Iridex (IRIX 3.17%), a medical device company specializing in laser-based systems for eye disease treatments, reported its second quarter results on August 12, 2025, covering the three months ended June 28. The key news in the release was a return to modest revenue growth while keeping operating expenses lower, which led to a narrower net loss and positive non-GAAP adjusted EBITDA. The company posted GAAP revenue of $13.6 million, compared to $12.6 million in Q2 2024, a 7% increase. Earnings per share (EPS, GAAP) improved to $(0.06), up from $(0.16) in Q2 2024. There were no official analyst estimates to compare against, but the results marked sequential and year-over-year improvement. Overall, declining gross margins remain a concern, yet disciplined expense management and slight growth indicate ongoing efforts to return to profitability.
| Metric | Q2 2025 | Q2 2024 | Y/Y Change |
|---|---|---|---|
| EPS (GAAP) | ($0.06) | ($0.16) | Improved |
| Revenue (GAAP) | $13.6 million | $12.6 million | 7.4% |
| Gross Margin | 34.5% | 40.7% | (6.2 pp) |
| Operating Expense | $5.6 million | $7.8 million | (28.2%) |
| Adjusted EBITDA (Non-GAAP) | N/A | ($1.7 million) | N/A |
Overview of Iridex's Business and Recent Focuses
Iridex develops, manufactures, and markets medical laser systems and related devices used to treat glaucoma and retinal diseases. Its portfolio includes advanced proprietary technologies like MicroPulse, which enables precise, tissue-sparing laser treatments favored for their safety and effectiveness. Its business relies on both capital equipment sales and a growing base of recurring revenues from single-use consumable probes and service contracts, which are crucial to stability.
Recently, the company has sharpened its focus on cost control, operational discipline, and increasing the adoption of recurring-use consumables such as laser probes. Key success factors include continuous innovation in its proprietary systems, expanding into global growth markets, ensuring high rates of recurring sales from installed equipment, and maintaining compliance with evolving medical regulations. Product differentiation and customer loyalty, especially in a competitive space dominated by larger companies, are also central to its long-term strategy.
Quarter Highlights: Growth, Margins, and Key Product Performance
Total revenue rose 7% year over year, supported by higher sales of Pascal laser systems (medical devices for retinal treatments) and increased sales of surgical and medical retina systems. Revenue from retina products reached $8.0 million, up 10% year over year. while 'other' revenue, including service, increased to $2.2 million. However, Cyclo G6 product family revenue, which includes devices and the company's critical recurring-use glaucoma probes, was flat year over year at $3.3 million.
The recurring revenue model faced a setback this quarter. Sales of Cyclo G6 probe units fell to 13,100 in the fiscal second quarter ended June 28, 2025, down from 15,100 in the same period last year. even as system sales rose by 25% (from 28 to 35 units). While installing more capital systems can help future probe sales, the decline in current probe use suggests pressure on the key consumables stream that underpins predictable revenue.
Gross profit declined in dollar terms and as a margin percentage, dropping to $4.7 million with a 34.5% gross margin, down from a 40.7% margin in Q2 2024. The company cited increased manufacturing costs, a greater mix of lower-margin capital equipment sales, and more international sales as the main reasons for the margin squeeze. These were partially offset by improved average selling prices (ASPs). Lower margins impact the company's ability to generate profit on each additional dollar of sales, making this a key metric for investors and stakeholders.
Expense reductions, launched in late 2024, continued to show results. Operating expenses dropped by 28% year over year to $5.6 million, thanks largely to workforce reductions and tighter discretionary spending. This deeply trimmed operating losses and contributed to an improved GAAP net loss of $(1.0) million. Non-GAAP adjusted EBITDA turned positive at $0.02 million after being negative $(1.7) million in Q2 2024, as the company achieved its third consecutive quarter at or near breakeven on this profitability measure.
Other notable points include a $6.8 million cash balance at quarter-end, down slightly during the period in line with continued cash usage but greatly improved from prior lows due to a substantial investment earlier in 2025. Accounts receivable are somewhat higher, reflecting increased sales but meriting ongoing monitoring.
Financial Outlook and What to Watch
Management reiterated its goal of achieving cash flow breakeven and positive non-GAAP adjusted EBITDA on annual sales consistent with 2024 levels. This signals an emphasis on improving profitability and expense discipline rather than forecasting significant new top-line growth. No formal guidance was given for revenue or margin expansion beyond last year’s levels.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
