Good day, ladies and gentlemen, and welcome to the First Quarter 2025 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'd 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 most recent 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 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 first quarter 2025 earnings conference call. I'm joined on the call today by our Chief Financial Officer, Domenic Della Penna. Let me start with an agenda of what we will cover during our prepared remarks. I will begin with a brief review of our first quarter results and operating developments in the recent months. Following that, Domenic will provide you with an in-depth review of our first quarter financial results as well as an update on our balance sheet and financial condition. Then we will open the call for your questions. With that agenda in mind, let's get started. As detailed in our press release issued today, our first quarter revenue results came in modestly softer than expected due to delays in the timing of new system sales expected in late March driven by current market conditions. Some of these sales were consummated in early April. First quarter revenue declined 22% year-over-year, driven by a 25% decline in systems revenue and to a lesser extent, a high single-digit decline in procedure-related products and service revenue. Our team delivered solid execution despite the continued challenging environment. The global capital equipment environment continues to present a level of uncertainty as to the timing and pace of new system adoption in both the U.S. and international markets across the aesthetic sector as a whole. Customer financing pressures, economic uncertainty, higher interest rates, tighter credit markets, and uncertainty related to proposed tariffs continue to impact customer system adoption throughout our business. Despite the more challenged operating environment, the team continues to focus on our strategic priority to transition the company to higher quality cash revenues. Cash system sales in the U.S. represented 80% of total U.S. system sales in the first quarter compared to 75% last year. We continue to believe that our efforts to reposition the business to prioritize cash system sales is the right strategy to enhance the company's long-term profitability profile. While the overall time to close deals continues to impact our quarter-to-quarter systems sales results, we are encouraged by the team's continued focus on customer engagement and support, as well as prioritizing core products in the U.S., including BlissMAX, Versa Pro, and Viva MD to improve sales efficiency. Our international results in the first quarter also reflect the impact of disruptive distributor ordering patterns due to the hesitancy on the part of our distributor partners given the uncertainty related to increased global macro headwinds and trade concerns. While we expect continued fluctuation in ordering patterns from our distribution partners in key international markets, we are encouraged by the early evidence that our efforts to evolve our OUS commercial strategy to enhance future growth and profitability are on the right track. Our priority now is to ensure that we are as well positioned as possible to return to growth when the overall global capital equipment environment improves. We're actively working on evolving our portfolio and look forward to announcing our next body device in the second half of 2025. We are managing our cash burn through disciplined cost management and making targeted investments to support our long-term growth. We believe that the increase of GLP-1 usage by consumers is an exciting catalyst for the industry and the chance for Venus to highlight the complementary benefits of our body technology, specifically skin tightening to our customers who are on weight loss medications. We enhanced our balance sheet condition in March by converting $11 million of Madryn debt to equity. And in April, we secured a new bridge loan amendment from Madryn and two equity capital transactions, which together represent further validation from existing and new investors of the potential value creation opportunity that Venus offers. With that, let me turn the call over to Domenic for a review of our first quarter financial results and balance sheet.

Thanks, Rajiv. For the avoidance of doubt, unless otherwise noted, my prepared remarks will focus on the company's reported results for the first quarter of 2025 on a GAAP basis and all growth-related items are on a year-over-year basis. We reported total revenue of $13.6 million, down $3.8 million or 22% year-over-year. As Rajiv mentioned earlier, our revenue results were softer than expected given the timing of system deals closing in the U.S. and distributor ordering patterns. We were encouraged to see some of the deals that were expected to close in late March, close in early April. Distributor hesitancy towards placing orders remains a potential headwind given the heightened level of global macro and trade uncertainty in recent months. Year-over-year decrease in total revenue in the first quarter was driven by a 29% decrease in international revenue and a 16.5% decrease in the United States. The year-over-year decrease in total revenue by product category included a 25% decrease in products systems revenue, and a 25% decrease in lease systems revenue. The percentage of total systems revenue derived from the company's internal lease programs, Venus Prime and our legacy subscription model, was approximately 25% in the first quarter of 2025 compared to 25% in the prior year period. Turning to a review of our first quarter financial results across the rest of the P&L. Gross profit decreased $2.9 million or 25% to $8.8 million. The decrease in gross profit is primarily due to the effects of tighter third-party lending practices, which negatively impacted capital equipment sales in the U.S., and a decrease in revenue in our international markets driven by the accelerated exit from unprofitable direct markets combined with distributor uncertainty over economic and trade patterns facing the macro environment. Gross margin was at 54.2% of revenue compared to 66.6% of revenue for the first quarter of 2024. Total operating expenses decreased $1.1 million or 6% to $18.3 million. The reduction in first quarter 2025 operating expenses reflects our continued progress in cost containment and streamlining of our operations. GAAP operating loss was $9.5 million compared to $7.8 million in the first quarter of 2024. Net interest and other expenses were $2.5 million compared to $2 million in the first quarter of 2024. The year-over-year change in net interest and other expenses was driven primarily by a $1 million noncash loss on debt extinguishment, which did not impact prior period results and a noncash foreign exchange gain of $0.1 million compared to a noncash loss of $0.3 million last year, offset partially by lower interest expense on outstanding borrowings, which totaled $1.6 million in the first quarter compared to $1.7 million last year. Net loss attributable to stockholders for the first quarter of 2025 was $12.4 million or $17.44 per share compared to a net loss of $9.8 million or $16.91 per share for the first quarter of 2024. Weighted average shares outstanding for the first quarter of 2025 and 2024 give effect to the company's 1-for-11 reverse stock split effective March 3, 2025. Adjusted EBITDA loss for the first quarter of 2025 was $8.3 million compared to adjusted EBITDA loss of $5.1 million for the first quarter of 2024. 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 March 31, 2025, the company had cash and cash equivalents of $3.2 million and total debt obligations of approximately $35.5 million compared to $4.3 million and total debt obligations of approximately $39.7 million, respectively, as of December 31, 2024. This represents a $4.2 million reduction in total debt obligations in the quarter. As Rajiv mentioned previously, we announced a new bridge loan amendment with our primary lender, Madryn Asset Management, which increased our financing capacity by $10 million. We continue to appreciate the support of Madryn as we execute on enhancing the financial profile of the business. We also announced three important items subsequent to quarter end. On April 1, 2025, the company exchanged $11 million of its subordinated convertible notes held by affiliates of Madryn Asset Management for 379,311 shares of its Series Y preferred stock. This transaction allowed us to maintain NASDAQ compliance through achieving NASDAQ stockholders' equity threshold. On April 10 and 14, the company announced a registered direct offering priced at the market for the sale of a combined 715,273 shares of common stock for combined proceeds of $2.7 million gross, before deducting placement charges and other offering expenses. Lastly, with respect to our financial outlook for 2025, given the company's active dialogue with existing lenders and investors, the ongoing evaluation of strategic alternatives with various interested parties to maximize shareholder value, and current market conditions impacted by trade disruptions, the company is not providing full-year 2025 financial guidance at this time. The company does expect to see sequential revenue growth in the second quarter. With that, I'll turn the call over to the operator to open the call for your questions.

Our first question comes from Thomas McGovern with Maxim Group. Please go ahead with your question.

Hi, everyone. Thank you for taking my question. I want to discuss how the recently enacted and proposed tariffs might impact your international business as we move through 2025. Thank you.

Domenic, do you want to take that? And I'll add to it?

Sure. I can take that. So as you know, our business is primarily on the energy-based side. We source our products directly from Israel through a contract manufacturer. The tariffs that are announced in respect of Israel relate to about 10% at this stage. Now negotiations are ongoing. But if we assume the 10% tariff holds, then that impact on the energy-based side would have in 2025, an impact of between 1% and 1.5% on our gross margins, and that's exiting 2025. As we move into 2026, that impact could be between 2% and 2.5% of gross margins. Now when we include our robotics business, which represents between 20% and 25% of our business, the impact is somewhat similar. It would be in the sort of 1% to 2% range in 2025 in the second half. And in 2026, it would be somewhere in the 2% to 2.5% range as well. So when you sort of dissect the business, three-fourth of the business is sourced from products from Israel, and one-fourth of that relates to products that are manufactured through the robotics side in the U.S., but there are component parts that come from Europe in relation to the robotics side of the business. So in both counts, the tariffs we expect are in the 10% range but could be lower depending on how the negotiations pan out with both Israel and the EU. Overall, it would have a slight marginal impact on margins, and that is without any mitigation efforts on our part, right? So we have the opportunities to try to recover some of that margin hit. But assuming there is no pricing recovery, that would be the maximum percentage of the impact.

Overall, Thomas, the actual impact of the tariffs on us is going to be very modest and likely manageable through pricing. I think the disruptions we're talking about is the fact that generally, there's overall economic uncertainty around the world because of the uncertainty of the tariffs, which is causing our distributors to be more hesitant in terms of their purchasing patterns. So it's not a direct impact, it's an indirect impact.

Understood. That makes a lot of sense. You mentioned also that there were several contracts, several sales that you expected to close at the end of the first quarter that were pushed into the second quarter. Were these mostly related to U.S. sales? Or are you seeing some distributor orders that maybe you expect in the first quarter that have been pushed into the second quarter?

It's a combination of the two. And again, it's generally tied to this issue of hesitancy in light of economic conditions, right, which is relevant to our U.S. customers as well as our international distributors. People have the need for these devices but are being more cautious. And oftentimes, a lot of our sales happen very much towards the very end of the quarter, literally in the last couple of days. Sometimes when these deal negotiations extend, it just extends beyond the end of the quarter, right, which is the phenomenon that we saw at the end of the first quarter.

Yes. Thomas, the lending practices are much more difficult. The protocols that the lenders are taking in terms of validating credit, etc. just take a lot longer. So it's tougher to get some of these deals closed, and we experienced that not only on the distributor side but in the U.S., it was our direct business. Even in Australia, we had deals that almost made it through in Q1 but closed shortly after Q1 ended. So it's impacting all markets.

Understood. I appreciate the color there. Then last thing for me, just you mentioned it briefly on the call, but obviously, still planning to launch this next-gen body contouring device. Curious if you can give us an update on that on the timeline if that remains on track for sometime early second half of '25, and then just maybe talk high level on kind of your initial expectations for traction and how you plan to ramp adoption of the next-gen contouring device in the back half of the year?

Sure. On your first part of your question, yes, we do expect the same timing that we've talked about before, which is an approval and launch sometime in the early part of the second half of the year. The regulatory process is underway, and as of now, there's no reason to believe that the timing should extend. We have not yet really talked publicly about all aspects of the products. I'm not going to go into many details other than to say that this is a device that has been developed based on a lot of customer feedback on some of our big selling devices that are already on the market. So we do expect meaningful market uptick when we do have it available. There's already a lot of customer excitement about it, and we expect to make more public commentary about it when the product is approved.

Understood. I appreciate you taking the time to answer all my questions. Great. Thank you.

Thanks, Thomas.

Thank you. We are currently showing no additional participants in the queue. That does conclude our conference for today. Thank you for your participation.