Q4 2024 Accuray Inc Earnings Call

Speaker Change: Dr. Wittes, Dr. Wittes,

Operator: Good day and welcome to the Accuray fiscal 2024 fourth quarter financial results call. All participants will be in listen-only mode.

Operator: Good day, and welcome to the Accuray fiscal 2024 4th quarter financial results call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero.

Speaker Change: Good day and welcome to the Acura Fiscal 2024 fourth quarter financial results call. All participants will be in listen-only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone phone.

Speaker Change: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two.

Operator: After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded.

Operator: To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Jesse Chew, Senior Vice President and Chief Legal Officer. Thank you, operator, and good afternoon, everyone. Welcome to Accuray's conference call to review financial results for the fourth quarter of fiscal year 2024, which ended June 30th, 2024. During our call this afternoon, management will review recent corporate development.

Jesse Chew: I would now like to turn the conference over to Jesse Chew, Senior Vice President and Chief Legal Officer.

Speaker Change: Please note this event is being recorded. I would now like to turn the conference over to Jesse Chew, Senior Vice President and Chief Legal Officer. Please go ahead.

Jesse Chew: Thank you, operator, and good afternoon, everyone. Welcome to Accuray's conference call review financial results for the fourth quarter of fiscal year 24, which ended June 30th, 2024. During our call this afternoon, management will review recent corporate developments.

Jesse Chew: Thank you, operator, and good afternoon, everyone. Welcome to ACRI's conference call to review financial results for the fourth quarter of fiscal year 2024, which ended June 30, 2024. During our call this afternoon, management will review recent corporate developments.

Jesse Chew: Joining us today's call is Suzanne Winter, Accuray's president, chief executive officer, and a lead pervade actor and chief financial officer. Before we begin, I would like to remind you that our call today includes four looking statements. Accuray's will be different materially from those consequences required by these four looking statements. Fact is that because these results didn't inform materially, our outline of the press release be issued just after the market closed this afternoon, as well as in our Financial Security Exchange Commission. We base the four looking statements on this call on the information available to us as a big date.

Operator: Joining us on today's call are Suzanne Winter, Accuray's President and Chief Executive Officer, and Ali Pervaiz, Accuray's Chief Financial Officer. Before we begin, I would like to remind you that our call today includes four looking statements. Actual results may differ materially from those contemplated or implied by these four looking statements.

Speaker Change: Joining us today is Colors, Suzanne Winter, Accuray's President and Chief Executive Officer, and Ali Pervaiz, Accuray's Chief Financial Officer. Before we begin, I would like to remind you that our call today includes four looking statements.

Speaker Change: Actual results may differ materially from those contemplated or implied by these four looking statements.

Jesse Chew: Factors that could cause these results to dim materially are outlined in the press release we issued just after the market closed this afternoon, as well as in our files with the Securities and Exchange Commission. We base the forward-looking statements on this call on the information available to us as of today's date. We assume no obligation to update any forward-looking statements as a result of new information or future events to the extent required by applicable securities law. Accordingly, you should not un-humanize any forward-looking statement. A few housekeeping items for today's call. First, during the Q&A session, we request that participants limit themselves to two questions and then re-queue with any follow-ups.

Speaker Change: Factors that could cause these results to diminish materially are outlined in the press release we issued just after the market closed this afternoon, as well as in our files with the Securities and Exchange Commission.

Speaker Change: We base the forward-looking statements on this call on the information available to us as of today's date. We assume no obligation to update any forward-looking statements as a result of new information or future events, except to the extent required by applicable security squads.

Jesse Chew: We assume no obligations to update any four looking statements as a result of new information or future events, excessive extent required by Apple full security clause. Accordingly, you should not put undue reliance on any forward-looking statements. If you'd have to keep your eye on us for today's call. First, here's a Q&A session. We request that participants limit themselves to two questions and then meet you with any follow-ups. Second, all references to specific quarter and paramount experts are fit for your quarters. For example, statements regarding our fourth quarter refer to our fiscal quarter and the June 30th, 20th before.

Speaker Change: Currently, you should not have ungnolized any forwarded statements [inaudible]

Speaker Change: A few housekeeping items for today's call. First, during the Q&A session, we request that participants limit themselves to two questions and then re-queue with any follow-ups.

Jesse Chew: Second, all references to a specific quarter and paired remarks are to our fiscal year quarters. For example, statements regarding our fourth quarter refer to our fiscal fourth quarter ending June 30, 2024. Additionally, there will be a supplemental slide deck that accompanies this call, which you can access by going directly to Accuray's Investor Relations page at investors.accuray.com. With that, let me turn the call over to Accuray's Chief Executive Officer, Suzanne Winter. Suzanne?

Speaker Change: Second, all references to specific quarter and paired remarks are sort of fit for your quarters.

Speaker Change: For example, statements regarding our fourth quarter refer to our fiscal fourth quarter ended June 30, 2024.

Jesse Chew: Additionally, there will be a supplemental slide deck that completes call, which you could ask us by going directly to the accurate investor relations page at investors.accuray.com.

Speaker Change: Additionally, there will be a supplemental slide deck that updates this call, which you can access by going directly to Accuray's investor relations page at investors.accuray.com.

Suzanne Winter: With that, let me turn the call over to Accurate Chief Executive Officer Suzanne Wincher.

Speaker Change: With that, let me turn the call over to Accuray's Chief Executive Officer, Suzanne Winter. Suzanne? Thank you, Jesse, and thank you all for joining the call. Today, I will provide highlights from our fourth quarter and fiscal 2024, both on our accomplishments and the areas of focus for FY25 and beyond.

Suzanne Winter: Thank you, Jesse, and thank you all for joining the call. Today, I will provide highlights from our fourth quarter and fiscal 2024, both on our accomplishments and the areas of focus for FY25 and beyond. I am pleased with our solid performance in the fourth quarter with total company revenue growing 14% year over year reflecting strong operational and commercial execution. This growth was driven by a record number of system shipments within the border representing 20% more than our previous highest shipment milestone.

Suzanne Winter: Thank you, Jesse. And thank you all for joining the call.

Suzanne Winter: Today, I will provide highlights from our fourth quarter in fiscal 2024, both on our accomplishments and the areas of focus for FY25 and beyond. I am pleased with our solid performance in the fourth quarter, with total company revenue growing 14% year over year, reflecting strong, operational, and commercial execution. This growth was driven by a record number of system shipments within the quarter, representing 20% more than our previous highest shipment milestone. Momentum going into FY 2025 remains elevated, particularly in the international markets, which represented more than 80% of our revenue for the fiscal year and reflects the strategy laid out at the beginning of FY24 of entering emerging markets where patient access to radiation therapy is under-penetrated and where we can become the number one or number two player over time.

Suzanne Winter: I am pleased with our solid performance in the fourth quarter, with total company revenue growing 14% year-over-year, reflecting strong operational and commercial execution.

Suzanne Winter: Newsworth was driven by a record number of system shipments within the border representing 20% more than our previous highest shipment milestone.

Suzanne Winter: Momentum going into FY 2025 remains elevated, particularly in the international markets, which represented more than 80% of our revenue for the fiscal year, and reflects the strategy we laid out at the beginning of FY24 of entering emerging markets, where patient access to radiation therapy is underpenetrated, and where we can become the number one or number two player over time. In the quarter, we saw shipments accelerate nicely both to new customers and by closing open opportunities from the prior period.

Speaker Change: Momentum going into FY 2025 remains elevated, particularly in the international markets, which represented more than 80% of our revenue for the fiscal year.

Speaker Change: and reflects the strategy we laid out at the beginning of FY24 of entering emerging markets where patient access to radiation therapy is underpenetrated and where we can become the number one or number two player over time.

Suzanne Winter: In the quarter, we saw shipments accelerate nicely, both to new customers and by closing open opportunities from the prior period. We also saw orders growth of 8% versus last year, largely driven by emerging market growth in APAC and Latin America. China was, despite remaining headwinds from the anti-corruption campaign, who orders by 80% in the quarter year over year, driven by a pent-up demand for the new Tomlum seed product, which recently received approval for our precision treatment planning system, making our Tomlum seed products ready to ship and customers. In Share and Latin America is the priority for us, and this region saw order growth of more than 400 percent within the order, including a four system competitive replacement win in Mexico.

Speaker Change: In the quarter, we saw shipments accelerate nicely, both canoe customers and by closing open opportunities from the prior period.

Suzanne Winter: We also saw orders growth of 8% versus last year, largely driven by emerging market growth in APAC and Latin America. China, which despite remaining headwinds from the anti-corruption campaign, grew orders by 80% a quarter year-over-year, driven by pent-up demand for the new TomoC product, which recently received approval for our Precision Treatment Planning System, making our TomoC product ready to ship to end customers. Game share in Latin America is a priority for us, and this region saw order growth of more than 400% within the quarter, including a four-system competitive replacement win in Mexico.

Speaker Change: We also saw orders growth of 8% versus last year largely driven by emerging market growth in APEC and Latin America.

Speaker Change: China, which despite remaining headwinds from the anti-corruption campaign, grew orders by 80% in the quarter year-over-year, driven by pent-up demand for the new TomoC product, which recently received approval for our Precision Treatment Planning System, making our TomoC product ready to ship to end customers.

Speaker Change: Game share in Latin America is a priority for us, and this region saw order growth of more than 400% within the quarter, including a four-system competitive replacement win in Mexico.

Suzanne Winter: Finally, I was very pleased with our global Q4 book-to-bill ratio where, even with record revenue, shipments was healthy at 1.2. We believe the book-to-bill metric continues to represent the strong leading indicator for future revenue. Product revenue contributed materially to the growth within the order of approximately 28% year over year, driven by strong demand in China, which grew product revenue by 55% compared to the prior year, and the rest of the pack, which grew significantly year over year. EIMEA, our largest region, delivered 27% year-over-year product revenue growth. The Japan region was up 1% for the quarter of year over year, and excluding headwinds from back back, grew product revenue by 13%.

Suzanne Winter: Finally, I was very pleased with our global Q4 book-to-bill ratio where even with record revenue shipments was healthy at 1.2. We believe the book-to-bill metric continues to represent a strong leading indicator for future revenue. Product revenue contributed materially to the growth within the quarter of approximately 28% year over year driven by strong demand in China, which grew product revenue by 55% compared to the prior year, and the rest of APAC, which grew significantly year over year.

Speaker Change: Finally, I was very pleased with our global Q4 book to Bill Ratio, where even the record revenue shipments with Healthy at 1.2, will be able to build metric continues to represent a strong leading indicator of the future revenue.

Speaker Change: Product revenue contributed materially to the growth within the quarter, up approximately 28% year-over-year, driven by strong demand in China, which grew product revenue by 55% compared to the prior year, and the rest of APAC, which grew significantly year-over-year.

Suzanne Winter: EIMEA, our largest region, delivered 27% year-over-year product revenue growth. The Japan region was up 1% for the quarter year over year, and excluding headwinds from FX grew product revenue by 13%. Japan is a very strong market for us, and we have put in several initiatives to help mitigate the impact of foreign exchange.

Speaker Change: EIMEA, our largest region, delivered 27% year-over-year product revenue growth.

Speaker Change: The Japan region was up 1% for the quarter year-over-year, and excluding headwinds from FX, grew product revenue by 13%.

Suzanne Winter: Japan is a very strong market for us, and we have put in several initiatives to help mitigate the impact for an exchange. We remain the number two market share player and continue to drive share game on our path to becoming number one in this developed market. Finally, the American region, as we had expected, continued to show weakness in Q4, with product revenue down 50% year over year, driven by customer delays and installation. We believe we have the greatest impact in FY24 and are cautiously optimistic that we will see conditions improve in the US market and show year-over-year growth starting in the second half of FY25.

Speaker Change: Japan is a very strong market for us and we have put in several initiatives to help mitigate the impact for an exchange. We remain the number two market share player and continue to drive share gain on our path to becoming number one in this developed market.

Suzanne Winter: We remain the number two market share player and continue to drive share gain on our path to becoming number one in this developed market. Finally, the Americas region, as we had expected, continued to show weakness in Q4, with product revenue down 50% year over year, driven by customer delays and installation. We believe we felt the greatest impact in FY24 and are cautiously optimistic that we will see conditions improve in the U.S. market and show year-over-year growth starting in the second half of FY25.

Speaker Change: Finally, the Americas region, as we had expected, continued to show weakness in Q4 with product revenue down 50% year-over-year, driven by customer delays and installation.

Speaker Change: We believe we felt the greatest impact in FY24 and are cautiously optimistic that we will see conditions improve in the U.S. market and show year-over-year growth starting in the second half of FY25.

Suzanne Winter: Service revenues for the quarter were down slightly due primarily to unfavorable effects in Japan and reduced training and square parts revenue. However, I am encouraged that recurring service contract revenue is up 4% year over year as we start to see the results of our strategy of driving install based growth by penetrating emerging markets like China, where service revenue grew 22% year over year. During the quarter, we received final approval on our precision treatment planning system for China, which was the final step in our approval process for the Toma C platform. As of late fourth quarter, we now have the ability to sell and ship full systems to Toma C customers and the type B segment.

Suzanne Winter: Service revenues for the quarter were down slightly due primarily to unfavorable effects in Japan and reduced training and square parts revenue. However, I am encouraged that recurring service contract revenue is up 4% year over year as we start to see the results of our strategy of driving install based growth by penetrating emerging markets like China where service revenue grew 22% year over year. During the quarter, we received final approval on our precision treatment planning system for China, which was the final step in our approval process for the TomoC platform.

Speaker Change: Service revenues for the border were down slightly due primarily to unfavorable effects in Japan and reduced training and square parts revenue.

Speaker Change: However, I am encouraged that recurring service contract revenue is up 4% year-over-year as we start to see the results of our strategy of driving install-based growth by penetrating emerging markets like China, where service revenue grew 22% year-over-year.

Speaker Change: During the quarter, we received final approval on our Precision Treatment Planning System for China, which was the final step in our approval process for the TomoC platform.

Suzanne Winter: As of late fourth quarter, we now have the ability to sell and ship full systems to TomoC customers in the type B segment. As a reminder, with this final approval, we can now fully record margin at time of delivery from our joint venture site in Tianjin to the end customer for all of our solo fee shipments in China. With this approval behind us, we are now able to fully compete in the Type B market, which represents approximately $3 billion in market potential over the next five years.

Speaker Change: As of late fourth quarter, we now have the ability to sell and ship full systems to Total C customers in the Type B segment.

Suzanne Winter: As a reminder, with this final approval, we can now fully record margin at time of delivery from our joint venture site in Tianjin customer for all of our home estate shipments in China. With this approval behind us, we are now able to fully compete in the type B market, which represents approximately $3 billion in market potential over the next 5 years.

Speaker Change: As a reminder, with this final approval, we can now fully record margin at time of delivery from our joint venture site in Tianjin to the end customer for all of our single-seat shipments in China.

Speaker Change: With this approval behind us, we are now able to fully compete in the Type B market, which represents approximately $3 billion in market potential over the next five years.

Suzanne Winter: Ali will discuss more of the Q4 financials, but I wanted to touch briefly on margins, which continues to be an area of focus. Although our overall Q4 adjusted EBITDA margins were within the range we expected, we believe that several factors that negatively impacted margins were transitory in nature and masked underlying productivity improvements we have achieved from our margin expansion initiatives. From a product perspective, later timing of the approval of precision treatment planning system in China delayed when we could recognize full margin.

Suzanne Winter: Ali will discuss more of the Q4 financials, but I wanted to touch briefly on margins, which continues to be an area of focus. Although our overall Q4 adjusted EBITDA margins were within the range we expected, we believed that several factors that negatively impacted margins were transitory to nature and matched underlying productivity improvements we have achieved from our margin expansion initiatives. From a product perspective, the later timing of the approval of the precision treatment planning system in China delayed when we could recognize full margin. With the clearance now behind us, we have begun shipping Toma C customers and shipped our first system late in Q4 FY24 and expect the majority of shipments to accelerate starting in Q2 FY25 based on customer readiness.

Speaker Change: Ali will discuss more of the Q4 financials, but I wanted to touch briefly on margins, which continues to be an area of focus.

Speaker Change: Although our overall Q4 adjusted EBITDA margins were within the range we expected, we believe that several factors that negatively impacted margins were transitory in nature and masked underlying productivity improvements we have achieved from our margin expansion initiatives.

Speaker Change: From a product perspective, the later timing of the approval of precision treatment planning system in China delayed when we could recognize full margin.

Suzanne Winter: With the clearance now behind us, we have begun shipping Tomosita customers and shipped our first system late in Q4 FY24 and expect the majority of shipments to accelerate starting in Q2 of FY25 based on customer readiness.

Speaker Change: With the clearance now behind us, we have begun shipping Tomasita customers and shipped our first system late in Q4 FY24, and expect the majority of shipments to accelerate starting in Q2 of FY25 based on customer readiness.

Suzanne Winter: It represents approximately $4 million of margin that was deferred at the end of FY24. Within service margins, we're mostly challenged by foreign exchange, which impacted our Japanese business performance materially, where we have a large install base. In addition, in Q4, we experienced an isolated supplier quality issue that caused a $2.4 million increase in card's consumption costs. We are working closely with a supplier and expect this to be resolved and recover the majority of these costs over the fiscal year. One suggested for the China margin referral and a supplier quality issue, our Q4 growth margins would have been improved versus the same period in the prior year.

Suzanne Winter: This represents approximately $4 million of margin that was deferred at the end of FY24. Within service, margins were mostly challenged by foreign exchange, which impacted our Japanese business performance materially, where we have a large installed base. In addition, in Q4, we experienced an isolated supplier quality issue that caused a $2.4 million increase in parts consumption costs.

Speaker Change: This represents approximately $4 million of margin that was deferred at the end of FY24.

Speaker Change: Within service, margins were mostly challenged by foreign exchange, which impacted our Japanese business performance materially, where we have a large install base. In addition, in Q4, we experienced an isolated supplier quality issue that caused a $2.4 million increase in parts consumption costs.

Speaker Change: We are working closely with the supplier and expect this to be resolved and recover the majority of these costs over the fiscal year.

Suzanne Winter: We are working closely with the supplier and expect this to be resolved and recover the majority of these costs over the fiscal year. Once adjusted for the China margin deferral and the supplier quality issue, our Q4 growth margins would have been improved versus the same period in the prior year. Finally, region next with a headwind to margin as we experience weakness in the US market, which is a higher margin market for us.

Speaker Change: Once adjusted for the China margin deferral and the supplier quality issue, our Q4 growth margins would have been improved versus the same period in the prior year.

Suzanne Winter: Finally, region mix was a headwind of margin as we experienced weakness in the US market, which is a higher-margin market for us. As discussed, we believe this is a temporary challenge in the US market and are encouraged by the Q4 order performance in the US, which grew 9%, suggesting signs of gradual improvement. Moving into FY25, we will be monitoring the timing of order to revenue conversion as a leading performance indicator for recovery in the US, and this significantly contributed to flowing revenue in FY24.

Speaker Change: Finally, region mix with a headwind to margin as we experience weakness in the US market, which is a higher margin market for us.

Suzanne Winter: As discussed, we believe this is a temporary challenge in the US market and are encouraged by the Q4 order performance in the US, which grew 9%, suggesting signs of gradual improvement. Moving into FY25, we will be monitoring the timing of order to revenue conversion as a leading performance indicator for recovery in the US, and this significantly contributes to flow to revenue growth in FY24. Reflecting on our full year performance, I remain incredibly proud of what our team has accomplished and remain humbled by our mission, which is centered around advancing care and radiation therapy through innovation, expanding patient access to radiotherapy globally, delivering superior service and support to our customers.

Speaker Change: As discussed, we believe this is a temporary challenge in the U.S. market and are encouraged by the Q4 order performance in the U.S. which grew 9%, suggesting signs of gradual improvement.

Speaker Change: Moving into FY25, we will be monitoring the timing of order to revenue conversion as a leading performance indicator for recovery in the U.S. and this significantly contributed to the flow of revenue in FY24.

Suzanne Winter: We are reflecting on our full year performance. I remain incredibly proud of what our teams accomplished and remain humbled by our mission, which has centered around advancing care and radiation therapy through innovation, expanding patient access to radiotherapy globally, delivering superior service and support to our over customers. We remain confident based on the positive secular trends in our industry, as well as our ability to execute well and gain share in the markets we participate in. While global revenue was flat for the year, I am encouraged by the strong momentum in our international and emerging markets. Excluding the America region, international revenues grew 10% year-over-year for fiscal 2024.

Speaker Change: Reflecting on our full year performance, I remain incredibly proud of what our team's accomplished and remain humbled by our mission, which is centered around advancing care and radiation therapy through innovation.

Speaker Change: Expanding patient access to radiotherapy globally, delivering superior service and support to our customers. We remain confident based on the positive secular trends in our industry as well as our ability to execute well and gain share in the markets we participate in.

Suzanne Winter: We remain confident based on the positive secular trends in our industry, as well as our ability to execute well and gain share in the markets we participate in. While global revenue is flat for the year, I am encouraged by the strong momentum in our international and emerging markets. Excluding the Americas region, international revenues grew 10% year-over-year for fiscal 2024. China revenue grew 27% year-over-year, whereas the rest of APAC grew 14% year-over-year.

Speaker Change: While global revenue is flat for the year, I am encouraged by the strong momentum in our international and emerging markets.

Speaker Change: Excluding the Americas region, international revenues grew 10% year-over-year for fiscal 2024.

Suzanne Winter: China revenue grew 27% year-over-year, whereas the rest of the APAC grew 14% year-over-year. Our EIMEA region grew 8.5% year-over-year, driven in large part by higher growth sub-region markets like India, the Middle East, and SIS, or the coming wealth of independent countries. Japan was down approximately 11% year-over-year and largely by the impact of effects. And as I mentioned before, the America region, most notably the US, continued to lag other regions that climbed in 26% year-over-year. Despite the near-term challenges in capital equipment budget cycles, we believe that the long-term potential of the US market remains intact, with the advanced age of the US and sole base of radiotherapy systems providing a catalyst for upgrade and replacement opportunities.

Speaker Change: China revenue grew 27% year-over-year, whereas the rest of AIPAC grew 14% year-over-year.

Suzanne Winter: Our EIMEA region grew 8.5% year-over-year, driven in large part by higher growth sub-region markets like India, Middle East, and CIS or the Commonwealth of Independent Countries. Japan was down approximately 11% year over year driven largely by the impact of FX.

Speaker Change: Our EIMEA region grew 8.5% year-over-year, driven in large part by higher growth sub-region markets like India, Middle East, and CIS or the Commonwealth of Independent Countries.

Suzanne Winter: And as I mentioned before, the Americas region, most notably the US, continued to lag other regions declining 26% year over year. Despite the near-term challenges in capital equipment budget cycles, we believe that the long-term potential of the U.S. market remains intact, with the advanced age of the U.S. installed base of radiotherapy systems providing a catalyst for upgrade and replacement opportunities. We expect to see gradual improvement in the U.S. from the second half of FY25 into FY26, where we estimate more of a full recovery. Moving on to service revenue for the full fiscal year, overall revenue was down 1% year over year.

Speaker Change: Japan was down approximately 11% year-over-year, driven largely by the impact of FX, and as I mentioned before, the Americas region, most notably the US, continued to lag, other regions declining 26% year-over-year.

Speaker Change: Despite the near-term challenges in capital equipment budget cycles, we believe that the long-term potential of the U.S. market remains intact.

Speaker Change: with the advanced age of the U.S. installed base of radiotherapy systems providing a catalyst for upgrade and replacement opportunities. We expect to see gradual improvement in the U.S. in the second half of FY25 into FY26 where we estimate more of a full recovery.

Suzanne Winter: We expect to see gradual improvement in the US and the second half of FY25 into FY26, where we estimate more of a full recovery. Moving on to service revenues for the full fiscal year, overall revenue was down 1% year-over-year. However, recurring contract revenue grew 4.5% year-over-year. As we mentioned on prior calls, we believe that our service solutions business is a huge long-term opportunity for both revenue and margin growth. The expansion of recurring service contract revenue demonstrates underlying performance improvements from the early stages of our plan. These include road burn cell base, impact of pricing actions, investments that will improve system uptime and serviceability performance, like our agreement with Airbus.

Suzanne Winter: However, recurring contract revenue grew 4.5% year over year. As we mentioned on prior calls, we believe that our service solutions business is a huge long term opportunity for both revenue and margin growth. The expansion of recurring service contract revenue demonstrates underlying performance improvements from the early stages of our plan. These include growth of our installed base, impact of pricing actions, investments that will improve system uptime and serviceability performance, like our agreement with Airbus, will leverage data and predictive analytics to help reduce customer downtime and reduce parts consumption.

Speaker Change: Moving on to service revenue for the full fiscal year, overall revenue was down 1% year-over-year. However, recurring contract revenue grew 4.5% year-over-year.

Speaker Change: As we mentioned on prior calls, we believe that our service solutions business is a huge long-term opportunity for both revenue and margin growth.

Speaker Change: The expansion of recurring service contract revenue demonstrates underlying performance improvements from the early stages of our plan. These include growth of our installed base, impact of pricing actions, investments that will improve system uptime and serviceability performance, like our agreement with Airbus.

Suzanne Winter: This will leverage data and predictive analytics to help reduce customer downtime and reduce parts consumption. Finally, we introduce new service solution offerings like Cybercom for the Cyberknife system, physics solutions like our partnership with True North, and advanced education offerings, which we will deliver in our global education centers, like the newly opened Innovation and Partnership Club in the general meeting. We expect these areas will drive top line and margin improvements, while increasing overall customer operational improvements and satisfaction.

Speaker Change: which will leverage data and predictive analytics to help reduce customer downtime and reduce parts consumption.

Suzanne Winter: Finally, we introduced new service solution offerings like CyberComm for the CyberKnight system, physics solutions like our partnership with TrueNorth, and advanced education offerings, which we will deliver at our global education centers like the newly opened Innovation and Partnership Club at General Meetings Switzerland.

Speaker Change: Finally, we introduced new service solution offerings like CyberComm for the CyberKnight system.

Speaker Change: Physics Solutions, like our partnership with True North.

Speaker Change: and Advanced Education Offerings which we will deliver in our global education centers like the newly opened Innovation and Partnership Clubs in General Leading Switzerland. We expect these areas will drive top-line and margin improvement.

Suzanne Winter: We expect these areas will drive top-line and margin improvement while increasing overall customer operational improvement and satisfaction. As we have articulated in the past, there are four major pillars of our strategic growth plan. Our first pillar is driving top line growth through innovation to advance radiotherapy and solve our customers biggest needs. During the year, we had several product introductions that strengthened our portfolio and further differentiated Accuray technology. Customer adoption of our new product innovation has been strong.

Speaker Change: While increasing overall customer operational improvements and satisfaction.

Suzanne Winter: As we have articulated in the past, there are four major pillars of our strategic growth plan. Our first pillar is driving top line growth through innovation to advance radius therapy and solve our customers' biggest needs. During the year, we have several product introductions that strengthen our portfolio and further differentiate Accuray technology. Customer adoption of our new product innovation has been strong. Notably, this included a 31 percent year of a year growth in Cyberknife system orders, who lead the rapidly growing clinical trends toward shorter course of latest treatments and one to five sessions. Back like clinical data over the long term for areas like prostate, lung, and neuro treatments is driving the increase in Cyberknife system demand.

Speaker Change: As we have articulated in the past, there are four major pillars of our strategic growth plan. Our first pillar is driving top-line growth through innovation to advance radiotherapy and solve our customers' biggest needs.

Speaker Change: During the year, we had several product introductions that strengthened our portfolio and further differentiated AccuRate technology.

Suzanne Winter: Notably, this included a 31% year-over-year growth in CyberKnife system orders. We believe the rapidly growing clinical trends to our shorter course of latest treatments in one to five sessions backed by clinical data over the long term for areas like prostate, lung, and neuro treatments is driving the increase in CyberKnife system demand. Additionally, many CyberKnifeSystem customers report strong patient awareness for CyberKnifeSystem versus other treatment platforms, with many specifically requesting to be treated on the CyberKnifeSystem due to its strong branding and high-precision capabilities.

Speaker Change: Customer adoption of our new product innovation has been strong. Notably, this included a 31% year-over-year growth in CyberKnife system orders.

Speaker Change: We believe the rapidly growing clinical trends toward shorter course of latest treatments in one to five sessions backed by clinical data over the long term for areas like prostate, lung, and neurotreatments is driving the increase in CyberKnife system demand.

Suzanne Winter: Additionally, many CyberKnife system customers report strong case awareness for CyberKnife system versus other treatment platforms, with many specifically requesting to be treated on the CyberKnife system due to its strong branding and high precision capabilities. A key area of focus for R&D investment will be the expansion of next generation capabilities for the CyberKnife system to further advance the use of stereo attack radio surgery and SBRT and drive replacement of our install base in the developed markets like the US, Europe, and Japan. Customer reception also continues to be strong on our R&D exact platform, which represents approximately 70 percent of product orders in FY24 driven by a clear R&D CT imaging, Syncretary Real-Time Motion Management, bioholes, which expands our breast treatment capabilities and see us online adaptive functionality that we introduced at the worsen progress and are planning a full introduction at SRO 25.

Speaker Change: Additionally, many CyberKnifeSystem customers report strong patient awareness for CyberKnifeSystem versus other treatment platforms, with many specifically requesting to be treated on the CyberKnifeSystem due to its strong branding and high precision capabilities.

Suzanne Winter: A key area of focus for R&D investment will be the expansion of next generation capabilities for the CyberKnife system to further advance the use of stereotactic radio surgery and SBRT and drive replacement of our installed base in the developed markets like the U.S., Europe, and Japan. Customer reception also continues to be strong on our RADxAC platform, which represents approximately 70% of product orders in FY24, driven by ClearRT CT imaging, Synchrony real-time motion management, Bioholes, which expands our breast treatment capabilities, and CNOS online adaptive functionality that we introduced as a works in progress and are planning a full introduction at ESRO 25.

Speaker Change: A key area of focus for R&D investment will be the expansion of next-generation capabilities for the CyberKnife system to further advance the use of stereotactic radiosurgery and SBRT

Speaker Change: and drive replacement of our installed base in the developed markets like the U.S., Europe and Japan.

Speaker Change: Customer reception also continues to be strong on our RADxAC platform, which represents approximately 70% of product orders in FY24, driven by ClearRT CT imaging, Synchrony real-time motion management,

Speaker Change: BioGold, which expands our breast treatment capabilities, and CENOS, online adaptive functionality that we introduced as a works in progress and are planning a full introduction at ESSRO 25.

Suzanne Winter: Beyond penetrating the China market, we also intend to serve other high potential markets where patient access to radio therapy is challenged, particularly India, where we introduced our new Accurate Helix product at the Indian Cancer Congress last fall. Today, we are announcing that we have obtained CE mark clearance for this product, with the press release to follow, and will ship our first unit to India in the coming months.

Suzanne Winter: Beyond penetrating the Chinese market, we also intend to serve other high-potential markets where patient access to radiotherapy is challenged, particularly India, where we introduced our new Accuray Helix product at the Indian Cancer Congress last fall. Today, we are announcing that we have obtained CE mark clearance for this product, with a press release to follow, and we'll ship our first unit to India in the coming month.

Speaker Change: Beyond penetrating the China market, we also intend to serve other high-potential markets where patient access to radiotherapy is challenged, particularly India, where we introduced our new Accuray Helix product at the Indian Cancer Congress last fall.

Speaker Change: Today, we are announcing that we have obtained CE mark clearance for this product with a press release to follow, and we'll ship our first unit to India in the coming months.

Suzanne Winter: Our next strategic pillar of expanding and growing our service business. We set out a multi-year plan to strengthen our service business, which represents a recurring revenue stream and margin expansion opportunity. Our service revenue has been essentially flat over the last decade and currently represents 48% of our global revenue for fiscal 24. Service contract revenue growth is largely dated by growth of our install base. In FY 24, we saw an expansion of our global install base in three of our four regions, driven by meaningful growth in the APEC region and healthy growth involved EINNA into PAN regions.

Suzanne Winter: Our next strategic pillar is expanding and growing our service business. We set out a multi-year plan to strengthen our service business, which represents a recurring revenue stream and margin expansion opportunity. Our service revenue has been essentially flat over the last decade and currently represents 48% of our global revenue for fiscal 24.

Speaker Change: Our next strategic pillar is expanding and growing our service business.

Speaker Change: We set out a multi-year plan to strengthen our service business, which represents a recurring revenue stream and margin expansion opportunity. Our service revenue has been essentially flat over the last decade and currently represents 48% of our global revenue for fiscal 24.

Suzanne Winter: Service Contract Revenue Growth is largely gated by growth of our installed base. In FY24, we saw an expansion of our global installed base in three of our four regions, driven by meaningful growth in the APAC region and healthy growth in both EIMEA and Japan regions. We're taking a longer term approach in the US with focused commercial investment, expanding our commercial footprint with the goal of ensuring the highest level of service and customer satisfaction. So we're best positioned in competitive replacement cycles, as well as upgrading our own install base.

Speaker Change: Service contract revenue growth is largely gated by growth of our installed base. In FY24, we saw an expansion of our global installed base in three of our four regions, driven by meaningful growth in the APAC region and healthy growth in both EIMEA and Japan regions.

Suzanne Winter: We're taking a longer term approach in the US with focused commercial investment, expanding our commercial footprint with the goal of ensuring the highest level of service and customer satisfaction for our best positions in competitive replacement cycles as well as upgrading our own install base.

Speaker Change: We're taking a longer-term approach in the U.S. with focused commercial investment, expanding our commercial footprint with the goal of ensuring the highest level of service and customer satisfaction. So we're best positioned in competitive replacement cycles, as well as upgrading our own install base.

Suzanne Winter: Expanding margin and profitability and improving our balance sheet with our third pillar. In 2023, Ali and I laid out a multi-year, multi-faceted plan to drive margin expansion and cost efficiencies, with a goal of leaving no stone unturned. While we have made good progress against our goals with actions that have helped us to navigate the impact of inflation, logistics costs, and foreign exchange fluctuations, we are still in the early innings of improvements and believe that we've laid out a strong foundation to show material improvement to margins as macro factors improve and as we increase scale. Finally, in FY 24, we strengthen our existing strategic partnerships with GE Health Care and research and also creating new ones like our product development partnerships with CRED, LINDUS AI, RED Formation, and service partnerships with Airbus and True North.

Suzanne Winter: Expanding margins and profitability and improving our balance sheet was our third pillar. In 2023, Ali and I laid out a multi year multifaceted plan to drive margin expansion and cost efficiencies with a goal of leaving no stone unturned. While we have made good progress against our goals with actions that have helped us to navigate the impact of inflation, logistics costs, and foreign exchange fluctuations, we are still in the early innings of improvements and believe that we've laid out a strong foundation to show material improvement to margins as macro factors improve and as we increase scale.

Ali: Expanding margin and profitability and improving our balance sheet was our third pillar. In 2023, Ali and I laid out a multi-year, multi-faceted plan to drive margin expansion and cost efficiencies with a goal of leaving no stone unturned.

Ali: While we have made good progress against our goals with actions that have helped us to navigate the impact of inflation, logistics costs,

Speaker Change: and Foreign Exchange Fluctuations, we are still in the early innings of improvements and believe that we have laid out a strong foundation to show material improvement to margins as macro factors improve and as we increase scale.

Suzanne Winter: Finally, in FY24, we strengthened our existing strategic partnerships with GE Healthcare and Research and also created new ones, like our product development partnerships with C-RAD, LIMBUS-AI RAD Formation, and service partnerships with Airbus and TrueNorth. We believe these alliances help us bring best in class solutions to the market faster, improve our sales funnel and enhance our win rate.

Speaker Change: Finally, in FY24, we strengthened our existing strategic partnerships with GE Healthcare and Research and also created new ones.

Speaker Change: Like our product development partnerships with C-RAD, LIMBUS-AI, RADFORMATION.

Suzanne Winter: We believe these alliances help us bring investment class solutions to the market faster, improve our sales funnel, and enhance our win rate.

Speaker Change: Service Partnerships with Airbus and True North. We believe these alliances help us bring best-in-class solutions to the market faster, improve our sales funnel, and enhance our win rate.

Suzanne Winter: I wanted to take a moment and highlight some of the key milestones in FY 2024 that have put us in a more favorable position going into FY 2025. We enter FY 25 with a strong backlog of orders, which at 487 million represents over two years of product revenue potential. From a demand perspective, we saw global orders grow by 10% year over year for the full year, with an annual book to build ratio of 1.5 exceeding our goal of 1.2. On the operational side, we completed the first full year on our new SAP ERP system without major negative disruptions.

Suzanne Winter: I wanted to take a moment and highlight some of the key milestones in FY 2024 that have put us in a more favorable position going into FY 2025. We enter FY 25 with a strong backlog of orders, which at $487 million represents over two years of product revenue potential. From a demand perspective, we saw global orders grow by 10% year over year for the full year, with an annual book-to-bill ratio of 1.5, exceeding our goal of 1.2. On the operational side, we completed the first full year on our new SAP ERP system without major negative disruption.

Operator: Good day, and welcome to the Accuray Fiscal 2024 4th quarter financial results call. All participants will be in listen only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero.

Speaker Change: I wanted to take a moment and highlight some of the key milestones in FY 2024 that have put us in a more favorable position going into FY 2025.

Speaker Change: We enter FY25 with a strong backlog of orders, which at $487 million represents over two years of product revenue potential.

Operator: After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star than one on your touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded.

Speaker Change: From a demand perspective, we saw global orders grow by 10% year-over-year for the full year with an annual book-to-bill ratio of 1.5, exceeding our goal of 1.2.

Jesse Chew: I would now like to turn the conference over to Jesse Chew, senior vice president and chief legal officer. Please go ahead. Thank you, operator, and good afternoon, everyone.

Speaker Change: On the operational side, we completed the first full year on our new SAP ERP system without major negative disruptions.

Suzanne Winter: Welcome to Accuray's conference call review financial results for the fourth quarter of fiscal year 24, which ended June 30th, 2024. During our call this afternoon, management will review recent corporate developments.

Suzanne Winter: I'm extremely proud of our teams as this was a foundational milestone for the company. I expect continued productivity benefits and better data and analytics to help us make improved operational decisions and drive further efficiency. As I mentioned on past calls, working capital will be a key part of cash flow improvements, and we delivered a $21 million reduction in total net inventory from Q3 and $7 million reduction for the fiscal year. This remains a priority for us going into FY25.

Suzanne Winter: I'm extremely proud of our team that this was a foundational milestone for the company. I expect continues for activity benefits and better data and analytics to help us make improved operational decisions to drive further efficiencies. As I mentioned on past, folks working capital will be a key part of cash flow improvement, and we delivered a $21 million reduction in total net inventory from Q3 and a $7 million reduction for the fiscal year. This remains a priority throughout going into FY 25. And finally, answering into the Type B market in China has been a long journey for us, and I am pleased with how we have worked at the cross-functional team to ramp up our joint venture manufacturing site in Tianjin, completing the first 10 system bills of Tomlasee and executing our first customer ship that have Tomlasee in June to Shandong Hospital.

Speaker Change: I'm extremely proud of our teams as this was a foundational milestone for the company. I expect continued productivity benefits and better data and analytics to help us make improved operational decisions to drive further efficiency.

Suzanne Winter: Joining us today's call is Suzanne Winter, Accuray's president, Chief Executive Officer, and a lead pervade actor and chief financial officer. Before we begin, I would like to remind you that our call today includes four looking statements. Accuray's will be different materially from those consequences required by these four looking statements.

Suzanne Winter: Fact is that because these results didn't inform materially, our outline of the press release be issued just after the market closed this afternoon, as well as in our financial security exchange commission. We base the four looking statements on this call on the information available to us as a big date. We assume no obligations to update any four looking statements as a result of new information or future events excessive extent required by Apple full security clause. Accordingly, you should not put undue reliance to any four looking statements.

Speaker Change: As I mentioned on past calls, working capital will be a key part of cash flow improvements, and we delivered a $21 million reduction in total net inventory from Q3 and $7 million reduction for the fiscal year. This remains a priority for us going into FY25.

Suzanne Winter: And finally, entering into the Type B market in China has been a long journey for us, and I am pleased with how we have worked as a cross-functional team to ramp up our joint venture manufacturing site in Tianjin, completing the first 10 system builds with Tomosy, and executing our first customer shipment of Tomosy in June to Shandong Hospital. With these key milestones behind us, I believe we are well-positioned to execute our strategic growth plan in FY 2025. The U.S. remains challenging, and we will continue to monitor key performance indicators.

Speaker Change: And finally, entering into the Type B market in China has been a long journey for us.

Speaker Change: And I am pleased with how we have worked as a cross-functional team to ramp up our joint venture manufacturing site in Tianjin, completing the first 10 system builds of Tunle Sea and executing our first customer shipment of Tunle Sea in June to Shandong Hospital.

Suzanne Winter: If you'd have to keep your eye on us for today's call. First, here's a Q&A session. We request that participants limit themselves two questions and then meet you with any follow-ups. Second, all references to specific quarter and paramount experts are fit for your quarters. For example, statements regarding our fourth quarter refers to our fiscal quarter and the June 30th 20th before.

Suzanne Winter: With these key milestones behind us, I believe we are well positioned to execute our strategic growth plan in FY 2025. The U.S. remains challenging, and we will continue to monitor key performance indicators. Additionally, we will closely watch China market conditions, including any remaining flowdown due to the anti-corruption campaign, in addition to the timing of the China stimulus program, which we believe can be a potential tailwind aimed at replacing the opportunities. These factors could impact demand for installations in FY 25, but believe these are timing-related and difficult to predict exact timing and trajectory, and therefore are really included in our guidance that we wait to see stronger signals of U.S.

Speaker Change: With these key milestones behind us, I believe we are well positioned to execute our strategic growth plan in FY 2025. The U.S. remains challenging, and we will continue to monitor key performance indicators.

Suzanne Winter: Additionally, we will closely watch China market conditions, including any remaining slowdown due to the anti-corruption campaign, in addition to the timing of the China stimulus program, which we believe can be a potential tailwind aimed at replacement opportunities. These factors could impact demand for installations in FY 2025, but believe these are timing-related and difficult to predict exact timing and trajectory, and therefore remain prudent in our guidance as we wait to see stronger signals of U.S. market recovery.

Suzanne Winter: Additionally, there will be a supplemental slide deck that completes call, which you could ask us by going directly to accurate investor relations page at investors.accuray.com.

Speaker Change: Additionally, we will closely watch China market conditions, including any remaining slowdown due to the anti-corruption campaign, in addition to the timing of the China stimulus program, which we believe can be a potential tailwind aimed at replacement opportunities.

Suzanne Winter: With that, let me turn the call over to accurate chief executive officer Suzanne Wincher. Suzanne. Thank you, Jesse. And thank you all for joining the call. Today, I will provide highlights from our fourth quarter in fiscal 2024, both on our accomplishments and the areas of focus for FY25 and beyond. I am pleased with our solid performance in the fourth quarter with total company revenue growing 14% year over year, reflecting strong, operational, and commercial execution.

Speaker Change: These factors could impact demand for installations in FY25, so believe these are timing-related and difficult to predict exact timing and trajectory, and therefore remain prudent in our guidance.

Suzanne Winter: Market recovery.

Suzanne Winter: And in summary, I'm proud of the foundation we've set for future growth. We achieved strategic customer wins in the marketplace, penetrated new markets, and forged key partnerships that enhance our solutions and improve our competitiveness. While we are still early in our transformation, we end the year to drive top-line growth, gaining share in the markets where we compete for the strong growth and margin and profitability of the coming year. I will now turn it over to Ali, who will cover our financial. Thank you, Suzanne. And good afternoon, everyone.

Louay: As we wait to see stronger signals of U.S. market recovery. And in summary, I'm proud of the foundation we've set for future growth. We achieved strategic customer wins in the marketplace, penetrated new markets, and forged key partnerships that enhance our solutions and improve our competitiveness.

Suzanne Winter: And in summary, I'm proud of the foundation we've set for future growth. We achieved strategic customer wins in the marketplace, penetrated new markets, and forged key partnerships that enhance our solutions and improve our competitiveness. While we are still early in our transformation, we end the year to drive pipeline growth, gaining share in the markets where we compete through strong growth in margin and profitability of the coming years.

Suzanne Winter: This growth was driven by a record number of system shipments within the quarter representing 20% more than our previous highest shipment milestone. Momentum going into FY 2025 remains elevated, particularly in the international markets which represented more than 80% of our revenue for the fiscal year and reflects the strategy delayed out at the beginning of FY24 of entering emerging markets where patient access to radiation therapy is under penetrated and where we can become the number one or number two player over time.

Louay: While we are still early in our transformation, we end the year to drive top-line growth, gaining share in the markets where we compete for the strong growth and margin and profitability of the coming years.

Ali Pervaiz: I will now turn it over to Ali, who will cover our financials.

Ali Pervaiz: Thank you, Zunan, and good afternoon, everyone. I would like to begin by thanking our global cross-confrontal teams who banded together and executed with unwavering dedication to deliver the strongest revenue quarter of the company's history. As we had mentioned before, fiscal year 2024 was a very important year for our company. Not only did we enter the value market of radiation therapy equipment to essentially double our industrial markets, we also continue to add more operational efficiencies toward business model, which continues to move the needles on our margin expansion plan. Although we face macroeconomic evidence, particularly in the U.S., as well as unbearable foreign exchange and inflation, we believe we are in a good position for growth in most of our markets in a well-positioned one of the U.S.

Louay: I will now turn it over to Ali who will cover our financials.

Ali Pervaiz: I would like to begin by thanking our global cross-functional teams who banded together and executed with unwavering dedication to deliver the strongest revenue quarter in the company's history. As we mentioned before, fiscal year 2024 was a very important year for our company. Not only did we enter the value market of radiation therapy equipment to essentially double our addressable market, we also continue to add more operational efficiencies to our business model, which continues to move the needles on our margin expansion plan.

Ali: Thank you, Suzanne, and good afternoon, everyone. I would like to begin by thanking our global cross-functional teams who banded together and executed with unwavering dedication to deliver the strongest revenue quarter in the company's history.

Suzanne Winter: In the quarter, we saw shipments accelerate nicely, both to new customers and by closing open opportunities from the prior period. We also saw orders growth of 8% versus last year largely driven by emerging market growth in APAC and Latin America. China was despite remaining headwinds from the anti-corruption campaign who orders by 80% in the quarter year over year, driven by a pent-up demand for the new Tomlum seed product which recently received approval for our precision treatment planning system, making our Tomlum seed products ready to ship and customers.

Ali: As we had mentioned before, fiscal year 2024 was a very important year for our company. Not only did we enter the value market of radiation therapy equipment to essentially double our addressable market, we also continued to add more operational efficiencies to our business model, which continues to move the needle in our margin expansion plan.

Ali Pervaiz: Although we face macroeconomic headwinds, particularly in the US, as well as unfavorable foreign exchange and inflation, we believe we are in a good position for growth in most of our markets and are well positioned when the US market recovers. Now turning to the quarter, net revenue for the fourth quarter was $134 million, which was up 14% versus prior year, and the highest reported revenue quarter in the company's history, exceeding Q4 of last year by $16 million, exhibiting strong demand for innovations, driven by a 28% increase in year-over-year product revenue.

Ali: Although we face macroeconomic hegemonies, particularly in the U.S., as well as unbearable foreign exchange and inflation, we believe we are in a good position for growth in most foreign markets and are well positioned when the U.S. market recovers.

Ali Pervaiz: market recovery covers. Now, turning to the quarter, net revenue to the fourth quarter was $134 million, which was up 14% versus prior, and the highest reported revenue quarter in the company's history, exceeding Q4 last year by $16 million, exhibiting strong demand for our innovations, driven by a 28% increase in year-over-year product revenue. Net revenue on a constant currency basis for the fourth quarter was approximately $137 million, which represented a 15% increase versus prior year. On a full-year basis, total revenue was $447 million, which was roughly flat from the prior fiscal year. On a constant currency basis, total revenue for the fiscal year was $448 million and represents a slight increase versus the prior fiscal year.

Speaker Change: Now I'm turning to the quarter.

Suzanne Winter: In Share and Latin America is the priority for us, and this region saw order growth of more than 400 percent within the order, including a four system competitive replacement win in Mexico. Finally, I was very pleased with our global Q4 book to bill ratio where even with record revenue shipments was healthy at 1.2. We believe the book to bill metric continues to represent the strong leading indicator for future revenue. Product revenue contributed materially to the growth within the order of approximately 28% year over year driven by strong demand in China, which grew product revenue by 55% compared to the prior year, and the rest of the pack which grew significantly year over year.

Speaker Change: Net revenue for the fourth quarter was $134 million, which was 14% worse prior, and the highest reported revenue for the company's history exceeding Q4 last year by $16 million, exhibiting strong demand for our innovations, driven by a 28% increase in year-to-year product revenue.

Ali Pervaiz: Net revenue on a constant currency basis for the fourth quarter was approximately $137 million, which represents a 16% increase versus prior year. On a full year basis, total revenue was $447 million, which is roughly flat from the prior fiscal year.

Speaker Change: Net revenue on a constant currency basis for the fourth quarter was approximately $137 million, which represented a 16% increase versus prior year.

Speaker Change: On a full year basis, total revenue was $447 million, which is roughly flat from the prior fiscal year. On a constant currency basis, total revenue for the fiscal year was $448 million and represents a slight increase versus the prior fiscal year, despite the Americas region being down 26% versus prior year.

Ali Pervaiz: On a constant currency basis, total revenue for the fiscal year was $448 million and represents a slight increase versus the prior fiscal year, despite the Americas region being down 26% versus prior year. Revenue in the rest of the world grew by 10% year-over-year and made up 80% of our global revenue in fiscal year 24, which is a powerful indication of our continued strength in those markets. Product revenue for the fourth quarter was $80 million, up 28% from prior year, and up 29% on a constant currency basis.

Ali Pervaiz: Despite the America's region being down 26% versus prior year, revenue in the rest of the world grew by 10% year over year and made up 80% of our global revenue fiscal year 24, which is a powerful indication of our continued strength in those markets. Project revenue for the fourth quarter was $80 million, up 28% from prior year and up 29% in Cox's currency basis. As Suzanne mentioned, product revenue included 36 system shipments, which is a new record number of ship shipments in the company's history and a 24% unit growth versus prior year. On a full year basis, product revenue was $234 million, roughly flat from the prior year.

Speaker Change: Revenue in the rest of the world grew by 10% year-over-year and made up 80% of our global revenue fiscal year 24, which is a powerful indication of our continued strength in those markets.

Suzanne Winter: EIMEA, our largest region, delivered 27% year over year product revenue growth. The Japan region was up 1% for the quarter of year over year, and excluding headwinds from back back, grew product revenue by 13%. Japan is a very strong market for us, and we have put in several initiatives to help mitigate the impact for an exchange. We remain the number two market share player and continue to drive share game on our path to becoming number one in this developed market.

Speaker Change: Product revenue for the fourth quarter was $80 million, up 28% from prior year, and up 29% on a constant currency basis. As Suzanne mentioned, product revenue included 36 system shipments, which is the new record number of shipped shipments in the company's history, and a 24% unit growth versus prior year.

Ali Pervaiz: As Suzanne mentioned, product revenue included 36 system shipments, which is a new record number of shipments in the company's history and 24% unit growth versus the prior year. On a full-year basis, product revenue was $234 million, roughly flat from the prior year.

Speaker Change: When a full-year basis product revenue was $2.34 million, roughly flat from the prior year, a full-year product revenue deducted from the impact of foreign exchange was $235 million and represented by increased resources to prior year.

Ali Pervaiz: Full year product revenue and up for the impact of foreign exchange was 235 million, represented despite increased versus prior year. Service revenue for the quarter was $55 million, down 2% from the prior year and flat on a constant currency basis, primarily given by $3 million of lower revenue related to training and lower spare parts volume. Notably, the contract revenue portion of our service business was up 4%, or 1.8 million versus the prior year, which showcased this growth in the mostly annuity part of the service business as our initial base continues to expand globally. Full year service revenue was $212 million, down 1% versus prior year.

Ali Pervaiz: Full-year product revenue adjusted for the impact of foreign exchange was $235 million, representing a slight increase versus the prior year. Service revenue for the quarter was $55 million, down 2% from the prior year and flat on a cost-to-currency basis, primarily driven by $3 million of lower revenue related to training and lower spare parts volume. Notably, the contract revenue portion of our service business was up 4%, or $1.8 million versus the prior year, which showcases growth in the mostly annuity part of the service business as our install base continues to expand globally. Full year service revenue was $212 million, down 1% versus prior year.

Suzanne Winter: Finally, the American region as we had expected continued to show weakness in Q4 with product revenue down 50% year over year driven by customer delays and installation. We believe we have the greatest impact in FY24 and are cautiously optimistic that we will see conditions improve in the US market and show year over year growth starting in the second half of FY25. Service revenues for the quarter were down slightly due primarily to unfavorable effects in Japan and reduced training and square parts revenue.

Speaker Change: Service revenue for the quarter was $55 million, down 2% from the prior year, and flat on a cost-to-currency basis, primarily driven by $3 million of lower revenue related to training and lower spare parts volume.

Speaker Change: Notably, the contract revenue portion of our service business was up 4%, or $1.8 million versus the prior year, which showcases growth in the mostly annuity part of the service business as our install base continues to expand globally.

Speaker Change: Full year service revenue was $212 million, down 1% versus prior year.

Suzanne Winter: However, I am encouraged that recurring service contract revenue is up 4% year over year as we start to see the results of our strategy of driving install based growth by penetrating emerging markets like China where service revenue grew 22% year over year. During the quarter, we received final approval on our precision treatment planning system for China, which was the final step in our approval process for the Toma C platform. As of late fourth quarter, we now have the ability to sell and ship full systems to Toma C customers and the type B segment.

Ali Pervaiz: Service contract revenue was also a highlight for full-year service revenue, which grew at 4.5% and contributed $8.5 million in additional revenue versus last year. This is noteworthy since contract revenue represents greater than 90% of service revenue. Gross orders for the fourth quarter were approximately $95 million and represented a book-to-bill ratio of 1.2. On a full-year basis, gross orders were $342 million and represented a book-to-bill ratio of 1.5.

Ali Pervaiz: Service contract revenue was also a highlight for full year service revenue, which grew at 4.5% and contributed $8.5 million in additional revenue versus last year. This is no worthy since contract revenue represents greater than 90% of service revenue. Growth orders for the fourth quarter were approximately $95 million and represented a book-to-bill ratio of 1.2. On a full year basis, growth orders were $342 million and represented a book-to-bill ratio of 1.5. Moving to the backlog, the end of the fourth quarter was a backlog of approximately $487 million, which represents greater than 2 years of product revenue, and we feel confident about the ability of this backlog to convert to revenue within 30 months.

Speaker Change: Service contract revenue was also a highlight for full-year service revenue, which grew at 4.5% and contributed $8.5 million in additional revenue versus last year. This is noteworthy since contract revenue represents greater than 90% of service revenue.

Speaker Change: Growth orders for the fourth quarter were approximately $95 million and represented a book-to-bill ratio of 1.2. On a full-year basis, growth orders were $342 million and represented a book-to-bill ratio of 1.5.

Ali Pervaiz: Moving to the backlog, the end of the fourth quarter was a backlog of approximately $487 million which represents greater than two years of product revenue, and we feel confident about the ability of this backlog to convert to revenue within 30 months. As part of our diligence in ensuring a high-quality backlog, we canceled three units representing approximately $6 million of orders due to evolving customer dynamics. Our overall gross margin for the quarter was 28.6% compared to 31.9% in the prior year, with the year-over-year decline primarily due to 2.1 points of higher margin deferral from China, and 2.1 points from higher parts and such.

Speaker Change: Moving to the backlog, we ended the fourth quarter with a backlog of approximately 487 million dollars, which represents greater than two years of product revenue, and we feel confident about the ability of this backlog to convert to revenue within 30 months.

Suzanne Winter: As a reminder, with this final approval, we can now fully record margin at time of delivery from our joint venture site in Tianjin customer for all of our home estate shipments in China. With this approval behind us, we are now able to fully compete in the type B market which represents approximately $3 billion in market potential over the next 5 years. Ali will discuss more of the Q4 financials, but I wanted to touch briefly on margins, which continues to be an area of focus.

Ali Pervaiz: As far as our diligence and ensuring the high quality backlog, we cancel three units representing a process with the $6 million of orders due to evolving customer dynamics. Our overall growth margin for the quarter was 28.6% versus 31.9% in the prior year, with the year-over-year decline primarily due to 2.1 points of higher margin deferral for Chinese shipments, and 2.1 points from higher parts consumption. Excluding Egypt factors, our reporting growth margin would have been higher by 4.2 points, implying year over your margin attribution. As discussed in previous quarters, the China margin deferral is a delay of margin recognition until the final product makes it to the end user, and we expect to recognize all of the deferred margins in Q2 FY25 and beyond.

Speaker Change: As part of our diligence in ensuring a high-quality backlog, we cancelled three units representing approximately $6 million of orders due to evolving customer dynamics.

Ali Pervaiz: Excluding these two factors, our reported growth margin would have been higher by 4.2 points, implying year-over-year margin attrition. As discussed in previous quarters, the China margin deferral is a delay of margin recognition until the final product makes it to the end user, and we expect to recognize all of the deferred margins in Q2 FY25 and beyond. Sparse consumption was higher due to a supplier quality issue we faced in the quarter that resulted in higher than anticipated failure rate of a critical component utilized in our CyberKnife platform.

Speaker Change: Our overall gross margin for the quarter was 28.6% compared to 31.9% in the prior year with a year-over-year decline primarily due to 2.1 points of higher margin deferral from China shipments and 2.1 points from higher parts consumption.

Suzanne Winter: Although our overall Q4 adjusted EBITDA margins were within the range we expected, we believed that several factors that negatively impacted margins were transitory to nature and matched underlying productivity improvements we have achieved from our margin expansion initiatives. From a product perspective, the later timing of the approval of precision treatment planning system in China delayed when we could recognize full margin. With the clearance now behind us, we have begun shipping Toma C customers and shipped our first system late in Q4 FY24 and expect the majority of shipments to accelerate starting in Q2 FY25 based on customer readiness.

Speaker Change: Excellent Egypt factors are reporting course marks a little bit higher by 4.2 points implying here where you are more than that reason.

Speaker Change: As discussed in previous quarters, the China Margin Deferral is a delay of margin recognition until the final product makes it to the end-user, and we expect to recognize all of the deferred margins in Q2 FY25 and beyond.

Ali Pervaiz: Our consumption was higher due to a supplier quality issue we faced in the quarter that resulted in a higher than anticipated failure rate of a critical component in our Cybernite platform. Our engineering teams have worked closely with the supplier to identify the root cause and have put in appropriate corrective actions in place. We continue to monitor the quality issue and expect it will be resolved in the first half of fiscal year 25. Excluding the China margin deferral and the higher parts consumption, our growth margins would have been higher than prior year, driven by lower cost due to productivity actions and the team has prioritized, along with higher contract revenue and pricing in our service business as part of our margin expansion actions.

Speaker Change: Sparse consumption was higher due to a supplier quality issue we faced in the quarter that resulted in higher than anticipated failure rate of a critical component utilized in our CyberKnights platform.

Ali Pervaiz: Our engineering teams have worked closely with the supplier to identify the root cause and have put appropriate corrective actions in place. We continue to monitor this quality issue and expect it to be resolved in the first half of fiscal year 25. Excluding the China margin deferral and the higher parts consumption, our gross margins would have been higher than the prior year driven by lower COGS due to productivity actions the team has prioritized, along with higher contract revenue and pricing in our service business as part of our margin expansion actions.

Speaker Change: Our engineering teams have worked closely with the supplier to identify the root cause and have put appropriate corrective actions in place.

Speaker Change: We continue to monitor this quality issue and expect it will be resolved in the first half of fiscal year 25

Speaker Change: Excluding the China margin deferral and the higher parts consumption, our gross margins would have been higher than prior year, driven by lower costs due to productivity actions the team has prioritized, along with higher contract revenue and pricing in our service business as part of our margin expansion actions.

Suzanne Winter: It represents approximately $4 million of margin that was deferred at the end of FY24. Within service margins, we're mostly challenged by foreign exchange, which impacted our Japanese business performance materially, where we have a large install base. In addition, in Q4, we experienced an isolated supplier quality issue that caused a $2.4 million increase in card's consumption costs. We are working closely with a supplier and expect this to be resolved and recover the majority of these costs over the fiscal year.

Ali Pervaiz: On a full year basis, our overall growth margin was 32% from where the 34.4% in the prior year, with the decline mainly driven by 1 point of higher China margin deferral, which we expect to contribute to the margin beginning in Q2 FY25, and 2 points of higher net parts consumption versus prior year, which is partially due to the supplier quality issue mentioned earlier. By 40, change overall served as a 30 basis points headwind for us in 1534. The Japanese ants alone contributed to a 1.1 point headwind, which was partly offset by other global cards you turned to hear.

Ali Pervaiz: On a full-year basis, our overall gross margin was 32% compared to 34.4% in the prior year, with the decline mainly driven by one point of higher China margin deferral, which we expect to contribute to margin beginning in Q2 of fiscal year 25, and two points of higher net parts consumption versus prior year, which was partially due to the supplier quality issue mentioned earlier. While the foreign exchange overall served as a 30 basis points headwind for us in fiscal year 24, the Japanese yen alone contributed to a 1.1 point headwind, which was partly offset by other global currency during the year.

Speaker Change: On a full-year basis, our overall gross margin was 32% compared to 34.4% in the prior year with the decline mainly driven by one point of higher China margin deferral, which we expect to contribute to the March

Speaker Change: which we expect to contribute to margin beginning in Q2 of fiscal year 25 and two points of higher net parts consumption versus prior year which was partially due to the supplier quality issue mentioned earlier.

Suzanne Winter: One suggested for the China margin referral and a supplier quality issue, our Q4 growth margins would have been improved versus the same period in the prior year. Finally, region mix was a headwind of margin as we experienced weakness in the US market, which is a higher margin market for us. As discussed, we believe this is a temporary challenge in the US market and are encouraged by the Q4 order performance in the US, which grew 9%, suggesting signs of gradual improvement.

Speaker Change: While foreign exchange overall served as a 30 basis points headwind for us in fiscal year 24, the Japanese yen alone contributed to a 1.1 point headwind, which was partly offset by other global currency trends a year. Had the Japanese yen not deteriorated by approximately 12% through fiscal year 24, it would have contributed an additional $5 million for our bottom line.

Ali Pervaiz: Had the Japanese yen not deteriorated by approximately 12% through fiscal year 24, it would have contributed an additional $5 million for our bottom. Operating expenses of the fourth quarter were $31.6 million, compared to $38.1 million in the fourth quarter of prior fifth of the year.

Ali Pervaiz: Had the Japanese and not deteriorated by approximately 12% of 1534, it would have contributed an additional $5 million for bottom line. Operating expenses of the fourth quarter were $31.6 million compared to $38.1 million in the fourth quarter prior fiscal year. The 17% year-over-year reduction was driven by improved efficiency of occupations, benefits from the restructuring we announced earlier in the year, and a lower company bonus payout. Operating expenses for the full year were $142.4 million compared to $151.6 million in prior year, representing a 6% reduction year-over-year, showcasing focus costs and control as we continue to push our teams to prioritize return and investment as part of our margin expansion actions.

Speaker Change: Operating expenses in the fourth quarter were $31.6 million compared to $38.1 million in the fourth quarter of prior fiscal year.

Ali Pervaiz: The 17% year-over-year reduction was driven by improved efficiency in cost organizations, benefits from the restructuring we announced earlier in the year, and a lower company bonus payout. Operating expenses for the full year were $142.4 million, compared to $151.6 million in the prior year, representing a 6% reduction year over year, showcasing focus cost control as we continue to push our team's prior tights, and return them as part of our Marching expansion act. Operating income for the quarter was $6.8 million compared to a loss of $0.5 million from the prior year. Operating income for the full year was $0.5 million compared to $2.4 million in the prior fiscal year.

Suzanne Winter: Moving into FY25, we will be monitoring the timing of order to revenue conversion as a leading performance indicator for recovery in the US, and this significantly contributed to flowing revenue in FY24. We are reflecting on our full year performance. I remain incredibly proud of what our teams accomplished and remain humbled by our mission, which has centered around advancing care and radiation therapy through innovation, expanding patient access to radiotherapy globally, delivering superior service and support to our over customers.

Speaker Change: [inaudible]

Speaker Change: Operating expenses for the full year were $142.4 million compared to $151.6 million in the prior year, representing a 6% reduction year-over-year, showcasing focused cost control as we continue to push our teams to prioritize return on investment as part of our margin expansion actions.

Ali Pervaiz: Operating in the fourth quarter was $6.8 million compared to a loss of $0.5 million in prior year-over-year income for the full year was $0.5 million compared to $2.4 million in the prior fiscal year. Adjustment even for the quarter was $10.1 million compared to $5.2 million for the prior year period. For the full year, adjustment even though was $19.7 million compared to $23.9 million for the prior period. From a year-over-year perspective, there were two main factors that negatively impacted our adjustment, even though. Firstly, we deferred $5 million of additional China margin versus last year, which we know of the timing-related issues that will result in a benefit starting in Q2 of fiscal year 25, and will be normalized going forward now that we have the NMPA approval for the precision treatment planning system.

Speaker Change: Operating income for the quarter was 6.8 million dollars compared to a loss of 0.5 million dollars from the prior year. Operating income for the full year was 0.5 million dollars compared to 2.4 million dollars in the prior fiscal year.

Suzanne Winter: We remain confident based on the positive secular trends in our industry as well as our ability to execute well and gain share in the markets we participate in. While global revenue was flat for the year, I am encouraged by the strong momentum in our international and emerging markets. Excluding the America region, international revenues grew 10% year-over-year for fiscal 2024. China revenue grew 27% year-over-year, whereas the rest of the APAC grew 14% year-over-year.

Ali Pervaiz: Adjusted EBITDA for the quarter was $10.1 million compared to $5.2 million for the prior year period. For the full year, adjusted EBITDA was $19.7 million compared to $23.9 million for the prior period. From a year-over-year perspective, there were two main factors that negatively impacted our adjusted EBITDA. Firstly, we deferred $5 million of additional China margin versus last year, which we know is a timing-related issue that will result in a benefit starting in Q2 of fiscal year 25 and will be normalized going forward now that we have the NMPA approval for the Precision Treatment Planning System.

Jesse Chew: Adjusted EBITDA for the quarter was $10.1 million compared to $5.2 million for the prior year period. For the full year, adjusted EBITDA was $19.7 million compared to $23.9 million for the prior period.

Ali Pervaiz: Secondly, we experienced $4 million of higher parts consumption out of which $2.4 million was related to a particular supplier quality issue which we anticipate resolving in the first half of fiscal year 25. Without these two issues, our adjusted EBITDA would have surpassed last year which points to the strong underlying operating performance of the business. We described the reconciliation between gap net income and adjusted EBITDA in our earnings issued earlier today. Turning to the balance sheet, total cash, cash equivalents and short term restricted cash amounted to $69 million compared to $61 million at the end of last quarter. Net accounts receivable were approximately $92 million, up $19 million from the last quarter, with a record number of system shipments. Our net inventory balance was $138 million, down $21 million from the prior quarter.

Jesse Chew: From a year-over-year perspective, there were two main factors that negatively impacted our adjusted evidence.

Speaker Change: Firstly, we deferred $5 million of additional China margin versus last year, which we know is a timing-related issue that will result in a benefit starting in Q2 of FY25 and will be normalized going forward now that we have the NMPA approval for the Precision Treatment Planning System.

Suzanne Winter: Our EIMEA region grew 8.5% year-over-year driven in large part by higher growth sub-region markets like India, Middle East, and SIS, or the coming wealth of independent countries. Japan was down approximately 11% year-over-year and largely by the impact of effects. And as I mentioned before, the America region, most notably the US, continued to lag other regions that climbed in 26% year-over-year. Despite the near-term challenges in capital equipment budget cycles, we believe that the long-term potential of the US market remains intact, with the advanced age of the US and sole base of radiotherapy systems providing a catalyst for upgrade and replacement opportunities.

Ali Pervaiz: Secondly, we experienced $4 million of higher-part consumption, on which $2.4 million was related to a particular supplier quality issue, which we anticipated resolving in the first half of fiscal year 25.

Speaker Change: Secondly, we experienced $4 million of higher parts consumption, which $2.4 million was related to a particular supplier quality issue, which we anticipate resolving the first half of 5th year or 25. Without these two issues, our density that would have surfaced last year was twice as strong underlying operating performance of the business.

Ali Pervaiz: Without these two issues, our justice even though would have surfaced last year, which points to strong underlying operating performance of the business.

Ali Pervaiz: We described the reconciliation between GAAP net income and adjusted, even though, you know, earnings issued earlier today. Turning to the balance sheet, total cash, cash equivalent, and short-term restricted cash amounted to $69 million compared to $61 million at the end of last quarter. Net accounts received over approximately $92 million, up $19 million from the last quarter, with the record number of system shipments. Our net inventory balance was $138 million, down $21 million from the prior quarter. I'm extremely proud of the way our team's executed to improve working capital performance with a substantial decline in inventory and increase in cash, which resulted in $9.4 million of free cash flow generation in Q4.

Speaker Change: We described the reconciliation between gap net income and adjusted even-dough in our earnings issued earlier today. Turning to the balance sheet, total cash, cash equivalents, and short-term restricted cash amounted to $69 million compared to $61 million at the end of last quarter.

Speaker Change: Net accounts receivable were approximately $92 million, up $19 million from the last quarter, with a record number of system shipments.

Suzanne Winter: We expect to see gradual improvement in the US and the second half of FY25 into FY26, where we estimate more of a full recovery. Moving on to service revenues for the full fiscal year, overall revenue was down 1% year-over-year. However, recurring contract revenue grew 4.5% year-over-year. As we mentioned on prior calls, we believe that our service solutions business is a huge long-term opportunity for both revenue and margin growth. The expansion of recurring service contract revenue demonstrates underlying performance improvements from the early stages of our plan.

Speaker Change: Our net inventory balance was $138 million, down $21 million from the prior quarter.

Ali Pervaiz: I'm extremely proud of the way our team executed to improve working capital performance with a substantial decline in inventory and an increase in cash, which resulted in $9.4 million of free cash flow generation in Q4. In summary, Fiscal Year 24 was a challenging year for us to execute through from a macro standpoint. While we saw inflation ease slightly over last year, the foreign exchange volatility, especially to the Japanese yen, served as a big headwind that hampered our results.

Speaker Change: I'm extremely proud of the way our team executed to improve working capital performance with a substantial decline in inventory and an increase in cash, which resulted in $9.4 million of free cash flow generation in Q4.

Ali Pervaiz: In summary, fiscal year 24 was a challenging year for us to execute through from a macro standpoint. While we saw inflation ease slightly over last year in the foreign exchange volatility, investments to the Japanese end served as a big headwind that hampered our results. Additionally, this blowdown of the U.S. market drove a 26% year-over-year decline in revenue from that region, which also happens to be a higher margin region in our portfolio. Despite those headwinds, our global teams worked tirelessly and were able to grow total revenue by 10% year over year, excluding the Americas, which also represents 15% year over year growth in product revenue, which will serve as a catalyst for service business in the coming quarter.

Ali Pervaiz: Additionally, the slowdown of the U.S. market drove a 26% year-over-year decline in revenue from that region, which also happens to be a higher margin region in our portfolio. Despite those headwinds, our global teams worked tirelessly and were able to grow total revenue by 10% year-over-year, excluding the Americas, which also represents 15% year-over-year growth in product revenue, which will serve as a catalyst to our service business in the coming quarters. Another positive indicator for our business was a strong growth in service contract revenue of 4.5% year over year, which represents greater than 90% of service revenue. I'm extremely proud of the financial discipline and operating rigor we have put in place over the last two years across our entire organization.

Speaker Change: In summary, Fiscal Year 24 was a challenging year for us to execute through from a macro standpoint. While we saw inflation ease slightly over last year, the foreign exchange volatility, especially the Japanese yen, served as a big headwind that hampered our results.

Speaker Change: Additionally, the slowdown of the U.S. market drove a 26% year-over-year decline in revenue from that region, which also happens to be a higher-margin region in our portfolio.

Suzanne Winter: These include road burn cell base, impact of pricing actions, investments that will improve system uptime and serviceability performance, like our agreement with Airbus. This will leverage data and predictive analytics to help reduce customer downtime and reduce parts consumption. Finally, we introduce new service solution offerings like Cybercom for the Cyberknife system, physics solutions like our partnership with True North, and advanced education offerings, which we will deliver in our global education centers, like the newly opened Innovation and Partnership Club in general meeting. We expect these areas will drive top line and margin improvements, while increasing overall customer operational improvements and satisfaction.

Speaker Change: Despite those headwinds, our global teams worked tirelessly and were able to grow total revenue by 10% year-over-year, excluding the Americas, which also represents 15% year-over-year growth in product revenue, which will serve as a catalyst to our service business in the coming quarters.

Ali Pervaiz: Another positive indicator for our business, there was a strong growth in service contract revenue, 4.5% year over year, represents where is the 90% of service revenue. I'm extremely proud of the financial discipline and operating rigor we have put in place over the last two years across our entire organization. Our teams continue to execute from an operational perspective, and are later focused on margin expansion through pricing actions, service growth, operational excellence, and focused affects management. While we've had many headless and growth margins, the hard work being done in all these areas above is helping to offset macro factors, and we believe will immediately contribute to our P&L's in the near term, once those examinance factors dissipate.

Speaker Change: Another positive indicator for our business, there was a strong growth in service contract revenue of 4.5% year-over-year, which represents greater than 90% of service revenue.

Speaker Change: I'm extremely proud of the financial discipline and operating rigor we have put in place over the last two years across our entire organization. Our teams continue to execute from an operational perspective and are laser focused on margin expansion through pricing actions, service growth, operational excellence, and focused on best management.

Ali Pervaiz: Our teams continue to execute from an operational perspective and are laser focused on margin expansion through pricing actions, service growth, operational excellence, and focused on tax management. While we've had many headwinds and growth margins, the hard work being done in all these areas above is helping to offset macro factors, and we believe will meaningfully contribute to our P&L in the near term once those exogenous factors dissipate. Additionally, we are well positioned to accelerate our growth in APAC and EIMEA while anticipating the recovery of the U.S. ARPA.

Speaker Change: While we've had many headwinds and gross margins, the hard work being done in all the areas above is helping to offset macro factors and we believe will meaningfully contribute to our P&L in the near term once those exogenous factors dissipate.

Suzanne Winter: As we have articulated in the past, there are four major pillars of our strategic growth plan. Our first pillar is driving top line growth through innovation to advance radius therapy and solve our customers biggest needs. During the year, we have several product introductions that strengthen our portfolio and further differentiated Accuray technology. Customer adoption of our new product innovation has been strong. Notably, this included a 31 percent year of a year growth in Cyberknife system orders, who lead the rapidly growing clinical trends toward shorter course of latest treatments and one to five sessions back like clinical data over the long term for areas like prostate, lung, and neuro treatments is driving the increase in Cyberknife system demand.

Ali Pervaiz: Additionally, we are well-positioned to accelerate our growth in APEC and EIMEA while anticipating the recovery of the US market.

Speaker Change: Additionally, we are well-positioned to accelerate our growth in AIFAC in EIMEA while anticipating the recovery of the US market.

Ali Pervaiz: Looking forward to Fiscal Year 25, I firmly believe that the new product innovations and service offerings we introduced Fiscal Year 24, along with expansion into the value segment, will position us as nights in your driving extended period of top-line growth and profitability. Based on the above, for fiscal year 25, we are guiding to a revenue range of $460 to $470 million, and an adjusted EIME to the range of $27.5 to $29.5 million. This guidance range assumes the following key factors. Firstly, the US market will begin to recovery in the second half of fiscal year 25, delaying system revenue, associated margins, and adjusted EBITDA to the back half of the year.

Ali Pervaiz: Looking forward to Fiscal Year 25, I firmly believe that the new product innovations and service offerings we introduced in Fiscal Year 24, along with expansion to the value segment, will position us nicely to drive an extended period of top-line growth and profitability. Based on the above, for fiscal year 25, we are guiding to a revenue range of $460 to $470 million, and an adjusted EBITDA range of $27.5 to $29.5 million. This guidance range assumes the following key factors.

Speaker Change: Looking forward to FY25, I firmly believe that the new product innovations and service offerings we introduce in FY24, along with expansion to the value segment, will position us nicely to drive an extended period of top-line growth and profitability.

Speaker Change: Based on the above, for fiscal year 25, we are guiding to a revenue range of $460 to $470 million and an adjusted EBITDA range of $27.5 to $29.5 million. This guidance range assumes the following key factors.

Ali Pervaiz: Firstly, the U.S. market will begin its recovery in the second half of fiscal year 2025, delaying system revenue and associated margin, and adjusting evenness in the back half of the year. Secondly, China margined deferral due to delayed NMPA approval of the Precision Treatment Planning System to begin releasing starting in Q2 of fiscal year 25 and then normalizing in the back half of the year. Those are a few financial highlights. And with that, I'd like to hand the call back to Suzanne. Thank you, Ali.

Speaker Change: Firstly, the U.S. market will begin its recovery in the second half of fiscal year 2025, delaying system revenue and associated margin, and adjusting evenness in the back half of the year.

Suzanne Winter: Additionally, many Cyberknife system customers report strong case awareness for Cyberknife system versus other treatment platforms, with many specifically requesting to be treated on the Cyberknife system due to its strong branding and high precision capabilities. A key area of focus for R&D investment will be the expansion of next generation capabilities for the Cyberknife system to further advance the use of stereo attack radio surgery and SBRT and drive replacement of our install base in the developed markets like the US, Europe, and Japan.

Ali Pervaiz: Secondly, China margin deferral due to delayed NFPA approval of the precision treatment planning system to begin releasing starting in Q2 of fiscal year 25, and then normalizing in the back half of the year.

Speaker Change: Secondly, China margined deferral due to delayed NMPA approval of the Precision Treatment Planning System to begin releasing starting in Q2 of fiscal year 25 and then normalizing in the back half of the year.

Ali Pervaiz: Those are key financial highlights, and with that, I'd like to hand the call back to you then.

Suzanne Winter: Those are a few financial highlights and with that I'd like to hand the call back to Suzanne.

Suzanne Winter: In closing, I'm incredibly proud of our global employees and the progress they have made this year against each of our strategic growth objectives. While we did not grow the way we had planned, we end with very strong fourth quarter performance. We have major regulatory approvals in place, including full Tomosy approval in China and CE mark for the Helix platform.

Suzanne Winter: Thank you, Oli. In closing, I'm incredibly proud of our global employees in the progress they have made this year against each of our strategic growth objectives. While we did not grow the way we had planned, we ended with very strong portfolio performance.

Speaker Change: Thank you, Ali. In closing, I'm incredibly proud of our global employees and the progress they have made this year against each of our strategic growth objectives.

Speaker Change: Well, we did not grow the way we had planned. We end with very strong quarter performance.

Suzanne Winter: We have major regulatory approvals in place, including full-term policy approval of China, and CE mark for the Helix platform. We have a strong backlog of orders, commercial momentum in the majority of our markets, and strong customer demand for our unique radio therapy platforms. Additionally, we've navigated a number of macroeconomic factors over the last couple of years, including inflation for an exchange headwinds, and remain cautiously optimistic that as these conditions improved, could provide a tailwind to our performance. All of this sets us up nicely to deliver to our guidance of 3-5% top-line growth in greater than 40% evened up for the year.

Speaker Change: We have major regulatory approvals in place, including full Tomosy approval in China and CE mark for the Helix platform.

Suzanne Winter: Customer reception also continues to be strong on our R&D exact platform, which represents approximately 70 percent of product orders in FY24 driven by a clear R&D CT imaging, Syncretary Real-Time Motion Management, bioholes, which expands our breast treatment capabilities and see us online adaptive functionality that we introduced at the worsen progress and are planning a full introduction at SRO 25. Beyond penetrating the China market, we also intend to serve other high potential markets where patient access to radio therapy is challenged, particularly India, where we introduced our new Accurate Helix product at the Indian Cancer Congress last fall. Today, we are announcing that we have obtained CE Mark clearance for this product with the press release to follow and will ship our first unit to India in the coming months.

Operator: We have a strong backlog of orders, commercial momentum in the majority of our markets, and strong customer demand for our unique radiotherapy platforms. Additionally, we've navigated a number of macroeconomic factors over the last couple of years, including inflation and foreign exchange headwinds, and remain cautiously optimistic that as these conditions improve, could provide a tailwind to our performance. All of this sets us up nicely to deliver to our guidance of three to 5% top line growth and greater than 40% evens up for the year.

Speaker Change: We have a strong backlog of orders, commercial momentum in the majority of our markets, and strong customer demand for our unique radiotherapy platforms.

Speaker Change: Additionally, we have navigated a number of macroeconomic factors over the last couple of years, including inflation or an exchange headwinds and remain cautiously optimistic that as these conditions improve could provide a tailwind to our performance. [inaudible] we are now at the day,

Speaker Change: All of this sets us up nicely to deliver to our guidance of 3-5% top line growth and greater than 40% even jump for the year.

Suzanne Winter: In advance, our strategic growth pillars is the next phase of execution, as we drive to deliver compelling solutions to improved patient outcomes and quality of life for patients diagnosed with cancer or neurological disease.

Operator: And advance our strategic growth pillars into the next phase of execution as we drive to deliver compelling solutions to improve patient outcomes and quality of life for patients diagnosed with cancer or neurological disease. I will now turn it back over to the operator for Q&A. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone.

Speaker Change: In advance, our strategic growth millers is the next phase of execution as we drive to deliver compelling solutions to approved patient outcomes and quality of life for patients diagnosed with cancer or neurological disease. I will now turn it back over to the operator for Q and A.

Operator: I will now turn it back over to the operator for Q&A.

Suzanne Winter: Our next strategic pillar of expanding and growing our service business. We set out a multi-year plan to strengthen our service business, which represents a recurring revenue stream and margin expansion opportunity. Our service revenue has been essentially flat over the last decade and currently represents 48% of our global revenue for fiscal 24. Service contract revenue growth is largely dated by growth of our install base. In FY 24 we saw an expansion of our global install base in three of our four regions driven by meaningful growth in the APEC region and healthy growth involved EINNA into PAN regions.

Operator: Thank you.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch cell phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two.

Outbridge: Thank you. We will now begin the question and answer session.

Operator: If you're using a speaker phone, please pick up your handset before press. To withdraw your question, please press star. At this time, we'll pause momentarily to assemble our audience. Our first question comes from Xuyang Li from Jeffries, please go ahead. Very great.

Speaker Change: To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we'll pause momentarily to assemble our roster.

Operator: At this time, we'll pause, no materially, to assemble our office. Foster.

Young Lee: Our first question comes from young Lee from Jeffries.

Speaker Change: Our first question comes from Young Lee from Jeffries. Please go ahead.

Young Lee: Please go ahead. Very great.

Xuyang Li: Thanks for taking our questions. And congrats on a strong finish to the year. I guess the start is on the guidance. I was curious if you can, you know, talk a little bit more about it. You know, how much Tomo C is in the guidance?

Young Lee: Thanks for taking our questions, and there are congrats on a strong finish to the year. I guess this starts us on the guidance. What's curious is if you can talk a little bit more about it. How much Tomo C. is in the guidance. What are some of the potential upside and downside drivers I can get you to the top end or lower end.

Speaker Change: All right, great. Thanks for taking our questions and congrats on a strong finish to the year.

Young Lee: I guess to start just on the guidance, I was curious if you can, you know, talk a little bit more about it, you know, how much Tomo C is in the guidance.

Suzanne Winter: We're taking a longer term approach in the US with focused commercial investment, expanding our commercial footprint with the goal of ensuring the highest level of service and customer satisfaction for our best positions in competitive replacement cycles as well as upgrading our own install base.

Unknown Executive: Um, what are some of the potential upside and downside drivers that can get you to the top end or lower end? And, you know, I guess, within China, what are the expectations for either anti-corruption impacts or stimulus impacts? Hey, Xuyang, thanks so much for the question.

Speaker Change: What are some of the potential upside and downside drivers that can get you to the top end or lower end?

Young Lee: I guess within China, what are the expectations for either anti-corruption impacts or stimulus impacts?

Suzanne Winter: Expanding margin and profitability and improving our balance sheet with our third pillar. In 2023 Ali and I laid out a multi-year multi-faceted plan to drive margin expansion and cost efficiencies with a goal of leaving no stone unturned. While we have made good progress against our goals with actions that have helped us to navigate the impact of inflation, logistics costs, and foreign exchange fluctuations, we are still in the early innings of improvements and believe that we've laid out a strong foundation to show material improvement to margins as macro factors improve and as we increase scale.

Suzanne Winter: Hey, thank you so much for the question. You know, I think in terms of overall guidance, maybe you're starting with the bottom end versus the top end. I think really the two big factors are the recovery and the timing of the recovery of the US market, which could really take us to the higher end versus the lower end that continues to be delayed. So that's a significant factor. And then obviously there's certainly a lot of different macro tailwinds that we continue to track as well. So I think those are sort of the two main factors that really determine the range of our guidance between 460 to 470, the important one really being the timing of the US market recovery.

Unknown Executive: You know, I think in terms of overall guidance, maybe starting with the bottom end versus the top end, I think really the two big factors are the recovery and the timing of the recovery of the U.S. market, which would really take us to the higher end versus the lower end that continues to be delayed. So that's a significant factor. And then, obviously, there are certainly a lot of different macro tailwinds that we continue to track as well.

Speaker Change: Thanks so much for the question. You know, I think in terms of overall guidance,

Speaker Change: And maybe starting with the bottom end versus the top end, I think really the two big factors are the recovery and the timing of the recovery of the U.S. market.

Speaker Change: which really take us to the higher end versus the lower end that continues to be delayed. So that's a significant factor. And then obviously there's certainly a lot of different macro tailwinds that we continue to track. [inaudible]

Suzanne Winter: Finally in FY 24 we strengthen our existing strategic partnerships with GE health care and research and also creating new ones like our product development partnerships with CRED, LINDUS AI, RED formation, and service partnerships with Airbus and True North. We believe these alliances help us bring investment class solutions to the market faster, improve our sales funnel, and enhance our win rate.

Unknown Executive: So I think those are sort of the two main factors that really determine the range of our guidance between 460 to 470, the important one really being the timing of the U.S. market recovery. I think overall when you think about our guidance for next year, you know, maybe I could just provide some more color. If you think about revenue, you know, we really think it's going to be a similar first half, second half performance that we've had historically, which is 45% of the first half versus 55% of the second half, which really is related to the demand profile that we're seeing for our customers. I think one thing that is noteworthy in the first half is that, you know, we do expect seasonality between Q1 and Q2. Historically speaking, Q1 has been our lowest revenue quarter.

Speaker Change: I think those are sort of the two main factors that really determine the range of our guidance between 460 to 470, the important one really being the timing of the U.S. market recovery.

Suzanne Winter: I think overall when you think about our guidance for next year, maybe I could just provide some more color. If you think about revenue. You know, we think it's going to be a similar first half, second half performance that we've had historically, which is 45% of the first half versus 65% of the second half, which really is related to the demand profile received for our customers. I think the one thing that is noteworthy in the first half is that, you know, we do expect seasonality between Q1 and Q2. Historically speaking, Q1 has been on the lowest revenue quarter.

Speaker Change: I think overall when you think about

Speaker Change: Our guidance for next year, you know, maybe I just provide some more color. If you think about revenue, you know, we really think it's going to be a similar first half, second half performance that we've had historically, which is

Suzanne Winter: I wanted to take a moment and highlight some of the key milestones in FY 2024 that have put us in a more favorable position going into FY 2025. We enter FY 25 with a strong backlog of orders which at 487 million represents over two years of product revenue potential. From a demand perspective we saw global orders grow by 10% year over year for the full year with an annual book to build ratio of 1.5 exceeding our goal of 1.2.

Speaker Change: 45% of the first half versus 55% of the second half, which really is related to the demand profile that we're seeing for our customers.

Speaker Change: I think one thing that is noteworthy in the first half is

Speaker Change: that, you know, we do expect seasonality between Q1 and Q2. Historically speaking, Q1 has been our lowest revenue quarter.

Suzanne Winter: You know, Q1 and 24, perhaps a little bit of an anomaly to maybe Q1 and 23 is the better reputation of how we expect revenue to unfold in the first half between those two quarters. And then all of the back out of the year Q3 tends to be the lower revenue quarter. And then we obviously have a huge ramp up in Q4, which we experienced in this particular year. Okay, so I think that's certainly very important to take into consideration as we think about the revenue profile for next year. You know, when it comes to our, even the profile, I would say it's somewhat similar in nature to what we experienced in fiscal year 23.

Unknown Executive: You know, Q1 of 24 perhaps was a little bit of an anomaly, so maybe Q1 of 23 is a better representation of how we expect revenue to unfold in the first half between those two quarters. And then also in the back half of the year, Q3 tends to be the lower revenue quarter and then we obviously have a huge wrap-up in Q4, which we experienced this particular year. Okay.

Suzanne Winter: On the operational side we completed the first full year on our new SAP ERP system without major negative disruptions. I'm extremely proud of our team that this was a foundational milestone for the company. I expect continues for activity benefits and better data and analytics to help us make improved operational decisions to drive further efficiencies. As I mentioned on past folks working capital will be a key part of cash flow improvement and we delivered a $21 million reduction in total net inventory from Q3 and $7 million reduction for the fiscal year.

Speaker Change: Q1 of 24 perhaps was a little bit of an anomaly to maybe Q1 of 23 is a better representation of how we expect revenue to unfold in the first half between those two quarters. And also in the back half of the year, Q3 tends to be the lower revenue quarter, and then we obviously have a huge ramp up in Q4, which we experienced this particular year. So I think that's certainly very important to take into consideration as we think about...

Unknown Executive: So I think that's certainly very important to take into consideration as we think about revenue profile for next year. When it comes to our EBITDA profile, I would say it's somewhat similar in nature to what we experienced in fiscal year 23. The biggest factor to take into consideration over there is really our service margin and our service parts consumption. So our overall service margin for the year was roughly 32.9% for the total year. In Q1 of fiscal year 24, it was 43%, so it was 10 points higher than where we actually ended the year.

Speaker Change: revenue profile for next year. You know, when it comes to our even the profile, I would say it's somewhat similar in nature to what we experienced in fiscal year 23. And, you know,

Ali Pervaiz: And, you know, the biggest factor taking consideration over there is really our service margin and our service parts and sections. Our overall service margin for the year was roughly 39 to 32.9% for the total year. In Q1 of this clear 24, it was 43%. So it was 10 points higher than where we actually ended the year. And that was artificially higher because if we recall, we had an ERP implementation that was completed in Q1 of fiscal year 24. And so we actually had almost $5 million of lower parts consumption, but then trickled into the remainder of the year.

Suzanne Winter: This remains a priority throughout going into FY 25. And finally, answering into the Type B market in China has been a long journey for us, and I am pleased with how we have worked at the cross-functional team to ramp up our joint venture manufacturing site in Tianjin, completing the first 10 system bills of Tomlasee and executing our first customer ship that have Tomlasee in June to Shandong Hospital. With these key milestones behind us, I believe we are well positioned to execute our strategic growth plan in FY 2025.

Speaker Change: The biggest factor to take into consideration over there is really our service.

Speaker Change: Margin, and our service parts consumption, so our overall service margin for the year.

Speaker Change: with roughly 39 to 32.9%

Speaker Change: for the total year. In Q1 of fiscal year 24, it was 43%. So it was 10 points higher than where we actually ended the year.

Unknown Executive: And that was artificially higher because, if you recall, we had an ERP implementation that was completed in Q1 of fiscal year 24. And so we actually had almost $5 million of lower parts consumption that then trickled into the remainder of the year. And so it is going to be important to ensure that, as we're thinking about Q1, that that was a one-off and that's certainly not going to repeat.

Speaker Change: And that was artificially higher because, if you'll recall, we had an ERP implementation that was completed in Q1 of fiscal year 24. And so we actually had almost $5 million of lower parts consumption that then trickled into the remainder of the year.

Suzanne Winter: The U.S, remains challenging and we will continue to monitor key performance indicators. Additionally, we will closely watch China market conditions, including any remaining flowdown due to the anti-corruption campaign, in addition to the timing of the China stimulus program, which we believe can be a potential tailwind aimed at replacing the opportunities. These factors could impact demand for installations in FY 25, but believe these are timing-related and difficult to predict exact timing and trajectory, and therefore are really included in our guidance that we wait to see stronger signals of U.S, market recovery.

Ali Pervaiz: And so it is going to be important to ensure that as we're thinking about Q1, is that what they won off? And that's certainly not going to repeat. And so, again, that's one factor to take into consideration. Then, as they sort of shared within the script, we do expect the China margin deferral to start to release in Q2 of our fiscal year. And that's really related to the fact that it is the year-end for our JV partner. And they're starting to bring a lot of customers online, and they expect the bolus of shipments to occur in Q2 and beyond.

Speaker Change: and so it is going to be important to you know ensure that as we're thinking about Q1 that that was a one-off and that's certainly not going to repeat.

Unknown Executive: And so, again, that's one factor to take into consideration. And as I sort of shared within the script, we do expect the China margin deferral to start to release in Q2 of our fiscal year. And that's really related to the fact that it is the year-end for our JV partner, and they're starting to bring a lot of customers online, and they expect a bolus of shipments to occur in Q2 and beyond

Speaker Change: And so, again, that's one factor to take into consideration, then as I sort of shared within the script.

Speaker Change: We do expect.

Speaker Change: that are the China margin to follow to start to release.

Speaker Change: Q2 of our fiscal year. And that's really related to the fact that it is the year-end for our JV partner. And, you know, they're starting to bring a lot of customers online, and they expect the bolus of shipments to occur in Q2 and beyond. And that's when we actually

Suzanne Winter: And in summary, I'm proud of the foundation we've set for future growth. We achieved strategic customer wins in the marketplace, penetrated new markets and forged key partnerships that enhance our solutions and improve our competitiveness. While we are still early in our transformation, we end the year to drive pipeline growth, gaining share in the markets where we compete through strong growth in margin and profitability of the coming years.

Ali Pervaiz: And that's what we actually started. I'm thinking about the release activities just starting to pick up. So I think those are really sort of the way to think about the guidance in terms of low end versus high end is also kind of how we think about the year on goal.

Unknown Executive: And that's when we actually start. I think that's really sort of the way to think about the guidance in terms of low-end versus high-end and then also kind of how we think about it year-on-year.

Speaker Change: Pervaiz, Unknown Executive, Jesse Chew, Suzanne Winter

Unknown Executive: That's very comprehensive, very helpful. I guess, maybe just to follow up, I was wondering if you can talk a little bit more about the contributions from TOMO-C in China and, you know, what you're hearing from the anti-corruption campaign side and anything on the stimulus side. Yes, you know, absolutely.

Ali Pervaiz: Okay, great. That's a very comprehensive, very helpful. I guess maybe this to follow up was wondering if she can talk a little bit more about the contributions from Tomaszi in China and, you know, we are hearing from the anti-corruption campaign side and anything on the stimulus side.

Speaker Change: Okay, great. That's very comprehensive, very helpful.

Ali Pervaiz: I will now turn it over to Ali who will cover our financials.

Speaker Change: I guess maybe this to follow up was wondering if you can talk a little bit more about the contributions from Tomo's Sea in China and, you know, we are hearing from the anti-corruption campaign side and anything on the stimulus side.

Ali Pervaiz: Thank you, Zunan, and good afternoon, everyone. I would like to begin by thanking our global cross-confrontal teams who banded together and executed with unwavering dedication to deliver the strongest revenue quarter of the company's history. As we had mentioned before, fiscal year 2024 was a very important year for our company. Not only did we enter the value market of radiation therapy equipment to essentially double our industrial markets, we also continue to add more operational efficiencies toward business model, which continues to move the needles on our margin expansion plan.

Suzanne Winter: Yeah, absolutely.

Unknown Executive: And, you know, the tone states that, you know, first we're all celebrating so after a very long time, waiting for the final approval to really do a full introduction, certainly our debut partner, very excited. We did shift our first meeting to our first customer at the very end of 24 and now they are working very closely to drive the remainder of the take installation based on customer timing in the first half and of course into the back half of the year as well. But really, we think they'll be a search in Q2 in terms of the overall installation. You know, I think that the response is very strong.

Suzanne Winter: I'm seeing out the Jones states that, you know, first we're all celebrating, so after a very long time waiting for the final two goals to really do a following production. Certainly, our daily partner, very excited. We did shift our first unit to our first customer at the very end of 24, and now they are working very closely to drive the remainder of the take-insulation based on customer timing in the first half and, of course, into the back half of the year as well. But really, we think they'll be researched in Q2 in terms of the overall installation.

Speaker Change: Yes, you know, absolutely. And, you know, the trophy, you know, of course, we're all celebrating after a very long time waiting for the final approval to really do a full introduction. Certainly our JV partner, very excited. We did ship our first unit.

Ali Pervaiz: Although we face macroeconomic evidence, particularly in the U.S., as well as unbearable foreign exchange and inflation, we believe we are in a good position for growth in most of our markets in a well-positioned one of the U.S, market recovery covers. Now, turning to the quarter, net revenue to the fourth quarter was $134 million, which was up 14% versus prior, and the highest reported revenue quarter in the company's history exceeding Q4 last year by $16 million, exhibiting strong demand for our innovations, driven by a 28% increase in year or year of product revenue.

Speaker Change: to our first customer at the very end of Q4, and now they are working very closely to drive the remainder of the installations based on customer timing in the first half, and of course, into the back half of the year as well. But really, we think there'll be a surge in Q2 in terms of the overall installations. You know, I think that the response is very strong, and again,

Suzanne Winter: You know, I think that the response is very strong and again China and the year very strong orders to which we're all translating to revenue over the coming years. So we're very enthusiastic about the potential, and now that we have this clearance behind this.

Unknown Executive: And again, China and the year very strong orders to which we'll translate into revenue over the coming years. So we're very increasingly asking about the potential. Now that we got...

Speaker Change: China End-of-the-Year Very Strong Orders, to which we'll translate into revenue over the coming years. So we're very enthusiastic about the potential.

Ali Pervaiz: Net revenue on a constant currency basis for the fourth quarter was approximately $137 million, which represented 15% increased versus prior year. On a full-year basis, total revenue was $447 million, which was roughly flat from the prior fiscal year. On a constant currency basis, total revenue for the fiscal year was $448 million, and represents a slight increase versus the prior fiscal year. Despite the America's region being down 26% versus prior year, revenue in the rest of the world grew by 10% year over year, and made up 80% of our global revenue fiscal year 24, which is a powerful indication of our continued strength in those markets.

Unknown Executive: Unknown Speaker, Jason Wittes, Unknown Attendee, Neil Chatterji, Xuyang Li, Ali Pervaiz, Suzanne Winter, Brandon Carney, Jesse Chew, Awais Mirza, Sandeep Chalke, Seth Blacksburg, Accuray Inc., Jesse Chew, Awais Mirza, Sandeep Chalke, Seth Blacksburg, Accuray Inc., Jesse Chew, Unknown Speaker, Jason Wittes, Unknown Attendee, Neil Chatterji, Xuyang Li, Ali Pervaiz, Suzanne, Until we start to see greater things. Alright, great. That's very helpful. Thank you so much.

Suzanne Winter: You know, just in terms of anti-corruption campaign, I think there's just a lingering sort of processes that, you know, have slowed down maybe that over the past year. The process, but again, it certainly has a cost from the results that we are seeing. But we do expect that some of this would be the new model. So I think our team just sort of built that into their overall forecast that some things are just going to take longer.

Speaker Change: is now that we have.

Clarence: Clarence behind us.

Clarence: You know, just in terms of the anti-corruption campaign, I think there's just lingering, sort of, prophecies that, you know, have slowed down, you know, over this past year, the process, but again, it certainly hasn't hurt us from the results that we are seeing, but we do expect that some of this will be the new normal, so I think our team just sort of built that into their overall

Speaker Change: Forecast.

Suzanne Winter: In terms of the stimulus, you know, that is starting to roll out. Again, it's an interest-free loan that the government is providing and not just the health care in terms of many industries. But it's really directed at replacement of older systems. And so, you know, again, our team in China is positioning new customers to be able to train the access. Those funds, you know, they have not. We have a seed that actually initiated yet, but we do expect that probably in the back half of the year we'll start to see some contributions to that, but we have not built that into our numbers.

Speaker Change: In terms of the stimulus, you know, that is starting to roll out, it's again, it's a

Ali Pervaiz: Project revenue for the fourth quarter was $80 million, up 28% from prior year and up 29% in Cox's currency basis. As Suzanne mentioned, product revenue included 36 system shipments, which is a new record number of ship shipments in the company's history and a 24% unit growth versus prior year. On a full year basis, product revenue was $234 million, roughly flat from the prior year. Full year product revenue and up for the impact of foreign exchange was 235 million represented despite increased versus prior year.

Speaker Change: And interest-free loans that the government is providing, and not just to healthcare, but many industries. But it's really directed at...

Speaker Change: replacement of older systems. And so, you know, again, our team in China is positioning these customers to be able to try and access those funds. You know, they have not, we haven't seen it actually initiated yet, but we do expect that probably in the back half of the year, we'll start to see some contribution to that, but we have not put that in.

Ali Pervaiz: Service revenue for the quarter was $55 million, down 2% from the prior year and flat in a Cox's currency basis, primarily given by $3 million of lower revenue related to training and lower spare parts volume. Notably, the contract revenue portion of our service business was up 4%, or 1.8 million versus the prior year, which showcased this growth in the mostly annuity part of the service business as our initial base continues to expand globally.

Suzanne Winter: I truly start to see greater signals. All right, great.

Speaker Change: Unknown to our members until we start to see greater signals.

Suzanne Winter: That's very helpful.

Marie Thibault: Thank you so much.

Speaker Change: Alright, great. That's very helpful. Thank you so much.

Marie Thibault: Our next question comes from Marie Tibo from BTIG. Please go ahead. Hi, thanks for taking the questions. I wanted to follow up a little bit on Japan. I heard that, you know, after you exclude the yen headwind, it certainly sounds like strong demand. I think in the past, you've said that you expected to see a strong backlog come through in that country. I'm curious if some of that came through in this quarter. And how long we might expect some of that demand to last.

Operator: Our next question comes from Marie Thibault from BTIG, please go ahead. Hi, thanks for taking the questions. I wanted to follow up a little bit on Japan.

Speaker Change: Our next question comes from Marie Thibault from BTIG. Please go ahead.

Ali Pervaiz: Full year service revenue was $212 million, down 1% versus prior year. Service contract revenue was also a highlight for full year service revenue, which grew at 4.5% and contributed $8.5 million in additional revenue versus last year. This is no worthy since contract revenue represents greater than 90% of service revenue. Growth orders for the fourth quarter were approximately $95 million and represented a book to bill ratio of 1.2. On a full year basis, growth orders were $342 million and represented a book to bill ratio of 1.5.

Marie Thibault: I heard that, you know, after you exclude the yen headwind, it certainly sounds like strong demand. I think in the past you've said that you expected to see a strong backlog come through in that country. I'm curious if some of that came through in this quarter and how long we might expect some of that demand to last. Thanks for your question, Marie.

Marie Tibo: Hi, thanks for taking the questions. I wanted to follow up a little bit on Japan. I heard that, you know, after you exclude the yen headwind, it certainly sounds like strong demand. I think in the past you've said that you expected to see a strong backlog come through in that country. I'm curious if some of that came through in this quarter and how long we might expect some of that demand to last.

Suzanne Winter: Thanks for your question, Marie. Yes, I think that we've just been cute for kids coming through with strong revenue performance. You know, it is a developed market, and we've talked about this in the past: a developed market. You know, you don't have to say first, we'll create some of the emerging markets, but our Japan team is really going after competitive replacements. We have done just an outstanding job in terms of really going after age and still base, not only hours, but also our competition. And, you know, again, we've talked a bit about that being the number two position.

Unknown Executive: Yes, I think that Japan's Q4 did come through with. We think they're on their way to being number one just based on how they're trending at this point. So, you know, again, we look at the Japan team, and we think that they have set a high bar for the other regions just in terms of really how to drive strong customer satisfaction.

Speaker Change: Thanks for your question, Marie. Yes, I think that we, you know, Japan's Q4 did come through with some

Ali Pervaiz: Moving to the backlog, the end of the fourth quarter was a backlog of approximately $487 million, which represents greater than 2 years of product revenue, and we feel confident about the ability of this backlog to convert to revenue within 30 months. As far as our diligence and ensuring the high quality backlog, we cancel three units representing a process with the $6 million of orders due to evolving customer dynamics. Our overall growth margin for the quarter was 28.6% versus 31.9% in the prior year, with the year over your decline primarily due to 2.1 points of higher margin deferral for Chinese shipments, and 2.1 points from higher parts consumption.

Sean Bradley: He's shot in breath in the air

Speaker Change: It is a developed market, and we've talked about this in the past, a developed market.

Speaker Change: You know, do not have the same sort of gold grades as some of the emerging markets, but our Japan team is really going after competitive replacements, and they have done just an outstanding job in terms of really going after age-to-soul base, not only ours, but also our competition, and, you know, again, we've talked a bit about them being the number two position.

Suzanne Winter: But, you know, we think they're on their way to being number one just based on their algorithm trending at this point. So, you know, again, we look at the Japan team, and, you know, we think that they are based on a high graph of the other regions, just in terms of really how to drive strong customer satisfaction. So we do expect continuing important contributions from that region. Okay, that's helpful.

Ali Pervaiz: Excluding Egypt factors, our reporting growth margin would have been higher by 4.2 points implying year over your margin attribution. As discussed in previous quarters, the China margin deferral is a delay of margin recognition until the final product makes it to be end user and we expect to recognize all of the deferred margins in Q2 FY25 and beyond. Our consumption was higher due to a supplier quality issue we faced in the quarter that resulted in higher than anticipated failure rate of a critical component in our cybernite platform.

Speaker Change: But, you know, we think they're on their way to being number one, just based on how they're trending at this point.

Speaker Change: So, you know, again, we look at the Japan team, and, you know, we think that they are, they've set a high bar for the other regions, just in terms of really how to drive strong customer satisfaction. So we do expect continued important contribution from that region.

Unknown Executive: And then maybe talking about one of the more emerging regions that has a lot of opportunity, congrats on the CE mark for Helix. Can you tell us a little bit more about your plans there in India? Could we expect to see some orders get booked here in this fiscal year? And while we're talking about regulatory wins, have there been any updates from the FDA on CINO since you submitted the 510K last year? Thanks. Yes. Let me talk about India first.

Marie Thibault: And then maybe talking about one of the more emerging regions that has a lot of opportunity. Congrats on the CE Mark for Helix. Can you tell us a little bit more about your plans there in India? Could we expect to see some orders get booked here in this fiscal year?

Ali Pervaiz: Our engineering teams have worked closely with the supplier to identify the root cause and have put in put appropriate corrective actions in place. We continue to monitor the quality issue and expect it will be resolved in the first half of fiscal year 25. Excluding the China margin deferral and the higher parts consumption, our growth margins would have been higher than prior year driven by lower cost due to productivity actions and the team has prioritized along with higher contract revenue and pricing in our service business as part of our margin expansion actions.

Speaker Change: Okay, that's helpful. And then maybe talking about one of the more emerging regions that has a lot of opportunity. Congrats on the CE mark for Helix. Can you tell us a little bit more about your plans there in India? Could we expect to see some orders get booked here in this fiscal year? And while we're talking about regulatory wins, have there been any updates from the FDA on CINOS since you submitted the 510K last year? Thanks.

Marie Thibault: And while we're talking about regulatory wins, have there been any updates from the FDA on Senos since you submitted the 510(k) last year? Thanks. Yes.

Suzanne Winter: Let me talk about India first. We do have the CE mark. There's still a couple more regulatory hurdles in India, but we do expect that we do a shipping position by the end of our calendar year. But we are anticipating orders now. So, the good news is, you know, we have started to go and find all orders within that region. And you're right. We see a lot of potential in India. And we believe that ending a half of the potential, you know, over the coming years to be a, you know, asking a market that's China's potential.

Unknown Executive: We do have the CE mark. There's still a couple more regulatory hurdles in India, but we do expect that we'll be in the shipping, by the end of our calendar year, but we are able to take orders now. So the good news is, you know, we can start to build a funnel of orders within that region. And you're right, we see a lot of potential in India. And we believe that India has the potential, you know, over the coming years to be, you know, as big a market as China's potential. Right now we think it's about $100 to $125 million market. We think the dealings will play very well there.

Speaker Change: Yeah.

Speaker Change: Let me talk about India first, we do have CE Mark, there's still

Ali Pervaiz: On a full year basis, our overall growth margin was 32% from where the 34.4% in the prior year, with the decline mainly driven by 1 point of higher China margin deferral, which we expect to contribute to the margin beginning in Q2 FY25 and 2 points of higher net parts consumption versus prior year, which is partially due to the supplier quality issue mentioned earlier. By 40 change overall served as a 30 basis points headwind for us in 1534, the Japanese ants alone contributed to a 1.1 point headwind, which was partly offset by other global cards you turned to hear.

Speaker Change: Pervaiz, Unknown Executive, Jesse Chew, Suzanne Winter

Speaker Change: By the end of our calendar year.

Speaker Change: But we are able to take orders now, so the good news is...

Speaker Change: We can start to build a funnel of orders within that region, and you're right, we see a lot of potential in India, and we believe that India has the potential, you know, over the coming years.

Suzanne Winter: Right now, we think it's about 100 to 125 million dollar markets. We do want to play very well there. But meanwhile, we are investing in our commercial footprint in India as well as our back office. And because we do believe the potential is very strong. And now, we've dealing with, you know, we've got a full portfolio. We do want to go out to this market.

Speaker Change: to be, you know, as big a market as China is potentially right now. We think it's about $100 to $125 million market. We think the humans will play very well there. But meanwhile, we are investing in our commercial footprint in India as well as our back office.

Ali Pervaiz: Had the Japanese and not deteriorated by approximately 12% of 1534, it would have contributed an additional $5 million for bottom line. Operating expenses of the fourth quarter were $31.6 million compared to $38.1 million in the fourth quarter prior fiscal year. The 17% year-over-year reduction was driven by improved efficiency of occupations, benefits from the restructuring we announced earlier in the year, and a lower company bonus payout. Operating expenses for the full year were $142.4 million compared to $151.6 million in prior year, representing a 6% reduction year-over-year, showcasing focus costs and control as we continue to push our teams to prioritize return and investment as part of our margin expansion actions.

Unknown Executive: But meanwhile, we are investing in our commercial footprint in India, as well as our back office, because we do believe the potential is very strong. And now we feel like, you know, we've got a full portfolio, we should be able to go out. Just in terms of the regulatory approval and C-Notes, you know, that is extended, I think, from, you know, what we had originally thought. Again, we had gone back and we're having conversations with the FDA in terms of just making sure that we now have the cybersecurity requirements as well as some other requirements.

Speaker Change: because we do believe the potential is very strong. And now we feel like, you know, we've got a full portfolio, we should be able to go after this market.

Suzanne Winter: Just in terms of the regulatory approval and Senos, you know, that is an extended, I think, from, you know, what we had originally thought. But again, we had gone back and we're having conversations with the FDA in terms of just making sure that we now have the cybersecurity requirements, as well as some other requirements around human factors. So, at this point, we're planning for a full introduction at SRO. But we're in a shipping mode; we're probably by the end of the calendar year. So, you know, we do think it'll help us to win new round-and-back orders, but the revenue trial that he knows will come within.

Speaker Change: Just in terms of the regulatory approval and C-Notes, that is extended, I think, from what we had originally thought. Again, we had gone back and were having conversations with the FDA in terms of just making sure that we now have the cybersecurity requirements as well as some other requirements.

Unknown Executive: , and they will be in a shipping mode probably by the end of the calendar year. So we do think it will help us to win the new Ravni FACT orders, but the revenue from OPENA will come within the first half of the calendar year. Okay, very helpful. So then just to clarify more regulatory hurdles in India for Helix, is that things like treatment planning system or something else? Oh, yeah, no, no, it's more at SUDESCO, you know, and it's more of a localization kind of hurdle.

Speaker Change: So at this point, we're planning for a full introduction at Estro, but we'll be in a shipping mode probably by the end of the calendar year. So you know, we do think it'll help us to win the new RatiFact orders, but the revenue from OPENA will come within the year.

Ali Pervaiz: Operating in the fourth quarter was $6.8 million compared to a loss of $0.5 million in prior year-over-ing income for the full year was $0.5 million compared to $2.4 million in the prior fiscal year. Adjustment even for the quarter was $10.1 million compared to $5.2 million for the prior year period. For the full year, adjustment even though was $19.7 million compared to $23.9 million for the prior period. From a year-over-year perspective, there were two main factors that negatively impacted our adjustment even though.

Marie Thibault: But of course, half of that price; anything. Okay, very helpful.

Marie Thibault: Susanne, just to clarify, more regulatory hurdles in India for Helix, is that things like treatment planning system or something else? So, yeah, no. Now, we've more of that to that scope, you know, and it's more of a localization kind of hurdle. And what we need to do is make sure that we shift our first order and then we have someone committed to that local body that does testing on it. And then, we open it up to position.

Speaker Change: I'm going to put this cap at that point for you, please. I'm going to put this cap at that point for you, I'm going to put this cap at that point for you, please.

Speaker Change: Okay, very helpful Suzanne. Just to clarify, more regulatory hurdles in India for Helix, is that things like treatment planning system or something else?

Unknown Executive: And what we need to do is make sure that we ship our first order, and then we have someone come in and send a local body that does testing on it. And then we open it up to bring the ship.

Speaker Change: Yeah, no, no, it's more at Sodexo, you know, and it's more of a localization.

Ali Pervaiz: Firstly, we deferred $5 million of additional China margin versus last year, which we know of the timing-related issues that will result in a benefit starting in Q2 of fiscal year 25, and will be normalized going forward now that we have the NMPA approval for the precision treatment planning system. Secondly, we experienced $4 million of higher-part consumption on which $2.4 million was related to a particular supplier quality issue, which we anticipated resolving in the first half of fiscal year 25.

Speaker Change: Curtain, and what we need to do is make sure that we ship our first order, and then we have someone come in and send that mobile body that does testing on it. And then we open it up to bring shipments.

Marie Thibault: Oh, Katja. Okay. Thank you so much. Nice quarter. Thank you.

Unknown Executive: Ah, gotcha. Okay. Thank you so much.

Speaker Change: Ah, Katja. Okay, thank you so much, nice quarter. Thank you.

Broxoneal: The next question comes from Broxoneal from Lake Street Capital Markets. Please go ahead. Thank you very much. Good afternoon. I'm just curious if you could give us a little more color on the US market in particular. It's a little bit about the competitive environment. Do you feel like your Danish share or losing share, gaining bunkers, losing bunkers, or what do you think the outlook is for fiscal 2025 in the US?

Unknown Executive: Nice quarter. The next question comes from Brooks O'Neill from Lake Street Capital Markets, please go ahead. Thank you very much. Good afternoon.

Katja: Thank you.

Katja: The next question comes from Broxoneal from Lake Street Capital Markets. Please go ahead.

Operator: I'm just curious if you could give us a little more color on the US market in particular, maybe a little bit about the competitive environment. Do you feel like your, Danny Share, or Losing Share, Danny Bunkers, Losing Bunkers, and what do you think the outlook is for fiscal 2025 in the US? Thanks for your question, Brooks. I mean, I would say the US market, you know, when we talk about revenue, we're really talking about the delays that we see our customers having, order to installation and getting the capital equipment priorities to be able to install. Unknown Speaker, Jason Wittes, Unknown Attendee, Neal Chatterji, Awais Mirza, Sandeep Chalke, they have greater visibility.

Ali Pervaiz: Without these two issues, our justice even though would have surfaced last year, which points to strong underlying operating performance of the business. We described the reconciliation between gap net income and adjusted even though, you know, earnings issued earlier today. Turning to the balance sheet, total cash, cash equivalent and short term restricted cash amounted to $69 million compared to $61 million in the end of last quarter. Net accounts received over approximately $92 million, up to $19 million from the last quarter, with the record number of system shipments.

Brooks O'Neill: Thank you very much. Good afternoon. I'm just curious if you could give us a little more color on the U.S. market in particular, maybe a little bit about the competitive environment. Do you feel like your

Speaker Change: gaining share or losing share, gaining bunkers, losing bunkers? And what do you think the outlook is for fiscal 2025 in the in the US?

Suzanne Winter: Thanks for your question, Broxoneal. I would say the US market, too, when we talk about revenue, we're really talking about the delays that we see our customers coming from the border to information and getting the capital preference priorities to be able to install what we saw over FY24 when we slow down lower priority growth radiation therapy. But I think as we build into, that's why 25 plus planning out is what our customers have been telling us, which it is made effective through the successful improvement in the back half of the year. They have greater visibility, as it is called.

Speaker Change: And thanks for your question, Brooks.

Ali Pervaiz: Our net inventory balance was $138 million, down $21 million from the prior quarter. I'm extremely proud of the way our team's executed to improve working capital performance with a substantial decline in inventory and increase in cash, which resulted in $9.4 million of free cash flow generation in Q4.

Speaker Change: I would say the U.S. market, you know, when we talk about revenue, we're really talking about the delays that we see our customers having from order to installation and getting the capital priorities to be able to install.

Speaker Change: What we saw, you know, over FY24 was a slowdown, you know, lower priority for radiation therapy. But I think as we go into FY25, what's playing out is what our customers have been telling us, which is they expect to see some gradual improvement in the back half of the year. They have greater visibility. As a result, we have greater visibility. So we think the back half of the year will start to see a gradual improvement and then more of a full recovery in FY26.

Ali Pervaiz: In summary, fiscal year 24 was a challenging year for us to execute through from a macro standpoint. While we saw inflation ease slightly over last year in the foreign exchange volatility, investments to the Japanese end served as a big headwind that hampered our results. Additionally, this blowdown of the U.S, market drove a 26% year over your decline in revenue from that region, which also happens to be a higher margin region in our portfolio.

Unknown Executive: As a result, we have greater visibility. So we think the back half of the year will start to see it as more of a full recovery in FY26. You know, in terms of, you know, are we winning?

Suzanne Winter: We have greater visibility to think the back half of the year will start to see as much improvement as that more of a full recovery in FY26. In terms of, are we winning? Our orders actually were good in the US, and overall it was made percent less and worse. So we think that's very strong. We think it's faster than the overall market growth and that we are gaining share as a result of our strong customer reception to our new product innovation. So what we're really looking at, and we take a look at the region for the year, is what is that timing of order to installation, and we help to accelerate that.

Ali Pervaiz: Despite those headwinds, our global teams worked tirelessly and were able to grow total revenue by 10% year over your, excluding the Americas, which also represents 15% year over your growth in product revenue, which will serve as a catalyst for service business in the coming quarter. Another positive indicator for our business, there was a strong growth in service contract revenue, 4.5% year over year, represents where is the 90% of service revenue. I'm extremely proud of the financial discipline and operating rigor we have put in place over the last two years across our entire organization.

Unknown Executive: You know, our orders actually were good in the U.S. and overall it was an 80% growth in orders. So we think that's very strong. We think it's faster than the overall market growth and that we are gaining share as a result of, you know, our strong customer reception to our new product innovation. So, you know, what we're really looking at, as we take a look at the region for the year, is what is that timing from order to installation?

Speaker Change: You know, in terms of, you know, are we winning, you know, our orders actually were good in the U.S. and overall it was an 80% growth in orders. So we think that's very strong. We think it's faster than the overall market growth and that we are gaining share as a result of, you know, our strong customer reception to our new product innovation. So, you know, what we're really looking at as we take a look at the region for the year is what is that timing of order to installation and can we help to accelerate that. And, you know, some of the things that are better visibility, the other is, is making sure that we've got a very robust.

Unknown Executive: And can we help to accelerate that? And, you know, some of the things that are better visibility, the other is, is making sure that we've got a very robust order to revenue process, so that we work very closely with our customers to help them to get the right order. Great. Let me ask one more. Appreciate the color.

Ali Pervaiz: Our teams continue to execute from an operational perspective, and are later focused on margin expansion through pricing actions, service growth, operational excellence, and focused affects management. While we've had many headless and growth margins, the hard work being done in all these areas above is helping to offset macro factors, and we believe will immediately contribute to our PNLs in the near term, once those examinance factors dissipate. Additionally, we are well-positioned to accelerate our growth in APEC and EIMEA while anticipating the recovery of the US market.

Suzanne Winter: And some of the things that are better visibility, the other is make sure that we've got a very robust order to revenue process so that we've learned very closely with our customers, can help them do the prego menu.

Speaker Change: in order to revenue process so that we've worked very closely with our customers to help them do what they're going to do.

Broxoneal: Great. Let me ask one more. Appreciate the color.

Speaker Change: Marie Thibault, Jason

Speaker Change: Great. Let me ask one more. Appreciate the color. A year or two ago, a lot of focus on service, margin improvement, service growth.

Broxoneal: You were to go a lot of focus on service margin improvement service growth. Would you say if I was listening correctly, maybe I wasn't, but it sounded like most of the service opportunity is perhaps more tied to system shipments, new system shipments. And I guess the question really is: do you continue to see opportunity to drive growth in service and service margin?

Unknown Executive: A year or two ago, there was a lot of focus on service, margin improvement, and service growth. Would you say if I was listening correctly? Maybe I wasn't, but it sounded like most of the service. Opportunity is perhaps more tied to system shipments, new system shipments. And I guess the question really is, do you continue to see opportunity to drive growth through them? in Service and Service Margin. Thank you very much. Yes, absolutely. I'll start, and I'll let Ali stop you there.

Ali Pervaiz: Looking forward to Fiscal Year 25, I firmly believe that the new product innovations and service offerings we introduced Fiscal Year 24, along with expansion into the value segment, will position as nights in your driving extended period of top-line growth and profitability. Based on the above, for Fiscal Year 25, we are guiding to a revenue range of $460 to $470 million, and an adjusted EIME to the range of $27.5 to $29.5 million.

Speaker Change: Would you say, if I was listening correctly, maybe I wasn't, but it sounded like most of the service opportunity is perhaps more tied to system shipments, new system shipments.

Speaker Change #100: And I guess the question really is, do you continue to see opportunity to drive growth in service and service margins? Thank you very much.

Ali Pervaiz: This guidance range assumes the following key factors. Firstly, the US market will begin to recovery in the second half of Fiscal Year 25 delaying system revenue, associated margins, and adjusted EBITDA to the back half of the year. Secondly, China margin deferral due to delayed NFPA approval of the precision treatment planning system to begin releasing starting in Q2 of Fiscal Year 25, and then normalizing in the back half of the year. Those are a key financial highlights, and with that, I'd like to hand the call back to you then.

Suzanne Winter: Thank you very much. Yes, absolutely. I'll start, and I'll let all of you here. Yeah, I would say our service results to be your not technical story. So I think that we did get some training and some installation revenue that's tied to the American information that we've planned for event that affected our overall service revenue. But what's most important to us is growing that service contract revenue; that's the recurring order to do this. That is 90% of the revenue that we've under things. Are one more one time. factors. And so, at 4.5% growth, we think that that is a significant win.

Unknown Executive: Yeah, I would say our service results for the year don't tell the full story. I think that, you know, we did get some training and some installation revenue that was tied to the America's Installations events that we planned for events that affected our overall service revenue. But what's most important to us is growing that service contract revenue. That's the recurring part of the business.

Speaker Change #101: Yeah, absolutely. I'll start and I'll let Ali jump in here. Yeah, I would say our service results of the year don't tell the full story.

Speaker Change #101: Unknown.

Speaker Change #102: I think that, you know, we did have some training and some installation revenue that was tied to the America's Installation Survey in a plan for events that affected our overall service revenue. But what's most important to us is growing that service contract revenue. That's the recurring part of the business. That is 90% of the revenue because these other things are one more one time.

Unknown Executive: That is 90% of the revenue because these other things are one more one time, factors. And so at four and a half percent growth, we think that that is a significant win. And we think there's still a lot more room for us to grow the service business, not only from an increase in price, but the new service solutions that we talked about, like CyberComm, that we can now sell to our Cyber9 customers in a service contract that can greatly reduce their commissioning time, as well as other value-added service solutions that we can bring to the table. And also, advanced education.

Suzanne Winter: Thank you, Oli. In closing, I'm incredibly proud of our global employees in the progress they have made this year against each of our strategic growth objectives. While we did not grow the way we had planned, we ended with very strong portfolio performance. We have major regulatory approvals in place, including full-term policy approval of China, and CE Mark for the Helix platform. We have a strong backlog of orders, commercial momentum in the majority of our markets, and strong customer demand for our unique radio therapy platforms.

Speaker Change #102: Factors.

Speaker Change #102: So at 4.5% growth, we think that that is a significant win, and we think there's still a lot more room for us to grow the service business, not only from an increase in price but the new service solutions that we talked about, like CyberComm, that we can now sell to our Cyber9 customers in a service contract that has greatly reduced their commissioning time, as well as other value-added service solutions that we can bring to the table. And also, advanced education, you know, we've made a big investment in our global education center, including the General UA Switzerland Innovation Hub, as well as one in China, we have one in Japan, and we have also...

Ali Pervaiz: And we think there's still a lot more room for us to grow the service business. Not only from an increase in price, but the new term institutions that we talked about, like Cybercom, that we can now sell to our cyber nine customers in a service contract, that we have greatly reduced their commissioning time as well as other values that have served the solutions that we can bring to the table. And also advanced education. You know, we've made a big investment in our global education center for seeking the general EAs, particularly innovation pods, as well as one in China that we have wanted to can.

Suzanne Winter: Additionally, we've navigated a number of macroeconomic factors over the last couple of years, including inflation for an exchange headwinds, and remain cautiously optimistic that as these conditions improved, could provide a tailwind to our performance. All of this sets us up nicely to deliver to our guidance of 3-5% top-line growth in greater than 40% evened up for the year. In advance, our strategic growth pillars is the next phase of execution, as we drive to deliver compelling solutions to improved patient outcomes, and quality of life for patients diagnosed with cancer or neurological disease.

Unknown Executive: You know, we've made a big investment in our global education centers, including the General UA Switzerland Innovation Hub, as well as one in China, and one in Japan. And we have also invested to expand our training center in Madison. So all of these things, you know, we think we're in the early innings. We're certainly conscious we have to stick at the four and a half percent growth on the service contract revenue. And we think we've got more to go. From a margin standpoint, Ali, I'll let you make comments. Yes, Suzanne, I totally agree with what you said.

Ali Pervaiz: And we have also invested to expand our training center in Madison. So all of these things, you know, we think we're in the early innings, where we are certainly consciously optimistic at the 4.5% growth on the service contract revenue. And we think we've got more to go. From a larger standpoint, I'll leave a link in the comments.

Speaker Change #102: All of these things, you know, we think we're in the early innings, we're, we are certainly consciously optimistic at the 4.5% growth on the service rep contract revenue, and we think we've got more to go.

Operator: I will now turn it back over to the operator for Q&A. Thank you.

Unknown Executive: I mean, I think, you know, the important metrics that we look at is how is contract revenue going, because that is really representative of mostly the annuity part of the service business. I mean, Suzanne mentioned that's going at four and a half percent year-over-year, and just in dollar terms, that added about eight and a half million dollars of, you know, continued revenue into that particular line item. And so then you're asking, you know, why is that – you know, why is service revenue not growing that same amount?

Ali Pervaiz: Yes, and then I totally agree with what you said to me. I think, you know, the important metrics that we look at is how is contract revenue going; just that is really representative of most Indian community part of the service business. I'm going to say that and mention that's going at 4.5%. You're a week year. And just in dollar terms, that added about 8.5 million dollars of, you know, continued revenue into that particular line. Okay. So, so then you're asking, don't go, why is that, you know, why is service revenue not going that same amount?

Speaker Change #103: From a larger standpoint, I'll really make comments.

Operator: We will now begin the question-and-answer session. To ask a question you may press star than one on your touch cell phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause no materially to assemble our office. Foster.

Speaker Change #104: Yes, Suzanne, I totally agree with what you said, I mean, I think, you know, the important metrics that we look at is how is contract revenue going, because that is really representative of most of the industry part of the service system.

Speaker Change #105: I'm going to Suzanne mentioned that's going in four and a half percent.

Speaker Change #106: You're with you're in just installer terms that made about eight and a half million dollars of you know continued revenue into that particular line. Okay, so so then you're asking over why is that. Okay.

Young Lee: Our first question comes from young Lee from Jeffries. Please go ahead. Very great.

Unknown Executive: Like Suzanne mentioned, that's being offset by some of the training install revenue, mostly by lower activity in our U.S. markets, and then also spare parts revenue. Okay, and spare parts revenue gets impacted when we actually enter countries for the first time because our distributors are building up their spare parts. And we actually had lower first-in-country activity in this particular year.

Suzanne Winter: Thanks for taking our questions and there are congrats on a strong finish to the year. I guess this starts us on the guidance. What's curious if you can talk a little bit more about it. How much Tomo C, is in the guidance. What are some of the potential upside and downside drivers I can get you to the top end or lower end. I guess within China, what are the expectations for either anti-corruption impacts or stimulus impacts?

Ali Pervaiz: Like I said, I mentioned that being offset by some of the training install revenue, mostly by lower activity in our U.S. markets, and then also spare parts revenue. Okay. And spare parts revenue gets impacted, but we actually enter countries for the first time because our distributors are building up their spare parts. And we actually had lower first-in-country activity in this particular year. So I would think that's all mostly tiny driven, but it's not a good indication of the fundamentals of performance on our service business. The contract revenue really is, and so that grew 4.5%, which is both an indication of growing higher than our install rate, and also the pricing activity that the team has been doing over the last 18 months.

Speaker Change #107: Why is service revenue not growing by the same amount?

Speaker Change #108: Like Suzanne mentioned, that's being offset by some of the training, install, revenue, mostly by lower activity in our U.S. markets, and then also spare parts revenue, okay, and spare parts revenue gets impacted when we actually enter countries.

Unknown Executive: So I would say that's all mostly timing-driven, but it's not a good indication of the fundamental performance of our service business. The contract revenue really is, and so that grew four and a half percent, which is both an indication of growing higher than our install base and also the pricing activity that the team has been doing. So we feel good about the fact that pricing activity is now starting to showcase into the P&L, okay?

Suzanne Winter: for the first time because our distributors are building up their spare parts.

Speaker Change #109: And we actually had lower first in country activity in this particular year. So I would say that's all mostly timing driven, but it's not a good indication of the fundamental performance of our service business. The contract revenue really is, and so that grew 4.5%, which is both an indication of growing higher than our install base, and also the pricing activity that the team has been doing over the last 18 months. So we feel good about the fact that pricing activity is now starting to show gains into the P&L, okay? I think the other element that's important to note is that

Suzanne Winter: Hey, thank you so much for the question. You know, I think in terms of overall guidance, maybe you're starting with the bottom end versus the top end. I think really the two big factors are the recovery and the timing of the recovery of the US market, which could really take us to the higher end versus the lower end that continues to be delayed. So that's significant factor. And then obviously there's certainly a lot of different macro tailwinds that we continue to track as well.

Unknown Executive: I think the other element that's important to note is that, you know, we got hit with about $2.4 million of higher part consumption related to a supply quality issue. And so really, had it not been for that particular one-off, our service margins would have been better by that amount.

Ali Pervaiz: So we feel good about the fact that pricing activity is now starting to showcase into the panel. Okay. I think the other element that's important to note is that, you know, we got hit with about $2.4 million of higher parts consumption when made it to higher quality issues. And so really, had it not been for that particular one off, our service margins have been better by that amount. And I think, you know, we don't get a lot of other operating metrics as well. I think the good news in terms of service parts consumption, which is probably the highest cost for service business bears, is that overall from a volume of parts consumed, we're seeing a lot of productivity.

Speaker Change #109: You know, we got hit with about $2.4 million of higher part consumption related to a supply quality issue. And so really, had it not been for that particular one-off, our service margins would have been better by that amount. I think, you know, we look at a lot of other operating metrics as well. I think the good news in terms of service parts consumption, which is probably the highest cost our service business bears.

Unknown Executive: I think, you know, we look at a lot of other operating metrics as well. I think the good news in terms of service parts consumption, which is probably the highest cost our service business bears, is that overall, from the volume of parts consumed, we're seeing a lot of productivity. What is that being offset is by the impact of inflation, right? So last year, in fiscal year 23, we had almost about 3% inflation.

Suzanne Winter: So I think those are sort of the two main factors that really determine the range of our guidance between 460 to 470, the important one really being the timing of the US market recovery. I think overall when you think about our guidance for next year, maybe I could just provide some more color if you think about revenue. You know, we think it's going to be a similar first half, second half performance that we've had historically, which is 45% of the first half versus 65% of the second half, which really is related to the demand profile received for our customers.

Speaker Change #110: is that overall, from the volume of parts consumed, we're seeing a lot of productivity.

Ali Pervaiz: Where that being offset is by the impact of inflation, right? So last year, in particular, 23, we had almost about 3% inflation. And this year then, you know, grew by about 2 to 3%. And so again, a lot of that underlying activity that the team is doing is being massed by a lot of the exogenous factors, and we do think that once you've gotten factors started to dissipate, not only by themselves, but also students, the work that our teams are doing, and their suppliers, and their engineering teams, that will meaningfully start to showcase our piano.

Speaker Change #110: & Associates, www.uncensored.com, www.uncensored.com, www.uncensored.com.au, www.uncensored.com.au,

Unknown Executive: This year, that, you know, grew by about 2.3%. And so again, a lot of that underlying activity the team is doing is being mapped by a lot of these exogenous factors. And we do think that once these exogenous factors start to dissipate, not only by themselves but also through the work that our teams are doing with our suppliers, with our engineering teams, that will meaningfully start showing our P&L. So I would say margin expansion is still very much front and center, not only for our service business but also in just overall cost reduction activities.

Speaker Change #112: Google by the App Room.

Speaker Change #113: Unknown Speaker 2.3%.

Speaker Change #114: Unknown Speaker And so again, a lot of that underlying activities the team is doing is being masked by a lot of these exogenous factors and we do think that once these exogenous factors

Suzanne Winter: I think the one thing that is noteworthy in the first half is that, you know, we do expect seasonality between Q1 and Q2. Historically speaking, Q1 has been on lowest revenue quarter. You know, Q1 and 24, perhaps a little bit of an anomaly to maybe Q1 and 23 is the better reputation of how we expect revenue to unfold in the first half between those two quarters. And then all of the back out of the year Q3 tends to be the lower revenue quarter.

Speaker Change #115: Unknown Executive, Jesse Chew, Suzanne Winter

Ali Pervaiz: So I would say margin expansion is very much front and center, not only for our service business, but also in just overall cost reduction activity. We did a lot of that in-house activity initially, but now we're actually actively engaging with our suppliers to really utilize them as partners to understand how do we start to accelerate this activity going into fiscal year 25? As a matter of fact, we just had our first supplier summit earlier this month, and that's exactly the partnership we're looking for from our suppliers. It's how do we continue to reduce this project to be as we anticipate our volume to pick up?

Speaker Change #116: That will meaningfully start to show people our piano. So I would say margin expansion, Neil very much front and center not only for our service business but also in just overall cost reduction activity. We did a lot of that in-house activity.

Unknown Executive: We did a lot of that in-house activity initially, but now we're actually actively engaging with our suppliers to really utilize them as partners to understand how do we start to accelerate this activity going into fiscal year 25. As a matter of fact, we just had our first supplier summit earlier this month. And that's exactly that partnership we're looking for from our suppliers, is how do we continue to reduce this cost activity as we anticipate our volume to pick up?

Speaker Change #116: initially, but now we're actually actively engaging with our suppliers.

Suzanne Winter: And then we obviously have a huge ramp up in Q4, which we experienced in this particular year. Okay, so I think that's certainly very important to take into consideration as we think about revenue profile for next year. You know, when it comes to our even the profile, I would say it's somewhat similar in nature to what we experienced in fiscal year 23. And, you know, the biggest factor taking consideration over there is really our service margin and our service parts and sections.

Speaker Change #116: to, you know, really utilize them as partners to understand how do we start to accelerate this activity going into fiscal year 25. As a matter of fact, we just had our first

Speaker Change #116: Supplier Summit.

Speaker Change #116: earlier this month, and that's exactly the type of partnership we're looking for from our suppliers. It's how do we continue to reduce this cause and activity as we anticipate our volume to pick up.

Broxoneal: Great. Thank you for all that. We're looking forward to coming here.

Unknown Executive: Great, thank you for all that. Looking forward to the coming year. Again, if you have a question, please press star, then 1. And our next question comes from Jason Wittes from Roth Capital. Please go ahead. Hi, thanks for the questions.

Speaker Change #117: Great. Thank you for all that. Looking forward to the coming year.

Suzanne Winter: Our overall service margin for the year was roughly 39 to 32.9% for the total year. In Q1 of this clear 24, it was 43%. So it was 10 points higher than where we actually ended the year. And that was artificially higher because if we recall, we had a ERP implementation that was completed in Q1 of fiscal year 24. And so we actually had almost $5 million of lower parts consumption, but then trickled into the remainder of the year.

Jason Wittes: Again, if you have a question, please press star, then one. And our next question comes from Jason Wittes from Roth Capital. Please go ahead. I eventually have a question. So, in terms of your service revenue and how you're growing it, is that largely pricing initiatives, or are just higher take rates on service contracts? Try to understand the mechanics behind the optimism there. Yeah, well, it's definitely the most advanced all day. So, you know, we had a strategy of going to emerging markets that would hide growth. So in intelligence, then generate service contract revenue. So that's really the big driver.

Speaker Change #117: Again, if you have a question, please press star, then 1. And our next question comes from Jason Wittes from Roth Capital. Please go ahead.

Jason Wittes: So, in terms of your service revenue and how you're growing it, is that largely pricing initiatives or just higher take rates on service contracts? I'm trying to understand the mechanics behind the optimism there. Well, it's definitely the growth of our installed base. So, you know, we had a strategy of going to emerging markets that were high growth. Those installations then generate service contract revenue.

Jason Whitz: Hi, thanks for your questions. So, in terms of your service revenue and how you're growing it, is that largely pricing initiatives or are just higher take rates on service contracts? I'm trying to understand the mechanics behind the optimism there.

Unknown Executive: So that's really the big driver. But we also have, we're starting to see pricing actions come through the P&L. And so that's also very encouraging. And then we believe that in the future, we'll start to see more contributions to the P&L. So it's from a really value-added to an offering set up. You know, and could be a source of growth for higher value in our what we provide to ourselves. Okay.

Jason Whitz: Yeah.

Suzanne Winter: And so it is going to be important to ensure that as we're thinking about Q1, is that what they won off? And that's certainly not going to repeat. And so, again, that's one factor taking consideration. Then as they sort of shared within the script, we do expect the China margin deferral to start to release in Q2 of our fiscal year. And that's really related to the fact that it is the year end for our JV partner.

Speaker Change #119: Well, it's definitely been most of the barns all day. So, you know, we had a strategy of going to emerging markets that were tied to those.

Speaker Change #120: Pervaiz, Unknown Executive, Jesse Chew, Suzanne Winter

Suzanne Winter: But we also have, we're starting to see pricing actions come through the T&L. And so that's also very encouraging. And then we will reuse that in future. We'll start to see more contributions to the growth rate from the value added to the offering that are true. And career sources grow for higher value and what we provide to ourselves. Okay. And then, you know, if I think about, you know, your growth over the last several years, it's kind of kind of mid to high single digits is kind of in the range. Part of that's half your revenue being serviced.

Speaker Change #121: I'm sorry the P&L. And so that's also very encouraging. And then we will read that in future, we'll start to see more contribution to the workplace from a really value added to this offering.

Suzanne Winter: And they're starting to bring a lot of customers online and they expect the bolus of shipments to occur in Q2 and beyond. And that's what we actually started. I'm thinking about the release activities just starting to pick up. So I think those are really sort of the way to think about the guidance in terms of low end versus high end is also kind of how we think about the year on goal. Okay, great.

Speaker Change #122: New and could be a source of growth for higher value in what we provide to our install base.

unknown: That's a very comprehensive, very helpful.

Unknown Executive: And then, you know, if I think about, you know, your growth over the last, you know, several years, it's kind of kind of mid, mid to high single digits is kind of in the range. Part of that's half your revenue being service, the other half obviously being capital and purchases. But with, you know, this new initiative to go after emerging markets and now that you're kind of set up both in China and India.

Speaker Change #123: Okay, and then, you know, if I think about, you know, your growth over the last, you know, several years, it's kind of kind of mid, mid to high single digits is kind of in the range. Part of that's

Suzanne Winter: The other half, obviously, being capital equipment purchases. But with, you know, this new initiative to go after emerging markets and now that you're kind of set up both in China and India, I assume that's all incremental. And is that potentially going to push you guys more towards double-digit type growth? How do we think about this opportunity sort of progressing over the next couple of years? Yeah, I mean, again, I think it was going to be year and about flat, you know, from a revenue perspective, but our international revenue is screwed by 10 percent. And so we're just significant growth.

Speaker Change #124: Half your revenue being serviced, the other half obviously being capital equipment purchases. But with, you know, this new initiative to go after emerging markets and now that you're kind of set up both in China and India, I assume that's all incremental and is that potentially going to. [inaudible]

Suzanne Winter: I guess maybe this to follow up was wondering if she can talk a little bit more about the contributions from Tomaszi in China and, you know, we are hearing from the anti-corruption campaign side and anything on the stimulus side. Yeah, absolutely. I'm seeing out the Jones states that, you know, first we're all celebrating, so after a very long time waiting for the final two goals to really do a following production. Certainly our daily partner, very excited.

Speaker Change #125: You push you guys more towards double digit type growth, or how do we think about this opportunity sort of progressing over the next couple of years?

Unknown Executive: I assume that's all incremental, and is that potentially going to push you guys more towards double-digit type growth, or how do we think about this opportunity sort of progressing over the next couple of years? Yeah, I mean, again, I did look at the chair.

Speaker Change #126: Yeah, I mean, again, I did look at the chair.

Unknown Executive: Transcripts provided by Transcription Outsourcing, LLC. So just significant growth, and it was really the U.S. that was down significantly. So what we believe is when the U.S. recovers, because we do think it was temporary, then our international growth will be incremental growth, you know, that can drive, you know, our overall outlook, you know, from a revenue perspective. So that's why, you know, we're being prudent here in our revenue outlook for this next year as we watch to see the U.S. market recover. And again, the U.S. market has tremendous potential because they have age-dependent, across the across the market. There's an opportunity for replacement, and UpGrade.

Speaker Change #127: Ended up flat, you know, from a revenue perspective, but our international revenue grew by 10%.

Suzanne Winter: It was really the U.S. that was down significantly that way. That's when, so what we believe is when the U.S. recovers, because we do think it was temporary. Then our international growth will be incremental growth in a big July, you know, higher overall outlook from a revenue perspective. So that's why, you know, we'll be improving here in our revenue outlook for this next year, as we watch to see the U.S. Market recover. And again, U.S. market has to mess the Tesla because they got aid equipment across the, you know, across the market. That is an opportunity for replacements and upgrades.

Speaker Change #128: and so just significant roles.

Speaker Change #129: It was really the U.S. that was down significantly.

Suzanne Winter: We did shift our first unit to our first customer at the very end of 24 and now they are working very closely to drive the remainder of the take-insulation based on customer timing in the first half and in, of course, into the back half of the year as well. But really, we think they'll be researched in Q2 in terms of the overall installation. You know, I think that the response is very strong and again China and the year very strong orders to which we're all translating to revenue over the coming years.

Speaker Change #130: We're out of here.

Speaker Change #130: So, what we believe is when the U.S. recovers, because we do think it was temporary,

Speaker Change #130: Then our international growth will be incremental growth, you know, that can drive our overall outlook from a revenue perspective. So that's why we're being prudent here in our revenue outlook for this next year, as we watch to see the U.S. market recover. Again, the U.S. market has tremendous potential because they've got a huge equipment.

Speaker Change #130: Across the, you know, across the market, there is an opportunity for replacement.

Unknown Executive: And so that is going to be the catalyst for the U.S. market. And again, we think this past year was an anomaly of what was happening in the U.S. and we will continue to watch it to see when the timing of improvement, Okay, and then you also related to emerging markets. I guess it's my assumption, and you can correct me, that both the product sales and even the services are going to be at a lower margin than your current base, yet you guys are looking to continue to expand margins.

Ali Pervaiz: And so that is going to be the catalyst for the U.S. market. And again, we think this past year was an anomaly of what we're passing in the U.S. and we will continue to watch it to see when at the time of improvement. Okay. And then you also related to emerging markets. I guess it's my assumption, and you can correct me, that those, those, both the sale, the product sales and even the services, services are going to be at a lower margin than your current base. Yet you guys are looking to continue to expand margins.

Suzanne Winter: So we're very enthusiastic about the potential and now that we have this clearance behind this. You know, just in terms of anti-corruption campaign, I think there's just a lingering sort of processes that, you know, have slowed down maybe that over the past year. The process, but again, it certainly has a cost from the results that we are seeing. But we do expect that some of this would be the new model. So I think our team just sort of built that into their overall forecast that some things are just going to take longer.

Speaker Change #130: And so that is going to be the catalyst for the U.S. market, and again, we think this past year was an anomaly of what was happening in the U.S., and we will continue to watch it to see when the timing of improvement.

Speaker Change #130: Okay, and then you also related to emerging markets.

Speaker Change #131: I guess it's my assumption, and you can correct me, that those

Speaker Change #132: Both the sale the product sales and even the services

Speaker Change #133: Services are going to be at a lower margin than your current base.

Suzanne Winter: In terms of the stimulus, you know, that is starting to roll out. Again, it's an interest-free loan that the government is providing and not just the health care in terms of many industries. But it's really directed at replacement of older systems. And so, you know, again, our team in China is positioning new customers to be able to train the access. Those funds, you know, they have not. We have a seed that actually initiated yet, but we do expect that probably in the back half of the year we'll start to see some contributions to that, but we have not built that in to our numbers. I truly start to see greater signals.

Ali Pervaiz: So how does the math work with that? Am I wrong about my assumptions about the margins for the emerging markets being lower, or is it just a kind of scale working its way through the P&L?

Unknown Executive: So how does the math work with that? Am I wrong about my assumptions about the margins for the emerging markets being lower, or is it just economies of scale working its way through the P&L? Just let me, maybe let me take that one.

Speaker Change #134: Yeah, you guys are looking to continue to expand margins. So how does the math work with that? Am I wrong about my assumptions about the margins for the emerging markets?

unknown: All right, great.

Speaker Change #135: Being lower or is it just economies of scale working its way through the P&L?

Ali Pervaiz: Let me take that one. So I would say your comments are absolutely right. But as we penetrate into the values segment of these emerging markets, we do expect our product markets to be pressured as a result of both margins. We will likely stay consistent or be pressured slightly. And we that make a difference because we expect that that pressure on product to be offset by the activity that we're going to be on service. And so it goes, marginal level. It's likely going to be pressure. But really, I think we're going to get the creative on our overall even tough and even the percent of the revenue, which is what we're looking to expand.

Unknown Executive: So, I would say your.., comments are absolutely right. As we penetrate into the value segment of these emerging markets, we do expect our product markets to be pressured. And as a result, our gross margin will likely stay consistent or be pressured slightly. And the reason I say consistent is because we expect that pressure on product to be offset by the activity that we're doing on service. And so at a gross margin level, it's likely going to be some pressure.

Speaker Change #136: Maybe let me take that one. So I would say your...

Speaker Change #137: Comments are absolutely right, and as we penetrate into the value segment of these emerging markets,

Speaker Change #138: We do expect our product markets to be pressured, and as a result, our growth margins will likely stay consistent or be pressured slightly, and the reason I think it's different is because

Speaker Change #138: We expect that pressure on product to be offset by the activity that we're doing on service.

Speaker Change #138: And so, at a gross margin level, it's likely going to be some pressure, but really, I think we're going to get the creative on our overall EBITDA, and EBITDA is the percentage of revenue, which is what we're looking to expand. And all of that's really driven by this phenomenon of volume leverage, in which the more volume that we have, we don't expect our costs to go out in the same way, and that should meaningfully contribute to margins at just the EBITDA level.

unknown: That's very helpful. Thank you so much.

Unknown Executive: But really, I think we're going to get the creative on our overall EBITDA, and EBITDA is the percentage of revenue, which is what we're looking to expand. And all of that's really driven by this phenomenon of volume leverage, in which the more volume that we have, we don't expect our costs to go out in the same way.

Marie Thibault: Our next question comes from Marie Tibo from BTIG. Please go ahead. Hi, thanks for taking the questions. I wanted to follow up a little bit on Japan. I heard that, you know, after you exclude the yen headwind, it certainly sounds like strong demand. I think in the past, you've said that you expected to see a strong backlog come through in that country. I'm curious if some of that came through in this quarter. And how long we might expect some of that demand to last.

Ali Pervaiz: And all of that's really driven by this open on volume leverage, in which the more volume that we have, we expect our cost to go the same way. And that should immediately contribute to margins that just be at a level. Okay, that's very helpful. And then you may just click Follow up. I didn't even mention the beginning that the guidance range is related to when the US recovers. Just to clarify, at the bottom of the range is assuming no US recovery, or in the end, the top end is assuming a second half recovery, or how do we think about that?

Unknown Executive: And that should meaningfully contribute to margins of just EBITDA level. Okay, that's very helpful. And then maybe just quick follow up. I know you mentioned the beginning that the guidance range is related to when the US recovers. Just to clarify, at the bottom end of the range is assuming no US recovery or, And the top end is assuming a second half recovery, or how do we think about that? The midpoint is assuming U.S. recovery in the second half, and then the bottom end could be impacted depending upon the timing of that moving around, and then same comments for the top end of that.

Speaker Change #139: Okay, that's very helpful. And then maybe just a quick follow-up. I know you mentioned in the beginning that the guidance range is related to when the U.S. recovers. Just to clarify, at the bottom end of the range is assuming no U.S. recovery or...

Suzanne Winter: Thanks for your question, Marie. Yes, I think that we've just been cute for kids coming through with strong revenue performance. You know, it is a developed market, and we've talked about this in the past, a developed market. You know, you don't have to say first, we'll create some of the emerging markets, but our Japan team is really going after competitive replacements. We have done just an outstanding job in terms of really going after age and still base, not only hours, but also our competition.

Speaker Change #140: And the top end is assuming a second half recovery, or how do we think about that?

Jason Wittes: The midpoint is assuming U.S. recovery is a second half. And then the bottom end could be impacted depending on the timing of that moving around, and then same comments for the top end of that. So obviously, something that we are watching very, very closely. And we are really getting interested in our customers that we expect products and voter revenue. And also obviously, our service business over there. So I think, you know, just a lot of focus on more volume. But I think that's right. Okay, great. I'll jump back and cue thanks and congrats on a solid end to it.

Speaker Change #141: The midpoint is assuming U.S. recovery in the second half.

Karen Ditra: American Bioman, Karen Ditra.

Speaker Change #143: You know, the impact, depending on the timing of that, moving around, and then same comments for the top end of that. So obviously, something that we are watching very, very closely, and we are, you know, really getting intimate with our customers that we expect products to go to revenue with, and then also, obviously, with our service business over there. So I think, you know, just a lot of focus on mobile US business, but I think that's probably a good thing about this.

Unknown Executive: So obviously it's something that we are watching very, very closely, and we are really getting into it with our customers that we expect products to go to revenue with, and it also obviously impacts our service business over there. So I think just a lot of focus on overall U.S. business, but I think that's the right way to think about it.

Suzanne Winter: And, you know, again, we've talked a bit about that being the number two position. But, you know, we think they're on their way to being number one just based on their algorithm trending at this point. So, you know, again, we look at the Japan team, and, you know, we think that they are based on a high graph of the other regions, just in terms of really how to drive strong customer satisfaction. So we do expect continuing important contributions from that region. Okay, that's helpful.

Unknown Executive: Okay, great. I'll jump back in queue. Thanks and congrats on a solid end to a tough year. Thanks, Jason. This concludes our question and answer session. I would like to turn the conference back over to Suzanne Winter for any closing remarks. Thanks very much. This concludes our earnings call. We look forward to speaking again with you in October for our fiscal 2025 first quarter earnings meeting. Conference is now concluded. Thank you for attending today's presentation. © The Ultimate Parody Site!

Speaker Change #144: Okay, great. I'll jump back in queue. Thanks and congrats on a solid end to a tough year.

Jason Wittes: Tough here. Thank you, Jason.

Suzanne Winter: This concludes our question and answer session. I would like to turn the conference back over to Suzanne Winter for any closing remarks. Thanks very much.

Speaker Change #144: This concludes our question and answer session. I would like to turn the conference back over to Suzanne Winter for any closing remarks.

Suzanne Winter: This concludes our earnings call over the floor, and just speaking again to you in October for our fiscal 2025 close to quarter earnings.

Suzanne Winter: And then maybe talking about one of the more emerging regions that has a lot of opportunity, congrats on the CE Mark for Helix. Can you tell us a little bit more about your plans there in India? Could we expect to see some orders get booked here in this fiscal year?

Suzanne Winter: Thanks very much. This concludes our earnings call. We look forward to speaking again with you in October for our fiscal 2025 first quarter earnings meeting.

Operator: Conference has now concluded. Thank you for attending today's presentation.

Speaker Change #145: Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: You may now disconnect. Thank you.

Suzanne Winter: And while we're talking about regulatory wins, have there been any updates from the FDA on Senos since you submitted the 5-10K last year? Thanks. Yes. Let me talk about India first. We do have the CE Mark. There's still a couple more regulatory hurdles in India, but we do expect that we do a shipping position by the end of our calendar year. But we are anticipating orders now. So, the good news is, you know, we have started to go and find all orders within that region.

Suzanne Winter: And you're right. We see a lot of potential in India. And we believe that ending a half of the potential, you know, over the coming years to be a, you know, asking a market that's China's potential. Right now, we think it's about 100 to 125 million dollar markets. We do want to play very well there. But meanwhile, we are investing in our commercial footprint in India as well as our back office. And because we do believe the potential is very strong. And now, we've dealing with, you know, we've got a full portfolio. We do want to go out to this market.

Suzanne Winter: Just in terms of the regulatory approval and Senos, you know, that is an extended, I think, from, you know, what we had originally thought. But again, we had gone back and we're having conversations with the FDA in terms of just making sure that we now have the cybersecurity requirements as well as some other requirements around human factors. So, at this point, we're planning for a full introduction at SRO. But we're in a shipping mode, we're probably by the end of the calendar year. So, you know, we do think it'll help us to win new round-and-back orders, but the revenue trial that he knows will come within. But of course, half of that price, anything. Okay, very helpful.

Suzanne Winter: Susanne, just to clarify, more regulatory hurdles in India for Helix, is that things like treatment planning system or something else? So, yeah, no. Now, we've more of that to that scope, you know, and it's more of a localization kind of hurdle. And what we need to do is make sure that we shift our first order and then we have someone committed to that local body that does testing on it. And then, we open it up to position. Oh, Katja. Okay. Thank you so much.

unknown: Nice quarter.

unknown: Thank you. The next question comes from Broxoneal from Lake Street Capital Markets. Please go ahead. Thank you very much. Good afternoon. I'm just curious if you could give us a little more color on the US market in particular. It's a little bit about the competitive environment. Do you feel like your Danish share or losing share, gaining bunkers, losing bunkers, or what do you think the outlook is for fiscal 2025 in the US?

unknown: Thanks for your question, Broxoneal. I would say the US market, too, when we talk about revenue, we're really talking about the delays that we see our customers coming from the border to information and getting the capital preference priorities to be able to install what we saw over FY24 when we slow down lower priority growth radiation therapy. But I think as we build into that's why 25 plus planning out is what our customers have been telling us, which it is made effective through the successful improvement in the back half of the year.

unknown: They have greater visibility as it is called. We have greater visibility to think the back half of the year will start to see as much improvement as that more of a full recovery in FY26. In terms of, are we winning? Our orders actually were good in the US and overall it was made percent less and worse. So we think that's very strong. We think it's faster than the overall market growth and that we are gaining share as a result of our strong customer reception to our new product innovation.

unknown: So what we're really looking at and we take a look at the region for the year is what is that timing of order to installation and we help to accelerate that. And some of the things that are better visibility, the other is make sure that we've got a very robust order to revenue process so that we've learned very closely with our customers, can help them do the prego menu. Great. Let me ask one more.

unknown: Appreciate the color. You were to go a lot of focus on service margin improvement service growth. Would you say if I was listening correctly maybe I wasn't but it sounded like most of the service opportunity is perhaps more tied to system shipments, new system shipments. And I guess the question really is do you continue to see opportunity to drive growth in service and service margin? Thank you very much. Yes, absolutely. I'll start and I'll let all of you here.

unknown: Yeah, I would say our service results to be your not technical story. So I think that we did get some training and some installation revenue that's tied to the American information that we've planned for event that affected our overall service revenue. But what's most important to us is growing that service contract revenue that's the recurring order to do this. That is 90% of the revenue that we've under things are one more one time, factors.

unknown: And so at 4.5% growth, we think that that is a significant win. And we think there's still a lot more room for us to grow the service business. Not only from an increase in price, but the new term institutions that we talked about, like cybercom, that we can now sell to our cyber nine customers in a service contract, that we have greatly reduced their commissioning time as well as other values that have served the solutions that we can bring to the table.

unknown: And also advanced education. You know, we've made a big investment in our global education center for seeking the general EAs, particularly innovation pods, as well as one in China, that we have wanted to can. And we have also invested to expand our training center in Madison. So all of these things, you know, we think we're in the early innings, where we are certainly consciously optimistic at the 4.5% growth on the service contract revenue.

unknown: And we think we've got more to go. From a larger standpoint, I'll leave a link in the comments. Yes, and then I totally agree with what you said to me. I think, you know, the important metrics that we look at is how is contract revenue going, just that is really representative of most Indian community part of the service business. I'm going to say that and mention that's going at 4.5%. You're a week year.

unknown: And just in dollar terms, that added about 8.5 million dollars of, you know, continued revenue into that particular line. Okay. So, so then you're asking, don't go, why is that, you know, why service revenue not going that same amount? Like I said, I mentioned that being offset by some of the training install revenue mostly by lower activity in our U.S, markets, and then also spare parts revenue. Okay. And spare parts revenue get impacted, but we actually enter countries for the first time because our distributors are building up their spare parts.

unknown: And we actually had lower first in country activity in this particular year. So I would think that's all mostly tiny driven, but it's not a good indication of the fundamentals of performance on our service business. The contract revenue really is, and so that grew 4.5%, which is both an indication of growing higher than our install rate, and also the pricing activity that the team has been doing over the last 18 months.

unknown: So we feel good about the fact that pricing activity is now starting to showcase into the panel. Okay. I think the other element that's important to note is that, you know, we got hit with about $2.4 million of higher parts consumption when made it to higher quality issues. And so really had it not been for that particular one off our service margins have been better by that amount. And I think, you know, we don't get a lot of other operating metrics as well.

unknown: I think the good news in terms of service parts consumption, which is probably the highest cost for service business bears, is that overall from a volume of parts consumed, we're seeing a lot of productivity. Where that being offset is by the impact of inflation, right? So last year, in particular, 23, we had almost about 3% inflation. And this year then, you know, grew by about 2 to 3%. And so again, a lot of that underlying activity that the team is doing is being massed by a lot of the exogenous factors, and we do think that once you've gotten factors started to dissipate, not only by themselves, but also students, the work that our teams are doing, and their suppliers, and their engineering teams, that will meaningfully start to showcase our piano.

unknown: So I would say margin expansion is very much front and center, not only for our service business, but also in just overall cost reduction activity. We did a lot of that in-house activity initially, but now we're actually actively engaging with our suppliers to really utilize them as partners to understand how do we start to accelerate this activity going into fiscal year 25? As a matter of fact, we just had our first supplier summit earlier this month, and that's exactly that partnership we're looking for from our suppliers.

unknown: It's how do we continue to reduce this project to be as we anticipate our volume to pick up? Great. Thank you for all that. We're looking forward to coming here. Again, if you have a question, please press star then one.

Jason Wittes: And our next question comes from Jason Wittes, from Roth Capital, please go ahead. I eventually have a question. So in terms of your service revenue and how you're growing it, is that largely pricing initiatives or are just higher take rates on service contracts? Try to understand the mechanics behind the optimism there. Yeah, well, it's definitely the most advanced all day. So, you know, we had a strategy of going to emerging markets that would hide growth.

Jason Wittes: So in intelligence, then generate service contract revenue. So that's really the big driver. But we also have, we're starting to see pricing actions come through the T&L. And so that's also very encouraging. And then we will reuse that in future. We'll start to see more contributions to the growth rate from the value added to the offering that are true. And career sources grow for higher value and what we provide to ourselves.

Suzanne Winter: Okay. And then, you know, if I think about, you know, your growth over the last, you know, several years, it's kind of kind of mid to high single digits is kind of in the range. Part of that's half your revenue being serviced. The other half, obviously being capital equipment purchases. But with, you know, this new initiative to go after emerging markets and now that you're kind of set up both in China and India, I assume that's all incremental.

Suzanne Winter: And is that potentially going to push you guys more towards double digit type growth? How do we think about this opportunity sort of progressing over the next couple of years? Yeah, I mean, again, I think it was going to be year and about flat, you know, from a revenue perspective, but our international revenue is screwed by 10 percent. And so we're just significant growth. It was really the U.S, that was down significantly that way.

Suzanne Winter: That's when, so what we believe is when the U.S, recovers, because we do think it was temporary, then our international growth will be incremental growth in a big July, you know, higher overall outlook from a revenue perspective. So that's why, you know, we'll be improving here in our revenue outlook for this next year, as we watch to see the U.S, market recover. And again, U.S, market has to mess the Tesla because they got aid equipment across the, you know, across the market.

Suzanne Winter: That is an opportunity for replacements and upgrades. And so that is going to be the catalyst for the U.S, market. And again, we think this past year was an anomaly of what we're passing in the U.S, and we will continue to watch it to see when at the time of improvement.

Ali Pervaiz: Okay. And then you also related to emerging markets. I guess it's my assumption, and you can correct me, that those, those, both the sale, the product sales and even the services, services are going to be at a lower margin than your current base. Yet you guys are looking to continue to expand margins. So how does the math work with that? Am I wrong about my assumptions about the margins for the emerging markets being lower or is it just a kind of scale working its way through the P&L?

Ali Pervaiz: Let me take that one. So I would say your comments are absolutely right. But as we penetrate into the values segment of these emerging markets, we do expect our product markets to be pressured as a result of both margins. We will likely stay consistent or be pressured slightly. And we that make a difference because we expect that that pressure on product to be offset by the activity that we're going to be on service.

Ali Pervaiz: And so it goes marginal level. It's likely going to be pressure. But really, I think we're going to get the creative on our overall even tough and even the percent of the revenue, which is what we're looking to expand. And all of that's really driven by this open on volume leverage, in which the more volume that we have, we expect our cost to go the same way. And that should immediately contribute to margins that just be at a level.

unknown: Okay, that's very helpful.

Ali Pervaiz: And then you may just click follow up. I didn't even mention the beginning that the guidance range is related to when the US recovers. Just to clarify, at the bottom of the range is assuming no US recovery or in the end, the top end is assuming a second half recovery or how do we think about that? The midpoint is assuming US recovery is a second half. And then the bottom end could be impacted depending on the timing of that moving around and then same comments for the top end of that.

Ali Pervaiz: So obviously, something that we are watching very, very closely. And we are really getting interested in our customers that we expect products and voter revenue. And also obviously, our service business over there. So I think, you know, just a lot of focus on more volume. But I think that's right.

Jason Wittes: Okay, great. I'll jump back and cue thanks and congrats on a solid end to it. Tough here. Thank you, Jason.

Suzanne Winter: This concludes our question and answer session. I would like to turn the conference back over to Suzanne Winter for any closing remarks. Thanks very much. This concludes our earnings call over the floor and just speaking again to you in October for our fiscal 2025 close to quarter earnings.

Operator: Conference has now concluded. Thank you for attending today's presentation.

Operator: You may now disconnect. Thank you.