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Akoya Biosciences, Inc. (AKYA)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 revenue of $18.8M fell 25% YoY; management said results were “below expectations” amid ongoing capital equipment constraints, though gross margin improved to 62.3% on manufacturing efficiencies .
  • Operating expenses declined 25% YoY to $20.1M and loss from operations improved 28% YoY to $(8.3)M, reflecting cost actions and the fully operational manufacturing center of excellence .
  • FY24 revenue guidance was cut to $80–$85M from $96–$104M; management is “actively evaluating a range of strategic alternatives” with nothing off the table, a potential stock-reaction catalyst .
  • Installed base reached 1,299 instruments (+15% YoY), with reagent revenue up 11% YoY; new IO60 panel and expanded barcodes aim to drive reagent mix and margin expansion in 2025 .

What Went Well and What Went Wrong

  • What Went Well

    • Gross margin expanded to 62.3% vs. 60.6% YoY, driven by the now fully operational manufacturing center of excellence and improving reagent mix .
    • Cost discipline: OpEx fell 25% YoY to $20.1M, improving operating loss to $(8.3)M from $(11.6)M YoY .
    • Product momentum: IO60 ultra-high-plex panel, mouse IO panel, and expanded molecular barcodes launched at SITC to accelerate adoption and reagent pull-through .
    • Quote: “We remain confident that Akoya’s technologies will continue to be the preferred platform in the spatial biology market from discovery to diagnostics, supporting a return to topline growth in 2025” – CEO Brian McKelligon .

  • What Went Wrong

    • Instruments underperformed: instrument revenue was $5.7M with 35 placements; extended sales cycles and North America academic funding constraints reduced conversions .
    • FY24 guide cut: revenue lowered to $80–$85M; management noted persistent macro headwinds and temporary disruption from restructuring .
    • Cash burn and breakeven timing: cash from operations burn was ~$8–$9M in Q3; management now expects adjusted EBITDA “low single digits” exiting year and does not expect Q4 cash flow breakeven .

Financial Results

MetricQ1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$18.35 $23.16 $18.81
Product Revenue ($USD Millions)$12.14 $15.93 $12.30
Service & Other Revenue ($USD Millions)$6.21 $7.24 $6.52
Gross Margin (%) (GAAP)46% 57.8% 62.3%
Operating Expenses ($USD Millions)$29.96 (GAAP) $24.47 (GAAP) $20.07 (GAAP)
Loss from Operations ($USD Millions)$(21.59) $(11.08) $(8.35)
Net Loss ($USD Millions)$(23.48) $(13.15) $(10.53)
Diluted EPS ($USD)$(0.48) $(0.27) $(0.21)

Segment breakdown:

SegmentQ1 2024Q2 2024Q3 2024
Instruments ($USD Millions)$4.90 $8.30 $5.70
Reagents ($USD Millions)$7.00 $7.40 $6.30
Services & Other ($USD Millions)$6.21 $7.24 $6.52

KPIs:

KPIQ1 2024Q2 2024Q3 2024
Installed Base (Total)1,213 (354 PhenoCyclers, 859 PhenoImagers) 1,264 (374, 890) 1,299 (388, 911)
PCF Units (PhenoCycler+Fusion)215 236 251
HT Units359 368 376
Publications (Cumulative)1,307 1,450 1,578
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$61.6 $48.7 $39.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2024$96–$104 $80–$85 Lowered
Gross Margin (%)Exit 2024 / Forward“Low-60s” exiting year; +200 bps YoY improvement (communicated) “Low-60s” exiting year; +200 bps YoY improvement reiterated Maintained
Operating Cash Flow BreakevenQ4 2024Targeted by year-end 2024 Not expected in Q4; adj. EBITDA low single digits exiting year Lowered
Services/CDx Milestones ($USD Millions)Q4 2024Not specified$2–$3 expected in Q4 New detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2024)Previous Mentions (Q2 2024)Current Period (Q3 2024)Trend
Capital equipment funding pressurePersistent CapEx pressure; elongated cycles; NIH uncertainty Constrained end market; caution on second-half guide North America academic weakness; conversion cycles lengthened ~35% Worsening near term
Manufacturing Center of ExcellenceRamp caused temporary reagent availability gaps; resolved by Q2 Fully operational; driving margin improvement Margins up to 62.3%; continued efficiencies Improving
Reagent/content initiativesEmphasis on high-plex panels/pull-through Installed base pull-through rising; pipeline for panels IO60 panel, mouse IO panel, expanded barcodes launched Accelerating
Clinical/CDx pipelineAcrivon Phase IIb progress; NeraCare partnership; KR-HT5 NMPA approval Momentum in CLIA lab trials; services mix Potential for first CDx via Acrivon; expanding CDx pipeline Strengthening
Strategic alternatives——Actively evaluating; “nothing off the table” New/heightened
Regional trendsChina stimulus: quoting uptick; no near-term impact APAC challenged; CROs softer; China impact likely 2025 Pressure centered in North America academia Mixed

Management Commentary

  • “Our third-quarter results came in below expectations… ongoing capital equipment purchase constraints… restructuring… enhanced our readiness to absorb the headwinds” – CEO Brian McKelligon .
  • “Gross margin was 62.3%… result of leveraging the full capacity of our recent manufacturing investments… expect to continue to expand our gross margin as we drive increases in our reagent revenue mix” – CFO John Ek .
  • “We are… actively evaluating a range of strategic alternatives… to identify the best path forward for sustainable growth, profitability, and long-term success” – Company statement and reiterated on the call .
  • “IO60… targeting 60 biomarkers… ready-to-use… we are confident that the IO60 will be a meaningful driver of PCF adoption and utilization” – Product launch remarks .

Q&A Highlights

  • Cash and breakeven: Cash from operations burn ~$8–$9M in Q3; Q4 cash burn expected meaningfully less; adj. EBITDA “low single digits” exiting year; Q4 cash flow breakeven unlikely .
  • Debt: Interest-only period extended to March 2026 after recent amendment; ongoing lender engagement .
  • Strategic alternatives: “Nothing is off the table” given market environment and fiduciary duty .
  • Sales cycles: ~35% lengthening vs. a year ago; heightened volatility in conversion rates, primarily North America academia; funding availability the key variable .
  • Services/CDx revenue: $2–$3M contracted milestones expected to land in Q4 .

Estimates Context

  • Wall Street consensus (S&P Global) for AKYA was unavailable via our estimates tool due to a missing CIQ mapping; therefore, explicit comparisons to consensus for Q3 could not be provided. Management noted results were “below expectations,” primarily due to instrument demand and funding constraints .
  • Given the lowered FY24 revenue guidance and commentary on continued margin expansion, sell-side models may need to reduce instrument growth assumptions for H2 and modestly increase gross margin trajectory and reagent mix contribution .

Key Takeaways for Investors

  • Near-term revenue headwinds are primarily instruments; reagent/content strategy (IO60, mouse IO, expanded barcodes) should support mix shift and margin expansion into 2025 .
  • FY24 revenue guide cut to $80–$85M underscores capital funding pressure; watch Q4 services/CDx milestone recognition ($2–$3M) and reagent trajectory for signs of stabilization .
  • Strategic alternatives are actively evaluated with “nothing off the table” – a potential catalyst path amid macro uncertainty .
  • Gross margin execution is a bright spot (62.3% in Q3); management expects low-60s exiting year and further expansion, aided by the manufacturing center of excellence .
  • Cash runway: $39.3M in cash and marketable securities; interest-only debt now through March 2026; focus on reducing cash burn/working capital intensity while instruments remain constrained .
  • Installed base and publications leadership continue to anchor long-term demand; clinical/CDx pipeline (e.g., Acrivon) offers optionality for step-change value creation .
  • Trading lens: near-term pressure until instrument demand normalizes; monitor academic funding data points, Q4 services recognition, and any disclosures regarding strategic alternatives as stock-moving events .