Pulmonx Corp. Q3 FY2026 earnings call

• Return to Growth: Pulmonix achieved its first year-over-year global revenue growth since leadership's return in 2025, marking a significant strategic milestone.
• US Commercial Execution: The company has filled substantially all open US sales positions. Growth is driven by the "near-to-far" framework, focusing on high-quality valve programs, physician education, and direct-to-patient efforts in geographies with established treating centers.
• Operational Efficiency: Adjusted EBITDA loss decreased nearly 60% to $3.5 million. Operating expenses fell 18% YoY due to cost reduction initiatives initiated at the start of the year.
• Clinical Pipeline Progress: Enrollment in the AeroSeal Convert2 IDE trial is on track for completion in the back half of 2027. AeroSeal is viewed as a TAM expansion tool potentially increasing the addressable market by ~20% globally.
• International Markets: China registration certificate renewed; commercial activity restarted with shipments expected early next year. Strong engagement observed at European Respiratory Society and AABIP meetings.
• Balance Sheet Strength: Ended Q3 with $52.7 million in cash. Debt maturity extended to 2031 with access to additional $20 million undrawn capital subject to milestones.

• Total Worldwide Revenue: $22.8 million (6% YoY increase). Contribution: 100% of total revenue.
• U.S. Revenue: $14.9 million (7% YoY increase). Contribution: ~65% of total revenue.
• International Revenue: $7.9 million (5% YoY increase, 6% constant currency). Contribution: ~35% of total revenue.
• Excluding China, International Revenue grew ~9% on both reported and constant currency bases.

• Full Year 2026 Revenue: Reiterated guidance of $90 million to $92 million.
• Full Year 2026 Gross Margin: Revised upward expectation to approximately 77%, driven by favorable mix in international markets and supply chain efficiencies.
• Full Year 2026 Operating Expenses: Expected between $108 million and $109 million, inclusive of ~$14 million non-cash stock-based compensation.
• Full Year 2026 Cash Burn: Expected to burn roughly $22 million, representing a 30% reduction from 2025 levels.
• No 2027 Guidance Provided: Management declined to provide specific 2027 financial guidance, citing a focus on executing the current year strong.

• China Market Uncertainty: While restarting operations, the China market is distributor-based, making revenue lumpy and less predictable than direct markets.
• Sales Team Tenure: The US sales force has relatively short average tenure (~1.8 years mean), leading to variability in ramp-up times and productivity curves.
• Forward-Looking Statement Risks: Results may differ from projections due to uncertainties in clinical trial timing, physician engagement, expense management, and market adoption.
• Regulatory and Commercial Dependencies: Growth depends on successful execution of the "near-to-far" strategy, continued enrollment in clinical trials (e.g., AeroSeal), and maintaining gross margin profiles above 75% despite potential modest drags from new market entries like China.

Q: Analyst asked about the drivers of Q3 US sequential growth and the productivity curve of the newly hired sales team. / A: Glen French noted that growth was broad-based rather than driven by one factor, aided by filling more territories. He highlighted that while the mean sales tenure is now 1.8 years (down from 3 years previously), promoted junior reps (TAMs) are performing exceptionally well, indicating effective training and a positive trajectory despite the younger team profile.

Q: Analyst questioned whether operating costs would remain flat or increase as revenue grows, given recent restructuring reduced recurring costs by 10%. / A: Derrick Sung stated the company is comfortable with the current cost structure, which supports growth without needing meaningful increases in spending. He expects OPEX to increase only slightly with inflation, ensuring that top-line growth continues to drive operating leverage through the P&L, supported by gross margins above 75%.

Q: Analyst sought clarity on long-term growth drivers for 2027, specifically regarding China's impact, Salesforce productivity, and AeroSeal launch timing. / A: Management clarified that China represents only ~2% of business and is unpredictable. AeroSeal will launch in Europe in 2027 but likely generate material revenues in 2028. They committed to sustaining double-digit growth long-term but refrained from 2027 specifics, emphasizing that Q3/Q4 momentum and sales rep ramp-up are the primary near-term drivers.

Q: Analyst asked about the balance between acquiring new accounts versus reactivating dormant ones with newer reps. / A: Glen French explained that while they add ~40 new accounts annually, the core strategy focuses on same-store sales via the "near-to-far" approach. Promoted junior reps have excelled at reigniting existing accounts that weren't fully utilized, with the top-performing region being led entirely by these internal promotions, proving their ability to focus on incremental revenue generation.