What Management Said
Read the full Q3 2026 transcript ↗Total revenue was approximately $105 million, up 3% sequentially, down 7% year-over-year. Additionally, our business in China continues to face headwinds that we discussed during our last earnings call, which pertained to geopolitical tensions and ongoing tariff uncertainty. Given such uncertainty, we believe the responsible approach is to withdraw our financial guidance at this time. This plan was designed to sharpen accountability, tighten cost control, and accelerate execution while positioning Accuray for sustainable, profitable growth over the long term.
We will provide an updated view on these annualized improvements on our fourth quarter earnings call. We will launch packages to add software solutions to our service agreements, which we believe strengthens recurring revenue opportunities and improves customer engagement over time. During the quarter, we have made enhancements to our service systems, which are designed to improve cash conversion and margin quality. This work is designed to support competitive wins at appropriate margins and is expected to translate into stronger sales quality and margin expansion over time.
Paul brings more than two decades of experience leading and scaling global capital medical device businesses across the Americas, EMEA, and APAC regions. In prior roles, his leadership helped drive the reversal of revenue decline trends and helped deliver double-digit annual growth. Each bring distinct capabilities across imaging, software, workflow innovation, clinical research, treatment continuity, and operational execution. Together, these partnerships allow us to deliver more comprehensive solutions to radiation medicine teams while improving speed to market and capital efficiency.
- Revenue of ~$105 million grew 3% sequentially, and the service business remained resilient at $55.1 million with a service contract capture rate of nearly 90% of active systems.
- The transformation ran ahead of plan: ~$10 million of the originally targeted $12 million of fiscal 2026 improvements were already achieved, and management expects to exceed the $12 million target and realize at least $25 million annualized in fiscal 2027.
- Adjusted operating expenses (excluding restructuring and a prior-year item) fell about $6 million or 18% year-over-year, showing cost actions taking hold.
- Paul Miele joined as Chief Commercial Officer, bringing more than two decades of global capital medical-device leadership, alongside a new VP of distributor partnerships.
- Accuray advanced a partnership-driven strategy -- a Radiosurgery Society-sponsored multi-center motion-tracking registry plus collaborations with the University of Wisconsin-Madison and Tata Consultancy Services -- and secured $0.6 million of service price favorability from renewal pricing.
- Net revenue fell 7% year-over-year (down 10% constant currency) to $104.8 million, with product revenue down 13% to $49.7 million.
- Product shipments to certain Middle East, North Africa and Pakistan customers were delayed indefinitely due to geopolitical disruption, also hitting service revenue by about $1.2 million.
- China continued to face geopolitical and tariff headwinds, adding volatility largely outside the company's control.
- Overall gross margin fell to 24.1% from 27.9%, driven by service margins of 26.1% (vs. 33.3%) on higher net parts consumption (~600 bps) plus logistics/duties, and tariffs hit service (~$0.8 million/150 bps) and product (~$2.6 million/530 bps).
- Operating loss was $9.1 million (vs. $1.1 million income) and adjusted EBITDA fell to $3.8 million from $6.0 million, including $6.5 million of non-recurring restructuring expense; cash was $44.4 million.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Fiscal 2026 financial guidance | FY2026 | Withdrawn -- management withdrew guidance given Middle East and China unpredictability; an update to come with fiscal Q4 results |
| Transformation savings | FY2026 / FY2027 | ~$10 million already achieved by end of Q3; on track to exceed $12 million in FY2026 and at least $25 million annualized in FY2027 |
| Restructuring charges | FY2026 | Expected to decrease sequentially from the $6.5 million Q3 level, with a significant portion recognized by fiscal year-end |
| Multi-year financial inflection | FY2027-FY2028 | 2027 and 2028 financial performance expected to reflect the benefits of current transformation actions |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Net revenue | -7% to $104.8 million (-10% cc, +3% sequential) | Indefinite Middle East/North Africa/Pakistan shipment delays and continued China headwinds. |
| Product revenue | -13% to $49.7 million | Majority of the year-over-year decline; China macro headwinds and Middle East geopolitical disruption. |
| Service revenue | -1% to $55.1 million (-5% cc) | ~$1.2 million Middle East impact, partly offset by $0.6 million of renewal price favorability; capture rate ~90%. |
| Overall gross margin | 24.1% vs. 27.9% | Service margin fell to 26.1% on higher net parts consumption (~600 bps) and logistics/duties; tariffs hurt both service and product. |
| Adjusted EBITDA | $3.8 million vs. $6.0 million | Revenue decline and gross-margin pressure, partly offset by ~18% lower adjusted operating expenses. |
| Backlog / book-to-bill | ~$356 million backlog; 1.0x book-to-bill (1.2x TTM) | ~$49 million of product gross orders in the quarter amid the disrupted demand environment. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Guidance withdrawal | $440-$450M revenue / $22-$25M adjusted EBITDA | Withdrawn due to indefinite Middle East shipment delays (EMEA is Accuray's largest region) and China unpredictability; update promised with Q4 results. | — |
| Transformation execution | ~$12M FY2026 target | Ahead of plan with ~$10M achieved; expects to exceed $12M in FY2026 and at least $25M annualized in FY2027; restructuring costs to taper. | — |
| Service monetization | Solutions-oriented tiers | Launched new training/education solutions (bundled or standalone), added software packages to service agreements, and improved systems/controls for billing and cash conversion; ~90% contract capture. | — |
| Commercial leadership and distributors | CCO appointment signaled | Paul Miele joined as CCO; a new VP of distributor partnerships was appointed to elevate distributor performance and accountability globally. | — |
| Partnership-driven model | UW-Madison MOU | Building an ecosystem including a Radiosurgery Society motion-tracking registry, University of Wisconsin-Madison and Tata Consultancy Services, to turn real-time motion-tracking data into a clinical evidence engine and speed time-to-market. | — |
| Pricing optimization | Value-based pricing initiative | Renewal pricing delivered $0.6 million of service price favorability in the quarter, with multi-year benefit expected to build over the next two to three years. | — |
Q&A Summary
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