Because there’s researchers at SITC that are, not only discovery researchers that have an interest in the PhenoCycler-Fusion, but absolutely translational and clinical companion diagnostic leaders in our market that have an absolute interest in the emerging clinical opportunities. So getting that visibility across that entire market continuum, I’d say is the second biggest value.
Timothy Chiang: And maybe just a follow-up question for Johnny. Obviously, your gross margins right at 60% this quarter. And you mentioned some supply chain efficiencies that you’re starting to benefit from. I mean, what — where can you get your gross margins down the road, Johnny?
Johnny Ek: So I think, as I mentioned, it’s sort of comprised of several efforts that will evolve gross margin over time. Our first and sort of quickest improvements to margin are on the cost supply chain, as Brian mentioned, the chain of custody of some of our reagents. Those things we can make moves there and have started making moves that you see this margin are improving. That will drive margin, as I’ve said in the past, a couple of hundred basis points a year is how we see margin moving. But as more and more long-term margin becomes — our revenue becomes more heavily weighted towards reagents, again, I think that margin continues to move north for the next several years, right? I mean, right now, in the near-term, it’s cost initiatives as well as a margins as a revenue shift.
But that becomes even more important as we fully leverage the 1,200 instruments we have in the field, as that annuity or that pull-through increases per box, that drives that margin improvement as well to something clearly north of the 60% that we are talking about now.
Timothy Chiang: Okay, got it. Thanks.
Operator: Thank you. Our next question or comment comes from the line of Mason Carrico from Stephens. Mr. Carrico, your line is now open.
Mason Carrico: Hey, guys, thanks for the question. Sorry, if these have already been asked, but I’ll ask two upfront, if that’s all right.
Brian McKelligon: Sure.
Mason Carrico: First, how are you thinking about the growth outlook for the services business going forward? Growth there has obviously been really strong this year. Is there anything that we should be taking into consideration when we are thinking about how to model that segment of your business next year? Or do you expect the demand momentum that we’ve been seeing to really keep continuing?
Brian McKelligon: Yes. On the services front, obviously, we report that out, but don’t guide at that level of granularity. But I think, I’d say, qualitatively, there’s two growth drivers to that service revenue, obviously, the growing installed base and warranty revenue. But some of the real material drivers, I think, as you’re alluding to, are our current companion diagnostic partnerships and the continued expansion of our Advanced Biopharma Solution service business. So we expect continued incremental growth across the services next year. The other thing, I would say is, as I noted to in the commentary, we are increasingly working with our CRO partners through our qualified service provider network to really begin to leverage them as a partner and an amplifier in the translational and clinical research segments, given that we have a really solidify workflow at this point with the 2.0 and the reagents and some of the software improvement.
So while we expect continued incremental growth in the services across the board from both of those contributors, warranty, and lab services, we are also increasingly focused on taking those opportunities with our biopharma partners. And turning those more into product revenue with our CRO partners, while we have more shots on goal and more clinical trials, giving us higher and higher probability of more CDx opportunities that we will have in-house in 2014 and beyond. And those CDx opportunities, I would say, Mason, really are upsides to the model. So I took some liberties with your question on how it fits in strategically, but that’s how we think about it.
Mason Carrico: No, that’s helpful. And if I could take one more here. How is adoption of the PhenoCode Panels trended? And how are you thinking about the timeline until when some of your higher utilization CRO customers should begin rolling those into regular use?
Brian McKelligon: That’s a really good question. And that — the latter part of your question is really our explicit strategy. And it’s embedded in our desire to build this glorified service provider network, because we want to have that in place because what we’ve talked about with our PhenoCode Panels, whether the signature panels on the HT or the discovery panels on the PhenoCycler, those have sort of a rolling cycle release that were really second half weighted and into ’24. So having that CRO network locked in, ready to grab those signature panels, having the systems upgrades on both of the two Os to leverage those panels to drive higher utilization, all of that does point to as you’re alluding to. 2024, really, as the realized year when we feel like those regions are going to begin to contribute to the top line and continue that reagent revenue growth.
Mason Carrico: Thanks. That’s helpful, Brian. Appreciate it.
Brian McKelligon: Thank you.
Operator: Thank you. I’m showing no additional questions in the queue. At this time, I’d like to turn the conference back over to Mr. McKelligon for any closing remarks.
Brian McKelligon: Yes. Just very simply, I think, to reiterate what both Johnny and I have said, first and foremost, thank everybody for your time, your questions, your intention. And obviously, as we look forward to really reiterate our priorities, there are threefold. Number one is to continue to invest in our portfolio, in that workflow. We continue to upgrade the systems, provide content, and software solutions so that time to answer is both easier and faster. And that will help drive a growth now in that reagent revenue portfolio. While at the same time, point number two, we invest in our own operational excellence to get better margins out of those very reagents themselves and maintain our overall cost basis while we continue to grow the top line, really securing our path to cash flow positivity.
