Three of the Global Healthcare Conference. Really pleased today to be joined by the team from Cytek. We have Wenbin Jiang, CEO, and Bill McCombe, CFO. Thank you both for being here. Good morning to you. Just before we get started, for any disclosures relating to this webcast, to this fireside, please see morganstanley.com/researchdisclosures. Maybe we can just dive straight in with how 2026 has played out so far versus your expectations. Anything that surprised you for the better, anything for the worse, and then we can get into some specifics from there. Sure. We guided to 3%-5% growth at the beginning of the year. In the first half, we recorded 6% growth, so above the high end of our expectations. Now, admittedly, that's against a weak comp in the first half of 2025, but the U.S. academic and government market has proved to be very strong. Pharma globally has been pretty solid as well, with good growth off a low base. Those have been positive surprises. Maybe we could just talk through, for those investors perhaps a bit newer to the name, how your portfolio differentiates from others in the market. Because the feedback we get is it's highly innovative and there are some standout features there. Just across the continuum from some of your higher-end products to some of your lower-end, what is it that makes the Cytek product stand out? What else is there in the market? Yeah. As you know, 10 years ago, we actually launched our first product, Aurora, at that time. When we were launching that product, clearly at that time, flow cytometry was already talking about a 50-year-old technology and old industry dominated by a few big players. We were a disruptor at that time. What we came up with, what we called at that time full spectral profiling technology-based flow cytometers. With what we did, and we have so far, over the last 10 years, changed the industry completely. The whole flow cytometry industry today is about full spectral technology. I don't think anyone will question the future of the flow cytometry will be a full spectral technology or not. It's about whose full spectral technology they will go after. During the last 10 years, we have pretty much established the industry with what we have developed as the standard. Now, especially, I know we started with the key opinion leaders, those key academic labs. From there, we penetrated into all the key pharmaceutical companies. Today, if you go to any of the labs in the U.S., in Europe, probably you'll be surprised not seeing anything from Cytek. Basically, this is what we have now. We build upon what we developed. We continued to evolve from there. We started with analyzer, then go to sorters, and then from analyzer, sorter, we continued investment and engagement with customers. From there, we developed, launched Evo as the second generation of flow cytometers. Just very recently, we launched our latest product, which we call the Borealis. Borealis is not just a new flow cytometer. In fact, it's a flow cytometer together with the reagents, the dyes. We launched the product as the whole package, as a full solution, including the imaging. With what we have now, we become the first flow cytometer company that enable more than 60 colors, which is exactly what many of the academic labs, as well as pharma discovery, are looking forward to enable them to truly improve the efficiency of their drug discovery or help them to truly understand the fundamental technology behind the new diseases and trying to understand it, a tool which they have been looking forward to. Cytek, we changed the whole industry, and now we continue to lead the industry based on the standards we have already very well established over the last 10 years. That's helpful. How would you characterize the demand environment today for flow instruments versus maybe six months or 12 months back? Just maybe any trends you've been seeing in the end markets. Sure. There's a substantial improvement. In the first half of last year, our growth rate was -5%. As you'll remember, there was a lot of uncertainty about government funding for research at that time, about funding the government was going to make available to universities, and about trade policy with respect to pharmaceuticals. Most of those issues have largely receded, and so in the first half of this year, we grew 6%, so 11% better growth rate. That underscores a much more solid environment. We've also seen the NIH come back, and had several purchases funded by either by the NIH directly or an NIH-funded grant. So, it's been a positive. In general, much more positive environment in the first half of this year. Yeah. I think the U.S. is particularly doing very well with regard to the overall growth. Yes. Exactly. Okay, amazing. We will dig into some of that in a bit, but maybe on the replacement cycle, I think you have talked about 50,000 installed base of mostly conventional flow cytometers ready for replacement by FSP. Typical replacement cycle of around 7-10 years. Just given how that market is starting to transition more broadly, I think customers feeling a bit healthier now with where their spend goes. How are you think about driving that next wave of replacements? Well, as Wenbin mentioned, in 2017 to 2019, we were the disruptor. We were bringing a new technology that the customers hadn't decided on yet. What's become evident, in recent years is that, there's broad acceptance that FSP technology is the way to go for the future. As the pioneer of that technology and the leader in that particular sector, we benefit from the replacement cycle from this, the replacement of conventional flow cytometers by FSP. So we're the incumbent leader. There's a broad population of people that know how to use our instruments. We have reputation in the marketplace. So we just need to continue to execute, with a strong selling effort, strong service offering, and continuing to introduce the best new products in the marketplace, which we have done both last year with the Evo and this year with the Borealis and the Evo 2. If we continue to execute, we're in an advantage position with respect to that big wave of replacements that are coming. We also, for the low and mid end of the market, we've now established this separate dedicated sales force to go after those opportunities. That's another initiative that we've undertaken to make sure that we benefit as much as possible from that. How evolved is that process? We formally implemented it this quarter, so it is just getting going. We know that is the right solution because those are different customers with different needs. We are bringing them a more economical, full spectrum system, our Northern Lights. We think it is well-adapted for that market. We think that dedicated selling effort and having the right products for that market will benefit us. Got it. Maybe just, taking instruments by end market, I think Acad/Gov, globally declined 12% in the second quarter. Maybe just unpack geographically where you are seeing pockets of strength. Sure. How we should be thinking about that for the back half of the year? Yeah. I don't want to say tale of two cities, tale of two regions. U.S., very strong academic and government was up 50% versus last year. For all the reasons I talked about, the cloud of uncertainty over university funding being lifted, the NIH coming back, and the new products and the leading research labs are big buyers of a new product. You introduce a new high-end product and there's going to be strong demand from those customers for that. In the other part of the, actually in China, the academic, what we classify as sales to distributors actually end up going to academic institutions. So that market was pretty good in the first half, but it shows up in our results in the biopharma segment. In Europe, we continue to see a soft market because the academic and government market in Europe is almost 100% government funded. Government's been under pressure in Europe because of the geopolitical issues and the funding of the conflict in Ukraine that they're all engaged in doing. So, we expect that that'll bottom out at some point. That will improve our overall growth rate. How much visibility do you have on those academic markets for the back half? We book and ship pretty much everything within a quarter. We don't carry much backlog at all into the second quarter. I can't really comment on backlog. We're in the business end of closing the third quarter, and I won't comment until we have the third quarter results in the books, but be more than happy to answer the question in a few weeks. Fair enough. Worth a try. Maybe just moving on to biopharma. I think that was one of the stronger instrument- Yeah. -components, up 22% in the second quarter. Was that strength broad-based across large pharma, biotech, and CROs? Maybe just unpack that a little. Yeah. The big pharma and the big biotech, the $50 billion, $100 billion biotech companies tend to be the big drivers. We have had significant interest from CROs as well. The CROs tend to be fleet buyers. They're interesting opportunities, but I'd say that big pharma and big biotech are the primary drivers of that, the distributors. Distributors tend to be more important in markets like Latin America, China, where it goes into the academic market, and Latin America being pretty solid. But big pharma, with the investment wave that they're on right now has probably been the most important driver. And that sector was up 17% in the first half. A little bit higher than that, sort of in the 20% in the U.S. because we're seeing some particular focus on reshoring into the U.S. These are also fleet buyers, and they've evaluated our technology, and they like it, and they're being consistent customers. I want to touch a little on the China strength, so double-digit growth there in Q2, I believe. Rest of APAC seemed flat. So maybe, again, just unpack what you're seeing in the region there, and if there's any kind of emerging regulatory or funding changes you think could be up and coming. Not really. Funding in China has always been pretty strong. The amount of research activity going on in China is extraordinary. That's something that I'm sure other companies will comment on. So, the funding mostly comes from the government, and institutions are ambitious about pushing their programs forward there. I think in China, they publish the results of-- Most of the purchasing is done through a tender, and they publish the results there, so we know exactly what our market position there is. I think we're number three, Wenbin, if I'm correct. That's right, yeah. In China, we are number three. Our market share, our instrument side is above 15% right now over there. Other APAC, I think the economies there have been a little softer than here in the U.S. I think there's been more impact from fuel prices on those economies. So they've been a little bit more cautious. It's been a bit tougher there. I know one of your- Our market position is very strong- Yep. -in those regions, so it's just a matter of the economies and interest rates being more of a factor there. On competition in China, I know one of your competitors is localizing some manufacturing in China that should start picking up, I think, in the back half of the year. So how are you thinking about that in relation to just your competitive position and that win rate? Actually, with the value first, I told me to looking at the market in China, you always need to look at market segment. Cytek plays primarily in the high end of the research market, where the primary targets are government-funded research institutions. Over there, typically, they all go through the tender process. Pricing is not really a primary factor for that segment. Cytek always wins by performance technology instead of pricing. Therefore, localizing manufacturing in China, that is not going to really help. Of course, there's one aspect right now in China here is to buy made in China. For that part of the subject, clearly, you are going to see some of the international companies may be disqualified from participation with regarding to tenders. Cytek can participate, whether it's made in China or made in international since we do manufacture across multiple regions. We do manufacturing in the U.S., in Singapore, in China, and basically also we have this region for region manufacturing process. That will enable us to participate in tenders, qualify for tenders at whatever conditions. Again, for those type of tenders, pricing is not really a primary subject always. It's about technology, about performance, and about the needs. That's why I don't feel this localizing manufacturing in China is going to change anything. Understood. Bill, maybe just to double click on EMEA. So decline again in Q2, just those government budgets remained slightly softer. How long should we think about this remaining under pressure? Do you have any visibility into trends there and any kind of green shoots that perhaps could come about? Yeah, look, we are starting to lap easier comps. We did have a quite a strong Q4 in EMEA. But Q3 last year was weaker. I think the rate of decline has slowed. Hopefully, that is a precursor to a flattening out, and we are getting to a minimum investment level out of there. The replacement cycle should be occurring in Europe as well. Their availability. They do not have the other sources of funding for academic institutions that we have in the U.S. Their private donations and endowments are nowhere near as big as they are here. College sports is not as big a deal in Europe, which is a big revenue generator here. It is all about fighting for a share of a government budget that continues to be under pressure. But look, we have got to hit bottom here pretty soon. It is like the end of last year when Europe was declining 30%, and we showed a slide that said if Europe was flat, that we would start to grow high single digits. In Q4, Europe actually went up, and so our growth rate went to 8%. I think at some point we will see a replay of that. I do not know exactly when. Certainly, the comps are getting easier. That is the good news. Indeed. Also, its share of the overall pie, because it is shrinking and everything else is growing, is getting smaller. Yeah, I think we spoke about innovation earlier, the Borealis launch back in June. Yeah, that will help. European academic market is one that is particularly. They get what's called innovation funding, which is a grant that is specifically made available to buy the newest, latest, greatest instrument. Borealis certainly qualifies for that. That's a more important source of funding in Europe, so that should help us. Yeah. Talk us through some of the early feedback on that and any numbers you can give on shipments or I guess ambitions for placements with time, just how that launch should shape up. Do you want to answer? I think Borealis right now is still in the early adopter stage. Right now, our primary shipment is still based on Evo 2, but Borealis is a product we expect will start to ramp up next year. Yeah. Look, we're selling all of them that we can make, but it's still low single digits or single digits in terms of units. Next year, there was for a long time demand for a high-end analyzer with imaging, so we knew that the market wanted it. We're going to have the imaging upgrade available next year, and that will be a knockout product. It'll be way better than anything else that's on the market in terms of number of colors, imaging capability, and it's exactly what the high-end institutions and research labs want. So we think that'll be very well received. Just as we think about manufacturing bottlenecks or demand outstripping supply, is that anything you anticipate or do you think you can service what you have out there demand-wise in the market? I think with any new product, the production rate improves over time as you get used to making it and deploying it. So I don't think that'll be a significant factor next year. I mean, look, the imaging upgrade will be new next year, and we'll have to work through deploying that. But we're excited about the prospects for that product. A year prior, Aurora Evo came out to the market. Maybe just talk through customer feedback there and how that- It's been fantastic. Our volumes have now, admittedly, we only had it half the year last year, but our volumes are broadly 3x what they were last year, and it's quickly become the vast majority of our Aurora portfolio. It'll be our largest-selling individual product probably this quarter, and very well received. Then we've introduced this year what we call the Evo 2 with the enhanced automation capability that allows it to basically operate completely automatically with a robotic arm. That's a key product for the automated lab of the future where you can set it up and load your plate hotel and it'll operate by itself. Yeah. When you think about that lab automation, we've had a lot of questions coming our way about it for the past few weeks. Where do you think you sit into that ecosystem? Well, we think that this product is a key element of that. The customers who are contemplating these projects tend to be the large pharma companies because they have the capital available, and they have the visibility on long research programs or high volume. They want to do high-volume screening. So we hear about these projects in the works. We believe that some of the construction projects that are underway are this kind of project. We think this is a great product for it, and it's in the market this quarter and selling very well with good demand. I think this is another one where we're selling everything we can make of this one. Great. We've obviously covered the high end and you're known for the high-end products, but you've spoken about that opportunity to penetrate the kind of entry and mid-level cytometry market. How have those efforts been progressing so far and what's uptake been like across the portfolio? And clearly, as you can see, high end of the market is about special. But special is not just about high end, it is also across the board. And here, the entry, mid-level, and the application normally is going to each individual labs, as well as pharma QA, QC, those kind of applications. And over there, people pay attention more toward consistency, reliability, and ease of use, versus the high end research market, always talking about high performance data flexibility. So there are certainly different aspects with regarding to the operation of the instrument. That is a reason why we formed this new business unit, which is solutions and clinical business unit, to enable us to really focus on that aspect of the customer applications and to drive into that business. Now, over there from spectral perspective, we have all the cost structure and we have all the performance needs as well as ease of use kind of qualifications to support that market segment. It is all about how we focus on driving the sales activity, marketing activity to focus on those customer base, which traditionally, it was not Cytek's focus, but now we start to pay attention to that. And we feel through those dedicated focused efforts, that will enable us to grow that part of the market segment. Amazing. Want to spend a bit of time on just the recurring revenue. I think that was one of the spots that held up pretty strong in the second quarter. Just on services, the installed base now, I think approaching 4,000 instruments. What percentage of the instruments are currently covered by service contracts, and what do you think the opportunity is to increase that attachment? Currently, we're at about 60%, 6-0. It's higher in U.S., and a little bit lower in Europe and APAC. As install base grows, the density of our network or the density of instruments within our network increases, so it makes it more efficient. That number, that 60% number, hasn't moved too much. Our best case expectation is that service revenue grows consistent with the growth in the install base. We're not counting on a lot of upside in that attach rate. By the same token, that's captive business. You can't get the service from anywhere else except us. So it has a very reliable growth path that is driven by the growth in the installed base. Good margins, predictable growth business, and obviously very attractive for us. Why isn't that something you can push a little harder, just given the margin profile's better and? Well, we do have sales. The margin profile isn't significantly. We'll have to wait until we see Q3 and Q4 before we can have a good picture of the margin of the products business. But there isn't a huge difference. We do have dedicated sales efforts. So part of our reorganization was to add a dedicated sales team to sell service contracts, so we will be pushing on it. It's just too early to say how that number. That number's been very stable. Hasn't moved down much or up much, so that's why I'm a little cautious about predicting significant upside, but we are putting resources behind it. Okay. On top of that, actually service, what's really important on the service side is about usage of the instrument. You need to drive the instrument to be used in the lab, and when customer have purchased it. So whether there's a service contract or not, instrument always require service. Even though some of the instrument may not have the service contract, they will eventually still come back to Cytek. Sometimes customer goes through the third party. There's a third-party insurance company, and they offer those type of services. Customer goes through them. But when the instrument actually requires service, they will still come back to Cytek, and then we start to charge by time and materials. So long as the instrument being used, the business always eventually come back to Cytek. And just on reagents as well, maybe just again, clarify the path out there, the growth you're seeing. Sure. Assuming these end markets get better, that seems like the obvious area. Yeah. The reagent business is, in general, a lower growth rate. What we're doing to drive. As we talked about in the past, we have about a $12 million reagent business. We think there's at least $150 million worth of reagents that flow across our installed base each year. What we're doing to improve it, to try to drive share gain, is we've significantly improved our delivery rate, the time between the order and when the reagent vial lands on the customer's desk. We brought that down from seven days to three, which is a big difference. The creation of the solutions and clinical business unit and sales force means that you now have a dedicated sales force, a big part of whose job is to sell reagents. We think that will over time as they get themselves set will help growth. We've also in-licensed or done deals with partners to distribute their products so that we have a much broader product portfolio. Having a broad number of SKUs is really important in flow cytometry. We're investing in our e-commerce platform, so it'll make it easier for people to order reagents and have an automated flow through to fulfillment. We're also working on new products. As an example, these new dyes that we invented for the Borealis, that's going to drive some reagent business. All across those multiple fronts, we're driving to try to grow this business faster. Very clear. I want to hit it as well on bioinformatics. I think you now have over 28,000 users on Cytek Cloud. Can you just elaborate on how that streamlines the user workflow, and then how does that correlate with instrument utilization and then obviously revenue growth for you guys? Sure. Yeah, no, this is in fact a very important platform to help drive customers towards Cytek ecosystem. Just an example, just recently, last few days, we launched a new application on Cytek Cloud, which is to enable users to do online data analysis. As you can see, the whole ecosystem involving not only starting from this panel design, then doing the actual experiment, and of course our system enable virtual experiment on our platform. Then go to the real lab, live demo or live experiment. And afterwards, there's a huge amount of data that require the analysis. Initially, our onboard instrument, especially for provide some basic data analysis, and many times customer, if they want to do a deeper analysis, they will go to third party and software. Now with Cytek Cloud online data analysis module, customer can rely on the same module starting from panel design until the end of the experiment in a simple workflow and to provide all the features that's needed. And that truly enable our customers to stay with Cytek, from starting to the end. And this is what can enable Cytek to maintain our leadership, to support our customers, and to drive customer towards Cytek, full spectral technology. Great. So just over a minute left. I want to understand your initial thoughts on how 2027 could look at a high level. We don't have to go into numbers here, but it feels like the end markets themselves are getting better. You obviously have good products coming through the pipeline that I think have strong interest behind them. So how should we think about that rate of change from how we're working through 2026 right now into 2027 at a high level? Look, I think the best indicator will be to look at our growth in the second half of 2026. First half growth, as I said, was 6%, was above the full year growth rate that we had guided to. Fundamental market drivers seem better in the U.S. and China. As we talk about EMEA, we would like to see it bottom out. I think our new product momentum will be a strong factor for us because the reception of the Evo 2 and the Borealis has been good, and we will be coming out with the imaging upgrades. That should be a positive. We are looking forward to 2027 with some optimism. Good. Okay. Wenbin, Bill, thank you so much. Thank you. Thank you.