Q4 2021 Cytek Biosciences Inc Earnings Call
Thank you for standing by and welcome to the <unk> Biosciences fourth quarter 2021 earnings 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 to ask a question. During the session you will need to press star one on your telephone we ask that you. Please limit yourself to one question one follow up you may.
Back in the queue as time allows as a reminder, today's program may be recorded I would now like to introduce your host for today's program, Alex Scott Investor Relations. Please go ahead Sir.
Thank you Earl.
Earlier today, <unk> Biosciences released financial results for the quarter and year ended December 31 2021.
<unk> received this news release or if you'd like to be added to the Companys distribution list. Please send an email to investors at <unk> bio dot com joining.
Joining me today from <unk>, our London, Zhang CEO and Patrick.
Chief Financial Officer.
Before we begin I'd like to remind you that management will make statements. During this call that are forward looking statements within the meetings of the federal securities laws, including statements regarding <unk> business plans strategies opportunities and financial projections. 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 forward looking statements in the press release issued today and in <unk> filings with the SEC.
This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles reconciliations to the most directly comparable GAAP financial measure maybe found in today's earnings release submitted to the SEC, except as required by law biotech disclaims any intention or obligation to update or revise any forward looking statements, whether because of new inferred.
Future events or otherwise this conference call contains time sensitive information and is accurate only as of the live broadcast February 23rd 2020 with that I would like to turn the call over to Lindon.
Thanks, Alex and welcome everyone joining the call today.
I want to start by thanking the in.
Credible scientific team for their dedication and execution.
We closed out from day one.
On today's call I will begin with brief overview of our company.
I will discuss our exciting progress for the quarter.
Yes.
And finally.
Ill turn the call over to Patrick for a more detailed look at our financials.
For those of you new to the cycle started.
We are a leading cell analysis solutions company advancing the next generation of upsell analysis tools.
Leveraging novel technical approach to create our core profiling.
Practical.
Our FSP platform includes instruments.
Reagents software and application services and utilize it.
<unk> special ops for restaurant signatures too good of a high resolution high content.
High sensitivity cell analysis.
Our technology and our solutions such as some of the.
Key limitations of conventional methods.
Well flow cytometry is a widely used the tool for single cell analysis.
Conventional flow cytometry and the early approach to special flow cytometry have been challenging.
So you're only able to detect a few markers in a single tool.
They are limited dimensionality.
Optimal resolution.
Throughput high cost of our performance.
The significant technical expertise is required to upgrade their system is really limited advanced cell analysis skills.
By contrast.
Our patented peak economics, optimizes sensitivity and accuracy.
It's a novel optical and electronic designs that utilize.
Innovative methods of light detection and the distribution.
This novel Technology application allows us to address the inherent limitations of other technologies.
Providing a higher density of inflammation with greater sensitivity.
The flexibility and the increased efficiency.
At a lower cost performance.
Our innovative technology has been validated by the 385 peer reviewed publications to take.
Over 1100 instrument placements at the end of the year and a growing number of applications.
At Phi Tech, we provide our customers.
And to end solution.
Instruments, and reagents software and application services.
We launched our initial flagship instrument.
In 2017.
So a year later.
The northern lights instrument.
Entry level product.
Both instruments analyzes offering high throughput.
Interest sensitive analysis.
Two of the workflows that work to address the unmet needs of our customers.
The instrument efficient compact making.
Making them well suited for clinical research.
In October of 2020, we launched our reagents to capitalize upon the recurring revenue opportunities.
But from the installed base we have generated.
Our 14 courtesy for immuno profiling.
And the particular optimized multi color immunofluorescence panel provides users with ready to use protocols antibodies simplifying the workflow from sample preparation to.
Analysis.
In October of 2021, we launched our new 75, immuno profiling assay and shortly after acquired agency business up tumble Biosciences.
Both additions further strengthen our position as a fee.
Full solution provider to our customers.
Our final caller immuno profiling assay include reagents and tools optimized for use with our rollout full special pro cyclical.
We are creating a new normal for flow cytometry by making such a high dimensional panel available as a standardized.
This past year, we also began shipping our sales products, which enable additional downstream genomics and proteomics analysis.
Importantly, our sources allow researchers to isolate a living cell populations from higher complexity panels beyond 40 biomarkers.
While our cell analyzers have been strong drivers of our revenue growth to date.
Spect that regions and a sales silica will play an important role in driving our revenue growth.
The next three to five years.
Okay.
As we highlighted previously once an instrument has been placed our in clinical workflow allows customers to quickly get up to speed on the technology and to begin generating results.
Additionally, we currently work with Kols engaging with these industry leaders to address their particular scientific questions by optimizing reagents in the protocol.
Instrumentation.
This often creates a blueprint for other customers who will build upon.
By collaborating with customers Cocreate with these novel racing panels okay.
We are continually opening new applications in the markets for our FSP platform.
I am proud to say that our installed base of instruments continue to achieve robust growth.
This quarter we.
Placed 140 instruments.
Our total installed base to 1110 instruments at the end of the year.
We continue to execute our core strategy.
<unk> achieved solid adoption with highly connected wholesale analysis users.
Ill also bringing full special profiling.
The level of users as well.
During the fourth quarter up 2021, we achieved an exciting milestone of shipping our 1000 cell analysis system.
Firstly being introduced in 2017.
Our cell analysis systems have gone to widespread adoption across the globe with us in more than 40 countries.
Additionally, we continue to make progress in regulated the clinical markets.
Including in China and in the EU.
In China, we have made progress towards China National medical product demonstration.
NPA IBD costs three certification for the TV NK assay to run all our previously certified northern like CLC instruments.
These are collection has been completed three hospitals comprising 700 patients.
The data analysis and the NPA submission package preparation has been initiated.
In the EU, we have received <unk> certification for our automated sample Lauder Paul.
So that is an accessory to our previously IBD certified northern lights CLC instrument.
Yes.
We also closed on our <unk>.
Ofcom global centers regional business, which along with the launch of our additional C for all new agents and reagent kits meaningfully enhanced our regional portfolio offering.
The integration of <unk>.
This business within sight it is largely complete.
As we are now preparing to expand these offerings further.
Well, what we welcome the talented humble team into Hy Tech and are excited to grow our presence in San Diego.
We are very pleased with that.
Performance of these in Qualcomm and <unk> offerings and the value they bring to our platform.
And last month, we announced the expansion of <unk>.
Our Fremont headquarters with the opening of a new facility tripling, our previous manufacturing capacity in order to meet growing global demand bulk cell analysis solutions.
In addition to the new Fremont facility. We have also opened new offices in Seattle, Washington.
Which are dedicated to key R&D initiatives and customer application support.
This new facility supports our commitment to develop tools.
That will advance the next generation of cell analysis.
Become the partner of choice for <unk>.
Throughout the life Sciences field.
As I mentioned earlier.
Technology has been validated by 385 peer reviewed publications to date.
These publications cover a wide array of topics.
The top five subjects being infectious disease domain knowledge.
Incentive fee.
Oncology and oncology.
In the fourth quarter, sorry, 55 publications in peer reviewed scientific journals.
The level of these publications about COVID-19, including a nature paper illuminating, which type of T cells give rise to a human immune system memory and some of the kind of them for that protection.
HIV continues to be another area in reputation for our customers.
In nature Medicine offers including Dr. Anthony Fortunately published an article detailing hall, the human immune system.
When HIV treatment is interrupted.
I'm excited by the progress our team has made this quarter and throughout the course of the year as we continue to establish ourselves as a leading cell analysis solutions company.
As we push forward, our cadence of new products and applications.
Deeply focused on providing a complete cell analysis solution to our customers.
We look forward to continuing to provide our novel FSP platform to these customers as they push the bounds of scientific discovery.
With that I will now turn the call over to Patrick for more details around our financials.
Thanks <unk> bin.
Total revenue for the fourth quarter of 2021 was $38 $9 million.
27% increase over the fourth quarter of 2020.
This increase was driven by instrument sales during the quarter and supported our full year revenue growth of 30.
88% in 2021.
We also saw an increase in contract services deals during this year.
Which we expect it to continue.
More instruments shipped warranty coverage and service contracts.
Gross profit was $23 6 million for the fourth quarter of 2021.
An increase of 22% compared to a gross profit of $19 4 million in the fourth quarter of 2020.
Gross profit margin was 61% in the fourth quarter of 2021.
64 in the fourth quarter of 2020.
non-GAAP gross profit margin in the fourth quarter of 2021.
3% compared to 64% in the first fourth quarter of 2020 after adjusting for stock based compensation expense amortization of acquisition related intangibles.
Operating expenses were $22 3 million for the fourth quarter of 2021 or 92% increased from 11 $6 million in the fourth quarter of 2020.
The increase was primarily due to expense to support continued growth of the business, including cost related to operating as a public company.
Research and development expenses were $7 $1 million for the fourth quarter of 2021 compared to $4 $4 million for the fourth quarter of 2020.
Sales and marketing expenses were $8 3 million for the fourth quarter of 2021 compared to $4 6 million for the fourth quarter of 2020.
General and administrative expenses were $6 9 million for the fourth quarter of 2021, an increase from $2 6 million in the fourth quarter of 2020.
Income from operations in the fourth quarter of 2021 was $1 $3 million.
<unk> to $7 $9 million in the fourth quarter of 2020.
Net income in the fourth quarter of $2021 3 million compared to $5 6 million in the fourth quarter of 2020.
non-GAAP net income in the fourth quarter of 2021.
$3 $9 million compared to $5 9 million into fourth quarter of 2020.
After adjusting for stock based compensation expense acquisition related amortization and other non recurring expenses.
This result reflects our focus on additional investments.
<unk> to support our anticipated revenue growth in 2022 and beyond.
Now turning to our guidance, we expect full year 2022 revenue to be in the range of $160 million $268 million.
With a quarterly cadence expect to be in line with the historical seasonality of our business.
Before I conclude I would like to touch on some assumptions embedded in our 2022 guidance.
As <unk> said, we are entering 2022 in a strong position.
Further our guidance does not currently anticipate another COVID-19 weighed yet we will remain ready from an operational standpoint to handle any customer or installation challenges should they arise.
Finally in line with our objectives, we are planning to increase our capital and operating investments in sales marketing and research and development this year by 55% to 60% in the aggregate.
Our continued growth initiatives.
We remain well positioned to maintain our profitability and achieve our long term growth targets and objectives.
We are also pleased with our strong balance sheet, including a solid cash position and no debt underpinning our husky organization.
We will continue to invest in our core business as it relates to new projects and innovation, while remaining opportunistic in M&A environment and focusing on growth in all key areas.
With that I will turn it back over to women.
Thanks, Patrick.
Has continually demonstrated our commitment to developing tools to advance the next generation of cell analysis.
I would like to express my deep gratitude for the team we have here at Mitek.
Excellent and the share the belief in this important mission drive our progress.
Over the past year, we have successfully executed on our strategy of growing the business.
While remaining profitable and investing in our enterprise will continue to grow.
From a product launch and the expansion of our <unk>.
Offerings, along with strategic investments in R&D and the Honeywell acquisition.
Have positioned our portfolio well continue to future growth.
Our robust.
<unk> installed instrument base comfortably get about a growing contribution of recurring revenue and supported by our solid financial position will drive our success in 2022 and beyond.
Going forward our team will continue on our path.
Cool.
So analysis solutions partner of choice for our pay for oil to the life Sciences field.
We leverage our novel technology.
Tickets will drive innovation transformed.
Analysis market and enable researchers to make significant scientific advances in key areas of medical with discovery.
With that we'll now open the call up for questions.
Operator.
Certainly ladies and gentlemen quick question at this time. Please press Star then one if your question has been answered and you'd like to remove yourself from the queue. Please press the pound key.
Our first question comes from the line of P. J <unk> from Morgan Stanley . Your question. Please.
Hi, guys good evening and thanks for the time this evening.
Perhaps one to kick things off shore wind and Alan feel free to chime in as well. So I was just curious about later some of these pandemic headwinds in the macro environment.
Some of your instrument focused peers, particularly those with a presence in academic labs have talked about sort of a little hesitancy in capex purchases and delays in the purchasing process have.
Have you seen any sort of like impact at all in terms of the elongation of your.
So aside domino replacement cycles, and an industry wide basis, and if not why do you think thats the case, especially for high Tech.
No.
That's a good question and correct.
It depends on where we are talking about goodbye.
Overall, we don't see much impact in the U S and Europe , but we do see some delay.
Especially on the installation and the service side.
The countries in APAC region. So.
And I think part of the reason why we don't really see much.
Fact is because as you can see from the number of publications in them.
The latest Covid right.
Quite often.
A lot of those applications.
<unk> generated which actually they need our tools.
Got it.
That's helpful. And then women can you provide a little bit of color on just the attraction for yourselves.
If you can give us some.
Commentary around just the demand youre seeing for bundled instruments and what youre seeing in terms of the mix of new versus existing site that customers as well as perhaps multi unit placements here that would be helpful.
Okay.
The deployment of our sales.
We actually have prepared.
For the need for our sales photos as many customers when they start to use our tools and start to study.
Uh huh.
They fund they actually many times they would like to.
No further deep into the first half.
<unk> looked at.
In the situations, where you actually would like to use the same sort of <expletive> , because our thoughts along the compatibility in terms of panel.
They have used so they can transfer.
Analyzers, Nfl's I'm, Tony as I.
So thats really a back and forth.
Basically yes, there is a lot with regarding to the kind of demand.
Sighted silicone technology as well.
Now in terms of who.
Existing customer as well as new customers.
I imagine some of our our existing analyzer customers, but there are also customers who would like to buy.
As in past in that case, those new customers.
Got it that's helpful. And then as we look at your guide of $160 million to $168 million.
Perhaps this is best addressed by by Patrick.
Just wanted to get a sense of what's embedded at the low versus the high end of the range is it just sort of incremental supply chain pressures and sort of COVID-19 , creating site access issues and installation delays at the low end.
Or is there something else that you are factoring in as you think about that range.
All of the.
The way, we look at the guidance the low end or the upper range.
Our brand.
We have a number of instruments that we are planning to move next year.
To a region.
Service.
Our service revenue. So it's a combination of these three components gives.
It gives us the lower end and the high end.
<unk>.
We feel very good with the low end.
And we also see some positive on the on the upper end.
Got it very helpful. Thank you guys.
The queue. Our next question comes from the line of Matt <unk> from Goldman Sachs. Your question. Please.
Hey, guys. This is David on for Matt.
Matt.
Congrats on the quarter.
Following up on the outlook for the year any additional color you can provide.
The instrument versus consumable mix and within instruments.
What you're expecting.
Yes, so the expectation is with UCB.
Large majority will be instrument, yet with a growing base of reagent.
And also expecting.
Service revenue to be.
Be slightly stronger than last year, but we still driven by instrument.
The South Florida.
Followed by the.
And then the other.
I'll start with revenue.
Got it and could you tell us more about the puts and takes affecting operating margin I appreciate the color on R&D.
Any additional color on the.
Levers you're pointing in SG&A.
Yeah.
So you were talking about a gross profit margin.
Operating margin gross profit margin as well yeah. So so I mean, we're looking when when when looking at.
We are continuing to invest in all the key areas.
Marketing R&D to.
To help us for the future and that's also going to help us better manage our overall business in the give out past 2022.
Great. Thanks.
Thank you. Our next question comes from the line of David Westbury from Piper Sandler Your question. Please.
David you might have your phone on mute.
Yes, I do thank you.
Congrats on the quarter.
So I'm going to first maybe talk about some of the reagents and sort of the highest plaques user users can you talk about their adoption cycle.
Or how fast they get ramped on an on the bigger and bigger panels in terms of the reagents and can we extrapolate some of that behavior to maybe some of the future customers.
Youre getting more and more mix shifts into reagents.
And in fact as you can see is a new business to us.
Our early customer pretty much <unk>.
<unk>.
Available.
The open market.
And then for those customers.
Certain regions are already designed into their application.
Pink Panther perspective, we are now.
Getting to this space and start to work with our customers to optimize the pen.
Leveraging the people.
Well as the region from our combo acquisition and so.
Some time, but we do see a great potential, especially.
We haven't given up including our fucking color and can be fiber.
Sure.
Immuno profiling those kind of okay.
Actually, especially the 25 okay.
Really helps in customers who.
Alleviated that type of research workload and enables them to really get onto those sophisticated complicated panel.
<unk>.
The work they want to look at.
I think we see great potential for those type of kit. We are developing right. Now. This is also going to continue to be focused company.
Accompany our R&D side.
We will have more and more of those type of costs coming out.
I appreciate the color there.
And this question came up for a lot from investors in terms of a competitor's launch into a new sell sider and I believe this competitor is the.
The number one company in terms of placements a flow cytometer just generally.
Do you anticipate any impact from that new Sluss cell sorter in.
In terms of your instrument placements on the year or do you feel still feel you you really do have on such a competitive advantage in terms of your technology that it probably won't hesitate any.
Customers won't hesitate to continue to buy.
Sure.
For your products.
We have noticed.
The announcement of.
The tools.
Going to round two but.
Until we have seen that.
The market in there.
Customer on the customer side, it's very difficult for us.
The kind of impact, but we're paying attention to it.
Gotcha Okay.
And then.
On the last question in terms of your Tam expansion 19, I think you've given color on the patent in the past you have an $8 billion Tam this could expand over the years I think it was 23 $23 billion can you give us some of the proof markets.
Might be near term Tam expanding markets that youre seeing with customers, maybe today and over the next couple of years and I'll stop there. Thank you.
Yes, I think we are.
Jay just mentioned about the.
The five areas of applications.
Applications.
That's a pretty much a summary.
Summarizes the type of applications, our core today is a supporting right.
So.
Certainly this is Jeff.
Kind of.
Our focus areas.
And then a more beyond that.
Sure.
Got it thank you.
Thank you. Our next question comes from the line of Max Masucci from Cowen Your question. Please.
Hi, This is Stephanie on for Matt. Thanks for taking the question and congrats on a great quarter.
So I just wanted to follow up on some of the questions on dark reagents.
In just over four months since you launched your 25 color immuno profiling assay how has the demand for this assay has been ramping and are you seeing most of your customers order. The 18 color kit on a standalone basis, alright, most ordering the assay along with the seven reagents provided by biologics.
I think it mostly for both.
SP.
Okay, great. Thanks for that.
And then as a follow up so if you compare some of your earlier customer win between 2017 and 2022 the customers you've won over the past year are you seeing any difference in their willingness to adopt your internally developed reagents and reagent kit.
Sticking with their original third party reagent provider.
In fact, we do see lot of interest in the case, we have developed and correct.
And our team has been very busy in our operating trying to deliver.
Good for me.
With our customer demand.
Okay, great. Thank you and then if I could sneak in one more.
I was just curious how your relationship with biologic helped to accelerate their pace of new customer wins or extended your customer reach and has no relationship with biotech and improve your ability to access new customers.
He is one of the American partners.
We have been working with Patrick.
Patrick.
<unk>.
Lifecycle of our product since its launch and we in fact have been working very closely with quite a few.
They've been talking about as well as you can clearly see because the technology.
We have.
Enables.
The use of lots of <unk>.
<unk>.
It definitely helps on both ends.
For us as well as our trading partners.
Okay got it thanks for taking my questions.
Thank you. This does conclude the question and answer session as well as today's program. Thank you everyone for your participation you may now disconnect good day.
Yeah.
Thank you.
Yes.
Okay.
Yes.
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