Cutera(US:CUTR)2022-11-05 21:44Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $62.8 million, representing a 9% increase compared to $57.4 million in Q3 2021, with a constant currency growth of approximately 17% [25][17] - Non-GAAP gross profit for Q3 2022 was $34.8 million, with a gross margin of 55.4%, a decrease of approximately 290 basis points year-over-year [30] - Non-GAAP operating income for Q3 2022 was a loss of $2 million compared to a profit of $5.1 million in the prior year [32] Business Line Data and Key Metrics Changes - Capital equipment revenue for North America was $25.4 million, up 23% year-over-year, while international capital equipment revenue was $15.6 million, reflecting a 50% increase in constant currency [27][19] - Recurring revenue, which includes consumables, global service, skincare, and AviClear product lines, was $21.8 million, down 13% as reported, but down only 2% in constant currency [28] - Skin care revenue was $9.4 million, down 36% as reported and down 21% in constant currency, primarily due to prior year prebuying activity [28][20] Market Data and Key Metrics Changes - The Japanese yen has depreciated approximately 30% against the U.S. dollar since the beginning of 2022, significantly impacting revenue from Japan [14] - The company is also monitoring economic conditions in Europe due to the ongoing conflict in Ukraine and the weakening Euro and British pound [16] Company Strategy and Development Direction - The company is focusing on expanding its market presence through the AviClear product, which is expected to transform its business model and improve financial margins [41] - Plans to accelerate the full North American launch of AviClear and invest an additional $20 million in Q4 2022 were announced [35] - The company aims to shift towards more procedural revenue channels, aligning interests with practices and enhancing long-term growth potential [41] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the core business performance, citing steady treatment volumes and strong customer demand for capital equipment [11][12] - The company is reiterating its total revenue guidance for 2022 at $255 million to $260 million, despite foreign exchange headwinds [37] - Adjusted EBITDA guidance has been revised to a range of breakeven to negative $5 million due to ongoing foreign exchange impacts [39] Other Important Information - The annual Cutera University Clinical Forum saw over 600 attendees, a 35% increase from previous years, indicating strong interest in the company's offerings [13] - The company has hedged 50% of projected cash flows from Japan to mitigate foreign exchange risks [26] Q&A Session Summary Question: What changes with the full launch of AviClear? - Management indicated that while the sales team will begin placing more boxes, activation will take time due to installation and training requirements [45][46] Question: Do you need more capital reps for AviClear? - Management acknowledged the need for tailored support for different customer segments and may require additional key account managers as placements increase [50][52] Question: What feedback have you received from physicians regarding AviClear? - Physician feedback has been positive, with strong clinical outcomes reported, but the company is still working on integrating the treatment into existing practice flows [55][56] Question: How are you addressing potential consumer spending concerns? - Management believes that acne treatments are more recession-resistant and has introduced financing options to help patients afford the procedure [64][67]