Pulmonx Earnings Call: Margin Gains Amid Growth Pause

Pulmonx Corporation ((LUNG)) has held its Q1 earnings call. Read on for the main highlights of the call.

Pulmonx’s latest earnings call struck a cautiously optimistic tone, balancing softer Q1 revenue and ongoing losses against improving margins, lower operating costs, and a much stronger liquidity position. Management leaned heavily on execution plans, emphasizing salesforce ramp-up, pipeline progress, and disciplined spending as key levers to reduce downside risk and restore growth momentum through 2026.

Reiterated Guidance and Path Back to Growth

Pulmonx reaffirmed its 2026 revenue outlook of $90 million to $92 million and outlined a clear sequencing of improvement through the year. Management expects sequential quarter-on-quarter gains and a return to year-over-year growth in both U.S. and international markets in the second half, exiting 2026 with double-digit topline expansion.

Q1 Revenue and Commercial Expansion

First-quarter 2026 revenue came in at $20.6 million, with the U.S. contributing $13.3 million, reflecting the near-term pressure in the business. At the same time, the company added 15 new U.S. treating centers and has now substantially filled sales leadership and field roles, with turnover stabilizing over the last six months, laying groundwork for future growth.

Gross Margin Moves Higher

Profitability metrics showed notable progress, with gross margin rising to 78% in Q1 from 73% a year earlier, largely due to a lower mix of lower-margin distributor sales. Management guided to a full-year gross margin of about 75%, with stronger levels in the first half and some moderation later in the year depending on geographic mix.

Cost Cuts Reshape Operating Expense Curve

Pulmonx executed a broad cost reduction program that is lowering its ongoing expense base by more than 10%, signaling a tighter focus on efficiency. Total operating expenses were $29 million, down 6% year over year, and excluding stock-based compensation and one-time restructuring charges, operating costs fell 8%, with full-year spending projected at $113 million to $115 million.

Adjusted EBITDA Trend Shows Gradual Improvement

On the earnings front, the company reported an adjusted EBITDA loss of $8.5 million, roughly in line with last year, but underlying trends improved when one-offs are stripped out. Excluding restructuring charges, adjusted EBITDA loss narrowed to $7.0 million, an 18% year-over-year improvement, while net loss edged down to $13.7 million, or $0.33 per share.

Liquidity Strengthened and Cash Burn Slows

Pulmonx closed the quarter with $61.6 million in cash, cash equivalents, and marketable securities, and secured a new $60 million interest-only credit facility that pushes debt maturity out to 2031 and offers potential access to another $20 million. With cost actions in place, management now forecasts 2026 cash burn of roughly $23 million, improved from $32 million last year, extending the company’s financial runway.

Clinical Progress and Market Expansion Potential

The company highlighted encouraging clinical momentum in its CONVERT II pivotal trial for AeriSeal, noting a faster enrollment pace following changes in clinical leadership and trial management. Pulmonx remains confident in completing enrollment in 2027 and believes AeriSeal could expand its global addressable market by about 20%, supporting medium- to long-term revenue growth beyond the current product base.

Revenue Declines Highlight Near-Term Pressure

Despite operational progress, Q1 underscored the demand challenges, with total revenue down 9% year over year to $20.6 million and down 12% on a constant-currency basis. U.S. revenue fell 7%, while international revenue declined 12% and 21% on a constant-currency basis, reflecting both China-related disruption and broader softness.

China Registration Delay Skews International Picture

Management stressed that the entire year-over-year revenue decline was attributable to the lack of sales to its China distributor as the company awaits renewal of its Chinese registration certificate. While China has historically contributed less than 5% of sales, it created difficult comparisons, and international revenue excluding China grew a robust 22% year over year, or 9% on a constant-currency basis.

Persistent Net Loss and Ongoing Cash Use

The company remains unprofitable, posting a Q1 net loss of $13.7 million and a cash balance that fell by $8.2 million since year-end, underlining continued cash outflows. Pulmonx still expects to use cash this year, even with a reduced burn rate, and investors will be watching how quickly revenue growth and expense controls can narrow losses.

Impact of Restructuring and Stock-Based Compensation

Reported results were also shaped by non-recurring and noncash items, including roughly $1.4 million in one-time restructuring costs and $3.8 million in stock-based compensation. These charges weighed on near-term profitability and partially obscured underlying improvements in the core operating expense trajectory.

Execution Risk Around Salesforce Ramp and China

Pulmonx’s recovery thesis is heavily tied to execution, especially how quickly newly hired U.S. sales reps reach full productivity, a process management estimates takes six to nine months. Guidance also assumes smooth execution on narrowed commercial priorities and timely renewal of the China registration, meaning delays in ramp or regulatory timing could pressure the return-to-growth plan.

Forward-Looking Guidance and Outlook

Looking ahead, management reiterated its confidence in achieving $90 million to $92 million of revenue for 2026, anchored by sequential quarterly improvement and a resumption of year-over-year growth in the back half. With gross margin expected around 75%, operating expenses held to $113 million to $115 million, and a slower cash burn, Pulmonx is positioning itself for a more sustainable growth profile as China returns and new centers mature.

Pulmonx’s earnings call painted a picture of a company in transition, absorbing a temporary revenue setback while steadily improving its financial foundation and commercial footprint. For investors, the story now hinges on execution: if salesforce productivity, China registration, and AeriSeal progress stay on track, the combination of improving margins and accelerating growth could meaningfully reshape the valuation narrative over the next two years.