Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2023 Earnings Conference Call for Venus Concept Inc. At this time, all participants have been placed in a listen-only mode. Please note that this conference call is being recorded and that the recording will be available on the company's website for replay. Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our recent 10-Q and our annual report on Form 10-K filed with the Securities and Exchange Commission. Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise. This call will also include references to certain financial measures that are not calculated in accordance with the generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in our earnings press release issued today on the Investor Relations portion of our website. I would now like to turn the call over to Mr. Rajiv De Silva, Chief Executive Officer of Venus Concept. Please go ahead, sir.

Thank you, operator, and welcome, everyone, to Venus Concept's Fourth Quarter 2023 Earnings Conference Call. I'm joined on the call today by our Chief Financial Officer, Domenic Della Penna and by our President and Chief Operating Officer, Dr. Hemanth Varghese. Let me start with an agenda of what we will cover during our prepared remarks. I will begin with a brief overview of our Q4 2023 results and notable operating developments in the recent months. Then Hemanth will share an update on our progress in several key initiatives of our corporate turnaround strategy. Dominic will then provide you with an in-depth review of our fourth quarter financial results and our balance sheet and financial condition at year-end as well as a review of our Q1 2024 financial outlook outlined in today's press release. Then we will open the call for your questions. With that agenda in mind, let's get started. As you would have seen in our press release issued today, we are pleased that we achieved our primary goal of reducing cash burn by more than 50% in 2023. Key elements of our transformation strategy. Cost reductions, shift to cash sales and working capital management, all contributed to this achievement. I'm proud of the resilience shown by our organization in navigating through a difficult year of transition. In the fourth quarter of 2023, we delivered total revenue of $18.1 million, down $6.2 million or 25% year-over-year and up $0.5 million or 3% quarter-over-quarter. Our fourth quarter revenue results reflect softer-than-expected system sales in the US due to macroeconomic conditions and tighter credit markets, and by the impact of our accelerated restructuring activities in certain international markets. Similar to what we discussed on our recent earnings calls, macroeconomic headwinds continue to pressure the aesthetic sector as a whole while higher interest rates are affecting our customers' ability to finance new capital equipment purchases, and deals are taking much longer to close. Our revenue results outside the US continued to be impacted by the strategic initiatives we executed last year. Specifically, we are transitioning the company to higher quality cash revenues, exiting unprofitable direct operations in certain international markets and implementing a series of restructuring activities, which, all together are expected to enhance the cash flow profile of the business and accelerate the path to long-term sustainable profitability and growth. We are pleased with the progress we have made in our strategic turnaround plan in 2023. Despite the continuing challenging operating environment, we remain encouraged by the signs that our efforts to reposition the business and to focus on key strategic and operational initiatives are well founded. First, we are pleased to report that cash system sales represented 67% of total systems and subscription sales for fiscal year 2023 compared to 58% in fiscal year 2022. Our progress on this initiative was even more evident looking at the mix of cash system sales in the US, which represented 71% of total US systems and subscription sales in fiscal year 2023 compared to 53% in the prior year period. Cash system sales to US customers increased 11% year-over-year in 2023, which reflects the team's strong execution towards our strategic priority to transition the company to higher quality cash revenues. Second, our restructuring activities in certain international markets have resulted in headwinds to our growth trends as expected. By way of reminder, one of our key strategic priorities in 2023 was to optimize our commercial and operational strategy in certain international markets and to reinvest those resources in high opportunity markets to enhance the company's longer-term growth and profitability profile. Our restructuring activities outside the US have included winding down direct operations in smaller and less profitable markets and transitioning to partner with distributors, with the target of having our new distributor partners in key markets identified, signed up and up and running in the majority of our key international markets by early 2024. With that, we expect to be well positioned for a return to growth in our key international markets this year. Finally, while the macroeconomic environment had represented more of a headwind than we had contemplated, our team is executing well despite these unexpected challenges. As I mentioned, importantly, the company achieved its primary strategic objective for 2023 to reduce cash used in operations by more than 50%. Specifically, our team's strong execution towards the strategic objective resulted in a 52% reduction in cash used in operations in 2023. We believe that this represents the clearest evidence that we are on the right track towards our goal of enhancing the cash flow profile of the business and accelerating the path to long-term sustainable profitability and growth. Two other noteworthy items I wanted to briefly discuss. On March 25th, we announced that we received a decision from the NASDAQ hearings panel granting our request for continued listing on the NASDAQ capital market, subject to the company demonstrating compliance with NASDAQ listing 5550(b) on or before May 28th, 2024, and certain other conditions. We also announced on January 24th that the company's Board of Directors had authorized exploration of strategic options for the company. This effort, focused on maximizing value for all stakeholders, is currently underway. As part of this effort, the company is engaging with its lenders and existing shareholders as well as with external parties to explore avenues to improve the financial profile of the company with a view to longer-term value creation. We look forward to providing an update on this initiative at the appropriate time. I would now like to turn the call over to Dr. Hemanth Varghese, who will share an update on recent progress in our restructuring programs, new product pipeline initiatives and our recent company-wide rebranding initiative, which marked an important inflection point in our strategic turnaround. Hemanth?

Thanks, Rajiv. As discussed in our last earnings call, we've made considerable progress against several key initiatives of our corporate turnaround strategy. Let me share a little color where we're making notable progress. First, our cost reduction and cash management initiatives designed to accelerate our path to cash flow breakeven are progressing at or ahead of expectations. The targeted incremental cost containment initiatives implemented in the second half of the year have helped to protect our near-term cash runway. Second, our efforts to rationalize our international infrastructure, reduce costs and simplify the organization are progressing well as we endeavor to establish the optimal mix of direct presence and distribution partners in key international markets around the world. Discussions are ongoing with existing and several new distribution partners to align with our new international strategy. We were pleased to announce the expansion of our international distribution network in December with the signing of two new exclusive partnerships in the United Kingdom and India. Multiple new distribution agreements are under negotiation, which has us on track to be substantially complete with our international repositioning and ready to return to growth outside the US in 2024. Fourth, our efforts to advance certain new product pipeline projects are ahead of expectations resulting in strong momentum on new product introduction in recent months. After receiving 510(k) clearance in September, we were pleased to announce the US commercial launch of our new multi-application platform, the Venus Versa Pro, on November 1st. We are pleased to announce CE Mark from DEKRA Certification BV to market the Venus Versa Pro system in the European Union on February 22nd. Finally, we're very excited with the early feedback from our company-wide rebranding initiative last October. As discussed on our last earnings call, Venus Aesthetic Intelligence, or Venus AI, captures our strong commitment towards growing our global brand, focusing on emerging technologies and services and partnering with customers to build smarter practices and customizable treatments. We want our customers to know that we are not just a product innovation company. Rather, we want to deliver more than meeting device performance. We are focused on delivering total practice performance from the moment the patient enters the clinic to post-treatment recovery. Further, by staying connected to our customers, we can start to leverage real-time data across our growing network of connected devices to uncover the meaningful business insights to define the best in practice performance and fuel the next generation of aesthetic device technologies. To that end, we were excited to announce the NEXThetics program in March. NEXThetics is a new series of customer education and training events launched under our Venus.ai rebrand. The NEXThetics program represents a great example of how we are enhancing our focus on physician education and practice enhancement by empowering professionals in the field of aesthetics with knowledge, tools and support they need to grow their businesses. With that, let me turn the call over to Dominic who will review our fourth quarter financial results and balance sheet as of year-end 2023. Dominic?

Thank you, Hemanth. For the avoidance of doubt, unless otherwise noted, my prepared remarks will focus on the company's reported results for the fourth quarter of 2023 on a GAAP basis, and all growth-related items are on a year-over-year basis. We reported total revenue of $18.1 million, down $6.1 million or 25% year-over-year. The decrease in total revenue by region was driven by a 40% decrease year-over-year in international revenue and a 14% decrease year-over-year in United States revenue. Our international business was impacted by the company's decision to exit three unprofitable direct markets in the past year as well as general macroeconomic headwinds that impacted customer access to capital. The decrease in total revenue by product category was driven by a 38% decrease in products systems revenue and a 30% decrease in products other revenue, partially offset by a 5% increase in lease revenue and a 4% increase in services revenue. The percentage of total systems revenue derived from the company's subscription model was approximately 41% in the fourth quarter of 2023 compared to 29% in the prior year period and 31% in the third quarter of 2023. Turning to a review of our fourth quarter financial results across the rest of the P&L. Gross profit decreased $3.7 million or 24% to $12.1 million. The change in gross profit was primarily due to a decrease in revenue in our international markets driven by the accelerated exit from unprofitable direct markets. Gross margin was 66.5% of revenue compared to 65% of revenue for the fourth quarter of 2022. The change in gross margin was primarily due to improved margin management and reduced inventory write-offs when compared to the previous period. Total operating expenses decreased $5 million or 20% to $19.7 million. The change in total operating expenses was driven primarily by a decrease of $2.7 million or 21% in general and administrative expenses, a decrease of $1.4 million or 15% in selling and marketing expenses, and a decrease of $0.9 million or 35% in research and development expenses. Fourth quarter of 2023 GAAP general and administrative expenses include approximately $0.3 million of costs related to restructuring activities designed to improve the company's operations and cost structure. The total operating loss was $7.6 million compared to an operating loss of $8.9 million for the fourth quarter of 2022. Net interest and other expenses were $3.7 million compared to $1.9 million in the fourth quarter of 2022. The year-over-year change in net interest and other expenses was driven primarily by a $2 million loss on debt extinguishment and higher interest expense offset partially by reductions in both noncash foreign exchange loss and a loss on disposal of subsidiaries compared to the prior year period. Net loss attributable to stockholders for the fourth quarter of 2023 was $11.1 million or $2.01 per share compared to a net loss of $9.9 million or $2.11 per share for the fourth quarter of 2022. Adjusted EBITDA loss for the fourth quarter of 2023 improved 7% year-over-year to $5.9 million compared to an adjusted EBITDA loss of $6.3 million for the fourth quarter of 2022. As a reminder, we have provided a full reconciliation of our GAAP net loss to adjusted EBITDA loss in our earnings press release. Turning to the balance sheet. As of December 31st, 2023, the company had cash and cash equivalents of $5.4 million and total debt obligations of approximately $74.9 million compared to $11.6 million and $77.7 million, respectively, as of December 31st, 2022. Cash used in operations for the three months ended December 31st was $0.8 million, a 77% decrease in cash use year-over-year and an 81% decrease in cash use quarter-over-quarter. The year-over-year and sequential decrease in cash used in operations was driven primarily by strong working capital performance with more than $5.5 million of cash generated from working capital in the period. Cash used in operating and investing activities during the fourth quarter of 2023 was partially offset by $1.3 million of cash from financing activities in the period, driven by the net proceeds of $1.8 million from the sale of senior preferred stock from the fourth tranche and the 2023 multi-tranche private placement, which occurred on October 20th, 2023. Turning to a review of our financial outlook for 2024, as outlined in our press release, given the company's active dialogue with existing lenders and investors and the ongoing evaluation of strategic alternatives with various interested parties to maximize shareholder value, the company is not providing full year 2024 financial guidance at this time. The company expects total revenue for the three months ending March 31st, 2024, of at least $16.5 million. With that, I'll turn the call over to the operator to open the call for your questions.

Thank you. Today's first question is from Marie Thibault of BTIG. Please go ahead.

Hi. Thanks for taking the question. I wanted to ask a question here about the Q1 outlook as well as the OUS outlook. For Q1, the forecast, what is being included in that forecast in terms of kind of macro environmental pressures, your OUS and US assumptions. If you can just give us a more detailed picture of what went into that outlook.

Sure. Marie, let me start. I'll have Dominic add to it. So look, as you can imagine, the first quarter is over, right? And the only uncertainty at this point is revenue recognition. So we've built some conservatism into that number to reflect the fact that we still need to go through revenue reflection procedures. But what I would say is that we are encouraged by what we are seeing in the international markets in the first quarter in that we are seeing our new distributors placing orders. We've also seen a pickup in our hair business outside the US. So all early indicators that the return to growth for 2024 is something that we can certainly aspire to depending on how the remainder of the year goes in the international markets. In the US, we continue to see the macroeconomic headwinds that we saw in the fourth quarter, and certainly, in terms of, we're obviously not giving guidance for the full year at this point given our strategic process, but we would not expect to see an improvement in that in the US environment, at least until the second half of the year.

Okay. That's very helpful. And then is there anything you can tell us on the evaluation of strategic options in terms of ideas or the options that are being narrowed down? Anything on timeline and also how you're managing cash flow in the meantime? Thanks for taking the questions.

Sure. Again, I'll start, I want to hand it over to Dominic to talk about the cash management part of the question. Look, the strategic evaluation process is ongoing. That's probably the only concrete statement I can make, as you can imagine, with these types of processes, until you come to some conclusion, it's difficult to provide interim updates. But I will say the following, which is that this is a process that includes multiple initiatives. One, obviously, is around working with our lenders to explore pathways to improve the company's financial profile. We're talking to existing shareholders, but also with a series of external parties who have expressed some interest in the company. And those discussions are ongoing. It is certainly not a process where we can conclude that there's a definitive outcome yet. But I'm encouraged by the progress we're making, and I am hopeful that we should be able to make at least a progress update in the coming months in the second quarter. And on the cash management topic, before I turn this over to Dominic, we are acutely focused on maintaining and improving the company's liquidity profile, and that clearly is a big part of our strategic initiative as well. And as you probably saw, we were able to do a small RDO this quarter to bring a little bit of cash in, and we continue to look for ways to enhance our cash profile. And we're also encouraged by the mix of cash versus subscription sales in the first quarter, which has also been helpful. So with that, Dominic, let me just see if you want to add anything else to the cash question.

Sure. I think, Marie, you saw in the fourth quarter, we continued to reduce our burn. We expect to continue that throughout all of 2024. The first quarter is a bit challenging because we've got very heavy expenses in relation to being a public company in the first quarter, but I think year-on-year, we'll demonstrate some decent results. But we're going to continue to focus on improving our overall cash burn in 2024 along the same lines of what we did in 2023. The other thing I will point out is that in relation to your earlier question in terms of international versus US business, in Q1, there are very many challenges that remain in the US, but we actually had a fairly good outcome quarter-over-quarter this year compared to last year in the US. So we're starting to see signs where it's certainly pointed in the right direction. International as well, having signed up distributors. We expect that to benefit us in the second half of the year, in particular, but we are encouraged by what we saw in the US in terms of performance, notwithstanding some of the headwinds that we had. We had a better overall performance, I would say, in the US than what we had in Q4.

Thank you.

Thank you. The next question is coming from Jeffrey Cohen of Ladenburg. Please go ahead.

Good morning. A couple of questions from this end if you don't mind. Number one, could you talk about any and timelines and anticipated launches, et cetera, for this year? And then secondly, could you talk a little bit about the hair business and any trends there over the past few quarters you've experienced? Thank you.

Thanks, Jeff. Hemanth, do you want to field those two questions?

With respect to AI.ME, as we have discussed, we continue to be pretty excited about what we're going to be able to do with AI.ME and the opportunity with the management we've been doing on cash and phasing of R&D investments. We have prioritized the energy-based products in the early part of this year like Versa Pro, we'd mentioned in the body system that we are targeting for 2024. And so AI.ME launch at this time at best would be back end of the year or into 2025 in terms of potential timing. It is one we want to make sure we do correctly. So we're spending the time to make sure we've gotten everything straight. The hair business as a whole, I will say Q4 was a little tougher. Again, with macroeconomic environments, our hair business, especially our artist robot, being probably the most expensive of our systems, gets most affected by the tough financing environment. But as Domenic had mentioned, we are seeing some strong turnaround type trends in 2024. And I think when we ultimately report on Q1, hair business rebounded; '24 outlook looks strong as well.

Perfect. Thanks for taking our questions.

Thanks, Jeff.

Thank you. We currently have no additional participants in queue. This concludes our conference for today. Thank you for your participation.

Thank you.