Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Akoya Biosciences Inc (AKYA, Financial) reported a 26% sequential increase in revenue for Q2 2024, reaching $23.2 million.
- The company's new Manufacturing Center of Excellence in Marlborough, Massachusetts, is fully operational, contributing to increased reagent volumes and instrument placements.
- Instrument revenue saw a significant 70% sequential growth, with 51 instruments placed in Q2 compared to 30 in Q1.
- Reagent revenue increased by 27% year-over-year and showed sequential growth from Q1.
- Service and other revenue grew by approximately 14% year-over-year and 17% sequentially, driven by expanded instrument warranty and field service revenue.
Negative Points
- Despite the revenue growth, Akoya Biosciences Inc (AKYA) had to lower its full-year revenue guidance to a range of $96 million to $104 million.
- The company implemented a workforce reduction of approximately 35% compared to the end of 2023, indicating significant restructuring.
- Operating expenses were $24.5 million in Q2, although this was a decrease from previous quarters, it still represents a substantial cost.
- The company continues to face pressures on capital purchases, particularly in the academic and biopharma sectors.
- There is a noted contraction in system utilization within CROs, as more projects are being brought in-house by biopharma companies.
Q & A Highlights
Q: Can you provide more details on the operating cash flow and the impact of the workforce reduction in July?
A: Brian McKelligon, CEO: With the reduced operating expenses, we project a run-rate OpEx of around $20 million to $21 million. By Q4, we expect to achieve operating cash flow breakeven and positive adjusted EBITDA, assuming we meet our revenue projections and maintain gross margins in the low 60% range.
Q: What led to the revenue guidance reduction, and how confident are you in the updated guidance?
A: Brian McKelligon, CEO: The guidance reduction was due to the pace of the rebound in Q2 being slower than needed to support our second-half recovery. Despite a strong Q2, the continued macroeconomic pressures led us to adopt a more prudent outlook for the second half.
Q: Are the issues related to the Manufacturing Center of Excellence fully resolved?
A: Brian McKelligon, CEO: Yes, the Center of Excellence is fully operational, and we have resolved the reagent availability challenges. Our focus now is on process optimization, catalog expansion, and improving reagent gross margins.
Q: How do you view the competitive landscape and pricing pressures?
A: Brian McKelligon, CEO: We are seeing strong competitive positioning, especially with our PhenoCycler Fusion and PhenoImager HT platforms. We are winning head-to-head competitions due to our higher plex capabilities, larger imaging areas, and increased throughput.
Q: What trends did you observe in the second quarter, and were there any sudden changes in order funnels?
A: Brian McKelligon, CEO: There were no sudden changes in trends. The pacing of orders and the size of the funnel informed our cautious outlook for the second half. The trends were consistent with what we saw in prior quarters.
Q: Can you provide more details on the restructuring efforts and their impact on the organization?
A: Brian McKelligon, CEO: The restructuring efforts were aimed at consolidating and streamlining our R&D and operational functions. While difficult, these changes were necessary to balance growth and profitability. We believe we have the organizational structure in place to return to growth trajectories.
Q: How do you view the capital budget pressures across your key customer segments?
A: Brian McKelligon, CEO: We continue to see pressures on capital purchases in both academia and biopharma. However, system utilization remains strong in academic, government, and biopharma settings, with some challenges in the CRO segment.
Q: What is the outlook for the Chinese market following the NMPA approval for the HT instrument?
A: Brian McKelligon, CEO: The NMPA approval is more of a long-term opportunity for clinical validation. On the RUO side, there has been no material change, and we expect any impact from the stimulus to be realized in 2025.
Q: What are the key factors needed to achieve the gross margin target in the low 60% range?
A: Johnny Ek, CFO: Achieving the gross margin target involves optimizing our revenue mix, leveraging our manufacturing investments, and improving inventory utilization. The fully operational Center of Excellence will help manage inventory better and reduce expiry issues, contributing to margin expansion.
Q: Do you have additional levers to pull to achieve cash flow break-even if revenue targets are not met?
A: Johnny Ek, CFO: Achieving cash flow break-even depends on hitting our revenue targets and managing working capital effectively. We have good visibility into our gross margins and operating expenses, which helps us predict our financial performance accurately.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
