Fiscal 2027 first quarter
Filed Nov 4, 2026Service growth and cost actions improved margins and adjusted EBITDA, but product revenue, orders and backlog declined.
Service revenue grew and service gross margin improved, while adjusted EBITDA turned positive and operating expenses excluding goodwill impairment declined. However, total revenue fell, product revenue declined, gross product orders were lower, book to bill was below 1.0, and backlog was approximately 31 percent lower year over year.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total net revenueGAAP | $86.5M | – | decrease of 8 percent |
| Product revenueGAAP | $27.3M | – | decrease of 26 percent |
| Service revenueGAAP | $59.2M | – | increase of 4 percent |
| Service revenue, constant currencynon-GAAP | $59.2M | – | up 5% on a constant currency basis |
| Total cost of revenueGAAP | $60.44M | – | – |
| Cost of productsGAAP | $22.05M | – | – |
| Cost of servicesGAAP | $38.39M | – | – |
| Gross profitGAAP | $26.1M | – | – |
| Total gross marginGAAP | 30.1 percent of total net revenue | – | – |
| Service gross marginother | 35.1% | – | rose 120 basis points from the prior year |
| Research and development expenseGAAP | $7.81M | – | – |
| Selling and marketing expenseGAAP | $8.68M | – | – |
| General and administrative expenseGAAP | $10.32M | – | – |
| Restructuring chargesGAAP | $400K | – | – |
| Goodwill impairment chargeGAAP | $35.4M | – | – |
| Total operating expensesGAAP | $62.6M | – | – |
| Operating expenses excluding goodwill impairment chargenon-GAAP | $27.2M | – | decrease of 29 percent |
| Loss from operationsGAAP | −$36.50M | – | – |
| Income from equity method investment, netGAAP | $114K | – | – |
| Interest expenseGAAP | −$11.83M | – | – |
| Gain on extinguishment of debtGAAP | $59.6M | – | – |
| IEEPA refund financing costsGAAP | −$55K | – | – |
| Loss from change in fair value of warrant liabilityGAAP | −$707K | – | – |
| Other income (expense), netGAAP | $66K | – | – |
| Income (loss) before provision for income taxesGAAP | $10.65M | – | – |
| Provision for income taxesGAAP | $517K | – | – |
| Net income (loss)GAAP | $10.1M | – | – |
| Net income (loss) per share, basicGAAP | $0.07 | – | – |
| Net income (loss) per share, dilutedGAAP | $0.07 per share | – | – |
| Weighted average common shares used in computing net income (loss) per share, basicGAAP | 138.2M | – | – |
| Weighted average common shares used in computing net income (loss) per share, dilutedGAAP | 139.3M | – | – |
| Net loss excluding gain on extinguishment of debt and goodwill impairment chargenon-GAAP | −$14M | – | – |
| Diluted net loss per share excluding gain on extinguishment of debt and goodwill impairment chargenon-GAAP | $(0.10) per share | – | – |
| Adjusted EBITDAnon-GAAP | $2.5M | – | – |
| Gross product ordersother | $19.8M | – | – |
| Net ordersother | −$13.23M | – | – |
| Order backlog as of September 30, 2026other | $272M | – | approximately 31 percent lower than at the end of the prior fiscal year first quarter |
| Book to bill ratioother | 0.7 | – | – |
| Total cash, cash equivalents and restricted cash as of quarter endGAAP | $50.4M | an increase of $1.6 million from June 30, 2026 | – |
| Cash and cash equivalents as of September 30, 2026GAAP | $42.25M | – | – |
| Restricted cash as of September 30, 2026GAAP | $827K | – | – |
| Long-term restricted cash as of September 30, 2026GAAP | $7.30M | – | – |
| Short-term debt, netGAAP | $6.7M | – | – |
| Long-term debt, netGAAP | $94.97M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| ProductsThe filing did not provide a specific driver for the product-revenue decline. | $27.3M | – | decrease of 26 percent |
| ServicesService contract pricing actions and nearly 3% growth in the global installed base. | $59.2M | – | increase of 4 percent |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Fiscal 2027 outlook
- NoteThe Company continues not to provide formal revenue or Adjusted EBITDA guidance for fiscal 2027.
What drove it
- Service revenue grew through service contract pricing actions and nearly 3% growth in the global installed base.
- The increase in total gross margin rate was primarily due to a higher service gross margin rate reflecting ongoing pricing initiatives.
- Service gross margin benefited primarily from pricing actions and a lower service labor cost structure.
- Transformation initiatives generated approximately $13 million of cost and margin improvement year over year, driven by headcount reductions, more efficient usage of strategic partners, focused product development and marketing plans, and discretionary spending discipline.
- Operating expenses excluding goodwill impairment decreased across all operating expense categories as a result of transformation initiatives.
Concerns
- Total net revenue decreased 8 percent and product revenue decreased 26 percent from the prior fiscal year first quarter.
- Gross product orders were $19.8 million versus $39.6 million in the prior fiscal year first quarter.
- Net orders were $(13,235) (in thousands), compared with $5,915 (in thousands) in the prior fiscal year first quarter.
- The book to bill ratio was 0.7, compared with 1.1 in the prior fiscal year first quarter.
- Order backlog was approximately 31 percent lower than at the end of the prior fiscal year first quarter.
- The quarter included a $35.4 million non-cash goodwill impairment charge.
- The reported net income included a $59.6 million non-cash gain on extinguishment of debt.
What to watch
- Whether customer engagement and clinical evidence translate into stronger product revenue and order performance.
- Gross product orders, net orders, the book to bill ratio and conversion of backlog to revenue.
- Sustainability of service pricing actions, installed-base growth and the 35.1% service gross margin.
- Execution of the RaySearch agreement and the Samsung NeuroLogica collaboration.
- Completion of the TCW financing transaction, including the $40 million exchange of term loan debt for convertible preferred equity.
Balance sheet and cash flow
- Total cash, cash equivalents and restricted cash as of quarter end amounted to $50.4 million, an increase of $1.6 million from June 30, 2026.
- Cash and cash equivalents were $42,254 (in thousands) as of September 30, 2026.
- Long-term debt, net was $94,972 (in thousands) as of September 30, 2026, compared with $146,370 (in thousands) as of June 30, 2026.
- The Company recognized a gain on extinguishment of debt of approximately $59.6 million in connection with its July 2026 financing transaction.
- The financing transaction with TCW included a $15 million investment. After quarter end, stockholders approved proposals to help enable a $40 million exchange of term loan debt for convertible preferred equity.
Analysis
Accuray reported a mixed fiscal 2027 first quarter. Total net revenue was $86.5 million, down 8 percent from $93.9 million, as product revenue declined 26 percent to $27.3 million. Service revenue increased 4 percent to $59.2 million, or up 5% on a constant currency basis. The contrast between the two revenue streams places the quarter's commercial pressure in products, while services provided the growth and stability.
Margin execution improved despite the revenue decline. Total gross profit was $26.1 million versus $27.0 million, while total gross margin increased to 30.1 percent of total net revenue from 28.8 percent. Service gross margin rose 120 basis points from the prior year to 35.1%, primarily due to pricing actions and a lower service labor cost structure. The company also stated that transformation initiatives generated approximately $13 million of year-over-year cost and margin improvement.
Reported earnings were materially affected by financing and impairment items. Net income was $10.1 million, or $0.07 per diluted share, including a $59.6 million non-cash gain on extinguishment of debt and a $35.4 million non-cash goodwill impairment charge. Excluding both items, net loss was $14.0 million, or $0.10 per diluted share, compared with a net loss of $21.7 million, or $0.18 per diluted share. Adjusted EBITDA was $2.5 million compared with negative adjusted EBITDA of $4.1 million. Operating expenses excluding goodwill impairment were $27.2 million, down 29 percent from $38.3 million.
Orders and backlog remain the central operating concern. Gross product orders were $19.8 million versus $39.6 million, net orders were $(13,235) (in thousands) versus $5,915 (in thousands), and the book to bill ratio was 0.7 versus 1.1. Order backlog as of September 30, 2026 was $272.0 million and was approximately 31 percent lower than at the end of the prior fiscal year first quarter. Management identified improving product and order performance as the immediate execution priority.
Liquidity and leverage actions were significant during and after the quarter. Total cash, cash equivalents and restricted cash were $50.4 million, an increase of $1.6 million from June 30, 2026. Long-term debt, net was $94,972 (in thousands), compared with $146,370 (in thousands) at June 30, 2026. The company cited the $15 million TCW investment and post-quarter-end stockholder approval for proposals intended to enable a $40 million debt-for-equity exchange. Accuray continues not to provide formal revenue or Adjusted EBITDA guidance for fiscal 2027, leaving service-margin durability and conversion of commercial engagement into product orders as the key reported execution markers.
Management, verbatim
During the first quarter, we made progress across several areas. Service margins improved, operating expenses remained well controlled, we strengthened our financial position, and we advanced our innovation roadmap through strategic partnerships with RaySearch and Samsung NeuroLogica.
Steve La Neve, President and Chief Executive Officer of Accuray
Our focus now is on turning that engagement into orders and revenue, and on pairing the operating discipline we have built with stronger commercial performance. We know what we need to execute, and our team is focused on delivering.
Steve La Neve, President and Chief Executive Officer of Accuray
Not in the filing
stated, not guessed- Formal fiscal 2027 revenue guidance
- Formal fiscal 2027 Adjusted EBITDA guidance
- Operating cash flow
- Free cash flow
- Capital expenditures
- Share repurchases
- Dividend information
- Formal tax-rate guidance
- Prior-quarter revenue, profitability, orders and backlog comparisons
- Prior-year service gross margin percentage
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.