Hello, and thank you for standing by. Welcome to Pulmonx Q3 2025 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to Laine Morgan. You may begin. Good afternoon, and thank you for participating in today's call. Joining me from Pulmonx are Glen French, President and Chief Executive Officer, and Derrick Sung, Chief Operating Officer and Chief Financial Officer. Earlier today, Pulmonx issued a press release announcing its financial results for the quarter ended September 30th, 2025. A copy of the press release is available on Pulmonx's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation, those relating to our operating trends, commercial strategies, and future financial performance, including long-term outlook and full-year 2025 guidance, the timing and results of clinical trials, physician engagement, expense management, market opportunity, guidance for revenue, gross margin, and operating expenses, commercial expansion, and product demand, adoption, and pipeline development are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of our filings with the Securities and Exchange Commission, including our annual report on Form 10-Q filed with the SEC on August 1st, 2025. Also, during this call, we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the press release, which is posted on our investor relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 12th, 2025. Pulmonx disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. I will turn the call over to Glen. Thank you, Laine, and good afternoon, everyone. I'm excited to be here today after returning to my role as CEO just a couple of weeks ago. I'm also very pleased to be joined today by Derrick Sung, who has returned as our COO and CFO. As many of you know, Derrick brings a broad and diverse skill set from across the medical device industry, having served in operational roles within R&D, marketing, and strategy, as well as in finance and capital markets. His unique background, including our prior experience together here at Pulmonx, makes him exceptionally suited for this role, and I'm very much looking forward to partnering with him once again. My decision to return to an operating role at Pulmonx was driven by the significant opportunity I see for value creation. My confidence is grounded in my more than 25 years in interventional pulmonology and with a clear understanding of both the challenges and opportunities ahead. To that end, I'd like to take a few moments to share how we're thinking about these opportunities and where we see the greatest potential for growth, the challenges we expect to face, and the steps we're taking to deliver meaningful value for patients, physicians, and shareholders. In my view, the opportunity starts with the solid foundation that we have already built. We have a market-leading product that fulfills a significant unmet need in severe emphysema patients who, in most cases, have no other treatment options. Our Zephyr Valves are supported by strong clinical evidence and are endorsed across domestic and international guidelines as the standard of care for severe emphysema. This has allowed us, in nearly all countries where we commercialize, to establish sufficient reimbursement. In our biggest market, the United States, substantially all patients seeking access to Zephyr Valves are able to get the treatment reimbursed. We have also already built a well-established commercial infrastructure. We have one of the largest global sales forces focused singularly on interventional pulmonology, with a presence in over 25 countries across six continents. We have a significant base of active accounts, many of which are consistent revenue generators and centers of excellence. Our plans to further expand our addressable market remain active and well-aligned with our clinical and commercial strategy. Finally, we have an attractive financial profile with strong gross margins. While we have an opportunity to improve execution, the position we have built in therapeutic interventional pulmonology is enviable, as we have already cleared many of the clinical, regulatory, reimbursement, and commercial build-out hurdles that have stymied to date nearly every company that has tried to do what we have done in this space. The platform, team, and market foundation are in place. Our task now is to focus on execution and accelerate more profitable growth. Of course, we recognize that challenges remain. We need to be clear about what hasn't worked so that we can sharpen our focus and address these issues effectively. Our growth trajectory, particularly in the U.S., has slowed. We acknowledge that some of the investments have not yielded the timely returns we expected. That said, we do see strength across many territories and an opportunity to raise our overall growth profile by bringing underperforming territories in line with those that are consistently performing best. Our slowing sales growth has made operating leverage elusive, and we are determined to change this. We must now thoughtfully realign spending with growth expectations to put ourselves back on a sustainable path to profitability. We understand the urgency and will pursue this objective immediately and aggressively. Derrick and I are fully committed to extending our cash runway, improving operating leverage, and using this time to refocus and execute with very specific intent. Over the next several weeks, we are taking a deliberate bottoms-up approach to shaping our plan. We are conducting a line-by-line review of all programs and spending to ensure every dollar is driving measurable value. We will focus our team on the most immediately serviceable opportunities. We will prioritize projects and investments with the highest return on capital with a lens on profitability, and we will work closely with our board and teams across the organization to align on a highly focused strategy. We do not have all the answers today, but we are acting with urgency and decisiveness. We are committed to transparency as we refine our plan and will communicate our progress clearly in the quarters ahead. With that, I will turn the call to Derrick to briefly review our Q3 performance. Thank you, Glen, and good afternoon, everyone. I'm thrilled to be back at Pulmonx working with Glen again, and I look forward to re-engaging with all of you in the months ahead. Before turning to a brief review of the company's Q3 performance, I want to take a moment to reinforce some of what Glen just mentioned. First, I am convinced that Pulmonx has built a solid foundation upon a truly exceptional product. Second, I believe there is meaningful room for execution improvement and value creation. While our team has worked hard to realize our mission, we have not delivered the operating leverage that I believe is critical to ensuring long-term success. To that end, I am committed to working with Glen and our entire team to reorient Pulmonx and ultimately deliver the value that all of our stakeholders expect. With that, I'll turn to recent performance and our outlook for Q4. Total worldwide revenue for the three months ended September 30th, 2025, was $21.5 million, a 5% increase from $20.4 million in the same period of the prior year, and an increase of 4% on a constant currency basis. U.S. revenue in the Q3 was $14 million, a 1% increase from $13.8 million in the prior year period. The team added nine new U.S. centers during the quarter. International revenue for the Q3 of 2025 was $7.5 million, a 15% increase compared to $6.6 million in the same period last year, and a 9% increase on a constant currency basis. Growth was driven by our major markets in Europe, partially offset by a reduction of revenue from China. Gross margin for the Q3 of 2025 was approximately 75% compared to 74% in the same period last year. The year-over-year increase was driven primarily by a lower mix of distributor sales. Total operating expenses for the Q3 of 2025 were $30.4 million, a 4% increase from $29.2 million in the Q3 of 2024. Non-cash stock-based compensation was $4.7 million in Q3 of 2025. Excluding stock-based compensation expense, total operating expenses in the Q3 of 2025 increased 8% from the same period of the prior year. Research and development expenses for the Q3 of 2025 were $4.8 million, an increase of 29% compared to $3.7 million in the prior year period, primarily reflecting higher clinical trial activity and investment in R&D programs. Sales, general, and administrative expenses for the Q3 of 2025 were $25.6 million, up 1% from $25.4 million in the Q3 of 2024. The increase was driven by continued investment in commercial efforts offset by lower G&A expenses. Net loss for the Q3 of 2025 was $14 million, or $0.34 per share, compared to a $14.1 million net loss, or $0.36 per share, for the same period last year. Weighted average shares were 40.9 million. Adjusted EBITDA loss for the Q3 of 2025 was $8.2 million, compared to $8.1 million in the Q3 of 2024. We ended the quarter with $76.5 million in cash and cash equivalents, a decrease of $7.7 million from the second quarter of 2025. Total cash utilization for the first three quarters of 2025 was approximately $25 million. Moving forward, we are committed to taking a disciplined approach to capital allocation to ultimately reduce our cash burn and extend our cash runway. Turning to guidance, we are updating our full year 2025 guidance to reflect our current views on operating trends. We expect full year 2025 revenue to be in the range of $89 million-$90 million. We expect gross margin of approximately 73% for full year 2025. We expect full year 2025 operating expense guidance to fall within the range of $125 million-$126 million, inclusive of approximately $21 million in non-cash stock-based compensation. We look forward to providing details on our plan to deliver future operating leverage and profitable growth during our Q4 call next year. I'll turn the call back over to Glen. Thank you, Derrick. As Derrick and I step back into leadership at Pulmonx, we are guided by two principles that will define our decisions moving forward, and we expect will enable a reinvigoration of sustainable revenue growth. First, we will stay true to our mission. We remain dedicated to improving the quality of life of patients suffering from severe COPD, a large and growing population that faces daily challenges and has very limited options. Second, we will execute with discipline and focus to drive value creation. We will operate with a renewed focus to ensure our investments, resources, and operational efforts are aligned with sustainable, profitable growth. We intend to narrow our investments to prioritize areas where we can deliver the greatest impact to further penetrate our immediately serviceable market. We intend to create long-term value through consistent execution and transparency. At this time, we will take questions from our analysts. Operator. Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Larry Biegelsen with Wells Fargo. Your line is open. Hi, this is Nathan Treybeck on for Larry. Thanks for taking the questions. Glen and Derrick, welcome back. I appreciate the comments you made on value creation and that you're still early in evaluating the go-forward strategy. As part of this, can you share your views on exploring alternate strategic pathways, whether it's asset sales, partnerships, anything around that? Thank you. Yes. Nathan, nice to hear your voice. This is Glen. Before I talk about or comment on your question, I'd just like to say we know that folks are going to be looking for exquisite specificity as it relates to our comments today and in the coming days. Obviously, Derrick and I both almost literally just arrived a matter of days ago, and we're coming up to speed very quickly. We're glad to be re-engaging, but we're really going to try not to speculate at this early stage. I'd simply like to acknowledge this upfront that we may not be able to, or we may not be comfortable with getting into a lot of details related to our still forming assessments and plans. As it relates, Nathan, to your question about us considering in an open-ended fashion alternatives, we're focused on our business and making sure that we can move forward in a profitable way. That's what we are focused on in the immediate term. Okay. Great. Just for my follow-up, obviously, you called out a concern for investors as U.S. growth has decelerated in the past couple of quarters. The company's added new centers and expanded the commercial footprint meaningfully. Can you just go into detail why that hasn't translated into sustained growth, all the investments that were made? As I said before, we're really digging into the details on that. I do have a good bit of optimism as it relates not only to the situation in the U.S., but around the world, where we have examples of territories doing very, very well, being very, very solid, and frankly, taking full advantage of the tailwinds that have been created by the activities and the investments that have been made in the company. Unfortunately, we have specific situations that are counterbalancing that. Yeah, I'm not in a position to get into a lot of specificity around that, but I am encouraged by the idea that we believe that there's an opportunity, just basic sort of blocking and tackling opportunity to bring those less strong territories and regions up to sort of the standard, if you will. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Rick Wise with Stifel. The line is open. Hi, this is Annie on for Rick. Thanks for taking our questions. Recently, we've been doing some physician calls, and we kind of came away appreciating how complex the patient referral and workup processes can be. I am hoping you could just kind of talk about how you plan to address those challenges and get patients treated more efficiently. I know you're not offering many specifics, but just thinking a bit more broadly. Yes. I would acknowledge and agree with your findings that it is a complex process. The accounts that are doing the greatest number of patients, by no coincidence, have the most efficient process for moving patients through. As we've talked about over the years, we have an array of different touchpoints with the patients, both to introduce them to the technology and move them toward seeking the treatment. There's another touchpoint, which is about 70% of patients go through referring physicians. We have to make sure that things do not stall there. When they arrive, 70% of the time through a referring physician, and the balance of the time directly, when they arrive at the front door of the hospital, they have to be moved through and to treatment in an efficient way. That is fundamental. Our best accounts have allocated the resources necessary to ensure that that happens. Great. Glen, I think in your, let's say, your first term, I guess, it seemed like you were focused on sort of bringing best practices from these high-performing accounts or territories to not as optimally performing accounts. Is this kind of an approach that you plan to take in this term, or are you going to kind of refocus that strategy? We're still digging in. As I just mentioned a little bit ago, we do have some heterogeneity in terms of the territories, whether it be in the U.S. or O.U.S. We have demonstrated it is sort of low-hanging fruit. I would say that to the extent that we have opportunities there, we will absolutely be pursuing them, while in parallel ensuring that more broadly, we're driving more patients and more efficiently processing them and increasing same-store sales over time. Okay. Great. Thanks so much. Thank you. Our next question comes from the line of John Young with Canaccord. Your line is open. Hi, Glen and Derrick. Welcome back. I appreciate that you guys do not have all the answers currently. Glen, when you spoke about the performing versus underperforming territories, is there anything consistent that you could identify today, essentially, that among those that are performing versus underperforming that explains what is going on in the U.S.? Is this a people issue? Is this something more structural? Anything here would be helpful. Thank you. John, it's a great question. Thanks for asking it. I'm not comfortable getting into that right now. I think it is something that we need to speak to when we talk to you again the next time around and provide a sense of how we see 2026 and so forth. It's, I think, a foundational question that we'll be sure to focus on when we come back and talk with you again. Okay. Thanks. And then Derrick. I just don't want to speculate. I completely understand. Derrick, the guidance revision that you guys issued today too, is this essentially you're coming back in just a few days back? Should we think of it as you essentially don't really have a good pulse of what's going on yet, and there's potential for upside? How should we think about just the guidance revision too? Thanks. Yeah. Hi, John. That's a fair question. I mean, I would just start by saying that it's important to both Glen and myself that we provide you with a range in terms of guidance that we have a high degree of confidence around achieving, right? We know some of the growth initiatives put in place this year have not been delivering to expectations. We want to take a realistic view on this. We also do believe, and we can get into specifics on our next call, that there is opportunity to improve execution around some of these programs. We're moving with urgency to develop a plan to focus ourselves and our resources and efforts on those initiatives that we expect to have the greatest impact. In the meantime, that $89 million-$90 million guidance range, it's a revenue range that we feel confident at this point around our ability to achieve. Okay. Great. Thank you so much. Thank you. As a reminder, ladies and gentlemen, that's star 11 to ask the question. Our next question comes from the line of Jason Bednar with Piper Sandler. Your line is open. Hey. Good afternoon. Thanks for taking the questions. Glen and Derrick, welcome back to the call. It's been a minute here. You referenced extending the cash runway and closely evaluating spending levels. I guess I want to clarify. When you say extending the cash runway, that just means reallocating expenses to better return areas rather than tapping external financing sources. I think that's what you're getting at, but I want to confirm. The follow-up there is whether you have some early thoughts on really how you plan to get the business back growing without spending more on the commercial side. It seems like this is a resource allocation initiative that you're talking about early on here. Do you think we can get the growth without spending more? Yeah. This is Derrick. I'll take this first, and Glen can chime in with additional comments. You are correct in your assessment. As we talk about extending the cash runway, we're cognizant of the fact that we haven't demonstrated meaningful operating leverage over the past couple of years. That's something that we are determined to change moving forward. We have gross margin in the mid-70%. There's no reason why we can't achieve operating leverage at the current scale that we're at. That is going to involve careful evaluation and assessment of our investments moving forward and really focusing, as you kind of alluded to, to focus on areas where we can really see and measure and expect to have impact on our investments and looking at areas that haven't been working and perhaps shifting resources away from those to areas that have. That's the approach that we're taking moving forward. That also translates to how we expect and plan to look at reinvigorating growth moving forward as well, right? Simply put, focusing on areas that have impact and shifting away from areas that do not. Again, we can provide more detail. We'll be in a position to provide more detail on our Q4 call. In general, that is the way that we are approaching our task. Yeah. If I could just add to that, when Derrick talks about areas, he's not necessarily talking about geographic areas. I mean, we've got a great field organization on a global basis composed of people that we have sort of hand-selected with a specific eye toward the capabilities that they bring to the challenges that exist in that specific market. We feel really good about the people and the profile and so forth that we've built over time. When we talk about areas, there are, however, certain investments that we make where we realize a greater return on that per dollar of invested capital. I think we're going to be pretty discriminating as it relates to that and make sure that we're leaning on those things that provide us with the greatest return. Okay. All right. Thanks, guys. Then as the second question here, I know it's early and probably an unfair question, and I think we're all trying to learn as much as we can, but understand you're in a tough spot just having to be back in your roles here in the last couple of weeks. Glen, you were on the board, and you saw the strategy of your predecessor. Are there things that you say are obvious where you want to pull back on? I think that Derrick was even referencing in response to some of John's questions that initiatives that aren't having the paybacks. I guess are you just open to talking about what you're looking to walk away from, even if you're not ready to talk about where you want to spend those incremental dollars and where you want to lean in? Yeah. I don't think we're in a position to talk specifically about where we have a lot of data, and we're diving in deep and analyzing that data and trying to decide where we're getting the greatest return. We'll be making decisions based on that, and as we lay out what we are prepared to commit to in 2026, we'll be talking more specifically about the answer to your question, Jason. Okay. Understood. Thank you. Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I will now like to turn the call back over to Glen French, President, Chief Executive Officer, for closing remarks. Thank you very much, Operator. First, I'm pleased to be back, and I'm energized by the opportunity that's in front of us. I'd like to thank you all for your time and interest and questions. I'd also like to thank our Pulmonx employees around the world for the important work that they do and for their ongoing support and efforts. Finally, I would like to reiterate something that I said earlier, that we at Pulmonx remain dedicated to improving the quality of life of patients suffering from severe COPD, a population that faces daily challenges and has very limited options. We intend to operate with a renewed focus to ensure that our investments, resources, and operational efforts are aligned with sustainable, profitable growth. Thank you all for your time. I look forward to talking to each of you as we proceed, and we'll be back in this forum in February as well. Thank you. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.