Q2 2025 Quantum-Si Inc Earnings Call
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Welcome to the quantum e, EI Q2 earnings call.
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Good afternoon, everyone. And thank you for joining us earlier today. Quantum SI released Financial results for the second quarter ended, June 30th 2025.
A copy of the press release is available on the company's website.
Joining me today are Jeff Hawkins, our president and chief executive officer, as well as Jeff Kai's our Chief Financial Officer.
Before we begin, I would like to remind you, that management will be making certain forward-looking statements within the meaning of the federal Securities laws. These statements involve material 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 this section entitled forward-looking statements of our press release.
For a more complete list and description of risk factors please, see the company's filings made with the Securities and Exchange Commission.
This conference call contains time-sensitive information. That is accurate only, as of the live broadcast date today. August 5th 2025, except as required, by law. The company disclaims, any intention or obligation to update or revise, any forward-looking statements
During this call, we will also be referring to certain Financial measures that are not prepared in accordance with us. Generally accepted accounting principles or gaap.
A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the press release filed earlier today.
With that, let me turn the call over to Jeffrey Hawkins.
Good afternoon and thank you for joining us on today's call. We will provide a business update and review our operating results for the second quarter of 2025. After that, we will open the call for questions.
I will begin with a reminder of our 3 corporate priorities.
To accelerate commercial adoption to deliver on our Innovation roadmap and to preserve Financial strength.
Our first corporate priority is to accelerate commercial adoption.
The second quarter of 2025 marked. The First full quarter of activity with the NIH funding and indirect cost cap uncertainties in full effect.
During the quarter, we observed a near halt in capital purchases by us academic labs.
As a result revenue for the second quarter was 591,000.
This result was below our expectations, driven entirely by capital sales of new instruments.
on the positive side, consumable purchases in the quarter were slightly ahead of our expectations with customers across all market segments, performing well,
As communicated on our last earnings call. We believe that Pharma and biotech represent a good opportunity for continued growth. In terms of both new instrument sales and ongoing consumable sales.
During the second quarter, our commercial team executed on specific initiatives to increase our funnel of opportunities in these market segments.
I am pleased to report that we more than doubled our funnel of opportunities in pharma and biotech during the quarter, from approximately 30 at the end of Q1 to more than 60 at the end of Q2.
While we are pleased with these results, we are fully aware of the longer sales cycle associated with this market segment.
We also know that not everyone of these opportunities will result in a sale. But for those that do are experienced with customers in this market segment is that they are consistent buyers of consumables once operational with our technology.
During the quarter, we also spoke with several customers who have budget to spend on consumables but simply can't purchase an instrument at this time.
Strategically, our goal is to create a large installed base of customers who consistently purchase consumables and apply our technology in their day-to-day research.
We expect that the results of their research projects will also generate scientific Publications further validating the utility of our technology.
Based on this customer feedback, we believe that in the current environment, having a single instrument acquisition model via capital sales is constraining the number of users of our technology as well as the capture of consumable revenue.
To address the capital sales headwinds and given our favorable cost to produce the Platinum. Pro instrument, we have recently launched an expanded set of instrument acquisition options that allow customers to have our instrument in their lab.
Purchase and run consumables without having to find the capital dollars to acquire the instrument up front.
While we are still in the early days of offering, these new instrument acquisition options, we have already secured, our first few customers, using this approach and they have purchased consumables to begin using our technology in their research.
Are installed based not just as a revenue driver. But as a strategic mode, with every new lab that implements Platinum Pro, we expect to see increasing consumable sales, scientific validation and customer advocacy. The cumulative impact of this cycle is key to long-term value creation.
While the capital headwinds in the market are going to impact short-term commercial results, we are optimistic about the opportunity to continue to grow our customer base. Using a mix of instrument acquisition options, which in turn will drive more consumable revenue and generate more published evidence demonstrating the value of our technology.
Strategically a large installed base of active users is the key to long-term success. And we will take advantage of our favorable cost to produce Platinum Pro and our strong balance sheet to continue to execute on that installed base growth despite the Capital Market headwinds.
Furthermore, we remain confident in the long-term Market opportunity in proteomics and the technology roadmap. We are executing against to capitalize on that opportunity.
Our second priority is to deliver on our innovation roadmap.
We continue to make solid progress across all of our development programs, our version 4 sequencing kit is currently undergoing validation studies and we expect to launch the kit during the current quarter.
This kit will further increase proteome coverage via increased amino acid detection and the addition of a new enzyme that is engineered specifically to provide high-efficiency cutting of the amino acid directly preceding a proline.
In addition, as part of this version for sequencing kit launch, we also expect to release an expanded set of 24 bars, that will allow customers to increase the multiplexing level of their experiments. While maintaining the same level of analytical performance. They experience with the original set of 8, bar codes.
Turning now to library preparation, our version 3 Library preparation, kit remains on track for launch by the end of 2025.
The program continues to progress well, and the data supporting lowering the sample input quantity continues to show great promise.
At this stage in the program, we believe that we will be able to lower the sample. Input quantity by at least 100 fold as compared to our current Library prep kit.
This lower input concentration requirement is expected to allow our customers to process a broader range of biological samples and study biologically relevant proteins that are at a much lower concentration than our current library prep kit can accommodate.
When combined with the V4 sequencing kit, We Believe customers will experience a meaningful level of improvement in overall system performance and be able to pursue some of the more complex. Biological sample work that to date has been difficult to do with the existing kits.
Next, I would like to provide an update on the Proteus development program as a reminder produce incorporates a new instrument and consumable architecture that will offer significantly more reads per sample, more samples per run, and greater workflow automation than our current platforms.
To be clear, produce is not just an incremental improvement over Platinum Pro. It is expected to be a huge leap in capabilities and we believe it will be a multi-year growth driver for the company.
We are pleased to report that we remain on track to successfully perform protein sequencing on a prototype Proteus system by the end of 2025.
Hitting this milestone in 2025 sets us up well to deliver on the launch of Proteus in the second half of 2026.
In terms of interim, Milestones of the Proteus development program. We are pleased to share 2 important Milestones since our last call.
First during our first quarter 2025 earnings call, we communicated that we had completed, the development of a set of fluorescent, dyes capable of supporting the transfer of our current sequencing chemistry onto the Proteus platform.
Since our last call, we have been able to demonstrate an additional die and more importantly, when we look at this expanded die set in the context of the overall Optical performance, we are observing with this new system. We are confident that there is room to add, even more dyes as we seek to scale our recognizer set. From its current level to our end-state goal of covering all 20 amino acids.
Second, we completed feasibility of wafer, scale surface, chemistry processing, and have made that our standard process to produce, consumables to support the Proteus development program.
This is an important milestone as we look to the future, commercialization of Proteus, and scale up of chip production.
Complexity of developing such a process.
Demonstrating feasibility for wafer, scale processing. So early in the program is a significant accomplishment by our surface chemistry team and sets us up well for the remainder of the development program and for our future commercial production needs,
Finally, I would like to spend a few minutes. Updating you on 2 other exciting initiatives within our R&D organization.
The first is about our amino acid recognizer development program.
As part of our recognizer development program, we have designed and screened millions of candidates.
As part of that process, we have amassed what we believe may be the richest set of data in the industry about how mutations inserted into engineered proteins affect their binding to end-terminal amino acids, the kinetic properties of those binding interactions, binder specificity, stability, and many other features.
This proprietary data set presents, a significant opportunity to leverage state-of-the-art AI tools, trained on this proprietary database to design new amino acid, recognizers and accelerate the path to full proteom coverage.
We recently used this approach to complete our first AI based recognizer design achieving a binder that meets specifications within 1 design cycle.
By using AI to design initial clones. We eliminate combinatorial screening and move directly to Downstream assays. Thus significantly shortening, our timeline to produce candidate binders for testing and sequencing.
We look forward to sharing more about this approach and the impact, we believe it can have on the timing to achieve full protein coverage at our analyst day later this year.
Our second initiative is around post-transaction.
At our November 2024 investor and analyst day, our head of research Dr. Brian Reid, shared data about various applications of our single molecule kinetic detection technology.
1 of those applications was combining a pre-selection only cycle with a standard protein sequencing, run to provide sight specific peptide, linked, PTM detection, regardless of the location of the PTM.
We believe that the advantage of this approach is that it will allow Platinum Pro users to detect quantify and identify the sequence position of a given PTM providing data and insights far beyond those provided by current Technologies.
In addition, this combined approach can detect a PTM. That may be very deep into a peptide and would not otherwise be detected via a sequencing only approach today.
We are pleased to report that this combined method for PTM detection has met our internal technology feasibility thresholds and has been successfully transferred to our product development team to begin developing commercial kits.
Our initial discussions with customers about this approach have made it clear just how difficult this type of PTM analysis is using current technologies.
And how beneficial it would be to their research to have these kits and associated automated software tools available on a low-cost platform, like Platinum Pro.
We are excited about the potential to make PTM Discovery accessible to all researchers and expect to provide more updates on the timing of commercial release at our upcoming investor day.
Our third priority is to preserve our financial strengths.
While the capital headwinds in the market are going to impact short-term commercial results. We are optimistic about the opportunity to continue to grow our customer base using a mix of instrument acquisition options.
We firmly believe that a large installed base of active users is a strategic advantage that will create long-term value for our shareholders. And we are uniquely positioned to grow that installed base. Now, despite the market headwinds because of our strong balance sheet and the steps we have taken over the past 2 years to be in this position financially.
I'll now turn the call over to Jeff to review our financial results.
Thanks Jeff. Now, review the details of our operating results for the second quarter of 2025.
Revenues due to 2025 were $591,000, which consisted of revenue from our Platinum line of instruments, consumables, and related services.
Gross profit was 351,000 and gross. Margin was 59%.
As I said in the past, our gross margin percentage will be somewhat variable for the foreseeable future. As we work through our continued, commercialization efforts and may be impacted by the timing and makes of instruments versus consumable bales
Platinum line of instruments to this end. Our gross margin for Q2 2025 includes approximately a 13% benefit.
For inventory utilized during the quarter that was carried at low or low volume.
For the 6-month, in the June 30th, 2025 Revenue was 1.4 million. Gross profit was 837,000 and gross margin was 58%.
As Jeff mentioned earlier, our year-over-year Revenue was impacted in the second quarter by continued Capital Market evidence driven by uncertainty in the NIH funding.
Affecting the macro Market.
We were impacted partially in the first quarter by this concept, but in the second quarter, we held the bullet impact.
Turning to operating expenses, Gap total operating expenses for the second quarter of 2025 were $30.5 million compared to $26.8 million in the second quarter of 2024, while adjusted operating expenses were $23.8 million for the second quarter of 2025 compared to $24.4 million for the second quarter of 2024.
For the 6-month ended. June 30th, 2025 Gap. Total operating expenses were 56.1 million compared to 50.44 million in the same period in 2024 and adjusted operating expenses were 46.6 million.
Compared to 46.3 million for the same period in 2024.
The flat overall adjusted operating expense year-over-year. Continues to highlight our very tight cost controls. We have for the organization while still funding Innovation and significant development progress of our Proteus platform and other programs that did not exist in the same period in 2024.
Keeping our overall spin flat. We now have been possible without continued cost control measures and allocating our Capital to fund and accelerate the highest return projects for our shareholders.
Of note in our Gap, total operating expenses for the quarter is an expense of approximately 3.4 million that represents our net estimated expense and cash outlay. After we've seen of insurance proceeds, in relation to a preliminary settlement of the Delaware stockholder litigation that we initially disclosed in May 2024.
The final settlement associated, with this case, is subject to various approvals that we anticipate these to be completed in either Q4 of this year or q1 of 2026.
Next, our dividend and interesting comment in the second quarter of 2025 was 2.3 million compared to 2.9 Million in the Texas quarter of 2024.
4.9 million for the 6 months in the June 30th 2025 compared to 6.5 million in the same period in 2024.
Overall, this change is reflecting lower interest rates year-over-year as well as relative lower investment balances as of June 30th 2025. We had 214.2 million in cash, cash equivalents and investments in marketable securities.
That we continue to earn a great state return on.
As an update.
Track the changing landscape of terrorists on our business.
Potential customer purchases.
From an acquisition cost of our inventory standpoint.
We have seen some minor impacts but continue to believe that we will see no material impact. On our inventory, acquisition costs in the near term based on current information.
Much of our materials and inventory on hand. Now up to and through 1 year of consumption was required prior to any type of impacts limiting our near-term exposure, we continue to monitor this situation and are working on relative to mitigation strategies to limit our overall, exposure long term.
Regarding important, terrorists related to other countries, we sell into to date. We have not seen any impact and continue to believe. We will not have any impact based on scientific and medical devices being historically, Exempted from import tariffs
As Jeff mentioned earlier, an Evidence, in this quarter's results, the NIH funding impact on the overall Capital Market continues to create uncertainty for us and many other Capital devices manufacturers.
To this end, we have deployed several Capital acquisition models. That gets our Platinum Pro units in the hands of customers that don't have budget for Capital spins but do have budgets for consumable purchases.
Though these new models are in their early stages, we are optimistic about their impact and ability to drive consumable volume.
Having said that until we get more momentum on these new models, and
More clarity on the NIH funding environment.
As our new models, give online tone and we get more clarity around final NIH funding. We hope to provide more clarity to Future quarters.
Next, as we announced in early July, we priced a 50 billion registered direct offering that closed on July 8th.
This capital wave will be used for four development and commercialization activities and further strengthens our capital resources to execute on our long-term plans.
We have stated in the past that we're going to be realistic and our opportunistic and our Capital approach especially in the challenging markets that we and many of our peers have seen over the last several years.
For this offering, we saw an opportunity to bring more Capital into the company and a reasonable price. And we took advantage of it going forward, we'll continue to ensure the company is well positioned to take advantage of any appropriate Capital opportunity.
Regarding 2025 guidance we're revising our annual estimate for adjusted operating expenses from 103 million or less to 988 million or less and for total cash use, we're still expecting to utilize 95 million or less.
which now is inclusive in any cash payment in relation to the case I mentioned earlier, that was not previously included in our annual estimate,
Overall, these net improvements are based on more efficient and effective use of the funds that we have and overall efficiencies in our development projects while still maintaining our development delivery timelines.
And finally, as I mentioned earlier, we ended the quarter with cash and cash equivalents and Mark Club Securities at 214.2 million. We now anticipate that this balance along with the 50 million from the registered direct offering that we completed in July will provide Runway into the second quarter of 2028.
Now, I'll turn the call over to the operator, to open the line for questions.
Thank you.
At this time, we will conduct the question and answer session.
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Please stand by while we compile the Q&A roster.
Our first question is from Scott Henry with AGP. Your line is open.
Thank you, and good afternoon. Certainly, challenging times.
When we look think about the 600,000.
For, for 2 Q. You know, how much of that is overseas? How much or, or in Pharma biotech? I'm just trying to get an understanding of the size of the, the base Foundation, uh, of revenues before we go into into the NIH impacted markets.
Yes. So Scott, we we don't break out the distribution by Pharma biotech or, or, you know, a sort of a specific segment. But we we have historically said, that sort of giving guidance around what our, uh, installed base looks like and the the install base of the company sits right now at about 65% of it is outside the US and about 35% of that install base is here in the US and that and within any given region, it encompasses a sort of all the types of customers academics. Uh other industrial Pharma biotech Government research Labs. So um that that sort of the, the breakdown
Okay, and I guess just to, you know, get at the question in another way. I mean, do you think we're kind of, you know, is 500 to 600,000 is, is that sort of the bottom and we should start to grow out of that, particularly with the different model or, you know, how should we think about the rest of 2025 given, uh, these Dynamics?
Resides. But in the short term, you know, it doesn't sort of build on the revenue growth rate as fast as the capital sales. I think, you know, we're optimistic that this is, you know, the bottom and we're able to start building out of this. I just don't think it's going to be an instant, uh, Improvement uh, in in in Q3 simply. Because, you know, it takes a, you know, a good number of instruments out there producing consumable Revenue to really get the to get the lift. So, you know, maybe a little, um, you know, a little little lighter going into Q3 sort of, in terms of growth over Q2 and then, you know, hoping to see a better acceleration in the Q4 between just that larger install base and pull through. But also, you know, perhaps we'll see some pickup in capital in Q4. That's more cyclical in nature that we've seen sort of every year in the fourth quarter.
Okay, just the final follow-up and then I'll jump back into the queue. Could you just give us uh you know example of what a typical placement would look like under the new model? You know, are their minimums? I is is is it a lease type model? You know, how what does that look like uh as far as uh consumables and what we should expect from them?
Thank you. Yeah, thanks Scott. So we're offering uh several models so obviously a capital purchase is is 1 opportunity. Um a customer can do a more classic reagent rental where they sign up for a longer term contract that has minimums on the consumables and capture sort of the instrument Revenue over a period of time. We've made third-party leasing available um as well to customers. And then the the last 1 is what you were mentioning which is in select uh situations where we believe the consumable opportunity is attractive and the type of data and such that would get published, um, from that work. We could choose to place the machine. We would do that on a shorter term basis. So we have the ability to, um, you know, rotate those machines to other accounts, if we don't see the, the consumable revenue we want. Um, but if we do see it, you know,
You know, I think the the strategy is if the instrument is there and the people are, you know, customers are running it and using it and getting value out of it. Um, will you know for the ones that we place we should be able to convert some of those to Capital sales. Some of those may move into rentals or other models over time. Um but you know if we do place a machine we we have that ability if we don't see the the type of utilization we want to be able to move those machines to another, uh, sort of site.
your customer lab where where we believe that opportunity you know, is is in place
Okay, great. Thank you for taking the questions.
Thank you.
Our next question comes from pakula ramakant from hwc. Your line is open.
Thank you, this is right. Um, so Jeff
in, um,
With with the new acquisition um uh uh opportunities. That you, you're offering uh, to your current customers or to your potential customers.
Do you see an increase in in terms of leads? Um as compared to going the um the typical Capital sales?
And, uh, I'm just trying to ask a question because I want to see if that can help you increase your on your consumables.
Or your your it's too early to to call any sort of trend.
Yeah, RT. So it's obviously early in in the offering of these, I
What the way I, uh, would sort of tell you to think about it. And what we're seeing in the initial data is it's not that the number of leads
Sort of, in the top of the funnel is going up. I think it's more about the customers who had progressed through the, the sales cycle with us. They, they learned about the technology. They, they had deeper discussions with our sales, um, folks, or our application Specialists really had, uh, you know, an understanding of it, maybe they even performed an evaluation and, and had some interactions with our application development team. That's a part of our R&D group and they were ready to move forward and implement but the capital dollars got frozen or the capital dollars weren't there. So I think, what we've seen as we've turned this sort of these options on and let our sales force go and talk about it is the first uh, sort of customer
Pursue these alternate placement models H are really people who had gone on the process with us were bought into wanting to apply the tech but just were stuck in terms of the capital dollars. So I don't think of it really today. I don't have the data to say it increases leads and that's probably just because it's early. I think the more, the more Salient point and what we can see in the data is for those that had done the homework and were bought into implementing the technology, you know, they're the ones who are showing up first here to to, you know, get access to equipment and start running. So I think it's more about, you know, maybe a better, uh, you know, sort of win rate coming out the back of the sales process by being able to offer multiple options to to customers in the current capital Market.
Okay. So um um the another question started to be on the same topic though. Um
in in, in
let's say if the world was, um,
you know, world did not change as bad as stuff as it has been in the last, you know, few months. So if the, if the capital um um, funding was still available. What's the Delta you think you missed um, by by losing those opportunities?
You know, I I don't want to speculate at what that number is. RK, I can tell you that, you know our, our sales force still is is certainly incentivized when Capital dollars are available to sell the machine outright. So we we haven't, you know, made some sort of wholesale adjustment here where our sales force you know, can just flip to these alternate uh sort of models in all scenarios. They they still have, you know, their compensation targets and and selling instruments for Capital. You know, is a big component of that. I think we have the luxury of doing these models. For a couple reasons. I think 1 is we, you know, we have a fairly low cost to build a platinum Pro device compared to other devices in our, uh, sort of, you know, competitive equipment that's in this market. We have a, you know, sort of a favorable profile. We obviously have a strong balance sheet, so we can invest in, in the building of that equipment to, to drive this user base. And I think we have a very experienced sales force, where we can give them sort of a menu of
Options and know that when the capital dollars are there they will, you know, they will go and try to capture those. And when they've exhausted all those options, they'll, you know, resort to 1 of these other approaches to ensure we get, you know, we at the end of the day, we get the user, we get the consumable revenue, and we get the corresponding and sort of advocacy from customers people, talking about it, people presenting and pushing data. So, that's how I sort of think about it. I think it would be complete speculation by me to try to, you know,
Know say are we capit any sales or not? I think we're not right now based on what I just laid out but it's something we will obviously closely Monitor and make sure it's not uh it's not doing that.
so, last question from me,
So based on the new plan and you know, that it's out of data that you're getting whether it's trying to pay Publications or um data on your consumables or whatnot. Um, is do you feel you're getting enough information so that you can improve um, your your product offering such a way that you can actually move your customer base our way, you know, from from that portion which is having the capital dollars issue at this point.
A lot of work going on. We've talked about in Prior quarters in terms of sort of Market development or scientific Affairs. I think some of that work in terms of generating more evidence, you know, it's getting to the final stages. So I do think there's a nice pipeline development. I think customers are going to do really
Customer.
And even more importantly, the version 3 Library prep kit with the much lower sample input. I think those
Um improvements are really Guided by what we were seeing in the field. Guided by what customers?
Will be very well received and then while we didn't, you know, give a lot of information today about what we're doing with post translational, modifications to sort of accelerate the capabilities there that, that too is directly linked to both existing customers who are using the tech for other purposes who want to do even more in that area, um, or new potential customers who have a very challenging, you know, PTM to work on. And, you know, this type of sort of combined kit that we're talking about would really open those up for us. So I think the, the combination of the different pipeline programs we have,
Open up both customers in the academic Market. They continue to help us in Pharma biotech, um, and in other segments, so I think it's, for me, it's about lifting, the improvements and the capability in terms of applications in all segments, not really about trying to move out of 1 segments or another because at some point this will improve um, you know, in the US academic market. So we're not going to abandon that market. Over something short term we'll keep lifting performance to service all customers and just try to prioritize more of our sales activities around the most, a sort of successful segments of based on whatever the macro Market is.
Thank you. Thank you, Jeff for taking all my questions. You're welcome.
Thank you.
1 moment.
Our next question is from Kyle Nixon from canaccord. Your line is open.
Hey guys, thanks for the questions. Um, so this is the like, the new, um, Capital acquisition options that you um, announced that you're kind of rolling out here.
Could you maybe just clarify how long you expect those to take place? And I know it's like probably reactionary based on like, you know, the external factors in the background environment but the real question is like, do you expect to launch prodius next year? In this like, with these options? And then if so like what what are the implications for just you know like essentially the financial, the economic implications for that type of a decision. Thanks.
Yes, good question, Kyle. I think in terms of Proteus, I would say we haven't made any decisions about offering Proteus. Through any model other than, um, a capital acquisition, an outright Capital sale. I think we'll monitor the market and, and we'll look at what the state of funding is and and, and such before we do that. Um, but you know, right now we haven't sort of altered our our go to market thinking in terms of uh, Proteus and part of why we don't need to necessarily do that is we still have Platinum Pro and it has certain capabilities.
That will, you know, meet the needs of of many customers. Maybe not do everything that a produce can do obviously, but do a lot of things I think, in terms of the duration of the program, we are being sort of proactive. And you know just moving fast with what the markets look like. Obviously, if the capital markets improve, you know, I think we're we're at least hearing some positive news around what NIH funding might look like. But obviously, that's got to work its way through the, the process and ultimately get approved and get implemented. Um, I think if those things roll out in a positive way and we see a return to the capital. We could slowly start to pull back from some of these options in terms of duration, you know, reagent rentals and leases tend to be, you know, longer term in nature, meaning, you know, measured in sort of, you know, a couple years 2 or 3 years when you start talking about leases or rentals. I think when we talk about us being opportunistic and placing a device,
You know, we're really putting a clock on that, so that we we place it with a customer. They they start purchasing consumables and are using it and we're really measuring that every month. Um, and we're committing to that customer that if they're using it, and getting value out of it, that will leave that machine there with them for 6 months. And at the end of that, they have to make a decision on sort of what they're going to do. Are they going to purchase it outright? Do they want to move into a rental? Um, but again, that we're using the placement sort of selectively, you know, lead with capital
Capital look to use lease or rental, wherever we can use placement as, you know, sort of a final stop in the placement has, you know, a lot more, uh, sort of flexibility for us on how long we leave it there. But, you know, trying to keep it in that sort of, you know, 6-month type of range. You know? Assuming that the the customer is using the machine at a reasonable rate.
All right, that was helpful, Jeff. And, um yeah, on the topic of utilization.
f****** outlay is, is necessary for that. So how's that going right now? And then also, how do you anticipate that to sort of progress, going forward? Given you, you got these, you know, Regent rental, potentially I, I would imagine that, you know, the pull through on. That would be a little different. You could just talk about what you, what, you expect to happen there.
Yeah, on the on the reagent front, you know, as we said in the prepared remarks, um, our
Our reagent revenue consumable revenue in the quarter was a little ahead of our internal expectations, so, um, you know, it's, it's been going well, we haven't seen any notable variation across market segments. Um, even with the NIH, headwinds affecting Capital sales in the US academic Market, our existing us academic, customers are still purchasing. We're still seeing um, purchasing in our, our government accounts, in our Pharma biotech accounts. So I think consumable purchasing has been consistent. Obviously, the variations that you see across segments, still exist, you know, some some academic Labs buy more episodically, where, you know, government or Pharma and biotech maybe buy to more consistent, you know, clip every single month. So the, the general Trends, we've talked about still hold. We have we haven't seen any, uh, notable drop offs. So, we've been pleased with that. And that's another reason why we believe these other sort of, uh, instrument acquisition models,
could make a lot of sense, is that that
The budget to spend on consumables and perform research is there; it seems to be consistent. It seems to not be going through these stop-start cycles that we're seeing with capital. Um, so this is a way for us to start to capture that and grow that, you know, sort of attribute or contribution to our overall revenue.
Great. And on on the new like, kits and prep launches that you have coming up, which and markets are those going to be going to be most suitable to you and I'm sure an application is too like I'm sure it's, you know, the research kind of academic world but it sounds like you're having more success in the bioer side obviously are these, you know, are you setting yourself up to, you know, have this kind of long tail of success and even deeper penetration in that end Market given these new products and things.
Yeah, so on on that, on that front Kyle. So the the first thing is, you know, we talked about as part of the V4 sequencing kit launch. We're expanding the number of barcodes available that that are, you know, sort of designed and highly validated by us, obviously, customers could choose to design their own barcodes as they do and, you know, other segments of the market, um, or using perhaps, you know, as you see in the world of, of DNA barcodes. But in our world, you know, we've really been focused on designing those validating a very high level of performance because that's at at the end of the day, what's being used in the Pharma biotech. So that expansion in the number of barcodes is a direct
A link to, you know, feedback. We've got gotten from existing uh, Pharma biotech customers as well as some that are in our funnel. That that they wanted to get up to that 24 level for the types of studies, they were doing or the types of applications they're doing. So I do think that that barcode set, you know, helps us continue to penetrate the Pharma biotech segment better as I talked about in the prepared remarks, you know, we have seen that funnel grow as we get more people using it, um, and we've got those, you know, sort of reference accounts to point to. So, we feel good about the funnel there. It's just a longer sales cycle, um, in the drug development world than it is in, in other segments, I think in terms of the library prep, there's certainly a benefit in Pharma biotech, but I think, you know, the benefit of that Library prep is probably a more broadly applicable to anybody doing, you know, more complex, biological sample, research. I think we, you know, we touched on a few of the attributes in the prepared remarks
That you know, the hundredfold lower input quantity ability to deal with mixtures better. I think those types of things tend to play across lots of different, you know, sort of biologically relevant systems and work whether that's basic research or translational. So, I do think that plays across all the segments when we get that V3 Library Prep kit launched.
Got it. And and the PTM capabilities that you referenced, I think it sounded like some new capabilities that that you guys are looking at. Um, are are you, um, are you kind of like meeting the the market, where where they need is right now, or is that more of a, a longer term? Um, you know, thing that's good that you can sort of you're looking at that opportunity now but like, you know, ptms are not quite where, um, customers are, you know, applying the technology currently
To do. Um, you know, we we know what our current Tech is capable of. There's been some preprints and posters presented that show sort of customers applying our Tech here. But we think there's more, we can do by doing the combined detection, run with sequencing and and the, the way we're thinking about it and we're going to sort of, you know, really talk about more of the of the plan and the kit roll out at our um investor and analyst day in November, but I think what, we're the way we've set it up the way we're prioritizing, it is really about what do we think customers want to be able to do right now? What are the pain points they have with existing Tech? Obviously the longer term view of. This is based upon where we think the market will be in the end state, but I think we're we're definitely not
Doing this work thinking.
You know it's not something that customers are going to need for a while. This is very um, consistent with what they'd like to be doing and where the challenges are with existing Tech to do this type of work today in their lab. So that's sort of our, our strategic approach to what we're doing on the PTM front.
okay and if you have, you know, a solidly over 20050 million in cash and you're you're having challenges in this kind of Core Business and it's it's been um, like a gradual
Some sort of, um, you know, uh, roll out over the years. Let's say, do you have any interest in using the capital to, you know, potentially partner or acquire or license some sort of, you know, external technology to um either you know either help you in an adjacency or uh, you know, take over for some of the slack uh maybe maybe something that's overlapping with proteomics or some sort of similar End Market that would um be attractive to you right now. Just giving you have. Again it's a lot of um to a big cash balance.
Yeah, Kyle, we're we're certainly recognized. We're we're fortunate to have the balance sheet strength that we have and to have a Runway out into the second quarter of 28. Uh, obviously our number 1 priority is executing on our core technology and our Core Business. Um, you know, we didn't spend a lot of time on it, in the call, but obviously we've been very diligent over the last 2 years, really optimizing our operating expenses, getting the organization at the right size, getting the right programs funded, we've leveraged Partnerships, um, to augment our work. Um, you know, once we've talked about in the past Nvidia and idex, Health, and Sciences, as a sort of a couple that are, you know, obviously deeply involved with R&D, related activities, you know, we have the commercial Partnerships and the channel partnership that's allowed us to really keep a pretty, you know, tight control over our sales and marketing spend. So I think
Our, our general plan is continue to operate the company with that level of fiscal discipline and stay focused on our business. That said, um, we are people who are always out in the market and we're always interacting with folks. We're always willing to learn about technologies that could get, you know, that could be integrated with ours. Could fit into the full workflow of the customer or even, uh, you know, products that are directly adjacent that might, you know, bring more Revenue per territory. We're we're we're certainly not opposed to the types of things you described, it's not necessarily our top priority. Um but we're we're always active, we're always listening and if we saw the right thing we wouldn't hesitate to do it. Um but we're going to be very picky, have a very high bar because at the end of the day you know investors have given us money to invest in our core Tech and our core business and that's the first thing we have to do. Um so we have to have a high bar there but we're you know eyes watch.
Wide open, always willing to learn. And if we see the right thing, you know, we're not afraid to be opportunistic.
All right, and then finally, if the Top Line, you know, remains a little bit soft and it's, you know, it's challenging to to generate like a lot of Revenue kind of going forward and you need to maybe look at some Cuts, uh, you know, internally would that be more on the R&D side or do you think that the, you know, the sales force just isn't matching this kind of Revenue level, you know, it's kind of, you know, you're over.
To that, um, commercial team. And that would be where
I think things kind of happen.
Are doing in that area is, is not really expanding it in any way. We're, we're sort of keep saying more flat being very targeted. If we do any additions on the R&D front, I think we're the, the proof for me is in sort of the results. We've, we've worked the R&D organization down in size and focus over the course of 2023 and 24. It's a very productive team. I mean, this team, you know, continues to deliver on time. And on specification um, sometimes that second Point gets lost in the market, people, sort of derate, their product to get out on time. That's not something we do. We set requirements and this team is hitting it, you know, it's a productive team. We still have 2 more launches and we're funding a very large platform program. That wasn't even in our 24 numbers. And our 25 numbers are essentially flat to that. So I think we've got the right.
Size group over there, we've got the right Talent densities in all of the key functions that you need to do a novel technology like this. And I think what we're really focused on is
More, what I would call finetune, if we see something that, you know, we can fine-tune, we will if we can, if we see a program, that's not progressing, the way we want. Say, in research, we'll stop that program. But I would, I would view it more as being very targeted, um, and I think the other lever we have control over and we've been very mindful of is, you know, we've, we've remained
You know, it's nearly flat with headcount, sort of plus or minus a couple of people since we did the big R&D realignment last fall. So I think we're, you know, we're taking advantage of...
You know, being just very targeted and having that Talent density and just being mindful of that, don't add to it. Keep it sort of get the productivity we can out of the people we have and, and just have the right priorities and the right Focus every day. So I think that's how we're we're approaching it right now. Obviously, if some major events occur that you know, impacted that thinking we would we would be
You know, sort of mindful of it and analyze it and make the right decisions, but I think the way we're planning for it is we've got what we need will stay very tight and not really grow that envelope. Um, and just really focus on executing the business at hand.
Perfect. Thanks guys. Appreciate it.
Thank you.
This does conclude our question and answer session, I would now like to turn it back to Jeff Hawkins for closing remarks.
Thank you for joining our call today. We look forward to providing more updates on our business during the next quarterly earnings call and at our upcoming investor and analyst day in November. Thank you for attending
This does conclude our program. You may now disconnect