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

We're very happy to report our Q1 2025 results. We had an outstanding quarter. Our momentum continues. We achieved $16.7 million in revenue, which represents 26% year-over-year growth. Our margins were 76.4% on a non-GAAP basis. And it's important to note that $7 million of this revenue came on a recurring basis, which represents a 49% year-over-year growth. We ended the quarter as of March 31 with $20.4 million of cash, and we performed over 0.5 million treatments and this number continues to expand as we continue to execute our strategic plan. I don't have to tell anybody on the call how challenging the world is, how challenging the market is. But it does create opportunities for SofWave, particularly how we're positioned with the ideal solution for the patients that are on GLP-1 agonist. We have a superior solution for lifting, toning and laxity. And as a result of all this and as well as the fact that our treatments actually biomize the skin, the natural appearance, we're navigating quite well in this difficult marketplace. The other interesting thing of note that came during the latter part of the quarter was the tariffs, which I'm sure we'll discuss sometime during the course of the call today. So as we look at the quarter, we had many more high points than low points. Our momentum continues. If you recall, we had a very strong Q4. It's good to start the fiscal year despite the macro with very strong console placements as well as pulse sales as well. We achieved record high levels. Our brand awareness continues to expand. And if we look at how our product is positioned from the standpoint of having demonstrated superior efficacy, patients like the treatments, providers enjoy giving the treatments because it's in high demand and offer superior results as well as the fact that our value proposition, our return on investment is the best-in-class. It's simply superior to all of the other competitive offerings that are out there. We see a rising market demand for lifting and toning, as well as for laxity improvement as a result of wide use of the GLP-1s. And we had an outstanding quarter and improved traction as well with world-class plastic surgeons that are adopting software as their noninvasive treatment of choice. Our execution on the whole has been solid. We have a scalable lean infrastructure and systems in place that will continue to support our high revenue growth and expanded profitability. Why are we taking market share? I mean it's a competitive world out there. We're competing for dollars. We're not just competing in the category. We're competing for the spend of aesthetic providers. But what we're offering really is a superior patient that has proven outcomes. We have seven FDA clearances on the SofWave device, two on Pure Impact. We've done numerous clinical studies on a day-to-day basis. The patients are coming back asking for more. And this demand, of course, achieves great ROI for the providers. The utility rates are increasing. This is a result that this treatment can be delegated. It has minimum downtime. And we can treat all skin types, 12 months a year, results in natural looking is superior and they're ideal complement to those patients that are on the GLP-1 throughout their patient journey. Our growth strategy has three legs. The first is market expansion. We recently announced our clearance in Japan. This is a major market for us. There are other markets that we plan on entering in the near-term future such as Brazil. And in the longer term, we have market opportunity in major markets such as China. The success of our provider is important. Customer success is very integral to our story, having an ROI where not only does the provider receive exceptional value, but that the patients themselves feel that the treatment is worth it, that they ask for more and they come back asking for more. And our entire business model is scalable and can be integrated into any practice. As far as the demand is concerned, we're increasing patient awareness in leaps and bounds, and this is as a result of our expanded social media and digital presence and launch. If we look at the Japanese market opportunity. Japan is the #3 global market for nonsurgical aesthetic procedures. And it has as well the #3 amount of plastic surgeons according to the ISAPS surveys. The regulatory approval gives us a great market opportunity. In Japan, there's an aging population, and it's culturally important to see natural looking results which SofWave achieves. There's a surge in noninvasive procedure adoption. This culture in particular wants no downtime. The demand for tone, texture and lifting, again, is driven by the adoption of the GLP weight loss drugs. We have a partner in Japan, JMAC, that's second to none. They're a major entity. We have a very robust go-to-market strategy. They're expanding their sales coverage as well as the fact that we'll be doing consumer marketing across multiple channels that were in lockstep, and we're planning on achieving results this quarter as a result of this recent clearance. The story continues. Last quarter, we showed the return on investment. This is the most current map. And as we look at the map, if we look at some of the smaller markets such as Minnesota, we see the return on investment well over 140%. We look at other major markets like California and New York, where we have, again, significant market penetration, but yet the return on investment continues to grow. We see this as scalable. We see this as we're driving the patient demand because the patient is well received, the outcomes are superior and something that's going to continue to mount momentum as we go forward. This is a major tool for our sales team, particularly in the U.S. as they go out there. And again, as we compete for dollars, what should the clinician buy? What should they integrate in their practice, what investment are they going to make? And SofWave, in essence, provides them with competitive advantage when they partner with us. The brand awareness, if we look at the numbers on the lower left-hand side, you'll see the web traffic, which increased by over 100%. We've also added on some key influencers. We spoke at the end of last quarter in the earnings call about the card actions about how we had organically. And again, this quarter, organic posts by the actions supporting software, supporting the uniqueness and the superior outcomes. This has driven some of the awareness not only on the web traffic as well as on social media. And we also extended our social presence on both Redline and WeChat, not only in North America, where there's very solid and growing Asian populations, in particular, as well as we began our efforts in Asia and China throughout the region. Of note as well was a recent recognition from guidepost QSight, which is an independent marketing agency, which service over 3,000 providers and SofWave was the #1 growth in procedure sales. We led the marketplace in this area. It's a completely independent service from us. And so across the board, we're firing on every cylinder and the awareness and the strategy around the digital investment we made continues to pay us dividends. If we look at the Kardashian effect, we see here what -- I'll call your attention to one number, the engagement rate. The engagement rate across the industry is 1.5%. SofWave in the last quarter alone achieved a 6.5% engagement rate. Now what engagement is a like share or comment. People enjoy and appreciate the content, the quality of the content that we're putting out there is high. This engagement rate pertains to all of our social media content, not just the Kardashian post. And if we look at the growth in social media, it's considerable recently, as of last week, as of last Wednesday, Kim Kardashian came out and posted on her third SofWave treatment. And if we look again towards the growth in the social media metrics on the next slide, you'll see across every channel, we're up by double digits year-over-year compared to Q1 2024. If we look particularly at YouTube, we have close to 100,000 subscribers on YouTube and our video views are up 23%, similarly across every channel. This is important as we go and sell to providers, they want their phone. They want to make sure that the demand is there, the awareness is there from the patients. It makes the whole sales process easier. And SofWave, I think is setting a new standard in the industry for brand awareness development. Again, now back to the next set is we look at what's happening in our trade shows, we have a very commanding presence, not only on the podium, but with world-class KOLs that continues to help us sell our technology by recommending to their peers, their successes, their belief in our mechanism of action, their belief in our efficacy. As well as their financial success with SofWave within the practice. We have on this slide here among some of the very most well-known physicians in the world, both plastic surgery, dermatology as well as from some very, very well-known national med spa chains. So lastly, the most recent news, and this is a forward-looking statement since this already occurred. Organically, and I want to repeat this, these are not paid post. We did not pay for the endorsement from either Kim or Khloe Kardashian. Just last week, Kim received her third treatment. She came out and posted that. She was corporate ready. She made appearances. It was picked up across various news media outlets. Immediately, we picked up 3,400 followers. And if we look in terms of the number of views that we achieved on the Daily Mail and [indiscernible] Entertainment, the reach is outstanding. Now this will continue to propel itself. We'll kick in the entire marketing engine, and we'll do some paid ads and some other very unique ways to make sure that this messaging is out there. And we see this setting the stage for us again in Q2 to continue the momentum and to continue to execute our strategic plan. I'll now turn it over to Shimon.

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

So in summary, a few points. First off, our technology is next generation. It is superior, it is patented and it's disruptive. It is a superior noninvasive skin treatment that's in demand. It's far advanced compared to the other solutions that are currently available. Our numbers show rapid industry adoption with the 26% growth in Q1. Our infrastructure, our processes are leading. We think as we look into the future, continued high growth and profitability can be supported by the structure that we have in place already. Our FDA clearances are very broad. Our provider has numerous patient candidates to apply software technology successful to. And our revenues -- recurring revenues are very unique that they're coming on a 40% basis with over 0.5 million treatments completed to date. The brand awareness story is a wonderful one. It's a great story that continues to expand, and we now have over 1 million organic followers. I'll now open it up for Q&A. Questions, please.

All right. The first question is for you, Lou, is about the schedule for launch in Japan and the progress we are making there with the new approval.

So first, I'd like to point out to everyone that through physician import license over the last several years, SofWave and our Japanese partner, JMAC, have been seeding the marketplace with the key plastic surgeons, the key dermatologists, the key thought leaders. There's an awareness on the efficacy of the technology, the superior nature of what we're doing. And what we're in the process of doing this quarter is train the widespread sales team as well as the marketing team to prepare the consumer marketing effort into Japan. We will begin to see our first revenue of scale coming from Japan starting this quarter.

Thank you, Lou. Another question actually for you, Lou. Do you think that we saw any substantial effect of the Kardashian effect on our Q1 results? And how do you see it going forward?

Well, I mean we can see it in the web numbers, and we can see it in the social media numbers. And we can see it in terms of the awareness as well as at the end of the day, if we look at the conversion funnel, we look at the number of leads that we generated just from the Kardashian post. Now Yes, I think there were a few people who were on the edge that we closed. I think if you look at the B2C element, the amount of inbound leads our providers achieved, that was significant. And when they went out and reposted on their own, I think we would have talked to some of our physicians or med spas, they would say that they had a higher demand. But in terms of giving an exact number, I would say it was very, very positive. I'd much rather have that endorsement and not have that endorsement. But I think we have a natural momentum. We have the solution for the GLP-1s. We have, I would say, an acceptance in the marketplace that continues to grow.

Thank you, Lou. The next question is regarding profitability. So I'll take it in Hebrew. [Foreign Language] A couple of more questions about Japan, but I think that we pretty much covered it. Shimon, I think we can go back to you and summarize.

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