Cytek Biosciences, Inc. (CTKB) Earnings Call Transcript & Summary

Good afternoon all, and welcome. My name is Fazi Kash, and I'll be moderating today's session. It is my pleasure to introduce Dr. Jiang, CEO and Chair; and Bill McCombe, CFO; Paul Goodson, Head of IR, to the JPMorgan Conference. And without further ado, I'll hand it over to Dr. Jiang.

Good evening. It looks like I'm the one between you and the evening parties. So I will be quick. So safe harbor statement. I'm not going to read. I'm sure you all know what it is. So Cytek is a cell analysis company and really empowering the scientific discovery in this community. And in fact, we have been very well recognized in the space and as evidenced validated by Cytek being named as one of the fastest-growing company by Time Magazine, along with other well-known companies, public companies in the U.S. Cytek has also been named as the Company of the Year by the Chronicle Journal as well as our Micro Muse, which was launched last year being named as the Inventor Award by the journal here, Technical Award of the year. So Cytek has, throughout the years, has been really driving the discovery and development in the cell analysis space. and as shown up here, as you can see, and throughout the year since we launched our first instrument in 2016, '17 so far, we have shipped delivered more than 3,000 instruments in the space. And more than 3,000 technical journals has listed Cytek as being the technology instrument, helping them to develop their discovery work. And we have now more than 2,000 customers and unique customers. Our instrument has also gone to more than 70 different countries in the world. We just released our preliminary results this Monday. And last year, our results showing and with $201 million, slightly above the year before. Overall, towards the end of Q3, our cash $262 million. So Cytek is really a global company, and we have our manufacturing operation across the world, including the U.S., Singapore and China. And through this operation, we are now doing region for region manufacturing that enable us to support customers across the world across all the continents. Our revenue has been supported by our shipment across all the countries, including the U.S. now carrying more than -- around 50% of our revenue and EMEA 26%; APAC, including China, 24%. And also, if we look at the industry, about 59% of the revenue is coming from biotech, pharma as well as through distribution and 41% through bio academic and government supported agencies. In fact, we are in the industry, in the market supported by big large opportunities. Based on the market reports published just recently, in 2025, the overall market opportunity is about $5.1 billion. And throughout 2032 and with a CAGR of 8.8%, that will enable us to reach $9.2 billion, and that's kind of a large market for the company, and this is where we are. That basically give us a great opportunity going forward to continue to develop, to evolve and to support these business opportunities. Cytek is supported by the 5 business pillars. That's what the company is built upon, which include instruments, applications, bioinformatics and clinical. As we all know, we started from instrument. That's how the company is built upon. And we continue to invest in advancing our technology on the instrument side, including to continue to improve performance, provide more intelligence and provide harmonization across all the instruments, which is absolutely needed today and by all the clinical trial and by the pharmaceutical companies as well as supporting all the clinical studies as well. And so to can harmonize all the data from different instruments, different labs. And the liability is another aspect we continue to pay attention to, which is very important to continue to drive the adoption of our instrumentation. Of course, cost is always something in mind by our customers, by our users. Application is where we drive reagent recurring business based upon our installed base. And so Cytek has been developing reagents, focus on expand the application based on the full spectrum technology embedded into Cytek's technology. That this is where the recurring revenue will continue to help to sustain and grow our business going forward. Bioinformatics, in fact, this is another area and which substantially differentiates Cytek from many of our competition. And through bioinformatics, we have accumulated more than 20,000 users who are using -- who are on Cytek Cloud every day and to develop panels and to drive the application utilization of Cytek instruments. Of course, bioinformatics Cytek Cloud also provide far more benefits for our users, including the automated optimization of the panels and data management and also eventually will enable our users to exchange information across over the Cytek Cloud. This is a platform will continue to evolve, continue to improve, continue to expand. And lastly, our business pillar is clinical. As we know, we have our instruments already clinically approved for applications in China and Europe. And we go our clinical instrument and due to the technology involved that due to the harmonization and really can drive the application as well as to provide more sensitivity and higher panels that enable to drive the application, including leukemia MRD. This is one of the areas which is unique for our technology for what we have developed because one of for MRD, one of the -- as we know in the MRD flow cytometry has always been the tools being used. But one of the problem previously with flow cytometry is with regarding to the sensitivity. Now us based on what we have developed. We have improved the sensitivity and by a factor of 2 to 3 and to really get to 10 to the minus 5 to minus 6 kind of sensitivity and AI is another aspect, and we are focusing on the clinical side for the data analysis to drive the clinical applications. Now through the years of development, we have already built up a very broad portfolio of best-in-class cell analysis tools, including from conventional to full spectrum as well as the imaging-based flow cytometry to support various applications and among our user base. In addition, with the installed base we have built upon and we started to enter into the reagent and space, we have a very broad portfolio of reagents today that enable our users to develop applications to support their research needs. And then earlier I mentioned about Cytek Cloud and for the bioinformatics as well as the services which, in fact, is one of the fastest growing space and also the segment for Cytek on our revenue. Now one of the things that differentiates Cytek compared to many other life science tool company is flow cytometry is a basic life science tool. It's an essential tool required for driving application in almost every life science labs. And so this is something you must have comparing to many other technology and tool, which is nice to have. Due to this, and even under a very challenging environment, as we all know, 2025 was kind of challenging but still our revenue continue to grow. And our business continue to evolve and as evidenced by the data we presented this Monday. And Cytek tools is built upon our core instrument is on Northern Lights Analyzer, Aurora Evo. And also Aurora Analyzer Evo is our new generation of high end of the research tool for the data analysis and also as well as the Aurora Cell Sorter, which is, in fact, the fastest-growing tools across our portfolio. And those instruments have been driving the applications for our users. And the latest Aurora Evo we launched last year has been also growing very fast because this tool has provided many of the features. And our customers, especially our pharma have been expecting to, including the high throughput, better sensitivity, nano particle detection, data harmonization, those kind of features have all been built into this Evo system, part of the reason why it has been receiving a great acceptance among our user bases. And many of the users come back actually start to replace the early instrument they acquired from Cytek. And so this is a tool we believe this can continue to grow and through 2026 and years forward. And I mentioned the application driving the division adoption. Cytek throughout the year has been -- and due to the cumulative installed base, we are working on -- and we have been working on developing reagents specific to enable us to expand the application of full spectrum technology. And through that, that help us to really drive the research applications in immuno-oncology, in infectious disease as well as inflammatory diseases. Of course, this is just a few. And in fact, our application can also drive way beyond the life science spaces, which we are also looking at. Throughout this process and enable Cytek's instrument application to be built into the typical pharma drug discovery and genomic and immuno profiling and technology, we have built big panels and standard panels to enable our users to get on to application quickly, fastly and also enable them to leverage what we have developed on the panel as a backbone to help them to quickly get on to their study, their research. In the meantime, we have also developed those single color and single-layer and 2-color TBNK panels to drive the clinical applications in China as well as Europe. Our instrument today, as earlier I mentioned on the clinical side has been cleared for clinical applications in the U.S. as well as in Europe. And this is another opportunity for us to continue to drive our revenue growth over the next few years. Cytek Cloud is another business pillar I mentioned. And Cytek Cloud, in fact, one of the biggest nice feature for Cytek Cloud is, in fact, to enable our users to be able to build a panel very quickly. Typically, especially when you get to those high dimensional data analysis or cell analysis, a large panel normally takes weeks, if not months, to optimize. Cytek Cloud has built into AI features to enable users to get the panel designed automatically. And so that will enable them to really speed up their experiment. In the meantime, Cytek Cloud also provide virtual experiment on Cytek Cloud to help them to optimize the panel before they actually take the panel over to the real instrument for the real lab wet lab experiment. Now we have also built features to enable users to buy reagents and after the panels are optimized. Through this process, we really help our users, our customers to expand their application more effectively, quickly and also cost effectively. And in fact, Cytek Cloud has been very well received among our user base. And over the last -- actually just by 2025 through Q3, we expanded the user base by more than 40% and by now, certainly, we exceeded the number listed here. So Cytek Cloud is a tool and is going to really continue to drive Cytek's instrument as well as reagent revenue growth going forward. Now looking at our revenue growth, we reported $62 million and for Q4 and the full year, $201 million. In fact, if you look at the quarter-to-quarter revenue growth, it's a continuous acceleration factors. Q1, minus 8% comparing to the previous year, then get to minus 2% year-over-year, then we quickly recovered in Q3, 2% and Q4, 8% year-over-year. And throughout the year, and as you can see, our business continues to improve. And this is reflected by how we execute our business and how the market improves, how our technology is helping drive the business among this portfolio and this acceleration of year-over-quarter revenue growth. And actually, if you go into look further deeper into our business, 50% of our business is supported by services regions, that's the global service and regions plus the APAC instrument revenue. And that carries about 50% of our overall business. And that business, in fact, throughout the year has been growing by actually double-digit growth. And then look at another half of the business, which is based in Europe and EMEA and North America, and that part of business has been stabilizing over the year. And in fact, by the last quarter, it started to show the positive growth. This is how overall, and as you can see, the business environment as well as our prospects continue to improve. And this is how we believe and going forward, it's going to continue to drive our revenue, our business growth. We continue to invest substantially in R&D and reflected throughout the years by the product launched since we launched our first product in 2016. And as you can see, and we built up a broad portfolio of products through our technology innovations and including our first flagship product in 2017, Aurora Analyzer through 2021, we have the Aurora Cell Sorters and then 2025, we launched our new generation of Cell Analyzer, Aurora Evo. And in fact, throughout the years, and our products has been really through those innovations, technology innovations, we have been generating great customer tractions and supporting our customer needs that has been very well recognized by our user base, by our customers. And so through that period of time earlier, I mentioned about the reagent business we have built upon. And in 2021, right after we went public, we acquired Tonbo to help drive our reagent revenue growth. And '23, we acquired the Luminex assets to help us to expand into the imaging space. And now through all those internal technology development as well as the merger and acquisition that expanded Cytek to cover all the broad portfolio of applications. We now have a product covering the full applications needs in the flow cytometry space to support our customers. And that broad portfolio is going to continue to drive Cytek going forward for our growth going forward. And of course, we will continue to invest in the R&D side to drive innovation to -- and as you can expect it, which has been showing here. So going to 2026 and in fact, multiple angles, we can take a look at how our revenue can continue to grow. Certainly, one as you can see, this increased installed base will continue to drive our service revenue, which is in the double-digit range. And this expanded installed base will also help continue to drive our reagent revenues. And also flow cytometry market earlier mentioned the CAGR of 8.8% through 2035 (sic) [ 2032 ] is going to give us another opportunity angle to drive our opportunity for the continued revenue growth. And then this R&D, new innovation for us will enable us to continue to launch new products to support the customer needs. And we are also in the cycle for the conventional instrument replacement. And this also provides us a great opportunity. This is evidenced in fact, 2025, we see our sales order growing double digit. Part of that growth is driven by this replacement cycle. This process will continue throughout 2026. And Cytek Cloud earlier mentioned, help improve workflow and utilization. And lastly, clinical is going to help us to drive our growth through EMEA and China. This is another opportunity for the year. So looking at why we want to invest in Cytek. Clearly, and all those factors to show Cytek is well positioned for growth and profitability. And going forward, this is where why you should invest. And number one, first, we are a technology leader in our space. Through what we have done, Cytek has already built a name, recognition and being the real innovator, we have changed the whole landscape of the flow cytometry industry and moving from conventional to full spectrum. Everybody today is, of course, following Cytek, but we are a leader. We'll continue to invest to maintain this leadership. Second, we are a global company, and that global diversification allow us to weather all kinds of situations. And so we have manufacturing operation across multiple continents. We have our sales and marketing activities across almost all the important market region, territories. And we have our service organization cover across more than 70 countries to support our customers. So this is another reason why -- and Cytek will continue to evolve, continue to grow. And then with this more than 3,000 instruments in the field that will continue to help drive our recurring revenue opportunity through services and also reagents. And lastly, and Cytek is actually one of the very few companies financially in the life science tool space and which is generating positive cash flow. And so we'll continue to be that way, and we will continue to manage the Cytek very efficiently, profitably and to drive our business. That's all we have today. Thank you. Any questions?

Great. I have a few questions. Thank you for that. Firstly, many companies in life science tools have seen a contraction in revenue in recent years. Yet now your fourth quarter seems to represent a return to growth. Is this primarily composed of market growth or market share capture or both? And do you believe that will continue in the future?

I think our revenue growth mostly is due to the market share, taking market share from our competition, which is very evident. And looking at the overall market or 2025, which was very, very challenging and overall investment and clearly has been contracting. But under this contracting market, especially for the life science capital expenditure market. We, in fact, managed double-digit growth for our sales order. This just means we are taking market share under this environment. But of course, towards the end of the year, we have also seen some recoveries with regarding to investment, especially in the academic space. We have also benefited from this. Overall, we feel we are growing due to taking market share.

Understood. And you mentioned that you're seeing signs of demand stabilization in both the U.S. and Europe. Why do you think this is? Do you expect this will continue? And is this across the board among your various customer types?

And if you look at overall growth, in fact, and APAC has always been doing nicely on the instrument side throughout the years. And early last year, and we had some challenge. We saw some challenges in both U.S. and Europe, especially in Q1, U.S. with all those NIH funding reduction or freeze and tariff and which caused a lot of concern with regarding to the spending. And then Europe, the challenge with regarding to prioritizing the government spending to some different other fields outside of the life sciences. So this clearly has caused some issues. What Cytek has done is we continue to invest. We continue to innovate. And throughout the process, we launched 2 new products and Aurora Evo as well as the Muse Micro, all of those have been doing very well after they were launched and which have showed up in Q3 and Q4 with all the revenue growth. In the meantime, with our Aurora CS taking the opportunities of this replacement cycle and taking market share from our competition, and that truly enabled us eventually to recover all the kind of challenge we see, and that's part of the reason why Q4, we have seen the kind of growth. We feel this momentum is going to continue throughout the quarters with this acceleration in growth, and we feel this momentum will last us into 2026. Earlier, I mentioned 50% of our business, including service reagents and APAC instrument is growing about actually growing double digit. And then with the stabilization of North America and EMEA instrument, we feel in '26, we should see substantial growth comparing to what we had in 2025.

Got it. And your reagent revenue grew strongly in 2025. You said that there's roughly $150 million per year in non-Cytek reagents being used in Cytek machines. Do you think you can capture a large portion of that revenue over time?

Certainly. And the instrument, if you look at -- yes, we have more than 3,000 instruments in the field, assuming if every instrument can support 50,000 reagent consumption, which is not really that much. And that's $150 million opportunities. Of course, today, most of the reagents are supported by other companies in the field simply because Cytek started from being a hardware instrument companies. And at that time, we drove our customers towards other companies for the reagent business. Nevertheless, and as we build up our installed base and starting from '21 and when we acquired Tonbo and reagent become a very important part of our focus, really to leverage our installed base. And clearly, throughout the years, we have already seen the benefit. Last year, reagent revenue growth was more than 20%. We feel this trend is going to continue. And '26, one of the focuses for Cytek is to invest and drive the reagent sales through our focus on sales and marketing activities.

And how far do you think you can take recurring revenue as a proportion of total revenue in the future?

I think overall, and as you can see and first year, if you segment the flow cytometry market overall $5 billion, right, $5.1 billion today and among that 5.1 million today, between $1.5 billion to $2 billion is instrument and 2 billion to 2.5 billion to 3 billion other regions. And then the balance are services. If you look at what we have today and within the instrument side, if we segment further, we are very well supported on the high end of the market segment for the instrument. And we, in fact, have a very low penetration in the low end and mid-end of the market side, low single digits. That basically presents a great opportunity for us to grow into that part of the business. As you can see, we have a very broad portfolio of instruments that support all kinds of applications. And so -- but our focus previously has been on the high end. But now with the newly established broad understanding and focus that gives us a great opportunity to penetrate into that market that will provide us a great growth opportunity. And then the reagents. And we have, again, a very low market penetration today. But if we just focus on our own installed base, clearly, reagent presents another great opportunity for the year. And so just those 2 areas of focus, we feel that will drive the opportunities for Cytek, of course. And we'll continue to build new markets, new applications and new products through new innovations and to further expand the opportunities for our business for our opportunities. That's what we see what Cytek is eventually going to be. And so Cytek through what we are, we are destined to become a true full solution cell analysis solution companies. And with all of those, I think Cytek will continue to grow going forward.

And what are you thinking about with respect to capital allocation and M&A in the future?

Actually, Bill, would you like to comment?

So we like to have a balanced strategy where we have capital available both for share repurchase and for opportunistic M&A. So far in 2025, we sized our share repurchase to be approximately equal to our free cash flow. We exceeded that a little bit in the early part of 2025. But generally, that's the rule or the guideline that we follow and we expect to operate in a similar way going forward.

Great. I'll see if there are any questions from the floor. If not, I have one more. What are the key takeaways that you'd like to leave investors with? And what do you feel is most underappreciated about the Cytek story?

I think one of -- first is Cytek is today, and we know is the only flow cytometry company, public flow cytometry companies. All of our competitors are basically a business unit within a large organization. So that makes it very difficult for the research community to actually understand our business. And they fail to realize what we have is really a must-have technology. What we have built upon is a product portfolio that all of the -- it's a basic essential life science tools needed for every lab. And no matter the market is contracting or growing and no matter how challenging the business market is, they will -- as long as they want to do experiment, they want to develop new medications, new drugs or they want to do a good research scientific work, they need our tools. And so that is basically an opportunity for Cytek to continue to thrive within all kinds of situations. And this is some thing. And clearly, of course, Cytek also need to provide more education to the research, to the investment communities and with regarding to what we have been doing. But in the end is we are a company that has been there to have developed a great technology. We are a leader in our space. This space is very large, over time, will continue to grow, and that give us a great opportunity and going forward. So that's the area we feel and we would like all the investment community to understand this is where we are.

Well, certainly very exciting. I think with that, we can conclude the presentation. Thank you.