IRIDEX Corporation Q2 FY2025 earnings call

• The company has shown transformation in business execution and operating efficiency over the past 3 quarters, with third consecutive quarter of year-over-year revenue growth, operating expense reductions, and positive adjusted EBITDA.
• Initiated aggressive cost reduction programs in Q4 2024, reducing operating expenses by 28% YoY, with these improvements expected to hold. Further efforts to reduce operating expenses and improve gross margins, including negotiating with contract manufacturers and planning to relocate facilities.
• Second quarter revenue growth driven by higher laser console sales (Pascal and G6 systems). Focus on retina product family: driving Pascal system adoption, achieving international approvals; strong U.S. Pascal sales, EMEA revenue strong, but Asia had tariff dispute challenges, Latin America/Canada had pricing pressures but initiatives underway.
• Glaucoma strategy: leveraging G6 system installed base, shifting to higher-margin disposables, improving utilization; resolved probe supply constraints in Q2.

In the second quarter, IRIDEX generated $13.6 million in top line revenue, representing 7% year-over-year growth and 14% sequential growth over the first quarter. Retina product revenue was $8.0 million in Q2 2025, a 10% year-over-year increase, driven by higher laser console sales (Pascal and G6 systems), with medical and surgical retina system sales strong but partially offset by lower G6 and surgical retina probe sales. Total product revenue from the Cyclo G6 glaucoma product group was $3.3 million, essentially flat year-over-year. Other revenue was $2.2 million in Q2 2025, up from $2.0 million in Q2 2024, driven by increased service revenue. Gross profit in Q2 2025 was $4.7 million (34.5% gross margin), down from $5.1 million (40.7% gross margin) in Q2 2024 due to higher manufacturing costs. Operating expenses were $5.6 million in Q2 2025, a decrease of $2.2 million from Q2 2024. Net loss was $1.0 million in Q2 2025, down from $2.7 million in Q2 2024. Non-GAAP adjusted EBITDA for Q2 2025 was $21,000, an improvement from a loss of $1.7 million in Q2 2024.

• On track to achieve cash flow breakeven and positive adjusted EBITDA in 2025.
• Expect cash use to continue or improve from current levels.
• Headed into Q3 with healthy carryover revenue, improved supply visibility, and growing demand across strategic platforms.

• Service challenges and delays in MDR certification for IRIDEX Pascal system in GmbH.
• Tariff dispute with China causing stock order rush and supply chain strain affecting Q2 and future quarters.
• Pricing pressures in Latin America and Canada impacting Pascal sales.
• Competitors emphasizing reusable probe offerings affecting G6 business growth in Latin America and Canada.