Good morning, everyone. Thank you for joining us on day three of our global healthcare conference. My name is Ed Minh Thu. I work on the life science tools team here at Morgan Stanley, and it's my pleasure to be hosting Cytek Biosciences Wenbin Jiang today. Speaking on behalf of the company, we have CEO Wenbin Jiang and CFO Bill McCombe. Thank you, Ed. 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. With that out of the way, Wenbin, can you help us set the stage and talk about how 2025 has played out versus your initial expectation 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. Clearly, starting from January, there was an export control from the prior administration right a week before his departure, and that certainly caught us in surprise. Thereafter, we know there were also tariff situations and the funding reduction of those subjects. Nevertheless, all those things are unexpected, and we have managed through. Clearly, due to our earlier preparation regarding region-for-region manufacturing, which was part of our projection, and potentially it may happen. Overall, we have managed this very well. Even though there was some impact, it's very minimal. So far, we have done well overall. In our market, where instrument sales have been challenging, last quarter, your core Full Spectrum Profiling (FSP) instruments placed a 3% year-over-year unit growth. Wenbin, what's driving the strength here? 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? Yeah, first, you know we know flow cytometry is a basic life science tool and used widely and being widely adopted in almost every life science lab. They have been used on a daily basis. Now, as the technology progresses and the application becomes more versatile, they need more and more advanced technology on the flow cytometry side to support their research. That means the conventional instruments fit our limitations. This is when we started to develop our technology, which is called a full spectral profiling technology. The way it works is it captures all the information from those biomarkers on the fluorescence side. That enables us to distinguish autophilic markers with special signatures very close to each other. Because of this, what we have done, that really drives us to break the conventional barriers and get us to far more parameters. We started with our initial 40-color panel, which now becomes the standard in our industry. 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 spectral becomes a standard in the industry. Of course, every one of our competitors are moving towards that direction. They realize the future of the flow cytometry technology is based on what Cytek has pioneered and has promoted. Now we've become a standard of the industry. That actually brings down to Cytek is, pretty much we compete against the conventional tools. We need to convince our customers why they have to go to spectral today. It's no longer the case. When customers start to make a decision on what to buy, clearly, full spectral is in their mind. That becomes a default position. Among that industry, and who is the leader? Clearly, Cytek is the first name they can recognize. We have enjoyed the benefit of that. A reason why, even in today's very tight capital expenditure environment, we continue to enjoy the growth. Our core technology tool continues to grow. Last quarter, we reported a 3% increase over the prior year. Got it. Got it. That's helpful. If we were thinking about the flow cytometry TAM, flow cytometry applications today address about a $7.5 billion initial TAM for cellular analyses and have the potential to advance into an $8.5 billion TAM for a total of $16 billion opportunity. If we were to take a step back, what's the difference between the initial TAM and the adjacent TAM? Where are we today in terms of penetrating this $8.5 billion TAM? I think the first is, when we talk about $5 billion, is what flow cytometry today is overall business revenues. $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, right? 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. 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 reason is due to the funding trend, especially. As you know, early startups and less and less funding getting invested into those industry new business, you don't see that as many. Clearly, that has impacted the purchase. Recently, you see all those new situations facing us. Long term, we believe it will continue to grow in that space, especially flow cytometry. Earlier, I mentioned about that's a very older technology, has been there and widely adopted. Many of the instruments, around 50,000 instruments in the field, many of those are up for renewal. They need to be updated. We feel, although the current capital expenditure investment has impacted the timing, eventually, it's going to come back, and they need to be replaced. In fact, we have already seen that. We do offer, for example, like a kind of incentive for those switch. We see lots of those kinds of situations these days, people coming back for Cytek to offer them a new technology, new tool, to replace their old instrument in the lab. This is getting more and more now. That's what we have been seeing recently. This is going to continue on this kind of process, we feel. We have definitely the benefit. Got it. Wenbin, you mentioned about a 50,000 install base of flow cytometers today. What do you think your guess for the mix between conventional flow versus FSP as we stand today? Yeah, I think FSP started from about 2015 timeframe. Overall, we believe today in the field about 3,000-ish, and based on full spectral technology. Clearly, this is going up rapidly. That's what we see. More and more coming. It's a great opportunity for us because the overall percentage is still very small and less than 10%. As you can see, going forward, flow cytometry typically 7 to 10 years will be the place. You can see the kind of opportunity for us as most of those become full spectral going forward within the next 5 to 10 years. Got it. 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. While instruments directly funded by the NIH only account for less than 5% of their total revenues, what are you seeing in your U.S. academic and government end market customers? How does the sentiment sound like today? I think it's on that purchase. Sometimes it's not just the deluxe funding situation. It's the kind of thinking mentality and the kind of fear. That really has slowed down their purchase decisions, even though when they actually need them, they push back their decision-making. That's a reason why we see some challenges. We have seen some challenges during the last few quarters. Nevertheless, I think gradually, people have started to realize it's not as bad as what people have been thinking about. Even the NIH funding reduction probably is not going to be as much worse as what we expected. I think overall, we have already seen, and I think the U.S. market has become stabilized. As you can see, last quarter, our overall results in the U.S. are already almost flat compared to a year ago and versus early Q1, which was a reduction. I think this trend is going to continue. That's what we feel for the U.S. market. Europe certainly is a different subject because of the overall challenges with regard to funding their defense, moving from less than 2% to about getting close to 5%. Clearly, they are struggling with moving around the funding to support that. That clearly is going to continue to impact the high expenditure support on the research space. Again, the needs are there. It's just with regard to where they are going to cut more and where less. We feel flow cytometry eventually is going to come back because of the needs for almost every of the research needs in your lab. Many of the tools are becoming old. They need to be replaced. Got it. I guess in terms of your customers in the academic, government, and market in EMEA, are you seeing regional differences, or is it broadly the same? Any trends to go on? We saw amongst the pharma customers, excuse me, the biopharma customers, some preference for swinging investment back to the U.S. in the second quarter. In terms of 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. In Asia-Pacific, the funding situation of both biopharma and we're seeing increasingly stronger contribution from the academic and government sector in Asia-Pacific. Much of the sales, particularly in China, go through distributors. They end up in our, as we classify them, in our biopharma sector. Much of that strength actually comes from, is driven by government spending. That's a screenshot. Got it. 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 2AQC applications? How does it differ between pharma, biopharma, and CRO customers? First is in the first question on the pharma side. The application is split between the discovery, drug discovery, and the translational, and that's related to the kind of clinical trial. Then production side, QC type of applications. Cytek tools today are mostly focused on toward drug discovery. I believe almost every large pharma today has Cytek's instrument already to support their research. We see the continued increase of our penetration to support those types of applications. Follow through is on the translational side. That's where they start to work very closely with CRO. Now we can clearly see CRO started to adopt Cytek tool technology more and more. They started on, of course, early days IQV. 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. It's still because during the clinical trial, they don't really want a 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 supports a larger panel, is the flexibility. CRO needs to show all kinds of clients, pharma-based, with many different types of biomarkers. Normally, without Cytek's tool previously, they have to deal with all those small panels one by one. They have to prepare lots of different types of reagents and a big catalog and large inventories. As you know, many of those probably eventually would have to be dumped to waste it. Now, after they have transitioned into Cytek technology, with those large panels, they can reduce the whole offering catalog down from a whole book to a couple of pages to support their customers. That significantly reduces the kind of inventory they need to prepare to support their customers. That saves them tremendously. Also, the kind of flexibility they have, we have to offer for them. That's why CRO is getting more and more into Cytek tools, Cytek technology. We have more than 10 CRO today based on Cytek tools, Cytek technology. More and more, we are seeing our penetration into that space to support them. QC, we do have a tool that can support QC. QC side is a different sales channel. As you know, Cytek started from the high end of the research, gradually getting into the translational clinical trial. With regarding QC, it's a different sales activity. We are learning. We feel that's an opportunity for Cytek. We have the tool. We have the products. We have the technology that can support them. We see that as a future opportunity for Cytek. Got it. 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. Looking at some of the publicly available tender information, Cytek always comes in a solid three with some months you guys coming in in second place. 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 the region that you're seeing? In China, you know, after that many years of work with our customers, clearly, Cytek has established ourselves as one of the top premium suppliers, especially as the new decision comes down what to purchase. When full spectral technology becomes a default position, Cytek now starts to benefit. Even though some of our competitors still have the name recognition, with regarding when getting down to the technology selection, clearly, we benefit. That's the reason why our market share in China starts to grow. During the last few quarters, we see this trend is continuing. We clearly are going to benefit. That's the reason why, you know, and we see overall our business in China is doing well. Right now. Got it. 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? How has the early reception been since it started shipping out? I think it was in June. Our Aurora Evo was supposed to launch 2017, right? As we engage with customers, as we are into more and more on the pharma side, we have been hearing a lot from the pharma with regarding to what they would like to see, certain features being tailored on our tool. Built upon those inputs, we started to develop new technology, new tools, and all of those features start to get into the new Evo system we launched in Cytek this year. That including, for example, the highest support pharma really would like to see. That's going to help them to improve the efficiency timing and with regarding to the drug discovery. The automation side is because all flow cytometry require turn-on, turn-off, and with certain time delay. This kind of automated process allows customers to remotely turn on, turn off, and those systems that can also speed up the process operation. We see the small particles more and more on the drug discovery side require those kinds of features. We did have the small particle option previously for early instruments. Now, this has become a standard across all Evo that supports those nanoparticle kind of research. Finally, harmonization also becomes a standard across Evo. All of those features are actually desired by the pharma. Evo is really a system for the pharmaceutical companies. Got it. It sounds like it packs a lot of great new features. 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 cell sorter? How should we be thinking about this? Yeah, we don't talk so much about the ASPs of individual products. It's something that falls at a premium to the Aurora because it has a lot of features that add productivity and value. Relative to the cell sorter, same zip code, maybe depending on the configuration could be a little higher, a little lower. Got it. That's a helpful color. I guess speaking of cell sorter, another instrument in your high-end portfolio, how has that been performing of late? Is it seeing some pressure given its higher ASP, or maybe some distraction from customer interest in the Evo? You mean the cell sorter? Yeah, cell sorter. I'd say it's, you know, we had a very strong first quarter, and it strengthened the Q4 of last year. It's continued with what I call solid performance in Q2. Bear in mind that we're in an overall market that has negative growth. Solid performance is actually pretty good. Got it. 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. If you guys could provide some color on how these efforts have been progressing and maybe some color on how Northern Lights have been performing of late and customer interest in your new Ming Yan Micro. Yeah, Ming Yan Micro has done really very well, but 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. The big products continue to be the Aurora and the sorter. They account for the majority of our revenue. Aurora plus Aurora Evo and sorter continue to be the bigger account for the majority of the portfolio. Got it. You guys are seeing a lot of momentum in your recurring revenues. It was service and reagents where both grew 18% year-over-year in Q2. Maybe parsing the two apart, on services, Bill, you've mentioned that there's a very predictable relationship between installed base growth and service revenue with a one-year lag on FSP. As your install base starts to mature, how do you think about this relationship evolving? I think it's, you know, our attach rate, if you will, has been very stable. It'll continue to grow with the growth in the installed base. As the denominator gets larger, the% increase will gradually get a little slower. That'll be a gradual effect on growth over a multi-year period. We're not going to see dramatic changes there, at least. That's our current view. Look, our systems are very actively used. We've got in our cloud, Cytek Cloud, we've got five or maybe six, seven users per machine. It's important for the customers that the machine is up and running and ready for use. I think that has supported our service business. Got it. On reagents, I know this is a relatively new and smaller business for you guys. One of the interesting things you guys talked about on the last call is your install base pulls in about $150 million worth of reagents annually, but you're only capturing less than 10% of that. I was wondering, what are some specific strategies or initiatives that you guys are implementing to accelerate the adoption of Cytek reagents on your instruments? Sure, Aldis. The most important one is reducing our delivery times, the time between when a customer orders and when the reagent shows up at their facility. We've brought that down very substantially since the beginning of the end of last year, and I think that's really helped. We've continued to invest. That's probably the most important driver of growth. The other things that we've done include continuing to invest in new reagents. We spend a lot of, you know, relative to the size of the business, a lot of money on new reagents and new dyes. Once you've developed a new dye in particular, that's an asset that keeps producing revenues over the long term. That's the second thing. The third thing is we have put together a number of partnerships that enable customers to buy other companies' reagents through our platform, and that has substantially expanded our product range. Through a combination of our own reagents and those that we source from other players, we now have a very full catalog. Lastly, Cytek Cloud, we've worked on making it easier for customers to buy reagents through Cytek Cloud, although that at this stage is a pretty small contributor, but it's a contributor. Got it. The combination of all those things has really improved the growth rate from pretty close to flat to 20% in the last quarter, 18%, I think. Got it. Speaking of Cytek Cloud, Wenbin, I think on the last call, you mentioned your vision of turning the Cytek Cloud into a platform for users to exchange their information and to present data in a forum for the community to better relay info. What are your thoughts on the timelines for implementing this strategy? How do you envision this creating additional stickiness for your customers? Actually, Cytek Cloud is clearly a platform and widely adopted now by our user bases and also growing very fast. The vision is beyond 20,000 users because the tool really is helping and streamlining the panel design for our users. Previously, that process takes weeks, months, and now a couple of hours. That's really helpful and useful. Even some of our competitors are coming to Cytek Cloud hoping that that can somehow help their user bases with regard to the reagent panelism. I think Cytek Cloud clearly is a system. 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 processes. We routinely offer workshops and user group meetings for them to exchange. Many of those activities can be adopted over Cytek Cloud. Right now, our primary focus today is trying to support on the reagent side. Lots of automations are being implemented from the panel design to reagent, coagent to reagent orders thereafter. Of course, we are going to expand and to include all those other activities. In order to support that, certainly, there's certain costs involved. They would hope the whole platform will be able to sustain by itself, self-sustainable. We feel through certain activities like reagent support and those kinds of things, eventually, we will be able to enable our Cytek Cloud to provide more and more capabilities. 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. 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? Where do you guys stand in terms of seeking clinical regulatory approval in the U.S.? Yeah, clinical clearly, we have to go through market by market. They are regulated by each country. Where we sell to, China was the first one who received the clinical clearance today. In fact, Northern Lights CLC, that platform, has been doing relatively well compared to other markets because of the clinical certification we received over there. We also have the cash-free clinical clearance for the reagents panels like TBMK. We are also trying to expand the application panels beyond what we have today over there for the market in China specifically. Europe is the second part. We have the Northern Lights CLC IVD-R cleared. We have also built a relationship with Sysmex. As we know, Sysmex is a premier clinical tool provider in Europe. We have built a partnership over there together to drive the Northern Lights CLC for that market in Europe. We also started 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. 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. I guess there's been some moves in the flow cytometry market of late. I have to ask an obligatory question on the competitive landscape. Can you provide us with the current view on the flow cytometry competitive landscape today? Are you beginning to see a narrowing of either capabilities or pricing? As I mentioned, as full spectrum becomes a primary technology and tool product for this industry, clearly, our competition is clearly the primary previously for the conventional, now moving into our space. We do have seen more and more players here into our space. We don't really see them as a threat. We see them as an endorsement. Cytek is a leader. Previously, as earlier I mentioned, we had to convince customers why they have to select full spectrum instead of staying with the conventional. Now, no such a need since everybody wants to spectrum and a great endorsement for Cytek. Cytek has been there shipping this product for that many years. We have gone through all the ups and downs, and all the problems being addressed versus all the newcomers. Here now, certainly, we have a broader, larger base for us to drive our product into. From our perspective, from a performance perspective, from a beta side, we continue to outperform across all the spaces compared to those newcomers. Now, the fun is about pricing, right? Cytek, in fact, has always been cost-efficient in our space. In fact, we don't worry about overall competition with regarding to pricing. That's what we are good at because of our operating efficiencies. Now, certainly, we will continue to drive new technology, new products presented by the Evo we launched to make sure and reduce the price erosion effect in our space because we provide value to our customers. In fact, in this industry, pricing is not really the primary driver for customers to select which product. It's about performance. Of course, as we move into the QC space, production size, it may be a different thing. This is an area we are still trying to learn, trying to adopt. We feel we are positioned to support that market, to be competitive in that market as well. Got it. Bill, maybe a few financial questions for you. On the last call, you guys lowered the top end of the guidance, and you are now expecting down 2% to plus 2% growth for the year. What are your underlying assumptions for your end markets across your regions here? How much visibility do you have into the second half? What gives you confidence in the advice range? We'll break the business down into three or four pieces, actually. The service business, where growth is driven by the growth in the install base with a one-year lag. We already know how the install base grew in 2024, so that gives us good visibility on what to expect in 2025. We expect continued growth there, consistent with the last few quarters. The reagent business for the regions 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. Then there's the Asia-Pacific instrument business, the Asia-Pacific portion of the instrument business. Those three represent about half the business. The Asia-Pacific instrument business, we don't report instruments by itself, but we report Asia-Pacific in total, and the majority of which is instruments. That grew at about 9% in the first half. The funding situation for instruments in those markets continues to be quite strong. There is good support in China from the government, and academic and biopharma institutions in the other Asian countries are pretty well supported. We expect growth to continue there, consistent with historical rates. 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 that continues. EMEA has been weak. We obviously are under pressure because of government funding, so that's a bit of a question mark. 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 the business. Got it. I know we're at 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? Maybe how should we be thinking about your long-term growth and what's driving that? Sure. I think the key point is that in a flow cytometry market that's down 3% in Q2 and a similar number in Q1, we grew our volumes for FSP instruments by 3%. The franchise was very strong. This downdraft that we've seen in the flow cytometry business is, you know, we're confident at some point will come to an end. We will emerge very strongly from that. I talked about the service, reagent, and Asia-Pacific instrument businesses, which are growing strongly. As soon as EMEA and U.S. instruments stop declining, you'll see growth in the overall portfolio. The other thing to remember is that the incremental margins on our instrument business as revenue grows are very high, in the 75%, 80% region. When we're able to reestablish top-line growth, you're going to see a lot of that drop through to the EBITDA line. With low EBITDA margins, EBITDA margins, excluding investment income, are in the 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 and the top line is growing. Great. Thank you guys for the time today. Thank you.