Cutera(CUTR) - 2019 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2019 was $47.8 million, representing a 12% increase year-over-year, marking the highest quarterly revenue in the company's history [15][9] - Non-GAAP gross margin improved to 55%, up approximately 190 basis points from the previous year, driven by revenue growth and improved pricing discipline [19][22] - Non-GAAP net income for Q2 2019 was approximately $4.4 million, or $0.31 per fully diluted share, compared to $800,000 in the same period in 2018 [22] Business Line Data and Key Metrics Changes - truSculpt product portfolio generated 44% worldwide revenue growth in Q2 2019, with truSculpt procedure-related revenue growing triple digits year-over-year [16][10] - Recurring revenue, defined as consumable, service, and skincare revenue, grew 41% over Q2 2018, accounting for approximately 21% of total revenue, up from 17% in the prior year [17][22] - U.S. revenue remained flat year-over-year, with strong demand for truSculpt and Secret RF systems offset by decreased contributions from the Juliet system [16] Market Data and Key Metrics Changes - International revenue grew 36% compared to Q2 2018, with significant growth in Japan, Europe, and Australia [15][12] - Direct sales efforts accounted for 45% of second-quarter international product revenue, up from 35% in the previous year [15] Company Strategy and Development Direction - The company is focused on executing commercial and operational initiatives, with a commitment to improving its positioning in key international markets [12][25] - The introduction of truSculpt flex is seen as a strategic move to enhance the body sculpting portfolio and penetrate competitive accounts [37][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance but emphasized the need for prudence in raising guidance due to the new CEO's recent onboarding and the need to build credibility [43][44] - The company remains focused on executing its initiatives and is optimistic about the potential of the truSculpt flex product [40][29] Other Important Information - Cash generated by operations was $4 million for Q2 2019, reflecting improved credit and collection policies [24] - The company reiterated its 2019 financial guidance, expecting total revenue in the range of $165 million to $175 million, representing a 2% to 8% increase over 2018 [25] Q&A Session Summary Question: Growth in consumables and recurring revenue - Management highlighted that all elements of recurring revenue contributed to gross margin accretion, with consumable revenue showing 150% growth year-over-year [34][35] Question: Rollout of truSculpt portfolio - Management indicated that truSculpt flex is positioned to enhance the existing portfolio, with opportunities for bundling with truSculpt iD [46][37] Question: Guidance for the second half of the year - Management stated that while there are positive indicators, they need time to build credibility and ensure effective execution before raising guidance [43][44]