Pulmonx (LUNG) Q2 2026 earnings review
Cost Cutting Saves the Quarter as Revenue Shrinks Again
Pulmonx reported its third consecutive quarter of revenue decline (-5% YoY), but the story is all about operating leverage. A realigned cost structure drove a 16% reduction in operating expenses, propelling gross margins to a record 78% and shrinking Adjusted EBITDA loss by 39%. The U.S. turnaround is showing early signs of bottoming, decelerating from an 11% drop in Q4 to a 4% drop today. Management maintained its $90-$92M full-year revenue target, setting the stage for a dramatic, high-stakes acceleration required in the second half of the year.
🐂 Bull Case
The margin profile is transforming rapidly. With gross margins hitting 78% and OpEx guidance slashed, Pulmonx is proving it can drastically reduce cash burn while awaiting top-line recovery.
Excluding the bureaucratic delays in China, the international business grew an impressive 12% YoY, validating the core demand for the Zephyr Valve outside the U.S.
🐻 Bear Case
With only $43.3M generated in H1, Pulmonx must deliver ~$47.7M in H2 to hit its guidance midpoint. This requires a sudden, steep acceleration from a sales force that is still in turnaround mode.
The ongoing lack of sales into China pending registration renewal completely erased international gains, dragging segment growth from +12% down to -6%.
⚖️ Verdict: ⚪
Neutral. Management deserves credit for aggressively controlling costs and stabilizing margins, but maintaining the full-year revenue guide shifts immense execution risk onto the next two quarters.
Key Themes
Operating Leverage is Now a Reality
Management's promise to re-engineer the cost structure is bearing fruit. Gross margin accelerated to a record 78% (up from 72% a year ago). Simultaneously, total operating expenses dropped 16% to $26.8M. This discipline allowed the company to improve Adjusted EBITDA loss by 39% to just $5.1M, giving them a much longer runway to execute the U.S. turnaround.
China Registration Delays Mask Core Demand
The international business appears weak on the surface (revenue down 6%), but this is entirely due to zero sales in China while awaiting a registration certificate renewal. Excluding China, international revenue grew 12% YoY. Until this bureaucratic hurdle is cleared, international optics will remain penalized.
U.S. Turnaround is Bottoming
The U.S. business, which suffered a massive disruption in 2025 due to sales force turnover and misaligned incentives, is showing signs of stabilizing. The YoY decline has softened consecutively: from -11% in Q4 '25, to -7% in Q1 '26, to -4% this quarter. The 'near-to-far' commercial strategy is beginning to plug the holes.
AeriSeal Trial - The Next TAM Expander
The AeriSeal CONVERT II pivotal trial remains the primary long-term value driver. If enrollment completes in 2027 as planned, it could unlock a potential 20% expansion of the global total addressable market by treating patients with collateral ventilation, who are currently ineligible for Zephyr Valves.
Other KPIs
Accelerating improvement. This represents a 39% reduction in loss compared to the $8.4 million loss in 25Q2, driven directly by the 16% cut in operating expenses and 600 bps of gross margin expansion.
Stable. The company is successfully protecting its balance sheet, remaining on track to hit its target of approximately $23 million in cash burn for the full year. This financial discipline removes near-term capital raise anxiety while the commercial turnaround plays out.
Guidance
Reversing. Management reaffirmed this target, which implicitly requires a massive turnaround in H2. With H1 delivering $43.3M (-6.6% YoY), the company needs to generate roughly $47.7M in H2 to hit the midpoint, requiring sales growth to flip from negative to high single-digits.
Accelerating. Upgraded from prior guidance of ~75%. While slightly lower than the 78% achieved in H1, it signals high confidence in sustained pricing power, manufacturing efficiency, and favorable regional product mix.
Decelerating. Lowered from the prior $113-$115 million guide. This is a crucial pivot, proving that management can structurally reduce the cost base by shifting away from low-yield growth initiatives and focusing purely on high-return centers.
Key Questions
China Registration Timeline
With the continued drag on international numbers, what is the latest specific timeline for the China registration certificate renewal, and is there risk of a permanent loss of market position while off-market?
The H2 Revenue Inflection Point
Maintaining the $90-$92M full-year revenue guide implies a steep acceleration in H2. What specific leading indicators from the U.S. sales force (e.g., StratX scan volumes) give you confidence that this inflection will materialize in Q3?
Sustainability of Record Margins
Gross margins hit an impressive 78% this quarter, yet full-year guidance was only raised to 76%. What are the specific anticipated margin headwinds in H2 driving this slight moderation?