Sonendo, Inc. releases financial results for the fourth quarter and full year of 2023

Sonendo, Inc. recently announced their financial results for the fourth quarter and full year of 2023, providing insights into the company’s performance and strategies moving forward. Despite a 4% year-over-year decline in fourth-quarter revenue, Sonendo’s full-year revenue for 2023 reached $43.9 million, representing a 5% year-over-year growth. Notably, the company achieved a significant improvement in non-GAAP gross margin for the fourth quarter, jumping from 27% in the same period of 2022 to 35%. Sonendo’s key priorities for 2024 include commercial execution, cash conservation, and margin expansion, all of which are aimed at bolstering the company’s growth and market presence. They have made strategic changes in their commercial team, reduced spending, divested their practice management software platform, and simplified their manufacturing operations. However, they also announced the departure of Michael Watts, their CFO, after seven years of service. With these developments, Sonendo aims to navigate the market challenges and continue driving growth in the coming year.

Financial Results for the Fourth Quarter and Full Year of 2023

Sonendo, Inc. recently released its financial results for the fourth quarter and full year of 2023. Let’s take a comprehensive look at the key findings and performance metrics for this period.

Overview

Sonendo, Inc. has shown resilience and growth in the face of challenging market conditions. Despite a decrease in revenue for the fourth quarter, the company has managed to achieve significant improvements in its gross margin and loss from operations. Looking ahead to 2024, Sonendo has set clear priorities aimed at driving commercial execution, conserving cash, and expanding margins.

Revenue

For the full year of 2023, Sonendo reported a total revenue of $43.9 million. This represents a 5% year-over-year growth, showcasing the company’s ability to generate consistent and sustainable revenue streams. While the fourth quarter saw a decrease in revenue, Sonendo’s focus on guidance alignment played a crucial role in ensuring that the results stayed in line with expectations.

Gross Margin

One of the highlights of Sonendo’s financial results for the fourth quarter is its non-GAAP gross margin improvement. The company achieved a 35% gross margin, a significant increase from the 27% reported in the same period of 2022. This improvement reflects Sonendo’s effective cost management and optimization strategies, resulting in better operational efficiency and profitability.

Loss from Operations

Sonendo also showcased notable improvement in its non-GAAP loss from operations during the fourth quarter of 2023. The company reported a 33% reduction in loss compared to the same quarter in 2022, amounting to $8 million. This achievement highlights Sonendo’s commitment to cost reduction initiatives and its ability to streamline operations for greater financial sustainability.

Full Year Revenue

Amount

Sonendo’s full year revenue for 2023 reached $43.9 million, marking a significant milestone in the company’s growth trajectory. This robust revenue figure underscores Sonendo’s ability to generate consistent and reliable income streams, positioning the company for future success.

Growth Rate

The year-over-year growth rate for Sonendo’s full year revenue in 2023 was 5%. This demonstrates the company’s ability to navigate market challenges and deliver sustainable growth. With continued focus on executing its commercial strategy and expanding market share, Sonendo is well-positioned to further accelerate its revenue growth in the coming years.

Fourth Quarter Revenue

Amount

Sonendo reported a fourth quarter revenue of $11.7 million in 2023. While this represented a 4% decrease compared to the same quarter in 2022, it is important to note that the company was able to align its performance with the guidance provided. This revenue figure reflects Sonendo’s ability to adapt to market conditions while maintaining a solid revenue base.

Year-over-Year Comparison

Despite the decrease in fourth-quarter revenue, it is essential to examine Sonendo’s performance in the context of the previous year. While there was a decline of 4% in revenue compared to the fourth quarter of 2022, it is important to note that Sonendo’s revenue for the corresponding period in 2022 was exceptionally high. This comparison indicates the company’s ability to sustain revenue levels even in challenging market conditions.

Guidance Alignment

Sonendo’s ability to meet its revenue guidance for the fourth quarter demonstrates the company’s commitment to accurate forecasting and operational execution. By aligning its performance with the guidance provided, Sonendo ensures transparency and reliability in its financial reporting. This approach strengthens investor confidence and supports the company’s long-term growth strategy.

Non-GAAP Gross Margin for the Fourth Quarter

Improvement

Sonendo achieved a significant improvement in its non-GAAP gross margin for the fourth quarter of 2023. The company’s gross margin increased to 35%, indicating an effective management of production costs and improved operational efficiency. This improvement is a testament to Sonendo’s commitment to maximizing profitability while delivering high-quality products and services to its customers.

Comparison to Previous Year

Comparing the non-GAAP gross margin for the fourth quarter of 2023 with the same period in 2022 reveals a remarkable improvement. The gross margin increased from 27% in 2022 to 35% in 2023, showcasing Sonendo’s ability to optimize its cost structure and enhance profitability. This achievement reflects the company’s dedication to continuous improvement and its ability to adapt to evolving market conditions.

Non-GAAP Loss from Operations for the Fourth Quarter

Improvement

Sonendo’s non-GAAP loss from operations for the fourth quarter of 2023 demonstrated significant improvement compared to the same period in 2022. The company achieved a 33% reduction in loss, amounting to $8 million. This improvement reflects Sonendo’s commitment to cost management and operational efficiency, positioning the company on a path towards sustainable profitability.

Comparison to Previous Year

Comparing the non-GAAP loss from operations for the fourth quarter of 2023 with the corresponding period in 2022 reveals a remarkable improvement. Sonendo managed to reduce its loss by 33%, showcasing its ability to optimize its operations and drive greater financial stability. This achievement underscores the company’s commitment to strategic decision-making and its focus on achieving positive financial results.

Sonendo’s Priorities for 2024

Sonendo has identified three key priorities that will drive its strategy and execution in 2024: commercial execution, cash conservation, and margin expansion.

Commercial Execution

Sonendo aims to enhance its commercial execution by focusing on effective sales and marketing strategies. The company will leverage its unique products, such as the GentleWave system, to penetrate target markets and expand its customer base. By strengthening its sales team and optimizing its go-to-market approach, Sonendo aims to accelerate revenue growth and establish itself as a leading player in the dental industry.

Cash Conservation

Prudent cash management is essential for sustainable growth and operational resilience. Sonendo recognizes the importance of conserving cash and optimizing its cash flows to support its strategic initiatives. By implementing cost control measures and prioritizing investments, the company aims to maintain a strong financial position and sustain its growth momentum.

Margin Expansion

Sonendo is committed to expanding its margins by optimizing its cost structure and driving operational efficiency. By continuously improving its manufacturing processes and supply chain management, the company aims to reduce costs and enhance profitability. Margin expansion will enable Sonendo to reinvest in research and development, further enhance its product offerings, and drive sustainable long-term growth.

Changes in the Commercial Team

Objective

Sonendo has initiated changes in its commercial team to enhance focus and efficiency in selling its GentleWave system. The objective of these changes is to streamline the sales process, improve customer engagement, and fuel revenue growth. By optimizing its commercial team structure and leveraging the expertise of its salesforce, Sonendo aims to drive market penetration and enhance customer satisfaction.

Implementation

The implementation of changes in the commercial team involves reassigning roles, enhancing training programs, and aligning performance metrics with strategic objectives. By fostering a customer-centric culture and optimizing team dynamics, Sonendo aims to empower its salesforce to effectively communicate the value of the GentleWave system and build strong customer relationships. These changes will support the company’s commercial execution and drive revenue growth in 2024 and beyond.

Cost Reduction and Operating Costs

Achievements

Sonendo has made significant progress in reducing costs and optimizing its operating expenses. During the fourth quarter of 2023, the company achieved a notable 17% sequential decrease in operating costs, demonstrating its commitment to cost reduction and efficiency improvement. These achievements have laid a solid foundation for improved profitability and financial sustainability.

Sequential Decrease in Operating Costs

The sequential decrease in operating costs signifies Sonendo’s ability to effectively manage its expenses while delivering high-quality products and services. By implementing cost reduction initiatives across various areas of the business, Sonendo has optimized its cost structure and improved operational efficiency. This sequential decrease in operating costs reflects the company’s commitment to financial discipline and its ability to adapt to changing market dynamics.

Divestment and Debt Agreement Renegotiation

Practice Management Software Platform

Sonendo divested its practice management software platform, TDO, to focus on its core competencies and strategic priorities. This decision enables the company to streamline its operations and allocate resources more effectively towards its flagship product, the GentleWave system. The divestment will enhance Sonendo’s ability to generate sustainable revenue growth and maximize value for its shareholders.

Balance Sheet Strengthening

In addition to the divestment, Sonendo has also renegotiated its debt agreement to strengthen its balance sheet. This strategic move provides the company with greater financial flexibility and stability, supporting its long-term growth plans. By optimizing its capital structure and reducing its debt obligations, Sonendo can allocate resources towards strategic initiatives and enhance shareholder value.

Consoles Placed and Net Change in Installed Base

Fourth Quarter Placements

Sonendo placed 58 consoles in the fourth quarter of 2023, contributing to its overall revenue figures. These placements showcase the company’s ability to attract customers and drive adoption of its innovative GentleWave system. By expanding its installed base, Sonendo creates opportunities for recurring revenue streams and long-term customer relationships.

Net Change

The fourth quarter of 2023 resulted in a net change of 57 consoles in Sonendo’s installed base. This indicates the company’s ability to retain and grow its customer base. The net change metric outlines the effectiveness of Sonendo’s sales and marketing efforts in driving adoption of the GentleWave system. By focusing on customer satisfaction and retention, Sonendo aims to strengthen its market position and drive sustainable revenue growth.

In conclusion, Sonendo, Inc.’s financial results for the fourth quarter and full year of 2023 reflect the company’s resilience and growth. Despite a decrease in revenue for the fourth quarter, Sonendo achieved significant improvements in its gross margin and loss from operations. With clear priorities set for 2024, including commercial execution, cash conservation, and margin expansion, Sonendo is well-positioned to drive sustainable growth and deliver value to its shareholders.