Accuray Incorporated

Good day and welcome to the Accurate Fiscal 2025 Second Quarter Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jesse Toot. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to Accurate's conference call to review financial results for the second quarter of fiscal year 2025, which ended December 31st of 2024. During our call this afternoon, National will review recent corporate developments. Joining us on today's call are Suzanne Witter, Accurate's President and Chief Executive Officer, and Ali Pervez, Accurate's Chief Financial Officer. Before we begin, I would like to remind you that our call today includes forward-looking statements. Actual results may differ materially from those contemplated or implied by these forward-looking statements. Factors that could cause these results to differ materially are outlined in the press release we issued just after the market closed this afternoon, as well as our filings with the Securities and Exchange Commission. We base the forward-looking statements on this call on the information available to us. Accordingly, you should not put undue reliance on any forward-looking statements. A few housekeeping items for today's call. First, during the Q&A session, we request that participants limit themselves to two questions and then re-queue with any follow-ups. Second, all references to a specific quarter in the prepared remarks are to our fiscal year quarters. For example, statements regarding our second quarter refer to our fiscal second quarter ended December 31, 2024. Additionally, there will be a supplemental slide deck to accompany this call, which you can access by going directly to Accra's investor relations page at investors.accurate.com. With that, let me turn the call over to Accra's Chief Executive Officer, Suzanne Winter. Suzanne.

Thank you, Jesse. Good afternoon, and thank you for joining us today. I'm very pleased to report on another strong quarter of performance across key financial metrics, which is enabling us to innovate and expand our efforts to improve outcomes for cancer patients around the world, which is our mission. We saw strong year-over-year revenue and adjusted EBITDA results this quarter reflecting significant progress on our FY25 priorities. These include advancing cancer care through innovation, expanding our service solutions business, and improving patient access to radiotherapy in developing markets where we believe we can grow faster than the market and achieve number one or number two market share in the long term. Finally, we advanced operational efficiencies and pricing actions to improve margins and long-term profitability. Revenue for the quarter was solid, growing 8% year over year with outstanding product revenue performance compared to the prior year period. Additionally, I was also pleased with our adjusted EBITDA performance at 9.6 million, which was driven by pricing and operational improvements, as well as Tomosi's system deliveries to end customers from our joint venture facility in Tianjin. Turning to orders in Q2, I'm very pleased with our book-to-bill results, which are encouraging, especially given the strength of our product shipments this quarter. EIMEA led the way with 7% orders growth balanced in both developed and emerging markets within the region. Last quarter, we gained CE Mark for the new Accuray Helix platform, which is manufactured in Madison, Wisconsin. And in Q2, we booked 12 new Helix system orders with key breakthrough wins from Pakistan, Northern Africa, and key markets in APAC. Turning to product revenues, we were up 19% versus last year, growing faster than the market, driven by strong demand for our solutions across the portfolio. Here, our new product innovation is focused on advancing the capabilities of our existing systems and always looking to improve patient care in the markets where we compete. The CyberKnife system, which remains the only truly robotic radiotherapy system dedicated to SBRT and stereotactic radiosurgery treatments, grew revenue well above 50% year over year, so great performance here. Another key driver for revenue growth was our overall performance in China, which was one of the standout stories for this quarter. Our team delivered over 50% revenue growth year over year in China. Our strategy in China is working. Driven first by our differentiated product portfolio and service growth, and I am very pleased with the performance of our joint venture partner, China Isotope and Radiation Corporation, or CIRC, which is one of the largest state-run entities. Additionally, we are very encouraged that in the most recent China market data for calendar year 2024, although the overall market declined versus the prior year, we gained 10 points of market share and are disrupting competitive market share dynamics. according to Ipsos, a global leader in market research, as well as official China government bidding and local government procurement websites. In the Type B market, we saw strong adoption of the Tomo C system, which positively impacted revenue and adjusted EBITDA in the quarter. We were able to complete significant Tomo C customer deliveries, allowing us to realize deferred margin, which has built up over the past several quarters, as we waited for National Medical Product Administration regulatory approval. As a reminder, the Tomla C product is manufactured in our JV Tanjin facility specifically for the China market. Again, we've invested heavily in understanding regional customer trends and developed the right product with our JV partner to address the unique needs of the Type B market, which is estimated to be $3 billion in market potential over the next five years. During the quarter, we also continued to see positive customer reception to our technology in the premium Type A segment in China. With the recent approvals for the CyberKnife S7 and Synchrony and ClearRT now available on the RADxAC Sync system, customers have access to advanced capabilities which are critical to performing SBRT and stereotactic radiosurgery treatments. We also saw standout revenue performance in Japan. where we continue to hold the number two market share position with over 40% growth in the quarter versus last year. Revenue was down in EIMEA and AMS regions in the quarter compared to last year, but as we have discussed in the past, regional performance can vary significantly from quarter to quarter, and I expect both of these regions to show stronger revenue growth in the second half. Moving on to our service business, our Q2 service contract revenues grew modestly on a comparable basis and were up sequentially from last quarter. Service revenue remains the largest long-term growth opportunity driven by a growing installed base of global customers who contract service from Accuray throughout the life of their system. This service revenue opportunity, which is predominantly a recurring revenue source, will further grow by retaining existing customers, winning new customers, and expanding new solution offerings like CyberCom accelerated commissioning for the CyberKnife, which continued to contribute materially within the quarter. We expect that our service business will be a growing part of our overall revenue and a primary catalyst for expanding margins as we benefit from higher pricing, increased scale, and improved operating leverage in the upcoming years. Finally, we're very proud of our clinical research and the academic recognition of clinical innovation leveraging our technology to advance cancer care. For example, in December, the International Journal of Cancer highlighted the CyberKnife system as an effective and time-efficient treatment option for brain stem metastases. Additionally, in October, we announced the publication of the Accurate-sponsored PACE-B trial in the New England Journal of Medicine, which showed groundbreaking potential for SBRT to change the way prostate cancer is treated. In summary, I'm proud of our team and the progress we're making towards achieving our longer-term goals. Operationally, we continue to strengthen our corporate leadership and are excited to welcome Leonel Peralta as Chief Operations Officer to the team. Leonel has a proven work history in driving growth while improving productivity, and brings more than 25 years of leadership experience in supply chain, business process improvement, and manufacturing optimization. This experience will be instrumental in transforming our supply base, driving operational excellence, and optimizing working capital. I'm pleased with our strong Q2 and first half performance, which demonstrates the execution of our strategy. With a solid first half behind us, we're raising our full year fiscal 2025 guidance for revenue to $463 to $475 million from $462 to $472 million and adjusted EBITDA to $28.5 to $31 million from $28 to $30 million. As we look to the second half of our fiscal year, we would expect similar seasonality as we have seen in the past years. with a larger portion of revenues and earnings coming in the fourth quarter aligned with the timing of customer demand compared to Q3. In closing, we are confident that we are well-positioned to achieve our goals in top-line growth, drive share in the markets where we compete, and expand margins in FY25 and beyond. I will now turn it over to Ali, who will cover our financials.