Cutera(US:CUTR)2020-08-08 08:39Financial Data and Key Metrics Changes - Total revenue for Q2 2020 was $26.4 million, a decline of approximately 45% compared to $47.8 million in Q2 2019, primarily due to COVID-19 related shutdowns [35] - U.S. revenue fell 61% to $10.9 million, while international revenue was $15.5 million, reflecting a 21% decline [35] - Gross profit decreased by 52% to $12.6 million, with gross margin dropping to 47.9% from 55.2% year-over-year [38] Business Line Data and Key Metrics Changes - Skincare revenue grew by 169% year-over-year to $4.8 million, driven by increased customer satisfaction and limited access to dermatologists in Japan [36][14] - Service revenue was better than anticipated, with practices requesting service in advance of reopening, leading to increased service calls [15] - Consumable revenue nearly doubled from May to June as practices began to ramp up patient traffic [30] Market Data and Key Metrics Changes - In North America, practices focused on driving procedure-related volume, particularly in skin revitalization and body sculpting [26] - European market sales were flat year-over-year despite government restrictions, aided by organizational restructuring and the launch of truSculpt flex [27] - In Japan, 60% to 70% of offices remained open at 50% to 60% capacity, with growth in both skin revitalization and body sculpting [29] Company Strategy and Development Direction - The company launched a membership program to assist customers with low upfront costs for energy-based aesthetic equipment, aimed at helping practices recover from COVID-19 impacts [17] - Focus on maintaining operational discipline and reducing expenses, with a significant reduction in headcount and non-essential programs [21] - Anticipation of continued aggressive marketing and treatment efforts from dedicated aesthetic practices, particularly med spas and plastic surgeons [19] Management's Comments on Operating Environment and Future Outlook - Management expressed guarded optimism for Q3 2020, expecting sequential improvement in revenue as patient traffic continues to ramp up [20] - The company is mindful of the ongoing impact of COVID-19 on revenue performance but is encouraged by early revenue trends in the current quarter [20] - Management emphasized the importance of customer engagement and adapting to the evolving market environment [8] Other Important Information - The company ended Q2 2020 with approximately $46.6 million in cash and equivalents, up from $31.7 million a year ago, bolstered by an equity offering and a PPP loan [44][45] - A new $30 million credit facility was established, replacing an existing facility with more favorable terms [46] - The company is focused on managing working capital and inventory effectively during the ongoing pandemic [47] Q&A Session Summary Question: How much of the recurring revenue growth is due to practices drawing down on inventory? - Management noted that consumable volumes lagged behind procedures initially but saw a significant increase as practices ramped up patient traffic [54] Question: Any updates on the acne program timeline? - Management indicated that clinical studies were extended due to COVID-19, and they are working with regulatory agencies to accelerate timelines [55] Question: How to sum up the impact on Q3 with various factors at play? - Management expressed encouragement from good patient traffic and noted that consumable inventories have been somewhat depleted, which should provide a tailwind for recurring revenue [60] Question: What is the growth trajectory of the business post-COVID? - Management believes that the organization is now leaner and focused on growth, with expectations to return to pre-COVID growth levels [66] Question: How does the membership program affect revenue recognition? - Management clarified that the membership program is seen as a courtesy to customers and is not expected to delay revenue recognition significantly [80]