Accuray (ARAY) Q1 2025 earnings summary

Executive summary

• Fiscal Q1 2025 net revenue was $101.5 million, down 2% year-over-year, with strong China performance and service business growth, while product revenue declined and service revenue increased 5% due to a larger installed base and higher contract prices.

• Adjusted EBITDA was $3.1 million, down from $6.5 million in the prior year, and net loss widened to $4.0 million ($0.04/share) from $3.0 million ($0.03/share).

• Significant progress in product innovation, service solutions, and commercial strategies, especially in high-growth markets like China, with Tomo C launch and NEJM publication supporting SBRT for prostate cancer.

• Raised full-year FY2025 revenue and Adjusted EBITDA guidance, reflecting confidence in demand and backlog.

• Cash and equivalents at quarter-end were $59.2 million, down from $69 million last quarter, mainly due to inventory buildup for future shipments.

Financial highlights

• Q1 FY2025 revenue was $101.5 million, down 2% year-over-year; product revenue was $48.4 million (down 9%), service revenue was $53.2 million (up 5%).

• Gross margin was 33.9%, down from 38.0% year-over-year, mainly due to normalization after prior year one-time benefits and deferred gross profit on JV sales.

• Adjusted EBITDA for Q1 was $3.1 million, a 52% decrease year-over-year, impacted by timing of one-time ERP-related cost benefits.

• Operating loss was $2.1 million, compared to operating income of $2.2 million in the prior year.

• Order backlog at quarter-end was $468.6 million, about 4% lower year-over-year; book-to-bill ratio was 1.1.

Outlook and guidance

• FY2025 revenue guidance raised to $462 million–$472 million, with Adjusted EBITDA guidance increased to $28 million–$30 million.

• Projected GAAP net loss for fiscal 2025 is $2.5 million–$4.5 million.

• U.S. market recovery expected in the second half of FY2025, with revenue and margin weighted toward H2.

• Expect $3 million–$4 million of net margin release from China JV included in revised guidance.

• Management expects continued negative impact on gross margins and net income from inflation, supply chain, and logistics costs through FY2025.