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Earnings call · Jul 2026 (Q2 FY26)

IRIDEX Q2 FY26 earnings call IRIX

Aug 18, 2026 Source

Executive summary

IRIDEX Q2 FY26 — Positive Cash Flow and Glaucoma Growth Amidst Retina Headwinds

IRIDEX achieved positive cash flow in Q2 FY26, reflecting significant cost structure transformation and working capital management. While the glaucoma business showed strong probe-led growth, the retina segment faced temporary market and operational challenges, leading to an overall revenue decline. The company is focused on strengthening execution and supply chain ahead of headquarters relocation and manufacturing transitions, reaffirming its full-year revenue guidance.

Highlights

4

  • Generated positive cash flow from operations in Q2 FY26, demonstrating improved financial discipline.

  • Cyclo-G6 probe volume rose 35% year-over-year to 17,700 units.

  • G6 product family revenue increased 19% year-over-year to $3.9 million.

  • Operating expenses reduced by 5% year-over-year to $5.3 million in Q2 FY26.

Concerns

5

  • Total revenue declined 7% year-over-year to $12.6 million, driven by lower retina product sales.

  • Retina product revenue decreased to $6.5 million from $8.0 million in the prior year period due to temporary headwinds.

  • Net loss increased to $1.3 million ($0.07 per share) in Q2 FY26 from $1.0 million ($0.06 per share) in Q2 FY25.

  • Non-GAAP adjusted EBITDA was a loss of $0.4 million in Q2 FY26, down from an income of $21,000 in Q2 FY25.

  • Cyclo-G6 system placements decreased to 18 units from 35 in the prior year period due to order timing and competitive pressures.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 revenue
$51 million to $53 million
high materiality
High
Full-year 2026 adjusted operating expenses
$19 million to $19.5 million
medium materiality
High
Retina revenue growth
low single-digit growth
medium materiality
Medium
Glaucoma probe volume growth
low double-digit growth
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Total Company
Total revenue for Q2 FY26, down from $13.6 million in Q2 FY25. Decline driven mainly by lower retina product sales, partly offset by glaucoma probe sales.
$12.6 million-7%——
Retina
Retina product revenue for Q2 FY26, down from $8.0 million in Q2 FY25. Decline driven by temporary headwinds including international commercial transitions and regulatory-related factors. Underlying global demand remained robust.
$6.5 million———
Glaucoma (Cyclo-G6 product family)
Growth attributed to increased unit volumes in U.S. and internationally, and increased ASP domestically. Probe volume increased from 13,100 units in prior year. System placements were down from 35 units in prior year due to order timing in EMEA and competitive pressures.
Cyclo-G6 probe volume: 17,700 unitsCyclo-G6 probe volume growth YoY: 35%Cyclo-G6 system placements: 18 units
$3.9 million19%——
Other Revenue
Essentially flat compared to $2.2 million in Q2 FY25.
$2.2 millionflat——

Product announcements

ProductTypeDetails
EndoProbe handpiecesexpansion

Deals & partnerships

EyePro GPO Broadening access to retina product portfolio domestically.

Added EndoProbe handpieces to existing product offering with EyePro GPO, which already included PASCAL, IQ 532, IQ 577, OcuLight TX, and Cyclo-G6 platforms.

Risks & headwinds

Temporary working capital investment due to safety stock build for headquarters relocation and manufacturing transition. Q2 FY26, Q3 FY26

impacted our second quarter cash flow and will further impact our third quarter cash flow

Mitigation:will enable us to achieve our 2026 revenue guidance of $51 million to $53 million; reversing and becoming a cash tailwind in 2027 as we work down the elevated inventory levels

Market dynamics and operational execution challenges affecting retina business. Q2 FY26

year-over-year revenue decline in our overall business was driven entirely by retina

Mitigation:actively addressing these factors and remain focused on strengthening execution, improving performance, and positioning the retina business for sustainable, profitable growth.

Order timing in EMEA and competitive pressures on new console placements in GmbH business. Q2 FY26

Cyclo-G6 system placements: 18 units during the quarter versus 35 in the prior year period

Mitigation:expect those numbers to increase over the second half of the year

Regulatory constraints and distributor inventory in China impacting retina sell-through. Q2 FY26, over the coming quarters

sell-through was impacted by regulatory constraints as well as the need for our distributor to work through existing inventory before placing additional orders.

Mitigation:actively progressing the regulatory renewal process and expect these factors to normalize over the coming quarters.

Market disruption from ongoing conflict in the Middle East. FY26

outlook excludes revenue from the region

Mitigation:On a pro forma basis that strips out 2025 Middle East revenue, the guide implies 2026 growth of 1% to 5% over 2025.

Continued choppiness in regional ordering patterns due to international ordering cadence. H2 FY26

In some markets, that sets up incremental opportunity as previously deferred backlog shifts and the product re-registration tied to our relocation are completed. In others, where distributors placed larger stocking orders this quarter, we expect a corresponding decline next quarter, representing some continued choppiness in different regions globally.

Mitigation:focused on commercial and operational execution in conjunction with continued expense management to drive positive cash flow from operations for the year.

What to watch in Q3 FY26

Retina revenue growth

H2 FY26
Current declined in Q2 FY26
Target low single-digit growth

Why it matters

Retina business faced headwinds in Q2; recovery is crucial for overall revenue growth and profitability.

We expect the second half of the year for retina to show low single-digit growth.

Q&A highlights

Will retina revenue grow year-over-year in H2 FY26, especially given Q4's historical strength?

Management expects low single-digit growth for retina in H2 FY26, driven by international regulatory approvals, broader market access for PASCAL, and annual promotion programs. They confirmed Q4 is typically the strongest quarter for system sales.

“We expect the second half of the year for retina to show low single-digit growth.”

asked by Scott Henry · answered by Patrick Mercer

2 min read 5 chapters

Detailed narrative

Cost Structure Transformation & Cash Flow

IRIDEX has reached an inflection point in its financial profile, generating positive cash flow in Q2 FY26. This achievement reflects two years of effort to transform the cost structure, strengthen working capital management, and build a more disciplined business. Ongoing initiatives include relocating headquarters and shifting production to lower-cost third-party contract manufacturers, both expected to drive gross margin improvement in 2027.

Headquarters Relocation & Supply Chain Management

The company initiated its headquarters relocation in August 2026, a key cost-cutting measure. To ensure supply continuity and protect distributor revenue during the transition and global registration blackout periods, IRIDEX is building safety stock inventory. This temporary working capital investment impacted Q2 cash flow and will further impact Q3, but is expected to reverse in 2027, becoming a cash tailwind as inventory levels normalize.

Glaucoma Business Strength

The glaucoma business continued to deliver solid, probe-led growth, with Cyclo-G6 probe volume increasing 35% year-over-year and G6 product family revenue up 19%. This growth was broad-based across all operating regions, driven by increased utilization of the G6 platform, targeted physician engagement via MedScout, tailwinds from Medicare LCDs, and improved U.S. average selling prices for probes and systems.

Retina Business Challenges & Strategic Focus

The retina business faced market dynamics and operational execution challenges, leading to a year-over-year decline in sales. These headwinds included international commercial transitions, regulatory factors, and sell-through delays in China. The company is actively addressing these issues, focusing on advancing the PASCAL upgrade cycle domestically, expanding its international footprint, and securing regulatory clearances for next-generation platforms, with expected MDR approval for PASCAL in Europe in H1 2027.

International Market Dynamics

International performance showed mixed results. In Europe, Middle East, and Africa, the U.K. registry for MicroPulse therapy is progressing, aiming for broader reimbursement. Germany and Austria operations performed well, reclaiming business from a former distributor. However, G6 console sales faced competition. In Asia and Latin America, distributors increased inventory ahead of business transitions and upcoming regulatory changes, contributing to some lumpiness in ordering patterns.

AI-generated summary of the company's earnings call. Not investment advice.