Venus Concept, Inc. Q2 FY2024 earnings call

1. Second quarter revenue modestly exceeded first quarter expectations despite the 17% year-over-year decrease. US business showed continued improvement with mid-single-digit declines. 2. Achieved a 37% reduction in cash used in operations year-over-year. 3. Completed debt transactions leading to a 39% reduction in total debt to approximately $46 million as of June 30, 2024. 4. Regained NASDAQ listing compliance. 5. Restructuring, cost reduction, and cash management initiatives progressed with a 13% year-over-year reduction in operating expenses. 6. Progressed in rationalizing international infrastructure, aiming for substantial completion of repositioning in the coming months. 7. Secured TGA clearance in Australia for Venus Versa Pro and a medical device license in Canada for the same product. 8. Experienced positive market response to the company-wide rebranding and NEXThetics programs with increasing event attendance.

Total revenue for the second quarter of 2024 was $16.6 million, a decrease of 17% year-over-year. US revenue posted mid-single-digit declines year-over-year, while international revenue decreased 29% due to strategic restructuring activities and ordering pattern fluctuations from new distribution partners. Product systems revenue decreased 30%, services revenue decreased 4%, lease revenue increased 5%, and products other revenue increased 2%. The percentage of total systems revenue derived from internal lease programs was approximately 34% in the second quarter of 2024, compared to 26% in the prior year period.

1. The company is not providing full-year 2024 financial guidance at this time. 2. It expects total revenue for the three months ending September 30, 2024, to be at least $17 million. 3. Anticipates the third quarter to have some uptick due to R&D spends, and the fourth quarter to potentially improve seasonally. 4. Aims to achieve cash flow breakeven in the second half of 2025.

1. Macroeconomic headwinds pressuring the aesthetic sector as a whole. 2. Customer financial pressures, higher interest rates, and tighter credit markets impacting system adoption, especially for high ASP systems. 3. Impact of strategic restructuring activities on international revenue, including ordering pattern fluctuations from new distribution partners.

Q: Marie Thibault asked about the sustainability of US revenue stability, ordering patterns in OUS, and cash runway.

A: Rajiv De Silva stated that the US business is approaching stability and is cautiously optimistic for the back half of 2024 to be flattish to growing. Regarding OUS, signing of new distributors will be done by the second half of 2024 with steady state in 2025. Domenic Della Penna mentioned cash burn with Q3 likely similar to Q2 and Q4 potentially improving seasonally.

Q: Thomas McGovern asked about remaining debt and international market strategic approach.

A: Rajiv De Silva said there is ongoing discussion with Madryn and stakeholders on the remaining $46 million debt. Hemanth Varghese explained transition to strong distribution partners in international markets with new terms and partnership approach focusing on profitable markets and proper partner selection.