Venus Concept, Inc. Q1 FY2024 earnings call

• Q1 2024 revenue exceeded expectations outlined in fourth quarter earnings report, despite 15% YOY decline. Cash system sales grew quarter-over-quarter in U.S. and international markets.
• Strategic initiatives to exit unprofitable direct markets outside U.S. are bearing fruit; international revenue up over 30% sequentially in Q1.
• Cost reduction and cash management initiatives progressing well; focus on protecting near-term cash runway and incremental cost containment.
• International infrastructure rationalization continuing, with initial demand from new exclusive partnerships in UK and India.
• New product pipeline progress: U.S. commercial launch of Venus Versa Pro going well, EU launch and TGA clearance in Australia, regulatory approval for Venus Bliss MAX in Israel.
• Company-wide rebranding initiative and NEXThetics program (customer education/training events) showing positive response.
• Expansion of commercial strategy to target corporate accounts, securing a win with a multicenter account.

Total revenue for Q1 2024 was $17.5 million, down 15% year-over-year. Cash system sales represented 75% of total systems subscription and lease program sales in Q1 2024 compared to 66% in the prior year period. International revenue increased more than 30% sequentially in Q1, driven by strong initial demand from new distribution partners added in late 2023 and stronger-than-expected ARTAS system sales. U.S. revenue decreased 15% year-over-year due to macroeconomic headwinds.

• Company is not providing full year 2024 financial guidance at this time.
• Expect total revenue for Q2 2024 ending June 30 to be at least $16.5 million.
• Macro-economic headwinds expected to continue impacting U.S. and international markets, with international markets having lumpy behavior until new distributors establish consistent ordering patterns.

• Macro-economic headwinds pressuring the aesthetic sector as a whole.
• Tighter credit markets impacting systems adoption throughout the business, especially in hair restoration due to high ASP of robotic capital equipment.
• Uncertainties related to international distributor ordering patterns causing lumpy behavior in international revenue.

Q: Review of what went better than expected in Q1 and assumptions for Q2 guidance.

A: Strength in international markets and ARTAS system sales outside U.S. were better than expected. U.S. performance was as expected given macroeconomic headwinds. For Q2, same trends expected to continue with macro headwinds not dramatically improved, U.S. pressures to continue, and international markets having lumpy behavior until new distributors stabilize.

Q: Managing working capital and cash burn, and remaining areas for improvement.

A: Focus on working with key customers to accelerate collection of receivables at reasonable discounts, and robust sales and operations planning to manage inventory for better inventory turns and working capital improvement.

Q: Hair business trends in Q1 2024 and 2024 outlook.

A: Hair business impacted by tight capital equipment market. International ARTAS device sales improved over Q4, but U.S. still challenging due to high ASP and financing environment. Cautiously optimistic about second half of 2024.

Q: MSLP loan agreement and international territories driving international revenue.

A: Madryn owns the majority of the debt stack, including the MSLP Loan. International revenue growth in Q1 was driven by improved performance in select direct markets like Australia and Israel, and progress in signing new distributors in Rest of World.