Zltq

Source: Zetliq Aesthetics. 

Zeltiq Aesthetics (NASDAQ:ZLTQ) may be helping some patients freeze off stubborn fat cells, but the stock itself is putting on some weight. Shares of the company behind the CoolSculpting machines have soared 12.5% through the past two trading days, taking off after posting another encouraging quarterly report. 

Revenue climbed 37% to $64.4 million since the prior year's second quarter. Top-line growth may be decelerating -- as impressive as a 37% year-over-year spurt may sound it's actually the weakest top-line growth that Zeltiq has experienced since the second quarter of 2013 according to S&P Capital IQ data -- but the company has never been in better shape.

Zeltiq shipped 387 CoolSculpting machines during the quarter, increasing its installed base to 3,910 systems. It had shipped just 208 systems a year earlier. Physicians and dermatologists are paying less upfront for the machines -- system revenue only rose 26% since the prior year despite an 86% spike in shipments -- but growing its installed base (up 53% over the past year) has resulted in a 49% year-over-year surge in higher margin consumable revenue.

An important milestone was reached at Zeltiq this quarter, as consumable revenue was greater than system revenue for the first time. That validates the promised results of CoolSculpting machines that freeze fat cells off of waistlines and thighs, and it also helped nudge gross margins higher. 

It's not all good news. Zeltiq has been investing in building out its sales team and marketing the CoolSculpting brand. Sales and marketing expenses soared 53% since the prior year, eating into its profitability. The silver lining there is that even with earnings decreasing to $0.03 a share from $0.07 a share a year earlier that analysts were holding out for a small deficit. 

Zeltiq's near-term prospects are encouraging. It recently rolled out its CoolSmooth Pro applicator, resulting in shorter treatment times at colder temperatures. It's also on track to launch CoolMini -- designed to treat smaller pockets of fat including double chins -- later this year. Clinical trials and a pilot launch in Europe have gone well for CoolMini, another game changer as Zeltiq expands from merely treating thighs and love handles.

The sum of Zeltiq's success is that it's once again boosting its top-line guidance. It now sees $245 million to $247 million in revenue, up nicely from the $235 million to $238 million that it was targeting just three months earlier and its forecast for $230 million to $235 million three months before that. This isn't a surprise for those that have been following Zeltiq. It has boosted its annual revenue outlook on an almost quarterly basis dating back to early 2013. The market likes to see that, and Zeltiq's stock is now a 10-bagger since bottoming out in the springtime of 2013. It hit yet another all-time high on Friday following the better than expected report, and that should be the norm as long as CoolSculpting continues to heat up.

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.