Quanterix Corporation

Thank you for standing by. Welcome to the Quinteros Corporation First Order 2023 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 PAR11 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that the conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Doyle, Chief Financial Officer. Please go ahead.

Thanks very much. Good afternoon, everyone, and thanks for joining us today. With me on today's call is Masoud Toulou, President and CEO of Quantarix. Before we begin, I'd like to remind you about a few things. The call will be recorded and will be available on the investor resources section of our website. Today's call will contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act. These forward-looking statements are based on management's beliefs and assumptions and on information available as of the date of this call. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statement. The risks and uncertainties that we face are described in our most recent filings with the Securities and Exchange Commission. To supplement the company's financial statements presented on a GAAP basis, the company has provided certain non-GAAP financial measures. Management uses these non-GAAP measures to evaluate the company's operating performance in a manner that allows for meaningful period-to-period comparison and analysis of trends in its business. Management believes that such measures are important in comparing current results with other period results and are useful to investors and financial analysts in assessing the company's operating performance. The non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for, the financial information presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures set forth in the appendix's presentation and in the earnings release issued earlier today. With that, I will turn the call over to Massoud.

Thank you, Mike, and good afternoon, everyone. On today's call, I'll cover progress on our comprehensive transformation plan, results, and recent developments in the clinical use of plasma biomarkers. We see 2023 as a year of focus and disciplined execution as we build the organization for future growth. I'm pleased to say we continue to make progress on our transformation plan in order to deliver quality products to our customers. Since initiating the plan, we have identified the gaps required for industrial manufacturing taken steps to improve the stability and scale of common assay components and have begun early stages of validating and transitioning these improvements into operations, a process that will continue throughout this year. While still early, several of the recently implemented operational processes have positively impacted yield and efficiencies. Successful outcomes of our transformation will be new products used and operating lines to efficiently manufacture those products by the end of this year and transitioning customer demand from our existing assays to new assays through 2024. In making these changes, we believe our customer experience will be significantly improved and operating efficiencies will benefit our margins, setting us in the right trajectory to scale revenue profitably. I've never been more confident and proud of our talented people. Transformations like these usually don't happen in such high intensity and tight timeframes, but it's the individuals in the company and their resolve that are propelling us forward. Led by our operating, commercial, and service leaders, and talented executive leadership team, it's a focused march towards successfully running the company while implementing the transformation by end of year. Moving on to first quarter results, we delivered $28.5 million in total revenue, up 10% from the fourth quarter of 22. Q1 consumable revenues increased by 25% quarter-over-quarter, while collaboration and instrument revenue modestly declined, collaboration being the reduction in licensing and 3% decline in instruments primarily due to softness in Asia-Pac related to economic uncertainty. One of our advantages in this area is that macro uncertainties and reluctance for CapEx purchases can be partially offset by customers performing research and clinical trial work through our accelerator program. GAAP gross margin was 59.5%, and non-GAAP gross margin was 53.1%, which both represent sequential increases of over 1,000 basis points over Q4-22. I do want to point out that we expect gross margin headwinds in the second half of 23 as we begin implementing assay efficiency improvements and carry two SKUs for our top products into our manufacturing lines. This work is often noisy as we refine the assay in the final stages and can increase scrap and other costs in the near term. That said, we still expect to exit 23 with gross margins higher than 22. Our cash decreased approximately $9.1 million since last quarter in line with expectations. And we ended Q1 with $329 million in unrestricted cash. Given the first quarter results, we are modestly adjusting upwards our guidance for the full year. We are targeting revenues in the range of $104 to $111 million and non-GAAP gross margins in the mid-40s on a percentage basis and GAAP gross margin in the high 40s. The sales guidance increase is driven by consumables, accelerator services, and continued collaboration revenues, offsetting potential softening of instrument revenue. Now I'll turn over the call to Mike to discuss some more financial details. Mike?