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Accuray Stock Down as Q4 Earnings Miss Estimates, Revenues Down Y/Y
ZACKS· 2025-08-14 16:21
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]
Accuray (ARAY) 2025 Conference Transcript
2025-06-04 22:30
Accuray (ARAY) 2025 Conference Summary Company Overview - Accuray is a $450 million company operating in the radiation therapy space, with revenue split evenly between product and service offerings [2][3] - Key product lines include Radixact, CyberKnife, Helix, and Tomo C, with the latter two targeting emerging markets and value segments [3][4] Market Position and Strategy - Accuray has doubled its total addressable market through the introduction of Helix and Tomo C, aiming to increase its install base and service contracts [4] - The company holds the number three market share in the radiation oncology industry, with a strong position in Japan where it ranks second [4][5] Tariff Impact and Mitigation Strategies - Recent tariff changes have seen U.S. tariffs on Chinese imports drop from 145% to approximately 30%, while retaliatory tariffs from China have decreased from 125% to 10% [8][10] - Accuray is actively engaging in tariff mitigation strategies, including a duty drawback program and exploring the establishment of a free trade zone in Madison [12][13] - The company is also assessing dual sourcing suppliers to minimize tariff impacts [14][15] Service Revenue and Pricing - Accuray anticipates minimal impact on its service business from current tariff rates, with plans to pass on tariff-related pricing to customers [22][23] - The service segment is viewed as a significant area for margin expansion, with a focus on reducing parts consumption and enhancing service pricing [24] Regional Market Dynamics - The EIMEA region is the largest backlog market for Accuray, with significant growth potential in Japan and emerging markets [26][27] - The company is optimistic about its joint venture in China, which has maintained a high market share in the premium segment [30] Product Performance and Future Markets - The Helix product has performed in line with expectations since its launch, with potential growth anticipated in India and South America [34][35] - Accuray sees India as a key market for future growth, with a significant need for radiation therapy equipment [37][38] U.S. Market Conditions - The U.S. market is currently experiencing pressures due to high interest rates affecting capital equipment decisions [39] - Both the U.S. and Western Europe are primarily replacement markets, with opportunities to upgrade aged systems [42] Service Model Transition - Accuray is in the early stages of transitioning its service offerings towards a subscription model, which is expected to align with customer needs [44] Investor Insights - Key misconceptions about Accuray include its differentiation in technology and the significance of its annuity revenue, which constitutes about half of its total revenue [46] - The company is focused on margin expansion and cost reduction strategies, with hopes that macroeconomic conditions will improve to reflect these efforts in financial performance [47]