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NeuroPace Inc (NPCE)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarter: revenue $27.35M (+30% YoY), gross margin 77.4%, operating loss narrowed to ($2.6)M; net loss per share improved to ($0.11) .
  • Clear beat vs Street: revenue $27.35M vs $24.63M estimate (+$2.72M), EPS ($0.11) vs ($0.195) estimate; EBITDA modest beat; drivers were broad-based RNS System adoption, Project CARE, and manufacturing/pricing mix tailwinds . Consensus figures marked with * retrieved from S&P Global.
  • Guidance raised: FY25 revenue to $97–$98M (from $94–$98M), gross margin to 76–77% (from 75–76%), OpEx to $94–$95M (from $92–$95M). Q4 mix guided to RNS $20–$21M, DIXI ~$3M, services ~$0.75M .
  • Strategic catalysts: NAUTILUS PMA supplement for IGE on track to submit by year-end (180-day review implies mid-2026), SeizureID AI tool submitted to FDA; pediatric indication via real‑world evidence pushed beyond 2025 .

What Went Well and What Went Wrong

What Went Well

  • RNS System momentum: $22.6M revenue (+31% YoY), with “all sales regions” exceeding plans; prescribers, accounts, and utilization reached all-time highs .
  • Margin quality: total gross margin 77.4% (vs 73.2% LY; 77.1% Q2), with RNS margin “above 80%” on manufacturing efficiency and favorable pricing .
  • Operating leverage and adjusted EBITDA: operating loss improved to ($2.6)M; adjusted EBITDA turned positive ~$0.1M for the first time, reflecting disciplined expense management and mix .
    • CEO: “We delivered record revenue growth with strong gross margin… advancing key clinical and product development initiatives” .

What Went Wrong

  • DIXI drag and tariffs: lower-margin DIXI products (slightly below 50% GM) and incremental tariffs diluted overall margins; DIXI winds down through Q1’26 .
  • OpEx tick-up: Q3 OpEx rose to $23.8M (+21% YoY), driven by sales overperformance and higher variable compensation; FY OpEx guide raised to $94–$95M .
  • Pediatric timing extended: real‑world evidence submission timing “extends beyond 2025,” delaying a potential incremental growth lever .

Financial Results

Quarterly Performance (Actuals)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$22.52 $23.52 $27.35
Gross Margin %77.0% 77.1% 77.4%
Total Operating Expenses ($USD Millions)$22.49 $24.96 $23.77
Net Loss Per Share ($USD)($0.21) ($0.26) ($0.11)

Q3 2025 vs Wall Street Consensus

Consensus values marked with * retrieved from S&P Global.

MetricEstimate*ActualSurprise
Revenue ($USD)$24,634,830*$27,354,000 +$2,719,170
Primary EPS ($USD)($0.1949)*($0.11) +$0.0849
EBITDA ($USD)($2,655,790)*($2,546,000) +$109,790

Segment Revenue (Q3 2025)

SegmentQ3 2025 Revenue ($USD Millions)
RNS System$22.6
DIXI Products~$4.0
Research Service Revenue~$0.77

Selected KPIs and Operating Metrics

  • Cash, cash equivalents and short-term investments: $60.0M; long-term borrowings: $58.7M (as of 9/30/25) .
  • Free cash flow (Q3): approximately ($2.0)M; adjusted EBITDA: +$0.1M (ex‑SBC) .
  • Prescribers, accounts, utilization: all-time highs (qualitative) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025$94–$98M $97–$98M Raised low end
Gross Margin %FY 202575–76% 76–77% Raised
Total Operating ExpensesFY 2025$92–$95M $94–$95M Raised low end
Sales & MarketingFY 2025$46–$47M $47–$48M Raised
Research & DevelopmentFY 2025$27–$28M ~$28M Upper end
General & AdministrativeFY 2025$19–$20M ~$19M Lower end
Interest ExpenseFY 2025~$8M ~$8M Maintained
Interest IncomeFY 2025~$2.5M ~$2.5M Maintained
RNS RevenueQ4 2025N/A$20–$21M New disclosure
DIXI RevenueQ4 2025N/A~$3M New disclosure
Research Service RevenueQ4 2025N/A~$0.75M New disclosure

Earnings Call Themes & Trends

TopicQ1 2025 (Prior-2)Q2 2025 (Prior-1)Q3 2025 (Current)Trend
RNS adoption & marginRecord revenue, 77.0% GM; focus on RNS portfolio and DIXI wind-down RNS GM >80%, total GM 77.1% Broad-based RNS growth; total GM 77.4%; RNS GM >80% Improving mix and leverage
Project CARE (community)Building momentum; implants/referrals up vs Q4’24 Sequential increases in site engagement and implants Sequential and YoY contribution; complementary to Level 4 centers Scaling
NAUTILUS (IGE)Topline planned H2’25 Strong safety; secondary endpoints highly significant; 18–24M median GTC reduction >80% indicated FDA pre-sub done; PMA-S submission by YE25; mid-2026 timing implied Regulatory progress
Pediatric indicationIntent to submit in 2025 —RWE protocol timing extends beyond 2025 Slower timeline
AI/SeizureIDAI tools under development Next-gen classifier learning from 22M events SeizureID submitted to FDA; suite of NeuroPace AI apps Advancing
Reimbursement (CMS IPPS)—DRG maintained; stability affirmed —Stable
DIXI wind-downAnnounced wind-down starting Q4’25 through Q1’26 Debt refinance; reiterated wind-down; mid-teens % of revenue historically Contract ended 9/30; six-month wind-down; minimal inventory risk Exiting line

Management Commentary

  • CEO: “We delivered record revenue growth with strong gross margin, operating and cash discipline while advancing key clinical and product development initiatives… establishing the RNS System as the standard of care in drug-resistant epilepsy” .
  • CFO: “Adjusted EBITDA turned positive, reflecting scalability and disciplined expense management… we are raising both full-year revenue and gross margin guidance” .
  • On NAUTILUS: “We believe the safety and effectiveness profile supports a favorable benefit-risk… PMA supplement on track to submit before year-end” .
  • On SeizureID: “Designed to improve clinical outcomes and accelerate iEEG review… making RNS more accessible and improving efficiency” .

Q&A Highlights

  • 2026 outlook: Company reiterates confidence in 20%+ RNS growth baseline, with DIXI substantially complete by end-2025; 2026 should be modeled as an RNS-only business .
  • Q4 dynamics: RNS off to a “solid start” with pipeline strength; overall gross margin implied step-down largely mix-related (potential DIXI sales variability) .
  • Pediatric submission: timing extends beyond 2025; focus on fit-for-purpose RWE design to align with FDA, with potential for time savings post-submission .
  • Replacements: currently <10% of revenue, mid-single-digit by quarter; initial implants remain the focus .
  • Partnerships: Rapport collaboration extended; new UCB collaboration; service revenue ~$0.77M in Q3; monetization opportunities with high-margin data services .

Estimates Context

  • Q3 beats: revenue $27.35M vs $24.63M estimate; EPS ($0.11) vs ($0.195) estimate; EBITDA ($2.546M) vs ($2.656M) estimate. Outperformance driven by stronger RNS volumes across regions, prescriber/base expansion, and margin tailwinds from product mix and manufacturing efficiencies .
  • Q4 setup: guidance mix implies total revenue ~$23.75–$24.75M, broadly bracketing consensus ~$24.35M; Street EPS estimate ($0.186)* .
  • Consensus values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Operational momentum: RNS growth and margin quality are accelerating, with adjusted EBITDA positive—suggesting improving path to profitability as mix shifts away from DIXI .
  • Guidance credibility: Raised FY revenue and margin ranges, plus detailed Q4 mix components, provide clearer modeling guardrails and reduce uncertainty .
  • Near‑term catalysts: NAUTILUS PMA-S submission by YE25 and SeizureID FDA review—both can expand utilization and support narrative on personalized neuromodulation .
  • 2026 margin baseline: With DIXI exit, model gross margin ≥80% on RNS-only mix; replacement cycle remains small near term (<10%) .
  • Watch pediatric RWE timing: extended beyond 2025; eventual approval could broaden addressable market and accelerate growth .
  • Data monetization optionality: Partnerships (Rapport, UCB) and services revenue provide high-margin ancillary streams; scale of proprietary EEG dataset is a competitive moat .
  • Trading implications: The beat-and-raise and positive adjusted EBITDA should be supportive; mid-2026 IGE timeline and AI submissions are the next catalysts. Near term, Q4 mix (DIXI) may modestly pressure consolidated margins, but RNS strength remains intact .
Note: Consensus estimates denoted with * are values retrieved from S&P Global.