InMode Ltd. Q1 FY2026 Earnings Call

Good day, and welcome to InMode's First Quarter 2026 Earnings Results Conference Call. The operator provided 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. Welcome to InMode's conference 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 statements outlined in today's earnings release also pertain to this call. If you have not received a copy of the release, please go to 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 pass the call over to Moshe Mizrahy, 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 Mr. Moshe Itskovitz, our Senior VP of Finance. Following our prepared remarks, we will be available to answer your questions. We executed in line with our expectations in Q1 2026. In addition, we are seeing early signs of stabilization, particularly in the U.S., and believe that this quarter reinforces our confidence that 2026 is moving in the right direction. I would like to start by reviewing InMode's progress in North America. As you know, we brought in new leadership at the end of Q3 2025, including a new North American President and Vice President. While it's still early, the energy and cultural shift are already having a positive impact. We have transitioned from our long-standing East-West structure to a unified North American model, bringing Canada and the Gulf Coast under the same organization. This is driving better coordination and clearer accountability. We also implemented a key structure change on January 1, 2026. The Envision team, our ophthalmology and optometry sales force, now operates independently. This creates a more focused model that we believe will support stronger execution over time. March delivered particularly strong progress, reinforcing our confidence that these changes are beginning to bear fruit. That said, we are looking for sustained consistency before calling it a long-term trend. On the international market, we continued to operate in over 100 countries with most of our business driven by our direct sales to local offices and supported by distributor partnerships. Europe remains a strong region for us with solid performance and meaningful room for continued growth. In Asia, performance is more mixed, consistent with what we saw last year, though we are making progress in key markets, including China, where we see significant long-term potential. Onto laser: the Pico and the CO2 laser performed well and recently introduced platforms made a meaningful contribution to our Q1 revenue performance and are strategically important for our long-term growth. They extend the range of procedures our physicians can offer and enable combinations of treatments, which are increasingly in demand. Physicians are looking for comprehensive solutions from a single partner, and these platforms support a one-stop-shop office. They may put pressure on our gross margin, but they play a critical role in strengthening our competitive position and deepening our customer relationships. On the broader market environment, we are seeing signs of stabilization. Demand for aesthetic procedures was again pressured in the first quarter of 2026 by macroeconomic headwinds. But as we have said many times before, we believe that the demand for aesthetic procedures will not go away. It may be deferred, but it will return. Now let me turn the call over to Yair, the Chief Financial Officer, who will walk you through the financial numbers. Yair?

Thanks, Moshe, and hello, everyone. Thank you for joining us. As announced earlier this morning, I will step down as CFO and remain with the company as a consultant for the next six months to support a smooth transition. After nine years with the company, I am proud to have been part of its journey from driving growth and supporting our expansion to helping lead our transition to the public markets. It's been a privilege to work closely with our dedicated employees and build a foundation of financial discipline and transparency. Even during recent macroeconomic headwinds, the company's strong financial position and resilience have enabled us to navigate challenges, including the global pandemic, while consistently prioritizing stability and our people. As I look ahead to new endeavors, I am confident that this discipline and long-term approach will continue to guide the company's success. With that said, let's get to the Q1 results. Starting with total revenue, InMode generated $82 million in the first quarter of 2026, up 5% from $77.9 million in the same quarter last year. Growth in Q1 was led by strong performance in the U.S. market. Moving to our international operations, sales outside the U.S. totaled $38.7 million in Q1, representing 48% of total sales and an increase of 2.65% compared to Q1 of last year. Gross margin in the first quarter of 2026 was 75% on a GAAP basis compared to 78% in the first quarter of 2025. Non-GAAP gross margins were 75% in the first quarter of 2026 compared to 79% in the first quarter of 2025. In Q1 2026, our minimally invasive technology platform accounted for 77% of total revenues. To support our operations and growth, we currently have a sales team of more than 298 direct reps and 73 distributors worldwide. GAAP operating expenses in the first quarter were $51.5 million, a 13.7% increase year-over-year. GAAP sales and marketing expenses increased to $42.9 million in the first quarter compared to $39.7 million in the same period last year. The year-over-year increase was primarily driven by increased sales expenses tied to the restructuring of the North America sales organization and headcount expansion from 2025 subsidiary build-outs, along with higher commission expense in line with a stronger sales performance. Next, we look at share-based compensation, which increased to $2.7 million in the first quarter of 2026. On a non-GAAP basis, operating expenses were $47.8 million in the first quarter compared to a total of $43.1 million in the same quarter of 2025, representing an 11.1% increase. GAAP operating margin for Q1 was 12%. Non-GAAP operating margin for the first quarter of 2026 was 17% compared to 23% for the first quarter of 2025. This decrease was primarily attributable to the increase in cost of goods and, as mentioned before, the new structure of the North America sales team implemented towards the end of 2025 and subsidiary establishments in the later part of 2025. GAAP diluted earnings per share for the first quarter were $0.18 compared to $0.26 per diluted share in Q1 of 2025. Non-GAAP diluted earnings per share for this quarter were $0.25 compared to $0.31 per diluted share in the first quarter of 2025. As of March 31, 2026, the company had cash and cash equivalents, marketable securities and deposits of $537.2 million. We also returned meaningful capital to shareholders, repurchasing shares in the amount of $127.4 million during 2025 and $52.7 million year-to-date under our new 2026 repurchase program, representing 3.86 million shares this year. With this flexibility, we remain well positioned to pursue a full range of capital allocation opportunities. This quarter, InMode generated $15.4 million from operating activities. Before I turn the call back to Moshe, I'd like to reiterate our guidance for 2026: revenues between $365 million to $375 million; non-GAAP gross margin between 74% and 76%; non-GAAP income from operations between $73 million and $78 million; non-GAAP earnings per diluted share between $1.33 to $1.38. I will now turn the call back to Moshe.

Thank you, Yair. Thank you very much. Operator, we're ready for Q&A.

The operator provided instructions. The first question comes from Mike Matson with Needham.

This is Joseph on for Mike. And Yair, I wish you the best in your next ventures. Maybe just a question on the next laser launch, I believe the Erbium laser. Can you remind us of the timeline of that? Was that end of the year? And just comparing to the Pico and the CO2 laser, is this product more just filling a gap that can do a different procedure versus the Pico or CO2? Or is it maybe much more differentiated? Just wondering how we should think about that. And then, under the assumption that this launches at the end of the year, should we expect further impact to gross margin in 2027 from this increased mix of laser platforms?

Okay. You asked three questions about three different lasers. First, the laser that we introduced to the market at the beginning of this year, sometime in February, was not Erbium; it was the Pico laser. The Erbium laser is still under development. We hope to finalize the development of the Erbium, which is being developed in Israel, and get FDA clearance sometime in the next month or two. So basically, we hope that by the end of this year, we will have it cleared by the FDA, and we can introduce it to the market. Now the third laser that you mentioned, the CO2, the one that we're selling today called the Solaria, is a CO2 laser that we buy from a U.S. manufacturer with several modifications that we made and with InMode software, and we sell it quite nicely throughout the U.S.; not in Canada because they don't have Health Canada clearance to sell it there. So this product is being sold only in the U.S. At the same time, we are developing our own CO2, which will enable us to expand the market and the territories to almost everywhere, but that will take time because regulation today is a long process, mainly in Europe where you have to clear it through the MDR and not the MDD process that recently changed. Anything else about those lasers?

No, I think that's all good and clear. Appreciate that. Maybe just one more follow-up question. Just wondering how your newer direct subsidiaries, I think Thailand and Argentina were established in 2025. How have those been growing? And then could you also remind us on the timeline for China? I believe that was maybe one of the next targets for this year. So maybe just what products you're targeting to get into China and then the timeline of when that could happen?

Okay, let's start with Argentina. Argentina was established late 2025. It took us some time, about two months, to get all the clearances from the regulatory body in Argentina under our name in our subsidiary. Now everything is almost ready. We have an office. We have one or two salespeople. We have a clinical trainer. We have a manager. And hopefully, in Q2 2026, we will see some results. Until now, it was more like a setup, organizing all the regulatory clearances. Hopefully, Q2 this year they will start delivering sales as well. Argentina is not a very big country compared to Brazil and others, but we believe that there is a market there. There have been major changes in the macroeconomics in Argentina recently, and we felt that this is the best time to establish a subsidiary there and go direct. Regarding China, we continue to work in the medical field with our distributors. But we have decided — I don't know if everybody knows — during COVID we established a company in Guangzhou, which was effectively dormant until today. We decided to use this company, which is fully owned by us, to become the spa and cosmetic arm of InMode in China. We hired a manager who is well acquainted with the spa and cosmetic sector in China, and we're developing special products to distinguish the product line from the medical side in order to penetrate this segment of the market in China. But it's not in full operation yet.

The operator provided instructions. Our next question comes from Matt Miksic with Barclays.

So, on ophthalmology, I was wondering if you could — and I've been hopping around a few calls, so apologies if it's already been covered — but maybe an update on how the U.S. sales reorganization and management structure is driving that growth, what your plans are there, maybe what some of the early results you've seen there and some of the upcoming milestones? And I have one quick follow-up.

Yes. Well, I'm sure everybody knows that we have a platform called Envision for ophthalmology and optometry. By the way, 95% of the customers are not ophthalmologists; they are more optometrists, who are doing treatment to relieve dry eye. We're working on a study for the FDA to get clearance. Therefore, right now, we don't market it under dry eye treatment, but rather under what we have clearance for, which is increased blood circulation and building some collagen, which we know also helps for dry eye. The team is 30 salespeople and a manager. The manager is a director level and reports to the President of North America. It's part of the North American team. It's not totally a separate company or even a separate division. They cover the entire U.S. They are not territory-based; they cover the entire U.S. and also support sales of Envision in Canada. This is the first time that we separate the product and the first quarter that we have a special team selling one product from our portfolio. We hope that this model will be successful because we might do it on other products as well in the future. But I believe it's very early to judge. It's only three months. So far, it seems like the concept is working. Although to be responsible for the entire U.S. and Canada with 30 people is a large territory, we did it. We'll see the results throughout the year, and then we'll decide if it's successful or not.

That's great. And just a question on — and again, I'll make the same apology if you've covered this — the plans to repurchase shares, use of cash. You've done a good job of putting that cash back to work, giving back to shareholders as volumes were slowing and the market was kind of troughing here. How does that strategy play out this year? How are you thinking about capital allocation at this point?

So this is Yair. We started — as you know, we announced a buyback plan earlier this year, and we started executing on that. So far, we purchased over $3.8 million under that plan.

Eight million shares.

And eight million shares, sorry — 3.8 million shares under the plan, and we continue to — we plan to continue to execute on the plan. Other than that, Moshe, do you want to elaborate about capital allocations? I think all the options are on the table.

Well, we always say the same thing: all options are on the table. We are allowed to repurchase up to 10% of the outstanding shares every year without paying dividend tax, and we've been doing it year-over-year. So far, I would say once we complete this 6.5 million shares, I believe it's another 2.5 million that we have to buy. We already did that six times and we returned $600 million to shareholders. If you ask me if that helped the share price, so far not. Therefore, it's always a question mark whether to continue returning capital to shareholders solely through buybacks. Now that the company continues to be a public company — and I'm sure everybody knows that 2025 was a very tough year for InMode because of the failed project that tried to sell the company without success — we remain public. I believe it's important also to the team and to the people who felt unsecured for a long time. Now we may consider other ways to allocate capital to shareholders: M&A, dividends and others. Everything is on the table and open.

The operator provided instructions. Our next question comes from Sam Eiber with BTIG.

Yair, I just want to say thank you for all the access over the years. It was really nice getting to work together. Hopping between a few calls this morning, so apologies if this question already got asked. But maybe just following back up on capital allocation and maybe diving a bit deeper in terms of appetite for M&A. I know it's something that you guys have always been considering, but haven't seen any kind of deals over the last several years. I guess is that something that, considering where markets are at this moment, you're willing to reevaluate? Or is it really more focused on still buybacks here?

Well, I cannot say more than what I did. Yes, M&A opportunities are being explored. We have nothing that is in any stage, but we're always checking because we believe that we did a lot of buybacks. If we have a candidate or a company to acquire in order to synergize either on the product level, the technology level or the customer level, we will explore. The only problem right now is private company prices are very high and, unfortunately, we were unable to acquire. We did two attempts, as you know, to buy an injectable company and to buy a toxin company, but we gave a price which was probably not acceptable for those companies' shareholders. Therefore, it was not accepted, but we will continue to try.

The operator provided instructions. Our next question comes from Michael Toomey with Jefferies.

This is Michael Toomey jumping on for Matt at Jefferies. I just had a question on what you're seeing on the broader aesthetics market, not just the energy-based side, but you mentioned the interest in injectables. How is the broader aesthetic market growing today? Any difference there between broad aesthetics, injectables, and energy-based devices?

Well, I believe that there are a few injectable companies which are public companies. If you look at them, you will realize that in 2025 they didn't do that well, but they see some signs of momentum in 2026. One thing I want to say: energy-based device companies are competing for the same marginal dollar that people have for aesthetic spend. On the other side, GLP-1 took a lot of money from this industry; a lot of money. And all the new products — boosters, biosimulators, exosomes — are also competing very toughly with energy-based devices, and some of them are doing very well. Now that means that in the future, and that's what we thought when we made offers to injectable companies, energy-based devices will need either strategic cooperation or M&A or mergers with other types of aesthetic solutions in order to be a one-stop shop. As of now, we know that several companies like Alma signed distribution agreements with fillers. I know that another Spanish company, Sinclair, actually closed all the EBD operation and stayed only with injectables. But I haven't seen yet a major company that actually offers both energy-based device treatments and all the other injectables, exosomes, biosimulators and other products that compete for the same aesthetic dollar. The reason for that is that it's two different operations: you don't have an engineer who can develop EBD and a pharma product, and you don't have a salesperson who knows how to sell an energy-based device for $100,000 and at the same time sell fillers or toxin for $100. You need two separate operations. In the future, I do believe that convergence will come.

Okay. That's great. And just a follow-up as well. With the new gross margin guidance, anything you can comment on the phasing through the year?

On the phasing, we believe it will stay around the guided range, like 74% to 75%.

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.

Okay. Thank you, everybody. Thank you for being with us today. Before I close the call, I want to thank our Chairman, Dr. Michael Anghel, who worked with us for, I would say, eight years as a Director and as Chairman. We enjoyed him very much. He is leaving, and I want to wish him success in the future. He was very helpful and contributed a lot to InMode. The second person I want to thank personally and on behalf of the company is Yair Malca, our Chief Financial Officer for nine years now — even before the IPO. He did a great job taking this company into an IPO and then maintaining everything we need to do as a public company with all the reporting, talking with investors, talking with analysts. So thank you, Yair, for everything you did for us and all the contributions you brought to this company. I wish you success in your new career. Hopefully, the war in Israel will end and everybody will go back to a normal life, including us, and we will continue to do our best.

Thank you very much.

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