Good afternoon, and thank you for standing by. Welcome to the Cytek Biosciences First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. As a reminder, today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Paul Goodson, Head of Investor Relations. Paul, please go ahead..

Thank you, operator. Earlier today, Cytek Biosciences released financial results for the quarter ended March 31, 2023. 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 investors@cytekbio.com. Joining me today from Cytek are Wenbin Jiang, CEO; and Patrik Jeanmonod, CFO.

Before we begin, I'd like to remind you that management 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.

Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements in the press release Cytek issued today and in Cytek 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.

Reconciliations to the most directly comparable GAAP financial measure may be found in today's earnings release submitted to the SEC. 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 live broadcast, May 9, 2023. With that, I would like to turn the call over to Wenbin..

Thanks, Paul, and welcome, everyone, joining our first quarter earnings conference call. On the call today, I will discuss our progress during the first quarter, including some of the headwinds impacting our top-line results, as well as our progress across our 4 key strategic pillars to drive growth.

Then I will turn the call over to Patrick for a more detailed look at our financial results and update on our outlook for 2023 before we open it up for Q&A. Starting with our first quarter results. We achieved $37.1 million of total revenue, representing growth of 6% year-over-year.

This included approximately $3.4 million of revenue from the product line acquired from Luminex. Excluding acquisition-related revenue, our organic revenue accounted for CNY 33.7 million. While we saw strong growth in Europe and APAC with notable growth in China, we faced increasing pressures with our biotech and pharma customer base in the U.S.

throughout the quarter, particularly at the end of the quarter. Among the factors affecting demand in the quarter were a marked slowdown in biotech funding, reduced spending among biotech and pharma companies, a decline in covered demand, and the macroeconomic uncertainties resulting in longer sales cycles and delayed orders.

Patrick will provide more detail on our financial results shortly. Based on our Q1 results as well as these headwinds, we now expect full year revenue in the range of $205 million to $220 million, representing growth of 25% to 34% over the prior year.

While our top-line growth this year will be slower than our previous expectations, we firmly believe the underlying demand for our full spectrum profiling or FSP platform remains strong. We remain committed to driving growth and diversifying our revenue streams to continue our strong overall performance.

We are taking proactive measures in this transition year to optimize our business operations in 2023 as we integrate the newly acquired business from Luminex with ongoing efforts to further our overall strategy.

At Cytek, we take pride in our distinctive position in the industry as we offer customers a comprehensive end-to-end solution that includes instruments, divisions, software, and application offerings. Our recent acquisition and partnerships have further strengthened our portfolio, allowing us to further stand apart in the field.

Our competent suite of products and services have continued to advance the adoption of Cytek's full spectrum profiling platform as the method of choice for sale analysis., Our core suite of instruments continues to see solid demand in part because there is a large market of conventional flow cytometers waiting to be converted to our FSP technology, whether it's ultra-high sensitivity needed to resolve more challenging sales corporations or ease of use into a workflow designed for models analysis, Cytek's portfolio is uniquely positioned to meet the needs of all sale analysis regardless of assay complexity.

In addition, our expanding portfolio of panels optimized for use on our instruments will continue to advance FSP's adoption and our recent acquisition of the flow cytometry and imaging business from Luminex will open new markets and applications.

As I have discussed before, we offer our business according to 4 key peers, each of which is integral to our long-term growth. These pillars, which are instruments, applications, power informatics and clinical, lay out our road map for offering our business now and in the future with intentional and purposeful execution.

Despite the challenges we faced in the first quarter, I remain confident that our daily works aligned under these 4 pillars executes on our overall strategy and will produce excellent growth over the longer term. Starting with instruments. During this quarter, we placed 96 Cytek instruments.

Altogether, Cytek's install base has now reached 1,766 instruments as of the first quarter of 2023. These placements reflect our core strategy to achieve growth across the range of applications and the users from entry-level to high imaginal cell analysis applications.

This number does not include the in-store instruments of Amnis and Guava product lines we acquired from Luminex, which has an installed base of more than 7,000 instruments across more than 1,500 customers in over 70 countries.

Over the longer term, we believe this installed base will eventually benefit from replacement and upgrades into our Northern Lights and Aurora platforms.

We also believe this expanded installed base will provide sites with a receptive market for new instruments we intend to launch in future years that are based on Cytek's advanced technologies, augmented by the powerful technologies we have acquired from Luminex. The applications area includes our divisions and trade.

Here, we are actively collaborating with our partners to expand our relations of portfolio and develop application-specific kits, and we are making progress in both areas.

Revenue from Regions and kits continues to be our fastest product growth area, highlighting the increasing demand for our offerings, which are focused on making the scientist's and clinician's work easier, faster, and more accurate.

We are strategically investing in opportunities to grow as exemplified by our strategic partnership with Bio-Rad Laboratories to expand our reagent portfolio and enhance high-parameter panels on our cell analysis systems.

The addition of Bio-Rad StarBright Dyes to our FSP platform, which we announced during the first quarter, provides a major advantage for researchers conducting multi-parameter experiments and we are excited about this ongoing partnership.

We also recently launched our 2 acute myeloid leukemia AML panels and effective and sensitive flow cytometric approach for identifying and characterizing normal and abnormal sales. Immunophenotyping evaluating retable residual disease or MRD in AML samples.

This new panel unleashed the power of our SFP technology and the year built on the company's extensive experience pioneering and revolutionizing full special power cytometry to offer a more comprehensive understanding of the human immune system.

Multi-parametric flow cytometry assets are widely used in detecting and monitoring AML in drug discovery, translational research, clinical trial, and clinical diagnostics.

Historically, on conventional frocytometers, markers used for assessing AML are typically split into multiple tubes due to the limitation of detection channels, forcing the use of redundant markers and the greater sample volume.

Our single-tube clinical kind of AML increases sensitivity while ending with waste for practice, enhancing laboratory operational efficiency by saving time and labor for sample acquisition and preparation as well as preserving pressure samples, and eliminating the use of redundant divisions.

By providing total solutions for specific application areas such as MRD, we are giving researchers and scientists new leverage to jumpstart their discoveries and advance the development of life-saving therapies. Our informatics is our third strategic area.

A key part of our bioinformatic strategy is enabling our customers to streamline their experiment workflow. Our site of cloud product allows customers to design panels faster with a suite of full spectrum panel design tools and the ability to share panels with other site customers.

In addition, customers can convert the panels into expanded templates that can be used on any cited instruments with special flow software. We believe providing these benefits to our users increases the attractiveness of our sales analysis solutions, drives demand and creates loyalty among our users.

Our site cloud product launched late last year was very rapidly adopted by many of our customers and continues to receive growing customer interest. Turning now to clinical opportunity.

Several of our products are approved for clinical use in both China and the European Union, where our most common sale for clinical applications is the Northern Lights CLC system accompanied by our seafloor reagents. As a reminder, we plan to submit our products for FDA clearance in the U.S.

where we believe our powerful FSP platform, if approved, will be enhanced diagnostic power and visibility to the benefit of patients by giving doctors a clearer and more detailed view of each patient's condition. As in China and the EU, we believe the U.S. clinical market also represents an attractive long-term business opportunity for Cytek.

Globally, our approach to the clinical and the laboratory-developed test or LDG market is being driven by customer recognition that our technology enables critical labs to efficiently perform high-level multiparameter immunophenotyping on small amounts of patient samples to identify new sales subtypes and the disease pathways.

This approach provides doctors with more refined and detailed insights into their patients' conditions. And because clinical samples are often difficult to obtain and limited in amount, the ability of our system to complete results with only one sample project in a single tool is important to patients, doctors, and the lapses alike.

In a very concrete way, our plan to have our technology adopted in the clinical market is expected to mirror the success we had beginning 6 years ago when we revolutionized the research market with full spectrum technology.

Our full spectrum technology was rapidly recognized as the gold standard for research yields and we plan to establish it as the standard bearer for clinical applications in the future.

As these benefits become better known in the clinical community in China and Europe, we believe our platform will have accelerated acceptance as the standard advance which other clinical diagnostic approaches are just in the comments of one of our European clinical customers are any indication of our success in this area, we are making great progress here.

We can better define normal by being able to use more markers in a single tube, maintaining full correlation between all markets. Beyond instruments, our crisp and regions are also gaining importance in clinical applications.

The Suncor panel for AML, I mentioned a few minutes ago, is a powerful new product for supporting diagnostic studies, clinical evaluations and the patient stratification in addition to being used as a research tool for the development of new drugs, and we expect it will have strong uptake.

All of us excited are and gratified that we are making such important contributions to the practice of critical research and medicine. This is part of our mission that drives us to manufacture high-performing products and develop new technologies that will enhance the lives of the patients and doctors who depend on our contributions.

Regarding peer-reviewed publications, that include our technology. We are pleased to report that during this quarter alone, there were 145 peer-reviewed publications mentioning SITEC, bringing the all-time number of publications to 1,152.

This remarkable achievement speaks to the momentum of our platform and validates the importance of our offerings to the scientific community. We remain committed to advancing scientific research with our innovative products.

As an example of how significant some of these research efforts are in one paper published in Nature, researchers at the [indiscernible] Cancer Institute identified our therapeutic strategies for stopping metastatic cancer relapse.

The second Nature publication published to longevity, scientists discovered conditions in which T cell replication does not stop after a certain number of divisions, suggesting a research direction for extending human life spend.

Another paper was recently accepted into the clinical section of the journal cytometry, which used a 3-laser FSP instrument running a 31-color panel and reinforces what we have been reporting to you about the importance of full special profiling in immunology and running samples in only 1Q, the abstract of this paper states, Immune monitoring of patients on a single-cell level is becoming increasingly important in various diseases.

Due to the often very limited availability of human specimens and our increased understanding of the immune system where was an increasing demand to analyze as many markets as possible simultaneously in one panel. Full cytometry is emerging as a half tool for immune monitoring.

Finally, I would like to spend a moment to discuss our progress with the integration of Luminex flow cytometry and imaging business.

As we have shared, the Luminex flow cytometry and imaging business provides important contributions to our technological abilities, product range, customer base, and commercial reach, although we are now only a little more than 2 months into the integration process and still have some key steps ahead of us.

We have completed several important milestones already. From a commercial perspective, we have cross-trained all of our commercial technologies due to them. That is the Amnis and Guava products to Cytek employees and the Cytek products for our new team members from Luminex.

These programs include all sales, technical application specialists, and service personnel and provide lessons on each other's marketing programs, product demonstrations, customer training, and other areas. In addition to cross-training, we launched a cross-training plan targeted at service teams, Amnis, and Guava products.

The integration of our service teams will take a bit longer due to the technical training required, but we have established a target base in the third quarter for the completion of that integration. From an operations perspective, we are making good progress on business system integration, manufacturing transition, and product harmonization.

Over the medium term, we have set 3 milestones regarding the acquisition. The first milestone is focused on accelerating sales of Amnis products with the goal of approaching Psyches corporate average sales growth rate by penetrating Amnis into the existing customer base.

This includes targeting half of the 1,000 Aurora customers to purchase at least 1 Amnis unit over the next 3 to 5 years, potentially generating approximately $200 million in additional revenue.

The second milestone is evaluating Guava's cost structure within the next 6 months to determine future product development plans, Guava microcapital technology is an attractive asset and its potential integration with the Northern Lights platform could provide access to a new, untapped customer base.

Lastly, it aims to convert the existing 3 [indiscernible] users to the Northern Life platform as part of the strategic integration growth for H2. We look forward to updating you on our progress.

While we expect modest revenue contributions from the acquisition this year, as a reminder, we think that the real value of this acquisition will be realized in the longer term in 3 primary areas. Most importantly, we have a number of new products we will introduce that represent a combination of the technologies available on each platform.

Next, there are significant cross-selling opportunities we will leverage with the integrated sales teams. And finally, we expect a significant improvement in the efficiency and the gross margin of our service organization with the addition of our new highly trained, and experienced team members from Luminex.

In all, once again, I'm pleased with the progress our team has made this quarter as we navigated some challenges on the macro front. We remain focused on providing a complete cell analysis solution to our customers.

We look forward to continuing to provide our novel SFP platform complemented by luminous products and technologies to these customers as they push the bounce of scientific discovery and the clinical progress. With that, I will now turn the call over to Patrick for more details around our financials..

Thanks, Wenbin. Total revenue for the first quarter of 2023 was $37.1 million, a 6% increase over the first quarter of 2022. As Wenbin mentioned, this included approximately $3.4 million of revenue from the products and services acquired from Luminex Corporation.

As a reminder, the agreement closed on February 28, meaning that we recognized 4 weeks of revenue from these product lines in the first quarter. Organic revenue, excluding the acquired products and services was $33.7 million, a decline of 4% compared to the same period of 2022.

Keep in mind that our 2022 revenue was particularly strong, posting 44% growth over the prior year and setting a high bar to achieve growth this year. Our organic revenue was impacted by a few key factors.

This slowdown was driven by a longer sales cycle and delayed ordering from our biotech and pharma customers, which we believe was due to increased conservatism arising from macro uncertainties in the funding environment, a decline in bioprocessing activity, higher interest rates, and other factors. The slowdown in the U.S.

was offset partially by better performance in all of our markets outside the U.S. A number of our ex-U.S. markets grew in the high double digits with China growing in the triple-digit as a percentage of revenue.

We are pleased with the significant improvement in gross margin in our service business, and revenue from our academic customers were in line with our expectations during the quarter. On a constant currency basis for the quarter, revenue was $38.1 million, an increase of 9% over the first quarter of 2022.

Gross profit was $21 million for the first quarter of 2023, an increase of 4% compared to a gross profit of $20.2 million in the first quarter of 2022. Gross profit margin was 57% in the first quarter of 2023 compared to 58% in the first quarter of 2022.

Adjusted gross profit margin in the first quarter of 2023 was 59% compared to 60% in the first quarter of 2022, after adjusting for stock-based compensation expense and amortization of acquisition-related intangibles. Operating expenses were $33.2 million for the first quarter of 2023, a 47% increase from $22.5 million in the first quarter of 2022.

The increase was primarily due to expenses to support continued growth of the business, including further investment in R&D, sales and marketing and G&A with increases in headcount and personnel-related expenses, costs related to the acquisition, and infrastructure services to support the growth of our overall operations.

Research and development expenses were $10 million for the 3 months ended March 31, 2023, as compared to $8 million for the 3 months ended March 31, 2022. Sales and marketing expenses were $11.1 million for the 3 months ended March 31, 2023, as compared to $7 million for the 3 months ended March 31, 2022.

General and administrative expenses were $12.1 million for the 3 months ended March 31, 2023, as compared to $7.5 million for the 3 months ended March 31, 2022. Loss from operation was $12.2 million this quarter compared to a loss from operations of $2.4 million for the first quarter of 2022.

Net loss in the first quarter of 23 was $6.8 million compared to a loss of $2.2 million in the first quarter of 2022. Additionally, adjusted EBITDA in the first quarter of 2023 was negative $2.5 million compared to positive $1.9 million in the first quarter of 2022 after adjusting for stock-based compensation expense.

Cash, cash equivalents, and short-term investments were $299 million as of March 31, 2023. Now turning to our guidance for 2023. As we've been shared, our expectation for the full year 2023 revenue now fall into a range of $205 million to $220 million, representing overall growth of 25% to 34% over the full year 2022.

This is comprised of revenue from our organic business in the range of $180 million to $190 million, representing growth of approximately 10% to 16% over the full year 2022 revenue and a total of $25 million to $30 million of revenue contribution in 2023 from the business acquired from Luminex.

This assumes no changes in the rate of foreign exchange as well as some continued delays in the longer sales cycles from biotech and pharma customers in the U.S., as Wenbin mentioned.

While our typical seasonal pattern is for revenue to be skewed towards the back half of the year, in 2023, we are expecting that pattern to be even more strongly apparent due to the effects of integrating Amnis and Guava as well as macro factors affecting the U.S. economy. With that, I will turn it back over to Wenbin..

Thanks, Patrick. As always, I want to start by thanking our team at Cytek for their dedication and drive as we execute on our mission to deliver our complete sale analysis solutions to a broad range of customers. It is their excellence, hard work, and shared belief in our important mission that drives our progress.

Cytek is in a fortunate position with many opportunities. We are in a strong position financially, continue to see solid demand, and are committed to remaining profitable on an annual EBITDA and a net income basis as well as achieving our long-term growth targets and objectives.

In addition, our solid balance sheet underpins the strength of our company and provides important strategic flexibility to take advantage of opportunities as they may arise. We have significant opportunities ahead to convert the large existing base of conventional flow cytometers to full spectrum to expand our products into clinical use in the U.S.

to accelerate the growth of our still new sales order, to create new products from our recent combination with Amnis and Guava, to drive sales through an expanded customer base and to make our overall company more efficient and profitable as we scale in size and product offerings.

We believe Cytek is particularly well positioned to address these opportunities given the power of our advanced technologies, the strength of our capital base, the growing awareness of Cytek among customers in the marketplace, and the extraordinary talent of our employees.

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

Operator?.

Thank you, Dr. Jiang. Yes, at this time, we'll conduct a question-and-answer session. [Operator Instructions] Our first question comes from David Westenberg with Piper Sandler..

I'm going to squeeze in a few here because I think a lot of people are on a lot of difficult nights anyway. Can I just maybe ask about the placement numbers here, your placement numbers missed me by more than the implied revenue beat.

Are you at least getting maybe traction with the Aurora placements? And can we make any kind of inference in terms of like what the potential for selling more reagents to that customer in 2023 and 2024 and beyond? And I have a few more here..

So maybe I can take the first question, Dave. Thanks for asking. So looking at the instrument placement. So we sold 96 last quarter, it was about 1.16. So we are down on almost all the categories. But at the same time, we've seen, to your point, an increase in reagent revenue. So the increase in revenue coming from the region is actually very positive..

Okay. Let me ask a few more here. Can you talk about maybe the penetration rate of full spectral flow cytometers here? I mean I think as you've noted, there is a slowdown in placements. I mean I still think that you have the best-in-class technology here.

But maybe are we getting in your opinion, maybe a little bit more mature market? Are we hitting an air pocket in terms -- or is this more air pocket in terms of market conditions? And I'll ask a couple more..

I think we can take a look at the split of our customer base, that includes academia and pharma biotech, also international, I think as indicated, our international sales have done very well and especially China, and actually, the market is leaning more towards our high end of the Aurora and the sales orders.

The U.S., our academia is, as expected, doing okay. And I think it meets our expectations for this way. It's the pharma biotech that's below our expectations. But it doesn't mean the business is lost. It just takes longer time for them to come back to place orders. They become more conservative.

And cited because of our business, like they are heavily leaned towards more actually kind of further months kind of behavior for each quarter. This quarter particularly is because of the situation we all know about.

And so really, the third month has failed to meet our expectations with those commercial customers in the pharma and biotech as they become more conservative. So that's basically what's happening right now..

Got it. Maybe I don't know I'd like to dwell into that because I don't think that the entire concept that biotech, small biotech, Danaher said it on their call, they're rationalizing spending.

We all know that they can't get kind of the funding that they want here from closed capital structure and capital markets environment, sorry, it takes a while to get that out. But I think U.S. pharma-based customers is -- what is that 1/4 of the customers.

Is there any chance that maybe some of the other customers, as we go further into the year, can kind of makeup for some of that slack here? I mean academic is not necessarily as dependent on these cycles as we see the back half of the year, is there an upside for maybe they don't need to cut out the spending considering biotech still needs to spend on their R&D projects for later-stage programs? Any color there would be helpful..

Exactly as what you have indicated. And it just takes longer for them to come back with an order, not necessarily means they will never come back. And indeed, we have seen this already, and as we get into the Q2. So that's basically what we'll put it over there like this..

And our next question comes from Tejas Savant from Morgan Stanley..

This is Edmond on for Tejas. I just wanted to dig a little deeper into what you're seeing in terms of the pharma biotech headwinds in the U.S. in the quarter.

But is there any sort of bifurcation between some of the SMID-cap pharma here versus some very larger biopharma and pharma companies? And are your expectations for -- I know you're saying that the orders are going to take a little longer, but are they going to be -- will this trend be normalized by the year-end? Or is this in that may lead a little longer to '24?.

Indeed, actually, there are some differences in the large pharma and small pharma biotech. Based on the data we have analyzed, in fact, a small biotech has kind of steady coming down over the last few quarters. But the big pharma actually has a sudden rapid effect, which is impacting what we are seeing right now.

But on the other hand, we don't think the business is lost. They will still come back once the situation stabilizes, as I mentioned earlier, and we are already seeing this trend right now. But it's going to take a longer time to close this year than what we normally see..

Got it. And then, Patrick, I think you mentioned a steeper second-half SKU. I was wondering if you could put that into context relative to your prior expectations, I believe it was about $43 57% for the year..

Yes. So with that statement, I think we're going to be closer to 40-60, 61, 40-60. So you see more skewed towards the second half. As to your point, as the trend normalizes, assuming also the economy doesn't fall apart, I think that's the expectation at this point, yes..

Got it. Great.

And then just touching real quick on your billing hold arrangements and the trends that you've been seeing, are the levels still elevated in this quarter? Or has it normalized to more normalized levels? Can you comment on the level of billing old?.

Yes. We still have, as I mentioned last year, we'll continue to have some bill and hold. I think this is a part of the business process. The expectation is that maybe going forward, it will come down a little bit, but it still is present in Q1 of this year..

Roughly what percent of the revenue?.

We have about a little less than $6 million in bill-and-hold over the revenue number..

Got it. And then turning to your FCI acquisition and the Amnis platform, I was just wondering what are some of the strategies you have in place to drive this conversion? And what has the initial feedback been? And then looking more specifically, I'm trying to understand how the 2 platforms will work together in the research workflow.

Is the idea here researchers can leverage the FSP platform to quickly narrow down to a smaller subset of cell populations of interest and then perform downstream analyses on the Amnis with imaging capabilities?.

Yes. And in fact, I think the over left here is more related to the pharma collab when in the early discovery stage, and the imaging provides some additional information regarding to the sales and look also the inside, the sale-to-sale interaction and inside sales, those are the actual information, which typically phenotype won't be able to provide.

This is where we see opportunities especially regarding to our 5 laser Aurora customers and mostly heavily clustered towards that type of applications. And we feel that Aminis will add on top of what we have provided to help our customers, our researchers to understand and more of the discoveries they are engaging with..

And our next question comes from Matt Sykes at Goldman Sachs..

This is Ivy Kozlowski on for Matt. Just wanted to ask what's baked into your guide in the base business for the rest of the year in terms of biotech funding and instrument demand.

And like more specifically, how much of the back half recovery is from synergies with the acquisition versus a macro recovery?.

Yes. So the back half, obviously, most of the recovery is going to be -- I mean, actually, it's going to be twofold. It's going to be, along with the added Guava and Amnis products. It's going to be also a much stronger activity on the academic side.

And obviously, also the expectation that the biotech pharma comes back or the trend improves in the next coming months. And we've already seen some early signals for that. So we're hopeful that the second half of this year will actually provide us with the increased revenue that we expect..

Yes. Just to add on top of that, right now, our sales funnel is still very, very strong, very powerful. We feel it might take a longer time to close, but eventually, it will come..

Okay. Great. Yes, that's really helpful.

And then you kind of touched on it, but what does your instrument backlog look like with other names in our coverage citing less visibility in recent quarters? What kind of visibility do you have on new orders for the rest of the year?.

So we don't really break out backlog information, although as Wenbin just mentioned, we have a funnel, which is the order level activity. And we track that funnel on a daily, weekly basis and our funnel is up compared to last year.

So we have a fairly good understanding of what's coming ahead of us, yet we have less -- we don't understand -- what we don't know is how fast customers will turn an order into an appeal..

Our next question comes from Stephanie Yan with TD Cowen..

A lot of ground already covered, so I'll just have a few different questions. So on the Luminex revenue, it looks like you raised the guide from, it used to be $20 million, I think, for 2023 to $25 million to $30 million.

So were you seeing similar macro headwinds on the Amnis flow cytometry platform? I'm just trying to square away the difference between lowering your organic guide and then raising the Luminex guide..

Yes. And for this way and during the last 2 months, as we continue on this integration, we start to understand more of the Luminex products. When we first provided our early guidance, we were kind of optimistic regarding to converting Guava customers into our Northern Lights platform.

But now we realize Guava has some special features, which actually is going to take a longer time for Northern Light to implement. That means that part of the business is not going to convert that quickly. It will happen, but it's going to take a longer time. Because of this, we have lowered the organic part of the business forecast.

But in the meantime, we have kept a certain business with Luminex, which we originally intended to terminate. Now we are going to continue. That was part of the reason why the Luminex business forecast has gone up..

Okay. All right. That makes sense.

And when do you think the integration and tech transfer will be completed for the Guava microfluidics to Northern Lights?.

I think basically, we are right now going to spend the next 6 months to really understand the features, understand their customer needs for those Guava then make a decision on how we are going to adapt or adopt certain of the features and integrate those types of features into Northern Lights so we can support the Guava customers with the Northern Lights platform..

Okay. Great. And then moving on to your Bio-Rad partnership using their StarBright Dyes.

Do you have any timing on when that product is going to launch? And if you're able to disclose how does the revenue share work with Bio-Rad or are you just using the Bio-Rad reagent as sort of like an OEM type of arrangement?.

The process here is we qualify and then integrate that Bio-Rad into Cytek portfolio, in fact, they are going to be sold at Cytek's reagents. So in that process, there are certain work that needs to be done internally from our operations side, but it's happening, but we should start to see the outcome results during the second half of the year..

Okay. Got it. And then I'll sneak in a last one for Patrick. I know, Patrick, you had a lot of questions on the U.S. and pharma and biotech softness, and you mentioned the heavy back-end cadence. But you did mention that there was a couple of points or trends that you're already seeing.

I'm just wondering if you could provide us with any color on some of these things, which are giving you confidence on a strong back half of 2023..

Yes. So the cost of trends that we're seeing is, first, the funnel activity remains fairly strong. So we're very pleased with that across all the regions, most notably in the U.S., so that's very positive. So that's a key element. And that's going to support the second half..

And that comes from David Westernberg again from Piper Sandler..

I just want to confirm in terms of competitors in full-spectrum flow cytometry. There's really not still any formidable competitors. I just want to confirm that.

And are you seeing anything in terms of patents or announced products that you would consider a little bit more of a threat?.

And first is, I think as we all know, a full spectrum profiling technology has already become the gold standard of the industry. And we hope -- I think nobody is questioning that the future is not going to be special based for cytometry. Cytek is the leader in this technology. And I'm sure today many other companies are working towards this.

And very likely, they are going to have products coming along. But in the meantime, Cytek as a leader, we are continuing to invest to make sure we stay ahead, keep our leadership positions. So we are very comfortable. We are very confident and that we will continue to be the leader for the years to come..

Got you. Okay. And then kind of a follow-up on my previous question here. I know you don't give long-term growth guidance, and this goes back to whether this is an air pocket or if you see maybe you hit some certain sort of penetration rate in the flow site home market.

But as we look at 2024, 2025, 2026, I mean I'm guessing this is definitely a double-digit grower, but I mean, any thoughts in terms of growth rates in out years compared to what we've seen guidance this year organically and what we've seen historically? Are we still that 30% growth?.

Put it this way, okay, as the company continues -- as our base starts to become larger, it's percentage-wise. It may be smaller, but the absolute number is going to be still very impressive, right? So the 30% of last year is not going to be the 30% this year.

It will be very different in the next few years, but on the other hand, we feel and as a growth company, and we will be very comfortable to stay ahead, continue to keep 15%, 20% of the kind of growth range. We don't feel any problem.

But on the other hand, of course, 30% is always something we are trying to achieve, but as your base becomes so large, you have to be realistic..

And that does conclude our Q&A. Thank you for your participation in today's conference. It concludes the program, and you may now disconnect..