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Alpha Teknova, Inc. (TKNO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $9.3M (+18% YoY), gross margin improved to 23.0% (vs. 17.0% in Q4 2023) as Clinical Solutions accelerated; net loss narrowed to $5.7M (EPS -$0.11) from $10.7M (EPS -$0.26) a year ago .
  • Operating expenses fell to $7.8M from $12.2M YoY, driven by headcount and professional fee reductions; adjusted EBITDA improved to -$3.2M and free cash outflow to -$1.5M, the lowest quarterly outflow since Q1 2021 .
  • 2025 guidance introduced: revenue $39–$42M, gross margin “high-20s%,” free cash outflow < $12M; company expects Q1 2025 to be the low point, then sequential improvement, consistent with typical seasonality .
  • Liquidity improved via amended/extended credit facility: maturity to March 2030; no principal repayments until April 2028; term loan increased by ~$1.1M to cover the exit fee—supporting runway and flexibility; management cited ~70% marginal cash drop-through per incremental revenue dollar as a key lever when volumes recover .

What Went Well and What Went Wrong

  • What Went Well

    • Clinical Solutions revenue more than doubled YoY in Q4 (to $1.9M; +110%), supporting gross margin expansion; management highlighted “new clinical customers” and “improved operational efficiency” as positive drivers .
    • Cost control: OpEx down ~$2.0M ex non-recurring items YoY; adjusted EBITDA improved to -$3.2M and free cash outflow improved to -$1.5M; CFO: “cost savings enacted throughout the year and good stewardship of our capital” .
    • Strategic financing: Amended/extended credit facility (2030 maturity, principal deferral) and earlier equity raise bolster liquidity, giving “additional cash runway” and effectively increasing liquidity by ~$4M via covenant changes .

  • What Went Wrong

    • Full-year gross margin fell to 19.2% from 28.1% due to a $2.8M non-cash inventory write-down and higher depreciation on the new facility; normalized 2024 gross margin would have been ~26.5% absent the charge .
    • Macro caution caused order delays into early 2025, particularly among smaller biotech and certain life science tools customers; management expects 2025 to remain a “recovery year” .
    • Clinical Solutions average revenue per customer fell 25% in 2024 to $148K as newer customers ramp more slowly; quarter-to-quarter lumpiness persists from larger custom orders .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD thousands)7,867 9,614 9,576 9,265
Gross Margin %17.0% 29.2% 0.9% (29.8% ex. $2.8M charge) 23.0%
Net Loss per Share (EPS, $USD)(0.26) (0.13) (0.15) (0.11)
Operating Expenses ($USD thousands)12,193 7,904 7,522 7,756
Adjusted EBITDA ($USD thousands)(6,031) (2,568) (5,001) (3,217)
Free Cash Flow ($USD thousands)(3,204) (2,953) (2,390) (1,503)
  • YoY: Revenue +18% (Q4), EPS improved by $0.15, gross margin +600 bps—primarily on Clinical Solutions mix and reduced headcount, partially offset by overhead .
  • Sequential: Revenue modestly lower vs Q3 (-3%), but FCF improved; OpEx held near ~$7.8M level management targets .

Segment breakdown (revenue)

Segment ($USD thousands)Q4 2023Q3 2024Q4 2024
Lab Essentials6,688 7,161 6,818
Clinical Solutions879 1,964 1,850
Other300 451 597
Total7,867 9,576 9,265

KPIs and balance sheet highlights

KPIQ4 2023Q3 2024Q4 2024
Cash + Short-term Investments ($USD thousands)28,484 cash , 0 ST inv. → 28,484 total 6,145 cash + 25,546 ST inv. = 31,691 3,708 cash + 26,688 ST inv. = 30,396
Gross Debt ($USD thousands)13,251 long-term, no current (year-end 2023) 12,1 stated (press release) 12,1 stated (press release)
Headcount (associates)211 (year prior) —173 (EOY)
Clinical Solutions customers (>$5K/yr)34 (2023) —48 (2024)
Lab Essentials customers & ARPC (FY)——3,045 customers; $9,486 ARPC (2024)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025—$39–$42M New
Gross Margin %FY 2025Normalized mid-20s% (2024 baseline) High-20s% Raised
Free Cash OutflowFY 2025—< $12M New
Operating ExpensesQuarterly run-rateBelow $8M (Q2–Q4 2024 achieved) ~ $8M/quarter (maintain) Maintained
Adjusted EBITDA breakeven rev.Annualized—$50–$55M New framework
Credit Facility MaturityFacilityPrior maturity (pre-amendment)March 2030; no principal until April 2028 Extended
Liquidity (covenants)Facility—Liquidity effectively +$4M via covenant changes Raised

Earnings Call Themes & Trends

TopicQ-2 (Q3 2024)Q-1 (Q2 2024)Current (Q4 2024)Trend
Bioprocessing demand (Biopharma custom)+40% YoY (ex new customer ~+25%); optimism building Sequential improvement; onboarding 43 clinical customers H1 Expect ~15% growth in 2025; macro caution delaying some orders Recovering, but cautious
Clinical customer pipelineSupports multiple therapies; 23 CGT clinical customers Express-Tek and RUO+ launched to aid transitions Most new wins preclinical/Phase I; 12–18 month conversion for Phase II+ Expanding early-stage footprint
Pricing—Portfolio pricing adjustments initiated Mid-single-digit average price increase effective start of year Tailwind to margins
Gross margin driversQ3 GM impacted by $2.8M write-down; ex-charge ~29.8% Lower Clinical Solutions mix and higher depreciation Q4 GM 23.0% on higher Clinical Solutions and reduced headcount; overhead still elevated Improving mix; overhead drag
Supply chain / tariffs / NIH——95% domestic sales; minimal NIH exposure (~4% academic); limited tariff sensitivity; possible onshoring tailwind Insulated; potential upside
Liquidity / financing$31.7M cash+ST inv.; $12.1M debt $18.6M cash; $12.1M debt; $15.4M equity raised Facility extended to 2030; +$4M liquidity via covenants Strengthening runway

Management Commentary

  • “I am very proud of our execution in 2024… We believe [our breadth] positions Teknova for long-term sustainable growth.” — CEO Stephen Gunstream .
  • “We delivered strong financial results… significant improvement in adjusted EBITDA and free cash outflow… Based on our 2025 revenue guidance… anticipate full-year free cash outflow of less than $12 million.” — CFO Matt Lowell .
  • “We expect 2025 to be a recovery year… mid-single-digit growth in catalog… at least 15% growth in Biopharma custom.” — CEO .
  • “Each additional dollar of revenue drops through at a marginal cash rate of ~70%… we expect gross margins in the high-20s% in 2025.” — CFO .

Q&A Highlights

  • Orders “softened” into late Jan/Feb 2025, concentrated in smaller biotech and certain life science tools; large pharma and catalog more resilient .
  • Pipeline mix: most new customers enter in preclinical/Phase I; converting Phase II+ takes 12–18 months but is doable; supporting ~50 preclinical, 10 Phase I, 3 Phase II+ therapies .
  • Pricing: mid-single-digit average price increase implemented for catalog and custom pricing algorithms at the start of the year .
  • 2025 phasing: Q1 expected to be lowest quarter, then sequential improvement through Q2/Q3, slight seasonal dip in Q4 (fewer business days) .
  • Exposure: ~95% domestic sales; limited NIH (~4% academic) and tariff sensitivity; potential onshoring could benefit CDMO customers and Teknova demand .

Estimates Context

  • Wall Street consensus estimates via S&P Global were unavailable at the time of request due to data-access limits; as a result, comparisons to consensus for Q4 2024 revenue and EPS are not provided. Where estimate comparisons are required, please note “Estimates unavailable via S&P Global at time of analysis.”

Key Takeaways for Investors

  • Mix-led margin recovery: Clinical Solutions growth and mid-single-digit pricing increases are improving margins; overhead (depreciation) remains a headwind but should dilute as volumes rise .
  • Cost discipline is sticking: OpEx stabilized around ~$8M/quarter for three consecutive quarters; adjusted EBITDA and free cash flow continue to improve .
  • Liquidity/credit refinements de-risk 2025: extended maturities (2030), principal deferral (to 2028), and covenant changes (+$4M liquidity) support runway through recovery .
  • 2025 setup: management targets $39–$42M revenue, high-20s% gross margin, and < $12M free cash outflow; Q1 likely trough, then sequential build—watch order cadence in Biopharma custom and catalog seasonality .
  • Medium-term thesis hinges on scale effects: CFO’s ~70% marginal cash drop-through implies strong operating leverage as volumes normalize; adjusted EBITDA breakeven targeted at $50–$55M annualized revenue .
  • Tactical lens: monitor near-term order timing (smaller biotech/tools), Clinical Solutions customer additions and spend ramp, and mix shift toward higher-margin clinical-grade products .

Bolded catalysts and surprises:

  • Credit facility extension and principal deferral materially extend runway (stock-supportive liquidity event) .
  • Q4 gross margin expansion and improved FCF versus prior year and quarter reflect operating discipline and mix shift .