Eargo Inc (EAR) 2021 Q2 法說會逐字稿

Thank you for standing by, and welcome to the Eargo Second Quarter 2021 Earnings Conference Call. (Operator Instructions) As a reminder, today's conference call is being recorded. I will now turn the conference over to your host, Mr. Nicholas Laudico, Vice President, Investor Relations. Please go ahead.

感謝您的耐心等待，歡迎參加 Eargo 2021 年第二季財報電話會議。 （操作員說明）提醒一下，今天的電話會議正在錄音。現在我將會議交給東道主投資者關係副總裁 Nicholas Laudico 先生。請繼續。

Good afternoon, everyone, and welcome to the Eargo Second Quarter 2021 Earnings Conference Call. The press release and slides to accompany this call are available on our Investor Relations website at ir.eargo.com. Please note, we have also provided supplemental historical financial information at the end of the slide presentation. As a reminder, both this live call and a digital replay will be available on our IR website.

大家下午好，歡迎參加 Eargo 2021 年第二季財報電話會議。本次電話會議附帶的新聞稿和投影片可在我們的投資者關係網站 ir.eargo.com 上取得。請注意，我們還在幻燈片演示的末尾提供了補充的歷史財務資訊。謹此提醒，我們的 IR 網站上將提供現場通話和數位重播。

Joining me on today's call are Christian Gormsen, President and Chief Executive Officer; and Adam Laponis, Chief Financial Officer. Christian and Adam will provide prepared remarks, and then we will open the call to Q&A.

與我一起參加今天電話會議的還有總裁兼執行長 Christian Gormsen；亞當‧拉波尼斯 (Adam Laponis)，財務長。克里斯蒂安和亞當將提供準備好的發言，然後我們將開始問答環節。

Before we begin, I'd like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in our slides. We wish to caution you that such statements are based on management's current expectations and beliefs, are forward-looking in nature, are subject to risks and uncertainties, and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors referenced in our press release today as well as our filings with the SEC.

在我們開始之前，我想提醒您，電話會議中討論的一些事項將包含有關我們幻燈片中概述的未來事件的前瞻性陳述。我們希望提醒您，此類陳述是基於管理層當前的預期和信念，具有前瞻性，存在風險和不確定性，實際事件或結果可能存在重大差異。可能導致實際結果或事件出現重大差異的因素包括但不限於我們今天的新聞稿以及我們向 SEC 提交的文件中提到的因素。

We will also be discussing non-GAAP financial results on today's call. Please refer to today's press release and slide presentation for full GAAP to non-GAAP reconciliations. With that said, I will now turn the call over to Christian.

我們也將在今天的電話會議上討論非公認會計準則財務表現。請參閱今天的新聞稿和幻燈片演示，以了解完整的 GAAP 與非 GAAP 調整表。話雖如此，我現在將把電話轉給克里斯蒂安。

Thank you, Nick, and good afternoon, everyone. Our business continued to outperform in the second quarter as we again executed on several very significant operational milestones. To name a few listed on Slide 5, delivered robust revenue growth of 44% year-over-year. We completed the initial launch of Eargo 5, our most revolutionary product ever. And we completed the acquisition of a web-based hearing screening technology called Clementine, which I will discuss more in a moment.

謝謝尼克，大家下午好。我們的業務在第二季度繼續表現出色，我們再次實現了幾個非常重要的營運里程碑。僅舉投影片 5 中列出的一些公司為例，其營收年增了 44%。我們完成了 Eargo 5 的首次發布，這是我們有史以來最具革​​命性的產品。我們也完成了對基於網路的聽力篩檢技術 Clementine 的收購，我稍後將詳細討論該技術。

Before turning the call over to Adam for a more detailed review of our financial performance, I will first briefly highlight our revenue and volume growth drivers and then elaborate on the strategic benefits of the milestones I just summarized.

在將電話轉交給 Adam 更詳細地審查我們的財務業績之前，我將首先簡要強調我們的收入和銷售成長驅動因素，然後詳細說明我剛剛總結的里程碑的策略效益。

Starting with revenue growth. We achieved another quarter of robust growth with revenue up 44% year-over-year despite a particularly challenging comparison to the second quarter of last year when we benefited from the early 2020 launch of HiFi and from the significant acceleration of our insurance business. This performance was also against the backdrop of a second quarter 2021 cable TV viewership in the 50-plus demographic that was at a 5-year low.

從收入成長開始。儘管與去年第二季度相比特別具有挑戰性，但我們仍實現了另一個季度的強勁增長，收入同比增長 44%，當時我們受益於 2020 年初推出的 HiFi 以及保險業務的顯著加速。這一表現也是在 2021 年第二季 50 歲以上有線電視收視率處於 5 年來最低水準的背景下實現的。

In the second quarter of 2021, we also delivered cross systems shipped growth of 39% and recorded a return accrual rate of approximately 24.1%, representing an improvement of 3 points year-over-year. Revenue growth in the second quarter was once again supported by continued penetration into the insurance market. We were also pleased to grow cash pay volumes both year-over-year and sequentially despite lower media viewership in the quarter.

2021年第二季度，我們也實現了跨系統出貨量成長39%，回報率約24.1%，年增3個百分點。第二季的營收成長再次受到保險市場持續滲透的支撐。儘管本季媒體收視率較低，但我們也很高興現金支付量較去年同期成長。

Turning now to Slide 6 and 7. We're incredibly pleased and excited to have launched Eargo 5 on schedule with initial shipments occurring late in the second quarter to select repeat customers and a full commercial launch on July 13. Eargo 5 is the smallest in-canal rechargeable device we've ever produced. The device operates on a completely new platform across hearing instruments, charger and mobile app and delivers significant sound quality and feedback cancellation improvements over an already impressive NEO HiFi.

現在轉向幻燈片6 和7。最小的耳機。該設備在一個涵蓋助聽器、充電器和行動應用程式的全新平台上運行，與已經令人印象深刻的 NEO HiFi 相比，提供了顯著的音質和反饋消除改進。

Most notably, Eargo 5, introduces a key feature that we're very excited about, our all-new sound match technology. Through our proprietary in-situ hearing screen and profile adjustment capabilities, sound match provides customers the ability to assess their hearing loss in real time using the hearing aid itself, either by themselves or while conducting a telecare appointment with one of our licensed tiering professionals. This is accomplished by test tones that are emitted through the device to assist the user in establishing their hearing profile and personalized recommendations based on the results.

最值得注意的是，Eargo 5 引入了一項令我們非常興奮的關鍵功能，即我們全新的聲音匹配技術。透過我們專有的現場聽力螢幕和檔案調整功能，聲音匹配使客戶能夠使用助聽器本身即時評估他們的聽力損失，無論是自己還是在與我們的一位持牌分級專業人員進行遠端護理預約時。這是透過裝置發出的測試音來實現的，以幫助使用者建立他們的聽力檔案並根據結果提出個人化建議。

Customers can then further self-calibrate their devices or work directly with our licensed hearing professionals to remotely make needed adjustments in real time. This is a new level of consumer experience, making an already easy-to-use product even easier while delivering the highest level of personalization.

然後，客戶可以進一步自我校準他們的設備或直接與我們執照的聽力專家合作，即時遠端進行所需的調整。這是一種新的消費者體驗水平，使本已易於使用的產品變得更加容易，同時提供最高水準的個人化。

Our Eargo 5 awareness generation strategy leverages media tools across multiple digital and traditional offline channels. We've also initiated robust direct marketing to existing Eargo customers, following 2 quarters of limited repeat customer marketing, offering a unique opportunity for current customers to own our latest generation product. All of this has driven strong early commercial traction of Eargo 5.

我們的 Eargo 5 認知產生策略利用跨多個數位和傳統離線管道的媒體工具。經過兩個季度有限的重複客戶行銷後，我們也向現有 Eargo 客戶發起了強大的直接行銷，為當前客戶提供了擁有我們最新一代產品的獨特機會。所有這些都推動了 Eargo 5 的早期商業吸引力。

We believe we have created a solution that puts customers first and provides them with the tools that they need to address their hearing loss within minutes without the barriers of clinic visits, high cost and obtrusive design. We look forward to further shaping the future of hearing with the Eargo 5.

我們相信，我們已經創建了一個將客戶放在第一位的解決方案，並為他們提供了在幾分鐘內解決聽力損失所需的工具，而沒有診所就診、高成本和引人注目的設計的障礙。我們期待透過 Eargo 5 進一步塑造聽力的未來。

Moving to Slide 8. We're very pleased to have completed the acquisition of assets from Clementine, a developer of web-based hearing screening solutions for approximately $2.9 million in the second quarter. Clementine offers remote audiology solutions and self-administered hearing screen technology to consumers with an online tool as well as a kiosk to screen hearing and physical settings. Clementine's online hearing screen is currently integrated on the Eargo website and is utilized as part of our free online hearing assessment.

轉到幻燈片 8。 Clementine 透過線上工具以及用於篩選聽力和身體設置的資訊亭，為消費者提供遠距聽力學解決方案和自我管理聽力篩檢技術。 Clementine 的線上聽力螢幕目前整合在 Eargo 網站上，並用作我們免費線上聽力評估的一部分。

We believe integrating this technology with Eargo's telecare infrastructure will further advance our core mission of making it easier for consumers to assess their hearing, consult with hearing professionals and purchase Eargo in the most seamless and convenient way possible. As part of this acquisition, we're also adding Clementine's high-quality R&D and software engineering talent to the Eargo team. Our immediate focus is to further optimize the Clementine technology and obtain FDA registration for the kiosk in 2022 followed closely by initial commercial testing. Therefore, we expect acquisition to have no impact on 2021 revenues and to modestly increase 2021 R&D expenses.

我們相信，將該技術與Eargo 的遠距照護基礎設施相結合將進一步推進我們的核心使命，即讓消費者更輕鬆地評估自己的聽力、諮詢聽力專家並以最無縫、最便捷的方式購買Eargo 。作為此次收購的一部分，我們也將 Clementine 的高素質研發和軟體工程人才加入 Eargo 團隊。我們目前的重點是進一步優化 Clementine 技術，並於 2022 年獲得 FDA 對該資訊亭的註冊，隨後進行初步商業測試。因此，我們預期收購不會對2021年營收產生影響，並會小幅增加2021年研發費用。

Lastly, and before turning the call over to Adam, I want to briefly touch on last month's executive order from the Biden administration, promoting competition in the American economy. As a reminder, this executive order directs the Department of Health and Human Services to consider issuing proposed rules within 120 days for allowing hearing aids to be sold over the counter. As another reminder, Eargo is not an OTC hearing aid as this regulatory category does not yet exist. However, we applaud the executive order and support the Biden administration's efforts to increase access to hearing aids and lower costs for consumers.

最後，在將電話轉給亞當之前，我想先簡單談談拜登政府上個月發布的促進美國經濟競爭的行政命令。提醒一下，該行政命令指示衛生與公共服務部考慮在 120 天內發布擬議規則，允許在櫃檯銷售助聽器。再次提醒您，Eargo 不是 OTC 助聽器，因為此監管類別尚不存在。不過，我們對這項行政命令表示讚賞，並支持拜登政府為增加助聽器使用機會和降低消費者成本所做的努力。

Eargo's mission is to increase consumer access to high-quality, virtually invisible hearing solutions and help more people hear better while doing so at approximately half the cost of hearing aids purchased through a traditional audiology clinic. While the specifics of the proposed legislation are still pending, Eargo has since inception been providing the type of consumer-friendly hearing care experience we believe the industry has needed for decades. As we look at the future, of the hearing industry, we believe we're well positioned for the future of how consumers will solve for their hearing loss. Let me now turn it over to Adam for his review of our financial results.

Eargo 的使命是讓消費者更多地獲得高品質、幾乎隱形的聽力解決方案，並幫助更多的人獲得更好的聽力，同時其成本大約是透過傳統聽力診所購買助聽器的一半。雖然立法的具體細節仍有待確定，但 Eargo 自成立以來一直在提供消費者友善的聽力護理體驗，我們認為該行業幾十年來一直需要這種體驗。當我們展望聽力產業的未來時，我們相信我們已經為未來消費者如何解決聽力損失問題做好了準備。現在讓我把它交給亞當，讓他審查我們的財務表現。

Thanks, Christian. Given Christian's discussion of revenue drivers, I will start with gross systems shipped. As a reminder, we define a system as 2 hearing aids, a charging case and starter accessories shipped as a single unit. Second quarter 2021 gross systems shipped were 12,548, up 39% year-over-year. The year-over-year change was driven by strong performance of our data-driven approach to demand generation, national advertising and increased penetration of the insurance market. Second quarter 2021 return accrual rate was 24.1% compared to 27% in the second quarter of 2020 and 23.2% in the first quarter of 2021.

謝謝，克里斯蒂安。鑑於克里斯蒂安對收入驅動因素的討論，我將從已發貨的系統總量開始。提醒一下，我們將系統定義為 2 個助聽器、一個充電盒和作為一個單元運輸的入門配件。 2021 年第二季系統總出貨量為 12,548 個，較去年同期成長 39%。這項同比變化是由我們以數據驅動的需求產生方法、全國性廣告和保險市場滲透率提高的強勁表現所推動的。 2021 年第二季的應計回報率為 24.1%，而 2020 年第二季為 27%，2021 年第一季為 23.2%。

Moving to non-GAAP gross margin and non-GAAP operating expenses. Our discussion of financial metrics, the gross margin line and below, will be on a non-GAAP basis, which excludes stock-based compensation expense. Please refer to our GAAP to non-GAAP reconciliation included in today's earnings release.

轉向非公認會計原則毛利率和非公認會計原則營運費用。我們對財務指標（毛利率線及以下）的討論將基於非公認會計原則（non-GAAP），其中不包括以股票為基礎的薪資費用。請參閱今天的收益發布中包含的 GAAP 與非 GAAP 調整表。

Second quarter non-GAAP gross margin was 72.3% compared to 67.3% in the second quarter of 2020. The year-over-year gross margin expansion was primarily due to a decrease in sales returns as a percentage of gross systems shipped and lower cost of goods sold per unit. Second quarter non-GAAP sales and marketing expenses were $20.0 million or 87.4% of net revenues compared to $10.7 million or 67.2% of net revenues in the second quarter of 2020. The increase was driven by expanded investments in demand generation against the backdrop of a significantly lower media viewership and planned launch costs associated with the Eargo 5.

第二季非 GAAP 毛利率為 72.3%，而 2020 年第二季為 67.3%。第二季非 GAAP 銷售和行銷費用為 2,000 萬美元，佔淨收入的 87.4%，而 2020 年第二季為 1,070 萬美元，佔淨收入的 67.2%。 5 相關的媒體收視率和計畫發布成本。

Non-GAAP research and development expenses were $4.1 million or 17.7% of net revenues compared to $2.1 million or 13.3% of net revenues in the second quarter of 2020. Non-GAAP general and administrative expenses were $6.3 million or 27.5% of net revenues compared to $3.0 million or 18.9% of net revenues in the second quarter of 2020. On a GAAP basis, we also experienced an increase in G&A due to higher costs associated with operating as a public company. Non-GAAP net operating losses for the second quarter of 2021 was $13.8 million compared to a non-GAAP net loss of $5.1 million in the second quarter of 2020.

非GAAP 研發費用為410 萬美元，佔淨收入的17.7%，而2020 年第二季為210 萬美元，佔淨收入的13.3%。 %。 2021 年第二季非 GAAP 淨營運虧損為 1,380 萬美元，而 2020 年第二季非 GAAP 淨虧損為 510 萬美元。

Moving to the balance sheet. We had cash and cash equivalents of $179.4 million at June 30, 2021. I'd now like to turn to the audit in process by our largest third-party payer referenced in today's press release. The payer accounted for approximately 80% of our gross accounts receivable as of June 30, 2021. As a result of the audit, claims submitted to the payer since March 1, 2021, have not been paid, increasing our net accounts receivable balance to approximately $15.4 million as of June 30, 2021. Approximately $10 million or roughly half of our total cash from this quarter is due to the claims that had not been processed. We are in active discussions with the payer and continue to work towards conclusion of the audit. We wanted to provide this level of transparency given the increase in accounts receivable.

轉向資產負債表。截至 2021 年 6 月 30 日，我們的現金和現金等價物為 1.794 億美元。截至2021 年6 月30 日，付款人約占我們應收帳款總額的80%。淨餘額增加至約截至 2021 年 6 月 30 日，金額為 1,540 萬美元。我們正在與付款人積極討論，並繼續努力完成審計。鑑於應收帳款的增加，我們希望提供這種程度的透明度。

Now turning to guidance. Due to the continued momentum in our business and confidence in Eargo 5 driving consumer demand, we are raising full year 2021 net revenue guidance to $93 million to $96 million, up from $89 million to $93 million. We expect revenue growth in the second half of the year to be primarily volume-driven. Looking at revenue cadence for the remainder of the year, we expect modest sequential growth in Q3 with the majority of our sequential growth in Q4.

現在轉向指導。由於我們業務的持續成長動能以及對 Eargo 5 推動消費者需求的信心，我們將 2021 年全年淨收入指引從 8,900 萬美元至 9,300 萬美元上調至 9,300 萬美元至 9,600 萬美元。我們預計下半年的營收成長將主要由銷售驅動。考慮到今年剩餘時間的營收節奏，我們預計第三季將出現溫和的環比成長，其中大部分環比成長將出現在第四季。

Moving to gross margin guidance. We are reiterating GAAP gross margin guidance between 68% and 71%. We are also reiterating non-GAAP gross margin guidance between 70% and 72%. I would now like to turn it back to Christian for summary closing remarks.

轉向毛利率指引。我們重申 GAAP 毛利率指引在 68% 至 71% 之間。我們也重申非 GAAP 毛利率指引在 70% 至 72% 之間。現在我想把它轉回給克里斯蒂安，讓其總結總結發言。

Thanks, Adam. To reiterate, we're pleased with our performance in the second quarter, particularly against the backdrop of a very challenging media viewership environment and feel confident in the momentum of our business into the second half of the year. Key revenue growth drivers in the back half of the year include the full commercial launch of Eargo 5, the continued scale-up of TV and other national advertising and the potential for continued growth of insurance customers.

謝謝，亞當。重申一下，我們對第二季的表現感到滿意，特別是在媒體收視環境極具挑戰性的背景下，並對我們下半年的業務勢頭充滿信心。下半年收入成長的主要推動因素包括Eargo 5的全面商業發布、電視和其他全​​國性廣告的持續擴張以及保險客戶持續成長的潛力。

When you take a step back and look at what is going on in the hearing industry, we feel the winds of change are blowing in our direction as a company that is revolutionizing an industry. Eargo is the only sizable B2C hearing aid company with true national visibility. So we have a unique opportunity to educate the payer, consumer and regulatory communities about how the hearing aid industry actually works, including the challenges consumers face in accessing and paying for quality hearing aids.

當你退一步看看聽力產業正在發生的事情時，我們會感覺到變革之風正在朝著我們作為一家正在徹底改變產業的公司的方向吹來。 Eargo 是唯一一家具有真正全國知名度的大型 B2C 助聽器公司。因此，我們有一個獨特的機會來教育付款人、消費者和監管機構了解助聽器行業的實際運作方式，包括消費者在獲取和支付優質助聽器方面面臨的挑戰。

We believe the pending OTC draft language as well as the stated desire of the current administration and U.S. legislature to broaden Medicare coverage of hearing aids could not have come at a better time. Additionally, telecare has permanently become a fixture in the way health care is delivered, giving us another competitive advantage. Eargo is reducing the barriers for consumers to access FDA registered Class 1 and 2 hearing aid in a regulatory-compliant way, and we feel better than ever about our competitive position to help more people hear better.

我們認為，待定的 OTC 草案措辭以及現任政府和美國立法機構明確表示的擴大助聽器醫療保險覆蓋範圍的願望來得正是時候。此外，遠距照護已永久成為醫療保健提供方式的固定方式，這為我們帶來了另一個競爭優勢。 Eargo 正在以符合監管的方式減少消費者使用 FDA 註冊的 1 級和 2 級助聽器的障礙，我們比以往任何時候都對我們幫助更多人獲得更好聽力的競爭地位感到更加滿意。

That concludes my prepared remarks. And I would like to turn the call back to the operator for Q&A.

我準備好的發言就到此結束。我想將電話轉回給接線生進行問答。

(Operator Instructions) Our first question comes from the line of Bob Hopkins with Bank of America.

（操作員說明）我們的第一個問題來自美國銀行的 Bob Hopkins 的電話。

I appreciate all the detail there. I guess 2 questions. One is about this quarter. Since it was kind of the quarter before the launch, the big launch of the Eargo 5, did you guys sort of tone down promotion this quarter? Or could you just talk about the promotion you had this quarter versus last? And the reason I ask the question is that just the magnitude of the beat you guys had this quarter was a little less than you've had in previous quarters. So I just want to understand the dynamic from you guys given the launch timing?

我很欣賞那裡的所有細節。我猜有2個問題。其中一個是關於本季的。由於是在 Eargo 5 發布之前的一個季度，你們在本季度的促銷活動中是否有所緩和？或者您能談談本季與上季相比的促銷情況嗎？我問這個問題的原因是，你們本季的成長幅度比前幾季小一些。所以我只是想了解你們對於發佈時間的動態？

Bob, Thank you. It's Christian here. So we did not tone down our media, right? We saw, as we also mentioned, right, a change in media behavior. We knew that we were going into an important launch here with Eargo 5, and we also know that we're sort of trailblazing in terms of creating a real position in the market. So we kept our media, and that's also reflected in our investment in sales and marketing throughout the quarter, and it is through back to promotions. We were running -- leading into the summer, Mother's Day, the Father's Day promotions as we also did last year. So we were running sort of a similar promotional schedule along with a continued investment into the media to continue to drive the business. And as we stated, we're pretty proud to deliver about 44% growth on a pretty tough comparative form. And the final point is we didn't have the benefit in this quarter, either of any kind of repeat orders, right? So on that backdrop, that was sort of the logic.

鮑勃，謝謝你。這裡是基督教的。所以我們沒有淡化我們的媒體，對嗎？正如我們也提到的，我們看到了媒體行為的改變。我們知道我們即將推出 Eargo 5，這是一個重要的發布，我們也知道我們在市場上建立真正的地位方面處於開拓地位。因此，我們保留了媒體，這也反映在我們整個季度對銷售和行銷的投資中，而且是透過促銷來實現的。我們一直在進行夏季、母親節、父親節促銷活動，就像我們去年所做的那樣。因此，我們運行了類似的促銷計劃，並持續投資媒體以繼續推動業務。正如我們所說，我們非常自豪能夠在相當艱難的比較形式下實現約 44% 的成長。最後一點是，我們在本季沒有獲得任何形式的重複訂單的好處，對吧？所以在這種背景下，這就是邏輯。

Okay. Okay. Got it. And then the follow-up, I did want to ask maybe a little bit more about the accounts receivables. Just to understand how much -- when did that resolve, what needs to happen and how -- and do you feel comfortable on the amount of cash you have coming in as a result, just wanted a little more color on that?

好的。好的。知道了。接下來，我確實想多問一些有關應收帳款的問題。只是為了了解有多少——什麼時候解決的，需要發生什麼以及如何發生——以及你對由此獲得的現金數量感到滿意，只是想對此有更多的了解嗎？

No, absolutely. I'll hand this one off to Adam. But I think one thing that's really clear here is we're in the process of really changing how you deliver hearing aids. So we see the audit in that life and I actually also applaud the efforts here to really understand how we can continue to deliver a better experience ultimately for members. But Adam, more specifically here.

不，絕對是。我會把這個交給亞當。但我認為這裡非常清楚的一件事是我們正在真正改變您提供助聽器的方式。因此，我們看到了當時的審計，實際上我也對這裡的努力表示讚賞，以真正了解我們如何能夠繼續最終為會員提供更好的體驗。但亞當，更具體地說是在這裡。

Yes. And Bob, look, these kind of audits and claims are pretty common, particularly given the growth in our business. We believe all the claims we submitted are valid reimbursable, and we have had a very productive call even this week with the payer, and we're confident we're able to provide them all the requested documentation. Of course, I can't speculate on to where the claims will -- whether they will absolutely be processed or not. But ultimately, our expectation and guidance is based on a positive outcome and we'll keep everybody posted as we learn more.

是的。鮑勃，你看，這類審計和索賠非常常見，特別是考慮到我們業務的成長。我們相信我們提交的所有索賠都是有效的可報銷的，即使在本週，我們也與付款人進行了非常富有成效的通話，我們有信心能夠向他們提供所有要求的文件。當然，我無法推測這些索賠將在哪裡——是否絕對會得到處理。但最終，我們的期望和指導是基於積極的結果，隨著我們了解更多信息，我們將隨時向大家通報情況。

Operator? Do we have any further questions?

操作員？我們還有其他問題嗎？

I'm happy to keep going.

我很高興繼續前進。

I know you are, Bob. I guess you can sneak in another one if you have one.

我知道你是，鮑伯。我想如果你有的話，你可以偷偷地再放進去一張。

Yes. No, absolutely. I mean, in terms of the launch, can you just talk about the guidance increase? And was that based on just base business trends or early signs from the launch? Just what drove you to raise the guidance there. And just maybe if you could quantify any of the initial reception into the launch, that would be helpful?

是的。不，絕對是。我的意思是，就發布而言，您能談談指導意見的增加嗎？這是基於基本的業務趨勢還是基於發布的早期跡象？這正是促使您提高指導意見的原因。也許如果您可以量化發布後的任何初始接收情況，這會有所幫助嗎？

Yes. No. Thank you. That was the question we were hoping for. We've always been really excited about Eargo 5 because we do think it's a transformational opportunity, not just from a product point of view but also how we deliver our telecare. I think what we've seen post launch has been -- and remember, this was sort of in the middle of July that we came out. We are seeing, as expected, an increase in repeat customers. And we're -- and I think more excitingly, the feedback we're getting from repeat customers is overwhelmingly positive around the sound quality, the experience. The fact that we've removed some of this challenges with prior products, so that feels great.

是的。不，謝謝。這就是我們所希望的問題。我們一直對 Eargo 5 感到非常興奮，因為我們確實認為這是一個變革性的機會，不僅從產品的角度來看，而且從我們如何提供遠距照護的角度來看。我認為我們在發布後所看到的是 - 請記住，這是我們發布的七月中旬。正如預期的那樣，我們看到回頭客增加。我認為更令人興奮的是，我們從回頭客那裡得到的關於音質和體驗的回饋絕大多數是正面的。事實上，我們已經用之前的產品消除了一些挑戰，所以感覺很棒。

The other piece of feedback that we're getting is really around now it's not just an Eargo product anymore, it's actually a system. The fact that we have now much more mobile app integrations and basically providing more user controls which was the whole plan. But obviously, that also gives us the confidence to go out and increase our guidance for the full year. Again, we have not rolled out Eargo 5 to all segments of our business. It's focused on repeat and cash pay. And that's where we're sort of focusing the attention. This is a platform that we want to continue to roll out, and that's why we see the real acceleration as we also see in prior years in Q4, where we have the opportunity of the holiday buying and so on. And by then, we want to be fully rolled out. But it's a very strong beginning, and that's, of course, also giving us the confidence to increase our guidance.

我們收到的另一個回饋現在確實存在，它不再只是一個 Eargo 產品，它實際上是一個系統。事實上，我們現在有更多的行動應用程式集成，基本上提供了更多的用戶控件，這就是整個計劃。但顯然，這也讓我們有信心走出去，增加全年指導。再次強調，我們尚未將 Eargo 5 推廣到我們業務的所有領域。它專注於重複支付和現金支付。這就是我們關注的焦點。這是一個我們希望繼續推出的平台，這就是為什麼我們看到真正的加速，就像我們在前幾年的第四季度看到的那樣，我們有假期購買的機會等等。到那時，我們希望全面推出。但這是一個非常強勁的開始，當然，這也給了我們增加指導的信心。

Our next question comes from the line of Robbie Marcus with JPMorgan.

我們的下一個問題來自摩根大通的羅比馬庫斯 (Robbie Marcus)。

So it's been about -- with a little sequential growth in third quarter, it will be about 4 quarters in the $22 million to $23 million range. So maybe just walk through some of the drivers that start accelerating sales, whether it's more repeat customers or how to think about the impact of the Eargo 5 on sales or a pickup in insurance sales? How do we think about some of the drivers moving forward? And is this really the pattern we should think about in future years? Or is this a little different because of the significant Eargo 5 launch?

因此，隨著第三季的連續成長，大約有 4 個季度的營收將達到 2,200 萬美元至 2,300 萬美元。那麼，也許只是簡單介紹一下開始加速銷售的一些驅動因素，是否是更多的回頭客，或者如何考慮 Eargo 5 對銷售或保險銷售回升的影響？我們如何看待一些向前發展的驅動因素？這真的是我們未來幾年應該考慮的模式嗎？還是因為 Eargo 5 的重大發布，這有點不同？

No. Well said. I think we saw a step change in our business happen already in Q2 of last year, right, Q3 and then a very strong Q4 of 2020. And you're right, since then, you now also have Q1 and Q2 more in line with Q4, which is probably the seasonality that we've seen in the business also historically. Clearly, the drivers that are sort of taking another sequential step-up from where we were in Q2 is the Eargo 5 launch really focused on the repeat customers, right? And that's what we're leaning into in Q3.

不，說得好。我認為我們的業務已經在去年第二季度發生了一步變化，對吧，第三季度，然後是2020 年第四季度非常強勁。第二季度更符合第四季度，這也可能是我們歷史上在該業務中看到的季節性。顯然，與第二季度相比，Eargo 5 的推出確實專注於回頭客，這在某種程度上是一個連續的提升，對嗎？這就是我們在第三季的重點。

On the insurance, on the general cash pay, we're sort of keeping our media investments roughly in line with where we've been. And then with Q4, we're having the promotional activities. Also please note that this is something we're really proud of. First of all, we launched Eargo 5 at the same price as prior generation. We're not running any introductionary offers or anything to sort of -- to artificially push demand. So where we were running a lot of promotions in Q3, Q4 last year, Q1, Q2, we're running no promotions right now because we believe that's where we want to take the company.

在保險方面，在一般現金支付方面，我們的媒體投資與我們一直以來的情況大致保持一致。然後在第四季度，我們正在進行促銷活動。另請注意，這是我們真正感到自豪的事情。首先，我們以與上一代相同的價格推出了Eargo 5。我們不會提供任何介紹優惠或任何類似的東西來人為地推動需求。因此，去年我們在第三季、第四季、第一季、第二季進行了大量促銷活動，但現在我們沒有進行促銷活動，因為我們相信這就是我們希望公司發展的方向。

That's, of course, also building up more powder. We've seen historically Q4 come in very strong from a consumer behavior point of view that benefits our business model. So those are really the drivers, and that's how we're sort of looking and I think we should -- you should also be looking at it. So we feel really good leaning into that, especially given where we are running the business right now in Q3.

當然，這也會累積更多的粉末。從歷史上看，從消費者行為的角度來看，第四季的表現非常強勁，這有利於我們的商業模式。所以這些確實是驅動因素，這就是我們的看法，我認為我們應該 - 你也應該看看它。因此，我們對此感到非常高興，特別是考慮到我們目前在第三季經營業務的情況。

Great. I appreciate that Christian. And maybe another financial question. Another great quarter of low to improving return rates. How do we think about what Eargo 5 can do both on the return rate and also on the cost of goods as it should help use some parts and I believe has a lower bill of goods in it? Appreciate that.

偉大的。我很欣賞那個基督徒。也許還有另一個財務問題。又一個季度退貨率低至改善。我們如何看待 Eargo 5 在退貨率和商品成本方面的作用，因為它應該有助於使用某些零件，而且我相信它的商品成本較低？感謝。

So I would say -- I'll have Adam run through the details here, but this has clearly been part of the whole design process. This is a product that's designed to be easier to use for the customer and benefit more people. right? We have not factored any of those things into return rates, just to be clear, and into our guidance either, right? So we want to see it work out. Needless to say, we feel good about the beginning. Typically, what we've seen in the past is when we launch a new product, we always have a lot of -- we typically see a small spike in returns, repairs because of how to work and support our new product. We're definitely seeing that better than we have historically.

所以我想說——我會讓 Adam 詳細介紹這裡的細節，但這顯然是整個設計過程的一部分。這是一款旨在讓客戶更容易使用並讓更多人受益的產品。正確的？澄清一下，我們沒有將這些因素納入退貨率，也沒有納入我們的指導，對吧？所以我們希望看到它成功。不用說，我們對開始感覺良好。通常情況下，我們過去看到的是，當我們推出新產品時，我們總是會遇到很多——由於如何使用和支持我們的新產品，我們通常會看到退貨和維修的小幅增長。我們肯定比歷史上看到的更好。

I think we're also a more mature organization driving better support. But please remember, and I know Adam is going to mention this now, one of the things, effects we will see short term is given that we don't have our refurbishment program up and running, we don't have inventory of return products, right, that's going to artificially -- that's going to drive more cost, right? And again, we are also working through sort of initial buys of components and so on that were bought at a higher price. So the total BOM cost is going to come down over time. But of course, we'll be seeing a short-term negative impact. Sorry, Adam, for taking all your thunder here. I know you have a little bit more to add.

我認為我們也是一個更成熟的組織，可以提供更好的支援。但請記住，我知道亞當現在要提到這一點，我們短期內會看到的影響之一是，我們沒有啟動並運行翻新計劃，我們沒有退貨產品庫存，對，這會人為地增加成本，對嗎？再說一次，我們還在努力以更高的價格購買一些組件等。因此，總 BOM 成本將會隨著時間的推移而下降。但當然，我們會看到短期的負面影響。抱歉，亞當，我把你的風頭都搶到這裡了。我知道你還有一些要補充的。

No. I think we'll say -- Christian, Robbie, I'd just add more color to that. We are very proud of the mid-20s on our RFC rates and 24% in Q2. We haven't modeled in our guidance, that improving in the back half of the year. Obviously, we are encouraged by the early signs of the Eargo 5 launch, but we won't have a strong signal. So that probably is won't be returning even as we close Q3, but we'll keep you guys posted as we learn more.

不，我想我們會說——克里斯蒂安、羅比，我只想為此添加更多色彩。我們對 RFC 利率達到 20 多歲，第二季達到 24% 感到非常自豪。我們還沒有在我們的指導中建模，這種情況在今年下半年有所改善。顯然，Eargo 5 發布的早期跡象讓我們感到鼓舞，但我們不會收到強烈的訊號。因此，即使我們關閉第三季度，這種情況也可能不會再出現，但我們會在了解更多資訊後隨時向大家通報情況。

I think for the COGS side of things, we definitely see a path to COGS improvement as well as a -- and gross margin improvement, obviously, with that. But it's going to take a bit of time in terms of Q3 will be, as Christian mentioned, the prototype part flushed through, and we won't really see the benefit from refurbishment until we get into Q4 and fully into Q1 of next year. But we're on track or maybe running slightly ahead of where I was thinking we'd be in terms of refurbishment capability. So feeling really good about it. It just takes a couple of quarters to activate.

我認為就銷貨成本而言，我們肯定看到了銷貨成本改善的途徑以及毛利率的改善，顯然，隨之而來。但正如克里斯蒂安所提到的，原型部分的完成需要一些時間，直到進入第四季度並完全進入明年的第一季度，我們才能真正看到翻新帶來的好處。但就翻新能力而言，我們正在步入正軌，或者可能稍微領先於我的預期。所以感覺真的很好。只需幾個季度即可啟動。

Our next question comes from the line of Larry Biegelsen with Wells Fargo.

我們的下一個問題來自拉里·比格爾森 (Larry Biegelsen) 與富國銀行 (Wells Fargo) 的對話。

Can you hear me okay?

你聽得到我說話嗎？

Loud and clear, Larry.

大聲而清晰，拉里。

Good. Great. Christian, maybe just one follow-up on the audit. The insurance channel is obviously important for you. Are you willing to disclose who the insurance company is? I assume this is government. Can you disclose any more on why they're not paying or you're in this negotiation and do you think you can resolve this in 2021? And I had a follow-up.

好的。偉大的。克里斯蒂安，也許只是審計的一個後續行動。保險管道顯然對您來說很重要。您願意透露保險公司是誰嗎？我認為這就是政府。您能否透露更多有關他們不付款的原因或您正在參與談判的信息，您認為可以在 2021 年解決這個問題嗎？我有一個後續行動。

No. Thank you on that one, Larry. Obviously, we're in discussions. We're not in negotiation. So this is more, as I see it, an education of our business model and how our business model works differently from the classic way of distributing hearing aids. Given that we're in an active discussion and it's a very constructive discussion, we're not disclosing the name, but it is a large payer that's basically administrating on behalf of the federal government.

不，謝謝你，拉里。顯然，我們正在討論。我們不是在談判。因此，在我看來，這更多的是對我們的商業模式以及我們的商業模式與傳統助聽器分銷方式的不同運作方式的教育。鑑於我們正在進行積極的討論，而且這是一次非常有建設性的討論，我們不會透露其名稱，但它是一個大付款人，基本上代表聯邦政府進行管理。

So I think you probably know what I'm talking about on that front. So it's really -- right now, it's a discussion around -- and of course, what they're seeing is -- remember, other people basically claiming benefits are typically independent providers. So it's a lot of very small and a low number of volume we're providing all over America, right? So we're one single provider with a high volume and hence a lot of dollars flowing through. So we see this more as -- they're actually doing their diligence by auditing everything we do because we do it in a different way than it's been -- we don't do it through a clinic, right? We do it through telecare, online experiences and phone experiences.

所以我想你可能知道我在這方面所說的內容。所以，現在確實是一個討論，當然，他們所看到的是，記住，其他聲稱福利的人通常是獨立的提供者。所以我們在美國各地提供的產品非常小且數量很少，對嗎？因此，我們是一個單一的供應商，擁有大量的流量，因此有大量的資金流入。所以我們更多地看到這一點——他們實際上通過審核我們所做的一切來盡職盡責，因為我們以與以往不同的方式做這件事——我們不是通過診所來做的，對嗎？我們透過遠距護理、線上體驗和電話體驗來做到這一點。

So it's really this process of seeing how that fits into the sort of the traditional way of providing documentation and so on for benefits. So that's the discussion. You asked about '21. Again, we can't speculate on what the timing is going to be, but that's clearly what we see an opportunity for. And we see this more as an educational process that gives us the opportunity to further broaden our insurance coverage.

因此，這實際上是一個了解如何適應提供文件等傳統方式以獲得好處的過程。這就是討論。你問的是'21。同樣，我們無法推測具體時間，但這顯然是我們看到的機會。我們更多地將這視為一個教育過程，使我們有機會進一步擴大我們的保險範圍。

Got it. And for my follow-up, Christian, I know you have a lot going on with the launch of Eargo 5, but I'd love to hear about how you're thinking about opportunities outside of the DTC model such as the omnichannel opportunity that you've talked about, if we could see anything this year or next year?

知道了。對於我的後續行動，Christian，我知道您在推出 Eargo 5 方面有很多進展，但我很想聽聽您如何看待 DTC 模式之外的機會，例如全渠道機會你說過，今年或明年我們是否能看到什麼？

Yes. No, this is something we've been laser-focused on and then we continue to push. And it's also a big part of the rationale for the acquisition of the hearing screening capability and, more importantly, acquiring engineers who are really specialized in this field through Clementine. So that's a thing we're excited about that will actually support our ability to work with partners because, again, hearing is not just a product. It's also understanding what is my hearing, and we're gaining a whole new capability to do that. So we are running a lot of tests, experiments on the sort of physical retail side. So that's something we're looking into.

是的。不，這是我們一直高度關注的事情，然後我們繼續推動。這也是收購聽力篩檢能力的一個重要原因，更重要的是，透過 Clementine 收購真正專業於該領域的工程師。因此，我們對此感到興奮，這實際上將支持我們與合作夥伴合作的能力，因為聽力不僅僅是一種產品。它還可以理解我的聽力，我們正在獲得一種全新的能力來做到這一點。因此，我們正在實體零售方面進行大量測試和實驗。這就是我們正在研究的事情。

In addition to education of our current payer, we are actively working across the Insurance segment to understand how we can build it out. Nothing has really fundamentally changed in terms of timing on the insurance side, Larry, because, again, there are certain windows, and '22 is essentially very much locked in, in terms of health plan designs, right? But we are seeing -- we are continuing to see a lot of long-term opportunity on that front.

除了對當前付款人進行教育之外，我們還在保險領域積極開展工作，以了解如何建立它。拉里，就保險方面的時間安排而言，並沒有真正發生根本性的變化，因為，再一次，存在一定的窗口期，而“22”在健康計劃設計方面基本上是鎖定的，對嗎？但我們看到——我們繼續在這方面看到很多長期機會。

On the retail, that's changing essentially on a day-by-day basis in terms of opening and so on, what's going to be happening here, so when is something going to happen. We don't think anything major is going to be changing in terms of actual distribution in '21, but OTC is being discussed, right? So this is clear. There's a lot of people working. I think there will be experiments happening. I'm pretty certain there will be a lot of experiments through '21, but I think anything of material value and growth will not be until the new year. And that's also pretty much in sync with the OTC proposed language and so on.

在零售方面，開業等方面每天都在發生本質上的變化，這裡會發生什麼，什麼時候會發生。我們認為 21 年的實際分配不會發生任何重大變化，但 OTC 正在討論中，對嗎？所以這很清楚。有很多人在工作。我認為將會有實驗發生。我非常確定到 21 年將會有很多實驗，但我認為任何具有物質價值和成長的東西都不會在新的一年出現。這也與 OTC 提議的語言等非常同步。

Our next question comes from the line of Margaret Kaczor with William Blair.

我們的下一個問題來自瑪格麗特·卡佐爾和威廉·布萊爾的對話。

This is Maggie Billy on for Margaret today. I wanted to ask a question on the launch of Eargo 5. So Christian, you just spoke to running the price of the product without a promotion. So I wanted to see if you could provide some color as to what the ASP for you guys looks like now? And then are you seeing more consumer demand for your Eargo 5, which could also drive your ASP up for the back half of the year?

這是今天瑪格麗特的瑪姬比利。我想問一個有關 Eargo 5 發布的問題。所以我想看看你們是否可以提供一些關於你們現在的 ASP 是什麼樣子的資訊？那麼您是否會看到消費者對 Eargo 5 的需求增加，這也可能推動您今年下半年的平均售價上漲？

Hey, Maggie. Good to have you here. No, that's a really good question. Again, it's really early days here in terms of where we are. The list price is the same. You can argue. We're not putting in the same level of promotion, right? Again, this is how we're running the business right now. So it's early days, but we definitely feel confident. And again, our guidance is still essentially on flat ASP, right? But we feel very confident around what that implies for our guidance. So I think that's really the first point. And I just lost your second point, while I was answering the question here. Apologies, Maggie.

嘿，瑪姬。很高興你在這裡。不，這是一個非常好的問題。再說一次，就我們目前的情況而言，現在還處於早期階段。標價是一樣的。你可以爭論。我們沒有進行同等程度的促銷，對嗎？再說一次，這就是我們現在經營業務的方式。所以現在還為時過早，但我們絕對充滿信心。再說一遍，我們的指導本質上仍然是固定平均售價，對吧？但我們對這對我們的指導意味著什麼非常有信心。所以我認為這確實是第一點。當我在這裡回答問題時，我只是失去了你的第二點。抱歉，瑪姬。

Yes. No, I was just asking if you're seeing more consumer demand for your Eargo 5, which could also contribute to driving flat ASP up?

是的。不，我只是問您是否發現消費者對 Eargo 5 的需求增加，這也可能有助於推高平均售價？

Yes. No, no, I don't think it's going to drive the ASP up per se, but we are definitely seeing a lot of interest, right? Again, our communication is obviously focused on repeat customers because that's something that we have been holding off for a while, and we're seeing record levels of interest, right? Within the actual cash pay part of it, we're seeing in terms of traffic and of course, we leaned into the launch, right, and hopefully, you had a chance to see some of that. We had a great partner in NASDAQ, who we're also -- we were on Times Square, we were on all the billboards. So yes, we've seen a growth in traffic, online traffic, right, web visits. We've seen a growth in phone calls, right, as expected to be fair around the launch, and that's all factored into our guidance.

是的。不，不，我不認為它本身會推高平均售價，但我們肯定看到了很多興趣，對吧？同樣，我們的溝通顯然集中在回頭客身上，因為這是我們已經推遲了一段時間的事情，而且我們看到了創紀錄的興趣水平，對吧？在實際的現金支付部分中，我們看到了流量，當然，我們傾向於發布，對吧，希望您有機會看到其中的一些。我們在納斯達克有一個很好的合作夥伴，我們也是－我們在時代廣場，我們在所有的廣告看板上。所以，是的，我們看到流量、線上流量、網路訪問量的成長。我們已經看到電話數量有所增長，對吧，正如預期的那樣，在發布前後，這都是公平的，這都已納入我們的指導中。

Great. And while I know you guys just launched Eargo 5, I've always got a side wondering about the future. So you guys have talked about launching a next-generation device each year. So what can we expect in 2022? Can it be something like a software update to a new device or given the software and hardware launch of Eargo 5? And how impactful can that next-gen product be to growth in 2022?

偉大的。雖然我知道你們剛剛推出了 Eargo 5，但我總是對未來感到好奇。所以你們談論了每年推出下一代設備。那麼 2022 年我們可以期待什麼呢？是否可能是新設備的軟體更新或 Eargo 5 的軟體和硬體發布？下一代產品對 2022 年的成長有何影響？

Yes. No, no, I kind of look at '21 as a, sort of, as a reset year based on a very tumultuous 2020, right, but also impacted our launch timing as we indicated as part of our IPO. We will definitely have a '22 launch also in the first half. So we have built the ability to continue to deliver product innovation, which is core to our strategy. And one of the things that gets me really excited is exactly what you're tuning to. Remember that a core feature set of Eargo 5 is that we're bringing much more of the algorithm firmware capabilities in-house. That's driving the strong performance of the current Eargo 5 product in terms of feedback cancellation.

是的。不，不，我認為 21 年是一個基於非常動蕩的 2020 年的重置年，對吧，但也影響了我們的發佈時間，正如我們在 IPO 中所指出的那樣。我們肯定也會在上半年推出 '22 版。因此，我們已經建立了持續提供產品創新的能力，這是我們策略的核心。讓我真正興奮的事情之一就是你正在調整的內容。請記住，Eargo 5 的核心功能集是我們在內部引入更多演算法韌體功能。這推動了目前 Eargo 5 產品在回饋消除方面的強勁表現。

We have a lot of opportunities to continue to make real meaningful audibility improvements, and that's clearly the area that we'll see. We are, and I think you know our sort of road map strategy, always looking at what can we do from a design point of view, hardware, right; what can we do from an audio processing point of view, i.e. algorithm; and also what can we do sort of from a mobile app interaction. And with Eargo 5, we're already seeing much more mobile app engagement than we've seen with the prior families. So we feel confident that what we can bring out in 2022 is going to be a meaningful and valuable upgrade to the product experience, right? And then that's what we constantly are striving to do.

我們有很多機會繼續做出真正有意義的可聽性改進，這顯然是我們將看到的領域。我們，我想你知道我們的路線圖策略，總是從設計的角度來看我們能做什麼，硬件，對吧；從音頻處理的角度來看，我們可以做什麼，即演算法；以及我們可以透過行動應用程式互動做什麼。透過 Eargo 5，我們已經看到比之前系列產品更多的行動應用程式參與度。因此，我們有信心在 2022 年推出的產品將是對產品體驗的有意義且有價值的升級，對嗎？這就是我們不斷努力在做的事情。

I'm showing no further questions in the queue. I will now turn the call back over to Nick for closing remarks.

我在隊列中沒有顯示任何其他問題。我現在將把電話轉回給尼克，讓他發表結束語。

Thanks, operator, and thanks, everyone, for joining us today. That concludes the Second Quarter Eargo Conference Call.

謝謝操作員，也謝謝大家今天加入我們。第二季 Eargo 電話會議到此結束。

Thank you.

謝謝。

Ladies and gentlemen. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful evening.

女士們，先生們。今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。祝大家有個美好的夜晚。