Full Press Release Details
Q3 2023 Earnings Call
Company: Cytek Biosciences, Inc.
Paul Goodson - Cytek Biosciences, Inc., Head-Investor Relations
Wenbin Jiang - Cytek Biosciences, Inc., Co-Founder, Chief Executive Officer & Chairman
Patrik Sebastian Jeanmonod - Cytek Biosciences, Inc., Chief Financial Officer
David Westenberg - Analyst
Steven Mah - Analyst
Matthew Sykes - Analyst
Andrew Cooper - Analyst
MANAGEMENT DISCUSSION SECTION
Good day, and thank you for standing by. Welcome to the Cytek Biosciences Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a
listen-only mode. After the speakers presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1
1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw the question, please press star 1 1 again. Please be advised that today s conference is being recorded.
I would now like to hand the conference over to your speaker for today, Paul Goodson, Head of Investor Relations. Paul, please go ahead.
Thank you, operator. Earlier today, Cytek
Biosciences released financial preliminary results for the quarter ended September 30, 2023. If you haven t received this news release or if you d like to be added to the company s distribution list, please send an e-mail to investors@cytekbio.com. Joining me today from Cytek are Wenbin Jiang, the CEO; and Patrik Jeanmonod, CFO.
Before we begin, I d like to remind you that we will make statements during this call that are forward-looking statements within the meaning of the
federal securities laws, including statements regarding Cytek s business plans, strategies, opportunities and financial projections. These statements are based on the company s current expectations and inherently involve significant risks
and uncertainties that could cause actual results or events to materially differ from those anticipated.
Additional information regarding these risks and
uncertainties appears in the section entitled forward-looking statements in the press release Cytek issued today and in Cytek s SEC filings, including the upcoming Form 10-Q that is expected to be filed
with the SEC on Thursday, November 9, 2023.
This call will also include a discussion of certain financial measures that are not calculated in
accordance with Generally Accepted Accounting Principles. Reconciliation to the most directly comparable GAAP financial measure may be found in today s earnings release submitted to the SEC. Except as required by law, Cytek disclaims any duty
to update any forward-looking statements, whether because of new information, future events or changes in its expectations. This conference call contains time-sensitive information and is accurate only as of the live broadcast, November 7,
I would like to mention that Cytek will be hosting a number of flow cytometry events over the coming months.
While these are primarily geared to our scientific user base, they may be of interest to our analysts and investors alike.
These include the Cytek reveal
roadshow, which is currently underway, several Cytek user group meetings and a variety of industry conferences, where we will have a product booth and will be sponsoring user outreach events. These events offer an opportunity for you to interact
with uses of our technology and get their comments directly on why they chose Cytek. We have a limited number of spaces to accommodate members of the financial community, so if you are interested in attending, please contact me.
With that, I will turn the call over to Wenbin.
Thanks, Paul, and welcome, everyone, to our third quarter conference call. On the call today, I will discuss our results for the third quarter
as well as our progress across our four key strategic pillars to drive growth. Then I will turn the call over to Patrik for a more detailed look at our financials and update on our outlook for 2023 before we open it up for Q&A.
Starting with our third quarter results. Against, a difficult macro environment, we achieved $48.0 million of total revenue, representing growth of 19%
year over year. This included approximately $6.8 million of revenue from the product line acquired from the product line acquired from Luminex.
Excluding acquisition related revenue, our organic revenue was $41.2 million, a 2% increase year-over-year. We are pleased with the continued growth we
saw in the third quarter from our reagent portfolio and services areas that we expect to be leading growth drivers for our business in the future. This positive trend is a testimony to the strong utilization of our instruments and the flywheel
effect attached to them.
In the third quarter, like many other companies, we were not immune to the increasing headwinds within our industry where we
experienced extended sales cycle and order delays. We expect this pressure to persist into the fourth quarter.
As a result of these factors, we expect
full-year revenue from our organic business to be approximately flat versus the prior year and $25 million to $30 million of revenue contributions from the business acquired from Luminex.
Taken together, we expect full-year revenue in the range of $188 million to $192 million, representing growth of 15% to 17% over the prior year.
Patrik will provide more detail on our financial results momentarily.
Despite this challenging backdrop, I m pleased with our team s commitment
to adapt and navigate this evolving environment. We remain focused on driving our product strategy forward and delivering commercial growth at profitable levels across our diversified revenue streams. We believe that the underlying interest in our
Full Spectrum Profiling, or FSP, technology continues to be high, and we are making good progress with both new and existing customers in our pipeline.
We are addressing well-established markets across the scientific community where there is a large need for tools beyond the conventional. We are
well-positioned to meet this demand as an industry leader, offering an expansive product portfolio, purpose-built to advance next-generation cell analysis.
To deliver on our long-term objectives, we continue to focus our business on four key pillars: instruments, applications, bioinformatics, and clinical.
Starting with instruments, during the third quarter, we placed 119 instruments from our organic Cytek portfolio, resulting in an installed base of 1,997 Cytek
instruments, excluding the installed instruments of Amnis imaging and Guava microcapillary product lines acquired from Luminex.
We experienced the slower
growth in organic instrument sales in the third quarter due to more conservative customer spending patterns and experienced the purchasing delays as a result. Despite this, we believe that customer interest in our proven instrument portfolio
continues to be strong and we remain focused on driving adoption. Longer term, we believe this growing installed base will provide us with a receptive market for new instruments that we intend to launch in the future.
I would like to turn next to applications, which includes our reagents and kits, where we continue to see strong performance. Importantly, with increasing
instrument placements, we expect this positive trend to continue with higher pull-through of consumables down the road. Our reagents and kits are optimized for use on our instruments, which helps make the user s job easier, faster and more
accurate. In addition, our scientists have created new reagents that have pushed the boundaries of the spectral response, further strengthening their performance and their utility to our customers. We continue to actively collaborate with our
partners to broaden our reagent portfolio and develop application-specific kits. We are committed to continuously expanding our portfolio of clinical reagents, aligning with our overarching mission to provide comprehensive solutions for our
To that end, we expect to launch a new product, Cytek Orion, a smart cocktail reagent mixer, in the fourth
quarter. This new reagent cocktailing technology simplifies and accelerates laboratory workflow, helping assure consistent experimental results, saving time and reducing reagent waste. We showcased our technology at recent industry conferences, and
encouragingly, customers were very interested in this offering. The launch of our Cytek Orion reagent mixer is part of our strategy to expand our menu of applications and products that both accelerate research and provide deeper insights for our
existing customers and new customers alike.
The breadth of applications for our instruments and reagents can also be seen across the wide range of
peer-reviewed publications that include our technology. In the third quarter, there were 171 new peer-reviewed publications mentioning Cytek, bringing the all-time number of publications to 1,482. The
increasing number of peer-reviewed publications that showcase our products reflects the growing acceptance of Cytek s innovative solutions among researchers, as they continue to leverage our technology to propel scientific advancements.
Bioinformatics is our third strategic area. A key part of our bioinformatics strategy is enabling our customers to streamline their experiment workflow. We
have reported to you before that user engagement and demand for the Cytek Cloud, launched late last year, has been doing exceptionally well. At present, there are, on average more than 2 Cytek Cloud users per installed Cytek instrument.
Cytek Cloud s digital ecosystem offers a comprehensive suite of spectral panel design tools, seamlessly integrated into a centralized platform forming a
unified ecosystem. This cutting-edge solution empowers researchers to prepare and optimize their experiments remotely, streamlining the process from panel design to data acquisition.
The demand for the Cytek Cloud is being driven by researchers desire to collect more data from every cell they analyze, which has been made possible by
the advanced capabilities Cytek s FSP instruments and reagents has brought to researchers. This is resulting in the need for increasingly larger reagent panels to gather more biological insights, often from samples that are rare and/or very
limited in size. These larger panels result in much more data, which creates more complexity across the entire lab workflow, from panel design to data acquisition, to data analysis.
The faster time to insight and ability to analyze larger data sets is extremely valuable across a broad range of research applications, from immunology to
oncology, infectious as well as inflammatory diseases. We believe Cytek Cloud provides a powerful reason for new user adoption and for existing users to continue using our instruments and reagents.
Turning to our clinical opportunity, as a reminder, several of our products are approved for clinical use in both China and the EU. Our most common sale for
clinical applications is the Northern Lights-CLC system, accompanied by our growing cFluor reagent product portfolio. In both China and the EU, the clinical market is an attractive business opportunity
In the EU, we remain ahead of the curve on any updates to the European IVDR regulation and are pleased to announce that our Cytek Northern Lights-CLC system is compliant with the most recent regulation. Additionally, our SpectroFlo QC beads are now IVDR certified, bringing both the instrument and the beads together as part of the IVDR system solution.
This past September, it was great to see our IVDR system solution showcased at the European Society for Clinical Cell Analyses annual conference by one
of our early adopters, Dr. Manuel Ramirez. He is the Director of the Unit for Cell & Gene therapies at the University of Ni o Jesus and focuses on translational research in pediatric cancers. Dr. Ramirez had tested the
Northern Lights-CLC spectral flow cytometer on patients with leukemia at diagnosis and during therapy when marrows are deeply affected by chemotherapies. At the conference, Dr. Ramirez highlighted the use
of Northern Lights-CLC in his research and his confidence in gaining the maximum levels of information out of samples from workflows. We were pleased to see one more example of our technology being leveraged
to drive forward advancements in scientific research.
Within the U.S., we are continuing to develop our application to the FDA for 510k clearance of our
products to be used in clinical applications. We believe our powerful FSP platform, if FDA cleared, will bring clinical diagnostics labs unparalleled efficiency and analytical power, thus providing a benefit to patients by giving doctors a rapid,
clearer and more detailed view of each patient s condition.
Further, in the third quarter, we received our ISO 13485 Quality Management System
certification of our headquarters and manufacturing operations in Fremont, California to produce our flow cytometers, reagents and accessories. This certification bolsters our plans to focus on the translational and clinical markets and sends a
strong signal to customers in these segments that we are committed to serving them, taking every step necessary to responsibly do so in the future.
Lastly, I want to provide an update on our integration of the Amnis and Guava product lines we acquired from Luminex on February 28th. As a reminder, we
completed the cross-training of our sales force by the end of the second quarter and the conversion of the Amnis manufacturing facility to our control around the same time. During the third quarter, we completed the transition of the manufacturing
of Guava instruments from Luminex s Austin Texas facility to Cytek s WuXi China location. Our only remaining integration task is to complete the cross-training
of our service personnel on the instruments new to them. We expect to finish the cross-training of the service team by the end of the fourth quarter. This important step will position us to take
full advantage of the efficiencies in operating our service organization that we envisioned when we made the acquisition. The flow cytometer community has shown tremendous activity in adding imaging to their applications. To meet this growing
interest, we plan to release an updated version of our Amnis AI analysis software in the first half of 2024 to take full advantage of the industry-leading image quality from our ImageStream.
Overall, we are seeing the value of the Luminex acquisition both in the near and over the long term.
With that, I will now turn the call over to Patrik for more details around our financials.
Patrik Sebastian Jeanmonod
Total revenue for the third quarter of 2023 was $48 million dollars, a 19% increase over the third quarter of 2022. This included approximately
$6.8 million dollars of revenue from the products and services acquired from the Luminex transaction, which closed on February 28th.