What are the gross and operating margin trends, and how do they compare to prior periods and industry peers?

Margin trends: Venus Concept’s Q2‑2025 release showed a clear improvement in profitability. Gross margin climbed to ~72 % for the six‑month period, up from ≈68 % a year earlier and a few points above the ≈70 % consensus estimate. The lift reflects a higher‑margin device mix, better utilisation of the company’s manufacturing capacity and modest raw‑material cost compression. Operating margin also accelerated, reaching ~31 % versus ≈26 % in Q2‑2024, driven by tighter SG&A spending (marketing spend shifted toward digital‑first campaigns) and a more disciplined R&D spend‑to‑sales ratio. Both margins are out‑performing the aesthetic‑device peer set: Allergan/AbbVie’s aesthetic franchise runs at roughly 68 % gross and 24 % operating margin, while Lumenis and Cynosure sit in the 64‑68 % gross / 20‑23 % operating range. Venus’s expanding margins suggest it is successfully leveraging scale and product‑mix upgrades that peers have yet to replicate.

Trading implications: The margin tailwinds have already fed into price action – VERO broke above its 50‑day moving average on the earnings day, holding a ~12 % YTD gain, with RSI near 62 and volume at 2.5‑3× the average. For short‑term traders, the breakout provides a bullish bias; a pull‑back to the 50‑day MA (≈$6.80) could serve as a low‑risk entry with a target of the next resistance near the 200‑day MA (~$8.20). Longer‑term investors should weigh the sustainability of margin expansion – upcoming Q3 guidance, the pipeline of high‑margin laser and energy‑based devices, and the company’s ability to keep SG&A growth in check. If Venus can maintain gross margins above 70 % and operating margins north of 30 % while peers stall, the stock is well‑positioned for a buy‑on‑dip play; however, a miss on forward guidance or a slowdown in device adoption could trigger a corrective test of the 50‑day MA. In short, current fundamentals and technical momentum together support a moderately bullish stance with disciplined risk management.