InMode’s Earnings Call: Balancing Growth and Challenges

Inmode ((INMD)) has held its Q2 earnings call. Read on for the main highlights of the call.

InMode’s recent earnings call presented a mixed sentiment, highlighting robust international growth and sustained high margins, yet overshadowed by North American market challenges, increased operating expenses, reduced guidance, and the impact of U.S. tariffs. The overall sentiment reflected a cautious outlook as the company navigates these hurdles.

Strong International Revenue Growth

InMode reported impressive international revenue growth, with sales outside the U.S. reaching $45 million, accounting for 48% of total sales. This marks an 11% increase year-over-year, with Europe emerging as the largest geographical revenue contributor, achieving a record $23 million.

High Gross Margins Maintained

The company successfully maintained high gross margins at 80% on a GAAP basis, consistent with the previous quarter. The non-GAAP gross margin was slightly down at 80% from 81% in Q2 2024, showcasing InMode’s ability to sustain profitability despite market challenges.

Increase in GAAP Net Income

InMode’s GAAP net income rose to $26.7 million, marking a 12% increase from $23.8 million in Q2 2024. Non-GAAP net income also saw an uptick, reaching $30.1 million from $29 million, indicating strong financial performance.

Strong Balance Sheet

The company ended the quarter with a robust balance sheet, holding cash and cash equivalents, marketable securities, and deposits totaling $510.7 million, underscoring its financial stability.

Reduced Revenue Guidance

InMode revised its revenue guidance for 2025, lowering it to between $365 million and $375 million from the previous $395 million to $405 million. This adjustment reflects the challenging conditions in the medical aesthetics market.

Challenging North American Market

The North American market remains challenging for InMode, with reduced personal spending leading to fewer treatments and less capital investment from physicians, impacting the company’s performance.

Increased Operating Expenses

Operating expenses increased, with GAAP operating expenses rising to $53.6 million, a 5% year-over-year increase. Non-GAAP operating expenses also grew by 9% year-over-year to $50.5 million, reflecting higher operational costs.

Impact of U.S. Tariffs

U.S. tariffs are expected to impact InMode’s gross margins by approximately 2% to 3%, contingent on the tariffs remaining at the current 10% rate, adding to the company’s financial challenges.

Weak Q2 Performance

InMode’s Q2 performance was slightly below expectations, with revenues of $95.6 million compared to the anticipated $100 million, highlighting the impact of market challenges.

Forward-Looking Guidance

Looking ahead, InMode provided revised guidance for 2025, projecting revenues between $365 million and $375 million, down from the previous forecast. Non-GAAP gross margins are expected to remain between 78% and 80%, with non-GAAP income from operations anticipated to be between $93 million and $98 million. The company cited reduced physician capital investment and a slowdown in the aesthetic market as reasons for the lowered guidance but remains optimistic due to ongoing global expansion and product innovations.

In summary, InMode’s earnings call reflected a cautious sentiment, balancing strong international growth and high margins with challenges in the North American market, increased expenses, and reduced guidance. The company’s strategic focus on global expansion and innovation offers a glimmer of optimism amidst these challenges.