Accuray (ARAY) Q4 2019 earnings summary

Executive summary

• FY19 revenue rose to $418.8M from $404.9M; operating income was $0.6M versus a $3.8M loss, while net loss narrowed to $16.4M from $23.9M.

• TomoTherapy system sales drove product growth, led by Radixact; CyberKnife sales declined. International markets contributed 68% of revenue outside the Americas.

• Backlog reached $495.6M, up from $478.5M, although cancellations, age-outs and currency changes can delay or prevent conversion to revenue.

Financial highlights

• Net revenue was $418.8M, up $13.9M YoY; product revenue increased $12.8M, while service revenue rose $1.1M.

• Operating expenses were $162.1M versus $165.5M; operating income was $0.6M versus an operating loss of $3.8M.

• Net loss narrowed to $16.4M from $23.9M; basic and diluted EPS improved to $(0.19) from $(0.28).

• Cash and cash equivalents were $76.8M at June 30, 2019, down from $83.1M; operating cash flow was $(29.6)M versus $18.3M.

Outlook and guidance

• FY20 R&D expense expected slightly lower in absolute dollars; selling and marketing slightly higher due to launches and added headcount; G&A expected lower with reduced bad debt expense.

• Synchrony for Radixact was planned for selected clinical evaluation sites through calendar 2019, with broader commercial launch expected in early calendar 2020.

• Cash and expected cash flows were expected to fund operations for at least 12 months; future capital needs remain dependent on sales, spending and debt requirements.

• Of $779.3M in remaining performance obligations beyond long-term warranty and service, 22%–31% was estimated for recognition in the next 12 months; historical cancellations could leave 17%–27% of contracts never producing revenue.