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spk14: stretching of business cycle type of issue more than anything else. We're not experiencing anything, you know, any losses, et cetera, in regard to that. So it's more of a timing type thing. So again, I think the overall trends in, you know, next generation proteomics and the demand there remains intact and just some timing things. And again, you know, the Europe comments are again off of extraordinarily strong comps from the year prior, you know, with the growth we had in Europe, especially in services, as Oscar had noted. So, you know, when the headwinds start to reside in biopharma, you know, we'll see. But, you know, again, we remain positive overall on that segment. And in the prior comments, we're not highly exposed to early biotech. So that's not a significant concern for us.
spk05: Okay. Thanks, Carl. And then just lastly, one technical question maybe for John. Could you guys just clarify the dynamic range of the Explorer offering with and without dilution? I think it's 8 to 10 logs is what your materials typically state. I think that assumes some level of dilution. If that's the case, would it be beneficial to increase the non-diluted dynamic range? Is there a path to do that in the future iteration of XOR?
spk02: Thanks, Kyle. Yeah, great to hear you pick up on the technical details. Yeah, so our approach is we've been very clear with most importantly to our customer, but also, of course, to investors, right? We try to be very particular in the acid development of each and every assay. So our approach is to ensure when we develop those assays that we have the appropriate relevant dynamic range to measure proteins in a healthy but also a severe disease state. So that sort of put the requirements on the dynamic range of the asset itself. And that's what we verify and validate in our asset development and product development efforts prior to releasing new products. So a quite unique approach in the very market and a very thorough, basically single-plex asset validation across each and every biomarker target. With that said, as I somewhat alluded to with molecular tricks. So, for example, capturing non-bound oligos to increase signal to noise, which will actually increase dynamic range and sensitivity. Are those things that we can do and are working on? Absolutely. Where is it most applicable for our product portfolio? So those are the type of sort of molecular designs that we are developing and contemplating and also where, you know, applying it to the products we think would make most sense for science. So hopefully that sort of in a broad perspective answers that question that yes, we definitely have capabilities and that we are, you know, led by science and customer needs and applying those efforts to produce a product.
spk05: Perfect. Thanks, John. Thanks, guys. Thank you.
spk08: Please stand by for the next question. The next question comes from Matt Sykes with Goldman Sachs. Your line is now open.
spk10: Hi, this is Evie Kozlowski on for Matt. Thanks for taking the questions. Could you talk a bit about the kit business and specifically explore as it relates to customer onboarding and installation time? Have you been able to shorten the duration of the installation process given the momentum you've seen in that business?
spk14: Yeah, hi, Evie. It's Carl. Yeah, we're always looking at, you know, ways to optimize onboarding and to make it seamless for our customers. And as John alluded to, we're always working on innovations and opportunities to make that better and better over time. That's our intention. So I guess the simple answer is yes, and we continue to work on this and develop it. you know, right now we feel good about where we are with that. And of course, there's always more opportunity to continue innovating and improving.
spk10: Okay, that's helpful. Thank you. And then can you talk about the growth you're seeing in the mid to low plex with the target and focus kits and what type of growth you're seeing in these products?
spk14: Yeah, I mean, we're really excited about that. I think it's, we talk a lot about Explorer. We get a lot of questions on that as you hear, but We're very excited about that business. As you saw, the signature unit sales were incredibly strong in Q1. You know, kit sales were up substantially, triple digits. So we're seeing great uptake. And I think this is a really, you know, very important part of the O-Link story that we can uniquely, you know, serve our customers from the very high flex to the low flex, there's a lot of companies in the life science space, which we'll talk about having solutions from, you know, soup to nuts, but often moving on to different technology platforms where it's sort of a one plus one equals two. But, you know, when you can really deliver, you know, the same technology at the same level of quality and specificity and performance from, you know, from one end of the spectrum to the other, that is truly unique. And that's more of a, you know, one plus one equals, equals three type of situation. I think we're getting recognition of that in our business as our customers clearly have needs that span from, again, discovery all the way down to wishing to apply that in some meaningful way.
spk11: Great. Thanks so much.
spk09: Please stand by for our next question.
spk08: Our next question comes from Tejas Saban with Morgan Stanley. Your line is now open.
spk06: Hi, this is Edmund on for Tejas. Thank you for taking my questions. I just wanted to circle back on the spending environment headwind increases in 1Q. I think you guys have previously mentioned seeing headwinds on both the biopharma and academic side, and a lot of talk was made on the biopharma side. So I was just wondering what you guys were seeing in terms of the academic side and if there's any sort of bifurcation in the trends that you're seeing.
spk14: Yeah, good question. Didn't comment on that. And this is maybe a fairly easy one to address. It remains largely intact, and you're not seeing any significant increase change in trends in academic and government spending. So I think that's sort of the positive end of the end markets while there's some of those headwinds in the biopharma space, not so much in academic and government spending.
spk06: Sounds good. And then circling back to the kit gross margin part, what are your underlying assumptions that drive supplier and logistic cost improvements throughout the year?
spk04: Yes, hey, it's Oscar here. So I think, I mean, looking at the Q1 GIF cross margin, I mean, it came, you know, just in line with our own expectations. So I think sort of, you know, this level we're currently seeing, I think sort of, you know, mid-80s, I think it's sort of, you know, what's sort of the level of margin that we're sort of, you know, planning for in the near term. And then I think as we've sort of discussed in the past, looking at sort of our you know, extensive sort of R&D efforts in sort of expanding our library and, you know, building that out with our own content, you know, over time will provide, you know, pretty strong sort of tailwind for, you know, the corporate and kids cross-margin.
spk06: Got it. And then finally from me, you guys have previously noted that you're actively monitoring your M&A opportunities with interest in both on acquisitions to augment your antigen development and supply chain capabilities. I was wondering if you could provide some commentary on your M&A pipeline today and also some progress update on your antigen library development efforts.
spk14: Yeah. I'll go ahead and take that. Yes, so we're – I mean, no specifics to add there aside from the fact that, you know, we're – of course actively looking at opportunities to strengthen that supply chain. As Oscar was alluding to, I think that's sort of a good opportunity for our business over time, so we'll continue to look at those. Our thesis there remains the same, so any sort of full-time opportunities that can strengthen our position there. And then, of course, our internal innovation is an area of focus as well. I think we, speaking of M&A, the Agrisera, acquisition that we did some time ago has been very fruitful, and that team performs extraordinarily well, and we're continuing to develop and build that capability as well, which has been a real shining star for the company. So we're excited about our internal efforts, and as noted, yeah, we're going to keep our eye open for some great but smart additions to the Olin business.
spk07: Great. Thank you for the time. Thank you.
spk08: I show no further questions at this time. I would now like to turn the call back to John Hymer for closing remarks.
spk02: Great. Thanks, everyone, for joining us today and for your interest in O-Link. We look forward to keeping you updated on our progress, and have a great day, everyone. Thank you.
spk08: this concludes today's conference call thank you for participating you may now disconnect you Thank you. Thank you. Thank you Thank you. Good morning and thank you for standing by. Welcome to the O-Link Proteomics fourth quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jim Medina, Vice President of Investor Relations and Capital Markets. Please go ahead.
spk15: Thanks, Michelle, and good morning, everyone. Thank you all for participating in today's conference call. On the call from O-Link, we have John Hymer, Chief Executive Officer, Carl Raymond, President, and Ostrich Hjelm, Chief Financial Officer. Earlier today, O-Link released financial results for the first quarter ended March 31st, 2023. A copy of the press release and an updated corporate presentation are available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the U.S. federal securities laws. which are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. For a list and description of the risks and uncertainties associated with O-Link's business, please refer to the risk factors section on Form 20F, Commission File Number 001-40277, filed with the U.S. Securities and Exchange Commission on March 27, 2023, and in our other filings with the SEC. We urge you to consider these factors, and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance. Also, in our remarks or responses to questions, management may mention some non-IFRS financial measures. Reconciliations of adjusted gross profit and EBITDA, constant currency revenue growth, and certain other non-IFRS financial measures to the most directly comparable IFRS measures are available in the recent earnings press release available on the company's website. This conference call contains time-sensitive information and is accurate only as a live broadcast today, May 11, 2023. O-Link disclaims any intention or obligation to update or revise any financial projections or forward-looking statements whether because of new information, future events, or otherwise, except as required by law. And with that, I will turn the call over to John.
spk02: John? Thank you, Jan, and good morning, everyone, and thank you for joining O-Link's first quarter 2023 earnings call. I'll start by discussing recent highlights and milestones we achieved during the quarter. I'll then turn the call over to Carl for details on our strong commercial performance and trends O-Link is seeing in the product omics market. Then Oscar will discuss the company's financials. During the early months of the year, O-Link continued to make major strides in the next generation proteomics market, delivering an industry-leading combination of revenue growth, financial momentum, and operational execution. We posted total revenue of $27.5 million, representing growth of 21% compared to the first quarter last year. In line were our expectations. Q1 2023 was highlighted by strong growth from kits overall, and specifically Explore kits. with continued progress toward our product mix goals. We also posted strong externalizations with robust performances by Xplore in high-plex and Signature in the low- and mid-plex segments. Proteomics remains a priority for customers driving an expansion of Omnix workflows along Olwink's entire product line, from high- to low-plex, Xplore, Signature, and Target. With more than 1,200 PA-based manuscripts now published and a growing footprint at major medical meetings, OLINK is making significant contributions to the science of proteomics every day. In addition, the UK Biobank recently made the first tranche of data available from the pioneering proteomics work conducted on the OLINK platform, releasing data from the first 1,500 proteins from roughly 54,000 individuals. We are proud that O-Link's Explore platform could be part of this tremendous journey and anticipate this landmark research will be a meaningful early step in harnessing the power of next-gen proteomics in combination with genetic information to improve human health. In the interim, BioPharma is already making decisions based on the data being generated by this effort. I want to thank the whole organization for yet another very successful quarter. It's clear that our commercial organization is executing exceptionally well, and we're also very excited to see the tremendous advances our R&D teams are making with our pioneering PEA technology. Olink continues to innovate across our entire platform with clever molecular designs, generating new and exciting opportunities spanning the entire proteomics spectrum. We're enabling new use cases and unlocking fresh value for drug researchers developers, and patients. We're also opening up new market segments and applications across existing and incumbent fleet of sequencers. Allink is committed to expanding its lead as a next-generation proteomics ecosystem. We're targeting a several-fold increase in multiplexing and throughput over time, drastically simplifying all PEA protocols from high-to-low-plex, increasing the dynamic range for the most low-abundant proteins resulting in even higher sensitivity assays, boosting customer data interpretation capabilities, and streamlining the past actionable results, creating new applications and customer acquisition opportunities with new product designs through mid- to high-throughput sequencers. And as we previously discussed, Our assay development efforts continue to advance ahead of plan, and the library of validated biomarker targets continues to increase rapidly. We expect some of these innovations to begin yielding exciting new product launches over the coming months and years, further lowering barriers and increasing opportunities for scientists around the world to apply proteomics as a strategy in their work. We believe this will continue to fuel the tailwind we've created in the age of modern proteomics. Very exciting times ahead. Stay tuned for more details. I will now turn the call over to Carl to provide more details on our commercial team's strong execution and what we're seeing in the market. Carl? Great. Thank you, John.
spk14: O-Link's first quarter showed solid growth of 21% year over year. Total revenue was made up of $13.5 million in kits revenue. $10.4 million in analysis services revenue and $3.5 million in other. Kit sales were very strong, growing almost 240% year over year, with Explore and Target performing very well to start 2023. First quarter kit mix was also strong at 49% of total revenue versus 18% in Q1 2022. We believe the timing of some analysis services orders boosted product mix towards kits in Q1 2023, with a tough analysis services comparison in Q1 2022 impacting year-over-year metrics as well. However, underlying kit fundamentals remain very good, and we continue to make strong progress toward our product mix goals. led by Explore kit sales of $9.4 million, Explore revenue of $16.9 million, with 61% of our total revenue in Q1, and 69% on a trailing 12-month basis. It was another strong quarter for Explore externalizations with 11 new sites, and the total reaching 63 at the end of March. These sites in aggregate represent more than 1.2 million in the annual sample volume potential, and we achieved roughly 780,000 in average customer pull-through during the 12 months ended March 31, 2023, stepping down only modestly from Q4 2022. Other revenue totaled $3.5 million, led by signature Q100, and we delivered 26 new instruments to customers during Q1, reaching an install base of 117. It was another strong quarter for the mid- and low-flex market segments, with significant signature placements as noted and solid uptake by new and existing customers. We also began shipments of O-Link Flex during the quarter, marking a significant expansion of our capability in the mid and low flex market and meeting market demand for scalable next-generation protein measurement solutions. Regarding the spending environment, as we previously discussed, the year-end 2022 budget flush environment was not as strong as we had seen in previous years, given an increase in macroeconomic headwinds. During the first quarter of 2023, these headwinds increased somewhat, impacting the timing of biopharma spending, including in the EMEA region where the effect on this customer segment has been greater. That said, we expect year-over-year growth in EMEA to improve in Q2 versus Q1 2023. We also note that EMEA was very strong in Q1 2022, growing more than 90% in the year-ago quarter and making for a tough comparison. Headwinds aside, customer appetite on a global basis continues to be supportive, leading us to believe that in our segment of OMICS, spending on next-generation proteomics remains a priority for our customers. Our commercial team executed with strength in the first quarter and remains focused on navigating the current environment. O-Link's commitment to innovation is evident in the rapid pace of new product launches we've delivered in a relatively short period of time since our IPO about two years ago. We've delivered low- to high-plex products, new assays, new instrumentation, new software solutions, and significant protein library expansion. I'd like to thank everyone at O-Link and our collaborators who have contributed their incredible efforts in service of improving our understanding and management of human health. As we discussed previously, we're actively monitoring external investment opportunities, including bolt-on M&A, to augment our antibody antigen development and supply chain capabilities. We'll be disciplined in our evaluation of these opportunities, seeking partners that share in our commitment to innovation and providing customers with exceptional value. We continue to strengthen our human capital as well, ending the first quarter with 630 employees, including 215 full-time employees on the commercial team. And last month, we were delighted to bring Bruno Rossi on board as OLINC's Chief Commercial Officer. We expect his considerable industry experience to be a significant advantage to our rapidly growing company. Upon Bruno's arrival, I have moved into the role of president of Olink. My immediate priorities will be supporting Bruno's transition and ensuring the success of our commercial team at Olink. Beyond that, I'll be serving a broader role where I will lead and oversee the chief commercial officer, chief operating officer, chief people officer, and chief strategy and product officer functions. Lastly, we are reiterating our full year 2023 guidance of reported revenue to be in the range of 192 to 200 million, representing growth of approximately 37 to 43% year over year. Beyond 2023, we see prospects for strong growth with O-Link continuing to operate and execute on the very sizable and growing proteomics and protein measurement market opportunity. I'll now turn the call over to Oscar to provide additional financial details.
spk04: Thanks, Carlin. Hello, everyone. First quarter revenue grew 21% on a reported basis and 25% on a constant currency basis. We reported adjusted EBITDA of negative 9.4 million versus negative 9.1 million in Q1 2022 with positive cash flow from operations. Negative adjusted EBITDA and positive cash flow from operations in the first quarter are in keeping with our typical seasonal cadence. We finished the quarter with 173 million in cash. As Carl mentioned, at the end of Q1, we had 63 externally placed revenue-generating Explore installations. Even with the significant number of new externalizations of the past three quarters, average customer pull-through over the last 12 months was a strong 780,000, an indication that the quality of our Explore externalizations remains high. We continue to expect variability in quarter-to-quarter pull-through, which could be further impacted by our customer spending seasonality, though we anticipate continued growth over time. Driven by very strong performance from Explore Kits as well as Target, total kits revenue for the first quarter grew 239% to 13.5 million as compared to 4 million for the first quarter of 2022. Analysis services revenue for the first quarter was 10.4 million versus 16.6 million in the first quarter of 2022. This brought product mix to 49% kits and 38% services. As called previously, discussed variability in customer buying drove a higher kit mix in Q1 than we anticipated. We expect Q2 to revert to a more typical seasonality. This means we expect Q2 kit mix to decline from Q1, but still expect kits to be approximately 50% of total revenue for 2023, helping drive strong improvement in our corporate margin. Led by sales In Signature Q100 instruments, other revenue was 3.5 million as compared to 2.1 million for the first quarter last year. By geography, revenue during the first quarter was 14.7 million in North America, 8.8 million in MEA, and 3.9 million in China and the rest of the world. MEA decreased year-over-year, though the Americas and APAC both saw impressive growth of 59% and 39% respectively. On EMEA trends in the current quarter, we expect year-over-year revenue growth will improve in Q2 versus Q1, and with the organic rate improving even more significantly when excluding UK biobank revenue booked in Q2 of 2022. Consolidated adjusted gross profit margin was 67% during Q1 as compared to 63% in Q1 of 2021. Adjusted gross profit margin for kids was 83% for the first quarter of 2023, as compared to 89% for the first quarter of 2022. The decrease, which was in line with our internal planning, was primarily due to increased supplier cost and logistic expenses. Over the long term, we continue to see strong opportunity for kids' gross margin to improve as we increase our own content on the platform. Adjusted gross profit margin for analysis service was 62% compared to 58% in Q1 2022, With the completion of the UK Biobank project last year, in addition to the tremendous improvement in efficiency made by our services team over the past couple of years, we expect service margin will improve on a year-over-year basis and following a seasonal cadence, be it a bit higher in the second half of the year. Adjusted gross profit margin for other was 21% in Q1 2023 as compared to 47% for Q1 2022, with a decrease primarily due to chip and hardware segment and signature. Total operating expenses for the first quarter were 34.9 million as compared to 29.5 million for Q1 2022. The increase was largely due to expansion and investment in the overall O-Link organization, as well as costs related to our capital rates. Operating expenses are broken out as follows. Selling expenses were 12 million versus 9.5 million for Q1 2022. Administrative expenses were 16.4 million versus 14.4 million for Q1 2022, and R&D total 6.4 million versus 6 million for Q1 2022. Net loss for the first quarter was 14 million as compared to a net loss of 12.2 million for the first quarter of 2022, when net loss per share was 11 cents as compared to a net loss of share of 10 cents in the first quarter of 2022. During the first three months of the year, we successfully completed a primary equity offering and also achieved positive free cash flow, exiting the quarter with 173 million in cash. As we consider our options to further accelerate investment into strategic internal initiatives and the evaluation of external opportunities, we'll remain disciplined with the use of our balance sheet. And we expect to operate with our previously issued profitability guidance. As with our previous investment, We intend to remain focused on delivering value to our customers and shareholders over time. Now to our guidance. When considering the dynamic macroeconomic environment and its headwinds, Holding continues to expect another year of strong industry-leading growth. We are reiterating our 2023 reported guidance to be in the range of 192 to 200 billion, representing growth of approximately 30%. 7% to 43% on a reported basis and roughly 38% to 44% on a constant currency basis. O-Link also expects revenue will progress along a seasonal pattern weighted slightly more toward the second half of the year than in recent years, but with fundamentals that continue to be positive. In addition, O-Link believes it will return to profitability this year as measured by our adjusted EBTA. Looking further ahead, we're still in the very early phases of penetrating our core markets in low-, mid-, and high-plex proteomics, with exceptional room for growth over the near- to long-term horizon. I will now turn the call back to John for his concluding remarks.
spk02: Thank you, Oscar. Thank you, Carl and Jan. During the early months of 2023, we continued to strengthen our leadership in the next-generation proteomics market, delivering exceptional value to customers and the community. And at this point, we'll open up the call for questions. Operator?
spk08: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. The first question comes from Puneet Sudha. With SBB Securities, your line is open.
spk03: Hey, guys. Thanks for taking the questions, and congrats on the strong quarter here. So let me ask about that. The kits performance obviously came in ahead of us. Explorer installs were strong in the quarter. John, could you tell us a bit about where those installs are coming from? There are obviously a number of questions in the market given what's happening with capital funding, early biotechs. So, would love to get your thoughts around where you're seeing momentum among the explorer and what are you seeing in terms of the overall, you know, growth expectations from the emerging biotechs and overall, you know, what are you hearing from your customers? Would love your thoughts on that first.
spk02: Hey, good morning, Puneet. Thank you very much. Good question. I'll let Carl lead that one.
spk14: Hey, Puneet. Good morning. Yeah, so we continue to see demand pretty balanced across our end markets for Explore. So regardless of, you know, any headwind commentary you're hearing, I think, again, we're, you know, the demand remains strong across all of our segments. I think so that's very positive and speaks to the overall trend and demand for next-generation proteomics. As far as biotech, we are sort of much more established in the top tier biopharma and larger biopharm. We have significantly less exposure, I think, to startup-type biotech. So that's not a significant part of our business and not creating any meaningful headwinds for us is, of course, that the funding environment there looks a little bit different. But again, that's not an area of high exposure for our customers. And then by region, again, somewhat balanced, you know, quarter by quarter, you know, shifts left and right a bit. But overall, it's been we've had strong growth in all regions.
spk00: Got it.
spk03: And then, you know, in terms of visibility, obviously Q1 is given the seasonality, generally your lowest quarter, second half is much more heavier. So what sort of visibility that you have into that? Obviously you have more Explorer installs this year versus last year. I don't know if that gives you more confidence, but maybe just talk about the visibility that you have into the second half and especially maybe the fourth quarter.
spk14: Yeah, so the pipeline continues to develop in a healthy way. Similar to prior commentary, it won't be exactly consistent every quarter. It'll bounce around a bit, but the trend of demand that we spoke to earlier remains fully intact. And these Q1 numbers, as we just reported, sort of back that up. It was significant progress that we made.
spk03: um yeah and we expect the business to keep growing as we've uh as we've talked about through the year we haven't changed our guidance um and so we expect the the same trends that we spoke of to uh you know to continue throughout the year okay and then last one for me is on the service side that came in below our estimate um uh was there a push out um in the quarter that we should now expect in second quarter um you know how should we think and and you know when we think about in full year sort of timeline. I think Oscar alluded to this being 50% kits. Maybe just give us a sense of sort of how that cadence for service versus kits plays out through the year. Thank you.
spk14: Yeah, so as you stated, our thesis on the full year kit mix remains the same. Q1 came in quite strong, and we did see some service opportunities shifting quarters a little bit, so I think we'll see a little bit step up in AS in the second quarter. And again, just sort of as we stated, it tends to move around a little bit, but I would expect, you know, based on some of those service deals, you know, where we saw a little softness in Europe around the biopharm services business, we'll see that shift a little bit, you know, in Q2. We'll see more strength in the AS business there.
spk03: Yeah, super. All right. Thanks, guys.
spk08: Please stand by for the next question. The next question comes from Sungji Nam with Scotiabank. Your line is now open.
spk01: Hi. Thanks for taking the questions. For your external kit customers, just would you have a sense of what the split is between the high throughput or, you know, customers that are using high throughput versus mid throughput sequencers? And also with the recent launch of NovaSeqX, do you have a sense of whether that could drive further, you know, growth acceleration over the next, you know, next year or so?
spk14: Yeah. It's Sanjay. This is Carl. I'll take that. Yeah. So most of our customers are leveraging high throughput sequencers for certain. You know, we have capability on the NextSeq system as well, but we see, due to the throughput and economics, I think that the higher throughput sequencer has been a more attractive option in general, but I think that speaks to a larger, you know, market opportunity out into the future, and there's quite a large install base that we could leverage in theory, you know, for our portfolio. And then NovaSeqX, more specifically, I think is actually, I mean, it's It's great for the genomic market. It's great for the next generation proteomics market as it drives down the cost of sequencing for end-user customers. So any benefit that they have in the market and that knock-on benefit as some of new competitors enter that market is just a net positive for our customers overall. So, NovaSeqX specifically, I don't think, is necessarily a dramatic difference in what we'll see in our business, but some, you know, incremental opportunities for our customers, for sure. The sequencing costs continue to have pressure.
spk01: Got it. And then, in terms of, you know, your next-gen product development pipeline, Could you kind of comment on how that's shaping up, you know, if you're anticipating any near-term milestones there?
spk02: Yeah, no, absolutely. Morning, Sunji. John here. So, yeah, and as I alluded to in my former script, right, I'm super excited by the amazing innovation we continue to do in this organization. I mean, the clever molecular designs and tricks we have and continue to explore are super exciting across the entire spectrum of our portfolio, everything from explored through target and focus and how we can apply these on top of sort of the additional advancements that we're doing on generating new antibodies and validating new acids, etc. So, yes, In particular, I think what we've seen over the past year or so internally, we've really done some amazing work. And this will propel itself into some really exciting new things coming out. As we said also that we expect, you know, new product launches this year. So we couldn't actually be more excited on how we continue to really lead and drive this next generation proteomics market with our truly disruptive and unique top of class technology PAs.
spk01: Got it. And then if I could squeeze in one more question. With the recent positive data coming out of all the Alzheimer's disease drugs, was kind of curious if you were seeing any uptick in terms of the demand for, you know, your neurology panels or just kind of, you know, other kind of development efforts?
spk02: Yeah, no, very good point, right? We've seen that for some time. I mean, neuroscience is a super important field that really needs new molecular tools and strategies, what we actually provide to better define subgroup of patients, to develop smarter targets, to predict response and modify treatments over time. So you're right, we're actually seeing an uptick in discussions with customers across the neuroscience space, and Alzheimer's is very high on that agenda. So yes, spot on, and it's super exciting for us and the community that with novel technologies as ours that will hopefully can help to unveil new opportunities to really improve patient outcomes. So yes, very exciting. nice and exciting momentum for sure.
spk01: Great. Thank you so much. Thank you.
spk08: Please stand by for the next question. The next question comes from Kyle Mixon with Canaccord. Your line is now open.
spk05: Hey, guys. Thanks for taking the questions. Congrats on the quarter. Wanted to talk about the Explore mixed dynamics, I guess. So congrats on the Explore revenue. The case revenue came in pretty impressive. That's, I think, 300% growth year-over-year. But the overall Explore growth of 7% was less than your total business. That would imply the service revenue for Explore declined 45% year-over-year. I know it's a pretty... tough comp it sounded like compared to 1Q22, but I mean, was that expected? Like maybe that was a blip given the order dynamics or the macro headwinds affecting analysis services, or was there something actually happening in that export segment that could be like a longer-term trend?
spk04: Hey, Karl. It's Oskar here. So I think, yes, very good question. So I think, I mean, as Karl alluded to in his part of the script, we saw some weakness in Europe and in pharma, and that was sort of in particular in services. So I think that is really what is driving the year-on-year decrease in services as a whole. And you clearly would explore being a large part of the business, that's going to impact explore as well. And then I think if you peel that onion a bit further, we were seeing Q1 last year was exceptionally strong in Europe in the service segment. We had a couple of really, really, many big projects. you know, that was sort of, you know, slated for sort of, you know, later this year or, you know, that didn't sort of materialize in the same way this Q1 as we saw last Q1. So it's also a very sort of tough comp for pharma services in Europe. And I think that is sort of what sort of, you know, putting a dent in the overall growth number. I think if you look at just sort of the growth in America and in APEC, I mean, 51% and 39%, I think, you know, it's a good momentum in that part of the business.
spk05: Okay, thanks, Oscar. That was great. And then maybe just kind of jumping off that, the EMEA biopharma trends, I think this was touched on earlier, but basically, you know, is that primarily small biotech or large pharma? Is that mainly kits or services? I know that sounded like a 1Q kind of issue, but can you just share some more detail on what you're experiencing most recently in EMEA in that biopharma segment? It sounded like it's taken back up, but I mean, you know, how persistent could that be, and is that affecting, you know, others in the space more broadly, do you think?
spk14: Yeah, hey, Kyle. It's Carl. Yeah, so that was, as Oscar stated, it was more in the sort of in the services space. And some of those headwinds, I think we talked a little bit about this last quarter, I think it's really friction in the buying cycle for pharma. And I think we've heard this from some peers in the science tools market. So I think that's more of a sort of stretching of business cycle type of issue more than anything else. We're not experiencing anything you know, any losses, et cetera, in regard to that. So it's more of a timing type thing. So again, I think the overall trends in, you know, next generation proteomics and the demand there remains intact and just some timing things. And again, you know, the Europe comments are again off of extraordinarily strong comps from the year prior. you know, with the growth we had in Europe, especially in services, as Oscar had noted. So, you know, when the headwinds start to reside in biopharma, you know, we'll see. But, you know, again, we remain positive overall on that segment. And in the prior comments, we're not highly exposed to early biotech, so that's not a significant concern for us.
spk05: Okay. Thanks, Carl. And then just lastly, one technical question maybe for John. Could you guys just clarify the dynamic range of the Xplor offering with and without dilution? I think it's 8 to 10 logs is what your materials typically state. I think that assumes some level of dilution. If that's the case, would it be beneficial to increase the non-diluted dynamic range? Is there a path to do that in the future iteration of Xplor?
spk02: Hey, thanks, Kyle. Great to hear you pick up on the technical details. Yeah, so our approach is we've been very clear with most importantly to our customer, but also, of course, to investors, right? So we try to be very particular in the assay development of each and every assay. So our approach is to ensure when we develop those assays that we have the appropriate a relevant dynamic range to measure proteins in a healthy, but also a severe disease state. So that sort of put the requirements on the dynamic range of the assay itself. And that's what we verify and validate in our assay development and product development efforts prior to releasing new products. So a quite unique approach in the market and a very thorough, basically single-plex asset validation across each and every biomarker target. With that said, as I somewhat alluded to with molecular tricks, so for example, capturing non-bound oligos to increase signal to noise, which will actually increase dynamic range and sensitivity. Are those things that we can do and are working on? Absolutely. Where is it most applicable for our product portfolio? So those are the type of sort of molecular designs that we are developing and contemplating and also where, you know, applying it to the products we think would make most sense for science. So hopefully that sort of in a broad perspective answers those questions that, yes, we definitely have capabilities and that we are, you know, led by science and customer needs and applying those efforts to produce that product.
spk05: Perfect. Thanks, John. Thanks, guys. Thank you.
spk08: Please stand by for the next question. The next question comes from Matt Sykes with Goldman Sachs. Your line is now open.
spk10: Hi, this is Evie Kozlowski on for Matt. Thanks for taking the questions. Could you talk a bit about the kit business and specifically explore as it relates to customer onboarding and installation time? Have you been able to shorten the duration of the installation process given the momentum you've seen in that business?
spk14: Yeah, hi, Evie. It's Carl. Yeah, we're always looking at ways to optimize you know, onboarding and to make it seamless for our customers. And as John alluded to, we're always working on innovations and opportunities to make that better and better over time. That's our intention. And so I guess the simple answer is yes, and we continue to work on this and develop it. So, you know, know right now we feel good about where we are with that and of course there's always more opportunity to continue innovating and improving okay that's helpful thank you and then can you talk about the growth you're seeing in the mid to low plex with the target and focus focus kits and what type of growth you're seeing in these products yeah i mean we're really um excited about that i think it's we talk a lot about explorer we get a lot of questions on that as you hear but We're very excited about that business. As you saw, the signature unit sales were incredibly strong in Q1. You know, kit sales were up substantially, triple digits. So we're seeing great uptake. And I think this is a really, you know, very important part of the O-Link story that we can uniquely, you know, serve our customers from the very high flex the low flex there's a lot of companies in the life science space which we'll talk about having solutions from you know soup to nuts but often moving on to different technology platforms where it's sort of a one plus one equals two but you know when you can really deliver you know the same technology at the same level of quality and specificity and performance from you know from one end of the spectrum to the other that is truly unique and that's more of a you know one plus one equals equals three type of situation. I think we're getting recognition of that in our business as our customers clearly have needs that span from, again, discovery all the way down to wishing to apply that in some meaningful way.
spk11: Great. Thanks so much.
spk09: Please stand by for our next question.
spk08: Our next question comes from Tejas Saban with Morgan Stanley. Your line is now open.
spk06: Hi, this is Edmund for Tejas. Thank you for taking my questions. I just wanted to circle back on the spending environment headwind increases in 1Q. I think you guys have previously mentioned seeing headwinds on both the biopharma and academic side, and a lot of talk was made on the biopharma side. So I was just wondering what you guys were seeing in terms of the academic side and if there's any sort of bifurcation in the trends that you're seeing.
spk14: Yeah, good question. Didn't comment on that. And this is maybe a fairly easy one to address. It remains largely intact, and you're not seeing any significant increase change in trends in academic and government spending. So I think that's sort of the positive end of the end markets while there's some of those headwinds in the biopharma space, not so much in academic and government spending.
spk06: Sounds good. And then circling back to the kit gross margin part, what are your underlying assumptions that drive supplier and logistic cost improvements throughout the year?
spk04: Yes, hey, it's Oscar here. So I think, I mean, looking at the Q1 gift cross margin, I mean, it came, you know, just in line with our own expectations. So I think sort of, you know, this level we're currently seeing, I think sort of, you know, mid-80s, I think it's sort of, you know, what's sort of the level of margin that we're sort of, you know, planning for in the near term. And then I think as we've sort of discussed in the past, looking at sort of our you know, extensive sort of R&D efforts in sort of expanding our library and, you know, building that out with our own content, you know, over time will provide, you know, pretty strong sort of tailwind for, you know, the corporate and kit cross-margin.
spk06: Got it. And then finally from me, you guys have previously noted that you're actively monitoring your M&A opportunities with interest in both on acquisitions to augment your antigen development and supply chain capabilities. I was wondering if you could provide some commentary on your M&A pipeline today and also some progress update on your antigen library development efforts.
spk14: Yeah, I'll go ahead and take that. I mean, no specifics to add there aside from the fact that we're actively looking at opportunities to strengthen that supply chain. As Oscar was alluding to, I think that's sort of a good opportunity for our business over time, so we'll continue to look at those Our thesis there remains the same, so any sort of bolt-on opportunities that can strengthen our position there. And then, of course, our internal innovation is an area of focus as well. I think we, you know, speaking of M&A, you know, the Agrisera acquisition that we did some time ago has been very fruitful, and that team performs extraordinarily well, and we're continuing to to develop and build that capability as well, which has been a real shining star for the company. So we're excited about our internal efforts, and as noted, yeah, we're going to keep our eye open for some great but smart additions to the Olin business.
spk07: Great. Thank you for the time. Thank you.
spk08: I show no further questions at this time. I would now like to turn the call back to John Hymer for closing remarks.
spk02: Great. Thanks, everyone, for joining us today and for your interest in Olink. We look forward to keeping you updated on our progress, and have a great day, everyone. Thank you.
spk08: This concludes today's conference call. Thank you for participating. You may now disconnect.
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