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- **Revenue Cut & Margins Under Pressure**: FY2026 revenue guidance reduced to $440-450M (from $471-485M) due to China instability, with product gross margin collapsing to 19.7% from tariffs and China delays.
- **Transformation Progress**: $25M annualized profit improvement plan underway, with 15% workforce reduction and $12M FY2026 savings.
- **Service Growth Focus**: Solutions-oriented service programs and distributor partnerships aim to diversify revenue and achieve high single-digit EBITDA margin within 9 months.
- **China Risks**: Ongoing geopolitical tensions and tariff impacts on product demand, with no near-term resolution visibility.

**【CEO Summary Section】**
- Announced a comprehensive strategic transformation plan targeting $25 million annualized operating profit improvement through 15% workforce reduction and operational streamlining.
- Fiscal 2026 revenue guidance revised down to $440-450 million (from $471-485 million) due to China geopolitical instability and tariffs, with adjusted EBITDA guidance of $22-25 million (from $31-35 million).
- Emphasized service growth initiatives (Select, Advantage, Optimum programs) and structured distributor partnerships to diversify revenue and improve margins.
- Aims to achieve high single-digit EBITDA margin within 9 months and double-digit margins long-term.

**【CFO Financial Commentary】**
- Q2 2026 net revenue $102.2 million (-12% YoY), with product revenue down 26% (-28% constant currency) due to China tariffs and geopolitical issues, while service revenue grew 4%.
- Gross margin declined to 23.5% (36.1% prior year), driven by product margin collapse to 19.7% (43.5% prior year) from tariffs, China JV delays, and CyberKnife shipments.
- Operating expenses decreased 21% (excluding $6.1 million restructuring charges), with adjusted EBITDA loss of $1.9 million (prior year $9.6 million).
- Cash balance $41.9 million, with $383 million product backlog.

**【Q&A Key Highlights】**
- **China Dynamics**: Slowed quota/license/tender processes and funding delays caused revenue underperformance, with no visibility on resolution.
- **Product Margin Outlook**: Tariffs and product mix will keep product margins in 20-30% range, with service margins targeted for expansion.
- **Service Growth**: Solutions-oriented service programs (training, data management, workflow analysis) expected to drive recurring revenue and margin improvement.
- **Capital Spending**: Hospitals maintain positive CapEx trends globally, with no indication of reduced healthcare investment.

Accuray Incorporated (ARAY) Q2 2026 Earnings Call Transcript

- **Service revenue growth**: +7% YoY, contract revenue +10%, driving margin focus.
- **EBITDA targets**: High single-digit in 12 months, double-digit long-term, despite Q1 loss of $4.1M.
- **Regional challenges**: EIMEA/China slowdown (-23% product revenue), APAC growth offsetting.
- **Tariff mitigation**: Active programs to recover tariffs, with fluid geopolitical considerations.
- **Backlog visibility**: $396M (18+ months of product revenue), orders timing shifting to H2.

**【Management Opening Remarks】**
- Earnings release for Q1 FY2026 ($94M revenue) and reminder of forward-looking statements.
- Supplemental slide deck available on Investor Relations page.

**【CEO Summary Section】**
- New CEO Steve LaNeve emphasizes transformation plan for EBITDA margin expansion (high single-digit in 12 months, double-digit long-term).
- Focus on restructuring, cost optimization, and collaboration with Board member Steven Mayer.
- Highlights innovation (Stellar product launch) and global market impact of radiation therapy.

**【CFO Financial Commentary】**
- Q1 revenue: $94M (-7% YoY), product revenue $37M (-23% YoY), service revenue $57M (+7% YoY).
- Gross margin 28.3% (-5.6pts YoY) due to product margin decline (20.3% vs 32.9%).
- Operating loss $11.3M; reiterate FY2026 guidance: $471-485M revenue, $31-33M EBITDA.
- Backlog $396M, orders $40M (book-to-bill 1.1), service contract growth 10% YoY.

**【Q&A Key Highlights】**
- Regional performance: U.S. stable, APAC growing, EIMEA/China slower due to macro/geopolitical factors.
- Gross orders $40M (below expectations) due to timing in China and Americas.
- Tariff mitigation: duty drawback program and foreign trade zone consideration.
- Margin outlook: Q2 product margin challenges, improvement in H2 with developed market orders.
- FY2026 revenue split: ~40% H1, 60% H2; service business expected to drive margin expansion.

Accuray Incorporated (ARAY) Q1 2026 Earnings Call Transcript

- **Revenue resilience**: Q4 revenue down 5% YoY but service revenue up 4%, driven by high-margin contracts and installed base growth.
- **Product momentum**: Tomo C (China) and Helix (India/Morocco) show strong demand, with APAC orders up 50% YoY.
- **Financial strength**: Full year adjusted EBITDA up 44% to $28.3M, with $190M refinanced debt for long-term growth.
- **Tariff mitigation**: 50% of Q4 tariffs ($4M) offset via duty drawback; FY26 guidance assumes similar impact with foreign trade zone benefits.
- **U.S. recovery**: FY26 hopes for CyberKnife S7 adoption and ASTRO 2025 product launches to drive developed market growth.

**【CEO Opening Remarks】**
- Q4 revenue: $128M (-5% YoY), impacted by geopolitical tensions in China and Middle East. Service revenue grew 4% YoY to $56.9M, driven by installed base expansion and margin improvements.
- Key product launches: Tomo C (China) and Helix (international) showed strong demand, with APAC orders up 50% and Japan up 34% YoY.
- Strategic milestone: Debt refinancing with TCW ($190M new credit facilities) and $1.7M margin deferral to FY26 due to China/EIMEA regional shifts.

**【CFO Financial Commentary】**
- Full year revenue: $459M (+3% YoY), with international markets (80% of total) growing 4% YoY.
- Q4 gross margin: 30.6% (+200bps YoY), driven by service margin expansion (9% improvement) and lower parts consumption.
- Adjusted EBITDA: $28.3M (+44% YoY), with $7.6M margin deferral from China JV.
- Tariff impact: $4M cash outflow in Q4, 50% mitigated via duty drawback program; FY26 guidance assumes similar run rate.

**【Q&A Highlights】**
- **China market**: Strong demand for Tomo C, but cautious guidance due to slow government funding for Type A licenses.
- **U.S. recovery**: Hopeful for FY26 with CyberKnife S7 momentum and ASTRO 2025 product launches targeting aged installed base.
- **Helix adoption**: Regulatory approvals in India, Bangladesh, Morocco; targeting Latin America as next growth region.
- **Tariff mitigation**: Foreign trade zone expected in H2 FY26, dual-sourcing initiatives, and price adjustments to offset costs.


Accuray Incorporated (ARAY) Q4 2025 Earnings Call Transcript

- **Revenue growth outperforms expectations**: 12% YoY to $113M, with services driving 59% of gross margin.
- **Tariff mitigation underway**: $10-15M Q4 China product revenue impact offset by U.S. production and global diversification.
- **Strong cash flow management**: $16M free cash flow and reduced inventory levels.
- **Service business momentum**: 9% YoY growth with SaaS expansion plans.
- **Geopolitical risk hedging**: 80% of products exported globally, 70% of components U.S.-sourced.

**【CEO Opening Remarks】**
- Q3 2025 revenue grew 12% YoY to $113M, driven by 16% product revenue growth and 9% service revenue growth.
- Service business now accounts for 49% of total revenue and 59% of gross margin, with subscription-based SaaS offerings in development.
- Book-to-bill ratio of 1.2x reflects strong demand, with 35% of orders replacing aged equipment.
- Tariffs on China shipments expected to reduce Q4 product revenue by $10-15M, but 80% of production is U.S.-based with mitigation strategies (e.g., foreign trade zones, duty drawback).

**【CFO Financial Highlights】**
- Adjusted EBITDA of $6M (vs. $1.1M YoY), driven by higher volumes, pricing, and operational improvements.
- Gross margin 27.9%, down 80bps YoY due to $1.4M China margin deferral.
- Free cash flow of $16M and reduced inventory to $146M.
- FY25 adjusted EBITDA guidance maintained at $28.5-31M despite China headwinds.

**【Q&A Key Takeaways】**
- China tariff impact: 70% of raw materials U.S.-sourced, but 80% of products exported globally. Seeking medical device exemption in China via JV collaboration.
- Emerging markets strength: Non-China APAC orders up, with wins in Thailand, Taiwan, Myanmar. U.S. market showing early signs of recovery.
- Tariff mitigation timeline: Potential resolution in FY26, with Q4 2025 focused on offsetting China losses through other regions.
- Service business resilience: 9% YoY growth in services, less exposed to tariffs than product business.

Accuray (ARAY)-30 Apr 25-2025 Q3 Earnings call transcript

- **China Dominance**: 54% YoY revenue growth, 10pts market share gain, and $9.6M EBITDA from JV shipments highlight China as growth engine.
- **CyberKnife Surge**: >50% YoY revenue growth underscores premium segment leadership in SBRT.
- **Service Growth Catalyst**: >90% recurring service contracts set stage for margin expansion as installed base grows.
- **Guidance Raise**: FY25 revenue up 1.5%, EBITDA up 5%, reflecting operational efficiency and China margin release.
- **Risk Management**: Minimal tariff impact; FX hedging focused on Japan service revenue.

**【CEO Summary Section】**
- **Revenue Growth**: Q2 revenue rose 8% YoY to $116 million, driven by 19% product revenue growth and strong demand in China (+54% YoY) and Japan (+40% YoY). CyberKnife revenue surged over 50% YoY.
- **China Market Leadership**: Gained 10pts of market share in China, outperforming a declining market. Tomo C shipments from JV facility in Tianjin contributed $9.6M to adjusted EBITDA. CyberKnife S7 and Radixact Sync clearances expanded premium segment access.
- **Service Business Expansion**: Service revenue grew modestly, with recurring contracts representing >90% of service income. CyberComm commissioning services contributed meaningfully.
- **Guidance Update**: Full-year 2025 revenue raised to $463-475M (prev. $462-472M), adjusted EBITDA to $28.5-31M (prev. $28-30M). Expect seasonal Q4 strength due to customer demand timing.

**【CFO Financial Commentary】**
- **Gross Margin Expansion**: 36.1% gross margin (vs. 33.5% YoY), driven by $2.6M China JV margin release and 2.9pts from pricing & efficiency gains. Offset by 2.7pts from higher service costs.
- **Order Backlog Strength**: $463M order backlog (2x FY24 product revenue), with 1.3 book-to-bill ratio. 12 Helix orders booked in Q2, including wins in Pakistan, North Africa, and APAC.
- **Balance Sheet Health**: $64M cash, $149M inventory (down $6M QoQ). FY25 capex focused on lean manufacturing and JV scale-up.
- **Tariff & FX Risks**: Minimal expected impact from U.S. tariffs in H2. Monitoring Japanese yen weakness through pricing actions.

**【Q&A Highlights】**
- **China Sustainability**: 54% YoY growth driven by JV execution and broad portfolio (Tomo C, CyberKnife, Radixact). Market share gains validate long-term strategy despite macro challenges.
- **U.S. Recovery Signals**: Key installations at Stephenson Cancer Center (Radixact) and Boston Medical Center (CyberKnife) indicate gradual recovery. FY26 expected for normalized market conditions.
- **India & Emerging Markets**: Helix CE mark in India pending; Tomo C success in Type B markets suggests similar potential. Clinical differentiation (helical delivery, CyberKnife) overpowers price competition.
- **FX Hedging**: Focused on Japan service revenue through pricing. EUR exposure minimal given EIMEA mix.
- **Tariff Monitoring**: U.S. administration actions fluid; no material impact anticipated in H2 FY25.

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