Q4 2024 Quanterix Corp Earnings Call
Okay.
Kathleen: Thank you for standing by. My name is Kathleen and I will be your conference operator today.
Kathleen: Thank you for standing by my name is Kathleen and I will be your conference operator today.
Kathleen: At this time, I would like to welcome everyone to the Quanterix Corporation 4th Quarter 2024 Earnings Call.
Speaker Change: At this time I would like to welcome everyone to the Quanta Rick's Corporation fourth quarter 2024 earnings calls.
Kathleen: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, press the star 1 again. Thank you.
Kathleen: All lines have been placed on mute to prevent any background noise.
Kathleen: After the speakers remarks, there will be a question and answer session.
Kathleen: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Kathleen: And if you would like to withdraw your question press the star one again.
Joshua Yang: And now I would like to turn the call over to Joshua Yang, Head of Investor Relations. Please go ahead. Thank you and good afternoon. With me on today's call are Masoud Toloue, Quanterix President and CEO, and Vandana Sriram, Quanterix Chief Financial Officer. Today's call is being recorded and a replay of the call will be available on the investor section of our website.
Kathleen: Thank you.
Speaker Change: Now I would like to turn the call over to Joshua Young head of Investor Relations. Please go ahead.
Speaker Change: Thank you and good afternoon with me on today's call are Ms. Sue to Lou <unk>, President and CEO and bonded Sriram quite Terex Chief Financial Officer.
Speaker Change: Today's call is being recorded and a replay of the call will be available on the investors section of our website.
Joshua Yang: During the course of today's presentation, we will make forward-looking statements. within the meaning of the U.S. Private Securities Litigation Reform Act. These forward-looking statements are based on management's beliefs and assumptions as of today, March 17, 2025. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statement. Forward-looking statements involve known and unknown risks, uncertainties, assumptions, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statement.
Speaker Change: During the course of today's presentation, we will make forward looking statements within the meaning of the U S. Private Securities Litigation Reform Act.
Speaker Change: These forward looking statements are based on management's beliefs and assumptions as of today March 17th 2025.
Speaker Change: We may not actually achieve the plans intentions or expectations disclosed in our forward looking statements.
Speaker Change: Forward looking statements involve known and unknown risks uncertainties assumptions and other factors that may cause our actual results performance or achievements to be materially different from any future results performance or achievements expressed or implied by the forward looking statements.
Joshua Yang: To supplement our financial statements presented on the GAAP basis, we have provided certain non-GAAP financial measures. These non-GAAP measures are used to evaluate our operating performance in a manner that allows for meaningful period-to-period comparison and analysis of trends in our business and our competitors. We believe that such measures are important in comparing current results with other period results and assessing our operating performance within our industry. Non-GAAP financial information presented herein should be considered in conjunction with and not as a substitute for the financial information presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures set forth in the presentation posted on our website and in our earnings release issued today.
Speaker Change: To supplement our financial statements presented on a GAAP basis, we have provided certain non-GAAP financial measures.
Speaker Change: These non-GAAP measures are used to evaluate our operating performance in a manner that allows for a meaningful period to period comparison.
Speaker Change: An analysis of trends in our business and our competitors. We believe that such measures are important in comparing current results with other periods results in assessing our operating performance within our industry.
Speaker Change: non-GAAP financial information presented herein should be considered in conjunction with not as a substitute for the financial information presented in accordance with GAAP.
Speaker Change: Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures set forth in the presentation posted on our website and in our earnings release issued today.
Joshua Yang: Finally, any percentage changes we discuss will be on a year-of-year basis unless otherwise noted.
Speaker Change: Finally, any percentage changes, we discussed will be on a year over year basis, unless otherwise noted.
Masoud Toloue: Now, I'd like to turn over to the call to Masoud Toloue. Thank you, Joshua. I'm pleased to report that Quanterix delivered our seventh consecutive quarter of double-digit revenue growth driven by robust demand for Samoa sensitivity. In a capital-constrained environment, this performance is a testament to past investments we've made in focusing our business model on multiple vertical markets and recurring revenue. I am pleased with our team's operational performance in the quarter. We achieved revenue of $35.2 million and our top line grew 11%, driven by capacity expansion in our accelerator lab, which grew 22% in the quarter.
Masoud: Now I'd like to turn over the call to Masoud too soon.
Masoud: Thank you Joshua.
Masoud: I am pleased to report that <unk> delivered our seventh consecutive quarter of double digit revenue growth driven by robust demand for similar sensitivity.
Masoud: In a capital constrained environment. This performance is a testament to past investments we've made in focusing our business model on multiple vertical markets and recurring revenues.
Masoud: I am pleased with our team's operational performance in the quarter.
Masoud: We achieved revenue of $35 2 million and our top line grew 11% driven by capacity expansion in our accelerator lab, which grew 22% in the quarter.
Masoud Toloue: Additionally, our investments in developing testing infrastructure for Alzheimer's disease is just starting as we generate $2.7 million of partner-enabled revenue in Q4.
Masoud: Additionally, our investments in developing testing infrastructure for Alzheimers disease is just starting as we generated $2 7 million of partner enabled revenue in Q4.
Masoud Toloue: Our approach to growth. has been disciplined while improving margin and core operating costs. A non-GAAP gross margin of 57.7% in the fourth quarter represented an increase of 300 basis points over the previous year, driven primarily by higher price and improved operating efficiency. Our cash usage declined by 31% to $4.4 million in the fourth quarter. Vandana will elaborate more on these results later in the call.
Masoud: Our approach to growth.
Disciplined while improving margin.
Masoud: Core operating costs.
Masoud: Our non-GAAP gross margin of 57, 7% in the fourth quarter represented an increase of 300 basis points over the previous year, driven primarily by higher price and improved operating efficiency.
Masoud: Our cash usage declined by 31% to $4 4 million in the fourth quarter, Ron and I will elaborate more on these results later in the call.
Masoud Toloue: Taking a step back, I want to talk about how our investments are driving strong returns in the business and how our team's disciplined operating execution is helping us outpace peers. Over the past two years, we generated a revenue CAGR of 14% while increasing our recurring revenues from 65% to 80%. We've expanded margins from 35% to over 54% today. We've reduced our cash burn by nearly half, all the while continuing to invest in R&D to position the company for future periods of high growth.
Masoud: Taking a step back I want to talk about how our investments are driving strong returns in that business and how our teams disciplined operating execution is helping us outpace peers.
Masoud: Over the past two years, we generated a revenue CAGR of 14%, while increasing our recurring revenues from 65% to 80%.
Masoud: We've expanded margins from 35 to over 40, 54% today.
Masoud: We've reduced our cash burn by nearly half all the while continuing to invest in R&D to position the company for future periods of high growth.
Masoud Toloue: With this foundation in place, we're in an excellent position to execute our three-year strategy. Number 1. Grill Menu. We're extending our leadership position in neurology while developing assays tailored for Neumark. We launched 20 new assays in 2024, including 13 in neurology, addressing therapeutic areas such as multiple sclerosis, Parkinson's disease, and traumatic brain injury. We also launched ultra-sensitive multiplex panels for therapeutic development of key immunology-related disorders, such as obesity, arthritis, and neuroinflammation.
Masoud: With this foundation in place we're in an excellent position to execute our three year strategy.
Masoud: Number one grow menu.
Masoud: Extending our leadership position in neurology, while developing assays tailored for new markets. We launched 20, new assays in 2024, including 13 in neurology addressing therapeutic areas, such as multiple sclerosis, parkinsons disease and traumatic brain injury.
We also launched ultra sensitive multiplex panels for therapeutic development of key immunology related disorders, such as obesity arthritis and neuro inflammation.
Masoud Toloue: Two. expanding into adjacencies both organically and inorganically. We're expanding into immunology and oncology markets with our Simul1 platform and our recently announced merger agreement to acquire Aquoia Bioscience. which will strengthen and accelerate this effort. I'll talk more about Ekoia in a few minutes. In 2024, we made progress on our Semo 1 platform, which we expect to launch at the end of 2025 and will further extend our business in immunology. Through SEMOA I, we will increase plexity and sensitivity beyond our current platforms, further extending our lead position. Assays on this platform will include code match technology, which are optically encoded barcodes and proprietary emission beads that will allow us to grow PLEX while maintaining high specificity across the assay in an efficient workflow with results in less than three hours.
Masoud: Two.
Masoud: Expanding into Adjacencies, both organically and Inorganically.
Masoud: We're expanding into immunology and oncology markets with a similar one platform and our recently announced merger agreement to acquire acquire Biosciences, which will strengthen and accelerate this effort.
Masoud: I'll talk more about it quite a few minutes.
Masoud: In 2024, we made progress on our <unk> platform, which we expect to launch at the end of 2025 and will further extend our business in immunology.
Masoud: Through similar one we will increase <unk> and sensitivity beyond our current platforms further extending our lead position.
Masoud: Assays on this platform will include code match technology, which are optically encoded barcodes and proprietary emission beads that will allow us to grow plex, while maintaining high specificity across the assay and an efficient workflow with the results in less than three hours.
Yeah.
Masoud Toloue: Finally, number three, translating into diagnostics. We're focused on building the leading global diagnostic testing infrastructure for Alzheimer's disease. We added 12 partners to our network last year and are working to expand this year with 10 new hospitals and reference labs already in active test validation. In 2024, we launched LucentAD Complete, a multi-marker algorithmic test that combines five biomarkers. It's available today as a laboratory developed test, and we're pleased to report that we're making great progress working in our prospective trials with plans to submit our package this year to the FDA under our breakthrough designation. As I discussed earlier, the importance of making strategic investments into growth and driving high recurring revenues in the business have yielded strong results for Quanterix over the past two years.
Masoud: Finally number three translating into diagnostics.
Masoud: We're focused on building the leading global diagnostic testing infrastructure for Alzheimer's disease.
Masoud: We added 12 partners to our network last year and are working to expand this year with 10, new hospitals and reference labs already an active test validation.
Masoud: In 2024, we launched loosened complete a multi marker algorithmic test the combined five biomarkers.
Masoud: It's available today as a laboratory developed test and we're pleased to report that we're making great progress working at our prospective trials with plans to submit our package this year to the FDA under our breakthrough designation.
Masoud: As I discussed earlier, the importance of making strategic investments into growth and driving high recurring revenues in that business have yielded strong results for <unk> over the past two years.
Masoud Toloue: Now, I'll spend a few minutes on how our proposed acquisition of ECOIA meets this objective. We are confident it will deliver attractive long-term returns to shareholders for three core reasons.
Masoud: Now I'll spend a few minutes on how our proposed acquisition of acquire meets this objective.
Masoud: We are confident it will deliver attractive long term returns to shareholders for three core reasons one.
Masoud Toloue: 1. Expanded addressable market.
Masoud: Expanded addressable market to actionable synergies and three enhanced scale.
Masoud Toloue: 2. Actionable synergies.
Masoud Toloue: 3. Enhanced scale. Through this combination, we're expanding Quanterix's research addressable market from $1 to $5 billion and our diagnostics TAM from $10 to $15 billion. By combining Quanterix, a number one player in ultra-sensitive detection of proteins in blood, with Akoya, number one in biomarker detections in tissue, we will uniquely position the company to speed up market development of new tissue and liquid biopsies. which we believe will eventually surpass the market size of all other diagnostic tests combined.
Masoud: Through this combination we are expanding <unk> research addressable market from $1 billion to $5 billion, and our diagnostics Tam from $10 billion to $15 billion.
Masoud: By combining <unk> a number one player in ultra sensitive detection of proteins in blood with our courtyard number one in biomarker detection and tissue.
Masoud: We will uniquely position the company to speed up market development of new tissue and liquid biopsies.
Masoud: Which we believe will eventually surpass the market size of all other diagnostic tests combined.
Masoud Toloue: Second, we have a clear line of sight to achieving the synergies we've projected. With regard to revenue synergies, starting immediately upon closing, Equoia will offer their NeuroBio solutions to our over 1,000 instrument install base. And we will provide our oncology solutions to ECOIA's 1,300 instrument install base. Much of our team, including myself, are intimately familiar with Equoia's platform and its capabilities. and we have owned their instruments for several years. This, coupled with our own organic program of Semoa I, gives us tremendous confidence we'll be able to hit the ground running on our cross-selling opportunities.
Masoud: Second we have a clear line of sight to achieving the synergies we've projected.
Masoud: With regard to revenue synergies starting immediately upon closing <unk> will offer their narrow bio solutions to our over 1000 instrument install base.
Masoud: And we will provide our oncology solutions to acquire 1300 instrument install base.
Masoud: Much of our team including.
Masoud: Including myself are intimately familiar with the <unk> platform and its capabilities.
Masoud: And we have owned their instruments for several years.
Masoud: This coupled with our own organic program with similar one gives us tremendous confidence we'll be able to hit the ground running on our cross selling opportunities.
Masoud Toloue: There's also a considerable customer overlap between our companies. We share the same top pharma customers, and generally speaking, half of our teams visit the same customer.
Masoud: There is also a considerable customer overlap between our companies we share the same top pharma customers and generally speaking half of our teams visit the same customer.
Masoud Toloue: We're very much focused on recurring revenues. We executed this at Quanterix and intend to apply the same playbook in the combined company. With regard to cost synergies, 100% of our 40 million operating synergies will be run rates by 2026. will expect $5 million per quarter in the first 12 months and will achieve $10 million per quarter by the end of 2026.
We're very much focused on recurring revenues, we executed this at <unk> and intend to apply the same playbook and the combined company.
Masoud: With regard to cost synergies, 100% of our $40 million operating synergies will be run rates by 2026.
Masoud: We will expect $5 million per quarter in the first 12 months and we will achieve $10 million per quarter by the end of 2026.
Masoud Toloue: Finally, there's a lot of low-hanging fruit on the SG&A side we can go after relatively quickly. Both companies are located in Boston, use identical antibody reagents, and similar operating infrastructures, which further de-risks footprint consolidation.
Masoud: Yes.
Masoud: Finally, there is a lot of low hanging fruit on the SG&A side, we can go after a relatively quickly.
Masoud: Both companies are located in Boston.
Masoud: As identical antibody reagents, and similar operating infrastructures, which further de risks footprint consolidation.
Masoud: Third.
Masoud Toloue: We're accelerating scale and profitability. By combining with Equoia, we expect to generate positive free cash flow in 2026, one year faster than we would as a standalone company. The transaction creates a new path for us to grow from a company with approximately a quarter billion in revenue this year to one with a billion in revenues with EBIT margins of 15 percent five years post-close. This goal reflects the contribution of diagnostics revenues from ECOIA and Quanterix, as well as meaningful contribution of revenue from our new SEMA 1 platform.
Masoud: We're accelerating scale and profitability.
Masoud: By combining with <unk>, we expect to generate positive free cash flow in 2026, one year faster than we would as a standalone company.
Masoud: The transaction creates a new path for us to grow from a company with approximately a quarter billion dollars in revenue. This year to one with 1 billion in revenues with EBIT margins of 15% five years post close.
Masoud: This goal reflects the contribution of diagnostics revenues from acquire and contacts as well as meaningful contribution of revenue from our new summer one platform.
Masoud Toloue: I want to conclude by saying a few words about current market conditions. While there is some degree of market volatility, our view is that good research in important chronic conditions will continue to be supported by private and public sectors alike. Investments we've made in our business model across multiple markets, namely research, pharma, and diagnostics, using a combination of products and services. continues to uniquely position the company for growth.
Masoud: I want to conclude by saying a few words about current market conditions.
Masoud: While there is some degree of market volatility our view is that good research.
Masoud: Important chronic conditions, we will continue to be supported by private and public sector alike.
Masoud: Investments, we've made in our business model across multiple markets, namely research pharma and diagnostics using a combination of products and services.
Masoud: Continues to uniquely positioned the company for growth.
Masoud Toloue: and A Path to Profitability. while we make investments in high growth markets for future cycles of value creation. These efforts have delivered over the last two years, and we expect them to continue.
And our path to profitability.
While we make investments in high growth markets for future cycles of value creation.
Masoud: These efforts have delivered over the last two years and we expect them to continue.
Vandana Sriram: Vandana will provide more detail on our financial performance.
Masoud: And then I will provide more detail on our financial performance.
Vandana Sriram: Thank you, Masoud, and good afternoon. I will now go over our performance for the fourth quarter, full year results, and provide our guidance for 2025. As Masoud described, in the fourth quarter, we continued our record of double-digit growth and margin expansion as compared to the prior year. Total revenue for the fourth quarter of 2024 was $35.2 million, an increase of 11% compared to the prior year. Accelerator Lab Revenue was $8.6 million, an increase of 22%, driven by strength in testing services for clinical trials and custom assay development.
Masoud: Thank you Michelle and good afternoon.
Masoud: I will now go over our performance for the fourth quarter full year results and provide our guidance for 2025.
Masoud: As Michel described in the fourth quarter, we continued our record of double digit growth and margin expansion as compared to the prior year.
Masoud: Total revenue for the fourth quarter of 2024 was $35 2 million, an increase of 11% compared to the prior year.
Speaker Change: <unk> revenue was $8 6 million, an increase of 22% driven by strength in testing services for clinical trials at custom assay development.
Vandana Sriram: As disclosed earlier, our Lilly Collaboration Agreement was completed in the third quarter. Consumable revenue was $17.4 million, flat with the previous year as customers continue to transition to Advantage Plus S. The Advantage Plus transition is approximately 50% complete, and we're on track to have all customers converted to Advantage Plus consumables by mid-2025. Instrument revenue was $3.1 million, down 7%, but up 29% sequentially. We placed 18 instruments in the quarter, up five instruments from the prior quarter. Other sales of $6 million include approximately $1.4 million of licensed revenue related to advancing our partner network in Alzheimer's disease diagnosis.
As discussed earlier, our Lilly collaboration agreement was completed in the third quarter.
Speaker Change: Consumable revenue was $17 4 million flat with the previous year as customers continue to transition to advantage plus assays.
Speaker Change: The advantage plus transition is approximately 50% complete and we are.
Speaker Change: On track to have all customized converted to advantage plus consumables by mid 2025.
Speaker Change: Instrument revenue was $3 1 million down, 7%, but up 29% sequentially.
Speaker Change: Placed 18 instruments in the quarter up five instruments from the prior quarter.
Speaker Change: Other sales of $6 million include approximately one 4 million of license revenue related to advancing our partner network and Alzheimer's disease diagnostics.
Vandana Sriram: For the quarter, we reported $2.7 million of revenue from our Diagnostics partner. Shifting to the rest of the P&L for the fourth quarter, GAAP gross profit and margin were 22.2 million and 63 percent respectively, up 2.8 million and approximately 150 basis points compared to the prior year. Non-gap gross profit was $20.3 million and non-gap gross margin was 57.7 percent, up approximately 300 basis points respectively compared to the fourth quarter of 2023. This strong gross margin performance was driven by favorable product mix, strong output, and improved inventory management. Gap operating expenses for the quarter were $36.9 million, up $3.9 million, and non-gap operating expenses were $35.1 million, up $4.2 million over last year.
Speaker Change: For the quarter, we reported $2 7 million of revenue from our diagnostics partners.
Speaker Change: Shifting to the rest of the P&L for the fourth quarter.
Speaker Change: GAAP gross profit and margin were $22 2 million and 63% respectively up.
Speaker Change: Up $2 8 million and approximately 150 basis points compared to the prior year.
Speaker Change: non-GAAP gross profit was $20 3 million and non-GAAP gross margin was 57, 7% approx.
Speaker Change: Approximately 300 basis points, respectively, compared to the fourth quarter of 2023.
Speaker Change: This strong gross margin performance was driven by favorable product mix.
Speaker Change: Output and improved inventory management.
Speaker Change: Okay.
Speaker Change: GAAP operating expenses for the quarter was $36 9 million up $3 9 million and non-GAAP operating expenses were $35 1 million up $4 2 million over last year.
Vandana Sriram: Included in operating expenses is approximately $2.7 million of costs related to our ongoing M&A transaction as well as the cost of the restatement of our financials. Cash usage for the quarter was $4.4 million, down $2 million from last year.
Speaker Change: Included in operating expenses is approximately $2 7 million of costs related to our ongoing M&A transaction as well as the cost of the restatement of our financials.
Speaker Change: Cash usage for the quarter was $4 4 million down $2 million from last year.
Vandana Sriram: For the full year 2024, we reported revenue of $137.4 million, an increase of 12%. This performance was driven by our accelerator business, which increased 37% to 38 million. Consumable revenue grew 8% to $69.3 million, while instrument revenue totaled $10.5 million, a decrease of 33%. Other revenue total $19.7 million, an increase of 32%. In terms of revenue stratification, our customer mix for the year was approximately 54-46 between pharma and academia. within pharma, sales to diagnostics partners totaled $6 million for the year. From a geographic perspective, our revenue growth was led by North America, which grew 17 percent.
Speaker Change: For the full year 2024, we reported revenue of $137 4 million an increase of 12%.
Speaker Change: This performance was driven by our accelerator business, which increased 27% to $38 million.
Speaker Change: Consumable revenue grew 8% to $69 3 million, while instrument revenue totaled $10 5 million a decrease of 33%.
Speaker Change: Other revenue totaled $19 7 million an increase of 22%.
Speaker Change: In terms of revenue stratification, our customer mix for the year was approximately 50 446 between pharma and academia.
Speaker Change: Within pharma sales to diagnostics partners totaled $6 million for the year.
Speaker Change: From a geographic perspective, our revenue growth was led by North America, which grew 17% Europe grew 11% and the Asia Pacific region was down 6% for the full year.
Vandana Sriram: Europe grew 11 percent, and the Asia-Pacific region was down 6 percent for the full year. Full-year GAAP gross profit increased to $83.1 million, up $8.9 million, and GAAP gross margin was down 20 basis points year over year. non-GAAP gross profit increased to $75 million, also up $8.9 million, and non-GAAP gross margin expanded 60 basis points to 54.6%. We ended the fourth quarter of 2024 with $291.7 million of cash, cash equivalents, marketable securities, and restricted cash. Cash usage for the year was $32 million, up $15 million from the prior year. This included approximately $16 million of investment in SMOA I and Diagnostics, which is consistent with our plan of investing up to $20 million in these initiatives in 2024.
Speaker Change: Full year GAAP gross profit increased to $83 1 million up $8 9 million and GAAP gross margin was down 20 basis points year over year.
Speaker Change: non-GAAP gross profit increased to 75 million also up $8 9 million and non-GAAP gross margin expanded 60 basis points to 54, 6%.
Speaker Change: We ended the fourth quarter of 2024 with $291 7 million of cash cash equivalents marketable securities and restricted cash.
Speaker Change: Cash usage for the year was $32 million up $15 million from the prior year.
Speaker Change: This included approximately $16 million of investment in similar one in diagnostics, which is consistent with our plan of investing up to $20 million in these initiatives in 2024.
Vandana Sriram: We are making an update to the non-GAAP financial measures that we report on a quarterly basis. As we add acquisitions to our portfolio, we are adding adjusted EBITDA and adjusted EBITDA margin as new metrics. Please refer to our earnings release and page 13 of the accompanying presentation for a definition of these metrics. Our adjusted EBITDA was negative $23.6 million in 2024, as compared to negative $19 million in 2023. As noted before, this included $16 million of investment in SEMOA-1 and Alzheimer's diagnostics, up $7 million from the prior year. Excluding these investments, we've made real progress towards our goal of achieving profitability through tight execution in our core business, which is allowing us to continue to make these strategic investments.
Speaker Change: We are making an update to the non-GAAP financial measures that we report on a quarterly basis.
Speaker Change: As we add acquisitions to our portfolio, we are adding adjusted EBITDA and adjusted EBITDA margin as new metrics.
Speaker Change: Please refer to our earnings release and page 13 of the accompanying presentation for the definition of these metrics.
Speaker Change: Our adjusted EBITDA was negative $23 6 million in 2024 as compared to negative $19 million in 2023.
Speaker Change: As noted before this included $16 million of investment in small London as harmless diagnostics up $7 million from the prior year exclude.
Speaker Change: Excluding these investments we've made real progress towards our goal of achieving profitability.
Speaker Change: Great execution in our core business, which is allowing us to continue to make these strategic investments.
Vandana Sriram: Turning now to guidance for the full year 2025. We currently expect to report revenues in a range of $140 to $146 million, which represents growth of 2 to 6%. This excludes revenue from Lucent Diagnostics Test. Masoud touched on some of the market volatility that we're observing in the near term. While we have minimal direct exposure to NIH spending, about 20% to 25% of our annual revenues are tied to U.S. academic customers. We have assumed that revenues related to U.S. academic customers will be down 10% in 2025, representing a year-over-year headwind of approximately 250 basis points.
Speaker Change: Turning now to guidance for the full year 2025.
Speaker Change: We currently expect to report revenues in a range of $140 million to $146 million, which represents growth of two 6%.
Speaker Change: This excludes revenue from loosens diagnostics testing.
Speaker Change: Matthew touched on some of the market volatility that we're observing in the near term.
Speaker Change: While we have minimal direct exposure to NIH spending about 20% to 25% of our annual revenues are tied to U S academic customers.
Speaker Change: We have assumed that revenues related to U S academic customers will be down 10% in 2025, representing a year over year headwind of approximately 250 basis points.
Vandana Sriram: Additionally, our accelerator lab, which is coming off a two-year CAGR of 27%, is expected to have a slower start to 2025, as we see a lower number of large pharma projects in the first half of 2025. Our accelerator pipeline remains strong and we expect our accelerator business will pick up pace in the second half of the year. From a revenue timing perspective, we expect the first half to be flat to slightly down year over year and ramping in the second half. We expect our first quarter revenue to be down 10 to 15 percent, driven by the near-term impact of the U.S.
Speaker Change: Additionally, our accelerator lab, which is coming off of a two year CAGR of 27% is expected to have a slower start to 2025, and we see a lower number of large pharma projects in the first half of 2025.
Speaker Change: Our accelerated pipeline remains strong and we expect our accelerator business will pick up pace in the second half of the year.
Speaker Change: From a revenue timing perspective, we expect the first half to be flat to slightly down year over year and ramping in the second half.
Speaker Change: We expect our first quarter revenue to be down 10% to 15% driven by the near term impact of the U S academic market and the timing of certain accelerated project.
Vandana Sriram: academic market and the timing of certain accelerator projects. Moving on to gross margin for the year, we expect GAAP gross margin to be in the range of 59 to 63% and non-GAAP gross margin in the range of 53 to 57%. And finally, we expect cash usage from our operations to be $35 to $45 million. This includes approximately $30 million of investment in diagnostics and small ones. In terms of allocating capital to deals, we expect to pay $20 million for the upfront and technical milestones related to emissions. We will also incur costs related to the ACOIA acquisition, which we will identify separately as those costs are incurred.
Speaker Change: Moving on to gross margin for the year.
Speaker Change: Expect GAAP gross margin to be in the range of 59% to 63% and non-GAAP gross margin in the range of 53% to 57%.
Speaker Change: And finally, we expect cash usage from our operations to be $35 million to $45 million. This includes approximately $30 million of investment in diagnostics and small one.
Speaker Change: In terms of allocating capital to deal, we expect it to be $20 million for the upfront and technical milestones related to emission.
Speaker Change: We will also incur costs related to the <unk> acquisition, which we will identify separately as those costs are incurred.
Vandana Sriram: We also reiterate our prior comments around achieving REO cash flow breakeven in the $170-$190 million revenue range, excluding diagnostics and vet. With expected investments of $15 to $20 million annually on diagnostics, we expect that Quanterix will achieve cash flow break-even in 2027 or 2028.
Speaker Change: We also reiterate our prior comments around achieving cash flow breakeven in the $1 $70 million to $190 million revenue range, excluding diagnostics investment.
Speaker Change: With expected investments of $15 million to $20 million annually on diagnostics, we expect that <unk> will achieve cash flow breakeven in 2027 or 2028.
Vandana Sriram: The integration of ACOYA and the realization of 40 million of synergies expedites that timeframe to 2026.
Speaker Change: The integration of Korea, and the realization of 40 million of synergies expedites that timeframe to 2026.
Masoud Toloue: I will now turn it back over to Masoud. Thank you, Vandana. Over the past two years, Quanterix has demonstrated strong operational performance, building the base. We are executing a three-year strategic plan centered around menu, adjacencies, and diagnostics that will expand the adoption of our ultra-sensitive SEMO platform, significantly growing our addressable market. And in doing so, we have outlined an accelerated path to scale and profitability.
Mitchell: I will now turn it back over to Mitchell.
Mitchell: Thank you bond at all.
Speaker Change: Over the past two years <unk> has demonstrated strong operational performance building debase.
Speaker Change: We are executing a three year strategic plan centered around menu.
Speaker Change: <unk> and diagnostics that will expand the adoption of our ultra sensitive similar platform.
Speaker Change: Significantly growing our addressable market.
Speaker Change: And in doing so we have outlined an accelerated path to scale and profitability.
Kathleen: Operator. Let's start the question. Thank you.
Speaker Change: Operator.
Speaker Change: Let's start the questions.
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Thank you we will now begin the question and answer session. If you have dialed in we would like to ask a question simply press star one on your telephone keypad to raise your hand and joined the queue.
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Matt Sykes: Your first question comes from the line of Matt Sykes of Goldman Sachs, please go ahead. Thank you, and thanks for taking my questions this afternoon. Maybe my first question, you outlined sort of the impact to NIH and academic government, which I understand.
Speaker Change: Your first question comes from the line of Matt Sykes of Goldman Sachs. Please go ahead.
Matt Sykes: Thank you and thanks for taking my questions. This afternoon maybe.
Speaker Change: Maybe my first question.
Speaker Change: You outlined sort of the impact to NIH in academic government, which I understand I guess I'm just wondering in terms of the cadence over the year given the guide you had for Q1 is pretty steep and it seems reliance upon some of these large pharma contracts coming back in the second half an accelerator lab I guess.
Masoud Toloue: I guess I'm just wondering in terms of the cadence over the year, given the guide you had for Q1 is pretty steep, and it seems reliant upon some of these large pharma contracts coming back in the second half in Accelerator Lab. I guess one, why were they delayed in the first half? Is it a timing issue? Is it a demand issue?
Speaker Change: One why were they delayed in the first half is that a timing issue as a demand issue and two what gives you confidence will come back in the second half to meet that full year guide.
Masoud Toloue: And two, what gives you confidence they'll come back in the second half to meet that full-year guide? Yeah, hey Matt. So yeah, I think when you look at Accelerator, first you have to take a look at the strong performance over the last year. Accelerator grew for us 30%, 37% year-on-year, strong two-year CAGR as well. So it's, you know, certainly performed for Quanterix. When you look at some of the increasing size of projects that we got towards the back half of 24, this became, you know, we're talking about projects in the million-dollar range, and it became partly a timing issue where we're, you know, expecting to see some of these larger projects materialize more on the back half.
Speaker Change: Okay.
Speaker Change: Yeah, Hey, Matt So I think when you look at accelerated first you have to take a look at the strong performance over the last year accelerated grew for us.
Speaker Change: Percent, 37%.
Speaker Change: Year on year strong two year CAGR as well.
Speaker Change: So.
Certainly performed for.
Speaker Change: <unk> when you look at some of the <unk>.
Speaker Change: Increasing the size of projects that we got towards the back half of 'twenty for this became we're talking about projects and the $1 million range. Then it became partly a timing.
Speaker Change: Issue, where we're expecting to see some of these larger projects materialize more on the on the back half.
Matt Sykes: We still have high confidence in what we're seeing with Accelerator. The diversity of customers that we see in the pipeline is even better than last year, and, and, you know, the word is getting out there that we can deliver excellent results without, you know, in a CapEx-constrained environment. So overall, those are the reasons that give us, you know, a more bullish view that Accelerator continues to deliver for Quanterix. Got it. Thank you for that, Masoud.
Speaker Change: We still have high confidence in what we're seeing with accelerator the diversity.
Speaker Change: Customers that we see in the pipeline is even better than last year.
Speaker Change: And the word is getting out there that we can deliver excellent results without.
Speaker Change: And our Capex constrained environment. So overall those are the reasons that give us.
Speaker Change: More bullish view that accelerated continues to deliver frequent eric's.
Speaker Change: Got it. Thank you for that Masoud and then just as my follow up you mentioned I think it was 10 hospitals and labs that you've kind of got in the validation phase right. Now are those sort of signed contracts that you've got or are those could those slip into further quarters in and if not like when do you expect those to be.
Masoud Toloue: And then just as my follow up, you mentioned, I think it was 10 hospitals and labs that you've got in the validation phase right now. Are those sort of signed contracts that you've got? Or are those, you know, could those slip, you know, into further quarters? And if not, like, when do you expect those to be contributing to revenue over the course of this year? Yeah, we expect of the, you know, we have 10 in validation. Some of them are actively in contract phrase, and some of them are waiting for validation to be complete before we sign some of these contracts.
Speaker Change: Contributing to revenue over the course of this year.
Speaker Change: Yes, we expect that.
Speaker Change: We have 10 and validation some of them are actively in contract phase and some of them are waiting for validation to be complete before we signed some of these contracts. So I expect.
Masoud Toloue: So, we expect, you know, some of this to contribute to some 25 revenue over the period, but we haven't provided any sort of breakdown as to how many will, you know, provide revenue in Q1 versus Q2 or subsequent quarters. But I can say that the pipeline looks great. Folks are signing up to use the Quanterix test because of the high sensitivity. We provide a result for all patients, not, you know, a subset of patients based on our sensitivity and the multiplex test has garnered a lot of excitement. So, you know, I think we have 10 right now that are validating, and I would be surprised if we didn't increase that number as we had, you know, throughout the rest of the year.
Speaker Change: Some of this to contribute to some 25 revenue.
Speaker Change: Over the period, but we haven't provided any sort of breakdown as to how many will provide revenue in Q1 versus Q2 or subsequent quarters, but I can say that the pipeline looks great.
Speaker Change: Folks are signing up to use the <unk> test because of the high sensitivity we provided results for all patients not.
Speaker Change: A subset of patients based on our sensitivity and the <unk>.
Speaker Change: Multiplex test.
Speaker Change: Garnered a lot of excitement. So I think we have 10 right now that are validating and I would I would.
Speaker Change: Would be surprised if we did an increase that number as we had.
Speaker Change: Throughout the rest of the year.
Masoud Toloue: Got it.
Masoud Toloue: Thank you.
Speaker Change: Got it thank you.
Kyle Mikson: Your next question comes from the line of Kyle Mikson of Catacord. Please go ahead. Hey, guys, thanks for the questions.
Speaker Change: Your next question comes from the line of Kyle Mixon of Canaccord. Please go ahead.
Kyle Mixon: Hey, guys. Thanks for the questions.
Kyle Mikson: I would love to just ask about the merger. Stock has dropped significantly since the announcement, presumably due to the negative sentiment around the deal, maybe some of the NIH and macro stuff as well. What's the company's response to that? Like what are investors missing?
Kyle Mixon: I would love to just ask about the merger so stock has dropped significantly since the announcement, presumably due to the negative sentiment around the deal maybe some of the NIH and macro stuff as well, what's the company's response to that like what are investors missing and then how has the board's view of the merger changed at all in light of the reaction.
Masoud Toloue: And then how has the board's view of the merger changed at all in light of the reaction? Hi, Kyle. Yeah, so two things. One, you know, clearly, we're in a NIH pressured environment. And I think, you know, majority of the pressure you see, you know, on Quanterix or other companies is, you know, exactly, hey, tools are indexed to academia, and there tends to be or looks like some paralysis in the market on spending in academia. And I think that's what you're seeing across the board, you know, versus sentiment on the deal. We're very excited about the deal.
Kyle Mixon: Yes, so two things one.
Kyle Mixon: Clearly, we're in a NIH pressured environment and I think a majority of the pressure you see on <unk>.
Kyle Mixon: <unk> or other companies.
Kyle Mixon: Xactly Hay tools.
Kyle Mixon: Our index to academia and tends.
Kyle Mixon: <unk> tends to be or it looks like some paralysis in the market on.
Kyle Mixon: Spending in academia, and I think thats, what youre seeing across the board.
Kyle Mixon: Versus the sentiment on the deal we're very excited about the deal this is a value creating opportunity.
Masoud Toloue: This is a value creating opportunity, you know, for the company. I think you look at the ECOIA, you know, two words, I'd say, reoccurring revenues, you know, we looked at a couple years ago, all tissue and spatial platforms. Aquoia was number one, has the highest throughput instrument platform, largest footprint. And when you're looking at an environment where there's capital constraint, you have to go to recurring revenues, as we have in our consumable base at Quanterix, as you have in services. So we put these two together and we see a real opportunity that one and one is four and not two.
Kyle Mixon: For the company I think you look at.
Kyle Mixon: The choir.
Kyle Mixon: Two words I would say reoccurring revenues when we looked at a couple of years ago, all tissue and special platforms.
Kyle Mixon: Korea was number one has the highest throughput.
Kyle Mixon: Instrument platform largest footprint and when Youre looking at a environment, where there is capital constrained you have to go to a recurring revenues as we have in our consumable base at <unk> as you have in services. So we put.
Kyle Mixon: These two together and we see a real opportunity that one and one is for.
Kyle Mixon: And not to and that's why we think that this is the right thing for the company and the timing is.
Kyle Mikson: And that's we think that this is the right thing for the company. And the timing is going to be something that we're going to be able to not only combine and synergize, but it's going to be accelerating for us from a scale and profitability standpoint. All right, got it. Thanks for that.
Kyle Mixon: Going to be something that we're going to.
Kyle Mixon: Be able to not only combine and synergize, but it's going to be accelerating for us from a scale and profitability standpoint.
Kyle Mixon: Alright got it thanks for that and then for Europe.
Vandana Sriram: And then for you, Ravanta, it sounded like the diagnostic enablement revenue in 2024 was $6 million for the year. Could you just confirm then how that trended throughout the year? And then is that, you know, the DX revenue to your, I guess, partners, is that included in the 2025 guidance as it stands today, or is that kind of incremental? Yeah, I can take that. Yeah, confirming that six million is the revenue that we generated from our diagnostics enablement partners. We started to call that out from the second quarter onwards. And, you know, we've had a steady cadence of anywhere between one to two and a half million each quarter through 2024.
Kyle Mixon: It sounded like the diagnostic enabling revenue in in <unk>.
Kyle Mixon: 24 was $6 million for the year could you just confirm that and how that trended throughout the year and then does that.
Kyle Mixon: The Dx revenue to your partners is that included in the.
Kyle Mixon: <unk> guidance as it stands today or is that kind of incremental.
Kyle Mixon: Yes, I can take that yes, confirming that 6 million is the revenue that we generated from a diagnostics enablement partners.
Kyle Mixon: We've started to call that out from the second quarter onwards, but we've had a steady cadence of anywhere between one to two and a half million each quarter through 2024.
Vandana Sriram: That is, you know, the sales to diagnostics partners is incorporated in our guide and we would expect similar revenue amounts as we start to add additional partners. What's not in our guide is direct testing on the Lucent side, which again, you know, as the market evolves, we'll provide more information.
Kyle Mixon: That is the sale to diagnostics partners is incorporated in our guide and we would expect a similar revenue amounts as we start to add additional partners. What is not in our guide is direct testing on the Lucent site, which again as the market evolves the to provide more information on.
Vandana Sriram: Awesome.
Masoud Toloue: And on a related note, could you talk about the Samoa One launch and how that could impact the results by, you know, end market and, again, let the cadence of you guys academic kind of, you know, clears up clears up a little bit. Yeah, so we expect CYM01 to launch towards the end of the year in 2025, so not a super large contributor, but very excited about how this expands the addressable market specifically around immunology. And so, Kyle, you know, we've been talking about this platform and our view that with our ultra sensitive ability to detect these protein biomarkers in blood, we're now 70 plus percent in neurology and we want to expand the applicability of this platform to immunology and oncology.
Kyle Mixon: Awesome.
Kyle Mixon: Could you talk about the <unk> launch and how that could impact the results by end market.
Kyle Mixon: Again, what the cadence of yes, academic kind of clears up clears up a little bit.
Kyle Mixon: Yes, so we expect.
Kyle Mixon: Similar one to launch towards the end of the year.
Kyle Mixon: In 2025, so not a super large contributor.
Kyle Mixon: But.
Kyle Mixon: Very excited about how this expands the addressable market specifically around immunology and.
Kyle Mixon: So we've been talking about.
Kyle Mixon: This platform in our view that with our ultra sensitive ability to detect these protein biomarkers in blood.
Kyle Mixon: We're now <unk>.
Kyle Mixon: 70, plus percent of neurology and we want to expand.
Kyle Mixon: The applicability of this platform to immunology and oncology that grows our addressable market and by adding additional plex with similar one we're going to be able to unlock some additional market opportunity. So super excited about.
Masoud Toloue: That grows our addressable market and by adding additional PLEX with CYM01, we're going to be able to unlock some additional market opportunity. So super excited about the platform. We should have more information on launch dates and additional specifications as we head towards the back half. And yeah, I think this is a super critical time for Quanterix and important as we really expand Samoa, not just the specialty neuro labs, but to all labs. Yeah, and from a guidance perspective, you know, we expect the program, the instrument to launch towards the end of the year. So the contribution for 2025 is relatively modest.
Kyle Mixon: About the platform, we should have more information on launch dates and additional specifications as we head towards the back half.
Kyle Mixon: And yes.
Kyle Mixon: I think this is a super critical time for <unk> and important as we.
Kyle Mixon: Really expand Samoa, not just a specialty neuro labs, but to all labs.
Kyle Mixon: And from a guidance perspective.
Kyle Mixon: The.
Kyle Mixon: Instrumental launch towards the end of the yard so the contribution for 2025, it's relatively modest but as we look to 2026 and beyond do you see this as a key growth driver.
Masoud Toloue: But as we look to 2026 and beyond, we see this as a key growth driver.
Puneet Souda: Your next question comes from the line of Puneet Souda of Leering Partners. Please go ahead. Hi, guys. A couple of questions here. Maybe Masoud would love to understand, I mean, you're guiding more than $12 million below the street number, which one could argue was already lowered from the NIH IDC impact and other concerns in the market. You know, given the uncertainty in the market, could you elaborate, you know, how are you thinking about the 2Q and 3Q recovery? Because a lot of that is still uncertain across the sector.
Speaker Change: Your next question comes from the line of <unk> <unk> of Leerink partners. Please go ahead.
Speaker Change: Yes, hi, guys couple of questions here.
Kyle Mixon: Maybe.
Kyle Mixon: <unk> would love to understand I mean, you're guiding.
Kyle Mixon: More than 10 minutes, but $12 million below the street number which one could argue was already lowered from the NIH IDC impact and other concerns in the market.
Kyle Mixon: Given the uncertainty in the market, but could you elaborate.
Kyle Mixon: How are you thinking about the <unk> and <unk> recovery because a lot of that is there's still uncertainty across the sector.
Masoud Toloue: You still have a sizable academic exposure, so just how do you get confidence on that to get to the $140 to $146 million guide for the year? Yeah, so first, I would take a look at, you know, that Quanterix's performance over the last year. In a difficult capital environment, Quanterix continues to find ways to grow. And what we did was last year, we invested in our accelerator capacity, that accelerator grew 37% for us, we ended up with double-digit growth, as we reported, you know, for full year 24. I don't think there was another tools player that grew at all last year.
Kyle Mixon: You still have a sizable academic exposure so just.
How do you get confidence on that too.
Kyle Mixon: To get to the $140 million to $146 million guide for the year.
Kyle Mixon: Yes, so first I would take a look at.
The context is performance over the last year.
Kyle Mixon: In a difficult capital environment.
Kyle Mixon: <unk> continues to find ways to grow and what we did was last year.
Kyle Mixon: We invested in our accelerator capacity that accelerator grew 37% for US we ended up with double digit growth as we reported for full year 'twenty four I don't think there was another tools player that grew at all last year.
Masoud Toloue: And so, you know, Quanterix, you know, definitely grew double digits, and that was great success. This year, I think that you look at sort of, you know, growth, you know, we're going to continue to grow. I think what you're seeing in the guide is that there's a lot of confusion and, you know, some paralysis in the academic market. I want to point out that we think it's just that, paralysis. If you sort of look at NIH, and the cuts to indirect, folks don't use indirect budget to buy our platforms or systems. That's direct budget. And so, you know, ultimately, I think this is more of a transient thing.
Kyle Mixon: No.
Kyle Mixon: Definitely.
Kyle Mixon: Grew double digits and that was great success there.
Kyle Mixon: This year I think that when you look at sort of growth, we're going to continue to grow.
Kyle Mixon: I think what Youre seeing in the guide is that there is a lot of confusion in some paralysis in the academic market.
Kyle Mixon: I want to point out that we think is just that paralysis. If you sort of look at NIH and the cuts to indirect.
Kyle Mixon: Folks don't use indirect budget to buy our platforms our systems.
Kyle Mixon: Direct budget and so.
Kyle Mixon: Ultimately I think this is more of a transient thing I don't think where our exposure long term is going to be something that.
Masoud Toloue: I don't think where our exposure long term is going to be, you know, something that is going to affect us. But that being said, you know, there's some sort of, you know, paralysis whenever there's indecision and, you know, you know, bureaucratic systems that are making decisions. And so we do have backed all of the academic pressure into the guide for the year. If academic funding is unlocked earlier, that'd be an upside to what we're reporting. If some of the indirect budget cuts were moved to direct, which is where folks use our, you know, folks use that, that's the budget people use to buy our systems. That would be upside to what we're looking at here in the guide.
Kyle Mixon: Is it going to affect us, but that being said there is some sort of parallel assess whenever theres indecision.
Kyle Mixon: Bureaucratic systems, they're making decisions. So we do have a baked all of the academic pressure into the guide.
Kyle Mixon: For the year.
Kyle Mixon: If academic funding is unlocked earlier that would be an upside.
Kyle Mixon: To what we're reporting if some of the indirect budget cuts.
Kyle Mixon: Move to direct which is where folks who use our.
Kyle Mixon: Folks use the budget people used to buy our systems that would be upside to what we're looking at here in the guide.
Masoud Toloue: Capital improvement would be upside and obviously, in what we're reporting, it doesn't include any sort of DX testing ramp.
Kyle Mixon: Capital improvement would be upside and obviously.
Kyle Mixon: And what we're reporting it doesn't include any sort of Dx testing ramp.
Puneet Souda: Okay, that's helpful. And then maybe let me ask it a different way. I mean, this is really the number one question here. And I think it's even more relevant today than early January when you announced the deal. You know, I appreciate the TAM estimates that you were putting out, but you know, a lot has happened in the tools since January 9th or 10th when you announced this deal, not just macro uncertainty and IHIDC cuts. There have been significant material impact across the sector and valuations. So just given all of that backdrop and the uncertainty, which you're already citing in your own guidance now, which is low, you know, lower versus the street, I guess, simply put, you know, why do you continue to value Akoya the same as you did, you know, in early January?
Kyle Mixon: Okay.
Kyle Mixon: And then maybe let me ask it a different way I mean this is really the number one question here and I think it's even more relevant today than early January when you announced the deal.
Kyle Mixon: I appreciate that.
<unk> estimates that youre, putting out but.
Kyle Mixon: A lot has happened in the tools since January 9th or 10th when you announced this deal not just macro uncertainty.
Kyle Mixon: IDC cuts.
Kyle Mixon: There've been significant material impact across the sector and valuations.
Kyle Mixon: Just given all of that backdrop and uncertainty, but youre already citing in your own guidance now which is low.
Kyle Mixon: Lowered versus the street.
Kyle Mixon: I guess simply put why do you continue to value our clear the same as you did.
Masoud Toloue: We really appreciate more on that.
In early January.
Kyle Mixon: Really appreciate it more on that thank you.
Masoud Toloue: Thank you. You know, going back to the three key reasons why we think this makes sense, you know, as you alluded, we're increasing our addressable market, you know, by combining us, number one, in blood with ECOIA, number one, in tissue, we think that that's going to unlock additional markets for us and get our platform and our systems and additional labs. Second, this $40 million in cost synergies, you know, we talked in the prepared remarks that, you know, this is largely de-risked, you know, there'll be operational and run rate by 2026. And then finally, you know, scale and profitability, the transaction is creating a new path for us.
Stephanie: Stephanie so.
Kyle Mixon: One.
Kyle Mixon: As I've mentioned earlier, we look at.
Kyle Mixon: Not we make long term value decisions.
Kyle Mixon: Not on a short term swings in market demand.
Speaker Change: We believe in the short mid and long term the market for acquirers products, particularly.
Particularly the interface with our some of our products are going to deliver compounded returns.
Speaker Change: Going back to the three key reasons why we think this makes sense.
Speaker Change: You alluded.
Speaker Change: Our addressable market by combining us number one in blood with a clear number one in tissue, we think that that.
Speaker Change: Mark additional markets for us and get our platform and our systems and additional labs.
Speaker Change: This $40 million in cost synergies.
Speaker Change: We've talked in the prepared remarks that this is largely derisked there'll be operational run rate by 2026.
Speaker Change: And then finally scale and profitability the transaction is creating a new path for us.
Masoud Toloue: We're going from a company that's, you know, going to be in the sub-billion dollar range and we have a goal to get into the billion dollar range, you know, five years post-close. So by, you know, and profitability is a key point of that scale and profitability. We'll be able to get cash flow positive in 2026 earlier than we would had we not done the transaction. So you look at, you know, the value creation opportunity here and you pull up the aperture and you look at the whole opportunity and you say this is a value creating event for the company, for investors, and ultimately for customers.
Speaker Change: We're going from a company.
Speaker Change: That's going to be in the sub $1 billion range and we have a goal to get to $1 billion range five years post close so bye.
Speaker Change: And profitability is a key point of that scale and profitability will be able to get cash flow positive in 2026.
Speaker Change: Earlier than we would have had we not done the transaction. So you look at the.
Speaker Change: The value creation opportunity here.
Speaker Change: And you pull up the aperture and you look at the whole opportunity and you say this is a value creating event.
Speaker Change: For the company for investors and ultimately for our customers.
Masoud Toloue: So, you know, we continue to be enthusiastic and look forward to closing and bringing the two companies together.
Speaker Change: So we continue to be enthusiastic.
Speaker Change: And look forward to.
Speaker Change: Clothing, and bringing the two companies together.
Dan Brennan: Your next question comes from the line of Dan Brennan of TD Common, your line is now open. Great. Thanks. Thanks for the questions.
Speaker Change: Your next question comes from the line of Dan Brennan of PD. Colin Your line is now open.
Dan Brennan: Great. Thanks, Thanks for the questions maybe just on the first quarter guide sorry can you I don't know if you mentioned it but in terms of the revenue decline that youre baking in can you just unpack kind of what youre, assuming for the academic and government customer base.
Vandana Sriram: Maybe just on the first quarter guide, sorry, can you, I don't know if you mentioned it, but in terms of the revenue decline that you're baking in, can you just unpack kind of what you're assuming for the academic and government customer base? And I know you talked a little bit about Accelerator, but just kind of wondering if you can kind of walk through a little bit like what's implied in 1Q for that, you know, for that particular customer base. Sure, Dan. I'll take this. So it's really the two factors that you mentioned. On the academic side, just like everybody else, we're seeing a lack of decision-making and some of the paralysis that Masoud mentioned.
Speaker Change: I know you talked a little bit about accelerator, but just kind of wondering if you can kind of walk through a little bit like what's implied in <unk> for that.
Speaker Change: For that particular customer base.
Jordan: Jordan I think so.
Jordan: So it's really the two factors that you mentioned on the academic side, just like everybody else, we're seeing a lack of decision making in some of the paralysis segments. We've mentioned so with that in mind, we've taken our Q1 academic number down quite substantially and then in addition to that on the accelerator side as you know we don't have.
Vandana Sriram: So with that in mind, we've taken our Q1 academic number down quite substantially. And then in addition to that, on the accelerator side, as you know, we don't have the Lilly collaboration agreement anymore. That's about a headwind of $1.5 million on a year-over-year basis. But we also have a handful of large-ticket pharma projects that are not going to hit in the first quarter but are scheduled for later in the year.
Jordan: The Lilly collaboration agreement anymore, that's about a headwind of $1 million five on a year over year basis, but we also have a handful of large ticket pharma projects that I'm not going to hit in the first quarter, but ask scheduled for later in the yard. So those are the two things that is baked into the guide.
Vandana Sriram: So those are the two things that we've baked into the guide. Got it.
Dan Brennan: Maybe just on the, on the equity transaction, just walk us through again, what needs to happen on the closing process. And then just, just a follow up Masoud, I know there's been a few questions asked, but, you know, there's some pushback in the market about, you know, the equity. While combined, you're very confident in kind of the path forward for an attractive revenue and synergy target. But how would you contest kind of the valuation that you're ascribing to ECOIA?
Jordan: Got it maybe just on the on the equation transaction just walk us through again, what needs to happen on the closing process and then just.
Jordan: Just a follow up Ms Sue and I know there's been a few question to ask but there is some pushback in the market about the equation.
Jordan: Yeah.
Jordan: While combined Youre very confident in kind of the path forward for an attractive revenue and synergy target, but how would you can test kind of the valuation that you are ascribing to acquire.
Masoud Toloue: Hey, Dan, you cut off on your last question. Can you repeat that? Yes. Yeah, yeah. Yeah. Sorry. I was just running kind of the closing process. from here, and then secondarily, in terms of the valuation that's being ascribed to Equoia, there's some pushback in the market that, you know, you're awarding them too much given their debt and burn, just kind of wondering how you would answer that. Yeah, Dan, you cut off again, but I think I got the scope of your question. Please let me know if I missed anything. So, you know, one, we're planning on closing in Q2, and so both QOIA and Quanterix will have a shareholder vote.
Dan Brennan: Hey, Dan you cut off on your last question could you repeat that yes, yes, yes, sorry, I was just wondering kind of the closing process.
Jordan: Okay.
Jordan: From here and then secondarily.
Speaker Change: In terms of the valuation thats being ascribed to acquire there's some pushback in the market that you're awarding them too much given their debt and burn just kind of wondering how you would answer that.
Dan Brennan: Yes, Dan you cut off again, but I think I got the.
Dan Brennan: Scope of your question please.
Speaker Change: Let me know if I Miss anything so.
Speaker Change: <unk>.
Speaker Change: We're.
Speaker Change: Planning on closing.
Speaker Change: In Q2.
Speaker Change: And so both <unk> and <unk> will have a shareholder vote.
Masoud Toloue: And then at that point, we expect after the shareholder vote, a successful shareholder vote, we begin working towards many of the $40 million in operating synergies that we filled out. On the, you know, on the value, we continue to believe that if you look at precedent transactions, that, you know, based on where Akoya is, that this was, you know, an attractive opportunity to both our shareholders and Akoya shareholders. On the larger opportunity, I think one key important point to recognize in sort of this year and this environment, it comes down to reoccurring revenue. You know, Quanterix has developed a core focus and competency on two things, increasing reoccurring revenues through assays and services.
Speaker Change: And then at that point, we expect.
Speaker Change: After the shareholder vote, a successful shareholder vote, we began working towards many of the $40 million in operating synergies that we filled out.
Speaker Change: On the <unk>.
Speaker Change: The value.
Speaker Change: I believe that if you look at precedent transactions.
Speaker Change: That's based on where our courtyard is that this was.
Speaker Change: The attractive opportunity to both our shareholders and shareholders.
Speaker Change: The larger opportunity I think one key important point.
Speaker Change: To recognize and sort of this year in this environment it comes onto reoccurring revenues.
Speaker Change: <unk> has developed a core focus and competency on two things increasing recurring revenues through assays and services. When you look at <unk> and the work. The team has done they have the highest throughput system and largest footprint in the market.
Masoud Toloue: When you look at ECOIA and the work the team has done, they have the highest throughput system and largest footprint in the market. So in a capital-constrained environment or an environment where there continues to be instrument pressure, you want to focus on those reoccurring revenues. We have a model that's worked. We plan on taking that model and deploying it to the combined company. And when we do that, and when we achieve the $40 million plus cost synergies, when we pull in our run rate to cash flow positive in 2026, we're growing, we have a faster path to profitability, and that's a value creator for our combined shareholder base.
Speaker Change: So in a capital constrained environment or an environment, where there continues to be instrument pressure.
Speaker Change: You want to focus on those reoccurring revenues, we have a model. That's worked we plan on taking that model and.
Speaker Change: Deploying it to the combined company.
And when we do that and when we achieve the $40 million plus cost synergies when we pull in our run rate to cash flow positive in 2026.
Speaker Change: We're growing where we're have a.
Speaker Change: Faster path to profitability and Thats a value creator for our combined shareholder base. So I think when you look at sort of a point in time I think you had a question on evaluation if.
Masoud Toloue: So, you know, I think you look at sort of point in time, I think you had a question on valuation. If we looked at, you know, point in time valuations in our business and what we do, that would be, you know, fairly short-sighted. And we can't make decisions on, you know, one month or two months swings or value windows, and otherwise we'd be, you know, a trading company. We're, you know, generating value in developing a high-growth company, and we're excited about this transaction.
Speaker Change: If we looked at a point in time valuations.
Speaker Change: In our business and what we do and that would be fairly short sighted and we can make decisions on one month or two month swings or.
Speaker Change: Value windows and otherwise it would be a trading company.
Speaker Change: We're generating value.
Speaker Change: Developing a high growth company.
Speaker Change: And we're excited about this transaction.
Kathleen: Again, if you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: Again, if you would like to ask a question. Please press star one on your telephone keypad.
Sung Jee Nam: And your next question comes from the line of Soong Jee Nam of Scotiabank, please go ahead. Hi, thanks for taking the questions. I just have a few clarification questions. Just on Samoa-1, you touched on the market opportunities in immunology.
Speaker Change: And your next question comes from the line of assumed genome of Scotia Bank. Please go ahead.
Speaker Change: Hi, Thanks for taking the questions I just have a few clarification questions.
Speaker Change: Similar one you touched on the market opportunities.
Masoud Toloue: I was wondering if you think that the existing Samoa IHD users could potentially adopt Samoa-1 as well, or do you think this will potentially replace some of the Samoa-1 install base, you know, kind of trigger a replacement cycle of some sort? Yeah, that's a that's a great question. What we're our focus, Sanjeev, has been on SOMOA-1 is that, you know, as I said earlier, SOMOA in all labs, not just specialty neural labs. So, with SOMOA-1, and we've been very focused from an assay perspective on expanding into immunology and oncology applications. So, day one of our product launch, you're going to see immunology menu.
Speaker Change: In immunology.
Speaker Change: I was wondering if you think that the existing CMO HD users could potentially adopt similar one as well where do you think this will potentially replace some of the smaller one install base.
Speaker Change: Rigor and a replacement cycle of some sort.
Speaker Change: Yes, that's a great question.
Speaker Change: Our focus has been on somewhat of a one is that is it.
Speaker Change: As I said earlier, CMO and all labs, not just specialty neuro labs, so with similar one and we've been very focused from assay perspective on expanding into immunology and oncology applications. So day, one of our product launch youre.
Speaker Change: Youre going to see immunology menu.
Masoud Toloue: We're going to be expanding our addressable market by going after new customers in our immunology base. I'm going after both research, large pharma, and accelerator projects that need higher plex, they need greater sensitivity, and they need fast turnaround time. And so our focus has been this additional market versus a replacement cycle of the existing base. We believe that our existing base will continue based on the system that we currently have to deliver a neurology. And then there might be some overlap of some of our neuro customers needing some additional sensitivity for some of their applications, but it's largely the immunology and oncology where plex of more than four has been asked of us and we plan on delivering.
Speaker Change: I'm going to be expanding our.
Speaker Change: Our addressable market by going after new customers in our immunology base.
Speaker Change: Going after both research large pharma and accelerating projects.
Speaker Change: That need higher plex, they need greater sensitivity and they need fast turnaround time and so our.
Speaker Change: Our focus has been this.
Speaker Change: Additional market.
Speaker Change: Versus a replacement cycle of the existing base, we believe that our existing base will continue.
Speaker Change: Just on the system that we currently have to deliver in neurology.
Speaker Change: And then there might be some overlap.
Speaker Change: Some of our neuro customers needing.
Speaker Change: Some.
Speaker Change: Additional sensitivity for some other applications, but it's largely the immunology and oncology, where plex of of more than four.
Speaker Change: Has it been asked of us.
Speaker Change: And we plan on delivering.
Sung Jee Nam: That's right. Great.
Speaker Change: Gotcha great.
Vandana Sriram: What's your underlying assumption in terms of OUS or ex-US growth for the company this year? Last quarter, I think you touched on also the UltraDX NMPA approval in China and things like that. So kind of curious what you guys are seeing, you know, outside of the US, in Europe and Asia, PAC in general. Thank you. Yeah, outside of the U.S., our expectation is basically low double digit to high single digit growth. You know, we normally don't pair out Asia versus Europe separately, but our expectation would be all of those markets would grow somewhat aligned with what we expected in 2024.
Speaker Change: What's your underlying assumption in terms of Oh U S or ex U S growth for the company this year.
Speaker Change: Last quarter I think you touched on also the <unk> approval in China and things like that just kind of curious what you guys are seeing outside of the U S in Europe and Asia Pac in general Thank you.
Speaker Change: Yes outside of the U S. Our expectation is basically low double digit to high single digit growth.
Speaker Change: We normally don't bear out to Asia versus Europe separately, but our expectation would be all of those markets.
Speaker Change: Somewhat aligned with what we expected in 2024 against that the headwind really is the decline in the U S academic market and some of the U S pharma projects that.
Sung Jee Nam: Against that, the headwind really is the decline in the U.S. academic market and some of the U.S. pharma projects that have the timing slip that we talked about in Accelerator. Gotcha.
Speaker Change: Had the timing slipped I think talked about.
Speaker Change: Sure.
Masoud Toloue: And then if I could squeeze one more in, you talked about kind of the paralysis you're seeing in the academic segment in the U.S. I just wanted to clarify, are you actually seeing, are there anecdotes kind of that you're seeing on the ground or are these just kind of the assumptions based on what's happening? in the microenvironment. Yeah, what we're seeing, Sung Ji, is more, you know, some confusion in the academic market, on budgets, on timing, on hiring, on capital purchases. And, you know, obviously, there are, you know, some days you hear that things are moving forward, and some days it's, you know, a couple steps back.
Speaker Change: Gotcha, and then if I could squeeze one more in you talked about kind of the paralysis youre seeing in the academic segment in the U S. I just wanted to clarify are you actually seeing are there anecdotal just kind of what youre seeing on the ground or are these just kind of your assumptions based on what's happening.
Speaker Change: In the macro environment.
Speaker Change: Yes, we're seeing SMG is more.
Speaker Change: There's some confusion.
Speaker Change: In the academic market budged.
Speaker Change: Budgets on timing on hiring on capital purchases and.
Speaker Change: Obviously, there are some days you here that.
Speaker Change: Things are moving forward and some days, it's a couple of steps back.
Masoud Toloue: It's just a lot of confusion. We're seeing, you know, some of this with our own customers. We're seeing it with other customers in the broader market. But I just want to reemphasize that this is, we think, transient and longer term. Quanterix has a very strong and tested model around Accelerator, where we're going to continue our, you know, high value projects in clinical studies with pharma, additional clinical trial work that we expect will ramp more in the back half of the year. And, you know, on the academic side, we think that because we're more direct, as opposed to the indirect, there could be scenarios where additional funding goes to, you know, chronic disease, chronic disease areas, and, you know, Quanterix would be, you know, beneficiary of that.
Speaker Change: There's just a lot of confusion.
Speaker Change: Seeing some of this with our own customers, we're seeing yet.
Speaker Change: With other customers in the in the broader market, but I just want to reemphasize that this is we think transient.
Speaker Change: And longer term contracts has a very strong and tested model around the accelerator, we're going to continue our high value projects.
Speaker Change: Clinical studies with <unk>.
Speaker Change: Pharma additional clinical trial work that we expect.
Speaker Change: Ramp more in the back half of the year.
Speaker Change: And academic side, we think that because we're more direct as opposed to the indirect there could be scenarios, where additional funding goes to chronic disease chronic disease areas and.
Speaker Change: <unk> would be a beneficiary of that so.
Masoud Toloue: So, overall, I do think that this is transient based on some of the conversations we're having, and Quanterix is well positioned for, you know, continuing to grow as a company.
Speaker Change: Overall I do think that this is transient based on some of the conversations we're having and <unk> is well positioned for.
Speaker Change: Continuing to grow as a company.
Kathleen: That's all the allotted questions we have for today. Thank you everyone for joining. You may now disconnect.
Speaker Change: That's all a lot of questions. We have for today. Thank you everyone for joining you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
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