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Venus Concept Inc. (VERO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue of $15.8M declined 13% YoY and rose 5% QoQ, missing prior Q4 guidance (“at least $17.0M”) and Wall Street revenue consensus; diluted EPS loss of $11.23 was worse than consensus, driven by lower sales and mix shift away from lease programs .
  • Management attributed the miss to tighter third‑party lending, elongated deal cycles, and a supply‑related inventory shortfall, while highlighting progress on shifting to higher‑quality cash system sales (internal lease share down to ~20%) .
  • Balance sheet de‑risking continued: total debt fell 47% YoY to ~$39.7M, cash ended at $4.3M; Madryn bridge capacity expanded by $10M; a 1‑for‑11 reverse split regained Nasdaq minimum bid compliance in March 2025 .
  • Near‑term outlook: no FY25 guidance; company guides Q1 2025 revenue to “at least $14.0M”; catalysts include distributor ramp in APAC/EMEA and a new body device targeted for early H2 2025 (slipped from prior Q1 2025 target) .

What Went Well and What Went Wrong

  • What Went Well

    • Cash systems mix and U.S. execution: “Cash system sales in the U.S. increased 27% YoY and represented 87% of total U.S. system sales in Q4” .
    • Gross margin resilience: Q4 gross margin improved to 69.1% (vs. 66.5% LY), reflecting margin management and mix effects .
    • Deleveraging and liquidity: Debt reduced to ~$39.7M (from $74.9M), plus $10M increased bridge capacity; reverse split restored Nasdaq compliance .

  • What Went Wrong

    • Revenue miss vs guidance and consensus: Q4 revenue was $15.8M vs prior Q4 guide “at least $17.0M” and consensus $17.0M*, driven by macro (tight credit) and supply‑related inventory shortfalls delaying closes .
    • Adjusted EBITDA loss widened slightly YoY (-$6.1M vs -$5.9M), despite lower OpEx, as lease revenue fell 58% YoY and systems growth did not fully offset .
    • Product launch timing slippage: the new body platform now targeted for early H2 2025 (vs Q1 2025 previously), tempering near‑term growth expectations .

Financial Results

Core P&L trend (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$16.582 $15.007 $15.765
Gross Margin %71.5% 66.1% 69.1%
Total Operating Expenses ($USD Millions)$17.445 $17.078 $17.560
Operating Loss ($USD Millions)$(5.596) $(7.157) $(6.671)
Net Loss ($USD Millions)$(19.864) $(9.302) $(8.016)
Diluted EPS ($)$(3.05) $(1.28) $(11.23)
Adjusted EBITDA ($USD Millions)$(4.142) $(5.874) $(6.098)

Note: Q4 EPS reflects the 1‑for‑11 reverse stock split; company notes Q4 and FY weighted‑average shares give effect to the split .

Q4 2024 actual vs prior periods and estimates

MetricQ4 2023Q3 2024Q4 2024 ActualConsensus*Surprise
Revenue ($USD Millions)$18.132 $15.007 $15.765 $16.985*$(1.220) / (7.2%)
Diluted EPS ($)$(20.14) $(1.28) $(11.23) $(10.01)*$(1.22)

Estimates marked with * are Values retrieved from S&P Global.

Region revenue breakdown (oldest → newest)

RegionQ2 2024 ($USD M)Q3 2024 ($USD M)Q4 2024 ($USD M)
United States$9.280 $8.548 $10.274
International$7.302 $6.459 $5.491
Total$16.582 $15.007 $15.765

Product/category revenue breakdown (oldest → newest)

CategoryQ2 2024 ($USD M)Q3 2024 ($USD M)Q4 2024 ($USD M)
Venus Prime / Subscription—Systems$4.517 $2.684 $2.533
Products—Systems$8.588 $8.898 $10.000
Products—Other$2.647 $2.741 $2.524
Services$0.830 $0.684 $0.708
Total$16.582 $15.007 $15.765

KPIs and balance sheet (oldest → newest)

KPIQ2 2024Q3 2024Q4 2024
Internal lease share of systems revenue (%)~34% ~23% ~20%
Cash used in operations (quarter) ($USD M)$(1.3) $(3.1) $(3.8)
Cash & Cash Equivalents ($USD M)$5.732 $4.489 $4.271
Total Debt ($USD M)~$46.0 ~$34.6 ~$39.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2024“At least $17.0M” (Nov 13, 2024) Actual $15.8M Missed vs prior guide
RevenueQ1 2025N/A“At least $14.0M” New quarterly guide
Full-year revenueFY 2025N/ANo FY25 guidance provided Maintained no FY guide

Earnings Call Themes & Trends

TopicQ2 2024 (Previous)Q3 2024 (Previous)Q4 2024 (Current)Trend
Shift to cash system sales; lease de‑emphasisEmphasized 70/30 target; Venus Prime introduced; lease share ticked up transiently to 34% Lease share ~23%; cash mix rising; tightening third‑party lending Internal lease ~20%; U.S. cash systems +27% YoY; 87% of U.S. systems sales Structural mix improving toward cash
International strategy: exit unprofitable direct markets, add distributorsTransition underway; APAC/Canada clearances (Versa Pro) Distributors up ~60%; APAC/EMEA demand; India/Taiwan/Colombia engagements Sales to distributors more than doubled YoY in Q4; early evidence of strategy working Distributor model scaling
Macro/credit headwindsTight credit elongating cycles, especially high ASP systems U.S. pressured; deals pushed late in quarter Continued tight lending; elongated cycle cited for miss Persistent headwind
Supply chain/inventoryNot highlightedNot highlighted“Supply‑related shortfall in inventory of select products” impacted closes New Q4-specific issue
Debt reduction and financing$35M debt‑to‑equity exchange; bridge financing Further debt exchanges; total debt ~$34.6M Debt ~$39.7M at YE; bridge capacity +$10M with Madryn Ongoing de‑risking; added capacity
New body device launch timingTarget early 2025; pipeline prioritized Target Q1 2025 Early H2 2025 expected in U.S. Slipped later
Hair business (ARTAS iX)Strong platform; AI.ME delayed Higher ASP impacts; demand varies by credit Well‑regarded; continued R&D; strategic interest in Venus Hair Mixed demand; strategic option value
TariffsNot discussedNot discussedLimited expected impact; robot manufactured in U.S.; energy devices mostly Israel Monitoring; limited near-term impact

Management Commentary

  • CEO on Q4 miss drivers and strategy: “Fourth quarter revenue declined… Importantly, the decline in system sales continue to be impacted by our strategic shift… Lease revenue declined by $3.5M or 58% YoY… Cash system sales in the U.S. increased 27% YoY and represented 87% of total U.S. system sales” .
  • CFO on mix, margins, and OpEx: “Gross margin was 69.1%… Total operating expenses decreased 11%… internal lease programs… approximately 20%… compared to 41% prior year period” .
  • CEO on macro and inventory: “Customer financing pressures… continued… In addition, we also experienced… a supply‑related shortfall in inventory of select products” .
  • CEO on product timing: “We look forward to launching our new body system… cautiously optimistic… early part of the second half of the year” .
  • CEO on capital structure: “Substantial reduction in overall debt… amendment to our bridge loan… increase financing capacity by $10 million” .

Q&A Highlights

  • Normalized business profile: Management expects less YoY decline vs 2024 but withheld FY25 guidance due to macro and ongoing strategic review .
  • Growth strategy 2025: Normalize distributor ordering rhythm over a few quarters; new body device launch expected early H2 2025 to drive U.S. growth .
  • Cost structure: Operating infrastructure viewed as efficient; limited additional cost cuts available; leverage sales volume over existing base .
  • Hair business: ARTAS iX remains well‑regarded; ongoing R&D; potential strategic interest in the segment .
  • Tariffs: Minimal anticipated impact given manufacturing footprint (U.S. robot; Israel devices) .
  • Cash burn: Q4 operating cash burn increased vs prior year due to working capital (advances to suppliers to secure inventory); full‑year cash used in ops down 14% .

Estimates Context

  • Q4 2024 revenue: Actual $15.765M vs Wall Street consensus $16.985M* → Miss (~$1.22M, ~7.2%) .
  • Q4 2024 diluted EPS: Actual $(11.23) vs consensus $(10.01)* → Miss (~$1.22).
  • Coverage depth: # of estimates = 2 for both revenue and EPS*.
    Estimates marked with * are Values retrieved from S&P Global.

Key Takeaways for Investors

  • Near‑term trading setup: Negative surprise vs Q4 guide and consensus, no FY25 guide, and launch timing push to early H2 2025 are likely overhangs; watch Q1 2025 setup (“at least $14.0M”) and distributor order cadence recovery .
  • Mix quality improving: Internal lease share down to ~20%; U.S. cash systems up strongly; margin management supports GM% resilience; monitor sustainability amid macro tightening .
  • Inventory/supply resolution is a key swing factor: Q4 inventory shortfalls impeded closes; advances to suppliers in Q4 should mitigate risks—track Q1/Q2 conversion .
  • Balance sheet risk declining but still central: Debt reduced materially and bridge capacity expanded; reverse split restored listing compliance—continue to watch Madryn negotiations and capital structure outcomes .
  • Product catalysts: New body device in early H2 2025 and regional certifications (India/Taiwan/Colombia) can drive orders; timeline slippage reduces near‑term visibility .
  • Estimate revisions: Expect modest downward adjustments to near‑term revenue and EPS given Q4 miss and delayed product launch; focus on margin progression and cash burn trajectory .
  • Execution priorities: Normalize distributor rhythms, secure component supply, maintain cost discipline, and accelerate cash systems to drive operating leverage .