Iridex 2025 Q3 Earnings Reduced Losses and Revenue Growth

Iridex (IRIX) reported mixed Q3 2025 results, with revenue rising 7.8% to $12.48 million and losses narrowing by 18.6% to $1.57 million. The company reaffirmed its guidance for cash flow breakeven in Q4 2025 and full-year adjusted EBITDA positivity, aligning with expectations.

Revenue

Iridex’s total revenue increased to $12.48 million in Q3 2025, driven by a 13% rise in Cyclo G6 probe sales to $3.54 million and $6.70 million in retina product revenue. The “Other” segment contributed $2.25 million, reflecting growth in service and legacy product sales. This performance underscores the company’s ability to maintain revenue momentum amid cost-cutting efforts.

Earnings/Net Income

The company narrowed its net loss to $1.57 million ($0.09 per share) in Q3 2025, a 18.6% improvement from $1.93 million ($0.12 per share) in the prior year. While the reduction in losses is positive, the company remains unprofitable, with continued cash burn.

Post-Earnings Price Action Review

The strategy of buying Iridex shares on revenue raise announcements and holding for 30 days delivered an 18.5% cumulative return over three years. Quarterly returns ranged from 6.5% in Q1 2023 to 15% in Q3 2023, with annual returns climbing from 11.5% in 2023 to 18.5% in 2025. This trend highlights the stock’s responsiveness to revenue momentum, though recent price declines suggest short-term volatility.

CEO Commentary

Patrick Mercer, CEO, emphasized four consecutive quarters of revenue growth, a 12% reduction in operating expenses, and a $1.3 million improvement in adjusted EBITDA. He highlighted the “much reduced cost structure” as a catalyst for 2025 EBITDA positivity and sustained cash flow, citing strong balance sheet support for operational sustainability.

Guidance

Iridex targets cash flow breakeven in Q4 2025 and full-year 2025 adjusted EBITDA positivity, assuming revenue trends align with 2024 levels. The company plans to leverage its lean cost structure to drive profitability and maintain operational efficiency.

Additional News

1. Leadership Stability: Patrick Mercer’s first year as CEO has reinforced Iridex’s focus on cost optimization and operational efficiency, with no executive changes reported.

2. Cost-Cutting Measures: The company relocated non-core functions outside California, projected to save $165,000 quarterly starting in Q1 2026.

3. Inventory Challenges: A $0.8 million non-recurring inventory write-down impacted gross margins, though management cited improved product mix and contract manufacturer negotiations as long-term solutions.

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Key Metrics Summary

• Revenue: $12.48 million (+7.8% YoY)

• Net Loss: $1.57 million (-18.6% improvement)

• Cash Flow Target: Q4 2025 breakeven

• Adjusted EBITDA: -$131K (improved $1.3 million YoY)