Standard BioTools Inc. Q2 FY2024 earnings call

• Leadership changes: Jeff Black is leaving, Alex Kim will take on interim CFO role from September 1, and Sean MacKay is new Chief Business Officer. - Results: Second quarter revenue was impacted by SomaScan assay services project delays and instrument revenue decline. But we saw 40% sequential improvement in instrument revenue. Reduced non-GAAP operating expenses by over $30 million in first half of 2024. Operationalized $60 million of $80 million cost synergies. Sales mix in second quarter: Instruments 19%, consumables and kits 40%, instrument support services 17%, SomaScan services 21%. Working to diversify customer base for SomaScan services and expanding growth drivers with Illumina partnership and new selling models. - Operating performance: Non-GAAP OpEx decreased in second quarter and first half of 2024, and we remain confident in driving non-GAAP gross margins into mid-60s over time.

In the second quarter, Instruments accounted for 19% of revenue, consumables and kits were 40%, instrument support services 17%, and SomaScan services 21%. On a pro forma combined basis in the first half of 2024, non-GAAP operating expenses were reduced by more than $30 million, or 27% over the first half of 2023. We have already operationalized $60 million of our $80 million target cost synergies. Pro forma combined revenue in the second quarter was just over $37 million, down 23%, and just over $83 million, down 11% for the first half of the year. Non-GAAP gross margin on a pro forma combined basis was 45% in the second quarter versus 53% in 2023, and 51% for the first half of 2024 compared to 53% in the same period last year.

• Revised revenue guidance for 2024 to $170 million to $175 million. - Pulled forward the $80 million cost reduction target to the end of 2024, a year ahead of plan. - Remain committed to hit breakeven adjusted EBITDA for the full year 2026.

• Risk of revenue variability due to SomaScan services being concentrated on a few big customers. - Headwinds from industry-wide restricted capital purchasing environment affecting instrument revenue. - Uncertainty related to timing of SomaScan assay services projects.

Q: Matt Stanton asked about the guidance cut, the bridge of the cut in terms of products for service, proteomics versus genomics, and visibility around the step-up in the second half.

A: Michael Egholm and Jeff Black responded that they've not broken out components by segment or product line, but are seeing encouraging signs of uptick in large pharma accounts and have visibility to the second half with the updated guidance.

Q: Dan Brennan asked about Jeff's decision to leave and resetting the guide.

A: Jeff Black said it's a personal decision to return to an industry closer to home and family. Michael Egholm mentioned a tight process on SomaScan side with rigorous forecasting now in place.

Q: Paul Knight asked about genomics revenue in the quarter and if it's a growing business.

A: Michael Egholm said genomics was down in the quarter as a managed decline while working through headwinds, but has niches with OEM partners picking up and will be a driver of profit in coming years.