SofWave Medical Ltd. (SOFW) Earnings Call Transcript & Summary

[Foreign Language]

[Foreign Language] Lou, please?

Thank you, Shimon. Good morning. I'd like to share with you our results for 2022 as well as our Q4 performance. For 2022, we achieved $35.6 million in revenue, which represented 63% growth year-over-year. In Q4, our revenues were $13.8 million, which represented a 55% year-over-year growth. Recurring revenue for the year was $7.2 million. This represents a very significant 177% year-over-year growth. Our gross margins were at 74.6% on a non-GAAP basis. We ended the year as of December 31, with $32 million in cash and since our inception, we have performed over 100,000 treatments. If we look at the year besides the financial metrics, we also had a year of major milestones. Starting with our strategic agreement in China, which HTDK, very important agreement for us as we look forward. This is a major market, which will represent the size of the U.S. market by 2025, and we're very well positioned. We also achieved our first U.S. patent was granted in the United States. It is very broad, protecting our proprietary innovative technology. In Q4, we received regulatory approval to market in Brazil, one of the largest markets for aesthetic procedures. We also, in December, received the FDA clearance for the improvement in the appearance of cellulite, another several billion dollar market with great opportunity for growth. And ending the year, we received in the very last days clearance to sell in Taiwan, another major market of which we received a very large opening order and a very strong commitment to our partner there. And if we look at the brand awareness, which is driving the procedure growth, just in YouTube alone, one particular Sofwave channel had over 2.5 million YouTube views. Looking at the market conditions, we feel that the market conditions remain favorable for us despite some macro concerns. The market demand, particularly in our segment of noninvasive skin tightening and lifting and body still remains strong and is growing favorably. If we look at our competitive advantage on our return on investment, it's even more pronounced in a high interest rate environment since many of our customers choose to pay cash for the purchase of our device. We're monitoring closely any currency impact across the Asia Pacific region, in particular. And if we look at our credibility, the building of the brand, the credibility of our science, our clinical results, our utility on a day-to-day use, I would say this is best evidenced by the overwhelming global KOL interest and support we had in 3 of the major trade shows, which happened both in Q4 as well as in Q1 of this year, such as IMCAS Paris, where it was attended by over 17,000 worldwide attendance. ASCS in the United States, which is American Drug Society and the AmSpa, which is the largest society and dealing with med spas in the U.S. It was very, very pleasing to see people with the growing awareness about our product, both new customers -- potential new customers as well as current customers standing in front of our booth generating great energy and enthusiasm for our device. As we look at the trends in the marketplace, it's clear that the influencers are driving consumer demand, particularly among the younger patients who are seeking treatments. The physicians expect this. This comes with the territory. You need to have brand awareness, so it becomes easier for them to perform a treatment when someone is calling on the phone, asking them about SofWave treatments. Multiple treatments are also being requested by the patients. This is due to their satisfaction. They like the results. They're coming back for a second and third treatment. They're trying other body areas at their request as well as the physician's judgment, which again is helping us expand our recurring revenue base. The procedure pricing, if you look at certain markets in the world, it's increasing, which is a very favorable position for us because we're being positioned as a premium brand on the strength of our technology as well as clinical performance. Our go-to-market strategy in this very large several billion-dollar market for skin tightening and body leads us to look at our fundamental clinical work that we're doing, where we're doing the scientific work, the clinical study and all the efforts necessary to achieve very broad clearances, both from the FDA as well as other regulatory bodies for our facial applications, which include tightening and lifting across the entire facial and neck area as well as recently in cellulite improvement. We're looking very hard into this as well for future body applications that Shimon will touch upon. And this is all backed by our digital presence, very important to reach the market as effectively as possible, and we built a very strong platform for not only attracting new customers, but also growing procedure demand and procedure growth as well with well over 0.5 million followers to date. Our KOLs and the peer-to-peer selling that they're doing, again, we think again, one of our key assets. Brand advocacy is very strong. In certain markets around the world, we're becoming the de facto standard for tightening. And if we look at our channel to market capability, our direct organization in the U.S. continues to grow. We're expanding beyond the early adopters, plastic surgeons and derms into the fast-growing med spa market. And we have some of the strongest partners in the aesthetic device space on a worldwide basis, not only in EMEA as well as in APAC. Awareness is important. We started from day 1 understanding how we had to win digitally, both in terms of web presence. We had over 40 million visits last year, and our social reach was over 25 million people, and it continues to grow. We're also looking at expanding into the Asian channels in the very short term, which we think as our channel to market capability and expanding regulatory clearances there. We see greater sight to the future there. Other media has recognized SofWave for its innovation, efficacy, strong consumer advocacy and the like, and this includes some of the major global publications in the world from Elle magazine to Cosmopolitan. These are not paid for awards. They're strictly independent, and we're very proud of this accomplishment in 2022. I'll turn it over to Assaf now for some financial highlights.

[Foreign Language].

[Foreign Language]

Thank you, Shimon. Just some highlights. SofWave is delivering a proprietary, well-protected next-generation energy-based platform for nonaesthetic -- non invasive aesthetic procedures, which is superior to outdated inferior solutions that have existed until SofWave came along. We have significant recurring revenue with over 20% of our revenue coming on a recurring basis, and we completed over 100,000 treatments since the launch of our product. We have rapid industry adoption, achieving a 63% growth in 2022 and our brand awareness, which is driving procedure growth as well as device sales, currently sits now at approximately 0.5 million verified followers. We have a broad and expanding range of FDA clearances for lifting, laxity and wrinkle treatments on the face and neck and now we'll be in the body with cellulite, and we also are expanding our regulatory markets. Our regulatory clearances in some key markets such as Taiwan, Brazil and Mexico, and this is fueled even further by the widespread acceptance of -- on a worldwide basis by global key opinion leaders. I'd like to open it up now for some questions and provide answers.

[Foreign Language]. Next question, I will actually refer to you, Lou. The question is, when are we expecting to see a significant and meaningful contribution from our recent regulatory approvals in Taiwan, Mexico and Brazil?

We're starting to see this contribution already. As I mentioned previously, we had a very large opening order, the closing moments of the year from our partner in Taiwan. They're already off to expanding that strong start in Q1 of this year. We have very strong partners in both the Mexican marketplace as well as in Brazil. We've met with many of the KOLs and early adopters along with our distributor partners, and their opening orders are quite impressive. So again, we think we're on our way in 3 more major marketplaces.

[Foreign Language]