AirSculpt Technologies, Inc.

Greetings and welcome to the AirSculpt Technologies, Incorporated second quarter 2025 earnings conference call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I would now like to turn the conference over to Allison Melkin, partner of ICR.

Good morning everyone. Thank you for joining us to discuss AirSculpt Technologies results for the second quarter of fiscal 2025. Joining me on this call today are Yogi Jasnani, Chief Executive Officer and Dennis Deane, Chief Financial Officer. Before we begin, I would like to remind you that this conference call may include forward-looking statements. These statements may include our future expectations regarding financial results and guidance, market opportunities and our growth. Risk and uncertainties that may impact these statements could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we file with the SEC, all of which can be found on our website at .airsculpt.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we will also reference certain non-GAAP financial measures. We use non-GAAP measures in some of our financial discussions as we believe they more accurately represent the true operational performance and underlying results of our business. A reconciliation of these measures can be found in our earnings release as filed this morning and in our most recent PEN-Q, which will also be available on our website. For today's call, Yogi will begin with an overview of our second quarter performance and share an update on our strategic priorities. Then Dennis will review our financial results in more detail and provide our outlook. With that, I'll turn the call over to Yogi.

Thank you, Allison. Good morning, everyone, and thank you for joining today's call. As we outlined in our earnings release this morning, Dennis Dean has announced his intention to retire later this year following a transition to a new chief financial officer. We currently have a search underway to identify his replacement. Dennis has been integral to our business, setting up the financial framework and the team that supported our successful initial public offering and most recently, our common stock offering. I am very thankful for Dennis's partnership. Aesculpt is better capitalized today versus when I joined the business seven months ago, and our transformation is well underway. Now turning to our results. In the second quarter, we made encouraging progress on our strategic initiatives to deliver improved revenue and profit trends. While we continue to operate in a dynamic demand environment, I am pleased to see us realize the early benefits of our actions. This has manifested in three things. A sequential improvement in our -over-year revenue performance, a record level of lead growth, and a meaningful increase in consultation volume. We once again saw strong consumer interest in Aesculpt this quarter with our average revenue per case consistent between $12,000 and $13,000. The quarter also saw us take important steps to strengthen our capital structure with the completion of our follow-on offering, which allowed us to pay down $16 million in debt with no borrowings on our revolving credit facility at quarter end. Looking forward, I am confident that we have the right strategy in place to stabilize our sales and return to growth. In total for the second quarter, revenue was $44 million, declining .7% from the second quarter of 2024, and adjusted EBITDA was $5.8 million for a margin of .3% versus $6.9 million for a margin of .5% in the second quarter of 2024. We narrowed our -over-year revenue decline by 4 percentage points versus the first quarter. The decline in revenue was driven by lower case volume, which reflects the challenging macro environment. Same store revenue, which does not include new centers, improved marginally from the first quarter and declined approximately 22% over the prior year quarter. While we are experiencing early progress from improvements made to our -to-market strategy, our new growth initiatives are only just beginning to pilot and therefore were not expected to drive growth in the quarter. Adjusted EBITDA totaled $5.8 million, marking an improvement from Q1 2025 of $2 million, which mainly reflects the sequential increase in our revenue as well as a more meaningful impact from our cost reduction plan. We have achieved these cost savings while simultaneously enhancing our operational efficiency. We will remain disciplined with regard to spend, focusing on the highest return opportunities. I will now discuss the progress we have made against our business imperatives this quarter, which center on enhancing our culture and improving our -to-market strategy. At AirSkult, we believe it is integral to foster a culture that propels our transformation and positions us for long-term success. Having visited 20 of our 32 centers since I joined AirSkult in January, I have seen firsthand that our teams are committed to deliver against our strategic priorities and are fueled by a deeper sense of purpose in what we are achieving together. Their enthusiasm and continued dedication is truly inspiring, and I am grateful for their efforts as they are the engine behind the progress we have made and the momentum we are building. As you may recall, our -to-market strategy includes five business priorities. First is marketing. We continue to see benefits from our reallocated marketing spend to proven strategies, including search engine marketing, social media, and online video. As a result, we have seen lead generation at record highs with improvements in marketing spend as a percentage of revenue and a reduction in customer acquisition costs. This is a signal that we are better monetizing our marketing tactics, and we ended the quarter with a robust pipeline of leads that we will continue to work to convert to cases. We are laser-focused on using data to optimize our marketing investment by dedicating spend to channels that show performance. Second is optimizing sales to convert these leads into cases. We have been supporting our sales team with enhanced training on key initiatives, including our expanded financing options to ensure they are well equipped to convert interest into cases. Additionally, the expansion of virtual appointments has contributed to higher concert volumes. Third, we are introducing new services to tap into more consumer demand. We launched a pilot of our skin tightening procedure in the second quarter to three centers and plan to extend the pilot into the third quarter to additional centers. We are gaining valuable learnings from the pilot and believe it can be a meaningful opportunity for us given the skin laxity that occurs following the use of GLP-1s. Fourth is enhancing our customer experience to ensure we consistently provide premium results. I have been impressed by the excellent quality of care delivered across our locations. That being said, we recognize there is an opportunity to further elevate the experience with initiatives we have planned in the back half of the year and into 2026. Lastly, we continue to invest in technology to accelerate these priorities. In support of this, we have launched expanded financing options across all our centers and our sales team has been trained on the benefits of these offerings. We expect to see positive impacts on conversion rates in the back half of the year. Second, we upgraded our IT system to enable more efficient routing of sales calls, significantly improving workflow, and increasing the number of consultations booked. This has helped reduce friction for customers and made the process smoother for our team. Third, we expanded the use of Salesforce in the first half of the year, which has contributed to higher consultation volume. By reconnecting with past customers through this platform, we have seen strong response rates. As Dennis will discuss in detail shortly, we are reiterating our annual outlook and currently expect fiscal 2025 revenue in the range of $160 million to $170 million and adjusted EBITDA between $16 million and $18 million. Our guidance reflects the current economic conditions with some conservatism built in due to consumer spending uncertainty but does not anticipate a downturn in the economy. In summary, we have continued to make progress on our initiatives in the second quarter and have seen encouraging signs with plans for the remainder of the year to further improve our performance. Our intense focus on our business priorities and cost management, along with our durable balance sheet, positions us well to return our business to growth and perform at a higher rate of profitability. Overall, I continue to believe that Aesculpt is a compelling business with a competitive mode that is right for disruption and that the best years lie ahead for Aesculpt and its shareholders. And with that, I will now pass it over to Dennis.