SOPHiA GENETICS - Earnings Call - Q1 2025
May 6, 2025
Transcript
Operator (participant)
Good morning, ladies and gentlemen, and welcome to the SOPHiA GENETICS Q1 2025 earnings call. At this time, all lines are in the listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, May 6, 2025. I would now like to turn the conference over to Kellen Sanger, SOPHiA GENETICS Head of Strategy and Investor Relations. Please go ahead.
Kellen Sanger (Head of Strategy and Investor Relations)
Thank you, and good morning, everyone. Welcome to the SOPHiA GENETICS first quarter 2025 earnings conference call. Joining me today to discuss the results are Dr. Jurgi Camblong, our Co-Founder and Chief Executive Officer; Ross Muken, our company President; and George Cardoza, our Chief Financial Officer. 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, and you should not place undue reliance on forward-looking statements. Additional information regarding these risks, uncertainties, and factors that could cause results to differ appears in the press release issued by SOPHiA GENETICS today and in the documents and reports filed by SOPHiA GENETICS from time to time to the Securities and Exchange Commission.
During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of IFRS and non-IFRS measures is included in today's press release, which is available on our website. With that, I'll now turn the call over to Jurgi.
Jurgi Camblong (Co-founder and CEO)
Thanks, Kellen, and good morning, everyone. I will start today's call with a brief recap of Q1 performance, which came in slightly ahead of our expectations as growth reaccelerated and cost management continued to improve. I will then turn the call over to Ross, who will give a more detailed update on the business. George will close with a review of our Q1 financial performance before we take your questions. Last quarter, we highlighted that 2024 was a foundational year for SOPHiA. We laid the groundwork for accelerated growth in 2025 by signing an impressive cohort of new customers, continuing to penetrate the U.S. market, and launching new and exciting applications such as MSK-ACCESS and MSK-IMPACT. In Q1, these efforts began to materialize. Revenue grew 15% on a constant currency basis and 13% on a reported basis, representing a solid movement toward near-historical growth levels.
Going forward, we expect to deliver accelerating revenue growth along the three drivers we outlined at the beginning of the year. First, we recapitalized on new customer signings by expediting implementation time and expanding across those new accounts over time. In 2024, we signed an impressive 92 new core genomic customers, and in Q1 2025, we added 28 new customers to that total. Our focus continues to be on implementing these new customers as quickly as possible so that they begin generating revenue faster. We implemented 33 new customers in the first quarter, up from an average of 23 per quarter last year. I look forward to these customers ramping up usage over the next few months and adopting additional applications over time. The second growth driver we will continue to focus on is the U.S. market.
In Q1, revenue and analysis volume from U.S. core genomic customers grew over 30% year over year. The impressive growth was delivered off an ever-expanding revenue base as the country is becoming one of our largest markets globally. On the new business side, we also announced major expands at two of the leading hospitals in the U.S., with Henry Ford Hospital adopting additional Solid Tumor and HemOnc applications, and the Mayo Clinic adopting additional applications in HemOnc. Congrats to the team for this impressive Q1 achievement. Our third focus area for 2025 is MSK-ACCESS and IMPACT, our new liquid biopsy and Solid Tumor applications. While clinical adoption continues at impressive rates, I'm happy to highlight that these applications are also attracting material interest from biopharma partners. Last week, we expanded our 2024 partnership with AstraZeneca to accelerate the deployment of MSK-ACCESS globally.
The expansion extends the scope of the partnership to 30 total sponsored institutions worldwide. The agreement also highlights the growing demand for somatic testing, as applications like MSK-ACCESS are becoming invaluable to biopharma for purposes of drug deployment and market access. In addition, the data generated from these tests and the diverse patient populations they reach offer immense value to biopharma for drug development and commercialization. In Q1, it was great to see the clinical and biopharma flywheel spinning again, as our growing network began attracting new interest from biopharma. I'm excited to keep you updated over the course of the year as our flywheel gains speed and revenue growth continues to accelerate. Beyond starting the year strong on the revenue side, I'm also proud of the team for continuing to excel at cost management.
In Q1, we delivered an impressive 24% year-over-year improvement to adjusted EBITDA loss, bringing the figure down to $9.8 million in the quarter. As we continue on our path to profitability, we believe this achievement serves as a proof point for the scalable nature of our business and our ability to drop incremental revenue growth down to the bottom line. In many ways, scalability was a theme this quarter. In Q1, we delivered a record 75.7% adjusted gross margin, up 520 basis points year-over-year. This achievement was made possible by innovations from our tech and data science teams, who continue to discover new ways to optimize the data compute and processing power of our platform. These improvements are especially impressive because they were delivered despite massive increases in the amount of data processed by SOPHiA DDM over the years.
Total processed by the platform increased at a CAGR of over 50% from 2021 to 2024. While analysis volumes continue to grow, so does the complexity of data. Gene panels are becoming larger, additional modalities are becoming more useful, and more sophisticated tests are being deployed each day. Our scalable cloud-based platform is designed to support the medical innovations of today and tomorrow, deploying new innovations with accuracy and efficiency. Whether it is liquid biopsy testing, HRD, whole genome sequencing, or MRD, the scalable nature of our platform and its AI factories enables us to bring biopharma breakthroughs from the research lab to the clinical market with relative ease. In this way, we are perfectly positioned to push waves of innovation in healthcare for years to come. However, this ability and the AI that enables it has not been achieved by chance.
In Q1, we reached an impressive milestone for our platform. As of March, SOPHiA DDM has now analyzed over two million genomic patient profiles since inception. This means that the AI powering SOPHiA DDM is uniquely trained on one of the most diverse and globally representative data sets available, learning from a constant flow of real-world data from over 800 institutions in 70 countries worldwide. Technology companies across the space are increasingly recognizing the breadth and diversity of our data sets and how our network and AI capabilities are nearly impossible to replicate. In March, I spoke at NVIDIA GTC's conference in San Jose, California, about how SOPHiA is pioneering the practical use of AI in healthcare. The conference reinforced what we are already seeing in the market. AI is no longer a future promise but a present force reshaping how we diagnose, treat, and understand disease.
It also reinforced that SOPHiA is a leader in this space. Our platform, AI factories, and global network places us soundly at the center of the future of healthcare. With that, I will now turn the call over to Ross, who will provide a more detailed update on what we're seeing in the market and our business performance to start the year.
Ross Muken (President)
Thanks, Jurgi. The go-to-market team shared your excitement and confirmed there is broad and growing demand for the SOPHiA offering. Along those lines, I'll start today by giving a brief update on our first quarter performance, including a strong start to the year across both new and existing business. I'll then cover some of the broader market dynamics before closing with a look at what we're seeing in the pipeline. First, the core business returned to healthy levels as revenue grew 15% on a constant currency basis in the first quarter, despite biopharma continuing to present some modest headwinds. We are proud to have re-accelerated the growth engine of the core business, and the biopharma pipeline is again developing well. On the clinical side, from a regional perspective, North America and Asia-Pacific continued to outperform in Q1, with 32% and 40% year-over-year volume growth, respectively.
Latin America declined slightly due to the acquisition of one of our top customers in the region by another lab, which we covered in detail in 2024. EMEA volume growth remained solid, with the United Kingdom as a notable driver. Last year, we announced a series of new customer signings across the U.K., including five of the seven NHS genomic laboratory hubs adopting SOPHiA DDM. Due to these signings and others, U.K. analysis volume grew over 60% year-over-year, and U.K. revenue was up approximately 80%. From an application standpoint, we continue to establish ourselves as a global leader in HemOnc testing. HemOnc volumes grew 34% year-over-year in the first quarter, off an increasingly large base. With over 180 HemOnc customers globally, we believe we are one of the largest providers of blood-based cancer testing in the world, an area of critical importance to both our clinical and biopharma constituents.
We're confident HemOnc will continue to be a growth driver of our future growth. Beyond HemOnc, we also started the year strong in Solid Tumors. As volumes grew well above the company average, new applications such as MSK-IMPACT and an upgraded CGP offering are solidifying our offering as the gold standard for comprehensive tissue testing. Last, the first wave of liquid biopsy testing began to come online in Q1, albeit in very modest initial volumes. We will look to the back half of the year for liquid biopsy applications such as MSK-ACCESS to meaningfully drive overall growth, as customers complete implementations and ramp up usage over 2025. Moving to the new business side, I'm happy to share that in Q1, we continued to book new business at record speed.
We landed 28 new core genomic customers in the quarter, up from 20 new customers signed in the first quarter of 2024. In addition, we also had many notable expands as the influx of new customers over the past year looked to adopt initial applications. In North America, Jurgi announced our recently expanded partnerships at Henry Ford and the Mayo Clinic. In addition, we also expanded our scope with Sunnybrook Health Sciences Centre in Toronto, Canada. Sunnybrook was already using the SOPHiA DDM for Solid Tumor HRD testing, and now they are adopting additional applications for HemOnc. On the land side, we signed LifeLabs in Q1, a major central reference lab in Canada. LifeLabs, Canada's largest community lab, which performs over 100 million lab tests annually, is adding SOPHiA DDM for Solid Tumor testing.
Lastly, we also announced the signing of Mount Sinai during the quarter, adding to the growing list of leading institutions in the U.S. using SOPHiA. In EMEA, I'm excited to highlight the signing of Jessa in Belgium. Jessa is one of the largest hospitals in Belgium located in Hasselt, and they will adopt SOPHiA DDM for Solid Tumor, liquid biopsy, and HemOnc testing. This signing represents one of the largest wins of the last year. Congrats to the EMEA team on this significant new addition. Beyond Western Europe, we continue to see growing adoption across the Middle East. During the quarter, we announced our partnership with N42, an Abu Dhabi-based world health leader that is implementing MSK-ACCESS at select hospitals throughout the U.A.E. Through this collaboration, we look forward to bringing best-in-class liquid biopsy testing to patients across the Middle East.
Moving to Asia-Pacific, we continue to see strong and growing interest. In the first quarter, we announced a new partnership with Genesis Healthcare to bring SOPHiA solutions to the Japanese market. We look forward to keeping you updated on our progress, as this would be a critical new market for us in the coming years. Beyond Japan, I'd like to highlight the signing of Premier Integrated Labs, a leading diagnostic lab in Malaysia that is adopting numerous applications in hereditary cancer, HemOnc, and inherited disorders, in addition to MSK-ACCESS. Lastly, in Latin America, we continue to make strides across the region. In Q1, we signed Bioma Genetics, a Brazilian-based precision medicine provider that is adopting SOPHiA DDM for HRD Solid Tumors, and Hospital de Amor in Barretos, Brazil, that is adopting MSK-ACCESS. Welcome, Bioma and Hospital de Amor, to the SOPHiA community.
In conclusion, new business remains strong across all geographies. We continue to sign new customers at impressive rates. In addition, the average contract value of signings continues to increase, with ACVs on new business up materially year-on-year. This is due, in part, to increasing success at enterprise-level sales pitching and, in part, due to industry-wide shift toward more sophisticated bioinformatic applications. We continue to see demand in the market for large gene panels, bigger sequencers, and more depth. Our liquid biopsy application, MSK-ACCESS, is a perfect proof point. MSK-ACCESS covers over 146 genes and relies on an advanced proprietary molecular barcoding algorithm called QMEN to detect variants and generate insights. On the Solid Tumor side, we're also seeing demand for larger CGPs, as well as the ability to track disease over time.
Last year, we announced the launch of MRD capabilities on SOPHiA DDM for acute myeloid leukemia, and we plan to expand the MRD features to additional applications such as Solid Tumors over time to serve our customers across the globe, including in Europe. In short, clinical new business pipeline continues to reach record levels as bioinformatic insights become more and more valuable. Growing demand does not stop with our clinical users. On the biopharma side, our pipeline is also reaching record highs. The revamped diagnostic offering is attracting more interest than ever. Opportunities range from sponsored testing partnerships like the expanded collaboration we recently signed with AstraZeneca to other projects focused on helping biopharma strengthen their clinical development programs and improve market access.
I joined the team at World CB and CDX Conference in London last month and was thrilled to see activity level and number of meetings we had with top 20 biopharma, including names such as J&J and Kartos. On the biopharma data side, we are beginning to see promising momentum as well. Our multimodal data offering, including the use of our AI factories to produce data structuring and predictive analytics, is gaining interest from top biopharma, particularly in the areas of lung and kidney cancer. We look forward to keeping you updated this year on the overall progress of the biopharma business. To conclude, I'm proud of the team for delivering an excellent quarter, and I'm also encouraged by the growth of our pipeline and of our end market.
With that, I will now turn the call over to George, who will provide a more detailed look in our Q1 financial results.
George Cardoza (CFO)
Thank you, Ross, and good morning, everyone. As Jurgi and Ross highlighted, Q1 results came in slightly ahead of expectations as new business from 2024 begins to come online. Total revenue for the first quarter of 2025 was $17.8 million, compared to $15.8 million for the first quarter of 2024, representing year-over-year growth of 13%. On a constant currency basis, year-over-year revenue growth was 15%, as foreign exchange headwinds negatively impacted reported revenue by approximately $400,000. Platform analysis volume was approximately 93,000 for the first quarter of 2025, compared to approximately 84,000 for the first quarter of 2024, representing year-over-year growth of 11%. Core genomic customers were 490 as of March 31, up from 463 in the prior year period and up sequentially by 18 customers relative to Q4 2024.
While we added 33 new customers in the quarter, we churned out a few smaller accounts who had not generated revenue over the past 12 months. Nonetheless, Q1 revenue churn remained low at approximately 4%, which is in line with our historical averages. Net dollar retention for the quarter was 103%, driven primarily by the decline in growth in Latin America. Gross profit for the quarter was $12.2 million, compared to gross profit of $10.4 million in the prior year period, representing year-over-year growth of 17%. Gross margin was 68.7% for the first quarter of 2025, compared with 65.9% for the first quarter of 2024, up 273 basis points year-over-year. Adjusted gross profit was $13.4 million, an increase of 21%, compared to adjusted gross profit of $11.1 million in the prior year period.
Adjusted gross margin reached a record high of 75.7% for the first quarter of 2025, up 520 basis points from 70.6% in the first quarter of 2024. As Jurgi mentioned, targeted platform improvements throughout the year continue to drive cloud compute costs and storage costs lower, an achievement we remain proud of and plan to continue throughout the year. Total operating expenses for Q1 were $28.2 million, compared to $29.2 million in the first quarter of 2024, representing an improvement of 3% year-over-year. R&D expenses decreased during the quarter as we increasingly focused on high ROI projects. Additionally, I remain pleased with our progress on the G&A side, where we also continue to benefit from targeted process improvements, system investments, and the optimization of our public company costs.
Sales and marketing expenses were up a touch, primarily due to select investments oriented at accelerating penetration of several key markets, as well as marketing initiatives to support our robust new product momentum. Operating loss for the quarter was $16 million, compared to $18.8 million in the prior year period. Adjusted operating loss was $10.8 million, compared to $14.1 million for the first quarter of 2024, representing an improvement of 23% year-over-year. EBITDA loss for the first quarter was $13.7 million, compared to $16.7 million in the prior year period. Adjusted EBITDA loss for Q1 was $9.8 million, compared to $12.9 million in Q1 of 2024, an improvement of 24% year-over-year. We remain proud of our ability to drop revenue growth down to the bottom line while also reducing costs across the P&L.
We continue to be highly disciplined with respect to headcount, where we have focused on optimized growth and scalability. We also continue to scrutinize all direct and indirect expenditures, ensuring a balanced focus on hitting our growth targets and achieving the operational efficiencies desired. We hope this performance serves as a proof point for our ability to reach our commitment to be approaching adjusted EBITDA break-even by the end of 2026 and crossing over to positive adjusted EBITDA in the second half of 2027. Lastly, total cash burn, which we defined as the change in cash and cash equivalents for the first quarter of 2025, was $11.7 million, compared to $19.5 million in the prior year quarter. Excluding the impact of exchange rate differences, cash burn improved approximately $3 million in Q1 as compared to the prior year period.
We finished the quarter with cash and cash equivalents of approximately $68.5 million as of March 31, 2025. As a reminder, we currently have access to an additional $35 million of capital through the financing line with Perceptive Advisors. We remain confident in our current capital position with respect to the achievement of our goals. I'll now turn to the 2025 outlook. Given the promising re-acceleration of clinical growth in Q1, SOPHiA GENETICS is reaffirming our full-year revenue guidance for 2025 of $72 million-$76 million, representing 10%-17% growth on a reported basis. Despite a slightly stronger-than-expected quarter, we still maintain that 2025 will be mostly back half-weighted, as new business signed in 2024 comes online in the second half of the year and as MSK-ACCESS business begins to ramp up to routine usage.
As a reminder, we expect Q4 to continue being the strongest quarter seasonably during the year. We also expect that exchange rates will be volatile due to macro uncertainties, which may have an impact on reported results. Beyond revenue, we are also reaffirming our full-year adjusted EBITDA loss guidance of $35 million-$39 million. As demonstrated this quarter, we continue to make targeted investments in our platform to optimize cloud compute and storage costs and expect to expand gross margin beyond 2024 levels. As a global company, we are watching the developments on the tariff front, as most are. First, I'll remind you that SOPHiA DDM is an AI software-as-a-service platform. We offer our customers three methods of accessing the platform, with Dry Lab, Bundle, and Integrated Access modes. The Bundle Access mode includes SOPHiA DDM plus consumables.
We have one assembly line located in Rolle, Switzerland, and we ship consumables globally from there. This includes some shipments to the U.S. Of our $9 million in U.S. revenue in 2024, the total value of consumable shipments to the U.S. was only approximately $800,000. Even with growth in 2025, a 10% tariff would be manageable. The tariff also apparently is to be reduced by raw materials sourced in the U.S., and in fact, many of our raw materials are sourced there. While the situation is fluid at this present time, we do not believe the impact to SOPHiA GENETICS to be very material. We also expect to continue to largely hold the line on operating expenses, as we currently have the correct team size to support our medium-term growth objectives.
While this excludes some high ROI investments, we will continue to make related to marketing activities, as well as certain investments in the commercial team. Lastly, we will continue to revisit our discretionary expenditures and execute on identified savings in systems, professional services, and certain public company costs throughout 2025. The combined nature of these items and the natural operating leverage in the business from strong revenue growth will further our path to profitability in the next two years. With that, I would like to turn the call back over to Jurgi for the closing remarks before we take your questions. Jurgi?
Jurgi Camblong (Co-founder and CEO)
Thank you, George. I'm proud of what the team achieved this quarter. We took a major first step during Q1, accelerating revenue growth to 15% constant currency, expanding adjusted gross margins again, now up to 75.7%, and improving adjusted EBITDA by 24% year-over-year. The quarter sets the tone for a strong 2025. Looking ahead, bookings momentum remains strong, and end markets continue to grow. We're offering seats at the center of concentric trends in healthcare. We have built an expansive global network of customers and dynamic AI capabilities, which generate critical insights for a growing number of cancer and rare disease patients globally. Better therapies are being developed each day, and data-driven medicine has become new basis for diagnosis, therapy selection, and follow-on testing, in addition to drug development and deployment. Given our business seats at the center of these innovations, we remain confident on our long-term growth.
In closing, I want to say thank you to our SOPHiA colleagues, partners, customers, and investors for joining us in our journey to transform patient care with data-driven medicine. Please note we are presenting at the RBC Conference on May 20 and 21 in New York City. We all look forward to continuing to update you on SOPHiA's future success of democratizing data-driven medicine around the world. Operator, you may now open the line for questions.
Operator (participant)
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. To ask a question, you may press star followed by the number one on your telephone keypad. If you are using a speakerphone, please speak up your hands before pressing any keys. To withdraw your question, please press star followed by the number two. Your first question comes from the line of Bill Bonello with Craig-Hallum. Please go ahead.
Bill Bonello (Analyst)
Hey, good morning, guys. Nice quarter. Just a couple of follow-up questions. First, you talked about accelerating the timeframe for implementation, and we're seeing that in the good implementation numbers. Can you talk just a little bit about the kinds of actions that you've been able to take that actually allow you to implement more quickly than maybe you have been able to do so in the past?
Jurgi Camblong (Co-founder and CEO)
Yes. Good morning, and thank you, Bill. Indeed, to start with the numbers first, as we highlighted this quarter, we implemented 33 new customers versus an average of 23 customers per quarter for 2024. Obviously, this is as well the result of bookings that are being improving over time. Specifically on the implementations, Ross has been scaling up team capabilities, and we'll give you a bit more color.
Ross Muken (President)
Thanks, Bill. Obviously, this has been a big focus. All of last year, we spoke to you about accelerating bookings momentum. Obviously, we knew that that would yield some pressure on the implementation teams as both the number of implementations were going up and also the complexity. You can see our deal size is going up. With that, also, these are more complicated, particularly in liquid biopsy implementations. We have created some tooling and automations in different aspects of the process to enable us to better execute and speed up elements. I would say, from a process perspective, we have added in some industrialization to make sure that at different stages, we understand sort of how much time in stage should be, what do we do to troubleshoot if there are challenges in the lab.
We've increased a little bit our headcount in terms of some of the wet lab and field application scientists that go into the field in the labs and work hand-in-hand with the clinicians, right, because obviously, sorry, with the pathologists, because obviously, there's a complexity to some of these capabilities. I think between tooling and systems, process, and then some select headcount, we've been able to speed up this process materially.
Bill Bonello (Analyst)
Okay. That's really helpful. And then just my second one is you talked about the average contract value increasing, and certainly, we would expect that with the more complicated analyses that are coming on board. But you also talked about enterprise sales. First of all, I want to make sure I understand that right. I'm assuming you're talking about customers that are coming on, and instead of just coming on initially with one or two applications, they're essentially using DDM for all of the NGS testing that they're doing. Can you, first of all, clarify if that is what you mean by enterprise sales? If so, why do you think you might be seeing an uptick in that? Is there something changing in the overall environment that's making it just that much more difficult for clients to do the bioinformatics on their own?
Is there a specific push that you've been making as a company to try and sell sort of at the enterprise level? Maybe just elaborate a bit on that.
Jurgi Camblong (Co-founder and CEO)
Yes. Sure, Bill. I will start and then let Ross further develop. Indeed, as you know, our platform has multiple capabilities, right, for multiple disease areas: HemOnc, Solid Tumor, hereditary cancer, liquid biopsy, and rare inherited disorders. For each of these disease areas, our platform can be used for multiple types of applications, multiple types of test kits. Today, it is 58% of our customers who are using two or more applications. Definitely, there is room to expand the utilization of applications per customer. You are absolutely right in your understanding of the enterprise concept. These are deals where, when we get in, we are basically signing for a majority of all the applications they are covering, right, unlike when we are landing a customer only for liquid biopsy.
Ross, maybe you want to give a bit more color on what you're seeing, especially when it comes to the bioinformatics in the field, and guide Bill whether the ACV being doubled year-on-year on a contract basis will primarily come from that or from more complex solutions or a mix.
Ross Muken (President)
Thanks, Jurgi. It's a really good question, Bill. This is probably one of the most important dynamics of what's happening in market. It really speaks to a point Jurgi touched on, and you made around the complexity of what is being analyzed now in many laboratories. If you think about the evolution of the market as we've gone from single gene to multi-gene or pan tumor, and then more complex capabilities like CGP, exome, whole genome, MRD, etc., now many laboratories have multiple types of sequencers, multiple types of assays or chemistry they're running, maybe different automates, and a mix of homegrown and then maybe SOPHiA or other solutions, right?
As the complexity continues to go up, it becomes completely unmanageable from an efficiency and cost perspective, particularly as data is growing, let's say, north of 50% in terms of output in many of these laboratories. The desire to then simplify across the workflows and harmonize on a common platform will gain you massive leverage in your laboratory where many still are, I would say, human capital constrained. That is really playing to our strength, particularly with our universal library prep and then with the uniformity of our workflows around different applications. This is attracting more and more laboratories to basically sunset either existing homebrew solutions and/or consolidate competitor solutions to us. We think this will only accelerate as we have more examples of this. Obviously, in Q1, we called out Jessa, a very large lab in Belgium.
This is a great example, but we'll have many more over the coming quarters. If I look in my pipeline, the number of multi-application deals is up materially year-on-year, and this is quite important. I would say, on top of that, if you think as well about what's happening in the sequencer market and just the higher output per sequencer, which again is moving people to more and more sophisticated applications internally, that as well begs a lot of the question of driving that shift. I think the more you see multi-manufacturer sequencers present in accounts and then higher throughput sequencers present in accounts, this will continue to push things in our favor. Lastly, I would just say this has also been a concerted effort, right?
We really spent a lot of time this year from a targeting and focus perspective from a go-to-market team at Salesforce and saying, "All right, we won some really mega names, right, around the world." If you look at our presence in the top 20, top 50, top 100 cancer institutions in central laboratories, we really have now the right to compete in these much bigger accounts. We have put a real onus on driving higher ACVs. I think that will continue to tick up throughout the year, and particularly with success we are having in the U.S. market and in markets like the U.K. and Germany, etc., and eventually Japan.
I think that will also positively benefit that metric and allow for us to not only grow at the rates we expect, which are improved, but also become more efficient as obviously you can service for us a million-dollar account similarly as you can service a $200,000 account. You get operating leverage in that as well.
Bill Bonello (Analyst)
Excellent. Thank you so much.
Operator (participant)
Your next question comes from the line of Conor McNamara with RBC Capital Markets. Please go ahead.
Conor McNamara (Analyst)
Hey, guys. Thanks for taking the questions and congrats on a solid quarter. On the gross margins, they came in a lot stronger than anticipated. Was there anything one-time in there? Are these GM gross margins sustainable above 75% going forward?
Jurgi Camblong (Co-founder and CEO)
Thank you. And good morning, Conor. So first, maybe you remember that we've been continuously speaking on improving as well our algorithms, right? So that while the data compute becomes more intense, the efficiency of the algorithms will become as well better and better. And so to some extent, this is being materialized as well in the gross margin. But I will let George further develop.
George Cardoza (CFO)
Yeah. We did have a relatively favorable mix in the first quarter. I do think gross margins did come in on the high side in the first quarter. We said year-over-year they would be up sequentially, and we still believe that. I do think the first quarter margin was probably a little bit better than expected. Again, we had a couple of one-time items in there, but I do think ultimately you'll see it still improve on a year-over-year basis, although not quite this high in the out quarters.
Conor McNamara (Analyst)
Great. Thanks, George. On the biopharma side of the business, is there any large contract wins or large contribution considered in your guidance? Where is the biggest medium-term opportunity that you're seeing with biopharma? Is it in early drug discovery and development, or are you starting to see a lot more interest on the targeted medicine companion diagnostic side from your biopharma customers?
Jurgi Camblong (Co-founder and CEO)
Yeah, thanks for the question, Ross, Conor. Ross was just at the AACR conference, right, which is one of the biggest conferences around cancer research. He's going to let you know where we stand today.
Ross Muken (President)
Thanks, Jurgi. Connor, as you recall, we did a bit of changes in our biopharma business last summer. With that, we've seen a material improvement in pipeline. In this quarter, you're starting to see bookings come through. I think, in general, we're quite pleased with the progress we've made, particularly in CTAs, CDX, and sponsored testing, sort of more on the traditional diagnostic side of things. I think the reality is we've shown good momentum. We're quite pleased with the progress. We're where we expected to be on that side of the business. I would say, in general, obviously, this is still in its nascent stages as a business. From that perspective, we are aggressively pursuing business, but I'll let George maybe comment on how we're reflecting that in the guidance.
George Cardoza (CFO)
Yeah. No, we guided before that we expected pharma to be flat in 2025. So even though we're very excited about some of the opportunities in the pipeline, at least at this point, we are expecting pharma to be flat year-over-year and then ideally a significant benefit in 2026.
Conor McNamara (Analyst)
Got it. Thanks. Just last one for me. I appreciate the color you guys gave on the tariff impacts and kind of what's going on from a macro environment. Is there a medium-term opportunity for you guys just because you're not selling capital to customers where either your customers may be looking to maximize the capital investments they've made, or if they were considering building out a software offering on their own that required a larger investment, you may be able to pick up some of that business just because they're maybe budget constrained or trying to save money on any capital expenses. That's all I've got. Thanks for the questions.
Jurgi Camblong (Co-founder and CEO)
Yes. Thank you, Conor. So indeed, right, it looks like there is a trend on being, I would say, to some extent, constrained on CapEx investments, obviously, in the world of research activities, maybe to some extent in the world of hospitals. As you know well, we are diagnostics, right? We are not tools. We do not sell as a CapEx. We go into the OpEx of the hospitals. We are being paid on use. I would say today, we do not see a pressure. To your point, this might be an opportunity as well, right, because it could be that some hospitals or different labs, given this new dilemma, do not want to invest themselves on making their own developments and may want to use the software like SOPHiA. Ross, we have been interacting with a number of customers around those constraints recently.
Maybe you want to highlight where we stand and, I guess, the little friction we see on our side.
Ross Muken (President)
Yeah. Maybe just to be super clear, we today see very healthy budgets across our customers. In general, it is quite a solid environment for us, essentially in most geographies around the world. In general, it is quite strong. I would say probably the biggest immediate or near-term impact we are seeing is if you have bought a sequencer, right, and upgraded, you have great desire to fill those flow cells. That means more applications, more content, which means players like SOPHiA need to step up and provide you with menu to be able to make the economics of that purchase viable. Increasingly, you see those interactions benefiting us.
It has also brought us closer to some of the CapEx equipment players as I think a number of them see us, right, as a key partner to bring that menu and to bring the validation and to show the ROI so that when you are bringing in-house certain capabilities, you can show that that level of investment was prudent and that you can ultimately not just bring, obviously, care closer to the patient and improve turnaround times, but you can drive a financial benefit and an ROI, which is obviously critical for CapEx investment in the current environment. Again, I think it is a net positive for us.
Conor McNamara (Analyst)
Great. Thanks for all that color.
Operator (participant)
Your next question comes from the line of Tejas Avan with Morgan Stanley. Please go ahead.
Hi. This is Jason on for Tejas. Thank you for taking our questions. Maybe just to start off, a question on the collaboration with AstraZeneca. You originally began this collaboration with AstraZeneca in 2023. Could you just talk about the traction you've had from this collaboration in that timeframe? What has it meant for the company's volume and ASP profile? Also, does this new collaboration include MSK-IMPACT? If not, could including MSK-IMPACT be in the cards? How are you thinking about other collaboration opportunities in the future, in particular with large pharma? Thank you.
Jurgi Camblong (Co-founder and CEO)
Yes. Thank you, Jason. I will start and then let it turn to Ross. As you may remember, our partnership with AstraZeneca on the diagnostic side started with HRD testing, which was something that the market was missing for prescription of PARP inhibitors, right? This was our initial collaboration where we had worked together on market access needs so that more patients could be properly tested in Europe on HRD. This collaboration was expanded, to your point, with MSK-ACCESS and MSK-IMPACT. Ross, do you want to give a status on where we stand on Access, Impact, and the new collaboration agreement we just signed?
Ross Muken (President)
Thanks, Jurgi. And Jason, thanks for the question. I would say, one, it's great to be aligned with AZ around these efforts, given obviously they today have an incredibly robust pipeline and one that matches very well with our offering in menu, right? There is a ton of fantastic overlap between the two organizations and our missions. They obviously have a real desire as well to bring care closer to the patient and improve market access. We're happy to help them on that journey. It's a really good partnership up and down in the organization. Now, if you look at the success we've had with Access and now Impact, obviously, they, as well as our own efforts, have been really critical to getting that into as many labs as we've penetrated quickly, right?
I would say this is probably for the company one of the fastest and best new product launches in history. In that vein, obviously, some of their efforts have helped us there. We're really appreciative of the partnership from that standpoint. You can see the recent expansion is kind of evidence of the success, right? We expect that to bear very nice fruit over the not just upcoming periods, but over the next several years. This is really a key partnership and product for us. I'm also pleased to say, as I hinted at before, we've also expanded our outreach with other top pharma. We will have, hopefully, later this year some further disclosures.
I think you can sort of ascertain that there are others as well that see the world similar to AZ and see the value that SOPHiA can bring, particularly around CGP testing and liquid biopsy. We expect this now to broaden out to others. We've publicly talked a bit about J&J as an increasing, I would say, important other partner for us, but I think there'll be more. Again, as Jurgi mentioned, coming off of World CDX and AACR, we really have seen an uptick in interest. Now we've got to translate that, obviously, into bookings and revenue. Again, we've been conservative, as George stated, in our assumptions for this year, but I'm quite confident that the trajectory is pointing in the right direction for us.
Great. Thanks. That was helpful. Maybe just a follow-up question. The question on the balance sheet. I guess last quarter, SOPHiA, you reframed your adjusted operating profitability target from year-end 2026 to adjusted EBITDA break-even in 2027. Is the current balance sheet sufficient to reach this new target? How are you thinking about opportunities to strengthen the balance sheet? Thank you.
Jurgi Camblong (Co-founder and CEO)
Yeah. George, that's for you.
George Cardoza (CFO)
Yeah. No, again, we finished the quarter with $68 million in cash plus another $35 million in undrawn credit line. So that's a total of over $100 million of available liquidity. Very pleased that we continue to shrink our EBITDA losses. And I think you've seen all the work and the efforts we've done around expense control and improving our gross margins on the COGS side. And again, our loss was less than $10 million this quarter. So certainly, I think that frames us up fairly well. And again, we think our losses will be quite small by the end of 2026, and we'll cross over into adjusted EBITDA profitability into 2027.
Great. Congrats on the quarter.
Operator (participant)
Your next question comes from the line of Dan Brennan with TD Cowen. Please go ahead.
Kyle Boucher (Analyst)
Hey, good morning, guys. This is Kyle on for Dan. Thanks for taking the questions. I wanted to go back to the guide and sort of pacing. You reiterated the guide this year, and implementations were pretty strong in the first quarter. Does this change any of the—I mean, I know you're still guiding for a back half way to year, but does this sort of smooth out some of that back half waiting since implementation has been stronger?
Jurgi Camblong (Co-founder and CEO)
Yeah. George?
George Cardoza (CFO)
Yeah. No, we're still expecting—while we're pleased, certainly, with first quarter results, we think it is prudent to maintain the guidance at this point. We do still feel, again, given our contracts that we've signed that still haven't really transferred into routine, that will happen more in the back half of this year. We do think we're going to see more growth in Q3 and certainly in Q4. Clearly, in the first quarter, our revenue growth was within the 10%-17% guidance range that we established. At this point, we are maintaining our guidance.
Kyle Boucher (Analyst)
Got it. Is there any detail you're willing to provide on the new customer signings? What % of the new signings are U.S. versus OU.S.? Earlier, you talked about the average size of contracts getting bigger. Can you quantify that at all?
Jurgi Camblong (Co-founder and CEO)
Yeah. We can give you some more color on the new logos in terms of the number of logos, where they come from. As you know, we do not disclose dollar values of bookings, right? Ross, on logos, on new logos?
Ross Muken (President)
Yeah. Thanks, Jurgi. In terms of the new customer signings, obviously, we've had, frankly, success around the globe. I would say there is sort of notable strength coming in North America. As you think about this year and into next year, I do think relative to our revenue mix, a disproportionate amount will come from the U.S. Those tend to be much larger lands or expands, several times larger than our average. That is pulling up that ACV number. I think that number, which again, doubled year-on-year, will continue to trend favorably for the remainder of the year. I would say in total, this will obviously show up eventually in our North American revenue growth, which on the clinical side was quite robust in the first quarter, and we expect to be strong throughout the year.
I can tell you the dynamics in general are really strong in terms of the U.S. business, and we're really pleased where that is. We think, again, this will be one of the key growth drivers for us in the back half of the year into 2026.
Kyle Boucher (Analyst)
Got it. Thanks, guys.
Operator (participant)
Your next question comes from the line of Subbu Nambi with Guggenheim. Please go ahead.
Subbu Nambi (Analyst)
Hey, guys. Good morning. Thank you for taking my questions. You churned out a few smaller customers who were not contributing revenue. We were wondering what is the split on customer number who are not material contributors versus those who are?
Jurgi Camblong (Co-founder and CEO)
Ross.
Ross Muken (President)
Yeah. Subbu, obviously, as you think about different regions, right, obviously, an IDN or an AMC in the U.S. or U.K. or even France is going to be quite different than someone in Costa Rica or in Thailand or Malaysia, etc., right? I would say in total, it's sometimes challenging, particularly in more of the emerging markets, to know when we sign a customer what the full potential is. I would say increasingly, again, and this is around this ACV comment, we've been more focused on, let's say, the top 500 sort of cancer centers in the world. There, obviously, we know the size and we know the patient sort of levels. I think, again, you will probably see some dynamic change in that mix.
When you're running a network model and the diversity of what we have, you're trying to play for the broadest network. We'll continue to obviously entertain customers in all of these emerging markets for oncology. Obviously, it will at times lead to at least the churn customer number being elevated, but not the churn %. We're still very pleased with where that remains in the low single digits, which is a world-class number for software.
Subbu Nambi (Analyst)
That's awesome. Can you provide some color on cross-selling the MSK-ACCESS and MSK-IMPACT offerings? I know MSK-ACCESS had 34 adopters as of February 2025. I'm just wondering how many adopters of both assays do you have today?
Jurgi Camblong (Co-founder and CEO)
Yes. Thank you, Subbu. So indeed, MSK-ACCESS and MSK-IMPACT are, we believe, applications which have a bright future, but it's still pretty early. So on MSK-ACCESS, the launch has been successful. We have had adoption of MSK-ACCESS in all continents, as you said, for about 30 customers already. And we expect basically the numbers to really pay out as we progress and we get more and more utilization. But I would say we're still very much at the beginning. And with a decentralized solution that everyone can adopt, probably MSK-ACCESS is pretty unique in its category. So we have high expectations, but still work to do so that on the market access side, we see more and more volume adoption. When it comes to MSK-IMPACT, say the competitive landscape is different.
You already had some people that adopted comprehensive genomic profiling solutions in the market. The market already exists, more competitive. The capabilities of MSK-IMPACT, because of its nature with tumor normal, are pretty unique. There we are as well very confident that in conjunction with MSK-ACCESS, we will have a number of customers that is going to grow in the adoption of MSK-IMPACT. The two tend to go very well together, MSK-IMPACT for the first diagnosis and after MSK-ACCESS for the longitudinal follow-up of the patient as the patient is being treated.
Subbu Nambi (Analyst)
That's helpful, Jurgi. One last one. You guys announced the expanded agreement with AstraZeneca to increase the number of MSK-ACCESS adopters from 20 to 30 this year. Was this already contemplated in your guide, given you didn't raise your guidance today? If not, would completing this just present an upside to the guide? Is the time frame about committing to adopt the solution and not necessarily ramping up engine writing revenue?
Jurgi Camblong (Co-founder and CEO)
Yeah. George?
George Cardoza (CFO)
Yeah. Again, when we sign somebody for MSK-ACCESS, I mean, it is a rather detailed application, and a lot goes into the validation and bringing it live. It does have probably a little bit longer of a runway in terms of somebody signing a contract to actually going live. We're still quite bullish about the opportunities here going forward.
Subbu Nambi (Analyst)
That makes sense. Thank you, guys.
Operator (participant)
Your next question comes from the line of Mark Mazzaro with GDIG. Please go ahead.
Hey, guys. This is Vivian on for Mark. Thanks for taking the questions. I'll just keep it to one, actually. Just on your competitor Fabric recently being acquired, I know the revenue base is much less mature, but could you just share any new views on how you're thinking about the competitive landscape? I think in the past, you've also called out increasing mix just to exome applications. Just any views there. Thanks.
Jurgi Camblong (Co-founder and CEO)
Yes. Thank you, Vivian. I guess this acquisition highlights the value of data analytics and bioinformatics, right? We have been often speaking about the fact that over time, probably data production, although there is subtlety on pre-sequencing steps, would become more and more automated, and that knowledge and dollars would move more towards data analytics. I would say this definitely highlights, in my opinion, the value of data analytics recognized in that case by GDX. Indeed, 20% of our business is on rare inherited disorders, where with one of the applications called Enhance Exome, we're seeing a significant demand in the market.
Great. Thanks for taking the question.
Operator (participant)
No further questions at this time. I would like to turn it back to Jurgi Camblong for closing remarks.
Jurgi Camblong (Co-founder and CEO)
Thank you all for the questions. Looking forward to update you in the next events. We're soon in an event in New York, ready to meet investors. Have a good day.
Operator (participant)
This concludes today's conference call. Thank you all for joining. You may now disconnect.