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01/11 05:03
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects several negative factors: declining instrument revenue, competitive pressures, regulatory and supply chain risks, and economic challenges. Although there are cost reductions and improved gross margins, the overall financial results are disappointing. The lack of a shareholder return plan and unclear guidance on product placements further contribute to a negative sentiment. The Q&A session highlighted management's vague responses, particularly regarding revenue-driving products, adding to uncertainty. Given the negative financial performance and market conditions, the stock price is likely to experience a decline in the short term.
Revenue $37.2 million, a decrease of 4% from $38.8 million in Q1 2024 due to lower instrument revenue.
Instrument Revenue $11 million, a decrease of 42% from $19 million in Q1 2024, largely reflecting increased uncertainty in academic funding.
Consumable Revenue $20.1 million, an increase of 26% from $16 million in Q1 2024, driven by strong utilization across Revio systems and typical fiscal year-end purchasing in Japan.
Service and Other Revenue $6 million, an increase from $3.8 million in Q1 2024, driven by an increase in service contract revenue related to Revio.
Non-GAAP Gross Profit $15 million, representing a non-GAAP gross margin of 40%, up from $12.6 million or 33% in Q1 2024, due to improved product mix and cost savings.
Non-GAAP Operating Expenses $61.7 million, a decrease of 29% from $87.2 million in Q1 2024, primarily due to restructuring initiatives.
Non-GAAP Net Loss $44.4 million, or $0.15 per share, compared to a net loss of $71.4 million, or $0.26 per share in Q1 2024.
Cash and Investments $343.1 million at the end of Q1 2025, down from $389.9 million at the end of Q4 2024.
Annualized Revenue Pull-Through per System Approximately $236,000.
Headcount 570 employees at the end of Q1 2025, down from 787 at the end of Q1 2024, due to restructuring.
New Product Launch: Continued rollout of Spark chemistry, enhancing Revio's data output and performance while reducing DNA input requirements. Nearly 90% of Revio reagent kit shipments in Q1 were Spark chemistry.
Product Performance: Early adopters of Spark chemistry reported yield increases of 46% compared to previous versions, indicating strong customer uptake.
Vega System Adoption: Vega users are achieving strong yields, exceeding specifications, and deploying the platform across various applications, with 50% of shipments to new customers.
Market Expansion: Strong growth in consumables revenue, reaching $20.1 million in Q1, a 26% year-over-year increase, indicating stable demand despite funding pressures.
Geographic Expansion: Continued momentum in EMEA, with strong Revio placements in hospitals and clinics, and a pioneering collaboration in Thailand for newborn screening.
Operational Efficiency: Restructuring plan executed in April aims to reduce annualized non-GAAP operating expenses by $45 million to $50 million by year-end.
Cost Management: Non-GAAP operating expenses decreased by 29% year-over-year to $61.7 million in Q1 2025.
Strategic Shift: Focus on HiFi technology and long-read sequencing market, pausing development of high-throughput short-read sequencing platform.
Future Outlook: Expecting revenue between $150 million and $170 million for 2025, adjusting lower end due to macroeconomic uncertainties.
Competitive Pressures: Increased uncertainty in academic funding, particularly in the United States, has led to a decrease in instrument revenue, reflecting competitive pressures in the market.
Regulatory Issues: The impact of newly implemented tariffs between the U.S. and China, along with proposed NIH budget reductions for fiscal year 2026, introduces incremental risks that could affect revenue.
Supply Chain Challenges: Potential tariffs may increase costs and affect capital purchasing timelines for the Revio platform, particularly in Asia-Pacific.
Economic Factors: The macroeconomic environment remains exceptionally challenging, with significant uncertainty in the broader academic research community impacting revenue expectations.
Operational Risks: The company has implemented a restructuring plan to reduce operating costs, which includes headcount reductions and a focus on high-impact initiatives.
Market Dynamics: The Academic and Research Institute segment represented the lowest percentage of instrument shipments since the Revio launch, indicating market dynamics are shifting.
Restructuring Plan: Executed a restructuring plan in April to narrow strategic focus and reduce operating costs, aiming for a $45 million to $50 million reduction in annualized non-GAAP operating expenses by year-end.
HiFi Sequencing Adoption: Continued momentum in HiFi sequencing adoption, with strong customer interest and growth among hospital and clinic customers.
Product Development: Advancing development programs for existing platforms and launching multi-use SMRT Cells to reduce sequencing costs and improve consumable gross margins.
Short-Read Sequencing Strategy: Paused development of high-throughput short-read sequencing platform to focus resources on HiFi technology and long-read sequencing market.
New Product Launches: Rolling out new Spark chemistry for Revio, enhancing data output and performance while reducing DNA input requirements.
Clinical Strategy: Progressing clinical strategy to improve outcomes and build long-term durability, including expanding kitted solutions for genetic testing labs.
Revenue Guidance: Adjusted full-year 2025 revenue guidance to $150 million to $170 million, reflecting a $5 million decrease due to macroeconomic pressures.
Gross Margin Expectations: Expect non-GAAP gross margin for 2025 to be between 35% and 40%, with an improvement expected to above 40% by year-end.
Operating Expenses Guidance: Expect non-GAAP operating expenses to decline 14% to 17% compared to 2024, in the range of $240 million to $250 million.
Cash Flow Positive Target: On track to achieve cash flow positive by the end of 2027, with an expected ending cash balance of approximately $270 million.
Cash Burn Improvement: Anticipate a $115 million cash burn in 2025, an improvement of $72 million compared to 2024.
Shareholder Return Plan: None
The earnings call presents a mixed picture: improvements in gross margins and reduced operating expenses are positives, but declines in Americas and Asia Pacific revenues are concerning. The Q&A highlights temporary challenges in Vega placements and strategic moves towards clinical applications. While there is optimism about future growth, particularly in EMEA and China, the lack of specific guidance and ongoing challenges in academic funding temper expectations. This balance of positive and negative factors suggests a neutral short-term stock price movement.
The earnings call reveals mixed insights: strong international growth and product adoption are positive, but concerns over revenue guidance reduction and flat Revio placements offset these gains. The Q&A highlighted uncertainties, particularly around NIH funding and demand conversion, influencing a neutral outlook. Positive factors like reusable SMRT Cells improving margins are balanced by cautious revenue guidance and unresolved demand issues, leading to a neutral sentiment.
The earnings call reveals several challenges: declining instrument revenue due to academic funding uncertainty, regulatory and supply chain risks, and macroeconomic pressures. Despite cost reductions and improved margins, the lack of share buyback or dividends, coupled with unclear guidance on product placements and monetization, adds to investor concerns. The Q&A further highlights management's avoidance of specifics, which could lead to negative sentiment. The absence of strong catalysts, like partnerships or high revenue growth, alongside the challenges, suggests a likely negative stock price movement.
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