Accuray(US:ARAY)2025-11-05 22:30Financial Data and Key Metrics Changes - Net revenue for Q1 2026 was $94 million, down 7% year-over-year and down 9% on a constant currency basis [15] - Product revenue for Q1 was $37 million, a decrease of 23% year-over-year and down 24% on a constant currency basis [15] - Service revenue was $57 million, up 7% from the prior year and up 4% on a constant currency basis [15] - Overall gross margin for the quarter was 28.3%, compared to 33.9% in the prior year [17] - Adjusted EBITDA for the quarter was a loss of $4.1 million, compared to income of $3.1 million in the prior year [20] Business Line Data and Key Metrics Changes - Product revenue was impacted by slower performance in the EIA, EMEA, and China regions [15] - Service revenue growth was driven by a 10% increase in contract revenue year-over-year [16] - Product orders for Q1 were approximately $40 million, with a book-to-bill ratio of 1.1 [16] Market Data and Key Metrics Changes - The company reported a backlog of approximately $396 million, providing strong visibility for future revenue conversion [17] - The decline in gross orders was attributed to timing of customer orders in China and The Americas [16] Company Strategy and Development Direction - The immediate goal is to identify key strategic, operational, and financial areas to enhance competitiveness and drive margin expansion [10] - The management team aims to reach a high single-digit adjusted EBITDA margin within twelve months and double-digit margins over the medium to long term [11] - A transformation plan is in place to improve operational responsiveness and foster a performance-based culture [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the execution of the transformation plan despite a slower start to FY 2026 [22] - There is optimism regarding the easing of geopolitical and macroeconomic issues, which may shift product demand to the second half of the fiscal year [33] Other Important Information - The company launched the Stellar product at ASTRO, receiving positive feedback and strong interest from customers [12] - A memorandum of understanding was signed with the University of Wisconsin to advance online adaptive radiotherapy [13] Q&A Session Summary Question: What is the current capital equipment purchasing environment? - The response indicated variability by region, with a slowdown in EIMEA and China, while the U.S. market remains stable and growth is seen in APAC [27][28] Question: Details on net orders and cancellations? - The company acknowledged age outs but emphasized focusing on gross orders, which were lower than expected due to timing issues [29][30] Question: Updates on tariff mitigation efforts? - The company is actively pursuing duty drawback programs and considering foreign trade zones to mitigate tariffs [31] Question: Insights on margin expectations? - Margins are expected to improve as backlog execution shifts towards developed markets, which typically have better margin profiles [36]