Accuray(ARAY) - 2025 Q2 - Earnings Call Transcript

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]