Q3 2024 Earnings Summary
- Seer has entered into a collaboration with Thermo Fisher Scientific to co-market and sell the Proteograph Product Suite alongside Thermo Fisher's Orbitrap Astral mass spectrometers. This partnership is expected to enhance accessibility of Seer's innovative technology to life science researchers worldwide and potentially shorten the Proteograph sales cycle by leveraging Thermo Fisher's existing customer base.
- Significant expansion of Seer's sales and marketing team, including the addition of multiple new regional business managers and a new VP of Global Marketing, is expected to drive growth. The company anticipates seeing benefits from this initiative later this year and into 2025, creating opportunities and shortening sales cycles.
- Increasing demand for large-scale projects, with Seer engaging in multiple conversations for studies involving 10,000-plus samples, indicates growing interest in the Proteograph Product Suite. This reflects a strong pipeline and potential for significant revenue growth as customers plan larger and larger studies utilizing Seer's technology.
- Ongoing Budget Pressures Leading to Flat Revenue Guidance: Seer's guidance of revenue in the range of $13 million to $15 million for 2024 implies a flat or slightly negative sequential step-down from Q3 to Q4, breaking with historical seasonality trends. The company continues to see pressure on budgets and is not forecasting a budget flush for the fourth quarter, indicating weak sales momentum due to ongoing budget constraints.
- Capital Constraints Among Commercial Customers Impacting Sales Growth: Capital constraints are making it difficult for commercial customers to make CapEx purchases, especially for new technologies like Seer's Proteograph. This impacts Seer's primary market and sales growth potential, as acknowledged by the CEO: "Clearly, the macro picture is making it difficult for CapEx purchases, especially for new technologies like Seer."
- Uncertainty in Gross Margins and Lack of Guidance for Next Year: While Seer's gross margins were 48% in Q3 2024 and are expected to be around 50% for the year, the company is not providing any guidance on margins for next year. This lack of visibility, coupled with potential margin pressure if instrument placements ramp up, creates uncertainty about future profitability.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2024 | $13M – $15M | $13M – $15M | no change |
Free Cash Flow Loss | FY 2024 | less than the free cash flow loss in 2023 | less than the free cash flow loss in 2023 | no change |
Gross Margin | FY 2024 | no prior guidance | ~50% | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Elongated Sales Cycles and Budget Constraints | Mentioned consistently from Q4 2023 to Q2 2024 due to macroeconomic pressures, cautiousness in CapEx spending, and slower adoption of new technology. | Continues as a recurring challenge, though signs of a more constructive capital purchasing environment were noted. | Recurring |
Shift from Commercial to Academic Customers | First noted in Q2 2024 as pipeline flipping from ~60% commercial / 40% academic to the reverse as academics gained interest. Not mentioned in Q1 or Q4 2023. | Reaffirmed in Q3 2024 with a sales pipeline increasingly including academic institutions (~60-40 split favoring commercial installed base). Larger academic studies reflect growing evidence/promotions. | Continuing |
Collaboration with Thermo Fisher | Not discussed in Q4 2023, Q1 2024, or Q2 2024. | Introduced in Q3 2024 as a non-exclusive co-marketing arrangement, aligning Proteograph with Orbitrap Astral mass spectrometers. Expected to drive adoption through Thermo Fisher’s global network. | New |
STAC Capacity Usage and Intentional Capping | Q4 2023 call mentioned intentional capping to avoid becoming a service business. Q1 2024 noted full capacity usage with priority for strategic studies, though no explicit mention of capping. No specific mention in Q2. | No mention of capping in Q3 2024; focus is on leveraging STAC for evidence generation. | No Longer Mentioned |
European STAC Lab Expansion | Introduced in Q1 2024 to serve European customers (lab in Germany). Operational in Q2 2024 with first samples processed. | Q3 2024 notes good demand from European customers and optimism about continued service growth. | Continuing |
Projected Second-Half Revenue Ramp | Q1 2024 and Q2 2024 emphasized a back-half weighted revenue outlook. | Q3 2024 guidance remained flat to slightly down sequentially for Q4, overshadowing prior ramp projections. | Shift in Sentiment |
Large-Scale (10,000+ Samples) Project Demand | No explicit mentions in Q4 2023, Q1 2024, or Q2 2024. | Spotlight in Q3 2024 with increased discussions around 10,000+ sample studies, reflecting growing evidence and interest from both commercial and academic customers. | New |
Lack of Next-Year Margin Guidance | Not mentioned in Q4 2023, Q1 2024, or Q2 2024. | Introduced in Q3 2024; company declined to provide next-year margin details, deferring guidance until the year-end call. | New |
PrognomIQ Revenue Reduction | Q4 2023 disclosed lower PrognomIQ revenue as they shifted to development phase. | Not repeated in Q1, Q2, or Q3 2024 [–]. | No Longer Mentioned |
Accelerated Peer-Reviewed Publications | Highlighted from Q4 2023 to Q2 2024 as a key driver of greater interest and adoption. | Not emphasized in Q3 2024, though the company continues to focus on growing the body of evidence to facilitate adoption. | Not Repeated This Quarter |
Sales and Marketing Team Expansion | Not discussed in Q4 2023 or Q1 2024. Q2 2024 noted new regional managers joining. | Further expanded in Q3 2024, including a new VP of Global Marketing; expected to impact late 2024 and into 2025. | Continuing |
Population-Scale Deep Proteomics Feasibility | Q4 2023 emphasized XT-based throughput and cost reduction for large-scale projects. | Briefly mentioned in Q3 2024 as a near-future reality, though not explicitly tied back to Q4 2023 statements. | Continuing (Mentioned but not extensively reiterated) |
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Q4 Guidance and Budget Pressure
Q: Why does guidance imply flat or negative Q4 revenue?
A: David Horn explained that the guidance reflects timing issues with deals in the pipeline, which could break either way depending on when they close. They are not forecasting a budget flush for Q4 due to continued pressure on budgets. -
Thermo Fisher Partnership Impact
Q: How will the Thermo partnership affect market reach and top line?
A: Omid Farokhzad stated that the timing is right for the partnership, as the Proteograph's value proposition is now widely recognized. They expect to operationalize the partnership and launch it in Q1, potentially shortening the Proteograph sales cycle by leveraging Thermo's Astral instrument placements, especially among customers doing proteomic studies in plasma, where the Proteograph increases detectable proteins from 750 to 6,000-8,000. -
Gross Margin Outlook
Q: Will gross margins dip next year if placements ramp?
A: David Horn noted that they expect to maintain around 50% gross margin for the back half of the year. They are not providing guidance for next year yet but will update on the year-end call. -
Shift Toward Academic Customers
Q: What is driving the shift to academic customers?
A: Omid Farokhzad explained that while the pipeline has more academics due to increased evidence and publications, the closed accounts are still tilted 60-40 toward commercial customers. Academics need time to secure grants, which contributes to the shift. Also, capital constraints and CapEx difficulties affect commercial customers. -
Sales and Marketing Expansion
Q: When will benefits from sales team expansion appear?
A: Omid Farokhzad said that the new sales and marketing team members are ramping up and making good progress, creating opportunities that should yield benefits later this year and into 2025. -
Competition in Proteomics
Q: How will new solutions affect the proteomics market?
A: Omid Farokhzad believes the proteomics market is in its infancy and will grow. Both targeted and untargeted approaches will coexist, with untargeted methods like Seer's driving content discovery and creating demand for targeted approaches. -
STAC Program Progress
Q: How is the STAC program in Germany progressing?
A: David Horn reported good traction in both the US and EU STAC programs, with the EU STAC seeing good demand in the third quarter. They expect continued steady growth into 2025.