What Management Said
Read the full Q4 2025 transcript ↗However, due to this regional shift of revenues into China and out of EIMEA, we had a $1.7 million higher margin deferral into future quarters, which impacted adjusted EBITDA. We expect to realize this margin as a positive adjusted EBITDA impact starting in the first half of fiscal 2026, as these products are delivered to their end customers. Now turning to the fiscal fourth quarter, total revenue for the quarter was approximately $128 million, down 5% year-over-year, driven by lower product revenue in our China and EIMEA businesses. Outside of these regions, we saw outstanding revenue performance in our APAC region, which was up 22%, driven by improved demand.
We were pleased to see a return to revenue growth in the Americas at 24%, with a solid conversion of backlog. Service revenue was a highlight for the quarter at $56.9 million, up 4% versus the prior year. We see tremendous opportunity in our service business for both revenue and margin expansion as we grow our installed base of customers. All regions showed installed base growth, with the exception of the U.S., which essentially remained flat.
From a regional perspective, the biggest highlights were 50% growth in orders in APAC and 34% year-over-year growth in Japan, followed by a 15% growth in China and a 12% growth in EIMEA. These were partly offset by slower order demand in the U.S., which was down as the replacement market had yet to recover in a meaningful way. Growth in the emerging markets where we have introduced new products like the Helix and Tomo C in China are seeing strong demand. These are among the highest growth markets in the world, which we are actively targeting and are an integral part of our growth plan in the next few years.
- Full-year fiscal 2025 revenue reached a record $459 million, up 3% year-over-year, with international now representing about 80% of total revenue.
- Service was a standout: fourth-quarter service revenue was $56.9 million, up 4%, and full-year service revenue rose 4% (the highest annual growth in several years), with contract revenue now about 90% of total service revenue.
- Service gross margins improved roughly 9 points year-over-year in Q4 on lower parts consumption and successful pricing initiatives.
- The company completed a comprehensive June 2025 debt refinancing, exchanging ~$82 million of 3.75% convertible notes and entering a new $190 million TCW senior secured facility that extends maturities five years and consolidates the capital structure.
- Regional strength offset developed-market softness: APAC revenue rose 22% and the Americas returned to growth at 24% in Q4, while full-year China product revenue grew 20% and the rest of APAC grew over 200%.
- Full-year adjusted EBITDA was $28.3 million, up 44% year-over-year, and backlog ended at about $427 million, representing over 18 months of product revenue.
- Fourth-quarter total revenue of ~$128 million was down 5% year-over-year, driven by lower product revenue in China and EIMEA.
- Geopolitics whipsawed the quarter: China revenue fell 14% on the April tariff escalation and EIMEA declined 34% on Middle East unrest in June, while Japan declined 11%.
- China JV accounting deferred $7.6 million of full-year margin (including a $1.7 million Q4 deferral) into future quarters, weighing on adjusted EBITDA.
- The company incurred about $4 million of cash tariffs in Q4, only roughly half of which was mitigated, with the remainder capitalized into inventory to hit the P&L over subsequent quarters.
- U.S. orders remained soft as the replacement market had not yet recovered, and the U.S. installed base was essentially flat.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Fiscal 2026 revenue | FY2026 | $471 million to $485 million |
| Fiscal 2026 adjusted EBITDA | FY2026 | $31 million to $35 million |
| Revenue phasing (H1/H2) | FY2026 | Roughly 45% first half / 55% second half; adjusted EBITDA roughly 30% first half / 70% second half |
| Foreign trade zone benefit | FY2026 (2nd half) | Assumed in guidance; expected to mitigate a significant portion of tariffs once the manufacturing site is designated a foreign trade zone |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Total revenue (Q4) | -5% to ~$128 million | Lower product revenue in China (tariffs) and EIMEA (Middle East unrest), partly offset by strong APAC and Americas. |
| Full-year revenue | +3% to a record $459 million | International growth (China +20% product, rest-of-APAC +200%) and record service revenue offset developed-market declines. |
| Service revenue (Q4) | +4% to $56.9 million | Installed-base growth, higher contract capture and value-added offerings; contract revenue ~90% of service revenue. |
| Q4 gross margin | +200 bps to 30.6% | Service margins up ~9 points on lower parts consumption and pricing, partly offset by China margin deferrals in product. |
| Full-year adjusted EBITDA | +44% to $28.3 million | Cost control, service margin expansion and revenue growth, despite a $7.6 million China JV margin deferral. |
| Backlog | ~$427 million (>18 months of product revenue) | Book-to-bill of 1.2 for the quarter and full year supported strong revenue visibility. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Tariff mitigation | April 2025 US-China tariff escalation (145%/125%) | Duty drawback program active, drop-shipping to bonded warehouses, dual-sourcing, and pursuit of a US foreign trade zone; ~50% of Q4 cash tariffs mitigated. | — |
| Service as a recurring-revenue engine | Growing installed base | Record full-year service growth (+4%), Accuray Care R&D initiative to cut parts consumption and downtime; targeted as a durable revenue and margin driver. | — |
| Emerging-market expansion | Tomo C (China) and Helix (India) launches | Emerging markets now the majority of revenue, grown at ~9% CAGR over three years; Helix expanding to India, Bangladesh, Morocco and Latin America. | — |
| Balance-sheet reset | SVB debt and 2026 convertible notes | June 2025 TCW refinancing extended maturities five years and added liquidity for high-ROI initiatives. | — |
| Margin expansion program | ERP completion and restructurings | Focused internal initiative to simplify processes, harness GenAI, reduce indirect costs and optimize value-based pricing ahead of the next growth cycle. | — |
Q&A Summary
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