Alpha Teknova, Inc.

Good day and welcome to Technova's fourth quarter and full year 2025 financial results call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Ms. Jennifer Henry, Senior Vice President of Marketing. Please go ahead.

Thank you, operator. Welcome to Technova's fourth quarter and full year 2025 earnings conference call. With me on today's call are Steven 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 insight when evaluating the company's financial performance and the effectiveness of its business strategies. 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 to Technova's website and at www.sec.gov. 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.

Thank you, Jen. Good afternoon, and thank you, everyone, for joining us for our fourth quarter and full year 2025 earnings call. 2025 was another year of strong all-around execution for Technova. Our top line revenue growth accelerated to 7% compared to 2024, despite a challenging macro environment. Revenue from sales of our catalog products led the way, growing by low double digits compared to 2024. The number of customers actively buying our clinical products increased to 60, 25% more than during 2024. We set new standards for customer service levels, delivering approximately 95% of our products on time in 2025. And we beat both our gross margin and adjusted EBITDA targets while utilizing only $10 million of cash, substantially better than our free cash outflow guidance of $12 million. Now, as we look to 2026, I want to discuss why I believe Technova has reached an inflection point in the growth strategy we articulated during our initial public offering back in June of 2021. First, we have become a critical supplier of GMP-grade reagents to developers of emergent therapies and diagnostics. Second, we deliver research-grade reagents to a large, diverse, predictable, and growing set of customers, and third, With the revenue growth we anticipate, Technova will offer an attractive financial profile of 60% to 65% gross margins and 25% to 30% adjusted EBITDA margins. Starting with our GMP-grade reagents, as I noted earlier, we are a critical supplier to 60 clinical customers, 50 of which are biopharma-related. We believe we are now supporting at least 70 therapies from these 50 customers. Notably, we are increasing both the total number of therapies and the number of later stage therapies we support as many of these therapies move closer to commercialization. We believe that at the end of 2025, we supported five therapies in phase two or later and 12 in phase one, up from three and 10 respectively at the end of 2024. We now believe that we will be supporting at least to commercial therapy by the end of 2027. The remaining 10 of our clinical solutions customers are primarily within the life science tools and diagnostics market segment. We supply these customers with everything from private label proprietary reagents for use in bioprocessing workloads to GMP grade ready to use sample isolation and preparation reagents for use in cancer screening applications. We believe that, similar to the therapies we support directly, these customers will scale their use of our products significantly as the diagnostics or therapies they're supporting or developing receive FDA approval. Now, shifting to our research reagents, over the last 30 years, we have built a diverse and predictable business that has grown, on average, in the low double digits. This growth is attributable to our ability to provide a wide breadth of high-quality critical reagents for the entire life science community, combined with our ability to consistently achieve best-in-class turnaround times. This is why we have attracted over 3,000 customers while maintaining an overall 95% annual customer retention rate and a low customer concentration with only 18% of our total revenue coming from the top 10 LabEssentials customers in 2025. As we look forward, we plan to build on these strengths by streamlining order-to-purchase experiences and expand further into private label manufacturing, particularly in the life science tools and diagnostics market segment. Already, many of our larger customers utilize Technova to manufacture their proprietary formulations for direct inclusion in their kits. or to produce bulk reagents for in-house manufacturing of their kits. We believe this capability will allow us to further penetrate high-growth market segments like sequencing, spatial genomics, and cancer screening. Finally, we will generate significant operating leverage in our P&L as our revenue increases. That's because the investments we've already made in our facilities, IT infrastructure, and automated processes and equipment will enable the company to generate more than $200 million in revenue with limited additional operating and capital expenditures. As a result, we believe that incremental revenue will continue to drop to the bottom line at a rate of approximately 70%. Considering our current cost structure and anticipated revenue growth this year and next, We therefore expect to become adjusted EBITDA positive by the end of 2027. Now, let's talk about the possible catalysts for our business over the next 12 to 18 months. Given that we have begun to see investments in our growth strategy pay off, as well as some market stabilization in life science tools, diagnostics, and bioprocessing, we have decided to invest further in our commercial capabilities and activities focusing on select market segments where we feel we have a differentiated product offering. Albeit relatively modest at approximately $2 million per year, we believe these investments will allow us to accelerate revenue growth towards the end of 2026 and into 2027 by expanding our presence with customers in these attractive market segments. We are excited to turn our primary focus back to investing in the business and away from cost-cutting. In addition, there has been an uptick in reported biotech funding in Q4 2025 and early in Q1 2026. Based on historical data, we see approximately a four-quarter lag between funding changes and their effects on our revenue. Therefore, if the increases in biotech funding continue, we would expect to see growth in biopharma-related revenue beginning in Q4 2026 Aside from funding, we also believe that some of the therapies and diagnostics we support may receive FDA approval in 2027, which we believe would result in an increase in the frequency and volume of purchases of our products. Lastly, as we have mentioned previously, we believe there is an opportunity to expand our product portfolio through collaborations and acquisitions. While we have spent recent years investing in infrastructure systems and scalability, Numerous other companies have focused on developing novel products and technologies. By acquiring or collaborating closely with these companies, we believe we can expand our product portfolio and geographic footprint. The combination of our operational commercial scale with our potential collaborators' novel products and technologies creates a great opportunity to drive additional top-line growth and margin expansion over the longer term. All things considered, we believe we are well-positioned to drive sustainable, above market revenue growth of 20 to 25% over the longer term and deliver long-term value for our shareholders. I will now hand the call over to talk through the financials.