Q4 2019 Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the flu. We go in fourth quarter 2019 financial results Conference call. At this time, all participants are in listen only mode.
Later, well conduct a question and answer session and instructions will follow at that time.
No one should require assistance during the conference this breast stored this year on their sexual telephone.
Certainly your conference calls being recorded.
No like to turned to countries jokes aside if leach Vice President Investor Relations. Please go ahead meal.
Thank you good afternoon, everyone welcome to the Fluidigm fourth quarter 2019 earnings Conference call.
Close in the market today, one time released its financial results for the quarter and full year ended December 31 2019.
During this call we will review our results and provide commentary on recent commercial activity market trends and our strategic business initiative.
Presenting for Fluidigm today, well be Chris with weight, our president and Chief Executive Officer, and become joke, our Chief Financial Officer.
During the call and subsequent kinase session. We will make forward looking statements about events and circumstances that have not yet occurred.
Putting plans and projections for a future.
Business future financial results and market trends opportunities.
Examples include statements about expected revenue growth the anticipated positive impact to various strategic and operational initiatives [laughter] prospects for our products and technologies potential customers in collaborators.
Trends in competition markets research funding and customer demand and guidance for revenues and operating loss for the full year 2020.
These statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from current expectations.
Information on these risks and uncertainties and other information affecting our business and operating results is contained in our annual report on form 10-K for the year ended December 31, 2018, as well as our other filings with the FCC.
The forward looking statements in this call are based on information currently available to us and Fluidigm disclaims any obligation to update these forward looking statements, except as may be required by law.
During the call. We will also present some financial information on a non-GAAP basis non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement and understanding the company's operating results as reported under U.S. cap. We encourage you to carefully consider our results under GAAP as well as our supplemental non-GAAP EPS.
Commission and the reconciliation between these presentations.
Reconciliations between GAAP and non-GAAP operating results are presented in a table accompanying our earnings release, which can be found in the investor section of our website I.
Well now turn the call over to Chris our President and CEO.
Thank you Agnes good afternoon. Thank you for joining our fourth quarter and full year 2019 earnings call.
The discovery deployment of new Biomarkers for disease insight in treatment is becoming more and more important door industry.
Particularly biomarkers related to the immune system.
We think this will be one of the biggest trends in life Science research in the coming decade, as new Biomarkers are revealed integrating them into clinical study requires technologies that allow many simultaneous measurements.
Fluidigm is unique in the life sciences tools space, because we provide innovative tools powering biomarker discovery and deployment at single cell resolution for DNA or RNA and protein.
Furthermore, our tools are transforming biological understanding through spatial interrogation of tissue, including elucidating the tumor micro environment.
We sell or instrument platforms, and consumables to leading academic medical centers research centers contract research organizations and industrial bio pharma entities for this purpose.
In addition, our tools are useful in adjacent industries, including AG bio abroad category of companies where content.
And to develop and improve consumables software and services for our customers to provide more complete integrated workflows with recurring revenue streams and enjoy strong intellectual property protection for our technologies.
We harness the power of two technology platforms mass cytometry, microfluidics, and new and compelling formats and they wouldn't large panels as well as the processing of a broad range of sample numbers.
In other words, we believe our prospects are bright as the science moves forward indoor areas of strength.
As a result of these trends in Q4, we exceeded our guidance increasing revenue on a sequential basis by 6 million and the delivering 4% growth net of FX FX effects.
On a full year basis in particular I'm pleased with the progress, we made and delivering broader adoption of mass cytometry across multiple customer segments.
We had notable customer expansion of this technology in the quarter, including adoption by Covance, a leading global CRM tool.
We should have a new mass cytometry center of excellence at the Georgetown Lombardi comprehensive cancer Center.
Emphasizing development of new imaging panels for PEMCO pancreatic cancer lung cancer and liver transplantation.
Significant new system placements and translational research says research centers in Germany, Japan, and China, driven by their increased investment and biomarker research.
Although the Microfluidics business performed below our expectations, we saw healthy adoption of our Juno instrument platform related to the aren't they seek library prep kit, we introduced late in Q3.
We are targeting a 300 million dollar market opportunity and delivered revenue growth in line with our Q4 guidance for that product.
Overtime, we believe this products will catalyze portfolio growth and other microfluidic categories with revenue acceleration in the latter half of 2020.
We've made good progress on the sales and marketing investments, we foreshadowed in our last earnings call. These commercial investments complement our product innovation pipeline.
And our overall optimism for the future.
In brief for the full year 2019, we drove mass cytometry utilization with full year 2019 revenue growth of 23% punctuated by very strong sales were imaging system configuration.
We innovated across our portfolio launching more than 10, new products for mass cytometry and Microfluidics.
We increased our active installed base of mass cytometry units to 292 with 85 enabled for imaging.
We witnessed exceptional growth in scientific knowledge enabled in part by these platforms, specifically publications developed with mass cytometry technology now exceed 1000 number representing 59% growth over the past year with exciting findings across immunology.
Immune function.
On college, you infectious disease to name a few.
Our mass cytometry technology powered 75, new clinical trials during Q4, 2019, a 25% increase from Q3.
We believe we're just beginning this journey in terms of the annual number of translational studies, we can penetrate.
We signed numerous new partnerships in collaboration agreements to supplement our organic initiatives.
Including a significant DARPA funded development program.
The software collaboration with the Deca labs around their powerful halo offering for imaging mass cytometry.
We strengthened our balance sheet by limiting a $150 million of debt in Q1 2019.
And refinancing the remainder of our 2014 convertible notes in Q4.
In 2020, we intend to build upon these foundational accomplishments I take fluidigm to new Heights.
Shifting from prior accomplishments to perspectives on the market.
I want to start with some comp <unk> comments on mass cytometry.
Across all regions, our underlying markets remain healthy.
From what we can determine we did not experience any unusual budget flushes in Q4 compared to Q4 2018.
We see strong market demand for analysis solutions and high parameter protein across tissue in cells, and we're seeing demand for new instruments as organizations build capabilities.
We believe usage of establish systems remain strong while sales of new systems has grown and our base of recurring revenue streams from consumables and services is becoming a meaningful part of our revenue profile.
In the U.S. market, we believe our prospects are good we continued NIH funding growth and Biopharma industrial investment.
There was a steady increase in new clinical studies and trials.
Especially in the areas, where we focus.
Namely immune response men measurement.
And for 2020, we don't anticipate fundamental changes in the funding landscape or competitive dynamics compared to 2019.
With this market context or underperformance in the Americas during the second half of the year was disappointing.
Starting late in Q3, we conducted a review of our market assumptions competitive positioning and commercial effectiveness and asked the question. How can we established more consistent growth in the Americas, both from mass cytometry and Microfluidics.
We concluded that end market health and competitive dynamics were not the prime drivers of our underperformance.
However, we did gain an important new insight.
Despite our large opportunity funnel our coverage model had not scaled with the accelerating growth of our mass cytometry installed base from the last two years.
Furthermore, we had poor coverage of high value Microfluidics accounts and prospects.
Simply put we were spread too thin on both business lines with a single selling team.
As a result, we began a series of commercial investments starting in Q4 and continuing into Q1 aimed at addressing the situation.
We anticipate reaching our target commercial footprint in Q2, and we're on track with our hiring plans.
We believe the incremental selling capacity in the Americas will accelerate our revenue growth as we enter the latter part of the year.
We have deployed other levers to mitigate the potential adverse impact on our cash burn.
In EMEA, we see relatively strong demand for our products. Despite the backdrop of slow GDP growth and Brexit dynamics.
Overall basic research funding is tight, but we see a shift in funding to areas, where we are well positioned.
We are part of numerous consortia of researchers and industrial partners on disease research and biomarker development, especially immune mediated diseases.
We continue to focus on market development activities on these organizations best positioned to benefit from the shifting research landscape.
The landmark nature paper, we highlighted in January is an Amazing example of how we have partnered with a leading academic center in Zurich, who in turn recruited a consortium of pathologist and hospitals to investigate novel novel, Biomarkers and cell populations important to breast cancer patient stratification and treatment.
Theres study suggests that high parameter protein image analysis of tumors could be a game changer.
On the heels of these scientific breakthroughs, we believe further sales channel investment is required to build on our product momentum.
Investments in sales heads for the German speaking countries have delivered new growth in 2019 and will be we believe this trend will continue in 2020.
In fact, we're investing an incremental selling resources for the entire EMEA region, primarily microfluidics, which will allow our existing mass cytometry team, which previously carried microfluidics and their bag to sharpen their focus.
We think it will be a win win for both franchises as we deploy a specialist sales model, while increasing our direct selling presence in key countries.
In addition conversion in some territories from distributors to direct sales makes more and more financial sense as we gain scale in those locations.
Similar to the Americas in EMEA, the APAC region is shifting funding to immune oncology and immune system related tools and related programs.
In absolute terms, China, and Japan, or the fastest growing markets, followed by Korea, Singapore and Australia.
Highlighting this market trend the Japanese government has funded a five year national immune oncology program in Q4, we sold imaging mass cytometry systems to key research centers that were awarded projects.
We believe these placements will drive recurring revenue streams in the coming years and we hope. These projects result in new biomarker panels important to prevention early detection and therapy.
China has shifted national funding to large precision medicine in immuno oncology programs as well as build out the as well as the buildout of institutional infrastructure at top medical research centers, we have not modeled any and adverse long term impacts from the recent krona virus outbreak and similar to other research tools providers, we believe our tools will be critical to.
Researching preventing and addressing future infectious diseases.
To capitalize on these growing markets, we're building out specialists teams to scale with the market demand in China.
From a segment perspective demand and large academic medical centers remain strong.
We have penetrated more than half of the targeted U.S. and EMEA accounts in the segment and in many situations we have sold multiple systems.
With the largest accounts approaching 10 or more installed units on the mass cytometry side of our business.
Consumables are trending in line with our expectations and we materially increased our clinical trial participation in 2019.
We see incremental placement opportunities and new demand emerging from these institutions as well as emerging interest from mid tier institutions.
Our microfluidic sales team focuses on the same segments, although the decision makers and users differ in most institutions.
The COO and CRL segment is another strategically important segment, although not currently our largest end market in terms of annual revenue.
We see this market segment, increasing in importance for us over the course of the coming years as early stage clinical studies scale and larger biomarker panel has become more common.
With the addition of Covance this quarter, we're laying the foundation for future growth, we have a good group a smaller specialty see arose servicing demand at biopharma customers. We've just scratched the surface of the market potential.
Similar to our model with other partners, starting with our Max par direct immune profiling panel Covance will market specialty services to pharma biotech customers well makes covance special is their ability to provide global scale and support for the larger programs, we think will emerge.
Over time, we can feed them new panels from our partnerships with academic centers to extend their service venue.
We know that most biopharma customers need flexibility and Preconfigured solutions.
And value speed to market. So turnkeys zero partnerships will play an important role in our long term success as we increase exposure to global drug development pipelines.
Turning now to Microfluidics.
Microfluidics business as a platform technology, serving the broad genomics for example, sequencing real time, PCR and sample prep markets as well as the biomarker discovery portion of the proteomics market.
These markets are very large within trench market participants, so we need to be targeted in our approach.
Our strategy is simple.
For genomics applications, we focused on high value customers, who appreciate our cost efficiency and automation, we use our innovation resources to target the biggest pain points for this type of research such as library prep for aren't they seek a fragmented market with no integrated automated workflow.
We achieved our guidance range for this product in Q4, and we anticipate steady growth in 2020, including Juno instrument placements with a focus on larger genomics cores and service providers.
Recently, we announced a key placement at managing a Saint Louis base genomic service provider, who has adopted Juneau and our advanced products, including the aren't they seek Ngs library prep prep product.
We've been building a good pipeline farhan I seek and expect this to ramp is instruments are installed and validated with more revenue in the second half of 2020.
The second our arm of our strategy is collaborations and partnerships oriented on key applications in end markets, where the partner has existing channel or insight.
We have an excellent collaboration with the Proteomic services provider that is right for further enhancement and a robust business development funnel.
Our technologies incredibly powerful, but we need channel support and content plays to capitalize on this potential we intend to avoid commodity applications and stay focused.
Our Microfluidics business performance in 29 team was disappointing largely because of weak demand from concentrated legacy customers.
However, we have made steady investments in new applications partnerships and channel expansion that should generate attractive returns in due time.
I'll now turn the call over to Vikram, our CFO for a complete review of our financial results. Thanks, and good afternoon everyone.
Total revenue was $32.4 million in Q4, 2019 flat compared to Q4, 2018, and up sequentially, 22% or about $6 million.
Total revenue for the full year, 2019 was $117.2 million or up 4% compared to full year 2018.
Changes in foreign exchange rates had a minimal net impact on revenues for the fourth quarter of 2019 and negatively impacted revenues by 1% for the full year period.
Mass cytometry revenue of $21.5 million in the fourth quarter increased 13% year over year for the full year 2019 mass cytometry grew 23% year over year.
Revenue in both the fourth quarter and full year reflected strong growth across all categories, including instruments consumables and service.
Mass cytometry consumables and service revenue delivered strong double digit year over year growth in the fourth quarter and the full year, including solid revenue growth from our Max bar direct immune profiling assay and new metals.
Consumable pull through in the quarter was close to our guidance range.
Cytometry instruments grew in the fourth quarter and delivered strong double digit year over year growth for the full year 2019.
Our total installed base of instruments at year end was 292, including 85 that are enabled for imaging applications.
Micro fluidics revenue of $10.9 million decreased 18% year over year, driven by a decline in consumables, partially offset by instruments.
R&D seek revenue for Q4 was in our guidance range at approximately $340000 with most of the revenue from Juno instrument placements.
We expect consumables to ramp up the during the year as these instruments are validated at customer sites.
We have seen Microfluidics revenue remained fairly steady over the last four quarters and are seeing good early progress with the new R&D seek product.
As Chris has mentioned we are executing on our microfluidic strategy to target new key accounts and grow the business longer term with new applications and partnerships.
To close off my commentary on Microfluidics consumables pull through for Juno and accessory was higher than our guidance range and biomark and you'd be one pull through continued to be lower than our guidance range.
Turning now to a regional perspective for Q4 2019 compared to the prior year period.
Asia Pacific revenue grew 15% to $9.1 million, primarily driven by higher mass cytometry sales.
EMEA revenue grew 13% to 11.6 million, primarily driven by higher mass cytometry sales and partially offset by lower micro fluidics consumables.
Foreign exchange rates had a negative 1% impact on sales.
Americas revenue declined 17% to 11.88 million, primarily driven by lower sales of mass cytometry instruments and Microfluidics consumables.
Partially offset by higher mass cytometry consumables.
Fourth quarter mass cytometry consumable pull through in the Americas continue to be significantly higher than our worldwide flow through.
Moving onto our operating performance GAAP gross margin was 55.1% in the fourth quarter of 2019.
Compared to 58.2% in the year ago period, and 53% into third quarter of 2019.
Non-GAAP gross margin was 65.3% in the fourth quarter of 2019 compared to 69.3% in the year ago period, and 65.5% in Q3 2019.
The year over year decrease in non-GAAP gross margin was primarily due to product mix and to a lesser extent lower average selling prices.
Sequentially. The decrease in non-GAAP gross margin was primarily due to lower average selling prices, mostly offset by a favorable product mix higher plant utilization and lower inventory reserves.
In the case of GAAP gross margin year over year decrease was coupled with lower stock based compensation expense.
The sequential increase was due to fixed amortization over higher revenue.
Operating expenses on a GAAP basis in the 2019 fourth quarter decreased approximately 10% year over year to 27.1 million.
Operating expenses on a non-GAAP basis decreased 6% year over year to 22.9 million.
The decrease in both GAAP and non-GAAP operating expenses was due primarily to lower variable compensation expense, partially offset by higher product development expense.
GAAP net loss for the 2019 fourth quarter was 12.7 million compared to 14.8 million for the same period last year and 12.9 million in Q3 2019.
The 2019 year over year and sequential decreases in GAAP net loss were primarily due to lower operating expenses offset by lower gross profit.
The non-GAAP net loss for the fourth quarter was 2.3 million compared to 2.4 million for the year ago period, primarily driven by lower operating expenses, partially offset by lower gross profit.
Reconciliation tables between our GAAP and non-GAAP measures that provided at the end of our earnings press release that was issued earlier today.
Moving on now to the balance sheet and cash flow.
Accounts receivable was $19 million at the end of the fourth quarter compared to 14 million at the end of the third quarter of 2019.
DSO was 53 days at the end of the fourth quarter compared to 48 days at the end of the third quarter.
Cash and cash equivalents short term investments and restricted cash at the end of the fourth quarter of 2019 totaled $60.7 million, including $37 million of short term investments that are readily available for sale and $2.1 million in restricted cash.
This compares to $64.8 million at the ended the third quarter of 2019, reflecting a net decrease of $4.1 million in Q4 2019.
At year end, the borrowing base under our asset based revolving credit facility was $8.9 million, none of which was utilized.
And finally onto guidance.
Based on Investor feedback going forward, we will be providing annual guidance for both revenue and operating income.
For the full year 2020 total revenue is projected to be approximately 126 million to 130 million or approximately 8% to 11% higher year over year.
GAAP operating loss is projected to be $51 million to $54 million.
Non-GAAP operating loss is projected to be between 21 and $24 million.
Excluding amortization of developed technology of 11.2 million stock based compensation of approximately 14 million and depreciation and amortization of approximately 4.5 million.
We expect most of the year over year revenue growth in twentytwenty to be in the second half of the year as our commercial investments start generating returns.
I would also note that historically revenue into first quarter of the year is lower than in the previous years fourth quarter.
We expect this revenue cadence in Q1 2020 as well.
In addition, operating expenses in the first quarter seasonally higher than in previous years fourth quarter.
Our guidance does not include any impact from the ongoing grew in a virus epidemic. The impact is still too early to determine as our China team is just returning from the extended Chinese new year holiday.
To provide some color under split of revenue by product lines. We are projecting that the majority of for 2020 revenue growth will be driven by mass cytometry with growth across all categories instruments consumables and service.
And with that I will turn the call back to Chris for closing remarks.
Thank you Vic.
Last quarter, we completed our second year of growth on the heels of some fundamental changes, namely new product innovation operational investments business focus on proteomics and tissue imaging.
Expanded organizational footprint investments and improvements to our balance sheet.
We have demonstrated operational execution as well as strategic agility as we take the steps to drive increased market penetration for key customer segments.
Overall, the mass cytometry business is growing rapidly, particularly our recurring revenue streams of consumables and services, we are making the requisite investments to sustain this growth.
On the heels of recent innovation, we're increasing our commercial footprint to return microfluidics to growth with enhanced specialist sales coverage for each franchise.
Looking to 2020 expectations.
While our higher ASP instruments may continue to drive quarterly variability our sales funnel remains strong.
On an absolute basis, the second half of the year will likely be stronger than the first half as we realize the full benefits of our sales channel investment in the first part of 2020.
To supplement our organic initiatives, we have secured new collaborations and partnerships and we are pursuing more opportunities to further expand share of wallet.
Commercialize improve workflows generate more channel research reach and identify novel content for disease diagnosis and treatment.
From an investor perspective, we have an improved balance sheet with greatly reduce debt obligations I'm confident in our ability to deliver new innovation and additional revenue growth, while maintaining financial discipline and continued operational improvements.
We believe these activities will drive sustained growth and tremendous long term value creation.
As always I think over 500 employees for their contributions this past quarter, we're honored to be recognized for launching the best cell product of the year, the Max par direct immune profiling system.
Furthermore, our fastest growing office in Canada was recognized as a 2020 best place to work in Toronto.
Finally, our thoughts or with our colleagues and customers in China as well as employees, who may have recently traveled to the regions impacted.
We hope to do our part in the fight against these infectious diseases now in the years ahead.
With that I'd like to open the line for questions.
At this time I would like to inform everyone in order to ask a question. Please press star one on your telephone keypad again ask that question. Please press star one on your telephone keypad.
We have your first question from soon gene NIM from B T. G. Your line is open.
Hi, Thanks for taking the questions I'm just a few clarification, maybe starting out with that Covanta. Thank Georgetown did these customers require multiple systems and for Covanta is there potential for them to acquire it I'd hearing anything and then if you translate.
Hi, sung Ji actually go for high sung Ji do you hear me my great. Yeah, Okay, great. So with regards to Covance actually with the George base, we did not reveal any details related to either one of those transactions. Although it is true on the Covance opportunity, we talk about healios as a placement and I do believe that there.
As Hyperion opportunities also at the account.
I don't I believe both institutions could represent.
Have significant strategic value for us over the long period of time certainly in the call. We gave some color related to covance and importance of their global footprint.
And in this case, it's around suspension and I think there's plenty of opportunity within the imaging side of the George Mason is specifically for Hyperion ours for George Jones, Sorry [laughter].
Lived in Virginia for too long, but yes, we're Georgetown University and lumbar to cancer Center. It is a hyperion opportunity, but they also have interest in both using both technologies and dual use format.
Okay, Great and then Vikram when you talked about lorries impacting margins and in a quarter or was that pretty much across the board across both product category is well within more skewed.
2.1 versus together.
No we didn't we didn't break that out sung ji.
So it was a factor that affected.
Gross margins as I said in my script, but it was mostly offset by mix and capacity utilization.
Okay and then just lastly did you say that E consumable revenue for Nasty time actually grew this quarter you every year, yes, we did okay.
Great. Thank you so much.
We have your next question from Bill Quirk from Piper Center. Your line is open.
Oh, great. Thanks, good afternoon everybody.
So I guess first question certainly heard your loud and clear that we're not going include anything in guidance for Corona virus and I also appreciate the team is just getting back from an extended holiday, but any intel whatsoever around on the logistics of moving products around the country, they giving any feedback on whether or not.
They can get instruments and consumables such to customers. We've been hearing have different different stories about the state of logistics over there.
Hi, Bill this is Chris yes, so with regards to we're still getting a lot of details I think out of the region.
At this moment as far as our products are Rick or our.
Involved so it for us its shipment getting permits and into the country primarily tax based permits. So we don't have a lot of details on the logistics and logistics flow at this time.
That's really all we can provide at this moment I think the secondary component is that our manufacturing supply chain, primarily is outside of China as a primary basis or manufacturer in Singapore, Toronto and the you us there's always the potential impact from a secondary supplies sources of course, but for the amount of visibility we have at this moment, we kind of stand by the comments we made in the call.
Okay got it and then Chris maybe you can elaborate on the timing rather comments concerning splitting up some of the sales functions between massive Thompson business broadly and Microfluidics.
Couple of years ago, I think when when nave is little tighter on capital you guys side to combine those two teams and so maybe just elaborate on why I am as right now right to split those two backup into specialty test. Thanks.
You are actually yeah, absolutely spot on and we Didnt make the decision actually right. When I came into the organization that we had the team split.
At that time, they were actually split around applied markets differences. So there was one around and then up as the fundamental difference we reunited instead of being applied differentiating between end customer segments. We went to one integrated team.
Now it is also true that in the Q3 time period and really on the heels I think of the aren't as seek launch that we really see a catalyst with the new significantly differentiated product that.
We think it presents a real winner and provides a halo for really driving the broader microfluidic story that it makes sense for us to catalyze this expansion by product areas. So one mass cytometry focused team a second on micro fluidics.
And really the third I think is that we've continued to accelerate our overall footprint in terms of mass cytometry. So.
That's really.
That's been really the primary catalyst for us for making this transition of the two teams.
Got it thank you very much.
We have your next question from Dog Sheryl Wolf from Cowen and company. Your line is open.
Hi, guys. This is Adam wish house on for Doug. Thanks for taking my question.
As you noted it was a very strong mass cytometry instrument revenue quarter. We have you, adding 17 mass cytometry instruments in the period, enabling around 15 entrants in the quarter for imaging. They just want make sure those numbers down approximately correct and did a lengthening sales cycles and funny dynamics you saw in Q3, EPS upside or was it just more that they were off.
That by the positive drivers you mentioned in your prepared remarks.
Well as far as the first question I managed to repeat the second part of the question I didn't fully got it but I'll come back to my second on the first part as you know we gave a Q3 snapshot of our install base and in the fourth quarter. We obviously gave a revised update here in the most recent calls so you have the real mass directly to mass cytometry as well as it relates to imaging specifically imaging enable.
Can you repeat the second part of the question. Please.
I'll just remind you want to I'll just remind you in the first part of a sorry to interrupt you.
The Steven the high Perions, our dual use so it also lets it can get complicated from mix perspective, just keep in mind I know you guys were card on the modeling.
From we have Healios, we have an imaging upgrade them, we sell Hyperion configuration. So there's three elements to that sales line.
Okay I understand the second part of the question, we just asking about a lengthening sales cycle and funding dynamics eight point out in the queue recall just trying to understand.
Subsided.
Or if they were just more off more than offset by positive commentary you mentioned on broadening customer bases and new applications driving the strength in the Q4.
Yeah, I think adding additional color, it's really more of the latter as we had commented that historically even in the 2017 2016 time period, the sales cycles were longer than what we'd experienced in 2018, we saw a lengthening.
And the 2019 time period, and so really the size of the funnel has and we started we've accommodated those elements in our in our forecasting.
Okay, you're biomark installed base increased around at the instrument. This year between 19 years access arranged all basis decreased by around well, we believe getting further attrition it's possible in 2020 or do you expect to install bases will grow this year as you targeting new customers application.
Yes, that's a that's correct this or that reflects the update in the snapshot that we gave between the last year and then this year on both of those line items on the access a Juno line item I think it's important for color as you know the access array as an older.
Piece of equipment and we've been in the legacy wind down of the access arrays and so new Juno placements are partially offsetting that I can only be speculating on what that that affect what before the 2020 time period at this stage, but that general trend is not a surprise to us and I think you can see a deceleration of that wind down of the access arrays.
Biomark also is reflects I think many of a biomark placements in the earlier cycles were tied to single cell and see one placements in particular, so we have seen some.
Decline from that line item as far as active installed base more related to the conjoined relationship with C and we've offset that partially with new placements of biomarks largely in connection with our proteomics applications and new customer acquisition.
Okay. Thanks, Michael aggressive you're welcome.
We have your next question from Paul Knight from Janney. Your line is open.
Hi, Chris regarding the distribution move you are making is that you're hiring additional people on the distribution force and also going more direct and also having them sell a broader portfolio products is that the way I should read it.
Hi, Paul first not exactly so lets say you know approximately we've we're investing or increasing our investment in direct selling heads by about 20% on a worldwide basis and simultaneous who are also creating more of a direct microfluidic selling organization. So we're enhancing we had a very small one of the United States, which were significantly.
The expanding and then in select geographies outside of the U.S.. We are also adding a direct microfluidic selling capability. In addition, we're also adding incremental mass cytometry selling capacity in a number of geography. So it's a two dimensions. So it's both creating a dedicated team in some geographies.
Expanding the two teams respectively speaking.
And how is your penetration of the biotechnology and the.
Let's call it the commercial non academic market, how much what was how how's the progress inboard Q.
Overall, I think we're pretty pleased with our continued the acquisition of biotech and non academic customers. We do maintain that are current install base today and a significant I'm a portion of our sales are closer in the academic space and increasingly more and more in the translational setting, but you have examples in our lexicon.
Have a installations like the one you heard about today Covance represents a significant expansion for us and access into Biopharma spend so we think that biopharm industrial spend as a very significant portion of the potential spend in this area and it will acquire that through a mix of system placements and then also through services contracts that reach into CR rose and so I think.
Yes, we're pleased but we're going to make a lot more progress in this area over the coming here.
And then lastly on the US was I guess softer in terms of your geographical split was that.
Capital equipment flow through not happening in Fourq you.
I'm actually one more time do you want asking the question on on the academic.
Yeah, you asked down in the quarter, what was behind that was that capital can.
Bidding constraints could you just talk to that.
You know it feels like to us and partially the U.S. both had a very strong comp in the in the prior in the prior year period, and the Q4 2018 time period, but to US it felt more as a coverage issue. So we have significant pipeline, but we are having trouble getting the full yield out of that pipeline. Although there was an issue in the rest of this thing it's an opportunity for us to.
To do more investment in that particular area to increase to maintain the rate of growth that's required for us to show absolute growth.
For the Americas. So it's primarily the microfluidics businesses, there that SAP some of the vitality out of their ants and we've had areas that where we had no series of Levered accounts in their lives.
As we've talked about in historically legacy accounts that have kind of ebbs and flows.
Thats certainly impacted the Americas number.
Okay. Thanks.
And I'd just add to thank you very much Paul and then on the held on the hiring basis that we made good progress in the fourth quarter on a hiring plans that we started those activities in Q3.
And so we continue to feel very pleased about the progress through made through Q1, and then we'll expect to be I think it full staff and the Q2 time period.
I'm showing no further questions at this time I would not I would now like to turn the conference back and Agnes Lee. Please continue.
Thank you Alexander we'd like to thank everyone for attending our call today, a replay of this call will be available on the Investor section of our website. This concludes the call. We look forward to the next update following the close at the first quarter 2020, please reach out to asset there further questions. Good afternoon, everyone Alex.
Andrew you May now close the call.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for your participation and have a wonderful day you may disconnect.
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