Good day, and welcome to InMode's Third Quarter 2025 Earnings Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Miri Segal, CEO of MS IR. Please go ahead.

Thank you, operator, and everyone, for joining us today. Before we begin, I would like to remind our listeners that certain information shared 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 visit 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. As such, we can give no assurance as to the accuracy of our forward-looking statements and assume no obligation to update them, except as required by law. With that, I'd like to turn the call over to Moshe Mizrahy, InMode's CEO. Moshe, please go ahead.

Thank you, Miri, and to everyone for joining us. With me today are Dr. Michael Kreindel, our Co-Founder and Chief Technology Officer; Yair Malca, our Chief Financial Officer; and Rafael Lickerman, our VP of Finance. Following our prepared remarks, we will all be available to answer your questions. The third quarter progressed in line with our expectation, even as we navigated a complex economic environment. Our performance this quarter reflects the strength in our diversified portfolio and the disciplined execution of our strategy. We remain focused on expanding our presence in high-growth markets and position the company well into the future. This quarter, we expanded our global footprint with opening a new subsidiary in Argentina, an important milestone, our regional growth strategy. Establishing a local presence in this key market will allow us to better serve customers through direct engagement and localized support. We are now focused on obtaining final clinical clearances and expect to begin generating internal initial revenue by the end of 2025. Following the earlier launch of our subsidiary in Thailand, we are actively building strong local team to drive sales, laying the groundwork for sustainable growth across both regions. As we noted in our Q2 update, we conducted a soft launch of the men wellness platforms to introduce it to selected users and early adopters, so we can gather initial clinical feedback. The full commercial rollout event took place during the third quarter and we expect the beginning of revenue contribution toward the end of the year. Finally, I'm excited to share some important news about a key leadership addition to our team. We recently appointed Michael Dennison as our President of North America. Michael is an entrepreneur-driven and award-winning sales leader who has built an impressive career in the medical aesthetic device industry, holding nearly every sales role along the way with over close to decade at InMode. Michael advanced from District Sales Manager to Vice President of Sales, helping to grow revenue nationally, expand market share and build a strong distribution network across North America. Looking ahead, we recognize the challenges in the marketplace, but remain confident in our competitive advantages, including our strong financial position, diverse and innovative portfolio and trusted global brand. These strengths position us as the global leader in the minimally invasive aesthetic and wellness industry. Now I would like to turn the call over to Yair, our Chief Financial Officer. Yair, please.

Thanks, Moshe, and hello, everyone. Thank you for joining us. I would like to review our Q3 2025 financial results in more detail. InMode generated revenues of $93.2 million. As a reminder, when comparing year-over-year results, last year's quarterly revenue of $130.2 million included $31.9 million in preorder sales. Even with the traditional Q3 seasonality, consumables and service revenues were $19.9 million, up 26% year-over-year. This growth in consumables was driven primarily by markets outside of the U.S. Our minimally invasive platforms accounted for 75% of total revenues this quarter. Sales outside of the U.S. increased slightly to $40 million or 43% of overall sales, a 10% increase year-over-year. The United States was the largest geographical revenue contributor, reaching $53.2 million. GAAP and non-GAAP gross margins in Q3 were 78%, down from 82% reported in Q3 2024. As expected, our third quarter gross margins were lower due to the anticipated impact of tariffs, which we had incorporated into our outlook. As part of our global expansion, we currently have 284 direct sales reps and distributors coverage in more than 73 countries. Sales and marketing expenses decreased to $44.9 million from $51.9 million in the same period last year. The year-over-year decrease primarily reflects the reduction in sales between the 2 periods. GAAP operating expenses in the third quarter were $51.4 million, an 11% year-over-year decrease. On a non-GAAP basis, operating expenses were $49.1 million this quarter, down from $54.4 million, a 10% decrease year-over-year. GAAP operating margin was 22%, down from 37% in the third quarter of 2024. On a non-GAAP basis, operating margin reached 25% compared to 40% last year. GAAP net income was $21.8 million, down from $50.9 million in the third quarter of 2024. On a non-GAAP basis, net income was $24.5 million, down from $54.9 million. GAAP diluted earnings per share for the third quarter were $0.34, down from $0.65 in Q3 of 2024. Non-GAAP diluted earnings per share was $0.38, down from $0.70 per diluted share in the third quarter of 2024. Share-based compensation declined to $2.7 million from $3.9 million in the third quarter of 2024. We ended the quarter with a strong balance sheet. As of September 30, 2025, the company had cash and cash equivalents, marketable securities and deposits of $532.3 million. This quarter, InMode generated $24.5 million in cash from operating activities. Before I turn the call back to Moshe, I would like to reiterate our guidance for 2025. Revenues to remain between $365 million to $375 million, non-GAAP gross margins to remain between 78% to 80%, non-GAAP income from operations to remain between $93 million and $98 million, non-GAAP earnings per diluted share to remain between $1.55 to $1.59. I will now turn over the call back to Moshe.

Thank you, Yair. Thank you very much. Operator, we are ready for the Q&A session. Please.

[Operator Instructions] And your first question comes from Danielle Antalffy with UBS.

Congrats on a good quarter here. Just curious, Yair, as you look at the Q4, the implied Q4 guidance based on what you provided at the midpoint, you did beat Q3. So it implies a little bit of a lower Q4 number. But I was wondering if you could level set us, sort of, as we think about the exit rate here in 2025 and look ahead to 2026, how we should be thinking about sales growth next year given the lingering uncertainties out there, I think consensus is sort of in the mid-single digit range?

I think it is a little bit too early for us to discuss guidance 2026. We would like to see how Q4 plays out before we discuss 2026. I think we would want to be somewhat conservative when we go into next year because of all the uncertainties, as you have mentioned. That's all I can say about 2026 at the moment.

Okay. That's totally fair. I hear you. And then just the capital equipment environment, it looks like in Q3, international was weaker, U.S. not as weak. But in the U.S. specifically, we are in an environment now where interest rates are coming down. I mean, does this make you a little bit more optimistic as we look ahead to 2026, appreciating you want a conservative starting off point, but just maybe comments on hearing from customers? Is there increased interest now to purchase capital equipment as interest rates come down?

So the interest rate has come down, but not enough to see that trickle in a meaningful way into the financing of the capital equipment in the U.S. as hopefully it will continue to come down, then we will start see a more meaningful impact. And then hopefully, this will translate to additional or increase in capital equipment sales. And Moshe, go ahead.

No. What I wanted to say, it's not just in the United States. We don't see the end -- the light at the end of the tunnel as regard to financing capital equipment, especially medical equipment to clinics. I'm not talking about hospital and hospital is probably different. But as far as clinics who are buying capital equipment like for medical aesthetic or any other medical community, I mean, the interest rate on leasing are still very high. I know that the interest rate went down twice in the United States, 0.5%. In Europe has not yet. So we believe that sometime in 2026, when the U.S. will lead the reduction of interest rate, it will come up to other territories, but we don't see it yet.

[Operator Instructions] Your next question comes from Matt Miksic with Barclays.

I had one question on the ophthalmology initiative that you've been sort of pushing forward over the last couple of years. It ran into some of your folks at AO and the general sentiment around the conference and around those specialties is significant upswing in dry eye treatment and significant interest, particularly in the optometrist channel. I'm just wondering any color or updates you have on your strategy there, the progress, contribution, if you want to go there? And then I had one quick follow-up.

Okay. Hi, this is Moshe. Well, let me answer your question on a couple -- 2 things. One, as regard to commercial and salespeople, we are separating the salespeople for the Envision from the rest of the aesthetic and starting 2026, it will be managed by a director who is responsible only for the Envision and the sales team will sell only to Envision to optometrists and also to ophthalmologists. We are making some progress with the American Optometrists Association. We have some agreements with them to do together some workshop in different state. And we started that at the second quarter, we continue on the third quarter and we have at least 3 events coming on the fourth quarter. In addition to that, as far as the ophthalmology, as you probably know, we still do not have the final clearance from the FDA to say that we're treating dry eye. We hopefully will -- we're still -- we negotiated with the FDA. I don't want to call it negotiated. It was a discussion with the FDA as regard to the protocol that we will do during the study to get the indication. We are in the last stage. We're doing some safety tests right now on [ Revit ]. Hopefully, they will approve it before the end of the year and we will start the study next year. It's not going to be a very long study, because you need to show some immediate effect. Hopefully, sometime towards the second quarter of 2026, we will finalize the results of the study, submit the FDA. So sometime towards the second half of 2026, we will be able to clear the indication and claim dry eye. But right now, not only in the United States, we have enough data that show the significant competitive advantage of any other modalities that deal with dry eye and we sell it without the clearance, just because we're explaining how it's worked. We do have the FDA clearance to the handpiece, either the Lumecca, the IPL or the bipolar RF. The 2 handpieces are already approved. So we sell it without the clear indication, but we have enough clinical data to show to the doctors and to the optometrists, they are also doctors, but they are ODs, to show them the advantage. And we are making progress. And hopefully, next year, once we have a distinguished and separated sales team, we will show better momentum.

That's very helpful. Just one, maybe zooming out to the broader business in aesthetics. Similar kind of question. When we all sort of, I think, have a sense of where you think the market is and waiting for sort of like this general sort of uptick or upswing in the cycle in the U.S. But in terms of new products, anything that you would call out in addition to this initiative and follow-through in optometry and ophthalmology that could start to kind of drive incremental growth in, say, early first half of '26, back half of '26? Any color on the pipeline would be super helpful.

Well, we have some products coming to the -- we will launch early next year, mainly in the aesthetic, some new lasers that we bring to the market. I don't want just to reveal the type of lasers and what exactly these lasers do, but they are very complementary to our aesthetic, I would say, portfolio. Two of them will be introduced during the national sales meeting in the U.S. sometime at the end of January '26. We will also present those 2 devices at IMCAS, which is the main conference in Europe, again, sometime in the beginning of February next year. Yes, we currently have enough projects on the R&D pipeline, aesthetic and wellness and we will launch them 2 at a time.

[Operator Instructions] Your next question comes from [ Caitlin Roberts ] with Canaccord Genuity.

It's [ Michelle ] on for Caitlin. Can you maybe talk more about your rationale for picking Michael Dennison for the new role of President of North America and what he is working to drive in the early days in the new position?

Yes. Michael worked with us for more than 10 years. And before that, he used to work for Cynosure, which is another major company in medical aesthetics. He is relatively young, in the 40s. Basically, before he took the President position, he was Vice President for the East Coast of the U.S., doing very well. I would say the reason why we nominated him is because we didn't have -- we didn't want to have the East and West in the U.S. We want to combine all the territories under one management. And we thought Michael is the right guy to do it for InMode. And therefore, right now, we are combining all the territories under one manager, including Canada -- including Canada. And anything else that you want to know about him? I mean, he's well known. He knows the market, he knows the doctors. He knows everything about sales and marketing, many years of experience. As part of his taking the position of President, 2 VPs left. One was the VP West, which wanted to be a President, but we had to select only one; and also, the VP of Canada, and we're not hiring another VP for the West and VP for Canada. We rather have some sales director in every territory. We divide the U.S. into 6 territories and Canada is the seventh one and they all report to Michael at that point. Next year, we might appoint some other position for strategic planning and other, but we want to keep the entire North America operation under one roof.

That's great. And maybe one more from us on urology. How did the user meeting in late August go on the urology side? And have you begun rolling out the products or seeing revenue contribution? And then any commentary or directionality you could give us for your expectations for the urology business in 2026?

Urology, I understand you mean the men wellness. Yes, I mean, the August event was a user meeting that we had in Chicago and it was with something like 800 doctors. And we introduced that with the 2 lectures and presenting some clinical data that we had at that time, which was good clinical results. And now we are launching it and every aesthetic rep can sell this device as well. We are not separating yet. We want to see what will be the results until the end of the year and the beginning of 2026 and we'll make the decision later.

And your next question comes from Sam Eiber with BTIG.

It's [ Alex ] on for Sam. So I just had a quick question on the OUS business. And so you mentioned that you guys opened a new subsidiary in Argentina this quarter and also have been expanding your efforts in Thailand. So can you just talk more about the strength in OUS this quarter? And how can we think about it moving forward?

You mean about the 2 subsidiaries that we opened this year?

And just OUS in general, like what are the trends there? Like how should we think about it, like for the end of the year and going into like '26? Like will it be more of the same or different?

Okay. If you're talking about OUS in general, currently, we have -- we're selling in 88 to 90 countries, out of which in Europe, we have 5 subsidiaries that cover 10 countries, Italy; Spain that cover Portugal as well; Germany cover Austria as well; France is covering Belgium as well; and U.K. is covering Ireland and Scotland. So these are all direct operations that we have in those countries, something like 10 countries. In Asia, we have 4 countries: Australia, India, Japan and the new established Thailand. And we are currently not planning to -- in 2025, we are not planning to add more countries, not in Europe and not in Asia. The only one country that we have direct right now in Latin America is Argentina. And the base we build in Argentina is also responsible to manage all the distributors in Latin America. As far as managing the distributors in EMEA, Europe, Middle East and Africa, we have a base in London with the VP sitting there and he is responsible for all of this area. In North America, you know we have Michael Dennison managing all the North American operations, Canada and the U.S. And Israel is also a country where we are considering now going direct. We used to have 2 distributors, but we want to go direct starting 2026, because it's a home base and we want to sell direct here. It's important for us. I don't know which country will develop in 2026 to become direct operation. We have not yet decided. We have several alternatives and we're exploring several opportunities, but we are just now focusing in the last 2 that we established in the last 6 months.

And your next question comes from Mike Matson with Needham.

This is [ Joseph ] on for Mike. I guess apologies if this was already asked, as I hopped on from a different call. But just looking at noninvasive growth, obviously, you guys had a really large quarter in the second quarter and dropped back down this quarter. I'm just kind of wondering how should we think about the lumpiness of this division? Is it -- was there just large orders in the second quarter and it's more stabilized from here out? Yes. Any color there would be helpful.

You mean on the noninvasive and non-ablative. That's correct?

Yes.

Okay. Let me say something before. I would say that except 1 or 2 platforms that we sell, almost every platform that we sell has at least one invasive or ablative handpiece, either Morpheus body face or the Ignite or the BodyTite. What we sell noninvasive, it's what we call the commodity type product like all the other competitors, diode laser, IPL, noninvasive RF, hands-free devices. We don't have -- we have a competitive advantage in this field and we would like it to grow, because we want to be one-stop shop to every doctor. So if the doctor needs a complementary technology to our minimally invasive and ablative, we wanted to buy from us. So this is -- and currently, we are developing some new lasers which are noninvasive. So this doesn't mean that we are now doing only things that are ablative and invasive. Everything is getting the same attention and we're developing the noninvasive as well. I don't know if I answered your question, but I believe that...

I would like to add that this year, Joseph, we -- the 2 new products that we added happened to be noninvasive, the CO2 that we added in the beginning of the year and men health that we added after. So this is the reason for the increase that you see in the noninvasive category for us.

I see. So just a lot of orders for customers that were waiting for those new platforms and a lot of that was realized in the second quarter. No, that's helpful. And then maybe just one quick one, just touching on the consumables growth. I'm curious how many handpieces you guys sold in the quarter and just how you're thinking about growth there in procedures.

In the third quarter of 2025, we sold about 230,000 disposable, which means onetime use tips, either for minimally invasive or ablative.

Okay. Great. That's helpful. So it looks like a sequential increase in the quarter. Okay. Yes. That's all very helpful.

This concludes our question-and-answer session. I would like to turn the conference back over to Moshe Mizrahy, InMode's CEO, for any closing remarks.

Thank you, operator, and thank you, everybody, who attended this call. I want to thank the InMode team, especially in all the territories. And we hope that the fourth quarter, as always, will be the strongest one and we're looking forward to 2026. Thank you very much.

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