Good morning, and thank you for participation. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder, this conference call will be recorded. I would now like to turn the call over to Cameron Radinovic of Burns McClellan. Mr. Radinovic, please go ahead.

Thank you, operator. Good morning, and welcome to the LENSAR Third Quarter 2024 Financial Results Conference Call. Earlier this morning, the company issued a press release providing an overview of its financial results for the quarter ended September 30, 2024. This press release is available on the Investor Relations section of the company's website at www.lensar.com. Joining me on the call today is Nick Curtis, Chief Executive Officer, who will review the company's recent business and operational progress. Following his comments, Tom Staab, Chief Financial Officer, will provide an overview of the company's financial highlights before turning the call back over to the operator to facilitate answering any questions you may have. Today's conference call will contain certain forward-looking statements, including those statements regarding future results, unaudited and forward-looking financial information as well as the company's future performance and/or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause the company's actual results, performance or achievements to be materially different from any future results or performance expressed or implied in this presentation. You should not place undue reliance on these forward-looking statements. For additional information, including a detailed discussion of the company's risk factors, please refer to the company's documents filed with the Securities and Exchange Commission, which can be accessed on the website. In addition, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, November 7, 2024. LENSAR undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this live call. With that, it's my pleasure to turn the call over to Nick Curtis. Nick?

Thank you, Cam, and good morning to everyone. I appreciate you joining us, and I'm excited to report that LENSAR had another record-breaking third quarter. Starting from an ALLY System placement standpoint, the third quarter was fueled by the recent market expansion to the EU and Taiwan as we placed a total of 24 new ALLY Systems, an outstanding 118% increase over what had been a strong third quarter of 2023 and a 41% increase over the second quarter of 2024. This was driven in part by very solid performance outside of the United States, where we sold 11 ALLY Systems following mid-third quarter regulatory clearances in Europe, Switzerland, and Taiwan. The rapid trajectory and success of the ALLY international launch speaks to several key factors. First, the advanced planning and collaboration between our commercial team and distributor partners in training, field service and clinical applications as well as our on-site assistance with first installs allowed for a rapid response after clearance to ship ALLY Systems. Second, we properly prepared the market, building interest by supporting our partners in attending multiple conferences, meeting with surgeons and performing demos, shared learnings from U.S. launch and clinic experience. Third, worked with our distributor partners on two of the larger PE groups in securing ALLY System commitments. Four, facilitated U.S. KOL surgeons using ALLY to network and perform presentations in several of the conference venues. And last, I was fortunate enough to have participated in several panel discussions just prior to receiving clearance and shortly thereafter, the AECOS European meeting in Prague and recently, the ESCRS in Barcelona. I'd like to recognize and thank our distributor partners for their close collaboration and commitment in making the initial ALLY launch so successful. The strong global interest in ALLY is creating a healthy expansion of…

Thank you, Nick. Just a few remarks from me on our extremely strong third quarter performance. Revenue was $13.5 million in the third quarter of 2024 compared to $9.8 million in the third quarter of 2023, representing an exceptional 38% increase. While we experienced growth across all revenue line items, the strong quarter can be largely attributed to the 11 systems sold outside the United States following regulatory approvals in the European Union and Taiwan. These clearances represented a huge milestone for us, opening operating regions outside the United States and allowing us to fill a backlog that had accumulated over the last two years. We expected pent-up demand for ALLY in these regions, but we were a little surprised with the sheer system sales volume given the mid-quarter clearances. Distributor and underlying surgeon demand exceeded our internal expectations. Looking forward, we expect the fourth quarter ALLY demand outside the United States to approximate the 10 to 11 lasers we sold in the third quarter. Another interesting aspect of our results was our trailing 12-month recurring revenue of $38 million, as Nick mentioned in his remarks. This represented a 22% increase over the trailing 12-month activity in 2023. Thus, we are growing our recurring revenue at a 20% plus clip rate with this growth to date entirely associated with the U.S. marketplace as it is too early to see any influence from the recent EU and Taiwan installations. A few other noteworthy aspects of the quarter. We have installed 38 ALLY Systems since June 1, representing an approximate 75% of our total 2024 ALLY placements. Many of these systems have yet to reach optimal steady-state procedure volume due to surgeons summer vacation schedules, the extended timing associated with training multiple surgeons, practice and ASC integration and just normal transition time…

[Operator Instructions] Your first question comes from the line of Frank Takkinen with Lake Street Capital. Please go ahead.

Great. Thanks for taking the questions. Congrats on the really strong results. Maybe I'll start with a little bit more commentary around Q4. It sounds like you provide a lot of anecdotal comments there about you expect it to continue to be strong. But I think if I picked out two things importantly, it was OUS should be at least as good as Q3 and the procedure volumes should be up also solidly in Q4. So maybe can we talk a little bit more about system placement expectations on capital sales side? And then what do you think we should be thinking about for a healthy procedural volume growth rate for Q4? Thanks.

Thanks. Hi, Frank, I appreciate the question, and thank you for the comment on the quarter. We're -- so I would expect very similar, per your comment, similar activity from outside U.S. in terms of systems shipped in the quarter as compared to Q3. It's likely not going to be more, and it's going to be -- it should be right in that same area, if you will, given a system either way, one way or another. In terms of procedures, it's interesting because fourth quarter globally is the highest sort of number of cataract procedures that will be performed globally. And I think -- and on the other hand, there have been a couple of events given the number of hurricanes and things that have gone on here in the U.S. out of everyone's control that have certainly affected doctors anecdotally, and even more specifically, certain high-volume practices where they basically weren't doing surgery for somewhere between one and three weeks in some cases. And in a couple of cases, one or two people are just getting back. That said, because the fourth quarter is the highest volume normal procedure quarter on a global basis, these doctors are committed to trying to get all of their backlog done and on track. It's really important, at the end of the year, for a lot of these patients that have deductibles that have been fulfilled and whatnot to get their surgeries done. So I think we're going to see like a strong flurry and finish despite the hurricane activity in the U.S. as well as the fact that we obviously have several substantive holidays towards the end of the year. So I think it's going to be a little lumpy, but I think we're going to go flying into the end of the year with a really strong procedure growth. We're also working to install quite a number of systems as well with goals this quarter given the backlog and new system activity that we're seeing as well. So I think we'll have good momentum going into the new year.

Yes. And Frank, just to add further color on that. In my comments, I said we expect 10 or 11 systems coming outside of the United States. It's going to be one or the other, but because we fulfilled the backlog over a two-year period, even though it was a short quarter, and we're going to have a full quarter outside the United States, you're right in assuming that the level outside the United States is probably right at, maybe a system shy of the third quarter. And the activity, I said in my remarks, our placement activity in the third quarter was exceptional. I mean it was just a fabulous quarter for us from a placement perspective, and it would be very difficult for us to increase off of that in the fourth quarter from a placement perspective just because it was such a phenomenal quarter based on the ex-U.S. activity.

You got the activity, but the thing is the days left to really...

Yes, with the holidays and that type of stuff. Exactly. And it's really hard on a procedure volume. We expect it to be strong, but with the hurricane and with the unknown ramp-up time of the lion's share of these sites, including with such a strong placement activity in the third quarter, you just don't know when they're going to receive a run rate. But certainly, we've -- we think the procedure volume is going to increase. So it's hard having such an exceptional third quarter and then using that as a foundation for the fourth.

Got it. That's helpful. Maybe if I could ask pretty much the same exact question for 2025. I know it's maybe a little early to start looking out that far, but hoping you guys can start to dial in how we should be thinking about 2025, both from a placements as well as procedure volume growth perspective.

Yes. I think the way I would think about that, Frank, is we'll give some decent guidance going forward when we wrap up the full-year. But as Nick mentioned in his previous comments, this is a game of inches, right? And so we really have to make sure that we have a good idea of when things are going to hit before we really project further than a quarter out. And I don't know if you want to have general comments, Nick, to that.

Yes. I would like to be able to provide you some -- as we get to the end of the year and into 2025, it would be -- I would like to provide you some -- a little more granular guidance as it relates to the procedure, what we expect from a procedure growth because that's going to be a really important measure. We certainly have goals here to continue to gain market share. And that means that we've got to continue to grow the procedures. And given the number of systems, Tom mentioned, the 40-plus systems having installed since June, you got to think about that on a rolling basis, right? Because it's not like they all get installed on the same day. And then it's a race to get them to their 90 days and then, all of a sudden, they're producing procedure numbers. This is rolling. So those 40 systems are being installed in different times, and then they start their training and then they -- and by the way, we do all the training at no charge and all the procedures and whatnot to them. And so that whole part of my discussion where I talked about the path to recognizing revenue and procedure revenue, it takes two to three months from the time it's installed to really see it get at a normalized run rate. And that's rolling. So as we get to the end of the year here, and I start to see what's happening, I would hope to be able to provide some better guidance as we get into 2025, given this large number of systems that we've grown this year.

Got it. That's helpful. And then maybe just for my last one, I was hoping, I think you commented on it a little bit in your prepared remarks, Nick, but just think about the femto-naive market a little bit. How should we think about your strategy there? Do you feel like it's time to go after that a little bit more aggressively? Or is it still, first and foremost, take share and then start to look at femto-naive from there?

It is first and foremost, to take share. And I sort of gave the -- in my remarks, the sort of order of battle, if you will, which, number one, are the competitive sites. And part of this has to do with just -- we have a smaller sales force. We're highly specialized. Our product is very, very specialized. And quite honestly, given where we're moving with robotic cataract laser surgery here, taking someone that heretofore has done nothing and then implementing this in the practice is a far heavier lift for both the customer as well as for LENSAR there. And so the strategy of gaining more momentum and market share through people that have already had some familiarity with these technologies and also our high-volume surgeons with high conversion rates are the -- is our primary focus because that still is very -- that's very fertile ground because with 1,200 lasers in the U.S. alone and 2,000 lasers on a global basis, you have a bolus of lasers there where people have accepted this concept of laser cataract surgery. We're bringing in this robotic and now you're putting a Ferrari in there and they can really grow -- they grow their business. And that's why we've seen 13% of LLS to that and why people that have heretofore never used LENSAR are moving to LENSAR. And so that naive -- that femto-naive market that hasn't done it requires a lot more resource, and we want to make sure that we've got this critical mass around us as well because that's very helpful in moving that market. And so that's still -- it's still a little early for us in that regard.

Got it. That's helpful. Thanks for taking my questions. Congrats again.

I do want to clarify one thing, though. Not to say that we don't have those because we do. We have several accounts that are femto-naive, but it's usually where the customer has expressed interest and they've come forth and are expressing interest rather than our like sort of mining for those right now, if that makes any sense.

Yes, perfect.

Frank, one other thing to understand sort of Nick's comments about the holiday. Remember, for us, to recognize a system placement in the United States, we have to have a contract, ship it, have it installed and have the physicians trained. And with the normal fourth quarter, if you don't have all that stuff done by about December 15 or 18, it's not -- you effectively lose 2, 2.5 weeks of the quarter because of holidays. So that's why I said it's important to appreciate that when you're looking at system placements for the fourth quarter.

Got it. Thank you.

This concludes our Q&A session. I will now turn the call back over to Nick Curtis for the closing remarks.

All right. I'd like to thank everybody for joining our call today and certainly for your continued interest in LENSAR. We continue to look forward to good things here, and I look forward to continuing to update you as we make further progress in the exciting remainder of 2024, and as we move into 2025. Thank you for your support.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.