Good day, and welcome to the BrainsWay Fourth Quarter and Full Year 2024 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Brian Ritchie of LifeSci Advisors. Please go ahead.

Thank you all, and welcome to BrainsWay's fourth quarter and full year 2024 earnings conference call. With us today are BrainsWay's Chief Executive Officer, Hadar Levy, and Chief Financial Officer, Ido Marom. The format for today's call will be a discussion of recent trends and business updates from Hadar, followed by a detailed discussion of the financials. Then, we will open up the call for your questions. Earlier today, BrainsWay released financial results for the three months and full year ended December 31, 2024. A copy of the press release is available on the company's Investor Relations website. Before I turn the call over to Hadar, I would like to remind you that this conference call, including both management's prepared remarks and the question-and-answer session, may contain projections or other forward-looking statements regarding, among other topics, BrainsWay's anticipated future operating and financial performance, business plans and prospects, and expectations for its products and pipeline, which were all subject to risks and uncertainties, including shifting market conditions resulting from geopolitical, supply chain and other factors, as well as the use of non-GAAP financial information. Additional information regarding these and other risks are available in the company's earnings release and in its other filings with the SEC, including the Risk Factors section contained in BrainsWay's Form 20-F. I would now like to turn the call over to Hadar. Please go ahead, Hadar.

Thank you, Brian. Welcome, everyone, and thank you for joining us today. We are excited to announce today that we completed 2024 with another quarter of rapidly growing sales of our market-leading Deep TMS system. The steady rise in our performance reflects the successful execution of our strategy focused on building sales momentum and scale of our commercial distribution around the world. As you will see, these results further reinforce BrainsWay's true business and technological leadership position in the TMS field. On the top-line, we generated $11.4 million in revenue, marking a 27% year-over-year increase. Our multi-year agreement with large enterprise networks strengthened customer partnership beyond one-time sales, ensuring alignment with their evolving needs. Additionally, our lease-based business model option continues to expand our recurring revenue base, providing a more stable foundation for long-term growth. In the fourth quarter of 2024, we shipped a total of 75 Deep TMS systems, representing a 25% increase compared with the same period last year. I think it is worth noting that combined with our growing backlog and record revenues, we have established a positive book-to-bill ratio over the past several quarters. This underscores the exceptional execution of our commercial team as we continue to partner with larger enterprise customers, those that have consistently delivered the highest return on our sales and marketing investment. We have significantly expanded our market presence, making Deep TMS accessible to more customers than ever before. To support this growth, we optimized our sales force to accelerate expansion within larger institutionals and enterprise accounts in the US and internationally. Our global reach now extend across key markets, including Canada, Asia, India and Europe. As we successfully transition into this new phase of growth, we are driving increased profitability, further setting us apart in our industry. This is reflected in…

Thank you, Hadar. Revenue for the fourth quarter of 2024 was $11.4 million, a 27% increase compared to the prior-year period revenue of $9 million. We placed 75 net Deep TMS systems in the fourth quarter. Our total installed base was 1,353 systems as of December 31, 2024, compared to 1,101 at the same point in the prior year. As a result of our strong performance in the fourth quarter, we hit the top-end of our guidance with $41 million of revenue recorded for the full year 2024. This represents a 29% increase compared to the $31.8 million reported for 2023. Gross profit for the fourth quarter of 2024 was $8.5 million or 75% gross margin. This is compared to $6.7 million during the prior-year period at the same gross margin. Gross profit for the full year 2024 was $30.6 million or 75% gross margin. This is compared to $23.5 million or 74% gross margin during 2023. Moving on to operating expenses. For the fourth quarter of 2024, sales and marketing expenses were $4.5 million compared to $4 million for the fourth quarter of 2023. For full year 2024, sales and marketing expenses were $16.2 million compared to $16.5 million for 2023. Research and development expenses were $2 million compared to $1.4 million in the fourth quarter of 2023. R&D expenses for the full year 2024 were $7.2 million compared to $6.7 million in 2023. General and administrative expenses for the fourth quarter of 2024 were $1.6 million compared to $1.2 million for the fourth quarter of 2023. General and administrative expenses for the 12 months ended December 31, 2024, were $5.8 million compared to $5.3 million for 2023. Operating profit for the fourth quarter was approximately $430,000 compared to approximately $180,000 for the same period in 2023. Operating profit…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Steven Lichtman with Oppenheimer. Please go ahead.

Good morning, Hadar and Ido, and congratulations on the quarter and year. The 75 placements was certainly a standout. Were there particular drivers this quarter that stood out that you'd like to highlight, whether the enterprise network sales, international acceleration? So, any further color on some of the drivers in the quarter?

Yeah. Hi, Steven, and thank you for your question. As always, the fourth quarter is always the strongest quarter for the company. However, we see -- we do see some specific trends that I'm expecting to continue also in 2025. Obviously, the main driver is the -- are the enterprise accounts that are contributing significantly to our future sales, very high demand is coming from those enterprise accounts. The other two aspects of it are the increased use for the -- and demand for the OCD, which is also the H7 Coil. We see a constant growing demand for this important indication. And I also mentioned, I think the last thing that is important also to add is the increasing utilization in our devices, both from the need from MDD, anxious depression and also treating elderly patients. All of those together are managed to increase the demand in the fourth quarter.

Great. You mentioned progress on the accelerated treatment protocol. What's the latest in terms of timing there when we could see data?

Yeah. So, we're on the final stage of the recruitment for this very, very important indication. Our intention is to finish the follow-up period, which is around 30 days and then start analyzing the data and submit it to the FDA. I do expect to come up with some news about this indication in the third quarter of 2025.

Got it. And then just lastly, I'll jump back in queue. On margin in 2025, can you talk to what you anticipate for gross margin this year? Thank you.

Yeah. So, we do expect the gross margin -- to keep the gross margin on the same level as 2024, around 75%. I'm always saying there is more room for improvement on the gross margin, and we are taking the necessary step to try and improve it, but we are expecting the gross margin for 2025 to stay on the same level as 2024, around 75%. And same -- and also to keep the same profitability levels also on the bottom-line and the EBITDA.

Great. Thanks, Hadar.

Thank you, Steven.

Our next question comes from Jeffrey S. Cohen with Ladenburg Thalmann. Please go ahead.

Good morning, Hadar and Ido, and thank you for taking our questions. Just a couple [indiscernible]. I wonder if you could talk about the psychedelics at current centers and newly placed centers. Are you seeing that current centers have an increasing level of psychedelic therapy as far as percentage? And what are you seeing also with new placements as far as centers out there?

Yeah. Thank you, Jeff. Good morning. What we are seeing is more and more psychedelic clinics are open and are looking to embed the Deep TMS technology in their facilities. The main reason for that is that they already got a designated room, they got the staff, and most of them are shooting for interventional psychiatry therapy. So, some of them wants to try a combination of those two treatments, but there is definitely a big demand from those centers from what I'm seeing in the market. What will be the impact going forward? I think it's hard to tell, but there is definitely room for us to grow through this channel. I see all those centers potentially offering our Deep TMS technology going forward.

Okay, got it. And could you talk about MDD a little bit? Are you seeing any changes on the treatment paradigm with the payers out there in the marketplace for MDD and also perhaps for OCD?

I would say that the paradigm for MDD was very positive in the last few years. They reduced the number of failures that are eligible for treatment from four failures in the past to only one or two. I do see some constant increase in some of the [indiscernible] per procedure. So, I think that the paradigm has been positive and I think it will stay positive as far as I see it, because at the end of the day, this is a very effective treatment that is saving money for the payers. As for OCD, we also see a very steady and slow growth on the coverage by our payers. Today, we've got coverage for close to 100 people lives in the US. We need to do some more work with -- continue and increase this also for the OCD because that's the only available treatment -- effective treatment for -- by TMS for those patients, and I'm expecting the payers to continue and embrace this technology and to cover it in the near future.

Got it. And then, lastly for us, Hadar, could you talk about the 360 system? And perhaps, give us a sense of during 2025, what we may expect to hear about as far as any studies or indication or any regulatory pathways?

Yeah. So, I think, the most exciting thing for us on the clinical side with the next-gen TMS 360 is to launch the multi-center trial in the US with this specific 360 system. We believe it represent the future of the TMS segment. So, the first use with this device on a multi-center trial in the US will be done through this multi-center trial that we plan to launch on the second half of 2025. On the same time, we do aiming also to use and to launch some feasibility studies with the TMS 360 for Alzheimer disease and Parkinson, because we believe that this [groundbreaking] (ph) technology could be benefit for these two indication, but we need to start to do some feasibility -- small feasibility studies with this technology.

Okay. And when you talk about a back-half launch of a multi-center trial, are you referring to MDD specifically as the indication?

No. I'm referring for the AUD clinical trial on the second half of 2025.

Got it. Okay. Perfect. Thank you very much for taking our questions.

Thank you, Jeff.

Our next question comes from Carl Byrnes with Northland Capital Markets. Please go ahead.

Thanks for the question, and congratulations on the quarter. I'm just wondering, given the cash build that you have, do you see any opportunities for complementary acquisitions or anything that might be in the business development space that we should be looking for potentially in the next 12 to 18 months or less? Thanks.

Yeah. Thank you, Carl, and good morning. Yes, we do have a very stable situation with our balance sheet, but I think that 2025 is going to be a pivotal year for the company, mostly on the innovative side. We're going to do lots of interesting and compelling studies in 2025. But we're also looking to continue and build our future and start planting all the right seeds for a long-term growth for the company, which means to continue and strength our relationship and partnership with growing and profitable enterprise accounts. So, our intention is to grow organically, but also looking for some interesting collaboration and partnership with growing mental health and potentially also addiction centers that can really increase our backlog for the long run. In terms of acquisition, we are not actively looking for an acquisition on the horizon. We are always looking on some interesting technologies that could be a completing technology to the Deep TMS system in the clinic, but we're also developing some new technologies that we believe could help us to bring new product to the market. So, just to summarize, we are looking to invest this money back into expanded growth for the company and enhance our collaboration with growing enterprise account and continue to invest in the future of mental health and addiction arena.

Great. Thank you.

Thank you, Carl.

[Operator Instructions] Our next question comes from Ram Selvaraju with H.C. Wainwright. Please go ahead.

Thanks very much for taking my questions, and congratulations on a very solid end to 2024. Firstly, I wanted to ask if you could comment on the current broader macroeconomic and geopolitical situation? And if you expect any of this to pose any unaccustomed challenges or possible opportunities for BrainsWay as we look ahead to the rest of 2025, particularly as this pertains to pricing dynamics as well as uptake in emergent indications for the Deep TMS system?

Yeah. We don't see, as of today, any impact on the macroeconomic changes [on cost] (ph). And BrainsWay is a US-based company. Most of our business is in the US. And most of our team is also based in the US market. However, we do see lots of positive tailwinds to our business, specifically around some of the new indication that we're about to bring to the market that relates to the mental health industry. I do believe that the accelerated Deep TMS protocol could really mitigate some of the trends that we're seeing in the market. I do think that the PTSD treatment that has been approved by the -- for reimbursement in Israel and we're currently -- there is some few publication from a very favorable results that has been used by the VA in the US might increase the interest also on the macroeconomics and might -- we potentially may benefit from it at the end. But for your question, the way that we think we see some of the microeconomics, we've got lots of mitigation on the financial side and the way that we are partnering with our partners down the road, so we remain very positive at that front.

Just as a follow-on to that question, I wanted to ask if you can confirm whether there has been, in fact, no impact to any governmental funding of exploratory work with the Deep TMS system. In particular, I recall that, one of these initiatives was being supported by NIH funding. As we all have heard, there are cutbacks going on at NIH right now. Just wanted to confirm that this, in fact, does not affect any of the work that is being done with your system.

Yeah, that's a very good question. I'm not aware of any pushback. I think we made some kind of a publication of granting from the NIH for the specific study. I would say, on the contrary, I think that the funding that we, I think, announced was -- relates to the addiction side, which is a very, very compelling and important disease that I believe the government and also the public wants to see some progress. But as of to date, there was no restrictions for any kind of funding to some of our projects.

Thank you very much.

Yeah.

This concludes our question-and-answer session. I would like to turn the conference back over to Hadar for any closing remarks.

So, I would like to thank all of the investors, analysts and other participants for their interest in BrainsWay. With that, please enjoy the rest of your day. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.