Accuray (ARAY) Q4 2020 earnings summary

Executive summary

• FY20 returned to profitability with net income of $3.8M, while revenue declined 9% YoY to $382.9M amid lower system sales and COVID-19-related delivery and installation delays.

• Backlog rose to $602.7M from $495.6M, but pandemic-related timing delays and expected higher-than-normal age-outs threatened near-term conversion to revenue.

Financial highlights

• Revenue was $382.9M, down 9% YoY; gross profit was $149.7M, down 8%, and operating income was $12.5M versus $0.6M in FY19.

• Net income was $3.8M versus a $16.4M net loss in FY19; diluted EPS was $0.04 versus a $0.19 loss.

• Other expense, net fell to $6.8M from $14.9M, including a non-recurring $13.0M gain on systems contributed to the China JV, partly offset by higher interest expense and FX losses.

• Net cash used in operations was $1.5M; cash and cash equivalents increased to $107.6M at June 30, 2020 from $76.8M a year earlier.

Outlook and guidance

• COVID-19 delivery and installation delays were expected to continue into FY21 and negatively affect revenue; the duration and extent of the impact could not be reliably estimated.

• Management expected sufficient cash resources and anticipated cash flows to fund operations for at least 12 months, while continuing to assess liquidity and debt-covenant compliance amid pandemic uncertainty.

• Revenue from 50 China Class A licenses, with estimated value of $115.0M, was delayed; recognition was then expected to begin in H1 FY21, subject to tender-process and pandemic uncertainty.