Accuray (ARAY) Q3 2025 Earnings Call April 30, 2025 04:30 PM ET Company Participants Jesse Chew - Senior VP & Chief Legal OfficerSuzanne Winter - President, CEO & DirectorAli Pervaiz - Senior VP & CFOMarie Thibault - Managing Director Conference Call Participants Brooks O'Neil - Senior Research AnalystJason Wittes - Managing Director & Senior Research Analyst Operator Good day, and welcome to the Accuray Third Quarter Fiscal twenty twenty five Financial Results Conference Call. All participants will be in a ...

Q3'FY25 Earnings Call Supplemental Presentation April 30, 2025 Forward-looking Statements This presentation is intended exclusively for investors. It is not intended for use in Sales or Marketing. Safe Harbor Statement Statements in this presentation (including the oral commentary that accompanies it) that are not statements of historical fact are forward-looking statements and are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in ...

Financial Data and Key Metrics Changes - Revenue for Q3 FY 2025 was $113 million, up 12% year-over-year and up 14% on a constant currency basis [16] - Adjusted EBITDA for the quarter was $6 million, compared to $1.1 million in the prior year, driven by higher volume, pricing, and operational improvements [8][19] - Operating income for the quarter was $1 million, compared to an operating loss of $4.6 million from the prior year [19] Business Line Data and Key Metrics Changes - Product revenue for Q3 was $57 million, up 16% year-over-year, reflecting a 23% increase in unit volume [17] - Service revenue for the quarter was $56 million, up 9% year-over-year [17] - The service business represented approximately 49% of total revenue and 59% of gross margin for the quarter [8] Market Data and Key Metrics Changes - Book to bill ratio was over 1.2, indicating healthy customer demand across both developed and emerging markets [9] - Approximately 35% of order growth was driven by the replacement of aged equipment [9] - The company reported a backlog of approximately $452 million, with zero order cancellations in the quarter [18] Company Strategy and Development Direction - The company aims to be the most reliable global partner in radiation therapy treatment technology, focusing on operational efficiency and customer partnerships [6][7] - Investments in ERP and talent are expected to enhance adaptability and capabilities in a rapidly changing global market [7] - The service business is anticipated to be a growth engine and primary catalyst for expanding margins [10] Management's Comments on Operating Environment and Future Outlook - Management noted lower visibility on near-term growth in revenues and earnings due to global trade circumstances [5] - Despite challenges, management expressed confidence in emerging stronger and more resilient from the current environment [6] - The company expects a potential negative impact of $10 million to $15 million in Q4 revenue due to tariffs, primarily affecting product sales in China [12][21] Other Important Information - The company is exploring various mitigation actions to offset tariff impacts, including establishing a foreign trade zone and developing secondary domestic sources [11] - Total cash and cash equivalents amounted to $79 million, up from $64 million at the end of the last quarter [20] Q&A Session Summary Question: Impact of deferred China adjusted EBITDA - Management confirmed that product margins were affected by higher margin deferral on China, with product margins at 22.7% for the quarter [26][27] Question: Potential impact in markets like India and South America - Management indicated that while the China impact is significant, they see strength in other regions, including India and non-China APAC markets [28][29] Question: Scenarios regarding tariff exemptions for medical products in China - Management is working closely with their China JV to seek a tariff exemption but noted uncertainty regarding the timeline and probability of success [31][34] Question: Future activity in China and potential impacts - Management stated that they are conducting internal scenario planning and will provide more clarity in future calls [38] Question: Focus on emerging markets - Management confirmed a strategic focus on both developed and emerging markets, leveraging opportunities in regions like the UK and non-China APAC [39][41]

Financial Performance - Total net revenue for Q3 fiscal 2025 was $113.2 million, a 12% increase from $101.1 million in Q3 fiscal 2024[4] - Product revenue in Q3 fiscal 2025 rose to $57.3 million, up 16% from $49.6 million in the same quarter last year[4] - Service revenue in Q3 fiscal 2025 increased to $55.9 million, a 9% rise from $51.5 million in Q3 fiscal 2024[4] - Total gross profit for Q3 fiscal 2025 was $31.6 million, representing 27.9% of total net revenue, compared to 28.7% in Q3 fiscal 2024[5] - Net loss for Q3 fiscal 2025 was $1.3 million, or $0.01 per share, significantly improved from a net loss of $6.3 million, or $0.06 per share, in Q3 fiscal 2024[6] - Adjusted EBITDA for Q3 fiscal 2025 was $6.0 million, compared to $1.1 million in Q3 fiscal 2024[6] - Total net revenue for the first nine months of fiscal 2025 was $331.0 million, a 6% increase from $312.3 million in the prior fiscal year period[9] Orders and Backlog - Gross product orders in Q3 fiscal 2025 decreased to $71.2 million from $89.1 million in Q3 fiscal 2024, with a book to bill ratio of 1.2[7] - Gross orders for the three months ended March 31, 2025, were $71,167 thousand, down 20.1% from $89,086 thousand for the same period in 2024[32] - Net orders decreased to $46,656 thousand for the three months ended March 31, 2025, compared to $60,795 thousand in the prior year, representing a decline of 23.2%[32] - The order backlog stood at $452,392 thousand as of March 31, 2025, down from $503,220 thousand a year earlier, indicating a decrease of 10.1%[32] - The book to bill ratio for the three months ended March 31, 2025, was 1.2, down from 1.8 in the same period of 2024[32] Cash and Assets - Cash, cash equivalents, and short-term restricted cash were $78.8 million as of March 31, 2025, an increase of $14.8 million from December 31, 2024[8] - Total assets increased to $484,291 thousand as of March 31, 2025, compared to $468,627 thousand as of June 30, 2024, reflecting a growth of 3.5%[30] - Cash and cash equivalents rose to $77,824 thousand as of March 31, 2025, up from $68,570 thousand as of June 30, 2024, indicating an increase of 13.3%[30] - Total current liabilities increased to $203,429 thousand as of March 31, 2025, compared to $195,267 thousand as of June 30, 2024, reflecting a rise of 4.4%[30] Future Projections - The company is adjusting its total revenue guidance for fiscal year 2025 to a range of $452 million to $460 million due to recent tariff impacts[14] - Projected GAAP net loss for the twelve months ending June 30, 2025, is estimated to be between $4,000 thousand and $1,500 thousand[37] - Projected adjusted EBITDA for the same period is expected to range from $28,500 thousand to $31,000 thousand[37] Growth Metrics - Adjusted EBITDA for the three months ended March 31, 2025, was $6,048 thousand, significantly up from $1,087 thousand in the same period of 2024, marking a growth of 457.0%[34]

Core Insights - Accuray Incorporated reported a strong performance in the third quarter of fiscal 2025, with a focus on mitigating the impact of tariffs and maintaining a clear strategy to meet growing demand for its technologies [1][2] Fiscal Third Quarter Results - Total net revenue for the third quarter of fiscal 2025 was $113.2 million, representing a 12% increase from $101.1 million in the same quarter of the previous fiscal year [2] - Product revenue increased to $57.3 million, up 16% from $49.6 million year-over-year, while service revenue rose to $55.9 million, a 9% increase from $51.5 million [2] Profitability Metrics - Gross profit for the third quarter was $31.6 million, accounting for 27.9% of total net revenue, compared to $29.1 million or 28.7% in the prior year [3] - Operating expenses decreased to $30.6 million, down 9% from $33.6 million in the previous fiscal year [3] Net Loss and Adjusted EBITDA - The net loss for the third quarter was $1.3 million, or $0.01 per share, an improvement from a net loss of $6.3 million, or $0.06 per share, in the prior year [4] - Adjusted EBITDA for the quarter was $6.0 million, compared to $1.1 million in the same quarter of the previous year [4] Orders and Backlog - Gross product orders decreased to $71.2 million from $89.1 million in the prior year, with a book to bill ratio of 1.2, down from 1.8 [5] - As of March 31, 2025, the order backlog was $452.4 million, approximately 10% lower than the previous year's backlog [5] Cash Position - Cash, cash equivalents, and short-term restricted cash totaled $78.8 million as of March 31, 2025, reflecting an increase of $14.8 million from December 31, 2024, but a decrease of $9.8 million from June 30, 2024 [6] Fiscal Nine Months Results - Total net revenue for the first nine months of fiscal 2025 was $331.0 million, a 6% increase from $312.3 million in the prior fiscal year [7] - Product revenue for the nine-month period rose to $166.9 million, an 8% increase from $154.5 million, while service revenue increased to $164.1 million, up 4% from $157.8 million [7] Guidance for Fiscal Year 2025 - The company reaffirmed its adjusted EBITDA guidance for fiscal year 2025, expecting it to be in the range of $28.5 million to $31.0 million [12] - Total revenue guidance was adjusted to a range of $452 million to $460 million due to the impact of recent tariff announcements [12]

Core Insights - Accuray Incorporated announced new data on the CyberKnife System, highlighting its effectiveness in treating central nervous system (CNS) tumors, which are among the most fatal cancers in the U.S. [1][3] - The studies presented at the 2025 Radiosurgery Society meeting emphasize the long-term efficacy and expanding applications of the CyberKnife System in treating various conditions, including benign tumors and complex spinal issues [3][4]. Clinical Advances - The CyberKnife System utilizes stereotactic radiosurgery (SRS) and stereotactic body radiation therapy (SBRT) to deliver targeted radiation in one to five sessions, achieving high precision through advanced image guidance and adaptive delivery technology [2][3]. - A 25-year study on vestibular schwannoma treatment showed a local control rate of 89.3% and an overall survival rate of 97.1%, demonstrating the long-term efficacy of the CyberKnife System [4]. Treatment Innovations - A study on circumferential SBRT for spinal metastases indicated that this technique is safe and effective, achieving high local tumor control with minimal complications [5]. - Research on trigeminal neuralgia in elderly patients revealed that 90% experienced pain relief after treatment with the CyberKnife System, showcasing its potential for patients with limited surgical options [5][6]. - For occipital condyle metastasis, the CyberKnife System achieved a local tumor control rate of 93.8% over three years, providing significant pain relief and improving neurological symptoms [6]. Company Commitment - Accuray is dedicated to advancing radiation therapy technology to improve patient outcomes, focusing on innovative solutions for complex cases while enhancing treatment accessibility for a broader patient population [7].

Company Participation - Accuray Incorporated will participate in the 37th Annual Roth Conference from March 16-18, 2025, in Dana Point, California [1] - Management will engage in a fireside chat on March 18, 2025, at 9:30am PT / 12:30pm ET, and will be available for one-on-one meetings with investors [1] Webcast Information - A live webcast of the fireside chat will be accessible on the Accuray website, with a replay available approximately one hour after the live presentation for 90 days [2] Company Overview - Accuray is dedicated to advancing radiation therapy to improve patient lives, focusing on innovative solutions for complex cases and enhancing treatment for commonly treatable cases [3] - The company is committed to continuous innovation in radiation therapy for oncology and neuro-radiosurgery, partnering with clinicians to facilitate faster patient recovery [3] - Accuray is headquartered in Madison, Wisconsin, with facilities located worldwide [3]

Accuray Incorporated (ARAY) is well-poised for growth in the coming quarters, courtesy of continued robust demand for its products. The optimism, led by robust global performance in the second quarter of fiscal 2025 and potential in the Radiosurgery Market, is expected to contribute further. However, reimbursement uncertainties and challenges related to FX impacts are concerning.This Zacks Rank #3 (Hold) company has lost 26.3% in the past year compared with a 1.3% decline in the industry. The S&P 500 has wi ...

Accuray Incorporated (ARAY) reported second-quarter fiscal 2025 earnings per share of 2 cents against the year-ago period’s loss of 10 cents. The bottom line surpassed the Zacks Consensus Estimate by 300%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Revenues in DetailAccuray registered quarterly revenues of $116.2 million, up 8.3% year over year. The figure beat the Zacks Consensus Estimate by 4.7%.The overall top-line growth was driven by robust growth in product revenue and solid ...

Financial Data and Key Metrics Changes - Revenue for the quarter increased by 8% year-over-year, reaching $116 million, with product revenue growing by 19% to $61 million [10][24] - Adjusted EBITDA for the quarter was $9.6 million, significantly up from $2 million in the prior year, driven by higher shipments and operational efficiencies [31][10] - The overall gross margin improved to 36.1% from 33.5% in the prior year, attributed to pricing and operational efficiencies [27][10] Business Line Data and Key Metrics Changes - Product revenue growth was driven by strong demand for the CyberKnife system, which saw revenue growth of over 50% year-over-year [12][10] - Service revenue for the quarter was $55 million, down 1% year-over-year, but adjusted for one-time items, it would have been up 2% [24][10] - The service business is expected to grow as the installed base increases, contributing to long-term revenue growth [18][10] Market Data and Key Metrics Changes - In China, revenue grew over 50% year-over-year, with significant contributions from the Tomo C System and a strong performance from the joint venture partner [13][10] - Japan experienced over 40% revenue growth, maintaining a number two market share position [16][10] - EIMEA region saw 7% orders growth, with balanced contributions from both developed and emerging markets [11][10] Company Strategy and Development Direction - The company aims to innovate and expand its service solutions business while improving patient access to radiotherapy in developing markets [9][10] - A focus on operational efficiencies and pricing actions is expected to enhance margins and long-term profitability [9][10] - The introduction of new products like the Helix platform is part of the strategy to capture market share in emerging markets [11][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue guidance of $463 million to $475 million for fiscal 2025, raising expectations from previous guidance [21][34] - The company anticipates a gradual recovery in the U.S. market in the second half of the fiscal year, with key installations already in progress [50][10] - Management is closely monitoring macroeconomic factors, including inflation and tariffs, but believes the risks are minimal for the second half of the year [33][54] Other Important Information - The company welcomed a new Chief Operations Officer, Leonel Peralta, to enhance operational excellence and productivity [20][10] - The company is focused on addressing its capital structure and refinancing needs to ensure flexibility for future growth [33][10] Q&A Session Summary Question: Details on China revenue growth and sustainability - Management highlighted strong performance in China, attributing it to a strategic joint venture partner and a robust product portfolio, with expectations for continued demand [42][44] Question: Revenue number from China - Management indicated that specific revenue numbers could be shared in one-on-one calls [46] Question: Confidence in U.S. market recovery and macroeconomic factors - Management expects gradual recovery in the U.S. market, with visibility on orders already in the backlog, and is monitoring inflation and tariffs closely [50][54] Question: Performance in Japan and future opportunities in India - Management noted strong performance in Japan and anticipated growth in India, particularly with the upcoming regulatory approval for the Helix product [61][64]