NeuroPace Upgrades 2025 Revenue Outlook to $94M-$98M on RNS System Surge

byjoko •Rabu, Agustus 13, 2025

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Earnings Call Highlights: NeuroPace, Inc. (NPCE) Q2 2025

Management View

CEO Joel D. Becker noted a "quarter of record revenue, with strong earnings of $23.5 million, marking a 22% increase from $19.3 million in the same period last year," attributing the rise to "ongoing robust sales of our primary RNS System, bolstered by heightened commercial efforts and expanded physician involvement." Becker mentioned "another quarter featuring record numbers of prescribers and active accounts as we continue to enhance access in both Level 4 facilities and community settings," highlighting the influence of Project CARE and the introduction of new service locations and medical applications.
Becker stated, "Based on this performance, we are increasing both our full-year revenue and gross margin guidance ranges. For revenue, we now anticipate a range of $94 million to $98 million. Gross margin is now projected to be between 75% and 76%." He also mentioned the completion of a debt restructuring, which offers "greater financial flexibility to support our strategic initiatives and eliminates the near-term debt maturity concern."
Clinical progress updates featured favorable outcomes from the Post-Approval Study and the NAUTILUS trial, as Becker noted, "Our pre-submission materials were received and approved by the FDA, and our submission was both well-considered and comprehensive... After submitting, the FDA will engage with us on a faster schedule." He emphasized his dedication to filing the PMA supplement during the second half of 2025.
Becker outlined advancements in AI-driven workflow tools and future improvements to the RNS system, stating, "we remain focused on development and regulatory work to introduce our initial AI-powered solutions in 2025."
The management updates involved selecting Patrick Williams as Chief Financial Officer and Chris Reese as Head of Sales. Becker stated, "These are deliberate and strategic decisions... I am confident in and enthusiastic about the path we are taking, both as a leadership team and as a company."
CFO Patrick F. Williams said, “We achieved a record second quarter 2025 revenue of $23.5 million, reflecting a 22% increase from $19.3 million in the second quarter of 2024.” Williams further noted, “The gross margin for the second quarter of 2025 was 77.1%, up from 73.4% in the same period of 2024 and 77% from the previous quarter.”

Outlook

The company increased its full-year revenue forecast to between $94 million and $98 million, compared to the earlier range of $93 million to $97 million, and revised its gross margin projection to 75%-76%, up from 73%-75%. Williams stated, "This revised guidance indicates an increase of roughly 18% to 23% over our 2024 reported revenue."
Projected operating expenses for 2025 are still set between $92 million and $95 million. Williams stated, "We still anticipate total operating expenses for 2025 to be within the range of $92 million to $95 million, in line with our earlier guidance."
Becker stated again, "We still anticipate submitting our PMA supplement during the second half of 2025, consistent with earlier projections."

Financial Results

Q2 2025 revenue reached $23.5 million, with a gross margin of 77.1%. Revenue from the RNS System increased by 16% during the quarter and by 21% in the first half of 2025. Total operating expenses amounted to $25 million, which included $1.9 million in one-time executive transition costs and $3.2 million in stock-based compensation.
Operating losses amounted to $6.8 million. The net loss stood at $8.7 million. Free cash flow was negative $2.3 million. Cash and short-term investments reached $62.1 million as of June 30, 2025. Williams stated, “Our newly refinanced debt offers access to an unused $15 million revolver.”

Q&A

Rohin Kirit Patel, JPMorgan: Inquired about the FDA submission approach for IGE and whether the company is aiming for a wide or specific indication. Becker stated that the strategy is "to seek an indication based on all the data and the entire population."
Patel inquired about the gross margin forecast, pointing out that the revised guidance suggests a decrease. Williams said, "Our guidance, although we raised it significantly, could indicate a possible slowdown, and I wouldn't interpret it any further than us being very careful and not getting ahead of ourselves."
Priya Sachdeva, UBS: Inquired about the aspects and impacts of Project CARE. Becker affirmed "significant implant contribution from CARE during the quarter."
Sachdeva also asked about guidance puts and takes. Williams stated, "We increased both the lower and upper bounds of guidance by $1 million... there might be some minor fluctuations" because of the DIXI contract phase-out.
Vikramjeet Singh Chopra, Wells Fargo: Questioned about whether NAUTILUS data affected commercial progress, Becker responded, "Not at all," highlighting ongoing excitement among researchers and medical professionals.
Frank James Takkinen, Lake Street: When questioned about the long-term strategy and the effects of the DIXI exit, Williams stated, "We are exiting that... what you're hearing from us is a belief that RNS has the potential to increase by at least 20%."
Ross Everett Osborn, Cantor Fitzgerald: Questioned regarding next-generation RNS and partnerships. Becker stated, "We are continuing to make solid progress, and we're adhering to the schedules we initially set." Becker also noted a collaboration agreement with UCB and other potential opportunities.
Yi Chen, H.C. Wainwright: Inquired about the probability of the FDA asking for another clinical trial and the potential in the pediatric market. Becker responded, "We don't think an additional trial is required," and highlighted the pediatric area as having "considerable potential."

Sentiment Analysis

Analysts were mostly upbeat, expressing appreciation for the results, but several asked for more transparency regarding gross margin forecasts, commercial progress from clinical findings, and the effects of the DIXI exit. Many inquiries requested detailed information on sustainability and the factors influencing financial estimates.
Management kept a confident and positive outlook, often highlighting the implementation, strategy, and long-term growth. Becker stated, “I have never been more assured about our plans, the execution of those plans, and the present and future expansion of the RNS System than I am now.” The language became more cautious when talking about forecast assumptions.
In contrast to the prior quarter, analysts' tone became somewhat more focused on questioning the endurance of growth and specific guidance information, while management's assurance rose, particularly concerning RNS growth and the new leadership.

Quarter-over-Quarter Comparison

The full-year revenue and gross margin projections have been increased compared to the previous quarter, indicating greater confidence and improved results. The revenue forecast was previously set between $93 million and $97 million, with a gross margin ranging from 73% to 75%.
The primary attention continues to be on growing the RNS System, with increased focus this quarter on artificial intelligence-based advancements and clinical data that support expanding the product's approved uses.
Analyst inquiries remain centered on Project CARE, factors influencing gross margins, and long-term expansion strategies, but this quarter sees increased focus on the DIXI divestiture and the viability of sustained high growth.
The leadership's approach is more confident and optimistic compared to Q1, consistently expressing belief in present results and future prospects. Analysts have adopted a more thorough tone, emphasizing particular program achievements and the mechanics of guidance.

Risks and Concerns

The management highlighted the reduction in sales of the DIXI Medical product, which "will be discontinued by the end of the first quarter of 2026 or earlier," along with potential temporary increases in revenue during this shift.
There are continuing regulatory challenges associated with the NAUTILUS trial and the PMA supplement for IGE, although management characterized the FDA interaction as cooperative and prompt.
Experts expressed worries regarding the long-term viability of gross margins, the effect of exiting DIXI on upcoming growth, and the potential for further clinical trials needed for new uses.
The management mentioned ongoing emphasis on operational discipline, expense management, and team growth as ways to address challenges.

Final Takeaway

NeuroPace's second quarter represented another high point for revenue and gross profit, prompting management to increase its full-year projections and express renewed confidence in the company's growth path. As the RNS System continues to expand, there are significant clinical advancements in both focal and generalized epilepsy, along with new leadership roles and progress in AI-driven innovation, all indicating a well-defined plan for ongoing success. Management emphasizes strong financial control, effective debt restructuring, and favorable regulatory interactions as key factors supporting its vision for long-term growth and value for patients, healthcare professionals, and investors.

Read the complete Earnings Call Transcript

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