Cutera(US:CUTR)2019-11-11 03:16Financial Data and Key Metrics Changes - Third quarter revenue was $46.1 million, up 14% year-over-year [19] - U.S. revenue grew 9% year-over-year, driven by share gains in the truSculpt body sculpting portfolio [19] - Recurring revenue, defined as consumable, service, and skin care revenue, grew 51% year-over-year and accounted for approximately 24% of total revenue, up from 18% in the prior year [19] - Non-GAAP gross margin was 58%, approximately 350 basis points higher than the previous year [21] - Non-GAAP operating income was $2.4 million, compared to $1.4 million in the same period of 2018 [23] - Non-GAAP net income for the third quarter was approximately $2.2 million or $0.15 per fully diluted share [24] Business Line Data and Key Metrics Changes - Total truSculpt revenue grew 43% year-over-year, driven by the launch of truSculpt flex [12][19] - truSculpt procedure-related revenue grew triple digits year-over-year [13] - Approximately 18% of the current active installed base generates consumable revenues, up from 13% at the end of 2018 [14] Market Data and Key Metrics Changes - International revenue grew 21% compared to the third quarter of 2018, with significant growth in Japan and Australia [20] - Direct sales efforts accounted for 55% of international product revenue in the third quarter, compared to 45% in the second quarter [20] Company Strategy and Development Direction - The company aims to establish itself as a leader in the energy-based aesthetics market by providing innovative technologies and superior support [8] - Key initiatives include driving performance in the body sculpting portfolio, expanding recurring revenue, and reducing material costs [9][10] - The company raised its 2019 financial guidance to $177 million to $179 million, reflecting ongoing momentum [10][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of current performance and the cumulative impact of previous execution [10] - The company is focused on executing commercial and operational initiatives to drive growth [26] - Management acknowledged the importance of recurring revenue streams to mitigate economic cycles [35] Other Important Information - The CFO, Sandy Gardiner, announced her departure for personal reasons, and the company expressed gratitude for her contributions [28] Q&A Session Summary Question: Plans for the continued rollout of truSculpt flex in the U.S. - The company is in full market release within North America and plans to roll out flex to Europe, Australia, New Zealand, and the Middle East in the first half of 2020 [32] Question: Progress on recurring revenue as a percentage of total sales - Management expects continued momentum in recurring revenue streams, particularly from consumable products [34] Question: Long-term gross margin expectations - Management aims for long-term gross margins to reach the low to mid-60s, though this will take time [39] Question: Consumer interest in truSculpt iD and flex - The company is seeing interest from both existing customers and new customers, with many adopting flex as a complement to existing fat reduction technologies [42] Question: Fourth quarter guidance and inventory increase - Management is being cautious with fourth quarter guidance due to the timing of product launches and capital sales [46]