Accuray Incorporated (NASDAQ:ARAY) Q1 2019 Earnings Conference Call Transcript

Oct 30, 2018 • 04:30 pm ET

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Accuray Incorporated (NASDAQ:ARAY) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 Accuray Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Todd Kehrli with EVC Group. Please go ahead.

Executive
Todd Kehrli

Thank you, Operator. Good afternoon, and welcome to Accuray's fiscal first quarter earnings conference call. With me on today's call are Josh Levine, Accuray's President and CEO; and Shig Hamamatsu, Accuray's Interim CFO.

(Forward-Looking Cautionary Statements)

Two housekeeping items: First, during the question-and-answer session we request that questioners limit themselves to two questions and then re-queue with any follow-ups. Second, all references we make to a specific quarter in the prepared remarks are to our fiscal quarters. For example, statements regarding our fiscal first quarter refer to our fiscal first quarter ended September 30th, 2018.

With that said, I'll now turn the call over to Accuray's President and CEO, Josh Levine.

Executive
Joshua Levine

Thank you, Todd. Good afternoon, everyone, and thank you for joining us on today's call. Before we begin, I'd like to introduce Shig Hamamatsu, our Interim CFO, who is joining me on the call today. Shig was our VP of Finance and CAO, before assuming the role of Interim CFO on October 1st. Shig has done a great job as the Interim CFO during this transition.

With regards to Q1 performance, we had a solid start to our fiscal year 2019. First quarter gross orders of $61.4 million were up 10% year-over-year, with especially strong demand for our Radixact System. Gross orders for our Radixact System more than doubled year-over-year, receiving approximately 25 system orders highlighting the growing market interest and adoption of our newest generation treatment offering. The strength in Radixact orders also highlights our expanding customer base with more orders coming from community and regional based hospitals.

Breaking down gross orders by type, approximately half of our Q1 orders for new vaults. We also had a strong quarter for competitive replacements, which more than doubled year-over-year and represented approximately 40% of our gross orders for the quarter. Again, this activity was driven by our Radixact product line. It's important to note that these orders from both new and competitive vaults represent positive indications for future installed base growth.

Lastly, 10% of our gross orders were replacement sales for existing Accuray Systems. We believe that the success we are seeing with Radixact in new vaults as well as with competitive replacements is because of improved performance characteristics related to treatment speed and overall throughput.

These characteristics have positioned Radixact as a highly efficient and versatile platform, exceedingly capable of treating routine cases with great speed and efficiency, while allowing for complex case treatment capability. Radixact's functional performance and efficiency improvements, early positive customer feedback and our upgrade road map have all contributed to a much stronger product position for Radixact