Sign in

You're signed outSign in or to get full access.

AT

Alpha Teknova, Inc. (TKNO)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 revenue was $9.6M, down 17% year over year but up 3% sequential; gross margin fell to 29.2% on mix and higher depreciation, while net loss improved to $5.4M ($0.13 per share) versus $7.2M in Q2 2023 .
  • Management reiterated FY2024 revenue guidance of $35–$38M and free cash outflow of less than $18M; Lab Essentials growth assumption was lowered to ~5% (from ~10% in Q1) with remaining dollars from Clinical Solutions .
  • Liquidity strengthened by a $15.4M equity private placement in July; quarter-end cash was $18.6M with gross debt of $12.1M, and free cash flow improved to -$3.0M from -$6.2M in Q2 2023 .
  • Strategic launches—RUO+ and Express-Tek—aim to accelerate customer workflows and are expected to be gross-margin accretive; clinical customers rose to 43, up ~26% in six months, positioning for 2025 as biotech funding stabilizes .
  • Street consensus from S&P Global was unavailable; thus, we cannot assess beats/misses versus estimates this quarter (S&P Global consensus unavailable).

What Went Well and What Went Wrong

What Went Well

  • Sequential improvement: revenue +3% q/q; adjusted EBITDA improved by ~$1.2M sequentially vs Q1, reflecting cost controls and operating discipline .
  • Strategic product launches with margin tailwinds: “Express-Tek allows customers to have their custom products enter production in days instead of weeks… it will be gross margin accretive for us” .
  • Growing clinical footprint and diversified base: active clinical customers reached 43, with no single direct customer >10% of revenue year-to-date, supporting future mix shift as trials advance .

What Went Wrong

  • Year-over-year decline and margin compression: total revenue -17% y/y; gross margin fell to 29.2% (from 43.9%) on lower Clinical Solutions revenue and higher overhead/depreciation from the new facility .
  • Clinical Solutions shortfall versus tough comp: $1.6M in Q2 2024 vs $3.7M in Q2 2023, primarily due to a large prior-year GMP order; average revenue per customer decreased despite more customers .
  • Continued losses despite expense cuts: net loss of $5.4M; adjusted EBITDA of -$2.6M indicates profitability still dependent on scale and mix improvements .

Financial Results

MetricQ4 2023Q1 2024Q2 2024
Revenue ($USD Millions)$7.867 $9.290 $9.614
Gross Profit ($USD Millions)$1.335 $2.209 $2.804
Gross Margin %17.0% 23.8% 29.2%
Operating Expenses ($USD Millions)$12.193 $10.195 $7.904
Net Loss ($USD Millions)$(10.656) $(8.097) $(5.364)
Diluted EPS ($USD)$(0.26) $(0.20) $(0.13)
Adjusted EBITDA ($USD Millions)$(5.418) $(3.756) $(2.568)
Free Cash Flow ($USD Millions)$(3.094) $(6.670) $(2.953)
Cash And Equivalents ($USD Millions)$28.594 $21.596 $18.596
Gross Debt ($USD Millions)$12.1 $12.1 $12.1

Segment revenue mix:

Segment ($USD Thousands)Q2 2023Q1 2024Q2 2024
Lab Essentials$7,581 $7,266 $7,638
Clinical Solutions$3,653 $1,718 $1,565
Other$293 $306 $411
Total Revenue$11,527 $9,290 $9,614

KPIs (Q2 2024):

KPIValue
Active clinical customers (#)43
Lab Essentials customers (#, year ended 6/30/24)2,913
Headcount (end of Q2)169
No direct customer >10% revenue YTDYes (None >10%)
Cash ($USD Millions)$18.6
Gross debt ($USD Millions)$12.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY2024$35–$38M $35–$38M Maintained
Lab Essentials Growth AssumptionFY2024~10% ~5% Lowered
Free Cash OutflowFY2024< $18M < $18M Maintained
Capex PaceH2 2024De minimis in Q1–Q2 Expect increased investment activity in H2 Increased
Adjusted EBITDA Breakeven TargetLT$50–$55M annualized revenue $50–$55M (reiterated) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023 and Q1 2024)Current Period (Q2 2024)Trend
Technology/product initiativesBuild-Tek custom configurator; AAV-Tek stabilizer launched (Q1) Launch of RUO+ manufacturing grade and Express-Tek expedited production Expanding portfolio, focused on speed/grade transitions
Macro/biotech funding2023 challenged; 2024 guide provided Stabilizing funding; ~4-quarter lag; optimism for 2025 Improving backdrop; timing remains cautious
Margin driversHigher depreciation from new facility pressured margins Mix (lower Clinical Solutions) and depreciation; headcount reductions partly offset Margin headwinds easing with mix normalization
Customer baseClinical customers grew in 2023 Clinical customers 43; diversified base, no customer >10% Broadening clinical footprint
Capacity/scaleNew facility increased overhead Hollister capacity supports ~$200M revenue potential Significant unused capacity supports scale
Cash/capex2023 FCF improved vs 2022 Equity raise $15.4M; capex to increase in H2 2024 Liquidity improved; selective investments

Management Commentary

  • “We now supply more than 43 active clinical customers… 23 of which operate in the cell and gene therapy market segment” .
  • “Express-Tek… allows customers to have their custom products enter production in days instead of weeks… yes, it will be gross margin accretive for us” .
  • “We believe this additional capital provides us a bridge to profitability without the need for more external funding” .
  • “We are cautiously optimistic… maintaining our full-year outlook of $35–$38 million of revenue and free cash outflow of less than $18 million” .

Q&A Highlights

  • New offerings will be margin accretive; Express-Tek carries a premium and enables rapid production slots; RUO+ bridges RUO to GMP with higher pricing to recover costs .
  • Macro view: funding improving but not yet translating to orders; management expects ~4-quarter lag and sees potential for double-digit growth in H2 2024 and into 2025 if trends persist .
  • Product traction: AAV-Tek revenues small today but aid in onboarding; commercialization could scale dollars materially over 2–3 years .
  • Competition/capacity: speed-to-market is a differentiator; Hollister facility supports ~>$200M capacity, enabling scaling as demand recovers .
  • Guidance nuance: Lab Essentials growth assumption reduced to ~5% despite “green shoots,” offset by Clinical Solutions dollars in full-year plan .

Estimates Context

  • S&P Global/Capital IQ consensus for Q2 2024 EPS and revenue was unavailable at time of analysis due to data access limits; therefore, we cannot quantify beats/misses versus Street expectations this quarter (S&P Global consensus unavailable).
  • Management’s reiterated FY2024 revenue outlook ($35–$38M) implies double-digit growth in H2 versus H2 2023 and flat full-year versus 2023 at the midpoint, which may prompt modest upward revisions if Clinical Solutions ramps and RUO+/Express-Tek gain traction .

Key Takeaways for Investors

  • Sequential progress with tighter cost control: revenue +3% q/q; adjusted EBITDA improved by ~$1.2M sequentially, and free cash flow improved versus Q2 2023, indicating operating discipline taking hold .
  • Mix and depreciation remain the primary margin headwinds; normalization of Clinical Solutions and benefit from new offerings should support margin recovery over time .
  • Strengthened liquidity via $15.4M private placement reduces financing risk and supports the bridge to profitability; quarter-end cash $18.6M and gross debt $12.1M .
  • Pipeline of clinical customers (43) and diversified revenue base position the company for scaling as trials advance; no single direct customer >10% year-to-date .
  • Guidance steady but mix shifted: Lab Essentials growth assumption lowered to ~5%, with Clinical Solutions expected to carry remaining dollars; watch H2 ramp and capex increase .
  • Medium-term path to breakeven at $50–$55M annualized revenue remains intact; capacity can support significant scale at Hollister .
  • Trading lens: near-term catalysts include incremental Clinical Solutions orders, visible uptake of RUO+/Express-Tek, and confirmation of H2 double-digit growth; risk remains around timing of funding translating to orders .