Executive Summary

Q3 FY25 revenue of $113.2M grew 12% YoY and topped S&P Global consensus by ~11.6% (consensus $101.5M*) while diluted EPS of -$0.01 beat by ~$0.04 (consensus -$0.053*) . Values retrieved from S&P Global.*
Mix and China JV deferrals pressured margins: GAAP gross margin was 27.9% (vs 28.7% LY and 36.1% in Q2), with product margin at 22.7% due to higher China margin deferral; ex-China-margin, gross margin was ~30.1% .
Orders and backlog healthy but decelerating: gross orders $71.2M (vs $89.1M LY), book-to-bill 1.2 (vs 1.8 LY), backlog $452.4M (~10% below LY) .
Guidance: FY25 revenue cut to $452–$460M (from $463–$475M prior) on tariff headwinds; adjusted EBITDA maintained at $28.5–$31.0M. Management framed Q4 revenue at $121–$129M and adj. EBITDA $9.5–$12M to offset reduced China shipments via other regions .

What Went Well and What Went Wrong

What Went Well

Broad-based revenue strength and execution: revenue +12% YoY with product +16% and service +9%; operating expenses -9% YoY drove adjusted EBITDA to $6.0M from $1.1M LY .
Service stability and scale: service represented ~49% of revenue and 59% of gross margin; management sees service as a durable growth and margin engine .
Management action plan for tariffs: “multiple mitigation actions” including a foreign trade zone, duty drawback, secondary domestic sourcing, and pursuit of China exemptions via the JV to offset tariff costs and volume pressure .

What Went Wrong

Margin compression from China JV timing: product margin 22.7% vs ~43.5% in Q2 due to higher margin deferral; GAAP gross margin fell to 27.9% (vs 36.1% in Q2) .
Orders/backlog down YoY: gross orders $71.2M (vs $89.1M LY), backlog $452.4M (~10% below LY), and book-to-bill 1.2 vs 1.8 LY, reflecting slower order intake vs a strong year-ago comp .
China volume risk near term: management expects “minimal shipments to China” near term and estimates a $10–$15M revenue headwind in Q4; uncertainty around medical device tariff exemptions persists .

Financial Results

Metric	Q3 FY24	Q2 FY25	Q3 FY25
Total Revenue ($M)	$101.132	$116.174	$113.243
Gross Margin %	28.7%	36.1%	27.9%
Operating Expenses ($M)	$33.636	$37.185	$30.580
Operating Income (Loss) ($M)	$(4.562)	$4.707	$1.047
Net Income (Loss) ($M)	$(6.342)	$2.537	$(1.297)
Diluted EPS	$(0.06)	$0.02	$(0.01)
Adjusted EBITDA ($M, non-GAAP)	$1.087	$9.634	$6.048
Product Revenue ($M)	$49.603	$61.189	$57.320
Service Revenue ($M)	$51.529	$54.985	$55.923

Segment mix and KPIs

KPI	Q3 FY24	Q2 FY25	Q3 FY25
Gross Product Orders ($M)	$89.086	$76.762	$71.167
Net Orders ($M)	$60.795	$55.639	$46.656
Book-to-Bill	1.8	1.3	1.2
Backlog ($M)	$503.220	$463.056	$452.392
Systems Delivered (Units)	—	—	27 (+23% YoY)
Product Margin (%)	—	~43.5% (call ref)	22.7% (call ref)
Gross Margin ex China margin impact (%)	—	33.21%	30.05%

Consensus vs Actual (S&P Global)

Metric	Consensus	Actual	Beat/(Miss)
Revenue ($M)	$101.531*	$113.243	+$11.712
EPS	$(0.053)*	$(0.01)	+$0.043

Values retrieved from S&P Global.*

Context and drivers:

YoY growth (12%) driven by both developed and emerging markets; service grew 9% and contributed 59% of gross margin, supporting profitability mix .
Margin variance vs Q2 driven by China JV margin deferral timing; net China margin deferral of ~$2.4M in Q3; FY25 net release expected ~+$0.5M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue	FY25	$463M–$475M	$452M–$460M	Lowered
Adjusted EBITDA (non-GAAP)	FY25	$28.5M–$31.0M	$28.5M–$31.0M	Maintained
Revenue	Q4 FY25	—	$121M–$129M (call outlook)	New intra-quarter outlook
Adjusted EBITDA (non-GAAP)	Q4 FY25	—	$9.5M–$12.0M (call outlook)	New intra-quarter outlook
Deferred China margin (net release)	FY25	—	~+$0.5M expected	Context (non-GAAP)

Rationale: guidance reduced primarily due to tariff-driven reduction in China product shipments; management is executing mitigation actions and expects other regions to partially offset in Q4 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 FY25)	Previous Mentions (Q2 FY25)	Current Period (Q3 FY25)	Trend
Tariffs/macro	Not a focus in Q1 PR; emphasis on China strength	Raised FY25 guidance; assumed minimal tariff impact	Significant headwind; minimal China shipments expected; $10–$15M Q4 revenue impact; mitigation underway	Deteriorating near-term visibility
China JV & margin deferral	Q1 JV investment balance noted; not thematic	Strong Tomo C deliveries; backlog healthy	Higher Q3 margin deferral drove product margin to 22.7%; FY25 net release ~+$0.5M	Timing-driven volatility
Product performance	Interest in Tomo C; Helix launch momentum starting	Continued Tomo C momentum; Helix breakthrough wins post CE mark	27 systems shipped (+23% YoY); product rev +16% YoY	Strengthening volumes
Service business	Service revenue growth; stability	Slightly down QoQ; stable YoY	9% YoY growth; 59% of gross margin; key margin lever	Positive mix tailwind
Regional trends	Strong China in Q1	Broad-based; raised guide on execution	Offsetting China via IMEA/India, non-China APAC; strong Japan; UK wins	Diversifying
Capital structure/refinancing	Not highlighted	Not highlighted	Exploring “any and all” refinancing alternatives	Active evaluation
Supply chain/operations	ERP investment mentioned	Execution improving	Mitigations: FTZ, duty drawback, secondary sourcing, JV exemption	Resilience-building

Management Commentary

CEO on performance and demand: “Revenue for the quarter was solid, growing at 12% year-over-year… service business… represented approximately 49% of our revenue and 59% of our gross margin.”
CEO on tariffs and mitigations: “We are expecting minimal shipments to China… estimate a potential negative impact of $10 million to $15 million in Q4 revenue… multiple mitigation actions… foreign trade zone… duty drawback… secondary domestic sources… obtain a tariff exemption in China.”
CFO on Q4 framing: “We expect Q4 revenues to be in the range of $121 million to $129 million and adjusted EBITDA in the range of $9.5 million to $12 million.”
CFO on product margins: “Product margins were at 22.7% this quarter… last quarter… about 43.5% because we did see an outsized China margin release… overall product margins for the year… around 31%.”

Q&A Highlights

China exposure and scenarios: Management is pursuing potential exemptions via the state-owned JV partner; timing/probability unclear; shipments could resume “relatively quickly” if exemptions materialize .
Regional offsets: Expect strength in IMEA (incl. India), non-China APAC, Japan, and opportunistic developed-market activity (e.g., UK stimulus, 5 premium orders) to offset China shortfall .
Margin dynamics: Higher JV deferrals weighed on Q3 product margin; the volatility is timing-related, with normalized annual product margin ~31% targeted .
Capital structure: Company is exploring all refinancing alternatives to optimize capital structure .

Estimates Context

Q3 FY25 results vs S&P Global consensus: revenue $113.24M vs $101.53M*; EPS -$0.01 vs -$0.053*. Both were beats on better volume, pricing and service mix; margin variance was timing-related due to China JV deferrals . Values retrieved from S&P Global.*
Prior quarters also exceeded revenue and EPS expectations: Q1 revenue $101.55M vs $97.55M*; EPS -$0.04 vs -$0.065*; Q2 revenue $116.17M vs $110.36M*; EPS $0.02 vs -$0.04* . Values retrieved from S&P Global.*

Implications: Street models likely lift near-term service margin and non-China product contributions while trimming China product assumptions and FY revenue; FY adj. EBITDA guardrails appear credible given Q4 outlook and cost control .

Key Takeaways for Investors

Core execution intact: three straight quarters of revenue/EPS beats versus S&P Global consensus; service is a steadying force for margin mix . Values retrieved from S&P Global.*
Near-term China risk likely the principal stock driver: watch for tariff exemption headlines and Q4 regional offset performance; management flagged a $10–$15M Q4 revenue headwind .
Margin volatility is transitory and accounting-driven: JV deferral timing compressed product gross margin; ex-China-margin GM ~30% in Q3 vs 33% in Q2 .
Orders/backlog signal healthy demand but decelerated YoY; focus shifts to conversion and mix quality; no cancellations in Q3 .
Liquidity improved (cash ~$78.8M) with strong Q3 collections; capital structure actions are being evaluated and could be a catalyst .
FY25 path: revenue narrowed lower, but adj. EBITDA maintained; execution against Q4 ranges is key to sustaining credibility into FY26 .
Product cycle remains constructive (Tomo C, Helix, CyberKnife S7); 27 system deliveries (+23% YoY) underscore shipment velocity despite macro noise .

Appendix: Additional Relevant Press Releases (Q3 FY25 period)

China NMPA-related update (context for China strategy): Company announced China regulatory progress earlier in the fiscal year, underscoring the strategic importance of the region .
New country access/use case: First CyberKnife treatments in Austria; showcases clinical adoption and portfolio momentum in developed markets .

Citations

Q3 FY25 earnings press release and financial tables:
8-K filing and supplemental earnings slides:
Earnings call transcript (prepared remarks and Q&A):
Prior quarters press releases for trend analysis: Q2 FY25 ; Q1 FY25
Additional press release (Austria CyberKnife):

Notes: All consensus estimate values marked with an asterisk () are from S&P Global and are provided without document citations. Values retrieved from S&P Global.

ACCURAY INC (ARAY)·Q3 2025 Earnings Summary