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Alpha Teknova, Inc. (TKNO)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue was $9.3M, up 2% YoY and +18% sequentially versus Q4 2023; gross margin improved sequentially to 23.8% (from 17.0% in Q4), while GAAP diluted EPS was -$0.20 .
  • Management reaffirmed FY 2024 guidance: revenue $35–$38M and free cash outflow < $18M; Lab Essentials expected to grow ~10% with the remainder from Clinical Solutions .
  • Non-GAAP metrics improved: Adjusted EBITDA -$3.8M (vs -$6.1M in Q1 2023) and Free Cash Flow -$6.7M (vs -$12.0M YoY), reflecting cost controls and lower capex .
  • Strategic catalysts: launch of Build‑Tek custom configurator (fast, no MOQ, 1–2 day ship) and AAV‑Tek Stabilizer (up to 50% capsid yield increase), plus ramp of new GMP facility (4x work orders vs Q4) .
  • Consensus estimates from S&P Global were unavailable; comparison to Street numbers could not be performed (S&P Global data request limit reached).

What Went Well and What Went Wrong

What Went Well

  • Product innovation: Build‑Tek enables rapid, customizable buffers with 1–2 day turnaround and no minimum order quantities; early customer feedback cited speed, quality, and workflow benefits .
  • Operational ramp: New facility regularly generating revenue with >4x work orders vs Q4; sequential revenue +18% and gross margin leverage as volume increases, with ~70% incremental revenue expected to drop to gross profit .
  • Cost discipline: OpEx excluding non‑recurring items fell ~$1.7M YoY; Adjusted EBITDA improved $2.3M YoY; capex fell to ~$0.1M in Q1 (7 straight quarters of decline) .

What Went Wrong

  • Gross margin still subdued YoY at 23.8% (vs 26.6% prior year) due to increased overhead (depreciation) from the new facility, partially offset by reduced headcount .
  • GAAP net loss remained sizable at -$8.1M and diluted EPS -$0.20; Clinical Solutions revenue remains “lumpy” with lower average revenue per customer despite a broader base .
  • Street estimate comparison unavailable this quarter; inability to benchmark results vs consensus limits near‑term clarity on “beat/miss” narrative (S&P Global data request limit reached).

Financial Results

Quarter Trend (oldest → newest)

MetricQ3 2023Q4 2023Q1 2024
Revenue ($USD Millions)$8.169 $7.867 $9.290
Gross Margin (%)18.0% 17.0% 23.8%
GAAP Diluted EPS ($)-$0.34 -$0.26 -$0.20
Adjusted EBITDA ($USD Millions)-$5.477 -$5.418 -$3.756
Free Cash Flow ($USD Millions)-$5.354 -$3.094 -$6.670

YoY Comparison

MetricQ1 2023Q1 2024
Revenue ($USD Millions)$9.121 $9.290
Gross Margin (%)26.6% 23.8%
GAAP Diluted EPS ($)-$0.31 -$0.20
Adjusted EBITDA ($USD Millions)-$6.063 -$3.756
Free Cash Flow ($USD Millions)-$11.996 -$6.670

Segment Breakdown (Q1 2024 vs Q1 2023)

SegmentQ1 2023 Revenue ($USD Thousands)Q1 2024 Revenue ($USD Thousands)
Lab Essentials$7,257 $7,266
Clinical Solutions$1,609 $1,718
Other$255 $306
Total$9,121 $9,290

KPIs and Balance Sheet (oldest → newest)

KPIQ3 2023Q4 2023Q1 2024
Cash and Equivalents ($USD Millions)$32.112 $28.594 $21.596
Debt (Long-term, net) ($USD Millions)$13.168 $13.251 $13.178
Gross Debt ($USD Millions)——$12.1
Operating Expenses ($USD Millions)$10.234 $12.193 $10.195
CapEx ($USD Millions)$0.972 $0.312 $0.112

Note: “Gross Debt” disclosed explicitly in Q1 2024 press release; prior periods provide long-term debt (net) from 8-K financials .

Estimates vs Actuals

MetricPeriodConsensusActualBeat/Miss
RevenueQ1 2024N/A (S&P Global data unavailable)$9.290M N/A
EPS (GAAP)Q1 2024N/A (S&P Global data unavailable)-$0.20 N/A

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)FY 2024$35–$38M (Q4’23) $35–$38M (Q1’24 reaffirmed) Maintained
Free Cash Outflow ($USD Millions)FY 2024< $18M (Q4’23) < $18M (Q1’24 reaffirmed) Maintained
Mix CommentaryFY 2024~10% Lab Essentials growth, remainder Clinical Solutions (Q4’23) Same (Q1’24) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023, Q4 2023)Current Period (Q1 2024)Trend
Biotech funding/macroCustomers conserving capital; expect 2023 revenue low end of range Signs of stabilization; 4‑quarter lag suggests more positive environment in early 2025 Improving outlook
Facility ramp & throughputValidated GMP processes; equity raise and $10M debt paydown New facility regularly generating revenue; >4x work orders vs Q4 Operational acceleration
Gross margin leverageGM compressed on lower absorption ~70% incremental revenue expected to drop to gross profit; sequential GM improvement Positive leverage with growth
Cost controls & OpExOpEx down vs prior year; impairments in Q4’23 OpEx ex non‑recurring down $1.7M YoY; ongoing RIF savings (~$8M annualized by Q2) Sustained discipline
Product innovationAEX kit expansion; >60 off‑the‑shelf reagents Build‑Tek launch and AAV‑Tek Stabilizer (up to 50% yield increase) New offerings broaden TAM
Customer breadth & lumpinessClinical Solutions down YoY; revenue lumpiness noted Diverse customer base, no >10% customer; Clinical Solutions lumpy; broader customer count Diversifying but lumpy

Management Commentary

  • “We had a strong start to 2024… revenue, adjusted EBITDA and cash outflow in line with our expectations… we remain confident in our $35–$38M full year revenue guidance” — CEO .
  • “Our new facility is now regularly generating revenue with more than 4x the work orders… enabling customers to receive custom… reagents in weeks instead of months” — CEO .
  • “Gross margin leverage is a real thing… ~70% of incremental revenue drop through to gross profit” — CFO .
  • “Adjusted EBITDA was a $2.3M improvement over prior year… we expect to meet or beat our cash outflow guidance of $18M” — CEO .
  • “We launched… Build‑Tek… ship in a matter of days… enables customization… early stage DOE” — CEO .

Q&A Highlights

  • Clinical Solutions run‑rate and lumpiness: No single large customer; orders can be ~$0.5M, making quarterly run‑rate uncertain; diversification noted vs last year’s Q2 concentration .
  • Build‑Tek strategy: Digital configurator complements custom manufacturing; eliminates lab buffer mixing with 1–2 day ship; early interest despite 40–50% higher per‑liter pricing, driven by speed/quality savings .
  • Gross margin trajectory: As volumes rise, ~70% incremental revenue to gross profit; sequential margin improvement tracking expectations .
  • CapEx outlook: “Virtually 0” currently; normalize around ±$2M per year for maintenance/growth; some digital infrastructure investment planned .
  • Phase III CGT customers: Three referenced in Q4; one in production; potential commercial demand late 2025/2026 if successful .

Estimates Context

  • S&P Global consensus estimates for TKNO (revenue/EPS) were unavailable due to a data request limit. As a result, Street beat/miss determination could not be completed this quarter.

Key Takeaways for Investors

  • Sequential recovery with operational leverage: Revenue +18% q/q and gross margin up to 23.8%; management expects ~70% incremental revenue drop‑through to GM as volumes scale .
  • Cost structure reset: OpEx ex one‑offs down ~$1.7M YoY; Adjusted EBITDA improved $2.3M YoY; capex minimal, supporting cash burn trajectory .
  • Product innovation enhances moat: Build‑Tek speed/customization and AAV‑Tek Stabilizer’s yield gains are likely to attract DOE and AAV workflows, strengthening RUO and GMP pipelines .
  • Diversified customer base but revenue lumpiness persists: No >10% customer in Q1; expanding Clinical Solutions customer count, yet average revenue per customer lower near‑term .
  • Guidance intact: FY 2024 revenue $35–$38M and free cash outflow < $18M reaffirmed; Lab Essentials ~10% growth expected .
  • Watch gross margin trajectory and order flow: Sequential margin improvement is tracking; monitoring funding stabilization and qualification activity suggests better environment into early 2025 .
  • Balance sheet covenants amended in March: Minimum cash raised to $10M; revenue covenant reduced to $34M for 2024; warrant issued to lender—improves near‑term flexibility but underscores financing discipline .