Q2 2024 Earnings Summary
- Shift in Pipeline towards Academic Customers: The company has observed a shift in its sales pipeline, with 60% of pipeline opportunities now coming from academic customers, compared to previous revenue which was 60% commercial and 40% academic. This shift is attributed to recent publications increasing academic interest, suggesting potential revenue growth from this sector.
- Confidence in Second Half Revenue Ramp Due to Strong Pipeline and Increased Interest: Despite elongated sales cycles, the company is feeling pretty good about the second half ramp. They attribute this confidence to a strong pipeline, increased interest from recent publications, and continued strength in STAC services. This suggests potential revenue growth in the upcoming periods.
- Accelerated Pace of Peer-Reviewed Publications Driving Customer Interest: In the last six months, the company has seen an increase in peer-reviewed publications, with 8 out of 11 total coming in this period. This accelerated publication rate is enhancing customer awareness and validating the value proposition of their Proteograph Product Suite, leading to more conversations with prospective customers and potential sales growth.
- Elongated sales cycles due to constrained capital budgets are pushing expected sales out by a quarter or maybe two, especially for novel technologies such as the Proteograph, which could delay revenue recognition.
- The sales pipeline has shifted from 60% commercial and 40% academic revenue to a pipeline of 60% academic and 40% commercial opportunities, indicating a reliance on academic customers who may have longer sales cycles and are dependent on grant funding.
- The company expects 56% of its revenue for 2024 to come in the second half, requiring a significant acceleration which may be challenging given the current market conditions and elongated sales cycles.
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Revenue Ramp Confidence
Q: How confident are you in 2H revenue ramp?
A: Management feels pretty good about the second half ramp. They cite a strong pipeline, increased interest from recent publications, more conversations, and potential larger studies as factors boosting confidence. Additionally, STAC is performing well, supporting their comfort with the revised guidance. -
Elongated Sales Cycles
Q: How has the sales cycle length changed?
A: Sales cycles have lengthened, pushing expected deals out by one or two quarters. This is due to constrained capital budgets, especially for novel technologies like the Proteograph, with customers lacking funds to purchase right now. -
Impact of Publications
Q: How are publications affecting customer adoption?
A: Recent publications are validating the Proteograph's value, enhancing customer interest. There are 11 peer-reviewed publications, with 8 published in the last six months. This surge in data showcases capabilities unattainable before, easing customer adoption. -
European Market Opportunity
Q: What's the traction of the STAC in Germany?
A: The EU STAC in Germany became operational in June and is processing the first customer samples. Expected revenue from the EU STAC is anticipated to align with U.S. sales proportions. It's early days, so more details will emerge as they gain clarity. -
Sales Pipeline Shift
Q: How is the pipeline split between pharma and academia?
A: The pipeline has shifted to 60% academic and 40% commercial opportunities. This contrasts with current revenue, which is 60% commercial and 40% academic. This change results from academics noticing recent publications and seeking grant funding for the technology.
Research analysts covering Seer Inc.