NPCE — NeuroPace, Inc.

NeuroPace Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Total Revenue: $27.4 million, a 30% year-over-year increase from $21.1 million.
• RNS Revenue: $22.6 million, up 31% year-over-year, driven by increased initial implants and broad-based growth across regions.
• Gross Margin: 77.4%, up from 73.2% year-over-year; RNS gross margin exceeded 80%.
• Adjusted EBITDA: Positive $0.1 million, marking the first positive adjusted EBITDA in company history.
• Net Loss: $3.5 million, improved from a net loss of $5.5 million in the prior year.
• Cash and Short-term Investments: $60 million as of September 30, 2025.

2. Strategic Updates and Business Highlights

• Record Quarter: Demonstrated strong execution of strategy, with all sales regions exceeding planned sales.
• Project CARE: Continued to enhance referral management and direct-to-consumer efforts, contributing to growth.
• Clinical Initiatives: Progress on NAUTILUS study for idiopathic generalized epilepsy (IGE) with plans to submit a PMA supplement by year-end 2025.
• R&D Pipeline: Focus on enhancing RNS system capabilities, including the recent submission of the seizure iEEG AI software tool to the FDA.

3. Forward Guidance and Outlook

• Revenue Guidance: Raised to $97 million - $98 million for the full year, reflecting 21% to 23% growth year-over-year.
• Gross Margin Guidance: Increased to 76% - 77% for the full year, with expectations of maintaining above 80% gross margin for RNS in 2026.
• Operating Expenses: Expected to range between $94 million and $95 million for 2025, reflecting a growth rate below revenue growth.

4. Bad News, Challenges, or Points of Concern

• DIXI Product Line Wind-down: Expected to contribute approximately $3 million in Q4, with a significant decline anticipated as focus shifts entirely to RNS.
• Pediatric Indication Delays: Timeline for submission extended beyond 2025 due to alignment on protocol and data set with the FDA.
• Market Competition: Concerns about maintaining growth momentum as the company transitions away from DIXI and focuses on RNS.

5. Notable Q&A Insights

• 2026 Outlook: Management indicated confidence in achieving at least 20% growth in the RNS business, emphasizing that DIXI revenue should not be factored into future growth models.
• Project CARE Impact: Management sees Level 4 centers as primary growth drivers, with community centers complementing this strategy.
• Seizure ID Tool: Expected to enhance clinical outcomes by improving efficiency in identifying patient episodes, potentially increasing RNS accessibility.
• Market Share vs. Market Expansion: Growth is attributed to both expanding the market and taking market share, with a focus on the unique capabilities of the RNS system.

Overall, NeuroPace reported a strong quarter with record revenues and significant milestones in product development, while also addressing challenges related to the transition away from DIXI and the timeline for pediatric indication submissions.