IRIDEX Corporation Q4 2025 Earnings Call Summary

• Achieved positive adjusted EBITDA for the first time in recent history by growing revenue 8% while slashing operating expenses by 22% in 2025.

• Performance was bolstered by 16% growth in Q4, driven by strong retina system sales and increased Cyclo G6 probe utilization in the U.S.

• Strategic shift in glaucoma sales involves using MedScout software to target high-volume MIGS surgeons and mid-range utilization accounts.

• U.S. Medicare Local Coverage Determinations (LCDs) are actively driving G6 adoption earlier in the treatment continuum for mild-to-moderate patients.

• The retina business is transitioning to an upgrade cycle, with the PASCAL system established as the flagship platform for both established practices and university training programs.

• International growth in EMEA was supported by fulfilling several large orders, though macroeconomic volatility and tariffs continue to challenge the Asia-Pacific region.

• Management expects to achieve positive cash flow for the full fiscal year 2026, with quarterly generation improving sequentially after Q1.

• Revenue guidance of $51 million to $53 million conservatively excludes all Middle East sales due to ongoing regional conflict.

• A multi-year transition to third-party contract manufacturing is expected to begin in 2026, aiming for significant gross margin expansion through 2027.

• Relocation of G&A functions and the corporate headquarters in 2026 is projected to save approximately $1.26 million on an annualized basis.

• Future international growth is contingent on securing MDR certifications for next-generation retina platforms to unlock new global geographies.

• The conflict in Iran is materially impacting Middle East sales, leading management to remove the region entirely from 2026 projections.

• Gross margins for the full year 2025 declined to 37% due to inventory write-downs, increased tariff-related product costs, and lower capitalization of manufacturing overhead.

• The fiscal year 2025 was a 53-week year, providing a 14-week fourth quarter compared to the standard 13-week period in 2024.

• Inventory write-downs contributed to the full-year gross margin compression despite overall revenue growth.

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• Management clarified that the Middle East represents approximately 5% of the total revenue base and 10% of the U.S. revenue base.

• The 2026 guidance assumes zero revenue from this region to account for maximum disruption.