Accuray (ARAY) Q4 2017 earnings summary

Executive summary

• FY17 gross orders grew 5% YoY and backlog rose 12% to a record $452.8M; focus for FY18 is converting backlog, particularly international distributor orders, into revenue.

• Radixact launched commercially in Q3; it represented two-thirds of TomoTherapy order mix in Q4. U.S. TomoTherapy replacement wins exceeded 80% of opportunities.

• Revenue fell 4% YoY and net loss widened to $29.6M from $25.5M; operating cash use was $0.4M versus $30.9M generated in FY16.

Financial highlights

• FY17 revenue was $383.4M, down 4% YoY; product revenue fell 7% to $179.6M and service revenue fell 1% to $203.8M.

• Gross profit was $141.3M versus $158.7M; operating loss was $9.8M versus $4.9M, and net loss was $29.6M versus $25.5M.

• Basic and diluted loss per share was $0.36 versus $0.32; FY17 ending backlog reached $452.8M versus $405.9M.

• Cash and cash equivalents were $72.1M and short-term investments $23.9M at June 30, 2017, compared with $119.8M and $47.2M a year earlier.

Outlook and guidance

• FY18 R&D expense expected above FY17 on planned development investment; selling and marketing expense expected slightly higher for launches and incremental hiring; G&A expected relatively flat.

• Management expects age-outs in FY18 Q1 to improve sequentially from FY17 Q4 and is prioritizing conversion of backlog, especially distributor orders, into revenue.

• Existing cash, investments and anticipated cash flows were expected to fund operations for at least 12 months; planned software upgrades are intended to improve treatment speed, workflow and throughput in FY18.