Q1 2025 InMode Ltd Earnings Call
Yeah.
Good day, and welcome to <unk> fourth quarter.
2025 earnings results Conference call.
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Speaker Change: I would now like to turn the conference over to maybe recycle CEO of M. S. IR. Please go ahead.
Speaker Change: Thank you operator and to everyone for joining us today welcome to <unk> first quarter 2025 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.
Speaker Change: Statement outlined in todays 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.
Speaker Change: Materially from these 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.
Speaker Change: With that I'd like to turn the call over to Marcia Mizrahi CEO Ms. Yang. Please go ahead.
Speaker Change: Thank you Mary and to everyone for joining us.
Speaker Change: With me today, a doctor Microcline del <unk>, cofounder and Chief Technology Officer.
Speaker Change: Yeah ear Malka, our chief financial Officer, and one for Andy come on our VP of finance following our prepared remark, we will be all be available to answer your question.
Speaker Change: The medical aesthetic market continued to face a headwind driven primarily by ongoing macroeconomic uncertainty.
Speaker Change: And soft consumer demand.
Steve: Steve elective procedures, particularly in the surgical aesthetic segment are often among the first to be pulled back during periods of economic slowdown and.
Steve: And we will and we have seen that reflected in recent quarters across the last two years.
Steve: Patient all deferring treatment and provider are taking a more cautious approach to capital investment.
Steve: Despite this near term pressure we remain confidence.
Steve: In the fundamental of our business consumer interest in minimally invasive aesthetic procedure continued to be solid and we believe the demand what are we doing as macro conditions stabilize and consumer confidence start to grow we made a deliberate deliverable.
Steve: Decision as a company not to cut corners, not to reduce our work force and to remain committed to leading the industry because we believe that when the market rebound and demand will will we tell them, we will be ready to lead.
Steve: And benefit as we have in the past following the major challenges.
Steve: Later this year, we plan to unveil a new platforms designed for wellness market further we're expecting the depth of our product portfolio. This addition reflect our ongoing strategy to diversify our offering and tap into a new.
Steve: Segment, we look forward to sharing more detail.
Steve: As we approach the official lounge.
Steve: Stated in the press release, we are proud to have completed our fifth share purchase program. This months earlier. This month, we purchased 6.95 million shares.
Steve: Selling 127 million.
Steve: Dollars in fact over the past 12 months alone we have returned more than $412 million to the shareholders through share repurchase.
Steve: Representing approximately 27% of our total capital.
Steve: Finally, despite the macroeconomic challenges we believe in mode is uniquely positioned to lead through this cycle.
Steve: With a strong balance sheet and diversified portfolio and industry leading technology.
Speaker Change: Now I would like to turn the call over to your ear, our Chief Financial Officer.
your ear: Thanks, Moshe and Hello, everyone. Thank you for joining us I would like to review, our Q1 2025 financial results in more detail.
Speaker Change: Starting with total revenue, even more generated $77 $9 million in the first quarter of 2025, a decrease of 3% compared to the first quarter of last year.
Speaker Change: Gross margin was 78% non-GAAP on a GAAP basis compared to 80% in Q1 'twenty 'twenty four.
Speaker Change: non-GAAP gross margins were 17, 9% in the first quarter compared to 80% in Q1 of 2024.
Speaker Change: In Q1, our minimally invasive platforms increased to be 87% of total revenues.
Speaker Change: Moving to our international operations first quarter sales outside of the U S.
Speaker Change: It accounted for $38 million or 49% of says a 1% increase compared to Q1 last year.
Speaker Change: In Q1, Europe was the largest revenue contributor from outside the U S and reached a record says number.
Speaker Change: To support our operations and growth. We currently have a sales team of more than 281 direct reps and 76 countries with distributors worldwide.
Speaker Change: GAAP operating expenses in the first quarter were $45 3 million.
Speaker Change: A 1% decrease year over year.
Speaker Change: Sales and marketing expenses decreased to $39 7 million in the first quarter compared to $39 $8 million in the same period last year.
Speaker Change: Share based compensation decreased to $2 $5 million in the first quarter of 2025.
Speaker Change: On a non-GAAP basis operating expenses were $43 1 million daus in the quarter compared to $42 $3 million in the same quarter of 2024, representing a 2% increase.
Speaker Change: GAAP operating margin in Q1 was 20% compared to 23% in the first quarter of 2024.
Speaker Change: While non-GAAP operating margin in the first quarter was 23% compared to 27% in the first quarter of 2024.
Speaker Change: GAAP diluted earnings per share for the first quarter were 26 cents compared to 28.
Speaker Change: The teacher in Q1 of 2024.
Speaker Change: non-GAAP diluted earnings per share for this quarter were 31 cents compared to 32 cents per diluted share in the first quarter of 2024.
Speaker Change: Once again, we ended the quarter with a strong balance sheet as of March 31st 2025, The company had cash and cash equivalents marketable securities and deposits of $512 $9 million this quarter and will generated $14 million from operating activities.
Speaker Change: As Michel mentioned, we remain committed to delivering shareholder value and returning capital to our investors in a disciplined and strategic manner.
Speaker Change: In addition, we continue to evaluate all avenues for capital allocation, including additional share repurchases potential dividend and strategic M&A.
Speaker Change: Our approach remains focused on minimize and maximize long term shareholder value, while preserving the strength and flexibility of our balance sheet.
Speaker Change: Looking ahead, we expect the wine share of international markets, along with the continued pressure.
Speaker Change: In the U S market to reduce operating margins by around 4% to 5%.
Speaker Change: In addition, we use U S tariffs as their current levels of 10%, we anticipate an impact of approximately 2% to 3% on our gross margins.
Speaker Change: As the situation remains fluid we are closely monitoring developments and will adjust our forecast and strategy accordingly.
Speaker Change: Before I turn the call back to Michelle I'd like to reiterate our guidance for 2025.
Speaker Change: Revenues between $395 million to $405 million.
Speaker Change: non-GAAP gross margins between 78% to 80%.
Speaker Change: Compared to previous guidance of 80% to 82%.
Speaker Change: non-GAAP income from operations between $101 million to $106 million compared.
Speaker Change: Compared to previous guidance of $30 million 30.
Speaker Change: $35 million.
Speaker Change: non-GAAP earnings per diluted share between $1.64 to $1 68, compared to previous guidance of $1 95 to $1.99.
Moshe: I will now turn over the call back to Moshe.
Speaker Change: Thank you operator, we're ready for Q&A session.
Moshe: Thank you.
Speaker Change: We will now begin the question and answer session.
Moshe: You ask a question you May press Star then one on your telephone keypad.
Moshe: If youre using a speakerphone please pick up your handset before pressing the keys.
Moshe: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Moshe: At this time, we will pass momentarily to assemble our roster.
Moshe: Okay.
Matt: Our first question comes from Matt <unk> from Barclays. Please go ahead.
Matt: Hey, Thanks, good morning, Thanks for taking the questions.
Matt: So maybe just a follow up on that.
Matt: This dynamic is mix.
Matt: And a walk through.
Sure.
Matt: When that started.
Matt: And more significantly.
Matt: And how mix across some of your <unk>.
Matt: Product lines or capital versus consumable is playing into the New guide then add one.
Matt: One quick follow up.
Matt: Yes.
Matt: Well.
Matt: I mean that the slowdown that we're experiencing today.
Matt: <unk> started in the middle of 2023.
Matt: All the way the almost a seven quarter.
Matt: It started in the middle of 2023, when interest rate and inflation went up significantly in the United States at that time, the leasing companies have raised the interest rate on leasing packages, which as you know.
Matt: The main.
Matt: Financing method for physician doctors and clinicians to buy our equipment.
Matt: Typically our interest rate was around six 7% on five years lease package and it went up to approximately 14 and 15%.
Matt: Which this the slowdown in capital equipment expenditure capital equipment purchasing by by Doctor.
Matt: In addition to that.
Matt: Consumer confidence went down in the last year, which also brought down that that that the numbers of.
Matt: The number of procedures that are being performed by Doctor we have to remember that minimally invasive procedures are not the typical 300 to $400.
Matt: As the treatment for hair removal skin rejuvenation is can cost thousands of dollars I mean, if it's a minimally invasive RFA yadkin caused for $5000 per treatment.
Matt: And then also on the Moorefield, it's not the three $400. So people are when a slowdown.
Matt: They try to postpone treatment, which are relatively expensive endeavor.
Matt: In the in the medical aesthetic, especially especially in <unk>.
Matt: <unk> and that's also.
Matt: Did not help us I can give you the numbers on Q1, we saw.
Matt: <unk> 237000 disposable.
Matt: Each disposable it's probably may be in some in most cases is one treatment.
Matt: It may be in Latin America, and other places and they use it twice, but it's it's basically bay, it's basically built it to be.
Matt: I think our single use.
Matt: Disposable pill treatment.
Matt: At the same time two years ago at the end of the first quarter of 2023 we saw the 240 of.
Matt: Something like that but we need to take into consideration that during the last two years, we have installed another close.
Matt: Close to 9000 system worldwide that mean that the average doctor or went down around I would say a 30%.
Matt: Uses of 30% less treatment, which are minimal databases and this is this is the main I would say factors that determine a how many how many patients are basically considering doing minimally invasive.
Matt: As of now I have to say based on the based on the first quarter.
Matt: And and the start of the second quarter, we don't see the light at the end of the tunnel, we don't see the slowdown coming with some new momentum.
Matt: Uh huh.
Matt: We have introduced two new platforms to the market and and usually when we introduced two new system to the market, we see a new momentum.
Matt: Currently since that 2024, we do not see that yet and that's the main reason why we are selling less than the first quarter in 2000 22024.
Matt: Even more than 80 versus 79, because on the first quarter 'twenty four if everybody remember we had the Warren as well and that's also suspend and some of the says this this quarter, we did not have any any.
Matt: Obstacle.
Matt: As the war.
Matt: To stop down or to slow down was down so the first quarter of 2025.
Matt: Is that is not a good quarter for us I have to say, but we are confident that once everything will get back to normal.
Matt: We will we will close the gap and go back to normal growth.
Matt: Got it.
Matt: The mix has been going on for a while but now we're seeing kind of the pull through.
Matt: Utilization mix.
Matt: That would account for the additional comments in the press release and the guide is that yes.
Matt: If you look at if you are talking about Joe geographic mix. If you look at the 2023 24 U S. Usually accounted for 62, 63%.
Matt: Of.
Matt: The total revenue.
Matt: And this quarter there.
Matt: Went down almost 50% so we definitely.
Matt: Now uses 50% now with that below 60%, but again that's percentage wise, yes.
Matt: The decline or the decrease in the U S market was much more than the rest of the world.
Go ahead.
Matt: In the U S. Our strongest mainly because we are also one of the largest players in the U S.
Matt: Right.
Speaker Change: Helpful Color just one quick follow up on the guide as well.
Speaker Change: The shortfall in Q1 right now several weeks ago.
Speaker Change: But holding that guide.
Speaker Change: We're in that dynamic do you expect is it is it stronger.
Speaker Change: Trends or U S or is it some.
Speaker Change: Delayed deals in the U S that will come back.
Speaker Change: Gets you to holding the guidance.
Speaker Change: So we're trying to be what.
Speaker Change: To be optimistic.
Speaker Change: And we try to think about the market in the U S that probably it will come back during 2024, alright, but 2025, but to be honest with you.
Speaker Change: It's all depend how the results on Q Q2 will look like if the results of Q2 will not be significant higher than what we saw on Q1, we will have to lower the guidance.
Speaker Change: Q2 is much stronger than Q1 on a seasonality base because Q1. After Q4 is always a slower quarter in Q2 is our strongest quarter. So we're waiting to see how Q2.
Speaker Change: Uh huh.
Speaker Change: We'll recover or if I can say it this way.
Speaker Change: Q1.
Speaker Change: Usually are usually is not the strongest months. So we don't see it yet but may and June hopefully will be stronger if we will do as we anticipate in Q2, we will maintain the guidance if we not we'll have to touch it.
Speaker Change: Understood. Thank you so much.
Speaker Change: Yes.
Danielle <unk>: Thank you. Your next question comes from Danielle <unk> from UBS. Please go ahead.
Danielle <unk>: Hey, good morning, good morning, guys. Thanks, so much for taking the question.
Justin: Hey, Justin.
Justin: Just a follow up on what you just said thanks for all the color you're giving.
Justin: I mean I guess.
Justin: How much it's hard there's no real precedent for their current times that we're in but I'm thinking less specifically about the tariff impact and things like that but how are you guys factoring in things like potential.
Justin: Like weaker economic environment going forward.
Justin: Or would that cause incremental downside pressure to the guidance. So thinking about where we are what we go into a recession. I know these are all questions right now, but a little bit more color on sort of the macro environment that you're factoring into the guidance reiteration there would be helpful. Thank you.
Justin: Well I believe I believe will stay we say that Amen.
Justin: We gave the guidance of $400 million or 295, four or five at the beginning of the year.
Justin: When we knew that the first quarter is usually a 20% of that of the year.
Justin: So I mean, 20% to $480 million, we did less we did 77 or $78 million not far from the basic guidance that.
Justin: Does that help us to guide there.
Justin: <unk> Q2 should be much higher I would say at least 25 to 225 or more percent of Q1, because Q2, usually represent 25 or 26 up to 27% of the total year and then Q3 is also very slow one in queue.
Justin: <unk> four is the strongest.
Justin: So based on that and the 77 or $78 million that we did we decided not to lower the guidance at this stage, hoping that we will see some momentum in the next two quarters.
Justin: And I will say it again, if it will not happen in.
Justin: In Q2.
Justin: I.
Justin: Mean that Q2 will not be 25% to 26% of the euro means that it will not be above $100 million, we will need to lower the guidance.
Justin: Okay got it that's helpful.
Justin: And just to confirm I mean, I know you guys are still investing in the business, but how.
Justin: And I appreciate that strategy very much but how are you keeping the sales force engaged at a time like this.
Justin: And maybe you could talk a little bit about how you did it during COVID-19 and what practices you're implementing here from your learnings that thanks, so much.
Justin: Well the public time was totally different.
Justin: The Covid time, we wish.
Justin: We stopped selling for almost four months zero.
Justin: And and we took the risk because we said we are a growing company we have a good sales team.
Justin: In the U S and Canada and in some countries, where we started subsidiaries and we said we don't want to lose them.
Justin: Because it's all about people.
Justin: I mean this is this is the talent I mean, if we lose them like the other company filed them and we hire them when the covered will will disappear or when will the covered then we might not be able to find them. They will go to other competitors. So we kept everybody and we took the risk it cost us about $10 million a year.
Justin: This time, we're still selling we did not stop selling there was a slowdown of course, it's a more than 25% of what we sold.
Speaker Change: Quarter in 2023, and <unk> and the profit went down 50% not 25%.
Speaker Change: From $45 million, a quarter or $221 million a quarter on a non-GAAP basis.
Speaker Change: But again, we have the resources and we made the same decision, although it's helping our profitability. We can cut cost some like kind of down $5 $6 million a quarter by firing some of the engineers and stop developing or get ahead of some of the sale.
Speaker Change: People.
Speaker Change: This type of behavior or this type of philosophy communicate something that.
Speaker Change: Not solid to their to the company because we're not a capital intensive company, where people intensive company and that's where we're taking against the risk maybe it will help our profitability, but in the future. If everything will go in and say that if nobody know when and how and how long it.
Speaker Change: We'll take we don't know and we don't want to predict we made the mistakes in the middle of 2024, and we said that in the second half of 2024, the market will go back to normal and he did it.
Speaker Change: And you know we have to eat.
Speaker Change: The statement that we that we said and we don't we will not do it again.
Speaker Change: So right now.
Speaker Change: We continue to develop we bring new a new a new product to the market no not in 2025 and 2025, we have probably another product to bring to the market, but but in 2026, we'll see.
Speaker Change: One thing I want to say we are in the in 2024 were in the middle of the slowdown we decided to be to bring two new products to the market the ignite and the Optimus Max.
Speaker Change: Now.
Speaker Change: This is because we thought maybe the market will get better on a typical slowdown it's not smart to bring your best product to the market to lounge them you have to wait, but we did it and.
And we hope that you know when the market will recover we will do better again.
Speaker Change: Got you thank you for that.
Bill: Thank you Bill.
Speaker Change: Before we take the next question a reminder to all the participants if you wish to register for a question. Please press star one now.
Speaker Change: Our next question comes from Matt Taylor from Jefferies. Please go ahead.
Speaker Change: Okay.
Speaker Change: Alright, Thank you for taking the question sorry.
Speaker Change: So I did want to follow up on the guidance question.
Speaker Change: And more specifically, what you're expecting for Q2 and the phasing for the rest of the year and then my other question was on the tariffs if you could be specific about.
Speaker Change: Where the impact is coming from in your tariff guidance.
Speaker Change: Yeah.
Speaker Change: Okay, let's start with the guidance.
Speaker Change: We gave a 40 $400 million in the beginning of the year.
Speaker Change: This is based on $80 million in the first quarter.
Speaker Change: Oh, 81, or 82, something similar to that.
Speaker Change: 101 hundred and and.
Speaker Change: $102 million on the second quarter.
Speaker Change: That is about let's say 185.
Speaker Change: And then another I would say $90 million on the third quarter and the rest of the fourth quarter. That's a typical seasonality of this industry I know in 2024, it did not happen in 2023, the third and the fourth quarter.
Speaker Change: Behaves differently because that was the start of the slowdown.
Speaker Change: But if you grow years ago that was the typical seasonality for the medical aesthetic.
Speaker Change: Now.
Speaker Change: And that's how we came up with the $400 million.
Speaker Change: Because we thought we want to stabilize the company, we did about close to $400 million in 2024, and we would like to repeat that number and if the market will behave differently than we will see what to do.
Speaker Change: Q1, two would be and I'll be honest Q1 would be 90 or $95 million. We will know that we will lower the guidance absolutely.
Speaker Change: No other way.
Speaker Change: We know what can happen in the third and the fourth quarter. The third quarter is usually slow because its summer time people don't do aesthetic procedure in the summer time. They go to they go on vacation and they spend the money there in the fourth quarter is strong the strongest one but unfortunately on Q4 2024.
Speaker Change: It was it was a very slow down quarter did not help us.
Speaker Change: So this is how we calculate the guidance and this is why we said okay. We are less than what we anticipated in Q2 Q1 are we going to low the market the targets the guidance or not and finally, we decided not to wait for the second quarter that was internal decision that we.
Speaker Change: Made as a management.
Speaker Change: Now regarding the regarding the tariffs.
Speaker Change: The terrorists the original tariff that was imposed in Israel was at 17%.
Speaker Change: Now the business in the U S is 50%.
Speaker Change: The transfer price on which we're paying the tariff, let's say, it's also 50% so the tariff effect, 17% on 25%.
Speaker Change: Basically divide the tariffs to 17% by for that.
Speaker Change: Rough calculation met.
Speaker Change: So if it's 17% it should be above 4% effect on the gross margin and also on the bottom line.
Speaker Change: If it's remain not remain 17 and it will be 10 like like what what is the what is now because of that as you know the president of the U S decided to give some kind of relief for three months before we imposed everything then if it's if it's 10%.
Speaker Change: Dan It's it's between two to three a pound something like two 5% on the on the gross margin and on the bottom line.
Speaker Change: How we calculated that but I want to tell you that everybody is confused.
Speaker Change: Including the customer priorities in the United States, They don't know what to do.
Speaker Change: What is include software announced software if we buy components from the U S can we deduct them or not deduct them. Those uncertainty right now nobody explained there was no rules nobody published something.
Speaker Change: We had discussed that with our Pwc auditors and they don't know everybody's guessing so we need to wait and see some for some clarification.
Speaker Change: Okay. Thanks for that and maybe just one follow up on the guidance. So it sounds like you're really forecasting the market and the seasonality I didn't hear anything about the new product I mean, do you expect the new products to contribute to the guidance how important are they to getting to the $400 million.
Speaker Change: Well, Matt we.
Speaker Change: We are bringing a new product almost every year.
Speaker Change: And always the new product or are you know if we have like for example, like now 10 10 platforms. The new products are not 20% of the total new products down more than 20%.
Speaker Change: And and and therefore, it's always a you know the all products are less than 20% in the new product are a little bit more than 20%, but the total remained the same when we are growing.
Speaker Change: And then the new product you know are the winner and then contribute some of the growth when we're not going we cannot anticipate that the new product will bring more than the average.
Speaker Change: Okay, great. Thanks, Thanks for the color.
Speaker Change: I'll pass on to the next person.
Speaker Change: Sure.
Thank you.
Okay. Your next question comes from Caitlin Cronin from Canaccord Genuity. Please go ahead.
Speaker Change: Okay.
Caitlin Cronin: Hi, Thanks for taking the question.
Caitlin Cronin: So I know you guys have noted expectations to maintain your sales force and spending I mean, any kind of updated guidance for opex. This year, given the continued macro challenges.
Caitlin Cronin: We are purchasing goods demo.
Caitlin Cronin: Youre talking to the guidance for the.
Caitlin Cronin: Operating profit.
We wish guidance talk about.
Caitlin Cronin: Yes. This is the operating expenses.
Speaker Change: I think you guys have talked about kind of maintaining you know not not letting anyone.
Speaker Change: Maintaining our sales and marketing type stuff, but I mean, any kind of updated expectations there.
Speaker Change: So the expectation is it will continue to keep the oil.
Speaker Change: All right.
Speaker Change: The investment that we plan to do in the beginning of the year, including expansion of the teams.
Speaker Change: Whether in the U S or internationally, where we open new subsidiaries.
Speaker Change: This results in additional cost.
Speaker Change: And as I mentioned regarding the change in the geographical areas.
Speaker Change: Our revenue mix.
Speaker Change: U S.
Speaker Change: <unk>.
Speaker Change: For headwinds than in the rest of the world that would.
Speaker Change: We have additional impact on the profitability at the end of the day.
Speaker Change: And we are expecting a roughly around 45% impact on it from that.
Speaker Change: Got it Okay, and then any updates on the U S management structure Moshe I know.
Speaker Change: As the interim president of <unk>.
Speaker Change: North America any updates there.
Speaker Change: We have not yet hired a new president for the U S on nominated somebody from within <unk>.
Speaker Change: Still I'm still.
Speaker Change: Uh huh.
Speaker Change: The active I would say.
Speaker Change: The acting president of the U S. I spend every months for few days in the U S and do you know.
Speaker Change: I'm doing it from Israel most of the time, but every months I'm in the U S with the with the team.
Speaker Change: Got it thanks for taking the questions.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Next question comes from Mike Matson from Needham and co. Please go ahead.
Mike Matson: Yeah. Thanks, So just one on the tariffs so it sounds like youre, not assuming youre able to offset the tariff impact with price increases. So is that right and I guess why why not try to pass some of that through to your customers.
Speaker Change: Well.
Speaker Change: We thought about it Mike, but in a tough market like this.
Speaker Change: We will go to the market and waste prices, just because well an Israeli company and North American company.
Speaker Change: And explained that this is an important product and we have to raise prices. It will not help us you.
Speaker Change: You are not raising prices in a market, where where the trend is down.
Speaker Change: Or where the slowdown you know.
Speaker Change: And when the market is very sensitive to price, especially when the interest rate on the leasing packages are high and the monthly payments go higher again as well because of the interest rate.
Speaker Change: So we have decided not to raise prices not the waste prices because of the tariff.
Speaker Change: And the only the only way the only on the time that we are raising prices is when we bring new product to the market and if the new product.
Speaker Change: Ah you know an upgrade for something similar that we saw then maybe we can wait a little bit the price, but other than that from a marketing and commercial point of view I don't think it will be smart right now for even more to go to the market and waste prices, let's say, but 10% no it will not.
Speaker Change: <unk>.
Speaker Change: Okay, Yeah that makes sense and then just the wellness platform that you mentioned.
Speaker Change: Do you expect to launch that and given your commentary around kind of.
Speaker Change: Better to help launches during when the market's recovering our stronger is that something where youre going to maybe hold off until you see signs of.
Speaker Change: Improvement in the market.
Speaker Change: The two wellness product that we have today one is the empower for women health for Su, I and some vaginal treatment and otherwise is envision for dry eye and Barry orbital treatment.
Speaker Change: Both of them were still selling both of them and by the way we started to hire specific salespeople just for.
Speaker Change: This product, which is more medical than the others, but but what we what we see now that dose product the revenue from those product wind down.
Speaker Change: In the same 20 or 25% that we're experiencing.
Speaker Change: The entire portfolio.
Speaker Change: Yes, sorry, I was referring to the I think you said earlier in the call that you were going to have a new platform for wellness, yes, yes, sorry.
Speaker Change: Yes, we have we have a new product that we will bring to the market.
Speaker Change: For <unk> and we will release the indication once we finish with that with the clinical study is going to be later this year, we're not sure exactly when we announce it once we decide.
Speaker Change: Okay got it thank you.
Speaker Change: Yeah.
Thank you.
Speaker Change: The next question comes from Sam <unk> from BTG. Please go ahead.
Speaker Change: Hey, good morning, everyone. Thanks for taking our questions here, maybe I could just start on a clarifying question on the tariff impact is that 2% to 3%.
Speaker Change: On a full year basis Sofia assume those go into effect, maybe July one the impact would be closer to 1% and then is that reflected in the 78% to 80% gross margin guidance.
Speaker Change: No we did not take it into account yet, yes, yes, yes, yes, yes, and yes, yes on both.
Speaker Change: On both yes, yes on both question two to three on another oil assuming it remains 10%. If you go back to the 10% we will need to.
Speaker Change: Ill get back in updated guidance, we really hope is going to stay at 10%, but no one really knows what's going on.
Speaker Change: Until that administration makes.
Speaker Change: Your final decisions and yes, we did count.
Speaker Change: It into the existing guidance.
Speaker Change: Assuming 10% tariffs from Q2 through Q4.
Speaker Change: Okay.
Speaker Change: Vacation.
Speaker Change: Okay. That's helpful. And then maybe I can use my follow up on capital allocation.
Speaker Change: It sounds like more to more to come for the rest of the year I guess any way.
Speaker Change: How youre thinking about prioritizing share repurchases dividends M&A.
Speaker Change: And then any more details in terms of the tax impact if you were to do an additional share repurchase program.
Speaker Change: Later this year.
Speaker Change: Well I will start from your last question, we are not considering right now to do another show business purpose purchase.
Speaker Change: Now.
Speaker Change: I'm just just just just to take you two days three we started to do.
Speaker Change: Share buyback.
Speaker Change: About two and a half values ago, we started when the stock was 50 and 60.
Speaker Change: And we bought already.
Speaker Change: Our stock for $500 million Baidu, a $508 million.
Speaker Change: With the average price per share of.
Speaker Change: All together all the all the packages all the probe program, which was about four to five program. The price per share that we purchase was close to $20 million $20 a share which is just to be precise 19 point 90 $519 95.
Speaker Change: Now actually from an investment point of view of the company, we actually invested $500 million, but it did not help the stock price the stock price on 15 today.
Speaker Change: So basically it was not the best.
Speaker Change: Best investment form from the Corporation point of view and I'm sure. It was not the best investment from the shareholders' point of view.
Speaker Change: So we need to think right now what to do.
Speaker Change: Because you know.
Speaker Change: Basically we leftover with $500 million.
Speaker Change: Yes.
Speaker Change: We invested five or spend $500 million for buyback with no results.
Speaker Change: And to the shareholders and to the company and if we want to do any acquisition, which we believe that's something that we're considering we don't want to be left with no cash no no money to do it so right now and that point after we bought 30% of the stock.
Speaker Change: For $500 million, we're not considering another one in the near future.
Speaker Change: Okay. That's helpful. And then maybe I could just squeeze a last one here just because it hasn't been asked yet.
Speaker Change: Europe, and what Youre seeing there that makes that market relatively stronger than maybe what youre seeing in the U S and <unk>.
Speaker Change: I guess, how sustainable that strength.
Speaker Change: What in your in Europe.
Speaker Change: Uh huh.
Speaker Change: Subsidiaries in.
Speaker Change: In Europe, the first quarter was better.
Speaker Change: As you know we are we made a lot of changes in the management of our subsidiaries.
Speaker Change: And it's work well.
Speaker Change: And Europe now performing better than the U S. You know per capita or bill.
Speaker Change: Country.
Speaker Change: <unk> in Europe are less than in the U S per system.
Speaker Change: And you have to take into consideration that in many countries in Europe, we still sell through distributors. So we are recognizing only the transfer price we're not recognizing the full price.
Speaker Change: We just we just are in Europe. The credit is getting tighter because those sign of inflation in certain countries, which will not help us and therefore, we had to open a pool with the leasing company to help to share the risk with them like we do in <unk>.
Speaker Change: To state the <unk>.
Speaker Change: All that we opened in 2020, 446% and <unk> and we will see hopefully it will help and it will keep the momentum will keep some kind of the growth.
Speaker Change: In Europe.
Speaker Change: And then in.
Speaker Change: Now to the distributors and the end through the subsidiaries.
Speaker Change: Great. Thanks for taking the question Sir.
Speaker Change: Thank you.
Speaker Change: The next question comes from Dane Reinhardt from Baird. Please go ahead.
Dane Reinhardt: Hey, guys. Thanks for the time here, maybe a follow up on Mike's question regarding pricing on the systems here I know it sounds like youre not raising prices on kind of existing products, but you did mentioned that you would take price on the new products and just kind of based on the math that you report out with systems revenue.
Dane Reinhardt: And new placements that you've installed kind of in the past few quarters. It does seem like there's been kind of a noticeable step up in asps, particularly in the U S. So have you raised prices on those new Optimus Max and ignite platforms, and how does that seem to be kind of being received by your customers at this point.
Speaker Change: We did not only surprised us on the ignite the prices that we setup for the ignite and Optimus Max in 2024, we did not change them because of the tariff the same price prices.
Speaker Change: What I said is whenever we introduce a new system like Optima smacks to replace the Optimus then the Optimus Max is priced a little bit higher than the Optimus.
Speaker Change: When we launched ignite to replace the board decide not to replace to complement the body type then we the price for the ignite was higher than that.
Speaker Change: <unk>.
Speaker Change: The regular the body type platforms, but when you bring new platforms on on a new indication than the <unk>.
Speaker Change: Prices need to be compatible to the market and not prices that you won I mean and certain technology. When we're unique we can charge a little bit more but this prior to this market right now, it's very competitive and therefore, we see no no way or no reason to raise prices in the middle.
Speaker Change: The slowdown or just because of the tariffs.
Speaker Change: Okay. Thanks for that yes.
Speaker Change: Just clarifying that there was a price increase on like Optimus Max relative to optimize so.
Speaker Change: That's helpful. And then just my second follow up obviously, the U S consumer confidence has kind of slowed here as we move throughout.
Speaker Change: Throughout the first quarter. So just from a cadence perspective, I know what you laid out through kind of Q2 through Q4, but just within the first quarter itself did you kind of see any worsening from January to March and into April just as those U S consumer confidence numbers have kind of a weekend.
Speaker Change: Thanks again.
Speaker Change: Well.
Speaker Change: The consumer confidence went down isn't it.
Speaker Change: But especially when it comes to capital equipment. Most of the revenue is anyway in March a January and February.
Speaker Change: I'll slow anyway, so you cannot really make too much out of comparing the cadence of the consumer confidence index.
During January through March and expect to see an impact throughout the quarter. Most of the revenue every quarter, we generate most of the revenue in the last quarter of <unk>.
In the last months of the quarter so.
Speaker Change: It will be interesting to see how.
Speaker Change: June and overall Q2 look like comparing to Q1.
Speaker Change: Does that answer your question.
Speaker Change: Yes that does thank you very much.
Speaker Change: Just maybe even one follow up here I'll tack on I'm not sure. If you answered it in the prior question, but what can you just remind us what again potential tax implications would be if you did do any sort of dividend because I know you've kind of mentioned that.
Speaker Change: But it seems like.
Speaker Change: Baxter off the table may be looking at M&A, but just remind us the tax implications. If you did do.
Speaker Change: Dividend now.
Speaker Change: On a dividend according to the Israeli tax law.
Speaker Change: Have to you have to pay 20% dividend tax before you distribute the money. So for example, if you want to allocate $100 million for dividend, 20% check you said for the Israeli IRS as Andy and $80 million to the to the shareholders.
Speaker Change: Okay.
I think you're on mute.
Speaker Change: Milligan.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session.
Speaker Change: I'd now like to turn the conference back over to Moshe Massaro, and most CEO for closing remarks.
Speaker Change: Okay. Thank you operator, thank you Mary.
Moshe Massaro: Want to thank first our team in more team worldwide that work very hard in the first quarter like always.
Speaker Change: Knowing that there was slowdown.
Speaker Change: And that we have to perform.
Speaker Change: I want to thank all the shareholders for being with us in this earning call.
Speaker Change: As we said.
Speaker Change: We meet again some time in.
Speaker Change: In June and July.
Speaker Change: Hopefully the market will improve by then and we will be a little bit more optimistic thank.
Speaker Change: Thank you all.
Speaker Change: Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].