Pulmonx (LUNG) Q2 FY26 earnings call: guidance and Q&A

Clarification on sales force hiring completion and the expected timeline for new reps to become productive and visibly impact sales.

Management stated that all sales leadership positions are filled, and sales turnover has normalized. While the average tenure is currently lower, they expect increased productivity from new reps and anticipate visible impact, noting improvements in sales training and the presence of a 'bench' of junior reps to accelerate ramp-up.

“The six to nine months is what is correct in terms of what we've seen historically. We've made some very, I think, constructive changes to our sales training process, which I think will, that may modify that six to nine months.”

asked by Frederick Wise · answered by Glendon French

Details on the steps following China registration renewal and the timeline for seeing material revenue from the region.

Management confirmed the registration renewal was a significant binary event. They are now focused on restarting commercial activity and reigniting accounts. Material revenues are not expected until early next year (CY27), with the balance of this year focused on preparation.

“As we look at the back half of the year, we're reigniting those accounts, get those engines up and running, and we're anticipating that we probably won't see material revenues until next year, early next year.”

asked by Frederick Wise · answered by Glendon French

Inquiry about the relative contributions of new reps, new centers, and deeper utilization to the expected double-digit growth exiting the year.

Management expects positive contributions across all factors. They highlighted that territories with reps perform better, and increased productivity from ramping reps will show in 'same-store sales.' New centers will also contribute, indicating a multi-faceted approach to achieving growth.

“We anticipate that we're going to get some positive contribution across the board there. We've already talked – I mean, we've talked about each of these elements.”

asked by Nelson Cox · answered by Glendon French

Question on the expected moderation of gross margin in the second half of FY26 and the long-term gross margin outlook, especially with China sales resuming.

Management explained that China sales come with a lower gross margin, so resuming shipments will naturally lower the blended gross margin. They expect to be comfortably at or above 75% gross margin even with China back online, due to ongoing supply chain efficiencies and production improvements.

“China or the absence of sales into China clearly help our gross margin. China does come at a lower gross margin, but still a very attractive operating margin, I'll point out. So we would expect to see our gross margin come in a little lower once we do resume shipments into China.”

asked by Nelson Cox · answered by Derrick Sung

How the ramping sales force might affect the typical Q2 to Q3 seasonality, specifically whether the sequential decline would be less pronounced.

Management expects the typical Q2 to Q3 seasonality (sequential decrease, flat to down a few percent in the U.S.) to persist this year, despite the ramping sales force. They noted that new reps are still relatively new and do not anticipate a significant deviation from historical patterns.

“I would expect to see that same level of of seasonality this year as well. While we do have folks coming up to speed, I do think that our folks folks that we have are still new and at this point I don't expect to see anything different than we have in the past from a seasonality perspective.”

asked by William Plovanic · answered by Derrick Sung

Inquiry about the timing of AeroSeal commercial availability or launch in CE Mark nations, given the Convert-2 trial enrollment timeline.

Management stated that AeroSeal will launch in CE Mark countries sooner than in the U.S., as it already has CE Mark. However, launches will only occur after the ConvertOne publication is out and Convert-2 enrollment is complete in the specific European markets. They clarified that there isn't a specific country-by-country target for enrollment completion, but rather an OUS (Outside U.S.) completion.

“Yes, but we don't have a specific target. The specific targets we have in the trial is we're trying to establish a ratio of the distribution between the US and OUS. We do not have a specific target in France or a specific target in the UK.”

asked by William Plovanic · answered by Glendon French

Question on the company's path to cash flow break-even, considering current cash and access to the new debt facility.

Management expressed confidence in reaching cash flow break-even. They believe the current cash on hand, combined with the additional $20 million buffer from the debt facility, provides a clear path to achieve this goal over the next few years.

“Yes, no, we feel good about our path to cash flow break-even. We believe that we have a clear path with the cash that we have on hand and an additional buffer with the access from the debt facility.”

asked by William Plovanic · answered by Derrick Sung