Pulmonx (LUNG) delivered the quarter its turnaround narrative needed. The company reported a loss of $0.19 per share, beating the -$0.26 consensus and the -$0.24 Earnings Whisper number by 20.8%. Revenue of $22.84 million topped the $22.01 million consensus by 3.7%. More important than the beat was the direction of the top line. Revenue grew 6.2% year over year after declines of 5% in Q4 FY2025 and 9% in Q1 FY2026, and management explicitly framed the return to growth as a milestone. Earnings improved 44.1% year over year as the net loss narrowed from $14.0 million to $8.4 million. Still, the quality of the beat deserves scrutiny, because cost cutting did more of the work than revenue did.

The income statement makes the drivers clear. Revenue rose $1.3 million, while total operating expenses fell 18% to $24.9 million. SG&A dropped from $25.6 million to $20.0 million, and stock-based compensation fell from $5.2 million to $3.6 million. Gross margin edged up to 76% from 75%. Adjusted EBITDA loss shrank 57% to $3.5 million. Below the operating line, the picture is less flattering. Interest expense climbed to $1.2 million while interest income was cut nearly in half, and the weighted share count rose about 5% year over year. The year-to-date view also tempers the headline: nine-month revenue is still down 2.5%. Q3 is an inflection, not yet a trend.

The operating detail from the call supports the view that growth is real rather than a comparison artifact. U.S. revenue rose 7% to $14.9 million, a sharp reversal from declines of 11% and 7% in the two earlier quarters cited, and it grew sequentially despite typical Q3 seasonality. International revenue rose 5%, or 9% excluding China, which contributed nothing this quarter. U.S. sales positions are now substantially filled, and new accounts are tracking ahead of the roughly 40-per-year pace. That said, Q3 added only 8 new accounts, compared with 15 in Q1.

Guidance changes sharpen the central tension: management raised every profitability metric but not revenue. Full-year gross margin guidance moved up to about 77% from roughly 75% earlier in the year. Operating expense guidance fell to $108–$109 million from $113–$115 million, and expected cash burn improved to about $22 million from $23 million. Revenue guidance of $90–$92 million was only reaffirmed. Against $66.2 million through nine months, that implies a fourth quarter of roughly $24–$26 million, a meaningful sequential step-up. Management signaled comfort with 2027 consensus of roughly 8% growth and expects opex to rise only a few percent. However, it offered no formal 2027 guidance and no timeline for its double-digit growth ambition.

Bears still have legitimate ammunition:

• **Sales force tenure:** Median U.S. rep tenure is just 1.2 years, down from about three years 18 months ago, so productivity gains are not guaranteed.
• **China timing:** Shipments slipped from the second half of 2026 to Q4 or early 2027. The channel is distributor-based, lumpy, and modestly dilutive to margins.
• **Pipeline delays:** CONVERT-2 enrollment completion is now framed as the back half of 2027, and material revenue from AeriSeal, which has a limited European launch planned for 2027, is pushed to 2028.
• **Balance sheet:** Cash fell to $52.7 million from $69.8 million at year-end, against $37.7 million of long-term debt and a newly recorded warrant liability. The improved burn outlook matters, but runway remains a live issue.

Investor expectations rose ahead of the print. Earnings Whispers sentiment climbed from 0.27 to 0.52, a substantial shift toward optimism. The stock gained 39.3% from the $1.40 open after the July report to $1.95 and sits about 19% above its 200-day moving average of $1.64. The path was uneven, however. Shares spiked to $2.59 in late August and entered the report nearly 25% below that high, though still well above the $1.33 low set immediately after the prior release. The negative AVWAP reading reflects that pullback from the August peak, even as the broader move since July remains positive.

The bottom line is that Pulmonx delivered the revenue inflection and the operating leverage it promised, and the cost story is now firmly credible. The growth story is not yet fully proven. A reaffirmed rather than raised revenue guide, a junior sales force, and a sequence of delayed catalysts leave the next leg dependent on top-line execution, not further expense cuts. With sentiment already markedly more positive and the stock well off its lows, Q4's implied sequential acceleration becomes the test that matters.