BrainsWay Ltd.

Good morning, everyone. My name is Sachi, and I will be your conference operator today. At this time, I would like to welcome everyone to BrainsWay's second quarter 2026 financial results conference call. All lines have been placed on mute to prevent any background noise. With us today are BrainsWay's Chief Executive Officer, Hadar Levy, and Chief Financial Officer, Ido Marom. The format for today's call will be a discussion of recent trends and business updates from Hadar, Followed by a detailed discussion of the financials. Then we will open up the call for your questions. Earlier today, BrainsWay released its financial results for the three and six months ended June 30, 2026. A copy of the press release is available on the company's investor relations website, www.brainsway.com. Before I turn the call over to management, I would like to remind you that this conference call, including both management's prepared remarks and the question and answer session, may contain projections or other forward-looking statements regarding, among other topics, BrainsWay's anticipated future operating and financial performance, business plans and prospects, and expectations for its products and pipelines, which are all subject to risks and uncertainties, including shifting market conditions resulting from geopolitical, supply chain, and other factors, as well as use of non-GAAP financial information. Additional information regarding these and other risks are available in the company's earnings release and in its other filings with the SEC, including the risk factors section contained in BrainsWay's Form 20-F. Finally, please note that the company's SK will be filed tomorrow at approximately 6 a.m. Eastern Time in accordance with the SEC's operating schedule. I would now like to turn the call over to Hadar.

Thank you. Welcome, everyone, and thank you for joining us today. We entered the second half of 2026 from a position of strength with accelerating growth, expanding profitability, and increasing visibility into future revenues. But more importantly, we believe BrainSway is entering the next phase of its evolution, from a leading deep TMS company into a broader platform for interventional psychiatry. Our second quarter results provide further evidence that the foundation of this platform is getting stronger. Revenue grew 35% to $17.1 million for the second quarter. Thank you very much. 141% to $3.5 million compared with $1.5 million for the same period last year, with adjusted EBITDA margin expanding to 20% from 11%. This also marked our 12th consecutive quarter of profitability, underscoring the scalable nature of the business model. These results mirror not only because of the growth They represent today. But because every system we install, every reimbursement expansion we achieve, and every new clinical indication we develop, strengthen the platform and expand our long-term opportunity. Let me take a minute to walk you through a few key metrics that we monitor each quarter to measure our continued growth. During the second quarter of 2026, we shipped 125 deep TMS systems A 42% increase over the same period last year, bringing our install base to approximately 1,950 systems. Every system represents more than an initial price placement. It creates potential for multi-year recurring revenue, additional utilization, new indications and protocols, deeper provider relationship, and greater clinical data. And importantly, As we expand the capabilities of the platform, we increase the potential value of systems that are already in the field. Remaining performance obligations have increased to $80.4 million as of June 30, 2026, a 30% increase compared with the same period last year. We believe the continued growth in remaining performance obligations over the past several quarters Demonstrate the strong market demands for DeepTMS, as well as the success of our leasing strategy focused on servicing enterprise customers. This is an important evolution in our business model. At the install-based growth, we believe revenue visibility, recurring revenue, and operating leverage can increasingly compound. Our strategy is built around what we believe is a powerful growth flywheel. with a series of reinforcing growth, drivers that build on one another over time. We believe the expanding clinical evidence for DeepTMS drives broader reimbursement, which in turn supports greater physicians' confidence and adoption. As adoption grows, our install base expands, creating a large recurring revenue stream and increasing operating leverage. The resulting operating leverage cash flow enable us to reinvent in additional clinical studies, reimbursement initiatives, and strategic partnership. At the foundation of our strategy is the strength of the DeepTMS platform itself. Our systems are supported by one of the industry's most extensive bodies of peer-reviewed clinical evidence, demonstrating efficacy across a broad range of neuropsychiatric disorders, including major depressive disorder, anxious depression, late-life depression, obsessive-compulsive disorder, and smoking addiction. This growing body of evidence has resulted in multiple FDA clearances, increasing physicians' confidence, broader reimbursement support, and ultimately accelerated adoption of DIV-TMS. One of the clearest examples of our momentum is the continued expansion of reimbursement for TMS. Commercial pairs increasingly recognize the clinical value of this therapy, while prioritization requirements continue to become less burdensome. Perhaps, just as important for us, we have also seen reimbursement continue to expand to include accelerated treatment protocols, which we called SWIFT. We currently estimate there are approximately 57 million covered lives in the U.S., with access to our SWIFT Pro-Accelerated Deep TMS protocol. Every reimbursement expansion lowers barriers to treatment, increases provider confidence in investing in deep TMS systems, expands patient access, and supports higher utilization across our growing install base. We believe SWIFT represents an important long-term growth opportunity for BrainSway. By reducing treatment from several weeks to just a few days, SWIFT has the potential to improve convenience for patients, increase treatment capacity for providers, and further strengthen the value proposition for PERS. During the quarter, we presented the first prospective 12-month durability data for the SWIFT accelerated DFTMS protocol. The study demonstrated that patients maintain meaningful clinical improvement We believe these findings further strengthen the clinical evidence supporting SWIFT and the case for broader reimbursement adoption, an important driver behind broader adoption of DeepTMS. Beyond expanding adoption within our existing indication, we continue seeking to broaden the clinical utility of DeepTMS platform. During the quarter, we presented results from the largest real-world study to date evaluating DeepTMS in patients with comorbid PTSD and major depressive disorder. which is one of the most challenging psychiatric population to treat. Across 462 patients treated at 11 clinical sites, more than 83% experienced a meaningful response in PTSD symptoms while substantial improvements were also observed in depression symptoms. We believe these findings further strength the growing body of evidence supporting deep CMS across If cleared, this would represent another important opportunity to expand the clinical utility of DeepCMS platform, increasing the value proposition for every system already installed in the field without requiring providers to purchase additional capital equipment. Taking together these clinical regulatory advances are occurring against the backdrop of an interventional psychiatry market that we believe is entering to an important period of long-term growth. Pairs are steadily expanding reimbursement for neuromodulation therapies, demand for non-pharmacologic Non-pharmacologic treatment options continue to grow among both providers and patients, and awareness conditions such as treatment-resistant depression, OCD, and PTSD continue to expand. We believe BrainSway is well-positioned to benefit from these tailwinds, giving our clinical evidence-based pipeline strategy, reimbursement infrastructure, and installed base of deep TMS systems. Capturing this opportunity required more than innovative technology. It also required expanding patients' access in investing in providers as they scale their practices. That is one of the key objectives of our strategic priority investment program. This initiative is designed to do much more than efficacy deploy capital in promising investment targets. It allows us to partner with leading behavioral health providers and to align ourselves with organizations that have a plan to grow and succeed by accelerating patient access to care and building awareness of cutting-edge interventional psychiatry treatment approaches. During the quarter, we continue to execute against this strategy with a strategic investment in Hopemark Health, a growth-oriented behavioral health platform serving multiple clinics in the greater Chicago area. Following the close of the quarter, we continued with this strategy through investment in Radial Health, an innovative mental health service platform combining clinical infrastructure, reimbursement capabilities, and AI-guided decision support, as well as in Sound Mind Behavioral, a leading growth-oriented outpatient behavioral health platform with locations across the Mid-Atlantic and Northeast. This minority-stake investment reflects our strategy of partnering with leading providers' organizations and expanding our presence within the broader behavioral health ecosystem, while allowing BrainWay to remain focused on advancing our technology, clinical evidence, and commercial execution. Looking ahead, we continue to assess a pipeline of investment opportunities and remain disciplined in identifying partners that can generate both financial growth and meaningful strategic value. Another important part of our long-term platform strategy is extending neuromodulation beyond the clinic. Today, DeepTMS anchors treatment in the clinical setting. Over time, we see an opportunity to extend the patient's journey into the home and ultimately connect treatment with the data and digital monitoring. That is the strategic context behind our investment in New Orleans. Following the FDA approval for its ProLivarex system in March, the commercial launch has begun and progressing. While it remains early in the launch, we are encouraged by the progress being made by New Orleans and the execution discipline that they roll out. International expansion represents another important layer of our long-term opportunity. Across our current partner market, we estimate there are more than 170 million untreated patients. Importantly, we are not starting from zero. We are building on established commercial partnership and existing infrastructure. providing what we believe is an attractive and capital efficient path to scale. As intervention out of psychiatry expands globally, we believe our international footprint can become an increasingly important contributor to brain soil growth. In closing, we are pleased with our performance this quarter, but we believe we are still in the early stage of much larger opportunity. For many years, Braintree has been known as a deep TMS company. Today, we are building something broader, a global platform for interventional psychiatry. Every system we install, every reimbursement extension, every new indication, and every strategic partnership strengthens that platform. And we are building it from a position of increasing financial strength with a strong growth, expanding profitability, and Greater Revenue Visibility. One platform, million of patients, decades of growth. With that, I will now turn the call over to Ido for his review of our second quarter of 2026 financial results. Ido. Thank you, Hadar.

During the second quarter of 2026, we continued to execute on our growth strategy, which drove a 35% increase in revenue to $17.1 million, compared with $12.6 million for the same period last year. During the quarter, we placed 125 D3MS systems, bringing our total install base to approximately 1,950 systems as of June 30th, 2026. Gross profit for the quarter was $12.8 million, up 34%, from $9.5 million in a prior year period, while gross margin remained stable at 75%. Turning to operating expenses. Sales and marketing expenses for the second quarter of 2026 totaled $4.9 million, steady with the second quarter of 2025. This reflects continued operating leverage and improved efficiency across our sales organization enabling us to support our commercial activities while maintaining a disciplined cost structure. Research and development expenses were $3.2 million compared with $2.3 million last year. The increase was primarily driven by investments in clinical development and research, including our ongoing PTSD and alcohol use disorder research initiatives. General and administrative expenses were $2.3 million compared with $1.6 million in the prior period, an increase of approximately $0.7 million driven by higher professional fees and administrative costs. Operating income was approximately $2.4 million compared with $0.6 million reported for the second quarter of 2025, with operating margin extending to 40% of revenue from 5%. This performance reflects the scaling of operations, the strength of our recurring revenue model, and disciplined cost management. For the second quarter, ended June 30th, 2026, we reported net income of $2.7 million, up 34%, compared with $2 million in the same period of 2025. Adjusted EBITDA. was $3.5 million, an increase of 141%, comparing with $1.5 million in the second quarter of 2025. Adjusted EBITDA margin extended to 20% from 11%. As Hadar mentioned earlier, this is the 12th consecutive quarter of positive adjusted EBITDA, and we are very excited by our progress in scaling our growth and profitability. Remaining performance obligations grew to $80.4 million as of June 30, 2026, a 30% year-over-year increase. We believe the steady increase of our RPOs reflect the strength of our business and execution against our long-term strategy. Cash flow from operation was $6.3 million in the second quarter of 2026, compared with $1.2 million in the third quarter. reflecting the strong payment term structure related to certain strategic deals. The capital structure of the company remained debt-free, giving us significant flexibility to pursue strategic growth initiatives, including our minority investment program. We reported cash and cash equivalents of $62.4 million as of June 30th, 2026. We believe our strong capital position will support the continued growth of our core scientific and technology operations, as well as our strategic investment program, which aims to increase patient access to innovative treatments, while also building long-term value for our shareholders. Looking ahead, based on our strong first-up performance and continuous momentum, we are raising our full year 2026 guidance from a range of 66 million to 68 million, to a range of $68 to $70 million for the full year 2026. This new guidance range, if achieved, will represent a year-over-year expected growth rate of 30 to 34%. In addition, we are narrowing our ranges for operating margin to 13.5% to 40% of revenue and adjusted EBITDA to $13 million to $40 million representing anticipated growth of approximately 90 to 100% over full year 2025. This concludes my preferred remarks and I will now turn the call back to the operator to please open up the call for questions. Operator?