Pulmonx Earnings Call: Cost Discipline Amid Growth Pause

Pulmonx Corporation ((LUNG)) has held its Q4 earnings call. Read on for the main highlights of the call.

Pulmonx’s latest earnings call struck a cautiously balanced tone, mixing clear operational setbacks with visible progress on financial discipline and clinical expansion. Management emphasized a stronger balance sheet, tighter cost controls and improving loss metrics, but also warned that revenue growth will be muted near term as U.S. execution issues and China headwinds weigh on results.

Refinancing Provides Breathing Room

Pulmonx refinanced its debt with a new $60 million credit facility designed to boost flexibility over the next several years. The company drew $40 million upfront to retire its prior loan and can access an additional $20 million through 2027 if it hits revenue milestones, extending debt maturity out to 2031 and easing near‑term balance sheet pressure.

Cost Cuts Aim to Ease Cash Burn

Management executed a cost restructuring that trims ongoing operating expenses by more than 10%, targeting a meaningful drop in cash burn. Annual cash usage is projected to fall from $32 million in 2025 to about $23 million in 2026, while total operating expenses are guided to $113–115 million, implying a 7–9% underlying reduction versus last year.

Margins Improve as Spending Tightens

The fourth quarter showed clear progress on profitability levers, with gross margin rising to 77.6% from 74% a year earlier and full‑year margin at 74%. Operating expenses for Q4 fell 11% year over year to $27.4 million as selling, general and administrative costs declined sharply, signaling that earlier cost control actions are taking hold.

International Markets Deliver Solid Growth

While the U.S. lagged, international operations continued to expand at a healthy clip, providing a bright spot in the top line. Full‑year 2025 international revenue reached $33.5 million, up 23% year over year, with fourth‑quarter international sales rising 8%, led by strong demand in major European markets.

Clinical Pipeline Progress with AeriSeal

Pulmonx highlighted momentum in its AeriSeal CONVERT II pivotal trial after changes in clinical leadership improved execution. Enrollment is now expected to complete in 2027, and management believes a successful outcome could expand the company’s global addressable market by roughly 20%, offering a longer‑term growth lever beyond current product lines.

Loss Metrics Trend in the Right Direction

Despite revenue pressure, quarterly profitability metrics improved, reflecting better cost discipline and margin expansion. The Q4 2025 net loss narrowed to $10.4 million from $13.2 million a year ago, while adjusted EBITDA loss improved to $5.5 million, and the company added 10 new U.S. treating centers to support future procedure growth.

Revenue Slippage Highlights Execution Risk

The core challenge remains top‑line weakness, particularly in the United States, where the business underperformed again. Fourth‑quarter worldwide revenue fell 5% to $22.6 million, and U.S. revenue dropped 11% to $14.1 million, underscoring soft procedural volumes and the impact of internal sales disruptions.

Flat 2026 Revenue Outlook

Management’s guidance signaled that 2026 will be a transition year, with little headline growth as the company works through its operational reset. Full‑year revenue is projected at $90–92 million versus $90.5 million in 2025, implying essentially flat sales and placing more focus on margin improvements and cash conservation until growth is expected to reaccelerate.

Sales Force Turbulence Weighs on U.S. Growth

Executives were candid that much of the U.S. underperformance was self‑inflicted, stemming from missteps in sales organization design and incentives. The team was stretched across too many initiatives, territories were reshaped, compensation was misaligned, and roughly half the sales force turned over, disrupting relationships and undermining account coverage.

China Faces Inventory and Regulatory Drags

China, once a growth driver, is now a source of volatility as Pulmonx navigates inventory and regulatory timing issues with its distributor. Shipments were minimal in the second half of 2025 and are expected to stay low into early 2026 as inventory is cleared and the company awaits renewal of its registration certificate, creating tough first‑half comparisons.

Heavy Losses and Cash Use Remain Concerns

The full year still showed the strain of Pulmonx’s investment and operating structure, with a net loss of $54 million highlighting the gap to profitability. Cash, cash equivalents and marketable securities declined to $69.8 million at year‑end, down $31.7 million over 12 months, illustrating the importance of recent financing and cost actions to support the business.

Expense Base Still High Amid R&D Push

Even with cuts, the company’s operating expense base remains elevated, reflecting ongoing investment needs and noncash costs. Total operating expenses for 2025 were $128.8 million, up slightly year over year, as stock‑based compensation reached $19.3 million and R&D spending increased to support the AeriSeal trial and other clinical activities.

Guidance Points to Stabilization Before Growth

Looking ahead, Pulmonx guided 2026 revenue to $90–92 million, gross margin around 75% and operating expenses of $113–115 million, with about $21 million of stock‑based compensation included. Management aims to cut annual cash burn to roughly $23 million, return to year‑over‑year revenue growth in the back half of 2026 and reach double‑digit global growth by Q4, supported by existing cash and its long‑dated credit facility.

Pulmonx’s earnings call painted a picture of a company tightening its financial screws while it works through meaningful commercial and geographic challenges. Investors will be watching whether a leaner cost structure, an improved balance sheet and a promising AeriSeal pipeline can offset execution risk in the U.S. and China and ultimately deliver the sustained growth management is targeting for late 2026 and beyond.