Q3 2021 Fluidigm Corp Earnings Call
Ladies and gentlemen, this is the operator todays conference is scheduled to begin shortly we just couldn't being at the standby and thank you for your patience.
[music].
Good afternoon, and thank you for standing by welcome to that's really done third quarter 2021 financial.
Its all its conference call.
At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
So question during the session you will need to press star one on the telephone keypad. If you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Mr. Peter Denardo, Sir Please go ahead.
Thank you and good afternoon, everyone welcome to Fluor's third quarter 2021 earnings Conference call.
A close of market today <unk> released its financial results for the quarter ended September 32021.
During this call we will review our results and provide commentary on our financial and operational performance market trends and strategic initiatives presenting for fluidized today will be Chris Flynn to weight our CEO.
CEO and victim joke our CFO.
The call and subsequent Q&A session, we will make forward looking statements about events and circumstances, they have not yet occurred including plans and projections for our business.
Financial results and market trends and opportunities.
Examples include statements about expected financial performance.
<unk> guidance relating to revenues net loss and business line performance as well as statements about strategic initiatives cash and financing plans market trends product releases and customer demand collaborations and partnerships and revenue expectations.
These statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from current expectations.
Information on these risks and uncertainties and other information affecting our business and operating results is contained in our annual report on Form 10-K for the year ended December 31, 2020, as well as our other filings with the SEC.
Forward looking statements in this call are based on information currently available to us and Florida disclaims any obligation to update these forward looking statements, except as may be required by law during.
During the call. We will also present some financial information on a non-GAAP basis non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of the company's operating results as reported U S. GAAP.
We encourage you to carefully consider our results under GAAP as well as our supplemental non-GAAP information and the reconciliation between these presentations.
Reconciliations between GAAP and non-GAAP operating results are presented in a table accompanying our earnings release, which can be found in the investors section of our website.
At the conclusion of our prepared remarks, we will take questions from participants on today's call.
I will now turn the call over to Chris <unk>, our president and CEO.
Thank you Peter and good afternoon.
In the third quarter, we executed on our three part strategy to leverage the power of our core technologies, we saw a very active third quarter. It may be.
Progress on our ambitious plan to commercially scale to new instrument systems.
Core demand for our products was healthy, but we were unable to fulfill all orders for our products during the quarter.
Largely due to supply chain issues.
Our backlog of unfilled orders stands at more than $9 billion.
Which is almost twice as much as our historic average.
We expect to work through these pending orders over the next few quarters.
Demand in the Asia Pac region was impacted by China tax issues and Covid related shutdown in Japan.
We saw strong demand from our proteomics OEM partner Olea.
New Microfluidic instrument designed and manufactured by Florida.
We delivered the first production units of the old ink signature Q1 hundred bench top instrument system.
And we anticipate an increase in deliveries for Q4.
We expect supply chain pressures to continue.
Our teams are working diligently to mitigate these issues and are working directly with supply chain partners.
However, the lack of visibility to supply chain reliability tempers our outlook for the near term.
<unk> also announced today.
Board of directors is undertaking a review of various options with the assistance of outside financial operating and legal advisers to maximize stockholder value.
Included with regard to strategic alternatives cost and capital structure and operation and supply chain.
Please note, we will not be commenting further on the strategic alternatives today, nor can we take questions on this topic.
Let's proceed to a review of the quarter.
All of our activities track to the strategic pillars of innovation partnerships beachhead expansion.
I'd like to review examples of how we're executing on these primary strategies.
In Q3, we continued to innovate.
The new site cost X T gained significant traction in Q3.
We see double digit opportunity funnel increases for both Q4 and for full year 2022, when compared to the beginning of Q3.
We have seen notable interests from Crows pharma and translational centers, including those pursuing appropriate vaccine and.
And car T cell therapy research.
Our next generation Microfluidics instrument.
Biomarker ex launches this week.
<unk> integrates the fluid on Juno and biomarker HD instruments into a single platform, while adding sample to answer capabilities.
<unk> is being officially launched at the society for immunotherapy of cancer or <unk> annual meeting in Washington D. C. Later this week.
Due to numerous factors, including supply chain considerations, we are rolling out a phased launch of biomarker tests.
And consequently.
Revenue contributions for <unk> are expected to be modest for 2021.
The <unk> X and the old signature Q1 hundred instruments share certain components for which near term supply availability is uncertain.
In Q3, we focused on partnerships to enter markets and new channels.
There are many examples in mass cytometry.
We expanded our collaboration with Vizio par to offer unique third party data analysis tool.
We signed an agreement with the Karolinska Institute to accelerate customer adoption of slice off to execute.
We haven't been progress collaboration underway with one of the largest global pharmaceutical companies to develop a new automation feature for Hyperion.
The CRO and the biotech brought aboard several new pharma customers. This relationship is emblematic of our focus on Crows partnerships.
We are collaborating with <unk> on an abstract for the 15th annual meeting that will highlight a new complementary workflow for mass cytometry customers doing tissue analysis.
Our mass cytometry technologies, including <unk> and IFC.
<unk> used in more than 175 national clinical trials, including 13, new trials in Q3.
This technology has been featured in more than 1700, 40 publications and pre prints with 130 correction of 130 of them related to high period.
In terms of partnership on the Microfluidics side, we can see that all milestones and our DARPA contract.
And the development phase of our proteomics, OEM and supplier development agreement.
Our agreement with the National Institutes of health as part of our <unk> program has extended into Q4.
Our next milestone includes FDA emergency use authorization submission.
Virginia, New sample to answer IFC format as part of our COVID-19 testing kit.
This submission specifies a test with a sample type that extracts RNA from nasal samples.
We focused on beachhead expansions as well during the quarter.
We announced that IFC or Hyperion is being utilized in studies led by Wild Cornell Medicine.
To identify molecular links between African ancestry, and aggressive forms of breast and prostate cancer.
The focus is racial disparities in cancer outcomes, and new data to inform prevention diagnosis and treatment.
A new study in nature communications based on slight top technology evaluated key inflammatory pathways in pregnant women.
Infected with Sars Cov two.
The virus to cost over 19000, COVID-19, illustrating the flexibility of sites off and gaining health insights for treatment decisions.
In Microfluidics, we provided our RT PCR saliva based testing technology.
For our saliva based testing program and a large network of public schools in the eastern United States.
Moving on to a review of our overarching strategy for each franchise and the proof points for each.
Our strategy for the mass cytometry suspension business as highlighted at our recent Investor day.
To be a leader in the fast growing markets in translational and clinical research and immune mediated conditions and diseases.
Let's review some progress.
Our sites are X T value proposition resonates with <unk> pharma and leading translational centers. We have sold 10 sites Opex T systems since launch with two additional instruments in backlog.
A top 10 global pharma company and a comprehensive cancer center in New England. Each purchased two <unk> system in Q3.
We continue to scale up site cost X T manufacturing capacity to meet market interest.
However supply side constraints presented near term headwinds.
Pharma and CRO customers are coming to our South San Francisco lab.
To see demos of this new instrument.
These customers include a global leader in rare genetic disease therapies.
A programmable cell therapy biotechnology company.
One of our SP customers plans to use the instruments and a COVID-19 vaccine study.
And <unk> is now among our therapeutic insights services offerings menu.
Our strategy for imaging mass cytometry is to power. The next generation of health care decision, making.
<unk>, an immuno call it on a kind of immuno oncology and neuroscience.
Proof points include continued expansion of our user base and applications as well as the broadening of our of our global footprint.
Outside of traditional geographies, we completed our first mass cytometry systems sales in Mexico and in Hong Kong.
Our recent IFC summit.
Uncovering spatial biology drew more than 1000 participants.
The event featured presentations of recently published findings are new and unique applications of IFC.
Focusing on translational and clinical research and immunology immuno oncology and infectious disease.
At the IFC summit, we launched Max par on demand antibodies.
This is an expanded option that more than doubled the current catalog offerings for metal conjugated antibodies for IFC.
Our strategy for Microfluidics is to invest in the foundational elements of a durable diagnostic strategy.
Virginia major investments from agencies, such as the NIH and department of Defense.
Let's review some recent progress.
We continue to see diagnostics, new diagnostic opportunities and applications beyond Covid testing.
We are in discussions with select go to market partners, who share our vision of simplifying complex workflows.
And reducing the cost structure of testing.
Evidence of how successful this strategy can be as our proteomics OEM partnership with OLED.
As we mentioned we delivered the first production units.
The OLED signature Q1 hundred bench top instrument system, and we anticipated increase in deliveries for Q4.
We are working with OLED on demand forecasting for 2022, and we are very pleased with the future prospects for this continuing collaboration which includes significant consumable pull through opportunities.
Our base Microfluidics consumables business has grown 16% year to date.
Offsetting by lower Covid testing related demand.
Beyond franchise updates I'd like to mention a highlight of activities to expand our market outreach.
We are pleased to announce that our public website fluidized dot com has been completely re platform.
It is part of an ongoing broader multiyear expansion of our digital infrastructure.
This new site allows us.
When it provides improved sufficient efficiency through our E Commerce channel, which now supports a more streamlined experience with greater reliability.
It also enhances our relationships with distributors by providing quicker access to permanent materials and greater transparency to the distribution sales funnel.
I'll now turn the call over to Vikram for a detailed discussion of our third quarter financial results.
Thanks, Chris and good afternoon, everyone.
Before turning to our third quarter financial results I would like to note that we have posted updated supplemental financial information. In addition to our investor presentation on our website.
Let me begin with a review of financial and geographic highlights for the third quarter of 2021, and then provide updates to our 2021 guidance.
Total revenue for the quarter was $28 $5 million as compared to $39 9 million for Q3 2020.
The year over year decline was primarily due to lower COVID-19 revenue and lower development and grant revenue.
Based product and service revenue, which exclude COVID-19 testing and other revenue was $25 6 million compared with $25 1 million.
For the year ago period.
In the third quarter, our base business recovery was tempered by supply chain disruptions and challenges in the Asia Pacific region, resulting in revenue shortfalls in both of our franchises.
Our backlog of unfilled orders at the end of the quarter with more than $9 million.
It was about twice as much as historic level.
Outside of our base business, we saw stronger than expected revenue from COVID-19 testing, which came in at $2 3 million.
As we have stated in the past COVID-19 testing revenue continues to be highly volatile and may vary widely each quarter with that being said, we currently believe that full year Covid revenue will come in toward the high end of.
Our revised range of $12 million to $13 million compared to our prior guidance of $10 million to $13 million.
In terms of the performance of each of our franchises mass cytometry product and service revenue of $15 8 million for the quarter was up 5% over the third quarter of 2020.
Microfluidics product and service revenue, which exclude COVID-19 testing revenue was $9 4 million or relatively flat compared to the $9 $5 million of revenue.
For the year ago period.
Total microfluidics product and service revenue was $12 1 million down $8 1 million or 40% over the prior year, driven primarily by lower Covid testing revenue, which declined by $7 9 million to $2 $3 million in Q3 2021.
Our services business after hitting a new quarterly record of $6 6 million during the prior quarter remained relatively strong given travel restrictions in certain regions.
Service revenue of $6 million was down slightly from $6 1 million for the same period a year ago.
In general our services business performance has been consistent and stable since much of the revenue is tied to maintenance contract.
Now looking at the third quarter revenue compared to the prior year period from a regional perspective.
Americas revenue declined by 45% to $13 million, driven primarily by lower Covid testing revenue based product and service revenue, which excludes COVID-19 testing revenue and other revenue was $10 4 million up 5% compared to $9 9 million for the year ago period.
EMEA revenue grew 14% to $10 $1 million driven primarily.
Merrily by improved mass cytometry instrument sales.
In Asia Pacific revenue decreased 27% to $5 4 million.
This decline was driven by the overhang from continued delays in issuing tax exemption certificates in China and regional Lockdowns, particularly in Japan.
While our commercial team pushed hard we were not able to completely mitigate the effect of these delays during the quarter.
For the third quarter, we reported other revenue of $600000 as we completed our commitments under the DARPA agreement in the development phase of our proteomics OEM supply and development agreement, which is now in the supply base.
Total revenue recognized under our OEM development agreement since its inception in March of 2020.
It was $11 $2 million, we are very pleased with the success of this program, which illustrates the potential for additional OEM opportunities to grow our business, while leveraging our partners distribution channel.
Moving on now to our operating performance GAAP net loss for the third quarter of 2021 was $13 8 million compared to $6 million for the third quarter of 2020 non.
Non-GAAP net loss of $5 4 million.
<unk> to non-GAAP net income of $2 5 million in the third quarter of 2020.
The increased net loss for the third quarter of 2021.
This is the prior year period was driven primarily by lower total revenue.
Lower product and service margin and higher operating expenses.
The remainder of my comments on operations will focus on non-GAAP measures.
Please note that the reconciliation tables between our GAAP and non-GAAP measures are provided at the end of <unk> earnings press release that was issued earlier today.
Non-GAAP product and service margin was 58, 9% for the third quarter and was down from 68, 3% for the same period, a year ago and 61, 5% in Q2 2021.
Unfavorable product mix from lower COVID-19, consumable sales in 2021 versus 2020 reduced margin by three seven percentage points.
Your capacity utilization for consumables and lower average instrument selling prices also contributed to this decline.
As a reminder, we noted on our last call that we expected product and service margins to be negatively impacted in the second half of 2021.
Due to new product transitions and a less favorable product mix.
Non-GAAP operating expenses were $28 4 million compared to $25 8 million for the third quarter of 2020.
The increase versus the year ago period was driven by the absence of temporary salary reductions and government subsidies in the third quarter of 2020.
Higher R&D project and marketing program expenses.
Moving on now to cash flow and the balance sheet cash.
Cash and cash equivalents short term investments and restricted cash at the end of the second quarter totaled $33 million.
Inclusive of the $10 million term loan.
Compared with $31 9 million at June 32021.
Operating cash burn was $9 $5 million during the quarter, a decrease of $5 1 million compared to the second quarter of 2021.
The decrease in the cash burn was primarily due to lower working capital requirements.
Accounts receivable DSO was 44 compared with 46 days at the end of the second quarter of 2021.
For the third quarter of 2021 investing cash flow outflow of $1 7 million was primarily related to the <unk> program. We expect to complete the Red X program in December of this year.
The borrowing base under our asset based revolving credit facility was $10 3 million at September 30, none of which was utilized as a reminder, we extended the maturity date of this facility by one year to August 2023.
In addition, we have lined up a proposal for non dilutive financing that we can pursue if we choose to do so.
Any actual funding under the proposal remains subject to negotiation of definitive agreements market conditions and final approval of the Investor and our board. In addition to other customary conditions.
And finally moving onto guidance.
We are revising our previously stated full year total revenue guidance in view of the various factors that have affected our business in the third quarter and our business outlook in the near term.
<unk> supply chain constraints.
Covid related disruptions and access to labs, and research institutions and ongoing uncertainty regarding resolution of tax payment issues in China.
Our current expectations for full year, 2021, and dissipate based product and service revenue, excluding COVID-19 testing revenues.
Of $107 million to $109 million, reflecting year over year growth of 7% to 9%.
<unk> revenue, which includes COVID-19 testing and other revenue of approximately $123 million to $127 million.
GAAP net loss of $63 million to $66 million and non-GAAP net loss of $37 million to $40 million.
Note that this guidance does not reflect the effects of any initiative that we may undertake pursuant to the strategic review that was announced earlier today.
Our expectations for the fourth quarter of 2021 are as follows.
Based product and service revenue.
Each excludes COVID-19 testing revenue.
Approximately 30% to $32 million.
Compared to $31 million in Q4 2020.
Total revenue, which includes COVID-19 testing revenue of 31% to $34 million.
Compared to $44 6 million in the fourth quarter of 2020.
The prior year quarter included $9 4 million of COVID-19 testing revenue and $4 1 million of other revenue.
The fourth quarter revenue guidance reflects year end seasonality tempered by expectations of near term supply chain, uncertainties and a more conservative outlook for the Asia Pacific region.
And with that I'll turn the call back to Chris.
Thank you Vikram.
Conclusion, I just want to thank.
Our employees and customers for their extraordinary patients as we address these near term challenges.
And finally I want to thank everyone for attending today's call.
This concludes our Q3 earnings call, we look forward to sharing important updates of our progress in the next earnings cycle.
Thank you and have a good day.
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[music].
[music].
[music].
Good afternoon, and thank you for standing by welcome to that's the only time third quarter 2021 for Nashville Airport.
This conference call.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session. So ask a question during the session you will need the best by one on your telephone keypad. If you require any further assistance. Please press star zero.
I'd now like to hand, the conference over to your Speaker today, Mr. Peter Denardo third. Please go ahead.
Thank you and good afternoon, everyone welcome to Fluor's third quarter 2021 earnings conference call at the close of market today <unk> released its financial results for the quarter ended September 32021.
During this call we will review our results I'll provide commentary on our financial operational performance market trends strategic initiatives presenting for fluidized today will be Chris length weight or.
CEO and victim joke our CFO.
The call and subsequent Q&A session, we will make forward looking statements about events and circumstances, they have not yet occurred including plans and projections for our business future financial results and market trends and opportunities.
Examples include statements about expected financial performance.
Guidance relating to revenues net loss and business line performance as well as statements about strategic initiatives cash and financing plans market trends product releases and customer demand collaborations and partnerships and revenue expectations.
These statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from current expectations.
Information on these risks and uncertainties and other information affecting our business and operating results is contained in our annual report on Form 10-K for the year ended December 31, 2020, as well as our other filings with the SEC. The forward looking statements. In this call are based on information currently available to us and Florida disclaims any obligation to.
These forward looking statements, except as may be required by law.
During the call. We will also present some financial information on a non-GAAP basis non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of the company's operating results as reported under U S. GAAP.
We encourage you to carefully consider our results under GAAP as well as our supplemental non-GAAP information and the reconciliation between these presentations.
Reconciliations between GAAP and non-GAAP operating results are presented in a table accompanying our earnings release, which can be found in the investors section of our website.
At the conclusion of our prepared remarks, we will take questions from participants on today's call.
I will now turn the call over to Chris <unk>, our president and CEO.
Thank you Peter and good afternoon.
In the third quarter, we executed on our three part strategy to leverage the power of our core technologies. We saw a very active third quarter and made progress on our ambitious plan to commercially scale to new instrument systems.
Core demand for our products was healthy, but we were unable to fulfill all orders for our products during the quarter largely due to supply chain issues.
Our backlog of unfilled orders stands at more than $9 billion.
Which is almost twice as much as our historic average.
We expect to work through these pending orders over the next few quarters.
<unk> in the Asia Pac region was impacted by China tax issues and Covid related shutdown in Japan.
We saw strong demand from our proteomics OEM partner for the new Microfluidic instrument designed and manufactured by Florida.
We delivered the first production units of the OLED signature Q1 hundred bench top instrument system.
And we anticipate an increase in deliveries for Q4.
We expect supply chain pressures to continue.
Our teams are working diligently to mitigate these issues and are working directly with supply chain partners.
However, the lack of visibility to supply chain reliability tempers our outlook for the near term.
<unk> also announced today that its four.
Our directors is undertaking a review of various options with the assistance of outside financial operating and legal advisers to maximize stockholder value.
Included with regard to strategic alternatives cost and capital structure and operations and supply chain.
Please note, we will not be commenting further on the strategic alternatives today, nor can we take questions on this topic.
Let's proceed to a review of the quarter.
All of our activities track to the strategic pillars of innovation partnerships beachhead expansion.
I'd like to review examples of how we're executing on these primary strategies.
In Q3, we continue to innovate.
The new cycle of XT gained significant traction in Q3, we.
We see double digit opportunity funnel increases for both Q4 and for full year 2022, when compared to the beginning of Q3.
We are seeing notable interest from Crows pharma and translational centers, including those pursuing COVID-19 vaccine at.
And car T cell therapy research.
Our next generation Microfluidics instrument, the biomarker ex launches this week.
<unk> integrates the fluid, our Juno and biomarker HD instruments into a single platform, while adding sample to answer capabilities.
<unk> has been officially launched at the society for immunotherapy of cancer or <unk> annual meeting in Washington D. C. Later this week.
Due to numerous factors, including supply chain considerations, we are rolling out a phased launch of biomarker tests.
And consequently.
Revenue contributions for biomarker X are expected to be modest for 2021.
The <unk> X and the Olympics signature Q1 hundred instruments share certain components for which near term supply availability is uncertain.
In Q3, we focus on partnerships to enter markets and new channels.
There are many examples in mass cytometry.
We expanded our collaboration with Vizio par to offer unique third party data analysis tool.
We signed an agreement with the Karolinska Institute to accelerate customer adoption or size of Opex key.
We haven't in progress collaboration underway with one of the largest global pharmaceutical company to develop a new automation feature for Hyperion.
The CRO and the biotech brought onboard several new pharma customers. This relationship is emblematic of our focus on Crows partnerships.
We are collaborating with ultra view on an abstract for the 15th annual meeting that will highlight our new complementary workflow for mass cytometry customers during tissue analysis.
Our mass cytometry technologies, including <unk> and IFC.
<unk> been used in more than 175 national clinical trials, including 13, new trials in Q3.
This technology has been featured in more than 1700, 40 publications and pre prints with 130 correction of 130 of them related to high period.
In terms of partnership on the Microfluidics side.
We completed all milestones and our DARPA contract and.
In the development phase of our proteomics Oems supply and development agreement.
Our agreement with the National Institutes of health as part of the <unk> program has extended into Q4.
Our next milestone includes FDA emergency use authorization submission leveraging a new sample to answer IFC format as part of our COVID-19 testing kit.
This submission specifies a test with a sample size that extracts RNA for nasal samples.
We focused on beachhead expansions as well during the quarter.
We announced that IFC or high period is being utilized in studies led by Wild Cornell medicine to identify molecular links between African ancestry, and aggressive forms of breast and prostate cancer.
The focus is racial disparities in cancer outcomes, and new data to inform prevention diagnosis and treatment.
A new study in nature communications based on <unk> technology evaluated key inflammatory pathways in pregnant women.
Infected with Sars Covid two.
The virus that caused over 19000, COVID-19, illustrating the flexibility of sites off and gaining health insights for treatment decisions.
In Microfluidics, we provided our RT PCR saliva based testing technology for our saliva based testing program and a large network of public schools in the eastern United States.
Moving on to a review of our overarching strategy for each franchise and the proof points for each.
Our strategy for the mass cytometry suspension business as highlighted at our recent Investor day.
A leader in the fast growing markets of translational and clinical research and immune mediated conditions and diseases.
Let's review the progress.
Our sites are X T value proposition resonates with <unk> pharma and leading translational centers.
We have sold 10 <unk> systems since launch with two additional instruments in backlog.
Our top 10.
Global Pharma company and a comprehensive cancer center in New England, each purchased two <unk> system in Q3.
We continue to scale up sites of XT manufacturing capacity to meet market interest.
However supply side constraints presented near term headwinds.
Pharma and CRO customers are coming to our South San Francisco lab.
To see demos of this new instrument.
These customers include a global leader in rare genetic disease therapies, and a programmable cell therapy Biotechnology company.
One of our XD customers plan to use the instruments and a COVID-19 vaccine study.
And <unk> is now among our therapeutic insights services offerings menu.
Our strategy for imaging mass cytometry is to power. The next generation of healthcare decision, making focused on immuno oncology immuno oncology and neuroscience.
Proof points include continued expansion of our user base and applications as well as the broadening of our of our global footprint.
Outside of traditional geographies, we completed our first mass cytometry systems sales in Mexico and in Hong Kong.
Our recent IFC summit titled uncovered spatial biology.
Drew more than 1000 participants.
The event featured presentation of recently published findings and new and unique applications of IFC.
Focusing on translational and clinical research and hematology immuno oncology and infectious disease.
At the IFC summit, we launched Max par on demand antibodies.
This is an expanded option that more than doubled the current catalog offerings for metal conjugated antibodies for IFC.
Our strategy for Microfluidics is to invest in the foundational elements of a durable diagnostic strategy leveraging the major investments from agencies, such as the NIH and department of defense.
Let's review some recent progress.
We continue to see diagnostics, new diagnostic opportunities and applications beyond Covid testing, we are in discussions with select go to market partners, who share our vision of simplifying complex workflows.
And reducing the cost structure of testing.
Evidence of how successful this strategy can be as our proteomics OEM partnership with OLED.
As we mentioned we delivered the first production units of the OLED signature Q1 hundred bench top instrument system, and we anticipated increase in deliveries for Q4.
We are working with OLED on demand forecasting for 2022, and we are very pleased that the future prospects for this continuing collaboration which includes significant consumable pull through opportunities.
Our base Microfluidics consumables business has grown 16% year to date.
Offsetting by lower Covid testing related demand.
The <unk> franchise updates I'd like to mention a highlight of activities to expand our market outreach.
We are pleased to announce that our public website, Florida Dot com has been completely re platform.
It is part of an ongoing broader multi year expansion of our digital infrastructure.
This new site allows us.
When it provides improved sufficient efficiency through our e-commerce channels, which now supports a more streamlined experience with greater reliability.
It also enhances our relationships with distributors by providing quicker access to permanent materials and greater transparency to the distribution sales funnel.
I'll now turn the call over to Vikram for a detailed discussion of our third quarter financial results Vikram.
Thanks, Chris and good afternoon, everyone.
Turning to our third quarter financial results I would like to note that we have boosted update the supplemental financial information. In addition to our investor presentation on our website.
Let me begin with a review of financial and geographic highlights for the third quarter of 2021, and then provide updates to our 2021 guidance.
Total revenue for the quarter was $28 5 million as.
<unk> to $39 9 million for Q3 2020.
The year over year decline was primarily due to lower COVID-19 revenue and lower development and grant revenue.
Based product and service revenue, which exclude COVID-19 testing and other revenue was $25 6 million compared with $25 1 million for the year ago period.
In the third quarter, our base business recovery was tempered by supply chain disruptions and challenges in the Asia Pacific region.
Resulting in revenue shortfalls in both of our franchises.
Our backlog of unfilled orders at the end of the quarter with more than $9 million.
Which was about twice as much than historic levels.
Outside of our base business, we saw a stronger than expected revenue from COVID-19 testing, which came in at $2 3 million.
As we have stated in the past COVID-19 testing revenue continues to be highly volatile and may vary widely each quarter with that being said, we currently believe that full year Covid revenue would come in toward the high end of our revised range of $12 million to $13 million compared to our prior guidance of 10%.
$13 million.
In terms of the performance of each of our franchises mass cytometry product and service revenue of $15 8 million for the quarter was up 5% over the third quarter of 2020.
Microfluidics product and service revenue, which exclude COVID-19 testing revenue was $9 4 million or relatively flat compared to the $9 $5 million of revenue for the year ago period.
Total microfluidics product and service revenue was $12 1 million down $8 1 million or 40% over the prior year, driven primarily by lower Covid testing revenue, which declined by $7 9 million due to $3 million in Q3 2021.
Our services business after hitting a new quarterly record of $6 $6 million during the prior quarter remained relatively strong given travel restrictions in certain regions.
Service revenue of $6 million was down slightly from $6 1 million for the same period a year ago.
In general our services business performance has been consistent and stable since much of the revenue is tied to maintenance contract.
Now looking at the third quarter revenue compared to the prior year period from a regional perspective.
The Americas revenue declined by 45% to $13 million, driven primarily by lower Covid testing revenue base.
<unk> product and service revenue, which exclude Covid testing revenue and other revenue was $10 4 million up 5% compared to $9 9 million for the year ago period.
EMEA revenue grew 14% to $10 $1 million, driven primarily by improved mass cytometry instrument sales.
In Asia Pacific revenue decreased 27% to $5 4 million.
This decline was driven by the overhang from continued delays in issuing tax exemption certificates in China and regional Lockdowns, particularly in Japan.
While our commercial team pushed hard we were not able to completely mitigate the effect of these delays during the quarter.
For the third quarter, we reported other revenue of $600000 as we completed our commitments under the DARPA agreement and the development phase of our proteomics OEM supplier development agreement, which is now in the supply base.
Total revenue recognized under our OEM development agreement since its inception in March of 2020.
Was $11 2 million.
We are very pleased with the success of this program, which illustrates the potential for additional OEM opportunities to grow our business, while leveraging our partners distribution channel.
Moving on now to our operating performance GAAP net loss for the third quarter of 2021 was $13 8 million compared to $6 million for the third quarter of 2020.
Non-GAAP net loss of $5 4 million compared to non-GAAP net income of $2 5 million in the third quarter of 2020.
The increased net loss for the third quarter of 2021 versus the prior year period was driven primarily by lower total revenue.
Lower product and service margin and higher operating expenses.
The remainder of my comments on operations will focus on non-GAAP measures.
Please note that the reconciliation tables between our GAAP and non-GAAP measure that provided at the end of <unk> earnings press release that was issued earlier today.
Non-GAAP product and service margin was 58, 9% for the third quarter and was down from 68, 3% for the same period, a year ago and 61, 5% in Q2 2021.
Unfavorable product mix from lower COVID-19, consumable sales in 2021 versus 2020 reduced margin by three seven percentage points.
Lower capacity utilization for consumables and lower average instrument selling prices also contributed to this decline.
As a reminder, we noted on our last call that we expected product and service margins to be negatively impacted in the second half of 2021 due to new product transitions and a less favorable product mix.
Non-GAAP operating expenses were $28 4 million compared to $25 8 million for.
For the third quarter of 2020.
The increase versus the year ago period was driven by the absence of temporary salary reductions and government subsidies in the third quarter of 2020, and higher R&D project and marketing program expenses.
Moving on now to cash flow and the balance sheet cash.
Cash and cash equivalents short term investments and restricted cash at the end of the second quarter totaled $33 million.
Inclusive of the $10 million term loan.
Compared with $31 9 million at June 32021.
Operating cash burn was $9 $5 million during the quarter, a decrease of $5 1 million compared to the second quarter of 2021.
The decrease in the cash burn was primarily due to lower working capital requirements.
Accounts receivable DSO was 44 compared with 46 days at the end of the second quarter of 2021.
For the third quarter of 2021 investing cash flow outflow of $1 7 million was primarily related to the <unk> program. We expect to complete the Red X program in December of this year.
The borrowing base under our asset based revolving credit facility was $10 3 million at September 30, none of which was utilized as a reminder, we extended the maturity date of this facility by one year to August two 2023.
In addition, we have lined up a proposal for non dilutive financing that we can pursue if we choose to do so.
Any actual funding under the proposal remained subject to negotiation of definitive agreements market conditions and final approval of the Investor and our board. In addition to other customary conditions.
And finally moving onto guidance.
We are revising our previously stated full year total revenue guidance in view of the various factors that have affected our business in the third quarter and our business outlook in the near term.
<unk> supply chain constraints.
Covid related disruption and access to labs, and research institutions and ongoing uncertainty regarding resolution of tax movement issues in China.
Our current expectations for full year, 2021, and dissipate based product and service revenue, excluding COVID-19 testing revenues.
Of $107 million to $109 million, reflecting year over year growth of 7% to 9%.
Total revenue, which includes COVID-19 testing and other revenue of approximately $123 million to $127 million.
GAAP net loss of $63 million to $66 million and non-GAAP net loss of $37 million to $40 million.
Note that this guidance does not reflect the effects of any initiative that we may undertake pursuant to the strategic review that was announced earlier today.
Our expectations for the fourth quarter of 2021 are as follows.
<unk> product and service revenue.
Which excludes COVID-19 testing revenue.
Approximately 30% to $32 million.
<unk> to $31 million in Q4 2020.
Joker revenue, which includes COVID-19 testing revenue of 31% to $34 million.
Compared to $44 6 million in the fourth quarter of 2020.
Year quarter included $9 4 million of Covid, 19 testing revenue and $4 1 million of other revenue.
The fourth quarter revenue guidance reflect year end seasonality tempered by expectations of near term supply chain, uncertainties and a more conservative outlook for the Asia Pacific region.
And with that I'll turn the call back to Chris.
Thank you Vikram.
In conclusion I just wanted to thank our employees and customers for their extraordinary patients as we address these near term challenges.
And finally I want to thank everyone for attending today's call.
This concludes our Q3 earnings call, we look forward to sharing important updates of our progress in the next earnings cycle.
Thank you and have a good day.