BrainsWay (BWAY) Q2 2025: $62M Backlog Anchors Multi-Year Lease Expansion

2025-08-13 | By EarningsIQ Research

BrainsWay’s deep TMS platform continues its shift to a recurring revenue model, with a record backlog and robust multi-year lease penetration. Strategic investments in mental health networks, accelerated clinical protocols, and next-generation device launches are broadening the company’s growth levers. Guidance was raised on the strength of enterprise adoption and visibility into future revenues, signaling a step-change in business model durability.

Summary

• Recurring Revenue Model Accelerates: Multi-year leases now drive the majority of new business, underpinning visibility and retention.
• Strategic Investment Program Scales: Minority stakes in mental health networks are yielding measurable utilization gains.
• Clinical and Product Pipeline Progresses: Accelerated treatment protocols and new device launches are set to expand addressable markets.

Performance Analysis

BrainsWay delivered record quarterly revenue and a 26 percent year-over-year increase, propelled by a 35 percent rise in deep TMS system shipments and a growing installed base now totaling 1,522 systems. The company’s recurring revenue model, anchored by multi-year lease agreements, reached approximately 70 percent of recent customer engagements, providing a foundation for stability and forward visibility. Gross margin remained robust at 75 percent, reflecting disciplined cost management and the scalable nature of the platform.

Operating leverage was evident as adjusted EBITDA rose alongside higher operating expenses directed toward commercial expansion and R&D. Net profit more than tripled year-over-year, underscoring the margin benefits of the recurring model and strong collections. Deferred revenue and backlog expanded to $62 million, up 25 percent year-over-year, driven by enterprise customer wins and advanced collections. The balance sheet remains debt-free, with cash reserves strengthened by both operations and strategic equity financing.

• Enterprise Customer Penetration Deepens: Large mental health networks increasingly drive backlog and multi-year lease activity.
• Operating Expenses Support Growth: Targeted increases in sales, marketing, and R&D are fueling commercial and clinical momentum.
• Cash Position Enables Flexibility: Ample liquidity and no debt allow for further strategic investments and pipeline advancement.

BrainsWay’s performance this quarter signals a business model transition toward predictability and scale, with the recurring revenue engine and enterprise channel providing a durable growth runway.

Executive Commentary

Strategic Positioning

1. Multi-Year Lease Model Drives Predictability

BrainsWay’s business model is rapidly shifting from transactional device sales to recurring, multi-year lease agreements, now representing the majority of new customer activity. This model provides revenue visibility, high customer retention, and a growing backlog, reducing quarter-to-quarter volatility and anchoring long-term planning.

2. Enterprise Channel Expansion

Strategic focus on enterprise mental health networks is yielding substantial, multi-phase system orders. These customers drive higher-value, multi-year contracts and create opportunities for deeper integration and utilization support, as evidenced by the Stella MSO partnership and similar deals in the pipeline.

3. Clinical Pipeline and Product Innovation

BrainsWay is advancing its clinical roadmap with the FDA submission of an accelerated deep TMS protocol for major depressive disorder. This protocol could reduce treatment cycles from six weeks to six days, potentially improving patient adoption and clinic throughput. The upcoming launch of the 360 device, targeting alcohol use disorder and other neurological indications, further expands the platform’s addressable market.

4. Strategic Investment Program

The company is deploying minority equity investments in mental health providers, leveraging capital from its $20 million equity raise. Early results, such as a reported 50 percent increase in utilization at Stella MSO clinics, validate this approach as both a growth and data-generation lever, with a target of at least five new investments by year-end and 15 by 2026.

5. Global Expansion and Health System Integration

International growth and deeper integration with health systems remain priorities, with ongoing clinical initiatives in Israel and broader educational efforts to differentiate deep TMS from older modalities, driving both awareness and adoption globally.

Key Considerations

This quarter marks a critical inflection in BrainsWay’s evolution from technology pioneer to recurring revenue platform, with a multi-pronged strategy aimed at expanding both market share and clinical relevance.

Key Considerations:

• Backlog Quality: The $62 million backlog is heavily weighted toward enterprise customers, supporting multi-year revenue visibility but concentrating exposure to a smaller set of large accounts.
• Pipeline Execution: Accelerated protocol FDA clearance and 360 device rollout represent near-term catalysts for clinical and commercial expansion.
• Investment Leverage: Minority stakes in mental health networks are already driving utilization and could create flywheel effects for future system placements and data collection.
• Commercial Team Scale: A focused sales force of 16 direct reps and 10 practice development staff supports both new system sales and customer retention through training and utilization optimization.
• Regulatory and Reimbursement Tailwinds: Current reimbursement structures allow up to two treatments per day, but further alignment with accelerated protocols could meaningfully expand addressable patient throughput.

Risks

BrainsWay’s growth trajectory is exposed to regulatory timing risk around FDA clearance for the accelerated protocol, as well as the pace of reimbursement adaptation. Enterprise customer concentration could amplify volatility if large accounts delay or reduce commitments. Additionally, the strategic investment program, while promising, introduces execution and integration risk as the company scales its minority stake approach across diverse networks.

Forward Outlook

For Q3 2025, BrainsWay guided to:

• Continued growth in multi-year lease agreements and enterprise account penetration
• Progress on FDA clearance for the accelerated depression protocol, with a decision expected by Q4 2025

For full-year 2025, management raised guidance:

• Revenue of $50 to $52 million, representing 22 to 27 percent growth
• Operating profit of 4 to 5 percent of revenue, and adjusted EBITDA margin of 12 to 13 percent

Management highlighted the strength of the backlog, robust cash position, and ongoing momentum in both US and international markets as key drivers of the revised outlook. Upcoming clinical and product milestones, as well as additional strategic investments, are expected to further reinforce growth into 2026.

Takeaways

BrainsWay’s business model transformation is gaining traction, with recurring revenue, enterprise focus, and clinical innovation converging to drive sustainable growth.

• Recurring Revenue Foundation: The multi-year lease model and $62 million backlog provide rare visibility and retention in the medtech space, supporting both top-line and margin expansion.
• Strategic Investments Amplify Growth: Early results from minority stakes in mental health networks highlight a scalable playbook for utilization and data leverage.
• Pipeline Catalysts Ahead: FDA clearance of the accelerated protocol and 360 device launch are near-term events that could unlock new markets and operational efficiencies.

Conclusion

BrainsWay’s Q2 2025 results underscore a successful pivot to a recurring revenue platform with expanding enterprise engagement and clinical momentum. The combination of strong financial execution, pipeline progress, and strategic investments positions the company for continued outperformance, though execution on regulatory and commercial fronts remains key to sustaining this trajectory.

Industry Read-Through

The medtech sector is increasingly favoring recurring revenue models and enterprise channel strategies, as demonstrated by BrainsWay’s shift away from transactional device sales. Strategic partnerships and minority investments in provider networks are emerging as powerful growth accelerators, offering both utilization lift and data-driven feedback loops. Companies with differentiated clinical pipelines and the ability to drive adoption through education and integration are best positioned to capture expanding budgets in mental health and neuromodulation. Reimbursement alignment and regulatory agility will remain critical competitive advantages as clinical protocols evolve.

BWAY Healthcare Medical Devices Recurring Revenue Mental Health Enterprise Sales Pipeline