Good morning, everyone. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to BrainsWay's First Quarter 2024 Financial Results Conference Call. After the speaker's remarks, there will be a question-and-answer session. Thank you, Troy Williams, Investor Relations from Life Science Advisors. You may begin your conference.

Thank you, Julie, and welcome to BrainsWay's First Quarter 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 3 months ended March 31, 2024. A copy of the press release is available on the company's Investor Relations website. Before I turn over the call 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 are all subject to risks and uncertainties, including shifting market conditions as 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 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.

Thank you, Troy. Welcome, everyone, and thank you for joining us today. I'm thrilled to report on the continued significant tailwind present throughout our entire business. As such, our outlook for the remainder of 2024 remains highly positive, and we are well-positioned to achieve the full year top line growth we anticipated, sustain the previously forecasted profitability momentum, and positive cash generation. More on that in a moment. Let me begin though with an overview of our strong results from the first quarter. Our revenue grew 37% year-over-year in the first quarter of 2024. In addition, we generated positive quarterly net income for the second consecutive quarter. Also, our gross margin improved nearly 200 basis points year-over-year, and we recorded positive adjusted EBITDA and cash flow from operations for the third consecutive quarter. Based on these excellent results and our expectations for continued strong performance throughout the remainder of the year, we are reiterating our previously provided full year 2024 revenue guidance of $37 million to $40 million. This would represent growth of 16% to 26% of the full year 2023 revenue. In addition, we continue to anticipate that our profitability momentum and positive cash generation will continue throughout 2024. As our first quarter results and future expectations would indicate, we remain confident in the upward trajectory of our overall business as well as the current market dynamics and the opportunities that lie ahead. I'd now like to take a few moments to discuss the key growth drivers behind the momentum in our business. We continue to optimize our existing commercial process, including enhancing our emphasis on larger institutional and enterprise customers that are playing an increasingly important role within the industry. We remain focused on adding our Deep TMS technology into this expanding large mental health groups and networks. As our results indicate, we continue to execute well on this strategy. Recent key agreements, including Chris collaboration with significant existing partner, Katie’s Way Plus, which provides comprehensive mental health services tailored to the unique needs of active-duty military members, veterans and their families. Katie’s Way Plus recently ordered an additional 18 Deep TMS systems and will now have an extensive network of approximately 40 devices. Moreover, our international business continued to perform extremely well. To this end, we recently installed our 11 Deep TMS system in Israel, a geography in which we have steadily increased our presence following the recent increase in reimbursement rates there. Looking more closely at the first quarter, we shipped a net total of 57 systems. Moreover, demand for the OCD treatment indication continued to grow as we shipped 31 OCD coils as add-on helmets to certain new and existing systems. Approximately 50% of our total installed base now includes OCD treatment capability. In addition, we continue to be supported by an extremely strong balance sheet with $47.8 million in cash and no debt as of March 31, 2024. In order to further leverage the favorable current commercial trends in our business, we recently appointed Honny Groen as Vice President of International Sales. Honny has over 3 decades of experience in global sales and business development within the medical technology industry, and she will be instrumental in advancing our efforts to expand BrainsWay's global footprint. We are also focused on driving more long-term growth. This is being accomplished by expanding the clinical and real-world evidence in support of Deep TMS in multiple large disease areas. The most recent example of this are the previously discussed Human Neuroscience publication on Parkinson's disease and the Journal of Clinical Medicine publication on late-life depression. Moreover, we recently appointed Dr. Gilad Masseur as Chief Technology Officer. Dr. Masseur has over 20 years of experience in the medical device industry with a substantial portion of that time spent leading R&D efforts at multiple companies. He will be critical in our efforts to expand BrainsWay's innovative technology platform. In closing, we believe BrainsWay remains in the strongest position it has ever been in. We have started 2024 just as we ended last year, which is with strong tailwinds throughout all aspects of our business. To reiterate, we continue to forecast top-line growth for full year 2024 of 16% to 26% over full year 2023 revenue. In addition, looking even further ahead, we remain focused on driving and leading innovation within the TMS industry and are highly confident in our ability to continue capturing significant market share, both in the U.S. and internationally. With that, I will now turn the call over to Ido for his review of our first quarter 2024 financial results. Ido?

Thank you, Hadar. Revenue for the first quarter of 2024 was $9.1 million, a 37% increase compared to the prior year period revenue of $6.6 million. We placed 57 Deep TMS systems in the first quarter. Our total installed base was 1,158 systems as of March 31, 2024, compared to 932 systems at the same point in the prior year. Gross profit for the first quarter of 2024 was $6.8 million or a 75% gross margin. This is compared to $4.8 million or a 73% gross margin during the prior year period. Moving on to operating expenses. For the first quarter of 2024, sales and marketing expenses were $3.8 million compared to $4.9 million for the first quarter of 2023. Research and development expenses were $1.6 million for the first quarter of 2024 compared to $1.8 million for the first quarter of 2023. General and administrative expenses for the first quarter of 2024 were $1.3 million compared to $1.8 million for the first quarter of 2023. Total operating expenses for the first quarter of 2024 were $6.7 million compared to $8.5 million, or a 21% decrease from the prior year period. Operating profit for the first quarter was $100,000 compared to an operating loss of $3.7 million for the same period in 2023. Adjusted EBITDA was $700,000, representing our third consecutive quarter of positive adjusted EBITDA and compared to a loss of $2.9 million for the first quarter of 2023. For the first quarter ended March 31, 2024, we achieved net income of $100,000 compared to a net loss of $2.4 million in the same period of 2023. We ended the first quarter with cash, cash equivalents and short-term deposits of $47.8 million and no debt, as compared to $46.2 million at December 31, 2023. This was the third consecutive quarter during which positive cash flow was achieved. Based on our robust pipeline, U.S. pipeline and continued momentum internationally, we are reiterating our full year 2024 revenue guidance in the range of $37 million to $40 million and anticipate positive cash flow and profitability momentum throughout the year. This concludes our prepared remarks. I will now ask the operator to please open up the call for questions.

Your first question comes from Jeff Cohen from Ladenburg. Please go ahead.

So firstly, any color you can provide on territory expansion or geography expansion, at least in the U.S. and abroad, perhaps some new territories in new areas of focus?

In the U.S., we've got broad coverage in almost all the relevant states. The most growing states continue to see great potential and strong momentum in the U.S. marketplace with an increasing demand. Internationally, we're seeing some very good momentum in the Far East with Korea, Taiwan, and India that are currently the main drivers in the international market, but also in some areas in Europe as well.

Got it. Okay. That's helpful. And then what might we expect over the course of 2024 on the study front as far as anything neuro-related such as Parkinson's, epilepsy, stroke, et cetera?

So we're actively selling those indications internationally. We've got the CE Mark for the neuro indications. And the demand is looking very good so far. We continue to collect the data and will engage in some kind of internal discussion regarding what should be our next indication in the pipeline at the beginning of next year, either on the addiction or on the neuro side, probably at the beginning of next year.

Got it. Okay. And then regarding treatment, Hadar, as far as some of the shorter courses that have been talked about and offered as far as Theta Burst, a handful of treatments versus the traditional treatment. Any color there on news U.S. or internationally as far as some of the treatment paradigms as far as number of sessions that our folks are receiving?

Yes. We're seeing some very interesting trends on the accelerated TMS, which is the short protocol. And we just launched a new clinical trial together with the FDA to see the benefits of this short protocol. We really believe that's going to gain some very good demand and momentum. But definitely, the ability to shorten the amount of days that you need to come to the clinic is crucial for the industry. We're hoping to achieve some good progress this year with this clinical trial.

Got it. And then I guess, lastly, maybe for Ido. Could you talk about the top line and guidance? I know you're reaffirming the $37 million to $40 million for the calendar year 2024. Any additional information you can provide on perhaps the cadence of those revenues or how they may play out for the year?

I can say that we are still, as Hadar mentioned in his remarks, confident with our guidance of the range of $37 million to $40 million. Our backlog is strong, and our bookings as of Q1 were right on target as we anticipated. So we believe that this guidance we've given around the $37 million to $40 million is supported by a strong backlog and pipeline that will enable us to achieve this target.

Your next question comes from Steve Lichtman from Oppenheimer. Please go ahead.

Just on that last point relative to the pipeline. Can you talk a little bit more about the composition of that? Are you continuing to see significant interest from large customers? Anything notable on that front in terms of what the makeup of that pipeline looks like for you?

Yes. I would say it's kind of a mix of both private offices. But the main growth is coming from growing small and mid-sized accounts and also from current customers. The business model works for them; they're seeing good results, and they want to continue to grow. So I would say it's a mix of current and new customers split between private psychiatrists and growing enterprise accounts.

Got it. What are the next steps on smoking? I know you've talked in the past about partnership potential. Can you update us there on that indication?

Yes. We are having an active dialogue with potentially interested parties on a consistent basis. It's still under kind of a business development scenario. So there is no timeline related to the establishment of a formal agreement yet, but there is a lot of interest in the addiction space overall, not just on smoking. We are actively speaking with some interested parties about taking this addiction indication and distributing the product and hopefully doing something significant before the end of the year.

Got it. I apologize if you did mention this, but on the Deep TMS 360, how are things proceeding there in terms of that study evaluation of that new system?

So we just launched TMS 360; that's the next generation of our product. We are testing two aspects: one, the feasibility of the technology, and the second aspect is the clinical efficacy from this technology. We just launched it, and we have enrolled a few patients in two different studies. It's too early for us to tell, but based on some feasibility studies that we have conducted internally, we expect to see some good results. More information will be shared as we have it.

And then just lastly, you've obviously been very disciplined on spend. Given the gross margin coming in solidly here, any thought about sort of reinvesting at a higher level to even further drive revenue growth? How are you thinking about that balance as you look ahead?

Yes. Listen, I believe that we should invest the money back into the growth of our operation, and that's exactly what we're going to do. We're going to increase the number of the sales team, implement more marketing initiatives, and also increase some of the investment in R&D and clinical efforts. However, all future investments will be aligned with our forecasted growth to maintain our profitability momentum and to be very sensitive to the positive cash flow generation.

Your next question comes from Ram Selvaraju from H.C. Wainwright.

A couple of metrics-related questions, if I may. Could you give us a sense of what you expect the total installed base to be at the end of 2024? As I recall, at the end of 2023, it was 1,100. I think you reported an end number of 1,158 for Q1. But if you could just give us a sense of what your expectations are in terms of how they conform to your financial guidance, that would be helpful.

So I think we are increasing the footprint of our installed base in a very steady way, roughly between 50 to 60 units every quarter. That should lead you to the total number of installed base by the end of the year.

Okay. That's helpful. Secondly, there have been some notable changes with respect to the nature of the prior authorizations, particularly in the MDD space. I'm talking in particular about the number of failed medications that are required before Deep TMS is deployed. Can you give us a sense of how that continues to evolve and whether you expect ultimately the standard to become more like failure of only 1 or 2 medications as opposed to 3 or 4?

So I would say that today the standard is much closer to failing in 1 or 2 medications than in 3 or 4. There has definitely been an improvement in this segment in the last 2 years. The main reason is the efficacy rates of the Deep TMS technology and the fact that this treatment saves money for the insurance companies. In terms of the way the market is evolving, we are starting to see some more standardization of allowing one failure before you can receive Deep TMS treatment. Overall, insurance for our technologies has seen favorable trends, and I don't see it changing unless there is something radical, but we are gaining great momentum and very good feedback on our treatment.

With respect to the comments you've previously made about Katie's Way and BrainsWay's relationship to Katie's Way. Can you comment on, a, what level of customer Katie's Way is? Is it among the biggest customers you have? I would imagine that that's the case, but I just wanted to get some clarity on that. And secondly, how many other entities like Katie's Way are there that you might be able to forge similar relationships with, particularly as this pertains to providing mental health care to active duty military personnel?

Yes. Katie's Way is, I believe, a wonderful story in our strategy. They started as a small to midsized mental health network with a few sites. In the last 2 to 3 years, due to our collaboration, we have managed to grow together. Today, they have an installed base of 40 systems. I believe they will continue to grow. The business model seems to be working very well. For your other question, there are many other entities like Katie's Way in our pipeline. Due to the market demand and treatment effectiveness, I see no reason why we can't grow more mental health companies like Katie's Way. Katie's Way is unique because they are targeted at the active military and veterans space. However, I observe many similar entities in our customer base that have the potential to expand.

And then lastly, with respect to your now growing cash position, strong balance sheet, and expectations for continued profitability and sales momentum. Can you give us a sense of how you're thinking strategically about efficient deployment of that capital to continue to add value and if you are considering the possibility of in-licensing or acquiring additional potentially complementary technologies at this time?

Yes. In terms of the use of proceeds, we intend to grow the business organically and inorganically. We are looking for the right opportunities that will help us to grow the business significantly. There are exciting opportunities in the addiction space, neuro space, and several other areas. However, it's too early for me to share specifics, but we are definitely exploring opportunities that will help us expand our business.

And there are no further questions at this time. I will turn the call back over to Hadar, CEO for closing remarks.

Great. Thank you so much. I would like to thank all investors, analysts, and other participants for your interest in BrainsWay. With that, please enjoy the rest of your day. Have a good day.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect your lines. Thank you.