Q4 2025 Pulmonx Corp Earnings Call

March 4, 2026

Speaker #1: Good day, and thank you for standing by. Welcome to the Pulmonx Fourth Quarter 2025 earnings conference call. At this time, all participants are noticed in only mode.

Operator: Good day, and thank you for standing by. Welcome to the Pulmonx Q4 2025 Earnings Conference Call. At this time, all participants are in listen only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session, you will need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's call is being recorded. I would now like to hand it over to your speaker today, Laine Morgan, Investor Relations. Please go ahead.

Speaker #1: After the speaker's presentation, we'll open up for The questions to ask a question during a session , you will need to press star one one on your telephone .

Speaker #1: You will then hear an automated message advising your hand is raised to withdraw your question . Please press star one one again . Please be advised that today's call is being recorded .

Operator: You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's call is being recorded. I would now like to hand it over to your speaker today, Laine Morgan, Investor Relations. Please go ahead.

Speaker #1: I would now like to hand it over to your speaker today, Elaine Morgan, Investor Relations. Please go ahead.

Speaker #2: Good afternoon, and thank you for participating in today's call. Joining me from Pomona are Glendon French, president and chief executive officer, and Derrick Sung, chief operating officer and chief financial officer.

Laine Morgan: Good afternoon, and thank you for participating in today's call. Joining me from Pulmonx are Glenn French, President and Chief Executive Officer, and Derek Sung, Chief Operating Officer and Chief Financial Officer. Earlier today, Pulmonx issued a press release announcing its financial results for the Q4 ended 31 December 2025. A copy of the press release is available on the Pulmonx 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 contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements.

Speaker #2: Earlier today, Pulmonx issued a press release announcing its financial results for the quarter ended December 31, 2025. A copy of the press release is available on the website.

Speaker #2: 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 .

Laine Morgan: 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 contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements.

Speaker #2: Any statements contained in this call that relate to expectations or predictions of future events or results , or performance , or forward looking statements .

Speaker #2: All forward looking statements , including , without limitation , those relating to our operating trends , commercial strategies and future financial performance , including long term outlook and full year 2026 guidance .

Laine Morgan: All forward-looking statements, including, without limitation, those relating to our operating trends, commercial strategies, and future financial performance, including long-term outlook and full year 2026 guidance, the timing and results of clinical trials, physician engagement, expense management, market opportunity, guidance for revenue, gross margin, operating expenses, cash usage, commercial expansion, and product demand, adoption, and pipeline development are based upon our 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 undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our filings with the Securities and Exchange Commission, including our quarterly report on Form 10-Q filed with the SEC on 12 November 2025.

Speaker #2: The timing and results of clinical trials . Physician engagement expense management , market opportunity guidance for revenue , gross margin , operating expenses , cash usage , commercial expansion and product demand and pipeline development are based upon our current estimates and various assumptions .

Speaker #2: These statements involve 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 undue reliance on these statements .

Laine Morgan: Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our filings with the Securities and Exchange Commission, including our quarterly report on Form 10-Q filed with the SEC on 12 November 2025.

Speaker #2: For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our filings with the Securities and Exchange Commission, including our quarterly report on Form 10-Q filed with the SEC on November 12, 2025.

Speaker #2: Also, during this call, we will discuss certain non-GAAP financial measures. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the press release, which is posted on our Investor Relations website.

Laine Morgan: Also during this call, we will discuss certain non-GAAP financial measures. Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the press release, which is posted on our investor relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, 4 March 2026. Pulmonx disclaims any intention or obligation, 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. With that, I will turn the call over to Glenn.

Speaker #2: These non-GAAP measures are not intended to be a substitute for our GAAP results . This conference call contains time sensitive information and is accurate only as of the live broadcast today , March 4th , 2026 .

Speaker #2: Pulmonic disclaims any intention or obligation 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 .

Speaker #2: And with that, I will turn the call over to Glenn.

Speaker #3: Thank you . Lynn . Good afternoon , everyone , and welcome to our fourth quarter and full year 2020 . Five earnings call .

Glendon E. French: Thank you, Laine. Good afternoon, everyone, welcome to our Q4 and full year 2025 Earnings Call. Since returning as CEO, I've conducted a thorough review of our business, and I am both confident in the company's future and determined to accelerate its progress. During the past few months, Derrick and I have taken a deliberate bottom-up approach to assess the business, building on what's working, addressing what isn't, and better aligning our spending with our strategic goals. We conducted a line-by-line review of all programs to identify and prioritize those with the highest returns on capital, with an emphasis on balancing growth with profitability.

Speaker #3: Since returning as CEO , I have conducted a thorough review of our business and I am both confident in the company's future and determined to accelerate its progress During the past few months , Derek and I have taken a deliberate bottom up approach to assess the business , building on what's working , addressing what isn't , and better aligning our spending with our strategic goals .

Speaker #3: We conducted a line by line review of all programs to identify and prioritize those with the highest returns on capital . With an emphasis on balancing growth with profitability We have already taken significant steps to realign our cost structure while preserving key commercial and clinical investments Derek will provide additional details on the impact of this prioritization , along with our recently announced debt refinancing , which significantly strengthens our balance sheet and provides greater financial flexibility as we execute on our strategy Our top three priorities are clear First , reaccelerating US sales growth .

Glendon E. French: We have already taken significant steps to realign our cost structure while preserving key commercial and clinical investments. Derrick will provide additional details on the impact of this prioritization, along with our recently announced debt refinancing, which significantly strengthens our balance sheet and provides greater financial flexibility as we execute on our strategy. Our top three priorities are clear. First, re-accelerating US sales growth. Second, advancing our TAM expanding clinical initiatives. Third, aligning our spending to deliver continued financial leverage as we move predictably toward profitability. With this backdrop, I'd like to walk through our initial assessment of what drove our weaker-than-expected US revenue performance last year. At a high level, we believe the underperformance was largely due to internal operational and executional challenges. First, the US sales organization was stretched across too many competing initiatives, some of which were not fully tested, distracting our sales team from critical activities.

Speaker #3: Second , advancing our Tam expanding clinical initiatives , and third , aligning our spending to deliver continued financial leverage as we move predictably toward profitability With this backdrop , I'd like to walk through our initial assessment of what drove our weaker than expected US revenue performance last year at a high level .

Speaker #3: We believe the underperformance was largely due to internal , operational and executional challenges . First , the US sales organization was stretched across too many competing initiatives , some of which were not fully tested , distracting our sales team from critical activities This diluted operational focus and challenged efficient execution Second , at the beginning of 2025 , US Territory manager roles and responsibilities were materially altered in a way that later proved disruptive to the sales organization And third , the 2025 US sales incentive structure proved to be suboptimal in effectively directing and motivating our US sales organization Altogether , these issues resulted in significant turnover in our US sales organization during 2025 , disrupting customer continuity and account management .

Glendon E. French: First, the US sales organization was stretched across too many competing initiatives, some of which were not fully tested, distracting our sales team from critical activities. This diluted operational focus and challenged efficient execution. Second, at the beginning of 2025, US territory manager roles and responsibilities were materially altered in a way that later proved disruptive to the sales organization. Third, the 2025 US sales incentive structure proved to be suboptimal in effectively directing and motivating our US sales organization.

Glendon E. French: This diluted operational focus and challenged efficient execution. Second, at the beginning of 2025, US territory manager roles and responsibilities were materially altered in a way that later proved disruptive to the sales organization. Third, the 2025 US sales incentive structure proved to be suboptimal in effectively directing and motivating our US sales organization. Altogether, these issues resulted in significant turnover in our US sales organization during 2025, disrupting customer continuity and account management. While our assessment is ongoing, these insights have meaningfully shaped the strategies we have already begun to implement. Our first area of focus has been on organizational alignment to optimize our resourcing and decision-making in critical areas. Derrick and I are leaning on talented leaders within the organization, allowing us each to have fewer direct reports so that we can dedicate substantial time and attention to the company's most important priorities.

Glendon E. French: Altogether, these issues resulted in significant turnover in our US sales organization during 2025, disrupting customer continuity and account management. While our assessment is ongoing, these insights have meaningfully shaped the strategies we have already begun to implement. Our first area of focus has been on organizational alignment to optimize our resourcing and decision-making in critical areas. Derrick and I are leaning on talented leaders within the organization, allowing us each to have fewer direct reports so that we can dedicate substantial time and attention to the company's most important priorities.

Speaker #3: While our assessment is ongoing , these insights have meaningfully shaped the strategies we have already begun to implement . Our first area of focus has been on organizational alignment to optimize our resourcing and decision making , in critical areas Derek and I are leaning on talented leaders within the organization , allowing us each to have fewer direct reports so that we can dedicate substantial time and attention to the company's most important priorities .

Speaker #3: As a result , I have taken a more direct role in day to day operations of our US sales organization and our two US area vice presidents now report directly to me .

Glendon E. French: As a result, I have taken a more direct role in day-to-day operations of our US sales organization, and our two US area vice presidents now report directly to me. We have also established new leadership of our clinical affairs organization in order to accelerate enrollment of our CONVERT 2 trial of AeriSeal, a critical step towards significantly expanding our addressable market. A cornerstone of our refined sales strategy is returning our attention to our customers' clinical and operational excellence and refocusing on what we know drives results. In 2025, our sales team was asked to manage an increasingly broad and prescriptive set of initiatives, including multiple new call points and services like LungTrax Detect.

Speaker #3: We have also established new leadership of our clinical affairs organization in order to accelerate enrollment of our CONVERT-TO trial of AeriSeal, a critical step towards significantly expanding our addressable market.

Speaker #3: A cornerstone of our refined sales strategy is returning our attention to our customers' clinical and operational excellence and refocusing on what we know drives results.

Speaker #3: In 2025 , our sales team was asked to manage an increasingly broad and prescriptive set of initiatives , including multiple new call points and services like lung tracks detect while well intentioned , this breadth of initiatives did not deliver the expected return on sales force time and came at the cost of focus on the foundational strategies that both built our US and international markets and drove consistent growth over the years We are now streamlining priorities of the US sales team to a small set of high impact mandates that we know drive results .

Glendon E. French: While well-intentioned, this breadth of initiatives did not deliver the expected return on sales force time and came at the cost of focus on the foundational strategies that both built our US and international markets and drove consistent growth over the years. We are now streamlining priorities of the US sales team to a small set of high-impact mandates that we know drive results. Our commercial strategy follows a deliberate near-to-far approach, where we are focused initially on those opportunities that are nearest to our critically important treating physician before shifting our attention to those opportunities which might be farther away. This includes better supporting our treating physicians, engaging pulmonary service line directors within hospitals, and prioritizing our COPD and patient education efforts in those areas closest to our well-established treating hospitals. That means three things.

Speaker #3: Our commercial strategy follows a deliberate, near-to-far approach, where we are focused initially on those opportunities that are nearest to our critically important treating physician.

Speaker #3: Before shifting our attention to those opportunities which might be farther away, this includes better supporting our treating physicians, engaging pulmonary service line directors within hospitals, and prioritizing our COPD and patient education efforts in those areas closest to our well-established treating hospitals.

Speaker #3: That means three things. First, the strongest programs begin with the clinical performance of our Zephyr valves and the confidence of our physician champions.

Glendon E. French: First, the strongest programs begin with the clinical performance of our Zephyr valves and the confidence of our physician champions. These champions are essential in establishing clinical protocols, bringing colleagues along, and ensuring that patients who need this therapy receive it in a timely manner. Our experience consistently shows that frontline clinical buy-in is the foundation of every high-performing center. We are now empowering our sales team to reengage with the clinical champions at their treating centers rather than diverting time to what have proven to be lower return activities away from these physicians. Second, when strong clinical leadership is matched with the right administrative support, it makes a significant difference in helping patients move through the funnel efficiently and scaling the program. With that in mind, we are prioritizing engagement with pulmonary service line administrators rather than initially trying to reach top-level C-suite administrators who are typically less accessible.

Speaker #3: These champions are essential in establishing clinical protocols , bringing colleagues along and ensuring that patients who need this therapy receive it in a timely manner Our experience consistently shows that frontline clinical buy in is the foundation of every high performing center We are now empowering our sales team to reengage with the clinical champions at their treating centers , rather than diverting time to what have proven to be lower return activities .

Speaker #3: Away from these physicians . Second , when strong clinical leadership is matched with the right administrative support , it makes a significant difference in helping patients move through the funnel efficiently and scaling the program With that in mind , we are prioritizing engagement with pulmonary service line administrators rather than initially trying to reach top level C-suite administrators , who are typically less accessible by focusing on administrators who are closest to the pulmonary and thoracic service lines , we ensure that our therapy is effectively protocolized into daily clinical workflows and that staffing is aligned to support them Third , we must ensure that there is a steady flow of patients to our treating centers and that each patient is supported through every step on their path to treatment .

Glendon E. French: With that in mind, we are prioritizing engagement with pulmonary service line administrators rather than initially trying to reach top-level C-suite administrators who are typically less accessible. By focusing on administrators who are closest to the pulmonary and thoracic service lines, we ensure that our therapy is effectively protocolized into daily clinical workflows and that staffing is aligned to support them. Third, we must ensure that there is a steady flow of patients to our treating centers and that each patient is supported through every step on their path to treatment. To ensure that patients are aware that valves may be an option, we are first focusing on physician education efforts within hospital systems that already offer valves before expanding outreach to the broader community.

Glendon E. French: By focusing on administrators who are closest to the pulmonary and thoracic service lines, we ensure that our therapy is effectively protocolized into daily clinical workflows and that staffing is aligned to support them. Third, we must ensure that there is a steady flow of patients to our treating centers and that each patient is supported through every step on their path to treatment. To ensure that patients are aware that valves may be an option, we are first focusing on physician education efforts within hospital systems that already offer valves before expanding outreach to the broader community. Similarly, we are concentrating our direct-to-patient efforts on geographies with established treating centers that have the capacity to accommodate interested patients rather than spreading those efforts broadly across the country.

Speaker #3: To ensure that patients are aware that valves may be an option , we are first focusing on physician education efforts within hospital systems that already offer valves before expanding outreach to the broader community Similarly , we are concentrating our direct to patient efforts on geographies with established treating centers that have the capacity to accommodate interested patients rather than spreading those efforts broadly across the country .

Glendon E. French: Similarly, we are concentrating our direct-to-patient efforts on geographies with established treating centers that have the capacity to accommodate interested patients rather than spreading those efforts broadly across the country. We expect this focus to meaningfully increase the return on invested time and resources. Taken together, these changes are designed to foster the right culture and consistency for a more stable, high-performing sales force with lower turnover. With the majority of our open US sales positions now filled, we are encouraged by the early positive feedback from our team, which reinforces our confidence that these actions are resonating internally. That said, it will take time for our newly filled territories to ramp up in productivity, leading to our expectation that US sales growth will resume in the back half of this year. Turning to our pipeline.

Speaker #3: We expect this focus to meaningfully increase the return on invested time and resources . Taken together , these changes are designed to foster the right culture and consistency for a more stable , high performing sales force with lower turnover with the majority of our open US sales positions now filled .

Glendon E. French: We expect this focus to meaningfully increase the return on invested time and resources. Taken together, these changes are designed to foster the right culture and consistency for a more stable, high-performing sales force with lower turnover. With the majority of our open US sales positions now filled, we are encouraged by the early positive feedback from our team, which reinforces our confidence that these actions are resonating internally. That said, it will take time for our newly filled territories to ramp up in productivity, leading to our expectation that US sales growth will resume in the back half of this year. Turning to our pipeline. Our AeriSeal program remains a key focus and represents our nearest term opportunity to expand our market.

Speaker #3: We are encouraged by the early positive feedback from our team , which reinforces our confidence that these actions are resonating internally . That said , it will take time for our newly filled territories to ramp up in productivity , leading to our expectation that US sales growth will resume in the back half of this year .

Speaker #3: Turning to our pipeline, our aerosol program remains a key focus and represents our nearest-term opportunity to expand our market. We continue to view aerosol as a way to reach a large number of severe COPD patients with collateral ventilation who are not candidates today for treatment with Zephyr valves.

Glendon E. French: Our AeriSeal program remains a key focus and represents our nearest term opportunity to expand our market.

Glendon E. French: We continue to view AeriSeal as a way to reach a large number of severe COPD patients with collateral ventilation who are not candidates today for treatment with Zephyr valves. Our CONVERT 2 pivotal trial is an important step to bringing this novel technology to market. The trial is designed to evaluate the safety and effectiveness of the AeriSeal system in limiting collateral ventilation in patients with severe emphysema. With our strengthened clinical leadership team now in place, we are pleased to see enrollment momentum accelerating. We continue to see strong potential for AeriSeal as both a revenue generator and a market expander for Zephyr valves over the medium and long term. We expect enrollment in the trial to be completed in 2027, which would bring us one step closer to potentially growing our total addressable market by an estimated 20% globally.

Speaker #3: Our CONVERT II pivotal trial is an important step to bringing novel technology to market. The trial is designed to evaluate the safety and effectiveness of the aerosol system in limiting collateral ventilation in patients with severe emphysema.

Speaker #3: With our strengthened clinical leadership team now in place, we are pleased to see enrollment momentum accelerating. We continue to see strong potential for aerosol as both a revenue generator and market expander for Zephyr valves over the medium and long term. We expect enrollment in the trial to be completed in 2027, which would bring us one step closer to potentially growing our total addressable market by an estimated 20% globally.

Speaker #3: In conclusion, 2026 will be a year of focused execution at Pulmonx Corp. We remain confident in the business and are excited to rebuild momentum through a clear operating plan that targets our highest impact initiatives.

Glendon E. French: In conclusion, 2026 will be a year of focused execution at Pulmonx. We remain confident in the business and are excited to rebuild momentum through a clear operating plan that targets our highest impact initiatives. We have much greater visibility into what went wrong last year, and we have already begun taking decisive action to fix it. We have the right strategy and the right people in place to execute. I returned to Pulmonx because I believe deeply in this technology and what it means for patients who have few treatment options. That conviction has only grown stronger over the past few months. We have work to do, and we are doing it, and we look forward to demonstrating that progress to you in the quarters ahead.

Speaker #3: We have much greater visibility into what went wrong last year, and we have already begun taking decisive action to fix it. And we have the right strategy and the right people in place to execute.

Speaker #3: I return to Pulmonx because I believe deeply in this technology and what it means for patients who have few treatment options that conviction has only grown stronger over the past few months .

Glendon E. French: That conviction has only grown stronger over the past few months. We have work to do, and we are doing it, and we look forward to demonstrating that progress to you in the quarters ahead. With that, I will turn the call to Derrick to briefly review our Q4 and full-year performance as well as our expectations for 2026.

Speaker #3: We have work to do , and we are doing it . And we look forward to demonstrating that progress to you in the quarters ahead With that , I will turn the call to Derek to briefly review our fourth quarter and full year performance , as well as our expectations for 2026 .

Glendon E. French: With that, I will turn the call to Derrick to briefly review our Q4 and full-year performance as well as our expectations for 2026.

Speaker #4: Thank you , Glenn , and good afternoon , everyone . I'd like to start off by commenting on two significant developments that meaningfully strengthen our financial outlook and balance sheet as we position the company for profitable growth First , we recently executed a cost restructuring initiative that reduced our ongoing operating expenses by over 10% , with this action , we believe we have achieved an appropriate balance between expense management and continued investment in our key growth initiatives Second , we are very pleased to have recently closed on a $60 million credit facility with a five year interest only structure that meaningfully strengthens our balance sheet by extending the maturity of our existing debt out to 2031 , and by providing us with access to additional undrawn capital .

Derrick Sung: Thank you, Glenn. Good afternoon, everyone. I'd like to start off by commenting on two significant developments that meaningfully strengthen our financial outlook and balance sheet as we position the company for profitable growth. First, we recently executed a cost restructuring initiative that reduced our ongoing operating expenses by over 10%. With this action, we believe we have achieved an appropriate balance between expense management and continued investment in our key growth initiatives. Second, we are very pleased to have recently closed on a $60 million credit facility with a 5-year interest-only structure that meaningfully strengthens our balance sheet by extending the maturity of our existing debt out to 2031 and by providing us with access to additional undrawn capital.

Speaker #4: The initial $40 million term loan drawn at closing refinances our previously existing loan, and we now have an option to draw an incremental $20 million through the end of 2027, subject to the achievement of certain revenue milestones.

Derrick Sung: The initial $40 million term loan, drawn at closing, refinances our previously existing loan. We now have an option to draw an incremental $20 million through the end of 2027, subject to the achievement of certain revenue milestones. Taken together, these two developments provide us with increased balance sheet flexibility and cash runway over the next few years as we focus on rebuilding momentum in our core business and advancing our clinical priorities. We are committed to demonstrating meaningful operating leverage and reducing our cash burn starting in 2026. As a case in point, we expect to significantly decrease our annual cash burn from $32 million in 2025 to $23 million in 2026, representing a reduction of nearly 30%. Now, turning to our recent performance.

Speaker #4: Taken together , these two developments provide us with increased balance sheet flexibility and cash runway over the next few years as we focus on rebuilding momentum in our core business and advancing our clinical priorities .

Speaker #4: We are committed to demonstrating meaningful operating leverage and reducing our cash burn , starting in 2026 . As a case in point , we expect a significantly decrease our annual cash burn from $32 million in 2025 to $23 million in 2026 , representing a reduction of nearly 30% .

Speaker #4: Now, turning to our recent performance: total worldwide revenue in the fourth quarter of 2025 was $22.6 million, a 5% decrease from $23.8 million in the same period last year.

Derrick Sung: Total worldwide revenue in Q4 2025 was $22.6 million, a 5% decrease from $23.8 million in the same period last year and a decrease of 7% on a constant currency basis. Worldwide revenue for the full year ending 31 December 2025 was $90.5 million, an 8% increase over the prior year and a 7% increase on a constant currency basis. US revenue in Q4 was $14.1 million, an 11% decrease from $15.9 million during the same period of the prior year. We added 10 new US treating centers during the quarter. US revenue for the full year 2025 was $57 million, a 1% increase over the prior year.

Speaker #4: And a decrease of 7% on a constant currency basis . Worldwide revenue for the full year ending December 31st , 2025 was $90.5 million and 8% increase over the prior year , and a 7% increase on a constant currency basis .

Speaker #4: US revenue in the fourth quarter was $14.1 million, an 11% decrease from $15.9 million during the same period of the prior year. We added ten new US treating centers during the quarter.

Speaker #4: US revenue for the full year was $57 million , a 1% increase over the prior year International revenue in the fourth quarter of 2025 was $8.5 million , and 8% increase from $7.9 million during the same period last year , and an increase of 2% on a constant currency basis International growth was driven by continued strength in our major European markets , offset by a lack of sales to our distributor in China .

Derrick Sung: International revenue in Q4 2025 was $8.5 million, an 8% increase from $7.9 million during the same period last year and an increase of 2% on a constant currency basis. International growth was driven by continued strength in our major European markets, offset by a lack of sales to our distributor in China. Our distributor continues to work through inventory from large orders placed in the first half of 2025 as we await the renewal of our Chinese registration certificate, which we expect in the second half of 2026.

Speaker #4: Our distributor continues to work through inventory from large orders placed in the first half of 2025, as we await the renewal of our Chinese registration certificate, which we expect in the second half of 2026.

Speaker #4: International revenue for the full year 2025 was $33.5 million , an increase of 23% over the prior year and a 19% increase on a constant currency basis Gross margin for the fourth quarter of 2025 was 77.6% , compared to 74% in the prior year The year over year increase was driven primarily by the lower mix of distributor sales .

Derrick Sung: International revenue for the full year 2025 was $33.5 million, an increase of 23% over the prior year and a 19% increase on a constant currency basis. Gross margin for Q4 of 2025 was 77.6% compared to 74% in the prior year. The year-over-year increase was driven primarily by the lower mix of distributor sales in our international markets. Gross margin for the full year 2025 was 74%. Total operating expenses for Q4 of 2025 were $27.4 million, an 11% decrease from the same period last year. Non-cash stock-based compensation expense was $3.9 million in Q4 of 2025. Excluding stock-based compensation expense, total operating expenses in Q4 of 2025 decreased 10% from the same period of the prior year.

Speaker #4: In our international markets Gross margin for the full year 2025 was 74% . Total operating expenses for the fourth quarter of 2025 were $27.4 million , an 11% decrease from the same period last year Non-cash stock based compensation expense was $3.9 million in the fourth quarter of 2025 , excluding stock based compensation expense .

Speaker #4: Total operating expenses in the fourth quarter of 2025 decreased 10% from the same period of the prior year. Total operating expenses for the full year 2025 were $120.8 million, a 1% increase over the prior year.

Derrick Sung: Total operating expenses for the full year 2025 were $128.8 million, a 1% increase over the prior year. Non-cash stock-based compensation expense was $19.3 million for the full year 2025. Excluding stock-based compensation expense, total operating expenses for the full year 2025 increased 3% over the prior year. R&D expenses for the Q4 of 2025 were $4.6 million compared to $4 million in the Q4 of 2024, reflecting increased clinical trial activity. Sales, general and administrative expenses for the Q4 of 2025 were $22.9 million compared to $27 million in the Q4 of 2024 as we began to implement cost controls during the quarter.

Speaker #4: Non-cash stock based compensation expense was $19.3 million for the full year 2025 , excluding stock based compensation expense . Total operating expenses for the full year 2025 increased 3% over the prior year R&D expenses for the fourth quarter of 2025 were $4.6 million , compared to $4 million in the fourth quarter of 2020 .

Speaker #4: Four , reflecting increased clinical trial activity . Sales , general and administrative expenses for the fourth quarter of 2025 were $22.9 million , compared to $27 million in the fourth quarter of 2020 .

Speaker #4: Four . As we began to implement cost controls during the quarter . Net loss for the fourth quarter of 2025 was $10.4 million , or a loss of $0.25 per share .

Derrick Sung: Net loss for Q4 2025 was $10.4 million or a loss of $0.25 per share as compared to a net loss of $13.2 million or a loss of $0.33 per share for the same period of the prior year. An average weighted share count of 41.4 million shares was used to determine loss per share for Q4 2025. Net loss for the full year 2025 was $54 million or $1.33 per share. Adjusted EBITDA loss for Q4 2025 was $5.5 billion as compared to $7.5 billion in Q4 2024. Adjusted EBITDA loss for the full year 2025 was $30.6 million.

Speaker #4: As compared to a net loss of $13.2 million , or a loss of $0.33 per share for the same period of the prior year .

Speaker #4: An average weighted share count of 41.4 million shares was used to determine loss per share for the fourth quarter of 2025. Net loss for the full year 2025 was $54 million, or per share. Adjusted EBITDA loss for the fourth quarter of 2025 was $5.5 million, as compared to $7.5 million in the fourth quarter of 2020.

Speaker #4: Our adjusted EBITDA loss for the full year 2025 was $30.6 million. We ended December 31, 2025, with $69.8 million in cash.

Derrick Sung: We ended 31 December 2025 with $69.8 million in cash equivalents, and marketable securities, a decrease of $31.7 million from 31 December 2024. Turning to our outlook for 2026. We expect to deliver full year 2026 revenue in the range of $90 to $92 million. Our revenue guidance contemplates a return to year-over-year growth in both our US and international businesses starting in the back half of the year. In the US, we expect our recently filled sales positions and our refocused commercial strategy to gradually drive improving sales productivity as the year progresses. Internationally, we expect revenue growth in the first half of 2026 to be negatively impacted by minimal sales to our distributor in China.

Speaker #4: Cash equivalents and marketable securities . A decrease of $31.7 million from December 31st , 2020 . For Now , turning to our outlook for 2026 .

Speaker #4: We expect to deliver full year 2026 revenue in the range of 90 to $92 million . Our revenue guidance contemplates a return to year over year growth in both our US and international businesses , starting in the back half of the year .

Speaker #4: In the US, we expect our recent positions and our refocused commercial strategy to gradually drive improving sales productivity as the year progresses. Internationally, we expect revenue growth in the first half of 2026 to be negatively impacted by minimal sales to our distributor in China.

Speaker #4: Our guidance contemplates continued strength throughout the year from our European markets , and we expect year over year sales growth in our international business to resume in the second half of the year .

Derrick Sung: Our guidance contemplates continued strength throughout the year from our European markets, and we expect year-over-year sales growth in our international business to resume in the second half of the year. We expect gross margin for the full year 2026 to be approximately 75%, trending slightly higher in the first half of the year and lower toward the second half of the year as we increase our mix of distributor sales. We are committed to demonstrating meaningful operating leverage this year. We expect full year 2026 operating expenses to fall between $113 to 115 million, inclusive of approximately $21 million of non-cash stock-based compensation expense. Excluding stock-based compensation expense, our guidance implies a 7% to 9% decrease in operating expenses from 2025, reflecting our cost realignment efforts while maintaining investments in key growth initiatives.

Speaker #4: We expect gross margin for the full year 2026 to be approximately 75%, trending slightly higher in the first half of the year.

Speaker #4: And lower toward the second half of the year. As we increase our mix of distributor sales, we are committed to demonstrating meaningful operating leverage this year.

Speaker #4: We expect full year 2026 operating expenses to fall between $113 million and $115 million, inclusive of approximately $21 million of non-cash stock-based compensation expense.

Speaker #4: Excluding stock based compensation expense . Our guidance implies a 7 to 9% decrease in operating expenses from 2025 , reflecting our cost realignment efforts , while maintaining investments in key growth initiatives .

Speaker #4: To conclude , we remain confident in the fundamentals of our business . We are operating with financial discipline and focus , and we are taking decisive actions to refine our strategy , regain sales momentum and position the company to deliver sustainable and profitable growth over time With that , I'd like to thank you for your attention .

Derrick Sung: To conclude, we remain confident in the fundamentals of our business. We are operating with financial discipline and focus. We are taking decisive actions to refine our strategy, regain sales momentum, and position the company to deliver sustainable and profitable growth over time. With that, I'd like to thank you for your attention. We will now open up the call for questions. Operator?

Speaker #4: We will now open up the call for questions Operator .

Speaker #1: Thank you . As a reminder to ask a question , you will need to press star one one on your telephone and wait for a name to be announced .

Operator: Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for a name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from the line of John Young from Canaccord. Your line is open.

Speaker #1: To withdraw your question , please press star . Please press star . One one again . Please stand by while we compile the Q&A roster One moment for our first question Our first question comes from the line of John Young from Canaccord .

Speaker #1: Your line is open .

Speaker #5: Hi . Glenn . Derek , thanks for taking the question this evening . And it's nice to see the operating leverage you guys are starting to demonstrate here .

John Young: Hi, Glenn and Derek. Thanks for taking the question this evening. It's nice to see the operating leverage you guys are starting to demonstrate here. I want to ask on your comments on the sales force, particularly the comment that you filled all the new positions. Could you tell us the percentage of the sales force overall that turned over in Q4? When did you start hiring and complete that hiring of the new reps? Thank you.

Speaker #5: I want to ask on your comments on the sales force , particularly the the comment that you filled all the new positions . Could you tell us the percentage of the sales force overall that turned over in Q4 ?

Speaker #5: And when did you start hiring and complete that hiring of the new reps ? Thank you

Speaker #3: So , John , nice to hear your voice . The the turnover was really across the entire year . So it wasn't in the fourth quarter .

Derrick Sung: John, nice to hear your voice.

Glendon E. French: The turnover was really across the entire year, so it wasn't in Q4. The magnitude was directionally up, you know, on the order of half of the sales organization across the year. When we got here, some number of those territories had been filled. We have some folks who joined in the middle to back part of the year. We've been about the task of filling additional openings since then. We find ourselves now with nearly all of those openings filled.

Speaker #3: The magnitude was directionally , you know , on the order of half of the sales organization across the year . When we got here , some number of those territories had been filled .

Speaker #3: So, we have some folks who joined in the middle to back part of the year, and we've been about the task of filling additional openings since then.

Speaker #3: And we find ourselves now with nearly all of those openings filled

Speaker #5: Got it . Thank you . And just as a follow up to , You know , you spoke a bit about the incentives not being aligned with the sales force last year .

John Young: Got it. Thank you. Just as a follow-up too, you know, you spoke a bit about the incentives not being aligned with the sales course last year. Can you just talk about maybe some color on how you're incentivizing sales now? What are the focus sales strategies now in the US that you guys are really focused on with these new reps to get them up to speed? Thanks again for taking the questions.

Speaker #5: Can you talk about maybe some color on how you're incentivizing sales now and , and what are the focused sales strategies now in the US that you guys are really focused on with these new reps to get them up to speed ?

Speaker #5: Thanks again for taking the questions, yeah.

Glendon E. French: Yeah. The incentives that we have in place aren't fundamentally different. I think the way that we had set things up at the beginning of last year was a bit of a challenge for many of our folks. One of the big questions. There's essentially two elements. One is the design of a compensation plan, and the second is the allocation of quota to each of the territories, and then how you do that is important.

Speaker #3: So the the incentives that we have in place aren't different . I think the way that we had set things up at the beginning of last year was a bit of a challenge for for many of our folks .

Speaker #3: One of the big questions—there's essentially two elements. One is the design of a compensation plan, and the second is the allocation of quota to each of the territories.

Speaker #3: And then how you do that is important . And we embraced a new approach to the allocation of quotas , which , which , which involved a couple things that both the amount of , of the quota that we allocated out and how we allocated it out across our sales organization together conspired to create a situation where there was some number of reps who felt like it was going to be difficult for them to to make the kind of money they were looking to make .

Glendon E. French: We embraced a new approach to the allocation of quotas, which involved a couple things that both the amount of the quota that we allocated out and how we allocated it out across our sales organization together conspired to create a situation where there was some number of reps who felt like it was gonna be difficult for them to make the kind of money they were looking to make. By the time we realized that this new system was not being constructive, we had started some movement that impacted us across the year.

Speaker #3: And by the time we realized That this new system was not being constructive , we have we had we had started some movement that that impacted us across the year .

Glendon E. French: As it relates to this year, we have been very careful both on the design of the sales incentive plan and with the allocation of those quotas and the amount of the quota that we're allocating at the initial point. We basically looked at where we stubbed our toe in 2025 and simply made the changes, went back to those things that we knew had worked in the past that were well received and well understood and embraced many of those elements. We're quite confident that we have in place a plan that is both viewed as quite reasonable as well as a design that I think people can get their heads around and get behind. It's been tested over time.

Speaker #3: As it relates to this year , we have been very careful both on the design of the sales incentive plan and with the allocation of those quotas and the the amount of the quota that we're allocating at the initial point .

Speaker #3: So we . Basically looked at where we stubbed our toe in 2025 and simply made the changes , went back to those things that we knew had worked in the past that were well received and well understood , and embraced .

Speaker #3: Many of of those elements . So we're quite confident that we have in place a plan that is both viewed as quite reasonable , as well as a design that I think people can get their heads around and and get behind .

Speaker #3: So and it's and it's been time it's been tested over time . Last year was the anomaly in terms of the construct . And frankly , we paid a price for that .

Glendon E. French: Last year was the anomaly in terms of the construct and frankly, we paid a price for that.

Speaker #5: Great . Thanks again

John Young: Great. Thanks again.

Speaker #1: Thank you . One moment for our next question . Our next question will come from line of Jason Bednar from Piper Sandler . Your line is open

Operator: Thank you. One moment for our next question. Our next question will come from the line of Jason Bednar from Piper Sandler. Your line is open.

Speaker #6: Hey . Good afternoon , Glenn and Derek . Thanks for taking the questions . I want to start here in the US business .

Jason Bednar: Hey, good afternoon, Glenn and Derek. Thanks for taking the questions. I wanna start here in the, in the US business, if I could. I totally appreciate there isn't a silver bullet in reversing the slide that the business has been through, but you've already taken a lot of action. You talked about applying a lot of initiatives that are underway. You talked about the sales force just in the prior question, that being a big one. I guess my question here is, though, is why wouldn't the growth come back sooner now that that sales force is fully in place and addressed? You add captive accounts that lost their covering rep or saw their rep change. I would think there shouldn't be new education with physicians that's necessary.

Speaker #6: If I could , I fully appreciate there isn't a silver bullet in reversing the slide that the business has been through , but you've already taken a lot of actions .

Speaker #6: You talked about , Glenn , a lot of initiatives that are underway . You talked about the Salesforce just on the prior question , that being a big one .

Speaker #6: I guess my question here is , though , is why wouldn't the growth come back sooner now that that Salesforce is fully in place and addressed , you had captive accounts that lost their covering rep or saw their rep change .

Speaker #6: I would think there shouldn't be new education with physicians . That's necessary . You shouldn't need to really prime the referral pump with patients into into those those trading accounts .

Jason Bednar: You shouldn't need to really prime the referral pump with patients into those treating accounts. I guess, again, very simply, why wouldn't that come back quicker in the US?

Speaker #6: So I guess why again , very simply , why wouldn't that come back quicker in the US

Speaker #3: Well , I think we've got a couple , a couple reactions to your question . One is that as you saw across the year , you know , relative to prior year , we were in fairly steep decline .

Glendon E. French: Well, I think we've got a couple reactions to your question. One is that, as you saw across the year, you know, relative to prior year, we were in fairly steep decline. I think we had 11% growth year-over-year in Q1, 6% growth in Q2, 1% growth in Q3, and we just announced on the order of a -10% year-over-year situation. We're springing off of somewhat spongy ground to begin with, if you look at the shape of that curve. We have in many cases, some folks that are just coming up to speed. We feel great about the team that we have in place.

Speaker #3: I think we we had 11% growth year over year in the first quarter , 6% growth in the second quarter , 1% growth in the third quarter .

Speaker #3: And we just announced on the order of a negative 10% year over year situation . So springing off of somewhat spongy ground to begin with .

Speaker #3: If you look at the shape of that curve and we have in many cases some folks that are just coming up to we're speed , we feel great about the team that we have in place .

Speaker #3: We have a construct where most of our sales folks are sort of doubled up in geographies, with sort of a senior, junior rep alignment.

Glendon E. French: We have a construct where most of our sales folks are sort of doubled up in geographies with sort of a senior/junior rep alignment. That's a design that allows people to come up to speed very quickly. We wanna be careful given sort of the soft ground that we're springing off of here coming off of the Q4, and the average tenure of the sales force being quite a bit different at this point this year as it was last year. With that integrated in, that explains our, you know, sort of back half projection.

Speaker #3: So that's a design that allows people to come up to speed very quickly . But we want to be careful , given sort of the soft ground that we're springing off of here .

Speaker #3: Coming off of the fourth quarter and , and the average tenure of the sales force being quite a bit different at this point this year , as it was last year .

Speaker #3: So with that integrated in that explains our sort of back half projection

Speaker #6: Okay . All right . Fair enough . Appreciate that . And Derek , I know you said you reduced the cost structure by 10% .

Jason Bednar: Okay. All right. No, fair enough. Appreciate that. Derrick, I know you said you reduced the cost structure by 10%, something on the order of that number. Can you expand upon what changed? You know, where did you source those savings from? Is that a gross number, or is the net savings lower since you've had to add back some spending on the sales force side? Then, sorry, this is a multi-parter, but with these changes that you made, can you give us a sense of what your fixed versus variable cost structure looks like now, just so we can have an idea of how much torque you have in the P&L once that top line starts to hum later this year?

Speaker #6: Something on the order of that Can you expand upon what changed ? Where did where did you source those savings from . Is that a gross number or is the net savings lower since you've had the add back some spending on the Salesforce side and then sorry , as the Multi-partner , but with these changes that you made , can you give us a sense of what your fixed versus variable cost structure looks like now , just so we can have an idea of how much torque you have in the PNL ?

Speaker #6: Once that top line starts later this year .

Speaker #4: Yeah . Hey , Jason , thanks for the question . So , you know , we you know , clearly got out in front of our skis over the last couple of years in terms of spending in anticipation of of sales growth that , you know , just didn't materialize in the time frame that we , we , we thought it

Derrick Sung: Yeah. Hey, Jason. Thanks for the question. You know, we, you know, clearly got out in front of our skis over the last couple of years in terms of spending in anticipation of sales growth that, you know, just didn't materialize in the timeframe that we thought it would. You know, we did take the difficult but necessary steps to realign our cost structure to our current growth profile. Kind of the 10% reduction that I spoke of is kind of roughly 10% of kind of recurring costs across the board that we took out. There's some puts and takes. There's obviously some restructuring costs that we incur, and that we're actually incurring this year.

Speaker #4: would . So , you know , we did take the difficult but necessary steps to realign our to come cost structure to our current growth profile , the kind of the 10% reduction that I spoke of is kind of roughly 10% of kind of recurring costs across the board that we took out .

Speaker #4: There's some puts and takes . There's obviously some restructuring costs that we incur and that that we're actually incurring this year . And so , you know , when you look at the numbers , you know , the guide that we're providing is kind of like a , you know , the 7 to 9% guide incorporates some of that relative to what where we were last year , the majority of the costs that we took out , and we were very careful to ensure that we kept our sights on continuing to invest in in our key growth initiatives , namely , you know , on the sales side , as Glenn mentioned , we're continuing to invest there .

Derrick Sung: You know, when you look at the numbers, you know, the guide that we're providing is kind of like a, you know, the 7% to 9% guide incorporates some of that relative to where we were last year. The majority of the costs that we took out, and we were very careful to ensure that we kept our sights on continuing to invest in our key growth niches, namely, you know, on the sales side, as Glenn mentioned, we're continuing to invest there. The sales force was not directly impacted by the cost restructuring. You know, on the R&D side, we're continuing to invest in our long-term future growth drivers, namely AeriSeal this year and into future years.

Speaker #4: The sales force was not directly impacted by the cost restructuring and , you know , on the R&D side , we're continuing to invest in long , long term future growth drivers , namely Aerosil .

Speaker #4: This year and into future years . So most of the expense reduction came from G&A and marketing and we believe that with , you know , those those expense reductions that we've made , you know , which are recurring , you know , we're in a strong position now to demonstrate operating leverage not only as you see , this year , but as you see moving forward

Derrick Sung: Most of the expense reduction came from G&A and marketing. We believe that, with, you know, those expense reductions that we've made, you know, which are recurring, you know, we're in a strong position now to demonstrate operating leverage, not only as you see this year, but as you see moving forward.

Speaker #6: All right . Helpful . Thank you

Jason Bednar: All right. Helpful. Thank you.

Speaker #1: Thank you. One moment for our next question. Our next question will come from the line of Rick Weiss from Stifel. Your line is open.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Rick Wise from Stifel. Your line is open.

Speaker #7: Hi . This is Annie on for Rick . Thanks for taking our questions . So I heard you call out Aerosil and the convert to trial as a key priority here for 2026 .

[Analyst] (Stifel): Hi, this is Annie on for Rick. Thanks for taking our questions. I heard you call out AeriSeal in the CONVERT 2 trial as a key priority here for 2026. Obviously, there's some investment required to ramp up enrollment and move toward commercialization eventually. I'm hoping you can talk about kind of how you plan to balance that out with your US sales organization investments and your plans to extend the cash runway.

Rick Wise: Hi, this is Annie on for Rick. Thanks for taking our questions. I heard you call out AeriSeal in the CONVERT 2 trial as a key priority here for 2026. Obviously, there's some investment required to ramp up enrollment and move toward commercialization eventually. I'm hoping you can talk about kind of how you plan to balance that out with your US sales organization investments and your plans to extend the cash runway.

Speaker #7: Obviously there's some investment required to ramp up enrollment and move toward commercialization eventually . So I'm hoping you can talk about kind of how you plan to balance that out with your US sales organization , investments and your plans to extend the cash runway

Speaker #3: Yeah , the so , first of all , the convert trial we came in , we spent , you know , I looked I looked around , made sure we had the right people in the right places .

Derrick Sung: Yeah. The first of all, the CONVERT trial, we came in, you know, I looked around, made sure we had the right people in the right places, and one of the key things that we looked at was ensuring that we had the proper alignment within our US sales organization. And the other area that I looked at immediately was making sure that we had the best possible alignment within our clinical function, given the role of AeriSeal in our future. And the CONVERT 2 trial, we were not enrolling in the CONVERT 2 trial as fast as I felt we should be. We made some realignments. We brought in a number of people who had been involved directly in the execution of our pivotal trial, our LIBERATE trial.

Speaker #3: And one of the key things that we looked at was ensuring that we had the proper alignment within our US sales organization.

Speaker #3: And the other area that I looked at immediately was making sure that we had the the best possible alignment within our clinical function , given the the role of of Aerosil in our future and the convert to trial , we we were not enrolling in the convert to trial as fast as I felt we should be .

Speaker #3: And so we made some realignments . We brought in a number of people who had been involved directly in the execution of our pivotal trial .

Speaker #3: Or liberate trial . One individual was here running another function and took over once , once again had formerly run clinical and is now running it again .

Derrick Sung: One individual was here running another function and took over once again. Had formerly run clinical and is now running it again. I'm thankful that he agreed to do that. We brought in two folks underneath him who were very much involved in the execution of that trial. In some ways, from a burn perspective, as you think about the execution of that trial, first of all, it's not all that spectacular a proportional amount of our annual burn. Number two, we're trying to get things, you know, optimized and aligned to deliver on, I think, what we had hoped we would be doing from a rate of clinical enrollment.

Speaker #3: So I'm thankful that he agreed to do that . And we brought in two folks underneath him who were very much involved in the execution of that trial .

Speaker #3: So in some ways , burn perspective , as you as you think about the execution of that trial , first of all , it's not all that spectacular .

Speaker #3: from a A proportional amount of our annual burn . And number two , we're trying to get things , you know , optimized and aligned to deliver on .

Speaker #3: I think what we had hoped we would be doing from a from a rate of of clinical enrollment . So I also don't think that that's going to have a meaningful impact on the overall spend of the company .

Derrick Sung: I also don't think that that's gonna have a meaningful impact on the overall spend of the company and certainly will not touch or pressure in any way the appropriate spending on our commercial operations.

Speaker #3: And certainly will not touch or or pressure in any way the appropriate spending on our commercial operations

Speaker #7: Got it , got it . Thank you . And then just one more for me . Just thinking about longer term . You know , appreciating that 2026 is more of a transition year for Pulmonx Corp as your new commercial focus kind of takes hold .

[Analyst] (Stifel): Got it. Got it. Thank you. Just one more for me. Just thinking about longer term, you know, appreciating that 2026 is more of a transition year for Pulmonx, as your new commercial focus kind of takes hold. I'm curious just how you're thinking about the company's longer term growth potential. How would you sort of frame your longer term growth aspirations now based on your time back into your respective roles?

Rick Wise: Got it. Got it. Thank you. Just one more for me. Just thinking about longer term, you know, appreciating that 2026 is more of a transition year for Pulmonx, as your new commercial focus kind of takes hold. I'm curious just how you're thinking about the company's longer term growth potential. How would you sort of frame your longer term growth aspirations now based on your time back into your respective roles?

Speaker #7: So I'm curious just how you're thinking about the company's longer term growth potential . How would you sort of frame your longer term growth aspirations now based on your time back into your respective roles ?

Speaker #3: Yeah , maybe I'll start in . Derek wants to add to that . I'll encourage him to do so . You know , we came back when when I departed , we had we had put up five quarters of 40% growth in the US and as a company , we were growing 30% and , and , and then things slipped and they slipped quite a bit .

Derrick Sung: Yeah. Maybe I'll start, and if Derrick wants to add to that, I'll encourage him to do so. You know, when I departed, we had put up five quarters of 40% growth in the US, and as a company, we were growing 30%. Things slipped, and they slipped quite a bit. It got a lot of people's attention and had everything to do with my coming back. I think without a question, our intention is to

Speaker #3: And it got a lot of people's attention . And had everything to do with , with my coming back . I think without a question , our intention is to take our growth profile to a much better place .

Glendon E. French: Take our growth profile to a much better place. Exactly where that is, I think we'll learn a lot about that as we go through the year and we see the kind of traction that we get from the programs that we're initiating and the types of things that we'll continue to refine and adopt as we go forward. I don't really think we're in a position to be telling you much more than we expect this to get substantially better. We're about that task, and I'm very confident we're headed in the right direction.

Speaker #3: Exactly where that is . I think we'll learn a lot about that as we go through the year , and we see the kind of traction that we get from the programs that we're initiating and , and the types of things that we'll continue to refine and adopt as we go forward .

Speaker #3: So I don't really think we're in a position to be Telling you much more than we expect this to get substantially better . And we're about that task .

Speaker #3: And I'm very confident we're headed in the right direction.

Speaker #4: Yeah . And Andy , this is Derek . I'll just add , you know , I even within the full year 2026 , our guidance implies obviously that we will sort of step up in growth through the year .

Derrick Sung: Yeah. Annie, this is Derrick. I'll just add, you know, even within the full year 2026, our guidance implies, obviously, that we will sort of step up in growth through the year. We expect that, you know, by the end of this year, you know, we'll be moving on a global basis to double-digit growth. Again, don't wanna sort of give guidance beyond 2026, but even within this year, by the end of this year, our guidance implies that we will be growing double digits by the Q4. Got it. That's super helpful. Thank you both.

Speaker #4: And we expect that , you know , by the end of this year we'll be moving on a global basis to double digit growth .

Speaker #4: So again , don't want to sort of give guidance beyond 2026 . But even within this year , by the end of this year , our guidance implies that we will be growing double digits by the fourth quarter .

Speaker #7: Got it . That's super helpful . Thank you both

Speaker #1: Thank you . And as a reminder to ask a question that's star one one star one one . Next question will come from the line of Frank Keenan from Lake Street Capital Markets .

Operator: Thank you. As a reminder, to ask a question, that's star one one. Star one one. Our next question comes from the line of Frank Takkinen from Lake Street Capital Markets. Your line is open.

Speaker #1: Your line is open .

Speaker #3: Hey , this is Frank .

[Analyst] (Lake Street Capital Markets): Hey, this is Nelson for Frank. Thanks for taking the questions and the comprehensive overview. I guess maybe just, you know, you've described 2025 underperformance as largely internal, wrong role structure, wrong incentives, maybe too many incentives. Anything out there may be fundamental from a market perspective-- market penetration perspective that surprised you, that's maybe more challenging or just anything there I think would be interesting?

Frank Takkinen: Hey, this is Nelson for Frank. Thanks for taking the questions and the comprehensive overview. I guess maybe just, you know, you've described 2025 underperformance as largely internal, wrong role structure, wrong incentives, maybe too many incentives. Anything out there may be fundamental from a market perspective-- market penetration perspective that surprised you, that's maybe more challenging or just anything there I think would be interesting?

Speaker #8: Thanks for taking the questions in the comprehensive overview. I guess maybe just, you know, you've described 2025 underperformance as largely internal.

Speaker #8: Wrong role structure , wrong incentives , maybe too many incentives , but anything out there , maybe fundamental from a market perspective , market penetration perspective , that's surprised you .

Speaker #8: That's maybe more challenging or just anything there . I think would be interesting

Glendon E. French: You know, the market is becoming increasingly active, which is I think a net positive. There are broader investments in the pulmonary space. Intuitive has a nice and growing business in the cancer side of our business. These service line directors in hospitals are, you know, they're managing many more procedures and a lot more, you know, the economics, I think, have gotten them moved up the hierarchy within hospitals. I think that's sort of a net positive. Again, in the short term, there have been moments along the way where there have been, you know, certain pressure on resources, but that's fairly easy to respond to.

Speaker #3: You know , the market is becoming increasingly active , which is , I think , a net positive . There are broader investments in the pulmonary space .

Speaker #3: Intuitive is has a nice and growing business in the cancer side of our our business . So these these service line directors in hospitals are , you know they're they're managing many more procedures and a lot more .

Speaker #3: You know the economics I think have gotten them moved up the hierarchy within hospitals . So I think that's sort of a net positive in in the short term .

Speaker #3: There have been moments along the way where there have been , you know , certain pressure on resources , but that that's fairly easy to respond to these procedures are done in operating rooms .

Glendon E. French: These procedures aren't done in operating rooms, so you know, the procedure rooms are much more plentiful around the hospital, so we'll be able to flex in that regard and pick up the resources necessary to set up and execute these programs. I think in general, the macro elements, whether you're talking about reimbursement, whether you're talking about places to do the procedure, people to execute the procedure, we just have to have the fundamentals in place. As folks become increasingly invested in pulmonary, be that cancer or emphysema or COPD, those are good things for us. I think, you know, from a macro perspective, that feels like a net positive over time.

Speaker #3: So , you know , the procedure rooms are much more plentiful around the hospital . So we'll be able to flex in that regard and pick up the resources necessary to to set up and execute these programs .

Speaker #3: So I think in general , the macro elements , whether you're talking about reimbursement , whether you're talking about places to do the the procedure , people to execute the procedure , we just have to have the fundamentals in place .

Speaker #3: And as folks become increasingly invested in pulmonary , be that cancer or emphysema or COPD , those are good things for us . So I think , you know , from a macro perspective that feels like a net positive over time

Speaker #8: Got it . And then you had mentioned like specifically called out Lung tracks to detect , you know , lower return activity that pulled Salesforce attention away .

[Analyst] (Lake Street Capital Markets): Got it. You had mentioned-- like you specifically called out LungTrax Detect being a lower return activity that pulled Salesforce attention away, and maybe I missed it, but is that program being shelved or deprioritized, handed off, or how are you thinking about just that in general?

Frank Takkinen: Got it. You had mentioned-- like you specifically called out LungTrax Detect being a lower return activity that pulled Salesforce attention away, and maybe I missed it, but is that program being shelved or deprioritized, handed off, or how are you thinking about just that in general?

Speaker #8: And maybe I missed it, but is that program being shelved, deprioritized, handed off, or how are you thinking about just that in general?

Glendon E. French: I think we set off at the beginning of last year, with the hypothesis that that was technology that would be useful potentially in most of our accounts. It is a great technology. It does all that we've said it does. One of the challenges, though, is that it's really optimal for a certain subset of some of our larger systems, at sites where, you know, all the elements are in place. In any case, it's something that is not, it doesn't fit well in every single hospital. It took us some time to figure that out. I think that my review of prior updates, indicated that there was a lot of discussion about it taking more time than we had thought it might take to set up.

Speaker #3: We we set off at the beginning of last year with the hypothesis that that was technology that would be useful potentially in most of our accounts .

Speaker #3: It is a great technology . It's it does all that we've said . It does . One of the challenges , though , is that it's really optimal for a certain subset of some of our larger systems at sites where all the elements are in place and in any case , it's something that is not it doesn't fit well in every single hospital .

Speaker #3: It took us some time to figure that out. I think that my review of prior updates indicated that there was a lot of discussion about it taking more time than we had thought it might take to set up.

Speaker #3: I think in properly selected hospitals that that sort of have a , an appropriate profile . There's , there's an absolute place for lung tracks to test .

Glendon E. French: I think in properly selected hospitals that sort of have an appropriate profile, there's an absolute place for LungTrax Detect. It's not being de-emphasized. I think it's being focused in certain types of situations as a potential positive. We have a number of accounts that are underway, and we're keeping a close eye on them, but the initial feedback is that it is being helpful in terms of identifying patients that otherwise wouldn't have gotten picked up.

Speaker #3: So it's not being de-emphasized . I think it's being focused in certain types of situations as , as a real positive potential positive .

Speaker #3: We have a number of accounts that are that are underway , and we're keeping a close eye on them . But the initial feedback is that it it is it is being helpful in terms of identifying patients that otherwise wouldn't have gotten picked up

Speaker #8: Helpful . Thank you guys .

[Analyst] (Lake Street Capital Markets): Helpful. Thank you, guys.

Frank Takkinen: Helpful. Thank you, guys.

Speaker #1: Thank you . One moment for our next question . Our next question will come from line of Larry Biegelsen from Wells Fargo . Your line is open .

Operator: Thank you. One moment for our next question. Our next question comes from the line of Larry Biegelsen from Wells Fargo. Your line is open.

Speaker #9: Hi . afternoon . This is Simran on for Larry . Thanks for taking the questions here . Maybe just another follow up question on the US sales force .

[Analyst] (Wells Fargo): Hi. Good afternoon. This is Simran on for Larry. Thanks for taking the questions here. Maybe just a, another follow-up question on the US sales force. I mean, I would be curious to maybe understand, you know, how are you thinking about the ramp in terms of months to productivity, and what early indicators should we be watching for to confirm that the ramp is tracking to plan?

Larry Biegelsen: Hi. Good afternoon. This is Simran on for Larry. Thanks for taking the questions here. Maybe just a, another follow-up question on the US sales force. I mean, I would be curious to maybe understand, you know, how are you thinking about the ramp in terms of months to productivity, and what early indicators should we be watching for to confirm that the ramp is tracking to plan?

Speaker #9: I mean , I would be curious to maybe understand . How are you thinking about the ramp up in terms of months to productivity and what early indicators should we be watching for to confirm that the ramp is tracking to plan

Speaker #4: I Simran , this is Derek . I'll jump in and go and can can add some color here . I mean , you know , in general it obviously differs territory to territory depending on what state the territory is .

Derrick Sung: Hi, Simran. This is Derrick. I'll jump in and Glenn can add some color here. I mean, you know, in general, it obviously differs territory to territory depending on what state the territory is when, you know, it was filled and when it was and how long it was open. You know, we normally look at kind of six to nine months for, you know, a new rep or new territory to get up the productivity curve. Now, as Glenn mentioned, you know, it wasn't like everybody left all at once and everybody came in all at once. There's a time frame here, and, you know, for the new territories to ramp up to productivity. That is, you know, embedded in our guidance.

Speaker #4: When you know the it was filled and when it was and how long it was open . But you know , we normally look at kind of 6 to 9 months for , you know , a new rep or new territory to get up the productivity curve .

Speaker #4: Now, as Glenn mentioned, you know, it wasn't like everybody left all at once and everybody came in all at once.

Speaker #4: So there's a kind of there's a time frame here and , you know , for the New territories to ramp up to productivity .

Speaker #4: And so that is , you know , embedded in our , our guidance . So , you know , specifically when we think about kind of US sales growth , you know , we kind of look at it as , you know , a grant gradual ramp from , you know , say mid to mid to high single digit declines .

Derrick Sung: you know, specifically when we think about kinda US sales growth, you know, we kind of look at it as, you know, a gradual ramp from, you know, say mid-to-high single-digit declines, you know, in Q1, moving towards high single-digit growth in Q4. I would think of it as kind of a, sort of a linear-ish, you know, you know, step up. I think the best, you know, metric to look at, you know, honestly is just us, you know, be sort of being able to deliver on those sales, 'cause in aggregate it'll all be obviously reflected in our US sales performance.

Speaker #4: You know , in the first quarter moving towards high single digit growth in Q4 . And I would think of it as kind of a sort of a linear ish , you know , you know , step up and , you know , I don't I think the best , you know , I think the best metric to look at , you know , honestly , is , is just us , you know , sort of being able to deliver on , on those , those sales because in aggregate it'll all be obviously reflected in our US sales performance .

Speaker #9: Yeah .

[Analyst] (Wells Fargo): Got it.

Larry Biegelsen: Got it.

Speaker #5: I would .

Glendon E. French: Yeah, I would.

Speaker #3: Absolutely I'm sorry . I would absolutely agree with what Derek said . I would however , and I was I hesitated when you asked the question because I thought it was a little bit of a smart response to to say , you know , look at the revenue number .

[Analyst] (Wells Fargo): Mm-hmm.

Larry Biegelsen: Mm-hmm.

Glendon E. French: I'm sorry. I would absolutely agree with what Derrick said. I would, however. Yeah, I hesitated when you asked the question 'cause I thought it was a little bit of a smartass response to say, you know, look at the revenue number. I do agree with Derrick that is really what the, what's gonna be reflective of these folks coming up to speed. I will say that one of the most meaningful positive changes within our sales organization since I departed was the adoption of this sort of senior rep, junior rep combination. The majority of our territories in general, and certainly virtually every single one of our larger territories, has this combination.

Speaker #3: But but I do agree with Derek that that that is really what the what , what what's going to be reflective of these folks coming up to speed .

Speaker #3: I will say that one of the most meaningful positive changes within our sales organization since I departed was the adoption of this sort of senior rep , junior rep combination .

Speaker #3: The majority of our territories in general , and certainly virtually every single one of our larger territories , has this combination . And one of the real benefits of the combination is not only the ongoing ability to have one plus one equals something greater than two , but also it's it's facilitates , I believe , and I and I can see with a number of combinations of more tenured and , and newer folks together .

Glendon E. French: One of the real benefits of the combination is not only the ongoing ability to have 1 plus 1 equals something greater than 2, but also it facilitates, I believe, and I can see with the number of combinations of, you know, more tenured and newer folks together, it really facilitates the training process and bringing new people up to speed when they can be working with somebody who's got a little bit more tenure, a little bit more ability to bring them up to speed. Anyway, that's a real positive about the new construct. The newer new, as defined as since I left a couple of years ago.

Speaker #3: It really facilitates the training process and bringing new people up to speed when they can . They can be working with somebody who's got a little bit more tenure , a little bit more ability to to bring them up to speed .

Speaker #3: So anyway , that's that's a real positive about the new construct . The newer new as defined as since I left a couple of years ago

Speaker #9: Got it . That's very helpful . And maybe just on the US side and apologies if I missed this , but I guess just Japan .

[Analyst] (Wells Fargo): Got it. That's very helpful. And maybe just on the OUS side, and apologies if I missed this, but I guess just Japan, how do we think about contribution from that geography? I know, you know, the previous management team talked about enrollment in that post-approval study, really kind of occurring in the back half of 2025, I believe, or maybe early 2026. So maybe just is that a contributor to 2026 international sales? And just kind of what's the status in that geography?

Larry Biegelsen: Got it. That's very helpful. And maybe just on the OUS side, and apologies if I missed this, but I guess just Japan, how do we think about contribution from that geography? I know, you know, the previous management team talked about enrollment in that post-approval study, really kind of occurring in the back half of 2025, I believe, or maybe early 2026. So maybe just is that a contributor to 2026 international sales? And just kind of what's the status in that geography?

Speaker #9: How do we think contribution from that geography ? I know you know , the previous management team talked about enrollment in that Post-approval study really kind of occurring in the back half of 2025 , I believe , or maybe early 2026 .

Speaker #9: So so maybe just is that a a contributor to 2026 international sales and just kind of what's the status in that geography ?

Speaker #8: Well .

Glendon E. French: Well, it is a contributor because these are revenue-generating patients that are going into that trial. It's essentially, you know, it's a post-approval study. We are continuing to enroll the patients. And the enrollment is accelerating, so cases are increasing. That's about all I'm prepared to say about that product.

Speaker #3: It is a contributor because these are revenue generating patients that are going into that trial . So it's essentially it's a post-approval study .

Speaker #3: We are continuing to enroll the patients And and they the enrollment is accelerating . So cases are are increasing . That's It's about all I'm prepared to say about that .

Speaker #4: Yeah I mean it's not it's not a meaningful I would say that it is not a meaningful growth driver in 2026 . As we contemplate within our guidance versus 2025 , you know , we as Glenn said , we expect to to continue through the post-market study in 2026 and true commercialization .

Derrick Sung: Yeah. I mean, it's not a meaningful growth driver in 2026 as we contemplate within our guidance versus 2025. You know, as Glenn French said, we expect to continue through the post-market study in 2026. True commercialization, you know, I think comes the following year. It's not a huge piece to our guidance in 2026.

Speaker #4: You know , I think comes the following year . So it's not a huge piece to our , our , our guidance in 2026 .

Speaker #9: Got it . That's helpful . And sorry for China as well . Is that also the case ? I know you talked about you're awaiting the renewal certificate in the second half .

[Analyst] (Wells Fargo): Got it. That's helpful. And sorry, for China as well, is that also the case? I know you talked about, you're awaiting the renewal certificate in the second half. Should we assume China sales are relatively, you know, kind of flattish to the prior year, or are they depressed? I guess, just help me understand the China piece.

Larry Biegelsen: Got it. That's helpful. And sorry, for China as well, is that also the case? I know you talked about, you're awaiting the renewal certificate in the second half. Should we assume China sales are relatively, you know, kind of flattish to the prior year, or are they depressed? I guess, just help me understand the China piece.

Speaker #9: So should we assume China sales are relatively , you know , kind of flattish to the prior year or are they depressed ? I guess just help me understand the China piece .

Speaker #4: Yeah. And thank you for asking, because the China piece is a bit nuanced and does impact the year-over-year growth rates from an optics perspective.

Derrick Sung: Yeah. Thank you for asking, because the China piece is a bit nuanced and does impact the year-over-year growth rates, you know, from an optics perspective. I think it is important to clarify that. Just to put this in context, China sales were less than 5% of our global revenue last year. The majority of those sales into our China distributor last year, we realized in the first half of 2025. In our guidance, we don't contemplate much of a meaningful contribution from China at all in the first half of the year. We do expect China to resume, our shipments to resume into China and sales to resume into China in the back half of the year.

Speaker #4: So I think it is important to , to to clarify that . So just to put this in context , China sales were less than 5% of our global revenue last year .

Speaker #4: But the majority of those sales into our China distributor last year , we realized in the first half of 2025 . And so our guidance and our guidance , we don't contemplate much of a meaningful contribution from China at all In the first half of the year .

Speaker #4: And we do expect China to resume our shipments to resume into China and sales to resume into China in the back half of the year .

Speaker #4: So there's this mismatch in timing with tough comps , if you will , from the first half of 2025 relative to the first half of 2026 , where we're contemplating minimal sales , and then the back half of 2026 , where we expect our China sales to resume .

Derrick Sung: there's this mismatch in timing with.

Derrick Sung: Tough comps, if you will, from the first half of 2025 relative to the first half of 2026, where we're contemplating minimal sales and then the back half of 2026 where we expect our China sales to resume. That results in a, you know, from a year-over-year growth perspective, kind of double-digit declines year-over-year in the first half, and then that'll flip to double-digit growth in the back half of the year. We do get a bit of this sort of mismatch in timing, that'll result in some of this sort of, you know, sort of funky optical, year-over-year growth dynamics that you should be aware of.

Speaker #4: And so that results in a , you know , from a year over year growth perspective , kind of double digit declines year over year in the first half .

Speaker #4: And then that'll flip to double digit growth in the the year . So we do get a bit of this sort of mismatch in timing that will result in some of this sort of , you know , sort of funky optical year over year growth dynamics that you should be aware of

Speaker #9: Great. Thank you so much.

[Analyst] (Wells Fargo): Great. Thank you so much.

Larry Biegelsen: Great. Thank you so much.

Speaker #1: Thank you . This concludes the question and answer session . I would now like to turn it back over to Glenn French for any marks .

Operator: Thank you. This concludes the question and answer session. I would now like to turn it back over to Glenn French for any closing remarks.

Speaker #3: Thank you very much. I just want to summarize by reinforcing that we remain confident in the business, and we're really excited to rebuild momentum through a clear operating plan that targets our highest-impact initiatives.

Derrick Sung: Thank you very much. I just want to summarize by reinforcing that we remain confident in the business, and we're really excited to rebuild momentum through a clear operating plan that targets our highest impact initiatives. I am confident that we have the right strategy and the right people in place to execute. We look forward to demonstrating our progress to you in the quarters ahead. Thank you very much for your time and your questions. Thank you very much to all the Pulmonx employees who work every day so hard on behalf of our patients. Have a good day.

Speaker #3: I am confident that we have the right strategy and the right people in place to execute , and we look forward to demonstrating our progress to you in the quarters ahead .

Speaker #3: Thank you very much for your time and your questions , and thank you very much to all the Pulmonx Corp employees who work every day so hard on behalf of our patients .

Speaker #3: Have a good day

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

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