BrainsWay (BWAY) Q3 2025: Book-to-Bill Ratio Hits 1.3x, Underscoring Lease-Led Growth Visibility
BrainsWay’s Q3 showcased a decisive pivot toward enterprise leasing, with a 1.3x book-to-bill ratio and robust recurring revenue underpinned by multi-year agreements. The company’s strategic minority investments and FDA-cleared accelerated protocols are driving utilization and market reach, while international expansion and a debt-free balance sheet support long-term optionality. With guidance raised and performance obligations up 37%, execution momentum is translating into higher visibility and scalable profitability for 2026.
Summary
- Enterprise Leasing Model Scales: Multi-year lease agreements now comprise 70% of new customer engagements, cementing recurring revenue.
- Strategic Investment Flywheel: Minority stakes in mental health providers are accelerating Deep TMS system utilization and expansion.
- Forward Visibility Strengthens: Remaining performance obligations and book-to-bill metrics point to durable demand and improved guidance confidence.
Performance Analysis
BrainsWay delivered record quarterly revenue and continued to outpace expectations, with deep TMS, or transcranial magnetic stimulation, system placements rising sharply and gross profit expanding. The shift to enterprise leasing is now the dominant go-to-market motion, with approximately 70% of recent deals structured as multi-year leases—providing a stable, predictable revenue base. Gross margin remained strong at 75%, reflecting the high-margin nature of the recurring lease model and disciplined cost control.
Operating leverage is increasingly evident as operating profit and adjusted EBITDA margins both improved meaningfully, with net profit more than doubling year-over-year. The company ended the quarter with $70.7 million in cash and no debt, even after deploying over $7 million into minority equity investments. Remaining performance obligations reached $65 million, up 37% YoY, and the book-to-bill ratio of 1.3x signals bookings are outpacing billings, setting up a strong revenue trajectory into 2026.
- Lease Model Drives Margin Stability: Recurring revenue from leases underpins gross margin consistency and cash flow resilience.
- Investment Program Boosts Utilization: Clinics with BrainsWay investment saw system usage rise over 50% since collaboration began.
- International and Indication Expansion: Asia-Pacific and Europe are flagged as key growth geographies, with new clinical indications broadening addressable market.
Cost increases in sales, R&D, and G&A reflect targeted growth investments rather than structural pressure, as management continues to prioritize commercial expansion, clinical trials, and strategic deal flow. The model’s scalability is now translating into higher operating profitability as revenue ramps.
Executive Commentary
"We made the decision approximately two years ago to focus our attention on selling to large enterprise customers who value our technology and high level of customer service to support their deep TMS systems. To this end, we have structured multi-year lease agreement, which in turn provide us a steady foundation from which to grow our business and maintain gross margin every year."
Adar Levy, Chief Executive Officer
"Gross profit for the quarter was $10.2 million, up $2.4 million from $7.7 million in the prior year period, while maintaining a strong gross margin of 75% compared with 74% for the same period last year. This stability continues to reflect the strength of our recurring revenue model and disciplined cost management."
Ido Marombe, Chief Financial Officer
Strategic Positioning
1. Leasing Model as Core Revenue Engine
BrainsWay’s shift to a lease-first model has fundamentally altered its growth profile. By prioritizing multi-year agreements with large enterprise customers, the company has created a recurring, predictable revenue stream. This approach not only supports higher gross margins but also aligns incentives for customer retention and expansion, as evidenced by high renewal and extension rates. The lease model’s scalability is now a central driver of both top-line and bottom-line performance.
2. Minority Investment Platform Accelerates Utilization
The minority equity investment strategy is driving tangible utilization gains for Deep TMS systems. BrainsWay’s investments in mental health providers, such as Stella Mental Health and Axis, have resulted in over 50% increases in system usage at those clinics. These investments, supported by a $20 million strategic equity injection from Valor Equity Partners, allow BrainsWay to expand market reach and drive adoption without taking on operational complexity. The pipeline for additional investments remains active, with more deals expected in late 2025 and 2026.
3. Clinical and Regulatory Differentiation
Regulatory clearances and new clinical protocols are expanding BrainsWay’s addressable market. The FDA’s approval of an accelerated protocol for major depressive disorder (MDD)—reducing the acute phase from four weeks to six days—has made Deep TMS more convenient and attractive for patients and providers. Ongoing NIH-supported studies are evaluating similar protocols for alcohol use disorder and other indications, leveraging BrainsWay’s DeepTMS360 system. This clinical momentum strengthens the company’s competitive moat and supports international expansion.
4. International Growth and Indication Expansion
BrainsWay is intensifying its focus on Asia-Pacific and Europe, where growing awareness and regulatory clearances are creating new demand. Management highlighted Japan, China, South Korea, and several European markets as key contributors to future growth, with new indications in addiction and neurology poised to further expand the opportunity set.
5. Balance Sheet Strength and Capital Flexibility
A debt-free balance sheet and strong cash position provide ample flexibility to pursue strategic investments, R&D, and commercial initiatives. Positive cash flow from operations and efficient collections reinforce the sustainability of the recurring model.
Key Considerations
This quarter marks a clear inflection in BrainsWay’s business model and growth trajectory, with the company leveraging recurring revenue, strategic investments, and clinical innovation to build forward visibility and optionality.
Key Considerations:
- Lease Penetration as Growth Lever: The transition to 70% lease-based customer agreements is locking in revenue and margin durability.
- Investment Pipeline Momentum: Additional minority stakes are expected, with due diligence focused on profitable, growth-oriented mental health providers.
- Accelerated Protocol Adoption: FDA approval of shorter treatment regimens is catalyzing demand and could drive further system placements.
- Geographic and Indication Diversification: Expansion into Asia-Pacific, Europe, and new therapeutic areas is broadening the company’s growth canvas.
- Operational Leverage Emerging: Margin expansion is being realized as scale increases, with cost growth tied to targeted investments rather than inefficiency.
Risks
BrainsWay faces risks related to regulatory timing, particularly with anticipated FDA clearances such as for NeuroLeaf, as well as execution risk in scaling minority investments and maintaining high utilization rates. International expansion introduces complexities around market access, distribution, and reimbursement, while increased R&D and investment spending must translate into sustained growth to justify margin expansion. Finally, competitive dynamics in neuromodulation and mental health technology remain active, requiring ongoing innovation and differentiation.
Forward Outlook
For Q4 2025, BrainsWay guided to:
- Continued revenue growth in line with raised full-year guidance
- Operating profit margin of 6% to 7% and adjusted EBITDA margin of 13% to 14%
For full-year 2025, management raised guidance:
- Revenue of $51 to $52 million (previously $50 to $52 million)
- Operating profit and EBITDA margin targets both increased by 1 percentage point
Management cited strong bookings, higher remaining performance obligations, and robust system utilization at partner clinics as drivers of higher confidence in forward performance.
- Minority investment pipeline remains active, with at least one more deal expected before year-end
- International expansion and new clinical indications will be focal points for 2026
Takeaways
BrainsWay’s Q3 performance reflects a business model transition that is now delivering recurring revenue scale, margin expansion, and strategic flexibility.
- Recurring Revenue Foundation: The lease-first model is translating into higher visibility, customer retention, and operating leverage, with 1.3x book-to-bill and $65 million in performance obligations underscoring future growth.
- Strategic Investments Driving Utilization: Minority stakes in mental health providers are not only expanding the installed base but also boosting system usage and market reach, with tangible results already visible at early partner clinics.
- Clinical and International Expansion as Next Catalysts: FDA-cleared accelerated protocols and international market momentum set the stage for further growth and differentiation into 2026.
Conclusion
BrainsWay’s Q3 2025 results mark a pivotal acceleration in recurring revenue and strategic investment execution, with the business model now delivering both scale and profitability. The combination of clinical innovation, capital flexibility, and international expansion positions the company for continued outperformance in the neuromodulation market.
Industry Read-Through
BrainsWay’s lease-led growth and minority investment strategy signal a broader shift in medtech commercial models, where recurring revenue and customer integration are increasingly favored over one-time sales. The success of accelerated clinical protocols and international expansion highlights the importance of regulatory agility and indication breadth in driving adoption. For neuromodulation and digital mental health peers, the focus on utilization, not just system placement, is a key differentiator. Investors should monitor how other device and digital health companies adapt their go-to-market and capital allocation strategies in response to these evolving dynamics.