Q1 2024 InMode Ltd Earnings Call
David Brown: [music].
Good morning, and welcome to the NN mode first quarter 'twenty 'twenty four earnings results Conference call.
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I'd now like to hand, the conference over to Mary Seagal C. E O M. S. I R. Please go ahead.
Miri Segal: Thank you operator, and everyone for joining us today welcome to <unk> first quarter 'twenty 'twenty four 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 outlined in two.
Miri Segal: 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 there.
Miri Segal: As 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.
Marcia: With that I'd like to pass the call over to Marcia means broadly in modes C. O. Boucher. Please go ahead.
Marcia Boucher: Thank you Mary and to everyone for joining us.
Marcia Boucher: With me today are Dr. Microcline, then Oh, cofounder and Chief Technology Officer, Phil Yeah, Youre Malka, our Chief Financial Officer, Shaquille that tiny our president in North America doctors pure Duro, our chief Medical officer and work for them and they come on our VP of finance.
Marcia Boucher: Following our prepared remark, we will all be available to answer your question I would like to start with a review of development during the first quarter.
Marcia Boucher: At the beginning of 'twenty 'twenty, four we launched our two new and advanced platforms.
Marcia Boucher: Nice RF and Optimus Max.
Marcia Boucher: Meanwhile, the macro environment continued to be challenging and we experienced slow down all toward the first quarter.
Marcia Boucher: As a result, we decided to decrease our guidance for the year. We believe the industry headwinds may continue into the second quarter is what.
Marcia Boucher: We're excited to see high level of interest and demand for our latest platforms. They ignite I guess, neither risks and the Optimus Max Although these platforms accounted for 16% of all status in Q1 delivery was delayed due to ongoing.
Marcia Boucher: <unk> off manufacturing line that led us to insufficient inventory levels, Although airport I'll focus on fulfilling orders promoting and ensuring that our inventory meet the needs of customers, who have already pretty old to the new platforms.
Marcia Boucher: Let me expand on the new line on the New line of platform you can I go with the next generation of our legacy where do frequency assisted leipold Isis technology.
Marcia Boucher: Minimally invasive platforms with the new Morpheus eight barrels 10 piece.
Marcia Boucher: All of the New York, One Tomorrow F N B M.
Marcia Boucher: N pieces quantum RF and pieces I would expect it to be FDA cleared in the second half of 'twenty 'twenty four and patent protected for 25 years.
Marcia Boucher: Optimus Max is a multi application platform with Morpheus as bill and.
Marcia Boucher: Noninvasive, RF IPL and laser based treatment.
Marcia Boucher: We expect that these two platforms will play a significant toll you know growth of our company.
Marcia Boucher: Moving to capital allocation in more board of director has approved it filled the share purchase program.
Marcia Boucher: Two 8.37 million shows in addition, we keep all our this option on the table, including exploring strategic M&A opportunities, playing paying dividend as well as additional future buyback.
Speaker Change: Before I conclude I I'm pleased to welcome Dr. Michael angle as new Chairman of the Board Michael has been a board member since 2019 and he has served on the board of several public companies. He has significant.
Marcia Boucher: Second financial and executive experience, including leading the discount investment Corporation limited and he said.
Marcia Boucher: He's the executive experience includes serving as the CEO of D. C M. A publicly traded company.
Marcia Boucher: Doctor angle hold B, a in economics, and an M b, a and ph D in finance from Columbia University.
Marcia Boucher: We look forward to benefiting from his financial and strategic expertise.
Marcia Boucher: Finally regarding the current wall situation in Israel, and the status of our new platforms management would like to assure investors that we prioritize the safety and the wellbeing of our employees and all of them and all of our team mistakes.
Marcia Boucher: In addition, due to the wall in its Wayne Assembly line of the new platforms may take longer to complete and the new platforms delivery may be pushed to the second half of the year now I would like to turn the call over to showcase our president of North America Chuck.
Marcia Boucher: Please.
Chuck: Thanks, Michelle and everyone for joining us as mentioned and motor is not immune to the headwinds in our industry. However, despite the slowdown we were pleased to report that consumables and service grew 13% year over year and accounted for $22 $5 million in Q1.
Chuck: It's a testimony to the demand and widespread recognition of Bmo's branch.
Chuck: Sighted about enthusiasm and demand for our new and improved platforms and we believe there will be growth drivers for us going forward.
Marcia Boucher: Considering the anticipated slower markets and 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.
Marcia Boucher: As the global leader in your stomach space with the most diversified portfolio, we continue to attract seasoned and accomplished salespeople our talented and dedicated team remains pivotal in driving our future success. Once again I'd like to thank our entire North American team for their continued hard work I'll now hand over the call to Europe for a review of the financial results.
Speaker Change: More detail here.
Speaker Change: Thanks, again, and Hello, everyone. Thank you for joining us.
Speaker Change: As Martin mentioned this quarter, we launched two new platforms and started selling them on a pre order basis.
Speaker Change: While we could not yet to recognize deferred revenue, we decided to provide pro forma results.
Speaker Change: Which added to the non-GAAP results.
Speaker Change: Reorder sales and their related expenses.
Speaker Change: We believe that the pro forma results better reflect the business activity during the quarter.
Speaker Change: Starting with the total revenue Emil generated $83 million in the first quarter was 2024 always been pro forma revenue was $96 million, which includes the appeal to both new platforms not delivered yet.
Speaker Change: GAAP and non-GAAP gross margin in Q1, 'twenty 'twenty four we're 80% while pro forma gross margin was 82% compared to 83% in Q1 of 2023.
Speaker Change: In Q1 O minimally invasive technology platforms accounted for 84% of total revenues.
Speaker Change: Moving to our international operations first quarter sits outside of the U S accounted for 38 million Bono, representing 47% of stood up.
Speaker Change: A 14% decrease compared to Q1 last year.
Speaker Change: In Q1, Europe was the largest revenue contributor from outside the U S and reached a record.
Speaker Change: Number.
Speaker Change: To support our operations and to ensure future growth. We currently have essentially team of more than 248 direct reps and 83 distributors worldwide.
Speaker Change: GAAP operating expenses in the first quarter was $45 $8 million, a 2% decrease year over year. So.
Speaker Change: Marketing expenses decreased slightly to $59 8 million daus in the first quarter compared to 41 7 million dogs in the same period last year.
Speaker Change: Equally attributed to the revenue shortfall in Q1 'twenty 'twenty four.
Speaker Change: Next we look at share based compensation, which decreased to 4 million daus in the first quarter of 'twenty 'twenty four.
Speaker Change: GAAP operating margin for Q1 was 23% compared to operating margin of 39% in the first quarter was 2023.
Speaker Change: non-GAAP operating margin for the first quarter was 27% and pro forma operating margin was 35% compared to a non-GAAP operating margin of 14, 3% in the first quarter of 2020 three.
Speaker Change: GAAP diluted earnings per share for the first quarter with 28 cents compared to <unk> 47 cents per diluted share in Q1 of 'twenty non.
Speaker Change: non-GAAP diluted earnings per share for the squawking, where 32 cents and pro forma diluted games, especially for this quarter were 45 cents compared to 52 cents per diluted share in the first quarter explain to me on a non-GAAP basis.
Speaker Change: Once again, we ended the quarter with a strong balance sheet.
Speaker Change: Oh March 31st 2024, the company had cash cash equivalents marketable securities and deposits of $775 million this quarter in mill generated $24 $1 million from operating activities.
Speaker Change: Before I turn the call back to Michelle I'd like to share with you our guidance for 'twenty 'twenty four.
Speaker Change: Full year 2020, full revenue will be 485 million, everyone else to $495 million.
Speaker Change: Compared to previous guidance of $495 million.
Speaker Change: $505 million.
Speaker Change: non-GAAP gross margin between 82% at 94% compared to previous guidance of 483% to 85%.
Speaker Change: non-GAAP income from operations between hunting and $69 million $274 million compared to previous guidance of $217 million due to $122 million.
Speaker Change: non-GAAP earnings per diluted share between $2 and one thing to do better than five cents compared to previous guidance of $2 53 to $2 57.
Speaker Change: I will now turn over the call back to Moshe.
Speaker Change: Yeah.
Moshe: Thank you. Thank you Shaquille operator a.
Moshe: We're ready for Q&A.
Moshe: We will now begin the question and answer session.
Moshe: To ask a question you May press Star then one on your telephone keypad.
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Moshe: At this time, we will pause momentarily to assemble the roster.
Moshe: And our first question comes from Matt mix. It of Barclays. Please go ahead.
Matthew Stephan Miksic: Great. Thanks, so much.
Matthew Stephan Miksic: I appreciate you taking the questions.
Matthew Stephan Miksic: Maybe yeah first.
Matthew Stephan Miksic: It's the the topic that we talk most about when we do talk about it nowadays.
Matthew Stephan Miksic: The confidence in the direction of travel for things like.
Matthew Stephan Miksic: The major factors that had been most challenging for you in the last six to nine months, it financing delays and the and sort of end market demand.
Matthew Stephan Miksic: Let's talk about.
Speaker Change: Yes, just that comprehensive then I have one follow up.
Speaker Change: You mean, our confidence are we on the on the market demand I didn't I didn't hear the question.
Speaker Change: Yes, I'm, sorry confidence in the trajectory.
Speaker Change: A stabilization and improvement.
Speaker Change: Anything that you.
Speaker Change: You can give investors on sort of the timing.
Speaker Change: Great that's play out this year.
Speaker Change: Okay at the beginning of the year or at the beginning of 'twenty 'twenty four I believe in the last earning call I said that we expect that the interest rate in the United States and all over the world will start to come down in the second half of 'twenty 'twenty four.
Speaker Change: Most of our doctors our financing there are you know our acquisition of capital equipment.
Speaker Change: With the with the Oh, Okay with the lease of five years.
Speaker Change: And lease of five years, the Interstate today I Oh on Oh now spot on lease financing have reached a very high weight, something like 14, and 15% and that's something that COSE delay in the decision of the doctors we went under the impression.
Speaker Change: <unk>, that's maybe in the second half of the year interest rate will go down and the interest rate on leaseback of jazz will go down as well.
Speaker Change: But in the last months, what we have seen in April that inflation in the United States starting to rise again.
Speaker Change: And and the announcement of the chairman was that he doesn't know where people will start cutting down the rate therefore, well I'm not sure that that's what happened in the second half of the year. We hope so once this one one the economy will start.
Speaker Change: To grow again, especially when the interest rates will go down then we believe we will start to see another momentum and are in the medical in the medical field, but twice now if we want to focus in the second quarter and maybe the beginning of the third quarter, we don't see a major.
Speaker Change: And you and I believe I said in my in my at my desk. The morning does that answer your question, yes, very much that's helpful. And then and so I guess, while you're waiting for things that you can't control, which some of the things you just described.
Speaker Change: You know maybe talk if you could a little bit about are things that you can't control what what can you advance in the next couple of quarters in terms of the new product launches.
Speaker Change: What can you advance geographically potentially.
Speaker Change: Just sort of.
Speaker Change: Offset some of the some of the macro backdrop issues that you or did you just described.
Speaker Change: Okay.
Speaker Change: She played three venues that I will let I will describe the first one is we're trying to work with the leasing companies and work with them to ease that the risk of the leasing company by creating some kind of a pool in order to enable them Uh huh.
Speaker Change: In order to share the risk with them and and enabled them to finance more deals we did that in the first quarter. It was successful partially successful we cannot we cannot include the older deals under the pool program, but that's helped us because we have a very strong balance sheet and we can see.
Speaker Change: The risk with the with the leasing company in order in order to enable them to finance small deals and we did that and and I believe we will continue to do it in the second quarter.
Speaker Change: The second venue is the new platforms that are always what we call. The first doctors to buy new equipment. We came up with to I would say breakthrough two new platforms breakthrough breaker to breaker breakthrough technology on to new platforms, and we believe that.
Speaker Change: Some doctors, even if a dangerous crazy is high and if any of those platforms are all new all kind of technology I would say use those that they won't buy the new equipment and and that's what helped a little bit odd the graph or a man.
Speaker Change: Turning the revenue generation are generating revenue in the second and then maybe on the third quarter.
Speaker Change: The third venue is I'm sure everybody knows that in 'twenty late 2023 we have established two new subsidiaries one in Germany that cover our cover also as well and one in Japan.
Speaker Change: So these two subsidiary started to work on the first quarter.
Speaker Change: It's not on a full momentum yet it's take time to ride on the learning curve and build the momentum in those country, but when we go direct we recognize the full value of the of that of that of the cells and not just the transfer price because they worked and that's also I would say you have a.
Speaker Change: <unk> to increase the top line other than that I don't think we can do something that might change that the macroeconomics I believe we're too small to do something like that.
Speaker Change: Yes of course, thanks, so much for the color.
Speaker Change: The next question comes from Danielle and healthy of UBS. Please go ahead.
Speaker Change: Hi, everyone. This is Simon Megan on for Danielle.
Simon Megan: Just wanted to dig into your operating margin a little bit.
Simon Megan: General and administrative expenses ticked up a bit more than expected wondering if you could just give some color there.
Simon Megan: I don't think G&A was higher than the first quarter of 2023, Oh G&A is relatively very very I would say slim or very low what went up was the marketing as a marketing and sales and marketing and this is because of two reasons.
Simon Megan: You know when you measure percentage and we did not cut marketing and selling expenses will continue to do all the marketing activity in all of the sales activity that that that basically was planned late last year. When we developed the budget or the beginning of this year, we did not.
Simon Megan: Say, okay, we're selling less we're cutting marketing et cetera. So we did not we did not cut R&D are we continue to do the R&D as we plan in the beginning of the year.
Simon Megan: So when you are what about marketing and sales expenses, our combined you know fixed cost and and AR and AR and the commission, which is not fixed cost, but the fixed cost is the same when you sell $80 million or when you said $120 million so percentage.
Simon Megan: Wise, it's a little bit higher.
Simon Megan: Second the first quarter is usually a tough quarter as far as marketing expenses, because we have at least three major events. The first meeting of North America, our impacts in Europe, and the distributor meeting and and and they'll.
Simon Megan: For the cost of those marketing expenses, a little bit higher than in a regular quarter. Overall, if you look on the overall if you look on the pro forma our marketing and sales expenses are without with everything that I said I believe that we will be able to.
Simon Megan: The adjusted debt to the original number.
Simon Megan: Or to the previous number in a once we get once we once we reach again above $100 million of revenue because percentage wise it will come down.
Speaker Change: That is really helpful. Just a quick follow up for you.
Speaker Change: Thinking about the product launches this year, how should we think about the contribution of some of these platforms to sales throughout the year and do you expect that any of these platforms will cannibalize sales are there other platforms.
Simon Megan: One second generation of minimal invasive usually I would not say cannibalize because it will take long time to cannibalize, a an old generation, but in the first few years, it's over and above its an addition.
Simon Megan: Because we did not stop selling the first generation Dallas and we continue to sell it we lounge. The second generation right now only in few countries. All the rest of the countries, we're still selling that the regular body tight and not the ignite or the regular optimized and not the Optimus Max.
Simon Megan: But yes eventually some of.
Simon Megan: The Doctor will prefer to buy the new generation, even if it's a little bit more expensive than to buy the old generation, but there are always market for the old generation. So we're keeping two lines. The top line, which is the second generation and the baseline which is the one that I would say the fifth generation, which is.
Simon Megan: Which is the body type platforms and the regular optimized and I believe that it will take at least four or five years before the fifth generation will disappear or fully cannibalized.
Speaker Change: That's helpful. Thank you.
Simon Megan: Okay.
Simon Megan: Yeah.
Simon Megan: The next question comes from Caitlin Cronin of Canaccord Genuity. Please go ahead.
Simon Megan: Hey, this is George on for Caitlin and thanks for taking our questions.
George: Our first one just kind of builds off the last question.
George: Think about these new platforms, especially with the delays in delivery how long do you see that kind of lasting throughout the year and then more so looking at your guidance how much of a contribution of these new platforms. These preorders Hello accounted in your current guidance numbers.
George: Okay regarding the first quarter, we believe that it will take at least the second quarter and the third quarter in order to fulfill all the preorders because remember in the third quarter, we're still accepting orders for the new devices.
George: And we still have something like I would say 120 devices or platforms that we have to deliver which will preorder. So it will last more than one quarter I hope that in the fourth quarter everything will be in line and we will deliver the system with.
George: And you needed to do to accept preorders. So before the end of the year our business will go back to usual.
Speaker Change: Now I'll remind me the second the second question.
Speaker Change: Yeah, just on the new platforms like the preorders how much of that is currently considered within your guidance.
Speaker Change: I mean, if it was all considered within the guidance.
Speaker Change: I mean, the guidance the guidance that we gave took into account the preorders soft Q1.
Speaker Change: Yeah.
Speaker Change: Okay, Great and then just a second question any more color you can give on the sales force changes in the U S.
Speaker Change: So Keith can you answer that.
Keith: Yeah sure we've actually had some changes at the top of management. We've also added a separate group of directors.
Keith: Which were internal promotions.
Keith: Which in turn will create some upward mobility and has foreseen when people that are obviously deserved it and those who will be deserving. It. So once the once things change a little bit in the macroeconomic environment becomes a little more favorable for us.
Keith: We're just planning on that bounce back because I mentioned in the script earlier. So we're you know we're we're obviously trying to prepare for it we're trying to move forward I'm. We're trying not to you know do what many other companies do in times like this while we're still trying to control the north.
Keith: Our balance sheet as well so we're trying to get primed for when things bounce back.
Keith: Uh huh.
Keith: Yes.
Keith: The next question comes from Mike Matson of Needham <unk> Company. Please go ahead.
Keith: Hey, everyone. This is Joseph on for Mike today.
Joseph: Wanted to maybe.
Joseph: Some of these may have already been asked so apologies I joined late but.
Joseph: I wanted to maybe just get an update on the manufacturing facilities.
Speaker Change: <unk> seen.
Speaker Change: Pressure is from.
Speaker Change: On delivery times, or I guess, you know has that gotten better or worse whats the labor capacity look like and I guess, how is that affecting the preorder blog I just want to kind of get a gauge it.
Speaker Change: He says you know reduce delivery times and manufacturing ability there.
Speaker Change: Okay. Good we have two facilities two manufacturing facilities in Israel.
Speaker Change: One into Iberia, and one in a small city called Mcdonald dynamic and where many factoring all the products in both of them.
Speaker Change: So that basically every line that we have every manufacturing line can be adjusted to every product.
Speaker Change: It's a full backup okay. That's the way we design it and that's the way we built it as we go to the new platforms, yes, well, even some delay and this is because of the situation in Israel, everybody know that you know in Israel a debt that the army is is built from.
Speaker Change: Ooh Zelle beauty and therefore, some of our employees were drafted for for a long time and that's created some delay in the manufacturing, but we're catching up right now well walking to shift you know.
Speaker Change: Order to catch up and create enough inventory to enable a sufficiently to deliver every pre older but as I said, we will not we don't think it will take one quarter. It will take more than one quarter to fulfill all the preorder, but these all those are all BD already been accepted.
Speaker Change: Most of them already been paid so we are 100% sure that we will deliver 100% of them in the next I would say three to six months.
Speaker Change: As far as as far as the manufacturing facility, we have capacity to double Uh huh.
Speaker Change: Yes.
Speaker Change: Last year, we basically manufacture more than 6000 system and if necessary. We can we can we can bring to the production level or the production capacity to 10000 without adding any capital equipment. It's only to run this to run the production line more than one.
Speaker Change: Shift so as far as the logistic and purchasing of components. There was no problem, a little bit delay because of logistic issues due to the Warren as well.
Speaker Change: But other than that we're building a safety inventory to make sure that the production line will never stop.
Speaker Change: So you know we're working on at 24 hours a day and we believe so far even with the war that is running now for more than six months were successful delivery. The only thing that we did not deliver on time are those preorders, but we can assure investors that all of these orders will be will be shipped.
Speaker Change: We then within a timeframe that they said before few months and we will we basically will get back to normal.
Speaker Change: Okay, great yeah, thanks for all that color.
Speaker Change: I guess, maybe just moving onto the new platform. So you're launching some upgraded platforms to your legacy.
Speaker Change: You know your legacy devices.
Speaker Change: I think you said that there been shipped to a certain number of countries and so I just wanted to maybe.
Speaker Change: Get some some info there maybe some early feedback from from some of your customers who have used these new platforms as well as I I think you said previously that.
Speaker Change: The new bodies heightened face tight.
Speaker Change: The upgrades kind of lowered the procedure complexity.
Speaker Change: So I was also curious if maybe you've been selling more too.
Speaker Change: You know what anybody that's I guess not a plastic surgeon, so like health clinics or anything like that and if they found the new platform easy to use.
Speaker Change: Absolutely let me start let me start with the ignite okay. They ignite is our is the four surgical platforms.
Speaker Change: What do I mean by full surgical platforms, the ignite can handle them.
Speaker Change: The the body types the face type what we call the first generation, but with higher energy because we improve the hand pieces.
Speaker Change: But that's something that we did Ah in order in order to ease the process and make the treatment faster. In addition, we have developed a new hand pieces, which which instead of.
Speaker Change: To talk talk talk and all that they have only one cannula and the bipolar RF is in the teeth of the cannula that make the theyre the doctor more flexible to reach any parking the buddy much easier than than a window with the regular <unk>.
Speaker Change: In addition to that this platform will include two new Morpheus hand pieces, one for the face and one for the body and also the Morpheus is the Morpheus, which call now Morpheus eight built is a new generation of technology. You can go any depth you want you can pull.
Speaker Change: In any depth up to three in every in every punch of the skin you can determine the level of energy and every death cell. For example, you can go to seven millimeter deliver 50% of the energy go up to five millimeter deliver 30% of the energy and go.
Speaker Change: Two two millimeter deepen the skin and deliver 20% altogether 100.
Speaker Change: So this is another technology that we develop and the Morpheus eighth best hand pieces for the face and for the body with 24 beans, or wheat 40 pins are able to use these two technology, which we call best and scale. So this is one platform.
Speaker Change: We believe that it's a brake job. It's it's a it's a breakthrough technology is something that nobody did before well protected because all covered with patent.
Speaker Change: Which you know are now we can count on 25 years, although I have to say that nobody has twice to infringe our radiofrequency us if the LIBOR licensed the body type Beth and since the beginning of that of the since the beginning of the of that of <unk>.
Speaker Change: 26, when we stop promoting them in commercializing them in the United States.
Speaker Change: The second platform is that Optimus Max basically the Optimus Max it's a new design much nicer than the regular off demand.
Speaker Change: With adjustable screen with Hana pieces are that look a little bit better and different the IPL Handpiece has 25% more energy, but this platform is designed to be able in the future to handle some other hand pieces that we're developing.
Speaker Change: Now, which the irregular Optimus cannot.
Speaker Change: This is another platform switches that which is the new platforms.
Speaker Change: Now as I said before we do not think that these two platforms will cannibalize. The first generation means that the Optimus Max will cannibalize, the Optimus or the order or the ignite will cannibalize the body type it would be over and above all it's all every doctors who won.
Speaker Change: It's to do more with the Morpheus will need to buy one of these two you cannot use the new Morpheus hand piece on the old generation AR platforms. So that will push the doctors to have two or more two or three different platforms and that's good for us in addition.
Speaker Change: And as I said, well now launching them in <unk>.
Speaker Change: Ah well walking on regulation in Canada, Europe Asia, and other territories will take time as you know for example in China. It takes two to three years to get the new platforms on the market in Brazil and visa its can take the same about a year and a half and we just started.
Speaker Change: So it will take few years before these two platforms will be commercially available in all the countries 96 countries that we're selling today, it's a process. It's a medical equipment its not fire and forget you need to train you need to create clinical data you need you need.
Speaker Change: You need to have training centers are you need to publish a it's a process that take few years before the full capacity of those platforms are will be exploited.
Speaker Change: Yes.
Speaker Change: Oh, absolutely yeah that was that was all very helpful. Thank you maybe just just one more.
Speaker Change: Think I heard you discuss that they provide.
Speaker Change: Providing loans for certain customers using your cash balances that's been.
Speaker Change: Going well more or less just curious now that they see.
Speaker Change: Said I didn't say that we're providing loans well I didn't say that I said that we had an agreement.
Speaker Change: With leasing companies to help them men and you'll know limited the risk by creating a pool pool of money that in some cases that can help the leasing company. So we enable them to take more risk in the in the deals that they are helping to finance.
Speaker Change: I didn't say that we're financing the customer well not were not a bank.
Gil: Sure This is gil.
Gil: This is data we put together some programs.
Gil: The risk sharing programs with some leasing companies in which under which we take a fraction of the risk and in return they are willing to provide faster approval and basically by deeper in terms of credit portfolio for our customers.
Speaker Change: Okay, Yeah, Okay that makes much more sense then.
Speaker Change: That clears up my question. Thank you very much.
Speaker Change: This concludes our question and answer session I would like to turn the call back over to MS. Seamus Rocky for any closing remarks.
Seamus Rocky: Okay. Thank you everybody. Thank you everybody for joining us I want to thank all the inboard employees all over the world are for continued to work with that I want to thank especially for the Israeli team that work day and night to doing the challenging times that we're having today.
Seamus Rocky: And and and maintaining.
Seamus Rocky: All the activities that are basically this company.
Seamus Rocky: It's performing thank you again, and we'll see you again in August.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
Speaker Change: [music].