Q1 2020 Earnings Call
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Ladies and gentlemen, thank you for standing by welcome to be 10, X. genomics first quarter 2020, <unk> earnings conference call I.
At this time, all participants are any listen only mode. After the speakers presentation, there will be a question and answer section.
Okay question during the fashion you want me to press Star one on your telephone keypad.
Thank you I'll now turn the conference over to you cant remember, though with Investor Relations you may begin.
Thank you earlier today connection on its released financial results for the first quarter ended March 31st 2020, if you have not received usually or if you'd like to be adding to the company's distribution list. Please send an email to investors and extra don't make dotcom an archived webcast of this call will be available on the.
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Before we begin I'd like to remind you that management will make statements. During this call that are forward looking statements and then the meeting a federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events materially differ from those anticipated you should not place undue reliance on forward looking statements.
Additional information regarding these risks and uncertainties and factors that could cause results to differ if you're going to press release, an extra gnomic issue today and then the documents and reports filed by tax coming from time to time with the Securities and Exchange Commission.
Tax genomics disclaims any intention or obligation to update or revise financial projections or forward looking statements, whether because of new information future events or otherwise with that I'd like to turn the call over to start facts and I'm companies co founder and Chief Executive Officer search.
Sure, but hoping and thank you for joining a goal through your first quarter 2020 results I Hope you. All your families are healthy and managing the quotas on humans anything as well as possible.
Before we conclude you don't have the quarter I want to store by thinking on voice for their amazing dedication flexibility and drive over the past. Several months. This has been very intense period I think a truly brought out the best in each over a few members.
I also want to take a moment of knowledge to work being done by customers and they go look at research community around the World. We're working relentlessly to understand Unquoted nine human developed cures for the buyers.
Well, we don't look you epidemic like those in our lifetime. We have also never seem to global consumer community fully with so much intensity on a single goal.
Sunil depends any sort of spreading around the world, we moved quickly to west instruments and provide regions or customers working on quota 19 research menial. These customers require special accommodations double instruments and by seems to level three lots.
Our problems are being used in multiple ways like solar the fight against the pandemic fundamentally they enable researchers to see biologist very high resolution and skill and because of that they'll all our customers to meet discoveries to understand the buyers and then underlying biology of the disease and to help develop therapies of vaccines.
There have already been dozens of prisons from scientists and clinicians around the world using tonight's recorded 19 research.
We are still single cell analysis have allowed our customers to establish which sells and tissues get affected by the virus when and where.
A number of on customers, who have been using the new profiling solutions to source for neutralizing antibodies in recovered patients, which could potentially be useful proper watches and treatment.
There is no sense of ongoing research to understand the biology of infection in lung tissues and other organs using our full suite of products.
One of our customers are intensely focus and understanding the immune systems response to the infection or ratziu.
You are already Nims robotic solution has been particularly powerful because it provides a detailed and comprehensive view what is happening with different immune cells clones and jeans during different stages of inception.
Our customer they've been teasing out the precise cells and receptors that neutralize the buyers as well as those are activated by the infection to produce interest in planetary order reactions.
The basin discovery, both published end up all this has been breathtaking. This research is helping to buy medical community understand live first the virus dozen different patients what kind of treatments would be effective when and how an assisted by CMS could the developed.
Technology incentive a discovery is ultimately how this crisis will result at tenets, we will keep doing everything we can to help signs of a shift just achieved this goal.
Turning now to our business I will start to this goal by reviewing our commercial execution during the first quarter, including detailed on the feedback from corporate 19 meant I will discuss how we're thinking about a recovery both fourteenx and the broader industry and will the new normal will look like fourth quarter 19, and finally I will walk through.
Key priorities in the near term as we navigate our business through the pandemic.
Then I will turn the call over its adjusted for a more detailed look at our financials and the impact from close to 19 I will return for some concluding remarks and on Brad will join us for UQM.
Our revenues for the first quarter grew 34% to $71.9 million as compared to the prior year period.
The Eurostar growth was strong demand for both chromium vision products, we're especially pleased to see a notable increase in biopharma sales relative to the prior year.
In Liberty, we hosted a workshop at the AGBT Conference, where we introduced a number of new capabilities for both chromium vision platforms. The roadmap. We add line has been stronger resonating with our customers and we're excited to launch these new capabilities over the coming months and yes.
On the grown in size, we made several announcements, including the product for the combined measurements of epigenetics and gene expression new solutions for targeted assays and the introduction of the tenants club to hope Democratised single cell analysis.
We look forward to releasing these solutions throughout the year.
Relative to grooming our vision blood from is still in its infancy with great enthusiasm for the platform at AGBT, especially as we review is upcoming capabilities, which is included HD compatibility proceeds measurements through efficient marketing technology, and then leave element of FOP sample types.
And while we just launched the first visit product a few months ago, we've already seen extensive adoption around the world.
The last earnings call in mid February we told you the vision was being used by one or 200 labs.
That number has more than doubled down to well over 400 across these labs would have been encouraged by the excitement from our customers. After their initial experiments as they started seeing amazing use the at a standing meaning different use cases.
While our business was strong for the majority of the quarter, we didnt use of central the died from quota 19, particularly during the month of March.
The first on started in January when before we begin to see a slowdown across China as a country was virtually shut down in response with them Zimmer.
In early March has confirmed coordinating gazes begin to spread globally with those significant reduction in our activity across all our customer base as institutions responded to the emerging pandemic.
By the end of the quarter with demand and approximately 75% of our customers has suspended operations in compliance with stay at home orders.
The only notable exceptions was lives of sort of this equipment 19 related research. These lasted in making use of all of our products, but most uprising late they need profiling solution has been particularly as being particularly strong demand.
These are closure simply docket that we'll continue to impact our business until they're able to reopen and really ample capacity.
Look today, most labs remain closed, but we've seen some reemergence of customer activity in recent weeks and even one clubs are open it will take some time for them to give dock optimized to capacity.
Now while the precise shape of the recovery is hard to Brazil, there's very little dub above the need to understand the master biology in the post quarter end World. This pandemic is showing in the particularly striking way no limitations of our current knowledge of biology, and the frightening consequences of those limitations.
So as we look to a future we have very strong confidence in our business.
Going forward, we expect newland sustained investments in bio medicines across industries and governments.
These investments will drive even greater needs for new technologies.
The products, we have built and plan to build that Pemex will be crucial for accelerating our understanding of biology and adapting human health.
Over the past several years, our customers are published over 850 papers using our products to make fundamental discoveries across many areas of human health and disease, including now with increasing urgency infectious diseases.
It is truly amazing how many incentive breakthroughs have been powered by our product in the 60 months they have been available to researchers.
And we have so much more to do the number researchers using our product products is still very small relative to the eventual is that we expect.
And so this is just the beginning of product platforms are in the early stages of development relative to their potential.
Which is of the product development opportunities in front of US our is anything more robust nobody has ever been our innovation engine is a core pillars of our competitive advantage. It is now supported by over 740, thousands of applications, including foundational dams and single cell analysis epigenomics spatial analysis on Multiomics.
Our priorities that continue to invest aggressively in R&D to develop new products and platforms. So accelerated future discovery in the dental consumables.
In addition to increased focus on by matters and that life Sciences, we expect as opposed to over the world's little bit different in other ways.
Virtualization precipitated by social distancing is likely to be a permanent ship that will stay with us even after the condemning subsides.
Travel enforces of us in person conferences, we'll likely being much more rare in the future.
People are adopting to new worth downturns, now and discovering the distal wisdom interact and can be more efficient and more effective many of them are likely now going back to all the ways of doing things.
We have been portion has nothing about several years, we'll have much vessels are essentially in digital capabilities to support our customers and help our fuel systems. These approving, especially valuable under current conditions as they allowed us to maximize our interactions with customers and promote customer success in the absence of in person visits webinars and other forms of digital.
We are also providing a platform where we can effectively launch new products into the multiples.
We expect that these digital investments give abilities will now serves as a foundation that will be particularly valuable in future.
I am more general effect of the Pandemics is that is causing a lot of changes throughout the world.
So just the moving fast and being adaptable.
Matters more now than it ever house and that will matter more in the future.
At some nights would have always prided ourselves of moving fast being nimble and resulting from first principles, which said that lease quality is will be at a premium in the future and intend to keep investing in our culture and processes to promotional.
And now turning to our near term priorities as we met navigating our business will then Dennis.
We have organize them around three principles first to protect the health and safety of our employees second to ensure the continues to evolve great collaborations to serve our customers and importantly to support their research upwards on quota 19, and third to prioritize investments that you focus on development.
As Colin Thank you Keith will begin providing us with an action and implemented early measures to ensure the production and wellbeing of our employees Tenax was designated as an essential business to continue necessary operations during a planned demos.
Initially the vast majority of our employees transition to work from home. We retained the core group of employees, one side, which is critical operations going while operating under stringent social dispensing and other production levels.
Several weeks ago with additional verticals and productions to ensure our key safety with started reading more about R&D function back into the labs in a deliberate and careful manner. We believe that one of the most effective ways to ensure a safe work environment is still just everyone for Sars globally to organise frequently recurring basis.
Well then in mind, we have set up and mobile program to provide Recurrings art Sars equity to testing on slide for all employees that needs to be at our headquarters employment.
We're also communicating regularly with our suppliers to ensure that our supply chain remains intact, we have not yet experience any material supply issues and have taken steps to ensure we have adequate inventory announcing new customer demand across a range of recovery scenarios.
Our customer service teams around the world, our operating or mostly I remain available to assist our customers and partners.
As I mentioned earlier, our commercial teams quickly switched to digital approaches for customer interactions. We have made use of our extensive online content with educated train and help our customers from afar sales teams of organized virtual meetings, we've been running webinars curious to educate potential customers and have been seen consistently record attendance in fab.
The effectiveness of virtual continental's appears to be substantially higher than four in person means.
While the near term and Latin micro environment is likely to remain uncertain with a strong conviction about the long run in the tremendous while of opportunities ahead of us.
Supported by strong balance sheet were continuing to scale, our business thoughtful and deliberately most importantly, we're continuing to invest in R&D and our operational infrastructure as we have always done at dynamics were focusing investments around key projects being very diligent with prioritization.
Diligence is especially important in the current environment to ensure that we are executing effectively toward our long term goals.
Okay.
At the MX with it out to build technologies to measure every aspect of biology. Among these technologies available to everyone whether for academic research for development of new medicines over treating patients. Our vision is not a land given any biological samples you should be able to measure every analyze the relevance of the ride resolution with all the necessary commerce.
Because that's how we will achieve understanding that's how we will arrive with yours.
With that and we'll now turn the call over to Justin for more details on our financials.
Thank you search.
Total revenue for the three months ended March 31st 2020 was $71.9 million compared to $53.6 million for the prior year period, representing a 34% will increase.
Consumables revenue was $61.4 million, which increased 34% over the prior year period.
Instrument revenue was $9.1 million, which increased 33% over the prior year period.
Service revenue was $1.3 million, which increased 52% over the prior year period.
Cobot 19 impacted our business in different ways consumable revenue.
Was unfavorably impacted due to many customer labs being closed instrument revenue was favorably impacted as we saw increased instrument revenue increased demand for our instruments service revenue was not materially impacted.
North America revenue for the first quarter was $39.7 million, representing 39% growth over the prior year period.
EMEA revenue for the first quarter was $13.2 million, representing 7% growth over the prior year period.
APAC revenue for the first quarter was $19 million, representing 48% growth over the prior year period.
By the third week in January we saw impacting China as customer labs began to close unit Carbonite team.
As the quarter progressed in the virus spread outside of China, We began to see an impact on customers in North America and EMEA.
And the last two weeks of the quarter lapse in China began to reopen and we saw reasonable recovery with ending revenues close to our expectations for us, but that impact to our Q1 revenue was driven by customer lab closures in North America animals.
Gross profit for the first quarter 2020 was $56.8 million compared to a gross profit of $39.6 million for the prior year period.
Gross margin for the first quarter was 79% compared to 74% for the first quarter 2019 gross.
The gross margin increase was driven primarily by lower accrued royalties related to ongoing litigation.
Total operating expenses from the first quarter of 2024 $76.7 million, an increase of 80% from $42.6 million for the first quarter of 2019. This was primarily attributable to increased expenditures relating to ongoing litigation personnel costs of Weve.
As we have continued to grow our headcount across the organization and stock based compensation expenses.
R&D expenses for the first quarter, 2020, or $26 million compared to $15 million for the first quarter of 2019.
This was driven primarily by $7.1 million of increased personnel related expenses and $2.5 million increase in laboratory supplies and expensed equivalent.
SGN a expenses from the first quarter were $50.4 million compared to $26.9 million for the first quarter 2018, with the increase driven primarily by $11.7 million of increased expenditures relating to ongoing litigation, which included a $5 million success fee payments at this.
Finally, the increase was driven by $8.9 million of increased personnel related expenses.
Operating loss for the first quarter was $18.9 million compared to a loss of $3 million for the first quarter of 2019. This includes $6.7 million of stock based compensation from the first quarter 2020 compared to $1.4 million for the first quarter 2018.
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Net loss for the period was $21.1 million compared to a net loss of $3.6 million for the first quarter 2019.
We ended Q1 2020 with $372 million in cash and cash equivalents, which includes the impact to the February repayment in fall of our term loan borrowings and associated fees for Silicon Valley bank totaling $31 million.
We are well capitalize and believe that our existing cash position along with cash generated from sales of our products will be sufficient to meet our anticipated needs for the foreseeable future.
Given the ongoing uncertainty of the scope to ratio and impact of the pandemic. We went through our 2020 revenue outlook in mid April and remain unable to reasonably estimate our financial performance for the year.
Looking ahead to the next few months, we expect a meaningful portion of our revenue to be impacted while labs remained close.
We are actively reviewing and managing all cost to navigate the current environment of remain committed to investing in our business in order to drive growth over the long term.
We have developed plans growth for a range of recovery scenarios and are well compared to steer through this period and continue on the trajectory of realizing the tremendous opportunity in part almost at this point I'll turn it back to search.
Thanks, Justin.
Before closing I want to extend my sincere thanks to everyone. A tenax for all of Europe Arsenal for all of them aging water do you have done I'm incredibly proud to be wireless team.
Every part of the company would have faced all the recent challenges with resolve transparency and fashion.
Our mission to Master biology, and bouncing on health is more important announcement has ever them I'm confident that the future goals and even greater appreciation appetite for scientific discovery.
And with that who will now open ended up for questions.
And at this time I would like to remind everyone in order to asking question press star and good number one.
Well from Keybanc.
Our first amendment to compile today roster.
Okay.
And your first question comes from pricing Peterson with JP Morgan.
Hey, Thanks surge I should tell you flagged some of the Kobe related research, but thats ongoing can you just talk a little bit about how you're thinking about revenue tailwind. There I know you mentioned that growth increased demand for instruments can you talk a little bit about how you're thinking about that opportunity and how much will speak split between discovery and translational work.
So in terms of the Tailwinds for Akovaz. So clearly there was.
There are some in Q1 and there's definitely some growing in Q2 I would caution though on the scale given the scale of our business.
It's too early to say that is going to be a significant part of relative to the rest of our business.
If they impact has been much more in terms of lap closure assemble the headwinds so far.
And come up funding perspective, any any views on on what the catch up on the back half of the year might might look like and thoughts on whether we like it something more meaningful.
Each.
Librettist.
IDTI goes Brad we've already seen some incremental.
Funding, it's been released by the NIH.
In some of that is already made its way into at labs and studies are underway, but theres a tremendous amount of work contemplated around the world certainly.
Please provide sanger, our head of applied for grant to do sort of very large studies and we're also seeing local consortia regionally around North America that are coming together.
Sometimes you almost rival labs, but to work together and as a lot of this is related to access to samples and unfortunately.
Truth of the pandemic as their samples everywhere.
Two other quick ones and then I'll hop off chromium connect just can you give us an update I think quickly talk back in the last quarter. You said, maybe 50 cents per share would be great. Obviously, the dynamics have changed but just curious how you're thinking about pharma traction for comment connect.
Uptight uptick as well.
Actually been very strong I mean, obviously, we didn't begin shipping and installing in.
In March and was obviously, a kind of rough because a lot of institutions are limiting access even before they close blimey access from deep on the outside but overall, we continue to see really good demand.
Weve built a pretty good book of demand that's consistent with what we expected and I would I would feel that here in the next few weeks when some of the lab start opening up we'll be able to commence onboarding customers.
Last one I'm just wondering surges, we kind of think about the current environment and more focus on surveillance going forward has any of this changed your view on the clinical opportunity and step she may need to take to open that up overtime.
I don't think Theres a material change in how we view our clinical opportunity. It certainly it would we signaled in the previous earning call and they're going to include the conversation we have throughout the quarter as we do have we'd have to more interest from translational researchers on from medical centers and also from a bias.
Pharma customers. So that is all pointing toward the so clinical translational vector and we still feel the same.
Yes.
It is stronger than before.
I wouldn't necessarily what caused that I think with covance kind of appearing there is more I think there's going to be more focus of infectious disease type of recession as such these types of applications I'm not sure of that not facility breaks more toward the sort of a clinical applications relative to based on research, but it's sold kind of project.
The greater like fundamental investment that we see in them and in biology in genomics in particular.
Okay. Thank you.
Your next question comes from Dare to Brian with Bank of America.
Hi, good afternoon.
Hey, so.
If I missed it my apologies, but what was your.
Exit rate of revenue decline exiting the second quarter and is that a good proxy for how to think about.
Q2.
Huh.
Derek I think.
If we're going to look at the revenue rate decline overall overall, there was a decline, but it really was broken out regionally with different impacts for each region. So we saw an acceleration in in China as the labs in China open back up again and we saw.
A slowdown in a more in EMEA as those lives began to close that we gave the metric that overall.
We estimate that about 75% of our customer labs are currently close.
And so thats, probably as best a proxy as any as far as how to think about the sourced how to think about the weighting while they all are closed.
Great I mean, thats actually where I was going to go next of that that was a next product in that we're talking about the acceleration China was that instrument pull throughs or is that test labs coming back in resuming.
Normal purchases consumable demand to something about that characteristic of.
You basically ended up.
He said flattish on your China quarter.
Derek This is Brad actually there were a lot of orders around Akovaz related research. So we read the ended the quarter. We had a lot of labs that through the month of the early part of March for sort of contemplating some of these bigger studies and we saw those orders come in in some cases royalty.
We're able to fulfill that but most of that.
So in that in the second quarter.
Got it then.
Going back on that yes, obviously your gross margins are going to take a hit because of lower volume in the second quarter. A degree of created a commentary on the gross margin impact for Q2.
At this adjustment of I'll take that one.
I think the biggest the biggest impact to gross margin over the rest of this year is going to be the continued transition.
To the next Gen products, there are going to be some headwinds just due to perhaps a lower volume.
The same on the same fixed based costs, but we expect that that the benefit.
From the Nexgen transition will continue to offset that.
Great. Thank you.
And your next question comes from that Cinco column.
Okay.
Hey, guys good afternoon.
Now committed maybe just.
Follow up on that last one on gross margin I'm going to do it a couple of cleanup.
Then ask a busy am question, but starting on gross margin.
Yes, Doug the Q1 gross margin was actually pretty impressive given adverse mix and probably some drop and utilization rates at the under the quarter I'm curious, where you think gross margin would have bad if it hadn't been further pandemic and.
Presumably it looks like you could have gotten to the 80 for drop is that right and if so is that is that kind of the new normal factoring in next gen.
And moving past some royalties once we get to the other side of the pandemic.
Yes. It does this as Justin I think I think thats hard to say for Q1, there wasn't due to the volume that we manufactured overall and shipped overall I wouldn't say that there was back creative an impact to Q1 margins due to the due to the pandemic.
If you look at the new products that we've introduced the chromium connect and museum products and also the manufacturing that were standing up in Singapore. Those are all going to be headwinds to the current gross margin.
In fact, we're expecting some period costs the start hitting this quarter as we ramp up as we ramp up Singapore, and then as visiting and conduct become a larger part of the overall revenue.
That will also become a bigger and bigger factor so.
I think it's difficult to forecast how all that is going to settle out in what the new norm would be.
I don't expect it to be a drastic change.
From where we've been moving this quarter ended up in last quarter.
Okay. Okay.
And then I guess another one maybe just taking a different approach.
In your prepared remarks, you noted that 75% of customer shut down at the bottom with some of these folks are coming back.
But others aren't necessarily behaving as normal given all that's going on.
Cove, It is a little bit of a tailwind, but it's only a small tailwind that China is getting back to normal, but I think it's only about 12% of sales. So is there any reason I hear you that you're not guiding and we understand why but is there any reason should not assume that total revenue for Q2 is.
50% to 75% below trend just applying what you said, what's going on at the end of Q1.
And apply that both consumables and instruments given that it lapse or closed they can't use the juice and given your commentary on instruments being pulled forward into Q1 is there anything I said that it's logical there.
Yes.
I think I would say that the single biggest variable there we're seeing as again left closures.
So essentially the one variable that determines certainly the consumable pull through.
Ladies FX instruments, maybe slightly smaller, but those as well so I'll, let Brian yes. So Doug. The other thing is then the amount of club openings and and Weve content Thats quite a bit obviously when labs open. There is some period of time as low as we're experiencing about our own R&D where people are using maybe she.
Shifts.
Different different cohorts at different time, so that's that's going to take awhile and then there's a lot of third services that that support the labs and they all have to be brought up animal tax facilities should.
Shipping and receiving so even though the whole thing for US is how how how the recovery looks and how quickly. It goes Oregon assume it's going to be some sort of a lag period of time lag period for labs to get anywhere close from the original capacity, we do believe though in our discussions with our customers that were right at the top of the list what they want to start work.
England.
Okay lots of that Super helpful and last one on busy you noted that over 400 labs have now adopted the platform or really put themselves in a place to use the consumables no upfront cost. This is double where you were at the last update on wait a few months ago any interesting observation on on crews that.
Topping up for what applications is it mostly existing versus new customers and from a competitive standpoint are you starting to run into situations where.
You are running into head to heads and winning those at this point.
So the better kind of Doug good question sort of independent of that is fairly similar to what we have seen before when we communicated the months ago in that most of the customers are still our existing customers, but theres, a fraction say, 15% to 20%, that's new and I have been fairly consistent the.
Sensors pretty wide others.
Before there was a particular focused on oncology immuno oncology and.
There are signs those are the big falls, but its spam and sales the gamut too like survey, Saudi thanks, including about cover 19 as well.
So it's pretty much across the board that I'd say again, we'd like we said before there is a greater interest from the translational and clinical.
Size of the warrants envision relative to what we don't see previously the single cell and chromium.
So.
And in fact, we established on let them back on this I would suggest since last call a clinical translational network, which has been to help.
The translational and clinical customers get on board has been gone that has been going quite well to turn to yours.
Competition question I think it's still.
I think the landscape has changed much shoe related so much I think there's certainly more awareness I would say with both platforms out there in the marketplace as far as we know we haven't lost any sale head to head and Theres only customers will have both.
Platforms out there.
Great all right. Thank you for all that Oh, sorry, sorry, sorry Europe.
Well I just I, just maybe a little bit more to that is part of the competitive landscape I mean, we've announced a number of enhancements to the video online. There's another platform on the market since announcing a lot of enhancements there were kind of where we're getting to the point, where we're we're going to meet more often right now we have not lost to say.
Sales don't expect to lose the sale of were very keenly aware right now that both platforms of kind of merge there's also been new platforms like re core we look at that is very complementary not sure exactly when that will be commercialize, but again, there's a tremendous amount of interest in.
Facial and just to touch on this clinical translational network that was massively overs oversubscribed, we had to actually in fact, we're at a live a number of spots that we could take but it really is consistent with polling spatial into the clinic and it's it's was actually quite surprising.
That's fantastic alright, thanks, guys.
Your next question comes from Patrick anomaly with Citi.
Great. Thanks, guys.
Maybe one for Brad I know you talked about some potential lag on labs purchasing when they come back there what are your conversations been around the health of budgets overall, where do you feel that instrument purchases, mostly we're just being pushed out in are going to be realized in the relative near term once the labs riocan kind of find their footing or do you think there's this level of uncertainty with cloud of uncertainty.
That is going to linger for a longer period, even once people are back in the lab.
I'm in general people are positive the NIH budget for 2021 is sort of pre announced and its strong.
I think people have budgets.
They're saving money and saving research to 110 and take on a sense of your customers. So I think there's a strong demand.
And to get back in I think everybody.
It's different I mean, institutionals institutions are sort of have different approaches to how they're going to bring this up and running our bring gift allows up and running.
As far as instruments I think they will not be impacted that much I think to the extent their delayed. So I think those will come back online first but theres a certain amount of businesses just unrecoverable because there is certain amount of time that we weren't in there and there's no I don't expect a huge bolus of mix.
Garments to be done right away that it's going to be a gradual build.
In fact the capacity.
Okay, and let me one for Justin on expenses side are you guys Rovs, we plan on ramping those quite a bit higher this year before the pandemic how does it change your opex plans for the year.
Caused any hiring you're planning on doing there just wondering on the balance between controlling costs and the current environment, and then being well positioned to capture growth when things normalize obviously, a big opportunity for you guys. So how do you balance those two.
Yes, good question Patrick.
The focus for us has been.
Finding the right balance on navigating through this temporary situation, while still ensuring that we're building the business for growth for the longer term.
And so we have gone back and we've looked at all of the costs for what we have planned out for the rest of the share most primarily due to additional headcount in R&D and commercial side and we just tried to be smart about prioritizing those hires as best we can as to not impact.
Product timelines or put any of our revenue plans.
And so I think when we started this year.
We had a pretty ambitious hiring plan overall it it's still quite ambitious, but we have we have pushed out a small number of of headcount into future quarters, where we can differ decision that doesn't have an immediate impact today.
Okay, and then maybe I'll pass one more premier differential has been asked a couple of times with in terms of even the customer closures are you guys have talked about 75% number anyway to frame that Neil how that's trended whether its end of March through April into almost mid may here that number.
Changed materially infrastructure figure out some companies given have a week to week look not anything you can help us with over the past month and a half of this is developed that would be helpful. Thank you.
All right. So this is Brad we beyond the China, which we've already discussed in the first week of March we sought starting primarily in the northwest Seattle Fred Hutch.
Washington that.
Alan brain, all announced some level of lab closures.
And then a span of the next seven days that basically swept across the country and in some cases they were measured they were given six days.
Seven days to shut down some cases it was literally.
Less than three days and then they in the Bay area around where we are it was essentially immediately it was a 24 hour.
And the last or shutdown on immediately.
That that those closures continued up through sort of the.
I'd say first weekend in April and then there was this low period I'll tell you is scary, but then abide by the second week in April to going into the third week, we started seeing a lot more activity. We saw people getting used to the fact that this was the new normal and then as we've gotten into sort of the second weaken may now we are actually.
And now you've seen labs to have opened primarily in the Midwest X.'s southeast and much much more activity as people are now contemplating.
Openings.
At the end demand in early June.
That's really helpful reference.
And your next question comes from Daypart, Luxembourg quick kind of kept securities.
Hi, Thank you for taking my question. So I am we do have to try to model. That's the best we can so what do you want to continue at that point on the 75% that was just asked as well I mean is there any kind of events that maybe we could track I mean is schools reopening in in the fall something that we maybe you can look at as.
Indicators that labs are opening and just trying to get a sense of.
The timing going forward and I get you've already been asked this five times, but just events that might might.
Trigger reopenings.
Yes, so they like an idea if we have the crystal ball about the when things were going to reopen around the world.
I think lukas being driven by the what fitbit and so in terms of molecule collection as far as like schools reopening. So much I mean, one thing I was the time distinguish is that.
Yes cools the school drilled uncompleted on I think that follows up labs will be opened widely in completely.
I will say that the even the schools don't be open.
The research work can continue to to could go on so the both us and aggressive as a sort of equipment they operate independent of the.
It's really the other population of the University the students the undergrads.
And and the other research environment tends to be pretty competitive so our view is that us.
Some signs has started getting back to work others will feel increased pressure to figure out how to started getting the experiments going as well.
It's hard to put up down until like precisely when different labs are going to be.
Opening up but the level of uncertainties on order.
One or two quarters as that level.
Yes.
Okay.
Our insist that whole get to that has the competitive nature of science and sometimes a who want then and we have our customers, calling asking who else is opening up when are they going to open up that that we share that information, but yet we're right on that precipice right now where we're labs are beginning to open and I think it's.
On a drive a lot of the momentum of other lapsed opened and again some in some parts of the decent world. There are certainly less impacted than others. So we'll see I think over the next three or four weeks it will be more clear.
That's that's very helpful. Actually so then I just want continue with one of tyco's questions about use an infectious disease I know that early generation droplet based on PCR technologies. For example can be used in low viral load situation. So you know as we're thinking about infectious disease. I mean is this maybe can you use on in R&D front.
To find out why certain technologies could not have handled viral loads I'm, just kind of getting a sense of how it could be used maybe more in infectious disease environment.
Yes.
Huge range of applications for sure I mean, I would say.
I would downplay maybe this dusting element of it but every other elemental trying to understand what is happening with the biology wide some patients get.
Mild symptoms wells others are the severe acute symptoms, how the sort of what does the actual biologist inspection how's vaccines.
You will create an immune response and patients all of that's really should be done and requires our product I don't think theres another way to get it again, the same clezio deal what's happening.
In any given patient so I think from that perspective on it and this is the full suite that certainly on new profiling solution is incredibly powerful we're seeing that.
And they made a difference a research projects, but the gene expression that.
The epigenetics and also now spatial products can play a part as well.
So again I will drive just kind of comprehensive understanding what's going on with the biologically disease of what's going with the biology of any individual patients as well.
Great. Thank you I'll just ask one last one can you remind us again on the expiration of the of the juice and I'm just kind of thinking about if labs are open for extended period of time I mean.
They would probably be empty in terms of consumables, assuming that you know your year six month, maybe is the expiration date on your consumables and just how do we think about that.
Yes, I think you're right on spot there is that three to six months the nature of very few of our customers actually essentially stock the products and these are out in the lab. We've already contemplated this NRT working to anticipate customers need, whereas there could be potential reagents that are out of date and how we'll deal with.
That so we thought about that quite a bit and actually trying to map out.
And certainly be there when when the startup happens if we got to get product to them.
Thank you very much.
Okay and there are no further questions I'll now turn the conference over to the company CEO for closing remarks.
I'll stay safe and thank you for joining us everyone.
Good bye.
Ladies and gentlemen. This concludes today's conference call. Thank you for participation you may now disconnect.
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