Venus Concept, Inc. Q4 FY2023 earnings call

Key Initiatives - Rajiv highlighted that the company achieved reducing cash burn by more than 50% in 2023 through cost reductions, shift to cash sales, and working capital management. - Fourth quarter revenue was impacted by softer US system sales due to macroeconomic conditions and international restructuring. - Hemanth discussed progress on cost reduction and cash management initiatives, international infrastructure rationalization (negotiating distribution partnerships, with two new exclusives in UK and India), new product pipeline (Venus Versa Pro launched in US in November, CE Mark in EU in February), and company rebranding to Venus AI with the NEXThetics program for customer education. - Domenic reviewed financial results: total revenue $18.1M, gross profit $12.1M (down $3.7M YOY), operating expenses decreased, net loss $11.1M, cash and cash equivalents $5.4M as of Dec 31, 2023, with cash used in operations $0.8M in Q4 2023.

In the fourth quarter of 2023, Venus Concept delivered total revenue of $18.1 million, down $6.2 million or 25% year-over-year and up $0.5 million or 3% quarter-over-quarter. Regionally, international revenue decreased 40% year-over-year and US revenue decreased 14% year-over-year. By product category, systems revenue decreased 38%, other products revenue decreased 30%, lease revenue increased 5%, and services revenue increased 4%. Cash system sales represented 67% of total systems and subscription sales for fiscal year 2023, up from 58% in fiscal year 2022. In the US, cash system sales were 71% of total US systems and subscription sales in 2023, compared to 53% in the prior year period, with cash system sales to US customers increasing 11% year-over-year.

The company is not providing full year 2024 financial guidance at this time. It expects total revenue for the three months ending March 31, 2024, of at least $16.5 million. Encouraged by international distributors placing orders and hair business pickup in Q1, but US still faces macroeconomic headwinds, with no expected improvement in the US environment until the second half of the year.

Macroeconomic headwinds pressuring the aesthetic sector, higher interest rates delaying customer equipment purchases, challenges with international restructuring initiatives, need to demonstrate compliance with NASDAQ listing 5550(b) by May 28, 2024, and uncertainties surrounding the ongoing strategic options exploration for maximizing shareholder value.

Q: Marie Thibault asked about Q1 outlook, OUS assumptions, and strategic options evaluation.

A: Rajiv mentioned Q1 outlook has conservatism due to revenue recognition, encouraged by international distributors placing orders and hair business pickup, strategic evaluation is ongoing with discussions with lenders and shareholders, and focused on maintaining liquidity.

Q: Jeffrey Cohen asked about product launches timeline and hair business trends.

A: Hemanth said AI.ME launch is likely back end of 2024 or 2025, hair business was tougher in Q4 but showing strong turnaround trends in 2024 with rebound expected in Q1.