• Revenue: $45 million in Q3, down 5% year-over-year; $128 million year-to-date, down 9% versus 2023.
• Consumables Revenue: $14 million in Q3, up 13% year-over-year; $45 million year-to-date, up 21% compared to 2023.
• Instruments Revenue: Just under $6 million in Q3, down 42% year-over-year; just under $20 million year-to-date, down 28% compared to 2023.
• Lab Services Revenue: $18 million in Q3, up over 1% year-over-year; $41 million year-to-date, down 23% compared to 2023.
• Field Services Revenue: Just over $6 million in Q3, down 4% year-over-year; $19 million year-to-date, flat compared to 2023.
• Non-GAAP Gross Margin: 57% in Q3, up from 52% year-over-year; 53% year-to-date compared to 52% in 2023.
• Non-GAAP Operating Expenses: $40 million in Q3, a 24% reduction year-over-year; $137 million year-to-date, a 22% reduction compared to 2023.
• Adjusted EBITDA: $14 million loss in Q3, a 50% reduction year-over-year; $69 million loss year-to-date, a 32% reduction compared to 2023.
• Cash and Short-term Investments: $368 million as of September 30, 2024.
• Cash Burn: $28 million in Q3, a 58% reduction from Q2; adjusted cash burn of $21 million, a 23% reduction from Q2.
• Full Year Revenue Guidance: Reiterated at $170 million to $175 million.

• Warning! GuruFocus has detected 5 Warning Signs with LAB.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Standard BioTools Inc (NASDAQ:LAB) achieved a sequential revenue increase of 21% from the previous quarter, indicating operational improvements.
• The company has successfully integrated SomaLogic, achieving $80 million in expected synergies a year ahead of schedule.
• Consumables revenue grew by 13% year-over-year, highlighting a strong margin profile and strategic focus.
• The company has improved its on-time delivery rate to 98%, significantly enhancing customer satisfaction and operational efficiency.
• Standard BioTools Inc (NASDAQ:LAB) has a robust cash position with $368 million in cash and short-term investments, supporting its strategic vision.

Negative Points

• Year-over-year revenue declined by 5% for the quarter and 9% year-to-date, reflecting ongoing market challenges.
• Instruments revenue fell by 42% year-over-year, impacted by capital spending constraints and weakness in China.
• The company faces a $15 million to $20 million headwind from its top five SomaScan customers, affecting service revenue.
• Operating in a challenging environment with conservative customer purchasing behaviors, impacting growth potential.
• Despite improvements, the company is still navigating gross margin headwinds and onetime costs, affecting profitability.

Q & A Highlights

Q: Can you quantify what percent of assay services revenue in Q3 was timing-based? A: Historically, our SomaScan services have relied on a few large customers. Outside those, we see double-digit growth in SomaScan Assay Services, which is encouraging. We had favorable timing in Q3 and unfavorable in Q2. For the year, from those five large customers, we have a headwind of $15 million to $20 million. The quarter-to-quarter timing can push numbers, but overall, we like where the business is headed. - Michael Egholm, President and CEO

Q: You reiterated your guidance of $170 million to $175 million for the year. Are you expecting any year-end budget flush or spending dynamics different from Q3? A: We don't expect a market recovery or new budgets becoming available today, but it would be nice if it came. We build in a little uptick on Instruments in Q4, and we feel comfortable with our funnel to hit the guidance. - Michael Egholm, President and CEO; Alex Kim, Chief Operating Officer

Q: Are you seeing any improvement in the instrument sales funnel, and what's the situation in China? A: Instruments are down year-to-date, largely in line with peers. Our funnels are building, which is encouraging. In China, things look a little better, but we don't expect it to flow through in Q4. We hope it will be a tailwind in 2025. We are seeing VC money flowing into biotech again, which is generating more leads. - Michael Egholm, President and CEO

Q: Can you elaborate on the areas you're investing in, such as the launch of single SOMAmers and Omics as a Service? A: We launched individual SOMAmers as a minimal viable product, with limited support and infrastructure. It's rolled out to existing customers, with a broader launch planned once infrastructure is ready. We're still investing heavily in R&D, as we see a long runway ahead for our technologies. - Michael Egholm, President and CEO

Q: With the current backdrop, any directional commentary for 2025, considering the Illumina ramp and instrument sales? A: We're not providing guidance for 2025 yet. Our focus is on closing out this year strong. We reiterate our guidance of $170 million to $175 million for 2024. We expect healthy growth long-term, especially with our relationship with Illumina, but adoption of new workflows takes time. - Michael Egholm, President and CEO; Alex Kim, Chief Operating Officer

Q: Have you recognized revenue from projects delayed last quarter, or are there still projects to be recognized in Q4? A: We had favorable timing this year and unfavorable timing last year. From our top five customers, we have a $15 million to $20 million headwind year-over-year. We have better visibility now with the application of SBS across the organization. - Michael Egholm, President and CEO

Q: What are you seeing in markets outside of China for instrument sales? A: We're doing well in the Americas. Japan and Korea have been tough due to macroeconomics. In Europe, we have a new leader focusing on rebuilding funnels. - Michael Egholm, President and CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.