NI
NeuroPace Inc (NPCE)·Q1 2025 Earnings Summary
Executive Summary
- Q1 2025 revenue reached $22.5M (+24% YoY) with gross margin of 77.0%, both record levels for the company; RNS System sales rose 26% YoY (29% excluding NAUTILUS study implants in Q1 2024) .
- Results beat Wall Street: revenue $22.5M vs consensus $21.8M*, EPS (-$0.21) vs consensus (-$0.235)*; management raised FY25 revenue guidance to $93–$97M (from $92–$96M) while maintaining GM 73–75% and OpEx $92–$95M .
- Strategic updates: portfolio refocus to core RNS (SEEG distribution to wind down in Q4’25–Q1’26), minimal tariff impact expected, and strong 3‑year PAS data (82% median seizure reduction; 42% ≥6‑month seizure‑free) to support adoption .
- Near-term catalysts: NAUTILUS pivotal data and FDA submission in 2H 2025; continued Project CARE expansion and AI-enabled software release in 2H 2025 .
What Went Well and What Went Wrong
What Went Well
- Record quarterly revenue and margin execution: $22.5M revenue (+24% YoY) and 77.0% GM, driven primarily by higher RNS volumes and manufacturing efficiencies .
- RNS adoption momentum and prescriber growth, aided by Project CARE referrals/implants; CEO: “We had a strong first quarter… driven by strong growth in our core RNS business” .
- Compelling clinical validation: PAS 3‑year data showed an 82% median seizure reduction and 42% of patients with ≥6 months seizure‑free; management is leveraging the data in field engagement .
What Went Wrong
- Operating expenses rose 8% YoY to $22.5M on increased R&D (AI and next-gen platform) and clinical trial costs; net loss was $6.6M (vs $8.9M in Q1’24) .
- Cash burn increased to $7.5M in Q1 (from $4.8M in Q4’24 and $1.8M in Q3’24), though balance sheet strengthened via equity raise; CFO expects sufficient cash to reach breakeven per long-range plan .
- Gross margin guidance implies a step-down from Q1’s 77% despite RNS strength; CFO reiterated quarter-to-quarter variability and maintained 73–75% full-year GM .
Financial Results
- Versus estimates (Q1 2025): Revenue $21.85M* consensus vs $22.52M actual; EPS (-$0.235)* consensus vs (-$0.21) actual; # of estimates: Revenue (7), EPS (6). Values retrieved from S&P Global.
KPIs and Operating Metrics
Note on segments: NPCE does not disclose quarterly segment revenue; management indicated RNS GM >78% and SEEG ~50% GM, with SEEG ~17% of FY2024 revenue .
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- CEO on commercial execution: “We had a strong first quarter… driven by strong growth in our core RNS business… expanding access to RNS therapy, with another quarter of a record number of prescribers and ongoing momentum from our Project CARE access initiative” .
- CEO on clinical evidence: “This study… showed an 82% median reduction in seizures… 42% of study participants had periods of more than 6 months of seizure freedom” .
- CFO on margin drivers: “Gross margin was particularly strong… benefiting from improved manufacturing efficiency… partially offset by lower gross margin from SEEG distribution” .
- CEO on product strategy: “We are… refocused… on our RNS business… make the RNS System the standard of care… we do not anticipate any material revenue impact in 2025” .
- CEO on forward plan: “We continue to expect a 20% plus CAGR through 2027, and remain on track for achieving cash flow breakeven by year end 2027” .
Q&A Highlights
- Gross margin sustainability: Management highlighted durable levers (volume absorption, reasonable price increases); cautioned quarter-to-quarter variability despite strong Q1 print .
- Project CARE impact: Referrals from Level 3/community centers into Level 4 are rising; multi-center activation and programming expansion underway; hiring cadence supports expansion .
- AI/software timing and monetization: 2H 2025 software release remains on track; focus on ease-of-use and efficiency to drive implants; monetization options under consideration longer term .
- SEEG exit and funnel visibility: NPCE expects to retain upstream visibility via existing relationships and process muscle; transition coordinated to keep customers well served .
- PAS data field reaction: Early physician engagement is positive; management “launched” the data like a product to drive education and differentiation vs VNS/DBS .
Estimates Context
- Q1 2025 results vs S&P Global consensus: Revenue beat ($22.52M vs $21.85M*), EPS beat ((-$0.21) vs (-$0.235)); 7 revenue and 6* EPS estimates supported consensus .
- Implications: Street models likely to lift FY25 revenue toward the new $93–$97M guide and reflect stronger GM mix from RNS; GM still guided 73–75% due to quarterly mix variability .
Note: Values marked with * are retrieved from S&P Global.
Key Takeaways for Investors
- Beat-and-raise quarter: Revenue and EPS exceeded consensus, and FY25 revenue guidance was increased; GM at 77% demonstrates operating leverage from RNS volumes .
- Adoption drivers strengthening: Project CARE referrals plus record prescribers underpin near-term growth, with direct‑to‑patient efforts enhancing funnel quality .
- Clinical and regulatory catalysts: PAS 3‑year outcomes bolster differentiation; NAUTILUS pivotal data/FDA submission targeted in 2H 2025, with pediatric submission similarly timed .
- Margin trajectory: Near-term margin benefits tied to RNS scale and SEEG wind-down; management still guides 73–75% recognizing mix variability .
- Cash runway intact: $66.3M cash & ST investments and long-term debt maturity in Sept 2026; management expects sufficient resources to breakeven per long-range plan .
- Portfolio focus: SEEG exit is margin accretive, allows commercial focus on RNS; no material FY25 revenue impact expected during inventory wind-down .
- Trading setup: Near-term stock narrative supported by raised guidance, clinical differentiation, and approaching NAUTILUS milestones; monitor quarterly GM cadence relative to 73–75% guide .