InMode Ltd. Q1 FY2025 earnings call

• The medical aesthetic market faces headwinds due to macroeconomic uncertainty and soft consumer demand, with elective procedures being deferred. However, InMode remains confident in its business fundamentals as consumer interest in minimally invasive aesthetic procedures is solid.
• The company decided not to cut corners or reduce workforce, aiming to be ready when the market rebounds.
• Plans to unveil a new wellness platform later this year to diversify the product portfolio.
• Completed the fifth share purchase program, purchasing 6.95 million shares totaling $127 million over the past 12 months, returning over $412 million to shareholders.
• Strong balance sheet with $512.9 million in cash and equivalents as of March 31, 2025, and $14 million generated from operating activities in Q1.

InMode generated $77.9 million in total revenue for Q1 2025, a 3% decrease compared to Q1 2024. Minimally invasive platforms accounted for 87% of total revenues. International sales outside the U.S. were $38 million, representing 49% of total sales. GAAP gross margin was 78% in Q1 2025 compared to 80% in Q1 2024. Non-GAAP gross margins were 79% in Q1 2025 vs. 80% in Q1 2024. GAAP operating expenses were $45.3 million in Q1 2025, a 1% decrease y-o-y, while non-GAAP operating expenses were $43.1 million, a 2% increase y-o-y.

• 2025 revenues expected to be between $395 million to $405 million.
• Non-GAAP gross margins forecasted to be between 78% to 80% (previously 80% to 82%).
• Non-GAAP income from operations expected to be between $101 million to $106 million (previously $130 million to $135%).
• Non-GAAP earnings per diluted share expected to be between $1.64 to $1.68 (previously $1.95 to $1.99%).
• Anticipates U.S. market pressure to reduce operating margins by 4%-5% and U.S. tariffs at 10% to impact gross margins by 2%-3%.

• Macroeconomic uncertainty and soft consumer demand leading to deferral of treatments and cautious capital investment by providers.
• U.S. tariffs at current levels impacting gross margins by 2%-3%.
• Credit tightening in certain European countries affecting distributor relationships.

Q: Matt Miksic from Barclays asked about the mix dynamic, when the slowdown started, and how it plays into the new guide.

A: Yair Malca responded that the slowdown started mid-2023 due to macroeconomic factors, discussed geographic mix and expectations for Q2.

Q: Danielle Antalffy from UBS asked about factoring in weaker economic environment and how sales force is kept engaged.

A: Moshe Mizrahy discussed seasonality, sales force retention strategy, and new product launches.

Q: Matt Taylor from Jefferies asked about Q2 phasing and tariff impact.

A: Moshe Mizrahy discussed seasonality-based guidance and tariff calculation impact on gross margins.

Q: Caitlin Cronin from Canaccord Genuity asked about operating expense expectations and U.S. management structure.

A: Moshe Mizrahy discussed maintaining investment and U.S. management status.

Q: Mike Matson from Needham and Co. asked about tariff impact offset by price increases and wellness platform launch.

A: Moshe Mizrahy discussed not raising prices due to market conditions and timeline for wellness platform launch.

Q: Sam Eiber from BTIG asked about tariff impact timing and tax implications of dividends.

A: Moshe Mizrahy and Yair Malca discussed tariff impact not yet accounted and Israeli dividend tax implications.

Q: Dane Reinhardt from Baird asked about price increases on OptimasMAX and tax implications of dividends.

A: Moshe Mizrahy discussed price increase on OptimasMAX and Israeli dividend tax details