Accuray Stock Down as Q4 Earnings Miss Estimates, Revenues Down Y/Y

Core Insights - Accuray Incorporated (ARAY) reported breakeven earnings per share (EPS) for the fourth quarter of fiscal 2025, missing the Zacks Consensus Estimate by 100% compared to the previous year's EPS of 3 cents [1][5] - The company's quarterly revenues were $127.5 million, a decrease of 5% year over year, but exceeded the Zacks Consensus Estimate by 2.5% [2][5] Revenue Breakdown - Product revenues fell by 11.3% year over year to $70.7 million, primarily due to weaker sales in China, EIMEA, and Japan [4][10] - Service revenues increased by 4.1% year over year to $56.8 million, supported by a growing installed base and improved service contract capture rates [4][10] Financial Performance - Gross profit improved by 1.3% year over year to $38.9 million, with gross margin expanding by 200 basis points to 30.6% [6] - Operating profit was $4.2 million, down from $6.8 million in the prior-year quarter [7] Financial Position - At the end of the fourth quarter, Accuray had cash and cash equivalents of $57.4 million, down from $77.8 million at the end of the previous quarter [8] - Total debt decreased to $136.5 million from $173.8 million in the prior quarter [8] Future Guidance - For fiscal 2026, Accuray expects revenues in the range of $471 million to $485 million, which is above the current consensus estimate of $452.7 million [9][10] Market Dynamics - The company faced challenges from lower product revenue in China and EIMEA due to tariff disruptions and geopolitical unrest, but saw a 22% sales surge in APAC and a 24% rebound in the Americas [10][11] - The book-to-bill ratio remained healthy at 1.2, indicating sustained demand despite regional challenges [11] Tariff Impact and Mitigation Strategies - Tariffs had a notable impact, costing approximately $4 million during the quarter, with half mitigated through a duty drawback program [12][13] - Long-term strategies include establishing a manufacturing site as a foreign trade zone and accelerating dual-sourcing for key components to cushion profitability from tariff volatility [13]