INMD — InMode Ltd.

Summary of InMode Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Total Revenue: $82 million, a 5% increase from $77.9 million in Q1 2025.
• International Sales: $38.7 million, accounting for 48% of total sales, up 2.65% year-over-year.
• Gross Margin: 75% (GAAP), down from 78% in Q1 2025; Non-GAAP gross margin also decreased to 75% from 79%.
• Operating Expenses: GAAP operating expenses rose to $51.5 million, a 13.7% increase year-over-year.
• Operating Margin: GAAP operating margin at 12%; Non-GAAP operating margin at 17%, down from 23% in Q1 2025.
• Earnings Per Share: GAAP diluted EPS of $0.18, down from $0.26; Non-GAAP diluted EPS of $0.25, down from $0.31.
• Cash Position: $537.2 million in cash and equivalents.
• Share Repurchase: $52.7 million in shares repurchased year-to-date, totaling 3.86 million shares.

2. Strategic Updates and Business Highlights:

• Leadership Changes: New leadership in North America has led to a unified organizational structure, enhancing coordination and accountability.
• Sales Structure: The Envision team for ophthalmology now operates independently, aiming for stronger execution.
• Product Performance: New laser products (Pico and CO2) contributed positively to revenue, enhancing the range of procedures offered.
• Market Presence: Continued operations in over 100 countries, with strong growth in Europe and mixed results in Asia, particularly in China.

3. Forward Guidance and Outlook:

• 2026 Revenue Guidance: Expected between $365 million to $375 million.
• Gross Margin Guidance: Non-GAAP gross margin projected between 74% and 76%.
• Operating Income Guidance: Non-GAAP income from operations expected between $73 million and $78 million.
• Earnings Guidance: Non-GAAP EPS projected between $1.33 to $1.38.

4. Challenges and Points of Concern:

• Gross Margin Pressure: Decrease in gross margins attributed to increased costs and the new sales structure.
• Market Headwinds: Demand for aesthetic procedures remains pressured due to macroeconomic factors, although the company believes demand will eventually rebound.
• Leadership Transition: Yair Malca, CFO, announced his departure after 9 years, which could impact financial strategy and execution during the transition.
• Competitive Pressures: The aesthetics market is becoming increasingly competitive, particularly with the rise of injectables and other aesthetic solutions.

5. Notable Q&A Insights:

• Laser Product Launches: The Erbium laser is under development, with FDA clearance expected soon, potentially impacting gross margins in 2027.
• International Subsidiaries: New subsidiaries in Argentina and Thailand are in the setup phase, with expectations for sales to begin in Q2 2026.
• Market Dynamics: The broader aesthetics market is seeing competition from injectables and other non-energy-based treatments, which may affect InMode's market share.
• Capital Allocation: The company is exploring M&A opportunities but faces challenges due to high valuations of private companies. Share buybacks remain a priority, but other capital allocation strategies are being considered.

Overall, InMode's Q1 2026 results reflect a mix of growth and challenges, with strategic initiatives aimed at stabilizing and enhancing market position amid a competitive landscape.