All right, I am David Westenberg, the life science tools and diagnostics analyst here at Piper. I'm here with Wenbin and Patrik. Wenbin, CEO, Patrik, CFO. Let's just start off with what is flow cytometry? What is it used for? Then, what is full spectral flow cytometry, and why we should care about that? Flow cytometry is a general tool used in many life science tool labs to study the cell surface proteins. It basically has the cells floating in the liquid, then go through the laser beams one by one very quickly, and typically going up, we can go beyond 10,000 cells per second. Then analyze the fluorescence emitted from the cells. Actually, the cells are tagged by the fluorescent dyes, so the dye will emit light and then captured by the detectors. Through the light detected, the wavelength of the dye detected, then the system will be able to identify the proteins, antibodies of the attached to the cells, and then derive, analyze the populations associated with that. So this will tell you the, the immune systems, immune response of the cells. So full spectral flow cytometer versus the conventional flow cytometer is with regard to how the lights are detected. In a conventional flow cytometer, there is an optical filter attached to each detectors, which remove the side band of the fluorescence and capture only the center part of the spectrum beam. Then that will be able to tell what dye it has received or detected. The problem with this conventional is, if the two dyes having the spectrum too close to each other, then the detector won't be able to identify exactly what light it has received. So there are lots of noises from the neighboring channels. It interfere with the detector being attached. In fact, the number of dyes, because of this, can be identified by the conventional flow cytometers are limited. Since when many of those dyes close to each other, then the system basically don't know what they are detecting. Full spectral technology is to detect the complete optical spectrum of the dyes emitted. Then through that, you have all the information. Then there's no optical filter in front of detector to remove all those sideband of the spectrum. And in fact, it's using the mathematical algorithm afterwards to separate those different dyes. That enable many different dyes to stay together and still be able to identify, and that increase the number of dyes that can be used simultaneously from a single tube. That allow to us to really break the barrier supported by the conventional flow cytometer. Now, we can go way beyond 40 colors, from a single tube, to support those high dimensional cell analysis. This is what full spectrum technology is capable of doing. What, what are your different product lines that are using full spectral flow cytometry? You know, if you can get into Northern Lights, you get into Aurora, what's the difference between those two product lines? And then, you know, maybe get into what the Amnis is and what it does, and how it complements the portfolio. We have the full spectrum profiling tools, including Northern Lights, Aurora, and Aurora CS. Northern Lights is an entry-level product supporting 1, 2, 3 lasers, can go up to 25 colors simultaneously from a single tube. Then Aurora is from 3-laser to 5-laser. It will support more than 40 colors, and support 40 parameters and more from a single tube. And then the Aurora CS, which is compatible with the Aurora cell analyzer. Actually, it's a 3 to 5 laser, also fully compatible with the Aurora analyzer, go way beyond the 40 colors. Those are the two other full spectrum tools. Then we also have other technologies, other tools, for example, the Amnis flow cytometry, which is imaging-based flow cytometer. It supports basically a high, it's a high-throughput, single-cell imaging flow cytometer with a resolution like a microscope. Okay. And then we have the Guava. Guava including two products. One is Guava Muse, single laser, two-color, which actually is powered by battery. So you can move around and even in the field, so very convenient for user convenience. And then the Guava easyCyte, from one laser to three-laser, support up to, like, 10 colors. So those are the two technology, actually, two products on microcapillary technology. Nice thing about microcapillary is, it doesn't generate lots of waste for every day usage, only two tubes of waste. A very small tube, which enable those industrial bioprocessing ease usage in the-... On the factory floor, very easy to move around, also manual driven, and to support users who don't really want to get to the details of the flow cytometry, just want to use a tool to get their results. Are you truly alone in full spectral flow cytometry? Who are the biggest competitors, and when do you think they would launch if you are alone? For the other full spectral technology players and for example, like Sony, they have full spectral analyzer only, okay? There's no sorter. And then there are two full spectral sorter players, like BD and Symphony, and as well as Thermo Fisher. But none of those players have a paired solution like what Cytek has, including both Aurora and Aurora CS, with compatible panel, which and you can move back and forth freely, yeah. Gotcha. Okay. Can you talk about the decision to acquire Luminex's the product lines? How do they complement your portfolio? And we'll move on. I have another part to that, but I'll wait for you to answer that part. No, I think three reasons for this acquisition. One is the Amnis imaging flow cytometry I just mentioned, and it provides those high-resolution, single-cell high-throughput analysis with a resolution just like a microscope. The second reason is Guava microcapillary technology with a large installed base. Luminex has been in the field for many years, and we would like to penetrate into the entry to mid-level with our Northern Lights technology. And the Guava customer base, over the time, more than 7,000, give us the opportunity to support their customer base. And lastly, is the operation efficiency on the services. If, you know, so field service require people there, and higher the density in a single territory, more efficient it will be to support the service operation. Just for your information, all flow cytometers require services, typically after the warranty and the customer purchase, service contracts. So it's a recurring business and typically carries until the factory stops support those instrumentations. Got it. What, what do you think the complementarity is between flow and spatial? I think flow is a single-cell level, cell-by-cell look at surface antigens or antibodies analysis. It's a single-cell based, and when typical spatial is on the tissue level, right? But from the speed throughput perspective, we do 100% screening across all cells very quickly. And typically, as I mentioned, a Cytek tool can go beyond 30,000 cells per second, to millions of cells, probably minutes, we have done, right? And spatial is tissue level, and it's slide by slide. It can do a very good understanding on the tissue surface part, but in terms of speed, definitely is limited. You cannot analyze 100% of all the cells. Got it. You know, growth has been slowing, has slowed down pretty meaningfully in 2023. Can you talk about some of the culprits that you saw in 2023? And as we move into 2024, will any of those culprits for slowing growth continue into 2024? I will let you. Yeah. So it's true that we've seen a slowing down of the growth in 2023. What we've seen is a slowing down in the instrument activity. At the same time, it was offset partially with increase in service business and our reagent, which is part of our product line. What we've seen is the top-of-the-line instruments, the Aurora, have seen a little bit of a lower growth rate than the prior years. Yet at the same time, we've seen continued growth on the Northern Lights, which is the instrument that Wenbin was just talking about. Looking into next year, what we've seen here is obviously we'll enter kind of a transition year. I think the macro environment remains very unknown or very difficult. So we expect the next year to be filled with expect to see growth, but maybe not at the level that we expected at the time of the IPO, which was in that 30% range. So we'll be stronger than market growth, considering that our products have a certain appeal that some other instruments do not have. Yeah, just to add on top of that, our technology continue to excel among all the products out there. And we believe and we continue to have the leadership position on the full spectral technology, and which has changed the landscape and the direction of the cell analysis. And so we are very confident with regarding to the overall penetration of our technology to support the cell analysis applications across all the life science space. Got it. What are the margins on instruments and consumables, and how are you going to maintain it, as we move into, you know, a tougher capital equipment environment, where you may be leaning on things like more leasing or longer sales cycles? Do you anticipate retaining, like, strong gross margins, you know, even from here on out to, you know, five, ten years? Yeah. So, I mean, the uniqueness of our instruments is that it has really one of the highest gross profit margin in the industry, and we expect to see that continue going forward, while we continue to optimize our global footprint. But also as we launch new products that have higher gross profit margin, such as our new instrument, the Orion, whereas we continue to launch new products like reagents, the expectation is that the gross profit margin will go back to the 60% range. Got it. Can you talk about priority of staying cash flow positive? What are the factors determining your approach to maybe, because you do have a lot of cash on the balance sheet. So, I mean, if you wanted to go out of cash flow positivity, you could do it for a number of years. So what are the factors you're thinking about? And obviously, market conditions, but are there any other, you know, maybe, Cytek-specific opportunities that you're thinking about? Yeah, it's a great question. Cytek is a little unique because since IPO times, we try to manage the top line, but also the expense side, obviously, investing in our business through R&D and sales. At the same time, we as an organization wanna stay just at EBITDA positive as we continue to grow and build that momentum. Looking at Q2, for example, where we saw a surge in SG&A as a result of the Luminex acquisition, but we've also managed that expense pretty well going into Q3, and what you've seen, SG&A has actually come down. The expectation is that SG&A components going forward is gonna be fairly flat. We will continue to invest, but at the same time, we wanna make sure that we align with the organization of revenue structure. Just, yeah, to add, we continue to invest heavily on R&D, but key question is how to manage the R&D dollars. This is what we excel. We only invest on something we have a very good confidence, and we spend a lot of time before we actually starting a project to make sure whatever the R&D dollar we spend will generate results, will have a great market opportunities, instead of wasting a lot of R&D dollars somewhere, which will never generate eventual outcome for the company. We have done this very well during the last seven or eight years of Cytek's history, and we'll continue to manage to make sure we invest smartly on the R&D. You know, let's maybe talk about some of the lengthening sales cycles. I mean, what's your confidence level here, that it's lengthening sales cycles and maybe just not buying. You mentioned tight budgets. How do you attack a tight budget kind of environment in 2024? Yeah, it's a great question. So I mean, obviously, we'll continue to come up with what we call our full solution. I mean, Cytek is not just limited to instruments, but we have the reagents family of products. We have our newly created platform around bioinformatics and obviously the clinical aspect. So when we put all these elements in front of our customer, it creates a lot of appeal. At the same time, we are having this global footprint, making us also unique to that front. Got it. In terms of the going back to this, the same concept of capital cycles, lengthening capital cycles, can you talk about the demand you saw from high-end versus low-end instruments? How, you know, your customers thought about number of cameras, number of lasers, et cetera? Firstly, under today's macroeconomy, customer does spend more time to assess and when to invest in the high end of the instrumentations. And clearly, we have seen a faster growth for our Northern Lights platform than our Aurora platform. It's just in alignment with today's macro environment. So, customers certainly become more cautious and... But we still feel and when the need arises and the customer will invest, and on the other hand, we looking at the overall market penetration and of Cytek product, we feel full spectrum can do far more than what we are doing today in the entry to mid-level, and it can provide a lot more opportunities. This is the direction and we are focusing on and looking at 24. A few areas of growth opportunity for the company. One is, and which we announced this Orion cocktail, and the second is the AI-based imaging analysis software we feel when launched next year will help to grow our imaging cytometry. Then third one is the Northern Lights. We just released our new software platform to enable the Northern Lights being used more easier and for customers. So, and that will help drive the full spectral technology into the entry to mid-level customers. And lastly, in the cell sorter is another growth opportunity. And since as a new product and our market penetration is still low, and that also means a greater opportunity for us next year. Those are the few great opportunity for Cytek in 2024 that we will rely upon to grow our business. And then, lastly is the reagents consumables, which we continue to focus on and, as one of the four business pillars, we are investing and working very closely with our customer to support translational and clinical trials using the kits we will have developed for that market. Yeah, maybe, Patrik, on what how important are those reagent sales that Wenbin just mentioned in terms of value variation for the company? How should we expect the growth rate of reagents in relation to the companies? I'm assuming it should be faster. Can you quantify, like, how much maybe more fast it should be than the overall base of the business? And I think you've now put reagent sales in the services bucket. So can you confirm that they have been trending faster than company percentages? Right. So just to clarify, so the reagent revenue still remains in product line revenue. Okay. So it's not separated, right? So the two product lines that we have are products, instrument, and reagent, and the second product line is service. Sorry. So the number one growth area this year was service. Obviously, this is a key area for us, with the more instrument coming off warranty, but also the acquisition of the service business from Luminex. Coming back to your question on the reagent side. So the expectation is that the reagent will grow at a much faster rate than the overall business, just because it comes from a smaller base. At the same time, we also see some stickiness. I think customers are coming back, repeating the purchase of reagents. And as we have more instrument, we expect that number to continue to grow. So I'm expecting the reagent to have one of the highest growth rates within Cytek. Gotcha. Can you talk about the how, what makes your reagent business different? Can you talk about some of the, you know, higher, higher parameter experiments and the needs for your reagents? I mean, is that really what's driving them to your reagents, or is it other things like service or just relationship with the customer? I mean, what, what, what is helping build that reagents business, and why do we feel confident that that's the, that's the big growth driver? We have a different business model on the reagent side. We focus on panels and the kits. One reason is because as we continue to support high dimensional cell analysis, the panel construction and optimization certainly is more challenging for our customers. And this is where we have the expertise to help to support. Through that activity, we build larger panels, either as a backbone or as a subset, to support varieties of research customers' needs. The second part is, we support high volume clinical trial, as well as the translational applications. That also rely upon the reagent kits, as well as the expertise on panel design. Those are the two directions for our reagent revenue growth. We develop bioinformatics solutions. Through bioinformatics, we support the customer of panel construction and, as well as panel optimization. Through that process, we enable our bioinformatics to support customers to purchase reagent through our portal, our bioinformatics portal, and using based on our partners, ourselves, as well as our partners' reagents. That allow more flexibility with more selection for our customers. And so this is more on a single reagent perspective. So those are the kind of business model we are supporting. Got it. You do have share buybacks, and I believe you've been tapping the share buybacks. What do you think the market is not getting, in your story that makes the best use of your capital to invest it into the shares of the company? You want to start? Well, we've been thinking about this quite a bit, obviously, and that's the reason why we have the buyback, and we're going to continue to invest in our own company, as we believe we are fairly undervalued. Couple things. When we look at the portfolio of products that the company has, the fact that these going to a defined market or they are built market, I mean, flow has been around for a number of years, so we're not creating a new market. It's a market that's going to continue to grow, so we believe there's future for this instrument, and we see that just with the growth that we've experienced. We also see that we have a solution to the customers, and it's good for the science. And in the end, there isn't really anything out there that we see very appealing to us. So we believe that investing in ourself is the right move today, especially at the price we see today. Yeah, as Patrik, what Patrik has said, we have a leading technology in the cell analysis space, in the flow cytometry space. We will continue to lead with through our investment in our R&D, through our 4 business pillars. At this level and looking around, definitely, we have the best story and in the life science tool space and best technology out there, best growth potential. That's why investing on ourself today is the best option to take full utilization of our cash, bring the value to the cash we have, comparing to all the other companies we have looked at today. I want to just add, the buyback authorized to us is $50 million. Mm-hmm. So we've through the second quarter of... Third quarter, sorry. We've tapped almost $10 million to it, so there's room to grow. Gotcha. All right, we are out of time. Thank you so much for coming.