Q1 2025 AirSculpt Technologies Inc Earnings Call
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Operator: Greetings and welcome to the Airsculpt Technologies, Inc. first quarter 2025 earnings call. At this time, all participants are in a listen only mode.
Greetings and welcome to the Air Sculpt Technologies, Inc. First quarter 'twenty 25 earnings call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation should anyone require operator assistance during the conference. Please press star zero on your telephone.
Operator: A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
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As a reminder, this conference is being recorded.
Allison Malkin: It is now my pleasure to introduce your host, Allison Malkin of ICR. Thank you. You may begin.
Speaker Change: It is now my pleasure to introduce your host Allison Malkin of ICR. Thank you you may begin.
Allison Malkin: Good morning, everyone. Thank you for joining us to discuss Airsculpt Technology's results for the first quarter of fiscal 2025.
Speaker Change: Good morning, everyone. Thank you for joining us to discuss air Sculpt Technologies' results for the first quarter of fiscal 2025, joining me on the call today are Yogi, just nanny, Chief Executive Officer, and Dennis Steen, Chief Financial Officer before we begin I would like to remind you that this conference call may include forward.
Allison Malkin: Joining me on the call today are Yogi Jashnani, Chief Executive Officer, and Dennis Dean, Chief Financial Officer.
Allison Malkin: Before we begin, I would like to remind you that this conference call may include four looking statements. These statements may include our future expectations regarding financial results and guidance, market opportunities and our growth. Risks and uncertainties that may impact these statements and could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we file with the SEC, all of which can be found on our website at investors.airsculpt.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law.
Speaker Change: Looking statements. These statements may include our future expectations regarding financial results and guidance market opportunities and our ground.
Speaker Change: Risks and uncertainties that may impact these statements and could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we file with the SEC all of which can be found on our website at investors that are Scott dotcom.
Speaker Change: We undertake no obligation to revise or update any forward looking statements or information, except as required by law.
Allison Malkin: During our call today, we will also reference non GAAP financial measures. We use non GAAP measures in some of our financial discussions, as we believe they more accurately represent the true operational performance and underlying results of our business. A reconciliation of these measures can be found in our earnings release as filed this morning and in our most recent 10Q which will also be available on our website.
Speaker Change: During our call today, we will also reference non-GAAP financial measures, we use non-GAAP measures in some of our financial discussions as we believe they more accurately represent the true operational performance and underlying results of our business.
Speaker Change: A reconciliation of these measures can be found in our earnings release filed this morning and in our most recent 10-Q, which will also be available on our website for todays call Yogi will begin with an overview of the first quarter performance and share an update on our strategic.
Allison Malkin: For today's call, Yogi will begin with an overview of the first quarter performance and share an update on our strategic priorities.
Allison Malkin: Then Dennis will review our financial results in more detail and provide our With that, I'll turn the call over to Yogi.
Speaker Change: Then Dennis will review, our financial results in more detail and provide our outlook with that I'll turn the call over to Yogi.
Yogesh Jashnani: Thank you, Allison. Good morning, everyone. And thank you for joining today's call. When I stepped into the CEO role earlier this year, we were facing clear headwinds, both from a softening consumer environment and from internal challenges that had built up over time. We approached 2025 with a focused plan to stabilize performance and lay the foundation for long term growth. Our Q1 results were in line with expectations, and while we are still in the early stages of our transformation, I'm encouraged by the traction we are seeing across key initiatives. Importantly, our early efforts around cost discipline, marketing efficiency, and operational rigor are showing measurable impact.
Yogi Justnanny: Thank you Alison good morning, everyone and thank you for joining today's call.
Speaker Change: I stepped into the CEO role or you got this year vehicle pricing tier headwind, both from a softening consumer environment I'm from Darden challenges.
Yogi Justnanny: Creep up over time.
Yogi Justnanny: We approach 2025, with a focused plan to stabilize performance and laid the foundation for long term growth.
Our Q1 results were in line with expectations and while we are still in the early stages of our transformation.
Yogi Justnanny: Alright, the traction we are seeing across key initiatives.
Yogi Justnanny: Importantly, our early efforts around cost disciplined marketing efficiency.
Yogi Justnanny: Operational rigor are showing measurable impact.
Yogesh Jashnani: Transformations are never linear, especially in a dynamic consumer environment, but I remain confident that we are taking the right steps to reposition the business for sustained success. In total for the first quarter, revenue was $39.4 million, declining 17.3% from the first quarter of 2024 and adjusted EBITDA was $3.8 million for a margin of 9.5% versus $7.3 million. and a margin of 15.4% in the first quarter of 2024. The decline in revenue was driven by lower case volume with average revenue per case up slightly. The pressure on cases was anticipated and reflected the decision to pull back marketing spend in the back half of last year, and was further compounded by a tough macroeconomic environment.
Yogi Justnanny: Transformations are never linear, especially in a dynamic consumer environment, but I remain confident that we are taking the right steps to reposition the business for sustained success.
Yogi Justnanny: Importantly for the first quarter revenue was $49 $4 million declined 17, 3% from the fourth quarter of 2024.
Yogi Justnanny: EBITDA was $3 8 million for a margin of nine 5%, what's the $7 $3 million.
Yogi Justnanny: On the margin of eight 4% in the fourth quarter of 'twenty 'twenty four.
Yogi Justnanny: The decline in revenue was driven by lower case volume with average revenue per case up slightly.
Yogi Justnanny: The pressure on pieces was anticipated and reflected the decision to pull back marketing spend in the back.
Yogi Justnanny: Cost of last year and was further compounded by a tough macroeconomic environment.
Yogesh Jashnani: Same store revenue, which does not include new centers, declined approximately 24% over the prior year quarter and was consistent with our expectation and Q4 trend. We saw an improvement in performance from February into March, and that momentum has continued into April. We believe this early progress reflects the impact of our go forward sales and marketing strategy starting to take hold. So while we continue to operate in a challenging environment, our efforts have led to robust lead generation that our sales team is actively working on to drive consultations as we enter the seasonally strong second quarter.
Yogi Justnanny: Same store revenue, which does not include new centers declined approximately 24% over the prior year quarter.
Yogi Justnanny: With our expectation and Q4 trend.
Yogi Justnanny: We saw an improvement in performance from February into March and that momentum has continued into April.
Yogi Justnanny: We believe this progress reflects the impact of our go forward sales and marketing strategy starting to pay court.
Yogi Justnanny: So while we continue to operate in a challenging environment.
Yogi Justnanny: Efforts have led to robust lead generation.
Yogi Justnanny: Sales team is actively working on to drive consultation.
Yogi Justnanny: The seasonally strong second quarter.
Yogesh Jashnani: Importantly, our disciplined cost actions in Q1 delivered tangible results. on essentially the same revenue base, we delivered $1.9 million more in adjusted EBITDA versus Q4 2024, demonstrating the early impact of our discipline around spend. We will continue to be laser focused, allocating and prioritizing investment spend on high return opportunities while increasing efficiencies in an effort to lower costs. In addition to cost savings, the quarter saw additional encouraging signs that tell us we possess a sought after procedure with growing brand strength and a strategy that has us on the right path.
Yogi Justnanny: Importantly, our disciplined cost actions in Q1 delivering tangible results.
On essentially the same revenue base, we delivered $1 $9 million more in adjusted EBITDA, What's the Q4 2024.
Speaker Change: Demonstrating the early impact of our thesis.
Yogi Justnanny: All right.
Yogi Justnanny: We will continue to be laser focused.
Yogi Justnanny: Kitting and prioritizing investments spend on high return opportunities, while increasing efficiencies in our effort to lower costs.
Yogi Justnanny: In addition to cost savings.
Yogi Justnanny: Water saw dish.
Yogi Justnanny: Encouraging signs that tell us we possess a sought after procedure.
Yogi Justnanny: Boeing brand strength.
Yogi Justnanny: Strategy that has us on the right path.
Yogesh Jashnani: I will share some of the areas that reflect these signs. First, we continue to see strong consumer interest in airsculpt. Consumers recognize Airsculpt for its effective procedures and decade long and successful track record in the body contouring space. The inherent value we have created is validated by the consistency of our average revenue per case between $12,000 and $13,000. This is an incredible asset that we will capitalize on as we grow our share of market. Second, we generated strong lead volume growth over Q1 last year, as we reallocated our marketing dollars to the tactics that we know work.
Yogi Justnanny: I'm sure some of the areas that reflect these signs.
Yogi Justnanny: First we continued to see strong consumer interest in Tesco.
Yogi Justnanny: Consumers recognize us.
Speaker Change: Effective procedures and decades long and successful track record in the body contouring space.
Speaker Change: The inherent value. We have created is validated by the consistency of our average revenue per case between 12000 and $14000.
Speaker Change: Yes.
Speaker Change: This is an incredible asset that even capitalize on as we grew our share of market.
Speaker Change: Second we generated strong lead volume growth over Q1 last year as we reallocated our marketing dollars to the topics that we know work.
Yogesh Jashnani: We increased the efficiency of our marketing, driving significant lead growth without increasing spend versus Q1 last year. This increase in leads has significantly expanded our pipeline. As a result, we have a robust database and will continue to engage with these prospects and convert them over time, even as market conditions remain soft.
Speaker Change: Christy.
Speaker Change: <unk>, a fault marketing driving significant lead growth without increasing spend versus Q1 last year.
Speaker Change: This increase in leads has significantly expanded our pipeline.
Speaker Change: As a result, we have a robust database.
Speaker Change: Can you to engage with these prospects and convert them overtime, even as market conditions remain soft.
Yogesh Jashnani: Third, we have strengthened our organization and believe we have the right people in place to drive our transformation. Last quarter, we noted two hires who have hit the ground running. Our new Chief Digital Officer, who joined us prior to the start of the year, has spearheaded our lead generation activities that have delivered meaningful year-over-year lead volume growth. and our new Chief Sales Officer is improving our consultative sales model with enhanced training, improved sales processes and a greater focus on lead conversion. We expect these efforts will help deliver same store sales improvement as we move through the year.
Speaker Change: Third we have strengthened our organization and believe we have the right people in place to drive our transformation.
Speaker Change: Last quarter, we know.
Speaker Change: Two hires who have hit the ground running.
Speaker Change: Our new Chief Digital officer, who joined US prior to the start of the year has spearheaded a lead generation activity that has delivered meaningful yoga, where you need volume growth.
Speaker Change: And our new Chief sales officer is improving our consolidated thanks Margaret.
Speaker Change: Screening.
Speaker Change: <unk> sales processes and a greater focus on lead conversion.
Speaker Change: We expect these efforts will help deliver same store sales improvement as we move through the year.
Yogesh Jashnani: I will now turn to a review of the progress made on our business imperatives that are focused on enhancing our culture and improving our go to market strategy. Culture is a key enabler of our transformation. I've had the opportunity to visit many of our locations and I've been very encouraged by the level of engagement and willingness to embrace change across the organization. Our teams are motivated and aligned around our business imperatives. They are committed to executing against a strategic priority. I want to take a moment to thank them for their resilience and focus. They are the driving force behind the progress we've made thus far and the progress still to come.
Speaker Change: I will now turn to a review of the progress made on our business and packages that are focused on enhancing our culture.
Speaker Change: Moving our go to market strategy.
Speaker Change: Culture is a key enabler of our transformation.
Speaker Change: Had the opportunity to visit many of our locations.
Speaker Change: Very encouraged by the level of engagement and willingness to embrace change across the organization.
Speaker Change: Our teams are motivated and aligned.
Speaker Change: Our roundup business in bankers, they are committed to executing against our strategic priorities.
Speaker Change: I want to take a moment to constant for the resilience and focus.
Speaker Change: They are the driving force behind the progress we've made thus far.
Speaker Change: Still to come.
Yogesh Jashnani: This cultural momentum is critical as we continue building the foundation for long term growth. Our go to market strategy improvement is powered by our five business imperatives. The first of which is marketing. During the quarter, we reallocated our marketing spend to capitalize on previously proven strategies, including search engine marketing and social media, while testing new areas such as online video. As a result, we have begun to see improvements in lead generation. We are focusing on improving the efficiency of our marketing by investing in the channels we see are performing well in order to drive a higher return on investment.
Speaker Change: This cultural momentum is critical as we continue building the foundation for long term growth.
Speaker Change: Our go to market strategy improvement is powered by our flight business imperatives.
Speaker Change: The first of which is marketing.
Speaker Change: During the quarter, we reallocated, our marketing spend to capitalize on previously proven strategies, including search engine marketing and social media, while testing new areas such as online video.
Speaker Change: As a result, we have begun to see improvements in lead generation.
Speaker Change: We are focusing on improving the efficiency of our marketing by investing in the channels. We see are performing well in order to drive a higher return on investment.
Yogesh Jashnani: Second, optimizing sales to convert the leads generated from marketing into cases. We have made meaningful investments on this front to strengthen our sales training and refine our processes. We have also expanded virtual appointments and in-person consultation hours to allow us to accommodate the busy lifestyles of our customers. Third, we are introducing new services to tap into more consumer demand. To capitalize on the complimentary nature of GLP-1 and increased demand for skin tightening, we launched a pilot of our skin tightening procedure in the second quarter. We believe this represents a meaningful new revenue stream that broadens our consumer reach and leverages existing infrastructure and surgical expertise.
Speaker Change: Second optimizing CS to convert the leads generated from marketing into cases.
Speaker Change: We have made meaningful investments on this front to strengthen our faith screening and refined our processes.
Speaker Change: We have also expanded virtual appointments and the inputs and consultation hours to allow us to accommodate the busy lifestyles of our customers.
Speaker Change: Third we are introducing new services to tap into more consumer demand.
To capitalize on the complementary nature of G. L. P. One and increased demand for skin tightening.
Speaker Change: Launched a pilot of a skintight procedure in the second quarter.
Speaker Change: We believe this represents a meaningful new revenue stream that broadens, our consumer reach and leverages existing infrastructure and surgical expertise.
Yogesh Jashnani: Fourth, enhancing our customer experience to ensure we consistently provide premium results. Improving our customer journey remains a top priority and we have initiatives that are in development and expected to roll out in the back half of the year and into 2026. Lastly, we continue to invest in technology to accelerate these priorities. We are in the process of launching expanded financing options to provide our customers with added flexibility to book cases, which is expected to help conversion, especially in this environment. We remain on track to introduce these new options across all of our centers by the end of the second quarter.
Fourth enhancing our customer experience to ensure we consistently provide premium results.
Speaker Change: Improving our customer journey remains a top priority and we have initiatives that are in development and expected to rollout in the back half of the your into 2026.
Speaker Change: Lastly, we continue to invest in technology to accelerate these priorities.
Speaker Change: We are in the process of launching expanded financing options.
Speaker Change: Why are you got customers with added flexibility to book cases, which is expected to help conversion, especially in this environment.
Speaker Change: We remain on track to introduce these new options across all of our centers by the end of the second quarter.
Yogesh Jashnani: Additionally, we expect to introduce new technology enhancements during the year to enable our sales team to close deals more efficiently.
Speaker Change: Additionally, we expect to introduce new technology enhancements during the year to enable our sales team to close deals more efficiently.
Yogesh Jashnani: As Dennis will discuss shortly, we are introducing an annual outlook and currently expect fiscal 2025 revenue in the range of $160 million to $170 million and adjusted EBITDA between $16 million and $18 million. Our guidance reflects current economic conditions with some conservatism built in given the uncertain consumer spending environment. Our outlook, however, does not contemplate a downturn in the economy. As it relates to tariffs, while we are not directly exposed, given we operate a service-based business and product costs are not material to our expenses, we are closely monitoring consumer behavior as inflationary pressures and change in consumer sentiment driven by tariffs can impact us given our procedures are discretionary and a considered purchase.
Speaker Change: As Dennis will discuss shortly we are introducing and on your outlook.
Speaker Change: Currently expect fiscal 'twenty 25 revenue in the range of $160 million $270 million and adjusted EBITDA between $16 million $18 million.
Speaker Change: Our guidance reflects current economic conditions with some conservatism baked in given the uncertain consumer spending environment.
Speaker Change: Our outlook does not contemplate a downturn in the economy.
Speaker Change: As it relates to Paris.
Speaker Change: While we are not directly exposed given the operate a service based business and product costs are not material to our expense base.
Speaker Change: We're closely monitoring consumer behavior as inflationary pressures and change in consumer sentiment driven by card it can impact us given our procedures are discretionary.
Speaker Change: A considered purchase.
Yogesh Jashnani: We are proactively addressing this by removing barriers that may prevent leads to convert to cases, such as by providing expanded payment options, while increasing our lead generation efforts. We believe that by staying focused on implementing our strategic priorities, we will be able to improve our sales trend despite the environment. In summary, we have made good progress in the first quarter, seeing early traction on our initiatives, and we have plans in place to continue to advance our business imperatives throughout the year. I remain confident in our business, the effectiveness of our procedures, and the growth opportunity we see ahead to capture a greater share of the $11 billion US addressable market that we serve.
Speaker Change: We are proactively addressing this by removing barriers that may prevent leads to convert two cases, such high spec providing expanded payment options, while increasing our lead generation efforts.
Speaker Change: We believe that by staying focused on implementing our strategic priorities.
Speaker Change: We'll be able to improve our sales trend despite the environment.
Speaker Change: In summary, we have made good progress in the first quarter of <unk>.
Speaker Change: Being early traction on our initiatives and we have plans in place to continue to advance our business imperatives throughout the year.
Speaker Change: I remain confident in our business.
Speaker Change: The effectiveness of our procedures and the growth opportunity. We see ahead to capture a greater share of the $11 billion U S addressable market that would be so.
Yogesh Jashnani: We remain vigilant in our management of expenses and expect to improve sales trends and profitability as we move through the year with a keen focus on maintaining a durable balance sheet as we continue our transformation. I know this business can return to growth and consistently perform at a higher rate of profitability. That is our focus and that is our commitment.
Speaker Change: We remain vigilant in our management of expenses and expect to improve sales trends and profitability as we move through the year with a keen focus on maintaining our durable balance sheet as we continue our transformation.
Speaker Change: I know this business can return to growth and consistently performed at a higher rate of profitability.
Speaker Change: <unk> is a focus and that is a commitment overall I firmly believe the best years lie ahead for <unk> and its shareholders.
Yogesh Jashnani: Overall, I firmly believe the best years lie ahead for Airsculpt and its shareholders.
Dennis Dean: And with that, I will now pass it over to Dennis. Thank you, Yogi, and good morning, everyone. As mentioned, revenue for the quarter was $39.4 million, a 17.3% decline versus the prior year quarter, with same store revenue down approximately 24%. Cases declined 17.9% to $3,076, and average revenue per case for the quarter was $12,799, slightly higher than the first quarter of 2024. The decline in revenue was mainly driven by lower cases, as we continue to operate in challenging conditions, and was further impacted by our reduction in marketing in the second half of 2024. However, at the start of 2025, we have refocused our marketing efforts, and as a result, leads have grown considerably, and our cases improved as we moved into March, with this trend also continuing through April.
Dennis Steen: And with that I will now pass it over to Dennis.
Dennis Steen: Thank you Yogi and good morning, everyone as mentioned revenue for the quarter was $39 4 million or 17, 3% decline versus the prior year quarter with same store revenue down approximately 24%.
Dennis Steen: Cases declined 17, 9% to 3076 and average revenue per case for the quarter was 12799 slightly higher than the first quarter of 2024.
Dennis Steen: The decline in revenue was mainly driven by lower cases, as we continue to operate in challenging conditions and was further impacted by a reduction in marketing in the second half of 2024.
Dennis Steen: However at the start of 2025, we have refocused our marketing efforts and as a result leads have grown considerably and our cases improved as we moved into March with this trend also continuing through April.
Dennis Dean: It is important to note that while we have experienced improvement in our revenue trend, cases are still down year over year due to the softness in consumer spending. The percentage of patients using financing to pay for procedures was 44%, which is below the 50% rate we have experienced in the fourth quarter. We're looking forward to sharing updates regarding the launch of our broad financing solutions, which will give prospective patients added flexibility. As a reminder, we received full payment of all procedures up front and we have no recourse related to patients who finance their procedures with third party vendors.
Dennis Steen: It is important to note that while we have experienced improvement in our revenue trend cases are still down year over year due to the softness in consumer spending.
Dennis Steen: The percentage of patients using financing to pay for procedures was 44%.
Dennis Steen: Which is below the 50% rate we have experienced in the fourth quarter.
Dennis Steen: We're looking forward to sharing updates regarding the launch of our broadened financing solutions, which will give perspective patients added flexibility.
Dennis Steen: As a reminder, we received full payment of all procedures upfront and we have no recourse related to patients who finance their procedures with third party vendors.
Dennis Dean: Cost of service decreased $2.1 million compared to the prior year period. However, as a percentage of revenue increased to 40.5% versus 37.9%, primarily due to fixed cost components such as rent and nursing, which do not scale down in line with short-term revenue fluctuations. As revenue trends improve, we expect this metric to align more closely with historical levels. Selling general and administrative expenses increased $6 million in the quarter compared to the same period in fiscal 2024, primarily due to an increase in equity-based compensation. The prior year quarter benefited from a $10.4 million reversal in stock compensation related to certain performance-based stock units.
Dennis Steen: Cost of service decreased $2 1 million compared to the prior year period, However, as a percentage of revenue increased to 45% versus 37, 9%.
Primarily due to fixed cost components, such as rent and nursing Wuxi that scale down in line with short term revenue fluctuations.
Dennis Steen: As revenue trends improve we expect this metric to align more closely with historical levels.
Dennis Steen: Selling general and administrative expenses increased $6 million in the quarter compared to the same period in fiscal 2024, primarily due to an increase in equity based compensation. The prior year quarter benefited from a $10 $4 million reversal and stock compensation related to certain perform.
Dennis Steen: I'm a space stock units.
Dennis Dean: On a sequential basis, SG&A decreased by $1.6 million, of which $1 million was from equity-based compensation and the remainder due to our cost reduction initiative. Our customer acquisition cost for the quarter was $3,130 per case, as compared to $2,990 in the prior year quarter. Our CAC was higher year-over-year, driven by a decrease in case volumes, as our total advertising spend was $1.2 million less than the prior year quarter. As our new marketing and sales efforts gain traction, we expect customer acquisition costs to decline. Adjusted EBITDA was $3.8 million compared to $7.3 million from fiscal year 2024 first quarter as a result of our revenue decline.
Dennis Steen: On a sequential basis SG&A decreased by $1 6 million of which $1 million was from equity based compensation and the remainder due to our cost reduction initiatives.
Dennis Steen: Our customer acquisition cost for the quarter was 3130 per case as compared to 2990 in the prior year quarter.
Dennis Steen: Our CAC was higher year over year, driven by a decrease in case volumes as our total advertising spend was $1 $2 million less than the prior year quarter.
Dennis Steen: As our new marketing and sales efforts gain traction, we expect customer acquisition cost to decline.
Dennis Steen: Adjusted EBITDA was $3 8 million compared to $7 3 million from fiscal year 2020 for first quarter as a result of our revenue declines.
Dennis Dean: Adjusted EBITDA margin was 9.5% compared to 15.4% in the prior year quarter. Adjusted net loss for the quarter was $1.1 million. or a loss of two cents per diluted share.
Dennis Steen: Adjusted EBITDA margin was nine 5% compared to 15, 4% in the prior year quarter.
Dennis Steen: Adjusted net loss for the quarter.
Dennis Steen: It was $1 $1 million.
Dennis Steen: Or a loss of two cents per diluted share.
Dennis Dean: Turning to our balance sheet. As of March 31, 2025, cash was $5.6 million. Our gross debt outstanding was $74.7 million. Our leverage ratio was 3.76 times at March 31st, 2025. And we are in compliance with all covenants under the terms of our credit agreement. We remain focused on reducing our leverage to historical levels. As such, from a capital allocation perspective, we intend to use excess cash generated from operations, as well as potential proceeds from any capital raise for this purpose. Cash flow from operations for the quarter was $0.9 million. compared to $3.4 million in the first quarter of fiscal 2024.
Dennis Steen: Turning to our balance sheet.
Dennis Steen: As of March 31, 2025, cash was $5 $6 million.
Dennis Steen: Our gross debt outstanding was $74 7 million or.
Dennis Steen: Our leverage ratio was 376 times at March 31, 2025, and we are in compliance with all covenants under the terms of our credit agreement.
Dennis Steen: We remain focused on reducing our leverage to historical levels as such from a capital allocation perspective, we intend to use excess cash generated from operations as well as potential proceeds from any capital raise for this purpose.
Dennis Steen: Cash flow from operations for the quarter was point 9 billion.
Dennis Steen: Compared to $3 4 million in the first quarter of fiscal 2024.
Dennis Dean: turn to our Outlook. For 2025, we are guiding revenue in the range of $160 to $170 million and adjusted EBITDA between $16 and $18 million.
Dennis Steen: Turning to our outlook.
Dennis Steen: For 2025, we are guiding revenue in the range of $160 million to $170 million and adjusted EBITDA between 16 and $18 million as.
Dennis Dean: As we prioritize accelerating same-store sales at our existing centers, our guidance continues to assume no new DeNovo openings this year. Additionally, we anticipate remaining in compliance with the terms of our credit agreement throughout the fiscal year.
Dennis Steen: As we prioritize accelerating same store sales at our existing centers our guidance continues to assume no new de novo openings this year.
Dennis Steen: Additionally, we anticipate remaining in compliance with the terms of our credit agreement throughout the fiscal year.
Operator: I will now turn the call over to the operator to begin the question and answer portion of the call. Thank you. We will now be conducting the question and answer session.
Dennis Steen: I'll now turn the call over to the operator to begin the question and answer portion of the call.
Dennis Steen: Thank you we will now be conducting a question and answer session. Please limit yourselves to one question and one follow up and then re queue to ask additional questions.
Operator: Please limit yourselves to one question and one follow-up and then re-queue to ask additional questions. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Dennis Steen: If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment. Please poll for questions.
Operator: One moment, please, while we pull for questions.
Joshua Raskin: The first question is from Josh Raskin from Neffron Research. Please go ahead. Hi, thanks. Just first question, can you speak to some of the specific cost savings that you saw in the quarter? And maybe how sustainable you think those are? And you know, if you think those have to increase in order to grow cases in the future?
Speaker Change: The first question is from Josh Raskin from Nephron Research. Please go ahead.
Josh Raskin: Hi, Thanks, just first question can you speak to some of the specific cost savings that you saw on the quarter and maybe how sustainable you think those are and if you think others have too.
Speaker Change: Increase in order to broke cases in the future.
Dennis Dean: Hey, Josh. Thanks for the question. This is Dennis. So A significant portion of what we benefited from the cost related to some workforce changes that we made. We did those, if you recall from the last call, we were focused on targeting about three million dollars of savings throughout the year. And so these were workforce reductions, and so we anticipate those running with us through the remainder of the year.
Josh Raskin: Hey, Josh Thanks for the question this is Dennis.
Josh Raskin: So.
Josh Raskin: A significant portion of our what we benefited from the cost related to some some.
Josh Raskin: Workforce changes that we made we did does it if you recall from the last call we were full.
Josh Raskin: Just on targeting about $3 million of savings throughout the year and so these were workforce reductions and so we anticipate those running with us through the remainder of the year.
Speaker Change: Okay. That's perfect and then guidance implies an EBITDA margin of let's call. It you know.
Just over 10%.
Speaker Change: What is the potential margin you think you can do on a $160 million to $170 million of revenues, meaning in the existing base of cases et cetera, where do you think margins can get to when all the cost savings take effect and then what sort of case growth do you think you need to see our total revenues in order to really increase margins and as you mentioned in the prepared remarks back towards targeted.
Speaker Change: Towards historic levels.
Yogesh Jashnani: Hey, Josh, this is Yovit. Thank you for the question. So for, for our current guidance between 160 and 170 million, we believe that EBITDA margin we have guided to is, is appropriate. As we get back to 2023-ish levels, 2022-2023-ish levels of same store revenue, we expect we start to approach the long term levels of 30-ish percent. for EBITDA merchants. Overall, we believe the business can get there and we're on our way over there. Yeah, so so Josh, we were what we saw was both seasonally getting seeing improvements, but also our same store sales, improving sequentially, we are encouraged by those signs.
Speaker Change: Hey, Josh this is <unk>. Thank you for the question so far.
Speaker Change: For our current guidance between $1 60, and 170 million, we believe the EBITDA margin, we have guided to.
Speaker Change: Is appropriate.
Speaker Change: We'd get back to you.
Speaker Change: 123 ish level 2000, 22023 ish levels of same store revenue. We expect we start to approach the long term levels of 30 ish percent.
Speaker Change: For EBITDA margin overall, we believe the business can get there and we don't know.
Speaker Change: We are going to be over there right now.
Speaker Change: That's super helpful. And then just lastly, if I could sneak in.
Speaker Change: You said you saw some momentum in cases exiting the quarter March better than February and then continuing into April is that the seasonal patterns or are you talking about sort of same store year over year cases, and are you anticipating still getting to the same store pace.
Speaker Change: Yeah sort of being flat by the end of the year.
Josh Raskin: Yes, so Josh we were what we saw was.
Josh Raskin: <unk> Malik getting seeing improvement, but also our same store sales improving sequentially. We are encouraged by those signs and yes, we still expect by end of year, we are targeting getting back to same store sales growth.
Yogesh Jashnani: And yes, we still expect by end of year, we are targeting getting back to same store sales. Thanks.
Josh Raskin: Perfect.
Whit Mayo: The next question is from Whit Mayo from Lear Inc. Partners. Please go ahead.
Speaker Change: The next question is from Whit Mayo from Leerink partners. Please go ahead.
Morgan Mccarthy: Hey, good morning. This is Morgan McCarthy on for Whit Mayo. It would be helpful to understand what some of the underlying assumptions are within the guidance range that you put forth today. So maybe around like same store case growth and pricing, and how do you expect that growth to ramp over the course of the year?
Morgan Mccarthy: Hey, Good morning. This is Morgan Mccarthy on for Whit Mayo.
Morgan Mccarthy: It would be helpful to understand what some of the underlying assumptions are within the guidance range that you put forth today. So maybe around like same store case growth in pricing and how do you expect that growth to ramp over the course of the year.
Dennis Dean: Thank Hey Morgan, thanks. So as it relates to how we're thinking about it, from a pricing standpoint, at this point, we've stayed very consistent in our thoughts around kind of how we finished out the quarter. Sequentially, we've been seeing pretty stable results on our pricing, so we're not really factoring any deterioration there. From a case perspective, obviously, we're 24% down in the first quarter, which is very comparable to Q4.
Morgan Mccarthy: Hey, Morgan Thanks.
Morgan Mccarthy: So as it relates to how we're thinking about it from a pricing standpoint at this point, we stayed very consistent in our thoughts around kind of how we are.
Morgan Mccarthy: <unk> finished out the quarter sequentially, we've been saying pretty stable.
Morgan Mccarthy: <unk> on our pricing so we're not really factoring any deterioration there.
From a case perspective, obviously were 24% down in the first quarter, which is very comparable to.
Morgan Mccarthy: Q4.
Dennis Dean: We are seeing some signs of improvement as we kind of move into the second quarter, but we're not gonna give inter-quarter guidance, and quite frankly, we haven't even closed out the month of April fully as far as where we are in the quarter. But we're seeing signs of improvements.
Morgan Mccarthy: We are seeing some signs of improvement as we kind of move into the second quarter, but we're not going to get.
Morgan Mccarthy: Inter quarter guidance and quite frankly, we haven't even closed out the.
Morgan Mccarthy: The month of April fully as far as where we are in the quarter, but we're seeing signs of improvement we think that.
Morgan Mccarthy: We think that the consumer's still showing signs of continued pressure, and so we're not expecting really what I would call significant improvement on a same-store percentage in the second quarter, but as we kind of move out through the remainder of the year, as Yogi mentioned, we do expect, as we exit the year, to return back to... same store, same store case growth. Okay, thanks.
Morgan Mccarthy: The consumers still showing signs of continued pressure and so where we are.
Morgan Mccarthy: Not expecting really what I would call significant improvement on a same store percentage in the in the second quarter, but as we kind of move out through the remainder of the year as Yogi mentioned, we do expect as we.
Morgan Mccarthy: We exited the year to be.
Morgan Mccarthy: Just to return back to some some same store same store case growth.
Morgan Mccarthy: Okay. Thanks, and then if I.
Morgan Mccarthy: And then, if I could just ask one more question. So you you've talked a lot about your lead volume improving. But have you seen any improvement in the rate of conversion to cases yet? And is that still trending around 60 days? I think that's where it was in the second half of last year. Or have you seen any improvement in that metric so far this year?
Morgan Mccarthy: I could just ask one more question. Thank you.
Speaker Change: You've talked a lot about your lead volume improving but have you seen any improvement in the rate of conversion to cases yet.
Speaker Change: And is that still trending around 60 days I think that's where it was in the second half of last year have you seen any improvement in that metric so far this year.
Yogesh Jashnani: Hey, Morgan, this is Yogi. So for as far as time to book cases, we are still seeing that that is elongated. We attribute that, you know, significantly to also not only some overhang from our activities, but the uncertain macroeconomic environment, we continue to see that the consumer is pressured.
Speaker Change: Hey, Morgan just this year.
Speaker Change: So for as far as timing to book cases, we are still seeing that that is elongated.
Speaker Change: We attribute that significantly to also not only some overhang from our activities but.
Speaker Change: The uncertain macroeconomic environment, we continue to see that the consumer is pressured.
Yogesh Jashnani: We are encouraged by the growth in lead volumes, and expect that becomes a robust source of growth for the future, and the activities that have led to those lead volumes to continue so that we continue to feed the pipe through markets.
Speaker Change: We're encouraged by the growth in lead volumes.
Speaker Change: Expect that becomes.
Speaker Change: A robust source of growth for the future and the activities that have led to those lead volumes to continue so that we continue to feed the pipe through marketing.
Morgan Mccarthy: Okay, thank you. Very helpful.
Speaker Change: Okay. Thank you very helpful.
Sam Eiber: The next question is from Sam Eiber from BTIG, please go ahead. Hey, good morning. Thanks for taking the questions here.
Speaker Change: The next question is from Sam <unk> from BTG. Please go ahead.
Sam: Hey, good morning, Thanks for taking my questions here, maybe I can start on the guide and clarify any contribution that you guys are assuming at this point for Standalone skin tightening you're gonna be piloting them this year.
Yogesh Jashnani: Maybe I can start on on the guide and clarify any contribution that you guys are assuming at this point for the standalone skin tightening you're going to be piloting this year.
Yogesh Jashnani: Hey, Sam, this is Yogi. I can I can take that one. So for for this year, we are not expecting any contribution from the skin tightening pilot. Any success and growth over there would be incremental and on top of what we have. Okay, thanks for the clarification.
Speaker Change: Hey, Sam this is <unk>.
Sam: I can take that one Paul for this year, we are not expecting.
Speaker Change: Any contribution from the skin tightening pilot.
Any success in growth over there would be incremental and on top of what we have projected.
Speaker Change: Okay. Thanks for that clarification, and then maybe moving to some of the newer our marketing initiatives.
Sam Eiber: And then maybe moving to some of the newer marketing initiatives.
Yogesh Jashnani: Any detail, maybe which ones are resonating more with others that's, you know, driving the, you know, the the better performance in terms of the lead generation. Just want to get a little bit more detail. That would be great. Thank you.
Speaker Change: Any detail, maybe which ones are resonating more with others. That's.
Speaker Change: Driving.
Speaker Change: The better performance in terms of the lead generation just wanted to get a little bit more detail that would be great. Thank you.
Yogesh Jashnani: Absolutely, Sam.
Speaker Change: Absolutely.
Yogesh Jashnani: So our focus in marketing starts with consumer behavior. What we are seeing is that there is still consumer interest in our services and we've We made an effort to make sure that we are tapping into that interest that's primarily coming from two areas. One is search engine marketing, where we see consumers are actively looking for solutions. And then the second being social media marketing, where it is much more of a passive approach where people are interested, but need a little bit more information to raise their hands and show their interest. Those have been the primary drivers of growth, and we continue those to be the key drivers going forward.
Speaker Change: Our focus in marketing starts with consumer behavior. What we are seeing is that there is still consumer interest in our services and <unk>.
<unk>.
Speaker Change: We've made an effort to make sure that we are tapping into that interest.
Speaker Change: It's been mainly coming from two areas. One is search engine marketing, where we see consumers are actively looking for solutions and then the second being social media marketing.
Speaker Change: It is much more of a passive approach that people are interested but.
Speaker Change: Need a little bit more information to raise their hand and show the interest those have been the primary drivers of growth and we continued those to be the key drivers going forward. We're also testing into new areas such as online video.
Yogesh Jashnani: We're also testing into new areas such as online video, but too early to report any results of it.
Speaker Change: Too early to report any results over there.
Speaker Change: Great. Thanks for taking the questions.
Speaker Change: Yes.
Korinne Wolfmeyer: The next question is from Korinne Wolfmeyer from Piper Sandler. Please go ahead. Good morning, team. Thanks for taking the question. I'd like to touch a little bit more on just like the current macro state and how you're factoring that into guidance. And you did give us a fairly wide guidance range. So maybe you can touch on, you know, what does the low end versus the high end assume for the current macro and the broader aesthetics market? Thank you.
Speaker Change: The next question is from Korean amongst Meyer from Piper Sandler. Please go ahead.
Speaker Change: Hey, good morning team. Thanks for taking the question I would like to touch a little bit more on the curve.
Speaker Change: Macro state and how you're factoring that into our guidance and you did give us a fairly wide guidance range. So maybe you can touch on you know what.
Speaker Change: Does the low end versus the high end of Syn <unk> for the current macro and broader aesthetics market. Thank you.
Yogesh Jashnani: Absolutely, Korinne. Thank you for the question. So our guidance, as you can imagine, incorporates a range of scenarios. the on the low end we are planning for a further moderation in consumer spending. but that does not include a recessionary environment. On the high end, we are incorporating our current operating environment with significant benefits from our initiatives, including things like financing options where we want to give consumers more options to be able to say yes to the treatments and get the treatments done. Overall, we do expect our actions to continue to deliver sequential improvement. But as you called out, the macro environment does remain challenging and uncertain.
Speaker Change: Absolutely. Thank.
Speaker Change: Thank you for the question so our guidance as you can imagine an operator a range of scenarios.
Speaker Change: The on the low end, we are planning for a further moderation in consumer spending.
Speaker Change: But that does not include a recessionary environment on.
Speaker Change: On the high end, we are incorporating our current operating environment.
Speaker Change: No significant benefits from our initiatives.
Speaker Change: <unk> things like financing options, where.
Speaker Change: Oh, we want to give consumers more auctions to be able to say, yes to the treatment and get the treatments done overall, we do expect our actions will continue to deliver a sequential improvement.
Speaker Change: As you pointed out the macro environment does remain challenging and uncertain. Other public companies are moving to pressure on the consumer as well.
Yogesh Jashnani: Other public companies are noting the pressure on the consumer as well. We are confident we have the right initiatives in place to make progress. Macro will ultimately impact the pace of the process.
Speaker Change: We are confident we have the right initiatives in place to make progress.
Speaker Change: Macro will ultimately impact the pace of the progress.
Korinne Wolfmeyer: Great, that's super helpful. Thank you.
Speaker Change: Great. That's super helpful. Thank you and then as it relates to the financing can you just.
Yogesh Jashnani: And then as it relates to the financing, can you just review again when that's rolling out? And, you know, what gives you confidence that that's really going to be, you know, or really help that case volume pick up? I mean, it does seem like the percent that financed this quarter stepped down a bit. So any data or insights you can share on how you know that financing or how you believe that financing is a meaningful benefit to the consumer? And what gives you confidence that it is going to lead to a bit of a pickup?
Speaker Change: With you again, when when that's rolling out.
Speaker Change: And what gives you confidence that that's really going to be.
Speaker Change: We hope that case volume pick up I mean, it does seem like the present that finance this quarter stepped down a bit so.
Speaker Change: Any data or insights you can share on.
Speaker Change: How you know that financing or how you believe that financing is meaningful.
Speaker Change: Benefit to the consumer and what gives you confidence that it is going to lead to a bit of a pick that thanks.
Yogesh Jashnani: Absolutely, Korinne. So to the question on timing, we are expecting to roll that out by the end of Q2. So that's that's in progress right now. It is one of many initiatives that we are working on. As you saw in Q1, many of our lead generation initiatives drove value. This quarter, this would be one of the key initiatives that is driving value. In terms of what gives us confidence, a couple of things. One, we continue to see demand for our services, and we continue to hear that financing options can help our consumers just figure out payment plans and go from there.
Speaker Change: After declining so.
Speaker Change: To the question on timing, we are expecting to roll that out by the end of Q2.
Speaker Change: So that's in progress right now.
Speaker Change: Is one of many initiatives that we are working on as you saw in Q1, many of our lead generation initiatives drove value. This quarter. This would be one of the one of the key initiatives that is driving value.
Speaker Change: In terms of what gives us confidence.
Speaker Change: One we continue to see demand for our services and we continue to hear that.
Speaker Change: Financing options can help our consumers just figured out payment plans and.
Korinne Wolfmeyer: We are a considered purchase at $12,000 to $13,000 average ticket. So financing does help there. And in my past background as well, having worked in multiple consumer businesses, including aesthetics, I've seen that is a key level that has helped businesses expand while making sure that we are meeting consumers' needs. So I'm comfortable saying it should have an impact. And once we roll it out, we'll have a sense of the magnitude of that impact. Very helpful, thanks so much.
Speaker Change: And go from there we are a considered purchase that 12 to $13000 average ticket.
Speaker Change: So financing Thats helped that and in main pass background as well having worked in multiple consumer businesses, including headaches as feedback is a key lever that as businesses expand while making sure that they're meeting consumers' needs. So.
Speaker Change: Im comfortable saying it should have an impact and once we roll it out we'll have a sense of the magnitude of that impact.
Speaker Change: Very helpful. Thanks, so much.
Operator: There are no further questions at this time.
Speaker Change: There are no further questions at this time I would like to turn the floor back over to you. Okay. Just 90 for closing comments.
Yogesh Jashnani: I would like to turn the floor back over to Yogesh Jashnani for a closing comment. Thank you again for joining us. We look forward to speaking with you when we report second quarter results.
Speaker Change: Thank you again for joining us we look forward to speaking with you when we report second quarter results.
Speaker Change: Yeah.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Yeah.
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Speaker Change: Yes.
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Speaker Change: Okay.
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