Pulmonx's Path to Profitability: Assessing Margin Stability and Operational Efficiency in a High-Growth, High-Burn Model

Pulmonx, a leader in pulmonary embolism therapies, continues to navigate the delicate balance between aggressive growth investments and operational efficiency. As the company eyes long-term profitability, investors must scrutinize whether its recent cost optimization efforts can temper its high-burn model without stifling innovation or market expansion.

Revenue Growth and Margin Resilience

Pulmonx reported third-quarter 2025 revenue of $21.5 million, a 5% year-over-year increase, driven by 15% international revenue growth to $7.5 million and 1% U.S. revenue growth to $14.0 million, according to Stock Titan. Despite this progress, the company's net loss widened to $14.0 million for the quarter, with operating expenses rising 4% to $30.4 million compared to Q3 2024, according to Stock Titan. Gross margin, however, remained stable at 75%, underscoring the company's ability to maintain pricing power and product efficiency, according to Stock Titan.

The updated 2025 full-year revenue guidance of $89–$90 million reflects cautious optimism, but the path to profitability hinges on whether operating expenses can be curtailed. For context, annual operating expenses surged from $65 million in 2020 to $141 million in 2024, according to Macro Trends, far outpacing revenue growth. While 2025 guidance of $125–$126 million represents a modest 9% reduction from 2024's $133–$135 million range, according to Pulmonx Investor Relations, this adjustment is critical for improving operating leverage.

Cost Optimization: Progress and Pitfalls

Pulmonx has implemented targeted cost-cutting measures, particularly in non-revenue-generating areas. For instance, stock-based compensation expenses were reduced by $3 million in Q3 2024, according to Pulmonx Investor Relations, and the company revised its 2025 non-cash compensation estimate to $21 million from $22 million, according to Stock Titan. These adjustments, coupled with headcount management and resource reallocation to high-impact initiatives like physician training and the LungTraX platform, signal disciplined execution, according to Pulmonx Investor Relations.

However, the breakdown of expenses reveals persistent challenges. In Q2 2025, selling, general, and administrative (SG&A) expenses accounted for 87% of total operating costs ($26.7 million), while research and development (R&D) represented just 17% ($5.3 million), according to Investing.com. This imbalance raises questions about the sustainability of growth if SG&A remains disproportionately high. Clinical and commercial investments, while necessary, must be balanced against margin preservation.

Strategic Levers for Profitability

Pulmonx's strategy to achieve profitability rests on three pillars:
1. Operational Efficiency: The company's revised 2025 expense guidance demonstrates progress, but further reductions in SG&A-particularly in non-core activities-will be essential.
2. Revenue Scaling: International growth (15% YoY) offers a promising avenue, though U.S. market saturation could limit upside.
3. Product Innovation: Maintaining R&D investment in its Zephyr Valves and LungTraX platform is critical to defend market share and justify premium pricing.

Risks and Considerations

While Pulmonx's cost optimization efforts are commendable, investors must remain wary of two risks:
- Overemphasis on Short-Term Efficiency: Aggressive SG&A cuts could undermine long-term R&D pipelines or clinical trial momentum.
- Revenue Volatility: A 5% YoY revenue growth rate, while positive, may not offset the $125–$126 million annual operating burn without significant margin expansion.

Conclusion

Pulmonx's path to profitability is neither guaranteed nor imminent, but the company is taking meaningful steps to align expenses with revenue growth. The revised 2025 guidance and focus on high-impact commercial initiatives suggest a commitment to operational discipline. However, sustained profitability will require not only tighter cost controls but also a step-up in revenue growth-particularly in the U.S.-and a balanced allocation of resources between innovation and commercialization. For now, the jury is out, but the company's ability to execute on its efficiency roadmap will be a key determinant of its long-term success.