Pulmonx outlines $89M–$90M 2025 guidance with renewed focus on execution and cost discipline

Earnings Call Insights: Pulmonx Corporation (LUNG) Q3 2025

MANAGEMENT VIEW

* CEO Glendon French announced his return to the CEO role and highlighted the reappointment of Derrick Sung as COO and CFO, citing Sung's "broad and diverse skill set from across the medical device industry" and prior successful collaboration. French indicated that the decision to return was driven by "the significant opportunity I see for value creation," with confidence built from "more than 25 years in interventional pulmonology."
* French described the company’s market position as having a "market-leading product" in Zephyr Valves, supported by strong clinical evidence and broad reimbursement, especially in the U.S., and a "well-established commercial infrastructure" spanning over 25 countries. He stated, "Our plans to further expand our addressable market remain active and well aligned with our clinical and commercial strategy."
* French acknowledged that "our growth trajectory, particularly in the U.S., has slowed," attributing it in part to investments that "have not yielded the timely returns we expected," but emphasized the opportunity to "raise our overall growth profile by bringing underperforming territories in line with those that are consistently performing best."
* The CEO committed to "realign spending with growth expectations to put ourselves back on a sustainable path to profitability," and announced a "deliberate bottoms-up approach to shaping our plan," including a "line-by-line review of all programs and spending to ensure every dollar is driving measurable value."
* CFO Derrick Sung stated, "I am convinced that Pulmonx has built a solid foundation upon a truly exceptional product," but noted, "we have not delivered the operating leverage that I believe is critical to ensuring long-term success."

OUTLOOK

* The company updated its full year 2025 guidance, forecasting revenue in the range of $89 million to $90 million, gross margin of approximately 73%, and operating expenses between $125 million and $126 million (including about $21 million in noncash stock-based compensation). Sung explained, "We are committed to taking a disciplined approach to capital allocation to ultimately reduce our cash burn and extend our cash runway."
* Management indicated that more details on the plan for operating leverage and profitable growth will be provided during the Q4 call next year.
* No comparison to analysts' estimates was provided due to lack of explicit estimates data in the transcript.

FINANCIAL RESULTS

* Pulmonx reported total worldwide revenue for Q3 2025 of $21.5 million, representing a 5% increase from $20.4 million in the same period of the prior year and a 4% increase on a constant currency basis.
* U.S. revenue for the quarter was $14 million, up 1% from $13.8 million the previous year, with the addition of 9 new U.S. centers. International revenue was $7.5 million, a 15% increase year over year, largely driven by Europe and partially offset by a reduction from China.
* Gross margin for Q3 2025 was approximately 75%, compared to 74% a year ago, attributed to a lower mix of distributor sales.
* Total operating expenses were $30.4 million, a 4% increase year over year, with research and development expenses rising to $4.8 million (up 29%) mostly due to increased clinical trial activity.
* Net loss for the quarter was $14 million or ($0.34) per share, compared to a $14.1 million net loss or ($0.36) per share last year. Adjusted EBITDA loss was $8.2 million.
* The company ended the quarter with $76.5 million in cash and cash equivalents, having used $7.7 million in cash during the quarter and $25 million over the first three quarters of the year.

Q&A

* Nathan Treybeck, Wells Fargo Securities: Asked about exploring "alternate strategic pathways, whether it's asset sales, partnerships, anything around that?" CEO French responded that management is "focused on our business and making sure that we can move forward in a profitable way," and was not prepared to speculate further at this stage.
* Treybeck followed up on U.S. growth deceleration and investments not translating to sustained growth. French said, "we're really digging into the details on that," noting optimism due to strong performance in some territories but not ready to provide specifics.
* Annie (for Rick Wise, Stifel): Asked about addressing the complexity of patient referral and workup processes. French acknowledged, "it is a complex process," and explained that high-performing accounts have more efficient processes and resource allocation.
* Annie asked if best practices from high-performing territories would be applied more broadly. French confirmed that pursuing such opportunities is "low-hanging fruit" and will be a focus alongside increasing same-store sales.
* John Young, Canaccord Genuity: Inquired about factors distinguishing performing from underperforming U.S. territories. French declined to provide specifics, stating, "I just don't want to speculate," but committed to address the issue in future updates.
* Young asked about the confidence level in the new guidance. CFO Sung answered, "it's a revenue range that we feel confident at this point around our ability to achieve," acknowledging some growth initiatives have underperformed but highlighting opportunities for execution improvement.
* Jason Bednar, Piper Sandler: Asked for clarification about "extending the cash runway" and whether growth could be achieved without increased commercial spending. Sung confirmed the focus is on reallocating expenses for better returns, "focusing on areas where we can really see and measure and expect to have impact."
* Bednar also probed for details on which initiatives might be deprioritized. French replied that management is still analyzing data and will provide more specifics on future calls.

SENTIMENT ANALYSIS

* Analysts' tone was neutral to slightly negative, frequently pressing for specifics on growth deceleration, strategic alternatives, and details about underperforming territories. There was a clear desire for more granular information, as seen in repeated follow-ups and requests for specificity.
* Management’s prepared remarks were measured and confident, but responses during Q&A became more cautious and occasionally defensive, with French stating, "I just don't want to speculate" and "we're really digging into the details on that." The tone shifted from assertive in prepared remarks to more reserved and noncommittal during the analyst exchanges, with repeated emphasis on ongoing evaluation and future updates.
* Compared to the previous quarter, management's tone moved from conviction in the strategy and ecosystem-building to an urgent focus on execution, cost discipline, and sustainable profitability. Analyst tone remained persistent but grew more skeptical regarding immediate growth prospects and execution specifics.

QUARTER-OVER-QUARTER COMPARISON

* Guidance was revised downward again, from $90–$92 million in Q2 to $89–$90 million in Q3, reflecting further tempered expectations for the remainder of 2025.
* The CEO and CFO have changed, with French and Sung returning to leadership roles, replacing Williamson and Joshi. Strategic language has shifted from building an ecosystem and investing in long-term growth drivers to a more urgent focus on "profitable growth," "operating leverage," and "extending cash runway."
* Management now emphasizes immediate cost control, a "bottoms-up" review of spending, and realignment of investments, compared to the prior focus on commercial expansion and clinical initiatives.
* Analysts in both quarters pressed for clarity on guidance and execution, but their skepticism increased in the current call, with heightened concern over U.S. growth and effectiveness of prior investments.
* Key metrics, such as net loss and gross margin, showed only modest change, but the guidance adjustment and management changes signal a more conservative and execution-focused approach.

RISKS AND CONCERNS

* Management highlighted slowing U.S. growth and underperformance in certain territories as major challenges.
* French noted the need to "be clear about what hasn't worked" to sharpen focus and address issues, and Sung reiterated the lack of "meaningful operating leverage" as a concern.
* Analysts raised concerns about the complexity of patient referral and workup, the effectiveness of prior investments, and the company's ability to achieve growth without additional spending.
* Management’s mitigation strategies center on realigning spending, a comprehensive review of programs, and prioritizing high-return projects, but specifics were deferred pending further evaluation.

FINAL TAKEAWAY

Pulmonx leadership underscored a renewed focus on execution, cost discipline, and aligning investments with measurable returns, as reflected in the updated full-year 2025 revenue guidance of $89 million to $90 million. While the company maintains confidence in its product and market position, management acknowledged the need to address underperformance, particularly in the U.S., and to realign resources to drive profitable growth. Investors can expect greater transparency and more detailed plans on operating leverage and growth initiatives in the upcoming quarters, as the company works to extend its cash runway and deliver sustainable value.

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

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