Q3 2025 IRIDEX Corp Earnings Call
Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the third quarter 2025 IRIDEX earnings conference call. I would now like to turn the conference over to Trip Taylor, Investor Relations. You may begin.
Thank you, and thank you all for participating in today's call joining me. From the company, your Patrick, Mercer here at X is chief executive officer. In Romeo design, the company's Chief Financial Officer earlier today, you're an ex release financial results for the quarter, ended, September 27th, 2025
A copy of the press release is available on the company's website.
Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Any statements made during this call that are not statements of historical facts including but not limited to statements, concerning our strategic goals and priorities. Product development matters, sales Trends and the markets in which we operate
All forward-looking statements are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place reliance on these statements.
For a discussion of the risks and uncertainties associated with our business. Please see our most recent form, 10K and form 10q filings with the SEC.
Here at IRIDEX, we have no intention or obligations, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise.
This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 11, 2025.
And with that, I'll turn the call over to Patrick.
Good afternoon, everyone, and thank you for joining us.
Business results.
We are proud of the steady progress, we have made during my first year as CEO and over the past 4 quarters.
We have executed our strategy to streamline our operations and Advance your decks towards profitability.
The financial transformation of this business is demonstrated by our fourth consecutive order of year-over-year, Revenue growth
Reduced operating expenses and improved adjusted IBA.
We are on track to achieve both positive cash flows in the fourth quarter and positive adjusted. Evida for the full year 2025
Importantly, the result of our hard work of the last year, puts us in position to achieve cash flow, positive operations, in 2026 as well.
I am proud to say, we have accomplished the goals. We set in place for are decks when we started this transformation.
Turning to the third quarter, we specifically achieved strong year-over-year revenue growth of 8%.
This was accomplished while reducing operating expenses by 12% and improving our adjusted ibida by 1.3 million compared to the prior year period.
You will recall that in beginning of the fourth quarter of 2024, we implemented a series of targeted cost reduction programs that have resulted in lowered operating expenses throughout 2025.
For the nine months ending September 27th, operating expenses have been reduced by 25%.
These efforts have meaningfully reduced our cash flow and strengthened the company's overall financial position.
As the cost structure is now better in line with our revenues.
We have identified additional opportunities to further strengthen the company's financial profile.
And are now implementing actions to enhance our gross margins and further reduce operating expenses.
On the manufacturing front, we are in negotiation with contract manufacturers, that could reduce our cost of goods sold and benefit gross margins.
It will take some time to implement these new relationships and transition certain product lines. But this is an initiative, we were made very excited about for 2026.
In the near term, we are relocating certain general and administrative functions outside of California. This initiative alone is expected to generate approximately $165,000 in quarterly savings beginning in the first quarter of 2026.
These moves demonstrate our commitment to continuing cost discipline and improved financial performance.
Turning next to discussing our commercial performance, I am pleased to share that. In the third quarter, our Topline Revenue, grew a healthy 8% year-over-year to 12.5 million.
With a smaller sales, force and reduced marketing spin, our commercial team, strong execution has been truly impressive.
They continue to drive efficiency by leveraging technology and long-standing customer relationships to drive sales.
The third quarter's revenue increase was driven by strength in both our glaucoma and retina product lines.
Starting with our glaucoma business. We remained enthusiastic about the global growth potential as acceptance of our Treatment Solutions increases.
In the U.S., our strategy for the G6 system centers on leveraging our substantial installed base to drive higher system utilization.
The Medicare LCDs introduced last year, have also created new opportunities for adoption of the G6 treatment earlier in the Continuum of Care for mild to moderate stage patients.
From a tactical standpoint, we are continuing to utilize Med Scout.
A sales enablement platform to identify accounts within the mid-range of utilization.
And support them to increase the utilization.
These practices have already demonstrated a strong commitment to G6.
And with targeting engagement, we see meaningful potential to increase their procedure volumes.
Overall, during the third quarter cylo G6 system cells, increased to 30 units from 26 in the prior year period.
Motion units were sold to existing users acquiring additional systems.
Often as they expanded into new locations.
We believe this demonstrates recognition of TLT as a necessary treatment option for clinicians.
18,600 in the prior year period.
Representing a higher utilization, in both the US and internationally.
We have also realized an increase in asps for for both probes and consults
International glaucoma performance was strong with positive contributions across geography.
In Europe, Middle East and Africa. We saw continued growth in grow approach sales supported by the Fulfillment of several orders initially deferred from Q2, due to supply. Constraints are index. Experience last quarter.
In GmbH, G6 Pro sales remain on a steady upward trajectory, reflecting sustained procedural demand and solid recurring revenue streams.
In Asia, for the second consecutive quarter, the region experienced volatility and operational challenges.
While demand remains strong, several macro factors continue to weigh on our commercial activity.
As in Q2, the ongoing character dispute with China continued to disrupt sales, planning, and forecasting into Q3.
Japan's Market remains sluggish driven by the weakened against the US dollar.
Which benefits domestic competitors. Who are less exposed to currency fluctuations.
Looking to Latin America and Canada, we saw improved G6 business momentum following the appointment of new glaucoma distributors and a stronger push from existing partners.
Shifting to our retina product portfolio.
Here are our top priorities, which include driving broader adoption of our flagship Pascal system and securing additional international regulatory approvals for our next generation retina platforms.
Enabling us to capitalize on robust global distribution Network.
And the US Pascal cells remain strong when sales representatives increasingly focusing their efforts on promoting our next Generation Pascal platform.
Medical and surgical retina revenue grew more than 10% year-over-year, in line with expectations and reflecting steady market demand.
Endoscopes remains stable throughout the quarter demonstrating consistent performance across our customer base.
Now, on to international retina performance.
In Europe, Middle East and Africa, to reach and continues to outperform expectations.
Primarily driven by strong Pascal performance in the Middle East and Africa.
Alongside steady synthesis activities from European markets.
MDR certification for the aex. Pascal are negative negatively, affecting retina cells throughout Europe.
But we expect this, and it just anticipates. Pinup demand will provide a tailwind once certification is achieved.
Gmbh operation space, they slow down and Capital Equipment, Sales largely due to purchase order delays associated with the Region's summer, holiday, period.
In Asia, our retina business was similarly affected by these, same Regional Dynamics, impacting the glaucoma business, including the continued impact of the China, tariff dispute and currency driven competitive pressures in Japan.
Despite these headwinds underlying demand for our retina products remains solid.
In Latin America and Canada, the region is showing signs of recovery, primarily fueled by a rebound in Pascal sales supported by renewed distribution engagement.
Now hand the call over to Romeo to discuss our financial results. Thank you, Patrick. Good afternoon, everyone, and thank you for joining us today.
I would like to begin by reviewing the financial performance for the third quarter, ended September 27, 2025.
As we noted in a press release and in Patrick's comments, our total revenues for the third quarter of 2025 are $12.5 million, representing an 8% year-over-year increase.
Growth is driven primarily by higher global probe sales and Pascal system sales, partially offset by lower surgical retina probe sales.
By the product revenue increased 4% in the third quarter of 2025 to $6.7 million compared to the third quarter of 2024, driven primarily by higher Pascal system sales and medical and surgical retina system sales. Our sales were offset by a decrease in surgical retina probe sales.
Total product revenue from the psycho G6 glaucoma product group was $3.5 million, representing a growth of 13% year-over-year.
in the third quarter of 2025 compared to 2.0 million dollars in the third quarter of 2024, driven primarily by an increase in service revenue.
Cost profit in the third quarter of 2025 was 4.0 million or a gross margin of 32.1%. A decrease of 0.3 million compared to 4.3 million or a gross margin of 37.3 million a percent in the third quarter of 2024
Cost margin decreased by 522 basis points.
Driven by $0.8 million charged to cost of goods sold due to an inventory write-down.
Partially offset by a more favorable geographic and product mix in the current year.
In the third quarter of 2025, we recorded a one-time, non-recurring, non-cash charge to write down inventory, following a detailed review related to the transition to a new resource planning system and our estimate of the cost of raw materials. Some assembled products were not absorbed as we continue to transfer production of various product lines to third-party contract manufacturers.
It was determined that such inventories are now excess and obsolete.
The stranded costs are typical in the transfer of production. The contract manufacturers.
Excluding this one-time write-down, our gross margin rate would have improved to 38.7%.
Operating expenses were $5.4 million in the third quarter of 2025, a decrease of $0.8 million or 12% compared to $6.2 million in the third quarter of 2024, due to expense reduction measures taken in late 2024.
Consequently that loss including the 1-time charge was 1.6 million or 9 cents per share or Q3 2025 compared to a net loss of 1.9 million or 12 cents per share in the same period as the prior year.
Non-GAAP adjusted. Even though for the third quarter of 2025, there was a loss of $131,000, this represents an improvement of $1.3 million compared to the non-GAAP adjusted loss of $1.4 million for the third quarter of 2024.
The improvement was driven primarily by the expense reduction measures implemented in late 2024.
cash and cash, equivalents total of 5.6 million. At the end of the third quarter of 2025 a reduction of 1.2 million compared to 6.8 million at the second quarter of 2025.
We are very pleased with our reduction in cash usage and expect cash use to continue or improve on these levels.
As you can see, we are making significant progress advancing our business plan with greater focus on profitability.
We are pleased with the results of our continuing financial prudence, and we plan to achieve a cash flow break-even in the fourth quarter at a positive EBITDA for fiscal year 2025. With that, I'll turn the call back to Patrick.
Thank you, Romeo.
Looking back over the past 12 months,
We have made significant progress towards the goals. We established a year ago when I assumed the CEO role
Most notably, we are proud that our focus on operating improvements is expected to support sustained cash flow positivity for our decks going forward.
We continue to take decisive actions to reduce operating expenses and strengthen our financial position.
Your ex is, well, positioned to extend his leadership in our atomic laser systems.
To the aex team. I'd like to take a moment to thank you for your continued, commitment, dedication, and outstanding execution.
We recognize that many of you are wearing multiple hats, and your contributions have not gone unnoticed.
To our shareholders. Thank you for your continued support of maiar Dex. We look forward to updating you on our progress next quarter.
This concludes today's conference call, thank you for joining. You may now disconnect