Release Date: February 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide more details on the console sales outlook and the confidence in achieving the projected growth despite a sequential decline in Q4 console revenues? A: Leslie Trigg, CEO, explained that the company experienced significant changes in 2024, including a 9 to 12-month sales cycle. The newly hired capital sales reps from 2024 will be fully tenured in early 2025. The sales management changes, regulatory adjustments, and balance sheet perceptions are now behind them, increasing confidence in achieving strong console growth in 2025. The pipeline is growing, with 70% of top opportunities already in the late stages of the sales process, which is a new advantage for the company.
Q: What drove the strong performance in recurring revenue and treatment sales? A: Nabil Ahmed, CFO, noted that the company saw strong console utilization on a larger installed base. There was also some stocking in Q4, but nothing significant to call out. The recurring revenue performance was driven by strong treatment sales.
Q: Can you walk us through the gross margin and operating expenses expectations for 2025? A: Nabil Ahmed, CFO, stated that the gross margin for 2024 was 35.6% and is expected to expand to the high 30% range in 2025. The gross margin will be affected by under absorption of manufacturing overhead, which has been around 300 basis points. Operating expenses are expected to be around $90 million in 2025, down from $120 million in 2024, due to restructuring actions. The focus is on maintaining commercial execution while achieving cost reductions.
Q: How does the company plan to manage the capital intensity required for growth while reducing cash outlay by more than 50% in 2025? A: Nabil Ahmed, CFO, explained that the company expects revenue growth, gross margin expansion, and reduced operating expenses to contribute to the reduced cash outlay. Additionally, efforts to reduce inventory levels and console build plans, along with a significant reduction in cash interest expense due to decreased debt, will help manage capital intensity.
Q: What are the key areas of focus for R&D and SG&A cuts, and how do they align with the company's goals for 2025? A: Leslie Trigg, CEO, highlighted that the company is prioritizing R&D projects that directly benefit revenue growth, gross margin expansion, and profitability in the near term. Longer-dated projects with payoffs outside the long-range plan are not being pursued. In SG&A, the company is achieving operating leverage by getting more done with fewer people, aligning with the goal of scaling the business efficiently.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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