Pulmonx Corporation Q3 FY2025 earnings call

Bullets:

• Company has a market-leading product (Zephyr Valves) for severe emphysema with strong clinical evidence and global endorsement.
• Well-established commercial infrastructure with a large global sales force in over 25 countries.
• Growth trajectory in U.S. has slowed, need to realign spending to improve operating leverage.
• Conducting a line-by-line review of programs and spending to ensure value creation.
• R&D expenses increased 29% due to higher clinical trial activity, SG&A expenses up 1% due to commercial investment offset by lower G&A.

Total worldwide revenue for the quarter ended September 30, 2025 was $21.5 million, a 5% increase from the prior year. U.S. revenue was $14 million, a 1% increase, while international revenue was $7.5 million, a 15% increase. Gross margin for the quarter was approximately 75% compared to 74% in the prior year. Revenue contribution: U.S. was a significant portion, international also contributed, with Zephyr Valves being the main product fulfilling unmet need in severe emphysema.

Bullets:

• Full year 2025 revenue expected to be in the range of $89 million to $90 million.
• Full year 2025 gross margin expected to be approximately 73%.
• Full year 2025 operating expense guidance falls within $125 million to $126 million, inclusive of ~$21 million in noncash stock-based compensation.

Bullets:

• Slowing sales growth making operating leverage elusive.
• Investments not yielding timely returns.
• Need to address underperforming territories to raise overall growth profile.

Q: Can you share views on exploring alternate strategic pathways like asset sales, partnerships?

A: Glen states they are just stepping back in and need to come up to speed, focused on making the business profitable in immediate term and not speculating on details yet.

Q: Why hasn't U.S. growth translated to sustained growth despite adding centers?

A: Glen says they are digging into details, sees opportunity to bring underperforming territories up to standard but can't get into specifics yet.

Q: How to address complex patient referral and workup processes?

A: Glen notes accounts with efficient processes move patients well, need to ensure no stalling at referring physicians and efficient movement to treatment at hospitals.

Q: Is the approach to bring best practices from high-performing accounts to underperforming ones still in play?

A: Glen says they are still digging in, but will pursue low-hanging fruit of bringing underperforming territories up while driving more efficient patient processing.

Q: Is the guidance revision due to not having a good pulse yet with potential for upside?

A: Derrick says guidance range is a realistic view as some growth initiatives didn't deliver, but there's opportunity to improve execution and they'll provide more detail on Q4 call.

Q: When extending cash runway, is it reallocating expenses to better return areas? How to get growth without spending more on commercial side?

A: Derrick says extending cash runway involves evaluating investments, focusing on areas with impact, shifting resources from non-performing to performing areas; Glen adds they feel good about the field organization but will be discriminating on investments.