Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cytek Biosciences Inc (CTKB, Financial) reported a 21% year-over-year increase in total revenue for Q1 2024, reaching $44.9 million.
- Organic revenue growth was strong at 11%, driven by robust service revenue from an increasing installed base and product revenue.
- The company expanded its global footprint with 99 organic sited instruments sold, bringing the total installed base to 2,447 instruments.
- Cytek Biosciences Inc (CTKB) launched a new 50,000 square foot facility in Wuxi, China, to meet rising global demand and improve operational efficiencies.
- The company successfully obtained regulatory approvals in China for its single laser instruments, enhancing its competitive position in the market.
Negative Points
- Despite overall revenue growth, Cytek Biosciences Inc (CTKB) reported a net loss of $6.2 million in Q1 2024, although this was an improvement from the previous year.
- Gross profit margin declined to 51% in Q1 2024 from 57% in the prior year, partly due to inventory adjustments and higher overhead expenses.
- The company is experiencing elongated sales cycles in the U.S. and A-Pac regions, excluding China, which could impact short-term growth.
- Operating expenses increased slightly due to higher headcount and personnel-related expenses, although they grew at a lower rate than revenue.
- The integration of Luminex inventories led to one-time inventory adjustments that negatively impacted the gross margin.
Q & A Highlights
Q: Could you elaborate on what you're seeing across your academic and pharma customer base in China and Europe, especially in light of the recent stimulus program?
A: Wenbin Jiang, CEO of Cytek Biosciences, noted that growth in China is primarily in the academic space, including universities and research institutions. While the stimulus program is expected to benefit the second half of the year, its impact has not yet been seen.
Q: What fraction of the orders this quarter were reagent rentals versus upfront purchases?
A: Wenbin Jiang explained that reagent rentals continue to be a diminishing portion of the business, with a focus on clinical business potentially impacting revenue more significantly in the future.
Q: Are you seeing any heavier price discounting from your next-gen flow peers due to industry challenges?
A: Wenbin Jiang highlighted Cytek's leadership in driving the industry towards full-spectrum flow cytometry technology, indicating that the company is well-positioned despite competitive dynamics.
Q: Can you discuss the sequential step-down in organic revenue and the pacing of growth for the rest of the year?
A: William McCombe, CFO, clarified that there was actually a significant increase in organic revenue growth from Q4 to Q1, and they are comfortable with the revenue guidance for the year, expecting quarterly revenue growth to follow historical patterns.
Q: How should we think about gross margins for the rest of the year?
A: Wenbin Jiang addressed concerns about margin declines, attributing them to specific factors like inventory adjustments from the Luminex integration and overhead absorption, which are expected to improve over the year.
Q: Are customers delaying purchases of higher-end instruments or moving down the price continuum?
A: Wenbin Jiang observed that interest remains strong for Cytek's flagship products and did not indicate a significant shift in customer purchasing behavior towards lower-tier products despite longer buying cycles, particularly in the U.S. and A-Pac regions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
