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

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[Foreign Language] Lou, go ahead, please.

Thank you, Shimon. Good morning. I'd like to start with a review of the first half of 2023 and have some specific comments on the first half as well as on Q2. In Q2 2023, we achieved $12.4 million in revenue, which represents a 53% year-over-year growth. In the first half of '23, our revenues were $22.8 million, which represents an outstanding 67% year-over-year growth. Of the revenue, particularly in Q2, $3.3 million of this revenue came on a recurring basis, which represented a 100% year-over-year growth. We ended the quarter as of June 30, 2023, with $25.3 million in cash with a gross margin of 75% and on a non-GAAP basis, and we performed to date over 155,000 treatments. As we look at the current market, we see the global market conditions as favorable despite what's going on, on a microeconomic as well as with the political concerns. The market demand continues to grow in our segment particularly for noninvasive skin tightening and lifting procedures. However, we're seeing a slowdown in a different segment of the market for expensive, costly, high downtime plastic surgery procedures. This appears to be slowing. The ROI of SofWave offers a significant competitive advantage than any other supplier. It's even more pronounced in a high interest rate environment since many of our customers choose to pay cash for purchases less than $100,000. We've achieved high product credibility and brand awareness globally, evidenced by the number procedures which we continue to ramp and build upon, as well as the support from some of the top thought leaders on a global basis. I'll show you an example in just a little bit as to what's going on in Asia. We just came back to some major industry trade events, both in Taiwan as well as in IMCAS where we're rapidly becoming the standard for skin tightening and lifting procedures. As far as trends, we see that people are looking for natural-looking results when seeking treatment. They want little to no downtime. They prefer our noninvasive approach. Patients are much more educated when they present themselves to the doctor, they're asking for certain branded procedures that have an awareness of, and this causes physicians to expect us as suppliers to be able to provide the customers with brand awareness and have a visibility of both not only amongst their peers, the other physicians as well as with consumers and the like. SofWave in certain markets such as the U.S., Taiwan, Canada and Brazil, all major markets is being positioned by physicians as a premium brand with the ability to have a premium value associated with the treatment as well as value derived from the patients. We are positioned for continued growth. If we look at our strategy, our strategy has involved doing proper scientific work, clinical study. We've expanded our FDA clears where we have very broad indications now across the base and expanding to the body. We're a totally noninvasive treatment, which we have both tightening fine lines and wrinkles, eyebrow, chin and neck lifting, as well as most recently cellulite improvement, and we're working on other things in the future for other applications on the body. Our in-house digital team has delivered strong results in terms of our digital presence as well as expanding our brand awareness, and this is leading to over 100,000 web visits per month and over 0.5 million verified social media followers. The KOL strategy that we adopted is giving us very strong podium presence, very strong peer-to-peer selling. We have fear of missing out among some of the providers right now as we start to build our installed base. People are coming asking for our SofWave procedure, and this is helping accelerate our sales process. We're emerging, as I mentioned earlier, in certain markets as the de facto skin tightening standard and lifting standard. As we look at our go-to-market strategy in terms of distribution, we continue to make investments in the direct sales team in the U.S. and in the U.K.. This allows us to increase our market coverage, address different markets, and as we gain additional clearances in markets outside of the U.S., we're working with some of the best of the best distributor partners who, again, are investing in the digital efforts and are following our strategy and building markets for us. As I mentioned earlier, this is an example of 2 events that happened. One was in Taiwan the AMWC Show where we see featured on the main thoroughfare as well as at the airport, as well as on TV and the like, a major Asian celebrity, Gigi Leung, who's known globally, at least not globally, but in this particular market as 1 of the key celebrities, she's a brand ambassador. This was invested in by our partner, and they're managing not only to drive system sales, to drive treatment and the enthusiasm around SofWave as the latest it, as the procedure continues to build and resonate throughout the region. Some of the accomplishments we achieved to date in 2023 include the FDA clearance for the Precise Applicator. We also achieved the FDA clearance for SofWave Smart, which is a wireless Internet of Things module that allows us to actively monitor our systems activity in the field. It has many, many attributes, including service attributes, including business intelligence and the like and other major advantage. We recently achieved regulatory approval in the major market of Mexico. We opened up in 2023, a direct subsidiary in the U.K. We are also were awarded a second U.S. patent was just approved and published. In terms of our U.S. and APAC telemarketing campaign, we've been able to achieve not only revenue traction as well as the social growth necessary to drive 155,000 treatments. If you recall, in Q1 at our Q1 earnings call, we reported 125,000 treatments. We're rapidly adding quarter-on-quarter and scaling this contribution to our overall revenue phase as the procedure becomes adopted. We also completed 2 large-scale multicenter studies for reduction of acne scars as well as the arm lift. Additionally, we won 2 more beauty awards. And if we look here at the beauty awards that we won to date, in addition to the 2023 New Beauty Award and Good Housekeeping, we also have an array of recognition that came from the industry that's across all the digital channels for some major entities such as Cosmopolitan Magazine, Elle Magazine, Shape Magazine. Again, these are global names with very high degrees of traffic, engagement and the like and SofWave, again, has been recognized for its best of breed and ability deliver value to both the patient and the provider alike. Our brand awareness continues to expand, both in terms of our social media presence with over 0.5 million followers across the most popular channels. And if we look here at a new campaign we have, Got Lift?, which, again, is a parity of what people have seen before with another type of consumer product ad. We have our physicians as celebrities. They're very excited about this. In just 2 weeks since the launch, we've had over engagement, engagement, which is really the name of the game here, how people interact from over 30,000 users on Instagram alone without any paid advertisement associated with this. Our distribution, our channel-to-market capability continues to expand. We're selling direct in the U.S. and U.K., and we also have very strong committed partners in over 36 countries to date. I'll turn it over right now to Dr. Shimon Eckhouse, our Co-Founder and Chairman, will discuss another new exciting application to Software.

Thank you very much, Lou. [Foreign Language]

[Foreign Language] Lou, back to you for summary.

So in summary, SofWave is delivering a very unique next-generation patented, noninvasive solution for aesthetic skin treatments. And it's a disruptive technology, it has many advantages over any other technology that's in the market today. This is evidenced by the rapid industry adoption in our growth, achieving over 66% growth in the first half of 2023. We have broad FDA clearances. We continue to expand upon our Lifting Laxity wrinkle treatment for face and neck as well as our first syndication on the body for cellulite. Our recurring revenue is coming on a very significant basis with over 20% of our total revenue coming from the up sales of our pulses. We've done to date, as I said earlier, over 150,000 treatments. Our brand awareness through social media and other digital channels continues to expand well over 0.5 million followers, and our regulatory clearances allows us access to major markets such as Taiwan, Brazil and Mexico. And we're also fueled and continue to grow by the widespread acceptance by the global thought leaders and key most influential people in the industry. I'd like to now open it up for questions and answers.

Thank you, Lou. [Foreign Language] Second question, I'm going to refer to you, Lou. Are we planning to continue and expand our sales team in the U.S.?

We will continue to be opportunistic in the expansion of our sales team in the U.S. We believe that there's still major markets that we can cover more effectively. We have room to add in the marketplace, highly organized, highly professional experienced sales team -- salespeople to improve our productivity levels and to drive our top line. So I would say for the immediate future, we continue to see expansion.

Thank you, Lou. [Foreign Language]

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Shimon?

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Thank you.