Cytek Biosciences, Inc. (CTKB) Q2 2026 Earnings Call Transcript

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'll turn the call over to Wenbin.

Wenbin Chen- Thanks, Mark. Welcome, everyone, and thank you for your interest in ZITEX. On today's call, I will start with a discussion about our performance in the second quarter and highlight a couple of exciting new product launch before turning the call over to build for a detailed look at our financials and our updated two-year outlook. Coming to slide three, 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 2016 revenue was $48.1 million and increase of 6% year-over-year. Our second quarter performance was driven by strong double-digit revenue growth in the U.S. and in China, mid-team growth from our FST instruments, and consistent double-digit growth in our service business. Coming to slide four. 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 instrument revenue in the academic and government sector and in our service business. In a year, second world revenue was $11.3 million, down approximately 8% year-over-year, reflecting a continuation of the budgetary pressures arising from regional geopolitical dynamics. Total APEC revenue, including China, was $7.9 million, plus year-over-year. China delivered a strong double-digit growth against a modest year-on-year count, which which was offset by softness in other parts of the region. Turning to slide 5, we continue to expand our global footprint in the second quarter, adding 142 units and bringing Cycats total installed base to 3,933 units. We continue to see good instrument unit growth in the second quarter, given by our high-end FSP instrument portfolio, which grew 11% year-over-year, and was led by Aurora Evo Analyzer and Aurora CS Cell Soda. 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 Cytec Borealis, the industry's first 60-color 7-laser full special flow cytometer. The alignment to resolve 60 unique colors in a single sample run was enabled by Borealis' unique technology, where 7-laser operates simultaneously in concert with purpose-built and proprietary UV and IR dye regions. The capability to analyze city colors in a single run significantly expands the range of cellular biomarkers that scientists can evaluate while retaining the direct hierarchy comparison benefits of a single tube sample. On top of the technological benefits that improve analytical capability, the Borealis 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 60-color, seven-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 access 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 configuration with expanded automation capabilities. These enhancements enable the integration of full special flow psychometry into highly automated laboratory environments by adding automated and the remote operation of key instrument functions as well as an API for interfacing with automation pre-handling systems eliminating the need for a human operator these capabilities are particularly relevant for biopharma organizations and CIOs where efficiency reproducibility and system integration are critical to large-scale programs. Picking 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 continues to strengthen in the second quarter. Combined relations and service revenue was $18.5 million in June 26th, up 8% year-over-year. Representing 35% of SpaceX's last 12-month revenue, up from 32% for the 12 months to June 25th. Service revenue was $15.6 million in the second quarter, growing 10% year-over-year, driven by continued growth in our install base and the high utilization of our instruments by customers worldwide. We expect recurring revenue to represent an increasing percentage of our total revenue over time, supported by high utilization and the continued expansion of our install base. Moving to bioinformatics, the Citech 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 self-analysis solutions. As of June the 30th, 2026, Citech Cloud has surpassed 28,000 users, up 15% since the start of the year. Growth in site-to-cloud users reinforces the strength of our integrated ecosystems 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, Wenlin. Turning to slide eight. 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 U.S., 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 U.S., while biopharma distributor and CRO customers grew in other regions. EMEA instrument revenue declined 10% year-over-year, reflecting the government budgetary pressures when being described earlier. In APAC, excluding China, product revenue was also lower, driven by normal fluctuations in purchasing patterns after a strong Q1. Service revenue was $15.6 million, growing 10% year-over-year, driven by our expanding install base and active instrument utilization globally. By customer segment, biopharma distributor and CRO revenue grew approximately 22% year-over-year to $29 million, the result of strong growth in EMEA in 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 nine, GAP 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 Q2-25 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 2.25, 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. Gap net loss in the second quarter was $12.2 million compared to $5.6 million in the prior year quarter. The increase in gap 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 Q2-26 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 break-even adjusted EBITDA. Our free cash flow for the quarter was approximately neutral. of. 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.

Thanks, Bill. Coming to slide 11. I want to close by thanking the entire site 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 cytometry industry. Revenue grew 6% year-over-year to $48.1 million in Q2 with strength in the U.S. and China demonstrating the demand for our technology. Our recording revenue base now represents 35% of last 12 months revenue, with service revenue delivering consistent double-digit year-over-year growth and our related business remaining well positioned to expand. Looking ahead, our priorities remain clear, accelerating the market penetration of our instrument platform, including the newly launched 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 investment we have made in our products, our people, and our operations position as well for the remainder 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.

In order to ask a question, please press star 1 on your telephone keypad. Your first question comes from the line of Brendan Smith with TD Cohen. Please go ahead.

Great. Thanks for taking the questions, guys. 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 the recovery in U.S. versus these other geographies? Just any kind of color and relative contribution there would be great. Thanks.

Hi, Bernard. This is Bill. Well, we saw strong demand, strong momentum in the U.S. driven by academic and government customers in particular. Biopharma in the U.S. was relatively flat, but in the first half, U.S. biopharma was up, you know, in the 20 percent area. So it continues to show strong growth on a longer-term basis. You know, 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, you know, 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. As 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. And that's something that's true in all major markets.

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

Appreciate it.

Your next question comes from the line of David Westenberg with Piper Sandler. Please go ahead.

Great. This is Diane for Dave. Thanks for the question. Just first, in the past, I think you've referenced a global install 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 instrument placements and whether those have been competitive upgrades from conventional systems versus net new full-spectrum adoption or expansion within existing full-spectrum accounts? And then I have a follow-up. Thanks.

And based on the market report, the annual placement is between 7,000 to 10,000 within that range. And from CITIC 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, and customers are shifting more and more toward the full-spectral 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 mentioned china is one of your expanding clinical markets in the past this quarter you saw double-digit growth now what are you seeing from these china chinese clinical flow cytometry adoption patterns versus kind of what you're seeing in the core academic and government areas thanks as you know we do have our northern like CLC clinically approved for hospital use over there, but just like many applications actually in other territories, in fact, and our research instruments continue to dominate our sales in that market. And I think if you take a look at all the public data, SISC continues 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 given in the releases of our competitors, and you look at our growth rate, our growth rate would appear to be significantly higher than our competitors. And, you know, 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. So 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.

Your next question comes from the line of Callum Titchmarsh with Morgan Stanley. Please go ahead.

Hi, this is Jason on for Callum. 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 the reorganization and what remains to be done before being completed in 3Q? 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.

So we're in the process of implementing that as we said we were going to implemented in Q3. So we've started to do that. I think in terms of the primary objective of this restructuring is to align resources around our different customer segments. As we do that, we expect that to improve our growth rate and improve 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, you know, or assumes that this implementation is happening now and will continue. So it's baked into the guide. and 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 segments 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 flagship make us serving our customer better.

So, 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. And over time, you know, we think this organization will be a significant improver 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 Cytec currently has 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 Cytec's strategy for penetrating the clinical market?

Actually, the business unit is called solutions and clinical business unit because clinical is part of the solutions. And so overall, and if you look at the pure, 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. And so we are serving for both markets right now and with what we have developed in particularly the panels, regions, and as well as the software optimizations to drive the application and penetration into that market across all the territories, including China, Europe, as well as the U.S.

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 or in Asia, but we don't have it in the U.S. So, that's one of the reasons that, you know, we have a small position now and the potential to grow significantly over time.

Appreciate the answers. Congratulations on the quarter.

Thank you.

Again, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Mason Carrico with Stevens, Inc. Please go ahead.

Hey, this is Harrison on for Mason. and thanks for taking the questions. Have the assumptions for instruments, 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, you know, our service business grew 10%. You know, we would expect continued growth at that level or better in services. So I think no major changes that the instrument revenues grew, you know, frankly, a little towards the higher end of our range of assumptions. So 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. It's not a you know, there's not one formula with specific numbers that You know that that 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 know, you'll You'll note that we've gone 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. You know, 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