ARAY

Completed First Phase of Corporate Transformation

• Launched a comprehensive business review and transformation in Q2 FY26 focused on streamlining operations, strengthening commercial leadership, reducing costs, and improving accountability and operating discipline.
• Exceeded original cost improvement targets: realized over $20 million in cost and margin improvement in FY26, beating the original target of $12 million. These improvements are expected to deliver approximately $15 million in incremental annualized benefit in FY27.
• Restructuring costs for the first phase of transformation are now substantially complete.

Strengthened Financial Foundation

• Announced a comprehensive capital structure transaction with TCW Asset Management to improve liquidity, reduce leverage, and extend financial flexibility.
• The transaction includes conversion of $40 million of existing debt into convertible preferred equity, a $15 million cash new investment, an up-to-$5 million delayed draw facility, and a covenant holiday through December 2027. Key portions of the transaction remain subject to shareholder approval and customary closing conditions.
• Plans for a reverse stock split (ratio to be determined, subject to shareholder approval) to position the company for future growth.

Expanded Strategic Partnership Ecosystem

• Adopted a new operating model focused on Accuray's core competencies, with strategic partnerships to expand capabilities without internal over-investment.
• Entered into non-binding letters of intent with Samsung HME America and research laboratories, and expanded the existing relationship with Tata Consultancy Services to improve capabilities in volumetric imaging, software development, adaptive therapy, engineering, and customer support, while generating operational efficiencies.
• Announced a 10-year strategic collaboration with the University of Wisconsin School of Medicine and Public Health to advance adaptive radiation therapy research, education, and training on Accuray's Stellar platform, building on decades of shared innovation.
• Management expects to continue expanding the partnership ecosystem with additional collaborations going forward.

Differentiated Technology Innovation Roadmap

• Focused product innovation on three core differentiated areas: real-time motion management (via the Synchrony platform powered by proprietary AI algorithms), high-quality volumetric imaging (via ClearRT for the RADxACT platform), and software workflow and optimization improvements (via Precision and Volo platforms).
• Strong positive market and clinical validation at ESTRO 2026, with multiple independent clinical presentations reinforcing strong clinical outcomes and low toxicity for Accuray's CyberKnife, RADxACT, and Stellar platforms across prostate, breast, kidney, and lung cancers. The event generated a meaningful year-over-year increase in qualified commercial leads, with strong traction for the European debut of the Stellar system.

Launched Transformation Phase Two

• The second phase of transformation focuses on four core priorities: (1) invest in differentiated innovation where Accuray holds unique competitive advantages; (2) continue reducing cost structure, remove organizational complexity, and leverage partnerships and technology for further efficiency gains; (3) expand global market reach, improve commercial execution and distributor performance; (4) grow service revenue and expand service margins via price optimization, improved parts and personnel utilization, remote diagnostics, and new value-added customer solutions.

• Management is not providing formal full-year FY27 revenue or adjusted EBITDA guidance due to significant macro and geopolitical uncertainty impacting demand forecasting and the timing of orders, installations, and revenue recognition.
• Expected continued YoY growth in service revenue for FY27, paired with improved service margins driven by pricing optimization and operational efficiency initiatives.
• Management expects ongoing operating expense discipline and continued transformation benefits to be realized in FY27, with approximately $15 million in incremental annualized cost and margin improvement from FY26 transformation actions, contingent on product demand, cost environment, and macro conditions.
• Management expects strategic partnerships to play an increasingly important role in expanding capabilities while allowing the firm to remain focused on core competencies.

Accuray reports two core business segments: Product and Service. For the fourth quarter of fiscal 2026 (ended June 30, 2026):

• Total net revenue: $100.9 million, down 21% year-over-year (YoY). Service revenue contributed 59.6% of total Q4 revenue, while product revenue contributed 40.4%.
  • Service segment: Q4 revenue of $60.1 million, up 6% YoY (up 5% in constant currency). Q4 gross profit was $22.1 million, with a gross margin of 36.8%, up 2.4 percentage points YoY. Full-year 2026 service revenue was $229 million, up 4% YoY (up 2% in constant currency), with full-year gross margin of 31%, down 1.6 percentage points YoY.
  • Product segment: Q4 revenue of $40.8 million, down 42% YoY. Q4 gross profit was $12.9 million, with a gross margin of 31.7% (17.5% after adjusting for one-time tariff favorability and obsolete inventory write-down). Full-year 2026 product revenue was $173 million, down 27% YoY (down 28% in constant currency), with full-year adjusted gross margin of 23.2%, down 8.4 percentage points YoY.

For full fiscal 2026:

• Total net revenue: $402 million, down 12% YoY (down 14% in constant currency). Service revenue contributed 57% of total full-year revenue, while product revenue contributed 43%.

• Geopolitical uncertainty, trade policy and tariff volatility, regional market volatility, and broader macroeconomic conditions create significant uncertainty around product demand, order timing, installations, and revenue recognition.
• Sustained geopolitical tension and tariff uncertainty contributed to a $58 million year-over-year decline in China product revenue in FY26, and continued weakness in the Chinese market remains a core headwind for product performance.
• Ongoing weakness in product order intake: FY26 full-year product gross orders totaled $192 million, for a trailing 12-month book-to-bill ratio of 1.1, below management's target healthy level of 1.2 for growing backlog.
• Key portions of the TCW capital restructuring transaction remain subject to shareholder approval and customary closing conditions, with no guarantee of completion on expected terms.

No participant questions were submitted during the Q&A portion of the call. The session concluded immediately after opening for questions, and the call moved to closing remarks from management.