ARAY - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the Accuray Fiscal 2024 Fourth Quarter Financial Results Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Jesse Chew, Senior Vice President and Chief Legal Officer. Please go ahead.

Jesse Chew

Thank you, operator, and good afternoon, everyone. call fiscal financial June year conference fourth 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;

cause Before in Factors assume implied results issued as results that a materially the may press events, these call extent we us update from available like as Commission. that by to except statements includes the on are no today Exchange those the any as market of the you applicable forward-looking I the remind and would We or forward-looking securities well these date. today's just or closed obligation information filings differ as based information future statements. forward-looking forward-looking to could begin, to consequent materially in differ laws. by to We our our statements. the to this with afternoon after result Actual Securities this outlined statements we call new of required and release

items on Accordingly, A housekeeping statements. undue for you today's reliance any few call. should put not forward-looking

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

quarter Second, prepared all year remarks to a and quarters. references specific at our fiscal

to fourth quarter fiscal XXXX. quarter ended our For refer example, fourth regarding statements XX, our June

Chief the Suzanne investors.accuray.com. With this over that Suzanne? me which Executive Accuray's to let us deck Additionally, could slide Investor going Winter. update call, Accuray's that, they give Officer, call at will supplemental turn to directly by you Relations ask

Suzanne Winter

for Thank joining you, all thank Jesse, the call. and you

our and FY quarter, representing system and fourth highlights provide am quarter our and both our strong pleased solid the beyond. milestone. XX% This shipment by driven our I focus previous revenue 'XX for number with record of performance Today, reflecting in with total year-over-year, fourth of than on XX% areas shipments the commercial highest a I quarter fiscal the XXXX, and company operational execution. will growing within from was growth more accomplishments

FY reflects into where represented markets, underpenetrated at where player patient can #X open beginning going the prior the we entering or over and of customers more quarter, the by closing to access the year we the time. new particularly of radiation the In of international therapy accelerate shipments Momentum FY and in is out our strategy markets opportunities we saw both from remains revenue than fiscal the emerging laid 'XX which XXXX #X to and period. for XX% nicely, become elevated,

We growth also which up pent-up America. demand making driven product, orders system, emerging XX% largely C headwinds year-over-year, versus from C the market China saw the by despite in received quarter by new APAC in Tomo ship our to approval campaign X% orders precision end driven was by remaining for year, customers. recently for to last our the ready Tomo planning treatment anticorruption and Latin products grew growth

saw order region America of X-system within quarter, a this growth the share in including win priority for replacement is Latin than us, In more in Mexico. a and XXX% competitive

believe I indicator for ratio record leading healthy revenue. strong Finally, metric book-to-bill with revenue pleased a QX the with represent shipments X.X%. even global to very where at was was continues We future our book-to-bill

growth. driven which which significantly of growth to and China, APAC, the demand the product within by quarter, XX% grew in largest XX% Product rest the revenue contributed year-over-year, prior the strong grew revenue year-over-year compared by product IMEA, XX% up our region, year-over-year. approximately year materially delivered to revenue

We have put from market to exchange. several market. quarter for the strong up is our share and to initiatives developed revenue FX, #X us, a year-over-year, excluding share and and market was the product region very Japan Japan grew becoming to The we continue by headwinds X% for player path in this #X remain help drive on in impact foreign mitigate of gain the XX%.

Americas U.S. second show customer by delays product FY impact optimistic year-over-year, revenue conditions in 'XX improve in with to expected, 'XX. the in starting show weakness Finally, We greatest FY the will down and we've year-over-year half XX% as continued QX had and we in growth are in region, believe the we driven installation. see that of got cautiously the market

unfavorable down in parts were spare and to Japan Service training slightly due revenues revenue. for and reduced FX the quarter primarily

see of as I emerging However, result where year-over-year recurring installed that like XX% strategy start markets of growth was to the X% grew up penetrating China base service we driving am encouraged year-over-year. our revenue revenue service contract by

received we Planning step on System the During which final was for [indiscernible] Treatment process Precision platform. China, approval final to C quarter, the our in our Tomo the

segment. to As ability the the fee of systems quarter, late total fourth and now sell customers in have we ship B to Type full

margin this record China. end of time in total of from with we site the all can approval, venture fee to at joint Tianjin now reminder, a for shipments in As final fully our our customer delivery

With I Type discuss briefly B fully QX on are which in margins area we margins Ali years. market approval and approximately impacted of nature adjusted QX from initiatives. financials, compete touch productivity of within behind transitory were an our several us, market, have X but over achieved wanted the margin represents were improvements which next that focus, we more that although believe continues this EBITDA in negatively to underlying masked we our in range will now to the potential $X margins, able billion the overall expansion the factors we be expected, to

approval perspective, the delayed margin. China System we later recognize timing could From full Precision in of when a of Treatment product the Planning

challenged that which exchange, and Japanese at have expect a impacted now base. clearance FY margin accelerate in on we deferred margins of Within was C million 'XX the by end of shipments were our the majority Tomo With foreign 'XX. of FY our shipping materially begun us, $X we to approximately starting QX behind in where system based first FY late and have business represents the This to installed of shipped 'XX QX customer readiness. performance large mostly service customers

In a QX, addition, $X.X caused supplier parts costs. in consumption quality isolated million increase an experienced issue we in that

and be We Once the the for issue, are QX the recover majority supplier over resolved and adjusted year. this improved the gross working versus margin of in and closely to same deferral our year. the have the margins fiscal expect prior with been supplier period quality these costs the would China

U.S. headwind Finally, market is us. a region a which for higher-margin to margin mix we was the in experienced market, weakness as

U.S. by the in QX X%, are temporary encouraged challenge of order the improvement. the gradual market and U.S., which As discussed, performance we believe this grew is a signs in suggesting

I has revenue care 'XX, what our superior FY through on radiation remain globally, innovation, incredibly FY in full expanding which conversion the patient proud service therapy radiotherapy a year customers. indicator revenue accomplished into 'XX. of centered to humbled around timing access for recovery our remain performance, and order as to contributed of advancing monitoring support team mission, by our be and is U.S. our Moving and for delivering leading Reflecting the slowing as in this performance we will to significantly

in share trends ability well remain positive in. to We the secular gain well markets the execute in on industry participate as our and confident based as we our

and I in encouraged our global by am the markets. strong While emerging revenue momentum the for international year, was flat

revenues year-over-year whereas fiscal XX% XX% APAC grew China Excluding the the of Americas for year-over-year. XX% rest region, XXXX. international grew revenue grew year-over-year,

the independent XX% regions commonwealth Our driven and of of Americas before, Middle impact India, other year-over-year. IMEA CIS region year-over-year, year-over-year, declining subregion the as by East, the higher X.X% grew to growth And notably or down the continued part XX% was I region, by countries. most large in approximately markets U.S., largely FX. like driven lag mentioned Japan

U.S. near-term systems the that believe catalyst upgrade a installed market advanced of equipment we age replacement intact the capital potential of challenges in Despite base remains radiotherapy of opportunities. for long-term with the providing the and cycles, U.S. budget the

expect FY of where We into full second see FY estimate gradual 'XX the the we U.S. to 'XX of in half recovery. more a improvement in

down year-over-year. for year. Moving service full revenue fiscal was X% on revenue to Overall the

revenue contract year-over-year. However, X.X% recurring grew

of plan. that [indiscernible] actions, for which impact As with performance agreement stages and our leverage will service like installed contract performance from our we improvements downtime calls, serviceability underlying These expansion consumption. of predictive customer that base, of business The investments prior huge on growth. a mentioned service revenue Airbus, help early margin data pricing long-term reduce believe demonstrates revenue and reduce improve recurring include both parts our solutions to system will the opportunity uptime analytics and we is and

partnership club, Finally, education deliver the physics CyberKnife the service Genolier TrueNorth for education Switzerland. in like in offerings, our like new like advanced global solution innovation Cybercom partnership we newly opened solutions and introduced centers with which we will offerings and our in System,

overall margin We increasing drive and operational customer top improvements expect improvement line these satisfaction. will areas and while

pillars growth X have As articulated we major of are in our past, the plan. strategic there

Our first driving growth through top radiotherapy innovation needs. and our biggest pillar solve customers' advanced is to line

year, Customer strong. our been technology. and innovation adoption we of product the introductions Accuray product had strengthened During differentiated that our further several has portfolio new

growth in System to of towards in rapidly shorter growing prostate, trends included demand. latest neuro the this increase Notably, We course long treatments data for driving clinical and over treatments in a term System X XX% like clinical backed X the CyberKnife by is lung sessions year-over-year areas orders. the believe CyberKnife

of other next-generation our and customers markets treated treatment strong precision stereotactic of its advance use be SBRT for with in branding will awareness for developed of report further System Additionally, high be and replacement the for versus platforms the A many Japan. the System strong drive the base R&D many specifically System Europe the patient key radiosurgery U.S., installed to CyberKnife the investment area on focus to System our CyberKnife like expansion and CyberKnife due capabilities of to and requesting CyberKnife capabilities.

Imaging, approximately at expands and also 'XX. be progress by Radixact we works driven in FY functionality orders ESTRO continues product XX% CENOS as exception that adaptive 'XX, our at motion full the and which management ClearRT our which and of breast introduced [indiscernible] online a planning CT represents Customer to real-time Synchrony platform, capabilities are in treatment strong introduction

at Beyond also last India, other serve penetrating we fall. where challenged, Helix Congress particularly market, Cancer where product high-potential patient introduced to markets radiotherapy Indian the intend to is the new our access Accuray we China

follow and have months. to announcing we first ship product are for Today, India will the our release obtained unit this press coming to in CE in that the Mark we clearance

set pillar plan to strategic which and business, margin our service multiyear expanding next recurring stream revenue is a a service represents our growing business, and Our we opportunity. strengthen out expansion

Our has currently base. decade gated for XX% last essentially been fiscal global by and is the growth our Service contract 'XX. revenue of installed represents largely service revenue flat of over revenue our growth

region and APAC installed and expansion of saw level expanding the satisfaction. We're healthy both the a we U.S. growth the an with 'XX, X our growth the taking X meaningful in longer-term FY regions, of In commercial by of Japan our global focused and EIMEA goal base driven in approach customer footprint of service with in regions. commercial highest investment, our in ensuring

positioned profitability and best installed competitive as in upgrading our improving we're third with our cycle base. and So, our as pillar. own margins sheet replacement Expanding well balance

Ali expansion and a and XXXX, leaving plan with cost efficiencies multiyear no margin out laid drive I In of to multifaceted stone goal unturned. the

fluctuations, have material the made improvement to foreign laid still that costs goals we show and good in believe and actions out macro a scale. as us exchange that of as our margins innings we early increase have foundation impact have we improve of progress to the inflation, navigate While with factors to logistics improvement strong we helped against and are

and enhance existing partnerships win rate. FY development to market product and in us strengthened with Research we faster, with new these C-RAD, also partnerships bring strategic 'XX, solutions Airbus Finally, best-in-class alliances Radformation, the and funnel like our service and sales ones Healthcare Limbus GE partnerships TrueNorth. created believe We with improve AI, our our and help our

demand a We a wanted take in FY key into and of with some of moment to favorable FY highlight have a FY put backlog strong 'XX I enter us XXXX XXXX. that milestones orders, more the in going a full position $XXX year at X book-to-bill product orders for exceeding From the goal ratio over of an X.X. years global which we of our year-over-year revenue grow saw perspective, annual by of XX% X.X, represents million potential.

completed analytics team the this for of extremely us we on year better efficiencies. side, milestone SAP new foundational system decisions our operational productivity to help I'm a operational full without expect continued major drive make benefits I disruption. the our first further and ERP negative and data as company. proud On was improved the to

from inventory $XX the This fall, total delivered for As a fiscal us a be mentioned capital a million I've into and flow net going and we of improvement, past on reduction FY key working 'XX. for QX will priority in remains reduction year. million part cash $X

has long system we bills at B our journey Tianjin, the I in into Tomo and venture and team to XX in shipment for been first China Type C executing entering us, have ramp how pleased up market finally, June manufacturing Hospital. cross-functional worked of site And to in completing C first Tomo customer with joint our of am Shandong a the the

key key execute we our well milestones I will FY U.S. believe challenging, to indicators. behind us, these plan XXXX. performance continue With strategic are growth and The positioned to monitor in remains we

in aimed replacement closely to program, timing China remaining any market at we we and can in believe market Additionally, recovery. the tailwind These FY exact the therefore, trajectory campaign remain watch we that predict stimulus guidance our which but for slowdown in to stronger a timing market factors China addition signals see of 'XX, timing could including installations difficult will anticorruption are opportunities. to demand wait to conditions, believe included potential due related U.S. these be the and of impact

summary, penetrated achieved We forged markets the our improve customer growth. key strategic in in that except new and marketplace I'm enhance for and partnerships proud the solutions And competitiveness. foundation our future of we wins

we While where gaining line share top margin years. early growth over we our end profitability the drive the in markets and coming year still the growth, we in strong transformation, with compete in to are

our turn who will cover over I Ali, now it to will financials.

Ali Pervaiz

by I the thanking deliver Thank to in with revenue global cross-functional and the begin would to dedication everyone. quarter afternoon, Suzanne, history. and who good executed teams our like together banded unwavering you, strongest company's

our on to plan. more our also business our add did we we our year market to model, the Not have to for operational move was to mentioned continues double company. we As equipment margin before, essentially XXXX fiscal therapy expansion very a needle enter market only of year value important which continue addressable efficiencies radiation the

Although we growth our position well good and in a believe exchange as face positioned U.S. U.S. recovers. when the macroeconomic foreign we the unfavorable as headwinds, in markets of we well and inflation, particularly most market are are for in

million, innovations driven quarter for XX% XX% last for the QX fourth strong was demand reported turning up year Net by to quarter. the the million, revenue year in prior quarter Now company's in revenue. highest year-over-year revenue the of $XXX versus which increase and exceeding was a $XX existing product history, our by

basis, a on fourth basis the was revenue the approximately million, prior which full fiscal constant prior was which currency from total a slight Americas down represents $XXX Net versus was quarter year. prior fiscal currency On million, represents for versus revenue million is basis, year. region $XXX XX% year for prior being a revenue On the flat a XX% year despite increase total a year versus and constant $XXX year. the fiscal the increase roughly

global 'XX, in which revenue markets. and Revenue strength a of our year those in fourth up powerful of for $XX indication continued made currency and was and XX% revenue quarter fiscal million by in is World XX% from XX% constant Rest up basis. up our XX% prior grew on of the Product a year-over-year the the year

unit product As and in systems XX% the Suzanne number which a revenue a company's year. included shipments, new of prior history versus mentioned, shipments ship growth is XX record

basis, for roughly parts of million, flat from million, related $X volume. training revenue flat from exchange year. the revenue On increase lower and million, revenue prior $XXX a $XX quarter impact lower driven revenue Full slight $XXX million year Service was constant foreign basis, representing for and year was the on year. a the down product a versus prior spare prior currency year product was by full adjusted to primarily of the X% the

million, last Full grew year, Notably, the was expand in versus up of greater is contributed revenue part contract year revenue down the year and million globally. revenue revenue highlight service or contract service Service to continues of This $X.X X% our showcases for additional revenue base annuity business year. $X.X at portion as than which our a was service since X% contract prior million of full service XX% year. noteworthy was service prior the X.X% represents in the growth installed $XXX versus growth. also revenue, mostly which versus business

a fourth million were the represented full X.X%. ratio of for and a orders ratio Gross quarter book-to-bill and orders book-to-bill of $XX a were X.X%. approximately On $XXX basis, gross million year represented

$XXX the about convert within a of to We than represents backlog. we with Moving XX quarter greater approximately this confident feel the which ended X revenue, revenue backlog ability backlog of to the years to product of million, months. and fourth

our diligence X $X canceled customer we units orders of representing of part a dynamics. As evolving backlog, high-quality million to ensuring in approximately due

gross higher from XX.X% quarter Our year-over-year year X.X China prior margin compared decline a margin consumption. primarily parts the points shipments with from in higher due to XX.X% overall for to the X.X and was of points deferral

Excluding margin each reported points been higher accretion. gross margin factors, implying have year-over-year X.X by would of our

As delay discussed it the CyberKnife until previous deferral end user, higher quality is recognition quarters, and a the margin consumption 'XX to in and in makes a critical recognize higher-than-anticipated a resulted the platform. of of beyond. the utilized deferred product all in to final margin margin supplier issue component we in FY China expect failure the was we rate QX of that to quarter Parts faced in due our

have the root actions teams with and the worked place. engineering corrective in identify appropriate to closely cause Our put supplier

resolved will fiscal the the first of We quality issue continue monitor half to 'XX. it expect year in and be

to year, prior with driven higher has and Excluding service have deferral our actions as consumption, by higher gross of part revenue parts lower our margin the our in and contract China expansion higher business team along actions. margin due pricing COGS the than been productivity the prioritized would margins

full with gross QX margin the On versus China deferral, to in our a consumption fiscal prior compared XX% margin contribute partially margin which issue of year part was XX.X% due basis, X earlier. year, year by of point to of the to the 'XX supplier net prior decline X beginning to mentioned higher points year and higher which was overall expect driven mainly in we quality

other the overall a fiscal through XX XX% $X approximately the year to contributed additional not global for it point basis line. Japanese headwind, served by headwind Yen currencies have an by in partly But during foreign year bottom was 'XX, exchange contributed 'XX, fiscal as for Japanese the alone offset Yen which point our us deteriorated X.X year. would Had a million

Operating expenses the year. were XX% the organizations, earlier payout. the The in fourth compared a quarter fourth million quarter efficiencies year-over-year was from the driven year $XX.X fiscal of we announced to reduction million company benefits in the lower and improved prior by restructuring $XX.X across in bonus

the Operating $XXX.X we and control to reduction a cost million expenses year, prior focused for our full in to $XXX.X the continue representing were year million X% year-over-year, compared showcasing push expansion prior teams to the $X.X to quarter return million year. million Operating was part investment prioritize on the our of for loss income from actions. margin of a $X.X compared as

year Operating income Adjusted $X.X quarter EBITDA prior year was million fiscal for compared the prior for the million in million year. $X.X the $X.X $XX.X compared to full to the was period. for million

EBITDA main impacted million factors year-over-year X compared For adjusted were was year, perspective, period. there our the full that a negatively million $XX.X to for EBITDA. the prior $XX.X From adjusted

know million the that System. a is forward $X starting the issue of for defer QX will 'XX approval result year, now Planning in which timing-related Treatment of be China NMPA we we that year and margin a last have additional benefit Precision will we going in normalized Firstly, fiscal versus

points issue, million $X parts our in experienced year strong anticipate net in particular today. reconciliation $X.X these earlier a adjusted related which issues, described EBITDA EBITDA earnings resolving operating supplier would the have of 'XX. fiscal the GAAP of we we consumption quality which adjusted on our X million to income We surpassed to half between was business. performance first issued underlying last year, higher the and of Without Secondly, which the

million restricted quarter. cash at cash Turning quarter, cash, record million, million approximately $XX $XX compared and shipments. Net end last of sheet. account amounted to last the system million equivalents balance number were with of up short-term a receivables to to from the Total $XX the $XX

capital I'm Our teams net extremely proud substantial improve in performance which decline an $XX was $X.X million, down a prior in inventory inventory cash of generation increase with free our million the in quarter. resulted million from in balance executed way the and of $XXX cash, to QX. working flow a

us macro 'XX summary, a fiscal due execute for year was In standpoint. a from challenging to

with slightly a last and especially foreign Japanese volatility, While served headwind Yen, the as we the our year big over inflation that saw hampered ease results. exchange

our the region, XX% both Additionally, of a from portfolio. that happens revenue decline year-over-year U.S. a region in to market also drove the be which higher-margin in

growth our teams headwinds, revenue worked revenue, business service to total year-over-year, excluding in as to with also Americas, XX% serve which the able were product by a which the represents catalyst tirelessly XX% in Despite our coming global grow quarters. year-over-year and will

revenue Another positive service in strong our was service contract growth revenue. business, indicator there XX% a than greater year-over-year, which represents of X.X% of for

of and rigor proud we across entire put organization. over extremely our operating years discipline in X the I'm last have financial the place

operational and focused expansion actions, laser-focused growth, margin excellence Our operational management. teams from are to through service continue OpEx execute and pricing perspective an on

factors gross to macro is in factors, and these to all many had dissipate. we will the helping near in margins, in term we've once being meaningfully headwinds While areas those hard done P&L exogenous our believe work contribute the offset above

our positioned the well and are the of in APAC we Additionally, anticipating market. EIMEA to recovery accelerate growth while U.S.

us growth adjusted million revenue million $XXX range above guiding million nicely year extended offerings $XX.X on of firmly an the value and year fiscal product believe to introduced we that are Based fiscal we line service in for range the a position to 'XX, profitability. I 'XX, $XXX $XX.X to new along segment fiscal of period top year to 'XX, drive the and with to will innovations and expansion EBITDA of forward Looking million. to

following the range guidance key factors. assumes This

to year adjusted half delaying 'XX in and U.S. associated fiscal margins the back half begin of recover the and system will EBITDA the year. revenue of the Firstly, second in market

to China of releasing system approval key to Secondly, fiscal highlights. of then and deferral delayed of begin treatment NFPA margin the year. in the are Those planning normalizing back financial starting year QX 'XX due in our the half precision

with that, to Suzanne. back call And I'd the hand to like

Suzanne Winter

Ali. proud closing, of made incredibly they strategic I'm the global you, our In and this our each employees Thank progress of have objectives. against growth year

we planned, While not quarter strong end performance. grow with had did we the way we fourth very

approvals We for Tomo have major approval Helix in including the C place, full regulatory in platform. China Mark and CE

We in our have majority platforms. a strong and backlog markets of demand orders, customer radiotherapy our the of commercial momentum strong unique for

optimistic a navigated as performance. exchange factors we've Additionally, and conditions number headwinds tailwind years, the macroeconomic inflation of cautiously couple our a of improve provide could including these to and over remain foreign last that

nicely we to X% phase execution neurological us or the guidance pillars top deliver cancer line next sets disease. up into outcomes advance for growth with to this to the diagnosed strategic patients X% our greater solutions than our of to of And of XX% compelling quality improve as growth to drive All and for life patient of EBITDA deliver year. and

it operator I will to turn now back Q&A. the for over

Operator

Thank Instructions] [Operator you.

question Xuyang first from Jefferies. from Our Li comes

Young Li

how guess China, more little curious strong if guidance. is the to for was year. finish bit Tomo are or the in to of just impacts expectations to end? end lower talk some guess get it, about start top can guidance. the potential are either C a anticorruption within I on the the a impact. can on I And downside stimulus I What Congrats much you drivers or the what and you upside that

Ali Pervaiz

so for question. Thanks the much

I recovery of really, the would continues X top think timing end the I think in guidance, versus factors starting higher bottom of lower are to the end big the the to which of that market, the recovery U.S. delayed. be us versus the terms the end take overall end, with the and maybe really

there then to certainly a well. So significant that that's we tailwinds macro a factor. track is obviously, lot different of And as continue

being the really of X million those main one the sort of U.S. $XXX think market the $XXX the I determine guidance million, are timing range that recovery. really factors our of So, to important between the

you some guidance overall, maybe more provide color. for when think year, I next can about our just think I

about the If half, we've second to is for demand seeing half, similar to revenue. think versus half profile that had customers. that going which in the in performance historically, our you which be XX% we're really half think We first is second XX% the it's first a related really

QX, we this revenue year, thing noteworthy which of accused in first I has been obviously between those ramp that QX. between an speaking, up a is expect lowest first the in back we we X the expect particular we QX quarter. think half also the to to then QX to half one perhaps of in anomaly the how in in experienced be little that QX unfold better Historically of then lower of is QX tends half was do maybe And is revenue and of quarters. a year. bit seasonality 'XX little and QX our 'XX, revenue have quarter a representation

consumption. comes similar in experienced to year. nature we really to fiscal take I we for our say profile, think think would and so service 'XX. And consideration into our the important Okay, that's it's margin biggest our somewhat what in I certainly parts it When about service is next there revenue profile factor EBITDA consideration very year to over taking as

service overall In was QX 'XX, the roughly it of for for So, our XX%. was total the year year. margin fiscal year XX.X%

the because year XX artificially was had it 'XX. you was higher was we implementation ended higher year. And points that ERP actually an of if we recall, where completed than fiscal that So, in QX

million the of year. that parts into consumption of $X almost remainder had lower then actually we so And the trickled

that to going is it a And that so, about to QX, important going was one-off, be repeat. and not certainly as that's ensure we're to thinking

online, of that's to related within it sort fact fiscal And expect the into that customers year, we thinking fact to activity to And shared to and shipments and the the in for again, take year-end release is started the starting occur that's expect up. beyond. and they've do our China one pick I QX the when to that's they that margin start deferral bolus as partner, our QX about really script, the we bring so of and to actually in consideration release lot to of of JV a just

those end So, really also of about about the versus think in the think board. year way terms of think then are low of how I on high kind the end and sort to we guidance

Young Li

a from Okay. if wondering up, China side? the you're Great. very C on was helpful. from you That's hearing in and Tomo I follow to maybe talk just campaign anything little comprehensive, very anticorruption the stimulus a the can And guess side? contributions about bit I where more

Suzanne Winter

Absolutely, based as at celebrating a the are they Tomo the is to to long you the know as customer very did C end the We time ship our closely half year to of first the working our back very unit timing approval into a well. do and introduction, now for very first partner waiting our Certainly, drive course, excited. of of of customer installations really on are very the formal Yes. the QX we're final the remainder JV half all in and first

search a QX overall the But really, in there'll be installations. in think of terms we

very is revenue the order, which response the strong coming the that will very in into year again, translate ended China to strong. think I And over years.

the have this So, about us. behind potential clearance we that now enthusiastic we're very is

down anticorruption there's this have campaign, I that year, past sort lingering slowed Just the of processes in think terms a just process. the of

the the we again, that we us hasn't from seeing. expect it do are that new something results certainly be But will normal. But turned

that So, I some in going that to teams of is think just built their overall are longer. have sort forecast take our things

loan it's at stimulus, Again, But government just many in an not interest-free the care starting of the it's the really health to older systems. of but that is industries. out. providing terms roll is In that replacement directed

signal. see our contribution to half of year, back the but that not have see built the greater to in until in probably And we haven't in our so team They to expect able funds. positioning again, initiated be we but China try actually -- those not and that numbers have start we to start customers seen access is do we'll yet, that to new some to that, we

Operator

question BTIG. comes from Marie Thibault next Our from

Marie Thibault

headwind, after I heard on wanted up Japan. follow to some demand. strong I like exclude you Yen certainly that little a there's the bit

in that how through in I said to in backlog that quarter? some some that demand to through might the long last? see past, a country. I'm strong expect we this curious of you've think come of And expected that came you if

Suzanne Winter

also Thanks revenue developed not for performance. our really job is But growth the rate I developed Yes, talked but base, the have do done competitive after It past competition. an think in some the about did team Japan is the question, after replacement. market, Marie. strong outstanding and through we've terms have only a Japan markets. first just ours in going installed aged emerging our markets. that really in in They some of come QX, same this not going We of with

And their again, a the #X on #X, being they're they're this just at on point. but gaining talked bit think we've to way trending about how based position, we

we the and think other at look just of the you how satisfaction. to strong regions, in customer when team that Japan [indiscernible] are based really drive again, they terms So

from region. So, important contribution a we continued that do expect

Marie Thibault

then Could this have talking about last XXX(k) talking we're India? the Helix. here in fiscal while since Okay. been there the FDA CE And on CENOS little booked see you year? Congrats from tell some the that a your Mark expect about about get bit regulatory updates a us And maybe to any lot you submitted we there year? wins, Can regions one of orders That's for plans the more helpful. on emerging in opportunity. of has more

Suzanne Winter

Yes.

do are couple hurdles of position be in to in by end a the calendar about have year. of a that India, do our But more we Let orders Mark, me we regulatory but there's still shipping able India CE talk we take expect first, now. to

be So, as And a of that the market orders within big is the as of can we potential over see And in believe to India. good a funnel China potential start coming India news to that region. the lot you're years potentially. build right, we in we has

its think will commercial office $XXX meanwhile, well market. investing believe But as in market. that as strong. do [indiscernible] to our Helix play well Right we And there. million is are financial it's dealings now, and $XXX think we now because the very we in We India, about footprint very with million back our

thought. what terms that in and the we CENOS, originally of Just I think, had regulatory approval is extended, from

back this that and Again, have in as gone making requirements requirements with had well conversations terms just sure cybersecurity having or we're now FDA the we of other we some as factors. nonhuman

the So, be of at introduction in a at probably end but this we'll point, year. a we're full shipping the calendar planning for by ASTRO, level

will to of it we but 'XX. [indiscernible] will from us the first CENOS help for cost the Radixact do within new win FY the think So, revenues orders, half

Marie Thibault

more things system Suzanne, treatment in helpful, Very India that is Okay. regulatory Helix, to or for something hurdles else? just clarify, like planning

Suzanne Winter

and [indiscernible] to of what a our then that body we first to testing order, up need hurdle is opened have local it sure and do ship localization we No, kind it. alternative then more it's we greater that And of more shipments. we on make it's does of a some

Operator

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

Brooks O'Neil

XXXX color I'm a more in for U.S. competitive the what feel give fiscal gaining or the you're And in losing you you about think like share particular, the little the do market, environment. losing maybe just gaining U.S.? outlook if us bit on is could bunkers? Do curious a bunkers, you share, little

Suzanne Winter

and back say the from Thanks U.S. your we talk Yes. us, install mean revenues, the. to about were of the visibility. installation getting 'XX, is telling what's for we question, have about for slowdown lower able we into we a customers what customers half our I they saw go radiation was expected been out 'XX priority playing really treatment therapy. I market, see counting to FY what think order we of seasonal our greater would have talking which They Brooks. priorities, that delays FY improvement But when we're over capital I in is the the as

result, a greater have we visibility. As

increase the FY the 'XX. of start as think see to in of we'll back recovery we year, more half a full it So,

and winning, grew in U.S. In in the our good that actually we were orders are terms of overall, of the orders. neighbors

our So, we to than of and innovation. we result a it's faster strong reception overall gaining are growth new very that the strong. as customer share product our that's think think We market

and that. we're looking new accelerate can for region timing the at look is the at a installation year of it, what the really we take what to we So, help order is to

of some visibility. things And the better is

that and very The we we've customers other is a making got them very sure process work help with so to closely priority. get robust order that the to revenue our

Brooks O'Neil

Great.

growth, sounded say lot really in you the like me I on focus was question if most perhaps improvement, of year tied appreciate you growth more. opportunity -- A drive color. system is go continue the one service listening due to maybe I of service do to but a service margin I see to it ask wasn't, the would service to is, more Let and I opportunity margin? And shipments. guess correctly,

Suzanne Winter

say start Ali let results I'll I year Absolutely. full here. for service then Yes. the I'll the jump tell not and in Yes, would story. our

because important are But the that some most I part some of overall XX% service revenue. we of for service have revenue that other installation Americas affected recurring did tied is That our think that planned revenue. the to is we've training That's what's things that onetime to business. installation the and more these revenue the growing that's factors. contract us events

growth, these think think not we in customers sell can China is still as innovation reduced also cyber increase that the to that, about the well one in new X.X% advance center table for education. Cybercom, to global as only hub centers there's a so, Japan, can and our from in a and an made we training Greatly now We've and we as Switzerland, we contract. one price like to more to in big service education grow talked at we us service as and that line expand significant room well our invested our in And that of lot a solutions value-added business Madison. also their service time and win, other solutions we that bring commissioning in a have investment Genolier including service

these in of all things, So, early think the innings. we we're

revenue. We at think we And rep the X.X% are consciously to optimistic the go. growth got certainly we've on service more contract

From a let Ali I'll margin make standpoint, comments.

Ali Pervaiz

of mostly of in I mean, the metric X.X% said. mean, with really year-over-year how line important revenue growing, we dollar you I about item. Suzanne, what is contract Yes. added into million business. agree I is the at is totally service think of look continued $X.X and the that that Suzanne mentioned revenue I that just terms particular part that that representative is

mostly markets. service I in you're Like same by growing asking revenue Okay? that's the mentioned, by amount? training, some revenue, less lower then So, activity being install of our the offset not why at

year. also okay? time are lower for then our because in enter spare countries in-country we spare when distributors the building And actually And impacted actually parts parts their activity spare this revenue, had first first and parts we up particular we get

So, I all fundamental of timing it's driven, business. not but a would of the our say service that's mostly good indication performance

is. really revenue contract The

over indication higher been installed which activity that also the the and of is base X.X%, both team has our growing than the doing So grew that an last pricing XX months.

the is feel to pricing starting into we showcase P&L. activity now So, about good that

important a about Okay, got that million $X.X quality to of note that's parts element is I supplier we consumption other issue. think with to the higher hit related

particular for had And that one-off. not so been really

amount. margins better that would service by Our been have

look as we other think I metrics well. at lot operating of a

good So offset in impact about productivity. is being 'XX, of for seeing right? almost we think year inflation, Where parts by And I X.X%. cost of consumption, that service is the business that had news fiscal we're that the lot we the service consumed, is X% by volume payers in year last which a this inflation. overall, terms probably of highest year, parts about grew

doing buy with is suppliers, that engineering underlying schools themselves, our factors, work And do and so team again, the that showcase that factors once start is also activities of think with a teams exogenous will teams, our being dissipate, can P&L. in to that only a the our but not these by doing these lot of masked to lot guide start to we you are our meaningfully

year overall a our did with to engaging actively would lot I 'XX. much our in we We So, still actually we're do to of how service for now accelerate But really this reduction margin but going suppliers center into say very that understand not and front initially. also expansion to just activity is our activity COGS activity. in-house start partners fiscal only utilize business,

summit our had cost is first just of partnership our anticipate for we're supplier to the suppliers we how volumes our type reduce of As that's month. fact, pick we And from looking continue earlier this a matter to exactly as up. the do activity we of

Operator

Wittes ROTH Capital. Jason our from question And comes next from

Jason Wittes

initiatives? So, to are revenue you're the on the growing of mechanics largely and understand service higher service pricing in just there? trying that optimism terms is rates behind Or your contracts, it, how take

Suzanne Winter

definitely it's base. installed our growth Yes. Well, of the

strategy then going a were emerging to we have revenue. that growth, generate installations service contract build high So, markets of

the starting we But big driver. So through P&L. we pricing that's really are see the also -- have actions to come

value a to also And the that of more very from encouraging. to that's our start source are to growth we we'll be And growth base. new installed -- sort then so offerings for rate believe in and the could higher really see future, we contribution provide what of been our that value-added than

Jason Wittes

after digits now if is and kind service, all last range. type that's in progressing guys about push to double-digit markets of then I kind half other of to the being of the to up more and several purchases. that's how with sort that the of years, you high incremental. growth assume go both I your this China growth? it's couple think of in your do going set kind obviously revenue new capital emerging Part potentially is being India, mid- next the opportunity your And equipment of single over of years? this think that Okay. towards And Or we over But about initiative

Suzanne Winter

because in international when is a the of think can look XX% do that temporary we perspective. again, the growth, by believe Yes. recovers flat year-ended we from grew be it was growth up perspective. outlook what U.S. revenues significant so so significantly U.S. just higher But our the a revenue -- incremental if that overall revenue and at the that international from mean, was growth I will down our really drive you

as next this U.S. being prudent outlook So recover. for see that's why our here revenue the we're market we year in watch to

is There U.S. replacement the has and potential because again, for And opportunity across the market an [indiscernible] upgrades. tremendous market.

and be to improvement. U.S., for timing going we the to past to will an of anomaly the watch of is it think is that market. continue year was catalyst the we this And U.S. in the see again, happening when So what

Jason Wittes

lower expand Okay. assumption, going correct And to margin those margins. are emerging to then services you are both -- continue me my than and I the can be also a to looking you and yet related at markets. guess the that your sales to it's even current guys product base,

for So of how wrong about scale margins the math is about assumptions does it P&L? my the the Or with markets work just lower? that? economies emerging Am its through being I working way the

Ali Pervaiz

me take that one. Let

would the be into pressured. these product absolutely do as doing say in to service. markets is because think our the product margins we And markets, our by gross activity stay So, pressure the result, that segment as consistent offset on right that slightly. pressured your on it comments or to expect value expect we I be we're we And I are that will likely penetrate emerging a would

it's gross be to a at going so, some likely margin And level, pressure.

get think by to all driven our to what as going looking overall EBITDA we're accretive And revenue, have, which more really should I and really, But is we we're the on same go with volume EBITDA of margins don't and up to level. expect expand. to contribute a that's the leverage percentage and in adjusted municipal phenomenon that of costs EBITDA mainly our volume way, we that of

Jason Wittes

at helpful. follow-up. U.S. recovers. is beginning range know guidance I related the just a mentioned then quick maybe That's very when that And Okay. the the you to

do we Just the bottom second at the half the that? range U.S. of clarify, think recovery? a no assuming is recovery assuming end top and end to is how about

Ali Pervaiz

that. the end bottom in The comments second around be midpoint impacted depending the moving of of recovery same U.S. timing that assuming for half on end the then and is and the top could then

with obviously over where expect [indiscernible] very that there. watching are revenue So really in obviously, then are customers getting our we something products business we intimate very closely, also the is and very, that service and we

focus just think about right to think I business, I U.S. way on overall So, it. by but think a that's

Operator

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

Suzanne Winter

much. call. fiscal with October release. again in very look earnings to forward earnings speaking This our quarter concludes Thanks first you for XXXX our We

Operator

Conference now concluded. Thank has presentation. you today's for attending

You may now disconnect.

Accuray (ARAY) 14 Aug 242024 Q4 Earnings call transcript