Q4 2022 Cytek Biosciences Inc Earnings Call
Speaker 1: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 11.
Speaker 2: Good day, and thank you for standing by. Welcome to the SciTech fourth quarter and full year 2022 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.
Speaker 2: To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Paul Goodson of Investor Relations. Please go ahead. We era us and move forward in the future. In a melodies world, prayer is version.
Speaker 3: Thank you, operator. Earlier today, SciTech Biosciences released financial results for the quarter and full year ended December 31, 2022. If you haven't received this news release or if you'd like to be added to the company's distribution list, please contact the Biosciences
Speaker 3: Please send an email to investors at scitech bio.com joining me today from scitech are Wenbin Zhang CEO and Patrick Jomino Chief Financial Officer
Speaker 3: Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of the federal securities laws, including statements regarding CITEX business plans, strategies, opportunities, and financial projections. 10 minutes after call, continues. Hi.
Speaker 3: These statements are based on the company's current expectations and inherently involve significant risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
Speaker 3: Additional information regarding these risks and uncertainties appears in the section entitled ?Forward-Looking Statements? in the press release SciTech issued today and in SciTech?s filings with the SEC. This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted financial measures.
Speaker 3: any forward-looking statements, whether because of new information, future events, or changes in its expectations.
Speaker 3: This conference call contains time-sensitive information and is accurate only as of the live broadcast, February 28, 2023. With that, I would like to turn the call over to Wenbin.
Speaker 4: Panasonic Park, where you crossed the teeth third wheel voices drawers and
Speaker 4: As always, I want to start by thanking our team at SITEC for their dedication and execution as we close out Sunday 22.
Speaker 4: On the quarterly, I will discuss our progress for the quarter and the year and highlight several recent developments that illustrate how CITES continues to advance toward our mission and vision.
Speaker 4: Finally, I will turn the call over to Patrick for a more detailed look at our financial results and outlook for 2020-23.
Speaker 4: 2022 was a significant year for SciTech, which demonstrated our continued evolution and progression as an organization.
Speaker 4: We begin the year by announcing the opening of our new facility in Fremont, California.
Speaker 4: which tripled our previous manufacturing capacity to meet growing global demand for cell analysis solutions.
Speaker 4: In April , we announced the appointment of Todd Ballen as our Chief Commercial Officer. In June , we hosted our successful inaugural analyst and the investor base. And in October , we named the Chris Williams Chief Operating Officer.
Speaker 4: And now in 20 something three, we are already seeing significant momentum.
Speaker 4: At the start of this month, we announced a strategic partnership with BioLED Laboratories to expand our religion portfolio.
Speaker 4: enhancing high parameter panels on our cell analysis systems. We believe that the addition of Bi-LED star bright lights to our full spectral profiling OFFP platform is a big win for researchers conducting multi-parameter experiments.
Speaker 4: and we are enthusiastic about this new partnership. Finally, we are very excited to have announced our acquisition of Lumenix Pro Cytometry Business. We are thrilled to welcome this organization and the team to our enterprise. list acquisition expenses.
Speaker 4: SciTech product portfolio, technical capabilities, global install the base.
Speaker 4: service offerings, and market opportunities.
Speaker 4: We will discuss further details of this transaction, including financial and strategic benefits, later in the call.
Speaker 4: This quarter and a year, our achievements have showcased the efficiency and effectiveness of our global business operation.
Speaker 4: We demonstrated solid results across growth margins, net income, and adjusted evidence.
Speaker 4: and our global sales have expanded. This is all in addition to our ongoing effort to diversify our revenue and further our overall strategy.
Speaker 4: As we look at the industrial landscape.
Speaker 4: Dietit continues to stand apart in the field as we provide our customers with an end-to-end solution, consisting of instruments, reagents, software and application services.
Speaker 4: Now, even further enhanced by the recent acquisition and the partnership I just mentioned, our unique patented portfolio of comprehensive solutions positions us as a leader in the sector.
Speaker 4: And we are proud of the demonstrated value we provide to our customers.
Speaker 4: This past year, we have consistently highlighted our comprehensive suite of products and services.
Speaker 4: which has led to a further diversification of our revenue stream beyond the felt of instruments.
Speaker 4: As we have said previously, beyond our original suite of instruments,
Speaker 4: As we have said previously, beyond our original suite of instruments, which continues to see solid demand,
Speaker 4: We expect our sales orders and the reagents to continue to contribute considerably to our future enterprise revenue growth. I'm pleased to say that our installed base of instruments continues to achieve robust growth in the field. During the fourth quarter,
Speaker 4: We placed the 169 instruments a quarterly record, bringing our total additions for the year to 560.
Speaker 4: well above the pace we accomplished in 2021. Altogether, our installed base has now reached 1,670 instruments as of the end of 2022.
Speaker 4: Furthermore, these placements reflected our core strategy to achieve growth across the range of applications and users.
Speaker 4: from entry level to high dimensional cell analysis applications. Since first being introduced in 2017, our cell analysis systems have gained widespread adoption across the globe with use in 50 countries and the region.
Speaker 4: And now we have seen great traction in diversifying our revenue base through the launch of new products.
Speaker 4: including recording sources of revenue through service and the region sales.
Speaker 4: While still a smaller part of our overall revenue, demand for our religions is growing rapidly.
Speaker 4: and we are excited for the potential of this contribution to our enterprise. Through our recent strategic partnership with Bauerrad to expand our religion portfolio.
Speaker 4: The new star bright lights will be available to SciTech to develop and commercialize new aging products to support high parameter applications on Aurora and Northern Lights Flow Psychometry Systems.
Speaker 4: Sub-bright eyes have been designed to be stable with superior brightness.
Speaker 4: Narrow excitation.
Speaker 4: and emission characteristics for a minimized spillover and improve the resolution of specific cell populations.
Speaker 4: thereby allowing researchers to build bigger and better panels. WRI dies complement SciTech's C4 family of proprietary dies, providing a wide variety of color options for highly multi-pronged panel design and application development.
Speaker 4: to develop and optimize single-value agents and the multi-color panels using StarBriteBite for the more than 1600 Bitec FP instruments already deployed across 50 countries and regions.
Speaker 4: These single-value agents and the multi-color panel will unlock additional capabilities for our end users.
Speaker 4: Researchers will be able to expand multi-parameter analysis into violet and ultraviolet channels would site have optimized the region.
Speaker 4: unleashing the full power of FST technology to obtain better resolution and a deeper understanding of cell populations.
Speaker 4: The partnership is squarely in line with our organization's strategic goals and initiatives to continue building out our application-driven relations business and further extend SCi-CAS competitive lead ahead of other technologies.
Speaker 4: In 2022, we also announced the launch of SciTechCloud, a cloud-based platform that features two integrated tools to streamline workflows on SciTech's state-of-the-art sales orders and analyzers. SciTechCloud streamlines the process from panel design to the cloud-based platform.
Speaker 4: The benefits of this approach is accelerating the time to insights for a wide range of applications.
Speaker 4: including immunology, oncology, infectious diseases, and inflammatory diseases. The addition of scientific clouds brings benefits to both our current...
Speaker 4: extensive customer base, and future SciTech users. On our roadmap, we aim to expand the capabilities of SciTech Cloud, covering data management, sharing, and analysis.
Speaker 4: The launch of CITACROUD is an exciting step for our organization.
Speaker 4: further startifying our position in the industry as a full solution provider with a wide array of offerings and services that seems like they work together toward helping our customers achieve their own goals.
Speaker 4: We have worked diligently to build out an organization that is now uniquely positioned in the industry as a full solution provider, offering a diverse and a complete suite of solutions to our customers.
Speaker 4: And this is well recognized across the industry. As we continue to grow our offerings at the base of instruments.
Speaker 4: And this is well recognized across the industry as we continue to grow our offerings in a pace of instruments, religion, and services.
Speaker 4: Our technology has now been validated by more than 1,000 peer-reviewed publications as of the end of the quarter. This quarter alone, there were 129 peer-reviewed publications mentioning site tech.
Speaker 4: bringing the total for the year to 504 and the all-time publication to 1013. I'm very proud of this accomplishment, which speaks to the momentum of our platform and validates the use of our offerings to the scientific community.
Speaker 4: As an example of how significant some of these research efforts are.
Speaker 4: One paper published in Nature identifies possible therapeutic targets to alleviate brain deficits of aging and Alzheimer's disease. A second exemplifies how our technology is used to study the relationship between the microbiome and the health.
Speaker 4: In that paper, researchers identified which gut bacteria drive neural inflammation in a module of multiple sclerosis.
Speaker 4: Finally, I would like to spend a moment to discuss our acquisitions of Lumenix Flow Cytometry Business. As we shared when we first announced the deal, we are excited about this transaction and are confident
Speaker 4: This acquisition will bring both immediate and long-term value for site tech. The Nominic Flow Site Tompchry business provides important contributions to our technological abilities, product range, customer base and commercial reach. Starting with the technology.
Speaker 4: and scientists a combination of enhanced AI-driven analytical performance from high-resolution cell imagery together with the speed, accuracy, phenotyping, and cell sorting capabilities of full-spectro aurora flow cytometry.
Speaker 4: We will also use Guava technology to enhance site test products. For example, Guava's capitalized fluidity technology for sample handling, along with its menu-driven user interface, will be incorporated into our Northern Lights platform. As a result, we are planning to gradually transition both
Speaker 4: the non-imaging Guava and the ominous product lines to our Northern Lights platform, all while retaining the key capabilities of these machines that have been so well appreciated by their respective customer bases.
Speaker 4: While we expect these tech transfer activities and product development initiatives to take some time, we believe SciTech will be positioned to offer new products with exciting new features and capabilities. These will include ease of use and the reduction of time required to conduct experiments.
Speaker 4: both of which we believe will broaden the appeal of our instruments to include scientists looking for insights without having to be control cytometry experts. In the meantime, we are committed to continue servicing and supporting Guava and the AMLEX customers throughout the instrument lifecycle.
Speaker 4: Looking at the customer base and our commercial reach.
Speaker 4: This transaction is expected to substantially expand our commercial team of pro experts by 50 percent in Asia Pacific and more than 80 percent in Europe , the Middle East, and Africa. We haveBoy grievously launched
Speaker 4: This is in line with our existing goals to broaden our commercial footprint to allow for even greater penetration worldwide for Cytex, Aurora, and Northern Lights instruments.
Speaker 4: Furthermore, we believe the current install base of Amadeus and Guava product lines, which totals over 7,000 instruments across more than 1,500 customers in over 70 countries, will be an eternal target market for SciTech, as this install base will benefit from the pacemans and upgrades into our nom-
Speaker 4: the efficiency in our service organization.
Speaker 4: reducing the travel time for our technicians and increasing our margin as we support our growing input base of instruments at a higher customer density in each geographic location.
Speaker 4: To summarize, while we expect modest revenue contributions from the acquisition this year, Patrick will provide more details shortly.
Speaker 4: We believe that the real value of this acquisition is threefold as discussed above.
Speaker 4: First, the acquired technology will be used to accelerate the development of new products.
Speaker 4: Second is the dramatic expansion in prospective customers for our Aurora and Northern Lights products from the existing user base of ominous and Guava instruments. Third, we expect the efficiency of having these product lines under the Cytek umbrella.
Speaker 4: to drive improvements in the growth margin and the profitability of our service operations. We look forward to welcoming the Lumenix Pro Cybometry team into the Cytech family.
Speaker 4: working together to meet the needs of our customers and continuing to drive their research forward. For more details, I encourage anyone who did not attend our conference call earlier this month to access the replay on the inverted section of our website.
Speaker 4: and refer to the press release and presentation deck from the announcement. Once again, I'm pleased with the progress our team has made this quarter and throughout 2022.
Speaker 4: As we continue to push forward a cadence of new products and applications, we remain deeply focused on providing a complete sale analysis solution to our customers. We look forward to continuing to provide our novel FSP platform to these customers.
Speaker 4: as they push the bounds of scientific discovery and clinical progress. With that, I will now turn the call over to Patrick for more details around our financial.
Speaker 5: Thanks, Wenbin. Total revenue for the fourth quarter of 2022 was $48.3 million, a 24% increase over the fourth quarter of 2021. On a constant currency basis for the quarter, revenue was $51.2 million, an increase of 32% over the fourth quarter of 2021.
Speaker 5: Growth profit was $29.4 million for the full squad of 2022, an increase of 24% compared to a growth profit of $23.6 million in the full squad of 2021.
Speaker 5: Gross profit margin was 61% in the fourth quarter of 2022 compared to 61 in the fourth quarter of 2021.
Speaker 5: Adjusted gross profit margin in the fourth quarter of 2022 was 62% compared to 63% in the fourth quarter of 2021 after adjusting for stock-based compensation expense and amortization of acquisition-related intangibles.
Speaker 5: Operating expenses were $29.3 million for the fourth quarter of 2022, a 31% increase from $22.3 million in the fourth quarter of 2021.
Speaker 5: The increase was primarily due to expenses to support continued growth of the business, including further investment in sales and marketing, R&D, and costs related to operating as a public company.
Speaker 5: Research and development expenses were $9.7 million for the fourth quarter of 2022, compared to $7.1 million for the fourth quarter of 2021. Sales and marketing expenses were $9 million for the fourth quarter of 2022, compared to $8.3 million for the fourth quarter of 2022.
Speaker 5: in the first quarter of 2021. General and administrative expenses were $10.5 million for the fourth quarter of 2022, an increase from $6.9 million in the fourth quarter of 2021.
Speaker 5: We achieved net income of $3.7 million this quarter compared to a loss of $1.2 million for the fourth quarter of 2021. Additionally, adjusted EBITDA in the fourth quarter of 2022 was $6.6 million compared to $5.5 million in the fourth quarter of 2021.
Speaker 5: after adjusting for stock-based compensation expense. Now for the full year. Total revenues for the year ended December 31, 2022 was 164,028% increase over the year ended December 31, 2021.
Speaker 5: On a constant currency basis, the revenue was 171.8 million, and increased of 34% over the full year of 2021. While we experienced targeted anticipated effects headwinds during the year, on a constant currency basis, the revenue was 171.8 million, and increased of 34% over the full year of 2021.
Speaker 5: We exceeded the top of our guidance range for 2022, driven by strength in instrument and service revenue. Growth profit was $101 million for the year ended December 31, 2022, an increase of 28% to a growth profit of $79.1 million.
Speaker 5: in the year ended December 31, 2021. Goose profit margin was 62% in the year ended December 31, 2021, compared to 62% in the year ended December 31, 2021. Adjusted Goose profit margin in the year ended December 31.
Speaker 5: 2022 was 63% compared to 63% in the year ended December 31, 2021, after adjusting for stock-based compensation expense and an activation of acquisition related intangibles.
Speaker 5: Operating expenses were $102.8 million for the year ended December 31, 2022, a 47% increase from $70 million in the year ended December 31, 2021.
Speaker 5: The increase was primarily due to expenses to support continued growth of the business, including costs related to operating at the public company.
Speaker 5: Research and development expenses were $34.9 million for the year ended December 31, 2022, compared to $24.4 million for the year ended December 31, 2021. Sales and marketing expenses were $33.2 million for the year ended December 31, 2022,
Speaker 5: Comforted $24.7 million for the year ended December 31, 2021. General and Abbey's Turkey expenses were $34.7 million for the year ended December 31, 2022. Unincrease from $20.8 million.
Speaker 5: for the year ended December 31, 2021. Net income in the year ended December 31, 2022 was 2.5 million compared to 3 million in the year ended December 31, 2021. Adjusted EBITDA in the year ended December 31, 2022 was 21.2 million compared to 17.5 million.
Speaker 5: in the year ended December 31, 2021, after adjusting for stock-based compensation expense and other non-recurring expenses. Cash, cash equivalents, and short-term investment were approximately $341.1 million as of December 31, 2022.
Speaker 5: Subsequent to A&, we made an all-cache acquisition of the aforementioned product lines from LoomingX, which will reduce our cash balance by approximately 45 million.
Speaker 5: Now turning to our guidance for 2023. We expect to see robust growth from our existing pre-acquisition business, to see an anticipated revenue from our existing business to be in the range of $205 million to $215 million.
Speaker 5: We're presenting growth of 25 to 31% over fully 2022, revenue of 164 million. This range assumes no changes to the rate of foreign exchange at the beginning of 2023, as well as some continued impact in China during the first half of the year related to COVID and other factors.
Speaker 5: which closed earlier today will contribute only 10 months of revenue in 2023.
Speaker 5: Additionally, as Wendy mentioned, we are transitioning the Guava product line as well as some of the AMIS product lines to our normal light platforms. We expect these tech transfer activities and product development efforts to take some time. As a result, our guidance assumes only very modest contribution from Guava in 2023. Counting together, our customer resources will be envied by the liquidity of global Rate sloppy customer service. We lately wanted to access our products differently, andkh-key people in a regulatory field for
Speaker 5: This brings our 48-2023 revenue gap to $225-235 million representing growth of 37-43% over 48-2022.
Speaker 5: In keeping with our typical seasonal pattern, we are expecting our 2023 revenue to be screwed towards the back half of the year. In all, SIPEC is in a strong position financially, continues to see solid demand, and is committed to remaining profitable on an annual, EBITDA, and net income basis.
Speaker 5: as well as achieving our long-term growth targets and objectives. In addition, our solid balance sheet underpins the strength of our healthy organization. We will continue to invest in our core business as it relates to new projects and innovation, while remaining opportunistic in the M&A environment and focusing on growth in all key areas.
Speaker 4: With that, I will turn it back over to Wendon. Thanks, Patrick. I'm proud once again of SCI-CAT's achievement this quarter and throughout 2022, marked by strong growth profit margin, net income, and adjusted EBITDA results.
Speaker 4: as well as the continued evolution of our organization. As I have discussed before, we operate our business according to four key pillars, each of which is integral to our enterprise's mission and forward vision.
Speaker 4: These pillars, which are intimate, application, bioinformatics and clinical, lay out our roadmap for operating our business now and in the future with intentional and purposeful execution. Today, I'm even more confident.
Speaker 4: that our daily work aligned under these four pillars adheres to and executes on our overall strategy. I would like to express my appreciation for our team around the world. It is their excellence, hard work, and their shared belief in our important mission that drives our progress.
Thank you, everyone. And we will now open the call for questions. Certainly. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. One moment.
I'm closing that to, so can you talk about the only 20 million in revenue from the acquisition? I know it's been traded hands a few times at a higher revenue basis. I mean, if I'm getting your color correctly, I think the guava line, you're not actively selling it. Can you just maybe go...
Just give us a little bit more how we should think about the contributions from the different product lines you're acquiring. Are you just focusing on the consumables and the service contracts and selling your own instruments? Any way you can help us think about that part.
So just to start, I just want to re-emphasize the purpose of this acquisition, the primary driver is not for its revenue. And so by saying that, we still expect some revenue coming from this acquisition, but just to do it.
The three objectives, one is the technology. And the second part is the wider customer base that will help us to sell our full special profiling technology and products into those customer base. And third is the efficiency that will help bring to improve our operation margin on the service side. Now,
Part of the reason for this 20 million is, first year, as Patrick has indicated, it's only 10 months, right? It's not full-talk months. Second part is, we folks, more towards imaging technology side, are using why most of the contribution coming from the Aminux imaging products. Now, if you look at Aminux itself, there are other products which is non-imaging, which we are going to deemphasize through the integration process.
And then also mention about this Guava. And actually during the Guava, we are moving the Guava manufacturing into site at facility. And there will be interruption during that process through the integration. And we are also looking deep into this product line. And through that whole process, that's why as Patrick has indicated, not much revenue has been counted from the Guava site. So overall, and adding together, we feel 20 million is kind of conservative. And David, I'm gonna just add that we expect to phase out.
of your best in class full spectral flow cytometry on this operating structure. Is there maybe upside for that versus the guidance expectations? Is that synergy still potential in 2023 or is maybe just a 2024 phenomenon for you to sell your existing products into that product line and really capture that revenue synergy?
So I would say that yes, there are some upside, but maybe more so on the second half of the year than on the first half. Yes. Okay. Maybe I'm just going to squeeze one last one in here. On the working capital, working capital, at least we're seeing a balance sheet versus a cash flow statement here. Kay will drop soon. But anyway. Get the closing markets up!
the growth is that the working capital will align with the revenue growth.
growth is that the working capital will align with the revenue growth.
Okay, moving forward to our next question. And our next question will come from Deja Savant of Morgan Stanley . Tejas, your line is open. Hello, this is Yuko on for Tejas. Thank you for taking our questions.
How should we be thinking about balancing investments into the newly acquired business versus cost synergies? Is there anything in particular to flag for OPEX in terms of cadence over the course of 23? How should we be thinking about balancing investments into the newly acquired business versus cost synergies?
be thinking about balancing investments into the newly acquired business versus cost synergies? Is there anything in particular to flag for OPEX in terms of cadence over the course of 23? I will go back to the previous video about what is<|sa|> this model to be.
Well, first of all, I mean, we are – it's a carve-out, so the expectation here on the synergies is mostly on the revenue, gross profit margin as we continue to improve the gross profit margin. And really, where we see expansion is on the service side. As when we mentioned, the business has about 7,000 instruments out there with a number of field service engineers. So we believe that there's an opportunity for us to improve that substantially. I think one of the most important aspects of –
this cover-up acquisition is actually its imaging technology. And that will really drive us toward building the next generation imaging-based special sales orders. That's what we are focusing on. This actually plays a lot with regarding the decision of going after this acquisition. Got it. And then as a separate follow-up, we are going to be talking about the new technology that is going to be going to be available to the industry. And then we are going to be talking about the new technology that is going to be available to the industry.
Could you elaborate on the circumstances where revenue is recognized under bill and fold transactions? How much revenue was recognized in 4Q under the bill and fold? I would have to come back to you, but it's about the same amount that we had in Q3 of last year's R.
Okay, thank you. One moment for our next question. And our last question will come from Max Masuki of COHN. Your line is open.
Hi, this is Stephanie on for Max. Thanks for taking my questions and congrats on closing the acquisition. Just quickly on your 2023 revenue guide specifically that 20 million in revenue from the Soren
So you mentioned that you were planning on transitioning some amnest and guava users to the Northern Lights platform. Can you just provide some more color on the pacing behind that transition and is that specifically baked into that 20 million in revenue and do you plan to break out organic revenue as the year progresses?
We haven't made any decision whether we will break out or not. But among those 20 million, the primary driver is the ominous imaging flow cytometer. So along with the service revenue.
we, as Patrick has earlier indicated, and not much of our revenue is embedded into this forecast. Got it, understood. And then on the,
on the service margin. So I understand that the recent acquisition should improve that. Can you provide some more color on the timing and the degree of improvement that we should expect to see in 2023 in terms of the margin? Yeah, so the expectation as we're going to go through a transition period as we integrate the company. So my expectation is that the margin will be
much higher on the second half, more so towards the last quarter of this year. As you can imagine, during the integration stage, we need to take some time for cross training of technicians on both sides.
in order for them to service the instruments of Guava armless as well as Cytex food special products. Got it, understood. And then if I could squeeze in one more. So with the acquisition expanding your commercial team in APAC by 50%
but we expect we will see the benefits towards the second half of the year. Got it, understood. Thanks for taking my questions.
And I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.
I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.
The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1-1. For more information, visit www.cpe.rutgers.gov
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Good day and thank you for standing by. Welcome to the SciTech fourth quarter and full year 2022 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 11 on your telephone. You will then hear an automated message advising that your hand is raised.
To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Paul Goodson, of Investor Relations. Please go ahead. Thank you, operator. Earlier today, Sytech Bio Sciences released financial results for the quarter and full year ended December 31, 2022. Thank you.
If you haven't received this news release or if you'd like to be added to the company's distribution list, please send an email to investors at scitechbio.com. Joining me today from Scitech are Wenbin Zhang, CEO , and Patrick Jean Monod, 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 meaning of the federal securities laws, including statements regarding Scitech's business plans, strategies, opportunities, and financial projections. These statements are based on the company's current expectations and expectations of the account.
and inherently involves significant 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 Stigments in the press release sitec issued today and in sitec's 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. For conciliation to the most directly comparable, GAAP financial measure may be found in today's earnings release submitted to the SEC.
Except as required by law, SITEC disclaims any duty to update any forward-looking statements whether because of new information, future events, or changes in its expectations. This conference call contains time-sensitive information and is accurate only as of the live broadcast February 28, 2023. With that, I'd like to turn the call over to Wenbin. Thanks Paul and welcome everyone joining the call today. As always, I want to start by 13 of our team at the site.
for their dedication and execution as we close out 2022. On the call today, I will discuss our progress for the quarter and the year and highlight several recent developments that illustrate how CITES continues to advance towards our mission and vision. Finally, I will turn the call over to Patrick for a more detailed look at our financial results and outlook for 2023.
2022 was a significant year for SciTech, which demonstrated our continued evolution and progression as an organization.
We began the year by announcing the opening of our new facility in Fremont, California, which tripled our previous manufacturing capacity to meet growing global demand for cell analysis solutions. In April , we announced the appointment of Todd Ballum as our chief commercial officer in Qum.
We hosted our successful inaugural analyst and the investor day. And in October , we named the quick willion Chief Operating Officer. And now in 2003, we are already seeing significance in the momentum. At the start of this month, we announced a tradition partnership with the Bauer-Led laboratory to expand our religion portfolio, enhancing high-programming panels on our steel analysis system.
We believe that the addition of power and star bright light to our full special profiling for FSP platform is a big win for researchers conducting multi-planetary experiments and we are in full district about this new partnership.
Finally, we are very excited to have announced our acquisition of Luminex Pro Cytometry business. We are thrilled to welcome this organization and team to our enterprise, as this acquisition expands Cytex product portfolio, technical capabilities, global install the base, service offering and market opportunities.
We will discuss further details of this transaction, including financial and strategic benefits later in the call. This quarter and a year, our achievements have showcased the efficiency and effectiveness of our global business operation.
We demonstrated solid results across growth margin, net income and adjusted evidence and our global sales have expanded. This is all in addition to our ongoing efforts to diversify our revenue and further our overall strategy. As we look at the industry landscape, Scikit continues to stand apart in the field.
as we provide our customers with an end-to-end solution, consisting of instruments, reagents, software, and application services. Now, even further enhanced by the recent acquisition and the publisher, I just mentioned. Our unique patented portfolio of comprehensive solutions positions us as a leader in the sector. And we are proud of the demonstrated value we provide to our customers.
This past year, we have consistently highlighted our comprehensive suite of products and services, which has led to further diversification of our revenue stream beyond the sales of instruments. As we have said previously, beyond our original suite of instruments, which continues to see solid demand, we expect our sales orders and the reagents to continue to contribute considerably to our future enterprise revenue growth. I'm pleased to say that our installed base of instruments continues to achieve robust growth in the field. During the fourth quarter,
We placed the 169 instruments accordingly record bringing our total additions for the year to 560. Well above the pace we accomplished in 2021. Altogether, our install base has now reached 1670 instruments as of the end of 2022. Furthermore, these basements reflected our core strategy to achieve growth across the range of applications and the users from entry level to high dimensional cell analysis applications.
Since first being introduced in 2017, our sales analysis systems have gained widespread adoption across the globe with use in 50 countries and regions. And now we have seen great traction in diversifying our revenue base through the launch of new products, including recruiting sources of revenue through service and the region sales.
While still a smaller part of our overall revenue, demand for our reagents is growing rapidly and we are excited for the potential of this contribution to our enterprise. Through our recent strategic partnership with Bio-RAD to expand our reagent portfolio, the new Star Bright device will be available to SciTech to develop and commercialize reagent products.
to support high parameter application on Aurora and Northern Lights Flow Cytometry systems. Sub-Rite dyes have been designed to be stable with superior brightness, narrow excitation, and emission characteristics for a minimized spillover and improved resolution of specific cell populations.
thereby allowing researchers to build bigger and better panels. Double-I-DIS complement site-tech see-through family of proprietary DIS providing a wide variety of color options for highly multiple-experial panel design and application development.
SciTech plans to develop and optimize single-value agents and the multi-color panels using StarBrite device for the more than 1,600 SciTech-FSP instruments already deployed across 50 countries and regions. These single-value agents and the multi-color panels are designed to be more efficient and
will unlock additional capabilities for our end user. Researchers will be able to expand multi-parameter analysis into violet and ultraviolet channels with site and optimize the region. Enlistions the full power of FST technology to obtain better resolution and deeper understanding of cell populations. The partnership is squarely in line with our organization's statistical goals and initiatives.
to continue building out our applications for the reagent business and further extend sites as competitive lead at head of other technologies. In 2222, we also announced the launch of sites or cloud. The cloud based platform that features two integrated tools to streamline workflows on sites as state of the art sales orders and analyzers. The site head cloud streamlines the process from panel design to data acquisition. The new site head cloud digital ecosystem combines all of site head special panel design tools in one place.
and allows users to prepare experiments remotely prior to accessing the instrument. The benefits of this approach is accelerating the time to insights for a wide range of applications, including immunology, oncology, infection diseases, and inflammatory diseases. The addition of site crowds brings benefits to both our current.
extensive customer base, and the future SciTech users. On our roadmap, we aim to expand the capabilities of SciTech Cloud, covering data management, sharing, and analysis. The launch of SciTech Cloud is an exciting step for our organization, further solidifying our position in the industry as a full solution provider with a wide array of offerings and services that seems they work together toward helping our customers achieve their own goals. We have worked diligently to build out an organization.
that is now uniquely positioned in the industry as a full solution provider, offering a diverse and a complete suite of solutions to our customers. And this is well recognized across the industry as we continue to grow our offerings at the base of instruments, religions, and services.
Our technology has now been validated by more than 1,000 peer-reviewed publications as of the end of the quarter. This quarter alone, there were 129 peer-reviewed publications mentioning sites, green the total for the year to 500 and 4.
and the all-time publication to 1013. I'm very proud of this accomplishment, which speaks to the momentum of our platform and the validate the use of our offerings to the scientific community.
As an example of how significant some of these research efforts are, one paper published in Nature identifies possible therapeutic targets to alleviate brain deficits of aging and Alzheimer's disease. A second exemplifies how our technology is used to study the relationship between the microbiome and the health. And that paper.
researchers identified which gut bacteria drive neural information in a module of multiple sclerosis. Finally, I would like to spend a moment to discuss our acquisitions of Luminex Flow Cytometry Business. As we shared when we first announced the deal, we are excited about this transaction and are confident this acquisition will bring both immediate and the long-term value for Cytek. The Luminex Flow Cytometry Business.
provides important contributions to our technological abilities, product range, customer base and commercial reach. Starting with the technology. Both the cellular imaging and the artificial intelligence technologies from the Amnesty line will be used to enhance the performance of sites that are all our analyzers and the cell-sword. These new capabilities will allow sites to offer researchers and scientists a combination of enhanced AI-jolene analytical performance.
from high resolution cell imagery, together with the speed, accuracy, phenotyping, and the cell sorting capabilities of the full spectral aurora flow cytometry. We will also use Guava technology to enhance side-text products. For example, Guava's capital-A fluid-based technology for sample handling, along with its menu-driven user interface, will be incorporated into our Northern Lights platform. As a result, we are planning to gradually transition both the NAND imaging Guava and the AMNIH product lines to our Northern Lights platform.
all while retaining the key capabilities of these machines that have been so well appreciated by their respective customer basis. While we expect these tech transfer activities and the product development initiatives to take some time, we believe SITEX will be positioned to offer new products with exciting new features and the capabilities. These will include ease of use and the reduction of time required to conduct experiments.
both of which we believe will broaden the appeal of our instruments to include scientists looking for insights without having to be controlled cytometry experts. In the meantime, we are committed to continue servicing and supporting Guava and the Amlef customers throughout the instrument life cycle. Looking at the customer base and our commercial reach, this transaction is expected to substantially expand our commercial team.
of pro experts by 30% in Asia-Pacific, and more than 80% in Europe , the Middle East, and Africa. This is in line with our existing goals to broaden our commercial footprint, to allow for even greater penetration worldwide for sites or other and the modern-life instruments. Furthermore, we believe the current in-store base of partners and the Guava product line, which totals to the world. Over 7,000 instruments across more than 1500 customers in over 70 countries.
will be an attractive target market for site tech. As this in-store-based will benefit from the tradesmen and the upgrades into our Northern Lights and Aurora platforms. And finally, looking at the benefits to our operations. This acquisition offers significant operational synergies in the service functions. We expect the expanded service team will provide the greater efficiency in our service organization, reducing the travel time for our technicians and increasing our margin as we support our growing into the base of instruments.
at a higher customer density in each geographic location. To summarize, while we expect modest revenue contributions from the acquisition this year, on which Patrick will provide more details shortly, we believe that the real value of this acquisition is threefold as discussed above. First, the acquired technology will be used to accelerate the development of new products. Second, is the dramatic expansion in prospective customers for our Aurora and Northern Lights products from the existing user base of ominous and the Guava instruments. And the third, we expect the efficiency of having these product lines under the Cytek umbrella.
to drive improvement in the growth margins and profitability of our service operations. We look forward to welcoming the limited-flow site promise routine into the site-test family, working together to meet the needs of our customers, and continuing to drive their research forward. For more detail, I encourage anyone who did not attend our conference call earlier this month to access the replay on the investment section of our website.
and refer to the press release and presentation deck from the announcement. In all, once again, I'm pleased with the progress our team has made this quarter and the flu out 20, 22. As we continue to push forward a cadence of new products and applications, we demand deeply focused on providing a complete sale of numerical solutions 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 and the clinical progress. With that, our novel can be called
for more details around our financials. Thanks, Wenbin. Total revenue for the fourth quarter of 2022 was $48.3 million, a 24% increase over the fourth quarter of 2021. On a constant currency basis for the quarter, revenue was $61.2 million, an increase of 32% over the fourth quarter of 2021. Growth profit was $29.4 million over the fourth quarter of 2022.
An increase of 24% compared to a gross profit of $23.6 million in the fourth quarter of 2021. Gross profit margin was 61% in the fourth quarter of 2022 compared to 61% in the fourth quarter of 2021. After adjusting for a start-based compensation expense and amultivation of acquisition related intangibles.
Operating expenses were $29.3 million for the fourth quarter of 2022, a 31% increase from $22.3 million in the fourth quarter of 2021. The increase was primarily due to expenses to support continued growth of the business, including further investment in sales and marketing, R&D and costs related to operating as a public company.
We searched and developed an expenses with $9.7 million for the fourth quarter of 2022, compared to $7.1 million for the fourth quarter of 2021. Sales and marketing expenses were $9 million for the fourth quarter of 2022, compared to $8.3 million in the first quarter of 2021.
General and administrative expenses were $10.5 million for the fourth quarter of 2022, an increase from $6.9 million in the fourth quarter of 2021. We achieved net income of $3.7 million this quarter compared to a loss of $1.2 million for the fourth quarter of 2021. Additionally, heart rate Won-Tuddu
Adjusted EBITDA in the first quarter of 2022 was $6.6 million, comfort to $5.5 million in the first quarter of 2021, after adjusting for stock-based compensation expense. Now for the full year. Total revenues for the year ended December 31, 2022 was $6.4 million, a 28% increase over the year ended December 31, 2021. On a constant currency basis, revenue of $171.8 million, an increase of 34% over the full year of 2021. While we experienced targeted anticipated FX headwinds during the year, on a constant currency basis, we exceeded a top of our guidance range for 2022.
and a motivation of acquisition of related intangibles.
Operating expenses were $102.8 million for the year ended December 31, 2022, a 47% increase from $70 million in the year ended December 31, 2021.
The increase was primarily due to expenses to support continued growth of the business, including costs related to operating as a public company. Research and development expenses were $34.9 million for the year ended December 31, 2022.
compared to $24.4 million for the year ended December 31, 2021. Sales and marketing expenses were $33.2 million for the year ended December 31, 2022, compared to $24.7 million for the year ended December 31, 2021.
for the year ended December 31, 2021. General and administrative expenses were $34.7 million for the year ended December 31, 2022. An increase from $20.8 million for the year ended December 31, 2021. Net income in the year ended December 31, 2021.
December 31, 2022 was 2.5 million compared to 3 million in the year ended December 31, 2021. Adjusted EBITDA in the year ended December 31, 2022 was 21.2 million compared to 17.5 million in the year ended December 31, 2021 after adjusting for stock-based compensation.
expense and other non-recurring expenses. Cash, cash equivalents and short-term investment were approximately $341.1 million as of December 31, 2022. Subsequent to year-end, we made an all-cash acquisition of the aforementioned product line from Luminex, which will reduce our cash balance by approximately $45 million.
Now turning to our guidance for 2023. We expect to see robust growth from our existing pre-acquisition business, this year an anticipated revenue from our existing business to be in the range of $525 million to $215 million. We're presenting growth of 25 to 31% over 48 2022.
revenue of 164 million. This range assumes low changes to the rate of foreign exchange at the beginning of 2023, as well as some continued impact in China during the first half of the year related to COVID and other factors. We expect these effects from China to abate by the second half of 2023. In addition, we expect approximately 20 million of the Chinese Global Businesstrips later this year
line to our Northern Lights platform. We expect these tech transfer activities and product development effort to take some time. As a result, our guidance assumes on the very modest contribution from Guadalupe 2020-23.
Taken together, this brings our 48-20-23 revenue guys to 225 to 235 million representing growth of 37 to 43% over 48-20-22.
In keeping with our typical serial pattern, we are expecting our 2023 revenue to be screwed to the back half of the year.
In all, SIPEC is in a strong position financially, continues to see solid demand, and is committed to remaining profitable on an annual EBITDA and net income basis, as well as achieving our long-term growth targets and objectives.
In addition, our solid balance sheet underpins the strength of our healthy organization. We will continue to invest in our core business as it relates to new projects and innovation, while remaining opportunistic in the M&A environment and focusing on growth in all key areas.
With that, I will turn it back over to Wendon. Thanks, Patrick. I'm proud once again of SCI-CAT's achievements this quarter and throughout 2022, marked by strong growth profit margin, net income, and adjusted EBITDA results.
as well as the continued evolution of our organization. As I have discussed before, we operate our business according to four key pillars, each of which is integral to our enterprise's mission and forward vision. These pillars, which are instruments, applications, and services, are the key pillars of our organization.
bioinformatics and clinical, lay out our roadmap for operating our business now and in the future with intentional and purposeful execution.
Today, I'm even more confident that our daily work aligned under these four pillars are the here two and the attitudes on our overall strategy.
I would like to express my appreciation for our team around the world. It is their excellence, hard work, and share the belief in our important mission that drives our progress. Thank you everyone. And we will now open the call for questions.
Certainly. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster one moment. Our first question comes from it.
I'm in closing that today. So can you talk about the only 20 million in revenue from the acquisition? I know it's been traded hands a few times at a higher revenue basis. I mean, if I getting your color correctly, I think you're the, the guava line, you're, you're, you're not actively selling it. Can you just maybe go, just give us a little bit more how we should think about the contributions from the different product lines.
driver is not for its revenue. So by saying that, we still expect some revenue coming from this acquisition, but just to emphasize the three objectives, one is the technology, and the second part is the...
a wider customer base that will help us to sell our full special profiling technology and products into those customer base. And third is the efficiency that will help bring to improve our operation margin on the service side. Now, part of the reason for this 20 million.
The first is, as Patrick has indicated, it's only 10 months, right? It's not a full 12 months. Second part is we focus more towards imaging technology side, a reason why most of the contribution coming from the Armanix imaging products. Now if you look at Armanix itself, there are other products which is non-imaging, which is non-imaging.
we are going to deemphasize through the integration process. And then I also mentioned about this guava. And actually, we are moving the guava manufacturing into site facility and there will be interaction during that process through the integration. And we are also looking deep into this product plan. And through that whole process, that's why, and as Patrick has indicated, not much revenue has been counted from the guava site.
So overall, and adding together, we feel 20 million is kind of conservative. And David, I'm going to just add that we expect to phase out products that have a lower gross profit margin than what we expect. So there's going to be some phasing out at some point.
I really appreciate that. Can you maybe give me color? I'm starting to harp on this, but the guidance did come post that acquisition a little bit below. I think we were all modeling. So I kind of have to get a little bit more granular here. We were expecting, I would have thought a little bit of revenue synergies. As you know, you do...
maybe just a 2024 phenomenon for you to sell your existing products into that product line and really capture that revenue synergy.
So I would say that yes, there are some upside, but maybe more so on the second half of the year than on the first half. Yes. Okay. Maybe I'm just going to squeeze one last one in here. On the working capital, working capital, at least we're seeing a balance sheet versus a cashflow statement here.
and then I'll stop there. Thank you. Yeah, and if you are correct, the expectation this year, considering the growth is that the working capital will align with the revenue growth. Moving forward to our next question.
And our next question will come from Deja Savant of Morgan Stanley . Tejas, your line is open. Hello, this is Yuko on for Tejas. Thank you for taking over.
How should we be thinking about balancing investments into the newly acquired business versus cost synergies? Is there anything in particular to flag for OPEX in terms of cadence over the course of 2023? How should we be thinking about balancing investments into the newly acquired business?
Well, first of all, I mean it's a carve out so the expectation here on the synergies is mostly on the revenue, gross profit margin as we continue to improve the gross profit margin. And really where we see expansion is on the service side.
As when we mentioned, the business has about 7,000 instruments out there with a number of field service engineers. So we believe that they've an opportunity for us to improve that substantially. I think one of the most important aspects of this carve out acquisition is actually its imaging technology.
And that will really drive us towards building the next generation imaging based cells and Jae I'm going to show you early in the picture what's in front of you. I'm going to show you early in the picture.
special sales order, that's what we are focusing on. This actually plays a lot with regarding to the decision of going after this acquisition. Got it. And then as a separate follow up, could you elaborate on the circumstances of this?
where revenue is recognized under bill and full transaction, how much revenue was recognized in Q3 of this year of last year's time.
revenue is recognized under bill and fold transactions, how much revenue was recognized in 4Q under the bill and fold? I will have to come back to you, but it's about the same amount that we had in Q3 of last year. Sorry. Okay, thank you. One moment for our next question. fountain, or what is your payer Latinos for Karen?
And our last question will come from Max Mesouki of Cohen. Your line's open. Hi, this is Stephanie on for Max. Thanks for taking my questions and congrats on closing the acquisition. Just quickly on your 2020 through revenue guide, specifically that 20 million in revenue from the historian.
So you mentioned that you were planning on transitioning some AMNIS and Guava users to the Northern Lights platform. Can you just provide some more color on the pacing behind that transition and is that specifically baked into that 20 million in revenue and do you plan to break out organic revenue as the year progresses?
We haven't made any decision whether we will break out or not. But among those 20 million, the primary driver is the ominous imaging flow cytometer. So along with the service revenue.
We, Patrick, have earlier indicated, and not much Quaba revenue is embedded into the s for?.
Got it, understood. And then on the service margin, so I understand that the recent acquisition should improve that. Can you provide some more color on the tithing and the degree of improvements that we should expect to see in 2023 in terms of the margin? Yeah, so the expectation as we're going to go through a transition period.
as we integrate the company. So my expectation is that the margin will be much higher on the second half, more so towards the last quarter of this year. As you can imagine, during the integration stage, we need to take some time for cross training of technicians on both sides in order for them to service the instruments.
of Guava Amelis as well as Cytex food special products. Got it, understood. And then if I could squeeze in one more. So with the acquisition expanding your commercial team in APAC by 50% and your EMEA commercial team by 80%, how should we think about this driving additional growth for these two regions in 2023?
We feel just like the service, initially there will be a time, a period of time for cross training of our people on both sides to be able to cross-sell. But we expect we will see the benefits towards the second half of the year.
Thank you for taking my questions. And I'm showing no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.