Accuray (ARAY) Q4 2016 earnings summary

Executive summary

• FY16 revenue rose 5% YoY to $398.8M; net loss narrowed to $25.5M from $40.2M, while adjusted EBITDA reached a record $24.6M.

• Record year-end product backlog of $405.9M and highest-ever quarterly gross orders reflected increased CyberKnife and TomoTherapy demand, including a major UK multisystem order.

• Strategic focus: launch Radixact, grow CyberKnife MLC adoption, pursue strategic accounts and multisystem orders, and expand in China with Onrad.

Financial highlights

• FY16 revenue was $398.8M, up 5% YoY; product revenue rose 8% to $193.3M and service revenue rose 2% to $205.5M.

• Gross profit increased 9% to $158.7M; operating loss narrowed to $4.9M from $19.2M, and net loss narrowed to $25.5M from $40.2M.

• Adjusted EBITDA was a record $24.6M, versus $11.8M in FY15; adjusted EBITDA excludes stock-based compensation.

• Net cash from operations was $33.5M versus $16.7M used in FY15; cash and cash equivalents increased to $119.8M from $79.6M.

Outlook and guidance

• FY17 R&D expense expected to be slightly lower than FY16 following completion of key development projects; selling and marketing expense expected to rise slightly with launches and added headcount.

• FY17 G&A expense expected to be slightly lower, reflecting anticipated lower legal fees.

• Onrad was expected to contribute to gross orders in H2 FY17; CyberKnife and TomoTherapy were expected to remain the main sources of gross orders for FY17.

• Priorities include the Radixact installed-base replacement opportunity, CyberKnife systems with MLC, multisystem strategic accounts, and China expansion.