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Venus Concept Inc. (VERO)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue declined to $13.64M, down 21.9% YoY and 13.4% sequentially vs Q4 2024; modestly softer due to deal timing into early April and distributor hesitancy amid macro/tariff uncertainty .
  • EPS of -$17.44 missed S&P Global consensus of -$14.62*, and revenue of $13.64M was slightly below the $13.98M consensus*, reflecting broader capital equipment headwinds and tighter lending practices .
  • Gross margin printed 64.2% (press release/8-K) vs 66.6% prior year; note the call remarks cited 54.2%—a likely misstatement—management attributed margin pressure to tighter third-party lending and international exits .
  • Guidance: no FY25 guidance; management targets sequential revenue growth in Q2 2025; prior Q4 outlook of “at least $14.0M” for Q1 was missed, indicating lingering deal-cycle friction .
  • Balance sheet actions (Madryn debt-to-equity exchange, bridge loan amendment, registered directs) reduced total debt to ~$35.5M and provided incremental liquidity, a key near-term narrative driver .

What Went Well and What Went Wrong

What Went Well

  • Cost discipline: Operating expenses fell 6% YoY to $18.3M, reflecting progress in streamlining operations .
  • Strategic financing and deleveraging: $11.0M Madryn debt exchanged into preferred equity; bridge loan capacity expanded by $10M; equity raises totaling ~$2.7M gross, strengthening flexibility .
  • Management focus on cash sales mix: U.S. cash system sales reached ~80% of U.S. system sales in Q1, supporting long-term profitability profile despite longer closing cycles .

What Went Wrong

  • Top-line pressure: Total revenue fell 21.9% YoY, driven by a 25% decline in systems and subscription revenues; timing pushed late-March deals into April .
  • Margin compression vs prior year: Gross margin decreased to 64.2% (press release), with management citing tighter lending practices and international exits; call text discrepancy (54.2%) noted .
  • International softness and distributor hesitancy: International revenue down 29.3% YoY amid macro/trade uncertainty, causing lumpy ordering patterns and delayed purchases .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$15.01 $15.77 $13.64
Gross Margin %66.1% 69.1% 64.2%
Operating Loss ($USD Millions)$(7.16) $(6.67) $(9.53)
Net Loss ($USD Millions)$(9.30) $(8.02) $(12.37)
Diluted EPS ($USD)$(1.28) $(11.23) $(17.44)
Adjusted EBITDA ($USD Millions)$(5.87) $(6.10) $(8.34)
Q1 Headline vs Prior Year and EstimatesQ1 2024Q4 2024Q1 2025Consensus (Q1 2025)*
Revenue ($USD Millions)$17.48 $15.77 $13.64 $13.98*
Diluted EPS ($USD)$(16.92) $(11.23) $(17.44) $(14.62)*
Gross Margin %66.6% 69.1% 64.2% —
Operating Expenses ($USD Millions)$19.41 $17.56 $18.28 —

Values with asterisk retrieved from S&P Global.*

Segment breakdown (Revenue by product)

Product Category ($USD Thousands)Q3 2024Q4 2024Q1 2025
Venus Prime / Subscription—Systems$2,684 $2,533 $2,649
Products—Systems$8,898 $10,000 $7,903
Products—Other$2,741 $2,524 $2,420
Services$684 $708 $671
Total$15,007 $15,765 $13,643

KPIs and mix

KPIQ3 2024Q4 2024Q1 2025
% of systems revenue from internal lease programs23% 20% 25%
U.S. cash system sales share (of U.S. system sales)76% 87% 80%
Cash & Equivalents (period end, $USD Millions)$4.49 $4.27 $3.20
Total Debt Obligations (approx., $USD Millions)$34.6 $39.7 ~$35.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ1 2025“At least $14.0M” (issued Mar 31, 2025) Actual $13.64M (below prior outlook) Lower vs prior outlook
RevenueQ2 2025NoneSequential growth targeted vs Q1 New directional color (sequential growth)
FY 2025 Financial OutlookFY 2025NoneNot providing FY25 guidance Maintained “no guidance”
Liquidity/Financing Capacity2025Bridge loan capacity prior to Mar 27, 2025 +$10M capacity; debt-to-equity exchanges; equity raises Increased capacity / improved flexibility

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Capital equipment demand & lendingDeal cycles lengthening; tighter credit; pushouts; cash mix targeted 70–75% Deals slipped from late March to early April; U.S. cash mix ~80%; distributor hesitancy persists Stabilizing mix; demand timing still choppy
International strategy & distributorsPivot to high-value distributors; APAC/EMEA partners; lumpy orders; Australia/Mexico/Hong Kong strength; India certification progress Distributor hesitancy amid macro/tariffs; lumpy patterns continue Mixed; improving long-term, near-term cautious
Tariffs/macroMinimal near-term tariff impact (Israel largely protected) Estimated 10% tariffs could hit GM by ~1–1.5% in 2025 and ~2–2.5% in 2026; manageable via pricing; indirect demand impact Elevated macro uncertainty; manageable direct margin impact
New body deviceTarget Q1 2025 launch; regulatory submission completed Approval/launch early 2H 2025; meaningful uptake expected; customer excitement Timing slipped; sustained strategic priority
Balance sheet actionsDebt reduced materially; NASDAQ compliance efforts; bridge loan amendment $11M debt-to-equity, +$10M bridge capacity, ~$2.7M equity; deleveraging continues Improving financial flexibility

Management Commentary

  • “Our first quarter revenue results came in modestly softer than expectations due to the timing of new system adoption expected in late-March, that closed in early April.”
  • “We are navigating the challenging operating environment and are targeting revenue growth on a sequential basis in the second quarter.”
  • “Cash system sales in the U.S. represented 80% of total U.S. system sales in the first quarter compared to 75% last year… prioritizing cash system sales is the right strategy to enhance the company's long-term profitability profile.”
  • “We enhanced our balance sheet… with a new bridge loan amendment from Madryn and two equity capital transactions…”
  • CFO: “Gross margin was… compared to the first quarter of 2024… noncash loss on debt extinguishment… lower interest expense… adjusted EBITDA loss of $8.3M.”

Q&A Highlights

  • Tariffs: Management estimates a modest GM impact (1–1.5% in 2025, 2–2.5% in 2026) assuming 10% tariffs; expects mitigation through pricing; indirect impact via distributor caution .
  • Deal timing: Sales pushed from Q1-end into early Q2 across U.S. and Australia; tighter lender protocols elongate cycles globally .
  • New body device: Regulatory timeline intact for early 2H 2025 approval/launch; meaningful uptake expected; further details post-approval .
  • Outlook cadence: Sequential revenue growth targeted in Q2; no FY25 guidance due to active lender/investor dialogues and strategic alternatives .

Estimates Context

PeriodMetricActualConsensus*Surprise
Q1 2025Revenue ($USD)$13,643,000 $13,983,000*Miss ~$0.34M (~2%)
Q1 2025Primary EPS ($USD)$(17.44) $(14.62)*Miss ~$2.82
Q4 2024Revenue ($USD)$15,765,000 $16,985,000*Miss ~$1.22M (~7%)
Q4 2024Primary EPS ($USD)$(11.23) $(10.01)*Miss ~$1.22

Values with asterisk retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term demand remains choppy; expect sequential revenue growth in Q2 but continued unpredictability in deal timing and distributor orders—position sizing should reflect execution risk .
  • Mix improvement (higher cash system sales) supports long-term margin structure and cash generation, but elongates sales cycles and may cap near-term revenue growth .
  • Margin pressure is modestly rising due to tariffs and supply disruptions (Israel), though management plans pricing mitigation; monitor reported GM vs call commentary discrepancies .
  • Balance sheet flexibility improved (debt-to-equity, bridge capacity, equity raises), reducing refinancing risk; watch further strategic actions (e.g., Venus Hair sale execution) .
  • Q1 missed prior “at least $14.0M” outlook and S&P Global consensus on revenue/EPS; estimate revisions may skew lower near-term—risk to numbers persists until macro/lending improves .
  • Product cycle: early 2H 2025 launch of new body device is the key growth catalyst; diligence ramp capacity, regulatory timing, and initial order book .
  • International strategy is structurally positive, but lumpy; watch APAC/EMEA distributor cadence and India/Taiwan/Colombia traction as certifications translate to orders .