Quantum-Si incorporated Q1 FY2025 earnings call

Accelerate Commercial Adoption

• Launched Platinum Pro system and completed first customer sales. Q1 revenue $842k, 84% increase y-o-y but below expectations.
• Slowdown in US academic instrument purchases due to NIH funding and indirect cost caps; expected to impact until fall 2025.
• Focus on pharma, biotech, and government labs in US; completed training of North American distribution partner Avantor.
• International market: 23 distribution partners, international business performed well.

Deliver on Innovation Roadmap

• Version 4 Sequencing Kit on track for Q3 2025 launch, expected to increase proteome coverage.
• Library Preparation Kit version 3 on track for end of 2025, aiming to reduce sample input.
• Proteus development program: on track to perform protein sequencing on prototype by end of 2025, aiming for launch in H2 2026.
• Core technology beyond protein sequencing: demonstrated ultrasensitive protein detection in low femtomolar range using Platinum Pro.

Preserve Financial Strength

• Strong balance sheet with $232.6M in cash, cash equivalents, and marketable securities as of March 31, 2025.
• Tracking tariff impacts, but preliminary analysis shows no material impact on inventory acquisition costs in near-term; mitigation strategies in place.

In the first quarter of 2025, Quantum-Si's revenue was $842,000, which is an 84% increase compared to the first quarter of 2024. Gross profit was $486,000 and gross margin was 58%. The revenue came from the Platinum line of instruments, consumable kits, and related services. The product segments showed that while the US academic market faced slowdown in new instrument purchases due to NIH funding and indirect cost caps, international markets with 23 distribution partners performed well.

Guidance

• Adjusted operating expenses expected to be $103M or less for 2025.
• Total cash used for 2025 expected to be $95M or less.
• Current cash position provides runway into H2 2027.

Risks

• NIH funding uncertainties impacting US academic instrument sales.
• Tariff uncertainties affecting inventory acquisition costs and sales channels outside US.

Q: Hey guys, thanks for the questions. So, I guess good to hear that you are pretty confident in the biopharma side of your business. Just given the issues on the U.S. academic research side. However, there are, there has been talk of potential tariffs over there on the pharma side as well as the most favorite nations, potential as well in the pricing there. So could you just walk through what in your recent conversations with those partners has given you confidence that you'll be able to continue to successfully penetrate that end market as well as maybe accelerate a bit too and make up for the lost research revenue?

A: Yes, thanks for the question, Kyle. You know, I think our -- I'd say a couple things. The first is, some of the various policy related items that are being discussed, those relate a lot to, on market drugs or therapeutics and the cost of those and such. And it's obviously a complex topic that goes well beyond just the pricing from the individual pharma company. But in general, we're not seeing any trickle through right now to where there are changes being made to sort of R&D priorities, or funding. I think a lot of the funding levels and areas of focus for at least the biotech and pharma companies that were speaking with, they've sort of been set in motion. Some of those have, been adjusted historically to the levels they were comfortable with. So we're not seeing it any of the headlines sort of trickle through to a change in the engagement from those, from those partners. So that's what really gives us the confidence that, we're solving for a problem that does fit something they're focused on, which is how do they, work more efficiently and more cost effectively.

Q: Thank you. And good afternoon. Big picture question. You may have mentioned it already, but I think it's worth doubling down on it. When you think about your total market, U.S. OUS, all segments, what percent do you think of your target market falls in that kind of NIH academic U.S. based market? Just trying to get a sense of the magnitude because I know you do a lot overseas as well.

A: Yes. So maybe I can give a couple data points that help to elucidate that. I think maybe one general comment I would make, Scott, is that, obviously at the, at the current commercial scale we're at, the market is very large. So we're not in a situation where, we've maximized penetration and, even the slightest change in a market size is going to in some way constrain us. So, I think from a macro perspective, obviously large markets with, fairly modest penetration, so a lot of upside to go tackle. A couple data points we can give you. One is if you think about our customer mix. So, like maybe just think about it in terms of instrument installations, where are those at? So at the end of the quarter, we're at about 60% of our instrument installations are in laboratories outside of the U.S. and about 40% of those are in the U.S. So that gives you a little flavor for the diversification of the base of installed instruments today. And in terms of the U.S. market, the data point we can give you is around 20% of the total business we have is in the U.S. academic market. So if you think about all machines placed globally, about 20% of those are in U.S. academic markets. Again, those people are still buying consumables. But if you want to sort of have a way to think about the instrument sort of distribution today, I think those two data points give you a couple ways to think about it.

Q: The next time when we were talking, you're telling or we were discussing that you always want to keep a distance between yourself and the next competitor. And in a market like this, since you have the little bit of the cushion that you have on the financial side, you always want to maintain that distance or even try to increase the distance artificially if the other competitor doesn't have enough financing. But having said that, as this was about a month and a half ago and now it's probably you have a little bit more insight into how, your various customers are behaving. Does that still resonate between you and the board and everybody in the company in terms of keeping that couple steps ahead of the competition? Or do you see that at some point you might also have to slow down a bit just to conserve cash and maintain the Runway?

A: Yes, I think, RK it's a fair question. I think consistent with what I said to Kyle on a similar thread, I think our view is, one is our view is that, yes, we are still well ahead of other technologies attempting to do something very similar to us, trying to sequence proteins at the amino acid level. We have technology roadmaps. We, while we're investing, you know, in a healthy way in R&D, I can tell you that we have more ideas than we do programs. So we are making decisions every day on where to apply that investment in an effort to continue to extend that market leadership, but not spend above what we think is prudent for the stage of the business, the market dynamics, cash balance, et cetera. So this is something we as a management team closely sort of watch and talk about. We have mechanisms in place to really monitor the way we're allocating that R&D investment across those maybe longer term investments in research or innovation versus the product development efforts that will directly lead to product launches in the nearer term and can be capitalized on commercially. So we're very careful with those allocations. And these are all things we discuss very openly and candidly with our board and get great counsel and advice from those folks. And I think right now we, we collectively are comfortable with the way we're investing, we're comfortable with where our runway is, but we are taking in data and watching the markets and the trends just as everybody else is. And if things were to deteriorate in the macro economy in some way, I think we've shown a willingness in the past to be proactive here and make changes when they're called for. But at this point we think we've done that some of that hard work, really have the investments focused the right way and believe we've got it allocated to the most high value programs. And we're sort of continuing with that approach at this time, but always monitoring, watching and prepared to react if indeed sort of it's required.