Accuray Q4 & FY25 presentation: Annual revenue hits record despite quarterly dip

Introduction & Market Context

Accuray Incorporated (NASDAQ:ARAY), a radiation therapy technology provider, released its fourth quarter and full fiscal year 2025 results on August 13, 2025, highlighting record annual revenue despite a fourth-quarter slowdown. The company’s stock closed at $1.48, up 0.68% on the day, with a modest 1.35% gain in aftermarket trading.

The presentation comes as Accuray continues to navigate challenging market conditions, including China tariff impacts that were previously flagged during the company’s Q3 earnings call. Despite these headwinds, the company managed to deliver overall growth for the fiscal year while setting an optimistic tone for FY26.

FY25 Financial Performance Highlights

Accuray reported record annual revenue of $458.5 million for fiscal year 2025, representing a 3% increase year-over-year. The company showed significant improvement in profitability metrics, with operating income reaching $7.8 million compared to just $0.5 million in the prior fiscal year. Adjusted EBITDA saw an impressive 44% jump to $28.3 million from $19.7 million in FY24.

Service revenue was a particular bright spot, growing 4% year-over-year, while product revenue increased by a more modest 1%. The company also reported a healthy order book-to-bill ratio of 1.2, indicating strong future demand for its radiation therapy systems.

As shown in the following financial highlights slide:

Q4 Results and China Impact

The fourth quarter presented more challenges, with total revenue declining 5% to $127.5 million compared to the same period last year. Product revenue was particularly affected, dropping 11% to $70.7 million, though service revenue maintained its positive trajectory with 4% growth to $56.8 million. Operating expenses increased 10% in Q4, while Adjusted EBITDA decreased 6% to $9.4 million.

A significant factor affecting Accuray’s reported results is the deferred margin impact from its China joint venture. The company’s presentation provided a detailed breakdown of this impact, showing how it affects gross margins and Adjusted EBITDA across quarters. For the full year, the net China margin deferral was $7.6 million, with particularly large impacts in Q2 and Q3.

The following slide illustrates the China deferred margin impact across quarters:

The quarterly and full-year financial results are further detailed in this comprehensive breakdown:

Product Portfolio and Strategic Focus

Accuray’s presentation highlighted its diverse product portfolio, which includes four main radiation therapy systems. The CyberKnife System is positioned as a unique robotic system dedicated to stereotactic radiosurgery and stereotactic body radiation therapy. The Radixact System offers helical radiotherapy with CT imaging capabilities. The company also features the Tomo C System specifically made in China through its joint venture, and the Accuray Helix system designed for improved patient access.

The company’s product lineup is central to its strategy of expanding access to precision radiation therapy globally:

Accuray’s overall strategy centers on "Closing the Gaps to Care" through four key initiatives: advancing care through innovation, expanding patient access in growth markets, growing and optimizing service solutions, and connecting the global radiation therapy community. This approach aligns with the company’s vision to "expand the curative power of radiation therapy to improve as many lives as possible."

FY26 Outlook and Strategic Priorities

Looking ahead to fiscal year 2026, Accuray provided an optimistic outlook with revenue projected to grow between 3% and 6% to reach $471-$485 million. The company expects Adjusted EBITDA to increase by 10-25% to $31-$35 million, signaling confidence in continued margin improvement despite ongoing challenges.

The guidance details are presented in the following slide:

To achieve these targets, Accuray outlined four fiscal priorities for FY26: revenue growth and installed base expansion, expanding service revenue and margins, focused capital deployment to fuel innovation and shareholder value, and targeted initiatives to meaningfully expand Adjusted EBITDA.

China Dynamics and Global Expansion

China remains a key market for Accuray, though one with complex financial implications. The company noted several achievements in expanding access to high-precision care, including NMPA approval for the Radixact SynC System and CyberKnife S7 System in China. Additionally, Accuray reported first patient treatments with various systems across multiple countries, indicating progress in global market penetration.

These developments align with the company’s Q3 earnings call, where management discussed potential revenue impacts from China tariffs estimated at $10-$15 million in the fourth quarter. The presentation suggests that despite these challenges, Accuray continues to view China as a strategic growth market while also diversifying its geographic footprint.

Conclusion

Accuray’s FY25 results demonstrate the company’s ability to deliver annual growth despite quarterly fluctuations and market challenges. The record revenue and significant improvement in profitability metrics provide a solid foundation for the company’s FY26 plans. However, investors should closely monitor the ongoing impact of China market dynamics, which have a material effect on reported margins.

With a book-to-bill ratio of 1.2 and projected revenue growth of 3-6% for FY26, Accuray appears positioned for continued expansion, though execution on strategic priorities will be crucial to achieving the ambitious Adjusted EBITDA growth targets of 10-25%. As the company continues to navigate global market complexities, its focus on service revenue growth and margin improvement may provide more stable revenue streams to complement its product sales.

Full presentation:

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