Earnings Call Transcript - INMD Q1 2025

Operator, Operator

Good day, and welcome to InMode's First Quarter 2025 Earnings Results Conference Call. All participants will be in listen-only mode. 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.

Miri Segal, CEO of MS-IR

Thank you, operator, and to everyone for joining us today. Welcome to InMode's first quarter 2025 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 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 these 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, CEO. Moshe, please go ahead.

Moshe Mizrahy, CEO

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 medical aesthetic market continues to face headwinds driven primarily by ongoing macroeconomic uncertainty and soft consumer demand. Effective elective procedures, particularly in the surgical aesthetic segment, are often among the first to be pulled back during periods of economic slowdown. And we have seen that reflected in recent quarters across the last two years. Patients are deferring treatment and providers are taking a more cautious approach to capital investment. Despite this near-term pressure, we remain confident in the fundamentals of our business. Consumer interest in minimally invasive aesthetic procedures continues to be solid, and we believe demand will return as macro conditions stabilize and consumer confidence starts to grow. We made a deliberate decision as a company not to cut corners, not to reduce our workforce, and to remain committed to leading the industry, because we believe that when the market rebounds and demand returns, we will be ready to lead and benefit as we have in the past following major challenges. Later this year, we plan to unveil a new platform designed for the wellness market, further expanding the depth of our product portfolio. This addition reflects our ongoing strategy to diversify our offering and tap into a new segment. We look forward to sharing more details as we approach the official launch. As stated in the press release, we are proud to have completed our fifth share purchase program this month. Earlier this month, we purchased 6.95 million shares totaling $127 million. In fact, over the past 12 months alone, we have returned more than $412 million to shareholders through share purchases representing approximately 27% of our total capital. Finally, despite the macroeconomic challenges, we believe InMode is uniquely positioned to lead through this cycle with a strong balance sheet, a diversified portfolio, and industry-leading technology. Now, I would like to turn the call over to Yair, our Chief Financial Officer. Yair?

Yair Malca, CFO

Thanks, Moshe, and hello everyone. Thank you for joining us. I would like to review our Q1 2025 financial results in more detail. Starting with total revenue, InMode generated $77.9 million in the first quarter of 2025, a decrease of 3% compared to the first quarter of last year. Gross margin was 78% on a GAAP basis, sorry, compared to 80% in Q1 2024. Non-GAAP gross margins were 79% in the first quarter compared to 80% in Q1 of 2024. In Q1, our minimally invasive platforms accounted for 87% of total revenues. Moving to our international operations, first quarter sales outside of the U.S. accounted for $38 million or 49% of sales, a 1% increase compared to Q1 last year. In Q1, Europe was the largest revenue contributor from outside the U.S. and reached a record sales number. To support our operations and growth, we currently have a sales team of more than 281 direct reps across 76 countries through distributors worldwide. GAAP operating expenses in the first quarter were $45.3 million, a 1% decrease year-over-year. Sales and marketing expenses decreased to $39.7 million in the first quarter compared to $39.8 million in the same period last year. Share-based compensation decreased to approximately $2.5 million in the first quarter of 2025. On a non-GAAP basis, operating expenses were $43.1 million in the quarter compared to $42.3 million in the same quarter of 2024, representing a 2% increase. GAAP operating margin in Q1 was 20% compared to 23% in the first quarter of 2024, while non-GAAP operating margin in the first quarter was 23% compared to 27% in the first quarter of 2024. GAAP diluted earnings per share for the first quarter were $0.26 compared to $0.28 per diluted share in Q1 of 2024. Non-GAAP diluted earnings per share for this quarter were $0.31 compared to $0.32 per diluted share in the first quarter of 2024. Once again, we ended the quarter with a strong balance sheet. As of March 31, 2025, the company had cash and cash equivalents, marketable securities, and deposits of $512.9 million. This quarter, InMode generated $14 million from operating activities. As Moshe mentioned, we remain committed to delivering shareholder value and returning capital to our investors in a disciplined and strategic manner. In addition, we continue to evaluate our revenues for capital allocation including additional share repurchases, potential dividends, and strategic M&A. Our approach remains focused on maximizing long-term shareholder value while preserving the strength and flexibility of our balance sheet. Looking ahead, we expect a growing share of international markets along with continued pressure in the U.S. market to reduce operating margins by around 4% to 5%. In addition, with U.S. tariffs at their current levels of 10%, we anticipate an impact of approximately 2% to 3% on our gross margins. As this situation remains fluid, we are closely monitoring developments and will adjust our forecast and strategy accordingly. Before I turn the call back to Moshe, I would like to reiterate our guidance for 2025. Revenues between $395 million and $405 million. Non-GAAP gross margins between 78% and 80% compared to previous guidance of 80% to 82%. Non-GAAP income from operations between $101 million and $106 million compared to previous guidance of $130 million to $135 million. Non-GAAP earnings per diluted share between $1.64 and $1.68 compared to previous guidance of $1.95 to $1.99. I will now turn the call back to Moshe.

Moshe Mizrahy, CEO

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

Operator, Operator

Thank you. We will now begin the question-and-answer session. Our first question comes from Matt Miksic from Barclays. Please go ahead.

Matt Miksic, Analyst

Hey, thanks. Good morning. Thanks for taking the questions. So maybe, Yair, just a follow-up on this dynamic of mix. If you could kind of walk through when that started to happen more significantly and how mix across some of your product lines or capital versus consumable is playing into the new guide? And then I have one quick follow-up.

Yair Malca, CFO

Well, I mean the slowdown that we're experiencing today started in the middle of 2023. It's already almost seven quarters. It started in the middle of 2023, when interest rates and inflation went up significantly in the United States. At that time, the leasing companies raised the interest rate on leasing packages, which as you know is the main financing method for physicians, doctors, and clinicians to buy our equipment. The typical interest rate was around 6%, 7% on five-year lease packages, and it went up to approximately 14% and 15%, which started the slowdown in capital equipment expenditures, capital equipment purchasing by doctors. In addition to that, consumer confidence went down in the last year, which also brought down the number of procedures performed by doctors. We must remember that minimally invasive procedures are not the typical $300 to $400 laser treatment for hair removal or skin rejuvenation. It can cost thousands of dollars. I mean, if it's a minimally invasive RFAL, it could cost $4,000 to $5,000 per treatment, and also on the Morpheus, it's not $300 or $400. So people, when a slowdown occurs, they try to postpone treatments that are relatively expensive in the medical aesthetic, especially in the aesthetic surgical segment, and that did not help us. I can give you the numbers. In Q1, we sold 237,000 disposables. Each disposable is probably in most cases designed for a single treatment, but in places like Latin America, they may use it twice; it's basically built for single use per treatment. At the same time, two years ago, at the end of the first quarter of 2023, we sold approximately 240,000 disposables. But we need to take into consideration that during the last two years we have installed another close to 9,000 systems worldwide. That means that the average treatment per doctor went down around, I would say, 30% or 30% fewer treatments, which are minimally invasive. And this is the main factor that determines how many patients are considering doing minimally invasive treatments. As of now, I have to say based on the first quarter and the start of the second quarter, we don't see the light at the end of the tunnel. We don't see the slowdown coming with some new momentum. We have introduced two new platforms to the market, and usually when we introduce new systems to the market, we see new momentum. Currently, since 2024, we do not see that yet. And that's the main reason why we are selling less in the first quarter compared to 2024, even with more than 80% versus 79%, because in the first quarter of 2024, if everybody remembers, we had the war in Israel, which suspended some of the sales. This quarter we did not have any obstacles like a war to slow us down. So the first quarter of 2025 is not a good quarter for us, I have to say, but we are confident that once everything gets back to normal, we will close the gap and return to normal growth.

Matt Miksic, Analyst

Got it. Now so the mix has been going on for a while, but now we're seeing kind of the pull-through of utilization mix that accounts for the additional comments in the press release and the guide. Is that a fair way to assume that?

Yair Malca, CFO

Yes. If you consider the geographic mix, traditionally the U.S. accounted for 62% to 63% of total revenue in 2023 and 2024, but this quarter it dropped to nearly 50%. So we definitely acknowledge that.

Moshe Mizrahy, CEO

Right now we use this 50%, but again, that's percentage-wise, the decline or the decrease in the U.S. market was much more than the rest of the world.

Yair Malca, CFO

The headwinds that we're experiencing in the U.S. are stronger, mainly because we are also one of the largest players in the U.S.

Matt Miksic, Analyst

That's very helpful color. Just one quick follow-up on the guide as well as the shortfall in Q1 that you've announced several weeks ago, you've been holding the guide, so where in that dynamic do you expect, is it stronger trends OUS or is it some delayed deals in the U.S. that will come back that gets you to holding the guidance?

Moshe Mizrahy, CEO

We try to be optimistic and think about the U.S. market that probably will come back during 2024, but to be honest with you, it all depends on how the results on Q2 will look like. If the results on Q2 are not significantly higher than what we saw on Q1, we will have to lower the guidance, because Q2 is much stronger than Q1 on a seasonal basis, because Q1 after Q4 is always a slower quarter and Q2 is the strongest quarter. So we're waiting to see how Q2 will recover if I can say so from Q1. Usually, if demand is anticipated for Q2, we will maintain the guidance. If not, we'll have to adjust it.

Matt Miksic, Analyst

Understood. Thank you so much.

Operator, Operator

Thank you. Your next question comes from Danielle Antalffy from UBS. Please go ahead.

Danielle Antalffy, Analyst

Hey, good morning. Good morning, guys. Thanks so much for taking the question. Moshe, just to follow-up on what you just said. Thanks for all the color you're giving. I mean, I guess, how much, and it's hard, there's no real precedent for the current times that we're in? But I'm thinking less specifically about the tariff impact and things like that, but how you guys are factoring in things like potential, like a weaker economic environment going forward, or would that cause incremental downside pressure to the guidance? So thinking about will we or won't we go into a recession? I know these are all questions right now, but a little bit more color on the macro environment that you're factoring into the guidance reiteration there would be helpful. Thank you.

Moshe Mizrahy, CEO

Well, I believe we said that. I mean, we gave the guidance of $400 million or $395 million to $405 million at the beginning of the year, when we knew that the first quarter is usually 20% of the year. So, I mean, 20% of $400 million is $80 million, we did less. We did $77 million or $78 million, not far from the basic guidance, which helps us to guide the year. Typically, Q2 should be much higher. I would say at least 25% or more of Q1, because Q2 usually represents 25% or 26% up to 27% of the total year. And then Q3 is also a very slow one, and Q4 is the strongest. So based on that and the $77 million or $78 million that we did, we decided not to lower the guidance at this stage, hoping that we will see some momentum in the next two quarters. If again, I will say it again, if that does not happen in Q2, it means that Q2 will not be 25% to 26% of the year, meaning that it will not be above $100 million. We will need to lower the guidance.

Danielle Antalffy, Analyst

Okay, got it. That's helpful. And just to confirm, I mean, I know you guys are still investing in the business, but how and I appreciate that strategy very much. But how are you keeping the sales force engaged at a time like this? And maybe you could talk a little bit about how you did it during COVID and what practices you're implementing here from your learnings then? Thanks so much.

Moshe Mizrahy, CEO

Well, the COVID time was totally different. In the COVID time we stopped selling for almost four months, zero. And we took the risk because we said we are a growing company. We have a good sales team in the U.S., in Canada, and in some countries where we started subsidiaries. And we said we don't want to lose them, because it's all about people. I mean this is the talent. If we lose them like the other company, fire them and hire them when COVID disappears, we might not be able to find them again. They will go to other competitors. So we kept everybody and took the risk. It cost us about $10 million a year. This time we're still selling. We did not stop selling; there was a slowdown of course. It's more than 25% of what we sold per quarter in 2023 and the profit went down 50%, not 25%, from $45 million a quarter to $21 million a quarter on a non-GAAP basis. That's a lot. But again, we have the resources and we made the same decision; although it's helping our profitability, we can cut costs by firing some of the engineers and stop developing or get rid of some of their salespeople. This type of behavior or this type of philosophy communicates something that is not solid to the company, because we're not a capital-intensive company, we're a people-intensive company. That’s where we’re taking the risk. Maybe it will hurt our profitability, but in the future if everything goes well, we hope to reap the benefits when the market recovers. I said if nobody knows when and how long it will take, we don't know and we don't want to predict. We made the mistakes in the middle of 2024 and we said that in the second half of 2024 the markets will go back to normal, and it didn't. And we have to deal with the statement we made and we will not do it again. So right now, we continue to develop, we bring new products to the market, and in 2025 we have probably another product to bring to the market, but in 2026 we'll see. One thing I want to say, in 2024, in the middle of the slowdown, we decided to bring two new products to the market, the Ignite and the OptimasMAX. Now this is because we thought maybe the market will get better. Under normal circumstances, it is not smart to bring your best product to the market to launch them during a slowdown, but we did it. We hope that when the market recovers, we will do better again.

Danielle Antalffy, Analyst

Got you. Thank you for that.

Operator, Operator

Thank you. Our next question comes from Matt Taylor from Jefferies. Please go ahead.

Matt Taylor, Analyst

Hi. Thank you for taking the question. Sorry. So I did want to follow-up on the guidance question and just ask more specifically what you're expecting for Q2 and the phasing for the rest of the year? And then my other question was on the tariffs, if you could be specific about where the impact is coming from in your tariff guidance?

Moshe Mizrahy, CEO

Okay. Let's start with the guidance. We gave $400 million at the beginning of the year. This is based on $80 million in the first quarter or $81 million or $82 million, something similar to that, around $102 million in the second quarter. That's about, let's say, $185 million, and then another, I would say, $90 million in the third quarter and the rest in the fourth quarter. That's a typical seasonality of this industry. I know in 2024 it did not happen. In 2023, the third and fourth quarters behaved differently because that was the start of the slowdown. But if you look years ago, that was the typical seasonality for the medical aesthetic market. And that's how we came up with the $400 million because we wanted to stabilize the company. We did about close to $400 million in 2024, and we would like to repeat that number, and if the market behaves differently, then we'll see what to do. If Q1 and Q2 are $90 million or $95 million, we will lower the guidance, absolutely. There's no other way, because we know what can happen in the third and fourth quarters. The third quarter is usually slow because it's summertime; people don't do aesthetic procedures in the summer because they go on vacation and spend their money there. And the fourth quarter is the strongest one, but unfortunately, in Q4 2024, it was a very slow down quarter, and that did not help us. So this is how we calculate the guidance. And this is why we said, okay, we are less than what we anticipated in Q2. Are we going to lower the market, the target, the guidance, or not? And finally, we decided not to and wait for the second quarter. That was an internal decision we made as management. Now regarding the tariff, the regional tariff that was imposed on Israel was 17%. Now the business in the U.S. is 50%, and the transfer price on which we pay the tariffs, let's say it's also 50%. So the tariff affects 17% on 25%. You basically divide the tariff, the 17% by four. That's a rough calculation. If it's 17%, it should be above a 4% effect on the gross margin and also on the bottom line. If it remains at 17% and will be 10% like it is now due to the relief decided by the President of the U.S. for three months, then if it's 10%, then it's between 2% to 3%, around 2.5% on the gross margin and bottom line. That's how we calculated that. But I want to tell you that everybody is confused, including the customs authorities in the United States. They don't know what to do. What is included in software and non-software? If we buy components from the U.S., can we deduct them or not? There's uncertainty. Right now, nobody is providing explanations, no rules published. We've discussed that with our PwC auditors, and they don't know. Everybody is guessing. So we need to wait and see for some clarification.

Matt Taylor, Analyst

Thanks for that. Maybe just one follow-up on the guidance. So it sounds like you're really forecasting the market and the seasonality. I didn't hear anything about the new products. I mean, do you expect the new products to contribute to the guidance? How important are they to getting to the $400 million?

Moshe Mizrahy, CEO

Well, Matt, we're bringing new products almost every year. And always the new products are, if we have, like for example, like now ten platforms, the new products are, if we have ten platforms, new products are not 20% of the total; the new products are more than 20%. Therefore, the old products are less than 20%. And when we're growing, the new products are the winners and contribute to some of the growth. When we're not growing, we cannot anticipate that the new product will bring more than the average.

Operator, Operator

Thank you. Your next question comes from Caitlin Cronin from Canaccord Genuity. Please go ahead.

Caitlin Cronin, Analyst

Hi. Thank you for the question. I understand that you have indicated expectations to make.

Moshe Mizrahy, CEO

So you're talking about the guidance on the operating profit, which guidance are you talking about?

Caitlin Cronin, Analyst

Yes, they're just the operating expenses. I think you guys have talked about maintaining not letting anyone go and maintaining sales and marketing type spend, but I mean any kind of updated expectations there?

Moshe Mizrahy, CEO

So the expectation is that we'll continue to keep all the investment we plan to do at the beginning of the year, including expansion of the teams whether in the U.S. or internationally where we open new subsidiaries. This results in additional costs, and as I mentioned regarding the change in the geographical revenue mix with the U.S. experiencing tougher headwinds than the rest of the world that would have additional impact on the profitability at the end of the day. And we are expecting roughly around a 4% to 5% impact only from that.

Caitlin Cronin, Analyst

Got it. Okay. And then any updates on the U.S. management structure, Moshe? I know you've been acting as the interim President of U.S. North America. Any updates there?

Moshe Mizrahy, CEO

We have not yet hired a new President for the U.S. or nominated somebody from within. I'm still the active, I would say, or acting President of the U.S. I spend every month for a few days in the U.S., and I'm doing it from Israel most of the time, but every month I'm in the U.S. with the team.

Operator, Operator

Thank you. Your next question comes from Mike Matson from Needham and Co. Please go ahead.

Mike Matson, Analyst

Yes, thanks. Just one on the tariffs. So it sounds like you're not assuming you're able to offset the tariff impact with price increases. So is that right? And I guess why not try to pass some of that through to your customers?

Moshe Mizrahy, CEO

Well, we thought about it, Mike, but in a tough market like this, if we go to the market and raise prices just because we're an Israeli company and not an American company and explain that this is an import product and we have to raise prices, it will not help us. You are not raising prices in a market where the trend is down or where the slowdown is strong, especially when the interest rate on the leasing packages are high and the monthly payments go up because of the interest rate. So we have decided not to raise prices because of the tariff. The only time we raise prices is when we bring new products to the market, and if the new product is an upgrade for something similar that we sold, then maybe we can raise the price a little bit. But other than that, from the marketing and commercial point of view, I don't think it will be smart for InMode to go to the market and raise prices by 10%. No, it will not help.

Mike Matson, Analyst

Okay. Yes, that makes sense. And then just the wellness platform that you mentioned, when do you expect to launch that until you see signs of improvement in the market?

Moshe Mizrahy, CEO

The two wellness products that we have today, one is the Empower for women's health for SUI and some vaginal treatment, and the other one is Envision for dry eye and periorbital treatment. We are still selling both of them. And by the way, we started to hire specific salespeople just for these products, which are more medical than the others. But what we see now is that the revenue from these products went down the same 20% or 25% that we are experiencing across the entire portfolio.

Mike Matson, Analyst

Yes, sorry, Moshe, I was referring to the wellness platform that you mentioned earlier in the call that you were going to have a new platform for wellness.

Moshe Mizrahy, CEO

Yes, yes. Sorry, I did not clarify. We have a new product that we will bring to the market for wellness, and we will release the indication once we finish the clinical study. It's going to be later this year. We are not sure exactly when we will announce it once we decide.

Operator, Operator

Thank you. The next question comes from Sam Eiber from BTIG. Please go ahead.

Sam Eiber, Analyst

Hey, good morning, everyone. Thanks for taking the questions here. Maybe I could just start with a clarifying question on the tariff impact. Is that 2% to 3% on a full year basis? So if you assume those go into effect maybe July 1, the impact will be closer to 1%? And then is that reflected in the 78% to 80% new gross margin guidance?

Moshe Mizrahy, CEO

No, we did not take it into account yet.

Yair Malca, CFO

Yes, yes and yes, yes on both. On both? Yes, on both questions. 2% to 3% on an overall assuming it remains 10%. If it goes back to 17%, we will need to get back and update the guidance. We really hope it's going to stay 10%, but no one really knows what's going on. Until the administration makes its final decisions. And yes, we did account for it in the existing guidance assuming 10% tariffs from Q2 through Q4.

Sam Eiber, Analyst

Thanks for the clarification. Thank you. And then maybe I can use my follow-up on capital allocation. It sounds like there is more to come for the rest of the year. I guess any way how you're thinking about prioritizing share repurchases, dividends, M&A, and then any more details in terms of the tax impact if you were to do an additional share repurchase program later this year?

Moshe Mizrahy, CEO

Well, I will start from your last question. We're not considering right now doing another share purchase. To take you through the history, we started to do share buybacks about 2.5 years ago. We started when the stock was around $50 to $60, and we bought already stock for $500 million, by the way, $508 million, with an average price per share of altogether all the packages or all the programs, which was about four to five programs, the price per share that we purchased was close to $20 a share, which is just to be precise $19.95. Now, actually from an investment point of view for the company, we actually invested $500 million, but it did not help with the stock price. The stock price is around $15 today. So basically it was not the best investment from the corporation point of view. I'm sure it was not the best investment from the shareholders point of view. So we need to think right now what to do. Because basically we have $500 million left. We invested $500 million for buybacks with no results and to the shareholders and to the company. If we want to do any acquisition, which we believe that's something we are considering, we don't want to be left with no cash or no money to do it. So right now, at that point after we bought 30% of the stock for $500 million, we are not considering another buyback in the near future.

Sam Eiber, Analyst

Okay, that's helpful. And then maybe I could just squeeze the last one here just because it hasn't been asked yet about Europe and what you're seeing there.

Moshe Mizrahy, CEO

The management of our subsidiaries has worked well, and Europe is now performing better than the U.S. per capita or per country. Prices in Europe are less than in the U.S. per system, and you have to take into consideration that in many countries in Europe we still sell through distributors. So we are recognizing only the transfer price; we are not recognizing the full price. We just, in Europe, the credit is getting tighter because there were signs of inflation in certain countries, which will not help us. Therefore, we had to open a pool with the leasing company to help share the risk with them, like we do in the United States, the pool we opened in 2024 for 6%, and we'll see. Hopefully it will help maintain some kind of growth in Europe and with the distributors and subsidiaries.

Sam Eiber, Analyst

Great. Thanks for taking the questions, sir.

Operator, Operator

Thank you. Your next question comes from Dane Reinhardt from Baird. Please go ahead.

Dane Reinhardt, Analyst

Hey, guys. Thanks for the time here. Maybe a follow-up on I think Mike's question regarding pricing on the systems here. I know it sounds like you're not raising prices on kind of existing products, but you did mention that you would take price on the new products. And just kind of based on the math that you report out with systems revenue and new placements that you've installed kind of in the past revenue and new placements that you've installed kind of in the past few quarters, it does seem like there's been kind of a noticeable step up in ASPs, particularly in the U.S. So have you raised prices on those new OptimasMAX and Ignite platforms and how does that seem to be kind of being received by your customers at this point?

Moshe Mizrahy, CEO

We did not raise prices on the Ignite. The prices that we set up for the Ignite and OptimasMAX in 2024, we did not change them because of the tariff. They are the same prices. What I said is whenever we produce a new system like OptimasMAX to replace the Optimas, the OptimasMAX is priced a little bit higher than the Optimas. When we launched the Ignite to complement the body type, the price for the Ignite was higher than the regular body type platforms. But when you bring new platforms on new indications, then the prices need to be compatible with the market and not prices that you want. In certain technology, when we are unique, we can charge a little bit more. But this market right now is very competitive, and therefore we see no way or reason to raise prices in the middle of the slowdown or just because of the tariff.

Dane Reinhardt, Analyst

Okay, thanks. Just even clarifying that there was a price increase on like OptimasMAX to Optimas. So that's helpful. And then just my second follow-up, obviously U.S. consumer confidence has kind of slowed here as we've throughout the first quarter. So just from a cadence perspective, I know what you laid out through kind of Q2 through Q4, but just within the first quarter itself, did you kind of see any worsening from January to March and into April just as those U.S. consumer confidence numbers have kind of weakened? Thanks again.

Moshe Mizrahy, CEO

Well, the consumer confidence went down, hasn't it?

Yair Malca, CFO

Yes, it did, but especially when it comes to capital equipment, most of the revenue is anyway generated in March. January and February are slow anyway. So you cannot really make too much of a comparison between the cadence of the consumer confidence index during January through March and expect to see an impact throughout the quarter. Most of the revenue every quarter, we generate most of the revenue in the last month of the quarter. It will be interesting to see how June and overall Q2 would look like compared to Q1.

Operator, Operator

Dane, does that answer your question?

Dane Reinhardt, Analyst

Yes, that does. Thank you very much. I guess just maybe even one follow-up here I'll tack on. I'm not sure if you answered it in the prior question, but what can you just remind us what again potential tax implications would be if you did do any sort of dividend? Because I know you've kind of mentioned that, but it seems like buybacks are off the table, maybe looking at M&A. But just remind us the tax implications if you did do a dividend.

Moshe Mizrahy, CEO

On a dividend, according to Israeli tax law, you have to pay 20% dividend tax before you distribute the money. So for example, if you want to allocate $100 million for a dividend, you'd have to send a 20% check to the Israeli IRS and $80 million to the shareholders.

Operator, Operator

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

Moshe Mizrahy, CEO

Okay. Thank you, operator. Thank you, Miri. I want to thank first our team, the InMode team worldwide that worked very hard in the first quarter like always, knowing there was a slowdown and that we have to perform. I want to thank all the shareholders for being with us in this earnings call. As we said, we will meet again sometime in June or July. Hopefully, the market will improve by then and we will be a little bit more optimistic. Thank you all.

Operator, Operator

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