Cytek Biosciences, Inc. (CTKB) 2026 Q2 法說會逐字稿

Hello, and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cytek Biosciences Second Quarter 2026 Earnings Conference Call.

(Operator Instructions) I would now like to turn the call over to Mark Meehan. Please go ahead.

Thank you, operator. Joining me today from Cytek are Wenbin Jiang, CEO and William McCombe, CFO. Earlier today, Cytek Biosciences released financial results for the second quarter ended June 30, 2026. If you haven't received this news release or if you'd like to be added to the company's distribution list, please send an email to investors.cytekbio.com.

A copy of the news release is also available on the Investor Relations section of Cytek website at investors.cytecbio.com. Please note that we will be referencing a slide presentation during the call today that has been posted to the Investors section of our corporate website. As a reminder, on slide 2, we will make statements during this call that are forward-looking statements within the meaning of the federal securities laws, including statements regarding Cytek business plans, strategies, opportunities, and financial. Objections. These statements are based on the company's current expectations and inherently involve significant risks and uncertainties that could cause actual results or events to materially differ from those anticipated in these statements. Additional information regarding these risks and uncertainties appears in our slide presentation, in the section entitled Forward-Looking Statements in the Press Release Cytek Issued Today, and in Cytek filings with the SEC.

This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Additional information regarding our use of non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures, may be found on our slide presentation and in today's press release. While the company believes these non-GAAP financial measures provide useful information for investors.

The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Except as required by law, Cytek disclaims any duty to update any forward-looking statements, whether because of new information, future events, or changes in its expectations. This conference call contains time-sensitive information and is accurate only as of the live broadcast, August 5th.

Finally, I would like to remind you of the organizational update we mentioned during our last call. During the third quarter of 2026, Cytek will begin operating as three distinct customer-aligned business units, Solutions and Clinical, Research Technology, and Service. For further details about these business units, please see the slide included in the appendix of our presentation. With that, I will turn the call over to Wenbin.

Thanks, Mark. Welcome, everyone, and thank you for your interest in Cytek. On today's call, I will start with a discussion on our performance in the second quarter and highlight a couple of exciting new product launch before turning the call over to Bill for a detailed look at our financials and our updated two-year outlook.

Turning to slide 3. We built upon our good start through the year with continued positive momentum through the second quarter, delivering another period of solid revenue growth. Second quarter 2026 revenue was $48.1 million, an increase of 6% year-over-year. Our second quarter performance. Was driven by strong double-digit revenue growth in the US and in China, mid-change growth from our FSP instruments and consistent double-digit growth in our service business. Turning to Slide 4. Geographically, in the United States, second quarter revenue was $28.2 million, an increase of 18% year-over-year. This maintains the strong trend from Q1 and reflects impressive growth in equipment revenue in the academic and government sectors and in our service business. In a year, transport revenue was $11.3 million, down approximately 8% year over year, reflecting a continuation of the budgetary pressure arising from regional geopolitical dynamics. Total APAC revenue, including China, was $7.9 million, flat year-over-year. China delivered a strong double-digit growth against a market year-on-year comp, which was offset by softness in other parts of the region.

Turning to slide 5, we continued to expand our global footprint in the second quarter. Adding 142 units and bringing Cytek total installer base to 3,933 units. We continue to see good instrument unit growth in the second quarter, driven by our high-end FSP instrument portfolio, which grew 11% year-over-year and was led by Aurora Evo Analyzer and Aurora CS cell sorter. Turning to Slide 6 and 7. I want to additionally highlight two exciting new product launches that further extend our technology leadership and set the foundation for our next phase of growth. First, we recently introduced the Cytek Borealis, the industry's first 60-color seven-laser full special flow cytometer. The advancement to resolve 60 unique colors in a single sample run was enabled by Borealis unique technology, where seven lasers operate simultaneously in concert with purpose-built and proprietary deep UV and IRI reagents.

The capability to analyze 60 colors in a single run significantly expands the range of cellular biomarkers that scientists can evaluate while retaining the developed hierarchy comparison benefits of a single tube sample. On top of the technological benefits that improve analytical capabilities, Borealis also delivers increased efficiency for our customers. Including the ability to analyze nanoparticles which expands the diversity of sample types, high flow rate that increases the speed of the analysis and throughput of the system, and enhanced automation that eliminates the need for manual sample handling. The Borealis system has also been designed to allow for the integration of onboard high-parameter cellular imaging capabilities. By incorporating imaging alongside advanced 68 color 7 laser special detection, Borealis will provide a more complete cellular view from a single sample, representing another meaningful step forward in what our customers can learn from each experiment.

Feedback from our early upsets customers has been very strong, and we look forward to sharing more on Borealis as we progress toward greater commercial availability. Second, we introduced the new Aurora EVO instrument configurations with expanded automation capabilities. These enhancements enable the integration of full spatial flow cytometry into highly automated laboratory environments by adding automated and remote operation of key instrument functions as well as an API for interfacing with automation trade handling systems, eliminating the need for a human operator. These capabilities are particularly relevant for biopharma organizations and CROs where efficiency, reproducibility and system integration are critical to large-scale programs. Taking together, these newly launched products underscore our continued commitment to extending our technology leadership while enabling cutting-edge research and driving lab productivity for our customers.

Turning to applications and services, our recurring revenue base continued to strengthen in the second quarter. Combined regions and service revenue was $18.5 million in 2026, up 8% year-over-year. Representing 35% of Cytek last 12-month revenue, up from 32% for the 12 months to June 30, 2025. Service revenue was $15.6 million in the second quarter, growing 10% year-over-year, driven by continued growth in our installed base and the high utilization of our instruments by customers worldwide. We expect recurring revenue to represent an increasing percentage of our total value overtime, supported by high utilization and the continued expansion of our installed base.

Moving to bioinformatics, the Cytek Cloud continues to play a critical role for researchers working to create and optimize experiment workflows and is also driving adoption and utilization of our cell analysis solutions. As of June 30, 2026, Cytek Cloud has surpassed 28,000 users, up 15% since the start of the year. Growth in SightCloud users reinforces the strength of our integrated ecosystem and drives deeper customer engagement. We believe this increasing level of engagement is an important factor in driving growth in our region and service businesses. And with that, I will now turn the call over to Bill for additional details on our Q2 financials and our updated guidance.

Thanks, Wenbin.

Turning to Slide 8. Second quarter revenue was $48.1 million, an increase of 6% compared to $45.6 million in Q2 2025. Growth was led by strong results in the US, where we saw 18% year-over-year growth and record revenue in Q2, as well as robust growth in China. These were partially offset by continued softness in EMEA and other APAC, excluding China. Product revenue, which is comprised of instruments and reagents, was $32.6 million, an increase of 4% year-over-year, driven by sales of our high-end instruments, which grew mid-teens during Q2. We saw improved sentiment and strong revenue growth from academic and government customers in the US. While biopharma, distributor and CRO customers grew in other regions. EMEA instrument revenue declined 10% year-over-year, reflecting the government budgetary pressures when been described earlier. In APAC, excluding China, product revenue was also lower, driven by normal fluctuations in purchasing patents after a strong Q1.

Service revenue was $15.6 million, growing 10% year over year, driven by our expanding installed base and active instrument utilization globally. By customer segment, biopharma distributor and CLO revenue grew approximately 22% year-over-year to $29 million, the result of strong growth in EMEA and China. Academic and government revenue was $19.1 million, down approximately 12% year over year. U.S. academic and government revenue grew strongly compared to both prior year Q2 and Q1 of this year. This was offset by weakness in academic and government sectors in EMEA and other APAC, excluding China, after a strong Q1 in both. Turning to slide 9, GAAP gross profit was $28.3 million in Q2, representing a gross margin of 59%, which included a one-time $2.8 million tariff refund received during the quarter. Excluding that tariff refund, gross margin would have been 53% compared to 52% in Q2 2025. Product gross margin was 60% or 52% excluding the tariff refund, compared to 53% in the year-ago quarter. Service gross margin was 56%, up from 52% in Q2 2025 as a result of lower material costs.

Adjusted gross margin, which excludes stock-based compensation and amortization of acquisition-related intangibles, was 61% in the second quarter or 56% excluding the tariff refund, compared to 56% in the prior year quarter. For subsequent quarters of this year, we expect gross margins, excluding the impact of the tariff refund, to increase as our revenue increase is consistent with our typical seasonal pattern. Total operating expenses were $39.7 million in Q2, up 15% versus Q2 of 2025. Research and development expenses were $9.7 million, up 10% versus Q2 2025, primarily due to higher personnel costs. Sales and marketing expenses were $13.2 million, up 9% versus Q2 2025, primarily due to higher personnel costs and advertising and marketing expenses. General and administrative expenses were $16.8 million, up $3.3 million or 24%. The increase was primarily due to higher legal expenses associated with a previously disclosed patent litigation case and higher severance and other personnel costs. Our loss from operations was $11.4 million in the current quarter versus $10.6 million in the year ago quarter.

GAAP net loss in the second quarter was $12.2 million compared to $5.6 million in the prior year quarter. The increase in GAAP net loss was due to three factors: first, a higher loss from operations of $0.8 million second, a $4.5 million lower net other income. Which was primarily due to foreign exchange losses of $0.7 million in the current quarter versus $1.6 million of gains in the year-ago quarter and a $1.6 million non-recurring write-off of an investment in an early stage technology company and third, a tax expense of $0.5 million in the current quarter versus $1.2 million of tax benefit in the year-ago quarter. Adjusted EBITDA, which excludes stock-based compensation, foreign exchange impacts and the non-recurring write-off, was a loss of $1.5 million in Q2 2026 compared to a positive $1.3 million in Q2 2025. The adjusted EBITDA loss was primarily due to a higher loss from operations, a lower add-back of stock-based comp and lower investment income.

However, we anticipate adjusted EBITDA to improve in the second half as revenue increases with our normal seasonal pattern and operating expense growth moderates. For the full year 2026, we expect to deliver around breakeven adjusted EBITDA. Our free cash flow for the quarter was approximately neutral. cash equivalents and marketable securities totaled $262 million as of June 30, 2026, compared to $262.2 million as of March 31, 2026. Our strong balance sheet continues to provide the financial flexibility to invest in our global growth priorities. Turning to Slide 10. Today, we are raising the low end of our full year 2026 revenue guidance range so that the revised range is $207 million to $212 million, increasing the midpoint by $1 million. This assumes no change in currency exchange rates. This outlook reflects positive year-to-date results and the overall growth outlook across our markets, particularly in the U.S. and APAC, including China. In the second half, we expect revenue to be significantly higher in the fourth quarter versus the third, consistent with our typical seasonal revenue patterns. With that, I'll turn it back over to Wenbin.

I want to close by thanking the in-half psych team for their continued dedication and execution on behalf of our stakeholders. Our second quarter and first half results reflect the strength of our technology leadership in the flow psychometry industry. Revenue grew 6% year-over-year to $48.1 million in Q2, with strength in the US and China demonstrating the demand for our technology. Our recruiting revenue base now represents 35% of last 12 months' revenue, with service revenue delivering consistent double-digit year-over-year growth, and our religion business remaining well-positioned to expand.

Looking ahead. Our priorities remain clear, accelerating the market penetration of our instrument platforms, including the newly launched Borealis and Aurora Evo automation capabilities, advancing our technological leadership through continuous innovation, expanding our recurring revenue lines, and delivering profitable, sustainable growth. We believe the investments we have made in our products, our people, and our operations position cycles well for the fundamental of 2026 and for the significant long-term opportunity ahead of us. I want to thank everyone for joining today's call.

We will now open up for questions.

Operator.

(Operator Instructions) Brendan Smith, TD Cowen.

Great. Thanks for taking the questions, guys. I appreciate all the color on the end market and geographic breakdown in the quarter, especially China and EU. I guess with the biotech funding environment continuing to improve, should we expect growth across end markets to kind of equilibrate a bit? And I guess just how should we think about levers at your disposal to kind of capitalize on recovery in U.S. Versus the other geographies? Just any kind of color on relative contribution there would be great.

Hi, Brendan, this is Will.

We saw strong demand, strong momentum in the U.S. Driven by academic and government customers in particular. Biopharma in the US was relatively flat, but in the first half, US biopharma was up in the 20% area, so continued to show strong growth on a longer-term basis. Europe continued to be challenged. What we're seeing is that government R&D funding continues to be under pressure as a result of shifting government spending priorities over there and prioritization of other areas such as defense. China was very good in the quarter and other APAC had a bit of a soft quarter, but we do expect over the longer-term that region as a whole will continue to be a strong growth market.

In terms of levers, we have significant new products that we talked about, the Borealis, the Aurora Evo automation with enhanced automation, which are attracting very strong interest from customers. We continue to invest in our sales and marketing infrastructure and our brand is very strong and it represents really the leading technology in the space. That's something that's true in all major markets.

And on top of that, we have seen Cytek sales order continue to demonstrate great performance and very well appreciated by our customers and becoming really the workhorse for their daily applications.

All right, great. Thanks, guys. Appreciate it.

(Operator Instructions) David Westenberg, Piper Sandler.

Great. Hi, this is Sky on for Dave. Thanks for the question. Just first in the past, I think you've referenced a global installed base of 46,000 flow cytometers as a long-term replacement opportunity. Do you have any visibility into the actual annual replacement or retirement rate? And can you share a bit about the recent insurance placements and whether those have been competitive upgrades from conventional systems. Net new full-spectrum adoption or expansion within existing full-spectrum accounts? And then I have a follow-up. Thanks.

Based on the market report, the annual placement is between $7,000 to $10,000 within that range. And from site perspective, we play primarily in the high end of the research market within that market segment. And we continue to see great traction with our products. Customers are shifting more and more toward full special technology, which we have outperformed in our space, we believe we are continuing to take market share in that aspect.

Okay, great. Thanks. And then just secondly, can you talk a bit more about the dynamics in China? I know you've mentioned China is one of your expanding clinical markets in the past. This quarter you saw double-digit growth. What are you seeing from these Chinese clinical flow cytometry adoption patterns versus kind of what you're seeing in the core academic and government areas? Thanks.

As we do have our Northern ICLC clinically approved for hospital use over there, but just like many applications actually in other territories, in fact, and our research instrument continue to dominate our sales in that market and I think if you take a look at all the public datas around site continue to be one of the top three players in the China market.

I just wanted to add something related to the prior question about the replacement opportunity, if you look at the indicators released by or or the indicators given in the releases of our competitors and you look at our growth rate would appear to be significantly higher than our competitors and one of the factors that could be behind that is the replacement of conventional flow cytometers with FSP and obviously the strength of our technology and brand position. I think that our relative growth rate compared to the peers would bear out that that replacement opportunity is something that's working in our favor.

(Operator Instructions) Kallum Titchmarsh, Morgan Stanley.

Hi, this is Jason on for Kallum. Thank you for taking our questions.

Maybe just a question on the strategic reorganization to create new business units and align resources to drive growth. Can you just update us where you are from an operational perspective with a reorganization and what remains to be done before being completed in Q3? And how soon could we expect to see benefits from the initiative translate to the P&L? Could benefits start showing up in Q4 and would that represent upside to the 2026 guide? And also, what is the potential for customer disruption just due to changes in the sales force or other factors?

Thank you.

We're in the process of implementing that. As we said, we were going to implement it in Q3. We've started to do that. I think in terms of the primary objective of this restructuring is to align resources around different customer segments. As we do that, we would expect that to improve our growth rate and improve our, particularly our market penetration in the mid and low-end instruments and in reagents, so that's the area covered by the solutions business. But look, that's going to take time to really bear significant fruit. The guide that we gave for this year reflects the or assumes that this implementation is happening now and will continue, so it's baked into the guide. I think those are the major points.

I think the way we are structuring in fact is going to enable us to serve our customers better because different products are aiming for different customer segment and then we are able to really focus our resources, our marketing, our R&D to really optimize our products, our marketing message aiming for the needs of our customers, so we don't expect any disruption in fact should make us serving our customer better.

The primary benefit is going to show up in improved top-line growth rate, improved market penetration in the solutions markets and an overall improved top-line growth rate, but it will take a little while to show up because those efforts are basically just beginning. But over time, we think this organization will be significant improvement to our growth rate.

Great. Thank you. And just to follow-up on that, I think the slides mentioned that one of the three new business units is a clinical-focused business unit. It mentions that Cytek currently has a low share in the clinical market and the market represents a big growth opportunity. Why do you think flow cytometry is currently underpenetrated in the clinical space today, and what is Cytek strategy for penetrating the clinical market?

Thank you.

Actually, the business unit is called solutions and clinical business unit because clinical is part of the solutions. So overall, if you look at the there are two parts of the clinical. One is clinical true diagnostic, that part of the business. Second part is more kind of research clinical oriented business. We are serving for both markets right now and with what we have developed in particularly in Panels, regions, and as well as the software optimizations to drive the application and penetration into that market across all the categories, including China, Europe, as well as the US.

Yeah, look, one of the reasons it's a small business for us now is we don't we have approval for clinical product in EMEA and Asia, but we don't have it in the US that's one of the reasons that we have a small position now and the potential to grow significantly overtime.

Appreciate the answers. Congratulations on the quarter.

(Operator Instructions) Mason Carrico, Stevens Inc.

Hey, this is Harrison on for Mason. Thanks for taking the questions.

Have the assumptions for instrument service and reagents baked into the guide shifted at all expectations as of last quarter were for continued growth in services and reagent revenue at levels consistent with recent quarters and flat to modest growth in instruments. Does that framework still hold within the updated guidance framework today?

Yeah, generally that's true. Look, every quarter we look at the results and we tweak the framework, but our service business grew 10%, we would expect continued growth at that level or better in services. I think no major changes that the instrument revenues grew frankly a little towards the higher end of Our range of assumptions. We look at the quarter and various scenarios and come up with the range based on looking at a range of scenarios and I would say there aren't major changes to that framework.

Got it. And then when you initially set the guide in February, you described a contingency built in for unforeseen macro developments. Has any of that cushion been consumed in the first half? And what's the dollar figure for that cushion in the back half if it's still being assumed into the guidance?

Yeah.

Look, there's some contingency there we don't break it out. There's not one formula with specific numbers that we use to produce the guide. It's not a formulaic or mechanical calculation. We look at a number of scenarios and there's some contingency in the back half there. You'll note that going faster in the first half than would be implied certainly by the low end of our guide and even the midpoint of the guide and so you can conclude from that that we still have some contingency in our number. We're not seeing any, we're not forecasting any change in our markets.

Great. Thanks for taking the questions.

There are no further questions at this time. Ladies and gentlemen, thank you for joining today's conference call. You may disconnect.