Accuray Incorporated Q2 FY2026 earnings call

• Announced a comprehensive strategic, operational, and organizational transformation plan in mid-December to sharpen accountability, tighten cost control, and accelerate execution. • Rightsized cost structure, reallocated engineering resources to high ROI programs, and realigned the organization. • Working to expand and diversify service portfolio, including solutions-oriented offerings to increase customer uptime and recurring revenue. • Developing a structured distributor partnership and management program. • Designing systems, processes, and controls to ensure proper compensation for services delivered. • Optimizing pricing across product and service portfolio. • Customer conversations highlighted health systems prioritizing reliability, interoperability, and patient throughput, influencing product roadmap and service investments. • Tightened weekly financial and operating reviews around key KPIs. • Leadership team emphasizing teamwork, collaboration, data-driven decision-making, and urgency for a performance-driven environment. • Despite external headwinds, focused on delivering transformation commitments and strengthening foundation for sustained profitable growth.

In the second quarter, net revenue was $102.2 million. Product revenue was $45 million, down 26% overall and 28% on a constant currency basis. Service revenue was $57.2 million, up 4% from the prior year and 3% on a constant currency basis. Product revenue contributed approximately 44% to total revenue, while service revenue contributed about 56%. Product gross orders for the quarter were approximately $66 million with a book-to-bill ratio of 1.5, and the company ended the quarter with an order backlog of approximately $33 million.

• Revised fiscal 2026 revenue guidance to $440 million to $450 million, down from previous $471 million to $485 million. • Adjusted EBITDA guidance revised to $22 million to $25 million, down from previous $31 million to $35 million. • Expect to reach high single-digit adjusted EBITDA margin run rate within next nine months and expand to double digits in medium to long term.

• Ongoing tariffs and increasingly unstable geopolitical environment, particularly in China, affected demand patterns and timing of commercial activity. • These external pressures have been difficult to fully anticipate and continue to impact the business.

Q: Marie Thibault asked about the revenue guidance cut, specifically regarding China's impact on the business.

A: Stephen LaNeve stated that the business was impacted by ongoing tariffs and unstable geopolitical environment in China, with the process in China around quota, license, tender, and funding slowing, making deal dynamics more protracted than anticipated.

Q: Marie Thibault asked about product gross margins.

A: Ali Pervaiz said product gross margins were impacted by China JV release, tariffs, and product mix, with headwinds stronger than margin expansion efforts, expecting product gross margins to be between 20% to 30% going forward but highly dependent on product mix and release timing.

Q: Yung Lee asked about new initiatives and hospital capital environment.

A: Stephen LaNeve discussed new initiatives like solutions-oriented service offerings and structured distributor partnerships, and stated that from customer conversations, there are no shifts downward in hospital capital environment for equipment purchase or lease.