InMode Ltd. (INMD) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals a decline in financial performance, with reduced revenue and EPS guidance, and lower operating margins. Despite new product launches, management's conservative stance on future sales and lack of detailed guidance for 2026 indicate uncertainties. The Q&A session highlights concerns about interest rates and noninvasive growth, with management providing limited clarity. The market cap indicates a small-cap stock, which may react strongly to these negative factors. Overall, the sentiment leans negative, with potential stock price decline in the range of -2% to -8%.
Key Financial Performance
Revenue InMode generated revenues of $93.2 million, compared to $130.2 million in Q3 2024. The decrease is attributed to the $31.9 million in preorder sales included in last year's revenue.
Consumables and Service Revenues Consumables and service revenues were $19.9 million, up 26% year-over-year. This growth was primarily driven by markets outside of the U.S.
Sales Outside the U.S. Sales outside of the U.S. increased to $40 million, representing 43% of overall sales, a 10% increase year-over-year.
Gross Margins GAAP and non-GAAP gross margins were 78%, down from 82% in Q3 2024. The decrease was due to the anticipated impact of tariffs.
Sales and Marketing Expenses Sales and marketing expenses decreased to $44.9 million from $51.9 million in Q3 2024, reflecting the reduction in sales between the two periods.
Operating Expenses GAAP operating expenses were $51.4 million, an 11% year-over-year decrease. Non-GAAP operating expenses were $49.1 million, down from $54.4 million, a 10% decrease year-over-year.
Operating Margin GAAP operating margin was 22%, down from 37% in Q3 2024. Non-GAAP operating margin was 25%, down from 40% last year.
Net Income GAAP net income was $21.8 million, down from $50.9 million in Q3 2024. Non-GAAP net income was $24.5 million, down from $54.9 million.
Earnings Per Share (EPS) GAAP diluted EPS was $0.34, down from $0.65 in Q3 2024. Non-GAAP diluted EPS was $0.38, down from $0.70.
Share-Based Compensation Share-based compensation declined to $2.7 million from $3.9 million in Q3 2024.
Cash and Cash Equivalents As of September 30, 2025, the company had cash and cash equivalents, marketable securities, and deposits of $532.3 million.
Cash from Operating Activities InMode generated $24.5 million in cash from operating activities this quarter.
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Operating Highlights
Men's wellness platform: Soft launch conducted earlier, full commercial rollout completed in Q3. Revenue contribution expected by year-end.
Argentina subsidiary: New subsidiary opened to expand global footprint and serve customers locally. Revenue generation expected by end of 2025.
Thailand subsidiary: Building a strong local team to drive sales and ensure sustainable growth.
Revenue: Generated $93.2 million in Q3 2025, with $19.9 million from consumables and services, up 26% year-over-year.
Sales outside U.S.: Increased to $40 million, accounting for 43% of total sales, a 10% year-over-year growth.
Gross margins: GAAP and non-GAAP gross margins were 78%, down from 82% in Q3 2024 due to tariffs.
Operating expenses: GAAP operating expenses decreased by 11% year-over-year to $51.4 million. Non-GAAP operating expenses decreased by 10% to $49.1 million.
Leadership addition: Michael Dennison appointed as President of North America to strengthen sales and market share.
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Risk or Challenges
Economic Environment: The company is navigating a complex economic environment, which could impact its performance and strategic objectives.
Tariffs Impact: Gross margins were lower due to the anticipated impact of tariffs, which could continue to affect profitability.
Revenue Decline: Year-over-year revenue decreased significantly, with GAAP net income and operating margins also declining compared to the previous year.
Seasonality: Traditional Q3 seasonality affected revenues, which may pose challenges in maintaining consistent financial performance.
Regulatory Approvals: The company is awaiting final clinical clearances for its new subsidiary in Argentina, which could delay revenue generation.
Market Challenges: Acknowledged challenges in the marketplace, which could include competitive pressures and economic uncertainties.
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Guidance & Outlook
Revenue Guidance: Revenues for 2025 are expected to remain between $365 million to $375 million.
Gross Margins: Non-GAAP gross margins are projected to remain between 78% to 80% for 2025.
Income from Operations: Non-GAAP income from operations is expected to remain between $93 million and $98 million for 2025.
Earnings Per Share: Non-GAAP earnings per diluted share are projected to remain between $1.55 to $1.59 for 2025.
Regional Revenue Contribution: Initial revenue generation from the new subsidiary in Argentina is expected by the end of 2025. Revenue contribution from the men wellness platforms is anticipated to begin toward the end of 2025.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Why does the Q4 guidance imply a lower number compared to Q3, and how should we think about sales growth for 2026?
A:Yair Malca stated that it is too early to discuss 2026 guidance and that they want to see how Q4 plays out. He mentioned they would take a conservative approach for next year due to uncertainties.
Q:Does the decrease in interest rates in the U.S. make the company more optimistic about capital equipment sales in 2026?
A:Yair Malca noted that while interest rates have decreased, the reduction is not yet significant enough to impact financing for capital equipment meaningfully. Moshe Mizrahy added that interest rates for leasing medical equipment remain high, especially for clinics, and they expect improvements in 2026 as interest rates decrease further.
Q:What updates are there on the ophthalmology initiative, particularly regarding dry eye treatment?
A:Moshe Mizrahy explained that they are separating sales teams for the Envision product and collaborating with the American Optometrists Association. They are awaiting FDA clearance for dry eye treatment and expect to start studies next year, with potential clearance by the second half of 2026. Meanwhile, they are selling the product based on existing clinical data.
Q:Are there any new products in the pipeline that could drive growth in 2026?
A:Moshe Mizrahy mentioned new aesthetic lasers to be launched early next year, which will complement their portfolio. These will be introduced at the U.S. national sales meeting in January 2026 and at the IMCAS conference in February 2026.
Q:What is the rationale for appointing Michael Dennison as President of North America, and what changes has he implemented?
A:Michael Dennison was chosen for his extensive experience and success as VP for the East Coast. The company combined all U.S. and Canadian territories under his management, eliminating separate VP roles for the West and Canada. They divided the U.S. into six territories and Canada as the seventh, all reporting to Michael.
Q:How did the urology user meeting in August go, and what are the expectations for the urology business in 2026?
A:The August user meeting in Chicago had 800 doctors and showcased clinical data with good results. The company is currently launching the product, with aesthetic reps selling it. They will evaluate results by early 2026 before making further decisions.
Q:What are the trends and plans for the OUS (Outside the U.S.) business?
A:Moshe Mizrahy detailed their operations in 88-90 countries, with direct subsidiaries in Europe, Asia, and Latin America. They do not plan to add more countries in 2025 but are considering going direct in Israel in 2026. They are focusing on recently established subsidiaries in Argentina and Thailand.
Q:Why was there a drop in noninvasive growth in Q3 compared to Q2, and how should we think about this segment?
A:Moshe Mizrahy explained that noninvasive growth is driven by complementary products to their minimally invasive offerings. Yair Malca added that the increase earlier in the year was due to new product launches, such as the CO2 and men’s health platforms.
Q:How many disposable handpieces were sold in Q3 2025, and what does this indicate about consumables growth?
A:Moshe Mizrahy reported selling about 230,000 disposable handpieces in Q3 2025, indicating sequential growth in consumables.
Q:Review of Unclear Management Responses
A:Management avoided providing specific guidance for 2026 sales growth, citing uncertainties and the need to see Q4 results first. They also refrained from revealing details about new laser products in the pipeline, only stating that they are complementary to the aesthetic portfolio.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America challenge
America entrepreneur
Argentina milestone
District Sales
InMode District
Manager Vice
Revenues income
Sales Manager
Sales market
States contributor
Thailand sale
Yair
activity Revenues
addition President
adopter feedback
advantage position
award sale
beginning contribution
brand strength
career device
cash activity
challenge marketplace
clearance end
compensation balance
consumables market
contribution end
contributor non
decade InMode
decrease basis
decrease reduction
device industry
distribution network
income share
leader
period decrease
presence market
subsidiary
wellness
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