Zeltiq Aesthetics Earnings: Looking Good on the Inside, Too

By Markets Fool.com

Image source: Zeltiq Aesthetics.

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Zeltiq Aesthetics(NASDAQ: ZLTQ)is starting to step on the accelerator, and that's great news for growth stock investors. The company behind the CoolSculpting machines that freeze away fat cells in non-invasive treatment cycles posted another blowout quarter after Wednesday's market close.

Revenue hit a record $95.2 million during Zeltiq's third quarter, 55% ahead of where it was a year earlier. the prior year's showing. The magic of healthy compounded growth is no illusion here. Zeltiq's top-line growth during the third quarter has risen by 108% in two years and 233% in three years.

Growth is accelerating as Zeltiq's installed base and CoolSculpting's consumer awareness and demand grow. Zeltiq's year-over-year growth during the first three months of the year had slowed to 25% -- its worst showing in three years, accordingtoS&P Global Market Intelligencedata. That rebounded to a 39% uptick during the second quarter and a 55% surge this time around.

Zeltiq scored system revenue of $42.7 million, 46% ahead of its showing a year earlier. It shipped 403 systems during the past three months, bringing its installed base up to 5,657 systems. Headier growth continues to be found in the higher margin consumable revenue segment, consisting essentially of the revenue it generates every time a CoolSculpting machine is used to turn intense cold into a fat cell eliminator. Zeltiq's $52.5 million in consumable revenue represents a 65% surge over the past year. There were 386,854 treatment cycles recorded during the quarter, a "this is only a fad"-thumping increase of 56%.

Cool beans

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Net income soared 142% to $5.2 million, or $0.12 a share. Gross margin took a step back as lower-margin add-on and previously deferred applicators were recognized during the period, but obviously the scalable nature of this business is more than making that back on the way down to the bottom line.

As Zeltiq introduces new products that treat new areas or improve the efficiency of the treatment cycle -- CoolSculpting was originally cleared for love handles a few years ago, but it's now being used to freeze away fat cells on flanks, thighs, stomachs, and double chins -- the platform's popularity continues to grow.

Zeltiq is boosting its top-line guidance, something that isn't a surprise since it's been a quarterly fixture in recent years. It is now targeting $350 million to $352 million in revenue for all of 2016, up from the $340 million to $350 million goal it was forecasting three months ago and the the $320 million to $325 million it was shooting for six months ago.

It may be natural to wonder if CoolSculpting's popularity will pass or if a rival system will eat into its growth, but quarter after quarter Zeltiq keeps zapping away those concerns -- just as it zaps away stubborn fat cells.

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Rick Munarriz owns shares of Zeltiq Aesthetics. The Motley Fool recommends Zeltiq Aesthetics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.