Hello and welcome to the InMode Limited Third Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions]. Please note today’s event is being recorded. I would now like to turn the conference over to Miri Segal, President of MS-IR. Please go ahead.

Thank you, operator and thank you all for joining us today. Welcome to InMode's third quarter 2021 earnings call. Before we begin, I would like to remind our listeners that certain information provided on this call may contain forward-looking statements, and the Safe Harbor statement outlined in today's earnings release also pertains to this call. If you have not received a copy of the release, please download one from the Investor Relations section of the company's website. Changes in business, competitive, technological, regulatory, and other factors could cause actual results to differ materially from those expressed by the forward-looking statements made today. Our historical results are not necessarily indicative of future performance. Therefore, we can give no assurance as to accuracy of our forward-looking statements and assume no obligation to update them, except as required by law. Today we are joined by Moshe Mizrahy, InMode's Chairman of the Board and CEO, who will start us off with a business update. Then, he will turn the call over to Shakil Lakhani, InMode's President of North America, to discuss North American operations. Finally, Yair Malca, our CFO, will discuss the financials of the third quarter in some more detail. With that, I'd like to pass the call over to Moshe Mizrahy. Moshe, congratulations on another record quarter. Please go ahead.

Thank you Miri and thank you all, everyone for joining us on our third quarter of 2021 earnings call. With me today are Dr. Michael Kreindel, our Co-Founder and Chief Technology Officer; Mr. Yair Malca, our CFO; Mr. Shakil Lakhani, our President of North America; Dr. Spero Theodorou, our Chief Medical Officer; and Rafael Lickerman, our VP Finance. Following our prepared remarks we will all be available for Q&A session. We are happy to report again a record quarter of profitable growth, thanks to our innovative unique technology, growing market demand, our excellent employees, and collaborative work to our network around the world we posted record revenue of $94.2 million for the third quarter of 2021, an increase of 58% over the same quarter last year. We continue to closely control our expenses and our net income for the quarter on a GAAP basis reached a record of $44.7 million, reflecting an 87% growth year-over-year including debt during the third quarter of 2021, sales of capital equipment accounted for 90% of our total revenue. Despite some slow down, sales from consumables and services remain strong, representing 10% of our total revenue at $9.1 million, a 68% increase over the same quarter last year. A strong demand of our consumable show widespread market acceptance indicating that physician buy more platforms and perform more treatment every month. Our minimally invasive surgical technology represents 73% of our revenue for the quarter compared to 59% in the third quarter last year. Hands free devices were 18% of total revenue while our two additional laser noninvasive RF platforms contributed 9%. The U.S. was once again a major contributor to our top clients with total sales reaching $62.6 million compared to $40.9 million in the third quarter of 2020 reflecting a 53% increase. It's worth noting…

Thanks Moshe and to everyone joining us. It's a pleasure to announce that we delivered a record breaking performance again this quarter just as it is to share the news of the launch of two new platforms EvolveX and EmpowerRF. In the third quarter our sales with capital equipment continued to be a driving force behind revenue which reached $85 million. As mentioned, consumables and service revenue continued to contribute to the strong performance from the previous quarter. The third quarter of 2021 raised the bar for record attendance of our workshops, enhancing our educational support network [indiscernible] our existing and new customer base. Despite the variations in COVID protocols across North America, physician offices are becoming increasingly busy. This reflects normalizing an elevated demand, that positively impacts our financial results. Consequently, we see a lot of interest expressed in our existing and newer platforms, accelerating market acceptance. Our history of successful launches combined with market demand fortifies us to grow different revenue segments even during seasonal and other fluctuations. The soft launch of EmpowerRF has been instrumental in giving us necessary insight to create an effective strategy. As doctors and patients learn how to better navigate life under the COVID-19 pandemic, part of our marketing strategy is to increase the number of in person events that we host in the coming months. Such events allow us to familiarize ourselves with the medical and wellness community with InMode’s comprehensive product portfolio. Finally, I'd like to thank the North American team for the ongoing efforts and the impressive performance that led to these record results. Their loyalty, dedication, and hard work is very much appreciated and a proven vital and indispensable in supporting InMode’s operations. With that I'd like to hand over the call to Yair for a review of our financial results. Yair.

Thanks Shakil and good day everyone. I'd like to review our strong financial results in more detail. Total revenue in the third quarter of 2021 increased 58% year-over-year to $94.2 million with a gross margin of 85% on a GAAP basis. The increase in revenues stem primarily from the new level of demand for aesthetic procedures that we're experiencing as well as a recovery from the lower revenue leverage recorded during Q3 of 2020 which was still significantly impacted by the COVID-19 pandemic. Our minimally invasive and traditional laser and non-invasive segments grew significantly in comparison to the same period last year. Minimal invasive and subdermal ablative technologies grew 95% while laser and non-invasive grew 85%. International sales were on track with the projected growth rate and increased year-over-year as we are successfully duplicating our U.S. growth strategy across these markets. Furthermore, capital equipment accounted for 90% of our revenue which consumed business service revenues representing the remaining 10%. GAAP operating expenses in the third quarter of 2021 was $35.2 million, a 30% increase year-over-year. GAAP, sales and marketing expenses for the quarter increased 30% compared to the third quarter of 2020. Share based compensation increased to $3.1 million this quarter compared to $2.4 million in the third quarter of 2020. On a non-GAAP basis, operating expenses totaled approximately $32.3 million in the third quarter of 2021 compared to operating expenses of $24.8 million in the same quarter of 2020, an increase of 30%. GAAP operating margin was 47.8% in the third quarter of 2021 compared to 39% in the third quarter of 2020. Non-GAAP operating margin in the third quarter of 2021 was 51% compared to 43% in the third quarter of 2020. Despite the usual technical nature of our industry leading to Q3, our record results can be credited to growing customer demand, global trends, exceptional results achieved by our treatments, as well as lower volume of travel relative to pre-COVID era. In addition, we are successfully managing component shortages in our supply chain through the various distributor and supply network we have established during the pandemic. GAAP diluted earnings per share for the quarter ended September 30, 2021 was $0.52 compared to $0.28 per diluted share in the third quarter of 2020. Non-GAAP diluted earnings per share in the third quarter of 2021 was $0.55 compared to $0.31 per diluted share for the same quarter of 2020. I'd like to remind our listeners that we completed a two for one stock split earlier in the quarter making our shares more affordable to the investment community and our employees. We completed the third quarter with a strong balance sheet. As of September 30th of this year, the company had cash and cash equivalents, marketable securities, and deposits of $387.4 million. On the cash flow front, the company generated $50.5 million from operating activities for the third quarter of 2021. I will now hand the call back over to Moshe.

Thanks Yair, thanks Shakil. Operator, we are ready for Q&A.

[Operator Instructions]. And the first question comes from Travis Steed with Barclays.

Hey, good morning and congratulations on a great quarter. When I'm looking at the quarter, it looks like things really shaped up nicely August-September, you didn't really see as much seasonality as you expected, so curious if you can comment a little bit on how the quarter shaped up and what you're seeing here in early October or late October and curious if you could comment on the growth in your various channels like dermatologists versus med spas, if you're seeing anything different with your different customer base?

Yeah, let’s start. Hi Travis, this is Moshe. Let’s start with the U.S. Shakil will start and I will complement him.

Sure, yeah Travis, hello. So, we did going to one part of your question, for October we've seen a good start so far. Going to last quarter we definitely -- normally we're used to kind of seasonality. It does affect certain product lines so you do differently than others, right. So minimally invasive kind of did quite well and then in our hands free side of things we did see a little bit of pull back but we expected that in Q3 of course. So we obviously are pretty optimistic about Q4 and where we are going with that. However, in terms of specialties it's kind of been status quo for a little bit now. What we will be doing as we continue to grow the soft launch of EmpowerRF, obviously we're going to start focusing and penetrating on the core markets first like we did with some of our minimally invasive technology and really build a solid work and support structure around that in order to really create what we like to call staying power for the devices. So that's a little bit of the North American side things. Moshe, do you want to talk about international.

Yeah, sure. Travis, you know that there are some countries in Europe for example that in the third quarter closed operation for at least six to eight weeks like France, Spain, Italy, and therefore in this country's most of the business came in September. A little bit in the beginning of July and then from the last week of August where everybody is coming back to work after vacationing. In Asia I would say that we didn’t see any slowdown in the summertime. We had a good quarter with Korea, a good quarter with India which is now a little bit better from the COVID pandemic there. Australia was mainly on lockdown most of the quarter so we didn't see much there. China I would say one month in August-September did very well. In South America, Brazil was in a slowdown I would say in July-August and they started again in September. But if I look on all the countries outside U.S. which is something like 71 countries that we sell to, this summer time, this quarter was better than any summertime quarter that I remember. And I'm in this industry, I would say for all the way from ESG and Luminous for 25 years. So I don't want to say we were surprised. We believe that this is because we have a different product. Usually summertime is not the best time to get laser treatments because, you are tanned, you just came from vacation, you don't go to get optical energy on your skin if you don't want to get the burns. But all of our minimally invasive technology, which are color or color free, or I would say colorblind, we saw a little bit more procedures compared to the I would say to the traditional laser treatments. We hope that that will continue. October started very strong in most of the countries. We see momentum, which we believe will continue in November-December. The last quarter, the fourth quarter is usually the strongest one. Did we answer your question?

Oh, that's super helpful detail. Thanks a lot on that. My next question is really thinking about next year, it seems like you've got a ton of momentum in the base business. So I would say really no change in that $50 million to $70 million growth that you typically see in the base business. But then thinking through the GYN launch and curious if you could add some color on some of the initial feedback on that and should we expect something like $20 million for next year incremental from the GYN launch?

Spero, do you want to talk a little bit about our strategy launching to the gynecology market.

Sure, Travis, it's a great question. I think we have seen in the past what's happened with different GYN products and the competitors in the past and we certainly don't want to do the same mistake. So we take the path that we took with plastic surgery and dermatology, especially plastic surgery. We took the hardest way and the hardest sort of adopters to convince that our technology is different. And in this case, we're starting off with the urogynecologist which will be equivalent of the plastic surgeons. A lot of the offerings that we have, we had to convince him that this is the case but what we're seeing right now it's quite enthusiastic. And so it's going to be a slow ramp in this respect, because we do need to give it credibility. And these are -- this group is probably the group that will -- is actually doing it for us. A lot of our KOLs are in that area. As urogynecologist and some of the gynecologist as well start adopting it, they'll move into general GYN, and everyone else. So that's how this is different. And this is why we're performing a lot of studies and putting a lot of effort to go with this group, which will take some time of course, but it's definitely worth in the long run especially when you want to have staying power. We don't want to mark a device that goes up one year or two years and goes back down, which has been the norm for usually in this industry. And as you've seen it's not been the case with us. Does that answer your question, Travis?

Yeah. [Multiple Speakers]

This is the first part and Moshe, you could comment on the rest.

Yeah, I would say that right now, we launched the power only in the U.S. We're still working, getting the regulation approvals in certain other countries, which is in the process where we are submitting our documentation studies according to any regulatory body and we have to deal with close to 30 of them worldwide and it's not approved yet. We believe that starting January, we will launch the product in Europe, probably during in cast [ph] in Paris, that's the end of January. So to give you a number, what will be the total revenue for next year, just because this gynecology market is new to us and just because we want to be very careful with what we claim and indication to the doctors, and this is according to what Spero said, we're spending a lot of money on studies and all kinds of checking for every indication that we claim. By the way, this is the only system on the market that has a very broad indication approval from the FDA and we believe we will get it from other regulatory bodies. So $20 million sound reasonable to me but as we go in November, December, and we will check our status as we are educating the market and learning from the market, and writing on the learning curve with this new product, and other products that we will bring to this category I will be more I would say, definite, be able to give you some numbers and some focus. We're in a very early stage. We have to remember, this product was launched in the last week of August so basically, we have only one month’s experience, only one month's experience with this product.

Great. Thanks for taking the questions.

Thank you. And the next question comes from Matt Taylor with UBS.

Great, good morning. Thank you for taking the question and congrats on a good quarter. So the first question I want to ask you Moshe was, in the past you have talked about the scale of the organization and being able to grow, it used to be $50 million in terms of absolute dollars on the top line. And you've talked about some increased numbers in recent months, and obviously this year, you have an easy comp. But you are growing potentially 140 million over last year in 2021. So I just wanted you to frame some thoughts on the scale of the organization, and how much you think you may be able to grow in dollars now with your current size and your products and expansion to international?

Yeah, thank you, Matt. Very good question. You know, I would say that in 2020, we grow from 156 to 206. That's about $50 million in 2020. But we all need to remember that that was a COVID year. I believe that if we want to normalize 2020, I would say that at least $30 million or $35 million from 2021 belongs to 2020. So we need to make some kind of an average between 2020 and 2021, to understand what was the real growth. But I agree with you, I mean, the total growth this year exceeded our expectation. If you remember, the first guidance that we gave for 2021 was 150 million -- $250 million to $260 million. And every quarter we continue to update the guidance according to the performance of the last quarter, and what we believe will be the performance of the next quarter. I mean, 2021 is a great year for us. I would say that maybe because 2020 was a COVID year and everybody now go to make aesthetic procedures, people call it a zoom effect, all kinds of other effects that people give a name to this. If you look in the future 2022 and 2023,. I cannot promise that we will continue to grow with $140 million every year. But we see a great momentum in the aesthetic and we see some good sign in the gynecology. And hopefully in 2022, we will come up with another platform for the medical, more ophthalmology or some others, and continue to develop products for the aesthetic, which we have right now on our R&D pipeline close to 15 products or 15 projects, I would say to enhance our portfolio. So, the total system that we sold up to now was around 10,000 system, out of which five times when -- and a change in the United States and the others in O.U.S. This is I would say very embryonic stage of our business. Since we believe that if we go into all the medical business, medical communities that we want to enter in the future, the total available market could be -- could reach 200 million -- 206 -- 200,000, sorry, 200,000 clinics. We will continue to grow probably much more than $50 million a year, how much we will give a guidance at the end of this year.

Okay, thanks Moshe, that’s a lot of good color. I appreciate you walking us through that. I did want to ask a follow-up on the pipeline. Could you talk about ophthalmology and the timing of that and what the ramp would look like there. You mentioned these 15 projects. So are there any other ones that you could give us some color on in terms of the timing or the composition?

I can tell you what projects we're working on. We're working on three projects right now for the aesthetic. We just came with the transform on the Evolve. We do something similar on the Evoke for the face to enhance our hand free device. We're developing products on the ophthalmology for dry eye, which will come probably early next year. We're doing a study now. We're working on E&P platform for snoring, for SEPTA treatments for turbinate and others. That will be a separate platform. We're working on the platforms for erection dysfunction, for urology, mainly for men. Plenty of projects. Some of them are new platforms, some of them are hand pieces, some of them are new indications. It's a variety.

Okay, thanks a lot for the color -- and thank you.

Thank you. And the next question comes from Kyle Rose of Canaccord Genuity.

Great, thank you very much, and congrats on the success thus far. I wanted to just see if we could talk a little bit more about Empower. I mean, I realized that you had a small contribution in the quarter, and you've got a controlled launch taking place. But when I just think about what the business looked like several years ago, when the gynecology market was still growing and you guys were launching the Votiva product, just trying to understand how should we think about the contribution of Empower maybe in the first 12 to 18 months of launch, can it be what Votiva was on a percentage of sales basis, I am just trying to understand how we should try to frame that opportunity given it seems like you might be one of the only companies in this space really investing in launching new technologies here?

Shakil, you want to start?

Yes, sure. Hey, Kyle. So I think the way to look at it is, again I appreciate you noting our controlled kind of release of this product. The one thing we definitely want to do is, as I mentioned before, get it in the right core specialties, the right hands, and make sure that it's doing what it's doing. I think we'll have a better idea, probably in the next one to two quarters as to what the potential looks like, for the longer outlook here. However, we all know what the total addressable market is for this particular segment. It's a big site, it's a large segment. However, the one thing to note is that typically the women's health and wellness physicians and specialties, they're used to dealing with insurance. The biggest hiccup that we have in dealing with them is getting them to understand how cash based procedures work. And luckily, we have a ton of experience and a lot of people that have told in that market over the last four or five years. So I think it gives us a leg up but before doing anything, we wanted to have enough statistical data that goes behind it, so that we could actually back it up. Because when you look at urologists you are going to call just OBGYN. They're very, very, very heavy on data. So we're invested in the fun end of doing that, which explains kind of a controlled release. We want to do it right, we want to make sure that if we're offering something for SUI that's going to work and it's going to change women's lives. So far, preliminarily, we've seen that. I think we're going to have, as I said, a better idea in the next one to two quarters as to what the maximum potential is. But we are definitely very, very optimistic as to what the total potential market for business. Does that make sense?

It does. Thank you. And then I'll just ask my last few questions, just kind of at the same time. One, can we get an update just on China and where you stand from a regulatory aspect, as far as the number of systems that are approved there? And then secondarily, you've obviously had very strong system sales the last 24 months. I guess you have had strong system sales, the entirety of your business. Just trying to understand how we should think about the mix of consumables and service maybe moving forward, I think the service contracts don't kick in until after 12 months, we're just trying to understand how that mix might change when we think about 2022 and beyond? Thank you.

Okay, let's start with China. Right now we have three products, the invasive product approved in China, and we expect to get into first quarter approval for laser IPL and some non-invasive product which we submitted to the CFDA something like eight weeks -- eight months ago. The formula with China, they don't give you a timeline. The CFDA has no commitment. They can come back to you after three months and ask question, they come back to you after eight months and ask question. And they don't tell you when they start and when they finish, that's the philosophy of the CFDA. And, we have to comply, and we have to deal with it. We have a team in China today and we also hired a consultant in order to expedite approvals within the CFDA. The CFDA usually makes it more difficult to foreign companies. But we believe we know how to deal with it and we will continue to deal to give you exact date when we get -- when we will get more approval I don't know and I cannot. But even with those three categories that right now are cleared in China, the market is growing and we're doing well. I believe that we're -- now we're doing about $2.5 million a quarter. Hopefully next year we will go to $4 million a quarter on average between the fourth quarter, that's my estimate. Now regarding the number of systems that we sold, in the last quarter we sold 1200 system worldwide, 100 more than the second quarter. Disposable, we sold 91,000 compared to 92,000 on the second quarter and I already mentioned that the summertime usually is slower as far as treatment by at least 10% to 15% so the fact that we did exactly the…

It does. Thank you very much.

Thank you. And the next question comes from Mike Mattson with Needham & Company.

Hi, good morning. Thanks for taking my questions. I guess I'll start with the international business. You mentioned you're looking at opening a subsidiary in a major European country. Just wondering if you could provide more detail on that and you talked about kind of the financial implications of doing that?

Yeah, yeah, of course, of course. Well, I don't want to mention the name of the country but it's one of the biggest. Right now we have Spain, UK and France. And, we have distributors in Italy and distributor in Germany. Probably we will go and establish a subsidiary in one of those two. And that's what will start operation in the beginning. We already hired the team. We're now training the team. The team was trained in Europe and probably will come to Israel to train in more detail on every system. The team consists of a manager, two sales manager, one clinical manager, and one admin. We are looking for a space to operate from. This all will be done in the next two months so we would like to start general first fresh in the country and we will work. When we sell direct, we get close to the doctor or to the customers, we know what the customer wants. And we don't need to depend on the loyalty of the distributors. Around 81% of our sales today worldwide are direct. And this is done and we have two subsidiaries in North America, currently three subsidiaries in Europe, and two subsidiaries in Asia, Australia, and India. So currently we're finishing the -- establish the subsidiary in China and also an additional country in Europe. So next year we'll have nine subsidiaries. And that will probably increase the percentage of what we sell direct compared to indirect. When we sell direct, we recognize the full value, we know what the doctor wants, we service him better and I have to say another thing, doctors in every country would like to buy from the company and not from distributors, we realized that. Because the distributors they work for you and one day go to another company and they want to have redundancy. So this is the plan. Do you want more detail Matt.

No, no, that was great. Thanks and then just wanted to ask on EmpowerRF, so I understand it's early days of the launch here but, what are you seeing in terms of the different hand pieces and options there, is it -- what's the most popular hand piece and is it only being driven primarily by the SUI options?

Yes. Yeah I'll hand it over to Spero in a second Moshe.

Okay, okay, go ahead.

Yeah, no, no problem. From the commercial aspect, we only really have a month to juggle on and it's a really small sample size. Of course it's a little tough to really figure out. I think like I said earlier it's probably going to take us at least three to six months to get an idea of what the patterns. From an interest level though, SUI is something that’s very, very popular and common and something that there's not a major solution for. So we do have a lot of excitement but as I mentioned before, we want to make sure that we have significant clinical data behind it so that we can live up to what we're promising. So I do think that the VTone hand piece and the MorpheusV are going to be significant drivers in terms of what's on the workstation itself. From more of the clinical side and the physician's perspective, I will hand it over to Spero.

Thank you Shak, that's a great question. We're simply going to gynecologist or general gynecologists worldwide everyone has a certain category and focus on what they're interested in. So when we talk to the urogynecologist, the whole fact about the intravaginal microneedling is a novel treatment, it's something that we founded and that's causing a lot of the excitement initially so far what we have seen. When we go over to gynecologist who are working still and delivering or OBs who are delivering babies and they're very excited about the ability to treat women right after delivery which includes all aspects of this, right. It includes VTone for public floor rehabilitation. In addition to our EMS device for diastasis closure and they're looking at selling it as a package to the patients after postpartum. So this is very, very unique. This has never been done before to actually be able to offer a comprehensive postpartum solution. So the doctors are doing a lot of OB and looking at this very differently. So within -- however, globally when you look at all these groups everyone has a solution for something. So whether you're a gynecologist or general gynecologist whether you do a combination of both treatments, this platform has such versatility that it offers different things that you can do. In addition, let's not forget right, we are an aesthetics company and we're introducing aesthetics into this category through that. So holding your hand initially there is a medical indication, here is where existing population of patients that you have and by the way here's they can also enter the cash based business which is aesthetics. So typical this is our philosophy how we move into these different categories.

Okay, thanks. That's helpful. And then my final question is really just on the supply chain. So obviously demand appears to be really strong in your business but one thing that I worry a little bit about is that we're just going to see an announcement one day that you had some kind of shortage in terms of semiconductors and some other components to your products. And so yes I just wanted to kind of gauge your confidence level and your ability to meet this tremendous growth that you're seeing, new volume growth that you're seeing in your business, given everything that's happening out there and then supply chain?

Yeah, as far as the supply chain and logistics, you are absolutely right Matt. We're seeing a lot of I would say companies that we used to get component in four weeks. Today we get delivery time of 14 weeks. So basically I don't know if you notice our inventory grew a little bit because we don't want to take any chance of shortage and we buy from everyone that can supply us. On every component and sub assembly that we use in our manufacturing line, we have at least two suppliers and in most of them three suppliers. We buy components from China, U.S., Europe. We buy from different territories. As far as manufacturing capacity, currently we have manufacturing capacity to 2500 system, 100 platform per quarter and today we are using only 50% of it but we prepared ourselves for the future. I mean, unlike some of our competitors we delivered everything. Everything in the third quarter according to the plan and according to the orders. No one waited more than I would say 10 days before we got to the order, either a distributor or a doctor and we will continue to watch it. We have a special engineering department that we established and built here. But the only thing they do is to check on alternative components whenever we have a problem with one component or one supplier. So we do it all the time and this is a major I would say effort in our part. In Israel everything is manufactured in Israel and shipping from here. One issue we have with the shipping and the logistics, the prices of sending either by sea or by air in the last year went up four times and this is why right now we are shipping mainly in containers and not by air in order to save money. All this is done in order to maintain the 85% gross margin which for us as I said before is a must, it is not nice to have.

Okay, and just the container, I'm hearing a lot about ports being backed up and things like that. So you're not worried about these things getting stuck in a container somewhere on a boat floating around, waiting to get in a port or back of an 18 wheeler somewhere?

No, we are not worried. But you know, you never know what will happen. Hopefully people learn to live with the pandemic and everything will go back to normal in the next year. It will not take months, it will take at least a full year until everything from a manufacturing, from the supply chain will go back to normal. But we have prepared ourselves very well this time and I believe we are coping with that in the right way.

Okay, got it thanks.

Thank you. And the next question comes from Jeff Johnson with Baird.

Yeah, thanks. Good morning guys. Moshe, it is not too dissimilar from a question I've asked in the past, I'd be interested in the quarter in the U.S. what percentage of your revenues are even qualitatively if you could talk about, how many of the systems of the hand pieces of the platforms that were sold in the U.S. during the quarter went into current customers, so they were buying a second, or third, fourth hand piece or system or versus how many went into brand new accounts. Just trying to understand penetration and where we are on kind of penetration in the U.S. of the derm and the plastic side of the market? Thanks.

Shakil, could you please answer that.

Yeah, sure. Hey Jeff, so we fortunately in some ways we're not the type of company that has -- it's not going to be like a striker or something where you have these -- type of sales per se meaning that you just go in and sell something every month, every quarter or anything like that either six bigger devices, we definitely do go after our existing customers but we do it once we know that they're successful, right. So it's a lot easier for them to reinvest in what we have and because of our robust pipeline we always have something new that's coming out and keep them kind of excited. But our first task is to definitely get them so that they are successful, right. So it kind of starts with that. In terms of what we're doing percentage wise, I don't want to give you anything that I'm not 100% certain of. But majority of our business is new business. So, although we have lot of existing customers who have purchased different devices, I know early on I talked about some of our workshops and we are seeing some record attendance and things like that. We have a good mix of existing customers and new customers. However, what I do feel as Spero even mentioned talking about Empower, as we get a lot of these specialties into doing things they're not used to doing, going after women's health and once they already have, a large degree of our large audience I should say been captive patient base but they can now start talking about that too. While lot of those patients are getting cosmetic and aesthetic procedures done elsewhere. So the idea is getting used to certainly charge no cash pay for these procedures and then slowly be able to help them kind of do that on the cosmetic side. So I know it's not an exact answer that you're looking for but I do see a lot of our business in North America bringing some newer customers although we do still have a very good existing customer base. The main thing for us is we want to make sure that they succeed first and then it's so much easier for our sales force to going in and talk to them about new technology, does that make sense.

Yeah, it does.

Hi Jeff. Jeff this is Yair, just to complement what Shakil said, I can tell you that at least the U.S. over 70% so far sales this year and we're to new customers. So, as Shakil mentioned, most of our revenue is still coming from [indiscernible].

Alright, that's helpful. Thank you Yair. And then I guess the follow-up to that and it kind of is an international question as well. Should we think then that Evolve and Evoke didn’t necessarily go into customers who owned AccuTite BodyTite platform that those procedure or those products were going more into med spas things like that and Moshe you mentioned in China getting IPL and hands free potentially next year, does that move you in China in the med spas whereas right now with the other MILF platforms you can more focused on the physician hospital category more so. I'm just trying to understand one, the Evolve and Evoke, are you doing well on the med spas side with some of those hands free technologies. And in China is the opportunity to go into hands free and IPL opening a new door that you're not necessarily in right now with MIRF, thanks?

Well let me answer you regarding China, Shakil will answer you about the med spa in North America. But Dwayne they work and they evolve were introduced in the O.U.S. only this year. And we are now just getting the first I would say approvals in certain countries. It has already been approved in Europe but not in Asia yet, and not in China. The market in China, you are absolutely right is, if you want to categorize it, you have the hospital, the private clinics, and what they are called is the spa market which is the biggest. The spa market is all the way from small shops to well organize spa market, spa chain. Yes, definitely. Once we get the approval for the hands free devices in China, we will go to the spa market. We can also go to the doctors, to the doctor clinics and sell them. Plastic surgeon and dermatologist which are now become something very popular in China, it used to be only in the hospital but right now there are private clinics as well. Definitely we will go to the spa market and also to those customers. Shakil you want to say something about North America.

Yeah, sure. Absolutely, so I think we've always kind of penetrated the market going after physicians specifically. The hands free technology does allow us into the med spa side of things and we do supplements [indiscernible] medical directors and certain physicians that can finance it. So guess the other thing is we're always going to be medical -- medical spa, the actual spa market itself it's really tough to get people finance and things of that nature when you're looking at just the spa market. And it's tough for a lot of those smaller places to record it. So a lot of our focus is on the medical professionals but in terms of the med spas, yeah, I mean the hands free technologies are applicable to them but also because you asked what someone who has AccuTite or BodyTite or FaceTite or whatever it is just remember that the hands free technology is kind of set it and forget it, right. So you are able to delegate that so you could have that one patient group generating a bunch of revenue for the offers. Well, the physician is still out there doing their AccuTite or BodyTite or whatever it is, right. So we do have the passive income side of things from the hands free while they can still keep doing what they're doing if they're using different technologies. So I think as far as the hands free goes, I don't think we have really special service yet. Hands free is not and as we know some of our former competitors and things like that. I mean, you think that our offering is a lot more unique than anything else that’s come into the marketplace between Evoke and Evolve and the things that we have -- that we are working on those products.

Understood. Thank you guys.

Thank you. And this concludes the question-and-answer session. I would like to turn the call to Moshe Mizrahy, Chairman and CEO for closing comments.

Okay. Thank you operator. Again, thanks everybody for joining us today. I want also to express thanks to all of our employees worldwide. I'm sure that some of them are on the line. We had a very successful quarter but a very tough one. We worked very hard on the logistics, on the manufacturing, sales, marketing, support, training and I believe as a team we did a very good job and we will continue the momentum for the benefit of the employees, all the stakeholders and the shareholders. Thank you every body. Bye-bye.

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