Q3 2022 Olink Holding AB (publ) Earnings Call

November 10, 2022

Good day, and thank you for standing by and welcome to the Old Link Proteomics third quarter 2022 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 one.

On your telephone please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, John Medina, Vice President Investor Relations and capital markets. Please go ahead.

Thanks, Kathryn and good morning, everyone. Thank you all for participating in today's conference call.

On the call from the OLED, we have John Hamer, Chief Executive Officer call, Raymond Chief Commercial officer, and offer him Chief Financial Officer.

Earlier today <unk> released financial results for the third quarter ended September 32022, a copy of the press release and an updated corporate presentation are available on the company's website.

Before we begin I would like to remind you that management will make statements. During this call that include forward looking statements within the meaning of the U S. Federal Securities laws, which are made pursuant to the safe Harbor provisions of the U S. Private Securities Securities Litigation Reform Act of 90 95.

Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.

Actual results may differ materially from those expressed or implied in the forward looking statements due to a variety of factors.

For a list and description of the risks and uncertainties associated with OLED business. Please refer to the risk factors section on form 20-F Commission final number 001 dash for zero to 77.

Filed with the U S Securities and Exchange Commission on March 17, 2022.

And in our other filings with the SEC.

We urge you to consider these backwards and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance.

Also in our remarks or responses to questions management may mention some non <unk> financial measures.

Reconciliations of adjusted gross profit and EBITDA constant currency revenue growth and certain other non RF financial measures to the most directly comparable <unk> measures are available in the recent earnings press release available on the company's website.

This conference call contains time sensitive information and is accurate only as of the live broadcast today November 10 2022.

<unk> disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise except as required by law.

And with that I'll turn the call over to John John .

Thank you John Good morning, everyone and thank you for joining <unk> third quarter 2022 earnings call.

I'll begin with a quick review of the quarter's accomplishments and recent milestones then wrap things up with our outlook for the remainder of the year.

Then turn the call over to Carl for details on our considerable commercial progress and then to Oscar for more details on our performance and guidance.

<unk> was another strong quarter for lake benefiting from our industry, leading execution and building on a very positive start to the year.

We believe we are well positioned with customers and prospects across Biopharma and academia.

As we look at broader industry dynamics and macro cross currents openings execution remains strong.

Overall customer base appears healthy with solid project funding and strong interest in proteomics.

We delivered quarterly revenue of $31 8 million, 59% growth over the third quarter of 2021.

The quarter was highlighted by strong growth from explorer kits and kit revenue overall, demonstrating strong progress in our product mix goes.

Other highlights included a record number of explorer externalization during the quarter and strong performances in low and mid Plex with signature Q1 hundred target.

<unk> has become a driving force in the modern proteomics fee and is increasingly viewed by the industry as an enabling platform to drive unprecedented insights and value from protein data <unk>.

Leveraging the decades worth of genomic efforts pursued by scientists.

We continue to see an expansion of use cases for proteomics with customers throughout the entire OLED portfolio.

This includes explore users adopting the signature and target platforms is there work demand and low plex users moving towards high plex as well.

Over time, we hope to define a new approach to treating disease provide new options for health care providers and patients and to improve health care overall.

<unk> not only to meet todays needs for proteomics customers, but also to enable new use cases, and new ways to unlock the value of protein.

We want to highlight a few such recent initiatives.

Last month, we announced the launch of <unk> insight and open access platform for the global research community.

Owning customers to share data and insights to accelerate but the oil mix.

It's been created from the ground up to address the complex challenges of Brookdale Proteomic data analysis, introducing a modern and user friendly interface to explore OLED MTX data.

Which will help deliver on the urgent scientific questions asked by the community.

The expectation is to accelerate the strategic use for proteomics in the scientific field with faster and more accurate result, shortening time to the next experiment.

We're also launching a fully flexible made to order product that will allow customers to create small protein panels from our library.

<unk> will cover this shortly and please stay tuned for more details at our Investor day for more on both initiatives.

Lastly, we are currently tracking ahead of our R&D goal to generate 500 validated assets this year.

Following extensive conversations and feedback from customers, we've accelerated our strategy to expand our protein library increased throughput and simplify workflows within the holding platform.

We've incorporated customer feedback into our development plan, while maintaining the same level of exquisite data quality that the holding is known for.

We are excited about the progress we've made and look forward to sharing more information as timelines get from them.

The holding scientific community also reach and other important milestone the achievement of more than 1000 thoughtfully executed research that is published in high impact journals around the world using Pega technology in every major therapeutic category from research and discovery to the downstream clinical setting.

Yes.

In other scientific venues OLED technology was also on display at <unk> in October with multiple abstracts, and presentations featuring <unk> across multiple major conditions.

This includes high interest in OLED posted and co hosted industry sessions with rooms filled to capacity and even standing room only.

In October at the European multiples growth is meeting extremes, our partner <unk> Biosciences presented multiple abstract and datasets as well.

<unk> also announced the commercial launch of their first in class precision care solution for multiple sclerosis, our multi dimensional tool that incorporate an 18 biomarker signature underpinned by <unk> technology.

Technology.

We will have much more to say about the science of tolling kept next Monday at Investor Day, and hope you'll join us join us to learn more.

Of course, our exemplary results would be impossible without the incredible talent and drive from people adopting.

It's due to their determined and combine efforts that we can achieve results like this and look forward to a bright future.

And we remain committed to growing this already broad and deep talent pool.

We started the third quarter with 516 employees and reached 548 upon entering the fourth quarter, including 208 full time employees on the commercial team.

These efforts also include the strengthening expansion of our management team for continued leadership in the modern proteomics area, including announcements announcing the appointment of call Raymond to precedent or plan to hire a new chief commercial officer, strengthening our already impressive supply chain capabilities.

So would predict nestle and appointing and Marcel Chief operating officer effective at the end of this month.

Turning to our expectations to.

To date <unk> execution has been extraordinary and our customers continue to appear healthy.

However.

Given that multiple global economic headwinds have horizon over the course of the year, including foreign exchange inflation or in other dynamics, our fourth quarter outlook now contemplates our updated outlook on these issues.

We now expect full year 2022 revenue to be in the range of $138 million to $142 million, representing yearly growth of 45% to 49% with constant currency revenue expected near the top end of its range and reported revenue expected near the bottom end of this range.

When factoring in the considerable FX headwinds we faced this year.

I E. The calculation, we consider this exceptional performance into a tremendous commercial opportunity still in early innings.

I'll now turn the call over to call to provide a few more details on the quarter Carl.

Thank you John .

Third quarter revenue grew 59% on a yearly basis highlighted by strong performance in our chip business and explore platform. This total is comprised of $13 4 million in kit revenue $15 1 million and analysis services revenue and $3 2 million in other Q.

Three mix improved strongly from Q2 and was the highest since our IPO, reaching 42% of total revenue and growing 265% year over year. Other revenue was up 174% on a yearly basis with signature representing the largest contributor to dollar growth.

Third quarter growth was driven by strength across our entire customer base with high level of interest from Biopharma and academic customers.

We are optimistic about the prospects for oil linked through the balance of 2022, but we've contemplated a more uncertain macro environment as we head into the last couple of months.

The year.

Darling with explorer strong performance total explore revenue of $21 7 million was 68% of our total revenue in Q3 and on a trailing 12 month basis represented 68% of total revenue as well on Q3 explore externalization. The addition of <unk>.

<unk> installations was the most ever during a single quarter and we ended Q3 with 40 total these installations in aggregate represent approximately 840000, an annual sample volume potential and we achieved roughly 725000 and average customer pull through.

During the 12 months ended September 32022.

Group includes installations at an increasing number of service providers as well the customer segment that has become very interested in bringing all linked into their product portfolio.

While our presence with service providers is still in its early phases. We believe this growing appetite bodes well over the long term.

We also delivered 12, new signature instruments to customers for a total of 63 by the end of Q3 signature adoption continues to show our strength in the mid and low plex segment and uptake by new and existing customers.

Let's turn to explore are still relatively new and we think that our early successes points at the incredible opportunity that still lays ahead of us across all segments of our business.

To build further on that opportunity. We're excited about two significant product introductions that expand that capability and value of our portfolio OLED insight, which was launched in October and the soon to be launched OLED flex platform.

John has already provided some background on OLED insights and I'll provide a little bit on the <unk> flex, which is a customizable mixed and matched panel building product that allows customers to select and combined up to 'twenty, one human protein from a library of over 200 into one biomarker.

Daniel.

Both new products are eagerly anticipated by our customers and will provide more detail next week during our Investor day in New York City in person or virtually we hope you can join us.

Our strong results were driven by solid performances in contributions from every member of the commercial group and I'd like to thank the entire team for their considerable efforts yet again, we believe the drive for new tools and new insights to improve human health is only growing with modern proteomics and OLED NPS data, specifically, representing a key enabler.

<unk> technology to drive a new era of biological understanding.

I'll now turn the call over to Oscar to provide additional financial details as well.

Thanks, Paul and Hello, everyone before I start I'd like to make a quick reminder, that next week. In addition to our Investor Day on November 14th we will also be at Canaccord Genuity in Med Tech Diagnostics Forum on November 17th we hope we hope to catch you at one of these events, while we earn in New York City.

Third quarter revenue growth was strong once again in Q3 up 59, 9% on a yearly basis, even with more sizeable FX headwinds that we had anticipated at the start of the year.

We continue to invest in line with our strategic plan and adjusted EBITDA was negative $1 7 million for the third quarter as compared to a negative seven point.

$5 million for the third quarter of 2021.

As Carl mentioned at the end of Q3, we had 40 externally placed revenue generating explore installations.

Even with this significant number of new external rotations average customer pull through with these customers over the last 12 months was a strong 725000 and indication that the quality of our explore externalization remains high.

As a reminder, we've seen average annual pull through for explore range from 500000 to 750000 per customer with individuals spend ranging from less than 100000 to multimillion dollar orders, we continue to expect variability quarter to quarter pull through which could be further impacted by our customer spending.

Seasonality, but overall, we anticipate continued strong growth.

Driven by very strong performance by explorer kits revenue for the third quarter grew 265% to $13 4 million as compared to $3 7 million for the third quarter of 2021 analysis service revenue in Q3 was flat year over year at $15 1 million.

The mix of kit first as another service revenue improved significantly from Q2 to Q3 from 26% of total revenue to 42% of total revenue respectively.

Other revenue was $3 2 million for the third quarter as compared to $1 2 million for the third quarter of 2021 growth and other was driven primarily by signature Q1 hundred instruments.

By geography revenue during the third quarter of 2022 was $12 4 million in Americas $15 million in EMEA at $4 $4 million in China and rest of the world.

Consolidated adjusted gross profit was $21 8 million or 6% to 9% of revenue in the third quarter versus $13 1 million or 6% to 6% in the third quarter of 2021.

Adjusted gross profit margin for kits was 89% in Q3 of 2021 as compared to 91% in Q3 of 2021.

Q3, adjusted gross profit margin for analysis services was 55% as compared to 59% in Q2 of 2021. The decline in service margin was driven primarily by deliveries to the U K B and lower lab activity during the summer months as.

As we exited the third quarter service margin reverted to the normalized levels, we have observed historically.

One quarter.

Quarter variation should be expected, we expect the combined positive impact of increasing case mix explore <unk> option and our antibody library to have a positive impact on gross margin over the long term.

Adjusted gross profit margin for <unk> was 49% in Q3 as compared to 74% for Q3 2021. The decrease was due to a mix shift in revenue stemming from the growth of signature revenues.

Total operating expenses for the third quarter of.

2022, with $29 million as compared to $24 1 million for the third quarter of 2021. The increase was largely due to continued investment in OLED commercial organization and research and development.

Operating expenses are broken out as follows.

Selling expenses for Q3, 2022 were $11 2 million versus 9 million for Q3, 'twenty to 'twenty, one administrate administrative expenses were $12 million versus $11 1 million for Q3, 2021, and R&D totaled $6 4 million and $4 2 million for Q3 2022 in Q3 2000.

'twenty one respectively.

Other operating income was 725000 latest quarter as compared to 276000 in Q3 2021.

Net loss for the third quarter was $1 3 million as compared to a net loss of $5 5 million for the third quarter of 2021.

Net loss per share was a cents as compared to a net loss per share of <unk> in the third quarter of 2021.

We ended the quarter with a strong cash balance of 70 $577 million in cash and cash equivalents are strong cash position and efficient use of capital is an indication of our ability to risk responsibly balanced investment needs with a positive ROI and consequently, we believe we remain sufficiently capitalized to achieve our return to profit.

Ability to fund our existing strategic plan.

Moving to our outlook.

The top of our 2022 full year revenue guidance calls for growth of approximately 49% on a constant currency basis, and roughly 45% that the bottom under rates when incorporating FX headwind based on today's rates to provide some background.

Set approximately $2 million.

FX headwinds during the first nine months of the year and now expect a significant amount of FX headwind in the fourth quarter as well.

Given the movements of the U S. Dollar we believe providing this additional layer of analysis, it's useful for investors as we enter the most important period of our fiscal year.

I would also like to highlight that our FX exposure is somewhat impact impacted by the mix of revenues and demand for products and services around the globe, which does vary from quarter to quarter.

Despite the macro related impacts from foreign exchange volatility bore and global monetary policy, We believe <unk> business is performing very well.

As we consider 2023.

We believe we remain well positioned for a return to profitability and continued strong growth.

I'll now turn the call back to John for his concluding remarks.

Thank you Oscar Thank you Carl and Jen.

We believe our leadership position in proteomics continues to grow with OLED seeing increasingly broad adoption across flex and across customer segments and across the globe.

At this point, we'll open up the call for questions operator.

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

Please standby, while we compile the Q&A roster.

Our first question comes from Puneet <unk> with SBB. Your line is open.

Yes, Hi, John .

Thanks for taking the question. So first one really I mean first of all congrats on the strong quarter here. The explorer installs were really impressive in the quarter. I don't think you had 11 installed in any quarter since the launch of this product.

So tell us a bit more about that what drove that and does it mean that there is a little bit of a pull forward here or and also what does it mean for 2023 with the rising mix of.

Revenue towards kits.

Maybe if you can talk about that and then just briefly around.

Yes.

What does this mean for the pull through sort of longer term.

Great.

Thanks Puneet.

Yes, much appreciate the comments on the past quarter right. I mean, then truly impressive right.

Every kpis one could mesh us on we certainly and deliver on or above so yes, we're super excited by bye bye. Thank you.

Definitely on the explore installations as well so maybe Carl Kevin can add to those comments.

On the call would you maybe you can just answer that puneet directly on sort of how you view the 11th with for sure.

The biggest we've done in one quarter.

Why that is no absolutely hyphenates.

Yes, so as we've talked about in prior quarters.

A bit non linear.

And so I think what this reflects is execution on our strategy, which we've spoken about in terms of.

Shifting to more of a product.

Versus the service business.

And I think you could see that growing in our business.

Prior performance in terms of explore demand how high that is in that sort of permeating now to customer.

Adoption so on.

You had asked about pull forward I think again, there's a bit of lumpiness. So I don't think I would look at it that way I think we will again over a shorter period of time. It doesn't look linear I think if you stretch that over a longer period of time, you'll see that trend.

Continue to rise I mean, it's still early.

Early days talking about 40 sites when we're considering the fact that there are thousands of sequencing.

Instruments out there in a while so I think that again represents a tremendous amount of opportunity as we continue to look ahead and then the pull through thing.

Just gets tricky just for the same non linear comment that I made there so as we haven't.

Newer users.

Ramping up their capabilities.

That will suppress the number of beds and then as they become productive and.

And taken more demand then.

And then it'll grow those numbers a bit so.

But so far again, we're seeing consistent sort of high quality.

Customers in that space and that's been very.

Very good for the business.

On point with our strategy.

Okay Super helpful. And then if I could follow up a question that we're getting this morning is.

Your timing to reach profitability.

And the need to drive the investment into growth, obviously, youre seeing strong traction here with <unk>.

Kitted products and with explorer. So the question I'm getting is given the cash position you have now.

Could you talk a little bit about your timing to reach profitability or need for any capital additions and then last one if I could just squeeze in with Illumina has lower cost per gigabit is what does that mean for your business with the new X plus launch for alumina.

How do you think that customers will utilize that.

To drive proteomics and all link.

Impairments. Thank you.

Tape related software here, so I'll take the first one and then I'll hand, the second more scientific part over to John .

I mean on our cash position and sort of on our path to profitability. We think remain very confident in sort of in our plan for next year to revert to profitability I think if you sort of dissect the third quarter results you can see sort of you know quite significant leverage on the cost space.

Especially sort of on the sort of non commercial non R&D sites.

And also with this sort of kit mix.

Proving driving sort of margin expansion on the gross margin side.

So.

That's sort of bleed into 2023 and profitability is sort of very much within our plan and then we plan to sort of invest a bit further into 2023 in regard to cash flow positive in 2024. So there is nothing sort of within the current scope of our plan to sort of raise additional capital.

Where we are today.

Yeah, and John here Puneet, So very good question an important one.

No, we havent agnostic strategy or technology is unique in that sense that you could.

And for explore use any sequencer out there really counting those feet named Barcodes and of course, we.

Super excited along with our customers when you see improvement in NIM get technology and also some competition to to be super transparent driving cost down so what it means for our customers is that the total price of the.

The experiments are going down.

And which is very good news and they could expand their projects or more on the same budget.

I thought what Illumina has.

Recently communicated was super impressive very very interesting and exciting developments on that technology, which will be super helpful for all linked and our customer base. So all good news.

Great. Thanks, guys congrats.

Thank you Evan.

Our next question will come from Matt <unk> with Goldman Sachs. Your line is open.

Hi, Thanks for taking my questions good morning.

Congrats on the quarter.

Maybe just some questions I'm getting from investors regarding the guide for.

For this year, just the narrowing of that guide and the lowering of the top end.

You've kind of contemplated the FX in there with the CER results at the top end.

But how should we think about your factoring in the macro headwinds and sort of narrowing that guide.

Versus sort of any kind of pull forward of orders into Q3 that you might have expected in Q4 or is this more about factoring in the macro headwinds in terms of lowering the top end or whether there is some change in order dynamics that we should be aware of.

Hey, good morning, Matt John here.

Kevin.

Start answering and then Karl wants to field in Pizza yourselves. So.

And first of all thanks right.

We're super happy with <unk>.

No so.

Based on the guidance, we just want to be clear as possible to the investor community.

And.

<unk> performed extremely well during all of the macro and what goes on in the global economy right.

But FX is truly a headwind for us and then we want to.

Yes, just to be very clear about that.

And so as we said in our script right.

We feel very good about where we're at on the.

Current currency rate, but then we when we factor in FX. We thought this was the right thing to do on the top end of the range.

So Paul I don't know I mean, basically with what we've said in the script is that we feel very good about what we're hearing from our customer base that they've continued to investing in proteomics and in particular in a link.

So I don't know Paul if you want to expand further on that yeah sure Matt.

Yes.

What we're hearing from our customers right now is that.

Their budgets are not affected by at least for their proteomics projects. So.

That remains largely intact, however, I mean being cognizant and prudent regarding the macroeconomic environment.

And certainly I think something a lot of companies.

Rely on this time of year is looking at sort of a budget flush.

That's to be determined still that tends to come into focus a little bit better late.

Late November early December so.

And I think actually.

Positive.

Sort of aspect of all of that too is we've been sort of as we've gone through this transition to more of a product business where in a smoothing.

Quarter out a bit.

Which I think is something.

But as commented on in prior quarters.

About the.

Seasonality of our business. So we see that as a positive as we shift to kit.

It smooth quarter without just a little bit better.

But overall again the macroeconomic environment is as an item to be determined but.

Again as John noted no we're not getting any specific signal, though from customers right now that their budgets are effective for their proteomics work.

Great. Thanks, Sean Karl I appreciate the color and then just on the.

On the installation number which was pointed it was very strong.

You've talked in the past about some of the recent explore installations.

Being more high throughput customers, so as evidenced by the strong pull through numbers that you have could you maybe talk about this set of 11 installations that you had in the quarter is it still trending with the high throughput customers. So should we expect that high consumable pull through number to likely continue and is there like a lag period of these 11.

When they get ramped up and when we'll actually see it show up in that pull through.

Yes, I can comment on that.

So, yes, I mean, we.

We continue to see customers, yes, we have a lot of capacity, obviously theres quite a bit of variation customer to customer so it's hard to be.

Overly generalized.

Some of them are quite high throughput some of them are.

On the lower end of throughput.

But there is certainly a period I think of sort of adoption and wrapping in scale.

I commented on that a little bit earlier, so I think when you look at those average pull through numbers as we have surges of adoption and how that will sort of suppressed those numbers a bit and then as they become mature.

That will grow those numbers again, so we're not.

Predicting any significant changes there I think.

The best way to continue to look at it as sort of this last.

Last 12 month type of figure, which helps to sort of smooth that out a little bit.

Got it and just last question is just on.

The low and mid Plex clearly this could just taking your placements were also fairly strong could you just maybe talk about the dynamic that you've spoken about in previous quarters about custom.

Customers, particularly on the Biopharma side moving across plaques and are you seeing greater adoption of those customers moving throughout the plex.

Spectrum.

Yes, I can comment on that one too yes, so again very.

Very similar comments.

Two prior I think we see about.

North now of half of our <unk>.

Explore customers are also mid plex customers as well.

And a growing appetite for.

For adoption and then with the flex launch I think we're going to see.

A nice strong tailwind as we sort of move into a part of the market space that we haven't been significantly competing in Pryor.

So I think that's only going to expand that opportunity and really only strengthened.

The <unk> story, which is very unique in terms of our ability to scale from high flex.

The low plex and now to be able to do that in a very flexible way as I can tell you is very.

<unk> for our customers.

Great. Thanks, very much for the time.

Thanks, Matt Thanks, Matt.

Thank you and our next question comes from Jay Haas Savant with Morgan Stanley . Your line is open.

Hey, guys good morning.

I wanted to follow up on.

Some of the guidance questions earlier.

John do you add 49% reported growth at the midpoint of your last guide and I think you had embedded a single digit FX headwind, so that would imply constant currency growth in the <unk> that is now 49% rate and I know you mentioned some of these macro factors, but first of all can you clarify what was the constant currency grew.

In your prior guide and help US bridge that number versus the 49% that you are now calling for in terms of these macro factors.

Okay.

Sure.

Alright, So thats, Australia, so I think sort of.

Yeah.

In our previous Scott and I think we've been very clear that sort of you know we viewed prior.

Prior earlier in the year, they sort of the guide is that sort of largely organic and clearly sort of the strengthening of the dollar since has sort of you know is very different from from at that point in time, when we gave that guidance.

I think sort of the 15, 49% of organic growth that we point to today is very similar to sort of how we have guided previously and now it's just sort of fine tuning that as we closed out the year and sort of drawing people, who tends to to sort of the FX headwinds and sort of directing that to sort of the reported growth rate of 45%.

Got it okay.

In terms of just the impressive new explore signings in the quarter.

How are you thinking about sort of.

Any sort of kept stocking dynamic related to that and how long do you think it'll take for these new these new.

Activations essentially before they start reordering kits.

Yeah, and I'll call, maybe you can mention you answered that question price here, but maybe you can do it again.

Yes, I think there is yes, there is a little bit there's variation I think in that so again, it's hard to over.

Over generalize.

Some customers for sure.

Who are taking some kits for projects, we'll have those in stock others, who have actually only taken a minimal amounts to start their training whatever and then to move.

Move ahead through.

Purchasing for projects.

That they have lined up so.

I think a little bit of variation, but I think maybe your question though.

Sort of Overstocking that sort of dynamic I don't believe so.

But again, there's variation customer to.

Customers of all we'll.

You will see that I believe average out and again I think looking at those numbers.

Over a longer period than any single quarter is probably a little more helpful for us.

For your modeling of the way you think about it.

Got it okay.

What are you doing from a derisking perspective to keep the service lab operating at full capacity given the possibility of energy shortages in Europe over the winter.

And on a related note are you able to pass on these rising energy costs to your customers in terms of just how your contracts are structured.

Yes, so I think sort of just sort of important to bear in mind that if you talk about sort of Europe and energy costs, I think sort of it's a very different dynamic across different markets. I think we are sort of somewhat looking Sweden to have.

Such a severe situation thats, even sort of observe on the continent.

But clearly sort of energy costs are.

Higher than they were a year ago.

But I think sort of we made great strides and in the service lab I think there are sort of improving efficiencies.

On a month by month basis, and doing a fantastic job and also sort of with Q4. This year not having any sort of a <unk> bank UK biobank samples and there is also sort of supportive of the margin levels.

Got it and then one final cleanup for me Oscar can you just lay out sort of what exactly your cash burn projections for the fourth quarter here.

I mean, we don't sort of got I don't turn, but it's typically sort of relatively low in the fourth quarter. So I think given sort of the high volume of activity.

A quite profitable quarter, and typically sort of relatively low in terms of Capex. Then clearly there is sort of working capital buildup as we invoice.

At the end of the quarter, but Thats clearly gets collected in Q1.

Got it very helpful. Thanks for the color guys. Thanks.

Thanks, guys.

Thank you and I'm showing no further questions at this time I would like to turn the call back over to John <unk> for any closing remarks.

Okay.

Thank you for joining us today and for your interest in a link and we look very much forward to keeping you updated on our progress so wish everyone. A great day. Thank you so much.

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

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Good day, and thank you for standing by and welcome to the Old Link Proteomics third quarter 2022 earnings Conference call. At this time, all participants are in a listen only mode.

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 is being recorded I would now like to hand, the conference over to your speaker today, John Medina, Vice President of Investor Relations and capital markets. Please go ahead.

Thanks, Kathryn and good morning, everyone. Thank you all for participating in today's conference call.

On the call from old link, we have John Hamer, Chief Executive Officer, Carl Raymond Chief Commercial Officer, and <unk> Chief Financial Officer.

Earlier today <unk> released financial results for the third quarter ended September 32022, a copy of the press release and an updated corporate presentation are available on the company's website.

Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements actual results may differ materially from those expressed or implied in the forward looking statements due to a variety of factors.

For a list and description of the risks and uncertainties associated with <unk> business. Please refer to the risk factors section on form 20-F Commission final number 001 dash for zero to 77 filed with the U S Securities and Exchange Commission on March 17, 2022, and in our other filings with the SEC.

We urge you to consider these backwards and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance.

Also in our remarks or responses to questions management May mentioned, some non <unk> financial measures.

Reconciliations of adjusted gross profit and EBITDA constant currency revenue growth and certain other non OE FRS financial measures to the most directly comparable <unk> measures are available in the recent earnings press release available on the company's website.

This conference call contains time sensitive information and is accurate only as of the live broadcast today November 10 2022.

Thank you Jim Good morning, everyone and thank you for joining <unk> third quarter 2022 earnings call.

I'll begin with a quick review of the quarter's accomplishments and recent milestones then wrap things up with our outlook for the remainder of the year.

I'll, then turn the call over to Carl for details on our considerable commercial progress and then to Oscar for more details on our performance and guidance.

<unk> was another strong quarter for <unk> benefiting from our industry, leading execution and building on a very positive start to the year.

We believe we are well positioned with customers and prospects across Biopharma and academia.

As we look at broader industry dynamics and macro cross currents owning <unk> execution remains strong our overall customer base appears healthy with solid project funding and strong interest in proteomics.

We delivered quarterly revenue of $31 8 million, 59% growth over the third quarter of 2021.

The quarter was highlighted by strong growth from explorer kits and keeps revenue overall, demonstrating strong progress in our product mix goes.

Other highlights included a record number of explorer externalization.

During the quarter and strong performance in low and mid Plex with signature Q1 hundred target.

<unk> has become a driving force in the modern procurements feet and is increasingly viewed by the industry as an enabling platform to drive unprecedented.

The deep insights and value from protein data.

Leveraging the decades worth of genomic efforts pursued by scientists.

We continue to see an expansion of use cases for proteomics with customers throughout the entire <unk> portfolio.

This includes explore users adopting the signature and target platforms is there work demand and low plex users moving towards high plex as well.

Over time, we hope to define a new approach to treating disease provide new options for health care providers and patients and to improve health care overall.

<unk> is driven not only to meet todays needs for proteomics customers, but also to enable new use cases, and new ways to unlock the value of protein.

We want to highlight a few such recent initiatives.

Last month, we announced the launch of <unk> insight and open access platform for the global research community and owning customers to share data and insights to accelerate but the oil mix.

It has been created from the ground up to address the complex challenges of Brookdale Proteomic data analysis, introducing a modern and user friendly interface to explore owning MTX data.

Which will help deliver on the urgent scientific questions asked by the community.

The expectation is to accelerate the strategic use for proteomics in the scientific field with faster and more accurate result, shortening time to the next experiment.

We're also launching a fully flexible made to order product that will allow customers to create small protein panels from our library.

<unk> will cover this shortly and please stay tuned for more details at our Investor day for more on both initiatives.

Lastly, we are currently tracking ahead of our R&D goal to generate 500 validated PPA assets this year.

Following extensive conversations and feedback from customers, we've accelerated our strategy to expand our protein library increased throughput and simplify workflows within the holding platform.

We've incorporated customer feedback into our development plan, while maintaining the same level of exquisite data quality that the holding is known for.

We are excited about the progress we've made and look forward to sharing more information as timelines get firmed up.

The holding scientific community also reach and other important milestone achievement of more than 1000 thoughtfully executed research that is publicly in high impact journals around the world using Pega technology in every major therapeutic category from research and discovery to the downstream clinical setting.

<unk>.

In other scientific venues OLED technology was also on display at <unk> in October with multiple abstracts, and presentations featuring <unk> across multiple major conditions.

This includes high interest in OLED posted and co hosted industry sessions with rooms filled to capacity and even standing room only.

In October at the European multiples growth is meeting extreme our partner <unk> Biosciences presented multiple apps and data sets as well.

<unk>.

We will have much more to say about the science of tolling kept next Monday at Investor Day, and hope you'll join us join us to learn more.

Of course, our exemplary results would be possible without the incredible talent and drive from people adults.

Is due to their determined and combine efforts that we can achieve results like this and look forward to a bright future.

And we remain committed to growing this already broad and deep talent pool.

We started the third quarter with 516 employees and reached 548 upon entering the fourth quarter, including 208 full time employees on the commercial team.

<unk>, our already impressive supply chain capabilities would predict netcom and pointing Ana Marcel Chief operating officer effective at the end of this month.

Turning to our expectations to.

To date only execution has been extraordinary and our customers continue to appear healthy.

However.

Given that.

Global economic headwinds have horizon over the course of the year, including foreign exchange inflation or in other dynamics, our fourth quarter outlook now contemplates our updated outlook on these issues.

When factoring in the considerable FX headwinds we faced this year.

I E. The calculation, we consider this exceptional performance into tremendous commercial opportunity still in its early innings.

I'll now turn the call over to call to provide a few more details on the quarter Carl.

Thank you John .

Three makes improved strongly from Q2 and was the highest since our IPO, reaching 42% of total revenue and growing 265% year over year. Other revenue was up 174% on a yearly basis with signature representing the largest contributor to dollar growth.

Third quarter growth was driven by strength across our entire customer base with high level of interest from Biopharma and academic customers.

We are optimistic about the prospects for oil linked through the balance of 2022, but we've contemplated a more uncertain macro environment as we head into the last couple of months of the year.

With explorer strong performance total explore revenue of $21 7 million, 68% of our total revenue in Q3 and on a trailing 12 month basis represented 68% of total revenue as well.

On Q3 explore externalization. The addition of 11 installations was the most ever during a single quarter and we ended Q3 with 40 total these installations in aggregate represent approximately 840000.

Sample volume potential and we achieved roughly 725000 and average customer pull through during the 12 months ended September 32022.

This group includes installations at an increasing number of service providers as well a customer segment that has become very interested in bringing all linked into their product portfolio.

While our presence with service providers is still in its early phases. We believe this growing appetite bodes well over the long term.

Cigna turn explore are still relatively new and we think that our early successes pointed the incredible opportunity that still lays ahead of us across all segments of our business.

To build further on that opportunity. We're excited about two significant product introductions that expand the capability and value of our portfolio OLED insight, which was launched in October and soon to be launched OLED flex platform.

John has already provided some background on OLED insights and I'll provide a little bit on OLED flex, which is a customizable mixed and matched panel building product that allows customers to select and combined up to 'twenty, one human protein from a library of over 200 into one biomarker.

Panel.

Both new products are eagerly anticipated by our customers and we will provide more detail next week during our Investor day in New York City in person or virtually we hope you can join us.

Our strong results were driven by solid performances in contributions from every member of the commercial group and I'd like to thank the entire team for their considerable effort yet again, we believe the drive for new tools and new insights to improve human health is only growing with modern proteomics and OLED NPS data, specifically, representing a key enabler.

<unk> technology to drive a new era of biological understanding I'll now turn the call over to Oscar to provide additional financial details as well.

Thanks, Paul and Hello, everyone before I start I'd like to make a quick reminder, that next week. In addition to our Investor day on November 14th we will look to be at Canaccord Genuity Med Tech Diagnostics Forum on November 17th we hope we hope to catch you at one of these events, while we own in New York City.

Third quarter revenue growth was strong once again in Q3 up $59, 8% to 9% on a yearly basis, even with more sizeable FX headwinds that we had anticipated at the start of the year.

We continue to invest in line with our strategic plan and adjusted EBITDA was negative $1 7 million for the third quarter as compared to negative seven point.

$5 million for the third quarter of 2021.

As Carl mentioned at the end of Q3, we had 40 externally placed revenue generating explore installations.

Even with this significant number of new external rotations average customer pull through with these customers over the last 12 months with a strong 725000, an indication that the quality of our explore externalization remains high.

<unk>, but overall, we anticipate continued strong growth.

Driven by very strong performance by explorer kits revenue for the third quarter grew 265% to $30 4 million as compared to $3 7 million for the third quarter of 2021 analysis service revenue in Q3 was flat year over year at $15 1 million.

The mix of kit first and other service revenue improved significantly from Q2 to Q3 from 26% of total revenue to 42% of total revenue respectively.

Other revenue was $3 2 million for the third quarter as compared to $1 2 million for the third quarter of 2021 growth and other was driven primarily by signature Q1 hundred instruments.

By geography revenue during the third quarter of 2022 was $12 4 million in Americas $15 million in EMEA, and $4 4 million in China and rest of the world.

Consolidated adjusted gross profit was $21 8 million or 69% of revenue in the third quarter versus $13 1 million or 6% to 6% in the third quarter of 2021.

Adjusted gross profit margin for kits was 89% in Q3 of 2021 as compared to 91% in Q3 of 2021.

As we exited the third quarter service margin reverted to the normalized levels, we have observed historically.

One quarter.

Adjusted gross profit margin for <unk> was 49% in Q3 as compared to 74% for Q3 2021. The decrease was due to a mix shift in revenue stemming from the growth of signature revenues.

Total operating expenses for the third quarter of.

2022, with $29 million as compared to $24 1 million for third quarter of 2021. The increase was largely due to continued investment in OLED commercial organization and research and development.

Operating expenses are broken out as follows.

Selling expenses for Q3, 2022 were $11 2 million versus 9 million for Q3, 2021, administrate administrative expenses were $12 million versus $11 1 million for Q3, 2021, and R&D totaled $6 4 million and $4 2 million for Q3 2022 in Q3 2010.

'twenty one respectively.

Other operating income was 725000 latest quarter as compared to 276000 in Q3 2021.

Net loss for the third quarter was $1 3 million as compared to a net loss of $5 5 million for the third quarter of 2021.

Net loss per share was <unk> as compared to a net loss per share of <unk> in the third quarter of 2021.

Ability and to fund our existing strategic plan.

Moving to our outlook.

The top about 2022 full year revenue guidance calls for growth of approximately 49% on a constant currency basis, and roughly 45% at the bottom under rates when incorporating FX headwind based on today's rates to provide some background, we offset approximately $2 million.

FX headwind during the first nine months of the year and now expect a significant amount of FX headwind in the fourth quarter as well.

Given the movements of the U S. Dollar we believe providing distant additional later analysis, it's useful for investors as we enter the most important period of our fiscal year.

I would also like to highlight that our FX exposure is somewhat inbox impacted by the mix of revenues and demand for products and services around the globe, which does vary from quarter to quarter.

Despite the macro related impacts from foreign exchange volatility bore and global monetary policy, We believe OLED business is performing very well.

And as we consider 2023.

We believe we remain well positioned for a return to profitability and continued strong growth.

I'll now turn the call back to John for his concluding remarks.

Thank you Oscar Thank you Carl and Jen.

We believe our leadership position in proteomics continues to grow with OLED seeing increasingly broad adoption across flex and across customer segments and across the globe.

At this point, we'll open up the call for questions operator.

Thank you as a reminder to ask a question you will need to press star one on your telephone please standby, while we compile the Q&A roster.

Our first question comes from Puneet <unk> with SBB. Your line is open.

Yes, Hi, John .

So tell us a bit more about that what drove that and does it mean that there is a little bit of a pull forward here or and also what does it mean for 2023 with the rising mix of.

Revenue towards kits.

Maybe if you can talk about that and then just briefly around.

Yes.

What does this mean for the pull through sort of longer term.

Great.

Puneet and yes much appreciate.

Comments on the past quarter right I mean, the truly impressive right.

Every kpis one could mesh us on we certainly and deliver on or above so yes, we're super excited bye bye bye. Thank you.

Definitely on the explore installations as well.

So maybe Karl Kevin can add to those comments.

Nicole would you maybe you can just answer that puneet directly on sort of how you view the 11th for sure.

The biggest we've done in one quarter.

Why that is no absolutely hyphenates.

Yes, so as we've talked about in prior quarters.

A bit non linear.

And so I think what this reflects is execution on our strategy, which we've spoken about in terms of shift.

Shifting to more of a product.

Versus the service business.

And I think you could see that growing in our business.

Higher performance in terms of explore demand.

That is in that sort of permeating now to customer.

Adoption and so on.

You had asked about pull forward I think again, there's a bit of lumpiness. So I don't think I would look at it that way I think will again over a shorter period of time. It doesn't look linear I think if you stretch that over a longer period of time, you'll see that trend.

Continue to rise I mean, it's still.

Early days talking about 40 sites when we're considering the fact that there are thousands of sequencing.

Instruments out there in a while so I think that again represents a tremendous amount of opportunity as we continue to look ahead and then the pull through thing.

It just gets tricky.

The same non linear comment that I made there so as we haven't certainly.

Newer users.

Ramping up their capabilities.

That will suppress the number a bit and then as they become productive and.

And taken more demand then.

General and grow those numbers a bit so.

But so far again, we're seeing consistent sort of high quality.

Customers in that space and that's been very.

<unk> been very good for the business and on.

On point with our strategy.

Okay Super helpful. And then if I could follow up.

That we're getting this morning is your timing to reach profitability.

And the need to drive the investment into growth, obviously, youre seeing strong traction here with the.

Kitted products and would explore so the question I'm getting is given the cash position you have now.

Could you talk a little bit about your timing to reach profitability or need for any capital additions and then last one if I could just squeeze in with alumina has lower cost per gigabit is what does that mean for your business with the new X plus launch for alumina.

How do you think that customers will utilize that.

To drive proteomics and all link experiments. Thank you.

Hey, Puneet, it's Australia, so I'll take the first one and then I'll hand, the second more scientific part over to John .

Especially sort of on the sort of non commercial non R&D sites.

And also with the sort of kit mix, improving driving sort of margin expansion on the gross margin side.

So.

That sort of bleed into 2023 and profitability sort of very much within our plan and then we plan to sort of invest a bit further into 2023 in regard to cash flow positive in 2024. So there is nothing sort of within the current scope of our plan to sort of raise additional capital.

Where we are today.

Yeah, and John here Puneet, So very good question an important one.

No.

We have an agnostic strategy or technology is unique in that sense that you could.

For explore use any sequencer out there really counting those DNA barcodes and of course, we.

Super excited along with our customers when you see improvement in NIM jet technology and also some competition to to be so.

Transparent driving cost down so what it means for our customers is that the total price of the.

Of the experiments are going down.

Which is very good news and they could expand their projects or more on the same budget.

I thought what Illumina has.

Recently communicated was super impressive very very interesting and exciting developments on that technology, which will be super helpful for link and our customer base. So all good news.

Great. Thanks, guys congrats.

Thank you Anthony.

Our next question will come from Matt <unk> with Goldman Sachs. Your line is open.

Hi, Thanks for taking my questions good morning.

Congrats on the quarter.

Maybe just some questions I'm getting from investors regarding the guide.

For this year, just the narrowing of that guide and the lowering of the top end.

You've kind of contemplated the FX in there with the CER results at the top end.

But how should we think about your factoring in the macro headwinds and sort of narrowing that guide.

Versus sort of any kind of pull forward of orders into Q3 that you might have expected in Q4 or is this more about factoring in the macro headwinds in terms of the lowering the top end or where there is some change in order dynamics that we should be aware of.

Hey, good morning, Matt John here.

Kevin.

Start answering and then Karl wants to see.

In that piece is so so.

And first of all thanks, right that we're super Super Happy with <unk>.

No so.

Based on the guidance, we just want to be clear as possible to the investor community.

And.

<unk> performed extremely well during all of the macro and what goes on on the global economy right.

But FX is truly a headwind for us and then we want to.

Yes, yes that would be very clear about that.

So as we said in our script, we feel very good about where we're at on the.

Current currency rate, but then we when we factor in FX. We thought this was the.

The right thing to do on the top end of the range.

So Paul I don't know I mean.

Basically with what we've said in the script is that we feel very good about what we're hearing from our customer base that they've continued to investing in proteomics.

Oh link.

So I don't know Paul if you want to expand further on that yeah sure Matt.

Yes.

What we're hearing from our customers right now is that.

Their budgets are not affected by at least for their proteomics projects.

So that remains largely intact, however, I mean being cognizant and prudent regarding the macroeconomic environment.

And certainly I think something a lot of companies.

Rely on this time of year is looking at sort of a budget flush.

That's to be determined still that tend to come into focus a little bit better late.

Late November early December so.

And I think actually.

Positive.

Sort of aspect of all of that too is we've been sort of as we've gone through this transition to more of a product business where in a smoothing.

A quarter out a bit.

Which I think is something.

But as commented on in prior quarters.

About the.

Seasonality of our business. So we see that as a positive as we shift to kit.

It smooth the quarter that was just a little bit better.

But overall again the macroeconomic environment is as an item to be determined but again as John noted no. We're not getting any specific signal, though from customers right now that their budgets are affected for their proteomics work.

Great. Thanks, Sharon and Karl I appreciate the color and then just on the.

On the installation number which was put out was very strong.

You've talked in the past about some of the recent explore installations.

When they get ramped up and when we'll actually see it show up in that pull through.

Yes, I can comment on that.

So, yes, I mean.

We continue to see customers, yes, we have a lot of capacity, obviously theres quite a bit of variation customer to customer so it's hard to be.

Overly generalized.

Some of them are quite high throughput some of them are.

On the lower end of throughput.

But there is certainly a period I think of sort of adoption and wrapping in scale.

I commented on that a little bit earlier, so I think when you look at those average pull through numbers as we have surges of adoption and now that will sort of suppressed those numbers a bit and then as they become mature.

That will grow those numbers again, so we're not.

Predicting any significant changes there I think.

The best way to continue to look at it as sort of the last.

Last 12 month type of figure, which helps to sort of smooth that view out a little bit.

Got it and just last question is just on.

The low and mid Plex clearly the skin placements were also fairly strong could you just maybe talk about the dynamic that you've spoken about in previous quarters about custom.

Customers, particularly on the Biopharma side moving across plaques and are you seeing greater adoption of those customers moving throughout the plex.

Spectrum.

Yes, I can comment on that one too yes, so again, yes very.

Very similar comments.

Two prior I think we see about.

North now of half of our <unk>.

Explore customers are also mid plex customers as well.

And a growing appetite for.

For adoption and then with the flex launch I think we're going to see.

A nice strong tailwind as we sort of move into a part of the market space that we haven't been significantly competing in prior so I think that's only going to expand that opportunity and really only strengthened.

The <unk> story, which is very unique in terms of our ability to scale from high flex.

The low plex and now to be able to do that in a very flexible way as I can tell you is very.

<unk> for our customers.

Great. Thanks, very much for the time.

Thanks, Matt Thanks, Matt.

Thank you and our next question comes from Jay Haas Savant with Morgan Stanley . Your line is open.

Hey, guys good morning.

I wanted to follow up on.

Some of the guidance questions earlier.

In your prior guide and help US bridge that number versus the 49% that you are now calling for it in terms of these macro factors.

Okay.

Sure.

Alright, Thanks, guys. So it's Australia, so I think sort of I mean.

In our previous Scott and I think we've been sort of very clear that sort of you know we viewed prior.

Prior earlier in the year sort of the guidance that sort of largely organic and clearly sort of the strengthening of the dollar has sort of you know is very different from at that point in time, when we gave that guidance.

I think sort of the 15, 49% of organic growth that we point to today is very similar to sort of how we have guided previously.

Obviously and now it's just sort of fine tuning that.

Both the year and sort of drawing people if it turns into sort of the FX headwinds and sort of directing that to sort of the reported growth rate of 45%.

Got it okay.

Now in terms of just the impressive new explore signings in the quarter.

How are you thinking about sort of.

Any sort of kit stocking dynamic related to that and how long do you think it'll take for these new these new.

Activations essentially before they start reordering kits.

Yeah, and I'll call, maybe you can mention you answered that question price here, but maybe you can do it again.

Yes, I think there is yes.

Yes, there's a little bit there is variation I think in that so again, it's hard to over.

Over generalize, we have some customers for sure.

Who are taking some kits for projects, we will have those in stock others, who.

Actually only taken a minimal amount to start their training whatever and then too.

Move ahead through.

They are purchasing for our projects.

They have lined up so.

A little bit of variation, but I think maybe your question though.

Is there a sort of overstocking that sort of dynamic I don't believe so.

But again, there's variation customer.

Customers of all.

We will see that I believe average out and again I think looking at those numbers.

Over a longer period than any single quarter is probably a little more helpful for.

For your modeling of the way you think about it.

Got it okay.

And then what are you doing from a derisking perspective to keep the service lab operating at full capacity given the possibility of energy shortages in Europe over the winter.

And on a related note are you able to pass on these rising energy costs to your customers in terms of just how your contracts are structured.

Yes, so yes, I think sort of just sort of important to bear in mind that if you talk about sort of Europe and energy costs, I think sort of it's a very different dynamic across different markets. I think we are sort of somewhat looking Sweden to have.

Not such a severe situation thats, even sort of observe on the continent.

But clearly sort of energy costs are high.

Higher than they were a year ago.

But I think sort of we made great strides.

In the service lab, I think there are sort of improving efficiencies.

On a month by month basis, and doing a fantastic job.

And also sort of with Q4 this year not having any sort of a <unk> bank UK biobank samples and there is also sort of supportive of the margin levels.

Got it and then one final cleanup for me Oscar can you just lay out sort of what exactly your cash burn projections for the fourth quarter here.

I mean, we don't sort of got I don't turn, but it's typically sort of relatively low in the fourth quarter. So I think given sort of the high volume of activity.

A quite profitable quarter, and typically sort of relatively low in terms of Capex, then clearly there's sort of a working capital buildup as we invoice.

At the end of the quarter, but thats clearly get collected in Q1.

Got it very helpful. Thanks for the color guys. Thanks.

Thanks.

Thank you and I'm showing no further questions at this time I would like to turn the call back over to John <unk> for any closing remarks.

Okay.

Thank you for joining us today and for your interest in a link and we look very much forward to keeping you updated on our progress so wish everyone. A great day. Thank you so much.

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

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