Thanks everybody for joining us. Pleased to have with us, the CFO and Chief Medical Officer of InMode, Yair Malca and Dr. Spero Theodorou. Theodorou? Gosh, that's terrible. Right. This is Matt Miksic. I am the U.S. medical device analyst here at Barclays. So, I want to maybe jump right into a couple of sort of some high-level topics and then kind of drill down. You know, the biggest, you know, at the highest level, I think, you know, we came into this year with InMode, and I think you spent a fair amount of time on this in November, December, kind of contemplating, you know, given some changes in end market demand, given some continued challenges in financing systems and so on, you know, how to set the bar for 2024. You know, I would characterize it as, you know, tempered, appropriately tempered, perhaps, but you know, tempered. You know, based on a certain set of assumptions. Maybe you start with, you know, what's baked into that number, and what we can look for maybe in the first and second quarter to see if is this a number that you could do better than, depending on how things start to shift, or, or is this actually where you're going to come in for the year? Makes sense. First of all, Matt, thank you for having us. Of course. We appreciate that. As you mentioned, we had some headwinds ending 2023, especially in Q4. Maybe it started already in Q3, but it was kind of covered up together with the seasonality that we experienced or the stronger than expected seasonality that we reported in Q3. So basically whatever we saw in Q3 and definitely in Q4, that was usually supposed to be the strongest quarter of the year, and it wasn't. We saw those some headwinds. One of them is higher interest rates and financing environment. The underwriting processes in the financing space has been significantly more strict than what we've seen in prior years. It started from, you know, the shakeup in the banking system, with Silicon Valley Bank falling out and some others exactly a year ago. So this has started then, this process, and then the spread will keep climbing up. And also what we see some struggle in the underlying demand to procedures in the aesthetic space. For us, we can see it from the consumable. If you look at Q1 and Q2, 2023, consumable grew year-over-year, around over 40% or so. This went down to 28% year-over-year growth in Q3 in consumables, and to under 20% in Q4. So still a very respectful growth year-over-year, double digits. Very nice. But you see that trend decelerating, and for us, that was a sign that there is something going on with the underlying demand. Some are talking about some a concern around consumer confidence. And this is something that's not unique to InMode. We see that all across the space. The competitors and other players in the space reporting the same headwinds that we're experiencing. So to answer your question about 2024, we don't see an improvement. We definitely see those trends continue into 2024. We hope that in the second half of 2024, things might get better. We understand that, you know, the estimate now is that the interest rates would start going down in the second half of the year, hopefully June and on. Maybe we'll see, I hope, three interest rate cuts this year after June. So that definitely can help to some extent, but mostly we are looking to launch three new products this year, and these are main technologies for us, next generation of our best-selling technologies. So this is exciting, and definitely we expect to see a contribution coming in the second half of the year. So overall, we believe the year will be pretty much flat, 2024 compared to 2023, because of all the headwinds. And this, we don't usually provide split between quarters, but it's gonna be heavier on the second half of the year, just because of this major launch that we plan to do in the middle of the year. Got it. So maybe, maybe taking those things, you know, sort of breaking them down. So, we get a fair amount of questions, had gotten questions like into the back half of last year. What you, what you can do, should do, or shouldn't do, maybe with, with, the financing challenge and, you know, delays, and now what you can do to sort of, you know, smooth those over, speed those up, without necessarily taking on the, the liability of, of these, these systems. Maybe talk a little bit about, you know, you mentioned some programs and pilots that you are running. So anything you can tell us about those and, you know, whether and when we might start to see benefits on that particular issue? Right. So as I mentioned, there were three main headwinds. One is the demand in the underlying market, one is the higher interest rate, and one is the underwriting process for those financing companies. We are able to put some into the problems that will help. From this standpoint, we cannot solve the other two, right? You know, we have no control over interest rates or the macro overall. But here we did put together some programs with some of our financing leasing companies that we work with, our partners, under which we offload a small portion of the risk. And in return, they will provide faster approval, and we'll be able to buy deeper into the credit profile of our customers. We introduced this program only a month ago. Based on the initial response, things are looking good. It's, it is helping out, but as I said, this is only one headwind that we see, not gonna solve everything, but definitely have it. And obviously, you know, speeding up the process of financing new systems, you know, making that easier to, to get done in a timely manner, doesn't exactly help if the end market remains, you know, a little bit soft, which it, it certainly softened into the back end of last year. You know, one of my colleagues covers specialty pharma, and is sort of seeing that maybe kind of bottoming a little bit. Wondering if that's, that's what you're starting to see. You know, any, any idea as to how, how far away we are from sort of a bottoming, stabilization, or recovery, and sort of volume demand out of these centers? Not fairly tied directly to you guys, but just general utilization. Just because of the capital nature of our business, we sell mostly capital equipment. Most of the deals and revenues being generated in the last few weeks of the quarter, I will have a better answer for you of whether we are bottoming or not, only after I see the full numbers for the quarter, that most of them will come the last couple of weeks. Only in a couple of weeks I'll be able to say, right? I can tell you, things are not getting better. It looks like they are not getting worse. I want to believe so, and we'll know in a few weeks, but they are not getting better, and I expect things to stay the same for another quarter or two, until they come forward. Gotcha. So, Gotcha. So, I would imagine, aside from the capital, you know, the actual transactions that are coming in that might be related to InMode, you know, conversations you have with clinics, you know, colleagues, or networks of clinics that you're aware of. I mean, are there any trends in InMode volumes, but just in general, what does the patient flow look like? Use of fillers, these are kind of like proxy indicators of maybe demand for it? Well, great question, Matt. I think Q1 traditionally is a slow month for plastic surgery, and these type of innovations, and it usually picks up right now. So up to now, no one, we haven't really, and I understand what you're saying, but on the ground, we haven't seen a slowdown. So in January, we did, but that's also, we're going back into the seasonality patterns we saw before COVID. And everyone's a little surprised, like, "Oh, what happened? What happened?" No, this is the way it's always been. The problem is that anyone has never experienced it because we're a young company, and we always, w e did what we did, then we went to a post-COVID boom, and everybody expected that. So, nothing concerning at this point. There's always a lag behind. Interest rates are high, and the actual consumer, at least in our space. Yeah. You know this. Back in 2008 and 2009, the biggest impact was felt in 2010, 2012. That's when everyone got hit. Which shows that chances are, like, people's mirror priorities. So maybe they're not feeding, you know, meals to their children, they're getting Botox instead. Unfortunately or fortunately, that's the way it is. So there is a lag with lipsticks and cigarettes. I'm not surprised that this lag came finally now. We've been talking about a recession for more than a year now, and we finally felt it, so there is a lag. Is it gonna be like 2008, 2009? No, I think the worst is behind us. We'll probably have a couple more quarters, which will be difficult on the ground, looking at the clinics and talking to them. But this is a high season all the way till May and June. Okay. And then the summer, predictably, it's gonna slow down. Okay. These are regular patterns. Nothing, I haven't been called by anyone saying, "We're alarmed. Our charges are really down." No one's complaining. They're like, standard stuff. Okay. From some of the signals of caution back in November, December, or? No, I didn't see it. I saw it in August. Okay. But that was seasonality. Right. No one was surprised. Okay. So usually I get a call and say, "Hey, are you, are you busy, or are you guys?" And we haven't gotten those calls. Okay. No one has. So I think it's back to the normal pattern. For the young guys who just started to practice this, I'm sure this is a big shock. Right. But for guys and girls who've been out there for 18-20 years, I think falling back into the pattern is what it shows. Now, some of our biggest Morpheus clinic users did say, "Yeah, we saw a drop a little bit." There's a lot of uncertainty also with the election, and the refugees are going, and working poor just spend their money, and that happens. But, if I had to say we're alarmed, no. Okay. All right. So, you know, these programs on the financing process may help. We'll find out in the next, you know, quarter or two. Maybe more importantly, this sort of, like, volume consumer behavior may pick up in the first half if you know traditional seasonality holds. Is that fair? Is that something that, and if so, you know, whether it's signs of that in Q1 or more indication of that in Q2, that's kind of the cadence that, you know, it keeps you to your back half guidance of likely to be stronger, that, you know, in addition to the products. So maybe. The product is a big thing. The timing of the launch of the product we planned to do it mid-year. If it will come into June or May, maybe it can, you know, make or break Q2. It decide whether Q2 will be a strong quarter or not, depending on the timing of the launch of the product. And definitely going to feel it. Most of the contribution will come in the second half. Got it. What you see is, people forget that after COVID, 30% of all new patients coming into the offices were new patients, people who would never consider plastic surgery before. I think that group has kind of held things in place, so as not to have some steep drop-off because of that increase. Now that we're going into seasonality, we're not going, "Oh, my God!" We're like, "Okay, we're okay." If we hadn't had that increase, I think we would have been in maybe a different picture, and we're more set. Does that make sense? Yeah. You look at first time boat buyers. Well, the majority of people who bought boats were after COVID. Now, the boat prices are dropping and like, "What the hell did I do?" Right? No, that's right. Selling those boats. So we belong in that category of disposable income. But because of the increase, I think we're not feeling it there, but we're probably not feeling it as strong as we thought we would. Got it. Okay. Kind of the whole picture. And then on the new products, maybe, so any, you know, it's sort of in the first half, you know, maybe in the second quarter. Is that the right way to think about timing? And, should we think of what happens sometimes with these new product launches, as folks hear about a new product coming and they pause on, "Well, we're not going to get a system now, because we have the new system." You know, should we expect that? How are you managing those behavior by some of your customers? We are trying to manage that. Obviously, the word is out about the new products. We are trying to manage that, and then we're trying to get us some programs to help us with managing that. We've seen a couple of processes in terms of which way we were successful. Even if we were not as successful, this is a shift of, you know, having between quarters. I don't expect that to be anything significant. Okay. We did have a stroke before, historically. I think more often than not, and call it early launches, call it soft launches. That's all you hear about as you look at historically. Right. The guys know and girls know how to pre-position those things. Okay. You know, whether they have a list, where they put them on the list, whether they take deposits, little things like that. Got it. But, they're used to navigate that. Okay. And are these just to, not to ask you to preview what these next gen platforms or systems are going to be, but is this going to be a whole console? You know, new console or a new attachment for t hree new consoles. Okay. So entirely new. So you have them. So, you know, we don't have manufactured obsolescence in our, in our devices. They're very hardy. They have less than 20% breakdown. They're not generally simple. However, this is the year, and Yair will tell you the numbers, that leases are coming up. So this is the first time we're actually renewing the first batch of products in BodyTite, and we're putting new things on it. Morpheus is going to be brand new, which is a big deal for us. Brand new abilities that it has, new handpieces, new box. So looking at the handpieces we have out there, Morpheus Face, about 8,000 handpieces, and Morpheus Body, another, you know, 2,500-3,000. Those will have to be, you know, replaced to add in all these other things, because the new devices will not work with the old. Got it. So, the third one is our Optimas, which has had a stronger IPL. So all these might not be the most exciting thing ever, but it's time for to refresh everything and give us an excuse to go back in and launch these products. So we're very excited about it, and I think it will have an impact for sure. Okay. And then, sort of in terms of your customers talking to their customers, you know, what, if anything, is s hould we look for in terms of these are some of the exciting incremental benefits of these new platforms? Okay. So I can line up a couple of things. So for BodyTite, we'll have the old BodyTite handpieces, but BodyTite is a surgical platform, so the surgeons are always complaining about speed. We chose safety over speed of the initial gen. Now we're putting safety with speed inside, so faster and more powerful. Then we have something called Quantum, which is a single bipolar wand. So it just got dispensed, so no outside device. Very quick for small areas, fractional BodyTite, essentially, of energy. So not like a pincher. Not a pincher anymore, just one inside. Got it. Eventually, the surgeons will have a whole armamentarium of products, and they'll probably end up using these more often than the older ones. Okay. The bipolar will still maintain everything on it. Then they have Morpheus. So you have Morpheus Burst technology, which is flaring the energy in one shot, make it very efficient. That was only present on the Body before. Now, it's coming to face. And that's a big deal, because I don't have to do two, three passes. The procedure may take you half an hour, 40 minutes, will take you 15 minutes or 10 minutes. So that's a big advantage. And the second part is, something called Scale, which allows you to deposit energy deep, without hitting the superficial as much as the superficial. So like a pyramid. Mm-hmm. That's really important for patients who have sensitive skin, but more so for patients with skin of color. As we know, skin of color is a fast-growing segment in aesthetics. Allergan knows this. We know it. Lasers cause problems with hyperpigmentation or change the color of the skin. So we already are good there, but we're doing even better. So when you approach a practice and say, "Hey, how do you want to attract skin of color patients? Use Morpheus." And now we have Morpheus Scale, which is less energy, causing any issue whatsoever, skin surface, more deep. Got it. So that's a big advantage of our new Morpheus handpieces. And then, of course, we have our Optimas, which is a bestseller, which has a stronger IPL, 25% stronger, and but just as safe. So, yeah, there are three distinct platforms that are upgrades of our previous technology. Cool. We do well with them. And, so it sounds like, you know, a big, and one of the key benefits here for both is the, like, as, as the alternative to not being able to do layering, like a three-step process or something before, now you can do that in one, and then obviously it applies faster. And can you, in terms of, like, how much faster from this to that? Yeah. So our BodyTite on average will take you from 45 minutes to an hour when you add it to a procedure, which is probably the most negative thing about it. So when listening to our surgeons, procedure times will go down from 25 to an hour to 15 minutes-20 minutes. Wow! It's a big drop. Okay. Yeah. Excellent. All right. And then, I guess the other side of the sort of outlook, and this is understandable, but, is sort of margins. How are you thinking about, you know, in these situations, you sort of temper the guidance, kind of flattish, as you're describing it, but, you know, wanting to continue to spend in key areas like investment in sales and marketing, investment in R&D. How are you managing that and coming up with the numbers that you put out? Right. So if you remember, we did take a step up in our investment in sales and marketing. In 2023, we went up from about 31% of sales in 2022, to 36% of sales in 2023, and this will continue into 2024. And that's why we say that, you know, things will stay flat, we meant also on the spending side. R&D, same thing. We have a more increase in R&D. We continue our business as usual. We don't let the headwinds and market challenges that we see make change our plans, right? We keep everybody on board. We continue to spend what we need to spend on the R&D, continue to develop new products. We don't delay any launch because, you know, the market is not so great. We continue business as usual and to execute on our plans. We know that at the end of the day, sooner or later, the market will come back, and the economy will improve, and we will be there ready to take over the market. Sounds good. That's just to continue on. So you're not cutting there, sort of tightening your belt, but you're maintaining, say, on a dollar basis, the spend into this year at the moment, or any areas of, you know, from a shareholder, you know, managing shareholder value or whatever, that you're looking to sort of trim back on discretionary expenses or anything like that, or on a dollar basis, you just think about flat SG&A, flat R&D? Yeah. It's gonna stay pretty much flat. Again, I think, it's in the best, it's best for the company, that we continue, that we, we have the cash, we have the profitability to afford it, even if we need to take a cut of 1% or 2% in profitability, but to put us in a position that will enable us to take over the market. Because look at all the other competitors, they are acting significantly, and they don't have the resources, the strong balance sheet, and the profitability that we have. So if we are, able to continue according to our plans, even if, if we need to take a hit of 1% or 2% in profitability, I think it will be, it will pay off big time. Same thing happened in COVID, by the way. We took a hit for a quarter or two. We kept everybody on board. We didn't terminate or lay off people. And as soon as the market came back, we were able to take over the market, because all the other companies that did lay off struggled to rebuild their teams. Okay. I think that what's important is the whole geo, you know, geopolitical thing with Israel, and I think investors probably need to hear about that because it's probably a concern, because we're an Israeli company. I can tell you right now, this is where Moshe excels. You know, the bigger the crisis, the better we do. We've got logistics plans, contingency plans, three different types of manufacturing plants. You know, 30 mi from the border up north, we get rocketed, you know, still moving through it, double shifts. So, this is not a concern. I wanna make sure that people understand that. Because maybe for other companies it is in Israel, but we want the emotions to not. Yeah. I want to put people at ease about that. Yeah, man, that's where military service kind of comes in handy in this, situations like this. There's a lot of you have involvement or experience in the military. Yeah, that's helpful, color. I appreciate that, because that was a bit of a scary situation over there and, and tough in a lot of ways, but, but in those early weeks and months, we didn't really know which way that was gonna go. So we appreciate the color. Just one other question on geography. I think the idea was, did U.S. do a little bit better just because some of the financing and, and maybe cyclical volatility and, and demand with the U.S. on that? I think one of the reasons the U.S., the O.U.S. is going to grow faster is because we started developing the O.U.S. market only later. Okay. You know, last year as a company. So we still have a long way to go there. We were investing heavily in developing the international markets after the IPO. Immediately after COVID happened, we developed international countries during COVID. Only now we have most of what we did, and we went to [audio distortion]. Hey, we missed this. Please send a question on cash generative. We get the question often in this situation: does it make sense to cut something in, and what are some of the parameters we think about to make something a good fit or a bad fit? So I think in terms of priority, we really think M&A is a main priority for us, for acquisition. We are trying to be very methodical about it, and every opportunity that we're looking at, we want to make sure that we put the accretive to the EPS within one year. In the first year, we expect the accretive. Again, it's challenging, I'll give you that, just because of the fact that we are so profitable and we have a very healthy EPS. It's very challenging to find something within a year that will be accretive, but we are very disciplined about it, and I hope that the investment community appreciate it. Sure. I agree with you. Thanks so much for your time.