Financial Performance - Total net revenue for the three months ended March 31, 2019, was $36,026,000, an increase of 5.6% compared to $34,125,000 for the same period in 2018[16] - Gross profit for the three months ended March 31, 2019, was $17,309,000, slightly down from $17,334,000 in the prior year[16] - Operating expenses increased to $25,335,000 for the three months ended March 31, 2019, compared to $22,083,000 in the same period of 2018, representing a 14.9% increase[16] - The net loss for the three months ended March 31, 2019, was $8,220,000, compared to a net loss of $2,032,000 for the same period in 2018, indicating a significant increase in losses[16] - Net loss per share for the three months ended March 31, 2019, was $(0.59), compared to $(0.15) for the same period in 2018[16] Cash and Equity - Cash and cash equivalents at the end of the period were $19,158,000, down from $26,052,000 at the beginning of the period[30] - Total stockholders' equity decreased to $39,120,000 as of March 31, 2019, from $46,386,000 at the end of 2018[10] - The company reported a total of $1,307,000 in stock-based compensation expense for the three months ended March 31, 2019[30] - The company has a total accumulated deficit of $(32,230,000) as of March 31, 2019, compared to $(24,010,000) at the end of 2018[10] Assets and Liabilities - The company’s total liabilities and stockholders' equity were $97,355,000 as of March 31, 2019, compared to $97,637,000 at the end of 2018[10] - As of March 31, 2019, total cash and cash equivalents amounted to $27.1 million, with marketable investments totaling $7.9 million[52] - The Company’s cash and cash equivalents decreased from $35.6 million as of December 31, 2018, to $27.1 million as of March 31, 2019[53] - The total marketable investments were classified as current assets, with a fair market value of $7.9 million as of March 31, 2019[54] Revenue Streams - The Company generates recurring revenue from consumables, including replacement hand pieces and single-use disposable tips, enhancing its revenue stream from existing customers[81] - Extended service contracts for post-warranty services provide additional recurring revenue, recognized over the service period, which can last one to three years[83] - Revenue recognized from performance obligations transferred over time accounted for approximately 15% of total revenue for the three months ended March 31, 2019[70] - The Company recorded $4.142 million in payments received for deferred service contracts during the three months ended March 31, 2019, compared to $2.995 million in the same period of 2018[69] Market Performance - Revenue from the United States decreased to $20,400,000, down 3.5% from $21,136,000 in the prior year[138] - Revenue from Japan increased significantly to $5,294,000, up 49% from $3,555,000 year-over-year[138] - Total product revenue was $30,762,000, an increase of 5.1% compared to $29,264,000 in the previous year[138] - Consumables revenue surged by 153% to $1,945,000, attributed to the introduction of new products with consumable elements[172] Expenses and Losses - The Company reported a net loss of $8.2 million for the three months ended March 31, 2019, compared to a net loss of $2.0 million for the same period in 2018[110] - Basic and diluted net loss per share for the three months ended March 31, 2019, was $(0.59), compared to $(0.15) for the same period in 2018[110] - Sales and marketing expenses increased by $3.0 million, or 23%, to $16,104,000, accounting for 45% of total net revenue[179] Accounting and Compliance - The Company plans to early adopt ASU No. 2018-15 for applicable implementation costs, currently assessing its impact on financial statements[46] - The Company adopted a new lease accounting standard resulting in additional net lease assets and liabilities of $10.3 million and $10.4 million, respectively, as of January 1, 2019[159] - The effective interest rate on the line of credit facility was based on a floating rate equal to the LIBOR rate, which was 2.60% as of March 31, 2019[206] Future Outlook - The Company’s future operating results are subject to risks including rapid technological change and competition from larger companies[40] - The Company is facing increased competition and regulatory challenges, which may impact future performance and product sales[154] - The Company is focused on expanding its product offerings through both internal development and partnerships with other vendors[152]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For fiscal year ended December 31, 2018 Commission file number: 000-50644 Cutera, Inc. (Exact name of registrant as specified in its charter) Delaware 77-0492262 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 3240 Bayshore Blvd. Brisbane, California 94005 (415) 657-5500 ...

Financial Data and Key Metrics Changes - In Q4 2018, actual revenue was $45.5 million, down 5% year-over-year. For the full year 2018, revenue was $162.7 million, reflecting a growth of 7% [29][30] - Non-GAAP gross margin was 53% in Q4 2018, approximately 500 basis points lower than the previous year, primarily due to compression of average selling prices across legacy products [35][36] - Non-GAAP net loss for Q4 2018 was approximately $1.6 million, or $0.11 per share, while non-GAAP net income for the full year was approximately $1.5 million, or $0.11 per share [41][42] Business Line Data and Key Metrics Changes - The truSculpt product portfolio generated 32% worldwide revenue growth in 2018 compared to 2017, with over 40% of new systems sold producing a consumable revenue stream [32] - Recurring revenue, defined as consumable, service, and skincare revenue, grew 28% in Q4 2018 compared to Q4 2017, accounting for approximately 19% of total revenue [32] - U.S. revenue in Q4 2018 was down 7% year-over-year, impacted by diminished contributions from the Juliet women's health system and increased sales force turnover [30] Market Data and Key Metrics Changes - International revenue grew 1% in Q4 2018 compared to Q4 2017, with growth in Japan and the Middle East offsetting softness in Europe and Asia [31] - Direct sales efforts accounted for 48% of international product revenue in Q4 2018, returning closer to prior year levels [31] Company Strategy and Development Direction - The company is focused on revenue-enhancing activities, including launching new products and optimizing its commercial structure [12][13] - Plans for 2019 include multiple international product launches and a commitment to refreshing legacy systems to maintain competitive pricing [19][21] - The company aims to grow revenue faster than the broader market, with guidance for 2019 revenue between $165 million and $175 million, representing annual growth of 2% to 8% [25][46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the women's health market and anticipated modest sales, but expected revenue growth to accelerate in the second half of 2019 [26][27] - The company emphasized a disciplined focus on growth and profitability, with a commitment to improving sales processes and operational efficiencies [28][36] Other Important Information - A $5 million charge was incurred in Q4 2018 related to the remediation of key componentry in a legacy laser system, reflecting the company's commitment to quality [23][37] - The company expects to record a one-time charge in Q1 2019 related to the resignation of the former CEO [41] Q&A Session Summary Question: Components of 2% to 8% revenue guidance - Management indicated that stabilizing legacy products and enhancing the sales force will contribute to achieving the revenue guidance [54] Question: Stability of sales force and one-time charges - Management confirmed that while there will be a one-time charge in Q1, they expect stability in the sales force moving forward [56] Question: Long-term plan for Juliet product - Management plans to work with partners to generate long-term clinical data and become more aggressive in the market by 2020 or 2021 [59] Question: Noninvasive body contouring market dynamics - Management expressed confidence in the growth potential of noninvasive body sculpting, citing clinical data and procedure convenience as key advantages [61] Question: Sales force turnover impact on ASPs - Increased turnover led to lower average selling prices, as remaining sales personnel had to offer discounts [70] Question: Details on the $5 million charge - The charge was related to a legacy platform, with remediation efforts already underway [70] Question: New product launches in 2019 - Management confirmed plans to launch new products in 2019, focusing on maximizing the impact of each launch [71]