RxSight, Inc. (RXST)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue was $37.9M (+28% YoY, -6% QoQ), with gross margin 74.8% driven by lower LAL costs and favorable mix; GAAP EPS was -$0.20, adjusted EPS was -$0.03 .
• The company cut FY2025 guidance on April 2 (revenue to $160–$175M, OpEx to $150–$160M, SBC to $27–$30M) and then reiterated this on May 7; prior FY2025 revenue guidance was $185–$197M and OpEx $165–$170M with SBC $22–$25M .
• Procedure volume headwinds stemmed from macro pressure and competitive trialing in premium IOLs, while LDD demand and installed base growth remained strong (installed base 1,044 at March 31) .
• Near-term narrative shift: pre-announced miss and guidance reset were the stock-reaction catalysts; management expects stabilization in Q2 and stronger LAL recovery in H2 on clinical/marketing initiatives and software updates .

What Went Well and What Went Wrong

• What Went Well

  • Strong gross margin execution: 74.8% in Q1 2025, aided by lower LAL cost recognition, higher-volume builds in 2024, and mix shift toward LAL revenue (72% of total) .
  • Installed base expansion: 73 LDDs sold in Q1; installed base reached 1,044 (+43% YoY) supporting future procedure capacity .
  • Product and regulatory momentum: ahead-of-schedule software update adding spherical aberration treatment and LDD monitoring; approvals in South Korea and EU LDD/LAL, with U.K. expected in Q2 .
  • Quote: “We are ahead of schedule in launching a previously announced software update… opening the door for further improvements in clinical results compared to fixed IOL technology.” — Ron Kurtz .

• What Went Wrong

  • Volume headwinds: first top-line miss since Q3 2021; first YoY drop in LALs per LDD metric due to macro softness and competitive trialing .
  • Guidance reset: FY2025 revenue cut to $160–$175M and OpEx lowered to $150–$160M with higher SBC; signals weaker near-term LAL volumes and spend reprioritization .
  • Practice capacity and workflow: staffing challenges and desire for more clinical/marketing guidance hindered same-store growth; seasonally strong Q2 cautioned due to macro/trialing .

Financial Results

• Actuals across periods

• Product mix (Q1 2025)

• KPIs

• Q1 2025 vs Wall Street consensus (S&P Global)

Values retrieved from S&P Global.*

Key drivers and commentary:

• Gross margin strength reflects cost timing and 2024 production volume leverage to stock ASCs for LAL+; some benefit spills into Q2, with lower gross margin expected later in 2025 given reduced production vs initial plan .
• Mix shift to higher-margin LAL increased LAL share to 72% of revenue, aiding margin performance .
• Elevated OpEx reflects personnel growth, registry data collection for LAL+, and higher SBC .

Guidance Changes

Management cadence and phasing:

• Q2 seasonally strong historically, but management cautions due to macro/trialing; expects LAL recovery in H2 with clinical education, marketing support, and software upgrade touchpoints .

Earnings Call Themes & Trends

Management Commentary

• Strategic focus: “Targeted programs focused on same-store procedure growth, while also continuing to develop the broader opportunity via the addition of new customers and markets.” — Ron Kurtz .
• On innovation: “Launching… a unique spherical aberration treatment option… first such application in cataract surgery, opening the door for further improvements… compared to fixed IOL technology.” — Ron Kurtz .
• On guidance/trajectory: “We are reiterating our full year 2025 guidance… Revenue of $160 million to $175… with stronger recovery in LAL procedure volume anticipated in the second half of 2025.” — Shelley Thunen .
• On market positioning: “More than 40 physician presentations… reaffirmed the distinct position our technology continues to hold within the premium IOL market.” — Ron Kurtz .

Q&A Highlights

• Timing of commercial initiatives: Expected impact in H2 given macro and competitive dynamics .
• Quarterly cadence: No quarterly guidance; caution on typical Q2 seasonality, recovery more H2-weighted; LDD sales to remain above 2024 levels .
• Practice constraints: Staffing/workflow challenges cited; company compiling and disseminating best-practice “pearls” to improve adoption .
• International strategy: Market-by-market; distributors where required (e.g., South Korea); direct vs distributor as appropriate; products exempt from tariffs in current OUS markets; all production U.S.-based .
• Treatment centers: Freestanding LDD service centers emerging; early-stage but promising for access/utilization .

Estimates Context

• Q1 2025 results vs consensus: Revenue essentially in-line ($37.895M actual vs $37.906M consensus*); adjusted/normalized EPS beat significantly (-$0.03 actual vs -$0.216 consensus*) .
• Given FY2025 guidance reduction, Street models likely need lower revenue and higher SBC assumptions near term; margin trajectory tempered by reduced 2025 production volumes vs initial plan .

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Guidance reset and pre-announcement drove the narrative; near-term headwinds are macro and competitive trialing, with management actions targeting same-store growth and customer enablement .
• Gross margin execution was strong and sustainable within 71–73% FY guide, but Q1’s 74.8% was boosted by prior production timing; expect moderation later in the year .
• Installed base growth (1,044 LDDs) underpins medium-term procedure upside; H2 recovery hinges on practice throughput and adoption programs .
• Product differentiation advancing: spherical aberration treatment and monitoring features deepen clinical value; regulatory progress opens targeted OUS markets (South Korea, EU, U.K.) .
• Capital allocation: OpEx lowered with flexibility to reinvest in sales/marketing if traction improves; strong cash position ($229.3M) supports path to breakeven .
• For trading: Watch procedural volume trajectory updates (monthly/quarterly color), competitive trialing intensity, and progress of software rollouts; H2 inflection is management’s core premise .
• For the thesis: LAL remains structurally differentiated; market penetration (10–12% of U.S. surgeons) suggests long runway, with execution on workflow/education critical to re-accelerate growth .