• Revenue: $77.9 million in Q1 2025, a decrease of 3% year-over-year.
• Gross Margin: 78% GAAP, 79% non-GAAP in Q1 2025, compared to 80% in Q1 2024.
• International Sales: $38 million, accounting for 49% of total sales, a 1% increase year-over-year.
• Operating Expenses: $45.3 million GAAP, a 1% decrease year-over-year; $43.1 million non-GAAP, a 2% increase year-over-year.
• Operating Margin: 20% GAAP, 23% non-GAAP in Q1 2025, compared to 23% and 27% respectively in Q1 2024.
• Diluted Earnings Per Share: $0.26 GAAP, $0.31 non-GAAP in Q1 2025, compared to $0.28 and $0.32 respectively in Q1 2024.
• Cash and Cash Equivalents: $512.9 million as of March 31, 2025.
• Cash from Operating Activities: $14 million in Q1 2025.
• 2025 Revenue Guidance: $395 million to $405 million.
• 2025 Non-GAAP Margin Guidance: 78% to 80%.
• 2025 Non-GAAP Income from Operations Guidance: $101 million to $106 million.
• 2025 Non-GAAP Earnings Per Share Guidance: $1.64 to $1.68.

• Warning! GuruFocus has detected 7 Warning Signs with INMD.

Release Date: April 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• InMode Ltd (NASDAQ:INMD) maintained a strong balance sheet with cash and cash equivalents totaling $512.9 million as of March 31, 2025.
• The company completed its fifth share purchase program, returning over $412 million to shareholders in the past 12 months.
• InMode Ltd (NASDAQ:INMD) plans to unveil a new platform designed for the wellness market, expanding its product portfolio.
• International sales accounted for 49% of total sales in Q1 2025, with Europe reaching record sales numbers.
• The company remains committed to its workforce and strategic investments, avoiding layoffs despite economic challenges.

Negative Points

• Total revenue for Q1 2025 decreased by 3% compared to the same quarter last year, reflecting ongoing macroeconomic challenges.
• Gross margins declined slightly, with GAAP gross margin at 78% compared to 80% in Q1 2024.
• The US market experienced significant headwinds, with its revenue share dropping to 50% from the usual 62%-63%.
• GAAP operating margin decreased to 20% from 23% in Q1 2024, and non-GAAP operating margin fell to 23% from 27%.
• The company anticipates a 4% to 5% reduction in operating margins due to continued pressure in the US market and international revenue growth.

Q & A Highlights

Q: Can you elaborate on the impact of product mix and market dynamics on your guidance? A: Moshe Mizrahy, CEO, explained that the slowdown began in mid-2023 due to rising interest rates and inflation, affecting leasing packages for equipment purchases. This led to reduced capital expenditure by doctors and decreased consumer confidence, impacting the number of procedures. The company sold fewer disposables compared to two years ago, indicating a decline in minimally invasive procedures. Despite introducing new platforms, the market has not yet shown signs of recovery.

Q: How are you factoring in the macroeconomic environment into your guidance? A: Moshe Mizrahy, CEO, stated that the guidance of $395 million to $405 million was set with the expectation of a typical seasonal pattern. The company is hopeful for market recovery in the next two quarters. If Q2 results do not meet expectations, the guidance may need to be adjusted.

Q: What is the status of your sales force and investment strategy during this slowdown? A: Moshe Mizrahy, CEO, emphasized the importance of retaining talent and maintaining investment in the business. The company has decided not to cut costs by reducing workforce or development efforts, believing that retaining their skilled team will position them well for future growth when the market recovers.

Q: Can you provide more details on the tariff impact and how it affects your margins? A: Yair Malca, CFO, explained that the tariff impact is estimated to be 2% to 3% on gross margins, assuming current US tariffs remain at 10%. The situation is fluid, and the company is monitoring developments closely. The guidance includes this tariff impact from Q2 to Q4.

Q: How are new products contributing to your revenue guidance? A: Moshe Mizrahy, CEO, noted that new products typically contribute more than 20% of total revenue. However, in the current market slowdown, the contribution from new products is not expected to exceed the average. The company continues to innovate and introduce new platforms, but market conditions will influence their impact.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.