Good day, everyone, and welcome to today's SANUWAVE Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions]. Please note, today's conference is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Morgan Frank, Chairman and CEO of SANUWAVE.

Thank you, Margo. Good morning, everyone. Welcome to SANUWAVE's fourth quarter and full year 2024 earnings call. Our Form 10-K was filed with the SEC last night. Our earnings release was issued this morning, and our updated presentation was made available on the website in our investor section. You can please refer that during your presentation. Joining me on this call is Peter Sorensen, our CFO. And after the presentation, we'll open the call up to Q&A. So, let me begin with the obligatory, forward-looking statements. This call may contain forward looking statements such as statements relating to future financial results, production expectations, and plans for future business development activities. Investors are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company's ability to control. Description of these risks and uncertainties and other factors that could affect our financial results is included in our SEC filings, and actual results may differ materially from those projected in the forward-looking statements. The company undertakes no obligation to update any forward-looking statement. Okay. As a reminder today, our discussion will include non-GAAP numbers. Reconciliations between our GAAP and our non-GAAP results can be found in our recently filed 10-K or the year ended December 31st 2024. Okay. With that out of the way, let's get to good stuff. So last conference call, we spoke about pigs and pythons and how engaging with larger and more sophisticated customers who were capable of purchasing large boluses of products and having found effect on our quarterly numbers was going to be one of the key characteristics of our revenue stream going forward. Q3, as I think many of you noticed, was definitely a pig quarter. Q4 gives us a chance to…

Again, achieving 10% sequential growth from last quarter's previous record as well as strong year-over-year growth of 47%. In addition to top line expansion, we also saw a continued improvement in gross margins both year-over-year and sequentially, reinforcing the strength of our business model. We continue to execute on our goal of rapid profitable growth. With that, let's take a closer look at the numbers. Revenue for the 3 months ended December 31, 2024, totaled $10.3 million, an increase of 47% as compared to $7 million for the same period of 2023. This growth is in line with our previous guidance of 40% to 50%. Gross margin as a percentage of revenue amounted to 77.9% for the 3 months ended December 31, 2024, versus 69.1% for the same period last year. For the 3 months ended December 31, 2024, operating income totaled $2.5 million, which is an improvement of $1.5 million compared to the same period last year, which aligns with our continued initiative to drive towards profitable growth and manage spend effectively. Operating expenses for the 3 months ended December 31, 2024, amounted to $5.5 million compared to $3.8 million for the same period last year, an increase of $1.7 million. This change was largely driven by an increase in noncash expense of stock comp of $1.5 million as we granted stock options to our employees and Board of Directors for the first time in over 6 years. Net loss for the 3 months ended December 31, 2024, was $12.7 million compared to net income of $18.2 million for the same period in 2023. The decrease in net income was primarily due to a change in the fair value of derivative liabilities, which was a $20.3 million gain in 2023 versus a $13.3 million loss in 2024. Most of…

Thanks, Peter. So, moving on to guidance. As you likely saw in our press release, we're guiding to $8.4 million to $9 million in revenue for Q1, which would represent 45% to 55% growth from Q1 of 2024. Q1 is always a somewhat seasonally slower period for medical device, including both systems and consumables as both budgets reset and sort of customer deductibles. We're expecting a slightly smaller drop on a percentage basis versus Q4 than the drop that occurred in Q1 of 2024 as compared to Q4 of 2023. But the last Q1 seasonality remains a fact of life and lifestyle. So, for the year, we're initiating guidance of $48 million to $50 million in revenues, representing a 50% year-on-year growth rate plus or minus 3%. We feel good about our opportunity, about our sales funnel and about our sales and production teams and their ability to generate and meet demand. I mean it's sort of while to me, it's already been 22 months for me here as CEO, I guess, time flies when you're having fun. And it really does seem like we're getting to a good part here. I just want to reemphasize that none of this just happens. Companies exist downstream of their culture, and I could not be more proud or grateful to the team at SANUWAVE. And as ever, our highest reward for good work is more work. So, we keep at it. And we look forward to speaking to you again soon about our further progress. And with that, let's open the call up to questions. Margo, if you could begin to queue them up?

[Operator Instructions]. We'll take our first question from Chris Plahm with Tall Pines Capital. Please go ahead.

Great year. I know you hired -- I noticed you guys hired a new head of sales back in January. Can you walk us through what's changing versus last year and how it's going so far?

Sure. Yes, good question. So, we started 2024 with two salespeople. We ended the year with nine and we will likely end Q3 also with about nine, but three of them will be different than the nine that we ended Q4 with. Ultimately, sort of the change in strategy is reflective of kind of the -- or changing the perception of the best way to sell and market this product. Like we have moved to a deeper, more sort of consultative sale, where we're going past sort of the easy economics of engaging with customers and trying to find ways to build long-term partnerships where we are built -- we're built into their treatment plans, their therapy plans, even their patient enrollment guidelines. And so, this takes a different kind of sale, it tends to come more from the top down. We're starting to engage with, I guess, we've discussed some substantially larger customers. And so, we've changed the sales force and the sale and the head of sales as a way to reflect that, we're really excited about hiring Tim Wern. He is -- I'm not sure if you're aware, he's the -- so Tim was the number 2 for our Board member, Jeff Blizzard when Jeff was the Head of Sales at Aviomad. And so, these are sort of the two guys that took that company from $50 million to $400 million. And so, he came highly recommended and we're really excited to get the band back together again to those two.

Great thanks.

Our next question comes from Carl Byrnes with Northland Capital Markets. Please go ahead.

Thanks for the question and congratulations on the quarter and the progress.

Thanks, Carl. Good morning.

Thanks. Good morning to you as well. You noted in your prepared comments that no customer represented more than 7% of revenue. And I'm wondering with the 135 UltraMIST placements or installs in the fourth quarter, how you might characterize them these placements with respect to large multi order enterprise-type accounts or small kind of one, two system order accounts? And the same with respect to your outlook for 2025. And this is obviously as you move to a larger customer focus.

It's -- the answer to that question gets a little bit complex. We certainly sold a number of ones and Qs in the quarter. We were excited to see a substantial number of new customers in the quarter. We're also excited to see some of our existing customers growing their businesses substantially. We had one significant size customer in the quarter come back and order, I believe, almost 20 systems. So, it's going to be a mix. And I think as we sort of think about planning for our base business, we're assuming sort of an ongoing pace of smaller sales of ongoing uptake from our existing customers. And we're sort of looking at the really big potential sales that might be out there as upside. It's still early for us in terms of getting the grips with exactly how some of these bigger customers are going to want to roll out, whether they want to whether they want to do things all at once, whether they want to do things on a more measured pace. And so, I think it's difficult to give too much guidance about that. But what we are gearing up for internally is to be able to take yes for an answer in a situation like that, where we're trying to build up our inventory of systems quite substantially. We're currently manufacturing UltraMIST systems at a pace of about 25 a week. And we're working to be able to double that on 60 days of notice. That's sort of the challenge I've given to the ops team is if we need to double that, let's be able to do it in 60 days. And I think we're starting to get close to being ready to do that. Well, at least able to do that, it's probably a better way to describe that.

Great. That's very helpful. And with respect to larger customers, I mean, with essentially 20-plus placement orders. Is there any way that you can manage that so there's no lumpy scenarios in any particular quarter?

Well, I mean, I'm not -- I guess I'm not entirely sure what you mean by manage it just from a standpoint of if somebody wants to put getting systems in the field is obviously our goal in systems in the field generate consumables. And so, from our standpoint, we're always sort of excited to do that earlier and to get more patients on care. So, I think it is going to continue to be -- when we give guidance, I think we sort of like to talk about what we think the base rate of the business likely is and this is what we plan to. You don't want to build your business on the assumption that there's going to be a pig for the python every quarter. But I think when they come, we want to be able to move at them quite rapidly.

I got it. That totally makes sense. Thanks so much, and congrats again.

Thank you. And we'll next go to Ian Cassel with IFCM. Please go ahead.

Hi, Morgan. Congrats.

Hey, Ian. Good morning.

Good morning, thanks. I was wondering if you could provide some color on advancing additional kind of confirmatory studies and also maybe perhaps new studies to potentially open up more use cases for UltraMIST?

Yes, sure. It's a good question. The -- I guess -- we're looking at it a couple of ways. Obviously, with the company now on sort of sounder financial footing, it's great to be able to start to think about these things again. We've started some more concerted outreach with some of our KOLs with some of the researchers who have done some studies in the past. I think we'll -- a couple of our customers have some very significant repositories data. And so, I think a couple of -- at least one or two will likely have papers, posters at SAWC this year. One, I know of that has -- that actually has an interesting new application of the product. I don't want to get into too much detail on Stealer Thunder. But we're excited about that. The -- as we go back and look -- but those obviously would tend to be retrospective data analysis. I think as we go forward and say, okay, what prospective studies? Would we want to do going forward? There are a number that have been interesting to us, particularly several that were done in the past showed really promising results, but that were simply underpowered, right? Like we had some study -- we had a study in -- it's up on our website, we just study in 2015 on the split-thickness donor sites that result from skin grafts. And despite only having 27 people in the study, you hit statistical significance on time to reepithelialization from time to time. First time to no drainage and very nearly hit stat sig on bond recurrence at 6 weeks. And that's a big deal because the split-thickness wounds are -- they're really painful and they have a nasty tendency to come back. The recurrence rate at 6 weeks under standard of care was 45%, and the recurrence rate at 6 weeks under UltraMIST was 8%. And so, to only kind of hit a 06 p value there was -- obviously, it's disappointing, but I think it really was just to find me if we can replicate that with a larger study size that that's sufficiently powered, that seems like a really interesting application. And I think that there are a number of other places we could take that, that sort of idea recurrence rates are a big cost here. They're a big fear in things like diabetic foot ulcers, like there are lots of places where it stands to reason that we could have a useful effect on recurrence rates. I think getting into the clinic and trying to validate it could get pretty interesting. So, stay tuned on that. I think over the next quarter or two, we should start to get some concrete plans in motion.

And at this time, we have no further questions. I'd like to turn the call back over to Morgan Frank for any final or closing remarks.

Well, thank you, guys. I appreciate everyone attending this morning, and have a great Friday.

Thank you. And ladies and gentlemen, that does conclude today's program. Thank you for your participation. You may disconnect at any time.