As for its guidance, the company is now anticipating FY18 revenue of $161-$163 mln, slightly below the $165.7 mln consensus. Back when the company issued its Q3 results on November 6, it issued in-line FY18 revenue guidance of $165-$170 mln compared to the $166.3 mln consensus.
On the topic of quarterly results, CUTR has taken a wrong turn over the past few quarters as revenue growth has slipped and performance relative to earnings expectations has also disappointed. Again, hence why the stock has tanked and why the Board believes a change at the top is necessary. Last quarter, for instance, revenue growth came in at a paltry 6% -- its weakest mark since 2Q14. Furthermore, while EPS of $0.11 handily exceeded analysts' $0.03 expectation, it declined substantially from 3Q17's earnings of $0.42/share.
And prior to that, CUTR had missed the Street's bottom line estimates in both 1Q18 and 2Q18. One issue that has negatively impacted the company is that revenue from the distributor channel has increased at a faster rate than revenue from its direct channel. Revenues generated from distributors carry a lower margin than those obtained from its direct channel. Also, pricing on its legacy products slipped a bit while the company has not fully achieved its goals in terms of driving operational efficiencies. As a result, gross margin has declined to the lower-to-mid 50% range from the upper 50% range a year ago.
Looking ahead, the company still believes that a few significant growth catalysts remain to help turn the tide. Its plan includes launching at least two new products per year (in 2018 it launched four new products) while executing better on its operational efficiency goals. More specifically, CUTR is and has been reviewing its manufacturing processes while also investing in infrastructure. The company is also looking to optimize contract manufacturing and will be implementing regional distribution centers in order to better manage inventory. While CUTR saw some benefit from these actions, these have taken longer to realize than anticipated and have not offset the aforementioned slide in average selling prices.
To conclude, in the near term, the shake-up in management adds to the challenges facing the company. It will take some time for the dust to settle. But from a longer-term perspective, it does seem that a change is in order, based on the stock’s action and the company’s financial performance. Whether that new leadership can reverse course, though, remains to be seen.