Earnings call transcript: Sofwave Medical Q2 2025 shows strong revenue growth

Sofwave Medical Ltd reported robust financial results for the second quarter of fiscal year 2025, showcasing a 43% year-over-year revenue growth to $21 million. The company achieved its first net income of $1.5 million, driven by significant recurring revenue and efficient cost management. Its stock price surged 17.05%, closing at $2,870, reflecting investor confidence in the company’s performance and growth prospects. According to InvestingPro analysis, the company is currently trading above its Fair Value, with a market capitalization of $251.84 million and maintaining a healthy current ratio of 2.25.

Key Takeaways

• Revenue increased by 43% year-over-year, reaching $21 million.
• Achieved first net income of $1.5 million.
• Stock price rose by 17.05% post-earnings announcement.
• Expanding market presence with nine FDA clearances.
• Strong demand in non-invasive aesthetic treatments.

Company Performance

Sofwave Medical demonstrated impressive performance in Q2 2025, with significant year-over-year revenue growth of 43%. The company reported its first net income of $1.5 million, a milestone that highlights its successful transition to profitability. While InvestingPro data shows the company was not profitable over the last twelve months, with a -$4.67 million net income, Sofwave’s strategic focus on expanding its market presence through innovative products and geographic expansion has paid off, as evidenced by its robust financial results and strong revenue growth of 18.92% in the last twelve months.

Financial Highlights

• Revenue: $21 million, up 43% YoY
• Recurring Revenue: $9.2 million, up 53% YoY
• Gross Margin: 75.5%
• Net Income: $1.5 million
• First Half Year Revenue: $37.7 million, up 35% YoY
• First Half Profit: $400,000
• Cash Position: $24 million

Market Reaction

Sofwave Medical’s stock experienced a significant increase of 17.05%, closing at $2,870. This surge reflects the market’s positive reaction to the company’s strong financial performance and growth prospects. InvestingPro data reveals impressive returns, with a year-to-date gain of 64.01% and a six-month return of 53.44%. The stock’s movement is notable within its 52-week range, nearing its high of $2,966. The market’s confidence is further bolstered by Sofwave’s strategic initiatives and innovative product offerings. For deeper insights into Sofwave’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Looking ahead, Sofwave Medical anticipates continued high double-digit growth, driven by expanding into new markets and strengthening provider partnerships. The company projects revenue forecasts of $67.11 million for FY2025 and $72.14 million for FY2026. With a moderate debt level and liquid assets exceeding short-term obligations, Sofwave’s focus remains on meeting the increasing demand for non-invasive aesthetic treatments and enhancing its product portfolio. Discover more exclusive insights and financial metrics with InvestingPro, including 8 additional ProTips and comprehensive financial health scores.

Executive Commentary

CEO of Sofwave Medical emphasized the strong market demand for the company’s energy-based volumization treatments, stating, "We see the tailwind for the rising demand for energy-based volumization treatments to be very, very strong." The CEO also highlighted Sofwave’s growth trajectory, noting, "Softwave is the rising star. The proof is in the numbers."

Risks and Challenges

• Market competition: Sofwave faces intense competition in the aesthetic procedures market, which could impact its market share.
• Regulatory hurdles: Navigating FDA clearances and international regulations remains a challenge.
• Economic conditions: Macroeconomic pressures could affect consumer spending on elective procedures.
• Supply chain disruptions: Potential disruptions could impact production and delivery timelines.

Sofwave Medical’s Q2 2025 earnings call highlighted the company’s strong financial performance and strategic growth initiatives, positioning it well for future success in the competitive aesthetic procedures market.

Full transcript - Sofwave Medical Ltd (SOFW) Q2 2025:

CEO/Founder, SoftWave: Thank you, Shimon. Good morning, everyone. We are very excited and pleased to report our Q2 twenty twenty five results. For the quarter, we achieved $21,000,000 in revenue, which represents a 43% year over year growth. Of these revenues, dollars 9,200,000.0 came on a recurring revenue basis, which represents a 53% year over year growth.

Our margins were 75.5% and we reported as well our first ever net income of $1,500,000 For the first half of the year, our revenues were $37,700,000,000 which represents a 35% year over year growth. And we are also reporting a profit of $400,000 for the first half. We ended the first half of the year with $24,000,000 in cash and we have performed over 600,000 treatments with SoftWave since we began commercialization. So what’s going on in the market? Because I’m sure all of our investors are hearing very different things.

We all are very aware of the geopolitical and economic uncertainties that are out there. There are headwinds with consumer confidence and with capital purchases in general, as well as we have the fact that tariffs are impacting certain of our competitors, particularly in The U. S. We have certain Korean and Chinese entrants there that are struggling right now to get a toehold in the marketplace. So this is improving our competitiveness.

And if we look at the market in general, we see the core market of the plastics and germs remaining quite healthy. However, the med spa market with access to capital and high interest rate is being challenged. Now, the headwinds, there are crosswinds and tailwinds. So we look at the glass as being more than half full from the standpoint that even in the second half of the year, with continued geopolitical concerns, high interest rates and tariffs, we see the tailwind for the rising demand for energy based volumization treatments to be very, very strong. People want a natural appearance.

We see the use of filler usage declining and GOP1 usage increasing. We have the ideal product at the right place and at the right time. So as we look at the quarter, we had exceptional results. There were many more high points than low points. We tend to be self critical.

We of course see opportunity to do even more. I can say the performance was balanced around the regions. There wasn’t any one specific order that made the quarter. We executed very strong across all levels despite the geopolitical considerations that happened in the region. We had a very, very strong finish in June.

Our brand awareness and total sales remain at record levels. We also, in terms of our product in the ROI positioning, it’s emerging as superior in terms of the value proposition, why patients get the procedure and why patients buy. We’re demonstrating time in and time out that we have the superior product and the best offering for support to the customer. And we see, despite what other companies may report, we see a growing demand in the marketplace for tightening, toning and lifting, particularly within the core segment. A few interesting things I want to point out as well.

We look on the next slide, please. If we look at the most recent study performed by McKinsey that was just published in May, they talk about the GLP phenomenon and how it’s driving aesthetic procedures. 63 of their group of patients that were surveyed are now seeking facial aesthetic procedures that were absolutely new. These are new patients coming in and seeking aesthetic treatment for the first time. And if you look as well, just about two thirds of these patients lost between eleven to 30% of their body weight, leading to all sorts of concerns about loose skin, laxity, sagging, patient volume loss, as well as muscle mass loss.

Now, statistics just published by ISAP support this. Now the marketplace is cheap. The marketplace for aesthetic procedures is still very strong, but you need to be in the right segment. We look here at this graph on the bottom of this chart, we see of course the exponential rise in the GLP-one use, particularly in the last two years. One treatment category in particular has completely fallen off the radar, which is the desire to have energy based devices reduce fat, fat destruction devices.

According to ASAPS and their global survey, this is off by 40% from ’23 to ’24 and the downward trend continues. On the opposite side of this, the demand for skin tightening grew by 39 from ’23 to ’24 and we expect this trend to continue. We see fillers, I mentioned just previously, people want the natural look as well. Filler volume is down. And I think this speaks to that.

This was thousands of physicians that are poor providers that build out a structured survey and the numbers are the numbers are the numbers. It’s a very strong market for what Softwave is offering the best in class. There’s demand for no downtime, lifting and toning devices that have consistent best of breed results that are delegatable, that the doctors and providers can make money on and have a proven predictable ROI. So the challenge is as well, consumer spending. So what are we selling in that sense?

We sell a device and we sell pulses, but everything we do has to provide competitive advantage to our providers. They simply have to have a better offering. They’re competing for patients. Patients want the best results. They want the latest and greatest.

They want the best technology that has the best outcome. Doctors want the competitive edge. They need to offer software. What’s also in their benefit is something that’s delegatable, where they can use anyone in the office and have a high throughput throughout their treatment rooms. They have overhead just like we have overhead in business and like, and they have a very suit view when they make an investment into this marketplace.

And the other thing they want is they want national branding. They want the companies to do the lifting in terms of the awareness before that patient ever gets to their office and ever gets in their chair. Now software is the rising star. The proof is in the numbers. The proof is in our growth that we have the best solution for non invasive lifting and tightening.

We’re ideally positioned today and tomorrow from the standpoint we have a holistic approach to the customer. We see these customers as our partner. We’re their partners with patient acquisition and patient retention. And we’re providing the vehicle to them, not only with technology, but in the support services and in the brand awareness. Again, that drives the demand for the procedure.

Patients are coming back. The phone is ringing for them to get to the practice and they’re coming back for more and more treatments. And we see this in our pulse numbers. The brand awareness is critical. The other thing that’s also important is once a provider makes investment into a given product, they wanna make sure their margins are protected.

They look at gross margins just the way we do from a corporate perspective. And we have a feature in our offering which allows for minimum advertised pricing protection, which we routinely police and make sure that we manage to make sure that our providers and the software treatment is viewed as premium so that the provider can continue to make a high gross margin. So when he thinks about offering a patient that presents himself with all the multiple of choices that he or she may have in the practice, soft wave is gonna make the highest margin on. So soft wave becomes the treatment of choice. So the strategy to take market share, again, is a slide from the last presentation where we continue to go into new markets based upon regulatory approvals.

Just recently, we announced the approval of the Japanese market. Hopefully China somewhere in the future, we have access to a market such as that. We have other markets on our radar from Russia to Brazil where we see the opportunity again to add some of these top 10 markets in terms of our go to market strategy, expand our coverage, making sure the provider, the customer is successful, making sure the product works within their practice, that they get consistent outcomes, that their patients are satisfied, continue to work with them on delivering a significant ROI, making sure that it’s scalable, that they continue to be able to treat more and more patients and integrate into any practice. Our device fits into any practice. It’s becoming a staple amongst, we have certain providers where the first device they’re buying now is software.

They may have just been doing injectables or in certain cases, just surgical procedures. The first device that they are considering now because of the growing demand in tightening now is Softwave. And again, this is driven by patient awareness across the various channels that are available to us. So brand awareness, you know, some interesting things are coming out of these numbers. First off, we need to do this in both B2C and B2B.

You need to drive, you need to sell devices, you need to drive demand procedure, and you need to be very, very careful how you spend this money. And as you look at our financials, you’ll see actually our sales and marketing expense is significantly dropping despite the fact that the awareness is going up. Recently, we talked about last quarter the Kardashian effect, but we have many more influencers coming on board organically as a result of that. Our website visits have doubled despite the fact a lot of people are going to AI engines now for searches or website visits are a 100% year over year. And I’m gonna introduce a new term that I think we should start looking at in the future, which is called share of voice.

Now what share of voice means, it means that how often using key search words such as GLP-one, weight loss, skin laxity, muscle tone, very competent, highly competitive keywords across 10 competitive companies. Softwave’s share of voice was recently measured at 34% in Q2. We’re going to increase this as well, and this means as consumers look for any of these major keywords as they tie together solutions for the lax skin, for muscle toning and the like, that soft wave appears either in the number zero or number one position in the Google search results. We had recently, I think it was ten days ago, we had another post organically by Chloe Kordasham. You can see the spike in the numbers.

You can see how it cascades, how it amplifies here. The mentions, when something happens, goes across the whole their entire network. We picked up 16,000 followers as a result of Khloe Kardashian’s last post. And, again, this is all organic at this point in time. If we look at the numbers in general overall, across all the social metrics, they’re all flashing green across every potential social channel.

It’s significant. It’s significant, the number of TikTok views, significant, the number of views on YouTube. The percentage increased. The organic reach has increased close to 600%. What’s really interesting and really defines the quality of this content is the engagement rate.

Engagement rate means like, share or comment. The industry average for beauty and aesthetics is 1.5%. We were above that last year in Q2, we were 2.3% and now we’re at 8.3%, 73% year over year outperforming the industry by 400%. We built a significant platform. We made the investment since day one and having best in class digital expertise.

It’s appearing in the numbers as our national campaigns, which we see on the next slide, which illustrates we had, we have a community. It’s very, important that you have social proof and you have a community of people that go out and because you don’t wanna do it all on your own. You want all your users, you want all your friends, to make sure that they’re engaged and involved when you do something. So the Got Lived campaign was highly successful. We ran this on June 6.

The click through rate, meaning the number of people who clicked on a link was 8%. The average click through rate on most posts is 0.6% and on the most successful, most successful campaigns of all sorts, 5% is phenomenal rate and we achieved an 8% rate. As well as if you look at our PR campaigns, we won additional awards and highly influential magazines such as Elle, Women’s Health and the like. So to summarize all of those numbers and before I turn it over to Shimon, just a few closing words. First off, we made the investments in brand visibility and influence partnerships and national campaigns.

They are paying off. They’re paying off not only in the numbers but the demand generation that’s happening out there. We’re creating buzz. We’re filling appointment books. A happy customer is one that’s treating with the device.

They’re making money, the patients are coming back. That’s the power of what we’re doing and how we’re approaching the market. And this demand we see as something like a perpetual motion machine and our viewpoint and how customers are trusting us, we view it as a partner. It’s a very, very different approach to most other aesthetic device companies. And at the end of the day, since our business model depends upon selling pulses, and when you look at the number of pulses greater than 40% that we’re selling in every growing number, this is significant and will continue to generate what we believe to be high double digit growth and exceptional profitability.

I’d like to now turn it over to Shvelle.

Shimon, SoftWave: Thank you very much,

CEO/Founder, SoftWave: So just to close this of the presentation, just a few of the highlights. We are truly delivering next generation technology with very strong intellectual property portfolio across both the Softwave and Pure Impact technology. We’re disrupting the industry that has outdated solutions. We’re achieving rapid industry adoption. Last quarter, 43% revenue year over year is a lot illustrative of what Softwave is capable of doing.

We have created a company with scalable and lean infrastructure, and we believe that we can continue to support high growth and profitability. We also have done all the homework and all the preliminary work in a very broad range, nine FDA clearances around lifting, laxity, toning, and wrinkle reduction on the face and neck, as well as other areas such as cellulite and body. The arm laxity and muscle toning represents another major, major opportunity for us. We have significant recurring revenue. We’re not in the box business.

We are selling holistically. The device, our value proposition is unique, wherein our pulses now represent 40% of our total revenue with the continually expanding volume of treatments being conducted. We have significant brand awareness and social media following with over a million followers. I’d like to close this portion of the presentation. Now I’ll open it up for questions and answers.

Shimon, SoftWave: Thank you very much,

CEO/Founder, SoftWave: second question I would like to refer to you is: What are the reasons for the increase in sales in Europe? Challenger market capability is critical. So in years gone by and other major aesthetic companies, we had as many as 110 countries. Softwave now presently has in the low 40s in a number of countries. And so we’re building it not only with the training rule with the larger countries contributing.

We’ve also added on distributors in Eastern Europe as well, as well as our efforts in The UK where selling direct is beginning to yield benefits for us. I want to thank Lou and Assaf for being here with us and building this wonderful company. And thank you very much everyone, and Asaf, Lou and myself are of course available to any questions, comments or complaints. Thank you very much.

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