Q1 2024 Earnings Summary
- Strong Demand for STAC Services at Full Capacity: Seer's Technology Access Center (STAC) continues to run at capacity and is expected to do so through Q2 and into Q3, indicating robust demand for Seer's Proteograph Product Suite and services. This consistent utilization suggests that STAC is effectively facilitating adoption of Seer's platform among customers.
- Expansion into European Market with New STAC Lab: Seer is launching a new STAC lab in Germany to serve European customers. This expansion will provide similar services as the U.S. STAC, addressing the unmet needs of European researchers and potentially increasing the customer base and revenue opportunities in the region.
- Anticipated Growth in Second Half Driven by Upcoming Publications: The company expects several interesting publications to come out in late Q2 and early Q3, which are anticipated to drive increased interest in Seer's platform. Additionally, Seer forecasts that revenue will be more weighted towards the second half of the year, aligning with industry seasonality where the fourth quarter is typically the strongest. This suggests potential revenue acceleration later in the year.
- SEER is experiencing elongated sales cycles and ongoing headwinds, leading them to be conservative in their outlook for Q2 and the rest of the year. David Horn stated, "we're going to continue to be conservative in our outlook just given what we see and some of the headwinds we've been facing."
- Budget impacts from large biopharma clients are causing delays in expected deals, indicating continued challenges in customer spending. David Horn mentioned, "We had a couple of deals actually that we were expecting that got pushed for budgetary reasons. So we're still seeing an impact."
- Limited updates on STAC customer growth may signal slower adoption rates, and since STAC is not intended to be a significant revenue driver, there may be limited visibility on revenue growth from this channel. Omid Farokhzad said, "I don't have an update... the STAC continues to run at capacity... it's really meant to facilitate adoption of our platform."
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Revenue Guidance and Seasonality
Q: Can you discuss the 2Q top line expectations, seasonality through the year, and visibility into the second half?
A: Management doesn't provide quarterly guidance but continues to see many opportunities in the pipeline, despite elongated sales cycles. They remain conservative in their outlook for Q2. Revenue is expected to be more second-half weighted due to seasonality, with the fourth quarter typically being the strongest. Upcoming publications in late second and early third quarters are anticipated to drive interest in the platform. -
STAC Traction and Capacity
Q: Can you talk about STAC traction, the number of organizations using STAC, project backlog, and visibility on revenue, especially with the new center in Europe?
A: The STAC continues to run at capacity and is expected to do so through Q2 and into Q3. Management did not provide an updated total customer number beyond the previously mentioned 48 organizations. Opening the European STAC will allow them to provide similar services to European customers, overcoming previous challenges with GDPR rules. The STAC is intended to lower barriers for customers to access Proteograph data and facilitate platform adoption, not to pivot into a service business. -
Biotech Funding Environment Impact
Q: Do you feel that sentiment is turning with green shoots in biotech funding being called out by peers?
A: There are ongoing impacts from biopharma budget constraints, especially among large biopharmas, with some expected deals being pushed due to budgetary reasons. However, smaller biotech firms are showing good use of STAC. Adoption of new technologies requiring capital expenditure remains challenging for large biopharma, but service models like STAC are well-received. Management still sees some headwinds depending on the account type. -
STAC Customer Base Composition
Q: Could you talk about the proportion of STAC customers coming from genomics researchers versus traditional mass spec researchers?
A: The customer base is relatively similar between those who have in-house mass spec and those who don't. Some customers with in-house mass spec send samples to STAC due to capacity constraints. The majority of customers are those who don't have access to a Proteograph or mass spec in-house and receive end-to-end services from STAC. -
STAC's Role in Market Strategy
Q: Can you provide additional details on STAC's role and expectations?
A: STAC has met market needs by lowering barriers for customers to access Proteograph data and bringing Proteograph in-house, even for customers unfamiliar with mass spectrometry. The customer base is diverse, including those with Proteograph in-house and genomic customers seeking large-scale studies. STAC will continue to be an important source of product adoption but is not intended to pivot Seer into a service business.
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