Third Quarter 2026 Earnings Conference Call - CYTEK BIOSCIENCES INC

Explicit Guidance:

• FY 2026 Revenue: Midpoint maintained; range narrowed to $208–$211 million, assuming no changes in currency exchange rates.
• FY 2026 Adjusted EBITDA: Expected to be around break-even, driven by a strong Q4 seasonal rebound and a $3–$4 million reduction in legal expenses compared to Q3.
• Q4 2026 Revenue: Expected to be meaningfully higher than Q3, aligning with typical year-end customer purchasing patterns and service growth.
• FY 2026 Service Revenue: Projected to continue growing at a low double-digit rate, consistent with recent quarters.
• FY 2027 Outlook: No specific numerical guidance provided; management expects revenue growth outpacing the market and peers as the Borealis analyzer (with full imaging) launches in 2027.

Business-Segment Outlook:

• High-End Instruments (Aurora Evo/Borealis): Borealis commercial launch scheduled for FY 2027; early access program expanding in Q4. Aurora Evo placements nearly doubled YoY in Q3; revenue growth for Aurora/Aurora Evo/Aurora Borealis category >30% in Q3.
• Service & Reagents: Recurring revenue (service + reagents) currently 36% of trailing 12-month revenue (up from 33%); expected to grow as a percentage of total revenue over time.
• Academic & Government: Strong growth expected to continue; U.S. instrument revenue to these customers grew >60% in Q3.
• Biopharma/CRO/Distributors: Anticipated improvement in the U.S. market due to year-end budget availability for high-throughput Aurora Evo systems; APAC/China demand remains suppressed by macro factors.
• Clinical: Performance expected to improve with the new organizational structure (implementation postponed) and the SysMaps collaboration in Europe.
• Recurring Revenue Base: SiteCloud user base approaching 30,000 (up >20% YTD); new subscription tier "SiteCloud Premium" launched for cloud analysis and storage.

Market and Competitive Outlook:

• Market Environment: Management views the market as generally positive, noting abatement of headwinds seen in early 2025 and better growth in Q4 2025/Q1-Q3 2026.
• Competitive Position: Confidence in gaining market share via the strengthened high-end product portfolio and technological leadership.
• Pricing & Volume: Expecting to leverage increased volume for improved profitability; no specific pricing strategy changes disclosed, but automation features (API integration) increase value proposition.

Macro / Industry Outlook:

• Geopolitical/Regulatory: U.S. patent litigation verdict does not impact global operations; patent only applies to U.S.-made/imported instruments. No operational changes required.
• Exchange Rates: FY2026 guidance assumes no change from current currency exchange rates.
• Manufacturing/Tariffs: Transfer of manufacturing capacity from Seattle to Singapore is fully realized, providing lower cost capacity, greater supply flexibility, and mitigation of tariff-related pressures.

Strategic Initiatives:

• Borealis Launch: Full commercial launch of the 7-laser, 60-color imaging cytometer planned for FY 2027.
• Organizational Restructuring: Implementation of the new business unit structure postponed to January 2027 to avoid near-term operational risk; resources will focus on delivery and growth in 2026.
• Cloud Ecosystem: Expansion of SiteCloud as a comprehensive digital ecosystem; continued growth of early access program for Borealis in Q4.
• Production: Increasing production rates for Borealis and Aurora Evo systems to meet demand; supply constraints are not a significant issue.

Risks and Headwinds to Outlook:

• Litigation Costs: Current legal expenses ($3M in Q3) are expected to decline in Q4, but potential for further legal fees if appeals or countersuits proceed.
• APAC/China Macro: Continued weakness in the Asia-Pacific region due to macroeconomic factors could dampen Biopharma/CRO/Distributor revenue segments.
• Reinvestment: Significant resource allocation to low-to-mid-range instruments and reagents could impact near-term margins until scale is achieved.
• Forward-Looking Statement Uncertainty: Standard risks regarding actual results differing from projections due to market conditions, execution, or external events.

Management Tone on the Future:

• Confidence: High confidence in technology leadership and ability to outgrow the market in 2027.
• Sentiment: Optimistic about the "strong finish" to 2026 and "improving profitability" in 2027 due to operating leverage and reduced G&A/litigation spend.
• Hedges: Reiterated FY2026 guidance without expanding the range, acknowledging current currency assumptions; refrained from providing specific 2027 numbers pending Q4 results in Feb/March.

Miscellaneous:

• Legal Update: Patent litigation verdict in Delaware (favorable on 3 claims, mixed on 1); post-trial motions filed; no impact on product shipping or operations.
• Installed Base: Total in-store base reached 4,073 units; 140 new instruments added in Q3.
• Cost Structure: GAAP gross margin improved to 59% in Q3 (53% in Q2 2025) and 61% YoY, driven by manufacturing transfer and lower tariffs.