• Q1 2024 Revenue: $59.3 million, up 42% year-over-year.

• 2024 Revenue Guidance: $255 million to $265 million.

• Gross Margin: Reported at 68.3%; Adjusted gross margin at 69.5%.

• Operating Expenses: GAAP $68.3 million; Non-GAAP $42.1 million.

• Net Income/Loss: Non-GAAP loss from operations $0.9 million.

• Cash Position: Ended Q1 with $97 million.

• 2028 Revenue Target: At least $700 million.

• Customer Accounts: Added over 700 new purchasing accounts in the U.S.

• Loyalty Program Redemptions: Approximately 180,000 in Q1, with 60% repeat treatments.

• Warning! GuruFocus has detected 4 Warning Signs with EOLS.

Release Date: May 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Evolus Inc (NASDAQ:EOLS) reported a strong revenue growth of 42% year-over-year, with first quarter revenue reaching $59.3 million.

• The company added over 700 new purchasing accounts in the U.S., increasing the total number of customers to over 13,000, representing approximately 40% market penetration.

• Evolus Inc (NASDAQ:EOLS)'s consumer loyalty program achieved an all-time high in redemptions, with approximately 180,000 consumers receiving treatment, 60% of whom were repeat treatments.

• The company is on track to achieve profitability by the fourth quarter of 2024, with operating expense growth maintained at less than half the rate of revenue growth.

• Evolus Inc (NASDAQ:EOLS) is preparing for international expansion and product diversification, including launching in Australia and Spain, and introducing a novel dermal filler line in 2025.

Negative Points

• Despite strong U.S. sales, international revenue remains a small fraction, with over 95% of total revenues coming from the U.S. market.

• The company reported a non-GAAP loss from operations of $0.9 million for the first quarter, although this was an improvement from the previous quarter.

• Evolus Inc (NASDAQ:EOLS) faces increasing competition in the neurotoxin market, with new entrants expected to challenge market dynamics.

• The company's reliance on the performance of Jeuveau poses risks if market dynamics shift unfavorably or if new products fail to meet expectations.

• While the company has a strong cash position, it noted the use of proceeds from a recent offering to potentially pursue strategic opportunities, which introduces uncertainty regarding future capital allocation.

Q & A Highlights

Q: Can you discuss the sustainability and necessity of the recent increase in new account additions? A: David Moatazedi, President and CEO, explained that the increase to approximately 700 new accounts per quarter is driven by demand and the company's enhanced market presence. He believes it is sustainable and emphasized that growth comes not only from new accounts but also from deepening relationships with existing ones. Moatazedi also noted that while the focus might shift towards existing accounts, especially with upcoming product launches, the company is well-positioned to maintain healthy growth rates.

Q: How do you view the potential market dynamics with new entrants in the neurotoxin market? A: David Moatazedi, President and CEO, stated that Evolus anticipated new entrants and has factored this into their guidance. He believes there is room for new entrants to carve out unique value propositions without disrupting the growth of existing players. Moatazedi highlighted that Evolus's focus on a younger demographic and unique partnerships gives them a sustainable competitive edge.

Q: What are your expectations for the pricing environment in the neurotoxin market with the entry of new competitors? A: Sandra Beaver, CFO, indicated that pricing has remained stable and they foresee potential modest increases rather than decreases. She emphasized that the U.S. market dynamics, driven by product quality and direct-to-consumer marketing, support a stable to increasing price environment, unlike the more price-competitive European market.

Q: Can you provide insights into the performance and expectations for the dermal filler market as you prepare for its launch? A: David Moatazedi, President and CEO, discussed the U.S. dermal filler market's potential, noting its significant size and healthy growth trends. He mentioned that the upcoming introduction of Evolus's filler line is expected to capitalize on these dynamics, with the company well-positioned to leverage its existing customer base and infrastructure for a successful launch.

Q: What are the strategic uses of the proceeds from the recent capital raise? A: Sandra Beaver, CFO, explained that the capital raise was opportunistic, aimed at strengthening the balance sheet to provide flexibility for potential strategic investments. She reassured that the company has sufficient liquidity to achieve profitability and pursue strategic opportunities without immediate plans for the newly raised funds.

Q: How is Evolus planning to integrate and potentially bundle its upcoming filler products with its existing neurotoxin products? A: David Moatazedi, President and CEO, indicated that strategic plans are in place to leverage Evolus's existing customer base and digital infrastructure, which were designed to support a multi-product portfolio. Details on specific strategies and bundling options will be shared closer to the product launch.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.