughter], who predicted that the economy will start to do slow down in the third quarter of 2023, and he was absolutely right.
It is my Coral economics us that study and research in the beginning of the air and he was a he was quite a quite a quite right.
Moshe Mizrahi: Regarding the Envision, the Envision was launched on the market in the middle of the second quarter in the United States, and we did well until the end of the year. We sold close to $30 million of this platform in two and a half quarters. So we're very, very encouraged. We see that the doctors and the users are happy with the results.
Regarding the envision they envision was lounge to the market in the middle of the second quarter in the United States.
And and we did well until the end of the year.
We sold close to $30 million of this platform in two and a half quarter. So we're very very encouraged very very in college.
We see that the doctors and the user are happy with the results and we believe that this that the momentum will continue in 2024.
Moshe Mizrahi: And we believe that the momentum will continue in 2024. We also intend to bring these platforms to Europe. We introduced the platforms during the distributor meeting and in Paris during the IMCA show ten days ago, close to ten days or two weeks ago, and everybody was excited. We need to find the right distributors in Europe and train our salespeople in the subsidiaries that we have in Europe so they can handle and sell this platform. We intend to bring some doctors from the United States and Canada who are luminaries for us in this particular category, ophthalmology, and bring them to do workshops in Europe so we can expedite the penetration process. But we're very encouraged with Envision. As regards the DEFINE, as you know, the first generation of the DEFINE was the EVOC, which was very successful when it was introduced during the COVID time because it enabled the doctor to do social distancing treatment without being in the room.
Are we also intend to bring these platforms to that to Europe. We introduced the platform is doing the distributor meeting and in Paris during the <unk> show.
10 days ago, a close to 10 days or two weeks ago, and and everybody was that was excited.
We need to find the right distributors in Europe and train our salespeople in the in the in the subsidiaries that we have in Europe. So they can they can handle and sell decide this this platform we intend to bring some doctors from the United States and Canada were luminary for us in this particular.
Our category ophthalmology and bring them to do walk shop in Europe. So we can expedite that the penetration process, but we're very encouraged with them would that would they envision.
As we go to the define a as you know the first generation of the defined what they evoke.
Which was very successful when it was introduced during the Covid time, because it enabled the doctor to do social distancing treatment without being in the room are but that are two years. After we decided that we want to improve these platform and brings.
Moshe Mizrahi: But two years later, we decided that we wanted to improve this platform and bring something a little bit more, I would say, more well-designed, especially with the mask that we put on the face. And we redesigned it, and we added to the platform Morpheus for the face, so the doctor can complement the hand-free treatment with Morpheus face, which everybody knows has great results. We developed a combination treatment for both the hand-free and the Morpheus for these platforms.
Something a little bit more I would say more well design, especially with the mask that we put on the face and we redesign it and and we added to the platform small skus for the face so the doctor can complement their hands free treatment with them.
All of Us face, which everybody know that the results are great. We develop a combination treatment for both the hands free and the Morpheus for these platforms. We introduced all this doing the doing the sales meeting of North America in the beginning of it.
Moshe Mizrahi: We introduced all this during the sales meeting in North America at the end of January, and it was well-accepted. We believe that right now, we should start to penetrate the market with the new protocol and the new device. I mean, it's hand-free.
End of January and and and and it was a it was well expected accepted our we believe that our right now we start to do we start to penetrate the market with the new protocol and the new device I mean.
It's a it's a hands free hands free it's not their highest technology all of them all the data that the bestseller of in mode. Because hands free was never best it's a complementary for that but I believe that this complementary product is the best in the market as far as the hands free category did.
Moshe Mizrahi: Hand-free is not the highest technology or the bestseller of InMod because hand-free was never a bestseller. It's a complementary product. But I believe that this complementary product is the best in the market as far as the hand-free category is concerned.
Yair Malka: Did I answer you, Matt? You did, Moshe. Thank you very much. And then, you know, just one more question. You talked about, you know, baking in the continuation of these macro headwinds into guidance, and you also mentioned you're in the process of establishing an approval program to expedite the credit process and maybe use some of Inmode's balance sheet. Can you just talk about where you stand in that process in terms of when that gets off the ground and where you're going to focus that geographically, and if that starts to make some headway or it becomes Yes, this is Yair.
To answer you Matt.
You did most of it. Thank you very much and then just.
One more question you talked about.
Baking in continuation of the macro headwinds into guidance and you also mentioned during the process of establishing an approval program.
To expedite the credit process and maybe use some of those balance sheet can you just talk about kind of.
Where you stand in that process in terms of when does that get off the ground and where youre going to focus that geographically.
If that starts to make some headway or where it becomes effective.
Drive upside to how youre thinking about 2024 sales or guidance right now.
Yes. This is Jay here right now I would say it is baked into.
Yair Malka: Right now, I would say it is back into our guidance already. We have a couple of programs, one in the U.S. and one outside of the U.S., and we are looking to expand those. Basically, what we are doing is some sort of, you know, risk-sharing mechanism where we can take a very small portion of the risk off our leasing partners, and that would give them the incentives to do what we call buy deeper and provide approval quicker. And I think that's definitely going to help us. But, as we mentioned, there is also some slowdown in the demand in the underlying market, and again, this will not help with this portion. So overall, we have already implemented a couple of programs, and we plan to expand those. However, this is already baked into the guidance, at least at the moment. Okay, great. Thank you, Yair. Our next question comes from Danielle Lentolfi with UBS. Thank you so much. Good morning, everyone.
Into our guidance already.
Hey, a couple of programs one in the U S and one outside of the U S and we're looking to expand.
Those basically what we are doing some sort of fair.
You know risk sharing mechanism, where we can take a very small portion of the risk.
Oh from the leasing partners and that would give them the incentive to and what we call buy deeper and provide the approval quicker and I think that are definitely going to help us.
Mentioned there is also some slowdown in the <unk>.
Demand in the underlying market and again this will not help was that with dispulsion. So overall, we already implemented a couple of programs and we plan to expand those.
This is already baked into the guidance at least at the moment.
Okay, great. Thanks.
Okay.
Our next question comes from Danielle <unk> with UBS.
Thank you so much good morning, everyone. Thanks for taking the question.
Moshe Mizrahi: Thanks for taking the question. Just, Yair and Moshe, on the underlying demand component here, just curious. I know Moshe, you mentioned January.
Moshe on the underlying demand component here just curious I know most of you mentioned in January so far you haven't seen an improvement I just want to confirm that that's true with the underlying demand as well.
Moshe Mizrahi: So far, you haven't seen an improvement. I just want to confirm that that's true of the underlying demand as well. And I would just love to hear how you guys think about, you know, the sort of drivers of improving demand. Like, what should we be looking for as it relates to the economy that could, you know, signal a potential uptick in improving demand? That's the first part of my question.
Just love to hear how you guys think about you know the sort of drivers that's improving demand like what should we be looking for as it relates to the economy that could signal a potential uptick and improving demand. That's the first part of my question and then the second part of your question given that this is a capital.
Moshe Mizrahi: And then the second part of the question, given that this is a capital business, how much of a lag is there once we see improving demand? Like, do people start purchasing equipment more readily? Three months later, six months later, is it right away? Would just love some color on how to think about that. Thanks so much.
Hum.
How much of a lag is there once you see improving demand like do people start purchasing equipment our equipment more rapidly three months later six months later it right away with just love some color on how to think about that thanks. So much.
Moshe Mizrahi: Okay, well, I will reiterate what I said. Right now, in the months of December and January, we do not see any change in the outlook of the macro situation. Whether or not we can see three months in advance, we don't know, and I don't think that anybody can answer that.
Okay.
Why don't I I will I will I will know, where we take where they said right now in the months of December and January we do not see any change in the in the in the in the in the in the in the outlook of the of the macro situations.
Whether or not we can see three months in advance Ah, We don't know I mean, and I don't think that anybody can answer that.
Moshe Mizrahi: We see some slowdown, not just in the equipment sales, but also in the disposable sales because we believe that the slowdown affects the consumer as well. And fewer people are going right now to do minimal invasive procedures, which is a little bit more effective than non-invasive procedures these days. So the only thing that we can say is we expect some improvement in the situation or the macro outlook sometime in the second half of the year, not in the first half of the year. We see the same process happening in Europe right now, especially in the major countries. The inflation in the United States has already gone down a little bit, but in Europe, it has not yet, and therefore, the process there will take some more time.
We see some slow down and not just in the equipment sales, but also we see some slowdown in the in the in the in the disposable says because we believe that the slowdown effect with the consumer as well and and less people are going right now.
Now to do minimally invasive procedures, which is a little bit more effective than none none the noninvasive procedure are these days.
So the only thing that we can say is we expect some some improvement in the situation of the macro look sometime in the second half of the year not in the first half of the year, we see the same process happening in Europe right now.
Especially in the major countries.
They in dad, the inflation in the United States already went download a debate, but in Europe, not yet and therefore the process there will take some more time.
But we're all well basically are you know are evaluating the situation on a daily basis.
Moshe Mizrahi: But we're basically evaluating the situation on a daily basis, almost on a daily basis. We see the behavior of the leasing companies, and this is something that tells us exactly what's going on in the market. The leasing companies right now are very tough in the time that it takes them to clear a transaction and also the interest rates that they are requiring, and also the process and what kind of deals they expect to get and what kind of deal they don't want to get.
Almost on a daily basis, we see the behavior of the leasing company and our this is a this is something that tell us exactly whats going in the market.
<unk> companies right now are very tough in the time that take them to a two clear air transaction.
And also the interest spread their requirement requiring and also that the process and what kind of deals they expect to get and what kind of deal. They don't want to get so I mean are we are monitoring it so far we don't see any sign of improvement.
Moshe Mizrahi: So I mean, we're monitoring it. So far, we don't see any sign of improvement, but hopefully, we can start seeing it at the end of the second quarter. Okay, that's helpful. And then you obviously have a very strong balance.
But hopefully we can start seeing it.
At the end of the second quarter.
Okay. That's helpful. And then you obviously have a very strong balance sheet.
Moshe Mizrahi: I appreciate the work you're doing to help take on risk as well. I assume that doesn't preclude you from continuing to search for potential M&A opportunities, and you can say where you guys stand there. I mean, it feels like the market might be ripe given the difficulties, and you guys are in a strong position there. Thanks so much.
Appreciate the work you're doing but help me rescue as well I assume that doesn't preclude you from continuing to search for potential M&A opportunities.
On on where you guys stand there I mean, it feels like the market might be right. Given the difficulty is when you guys are in a strong position there. Thanks so much.
We are currently exploring.
Moshe Mizrahi: We're currently exploring a potential candidate for M&A, something that complements our portfolio. Not a laser company, by the way. It's a company that is also in the aesthetic field, but not similar to us. We're in the very early stage of evaluating the company. We don't have any bank.
A potential candidate for M&A.
Something that complement our portfolio.
Not a laser company by the way. It's a company that are that are also in the static field.
But not similar to us.
We're in the very early stage of evaluating the company. We don't have any bank, we're doing it our self.
Moshe Mizrahi: We're doing it ourselves. And we will know better sometime in the month, at the beginning of March, whether we can go to the next practical step or not. That's all what we do right now. As I said before, the board of directors decided not to do buybacks for many reasons that I have explained before, but rather to keep the money to try to do M&A, more strategic M&A, which we believe will benefit the company much better than buying our own stock. So this is the situation:
And we will know better sometime in the month in the beginning of March whether it's a it's a we can go to the next practical step or not desktop what we do right now.
I said before the board of directors decided not to do buyback.
Because of many reasons that I have explained before.
But rather to keep the money to try to do our M&A more strategic M&A, which we believe will will benefit the company much better than buying our own stock. So this is the situation I mean I have to say something the macroeconomics did not help.
Moshe Mizrahi: I mean, I have to say something, macroeconomics did not help the M&A, I would say, process, but all the sellers are waiting to see whether the market will improve, maybe they can get a better price for their assets, but that's the situation. We cannot help it, but as I said, we're exploring one opportunity right now. Thank you so much. Great color.
To the M&A I would say process.
Because you know all the sellers are waiting to see that the market will improve maybe they can get a better a better price for their assets and but then but that's the situation we cannot help it but as I said, we're exploring one opportunity right now.
Thank you so much gratefully.
Moshe Mizrahi: And our next question comes from Mike Matson with Needham & Company. Good morning. Thanks for taking my questions. I just wanted to start with kind of quarterly sequencing in 2024. So, you know, can you comment on whether or not you're comfortable with consensus in the first quarter? I think it's around 100 million or so.
And our next question comes from Mike Matson with Needham <unk> Company.
Good morning, Thanks for taking my question just wanted to start with kind of the quarterly sequencing in 2024.
So can.
Can you comment on whether or not you're comfortable with consensus in the first quarter I think it's around 100 million or so.
Moshe Mizrahi: We do not give guidance per quarter. We only give guidance per year. And we're updating the guidance, if we're updating the guidance, not always at the end of each quarter, based on the performance of the quarter and what we see forward. And therefore, we will not comment on any guidance for the first quarter. But, as you know, this industry has some seasonality. The fourth quarter is the strongest one. The third quarter is the slowest one because of the summer. The second quarter is also strong. And the first quarter is in between.
We do not give guidance per quarter.
We only give guidance per year.
We are updating the gun guy we're updating the guidance if we updated the guidance not always.
At the end of each quarter based on the performance of the quarter and what we see forward.
And therefore, we will not comment on any guidance on the first quarter, but as you know this industry is that.
It has some seasonality.
The fourth quarter is the strongest one the third quarter is the slowest one because of the summer. The second quarter is also strong and the first quarter is in between but during the last few years because of the cold weather because of some other reason the seasonality did not exactly was this.
Moshe Mizrahi: But, you know, during the last few years, because of COVID and because of some other reasons, the seasonality did not exactly was the same as years ago. And therefore, we don't know what will happen in 2024. Therefore, guidance per quarter is not something that we provide.
Same as a as a as a <unk> ago and therefore, we don't know what would happen in 2024, and therefore guidance per quarter is not something that we provide.
Okay, I understand and then.
Moshe Mizrahi: Okay, I understand. And then, you know, your commentary around patient demand. From what I remember, you know, I don't remember you talking about that as much or commenting on it. I seem to remember the focus, you know, in the prior couple of quarters about the challenges you're facing being more kind of focused on the financing conditions, both interest rates and just tighter, slower financing in general, so more on the physician side of things. Am I correct in interpreting this patient demand issue as being something kind of a newer headwind, or has that been there all along? Well, you know, we have to distinguish between non-invasive treatment and minimal invasive treatment. Non-invasive treatments like hair removal, pigmentation, all kinds of topical treatments; these treatments are a type of commodity; the cost is not very high.
Your commentary around the patient demand.
Hmm.
What I remember.
I don't remember you talking about that as much or commenting on that I seem to remember the focus.
The prior couple of quarters.
The challenges you're facing being more kind of focus on the.
Financing conditions, both interest rates and just tighter solar financing in general.
More on kind of the physician side of things.
Mike correct in interpreting this patient demand issue as being something kind of on a newer headwind or was that theyre. All has that been there all along.
Well you know.
We have to distinguish.
Between noninvasive treatment and minimally invasive treatment, okay, noninvasive, Sweden, like hey, remove a pigmentation all kind of a you know topical treatment these treatment.
Type of commodity they the cost is not very high and I don't know just because we're not exactly in this type of business only 10% of our product a commodity type I don't I don't know how much are this this segment of the market was affected.
Moshe Mizrahi: And I don't know, just because we're not exactly in this type of business, only 10% of our products are commodity type, I don't know how much this segment of the market was affected. The minimal invasive, mainly the minimal invasive radiofrequency-assisted dipolysis means doing some kind of plastic surgical procedure with one incision point with all the benefits that we have presented to the market. And the Morpheus 8, which is also surgical because it penetrates the skin up to 7mm deep, are not cheap procedures. These procedures can range from, I don't know, $2,000 to $5,000, $6,000, $7,000 per procedure.
The minimal invasive mainly the minimal invasive radio frequency assisted dipole Isis means doing some kind of plastic surgical procedure with one incision point with all the benefit that we have presented to the market and the Moorefield state, which is also surgical because its penetrate the skin up to 7 million.
Millimeter leap are not cheap procedures. This procedure can range from I don't know $2000 to $5 $67000 spill procedure, although he's done in the doctor clinics, and although it's much cheaper than a false surgical procedures, but yet it's expensive well.
Moshe Mizrahi: Although it's done in a doctor's clinic and although it's much cheaper than a full surgical procedure, it's still expensive, relatively to non-invasive treatment. And we believe from the disposable part of our business, we see some slowdown. Not a major slowdown. By the way, in the fourth quarter, we sold more disposables than in the third quarter. But the growth rate was not what we expected. Overall, in 2023, we sold almost 1 million disposable toiletries compared to 730,000 in 2022.
<unk> lead to noninvasive treatment and we believe our from the disposable part of our business, we see some slowdown not the major slowed down by the way in the fourth quarter, we sold more disposable than on the third quarter.
But the growth rate was not what we expected overall in 2023, we sold almost 1 million disposable compared to 730000 in 2022, So we see increase as far as the total numbers of disposable and the total number of policies.
Moshe Mizrahi: So we see an increase as far as the total number of disposables and the total number of procedures. When I said we saw some slowdown, I meant that we don't see the exact growth rate that we experienced in the previous quarter and in the previous year. But that will change, hopefully, when the economy prospers again and the cost of capital goes down, and people will continue to spend money on minimal invasive and cosmetic surgery as well. So that's the situation today, and this is the reason why we said we saw some slowdown. But don't take it as a complete slowdown. It's just a slowdown in the rate of growth. Am I explaining myself?
When I said, we see some slowdown I mentioned that we don't see the exec to growth rate that we are we experience in previous quarter and in previous year, but that will change hopefully when the market will not the market one that there.
<unk> will will put spill again, and AR and AR and the cost the cost of capital will go down and people will continue to spend money on minimally invasive in plastic surgery as well.
So that's the situation today and and and this is the reason why we said we see some slowdown but don't take it as a complete slowdown it's a slow down of the rate of growth.
Am I expanding myself.
Moshe Mizrahi: Yeah, that makes sense. Thank you, Moshe. Our next question comes from Caitlin Cronin with Canaccord Genovese.
Yeah that makes sense. Thank you Moshe.
Our next question.
Comes from Caitlin Cronin with Canaccord Genuity.
Okay.
Okay.
Shaquille O'Connor: Hi everyone, thank you for taking the question. I just want to focus on the U.S. for a moment. What was consumable growth in the U.S. in Q4? Was it still, was it positive, or was it negative? And then just regarding, you know, the guidance for this year, what does that really assume from the U.S. perspective? You know, continued deceleration or, you know, some growth? Shaquille, would you answer that?
Thanks for taking the question.
I just wanted to focus on the U S Ah Ah moment.
Okay.
Thank you Paul It was it was it positive or negative and then just regarding the guidance for this year.
Hum.
That's perspective, you know continued deceleration or.
Sounds good.
Shaquille would you answer that.
Did you want to go over them.
Yair Malka: Yair, did you want to go over the numbers? I can answer that. The overall consumable growth did go around 15%, I would say, although obviously, it's lower than in Q1 or Q2 or Q3. So, as Moshe mentioned, we do see some slowdown in the growth rate. So it's in the high teens, but it's definitely lower than the 40% that we saw in the first half of the year. So in the second half of the year, we start seeing some slowdown in the growth rate. Okay, and then when do you expect a dry eye indication in the U.S. for...
The overall consumable growth did go.
Around the 15% I would say, obviously, it's lower than in <unk>.
The Q1 or Q2 or Q.
Q3, so we this is.
Moshe mentioned, we do see some slowdown in the growth rate.
In the high teens, but its definitely.
Noel than a 40% four zero percent that we saw in the first half of the year. So in the second half of the year, we start seeing some slowdown in the growth rate.
Okay.
Oh, Okay, and then when do you stop the dry eye indication that's for sure.
Say it again I indication.
Moshe Mizrahi: They had to get re-indicated, and we are in the process of finalizing the protocol with the FDA under an IDE submission. They asked a few questions; hopefully, by the end of this month, we will answer them, and they will give us the promotion to do a pivotal study for 510K clearance, which will probably start sometime at the end of this quarter. We have already selected the site to do the study according to the protocol that will be approved.
Ah Okay.
Well, we're in the process of finalizing the protocol with the FDA under I E submission.
They ask few question.
Hopefully by the end of this month, we will answer them and they will give us the promotion to do a pivotal study for five 10-K clearance, which will probably start sometime at the end of this quarter. We already selected decides to do the study according to the protocol.
It will be approved.
Moshe Mizrahi: It's a process, but in the meantime, although we do not claim that because we don't have clearance yet from the FDA, we have a preliminary study that we did showing the combination of treatment that's helping dry eye, and doctors are testing it themselves, and the results, as far as we hear from the market, are great. Thank you. Thank you. Our next question comes from Jeff Johnson with Baird. Thank you. Good morning, guys.
It's a process.
But in the meantime, although we do not claim that because we don't have the clearance yet from the FDA, but we have preliminary study that we did showing the combination of treatment that helping dry eye and and doctors and doctors saw testing it themselves.
And the result, as far as what we hear from the market is great.
Okay.
Thank you. Our next question comes from Jeff Johnson with Baird.
Thank you good morning, guys, Hey, understanding you don't give quarterly guidance, but.
Moshe Mizrahi: Moshe, I understand you don't give quarterly guidance, but I guess I'll try one more time on it. You know, you have said you don't expect an improvement in the first half, and that should come potentially in the second half. If we look back at 2013, obviously, the first half of 2013 was still a very solid year, especially the first quarter. But both quarters were solid.
I guess I'll try one more time on it you have said you don't expect an improvement in the first half that that should come potentially in the second half.
Look back at 23, obviously, the first half of 'twenty three we still have a very solid year, especially the first quarter, but bulk orders were solid.
Yair Malka: And you've said there's no improvement in December and January off the kind of second half, twenty-three. So if I put all that kind of in the mix, it would seem to me that it's just a logical statement to say the first half of the year is probably down mid-upper single digits on a year over year basis from a revenue perspective. And then in the second half, the hope would be to get back to kind of mid-upper single-digit growth. If I balance it that way, is there any flaw in my logic there, even though I know you don't give quarterly guidance? So we do not give quarterly guidance, but you do see that the overall guidance is pretty much flat year over year. I would say that probably the sequence between the quarters, the allocations of this guidance between the quarters will either be similar to 2023 or a little bit back-ended because of all the factors that Moshe mentioned.
And you've said there is no improvement in December and January off the kind of second half 'twenty three so if I put all of that kind of in the mix. It would seem to me that it's just a logical statements lets say the first half of the year, probably down mid to upper single digits on a year over year basis from a revenue perspective, and then in the second half the hope would be to get back to kind of mid to upper single digit.
Growth.
And once it that way just is there any floor in my logic, there, even though I know you don't give quarterly guidance.
Sure.
Yeah, Yeah. So we don't we do not give quarterly guidance, but you do see that the overall guidance is pretty much flat year over year, Yeah, I would say that.
For me the sequence between the quoted allocations of this guidance between the quota will either be similar to 2023, Oh, it's a bit back ended because of all the.
Factors that Tim will share I mentioned, yes.
Moshe Mizrahi: Yeah, I mean, in 2023, for the first two quarters, the growth compared to 2022 was 20% in the first quarter and the second quarter. If you ask me if we expect to have the same growth this year, absolutely not. The second half of 2023 was slow.
In the in 2023, the first two quarters the growth compared to 2022 was 20% in the first quarter in the second quarter.
If you ask me if we anticipate to have the same growth this year absolutely not.
The second half of 2023 was slow.
Moshe Mizrahi: And the first half of 2023 was with the right momentum. I believe in 2024 it will be the opposite, if I'm right. So the first two quarters will be the slowest ones, and the second two quarters, I mean, will compensate. All right. Yeah, we'll try again, maybe offline.
And the first half of 2023 was was a was a with the right momentum.
I believe in 2024, it will be the opposite.
If I'm right.
So the first two quarter will be the slowest one in the second quarter I mean, we will compensate.
Yeah.
Yes.
Alright.
Yeah.
And maybe offline.
Moshe Mizrahi: On the margin side, Moshe, if I look back, you know, pre-COVID, your operating margin, and I'm thinking more operating margin, obviously, your gross margin has stayed very nicely consistent here for many years in that low to mid 80s. If I look at the operating margin, you know, pre-COVID, you were kind of right around that 40% range. Obviously, in the really strong 21, 22 years, you picked up to 50%. This past year, kind of 45, guiding to about 44 in 24.
On the margin side.
If I look back pre Covid your operating margin and I'm thinking more operating margin. Obviously your gross margin and stayed very nicely consistent here for many years not low to mid Eighty's I look at the operating margin pre COVID-19 newer kind of right around that 40% range. Obviously in a really strong 'twenty one 'twenty two years, you picked up to 50.
Perfect.
This past year of kind of 45 guiding to about 44 and 24. So I guess my question is are we steadily and it kind of that low to mid Forty's 44, 45, if I think out over the next three to five years and if we exclude any kind of M&A do you think you can hold that low to mid forty's operating margin going forward and kind of.
Moshe Mizrahi: So I guess my question is, are we settling in at kind of the low to mid 40s, 44, 45? If I think out over the next three to five years, and if we exclude any kind of M&A, do you think you can hold that low to mid 40s operating margin going forward and kind of grow earnings in line with revenue growth rates? Is that the way to think about the kind of algorithm to end mode over the next several years? Thank you. Absolutely, yes.
Grow earnings in line with what revenue growth rate is that the way to think about kind of.
The algorithm to end mode over the next several years. Thank you.
Absolutely, yes, I mean were trying very hard to keep the margin steady gross margin and operating although if you'll notice we're spending more money for marketing.
Moshe Mizrahi: I mean, we're trying very hard, I mean, to keep the margin steady, gross margin and operating margin. Although, if you notice, we're spending more money on marketing. And this is because of many, many reasons.
And this is because because of many many reasons, we believe that doing a slowdown period, we have to invest more in marketing.
Moshe Mizrahi: We believe that during a slowdown period, we have to invest more in marketing. I know that many people think differently than me, that in a crisis you need to slow down on expenses. We don't think the same.
I know that many people think differently than me then in a crisis you need to slow down and expenses. We don't think the same we believe that when the market is slowing down or there is some crisis on the market.
Moshe Mizrahi: We believe that when the market is slowing down or there is some crisis in the market, the opportunity for a company like us is to continue spending on R&D, marketing, of course, not G&A, you notice that, and capturing market share. And although, I mean, the total market went down a little bit, but as far as market share is concerned, I believe Inmode's market share grew in the last six months of the year. And you know, we're waiting to see what Qterra will report, but I'm sure you'll see that they did not grow this year. On the contrary, they went down.
Opportunity for a company like US is to continue spending R&D marketing of course, no G&A, you'll notice that AR and AR and capture market share then although the total market went down a little bit, but as far as market share I believe the market shelf in mode.
Grow in the in the last six months of the year and and you know we're waiting to see what Cutillo will will report, but I'm sure you will see that they did not grow this year on the opposite they went down.
Other companies are are there other companies in this industry are mostly private.
Moshe Mizrahi: Other companies in this industry are mostly private, but here and there, we have some information. Alma is a public company, and as you notice, they went down in the second half of the year. They did not report the second half, but in the first half of the year, they went down.
But when do we hear that we have some we have some information or might it as a public company and as you notice. They went down in the second half of the year or they did not report the second half, but in the first half of deal. They went down so so for us keeping the margin is important.
Moshe Mizrahi: So for us, keeping the margin is important, but we will not discontinue to invest, not in marketing, not in R&D; we're not doing cost cutting. Thank you. And our final question today comes from Anthony Petrone with Mizzou Financial. Thank you for taking the time to ask the question and fitting me in here. Maybe one on macro, just as we think about it geographically, how do the pressures in the U.S. stack up relative to Europe and the APAC region? So that'd be the first question. And when you think about financing options, Moisha, do we think about, you know, again, directly financing practices, or will there also be an option for patient financing? And so thinking about an entity in the U.S., such as Care Credit, you know, that is providing financing for aesthetic procedures, can you also step into that market as well? Or, again, is this just gonna be capital financing? Thanks. Well, good question. As far as territories, I think we mentioned it in the PR, ROW in 2023 grows by something like 18%. The total number of deaths in North America was less than that.
But we will not discontinued to invest not in marketing not in R&D, we're not doing cost cutting.
Thank you.
Thank you.
And our final question today comes from Anthony Petrone with Mizuho.
Group.
Hello.
Thank you for taking our questions fitting me in here, maybe one on on macro just as we think about it geographically.
How did the pressures in the U S stack up relative to Europe, and APAC region. So that'd be the first question and when you think about financing options moisture.
Why do we think about you know again directly financing practices or will also be an option for patient finance and so thinking about an entity in the U S such as care credit that.
That is providing financing for aesthetic procedures can you also step into that market as well or again is this just going to be capital financing. Thanks.
Well good question as far as territories I.
Think we mentioned it in the in the PR.
Oh W. In 2023.
Grove by something like 18%.
North America total AR was up less.
Less than that so and the reason for that and the reason for that is not because we're not investing in North America and the United States. The reason for that is that in 'twenty 'twenty four and 2023 we have established two new subsidiaries in Europe, and one in Japan, and one in Germany, Austria.
Moshe Mizrahi: And the reason for that is not because we're not investing in North America or in the United States. The reason for that is that in 2023, we have established two new subsidiaries, one in Japan and one in Germany and Austria. And we continue to hire more people and more salespeople because the ROW market is important for us, and we believe the ROW will grow in 2024. We have a plan to continue to invest in addition to what we're investing in the United States. So our W in 2023 will grow a little bit more than in the United States, especially in platforms and new territories and new, I would say, regulatory clearances that we received for different countries. As far as financing customers goes, we've never been in this business. There are companies that are doing it, and they work directly with the doctors.
And we continue to hire more people and more salespeople because download W. Market is important for us and we believe our W will grow in 2024, we have a plan to continue to invest in addition to what we're investing in the United States.
So our our W. In 2023 grow a little bit more than than in the U S, especially in platforms and new territories, and new I would say regulatory clearances that we received for different countries.
As far as financing customers, we've never been in this business now.
There are companies that are doing it.
And in the work directly with the doctors.
Moshe Mizrahi: We don't intend to go to finance customers because, you know, this is not the business that we are in. We will help them use our strong balance sheet, as Yair said and I said, to help the leasing company or share the risk with them to expedite the process of clearing transactions for the doctors. But as far as customers are concerned, we do not intend to get into that business. Okay, thank you.
We don't intend to go to finance customers because you know.
This is this is not the business that we're in.
We will help to to using our strong balance sheet.
You said and I said.
To help the leasing company or showed the risk with them to expedite the process of a clearing transaction for the doctors, but as far as customers, we do not intend to get into this business.
Okay.
Okay.
Okay. Thank you we've run out of time for questions today.
Operator: We've run out of time for questions today. This concludes our question and answer session. I would like to turn the conference back over to Moshe Mizrahi, Chairman and CEO, for any closing remarks. Thank you, operator. Again, I would like to say that, you know, although 2023 was a challenging year for us, we keep the momentum, and we know how to turn, you know, slowdowns and crises into opportunities. And I believe we have done that.
Concludes our question and answer session I would like to turn the conference back over to Moshe Israhi, Chairman and CEO for any closing remarks.
Thank you operator, again I would like to say that you know although.
Although 2023 was a challenging year for us.
But but we keep the momentum.
And we know how to turn you know slowdown in prices into opportunities and I believe we did that.
Moshe Mizrahi: With all the new R&D, the new two subsidiaries that we built, even in a tough time, adding more people all over the world in order to enlarge the sales force and the support force. I would like to thank all Inmode employees worldwide for the hard work they did in 2023. Especially, I would like to thank the Israeli team. As everybody knows, we're facing a very challenging time in Israel. And I think that the effort that the people in Israel did since October, when the war started, to make sure that we would run the business as usual, although many of the team in the manufacturing and in the office went on reserve duty, everybody worked overtime as much as needed. We rescheduled the manufacturing line to make sure that we would be able to supply everything to everybody within seven days. And we did it very well, and we continue to support it, and we continue to look for the cost, maintaining the margin. I hope 2024 will be a better year for us. Although 2023 was not, I don't want to say that it was a tough year but not a bad year.
With that with all the new R&D are the new two subsidiaries that we build even in a tough time.
Adding more people.
All over the world in order to enlarge the sales force and the support for US I would like to thank all our inboard employees worldwide for their hard work. They gave in 2023, especially I would like to thank the Israeli team.
But you know we're facing a very challenging time in Israel.
And I think that the effort that people in Israel did since October when the war started to make sure that a we will run the business as usual, although many of the team in the manufacturing and in the office.
And on reserve duty, everybody work overtime as much as needed.
We rescheduled the manufacturing line to make sure that we will be able to supply everything to everybody within seven days and we did it very well and we continue to support and will continue.
To look for the cost maintaining the margin I hope 2024 will be a better year for us. Although 2023 was not was not a I don't want to say that it was a it was a it was a tough year, but not a bad deal.
Operator: So thank you all and I look forward to seeing you at the end of the first quarter. The conference has concluded. Thank you for attending today's presentation. You may disconnect.
So thank you all and looking forward to see you at the end of the first quarter.
The conference has concluded. Thank you for attending today's presentation you may disconnect.
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Okay.
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Hum.
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Yeah.
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