BWAY — Q2 2026 Financial Report Analysis

Overview

BrainsWay, the Israeli maker of Deep TMS systems (machines that use magnetic pulses through a helmet-like coil to treat depression, OCD and smoking addiction), grew second-quarter 2026 revenue 35% to a record $17.1 million and quadrupled operating income to $2.4 million. The growth came from more systems sold rather than leased, a record 125 systems shipped, and a sharp jump in sales outside the US; because operating costs grew far more slowly than revenue (selling and marketing spend actually fell), most of the extra gross profit dropped to the bottom line. Net income rose a smaller 34% to $2.7 million because interest and hedging income shrank. Management raised its full-year revenue guidance to $68–70 million.

At a glance

• Operating margin 14.0% vs 4.6% a year ago — the share of revenue left after running the business (before interest and tax) tripled, because revenue grew 35% while operating expenses grew 16%.
• $80.4 million of remaining performance obligations, up 30% — contracted revenue not yet recognised (mostly multi-year leases and service), which is close to five quarters of current revenue already signed.
• Non-US revenue more than doubled in the first half (+119%, to $8.4 million) — the US still brings in 74% of sales, but it grew 19%; international customers supplied more than half of the first half's $8.5 million revenue increase.

Q2 2026 results

Figures are IFRS (the international accounting standards BrainsWay reports under), in US$ millions except per-share data.

The company gave the shipment and RPO growth rates but not the prior-year counts, so those cells are left blank. The EPS change is distorted by rounding to the cent: net income rose 34%.

Where the growth came from

Selling, not leasing. BrainsWay places systems two ways: it sells them outright (all revenue booked on delivery) or leases them for a fixed fee over 48–60 months (revenue spread over the lease). In the first half, sale revenue rose 49% to $23.4 million while lease revenue rose 15% to $6.8 million; sales went from 64% to 72% of total revenue. That mix pulls revenue forward: a sold system shows up in this quarter's revenue in full, a leased one trickles in over four to five years. Lease revenue is the steadier part of the business, and it is growing at less than half the headline rate.

Outside the US. First-half US revenue grew 19% to $24.2 million. Asia-Pacific grew 65% to $3.9 million and "Other" regions roughly tripled to $4.5 million (from $1.5 million). The US share of revenue fell from 84% to 74%. A single customer ("Customer A") still accounted for 27% of first-half revenue, down from 31%.

Costs held back. Quarterly operating expenses rose 16% to $10.4 million against 35% revenue growth. Within that, selling and marketing fell 2% to $4.9 million, research and development rose 37% to $3.2 million (more headcount and software subcontractors, per the filing), and general and administrative expense rose 41% to $2.3 million — which the half-year review attributes to "higher provisions for doubtful accounts and professional fees". Gross margin was essentially flat at about 75%; the filing says there has been "no material change" in gross margin for three years, so all of the margin expansion came from below the gross-profit line.

What the headline numbers hide

• Net income lagged operating income because finance income fell. Operating income rose by $1.8 million, but net finance income (interest on cash plus hedging gains, minus finance costs) fell from $1.5 million to $0.5 million, and the tax charge rose from $0.07 million to $0.21 million (an effective rate of about 7% vs 3%). That is why net income grew 34% while operating income quadrupled. Earnings are now driven by the business itself rather than by interest on cash — a better-quality profit, even if the headline growth is smaller.
• Cash conversion is good this quarter, weaker for the half. Q2 operating cash flow of $6.3 million was 2.3 times net income. For the first half it was $7.5 million against $5.0 million of profit, down from $17.4 million a year earlier. The filing attributes the drop to "a lower increase in deferred revenues and an increase in trade receivables" — last year customers prepaid much more up front (deferred revenue rose $14.7 million in H1 2025 vs $2.7 million in H1 2026), which flattered last year's cash flow.
• Receivables grew faster than sales. Trade receivables (money customers owe) rose 71% from $4.1 million at year-end to $7.0 million at June 30, against 35% revenue growth, and G&A rose partly on bigger bad-debt provisions. Receivables did fall slightly during Q2 itself, so most of the build happened in Q1; it is worth watching whether it unwinds.
• The adjusted-EBITDA gap is widening. Adjusted EBITDA adds back depreciation, share-based pay and one-offs. Share-based pay nearly tripled to $0.67 million in the quarter, so more of the gap between the $2.4 million operating income and the $3.5 million adjusted EBITDA is stock compensation, a real cost to shareholders through dilution. The prior-year quarter included a $0.26 million restructuring and litigation charge; there was none this year.
• No buybacks — share count is rising. Diluted weighted shares for the half were 41.0 million, up about 5% from 39.1 million, mainly from option exercises (902,741 options exercised in H1). All of the per-share growth came from operations.
• Cash is being redeployed into minority stakes in clinic operators. Cash and equivalents fell from $67.7 million at year-end to $62.1 million, mainly because BrainsWay put $10.1 million into minority investments in H1 (including a $6 million convertible loan to Neurolief); this portfolio is now carried at $25.0 million. After quarter-end it committed about $4.3 million more (Radial Health $3.0 million, Sound Minds $0.5 million, Tangient $0.8 million). BrainsWay also sells to at least two clinics served by these investees (the filing treats them as related parties), and the stakes are valued with internal models (Monte Carlo and similar) rather than market prices.
• Guidance went up modestly. Revenue guidance rose to $68–70 million from $66–68 million; adjusted EBITDA narrowed to $13–14 million from $12–14 million; operating margin guidance tightened to 13.5–14% from 13–14%.

Outlook

Management now expects 2026 revenue of $68–70 million (about 30–34% growth on 2025), an operating margin of 13.5–14%, and adjusted EBITDA of $13–14 million (roughly double 2025). With $32.6 million of first-half revenue booked, hitting the range needs $35.4–37.4 million in the second half, about $17.7–18.7 million a quarter. That is only modestly above Q2's $17.1 million and implies second-half growth somewhat below the first half's 35%, so the target looks achievable rather than stretched. First-half operating margin was 13.5%, at the bottom of the new margin range, so the guidance assumes Q2's 14% holds.

Our read: the quality of the growth is the question to watch. Revenue is being pulled forward by outright sales and by fast-growing international distribution, while recurring lease revenue grows about 15%. The $80.4 million of contracted backlog and the SWIFT accelerated protocol's growing insurance coverage support demand, but the rising receivables, higher bad-debt provisions and the company's growing financial ties to clinic operators that also buy its systems are the items most likely to explain any disappointment. BrainsWay's Q3 results are the next check on whether operating margin holds at 14%.

Takeaway: BrainsWay has crossed into operating leverage: revenue grew 35% while operating costs grew 16%, tripling the operating margin to 14% — but the growth leans on one-off system sales and non-US distributors more than on the recurring lease base, which grew only 15%.

Source: BrainsWay Q2 2026 earnings release (Form 6-K, Exhibit 99.1, filed Aug. 12, 2026). Revenue mix, geographic split, customer concentration, share count and investment details are from the company's unaudited H1 2026 interim financial statements and operating review (Form 6-K, filed Sept. 29, 2026).