Q4 2024 Venus Concept Inc Earnings Call
Speaker Change: [music].
Operator: Please stand by. Good day, ladies and gentlemen, and welcome to the fourth quarter and fiscal year 2024 earnings conference call for Venus Concept, Inc. At this time, all participants have been placed in a listen-only mode.
Please standby good day, ladies and gentlemen, and welcome to the fourth quarter and fiscal year 'twenty 'twenty four earnings conference call for Venus concept, Inc.
At this time all participants have been placed in a listen only mode. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay before we begin I would like to remind everyone that our remarks and responses to your questions. Today may contain forward looking statements that are based on the current expectations of management and involve inherent.
Operator: Please note that this conference call is being recorded and that the recording will be available on the company's website for replay. Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the risk factors section of our most recent annual report on Form 10-K, filed with the Securities and Exchange Commission. Such factors may be updated from time to time in our filings at the SEC, which are available on our website.
And uncertainties that could cause actual results to differ materially from those indicated including those identified in the risk factors section of our most recent annual report on Form 10-K filed with the Securities and Exchange Commission such factors may be updated from time to time in our filings with the SEC, which are available on our website, we undertake no.
Operator: We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events, or otherwise.
[noise] obligation to publicly update or revise our forward looking statements as a result of new information future events or otherwise. This call will also include references to certain financial measures that are not calculated in accordance with the generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures reconciliations of those.
Operator: This call will also include references to certain financial measures that are not calculated in accordance with the Generally Accepted Accounting Principles, or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in our earnings press release issued today on the Investor Relations portion of our website.
non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in our earnings press release issued today on the Investor Relations portion of our website.
Rajiv Da Silva: I will now turn the call over to Mr. Rajiv Da Silva, Chief Executive Officer of Venus Concept. Please go ahead, sir.
Speaker Change: I'd like to turn the call over to Mr. Rajiv de Silva Chief Executive Officer of Venus concept. Please go ahead Sir.
Rajiv Da Silva: Thank you, operator, and welcome everyone to Venus Concept's fourth quarter 2024 earnings conference call.
Speaker Change: Thank you operator, and welcome everyone to Venus Concept's fourth quarter 'twenty 'twenty four earnings conference call.
Rajiv Da Silva: I am joined on the call today by our Chief Financial Officer, Domenic Della Penna.
Speaker Change: I am joined on the call today by our Chief Financial Officer Domenic della Penna.
Rajiv Da Silva: Let me start with an agenda of what we will cover during our prepared remarks. I will begin with a brief review of our fourth quarter results and operating developments in the recent months. Following that, Domenic will provide you with an in-depth review of our fourth quarter financial results, as well as a balance sheet and financial condition at year-end.
Speaker Change: Let me start with an agenda, we will cover during our prepared remarks.
Speaker Change: I will begin with a brief review of our fourth quarter results and operating developments in the recent months.
Speaker Change: Following that Domenic will provide you with an in depth review of our fourth quarter financial results as well as our balance sheet and financial condition at year end.
Rajiv Da Silva: Then we will open the call for your questions. With that agenda in mind, let's get started. As detailed in our press release issued today, our fourth quarter revenue results were softer than expectations we outlined on our third quarter earnings call. Fourth quarter, revenue declined 2.4 million or 13% year-over-year, driven by a mid-teens decline in systems revenue and, to a lesser extent, a mid-single-digit decline in procedure-related products and service revenue. Importantly, the decline in system sales continue to be impacted by a strategic shift to prioritizing system sales versus subscription sales as expected. Lease revenue declined by $3.5 million, or 58% year-over-year, in the fourth quarter, which offset mid-teens' growth in cash system sales in the period.
Speaker Change: Then we will open the call for your questions.
Speaker Change: With that agenda in mind, let's get started.
Speaker Change: As detailed in our press release issued today.
Speaker Change: Fourth quarter revenue results were softer than expectations, we outlined on our third quarter earnings call.
Speaker Change: Fourth quarter revenue declined $2 4 million or 13% year over year, driven by a mid teens decline in systems revenue and to a lesser extent a mid single digit decline in procedures related products and service revenue.
Speaker Change: Importantly, the decline in system sales continued to be impacted by our strategic shift to prioritizing system sales versus subscription sales as expected.
Speaker Change: <unk> revenue declined by $3 5 million or 58% year over year.
Speaker Change: In the fourth quarter, which offset mid teens growth in cat system sales in the period.
Rajiv Da Silva: We are encouraged that our commercial team's focus on prioritizing cash deals is proving effective. Cash system sales in the U.S. increased 27% year-over-year and represented 87% of total U.S. system sales in the fourth quarter, compared to 58% last year and 70% in the first nine months of 2024. We continue to believe that our efforts to reposition the business to prioritize cash system sales is the right strategy to enhance the company's long-term profitability profile. While we were pleased to see strong growth in cash system sales in the U.S. in the fourth quarter, global systems adoption continues to be impacted by macroeconomic headwinds, which are impacting this aesthetic sector as a whole.
Speaker Change: We are encouraged that our commercial teams focus on prioritizing cash deals that's improving.
Speaker Change: Proving effective.
Speaker Change: Our system sales in the U S increased 27% year over year and represented 87% of total U S system sales in the fourth quarter compared to 58% last year and 70% in the first nine months of 2024.
Speaker Change: We continue to believe that our efforts to reposition the business to prioritize cash system sales is the right strategy to enhance the company's long term profitability profile.
Speaker Change: While we were pleased to see strong growth in cash system sales in the U S. In the fourth quarter Global systems adoption continues to be impacted by macroeconomic headwinds.
Speaker Change: That impact in this aesthetic sector as a whole.
Rajiv Da Silva: customer financial pressures, economic uncertainty, high interest rates and tighter credit markets continue to impact customer system adoption throughout our business. The softer than expected total revenue results in Q4 were driven primarily by continued macro-related challenges impacting the overall time-to-close deal. In addition, we also experienced Venus-specific factors which impacted our ability to close systems deals, specifically a supply-related shortfall in inventory of select products. I'm proud of our team's continued commitment to our strategy despite the challenging operating environment.
Speaker Change: Customer financing passers.
Speaker Change: Economic uncertainty high interest rates and tighter credit markets continued to impact us.
Speaker Change: System adoption throughout our business.
Speaker Change: The softer than expected total revenue results in Q4, but driven primarily by continued macro related challenges impacting the overall time to close deals.
Speaker Change: In addition, we also experienced venous specific factors, which impacted our ability to close systems deals specifically if supply related shortfall in inventory of select products.
Speaker Change: I'm proud of our team's continued commitment to our strategy despite the challenging operating environment.
Rajiv Da Silva: The U.S. team delivered fourth quarter cash systems growth of 48% on a quarter-over-quarter basis. US cash system sales represented the majority of our US system's revenue in the period, which reflects the team's strong execution towards a strategic priority to transition the company to higher quality cash revenue. Our efforts to reposition our international business from unprofitable direct markets to partnering with high-value distributors are also proving effective. Sales to distributors more than doubled year-over-year in Q4, fueled by demand from new and existing distribution partners in the APAC and EMEA regions. While we expect continued fluctuation in ordering patterns from our distribution partners in key international markets, we are encouraged by the early evidence that our efforts to evolve our OUX commercial strategy to enhance future growth and profitability are on the right track.
Speaker Change: A U S team delivered fourth quarter cat systems growth of 48% on a quarter over quarter basis.
Speaker Change: U S tax system sales represented the majority of our U S systems revenue in the period, which reflects the team's strong execution towards our strategic priority to transition the company to hire quality cash releases.
Speaker Change: Our efforts to reposition our international businesses from unprofitable direct markets to partnering with high value distributors are also proving effective.
Speaker Change: Says distribute has more than doubled year over year in Q4 fueled by demand from new and existing distribution partners.
Speaker Change: APAC and EMEA regions.
Speaker Change: While we expect continued fluctuations in ordering patterns from our distribution partners in key international markets. We are encouraged by the early evidence that our efforts to evolve all U S commercial strategy to enhance future growth and profitability on the right track.
Rajiv Da Silva: Stepping back, our revenue results in fiscal year 2024 reflect a decline of 15% year-over-year, which is better than the performance many of our competitors delivered this year. It is important to remember that our total revenue results reflect the impact of the strategic initiatives we have executed throughout the year, primarily the shift to prioritizing cash system sales, which had a material impact on our total revenue results in 2024. Specifically, more than 60% of the year-over-year decline in total revenue this year is a result of our transition away from subscription system sales. Importantly, we believe the impact on our year-over-year growth profile from the strategic transition is behind us, and we look forward to a more normalized business profile going forward.
Speaker Change: Stepping back our revenue results in fiscal year, 'twenty 'twenty four reflect a decline of 15% year over year, which is better than the performance many of our competitors delivered this year.
Speaker Change: It is important to remember that on a total revenue results reflect the impact of the strategic initiatives, we have executed throughout the year.
Speaker Change: Primarily the shift to prioritizing cash system sales, which had a material impact on our total revenue results in 2020 four.
Speaker Change: Specifically more than 60% of the euro or euro decline in total revenue. This year, it's a transition away from subscription system sets.
Speaker Change: Importantly, we believe the impact on a year over year growth profile from the strategic transition that's behind us and we look forward to a more normalized business profile going forward.
Rajiv Da Silva: However, our quarterly business performance will continue to be impacted by macroeconomic headwinds. Despite these challenges, we remain focused on our strategic initiative to enhance the cash flow profile of the business and accelerate the path to long-term sustainable profitability and growth.
Speaker Change: However, our quarterly business performance will continue to be impacted by macroeconomic headwinds.
Speaker Change: These challenges we remain focused on our strategic initiative to enhance the cash flow profile of the business and accelerate the path to long term sustainable profitability and growth.
Rajiv Da Silva: We outlined the key elements of our transformation strategy on our fourth quarter call last year. Specifically, Cost Reductions, Shifting to Cash Sales, and Working Capital Management. The team's strong execution towards each of these key elements in 2024 contributed to this achievement. We achieved a 14% reduction in our cash used in operations year over year. in 2024, which we view as solid performance given the continued headwinds to revenue growth that aesthetic sector participants have been facing over the last year. We continue to believe that the reduction in cash used in operations represents the clearest evidence that we are making progress with respect to the key elements of our transformation strategy.
Speaker Change: We outline the key elements of our transformation strategy on our fourth quarter call last year.
Speaker Change: Specifically cost reductions shifting to pass sales and working capital management.
Speaker Change: The team's strong execution towards each of these key elements in 2020 full contributed to this achievement.
Speaker Change: We achieved a 14% reduction in our cash used in operations year over year.
Speaker Change: In 2020, full which we view as solid performance given the continued headwinds to revenue growth that aesthetics tick the box, but I've been facing over the last year.
Speaker Change: We continue to believe that the reduction in cash used in operations represents the clearest evidence that we are making progress with respect to the key elements of our transformation strategy.
Rajiv Da Silva: Our priority now is to return to growth, as a substantial part of our operational turnaround is complete.
Speaker Change: Our priority now is to return to growth.
Speaker Change: Substantial part of our operational turnaround is complete.
Rajiv Da Silva: We are actively working on evolving our portfolio and look forward to announcing our next body device in the near future. We believe that the increase of GLP-1 usage by consumers is an exciting catalyst for the industry and a chance for Venus to highlight the complementary benefits of our body technology, specifically skin tightening, to our customers that are on weight loss medication.
Speaker Change: We are actively working on evolving our portfolio and look forward to announcing our next body device in the near future.
Speaker Change: We believe that the increase of G. O P. One usage by consumers is an exciting catalyst for the industry and a chance for Venus to highlight the complimentary benefits for body technology, specifically skin type thing to our customers that are on weight loss medications.
Rajiv Da Silva: Now, before I turn the call over to Domenic, I wanted to provide an update on a few areas of notable progress and operating developments in 2024 and in recent months. First, we made material progress towards our strategic initiative to restructure the company's debt obligations and secure bridge financing in 2024. As of December 31, 2024, the company had total debt obligations of approximately $39.7 million down 47% from $74.9 million outstanding as of December 31, 2023. The substantial reduction in overall debt is evidence of continued progress in the restructuring of the balance sheet and will enable us to be best positioned for future growth.
Speaker Change: Now before I turn the call over to Dominic I wanted to provide an update on a few areas of notable progress and operating developments in 2024 and in recent months.
Speaker Change: First.
Speaker Change: We've made material progress towards our strategic initiative to restructure the company's debt obligations and secure bridge financing in 2024.
Speaker Change: As of December 31, 2024, the company had total debt obligations of approximately 39.7 million down 47% from $74 9 million outstanding as of December 31, 2020 three.
Speaker Change: The substantial reduction in overall debt is evidence of continued progress and the restructuring of the balance sheet and will enable us to be best positioned for future growth.
Rajiv Da Silva: Second, on February 25, 2025, the company announced several changes to its senior leadership team, including the following.
Speaker Change: Second on February 25th train 25, Okay.
Speaker Change: We announced several changes to its senior leadership team, including the following.
Rajiv Da Silva: Dr. Hemanth Varghese, President and COO, departed the company to pursue other opportunities effective March 28, 2025. and Bill McGrail, EVP Technical Operations and Compliance, retired effective February 28, 2025.
Speaker Change: Dr. Hammond Varghese, President and C. O departed the company to pursue other opportunities effective March 28 2025.
Speaker Change: And Bill Mcgrail EVP of technical operations and compliance record effective 28 February 28 2025.
Rajiv Da Silva: Kirk Gunnis was appointed Chief Revenue Officer with global responsibility for Venus' sales efforts.
Speaker Change: Oh goodness was appointed Chief revenue Officer global responsibility for venous those sales efforts.
Rajiv Da Silva: Rasputaro was appointed as EVP Commercial Strategy and Head of Venus Hera, with a primary focus on overseeing Venus Hera, expanding their business in all jurisdictions, and evaluating strategic opportunities.
Russ photography: Russ photography was appointed as EVP commercial strategy and head of being is here with us.
Speaker Change: <unk> focus on overseeing Venus, yeah, expanding that business in all jurisdictions and evaluating strategic opportunities.
Rajiv Da Silva: Melissa Kang, the company's former EVP, Global Marketing and Product Management, was appointed Chief Product Officer.
Speaker Change: No that's okay. The company's former EVP global marketing and product management was appointed Chief product Officer.
Rajiv Da Silva: Michael Mandarello, the company's chief legal officer, was appointed head of strategy and operations to include the oversight of Venus' corporate strategy and operational execution in addition to his existing responsibilities. This new management structure is designed to streamline decision-making and best position the company for its return to growth and its journey towards profitability. This reorganization demonstrates our commitment to building the right team to enable future growth and maximize upcoming new product launch.
Michael: Michael <unk>, the company's Chief legal officer was appointed head of strategy and operations to include the oversight of Venus as corporate strategy and operational execution in Edison to his existing responsibilities.
Michael: This new management structure is designed to streamline decision, making and best position the company for its return to growth and it's a journey towards profitability.
Michael: This reorganization demonstrates our commitment to building the right team to enable future growth and maximize upcoming new product launches.
Rajiv Da Silva: I look forward to working with Kirk Ross, Melissa, and Michael in their new role.
Michael: I look forward to working with Coke Ross Mellissa, Michael in their new roles.
Rajiv Da Silva: I also want to share my appreciation for the pivotal role Hemanth has played in executing the company's transformation efforts over the last two years, and want to congratulate Bill on his well-deserved retirement.
I also wanted to share my appreciation for the pivotal role here a month has played in executing the company's transformation efforts over the last two years and wanted to congratulate bill on its well deserved retirement.
Rajiv Da Silva: In addition, on February 27th, the company announced a 1 for 11 reverse stock split of the company's issued and outstanding common stock. The company's common stock began trading on the Nasdaq capital market on a split-adjusted basis at the open of trading on March 4, 2025. Venus stock traded above $1 for 10 consecutive trading days following the completion of the reverse stock split.
Michael: And Allison on February 27th the company announced a one for love under a stock split of the company's issued and outstanding common stock.
Michael: The company's common stock began trading on the NASDAQ capital market on a split adjusted basis had to open up trading on March four 2025.
Michael: When our stock traded about a dollar for 10 consecutive trading days following the completion.
Michael: The reverse stock split and on March 18, 2025, we received a formal notice of compliance from NASDAQ.
Rajiv Da Silva: And on March 18, 2025, we received a formal notice of compliance from NASDAQ.
Rajiv Da Silva: Finally, on March 28th, we announced an amendment to a bridge loan agreement with Madryn Asset Management that will increase our financing capacity by $10 million. This is evidence of the continued financial commitment from Madren in our ongoing partnership.
Michael: Finally on March 28, we announced an amendment to our bridge loan agreement with <unk> asset management that will increase our financing capacity by $10 million.
Michael: This is evidence of the continued financial commitment from Madrian now ongoing partnership.
Michael: Yeah.
Domenic Della Penna: With that, let me turn the call over to Domenic for a review of our fourth quarter financial results and balance sheet at year-end. Thank you, Rajiv. For the avoidance of doubt, unless otherwise noted, my prepared remarks will focus on the company's reported results for the fourth quarter of 2024 on a gap basis, and all growth-related items are on a year-over-year basis. We reported total revenue of $15.8 million, down $2.4 million or 13% year over year. The decrease in total revenue was driven by a 13% decrease year-over-year in both United States and international revenue. As Rajiv mentioned earlier, the decrease in total revenue by product category was driven primarily by a 58% decrease in lease revenue, cash systems revenue and sales of products and services increased 10% year-over-year in Q4.
Michael: That let me turn the call over to Dominic for a review of our fourth quarter financial results and balance sheet at year end Dominic.
Dominic: Thank you Rajeev.
Dominic: For the avoidance of doubt unless otherwise noted my prepared remarks will focus on the company's reported results for the fourth quarter of 2024 on a GAAP basis, and all growth related items are on a year over year basis.
Dominic: We reported total revenue of $15 8 million down $2 4 million or 13% year over year.
Dominic: The decrease in total revenue was driven by a 13% decrease year over year in both the United States and international revenue.
Dominic: As Rajeev mentioned earlier the decrease in total revenue by product category was driven primarily by a 58% decrease in lease revenue.
Dominic: Cash systems revenue and sales of products and services increased 10% year over year in Q4.
Domenic Della Penna: The percentage of total systems revenue derived from the company's internal lease programs, Venus Prime, and our legacy subscription model was approximately 20% in the fourth quarter of 2024, compared to 41% the prior year period. Our focus on prioritizing cash system sales has been enhanced through various partnerships secured with preferred lenders in the U.S. and in other key international markets. These preferred lending arrangements assist us in accelerating the lending approval cycle, offering competitive financing solutions to our customers and accelerating our cash funding requirements. The decrease in utilizing our internal lease programs is partially attributed to the recent success of these preferred lending arrangements.
Dominic: The percentage of total systems revenue derived from the company's internal lease programs Venus crime and our legacy subscription model was approximately 20% in the fourth quarter of 2024 compared to 41% the prior year period.
Dominic: Our focus on prioritizing cash system sales has been enhanced through various partnership secured with preferred lenders in the U S and in other key international markets.
Dominic: These preferred lending arrangements assist us in accelerating the lending approval cycle offering competitive financing solutions to our customers and accelerate our accelerating our cash funding requirements.
Dominic: The decrease in utilizing our internal lease programs is partially attributed to the recent success of these preferred lending arrangements.
Dominic: Yeah.
Domenic Della Penna: The overall percentage of total systems revenue derived from our internal lease programs declined from approximately 42% in fiscal year 2022 to 33% in fiscal year 2023 and 26% in fiscal year 2024. As discussed on our recent investor calls, this strategic initiative has been a key driver of the significant improvements in cash generation and is consistent with our focus on quality of revenue. In the current macro environment, third-party lending has tightened and so has access to capital. These conditions often result in the postponement of capital equipment purchases. With this in mind, the ability to offer Venus Prime represents a valuable option to help with new system sales.
Dominic: The overall percentage of total systems revenue derived from our internal lease programs declined from approximately 42% in fiscal year, 2022% to 33% in fiscal year 2023, and 26% in fiscal year 2024 as discussed in our recent Investor calls this strategic initiative.
Dominic: Has it been a key driver of the significant improvements in cash generation and is consistent with our focus on quality of revenue.
Dominic: And the current macro environment third party lending has tightened and so has access to capital. These conditions often result in the postponement of capital equipment purchases with this in mind the ability to offer Venus Prime represents a valuable option to help with new system sales.
Domenic Della Penna: While we continue to favor cash system sales, with our new target of roughly 70-75% of total systems revenue coming from cash sales, we are very pleased to have the unique lever of our Venus Prime program as a key differentiator from competitors.
Dominic: While we continue to favor cash system sales with our new target of roughly 70% to 75% of total systems revenue coming from cash sales. We are very pleased to have the unique lever of our venous Prime program as a key differentiator from competitors.
Domenic Della Penna: Turning to a review of our fourth quarter financial results across the rest of the P&L. Gross profit decreased $1.2 million or 10% to $10.9 million. The change in gross profit was primarily due to the effects of tighter third-party lending practices, which negatively impacted capital equipment sales in both the U.S. and international markets. partially offset by an improvement in third-party international distributor revenues. Gross margin was 69.1% of revenue compared to 66.5% of revenue for the fourth quarter of 2023. Our continued focus on margin management was the largest contributor to the year-over-year change in gross margin, while the change in revenue mix by geography, by product, and by channel was a contributor.
Dominic: Turning to a review of our fourth quarter financial results across the rest of the P&L.
Dominic: Gross profit decreased $1 2 million or 10% to $10 9 million.
Dominic: The change in gross profit was primarily due to the effects of tighter third party lending practices, which negatively impacted capital equipment sales in both the U S and international markets.
Dominic: Partially offset by an improvement in third party international distributor revenues.
Dominic: Gross margin was 69, 1% of revenue compared to 66, 5% of revenue for the fourth quarter of 2023.
Dominic: Our continued focus on margin management was the largest contributor to the year over year change in gross margin, while the change in revenue mix by geography, byproduct and by channel was a contributor.
Domenic Della Penna: Total operating expenses decreased $2.1 million, or 11%, to $17.6 million. The change in total operating expenses was driven primarily by a decrease of $1.3 million or 13% in general and administrative expenses, a decrease of $0.7 million or 8% in selling and marketing expenses, a decrease of $0.2 million or 12% in research and development expenses. The reduction in fourth quarter 2024 operating expenses reflects our continued progress and cost containment and streamlining of our operation. Gap operating loss was $6.7 million compared to $7.6 million in the fourth quarter of 2023. Net interest and other expenses were $2.1 million compared to $3.7 million in the fourth quarter of 2023.
Dominic: Total operating expenses decreased $2 1 million or 11% to $17 6 million.
Dominic: The change in total operating expenses was driven primarily by a decrease of $1 3 million or 13% and general and administrative expenses, a decrease of zero point $7 million or 8% and selling and marketing expenses.
Dominic: A decrease of <unk> 2 million or 12% and research and development expenses.
Dominic: The reduction in fourth quarter 2020 for operating expenses reflects our continued progress in cost containment and streamlining of our operations.
Dominic: GAAP operating loss was $6 7 million compared to $7 6 million in the fourth quarter of 2023.
Dominic: Net interest and other expenses were $2 1 million compared to $3 7 million in the fourth quarter of 2023.
Domenic Della Penna: The year-over-year change in net interest and other expenses was driven by non-cash foreign exchange loss of $1.0 million compared to a non-cash gain of $0.7 million last year, interest expense on outstanding borrowings of $1.1 million compared to $2.2 million last year, and a $2 million non-cash loss on debt extinguishment in the fourth quarter of 2023, which did not impact current period results. Net loss attributable to stockholders for the fourth quarter of 2024 was $8 million, or $11.23 per share, compared to a net loss of $11.1 million, or $20.14 per share for the fourth quarter of 2023.
Dominic: The year over year change in net interest and other expenses was driven by noncash foreign exchange loss of 1.0 million compared to a noncash gain of 0.7 million last year interest expense on outstanding borrowings of $1 1 million compared to $2 2 million last year.
Dominic: And at 2 million noncash loss on debt extinguishment in the fourth quarter of 2023, which did not impact current period results.
Dominic: Net loss attributable to stockholders for the fourth quarter of 2024 was 8 million or $11 23 per share compared to a net loss of $11 1 million or $20.14 per share for the fourth quarter of 2023.
Domenic Della Penna: Adjusted EBITDA loss for the fourth quarter of 2024 was $6.1 million compared to $5.9 million last year. As a reminder, we have provided a full reconciliation of our GAAP net loss to adjusted EBITDA loss and our earnings press release.
Dominic: Adjusted EBITDA loss for the fourth quarter of 2024 was $6 1 million compared to $5 9 million last year.
Dominic: As a reminder, we have provided a full reconciliation of our GAAP net loss to adjusted EBITDA loss in our earnings press release.
Domenic Della Penna: Turning to the balance sheet, as of December 31st, 2024, the company had cash and cash equivalents of $4.3 million and total debt obligations of approximately $39.7 million compared to $5.4 million and $74.9 million, respectively, as of December 31st, 2023. The 47% reduction in debt obligations in fiscal year 2024 demonstrates our commitment to deliver the balance sheet and improve the financial profile of the company. As Rajiv mentioned previously, we announced an amendment to our bridge loan agreement with our primary lender, Madrin Asset Management, that increases our financing capacity by $10 million. We continue to enjoy the support of Madren as we execute on enhancing the financial profile of the business.
Dominic: Turning to the balance sheet as of December 31, 2024, the company had cash and cash equivalents of $4 3 million and total debt obligations of approximately $39 7 million compared to $5 4 million and $74 9 million respectively as of December 30.
Dominic: <unk> 2023.
Dominic: The 47% reduction in debt obligations in fiscal year 2024 demonstrates our commitment to delever the balance sheet and improve the financial profile of the company.
Dominic: As Rajeev mentioned previously we announced an amendment to our bridge loan agreement with our primary lender madron asset management that increases our financing capacity by $10 million.
Dominic: We continue to enjoy the support of madron as we execute on enhancing the financial profile of the business.
Domenic Della Penna: Cash used in operations for the three months ended December 31st was $3.8 million compared to $0.8 million last year. The year-over-year change in cash used in operations was driven primarily by changes in net working capital, offset partially by an improvement in net loss year-over-year. Note, approximately half of the year-over-year increase in cash used in operations was related to an increase in advances to suppliers as part of our efforts to secure requisite supply of component inventory to avoid continued impacts on system sales due to shortages. Despite the increase in cash used in Q4, we are very proud of our continued improvement in reducing our cash used in operations in 2024 despite the challenging operating environment.
Dominic: Cash used in operations for the three months ended December 31 was $3 8 million compared to 0.8 million last year.
Dominic: The year over year change in cash used in operations was driven primarily by changes in networking capital offset partially by an improvement in net loss year over year.
Dominic: Note approximately half of the year over year increase in cash used in operations was related to an increase in advances to suppliers as part of our efforts to secure a requisite supply of component inventory to avoid continued impacts on sales and system sales due to shortages.
Dominic: Despite the increase in cash used in Q4.
Dominic: We are very proud of our continued improvement in reducing our cash used in operations in 2024, despite the challenging operating environment.
Domenic Della Penna: We remain intently focused on further enhancement of the balance sheet and cash flow profile of our business and believe we have the right strategy to build the requisite foundation to support our growth and profitability goals in the years to come.
Dominic: We remain intently focused on further enhancement of the balance sheet and cash flow profile of our business and believe we have the right strategy to build the requisite foundation to support our growth and profitability goals in the years to come.
Domenic Della Penna: Lastly, with respect to our financial outlook for 2025, As outlined in our press release, given the company's active dialogue with existing lenders and investors and the ongoing evaluation of strategic alternatives with various interested parties to maximize shareholder value, the company is not providing full year 2025 financial guidance at this time. The company expects total revenue for the three months ending March 31st, 2025, of at least $14 million.
Dominic: Lastly, with respect to our financial outlook for 2025.
Dominic: As outlined in our press release, given the company's active dialogue with existing lenders and investors in the ongoing evaluation of strategic alternatives with various interested parties to maximize shareholder value. The company is not providing full year 2025 financial guidance at this time.
Dominic: The company expects total revenue for the three months ending March 31, 2025 of at least 14 million.
Operator: With that, I'll turn the call over to the operator to open the call for your questions. Operator? If you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.
Dominic: With that I'll turn the call over to the operator to open the call for your questions operator.
Speaker Change: Thank you.
Speaker Change: If you'd like to ask a question. Please signal by pressing star one on your telephone keypad.
Speaker Change: If you're using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.
Marie Thibault: And our first question will come from Marie Thibault with BTIG. Hi, good morning. Thanks for taking the questions. I appreciate that you're not able to give 2025 guidance, but I did catch the commentary that post the strategic shift, you're looking for a more normalized business profile going forward. Can you characterize that for me a little further? It's just a little hard to know what a normal business profile is given the macroeconomic conditions. So any more details you can give on that would be helpful. Yes.
Marie Thibault: And our first question will come from Marie Thibault with BTG. Please proceed with your question Hi.
Marie Thibault: Hi, good morning, Thanks for taking the question.
Marie Thibault: I appreciate that Youre, not able to give 2025 guidance.
Marie Thibault: That's the commentary that post the strategic shift your ear looking for a more normalized business profile going forward can you characterize that for me a little further it it's just a little hard to know what a normal business profile is given the macroeconomic.
Marie Thibault: Conditions. So any more details you can give on that would be helpful.
Rajiv Da Silva: Hi, Marie. This is Rajiv. Thank you for the question. Look, you know, as you said, with the macroeconomic environment, it is a little hard to predict, right? Now, in addition to that, obviously, we've been through a lot of structural changes in the business. And I think what we're saying is that those structural changes are now behind us. and as we look forward to the rest of 2025, we would expect our performance versus prior year to begin to improve versus last year. In other words, we do not expect to see the level of decline versus prior year as we did in 2024.
Rajiv: Yes, Hi, Mary this is rajiv thank you for the question.
Marie Thibault: And they're gonna be.
Marie Thibault: As you said with the macroeconomic environment is a little hard to predict right. Now in addition to that obviously you've been through a lot of structural changes in the business and I think a little bit.
Marie Thibault: We're saying is that those structural changes are now behind us.
Marie Thibault: And <unk>.
Marie Thibault: You know as we look forward to <unk> to the rest of 2025, we would expect our performance versus prior year.
Marie Thibault: To begin to improve versus last year in other words, we do not expect to see the level of decline versus last year.
Marie Thibault: It's probably yes, we did in 2024.
Marie Thibault: You know, what's difficult to predict, of course, is what's going to happen in the global economy, tariffs impact on the business, etc. And that's why we're being cautious. We're also being cautious, because we continue to expect to have results from a strategic review of the business, which is obviously taking a little bit longer than expected. But in light of all of that, we didn't think it was prudent to have fully a guide. Okay. That's very helpful, Rajiv. Thank you.
Marie Thibault: What's difficult to predict of course is what's going to happen in the global economy tariffs impact on the business et cetera, and that's why we're being cautious we're also being cautious because they're going to be continuing to expect to.
Marie Thibault: Results from our strategic review.
Marie Thibault: Off the business, which has obviously taken a little bit longer than expected, but in light of all of that we didn't think it was prudent to have full year guidance.
Speaker Change: Okay. That's very helpful. Thank you and then my follow up I Wonder if you could give us a little more detail on how the zenith hair business is going I know that has been in.
Marie Thibault: And then my follow-up, I wonder if you could give us a little more detail on how the Venus hair business is going. I know that has been in the past sometimes a bright spot for the business. I know it's a well-regarded product for sure. So I'm curious how customers are viewing that, if there's been much uptake, what volumes are like, just a more detail on the hair business. Thank you.
Marie Thibault: In the past, sometimes a bright spot for the business I know, it's a well regarded product for sure some I'm curious.
Marie Thibault: How customers are viewing that if theres been much uptake what volumes are like just some more detail on the hair business. Thank you sure.
Rajiv Da Silva: Sure. As you know, we don't give product-level guidance, but we are pleased with the performance of the Venus hair business. And as you know, it's one of our higher-priced pieces of equipment. And despite that, we've had good performance, particularly on the Venus artist robot, both in the U.S. as well as outside the U.S. And more importantly, we've also been, despite our financial constraints, we've worked on some pretty important R&D innovations around the robot, and we look forward to progressing those in 2025. And then finally, it is also one of because of its profile, and as you pointed out, how well it is received by customers, that we've had more strategic interest in that specific business.
Speaker Change: We don't know, we don't give product level.
Marie Thibault: Guidance, but.
Marie Thibault: We are pleased with the performance of the business.
Marie Thibault: And as you know, it's one of our higher priced piece of equipment.
Marie Thibault: And despite that we've had.
Marie Thibault: We've had a good performance.
Marie Thibault: With the.
Marie Thibault: On the Divina Robot August robot.
Marie Thibault: Both in the U S as well as outside the U S. I think more importantly, we have also been despite.
Marie Thibault: Despite our.
Marie Thibault: Financial constraints to be worked on some pretty important.
Marie Thibault: The innovations around around the robot and we look forward to progressing those in in 2025.
Marie Thibault: And then finally he was also one of those businesses because of its profile.
Marie Thibault: And as you pointed out a whole whether it's received by customers there'd be pad more strategic interest in that in that space.
Marie Thibault: Vic business right so be be up.
Marie Thibault: So we continue to evaluate those options, as well as progress our internal R&D efforts. And it is an important value driver for the company. Well understood. Thank you so much. Thank you, Marie. Thank you.
Marie Thibault: Continuing to evaluate those options as well as progress our internal R&D efforts and.
Marie Thibault: It's a it it is a important value driver for the company.
Speaker Change: Well understood. Thank you so much.
Marie Thibault: Thank you Marie.
Speaker Change: Thank you.
Operator: As a reminder, if you'd like to ask a question, please signal by pressing star one on your telephone keypad, and if you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.
Speaker Change: A reminder, if you'd like to ask a question. Please signal by pressing star one on your telephone keypad and if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
Jeremy Perlman: The next questions are from the line of Jeremy Perlman with Maxim Group. Thank you for taking my question. Good morning.
Speaker Change: The next question is from the line of Jeremy problem with Maxim Group. Please proceed with your question.
Speaker Change: Thank you for taking my question. Good morning, just on it seems you know we mentioned on the call. The most of the strategic shift and done in 2024 is now behind US maybe if you can just talk a little bit about going into 2025, what's your strategy to maybe see some top line growth just across the business. Thanks.
Rajiv Da Silva: Just, it seems, you know, we mentioned on the call that most of the strategic shift is done in 2024 is now behind you. So maybe you could just talk a little bit about going into 2025, you know, what's your strategy to, you know, to maybe see some top on growth just across the business. Thanks. Sure. So, you know, outside the US, it's really about getting to a normal rhythm of ordering with our new distribution partners. You know, I think, as you said, the shift to distribution is complete, but distributor orders tend to be lumpy by its sheer nature.
Speaker Change: Sure. So you know.
Speaker Change: Outside the U S. It's really about getting to a normal rhythm of ordering with that and your distribution partners.
Speaker Change: I think as we said.
Speaker Change: The shift.
Speaker Change: The distribution is complete but.
Speaker Change: Boot orders tend to be lumpy by its nature and one of the things that you need to do in 2024 hours to get to a bit more of a rhythm.
Rajiv Da Silva: And one of the things we need to do in 2025 is to get to a bit more of a rhythm with those orders. And I suspect it will take us a couple of quarters to get to that point. But once we do, I think that we do look forward to growth in our international business.
Speaker Change: Orders and I suspect it will take US a couple of quarters to get to that point, but once we do.
Speaker Change: I think that would be we do look forward to growth in our international business.
Rajiv Da Silva: In the US, we look forward to launching our new body system sometime later this year. We have not given specific guidance as to when we expect that to be, but we are cautiously optimistic that it will be sometime in the early part of the second half of the year. And that we expect to be an important driver for the business. Understood.
Speaker Change: In the in the U S. We look forward to launching our new body system. Sometime later this year. We are we have we have not given specific guidance as to when we expect that to be but we are we are cautiously optimistic that it'll be sometime in the early part of the second half of the year.
Speaker Change: And that we expect to be a important driver for the business.
Rajiv Da Silva: And then maybe I know, you know, you've taken cost cutting measures, is there anything left on the table that you could, or that you know, you could, you could still see as gaining some, you know, extra savings there or are you operating as lean as possible? Yeah, look, I think, you know, we're at a point where The infrastructure is pretty efficient, and really, the issue is lack of critical mass of sales, right? So, in other words, with this existing cost base, we should be able to support a much higher level of sales. So, you know, we don't expect the need to add substantially to the cost base other than some marketing expense that kind of expands with sales as we go, but we also don't think there are.
Speaker Change: Understood and then maybe I know you've taken cost cutting measures is there anything left on the table that you could or.
Speaker Change: You can see that.
Speaker Change: You could still see us gaining some.
Speaker Change: Uh huh.
Speaker Change: Savings, there or you're operating as lean as possible.
Speaker Change: Yeah look I think we at a point where.
Speaker Change: The infrastructure.
Speaker Change: Is pretty efficient.
Speaker Change: Really what what would be the issue with lack of critical mass of sales right. So in other words with these existing cost base, we should be able to support.
Speaker Change: Excuse me it much higher.
Speaker Change: The level of sales.
Speaker Change: So we don't expect to need to add substantially.
Speaker Change: Substantially to the.
Speaker Change: The cost base other than variables to have some marketing expense that kind of expense with sales as we go but we also don't think there are.
Rajiv Da Silva: large areas of cost reduction opportunities that we have.
Speaker Change: Large areas of cost reduction opportunities that we have missed.
Rajiv Da Silva: Okay, and then just one last quick question. You know, everyone's, it's a hot topic, tariffs. How would that, does that affect, how would that affect your business at all? Maybe more internationally in the U.S.? Are your products produced in the U.S.? I'm just curious, maybe talk about how tariffs could have an effect on your business. Thanks. Sure. So our products, it depends on the business, our robot is assembled and manufactured in the U.S. Our energy-based products, for the most part, are manufactured in Israel. And, you know, depending, of course, you know, nothing is certain for sure, but so far, Israel has been protected from the increased tariffs.
Speaker Change: Okay understood and then just one last quick question I know everyone's thats, a hot topic tariffs how would that does that affect how would that affect your business at all maybe more internationally.
Speaker Change: In the U S are your products produced in the U S. I'm just curious maybe talk about how tariffs could have an effect on your business. Thanks.
Speaker Change: Sure so our products.
Speaker Change: Well it depends on the business hour, our robot is assembled and manufactured in the U S.
Speaker Change: Our energy based products for the most part.
Speaker Change: Manufactured in Israel.
Speaker Change: And you know depending up because you know nothing is certain for sure but so far.
Speaker Change: Israel has been protected from the increased tariffs so from that standpoint, we do not expect a substantial near term impact on our business.
Rajiv Da Silva: So from that standpoint, we do not expect a substantial near-term impact on our business. Okay, great.
Operator: Thank you so much for taking my question. We are currently showing no additional participants in the queue. That does conclude our conference for today. Thank you for your participation. Thank you.
Speaker Change: Okay, great. Thank you so much for taking my questions.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: We are currently showing no additional participants in the queue that does conclude our conference for today. Thank you for your participation.
Speaker Change: Alright, thank you.
Speaker Change: Thank you.
Speaker Change: Yeah.