Executive Summary
Accuray reported robust top-line momentum in Q3 FY2025, with total net revenue of $113.2 million, up 12% year over year (YoY) and 14% on a constant currency basis. Product revenue rose 16% YoY, while service revenue increased 9% YoY, underscoring the company’s multi-channel growth and the strategic emphasis on services as a margin and cash-flow lever. The quarter featured a constructive mix, with services accounting for about 49% of revenue and 59% of gross margin, contributing to an adjusted EBITDA of $6.0 million, up from $1.1 million a year ago. Order activity remained healthy, as evidenced by a book-to-bill ratio of 1.2x and a backlog of approximately $452 million, which supports visible demand in the near term. However, gross margin declined modestly to 27.9% from 28.7% in the prior year, driven largely by a 1.3 percentage-point incremental China margin deferral tied to shipments to a joint venture rather than end customers, partially offset by higher service margins and broader volume growth.
Key Performance Indicators
QoQ: -77.76% | YoY:122.95%
QoQ: -151.12% | YoY:79.55%
QoQ: -162.00% | YoY:75.74%
Key Insights
Revenue: $113.2M (+12% YoY; +14% CC); Gross Margin: 27.9% (vs 28.7% prior year); Operating Income: $1.0M (YoY improvement from -$4.6M); Net Income: -$1.30M; EPS: -$0.015; Product Revenue: $57.0M (+16% YoY); Service Revenue: $56.0M (+9% YoY); Book-to-Bill: 1.2x; Backlog: ~$452M; Cash & Equivalents: ~$80.2M; Free Cash Flow: $17.1M; Adjusted EBITDA: $6.0M; YoY gross margin drivers and Q4 tariff exposure noted; guidance reaffirmed for FY25....
Financial Highlights
Revenue: $113.2M (+12% YoY; +14% CC); Gross Margin: 27.9% (vs 28.7% prior year); Operating Income: $1.0M (YoY improvement from -$4.6M); Net Income: -$1.30M; EPS: -$0.015; Product Revenue: $57.0M (+16% YoY); Service Revenue: $56.0M (+9% YoY); Book-to-Bill: 1.2x; Backlog: ~$452M; Cash & Equivalents: ~$80.2M; Free Cash Flow: $17.1M; Adjusted EBITDA: $6.0M; YoY gross margin drivers and Q4 tariff exposure noted; guidance reaffirmed for FY25.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
113.24M |
11.98% |
-2.52% |
| Gross Profit |
31.63M |
8.78% |
-24.50% |
| Operating Income |
1.05M |
122.95% |
-77.76% |
| Net Income |
-1.30M |
79.55% |
-151.12% |
| EPS |
-0.02 |
75.74% |
-162.00% |
Key Financial Ratios
operatingProfitMargin
0.93%
operatingCashFlowPerShare
$0.18
freeCashFlowPerShare
$0.17
priceEarningsRatio
-35.48
Management Commentary
Key management themes from the QQ3 2025 earnings call include resilience in revenue growth and a clear emphasis on services as a driver of margin and cash flow, ongoing tariff headwinds from U.S.-China policies, and a strategic focus on geographic diversification and operational improvements. Highlights include: (1) Revenue momentum: “Revenue for the quarter was solid, growing at 12% year-over-year” (CEO Suzanne Winter). (2) Orders and backlog: “Our book-to-bill was over 1.2x this quarter” and “We ended the third quarter with an order backlog of approximately $452 million.” (3) Service excellence: “service revenue grew by 9% year-over-year. This quarter represented approximately 49% of our revenue and 59% of our gross margin.” (4) Tariff-related risk: “there is a potential negative impact of $10 million to $15 million in Q4 revenue as a direct result” of tariffs and China exposure, with mitigations in place. (5) Guidance and outlook: management reaffirmed “adjusted EBITDA guidance range of $28.5 million to $31 million” for FY25 and signaled ongoing optimization of costs and regional contributions to offset China headwinds. (6) Regional momentum: strength in non-China APAC (Japan, Thailand, Taiwan, Korea) and UK stimulus-driven orders; continued attention to U.S. market recovery. (7) Balance sheet and capital structure: cash generation and inventory discipline supported a leaner balance sheet while exploring refinancings to optimize capital structure.
Revenue for the quarter was solid, growing at 12% year-over-year.
— Suzanne Winter
There is a potential negative impact of $10 million to $15 million in Q4 revenue as a direct result of tariffs.
— Ali Pervaiz
Forward Guidance
Near-term visibility remains constrained by tariff developments, but Accuray maintains a constructive outlook anchored by backlog visibility, regional demand diversification, and continued service-margin expansion. Near-term guidance for Q4 FY2025: Revenue in the range of $121–$129 million and Adjusted EBITDA of $9.5–$12 million, excluding potential incremental tariff costs. Full-year FY2025 guidance remains the Adjusted EBITDA range of $28.5–$31 million. The company notes that China-origin shipments could weigh on near-term revenue by approximately $10–$15 million in Q4, with the potential to offset some impact via higher contributions from other regions and services. Key factors investors should monitor include: (1) progress on tariff exemptions or policy changes affecting medical-device imports, particularly in China; (2) progression of non-China APAC and UK/EU demand; (3) service-revenue growth trajectory and SaaS monetization; (4) capital-structure actions and refinancing opportunities; (5) currency/headwinds and potential product mix shift toward higher-margin service offerings. Overall, management appears confident in mitigating near-term tariffs and delivering a stable path to the FY25 EBITDA goal if regional demand remains resilient.