What caused ARAY's EPS surprise in Q4 2024?

Accuray's EPS surprise in Q4 2024 was primarily driven by a combination of factors that influenced its revenue and expense trends: 1. **Revenue Trends**: Accuray's revenue fell by 2.3% year-over-year to $101.55 million, which was slightly below the Zacks Consensus Estimate of $98.1 million. However, when considering constant exchange rates, net revenues were $102 million. This slight discrepancy suggests that the company's revenue decline was partially offset by favorable currency movements. The service revenue segment showed resilience, growing by 5.3% to $53.2 million, while product revenues declined by 9.4% to $48.4 million. The growth in service revenues, particularly from increased contract revenue and enhanced service offerings, was a positive contributor to the company's overall performance. 2. **Gross Margin Dynamics**: The gross margin for the quarter contracted by 410 basis points to 33.9%, compared to 38% in the prior year. This decline in gross margin, partly due to a one-time cost benefit in the previous year, had a negative impact on the company's profitability and, consequently, its EPS. 3. **Operating Expenses**: Accuray's operating expenses decreased by 1.8% to $36.6 million. This reduction in operating expenses, despite the decline in revenue, did not fully offset the impact of lower gross margins on the bottom line. 4. **Strategic Initiatives**: The company's strategic initiatives, such as the successful launch of the Tomo C product in China, contributed to strong revenue growth in the region, with a 30% year-over-year increase. This regional performance indicates that Accuray's focus on strategic growth initiatives could be a key factor in its future performance. In summary, Accuray's EPS surprise in Q4 2024 was influenced by a combination of revenue trends, gross margin dynamics, operating expenses, and strategic initiatives. While the company faced challenges in product revenue and gross margin, its focus on strategic growth initiatives, particularly in the Chinese market, provided a positive outlook for future performance.