Bruker Corporation (BRKR) Earnings Call Transcript & Summary

All right. Well, good morning. I would like to welcome everyone to Bruker Corporation's 2023 Investor Day. I'm Justin Ward, Senior Director of Investor Relations and Corporate Development. Now before we begin, I would like to refer you to our safe harbor statement, which is presented here now behind me on the screen, but is also accessible on the Investor Relations portion of the Bruker website in the IR Day presentation deck. So now I will briefly review the agenda for the day. We will begin with Dr. Frank Laukien, Bruker's President and CEO, who will discuss Bruker's strategy and key opportunities with a particular focus on proteomics and spatial biology. After Frank, we will have various business leaders to discuss some of the compelling innovations and opportunities across Bruker's Project Accelerate initiatives, including Dr. Mark Munch, the President of Bruker's Nano Group. Then Gerald Herman, Bruker's Chief Financial Officer, will discuss Bruker's financial performance, operational excellence program, and will provide an update to our medium-term financial outlook. Finally, we will conclude with a Q&A session. For those listening by webcast, please note that you can submit your questions through our Investor Relations inbox by e-mailing us at [email protected]. With that said, it is now my pleasure to introduce Bruker's CEO, Frank Laukien.

Thank you very much. Good morning, and good morning to those online as well. These are not my slides, but we'll get there. I hope you enjoyed the tour this morning. Thank you for coming out a little bit early before the presentations and the Q&A. And you've obviously seen some very unique NMR and mass spectrometry timsTOF tools in the last hour and 15 minutes. Apologies to those online. The tour we got carried away, of course, and had some very good questions. And so we're starting just a little bit late. So ladies and gentlemen, thank you for being here today. It's really wonderful to see so many well-known faces and people that have known on the sell side or buy side for many years. And so many new people that are perhaps somewhat new to the Bruker story. I just want to take a deeper dive today. I am Frank Laukien, I'm the President and CEO. And with that, I'd like to jump into giving you an introduction and an update, so to speak. Right. So here is what I'm proposing what might be some of the key takeaways of our Investor Day 2023, we call it disciplined entrepreneurialism at work. So our strategy, our Project Accelerate 2.0 initiatives are clearly working. They are continuing to transform Bruker into a higher organic growth company. We had, as you will see later in Gerald's presentation from gone from -- or are going and have gone recently and recent in the last 3 years with very solid evidence from a market growth company to the one that has very significantly outgrown the organic growth rates of our market, and we expect to be able to continue to do that. So for the time frame in which we -- for our medium-term outlook, we are -- we believe that we can outgrow the market, which may grow at 4% to 6% by 200 to 300 bps per year. This year, with the midpoint of our guidance at 10%, we would be higher than that. Last year that was approximately 2 and 3 years ago, we grew 19%, although that was partly a recovery from the COVID year 2020. Nevertheless, excellent growth, and we expect to be able to be more permanently a high-growth company. The dual strategy of Project Accelerate 2.0, we'll talk a lot about some of the key initiatives there particularly proteomics and spatial. But along with our operational excellence, rigor and discipline and excellent Bruker management process that together -- that's the dual strategy that delivers growth, that delivers market share gain and very much so also margin expansion and, of course, ultimately, EPS growth. We expect to continue with that formula. It's really working for us. We expect to see, as Gerald will give you more details that we will also not only be able to grow our revenue, and despite our very significant roughly 10% R&D investment to seize the historic large secular megatrends in spatial biology and proteomics, and to some extent, even in artificial intelligence for our semiconductor business, but we're not going to focus on that today. So despite that very significant R&D investment, that is a good 3% or so above the peer average. We expect to make further progress into the low 20% -- 20s% operating margin, and we expect to deliver double-digit non-GAAP EPS growth. Our management process that has now been honed for many years, is delivering much more predictability, visibility and very good execution. I hope you will agree that we've executed. And I would like to thank my colleagues all over the world for executing extremely well and our leadership teams. It's that management process is, of course, a very good management team, great leadership team that we have here, a management process, and one that's somewhat uniquely in the industry, that is a bit differentiated, focuses on, here it is, again, the disciplined entrepreneurialism that is perhaps not emphasized as much in other management systems that you may be familiar with. We are focusing today, as you've heard, on Bruker investing to seize 2 very large secular trends, proteomics, maybe more broadly, phenomics because there's some -- we look at PTMs, we look at lipidomics, metabolomics, we put all of that into the proteomics basket some targeted mostly unbiased as well as the related field of spatial biology and some other related fields that Mark will explain. You may have seen our excitement, and I think you've seen that we've delivered results, not beyond excitement with our TIMS/PASEF platform, timsTOF doing 4D-proteomics with the really unique ability to do large-scale collision cross sections and additional molecule information at scale for better ways of dealing with a fundamental biological complexity that you have from cells -- single cells to plasma. And it continues to drive a well, very fast evolution, if not a revolution in proteomics. We're not just riding the wave of proteomics taking off in a big way. We are creating that way, and we're enabling it to a significant extent with the timsTOF. So Bruker at a glance. We have our revenue guidance. We have more than 8,500 colleagues now. We will continue to spend about 8% to 10% on R&D. The other -- the pie charts may be a little bit different than those of you who may have followed us for 5 or 10 or more years I've seen. So we've done really -- we continue to be very strong in academic and government. But even that used to be more than 50%, now it's just below 40%. Importantly, there's a lot of translational and clinical research in major academic medical centers. A lot of that proteomics and spatial biology growth is in translational and clinical research. So it would be in that academic government bucket, but importantly, there's a lot of good NIH and equivalent funding for clinical research in cancer and neuroscience and many other fields. Industrial is not only good old industrial. There is some very exciting parts within our industrial space that go into green tech from battery technology, research, I'll give you a slide on that one, to superconducting technologies for future, even larger offshore wind turbines, to eventually magnetic confinement fusion as part of the renewable energy mix. So we're playing a big role in that. Biopharma with NMR and mass spec and timsTOF tools grown tremendously. For us that continues to be an excellent market with excellent growth also in Q1. I know there's some concerns about the health of that market presently, where others see a softening and perhaps a slight decline, we may see a deceleration because you're not going to grow at 20% per year forever. But for us, we do not see a softening of those markets. They're very strong for us. Microbiology, MALDI BioTyper molecular diagnostics has become a mainstay of our business, very solid, lots of consumables, lots of aftermarket, excellent margins. And semiconductor metrology with the science and chips stack, now a similar chip stack, whatever it's called in Europe of similar $50 billion in magnitude, the revolution AI. Perhaps this company will benefit more than any other company in our tool space from this AI revolution. And maybe at our next Investor Day in 2 years, maybe we'll also focus more on the non-life science parts, which really have excellent margins and growth potential. We, of course, also are in the applied markets. Our geographic mix has changed quite a bit. If you look at us, we used to be nearly 50% Europe, that was good because we're very, very deeply involved in the European science community and collaboration. Some of our timsTOF instruments have been developed. These days with really collaborators on both sides of the Atlantic and in Asia, but initially primarily in Europe. So that's a good thing. But we're not that dependent, we're not that overweight as some of you may call it on Europe anymore. We had good Asia Pacific and South Asia growth. That's included in our APAC numbers here, India, for example. But we've also had and in particularly had exceptional growth in the United States, particularly in biopharma, but also in academic medical research. And that's why the America's part, which used to be in the 20s or low 20s even for us years ago is now come up to 30%. So it's a very healthy balance, very healthy mix. And Project Accelerate, as you've known already, a few years ago went over 50% is now actually over 50s, is now 56% of our revenue as of last year. Well, we won't read every word here, but culture is important, and we take it very seriously. We really are and always have been very passionate about the customer success, integrity and quality in everything we do. We don't pay an agency for a new slogan every few years. We've had this Innovation with Integrity for many years. And it strongly felt that's what we're doing. The people in this company were compensated fairly and all of those good things, but really, people are very passionate and they come to work with a sense of purpose in the leadership team, but not only in the leadership team in the vast majority of our colleagues. So it is a somewhat differentiated and unique culture that we really, really like, and that is a little bit of a different company in this industry. So the Project Accelerate and operational excellence. Just again, not going into every detail. All of these slides are available for your scrutiny, later on, if you so choose. But I always think of Project accelerating -- Accelerate 2.0 initiatives, pulling up the growth rates, of course, going for new markets that have very large TAMs, very large secular trends and pushing up -- pulling up the margins, whereas with operational excellence, we push from below, we push up the margins with productivity gain, also with market share gains with innovation and product refresh in our core business, our core business is in excellent shape. We think we're gaining market share there. It has decent growth rates. It has margin improvements. This isn't some legacy business. This is absolutely essential for us. So operational excellence also is being applied to proteomics and spatial biology. We don't do starry-eyed innovation for a few years, and then we start with operational excellence. It's very much an integral part. It's part of that disciplined entrepreneurialism, right? So a few things to consider for those who have a longer-term perspective, our organic revenue CAGR in recent years has been 7.5% to 8% in that range, right? So a very nice improvement. As I said, the last year was 10%, this year the midpoint of our guidance is 10% as well. And we continue -- and we -- while we had even faster growth in our orders and therefore, backlog growth, this is all good. Our non-GAAP EPS CAGR has come from the high single digits to the double digits. And we did this all along with the ROIC that we so far have consistently, even in the weaker 2020 COVID year kept over 20%, something that we're proud of and that matters to some of our investors. We've gone through different phases, some of you may be familiar with. I will go through that right now in the interest of time. Happy to discuss it over coffee later on, right. So the Project Accelerate 2.0. This is our road map. These are the 6 initiatives. There's a lot of wording here. This is for -- you either know it already. You can read it more -- in more detail later on. Today, we're going to focus on 2, with cherry picking a little bit. I've seen other companies that do Investor Days or Analyst Days, they also sometimes focus on certain topics because Bruker is very broad, Bruker is complicated. We have many tools, many markets. It's wonderful. It's called diversification. We're going to focus on the green and the yellow, so to speak, today and with a high level, there's other subfields in there on proteomics and on spatial. So part of our proteomics story, although we categorize it in the 10% microbio and molecular diagnostics is really the most successful by far applied in clinical proteomics technology that's on the market. Sometimes we chuckle when we see that people are wondering where the mass spec will ever make it into the clinic. All right. We're there. Over 15 years plus. We've delivered over more than 5,500 MALDI BioTypers that uses a proteomics fingerprinting method. It is clearly an applied in clinical proteomics method, 2/3 of these instruments are in clinical microbiology, 1/3 are in applied markets from water safety, water -- food safety, product release in pharma industry, et cetera. It's a beautiful market we're developing. We're the clear market leader worldwide with that we're continuing to innovate. We're refreshing that product line with the MALDI BioTyper sirius. It can now actually do also a bit of lipidomics with a negative ion mode. I know that gets too technical, but there are some new things that have come out of certain academic research labs that have indicated that, that's beneficial additional information, functional information beyond the microbiological fingerprinting that we do with applied proteomics, there's additional functional and resistance information that you can get with lipidomics. So we keep innovating. We have new workflows. We have new software. We keep innovating -- this is our -- this is one of our flywheels and we just keep innovating with it. And if anything, our market position is getting stronger because we keep innovating, and we're also now displacing others that may already have an installed base. Over 5,500 systems out there, we're placing about 500 per year, probably closer to 200 million IDs per year in total, but 100 million is a very conservative number. This has very much gone mainstream, applied proteomics at its best. Right. Quick excursion into something else, our magnetic resonance business. You saw some NMRs this morning. As you will hear, going forward also, we're having -- playing a bigger and bigger role with many of our core tools also in clean tech, in this case, in battery research, but also in battery production, in QC and in recycling even, there are many, many elements here. I won't go into that. But from production to conditioning to battery recycling, lithium-ion batteries, other batteries that are coming along, where we're playing a very important role with magnetic resonance but also with our x-ray and IR and many other tools. Clean energy, another theme on clean energy, which is becoming more important is applying our best, our energy and superconducting technologies, 10% business, if you remember. They're getting into some very interesting markets with magnetic confinement fusion at ITER but also some very large fusion pilot projects in Asia and China, in particular, where we've received further orders since we announced this first. You may have seen some of the fine print has changed further, further ITER orders further, now also for plasma heating for inner vertical targets that can exchange extreme plasma heat and of course, our very unique next-generation advanced superconductors for magnetic fusion. We also think, especially due to the extreme dependence of our onshore and offshore wind industry -- wind energy industry that uses permanent magnets that are completely 99% sourced in only one country where there's some geopolitical concern. And plus, as we want to go to larger and larger maybe 20-megawatt offshore wind turbines, you have to go to super conductivity, we think. And we're very pleased there's a DOE R&D project with a major U.S. energy company, where we've been chosen as the wire supplier. So there's new venues even in wind energy and magnetic confinement fusion that are very exciting to us. So this is in proteomics or spatial biology. We'll get to that, but there's some other cool stuff happening at Bruker and some very important trends that we're pursuing. Speaking of important trends. I don't -- you all know it, AI and all the way to ChatGPT is revolutionizing the world right now. And we understand that NVIDIA is a beneficiary. But as you go down the value stream, of course, other semiconductor metrology tools companies and particularly those that have very advanced capabilities for smaller feature chips all the way to 3D packaging to multilayer technologies. That's -- those are the areas that we serve that are somewhat specialized, but the markets are growing towards us. So we are doing well in that, and it's becoming a bigger part. We're doing a lot with NMR, gigahertz NMR, structural biology and unstructural biology for inherent disorder in biology and disease biology tremendously important looking at binding, looking at kinetics, looking at time, 4D time and structure, very unique capabilities that you don't get out of crystallography or cryo-em at least not to this extent. So NMR complementing these other technologies that are also very important is doing very, very well. And here, some of our cool technologies, magnets, of course. This wouldn't be Bruker if we didn't talk about magnets, especially that little compact 4 kelvin magnet that needs so much less helium fits into any single story lab. We had some immediate -- after the launch last year, some immediate orders. We already installed a couple at the end of last year. We now have the larger 2-story magnets, 1.2 gigahertz and the compact 1 gigahertz, we now have more than 26 installed or on order, we have a multiyear backlog. And we recently had announced 2 systems from the U.K. that already had 2 of these 1 gigahertz and now ordered two 1.2 gigahertz systems for use by the entire science community, biology and green tech in the U.K. We hope that will be the rate to apply to the rest of the world. Well, it's a little optimistic. But nevertheless, this is this or what Spain has done and other countries or Germany or Switzerland is exemplary. We think others eventually the U.S. and China and others will follow. Some very cool technologies, including use of AI and automated structure generation, whether you start from de novo or from other AI programs that give you structures already and some unbelievable technologies. The one in the middle, it's just kind of fun. Can you imagine something rotating 160,000 times mechanically per second. Well, this is what these probes do and not just for fun because you can look at membrane, proteins and prions and aggregation and very important diseases with it. Well, today, the focus is on spatial and proteomics, actually overlapping. A lot of the spatial we do is targeted proteomics, but in a spatial context, as Mark and Kevin and others will explain. Proteomics, as I said, we're also looking at post-translational modification or epiproteomics, lipidomics, metabolomics, often all bundled under phenomix. We think, we're the leading phenomics tools company. And I think we will be one of the leading spatial biology companies. This has grown quite a bit. If you wanted to look at that. We added it all up. And from applied proteomics to proteomics by timsTOF to structural biology to the relatively new, but now soon also needle-moving spatial biology tools. We think that is now more than 25% of our revenue. Someday, I think this will be 50%, but not by 2026, yet somewhat longer-term horizon. But over time, I think we are already and will be the leading or one of the leading proteomics and spatial biology companies. And it's really beginning at the -- in the aggregate, clearly moving the needle. A lot of investments, but very good gross margins. Right. This is a slide that you may have seen already in the interest of time from our previous acquisitions. These are sample prep and automation and consumables for proteomics or examples of what our previous software acquisitions have done for our proteomics solutions overall, very successful introductions from acquisitions we did 1.5 years ago. Here are some of the newer acquisitions. You'll hear from both the founders and CEOs of Inscopix and Biognosys today by video. So I won't talk about it, but very important capability in neuroscience research with microscopy, in-vivo microscopy and then in very high-end tools, consumables, software and services for proteomics primarily for drug and biopharma customers. And yes, timsTOF that's our very big flywheel. We really keep innovating in that. We think that in terms of innovation and capabilities, we continue to be clearly leading. We now have over 700 of these systems installed with many more on orders. We launched the timsTOF Ultra that you've seen downstairs. There's other products in that product range. This is a very important platform with very unique 4D capabilities, these TIMS and PASEF things, just nobody else in the industry has anything like that. Some others are adding some basic ion mobility capability by doing this at scale, doing 4D all the time and benefiting from artificial intelligence to deeper dissection is very important, not only scientifically, I have -- I get excited about science and applications but very much -- very important for business. Right. And with that, this is what hopefully you'll conclude at the end of the day, and you'll hear a lot more from my colleagues. Thank you very much.

All right. Thank you, Frank. So up next, we will have 2 presentations from 2 of the business leaders in our Bruker CALID group. First, we will have Rohan Thakur, who will -- who is the President of Bruker's Life Science Mass Spec business. He will talk about unbiased deep 4D-proteomics on the timsTOF. And for those of you in the building with us here today, we just were down in the demo lab, and you saw many of those timsTOF instruments. And then after that, we will have Oliver Rinner, who is the President of Biognosys, which earlier this year became a part of Bruker, and he will discuss proteomics drug discovery services and tools. So with that...

Hello, everyone. My name is Rohan Thakur, and I'm the President of Bruker's Life Sciences Mass Spectrometry division. And it's my pleasure to talk about the game-changing timsTOF platform and the impact it's had on the field of proteomics. When we launched the timsTOF Pro at HUPO in 2017, it enabled proteomics to hit refresh. And what I mean by that is before timsTOF Pro and PASEF, an average proteomics run would take about 90 minutes to 2 hours because of the speed of PASEF and the duty cycle of TIMS. The timsTOF Pro allowed proteomics experiments to be done in 20 minutes or less with more depth, with more identification of PTMs and with higher confidence because of CCS values. It essentially allowed us to check all 4 checkmarks on what's required in mass spectrometry, which is speed, robustness, sensitivity and specificity. And what we see today in the different applications of proteomics space, mass spectrometry is an increase in sample throughput and a decrease in sample amounts injected. So this puts a lot of emphasis in sample preparation, which then needs -- which then requires the mass spectrometers to be more sensitive because then you need data science to actually pick up on all these nuances. So together with our partners at CTC, EvoSep, IonOptiks, Cellenion, we're developing an ecosystem to enable the various applications that we see in proteomics. And one unique advantage that tims brings is CCS enablement. And today, it is a digital biology where you have machine learning. And if you look at this wonderful prospective paper from Professor Matthias Mann and the image on the left, you'll see that since about 2006, everything has remained pretty much the same in mass spectrometry except for ion mobility. And ion mobility and the CSS values that you can drive, it feeds the machine learning algorithms, which then makes the output more defined in terms of discovery. What this triggers is, once users understand the benefits that PASEF brings, they embrace that and the community starts to develop different techniques so that the different experiments are enabled and the benefits are realized. So in 2018, [indiscernible] launch the timsTOF Pro, we had data dependent PASEF. And you can see today, we have about 7 different types of PASEFs specific for the different experiments with some key improvements such as plexDIA-PASEF for single-cell proteomics, synchro-PASEF, again from Matthias' Group and of course, maximum information or miDIA-PASEF which is quite significant in applications such as immunopeptidomics. Of course, the user community or the peer group recognizes these advances made, and you can see we've been rewarded for the introduction of PASEF by the European Proteomics Association. We were recognized at the international human proteomics conference. And of course, MALDI too which helps us in spatial biology and then once again for single-cell biology. Again, we won the award at the European Proteomics Association for the advances made in proteomics space mass spectrometry. This year is no different. I think continuous innovation, bringing new products to markets, hardwired in our DNA, and we have made a revolutionary breakthrough in the sensitivity required for proteomics with the launch of the timsTOF Ultra and the CSI-Ultra ion source. And this is pretty significant because if you can see the graph here, we've achieved about 5,500 protein groups and over 55,000 peptides at 125 picograms injected, this K562 cells at 1% FDR. And if you have highlighted the box there to show you and it is important for 2 reasons. You can inject less, you get more protein coverage with the number of peptides that this system can analyze, which is fairly important, actually quite critical for expands like immunopeptidomics with are [indiscernible] 9 immunoacids long and you need to cover at the peptide-level. And then the graph below that looks like 2 mountain peak shows you that with the enhanced sensitivity and the peptide coverage that we had at 1% FDR at passive speeds recovering over 5 orders of dynamic range in this experiment. Of course customers don't do HeLA or 562 every day. They're looking at real samples. And the benefits of high sensitivity and speed are nicely illustrated by Dr. Fabian Coscia at the MDC in Berlin, where he takes a laser cancer marker dissection of mouse liver FFPE tissue, FFPE tissue is the difficult matrix because of the cross linking that occurs during the formal infixing process. He can isolate about 1 to 2 hepatocytes from mouse liver and the detection limits are between 1,500 to 2,000 proteins from this very difficult matrics. Karl Mechtler, Professor Karl Mechtler who's focused on quantitative proteomics shows us how important it is to be quantitative at low levels injected. So this is once again K562, 200 picograms injected, about 6,000 protein groups and a median CV of 10%. So it's nice to have sensitivity but to look at expression of proteins you have to be quantitative, and this is very nicely illustrated by Professor Karl Mechtler, one of the pioneers of single-cell proteomics. The unique value for TIMS in immunopeptidomics is shown beautifully in this paper from the Steve Carr Group at The Broad Institute. What TIMS lets you do is specifically isolate singly-charged peptides in a specific region during the gas phase separation intents, which will then transition into the mass spectrometer, right? So identification of these low copy number HLA-1 and HLA-2 peptides are clearly differentiated and identified a very low copy numbers that are showcasing the value TIMS brings to high sensitivity applications such as immunopeptidomics. And you can see compared to the competition, it's a clear with systems have the sensitivity to deliver on this key application. Well, if we can do a single-cell proteomics, it opens up different fields where you can now start looking at the single cell lipido. So a lot of these systems and systems biology work in a cascade so actually dig deeper into single cells which is Dr. Byeon Seul Kee at the Mayo Clinic that's looking once again working together with our partners at cellenONE to isolate single cells and then look at the lipidom as the cells get perturbed and this is a good example in lung cancer. So you can see how sensitivity and specificity of the timsTOF Ultra systems impact multiomics in this space. Of course, if we have such a big increase in sensitivity, we are now entering the fourth decade of proteomics space mass spectrometry. Sensitivity of mass spectrometers since the '90s has increased by almost 1,000, if not 10,000 fold. So you could get more robust flow a little higher, do micro-flow rates and see, if you can use a robustness, not of the mass spectrometer this time, but specifically on the LC side, flow slightly higher, used heated electrospray, huge larger bore columns, so that they're more robust. And here is about 2,000 samples with tissues -- with brain tissues and QCs that deliver about 10,000 protein groups. So once again, the sensitivity used in a different manner to accelerate discovery in proteomics. Well, if a 20 minute run is not fast enough, here is the Ralser Group at the Charite doing proteomics in 3 minutes. So pretty much proteomics at unprecedented scale that delivers on the precision and the sensitivity that's required together with reproducibility and high throughput. So 3 minute gradients, about 400 samples a day, truly proteomics at an unprecedented scale, made possible by the timsTOF platform. It's going to check, as I said earlier, speed, robustness, sensitivity and specificity. And we can go faster so this year at ASMS, which is this week, we launched a 300 hertz DDA-PASEF experiment. The 3 minutes was too long, there is lipidomics, 4D-lipidomics in 1.5 minutes using a 300 hertz PASEF mode to identify different of lipids. But let's not forget the timsTOF platform enabled bulk proteomics with the timsTOF HT, spatial proteomics, as you can see here with the timsTOF Flex and, of course, single-cell proteomics with the timsTOF Ultra now, but it is a beautiful example of spatial biology can use in a multiomics banner together with our partners, again at AmberGen to label proteins and tissue to a label-free glycan image and then compare it to the histopathology stain Hematoxylin in a path lab. And Dr. Peggi Angel makes use of this beautifully for studying different cancers and possibly being prognostic in this manner. So key takeaways as I close the talk, I think we made a revolutionary breakthrough in the sensitivity that's required by the field. We can identify low abundant proteins with higher coverage using smaller sample amounts. As you saw, the user community has adopted the benefits of PASEF so data formats will remain open, so that they can harvest the benefits and drive more discovery with the different tools at their disposal. TIMS technology is new. So it's only in its fourth generation. It's about 5 years old. And we'll continue to evolve it so that the users benefit in 4D-proteomics, lipidomics, more PTMs identified. Of course, and it's playing a vital role in spatial proteomics. As you saw in the example with the Peggy Angel. Availability will always be a top goal whenever possible so that the users can benefit from the advances we make. Our M&A partners will continue to drive innovation. As you saw, sample throughput is going up and sample amounts are going down. So that puts emphasis on innovating in the sample prep area and in the software area, feeding machine learning. So the output that we derive has more information to make more intelligent decisions. And I'd like to close by reminding everybody that the MALDI BioTyper is a world leader in applied clinical proteomics and it uses proteomics fingerprinting, fast ID in clinical microbiology. So at Bruker proteomics and innovations in proteomics is in our DNA. So thank you very much for your time and your attention.

Welcome also from my side to the Bruker Investor Day. My name is Oliver Rinner. I'm CEO of Biognosys. Biognosys has a history of 15 years at the frontier of proteomics technology. Since it's time off from the lab of proteomics [indiscernible] , we have been pushing the leading edge of proteomics technology, and we continue to do so with a high R&D intensity. Our mission is to provide researchers access to the most advanced proteomics technology, which over the years helped us to build a large customer base with many publications and reference or use our technology. We are located close to Zurich in Switzerland. Have commercial presence in Cambridge and soon will open their facility too. In January '23, Bruker took a majority stake in Biognosys, and we are now part of the Bruker family. We address a fundamental program in life science and medicine, understanding cellular function, health and disease. Proteomics would not be possible without our ability to read the genome, but it goes far beyond and directly related to the phenotype, the biological function accreting the proteome on all functional levels is orders of magnitude more complex than DNA sequencing because it's not about sequencing proteins alone, function proteomics place on the structural level or even the interaction between different proteins. Big data and AI will drive huge advances in the field, but alone will not help us to solve the biggest challenge in drug development. Only deep understanding of biological mechanisms will, and the role of proteomics is to achieve that, but at a much higher pace than classic biochemistry and cell biology could do in the past decades. That's because virtually all the challenges in drug developments are connected to a lack of understanding of what happens in the proteom on a mechanistic level. Consequently, the main applications of proteomics today that we see in drug discovery and development op, understanding the biological mode of [indiscernible] compounds on one hand, and in discovery and development of protein signatures, biomarkers for preclinical and increasingly also clinical stages of development. Onto the technology behind Biognosys. Our technology is centered around mass spectrometry, which is a physical analytical technique, can address virtually all relevant levels of protein function in a highly scalable and also cost-efficient way. Biognosys has developed proprietary methods in sample preparation, automation and especially also the data analytics software, which is key to exploit extreme depth and complexity of mass spec data. Since Biognosys coinvented the modern way of so-called data independent analysis since 2012 with ever increasing performance of mass spectrometers like Bruker's timsTOF. We have seen a huge increase in analytical depth. Shown here using identified protein from cell line as a standard benchmark. You can now cover almost all cellular processes and cells, tissue, blood. While a few years back, you could barely scratch the surface. But proteomics remains hot and is still less accessible than, for example, gene sequencing. Therefore, from the beginning, we focused on 2 market segments. The one of the experts that are able to operate a mass spectrometry. Potential customers of Bruker, who can be the customers of our enabling products and still a large, larger market, on the other hand, are researchers that need proteomics to address their research questions but are not unable yet to run a mass-spec facility or rather use our CRO services. And interestingly, these 2 markets were very separate in the beginning, but are now moving together. Many of our customers run with perhaps limited capacity proteomics in-house. And at the same time, they work with us as a service provider. And our dual mode of working with the customers gives us the unique ability to position us as the partner of choice for all the proteomics needs. And we cover these needs of early research, translational and clinical trials with our service platforms that address different research questions. To target platform essentially turns the mass spectrometry into structural biology tool that can uncover binding sites of compounds within the whole curriculum. True Discovery is a deep last year profiling of 1,000 and 10,000 of proteins for their phosphorylation patterns. And True Signature can measure proteins with very high specificity and translate the discoveries into assays that can be used in clinical trials. The customer base for our services are almost exclusively biopharma, split between U.S. and Europe, and they use our platform as a service. Our software and products enable mass spectrometry users to perform proteomics experiments themselves more effectively and to get much more out of their data. Our flagship software Spectronaut which is widely used in industry, academia by the top or proteomics labs. And here, this enables us to reach a customer base that is not accessible with our commercial CRO services, namely academic institutions and core facilities. All of them, users of mass spectrometry are potential customers of Bruker. And together, we can provide them with more complete and seamless solutions. And the synergies between Bruker and Biognosys that we are now building since our transaction January '23 goes far beyond co-selling or product bundling. Our joint mission is ultimately to enable researchers, drug developers to turn biological samples into biological insights. With our products that complement the offerings of Bruker and partners like Preomics, we can better support customers to be successful with the powerful but complex mass spectrometers. With our CRO services, we provide them a direct root towards deeper biological insights with proteomics, and we can drive our ambition to establish proteomics as the key technology beyond [indiscernible] next-gen sequencing bit for the genomics world. Since January, a lot happened already. We have launched a data analysis platform Proteoverse, a high-throughput method for deep scalable platform proteomics at the ASMS 2023 and a major new release of our flagship software Spectronaut with improved support for timsTOF data. We have also released our first joint offering, [indiscernible] our widely used calibration IT kit in Bruker's [ Cellscape ] platform. The most important step this year towards great accessibility of our services is the setup of our new Cambridge-based mass spectrometry facility that brings us closer to the U.S. market and which will be online end of '23. Together, we can drive the further development of proteomics to achieve our goal to better understand the functional proteom for better lives. We are still at the beginning of proteomics age, and I'm convinced that proteomics will transform the ways drugs are discovered and developed. As Biognosys, together with Bruker, we are well positioned to drive that transformation. Thank you very much for your attention.

All right. Well, thank you to Oliver and Rohan. So we trust that you have found these presentations, very interesting and informative so far. We're going to take about a 10 break right now before we continue the program. So those of you with us on site, we have some refreshments, some food in the adjacent room. So please welcome you to that. And then for everyone on the webcast, we'll join you again in about 10 minutes here. So thank you. [Break]

All right. Well, welcome back, everybody. Up next, we have Dr. Mark Munch, who is the President of the Bruker Nano Group. Bruker Nano Group has a wide portfolio of technologies and applications, but today he is going to focus on some of the exciting innovations in spatial and cell biology. So with that, Mark.

Hello. Good afternoon, everybody. Nice to see you all here. So in this part of the presentation -- pick it of the next slide, please. We're going to talk about the yellow part of the hexagon. So this is where you have spatial biology and cellular analysis. So this is over $70 million revenue for 2023 for us. And that supports a number of areas, and it really comes off a pretty broad core competency in fluorescence imaging. In the core constituency of fluorescence imaging, there's a number of platforms and every platform listed here, we are the leader in innovations and have the best product implementations. And I'm going to touch on later why that's relevant when I talk about Spatial Biology. So those platforms that I just showed support a number of interesting growth applications. So a lot of focus for this session will be on the Canopy, CellScape system. That is our system for Single-Cell and Sub-Cellular Spatial proteomic and Spatial Biology. That system also you can examine cell suspensions in immunology in this -- the diagram shown on the lower left. We also have the Vutara Super-Resolution platform. It supports also many applications, one that's quite interesting is Extracellular Vesicles And then we'll have a video later that's a neuroscience-focused video, which is -- comes off 2 of these core platforms. One is in what's called Multiphoton Microscopy, or for short, you can think it was 2-Photon Microscopy. And the others are recently acquired in Inscopix which is head-mounted 1-P microscopy. And then lastly, we have our Luxendo Light-Sheet microscopy platform. That also supports a number of interesting life science applications. One in particular, that's very interesting is organoid imaging. So we're going to focus on Spatial Biology. And so one of the things I wanted to describe and other people -- companies describe the market this way is how the market segments. So to the left, you see the Discovery Research segment. This is a segment where you heard Rohan and Frank referred to. We have our timsTOF flex or the MALDI base that's mass spec-based Spatial Biology. And so that's really appropriately positioned for every research, if you want to do proteomics with deep omics technology in terms of metabolomics, it's lipidomics, and very kind of multi-omic. We also have the Acuity PaintScape system, which I won't talk about today. And so the focus here will talk about Canopy CellScape, and that goes across discovery research, but also into translational. And we think of translational as 2 segments, both translational academic as well as pharma where we do clinical drug development support. Okay. Now the CellScape platform besides expanding all segments, it's the platform really that is positioned also when Spatial starts moving to clinical diagnostics. It's mostly believed that Spatial proteomics will be what moves to clinical diagnostics. And the way we -- you'll see as we go through these protocols and talk a little bit about the platform, why this is actually a technology that we feel we can take there in the future. Okay. So why Spatial important? Why is it so exciting? Or why all the buzz about Spatial? I think there's some -- can be some confusion out there, but Spatial is very valuable. It's really kind of a whole -- brings whole new insights into Biology. On the diagram here, I'm showing the tumor microenvironment, so in the field of oncology, the types of things that Spatial allows answers to and where researchers are asking questions are from have a tumor in a tissue, what are and where are the cells in this tumor microenvironment? And then what are the subtypes of those cells? And how do they interact with each other? And what is the immune tumor infiltration look like? And what does that immune tumor cell interface look like? So it's very, very important. This could be done without Spatial before, and this is why all the buzz is happening around Spatial. On the right or more general questions, if you go out any sort of disease beyond oncology, the big picture is, what are the relationships between these cells, right? There are cell-cell communication networks. Cells can know where they are. And so the question is, do we understand the cell communication networks and what are the roles of those cells? What are they doing? And how are they communicating with each other? This is the promise of Spatial Biology, right? It's what provides these insights. And through those insights, the hope is and the promise is we can develop better diagnostics, and through those better diagnostics, we can build better therapeutics. So Spatial is a big deal. And so as I go through the talk a little bit talk about the Canopy CellScape, keep in mind, Biology is Spatial, right? There's high value and what it teaches us. And the other thing on is Biology is very complex, okay? And so Spatial Biology is in early innings. It's just the beginning of this field. Okay. So the Canopy CellScape system. It's a very differentiated quantitative, emphasize that a lot, performance platform and its services cancer, immunology and neurobiology. Okay. One of the interesting things about Bruker makes me excited about working for Bruker and all our employees is this flywheel concept or this thing, we go deep in technologies, and then we find all these application offshoots, okay? Canopy into Spatial proteomics is one of those stories. So Canopy was a CRO. They had effected a multiplex cyclic immunotherapies technique very well. They had developed a proprietary technique for dynamic detection and algorithms that used it, and they were operating that methodology as a CRO offering services, okay? They didn't have an instrument, it was lacking in instrument and didn't have panels and reagents, okay? So we saw an opportunity to get into Spatial Biology by adding a pit, leveraging this core competency we have in microscopy and instrumentation in general, okay? And so what we have done is now develop a best-in-class high-resistant multiplex instrument that are optimized for those protocols. And then we've developed kits and panels to run on this instrument. And we do this still while writing the CRO today, which further always advances our knowledge in terms of new markers, new panels to develop, okay? And so the result for us, in terms of completing -- adding this pivot is this differentiated -- highly differentiated quantitative Spatial Proteomics platform with leading sensitivity and precision a quantification. Now I'm going to show you a video in a second that this will give you the highlights of the Canopy CellScape system. And then afterwards, I'll follow up with key elements and tell you really why this is really important. So let's roll the video. [Presentation]

Okay. So that video gave you some highlights. And so some things I touched on is features of the CellScape are the high optical resolution, the high dynamic range the ability to multiplex up to high levels and whole tissue imaging and walkaway automation, okay? So those are features. And there's a lot of confusion, I'd say, in Spatial Biology and in general in the marketplace. And so I want to take those features, and I'm going to show you really why those matter in terms of benefits, okay? So this is a differentiating truth that matters, and hopefully dispel a lot of confusion here. So the first one is this differentiated quantitative performance. It was supported by the high resolution, the high range and the ability to flex up to really high levels, okay? The second one is we're actually using a very straightforward reliable technique. So there's no false starts to your experimentation or delayed starts. This is using cyclic immunofluorescence, basically technology for florescence have been around for decades. And so I'll talk about how we do that and why that's important and why that's differentiated in the way we do that. Then once you're up in imaging, getting productive, the fast time to result and the high throughput of our system while maintaining this high performance. And the last is around plexity, or the ability to get to high plex and actually do it, not just claiming you can do it, but really doing it, Okay? Now why should you really care about this? Well, first of all, our customers care about that a lot. And so this is why you should care about it. And so Spatial, it's about seeing all the Spatial neighborhood, not just some of the Spatial but all the Spatial and then seeing all the phenotypes and the gradation of phenotypes there. So that's what that differentiated quantitative performance does. The straightforward and fast time results is about being productive and not having these false starts and getting to your work without any lengthy assay to development, which are problems with other systems out there. And the last is the ability to get confidence to whatever plex levels you want and the market choices you want. Okay. So this is what's really key and really actually differentiates us in the market, okay? So we're going to step through each of those 4 benefits. So that differentiate quantitate performance. So this comes from 2 things. Comes from our very high, best-in-class optical resolution for our levels of plexity. So we're 180 nanometers for pixel, and there's kind of standard mode. And that, combined with our high-dynamic range, is 8-log dynamic range detection. Those 2 features combine to deliver this quantitative phenotype of all the cells, okay? And then classifying the ability those cells in different expression levels, okay? Why that's important is you want to see the whole neighborhood. The whole thing about Spatial is seeing the cells and seeing those cells communication networks. You don't always see most of the cells. You want to see all the cells. So you want to have both of these things, high-Spatial resolution and the fidelity of high dynamic range, and that allows you to see all the cells. Why that is, is because cells don't appear all the same abundance, and they don't appear in all the same expression levels, okay? So that's why that's really important, and we're unique this way. The second thing is, the phenotypes, it's a continuum, right? It comes in degrees, it's a gradation. And so if you don't have this high fidelity, we won't see all those degrees. So our ability, we can keep phenotyping and subtyping populations of cells, really, really important. So example, of results, taken on this CellScape, this is a spleen tissue. You can see the high fidelity both in resolution, the high dynamic range. We can focus on sell and say, okay, I'm look at this cell here and say, okay, this cyclic T cell, you can see high expression markers, you can see low expression markers, right? If you miss a low expression markers, you will have hard time phenotyping, first of all. But we see gradations in the level of phenotyping, right? And you can just move through the sample. It's part of the future of software you can go to a cell and you can produce these phenotype, these expression strips. So it's really important. This comes from this differentiated performance and dilution and high dynamic range, okay? So the pictures are nice. Building phenotype is really important. So what do you do with it? And it has to do with quantitative results. So you see others in industry are talking about relative cell counts. We're unique, and we get absolute cell counts, okay? So the spleen sample I just showed you of the leukemia here based on M1, the first column, 144,000, okay? So say, I wanted to look at the -- how many regulatory T cells were in that view, 109, okay? The control, for example, another nondisease spleen, 1,629, okay? We're down to single cell counts because we had a fidelity, or in the same study, in the same leukemia, looking at the femur, we saw 3 regulatory T cells. This is a fidelity. That's why the differentiated, quantitative performance matters. You're going to miss that if you don't have that, and this is what makes us very unique, okay? So more samples, breast cancer tissue. Again, you focus on each cell, you can produce these strips. So something that high-fidelity allows us to do is we can actually segment and look at cell population clusters in a very different way. You use a standard way new map and plots, but something that you won't find competitors of us doing is by supervise gating techniques that are very, very common for decades in flow cytometry. We do it in Spatial. And we're the only ones that can do it in Spatial with good results is because we have this high fidelity. You won't see others doing this. And so for example, I want to look at immune cells with supervised gating, you say, okay, within immune cells, here are my T cells. Here's my population of NKT cells, here's my NK cells, here within that, I want to look further into T cells, here's my helper T cells. Here's my cytotoxic T cells. When I look further over, here's a population of T reg cells. We can just keep going with this because we have this high fidelity ability to look at subclass populations. Okay. The second benefit I described was this fast time result, right, and doing this with whole tissue imaging or whole slide imaging. So there's a whole tissue image here. In the white box we showed you, that is other competitors field of view that use fluorescence microscopy for CellScape techniques. This is ours in our standard mode. This is really important. So this gives the ability to move through this tissue very, very quickly because we have just a larger area for the view. And this is all done with this 182-nanometer per pixel resolution, okay? Just going up to a little bit more for you, this is we call our FalconFAST mode, and you see how you can just fly through the tissue. This is a 374 still sub single cell resolution and still with that 8 log detection, okay? So ability to move through tissue has been very productive, and we can do this four batch samples at a time. This is how the CellScape operates. Okay. The third key benefit of all those features is it's a very straightforward technique, okay? Our technique is based on using primary monoclonal antibodies. These are all markers that we're reading directly off of. Why that's important is this is what brings high specificity. We don't use secondary antibodies to read the signal. Secondary is not a problem. This is where you have cross-reactivity and you can lack specificity. We don't do that. We also don't do all the conjugations to antibodies or crosslink antibodies down to keep them in place while we're dehybridizing our reading probes, okay? So it's a very straightforward technique. And without these complications, you can just basically select probes, validate and get to work right away, okay? So we can be very, very productive in our system. And so this allows for a very fast new marker validations of somebody out of our -- we have 350 validated antibodies markers. We've combined those in the standard panels we offer, but certainly wants an extra custom market, that's a very quick process for us. The last benefit is actually getting the high plex, not just talking about it. Okay. So in our system, Canopy CellScape, how it works is you stay up to 5 markers at a time. You image, you raise that signal and you just go around this loop, you keep going that loop. And we go around that loop without any harsh chemical washes. We don't use chemical washes, okay? So techniques that use chemical washes, for example, trying to move secondary antibodies. The secondary antibodies are stuck on with high affinity. So you actually have to use heat and chemicals to get them off, okay? Or if you're using a conjugated algo technique, you have to dehybridize your reading probes, which, again, use chemicals to get them off. We don't do any of that. Why that's important is those chemicals that competitors use, they degrade your sample. And that limits in practicality that plex levels you can get to. So we just keep going around the circle, right? And so here's an example. Here's a 100-plex breast cancer tissue. I'd point out by that you can see the single-cell resolution, the high fidelity here looking at both abundant cells and faint cells, okay? So we just keep going, and we actually haven't found a plex limit on our technology yet and the sample stays in place with high integrity, okay? So in summary, it's this differentiating truth that really matters, right? A lot of confusion out there in the industry. But it's here at the CellScape, we have this highly different quantitative performance that allows you to see things, see cells and phenotypes that others miss. It's very straightforward, so no false stops, no delay starts to getting at work. And then moving through your sample very quickly at this high field of view that we have while keeping that performance. And then lastly, actually getting to high plex. So thank you very much for your attention. And we will now do a demo. I'd like to introduce here Kevin Gamber, he's Vice President of Marketing and Product Management for Canopy, okay? And Marco Navarro, who's going to assist him and they're going to show you a great demo here, and you'll find it very interesting. Thank you.

All right. Thanks, Mark. And thank you all for the opportunity here to demonstrate the CellScape instrument to you today. This is -- we're quite excited about this. And what you see is here on the table. There's 2 units. You see the main unit here is on the right. This is where all of the imaging and staining is performed is on that unit. You'll see that there are -- we'll see this in a second actually that there are 4 -- will hold the 4 different samples at once. The unit there on the left, that is the microfluidics pump, and that's just responsible for all the reagents to the CellScape unit on the right. You'll see that there are 15 different tubes there. Each one of those tubes can hold a cocktail of 5 different antibodies. These are actually hot swappable during the experiments. So we're not limited in plex by even the number of tubes on the fluidics device. So you can swap those during the experiment and keep ongoing in terms of plex. Now the samples themselves are cells loaded on our microfluid chips. And Marco here is I think he's got a -- so as you get said on there, has a microfluid chip along with a tissue specimen, which is actually -- this is a colorectal cancer tissue specimen. This is an FFPE sample. FFPE is the very common predominant sample type that's used in pathology labs everywhere. And so basically, all you do is here that sample to the bottom of the chip. And what that enables you to do -- the chip actually enables a few different things. It's a microfluid device, you'll see it has an inlet and an outlet on the chip itself. That enables you to hook it up to the fluidics. And once it's hooked up to the fluidics, it enables true walkaway automation. So by having that inlet and outlet, you can, as I said, hook it up, all these things are automated on the device an image. Now the chip has some additional benefits. The next is around storage. So the -- once the chip -- the samples on the chip, it's stable for up to 2 years. And you can also go back and reinvestigate your sample with additional markers at a later date. So say, you've done your experiment, some time has passed and a new marker has come up with interest. You're able to go back then and reinvestigate that tissue -- that marker on the tissue. And the last thing that it has is a barcode. And all the chips are barcoded. And this gives you a history of every single thing that has happened to that sample. So there is no question about what is on the chip or what has happened. So now Marco next is going to load the sample into the instrument and then connect the two -- the inlet and the outlet, and then all we have to do after that is close the lid and hit go. And that's that. It's very simple. The workflow is extremely simple. And within about 6 to 8 hours after this run, then you would get some beautiful images. And so I'm about to show you what some of those beautiful images look like. Okay. So here, this is actually now a non-small cell lung cancer. And what you'll see here is in orange. This is all cancer tissue. If we can actually zoom in on this tissue fragment here, let me zoom out just a bit. And you can actually see these red blue cells here. These are cytotoxic T cells, which are about to attack this piece of tumor tissue. Obviously, a very important response in immuno-oncology. Next, let's take a look at another piece of this sample here. And Mark showed you earlier, he was talking about the tumor microenvironment and how important that is and how important it is to look at immune cells on the outside of what you saw, but also they have infiltrated the tumor as well. And you see that here. So again, this is a piece of tumor. And then inside here, you can actually see some immune cells. And let's just take a closer look here. And you can actually see here in green, these are your B cells, these are the cells that make antibodies. And then in blue are some monocytes. So you can see this tumor is well infiltrated with immune cells, which is a response that we would want to have as we fight cancer. All right. And let's next move to a third area. In this area, again, the tumor is in orange. And what we're seeing here are in cyan blue here. These are cells, another type of immune cell. These are antigen-presenting cells. And then we also have another population of cell type -- cells here. These are plasmacytoid dendritic cells. So again, just taking a look around the tissue, you can see all sorts of interesting Biology. You can see really amino-oncology happening in real time, which is an amazing, amazing feature of the technology. But pretty pictures are one thing, as Mark mentioned. Being able to now understand these in a quantitative way is another. And so next, I'd like to switch to some slides to show you a couple of examples of that. Mark did a great job of explaining how Fidelity is so important in Spatial Biology. And that fidelity is enabled by the high resolution, which you talked about, but also the HDR imaging. And just to give you an example of that, here, we've got just a single exposure. And we've got 2 cells outlined in the square and the circle. In the Square, you'll see a very, very dim cell. You can't even see all of it in this exposure. In the circle, you'll see a pretty good well exposed cell. These are heat maps. So different than what I was showing you before, which all the cells were just an individual color. This is actually a heat map, so it goes from black to red. Red is very high expression black is very low to nonexistent expression. So here we're just a single exposure. You can see that we can't quite see all the cells. Now we can take -- what we do is we actually taken additional exposure. And now you can see more cells than you saw before. You can start to see more of that sale in the square. And now the square and the circle is starting to get saturated. So now you're kind of reaching the upper limit of what you -- of expression levels that you can detect in that cell. Looking again, exposure 3. Now you can definitely see that the circle cell is beginning to be overexposed, and you're getting really good exposure of the cell in the square. And then finally, we have exposure 4. This is the longest exposure. And now you've got 2 but not everything is basically saturated overexposed and you're not going to be able to do too much quantitative things with that. So this is a problem because if you're using another technology that's going to force you to pick an individual exposure, one exposure you're going to have a very tough time of seeing all the cells, as Mark mentioned, which is so important. With HDR imaging, we are able to see all the cells. We're able to utilize all of these exposures, combine them into a very wide 8 logs of dynamic range, and now you're able to quantify all these markers in each and every cell and see every cell. Okay. So I've been talking a lot about immuno-oncology. We're also able to explore applications outside immuno-oncology. Here's 1 I'd just like to share with you briefly. This is around celiac disease. As I'm sure you all well know, celiac disease is an autoimmune disease, characterized by sensitivity to gluten. What you'll see here are 2 samples here. On the left, you have a healthy control. And on the right, we have a sample from celiac disease. And you'll see right away, you can see all the immune cells that are to pop out just from this very high level view. But if we take a closer look, we can perform the gating that Mark mentioned. And each single one of these dots represents one of the cells that we saw in the prior -- the prior slide. And we can actually gate this in real time. So we can draw these gates and we can see which cells we're selecting and which markers that we're selecting. And by performing these gates and then subgates, we can identify all of these sorts of different immune cells, and you see them here, and more and more. So now we can identify phenotype every single cell that's in our sample. We can then start to look at quantitative differences now between these -- the healthy control samples and the celiac disease samples. And what you'll see here is, one, a decrease in epithelial cells, and that's indicative of the atrophy that you see in celiac disease. The other thing that you'll see here is an increase in immune cell type across the board in celiac disease. And then again, if we look at even more use cell types, very now specialized populations of immune cell types. Again, you can see this increase in immune cell populations. So now we've gone from an image to actually something quantitative. And we can start to we can make some interesting observations about what's happening in our tissue. We can also perform the unsupervised gating that others do as well. And you'll see that on the left. And basically, all that is, is it's a computer algorithm that's taking a look at your sample and then grouping cells based on similarities in gene expression. And then on the right here, you can actually see, as Mark mentioned, this is actually now a heat map of individual markers, CD4 and CD8. And you can see here there isn't just a plus or minus of expression. There's a continuum of expression from low to high. You can see all of that here in these plots. Okay. And then you can actually take -- once you've identified those cells, you can also map them back onto your tissue. You see exactly where they are. So this is an cytotoxic T cells and then we can quantify that as well. Again, you can see there's a large increase in cytotoxic T cells in the celiac tissue. And then finally, we can do some more advanced Spatial analysis. Now this isn't all that advance here. We're just looking at pie charts. This is similar to what I showed you before. But if we take a deeper look, we can develop these And this is very messy, I admit, but what I want you to focus on is that yellow green bar in between the NK cells and the memory helper T cells. And what you see in the celiac disease is that bar widens. That indicates there's a greater Spatial relationship between those natural killer cells and the memory helper T cells. So we have a way to visualize this other than just the images of these connections. Okay. So with that, I'll just conclude here and just the points I wanted to reemphasize is just how simple that workflow was Marco went through it very quickly here. And then it's automated with the fluidic unit. Marco literally walked away, so we had that walkaway automation as the system runs. The ACR imaging, as I showed you, all the cells, which is so important if you're going to phenotype your sample and you saw that continuum expression in that very large wide dynamic range. We were able to identify phenotype and quantify all the cells in the sample and then also examine those Spatial relationships between them. . So with that, I'll conclude and just thank you for all for your attention. I'm going to turn it back over to Mark, who's going to talk to us about neuroscience. Thanks, Mark. Thank you.

Okay. So hope you can see how powerful the CellScape platform really is. So we're going to talk -- again, it's another part of the flywheel, right? So this is what makes Bruker very special. We go very deep into certain technologies and then we find these different application offshoots. So again, still leveraging this core competency in fluorescence imaging, okay? So I think -- I talked about fluorescence imaging. I know the breaks was say, hey, that was a really nice specs pack. Now that was all fluorescence imaging, okay? This is fluorescence-based imaging as well, okay? And this is neuroscience, okay? So neuroscience is hugely important. The of neuroscience research is very, very humungous. And this is because there's an escalating health crisis around the world in terms of increasing brain orders -- disorders and brain disease. So here's just some statistics. I'll just talk about maybe 3 of them. One is prevalence. Pretty staggering statistics, but 25%. So 1 in 4 of us -- the world's population will suffer from some sort of brain disorder in our lifetime, okay? Others 1 and 8, okay, in the population, any one time will have some sort of brain disorder. Dementia, okay, obviously, increasing problem, 47.5 million people globally with 7.7 million new cases each year, okay? Now these are big problems, right? But a lot of spend happening into neuro therapeutics, estimated in 2027 between $150 billion to $200 billion will be spent trying to tackle brain disorder or CNS. CNS combine, CNS and brain disorder functions. So these are all the things we do in neuroscience using fluorescence imaging. On the left, and take you through is whole brain imaging. So on that video, you're flying through a mouse brain. And then we also look at brain still pretty large scale, somewhat smaller. The video you're going to see in a second, then is looking at actually live in vivo brain circuit mapping, okay? And then we just talked about Spatial. And then at a final scale in a more molecular looking between synaptic junctions, between neurons, okay? So those are all supported by these platforms where we have the best product invitations and the world's leading innovation. Okay. Live sheet multiphoton super resolution and then Inscopix headmount 1-P, okay? So a couple of my colleagues here are going to be in a video that will show you next. And those are [indiscernible]. So let's roll that video. [Presentation]

Thank you, Our Multiphoton Microscopy products, as [indiscernible] just spoke about, have had a profound impact on understanding the brain and especially in serving the needs of the basic neuroscience research market. Our head-mounted fluorescence microscopy segment builds on our core competencies in fluorescent microscopy. The head-mounted fluorescence microscope or miniscule, is the miniaturization of a Benchtop epifluorescence microscope into a tiny device that can be on born the cranium of a rodent, enabling the imaging of the individual dynamics of hundreds to thousands of neurons during free and natural behavior. In a translational context, this fundamentally now enables studying brain circuits in action, understanding how circuits are disrupted in disease and in enabling the development of brain circuit-based preclinical models of disease. While the MiniScope technology is relatively new, it has already been recognized as 1 of the top 10 innovations in the life sciences. There are over 1,200 based systems at over 550 sites worldwide, including the laboratories of 6 Noble collectively resulting in over 200 publications. A good example of what the can enable for translational research and for drug development can be found in Parkinson's. The state of affairs in Parkinson's is unfortunately emblematic of the state of neurotherapeutics development. Despite being a fairly well interested disease, there have been over 2,000 largely failed clinical trials and only a few good with levodopa or L-dopa, a 50-year-old drug still the standard of care. This speaks to the fundamental of translation. Conventional animal behavior-based models, which will pass a candidate compound as effective if the compound corrects the animals turns in a behavioral assay failed to discriminate between clinically good and bad compounds, passing both a good drugs such as L-dopa, but also passing known bad drugs. If we could only look literally into the brain and extract a brain circuit for Parkinson's versus relying on accrued animal behavior-based readout, we would be able to screen compounds based on their ability to correct the underlying circuit deficit. Thanks to Multiphoton Microscopy, we know where to look in the brain. [indiscernible] showed how our multiple systems are helping find brain regions and the specific cell types implicated in Parkinson's, based on analyzing dendritic spine turnover and synaptic plasticity. With that knowledge, we can now use the platform to literally image in that brain region, in this case, the striatum and record the dynamics of those specific cell types in both normal and disease states. As you can see from these data sets, there are distinct patterns of activity in Parkinson's. The platform can be used to acquire such data over multiple animals, and we can use that data to extract a circuit signature or biomarker of the disease. As we might expect, it turns out that the circuit-based preclinical model is much more predictive than conventional animal behavior-based methods in predicting clinical efficacy, showing that L-dopa is indeed effective but not passing the known clinically bad candidate compounds. The tools we have talked about today are examples of cutting-edge instrument development that are transforming the state of brain research and new drug development.

All right. Well, thank you so much, Mark and team for showing all of us some of these incredibly exciting instruments and software that's clearly enabling breakthrough discoveries across many, many areas of life sciences. So -- well, that may be a very difficult act to follow. I know many of you are very eager to hear from our next presenter, CFO of Bruker, Gerald Herman, who will give you an overview of Bruker's financial performance and operational excellence as well as update you on some of our medium-term financial outlook. So Gerald.

Well, thank you all. Thank you so much for joining me. And now we're going to talk about something really interesting, which is the financial section. I'm here to share an overview of the 2023 guidance, our medium-term outlook and some other updates with you. So let's jump right in. I'd like to start today with a reminder of our fiscal year 2023 guidance, which is unchanged actually from the outlook we provided in our May 4, first quarter '23 earnings results. There's no new news here today on the outlook '23, but on the basis of our strength in bookings and our record backlog in May, we increased our overall guidance to a range of $2.83 billion to $2.88 billion for the year or organic revenue growth of 9% to 11% year-over-year. We expect a foreign exchange tailwind of about 1% and adding acquisitions, another 2%, all leading to guidance of 2023 reported revenue growth in a range of 12% to 14%. On the bottom line, we raised our non-GAAP EPS guidance by $0.03 to $2.55 to $2.60, which represents non-GAAP EPS growth of 9% to 11% compared to 2022. We will not be discussing much about the 2023 guidance today, but we will for sure revisit it during our second quarter '23 earnings call in early August. So as Frank noted earlier, our revenue profile has really been transformed over the past few years. Bruker has had a long established leading presence in academic government research markets as well as strengthening biopharma -- markets in biopharma, microbiology and the microelectronics and semiconductor metrology market segments. At Bruker, we carry deep scientific routes, as you've just heard, which helps to strengthen our already solid positions in core research market segments across the globe. While we're continuing to focus on stable academic government research markets, there's now a healthier mix with respect to higher growth in biopharma and also industrial green tech and clean tech markets. These end markets carry strong secular trends and are contributing to our accelerating revenue growth as well as our improved margin performance. Overall, these diversified markets really help to mitigate market and macro risks in a way that really wasn't available to us years ago. In the middle of the slide, you can see that our Project Accelerate 2.0 initiatives now make up 56% of the total revenue of Bruker, up from 51% about 2 years ago. This reaffirms our Project Accelerate strategy, which targets faster-growing markets with higher-margin life science solutions. And for those of you that have followed Bruker for some time, as Frank mentioned, we have shifted a lot of our geographic mix, now reflecting quite a balanced mix across Europe, the Americas and the Asia Pacific region. We've seen much faster growth in the U.S., but as well in the APAC region and a balancing or rebalancing away from our traditional strength in Europe over the past few years. On this slide, you can clearly see our significant organic revenue acceleration coming out of the COVID period here. Starting in 2021, with 19% organic revenue growth followed by 10% in '22 and our '23 guide of 10% organic growth at the midpoint of our guide. Due to supply chain constraints in '22, consistent order growth and continuing BSI book-to-bill ratios of greater than 1 for over 20 quarters. We now have record backlog, further fueled actually by excellent order growth in the first quarter of '23. Now some of that first quarter demand was clearly driven by strong China orders from their loan stimulus program. But when we step back and look at this over the last 2 years, we also saw broad-based demand in orders for our unique life science tools across most geographies and actually most end markets. This level of sustained demand confirms that our Project Accelerate 2.0 initiatives are, in fact, accelerating revenue and improving our margins. If we move to the next slide. On the left of this slide, you can see our strengthening gross margin performance over the period 2017 to 2023 with our BSI gross margins expected to be greater than 55% in 2023. This represents annual average improvement of about 85 basis points in gross margin during this period reflecting innovation and value pricing, pricing actions in response to inflation as well as operational excellence at work in improving productivity in our production and operations. We've also delivered an average of 50 basis points of operating margin expansion per year during the same 5-year period. This is especially impressive because we continue to invest heavily in strengthening our portfolio and positioning in key markets, notably proteomics and Spatial Biology and biopharma during this 5-year period. R&D investments were in the 9-plus percent range during this period with priority investments going on in the fastest-growing opportunities. These actions have translated into significant improvements in our profitability with non-GAAP EPS more than doubling from 2017 to 2023. Overall, we believe these investments position us well to continue to deliver on the organic revenue and EPS growth we expect in 2024 and beyond. Now turning to our revenue growth outlook for the next few years, we expect several drivers to continue to drive strong organic revenue growth in the '24 to '26 period. You heard today from some of our key leaders on the momentum we are building in the proteomics and spatial biology areas. But we also expect to see growth off of a healthy, well-managed core business of about $1.3 billion of annual revenue. A few comments, if I may, on the core business. This doesn't get a lot of attention generally in the investor community. But we have a solid growing core business in healthy markets including advanced x-ray tools, FTIR and NIR, molecular spectroscopy, nano surface and analytical tools and of course, superconducting products. We're continuously strengthening these core businesses through operational excellence to grow and improve the margins and to gain share. Our core business is expected to contribute steady revenue growth through the outlook period in the mid-single digits. In addition, our other Project Accelerate 2.0 initiatives like our biopharma and applied initiatives, our semi and microelectronics metrology tools, microbiology and molecular diagnostics, aftermarket revenue streams are well positioned to continued solid growth over this period, which we estimate will be in the high single-digit range. And of course, we expect the highest growth to come from proteomics and spatial biology, which you've just heard of over the next 3 years. You've now heard about these remarkable opportunities in these major markets where we have differentiated strong solutions are already gaining market share while the markets are rapidly expanding. We anticipate organic revenue growth in the double-digit range from proteomics and spatial biology. Given the margin expansion opportunities we see in this area, I'd just like to offer a few more details on operational excellence. Operational excellence is the second important pillar of Bruker's strategy. we use operational excellence to describe generally a toolbox of programs that are designed to drive growth and market share and expand and sustain our gross and operating margins. These programs include continuous improvement, lean initiatives, productivity enhancements, commercial excellence initiatives covering sales and marketing and business development actions as well as R&D and product life cycle management practices. Operational excellence principles are also applied vigorously to our G&A and infrastructure and functions to improve efficiency and productivity. All of these programs are firmly rooted in the Bruker management process that provides discipline and structure to these operational excellence programs. Just a couple of highlights regarding operational efficiency and productivity improvements. We're nearing completion of our major footprint expansion in our CALID Group in Bremen, Germany. This expansion will meet the strong demand for our mass spec systems, including the timsTOF platform you've heard about today, but also optimizing our final assembly and test activities for our MALDI BioTyper and other platforms. Our recent building expansion in Hanau, Germany, positions us to move past some capacity constraints we have, which have been driven by strong global demand for our superconducting wire. And we soon expect to see production workflow along with capacity expansion there. In our new facilities, we're squarely focused on sustainable energy solutions that drive energy efficiency, long-term cost savings and support environmental sustainability. And more on that in a moment. On the commercial excellence front, we're making significant commercial investments to support growth across the Project Accelerate portfolio. For example, we recently made sales and service investments to scale up our commercial and technical teams globally to expand our marketing reach in proteomics solutions and also added channels to support the CellScape system you saw today as well as upcoming product launches for our acuity spatial genomics. And finally, as we begin to move beyond the supply chain challenges we saw in '22 and this -- early part of '23, we expect strong focus on reducing inventory levels and driving improvements in cash flow. From improving profitability over the past few years, we are now generating significant operating cash flow. The operating cash flow continues to be impacted by working capital growth, which we consciously accepted to manage the growth and supply chain challenges during and after COVID. But remember, this cash flow from an operations perspective is after investing heavily in innovation with R&D investments at or about 9-plus percent of our revenue annually during this period. As we move forward, we intend to carefully manage operating expenses and our working capital under accelerating growth conditions. On the right side of the slide, you can see that we have made significant capital expenditure investments to expand production capacity to meet this strong demand. And I should note that we do experience some lumpiness from time to time in our free cash flow quarter-to-quarter connected to cash advances and the like. But overall, we expect to be able to improve our operating cash flow generation over the next few years. Turning now briefly to one of the most important elements of Bruker innovation. We've consistently invested at a high level of R&D as a percentage of revenue compared to our peers. Year after year, we've invested 9-plus percent of revenue into R&D. And in 2023, our R&D budget is expected to exceed $300 million or about 10% of our revenue. We believe this to be a key competitive advantage as it drives solutions leadership and deep applications expertise, some of which you've seen here today. You can see on the slide some of the fields in which we lead as a result of these innovative investments, but I'd specifically highlight the investments we make in proteomics and spatial biology. Annually, at ASMS, we announced and launched new timsTOF solutions to meet discovery and translational research opportunities. And we also continue to forward fund our leading Canopy and soon acuity spatial biology solutions. Before moving to our medium-term outlook, I wanted to draw your attention to the fact that we did issue a 2023 sustainability report yesterday. The report confirms Bruker's commitment to social responsibility, transparency and progress in many high-impact ESG-related areas. And I'd encourage you to take a moment to review the report because it highlights the many innovative solutions that we have introduced to address environmental challenges, advanced disease, research and scientific discovery, identify hazard materials in our environment, secure the safety and authenticity of food and other materials, advanced research and development of next-generation and renewable energy technologies and also to improve recycling. It also outlines our ESG strategy initiatives and performance and will serve as the foundation for other future sustainability reports. You can see some several important elements highlighted under the ESG components of this slide, but I'd encourage you to review the report to see more information. Now just a couple of comments on our capital deployment strategy. I get a number of questions in this area. Essentially, simply our #1 priority is continuing to invest in opportunities that support the core business and our Project Accelerate 2.0 initiatives. That means funding significant R&D and sales and marketing investments that support innovation and drive market gain, capital expenditures that drive capacity and productivity as well as thoughtful strategic and bolt-on M&A. Coupled with our investments in growth initiatives, we consistently maintain a strong balance sheet, with excellent liquidity and conservative leverage. We currently have capacity and flexibility in our capital structure to address interesting portfolio additions that may come along. You see here on the slide, we deliver a leading ROIC performance, exceeding 20% and have done so consistently over the past 5 years, including difficult market conditions like 2020. And a final comment on returning capital to shareholders. Our strategy supports a steady dividend. And in May 2023, our Board again authorized an up to $500 million share repurchase program for the next 2 years. We intend to return capital to shareholders over time and like the flexibility to pause, start or restart buybacks depending on the opportunities that stand in front of us that support the growth of the business. Turning now to our medium-term outlook, looking out to 2024 to '26. In 2021, we communicated our expectation of 5% to 7% organic revenue CAGR over the medium term. And I'm pleased to report to you that despite supply chain and some macro headwinds, we expect to be very much on track with that target. For our updated medium-term outlook, we expect that Bruker organic revenue will outgrow the market, which we estimate to be 4% to 6% growth by 200 to 300 basis points annually. Accordingly, we project that we will generate $3.4 billion to $3.6 billion of revenue in 2026. Given that our full year 2023 guidance takes us to a projected revenue of $2.83 billion to $2.88 billion, this implies a 3-year organic revenue CAGR of 6% to 8% over the 2024 to 2026 outlook period or 7% growth at the midpoint. As you've just heard, excellent opportunities in proteomics and spatial biology combined with solid secular end markets from our other Project Accelerate 2.0 initiatives and our core business give us a clear line of sight towards $3.5 billion of revenue by 2026. Moreover, with improved operating leverage, increasing Project Accelerate 2.0 mix, our operational excellence initiatives, we also expect to continue to deliver operating margin expansion even after 10% R&D investments annually over the outlook period. Measuring the midpoint of our projection for 2026 against the expected 2023 operating margin of 19.3%, our model implies 170 to 270 basis points of expansion over the 3-year period. Our goal for 2026 is a non-GAAP operating margin in the range of 21% to 22%. And this leads us to forecast double-digit EPS CAGR in the range of 10% to 13% as reflected on the right side of this chart to a level of $3.40 to $3.70 per share in 2026. And I should add that our outlook model for revenue growth is before any future capital deployment for M&A, which could be incremental to our outlook for 2026. So just to recap, our medium-term outlook for 2026 is summarized as follows: revenue in a range of $3.4 billion to $3.6 billion, non-GAAP operating margins in the range of 21% to 22% and non-GAAP EPS in the range of $3.40 to $3.70 per share. Our outlook assumes a tax rate of around 27%. Further details around the 3-year financial outlook model that we've been discussing will be available on our Investor Relations website after the conclusion of today's event. And that concludes my remarks. Thank you very much for your interest in Bruker. And I'll now turn it over to Frank for some closing remarks. Thank you very much.

Yes. Thank you. Okay. Here we go. Thank you very much. As before we go, we'll take a short break in a moment and then start the Q&A. I think you see a lot of change and transformation at Bruker and a lot of good things at Bruker remain the same, and we're very proud of those and continue to drive that forward. You see a big emphasis on biology. I keep preaching at Bruker, and we have physics and chemistry and engineering and math as our basis. That's why we built very good unique instruments from gigahertz NMRs to MALDI Biotypers to the new CellScape, to many other examples you've heard, not to forget the timsTOF, very unique scientific instrumentation, but we leverage that of course, for non-biological, semiconductor or food analysis chemictry solutions, but more and more, we're going very, very deep in becoming a biology company and actually a disease biology company, at least in microbiology and infectious disease. You'll hear -- you heard a lot about neuroscience research today. You will hear more and more also about cancer research and cancer testing and eventually cancer diagnostics. Many other new trends from AI being a megatrend that we will benefit from to many of the green tech and clean tech trends. So a lot of moving pieces, and we look forward to the Q&A. And then, of course, eventually, having you here -- back here, wherever we meet in New York in a couple of years for future Investor Day, and there will be some of the same topics, of course, spatial biology and proteomics. We think they will be very, very big for the transformational for Bruker, but also new opportunities that I've mentioned that we've teased about already, perhaps we'll be talking -- I predict we'll be talking about Project Accelerate 3.0 in a couple of years. And you kind of see where it's going, neuroscience cancer, clean tech. It's not replacing other areas. We're just very, very blessed having so many organic opportunities ahead of us. Thank you. Let's take a 3-minute break and then we'll start the Q&A, a quick bio break, and then we'll be here for your questions. [Break]

All right. Well, welcome back, everybody. So we're going to jump into Q&A here, do maybe about 25 minutes of Q&A. And we reiterated our guidance for the year. So really, we kind of encourage you guys to inquire more about kind of the longer-term opportunities we're pursuing here and the longer-term type guidance. So with that, yes, we already if you want to jump in here?

Mike Ryskin, Bank of America. Thanks for the presentation. That was really great. I appreciate it. First, I want to ask real quick about your expectation for academic and government funding going forward. As you highlighted, a lot of exposure there for you still about 40% of revenues, and that's been really strong in the last couple of years, but now there's expectations in the U.S. and in Europe that can moderate. So what is -- what's sort of built into assumptions for the 3-year guide? And what are the potential offsets you have if that does tend trickle down?

Yes. I mean our total NIH exposure is perhaps around 5%. So if it really came -- the slower growth may have a 30 to 50 bps growth impact on us, but I think it will be much less than that because it's really not for us, the NIH budget is a very, very, very large budget, and it really is much more about allocation and priorities. We think some of the highest priorities will be in spatial single cell biology and in proteomics phenomics. In the past, it was very much focused on genomics and next-generation sequencing. That's not going to go away, but I think it's going to be deemphasized relatively to these higher priorities in the life sciences. And then I would just observe, I mean, in '20 -- let me get the years right, '22, we had a 100 bps headwind from losing the Russia business. This year, we built in a 50 to 100 bps headwind from not being able to export all of our semiconductor metrology tools to China. So we're taking these things into account. They're taken into account in our long-term guidance. Overall, the academic government and particularly also the academic medical research center spending and investment in our types of tools is incredibly strong and basically anywhere in the world we look.

And then real quick, if I can do a follow-up on within Project Accelerate. Obviously, a lot of the focus was on spatial today and [fluorescence]. Is there additional opportunity [here] for bolt-on acquisitions. You highlighted a couple today that really built out your capabilities. Is that where we should look for new technologies to come in? Or is there more sort of homegrown organic efforts there?

We tend to do that pretty regularly. I don't know what the -- and often, we deploy 50 million to 100 million, sometimes more in a year on bolt-on acquisitions. Biognosys was a good example. We became a majority holder in Biognosys. Inscopix was an excellent example. A year ago, we bought PreOmics again, a majority position. So undoubtedly, we will continue to fill out the portfolio where we have -- where we see benefits and more complete solutions.

Yes. I think Puneet was [had to send] Rachel, yes, please.

Rachel Vatnsdal, JPMorgan. So, thanks for everything today was great. Just maybe can you spend a minute talking about how many months of backlog you have today? And then how does that really contemplate into the cadence of the new guidance that you guys have laid out here? You grew 10% last year, midpoint of the guide for '23 implies 10% organic this year as well. So how does that kind of read across is 2024, just given those tough comps, should we expect that to be lower than this more range of the midterm guide? Or could it just be higher given that backlog commentary? And then I have a follow-up.

I'm very confident that we're not giving '24 guidance today, but the general question, maybe I'll give that to you.

Yes. Well, first of all, on the backlog question, we have about 8.5 months currently of backlog, and that's record backlog for Bruker. We're starting -- as I've just said in my presentation, we've had 20 quarters of BSI book-to-bill ratio is greater than 1, which essentially means we're not eating into that backlog. So at the moment, it's a little hard to predict exactly what's going to happen with 2024, but we have quite a long runway, it seems to me, multi-years in order to be able to get that backlog down over time.

Perfect. And then maybe just as a follow-up on the margin expansion, that [OPM] guidance implies roughly low 70 basis expansion on an annual basis to get to the 21% to 22% operating margin in 2026. That's up from the 50 basis points CAGR that you guys flagged in the 5-year over the last 5 years. So can you just walk us through where are you seeing that margin acceleration come from? Is it more in the gross margin line? Or are you seeing some operating leverage as well?

That's maybe a clarification, if I may, because we have some temporary headwinds to our margins this year, certainly about 60 bps comes from foreign currency, and we hope that doesn't repeat itself next year. We have another 60 bps that comes from M&A, but you know that M&A is now part of us, so those are businesses like Inscopix or like Biognosys that aren't at the corporate average yet. So I think a better way to think about our margin expansion is sort of in that 30 to 50 bps. And I'm just taking a pro forma view on 2023, and then it gets you more to those numbers. We're not increasing our margin expansion to 70 bps. That's a bit of an artifact of 2023.

Frank, Puneet here. So it seems like UHF backlog was 26 this is the gigahertz backlog. Just correct me if I'm wrong, but that -- did that increase meaningfully because from the China orders, and if that -- if there is expectations for any further China orders, is the China stimulus at this point complete?

Not complete, but mostly came in, in Q1 and a little bit in Q4 for us, probably a little bit in Q2 still, we'll have to see. And yes, indeed, that was made for very strong orders again and further backlog expansion in Q1.

Okay. And then a follow-up on timsTOF. Obviously, great technology, has made quite a bit of strides. When you look at the technology versus the competition. First, one market question and maybe a sort of a technical question. And the market question is, are we seeing continued expansion of this market towards higher price into $1 million plus instrumentation is that where that seems like where Ultra is headed, and another competitor is headed that way, too. So do you think that the market is ripe for million or plus instruments and in proteomics at this point? And then on the technical aspect, how would you compare and contrast versus the new competitive launch from [up here], which was more high res and a tough attachment to it.

Right. So I think there is a market niche that's sizable, $4 million-plus instruments in proteomics in the discovery research, right? And I understand that a competitor has launched a very expensive, very heavy, big new instrument. Our Ultra is also up in the above $1 million. So there is a niche for that. So it's for the [plex]. It's not that small, I'm not as small as 1 might expect. But I don't think that this is necessarily the harbinger of the proteomics market. I think the sub-million $750,000 market and eventually also lower-priced systems, not low-cost systems, but $500,000, $600,000 systems, eventually benchtop systems. I think, is where there will be perhaps even more significant growth in the long run, and we're very much pursuing that as well. In that direction we have outstanding instruments that sell well today, that sell well below $1 million, and that can have amazing performance and competitive performance. We don't know how $1.8 million instrument will fare in that market. That remains to be seen when it truly launches and the demo labs have it and they can ship. So we shall see. We're very comfortable with our timsTOF platform and the new Ultra launch, it's all I can say.

Okay. Give you one here and then...

I think that hand has been up for a while.

Dan Brennan from TD Cowen. Maybe just on spatial, can you just remind us, I forget, can you just size your spatial business obviously cuts across a lot of areas. I don't know how you want to size it? And can you help us fit it in because you've got some other more genomic players out there that make a lot of noise on spatial. You're coming in from the protein side. So could you give us a flavor for -- on the protein side where there is some competition exactly kind of what you think your addressable market is the way they've sized it? Just give us a flavor for you highlight all this differentiation, which is a lot of unique features, but I think it will be helpful both to think about maybe a size, what's an implied growth rate and then how we think about kind of the addressable market that you serve there?

Yes. So let's start with, I guess, the TAM, the size of the market. The -- for all spatial biology. We size that actually in 2 years ago, and I think we still view it similarly. You saw I think much larger estimates of the size from others, but we saw it as a eventually kind of $5 billion TAM, which I think is plenty large enough without getting too carried away with the TAM type numbers that people were throwing around. So large TAM, right? And I think [indiscernible] at this point, It's pretty large, as long as something is large. I'm not going to quibble about whether it's $4 billion or $5 billion. So that's the TAM. Of the yellow part of the hexagon, right, the spatial biology and cell analysis that's going to do over $70 million this year total, and of that, which is truly just spatial, it's about 1/3.

Okay. And you want to talk about special transcriptomics versus proteomics really market segments, right?

Yes, really is. The -- you saw this rush, if you're quite aware of the all the spatial transcriptomic players, right? And that market got pretty crowded. And there's been some that have gone [biowaste] side that don't practice that anymore. And then in spatial biology, where we started. And by the way, I forgot to mention that instrument we develeoped that only in 18 months, and that's again because of that core competency we have. So pretty quickly, much later start than others. In the spatial proteomics, it really -- it's a different set of players that really push the main transcriptomic theme. And so yes, we kind of view those 2 different segments. If you're really trying to phenotype well and really understand the market environment, proteomics dominates what you really want to look at. And then where the transcriptomic comes in is where not everything is on the surface of the cell. So cytokines, chemokines or just want to understand other aspects about cell state in terms of gene expression. So how we view the transcriptomic segment coming from the proteomics side is we don't believe on the [indiscernible] side that makes sense to just do Hi-Plex for [plex's sake]. You want to do the level of flex on RNA. I guess I gloss over. We have -- have done RNA in the CellScape. We use RNA scope. We do it just to really give insights to the extra biology that goes beyond phenotyping, yes.

Yes. And I would add, perhaps, you've seen the $5 billion TAM that we're talking about a bit more conservatively. Others have talked about 10 billion, 12 billion TAMs. I think using your Canadian phrases, they're getting ahead of their skis. Thinking about translational and clinical markets that are still going to evolve eventually. So I don't argue that, eventually, it may not be 10 billion to 12 billion TAM over maybe a decade, then I would predict and -- or we would predict that the spatial proteomics will be the bigger part of the market because that's what you need in translational and clinical work, whereas this very high plex or [indiscernible] is more in discovery research.

Yes. I was just going to say that those access those large TAMs, which really include in all those estimates, whether it's our numbers or others, it's really when people start talking about clinical diagnostics, right? And this is pretty uniformly felt. And I'd say not really just by the spatial proteomics players, it's spatial proteomics, which will get to clinical first and actually be the dominant force there in clinical.

Yes. And maybe just a follow-up on the 6 to 8 organic guide. So just wondering how would you characterize that? Obviously, there's -- you've got the near-term concerns over pharma, maybe some [academic] pressure. But net-net, you've got a lot of -- you've been certainly exceeding that pretty healthily. You've got R&D at this level. You've got these breakout growth opportunities. Is it balanced? Or kind of where would you highlight would be the biggest drivers of upside to that 6 to 8 [TAM].

Before the pandemic, we're sort of a 4.5% to 5% organic growth company, right? Our previous medium-term guidance from our Investor Day 2 years ago for '24 implied 5 to 7, 6% in the midpoint we're raising that further. Yes, this year, we're growing faster. We're not predicting a slowdown. And maybe that will be the conclusion that some of you write down, I don't know. We're just trying to give a reasonable guidance that we hopefully can deliver and perhaps also a little bit over deliver in certain years. But there are some near-term concerns about a slowdown of the economy, and there clearly are some macroeconomic and even geopolitical risks, right? So we think this is prudent guidance for 7% at the midpoint that we hope to be able to deliver with better than 50% probability, right? And if we can overperform in some years, we'll be delighted to do so.

Dan Arias from Stifel. I guess I have to apologize because I'm probably going to ask just a version of Dan's question here. Mark, can you just maybe talk about a served addressable market or think about that $5 billion a little bit more today because to Frank's point, some of these life sciences companies have gotten themselves in trouble with 5 billion, 10 billion, 20 billion TAMs and then seeing some growth peering out that makes you wonder what is actually addressable today. So how do you see the portion of the market that is focused on proteomics, focused on in a way that moves beyond just what you can get from some of these in C2 platforms that offer protein capabilities? And then ultimately, what portion of the market do you think that, that might be today?

Yes. So -- and again we sized that in 2 years ago as well. And of that $5 billion, we had about $1 billion or so. And I think that's pretty close to the SAM, it's really the service market, it's in that kind of $800 million to $1 billion type range for spatial.

For spatial.

For spatial in general.

Okay. And then just a follow-on, if I could. Is there a recurring revenue stream behind the CellScape? If so, what might that be?

Yes. Certainly, I talked briefly when I talk about the kits and panels. So it's an open system, but what customers are looking for are these pre-validated panels where you say, "Hey, do you have an immuno-oncology panel to run. And so it will be like a 23 plex panel. So that's -- those are consumables that follow on. And then there are also our custom markers that they often will augment those panels with. So that's one. And the other is actually the chips themselves that we run on that are proprietary and to our -- that go match to our system where things checked out. So those are definitely important consumable [indiscernible] as they go on top of this.

So until you ask the question over time, I don't think it'll be a razor, razor blade model, which maybe may inflate 20 to 80. But proteomics and spatial proteomics could very well in quite a few years forward, be sort of at that 50-50 level aftermarket consumables, software and 50% instrumentation. That's a bit down the road, but that's sort of the trajectory, not unlike our MALDI Biotyper -- or actually the MALDI Biotyper is a little bit more on the consumables side even.

John Sourbeer, UBS. Frank, you talked about it at the beginning of the presentation just some of the onshoring and semiconductor opportunity. When you think about the long-term guidance, are you willing to quantify any of orders there where you see that on the driver?

Yes, Mark is also running our semiconductor metrology and microelectronics business within the Nano group, so maybe I'll have him comment?

Yes. So -- so we see semiconductor. Obviously, we saw it before the -- like the U.S. Chips Act onshore is long-term growth, and we plotted that out pretty carefully. So -- and I've commented to some of these before, I'll kind of date myself when I say this, but I've been in and out of semiconductor for quite some time. And what's great about semiconductor, it is a growth segment, it's kind of known to cycle, but it cycles a lot less than it used to back when I was doing it 25 years ago. And that has to do with the fact that chips are everywhere, right, and kind of Internet of Things and electronics everywhere. And then now with this explosion of AI on top of that, that's seeming to be more so. So long-term growth prospects are very, very good. Traditionally, if you kind of plot out that kind of long-term CAGR for the market we participate in, it's always in that 10%, 11% kind of range. Now regarding the U.S. Chips Act, there's -- that now adds some extra in terms of the U.S. market. You build a fab overnight. And then, of course, those chips companies are still kind of negotiating and wrangling with the government. So that's just kind of this back tailwind that's there for the U.S. market. And you'll see companies kind of make then their own decisions about how they deploy within the U.S., but that's happening. We're already actually having instruments go into some of those first sites that were kind of already in progress before the Chips Act, but then they were grateful that it happened. And so we're kind of deploying some of that. So that's going to be a multiyear thing.

I mean we're in the first inning -- first half of the first inning on that coming through. So this will be 3 to 5 years. And then, of course, the European chips act now being at $47 billion U.S. dollars once you translate it will also be pretty significant. It doesn't have quite as much political baggage and requirements, so maybe it'll get implemented a little faster. But don't get me started.

And then 1Q, you mentioned China stimulus. I guess just any thoughts on just the China market in general, maybe near term and long term, where the opportunities are there?

Well, that clearly was a bit of a bolus, right? I mean, the Q1 orders and late Q4 orders, which were really pretty outstanding. Some of that is a bit of a pull forward within the year. Our teams tell us other than this annual effect, there was also this timing effect, there was some clear additional business. And as in other stimulus programs even in 2009, '10, '11, that tended to benefit is our observation, the big-ticket items, and we do sell big ticket items. So timsTOF and NMR orders were pretty strong. When people get an extra million, they tend to buy $1 million system and don't buy lots of consumables for the next 3 years. So we've benefited from that. And other than that, look, I mean, China continues to be a very strong market economy. That's obviously very much investment focused. Excluding geopolitical risks, which we all know are out there, right, I mean China is a terrific market.

Josh from Cleveland Research. Frank, maybe -- or Mark, maybe going back to the proteomics and spatial omics markets. I think in the deck, you referenced low double-digit growth. I'm just curious if you could provide kind of an upper bound to that range? I mean it seems like if you're at 20% there, a path to low double digits for total growth is very reasonable. Any more context you can both provide would be helpful.

Well, it has many ranges, right? There are some things like the MALDI Biotyper, where the instrumentation is now growing in the high single digits. There are some things like CellScape that initially will have very, very high growth rates from a small basis, right? And things like timsTOF in between that has very good double-digit growth rates. But no, it's not growing by 50% or 80% anymore, but it still has a remarkable growth rate. So, I didn't really give you the answer, but that was deliberate. So it's a range, but when you combine it and of course volume average it, right, the bigger divisions grow a little bit -- or businesses grow a little bit more slowly eventually than something that's just been launched, right?

And then you didn't talk much about the service business. I wondered if you could provide an update on portion of revenue coming from service, the core growth drivers there and then context on kind of growth outlook and margin outlook in that business.

We generally think about that as a high single-digit growth business with a little bit dilutive on operating margin, but -- sorry, on gross margin, but excellent on operating margin, some of the highest operating margins in the business, and that's just the gift that gives on giving, right? I mean that just keeps growing. And it is service. It's increasingly also software. We didn't talk about that at all today, but there's a growing software business within BioSpin for analytical markets and lab markets. Of course, there's a lot of software investment in proteomics, there will be a lot in spatial biology as well. So it's not all one concentrated central software business, but many parts of our businesses have software, but there's also a dedicated software business, again, something to talk about in the future. And yes, consumables and kits are -- I think the aftermarket is now about 30% of our revenue. We've gone up from the 20s and mid-20s to 30% over time that will go higher. Although we are still really quite proud to be a premier or to be the premier scientific instruments company because that's where you can really create new markets and can do innovation and then eventually [follow] in the aftermarket into that. But if you only do aftermarket, you're probably going to be a follower. We're not a follower generally. So anyway.

So I think we have time for maybe 1 or 2 more questions. We're not. All right. Can sneak one in here. Yes, please.

If anybody needs to leave and catch a flight. We're going to be here for a little bit longer for questions, but if anybody needs to run out, feel free to do so.

Gerald, can I just sneak 1 in on productivity and efficiency. Where do you think you are there just in the process of improvement and how much you have that's sort of untapped low hanging fruit versus iterations of processes that you might have already put in place.

Well, the really big bulk of that in restructuring and taking cost out and outsourcing was sort of in that '14, '15, '16, '17 time frame when we also ended up growing a little bit more slowly, right? Other than that, it's a continuous process. Every year, as part of our management and strategy process, not only do we have great ideas for new solutions and new markets, but we take our costs, we improve productivity. We look for lower cost of goods sold. These days, it's not -- you also want the lowest total cost of ownership and of buying, right? So you need -- these days, you spend a little bit more money on having 2 sources for everything after the world is fragmenting again, and we've [indiscernible] out of the supply chain crisis. But it never ends. I mean that's a continuous management process. So right now, there is no discernible [over] in this inning or we're at this inflection point, we're in this continuous improvement phase that will never end. It's really a very core part of our management cadence and process.

And that's particularly true for the new facilities, including production and operations facilities.

So there, I would say there has been a bit of a CapEx bolus, and we're still in that and maybe another year into it after that, where we're well above $120 million or towards $130 million in CapEx. That's probably going to come down a little bit, but we're hesitating to put that into our guidance because we are expanding capacity and capabilities rather quickly and sometimes even our acquisitions then lead to further CapEx. So whether that's really going to level off from that $120 million, $130 million per year level which historically is high for us or whether it remains at that level, we will see. But it's very good investments. We feel great about those investments. and they help us on productivity and capacity. We're really building not just for the next capacity not only for the next 2 or 3 years, but for the next decade at considerable growth rates.

One last one, if I could squeeze in too. So if you look at the overall market, Frank, just in terms of M&A, just -- I know you talked briefly about it, but given the COVID cash and some of the broader life science tools market, I mean in your -- from your perspective, why are we not seeing more M&A? Is it more on the seller side, that hesitation? Or are they meaningfully still higher expectations? Or is it a matter of the right fit in technology? What I just wanted to get your high-level thoughts there.

Yes, I'm not sure -- we're not a serial acquirer. We're not one of the core compounders. We hope to be an innovator. We're not a narrow innovator. We're -- we obviously have enough diversity, but we're also not trying to do everything in our industry from [centrifuges] to freezers, right? So for us, it's typically about strategy and fit, but also sometimes about just valuations have come down, but look at the P&Ls of some of the potential targets. We're -- this disciplined entrepreneurialism also means we're not going to do acquisitions that would be damaging to our stakeholders.

All right. I don't know if you want to have any closing comments.

Thank you very much for coming here. I mean really very many of you spent much of the day with us. I hope -- we hope you thought the lab tours were useful and that we picked 2 focus topics. We talked a little bit about other stuff. But we thought we'll highlight 2 focus topics. And I know you know quite a bit about our proteomics work and what others are doing in proteomics. I thought today was a great day for showing you what we're doing in spatial biology. And yes, we went a little bit deep into some more details and even gave you a full demo, a partial demo here at least. But I hope you thought it was interesting for understanding Bruker and where we're going. Thank you very much. Thank you.