Oxford Nanopore H1 revenue jumps 28%, loss narrows

Oxford Nanopore reported robust first-half results, with revenue climbing 28% at constant currency to £105.6 million, exceeding expectations due to broad-based growth across geographies and customer segments, notably a 59.6% surge in PromethION sales. The company significantly narrowed its adjusted EBITDA loss to £48.3 million, driven by improved gross profit and disciplined cost control, while reaffirming its guidance for 20-23% revenue growth this year and adjusted EBITDA breakeven by fiscal year 2027. Despite a slight gross margin contraction attributed to one-off charges and mix effects, these results underscore strong operational momentum and a clear trajectory towards profitability, validating its growth strategy.

Analysis

Oxford Nanopore demonstrated strong operational momentum in its first-half results, with revenue growing 28% at constant currency to £105.6 million, surpassing expectations. This growth was driven by the successful adoption of its high-end PromethION platform, where sales surged 59.6% year-on-year, offsetting a 3.1% decline in the MinION product and indicating a favorable shift in product mix. Geographically, performance was robust in APAC (+38.3%) and EMEAI (+32.7%), though growth in the Americas was notably slower at 16.9%, reflecting stated U.S. research market uncertainty. The company showed significant progress on its path to profitability, narrowing its adjusted EBITDA loss to £48.3 million from £61.7 million a year prior, attributed to higher gross profit and disciplined cost management. However, gross margin contracted 60 basis points to 58.2%, impacted by a one-off £3.3 million inventory charge, product mix, and currency headwinds, which masked underlying margin gains. The cash position decreased to £337.3 million, but the reaffirmation of guidance, including 20-23% revenue growth for the current year and an adjusted EBITDA breakeven target for fiscal year 2027, provides a clear framework for the company's medium-term trajectory.

Key Decisions for Investors

• Investors with a growth-focused mandate may see the strong top-line performance and reaffirmed guidance for breakeven by FY27 as validation of the long-term thesis, warranting a continued hold or accumulation on positive sentiment.
• It is critical to monitor gross margin performance in subsequent quarters to ensure the 60 basis point contraction was indeed temporary and that underlying margin expansion initiatives can overcome mix and currency headwinds to support the path to profitability.
• Given the cash burn reducing reserves to £337.3 million, investors should model the company's liquidity runway against its FY27 breakeven target and watch for any deceleration in growth, particularly in the slower-growing Americas market, which could pressure future performance.