Teknova(US:TKNO)2023-11-11 10:01Financial Data and Key Metrics Changes - Total revenue for Q3 2023 was $8.2 million, a 24% decline from $10.7 million in Q3 2022. Excluding two large non-biotech customer deliveries in Q3 2022, underlying growth was approximately 5% [8][59] - Gross profit for Q3 2023 was $1.5 million compared to $4.8 million in Q3 2022, with gross margin at 18.0%, down from 44.6% in the prior year [9][80] - Net loss for Q3 2023 was $10.2 million or $0.34 per diluted share, compared to a net loss of $22.5 million or $0.80 per diluted share in Q3 2022 [81] - Adjusted EBITDA was negative $5.5 million for Q3 2023, compared to negative $4.6 million in Q3 2022 [60] Business Line Data and Key Metrics Changes - Lab Essentials revenue was $7.3 million in Q3 2023, a 23% decrease from $9.5 million in Q3 2022, attributed to a lower number of customers and lower average revenue per customer [79] - Clinical solutions revenue was $0.6 million in Q3 2023, a 35% decline from $0.9 million in Q3 2022, due to lower average revenue per customer, partially offset by a higher number of customers [58] Market Data and Key Metrics Changes - The company has been qualified by 12 high-profile customers since June, with eight involved in cell and gene therapy development, indicating a positive market response [5] - The company expects market conditions observed in Q3 to persist, anticipating total revenue for fiscal 2023 to be at the low end of the guidance range of $37 million to $40 million [7][61] Company Strategy and Development Direction - The company is focused on executing its growth strategy to help customers accelerate the introduction of novel therapies and diagnostics [14] - Significant investments have been made in a new GMP facility, which is expected to unlock potential for future growth, with capacity to deliver approximately $200 million in annual product revenue when fully utilized [76][54] - The company is committed to managing expenses while preserving critical investments for long-term growth [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2024, noting an increase in clinical customers and positive feedback from recent audits [56][71] - The company believes it is near the bottom of the current market conditions, with signs of order increases and stabilization in biotech funding [41][85] - Management highlighted the importance of maintaining investments while managing costs to support future growth [37][116] Other Important Information - The company raised $22.9 million in capital through a registered direct offering and paid down $10 million of long-term debt during Q3 2023 [10][75] - Operating expenses for Q3 2023 were $10.2 million, significantly reduced from $27.7 million in Q3 2022, driven by reduced headcount and spending [59] Q&A Session Summary Question: What is the outlook for revenue per customer in 2024? - Management indicated steady increases in average revenue per customer on the lab essentials side, but noted that newer clinical customers may lead to flat or declining revenue per customer in that segment [28][44] Question: What percentage of the customer base has visibility, particularly in biopharma? - Management stated that biopharma constitutes about half of the customer base, with emerging biotech making up a significant portion, and noted a decline in that segment due to funding issues [31][47] Question: Are there plans for further cost-cutting efforts? - Management confirmed that while they have made significant reductions in operating expenses, they do not anticipate dramatic cuts going forward to preserve critical investments [105][115] Question: What is the status of the new GMP facility and customer audits? - Management reported positive feedback from customers who have audited the new facility, with a pipeline of audits extending into 2024 [70][91]