NeuroPace raises 2025 revenue guidance to $94M-$98M as RNS System drives record growth

Earnings Call Insights: NeuroPace, Inc. (NPCE) Q2 2025

MANAGEMENT VIEW

* CEO Joel D. Becker highlighted a “record revenue quarter with strong revenue of $23.5 million, representing 22% growth compared to $19.3 million in the prior year period,” with growth “driven by continued strength in sales of our core RNS System, supported by increased commercial activity and broader prescriber engagement.” Becker pointed to “another quarter of record high prescribers and active accounts as we further expand access in both Level 4 centers and in the community,” emphasizing the impact of Project CARE and expansion into new service sites and clinical indications.
* Becker announced, “Given this performance, we are raising both our full year revenue and gross margin guidance ranges. For revenue, we now expect a range of $94 million to $98 million. Gross margin is now expected to be between 75% to 76%.” He also reported completion of a debt refinancing, providing “enhanced financial flexibility to fund our strategic initiatives and removes the near-term debt maturity overhang.”
* Clinical development updates included positive results from the Post-Approval Study and NAUTILUS trial, with Becker stating, “Our pre-submission documents were received and accepted by the FDA, and our submission was both thoughtful and robust... Following submission, the FDA will meet with us on an accelerated timeline.” He reiterated commitment to submitting the PMA supplement in the second half of 2025.
* Becker described progress on AI-powered workflow tools and next-generation RNS enhancements, noting that “we continue to progress with development and regulatory efforts to launch our first AI-powered tools in 2025.”
* Management changes included the appointment of Patrick Williams as CFO and Chris Reese as Head of Sales. Becker said, “These are intentional and strategic choices... I am both confident in and excited about the direction we are headed, both as a leadership team, as well as a business.”
* CFO Patrick F. Williams stated, “We reported record second quarter 2025 revenue of $23.5 million, representing 22% year-over-year growth compared to $19.3 million in the second quarter of 2024.” Williams added, “Gross margin in the second quarter 2025 was 77.1% compared to 73.4% in second quarter of 2024 and 77% last quarter.”

OUTLOOK

* The company raised its full-year revenue guidance to a range of $94 million to $98 million, up from the previous range of $93 million to $97 million, and updated gross margin guidance to 75%-76% from 73%-75%. Williams explained, “This updated guidance reflects an increase of approximately 18% to 23% over our reported revenue for 2024.”
* Operating expense expectations for 2025 remain at $92 million to $95 million. Williams said, “We continue to expect total operating expenses for 2025 to range between $92 million and $95 million, consistent with our previous guidance range.”
* Becker reiterated, “We continue to expect to submit our PMA supplement in the second half of 2025, in line with previous expectations.”

FINANCIAL RESULTS

* Revenue for Q2 2025 was $23.5 million, with gross margin at 77.1%. RNS System revenue grew 16% in the quarter and 21% in the first half of 2025. Total operating expenses were $25 million, including $1.9 million in one-time executive transition costs and $3.2 million in stock-based compensation.
* Loss from operations was $6.8 million. Net loss was $8.7 million. Free cash flow was negative $2.3 million. Cash and short-term investments totaled $62.1 million as of June 30, 2025. Williams noted, “Our recently refinanced debt provides access to an undrawn $15 million revolver.”

Q&A

* Rohin Kirit Patel, JPMorgan: Asked about the FDA submission strategy for IGE and whether the company is targeting a broad or segmented indication. Becker responded that the plan is “to go for an indication involving the totality of the data and the totality of the population.”
* Patel followed up on gross margin outlook, noting the updated guidance implies a decline. Williams stated, “Our guidance, although we did increase it quite a bit, it would imply potentially a deceleration, and I would not read more of that other than us being very thoughtful and not wanting to get ahead of ourselves.”
* Priya Sachdeva, UBS: Asked about Project CARE dynamics and contributions. Becker confirmed “strong implant contribution from CARE in the quarter.”
* Sachdeva also inquired about guidance puts and takes. Williams said, “We did raise both the low end of guidance and the high end by $1 million... there could be a little bumpiness there” due to the DIXI contract wind-down.
* Vikramjeet Singh Chopra, Wells Fargo: Asked if NAUTILUS data impacted commercial momentum. Becker answered, “Absolutely no,” emphasizing continued enthusiasm from investigators and clinicians.
* Frank James Takkinen, Lake Street: Asked about the long-range plan and the impact of DIXI exit. Williams explained, “We are divesting away from that... what you're hearing from us is a conviction that RNS at a minimum has the ability to grow at 20%.”
* Ross Everett Osborn, Cantor Fitzgerald: Asked about next-gen RNS and partnerships. Becker reported, “We continue to make good progress there, and we're on the timelines that we had laid out.” Becker also mentioned a collaboration agreement with UCB and ongoing opportunities.
* Yi Chen, H.C. Wainwright: Asked about the likelihood of the FDA requesting another clinical trial and pediatric market opportunity. Becker stated, “We don't believe that an additional trial is necessary,” and described the pediatric segment as having “significant opportunity.”

SENTIMENT ANALYSIS

* Analysts were generally positive, offering congratulations on results, but several pressed for clarity on gross margin guidance, commercial momentum from clinical data, and the impact of the DIXI exit. Multiple questions sought specifics on sustainability and the mechanics behind financial projections.
* Management maintained a confident and optimistic tone, frequently emphasizing execution, strategy, and growth durability. Becker said, “I have never felt more confident in our plans, the execution of those plans, and the current and future growth of the RNS System than I do right now.” Cautious language appeared when discussing guidance assumptions.
* Compared to the previous quarter, analysts’ tone shifted slightly more toward probing for the sustainability of growth and guidance details, while management’s confidence level increased, especially regarding RNS growth and new leadership.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full-year revenue and gross margin has been raised from the prior quarter, reflecting increased confidence and performance. The revenue guidance was previously $93 million to $97 million with gross margin at 73%-75%.
* Strategic focus remains on expanding the RNS System, with more emphasis this quarter on AI-driven innovation and clinical data supporting label expansion.
* Analyst questions continue to focus on Project CARE, gross margin drivers, and long-term growth plans, but this quarter includes more attention on the DIXI exit and the sustainability of high growth rates.
* Management’s tone is more assertive and positive than in Q1, repeatedly stating conviction in current performance and future outlook. Analyst tone has become more detailed, focusing on specific program outcomes and guidance mechanics.

RISKS AND CONCERNS

* Management called out the wind-down of DIXI Medical product sales, which “will phase out by the end of the first quarter of 2026 or sooner,” and possible short-term revenue bumps associated with that transition.
* There are ongoing regulatory risks related to the NAUTILUS trial and PMA supplement submission for IGE, though management described the FDA engagement as collaborative and timely.
* Analysts raised concerns about gross margin sustainability, the impact of DIXI exit on future growth, and the possibility of additional clinical trial requirements for new indications.
* Management cited continued focus on operating discipline, cost control, and organizational development as mitigation strategies.

FINAL TAKEAWAY

NeuroPace’s second quarter marked another record period for revenue and gross margin, leading management to raise full-year guidance and reaffirm confidence in the company’s growth trajectory. With ongoing expansion of the RNS System, clinical advances in both focal and generalized epilepsy, new leadership appointments, and progress in AI-enabled innovation, the company asserts a clear strategy for continued performance. Management highlights strong financial discipline, successful debt refinancing, and positive regulatory engagement as supporting its outlook for sustainable growth and value creation for patients, clinicians, and shareholders.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/npce/earnings/transcripts]

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