Q4 2023 Standard BioTools Inc Earnings Call

Good day, everyone and welcome to standard Bio tolls, Inc, fourth quarter and full year 2023 financial results Conference call.

Operator: Good day, everyone, and welcome to Std Biotools Inc.'s fourth quarter and full year 2023 Financial Results Conference. As a reminder, this conference is being recorded. And now, it is my pleasure to introduce your host, David Holmes from Investor Relations.

As a reminder, this conference is being recorded.

It's now my pleasure to introduce your host David Holmes from Investor Relations David <unk>.

David Holmes: Please go ahead. Thank you, operator, and good afternoon, everyone. Welcome to Std Biotools' fourth quarter and full year 2023 earnings conference call. Leading the call today is Michael Egholm, President and Chief Executive Officer, Jeff Black, Chief Financial Officer, and Adam Taich, Chief Strategy Officer. At the close of market today, February 28, 2024, Std Biotools released its financial results for the quarter and fiscal year ended December 31, 2023. During this call, we will review our results and provide commentary on our financial and operational performance, our 2024 outlook, market trends, and strategic initiatives. During the call, we will make forward-looking statements about events and circumstances that have not yet occurred, including plans and projections for our business.

Speaker Change: Go ahead.

David Holmes: Thank you operator, and good afternoon, everyone.

David Holmes: Welcome to standard buyer channels fourth quarter and full year 2023 earnings conference call, leading the call today, Michael Holmes, President and Chief Executive Officer, Jeff Black Chief Financial Officer, and Adam <unk> Chief strategy Officer.

David Holmes: At the close of market today February 28, 2024 standard bio tools released its financial results for the quarter and fiscal year ended December 31 2023.

David Holmes: During this call we will review our results and provide commentary on our financial and operational performance 2024 outlook market trends and strategic initiatives.

David Holmes: During the call we will make forward looking statements about events and circumstances that have not yet occurred including plans and projections for our business.

David Holmes: Our Outlook for 2024 and future financial results. Unknown Attendee, Michael Egholm, Vikram Jog, Adam Taich, Elizabeth Garcia, Scott Greenstone, Std Biotools. The statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from current expectations. The forward-looking statements in this call are based on information currently available to us, and we disclaim any obligation to update these statements, except as may be required by law. During the call, we will also present some financial information on a non-gap basis. We believe these non-GAAP financial measures are useful in evaluating our core performance and as a baseline for assessing the future earnings potential of the company. We use these non-GAAP measures in our own evaluation of continuing operating performance.

David Holmes: Our outlook for 2024 and future financial results.

David Holmes: <unk> trends and opportunities and our expectations related to the combined operations with Soma logic, including potential synergies and our business outlook for the combined company.

David Holmes: These statements are subject to substantial risks and uncertainties that may cause actual events or results to differ materially from current expectations.

David Holmes: Forward looking statements in this call are based on information currently available to us and we disclaim any obligation to update these statements except as may be required by law.

David Holmes: During the call. We will also present some financial information on a non-GAAP basis. We believe these non-GAAP financial measures are useful in evaluating our core performance and as a baseline for assessing the future earnings potential of the company. We use these non-GAAP measures and our own evaluation of continuing.

David Holmes: <unk> operating performance.

David Holmes: We encourage you to carefully consider our results on a GAAP and non-GAAP basis. The reconciliation between non-GAAP measures and their GAAP equivalents is provided in the tables accompanying today's press release and as an appendix to today's presentation slide. Please note that management will be referring to a slide presentation today, including updated supplemental financial information, during the webcast today and will not host a Q&A session following their remarks.

David Holmes: We encourage you to carefully consider our results on a GAAP and non-GAAP basis, a reconciliation between non-GAAP measures and their GAAP equivalents are provided in the tables accompanying today's press release and as an appendix to today's presentation slides.

David Holmes: Please note that management will be referring to a slide presentation, including updated supplemental financial information within the webcast today will not host a Q&A session. Following their remarks.

David Holmes: Today's slide presentation, along with a replay of the webcast, will be available on the investor section of our website. I would now like to turn the call over to Michael Egholm, President and CEO of Std Biotools. Thank you, David.

David Holmes: Today's slide presentation, along with a replay of the webcast will be available on the investors section of our website.

David Holmes: I would like to now turn the call over to Michael <unk>, President and CEO of <unk>.

David Holmes: Biofuels.

Michael Egholm: Thank you David we greatly appreciate everyone joining us on today's call.

Michael Egholm: We greatly appreciate everyone joining us on today's call. 2023 was our first full year of operations at Std Biotools, and I could not be more proud of our team and its accomplishments. In one of the more challenging times for life science companies in recent memory, our disciplined team of operators significantly reduced cost and cash burn, expanded gross margins, and returned the declining business to growth. Add to this the successful closing of the merger with Somalogic, and I can say with excitement that Std Biotools has now fully activated the business thesis to build scale in a highly fragmented space while maintaining operational focus and recognizing the all important maxim, " With the recent completion of the Simulogic merger on January 5th, the Performa combined business generated $192 million in revenue in 2023 and positions the combined company not only as a frontrunner in spatial biology but as a business with three highly differentiated technologies under one roof, representing certainly the broadest next generation of solutions serving the proteomics customer and market in the beyond-genomics era.

2023 was our first full year of operations stand with bio tools and I could not be more proud of our team.

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Michael Egholm: One of the more challenging times for the life science companies in recent memory.

Disciplined team of operators significantly reduced cost and cash burn expanded gross margins and return to declining business to grow.

Michael Egholm: At today's navigating a successful closing of the merger with Soma logic I can say that excitement Thunder Bayou tools has now fully activated.

Michael Egholm: Business thesis to build scale in a highly fragmented space, while maintaining operational focus and recognizing the all important maxim.

Michael Egholm: No margin no mission.

Michael Egholm: With the recent completion of the sumo logic merger on January 5th the pro forma combined business generated $192 million in revenue in 'twenty tweet and positions. The combined company not only as a front runner in spatial biology, but its business with highly differentiated technologies under one roof representing sudden.

Michael Egholm: Really the broadest next generation of solutions, So I think that probably only customer.

Michael Egholm: <unk> market in the beyond genomics Arrow factor in the $565 million and combined pro forma cash on the balance sheet at the end of 2020 to treat and I can certainly say today, we are full speed ahead.

Michael Egholm: Factor in the $565 million in combined Performa cash on the balance sheet at the end of 2023, and I can certainly say today we are full speed ahead. While it's still early days with so much more to be done, I look back at 2023 as a year of foundation building and validation of our mission to become a diversified leader in life science tools and empower our customers to do better world-changing research. During today's call, I will review our strategic objectives and provide a summary of our 2023 performance against those objectives. I will also briefly review our product portfolio and thoughts on our enhanced competitive position, and finally, highlight critical near-term initiatives we expect will position the combined business for success. Following my comments, I'll turn the call over to Jeff Black, who will provide a more detailed analysis of our fourth quarter and full year 2023 financial performance.

Michael Egholm: While it's still early days, but so much more to be done I look back at 'twenty to 'twenty three as the year Foundation building and validation of our ambition to become a diversified leader in life science tools and empower our customers to do better world changing research.

Michael Egholm: During today's call I will review, our strategic objectives and provide a summary of our 2020 treat performance against those objectives.

Michael Egholm: Briefly review, our product portfolio and thoughts on our enhanced competitive position and finally highlight critical near term initiatives, we expect precision to combined business for success.

Michael Egholm: Following my comments I will turn the call over to Jeff Black who will provide a more detailed analysis of our fourth quarter and full year 'twenty to 'twenty three is financial performance at the conclusion of Jeff's section and on page will talk on the integration process as we advance the combined business forward in 2024.

Michael Egholm: At the conclusion of Jeff's section, Adam Taich will talk about the integration process as we advance the combined business forward in 2024. To begin, let me restate our top three objectives, which are equally important and fuel each other, highlighting our progress in 2023. These are the objectives that guide our strategy and execution and what we and you should measure our progress against. Goal one, standardize and instill operating discipline and a culture of uncompromising focus with our lean operating approach known as the Std Biotools Business Systems, or SBS, at its core.

Jeffrey G. Black: To begin let me restate, our top three objectives, which are equally important and fuel each order highlighting our progress in 2023.

Jeffrey G. Black: These are the objectives to guide on strategy and execution and what what we and you should measure our progress against.

Jeffrey G. Black: Two one standardized and they still operating discipline and a culture of uncompromising focus with our lean operating approach known as to send the Biofuels business systems. All S. P. S. At its coal from this operational platform, which drives the organization to enhance business.

Michael Egholm: From this operational platform, we drive the organization to enhance business efficiency and drive profitability. To this end, we delivered meaningful progress in 2023, including 900 basis points of non-GAAP gross margin expansion, a $20 million and 17% reduction in non-GAAP operating expenses, and over $47 million and 53% improvement in operating cash use. Objective two, create a scale platform that profitably can deliver breakthrough life science technologies and services for our customers. As I stated before, without margin, there's no mission. And bringing together important solutions under one roof is crucial in the heavily fragmented and unprofitable life science tool space.

Jeffrey G. Black: Patiency and drive profitability.

Jeffrey G. Black: To this end, we delivered meaningful progress in 2023, including 900 basis points of non-GAAP gross margin expansion.

Jeffrey G. Black: 20 million and 17% reduction in non-GAAP operating expenses.

Jeffrey G. Black: And over 47 million and 53% improvement in operating cash use.

Jeffrey G. Black: Our objective to create a scaled platform that probably can deliver breakthrough, enabling life science technologies and services for our customers.

Jeffrey G. Black: As I stated before without margin Theres, no mission and bringing together important solutions to under one roof is crucial in the heavily fragmented and unprofitable life science tool space.

Michael Egholm: We are announcing a broad portfolio of highly differentiated platforms, expanding our reach across a diverse set of customers and end markets, and building a distributed business model that promises 60 plus percent gross margin across a mix of instruments of recurring services and consumables revenue. The model of being better together is really the only proven business model to date in our space, and the recent merger with Somalogic has activated that plan fully. With the operational team laser-focused on successful integration with Somalogic, the business development team continues to identify new potential acquisitions in this broad landscape. This includes emerging and compelling technologies, proven platforms, and underappreciated businesses with stellar but overly burdened teams.

Jeffrey G. Black: Beyond massing, our broad portfolio of highly differentiated platforms, expanding our reach across a diverse set of customers and end markets and building a distributor business model. The promise was 60 plus percent gross margin.

Jeffrey G. Black: So it makes up instruments of recurring services and consumables revenue.

Jeffrey G. Black: The model of being better together is really the only proven business model today in our space and the recent merger, but some logic has activated that plant fully.

Jeffrey G. Black: The operational team laser focused on successful integration, but some logic.

Jeffrey G. Black: Business development team continues to identify new potential acquisitions in this broad landscape. This includes emerging and compelling technologies proven platforms underappreciated businesses with stellar but overly burden teams.

Michael Egholm: Our goal is to approach these opportunities as partners and bring these products, businesses, and people into the Std Bio family. We are careful but confident that when executed well, this strategy will not only diversify collective revenue and empower our customers with truly differentiated technologies but will also fuel growth and growth margin at scale. This leads me to our third and critical objective, Fuel More Growth, against the challenging macroeconomic environment.

Jeffrey G. Black: Our goal is to approach these opportunities as partners and bring these products.

Jeffrey G. Black: And people into the standard bio family.

Jeffrey G. Black: We are careful but confident that when executed well this strategy will not only drive.

Diversified collective revenue and empower our customers with truly differentiated technologies.

Jeffrey G. Black: Also fuel growth and gross margin at scale.

Jeffrey G. Black: This leads me to our third in critical object to fuel more growth.

Jeffrey G. Black: Against the challenging macroeconomic environment I'm pleased to report the return our core business to growth in 'twenty to 'twenty three with total revenue of $106 million.

Michael Egholm: I'm pleased to report that we turned our core business to growth in 2023 with total revenue of 106 million, representing 9% growth over 2022, with instrument revenue up more than 40% year-on-year led by placements of our new Hyperion XTI imaging system. We see growth in instrument revenue as the leading indicator to drive future recurring consumables and services revenue across an expanding installed customer base. In addition, the Sumo Logic team delivers solid revenue growth in 2023 with 86 million in total revenue and over 20% core revenue growth when excluding certain non-recurring royalty revenues in 2022. Sumo Logic also expanded its authorized site footprint from 8% to 17 in 2023, setting us up for growth in the distributed kits business. On a performer basis, our businesses delivered revenue of $192,000,020, activating a major step to achieving operating scale for the combined business. On this objective, I will add one comment, given the industry has just emerged from it, and growth at all costs, while expanding market share and customer segment, was pursued at the expense of business fundamentals. While it may have made sense in a market flush with cash,

Jeffrey G. Black: Representing 9% growth or what kind of 'twenty, two with instruments revenue up more than 40% year over year led by placements of our Nu.

Jeffrey G. Black: X T I imaging system <unk>.

Jeffrey G. Black: C growth in instrument revenue is the leading indicators to drive future recurring consumables and services revenue across an expanding installed customer base.

Jeffrey G. Black: In addition, the sumo logic team delivered solid revenue growth in 2023 with $86 million in total revenue and over 20% core revenue growth when excluding certain non recurring royalty revenues in 2022.

Jeffrey G. Black: So my logic also expanded its authorized sites footprint from 817 in 'twenty to 'twenty, three setting us up for growth and to distribute the kids business.

Jeffrey G. Black: On a pro forma basis, our business delivered revenue of 192 million in 2023, activating a major step to achieving operating scale the combined business.

Speaker Change: And I'll add one comment given the industry has just emerged from that.

Speaker Change: Our growth at all cost period, while expanding market share and customer segment was pursued at the expense of business fundamentals.

Speaker Change: While it may have made sense in the market flushed with cash.

Michael Egholm: When capital dries up, as it usually does, the underfunded and those without a secure path to profitability experience existential risk and deeply discounted values. We at Std Biotools recognize the need for growth but also appreciate that it must be and will always be pursued with an eye to profitability and long-term shareholder value. We work for our shareholders and commit to you to build sustaining value. While we enable our customers to conduct distinct omics research, we view the Std Biotools business in distinct product categories, including instruments, consumables, Field-Based Instrument Service, and now our SOMA SCAN service. These offerings serve our customers largely in academic research and biopharma across two scientific disciplines, proteomics and genomics. Consumables are some of the most attractive products in life sciences with a target gross margin profile of no more than 70 percent. Today, consumables represent over 39 percent of our 2023 revenue. Instruments are a larger capital expense product, but once installed, they have long life cycles and service fuel for future consumable pull-through.

Speaker Change: When capital dried up as it usually does.

Speaker Change: Underfunded and or dose without a secure pet to profitability.

Speaker Change: Existential risk and deeply discounted values, we extend about who recognize the need for growth, but also appreciate that it must be and will always be pursued with an eye to profitability and long term shareholder value.

Speaker Change: For our shareholders and commit to you to bill sustaining value.

Speaker Change: While we enable our customers to conduct distinct research we view these stand about tools business.

Speaker Change: Stinker product categories, including instruments consumables field based instrument service and now also must cancers.

Speaker Change: These offerings serves our customers largely in academic research and Biopharma.

Speaker Change: Cross two scientific disciplines proteomics and genomics.

Speaker Change: Consumables with some of the most attractive products in life Sciences with a target gross margin profile.

Speaker Change: No one of 70% today consumables represented over 39%.

Speaker Change: Our 'twenty to 'twenty three revenue instruments are a lot of capital expense product, but once installed have long life cycles and serve as few with future consumable pull through our instrument business has the target gross margin north of 60% and today represents about 35%.

Michael Egholm: Our instrument business has a target gross margin of no more than 60 percent and today represents about 35 percent of our current revenue and grew 46 percent in 2023. We believe this is the leading indicator, as new instrument sales generally lead to future growth of existing sales of consumables and field-based services with attractive margins. And in 2024, the legacy Sumo Logic business becomes part of our revenue mix.

Speaker Change: Of our current revenue and grew 46% in 2023. We believe this is the leading indicator as new instrument sales generally lead to future growth of recurring sales of consumables and field based services with attractive margins.

Speaker Change: And in 2020 for the legacy Sumo logic becomes part of our revenue mix. Most of this revenue today is driven by our Soma sketch services businesses.

Michael Egholm: Most of this revenue today is driven by our SumoScan services business, and our elite customer relationships with over 190 customers, including many of the top 25 pharmaceutical companies. Today, this revenue carries a gross margin profile in the 50% range and is concentrated predominantly in large biopharma accounts running large-scale discovery programs and now also has traction in the clinical trial pipeline. However, given this business is highly project-based and concentrated, revenue can be lumpy from quarter to quarter. We will continue the progress that Adam and his team have made to diversify and expand the customer base and enhance revenue consistency and predictability, and we will apply our lean SPS principles to improve the gross margin profile of this business. We'll also continue to execute on our authorized sites program, which expanded to 17 sites in 2023.

Speaker Change: Our unique customer relationships with over 190 customers employ many of the top 20 biopharmaceutical companies.

Speaker Change: This revenue carries a gross margin profile in the 60% range and it's concentrated predominantly in large biopharma accounts running large scale with discovery programs and now also has traction in the technical trial pipeline.

Speaker Change: Given this business is highly project based and concentrated revenue can be lumpy from quarter to quarter.

Speaker Change: We'll continue to progress that Adam and his team made to diversify and expand the customer base and enhance revenue consistency and predictability.

And we will apply our lean SBS principles to improve the gross margin profile of this business.

Speaker Change: We will also continue to execute on our ultra large size program with expanded to 17 sites in 'twenty to 'twenty three.

Michael Egholm: This should continue to drive a broader customer mix and higher-margin consumable revenue. We're excited about the opportunity to leverage Std Biotools' legacy academic-research relationship as a way to further evolve the SoMarscan customer base. We seek great opportunities over time to broaden our commercial reach for this best-in-class technology through our service offering, our certified size model, and our commercial relationship with Illumina. Genomics opened our eyes to the blueprint of human function, but a proteome is the business end of that blueprint and an exciting and fast-growing field of research. Within proteomics, we believe we are the only company with three next-gen technologies in the portfolio. First, our Hyperion XTI imager has the highest throughput and data quality in the spatial proteomic space. DITOF is the only immune cell profiling technology that can distinguish more than 50 intracellular and extracellular markers at the same time.

Speaker Change: Continue to drive broader customer mix and higher margin consumable revenue.

Speaker Change: We're excited about the opportunity to live would spend about shoots legacy academic research relationship as a way to further evolve. There's so much kind of customer base, we see great opportunity over time to broaden our commercial reach with this best in class technology.

Speaker Change: Through our service offering our certified size model.

Speaker Change: And our commercial relationship with Illumina.

Speaker Change: Genomics opened our eyes to the blueprint of human function, but the proteome is the business end of that blueprint and an exciting and fast growing field of research, but it put it all makes we believed we had the only company with treat nextgen technologies in that portfolio.

Speaker Change: Our high paying X Gi imager is the highest throughput and data quality in the space of proteomics space.

Speaker Change: They can.

Speaker Change: Titan is the only immune cell profiling technology that can distinguish more than 50 intracellular and extracellular markers at the same time.

Speaker Change: Third starting in 24 hour Soma scan plasma proteomics.

Michael Egholm: Third, starting in 24, our SomaScan plasma proteomics offer the highest coverage of the proteome and the lowest cost. In 2023, we returned our legacy Std Biotools polyomics business to growth, an increase of over 20% year-over-year with the launch of our Hyperion XGI imaging system as a major contributor to that growth. The system's market-leading data quality and throughput continue to be very well received by existing and prospective customers as a solution in the emerging field of spatial proteomics for translational research. We plan to launch a new workflow model in the first half of 2024 that will improve customer workflow and, by extension, consumable pull through. Flow by CyTOF is the only technology that can do a high number of both.

For the highest coverage of the proteome and lowest CEB.

Speaker Change: In 'twenty to 'twenty, three we returned to our legacy spend about proteomics business to grow and increase of over 20% year over year with the launch of our Hyperion imaging system as a major contributor to that growth.

Speaker Change: The systems market, leading data quality and throughput continued to be very well received.

Speaker Change: Existing and prospective customers as a solution in the emerging field of space of proteomics for translational research.

Speaker Change: And to launch a new workflow models. The first half of 'twenty 'twenty four there will improve customer workflow and by extension in time consumable pull through.

<unk> is the only technology that can do a high number of both.

Michael Egholm: Extracellular markers and intracellular markers enable our customers to gain biological insights that would otherwise go unnoticed using competing technology. This is an important point of differentiation and should help support growth in 2024. With the addition of the SomaScan platform and expansion of key customer accounts, we have an important differentiated solution for biopharma, enabling the broadest coverage of the proteome for discovery of important biomarkers and compelling new drug targets. Furthermore, with the authorized science expansion, we expect growth in the academic market where legacy standard bio traditionally plays. In 2023, Somalogic core revenue grew over $20 billion. In 2023, while the genomics revenue was down 7% in total and 4% excluding the impact of discontinued products, the genomic business achieved a near positive contribution margin at a small loss of $100,000, compared to a loss of more than $25 million in 2020. This is the type of business discipline you can expect from us. Genomics has been the backbone of life science discovery and innovation for the last 40 years.

Speaker Change: Extracellular markers and intracellular mazdas, enabling our customers to gain biological insights.

Speaker Change: Otherwise go unnoticed using competing technologies. This is an important point of differentiation and she'll help support growth in 2024.

Speaker Change: The addition of the Soma scan platform and the expansion of key customer accounts, we have an important differentiator solution for biopharma, enabling the broadest coverage the proteome for discovery of important biomarkers and compelling new drug targets.

Speaker Change: Furthermore, with the authorized sites expansion, we expect growth in the academic market, where <unk> spent a bio traditionally placed two and 2023. Similarly coal revenue grew over 20%.

Speaker Change: In 'twenty to 'twenty three while the genomics revenue was down 7% in total and 4% excluding impact of discontinued product.

Speaker Change: No my business achieved a net positive contribution margin at a small loss of 100000.

<unk> to a loss of more than $25 million in 'twenty to 'twenty two.

Speaker Change: This is the type of business discipline, you can expect from us.

Speaker Change: Genomics has been the backbone of life science discover innovation for the last 40 years and with the advent of next generation fast and cheap sequencing has been aldehyde hopefully fuel the golden age of biology, while our genomics business remains.

Michael Egholm: And the event of next generation sequencing has, without hyperbole, fueled the golden age of biology. While our genomics business remains a strategic asset for us, it's also a highly competitive market with increasing price, competition, and sensitivity as next-gen sequencing costs have greatly reduced over the past several years. To that end, we are managing this business prudently and will incrementally invest in its continued growth only if we expect it to drive near-term incremental contribution margins. Post the strategic reposition, we delivered solid progress in 2023 and have consolidated our portfolio from five instruments to one, the Biomark X9. From this platform, we focus on being an OEM provider and strategic enabler to a core set of customers. With a significantly reduced genomic spend and a focus on commercial, we have expanded our installed base with our major OEM partner while targeting additional OEMs and high volume key accounts to help return the segment to growth and enhance the genomic segment's contribution.

Speaker Change: Strategic asset for US, it's also highly competitive market.

Speaker Change: Police and price competition and sensitivity as next gen sequencing cost of greatly reduced over the past several years.

Speaker Change: To that end, we are managing this business prudently and incrementally invest in its continued growth only if we expect that to drive near term incremental contribution margin.

Speaker Change: Post the strategic with precision we delivered solid progress in 2023 and have consolidated portfolio from five instruments to want to buy.

Speaker Change: Io market snowing.

Speaker Change: This platform will be focused on being an OEM provider and strategic and they look to a core set of customers.

We had a significantly reduced genomic spent and hope was uncommercial approach, we have expanded our installed base with our major OEM partner, while targeting additional Oems in high volume key accounts to help return the segment to grow and enhance the genomics segment contribution margin in fact earlier this week.

Michael Egholm: In fact, earlier this week, we announced a long-term OEM agreement with NextGen Diagnostics. As our second major OEM agreement, this partnership with NGD in the field of pathogen sample preparation reflects the advancement of our growth strategy, bringing domain focus and expertise that will broaden the impact of our microfluidic platform across vital sectors of the life cycle. As I mentioned earlier, with operational execution and the successful close of our merger with SomaLogic, we have established a strong foundation for leadership precision in the life science tool space. But we're not nave to the work that lies ahead. We're just getting started.

Speaker Change: We announced a long term OEM agreement with Nextgen diagnostic.

As a second major OEM agreement this partnership with NTT and distill, a paddle James sample preparations with flex the advancement of our growth strategy bring.

Speaker Change: Bringing domain focus and expertise that will broaden the impact of our microfluidic platform across its titled sex types of life Science.

Speaker Change: As I mentioned earlier with operational execution and the successful close of our merger with similar logic. We have established a strong foundation for our leadership persistent and life science tool space, but we're not naive to the work that lies ahead. We're just getting started as we look to the remainder of 2024 and beyond.

Michael Egholm: As we look to the remainder of 2024 and beyond, we have a clear roadmap for key drivers of value and are committed to delivering. Over the next months and quarters, here's what you can expect from us. First, continued progress on merger integration and prioritization of strategic initiatives. We're pleased to report that our merger integration activities are well underway with a clear line of sight on several strategic, tactical, and operating decisions, and we have more work to do on others. We look forward to our Q1 earnings call in May when we expect to provide an update on our initial 90-day strategic plan and priorities. In the meantime, we remain focused on running the business with the same level of operating discipline we've shown over the past seven quarters since we assumed leadership at Std Biotools.

Speaker Change: Oh roadmap.

Speaker Change: Key drivers of value and staying committed to delivery.

Speaker Change: For the next months and quarters ahead is what you can expect from us.

Speaker Change: First continued progress on merger integration on privatization of strategic initiatives. We are pleased to report that our merger integration activities are well underway with clear line of sight on several strategic tactical.

Speaker Change: Rating decisions and more work to do and we look forward to our Q1 earnings call in May when we expect to provide an update on our initial 90 day strategic plan and priorities in the meantime, we remain focused on running the business with the same level of operating discipline, we have shown over the past.

Speaker Change: One quarters since we assumed leadership at standard bio tools.

Michael Egholm: Second, delivery on our cost synergies commitments. To reiterate, we expect the merger will deliver approximately $80 million in annual cost synergies by 2026 compared to our current combined operating expense run rate for the first half of 2023. This is a shared operating focus across the organization with several joint workstreams already in place.

Speaker Change: Taken delivery on our cost synergies commitments to reiterate we expect the merger will deliver approximately $80 million in annual cost synergies by 2026 compared to our current combined operating expense run rate, but at first half of 2023.

Speaker Change: This is a shared operating focus a crusty organization with several joint work streams already in place.

Michael Egholm: While it would take a quarter or two to begin to see these efforts show up in operating results, we expect to see meaningful reductions in our non-GAAP operating expenses in the second half of 2024, particularly in G&A. We expect to have more than 50% or 40 million of our annualized target synergies implemented and operationalized by the end of the fall quarter. Third, continued traction on revenue growth. Today, we provide revenue guidance for 2024 and the range of 200 million to 205 million, implying combined revenue growth of four to seven. This is against the backdrop of both internal merger integration priorities and continued uncertainties from macroeconomic headwinds that we see continuing to play across the industry. Still, we remain confident in our growing pipeline of opportunities, providing a good setup for an expanded growth profile into 2025 and beyond. This will all take patience, focus, and time, but we're confident in our ability to deliver.

Speaker Change: While it would take a quarter or two to begin to see these efforts show up in the operating results, we expect to see meaningful reductions in our non-GAAP operating expenses in the second half of 'twenty to 'twenty four particularly in G&A.

Speaker Change: We expect to have more than 50% of $40 million of our annualized target synergies implemented and operationalized by the end of the fourth quarter.

Speaker Change: Third continued traction on revenue growth.

Speaker Change: Today, we provided revenue guidance for 2020 fall in the range of 200 million to $205 million, implying combined revenue growth for two 7%.

Speaker Change: This is against the backdrop of both internal merger integration priorities and continued uncertainties from macroeconomic headwinds that we see continuing to play across the.

Speaker Change: The industry still we remain confident in our growing pipeline of opportunities providing a good set up for an expanded growth profile into 2025 and beyond.

Speaker Change: This will all take patients focus and time.

Speaker Change: But we are confident in our ability to deliver and we look forward to providing you with progress updates along the way.

Michael Egholm: And we look forward to providing you with progress updates along the way. I'll now turn the call over to Jeff for more detailed commentary on our fourth quarter and full year 2023 financial results. Thank you, Michael, and thank you all for joining our call today.

Speaker Change: I'll now turn the call over to Jeff for more detailed commentary on our fourth quarter and full year 2023 financial results Jeff.

Jeffrey G. Black: Thank you Michael and thank you all for joining our call today.

Jeffrey G. Black: As a reminder, unless otherwise noted, the 2023 financial results we reported today reflect only the standard Biotools legacy business and exclude the result of Somalogic, which will be included for the first time with our first quarter results. As Michael noted, we're pleased with our results for both the fourth quarter and the full year of 2020. Starting with revenue in 2023, we delivered revenue ahead of guidance and returned to declining business to growth, all while navigating a challenging macroeconomic environment. Total revenue for the fourth quarter was $28.2 million and grew about 4% over 2022. Instrument revenue grew 44% in the quarter and was offset by a 22% reduction in consumable revenue related primarily to the timing of customer orders.

Jeffrey G. Black: As a reminder, unless otherwise noted 2023 financial results we reported today.

Jeffrey G. Black: The only the standard <unk> legacy business and exclude the results of some logic.

Jeffrey G. Black: It will be included for the first time with our first quarter results.

Speaker Change: As Michael noted, we're pleased with our results for both the fourth quarter and the full year of 2023.

Speaker Change: Starting with revenue in 2023, we delivered revenue ahead of guidance and.

Speaker Change: When we turned a declining business to growth all while navigating a challenging macroeconomic environment.

Speaker Change: Total revenue for the fourth quarter was $28 2 million and grew about 4% over 2022.

Speaker Change: Instrument revenue grew 44% in the quarter and was offset by a 22% reduction in consumable revenue related primarily to the timing of customer orders.

Jeffrey G. Black: Recall that 2022 benefit is from our OEM partners' initial consumables purchases, so we expect consumables revenue to expand as they burn off that inventory and increase their installed base. Service and other revenue in the quarter grew 12%.

Speaker Change: Call that 2022 benefited from our OEM partners initial consumables purchases. So we expect.

Speaker Change: <unk> revenue to expand as they burn off that inventory and increase their installed base.

Speaker Change: Service and other revenue in the quarter grew 12%.

Speaker Change: Now looking at the full year, which is less variable and more reflective of the progress we've made over the last several quarters.

Jeffrey G. Black: Now looking at the full year, which is less volatile and more reflective of the progress we've made over the last several quarters, total revenue of 106.3 million expanded by nearly 9%. Growth was driven by a 46% increase in instrument revenue and offset by an 11% decline in consumables, excluding the aforementioned impact of our OEM partnership in genomics. Consumables revenue actually grew 8% in our proteomics business last year; Service and other revenue grew 6% in 2023. I think it's important to reiterate that we believe growth and instrument placement are a leading indicator and metric. While we expect continued variability and quarter-to-quarter instrument placement, a growing installed base expands future consumables and field service pull through, which are drivers of both revenue and margin growth.

Speaker Change: Total revenue of $106 3 million expanded by nearly 9%.

Speaker Change: Growth was driven by a 46% increase in instrument revenue and offset by an 11% decline in consumables.

Speaker Change: Excluding the aforementioned impact of our OEM partnership and genomics consumables revenue actually grew 8% and our proteomics business over last year.

Speaker Change: Service and other revenue grew 6% in 2023.

Speaker Change: I think it's important to reiterate that we believe growth in instrument placement is a leading indicator and metric.

Speaker Change: While we expect continued variability in quarter to quarter instrument placement.

Speaker Change: Growing installed base expand future consumables and field service pull through which are drivers of both revenue and margin growth.

Speaker Change: Recurring sources of consumables and service revenue were about 64% of total revenue in 2023.

Jeffrey G. Black: Recurring sources of consumables and service revenue will be about 64% of total revenue in 2020. Now turning to revenue contribution by segment, our total proteomics revenue was up 21% in the fourth quarter and 22% for the full year, led by continued traction of Hyperion XTi, which we launched in the second quarter. Total genomics revenue was down 13% in the fourth quarter and 7% for the full year.

Speaker Change: Now turning to revenue contribution by segment, our total proteomics revenue was up 21% from the fourth quarter and 22% for the full year.

Speaker Change: Led by continued traction of Hyperion ex Ti, which we launched in the second quarter.

Speaker Change: Total genomics revenue was down 13% in the fourth quarter and 7% for the full year.

Jeffrey G. Black: As we mentioned, our consumables growth in genomics was impacted by larger consumables orders in 2022 associated with the launch of our first OEM partnership. In fact, genomic instrument placements were up in 2023 with related growth over 30%. As Michael mentioned, we recently signed a second OEM partner, NGD, which has paved the way for a return to growth in this segment. Most importantly, we've managed this business to a near contribution margin positive, posting a small $100,000 loss in 2023 versus a negative contribution of over $25 million in 2022. So in short, in 2023, we return to declining proteomics business to growth, and we set up our genomics business for future profitability. Moving on to our operating performance, our non-gap gross margin for the fourth quarter expanded by 630 basis points to over 59%. And for the full year, our non-gap gross margin improved by about 900 basis points to just over 60%. And recall that non-GAAP gross margin primarily excludes non-cash amortization of intangibles.

Speaker Change: As we mentioned our consumables growth in genomics was impacted by larger consumables orders in 2022.

Associated with the launch of our first OEM partnership.

Speaker Change: In fact genomic instrument placements were up in 2023 with related growth over 30%.

And as Michael mentioned, we recently signed a second OEM partner N G D, which should pave the way for a return to growth in this segment.

Most importantly, we manage this business to a near contribution margin positive posting a small $100000 loss in 2023.

Speaker Change: This negative contribution over of over $25 million in 2022.

Speaker Change: So in short in 2023, we returned to declining proteomics business to growth.

Speaker Change: And we set up our genomics business for future profitable growth.

Speaker Change: Moving on to our operating performance, our non-GAAP gross margin for the fourth quarter expanded by 630 basis points to over 59%.

Speaker Change: And for the full year, our non-GAAP gross margin improved by about 900 basis points.

Speaker Change: Just over 60%.

Speaker Change: Recall that non-GAAP gross margin, primarily excludes noncash amortization of intangibles.

Speaker Change: We continue to face with Google headwinds related to legacy service and warranty related costs product mix and capacity utilization.

Jeffrey G. Black: We continue to face residual headwinds related to legacy service and warranty-related costs, product mix, and capacity utilization. We're aggressively managing these service and warranty costs, often on a customer-specific basis. And this could create continued pressure throughout 2024.

Speaker Change: We're aggressively managing these service and warranty costs, often on a customer specific basis and this could create continued pressure throughout 2024.

Jeffrey G. Black: But we do remain confident in our ability to drive gross margins for our Std Biotools legacy business over time in the mid-60% range, especially as we move past these transitory headwinds. At the same time, our growth margins should continue to benefit from our SBF lean approach and Price Realization. Keep in mind that gross margins are different across instruments, consumables, and services, and thus, revenue mix quarter to quarter impacts our ability, for the time being, to be overly specific on our margin expansion revenue.

Speaker Change: We do remain confident in our ability to drive growth gross margins for our standard buyout with legacy business over time.

Speaker Change: Mid 60% range, especially as we move past these transitory headwinds.

At the same time, our gross margins should continue to benefit from our Sps lean approach and price realization.

Keep in mind that gross margins are different across instruments, consumables and services and revenue mix quarter to quarter impacts our ability for the time being.

Speaker Change: Overly specific on our margin expansion roadmap.

Speaker Change: Moving to our operating expenses total non-GAAP opex of just over $24 million or about 86% of revenue in the fourth quarter down from about 94% of revenue in the fourth quarter of 2022.

Jeffrey G. Black: Moving to our operating expenses, total non-GAAP OPEX of just over $24 million, we're about 86% of revenue in the fourth quarter, down from about 94% of revenue in the fourth quarter of 2022. Non-GAAP operating expenses for the full year were just under $99 million and 93% of revenue in 2023, down from about $119 million and 121% of revenue last year. For the full year in 2023, we reduced non-GAAP operating expenses by more than $20 million, or 17%. And this is reflected primarily in the cost rationalization programs we've executed over the past year, a testament to the strong execution of our SBS operating discipline and lean transformation. This is also indicative of the discipline we have engaged in since the close of our merger with Somalogic to reduce outbacks across our combined organization, on our path to realizing our 80 million cost synergies commitment by 2020. It's early days, but we're well on our way.

Speaker Change: non-GAAP operating expenses for the full year were just under $99 million and 93% of revenue in 2023.

Speaker Change: Down from about $119 million and 121% of revenue last year.

Speaker Change: For the full year in 2023, we reduced non-GAAP operating expenses by more than $20 million or 17%.

Speaker Change: And this is reflective primarily of the cost rationalization programs, we've executed over the past year.

Speaker Change: Estimate to strong execution of our Sps operating discipline and lean transformation.

Speaker Change: This is also indicative of the discipline, we engaged since the close of our merger with some logic to reduce opex across our combined organization.

Speaker Change: On our path to realizing our 80 million cost synergies commitment by 2026.

Speaker Change: Early days, but we're well on our way.

Jeffrey G. Black: In fact, the Simulogy team provided a healthy head start delivering a second half 2023 reduction in non-gap OPEX of roughly $10 million as compared to the first half of 2023. We remain enthusiastic about the value we expect to generate with the combined cost structure while leveraging the scale and reach of our diversified portfolio. At the same time, we continue to make focused investments in our commercial organization and our R&D pipeline to support sustained long-term revenue growth. That brings me to cash flow and the balance sheet. On a standalone basis, we ended 2023 with over $115 million in cash, cash equivalents, restricted cash, and short-term investments. For the full year, we reduced operating cash use by $47 million, or about 53%.

Speaker Change: In fact, there's some logic team provided a healthy head start delivering a second half 2023 reduction in non-GAAP opex of roughly $10 million as compared to the first half of 'twenty three.

Speaker Change: We remain enthusiastic about the value, we expect to generate with the combined cost structure, while leveraging the scale and reach of our diversified portfolio.

Speaker Change: I think time, we continue to maintain focus investments in our commercial organization and our R&D pipeline.

Speaker Change: To support sustained long term revenue growth.

That brings me to cash flow and the balance sheet.

Speaker Change: On a standalone basis, we ended 2023 with over $115 million in cash cash equivalents restricted cash and short term investments for the full year, we reduced operating cash used by $47 million or about 53%. We have been and will continue to be disciplined stewards of cash.

Jeffrey G. Black: We have been and will continue to be disciplined stewards of cash. On a pro-forma combined basis, after giving effect to the merger with Thumbelogic, our cash, cash equivalents, restricted cash, and short-term investments at the end of 2023 were approximately $565 million. While we expect our cash flow over the next few quarters to be elevated due to transaction integration and restructuring activities, we're well positioned to both fund these non-recurring activities and support the combined business to cash flow breakeven. As we look to future M&A, you can be assured that the FilmLogic merger integration remains priority number one and we will be thoughtful about additional strategic M&A when such opportunities arise. As Michael mentioned, we're careful but confident that when executed well, the strategy will diversify revenues and fuel growth and gross margins at scale.

Speaker Change: On a pro forma combined basis, after giving effect to the merger with some logic, our cash cash equivalents restricted cash and short term investments at the end of 2023 were approximately $565 million.

Speaker Change: While we expect our cash burn over the next few quarters to be elevated due to transaction integration and restructuring activities. We are well positioned to both fund these nonrecurring activities and support the combined business to cash flow breakeven.

As we look to future M&A you can be assured that there's some logic merger integration remains priority number one and we'll be thoughtful about additional strategic M&A when such opportunities arise as Michael mentioned, we're careful but confident that when executed well this strategy will diversify revenues and fuel.

Speaker Change: And gross margins at scale.

Speaker Change: Before I turn the call back over just a few comments on our 2020 for outlook and our longer term financial profile.

Jeffrey G. Black: Before we turn the call back over, just a few comments on our 2024 outlook and our longer-term financial profile. Today, we issued Total Combined Revenue Guidance for Fiscal 2024 in the range of $200 to $205 million, implying annual growth in the 4% to 7% range. As Michael mentioned, 2024 is a year of focused execution of our strategic priorities, while also maintaining a laser focus on realizing long-term cost synergies to secure a path to profitable growth. And at the same time, we're navigating continued macroeconomic headwinds facing our entire industry. While our revenue growth will not be linear, we remain committed to our longer-term growth targets as we hit two commercial inflection points.

Speaker Change: Day, we issued total combined revenue guidance for fiscal 2024 in the range of 200 $205 million, implying annual growth in the 4% to 7% range.

Speaker Change: As Michael mentioned in 2024 is a year of focused execution of our strategic priorities. While also maintaining a laser focus on realizing long term cost synergies.

Speaker Change: Our path to profitable growth.

And at the same time, we're navigating continued macroeconomic headwinds facing our entire industry.

Speaker Change: While our revenue growth will not be linear we remain committed to our longer term growth targets as we hit key commercial inflection points. We continue to believe by the end of 2026, our combined business will deliver approximately $300 million of revenue with non-GAAP gross margins in the mid sixties positive adjusted EBITDA margin and <unk>.

Jeffrey G. Black: We continue to believe that, by the end of 2026, our combined business will deliver approximately $300 million in revenue with non-GAAP gross margins in the mid-60s, positive adjusted EBITDA margin, and a cash position capable of supporting our continued growth. And one final update on our cap structure. The board recently approved a new share repurchase program of up to $50 million dollars through March of 2020. This buyback program will be effective as of March 1st, 2024.

Cash position capable of supporting our continued growth.

Speaker Change: And one final update on our cap structure of the board recently approved a new share repurchase program of up to $50 million through March of 2026.

Speaker Change: This buyback program will be effective as of March 1st 2024, with our enhanced balance sheet and operating cash flow improving this will enable us to repurchase opportunistically and offset future dilution from possible equity issuances.

Jeffrey G. Black: With our enhanced balance sheet and operating cash flow improving, this will enable us to repurchase opportunistically and offset future dilution from possible equity issuance arising from convertible BAT and other instruments in our existing captive. We see this as nothing more than responsible housekeeping to provide additional flexibility in preserving our long-term shareholder value. With that, I'll turn the call over to Adam Taich, former CEO of Somalogic and our current Chief Strategy Officer, for some additional perspective on 2023 and the combination of our two companies. Thank you, Jeff.

Speaker Change: Rising from convertible debt and other instruments in our existing cap structure.

Speaker Change: We see this as nothing more than responsible housekeeping to provide additional flexibility and preserving our long term shareholder value.

Speaker Change: And with that I'll turn the call over to Adam <unk>, former CEO of some logic and our current chief strategy officer for some additional perspective on 2023 and combination of our two companies.

Adam: Thank you Jeff we are extremely excited about the progress we have made and the value. We have collectively generated in 2023, culminating with the groundbreaking merger of our two companies.

Adam Taich: We are extremely excited about the progress we have made and the value we have collectively generated in 2023, culminating with the groundbreaking merger of our two companies. Speaking on behalf of the entire Somalogic team, we are thrilled to now be part of the Std Biotools family and are driven to tackle our next chapter of growth together. As we have highlighted previously, SomaLogic has carefully cultivated strong customer relationships and invested in broadening our commercial reach, which today services many of the top 20 biopharma companies, and we have more than doubled our footprint of global authorized sites in the past 12 months. We are also extremely excited about our partnership with Illumina, which will dramatically expand the ways in which customers can utilize the SomaScan technology. Ongoing improvements and menu expansion have enabled multiple enhancements while preserving a commitment to accuracy and reproducibility that is now synonymous with the Somascan name. The most recent menu expansion, announced late last year, provides researchers with the broadest coverage tool available to make meaningful advancements in biomarker discovery and drug targeting.

Speaking on behalf of the entire summer logic team. We are thrilled to now be part of the standard bio tools family and are driven to tackle our next chapter of growth together.

Adam: As we have highlighted previously some logic has carefully cultivated strong customer relationships and invested in broadening our commercial reach which today services. Many of the top 20 Biopharma companies.

Adam: And have more than doubled our footprint of global authorized sites in the past 12 months. We are also extremely excited about our partnership with Illumina, which will dramatically expand the ways in which customers can utilize the soma scan technology.

Adam: Ongoing improvements and menu expansion have enabled multiple enhancements, while preserving a commitment to accuracy and reproducibility that is now synonymous with the Soma scan name.

Adam: The most recent menu expansion announced late last year provides researchers with the broadest coverage tool available to make meaningful advancements in biomarker discovery and drug targeting.

Adam Taich: When we first started discussions on the merger, the complementary nature of our platforms and technologies was one of the most compelling aspects of the combined business. Now, as we sit together on this conference call, our two companies have come together to create a leading multi-omics platform to drive improved returns for all of our stakeholders. We are pleased that the integration process is well underway, and we are advancing towards growing our combined business with vast upside potential in attractive markets. I also want to take this opportunity to once again thank our world-class team of dedicated professionals who have worked so diligently to bring us to this point today. With that, I will turn the call back over to Michael for his closing remarks. Thank you, Adam.

Adam: When we first started discussions on the merger the complementary nature of our platforms and technologies was one of the most compelling aspects of the combined business now.

Adam: Now as we sit together on this conference call. Our two companies have come together to create a leading multi omics platform to drive improved returns for all of our stakeholders we.

Adam: We are pleased that the integration process is well underway and we are advancing towards growing our combined business with vast upside potential in attractive markets.

Adam: I also want to take this opportunity to once again, thank our world class team of dedicated professionals that have worked so diligently to bring us to this point today with that I will turn the call back over to Michael for closing remarks.

Michael: Thank you Adam I'll conclude by thanking our team for the solid execution in 2023, and our investors for their continued support of our mission and I. Once again welcome our Soma Lukach team members to the standup pouches family, including key additions to our secretary.

Michael Egholm: I'll conclude by thanking our team for their solid execution in 2023 and our investors for their continued support of our mission. And I once again welcome our Somalogic team members to the Std Biotools family, including key additions to our executive leadership team. So join us from an organization of highly talented individuals with a true passion for the legacy Somalogic technology. I couldn't be more excited about the impact our combined businesses will have on empowering research and changing lives. We are ever mindful of the work still to be done and challenges ahead, but I am more convinced now than ever that the Std Biotools and Sumo Logic are better together. Stay tuned for future updates. We look forward to connecting with many of you at the upcoming TD Cowen Healthcare Conference on March 6 in Boston and the KeyBank Virtual Life Sciences and MedTech Forum on March 19. I'll now turn the call over to the operator for closing remarks. Ladies and gentlemen, with that, we'll conclude today's presentation. We do thank you for joining us. You may now disconnect your line.

Michael: Shifting to join us from an organization of highly talented individuals with a true passion for the legacy sumo logic technology.

Michael: I couldnt be more excited about the impact our combined businesses will have on empowering research and changing lives.

Michael: And we're mindful of the work still to be done and challenges ahead, but I am more convinced now than ever that the standard bio tools and similar logic are better together.

Michael: Stay tuned for future updates.

Michael: We look forward to connecting with many of you at the upcoming TV Cowen Healthcare Conference on March six in Boston and the key Bank virtual life Sciences in Med Tech Forum on March 19.

Speaker Change: I'll now turn the call over to the operator, concluding remarks.

Speaker Change: Ladies and gentlemen, with that we'll conclude today's presentation. We do thank you for joining.

Speaker Change: You may now disconnect your lines.