Q4 2023 SOPHiA GENETICS SA Earnings Call

March 5, 2024

Good morning, My name is true and I will be your conference operator today at this time I would like to welcome everyone to the Soviet genetics fourth quarter and full year 2023 earnings conference call.

Operator: Good morning. My name is Drew, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sophia Genetics fourth quarter and full year 2023 earnings conference call. All participants will be in listen-only mode.

All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing star.

Operator: Should you need assistance, please signal a conference specialist by pressing star, then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad.

And then zero.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded.

Operator: To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Kellen Sanger, Sophia Genetics' Head of Strategy and Investor Relations. You may begin. Thank you, and good morning, everyone.

I would now like to turn the conference over to Kelvin Sanger Sofia generic genetics is held of strategy and Investor Relations you may begin.

Thank you and good morning, everyone welcome to the Sofia genetics fourth quarter and full year 2023 earnings conference call joining.

Kellen Sanger: Welcome to the Sophia Genetics fourth quarter and full year 2023 earnings conference call. Joining me today to discuss our results are Dr. Jurgi Camblong, our co-founder and chief executive officer, and Ross Muken, our chief financial officer and chief operating officer. I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on such forward-looking statements.

Joining me today to discuss our results our Doctor Yogi Cam block, our co founder and Chief Executive Officer, and Ross <unk>, Our Chief Financial Officer, and Chief operating Officer.

I'd like to remind you that management will make statements. During this call are forward looking statements within the meaning of federal Securities laws. These.

These statements involve material risks and uncertainties that could cause actual results or events to <unk>.

<unk> differ from those anticipated and you should not place undue reliance on forward looking statements.

Additional information regarding these risks uncertainties and factors that could cause results to differ appears in the press release, the FDA genetics issued today and in the documents and reports filed by Sofia genetics from time to time with the Securities and Exchange Commission.

Kellen Sanger: Additional information regarding these risks, uncertainties, and factors that could cause results to differ is included in the press release Sophia Genetics issued today and in the documents and reports filed by Sophia Genetics from time to time with the Securities and Exchange Commission. During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of IFRS to non-IFRS measures is included in today's earnings press release, which is available on our website. With that, I will now turn the call over to Jurgi.

During this call we will present, both <unk> and non <unk> financial measures.

A reconciliation of the.

And non <unk> measures is included in today's earnings press release, which is available on our website with.

With that I will now turn the call over to Yankee.

Jurgi Camblong: Thanks, Kellen, and good morning, everyone. During today's call, I will start with an overview of our progress in 2023, followed by a quick look at our performance in Q4. Next, I will highlight our quick priorities for 2020. Then, Ross will provide a more detailed look at our financial results. Business Trends and Guidance for the Upcoming Years. Before I get started, I want to take a moment to reflect on some of the trends we saw in healthcare in 2023 and also more broadly across industries. In many ways, 2023 was the year of AI. It was the first time that the general public had access to powerful AI models and learned what they could do.

Thanks, Kevin and good morning, everyone.

During today's call I will start with another view of our progress in 2023, followed by a quick look at our performance in Q4.

Next I will highlight our key priorities for 2024.

Then what we provide a more detailed look at our financial rather.

Business trends.

And guidance for the upcoming year.

Before I get started I want to take a momentum to reflect on some of the trends we saw in.

In 2023, and also more broadly across the industry.

Maybe in late 2023 was the year of <unk>.

It was the first time that that to the generic <unk> and access to our full AI models and learn what they can do.

Is the co founder and leader of an AI driven.

Jurgi Camblong: As the co-founder and leader of an AI-driven precision medicine company who has been working on building AI in healthcare since Sophia Genetics' inception in 2011, this moment has been a fulfilling experience for me. I will take this opportunity to highlight that since our inception 13 years ago, we have invested over $400 million to build some of the most advanced AI capabilities in the healthcare sector. We have recruited a team of more than 200 of the top data scientists and engineers in the world who contribute to building and developing our platform, Sophia Lydian. Sophia DDM today is widely recognized by healthcare professionals for its world-class analytical performance and by some of our partners as the leading AI platform in healthcare. However, at Sophia Genetics, innovation is not the development of new technologies but rather the adoption of those technologies in the market.

The company, who has been working on building AI health care.

<unk> genetics inception in 2011, this moment as it being a full feeding experience for me.

I will take this opportunity to highlight that since inception 13 years ago, we have invested over $400 million to bill some of the most advanced AI capabilities India's third sector.

We have recruited a team of more than 200 of the top data scientists and engineers in the world will contribute to building and developing our platform Sofia ADM.

So <unk> today is widely recognized by health care professionals for its world class analytical performance and by some of our partners as the leading AI platform in healthcare.

However, I put ph entity.

It's not to the development of new technology, but rather the adoption of this technology in the market.

Jurgi Camblong: And in that spirit, let's turn to 2023 and the progress we made driving the adoption of SOFIAD. 2023 was a tremendous year for Sophia Genetics. We grew revenue 31% year-over-year to $62.4 million by continuing to drive widespread adoption of our platform. In 2023, SOFIA-DDM was used by 450 core genomic customers across the globe to perform over 317,000 analyses. This record number of analyses represents a remarkable 27% year-over-year growth when excluding COVID-related volumes.

And in that theory, let's turn to 2023 and the progress we made to driving adoption of Sofia.

2023 was a tremendous year for kitchen entity.

Grew revenue, 31% year over year to $62 4 million by continuing to drive widespread adoption of our platform.

In 2023, <unk> used by 450 core genomic customers across the globe to perform over 317000 in that disease.

This record number of analyses with presents a remarkable 27% year over year growth when excluding COVID-19 related volume.

At the beginning of 2023, we laid out three primary REIT drivers to achieve our ambitious growth objective.

Jurgi Camblong: At the beginning of 2023, we laid out three primary drivers to achieve our ambitious growth objective. First, we highlighted the large market potential for SOFIA-DBM, so let's do more applications. Especially, we expressed excitement over HRD, which was exhibiting world-class analytical performance due to an innovative deep learning algorithm we developed called Ginger.

First we are likely to the large market potential for Sofia DBM.

Two more application, especially we expressed excitement over HRD, which was exhibiting workplace analytical performance due to an innovative deep learning algorithm, we develop called Ginger.

Jurgi Camblong: Second, we highlighted the high potential for growth in the U.S. market. And third, we explained that the genomic and multimodal data computed every day on our platform, in addition to our advanced AI algorithms being trained on these data sets, would create meaningful value for our biopharma partners. I'm proud to say that we delivered in each of these three areas.

Second we have 19 high potential for growth in the U S market.

And third we explained that the genomic and multimodal data computed everyday on our platform. In addition to our advanced AI algorithms being trained on these data sets, which creates meaningful value for our Biopharma partners.

I am proud to say that we delivered in each of these three areas with.

Jurgi Camblong: With respect to Sophia Didier and Solid Tumor's applications, and in particular HRD, we saw impressive growth. Solid Tumor revenue grew above company average in 2023, and HRD was a major driver with over 150% revenue growth during the period. We're pleased to see both existing and new customers adopt Sophia DDM for a solid tumor application. We signed an impressive 36 new logos for solid tumor applications in 2023.

With respect to Sofia <unk> solid tumours applications and in particular HRD. We saw impressive growth solid Q4 revenue grew above company average in 2023 and HRD.

A major driver with over 150% revenue growth during the period.

We're pleased to see both existing and new customers adopt <unk> solid tumor applications. We signed an impressive 36, new logos for solid tumor applications in 2023 and by the end of Q4, we were proud to have a total of 129 core genomics customers using solid tumours.

Jurgi Camblong: And by the end of Q4, we were proud to have a total of 129 core genomics customers using solid tumor applications. This group includes nearly 50 customers using SophiaDDM for HRD, all of which were attracted by the application's world-class analytical capabilities. Moving on to our second growth driver for 2023, the U.S. market. In 2023, U.S. revenue grew 70% to $9.5 million, up from $5.6 million in 20

Yeah.

This group includes nearly 50 customers using Sofia DBM for HRD.

All of which were attracted by the <unk> World class analytic outperformance.

Moving on to our second growth driver for 2023, the U S market.

In 2023 U S revenue grew 70% to $9 5 million up from $5 6 million in 2022 weeks.

Jurgi Camblong: We signed nine new core genomic customers in the U.S. in 2023, and we're proud to welcome some of the top U.S. cancer centers and labs to the Sophia DDM Network. Apart from customer relationships, we also had a landmark year with our partners in the U.S. Namely, we continue to build our strategic partnership with Memory Loss and Catchment. During 2023, we entered into a partnership with MSK to help them to decentralize their liquid biopsy test, MSK-Access, and their solid tumor test, MSK-Impact, and to make these tests available to healthcare institutions across the globe. We officially launched MSK Access Powered with Sophia DDM in December, and I've been pleased to see strong demand for this application in the market.

We signed nine new core genomic customers in the U S. In 2023, and we're proud to welcome some of the top U S cancer centers and labs to the Sofia DBM network.

Apart from customers relationships, we also add a landmark year with our partners in the U S.

Finally, we continue to build our strategic partnership with Memorial Sloan Kettering.

During 2023, we entered into a partnership with <unk> to help them to decentralize, our liquid biopsy test MSP access and their solid tumor with task Emmis came back and to make this test available to health care institutions across the globe.

We officially launched <unk> powered with Sofia DBM in December and they have been pleased to see strong demand for this application in the market.

In the U S. We announced a number of new signings for MFC access powered with Sofia DBM and are looking forward to capitalizing on this momentum going into 2024.

Jurgi Camblong: In the U.S., we announced a number of new signings for MSK Access powered by Sophia DDM and are looking forward to capitalizing on this momentum going into 2020. The third growth driver we focused on in 2023 was delivering value to our biopharma customers. The first way we accomplished this was through a number of deals with biopharma partners where they sponsored the deployment of Sophia DD.

The third growth driver, we focus on in 2023, while delivering value to our biopharma customers. The first way we accomplish this by a number of deals with Biopharma partners or the sponsored the deployment of Sofia DDA.

Jurgi Camblong: Biopharma customers are motivated to do this because they are mutually interested in expanding access to cancer testing. Our partnership with AstraZeneca has been a major proof point in this area. Last month, we announced that AZ sponsored the deployment of Sophia DDM's HRD application across Spain in 2023 with resounding success. While the deployment of our genomics offering continues to be a key focus for us and our biopharma partners, we have always intended to complement our genomics computing capabilities with multi-modal analysis. Multimodal data and multimodal algorithms analyzing that data provide significant value to biopharma companies. 2023 was a landmark year for us in building our multimodal capability; we launched SOFIA-CREPA, a module of SOFIA-DDM, which enables customers to perform longitudinal analysis of multimodal patient data. This includes multi-modal models designed to predict treatment effects of different treatments.

Biopharma customers are motivated to do this because they are mutually interested in expanding access to cancer.

Our partnership with Astrazeneca as being a major proof point in this area.

Last month, we announced that Asus sponsored the deployment of Sofia Dpm's HRD application across Spain in 2023 with resounding success.

While the deployment of our genomics offering continues to be a key focus for us and our Biopharma partners. We have always intended to complement our genomics computing capabilities, we immediately model analytics.

The model data and welcome with algorithms and our leasing data provide significant value to biopharma companies.

2023 was a landmark year for us in building, our multimodal capability, we launched Sofia Cooper, a module of Sofia, DBM, which enables customers to perform longitudinal analysis of multi modality patient data.

This includes humidity model models designed to predict treatment effects of different therapy decisions.

Jurgi Camblong: As you can imagine, these capabilities provide differentiated value to our biopharma customers who are willing to pay for access to the multimodal patient data and to multimodal algorithms that analyze it. Towards the end of 2023, we completed a momentous project with one of our key biopharma partners, where Sophia Kirpa identified a signature in subpopulations of lung cancer patients which could indicate different treatment effects for a specific drug. We continue to remain excited about these use cases for a multimodal offering and the value these capabilities bring to our biopharmacists. In 2024, we plan to expand the footprint of Sophia Kerpas' Björnman cancer to breast, prostate, and kidney cancer.

As you can imagine these capabilities provide differentiated value to our biopharma customers, who are willing to pay for the access to the multi modal patient data and 2 million people with algorithms, which analyzes them.

We're at the end of 2023, we completed a momentous project with one of our Biopharma partners with Sofia career path identified a signature.

<unk> populations of lung cancer patients, which could indicate different treatment effect for a specific drug.

We continue to remain excited about these use cases for our multi modal offering.

And the value this capability brings to our biopharma customers.

In 2024, we plan to expand the footprint of Sofia capacity beyond lung cancer, two breast prostate lung and kidney cancer.

Jurgi Camblong: We recently announced two data partnerships that will accelerate our progress in this mission, first with MSK, and second with Exactis Innovation, a network of 13 hospitals across Canada dedicated to improving cancer survivorship. These partners will help us gain access to valuable multimodal data sets, which will be ingested into SophiaCurePath for our biopharma customers to use and access. Now that I have provided a brief overview of 2023 as well, I would like to spend a minute discussing Q4 2023 performance in more detail. In Q4, we grew revenue 27% year-over-year to $17 million. We performed approximately 85,000 analyses, up 20% year-over-year, including COVID-related analyses, or 24% year-over-year growth, excluding COVID-related analyses. As of December 31st, we have 450 core genomics customers who are using our platform regularly to analyze patients for cancer and rare diseases, up from 434 in the prior year and up 19% sequentially from 2010. 2.4 was a great quarter in terms of landing new logos.

We're really chunky announced two data partnerships, which will accelerate our progress in this mission.

First with M. S. K second with exactly see no question, a network of 13 hospitals across Canada dedicated to improving cancer.

Vivor ship.

These partners will help us gain access to valuable really model dataset, which will be ingested into Sofia career path for our biopharma customers to use and access.

Now that you have provided a brief overview of 2023 as well I would like to spend a minute discussing Q4 2023 performance in more detail.

In Q4, we grew revenue, 27% year over year to $17 million.

We performed approximately 85000 analogies.

8% year over year, including Covid related and how do you gauge or 24% year over year growth, excluding COVID-19 related or not.

As of December 31st we have 450 core genomics customers, who are using our platform regularly to analyze patient for cancer and rare diseases.

434 in the prior year and up 19% sequentially from Q3.

Q4 was a great quarter in terms of landing new logos.

Jurgi Camblong: In the fourth quarter, we landed a resounding 35 new core genomics customers. These customers will add to our total number of core genomic customers over the course of 2024 as they are on-boarded onto SophiaDG. As mentioned previously, it typically takes customers 6 to 9 months to enter routine usage.

Fourth quarter, we landed a resounding 35, new genomics customers. These customers will add to our total number of core genomics customers over the course of 2024 as they are on boarded on to Sofia DBM.

As mentioned previously it typically takes customers six to nine months to enter routine usage.

Jurgi Camblong: After landing a new logo, our Expanse strategy continues to be effective as existing customers adopt more and more applications. As of the end of Q4, 56% of customers were using two or more applications, up from 49% a year ago. 31% of customers were using three or more applications, up from 28% a year ago. And 21% were using four or more applications, up from 17% a year ago. Moreover, our net dollar retention was 130% in Q4 2023, that's 2800 base points from 102% at the end of 2020. The continued proof of our ability to expand within existing customers exemplifies the importance of landing new customers across the globe. On that note, I will take a quick moment to highlight our progress in a key growth market for us, India, where the usage of our platform grew 70% from 2022 to 2023.

After landing a new logo, our expand strategy continues to be affected as existing customers adopt more and more applications.

As of the end of Q4, 56% of customers were using two or more applications up from 49% a year ago.

Three 1% of customers, who are using three or more applications.

From 28% a year ago, and 21% were using four or more applications up from 17% a year ago.

Moreover, our net dollar retention was 130% in Q4 2023.

2800 basis points from 102% at the end of 2022.

The continued proof of our ability to expand within existing customers exemplifies the importance of landing new customers across the globe.

On that note I will take a quick comment to highlight our progress and our key growth market for us India, where the usage of our platform grew 70% from 2022 to 2023.

I recently returned from a heartwarming trip across India, visiting our fantastic partners.

Jurgi Camblong: I recently returned from a heartwarming trip across India visiting our fantastic partners there, such as Tata Memorial Hospital in Mumbai and the Institute Rotary Cancer Hospital in New Delhi. I also spent time with our newest partner, Carcino Healthcare, an oncology platform boldly addressing the over 2 million estimated cancer cases in India. Together, we will work with CAR-CNOS to provide genomic testing applications to the population of India, in addition to a range of other strategic objectives.

Such as Tata Memorial Hospital in Mumbai, and the Institute Rotary Cancer Hospital in New Delhi.

Also spent time with our newest partner <unk> self care and oncology platform broadly addressing the over $2 million estimated cancer cases and engage here.

Together, we will work with <unk> to provide genomic testing applications to the population of India.

Addition to a range of other strategic objectives.

Jurgi Camblong: I am especially inspired by the shared vision between Sophia Genetics and CAR-T NOS, and I am excited for what this means for the broad deployment of Sophia DDM across the world. Beyond India, I would like to announce today a few additional major signings and expansions. In the U.S., we recently signed Lifespan Health System, a network of award-winning hospitals in Rhode Island with dozens of locations across

I am, especially inspired by the shared vision between Sofia Chantix and car T now and I am excited for what this means for the broad deployment of Sofia began across India.

Beyond India, I would like to announce today, a few additional major signings and expansions in the U S. We recently signed lifespan health system, a network of award winning I'll speak out in Rhode Island, with those kinds of locations across state lines.

Jurgi Camblong: Lifespan adopted multiple Sophia DDM EMONC applications due to their top analytical performance and our platform's ability to seamlessly integrate into the workflow. In Spain, we recently expanded our relationship with Valdebron Institute of Oncology, one of the top comprehensive cancer centers in Europe, by adopting Sophia Didyam solid tumor application for HRD. Valdebron joins other top European cancer centers using SOFIA DTM4HRD testing, including the top two, namely Gustave Roussier and the Royal Marathon.

Lifespan adopted Medicaid Bill Sofia, DBM inbound complications due to their top analytical performance and our platform's ability to seamlessly integrate into their workflow.

In Spain, we recently expanded our relationship with the Boulder Brown Institute of oncology, one of the top comprehensive cancer centers in Europe with adopting Sofia <unk> solid two more Aki caching for HIV.

Val de Brun joins other top European Cancer Center, which is in itself yet again for HIV testing, including the top two namely <unk> and the Royal Marsden.

I'm also excited to announce that in Latam.

Jurgi Camblong: I'm also excited to announce that, in LATAM, we expanded our relationship with DASA, the largest clinical diagnostic company in Latin America. DASA is adopting MSK access powered by Sophia DDM for liquid biopsy testing. This will be the DASA 6 Sophia DIVM application.

We expanded our relationship with <unk>, the largest clinical diagnostic company in Latin America, that's adopting MSP access powered with Sofia the dam for liquid biopsy testing.

This will be the data takes Sofia DBM application.

Jurgi Camblong: We're excited to see these customers in addition to the 35 new logos we landed in Q4 2023, and ramping up usage of Sophia DDM during 2025. Speaking of 2024, let's move on to our priorities and outlook for the coming year. Similar to last year, I will highlight three primary growth drivers. I will then touch on how these growth drivers, along with continued fiscal discipline, will allow us to achieve profitability in the next two-plus years. First, we are excited to capitalize on the launch of our new liquid biopsy offering, including MSK Access powered by Sophia Detox.

We're excited to see discuss some routes. In addition to the 35, new logos, we landed in Q4 2023 <unk>.

Beginning ramping up usage of Sofia D D M. During 2024.

Speaking of 2024, let's move on to our priorities and outlook for the upcoming year.

Last year I will highlight three primary growth drivers I will then touch on how would these growth drivers along with continued fiscal discipline will allow us to achieve profitability in the next two plus years.

First we are excited to capitalize on the launch of our new liquid biopsy offering, including Emmis get access powered with Sofia Lithia.

Jurgi Camblong: We are pleased with the strong demand we are seeing in the market for this application and excited by our sales pipeline for it, which is approaching double-digit millions. As an additional catalyst for the growth of our liquid biopsy applications, we recently announced a collaboration with AstraZeneca in which they will sponsor the deployment of MSK Access on Sophia DDM to customers across the globe during 2025. Our second growth driver for 2024 is the significant opportunity we continue to see in solid humor. A major tailwind for us in the solid tumor space has been the increasing complexity of signature. As signature detection becomes more complex, more sophisticated algorithms are needed.

We're pleased with the strong demand we are seeing in the market for this application and they are excited by our sales pipeline for it which is approaching double digit millions.

As an additional catalyst for the growth of our liquid biopsy applications, We recently announced a collaboration with Astrazeneca in which they will sponsor the deployment of MFC access on Sofia began to customers across the globe during 2024.

Our second growth driver for 2024 is the significant opportunity we continue to see Insulet keywords, a major tailwind for us in the solid tumor space as being the increasing complexity of signatures.

Our signature detection becomes more complex more sophisticated algorithms are needed.

Jurgi Camblong: One example is our proprietary algorithm GINGER, which was recently published in Cell Reports Medicine for its unique ability to detect the HRD sigmatron. Beyond HRD, we are also using other algorithms to help customers like Founders Bio detect additional complex signatures, such as extra-chromosomal DNA, which is present in about 20% of cancer cases. Not only are we well-equipped algorithmically to address this growing demand in solid tumors, but we also have a strong portfolio of comprehensive genomic profiling applications to meet our customers' needs.

One example is our proprietary algorithm Ginger, which was recently published in cell reports medicine for its unique ability to detect the HRD signature.

Beyond they tried to me we are also using all their algorithms to help customers like from this by you detect additional complexity in nature, such as extra chromosome all DNA, which are present in about 20% of cancer cases.

Not only are we well equipped algorithmically to address this growing demand in solid tumors, but we also have a strong portfolio of comprehensive genomic profiling applications to meet our customers' needs.

Jurgi Camblong: This includes the upcoming launch of MSK Impact, powered by Sophia Genetics. Similar to our work with MSK Access, we will decentralize MSK's CGP test, MSK Impact, and deploy it to customers worldwide. The third key priority for us in 2024 is continuing the trend of strong growth in the U.S. As mentioned earlier, we picked up significant momentum in the U.S. in 2021. In 2024, we're looking forward to capitalizing on this momentum and leveraging market names to attract other US customers to our network. Apart from the three growth drivers mentioned today, we're also delivering a series of targeted high-impact platform and application launches in 2024. We plan to launch new capabilities in IM-HONC with an application to measure minimal residual disease in acute myeloid leukemia.

This includes the upcoming launch of the Michigan impact powered with Sofia.

Similar to our work with MSC access, we will decentralize M. S Kids CGP test domestic impact and deploy it to customers worldwide.

Astrazeneca join says in the mission and will also contribute to the deployment of the application to customers across the globe.

The third key priority for us in 2024 is continuing the trend of strong growth in the U S.

As mentioned earlier, we picked up significant momentum in the U S. In 2020.

In 2024, we're looking forward to capitalizing on this momentum and leveraging marquee names to attract all their U S customers to our network.

Apart from the three growth drivers mentioned today, while also delivering a series of targeted high impact platform and application launches in 2024.

Planned to launch new capabilities in all with an application to measure a minimum wage <unk> for acute myeloid leukemia.

Jurgi Camblong: We also plan to launch new features in rare and inherited disorders to serve our customers' needs for whole genome sequencing and pharmacogenomics. From a platform perspective, we are launching the full modernization of SophiaDDM as we move to web technology and microservices. We will also continue making upgrades to SOFIA CurvePath and its multimodal capabilities in order to create even more value for our biopharmacists. Based on our current commercial pipeline, we're confident that these new launches will deliver long-term value to our business. In summary, 2024 is an exciting year. From our liquid biopsy capabilities to our world-class solid tumor application, to the momentum we are building in the U.S., we're well-equipped for 2024 and as we continue on our path to profitability in the next two plus years. So with that, I will now turn it over to Ross, who will provide a more detailed look at our financial results, business trends, and guidance for the year 2024. Thank you, Jurgi, and good morning, everyone.

We also plan to launch new features in <unk> and inherited disorders to serve our customers' needs on wall genome sequencing and pharmacogenetics.

From a platform perspective, we are launching a full more are there any session of Sofia DBM as we move to web technology and micro services.

Also continue making upgrades to Sofia Cooper and its multimodal capability in order to create even more value for our biopharma customers.

Based on our current commercial pipeline, we're confident that these new launches will deliver long term value to our business.

In summary, 2024, it is an exciting year from our liquid biopsy capabilities to our world class solid tumor applications to the momentum we are building in the U S. We're well equipped for 2024 and as we continue on our path to profitability in the next two plus years.

So with that I will now turn it over to Ross.

We'll provide a more detailed look at our financial results business trends and guidance for the 2024 years.

Thank you <unk> and good morning, everyone I'm pleased to share that despite the challenging macro environment. So if he had genetics delivered strong performance in the fourth quarter, continuing our commitment to sustainable growth total revenue for the fourth quarter of 2023 was $17 million compared to <unk>.

Ross Jordan Muken: I'm pleased to share that despite the challenging macro environment, Sophia Genetics delivered strong performance in the fourth quarter, continuing our commitment to sustainable growth. Total revenue for the fourth quarter of 2023 was $17 million, compared to $13.4 million for the fourth quarter of 2022, representing year-over-year growth of 27 percent. Constant currency revenue growth was 26 percent, and constant currency revenue growth, which excluded COVID-related revenue, was also 27 percent. Of note, clinical revenue fell in line with our internal plan, as consumption trends played out as expected in the second half.

$84 million for the fourth quarter of 2022, representing year over year growth of 27% constant currency revenue growth was 26% and constant currency revenue growth excluding coding related revenue was also 27%.

Clinical revenue fell in line within our internal plan, it's consumption trends played out as expected in the second half. However, we did have a small amount of biopharma related revenue shift from the fourth quarter to the first half of 2024 as I have stated previously our Biopharma revenue is still in its nascent <unk>.

Ross Jordan Muken: However, we did have a small amount of biopharma-related revenue shift from the fourth quarter to the first half of 2024. As I've stated previously, our biopharma revenue is still in its nascent stages, and thus, you should continue to expect small timing-related recognition impacts over the near to medium term. Platform analysis volume was approximately 85,000 for the fourth quarter of 2023 compared to 71,000 for the fourth quarter of 2022. The 20% year-over-year growth was attributable to the strength of our core platform analysis volume, offset by continued expected declines in COVID-related analysis volume. Excluding COVID-related volume, platform analysis grew a healthy 24% year-over-year in the period. Strength in North America and Asia Pacific highlighted geographic outperformance in the quarter, offsetting a slight moderation in Latin America, which had an overall strong 2023. From an application standpoint, rare and inherited disease applications outperformed oncology applications in the period, giving broad demand for exomes despite strong contributions from solid tumor, liquid biopsy, and hemonc applications.

Ages, and thus you should continue to expect small timing related recognition impact over the near to medium term.

Analysis volume was approximately 85000 for the fourth quarter of 2023, compared with <unk> 71000 for the fourth quarter of 2022, the 20% year over year growth was attributable to the strength of our core platform analysis volume offset by continued expected decline of Covid related analysis.

I am excluding Covid related volume platform analysis grew a healthy 24% year over year in the period strength in North America, and Asia Pacific highlighted geographic outperformance in the quarter offsetting a slight moderation in Latin America, which had an overall strong in 2023.

And application standpoint, rare inherited disease applications outperformed oncology applications in the period, given the broad demand for XOMA. Despite strong contributions from solid tumor liquid biopsy and haemonchus applications.

Ross Jordan Muken: Gross profit for the fourth quarter of 2023 was $11.9 million compared to gross profit of $9.6 million in the fourth quarter of 2022, representing year-over-year growth of 24 percent. Gross margin was 70 percent for the fourth quarter of 2023 compared with 72 percent for the fourth quarter of 2022. Adjusted gross profit was $12.5 million, an increase of 25 percent compared to adjusted gross profit of $10 million in the fourth quarter of 2022. Adjusted gross margin was 73 percent for the fourth quarter of 2023 compared to 75 percent for the fourth quarter of 2022. We continued to benefit in the period from economies of scale related to cloud-based compute and storage costs as well as favorable price capture, partially offset by a challenging prior year comparable related to sizable Microsoft Azure cloud credits offsetting our computational and storage-related costs. Excluding this one-time benefit, gross margins would have increased 600 basis points year-on-year.

Gross profit for the fourth quarter of 2023 was $11 9 million.

Compared to gross profit of $9 $6 million in the fourth quarter of 2022, representing year over year growth of 24% gross margin was 70% for the fourth quarter of 2023, compared with 72% for the fourth quarter of 2022.

Adjusted gross profit was $12 5 million, an increase of 25% compared to adjusted gross profit of $10 million in the fourth quarter of 2022, adjusted gross margin was 73% for the fourth quarter of 2023 compared to 75% for the fourth quarter of 2022.

We continued to benefit in the period from economies of scale related to cloud based compute and storage costs as well as favorable price capture partially offset by a challenging prior year comparable related to sizable Microsoft Azure cloud credits offsetting our computational and storage related cost.

Excluding this onetime benefit gross margins would have increased 600 basis points year on year.

Ross Jordan Muken: Total operating expenses for the fourth quarter of 2023 were $30.8 million, compared to $24.7 million for the fourth quarter of 2022. Across the functions, we continued to benefit from lower headcount, both on a year-over-year basis as well as quarter-on-quarter basis. FX was a notable headwind in the period, particularly impacting R&D expenditures.

Total operating expenses for the fourth quarter of 2023 were $38 million compared to $24 7 million for the fourth quarter of 2022 across the functions. We continue to benefit from lower head count both on a year over year as well as quarter on quarter basis FX was a noted.

<unk> headwind in the period, particularly impacting R&D expenditures on a reported basis share based compensation was also a notable headwind broadly lastly, I am also proud of our hard work on the G&A side, where we continue to benefit from lower professional service fees and optimization of our public company costs.

Ross Jordan Muken: On a reported basis, share-based compensation was also a notable headwind broadly. Lastly, I am also proud of our hard work on the G&A side, where we continue to benefit from lower professional service fees and optimization of our public company costs. Operating loss for the fourth quarter of 2023 was $18.9 million compared to $15.1 million in the fourth quarter of 2022. Adjusted operating loss for the fourth quarter of 2023 was $13.3 million compared to $12.1 million for the fourth quarter of 2022.

Operating loss for the fourth quarter of 2023 was $18 9 million compared to $15 $1 million in the fourth quarter of 2022.

Adjusted operating loss for the fourth quarter of 2023 was $13 3 million compared to $12 1 million for the fourth quarter of 2022, we continue to be pleased with our trajectory towards profitability and believe the additional head count actions. We took in the second half of 2023, where necessary to sustain the trends.

Ross Jordan Muken: We continue to be pleased with our trajectory toward profitability and believe the additional headcount actions we took in the second half of 2023 were necessary to sustain the trend into the first half of 2024. Of note, below the line this quarter, we did have a significant charge related to foreign exchange losses. This is due to the material appreciation of the Swiss franc and euro in the period.

Into the first half of 2024.

Of note below the line this quarter, we did have a significant charge related to foreign exchange losses. This is due to the material appreciation of the Swiss franc and euro in the period.

Ross Jordan Muken: As this is primarily related to intercompany receivables, you will see an immaterial impact on our cash utilization overall. Lastly, our total cash burden for the fourth quarter of 2023 was $9.5 million compared to $10.6 million in the prior year quarter. This represents an 11 percent year-over-year improvement, even when factoring in a credit for computational and storage-related expenses related to our strategic agreement with Microsoft in Q4 2022. We remain happy overall with our cash and utilization trend and are on track with respect to our medium-term liquidity trajectory. Now turning to full year 2023 financial, Total revenue for the full year 2023 was $62.4 million compared to $47.6 million in 2022, representing year-over-year growth of 31 percent. Constant currency revenue growth was 30 percent, and constant currency revenue growth excluding COVID-related revenue was 32 percent.

It is primarily related to intercompany receivables you will see an immaterial impact on our cash utilization overall lastly, total cash burn for the fourth quarter of 2023, with $9 5 million compared to $10 $6 million in the prior year quarter. This represents an 11% year over year.

Improvement, even when factoring in a credit to computational and storage related expenses related to our strategic agreement with Microsoft in Q4, 2022, we remain happy overall with our cash and utilization trends and are on track with respect to our medium term liquidity trajectory now.

Turning to full year 2023 financials.

Total revenue for the full year, 2023 was $62 $4 million compared to $47 $6 million in 2022, representing year over year growth of 31% constant currency revenue growth was 30% and constant currency revenue growth, excluding COVID-19 related revenue was 30.

2%. This outcome was generally in line with our initial forecast and speaks to the level of revenue visibility. We continue to have in the business, despite ongoing macro and industry industry specific headwinds.

Ross Jordan Muken: This outcome was generally in line with our initial forecast and speaks to the level of revenue visibility we continue to have in the business despite ongoing macro and industry-specific headwinds. Platform analysis volume was 317,000 for the full year 2023, compared to 264,000 in 2022, and this represents 20% year-over-year growth. Excluding COVID-related volume, platform analysis grew at a strong 27% year-over-year in the period. For the full year, oncology application growth outperformed rare and inherited disease applications, led by strength in solid tumors and liquid biopsy. Regional growth was generally balanced, with APAC representing the exception, delivering greater than 50% growth.

Platform analysis volume was 317000 for the full year 2023 compared to 264000 in 2022 represented 20% year over year growth, excluding COVID-19 related volume platform analysis grew at a strong 27% year over year in the peer.

For the full year oncology application growth outperformed rare an inherited disease applications led by strength in solid tumors and liquid biopsy regional growth was generally balanced with APAC, representing the exception liberating greater than 50% growth.

Ross Jordan Muken: Core Genoma customers were 450 as of December 31, 2023, up from 434 in the prior year period and up sequentially by 19 customers relative to Q3. The annualized revenue churn rate was 4% in 2023, in line with our expectations. Net dollar retention for the year improved to 130 percent, up 2,800 basis points from 102 percent in 2022. Constant currency net dollar retention excluding COVID-related revenue was 130 percent as compared to 123 percent in 2022.

Corporate genomic customers were 450 as of December 31, 2023 up from 434 in the prior year period and up sequentially by 19 customers relative to Q3 2023 annualized revenue churn rate was 4% in 2023 in line with our expectations.

Net dollar retention for the year improved to 130% up 2800 basis points from 102% in 2022 constant currency net dollar retention, excluding COVID-19 related revenue was 130% as compared to 123% in 2022.

Ross Jordan Muken: Strong NDR and a healthy level of backlog continued to provide us with a high level of revenue visibility going forward. Gross profit for the full year 2023 was 42.9 million dollars compared to gross profit of 31.3 million in 2022, representing year-over-year growth of 37 percent. Gross margin was 69 percent for the full year 2023 compared with 66 percent for 2022.

Strong MBR in a healthy level of backlog continues to provide us with a high level of revenue visibility going forward gross profit for the full year of 2023 was $42 9 million.

Compared to gross profit of $31 3 million in 2022, representing year over year growth of 37% gross margin was 69% for the full year 2023, compared with 66% for 2022.

Ross Jordan Muken: Adjusted gross profit was $45 million, an increase of 39% compared to adjusted gross profit of $32.4 million for the full year 2022. Adjusted gross margin was 72% for the full year 2023 compared to 68% for 2022. I am incredibly proud of this outcome, as we have now outperformed our medium-term guidance for an entire year. I remain encouraged with respect to continued expansion opportunities moving forward. Total operating expenses for the full year 2023 were $117.7 million compared to $119.1 million in 2022. R&D expenses for the full year were $37 million compared to $35.4 million in 2022. Sales and marketing expenses for the full year 2023 were $28.4 million compared to $28.3 million in 2022. General and administrative expenses for the full year 2023 were $53.3 million compared to $55.8 million in 2022. Operating loss for the full year 2023 was $74.8 million compared to $87.8 million in 2022. Adjusted operating loss for the full year 2023 was $55.9 million compared to $72 million in 2022.

Adjusted gross profit was $45 million, an increase of 39% compared to adjusted gross profit of $32 4 million.

In the full year 2022.

Gross margin was 72% for the full year 2023, compared to 68% for 2022 I am incredibly proud of this outcome as we have now outperformed our medium term guidance for an entire year I remain encouraged with respect to continued expansion opportunities moving forward.

Operating expenses for the full year of 2023 were $117 7 million compared to $119 1 million in 2020 to R&D expenses for the full year were $37 million compared to $35 $4 million in 2022 sales and marketing expenses for the <unk>.

Full year, 2023 were $28 $4 million compared to $28 $3 million in 2022.

General and administrative expenses for the full year 2023 were $53 $3 million compared to $55 $8 million in 2022.

Operating loss for the full year of 2023 with $74 8 million compared to $87 8 million in 2022, adjusted operating loss for the full year 2023 was $55 9 million compared to $72 million in 'twenty two.

Ross Jordan Muken: Lastly, total cash burn for the full year 2023 was $55.4 million compared to $86.7 million in the prior year, down 36%. We are quite proud of this achievement and remain committed to sustainable growth moving forward. Cash and cash equivalents were approximately $123.3 million as of December 31, 2023.

Lastly, total cash burn for the full year 2023, with $55 4 million compared to $86 7 million in the prior year down 36%. We are quite proud of this achievement and remain committed to sustainable growth moving forward.

Cash and cash equivalents were approximately $123 $3 million as of December 31, 2023.

Ross Jordan Muken: Now turning to our 2024 outlook, Sophia Genetics expects full-year reported revenue to be between $78 million and $81 million, representing 25 to 30 percent growth on a reported basis. Let me provide a few key underlying assumptions relative to our reported revenue forecast for 2024. First, we currently contemplate that exchange rates will remain highly volatile, and as such, we are anticipating a moderate negative impact on reported results in 2024. Two, we also expect a very modest headwind to 2024 reported revenues related to a cessation of COVID-related contributions. The combined impact of these assumptions would place our implied organic growth rate toward the low end of our medium-term guidance of 30 to 35 percent.

Now turning to our 2024 outlook Sofia genetics expects full year reported revenue to be between $78 million and $81 million, representing 25% to 30% growth on a reported basis.

Let me provide a few key underlying assumptions relative to our reported revenue forecast for 2024, one we currently contemplate that exchange rates will remain highly volatile and as such we are anticipating a moderate negative impact to reported results in 2024. It too. We also expect a very modest headwind to 2000.

<unk> 24 reported revenues related to our ceasing of Covid related contribution the combined impact of these assumptions would place our implied organic growth rate for the low end of our medium term guidance of 30% to 35%. This is despite excellent new customer momentum exhibited in 2023.

Ross Jordan Muken: This is despite excellent new customer momentum exhibited in 2023. We would attribute two key factors to a more conservative stance as we approach 2024 revenue guidance. First, we have assumed elongated implementation times for liquid biopsy applications given the complexity of the workflow as compared to tissue.

We attribute two key factors to a more conservative stance as we approach 2020 for revenue guidance first we have assumed elongated implementation times for liquid biopsy applications, given the complexity of the workflow as compared to tissue.

Ross Jordan Muken: Further complicating the matter is a need to help our customers gain access to tumor normal reference samples for proficiency testing. We currently believe this may add up to three months to the implementation timeline, meaning we will likely see a larger impact from recent key wins in 2025. Second, we are seeing increased adoption of new sequencers in the market. This includes companies like Complete Genomics, PacBio, Ultima, Oxford Nanopore, and Element.

They're adding complication is a need to help our customers gain access to tumor normal reference samples for proficiency testing. We currently believe this may add up to three months to implementation timelines.

We will likely see a larger impact from recent key wins in 2025 second we are seeing increased adoption of new sequences in the market. This includes companies like complete genomics Pac bio Ultima, Oxford Nano point element as Sofia genetics, we welcome this diversity one of the founding principles.

Ross Jordan Muken: At Sophia Genetics, we welcome this diversity. One of the founding principles of our platform is to be technology agnostic. While the prevalence of these new sequencers is driving opportunity across our offering, the changing adoption pattern also warrants some conservatism about customer readiness to implement our solutions as they first need to manage their sequencer transitions. Thus, a majority of the growth forecast in 2024 is from the expansion of existing customers. This is consistent with our historical NDR of 125% to 130%.

Of our platform is to be technology agnostic, while the prevalence of these new sequences is driving opportunity across our offering the changing adoption pattern also warn some conservatism about customer readiness to implement our solutions as they first need to manage their sequence or traditions. Thus a majority of the growth forecast.

In 2024, it's from the expansion of existing customers. This is consistent with our historical MTR of 125% to 130%. We will update you over the course of the year as to how new implementations are trending with respect to seasonality. We would expect 2024 to follow our typical cadence.

Ross Jordan Muken: We will update you over the course of the year as to how new implementations are trending. With respect to seasonality, we would expect 2024 to follow our typical cadence, whereby 1Q and 3Q tend to be seasonally softer from a revenue standpoint, while 2Q and 4Q tend to be seasonally stronger. With 4Q being the largest in terms of percent of revenue contribution to the full year, as many of our recently signed logos will likely begin ramping up at that point, we continue to expect a larger portion of our 2024 revenue to be recognized overall in the second half of the year. Following on our strong cost performance in 2023, Sophia Genetics expects further gross margin expansion from 2023 levels in 2024. We currently forecast adjusted gross margins for 2024 in the range of 72.5% to 72.7%, representing an improvement of up to 50 basis points. This is despite a challenging comp in the first quarter due to the remaining prior year Microsoft credit. Turning to operating loss, we currently expect adjusted operating loss to fall between $45 million and $50 million.

Whereby <unk> and <unk> tend to be seasonally softer from a revenue standpoint, while <unk> and <unk> tend to be seasonally stronger with <unk> being the largest in terms of percent of revenue contribution to the full year as many of our recently signed logos will likely begin ramping up at that point, we continue to expect a larger portion.

Of our 2020 for revenue to be recognized overall in the second half of the year.

Following our strong cost performance in 2023, Sophia genetics expects further gross margin expansion from 2023 levels. In 2024, we currently forecast adjusted gross margins for 2024 in the range of 72, 5% to 72, 7% representing an improvement of up.

$2 50 basis points. This is despite a challenging comp in the first quarter due to the remaining prior year, Microsoft credit turning to operating loss. We currently expect adjusted operating loss to fall between $45 million and $50 million. This is yet again another notable improvement from 2023 level.

Ross Jordan Muken: This is yet again another notable improvement from 2023 levels, despite a less material benefit year-over-year with respect to headcount, which drove a majority of our loss improvement in 2023. We are confident in our medium-term path to profitability. We have taken the required actions to expedite that goal and remain obsessed with capital efficiency.

Despite a less material benefit year over year with respect to head count, which drove a majority of our loss improvement in 2023, we are confident in our medium term path to profitability. We have taken the required actions to expedite that goal and we remain obsessed with capital efficiency in the second half of 2023, we took.

Ross Jordan Muken: In the second half of 2023, we took some tactical headcount actions to further optimize our operations while also continuing to focus our R&D efforts on increasingly higher ROI projects. These were difficult decisions, but we prioritized sustaining medium-term revenue momentum at our previously communicated targeted levels while ensuring a reasonable time frame for cash flow generation. In 2024, we will continue to revisit our discretionary expenditures and execute identified savings in systems, professional services, and certain public company costs.

Some tactical head count actions to further optimize our operations, while also continuing to focus our R&D efforts on increasingly high ROI projects. These were difficult decisions, but we prioritize the staining medium term revenue momentum at our previously communicated targeted levels, while ensuring a reasonable timeframe to cash flow generation.

In 2024, we will continue to revisit our discretionary expenditures and execute and identified savings in systems professional services and certain public company costs. The combined nature of these items and the natural operating leverage in the business from strong revenue growth will further our profit profitability in the next two plus years with that.

Ross Jordan Muken: The combined nature of these items and the natural operating leverage in the business from strong revenue growth will further our path to profitability in the next two-plus years. With that, I would like to turn the call back over to Yurgi for the closing remarks before we take your questions. Thank you, Ross.

That I would like to turn the call back over to <unk> for closing remarks before we take your questions.

Thank you Russ we're proud of our performance, which we believe reflects our continued ability to execute on our vision and the opportunity ahead.

Jurgi Camblong: We're proud of our performance, which we believe reflects our continued ability to execute on our vision and the opportunity ahead. Sophia's success depends on our ability to delight customers and continue driving more and more usage of our platform. After a successful 2023, our focus shifts to Sophia's future. I will share just a few final thoughts as we look towards the near future with three key priorities for 2025. First, we look forward to seeing significant growth from new liquid biopsy applications, including MSK Access, powered by Sophia DDM, as we deploy the applications to customers worldwide with the help of our biopharma partners.

So fear success, hence on our ability to delight customers and continued driving more and more usage of our platform.

After a successful 2023, our focus shifts to Sophie's picture I will share just a few final thoughts as we look towards the near future with three key priorities for 2024.

We look forward to seeing significant growth from new liquid biopsy applications, including MSP access powered with Sofia TTM as we deployed the applications to customers worldwide.

The help of our Biopharma partners.

Jurgi Camblong: Second, although we set the bar high in 2023, we're excited to continue growing Sophia Didyam's solid tumor applications and capitalize on the demand for increasingly complex signatures. And third, we plan to continue our strong trajectory of growth in the U.S. As we leverage momentum from 2023. In closing, thank you to our Sophia colleagues, partners, customers, and investors for joining us on our journey. Without you, none of this would be possible.

Second although we set the bar high in 2023, we're excited to continue growing so if you had <unk> solid tumor applications and capitalize on the demand of increasingly complex teenagers.

Third we plan to continue our strong trajectory of growth in the U S. As we leverage momentum from 2020.

In closing thank you to our Sofia colleagues partners customers and investors for joining us in our journey without you know if this would be possible.

Operator: Please note that we are attending the Cowell HealthCare Conference tomorrow in Boston and Barclays next week in Miami. I look forward to continuing to update you on Sophia's future success in democratizing data-driven medicine. Operator, you may now open the line for questions. Before we begin, I'd like to turn it back over to Ross for a brief statement. Thanks. Please note Jurgi won't be joining us today for the Q&A portion of the call as he had a minor medical procedure over the weekend. He sends his regards and apologizes for not being able to make it today.

Please note that we are attending Cowen Healthcare conference Tomorrow in Boston and Barcelona next week in Miami.

I look forward to continuing to update you on <unk> future success of Democratizing data have you maybe seen operator, you may now open the line for questions.

Before we begin I'd like to turn it back over to Ross for a brief statement.

Thanks. Please note here again won't be joining us today for the Q&A portion of the call as he had a minor medical procedure over the weekend. He sends his regards and apologizes for not being able to make it today, we look forward to having him back soon now back to you drew.

Operator: We look forward to having him back soon. Now, back to you, Drew. The line is now open for questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Your line is now open for questions. We will now begin the question and answer session.

I ask a question you May press Star then one on your telephone keypad.

You were using a speaker phone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.

Operator: To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Dan Brennan with TD Cowen. Please go ahead.

The first question comes from Dan Brennan with TD Cowen. Please go ahead.

Daniel Gregory Brennan: Great, thanks. Thanks for the questions, Ross. I hope Jurgi's OK.

Great. Thanks, Scott Thanks for the questions Ross I Hope yours, Okay.

Ross Jordan Muken: Maybe just on the first question, just on the guide, you talked about the elongated implementation for liquid biopsy and the newer platforms. Could you just contextualize that a little bit, like just... I'm going to summarize the liquid biopsy business today, kind of frame exactly what's going on there, and then on the sequencing side... Just give a little more color on how pervert, you know, how, how widespread is this new platform adoption and, Like, in the second quarter, will we be talking about this? Could this be something that lingers throughout the year for you guys?

Maybe just on the first question just on the guide you talked about the elongated implementation for liquid biopsy.

And the newer platforms could you just contextualize that a little bit like just.

Size, the liquid biopsy business today.

You know kind of frame exactly what's going on there and then on the sequencing side.

Just give a little more color there like like how pervert, how how widespread is this new platform adoption and.

In the second quarter would we be talking about this could this be something that lingers throughout the year for you guys.

Ross Jordan Muken: And then I have a few follow-ups. Thanks. Thanks, Dan.

And then I have a few follow ups. Thanks.

Thanks, Dan So in terms of.

Ross Jordan Muken: So, in terms of some of the factors we put into the guidance. So, one, I would point you to the fact that we had a tremendous quarter in terms of adding new core logos, right? We added 35 in the period. We also had, and again, this is not a number we typically share.

Some of the factors, we put into the guidance so one I.

I would point you to the fact that we had a tremendous quarter in terms of adding new core logos right. So we added 35 in the period.

We also had and again this is not a number we typically share. We also had incredibly strong bookings towards the end of the year. So the new demand environment in general is quite healthy a good portion of that is coming in liquid biopsy.

Ross Jordan Muken: We also had incredibly strong bookings toward the end of the year. So, the new demand environment, in general, is quite healthy. A good portion of that is coming in liquid biopsy. And so, I think, you know, that solution, again, relative to tissue, is a bit more complex, right?

And so I think that solution again relative to tissue is a bit more complex right and I think on our end both given it's a tumor normal solution and so that means sample acquisitions a bit more challenging but also just the workflow for the customer we wanted to be a bit more.

Ross Jordan Muken: And I think on our end, both given that it's a tumor normal solution, and so that means sample acquisition is a bit more challenging, but also just the workflow for the customer. We wanted to be a bit more, I would say, conservative and essentially added in our assumption of customers ramping up about three months to the adoption process relative to our typical six months. Again, that mathematically would just mean we're only getting roughly one quarter of contribution from some of those new customers in the year, whereas typically we would get two. So that's liquid biopsy.

I would say conservative and essentially added in our assumption of customers ramping about three months.

Two the adoption process relative to our typical six month. So again that mathematically would just mean, we're only getting roughly one quarter of contribution from some of those new customers in the year, whereas typically we would get to.

So that's liquid biopsy on the sequencer side.

Ross Jordan Muken: On the sequencer side, you know, obviously, this has been a market where you've had, you know, essentially two players for the majority of the last number of years, with one player being quite dominant. We still see obviously no change in the sort of leadership position in the market, but we are seeing quite a number of new vendors having success in different applications within the market. And so for us, you know, this is obviously a really nice development. We welcome the diversity of new applications and new sequencer types and vendors, but there is, I would say, to a degree, a bit less certainty for us solely because we have not seen this before, right? And so, you know, again, I wouldn't say there's anything we're necessarily seeing in our startup time that's elongated, but we wanted to add a bit of cushion just in case, right? And so, again, I think it's ultimately, on both of these ends, very positive long-term developments for us, but we wanted to be a bit extra conservative as we entered the year just because it does introduce, in terms Okay, I got it.

Obviously this has been a market where you have had essentially two players for the majority of the last number of years.

With one player being quite dominant.

We still see obviously no change in sort of the leadership position.

In the market, but we are seeing quite a number of new vendors having success.

Different applications within the market and so for US. This is obviously, a really nice development and we welcome the diversity of new applications and new.

New sequence or types.

Vendors, but there is I would say to that degree a bit less certainty for us solely because we have not seen this before right.

So again I wouldn't say, there's anything we're necessarily seeing in our setup times, that's elongated, but we wanted to add a bit of a cushion.

Just in case right and so again I think it's ultimately on both of these ends very positive long term developments for us, but we wanted to be a bit extra conservative.

As we entered the year just because it does introduce in terms of new business are slightly different wrinkle than we typically have faced in the past.

Okay got it thanks, and then maybe just as a follow up.

Ross Jordan Muken: Thanks. And then, and then maybe this is a follow-up. It'll be a two-parter, and then I'll just go back in the queue. Just biopharma, I think in the 20F, you noted was at three million year-on-year. Could you give us some color of what the base was, and just any color?

It would be to partner and then I'll just go back in the queue, just biopharma I think of the 20-F.

It was a $3 million year on year could you give us some color what the base was and just any color.

Ross Jordan Muken: on the biopharma contribution and how we're thinking about the impact in 23. And then you discussed in the prepared remarks the medium-term path to profitability and the actions that you guys are taking in order to ensure that. I know you haven't given us a distinct date or timetable, but any more color around what that medium-term path looks like, whether, you know, how long, what the revenue base is, what needs to happen. Thank you.

On the Biopharma contribution and how we're thinking about the impact in 'twenty three and then you discussed in the prepared remarks, the medium term path to profitability and the actions that you guys are taking in order to ensure that I know you haven't given us a distinct date or timetable, but any more color around.

What that medium term path looks like whether how long what the revenue base is what needs to happen.

Thank you.

Ross Jordan Muken: Excellent Dan, thanks for the question. So in terms of biopharma, you'll note we still have not broken that out, and we did, obviously, also call out in the period that there was a slight amount of revenue that shifted to the first half of next year. You know, I would say that business remains in its nascent stages, but we're still incredibly excited about the opportunity there. We're seeing quite a lot of synergy between our clinical and pharma business, particularly in liquid biopsy, where I think, you know, again this year, you'll see continued updates from us on some of the new partnerships and success we're having there. But I think, overall, obviously, longer term for us, on top of what we've already done in terms of sponsored testing, we're very excited about multimodal, and multimodal, And so overall, I'm pleased with how pharma performed this year. It actually outperformed our internal expectations, but I would say it's still small enough as a business relative to the whole that we're not quite at the point of breaking it out.

Okay.

Excellent Dan Thanks for the question. So in terms of Biopharma. So youll note, we still have not broken that out and we did obviously also call out in the period that there was a slight amount of revenue that shifted to the first half of next year.

I would say that business remains in its nascent stages, we're still incredibly excited about the opportunity there we're seeing quite a lot of synergy between our clinical and pharma business, particularly in liquid biopsy.

Well I think again.

This year Youll see continued updates from us on some of the new partnerships and success, we're having there, but I think overall, obviously longer term for us on top of what we've already done in terms of sponsored testing, we're very excited about multimodal.

Multimodal for US is very present within sort of the pharma landscape and that's where I would say.

Stay tuned for some of the other types of projects, we're working on right and so overall I am pleased with how pharma performed this year it actually outperformed our internal expectations, but I would say, it's still small enough that it's a business relative to the whole.

We're not quite at the point of breaking it out.

Ross Jordan Muken: And so the disclosures as such show you the nice momentum we're having, but we're still at a point where we want you to think about the platform as a whole. In terms of your second question relative to our path to profitability, you know, I'm really proud this year of the work of the team. You know, we did a great job on gross margins. In this quarter, excluding the Microsoft credit, gross margins were up over 600 basis points.

So the disclosures as such show you the nice momentum, we're having but we're still at a point, where we want you to think about the platform as a whole.

In terms of your second question relative to our path to profitability.

Proud this year the work of the team.

We did a great job on gross margins in this quarter, excluding the Microsoft credit gross margins were up over 600 basis points. We also made great progress throughout the year on head count, which is our main expense and so we'll continue to see that improvement play out as you know we're a European entity.

Ross Jordan Muken: We also made great progress throughout the year on headcount, which is our main expense. And so, you know, we'll continue to see that improvement play out. As you know, we're a European entity majority in terms of our headcount mix, and so it does take some time for headcount actions to work their way through the P&L, so you'll continue to see that benefit on OPEX in the first part of next year. And then we continue to be very disciplined on the rest of our discretionary spend, whether that's professional services or systems or our real estate, etc., etc., and That being said, I would say from here, the biggest contributor to the path to profitability is going to be the drop in incremental revenue, right?

Majority majority in terms of our head count mix and so it does take some time for head count actions to work their way through the P&L. So you'll continue to see that benefit on opex in the first part of next year and then we continue to be very disciplined on them and the rest of our discretionary spend whether that's professional services our system.

<unk> or our real estate et cetera, and so we're constantly looking for areas to target that being said I would say from here the biggest contributor too.

The path to profitability is going to be the dropdown of incremental revenue right. So the good news for US is we have incredibly visible strong organic growth right. So we talked about net dollar retention being 130% for the year. So that gives us a very nice base with which to sort of model our forward growth and so.

Ross Jordan Muken: So the good news for us is we have incredibly visible, strong organic growth, right? So we talked about net dollar attention being 130% for the year. So that gives us a very nice base with which to sort of model our forward growth. And so with this sort of continued gross margin expansion we talked about this year, and again, we haven't updated our long-term target or medium-term target, but we're obviously increasingly confident in our ability to drive margin expansion. With those strong incrementals off of net revenue growth, we expect to drop a very high portion of that incremental gross profit to the EBIT line. And so, that will materially help our path to profitability. So again, at J.P. Morgan, Jurgi spoke about two plus years and our sort of sufficient capital base. So you can sort of back into, you now know at least a range for this year in terms of loss. And now you can see that with continued improvement in 25 and into 26, that should be a pretty visible, I would say, trajectory with some of those assumptions to cross over to cash flow breakeven. Great.

This sort of continued gross margin expansion, we talk about this year and again, we haven't updated our long term target our medium term target, but we're obviously increasingly confident in our ability to drive margin expansion with those strong incrementals off of the net revenue growth, we expect to dropdown very high.

Portion of that incremental gross profit to the EBIT line and so with that that will materially help our path to profitability. So again at Jpmorgan you already spoke about two plus years.

And all our sort of sufficient capital base. So you can sort of back into you know now at least a range for this year in terms of loss.

And now you can see that with continued improvement in 25% to 26.

That should be a pretty visible I would say trajectory with some of those assumptions to cross over to cash flow breakeven.

Great. Thanks Ross.

Tejas Rajeev Savant: Thanks, Ross. The next question comes from Tejas Savant with Morgan Stanley. Please go ahead. Hey, Ross.

The next question comes from Tejas Savant with Morgan Stanley. Please go ahead.

Hey, Ross good morning, and best wishes to you here.

Tejas Rajeev Savant: Good morning, and best wishes to Jurgi here. Just a couple of quick cleanups on some of the comments you just made on the guide and the path to breakeven. So I guess my question is really, you've been well north of 70% for a while now, and as you mentioned, really good progress in GMs in the fourth quarter as well, even adjusted for the Microsoft dynamic. So what's holding you back from perhaps bumping that target to, let's say, 75% plus on the margin line? And then as a related follow-up, you talked about the, I want to focus on the plus in the two-plus years to operating profit breakeven. So is that just to preserve a degree of optionality? Should there be opportunities to really lean in and invest more than you currently anticipate over the next couple of years? Or is there something else that we should be looking into in terms of that sort of phrase? Good morning, Tejas, and thanks for the question. So I would say, I'll take your second one first.

Just just a couple of quick cleanups there on some of the comments you just made on the guide.

And the boss to breakeven. So I guess my question is really you know you've been well north of 70% for a while now as you mentioned really good progress on Gms in the fourth quarter as well even adjusted for the Microsoft dynamic. So what's what's holding you back from perhaps bumping that target to let's say, 75%.

Plus on the margin line and then.

Is it related follow up you talked about the I wanted to focus on the plus and the two plus years to operating profit breakeven. So is that just to preserve a degree of optionality should there be opportunities to really lean in and invest more than you currently anticipate over the next couple of years.

Or is that something else that we should be reading into it in terms of that sort of freezing.

Good morning, and thanks for the question. So I would say I'll take your second one first so on the plus here I think the way you characterize that ultimately it does give us a bit of a degree of freedom, but frankly I think.

Ross Jordan Muken: So on the plus side, yeah, I think the way you characterized it ultimately does give us a bit of a degree of freedom. But frankly, you know, I think, you know, as a public company, we're obviously incredibly focused, right, on this initiative, given sort of the end market environment. But the practical reality is, as a business that's primarily a headcount business, right, you know, we have a high degree of control of where we land. But we also want a balance to make sure that we hit our growth objectives, right, as I mentioned before, so much of the drop down that comes is relative to that top line momentum. And so I think from that standpoint, you know, it's really crucial that we don't lose sight that we still need to invest in the future, right, and we need to be able to innovate.

As a public company, we're obviously incredibly focused right on this initiative given sort of the end market environment, but the practical reality is there's a business that's primarily a head count.

We have a high degree of control.

And where we landed but we also want a balance to make sure that we hit our growth objectives right as I mentioned before so much of the dropdown.

Cognizant is relative to that top line momentum and so I think from that standpoint.

It's really crucial that we don't lose sight that we still need to invest for the future right and we need to be able to drive.

And full year 2023 earnings conference call all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero.

I would now like to turn the conference over to Kelvin Sanger Sofia generic genetics as head of strategy and Investor Relations you may begin.

Thank you and good morning, everyone.

Come to the Sofia genetics fourth quarter and full year 2023 earnings conference call.

With me today to discuss our results are Dr. <unk> <unk>, our co founder and Chief Executive Officer, and Ross <unk>, Our Chief Financial Officer, and Chief operating Officer.

I'd like to remind you that management will make statements during this call.

Forward looking statements within the meaning of federal Securities laws.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated and you should not place undue reliance on forward looking statements.

Additional information regarding these risks uncertainties and factors that could cause results to differ appears in the press release of the genetics issued today and in the documents and reports filed by Sofia genetics from time to time with the Securities and Exchange Commission.

During this call we will present, both <unk> and non <unk> financial measures.

A reconciliation of <unk> to non <unk> measures is included in today's earnings press release, which is available on our website.

With that I will now turn the call over to Yankee.

Thanks, Kevin and good morning, everyone.

During today's call I will start with another view of our progress in 2023, followed by a quick look at our performance in Q4.

Next I will highlight our key priorities for 2024.

Then what we provide a more detailed look at our financial rather than.

Business trends.

And guidance for the upcoming year.

Before I get started I wanted to take a momentum to reflect on some of the trends we saw.

In 2023, and also more broadly across the industry.

In many ways.

23 was the year of AI.

It was the first time that that to the general community and access to our full AI models and learn what they can do.

Is the co founder and leader of an AI driven 50% maybe.

The company, who has been working on building AI in healthcare seems to appear genetics and assumption.

11, this moment as it being a full seating experience for me.

I will take this opportunity to highlight that.

Inception, 13 years ago, we have invested over $400 million to build some of the most advanced AI capabilities in the healthcare sector.

We have recruited a team of more than 200 of the top data scientists and engineers in the world.

Contribute to building and developing our platform Sofia ADM.

So <unk> today is widely recognized by healthcare professional.

World Class analytical performance and by some of our partners as the leading platform in health care.

However at <unk> in November.

It's not to the development of new technology.

But rather the adoption of this technology in the market.

And in that spirit, let's turn to 2023 and the progress we made to driving adoption of Sofia.

2023 was a tremendous year for kitchen entity.

We grew revenue, 31% year over year to $62 4 million by continuing to drive widespread adoption of our platform.

In 2023, <unk> used by 450 core genomic customers across the globe to perform over a 317000 in that disease.

This record number of analyses with presents a remarkable 27% year over year growth when excluding COVID-19 related volume.

At the beginning of 2023, we laid out three framer re drivers to achieve our ambitious growth objective.

First we are likely to the large market potential for Sofia DBM solid tumor applications, especially we expressed excitement over HRD, which was exhibiting workplace analytical performance due to an innovative deep learning algorithm, we develop called Ginger.

Chicken related high potential for growth in the U S market.

And third we explained that the genomic and multimodal data computed everyday on our platform. In addition to our advanced AI algorithms being trained on these data sets will create meaningful value for our Biopharma partners.

I'm proud to say that we delivered in each of these three areas.

With respect to Sofia DBM solid tumours applications and in particular HRD. We saw impressive growth solid Q4 revenue grew above company average in 2023 and HRD.

A major driver with over 150% revenue growth during the period.

We're pleased to see both existing and new customers adopt Sofia <unk> solid tumor applications. We signed an impressive 36, new logos for solid tumor applications from 2023 and by the end of Q4, we were proud to have a total of 129 core genomics customers using solid tumours that peak.

<unk>.

This group includes nearly 50 customers using Sofia D DM for HRD.

All of which were attracted by the applications World class analytic outperformance.

Moving on to our second growth driver for 2023, the U S market.

In 2023 U S revenue grew 70% to $9 5 million up from $5 6 million in 2022 weeks.

We signed nine new core genomic customers in the U S. In 2023, and we're proud to welcome some of the top U S cancer centers and labs to the Sofia DBM network.

Apart from customers relationships, we also add a landmark year with our partners in the U S.

Namely we continue to build our strategic partnership with Memorial Sloan Kettering.

We officially launched <unk> powered we Sofia DBM in December and I've been pleased to see strong demand for this application in the market.

In the U S. We announced a number of new findings for MFC access powered with Sofia DBM and are looking forward to capitalizing on this momentum going into 2024.

The third growth driver, we focus on in 2023, while delivering value to our biopharma customers. The first way. We accomplish this was by a number of deals with Biopharma partners, where they sponsored the deployment of <unk>.

Biopharma customers are motivated to do this because they are mutually interested in expanding access to comfort.

Our partnership with Astrazeneca as being a major proof point in this area.

Last month, we announced that the AZ sponsored the deployment of Sofia Dpm's HRD application across Spain in 2023 with resounding success.

The C model daytime milken with algorithms and our leasing data provide significant value to biopharma companies.

2023 was a landmark year for us in building, our multimodal capability, we launched Sofia Cooper the module, a Sofia DBM, which enables customers to perform longitudinal analysis of Mickey modality patient data.

This includes humidity model models designed to predict treatment effects of different therapy decisions.

As you can imagine this capability to provide differentiated value to our biopharma customers, who are willing to pay for the access to the media model patient data and communicate with algorithms, which analyzes them.

We're at the end of 2023, we completed a momentous project with one of our Biopharma partners with Sofia career path identified a signature shoe.

<unk> populations of lung cancer patients, which could indicate different treatment effect for a specific drug.

We continue to remain excited for both of these use cases for our multimodal offering and the value of these capabilities it brings to our biopharma customers.

In 2024, we plan to expand the footprint of Sofia capacity beyond lung cancer, two breast prostate lung and kidney cancer.

We're really turnkey announced two data partnerships, which will accelerate our progress in this mission.

First with M. S K silicon with exactly see no question, a network of 13 hospitals across Canada dedicated to improving cancer.

Diversity.

These partners will help us gain access to valuable really model dataset, which will be ingested into Sofia kickoff for our biopharma customers, who use and access.

Now that you have provided a brief overview of 2023 as a ball I would like to spend a minute discussing Q4 2023 performance in more detail.

In Q4, we grew revenue, 27% year over year to $17 million.

Performed approximately 85000 analogies up 20% year over year, including Covid related anti heat or 24% year over year growth, excluding COVID-19 related or not.

As of December 31st we have 450 core genomics customers, who are using our platform regularly to analyze patient for cancer and rare diseases up from 434 in the prior year and up 19% sequentially from Q3.

Q4 was a great quarter in terms of landing new logos in the fourth quarter, we landed a resounding 35, new genomics customers. These customers will add to our total number of core genomics customers over the course of 2024.

They are on boarded on to Sofia DBM.

Mentioned previously it typically it takes customers six to nine months to enter routine usage.

After landing a new logo, our expand strategy continues to be effective as existing customers adopt more and more applications as of the end of Q4, 56% of customers, who are using two or more applications up from 49% a year ago, 31% of customers who are using <unk>.

Three or more applications up from 28% a year ago, and 21% were using four or more applications up from 17% a year ago.

Moreover, our net dollar retention was 130% in Q4 2023.

2800 basis points from 102% at the end of 2022.

The continued proof of our ability to expand within existing customers exemplifies the importance of landing new customers across the globe.

On that note I would just take a quick comment to highlight our progress and our key growth market for us India or the usage of our platform grew 70% from 2022 through 2023.

I recently returned from a heartwarming trip across India, visiting our fantastic partners, such as Tata Memorial Hospital in Mumbai, and the Institute the Rotary cancer Hospital in New Delhi.

Also spent time with our newest partner <unk> self care and oncology platform broadly addressing the over 2 million estimated cancer cases and engage here.

Together, we will work with car King us to provide genomic testing.

<unk> to the population of India. In addition to a range of other strategic objectives I.

I am, especially inspired by the shared vision between Sofia, Chantix and car T North and I am excited for what this means for the broad deployment of Sofia D DM across India.

Beyond India, I would like to announce today, a few additional major signings and expansions in the U S. We recently signed lifetime Health system, a network of award winning RFP calcium, Rhode Island with those kinds of locations across state lines.

Lifespan adopted Medicaid Bill Sofia D DM email applications due to their top analytical performance and our platform's ability to seamlessly integrate into their workflow.

In Spain, we recently expanded our relationship with the Boulder Brown Institute of oncology, one of the top comprehensive cancer centers in Europe with adopting Sophie Iddm solid two more Aki caching for HIV.

Val de Brun joins other top European cancer centers, using Sofia began for HIV testing, including the top two namely <unk> and the Royal Marsden.

I'm also excited to announce that in Latam.

We expanded our relationship with <unk> the largest clinical diagnostic company in Latin America, that's adopting M. S access powered with Sofia the dam for liquid biopsy testing.

This will be the data takes Sofia DBM application.

We're excited to see discuss some routes. In addition to the 35 new logos. We landed in Q4 2023, beginning ramping up usage of Sofia D. D. M. During 2024.

Speaking of 2024, let's move on to our priorities and outlook for the upcoming year.

Similar to last year, we highlight three primary growth drivers I will then touch on how would these growth drivers along with continued fiscal discipline, we do allow us to achieve profitability in the next two plus years.

First we are excited to capitalize on the launch of our new liquid biopsy offering including Emmis access powered do we still feel that we're at.

Pleased with the strong demand we are seeing in the market for this application and they are excited by our sales pipeline for it which is approaching double digit millions.

As an additional catalyst for the growth of our liquid biopsy applications, We recently announced a collaboration with Astrazeneca in which they will sponsor the deployment of MSP access on Sofia began to customers across the globe during 2024.

Our signature detection becomes more complex more sophisticated algorithms are needed.

One example is our proprietary algorithm Ginger, which was recently published in cell reports medicine for its unique ability to detect the HRD signature.

They tried to me we are also using all their algorithms to help customers like from this by your detects additional complexity natures, such as extra chromosome all DNA, which are present in about 20% of cancer cases.

Not only are we well equipped algorithmically to address this growing demand and solid tumors.

We also have a strong portfolio of comprehensive genomic profiling applications to meet our customers' needs.

This includes the upcoming launch of the Michigan impact powered with Sofia two.

Similar to our work with MSC access, we will decentralize M. S Cuz, CGP test domestic impact and deploy it to customers worldwide.

And they can join says in the mission and will also contribute to the deployment of the application to customers across the globe.

The third key priority for us in 'twenty 'twenty four is continuing the trend of strong growth in the U S.

As mentioned earlier, we picked up significant momentum in the U S. In 2020.

In 2024, we're looking forward to capitalizing on this momentum and leveraging marquee names to attract all their U S customers to our network.

Apart from the three growth drivers mentioned today, while also delivering a series of targeted high impact platform and application launches in 2024.

Planned to launch new capabilities in the arm with an application to measure a minimum wage in U L. D Heath for acute myeloid leukemia.

We also plan to launch new features in <unk>, and you know Richie disorders to serve our customers' needs on wall genome sequencing and pharmacodynamics.

From a platform perspective, we are launching a full more are there any session of Sofia D. D N as we move to web technology and micro services.

Also continue making a break to Sofia Cooper and each multimodal capability in order to create even more value for our biopharma customers.

Based on our current commercial pipeline, we're confident that these new launches will deliver long term value to our business.

In summary, 2024, it is an exciting year from our liquid biopsy capabilities to our world class solid tumor applications to the momentum we are building in the U S. We're well equipped for 'twenty 'twenty four and as we continue on our path to profitability in the next two plus years.

So with that I will now turn it over to Ross, who will provide a more detailed look at our financial results business trends and guidance for the 2024 years.

Thank you <unk> and good morning, everyone I'm pleased to share that despite the challenging macro environment Sofia genetics delivered strong performance in the fourth quarter, continuing our commitment to sustainable growth.

<unk> revenue for the fourth quarter of 2023 was $17 million compared to $13 $4 million for the fourth quarter of 2022, representing year over year growth of 27% constant currency revenue growth was 26% and constant currency revenue growth excluding COVID-19.

<unk> related revenue was also 27%.

Stages, and thus you should continue to expect small timing related recognition impact over the near to medium term.

Volume, excluding COVID-19 related volume platform analysis grew a healthy 24% year over year in the period strength in North America, and Asia Pacific highlighted geographic outperformance in the quarter offsetting a slight moderation in Latin America, which had an overall strong in 2023 from an application.

<unk> standpoint, rare inherited disease applications outperformed oncology applications in the period, given broad demand for XOMA. Despite strong contributions from solid tumor liquid biopsy and haemonchus applications.

Gross profit for the fourth quarter of 2023 was $11 9 million.

Adjusted gross profit was $12 $5 million, an increase of 25% compared to adjusted gross profit of $10 million in the fourth quarter of 2022, adjusted gross margin was 73% for the fourth quarter of 2023 compared to 75% for the fourth quarter of 2022.

Excluding this onetime benefit gross margins would have increased 600 basis points year on year.

Total operating expenses for the fourth quarter of 2023 were $38 million compared with $24 7 million for the fourth quarter of 2022 across the functions. We continue to benefit from lower head count both on a year over year as well as quarter on quarter basis FX was a noted.

Operating loss for the fourth quarter of 2023 was $18 9 million compared to $15 $1 million in the fourth quarter of 2022.

Adjusted operating loss for the fourth quarter of 2023 was $13 $3 million.

Compared to $12 1 million for the fourth quarter of 2022, we continue to be pleased with our trajectory towards profitability and believe the additional head count actions. We took in the second half of 2023, where necessary to sustain the trend into the first half of 2024.

Of note below the line this quarter, we did have a significant charge related to foreign exchange losses. This is due to the material appreciation of the Swiss franc and euro in the period.

Is primarily related to intercompany receivables you will see an immaterial impact on our cash utilization overall lastly, total cash burn for the fourth quarter of 2023 was $9 5 million compared to $10 $6 million in the prior year quarter. This represents an 11% year over year.

Turning to full year 2023 financials.

And 2%. This outcome was generally in line with our initial forecast and speaks to the level of revenue visibility. We continue to have in the business, despite ongoing macro and industry industry specific headwinds.

Strong MBR in a healthy level of backlog continues to provide us with a high level of revenue visibility going forward gross profit for the full year of 2023 was $42 9 million.

Compared to gross profit of $31 3 million in 2022, representing year over year growth of 37% gross margin was 69% for the full year 2023, compared with 66% for 2022.

Adjusted gross profit was $45 million, an increase of 39% compared to adjusted gross profit of $32 $4 million in the full year 2022, adjusted gross margin was 72% for the full year 2023 compared to 68% for 2022 I am incredibly proud of this.

Outcome as we have now outperformed our medium term guidance for an entire year I remain encouraged with respect to continued expansion opportunities moving forward.

Total operating expenses for the full year of 2023 were $117 7 million compared to $119 $1 million in 2020 to R&D expenses for the full year were $37 million compared to $35 $4 million in 2022 sales and marketing expenses for.

Full year, 2023 were $28 4 million compared to $28 $3 million in 2022 general and administrative expenses for the full year 2023 were $53 3 million compared to $55 $8 million in 2022.

Operating loss for the full year in 2023 with $74 $8 million compared to $87 8 million in 2022, adjusted operating loss for the full year 2023 was $55 9 million compared to $72 million in 'twenty two.

Cash and cash equivalents were approximately $123 $3 million as of December 31, 2023.

Now turning to our 2024 outlook Sofia genetics expects full year reported revenue to be between $78 million and $81 million, representing 25% to 30% growth on a reported basis.

We really attribute two key factors to a more conservative stance as we approach 2020 for revenue guidance first we have assumed elongated implementation times for liquid biopsy applications, given the complexity of the workflow as compared to tissue.

Further, adding complication is a need to help our customers gain access to tumor normal reference samples for proficiency testing. We currently believe this may add up to three months to implementation timelines.

We will likely see a larger impact from recent key wins in 2025 second we are seeing increased adoption of new sequences in the market. This includes companies like complete genomics Pac bio Ultima, Oxford Nano point element and Sofia genetics, we welcome this diversity one of the founding principles.

Of our platform is to be technology agnostic, while the prevalence of these new sequences is driving opportunity across our offering the changing adoption pattern also warrants some conservatism about customer readiness to implement our solutions as they first need to manage their sequence or traditions. Thus a majority of the growth forecast.

In 2024, it's funding the expansion of existing customers. This is consistent with our historical MTR of 125% to 130%. We will update you over the course of the year as to how new implementations are trending with respect to seasonality. We would expect 2024 to follow our typical cadence.

Whereby <unk> and <unk> tend to be seasonally softer from a revenue standpoint, while <unk> and <unk> tend to be seasonally stronger with <unk> being the largest in terms of percent of revenue contribution to the full year as many of our recently signed load those will likely begin ramping up at that point, we continue to expect a larger portion.

Of our 2020 for revenue to be recognized overall in the second half of the year.

50 basis points. This is despite a challenging comp in the first quarter due to the remaining prior year, Microsoft credit turning to operating loss. We currently expect adjusted operating loss to fall between $45 million and $50 million. This is yet again another notable improvement from 2023 level.

Despite a less material benefit year over year with respect to head count, which drove a majority of our loss improvement in 2023.

Our confidence in our medium term path to profitability, we have taken the required actions to expedite that goal and we remain obsessed with capital efficiency in the second half of 2023, we took some tactical head count actions to further optimize our operations. While also continuing to focus our R&D efforts on increasingly high ROI projects.

Rejects these were difficult decisions, but we prioritized sustaining medium term revenue momentum at our previously communicated targeted levels, while ensuring a reasonable timeframe to cash flow generation. In 2024, we will continue to revisit our discretionary expenditures and execute and identified savings in systems professional service.

<unk> and certain public company costs, the combined nature of these items and the natural operating leverage in the business from strong revenue growth will further our prost the profitability in the next two plus years with that I would like to turn the call back over to your need for the closing remarks before we take your questions.

Thank you Ross, we're proud of our performance, which we believe reflects our continued ability to execute on our vision and the opportunity ahead.

He has success turns on our ability to delight customers and continued driving more and more usage of our platform.

After a successful 2023, our focus shifts to Sophie's picture I will share just a few final thoughts as we look towards the near future with three key priorities for 2024.

We look forward to seeing significant growth from new liquid biopsy applications, including MSP excess power or do we still see <unk> as we deployed the applications to customer a worthwhile risk.

The health of our Biopharma partners.

Although we set the bar high in 2023, we're excited to continue growing so if you had <unk> solid tumor applications and capitalize on the demand of increasingly complex teenagers and third we plan to continue our strong trajectory of growth in the U S. As we leverage momentum from 2020.

In closing thank you to our Sofia colleagues partners customers and investors for joining us in our journey without you don't know if this would be possible.

Please note that we are attending Cowen Healthcare conference Tomorrow in Boston and Barcelona next week in Miami.

Look forward to continuing to update you on <unk> future success of Democratizing data have you already seen.

Operator, you May now open the line for questions.

Before we begin I'd like to turn it back over to Ross for a brief statement.

Your line is now open for questions. We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you were using a speaker phone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

The first question comes from Dan Brennan with TD Cowen. Please go ahead.

Great. Thanks, Scott Thanks for the questions Ross I Hope yours, Okay.

Maybe just on the first question just on the guide you talked about the elongated implementation for liquid biopsy.

And the newer platforms could you just contextualize that a little bit like just.

Size, the liquid biopsy business today.

You know kind of frame you know exactly what's going on there and then on the sequencing side.

Give a little more color there like like how perverse how how widespread is this new platform adoption and <unk>.

In the second quarter, when we'd be talking about this could this be something that lingers throughout the year for you guys.

And then I have a few follow ups. Thanks.

Thanks, Dan So in terms of.

Some of the factors, we put into the guidance so one I.

I would point you to the fact that we had a tremendous quarter in terms of adding new core logos right. So we added 35 in the period.

I would say conservative and essentially added in our assumption of customers ramping about three months.

Two the adoption process relative to our typical six months again that mathematically would just mean, we're only getting roughly one quarter of contribution from some of those new customers in the year, whereas typically we would get to.

So that's liquid biopsy on the sequencer side.

Obviously this has been a market where you have had essentially two players for the majority of the last number of years.

With one player being quite dominant.

We still see obviously no change in sort of the leadership position.

In the market, but we are seeing quite a number of new vendors having success.

Different applications within the market and so for US. This is obviously, a really nice development and we welcome the diversity of new applications and new.

New sequence or types.

Vendors, but there is I would say to that degree a bit less certainty for us solely because we have not seen this before right.

And so again I wouldn't say, there's anything we're necessarily seeing in our setup times, that's elongated, but we wanted to add a bit of a cushion.

Just in case right.

So again I think it's ultimately.

Both of these ends very positive long term developments for us, but we wanted to be a bit extra conservative.

As we entered the year just because it does introduce in terms of new business are slightly different wrinkle than we typically have faced in the past.

Okay got it thanks, and then maybe just as a follow up.

It would be to partner and then I'll just go back in the queue, just biopharma I think of the 20-F.

It was a $3 million year on year could you give us some color what the base was and just any color.

The Biopharma contribution and how we're thinking about the impact in 'twenty three and then.

You discussed in the prepared remarks, the medium term path to profitability and the actions that you guys are taking in order to ensure that I know you haven't given us a distinct date or timetable, but any more color around.

What that medium term path looks like whether how long what the revenue base is what needs to happen.

Thank you.

Okay.

Well I think again.

Multimodal for US is very present within sort of the pharma landscape and Thats, where I would say.

Breaking it out.

So the disclosures as such show you the nice momentum, we're having but we're still at a point, where we want you to think about the platform as a whole.

In terms of your second question relative to our path to profitability I'm really proud this year the work of the team.

Or a real estate et cetera, and so we're constantly looking for areas to target that being said I would say from here the biggest contributor too.

The path to profitability is going to be the dropdown of incremental revenue right. So the good news for US is we have incredibly visible strong.

Organic growth right. So we talked about net dollar retention being a 130% for the year. So that gives us a very nice base with which to sort of model our forward growth and so with this sort of continued gross margin expansion.

<unk> talked about this year and again, we haven't updated our long term target our medium term target, but we're obviously increasingly confident in our ability to drive margin expansion with those strong incrementals off of the net revenue growth, we expect to dropdown very high portion of <unk>.

That incremental gross profit to the EBIT line, and so with that that will materially help our path to profitability. So again at Jpmorgan, where he spoke about two plus years.

And all our sort of sufficient capital base. So you can sort of back into you know now at least a range for this year in terms of loss.

And now you can see that with continued improvement in 'twenty five and into 'twenty six.

That should be a pretty visible I would say trajectory with some of those assumptions to cross over to cash flow breakeven.

Great. Thanks Ross.

The next question comes from Tejas Savant with Morgan Stanley. Please go ahead.

Hey, Ross good morning, and best wishes to you a year.

Just just a couple of quick cleanups there on some of the comments you just made on the guide.

The path to breakeven.

I guess my question is really you know you've been well north of 70% for a while now as you mentioned really good progress on Gms in the fourth quarter as well even adjusted for the Microsoft dynamic. So what's what's holding you back from perhaps bumping that target to let's say, 75% plus on the margin line.

And then.

And in terms of that sort of freezing.

Good morning, and thanks for the question. So I would say I'll take your second one first so on the plus yeah I think the way you characterize that ultimately it does give us a bit of a degree of freedom, but frankly I think.

We have a high degree of control.

And where we landed but we also want a balance to make sure that we hit our growth objectives right as I mentioned before so much of the dropdown.

Cognizant is relative to that top line momentum.

So I think from that standpoint.

It's really crucial that we don't lose sight that we still need to invest for the future right and we need to be able to drive.

Really good operating leverage, but we also need to contain or sustain our revenue momentum.

Within our targeted range. So so again I think it's always the balance we're trying to delicately balance that and maximize shareholder value creation and so I think again, we've done a relatively good job of that so far and we're maniacally focused on continuing to execute and deliver on that in the future.

Got it.

Yes go ahead sorry.

No No go ahead go ahead.

No and I was just going to say overall right as we just take a step back I think the business has.

Good momentum on the gross margin side.

We've done a fantastic job in terms of compute and store, which is a majority of our Cogs.

Very good labor absorption I think there.

Only.

Sort of question for US is as well mix over time, there are elements of our business right. We are somewhat focused we haven't talked about it a ton, but we have I would say started to really push on our professional services effort.

With our size and scale and with the number of laboratories. We touch there are I would say really nice opportunities to further ingrain ourselves within our customers and help them on a number of items. So if you think about today like the LDC legislation. For example, this will be an area, where I think we potentially can help Additionally, I would say.

On the pharma side, there could be some elements of that business over time that have service components, and so I would say given those moving parts.

We have waited to sort of better understand.

Where are those pieces will fit in in terms of overall mix, but but frankly overall, we feel quite confident on our continued ability to drive <unk> expansion. We you can see that in the guide this year.

And certainly over time maximize gross profit dollars, which again at the end of the day.

It's going to be I would say crucial to that that path to profitability being closer to that two figure versus the sort of two plus so again, we're super focused on it. We just we have a high degree of I would say visibility and accuracy in our ability to predict our business and so we don't want to commit to something until we're 100% sure.

Sure, we can deliver it and today the right sort of mix for the business given some of the other pushes and pulls were seeing from a demand perspective.

Within the business and again I would argue are all positive developments.

Got it Super helpful Ross.

My next question here is really related to the expand part of your land and expand sort of algo rate.

Would you be willing to share a little bit more color in terms of what youre doing to incentivize cross selling into your existing customer base. Once you land them you called it out as one of the more conservative assumptions in the guidance I'm assuming it is.

<unk> focus area for you.

And off the growth that you saw in 'twenty three.

Do you think you could parse it out for us in terms of how much came from just new accounts versus existing accounts ramping volumes on.

Your legacy solution, so to speak and then the third leg being existing accounts, adding new Sofia solution. So they haven't used before.

Sure.

Great question, because I really think it speaks to sort of the differentiation of our business and again as a software company net dollar retention remains a crucial metric for us right because that truly kind of I would say shows the health of the expand right and so.

Your D. In the prepared remarks did share that our average number of applications per customer expanded this year from two three to $2 five right with many more I would say having multiple applications that we've seen in the past. This is incredibly crucial to us and it gives us again very high degree of visibility, but it's also a very high.

High return on CAC right in terms of the customer acquisition cost.

You are obviously selling within already landed customer and so in that I would say and even more so over the last six months.

We've put a real focus on the expand.

And I think we're seeing really nice dividends and you can see the growth. We had this year in HRD or solid tumor overall I think 'twenty four 'twenty five liquid biopsy will remain a really good story.

For us, but frankly, there are quite a number of applications for folks to adopt.

Our client.

Called out on the call. It actually is going to start with us with 11 applications, rather I would say this is not the norm, but it just gives you the sense of how much expand potential there is at many accounts and so I would say we're doing a much better job now of incentivising that behavior, albeit I would caveat I'd say its still challenging.

At times, because if you are using as the existing solution and you even if you're not happy with it.

The friction to change is high right. So this is why our churn is although in general so it also benefits us, but it does make I would say the pace of expansion a bit more elongated than you would see in most markets, but still again longer term. This is quite a positive.

And then one other thing I would say.

To your question is obviously, a good proportion of very high proportion of our growth came from the expanded from existing customers. This year.

The land typically for us is anywhere between zero to 5% right of our growth. This.

This year, we're sort of in the middle.

I would say.

The ideal situation for us is that sort of sustains solely because it essentially positions us for a much more I would say visible elongated period of elevated growth because all of those customers. The 80 plus that came on this year they will contribute materially in 2020.

425, right and the ones we land this year thereafter.

In the guide, we obviously are assuming a much more conservative.

This year, it's towards the lower end of that so we have very little contribution and so again, maybe that will prove conservative, but we just wanted to call. It out this year relative to some of those dynamics that we're seeing right and so ultimately we feel good about that calendar do you want to maybe add a key point there yes sure.

Sure. Thanks, Josh.

I think as I mentioned, we've added we've demonstrated a proven ability to expand within our existing customers, which makes the announcement that we had today that we're adding 35, new core genomics customers that we landed 35, new coordinates genomics customers in Q4, even more exciting. These are customers who are going to be ramping up in implementing Sofia D. DM over the next six months.

Months within 2024, and so after landing those receive and more potential.

To expand within those accounts in the areas that we mentioned around liquid biopsy or solid tumors of the other growth drivers.

Got it very helpful guys.

Last one for me.

Russ any any thoughts on this on the LPT regulation from the FDA. It now appears increasingly imminent what are you hearing from your customers and shipped out final rule not include grandfathering or any further push outs to implementation what can you do to help your customers adapt.

That's a great question right and so I would say overall, we view the regulation is positive. This has been quite a good result for us in Europe as well if you think about <unk> and so we're essentially using the same playbook. We saw with IBD are for the U S with Lv T, albeit.

The other point on gross margins there might be a higher professional service component.

As the potential pace of transition is probably a bit more I would say expedited than what we've seen with IBD are although that's been pushed out several times and so I think the need for a validated platform and the ability to track QM. That's events right. This is all stuff we already.

Due to some degree and so now it's more formalizing and so I think the.

Pressure on our customers essentially to move to a validated platform will just be higher because the ability to maintain your own pipelines or multiple disparate pipelines and approaches I think it will be quite a challenge and so it's our view that the ultimate net of this will be I would say a positive but obviously it will.

The situation, we have to see the final rule.

Eagerly awaiting as I'm sure you are but in the end.

Regulation tends to be favorable to two larger scaled players, which I would say fits our fits our profile.

Super helpful. Thanks, So much appreciate it.

The next question comes from Mark Massaro with BTG. Please go ahead.

Thanks for taking the question. This is maybe an answer Mike.

Sounds good strong HIV grant that you've been seeing for some time now I think.

Just kind of sustainable do you think that growth engine.

And just when do you think you are in the adoption curve.

Sure. So I think relative to the initial opportunity in ovarian we're making very good progress and I think our share in many key markets has been quite high and so as we've spoken about before the next phases of growth for <unk> will come as the.

The class and parks kind of moves out of ovarian into other indications.

So, we're obviously monitoring that incredibly closely.

We think as the signature overall this will continue to be quite important.

I'm not quite sure right, we can sustain the growth we saw this year as we're sort of in the early phases.

Kind of the product cycle, but ultimately for us HRD and solid tumor overall remain a really key element of the platform.

Mainly it's quite I would say a popular application for us as we look at our pipeline and we're eager to continue to work in this category, particularly with our pharma partners over time.

Okay perfect.

No.

The bio reference customer last quarter what is that.

Feedback on MFA access been there.

Just how winning that accountants move along compensation for this other large U S customers.

Yes, so I don't want to specifically comment on our customer, but I would say overall, we're quite happy with both the pipeline we built our EMS access as well as I would say the early experience of what we're seeing both in our own R&D lab as we decentralize the solution as well as well.

Starting to bring it to some of our early access customers so stay tuned.

We hope to have more updates here, but overall I would say things are progressing quite well and I'm incredibly proud of the hard work of the team is I do think again for US. This remains a really unique partnership with SK and.

An asset over time for us.

Really I would say transform elements not just of our business, but a cure in the decentralized where all the types of conversations we're having with institutions.

And I would say the places in the World. We think we can take this.

Really quite expanded from what I would've thought even six months ago, and so I'm incredibly encouraged around the early interest and now it's on us to turn that.

Activity and interest into revenue right and so I would say again this will be something that plays out primarily for us in the second half of this year.

But we'll move into 'twenty.

<unk> 25, as well Kevin do you want to maybe comment as well on the Biopharma opportunity, yes, sure. So specifically for liquid biopsies of MSCI access we're getting a lot of interest as Ross mentioned in the clinical market. It's one of those solutions are you bring the memorial Sloan Kettering name in the customer almost immediately perked up both our existing customers, who might want to add that application as well as.

New customers that we're speaking to you mentioned bio reference, we also announced Tennessee oncology at Jpmorgan, but that's certainly the clinical markets. We're also getting a lot of attraction from from Biopharma. So we announced a collaboration earlier last year with Astrazeneca, who is sponsoring the deployment of our <unk> application in Spain.

We gave an update today on that and mentioned that there was an incredibly successful partnership. We're now I think testing approximately 90% of all HR Division, which has been a great success.

And we know later.

Year that we're going to be expanding that partnership with Astrazeneca and they will now be sponsoring the deployment of both MFA access MSA impact globally. So this is really exciting for us.

In the liquid biopsy space as they help.

Offer their footprint to reach more clinical customers globally, and then that will help also with MSA impact which is slated to launch later this year.

Okay.

Perfect. Thanks, so much guys.

Again, if you have a question press Star then one.

The next question comes from Connor Mcnamara with RBC capital markets. Please go ahead.

Hey, Ross Thanks for taking the question just a quick follow up on the on the new sequencing technology and how it impacts your customers that you talked about did.

Did your guidance are you anticipating actually potentially losing customers as they switched vendors or is it more a function of as the.

They implement and validate or just evaluate a new vendor that it slows down their overall volume.

Yes, it's really the second quarter I think in general and again I wanted to be very clear. This is not something we're actually seeing in practice, it's more of an assumption as we're seeing in our pipeline as well as in our bookings.

A different sequence or mix than we did in the past and so our assumption is that the delivery of those sequencer is the installation of those sequences and thus the onboarding of our platform they just take longer.

And again, it's not clear to us if that will be the case, we'll obviously tracking report over the balance of the year, but given our lack of historical context with many of these businesses right again, you well know the market had been dominated by one or two players for the better part of the last decade, and so again I'm not suggesting a.

Significant shift, but I think at the margin we are seeing in the clinical market more players pop up and we're seeing more requests for new players in many different geographical markets and so we just wanted to be prepared.

Case that there is some change in the typical cadence of Onboarding for us and so again no loss if anything longer term this expands the market overall and.

And we think for us the diversity plays into our strength as a business.

Great. Thanks for clearing that up that's that's all I have and thanks for the question.

Thank you Cotter.

This concludes our question and answer session I would like to turn the conference back over to Ross <unk> for any closing remarks.

Thank you everyone for joining us we're pleased to have an incredibly strong ended the year I am proud of all of this a fee and that contributed to it and we look forward to having you already back with US here on the call very shortly so thank you everyone.

And I send our best wishes to guarantee and we'll talk to you all soon at conferences next week.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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