Q3 2025 Brainsway Ltd Earnings Call

Speaker #2: The format for today's call will be a discussion of recent trends in business updates from Hadar Levy and Ido Marom, followed by a detailed discussion of the financials.

Speaker #2: Then we will open up the call for your questions. Earlier today, Brainsway released financial results for the three months ending September 30, 2025. A copy of the press release is available on the company's investor relations website.

Speaker #2: Before I turn the call over to Hadar, I would like to remind you that this conference call, including both management's prepared remarks and the question and answer section, may contain projections or other forward-looking statements regarding among other topics, Brainsway's anticipated future operating and financial performance, business plans and prospects, and expectations for its products and pipeline, which were all subject to risks and uncertainties.

Speaker #2: Including shifting market conditions, resulting from geopolitical, supply chain, and other factors, as well as the use of non-GAAP financial information. Additional information regarding these, and other risks, are available in the company's earnings release and its other filings with the SEC, including the risk factor section contained in Brainsway's form 20F.

Speaker #2: Finally, please note that the company's 6-K will be filed tomorrow at approximately 6:00 AM Eastern Time in accordance with the SEC's operating schedule. I would now like to turn the call over to.

Speaker #2: Hadar. Thank you,

Speaker #3: Brian: Welcome, everyone, and thank you for joining us today. We are excited to announce record quarterly revenue of $13.5 million, reported in the third quarter of 2025.

Speaker #3: This represents a 29% increase compared with the same period last year. In addition, we shipped a total of 90 deep TMS systems, during the quarter, representing a 43% increase compared to the same period last year.

Speaker #3: This brings our total installed base to more than 1,600 systems, across the globe. With our quarterly results, continuing to trend towards the higher end of expectations and improved visibility into the remainder of the year, we are raising the midpoint of our guidance for the full year 2025, including increasing our revenue guidance to a range of 51 to 52 million dollars, which is up from our previous guidance of 50 to 52 million dollars.

Speaker #3: We now expect to report operating profit in the range of 6% to 7% of revenue, up from the previous guidance of 4% to 5%, and adjusted EBITDA in the range of 13% to 14% for the year, up from the previous guidance of 12% to 13%.

Speaker #3: Let me now take a deeper dive into our performance and why we believe our long-term growth is being built into the current execution of our strategy.

Speaker #3: As I have mentioned previously, we made the decision approximately two years ago to focus our attention on selling to large enterprise customers who value our technology and high level of customer service to support their deep TMS systems.

Speaker #3: To this end, we have structured multi-year lease agreements, which in turn provide us a steady foundation from which to grow our business and maintain gross margin every year.

Speaker #3: As a result, of our team's dedication to this sales model, we have transitioned the majority of our sales over with approximately 70% of our recent customer engagement being lease agreements.

Speaker #3: And I want to highlight that the customers are aligned with this type of engagement. As we have had high rates of customer retention extend and even with many customers deciding to several years.

Speaker #3: And this outcome really highlights the scalability of our business. And while perhaps the initial focus each quarter is on the revenue numbers internally, we also find value in looking at our book-to-bill ratio for the quarter, which was 1.3X, indicating that booking were solidly above our billing.

Speaker #3: And our remaining performance obligation under existing customer agreement was 65 million dollars at the end of the quarter. These are just a couple of metrics which we believe reflect a strong market demand momentum and give us confidence in our forward visibility and revenue trajectory.

1 further elevating Market, awareness of deep TMS and its clinical impact.

2.

advancing, our R&D roadmap to unlock new and expanded treatments indication and 3 broadening patients access through global global extension and health system integration

At the call of this initiative is our regulatory approvals and clinical data which continued to set deep TMS apart and allow us to lead the market.

Most recently, we announced that the US FDA has granted an expansion of the treatment protocol for the dtms system to include an accelerated protocol for major, depressive disorder or MDD treatment.

As a reminder, the traditional dipmas protocol involves a 4-week acute treatment phase with 1 session on each day of treatment.

Compared to an accelerated protocol, which involves a significantly shorter acute phase taking place over several treatment days.

This is very exciting development for us and the treatment centers using our systems As We Believe The Accelerated protocol as the potential to improve convenience and thereby, make deep TMS substantially more appealing to prospective patients.

As a reminder, dtms is the only TMS modality cleared by the FDA and with peer-reviewed published clinical evidence for a broad range of indications including depression, anxious, depression, late life, depression OCD, and smoking addiction.

We're also supporting the evaluation of the accelerated protocol for these other indications.

for example, the US NIH recently, awarded approximately 2.5 million in 5 year grant for the clinical study, evaluating the mechanism of action and potentially efficacy of the accelerated dtms protocol to treat alcohol, use disorder, or AUD

The study will be conducted by research team led by Dr. Claudia padulla, and Dr. Michelle madore, of Stanford University and the Palo Alto veterans Institute of research.

The study is posted on ClinicalTrials.gov for any of you who would like to review the details.

We will utilize our novel deep TMS 360 system, which has been designed to provide more comprehensive and uniform stimulation of the neurons in the targeted brain regions.

The Accelerated protocol being evaluated in this study is similar to The Accelerated protocol for MDD including an acute phase taking place over several treatment days as compared to the traditional protocol which is several weeks.

Moving on to our investment initiative as previously announced in late 2024 where identified a new opportunity to generate shareholder value, by making minority interest investment. In mental health providers,

As well as other enterprises that we believe are complementary to our business.

The strategy allows us to tap into the market, we know. Well,

Building additional market awareness, R&D roadmap data, analysis capabilities, and expanding access to deep TMS, while avoiding stepping into an operational role outside of our core. Focus on deep TMS.

To support us in this initiative vallow Equity partner made a 20 million dollar, Strategic Equity investment in our company.

This investment provided us with the capital needed to quickly move ahead with this strategy on a broader, more meaningful scale.

We are pleased with the rollout of this initiative to date, which most recently included our third and fourth investments in 2025.

this recent Strategic investment of come quickly on the hills of our first 2 agreements, with Stella mental health and access,

This collaboration is already making a meaningful contribution, as utilization of the deep TMS system at those clinics is up over 50% from the start of our relationship.

During the third quarter, we also announced an initial Strategic investment in a, a developer of the world's first wearable non-invasive multi-channel, brand new modulation platform that is designed for use at home.

Disagreement includes a milestone based funding for Apple up to an additional 11 million of convertible loan over to tranches, along with an option to fully acquire the company.

This strategic Investments are an exciting new part of our story and we look forward to helping each business grow initially through the additional fund.

The investment provide, but also through strategic console as they look to navigate faster and larger growth.

We look forward to identifying additional investment and will keep you updated on this initiatives.

This is a truly exciting time in our history as we continue to identify ways to drive long-term shareholder growth.

as you just heard there is significant momentum in all aspect of our business,

So much so that it is too much to cover on this call.

Discussed our operation clinical Regulatory and financial progress, additional details will be announced shortly.

With that, I will now turn the call over to do for his review of our third quarter 2025 financial results.

Thank you.

3, 2025 was another record quarter for brainsway who is revenue of 13.5 million representing a 29% increase compared with the 10.5 million reported for the same period last year.

during the quarter, we placed 90 deep TMS systems, bringing our total installed based to more than 1600 systems as of September 30th 2025

Gross profit for the quarter was 10.2 million up, 2.4 million from 7.7 million in the prior year period, while maintaining a strong gross margin of 75% compared with 74% for the same period last year.

This stability continues to reflect the strength of our recurring Revenue model and disciplined cost management.

Turning to operating expenses.

Sales and marketing totaled. 4.7 million compared to 4.1 million in Q3 2024, an increase of approximately 0.6 million driven by targeted investment in commercial, expansions and marketing programs.

Research and development expenses were $2.4 million compared to $1.8 million last year, an increase of $0.6 million primarily for our ongoing clinical trials and development activities.

General and administrative expenses were 1.8 million compared to 1.5 million in the prior year, period, and increase of 0.3 million due in part to additional legal fees and due diligence costs related to new Investments.

Operating profit was approximately 1.3 million which is a 1 million dollar increase, compared with the 0.3 million reported for the same period last year.

Adjusted evida increased to 2 million dollars from 1.1 million in the prior year period.

Net profit for the quarter was 1.6 million compared to 0.7 million in the same period of 2024 demonstrating the operating leverage in our model as we scale.

From a balance sheet perspective, we ended the quarter with $70.7 million in cash and cash equivalents, up $1.1 million from $69.6 million at year-end 2024.

This increase was driven primarily by very strong collections during the quarter, despite deploying in 7.3 million for our minority Equity investment as part of our strategic initiative.

Remaining performance obligations grew to $65 million, a 37% year-over-year increase, providing strong visibility into future revenues.

Cash flow from operations. In the quarter was positive further. Further reinforcing the strength of our recurring model and I collection efficiency.

Our capital structure remains that free, giving us significant flexibility to pursue strategic growth initiatives, including the investment program we outlined earlier.

It's a Dar mentioned. After a strong, third quarter and increased visibility for the remainder of the year. We have raised the midpoint of our guidance for the full year 2025, which includes Revenue, guidance of 51 to 52 million up from our previous guidance of 50 million to 52 million.

This guidance represents a year-over-year, growth rate of 24 to 27%.

We also expect operating profit in the range of 6 to 7% of Revenue up from our previous guidance of 4 to 5%.

And adjusted evida in the range of 13 to 14% for the year up from our previous guidance of 12 to 13%.

The increased operating and adjusted ebida. Margins, reflect the increased scale of our operations.

This concludes my remarks and I will now turn the call back to the operator, to please open up the call for questions.

Operator.

Question and answer session.

to ask a question, you may press star then 1 on your touchtone phone,

If you're using a speaker-phone, please pick up your handset before pressing the keys.

If at any time your question has been addressed and you would like to withdraw your question.

Please press star. Then 2

At this time, we will pause momentarily to assemble our roster.

First question comes from Jeffrey, Khan with ladenburg Talman. Please go ahead.

Hey, good morning Edo. Um, thanks for the questions, and congrats on the quarter. So I guess. Firstly, could you talk about the, uh, accelerated protocol and give us some sense of, um, current treatments that are taking on the accelerated protocol? What you may expect, over the coming quarters,

Yeah, I think I think.

You know, the extra protocol is a really big news for uh, uh, for patients, uh, around the world. That is basically, uh, shorter in the, uh, the acute phase protocol from 4 weeks, uh, to only, uh, 6 days in which we are increasing the dosage, the amount of treatments per day to uh, uh, 5 treatments, uh, uh, per day. Uh, the demand so far looks uh, pretty uh uh, pretty good. And

I think that that's what, really driving the demand for the growth of the company.

Okay, got it then. Certainly could you talk about um, minority Equity Investments, congrats on the handful already this year but what might we expect as far as the pipeline and other Investments over the coming quarters?

Yeah. So um

we have a full hand of uh of pipeline of this minority uh investment. Uh that we are speaking and exploring uh the option to collaborate with them. Uh, you know, with the we still need to check the box on part of our due diligence process to make sure that this growing Enterprise are growing, they're profitable. They have the right management team and that we believe that they can execute upon their, uh, business uh, uh, plan. So, the goal, uh, before the end of the year is to, uh, sign at least 1 more. Um, and there is a handful of additional opportunities for 2026, uh, that looks very promising.

Got it. And then lastly for us. Um, could you give us an update on neural Leaf as far as any activity currently going on, in Japan and EU and then talk about um, Us timing or anticipated activities here.

yeah, but you know I think we're all

The a clearance.

Toward the end of the, uh, of of the year. Um, you know, we're hoping there won't be some additional delay, uh, uh, with that. But, you know, uh, things that might, uh, uh, look a little bit, uh, uh, slow due to the current, uh, um, situation with the, uh, FDA Administration. But we're hoping to get this FDA clearance toward the, the, uh, the end of the year once we get clearance for that. They're ready to uh, uh, Market their, uh, to distribute their device, uh, through different channels. It could be VA. It could be idms and obviously, uh, TMS clinics, uh, through brainsway customers.

But, uh, the most, you know, the most promising one that we're waiting for is FDA clearance toward the end of the year.

Perfect. Thanks for taking our questions. Congrats on the quarter.

Thank you very much.

The next question comes from Carl Bones with Nland Capital Markets. Please go ahead.

Thank you for the question and congratulations on the quarter. Um, I'm just curious what you're seeing in terms of system, placements from the minority Partners thus far, and then again looking at adding, you know, 5 or so Partnerships per year, what we should expect potentially in terms of incremental uh system placements and then I'll jump back into the queue. Thanks so much.

Yeah, you know? Um,

Opening up, uh, additional 10 to 15 new clinics. Uh, um, every year, obviously, the first year is, uh, uh, is always the most challenging 1 to make sure that, you know, they've got all the necessary setup. But once, uh, uh, they got the funding and they got everything they need, uh, they should deliver, uh, uh, on that either by merger and Acquisitions or opening some denovo, uh clinics. So that's pretty aligned with our expectations. Uh, we're not sharing the, the data of, uh, the current, uh, install base that we received from, uh, our, uh, um, minority investment. But I can only share with you that it's aligned with our expectations. Um, I did share a very important fact that, you know, with the, um, most early investment that we've made with both Stella mental health and, uh, and access both of them grew their utilization rate.

More than 50%. Uh, since Inception since the collaboration with us and that's the most important sign, it means that there are like the technology that are utilizing this technology and their expanding uh which is pretty aligned with our expectations.

Great, thanks. And congrats again.

Thank you.

Thank you.

If you have a question, please press star then 1.

The next question comes from ram silver Raju with Etsy brain, right? Please go ahead.

Thanks very much for taking my questions and congratulations on the quarter. I wanted to ask about, first of all, how you think you will alter a metrics reporting going forward in general. If, uh, we can expect greater granularity on. For example, what you expect to be growth in total install base, uh, what you anticipate to be performance with respect to some of the individual, minority Investments, and so on. And also I want to ask a couple of specific questions about where we are currently. Uh firstly if you could elaborate on where you are with respect to the upcoming cycle across the install base, uh and how you expect that to play out over the course of the coming quarters, that would be very helpful. And then, if you can offer us any granularity regarding the state of the international business and geographically speaking where you

Respect. Uh the bulk of growth to come from as we look ahead to 2026. Thank you.

Yeah, great. Thank you for the questions and, uh, I'm hoping I won't forget, uh, um anything. Um, so you know, in terms of the metrics uh,

Kpi that we are measuring, I think it's going to be a mix of uh of uh um, some very relative, uh, kpis, it will be uh uh number of systems that we are uh, uh, shipping on a quarterly basis. And we can we see some very consistent uh, growth on that. It will be also, um, the additional indications that we also selling on top of, uh, uh, the traditional 1, you know, it could be the OCD, the HD 87 or the 84 for addiction, that will be another important kpi, uh, the book to build a ratio and the most important again like, is, is the new initiative with this minority investment that? Uh, uh, we most probably going to share much more information and trajectory, uh, on the analysts, they, uh, uh, uh, meeting uh, on the December uh, 1st. Uh, so I promise to

Give you a bit more details about some of those metrics and how you can all try and measure the progress of the company in 2026 and Beyond. Follow up questions about the um, uh, the international, uh, uh, growth. So we continue to strength our, um,

Seeing some constant demands in those uh market. And, you know, last but not least. Also the Israeli Market is also a growing in a very uh, uh nice way. So, you know, overall I think that the uh International growth is pretty aligned with our expectations. I believe there is a chance for us to even expand faster, uh, with the additional indication that we currently cleared in those area, which is beyond the mental health, you know. Mainly some of them relates to addiction, some of them relates to neurology indications, that we're seeing some good, uh, results in these areas, but that's a very, very promising targets. Market targets for the company for 2026 and Beyond.

And just 1 other quick 1. If I may maybe this is more for eido. Uh do you have any plans to alter the way in which you report Revenue, particularly given the minority Stakes that you are acquiring if you're going to break out Revenue coming from those sources uh or any other changes that you anticipate uh with respect to Topline item reporting? Thank you.

Yes. Uh, so those minority investment, uh, won't impact our Topline Revenue. Uh, uh, we are still, uh, need to examine that with our Auditors, for the financial statements of the end of the year. But, uh, right now, those are invest. Those investments will be written, uh, either in their fair value or as an equity under the operating profit. So it's not part of our Top Line.

Thank you.

Thank you.

This concludes the question and answer session. I would like to turn the conference over to hadan. Levi, for any closing remarks.

Great. Thank you. I would like to thank all the investors analysts and other participants for their interest in brainsway with that. Please enjoy the rest of your day. Goodbye.

The conference has now concluded.

Thank you for attending today's presentation. You may now disconnect. Thank you.