• Revenue Growth: 8% year-over-year increase, reaching $116 million for the quarter.
• Product Revenue: $61 million, up 19% from the prior year.
• Service Revenue: $55 million, down 1% from the prior year.
• Adjusted EBITDA: $9.6 million, compared to $2 million from the prior year.
• Gross Margin: 36.1%, up from 33.5% in the prior year.
• Book-to-Bill Ratio: 1.3 for the quarter.
• Order Backlog: Approximately $463 million.
• China Revenue Growth: Over 50% year-over-year increase.
• Japan Revenue Growth: Over 40% growth compared to last year.
• Full Year Revenue Guidance: Raised to $463 to $475 million.
• Full Year Adjusted EBITDA Guidance: Raised to $28.5 to $31 million.

• Warning! GuruFocus has detected 5 Warning Signs with ARAY.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Accuray Inc (NASDAQ:ARAY) reported strong year-over-year revenue growth of 8% for the quarter, driven by outstanding product revenue performance.
• The company achieved significant progress in China, with over 50% revenue growth year-over-year, supported by a strong product portfolio and strategic joint venture partnerships.
• Accuray Inc (NASDAQ:ARAY) saw a 19% increase in product revenues compared to the previous year, driven by strong demand for their solutions across the portfolio.
• The CyberKnife system, a key product, experienced revenue growth well above 50% year-over-year, highlighting its market strength.
• The company raised its full-year fiscal 2025 guidance for revenue and adjusted EBITA, reflecting confidence in continued growth and profitability.

Negative Points

• Service revenue for the quarter was down 1% from the prior year, indicating challenges in maintaining growth in this segment.
• Revenue was down in the EIMEA and AMSS regions compared to last year, showing regional performance variability.
• Inflation and macroeconomic headwinds continue to impact the company's financials, particularly in terms of cost management.
• The company faces ongoing challenges related to tariffs and foreign exchange fluctuations, particularly in the Japanese market.
• Accuray Inc (NASDAQ:ARAY) is still awaiting local regulatory approval for the Helix system in India, which could delay market penetration in this strategic region.

Q & A Highlights

Q: Can you detail the 54% year-over-year growth in China and discuss the sustainability of this demand? A: Suzanne Winter, President and CEO, explained that Accuray's strong performance in China is due to their strategic joint venture partner and a robust product portfolio, including the Tomo C and enhanced Cyberknife systems. While the first half was expected to be stronger due to seasonality, they are pleased with the market share gains and aim to disrupt competitive dynamics in China and other emerging markets.

Q: Can you share a revenue number for China? A: Suzanne Winter mentioned that they could provide specific revenue numbers during one-on-one calls.

Q: What gives you confidence in minimal tariff impact and US market recovery in the second half? A: Suzanne Winter noted that the US market recovery is based on high visibility to orders in the backlog moving into installation phases. Ali Pervaiz, CFO, added that while tariffs are a fluid situation, they currently see minimal risk. Inflation remains a concern, but they are taking actions to manage costs and maintain service revenue, particularly in Japan.

Q: What drove the strong performance in Japan this quarter? A: Suzanne Winter stated that the first half of the year was expected to be stronger in Japan due to customer timing. Japan is a replacement market with strategic competitive displacements, contributing to the strong performance.

Q: What opportunities do you see in India and other emerging markets? A: Suzanne Winter highlighted that they expect strong growth in the second half from the EIMEA region, including India. They are awaiting local regulatory approval for the Helix system in India, which they believe will have a meaningful impact. The Helix and Tomo systems are seen as differentiated by their clinical capabilities, not just pricing.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.