Pulmonx Corp (LUNG)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 revenue was $21.5M, up 5% YoY and down sequentially vs Q2; gross margin expanded to 75% and EPS improved to -$0.34. International revenue grew 15% YoY, partially offset by reduced revenue from China, while U.S. grew 1% YoY and added nine new centers .
• Results were modestly above Street: revenue beat consensus by ~$0.6M and EPS beat by ~$0.08; management lowered FY 2025 guidance for revenue (to $89–$90M) and gross margin (~73%), while reducing OpEx to $125–$126M . Consensus details below (S&P Global).
• Leadership transition: Glen French returned as CEO and Derrick Sung as COO/CFO; both emphasized refocusing spend, extending cash runway, and driving operating leverage, with a bottoms-up plan underway .
• Near-term stock narrative catalysts: lowered revenue/gross margin guidance, cost discipline initiatives, and CEO/CFO return aimed at execution improvement; international strength vs U.S. deceleration and China headwinds remain key watch items .

What Went Well and What Went Wrong

What Went Well

• International strength: Q3 international revenue grew 15% YoY to $7.5M (9% cc), driven by Europe, supporting consolidated gross margin expansion to 75% .
• Expense discipline signaled: FY 2025 OpEx guidance cut to $125–$126M (incl. ~$21M SBC), with management committing to extend cash runway and prioritize higher-return initiatives .
• Execution-focused leadership: CEO/CFO return with clear emphasis on operating leverage and a line-by-line spend review; “extend cash runway” via reallocating spend rather than external financing .

What Went Wrong

• U.S. growth deceleration: Q3 U.S. revenue grew just 1% YoY to $14.0M despite adding nine new centers, reflecting slower conversion of commercial initiatives .
• Guidance lowered: FY 2025 revenue revised down to $89–$90M from $90–$92M in Q2; gross margin revised to ~73% (from ~74%), reflecting more conservative operating expectations .
• China headwinds: International growth was “partially offset by a reduction of revenue from China,” highlighting regional exposure risks .

Financial Results

*Values retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We must now thoughtfully realign spending with growth expectations to put ourselves back on a sustainable path to profitability… [conducting] a line-by-line review of all programs and spending” — Glen French, CEO .
• “Total worldwide revenue… was $21.5 million… U.S. revenue… $14 million… International revenue… $7.5 million… Gross margin… ~75%… We expect full year 2025 revenue… $89–$90 million… gross margin ~73%… OpEx $125–$126 million” — Derrick Sung, COO/CFO .
• “We intend to operate with a renewed focus to ensure that our investments, resources, and operational efforts are aligned with sustainable, profitable growth” — Glen French .

Q&A Highlights

• Strategic alternatives: Management declined to speculate on asset sales/partnerships, emphasizing focus on profitable execution in the near term .
• U.S. growth drivers: Acknowledged heterogeneity across territories; plan to lift underperforming regions via “blocking and tackling” and best-practice transfer; not ready to detail structural vs people issues .
• Referral/workup process: Complexity acknowledged; throughput and resource allocation at best accounts drive higher patient volumes; aim to improve process efficiency across centers .
• Guidance confidence and cash runway: Provided a range with “high degree of confidence,” moving with urgency to reallocate spend toward measurable impact; extending cash runway via spend focus rather than external financing .
• Resource allocation: Expect discriminating investment toward highest-return programs rather than geographic cuts; specifics to come on Q4 call .

Estimates Context

• Q3 2025 vs Street: Revenue $21.502M vs $20.900M consensus (beat); EPS -$0.34 vs -$0.418 consensus (beat). Target price consensus mean $5.75. # of estimates: 6 for revenue and EPS*.
• FY 2025 consensus: Revenue ~$89.6M; EPS -$1.462*.
• Implications: Modest quarterly beat, but lowered FY guidance likely prompts estimate resets on revenue and gross margin; OpEx guidance cut supports improving FCF trajectory assumptions*.

*Values retrieved from S&P Global.

Key Takeaways for Investors

• International strength and gross margin expansion were positives, but U.S. growth remains the swing factor; watch conversion of newly added centers and process efficiency initiatives .
• FY 2025 guidance reset (revenue and margin lower) balances the quarter’s beat; expect consensus nudges down on topline/GM and modestly down on EPS, partially offset by OpEx reduction .
• Leadership change is a key narrative pivot: expect near-term updates on spend reallocation, operating leverage roadmap, and “areas with greatest return on capital” on the next call .
• China exposure is a headwind within otherwise solid OUS growth; monitor Europe momentum and any incremental commentary on China .
• Cash and liquidity: $76.5M cash/cash equivalents at quarter-end; management aims to extend runway via cost focus, reducing burn (Q3 EBITDA loss of ~$8.2M) .
• Near-term trading lens: Beat/guide-down setup with execution-over-talk tone; stock likely sensitive to tangible evidence of U.S. same-store growth and cost actions in Q4 .
• Medium-term thesis: Zephyr Valve’s clinical/reimbursement foundation intact; thesis shifts to execution discipline and operating leverage under returning leadership to convert a strong gross margin model into profitable growth .

Appendix: Source Documents

• Q3 2025 earnings press release and 8-K: financials, guidance, and exhibits .
• Q3 2025 earnings call transcript: prepared remarks and Q&A – –.
• Management transition & preliminary revenue press release (Oct 27): leadership changes; prelim Q3 revenue –.
• Prior quarters for trend analysis: Q2 2025 8-K and press release ; Q1 2025 8-K and press release .