Cryoport, Inc. (CYRX) Earnings Call Transcript & Summary

Good afternoon, and welcome to Cryoport's Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I will now turn the call over to your host, Mr. Todd Fromer from KCSA Strategic Communications. Please go ahead.

Thank you, operator. Before we begin today, I would like to remind everyone that this conference call contains certain forward-looking statements. All statements that address our operating performance, events or developments that we expect or anticipate occurring in the future are forward-looking statements. These forward-looking statements are based on management's beliefs and assumptions and not on information currently available to our management team. Our management team believes that these forward-looking statements are reasonable as and when made. However, you should not place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results, events and developments to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Item 1A, Risk Factors and elsewhere in our annual report on Form 10-K to be filed with the Securities and Exchange Commission and those described from time to time in the other reports which we file with the Securities and Exchange Commission. It is now my pleasure to turn the call over to Mr. Jerrell Shelton, Chief Executive Officer of Cryoport. Jerry, the floor is yours.

Thank you, Todd. Good afternoon, ladies and gentlemen. Thank you for joining our fourth quarter and full year 2024 earnings call. With us this afternoon is our Chief Financial Officer, Robert Stefanovich; our Chief Scientific Officer, Dr. Mark W. Sawicki; and our Vice President of Corporate Development and Investor Relations, Thomas Heinzen. As a reminder, we have uploaded our fourth quarter and full year 2024 in review document to our website. It can be found on the main page of the Cryoport, Inc. website. This document provides a review of our financial and operational performance and a general business outlook. If you do not have a chance to read it, I would encourage you to go to the website and download it. Now I will provide you with a brief update on our business, and then we'll take your questions. 2024 was a tough year for life sciences. The effects of macroeconomic conditions and market dynamics were felt throughout the year. We adapted to the challenges and concluded the year with solid results and total annual revenues of $228.4 million, which is in line with our expectations. Our Life Sciences Services business continued its expansion with double-digit year-over-year growth in Biostorage and Bioservices revenue during both the fourth and the full year periods. For the full year 2024, our Life Sciences Services business represented 67% of total revenue compared to approximately 62% last year. We saw considerable revenue growth for the support of commercial cell and gene therapies, which rose 37% and 20% for the fourth quarter and full year, respectively. Cryoport continues to expand its market share in the growing cell and gene therapy industry. As of the year-end, we supported a total of 701 clinical trials, a net increase of 26 clinical trials over last year with 81 of these trials in Phase III. This is a record number of total clinical trials supported by Cryoport and it is indicative of the potential commercial revenue opportunity that is developing. Moreover, we also saw a record number of Cryoport supported commercial approvals over the last year, increasing the number of commercial programs we support from 14 to 19. In our Life Sciences Product business, we think our order patterns are beginning to show signs of stability. I would remind you that even with the downturn of the cryogenic systems market, our management team has continued to provide positive free cash flow from this business. As previously reported, during 2024, we implemented a number of cost management initiatives in our Product segment to align our operations with current global industry dynamics. As cost reduction and capital realignment strategies were implemented across our entire company, we made considerable progress in improving our gross margin. For the fourth quarter of 2024, our gross margin rose to 45.8% compared to 40.6% in the same period last year. We remain confident that these actions that have been taken are taking effect and will lead us to a return to positive adjusted EBITDA during 2025. At the same time, we have continued to advance our most important business development plans, which have been underway for some time as we strive to balance those plans with our commitment to achieving positive adjusted EBITDA during 2025. We're confident that these undertakings will open up new revenue streams and move us forward. For example, in the fourth quarter, we opened our IntegriCell cryopreservation solution with new state-of-the-art facilities located in Houston, Texas and Liege, Belgium. IntegriCell was set up to produce high-quality standardized cryopreserved starting material for the manufacture of cell therapies. Based on market research and our first interactions with prospects and newly signed clients, we believe IntegriCell will generate significant revenue as it offers significant advantages to cell therapy manufacturers, allowing them to produce more consistent, more robust, standardized product more efficiently. IntegriCell addresses a critical aspect in optimizing the supply chain for the development and commercialization of cell-based therapies. Another example is our Cryoport Express cryogenic CXHV3 shipping System, or HV3, which was introduced in January of this year. The HV3 is a revolutionary cryogenic shipper that offers our clients enhanced payload production, storage efficiency, mobility and accessibility. With the introduction of HV3, we also improved patient accessibility to vital cell therapies in smaller cities and remote areas as it will fit into smaller aircraft. We believe this will benefit patient outcomes at large. Looking forward in 2025, we believe we are well positioned to further capitalize on the anticipated growth of the cell and gene therapy industry. At this time, we are projecting that 23 BLAs or MMA filings could occur in 2025, up from 11 last year. We're happy that 2025 is off to a good start as 3 filings have already occurred in January. Cryoport's huge base of clinical trials continues to push forward, and we expect to post another record amount of commercial revenue in 2025. Based on all this, we're providing full year 2025 revenue guidance in the range of $240 million to $250 million. We intend to maintain our leading market positions, open up additional revenue streams and unleash our operating leverage as market demand grows. It will complement -- we will complement this with seeking strategic collaborations throughout the year. We're confident that we have taken steps necessary to implement our growth plans and to reach our objectives of positive adjusted EBITDA during 2025. This concludes my prepared remarks. And now I'll ask the operator to open the lines for your questions.

[Operator Instructions] Your first question comes from the line of Anna Snopkowski from KeyBanc Capital Markets.

This is Anna on for Paul Knight. Maybe to start on the significant and impressive 37% increase in commercial revenue you saw in the fourth quarter. Could you walk through some of the drivers there and whether this was broad-based or maybe 1 commercial therapy that drove this?

I think Mark Sawicki can best answer that question.

I'd be happy to answer that question. So a couple of factors. Number one is, it was a broad-based increase. It wasn't focused on 1 or 2 clients. Some of the key drivers here are we've seen the advancement of earlier line approvals with some of our commercial clients. We've seen additional companies get approved. We had 5 commercial approvals last year, and we're starting to see contribution with multiple of those programs as well, as well as our historical programs continue to expand on a geographic basis, as well as we're pushing for line extension into different therapy classes and all of those have contributed to that strong Q4 performance.

That's helpful. And then Switching to the MVE side of the business. It seems like you saw some stabilization there in the fourth quarter. Do you feel confident that this will continue to stabilize or maybe even recover in 2025?

We are seeing the order patterns beginning to show some signs of stability at MVE, and we feel that, that will continue throughout 2025. It may be uneven, but we think it will continue to progress.

And your next question comes from the line of Puneet Souda from Leerink Partners.

So first one on -- around the guide for '25, can you elaborate your expectation for service versus product? And maybe what are the growth assumptions you have for biologistics and also the Cryogene and the MVE business within the context of guide?

In the context of guidance, I think Robert will add to what I have to say, Puneet, and thank you for that question. But, obviously, services will be a bigger portion of our guidance, and it will grow faster than Life Sciences products. And with that, I'll turn it to Robert to elaborate more.

Yes. Maybe just a few things to put it in context, we typically don't guide on business units directly. But what I can say is, if you look at the revenue growth in Biostorage/Bioservices, which was double-digit, the Bioservices growth, which was 7% year-over-year. But then in particular, on the cell and gene therapy side, the strong growth on the commercial therapy side, that obviously drives the Services business growth. For Product, we certainly have to take a more conservative view just based on the comments that Jerry had earlier on this call to really look at very modest increases in product revenue for guidance purposes. So it's really driven by the services side.

Okay. That's helpful. And then there's quite a bit of discussion on tariffs. I'm just wondering, is there any impact on the cost of the dewars or freezers from any of the steel or aluminum tariffs, Canada, Mexico, or otherwise? And I'm just trying to understand. I'm sure you've thought through that, but are there any tariffs on the freezers from the China plant or anything that is getting serviced from U.S.?

We have thought through that. We do have, Puneet. And, whatever -- however, tariffs impact us and we can't tell for sure on all of them except the direct things that we hear about the tariffs on aluminum and stainless steel. And -- but we will pass on tariff impacts through surcharges for the period of time that they exist. And so, we don't expect impact on our margin. Would you like to comment on that further, Robert?

No, I think that covers it. I mean, I think what we have demonstrated even in the past with some of the supply chain issues that we've had in prior years that the management has been able to really maintain solid gross margins. So I think we have quite good control over the cost structure and then the ability to ensure that we maintain gross margins for the MVE for the products business.

I'd just like to make one thing clear. This is Tom, Puneet. The freezers for the U.S. market are made in Ball Ground, Georgia.

Cryogenic freezers.

Cryogenic freezers. And the cryogenic dewars are also manufactured in Minnesota. So there is no impact that way for our U.S. business.

Got it. That's helpful. And then when I was looking at your clinical trial growth, just a last question on this. That appears to be about net clinical trial growth of about 6% in '24. Wondering what's your expectation here for '25? And then, any impact from NIH indirect cuts? A number of these trials get started in the academic setting in medical schools. So wondering if you're seeing any updates or impact that you're contemplating from any of those institutions.

Puneet, I'll answer the last question first and then turn it to Mark for trial expectations. But in terms of the NIH, we have very little exposure to the situation with the NIH. So we aren't directly concerned about that at this point. Mark, would you answer the second part?

Yes, happy to. Yes. So as you can see with the data itself in Q4, Q4 was the best performance that we've had in, I would say, over the last 8 quarters on new trial acquisition. And I think that's a manifestation of the improvement in the overall cell and gene space as it relates to clinical trial activity. I do anticipate that we will see a continued strong performance. So I would expect that 2025 will be stronger than 2024 on a new trial acquisition basis.

And then, Puneet, as you'll see in the review document, there's another 23 possible filings in 2025. So on the commercial side, there's a lot of activity as well. Three filed already in January. We expect another 10 possible approvals, of which 5 are new therapies. So it's a very robust kind of pipeline of activities within the cell and gene therapy space.

And your next question comes from the line of Tejas Savant from Morgan Stanley.

This is Edmund on for Tejas. Switching back to MVE. Can you guys elaborate a little bit more on what you guys are seeing from your customers across your geo regions in terms of seeing early signs of stability?

Well, the signs of stability are in the order patterns, and that's a collective thing. So that's as far as I can actually go in answering that question. It's -- we do see signs of stability. This doesn't say that everything is stable and rosy, but we are seeing those signs of stability that we like to see in that market.

Got it. And appreciating that your presence in China has gotten smaller over the past few years to about less than 3% of your total. But given the concerns on Chinese retaliation on tariffs, even if nothing has happened yet, to what degree are local substitutes available in the region? And do you continue to think that your for China in China strategy is sufficient in securing a position in the market here?

Yes. I mean, local sources in China certainly are available and there are other sources throughout Asia. But -- and we're implementing our [ China For China ] strategy as we speak, and that will unveil that later on.

So, yes, and outside of China, again, this is where Tom mentioned that we have our manufacturing facilities here in the U.S. that manufacture the cryogenic freezers and dewars for the U.S. market, for the European market. So in some ways, we have -- we mitigate some of that risk that a lot of other companies have in the space with regards to China.

Maybe one last thing to add there, Ed, is that, in our guide, there is no assumption of a recovery from China.

Got it. That's helpful. And then one last one for me. How are you guys thinking about revenue contributions from the 5 new therapies that were approved of in 2024 for your 2025 guidance? And with the recent layoffs at the FDA, are you starting to hear customers concerned about longer approval time lines for cell and gene therapies?

Mark, I don't know that we can give guidance on those 5 therapies, but I'll let you speak to that question.

No, you're absolutely right. We don't break out individual contribution, although we do anticipate that multiple of the new therapies that were launched in 2024 will contribute meaningful revenue to the commercial totals for '25. That's about as far as I can delineate on that. Regarding the FDA, no, we do not anticipate the activities within the FDA from a governmental standpoint to have an impact on cycle time. In fact, we've seen very robust approval activity, and we continue to see progression there. So I wouldn't anticipate a meaningful impact on the '25 portfolio.

As a matter of fact, one of our customers today announced that they had their BLA received and have a PDUFA date in August. So things keep moving forward.

And your next question comes from the line of David Saxon from Needham.

Congrats on the quarter. Maybe I'll start with Robert, just on profitability. The PR noticed or noted expectations for getting to profitability in '25. Can you just help us around specificity, when might that be either by quarter, like first half, second half? And then kind of directional expectations for the year, should we be thinking breakeven or any better or worse? And then I'll have a follow-up.

Yes. Maybe just to frame it a little bit. When we talked about some of the cost measures that we took in -- starting in Q2, we've made good progress. We implemented the majority of those activities, and that really drove that consistent improvement of adjusted EBITDA over the last 3 quarters, moving from a negative $6.6 million to now negative $1.3 million for Q4. On an annualized basis, that equates to about $22 million. So that is in line with what we were targeting, actually a little bit better than what we were targeting. We are, of course, focusing on expanding gross margin and driving profitable revenue growth. And you've seen a significant enhancement of our gross margins year-over-year, both for the services revenue, as well as for the product revenue. So I think we're well on track to continue to execute. At the same time, we are driving certain initiatives that we have that we believe will drive revenue growth in the near future. So that's another aspect to consider. So I think in terms of timing of reaching adjusted EBITDA -- positive adjusted EBITDA, we can't give you direct timing, but it is our stated goal to reach that during 2025. And the timing of it really depends on some of the ramp that we expect to see on the services side, and particularly on the cell and gene therapy side.

Okay. That was helpful. And then I wanted to ask on MVE. So you're noting order patterns are stable. The quarter was pretty strong at $20 million in dollar terms. So is that a good starting point if against the backdrop of orders -- order pattern being stable? Or is there any like mix dynamic that we should be aware of that would materially change kind of quarterly expectations?

There's no mix dynamic, David, that we can point to right now.

And your next question comes from the line of Subbu Nambi from Guggenheim.

One question, once the therapy is commercial, what are the drivers of revenue growth to Cryoport on that therapy? Is it just volume ramp for the therapy and indication of something? Or are there opportunities to increase your wallet share with the manufacturer? We're pursuing both.

Yes, we pursue both avenues. So both ramp in volume from a patient treated standpoint, as well as revenue diversification. So in many of the cases, we're seeing that both of those occur.

Thank you for asking that. And it's -- yes, you see that in the Bioservices/Biostorage starting to grow. And hopefully, this year, as Mark will probably talk more later on, is that IntegriCell initiative. So these are the projects that we've invested in for years that are now starting to get some traction.

And you did mention that you expect 2025 to be better, but what have you been seeing with respect to biopharma biotech funding in 4Q? And what trends are you expecting to see in 2025?

Yes. So I think there was -- I think it was $15.2 billion for all of '24, which was the best year in a number of years, in fact, for cell and gene investment. 2025 is going to be a little bit more challenging from an expectation standpoint. I think it will be a strong year, but we obviously have to see what happens with the federal government and what's happening there. So I'll couch that with just a caveat. But the markets themselves are very positive. In fact, a lot of the activity that we were at from a trade show standpoint and from a market standpoint, the sentiment overall is much more positive than it has been in a long time. I'm not sure if Tom wants to add anything to that?

No, other than on our quarterly review document that's on our website, Subbu, when you have a chance to download it on Page 5, you'll see the cell and gene therapy investments by year, and it was a really good year in 2024.

Correct.

And so, you are assuming the similar levels of funding for 2025 in your guide?

Yes. I mean, we obviously -- based on the sentiment that was expressed at some of the JPMorgan facilitate and others, it looks like it will be a year that we believe will be positive. So, I would expect, hopefully, that we'll see activity that's at par or even a little bit stronger than '24.

And just to maybe clarify, Subbu, that when you think about our guide, especially when you think about our commercial revenue and how we're factoring that in, and that has nothing to do with funding. These are from large pharma or public companies that aren't dependent on money coming in the door for their commercial ramps.

Tom, I was just asking that because many of the smaller biotech funding -- biotech companies saw some struggle during their '22, '23 phase. So that is what I was hitting on, not so much -- I completely understand you come more on the commercial and probably late-stage clinical space.

Yes. And most of what we saw as it relates to that -- those activities in '22 and '23 have already shaken out. If you followed our clinical trial activity over the last 4 to 6 quarters, we saw higher-than-average attrition of programs, and that was the culling of nonproductive programs, as well as the tightening of the clinical trial environment. But that's been winding down over the last 2 quarters. And I think you see that as evidenced by a strong increase in clinical trials supported in Q4, much higher than we've seen in the last 8 quarters.

And your next question comes from the line of David Larsen from BTIG.

Congratulations on a good quarter. It looks like you're turning the corner here. Can you talk a little bit about the gross margin expansion? I think it was up over 500 basis points year-over-year in the quarter, both product and service. Just was that more cost reduction efforts? Or was it really top line growth? Just any thoughts there would be helpful.

Yes. No, absolutely. Look, I think a lot of it is related to the cost measures that we've implemented in the second half of the year. So we've seen a significant improvement in the cost structure based on the actions that we have taken. And that really has helped drive the gross margins to where they are. You absolutely right on the service side. We moved for Q4 to 46.2% from 40.8% last year and for the product side from 40.4% last year to 45.1% this year. So both on the services side as on the product side, we've seen a good bounce back of gross margins. Our targeted gross margins in the longer term are 55%. And in that model, we're looking at about 30% adjusted EBITDA margin. So those are our targets, and we're certainly going to continue to take the actions to drive gross margins. There's still some room on the cost side. But, obviously, we do expect the revenue growth to contribute to the gross margin as well going forward.

I guess, without getting too specific, Robert, would you be expecting like a mid-40% gross margin in '25? Like is this a good steady state at the 4Q results?

Yes. I think there's opportunity for increase throughout the year. I think if you look at the year of '25 and the guidance we've given, we expect overall to see kind of sequential improvements in our financial metrics. So I think there's still some upwards mobility on the gross margins. At the same time, I also want to remind everyone, we do have some new initiatives that just came online like IntegriCell, where we brought up 2 facilities in Liege, Belgium and in Houston, Texas. And, obviously, there's also going to be a little bit of a drag on that margin until they start seeing more substantial revenue come through the door. But I do expect there's some upward mobility on the margins over time.

David, we have not veered from our targets that we've talked about for years, 55% gross margin, 30% adjusted EBITDA. And those are fully in sight. We simply have the drag of some of these projects that we have underway. And they will -- as they come online, as Robert just mentioned, they will unleash operating leverage, and that will help drive our gross margin up substantially and thereby our adjusted EBITDA. So we're confident in our plan and in the way we're implementing it. The cost adjustments that we did were simply reprioritization, some cost management required cutting where we could, and it's showing extraordinary results, and we intend for that to continue.

Great. And then just one more quick one for IntegriCell. Is that generating revenue right now? And any sense for what the revenue contribution will be in fiscal '25?

It is. And Mark can comment on that.

Yes. Yes. So the bottom line is, yes, we've signed our first contracts with the IntegriCell platform in Q4 and continue to sign contracts in this quarter. We will see some revenue contribution in Q1, although very modest. I don't anticipate significant contribution for 2025. We'll start to see notable contribution in 2026. It just takes time because there's a lengthy audit validation process to onboard starting material manipulation as it relates to FDA regulatory considerations. So it takes a little bit of time. But we have signed our first contracts in that space, including some top 5 pharmas that have bought into the platform will start to use it in their portfolio, which we're very excited about. That's great. And then for MVE, any comments on large freezer, small freezer, dewars? I've heard the word stabilizing. Is it stabilizing across all 3 of those categories in large freezer in particular?

What you heard is order patterns are beginning to stabilize, and it cuts across the company.

And your next question comes from the line of Richard Baldry from ROTH Capital.

On the IntegriCell side, can an existing clinical trial protocol be altered to adopt the IntegriCell? Or do you think this will be strictly on sort of new clinical launches?

This is not an alteration. This is an improvement in process. It's a revolutionary improvement. And Mark, do you want to comment further?

Yes. So, obviously, it's being written into quite a few new programs that are starting, but it does not preclude the ability to transition. If they have an established cryopreservation paradigm that's written into their BLA, yes, they can transition that into our platform. They may have to do an addendum to that, but it is doable. And in fact, we are seeing that type of activity as well.

And as commercial cell and gene therapy becomes more material to the overall business, can you talk about any underlying seasonality to that specific segment that we should be concerned about, whether strength -- stronger quarters, weaker quarters, whether that's based on numbers of days, holidays, things like that, that we should take into consideration?

Nothing out of the ordinary that we can comment on there.

Yes, there's nothing specific from a seasonality standpoint. The only impact you'll ever see is facility shutdowns where most companies will do a shutdown for the manufacturing for a week or 2 a year, but they're all different based on companies. So it's impossible to predict those elements.

And it sounds like you're largely done the operating expense cuts and got a little bit ahead of your own plan in terms of how much was realized. We look forward, do you feel like you're in more of a sideways spending pattern until sort of the top line begins to come back up? Or are there some things that come in early, whether it's the 2 new facilities launched that bring the overall spending up maybe earlier in the year and then sort of plateaus as the revenues come through to get you back to profitability?

Yes, Rich, we'll have some CapEx expenditures related to the new facilities in California and in Paris. That's certainly the case. But I think maybe 2 items. One, we don't expect any significant increase in OpEx. Two, as a CFO, I can say that there's always opportunity for additional review of how we do things and where we can potentially take additional cost actions. So I do expect us to really continue to look at ways we can improve efficiency, ways we can reduce cost without changing the growth initiatives that we have. So yes.

And your next question comes from the line of Kyle Crews from UBS.

Taking a step back from cell and gene therapy and looking kind of at the broader market and the non-cell and gene therapy part of your services business, can you expect how you expect that market to evolve over the next year?

Mark, do you want to take that?

Sure. Yes. I mean, obviously, we support multiple verticals within life sciences. Cell and gene is our focus, but we also do a lot in direct-to-patient. We do activity on different vaccine activities or other biopharma space. I expect to see those to grow, but nominally or modestly because that the non-cell and gene market is a little bit softer, but we should still see some growth in that space. On the transportation side, I think we'll also see growth -- continued growth as it relates to non-cell and gene pharmaceutical product distribution. So...

Just add to growth, Mark, maybe IVF as well.

Yes. So reproductive medicine, we continue to see and play a dominant role. We're making very good headway as it relates to expansion of our service platform ex U.S., and I do think we'll see contribution from that this year in the reproductive medicine space and as well in the animal health space. We're seeing an acceleration of clinical trial activity for companion animal cell therapy products. And we should anticipate seeing quite a few clinical trial starts in support of the animal health space for companion animal cell therapy in '25.

Operator, are there more questions?

Your next question comes from the line of Matt Stanton.

Maybe just to go back to the '25 guide. I appreciate you guys obviously don't give color at the specific therapy line item. But just if we think about the commercial basket overall, trying to get a better feel. I think it was up 20% for the year, high 30s for the quarter. So kind of which of those 2 is better for that bucket for 2025? I think, Mark, historically, you've talked about maybe 30% plus type growth over the next few years. So is something in the 30% plus range fair for the commercial revenue bucket here in 2025?

I think that's fair, Mark, but do you want to comment on that further?

Yes. I mean, I think we'll be stronger than 20%, which was this year from a growth standpoint with a number of new launches in the therapy expansions. I think getting into the mid-30s is probably a hair aggressive. So I think we'll probably be in the high 20s is my guess at this point in time based on what we're seeing.

Thank you. There are no further questions at this time. I will now hand the call back to Mr. Jerry Shelton for any closing remarks.

Thank you, operator, and thank you all for your questions. I think we had some constructive discussions, and we appreciate your interest in Cryoport. We finished this year with solid fourth quarter results that were consistent with our expectations. The results reflect the continued growth of our Life Sciences business, which included the revenue growth we achieved from the support of commercial cell and gene therapy. For our Life Sciences Products segment, we're seeing what appears to be a stabilization of orders as we talked about in the question-and-answer period. And we have -- as we've said before, our Life Sciences Product business is solid and continues to provide positive cash flow. Our results also show our significant progress in improving our business economics. Market conditions in 2024 were difficult, and we look -- we took actions to address this. As a result, we're beginning to see the effects of these initiatives, most notably in our gross margin improvement. We continue to anticipate that these actions will guide us to a return to positive adjusted EBITDA during 2025. We thank you for joining us this afternoon, and we appreciate the conversation. We appreciate your continuing support and your interest in our company. We look forward to updating you on our progress again as we report the first quarter of our financial results at the next call. Thank you very much, and have a good evening.

Thank you. And that concludes our call for today. Thank you for participating. You may all disconnect.