Q2 2021 Sophia Genetics SA Earnings Call

[music].

Good day, ladies and gentlemen, and thank you for standing by and welcome to the Sofia Genetics second quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will.

Need to press star one on your telephone.

Please be advised that today's conference may be recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today Caribbean Deville Investor Relations. Please go ahead.

Thank you.

Earlier today Sofia genomics released financial results for the quarter ended June 32021.

If you haven't received this news release.

Or if you'd like to be added to the Companys distribution list. Please send an email to IR at Sofia genetics dotcom.

Joining me today from 50 organic or Yogi Camborne, co founder and CEO and Ross <unk> CFO.

Before we begin I'd like to remind you that management will make statements. During this call that are forward looking within the meanings of the U S. Federal Securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated additional information.

Information regarding these risks and uncertainties appears in the section entitled cautionary statement regarding forward looking statements and exhibit 99.2 of their port on form 6K on file with the SEC.

Except as required by law, Sociogenetic disclaims any intention or obligation to update or revise any financial or product pipeline projections or other forward looking statements, whether because of new information future events or otherwise.

This conference call contains time sensitive information and is accurate only as of its broadcast September nine 2021 with that I'd like to turn the call over to your key.

Thank you Carrie and good morning, everyone I'm excited to be here today and welcome you to our first earnings call as a public company.

On today's call I will start with a brief overview of our company for those who are not familiar with our story next I will take you through the progress we have made during the second quarter and since our appeal at the end of July.

Finally, I will discuss our goals and objectives as we look ahead to the second milestone for 2021 and beyond.

I will then turn the call over to Ross for a more detailed look at our second quarter financial results and our outlook for the rest of 2021.

As many of you know we completed our initial public offering in July raising approximately $217 million in net proceeds before I get started I would like to take a moment to express my sincere. Thanks to the Sofia team for their continued hard work and execution without them none of these.

It would be possible.

Additionally, I would like to extend my gratitude to our investors on venue for their ongoing support and enthusiasm for the work we are doing here at <unk>.

We look forward to continuing to engage with all of you as we pursue our long term goals.

Before we get into the specifics of our progress I want to give you a sense of the vision that is driving us at Sofia.

Over the last decade, there has been an explosion in the amount of digital data generated by the healthcare industry.

Our ability to draw insights from this data led to an extra erection Indian understanding of biology and disease.

However, this data is being generated primarily using non standardized methods by clinicians and researchers across many Oscar institutions and as a result. These data is largely remain siloed, preventing it from being fully leverage for the benefit of patients.

Our Sofia, we have set out to change this.

<unk> created our Sofia platform, which sits in the cloud and uses AI and machine learning to analyze data sets to enable precision medicine in many hospital laboratory or Biopharma institution around the world. We operate in a decentralized model in which we supported our customers with data analytics need while ensuring.

That they keep custody of their samples and data with benefits from shared insights across our network.

We refer to the practice of drawing insights from complex data sets to improve diagnosis treatment and drug development data.

Data driven medicine.

Using data driven medicine, healthcare professionals, who payment their own X brands and intrusion with data insights and sharing knowledge from their peers to advice, our best course of action for their patients or research.

Our platform, we are unlocking data silos, leveraging AI to generate actionable insights from digital else data and helping us to professionals work together as a community and deployed our collective expertise for the benefit of patients around the world.

We believe the soft GAAP that from we've helped drive the decentralization of healthcare industry over time.

We're uniquely positioned to leverage this decentralization and serve hospitals that are transitioning their equipment to next generation sequencing machines as well as other diagnostic modalities into which we may spend in order to deliver precision medicine applications.

Today, we're enabling the use of data driven medicine for more than 780 client institutions across 72 countries.

Institutions produce data locally or platform ensures that our data into the cloud where it is computed using our appropriately.

<unk> learning algorithms.

We then leverage the output against previously collected data.

To provide insights to the customer our platform sits at the heart of the virtuous cycle of data generation, where data output is fed back into our database to generate even better insights.

This approach uniquely aligns our interest with those of our customers and patients.

Our platform is equipped to analyze data and generate insights from complex medical mobile data sets and different diagnostic modalities.

Today most of the data we work with is genomic data, we analyzed more than 20000 genomic profiles per month, and we have completed over 770000 genomic profiles on the Sofia platform since 2014.

To further expand and leverage the power of our platform. We are focused on five key objectives.

First expanding customer adoption with new clinical customers, especially in the United States second increasing utilization within our existing clinic customer base.

Third further advancing our platform to continue the innovation to increase its capabilities and broader applications for developing partnerships and collaborations across the healthcare ecosystem and fees leveraging our platform and data base to continue to drive adoption with biopharmaceutical.

<unk>.

We're making important progress across each of these dimensions of our business.

Starting with new customer adoption during the second quarter. We grew our total customer base to 780 customers up from 750 customers in the first quarter of this year, we're especially focused on growing the adoption of our platform in the U S market, which we view as our.

Largest addressable market opportunity.

To that end, we have recently began collaborating with wild Cornell medicine, one of the nation's top ranked Medicare and graduate schools 12 support comprehensive genomic research across her lap network or.

Our Sofia platform will collaborate with the Wild Cornell Medicine next generation sequencing laboratories to provide the management solution that we hope will streamline the vast amounts of related cloud data.

Well Cornell medicine, researchers hope to leverage our intuitive software platform to assess fully comprehensive data sets.

We believe our platform will help researchers quickly filter through genomic profile for variants of interests to dissect and discover details that can potentially lead to new medical research discoveries.

By advancing new technologies and data driven approaches in medicine, we are very proud to support 12, Cornell Medicine continued research success and journey towards better curve protocol.

I am excited by our growing partnerships with top tier institutions in the U S and across the globe and Im encouraged by our growing pipeline of potential customers with broad interest across our menu of applications.

There are continuing to raise awareness of benefits of data <unk> been ready to Tim and the expanded use of our platform through our direct sales force, our distributors and our collaborator of network.

As of the end of the second quarter, our direct sales team consisted of more than 80 field based commercial representatives, including sales and business development managers and key account managers and biopharma audience managers.

We also employ subject matter experts clinical genomic experts and buy your promo progression specialist will provide customer facing technical and scientific support.

We are continuing to invest heavily in our direct sales force in North America to further scale the size of our network. Both in terms of the number and types of new customers.

Now moving onto our second objective regarding the UTV sectional for our platform.

<unk> and land and expand commercial model that is focused on winning new customers like both Cornell medicine, and then driving greater utilization of our solution baidu customers.

Once we have secured the customer we use our direct sales force to build further engagement and outside customers profitably increased testing operations. We also target additional condition users and departments within each institution.

During the second quarter total recurring platform customers grew from 348 customers in the first quarter of this year to 367 customers.

Total number of analogies grew 16% quarter over quarter from 54000 ounces in Q1 to 63000 analysis in Q2.

This sequential growth is underpinned by growing demand from new customers as well as existing customers broadening their usage to a growing number of applications.

Now turning to our third objective related to menu expansion.

We're continuing to invest in scientific innovation to land, new customers and bring new high impact content to our customers through regular updates to our platform.

This menu expansion includes new features new applications, new data modalities and new services.

The more we intend to augment our offering across a multi modality framework generating novel insights, enabling by our expanding data sets, including genomic state that Roger mixed data clinical data and featured additional data model.

In early July we announced the addition of new comprehensive genomic profiling work for two hours Sofia platform.

This new data to report workflow is designed to maximize the utility.

The Illumina FDA Tso 500 assay by optimizing its data output for secondary analyses. The Sofia platform facilitates highly accurate detection of single nucleotide variant in Delta gene fusions and tumor mutational burden.

With expanded coverage of copy number variation in 495 genes and qualitative assessment of microsatellite instability benchmark to the PCR standard.

The Sofia platform for DSO 500 offers an accelerated assessment of genomic data. Thanks to reduction pre classification that is supported by advanced algorithms customizable filters and hotspot screen.

We're also excited to share the progress we've made on our novel NGF space envelope with recombination deficiency or HRD solution.

Cherokee is a complex biomarker, notably important for PARP inhibitors that helps identify whether it cancer patients may respond better to specific treatments and its use.

Eventually leads to personalized therapies that benefit the individual patients.

Our profit very smart and deep learning algorithms provide a unique approach for testing, both HRD, causing reductions and HRD in use genomic instability in a single engineers for borrowers.

Powered by our cloud based software platform the wall genome profile as analyzed by our proprietary deep learning model, which produces a genomic integrity index.

Development data generated from hundreds of samples have demonstrated high analytical performance compared to the reference method, we intend to initiate an early access program next month and are on track to launch the <unk> version of our HIV solution in early 2000 <unk>.

20 tools to support clinical research activities.

In oncology.

Moving beyond genomics to multimodal data, we're on track to launch our first <unk> sponsored clinical study.

Aimed deep lung for us in Q3 this year.

<unk> is an international multicenter vehicle to the rationale retrospective and prospective clinical study that will recruit 4000 patients diagnosed with metastatic stage four non small cell lung cancer in the first line of treatment setting.

The overall objective of this study is to be able to predict individual patient response to therapy and prognosis with baseline data by combining genomics radio mix chemical and biological data using advanced machine learning model.

The head of the strategy launch we have recently completed an important regulatory step related to data privacy and security having obtained the approval from one of the world's leading regulatory bodies.

We look forward to sharing further details related to this study later this year.

Moving on to our fourth objective of partnerships, we are committed to developing partnerships and collaborations across the healthcare ecosystem with companies, who provide products and services to our customers.

We believe that each new collaboration we develop helps facilitate further adoption of our platform. The evolution of the solution, we provide to customers and the growth of our network and product capabilities.

Large network enables us to continue to collaborate with customers to develop new solutions and to commercialize these solutions benefiting all users across the ecosystem.

To that end we.

We have recently announced the expansion of our partnership with <unk> to include a first decentralized HRD solution in Latin America.

<unk> is the largest integrated healthcare network in Brazil, serving more than 20 million patients per year.

This expanded partnership will load does that to offer local testing in accordance with original load and regulations, while retaining control of samples and data for rapid Russell's turnaround to cancer patients across Latin America.

Our work with Desert began five years ago, when they choose Sofia genetics to build the original brookstone for their genomic slab.

This partnership between 2020, when does that implemented our Sofia platform for radio mix and trail much solutions to create the first multi modality approach in the region.

With the recently announced expansion of the Sofia does that partnership.

<unk> will be able to offer the clearest decentralize HRD analytic solution in Latin America.

In Q2, we have also embarked on a co marketing agreement with <unk> to automate next generation sequencing or NGF library progression and analytics processes for cancer research.

Combining Archie Lance automated mcnamee, <unk> prep system and to select assets with the Sofia platforms AI powered analytical performance. This partnership broadens <unk> access to flexible oncology workforce and supports a diverse array of applications.

And finally, moving on to our Biopharma opportunity.

In these markets, we currently serve pharmaceutical and biotechnology companies and clinical research organizations or Crs. We continued to promote our current products and services, which we believe will strengthen existing collaborations with biopharmaceutical companies as well as the lead to new relationships.

Additionally, we plan to develop new offerings for Biopharma as we expand the number and type of new applications and data modalities on our platform.

For example earlier in this call I mentioned, our recently launched NGF space HRD solution or.

Already seeing strong interest in this solution across our biopharma customers.

We are initially focused on developing our solution using o'brien in breast cancer tissue types, but we believe other cancer types, including prostate pancreatic and bladder and retro biliary tract in head and neck cancers will require HRD testing.

These are being investigated using PARP inhibitors across the continuum of care in over 115 actively recruiting clinical trials as reported on Clinicaltrials Gov.

Conceptually our approach could also be relevant PARP inhibitors for other targets that are part of the HRD pathway and if mutated could lead to genomic instability.

I am pleased with our progress across the Biopharma landscape and we are now investing heavily to expand this team over the next 12 months to meet the growing demand for our services in this market segment, including our HIV offerings.

As we look ahead in 2021, we're focused on continuing to grow across these five pillars, particularly in the U S.

Overall.

I'm very proud of the progress our team has made to date and I am confident we are well positioned to execute our strategy going forward.

I would now like to hand, the call over to Russ to discuss our financial results Russ.

Thanks, Jeremy total revenue for the second quarter of 2021, with $12.0 million compared to $7.0 million for the second quarter of 2020, representing a 72% increase as a reminder, our second quarter revenues for 2020 were impact.

And by the global effects related to the COVID-19 pandemic the increase in revenue for the second quarter 2021 was primarily driven by new customers on boarded onto our platform and improve usage rates across our existing customers as COVID-19 related restrictions lesson.

Our strong growth during the quarter was underpinned by three key therapy eccentric kpis. They include platform analysis volume growth recurring platform customers and average revenue per platform customer.

Our core platform customer base is comprised of those who access our platform through our bundle and dry lab offering.

During the second quarter, we saw significant growth as we on boarded new customers through our land strategy and grew usage rates through our expand strategy.

That form analysis volume increased to approximately 63000 analyses in the second quarter of 2021 compared to approximately 31000 analyses in the second quarter of 2020.

Recurring platform customers grew to 367 customers in Q2 of 2021 compared to 320 customers in Q2 of 2020.

In addition, our average revenue per platform customer during the second quarter increased to 84000 compared to 65000 for the period prior.

Additionally, as a software company. We also track a number of industry specific Kpis, which we believe are also indicative of our underlying financial performance. These key software Kpis include net dollar retention churn rates and LTV to CAC ratio.

Even with the impact of Covid headwinds in 2020, our net dollar retention remains above 125%, which is competitive with top tier SaaS company.

Our metrics indicate that we are growing our revenue generated from existing customers net of churn highlighting the effectiveness of our expand strategy.

With respect to our churn rate I would note. It has returned to a historical low of less than 1% of total revenue for the first half of 2021.

Furthermore, our LTV to CAC ratio remains above the industry coveted three times threshold, demonstrating our ability to efficiently generate additional value through investment in customer acquisition.

Gross profit in the second quarter of 2021 with $8.0 million and.

An increase of 57% compared to a gross profit of $4 million.

In the second quarter of 2012.

Gross profit margin was 61% in the second quarter of 2021 as compared to 67% in the second quarter of 2020.

Adjusted gross margin was 62% in the second quarter of 2021 after accounting for the capitalization of our research and development expenses, which we expect to grow over time as we scale our R&D efforts the decline in gross margin.

Primarily attributable to increased computational and storage related costs and negative FX movements total operating expenses for the second quarter of 2021 were $24.0 million compared.

Compared to $11 million in the second quarter of 2020.

R&D expenses for the second quarter of 2021 were $10.0 million compared to $11.0 million the second quarter of 2020.

This increase was primarily driven by an increase in employee related expenses for R&D initiatives related to the development of new products and applications.

And marketing expenses for the second quarter of 2021 were $13.0 million.

Compared to $11.0 million in the second quarter of 2020.

The increase was primarily driven by an increase in head count related expenses commissions and sales related costs and higher variable expenses.

General and administrative expense for the second quarter of 2021 were $10.0 million compared.

Compared to $8.0 million in the second quarter of 2012. The increase was primarily driven by the continued scale up of our organization and the development of quality related initiatives to support a potential expansion of our business into more regulated market and additional costs associated would be cut.

And being a public company.

Operating loss in the second quarter of 2021 was $24.0 million.

Compared to $7 million in the second quarter of 2020.

Net loss in the second quarter of 2021 was $22.0 million or.

Or <unk> 38 per share compared to $16.0 million or <unk> 20 per share in the second quarter of 2012.

Adjusted net loss in the second quarter of 2021 was $15 million or <unk> 31 per share compared to $7 million or <unk> 18 per share in the second quarter of 2020.

We ended the second quarter of 2021 with approximately $64 million in cash and cash equivalent and short term deposits.

After quarter end, we completed our IPO on July 23rd raising approximately $243 million of gross proceeds yielding approximately $217 million in net proceeds when taking into account our underwriters' partial exercise of the overallotment opt.

And after deducting for estimated underwriting expenses and transaction and advisory fees.

Concurrent with the IPO. We also raised an additional $20 million in gross proceeds upon the completion of our private placement investment from an affiliate of GE healthcare.

Turning to our outlook for 2021, we expect our full year revenue to be in excess of $39 million representing.

Representing growth of over 37% compared to 2020 with that I'd like to turn the call back over to <unk> for closing remarks.

Thanks, Russ and so proud of what we have achieved that Sofia and even more excited about what lies ahead, we strongly believe that our Sofia Tech platform, we've transformed the precision medicine space.

Sitting on top of the data that is being produced for brake data silos across institutions instruments and modalities.

We're still at the onset of this journey and look forward to updating you on our progress.

With that we'll now open the call.

Call for questions operator.

<unk>.

Thank you as a reminder to ask a question you will need to press star one on your telephone.

To withdraw your question press the pound key.

And our first question comes from Doug Schenkel with Cowen Your line is open.

Yes.

Hi, good morning, and thank you for taking the questions.

I was just wondering if you could provide a little more detail on the mix of new customers by customer type and by geography.

And then also if you could comment on the mix of new folks that are using the full suite of offerings versus job element only.

Yes, Hello, Doug and thank you for your question.

So as you know and that we have customers all around the world right.

And right now we have in total 780 customers so moving from seven <unk> in the previous quarter. So the new customers. We added Doug our all platform customers and in terms of category. These are really primarily tier one academic centers like well coronary.

Maybe some in New York.

And.

From now.

What you could expect I would say in the future is that we continue experiencing the same type of.

Adoption with customers all around the world all being this kind of tier one academic centers using the platform and as you know primarily we're focusing as well on getting more adoption in the U S market.

Is the market, we see being the biggest for the feature making wildcard annuities really nice example of the type of customers. We can support in the U S market.

That's great and then maybe building off of that could you just talk about how things are progressing in terms of commercial and more broadly.

Any hiring initiatives that you have underway to really advance.

Your footprint in the United States, That's obviously a key area of focus.

Yes.

Try to replicate a lot of the success that you've had a globally, especially in Europe here in the United States House commercial and more broadly hiring progressing over the last three months.

Thank you the activity, we're very excited indeed to both the U S opportunity.

We started significantly investing in the U S. Two years ago and since then we've been able to attract.

I would say high quality customers, such as well Cornell.

And we are now investing.

Investing in the U S grow our market penetration to give you a sense seven months ago. We had 46 head counts in the U S and right now we have 85, Ed counts most of them being in these commercial people, but we are now what loan investing.

And our commercial activities.

Our technology teams, so basically engineers in Datacenters and along those lines to welcome. These new people, we are slow creeping our office space in Boston.

That's great and maybe one last one for probably both you and Ross.

If I'm doing what I think a simple math, but it's the coffee is still kicking in but.

I think if I look at your guidance it implies that you're expecting SEC.

Half of revenue that would be essentially kind of level with Q2 levels essentially taking the Q2 level.

Extrapolate for the second half, it's about flat I'm, just wondering what's the logic behind that.

And keeping in mind that the streets looking for 2022 revenue growth of over 30%, which would translate into revenue of around $50 million.

What would you expect it to be the key drivers to that type of growth.

The annualized run rate coming out of Q4 is closer to $40 million. Thank you.

No I think Q2, you for the question Doug.

So first taking a step back Doug I would like to say that I'm very excited about our Q2 performance and our overall 2021 growth.

When it comes to more details let me have Russ give you some more guidance.

Hi, Doug. Thanks for the question just to clarify one element of what you said in terms of our 2021 revenue guidance I want to make sure everyone. Understands this is not a point estimate right. This is a floor or a minimum.

And so with that I would also say.

And remind you that our model really a SaaS like in nature from a revenue standpoint, so it's incredibly visible.

So I think at this point, we found providing a minimum floor given where we are in the year and more sensible is the approach.

And obviously, we'll be very focused on driving very strong momentum in terms of future growth, obviously I'm not going to comment at this point on 2022 I will say.

Obviously as we mentioned in the script.

Our net dollar retention remains above 125%, that's excellent and Thats a very good forward leading indicator.

Additionally, I'm also very proud in the quarter of our commercial folks and what we did on new customers and our new customer momentum overall remains robust and so I think those two elements should give us give you some level of confidence for the second half of this year as well as beyond I'll also just sort of conclude with our.

Growth algorithm really has many levers.

Rest assured we are super focused on delivering strong performance across all of the elements of our land and expand strategy and we'll be back to you at a future date to update you on 2002.

Okay.

Well, thank you again.

Thank you Doug.

Thank you. Our next question comes from Tejas Savant with Morgan Stanley. Your line is open.

Hi, This is Hugo on the call for <unk>. Thank you for taking our questions would you elaborate on the recently announced GE healthcare collaboration and what impact.

Yeah versus medium term from from this collaboration.

Yes, good morning, Nucor and thank you for.

Your question so indeed.

You remember Sofia intends to break data say to us not only across institutions right. So the 780 customers that are using our platform.

As well across modalities and in particular in oncology, we envision that there's going to be very important to break data silos across genomics and radio mixed data to be able to characterize what is driving the cancer of sufficient by computing genomics data and then by looking at the radio make.

<unk> data for <unk>, making data longitudinally following this patient trying to ultimately and.

Eventually clustering patients and they have an idea of how future patients will be responding to a specific type of cancer treatment.

So in that context, the GE partnership for us, it's something that is pretty exciting.

I think is about $4 million imaging devices around the world and so this could be kind of catalyze here now where movements to democratize data driven the team around the world.

Great. Thank you for the color and then following up on the prior question on visibility would you comment on the visibility built into the business model and specifically what time Horizon would you say you have good visibility in terms of revenue projections.

Yes. Thank you for the question on <unk>, that's a very good question.

So as you will remember our Morgan, it's almost like assessed like recurring model right. So we kind of get more annuities.

And we are being paid on us so and the importance for us off.

Landing into new customers, but as well once we have landed into a customer like wild Cornell.

About getting utilization and were being paid each time patient data being added into the platform.

And so in that context. This is why as well beyond if you like.

Getting into one customer, adding more applications to this customer and expanding our menu of product capabilities is extremely important when it comes to the numbers.

Maybe Rob you can give some more color as well about our ability to predict forward looking at our performance I would note a majority of our revenue comes from our recurring platform customers right and those are using our platform day in and day out typically so.

So that tends to be on a trend basis.

It's visible in terms of predicting.

Future growth I would also say on average in terms of our setup times, they can be three or six months and obviously we are building a pipeline ahead of that right. So our visibility overall on the customer funnel.

From opportunity through close and then and then into launch and then into routine.

Given that timeframe, it's quite good right, so I would say.

Certainly there are elements that can be challenging to predict right in terms of patient volumes, particularly in a time period. When you have a pandemic at periods, we saw last year, but but overall I would say, it's quite a good degree of visibility and overall I think it's a really unique model relative to the.

The traditional life science space.

Great. Thank you so much.

Thank you. Thank you your call.

Thank you. Our next question comes from Katie <unk> with Credit Suisse. Your line is open.

Hi, Thanks for taking my question, maybe just moving to the gross margin I mean, how should we be thinking about that over the balance of the year and can you maybe parse out the impact of the cloud storage reservation system dynamics and how that works.

And I mean, just.

How do you plan for that in the future and how where do you expect gross margin although overtime.

Thank you for your question Kathy and good morning.

So first our gross margins are being pretty solid right.

For Q2, with 62% and of course as a company, we don't only wants to grow our revenue, but we wont disclose to make best use of our resources and the gross margins in data some seem that we consider as being important.

We're making a number of exports to continue to improve or sustainable gross margin at that level and maybe Russ are you could give some more color. There. Thank you. So I think as you think about this quarter right. The two most significant impacts for us where compute and storage costs.

And then FX actually so some of our cross country dynamics.

The key thing to remember for us is.

We typically plan well ahead for our expected volumes in terms of our reservation with our cloud provider right and so when we exceed our volume of analysis in a given period that incremental volume will then come at spot pricing, which tends to be materially above our reserve.

Pricing and so I think you saw that dynamic obviously impact us in this quarter I would also note from the prior year period, there was a comparable related to or a challenging comparable related to a biopharma contract we had in the prior year, but overall.

We can react relatively quickly to changes in demand and so rest assured as you think about our.

Trajectory post June.

We've already started to make some adjustments.

Relative to our reservations in the period so yes.

We are striving to obviously move that number back up.

I think in terms of the long term.

Mix and some of our newer initiatives, particularly biopharma will have a fairly significant impact on where that long term trajectory leads but suffice to say given the software nature of our business model. We continue to have very nice opportunity to move that gross margin up.

Over time, and that's going to be a focus, albeit in the near term I think.

The degree of expansion will be very much determined by the.

The pace of growth right and whether that fits within our plan or does not.

Okay got it that's helpful. And then and then maybe on the Biopharma side of the business.

Can you just speak to how those efforts are ramping up what your customer pipeline looks like and what sort of feedback you've been getting today, particularly given.

I think.

It is quite a competitive landscape on that front and maybe any changes you're seeing.

From competitors, there as well that'd be helpful. Thanks.

Yes, Thank you Kathy.

And so we are in a quite unique position right.

The network with fuel so the 780 connected those T cells, we gather over 20000 genomic profiles as you know for a month and so this gives us a beautiful position when it comes to serve the biopharma industry.

For pre approval efforts drug preapproval exports and so along those lines in the last weeks and months, we have seen increased.

Demand for our <unk> solutions.

But long term, we do see now as well new opportunities for example around the companion companion diagnostic assets.

And along those lines I think it's important as well to.

A reminder of what we have announced regarding these HIV capabilities right. This can be.

Eventually something significant considering that as I was mentioning they are already 150 clinical trials that are being ongoing around the world.

And that would require HRD related testing.

And that this may grow in the future as a PARP inhibitor is to take one example, maybe.

<unk> four cancers over ovarian and breast cancer. So I think all of that the position we've taken in the market. The data we gather and the new capabilities. We are building such as the HRD or so Chad along the deep lung for cancer.

We are anticipating to launch before end of the year are bringing us a lot of the <unk> towards our biopharma targets.

Okay, great. Thanks.

Thank you Kathy.

Our next question comes from Tycho Peterson with Jpmorgan. Your line is open.

Hi, Good morning. This is giuliano di Cowen Congrats on the quarter.

Just a quick.

A follow up regarding the churn rate, it's certainly great to see that and it's dropped.

Dropped to below 1% in the first half could you maybe comment on your confidence of how sustainable they are.

<unk> rate improvement is going forward.

Yes. Thank you for the question Julia.

So indeed as a.

That cap layer in the healthcare sector. They are really people.

I would say key performance indicators, we follow right. So one is how we expand the network of our customers do is how we grow this customers and hence the importance of the net dollar retention rate is.

Is <unk>.

The significant rate that Sofia with 120 type person. So this would place us really best in class in the SaaS World. The third one is the LTV CAC right the lifetime value of a customer divided by cost of acquisition because it gives us as well.

Our efficiency in basically winning new customers and as people can reading our S. One our LTV CAC, Russia, it's pretty optimal right now and the last one is the churn.

And so on the churn side overall.

We are being able to retain our customers.

A very good retention rate so over the last five years.

Cumulative net retention was 85% right. So basically the churn on a yearly basis, it's about 2%.

And considering we are growing quite significantly in terms of number of customers. Just remember remainder we ask now 30, new customers in a single quarter. This journey some seem that.

As well as best in class for SaaS companies.

I'd just add I would say sub 1% is exceptional right I think that would be.

Pretty challenging BARDA maintained but certainly we are seeing coming out of COVID-19 very favorable.

I'd say trend there, obviously, we saw a bit of an uptick last year.

When.

Hospitals were really challenged but I would say to <unk> point overall, if you think about our.

Quiet period.

Churn so that sub one or even if you think about that 85% that would be in the very highest tier of SaaS software performance and so again I would say.

In any given period some of these pieces can bump around but the key is that trend over time and I would say the metric I really want everyone to start to get more centered on is really that net dollar retention because that is probably the best indicator of kind of our forward momentum in the business and.

And it's something we are.

Very focused on internally in terms of consistently driving topline growth and just to make sure.

<unk> was taken by everyone listening to 85% we're talking about is on the three to five years right, So which means that between 2003 for attendance linearity basis.

Great.

And then a follow up on the GE partnership.

Help us think about the magnitude of the opportunity in long term and is that kind of an association to support your multi omics offering or is there a broader amortize partnership strategy outside of GE.

Okay.

So on <unk>, it's too early right.

We have said that this is.

A partnership on.

And progress the final agreement has not yet been signed but we are super excited about it.

He is one of the.

Main azure players in the field of medical devices.

And we.

We know that at least in cancer to build the future of AWS medicine, NBA bolt basically to kind of close to a patient to give a better perspective on guidance to oncologists on what type of treatments may eventually their workforce.

Efficient imaging data in particular loan using our data are very important. So it is in that sense that we are very excited about the potential <unk> partnership our teams have been working very closely over the last weeks.

And we hope that we're going to be able to realize this partnership with a final agreement.

The next months.

I would say, obviously, we're not going to give any.

Financial expectations around it but I think the.

<unk> GE speaks for itself in terms of its global commercial footprint and obviously for US. This is a terrific partner and one we're incredibly excited about and then beyond that Julia Indeed, as you mentioned the partnership are some senior debt are very important for Sofia right.

As a as a SaaS platform player in the field of documents in precision medicine, we don't intend to do everything by ourselves, we rather intends to leverage on what the other is unknown and along those lines as well as the co marketing agreement, we announced with agile and for the comprehensive.

Genomic profiling is something that is very important because this.

Those partnership enabled us as well to cover more needs out there in the market and so better in support of <unk> and it is along those lines as well as we have announced the efforts we've made.

On the on the same type of applications on the Illumina <unk> under that set.

That's one where we are today and <unk> seen that as well.

Yes.

Sales pipeline that is being a growing up.

Great. Thank you.

Welcome and thank you to you today.

Thank you and there are no further questions in the queue I'd like to turn the call back to <unk> for closing remarks.

So I would like to thank you all very much this left for us our first earning call and we're pretty excited to be in the journey of being a public company.

And with that said I would like to wish you to have a great day. Thank you all.

This concludes today's conference call. Thank you for participating you may now disconnect.

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Yes.

Okay.

Yes.

Yes.

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Good day, ladies and gentlemen, and thank you for standing by and welcome to the Sofia Genetics second quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star.

One on your telephone.

Please be advised that today's conference may be recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today, Gary Mandel Investor Relations. Please go ahead.

Thank you.

Earlier today. So if you didn't have extra released financial results for the quarter ended June 32021.

If you haven't received the news release or if you'd like to be added to the company's distribution list. Please send an email to IR at Sofia genetics dotcom.

Joining me today from 50, Oceanic art Gergen, Camborne co founder and CEO and Rocky Okay CFO.

Before we begin I'd like to remind you that management will make statements. During this call that are forward looking within the meaning of the U S. Federal Securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.

Additional information regarding these risks and uncertainties appears in the section entitled cautionary statement regarding forward looking statements and exhibit 99.2 of the report on form 6K on file with the SEC.

Except as required by law Sofia genetics disclaims any intention or obligation to update or revise any financial product pipeline projections or other forward looking statements, whether because of new information future events or otherwise.

This conference call contains time sensitive information and is accurate only as of the broadcast September nine 2021.

I'd like to turn the call over to yorkie.

Thank you Carrie and good morning, everyone I'm excited to be here today and welcome you to our first earnings call as a public company.

On today's call I will start with a brief overview of our company for those who are not familiar with our story next time, we can take you through the progress we have made during the second quarter and since our IPO at the end of July.

Finally, I will discuss our goals and objectives as we look at the cycle now for 2021 and the guidance I will.

And then turn the call over to Rob for a more detailed look at our second quarter financial results and outlook.

Outlook for the rest of 2020.

As many of you know we completed our initial public offering in July raising approximately $217 million net proceeds before I get started I would like to take a moment to express my sincere. Thanks to the Sofia team for their continued hard work and execution.

Then none of this would be possible.

Additionally, I would like to extend my gratitude to our investors for their ongoing support and enthusiasm for the work we are doing here at <unk>.

We look forward to continuing to engage with.

All of you as we pursue our long term goals.

Before we get into the specifics of our progress he wants to give you a sense of the vision that is driving that.

Over the last decade, there has been an explosion in the amount of digital data generated healthcare industry the ability to draw insights from this data led to an extra Russia Indian understanding of biology and disease.

However, this data is being generated primarily using non standardized methods by clinicians and researchers across many illustrate institutions and as a result of these data largely remain siloed, preventing it from being fully leverage for the benefit of patients.

Our Sofia, we have set out to change. This we have created our Sofia platform, which sits in the cloud and usage.

And her name to analyze data sets to enable precision medicine in any hospital laboratory or Biopharma institution around the world. We operate in a decentralized model in which we supported our customers with data analytics needs, while ensuring that they keep custody of their samples and data but benefit from.

Sure the insights across our network, we referred to the practice of drawing insights from complex data sets to improve diagnosis treatment and drug development as data driven medicine.

Using data driven medicine as care professionals, who payment their own experience and nutrition with <unk>.

Data insights and sharing knowledge from their peers to advise the best course of action for their patience our research through our platform. We are unlocking data silos, leveraging AI to generate actionable insights from digital real estate and helping us care professionals work together as a community and deploy either a collective expert.

For the benefit of patients around the world.

We believe this will keep that from we've helped drive the decentralization of healthcare industry over time.

We're uniquely positioned to leverage this decentralization and hospitals that are transitioning their equipment to next generation sequencing machines as well as other diagnostic modalities into which we may expand in order to deliver precision medicine applications.

Today, we are enabling the use of data driven medicine for more than 780 client institutions across 72 countries.

Institutions produce data locally or platform interest their data into the cloud.

It is computed using our appropriate.

And the machine learning algorithms.

We then leverage the output against previously collected data analysis to provide insight to the customer.

<unk> sits at the heart of the virtuous cycle of data generation, where data output is fed back into our database to generate even better insights.

This approach uniquely aligns our interest with those of our customers and patients.

Our platform is equipped to analyze data and generate insights from contracts Medicare mobile data sets and different diagnostic modalities.

Today most of the data we work with is genomic data, we analyze more than 20000 genomic profiles per month, and we have completed over 770000 genomic profiles on the Sofia platform since 2014.

To further expand and leverage the power of our platform. We are focused on five key objectives.

First expanding customer adoption with new clinical customers, especially in the United States second increasing utilization within our existing clinics.

Some of our base.

Third further advancing our platform to continue the innovation to increase its capabilities and broader and subsea questions for developing partnerships and collaborations across the healthcare ecosystem and leveraging our platform and database to continue to drive adoption with biopharmaceutical.

Concrete.

We're making important progress across each of these dimensions of our business.

Starting with new customer adoption during the second quarter. We grew our total customer base to 780 customers up from 750 customers in the first quarter of this year, we're especially focused on growing the adoption of our platform in the U S market, which we view as our.

Largest addressable market opportunity.

To that end, we have recently begun collaborating with wild Cornell medicine, one of the nation's top ranked medical and graduate schools 12 support comprehensive genomic research across through our lab network. Our Sofia platform, we collaborate with the Wild Cornell Medicine next generation sequencing laboratories.

To provide the management solution that we hope will streamline the vast amounts of related cloud data.

Well Cornell medicine, researchers hope to leverage our intricate Sofia black firm to assess fully comprehensive data sets. We believe our platform will help researchers quickly future through genomic profile for variants of interest to dissect and discover details that can potentially lead to new medical research.

Discoveries.

By advancing new technologies and data driven.

Approaches in medicine, we are very proud to support <unk> continued research success and journey towards better curve profile.

I am excited by our growing partnerships with top tier institutions in the U S and across the globe and I'm encouraged by our growing pipeline of potential customers with broad interest across our menu of applications for our continuing to raise awareness of benefits of data <unk>.

And the expanded use of our platform through our direct sales force, our distributors and our collaborator of network.

As of the end of the second quarter, our direct sales team consisted of more than 80 field based commercial representatives, including sales and business development managers and key account managers and biopharma audience managers.

We also employ subject matter experts clinical genomic experts in biopharma or progression, especially will provide customer facing technical and scientific support.

We are continuing to invest heavily in our direct sales force in North America to further scale the size of our network. Both in terms of the number and types of new customers.

Now moving onto our second objective regarding the UTV session of our platform, we employ a land and expand commercial and without that is focused on winning new customers like both Cornell medicine, and then driving greater utilization of our solution baidu customers.

Once we have secured the customer we use our direct sales force to build further engagement and outside customers profitably increased testing of impressions. We also target additional clinician users and departments within each institution.

During the second quarter total recurring platform customers grew from 348 customers in the first quarter of this year to 367 customers.

Total number of analogies grew 16% quarter over quarter from 54000 in Q1 to 63000 analyzers in Q2.

This sequential growth is underpinned by growing demand from new customers as well as existing customers broadening their usage to a growing number of applications.

Now turning to our third objective related to menu expansion.

We're continuing to invest in scientific innovation to land, new customers and bring new high impact content to our customers through regular updates to our platform.

Additionally, new expansion includes new features new applications and data modalities and new services.

The more we intend to augment our offering across a multi modality framework generating novel insights, enabling by our expanding data sets, including genomics a director mixed data clinical data and featured additional data.

In early July we announced the addition of new comprehensive genomic profiling work so two hours Sofia platform.

This new data to report workflow is designed to maximize the utility.

The Illumina FDA Tso 500 assay by optimizing its data output for secondary analyses. The Sofia platform facilitates highly accurate detection of single nucleotide variant in Delta gene fusions and tumor mutational burden with expanded coverage of copy number variation in 495 change.

And qualitative assessments of microsatellite instability benchmark to the picture of standards.

The Sofia platform for DSO 500 offers and an accelerated assessment of genomic data. Thanks to reduction in pre classification that is supported by advanced algorithms customer example, filters and hotspot screen.

We're also excited to share the progress we made on our novel NGF space envelope with recombination deficiency or HRD solution.

<unk> is a complex biomarker, notably important for PARP inhibitors that helps you densify, whether it cancer patients may respond better to specific treatments and its use.

Ultimately leads to personalized therapies that benefits the individual patients.

Our proprietary smart in deep learning algorithms provide a unique approach for testing, both HRD, causing mutations and HRD induced genomic instability in a single LNG exports.

Powered by our cloud based software platform the wall genome profiling analyzed by our proprietary deep learning model, which produces a genomic integrity index.

Development data generated from hundreds of samples have demonstrated high analytical performance compared to the reference methods. We intent to initiate an early access program next month and are on track to launch the <unk> version of our HIV solution in early 'twenty.

20 tools to support clinical research activities.

In oncology, we're moving beyond genomics to multimodal data we're on track to launch our first <unk> sponsored clinical study named deep lung for it in Q3 this year.

<unk> is an international multicenter vehicle to the rationale retrospective and prospective clinical study that will recruit 4000 patients diagnosed with metastatic stage four non small cell lung cancer in the first line of treatment setting.

The overall objective of this study is to be able to predict individual patient response to therapy and prognosis with baseline data by combining genomics radio mix chemical and biological data using advanced machine learning models.

Ahead of this launch we have recently completed an important regulatory step related to data privacy and security having obtained the approval from one of the world's leading regulatory bodies.

We look forward to sharing further details related to this study later this year.

Moving on to our fourth objective of partnerships, we are committed to developing partnerships and collaborations across the healthcare ecosystem with companies, who provide products and services to our customers.

We believe that each new collaboration we did lap helps facilitate further adoption of our platform. The evolution of the solution, we provide to customers and the growth of our network and product capabilities.

A large network enables us to continue to collaborate with customers to develop new solutions and to commercialize these solutions benefiting all users across the ecosystem.

To that end we.

We have recently announced the expansion of our partnership with <unk> to include our first decentralized HRD solution in Latin America.

<unk> is the largest integrated healthcare network in Brazil, serving more than 20 million patients per year.

This expanded partnership will load does that to offer local testing in accordance with original load and regulation, while retaining control of samples and data for rapid Russell turnaround to cancer patients across Latin America.

Our work with does that began five years ago, when they choose for Piet genetics to build the original brookstone for their genomic slab.

This partnership between 2020, when does that implemented our software platform for radio mix and trail much solutions to create the first multi modality approach in the region.

With the recently announced expansion of the Sofia does that partnership.

<unk> will be able to offer it to Chris to decentralize HRD analytic solution in Latin America.

In Q2, we have also embarked on a co marketing agreement with <unk> to automate next generation sequencing or NGF library progression and analytics processes for cancer research.

Combining Archie Lance automated macanese, mgs prep system and to select assets with the Sofia platforms AI powered analytical performance. This partnership broadens <unk> access to flexible oncology workflows and support a diverse array of applications.

And finally, moving on to our Biopharma opportunity.

In these markets, we currently serve pharmaceutical and biotechnology companies and clinical research organizations or Crs. We continued to promote our current products and services, which we believe we strengthened existing collaboration suite biopharmaceutical companies as well as the lead to new relationships.

Additionally, we plan to develop new offerings for Biopharma as we expand the number and type of new applications and data modalities on our platform.

For example earlier in this call I mentioned, our recently launched NGF space HRD solution.

Already seen strong interest in this solution across our biopharma customers.

We are initially focused on developing our solution using o'brien in breast cancer tissue types, but we believe other cancer types, including prostate pancreatic and bladder and ritual biliary tract in head and neck cancers will require HRD testing.

These are being investigated using PARP inhibitors across the continuum of care in over 115 actively recruiting clinical trials as reported on Clinicaltrials Gov.

Conceptually our approach could also be relevant.

Any research for other targets that are part of the HRD pathway and each mistake it could lead to genomic instability.

I am pleased with our progress across the Biopharma landscape and we are now investing everyday to expense. This team over the next 12 months to meet the growing demand for our services.

<unk> segment, including our HRD offerings.

As we look ahead in 2021 were.

We're focused on continuing to grow across these five pillars, particularly in the U S.

Overall I'm very proud of the progress our team has made to date and I am confident we are well positioned to execute our strategy going forward.

I would now like to hand the call.

Over to Ross to discuss our financial results Russ.

Thanks, Jeremy total revenue for the second quarter of 2021, with $12.0 million compared to $7.0 million for the second quarter of 2020, representing a 72% increase as a reminder, our second quarter revenues for 2020 were impacted.

By the global effects related to the COVID-19 pandemic the.

The increase in revenue for the second quarter 2021 was primarily driven by new customers on boarded onto our platform and improved usage rates across our existing customers as COVID-19 related restrictions lesser.

Our strong growth during the quarter with underpinned by three key <unk> centric Kpis. They include platform analysis volume growth recurring platform customers and average revenue per platform customer.

Our core platform customer base is comprised of those who access our platform through our bundle and dry lab offering.

During the second quarter, we saw significant growth as we on boarded new customers through our land strategy and grew usage rates through our expand strategy.

Platform analysis volume increased to approximately 63000 in Dallas in the second quarter of 2021 compared to approximately 31000 analyses in the second quarter of 2020.

Recurring platform customers grew to 367 customers in Q2 of 2021 compared to 320 customers in Q2 of 2020.

In addition, our average revenue per platform customer during the second quarter increased to 84000 compared to 65000 for the period prior.

Additionally, as a software company. We also track the number of industry specific Kpis, which we believe are also indicative of our underlying financial performance.

These key software Kpis include net dollar retention churn rates and LTV to CAC ratio.

Even with the impact of Covid headwinds in 2020, our net dollar retention remains above 125%, which is competitive with top tier SaaS company.

<unk> indicates that we are growing our revenue generated from existing customers net of churn highlighting the effectiveness of our expand strategy.

Respect to our churn rate I would note. It has returned to a historical low of less than 1% of total revenue for the first half of 2021. Furthermore, our LTV to CAC ratio remains above the industry coveted three times threshold, demonstrating our ability to.

Additionally, generate additional value through investment in customer acquisition.

Gross profit in the second quarter of 2021 with $8.0 million.

An increase of 57% compared to a gross profit of $4 million in the second quarter of 2012.

Gross profit margin was 61% in the second quarter of 2021 as compared to 67% in the second quarter of 2020.

Adjusted gross margin was 62% in the second quarter of 2021 after accounting for the capitalization of our research and development expenses, which we expect to grow over time as we scale our R&D efforts the decline in gross margin.

Primarily attributable to increased computational and storage related costs and negative FX movements total operating expenses for the second quarter of 2021 were $24.0 million.

Compared to $11 million for the second quarter of 2020.

R&D expenses for the second quarter of 2021 were $10.0 million compared to $11.0 million in the second.

Second quarter of 2020.

This increase was primarily driven by an increase in employee related expenses for R&D initiatives related to the development of new products and applications.

Sales and marketing expenses for the second quarter of 2021 were $13.0 million.

Compared to $11.0 million in the second quarter of 2020.

The increase was primarily driven by an increase in head count related expenses commissions and sales related costs and higher variable expenses.

General and administrative expense for the second quarter of 2021 were $10.0 million compared to $8.0 million in the second quarter of 2012. The increase was primarily driven by the continued scale up of our organization and the development of quality related initiatives to support a potential <unk>.

Spansion of our business into more regulated market.

And additional costs associated with becoming a public company.

Operating loss in the second quarter of 2021 was $24.0 million.

Compared to $7 million in the second quarter of 2020 net loss in the second quarter of 2021 was $22.0 million.

Or <unk> 38 per share compared to seven $9 million or <unk> 20 per share in the second quarter of 2012.

Adjusted net loss in the second quarter of 2021 was $15 million or <unk> 31 per share compared to $7 million or <unk> 18 per share in the second quarter of 2020.

We ended the second quarter of 2021 with approximately $64 million in cash and cash equivalents and short term deposits.

After quarter end, we completed our IPO on July 23rd raising approximately $243 million of gross proceeds yielding approximately $217 million in net proceeds when taking into account our underwriters' partial exercise of the over allotment option.

And after deducting for estimated underwriting expenses and transaction and advisory.

In current with the IPO. We also raised an additional $20 million in gross proceeds upon the completion of our private placement investment from an affiliate of GE healthcare.

Turning to our outlook for 2021, we expect our full year revenue to be in excess of $39 million.

Representing growth of over 37% compared to 2020 with that I'd like to turn the call back over to <unk> for closing remarks.

Thanks, Russ Im so proud of what we have achieved that sop, yet and even more excited about what lies ahead, we strongly believe that our Sofia Tech platform, we've transformed a precision medicine space.

Sitting on top of the data that is being produced break data silos across institutions instruments and modalities.

We're still at the onset of this journey and look forward to updating you on our progress.

With that we'll now open up the call for questions operator.

Yes.

Thank you as a reminder to ask a question you'll need to press star one on your telephone.

To withdraw your question press the pound key.

And our first question comes from Doug Schenkel with Cowen Your line is open.

Yes.

Hi, good morning, and thank you for taking the questions.

I was just wondering if you could provide a little more detail on the mix of new customers by customer type and by geography.

And then also if you could comment on the mix of folks that are using the full suite of offerings versus job element only.

Yes, Hello, and thank you for your question.

As you know and that we ask customers all around the world right.

And right now we have in total 780 customers so moving from seven <unk> in the previous quarter.

So the new customers, we added Doug or Pat.

Platform customers and in terms of categories. These are really primarily tier one academic centers like wild Cornell Medicine in New York.

And.

From now.

What you could expect I would say in the future is that we continue.

<unk> is experiencing the same type of.

Adoption with customers all around the world all being these kind of tier one academic centers using the platform and as you know primarily.

Kissing as well on getting more adoption in the U S market.

Is the market, we see it being the biggest for the feature making world coronary is really a nice example of the type of customers. We can support in the U S markets.

That's great and then maybe building off of that could you just talk about how things are progressing in terms of commercial and more broadly.

Any hiring.

<unk> that you have underway to really advance.

Your footprint in the United States, That's obviously a key area of focus.

To try to replicate a lot of the success that you've had globally, especially in Europe here in the United States House commercial and more broadly hiring progressing over the last three months.

Yes. Thank you that actually we're very excited indeed, the vote the U S opportunity.

We started significantly investing in the U S. Two years ago and since then we've had been able to attract.

Very I would say high quality customers, such as well Cornell.

And we are now.

Investing in the U S growth our market penetration to give you a sense seven months ago. We had 46 head counts in the U S and right now we have 85 S counts most of them being in these commercial people, but we are now what's loan investing.

Beyond our commercial activities.

Our technology teams, so basically engineers and data scientists and along those lines to welcome. These new people, we are as well keeping our office space in Boston.

That's great and maybe one last one for probably both you and Ross.

If I'm doing what I think is simple math, but it's the coffee is still kicking in.

I think if I look at your guidance it implies that you're expecting second half revenue that would be essentially kind of level with Q2 levels essentially taking the Q2 level.

If you extrapolate from the second half it's about flat.

Just wondering what's the logic behind that.

And keeping in mind that the streets looking for 2022 revenue growth of over 30%, which would translate into revenue of around $50 million.

What would you expect to be the key drivers to that type of growth.

The annualized run rate coming out of Q4 is closer to $40 million. Thank you.

Thank you to you for the question Doug.

First taking a step back Doug I would like to say that I'm very excited about our Q2 performance and our overall 2021 growth.

When it comes to more details let me have Russ gives you some more guidance.

Doug Thanks for the question just two.

Verify one element of what you said in terms of our 2021 revenue guidance I want to make sure everyone. Understands this is not a point estimate right. This is a floor or a minimum.

And so with that I would also say.

And remind you that our model really SaaS like in nature from a revenue standpoint, so it's incredibly visible right. So I think at this point, we found providing a minimum floor given where we are in the year more sensible is the approach.

And obviously, we'll be very focused on driving very strong momentum in terms of future growth, obviously I'm not going to comment on this point on 2022 I will say.

Obviously as we mentioned in the script.

Our net dollar retention remains above 125%, that's excellent and that's a very good forward leading indicator.

Additionally, I'm also very proud in the quarter of our commercial folks and what we did on new customers and our new customer momentum overall remains robust and so I think those two elements should give this really gives you some level of confidence for the second half of this year as well as beyond I'll also just sort of conclude with <unk>.

The growth algorithm really has many levers.

Rest assured we are super focused on delivering strong performance across all of the elements of our land and expand strategy and we'll be back to you at a future date to update you on 2002.

Okay.

Helpful. Thank you again.

Thank you Doug.

Thank you. Our next question comes from Tejas Savant with Morgan Stanley. Your line is open.

Hi, This is Hugo on the call for <unk>. Thank you for taking our questions would you elaborate on the recently announced GE healthcare collaboration and what impact you envision your versus medium term from from this collaboration.

Yes. Good morning, Thank you for.

Your question.

So indeed.

You remember Sofia intends to bring data silos not only across institutions right. So the 780 customers that are using our platform, but as well across modalities.

In particular in oncology, we envision that there's going to be very important to break data sales also across genomics and radio mixed data to be able to characterize what is driving the cancer a sufficient by computing genomics data and then by looking at the radio mix data, making data.

Generally following this patient trying to EBIT may to the end.

Eventually clustering patients and have an idea of how future patients will be responding to a specific type of cancer treatments.

So in that context, the GE partnership for us, it's something that is pretty exciting.

I think is about $4 million imaging devices around the world and so this could be kind of catalyze area now where movements to democratize data driven the team around the world.

Great. Thank you for the color and then following up on the prior question on visibility would you comment on the visibility built into the business model and specifically what time Horizon would you say you have good visibility in terms of revenue projections.

Yes. Thank you for the question on <unk>, that's a very good question.

So as you remember our model, it's almost like a SaaS like recurring model right. So we kind of get more annuities.

And we are being paid on us so and the importance for us off.

Landing into new customers, but as well once we have landed into a customer like wild Cornell.

About getting utilization and were being paid each time patient data being added into the platform.

And so in that context. This is why as well beyond if you like.

Getting into one customer, adding more applications to this customer and expanding our menu of product capabilities is extremely important when it comes to the numbers.

Maybe Rob you can give some more color as well about our ability to predict forward looking performance, yes, I would note a majority of our revenue comes from our recurring platform customers right and those are using our platform day in and day out typically so.

So that tends to be on a trend basis.

<unk> visible in terms of predicting.

Future growth.

Also say on average in terms of our setup times, they can be three or six months and obviously we are building a pipeline ahead of that right. So our visibility overall on the customer funnel from opportunity through close and then and then into launch and then into routine given that time.

Frame, it's quite good right, so I would say.

Certainly there are elements that can be challenging to predict right in terms of patient volumes, particularly in a time period. When you have a pandemic at periods, we saw last year, but but overall I would say, it's quite a good degree of visibility and overall I think it's a really unique model.

<unk> to the traditional life science space.

Great. Thank you so much.

Thank you.

Do you recall.

Thank you. Our next question comes from Katie <unk> with Credit Suisse. Your line is open.

Hi, Thanks for taking my question, maybe just moving to the gross margin I mean, how should we be thinking about that over the balance of the year and can you maybe parse out.

The cloud storage reservation system dynamics, and how that works.

I mean just.

How do you plan for that in the future and how where do you expect gross margin to go over time. Thanks.

Thank you for your question Kathy and good morning.

First our gross margins are being pretty solid right over Q2, with 62% and of course as a company. We don't only wants to grow our revenue, but we want to slow to make best use of our resources and the gross margin is indeed that some seem that we consider are being in the <unk>.

We're making a number of forward to continue to improve or sustain our gross margin at that level and maybe Russ are you could give some more color. There. Thank you. So I think as you think about this quarter right. The two most significant impacts for us were computing storage costs.

And then FX actually so some of our cross country dynamics.

The key thing to remember for us is.

We typically plan well ahead for our expected volumes in terms of our reservation with our cloud provider right and so when we exceed our volume of analysis in a given period that incremental volume will then come at spot pricing, which tends to be materially above.

Our reserve pricing and so I think you saw that dynamic obviously impact us in this quarter I would also note from the prior year period, there was a comparable related to or a challenging comparable related to a biopharma contract we had in the prior year, but overall.

Yes, we can react relatively quickly to changes in demand and so rest assured as you think about our.

Trajectory post June.

We've already started to make some adjustments.

<unk> to our reservations in the period so.

We are striving to obviously move that number back up.

I think in terms of the long term.

Mix and some of our newer initiatives, particularly biopharma will have a fairly significant impact on where that long term trajectory leads but suffice to say given the software nature of our business model. We continued to have very nice opportunity to move that gross margin up over time, and that's going to be.

Focus, albeit in the near term I think.

The degree of expansion will be very much determined by.

The pace of growth right and whether that fits within our plan or does not.

Okay got it that's helpful. And then and then maybe on the Biopharma side of the business.

Can you just speak to how.

All of those efforts are ramping up what your customer pipeline looks like and what sort of feedback <unk> been getting today, particularly given.

I think.

It is quite a competitive landscape on that front and maybe any changes you're seeing.

Yes from competitors, there as well that'd be helpful. Thanks.

Yes, Thank you Kathleen.

And so we are in a quite unique position right. We've been network, we fueled so the 780 connected those peak hours.

We gather over 20000 genomic profiles. So as you know for a month and so this gives us a beautiful position when it comes to serve the biopharma industry.

For pre approval therefore, it struck preapproval exports and so along those lines in the last weeks and months, we have seen increased.

Demand for our Tri unmatched solutions.

But long term, we do see now as well new opportunities for example around the world.

Companion diagnostic asset.

And along those lines I think it's important as well too.

Remind what we have announced regarding these HIV capabilities right.

B.

Eventually something significant considering that as I was mentioning they are already 150 clinical trials that are being ongoing around the world.

And that require HRD related testing.

And that this may grow in the future.

PARP inhibitors to take one example.

May be.

Used for cancers, other ovarian and breast cancer. So I think all of that the position we've taken in the market. The data we gather and the new capabilities. We are building such as the HRD or so Chad along the deep lung cancer.

B that we are anticipating to launch before end of the year are bringing us a lot of the <unk> towards our biopharma targets.

Okay, great. Thanks.

Thank you Kathy.

Our next question comes from Tycho Peterson with Jpmorgan. Your line is open.

Hi, Good morning. This is Julian on for Tycho and congrats on the quarter.

Just a quick follow up regarding the churn rate, it's certainly great to see that and it's dropped to below 1% in the first half could you maybe comment on your confidence of how sustainable this.

Our rating improvement is going forward.

Okay.

Yes. Thank you further question Julia.

So indeed as a.

Tech player in the healthcare sector. They are immediately Paul.

I would say key performance indicators, we follow right. So one is how we expand the network of our customers do is how we grow this customers and hence the importance of the menthol retention, which is pretty significant <unk> hundred 20 type person.

So this would place us really best in class in the SaaS World. The third one is the LTV CAC right the lifetime value of a customer divided by cost of acquisition because it gives us as well.

Our efficiency.

<unk>, winning new customers and as people can really now we're at town F. One our LTV CAC, Russia, it's pretty optimal right now and the last one is our churn.

And so on the churn side overall.

We are being able to retain our customers we have a very good retention rates. So over the last five years. The cumulative net retention was 85% right. So basically the churn on a yearly basis.

<unk> two <unk>.

And considering we are growing quite significantly in terms of number of customers just because remember remainder we ask now 30, new customers in a single quarter Eastern you said some seem that it's.

As well as best in class for SaaS companies.

I'd just add I would say sub 1% is exceptional right I think that would be.

Pretty challenging bar to maintain but certainly we are seeing coming out of COVID-19 very favorable I would say trend. There obviously, we saw a bit of an uptick last year.

When.

Hospitals were really challenged but I would say to your point overall, if you think about our.

Quiet period.

So that sub one or even if you think about that 85% that would be in the very highest tier SaaS software performance and so.

Again, I would say.

In any given period some of these pieces can bump around but the key is that trend over time and I would say the metric I really want everyone to start to get more centered on is really that net dollar retention because that is probably the best indicator of kind of our forward momentum in the business.

And it's something we are very.

Very focused on internally in terms of consistently driving topline growth and just to make sure.

The point is well taken by everyone listening is at 85%. We're talking about is on the period of five years, right, So which means that between 2003 for attendance linearity basis.

Great.

Then a follow up on the GE partnership can you help us think about the magnitude of the opportunity in the long term.

And is that kind of mean association to support your multi omics offering or is there a broader amortize all makes partnership strategy outside of GE.

Yes.

So on <unk>, it's too early right.

We have said that this is.

The partnership.

And progress the final agreement has not yet been signed but we are super excited about it.

<unk> is one of the.

Main azure players in the field of medical devices.

And.

We know that at least in cancer to build that feature of AWS <unk> NBA, both the key to kind of cluster patients to give a better perspective, our guidance to oncologists on what type of treatments may eventually their workforce.

Efficient imaging data in particular loans. These are very important. So it is in that sense that we are very excited about the potential <unk> partners shape. Our teams have been working very closely over the last weeks.

And we hope that we're going to be able to materialize. This partnership with the final agreement.

The next month's piece.

I'd say, obviously, we're not going to give any.

Financial expectations around it but I think the name of GE speaks for itself in terms of its global commercial footprint and obviously for US. This is a terrific partner and one we're incredibly excited about and then beyond that Juliet. Indeed as you mentioned the partnership are some senior debt are very.

Important for Sofia right.

As a SaaS platform player in the field of documents in precision medicine, we don't intend to do everything by ourselves, we rather intends to leverage on what the others up known and along those lines as well as the co marketing agreement, we announced with <unk> for the comprehensive.

Genomic profiling is something that is very important because.

Those partnership enabled us as well to cover more needs out there in the market and so whether it's <unk> and it is along those lines as well as we have announced the efforts we've made.

On the same type of applications on the Illumina FDA, so five under that tent.

That's one where we are today and <unk> seen as well.

Yes.

Sales pipeline that is being a growing up.

Alright, thank you.

Welcome and thank you for you to GAAP.

Thank you and there are no further questions in the queue I'd like to turn the call back to Yogi Kembla for closing remarks.

So I would like to thank you all very much the swift for US our first earnings call and we're pretty excited to be in the G&A being a purely companion.

And with that said I would like to.

Wish you to have a go.

Great day, Thank you all.

Okay.

This concludes today's conference call. Thank you for participating you may now disconnect.