InMode (INMD) Q3 2025 Earnings Call Transcript

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Date

Wednesday, Nov. 5, 2025 at 8:30 a.m. ET

Call participants

Chairman and Chief Executive Officer — Moshe Mizrahi

Chief Technology Officer and Co-Founder — Dr. Michael Krindle

Chief Financial Officer — Yair Malca

Vice President of Finance — Rafael Lichemann

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Risks

Gross margins decline — Yair Malca stated, "GAAP and non-GAAP gross margins in Q3 were 78%, down from 82% reported in Q3 2024," citing the anticipated impact of tariffs as a direct driver.

Reduced operating profitability — GAAP operating margin dropped to 22% in Q3 2025 from 37% in Q3 2024, and non-GAAP operating margin fell to 25% in Q3 2025 from 40% in Q3 2024.

Lower net income — GAAP net income was $21.8 million in Q3 2025, down from $50.9 million in Q3 2024, and non-GAAP net income was $24.5 million in Q3 2025, down from $54.9 million in Q3 2024.

Guidance caution — Yair Malca commented, "We would want to be somewhat conservative when we go into next year because of all the uncertainties," signaling management's wariness about the near-term outlook.

Takeaways

Revenue -- $93.2 million, compared to $130.2 million, with prior-year sales including $31.9 million in preorder activity.

Consumables and service revenue -- $19.9 million, increasing 26% year-over-year, primarily driven by markets outside the U.S.

Minimally invasive platforms -- Represented 75% of total revenues this quarter, highlighting product mix concentration.

International sales -- $40 million, or 43% of total revenue, up 10% year-over-year, while U.S. sales stood at $53.2 million.

Gross margins -- 78% on both GAAP and non-GAAP basis, down from 82%, due to expected tariff effects.

Operating expenses -- GAAP operating expenses of $51.4 million, an 11% decrease, and non-GAAP operating expenses of $49.1 million, down 10% year-over-year.

GAAP diluted EPS -- $0.34, compared to $0.65; non-GAAP diluted EPS at $0.38, compared to $0.70.

Share-based compensation -- $2.7 million, down from $3.9 million.

Cash position -- $532.3 million in cash, marketable securities, and deposits as of quarter-end.

Operating cash flow -- $24.5 million generated in the quarter.

Full-year 2025 guidance -- Revenue expected between $365 million-$375 million, non-GAAP gross margins of 78%-80%, non-GAAP operating income of $93 million-$98 million, and non-GAAP EPS of $1.55-$1.59.

Argentina subsidiary launch -- New direct operation established to support Latin American distribution and drive regional revenue beginning in 2025.

Thailand expansion -- Local sales team being built to capitalize on market development following recent subsidiary opening.

Leadership addition -- Michael Dennison appointed President of North America as part of organizational restructuring, consolidating U.S. and Canada under unified management.

Men's wellness platform commercialization -- Full commercial rollout held during the quarter, with revenue contribution expected late this year.

Ophthalmology strategy -- Dedicated Envision sales team for optometry and ophthalmology launching in 2026; clinical studies underway to secure FDA dry eye indication, with results anticipated by late 2026.

R&D pipeline -- Two new complementary lasers in aesthetic portfolio to launch in early 2026, with product premieres scheduled at upcoming domestic and international conferences.

Disposables volume -- Approximately 230,000 one-time-use tips sold so far in 2025, spanning minimally invasive and ablative procedures.

Summary

InMode (NASDAQ:INMD) delivered quarterly financial metrics affected by a notable year-over-year contraction in both revenue and profit metrics, which management attributed in part to lower preorder sales and tariff-driven margin pressure. Structural changes included the establishment of new subsidiaries in Argentina and Thailand to increase direct market access and distribution across Latin America and Southeast Asia. The commercial debut of the men's wellness platform and a strategic restructure of North American leadership were completed as planned. Focused investment continues in ophthalmology with the dedicated Envision sales force and regulatory efforts aimed at a dry eye indication, while R&D initiatives target two new aesthetic laser products for introduction in 2026. Operational and commercial discipline preserved the cash position and operating cash flow, supporting continued investment amid management's cautious full-year guidance outlook.

Management confirmed the company maintains direct representation or distributor coverage in over 73 countries, and is currently selling in as many as 90 global markets.

"Interest rate has come down but not enough to see that trickling in a meaningful way into the financing of the capital equipment in the U.S," Yair Malca said, signaling minimal current relief for domestic capital sales from macroeconomic factors.

North America is now structured under a single leadership and management platform, with six territories in the U.S. and one for Canada all reporting to Michael Dennison.

Sales and marketing expenses decreased to $44.9 million, down from $51.9 million, consistent with reduced sales activity and operational scaling.

Planned increase in direct sales in Israel will begin in 2026, marking another incremental change in distribution strategy.

Industry glossary

Envision: InMode's specialized platform for ophthalmology applications, targeting optometrists and ophthalmologists; subject of FDA clinical protocols for dry eye indications.

Morpehus Body/Face, Ignite, BodyTite: Proprietary minimally invasive or ablative platforms offered by InMode for body and facial procedures.

Disposables: Single-use, one-time surgical handpiece tips or components sold by InMode, critical for procedure-driven recurring revenue.

Preorder sales: Advance bookings and shipments recognized in revenue prior to the underlying service or product delivery in a typical quarter.

Full Conference Call Transcript

Moshe Mizrahi: Thank you, Miri, and to everyone for joining us. With me today are Dr. Michael Krindle, our Co-Founder and Chief Technology Officer, Yair Malca, our Chief Financial Officer, and Rafael Lichemann, 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 expectations, even as we navigated a complex economic environment. Our performance this quarter reflects the strength of our diversified portfolio and the disciplined execution of our strategy. We remain focused on expanding our presence in high-growth markets and positioning the company well into the future.

This quarter, we expanded our global footprint with the opening of a new subsidiary in Argentina, an important milestone in 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 initial revenue by 2025. Following the earlier launch of our subsidiary in Thailand, we are actively building a 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's 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 key leadership additions 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 a 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.

Yair Malca: 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 distributor 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 two 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 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 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 2024. Non-GAAP diluted earnings per share was $0.38, down from $0.70 per diluted share in 2024. Share-based compensation declined to $2.7 million from $3.9 million in 2024. We ended the quarter with a strong balance sheet.

As of 09/30/2025, 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 are 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.

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

Operator: We will now begin the question and answer session. Your first question comes from Danielle Antalffy with UBS. Please go ahead.

Danielle Antalffy: Yes, good morning, guys. Thanks so much for taking the question. 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.

Yair Malca: Hey, Danielle. I think it is a little bit too early to discuss guidance for 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.

Danielle Antalffy: Oh, okay. That's totally fair. I hear you. And then just the capital equipment environment, you know, 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 comment on hearing from customers, is there increased interest now to purchase capital equipment as interest rates come down? Thanks so much.

Yair Malca: The interest rate has come down but not enough to see that trickling 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 seeing more meaningful impact and then hopefully, this will translate to additional increase in capital equipment sales. And Moshe, go ahead.

Moshe Mizrahi: No. What I wanted to say, it's not just in the United States. We don't see the light at the end of the tunnel as we got to financing capital equipment, especially medical equipment to clinics. I'm not talking about hospitals. In hospitals, it's probably different. But as far as clinics were buying capital equipment like for medical aesthetic or any other medical community, I mean, the interest rate on leasing is still very high. I know that the interest rate went down twice in the United States, half a percent. In Europe, it has not yet.

So we believe that sometime in 2026 when the U.S. will lead the reduction of interest rates, it will come up to other territories, but we don't see it yet.

Danielle Antalffy: Understood. Thank you.

Operator: Your next question comes from Matt Miksic with Barclays. Please go ahead.

Matt Miksic: Hey, thanks so much for taking the questions. I had one question on the ophthalmology initiative that you've been sort of pushing forward over the last couple of years. I ran into some of your folks at AO, and the general sentiment around the conference and around those specialties is a 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.

Moshe Mizrahi: Okay. Hi, this is Moshe. Well, let me answer your question on cover two things. One, as regards 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're making some progress with the American Optometrist Association. We have some agreement with them to do together some workshops in different states. And we started in the second quarter, we continue in the third quarter. And we have at least three events coming in the fourth quarter.

In addition to that, as far as the ophthalmologist, 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 start, we're still negotiating with the FDA. I don't want to call it negotiating. It was discussions with the FDA as regards to that protocol that we will do during the study to get the indication. We're 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 toward 2026, we will finalize the results of the study, submit to the FDA. So sometime toward 2026, we will be able to clear the indication and claim dry eye. Right now, not only in the United States, we have enough data that shows 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 works. We do have the FDA clearance for the handpiece, either the Lumecca, the IPL, or the bipolar RF, the two 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're also doctors but they are ODs, to show them the advantage. And we're making progress, and hopefully next year once we have a distinguished and separated sales team, we will show better momentum.

Matt Miksic: That's very helpful. Just one maybe zooming out for 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. 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 2026? Any color on the pipeline would be super helpful. Thanks.

Moshe Mizrahi: Well, we have some products coming that 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 two devices at IMKAS, 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 two at a time.

Matt Miksic: Very helpful. Thanks so much.

Operator: Your next question comes from Caitlin Roberts with Canaccord Genuity. Please go ahead.

Mikaela (for Caitlin Roberts): Hey guys, it's Mikaela on for Caitlin. Thanks for taking the questions. 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?

Moshe Mizrahi: Yeah. Michael has worked with us for more than ten years. And before that, he used to work for Shore, which is another major company in medical aesthetics. He is relatively young, in his 40s. Basically, before he took the President position, he was Vice President for the East Coast of the U.S., doing very well. I will say the reason why we nominated him is because 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.

And anything else that you want to know about him? I mean, he is 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, two 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 six territories and Canada is the seventh one. And they all report to Michael at that point.

Next year, we might appoint some other positions for strategic planning and others, but we want to keep the entire North America operation under one roof.

Mikaela (for Caitlin Roberts): That's great. Thanks. 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?

Moshe Mizrahi: Urology, I understand you mean the men's 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 two left and presented some clinical data that we had at that time, which was good clinical results. And now we're launching it, and every aesthetic rep can sell this device as well. We're not separating yet. We want to see what would be the results until the end of the year and the beginning of 2026, and we'll make the decision later.

Mikaela (for Caitlin Roberts): Great. Thank you.

Operator: Your next question comes from Sam Eiber with BTIG. Please go ahead.

Alex (for Sam Eiber): Hey, 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?

Moshe Mizrahi: You mean about the two subsidiaries that we opened this year?

Alex (for Sam Eiber): And just OUS in general, like what are the trends there? Like how should we think about it like the end of the year and going into 2026? Like will it be more of the same or different?

Moshe Mizrahi: Okay. If you're talking about OUS in general, currently we are selling in 88 to 90 countries. Out of which in Europe we have five subsidiaries that cover 10 countries. Italy, Spain that cover Portugal as well, Germany cover Austria as well. France is covering Belgium as well. And the UK is covering Ireland and Scotland. So these are all the West operations that we have in those countries. Something like 10 countries. In Asia, we have four countries: Australia, India, Japan, and the newly established Thailand. And we are currently not planning to, in 2025, we're 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 for managing 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, 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 two 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 a direct operation. We have not yet decided. We have several alternatives, and we're exploring several opportunities, but we're just now focusing on the last two that we established in the last six months.

Alex (for Sam Eiber): Okay. Thank you so much.

Operator: Your next question comes from Mike Matson with Needham. Please go ahead.

Joseph (for Mike Matson): Hey, Moshe, Yair. 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? Was there just large orders in the second quarter, and it's more stabilized from here out? Yes, any color there would be helpful.

Moshe Mizrahi: You mean on the non-invasive and non-ablative?

Joseph (for Mike Matson): That's correct? Yes.

Moshe Mizrahi: Okay. Let me say something before. I would say that except for one or two 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 Body Tight. What we sell non-invasive, it's what we call commodity-type products like all the other competitors. Diode laser, IPL, non-invasive RF, hands-free devices. We don't have a competitive advantage in this field. We would like it to grow because we want to be a one-stop shop for every doctor. So if the doctor needs a complementary technology to our minimally invasive and ablative, we want them to buy from us.

So this is, and currently, we're developing some new lasers, which are non-invasive. 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 non-invasive as well. I don't know if I answered your question, but I believe that I would like to add that this year, Joseph, the two new products that we added happened to be non-invasives. The CO2 that we added in the beginning of the year and then the man has that we added after. So this is the reason for the increase that you see in the non-invasive category for us.

Joseph (for Mike Matson): 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?

Moshe Mizrahi: In 2025, we sold about 230,000 disposables, which means one-time use tips either for minimally invasive or ablative.

Joseph (for Mike Matson): Okay, great. That's helpful. So it looks like a sequential increase in the quarter. Okay. Yes, that's all very helpful. Thank you very much for taking our questions.

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

Moshe Mizrahi: 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.

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

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