Hey, good morning, and thanks everybody for joining us for our next session here at the Jefferies Private MedTech Virtual Summit. I am Matt Taylor, the U.S. Medical Supplies and Devices Analyst here at Jefferies. I am very pleased to be joined by the management team from SofWave Medical. They are going to give a presentation here in a few minutes, and we might have some time for Q&A at the end. I want to introduce Louis Scafuri, who is the CEO of SofWave, and Assaf Korner, the CFO. Guys, why don't you take it away and I will come back at the end with the Q&A.
Thank you, Matt. This presentation will be covered by the safe harbors. SofWave is the emerging market leader in non-invasive aesthetic devices. We have been a public company since 2021 on TASE. We have a global presence. We are selling in over 50 countries. Our products have over 12 FDA clearances, and we are a high-growth company, with our compounded annual growth rate being over 42% over the last five years. We focus very differently beyond the capital model. We have a utilization model where 43% of our revenue in 2025 came on a recurring basis, and this continues to grow as our product continues to become the standard. We are cash flow positive. A glimpse at last quarter, we achieved $29.96 million or $30 million in revenue, which represents a 43% year-over-year growth at a 76.5% gross margin.
What is interesting to note is that close to $14 million, $13.9 million, were usage fees, which was up 52% year-over-year. In terms of our profitability on an IFRS basis for Q2, we achieved $2.5 million as well of profit. In terms of the number of installed base, we have sold 3,100 systems through Q2 since our inception. We have performed over one million treatments, and we have a strong balance sheet with $38.8 million as of June 30th on the balance sheet and no debt. Why are we winning in this marketplace? First off, our business model and our go-to-market strategy, it really gives us great advantage from the standpoint that the product truly is disruptive. We have consistent outcomes. We have done the work related to a clinical study as well as FDA clearance. The results are natural. There is no downtime associated with the procedure.
It is very consistent. The last thing a provider wants to do is having to give their money back to a patient. In our case, they actually come back and ask for additional treatments. The economics for the provider are very strong, in terms of the ROI related to our product in Q2 was over 215% ROI in the first year for our device. In many cases, the practices, it is the number one revenue as well as profit generator. This continues to go as we get the marketing edge in, the brand awareness, the phones are ringing in the practices. The awareness around SofWave is very strong, and it continues to feed in this cycle.
We have a very experienced management team, starting first with our Co-Founder, Dr. Shimon Eckhouse, who is a very well-known inventor in this field, as well as of other medical technologies with over 150 patents issued. He was the founder of a company called Lumenis, as well as Syneron Candela, and he is also the inventor of intense pulsed light technology. I have been with Shimon now for 27 years as a senior executive in both Lumenis as well as Syneron Candela, and before that, I have a very successful track record in cardiology. Assaf Korner, who is on the call here with me, has worked with us for over 15 years and has a very strong background with both public and private companies, as well as strong expertise in the aesthetic space. The rest of our team, again, is highly experienced.
We have, I would say, our hallmark as a company is our ability to execute. You will see that when we get to the financials quarter-over-quarter, milestone-over-milestone. SofWave continues despite all the challenges we have had between COVID, supply chain, geopolitical, and economics, we have continued to have major trajectory versus major headwinds, of course, because of our product and the uniqueness of what we do. We now have a secular tailwind coming into the market. Despite what is on the headlines, this is a market where everyone is living longer, everyone wants to look our best. We have the GLP expansion, which is causing a demand specifically for the sweet spot of SofWave's products, which is for lifting and tightening of the skin. Emerging with the GLP-1s is also with the massive weight loss, the need to regenerate muscles as well.
It is one of these things that no matter what social media or wherever you look, there is extremely strong pull from the consumers for aesthetic procedures at present time. It is amplified by social. People really do their research before they go out to even visit a provider. What they are looking for is consistent results. They want natural-looking outcomes, not the overfilled look, minimum downtime, and comfort matters, all these boxes which we check. We are also finding that today's current patient is also coming back for combination protocols and multiple treatments. It is not just one and done. If we look to the right here of the slide, we are seeing a CAGR in the overall global marketplace by 9% through 2029. This number is staggering, one out of every eight adults. This is from a 2024 number.
We think it is actually higher than this right now with the oral GLP-1s coming available, as well as reimbursement being more available across the U.S., and we are seeing this as well across various markets such as Korea, the U.K., Western Europe, and the like. As a result of this weight loss, people are seeking treatment that basically has the ability to tighten and lift skin. Other products, other technologies in this space, some of the legacy products actually will get into deeper layers and actually will damage the fat and other structures within the facial area and body area. Again, safety, consistency, and patient comfort are all very, very important as this huge population is seeking aesthetic providers. The technology fundamentally is very easy to explain. It is proprietary, unique ultrasound that we have employed in a manner where our IP moat is considerable.
We have over 10 issued patents, over 50 office actions pending, and what we're doing is we're using high intensity, high frequency ultrasound to deliver to the skin in a very, very rapid basis a unique stimulation injury which targets the mid-dermal area. The mid-dermal area in a range of 1.5 - 2.0 is the area where it's been scientifically validated where collagen, hyaluronic acid, and elastin is being stimulated. We deliver this in a manner where all these beams deliver the energy, again, in very unique methods. The other thing that's really, really important besides the safety is the fact that we're preventing fat injury, that the last thing someone who's lost massive amount of weight is to lose any additional weight in a given area. The way the business model works is very interesting. We sell the capital equipment. The customer buys the SofWave Console.
The customer could be a physician, it could be a med spa, whatever. They buy the system and it comes with the starter pulse pack. What the pulses are is basically these are necessary. These are energy units that are sequentially provided and delivered to the patient, upwards of 150 to 200 pulses to the face and neck for a 30-minute treatment. And at the end of the day, basically, the provider would charge for a procedure like this probably anywhere in the U.S. $2,500 - $3,000. It's a premium procedure. As they use the device, they have the ability to store on device or pay as they go. They consume approximately $200 - $225 per treatment, with the individual unit costing $1.50 per pulse.
If we look at the number here at $225 - $300 cost with a delegatable procedure, it's very safe, very easy to use. The growth is driven by utilization. Basically, the providers who buy our systems year-over-year, we've consistently been able to increase the utilization in each practice. Why? Well, first off, in terms of the business model, it's frictionless.
The provider buys the system and the ROI is four to six months versus competitive units which is much, much higher. We have premium pricing. We have minimum advertised pricing agreed to in our contracts. As we generate and share the success of the treatment, basically the practice can have anywhere from a 70% to 80% gross margin and the patient walks away in many cases wanting the second treatment, wanting additional treatments because of the success of the first treatment.
What we do here is very, very different than other capital equipment companies that people may be aware of. Usually, there's actually some scar tissue around aesthetic companies in the space and with our previous experience developing the market leaders at both Syneron Candela and Lumenis, we learned a great deal. We learned to do the clinical study, understand how the product worked, get the FDA clearances, and how to support the product in the field. Where many other competitors in the marketplace come to market and they'll hype, they'll use hype, they'll market outside their claims, the product hasn't fully been tested on humans, and a year, 18 months later, it goes away. You've seen that in the numbers of some of the other publicly traded companies.
The whole replacement cycle is very, very fast, so the life cycle of the company in many cases is two years. We built SofWave to last from the standpoint that the economics work from both the patient perspective, provider perspective, and from SofWave's perspective. The outcomes are superior. Treatments are repeatable. We have FDA claims supporting both the durability, one per year, or we have other claims supporting specific anatomical areas where you can treat at higher frequency. The sustainable revenue that we have been able to achieve continues to grow as a result of the marketing effort, promoting the brand as a result of patient satisfaction, as well as product line extensions that we have done, both in terms of indication that you are seeing the wide array across the face and body that we have FDA clearance for.
Also in terms of different applicators that actually provide advantage to the provider in actually being able to treat certain areas with better degree of coverage by these different applicators, which we continue to feed and launch into the product life cycle. As we approach the whole area, the growing market for both skin and muscle, we have two disruptive products.
We are offering the SofWave Console on the left, which is for skin rejuvenation across the face and the body. We have also, as well, just recently this year introduced the Pure Impact VIP, which under clinical study and FDA clearance, has been shown to improve functional strength, which is very novel. As we look at patients and predictors of longevity, skeletal muscle mass is one of the major predictors.
As well as if we look at the GLP-1s, people losing large muscle masses such as the gluteal, the thigh. We have built into the unique Pure Impact VIP, the ability to emulate 75 different HIIT or core exercises, which again gives us the superior ability in a combined treatment to affect both rejuvenation, tightening, lifting, and regeneration of the skin, as well as restore muscle in a series of four to six sessions in a superior manner versus any technology that has been in the marketplace to date. The flywheel around all of this, I just want to just back it up one second here. This is a study that was just published in September, absolutely a blinded, peer-reviewed study that shows the functional strength improvements. No other company has done this before, that the researcher is the outgoing president of the American Society of Plastic Surgeons.
Again, foundationally, everything we have done, we have done in terms of we did the work to establish provider trust, so we would be able to have safe and efficacious product on the market. So behind all of this, behind the technologies, behind the fact that devices are all connected to our e-store, they are all Wi-Fi enabled, I reviewed the utilization fees that we have is the brand and consumer awareness.
We have great momentum in this area. We have what is known as share of voice, as measured by Dash Hudson, where across 10 of our competitors, we have 54% of the share of voice in terms of both engagement as well as social sentiment towards SofWave. Our digital strategy has been very effective to date. As we look at growth, as we move forward over here in 2026 and 2027, we see our current customers.
This is one of our strengths, is a very happy install base. The growing in the treatment volumes, of course, we have the tailwind of the GLP-1s as well as people interested in wellness in general. The actual customers are increasing their pulse consumption consistently, and this helps us. Some of our best advocates are the satisfied customers. Last year in our customer satisfaction survey, 94.8% of our entire U.S. install base said they would buy from us again, buy the product again, as well as recommend this to someone else. We have also added treatment protocols for the face and body to improve treatment times, as well as looked at various areas where we can improve product productivity as well.
We have had certain campaigns that are highly recognizable within the aesthetic space, where we look not only at the digital world from the standpoint of SEO on the web, we look across the social channels as well as AI as well. We are very active in that area, that our visibility is strong. We continue to build out our channel to market capability. We have now the clearance to sell in Japan.
We achieved that at the end of last year. We are also expanding in key markets, such as Spain, Brazil, and Germany in Europe. We have lots of upside there. Last week we announced that we obtained the NMPA regulatory clearance in September. This has major long-term significant potential, and it is a very important growth catalyst for the company. Our R&D pipeline is quite active as we look to bring future products to the market.
A bit more about the Chinese approval. This is a market that many consider to be the same size of the U.S. market. We have a partner, a wholly owned subsidiary of Warburg Pincus called HEDK, who are experts in product launch and regulatory approval. They are leading the go-to-market strategy as well. In our study that we conducted there, which we are attempting to have published, it showed over 200 subjects, a very large-scale study, a 95% improvement in the Global Aesthetic Improvement Scale and 81% improvement in the Fitzpatrick Wrinkle Scale. These numbers are outstanding with a very low p-value, and we believe there is a pent-up demand for our product in this market, and our sales and marketing activities have already started. Quick look at the financials. We have continued strong quarterly results with year-over-year results in Q2 at 43% growth.
We also have our usage fees expanding, which grew 52% year-over-year for $13.9 million, and our compound annual growth rate from 2021 through 2025 was 42%. If you look at the quarters, as I said, management executes. We have grown quarter-over-quarter both in terms of console placement, revenue, as well as utilization fees related to the pulse utilization. Our revenue is a split of approximately 50% in the U.S. and 35% APAC, 12% Europe, 3% international. We are selling in, again, 50 countries. We see the potential to sell in over 110 countries. So we are just now getting started in the expansion of our channel to market capability. We have been profitable since Q4 of 2024. We are looking always how do we get more leverage with our revenue growth on every line of the P&L. We are looking for leverage in R&D, in sales and marketing, and G&A.
Here's a snapshot of what it looks like. Last quarter, our gross margins continued to expand, particularly as our volume increases. The pulses come to us, I mean, the pulses are all digital. They come at almost 100% margins, so we want to expand, of course, the utilization of our devices. If we look for the first half of the year, the P&L, again, is very strong on both a non-IFRS. We don't have GAAP on here, but it looks equally strong, the P&L from there. Our balance sheet, I mentioned earlier, we have $38.8 million cash on the balance sheet. We're generating cash right now. We did $3.6 million in Q2 of 2026. As we summarize here, the four elements that really ought to remember. First off, the technology is superior. It's biologically aligned. The results are reproducible from patient to patient. Customer satisfaction is high.
We're in a growth market now. Our business model is not just capital-based. Our business model is expanding the utilization, expanding the success of our customer. We look towards really expanding our leadership in the marketplace that we've established as potentially the standard of care for skin tightening, lifting, and now muscle regeneration. I'll open it up now for questions.
Great. Thanks for a nice presentation there. Let me start with a revenue question. You had really nice momentum, it looks like, the last few quarters, and also consistent growth the last few years. It looks like the growth really stepped up a notch in 2026. I was hoping you could offer some thoughts on why that was. Was it more product-driven, or sales force expansion-driven, or a combination of both?
It's a combination of both. I would say expanding the channel of market capability, adding on countries. In 2025, we were selling in 34 countries. Now we're up over 50. Certainly, having momentum in key markets like Japan and Korea has helped. We've put more feet on the street in the U.S. We've added practice development people to drive utilization. We also have the tailwind of the GLP-1s. People are caring about how they look. They're buying new clothes, and they're also looking to treat the laxity.
Understood. Great. The China approval is fresh off the press and kind of a big deal. I was wondering if you could talk a little bit more about the opportunity there for you specifically. I know it's a big market. Do you think it'll be a material market for SofWave? When will you start to see a ramp-up there?
We think it's going to be a material market. We think both in terms of the launch which will begin in Q4. Through the next several years, we think that we will be able to accelerate our growth as a company as a result of now having this approval. Assaf, do you have anything to add to that?
No, absolutely. We look at it as a major opportunity in terms of number of units that can be sold there. We've been looking at data, and we see that it can be as big as the number of systems sold in the U.S. As a reminder, we don't only sell the equipment, then we have the recurring revenue and the utilization fee that will come from that. Therefore, we see it as a major opportunity.
Understood. Maybe you could talk a little bit more about the pipeline. You've got, obviously, the core platforms for dermal resurfacing and lifting and strengthening. Can you give us a sneak peek at anything that's coming one, two, three years down the road?
Well, we want to treat the total body. Coming out and treating the face when we were all stuck behind Zoom calls during COVID, it was great, right? Everybody wanted that lunchtime treatment. They get back on the Zoom call by 1:00 P.M. But the reality is that sagging skin and muscle loss across the body, being able to do treatments faster, room time is a big thing. How fast for a provider, how fast can they turn over a room? Being able to do a treatment faster across the body, being able to improve the efficacy of the device, being able to— Pardon me. Being able to go ahead and do it at a more comfortable basis for the patient are all meaningful contributions that we can expect in the short run.
Great. Thank you. The muscle data was also very interesting. Could you go into that a little bit more? You mentioned there was some improvement. How much improvement are we talking about? Could you talk about how material that product line specifically is for the company?
The muscle study is very unique, and I'm going to get to the particular study from the standpoint that it was objective testing. It was 38 patients where basically four functional exercise tests were done across typical Pilates or core exercise moves. It was done on a controlled basis. Six treatments were had, and it was assessed by blinded reviewers, and it showed results on average of a 65% improvement in functional strength. What was significant was that it was durable. It remained after week nine, and then we had no adverse events. The physician who did the study was a huge skeptic because of muscle devices had been on the aesthetic marketplace before. He's also a triathlete, and so he was pleasantly surprised to see the improvement in these patients that he had.
He sees all sorts of implications for a variety of patients post-surgery, prior to surgery. He sees this in the case of body after baby and the like, and clearly in the GLP-1s. I would say in terms of we're just now getting started with the launch of the product, I would think right now the material is additive to what we're doing, and I think next year, in terms of the commercial success and the visibility and the adoption of the practice, we expect that to be an exceptional year for this device.
Great. Hopefully, there is a financial analyst version of that you can give to me.
Okay.
But thanks so much for the presentation and the time. Very interesting stuff. Thanks everybody for your interest on the webcast on SofWave. And guys, I hope you have a great rest of your day. Thanks a lot for participating in the conference.
All right. Thank you, Matt.
Thank you, Matt. Take care.
All right. Take care, guys.