Cytek Biosciences at Goldman Sachs Conference: Growth Amidst Challenges

On Wednesday, 11 June 2025, Cytek Biosciences (NASDAQ:CTKB) presented at the Goldman Sachs 46th Annual Global Healthcare Conference. The company outlined its strategic initiatives and financial health, highlighting strong growth in Asia-Pacific, while acknowledging challenges in the US and EMEA academic markets. Cytek remains optimistic about its technology and market position, despite current headwinds.

Key Takeaways

• Cytek is experiencing rapid growth in its Asia-Pacific segment, particularly in China.
• The company aims to increase recurring revenue streams to 40% in the coming years.
• Cytek’s EBITDA margin is expected to double or triple in the next few years.
• New product innovations and the SciTech Cloud platform are central to Cytek’s strategy.
• Current downturns in US and EMEA academic markets are seen as cyclical.

Financial Results

• Installed Base Growth: Approximately 20% growth, driving the service business.
• Recurring Revenue: At 31% of total revenue, with a target of 40% within five years.
• EBITDA Margin: Aiming to double or triple from last year’s 7%.
• Revenue: $200 million last year, with similar expectations for this year.
• Gross Margins: Improved from 50% to approximately 55%, heading towards 60%.
• China Growth: Now the third largest in China, benefiting from local tenders.

Operational Updates

• Manufacturing Footprint: Facilities in Wuxi, Fremont, and Singapore mitigate tariff risks.
• SciTech Cloud: Over 18,000 users, aiding in rapid panel design and optimization.
• Tariffs: Impact on gross margin estimated between 1% to 3%.
• New Product: AURORA analyzer received positive customer feedback.

Future Outlook

• Growth Strategy: Focus on expanding the installed base and increasing recurring revenue.
• Market Outlook: Cytek expects a turnaround in the US and EMEA academic markets soon.
• R&D Investments: Ongoing, with enhancements to the SciTech Cloud platform.
• Cost Management: Revenue growth expected to reflect in improved gross margins and EBITDA.

Q&A Highlights

• Pharma/CRO Segment: Recent weaknesses seen as temporary variations, not trends.
• Academic Funding: Current challenges in the US and Europe are viewed as cyclical.
• Competition: Cytek’s technology is seen as superior in the flow cytometry market.
• Service Growth: Driven by organic growth and inflation tracking.

For further details, please refer to the full conference call transcript below.

Full transcript - Goldman Sachs 46th Annual Global Healthcare Conference:

Wenbin Jiang, Chief Executive Officer, Cytek: Leukemia, MRD. And in fact, we have been working with many of our partners to try and pull that type of application, especially in APAC and Europe, where we have our instrument cleared for the clinical applications.

Matt, Analyst: Thank you. Super helpful overview. Bill, let me go back to you for a just and more and more philosophical when it comes to guidance. This is such an uncertain time, and it’s really hard to figure out, particularly in academic and government, sort of what sort of the year might portend. But as you think about your guide and what you did in Q1, what are sort of the guardrails around upside, downside?

You kind of talked about sort of half of the business actually doing very well. The other half is dragging that down. But as you think about sort of

Wenbin Jiang, Chief Executive Officer, Cytek: the

Matt, Analyst: conservatism you’ve baked into the rest of the year, what are sort of the upside and downside cases in your mind, whether it’s an end market, whether it’s a particular instrument or something like that, that kind of help us kind of put into context

Bill, Chief Financial Officer, Cytek: So half the business is service and the Asia Pac and rest of world portion of the instrument business. And with the service business, we’ve seen a relatively predictable relationship between the growth in the installed base and the growth in service revenues. And the reason for that is that our service contracts is that our instruments get high utilization. So it’s important to the Core Labs that the instrument be up and running because they operate as a business themselves. So when we look at that, we have reasonable confidence of continued growth in that portion of the business at a rate consistent with the growth in the installed base.

The reagent business has been pretty steady. And actually, we had improved growth in the first quarter. So we feel relatively we’ve been making changes there that show that have been improving our execution and our delivery times. And so we’re pretty confident about that. And then you come to the instrument business.

And as I talked about, the Asia Pac and rest of world are markets where there’s good funding and where we’ve been seeing good growth. So really the variability comes with when we gave the guidance that was in early May, there was a lot of uncertainty about academic funding in The US. There’s pressure on government budgets, which are the primary providers of funding to the universities in Europe. So we’ve seen pressure there. And really that portion of the business constitutes most of the range of outcomes.

And it’s a function of how much does the uncertainty delay purchasing decisions. And we looked at a range of scenarios there and bracketed our guidance at the minus 2% to plus 5%. Look, the midpoint is still for growth. And we think that whatever the pressures on US academic funding, that they’re cyclical in nature, that over time we expect that market to write itself. But for this year, you have to be a little cautious.

And so that represents the outcome or represents the range. As I said in my answer to the question, we think that the down cycle in U. S. And EMEA, the percentage declines relative to the prior quarter will start to get smaller because we’re coming up against easier comps, number one. And as we get further into the year, the universities will just be better at figuring out what the situation is and what they can spend.

And look, we’ve all the while, been continuing to sell instruments to universities in The U. S. And last comment I’ll make is that university funding is quite situational. There are some universities where they’re under more pressure than others. And some of those other universities are in pretty good shape.

Others are more difficult situations.

Matt, Analyst: Got it. You’ve historically outgrown the flow cytometry market, and it’s obviously a core part of sort of your long term growth assumptions. Maybe just kind of give us a mark to market on where you think the flow cytometry market growth is today and your expectation for the future to the extent you have one.

Bill, Chief Financial Officer, Cytek: I think the last number we saw for the first quarter was down 2%, if I’m not mistaken.

Wenbin Jiang, Chief Executive Officer, Cytek: Actually, Alder has a report of Q1 overall. In the cell analysis space, the overall growth was negative, I think 12% to 3%. But the indication says this negative growth is mostly due to the downturn of the flow cytometry in that space. So that just means flow cytometry could be even worse than that total in Q1.

Bill, Chief Financial Officer, Cytek: Look, we’re growing faster than that because our installed base is growing at around 20%, right? So that has driven growth at around that level in our service business. And then our Asia Pacific and rest of world business is growing much faster than The U. S. And EMEA.

So that’s why we’re able to outperform. The other point in that regard is that we’re in the full spectrum profiling portion of the overall flow cytometry market and that segment is expanding. So it’s growing faster than the overall market. So for all those reasons, and I think also because of our product innovation, the new EVO being a great example, That’s another reason that we would expect to continue to outgrow the market. There are solid

Matt, Analyst: factors behind our continued outperformance. Understood. In the first quarter, you noted some weakness across the pharma CRO cohort. You actually had a decent Q4 out of that same cohort. So maybe just talk a little bit about what changed in the quarter.

Are you expecting weakness from that cohort to linger across 25?

Bill, Chief Financial Officer, Cytek: That cohort segment is sort of lumpy in its purchasing behavior. The industry has been under some pressure from some of the drug pricing initiatives in The U. S. That have been talked about by the government, approaching patent cliffs. But that pressure on funding in the industry isn’t very different than where it was in Q4 of last year.

So I think that’s just an episodic thing. Our technology continues to enjoy an advantage with pharma customers in that it’s uniquely capable of being harmonized across different sites. So we don’t think that that’s there’s a different directional trend beginning in pharma. We see it more as a blip than anything else.

Wenbin Jiang, Chief Executive Officer, Cytek: Yes. There’s a quarter to quarter variation. The best indication probably is the trailing twelve month comparison versus just looking at a particular quarter.

Matt, Analyst: Yes. I mean, you’re not alone in lumpiness from that segment. It’s been they’ve had their own challenges.

Bill, Chief Financial Officer, Cytek: Right. And they have plenty of money, plenty of funding. The portion of our business that comes from the small biotech companies that are reliant on external funding is very small. It’s in the low single digits. Most of our pharma and CRO business comes from the large pharma companies and large CRO companies.

Matt, Analyst: Got it. You’ve already highlighted how Services was a really bright spot in Q1, and you’ve done a phenomenal job growing that business. You’ve mentioned, as I think many of us know, that it’s attached to the installed base growth as well. But at some point, there’s also going to be some level of replacement or maybe even extension of some of the service contracts as people might not have the funding. In terms of like your long term aspirations for services, either as a percentage of the business or sort of a long term growth algorithm, how should investors think about that business?

Because it’s coming up now on radar screens. It’s becoming a material part of your growth in your business. So maybe helping us frame what that opportunity set is

Bill, Chief Financial Officer, Cytek: that will be just the fact that the installed base is growing at a faster percentage rate than the instrument sales business will cause the service business that faster growth will mean it will become increasingly bigger proportion of the overall portfolio. So you could see that business becoming into the I think we said in the first quarter that our recurring revenue, which includes the reagent business and reagent is about 5% or 6% was 31% on a trailing 12 basis. Over time, you can see that get into the 40s, I would say.

Wenbin Jiang, Chief Executive Officer, Cytek: And

Bill, Chief Financial Officer, Cytek: just because high utilization continues to be a feature of our installed base, our instruments get used 20 fourseven in the labs or we hear that a lot. So it means it’s important for those labs to have service contracts because a Core Lab operates as a business. It charges out its services to other parts of the university. So uptime and high utilization is important. That’s why we’re optimistic about continued future growth.

Now as the deliveries in each year, as the installed base gets larger, the percentage that the deliveries in each year represent of the total installed base will get smaller. So that 20% over the next few years is going to come down into teens, but it will still be very healthy growth. Yes.

Wenbin Jiang, Chief Executive Officer, Cytek: I think from modeling perspective, this is what we see. Eventually the total installed base is going to grow based on the organic market growth eventually when it stabilizes this business. So there are two part of the growth. One is organic in store base growth based on market growth eventually. Then part is basically to track the inflation.

Because service, you service your own instrument, you don’t really have a competition from that perspective. So that’s become your own guaranteed business and then it’s going to track the inflation plus the organic growth.

Bill, Chief Financial Officer, Cytek: Yes. And look the instruments need service. Every once in a few years the lasers need replacement. So if you’ve got a service contract, you get the laser replaced for free. So it continues to be a good incentive for the customer to have a service contract.

Matt, Analyst: And then higher level, if I look at your combining your reagents and services, so let’s call it your recurring revenue, I believe it was about 31% of total revenue on a trailing twelve month I mean, that’s an attractive part of the Tools business model, right, is having this recurring revenue. Ideally, like what is your sort of mix that you would like to see? Because your instruments unlike some of your peers, your instruments are actually accretive to margins, too. They’re really good margins on the instruments as well. But it’s more transactional in nature.

It’s a little bit lumpier. So as you think about how to properly have that balance between recurring and nonrecurring, how do you think about that?

Bill, Chief Financial Officer, Cytek: Sure. Look, we would like to have recurring revenue be as high as possible. And we continue to invest in growing the service business, but it grows with the installed base. And then the reagent business is small. It’s five or 6% of revenue, but we’re growing it in the big markets at close to double digit rates.

So we’ll grow those two parts of the portfolio as much as we can. As I mentioned before, I think realistically getting them into the 40 range five years from now is

Wenbin Jiang, Chief Executive Officer, Cytek: doable. Yes. The other part is if you really want to do the long term modeling and when stabilizes reasonable ratio between instrument reagent and consumable altogether more like a 45%, 55% range, 45% instrument, 55 recurring, which include service and the regions.

Matt, Analyst: And regions, okay. Yes. It. China has been a pretty good source of consistency and growth for you guys, unlike some of your peers that have called out some weakness in the region. Maybe walk through what you’re seeing here in China and any color on how SciTech is benefiting from China equipment renewal stimulus packages?

Wenbin Jiang, Chief Executive Officer, Cytek: We started with China later than The U. S. And the European market. In the early days, pretty much we were trying to establish ourselves with the name recognition. And because that market previously was dominated by a few players like BD, Beckman and Thermo Fisher, those kind of companies.

But over the time and clearly, SiTech now is becoming a well known name in China, especially as the full special technology become established in this industry, SiTech now is regarded as a premium company. So that we benefited from that. Then the next is due to the stimulus program and encourage many of the customers, users over to buy new instrument. And so coupling both, so we actually that’s a reason for Cytec’s record growth right now in that market from a very small portion to today. In fact, we are now the number three in China and based on 2024 tender won by all the potential suppliers over there and the top two, of course, we know who they are and we are number three overall.

But on the other hand, China is large and territory dependent. In fact, in some important territory like Shanghai, Saipei is already number two now. So we are doing very well.

Matt, Analyst: Got it. Maybe talk a little bit about tariffs. I mean talk about a moving target. There’s some news last night or today as However, maybe just refresh for investors sort of what your tariff exposure is? What is sort of your manufacturing footprint in China in terms of both instruments and reagents?

And how should we think about mitigation?

Bill, Chief Financial Officer, Cytek: Sure. So we have established a we have three major manufacturing facilities. So let me talk about instruments and And so Wuxi, China Fremont, California and Singapore. And so we’re able to manufacture product for the Asian and European markets in either Singapore or Wuxi. And there’s no tariff issue there.

The vast majority of the components for our systems are sourced in Asia somewhere. And then for The U. S. Product, either manufacturing it in Fremont or trying as much as possible to bring it in from Singapore. So it’s a region for region manufacturing strategy.

Obviously, are some components for U. S. Product that have to come in from Singapore or other places. So there’s some tariff impact, but we are adding tariff surcharges to our invoices to recapture that. So net net, we’ve talked about an impact of 1% to 3% to gross margin, but I expect it to be very much towards the lower end of that range.

So it’s not a huge deal for us.

Matt, Analyst: Okay. And then Bill, just how should we be thinking about sort of your fixed versus variable cost base? Particularly, what level of sustained revenue do you need in order to generate a consistent positive adjusted EBITDA going forward? I mean, you have it now, but just kind of think about give people some context around sort of the fixed versus variable and what sort of maybe a potential EBITDA margin expansion could look like.

Bill, Chief Financial Officer, Cytek: Yes. So the short answer to that is that we about 75% to 80% of $0.80 on every incremental dollar of revenue drops through to the EBITDA line. So our gross margins roundabout 50% on last year, I think we’re 55% heading towards 60%. And so of that cost of goods, it’s about 40%, about half of that is fixed and half of it’s variable. So you should get a drop through of about 20% of that or And then at the operating expense line, we expect fairly limited growth.

It’s sort of around inflation levels because we have the infrastructure in place already to support substantially higher. So we did have we had positive EBITDA last year with $200,000,000 of revenue. We had so $22,000,000 including investment income and $14,000,000 excluding investment income. And so we’re predicting revenue in a similar range this year. And I don’t think our cost structure is going to change too much.

So as we grow revenue, we should be able to drop through at least 70% of that, 75% to 80% from the cost of goods at the gross margin line. And then 1%, two or 3% total growth in operating expenses. Okay. You can see $10,000,000 of incremental revenue, we could easily see $7,000,000 of incremental EBITDA from that.

Matt, Analyst: Got it.

Bill, Chief Financial Officer, Cytek: Maybe 7,000,000 to $8,000,000 I would say. Okay. It’s pretty healthy. Yes. So I think you made a good point, Matt, is that we’re really at an inflection point where our EBITDA margin ex investment income was about 7% last year.

That could easily double or triple in the next few years.

Matt, Analyst: Yes. I want talk a little bit about the SciTech cloud, which has been interesting. You’ve got I think you reported in Q1 18,000 users. Maybe just kind of give us a little brief overview of the platform, but also, I think importantly, how this provides sort of a stickiness with your customer base? And how do you offset the advantage of the stickiness with maybe some absorption of costs you’re doing?

Mean, there’s a lot of data they’re producing. It can kind of get out of control at a certain So how do you kind of strike that balance?

Wenbin Jiang, Chief Executive Officer, Cytek: Yes. No, absolutely. Before Cytocaud, when customers use Cytocaud instrument and to design develop panel, they have to on trial basis in the lab and putting the view in regions onto the instrument and if not doing well and they change. Typically, it takes three to six months to optimize panel. Now what Cytec Cloud has done is it enable users to design and optimize panel virtually on-site system, actually the cloud.

Afterwards, the system will allow users to purchase reagents through Saita Cloud because it’s linked to our reagent purchase platform or they can, of course, buy elsewhere. And then they can just take their panel and to the lab and do the experiment. That clearly expedited their development of panel very quickly, right, a week or so and everything is done. And so that makes it very, very efficient. And so many users like this platform.

A reason why and when we launched two years ago, immediately received all the attention of our user base, but by now 18,000 and clearly more than 18,000 by now and because we have grown so fast. That also has reflected the number of users, how many people are using instrument and which also reflected on the service revenue growth. Now this is just one part of the features of Saita Cloud. part, actually Saita Cloud, we are continuing to improve this year to provide data analysis afterwards, the experiment through cloud. And then for data management as well, today, special instruments, so much data and typical in the old days, you have a desktop type of storage system and quickly gets full.

And now we will provide those online storage. And then the data management and also then easily for them to access the old equipment and pulling out to compare, to look at it, study them. And now going forward, we’ll continue to evolve and become a platform for users to exchange information data and present results, discuss become a forum for the user base. So through that way, it becomes really a great platform for SITEQ customers and that will enable SITEQ customers to stay with our platform, our solution. So that’s the kind of system we are developing.

Matt, Analyst: Am I correct in assuming if you’re uploading all this data in the cloud and you’re using it and you’re recalling that information for data generation and studies and things, If you were to switch off of SciTech to a new instrument, none of that would be relevant or usable. And therefore, it keeps that virtual cycle of people in the ecosystem for SciTech. Is that a correct assumption?

Wenbin Jiang, Chief Executive Officer, Cytek: Basically, all the data, once developed, it will be continued to be valid, usable, unsighted instrument, of course, not for others.

Matt, Analyst: Yes. Of course. Okay. We have about a minute left. Maybe just to kind of wrap things up a little bit.

What is kind of the message you’d like to leave investors with? And what do you feel is the most underappreciated or things that are underappreciated about the SciTech story?

Bill, Chief Financial Officer, Cytek: Sure. I think as I mentioned earlier, the fact that half of the business is growing at 20%, that the other half, the EMEA instrument business, that I think we’re much closer to the bottom than the top of the cycle and that will turn relatively soon. And unlike almost every other sub billion dollar market cap tools company, we are dependent on going back to the financing markets because we’re generating positive EBITDA and positive cash flow. And that we’ve also just introduced a new version of our core AURORA analyzer and it’s met with very positive reviews from customers. And we are quite optimistic about how that’s going to perform and drive sales going forward.

So I think that’s a lot about our story that’s there’s a lot to like right now.

Matt, Analyst: Great. Well, Wenbin and Bill, thank you very much. Appreciate your time.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.