Pulmonx Corp. Q1 FY2025 earnings call

• Executed the acquired test and treat strategy, focusing on educating providers and patients to increase referrals for Zephyr Valves. Hosted over 40 peer-to-peer events and launched new CME modules through Medscape. - Hired therapy awareness specialists to educate community physicians. - LungTrax Detect system is identifying patients with radiographic emphysema, with early results showing an average rate of emphysema detection of approximately 15%. - International revenue grew 39% year-over-year, driven by strength in China and expansion in Europe and Japan. - Progressed in the AeriSeal CONVERT II trial for expanding indications, with plans for commercial launch outside the US in approximately 2026 and in the US in approximately 2027.

Worldwide sales for the first quarter of 2025 were $22.5 million, representing 20% growth over the same period last year and 21% on a constant currency basis. US revenue in the first quarter was $14.2 million, an increase of 11% from the prior year period. International revenue in the first quarter was $8.3 million, a 39% increase from the same period last year. Gross margin for the first quarter of 2025 was 73% compared to 75% in the prior year period. US revenue contributed approximately 63.1% to total worldwide revenue ($14.2M / $22.5M), while international revenue contributed approximately 36.9% ($8.3M / $22.5M).

• Reaffirmed full-year 2025 revenue guidance of $96 million to $98 million. - Anticipated gross margin for the full year to be approximately 74%, with improvement expected in the second half of the year. - Full year operating expenses projected to be $133 million to $135 million, including approximately $22 million in noncash stock-based compensation. - Expect growth in the second half of 2025 driven by scaling commercial initiatives in the US and continued solid growth internationally.

• Uncertainty from global macroeconomic environment, including tariffs and foreign exchange rate fluctuations affecting international revenue. - Impact of potential changes in global trade policies on international revenue and ordering patterns.

Q: Could you give additional color on your guidance outlook and where upside to full year guidance could come from?

A: Mehul Joshi stated that guidance remains at $96M to $98M as Q1 hit as anticipated. Upside could come from adoption of US initiatives like LungTrax, physician education programs, virtual Navigator pilots, and direct-to-patient (DTP) programs. Steve Williamson added that strong DTP metrics and growth in treatment centers could drive upside.

Q: How are you balancing SG&A leverage with treatment center expansion and physician training?

A: Mehul Joshi mentioned that the company is focused on operating leverage, investing in initiatives driving revenue, and balancing leverage with investment to grow revenues. Q1 SG&A was affected by geographic mix, but goal is to drive leverage in P&L moving forward.

Q: What have you been hearing from international partners regarding tariffs?

A: Mehul Joshi said they haven't heard much from most international partners, but strength in international revenue was due to strong demand and distributor stocking in response to evolving trade and regulatory landscape. They are monitoring global trade policies but haven't seen changes in ordering patterns yet.