Zeltiq Aesthetics Earnings: Keeping Up Appearances

Image source: Zeltiq Aesthetics.

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Zeltiq Aesthetics(NASDAQ: ZLTQ)has carved out a cozy living by making people feel better about the way they look on the outside, making Zeltiq's insides look pretty good in the process. Shares of Zeltiq Aesthetics moved higher in after-hours trading on Monday following its latest financial results.

The company behind theCoolSculpting machines that use intense cold to freeze away fat cells continues to post healthy growth spurts.Revenue hit a record $89.5 million during Zeltiq's second quarter, 39% ahead of the prior year's showing. Putting the power of Zeltiq's healthy compounded growth in perspective, Zeltiq's top-line growth during the second quarter has risen by 90% in two years and 240% in three years.

Zeltiq's year-over-year growth during the first three months of the year had slowed to 25% -- its worst showing in nearly three years, accordingtoS&P Global Market Intelligence

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System revenue clocked in at $39.5 million, 23% ahead of its showing a year earlier. It shipped 364 systems during the quarter, pushing its installed base up to 5,254 systems. Zeltiq has also been successful in moving add-on applicators that either speed up the procedure process or help the CoolSculpting machine tackle new treatment areas.

The real growth at Zeltiq these days is coming from consumable revenue, essentially the money it generates for every treatment cycle. Consumable revenue soared 54% for the quarter. CoolSculpting machines completed 370,122 revenue cycles during the period, up 47% since the prior year.

Zeltiq did post a small deficit for the period, a rare sight, as it had registered a loss only during the seasonally sleepy first quarter in each of the past three years. However, with gross margin on one hand that took a step back, given the product-mix shift to new add-on applicators, and a dramatic spike in sales and marketing costs on the other hand as the company put some muscle behind a national consumer-direct campaign, the red ink isn't a surprise. It's near-term pain for the sake of long-term gain.

CoolSculpting keeps heating up

CoolSculpting is finally starting to become a household brand. Zeltiq experienced 4 million visits to its informational website through the first half of this year, and its research shows that there are 30 million people potentially interested in its non-invasive procedures.

As CoolSculpting's applications grow -- it was originally cleared for love handles, but it's now tackling flanks, thighs, stomachs, and even double chins -- consumer acceptance should also continue to widen.

Once again we see Zeltiq boosting its top-line guidance. It's now targeting $340 million to $350 million in revenue this year, up from its earlier outlook of $320 million to $325 million. This is something that's been routinely happening since 2013. The news isn't as comforting as we work our way down the income statement. It now sees a leaner gross-profit margin and a small loss for the year.

Investors are still being rewarded with a 4% pop in after-hours trading on Zeltiq stock. They're valuing Zeltiq's ability to expand its CoolSculpting system installations over near-term profitability, and for now that's what the market finds aesthetically pleasing.

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