Accuray (ARAY) Q4 2014 earnings summary

Executive summary

• FY14 marked a commercial and financial recovery: revenue grew 17% YoY, gross profit 46%, operating expenses fell 10%, and adjusted EBITDA turned positive at $13.3M.

• Net orders grew 29% YoY; the worldwide installed base exceeded 700 systems, with 500,000 patient treatments reported.

• Customer satisfaction reached the top radiation-oncology vendor rating for four consecutive quarters, alongside reported record reliability and system uptime.

Financial highlights

• FY14 revenue was $369.4M, up 17% YoY; gross profit was $142.8M, up 46%, with gross margin at 39% versus 31%.

• Net loss attributable to stockholders was $35.4M, improved from $103.2M in FY13; diluted loss per share was $0.47 versus $1.41.

• Operating loss narrowed to $18.1M from $80.7M; adjusted EBITDA was $13.3M versus a $55.7M loss in FY13.

• Product revenue rose 26% to $173.6M and services revenue rose 10% to $195.8M; system units sold increased 40%.

• Operating expenses declined 10% to $160.9M; R&D fell 19% to $53.7M, while selling and marketing rose 14% to $61.9M.

Outlook and guidance

• FY15 priorities include rebuilding U.S. market share, growing internationally, improving service and customer satisfaction, and optimizing the product portfolio.

• FY15 R&D spending was expected to exceed FY14 levels; selling and marketing expense was also expected to increase with headcount and compensation.

• Management expected available cash, investments and anticipated cash flows to fund operations for at least 12 months, with a stated pathway to profitability.

• Broader CyberKnife M6 MLC launch depended on successful field evaluations; a wider launch was targeted during FY15 if clinical performance supported it.