NeuroPace Earnings Call Highlights Growth And AI Push

Neuropace, Inc. ((NPCE)) has held its Q4 earnings call. Read on for the main highlights of the call.

NeuroPace’s latest earnings call struck an upbeat tone, as management highlighted strong revenue growth, expanding margins and tangible product and clinical milestones. While the company acknowledged ongoing GAAP losses and a guided adjusted EBITDA decline in 2026 due to stepped-up investments, executives framed these pressures as manageable and strategic, supporting a confident long-term growth narrative.

Strong Top-Line Growth

NeuroPace delivered Q4 2025 revenue of $26.6 million, up 24% year over year, underscoring sustained demand in its core epilepsy business. Full-year 2025 revenue reached $100 million, a 25% increase versus 2024, signaling that the company is scaling meaningfully despite a still-niche neuromodulation market.

RNS System Momentum

The RNS System remained the growth engine, producing $22.4 million in Q4 2025 revenue, up 26% from a year earlier. For 2025 overall, RNS revenue climbed 25%, with a 29% growth rate in the second half driven mainly by higher-volume Level 4 centers that are increasingly standardizing on the platform.

Improved Gross Margins

Gross margin continued to move higher, reaching 77.4% in Q4 2025 versus 75.4% in the prior-year quarter, a roughly 200-basis-point expansion. The RNS franchise was even more profitable, with Q4 gross margin of 80.5% and a full-year margin of 81.9%, reflecting manufacturing efficiencies and favorable mix.

Positive Adjusted EBITDA and Cash Generation

The company posted its second straight quarter of positive adjusted EBITDA, coming in at $0.9 million in Q4, an improvement of $1.9 million year over year. NeuroPace also generated about $0.5 million in operating cash flow and $0.4 million in free cash flow in the quarter, lifting cash and short-term investments to $61.1 million.

Regulatory and Clinical Milestone for IGE

A key clinical and regulatory catalyst was the FDA’s acceptance of a PMA supplement for idiopathic generalized epilepsy filed in mid-December, launching a 180-day review. Supporting the submission, 18-month NAUTILUS data showed a 77% median seizure reduction in a highly refractory IGE population with a favorable safety profile, potentially broadening NeuroPace’s addressable market.

Advancing Product and AI Pipeline

Management emphasized progress in AI and digital capabilities, including the Seizure ID algorithm, which has been submitted and is expected to receive clearance in the first half of 2026. The company is also moving its clinician platform to the cloud, advancing remote programming and developing a proprietary foundation model trained on more than 24 million intracranial EEG recordings.

Reiterated 2026 Revenue Guidance and Commercial Push

NeuroPace reiterated its 2026 revenue outlook of $98 million to $100 million, which implies core RNS growth of 20% to 22% with no contribution from new indications or services. To support this trajectory, the company plans targeted sales-force expansion, updated incentive structures and more nurse navigator resources to improve patient access and conversion through the care funnel.

Operating Leverage Emerging

The company is beginning to show operating leverage, with Q4 operating expenses rising 13% while revenue increased 24%. On a normalized basis for 2025, operating expenses grew around 13% versus 25% top-line growth, suggesting that the business model is scaling more efficiently even as it invests in growth.

Near-Term Profitability Guidance Still Negative

Despite quarterly progress, management guided to a full-year 2026 adjusted EBITDA loss of about $9 million to $10 million. The company expects profitability metrics to worsen in the first half of 2026 as it front-loads commercial and growth investments before improving in the back half as those investments start to yield returns.

Persistent GAAP Losses

GAAP profitability remains out of reach, with a Q4 2025 net loss of $2.7 million, albeit improved from a $5.3 million loss a year earlier. For the full year, NeuroPace posted an adjusted EBITDA loss of $5 million, an improvement of $6.2 million versus 2024 and a sign that losses are narrowing as scale and margin expansion build.

DIXI Medical Transition Weighs on Mix

DIXI Medical contributed roughly $3 million of revenue in Q4 2025, down 4% from the prior year as that partnership wound down. With the commercial relationship ending on December 31 and DIXI to be reported as discontinued operations from Q1 2026, investors should expect some noise in year-over-year comparisons and a cleaner focus on core RNS going forward.

Higher Operating Expenses and Stock-Based Compensation

Total operating expenses for 2025 were $93.6 million, up 16% year over year, or about 13% when adjusting for one-time items, reflecting increased investment in growth. Stock-based compensation totaled roughly $10 million and will be excluded from non-GAAP 2026 presentations, giving investors a clearer view of underlying cash-based operating trends.

Time Required to Monetize IGE Opportunity

Management cautioned that even if IGE wins approval on the current timetable, revenue will not materialize immediately as payer coverage and referral patterns catch up. With Medicare and Medicaid representing only 20% to 25% of the payer mix, broader private insurer adoption and clinician education will be essential and may take time to fully ramp.

Service Revenue Still Modest and Uncertain

NeuroPace generated about $890,000 of service revenue in Q4 2025 from data collaborations, adding a nascent but potentially strategic income stream. However, given its modest size and limited visibility, the company is not including service revenue in its 2026 outlook and will only fold it into guidance once it becomes more predictable.

Leverage and Balance Sheet Position

The balance sheet shows $58.9 million of long-term borrowings against $61.1 million in cash and equivalents, leaving the company modestly net-cash positive. While management signaled ongoing cash burn in 2026 due to the guided adjusted EBITDA loss, they expect improving trends later in the year as revenue and operating leverage build.

Forward-Looking Guidance and Outlook

For 2026, NeuroPace reaffirmed revenue guidance of $98 million to $100 million and Q1 revenue of $21 million to $22 million, excluding DIXI, IGE upside and service revenue. On a non-GAAP basis, the company expects adjusted gross margin of 81.5% to 82.5%, adjusted operating expenses of $90 million to $92 million and an adjusted EBITDA loss of $9 million to $10 million, with heavier first-half spending and second-half improvement.

NeuroPace’s earnings call painted a picture of a company moving toward scale, with accelerating RNS adoption, expanding margins and a richer AI-enabled product roadmap. While GAAP losses, 2026 adjusted EBITDA pressure and the DIXI wind-down temper near-term optics, management’s disciplined investment stance and clear growth runway leave the long-term story firmly on an upward trajectory.