Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Standard BioTools Inc (LAB, Financial) achieved a sequential revenue increase of 21% from the previous quarter, indicating operational improvements.
- The company has successfully integrated SomaLogic, achieving $80 million in expected synergies a year ahead of schedule.
- Consumables revenue grew by 13% year-over-year, highlighting a strong margin profile and strategic focus.
- The company has improved its on-time delivery rate to 98%, significantly enhancing customer satisfaction and operational efficiency.
- Standard BioTools Inc (LAB) has a robust cash position with $368 million in cash and short-term investments, supporting its strategic vision.
Negative Points
- Year-over-year revenue declined by 5% for the quarter and 9% year-to-date, reflecting ongoing market challenges.
- Instruments revenue fell by 42% year-over-year, impacted by capital spending constraints and weakness in China.
- The company faces a $15 million to $20 million headwind from its top five SomaScan customers, affecting service revenue.
- Operating in a challenging environment with conservative customer purchasing behaviors, impacting growth potential.
- Despite improvements, the company is still navigating gross margin headwinds and onetime costs, affecting profitability.
Q & A Highlights
Q: Can you quantify what percent of assay services revenue in Q3 was timing-based?
A: Historically, our SomaScan services have relied on a few large customers. Outside those, we see double-digit growth in SomaScan Assay Services, which is encouraging. We had favorable timing in Q3 and unfavorable in Q2. For the year, from those five large customers, we have a headwind of $15 million to $20 million. The quarter-to-quarter timing can push numbers, but overall, we like where the business is headed. - Michael Egholm, President and CEO
Q: You reiterated your guidance of $170 million to $175 million for the year. Are you expecting any year-end budget flush or spending dynamics different from Q3?
A: We don't expect a market recovery or new budgets becoming available today, but it would be nice if it came. We build in a little uptick on Instruments in Q4, and we feel comfortable with our funnel to hit the guidance. - Michael Egholm, President and CEO; Alex Kim, Chief Operating Officer
Q: Are you seeing any improvement in the instrument sales funnel, and what's the situation in China?
A: Instruments are down year-to-date, largely in line with peers. Our funnels are building, which is encouraging. In China, things look a little better, but we don't expect it to flow through in Q4. We hope it will be a tailwind in 2025. We are seeing VC money flowing into biotech again, which is generating more leads. - Michael Egholm, President and CEO
Q: Can you elaborate on the areas you're investing in, such as the launch of single SOMAmers and Omics as a Service?
A: We launched individual SOMAmers as a minimal viable product, with limited support and infrastructure. It's rolled out to existing customers, with a broader launch planned once infrastructure is ready. We're still investing heavily in R&D, as we see a long runway ahead for our technologies. - Michael Egholm, President and CEO
Q: With the current backdrop, any directional commentary for 2025, considering the Illumina ramp and instrument sales?
A: We're not providing guidance for 2025 yet. Our focus is on closing out this year strong. We reiterate our guidance of $170 million to $175 million for 2024. We expect healthy growth long-term, especially with our relationship with Illumina, but adoption of new workflows takes time. - Michael Egholm, President and CEO; Alex Kim, Chief Operating Officer
Q: Have you recognized revenue from projects delayed last quarter, or are there still projects to be recognized in Q4?
A: We had favorable timing this year and unfavorable timing last year. From our top five customers, we have a $15 million to $20 million headwind year-over-year. We have better visibility now with the application of SBS across the organization. - Michael Egholm, President and CEO
Q: What are you seeing in markets outside of China for instrument sales?
A: We're doing well in the Americas. Japan and Korea have been tough due to macroeconomics. In Europe, we have a new leader focusing on rebuilding funnels. - Michael Egholm, President and CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
