Cutera(US:CUTR)2019-02-21 01:46Financial Data and Key Metrics Changes - In Q4 2018, actual revenue was $45.5 million, down 5% year-over-year. For the full year 2018, revenue was $162.7 million, reflecting a growth of 7% [29][30] - Non-GAAP gross margin was 53% in Q4 2018, approximately 500 basis points lower than the previous year, primarily due to compression of average selling prices across legacy products [35][36] - Non-GAAP net loss for Q4 2018 was approximately $1.6 million, or $0.11 per share, while non-GAAP net income for the full year was approximately $1.5 million, or $0.11 per share [41][42] Business Line Data and Key Metrics Changes - The truSculpt product portfolio generated 32% worldwide revenue growth in 2018 compared to 2017, with over 40% of new systems sold producing a consumable revenue stream [32] - Recurring revenue, defined as consumable, service, and skincare revenue, grew 28% in Q4 2018 compared to Q4 2017, accounting for approximately 19% of total revenue [32] - U.S. revenue in Q4 2018 was down 7% year-over-year, impacted by diminished contributions from the Juliet women's health system and increased sales force turnover [30] Market Data and Key Metrics Changes - International revenue grew 1% in Q4 2018 compared to Q4 2017, with growth in Japan and the Middle East offsetting softness in Europe and Asia [31] - Direct sales efforts accounted for 48% of international product revenue in Q4 2018, returning closer to prior year levels [31] Company Strategy and Development Direction - The company is focused on revenue-enhancing activities, including launching new products and optimizing its commercial structure [12][13] - Plans for 2019 include multiple international product launches and a commitment to refreshing legacy systems to maintain competitive pricing [19][21] - The company aims to grow revenue faster than the broader market, with guidance for 2019 revenue between $165 million and $175 million, representing annual growth of 2% to 8% [25][46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the women's health market and anticipated modest sales, but expected revenue growth to accelerate in the second half of 2019 [26][27] - The company emphasized a disciplined focus on growth and profitability, with a commitment to improving sales processes and operational efficiencies [28][36] Other Important Information - A $5 million charge was incurred in Q4 2018 related to the remediation of key componentry in a legacy laser system, reflecting the company's commitment to quality [23][37] - The company expects to record a one-time charge in Q1 2019 related to the resignation of the former CEO [41] Q&A Session Summary Question: Components of 2% to 8% revenue guidance - Management indicated that stabilizing legacy products and enhancing the sales force will contribute to achieving the revenue guidance [54] Question: Stability of sales force and one-time charges - Management confirmed that while there will be a one-time charge in Q1, they expect stability in the sales force moving forward [56] Question: Long-term plan for Juliet product - Management plans to work with partners to generate long-term clinical data and become more aggressive in the market by 2020 or 2021 [59] Question: Noninvasive body contouring market dynamics - Management expressed confidence in the growth potential of noninvasive body sculpting, citing clinical data and procedure convenience as key advantages [61] Question: Sales force turnover impact on ASPs - Increased turnover led to lower average selling prices, as remaining sales personnel had to offer discounts [70] Question: Details on the $5 million charge - The charge was related to a legacy platform, with remediation efforts already underway [70] Question: New product launches in 2019 - Management confirmed plans to launch new products in 2019, focusing on maximizing the impact of each launch [71]