LENSAR, Inc. Q4 FY2024 earnings call

• Revenue growth: Significant growth in 2024 with Q4 2024 revenue up 38% Y/Y and full year up 27% Y/Y.
• ALLY placements: 31 ALLY Systems placed in Q4 2024, including 20 in the US. Installed base of ALLY Systems surpassed 135 globally.
• Market share: Gained 7.5% share in US procedures since ALLY launch 2 years ago, totaling almost 21%.
• Procedure volumes: Increased 24% Y/Y in US and worldwide. Over 80% of systems placed in 2024 were installed after June 1, expected to contribute more to recurring revenue as utilization ramps up.
• Operational highlights: Participated in congresses like AAO and ESCRS, had 11 abstracts accepted at ASCRS Annual Meeting, expanded globally with EU and SE Asia launches.

In the fourth quarter of 2024, LENSAR achieved a record revenue of $16.7 million, representing a 38% growth over Q4 2023. Full year 2024 revenue grew 27% compared to 2023. Fourth quarter recurring revenue totaled approximately $10.8 million, and full year recurring revenue was over $40 million. Gross margin for the fourth quarter was 42%, with a full year gross margin of 48%. The installed base of ALLY Systems surpassed 135 globally, and the total installed base (including legacy LLS systems) grew to 385 worldwide, a 26% increase from December 31, 2023. Revenue contribution: Fourth quarter top line revenue was $16.7 million, with recurring revenue making up a significant portion, and system placements and procedure volumes driving growth.

• 2025 revenue growth expected above the 27% growth achieved in 2024.
• First quarter 2025 revenue growth aligns with 2024 full year growth (27%), with subsequent quarters anticipated to grow.
• Expect positive adjusted EBITDA for full year 2025, with the measure increasing as the year progresses.
• Continue to invest in the commercial organization, including service and customer applications infrastructure, to support growth.

Forward-looking statements are subject to known and unknown risks and uncertainties which may cause actual results, performance, or achievements to differ materially from those expressed or implied. Refer to the company's SEC filings for detailed risk factors.

Q: Could you talk more about the mix of placements in the fourth quarter, specifically femto-naive competitive changeouts versus replacing LLS?

A: 75% of placements were new to LENSAR customers. Only a few LLSs were displaced, about 30% of systems were replacement of competitive devices, and ~21% were femto-naive. The strategy of targeting private equity groups and larger practices is working well.

Q: As you've scaled, update on the strategy of taking market share, replacing old LLS, and going after femto-naive market?

A: Strategy is working well. Spending time with private equity groups and larger practices that already accept laser cataract surgery. Femto-naive customers are coming through meetings and demonstrations, and the system addresses shortcomings of first-generation technology.

Q: How are you thinking about the split between sales and leases versus procedural or consumable revenue in 2025?

A: As placement demand increases, the percentage of sold systems will drop slightly, with a higher percentage of placed systems. Aggregate sales/lease mix expected to be about 60% sales.

Q: When might we see an inflection in OUS sales given product approvals?

A: OUS sales will grow steadily, with larger growth expected in 2026. Growth will come from existing LENSAR KOLs and expansion in markets like Germany.

Q: Thoughts on establishing direct presence vs continuing with distributor model in OUS markets?

A: Comfortable with distributor relationships in EU and Asia, but will consider direct presence in other markets as opportunity is assessed.

Q: Is $7 million SG&A for Q4 2024 the baseline for 2025?

A: SG&A will tick up as we continue to invest in the commercial infrastructure, with less offset from other expense areas compared to prior quarters.