ARAY - Earnings call transcript Q1 2021

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Operator

Good Day, and welcome to the Accuray First Quarter Fiscal 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note, today’s event is being recorded. I would now like to turn the conference over to Joe Diaz from Lytham Partners. ahead. go Please

Joe Diaz

XX, and conference Rocco, first to Welcome on everyone. of Thank to good review Accuray’s September ended which call year the financial to fiscal you, XXXX, afternoon XXXX. results quarter for

During developments. corporate review this our afternoon, call will recent management

Shig call Financial and Officer. Accuray’s us Executive today’s President Chief President Josh are Joining Senior Accuray’s Vice Levine, and Officer; Hamamatsu, Chief and

differ are as closed to this from results Securities would call results our in these begin, market issued well I that as like the contemplated materially materially Commission. today may forward-looking we in the you we press Factors our to Exchange release by Before that afternoon, implied Actual the filings includes statements. differ forth statements. after just these those or with set remind forward-looking and cause could

a Forward-looking you available information forward-looking we no based put applicable obligation statements to for date, Accordingly, extent statements. securities or required to items to undue by the not us as of today’s are this Two any and on any of today’s future forward-looking results, on assume result housekeeping law. on call. update reliance except should new information call as statements

to session, that we during any First, Q&A the and participants two limit then request themselves questions follow-ups. with requeue

year Second, fiscal quarters. to remarks specific a we are all make references to quarter in our prepared the

September XX, Accuray’s that, Executive regarding quarter to fiscal Josh? Josh Chief With first refer quarter statements XXXX. our Officer, ended example, me our call and For turn to let President over the Levine. first

Josh Levine

our Winter, Chief performance XXXX is by Accuray’s Shig today making, environment. the of Head the created Officer; today’s you Commercial call. COVID-XX momentum Joe, Financial Officer despite business continues the joining fiscal joined our for and Suzanne Chief our thank us positive reflect quarter and Thanks, and Hamamatsu, headwinds to first by to everyone R&D. I’m

although impacted as well level, a we successfully challenging the adjustments around and Our customer the of even markets times, that delays. to related during was Company QX a make overall that profit, adapt positive by installation necessary consecutive fourth be the at commercial globally environment. the team a has operating at million, was as face QX compete of quarter. a the our This $X.X and in showed number well access post-COVID key solid not our at both high substantially in operating $XX travel was for world to demonstrate the unexpected. the execute to which quarter order as and to of operating to down fiscal Gross expect quarter we for the continues the restrictions, and level, million. quarter order position income ability positive bunker came generated in $XX.X prior EMEA to generated construction leverage order result million, versus that continue The us in growth, these Japan year, we revenue volume the and Validating continuing regional regions represents in

the to year-end business. half in highlighted a of comparisons realization and large the order phase communicated by of FYXX our orders first August, earnings A in the year, multisystem China prior have our we we call tough Latin first the in driven American from in As the Type

fiscal flow making Their to efforts under continuously our as improving are want evolving year. maintain individual on entire Accuray their customers for Going growing responsiveness. customers’ needs conversion, forward, we ensuring their ensure I income, meeting employees conditions. during collective dedication and to are and revenue customer we of to our our focused cash difference, overall a focus patients operating the and thank the we safety on our this supporting and that free team

the through preservation overall debt focus will capital QX reducing illustrated successfully working current global to finished with commitment million loan Our $XX by We aggressive cash $XX the and in and management million our ensure conditions. cash quarter. on economic prepaying continued navigate of help during fiscal term we our

we’re provide the operating quarterly this you macro outcome. pleased current detail very call. later on will greater Shig environment, with with financial the in the Given results

On month. and the joint medical customers, class to to and professionals operational this an which Corp. Radiation opening with earlier our will significant make China Isotope front, for and hub Center products Tianjin, in successfully progress China enable September, continues learn them with about into incorporate throughout their the how be venture started in-person to China important Training to This practices. our instruction

manufacturing local Tianjin establishing schedule have XX on our months. next the to still B As product far presence, within we the are as Type produced

XX As we current fiscal quarter revenue to conversion and in of related believe in awarded China the catalysts for look devices of that begin in to Type first the A the months. XXXX continue October this of next near-term, we Accuray the to XX licenses will course revenue over the generation will

Health systems named to A the Type awards. National tranche announced XX, Commission user hospitals. of report October additional were the license are Accuray on China of that XX licenses, we end second radiotherapy to Additionally, XXXX, awarded pleased in A And the Type XX

our in Given week, Earlier meeting. the on ASTRO National from of the late we’re team timing future still XXXX evaluating this annual announcement impact the activity. our participated the this of commercial Commission, Health announcement this order

on great basis strategic R&D important our COVID conducted the first innovations product the us a launch for for given was opportunity it several pipeline. time, was from While this to environment, virtual a

we’ve technology quality and preceding with and who interactions enhancements the imaging with During platforms, on on ASTRO, motion showed platform, institutions, delivery Synchrony that high the new CyberKnife and had great leading ASTRO include platform, both SX ClearRT. Helical Radixact planning, product both synchronization, our our during with VOLO interest real-time introduced in particularly we CyberKnife called adaptation our recently new clinicians capability platforms. Radixact the treatment the These and for Radixact kVCT and

versatile product positioning. planning We meaningful and radiation imaging capabilities, of functionality will platform. and delivery We growing expect our creates a upgrade, have therapy overall experience introduction will strategic platform, on of clinical that our combination the to help And these a technology advance the Synchrony to and our powerful see adoption treatment technology and innovations ClearRT and with the uniquely further Radixact in impact Synchrony.

XXXX. driving Additionally to both broader capabilities the reimbursement with platforms now recently and schedule delivering importantly, a their that and choice and has by is the image-guided high-precision Centers of effective radiotherapy options, TomoTherapy clinical results, need and our creating platforms community as that treatments. At reinforced we for growth this a most for ensure confidence SBRT during market treatments platforms are we go & in the and the standard CyberKnife precise, conference, freedom and highlighted a to health Medicare delivery deliver and fee value the Accuray for will July Accuray The treatment and been or ultra-precise of well-aligned gold week’s our providers of into has ultra- XX hypofractionated expeditious products. reinforced alternative product ASTRO the advanced model as bringing shared safely clinical long-term market position that enable is pioneer that innovations long-term for believe Services, hypofractionated for with are in And Medicaid is excellent of pioneer technologies planned our hypofractionated these and opportunity positioned maintain experience in which the new payment we clinical announced effect that catalyst be the ultra-hypofractionation. COVID treatments. in abstracts hypo Accuray pandemic the believe a for users moderately by care global

in both delivering of SRS upgrades enhance technology across are effectively, designed and our important SBRT efficiently. and We hypo launching ultra-hypofractionated further to that treatment are current and capabilities more platforms safely their

the progress today, we see well we with we during Day Investor ASTRO and our as earlier As about excited the momentum this as discussed have growth in our business of week, front long-term occurring opportunities presentation us. are

are and radiosurgery we market. we on that market. navigation, is excited surgical innovator most with that the an in a in opportunities leader treatment solutions the neuro-radiosurgery will announced treatment of CyberKnife capabilities Yesterday, the planning, neuro-radiosurgery for who the expanding about is Brainlab collaboration market focus One

path be Quentry results. Brainlab that, review to with data to provide platform for a Accuray I’ll Shig, registries, neuro-radiosurgery. neurosurgery improve to will create provide the call of the to over patient of software financial and customers with Elements planning patient clinicians CyberKnife add precision First, believe registry Shig? and to Brainlab’s last, dose three Accuray workflows; a interoperability the through access neuro-radiosurgery improved collaboration to distinct second, addresses delivery; Our Brainlab And catalyst provide future our to that treatment penetration in improve strong community QX collaboration will ability with this between treatment optimized accuracy optimize capabilities to development help contouring outcomes. the turn the We to neuro-radiosurgery software focus: ensure areas dose to market to

Shig Hamamatsu

and can some factors. everyone. highlights as and Thank decline additional prior first focus year-over-year financial year. for details three attributed on gross first Gross with million compared you, afternoon, our Josh, period. be The $XX in quarter, on quarter for $XX performance then to the orders the the for good million were some begin I’ll the to in orders

QX to as XXXX, phase First, A was end and of triggered already challenging to to the A Type decline A demand orders distributor systems of start which first you order users received most that been the orders, have XX significant related quota anticipated prior last comparables pent-up a we year. year, TomoKnife, in in Accuray the in A like as this from to prior we back the of Type due of reflected Type I’d Type activity. by year had the fiscal Type anticipated, decline a remind the orders to licenses awarded announcement A to in saw China we our legacy received

prior recur which our are the fiscal million this the Type second Looking not stated. just ahead year, expected for not I year second in system A reasons were gross the to quarter $XX of of of orders, quarter to included second -- quarter, orders which

presented a the America. quarter In $X million orders addition tough perspective first a prior as South included multisystem the region year Americas to gross the order comparison year-over-year a for China, from from

accounted age-outs particularly to did expected million platform quarter has volume product pandemic, growth Lastly, we region, unit the the challenging activities and grew strong Despite TomoTherapy CyberKnife affected headwinds see for remaining did comparison were the XX%. a Japan the included year-over-year China perspective, the in orders approximately X% mix during order and $X quarter. respectively. of for the $XX EMEA regions, order see U.S. of where the timing aging some which Americas and placement. accounted XX% the the million we regions for quarter, and in of XX%, for order and From for Net due the

first from adjustments. $X by and quarter, offset had which was benefit the million, approximately other million $X impact we During cancellations of FX

in orders $XXX of result, first ended is a million with XX% the As the generated net an backlog basis, we quarter million, of XX, first quarter. from on September which of We $XX our XXXX. increase

COVID-XX conversion We disruption revenue near-term. to the that timing in continue slow anticipate will

extent to number Although of level the see vary which due COVID-XX age-outs higher depth of expect disruption. the quarters individual will a normal and also factors, to we in on coming this markets impact than to based could

year. our pandemic, $XX.X to to the quarter across million, primarily now year. basis, decline APAC compared down for of X% due year-over-year statement. saw On was first income China, Turning regions. the Total impact excluding the decline the regions, XX% CyberKnife One of of prior The except mix prior we the revenue TomoTherapy mix. in varied from Product approximately the all degree volume the CyberKnife mix for reminder a the revenue although $XX.X decrease regional for revenue region XX% to for remaining a quarter revenue the unit compared quarter’s between to for a of perspective, the varies about platform revenue product the the and TomoTherapy the while was quarter-to-quarter. accounted accounted From XX%. million, product

in approximately annual CyberKnife revenue our A the China of With related along past the TomoTherapy was granted mix basis for increase activities and being XX% Type healthy mix an X% licenses revenue demand installation Type basis, A we to XX% TomoTherapy. Service environment, approximately and within on annual product for Also, fiscal XXXX, $XX.X quarter value-based upgrades, with two an product second the to XX% saw as XX% well-positioned fiscal XX licenses years. the forward. China the expected been we quarter. as the quarter has million, However, recognition systems CyberKnife a increased the the training year, the from going prior portfolio platforms healthy the product was we an for for as mix our believe can and of well care revenue between maintain two during on Accuray

margin. gross to now Turning

for gross Product compared service higher was compared XX.X% margin year. margin I’d than lower XX.X%, quarter in mix, parts in from like past The a service the fluctuate The the quarters, parts margin. remind prior Our due was for normalizing quarter year-over-year to first to included XX.X%, XX.X% year. quarter of overall gross QX prior margin in I prior gross primarily the XX.X%, to done consumption year quarter-to-quarter. XX.X% great to the impact the for in can you three was material the to as level gross the of compared product normal margin margin year. that was of mentioned has gross to the a for in service earlier, the which prior quarter Service team which contributed job the improvement consumption.

reductions higher the and in benefited service margin QX well benefit costs from due to operating continued as as from operating other pandemic. travel revenue Additionally, to

trade particularly compared prior Operating in quarter in also expenses expenses. for to ASTRO second quarter related income the $X.X the fiscal That operating COVID-XX, prior implemented year quarter with year. show, decrease of income and response year. costs a or by included with we operating quarter XX% $X.X a the well $XX.X position was costs eliminations prior in of which driven operating down were the for of first impact events, the year-over-year this of as million, the year. actions as for accounted expenses travel, pandemic, of $X.X associated included the million, was which loss The the curtailment primarily in Moving from associated million expenses the is marketing annual million decline statement, to

measured in measured XXXX. XX of The quarter operating trailing first $XX operating September XX, XXXX, generated income the period, GAAP quarter previous of from income we have of XX, operating is represented fourth generation. the for generated constructive September the XX months $X significant from million And, which improvement million income trailing period, a from the months

consistency While QX or connection quarter a our was well in to the We a $XX debt of voluntary loan operating ended the single short-term quarter. reported million million the GAAP $X of post-COVID $X the year. in a our loss issues operating response adjustments being the equity line. prior adjusted trailing ending item, expected million basis, release earnings pandemic, a China income cash EBITDA $XX of EBITDA. partially to cash in amendments we $XX,XXX. On between million, below income outlined of on a quantified with the income today. for loss restricted to item statement taken our income in The months operating of the compared cash. impact in prepayment our in us of the was loss the the and on and XX our as million is This gain with have demonstrates quarter at JV quarter operating completed term improvement investment, of Adjusted operating our line from net income reflects facility our in benefited called are is adjusted generated The that position the for $XX and beginning actions leverage right generating EBITDA the impact to environment.

ahead uncertain to second demand continue to an on expect Looking constraints environment to hospitals. near future at we put continues system capital to orders quarter, expenditures as for COVID-XX mid-term

Type of are the quarter $XX year. in mentioned fiscal I of second addition, prior quarter our as to million recur A orders included gross expected not which orders, this year In earlier, system second

experienced other start prior we are second revenue in the due COVID year As licenses the this Type quarter revenue revenue, level anticipate will fiscal related remain the recognition for A more regions. confidence to headwinds below we although gaining year, to China that will in

operational working As conversion, the and near-term we expansion margin focus headwinds revenue management. continue on to we efficiency, manage and capital

Josh. We revenue chain are on hand as that, And A appropriate with to also management execute like inventory. supply focused we on maintaining while back levels call inventory Type to I’d of and the conversion the

Josh Levine

uncertainties encouraged the COVID Shig. results. QX our operating created we Thank situation, you, with by Even by the are

future. of to new want We’re to successfully I to for patients, their that and across the they’re demonstrating are adapt all the have for the with energy ability thank making about that, to open the globe And customers unprecedented excited external questions. call up our we our times. we daily employees our environment, and support their contributions these we’re ready and during this to

Operator

Thank you.

will We session. [Operator comes the first now begin question from go with question-and-answer Instructions] Josh Jennings Today’s Please ahead. Cowen.

Unidentified Analyst

Josh. questions. for Hi, Thanks Neal guys. for [ph] This our is on taking

does to made are offering, in there what how wondering this therapy your ClearRT, you get on efforts, is to just step just share that of can providing of big a adaptive advance question in complete solution? steps how terms clinicians technology adaptive and an direction? Anything ClearRT First a radiation

Josh Levine

this late I’m to take Winter question. going Suzanne

Suzanne Winter

The imaging significant in is a ClearRT, of heart introduction Helical the kV at is done here of we the think step ASTRO, forward, we’ve realm especially therapy. adaptive that And imaging. at

at have to system slip Radixact to degree That the We XXX core, the platform imaging. able is a basically allows us a design. be our with advantage ring helical do full Tomo CT

you we’re largest a available an field at from longitudinal And XX images, longer market. start image. center imaging compared low is meters, of is significantly to of the of to to table from move the low the on X.XX beam, what market again the There Once to standpoint, the much image noise, in beam standpoint, what than centimeters what here CT, best compared is the at you view very beam is quality. lose axial beyond really low so, center, cone visualization your and available the cone from scatter, CT contrast bringing is better cone the

images. their together stitch to have competitors our so, And

interpolation And so, of there’s data.

but dose ultra-hypofractionated goes and the calculations, image And you data what doing that’s market into translates only So, want, when precision possible. bringing to accuracy. you ultimately, the fidelity, is which which uniform the fundamentally, treatments, what are want into especially images ultimately higher ultimately imaging, not the is ultimately, highest you we’re

are believe the closer the with do we to than continuing to type from to diagnostic much cone what again bringing MR tissue beam high a providing imaging to investment, get better are as we And contrast, as So, path on table resolution. competing even CT, and is we we’re the soft CT.

Unidentified Analyst

you just one And follow-up. Thank had I for Great. that. then,

and could you Varian the associated success. and that how if tailwinds headwinds views and on with the wondering us Just guess your combination the also I impact could Siemens Accuray’s share with

Josh Levine

and that But, in public remarks in answer might that from APAC I generation were today, So, Neal, which prepared that -- near-term, the think these quarter. of for to the these I there’s EMEA have and end and as the come been sorry, that we’ve some in that to disruption in previous Japan, two is short we in highlighted businesses thoughts regions I’m together. intermediate-term on the actually some comments the two us [ph] strong think, be benefited we’ve the wise. order performers specifically likely

in customers easily that customers proposition that’s reflect And disruption, those together the do be sense Varian obtained in of or I still to combined standpoint. company will, that that mean, to different think have regions. to the asking distraction some workflow achieved. that bottom-line those is businesses. I early I’m reported think it, term, I going sure if out. call two a the coming might down is comparisons the And to for create think a I a factor, going or is you jury not value from dramatically without that things Longer really makes

too closely think to following say. it’s watching But, early So, and again, it. I we’re this

we’re from things excited standpoint. doing are about a We technology the

what product think that going think, feedback from if changes from the described. And customers are and I and we’re concurrent right products a us I for portfolio I I confidence our you positioning we’re this to the now, meeting, launching getting forward gives to the from just with capabilities. ASTRO two feedback fast week’s significant year innovation-wise, game upgrades now, be from that now, the think, years

Operator

Markets. next Street today And Capital ahead. from go question Please our Brooks from O’Neil comes Lake

Brooks O’Neil

I COVID. Good new solid it the orders afternoon, was very everyone. in thought Type China good on quarter light A of the overall, Congratulations in and

have I a questions. couple So, of

is Class And on B to you’ll could first you’re China? that what opportunity The it get be is, the recognition I the Type revenue in recognizing China, about revenue exactly in and hearing it is one then you’re QX? you triggers A confident what was also licenses and why status And on say hoping thereof? the the something maybe,

Shig Hamamatsu

Brooks. This and is Shig. maybe. pass first Yes. can want Hey, process to maybe Josh, B question revrec, on and I the the Type take I of to timing

And the XX know, a talking is for revenue had user -- recognition So, we recent A process, Type of after the the the in get last year has step addition, the through to in have the go that wins. a which you first license, one step, next which as a user Josh talked about to about to we’ve with And about past, additions XX talked the the happened they ago receives our license, that. the been as end license tender of year. end part good

to So, the the the have starting user of start revenue are can terms purchase. with the first QX of of that out that out reason progress in gaining license the we end the recognition we the China because in XX of of confidence seen is coming first that

So, that’s why.

And are Josh letting in that the licenses not So, those one that announcement -- to his recent systems. there we’re granted China. government A orders, question Josh on granted Accuray of new additional clarification, mentioned Type we’ve XX that have that out news Type been to in Chinese I to back XX-licenses before sorry, know prepared from seen I’m pass Accuray XX remarks, was B, the you that new just systems

or we’re receive either. QX those QX in expecting said as to for in in are my orders I not remarks, prepared those So, not orders

that So, clarification. make I just wanted to

Brooks O’Neil

that. I you. Thank appreciate

Shig Hamamatsu

for to it Josh, give Type B. I’ll

Josh Levine

have there had Radiation overall, any about go-to-market China position the the benchmark think market number. there visibility it past, business to operate form product if were that between things of able represents XX% to Isotope by because in segments in ground the the as is of know, advantages or opportunity B, business, alone. of owned the a strategy and the at in They Corp. you past, the we in is, which the of Type as have us B, manufacturing significant talked comparison we in likely on opportunity a we’ve believe were opportunity in big the say throughout market you’ve heard relationships of big, partner their B in radioisotope country, us the we Type go hospitals frankly, in is and having visibility X,XXX truly China Brooks, the that XX% standalone and selling a country. to different it represents, the entity that share They inside we and that trying might like And Type market somewhere being here state for we have as us, X,XXX while about which the core deployed, a to unique is quite give scale. not active really

product So, Tianjin in positions and a domestic we certainly we aligning is high local that technology around It’s XXXX. not that their they product Made create last product the a local with that not this in us with what in us going to that happen of capability government Chinese branded supporting is market It access access is we’re government well -- in fact for market access that what wants going an or but wants be producing is -- is for us CIRC essentially this. have which a to insignificant. the relationship And, brand. think terms locally, the for be least, built area really market epic help deliver for. again, And the basically China

BIMT still through schedule the from product producing think produced validation XX-month now, going right roughly and a And or product timeline for we window, the in-country Tianjin testing we’re for in release on sometime Tianjin. testing in now. going to in which we’re We’re right is be that

Brooks O’Neil

I from very in am you and us if and you to Thank all the or if the just help good. on Great. why much better curious, not. to more. competitors sneak elaborate could understand up you could positioned good RO-APM, That’s you’re going work. you I’m benefit maybe just believe to keep again why than one

Josh Levine

been on Thanks, that has by as opposed a of based RO-APM a the number reimbursement essentially treatment where employed paid overall which and people prior The efficiency the an methodology, on model in that premium treat patient and fractions speed terms of value, entire to being Brooks. to sessions regimen. were puts being is defined over value of treatment, market a or

higher safety are more of forward, performed, would into in being Both about the hypofractionated dose be RO-APM heavy across things both, what with sites a minimum much spot overall from sweet with of patient treatment will the and fractions heart of effects we volume that XX regiments, a over utilizing standpoint. standpoint, efficacy encouraging encourage the is fewer of treatment the platform disease regimens frequently in and procedure of side think Synchrony, the encouraging. detrimental safely. with to terms clinical stereotactic our platforms benefit failsafe around and when you model ultra-precise, our of it our being degree do use Radixact -- regards of and treatment are dose kind ultra-accurate, which of product offering are CyberKnife and Going to SBRT in increase view most grouped able to ultra-hypofractionated towards both providing radiotherapy have shorter is is confidence a mix some this the a the portfolio, a in and body treatment form radiotherapy that or than previously. And a It’s regimens,

so, if given as environment’s the so, direction not well-positioned more in. moving as the And that anybody, think we we’re reimbursement

Suzanne Winter

add the of would thing different presentations, were ASTRO, recent because the clinical XX to And pioneer we and we with too. only ultra-hypofractionation, the posters, on focus I on -- oral had presentations is, the that at hypofractionation the use

the efficacy. follow-up longest been safety and data We reported on have that’s

we So, do well-positioned. think we’re

Operator

And next BTIG. the go Thibault question today from ahead. with Marie Please comes

Marie Thibault

said I China, size on of -- this My quantitatively, if, wanted $XXX you revenue in revenue tranche orders you terms notes having of could the here recognition. to see about be would million want opportunity. A to Type first up have the start

double announcement So, the and check I are the how worth? to what I would eventual millions amount, could up many wanted recent given of know, still it’s then that early, second true. was size And that but that those mean revenue wondered systems secondly, that if you tranche,

Shig Hamamatsu

Yes.

first Marie, for thanks the question. the take So, I’ll part.

So, about back on won XXX for A guess, the first system your in, a we Type number And is correct. represented I now. XX the that year recollection licenses revenue ago

is that so, correct. still And

value, to the of start over in Josh following now. first right XXX revenue script, that his XX And that out estimated quarter to Josh system -- believe the described terms to XXX recognized second the XX gets in again, In months. of in one we expecting we’re wave we’re as that

gives So, to question the part pace the hopefully, to of cadence here. and going the that of I’m sense of Josh amount. And the that you pass second

Josh Levine

it’s hard first Marie, is confusing backdrop pick the tranche, piece just does this. up. and and tranche tranche first some what kind tranche, at a together end where that recognize additional to second the color on We times, of second

at devices process the to talked that MOH with that Point And the and simple two that are of Commission end I they think important that Type complete. level very, foremost before Shig continuing pretty tendering win win that and licenses a straightforward. regards takeaways very the continuing to are to one. being high the -- the hospitals. A user we’re our here Health are first are to about point National That’s is visibility and distributing

quite that least out, by installation pointed tender than that in talked We where process now tendering part what can guys. wave, you waiting, first other at equipment. have about. to And XX we here no execute basically of maybe bidding execute point means been Shig the than But, more contracts, is year, the paperwork, the of that in almost one they first frustrated schedule as the related is a that process the and frankly, and a customers delay are, it’s licenses just complete, we better are in is

excited become now in we’ve described, of conversion rate visible is bidding trying the confidence the license conversion. the second in in revenue we’re and now been if the what process, continuing in the conversion, and given the the to unlocks generating given level here A And of our that revenue consistent second that on the we’re the that consistent just will, And the really just are see first us in quarter. focus to the Basically current more execution kind the with that’s a win We tendering that trigger about initial tranche. process around you I gives the pretty fact on to -- complete. fact that’s revenue starting that’s Type -- so, tranche, tranche activation, the

XX with hours not second to really and the regards this old we’re even impact trying road, And is to so, at news, this at regards the activity order that’s point we rate, will digesting impact fact this down at with to be perhaps but provide detail, given ordering. understand it more round, able win the on kind point the to the of the

Marie Thibault

Understood.

Okay.

earlier when actually, up and neurosurgery kind We see will over opportunity, means business. the ASTRO for start Thank skip on Glad possibly the start I some you to wait that hit might that want the much. what timelines week. at great. us market addressable to to so wondered that here of if then market for this yesterday, terms see could in announcement I to the of and we of size you to discussion opportunity. update,

Suzanne Winter

Marie, Hi Suzanne. it’s Yes.

of parts. actually the -- So, neuro-radiosurgery I marketing in think, two opportunity, different we different think two

move install an there’s again, say, probably opportunity, Novalis would Gamma about a replacement assuming more million, as our of dedicated would and system, that’s are shared Knife, at looking these there. immediate I of oncology of to out a short-term. between radiation neurosurgery, total, globally. at an it, at to that to units conservative that XXX million some the still of about well in And is even XX% in XXX XXX think base least as way systems I First, aged translates

a little it’s pharma brain heard this about day, at Loiselle And, a and is essential the still deep Medical they heard investor little Dr. treatment again, opportunity with I the opportunity, there’s of opportunity you stimulation. associated therapy, now, tremor. go And number therapy to longer talk about Center, the refractory Swedish if right for bit that. term And issues in think, you into bit from of use take movement disorders. radiation Chris a to that

and as the So, population, -- more of think, X% and gets severe is prevalence age. adult the I it you

translation what here penetration. terms a think therapy moving real the continue we with potential there’s put we in into market potential opportunity So, But, forward. system in is clinicians point. work And purchases, of we to haven’t the to at on that see this will

Marie Thibault

Very helpful, you so Thank Suzanne. much.

Operator

Jeffries. Anthony next [Operator from ahead. comes question Our with Instructions] Please go Petrone

Anthony Petrone

and of again, that is months, specifically, in geographies? adoption, you everyone’s Thank I touched would just key calls if changing noticed radiation think and couple doing push-out so the thinking just and now to be on Have radiation that’s resurgence, here, the a any I And equipment of capital and of healthy. Maybe few your One maybe COVID be you with hope be may debate questions. -- get Josh well and or Shig, the tailwind. and next hopping year. there’s a we’re preparedness, apologize the of the when headwind therapy? of those they But, you, any hospital whether around just into of U.S. to then, sort around would one and you trends of a these. about pushed views, the afternoon. as the in conversation It’s Obviously, of good next sort a middle on how staying bundle

of radiation So, not your and whether bundle, that’s tailwind on the for adoption? the capital there latest thoughts a push-out or

Josh Levine

pretty quite intensity it is not of the be terms question -- of is to there’s Yes. by it in continues It up is necessarily frankly, ramping no region. COVID the Thanks, COVID-XX, intensity. situation That’s changing. variable that Anthony.

about and very heard COVID at talk that the visible point. I You Shig And prepared in that’s remarks this both I headwinds in U.S. market. certainly think

backlog good countries in also, as that again, risk in splitting think I so on generation one every that order have Interestingly, said, are last Europe, Italy, to orders at well. seeing going Certainly markets anticipate again, we that I order there’s certainly, any with share just we’re we talked don’t kind the timing. But, about, maybe ramp but quarter, the out announced the U.S. would some in, from being remain, and not standpoint. would EMEA some and would question be or one, there that environmental day we’re the Europe, not in more and that slowdown related they’re the France Germany markets Spain to in which saw an impact say, here other, Western restrictive Western eurozone though, of of the markets, think Germany, maybe France, I of all of selected COVID. precautions. I cancel

procedures lockdowns, hospitals to that directly back any were spring absolute where going We’re early back from or other being summer off. turned in late they’re not they and hearing with essentially

practitioners to what a fulfill question now. regards -- degree going CMS, ASTRO taking the think, predictability going -- say AdvaMed So, no visibility of there given amount to with implementation With I those at through was being think actually CMS, I could the we’re dialogue weren’t in under kind the like from was obligations customers I that, they pandemic, to and idea move what there’s the we decisions on it’s are made, this and your with a But, where be But CMS, this push to the and and for. is July. marketplace we between this in completely to supportive that again, discussion going requirements. I land, the we’ll be ready, this allow thing. Anthony, for again, the until that -- confidence be, months situation. XX or primarily, would of order to is good ways their a is would channels, you point, which to of around they day-by-day high X significant the felt -- severe give were months, of messaging the There a day-by-day was needed wish I seeing

have so, that and community, And or to -- we the a vendor to as we a as provider respect provider, do. to

now begin And We July, into as it’s scheduled the is discussions. train so, January or January it’s interesting, we in the you view has implementation topic irrelevant And input because in saw our see the in -- on almost were somewhat those gave this it’s whether you station. our to left occur aligned. it coming

more either SBRT on in you focus look see of payer payers already of hypofractionated side world, -- our with involved are commercial at rapidly reimbursement If most or the have moved to delivery. that the we already commercial are the products moving

this really implementation is And the the topic July or so, I don’t a change market. going think to trends, the macro January on broader in trends between difference

Anthony Petrone

Thank you so much.

Operator

from comes And today [indiscernible]. question our ahead. go next Please

Unidentified Analyst

EBITDA were you I in around to what Any that how be? EBITDA, the maybe have might quarter, guide, first On absent. Can sort for puts lots of the we of us all can us you but that give any sense in give and million want you at any puts the sense a takes -- revenue things and is? $X similar XQ, takes don’t level atypical -- know, for of but sense if

Shig Hamamatsu

and to Yes. appreciate think color about me going help But, you try Ryan, specific from I us be that. And, keep about not I’m question. the let this. to

has historically been quarters. lowest quarter first So, OpEx quarterly

shifted this expense my said that ASTRO it also, And of from that. part QX. quarter, to as is year QX past So, remarks the in I this

So, you’re said EBITDA million with, of there’s I some know I’m year, I you’re if OpEx asking run looking I rate and is out takes. -- last from But, coming right, I something OpEx puts think think, QX but about quarterly about on back forward. that $XX perspective, comfortable

we be on I think, I my see from a few place average margin basis, top that around was can still think though that is QX hovering I that, probably a produce. $XX the $XX million, So, for good I say like an would of On last to XX% more of we’re area million gross quarters. thing. consistent being perspective. of a same Even OpEx somewhat

my sort sort give So, so you need to guidance little way margin, kind model you the OpEx run of to of you hopefully, to bit, revenue, of speak. you enough just here, in lay in and any giving rate help a without gross hint

Operator

the out conference to Mr. question-and-answer sorry. close was you. over going I any ladies and Thank and Levine just session remarks. to turn back Thank for -- final the you,

Josh Levine

afternoon. later and when very Healthcare look Thank in at Thanks for January, with JP Thanks on everyone we forward in Annual We much. you we again results. you, this operator. quarter second January, to fiscal Conference, us XXXX speaking when present our joining report Morgan’s

Operator

for Thank you, gentlemen. thank ladies all call. We attending today’s concludes and This you presentation. conference today’s

You may wonderful lines, your day. a and now disconnect have

Accuray (ARAY) 29 Oct 202021 Q1 Earnings call transcript