Q1 2024 Cytek Biosciences Inc Earnings Call
Thank you for standing by my name is less and I'll be your conference operator today at this time I'd like to welcome everyone to decide to Biosciences first quarter 2024 earnings conference call.
Liz: Thank you for standing by. My name is Liz, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Cytek Biosciences first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.
Speaker Change: All lines have been placed on mute to prevent any background nice.
Liz: After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press star one again. Thank you. I would now like to turn the call over to Paul Goodson, Investor Relations. Please go ahead.
Speaker Change: After the Speakers' remarks, there will be a question and answer session. If you'd like to ask the question. During this time simply press star followed by the number one on your telephone keypad.
You'd like to withdraw your question. Please press star one again.
Speaker Change: I would now like to turn the call over to Paul Goodson Investor Relations. Please go ahead.
Paul D. Goodson: Thank you operator earlier today, sorry, Jake Biosciences released financial results for the quarter ended March 31, 2024. If you haven't received this news release or if you'd like to be added to the Companys distribution list. Please send an email to investors.
Paul D. Goodson: Thank you, Operator. Earlier today, Cytek Biosciences released financial results for the quarter ended March 31, 2024. If you haven't received this news release, or if you'd like to be added to the company's distribution list, please send an email to investors at CytekBio.com. Joining me today from Cytek are Wenbin Jiang, CEO, and newly appointed CFO, Bill McCombe. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of the federal securities laws, including statements regarding Cytek's business plans, strategies, opportunities, and financial projections.
<unk> bio dot com.
Paul D. Goodson: Joining me today from <unk> are Windsor, and Johnny CEO newly appointed CFO Bill Mccalmont before we begin I would like to remind you that management will make statements. During this call that are forward looking statements within the meaning of the federal securities laws.
Paul D. Goodson: These statements are based on the company's current expectations and inherently involve significant risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements in the press release Cytek issued today and in Cytek's filings with the SEC. This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Reconciliation to the most directly comparable financial measure may be found in today's earnings release submitted to the FCC. Only accept those required by law.
Paul D. Goodson: Cytek disclaims any duty to update any forward-looking statements, whether because of new information, future events, or changes in its expectations. This conference call contains time-sensitive information and is accurate only as of the live broadcast, May 8, 2024. Before Wenbin speaks, I would like to mention that Cytek will be participating in a variety of industry and academic conferences, meetings, and seminars throughout 2024. However, these are primarily geared to the scientific community. They may offer an opportunity to interact with users of our technology and to learn why Cytek instruments are so highly valued by our customers.
Paul D. Goodson: Statements regarding <unk> business plans strategies opportunities and financial projections.
These statements are based on the company's current expectations and inherently involve significant risks and uncertainties.
Paul D. Goodson: Could cause actual results or events to materially differ from those anticipated.
Additional information regarding these risks and uncertainties appears in the section entitled forward looking statements in the press release issued today.
Hi, techs filings with the SEC.
This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles.
Conciliation to the most directly comparable GAAP financial measure may be found in today's earnings release submitted to the SEC.
Except as required by law Sci-tech disclaims any duty to update any forward looking statements, whether because of new information future events or changes in its expectations.
Paul D. Goodson: Conference call contains time sensitive information and is accurate only as of Hawaii broadcast may eight 2024.
<unk> been speaks I would like to mention that that's high tech will be participating in a variety of industry and academic conferences meetings and seminars throughout 2024.
Paul D. Goodson: While these are primarily geared to the scientific community. They may offer an opportunity to interact with users of our technologies.
Paul D. Goodson: Learn wisi, Texas instruments are so highly valued by our customers.
Paul D. Goodson: There is a cost to attend most events, and we have a limited number of spaces to accommodate members of the financial community, so if you are interested in attending, please contact me. With that, I would like to turn the call over to Wenbin.
There was a cost to attend most events and we have a limited number of spaces to accommodate members of the financial community.
Speaker Change: If you're interested in attending please contact me.
Wind Down: With that I would like to turn the call over to wind down.
Wind: Thanks, Paul welcome.
Wenbin Jiang: Welcome everyone and thank you for your interest in Cytek. On the call today, I will discuss our performance for the first quarter of 2024 and the progress achieved on our strategic objectives to drive sustainable growth and profitability. Then I will turn the call over to Bill for a more detailed look at our financial results and our outlook for 2024 before we open it up for Q&A.
Wind Down: Welcome everyone and thank you for your interest in <unk>.
Paul: On the call today, I will get our performance for the fourth quarter, often default and the progress achieved on.
Bill: Thank you.
Bob: Bob yesterday.
Bob: Sustainable growth and profitability.
Bob: Then I will turn the call over to Bill for a more detailed look at our financial results and our outlook for funding for default.
Bill Mccalmont: We open it up for Q&A.
Speaker Change: Our priority in 2010 before centered.
Wenbin Jiang: Our strategic priorities in 2024 are centered on strengthening our competitive position with an eye toward improving operational leverage. We are focused on driving revenue growth, margin expansion, and capital efficiency. These objectives are part of our balanced business strategy to deliver sustainable profitability and maximize free cash flow. Turning to specifics and our first quarter revenue result, we achieved $44.9 million, representing growth of 21% year over year. Organic revenue grew 11%, excluding acquisition-related revenue of $7.6 million in the first quarter of 2024.
Speaker Change: Our competitive position.
Bill: Hi toward improving operational leverage.
Bill Mccalmont: We are focused on driving revenue growth margin expansion and capital efficiency.
Wenbin Jiang: These are part of our balanced business strategy.
Bill: <unk> profitability and maximize free cash flow.
Bill: Turning to <unk>.
Bill: And our first quarter revenue results.
Bill: We achieved $44 9 million.
Bill: Representing growth of 71% year over year.
Wenbin Jiang: Organic revenue grew 11%.
Bill: Holding acquisition related revenue of $7 6 million.
Bill: First quarter of 10 days in April.
Wenbin Jiang: We began to see improvement in organic revenue growth.
Wenbin Jiang: We began to see improvement in organic revenue growth in the fourth quarter of 2023, which we were pleased to see continue into the first quarter. Total organic revenue growth was 11% in the first quarter, driven by strong growth in our services revenue from our increasing in-store base. Organic revenue growth was also driven by continued growth in our product revenue.
Bill: Fourth quarter of <unk>, which we were pleased to see continue into the first quarter.
Wenbin Jiang: Total organic revenue grew 11% in the first quarter driven by strong growth in <unk>.
Bill: Our services revenue from our increasing installed base.
Bill: Organic revenue growth was also driven by continuous growth in our product revenue.
Wenbin Jiang: Longer term.
Wenbin Jiang: Longer term, we expect our recruiting services and the reagent revenue will be strong growth drivers for Cytek. In the first quarter, we expanded our global footprint with 99 organically sited instruments sold, reaching a total installed base of 2,247 instruments. This number does not include the thousands of installed amnesties and the Guava Institute.
Bill: We expect our recurring services revenue will be strong growth driver for <unk>.
Bill: In the first quarter, we expanded our global footprint.
Bill: 99, while then excited instruments sold.
Wenbin Jiang: Reaching a total installed base of 2447 instruments.
Bill: This number does not include the thousands of installed.
Bill: Rob I instruments.
Bill: Are there any trends in the first quarter for both organic and inorganic products were largely within our expectations.
Wenbin Jiang: Modeling trends in the first quarter for both organic and inorganic products were largely within our expectations, but some missed activity levels by region. Specifically, we experienced increased strength across Europe and China, where Cytek FSP products are also becoming well-established as a market leader in flow cytometry. We are seeing customers gradually returning to their regular buying patterns in these regions. However, in the US and APEC, excluding China, we continued to see some elongated sales cycles.
Bill: Mr activity levels by the year.
Bill: Specifically, we experienced increased distress across Europe, and China, where <unk> SP products also becoming well established as a market leader in <unk> site.
Bill: Cytometry.
Bill: We are seeing customers, graduating the tuning tools their level of buying pattern in these regions.
Bill: Okay.
Bill: However, in the U S and APAC, excluding China, we continued to see some.
Bill: Data sales cycles.
Bill: In the third quarter, we continued to make strategic investments to increase the efficiency and the performance of our operations.
Wenbin Jiang: In the first quarter, we continued to make strategic investments to increase the efficiency and performance of our operations. In March, we announced that we opened a new 50,000-square-foot facility in Wuxi, China, to meet the rising global demand for our cutting-edge cell analysis solution. With this facility, we are able to increase our manufacturing capacity and foster unique vendor relationships to drive operational efficiencies and further our competitive advantage over industry peers, turning to bioinformatics.
Bill: In March we announced that we opened a new 50000 square foot facility in Wuxi, China to meet the rising global demand.
Bill: Our cutting edge cell analysis solutions.
Bill: This liquidity.
Wenbin Jiang: April to increase our manufacturing capacity and the FERC unique vendor relationships.
Bill: Operational efficiencies and further our competitive advantage over industrial peers.
Bill: Okay.
Bill: Turning cobalt informatics.
Wenbin Jiang: Our primary goal is to enable our customers to streamline their experiment workflow through our software tools, which drive adoption and the utilization of our cell analysis solutions. One way we track our success in bioinformatics is through user engagement and demand for our core bioinformatics offerings, the Cytek Cloud. I'm pleased to report that we now have over 8,500 users, representing an average of more than three Cytek cloud users per installed Cytek FFP instrument.
Bill: Our primary goal is to enable our customers to streamline their experiment workflow through our software tools.
Wenbin Jiang: Which drive adoption and utilization of our cell analysis solutions.
Bill: While we track our success in power in robotics is through user engagement and demand for our core bio informatics offerings Sci-tech.
Wenbin Jiang: <unk> cloud.
Wenbin Jiang: I am pleased to report that.
Bill: We now have over 8500 users.
Bill: Representing an average of more than three cycle value that per installed FTE instruments.
Bill: As a reminder type of cloud and digital ecosystem offers a comprehensive suite of.
Wenbin Jiang: As a reminder, PfizerCloud's digital ecosystem offers a comprehensive suite of special panel design tools, seamlessly integrated into a centralized platform, forming a unified ecosystem. Our cutting-edge solution empowers researchers to prepare and optimize their experiments remotely, simulated the process from panel design to data acquisition.
Bill: <unk> panel design tool.
Bill: Seamlessly integrated into a centralized platform.
Speaker Change: I mean, a unified ecosystem.
Speaker Change: Our cutting edge solution empowers researchers to prepare and to optimize.
Speaker Change: Sentiment remotely.
Speaker Change: Kim lining the process for our internal design to data acquisition.
Speaker Change: We are also pleased to share that just this week the cycle conference.
Wenbin Jiang: We are also pleased to share that just this week at the CYTO conference, The Primary Flow Cytometry Conference Worldwide, we launched our special panel software package through an early access program. Special Panel is an intelligent design algorithm that automatically designs high-quality panels for optimal marker resolution and is optimized specifically to use on the Cytek FSP instrument. We expect the special panel tool to make sci-fi instruments even easier to use and will save researchers time and money by allowing a broader range of religions to be selected automatically for the design panel to achieve biological objectives with optimized data quality.
Speaker Change: Finally flow cytometry conference below the white.
Speaker Change: We launched our special panel software package.
Speaker Change: The access code one.
Speaker Change: Special panel.
Speaker Change: Intelligent algorithms.
Speaker Change: Automatically run high quality panels for optimal multi resolution and is optimized specifically for use on site at P instruments.
Speaker Change: We expect a special panel tool will make cycle instruments, even easier to use.
Speaker Change: And the real estate, researchers time and money by allowing a broader range of behaviors, we selected automatically for that around the panel to achieve biological of GSK.
Speaker Change: We optimize the data quality.
Speaker Change: We recently announced this solution.
Wenbin Jiang: We recently pre-announced this solution on our social media channels, and we encourage you to follow the discussion there for more information. On the clinical front, we have previously reported our success at obtaining IBGR compliance for our single-laser BISCO TGNK panel in the EU market. I'm pleased to report that just last week... Our application for this six-color TBNK panel on our single-laser NLC-LC instrument was approved in China. This approval is unique to Cytek and is an important development, as previous regulatory approvals for TPNK analysis have been based on using two-laser instrumentation.
Speaker Change: Our social media channels.
Speaker Change: And we encourage you to follow the discussion there for more information.
Speaker Change: On the clinical front.
Speaker Change: We had previously reported our success at obtaining the <unk> contract.
Speaker Change: For our single laser nickel PGM Paypal, Inc.
Speaker Change: <unk> market.
Speaker Change: I'm pleased to report that just last week.
Speaker Change: Our applications for the fixed color TV panel, our single laser and LC LC instruments.
Speaker Change: <unk> in China.
Speaker Change: This proposal is unique to <unk>.
Speaker Change: An important development.
Speaker Change: Premier regulatory approvals for TVN analysis had been based on using two laser instruments.
Speaker Change: Moving cycle, one laser system will provide important advantages to our users in the form of lower cost more reliable operation and more consistent results.
Wenbin Jiang: Using Cytek's one-laser system will provide important advantages to our users in the form of lower costs, more reliable operation, and a more consistent result to support laboratory standardization. Overall, the start to 2024 was encouraging with a resumption of organic growth and improved customer purchasing patterns that we began seeing in the fourth quarter that continued through the balance of the first quarter.
Speaker Change: The powertrain standardization.
Speaker Change: Overall desktop to <unk> 24 was encouraging.
Speaker Change: Function of organic growth and the improved customer purchasing patterns.
Speaker Change: Trends that we began seeing in the fourth quarter that continued through the balance of the.
Speaker Change: The first quarter.
Speaker Change: It is a testimony to our position as an industry leader in comprehensive analysis solution and the clear underlying demand for our products.
William D. McCombe: It is a testament to our position as an industry leader in comprehensive sales analysis solutions and the clear underlying demand for our product. We are purpose-built to advance next-generation cell analysis with our end-to-end platform, addressing the direct needs of our customers to advance their research. And we believe this continues to be a valuable and important differentiator for Cytek. With that, I will now turn the call over to Bill for more details on our financials.
Speaker Change: We are purpose built to advance next generation cell analysis with our end to end platform addressing the diverse needs of our customers.
Speaker Change: Their research and we believe it continues to be available and important differentiator for <unk>.
Speaker Change: With that I will now turn the call over to bill for more details around our financials.
Bill Mccalmont: Thanks Brendan.
William D. McCombe: Before reviewing more details around our financials, I wanted to express my gratitude for the opportunity to join this innovative company and play a meaningful role in charting the next chapter of Cytek's continued success. I believe there is tremendous growth potential at Cytek, and I look forward to working alongside this team to drive sustainable growth and long-term value creation.
Bill Mccalmont: We are reviewing more details around our financials I wanted to express my gratitude for the opportunity to join this innovative company and play a meaningful role in charting the next chapter of <unk> continued success.
Bill Mccalmont: Believe there is tremendous growth potential its project and I look forward to working alongside this team to drive sustainable growth and long term value creation.
William D. McCombe: Total revenue for the third quarter of 2024 was $44 9, million% to 21% increase over the first quarter of 2023.
William D. McCombe: Total revenue for the first quarter of 2024 was $44.9 million, a 21% increase over the first quarter of 2023. The first quarter of 2024 included $7.6 million of revenue acquired in the Luminex transaction, which closed on February 28, 2023, and contributed $3.5 million of revenue to that quarter. Organic revenue, which excludes revenue from the acquired Luminex business, was $37.3 million in the first quarter of 2024, an increase of 11% compared to the first quarter of 2023.
William D. McCombe: First quarter of 2024 included $7 6 million of revenue acquired in the illuminate transaction, which closed on February 28, 2023, and contributed $3 $5 million of revenue to that quarter.
Bill Mccalmont: Ganic revenue, which excludes revenue from the acquired illuminate business was $37 $3 million in the first quarter of 2024, an increase of 11% compared to the first quarter of 2023.
William D. McCombe: Beginning in the second quarter and going forward, the acquired Luminex business will have been owned for the full prior year quarter, so we will no longer break out this revenue separately. Gross profit was $23 million for the first quarter of 2024, an increase of 9% compared to a gross profit of $21 million in the first quarter of 2023. Gap's gross profit margin was 51% in the first quarter of 2024 compared to 57% in the prior year quarter.
Bill Mccalmont: Beginning in the second quarter and going forward the acquired <unk> business, what will have been owned for the full prior year quarter. So we will no longer breakout this revenue separately.
Bill Mccalmont: Gross profit was $23 million for the first quarter of 2024, an increase of 9% compared to a gross profit of $21 million in the first quarter of 2023.
Bill Mccalmont: GAAP gross profit margin was 51% in the first quarter of 2024 compared to 57% in the prior year quarter in.
William D. McCombe: Inventory adjustments of a one-time nature arising from the integration of the Luminex inventories into the Cytek system contributed 2% of the margin deterioration. Higher overhead expenses, which were lower than in the fourth quarter of 2023 but higher relative to revenue in the first quarter, drove the remainder of the margin decline. We expect overhead expenses will remain fairly constant over the balance of the year and will gradually decline as a percentage of revenue.
Bill Mccalmont: Inventory adjustments of a onetime nature arising from the integration of the alumina next inventories into the <unk> system contributed 2% of the margin deterioration.
Bill Mccalmont: Higher overhead expenses, which were lower than the fourth quarter of 2023.
Bill Mccalmont: Higher relative to revenue in the first quarter drove the remainder of the margin decline.
Bill Mccalmont: Expect overhead expenses will remain fairly constant over the balance of the year and will gradually decline as a percentage of revenue.
Bill Mccalmont: Adjusted gross profit margin, which excludes stock based compensation expense and amortization of acquisition related intangibles was 55% in the first quarter of 2024 compared to 59% in the prior year quarter.
William D. McCombe: Adjusted gross profit margin, which excludes stock-based compensation expense and amortization of acquisition-related intangibles, was 55 percent in the first quarter of 2024, compared to 59 percent in the prior year quarter. Operating expenses were $33.7 million in the first quarter of 2024, increasing 1.6 percent from $33.2 million in the first quarter of 2023, driven primarily by an increase in headcount and personnel-related expenses. Notably, operating expenses increased at a substantially lower rate than revenue growth during the same period, demonstrating our focus on operating leverage.
Bill Mccalmont: Operating expenses were $33 7 million for the first quarter of 2024, increasing one 6% from $33 2 million in the first quarter of 2023, driven primarily by an increase in head count and personnel related expenses.
Bill Mccalmont: Notably operating expenses increased at a substantially lower rate than our revenue growth in the same period, demonstrating our focus on operating leverage.
William D. McCombe: Research and development expenses were relatively flat at $9.8 million for the first quarter of 2024 as compared to $10 million for the prior year period. Sales and marketing expenses were $12.5 million for the first quarter of 2024, as compared to $11.1 million for the prior year period. The increase of $1.4 million was primarily due to increased headcount and related expenses.
Bill Mccalmont: Research and development expenses were relatively flat at $9 8 million for the first quarter of 2024 as compared to $10 million for the prior year period.
Bill Mccalmont: Sales and marketing expenses were $12 $5 million for the first quarter of 2024 as compared to $11 1 million for the prior year period. The increase of $1 4 million was primarily due to increased head count and related expenses.
Bill Mccalmont: General and administrative expenses were $11 4 million for the first quarter of 2024 as compared to $12 1 million for the prior year period. The decrease of <unk> 7 million was driven by acquisition related legal expenses in the prior year period not reoccurring.
William D. McCombe: General and administrative expenses were $11.4 million for the first quarter of 2024 as compared to $12.1 million for the prior year period. The decrease of $0.7 million was driven by acquisition-related legal expenses in the prior year period not reoccurring, and were set by higher consulting expenses. Loss from operations was $10.7 million for the first quarter compared to a loss from operations of $12.2 million for the first quarter of 2023. Net loss in the first quarter of 2024 was $6.2 million as compared to $6.8 million in the prior year. This was primarily due to a lower loss from operations, offset by lower other income, which was due to unrealized foreign exchange losses.
Bill Mccalmont: Offset by higher consulting expenses.
Bill Mccalmont: Loss from operations was $10 7 million for the first quarter compared to a loss from operations of $12 2 million for the first quarter of 2023.
Bill Mccalmont: Net loss in the first quarter of 2024 was $6 2 million as compared to $6 8 million in the prior year.
Bill Mccalmont: This was primarily due to a lower loss from operations offset by lower other income, which was due to unrealized foreign exchange losses.
Bill Mccalmont: Adjusted EBITDA, which excludes stock based compensation expense and foreign currency impacts for the first quarter of 2024 was a reduced loss of $7 million.
William D. McCombe: Adjusted EBITDA, which excludes stock-based compensation expense and foreign currency impacts, was a reduced loss of $0.7 million compared to a loss of $2.5 million in the first quarter of 2023. This was due to higher revenue and gross profit. We are committed to continuing to improve our profitability going forward by driving revenue growth and controlling costs. Cash from operations for the first quarter of 2024 was a positive $4 million, and total cash and marketable securities increased by $7.7 million in the quarter to $270.4 million.
William D. McCombe: Compared to a loss of $2 5 million in the first quarter 2023. This was due to higher revenue and gross profit.
William D. McCombe: We are committed to continuing to improve our profitability going forward by driving revenue growth and controlling costs.
Bill Mccalmont: Cash from operations for the first quarter of 2024 was a positive $4 million in total cash and marketable securities increased by $7 $7 million in the quarter to $274 million.
William D. McCombe: With healthy cash reserves, no meaningful debt, and positive operational cash flow, we continue to operate from a position of strength and can fully support our global growth initiatives. Now, we turn to our outlook for the full year 2024. Today, we are reiterating our 2024 revenue guidance, which we expect to be in the range of $203 to $213 million, representing 5 to 10% growth over our 2023 total revenue. And this assumes no change in the currency exchange rate.
William D. McCombe: With healthy cash reserves, no meaningful debt and positive operational cash flow. We continue to operate from a position of strength and can fully support our global growth initiatives.
Speaker Change: Now turning to our outlook for the full year 2024.
William D. McCombe: We are reiterating our 2020 full revenue guidance, which we expect to be in the range of $203 million to $213 million, representing 5% to 10% growth.
Speaker Change: 2023 total revenue.
William D. McCombe: And this assumes no change in currency exchange rates.
William D. McCombe: We started the year with the first quarter results showing a continuation of improvements in ordering trends, which support our full year outlook. As we look ahead, we continue to expect modest growth across all our product and service lines, with most of that growth being weighted toward the second half of the year, consistent with historical spending patterns of our customer base. We expect that our 2024 revenue growth, combined with our ongoing cost control efforts, will position us to report positive gap net income for the full year 2024. With that, I will turn it back over to Wenbin.
Bill Mccalmont: Out of the year with the first quarter results showing a continuation of improvements in ordering trends, which support our full year outlook. As we look ahead, we continue to expect modest growth across all of our product and service lines with most of that growth being weighted towards the second half of the year.
William D. McCombe: Consistent with historical spending patterns of our customer base.
William D. McCombe: We expect that our 2020 for revenue growth.
Bill Mccalmont: Combined with our ongoing cost control efforts will position us to report positive GAAP net income for the full year 2024.
Bill Mccalmont: With that I will turn it back over to Lindon.
Lindon: Thanks Bill.
Wenbin Jiang: I want to express my gratitude to our exceptional science team for their dedication to driving our mission forward. It is their unwavering belief in our mission, coupled with the effective execution of our business strategy, that positions Cytek as a frontrunner in advancing the next generation of cell analysis. The increasing application of cell analysis in fields across healthcare, including immuno-oncology, infectious diseases, and immunology, has led to a rising need for advanced cell analysis solutions.
Lindon: I want to express my gratitude to our exceptional <unk> team for their dedication to driving our mission forward.
Lindon: It is their unwavering belief in our mission coupled with effective execution of our business strategy that position excited at.
Wenbin Jiang: Frankly on the in advancing the next generation of cell analysis.
Lindon: The increasing application upheld analysis in fields across health care, including immuno oncology infectious diseases and the immunology has led to rising need for Adam.
Lindon: The sale of American solutions.
Lindon: We are uniquely positioned to serve these attractive end markets.
Wenbin Jiang: We are uniquely positioned to serve these attractive end markets as an industry leader in next-generation sales analysis solutions, underpinned by long-term recurring growth drivers in services and the rest regions. I'm excited for our roadmap ahead to address this demand as we build comprehensive and competitive solutions and empower scientists directly with the tools and support they need to advance their research. I want to thank everyone for joining today's call, and we will now open it up for questions. Operator.
Lindon: An industry leader in next generation cell analysis solution.
Lindon: Underpinned by long term recurring growth drivers in services.
Lindon: Reagents.
Lindon: I'm excited for our road map ahead to address this demand as we build the comprehensive and a competitive solution and the empowered tanker directly with the tools and support they need to advance the research.
Speaker Change: I want to thank everyone for joining today's call and we will now open it up for questions.
Lindon: Operator.
Speaker Change: At this time I would like to remind everyone in order to ask a question.
Liz: At this time, I'd like to remind everyone, in order to ask a question, press the star followed by the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Tasia Savant from Morgan Stanley. Please go ahead.
Speaker Change: Number one on your telephone keypad.
Speaker Change: We will pause for just a moment to compile the Q&A roster.
Speaker Change: Your first question comes from the line of Tejas Savant from Morgan Stanley. Please go ahead.
Tejas Savant: Good evening and thanks for the time here when it looks like a decent start to the year on both product and service revenue and placements as well I wanted to ask you on your comments on China and Europe to start with could you just elaborate on what youre seeing there across your academic and pharma customer base, especially.
Wenbin Jiang: Good evening, and thanks for the time here. Wenbin, looks like a decent start to the year on both product and service revenue and placements as well. I wanted to ask you about your comments on China and Europe. To start with, could you just elaborate on what you're seeing there across your academic and pharma customer base, especially in China? And then, in light of that recent stimulus program that's about to be rolled out over the next three years or so, is that starting to show up in your early customer conversations in the funnel just yet? And any anecdotal color you can share on potential benefits, perhaps not in 24, but into 25 and beyond, would be great. Thank you.
Wenbin Jiang: Actually, in China today, our current primary growth is from academic studies. Mostly universities and research institutions. Now, regarding your question on the incentive program, it's coming, but we haven't seen the benefits yet. We expect it probably will help for the second half of the year.
Wenbin Jiang: <unk> in China, and then in light of that recent stimulus program, that's about to be rolled out over the next.
Tejas Savant: Three years or so.
Tejas Savant: Is that starting to show up in your early <unk>.
Speaker Change: More conversations in the funnel, just yet and any any anecdotal color you can share on potential benefit perhaps not in 'twenty, four but into 'twenty five and beyond would be great. Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Wenbin Jiang: Actually in China.
Speaker Change: Today, our current primarily.
Speaker Change: Growth in the fall at the bandwidth space.
Wenbin Jiang: Most of them.
Speaker Change: Administrative.
Speaker Change: And the research institutions.
Speaker Change: Regarding to your question on.
Speaker Change: Central program.
Wenbin Jiang: It's coming but we haven't.
Speaker Change: Seeing the benefit yet.
Speaker Change: That probably will help for the second half of the year.
Speaker Change: Got it that's helpful.
Speaker Change: And then I wanted to ask you on reagent rentals during the quarter.
Wenbin Jiang: Got it, that's helpful. And then I want to ask you about reagent rentals during the quarter. In terms of just the order book, what fraction of the orders this quarter were reagent rentals versus upfront purchases? Any color on that?
Wenbin Jiang: In terms of just the order book, what fraction of the orders this quarter were reagent rentals versus upfront purchases any color on that.
Speaker Change: Yeah.
Wenbin Jiang: This is a very small portion of our overall business. Of course, going forward, as we continue with our clinical business, we might see the kind of more impactful revenue to Cytek, mostly on the reagent side, but it's just right now still in the early stage.
Wenbin Jiang: Oh.
Speaker Change: Is it a portion of our overall business.
Speaker Change: Of course going forward, although we continue with.
Speaker Change: No.
Speaker Change: Regarding to our clinical business, we might see.
Wenbin Jiang: On a more impactful.
Speaker Change: Revenue to slightly but mostly on the agent side, but.
Wenbin Jiang: It's just right now seeing early stage.
Wenbin Jiang: Perfect. And last one for me here on just the competitive dynamics here. Are you seeing any heavier sort of price discounting from your next-gen flow peers, you know, Sony, BD, etc., as, you know, the industry grapples with instrument purchasing headwinds and elongated sort of purchasing cycles, as you called out, at least in North America and APAC X China?
Speaker Change: Perfect and last one for me on just the competitive dynamics here are you seeing any heavier sort of price discounting from your nextgen flow peers.
Speaker Change: Sony BD et cetera, as the industry grapples with instrument purchasing headwinds and elongated purchasing cycles as you called out at least in North America, and APAC ex China.
Speaker Change:
Wenbin Jiang: We do start to see new players in this space, and this is a reflection of our success in driving the flow cytometry industry towards the full spectral technology, which we pioneered seven years ago. So previously, we were probably more trying to convert conventional into spectral. The whole industry is truly convinced this is the direction; this is the future. Cytek is clearly a leader in this space, in this technology. This is also reflected in Jessica Simmich's cycle meeting in Edinburgh, and it's very exciting, and we are very encouraged by what we have seen over there.
Speaker Change: Well, let's start with.
Speaker Change: <unk> in this space.
Speaker Change: In a reflection of our success with regarding to jogging.
Speaker Change: We started publishing industry towards full special technology, which we pioneered several months ago.
Speaker Change: So previously.
Speaker Change: Probably more chance will convert conventional into special and no.
Speaker Change: The whole English a truly clean Inc.
Speaker Change: Thinking of the future.
Wenbin Jiang: And clearly.
Speaker Change: <unk> English.
Speaker Change: Pace in this technology. This is also reflected in the Jessica finished you will cycle meeting adding.
Speaker Change: Edinburg.
Speaker Change: It's really exciting and the way I'm really encouraged.
Speaker Change: What we have seen over the.
Speaker Change: Yeah.
Liz: Got it. Super helpful. Thanks, guys. Appreciate the time. And your next question comes from the line of Matthew Sykes from Goldman Sachs. Please go ahead.
Speaker Change: Got it Super helpful. Thanks, guys I appreciate the time.
Speaker Change: And your next question comes from the line of Matthew <unk> from Goldman Sachs. Please go ahead.
Liz: And your next question comes from the line of Matthew Sykes from Goldman Sachs. Please go ahead.
Speaker Change: Hello. Thank you for taking my question. This is Jake on for Matt. So you saw a sequential step down in organic revenue can we attribute that to seasonality in the quarter and then can you also talk about how youre thinking about the pacing of growth throughout the rest of the year. Thank you.
Speaker Change: Yeah.
Matthew Carlisle Sykes: I think I will not be able to handle that question.
Wenbin Jiang: I think I will not be able to handle that question.
Wenbin Jiang: I'm not sure I understood it, but our organic revenue actually increased substantially in this quarter compared to Q4 sequentially. It was increased from, I believe, around 1% to 11%.
Matthew Carlisle Sykes: I'm not sure I understood it but al organic revenue actually increased substantially in this quarter compared to Q4 sequentially.
Speaker Change: It was.
Speaker Change: Increased from I believe around 1% to 11%.
Wenbin Jiang: So, we, you know, we saw a meaningful improvement in organic revenue. As far as, did I understand your question correctly? Yes. Yes, you did. Okay. So that's the answer there.
Speaker Change: So we saw a meaningful improvement in organic revenue growth.
Wenbin Jiang: As far as.
Speaker Change: Did I understand your question correctly.
Speaker Change: Yes, Yes, you did.
Wenbin Jiang: Okay.
Speaker Change: So that's the answer there are meaningful.
William D. McCombe: Meaningful uptick in organic revenue growth. And as far as revenue staging is concerned, look, I think we're still comfortable with the revenue guidance that we gave for the year. Obviously, that implies some quarterly revenue growth during the balance of the year, and, you know, we would expect that to follow, you know, a similar pattern to recent years. I think we're ready for the next question.
Speaker Change: Uptick in organic revenue growth and as far as revenue staging is concerned.
Speaker Change: Look I think we're still comfortable with the revenue guidance that we gave for the year obviously.
William D. McCombe: That implies.
Speaker Change: Some quarterly revenue growth during the balance of the year.
Speaker Change: And we would expect that to follow.
William D. McCombe: A similar pattern to recent years.
Speaker Change: Yeah.
Speaker Change: I think we're ready for next question operator.
Speaker Change: Yes.
Liz: And your next question comes from the line of David Westenberg from Piper Sander. Please go ahead.
Speaker Change: And your next question comes from the line of David question, Greg from Piper Sandler. Please go ahead.
David Michael Westenberg: Hi. Thanks for taking the question. So welcome, William, and I'll just go ahead and pick on you since this is your first earnings call.
David: Hi, Thanks for taking the question so just.
David: Welcome Welcome William and I'll, just go ahead and pick on you on since this is.
David Michael Westenberg: To your first earnings call.
David: So.
David Michael Westenberg: The margins missed the street by a little bit.
David Michael Westenberg: This is probably a lot to do with services and mix and.
Speaker Change: Is some of this potentially also just the way customers are buying the instrument on on more services contracts and then with all that in mind.
William D. McCombe: So the margins missed the street by a little bit. You know, this is probably going to have a lot to do with the service mix. And, you know, is some of this potentially also just the way customers are buying the instrument on more services contracts? And then, with all that in mind, you know, how should we think about gross margins for the rest of the year just in terms of pacing? And, you know, could we be seeing, you know, as we go into 25, 26, maybe this level of gross margins reset to this level? Thank you.
Speaker Change: How should we think about gross margins the rest of the year just in terms of pacing in.
Speaker Change: Could we be seeing you know as we go into 'twenty five 'twenty six.
Speaker Change: Maybe this reset to this.
William D. McCombe: This level of gross margins. Thank you.
William D. McCombe: Thank you for the welcome and for the question. The declining gross margin was due to a couple of very specific things. It did not, there's no change in the way that customers are buying our product. It's not related to product mix or anything like that. It's too very specific.
Speaker Change: Alright, Thank you for the welcome thanks for the question.
William D. McCombe: The.
Speaker Change: The decline in gross margin was due to a couple of very specific things it did not.
Speaker Change: No change in the way that customers are buying our product.
Speaker Change: Not related to product mix or anything like that its two very specific <unk>.
William D. McCombe: Factors, one of which was an unusual inventory adjustment. And as we mentioned in the press release or in the prepared remarks, this was something that was caused by the integration of Luminex inventories into the Cytek system, which had to be done. The inventories, post-acquisition, where a significant portion of them were held in a third-party warehouse and third-party ERP system. And when those were finally integrated into our system, that was a manual process. There were literally thousands of skews, and there were just a few errors, like a small handful of errors made. So it's a unique set of circumstances that we wouldn't expect to recur in the ordinary course.
William D. McCombe: Factors.
Speaker Change: One of which was.
William D. McCombe: Unusual.
William D. McCombe: Inventory adjustment.
Speaker Change: And as we mentioned in the press release or in the prepared remarks.
Speaker Change: This is something that was caused by the integration of <unk> inventories into the <unk> system.
Speaker Change: That had to be done.
Speaker Change: The inventories.
Speaker Change: Post acquisition, where we're a significant portion of them were held in a third party.
Speaker Change: Warehouse and third party.
Speaker Change: P system.
Speaker Change: And when those were finally integrated into our system that was a manual process. There were literally thousands of Skus and there were just a few areas.
William D. McCombe: Small handful of errors made so it's a unique set of circumstances that we wouldnt expect to recur.
Speaker Change: In the ordinary course.
William D. McCombe: So, that accounted for about 2% of the margin decline; the balance related to overhead absorption. This is because although overhead expenses were actually a little bit less than Q4, but broadly comparable, revenue was lower than Q4, so we had less overhead absorption, and that had a negative impact on margin. And as we mentioned, you know, we would expect that to revert over the course of the year as quarterly revenue increased. You know, the one-timer on inventory, we would, we do expect that that was a one-timer. And then the overhead impact, we would expect that that would diminish over the course.
Speaker Change: So that accounted for about 2% of the margin decline.
William D. McCombe: The balance related to overhead absorption.
Speaker Change: This is although overhead expenses were.
Speaker Change: Ask a little bit less than Q4.
William D. McCombe: Broadly comparable revenue was lower than Q4 so.
Speaker Change: We had.
Less overhead absorption and that had a negative impact on margin.
Speaker Change: And as we mentioned.
Speaker Change: We would expect that to revert.
Speaker Change: Over the course of the year as quarterly revenue increases.
Speaker Change: So.
The one time.
Wenbin Jiang: On inventory, we would we do expect that that was a one timer.
William D. McCombe: And then the overhead impact we would expect that that would ameliorate.
William D. McCombe: In the course of the year.
Speaker Change: Got it.
William D. McCombe: So the real way to think about the rest of the year is that 55% kind of number and maybe take it off from there or march from there. I don't want to be specific about margin guidance.
Speaker Change: The real way to think about the rest of the year is that 55% kind of number and maybe take it from tick it off from there.
William D. McCombe: March.
Speaker Change: I don't want to be specific about our margin guidance is not something that we've done.
David Michael Westenberg: It's not something that we've done. I would just say that certainly our goal is to get back to our historic growth. Perfect. All right. Well, thank you for that. Lots of great detail there.
Speaker Change: I would just say that we're certainly al.
Speaker Change: Our goal is to get back to our historic gross margins.
Wenbin Jiang: So just Wenbin, I think you said Asia and Europe are seeing some of the return of capital cycle purchases. I just want to make sure I heard that correctly. And I think you were saying maybe this could be an analog to the U.S. and what might be happening in the U.S. or North America. I just want to confirm that I heard you correctly. And can you elaborate a little bit on what you're seeing there and why you're optimistic in terms of that?
Speaker Change: Perfect Alright, well, thank you on that.
Speaker Change: It's a great detail there and so just.
Wenbin Jiang: When Ben I think you said.
Wenbin Jiang: Asia and in Europe, you're seeing.
Wenbin Jiang: Some of the return of capital cycle purchases just wanted to make sure I heard that correctly and I think you were saying you maybe this could be an analog to the U S and what might be happening in the U S or North America.
Wenbin Jiang: But I just wanted to confirm I heard that correctly and can you elaborate a little bit on what youre seeing there and why you're optimistic in terms of of that.
Wenbin Jiang: Okay.
Wenbin Jiang: And we are saying, and particularly in Europe and China, we are seeing purchasing coming back to where it was before. And this actually started in Q4, which continued in Q1. That's very encouraging.
Speaker Change: No.
Wenbin Jiang: Sure thing.
Speaker Change: Particularly in Europe and China.
Wenbin Jiang: We are seeing.
It puts us in a coming back to work.
Speaker Change: Yeah.
Wenbin Jiang: Include normal cause this way.
Wenbin Jiang: <unk> actually started in Q4, which continued in Q1, that's not even kind of.
Wenbin Jiang: On the other hand, we do see continued elongated purchasing cycle in the U.S., as well as APEC, excluding China. But we are going to, those orders will return, and it's not. [inaudible] They will come back, and they will close, and we expect them to close.
Wenbin Jiang: On the other hand, we do see continued.
Wenbin Jiang: Pleasure.
Wenbin Jiang: Cycle.
Wenbin Jiang: The U S as well as APAC.
Wenbin Jiang: Excluding China.
Wenbin Jiang: But.
Wenbin Jiang: Those are the Wellington.
Wenbin Jiang: It's not.
Wenbin Jiang: Loss available.
Wenbin Jiang: Yeah.
Wenbin Jiang: They will come back and they will.
Wenbin Jiang: It will close.
Wenbin Jiang: Then to close.
Wenbin Jiang: Got it just on my last one just in terms of customers using larger or the full potential of <unk> full spectrum flow cytometer.
Wenbin Jiang: Got it. Just on my last one, just in terms of customers using larger or the full potential of full spectral flow cytometry, are you seeing an increase in that usage? And when you are seeing an increase in that, are you seeing them order Cytek-specific reagents? And just a little bit more color on how you're seeing adoption in terms of reagents there. And that will be my last one. Thank you. We are definitely seeing progress.
Wenbin Jiang: Full spectrum flow cytometry.
Wenbin Jiang: Are you seeing it.
Speaker Change: An increase of that usage and when you are seeing an increase of that are you seeing them order site Tech specific reagents, and just even a little bit more color on how you're how you're seeing adoption in terms of reagents, there and that will be my last one thank you.
Wenbin Jiang: We are definitely seeing encouraging.
Wenbin Jiang: We are definitely seeing encouragement across the industry, especially with farmers, and they have started to validate our instruments and harmonize our instruments across the organization, and they are continuing to come back to expand the number of instruments they have across their organization. So we are talking about users. We are actually not a few in the whole organization. Even hundreds of those users are on our site today. So in some organizations, very encouraging.
Wenbin Jiang: Yes.
Wenbin Jiang: Especially with pharma.
Wenbin Jiang: Let me start go vertical with our instruments and harmonize.
Speaker Change: Of course.
Speaker Change: Organization.
Wenbin Jiang: Uh huh.
Speaker Change: They are.
Speaker Change: Could come back to expand the number of instrument they have across the organization.
Wenbin Jiang: So we.
Wenbin Jiang: We are talking about user.
Speaker Change: Not a flu.
Wenbin Jiang: Our innovation Hungary, although that was a year ago.
Wenbin Jiang: Sorry for the instrument.
Wenbin Jiang: So in some organization that encourage it.
Speaker Change: Thank you. Thank you.
Speaker Change: Yeah.
Wenbin Jiang: And your next question comes from the line of Angie <unk>.
Liz: And your next question comes from the line of Andrew Cooper from Raymond James. Please go ahead.
Liz: <unk>.
Hey, everyone. Thanks for taking my question. This is Noah on for Andrew.
Noah: Hey, everyone. Thanks for taking my question. This is Noah, on behalf of Andrew.
Noah: So my first question is, you know, you talked about instrument sales coming in where you thought they'd come in. Were you seeing any particular strength across particular instruments? So would that be the sort of sales sort in the higher end products? Or is that mostly from other places within the portfolio?
Noah: So my first question is.
Noah: You talked about instrument sales coming in where you thought they'd come in.
Noah: Where are you seeing any particular strength across particular instrument, so would that be to sell somewhere in the higher end products or is that mostly from other places within the portfolio.
Wenbin Jiang: Our strengths continue to be our flagship product, which is Aurora, and we see it continue to grow. Of course, in the meantime, we are... going to focus more and more on entry at the mid-level and to drive adoption across our product portfolio.
Noah: Our strength continues to be our flagship product which is a.
Wenbin Jiang: We see continued to grow.
Wenbin Jiang: Of course in the meantime, we are.
Wenbin Jiang: Going to.
Wenbin Jiang: Folks more and more towards entry level.
Wenbin Jiang: To drive it.
Wenbin Jiang: Adoption across our product portfolio.
Speaker Change: Awesome. Thank you so much and one more question you guys launched the Orion reagent mixture in <unk> of 'twenty three and.
Noah: Awesome. Thank you so much.
Speaker Change: And I understand that the dollars are going to be minimal, but have you seen any new doors open for the rest of the business because now you've had a full quarter selling and possibly seen any reagent pull through on that end.
Noah: Okay.
Noah: Okay.
Noah: Well, a new instrument it was alone.
Speaker Change: It belonged Sheila the first thing is to work with customers to validate it.
Noah: A few months before they actually put it into production on a customer site and we have seen very good.
Noah: And one more question. You guys launched the Orion reagent mixer in 4Q of 23. And I understand that the dollars are going to be minimal, but have you seen any new doors open for the rest of the business? Because now you've had a full quarter selling and possibly seen any reagent pull through on that end?
Noah: Again, the trend right now under the interest from our customer base.
Speaker Change: Awesome. Thank you.
Noah: And your next question comes from the line of Nathan <unk> from.
Wenbin Jiang: You know, when a new instrument is launched, the first thing is to do a demo, to work with customers to validate the instrument before it is actually put into production on the customer side. And we have seen very encouraging trends right now in the interest of our customer base.
Liz: And your next question comes from the line of Mason Currigo from Stephens. Please go ahead.
Stevens: Stevens. Please go ahead.
Mason Owen Carrico: Hey, guys.
Mason Owen Carrico: Hey guys, just two questions for me here. First, given the funding environment and budget constraints that you're seeing, for customers that are interested in buying maybe one of your higher-end instruments, are the majority of these customers, I don't want to say majority, but for the customers that are delaying their purchases, are they simply delaying making that purchase, or is there a trend of them maybe moving down the price continuum and buying perhaps, you know, the mid-tier instruments?
Mason Owen Carrico: Just two questions for me here first given the funding environment and budget constraints that you're seeing for customers that are interested in buying.
Mason Owen Carrico: One of your higher end instruments are.
Mason Owen Carrico: Are the majority of these customers I don't want to say majority, but for the customers that are delaying their purchases or are they simply delaying making that purchase or is there a trend of them, maybe moving down the price continuum and.
Mason Owen Carrico: Buying perhaps the mid tier instrument.
Mason Owen Carrico: Hum.
Wenbin Jiang: As I just mentioned, we continue to see greater interest in our flagship products, which are Aurora and Aurora CS. And so in that regard, we don't really see much change regarding how our budget will impact their buying behavior. But the elongated buying cycle is particularly related to the U.S. and the APAC region, which has been that way for quite a while. But with the outcome, it just takes a longer time for them to make decisions. That's what we are seeing.
Wenbin Jiang: Yes, I mentioned that we continue to see greater interest on our flagship product.
Mason Owen Carrico: Got it. Okay.
Wenbin Jiang: Yes.
Mason Owen Carrico: So in that regard and we don't really see much change.
Mason Owen Carrico: Is that going to haul it budget.
Mason Owen Carrico: Impact buying behavior.
Mason Owen Carrico: But it is.
Speaker Change: Good bye.
Mason Owen Carrico: Buying.
Mason Owen Carrico: Cycle, particularly related to the tool.
Mason Owen Carrico: <unk> and <unk>.
Mason Owen Carrico: APAC region, which had.
Mason Owen Carrico: Definitely for quite a while.
Mason Owen Carrico: But it all kind of I guess take longer time for them to make a decision. That's what we are seeing.
Mason Owen Carrico: Yeah.
Speaker Change: Got it okay, and maybe kind of the opposite question here, but last quarter, you talked about seeing early success in converting.
Wenbin Jiang: And maybe kind of the opposite question here, but last quarter, you talked about seeing early success and converting existing Guava customers to your Northern Lights platform. Has that trend continued? And really, you know, when it comes to your Northern Lights sales, what proportion of those sales are going to existing Guava customers versus non-guava customers?
Wenbin Jiang: Existing guava customers to your northern lights platform.
Wenbin Jiang: That trend continued.
Wenbin Jiang: And really.
Wenbin Jiang: When it comes to your northern light sales.
Wenbin Jiang: What proportion of those sales are going to existing guava customers versus <unk>.
Wenbin Jiang: Non guar for customers.
Wenbin Jiang: Okay.
Wenbin Jiang: In the previous session, we mentioned that Guava customers do have their specialized needs, which today are not really being satisfied by Northern Lights. This is because Guava, in particular, some of the platform is manageable, while Northern Lights is more designed for individual users with flexibility, and this is something we are working on, on the software side, to enable us to facilitate those needs from Guava customers. We expect this will eventually be addressed by then, and more Guava users will convert.
Wenbin Jiang: In the previous session, we didn't have nation.
Wenbin Jiang: <unk>.
Wenbin Jiang: Well our customers do have their specialized needs, which today are not really being satisfied by the northern lights.
Wenbin Jiang: This would be a problem.
Wenbin Jiang: While the guava.
Wenbin Jiang: Particularly some of the platform is manageable.
Wenbin Jiang: The northern lights.
Wenbin Jiang: With Iran.
Wenbin Jiang: For individual users when you split out stability and this is something we are working on the software side to enable us to further facilitate those needs are.
Wenbin Jiang: From the global customers.
Wenbin Jiang: It's Paul will eventually will be addressed by then.
Wenbin Jiang: Are you that the World Cup.
Speaker Change: Got it thank you guys.
Mason Owen Carrico: Got it. Thank you, guys.
Mason Owen Carrico: And your next question comes from the line of Jacqueline Chiesa from TD Cowen. Please go ahead.
Liz: And your next question comes from the line of Jacqueline Kisa from T.D. Cohen. Please go ahead.
Jacqueline Kay Kisa: Hi, This is Jack when Keith on for Steven MA Congrats on the approvals and the facility opening looking forward on your clinical progress are there any specific clinical milestones. We can expect to see on the horizon now that you've gained approval for your TV panel and reagents.
Jacqueline Kay Kisa: Hi, this is Jacqueline Kiesa speaking on behalf of Steven Mah. Congratulations on the approvals and the facility opening. Looking forward to your clinical progress, are there any specific clinical milestones you can expect to see on the horizon now that you've gained approval for your TBNK panel and reagents?
Speaker Change: Yes, absolutely we expect to see.
Wenbin Jiang: Yeah, absolutely. We expect to see continued growth to drive our aging business, and, of course, in the meantime, we hope, and that will also help us to grow our northern ICLC instrumentation. But earlier, there was a question regarding the aging rental, which will also be helpful because a tool like PB&K will enable users to come back to our Internet, to support that type of business model.
Wenbin Jiang: Continue to drive our business.
Wenbin Jiang: Accordingly in the meantime, we hope and that will also help us to grow our northern Icrc instrumentation.
Wenbin Jiang: But earlier I guess it was a question with regarding to the reagent rental which will also be helpful. Because approved TNK will enable.
Wenbin Jiang: Users will come back for our instruments.
Wenbin Jiang: I suppose that type of business model.
Speaker Change: Great. Thank you and has the opening of the new facility driven in any demand or customer conversations and well the facility focus more on supporting clinical applications or more just provide support across the board.
Wenbin Jiang: Great, thank you. And has the opening of the new facility driven any demand or customer conversations, and will the facility focus more on supporting clinical applications or more just provide support across the board?
Wenbin Jiang: What's left to sort of across the board.
Wenbin Jiang: The facility is to support across the board for our product manufacturing, mostly instruments.
Wenbin Jiang: Product manufacture mosaiq instrument.
Wenbin Jiang: Okay.
Speaker Change: Great. Thank you and if I could just sneak one more in late last year, you launched the software improvement on the northern lights have you received any feedback from that from customers and is there any room for similar product improvements on the rest of the portfolio.
Jacqueline Kay Kisa: Great. Thank you. And if I could just sneak one more in,
Jacqueline Kay Kisa: Well actually we do have a hub in kind of your comment on the front of.
Wenbin Jiang: Late last year, you launched a software improvement on Northern Lights. Have you received any feedback on that from customers? And is there any room for similar product improvements on the rest of the portfolio?
Wenbin Jiang: The customer with regarding to the new software, which enable both conventional instrumentation was true.
Jacqueline Kay Kisa: No, actually, we do have heard encouraging comments from the customer regarding the new software, which enables those conventional instrumentations to leverage the special features and, in the meantime, reduce the kind of barriers to move from one platform to the other. I think we feel it's a great success. Great, thank you. I appreciate it.
Jacqueline Kay Kisa: Language less special features.
Jacqueline Kay Kisa: Time reduced the kind of bandwidth to move from one platform to the other.
Jacqueline Kay Kisa: I think we feel it's a great success.
Speaker Change: Great. Thank you I appreciate it.
Jacqueline Kay Kisa: Great. Thank you. I appreciate it.
Speaker Change: Again, if you would like to ask a question. Please press star one on your telephone keypad.
Liz: Again, if you would like to ask a question, please press star 1 on your telephone keypad. There are no further questions at this time. Ladies and gentlemen, that concludes today's call. Thank you all for joining us. You may now disconnect.
Liz: Okay.
Liz: There are no further questions at this time, ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
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