InMode - Earnings Call - Q1 2025
April 28, 2025
Transcript
Operator (participant)
Okay, and welcome to InMode's first quarter 2025 earnings results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Miri Segal, CEO of MS-IR. Please go ahead.
Miri Segal (CEO)
Thank you, Operator, and to everyone for joining us today. Welcome to InMode's first quarter 2025 earnings call. Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements, and the safe harbor statement outlined in today's earnings release also pertains to this call. If you have not received a copy of the release, please go to the investor relations section of the company's website. Changes in business, competitive, technological, regulatory, and other factors could cause actual results to differ materially from these expressed by the forward-looking statements made today. Our historical results are not necessarily indicative of future performance. As such, we can give no assurance as to the accuracy of our forward-looking statements and assume no obligation to update them except as required by law. With that, I'd like to turn the call over to Moshe Mizrahy, CEO.
Moshe, please go ahead.
Moshe Mizrahy (CEO)
Thank you, Miri, and to everyone for joining us. With me today are Dr. Michael Kreindel, our Co-founder and Chief Technology Officer; Yair Malca, our Chief Financial Officer; and Rafael Lickerman, our VP of Finance. Following our prepared remark, we will all be available to answer your questions. The medical aesthetic market continues to face headwinds driven primarily by ongoing macroeconomic uncertainty and soft consumer demand. Elective procedures, particularly in the surgical aesthetic segment, are often among the first to be pulled back during periods of economic slowdown, and we have seen that reflected in recent quarters across the last two years. Patients are deferring treatment, and providers are taking a more cautious approach to capital investment. Despite this near-term pressure, we remain confident in the fundamentals of our business.
Consumer interest in minimally invasive aesthetic procedures continues to be solid, and we believe demand will return as macro conditions stabilize and consumer confidence starts to grow. We made a deliberate decision as a company not to cut corners, not to reduce our workforce, and to remain committed to leading the industry because we believe that when the market rebounds and demand will return, we will be ready to lead and benefit as we have in the past following major challenges. Later this year, we plan to unveil a new platform designed for the wellness market, further expanding the depth of our product portfolio. This addition reflects our ongoing strategy to diversify our offering and tap into a new segment. We look forward to sharing more details as we approach the official launch.
As stated in the press release, we are proud to have completed our fifth share purchase program this month. Earlier this month, we purchased 6.95 million shares, totaling $127 million. In fact, over the past 12 months alone, we have returned more than $412 million to the shareholders through share purchases, representing approximately 27% of our total capital. Finally, despite the macroeconomic challenges, we believe InMode is uniquely positioned to lead through this cycle with a strong balance sheet, a diversified portfolio, and industry-leading technology. Now, I'd like to turn the call over to Yair, our Chief Financial Officer. Yair.
Yair Malca (CFO)
Thanks, Moshe, and hello everyone. Thank you for joining us. I would like to review our Q1 2025 financial results in more detail. Starting with total revenue, InMode generated $77.9 million in the first quarter of 2025, a decrease of 3% compared to the first quarter of last year. Gross margin was 78% on a GAAP basis compared to 80% in Q1 2024. Non-GAAP gross margins were 79% in the first quarter compared to 80% in Q1 of 2024. In Q1, our minimally invasive platforms increased to be 87% of total revenues. Moving to our international operations, first quarter sales outside of the U.S. accounted for $38 million, or 49% of sales, a 1% increase compared to Q1 last year. In Q1, Europe was the largest revenue contributor from outside the U.S. and reached a record sales number.
To support our operations and growth, we currently have a sales team of more than 281 direct reps and 76 countries through distributors worldwide. GAAP operating expenses in the first quarter were $45.3 million, a 1% decrease year over year. Sales and marketing expenses decreased to $39.7 million in the first quarter compared to $39.8 million in the same period last year. Share-based compensation decreased to $2.5 million in the first quarter of 2025. On a non-GAAP basis, operating expenses were $43.1 million in the quarter compared to $42.3 million in the same quarter of 2024, representing a 2% increase. GAAP operating margin in Q1 was 20% compared to 23% in the first quarter of 2024, while non-GAAP operating margin in the first quarter was 23% compared to 27% in the first quarter of 2024.
GAAP diluted earnings per share for the first quarter were $0.26 compared to $0.28 per diluted share in Q1 of 2024. Non-GAAP diluted earnings per share for this quarter were $0.31 compared to $0.32 per diluted share in the first quarter of 2024. Once again, we ended the quarter with a strong balance sheet. As of March 31, 2025, the company had cash and cash equivalent marketable securities and deposits of $512.9 million. This quarter, InMode generated $14 million from operating activities. As Moshe mentioned, we remain committed to delivering shareholder value and returning capital to our investors in a disciplined and strategic manner. In addition, we continue to evaluate all avenues for capital allocation, including additional share repurchases, potential dividends, and strategic M&A. Our approach remains focused on maximizing long-term shareholder value while preserving the strength and flexibility of our balance sheet.
Looking ahead, we expect a growing share of international markets, along with the continued pressure in the U.S. market, to reduce operating margins by around 4%-5%. In addition, with U.S. tariffs at their current levels of 10%, we anticipate an impact of approximately 2%-3% on our gross margins. As this situation remains fluid, we are closely monitoring developments and will adjust our forecasts and strategy accordingly. Before I turn the call back to Moshe, I'd like to reiterate our guidance for 2025: revenues between $395 million-$405 million, non-GAAP gross margins between 78%-80%, compared to previous guidance of 80%-82%. Non-GAAP income from operations between $101 million-$106 million, compared to previous guidance of $130 million-$135 million. Non-GAAP earnings per diluted share between $1.64-$1.68, compared to previous guidance of $1.95-$1.99.
I will now turn over the call back to Moshe. Thank you, Yair. Operator, we are ready for Q&A session.
Operator (participant)
Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one, on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Matt Miksic from Barclays. Please go ahead.
Matt Miksic (Analyst)
Hey, thanks. Good morning. Thanks for taking the questions. Maybe just a follow-up on this dynamic of mix. If you could kind of walk through when that started to happen more significantly and how mix across some of your product lines or capital versus consumable is playing into the need side, and then I have one quick follow-up.
Moshe Mizrahy (CEO)
I mean, the slowdown that we're experiencing today started in the middle of 2023. It's already almost seven quarters. It started in the middle of 2023 when interest rates and inflation went up significantly in the United States. At that time, the leasing companies have raised the interest rate on leasing packages, which, as you know, is the main financing method for physicians, doctors, and clinicians to buy our equipment. The typical interest rate was around 6%-7% on a five-year lease package, and it went up to approximately 14%-15%, which did start the slowdown in capital equipment purchasing by doctors. In addition to that, consumer confidence went down in the last year, which also brought down the numbers of procedures that are being performed by doctors.
We have to remember that minimally invasive procedures are not the typical $300 or $400 laser treatment for hair removal or skin rejuvenation. It can cost thousands of dollars. I mean, if it's a minimally invasive, RFAL can cost $4,000 or $5,000 per treatment. I mean, also on the Morpheus, it's not $300 or $400. People, when a slowdown occurs, they try to postpone treatments, which are relatively expensive in the medical aesthetic, especially in the aesthetic surgical. That also did not help us. I can give you the numbers. On Q1, we sold 237,000 disposables. Each disposable, it's probably maybe in most cases, it's one treatment. Maybe in Latin America and other places, they use it twice, but it's basically built to be a single-use disposable per treatment.
At the same time, two years ago, at the end of the first quarter of 2023, we sold 240 of something like that thousand. We need to take into consideration that during the last two years, we have installed another close to 9,000 systems worldwide. That means that the average per doctor went down around, I would say, 30% uses or 30% less treatments, which are minimally invasive. This is the main, I would say, factor that determines how many patients are basically considering doing minimally invasive. As of now, I have to say, based on the first quarter and the start of the second quarter, we do not see the light at the end of the tunnel. We do not see the slowdown coming with some new momentum. We have introduced two new platforms to the market.
Usually, when we introduce two new systems to the market, we see a new momentum. Currently, since 2024, we do not see that yet. That is the main reason why we are selling less than the first quarter in 2020, 2024, even more than the 80 versus 79, because on the first quarter 2024, if everybody remembers, we had the war in Israel, and that also suspended some of the sales. This quarter, we did not have any obstacle as a war to stop down or to slow down. The first quarter of 2025 is not a good quarter for us, I have to say. We are confident that once everything will get back to normal, we will close the gap and go back to normal growth.
Matt Miksic (Analyst)
Got it. Yeah. The mix has been going on for a while, but now we're seeing kind of the pull-through of utilization mix that would account for the additional comments in the press release and the guide. Is that a way to?
Yair Malca (CFO)
If you're talking about geographic mix, if you look at 2023, 2024, US usually accounted for 62%-63% of the total revenue. This quarter, it went down almost to 50%. We definitely experienced.
Moshe Mizrahy (CEO)
Right now, U.S. is 50%, and now we're down to U.S. 50%. Again, that's percentage-wise.
Yair Malca (CFO)
Yeah, yeah. Percentage.
Moshe Mizrahy (CEO)
The decline or the decrease in the U.S. market was much more than the rest of the world.
Yair Malca (CFO)
The headwinds that we are experiencing in the U.S. are stronger, mainly because we are also one of the largest players in the U.S.
Matt Miksic (Analyst)
Right. That's very helpful color. Just one quick follow-up on the guide as well. The shortfall in Q1 that you had pronounced several weeks ago, holding the guide, where in that dynamic do you expect? Is it stronger trends OUS, or is it some delayed deals in the U.S. that'll come back that gets you to holding the guidance?
Moshe Mizrahy (CEO)
We're trying to be optimistic. We try to think about the market in the US that probably it will come back during 2024, but 2025. To be honest with you, it all depends on how the results on Q2 will look like. If the results on Q2 will not be significantly higher than what we saw on Q1, we will have to lower the guidance. Q2 is much stronger than Q1 on a seasonality base. Q1 after Q4 is always a slower quarter, and Q2 is the strongest quarter. We're waiting to see how Q2 will recover, if I can say it this way, from Q1. Usually, April is not the strongest month, so we don't see it yet. May and June, hopefully, will be stronger. If we will do as we anticipate in Q2, we will maintain the guidance.
If we're not, we'll have to touch it.
Matt Miksic (Analyst)
Understood. Thank you so much.
Operator (participant)
Thank you. Your next question comes from Danielle Antalffy from UBS. Please go ahead.
Danielle Antalffy (Managing Director)
Hey, good morning. Good morning, guys. Thanks so much for taking the question. Moshe, just to follow up on what you just said, thanks for all the color you're giving. I mean, I guess how much, and it's hard, there's no real precedent for the current times that we're in. I mean, I'm thinking less specifically about the tariff impact and things like that, but how you guys are factoring in things like potential weaker economic environment going forward, or would that cause incremental downside pressure to the guidance? Thinking about, will we or won't we go into a recession? I know these are all questions right now, but a little bit more color on sort of the macro environment that you're factoring into the guidance reiteration there would be helpful. Thank you.
Moshe Mizrahy (CEO)
I believe we say that. I mean, we gave the guidance of $400 million or $395-$405 million at the beginning of the year when we knew that the first quarter is usually 20% of the year. I mean, 20% of $400 million is $80 million. We did less. We did $77-$78 million, not far from the basic guidance that helped us to guide the year. Typically, Q2 should be much higher. I would say at least 25% or more of Q1 because Q2 usually represents 25%-26% up to 27% of the total year. Q3 is also a very slow one, and Q4 is the strongest. Based on that and the $77-$78 million that we did, we decided not to lower the guidance at this stage, hoping that we will see some momentum in the next two quarters.
I will say it again. If it will not happen in Q2, mean that Q2 will not be 25%-26% of the year, mean that it will not be above $100 million, we will need to lower the guidance.
Danielle Antalffy (Managing Director)
Okay. Okay. Got it. That's helpful. Just to confirm a minute, I know you guys are still investing in the business, but how—I appreciate that strategy very much—how are you keeping the salesforce engaged at a time like this? Maybe you could talk a little bit about how you did it during COVID and what practices you're implementing here from your learnings then. Thanks so much.
Moshe Mizrahy (CEO)
The COVID time was totally different. In the COVID time, we stopped selling for almost four months, zero. We took the risk because we said we are a growing company. We have a good sales team in the U.S., in Canada, and in some countries where we started subsidiaries. We said we do not want to lose them because it is all about people. I mean, this is the talent. I mean, if we lose them, like the other company, fire them and rehire them when the COVID will disappear or when the COVID, then we might not be able to find them. They will go to other competitors. We kept everybody, and we took the risk. It cost us about $10 million a year. This time, we are still selling. We did not stop selling. There was a slowdown, of course.
It's more than 25% of what we sold per quarter in 2023, and the profit went down 50%, not 25%, from $45 million a quarter to $21 million a quarter on a non-GAAP basis. That's a lot. Again, we have the resources, and we made the same decision. Although it's helping our profitability, we can cut costs some, like $5 million-$6 million a quarter by firing some of the engineers and stop developing or get rid of some of their salespeople. This type of behavior or this type of philosophy communicates something that's not solid to the company because we're not a capital-intensive company. We're a people-intensive company. That's why we're taking again the risk. Maybe it will hurt our profitability. In the future, if everything will go—and I said if—nobody knows when and how, how long it will take. We don't know.
We do not want to predict. We made mistakes in the middle of 2024, and we said that in the second half of 2024, the market will go back to normal, and it did not. We have to eat the statement that we said, and we will not do it again. Right now, we continue to develop. We bring new product to the market. No, not in 2025. In 2025, we have probably another product to bring to the market. In 2026, we will see. One thing I want to say, in 2024, in the middle of the slowdown, we decided to bring two new products to the market: the Ignite and the Optimas Max. This is because we thought maybe the market will get better. On a typical slowdown, it is not smart to bring your best product to the market to launch them. You have to wait.
We did it. We hope that when the market will recover, we'll do better again.
Danielle Antalffy (Managing Director)
Gotcha. Thank you for that.
Operator (participant)
Thank you. Before we take the next question, a reminder to all the participants. If you wish to register for a question, please press star and one now. Our next question comes from Matt Taylor from Jefferies. Please go ahead.
Matt Taylor (Managing Director)
Hi. Thank you for taking the question. Sorry. I did want to follow up on the guidance question and just ask more specifically what you're expecting for Q2 and the phasing for the rest of the year. My other question was on the tariffs, if you could be specific about where the impact is coming from in your tariff guidance.
Moshe Mizrahy (CEO)
Okay. Let's start with the guidance. We gave $400 million in the beginning of the year. This is based on $80 million in the first quarter, or $81 or $82, something similar to that, $102 million on the second quarter. That's about, let's say, $185. And then another, I would say, $90 million on the third quarter and the rest of the fourth quarter. That's the typical seasonality of this industry. I know in 2024, it did not happen. In 2023, the third and the fourth quarter behaved differently because that was the start of the slowdown. If you go years ago, that was a typical seasonality for the medical aesthetic. That's how we came up with the $400 million because we thought we want to stabilize the company. We did about close to $400 million in 2024, and we would like to repeat that number.
If the market will behave differently, then we'll see what to do. If Q2 will be—and I'll be honest—Q1 will be $90 million or $95 million, we will lower the guidance. Absolutely. There's no other way because we know what can happen in the third and the fourth quarter. The third quarter is usually slow because it's summertime. People don't do aesthetic procedure in the summertime. They go on vacation, and they spend the money there. The fourth quarter is the strongest one. Unfortunately, on Q4 2024, it was a very slowdown quarter. Did not help us. This is how we calculate the guidance. This is why we said, "Okay, we are less than what we anticipated in Q1. Are we going to lower the market, the guidance, or not?" Finally, we decided not to and wait for the second quarter.
That was an internal decision that we made as a management. Now, regarding the tariff, the regional tariff that was imposed on Israel was 17%. Now, the business in the U.S. is 50%. And the transfer price on which we're paying the tariff, let's say, it's also 50%. So the tariff effect, 17% on 25%. You basically divide the tariff, the 17%, by 4. That's a rough calculation, Matt. If it's 17%, it should be above a 4% effect on the gross margin and also on the bottom line. If it's not remained 17 and it will be 10, like what is now because of the—as you know, the president of the U.S. decided to give some kind of relief for three months before we imposed everything. If it's 10%, then it's between 2-3, something like 2.5% on the gross margin and on the bottom line.
That's how we calculated that. I want to tell you that everybody is confused, including the customs authorities in the United States. They don't know what to do. What is included? Software and non-software. If we buy components from the US, can we deduct them or not deduct them? There's uncertainty right now. Nobody explained. There are no rules. Nobody published something. We had discussed that with our PwC auditors, and they don't know. Everybody is guessing. We need to wait and see for some clarification.
Matt Taylor (Managing Director)
Okay. Thanks for that. Maybe just one follow-up on the guidance. It sounds like you're really forecasting the market and the seasonality. I didn't hear anything about the new product. I mean, do you expect the new product to contribute to the guidance? How important are they to getting to the $400 million?
Moshe Mizrahy (CEO)
Matt, we're bringing a new product almost every year. Always, the new products are—if we have, for example, like now 10 platforms, the new products are not 20% of the total. The new products are more than 20%. Therefore, it's always the old products are less than 20%, and the new products are a little bit more than 20%. The total remains the same. When we're growing, the new products are the winner and then contribute some of the growth. When we're not growing, we cannot anticipate that the new product will bring more than the average.
Matt Taylor (Managing Director)
Okay. Great. Thanks for the color. I'll pass it on to the next person.
Operator (participant)
Thank you. The next question comes from Caitlin Cronin from Canaccord Genuity. Please go ahead.
Caitlin Cronin (Director)
Hi. Thanks for taking the question. I know you guys have noted expectations to maintain your salesforce and spending. I mean, any kind of updated guidance for OpEx this year, given the continued macro challenges?
With purchasing the most.
Yair Malca (CFO)
You're talking the guidance on the operating profit?
Moshe Mizrahy (CEO)
Which guidance did you talk about?
Caitlin Cronin (Director)
Yeah. They just got operating expenses. I think you guys have talked about kind of maintaining, not letting anyone go, and maintaining sales and marketing-type spend. I mean, any kind of updated expectations there?
Yair Malca (CFO)
The expectation is that we'll continue to keep all the investment that we plan to do in the beginning of the year, including expansion of the teams, whether in the U.S. or internationally, where we open new subsidiaries. This results in additional costs. As I mentioned, regarding changing the geographical revenue mix with the U.S. experiencing tougher headwinds than in the rest of the world, that would have additional impact on the profitability at the end of the day. We are expecting roughly around 4-5% impact only from that.
Caitlin Cronin (Director)
Got it. Okay. Any updates on the U.S. management structure? Moshe, I know you've been acting as the interim President of U.S. North America, any updates there?
Moshe Mizrahy (CEO)
We have not yet hired a new president for the U.S. or nominated somebody from within. I'm still the active, I would say, or the acting president of the U.S. I spend every month a few days in the U.S., and I'm doing it from Israel most of the time, but every month I'm in the U.S. with the team.
Caitlin Cronin (Director)
Got it. Thanks for taking the questions.
Operator (participant)
Thank you. The next question comes from Mike Matson from Needham & Co. Please go ahead.
Mike Matson (Analyst)
Yeah. Thanks. Just one on the tariff. It sounds like you're not assuming you're able to offset the tariff impact with price increases. Is that right? I guess, why not try to pass some of it through to your customers?
Moshe Mizrahy (CEO)
We thought about it, Mike. In a tough market like this, if we will go to the market and raise prices just because we're an Israeli company and not an American company and explain that this is an import product and we have to raise prices, it will not help us. You're not raising prices in a market where the trend is down or where the slowdown and when the market is very sensitive to price, especially when the interest rate on the leasing packages are high and the monthly payments go higher as well because of the interest rate. We have decided not to raise prices, not to raise prices because of the tariff. I mean, the only way, the only time that we're raising prices is when we bring new product to the market.
If the new product is an upgrade for something similar that we sold, then maybe we can raise a little bit the price. Other than that, from a marketing and commercial point of view, I do not think it will be smart right now for InMode to go to the market and raise prices, let's say, by 10%. No, it will not help.
Mike Matson (Analyst)
Okay. Yeah. That makes sense. Just the wellness platform that you mentioned, when do you expect to launch that? Given your commentary around kind of better to have launches when the market's recovering or stronger, is that something where you're going to maybe hold off until you see signs of improvement in the market?
Moshe Mizrahy (CEO)
The two wellness products that we have today, one is the Empower for women's health for SUI and some vaginal treatment. The other one is Envision for dry eye and periorbital treatment. Both of them, we're still selling both of them. By the way, we started to hire specific salespeople just for this product, which was more medical than the others. What we see now, the revenue from those products went down in the same 20% or 25% that we're experiencing on the entire portfolio.
Mike Matson (Analyst)
Yeah. Sorry, Moshe. I was referring to the I think you said earlier in the call that you were going to have a new platform for wellness.
Moshe Mizrahy (CEO)
yes, yes.
Mike Matson (Analyst)
I was asking about that.
Moshe Mizrahy (CEO)
Absolutely. I didn't know about that.
Mike Matson (Analyst)
Yeah.
Moshe Mizrahy (CEO)
We have a new product that we will bring to the market for women's health, and we will release the indication once we finish with the clinical study.
It's going to be later this year. We are not sure exactly when. We'll announce it once we decide.
Mike Matson (Analyst)
Okay. Got it. Thank you.
Operator (participant)
Thank you. The next question comes from Sam Eiber from BTIG. Please go ahead.
Sam Eiber (VP)
Hey. Good morning, everyone. Thanks for taking the questions here. Maybe I could just start on a clarifying question on the tariff impact. Is that 2-3% on a full-year basis? If we assume those are going to affect maybe July 1, the impact would be closer to 1%. Is that reflective in the 78-80% new gross margin guidance?
Moshe Mizrahy (CEO)
No. We did not take it into account yet.
Yair Malca (CFO)
Yes. Yes and yes. Yes on both.
Sam Eiber (VP)
On both?
Yair Malca (CFO)
Yes on both questions. Two to three on overall, assuming it remains 10%. If it goes back to 17%, we will need to get back and update the guidance. We really hope it's going to stay at 10%, but no one really knows what's going on until the administration makes its final decisions. Yes, we did count it into the existing guidance, assuming 10% tariffs from Q2 through Q4.
Moshe Mizrahy (CEO)
Okay. We'll get into the clarification.
Sam Eiber (VP)
Okay. That's helpful. Maybe I can use my follow-up on capital allocation. It sounds like more to come for the rest of the year. I guess any way how you're thinking about prioritizing share repurchases, dividends, M&A, and then any more details in terms of the tax impact if you were to do an additional share repurchase program later this year?
Moshe Mizrahy (CEO)
I will start from your last question. We are not considering right now to do another share purchase. Just to take you through the history, we started to do share buyback about two and a half years ago. We started when the stock was 50 and 60, and we bought already stock for $500 million. By the way, $508 million. With the average price per share of altogether, all the packages or all the program, which was about 4 to 5 programs, the price per share that we purchased was close to $20 a share, which is, just to be precise, 19.95 cents, $19.95. Actually, from an investment point of view of the company, we actually invested $500 million, but it did not help the stock price. The stock price is on 15 today.
Basically, it was not the best investment from the corporation point of view, and I'm sure it was not the best investment from the shareholders' point of view. We need to think right now what to do because basically, we left over with $500 million. We invested or spent $500 million for buyback with no result to the shareholders and to the company. If we want to do any acquisition, which we believe that's something that we're considering, we don't want to be left with no cash or no money to do it. Right now, at that point, after we bought 30% of the stock for $500 million, we're not considering another one in the near future.
Sam Eiber (VP)
Okay. That's helpful. Maybe I could just squeeze a last one here just because it hasn't been asked yet about Europe and what you're seeing there that makes that market relatively stronger than maybe what you're seeing in the U.S. and I guess how sustainable that strength is.
Moshe Mizrahy (CEO)
What in Europe?
Sam Eiber (VP)
In Europe.
Moshe Mizrahy (CEO)
In Europe.
Yair Malca (CFO)
In Europe.
Moshe Mizrahy (CEO)
In Europe, the subsidiaries were consistent.
In Europe, the first quarter was better. As you know, we made a lot of changes in the management of our subsidiaries, and it's worked well. Europe now is performing better than the U.S. per capita or per country. Prices in Europe are less than in the U.S. per system. You have to take into consideration that in many countries in Europe, we still sell through distributors. We are recognizing only the transfer price. We're not recognizing the full price. In Europe, the credit is getting tighter because there were signs of inflation in certain countries, which will not help us. Therefore, we had to open a pool with the leasing company to help to share the risk with them like we do in the United States, the pool that we opened in 2024 for 6%. We'll see.
Hopefully, it will help, and it will keep the momentum or will keep some kind of growth in Europe and through the distributors and through the subsidiaries.
Sam Eiber (VP)
Great. Thanks for taking the questions, sir.
Operator (participant)
Thank you. The next question comes from Dane Reinhardt from Baird. Please go ahead.
Dane Reinhardt (Associate)
Hey, guys. Thanks for the time here. Maybe a follow-up on, I think, Mike's question regarding pricing on the systems here. I know it sounds like you're not raising prices on kind of existing products, but you did mention that you would take price on the new products. Just kind of based on the math that you report out with systems revenue and new placements that you've installed kind of in the past few quarters, it does seem like there's been kind of a noticeable step up in ASPs, particularly in the U.S. Have you raised prices on those new Optimas Max and Ignite platforms? How does that seem to be kind of being received by your customers at this point?
Moshe Mizrahy (CEO)
We did not raise prices on the Ignite. The prices that we set up for the Ignite and Optimas Max in 2024, we did not change them because of the tariff. They are the same prices. What I said is whenever we introduce a new system like Optimas Max to replace the Optimas, then the Optimas Max is priced a little bit higher than the Optimas. When we launch the Ignite to replace the BodyTite, not to replace, to complement the BodyTite, then the price for the Ignite was higher than the BodyTite, the BodyTite platforms. When you bring new platforms on a new indication, then the prices need to be compatible to the market and not prices that you want. I mean, in certain technology, when we are unique, we can charge a little bit more.
This market right now, it's very competitive, and therefore, we see no way or no reason to raise prices in the middle of the slowdown or just because of the tariff.
Dane Reinhardt (Associate)
Okay. Thanks for that. Yeah. Just even clarifying that there was a price increase on Optimas Max relative to Optimas. That is helpful. Just my second follow-up. Obviously, US consumer confidence has kind of slowed here as we went throughout the first quarter. Just from a cadence perspective, I know what you laid out through kind of Q2 through Q4. Just within the first quarter itself, did you kind of see any worsening from January to March and into April just as those US consumer confidence numbers have kind of weakened? Thanks again.
Moshe Mizrahy (CEO)
The consumer confidence went down, isn't it?
Yeah, it did. Especially when it comes to capital equipment, most of the revenue is anyway in March. January and February are slow anyway. You cannot really make too much out of comparing the cadence of the consumer confidence index during January to March and expect to see an impact throughout the quarter. Most of the revenue, every quarter, we generate most of the revenue in the last months of the quarter. It will be interesting to see how June and overall Q2 would look like compared to Q1. Dane, does that answer your question?
Dane Reinhardt (Associate)
Yes, that does. Thank you very much. I guess just maybe even one follow-up here I'll tack on. I'm not sure if you answered it in the prior question, but can you just remind us what, again, potential tax implications would be if you did do any sort of dividend? Because I know you've kind of mentioned that, but it seems like buybacks are off the table, maybe looking at M&A. Just remind us the tax implications if you did do a dividend now. Thanks.
Moshe Mizrahy (CEO)
On a dividend, according to the Israeli tax law, you have to pay 20% dividend tax before you distribute the money. For example, if you want to allocate $100 million for dividend, 20% check you send for the Israeli IRS and $80 million to the shareholders.
Operator (participant)
Think you're on mute.
Moshe Mizrahy (CEO)
Me on mute.
Operator (participant)
Thank you. That concludes our question and answer session. I would now like to turn the conference back over to Moshe Mizrahy, InMode CEO, for closing remarks.
Moshe Mizrahy (CEO)
Okay. Thank you, Operator. Thank you, Miri. I want to thank first our team, InMode team worldwide, that worked very hard in the first quarter, like always, knowing that there was a slowdown and that we have to perform. I want to thank all the shareholders for being with us in this earning call. As we said, we meet again sometime in July. Hopefully, the market will improve by then, and we will be a little bit more optimistic. Thank you all.
Operator (participant)
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.