Cytek BioSciences Inc Stock

[Audio Gap] Life Science Day 3 of the Global Healthcare Conference. Really pleased today to be joined by the team from Cytek. We have Wenbin Jiang, CEO; and Bill McCombe, CFO. Thank you both for being here. And just before we get started, for any disclosures relating to this webcast to this fireside, please see morganstanley.com/researchdisclosures.

So maybe we can just dive straight in with how 2026 played out so far versus your expectations. Anything that surprised you for the better, anything for the worse, and then we can get into some specifics from there.

Sure. So we guided to 3% to 5% growth at the beginning of the year. In the first half, we recorded 6% growth, so higher -- above the high end of our expectations. Now admittedly, that's against a weak comp in the first half of 2025. But the U.S. academic and government market has proved to be very strong. And pharma globally has been pretty solid as well with good growth off a low base. So those have been positive surprises.

Maybe we could just talk through, for those investors perhaps a bit newer to the name, how your portfolio differentiates from others in the market? Because feedback we get is it's highly innovative and there are some standout features there. But just across the continuum from some of your higher-end products to some of your lower end, like what is it that makes the Cytek product stand out? What else is there in the market?

Yes. As you know, 10 years ago, we actually launched our first product, Aurora, at that time. And -- when we were launching that product, clearly, at that time, flow cytometry was already talking about a 50-year-old technology and old industry dominated by a few big players. We were a disruptor at that time. And what we come up with, what we call at that time, full spectrum profiling technology-based flow cytometers. With what we did, and we have so far over the last 10 years, changed the industry completely. And the whole flow cytometry industry today is about full spectrum technology.

And I don't think anyone will question the future of the flow cytometry will be a full spectral technology or not. It's about whose full spectral technology they will go after. And during the last 10 years, we have pretty much established the industry with what we have developed as the standard. And now the -- especially -- and we started with the key opinion leaders, those key academic labs. From there, we penetrated into all the key pharmaceutical companies. And today, if you go to any of the labs in the U.S., in Europe, probably you'll be surprised not seeing anything from Cytek.

So basically, this is what we have. Now we build upon what we developed, we continue to evolve from there. We started with analyzer then go to sorters. And then from analyzer, we continued investment and engagement with customers. And from there, we developed, launched EVO as the second generation of flow cytometry. And then just very recently, we launched our latest product, which is called Borealis. Borealis is not just a new flow cytometer. In fact, it's a flow cytometer together with the reagent, the dyes, and we launched the product as the whole package as a full solution, including the imaging.

With what we have now, we become the first in flow cytometry company that enable more than 60 colors, which is exactly what many of the academic labs as well as pharma discovery are looking forward to enable them to truly improve the efficiency of the drug discovery or help them to truly understand the fundamental technology behind the new diseases and they're trying to understand it, a tool which they have been looking forward to. And so Cytek, we changed the whole industry, and now we continue to lead the industry and based on the standards we have already very well established over the last 10 years.

That's helpful. How would you characterize the demand environment today for flow instruments versus maybe 6 months or 12 months back? Just maybe any trends you've been seeing in the end markets?

Sure. There is a substantial improvement. So in the first half of last year, we were down -- our growth rate was minus 5%. And as you remember, there was a lot of uncertainty about government funding for research at that time, about funding the government was going to make available to universities and about trade policy with respect to pharmaceuticals. And most of those issues have largely receded. And so in the first half of this year, we grew 6%, so 11% better growth rate. So that underscores a much more solid environment. We've also seen the NIH come back and had several purchases funded by -- either by the NIH directly or NIH-funded grants. So that's been a positive. So in general, a much more positive environment in the first half of this year.

U.S. particularly doing very well with regard to the overall growth...

Yes. Exactly.

Okay. Amazing. We'll dig into some of that in a bit. But maybe on the replacement cycle, I think you talked about 50,000 installed base of mostly conventional flow cytometers ready for replacement by FSP, typical replacement cycle of around 7 to 10 years. Just given how that market is starting to transition more broadly, I think customers feeling a bit healthier now with where that spend goes. How do you think about driving that next wave of replacements?

Well, as Wenbin mentioned, in 2017 to 2019, we were the disruptor. We were bringing a new technology that the customers hadn't decided on yet. And what's become evident in recent years is that there's broad acceptance that FSP technology is the way to go for the future. So as the pioneer of that technology and the leader in that particular sector, we benefit from the replacement cycle from the replacement of conventional flow cytometers by FSP. So we're the incumbent leader. There's a broad population of people that know how to use our instruments. We have reputation in the marketplace.

So we just need to continue to execute with a strong selling effort, strong service offering and continuing to introduce the best new products in the marketplace, which we have done both last year with the EVO and this year with the Borealis and EVO 2. So if we continue to execute, we're in an advantaged position with respect to that big wave of replacements that are coming. We also -- for the low and mid-end of the market, we've now established this separate dedicated sales force to go after those opportunities. So that's another initiative that we've undertaken to make sure that we benefit as much as possible from that.

How evolved is that process?

We formally implemented it this quarter, so it's just getting going. But we expect -- we know that, that's the right solution because those are different customers with different needs. But we're bringing them a more economical full spectrum system, our Northern Lights. So we think it's well adapted for that market. And we think that will -- that dedicated selling effort and having the right products for that market will benefit us.

Got it. And maybe just taking instruments by end market. I think [ Acad/Gov ] globally declined 12% in the second quarter. Maybe just unpack geographically where you're seeing pockets of strength and then how we should be thinking about that for the back half of the year?

Yes. So I don't want to say tale of 2 cities, tale of two regions. U.S., very strong. Academic and government was up 50% versus last year. And for all the reasons I talked about, the uncertainty -- the cloud of uncertainty over university funding being lifted, the NIH coming back and the new products and the leading research labs are big buyers of new product. You introduce a new high-end product, and there's going to be strong demand from those customers for that. In the other part of the -- actually, in China, the academic -- what we classify as sales to distributors actually end up going to academic institutions.

So that was -- that market was pretty good in the first half, but it shows up in our results in the biopharma segment. And then in Europe, we continue to see a soft market because the academic and government market in Europe is almost 100% government funded and governments have been under pressure in Europe because of the geopolitical issues and the funding of the conflict in Ukraine that they're all engaged in doing. So we expect that, that will bottom out at some point, and that will improve our overall growth rate.

How much visibility do you have on those academic markets for the back half?

We book and ship pretty much everything within a quarter. We don't carry much backlog at all into the second quarter. So I can't really comment on backlog. We're in the business end of closing the third quarter, and I won't comment until we have the third quarter results in the books. But be more than happy to answer the question in a few weeks.

Fair enough. Worth a try. Maybe just moving on to biopharma. I think that was one of the stronger instrument components, up 22% in the second quarter. Was that strength broad-based across large pharma, biotech and CROs? Maybe just unpack that a little bit.

Yes. The big pharma companies tend to be -- the big pharma and the big biotech, the $50 billion, $100 billion biotech companies tend to be the big drivers. We have had significant interest from CROs as well. The CROs tend -- they tend to be fleet buyers. So they are interesting opportunities. But I'd say that big pharma and big biotech are the primary drivers of that. The distributors -- distributors tend to be more important in markets like Latin America, China, where it goes into the academic market and Latin America pretty solid. But big pharma with the investment wave that they're on right now has probably been the most important driver. And that sector was up 17% in the first half, a little bit higher than that sort of in the 20% in the U.S. because we're seeing some particular focus on reshoring into the U.S. And these are also fleet buyers, and they've evaluated our technology and they like it and they've been consistent customers.

I want to touch a little on the China strength. So double-digit growth there in Q2, I believe. Rest of APAC seemed flat. So maybe again, just unpack what you're seeing in the region there? And if there's any kind of emerging regulatory funding changes you think about...

Not really. Funding in China has always been pretty strong. The amount of research activity going on in China is extraordinary. And that's something that I'm sure other companies will comment on. So the funding mostly comes from the government and institutions are ambitious about pushing their programs forward there. So we've seen -- I think in China, they published the results of -- most of the purchasing is done through a tender, and they publish the results there. So we know exactly what our market position there is. I think we're #3 when the...

Yes. In China, we are #3. Our market share on the instrument side is about 15% right now...

And then other APAC, I think the economies there have been a little softer than here in the U.S. I think there's been more impact from fuel prices on those economies. And so little bit -- they've been a little bit more cautious, a bit tougher there.

And I know one of your...

Our market position is very strong in those regions. So it's just a matter of the economies and interest rates being more of a factor there.

And just on competition in China. I know one of your competitors is localizing some manufacturing in China that should start picking up, I think, in the back half of the year. So how are you thinking about that in relation to just your competitive position in that win rate?

Actually, when evaluating flow cytometers, looking at the market in China, you always need to look at the market segment and Cytek plays primarily in the high end of the research market, where the primary targets are government-funded research institutions. And over there, and typically, they all go through the tender process. Pricing is not really a primary factor for that segment. Cytek always wins with by performance, technology and instead of pricing. Therefore, localizing manufacturing in China, that is not going to really help. But of course, there's one aspect right now in China is to buy made in China and for that part of the subject, clearly, and you are going to see some of the international company may be disqualified from participation with regarding to tenders.

But Cytek can participate, whether it's made in China or made in international since we do manufacturing across multiple regions. We do manufacturing in the U.S., in Singapore, in China. And basically, also, we have this region for region manufacturing process. And so that will enable us to participate in tenders -- qualify for tenders whether at whatever conditions. But again, and for those type of tenders, pricing is not really a primary subject always. It's about technology, about performance and about the needs. That's why I don't feel this localizing manufacturing in China is going to change anything.

Understood. And Bill, maybe just to double-click on EMEA. So decline again in Q2, just those government budgets remained slightly softer. How long should we think about this remaining under pressure? Do you have any visibility into trends there? And any kind of green shoots that perhaps could come about?

Yes. Look, we're starting to lap easier comps. So we did have a quite a strong Q4 in EMEA, but Q3 last year was weaker. And I think the rate of decline has slowed. And hopefully, that's a precursor to flattening out and we're getting to a sort of a minimum investment level over there. The replacement cycle should be occurring in Europe as well, but their availability -- they don't have the other sources of funding for academic institutions that we have in the U.S. They don't -- their private donations and endowments are nowhere near as big as they are here.

The college sports is not a big deal in Europe, which is a big revenue generator here. So it's all about fighting for a share of the government budget that continues to be under pressure. But look, we've got to hit bottom here pretty soon. And it's like the end of last year when Europe was declining 30%, and we showed a slide that said while if Europe was flat, that we would start to grow high single digits. And in Q4, Europe actually went up. And so our growth rate went to 8%. So I think at some point, we'll see a replay of that. I just -- I don't know exactly when. But certainly, the comps are getting easier. That's a good news.

Indeed. And...

And also, its share of the overall pie, because it's shrinking and everything else is growing, is getting smaller.

Yes. And I think we spoke about innovation earlier that Borealis launched back in June.

Yes, that will help. The European academic market is one that is particularly -- they get what's called innovation funding, which is a grant that is specifically made available to buy the newest, latest, greatest instrument. And Borealis certainly qualifies for that, and that's a more important source of funding in Europe. So that should help us.

Yes. Talk us through some of the early feedback on that. And any numbers you can give on shipments or I guess, ambitions for placements at the time, just how that launch should shape up?

Do you want to answer?

I think Borealis right now is still in the early adopter stage. And so we are not -- right now, our primary shipment is still based on EVO, EVO 2, but Borealis is a product we expect will start to ramp up next year.

Yes. Look, we're selling all of them that we can make, but it's still low single digits or single digits in terms of units. So -- and next year, there was, for a long time, demand for a high-end analyzer with imaging. And so we knew that the market wanted it. We're going to have the imaging upgrade available next year, and that will be a knockout product. It will be way better than anything else that's on the market in terms of number of colors, imaging capability, and it's exactly what the high-end institutions and research labs want. So we think that will be very well received.

And just as we think about manufacturing bottlenecks or demand outstripping supply, is that anything you anticipate or service what you have out there demand-wise in the market?

I think with any new product, the production rate improves over time as you get used to making it and deploying it. So I don't think that will be a significant factor in next year. I mean, look, the imaging upgrade will be new next year, and we'll have to work through deploying that. But we're excited about the prospects for that product.

And then a year prior, Aurora EVO came out to the market. Maybe just talk through, customer feedback there and how that.

It's been fantastic. Our volumes -- now admittedly, we only had half the year last year, but our volumes are broadly 3x what they were last year, and it's quickly become the vast majority of our Aurora portfolio. It will be our largest selling individual product probably this quarter and very well received. And then we've introduced this year what we call the EVO 2 with the enhanced automation capability that allows it to basically operate completely automatically with a robotic arm. And so that's a key product for the automated lab of the future where you can set it up and load your plate hotel and it will operate by itself.

How do you think about that lab automation? We've had a lot of questions coming our way about it for the past few weeks. Where do you think you fit into that ecosystem?

Well, we think that this product is a key element of that. The customers who are contemplating these projects tend to be the large pharma companies because they have the capital available and they have the visibility on long research programs or high volume, they want to do high-volume screening. So we hear about these projects in the works. We believe that some of the construction projects that are underway are this kind of project. We think this is a great product for it. And it's in the market this quarter and selling very well, good demand. I think this is another one where we're selling everything we can make at this one.

Great. And we've obviously covered the high end and you're known for the high-end products. But you've spoken about that opportunity to penetrate the kind of entry and mid-level cytometry market. So how have those efforts been progressing so far? And what's the uptake been like across the portfolio?

Clearly, as you can see, high end of the market is about the spectrum. But Spectrum is not just about high end. It's also across the board. And here, the entry mid-level and the application normally is going into each individual labs and as well as pharma QA, QC, those kind of applications. And over there, people pay attention more towards consistency, reliability and ease of use versus the high end of the research market, always talking about high-performance data flexibility. And so there are certain different aspects with regarding to the operation of the instrument.

So that's the reason why and we formed this new business unit and which is Solution (sic) [ Solutions ] and Clinical business unit to enable us to really focus on that aspect of the customer applications and to drive into that business. Now over there from structural perspective, and we have all the cost structure and we have all the performance needs as well as ease-of-use kind of qualifications to support that market segment. It's all about how we focus on driving the sales activity, marketing activity to focus on those customer bases, which traditionally was not Cytek focused, but now we start to pay attention to that. And we feel through those dedicated focused efforts that will enable us to grow that part of the market segment.

Amazing. I want to spend a bit of time on just the recurring revenue. I think that was one of the spots that held up pretty strong in the second quarter. Just on services, the installed base now, I think, approaching 4,000 instruments. What percentage of the instruments are currently covered by service contracts? And what do you think the opportunity is to increase that [indiscernible] attachment?

Currently, we're at about 60%, 60. And -- it's higher in the U.S. and a little bit lower in Europe and APAC. And so as the installed base grows, the density of our network or the density of instruments within our network increases. So it makes it more efficient. That number, that 60% number hasn't moved too much. So it's -- our base case expectation is that service revenue grows consistent with the growth of the installed base. We're not counting on a lot of upside in that attach rate. But by the same token, that's captive business. You can't get the service from anywhere else, except us. So it's a very reliable -- it has a very reliable growth path that is driven by the growth in the installed base, good margins, predictable growth business and obviously very attractive for us.

Why isn't that something you can push a little harder just given the margin profile is better?

Well, we do have sales -- well, the margin profile isn't significantly. I can't -- we'll have to wait until we see Q3 and Q4 before we can have a good picture of the margin of the products business, but there isn't a huge difference. We do have a dedicated sales effort. So part of our reorganization was to add a dedicated sales team to sell service contracts. So we will be pushing on it. I just -- it's just too early to say how that number -- that number has been very stable. It hasn't moved down much or up much. So that's why I'm a little cautious about predicting significant upside, but we are putting resources behind it.

On top of that, actually service -- what's really important on the service side is about usage of the instrument. You need to drive the instrument to be used in the lab when customers have purchased it. So whether there's a service contract or not, instrument always requires service, and even though some of the instrument may not have the service contract, they will eventually still come back to Cytek. Sometimes customer goes to the third party. They're a third-party insurance company and they offer those type of services, customer goes through them. But when the instrument actually requires service, they will still come back to Cytek and then we start to charge time and materials. So long as the instrument are being used, the business always eventually come back to Cytek.

And just on reagents as well, maybe just again, clarify the path out there, the growth you're seeing and again, assuming these end markets get better, that seems like the obvious area of...

Yes. The reagent business is, in general, is a lower growth rate. So what we're doing to drive -- and as we talked about in the past, we have about $12 million reagent business. We think there's at least $150 million worth of reagents that flow across our installed base each year. So what we're doing to improve it to try to drive share gain is we've significantly improved our delivery rate, the time between order and when the reagent vial lands on the customer's desk. So we brought that down from 7 days to 3, which is a big difference.

The creation of the Solutions business unit and sales force means that you now have a dedicated sales force. A big part of whose job is to sell reagents. So we think that will, over time, as they get themselves set will help growth. We've also in-licensed or done deals with partners to distribute their products so that we have a much broader product portfolio. That's -- having a broad number of SKUs is really important in flow cytometry. We're investing in our e-commerce platform, so to make it easier for people to order reagents and have an automated flow through to fulfillment. And we're also working on new products. And as an example, these new dyes that we invented for the Borealis, that's going to drive some reagent business. So all across those multiple fronts, we're driving to try to grow this business faster.

Very clear. I want to hit as well on bioinformatics. I think you now have over 28,000 users on Cytek Cloud. Can you just elaborate on how that streamlines the user workflow? And then how does that correlate with kind of instrument utilization and then obviously, revenue growth for you guys?

Yes. No, this is, in fact, a very important platform to help drive customers towards Cytek ecosystem. Just an example, just recently, last few days, we launched a new application on Cytek Cloud, which is to enable users to do online data analysis. As you can see, the whole ecosystem involving not only starting from the panel design, then doing the actual experiment. And of course, our system enables virtual experiment on our platform and then go to the real lab, live demo live experiment and afterwards, there's a huge amount of data that the analysis initially, our onboard instrument especially provide some basic data analysis.

And many times, customers, if they want to do a deeper analysis, they will go to third-party software. Now with Cytek Cloud online data analysis module, they can -- customer can rely on the same module starting from panel design until the end of the experiment and a simple workflow and to provide all the features that's needed. And that truly enable our customers to stay with Cytek from starting to the end. And this is what can enable Cytek to maintain our leadership to support our customers and to drive customers towards Cytek through special (sic) [ spectral ] technology.

Great. So just over a minute left. I want to understand like your initial thoughts on how 2027 could look at a high level, like we don't have to go into numbers here, but it feels like the end markets themselves are getting better. You obviously have good products coming through the pipeline that I think have strong interest behind them. So how should we think about that rate of change from how we're working through '26 right now into 2027 at a high level?

Look, we -- I think the best indicator will be to look at our growth in the second half of 2026. First half growth, as I said, was 6% was above the full year growth rate that we had guided to. Market -- fundamental market drivers seem better in the U.S. and China. As we talked about EMEA, we'd like to see it bottom out. And I think our new product momentum will be a strong factor for us because the reception of the EVO 2 and the Borealis has been good, and we'll be coming out with the imaging upgrade. So that should be a positive. So we've got a -- we're looking forward to 2027 with some optimism.

Good. Okay. Wenbin, Bill, thanks so much.

Thank you.

Thank you.

Hello, and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the SciTech Biosciences second quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. To withdraw your question, press star one again.

Thank you. I would now like to turn the call over to Mark Meehan. Please go ahead. Thank you, operator.

Joining me today from SciTech are Wenbin Jiang, CEO, and Bill McComb, CFO. Earlier today, SciTech Biosciences released financial results for the second quarter in the June 30th, 2026. haven't received this news release or if you'd like to be added to the company's distribution list please send an email to investors at sci tech bio com A copy of the news release is also available on the investor relations section of Scitech's website at investors.scitechbio.com. Please note that we will be referencing a slide presentation during the call today that has been posted to the investor section of our corporate website. As a reminder, on slide two, we will make statements during this call that are forward-looking statements within the meaning of the federal securities laws, including statements regarding SITAC's business plans, strategies, opportunities, and financial projections. These statements are based on the company's current expectations and inherently involve significant risks and uncertainties that could cause actual results or events to materially differ from those anticipated in these statements. Additional information regarding these risks and uncertainties appears in our slide presentation in the section entitled Forward-Looking Statements in the Press Release SciTech Issue today. and in CITEX filings with the SEC. This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles.

Additional information regarding our use of non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures, may be found on our slide presentation and in today's press release. While the company believes these non-GAAP financial measures provide useful information for investors, The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Except as required by law, CITEC disclaims any duty to update any forward-looking statements, whether because of new information, future events, or changes in its expectations. This conference call contains time-sensitive information and is accurate only as of the live broadcast, August 5, 2026. Finally, I would like to remind you of the organizational update we mentioned during our last call. During the third quarter of 2026, SciTech will begin operating as three distinct customer-aligned business units, Solutions and Clinical, Research Technology, and Service. For further details about these business units, please see the slide included in the appendix of our presentation.

With that, I'll turn the call over to Wenbin. Thanks, Mark. Welcome, everyone, and thank you for your interest in SciTech. On to the poll, I will start with a discussion on our performance in the second quarter and highlight a couple of exciting new products launch before turning the call over to Bill for a detailed look at our financials and our updated two-year outlook. Turning to slide three, we built upon our good start through the year with continued positive momentum through the second quarter. delivering another period of solid revenue growth. Second quarter 2026 revenue was $48.1 million and increase of 6% year over year. Our second quarter performance was driven by strong double-digit revenue growth in the US and in China. from our FFT instruments and consistent double digit growth in our service business. Coming to slide four, geographically in the United States.

Second quarter revenue was $28.2 million, an increase of 18% year over year. This maintains the strong trend from Q1 and reflects impressive growth in instrument revenue in the academic and government sector and in our service business. In a year, second world revenue was $11.3 million, down approximately 8% year over year, reflecting a continuation of the budgetary pressures arising from regional geopolitical dynamics. Total APEC revenue including China was $7.9 million plus year over year. China delivered a strong double-digit growth against a modest year-on-year comp, which was offset by stockiness in other parts of the region. Turning to slide five, we continued to expand our global footprint in the second quarter, adding 142 units and bringing SciCAD's total install base to 3,933 units. We continue to see good instrument unit growth in the second quarter, driven by our high-end FSP instrument portfolio, which grew 11% year-over-year, and was led by Aurora EvoAnalyzer and Aurora CS sales order.

Turning to slide six and seven, I want to additionally highlight two exciting new product launches that further extend our technology leadership and set the foundation for our next phase of growth. First, we need to introduce the SightTech Board of Auditors, the industry's first 60-color, 7 laser, full special flow cytometer. The announcement to resolve 60 unique colors in a single sample run was enabled by Borealis unique technology where several lasers operate simultaneously in concert with purpose-built and proportionate DPoB and IR dye reagents. The feasibility to analyze 6A colors in a single run significantly expands the range of cellular biomarkers that scientists can evaluate while retaining the direct hierarchy comparison benefits of a single tube sample. On top of the technological benefits that improve analytical capability, the Borealis also delivers increased efficiency for our customers, including the ability to analyze nanoparticles, which expands the diversity of sample types. high flow rate that increases the speed of the analysis and the throughput of the system. and enhanced automation that eliminates the need for manual sample handling. The Borealis system has also been designed to allow for the integration of onboard high parameter cellular imaging capabilities. By incorporating imaging alongside advanced assistive color 7 laser special detection, Morales will provide a more complete cellular view from a single sample, representing another meaningful step forward in what our customers can learn from each experiment.

Feedback from our early access customers has been very strong, and we look forward to sharing more on Borealis as we progress toward greater commercial availability. Second, we introduced the new Aurora EVO instrument configuration with expanded automation capabilities. These enhancements enable the integration of full special flow psychometry into highly automated laboratory environments. by adding automated and remote operation of key instrument functions, as well as an API for interfacing with automation trace handling systems. eliminating the need for a human operator. These capabilities are particularly relevant for biopharma organizations and CROs where efficiency, reproducibility, and system integration are critical to large-scale programs. Pacing together, these newly launched products underscore our continued commitment to extending our technology leadership while enabling cutting-edge research and driving lab productivity for our customers. Turning to applications and service, our recurring revenue base continues to strengthen in the second quarter. Combined the reagents and service revenue was $18.5 million in two to eight percent year over year. the presenting 35% of SkyCase last 12 months revenue up from 32% for the 12 months to June the 30th, 2025.

Our service revenue was $15.6 million in the second quarter, growing 10% year-over-year, driven by continued growth in our in-store base and the high utilization of our instruments by customers worldwide. we expect recurring revenue to represent an increasing percentage of our total revenue over time. by high utilization and the continued expansion of our in-store base. Moving to bioinformatics, the scientific crowd continues to play a critical role for researchers working to create and optimize experimental workflows and is also driving adoption and utilization of our cell analysis solutions. As of June the 30th, 2026, Cytacloud has surpassed 28,000 users, up 15% since the start of the year. Growth in SiteCloud users reinforces the strength of our integrated ecosystem and drives deeper customer engagement. We believe this increasing level of engagement is an important factor in driving growth in our religion and service businesses. And with that, I will now turn the call over to Bill for additional details on our Q2 financials and our updated guidance.

Thanks, Wenbin. Turning to slide eight, second quarter revenue was $48.1 million, an increase of 6% compared to $45.6 million in Q2 2025. Growth was led by strong results in the U.S. where we saw 18% year-over-year growth and record revenue in Q2, as well as robust growth in China. These were partially offset by continued softness in EMEA and other APAC, excluding China. Product revenue, which is comprised of instruments and reagents, was 32.6 million, an increase of 4% year-over-year, driven by sales of our high-end instruments, which grew mid-teens during Q2. We saw improved sentiment and strong revenue growth from academic and government customers in the US. while biopharma distributor and CRO customers grew in other regions. EMEA instrument revenue declined 10% year over year, reflecting the government budgetary pressures when been described earlier. In APAC, excluding China, product revenue was also lower, driven by normal fluctuations in purchasing patterns after a strong Q1.

Service revenue was $15.6 million, growing 10% year-over-year, driven by our expanding install base and active instrument utilization globally. By customer segment, biopharma distributor and CLO revenue grew approximately 22% year-over-year to $29 million, the result of strong growth in EMEA in China. The Academic and government revenue was $19.1 million, down approximately 12% year-over-year. Okay. U.S. academic and government revenue grew strongly compared to both prior year Q2 and Q1 of this year. This was offset by weakness in academic and government sectors in EMEA and other APAC, excluding China. after a strong Q1 in both. Turning to slide nine. GAAP gross profit was $28.3 million in Q2, representing a gross margin of 59%, which included a one-time $2.8 million tariff refund received during the quarter. Excluding that tariff refund, gross margin would have been 53% compared to 52% in Q2 2025.

Product gross margin was 60% or 52% excluding the tariff refund compared to 53% in the year-ago quarter. The surface gross margin was 56% up from 52% in Q2-25 as a result of low material costs. Adjusted gross margin, which excludes stock-based compensation and amortization of acquisition-related intangibles, was 61% in the second quarter, or 56% excluding the tariff refunds, compared to 56% in the prior year quarter. For subsequent quarters of this year, we expect gross margins excluding the impact of the tariff refund to increase as our revenue increase is consistent with our typical seasonal pattern. Total operating expenses were $39.7 million in Q2, up 15% versus Q2 of 2025. Research and development expenses were $9.7 million, up 10% versus Q2 2025, primarily due to higher personnel costs. Sales and marketing expenses were $13.2 million, up 9% versus Q2 2025, primarily due to higher personnel costs. costs, and advertising and marketing expenses.

General and administrative expenses were $16.8 million, up $3.3 million, or 24%. The increase was primarily due to higher legal expenses associated with a previously disclosed patent litigation case and higher severance and other personnel costs. Our last from operations was $11.4 million in the current quarter versus $10.6 million in the year-ago quarter. Gap net loss in the second quarter was $12.2 million compared to $5.6 million in the prior year quarter. The increase in gap net loss was due to three factors. First, a higher loss from operations of $0.8 million. Second, a $4.5 million lower net other income, which was primarily due to foreign exchange losses of $0.7 million in the current quarter versus $1.5 million in the current quarter. million of gains in the year-ago quarter and a 1.6 million non-recurring write-off of an investment in an early-stage technology company.

And third, a tax expense of $0.5 million in the current quarter versus $1.2 million of tax benefit in the year-ago quarter. Adjusted EBITDA, which excludes stock-based compensation, foreign exchange impacts, and the non-recurring write-offs, was a loss of $1.5 million in Q2 2026 compared to a positive $1.3 million in Q2 2025. The adjusted EBITDA loss was primarily due to a higher loss from operations, a lower add back of stock based comp, and lower investment income. However, we anticipate adjusted EBITDA to improve in the second half as revenue increases with our normal seasonal pattern and operating expense growth moderates. For the full year 2026, we expect to deliver around break-even adjusted EBITDA. Our free cash flow for the quarter was approximately neutral. Cash, cash equivalents and marketable securities totaled $262 million as of June 30, 2026, compared to $262.2 million as of March 31, 2026. balance sheet continues to provide the financial flexibility to invest in our global growth priorities Turning to slide 10, today we are raising the low end of our full year 2026 revenue guidance range so that the revised range is $207 million to $212 million, increasing the midpoint by $1 million.

Okay. This assumes no change in currency exchange rates. This outlook reflects positive year-to-date results the overall growth outlook across our markets, particularly in the U.S. and APAC, including China. In the second half, we expect revenue to be significantly higher in the fourth quarter versus the third, consistent with our typical seasonal revenue patterns. With that, I'll turn it back over to Wenbin. Thanks, Bill. Turning to slide 11. I want to close by thanking the entire site team for their continuous dedication and execution on behalf of our stakeholders. Our second quarter and first half results reflect the strength of our technology leadership in the flow cytometry industry.

Revenue grew 6% year-over-year to $48.1 million in Q2, with strength in the U.S. and China demonstrating the demand for our technology. Our recurring revenue base now represents 35% of last 12 months revenue. service revenue delivering consistent double-digit year-over-year growth, and our religion business remaining well positioned to expand. Looking ahead, our priorities remain clear, accelerating the market penetration of our instrument platforms, including the newly launched Vorealis and Aurora Evo automation capabilities, advancing our technological leadership through continuous innovation, expansion, and innovation. expanding our recurring revenue line and delivering profitable, sustainable growth. We believe the investments we have made in our products, our people, and our operations position sites as well for the remainder of 2026 and for the significant long-term opportunity ahead of us. I want to thank everyone for joining today's call. We will now open up for questions.

I'll try this. In order to ask a question, please press star one on your telephone keypad. Your first question comes from the line of Brendan Smith with T.D. Cohen. Please go ahead.

Great. Thanks for taking the questions, guys. Appreciate all the color on the end market and geographic breakdown in the quarter, especially China and EU. I guess with the biotech funding environment continuing to improve, should we expect growth across end markets to kind of equilibrate a bit? And I guess just how should we think about levers at your disposal to kind of capitalize on the recovery in US versus these other geographies. Just any kind of color and relative contribution there would be great, thanks.

Hi, Brandon. This is Bill. We saw a lot of people who were interested in the strong demand, strong momentum in the U.S. driven by academic and government customers in particular. A biopharma in the US was was relatively flat, but in the first half, US Biopharma was up. You know, in the 20% area, so continue to show strong growth on a a long-term challenge. What we're seeing is that, government R&D funding continues to be under pressure as a result of shifting government spending priorities over there and prioritization of other areas such as defense. China was very good in the quarter and other APAC had a bit of a soft quarter but you know We do expect over the longer term that region as a whole will continue to be a strong growth market. In terms of levers, you know, we have significant new products that we talked about, the Borealis, the Aurora Evo automation, with enhanced automation, which are attracting very strong interest from customers. We continue to invest in our sales and marketing infrastructure and And our brand is very strong and we And it represents really the leading technology in the space.

And that's something that's true in all major markets.

And on top of that, we have seen Cytek sales order continue to demonstrate great performance and very well appreciated by our customers and becoming really the workhorse for their daily applications.

Got it. Great. Thanks, guys. Appreciate it.

Your next question comes from the line of David Westenberg with Piper Sandler. Please go ahead.

Great. Hi, this is Skye. I'm for Dave. Thanks for the question. Just first, in the past, I think you've referenced a global installed base of 46,000 flow cytometers as a long-term replacement opportunity. Do you have any visibility into the actual annual replacement or retirement rate, and can you share a bit about the recent instrument placements and whether those have been competitive upgrades from conventional systems or net new full spectrum adoption or expansion within existing full spectrum accounts and then I have a follow-up thanks.

Based on the market report, the annual placement is between 7,000 to 10,000 within that range. And from CITIC's perspective, we play primarily in the high end of the research market within that market segment, and we continue to see great traction with our products. and customers are shifting more and more toward full-spectrum technology, which we have outperformed in our space. We believe we are continuing to take market share in that aspect.

Okay, great, thanks. And then just secondly, can you talk a bit more about the dynamics in China? I know you've mentioned China as one of your expanding clinical markets in the past. This quarter you saw double-digit growth. What are you seeing from these China trends? Chinese clinical flow cytometry adoption patterns versus kind of what you're seeing in the core academic and government areas, thanks.

As you know, we do have our Northern Lights CLC clinically approved for hospital use over there, but just like many other hospitals. application actually in other territories, in fact, and our research instrument continue to dominate our sales in that market. And I think if you take a look at all the public data, Sysco continues to be one of the top three players in the China market.

I just wanted to add something related to the prior question about the replacement opportunity. If you look at the indicators released by – the indicators given in the releases of our competitors. and you look at our growth rate, our growth rate would appear to be significantly higher than our competitors. And one of the factors that could be behind that is the replacement of conventional flow cytometers with FSP and obviously the strength of our technology and brand position. So I think that our our relative growth rate compared to the peers would bear out that that replacement opportunity is something that's working in our favor.

Your next question comes from the line of Callum Titchmarsh with Morgan Stanley. Please go ahead.

Hi, this is Jason on for Calum. Thank you for taking our questions. Maybe just a question on the strategic reorganization to create new business units and align resources to drive growth. Can you just update us where you are from an operational perspective with the reorganization and what remains to be done before being completed in 3Q? And how soon could we expect to see benefits from the initiative translate to the P&L? Could benefits start showing up in Q4, and would that represent upside to the 2026 guide? And also, what is the potential for customer disruption just due to changes in the sales force or other factors? Thank you.

So we're in the process of implementing that. As we said, we were going to implement it in Q3, so we've We've started to do that. I think in terms of the primary objective of this restructuring is to align resources around our different customer segments. As we do that, we expect that to... to improve our growth rate and improve our, particularly our market penetration in the, the mid and low end instruments and in reagents. So that's the area covered by the solutions business. But look, that's going to take time to... to really bear significant fruit. The guide that we gave for this year reflects the reflects the, you know, or assumes that this is happening now and will continue.

So it's baked into the guide.

And I think those are the major points. I think the way we are structuring, in fact, is going to enable us to serve our customers better because different products are aiming for different customer segments. And then we are able to really focus our resources, our marketing, our sales R&D to really optimize our products, our marketing message, aiming for the needs of our customers. So we don't expect any disruption in fashion make us serving our customer better.

So the primary benefit is going to show up in improved top line growth rate, improved market penetration in the solutions markets and include an overall improved top line growth rate. But it will take a little while to show up because those efforts. are basically just beginning. Over time, we think this organization will be a.

significant improver to our growth rate. Great, thank you. And just to follow up on that, I think the slides mentioned that one of the three new business units is a clinical-focused business unit. It mentions that SciTech currently has low share in the clinical market, and the market represents a big growth opportunity. Why do you think flow cytometry is currently underpenetrated in the clinical space today, and what is.

strategy for penetrating the clinical market? Thank you. Actually, the business unit is called Solutions and Clinical Business Unit because clinical is part of the solutions. And so overall, if you look at the pure, there are two parts of the clinical. One is clinical, true diagnostic, that part of the business. Second part is more clinical. kind of research clinical oriented business. So we are serving for both markets right now and with what we have developed in particularly the panels, reagents, and as well as the software optimizations to drive the application and penetration into that market across all the territories including China, Europe, as well.

the US yes what look one of the reasons it's a small business for us now is we don't we have approval for clinical product in in EMEA or in Asia but we we don't have it in the US so that's that's one of the reasons that We have a small position now and the potential to grow significantly over time. Appreciate the answers. Congratulations on the quarter. Thank you.

Again, if you would like to ask a question, press star 1 on your telephone keypad. Your next question comes from the line of Mason Carrico with Stevens, Inc. Please go ahead.

Hey, this is Harrison on for Mason. Thanks for taking the questions. Have the assumptions for instruments, service, and reagents baked into the guide shifted at all? Expectations as of last quarter were for continued growth in services and reagent revenue at levels consistent with recent quarters and flat to modest growth in instruments. Does that framework still hold within the framework?.

in the updated guidance framework today? Yes, generally, Generally that's true. Look, every quarter we look at the results and we tweak the framework. You know, our service business grew 10%. You know, we would expect, you know, continued growth at that level or below. better in services. So I think no major changes. The instrument revenues grew, frankly, a little towards the higher end of our our range of assumptions. So we look at the quarter and various scenarios. and come up with the range based on looking at a range of scenarios and I would say, you.

whether there aren't major changes to that framework. Got it. And then when you initially set the guide in February, you described a contingency built in for unforeseen macro developments. any of that cushion been consumed in the first half? And what's the dollar figure for that cushion in the back half if it's still being used?.

assumed into the guidance? Yes, look, there's some contingency there. We don't break it out. It's not a, you know, there's not one formula with specific numbers that, you know, that we use to produce the guide. It's not a formulaic or mechanical calculation. We look at a number of scenarios and there's some contingency in the back half there. You know, you'll note that... and faster in the first half than would be implied, certainly by the low end of our guide. and even the midpoint of the guide. And so you can conclude from that that we still have some contingency in our number. you know we're not seeing any we're not forecasting any change in our markets.

Great. Thanks for taking the questions. There are no further questions at this time. Ladies and gentlemen, thank you for joining today's conference call. You may disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Cytek Biosciences First Quarter 2026 Earnings Conference Call. [Operator Instructions]

I will now turn the conference over to Paul Goodson, Head of Investor Relations. You may begin.

Thank you, operator. Earlier today, Cytek Biosciences released financial results for the first quarter ended March 31, 2026. If you haven't received this news release, or if you'd like to be added to the company's distribution list, please send an e-mail to [email protected]. A copy of the news release is also available on the Investor Relations section of Cytek's website at investors.cytekbio.com.

Please note that, we will be referencing a slide presentation during the call today that has been posted to the Investors section of our corporate website.

Joining me today from Cytek are Wenbin Jiang, CEO; and Bill McCombe, CFO.

As a reminder, on Slide 2, we will make statements during this call that are forward-looking statements within the meaning of the federal securities laws, including statements regarding Cytek's business plans, strategies, opportunities and financial projections. These statements are based on the company's current expectations and inherently involve significant risks and uncertainties that could cause actual results or events to materially differ from those anticipated in these statements.

Additional information regarding these risks and uncertainties appears in our slide presentation in the section entitled Forward-Looking Statements in the press release Cytek issued today and in Cytek's filings with the SEC.

This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles.

Additional information regarding our use of non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures may be found in our slide presentation and in today's press release. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with GAAP.

Except as required by law, Cytek disclaims any duty to update any forward-looking statements, whether because of new information, future events or changes in its expectations. This conference call contains time-sensitive information and is accurate only as of the live broadcast, May 7, 2026.

With that, I will turn the call over to Wenbin.

Thanks, Paul. Welcome, everyone, and thank you for your interest in Cytek.

On today's call, I would like to start with a discussion on our performance in the first quarter of 2026 before turning the call over to Bill for a detailed look at our financials and our guidance outlook for the full year.

Turning to Slide 3. First quarter 2026 revenue was $44.1 million, representing 6% growth year-over-year compared to $41.5 million in Q1 2025. This reflects continued positive momentum from the second half of 2025 and marks a constructive start to the year and what appears to be a return to normal market conditions in the U.S., continued secular growth in APAC, excluding China, recurring revenue growth globally and the diversity of our portfolio.

Importantly, we believe our revenue growth in the first quarter was particularly notable against the continued broad market challenges in the life science tools industry. This performance further demonstrates Cytek's technology leadership and is also evidenced by the strong customer demand for the Cytek Aurora Evo analyzer, since its launch last year.

Further, our growing installed base continues to fuel expansion in our service and reagent businesses as represented by the continued growth we are seeing with recurring revenue as a percentage of total revenue.

Turning to Slide 4. Looking at total revenue geographically, in the U.S., first quarter revenue was $24.4 million, an increase of 32% compared to $18.5 million in Q1 of last year.

Our strength in the U.S. was broad-based and included sales to leading academic institutions and biopharma companies. These organizations continue to be repeat buyers, with a high percentage of them having purchased at least 1 instrument from us in the prior 4 quarters.

I'm pleased to report that, our Aurora flagship products continue to gain traction with these buyers, which suggests how well Cytek's products have been addressing the needs of our user base.

In EMEA, first quarter revenue was $10.8 million, a decrease of 7% versus Q1 2025. Instrument revenue in the region was softer in the quarter, due to disruption caused by the conflict in the Middle East and an end of quarter shipment delay in another region.

These pressures were partially offset by continued growth in our service business. APAC, including China declined 13% year-over-year, primarily due to accelerated order timing in the first quarter of last year in China. Excluding China, the remainder of APAC continued to show very strong growth across instruments, reagents and service.

Turning to Slide 5. Our recurring revenue base continued to strengthen in the first quarter, with combined reagents and service revenue reaching $18.4 million in the first quarter on a trailing 12-month basis in the first quarter.

Recurring revenue represented 35% of total revenue and notably grew 19% year-over-year. We expect recurring revenue to represent an increasing percentage of total revenue over time, driven by faster growth in our service and reagent businesses.

Service revenue alone grew 15% year-over-year to $15.4 million, continuing to benefit from growth in our installed base and the active utilization of our instruments by customers worldwide.

Reagent revenue grew mid-teens on a percentage basis over Q1 of 2025, also reflecting active usage of our installed base.

I would now like to update you on the progress our team has made across our core strategic pillars, instruments, applications, bioinformatics and clinical to further reinforce Cytek's position as a market leader in next-gen cell analysis solutions.

Starting with our core instruments on Slide 6. We continue to expand our global footprint in the first quarter, adding 125 units and bringing Cytek's total installed base to 3,789 units. Instrument unit performance was a key highlight in the first quarter with total unit volume increase of 9% year-over-year, including a 3% year-over-year increase of FSP instrument.

We are also pleased with the ongoing market reception for the Cytek Aurora Evo system. Since its introduction, it has consistently driven revenue and unit volume growth, revenue for the Aurora analyzer category up 8% year-over-year. We believe our continued focus on technological differentiation positions Cytek well in the broader flow cytometry market.

Turning to our next growth pillar, applications, which is comprised of our reagent business. Reagent revenue grew 16% versus Q1 2025. Reagent revenue growth was broad-based across regions, with particular strength in APAC and the rest of the world regions, where reagent revenue together grew more than 40% year-over-year and double digits in the U.S.

Our reagent strength in Q1 reflects the continued benefits of the initiatives we undertook in 2025, including best-in-class delivery times, expanded reagent offerings and our dedicated reagent sales team.

Our bioinformatics platform continued to deepen customer engagement and support our reagent growth engine. As of March 31, 2026, Cytek Cloud has grown to more than 26,000 users, representing an average of 8 users per installed Cytek FSP instrument.

As users on the Cytek Cloud increase, the value proposition of our integrated ecosystem strengthens and enhances customer engagement.

Turning to Slide 7. As part of our strategic and business growth process, we have been planning to refocus our operations into 3 distinct customer aligned business units, which will be completed in the third quarter of this year.

The new solutions and clinical business unit will bring successful platforms such as reagents, Guava Muse Micro and Northern Light into markets, historically, dominated by larger incumbents, while the research technology business unit will continue to advance Cytek's leadership in high parameter flow cytometry within the research use-only market.

This structure will create more focus on aligning marketing, sales and R&D resources to expand Cytek's share of the reagent and low mid-tier instrument market.

Together, these 2 units position Cytek to capture 2 major business opportunities. First, for the Solutions and Clinical business unit, growth in reagent consumables and low to mid-tier instruments for QA and QC workflows. And second, for research technology, a robust high-performance instrument replacement cycle with tens of thousands of instruments eventually needing to be replaced

Finally, our service business unit will provide the foundation that supports the installed base of instruments for both the solutions and clinical and the research technology units.

Collectively, this structure positions Cytek to accelerate its next phase of growth and reinforce our competitive leadership as the market evolves.

Under the new Solutions and Clinical business unit, we see meaningful growth opportunities in the clinical research market where the need for high parameter high-performance cell analysis solutions is growing.

In part, this is already being reflected by an increase in leading sales supporting clinical applications. Cytek's technology platform is well suited to support this expansion, and we are investing to meet the evolving needs of clinical researchers and translational scientists.

Now, I would like to ask Bill to review our financials.

Thanks, Wenbin. First quarter 2026 revenue was $44.1 million, an increase of 6% year-over-year compared to $41.5 million in Q1 2025.

As Wenbin noted, revenue growth was led by strong growth in U.S. instruments and continued double-digit growth in both global services and reagents. These were partially offset by disruptions and softer instrument demand in EMEA and the order timing-related slowdown in APAC.

Turning to Slide 8. Product revenue comprised of instruments and reagents was $28.8 million, an increase of approximately 2% year-over-year.

U.S. product revenue rebounded strongly compared to a weak Q1 '25, returning to a more normal growth path consistent with the years prior to last year. This was driven by improved sentiment and strong demand growth in both the academic and government and biopharma customer segments.

EMEA product revenue declined versus Q1 '25 as a result of lost orders due to the Middle East conflicts, an end-of-quarter shipping delay in another region and softer instrument demand.

In APAC, product revenue was also lower. This was due to the acceleration of orders in China in the first half of last year into Q1.

Growth in other APAC regions in Q1 of this year was very high on a year-over-year basis, and the overall secular growth trend of the region remains strong.

Reagents continued on its strong growth trajectory with 16% quarter-over-quarter growth, primarily driven by the U.S. and APAC regions. Service revenue was $15.4 million, growing 15% year-over-year, driven by our expanding installed base of instruments and active system utilization globally.

Turning to total revenues by geographic region. U.S. revenues grew 32%, driven by a strong rebound in instruments, as I mentioned before, and continued growth in services.

EMEA was down 7% due to the Middle East conflicts and the end of quarter shipping delay I mentioned before. APAC was also down 13% due to the order timing issue, as I mentioned before.

Turning to Slide 9. GAAP gross profit was $21.3 million in Q1 2026, representing a gross margin of 48% compared to 49% in Q1 2025. Product gross margin was flat versus the year ago quarter, whereas service gross margin was slightly lower due to higher labor costs.

Adjusted gross margin, which excludes stock-based compensation and amortization of acquisition-related intangibles was 51% in the first quarter compared to 52% in the prior year quarter.

For subsequent quarters of this year, we expect gross margins to increase as our revenue increases consistent with our typical seasonal pattern.

Total operating expenses were $39.7 million in Q1, up 13% versus Q1 of 2025. Research and development expenses were $9.6 million, down 1% versus Q1 '25 due to lower compensation expenses.

Sales and marketing expenses were $11.6 million, down 7% versus Q1 '25 due to lower compensation and selling commission expenses.

General and administrative expenses were $18.5 million, up $5.6 million or 43%, the increase was primarily due to higher legal expenses associated with the previously disclosed patent litigation case, outside consulting expenses and bad debt reserves.

The loss from operations was $18.5 million in the current quarter versus $15 million in the year ago quarter. GAAP net loss in the first quarter was $18.9 million compared to a GAAP net loss of $11.4 million in the prior year quarter.

The increased GAAP net loss was primarily due to higher operating expenses of $4.6 million, lower other income due to a $1.2 million foreign exchange loss in the current quarter compared to a $1.3 million FX gain in the prior year quarter and a tax expense of $1.5 million versus a tax expense of $0.1 million a year ago.

Adjusted EBITDA, which excludes stock-based compensation and foreign exchange impacts, was a loss of $9.1 million in Q1 2026 compared to a loss of $3.3 million in Q1 2025. The increased adjusted EBITDA loss was primarily due to the $4.6 million increase in operating expenses and $1.8 million lower stock-based compensation, which is an add-back.

We expect adjusted EBITDA to increase in subsequent quarters, driven by normal seasonal revenue patterns and that we will deliver positive adjusted EBITDA for the full year 2026.

Cash, cash equivalents and marketable securities totaled $262.2 million as of March 31, 2026, compared to $261.5 million at year-end 2025. Our strong balance sheet continues to provide the financial flexibility to invest in our global growth priorities.

Turning to Slide 10. Today, we are reaffirming our full year 2026 revenue guidance of $205 million to $212 million, assuming no change in currency exchange rates. This outlook reflects the positive growth we've seen recently in the U.S. and APAC as well as some stabilization in the EU.

With that, I will turn it back over to Wenbin.

Thanks, Bill.

Turning to Slide 11. I want to close by thanking the entire Cytek team for their continued focus and execution on behalf of our customers and shareholders.

Our first quarter performance reflects the ongoing resilience and diversification of our business model. Our recurring revenue base continues to grow and now represents 35% of total revenue on a trailing 12-month basis, a testament to the value of our growing installed base and the strength of our customer relationships.

Our priorities for 2026 remain clear and consistent, accelerating the market penetration of our instrument platforms, advancing our technological leadership through continuous innovation, expanding our recurring revenue line and delivering profitable, sustainable growth. We believe the investments we have made in our products, our people and our operational infrastructure position Cytek well for the remainder of 2026 and beyond.

I want to thank everyone for joining today's call. We will now open it up for questions. Operator?

[Operator Instructions] Your first question comes from the line of Mason Carrico with Stephens Inc.

This is Harrison on for Mason. On your 2026 guide, you're calling for 2% to 5% growth. Could you just walk us through what needs to go right to get to the high end versus what would keep you towards the lower end of that range for the year?

Sure. This is Bill. So the way that we put together the guide and what we're reaffirming today is continued growth in services and reagents at levels broadly consistent with recent quarters. And then flat to modest growth in instruments and then on top of that, the contingency for unforeseen or developing macro risks. And that's the framework. We feel very comfortable with the -- the growth in services and reagents, the instrument market is -- we did see positive growth in Q1. And we don't see any reason why that shouldn't continue. But as we all know, there are macro risks out there. So we'd like to have a contingency in our guide in order to cover for things that we can't foresee at the moment.

Got it. That's helpful. And then I did want to ask what's the customer mix today between academic and government versus biopharma customers purchasing the Aurora Evo instrument? And can you just talk about the key benefits that each of those customer segments see with that product today?

As we will release shortly or about to release in the Q, that the customer mix for the quarter overall was 62% biopharma distributor CRO and 38% academic and government. So that's the Q1 mix. Generally speaking, last for full year '25, that mix was 58%, 42%. So it was a little higher. We had a stronger performance in the biopharma segment.

As it relates to Aurora Evo, I don't have the numbers to hand, and we don't usually report customer mix down to that level other than to say this is a product that was really designed for the pharma customer with its higher throughput, but it's seen a strong reception in both customer segments, both biopharma and academic and government. Wenbin, anything you would add to that?

That's right. And also included integrated intelligence automatic shutdown and turn on and all of those will really help the researchers to schedule planning. And it has also integrated nanoparticle detection in the system.

[Operator Instructions] Your next question comes from the line of David Westenberg with Piper Sandler.

This is Skye on for David. So just on NIH funding uncertainty, which was a risk factor for 2026, do you see any measurable impact on U.S. academic government instrument demand or the order timing in the first quarter? And how are you thinking about that exposure for the remainder of the year?

Academic and government in Q1 was up in the U.S. was up substantially on Q1 of last year. And it was back to a level more consistent with what we've seen in years prior to 2Q of 2025. In fact, it was our strongest first quarter in U.S. academic and government in a number of years, maybe ever.

So we did see a strong rebound to more normal levels. And with respect to NIH funding, I mean, the budget we saw strong disbursements in Q4 of last year. Momentum in the academic and government market seems to have carried over into Q1. And the budget for this coming year is not is obviously still under discussion in Congress.

The initial proposal from the administration was not as draconian as the initial proposal last year. So we'll have to see where it settles out. But in the first quarter, our academic and government sector performance in the U.S. was pretty strong.

And then with sales and marketing expenses declining in Q1, how are you thinking about commercial investment for the remainder of the year?

We're going to continue to invest at a good level. This was more of a quarterly blip than a trend, but we expect to continue investing aggressively in sales and marketing for the balance of the year.

There are no further questions at this time. That concludes today's call. Thank you all for joining, you may now disconnect.

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cytek Biosciences Fourth Quarter 2025 Earnings Call. [Operator Instructions]

It is now my pleasure to turn the call over to Paul Goodson, Head of Investor Relations. You may begin.

Thank you, operator. Earlier today, Cytek Biosciences released financial results for the fourth quarter and year ended December 31, 2025. If you haven't received this news release or you'd like to be added to the company's distribution list, please send an e-mail to [email protected]. A copy of the news release is also available on the Investor Relations section of Cytek's website at investors.cytekbio.com.

Joining me today from Cytek are Wenbin Jiang, CEO; and Bill McCombe, CFO. Please note that we will be referencing a slide presentation during the call today that has been posted to the Investors section of our corporate website.

As a reminder, on Slide 2, we will make statements during this call that are forward-looking statements within the meaning of the federal securities laws, including statements regarding Cytek's business plans, strategies, opportunities and financial projections. These statements are based on the company's current expectations and inherently involve significant risks and uncertainties that could cause actual results or events to materially differ from those anticipated in these statements.

Additional information regarding these risks and uncertainties appears in our slide presentation in the section entitled Forward-Looking Statements in the press release Cytek issued today and in Cytek's filings with the SEC.

This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Additional information regarding our use of non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures may be found on our slide presentation and in today's press release. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

Except as required by law, Cytek disclaims any duty to update any forward-looking statements, whether because of new information, future events or changes in its expectations. This conference call contains time-sensitive information and is accurate only as of the live broadcast, February 26, 2026.

With that, I will turn the call over to Wenbin.

Thanks, Paul. Welcome, everyone, and thank you for your interest in Cytek. On today's call, I would like to start with a discussion on our performance in the fourth quarter and the full year 2025 before turning the call over to Bill for a detailed look at our financials and our outlook.

Turning to Slide 3. We exited 2025 in line with our expectations and delivered accelerating revenue growth quarter-over-quarter throughout the year despite challenging industry conditions. Fourth quarter revenue in 2025 reached $62.1 million, representing a year-over-year increase of 8% compared to the same period in 2024 and notably the highest revenue historically achieved in a quarter at Cytek. This growth was driven by a continuation of the trend we saw in the third quarter, namely stabilization and growth in the U.S., a turnaround in the EU, continued strength in APAC and the solid expansion of our recurring revenue businesses worldwide.

Turning to Slide 4. Geographically, in the fourth quarter, EMEA and APAC both posted double-digit year-over-year percentage revenue increases with solid gains across instruments, reagents and service. Year-over-year fourth quarter revenue growth in EMEA was driven by strong instrument demand from academic and government customers and continued momentum in service revenue, partially offset by a decline in instrument revenue from biotech, pharma and CRO customers.

For the fourth quarter of 2025 in the U.S., we saw mid-single-digit year-over-year growth in total revenue, driven by sentiment shifting in the academic and government market. This increase was partially offset by a decline in instrument sales to the biotech, pharma and CRO market, reflecting the typical fluctuations we see with this sector, particularly after a strong third quarter.

Turning to Slide 5. Full year revenue in 2025 reached $201.5 million, representing a year-over-year increase of 1% compared to 2024. I want to take a moment to highlight the improvement in our revenue growth during 2025. For the first half of the year, total revenue was down almost 5% year-over-year due to public policy issues affecting life sciences spending.

Our momentum pivoted in the second half with total revenue up 5% compared to the second half in 2024. This return to growth reflects improved trends and increased customer demand. Importantly, our overall performance in 2025 demonstrates the durability of our business, particularly when compared to the evidence of declines in cell analysis and life science instrument demand through the end of the third quarter.

We believe our success at delivering revenue growth in 2025 was achieved through the strength of our brand and technology, the diversification of our revenue streams across multiple geographic regions and a growing contribution from recurring revenue. We believe this return to growth will continue in 2026.

I would now like to update you on the progress our team has made across our core strategic pillars, instruments, applications, bioinformatics and clinicals to further reinforce Cytek's position as a market leader in next-gen cell analysis solutions.

Starting with our core instruments on Slide 6. In the fourth quarter, we expanded our global footprint by 208 instruments, bringing Cytek's total installed base to 3,664 units. In 2025, challenging market environment, we believe the growth in our FSP instrument revenue reflects the superior performance of Cytek's products, our brand recognition and the underlying strength of our core business. We are particularly pleased with the growth in our sales for the unit volume, which grew 22% in 2025 compared to the prior year and accelerated to 26% growth in the fourth quarter over the prior year period.

We have also been very pleased with the performance of our new Cytek Aurora Evo system. In the short time since its launch last May, it has been tremendously successful, driving 21% unit growth in the combined Aurora category in the fourth quarter versus Q4 of 2024. I'm also pleased to highlight that the Muse Micro System was recently awarded the 2025 Biotech Breakthrough Awarded for Drug Discovery Solution of the Year.

As we previously noted, the Muse Micro analyzer is an ideal choice for researchers and labs seeking cost-effective flow cytometry solutions and has had a very strong reception since its introduction last year. These new product offerings reflect our commitment to maintaining our position at the forefront of the technology innovation in cell analysis generally and flow cytometry specifically.

I would now like to turn to our next growth pillar applications, which is comprised of our reagent business. We delivered more than 20% growth in reagents in the fourth quarter in all of our geographic regions, except the U.S. Our reagent growth continues to be driven by the improvements we put in place in 2025, including best-in-class delivery times, a large catalog of reagents and new initiatives and strategies on reagent sales.

Turning to Slide 7. Our recurring revenue continues to strengthen as our installed instrument base expands. For all of 2025, recurring revenue represented 34% of total revenue and notably grew 21% year-over-year. We expect the recurring revenue proportion of total revenue will continue to grow steadily with increased cumulative instrument placements and to become an increasingly larger share of our business over time.

In bioinformatics, our software ecosystem continues to be a powerful growth driver. The advanced software embedded directly in our instruments, combined with the capabilities of the Cytek Cloud are highly valued by our customers and are accelerating adoption of our products. By year-end 2025, the number of users on the Cytek Cloud grew to over 24,000, representing growth of more than 50% in a single year and reaching nearly 8 users per installed FSP instrument. Our expanding digital footprint enhances the attractiveness of our offerings overall and helps to drive reagent revenue growth.

Before turning to our financial results, I want to highlight the meaningful operational progress we achieved in 2025. Early in the year, we established a new manufacturing facility in Singapore and optimized our broader global operational footprint. These actions strengthened our region for region manufacturing strategy and further reinforced the resilience of our supply chain.

I'm particularly proud that the Singapore site began generating revenue in less than 100 days from when we started the build-out. Importantly, these initiatives also positioned us to mitigate the impact of the still evolving tariff policies worldwide.

Now I would like to ask Bill to review our financials.

Thanks, Wenbin. Before I discuss the quarterly and full year numbers, I want to comment on the macro trends we saw play out across the quarters of 2025. Beginning in the first quarter, macro uncertainties and weak demand resulted in total revenue declining 8% year-on-year. In Q2 and Q3, revenue growth stabilized with minus 2% and plus 2% growth, with growth in our service and APAC businesses being offset by declines, particularly in EMEA.

Then in Q4, as we had expected, we saw EMEA stabilize while other markets continue to grow and overall revenue growth increased to 8%. We believe this turnaround is reflective of more durable trends in our markets as we have seen these trends continue into 2026, which has informed the full year 2026 guidance I will share with you in a moment.

Turning to Slide 8. Fourth quarter revenue was $62.1 million, up 8% year-over-year. Growth was driven by strong global performance in service and reagents, continued momentum in instrument demand across Asia Pacific and a rebound in EMEA instrument demand among academic and government customers.

Currency movements were also a factor contributing 3% to growth in the quarter. In the U.S., instrument revenue was flat as strength in academic and government offset softer demand from biotech and pharma. Globally, in the quarter, revenue from academic and government customers grew 33% off a weak prior year comparison, while biopharma revenue declined 6% against a strong Q4 last year.

Product revenue, which is comprised of instruments and reagents, increased 3% versus Q4 of 2024, driven by double-digit gains in APAC and EMEA as well as a low single-digit gain in the U.S. U.S. product revenue continued the stable trend from Q3, attributable to a strong double-digit increase in instrument revenue from academic and government customers compared to a weak fourth quarter in 2024. This was offset by weakness in pharma biotech instrument sales in Q4 after their strong purchases in the third quarter of 2025.

Our instrument sales in the U.S. was supported by the launch of our new Aurora EVO instrument as well as pent-up demand from and stabilized funding of academic and government customers. In EMEA, the situation was somewhat similar to the U.S. The double-digit percentage increase in EMEA product revenue was primarily driven by outsized gains in revenue from academic and government customers compared to a weak Q4 in 2024.

Also similar to the U.S., EMEA revenue from pharma biotech was weak in Q4 compared to a strong year ago quarter. While our reagent revenue is still a mid-single-digit percentage of our total revenue, it grew more than 20% in Q4 and more than 25% for all of 2025. As we've mentioned previously, this strong growth is due to a number of initiatives we implemented at the beginning of 2025, including attaining industry-leading delivery times, offering a large catalog of reagents, creating a new dedicated reagent sales team and introducing new reagent products. Service continued to deliver strong recurring revenue growth with 25% growth in Q4 versus the prior year quarter. This was driven by growth in the installed base and active usage of our systems. We expect service to continue to grow based on these factors, although its growth will slow gradually as the number of installed instruments grows, making the denominator larger in that calculation.

Turning to geographic market performance. Total U.S. revenue grew 5% in Q4 versus prior year, driven by double-digit service revenue growth. EMEA grew 21% due to strength in service and instrument revenue from academic and government customers. APAC, including China, grew 15% in Q4, driven by growth in instrument service and reagents.

GAAP gross profit was $32.9 million, a 2% decline versus the $33.7 million in Q4 of 2024. GAAP gross profit margin was 53% versus 59% in the prior year quarter. This was due to both a lower service gross margin resulting from an increase in headcount and travel costs and a lower product gross margin as a result of higher materials and tariff costs and higher manufacturing overhead due to the duplicate costs from transitioning a production facility overseas.

Adjusted gross profit margin, which excludes stock-based compensation and amortization of acquisition-related intangibles was 55% in Q4, down from 61% in the prior year quarter. Total operating expenses were $38.5 million in Q4, up $7.8 million or 25% versus Q4 of '24, which included a nonrecurring expense reduction of $2.6 million related to a change in estimate for a license and royalty settlement liability adjustment.

Excluding this expense reduction, the increase was $5.2 million. This was driven by higher general and administrative and sales and marketing expenses, partially offset by lower R&D. Research and development expenses were $9 million, down 8% versus the year ago quarter, primarily due to lower headcount and compensation expenses and lower engineering expenses.

Sales and marketing expenses were $13.1 million, up 11% versus the year ago quarter due to higher headcount and compensation expenses and higher sales commissions. General and administrative expenses were $16.4 million, up $7.3 million from the year ago quarter, which included the $2.6 million reduction I mentioned before. Excluding this reduction, the increase would have been $4.7 million or 40%. The increase was primarily attributable to legal expenses related to a patent litigation case and higher compensation, software and bad debt expenses.

Loss from operations was $5.6 million for Q4 versus a $3 million income from operations in the year ago quarter, which included the $2.6 million nonrecurring expense reduction that I mentioned before. Excluding this amount, income from operations in Q4 '24 would have been $0.3 million. The remaining decline in income from operations of $5.9 million was due to $0.8 million lower gross profit and $5.2 million higher operating expenses.

Net loss in Q4 was $44.1 million versus net income of $9.6 million in the prior year quarter. The current quarter net loss of $44.1 million included the recording of a $38.1 million valuation allowance or write-off against deferred tax assets under ASC 740 due to the uncertainty of realizing the associated future tax benefits. This is solely an accounting determination that does not affect our ability to use these losses for tax purposes and is a noncash item.

Moreover, it is an unusually large amount as these deferred tax assets have been accumulated over multiple years, and this was the first time such a valuation allowance had been taken. Excluding this valuation allowance, the net loss would have been $6.0 million. Net income in Q4 '24 included a nonrecurring benefit of $6.7 million after tax associated with the settlement liability adjustment I mentioned before.

Excluding this item, net income would have been $2.9 million. The remaining increase in net loss of $8.9 million was primarily due to $0.8 million lower gross profit, the $5.2 million increase in operating expenses and a $2.5 million increase in other tax expense, principally on foreign earnings.

Adjusted EBITDA, which excludes the stock-based compensation and foreign exchange impacts, declined to $4.5 million from $12.5 million in the year ago quarter, which included the $2.6 million nonrecurring benefit I described above. Excluding this amount, adjusted EBITDA in Q4 '24 would have been $9.9 million. The decline of $5.4 million was primarily due to higher operating expenses of $5.2 million and lower gross profit of $0.8 million.

Free cash flow during Q4 '25 was slightly negative at minus $0.2 million, modestly decreasing our total cash and marketable securities to $261.5 million at December 31, 2025, from $261.7 million at the end of the third quarter.

Now turning to Slide 9 for the full year 2025. Total revenue for the year ended December 31, 2025, was $201.5 million, a 1% increase over the prior year. The increase in total revenue in 2025 was primarily driven by a 21% growth in worldwide service revenue and double-digit growth in APAC product revenue, offset by a slowdown in EMEA and U.S. product revenue.

GAAP gross profit was $104.5 million for 2025, a decrease of 6% compared to a GAAP gross profit of $111.1 million in the prior year. GAAP gross margin was 52% for 2025 compared to 55% in the prior year. The decline was primarily due to higher service headcount and material costs, higher tariffs and higher manufacturing overhead costs due to transitioning the production facility overseas, as I mentioned before.

Adjusted gross margin, which excludes stock-based compensation and acquisition-related intangibles for 2025 was 55%, down from 59% in the prior year. Operating expenses were $144.8 million for 2025 compared to operating expenses of $131.6 million in the prior year, which included the nonrecurring reduction of $2.6 million I described before. Excluding this reduction and a nonrecurring ATM offering cost write-off in Q3 2025, the increase would have been $9.9 million or 7%. This was primarily due to higher G&A costs offset by lower R&D costs.

Research and development expenses were $36.5 million, down from $39.4 million or 7% versus the year ago quarter, primarily due to lower headcount and engineering expense. Sales and marketing expenses were $49.4 million, up 1% versus the $49.1 million in the year ago quarter. General and administrative expenses were $58.9 million versus the $43.1 million in the year ago quarter, which included the $2.6 million reduction I mentioned before.

Excluding this reduction and the nonrecurring offering cost write-off, the increase would have been $12.5 million or 27%. The increase was primarily attributable to higher legal expenses related to the patent litigation case I mentioned before, higher compensation, sales and use tax and software expenses.

Loss from operations in 2025 was $40.4 million, which included a $0.7 million nonrecurring deferred ATM facility offering cost write-off. This compares to a loss of $20.5 million in 2024 or $23.1 million, excluding the $2.6 million nonrecurring expense reduction I described before.

Excluding both these nonrecurring items, the loss from operations increased by $16.6 million, which was due to $6.6 million lower gross profit and $9.9 million higher operating expenses. GAAP net loss for the year ended December 31, 2025, was $66.5 million -- this included the recording of a $33.1 million valuation allowance or write-off against deferred tax assets, as I described before in relation to Q4 due to the uncertainty of realizing the associated future tax benefits.

As mentioned before, this was an unusually large amount due to the first-time nature of this allowance. The GAAP net loss also included the $0.7 million nonrecurring offering cost write-off mentioned earlier. Excluding these items, GAAP net loss for 2025 would have been $32.7 million compared to a net loss of $6 million or $12.7 million, excluding the $6.7 million nonrecurring benefit from the settlement liability adjustment described before.

Excluding these nonrecurring items, GAAP net loss increased by $20 million in 2025. This was due to $6.6 million lower gross profit, $9.9 million higher operating expenses and $3.3 million higher taxes, mainly on foreign earnings.

Adjusted EBITDA was $5 million in 2025, which excludes the nonrecurring items mentioned earlier, foreign exchange impacts and stock-based compensation expense. This compared to $22.4 million in 2024. The decline of $17.4 million was primarily due to $6.6 million lower gross profit, $9.9 million higher operating expenses and $2.3 million lower stock-based compensation.

Adjusted EBITDA, excluding investment income, declined from $14.4 million in 2024 to a negative $3.1 million in 2025. Consistent with our historical focus on cost control and profitability, we are committed to improving these metrics going forward.

Cash, cash equivalents and marketable securities totaled $261.5 million as of December 31, 2025. This represents a decrease of $16.4 million from the $277.9 million at the end of December 2024, in part reflecting the repurchase of $15.1 million of Cytek stock in our stock repurchase program during 2025. This $15.1 million repurchased approximately 3.3 million shares at a weighted average cost of $4.58 per share, leaving us with 128.6 million shares outstanding as of December 31, 2025. Our strong balance sheet and positive cash generation underscore our ability to invest in our global growth initiatives.

Turning to our full year guidance 10. We are initiating our 2026 revenue outlook at $205 million to $212 million, assuming constant currency exchange rates. We are also not assuming any significant benefit at this time from changes in the tariff environment going forward. This guidance range reflects the improved market environment in EMEA and the U.S. and continued strong growth in APAC instruments and in our service and reagent businesses globally.

We expect these dynamics to continue. Importantly, we continue to believe our performance in Q4 and full year 2025 reflects a strong market leadership position in what has been a difficult environment. Our core business is now showing positive growth in all major regions and our recurring revenue continues to grow.

Notwithstanding some temporarily elevated operating expenses, we delivered positive adjusted EBITDA for full year 2025, which we anticipate will continue in 2026. As we've done previously, we believe we will continue to perform well relative to the overall flow cytometry market, which is also beginning to show signs of stabilization.

With that, I will turn it back over to Wenbin.

Thanks, Bill. Turning to Slide 11. I want to close by thanking our Cytek team. This year, we were recognized as a public company growth leader in America by Time Magazine. This validation is a testament to Cytek's outstanding record of growth and innovation over the last 5 years.

Overall, I believe our fourth quarter and full year performance during a challenging 2025 reflects the resilience of our organization and the strength of our leadership in the flow cytometry market. Our broad-based execution positions us well for 2026, where our priorities remain focused on driving the market penetration of our instrument platforms continuing to advance our technological leadership with innovative new products, driving the growth of our recurring revenue lines and delivering profitable, sustainable growth.

I want to thank everyone for joining today's call, and we will now open it up for questions. Operator?

[Operator Instructions] And from TD Cowen, our first question comes from the line of Brendan Smith.

I appreciate all the color. I actually wanted to maybe ask a little bit higher-level question just about some of the underlying assumptions of the growth of the overall flow cytometry market. You guys gave a lot of good color on different end market breakdown. And I think we've seen something like 8% to 9% CAGR maybe up to 2031 or '32, if I'm not mistaken. But I guess, irrespective of that exact number, do you have a sense kind of given your global exposure there of relative end market breakdown of that growth? And I guess, maybe better put, are there geographic considerations for expansion of the market that you think you'd be maybe better positioned to capitalize on, just especially given your strength in APAC. Just kind of wondering how you're thinking about that overall. Thanks, guys.

Yes. I think -- Brendan, this is Bill. I think we've seen consistent double-digit growth in the market in APAC, at least in our revenues in APAC. We may have done a little better than the market, particularly given our growth in sorters and the Aurora franchise.

So -- but our sense is that, there's a decent mid-single digits, mid- upper single digits growth in that market, in that region. And we think that Europe has probably been the slowest market, certainly has been for us. And the U.S. falls somewhere in between. we recorded -- we think we've done better than the market overall in the U.S. and in EMEA. Hard to really estimate what the market is doing in those regions. We've seen some negative growth by some of our competitors, but it's hard to extrapolate. Wenbin, do you have any other comments?

No, I think that summarizes it well.

And look, I think we're in a the market growth rates that we've seen in the last couple of years have certainly been below most of the estimates that we -- most of the market studies for 5-year growth for flow cytometry cohort -- growth rates that are in the high single digits on a global basis, and we obviously have been temporarily below that for the last couple of years, but we expect it to rebound.

From Piper Sandler. Our next question comes from the line of David Westenberg. Please go ahead.

This is Skye on for Dave. Thanks for taking the question. Just to start off, what was the end of year growth acceleration, what was that driven by? Was it primarily academic budget cycles? Or are you seeing a recovery in pharma spending? And how should we think about budgets for 2026?

We think -- yes, we saw, as I mentioned in my remarks, an improving environment across each of the quarters of 2025. So the first quarter was not so great with minus 8% revenue growth. And then we saw a stabilization going back to minus 2% in Q2, plus 2% in Q3 and then plus 8% in Q4.

And I think that was driven by a normalization, a combination of a normalization in the academic and government spending market. We saw some catch-up disbursements from the NIH, and we think some catch-up spending that had been deferred from earlier in the year. So all those factors were at play.

We also had a currency benefit in EMEA. So when we look, we put all that together, we think that the uncertainties that impacted the markets in the first part of 2025, particularly the first quarter, seem to have receded, and we're seeing improving particularly strong academic and government quarter in the fourth quarter. And we think, as I said, there's a combination there of just a fundamentally improved sentiment and some catch-up. And we're expecting -- we're assuming a continuation of that more positive environment in our guidance.

Yes. Globally, academic and government sectors have done well in Q4.

We saw 5% growth in academic and government for the full year and 9% in the second half. And that's across both our product and service businesses. So that second half growth is in academic and government is obviously pretty solid.

Very helpful. And just lastly, what was the mix in 2025 between new customer acquisitions versus existing customers maybe expanding their capacity? And do you have any idea where you might see this mix for 2026?

Yes. We don't really break out those statistics just to say it's a combination of both. We have a lot of customers who have purchased multiple systems and continue to prefer our technology. Pharma companies, as we've indicated in the past, once they make a technology choice, they tend to stick with it. But then we're also seeing conversions from competitor systems.

From Stephens. Our next question comes from the line of Mason Carrico.

This is Ben on for Mason. How are you thinking about maybe your commercial investments in 2026? Are you comfortable with the size of the sales teams today? And is there anywhere you're looking to invest in the next year?

Yes. Overall, as you can see, we have been focused on high end of the market segment and represented by the products like Aurora EVO and Aurora Cell Sorter, which grew double digit last year and in Q4. And on the commercial side, clearly, and we are reviewing and the segment, we are clearly weak, and we are going to continue to invest in those segments to drive the future revenue growth.

Yes. We have also made investments in our reagent sales force as well. So the commercial side will continue to be an area of focus for investment.

Got it. And then what's your willingness to be flexible on pricing this year to help drive instrument placements?

So Cytek, pricing is always market driven, and we -- our cost structure is very competitive, and we can deal with any situations as needed.

[Operator Instructions] Our next question comes from the line of Andrew Cooper with Raymond James. Please go ahead.

Maybe just one, there was a comment or a couple of comments there about some pent-up demand helping 4Q. Can you just give a sense for the magnitude of what you feel like was sort of makeup volume from maybe earlier in the year or the last few years versus what you view as sort of that steady-state growth trajectory of the business as you think about where it sits today in the current end market?

Yes. That's a hard one to estimate. I think if you look at our total academic and government revenues, which are publicly disclosed, starting with fourth quarter of last year, we were $21 million and $17 million, $22 million, $18 million and then $28 million in Q4.

So we had a significant jump there, as I said, a lot of that is attributable to a better environment, but it's also possible that some of those weaker numbers in early 2025 were, in fact, just deferments of money that got spent later in the year. It's really impossible to sort of pause it out. You'd have to you have to do a customer-by-customer survey and dive into what their intentions were. And obviously, we don't do that. I think pharma segment is much more stable. And there, we had pretty stable revenue between Q3 and Q4 was basically the same.

Sure. Helpful. Maybe just thinking about the guide a little bit and trying to put it in context of some of that commentary. You just did sort of 5-ish percent organic. You talk about the market feeling like it's getting a little bit better, a little bit more stable, and you guided to 2% to 5% growth for the year. So -- what happens in the end market to make you feel like 2% is the right number as opposed to 5%? And what happens to get you above that if we're already assuming that things are maybe a little bit better through most of '26 than they were through most of '25?

Yes. So the way we thought about the guide was we expect continuation of strong growth in service and reagents. In service because our installed base is growing and reagents, we're starting from a small base and its growing quickly. We expected modest -- flat to modest growth in instruments, and then frankly, we put in some range of contingencies, to account for uncertainties. Because --at this time last year there were some black swans that emerged. And so we wanted to have a cushion to account for those sorts of things. So that was the thinking that went into the range. At the high end of the range, obviously, that would represent a smaller level of contingency and better performance in the instrument business.

And with no further questions in queue, this does conclude our conference call for today. You may now disconnect.

Good afternoon all, and welcome. My name is Fazi Kash, and I'll be moderating today's session. It is my pleasure to introduce Dr. Jiang, CEO and Chair; and Bill McCombe, CFO; Paul Goodson, Head of IR, to the JPMorgan Conference.

And without further ado, I'll hand it over to Dr. Jiang.

Good evening. It looks like I'm the one between you and the evening parties. So I will be quick. So safe harbor statement. I'm not going to read. I'm sure you all know what it is.

So Cytek is a cell analysis company and really empowering the scientific discovery in this community. And in fact, we have been very well recognized in the space and as evidenced validated by Cytek being named as one of the fastest-growing company by Time Magazine, along with other well-known companies, public companies in the U.S. Cytek has also been named as the Company of the Year by the Chronicle Journal as well as our Micro Muse, which was launched last year being named as the Inventor Award by the journal here, Technical Award of the year.

So Cytek has, throughout the years, has been really driving the discovery and development in the cell analysis space. and as shown up here, as you can see, and throughout the year since we launched our first instrument in 2016, '17 so far, we have shipped delivered more than 3,000 instruments in the space. And more than 3,000 technical journals has listed Cytek as being the technology instrument, helping them to develop their discovery work. And we have now more than 2,000 customers and unique customers. Our instrument has also gone to more than 70 different countries in the world.

We just released our preliminary results this Monday. And last year, our results showing and with $201 million, slightly above the year before. Overall, towards the end of Q3, our cash $262 million. So Cytek is really a global company, and we have our manufacturing operation across the world, including the U.S., Singapore and China. And through this operation, we are now doing region for region manufacturing that enable us to support customers across the world across all the continents.

Our revenue has been supported by our shipment across all the countries, including the U.S. now carrying more than -- around 50% of our revenue and EMEA 26%; APAC, including China, 24%. And also, if we look at the industry, about 59% of the revenue is coming from biotech, pharma as well as through distribution and 41% through bio academic and government supported agencies.

In fact, we are in the industry, in the market supported by big large opportunities. Based on the market reports published just recently, in 2025, the overall market opportunity is about $5.1 billion. And throughout 2032 and with a CAGR of 8.8%, that will enable us to reach $9.2 billion, and that's kind of a large market for the company, and this is where we are. That basically give us a great opportunity going forward to continue to develop, to evolve and to support these business opportunities.

Cytek is supported by the 5 business pillars. That's what the company is built upon, which include instruments, applications, bioinformatics and clinical. As we all know, we started from instrument. That's how the company is built upon. And we continue to invest in advancing our technology on the instrument side, including to continue to improve performance, provide more intelligence and provide harmonization across all the instruments, which is absolutely needed today and by all the clinical trial and by the pharmaceutical companies as well as supporting all the clinical studies as well. And so to can harmonize all the data from different instruments, different labs.

And the liability is another aspect we continue to pay attention to, which is very important to continue to drive the adoption of our instrumentation. Of course, cost is always something in mind by our customers, by our users. Application is where we drive reagent recurring business based upon our installed base. And so Cytek has been developing reagents, focus on expand the application based on the full spectrum technology embedded into Cytek's technology. That this is where the recurring revenue will continue to help to sustain and grow our business going forward.

Bioinformatics, in fact, this is another area and which substantially differentiates Cytek from many of our competition. And through bioinformatics, we have accumulated more than 20,000 users who are using -- who are on Cytek Cloud every day and to develop panels and to drive the application utilization of Cytek instruments. Of course, bioinformatics Cytek Cloud also provide far more benefits for our users, including the automated optimization of the panels and data management and also eventually will enable our users to exchange information across over the Cytek Cloud. This is a platform will continue to evolve, continue to improve, continue to expand.

And lastly, our business pillar is clinical. As we know, we have our instruments already clinically approved for applications in China and Europe. And we go our clinical instrument and due to the technology involved that due to the harmonization and really can drive the application as well as to provide more sensitivity and higher panels that enable to drive the application, including leukemia MRD. This is one of the areas which is unique for our technology for what we have developed because one of for MRD, one of the -- as we know in the MRD flow cytometry has always been the tools being used. But one of the problem previously with flow cytometry is with regarding to the sensitivity. Now us based on what we have developed. We have improved the sensitivity and by a factor of 2 to 3 and to really get to 10 to the minus 5 to minus 6 kind of sensitivity and AI is another aspect, and we are focusing on the clinical side for the data analysis to drive the clinical applications.

Now through the years of development, we have already built up a very broad portfolio of best-in-class cell analysis tools, including from conventional to full spectrum as well as the imaging-based flow cytometry to support various applications and among our user base. In addition, with the installed base we have built upon and we started to enter into the reagent and space, we have a very broad portfolio of reagents today that enable our users to develop applications to support their research needs. And then earlier I mentioned about Cytek Cloud and for the bioinformatics as well as the services which, in fact, is one of the fastest growing space and also the segment for Cytek on our revenue.

Now one of the things that differentiates Cytek compared to many other life science tool company is flow cytometry is a basic life science tool. It's an essential tool required for driving application in almost every life science labs. And so this is something you must have comparing to many other technology and tool, which is nice to have. Due to this, and even under a very challenging environment, as we all know, 2025 was kind of challenging but still our revenue continue to grow. And our business continue to evolve and as evidenced by the data we presented this Monday.

And Cytek tools is built upon our core instrument is on Northern Lights Analyzer, Aurora Evo. And also Aurora Analyzer Evo is our new generation of high end of the research tool for the data analysis and also as well as the Aurora Cell Sorter, which is, in fact, the fastest-growing tools across our portfolio. And those instruments have been driving the applications for our users. And the latest Aurora Evo we launched last year has been also growing very fast because this tool has provided many of the features. And our customers, especially our pharma have been expecting to, including the high throughput, better sensitivity, nano particle detection, data harmonization, those kind of features have all been built into this Evo system, part of the reason why it has been receiving a great acceptance among our user bases.

And many of the users come back actually start to replace the early instrument they acquired from Cytek. And so this is a tool we believe this can continue to grow and through 2026 and years forward. And I mentioned the application driving the division adoption. Cytek throughout the year has been -- and due to the cumulative installed base, we are working on -- and we have been working on developing reagents specific to enable us to expand the application of full spectrum technology. And through that, that help us to really drive the research applications in immuno-oncology, in infectious disease as well as inflammatory diseases. Of course, this is just a few. And in fact, our application can also drive way beyond the life science spaces, which we are also looking at.

Throughout this process and enable Cytek's instrument application to be built into the typical pharma drug discovery and genomic and immuno profiling and technology, we have built big panels and standard panels to enable our users to get on to application quickly, fastly and also enable them to leverage what we have developed on the panel as a backbone to help them to quickly get on to their study, their research.

In the meantime, we have also developed those single color and single-layer and 2-color TBNK panels to drive the clinical applications in China as well as Europe. Our instrument today, as earlier I mentioned on the clinical side has been cleared for clinical applications in the U.S. as well as in Europe. And this is another opportunity for us to continue to drive our revenue growth over the next few years.

Cytek Cloud is another business pillar I mentioned. And Cytek Cloud, in fact, one of the biggest nice feature for Cytek Cloud is, in fact, to enable our users to be able to build a panel very quickly. Typically, especially when you get to those high dimensional data analysis or cell analysis, a large panel normally takes weeks, if not months, to optimize. Cytek Cloud has built into AI features to enable users to get the panel designed automatically. And so that will enable them to really speed up their experiment. In the meantime, Cytek Cloud also provide virtual experiment on Cytek Cloud to help them to optimize the panel before they actually take the panel over to the real instrument for the real lab wet lab experiment.

Now we have also built features to enable users to buy reagents and after the panels are optimized. Through this process, we really help our users, our customers to expand their application more effectively, quickly and also cost effectively. And in fact, Cytek Cloud has been very well received among our user base. And over the last -- actually just by 2025 through Q3, we expanded the user base by more than 40% and by now, certainly, we exceeded the number listed here. So Cytek Cloud is a tool and is going to really continue to drive Cytek's instrument as well as reagent revenue growth going forward.

Now looking at our revenue growth, we reported $62 million and for Q4 and the full year, $201 million. In fact, if you look at the quarter-to-quarter revenue growth, it's a continuous acceleration factors. Q1, minus 8% comparing to the previous year, then get to minus 2% year-over-year, then we quickly recovered in Q3, 2% and Q4, 8% year-over-year. And throughout the year, and as you can see, our business continues to improve. And this is reflected by how we execute our business and how the market improves, how our technology is helping drive the business among this portfolio and this acceleration of year-over-quarter revenue growth.

And actually, if you go into look further deeper into our business, 50% of our business is supported by services regions, that's the global service and regions plus the APAC instrument revenue. And that carries about 50% of our overall business. And that business, in fact, throughout the year has been growing by actually double-digit growth. And then look at another half of the business, which is based in Europe and EMEA and North America, and that part of business has been stabilizing over the year. And in fact, by the last quarter, it started to show the positive growth. This is how overall, and as you can see, the business environment as well as our prospects continue to improve. And this is how we believe and going forward, it's going to continue to drive our revenue, our business growth.

We continue to invest substantially in R&D and reflected throughout the years by the product launched since we launched our first product in 2016. And as you can see, and we built up a broad portfolio of products through our technology innovations and including our first flagship product in 2017, Aurora Analyzer through 2021, we have the Aurora Cell Sorters and then 2025, we launched our new generation of Cell Analyzer, Aurora Evo. And in fact, throughout the years, and our products has been really through those innovations, technology innovations, we have been generating great customer tractions and supporting our customer needs that has been very well recognized by our user base, by our customers.

And so through that period of time earlier, I mentioned about the reagent business we have built upon. And in 2021, right after we went public, we acquired Tonbo to help drive our reagent revenue growth. And '23, we acquired the Luminex assets to help us to expand into the imaging space. And now through all those internal technology development as well as the merger and acquisition that expanded Cytek to cover all the broad portfolio of applications. We now have a product covering the full applications needs in the flow cytometry space to support our customers. And that broad portfolio is going to continue to drive Cytek going forward for our growth going forward. And of course, we will continue to invest in the R&D side to drive innovation to -- and as you can expect it, which has been showing here.

So going to 2026 and in fact, multiple angles, we can take a look at how our revenue can continue to grow. Certainly, one as you can see, this increased installed base will continue to drive our service revenue, which is in the double-digit range. And this expanded installed base will also help continue to drive our reagent revenues. And also flow cytometry market earlier mentioned the CAGR of 8.8% through 2035 (sic) [ 2032 ] is going to give us another opportunity angle to drive our opportunity for the continued revenue growth.

And then this R&D, new innovation for us will enable us to continue to launch new products to support the customer needs. And we are also in the cycle for the conventional instrument replacement. And this also provides us a great opportunity. This is evidenced in fact, 2025, we see our sales order growing double digit. Part of that growth is driven by this replacement cycle. This process will continue throughout 2026. And Cytek Cloud earlier mentioned, help improve workflow and utilization. And lastly, clinical is going to help us to drive our growth through EMEA and China. This is another opportunity for the year.

So looking at why we want to invest in Cytek. Clearly, and all those factors to show Cytek is well positioned for growth and profitability. And going forward, this is where why you should invest. And number one, first, we are a technology leader in our space. Through what we have done, Cytek has already built a name, recognition and being the real innovator, we have changed the whole landscape of the flow cytometry industry and moving from conventional to full spectrum. Everybody today is, of course, following Cytek, but we are a leader. We'll continue to invest to maintain this leadership.

Second, we are a global company, and that global diversification allow us to weather all kinds of situations. And so we have manufacturing operation across multiple continents. We have our sales and marketing activities across almost all the important market region, territories. And we have our service organization cover across more than 70 countries to support our customers. So this is another reason why -- and Cytek will continue to evolve, continue to grow. And then with this more than 3,000 instruments in the field that will continue to help drive our recurring revenue opportunity through services and also reagents.

And lastly, and Cytek is actually one of the very few companies financially in the life science tool space and which is generating positive cash flow. And so we'll continue to be that way, and we will continue to manage the Cytek very efficiently, profitably and to drive our business.

That's all we have today. Thank you. Any questions?

Great. I have a few questions. Thank you for that. Firstly, many companies in life science tools have seen a contraction in revenue in recent years. Yet now your fourth quarter seems to represent a return to growth. Is this primarily composed of market growth or market share capture or both? And do you believe that will continue in the future?

I think our revenue growth mostly is due to the market share, taking market share from our competition, which is very evident. And looking at the overall market or 2025, which was very, very challenging and overall investment and clearly has been contracting. But under this contracting market, especially for the life science capital expenditure market. We, in fact, managed double-digit growth for our sales order. This just means we are taking market share under this environment. But of course, towards the end of the year, we have also seen some recoveries with regarding to investment, especially in the academic space. We have also benefited from this. Overall, we feel we are growing due to taking market share.

Understood. And you mentioned that you're seeing signs of demand stabilization in both the U.S. and Europe. Why do you think this is? Do you expect this will continue? And is this across the board among your various customer types?

And if you look at overall growth, in fact, and APAC has always been doing nicely on the instrument side throughout the years. And early last year, and we had some challenge. We saw some challenges in both U.S. and Europe, especially in Q1, U.S. with all those NIH funding reduction or freeze and tariff and which caused a lot of concern with regarding to the spending. And then Europe, the challenge with regarding to prioritizing the government spending to some different other fields outside of the life sciences. So this clearly has caused some issues.

What Cytek has done is we continue to invest. We continue to innovate. And throughout the process, we launched 2 new products and Aurora Evo as well as the Muse Micro, all of those have been doing very well after they were launched and which have showed up in Q3 and Q4 with all the revenue growth. In the meantime, with our Aurora CS taking the opportunities of this replacement cycle and taking market share from our competition, and that truly enabled us eventually to recover all the kind of challenge we see, and that's part of the reason why Q4, we have seen the kind of growth.

We feel this momentum is going to continue throughout the quarters with this acceleration in growth, and we feel this momentum will last us into 2026. Earlier, I mentioned 50% of our business, including service reagents and APAC instrument is growing about actually growing double digit. And then with the stabilization of North America and EMEA instrument, we feel in '26, we should see substantial growth comparing to what we had in 2025.

Got it. And your reagent revenue grew strongly in 2025. You said that there's roughly $150 million per year in non-Cytek reagents being used in Cytek machines. Do you think you can capture a large portion of that revenue over time?

Certainly. And the instrument, if you look at -- yes, we have more than 3,000 instruments in the field, assuming if every instrument can support 50,000 reagent consumption, which is not really that much. And that's $150 million opportunities. Of course, today, most of the reagents are supported by other companies in the field simply because Cytek started from being a hardware instrument companies. And at that time, we drove our customers towards other companies for the reagent business.

Nevertheless, and as we build up our installed base and starting from '21 and when we acquired Tonbo and reagent become a very important part of our focus, really to leverage our installed base. And clearly, throughout the years, we have already seen the benefit. Last year, reagent revenue growth was more than 20%. We feel this trend is going to continue. And '26, one of the focuses for Cytek is to invest and drive the reagent sales through our focus on sales and marketing activities.

And how far do you think you can take recurring revenue as a proportion of total revenue in the future?

I think overall, and as you can see and first year, if you segment the flow cytometry market overall $5 billion, right, $5.1 billion today and among that 5.1 million today, between $1.5 billion to $2 billion is instrument and 2 billion to 2.5 billion to 3 billion other regions. And then the balance are services. If you look at what we have today and within the instrument side, if we segment further, we are very well supported on the high end of the market segment for the instrument. And we, in fact, have a very low penetration in the low end and mid-end of the market side, low single digits.

That basically presents a great opportunity for us to grow into that part of the business. As you can see, we have a very broad portfolio of instruments that support all kinds of applications. And so -- but our focus previously has been on the high end. But now with the newly established broad understanding and focus that gives us a great opportunity to penetrate into that market that will provide us a great growth opportunity. And then the reagents. And we have, again, a very low market penetration today. But if we just focus on our own installed base, clearly, reagent presents another great opportunity for the year. And so just those 2 areas of focus, we feel that will drive the opportunities for Cytek, of course.

And we'll continue to build new markets, new applications and new products through new innovations and to further expand the opportunities for our business for our opportunities. That's what we see what Cytek is eventually going to be. And so Cytek through what we are, we are destined to become a true full solution cell analysis solution companies. And with all of those, I think Cytek will continue to grow going forward.

And what are you thinking about with respect to capital allocation and M&A in the future?

Actually, Bill, would you like to comment?

So we like to have a balanced strategy where we have capital available both for share repurchase and for opportunistic M&A. So far in 2025, we sized our share repurchase to be approximately equal to our free cash flow. We exceeded that a little bit in the early part of 2025. But generally, that's the rule or the guideline that we follow and we expect to operate in a similar way going forward.

Great. I'll see if there are any questions from the floor. If not, I have one more. What are the key takeaways that you'd like to leave investors with? And what do you feel is most underappreciated about the Cytek story?

I think one of -- first is Cytek is today, and we know is the only flow cytometry company, public flow cytometry companies. All of our competitors are basically a business unit within a large organization. So that makes it very difficult for the research community to actually understand our business. And they fail to realize what we have is really a must-have technology. What we have built upon is a product portfolio that all of the -- it's a basic essential life science tools needed for every lab.

And no matter the market is contracting or growing and no matter how challenging the business market is, they will -- as long as they want to do experiment, they want to develop new medications, new drugs or they want to do a good research scientific work, they need our tools. And so that is basically an opportunity for Cytek to continue to thrive within all kinds of situations. And this is some thing. And clearly, of course, Cytek also need to provide more education to the research, to the investment communities and with regarding to what we have been doing.

But in the end is we are a company that has been there to have developed a great technology. We are a leader in our space. This space is very large, over time, will continue to grow, and that give us a great opportunity and going forward. So that's the area we feel and we would like all the investment community to understand this is where we are.

Well, certainly very exciting. I think with that, we can conclude the presentation. Thank you.

Good day, everyone, and thank you for standing by. My name is Arjarie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cytek Biosciences Third Quarter 2025 Earnings Conference Call.

[Operator Instructions] I would now like to turn the call over to Paul Goodson, Head of Investor Relations. Please go ahead.

Thank you, operator. Earlier today, Cytek Biosciences released financial results for the third quarter ended September 30, 2025. If you haven't received this news release or if you'd like to be added to the company's distribution list, please send an e-mail to [email protected]. A copy of this news release is also available on the Investor Relations section of Cytek's website at investors.cytekbio.com.

Joining me today from Cytek are Wenbin Jiang, CEO; and Bill McCombe, CFO. Please note that we will be referencing a slide presentation during the call today that has been posted to the Investors section of our corporate website.

As a reminder, we will make statements during this call that are forward-looking statements within the meaning of the federal securities laws, including statements regarding Cytek's business plans, strategies, opportunities and financial projections. These statements are based on the company's current expectations and inherently involve significant risks and uncertainties that could cause actual results or events to materially differ from those anticipated in these statements.

Additional information regarding these risks and uncertainties appears in our slide presentation in the section entitled Forward-Looking Statements in the press release Cytek issued today and in Cytek's filings with the SEC.

This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Additional information regarding our use of non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures may be found in our slide presentation and in today's press release.

While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Except as required by law, Cytek disclaims any duty to update any forward-looking statements, whether because of new information, future events or changes in its expectations. This conference call contains time-sensitive information and is accurate only as of the live broadcast, November 5, 2025.

I want to thank those of you who attended our User Group Meeting on October 22 in New York City. Our next and last User Group Meeting for 2025 will be just 2 days from now on November 7 in Montreal. Cytek also participates in a variety of industry conferences worldwide, often hosting a booth where attendees can see our products and learn about them from our knowledgeable team members.

As always, these events are primarily geared to the scientific community, but they may offer an opportunity to investors and analysts to interact with our users of technologies and to learn why Cytek's instruments are so highly valued by our customers. We have a limited number of spaces to accommodate members of the financial community, so if you are interested in attending any of these events, please contact me in January when we will have a list of 2026 events.

With that, I will turn the call over to Wenbin.

Thanks, Paul. Welcome, everyone, and thank you for your interest in Cytek. On today's call, I would like to start with a discussion of our performance in the third quarter. Next, I will give you some highlights of our progress during the third quarter on our strategic priorities before turning the call over to Bill for a more detailed look at our financials and our outlook.

Turning to Slide 3. In the third quarter of 2025, total revenue reached $52.3 million, representing a year-over-year increase of 2% compared to the same period in 2024. This growth was primarily driven by strong double-digit gains in the Asia Pacific region and the continued momentum in our recurring revenue businesses, specifically service and reagents.

Turning to Slide 4. Geographically, APAC, including China, led our performance with robust revenue growth across all categories, including instruments, reagents and service. In the U.S., we saw double-digit positive year-over-year overall revenue growth driven by continued momentum in service revenue.

In contrast, EMEA experienced a double-digit year-over-year revenue decline, largely due to significantly reduced instrument sales to academic and government customers and a modest decline in instrument sales to pharma, biotech and CRO customers. In our Rest of World region, which includes Canada and Latin America, we achieved double-digit overall revenue growth compared to the third quarter of last year.

Turning to Slide 5. Notably, I wanted to call out that excluding the performance in EMEA, Cytek posted double-digit revenue growth in all worldwide regions in the third quarter, as you can see from this slide.

Focusing now on instruments. Our instrument revenue to pharma and biotech customers grew 12% worldwide, including 10% in the U.S., driven in part by the launch of our Aurora Evo instruments. Instrument revenue in APAC, including China, grew 20% year-over-year and grew 32% year-over-year in rest of the world. This strong momentum is being driven by a positive funding environment for academic institutions in these regions.

In the U.S., overall instrument revenue was flat compared to a year ago. U.S. instrument revenue was driven by improving demand from pharma, biotech and CRO customers, which we believe stems from greater clarity around the macroeconomic and industry factors. However, these instrument revenue gains were offset by continued softness in the academic and government sectors, where funding uncertainty persisted due to the evolving U.S. policy landscape.

In the quarter, we did begin to see some stabilization in this end market. However, academic and government demand remained under pressure, resulting in no net overall instrument revenue growth in the U.S. in the third quarter. In EMEA, instrument revenue declined, particularly in the academic and government sector, which we believe reflects a broader shift in public spending priorities.

Looking at our recurring revenue sources, service revenue continued to grow strongly, contributing meaningfully to our overall base of recurring revenue. APAC was particularly strong broadly, including in service and reagents. Service revenue growth was driven by our expanding installed instrument base and strong utilization of our products. Reagent revenue grew 21% globally year-over-year, supported by operational improvements, including faster delivery times and enhanced customer service.

I would now like to update you on the progress our team has made across our core strategic pillars; instruments, applications, bioinformatics and clinical to further solidify Cytek's position as a market leader in next-gen cell analysis solutions.

Starting with our core instruments on Slide 6. In the third quarter, we expanded our global footprint by 161 instruments, bringing Cytek's total installed base to 3,456 units. Within our instrument portfolio, our Aurora cell sorter was the strongest contributor in Q3, growing 35% year-over-year. We believe this strong growth is notable during a time when competing instruments have been recently introduced to the market.

Late in the second quarter, we introduced the Aurora Evo Analyzer, and I'm pleased to report that it has had a strong reception. The Aurora Evo system is a demonstration of Cytek's commitment to maintain its position at the forefront of technology development in the flow cytometry industry. It offers a unique combination of high throughput, industry-leading data quality, small particle detection, ease of use and automation and harmonization features.

We expect it will be the standard against which other systems are measured. We included these new features after listening to what our customers wanted. And by the strong reception during Q3, it's clear that they are deriving value from the new features we added to create the Aurora Evo.

Finally, regarding instruments, I want to mention that our Muse Micro Analyzer has gotten a very strong reception since it was first introduced this past March. The Muse Micro offers advanced microcapillary fluids, enhanced optics, better software and broader assay compatibility, all while maintaining affordability and a compact design. It's an ideal choice for researchers and the labs seeking cost-effective flow cytometry systems.

Turning to our next growth pillar applications, which includes reagents. We remain focused on driving our reagent product engine growth. And as part of this commitment, we recently announced the expansion of our European headquarters at our facility in Amsterdam's Life Science District. This site increases our footprint in EMEA by more than 40%, including a dedicated customer service and training center. To further advance our reagent business, we additionally transitioned reagent warehouse operations to this site to improve operational agility and efficiency, reduce turnaround time and provide reliable and consistent experiences for our customers. Over time, we expect our recurring revenue base to continue growing.

Moving to bioinformatics. As we have mentioned before, our Cytek Cloud continues to provide important benefits to our users. Our software tools empower customers to streamline their experiment workflow, which drive adoption and utilization of our cell analysis solutions and growth in our reagent and service businesses.

As of September 30, 2025, we had more than 22,600 Cytek Cloud users, representing remarkable growth of over 40% since the beginning of 2025. This represents an average of almost 8 users per installed Cytek FSP instrument. We believe this growth reflects the loyalty our users have to our product portfolio and the halo effect of the Cytek Cloud driving the utilization of our technology platform, including our recurring revenue offerings in reagents and service.

As a reminder, our Cytek Cloud is transforming how researchers design and conduct complex flow cytometry experiments. At its core is our proprietary AI-powered Panel Builder, which saves weeks or months of time by automating critical steps like fluorochrome selection and marker matching. Scientists can then conduct virtual experiments before committing to real wet lab studies, reducing trial and error and improving data quality from the start.

Moving to clinical. We continue to believe the clinical market represents an attractive business opportunity for Cytek. In the third quarter, Cytek took center stage to showcase our complete cell analysis solutions at several industry conferences. One notable event was the ESCCA meeting in Montpellier, France in September. The event featured presentations by independent researchers discussing the importance of special flow cytometry in performing in vitro diagnostic procedures and acknowledging that Cytek's Northern Lights-CLC system is the only special analyzer approved for clinical use in the EU.

With that, I will now turn the call over to Bill for more details about our financials.

Thanks, Wenbin. Turning to Slide 7 and our third quarter financial results. Total revenue for Q3 was $52.3 million, a 2% increase versus Q3 of 2024. This reflects strong growth in service and reagents worldwide, in instruments in Asia Pacific and stabilization in U.S. instrument revenues. These were offset by continued weakness in EMEA instrument revenues.

We saw a 14% growth in total revenues from biopharma customers globally versus the year ago quarter, offset by a similar decline in revenues from government and academic customers. Product revenue, which is comprised of instruments and reagents, decreased 4% versus Q3 of 2024, driven by a 26% decline in EMEA, offset by 19% growth in APAC. U.S. product revenue was up 20% versus Q2, but flat versus Q3 of 2024, which was the strongest quarter of product revenue in 2024.

Our performance in the U.S. was attributable to a 10% increase in instrument revenue from pharma and biotech customers, driven by the launch of our new Aurora Evo instrument and an improved industry environment. This was offset by a 13% decline in instrument sales to academic and government customers as funding pressures continued.

In EMEA, the decline in product revenue was primarily driven by a significant percentage decline in revenue from academic and government customers, which we believe is a result of a shift in government spending priorities and a single digit decline from pharma, biotech and CRO accounts. While our reagent revenue is still a single-digit percentage of our total revenue, it achieved its highest ever quarterly revenue in Q3, representing 21% growth over the prior year quarter.

As Wenbin mentioned, this was largely due to a concerted effort by our reagents team to shorten delivery times and to improve customer service. Service continued to deliver strong revenue growth with 19% growth in Q3 versus the prior year quarter. This was driven by growth in the installed base and active usage of our systems.

Turning to geographic market performance. U.S. revenue grew 12% in Q3 versus prior year, driven by service revenue growth. EMEA declined 28% due to lower instrument revenue. APAC, including China, increased 25% in Q3, driven by growth in instruments, service and reagents.

GAAP gross profit was $27.6 million, a 5% decrease versus Q3 of 2024. GAAP gross profit margin was 53% versus 56% in the prior year quarter. This was due to both a lower service gross margin resulting from an increase in headcount and travel costs and a lower product gross margin as a result of lower product revenues, higher materials and tariff costs and higher overhead. GAAP gross margin improved sequentially from 52% in Q2 due to higher product gross margins on higher product revenues and improved overhead absorption.

Adjusted gross profit margin, which excludes stock-based compensation and amortization of acquisition-related intangibles was 55% in Q3, down from 60% in the prior year quarter and down from 56% in Q2. Operating expenses were $36.7 million in Q3, up $3.5 million or 10% versus Q3 2024. This was driven by higher general and administrative expenses, partially offset by lower R&D and sales and marketing expenses.

Research and development expenses were $9 million, down 9% versus the year ago quarter, primarily due to lower headcount and compensation expenses, partially offset by higher engineering expenses. Sales and marketing expenses were $11.7 million, down 6% versus the year ago quarter due to lower headcount and compensation expenses and lower outside services expenses.

General and administrative expenses were $16.1 million, up $5.2 million or 47% from the year ago quarter. The increase was primarily attributable to legal expenses related to a patent litigation case, and to a lesser extent, a $0.7 million non-recurring non-cash write-off of deferred offering costs for an at-the-market equity financing facility entered into in 2022, which expired in the current quarter.

Loss from operations was $9.2 million for Q3 versus $4.2 million in the year ago quarter, driven by $1.5 million lower GAAP gross profit and $3.5 million higher operating expenses. Net loss was $5.5 million in Q3 versus net income of $0.9 million in the prior year quarter.

This was driven by 3 factors. First, higher loss from operations of $5 million, as mentioned above. Secondly, net other income decreased by $3 million to $1.4 million from $4.4 million in the prior year quarter. This was primarily driven by $0.9 million of FX losses in the current quarter versus $1.1 million of FX gains in the prior year quarter and lower interest income of $0.9 million. The higher loss from operations and lower net other income totaling $8 million were offset by an increased tax benefit of $2.3 million in the current quarter as a result of a higher effective tax rate versus a tax benefit of $0.8 million in the prior year quarter.

Adjusted EBITDA, which excludes stock-based compensation, foreign exchange impacts and the nonrecurring charge of $0.7 million for the write-off of deferred offering costs declined to $2.5 million from $7.6 million in the year ago quarter. This was due to lower gross profits of $1.5 million and higher operating expenses of $3.5 million due to the factors I described above. Free cash flow was slightly negative at minus $0.3 million in the quarter, modestly decreasing our total cash and marketable securities to $261.7 million.

Lastly, turning to our full year guidance on Slide 8. We are reaffirming our full year 2025 revenue outlook for a range of $196 million to $205 million, assuming no change in currency exchange rates. This is based on our year-to-date results, our pipeline of instrument sale opportunities for Q4 and the good momentum we see in our service and reagent businesses. Our performance this quarter showed continued strong growth in instruments in APAC, stabilization in U.S. instruments and solid growth in our recurring revenue businesses.

We expect these trends to continue, and our outlook remains consistent with our views in previous quarters that we would see slowly improving trends as the year progressed. We have noted this in the U.S. market, whereas EMEA remains challenged. Importantly, we continue to believe our performance in Q3 and in 2025 year-to-date reflects a strong market leadership position in what has been a difficult environment.

Our core business is showing positive growth in all regions except EMEA, and our recurring revenue continues to grow. Notwithstanding some temporarily elevated operating expenses, we delivered positive adjusted EBITDA, which we anticipate will continue in Q4. We believe we will perform well relative to the overall flow cytometry market, which is also beginning to show signs of stabilization. Finally, our strong balance sheet also gives us the ability to continue investing for growth.

With that, I will turn it back over to Wenbin.

Thanks, Bill. Turning to Slide 9. I want to close by first thanking our Cytek team for their continued commitment to advance our mission amid a challenging and evolving market environment. We believe our third quarter results are encouraging and demonstrate our established brands and strong technology and underscore our market leadership position.

Our team continues to execute with discipline, expanding our global installed base, growing our recurring revenue streams and sharpening our focus on profitability and cash generation. At the same time, we are committed to making targeted investments that will reinforce our competitive position and accelerate our growth. While we remain mindful of broader market conditions, we believe Cytek is well positioned to deliver long-term value through our differentiated technology portfolio, durable growth drivers, strong balance sheet and global reach.

I want to thank everyone for joining today's call, and we will now open it up for questions. Operator?

[Operator Instructions] Your first question comes from the line of David Westenberg of Piper Sandler.

I wanted to actually maybe just start with the product launch, the Aurora Evo. Can you talk about the differences in this product versus the other products in the market and how we should think about growth contribution from new products in the next couple of years?

I think this new product, basically, what we have done here is we listened to our customers, specifically from pharma biotech customers. And in terms of the features, we have included like higher throughput and small particle detection, automation and harmonization, all of those really suited for those pharma customers.

Got it. Just maybe speaking of pharma customers, and actually, I was going to say, is there anything to take away from the double-digit growth in CROs? Meaning, are there -- are they potentially leading indicators that biopharma might want to own their own instruments?

When we talk about biopharma and CROs, we're talking about one category. So, when Wenbin talks about biopharma customers, we're grouping all of those together. And as we noted in the remarks, our instrument revenue to that group grew 12% worldwide and 10% in the U.S. So, we've received a very favorable response.

Maybe I'll ask another way. In the press release, it mentioned CROs. I think it said it grew at 14%. Now normally, when I think about CROs and their usage...

Yes. No, that -- what we referred to was the aggregate group of customers, which are comprised of pharmaceutical companies, biotech companies, CROs and distributors. That's one group of companies. And so -- yes, what the press release said was that total revenues to those -- that aggregate group rose 14% in the quarter. And what I just mentioned is to that same group, instrument revenue rose 12%. And the big pharma companies are probably the largest component -- subcomponent of that group. So that's the way to think of it.

Just maybe on the double-digit revenue growth in the U.S. Can you remind us of how much of that might be -- sorry to say, but easier comps versus just good execution? And I mean, are we now, in your opinion, at kind of the late innings of a -- maybe I'd say, early innings of a recovery instead of late innings of stagnation. And I'll take it offline from here.

I think -- no, it's not -- the third quarter of last year was pretty strong. So, it's -- the performance in the U.S. is a function of strong service and reagent growth and the fact that our instrument in the U.S. were flat. But as I mentioned in my remarks that the U.S. instruments that Q3 of last year was the highest quarter of 2024 for U.S. instruments. So, the benchmark was actually pretty high. And so, to be flat against that is quite a good achievement. On the -- I'm talking about -- it's quite a good achievement on the instrument side. And then in addition to that, we had strong growth in services and reagents. Does that answer your question?

Your next question comes from the line of Brendan Smith of TD Cowen.

I appreciate all the color. Wanted to ask just a little bit more actually about the quality of conversations you're having with customers in recent weeks. And if there's any additional color you can maybe provide about their appetite to spend more on some of these instruments next year as they're really starting to put together their 2026 budgets. And I guess, if so, do you have any sense which of your offerings you think they'd maybe reach for first once some of those dollars start to become maybe more readily available into next year? And then I guess just if you have -- if you're noticing maybe any geographic differences in your answer to that question.

Yes. I think what -- the trends that we currently see in the business are that Asia Pac is strong, is growing strongly in -- the Asia Pac instrument business is growing strongly. Service momentum continues to be strong as does reagent. As we noted, EMEA continues to be challenged. And the U.S. is following a path that we expected from -- that we talked about in earlier quarters of gradual improvement as the year progressed.

And we've seen that. And so, we've seen a stabilization in the U.S. instrument business, where it's been basically flat versus last year for 2 quarters in a row now. And look, we don't have a crystal ball about next year. But based on -- assuming there are no exogenous shocks, we expect those trends to continue. Within the U.S., the biopharma sector, as we noted, has been -- within U.S. instruments, the biopharma sector has been strong. Academic and government has been weak, but the 2 have offset each other.

So, it's a bit early for us to be talking about 2026. The only comment we would make is, we generally expect the areas of the business that are growing to continue to grow, absent exogenous factors. And I think at some point that Europe has to hit bottom. It was down quite significantly this year. And you'll see it's down almost 30% this year on an aggregate revenue basis. And one would think that, that rate of decline has to slow.

Your next question comes from the line of Mason Carrico of Stephens.

This is Harrison on for Mason. Can you walk us through your key assumptions behind the 2025 outlook? Are you assuming the typical 4Q step-up in instrument placements or something more muted, given the macro environment?

We would -- we think that we don't have any reason -- let me back up. We typically see a budget flush of -- from the biopharma customers in Q4. We don't have any reason to doubt that that will -- or to expect that that will not happen this year. So, we would expect some typical seasonal improvement in Q4.

And again, I'd go back to what I just said about the outlook that service and reagent momentum is strong. Asia Pac is strong. U.S. is stable, and we think EMEA will continue to be under pressure versus last year.

Understood. And then just wanted to ask on -- ask a little bit more about the U.S. How has the U.S. academic and government demand trended since last August? And are you seeing any signs of stabilization as we head into next year?

It continues to be down versus last year. And obviously, the funding pressures or the funding reductions are -- there hasn't been much change to that picture. But on -- look, on the flip side, the momentum in biopharma has been quite good, quite strong, as we noted. So, we don't see the academic -- U.S. academic and government, we don't have a reason to expect it'll get particularly better or worse. We just think it will remain under pressure versus last year's levels.

Okay. And then, I know reagents are growing, and you've cited over $150 million annual opportunity with less than 10% captured today. What specific initiatives are you implementing to increase that capture rate? And have you begun to see those initiatives bear fruit?

As you can see, we have really improved our operational efficiency and our logistics functions, and we significantly shortened the delivery time. As you know, reagent is a recurring business, and so you have to address all of those logistics side of the issues, which is what we have been focusing on doing during the last few quarters. And clearly, it has benefited -- we have benefited from those kinds of improvements we have made. And recently, we also expanded our European facilities in Amsterdam and moved the warehouse -- reagent warehouse in-house and clearly -- and we'll continue to see the kind of benefits we have done so far.

We also are focused on what we've mentioned in the past around what we call our design-in activities where we design a panel for a customer and use that as a way to sell more of our reagents. So that's another initiative.

Cytek Cloud is another area we have leveraged to help drive our reagent business.

Yes. And then finally, we continue to invest in R&D in bringing -- in expanding our portfolio of reagents. We do custom reagents for certain customers, and we may then move those into the catalog. So, that's another way of expanding our reagent business, another initiative. So, there are multiple things we're doing on lots of different fronts.

[Operator Instructions] Your next question comes from the line of Andrew Cooper of Raymond James.

This is Noah on for Andrew. First question, going off of the other one around the 4Q guide and outlook for the year, we expected a bit of a step-up just seasonally, but you mentioned some budget flush. How reliant is the 4Q guide and the rest of the year on a step-up or really a budget flush versus pure seasonality? So just trying to get a feel for the mix between [ them ] in terms of the step-up.

When we use those terms, we're basically referring to the same thing. Our seasonality that we see is caused by customers spending the remaining available budget or flushing it, if you will. So that really -- those 2 terms refer to the same phenomenon. And as we mentioned, we don't see that pretty typically every year. We saw that last year. And we've seen that regularly in previous years. And as we say, we don't have any information to suggest that that would not occur to some extent this year.

So, the outlook is based on, as we mentioned, obviously, our year-to-date results, the momentum in our recurring revenue businesses. So, the growth drivers there are the reagent business we talked about, the installed base for services. And then we look at our pipeline of opportunities in the instrument business, and we factor all those in. And based on that, we are reiterating our range.

Okay. Got it. Yes, I just wanted to clarify whether when you meant budget flush that there was a significant like improvement in the market, but I understand the seasonality…

Yeah. No, [indiscernible] particularly biopharma companies budget on a calendar year basis. So, as they get into Q4, they have some incentive to spend what the remaining amount that hasn't been spent in order to make sure they spend the whole budget.

Got it. And maybe lastly. Okay, yes, sorry. Yes, I was going to say my last one was just on capital deployment. You talked about a pretty strong balance sheet, and you expect to be cash flow -- free cash flow positive. So, any appetite for more share buybacks, maybe what you're seeing in the acquisition pipeline, if there's any interest there?

Yes. So, short answer is we aim to -- our objective is to do both share repurchase and M&A to size our share repurchase. What we have done in the past is size our share repurchase to be approximately equal to free cash flow. Year-to-date, we've actually spent more than our free cash flow on share repurchase. So, as a result of that, we -- because we were in excess of free cash flow, we didn't buy any shares in the third quarter.

But generally, our objective is to buy -- our approach to share repurchase is to be opportunistic and to buy when we think it's particularly favorable, but to size those purchases at -- somewhere broadly in the range of our free cash flow. So, we are not making any changes to that general approach, and we'll execute as we see opportunities going forward.

And then with respect to M&A, we continue to review a number of different opportunities. But as you know, M&A opportunities are episodic, and they come and go in sort of an irregular pattern. But we are seeing things. We are reviewing things, and it's our objective to grow through both organic and inorganic means.

So, that ends our Q&A session, and we appreciate your participation. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, everyone. Thank you for joining us on Day 3 of our Global Healthcare Conference. My name is Edmund Tu. I work on the Life Science Tools team here at MS. And it's my pleasure to be hosting Cytek Biosciences today. Speaking on behalf of the company, we have CEO, Wenbin Jiang; and CFO, Bill McCombe. Thank you, guys.

Before we get started, I would like to remind everyone, we have important disclosure information that can be found on our disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your sales representative.

So with that out of the way, can you help us set the stage and talk about how '25 has played out versus your initial expectations at the start of the year? And what are your key accomplishments in the past 12 months?

As you know, we have a new administration for the year. And when we initially presented our forecast, that was not in part of the considerations. And clearly, starting from January, and there was an export control from the prior administration right a week before his departure. And that was certainly caught us some surprise. And thereafter, we know there was tariff situations and the funding reduction of the subjects.

Nevertheless, and all those things, although expected, and we have managed through and clearly due to our earlier preparation will be regarding to region for region manufacturing, which was part of our projection and potentially, it may happen. And overall, we have managed this very well. And even though there was some impact, but it's very minimal. So far, we have done well overall.

I mean, in a market where instrument sales have been challenging, last quarter, your core FSP instruments placed a 3% year-over-year growth, unit growth. So wondering what's driving the strength here? And maybe taking a step back, can you help remind the audience, what's different about your FSP platform versus conventional flow cytometers out there today?

Yes. First, we know flow cytometry is a basic life science tool and used widely and being widely adopted in almost every life science labs. And so they have been used on a daily basis. Now as the technology progresses and the application become more versatile, and they need more and more advanced technology on the flow cytometry side to support their research. And that means the conventional instrument and set limitations. This is when we started to develop our technology, which is called the full spectrum profiling technology. The way it works is it capture all the information from those biomarkers on the fluorescent side that enable us to distinguish lots of markers with special signature very close to each other.

So because of this, what we have done and that really drive us to break the conventional barrier and get us to far more parameters, and we started with our initial 40 color panel, which now becomes the standard in our industry. Now we certainly have already broken that barrier as well, we go way beyond 50 colors. With our technology, pretty much we have changed the whole landscape of the flow cytometry. Now full spectrum becomes a standard in the industry.

And of course, every of our competitors are moving towards that direction. They realize and the future of the flow cytometry technology is based on what Cytek has pioneered and has promoted, and now we become a standard of the industry. That actually brings down to Cytek is previously, we compete against the conventional tools. We need to convince our customers why they have to go to spectrum today is no longer the case. And when customers start to make a decision what to buy, clearly, full spectrum is in their mind, that becomes a default position.

And among the industry and who is the leader, clearly, Cytek is the first name they can recognize. And so we have enjoyed the benefit of that the reason why even in today's very tight capital expenditure environment, we continue to enjoy the growth and our core technology tool continues to grow. And last quarter, we reported a 3% increase over the prior year.

Got it. That's helpful. And then if we were thinking about the flow cytometry TAM, flow cytometry applications today address about a $7.5 billion initial TAM for cellular analysis and has the potential to advance into a $8.5 billion TAM for a total $16 billion opportunity. So if we were to take a step back, what's the difference between the initial TAM and the adjacent TAM? And where are we today in terms of penetrating this $8.5 billion?

I think the first is when we talk about $5 billion, is what flow cytometry today is overall business revenues and $7 billion is the potential flow cytometry is able to support if every application starts to adopt what we have presented to the user base. I think first is, today, clearly, and we know in today's environment and actually, coming back to the overall general growth and the projection and also based on past history is always about 7% to 8% year-over-year annual growth.

Of course, the last couple of years, we actually see a contraction in the space due to a few reasons. And one is the over investment during the pandemic space. Many companies purchased the capital instrument based on, at that time, what's available to them, the investment. Second part is -- second reason is due to the funding trend, especially. And as you know, early start-ups and less and less funding getting invested into those industry new business, you don't see that as many. And clearly, that has impacted the purchase. And then, of course, recently, you see all those new situations facing us. And -- but long term, and we believe and it will continue to grow in that space, especially flow cytometry, earlier I mentioned about that's a very old technology has been there and widely adopted, but many of the instruments around 50,000 instruments in the field, many of those are up for renewals, they need to be updated.

And so we feel -- and although the current capital expenditure investment has impacted the timing and -- but eventually, it's going to come back, and they need to be replaced. And in fact, we have already seen that. And we do offer, for example, like kind of incentive for those switch, and we see a lot of those kind of situations these days and people coming back for Cytek to offer them the new technology, new tool and to replace their old instrument in the lab and this is getting more and more now. That's what we have been seeing recently. And this is going to continue on this kind of process, we feel. And we are definitely going to benefit.

Got it. And Wen, you mentioned about a 50,000 installed base of flow cytometers today, what do you think your guess for the rough mix between conventional flow versus FSP as we stand today?

I think FSP started from about 2015 time frame. And overall, we believe today in the field about 3,000 ish and based on full special technology. And clearly, this is going up rapidly. That's what we see and more and more cutting. So great opportunity for us is because the overall percentage is still very small and less than 10%. And as you can see going forward, and flow cytometry, typically 7 to 10 years will be the place. And you can see the kind of opportunity for us as most of those become full special going forward within the next 5 to 10 years.

Got it. And then maybe diving into your end markets a little bit. On the academic end market. I think the funding pressures and the softness in the U.S. academic government end market is pretty well known. And while instruments directly funded by the NIH on the account for less than 5% of your total revenues, what are you seeing in your U.S. academic and government and market customers? And how is the sentiment sounding like today?

I think it's -- from that purchase, sometimes it's not just a derived funding situation. It's kind of thinking mentality and the kind of fair and that really has slowed down their purchase decisions even though when they actually need them, and they are going to push back their decision-making. But that's the reason why we see some challenges. We have seen some challenges during the last few quarters. Nevertheless, I think gradually and people have started to realize, and it's not as bad, and what people have been thinking about, even NIH funding reduction probably is not going to be as much worse as what we expected.

So I think overall, we have already seen and I think the U.S. market has become stabilized and so as you can see, last quarter, our overall results in the U.S. is already almost flat compared to a year ago versus early Q1 and which was a reduction. And so I think this trend is going to continue. That's what we feel and for the U.S. market. Europe is a different subject and because of the overall challenges with regard to funding or defense moving from less than 2% to above getting close to 5%.

Clearly, they are struggling with moving around the funding to support that, and that clearly is going to continue to impact high expenditure support on the research space. But again, the needs are there, and it's just we regarding to where they are going to cut more and where is less. We feel flow cytometry eventually is going to come back because of the needs for almost every of the research needs in the lab and many of the tools are becoming old. They need to be replaced.

Got it. And then I guess in terms of your customers in the academic government end market in EMEA, are you seeing regional differences? Or is it broadly the same? Any trends to call out?

We saw amongst the pharma customers, the biopharma customers, some preference for swinging investment back in the U.S. in the second quarter. In terms of the academic and government, we actually had a good quarter in EMEA, but it came principally from countries that were not in NATO. The NATO countries appear to be most affected by the budgetary constraints. And in Asia Pac, the funding situation of both biopharma and we're seeing increasingly stronger contribution from the academic and government sector in Asia Pacific.

Now much of the sales, particularly in China, go through distributors, so they end up in our, as we classify them in our biopharma sector, but much of that strength actually comes from -- is driven by government spending. So that's sort of a -- that's a snapshot.

Got it. And then I guess in terms of your biopharma customers and your FSP platform, can you kind of tell us how these customers in this end market use your instruments? Is it more in the upstream discovery work? Or are you seeing some of this being used in 2 QC applications? And how does it differ between pharma, biopharma and CRO customers?

Firstly, in the first question in the pharma side, the application is split between drug discovery and translational and that's related to the kind of clinical trial and then production side, the QC type of applications. Cytek tool today are mostly focused on towards drug discovery. And I believe almost every large pharma today have Cytek instrument already to support their usage and continue. We see the continued increase of our penetration to support those type of applications.

And then follow through is on the translation side. And that's where they start to work very closely with CRO. And we clearly see CRO started to adopt Cytek tool technology more and more and started from, of course, early days IQVIA. And one of the reasons they have cited with regarding to going to Cytek for supporting the clinical trial in the CRO is not because of the high parameter itself because during the clinical trial, they don't really want big panel, it's expensive. They only want to shrink the size of the panel. Nevertheless, the reason why CRO would like to adopt Cytek technology, which support large panel is the flexibility, okay?

Because CRO needs to serve all kinds of clients, pharma based with many different type of biomarkers. And normally, without Cytek tool previously, they have to deal with all those small panel one by one, and they have to prepare lots of different type of reagents and a big catalog and large inventories. As you know, and many of those probably eventually would have to be down to wasted. Now after they have transitioned into Cytek technology with those large panels, they can reduce the whole offering catalog down from a whole box to a couple of pages to support their customers. That significantly reduced the kind of inventory they need to prepare to support their customers that save them tremendously, also the kind of flexibility they have -- we have to offer for them.

That's the whole reason why CRO is getting more and more into Cytek to Cytek technology. We have more than 10 CRO today based on Cytek to Cytek technology and more and more we are seeing our penetration into that space to support them. QC, we do have a tool that can support QC, but QC side is a different sales channel. As you know, Cytek started from high end of the research, gradually getting into the translational clinical trial. And with regard to QC is a different sales activities. We are learning, and we feel that's an opportunity for Cytek. We have the tool, we have the products. We have the technology can support them, and we see that as a future opportunity for Cytek.

Got it. And then before we move away from the regions, maybe just zooming in on China a little bit. It seems like you guys have done pretty well in the first half. And looking at some of the publicly available tender information, Cytek always comes in a solid team with some months, you guys coming in, in the second place. So maybe can you guys talk about what you're seeing in the region there, how customers are reacting and maybe some of your stimulus wins or benefits in retail in China?

And in China, after that many years of work with our customers, clearly, Cytek has established ourselves as one of the top premier supplier, especially as the new decision come down, what to purchase when full spectrum technology become a default position, Cytek now start to benefit. And so even though some of our competitors still have the name recognition, but with regarding -- getting down the technology selection, clearly, we benefit. And that's the reason why we -- our market share in China start to grow during the last few quarters, we see this trend is continuing, and we clearly going to benefit. And so that's the reason why, and we see -- overall, our business in China is doing well right now.

.

Got it. And then maybe switching over to your portfolio. I think the exciting news coming out of Cytek 2025 this year was your Aurora EVO debut. Tell us more about this new instrument, what's new here? And how has the early reception been since it started shipping, I think it was in June?

You see, Aurora, we first launched in 2017, right? And as we engage with customers, as we into the pharma side, we have been hearing a lot from the pharma with regarding to what they would like to see certain features being carried on our tool. Build upon those inputs, we started to develop a new technology, new tool and all of those features start to get into the new EVO system we launched in Cytek this year. That's including, for example, the highest throughput, pharma would like to see and that's going to help them to improve the efficiency timing and with regarding to drug discovery.

And then the automation side is because all flow cytometry require turn on, turn off and with certain time delay and this kind of automate the process that allow customers to remotely turn on, turn off and those systems that can also speed up the process operation. And then we see the small particle more and more on the drug discovery side require those kind of features. Now we did have the small particle option previously for early in human. Now it has become a standard across all EVO that support those nanoparticle kind of research. Finally, is harmonization also become a standard across EVO. All of those features are actually desired by the pharma. So EVO is really a system for the pharmaceutical company.

Got it. It sounds like it packs a lot of great new features. So I guess maybe one for you, Bill, how should we be thinking about the ASP of this new instrument? Would it be fair to think of something higher than the Aurora, but maybe lower than the sales order? How should we be thinking about this?

Yes, we don't talk so much about ASPs of individual products. It's something that fills out a premium to the Aurora because it has features that add productivity and value. Relative to the sales order things occurred maybe depending on the configuration, it could be a little higher, a little lower.

Got it. That's a helpful color. And then, I guess, speaking of sales order and other instrument in your high-end portfolio, how has that been performing a way? Is it seeing some pressure given its higher ASP or maybe some distraction from customer interest in the EVO?

You mean the sorter?

Yes, the sorter.

I'd say it's, we had a very strong first quarter. And strength in the Q4 of last year, and it's continued with what I call solid performance in Q2. Bear in mind that we're in a market -- an overall market that have negative growth. So solid performance is actually pretty good.

Got it. And I know Cytek has been a leader in the high-end flow cytometry space, but you guys have also indicated your interest in further penetrating the entry and mid-level flow cytometry market. So if you guys could provide some color on how these efforts have been progressing? And maybe some color on how Northern Lights has been performing of late and customer interest in your new Muse Micro?

Yes, Muse Micro has done really very well. And it's a low ASP product. So it's not a big contributor to overall revenue. Northern Lights continues to be a solid performer. We're growing at least as fast as probably doing a little better than the market in that product as well. But the big products continue to be the Aurora and the sorter. They account for the majority of revenue. Aurora plus Aurora EVO and sorter continue to be the big account for the majority of the portfolio.

Got it. And then you guys are seeing a lot of momentum in your recurring revenues and it was a service and reagents with Brightspot and [indiscernible] both growing 18% year-over-year. So maybe parsing the 2 apart, on services, Bill. You've mentioned that there's a very predictable relationship between installed base growth and service revenue with a 1-year lag on average. But as your installed base starts to mature, how do you think about this relationship evolving?

Well, I think it's our attach rate, if you will, it's been very stable. So it will continue to grow with the growth in the installed base. But as the denominator gets larger, the percentage increase will gradually get a little slower, but that will be a gradual effect on growth over a multiyear period. We're not -- we're not going to see dramatic changes there at least. That's our current view.

Look, our systems are very actively used that we've got in our cloud, Cytek Cloud, we've got or maybe 6, 7 users per machine. So it's important for the customers that the machine is up and running and ready for use. So I think that has supported our service business.

Got it. And then on reagents. I know this is a relatively new and smaller business for you guys. But one of the interesting things you guys talked about on the last call is your installed base post about $150 million worth of the agents annually, but you're only capturing less than 10% of that. So I was wondering what are some specific strategies or initiatives that you guys are implementing to accelerate the adoption of Cytek reagents on the instruments?

Sure. So the most important one is reducing our delivery times, time between when a customer orders and when the reagent shares up at their facility. So we've brought that down very substantially since the end of last year. And I think that's really helped. We've continued to invest. So that's probably the most important driver of growth. The other things that we've done include continuing to invest in new reagents. So we spend a lot of relative to the size of business, a lot of money on new reagents and new dyes. And once you've developed a new dye in particular, that's an asset that keeps producing revenues over a long term, over the long term. So that's the second thing.

And the third thing is we have put together a number of partnerships that enable people -- the customers to buy other companies reagents through our platform. And so that has substantially expanded our product range. So we, through a combination of our own reagents and those that we source through from other players, we now have a very full catalog. And I guess lastly is Cytek cloud. We've worked on making it easier for customers to buy reagents through Cytek cloud, aloha at this stage is a pretty small contributor, but it's a contributor. So that -- and look, the combination of all those things has really improved the growth rate pretty close to flat to 20-ish percent in the last quarter, 18%, I think.

Got it. And then speaking of Cytek Cloud Lending, I think on the last call, you mentioned your vision of tying the Cytek Cloud into a platform for users to exchange their information and to present data and inform for, I guess, the community to better relying. What are your thoughts on the time lines to implementing this strategy? And how do you envision this creating additional stickiness for your customers?

Actually, Cytek cloud clearly, a platform and widely adopted by our user base and also growing very fast and reaching beyond 20,000 users because the tool really is helping and streamline the panel design for our users. Previously, that process takes weeks months, now a couple of hours. And so that's really helpful and useful, given some of our competitors coming to Cytek cloud and that can somehow help their user bases with regarding to the user panel. Now I think Cytek cloud system and earlier, I mentioned about the platform, we want to continue to expand, including supporting the user bases for them to exchange information.

Today, we do have all those process. We routinely offer workshop user group meetings and for them to exchange. And many of those activities can be adopted over Cytek cloud. But right now, our primary focus today is trying to support on the reagent side and the lot of automations are being implemented from panel design to reagent quote to reagent orders thereafter. And of course, we are able to expand and to include all those other activities. But in order to support that, certainly, there are certain costs involved, and we hope the whole platform will be able to sustain by self sustainable. And we feel through certain activities like reagent support and those kind of things, eventually, we will be able to enable our Cytek cloud to provide more and more capabilities, and that's going to continue. We do have invested quite a bit on making this platform more and more user friendly for our user base.

Got it. And then the clinical market is an important part of your growth strategy and your focus. Could you provide us with a quick update on how the clinical market is doing in China and where do you guys think in terms of seeking clinical regulatory approval in the U.S.?

Yes. Clinical clearly, we have to go through market by market, and we are regulated by each country and where we sell to China was the first one we received the clinical clearance today, and we in fact, Northernized CRC platform and has been going relatively well compared to other markets. And because of the clinical certification we received over there, we also have the class clinical clearance for the reagents panels like TBK. We are also trying to expand the application panels beyond what we have today and over there for the market in China specifically.

Europe is the second part, we have the Northernized CLC, IBD, we have also built a relationship with Sysmex. And as we know Systemax premier clinical tool providers in Europe, and we have built a partnership over there and together to drive the Northern light COC for that market. In Europe, we also build a dedicated we start to build a dedicated clinical team to drive the adoption in Europe as well. Here in the U.S., FDA and we continue to drive clearance and my understanding based on FDA regulatory requirements, I can't talk too much for those things still in the process.

Got it. That makes sense. And I guess there's been some moves in the flow cytometry market of late, and I have to ask an obligatory question on the competitive landscape. So can you provide us with your current view on the flow cytometry competitive landscape today? And are you beginning to see a narrowing of either capabilities or pricing?

And as I mentioned, a full spectrum becomes a primary technology and tool products for this industry. Clearly, our competition is clearly and the primary previously for the conventional now moving into our space. And we do have seen more and more players here into our space. But we don't really see them as a threat. We see them as an endorsement. Cytek is a leader. Now previously, earlier I mentioned, we have convinced customers why they have to select a full spectrum and instead of staying with the conventional. Now, no such a need since everybody is on to spectrum and a great endorsement for Cytek cloud. Now Cytek has been shipping this product for that many years.

And we have gone through all the ups and downs and all the problems being addressed, and versus all of the newcomers. And here and now, certainly, we have a broader, larger base for us to drive our products into. And from our perspective, from a performance perspective, from a data side, we continue to outperform across all the spaces and comparing to those newcomers. And now the point is about pricing, right? And Cytek, in fact, has always been cost efficient in our space. And in fact, we don't worry about overall competition with regarding to pricing, and that's what we are good at and because of our operational efficiencies and certainly. And we will continue to drive products represented by the EVO we launched to make sure and we reduced the price erosion effect in our space and because we provide value to our customers.

In fact, in this industry, pricing is not really the primary driver for customers to sell up to each product. It's about performance. And of course, as we move into the QC space production side, it may be a different thing, but this is an area we are still trying to learn, trying to adopt, but we feel we are positioned to support that market to be competitive in that market as well.

Got it. And then, Bill, maybe a few financial questions for you. On the last call, you guys were at the top end of your guidance, and you're now expecting down 2% to plus 2% growth for the year. What are your underlying assumptions for your end markets across your regions here? And how much visibility do you have into the second half? What gives you confidence in the revised range?

When we break the business down into 4 pieces actually. So the service business where growth is driven by the growth in the installed base with a 1-year lag. So we already know how the installed base grew in 2024. So that gives us a good visibility on what to expect in 2025. But we expect continued growth there, consistent with the last few quarters. The reagent business for the reasons I talked about, we've seen a real uptick in growth there, and we expect that to continue because those drivers are in place. They're going to continue to drive growth there.

And then as the Asia Pac instrument business, the Asia Pac portion of the instrument business. So those 3 represent about half of the business. And the Asia Pac instrument business, we don't report instruments by itself, but we report Asia Pac in total and that the majority of which is instruments and that grew at about 9% in the first half. The funding situation for instruments in those markets continues to be quite strong, good support in China from the government. And academic and biopharma institutions in the other Asian countries are pretty well supported. So we expect growth to continue there consistent with historical rates.

And then you come to the other half of the business, which is U.S. and EMEA instruments, more of a challenge there. The U.S. was a little better in the second quarter than the first. So we're hopeful continues. And the new year has been weak, we -- it's obviously under pressure because of government funding. And so that's a bit of a question mark. But the guidance assumes that the half of the business that's growing strongly provides enough of a lift to overcome whatever headwinds we encounter in the other half of business.

Got it. I know we're out of time here, but I just want to give you guys an opportunity to give us some closing remarks. What are some of the key points that you want to highlight to investors today? And maybe how should we be thinking about your long-term growth and what's driving that?

Sure. I think key point is that in flow cytometry market that's down 3% in Q2 and similar number in Q1, we grew our volumes for FSP instruments by 3%. So the franchise is very strong. And this downdraft that we've seen in the flow cytometry business we're confident at some point will come to an end, and we will emerge very strongly from that. I talked about the service reagent and Asia Pac instrument businesses, which are growing strongly. So as soon as EMEA and U.S. instruments stop declining, you'll see growth in the overall portfolio.

And then the other thing to remember is that the incremental margins on our instrument business as revenue grows, are very high. We're in the 75%, 80% region. So when we're able to reestablish top line growth, you're going to see a lot of that drop through to EBITDA line. And with low EBITDA margins, our EBITDA margins excluding investment income are in 7% area, you could see substantial EBITDA growth as we come out of this downturn in the industry. I think that's going to change investor perception on the company when they realize just how profitable we can be in an industry environment where the headwinds have abated then the top line is growing.

Great. Thank you guys for the time today. Thank you.