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NeuroPace Inc (NPCE)·Q4 2024 Earnings Summary

Executive Summary

  • Record Q4 revenue of $21.5M (+19% YoY) and gross margin of 75.4% (above the 72–74% FY24 guide range); FY24 revenue $79.9M (+22% YoY) and FY24 gross margin 73.9% (top end of guide) .
  • 2025 guidance maintained: revenue $92–$96M (+15–20%), gross margin 73–75%, OpEx $92–$95M incl. ~$11M SBC; management also targets 20%+ multi‑year revenue CAGR and cash flow breakeven over three years .
  • Liquidity strengthened via February equity offering (gross $74.8M; net ~$69.8M), with $49.5M used to repurchase ~5.3M shares from KCK Ltd.; pro forma cash/short‑term investments ~$68.6M as of Feb 28, 2025 .
  • Growth drivers: expanding adoption at Level 4 CECs, Project CARE momentum (higher Q4 referrals/implants vs Q3), and product initiatives (AI‑enabled tools, remote programming); regulatory catalysts: NAUTILUS IGE pivotal data and pediatric indication submissions planned for 2H25 .

What Went Well and What Went Wrong

What Went Well

  • Record quarterly revenue in Q4 and full‑year growth at top end of expectations; “revenue came in at the top end of the guide, gross margin came in at the top end of the guide, and OpEx came in toward the bottom end of the guide,” highlighting disciplined execution .
  • Project CARE traction: “increase in both the referrals as well as implants in Q4 over Q3,” contributing meaningfully to performance and slated for “CARE 2.0” scale‑up in 2025 .
  • Balance sheet de‑risked: net offering proceeds ~$69.8M; repurchased ~5.3M KCK shares to remove an overhang; pro forma liquidity ~$68.6M to fund operations to cash flow breakeven; ATM terminated .

What Went Wrong

  • Still loss‑making: Q4 operating loss $(3.7)M and net loss $(5.3)M, though improved YoY; FY24 net loss $(27.1)M .
  • DIXI mix a continuing margin headwind (lower margin than RNS) even as RNS volume and pricing support GM; management cautions quarterly variability and mix sensitivity in 2025 .
  • Execution risk on 2025–2026 catalysts: reimbursement policy expansion for new indications required; NAUTILUS readout/pediatric submissions targeted for 2H25 carry regulatory timing uncertainty; debt maturity 9/30/2026 .

Financial Results

Quarterly trend (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($M)$19.26 $21.06 $21.47
Gross Margin %73.4% 73.2% 75.4%
Operating Expenses ($M)$20.36 $19.66 $19.84
Operating Income (Loss) ($M)$(6.23) $(4.24) $(3.65)
Net Income (Loss) ($M)$(7.51) $(5.45) $(5.25)
Diluted EPS ($)$(0.26) $(0.19) $(0.18)
Cash & ST Investments ($M)$55.5 $56.8 $52.8
Long‑term Debt ($M)$59.0 $59.27 $59.53

Q4 YoY comparison

MetricQ4 2023Q4 2024
Revenue ($M)$18.01 $21.47
Gross Margin %75.2% 75.4%
Operating Expenses ($M)$18.60 $19.84
Net Income (Loss) ($M)$(6.20) $(5.25)
Diluted EPS ($)$(0.23) $(0.18)

Notes: Management also reported that, excluding NAUTILUS study cases in Q4’23, RNS sales grew 27% YoY, and DIXI comprised ~17% of FY24 revenue vs ~15% in FY23 .

Estimates comparison

  • S&P Global consensus estimates were unavailable at time of analysis due to temporary access limits; therefore, Street vs. actual comparisons are not included. One analyst noted GM performance was ~200 bps ahead of the Street’s thinking qualitatively, but no numeric consensus was cited during the call .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$92–$96M (Investor Day 1/28/25) $92–$96M (Q4 release 3/4/25) Maintained
Gross Margin %FY 202573%–75% 73%–75% Maintained
Total OpEx ($M)FY 2025$92–$95M incl. ~$11M SBC $92–$95M incl. ~$11M SBC Maintained
Multi‑year targets3‑year20%+ revenue CAGR; cash flow breakeven Reiterated Maintained

Context: FY24 revenue guidance was raised twice during 2024 (to $76–$78M after Q2 and to $78–$80M after Q3) and actual came in at $79.9M (top end) .

Earnings Call Themes & Trends

TopicQ2 2024 (8‑K)Q3 2024 (8‑K)Q4 2024 (Call/PR)Trend
AI/TechnologyBuilding next‑gen data platform; operating discipline; gross margin expansion Continued product dev incl. AI software; leadership hires Plan to launch first AI‑enabled seizure classifier in 2025; remote programming roadmap Accelerating productization
Project CARE/site of servicePilot underway; commercial org expanded “Meaningful increase” in implants/referrals; added sales reps Q4 referrals/implants increased vs Q3; launching “CARE 2.0” in 2025 Building momentum
Regulatory/clinicalExecuting NAUTILUS; broader access strategy Post‑approval study 3‑yr data submitted; Investor Day planned NAUTILUS 1‑yr follow‑up finishing Mar’25; data readout then FDA submission 2H25; pediatric NEST/RWD submission 2H25 2H25 catalysts
Commercial adoptionIncreased active prescribers; gross margin improved Record revenue; adoption expansion in CECs “Record levels” of active prescribers in 2024; pricing and contracting discipline help GM Broadening
Reimbursement——Existing coverage established; for new indications, policies to be expanded using evidence Manageable workstream
Financial disciplineCash burn improved; GM expanded Cash burn down to $1.8M; GM within guide Q4 GM above guide; OpEx growth +7% vs revenue +19%; target cash flow breakeven Sustained

Management Commentary

  • “Revenue came in at the top end of the guide, gross margin came in at the top end of the guide, and OpEx came in toward the bottom end of the guide,” underscoring “growth with discipline” .
  • “We saw an increase in both the referrals as well as implants in Q4 over Q3… a continued meaningful impact on the overall performance of the business” (Project CARE) .
  • “We plan to release our first AI‑enabled software tool later this year with an AI‑powered seizure classifier” to improve efficiency and care .
  • “We used approximately $49.5 million… to repurchase approximately 5.3 million shares… from KCK Ltd… [addressing] the potential overhang on our stock” .
  • NAUTILUS: complete 1‑yr follow‑up in March, then analysis and 2H25 FDA submission; plan a high‑profile publication/presentation around data lock and agency alignment .

Q&A Highlights

  • Guidance puts/takes: High‑end driven by Level 4 CEC adoption/utilization, Project CARE scaling (goal to more than double implants/referrals), DTC efforts, and steady DIXI contribution .
  • Capital allocation: Prioritize commercial expansion, DTC awareness, and CARE 2.0 in 2025 while preparing for scale‑up tied to indication expansion .
  • Gross margin drivers: Volume leverage, low single‑digit pricing, contracting discipline; 2025 GM guided 73–75% with quarterly variability from mix (DIXI) .
  • Reimbursement for new indications: Same coding; will work with payers to expand coverage criteria post‑evidence; management confident in policy expansion .
  • Cadence/seasonality: Historically stronger 2H vs 1H; 2024 grew 21% 1H and 23% 2H; expect similar cadence .

Estimates Context

  • S&P Global (Capital IQ) consensus for Q4 2024 revenue/EPS and the prior two quarters was unavailable at the time of analysis due to temporary access limits; therefore, explicit beat/miss vs Street is not included. An analyst remarked that gross margin was roughly 200 bps ahead of Street assumptions qualitatively, but no numerical consensus was cited on the call .

Key Takeaways for Investors

  • Execution quality: NPCE delivered record Q4 revenue and top‑end gross margin with controlled OpEx growth (+7% vs revenue +19%), improving operating losses and supporting the “growth with discipline” narrative .
  • 2025 setup intact: Guidance maintained (rev $92–$96M, GM 73–75%) with clear levers (Level 4 adoption, CARE 2.0, DTC) and operating discipline; multi‑year algorithm targets 20%+ CAGR and breakeven .
  • Catalysts: NAUTILUS IGE data/readout and pediatric RWD submission in 2H25, plus initial AI‑enabled software launch in 2025, can expand TAM and support adoption .
  • Liquidity and float: Post‑offering pro forma cash/short‑term investments ~$68.6M and removal of KCK overhang reduce financing/technical risk into catalysts; debt matures 9/30/2026 .
  • Watch margins/mix: RNS volume/pricing and contracting discipline support GM, but mix shifts toward DIXI can temper upside; quarterly GM variability likely within 73–75% guide .
  • Reimbursement workstream: Existing coverage is solid; for new indications, policy expansions should follow evidence—execution here will be pivotal for market expansion .
  • Near‑term trading lens: Without Street estimates, the narrative centers on reiterated 2025 guide, above‑guide FY24 GM, CARE momentum, and approaching trial milestones—updates on NAUTILUS timing and CARE 2.0 metrics are likely stock movers .

Appendices

Additional Q4‑related press releases and disclosures

  • Preliminary Q4/FY24 revenue (pre‑audit): Q4 $21.0–$21.5M; FY24 $79.4–$79.9M .
  • 2025 financial targets (Investor Day): revenue $92–$96M; GM 73–75%; OpEx $92–$95M incl. ~$11M SBC; 3‑yr 20%+ CAGR and cash flow breakeven .
  • Equity offering: proposed/priced/completed on Feb 13/14/18; gross proceeds ~$74.8M .

Selected KPIs

KPIQ2 2024Q3 2024Q4 2024
Cash Burn ($M)$(4.0) $(1.8) $(4.8)
Cash & ST Investments ($M)$55.5 $56.8 $52.8
R&D Expense ($M)$6.07 $5.75 $6.05
SG&A Expense ($M)$14.30 $13.91 $13.79

Segment note: No formal segment reporting; revenue growth primarily driven by increased RNS System sales with continued DIXI Medical contribution; DIXI was ~17% of FY24 revenue vs ~15% in FY23 .