Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DarioHealth Corp (DRIO, Financial) reported a significant revenue increase of 111% year-over-year, reaching $7.42 million in Q3 2024.
- The company achieved a gross margin of 83% in its B2B2C business, reflecting strong operational efficiency.
- DarioHealth Corp (DRIO) secured 10 new client contracts in Q3 2024, with expectations to add 5 more by year-end, indicating strong business momentum.
- The company successfully reduced non-GAAP operating expenses by 15.9% sequentially, demonstrating effective cost management.
- DarioHealth Corp (DRIO) transitioned its Pharma business to a subscription-based model, enhancing revenue predictability and stability.
Negative Points
- Despite revenue growth, DarioHealth Corp (DRIO) is not yet cash flow positive, with a target to achieve this by the end of 2025.
- The company faces challenges in converting new client logos into meaningful revenues efficiently.
- DarioHealth Corp (DRIO) is still in the process of integrating recent acquisitions, which may pose operational challenges.
- The transition from milestone-based to subscription-based revenue in the Pharma channel may initially create revenue volatility.
- The company is undergoing significant organizational changes, including budget reallocations, which could impact short-term operational stability.
Q & A Highlights
Q: As we approach 2025, can you provide some guidance on how we should think about the 2025 growth range for B2B2C revenue?
A: Erez Raphael, CEO: We have around 25 new clients this year, which is more than a 30% increase in our client base. While we are not providing precise guidance, we expect to reach a $50 million run rate by the end of next year, which will make the company operationally cash flow positive.
Q: The B2B2C revenue stepped up sequentially this quarter. Should we continue thinking about the annual range of $8 to $9 million as the continued range going forward?
A: Erez Raphael, CEO: On the B2C side, we are looking at an $8 million range, which should remain stable. For B2B2C, we are projecting a growth of 50% to 70% in revenues this year.
Q: Can you share what you estimate each of the new Pharma customers can contribute, particularly the large Pharma customer?
A: Steven Nelson, Chief Commercial Officer: We have a range for these accounts, from $500,000 to $5 million, depending on their goals and scale. We are working to convert milestone-based contracts to platform fees for more predictable revenue.
Q: Do the prior Pharma partners remain on track under the legacy model?
A: Steven Nelson, Chief Commercial Officer: We aim to convert existing contracts to more stable, predictable revenue models. The goal is to eliminate revenue lumpiness and achieve a healthier revenue mix.
Q: What are the key levers for OpEx improvement, and how do you plan to grow on a more stable OpEx base?
A: Erez Raphael, CEO: We have absorbed an entire organization with minimal increase in OpEx. We expect to reach a $41 million run rate by Q1 2025. We've strategically shifted budget from R&D to sales and marketing, focusing on revenue growth with existing assets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
