Cutera(US:CUTR)2019-05-13 03:00Financial Data and Key Metrics Changes - First quarter revenue was $36 million, up 6% from the same period a year ago [13] - Non-GAAP gross margin was 49%, approximately 235 basis points lower than the year-ago period [15] - Non-GAAP operating loss was $4.7 million in the quarter compared to a loss of $2.4 million in the same period of 2018 [19] - Non-GAAP net loss for the first quarter of 2019 was approximately $4.9 million or $0.35 per fully diluted share [19] - Cash used by operations was $7.9 million for the first quarter compared to $10 million in the first quarter of 2018 [21] - The company held cash and investments of $27.1 million with no debt as of March 31, 2019 [21] Business Line Data and Key Metrics Changes - Total truSculpt revenue grew 29% over the first quarter of 2018, with procedure-related revenue growing 300% [7][8] - Recurring revenue, defined as consumable, service, and skincare revenue, grew 28% over the first quarter of 2018 [14] - Consumable revenue grew over 150% compared to the first quarter of 2018 [14] Market Data and Key Metrics Changes - U.S. revenue in the first quarter was down 3% year-over-year, while international revenue grew 20% compared to the first quarter of 2018 [13] - Direct sales efforts accounted for 59% of the first quarter international product revenue compared to 46% in the year-ago period [14] Company Strategy and Development Direction - The company aims to rapidly expand high-margin consumable revenue, with a focus on driving adoption of systems with procedure-related revenue [9][25] - The company is committed to improving pricing discipline in North America and enhancing operational efficiencies [10][12] - The company is focused on innovation and empowering employees to challenge the status quo to achieve long-term operational and financial objectives [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the positive signs from initiatives implemented in 2018 and the potential for improved gross margins throughout 2019 [24][22] - 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 [22] - Management acknowledged the competitive landscape in the non-invasive body contouring market but highlighted the unique features of their truSculpt technology [37] Other Important Information - The company established two U.S.-based distribution centers to improve response times and lower transportation costs [12] - The company is working closely with the manufacturer of the Juliet device to address regulatory challenges and is optimistic about its future in the women's health space [32] Q&A Session Summary Question: Impact of domestic sales and margin from pricing and loss of Juliet - Management acknowledged the need for better pricing discipline and noted that international sales were robust, contributing to overall performance [27][28] Question: Long-term margin structure objectives - Management remains focused on achieving long-term margin goals, emphasizing the need for time to implement operational improvements [30] Question: Update on Juliet's U.S. market return - Management confirmed ongoing efforts to address regulatory challenges and has a pre-sub-meeting with the FDA scheduled [32] Question: North American sales force stability and hiring plans - Management reported stabilization in turnover and plans to add more personnel in the practice development manager space [34][35] Question: Non-invasive body contouring market dynamics - Management noted fierce competition but highlighted their ability to sustain pricing above competitors [36][37] Question: Clarification on gross margin pressures - Management confirmed that the sequential gross margin pressure was primarily due to lower revenue base rather than pricing changes [39] Question: Expectations for gross margin improvement - Management reiterated expectations for non-GAAP gross margins to improve over the full year compared to 2018 [40]