Core Viewpoint - Pulmonx is focusing on rebuilding U.S. sales momentum and improving operational efficiency after a weaker-than-expected performance in 2025, with a strategic shift towards high-impact initiatives and a streamlined sales organization [4][7][23] Organizational Changes - CEO Glen French has taken a more direct role in the U.S. sales organization, with area vice presidents now reporting directly to him [1] - The company is streamlining its sales priorities to focus on fewer, high-impact mandates [1][7] Sales Performance and Challenges - The U.S. sales organization experienced significant turnover in 2025, estimated at around 50%, disrupting customer continuity [2][7] - Internal operational challenges, including a spread of initiatives and disruptive territory manager role changes, contributed to the U.S. shortfall [3][7] Financial Overview - Pulmonx executed a cost restructuring that reduced ongoing operating expenses by over 10% and secured a $60 million credit facility extending debt maturity to 2031 [5][13] - The company expects to reduce annual cash burn from $32 million in 2025 to $23 million in 2026, a decrease of nearly 30% [5][14] - For Q4 2025, worldwide revenue was $22.6 million, down 5% year-over-year, while full-year revenue was $90.5 million, up 8% [14][15] Market Expansion Efforts - Pulmonx is prioritizing the AeriSeal program and the CONVERT II trial to expand its total addressable market, with an estimated potential 20% increase [6][11][12] - Enrollment for the CONVERT II trial is expected to finish in 2027, with leadership changes in clinical affairs to accelerate this process [12] 2026 Guidance - The company projects 2026 revenue between $90 million and $92 million, anticipating growth in both U.S. and international markets in the second half of the year [20] - Gross margin for 2026 is expected to be approximately 75%, with operating expenses projected between $113 million and $115 million [22] Strategic Focus - The company is adopting a "near-to-far" approach to sales, prioritizing engagement with treating physicians and established valve centers [7][9] - Management emphasizes a year of "focused execution" in 2026 to regain sales momentum and advance clinical priorities [23]

Financial Data and Key Metrics Changes - Total worldwide revenue in Q4 2025 was $22.6 million, a 5% decrease from $23.8 million in the same period last year, and a decrease of 7% on a constant currency basis [20] - Worldwide revenue for the full year 2025 was $90.5 million, an 8% increase over the prior year, and a 7% increase on a constant currency basis [20] - U.S. revenue in Q4 was $14.1 million, an 11% decrease from $15.9 million during the same period of the prior year [20] - International revenue in Q4 was $8.5 million, an 8% increase from $7.9 million during the same period last year [22] - Gross margin for Q4 was 77.6%, compared to 74% in the prior year [23] - Net loss for Q4 was $10.4 million or a loss of $0.25 per share, compared to a net loss of $13.2 million or a loss of $0.33 per share for the same period of the prior year [25] - Cash equivalents and marketable securities at the end of 2025 were $69.8 million, a decrease of $31.7 million from December 31, 2024 [26] Business Line Data and Key Metrics Changes - U.S. revenue for the full year 2025 was $57 million, a 1% increase over the prior year [21] - International revenue for the full year 2025 was $33.5 million, an increase of 23% over the prior year [22] - R&D expenses for Q4 were $4.6 million compared to $4 million in Q4 2024, reflecting increased clinical trial activity [24] - Sales, general, and administrative expenses for Q4 were $22.9 million compared to $27 million in Q4 2024 [24] Market Data and Key Metrics Changes - International growth was driven by continued strength in major European markets, offset by a lack of sales to the distributor in China [22] - The distributor in China is working through inventory from large orders placed in the first half of 2025, awaiting the renewal of the Chinese registration certificate expected in the second half of 2026 [22] Company Strategy and Development Direction - The company aims to re-accelerate U.S. sales growth, advance clinical initiatives, and align spending to deliver financial leverage towards profitability [7] - A focus on organizational alignment to optimize resources and decision-making in critical areas has been established [8] - The sales strategy is shifting to prioritize high-impact mandates and streamline the U.S. sales team's focus [10] - The AeriSeal program is a key focus for expanding the market, with the CONVERT II trial expected to complete enrollment in 2027 [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the underperformance in U.S. revenue was largely due to internal operational challenges and has begun implementing strategies to address these issues [7][8] - The company expects to deliver full-year 2026 revenue in the range of $90 million-$92 million, with a return to year-over-year growth anticipated in the back half of the year [26] - Management is confident in the business fundamentals and is focused on demonstrating meaningful operating leverage and reducing cash burn starting in 2026 [19][28] Other Important Information - A cost restructuring initiative has reduced ongoing operating expenses by over 10% [18] - A $60 million credit facility has been secured, extending the maturity of existing debt to 2031 and providing access to additional capital [18] Q&A Session Summary Question: What percentage of the sales force turned over in Q4? - The turnover was across the entire year, with approximately half of the sales organization experiencing turnover [31] Question: How are sales incentives structured now? - The design of the compensation plan has been adjusted to ensure it is reasonable and well-understood, with a focus on effective quota allocation [34] Question: Why wouldn't growth return sooner with the new sales force in place? - The company is starting from a position of decline, and new reps require time to ramp up productivity [41] Question: What areas contributed to the 10% cost reduction? - Most savings came from G&A and marketing, while maintaining investments in key growth areas like sales and R&D [46] Question: How will AeriSeal and the CONVERT II trial be balanced with U.S. sales investments? - The company believes that the trial's execution will not significantly impact overall spending and will be aligned with commercial operations [52] Question: What is the status of sales in China? - Sales to China are expected to resume in the back half of 2026, with minimal contributions anticipated in the first half [78]

Financial Data and Key Metrics Changes - Total worldwide revenue in Q4 2025 was $22.6 million, a 5% decrease from $23.8 million in the same period last year, and a decrease of 7% on a constant currency basis [20] - Worldwide revenue for the full year 2025 was $90.5 million, an 8% increase over the prior year, and a 7% increase on a constant currency basis [20] - Gross margin for Q4 2025 was 77.6%, compared to 74% in the prior year, driven primarily by a lower mix of distributor sales in international markets [23] - Net loss for Q4 2025 was $10.4 million, or a loss of $0.25 per share, compared to a net loss of $13.2 million, or a loss of $0.33 per share for the same period last year [25] - The company expects to significantly decrease its annual cash burn from $32 million in 2025 to $23 million in 2026, representing a reduction of nearly 30% [19] Business Line Data and Key Metrics Changes - U.S. revenue in Q4 was $14.1 million, an 11% decrease from $15.9 million during the same period of the prior year [20] - U.S. revenue for the full year 2025 was $57 million, a 1% increase over the prior year [21] - International revenue in Q4 2025 was $8.5 million, an 8% increase from $7.9 million during the same period last year [22] - International revenue for the full year 2025 was $33.5 million, an increase of 23% over the prior year [22] Market Data and Key Metrics Changes - International growth was driven by continued strength in major European markets, offset by a lack of sales to the distributor in China [22] - The company expects to resume shipments to China in the back half of 2026, following the renewal of its Chinese registration certificate [22][26] Company Strategy and Development Direction - The company has identified three top priorities: re-accelerating U.S. sales growth, advancing clinical initiatives to expand total addressable market (TAM), and aligning spending to achieve financial leverage [7] - AeriSeal program is a key focus, with expectations to grow the total addressable market by an estimated 20% globally upon completion of the CONVERT II trial in 2027 [15][16] - The company is committed to demonstrating meaningful operating leverage and reducing cash burn starting in 2026 [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the underperformance in U.S. revenue was largely due to internal operational challenges and a need for better alignment within the sales organization [8][9] - The company expects U.S. sales growth to resume in the back half of 2026, driven by a refocused commercial strategy and filled sales positions [14][26] - Management remains confident in the business fundamentals and is focused on rebuilding momentum through a clear operating plan [28] Other Important Information - The company executed a cost restructuring initiative that reduced ongoing operating expenses by over 10% [18] - The company closed on a $60 million credit facility, extending the maturity of existing debt to 2031 and providing access to additional capital [18] Q&A Session Summary Question: What percentage of the sales force turned over in Q4? - Management indicated that turnover was across the entire year, with approximately half of the sales organization experiencing turnover [30] Question: How are sales incentives structured now? - The company has made changes to the compensation plan and quota allocation to ensure better alignment and motivation for the sales force [32][34] Question: Why wouldn't growth return sooner with the new sales force in place? - Management noted that the sales team is coming up to speed and that the company is starting from a lower base due to previous declines [40] Question: What specific changes contributed to the 10% cost reduction? - The majority of cost reductions came from G&A and marketing, while ensuring continued investment in key growth areas [44] Question: How is the AeriSeal program being balanced with U.S. sales organization investments? - Management emphasized that the AeriSeal program is a priority, and they are ensuring alignment within the sales organization to support its success [48][50] Question: What is the expected contribution from Japan and China in 2026? - Japan is expected to contribute through revenue-generating patients in a post-approval study, while China sales are anticipated to resume in the back half of 2026 [72][76]

Financial Data and Key Metrics Changes - Total worldwide revenue in Q4 2025 was $22.6 million, a 5% decrease from $23.8 million in Q4 2024, and a 7% decrease on a constant currency basis [19] - Full year 2025 revenue was $90.5 million, an 8% increase over the prior year, and a 7% increase on a constant currency basis [19] - U.S. revenue in Q4 2025 was $14.1 million, an 11% decrease from $15.9 million in Q4 2024, while full year U.S. revenue was $57 million, a 1% increase over the prior year [19] - International revenue in Q4 2025 was $8.5 million, an 8% increase from $7.9 million in Q4 2024, and a 2% increase on a constant currency basis [20] - Gross margin for Q4 2025 was 77.6%, up from 74% in the prior year, driven by a lower mix of distributor sales [21] - Net loss for Q4 2025 was $10.4 million, or a loss of $0.25 per share, compared to a net loss of $13.2 million, or a loss of $0.33 per share in Q4 2024 [24] Business Line Data and Key Metrics Changes - The company added 10 new U.S. treating centers during Q4 2025 [19] - R&D expenses for Q4 2025 were $4.6 million, compared to $4 million in Q4 2024, reflecting increased clinical trial activity [23] - Sales, general, and administrative expenses for Q4 2025 were $22.9 million, down from $27 million in Q4 2024 due to cost controls [23] Market Data and Key Metrics Changes - International revenue for the full year 2025 was $33.5 million, a 23% increase over the prior year, and a 19% increase on a constant currency basis [20] - The company expects revenue growth in the first half of 2026 to be negatively impacted by minimal sales to its distributor in China, with a return to growth expected in the second half [25][26] Company Strategy and Development Direction - The company’s top three priorities are re-accelerating U.S. sales growth, advancing clinical initiatives, and aligning spending to achieve profitability [6] - AeriSeal program is a key focus, with expectations to expand the total addressable market by an estimated 20% globally upon completion of the CONVERT II trial in 2027 [14][15] - The company aims to demonstrate meaningful operating leverage and reduce cash burn from $32 million in 2025 to $23 million in 2026, representing a reduction of nearly 30% [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the underperformance in U.S. revenue was largely due to internal operational challenges and has taken steps to realign the sales organization [6][8] - The company expects U.S. sales growth to resume in the back half of 2026, driven by a refocused commercial strategy and newly filled sales positions [25] - Management remains confident in the business fundamentals and is focused on executing a clear operating plan targeting high-impact initiatives [27] Other Important Information - The company executed a cost restructuring initiative that reduced ongoing operating expenses by over 10% [17] - A $60 million credit facility was closed, extending the maturity of existing debt to 2031 and providing access to additional capital [17] Q&A Session Summary Question: What percentage of the sales force turned over in Q4? - The turnover was across the entire year, with approximately half of the sales organization experiencing turnover [29] Question: How are sales incentives structured now? - The company has embraced a new approach to quota allocation and compensation design, ensuring it is reasonable and well-understood by the sales team [34] Question: Why wouldn't growth return sooner with the new sales force in place? - The company is starting from a position of decline and needs time for the new sales team to ramp up productivity [40] Question: What changes contributed to the 10% cost reduction? - The majority of the savings came from G&A and marketing, while maintaining investments in key growth areas like sales and R&D [45] Question: How is the AeriSeal trial progressing? - Enrollment in the CONVERT II trial is accelerating, and it is not expected to significantly impact overall company spending [52] Question: What is the outlook for China sales? - Minimal sales are expected in the first half of 2026, with a return to shipments anticipated in the back half of the year [78]