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STANDARD BIOTOOLS INC. (LAB)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 continuing operations revenue was $21.8M (down 3% YoY), with non-GAAP gross margin rising to 54.1% on product mix and SBS improvements; combined company revenue was $42.0M. Management paused the Q2 earnings call and emphasized strategic actions including the announced sale of SomaLogic to Illumina.
  • The company announced the strategic sale of SomaLogic to Illumina for up to $425M cash plus future royalties, with at least $550M cash & equivalents expected at close to fund inorganic growth; targeting adjusted EBITDA break-even in 2026.
  • Consumables strength (+18% YoY) offset instrument weakness (-26% YoY) as capital budgets remained constrained; services declined due to fewer contracts and improved instrument uptime.
  • FY25 combined revenue guidance maintained at $165–$175M; new FY25 continuing ops revenue guidance added at $78–$83M. Management reiterated minimal impacts from export controls/tariffs and modeled NIH-related pressure in Americas academic funding.
  • Potential stock reaction catalysts: divestiture proceeds, new continuing ops revenue guidance clarity, and biobank wins (e.g., PRECISE-SG100K selecting SomaScan).

What Went Well and What Went Wrong

What Went Well

  • Non-GAAP gross margin expanded to 54.1% (from 48.6% YoY) driven by mix and SBS efficiency initiatives. “We are driving toward our profitability target in 2026… strong balance sheet and a lean operating model positions us to continue playing offense.” – CEO Michael Egholm.
  • Consumables revenue rose to $10.5M (+18% YoY) with broad-based increases across imaging, flow and microfluidics product lines.
  • Additional strategic validation via PRECISE-SG100K choosing the SomaScan 11K Assay to run 100,000 samples, reinforcing leadership in population-scale proteomics.

What Went Wrong

  • Instruments revenue fell to $5.2M (-26% YoY) on capital constrained end-markets globally.
  • Services revenue declined to $6.1M (-8% YoY) due to fewer active service contracts and lower on-demand revenue stemming from improved instrument quality and uptime.
  • The company paused earnings conference calls, limiting qualitative detail and near-term investor interaction; results were disclosed via press release and will be detailed in the 10-Q.

Financial Results

Q2 2025 (Continuing Operations) vs Prior Year

MetricQ2 2024Q2 2025
Revenue ($USD Millions)$22.5 $21.8
Gross Margin %46.1% 48.8%
Non-GAAP Gross Margin %48.6% 54.1%
Operating Expenses ($USD Millions)$40.6 $36.3
Non-GAAP Operating Expenses ($USD Millions)$28.3 $27.9
Operating Loss ($USD Millions)$(30.3) $(25.7)
Net Loss from Continuing Ops ($USD Millions)$(25.4) $(17.7)
Adjusted EBITDA ($USD Millions)$(17.4) $(16.1)
EPS from Continuing Ops (Basic & Diluted, $USD)$(0.07) $(0.05)
Cash, Cash Equivalents, Restricted Cash & ST Investments ($USD Millions)$397.2 $239.7

Key drivers:

  • Mix/SBS drove margin expansion; OpEx reductions reflect merger synergies and productivity gains.
  • Instruments weakness tied to capital spending; services down due to contract count and uptime improvements.

Sequential Comparison (Combined Company)

MetricQ1 2025Q2 2025
Revenue ($USD Millions)$40.8 $42.0
Gross Margin %48.4% 45.9%
Non-GAAP Gross Margin %53.2% 52.8%
Adjusted EBITDA ($USD Millions)$(16.9) $(18.6)
Net Loss per Share (Basic & Diluted, $USD)$(0.07) $(0.09)

Notes:

  • Gross margin stepped down sequentially on mix/price realization; adjusted EBITDA modestly worse vs Q1.

Segment Revenue (Continuing Operations)

Segment ($USD Millions)Q2 2024Q1 2025 (derived from H1)Q2 2025
Instruments$7.0 $6.6 (derived from H1 and Q2) $5.2
Consumables$8.8 $8.1 (derived from H1 and Q2) $10.5
Services & Other$6.6 $5.4 (derived from H1 and Q2) $6.1
Total$22.5 $20.2 (derived from H1 and Q2) $21.8

Drivers:

  • Q2 consumables growth across imaging, flow, microfluidics; instruments pressured by capex; services lower on contracts/uptime.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (Combined)FY 2025$165–$175M $165–$175M Maintained
Revenue (Continuing Ops)FY 2025N/A$78–$83M New item
Adjusted EBITDA TimelineFY 2026Break-even target 2026 Break-even target 2026 Maintained
Cash at Close (Illumina transaction)H1 2026 expected closeN/A≥$550M cash & equivalents expected at close New item
Tariffs/Export Controls ImpactFY 2025No expected effect from export controls; limited tariff impact No expected effect from export controls; limited tariff impact Maintained
Americas Academic Funding AssumptionFY 2025High single-digit millions decline High single-digit millions decline (more pronounced in continuing ops) Maintained/clarified

Earnings Call Themes & Trends

Note: Company did not host a Q2 2025 call. Themes reflect Q1 call and Q2 disclosures.

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Proteomics momentum & Illumina partnershipQ1: Hyperion XTi demand; Illumina NGS-based solution near launch; ~90 AACR presentations; distributed solutions expected to expand access. Announced SomaLogic sale to Illumina; biobank win (PRECISE-SG100K) reinforces platform leadership. Strengthening, strategic clarity
Tariffs/export controlsQ1: low single-digit million exposure; some pass-through to customers; manageable impact. Outlook assumes no expected effect from export controls and limited tariff impact. Stable/managed
Americas academic fundingQ1: mid-teens decline baked in; observed travel/purchasing constraints. Guidance continues to model high single-digit millions decline; impact more pronounced in continuing ops. Persistent headwind
Capital equipment demandQ1: funnel growth; Hyperion XTi traction; no clear pull-forward. Instruments down YoY on capex constraints. Mixed; demand uneven
Cost reductions/SBSQ4/Q1: ~$90M annualized synergies; OpEx down 22% YoY (non-GAAP). Continued improvements reflected in margins/OpEx; profitability target reiterated. Ongoing execution
M&A strategyQ1: disciplined consolidator approach; pipeline of actionable deals. Proceeds from divestiture expected to fuel inorganic growth strategy. Acceleration likely

Management Commentary

  • “The announced sale of SomaLogic to Illumina marks a pivotal milestone… unlocking up to $425 million in total cash consideration… further validating the power of our model.” – Michael Egholm, CEO.
  • “With at least $550 million in cash… and a simplified operating infrastructure, we are driving toward our profitability target in 2026.” – Michael Egholm, CEO.
  • “Consumables revenue in the quarter increased across imaging, flow and microfluidics… Operating expenses… decreased… a result of merger cost synergies and continued productivity gains from SBS.” – Company statement.

Q&A Highlights

(From Q1 2025 call; Q2 call was paused.)

  • Revenue weighting: Back-half driven by funnel projects rather than typical seasonality.
  • Instruments demand: Hyperion XTi funnel improving; no evidence of tariff-related pull-forward.
  • M&A pipeline: Increased opportunities at better valuations; high bar and disciplined approach.
  • U.S. academic outlook: Mid-teens decline persisting; visible constraints on travel/orders; private funding supported some instrument shipments.
  • Illumina partnership revenue: Moderate YoY growth in 2025; stronger traction expected in 2026+.

Estimates Context

MetricConsensus (Q2 2025)Actual (Q2 2025 Continuing Ops)Result
Revenue ($USD)$39.83M*$21.76M Miss
Primary EPS ($USD)$(0.04)*$(0.05) Slight miss
EBITDA ($USD)$(18.55)M*$(16.14)M (Adjusted EBITDA) Modest beat
  • Note: Classification changed post-announced SomaLogic sale; consensus may reflect combined revenue, while actual continuing ops revenue is reported separately. Combined revenue was $42.0M.
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Execution against SBS continues to drive margin expansion and OpEx reductions, improving loss metrics even amid capex headwinds.
  • Strategic divestiture (SomaLogic to Illumina) provides significant liquidity (≥$550M expected at close) to pursue disciplined inorganic growth and accelerate path to profitability.
  • Near-term revenue pressure in instruments and services is driven by academic funding constraints and improved uptime; consumables momentum is encouraging.
  • Guidance clarity improved with the addition of FY25 continuing ops revenue ($78–$83M); combined guidance maintained at $165–$175M.
  • Trading setup: Potential rerating on closing milestones/divestiture cash visibility, ongoing biobank wins (e.g., SG100K), and Illumina distributed solution progress; note lack of Q2 call reduces narrative flow near-term.
  • Watch estimate resets: Analysts should align models to continuing vs combined reporting; YoY comps and margin trajectory supported by SBS mix/efficiency.
  • Medium-term thesis: Lean platform, consumables mix shift, and consolidator strategy position LAB to scale efficiently into 2026 profitability target.

Appendix: Additional Data Points

  • Combined company revenue Q2 2025: $41.96M; combined gross margin 45.9%; non-GAAP GM 52.8%; adjusted EBITDA $(18.57)M.
  • Q2 2025 continuing ops segment revenue: Instruments $5.215M; Consumables $10.458M; Services $6.089M.
  • Cash & equivalents June 30, 2025: $239.7M; March 31, 2025: $260.7M.