Alpha Teknova, Inc.

Hello and welcome to Alpha Tech Nova third quarter 2024 financial results. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the 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. I would now like to hand the conference over to Jennifer Henry, Technova's Senior Vice President of Marketing. You may begin. Thank you, Operator.

Welcome to Technova's third quarter 2024 earnings conference call. With me on today's call are Stephen Gunstream, Technova's President and Chief Executive Officer, and Matt Lowell, Technova's Chief Financial Officer, who will make prepared remarks and then take your questions. As a reminder, the forward-looking statements that we make during this call, including those regarding business goals and expectations for the financial performance of the company, are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning these risk factors is included in the press release the company issued earlier today, and they are more fully described in the company's various filings with the SEC. Today's comments reflect the company's current views, which could change as a result of new information, future events, or other factors, and the company does not obligate or commit itself to update its forward-looking statements except as required by law. The company's management believes that, in addition to GAAP results, non-GAAP financial measures can provide meaningful information about the company's financial performance and the effectiveness of its business strategy. We will therefore use non-GAAP financial measures of certain of our results during this call. Reconciliations of GAAP to non-GAAP financial measures are included in the press release that we issued this afternoon, which is posted on both Technova's and the SEC's website. Non-GAAP financial measures should always be considered only as a supplement to and not as a substitute for or as superior to financial measures prepared in accordance with GAAP. The non-GAAP financial measures in this presentation may differ from similarly named non-GAAP financial measures used by other companies. Please also be advised that the company has posted a supplemental slide deck to accompany today's prepared remarks. It can be accessed on the Investor Relations section of Technova's website and on today's webcast. And now, I will turn the call over to Stephen.

Thanks, Jen. Good afternoon, everyone, and thank you for joining the call today. We reported strong results in the third quarter, with 17% revenue growth compared to the same period last year and quarterly free cash outflow of $2.4 million, our lowest level in over three years. I am pleased with how we're advancing our strategy while continuing to manage our costs, and I believe we're on track to achieve our long-term goal of sustainable above-the-market growth. Let me start by talking about the biopharma market environment. Even though some of our biopharma customers continue to rationalize their clinical pipeline and reduce headcount, we believe the market has now stabilized and we expect modest growth in 2025. Notwithstanding that market environment, our growth in the third quarter was driven by sales of custom research and clinical grade reagents to biopharma customers. We are also encouraged by the fact that the number of our active clinical customers, again, increased in the third quarter. The growth in the number of accounts and our sales to these biopharma customers is encouraging because we expect these customers to increase their annual spend with us as their therapies move closer to commercialization. Outside of sales of custom products to biopharma, we were also pleased with the underlying performance of the broader business. Our lab essentials catalog sales returned to high single-digit growth. offset primarily by lower sales of custom products to a few large life science tools companies, which we believe were either timing-related or account-specific. Our ability to achieve high rates of revenue growth in spite of headwinds associated with a few customers is a testament to the diversity of our business and customer base, with no single direct customer representing more than 4% of our total revenue in the trailing 12 months. When it comes to managing our costs, we are seeing the benefit of the difficult decisions we've made over the past two years. We have reduced our operating expenses by more than $9 million on an annualized basis since the end of 2023 and $19 million since the end of 2022. Lower operating expenses have combined with operational improvements to deliver our lowest free cash outflow since we began investing in our growth strategy in the first half of 2021. In summary, I feel confident that we'll achieve our long term goal of sustainable above market growth for several reasons. First, the biopharma market environment has stabilized in 2024 and we expect modest growth in 2025. Second, we continue to build a strong pipeline of clinical customers, which we expect will drive additional revenue and growth as their therapies move towards commercialization. Third, Our business is prepared to scale with the infrastructure and facilities in place to support up to approximately $200 million in revenue. Fourth, we have successfully reduced our costs while executing on our core strategy. And finally, we have the liquidity necessary to reach profitability without additional capital. I will now hand the call over to Matt to provide additional color on the financials.