Pulmonx's Q2 2025 Earnings: A Breath of Fresh Air for COPD Therapeutics?

Pulmonx Corporation (NASDAQ: LUNG), a leader in minimally invasive treatments for chronic obstructive pulmonary disease (COPD), is poised to deliver its Q2 2025 earnings results on July 30, 2025. Investors are watching closely for signs of momentum in its Zephyr Valve adoption, international expansion, and progress on its AeriSeal CONVERT II trial—a catalyst that could unlock a broader market opportunity. With its stock trading at a deeply discounted valuation relative to peers, the question remains: Does Pulmonx's undervalued status mask untapped growth potential, or are risks to its margin trajectory and reimbursement dynamics too significant to overlook?

Earnings Preview: Revenue Growth Amid Margin Pressures

Pulmonx's Q1 2025 results provided a glimpse of its trajectory, with total revenue rising 20% year-over-year to $22.5 million. The international segment shone, surging 39% (43% on a constant currency basis), reflecting strong adoption of its Zephyr Valve in markets like Europe and Asia. While gross margin dipped slightly to 73% from 75% in Q1 2024 due to elevated commercial investments, the company reaffirmed its full-year guidance of $96–$98 million in revenue and a 74% gross margin. This suggests management believes operational efficiencies and its high-margin product mix will stabilize profitability.

The key unknown for Q2 will be whether the modest margin pressures persist or if cost controls and revenue growth can offset them. With operating expenses rising 8% year-over-year to $30.9 million in Q1, investors will scrutinize whether the company is efficiently scaling its commercial infrastructure to sustain global expansion.

Market Expansion: International Growth and Zephyr Valve Adoption

Pulmonx's "Acquire, Test, and Treat" strategy hinges on broadening access to its Zephyr Valve, a FDA-approved breakthrough device for severe emphysema. The valve's global adoption has been robust, with procedures now performed in over 25 countries. In Q1 2025, international revenue growth outpaced the U.S. (39% vs. 11%), underscoring the untapped potential in emerging markets.

Analysts estimate the global COPD market could exceed $5 billion by 2030, with bronchoscopic lung volume reduction (BLVR) therapies like Zephyr gaining traction. Pulmonx's ability to capitalize on this trend will depend on:
1. Reimbursement Expansions: Securing coverage in new markets, particularly in Europe and Asia, where public healthcare systems are slow to adopt innovative therapies.
2. Procedure Growth Rates: Q2's earnings call will likely include updated metrics on the number of new treatment centers and patients treated—key indicators of demand.

Pipeline Catalyst: The AeriSeal CONVERT II Trial

The AeriSeal CONVERT II trial is Pulmonx's most critical near-term catalyst. This pivotal study evaluates whether the AeriSeal System can convert more COPD patients from “non-responders” to candidates for Zephyr Valve treatment. Positive 6-month data from this trial—expected in early 2026—could secure FDA approval for AeriSeal, expanding the addressable patient population.

Early signs are promising: The Phase I CONVERT trial showed 77.6% of patients converted to “CV-” status, enabling Zephyr Valve use. If CONVERT II replicates these results, Pulmonx could capture a larger slice of the $1.5 billion BLVR market. The trial's enrollment, ongoing through early 2026, is proceeding steadily, with 200+ patients enrolled globally.

Valuation: Is Pulmonx Undervalued?

Pulmonx's stock has underperformed the market, down 22% post-Q1 earnings despite beating EPS estimates. Its trailing P/E of 0.0 reflects skepticism about near-term profitability, but this overlooks its long-term trajectory. Key valuation metrics:
- Revenue Multiple: At $98 million in annualized revenue and a current market cap of ~$350 million, the company trades at ~3.6x revenue—a discount to peers like ResMed (4.5x) and Philips (5.2x).
- Cash Position: $88.7 million in cash provides ample runway to execute on growth plans without dilution.

The company's stock is a “buy” at current levels if Q2 results confirm:
1. Sustained international growth (e.g., 35%+ revenue expansion).
2. Margin stability (74% gross margin met or exceeded).
3. Progress on AeriSeal: Management provides a timeline for CONVERT II data or hints at FDA discussions.

Risks and Challenges

• Margin Volatility: Elevated operating expenses could pressure net losses further unless revenue accelerates.
• Reimbursement Hurdles: Securing coverage in key markets like Germany and Japan remains uncertain.
• Competitor Threats: Established players like Medtronic and Johnson & Johnson are exploring BLVR alternatives.

Conclusion: A Buy Ahead of the Earnings Call

Pulmonx's Q2 results are a critical inflection point. The stock's depressed valuation ignores its first-mover advantage in BLVR and the transformative potential of AeriSeal. Investors should prioritize the earnings call on July 30, focusing on procedure growth metrics, international traction, and pipeline updates. With a 3.6x revenue multiple and a catalyst-rich pipeline, Pulmonx offers asymmetric upside for investors willing to look past short-term losses.

Historically, Pulmonx's stock has reacted positively to earnings releases, with the latest occurrence on July 7, 2025, driving a 2.39% single-day gain. This historical context suggests the market may reward positive updates during the upcoming call.

Recommendation: Buy Pulmonx ahead of the earnings call. Target price: $10.00 (28% upside). Risks include delayed trial results or reimbursement setbacks, but the long-term COPD market opportunity justifies the risk-reward profile.