ARAY - Earnings call 2 2024 | Accuray Incorporated

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Operator

Good day, and welcome to the Accuray Second Quarter Fiscal 2024 Financial Results. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jesse Chew, Senior Vice President, Chief Legal Officer. Please go ahead.

Jesse Chew

Thank you, operator, and good afternoon, everyone. call fiscal financial December year conference second for XX, Accuray's of quarter XXXX, to to results review the XXXX. Welcome which ended

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

and Suzanne on us President Executive Chief today's Officer. are Ali Joining Winter, Accuray's Pervaiz, call and Accuray's Chief Financial Officer;

that Before forward-looking this ] results release cause that materially of with to forward-looking not may any in could in call except information of we the reliance from extent information statements. like statements. Securities date. Exchange or includes our differ today those today's forward-looking We outlined should filings result this new and after obligation as you I undue future Accordingly, laws. as remind would contepleted afternoon on on implied we or the differ us statements these by call forward-looking Factors available any Commission. begin, [ to to well are as based results on to our statements. you just put assume statements We these required securities close events, issued no the Actual market a by update materially applicable press the the as forward-looking to the

items housekeeping today's few for A call.

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

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

our refer second our to For quarter quarter regarding second XX, example, ended statements fiscal December XXXX.

page With let supplemental Accuray's call Winter. going to call, you Chief the Suzanne? by which Officer, will investors.accuray.com. over directly be this that, Suzanne a Relations Investor Executive can Additionally, deck slide turn to accompany to there me Accuray access at

Suzanne Winter

growth, call. first line expectations afternoon, top by all Thank bottom driven and both with and Accuray our performance, order outstanding thank half. the our for consistent you you, another the product new and strong Jesse. introductions quarter delivered joining for Good with

innovation I in Investor quarter, few of the into driving we ASTRO include I points from and portfolio the advanced balance through These while get business accelerating global outlook details recurring want solutions improving X-year Day to growth broadening compete our key a our October. growth profitability to our to Before in value service the the revenue sheet. strengthening in care, our highlight segment, at product introduced

that made will to quarters. each that good have first of proud advanced I'm strategic and FY we say the in pillars in 'XX, realized progress coming of on the growth these significant half catalysts be

in value new beyond. in like growth believe growth into C segment We our Helix, revenue accelerate the online FY 'XX capability and adaptive QX Tomo launches begin product Helical product and catalysts profitability Radixact, China, Cenos and be VitalHold for to and and will

QX, represents a year-over-year a healthy I strong X.X. ratio am and at believe of We performance, on book-to-bill extremely growth with target. Reflecting XX% $XX million order book-to-bill pleased which X.X very ratio is

we X.X, new were at these are customer innovation very strategies. product results, So and commercial pleased of our driven which high-impact adoption by with

Radiation Japan Oncology VitalHold shown-in conference. of where C-RAD. to share position received cancer as the close market introduction our breast Japan. Japanese for Conference #X heart this a enabling and full a the the our therapy We treatment strengthen market result development [ lungs received We protect further surface-guided at and at for joint by of will in with in designed believe enhances we Society orders ] X clearance VitalHold with the

and win we expected enhance for This believe market build clearance allow base adaptive of for backlog believe it is competitive of and is AI it order We customer trade-in, for treatment our our on ASTRO. with replacements and since higher Additionally, and market we we will AI in partnership installed planning rate solution. on the drive to Radixact base continued half encouraged technology our online platform. our are a capabilities the us interest advancing of will are Systems. result by the leverages our U.S. help year second trade-up upgrades the progress competitive precision growth fiscal clearance and Radixact to for installed Limbus gaining Cenos rates Cenos and win

margin while China China QX customer in we to overall and within order indicator was turning demand an installation to Tomo represents We some China. for FY saw year-end Tomo beginning customer towards in with partially the Now our activity our quarter system important XX% expect approval order fiscal C this market And into growth continue since in of region be system first timing. QX response. and pent-up strong the C, to regulatory pending the growth revenue was in quarter. year-over-year to and 'XX

As represents a with portfolio our a and enhances product years. expands annually Type reminder, $XXX market, which approximately into Tomo in access B X domestic-made over the our next C the China million

was with growth revenue year-over-year. outstanding service Additionally, our in X% QX performance

is XX- XX-year period. service the service we a focus strategic business the area each after system to a the the for As over of represents and stream discussed, of company, revenue contract life recurring have warranty the

to in Although of enhance am our transformation, improve our commercial very we early service I the impact actions put see pleased innings we remain in offering. performance strategic from to the place and

This installed XXX region, demand ended our global of installed X% of growth year-over-year and the one for global milestone fastest-growing our growth. by strong, celebrated led regions in systems XX% at which installation systems. of installed base we the remains the QX quarter was base and was year-over-year Finally, with APAC

a future base leading contract As and model indicator revenue. we service we primary business the growth behind see driver our look at performance installed going as forward,

from to line impact benefit significant improving grows, margins. service As and bottom from we scale see expect revenue a

revenues Australia growth, and Taiwan, XX% to in was the which impacted XX% timing respectively. Revenue due and year-over-year. in primarily The China continues tender strong EIMEA XX% APAC region outstanding reflecting performance delivering a resulted demand. year-over-year, APAC region perspective, with X% and orders region both down growth From with in in XX% year-over-year, in QX, had customer being order APAC growth its revenue

We to starting our accelerate China fiscal year-end, C expect late recovery orders QX. resolve this to in conversion with backlog revenue of Tomo by along new in

order growth and basis X% positive was up currency delivered on constant a Japan year-over-year.

the of versus revenue which with However, actual grew growth last the X.X%. due constant shipments, year the offset volume currency down XX% to half. in region order FX Service a but on will revenue by negative in XX% higher lower second reduced to product was impact we expect basis, total

showed continues prior result growth with region the of focused side, the direct XX% coming of the strong solutions sequential at of positive wins competitive installed grow region with This strategies the new is help from commercial retain customers lead key competitive Americas XX% to base. replacements. a order The the quarter. to to from value-added orders On and

installation longer time XX% over sequential quarterly revenue Americas saw and in year-over-year, lines we with encouraged down the conditions quarters. optimistic QX, region cautiously will XX% are the revenues but improve we growth coming In the strong customer that by are

Operationally, our we beginning are will laid progress at in expansion we're seeing in and as executing the Ali at Day. out our the detail on margin strong the plans. discuss year greater Investor financial of our progress initiatives we

service degree lower This a pricing has of Specifically, margin year direct last we're on half the solutions, trends consumption. in confidence costs higher impact to in the same service parts had to service initiatives and due year seeing and which reduction period our a operating us compared and margin, has in product across in improved positive plan. by improved first a our XXX gives expansion basis of the points longer-term costs

price faster organizational implemented transformation. gain solutions, Margin XX new the incremental have over will while customer financial months, mechanisms last more more new to operating to Ali, we we cultural expansion who now differentiated cycle a over speak about structures cost to our satisfaction remains our drive it for And P&L revenue increasing I and ensuring value. will accountability, a turn with and performance. ensure predictable continuing efficiencies

Ali Pervaiz

our I everyone. cross-functional afternoon, employees our execute with to and good to want and continue global ethic thanking and on work Suzanne, strategy. to you, their us begin who amaze incredible teams ability by Thank

quarter it the of sign strong to speaks the our new and the teams X the We're strongest further and commercial prior our the contribute products were of adjusted This the fiscal confidence which increase foreign Suzanne of Product of growth to once year vitality and had proud to years our our orders in across in is to market's volume XX% XX% a the result. health mentioned, backlog innovations. clear versus and future business. impact for as approximately the able the the is is $XX This strengthens financials. Turning globe that we've and a million, the exchange. last second order of were for

margin points pricing, rate mostly This order driven by sequentially customer our product across represents portfolio. grew of book-to-bill timing which X.X, X by order a and improved intake

revenue prior was million the for million, $XXX year. was X% quarter Net second prior fiscal currency to on revenue a X% the basis constant half versus year is and $XXX the the represents was for first flat decrease Net down quarter versus second sequentially of year. for revenue Net the X% prior which an up the year. which the

installation, first Service in which contracts service million, are contract primarily and from Service year the of half installed revenue revenue, our increase as X% pricing our fiscal year, be for the basis, year-over-year is This spare the of exceeds up up constant the on lift in half. X% that the an service growth illustrating up to expected. X%, higher X% by X% our training base versus was actions in contract for by prior quarter and driven $XX revenue was up reflected driven and starting prior for volume our parts revenue and P&L. year revenue a now currency

was the driven revenue fewer last XX% year, unit down X Product year. the versus from shipments million, for $XX quarter by prior second

our new which the call, the introductions. first more the the loaded prior Product discussed timing down versus is in half of year. of a year revenue last product second towards fiscal is fiscal our our in is the back-end for half, revenue As 'XX X% profile result earnings year of

approximately X% X% year up million greater backlog. order XX which than which X our than lower years reported months, beyond not Moving the include to in $XX reported the to XX and ended revenue. $XXX aged FY due the we prior represents backlog product backlog. orders representing that quarter sequentially second million, is product backlog This of with 'XX of a We do

contributed and product approximately million [ quarter. In aided QX, the we that had for within orders revenue to in ] $X X

we no Finally, the in order had quarter. cancellations

margin was to prior Our XX.X% for in quarter the XX.X% compared year. the overall gross

parts we as may half lower QX of in margin ERP recall, expected it the experienced to QX the first first the you cost related was which in mix. was in Gross product a slightly reflected prior onetime benefit our results. to due to year, consumption half due for XX.X%, offset to the As and below implementation mainly

we as better along with restructuring half expect gross in taken actions service second realize margins improve We benefit to of in the QX. the full pricing

Operating quarter X%. in expenses year, to second $XX.X the the million compared down million were prior in $XX.X

payouts, prior costs. compared to operating ERP expenses on the was million Excluding X% operating down million investment. margins, of to continued negative severance illustrating severance the return year, cost focus were to prior for and $X on lower standard the discipline implementation income $X.X year and and from implementation quarter Operating an gain costs due ERP

the $XX.X with product to $X million prior million quarter was for million of by year driven fiscal versus the $X.X first for EBITDA EBITDA volume. the Adjusted year. decrease from the year compared lower prior million 'XX mainly half in Adjusted the was $X.X

in of between grow release today. the income EBITDA in the with adjusted revenue benefit GAAP along full adjusted EBITDA with net described QX expect higher the We issued to We taken reconciliation second in restructuring product and earnings actions half volume. our the

$XX million Total and million cash $XX balance Turning prior equivalents of amounted were approximately to sheet. the end flat compared Net quarter. $XX last at cash, to restricted quarter. short-term to receivable to the million, the cash accounts

very DSO which are the XX the of XX to compared a prior on with collections, days strong We year. pleased days in in focus resulted

up shipments. Our from was net million, timing quarter system prior million balance the the $XXX of inventory $X to due

capital continuing improve to on position. working are teams cash to optimizing our Our focus

EBITDA FY EBITDA on year are In in $XX and pleased million growth executing of full new product of half expecting million $XXX strong adjusted to driven half, million introductions from total million revenue of margin million and product in with to resulting reiterating second million, results million summary, range backlog, and by starting revenue higher the very million, $X.X the efforts $XXX $XXX our first our QX to $XX guidance on With adjusted are to of $XX.X strong adjusted service revenue volume 'XX EBITDA. deliver. million $XXX and our and and on expansion a $XX.X we with our $XXX we're of to million

assumed with we As August, year. part, a assumptions fiscal reminder, the staying into full year FX the last coming our consistent in guidance provided

fiscal is continue beginning product in have second the However, we're half year the seen particularly fiscal noteworthy, weaken the the year-to-date we yen from of to year strong given contribute expecting versus to the Japanese to 'XX, volume revenue 'XX. This Japan region. in

closely FX you as our pertains and year spring. we'll We monitoring are guidance to update the again in full it

like our along key to of product our highlights. I'd EBITDA hand million and million the introductions, in range expect back QX. to range of $X last of quarter to in we to that million. timing in expected a the are result financial in adjusted $X mind, our of new be stated as amount of Additionally, deferrals in the recognition call, earnings Suzanne. With to with China recognized revenue call $XXX And an performance with margin will revenue that, greater million $XXX margins being the with the third Those

Suzanne Winter

we Ali. and innovation. in long-term In pipeline you, Thank of closing, our confident remain strategy

have profitability us and above-market flexibility laser-focused deployment, to and our strategies on margins sheet strengthening We financial value. we deliver we shareholder while commercialization exciting balance allow will over Operationally, so growth that capital that time. remain growth we catalysts believe improving create and maximize high-impact

I diagnosed passion. work entire we dedication We in their our major better I our forward now patients would Accuray will Q&A. makes for thanking with for for of over by to like team company know and we it turn moving Together, organization back of the lives serve. cancer. the are a the fulfilling we that to a people future operator difference do the the creating and end mission

Operator

Marie Thibault [Operator from Instructions] BTIG. with comes Our first question

Marie Thibault

guess, here, I I the guidance. wanted to on

what geographies there inputs You from most I'll bolus quarter half on large And your third guidance, with confidence it rather talked excited about? are about it's kind quarter. big first What fourth a understand the you're guess, -- in and fiscal Help implying various second the the that? gives a fiscal I noted question. in that yes, me of leave that

Suzanne Winter

Marie. our No, guidance is there QX. One sure of Yes, Tomo are in the of major thanks, the confidence a Yes. and drivers so for couple really the C.

tremendous a the QX going order delivery. China. in about We And have just quarter from are when time really, customers is order to

of C. the be will weighted as And so we heavily a believe QX result Tomo

introduction we VitalHold is other The Again, strong VitalHold. had very in Japan.

orders expect that shipments And related to come so will that we new in QX. do be those there

there QX. They then around seasonality in is And some timing customer Japan. have a strong very

from So the full really heavy-weighted Tomo And then restructuring with an deferral perspective, we've C then And things the those some just that also recognize is of see we benefit QX. would EBITDA in X delivery we'll the that margin taken. our QX. actions China of

Marie Thibault

waiting that on that on? me starts all think to there. approval. on still system Okay. at And And planning I Tomo we're remind Or Has were that we waiting hit C, is point? something been treatment a this secured

Suzanne Winter

on a end March, frame. expecting to bit in like adds the of going waiting to were it. time is early either at still We're or May April the it's little looking And QX. We it the also be that

Marie Thibault

be Okay. that to able And start in? revenue comes recognizing you'll after

Suzanne Winter

Correct.

Marie Thibault

Okay.

I continue we to think Okay. point, And question on you've of make sustainable? and metric here. expansion off. sorry this that for then bit Glad should say hear you service of as can margin Or the volumes would are a my to the are things at know, Ali, margin service efforts paying difference. that a second some made little efforts lumpy? course, of

service So kind floor how of margin? we thinking about that a should be on

Ali Pervaiz

the Yes. Thanks for Marie. question,

is on that's contract our our going something is pricing the be that say sustainable forward. that definitely sticky to something introduced is contract would going revenue we've and revenue certainly I So

bit makes so of it, the And continue. related is, revenue, little I more, revenue guess, share that up lion's I'll our our What service that will call quarter-over-quarter is volatile our installation, so to training. a

the grew continue top X% going and bottom half, add about our quarter-over-quarter. And so vary really to It for that's really that and to can line. to

Operator

Street comes from Brooks question with next The Capital O'Neil Lake Markets.

Brooks O'Neil

the Tomo any any get interesting in market China perhaps hear can to I'd if you be of any to China. response other on in C love to seeing color you're offer that as about outside response additional just well. And to

Suzanne Winter

we're of quarter no, since with Brooks. pleased think approval our Thanks, the the Tomo we've I X very belt Yes, regulatory under gotten C.

As there we expected, But some there's demand pent-up order we JV our from this here perspective. actually week. have an China team leadership entire

how time details of quarters lot a spending think, look. we're on I next getting, so And them the with

we so pretty is And strong. feel the response that confident market very

market this product. share product the domestic-made A into market the again, market. a segment. in effect come Type a within our it's the Again, of with helical B halo Type a We is And

so in think right the got it's place infrastructure to we And differentiated, commercial well. we've very do and

Brooks O'Neil

Or any curious, response was too it early is to in India? I say?

Suzanne Winter

Okay.

the was question. second your part that of sorry, So

I be think the show conference We're was very India it's build the in Mumbai funnel, November, and able to for to to the approval that. still waiting did still regulatory good think a in early, orders response our was positive. but response I there we Helix but at

Brooks O'Neil

United And market. I'll any about success just takeaways your the tack to in then your States. takeaway on Japanese mentioned particularly is competitive I'm in other you're thinking XX% some obviously, achieve X Great. opportunity most more feeling market? you What's having the about -- the

Suzanne Winter

and Brooks. Americas compete sale Yes. win. past not of aged focused for we every is replacement, orders said, the of have takeaways. the base on and we strong a market, leads competitive, competitive do it's we takeaways being of are firmly this if Yes, And That systems. so we they're did our can competitive No, because some more that percent thanks quarter, feel even question. Japan the overall trade-up trade-in, in are that coming very terms primarily definitely installed in In

we we to good time our about every win, So be. ability feel

Brooks O'Neil

Absolutely. to That's I'm looking the great. the Congratulations. rest of forward year.

Suzanne Winter

Thanks.

Operator

would concludes for closing remarks. session. to to like question-and-answer Winter our over turn any conference back Suzanne This I the

Suzanne Winter

This call. with operator. our for fiscal concludes you release. earnings XXXX the our you, Thank joining Thanks quarter earnings to Xrd look speaking call. again this forward We spring for

Accuray (ARAY) 31 Jan 242024 Q2 Earnings call transcript