RxSight, Inc. (RXST)·Q2 2024 Earnings Summary

Executive Summary

• Strong beat on growth metrics; RxSight delivered Q2 revenue of $34.9M (+68% y/y; +18% q/q), driven by 92% y/y growth in Light Adjustable Lens (LAL) unit volume and continued LDD placements; gross margin reached 69.5% (vs. 57.8% y/y; 70.1% in Q1) .
• Management raised FY24 revenue guidance to $139–$140M (from $132–$137M) and raised OpEx (mostly higher non-cash SBC), while maintaining gross margin guidance at 68–70%; CFO expects only a “nominal” sequential revenue increase in seasonally softer Q3 .
• Strategic adoption drivers accelerated: LAL per LDD utilization rose to 11 per month (vs. 10.1 in Q1; 9.2 in Q2’23), installed base expanded to 810, and LAL+ received an FDA power-range extension (–2 to +3 D), a potential TAM broadener for high myopes .
• Profitability mix improving: Adjusted net earnings were approximately breakeven in Q2 ($0.0M; $0.00/share), reflecting mix shift to higher-margin LAL and better LDD ASP/costs; GAAP net loss narrowed to $(6.1)M ($(0.16)/share) .
• Balance sheet strengthened: $233.3M in cash, cash equivalents and short-term investments post-CMPO; provides ample runway for commercial and R&D investments that are expected to show greater impact in 2025 .

What Went Well and What Went Wrong

• What Went Well

  • Utilization inflected: LAL procedures per LDD reached 11/month in Q2 (from 10.1 in Q1), signaling deeper account penetration and faster ramp of newer cohorts; “we have seen continuous improvement” in utilization across cohorts .
  • Guidance raise underscored demand: FY24 revenue guided to $139–$140M (from $132–$137M); GM guide maintained at 68–70%; CFO framed Q2 strength and durable mix benefits .
  • Product pipeline/regulatory: FDA approved extension of LAL+ spherical power to –2 to +3 D; commercial distribution of the expanded range anticipated toward end of 2024, broadening eligibility among highly myopic patients .

• What Went Wrong

  • Seasonality and pricing mix slightly pressured sequential GM: GM dipped 60 bps q/q to 69.5%, primarily due to slightly lower LDD ASP ($130.5K in Q2 vs. $132K in Q1) and expected mix/period costs variability .
  • Higher OpEx trajectory: FY24 OpEx raised to $135–$136M (from $126–$130M), largely due to higher non-cash SBC ($29–$30M vs. $22–$25M prior) plus investments in sales/marketing and R&D .
  • Q3 cadence to moderate: Management telegraphed only a “nominal” sequential revenue increase in Q3 due to typical summer seasonality (patients and physicians on vacation), and likely LDD placements seasonality .

Financial Results

Product revenue breakdown and mix:

Key KPIs:

Estimates comparison (Wall Street consensus)

• Consensus (S&P Global) for Q2 2024 EPS and revenue was unavailable at time of analysis; therefore beat/miss vs estimates cannot be stated. Management’s FY24 revenue guidance was raised following Q2 .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We continued to make significant progress in the adoption of adjustability as a new standard in the premium market, highlighted by robust LDD sales and the positive reception of the recently launched LAL+.” — CEO Ron Kurtz .
• “Gross margin in the second quarter of 2024 was 69.5%... The y/y increase reflects the shift in product mix with higher-margin LAL revenue... and increased margins on our LDD.” — CFO Shelley Thunen .
• “Full year 2024 revenue is now projected to be between $139M and $140M... We continue to anticipate sequential quarterly growth with a nominal increase in Q3.” — CFO Shelley Thunen .
• “FDA approval for an extension of the spherical refractive power range for LAL+ from minus 2 to plus 3 diopters... Commercial distribution... anticipated towards the end of 2024.” — CEO Ron Kurtz .

Q&A Highlights

• Utilization and guidance cadence: Utilization advanced to 11 LAL/LDD/month; Q3 expected to show nominal sequential revenue increase due to seasonality (capital and procedures) .
• LAL+ as “door opener”: New optical design aids near/intermediate vision recovery, helping convert non-customers; same price as LAL to keep patient selection clinical rather than pricing-driven .
• Mix and gross margin: Slight q/q GM dip tied to LDD ASP variability and period costs; FY24 GM guide held at 68–70% to allow for mix and cost dynamics .
• Installed base and placements: Buyers typically add LDDs in new offices (not same-site capacity), expanding access; placements still predominantly to new accounts .
• Market expansion: ~40–44% of LAL patients are converted from monofocal based on recurring third-party customer surveys; supports market-expansion narrative .

Estimates Context

• Q2 2024 Wall Street consensus (S&P Global) for revenue and EPS was unavailable at the time of analysis; therefore, we cannot quantify beat/miss vs consensus. Management raised FY24 revenue guidance and maintained GM guidance, suggesting positive estimate revisions to revenue and modestly higher OpEx (mostly non-cash SBC) .
• Management quantified that combined revenue and GM increases since initial January guidance contribute an additional $7.5M–$11M to operating income (excluding largely non-cash OpEx increase), implying upward bias to operating profitability trajectories .

Key Takeaways for Investors

• Utilization inflection is material: LAL/LDD utilization rose to 11/month, a key driver of recurring, higher-margin revenue; watch for sustained utilization into Q4 after expected Q3 seasonal moderation .
• Mix tailwind intact: LAL at 68% of revenue in Q2 (vs. 60% a year ago) supports durable GM in high-60s to 70% range; sequential GM can wiggle with LDD ASP/mix and period costs .
• Guide raise is the catalyst: FY24 revenue lifted to $139–$140M; GM guide held at 68–70%; near-term sentiment supported despite Q3 seasonality .
• Pipeline/regulatory upside: LAL+ power-range extension should broaden the addressable population (e.g., high myopes) with distribution expected late 2024; potential incremental LDD sales catalyst .
• Capital discipline with runway: $233.3M cash and investments post-CMPO funds enhanced sales/education/R&D programs, with more tangible benefits likely in 2025 .
• Operating leverage emerging: Adjusted net at breakeven in Q2 with rising scale and favorable mix; CFO quantified $7.5–$11M operating income uplift vs. initial 2024 framework (excluding higher SBC) .
• Watch list into 2H: Q3 seasonality (procedures, capital), LDD ASP stability, international approvals cadence, and LAL+ distribution timing (late 2024) as incremental stock drivers .

Appendix: Additional Detail

Revenue and unit growth detail (y/y and q/q context)

• Q2 revenue: $34.9M (+68% y/y; +18% q/q); LAL units 24,214 (+92% y/y) and LDD units 78 (+16% y/y); installed base 810 (+55% y/y) .
• Q1 revenue: $29.5M (+69% y/y; +3% q/q vs Q4’23) with LAL revenue $19.9M and LDD revenue $8.7M; installed base 732 (+61% y/y) .
• Q4’23 revenue: $28.6M (+78% y/y); LAL revenue $17.8M and LDD revenue $10.0M; installed base 666 (+67% y/y) .

Other relevant press releases in the period

• RXST announced Q2’24 earnings date (July 22, 2024) and conference participation in early September; neither included incremental financial guidance beyond earnings logistics and investor event access .