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Accuray(ARAY) - 2024 Q1 - Earnings Call Transcript
ARAYAccuray(ARAY)2023-11-08 03:46
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Financial Data and Key Metrics - Global revenue grew by 8% year-over-year, with product revenue increasing by 17% year-over-year [8] - Order backlog stood at 489million,representingmorethan2xfiscalyear2023productrevenue[8]−Installedbaseofcustomersgrewto1,040systems,a5489 million, representing more than 2x fiscal year 2023 product revenue [8] - Installed base of customers grew to 1,040 systems, a 5% year-over-year increase [9] - Net revenue for Q1 was 104 million, up 8% from the prior year, with product revenue at 53million,up1753 million, up 17% [22][23] - Service revenue was 51 million, down 1% from the prior year [23] - Gross margin for the quarter was 38%, up from 35.9% in the prior year [25] - Adjusted EBITDA for the quarter was 6.5million,comparedto6.5 million, compared to 1.9 million in the prior year [25] Business Line Performance - Continued customer adoption of CyberKnife, Radixact, and TomoTherapy platforms, driven by demand for advanced radiotherapy treatments [7] - New product innovations showcased at ASTRO, including VitalHold, Alliance-Plus, and Cenos online adaptive capability [10][11] - Cenos, leveraging AI for adaptive radiotherapy, is expected to be available for customer orders in spring 2024 [12] Market Performance - Strong performance in the U.S. and China, with regulatory clearance for the Tomo C platform in China, targeting a 600millionannualmarketopportunity[14][15]−IntroductionofHelix,avaluesegmentproduct,targetinghigh−potentialemergingmarketslikeIndia[16]−StrategicwinattheRoyalMarsdenintheU.K.,reinforcingthecompany′sbrandandmarketposition[17][18]StrategicDirectionandIndustryCompetition−Focusonachievingabove−marketrevenuegrowththroughinnovationandcommercialexecution,expandingmargins,andleveragingstrategicpartnerships[6]−Emphasisonimprovingpatientaccessinunderpenetratedglobalmarkets,particularlyinChinaandIndia[14][16]−CompetitivedifferentiationthroughcomprehensiveadaptivetoolslikeCenos,expectedtoincreasewinratesandupgradetheagedTomoTherapyinstalledbase[12]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−Positiveoutlookforradiationoncology,supportedbytechnologyadvancementsandclinicaldata,despiteshort−termheadwindsintheU.S.[13]−Restructuringactions,includinga6600 million annual market opportunity [14][15] - Introduction of Helix, a value segment product, targeting high-potential emerging markets like India [16] - Strategic win at the Royal Marsden in the U.K., reinforcing the company's brand and market position [17][18] Strategic Direction and Industry Competition - Focus on achieving above-market revenue growth through innovation and commercial execution, expanding margins, and leveraging strategic partnerships [6] - Emphasis on improving patient access in underpenetrated global markets, particularly in China and India [14][16] - Competitive differentiation through comprehensive adaptive tools like Cenos, expected to increase win rates and upgrade the aged TomoTherapy installed base [12] Management Commentary on Operating Environment and Future Outlook - Positive outlook for radiation oncology, supported by technology advancements and clinical data, despite short-term headwinds in the U.S. [13] - Restructuring actions, including a 6% workforce reduction, aimed at simplifying the organization and improving operational efficiency [19] - Investments in commercial and customer support resources to maximize product innovations and market position [20] Other Important Information - Participation in the ASTRO conference, driving interest in new product innovations and showcasing the company's leadership in radiation oncology [10][17] - Launch of Accuray Financial Services to provide flexible financing options for capital equipment acquisition [10] - Enhanced executive team with new leadership in R&D, global service, and IT, leveraging experience from leading companies in the sector [21] Q&A Session Summary Question: Guidance and Order Funnel - The company remains cautiously optimistic, with strong Q1 performance but conservative guidance due to extended sales cycles in the U.S. and anti-corruption campaigns in China [30][31] Question: China Tomo C Opportunity - Tomo C approval came earlier than expected, with strong demand anticipated in the Type B market segment in China [32][33] - Revenue from Tomo C is expected to start contributing in Q4, with shipments to customers beginning in fiscal Q4 [34] Question: Inflation and Pricing Environment - Inflation remains a challenge, with a 2.5 million headwind in Q1, though supplier price increases have slowed [36][37] Question: Reimbursement Changes - Positive movement in U.S. reimbursement models, with ASTRO proposing a model that favors shorter-duration treatments like SBRT, expected to take over a year to implement [38][39] Question: Cenos Online Adaptive Solution - Strong customer interest in Cenos, with 510(k) pending and expected availability for orders in Q3 [42][43] Question: Helix Market Potential in India - India represents a 100millionto100 million to 150 million annual market opportunity for the Helix product, targeting high-growth emerging markets [44][45]