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RxSight, Inc. (RXST)·Q3 2024 Earnings Summary

Executive Summary

  • Strong Q3: Revenue rose 59% year over year to $35.3M, gross margin expanded to 71.4% (from 61.9% a year ago), and non‑GAAP swung to a small profit ($0.214M; $0.00 diluted EPS), though GAAP net loss was $(6.3)M or $(0.16) per share .
  • Mix and scale drove margin: Higher LAL mix, lower manufacturing costs for both LAL and LDD, and stable LDD pricing lifted margins sequentially and YoY; LAL represented 69% of revenue in Q3 versus 61% a year ago .
  • Guidance raised/tightened: FY24 revenue to the top of $139–$140M, gross margin to 70–71% (from 68–70%), and OpEx to the low end of $135–$136M; management implied Q4 revenue of ~ $40M, Q4 GM similar to Q3, and Q4 OpEx at the low end of $37–$38M .
  • Commercial momentum: 78 LDDs placed (flat sequentially; +18% YoY) and installed base reached 888; LAL units 24,554 (+80% YoY); average monthly utilization 10.1 per LDD (vs 11.0 in Q2; 8.7 a year ago); LDD ASP ~ $130K held firm .
  • Potential stock catalysts: Raised margin outlook, implied strong Q4, sustained LDD placements and utilization, LAL+ rollout with new low‑diopter powers broadening the addressable range, and early signals of international expansion in coming months .

What Went Well and What Went Wrong

What Went Well

  • LAL and LDD volume momentum with pricing discipline: “LAL sales were in line with seasonal trends… the full rollout of LAL+ in the U.S. and recent approval of LAL+ in Canada”; LDD ASP ~ $130K remained stable, supporting margins .
  • Margin expansion and cost control: Gross margin reached 71.4% (Q3’24) vs 69.5% (Q2’24) and 61.9% (Q3’23) on favorable mix and lower costs; OpEx growth (31% YoY) lagged revenue growth (59% YoY) .
  • Guidance uplift: FY24 gross margin increased to 70–71% (was 68–70%); revenue guided to the top of $139–$140M; OpEx to the low end of $135–$136M; implied Q4 revenue of ~ $40M .

Quotes:

  • “We continue to see recognition of the transformative power of adjustability… position us for a strong finish to 2024 and for continued success in the years to come.” — CEO Ron Kurtz .
  • “Average monthly utilization… was 10.1 LALs per LDD, up from 8.7… last year… while lower than 11 in Q2.” — CFO Shelley Thunen .
  • “Gross margin… up from our previous guidance of 68% to 70%… primarily reflects… majority of sales coming from higher‑margin LAL along with lower cost of manufacturing.” — CFO Shelley Thunen .

What Went Wrong

  • Seasonal and weather‑related softness: LAL utilization dipped sequentially (10.1 vs 11.0 in Q2) due to typical Q3 seasonality and late‑quarter hurricanes that closed practices and cost surgery days .
  • GAAP still in loss territory: Despite non‑GAAP breakeven, GAAP net loss was $(6.3)M (EPS $(0.16)), slightly larger than Q2’s $(6.1)M; continued investment in growth kept OpEx elevated .
  • Cash balance discrepancy: The press release/8‑K reported $237.1M cash & short‑term investments at 9/30/24, while on the call the CFO referenced $207.1M; management indicated AR collections and low capex helped; investors should anchor to filed figures .

Financial Results

MetricQ3 2023Q2 2024Q3 2024Wall St. Consensus
Revenue ($M)$22.199 $34.887 $35.314 N/A (S&P Global data unavailable)
Gross Profit ($M)$13.731 $24.250 $25.220 N/A
Gross Margin (%)61.9% 69.5% 71.4% N/A
Total OpEx ($M)$26.243 $32.583 $34.446 N/A
Net Income (Loss) ($M)$(12.415) $(6.079) $(6.338) N/A
Diluted EPS ($)$(0.35) $(0.16) $(0.16) N/A
Adjusted Net Income ($M)$(6.937) $0.026 $0.214 N/A
Adjusted Diluted EPS ($)$(0.19) $0.00 $0.00 N/A

Notes:

  • Revenue +59% YoY; sequential +1% vs Q2 per management .
  • S&P Global consensus data was unavailable at time of analysis due to provider rate limits; comparisons to estimates will be updated when accessible.

Segment and Volume Details

MetricQ2 2024Q3 2024YoY Commentary
LAL revenue ($M)$23.8 $24.2 +79% vs Q3’23
LAL units (procedures)24,214 24,554 +80% vs Q3’23
LDD revenue ($M)$10.2 $10.1 +28% vs Q3’23
LDD units (placements)78 78 +18% vs Q3’23

KPIs

KPIQ2 2024Q3 2024Trend / Context
Installed LDD base (units)810 888 +51% YoY installed base growth
Avg monthly LALs per LDD11.0 10.1 Seasonal dip; up vs 8.7 YoY
LDD ASP~ $130K ~ $130K Stable post ~10% price hike in mid‑Q3’23
Cash & ST investments ($M)$233.3 (6/30/24) $237.1 (9/30/24) per 8‑K/PR CFO cited $207.1M on call; filed PR/8‑K show $237.1M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2024$139–$140M Top of $139–$140M (≈$140M) Tightened to top end
Gross MarginFY 202468%–70% 70%–71% Raised
Operating ExpensesFY 2024$135–$136M Low end of $135–$136M Lower within range
Non‑cash Expenses (primarily SBC)FY 2024$29–$30M Low end of $29–$30M Lower within range
RevenueQ4 2024 (implied)N/A≈ $40M New disclosure
Gross MarginQ4 2024N/ASimilar to Q3 New disclosure
Operating ExpensesQ4 2024N/ALow end of $37–$38M New disclosure

Earnings Call Themes & Trends

TopicQ1 2024 (Prior-2)Q2 2024 (Prior-1)Q3 2024 (Current)Trend
LAL+ rollout and product innovationFull launch of LAL+; strong reception; plan to maintain rapid innovation FDA approved low‑diopter extension for LAL+; broadest spherical power range planned for late 2024 Full U.S. rollout; approval in Canada; low‑diopter LAL+ powers release on track in Q4 Expanding indications/appeal
Utilization and installed baseUtilization ~10.1 in Q1; installed base 732 Utilization 11.0 (seasonally strong); installed base 810 Utilization 10.1 (seasonal dip); installed base 888 Upward YoY, seasonal dips
Pricing/ASP disciplineLDD ASP uplift post 2023 price increase; stable pricing LDD ASP ~ $130K, slight q/q variation LDD ASP ~ $130K; LAL retail $1,000 without pushback Stable
Gross margin outlookFY24 GM raised to 68–70% Maintained 68–70% Raised to 70–71%; Q4 similar to Q3 Upward
International expansion2024 largely U.S./Canada; other OUS minor in 2024 Progressing on OUS approvals; timing uncertain Updates expected in Asia/Europe in coming months Building pipeline
Optometry channelOutreach and education programs expanding Continued emphasis Optometrists play key role; broader education ramping Increasing emphasis
Macro/capital environmentROI and premium revenue offsets highlighted LDD positions as practice investment; steady demand Clinic‑based LDD decisions less exposed to hospital capex constraints; ROI ~6 months Supportive

Management Commentary

Prepared remarks highlights:

  • “In Q3, we experienced robust growth in our LDD installed base, surpassing typical seasonal expectations… postoperative adjustability brings… value.” — CEO Ron Kurtz .
  • “Gross margin in Q3’24 was 71.4%… YoY increase reflects… higher LAL mix, lower cost of sales for both LDD and LAL, and sustained pricing stability.” — CFO Shelley Thunen .
  • “We are increasing our full year revenue and gross profit guidance while reducing operating expense… This translates to Q4 revenue of approximately $40M.” — CFO Shelley Thunen .

Important quotes:

  • “90% or more of patients get 20/20 at distance, J2 at near… payback is about 6 months.” — CFO Shelley Thunen .
  • “Low‑diopter LAL+ powers… will give our platform the broadest spherical power range… from −2 to +30 diopters.” — CEO Ron Kurtz .
  • “Average monthly utilization… 10.1 LALs per LDD… lower than 11 in Q2, generally a seasonally strong quarter.” — CFO Shelley Thunen .

Q&A Highlights

  • Capital and LDD demand/ROI: Management reiterated clinic‑based ROI (~6 months) and stable demand for placements; practices often add units at additional offices, not the same site .
  • Weather/seasonality: Late‑quarter hurricanes caused lost surgery days (not quantified), compounding typical Q3 vacations; expectation for recovery into Q4 .
  • Pricing stability: LAL retail ~$1,000 with limited pushback; LDD ASP stable ~ $130K more than a year after the mid‑Q3’23 ~10% increase .
  • Gross margin sustainability: Management sees current GM as sustainable with further improvements driven primarily by mix (higher LAL share) and ongoing cost reductions .
  • International outlook: Regulatory efforts underway in Europe and Asia; approvals and commercialization updates anticipated over the coming months, with market‑by‑market approaches (direct vs distributor) .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable at the time of this analysis due to provider rate limits; therefore, estimate comparisons are not shown. We will update the recap with consensus and beat/miss analysis once S&P Global data becomes available.

Key Takeaways for Investors

  • Mix‑led margin story: LAL’s higher margin and growing share underpin sustained GM expansion; guidance raised to 70–71% for FY24, with Q4 similar to Q3 — a key support for valuation and estimates durability .
  • Durable demand/ROI: LDD demand remains resilient in a clinic‑driven model with ~6‑month payback; sequentially flat placements at 78 offset typical seasonality and reinforce installed base growth to 888 .
  • Utilization trajectory intact: Seasonal dip to 10.1 LALs/LDD vs 11.0 in Q2, but above 8.7 YoY; utilization and installed base growth together support robust consumables revenue into Q4 .
  • LAL+ broadens TAM: Low‑diopter power rollout in Q4 and Canadian approval expand addressable patient segments and offer additional “door openers” for LDD adoption and procedure growth .
  • FY24 finish set up: Implied Q4 revenue of ~ $40M, similar gross margin to Q3, and OpEx discipline at the low end provide a clean setup for year‑end performance and 2025 estimate frameworks despite limited consensus visibility this quarter .
  • Watch cash disclosure: Filed PR/8‑K show $237.1M cash & ST investments at 9/30; call commentary cited $207.1M — investors should rely on the filed figures and seek clarification in follow‑ups .
  • Near‑term catalysts: Continued LAL+ adoption, Q4 seasonal strength, potential OUS regulatory updates in Asia/Europe, and sustained pricing/GM could be positive trading catalysts .

Appendix: Additional Data Points

  • Revenue growth drivers: LAL revenue +79% YoY; LDD revenue +28% YoY; LAL units +80% YoY; LDD units +18% YoY .
  • Operating expense detail: SG&A $25.6M (+34% YoY; +5.4% seq) and R&D $8.8M (+24.5% YoY; +6.6% seq) in Q3’24, reflecting personnel and stock‑based compensation increases and added hires .
  • Non‑GAAP reconciliation: Q3’24 adjusted net income of $0.214M vs $(6.937)M in Q3’23; adjusted diluted EPS $0.00 vs $(0.19) .