Seer - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue was $4.205M, up 37% y/y and above S&P Global consensus of $3.25M; GAAP EPS was -$0.34 vs consensus -$0.362, and gross margin was 49% (vs 44% y/y). Revenue/EPS consensus figures marked with asterisks were retrieved from S&P Global.*
• Management reiterated FY25 revenue guidance of $17–$18M and continued to expect FY25 free cash flow loss of $40–$45M, citing ongoing NIH/government funding uncertainty and tariff-related macro headwinds.
• Demand indicators strengthened: “we shipped as many instruments in Q1 2025 as we did in all of 2024” (10 units in FY24), buoyed by STAC conversions and the Thermo Fisher co-marketing partnership rollout (U.S. sales force trained).
• Balance sheet remains a differentiator with ~$285M in cash, cash equivalents and investments and active buybacks (352K shares at $1.91 in Q1), supporting runway to cash flow breakeven as the company invests selectively in R&D.

What Went Well and What Went Wrong

What Went Well

• Instrument momentum and STAC conversions: “we shipped as many instruments in the first quarter of 2025 as we did in all of 2024” and “half of our instrument shipments were acquired by customers who had previously accessed our STAC”.
• Commercial leverage via Thermo Fisher: U.S. sales force training completed; European training next; teams are collaborating on opportunities, with early traction across regions.
• Large-cohort demand signal: Discovery Life Sciences/Seer secured a first-of-its-kind 10,000-sample study after head-to-head vendor evaluation, reinforcing Proteograph’s population-scale positioning.

What Went Wrong

• Macro headwinds persisted: management cited NIH/government funding uncertainty, new tariff dynamics, and drug pricing proposals leading to customer caution and some spending pauses.
• Profitability still distant: Q1 operating expenses were $22.8M (incl. $4.5M SBC) and net loss was $19.9M despite higher revenue, underscoring operating leverage yet to be realized.
• Gross margin volatility: 49% in Q1 (down sequentially from 51% in Q4) with mix-driven variability expected quarter to quarter; long-term target remains 70–75% at scale.

Transcript

Operator (participant)

Today, and thank you for standing by. Welcome to the Seer First Quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Kelly Gura, Investor Relations. Please go ahead.

Kelly Gura (Head of Investor Relations)

Thank you. Earlier today, Seer released financial results for the quarter ended March 31st 2025. If you've not received this news release, or if you'd like to be added to the company's distribution list, please send an email to [email protected]. In addition, during today's conference call, we will be referencing a slide presentation that can be accessed on the events and presentations section of Seer's Investor Relations website. Joining me today from Seer is Omid Farokhzad, Chief Executive Officer and Chair of the Board, and David Horn, Chief Financial Officer and President. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.

Additional information regarding these risks and uncertainties appears in the section titled forward-looking statements in the Press Release Seer issued today. For a more complete list and description, please see the risk factors section of the company's quarterly report on Form 10Q for the quarter ended March 31st 2025, and in its other filings with the Securities and Exchange Commission. Except as required by law, Seer disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast, May 13, 2025. With that, I would like to turn the call over to Omid.

Omid Farokhzad (CEO and Chair of the Board)

Thanks, Kelly, and thank you, everyone, for joining us this afternoon. I will begin our talk today by providing updates on our business, and I will then turn the call over to David to provide more detail on our financial results for the first quarter of 2025, as well as our outlook for the full year. Beginning with slide three, we have always believed that our technology will redefine the trajectory of proteomics and make a meaningful impact within the scientific community. While near-term macroeconomic volatility, including the recently introduced tariffs and ongoing government funding challenges, are expected to persist and limit visibility for the balance of the year, our long-term vision and opportunity remains unchanged. In fact, I'm more confident in that belief than ever before.

We delivered a strong start to the year with 4.2 million of revenue in the first quarter, driven by increasing demand for the Proteograph Product Suite. We shipped as many instruments in the first quarter as were shipped in all of 2024 and saw continued traction for our Seer Technology Access Center, or STAC. Our impact is clearly reflected in the high-quality data our customers are generating and the acceleration of publication that further validates the power of our technology. Despite the heightened macroeconomic uncertainty and headwinds that our customers are facing, we're reiterating our full-year 2025 revenue guidance of $17 million-$18 million, representing 24% year-over-year growth at the midpoint. As the policy landscape continues to evolve, we will closely monitor the impact of U.S. policy changes on our customers as we navigate through this dynamic environment.

We continue to view our strong balance sheet of approximately $285 million in cash, cash equivalent, and investments as a key differentiator in the current environment, and we remain disciplined in deploying it. In this context, we're making highly concentrated and impactful investments in R&D to execute on our product roadmap and continuing our share repurchase program to benefit shareholders as we believe there is a significant dislocation between our core value proposition and what our stock price reflects today. While we've not seen direct effects on our supply chain to date from the recent tariff implementations, we are actively de-risking our business in two ways. For the near term, we have worked with our suppliers to ensure price stability at pre-tariff levels over the coming year. For the longer term, we're evaluating our cost structure and taking steps to improve our margins.

We're confident in our strategy, our operational discipline, and the growing demand for deep and mass proteomics at scale. Now, I'd like to walk through our recent progress in our core initiatives of validating and enhancing access to the Proteograph Product Suite in more detail. Starting with the validation of our platform on slide four, we proudly believe that the best-in-class quality and performance of the Proteograph Product Suite for deep and mass proteomics at scale makes us a trusted partner for our customers. We started Seer with the vision to change the arc of proteomics by providing unprecedented access at scale to the complexity of the proteome for widespread research. Seer is based on an extremely strong scientific foundation for nanoparticle engineering that formed the basis for the Proteograph Product Suite.

As I take a moment to reflect, I believe the growing body of evidence demonstrates that we have already executed on this vision by making the previously impractical unbiased proteomics studies readily possible today. Our customers have repeatedly demonstrated the power of our technology and the differentiated biological insight they get from the Proteograph Product Suite. This is recognized in hundreds of abstracts, webinars, seminars, and talks. We now have 42 customer publications, preprints, and reviews showcasing the capabilities of our platform, with many appearing in high-impact journals. Our customers are discovering novel biologies that will solve challenges in human health, growing existing end markets that leverage proteomics, and creating entirely new end markets that do not exist today. The combination of the Proteograph and mass spec is enabling the scientific community to conduct unbiased proteomics studies with a step change in scale and complexity.

We see a future where millions of proteomes will be interrogated in an unbiased way, mirroring what we saw in genomics with increased throughput and accelerated adoption and a reduction in cost. In proteomics, I believe this slope of adoption will be even steeper, the pace of discovery even more accelerated, and most importantly, the biological insight that will be unlocked will be truly unprecedented. In the past three years, we've started to see researchers move beyond pilot studies of tens of samples and opting to run studies of hundreds of samples, and in many cases, thousands.

To that end, I'm pleased to share that Discovery Life Sciences, one of our centers of excellence and a leading omics service provider, in collaboration with us, has secured a significant contract from a new customer to run a 10,000-sample study on the Proteograph Product Suite and the Orbitrap Astral Mass Spectrometer. This customer conducted an extremely thorough and extensive evaluation process on the commercially available proteomic technologies and service providers. They concluded that the combination of the Proteograph Product Suite, the Orbitrap Astral, and Discovery's expertise in mass spec proteomic services would produce the deepest and most robust data set. We are excited to be engaging in more conversations for larger-scale projects, including multiple population-scale studies that would leverage the Proteograph Product Suite.

As our platform gains broader awareness, there is a clear shift towards significantly larger studies, marking a key milestone for the proteomics market. While the size and timing of these projects may lead to some quarterly revenue variability, the momentum is encouraging. We believe Seer is uniquely positioned as the leading unbiased and scalable platform to enable the next generation of proteomics discovery. While we believe that we have already changed the arc of deep unbiased proteomics, we're still at the very beginning of this journey. By leveraging the Proteograph Product Suite, our customers are starting to uncover novel biological insights. Looking ahead, I'm really excited for our presence at the ASMS conference in a couple of weeks. The need for our scalable deep unbiased proteomics platform has never been greater.

Now moving to slide five to take a closer look at our progress with accelerating access to the Proteograph Product Suite. We continue to see strong demand for STAC, which lowers the barrier of adoption of the Proteograph Product Suite. STAC allows the Proteograph user to run samples in their own lab and have Seer run the mass spec, or alternatively, provides end-to-end services from sample to proteomics data and analysis. Encouragingly, in Q1, half of our instrument shipments were acquired by customers who had previously accessed our STAC, representing the highest number of STAC to instrument conversions in a single quarter. Furthermore, nearly half of STAC customers in Q1 were new.

Taken together, STAC continues to be an excellent source of revenue and concurrently serves as a strategic and marketing asset by allowing users to experience the power of the Proteograph and, for some of these users, to bring an instrument in-house. Our customers are increasingly recognizing the value of our technology and the data that is being generated from it. Given the level of demand we're seeing, we have aligned our site into operational efficiencies that will expand the capacity of STAC. We look forward to seeing more data generated on the Proteograph as more customers get access to our technology. Our Strategic Instrument Placement Program, or SIP, continues to be an important catalyst for adoption. As a reminder, SIP removes barrier by utilizing available operating budgets for our customers who are capital constrained, particularly in the current macroeconomic environment.

Under this program, we will loan an instrument to a customer with an upfront purchase of consumable kits. A portion of our shipped instruments in Q1 was through this program. Now moving on to provide an update on our expanded partnership with Thermo Fisher Scientific to co-market and sell the Proteograph Product Suite alongside their Orbitrap Astral Mass Spectrometer. As a reminder, this powerful pairing makes it possible for the first time to achieve population-scale deep unbiased proteomics with exceptional robustness and reproducibility. In addition, this partnership further strengthens our commercial reach and makes it easier for our customers to access a seamless end-to-end solution for unbiased proteomics. We completed training of the Thermo Fisher U.S. Salesforce in the first quarter, and the next phase of our partnership includes the training of the European Salesforce.

Our respective sales teams are increasingly collaborating to identify and capture opportunities that are mutually beneficial, and we have already seen traction in several regions. In late April, Thermo Fisher Scientific hosted a compelling webinar featuring Dr. Brendan Keating that highlighted the impact of combining the Proteograph Product Suite with Orbitrap Astral Mass Spectrometer. This study demonstrated how deep unbiased proteomics profiling can reveal critical physiologic and immunologic changes in xenotransplant recipients. These insights provided valuable information on transplanted organ viability and host responses, which are key factors in advancing xenotransplantation as a viable solution to the organ shortage crisis. Looking ahead, we have a number of customer webinar coming up to provide further insight into what is possible using the Proteograph Product Suite.

On our last earnings call, we highlighted the launch of our cell-license application on the Proteograph XT, which extended the power of Proteograph XT beyond plasma and tissue analysis. We've been very pleased with the feedback around the newly launched cell-license application. As a reminder, we now have over 10 Proteograph protocols available to conduct proteomic analysis on a diverse list of sample types, including non-human plasma or serum, conditioned media, cerebrospinal fluid, and dried blood samples. We plan to continue expanding the capabilities of the platform throughout the year. I am deeply proud of the team's hard work and execution this quarter. Looking ahead, I'm even more excited for the new data and catalysts that are coming over the next few months and will serve as a tailwind for Seer. With that, I will now turn the call over to David. Thanks, Omid.

David Horn (CFO and President)

Turning to slide six, total revenue for the first quarter of 2025 was $4.2 million, representing an increase of 37% compared to $3.1 million in the first quarter of 2024. It was primarily due to higher instrument, consumable, and service revenue. Revenue recognized primarily consisted of sales of Proteograph instruments, consumable kits, and service revenue, of which $52,000 was attributed to related parties. Product revenue for the first quarter of 2025 was $2.9 million, including $5,000 of related party revenue, and consisted of sales of Proteograph instruments and consumable kits. As Omid mentioned, while we continue to see pressure on CapEx budgets and elongated sales cycles for the outright purchase of new instruments, we were pleased by the traction we saw in terms of instrument shipments in the first quarter.

Service revenue was $1.2 million for the first quarter of 2025, including $47,000 of related party revenue, and primarily consisted of revenue related to STAC service projects. We continue to be encouraged by customer interest in running projects through STAC and their ability to gain access to Proteograph data, including a significant number of new customers. Sample volumes increased on a year-over-year basis. As we have stated previously, we may continue to undertake projects for key strategic studies and other marketing efforts that will result in additional presentations and publications in the near-term, but are conducted at a lower price point than our typical STAC service projects. Other revenue was $60,000 for the first quarter of 2025 and consisted of lease and shipping revenue.

Total gross profit was $2.1 million for the first quarter of 2025, representing a gross margin of 49%, compared to $1.4 million in the first quarter of 2024, representing a gross margin of 44%. Gross margins were driven by a higher mix of service revenue in the first quarter of 2025 relative to the first quarter of 2024. We continue to expect variability in our gross margin on a quarter-by-quarter basis since the proportion of instrument, consumable, and service revenue will fluctuate in any given quarter. We continue to expect overall volatility in our gross margins on a quarterly basis. At scale, we continue to believe our long-term gross margins will be in the range of 70%-75%.

Total operating expenses for the first quarter of 2025 were $22.8 million, including $4.5 million of stock-based compensation, a decrease of 14% compared to $26.6 million, including $7.2 million of stock-based compensation in the first quarter of 2024. Research and development expenses for the first quarter of 2025 were $11.4 million, a decrease of 7% compared to the $12.3 million in the first quarter of 2024. The decrease in R&D expenses was primarily due to decreases in stock-based compensation and laboratory expenses. Selling, general and administrative expenses for the first quarter of 2025 were $11.4 million, a decrease of 20% compared to $14.3 million in the first quarter of 2024. The decrease in SG&A expenses was primarily due to a decrease in stock-based compensation expenses. Net loss for the first quarter of 2025 was $19.9 million compared to $20.7 million in the first quarter of 2024.

Free cash flow loss was approximately $12.1 million for the quarter ended March 31st 2025. We continue to expect free cash flow loss to be in the range of $40 million-$45 million for the year. In addition, we continued our share repurchase activities in the first quarter of 2025 since we continue to believe that there is a significant dislocation in our share price. In the first quarter, we repurchased 352,000 Class A common shares at an average price of $1.91 per share. As of May 6, 2025, we had approximately 54.8 million Class A and four million Class B common shares outstanding. We ended the quarter with approximately $285 million in cash, cash equivalents, and investments. Importantly, we believe that with our current cash, cash equivalents, and investments on hand, we have sufficient capital to reach cash flow break-even.

While our long-term target is to become a profitable company, we are balancing that goal with the investments needed to innovate and build the company to drive sustained growth in the future. We aim to continue managing our significant cash balance in an extremely prudent manner and believe that our strong balance sheet puts us at a significant advantage to capture the massive opportunity ahead. Turning now to our outlook for the year on slide seven, we continue to expect revenue to be in the range of $17 million-$18 million for 2025, representing growth of 24% at the midpoint over the full year 2024. Our guidance range assumes our customers will continue to face budget pressures, government funding uncertainty, and macroeconomic volatility as it relates to tariffs. The NIH and government funding environment remains extremely uncertain and dynamic.

As a reminder, in 2024, revenue from academic and government entities represented approximately 30% of our overall revenue. Any fluctuations in NIH, government, and academic funding may impact these customers in 2025. In the last week, we have seen potential tariffs for pharmaceutical companies be discussed, which will add additional uncertainty for our commercial customers, the impact of which remains to be seen. While we were encouraged by our results in Q1, particularly around instrument shipments, we also saw some customers pause spending given this uncertainty. Therefore, we remain cautious due to this significant macroeconomic uncertainty, but are reaffirming our revenue guidance at this time. In terms of tariff impact on us, we have not seen any direct effects on our supply chain since our key suppliers manufacture the products we purchase from them in the United States.

However, we are actively monitoring this rapidly evolving environment, and our supply situation could change. On the revenue side, we do see potential implications and impact from the tariffs imposed by other countries on products originating in the United States, especially as it relates to China. We do not expect revenue related to our STAC services to be impacted by tariffs. While the majority of our product sales are in the United States, approximately 25% of our total revenue is derived from product sales to customers who reside outside of the United States. While we do not anticipate a significant impact of sales to these customers and our current exposure to China is limited, the environment remains extremely volatile and uncertain. We will continue to actively monitor the current environment for any changes that could impact us.

At this point, I would like to turn the call back to Omid for closing comments.

Omid Farokhzad (CEO and Chair of the Board)

Thank you, David. Moving on to slide eight. Our performance in the first quarter is a testament to the value our technology brings to our customers, especially given the challenging and dynamic macro environment. Looking ahead, I continue to believe we're well positioned for a strong year ahead. We remain focused on four key growth drivers in 2025, which include expanding our user base and continuing to enhance access, driving larger-cohort studies, continuing to drive product innovation, and enabling more customers to generate meaningful and actionable biological insights. I look forward to keeping you updated on our progress, and with that, we will now open it up for questions. Operator.

Operator (participant)

As a reminder, if you'd like to ask a question at this time, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Again, that is star 11 to ask a question. We have a question from the line of Rachel Vatnsdal with JP Morgan. Your line is now open.

Rachel Vatnsdal (Research Analycst)

Hi, good afternoon. Thanks so much for taking the questions today. So one thing, you talked about this life sciences project. Can you just walk us through the magnitude of this on the Discovery Life Sciences project that you called out, and then how long do you expect that to last for?

Omid Farokhzad (CEO and Chair of the Board)

Thank you so much. Let me have actually David comment on the DLS project.

That's the relationship David has been managing for the last two years, and it's a very exciting project. It's a 10,000 sample study. David?

David Horn (CFO and President)

Yeah, thanks for the question, Rachel. This is a really interesting project that's been evolving over a number of quarters in that this particular customer wanted to look at a large 10,000 sample cohort in deep proteomics and to really try and understand potential biomarker signatures and other things. I can't go into a ton of detail yet. They are going to have a press release likely coming out over the next month or so that will kind of go into detail. Really, it's the first of its kind database that we know of that's going to be created.

I think, as Omid mentioned in his remarks, this is really something where they did an extensive analysis of all the available proteomics technologies and came to the conclusion that the Proteograph with the Astral performed, the service will be performed by Discovery Life Sciences, would give them the best, most robust data set for this cohort such that they could then mine it for potential targets and biomarkers. We're really excited about this. It's the first real kind of population-scale study, and I think it's going to be really impactful in terms of the overall scientific impact of it. It will take some time, I'd say, over the course of the next 12-18 months, I imagine. It really just depends on how quickly they bring together the cohort and things like that.

We're excited about it, and more details to come here over the next month or so.

Omid Farokhzad (CEO and Chair of the Board)

Rachel, let me just add to David's comment in that about nine months ago in September, and this was at the Morgan Stanley Conference, I alluded to the fact that 2025 is the year where we're going to start seeing population-scale deep unbiased proteomics go live on the back of the Proteograph Product Suite that enables them. This 10,000 sample study is the first. I expect over the course of the coming months, you'll hear other announcements of even larger studies. We are in a new paradigm in terms of deep unbiased mass spec-based proteomics really taking the scale.

I think the platform and the roadmap that we have, even hundreds, thousands of samples or hundreds of thousands of samples, are completely within the realm of reality in terms of cost-effectiveness, in terms of feasibility. I am super excited to keep you informed over the coming months.

Rachel Vatnsdal (Research Analycst)

Great. Thank you both on that color. Maybe just in terms of the academic and government weakness, obviously, you talked a little bit about that in the prepared. Can you give us the updated expectation in terms of what are you expecting your U.S. academic and government customers to decline for the full year? Can you unpack for us a little bit in terms of the trends that you saw in March or, excuse me, in the first quarter and maybe just the month of March as well, but also what you saw in April?

Have you seen orders and trends across that customer group continue to get worse, or have they kind of stabilized at this point? Thanks.

Omid Farokhzad (CEO and Chair of the Board)

Yeah. And Rachel, maybe let me open up, and then I'll hand it to David for kind of a deeper color. As we had discussed with you at your conference, academic and government together is about 30% of our revenue, and that 30% breaks down into roughly 18% academic and 12% government. The guidance that we provided actually represents our expectation of weakening in terms of these two market segments in 2025. Now, that said, if I look at the Q1 of 2025, there was actually a very nice balance both in terms of revenue and in terms of instrument placement between academic and government and biopharma. I think to answer directly, I would say we're now stabilized.

That said, I would only caveat it by saying it's such a moving target that maybe next week I would have a completely different perspective. If everything stays as is, then I think we are more or less stable, and our guidance for the year holds. David, do you want to add additional color, please?

David Horn (CFO and President)

Yeah, Rachel, thanks for the question. In terms of the trends we're seeing, obviously, we're very happy with the first quarter. I do feel like people are getting more cautious with things in terms of just the general trends out there, whether it's tariffs or NIH funding or even now with the commercial side with some of the drug pricing control proposals that have been floated in the last couple of days.

Again, I think given our customer base and given our installed base and the prospects and the funnel we have, we feel like it really will come down to kind of a case-by-case basis. I do think it's important to remember that any reduction in the NIH budget will likely impact future grants and not existent grant funding. What we are hearing from some of our customers is they do have funding for the balance of the year, and it's a question of whether they seem to be able to have access to it. It's the going forward after that that I think is the big question mark. It kind of remains to be seen, but we are seeing a little more weakness here in the second quarter relative to the first quarter.

Rachel Vatnsdal (Research Analycst)

Perfect. That's it for me. Thanks so much, you guys.

David Horn (CFO and President)

Thank you.