Executive Summary

Q1 2025 delivered marginal top-line growth ($11.9M, +1% YoY) with materially improved profitability: gross margin expanded 460 bps to 42.5% and adjusted EBITDA turned positive ($0.4M) for the second straight quarter, driven by a 32% YoY OpEx reduction and favorable mix toward glaucoma consumables .
Glaucoma (Cyclo G6) outperformed (revenue +8% YoY to $3.2M; 13,900 probe units; 24 systems), offsetting softer Retina systems; operating loss narrowed to $(0.2)M and net loss improved to $(1.7)M despite a non-operating write-off tied to the Lind note settlement .
Balance sheet strengthened by a $10M strategic investment from Novel Inspiration; cash ended Q1 at $7.2M with the Lind note settled; management reiterated 2025 targets for cash-flow breakeven and positive adjusted EBITDA on revenue consistent with 2024 .
Stock reaction catalysts: continued proof of cost discipline (two consecutive positive adjusted EBITDA quarters), sustained Cyclo G6 momentum (especially probes/MP3), and execution on Novel-enabled portfolio expansion and margin initiatives; tariff exposure appears minimal due to U.S.-centric sourcing and assembly .

What Went Well and What Went Wrong

What Went Well

Cost actions drove operating expense down 32% YoY to $5.3M and enabled a second consecutive positive adjusted EBITDA quarter ($0.4M), signaling operating leverage on a stable revenue base .
Cyclo G6 momentum: revenue +8% YoY to $3.2M; 13,900 probes (+5% YoY) and 24 systems sold, aided by updated clinical settings, training, and sales enablement (MedScout) .
Management tone confident: “We have returned to year over year revenue growth and decreased operating expenses to achieve our first two quarters of adjusted EBITDA positive results” — Patrick Mercer, CEO .

What Went Wrong

Retina product revenue declined 3% YoY to $6.6M on lower Pascal system sales (partly offset by stronger medical and surgical systems); variability persists in EndoProbes despite a $0.1M beat vs plan .
Gross margin (42.5%) improved YoY but remains sensitive to mix and manufacturing costs; sequentially it trailed Q4’s 44.0% as Q4 benefited from mix and higher absorption .
“Other expense, net” spiked to $(1.5)M due to the write-off of loan origination costs tied to Lind note settlement, masking improved operating performance at the net-income line .

Financial Results

Headline metrics vs prior periods and vs estimates

Metric	Q3 2024	Q4 2024	Q1 2025	Street Consensus (Q1 2025)
Revenue ($M)	$11.58	$12.70	$11.90	N/A*
Diluted EPS ($)	$(0.12)	$(0.05)	$(0.10)	N/A*
Gross Margin (%)	37.3%	44.0%	42.5%	N/A*
Adjusted EBITDA ($M)	N/A	$0.37	$0.42	N/A*

Notes: Street consensus data for Q1 2025 (EPS, Revenue) were not available from S&P Global; IRIX has limited formal sell-side coverage. Values marked N/A* indicate unavailable S&P Global consensus. Values retrieved from S&P Global.*

Segment revenue breakdown

Segment ($M)	Q3 2024	Q4 2024	Q1 2025
Retina	$6.5	$7.3	$6.6
Cyclo G6 (Glaucoma)	$3.1	$3.3	$3.2
Other	$2.0	$2.1	$2.1
Total Revenue	$11.6	$12.7	$11.9

KPIs and operating metrics

KPI	Q3 2024	Q4 2024	Q1 2025
Cyclo G6 probe units (k)	13.6	13.3	13.9
Cyclo G6 systems sold	26	47	24
Operating Expenses ($M)	$6.19	$6.09	$5.26
Loss from Operations ($M)	$(1.87)	$(0.50)	$(0.21)
Other (Expense), net ($M)	$(0.05)	$(0.34)	$(1.47)
Cash & Cash Equivalents ($M)	$3.86	$2.39	$7.24

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA	FY 2025	Positive adjusted EBITDA in 2025	Positive adjusted EBITDA in 2025	Maintained
Cash Flow	FY 2025	Cash flow breakeven in 2025	Cash flow breakeven in 2025	Maintained
Revenue	FY 2025	Revenue consistent with 2024	Revenue consistent with 2024	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Cost discipline / EBITDA	Q3: cost actions initiated; Q4: achieved positive adj. EBITDA and OpEx down 24% YoY	Second consecutive positive adj. EBITDA; OpEx down 32% YoY	Improving, sustained
Reimbursement backdrop	New LCDs limit MIGS, potentially favoring IRIDEX laser therapies	Strategy to drive earlier/repeat MP3 use in mild/moderate glaucoma	Supportive tailwind
Product performance – Glaucoma	Q3: G6 resilient; probes stable YoY	G6 +8% YoY; MP3 probes above plan; G-Probe demand held despite price increase	Positive momentum
Product performance – Retina	Q3: retina softness, regulatory delays	Pascal slower early quarter; IQ strong; EndoProbes above plan but volatile	Mixed, stabilizing
Regions / Supply chain	Q3: some regulatory hurdles OUS	EMEA stable; Asia approvals support capital sales; China recovery; Japan rollout ongoing	Gradual improvement
Tariffs / Macro	Noted evolving backdrop	Minimal direct tariff exposure due to U.S.-based assembly/OEMs	Limited risk
Strategic actions	Q4: Novel investment announced; cost cuts ongoing	Working with Novel on partnerships, distribution, tuck-ins; leverage global base	Opportunity set expanding

Management Commentary

“We have returned to year over year revenue growth and decreased operating expenses to achieve our first two quarters of adjusted EBITDA positive results” — Patrick Mercer, CEO .
“Gross margin…increased…driven by favorable product mix and lower manufacturing expenses” — Romeo Dizon, CFO .
On tariffs: “We expect minimal direct exposure…Many competitors…face higher costs…This gives us a pricing and supply chain advantage” — Patrick Mercer .
On growth strategy with Novel: pursue portfolio expansion via distribution agreements, partnerships, or small accretive acquisitions to leverage global customer relationships .

Q&A Highlights

Tariffs/macro: Management reiterated minimal direct impact due to U.S.-centric sourcing and assembly; potential relative advantage vs import-reliant competitors .
Portfolio expansion: With Novel, IRIDEX is evaluating distribution/partnerships and tuck-in acquisitions to broaden offerings to its installed base .
Cash burn trajectory: Net cash used in operating activities improved to $1.1M in Q1 (−31% YoY); ongoing discipline expected to sustain positive adjusted EBITDA and cash flow breakeven in 2025 .

Estimates Context

S&P Global consensus for Q1 2025 EPS and Revenue was not available; IRIX appears to have limited formal coverage. We therefore cannot assess beat/miss against Street for the quarter. Values retrieved from S&P Global.*

Key Takeaways for Investors

Operating turnaround is taking hold: two straight positive adjusted EBITDA quarters with structurally lower OpEx, even as revenue remains near prior-year levels .
Glaucoma probes/MP3 adoption are key drivers; updated treatment settings, training, and sales tooling are catalyzing utilization and should support mix and margin quality over time .
Retina variability persists but appears manageable; system momentum (IQ/PASCAL) and OUS approvals underpin medium-term stabilization; EndoProbes remains a swing factor .
Balance sheet improved via Novel’s $10M financing; Lind note settled; cash up to $7.2M — providing flexibility to pursue margin initiatives (outsourcing, footprint) and portfolio expansion .
2025 guide maintained (cash breakeven, positive adjusted EBITDA on 2024-like revenue), setting a credible bar for sustained profitability, though non-operating items (e.g., write-offs) can obscure net income optics near-term .
Watch catalysts: execution on Novel-enabled partnerships/tuck-ins, sustained probe growth vs reusable competition in certain regions, and gross margin expansion from cost actions and mix .

Additional Detail and Cross-References

Revenue: $11.896M in Q1 2025 vs $12.696M in Q4 2024 and $11.581M in Q3 2024 .
EPS: $(0.10) in Q1 2025 vs $(0.05) in Q4 2024 and $(0.12) in Q3 2024 .
Gross margin: 42.5% in Q1 2025 vs 44.0% in Q4 2024 and 37.3% in Q3 2024 .
Adjusted EBITDA: $0.415M (Q1 2025); $0.369M (Q4 2024) .
Segment revenue (Q1 2025): Retina $6.6M; Cyclo G6 $3.2M; Other $2.1M .
Operating expenses: $5.26M (Q1 2025), down ~32% YoY; loss from operations improved to $(0.21)M .
Other expense: $(1.47)M in Q1 2025 due to write-off of Lind note origination costs .
Cash: $7.24M post Novel investment and Lind note settlement .

All quoted statements and figures are sourced from IRIDEX’s Q1 2025 press release and 8-K, Q1 2025 earnings call, and prior-quarter press releases as cited above.

IRIDEX CORP (IRIX)·Q1 2025 Earnings Summary