Adam Laponis: Definitely, I’m happy to help actually to help provide additional color and thank you for the question on. I mean, if I look at the — for the first part of that you know there’s always going to be a dynamic as I’m learning this business. The orders don’t always translate in the same period to revenue. There’s a natural delay particularly on both large NGS customers have put in large POs for multi period, as well as we have on the biopharm side customers who have a multi-period POs over many quarters. So typically the revenue impact comes in over the next three to six months after we get the get the order. From that perspective, I don’t expect all the Q1 orders to turn into revenue in Q2, but we do expect them to convert as we progress throughout the year and potentially even into ’25 given some of the major deal type orders.
In terms of where we are and what’s driving the guide, I will be really clear and I have a lot of confidence in the progress we’re seeing. I mean, you don’t come out of a record quarter in revenue without confidence. I see the team firing on all cylinders, whether it’d be from the express genes and SynBio or beyond the progress we’re making on the NGS front with new customers. So I’m very confident in the guide we’re giving. But I’m also and I said before, it’s early days for me, so I don’t want to get over my skis in any of it. So hopefully that clarifies.
Operator: Thank you. Our next question comes from Sung-Ji Nam with Scotiabank. Your line is open.
Sung-Ji Nam: Hi. Thank you and congrats on the quarter. Just one question on the NGS segment, it’s great to see obviously continued strength there, especially from the top customers. But as you look at the sales funnel, just kind of curious, is it pretty much the usual suspects or are you seeing kind of more new diversified customer leads and especially with the product launches like RNA-seq?
Adam Laponis: Yes. Thank you for your question. So definitely that has been the focus of our new product introduction. We launched RNA-seq last lesson learned and the purpose is to expand into the research market. You’ll see at AGBT next week that we’ll have a product focused on strengthening our position in liquid biopsy versus slowdown. We are very interested in converting the microarray market to NGS and it has not gone as fast as we wanted and so there will be more product introduction squarely focused on going after that market with it’s really best in class on tools. So we expect in terms of market expansion a continuation of our efforts around academia and I’d value some home. I think those are two additional growth opportunity for us.
In addition to I think the great performance we’ve been having in liquid biopsy and MRD. And so the time right now a lot of our success in NGS is riding the — enabling I’d say the liquid biopsy market. But we’re quite focused on expanding towards our market shares at BIO and academia.
Sung-Ji Nam: Thank you. I’ll get back in the queue.
Operator: Thank you. Our next question comes from Rachel Vatnsdal with JPMorgan. Your line is open.
Rachel Vatnsdal: Thanks. Good morning and thank you for taking the questions. So first, I just want to ask on biopharma. You mentioned that you’re in discussions for anybody outlicensing. So can you spend a minute talking about that opportunity and how meaningful these licensing deals can potentially be? And also just what’s the time line in terms of where we expect to see any headlines related to those yields?
Adam Laponis: Yes. Thank you, Rachel. It’s a good question. So for context just a quick reminder, the main effort of our biopharma business is to sell a service, where customers give us a target. And we use our AI in vivo, in vitro tools to deliver a quick clinical asset for them. So that’s the main thrust of our efforts. In the past, we’ve also spent some internal R&D dollars to choose — our own assays. And then we now have a maybe a dozen of assays that we think are valuable. And we’ve stopped spending internal R& D dollars to advance them. And now we’re in discussion with partners to license them those out. As you know biopharma licensing deals can be lengthy. And so — and at the same time to — I think the bottom line for me is we are not expanding significant cash to pursue those licensing deals, and those licensing deals are not in the forecast. So, they will be nice upside when they happen.
Rachel Vatnsdal: Great. Thank you. And just — oh, yes, sorry go ahead.
Emily Leproust: No, no, go ahead.
Rachel Vatnsdal: Oh, sorry. I thought one of you were saying something. And then just as my follow-up, you mentioned some of these cost actions to impact COGS over the next 18 months. So can you just walk us through the levers that you’re pulling from a cost action perspective? And then how much of that is already contemplated within guidance right now for those cost actions for the year? Thanks.
Emily Leproust: Well, thank you. And so great question. So we’re really taking advantage of the up-leveling of the management team that we’ve done over the last few quarters. We have a great new SVP of Ops, a great VP of Supply Chain. And now as a company that is growing in a market that is not we have a nice profile with our results our suppliers. We have an opportunity to have a choice of in-sourcing some of the products. We have the opportunity to consolidate vendors. And so we’re really exercising our muscle with our suppliers to make sure that we get the best target costing over time to benefit our gross margin. In addition, when we launch our Express Gene, we really turn over a lot of stones in our processes, and we’ve seen a lot of opportunities where we can swap out reagents.
We can shorten or skip steps. And that has given us opportunities in the future to a slow lean on the processes that we have and tweak some of the reagents to take cost out. So that takes time to realize. And but at the same time, we see the opportunity and we’ll do the work to get the best gross margin outcome. And I’d say, it’s a natural evolution of our maturation as a company. The first step was always, let’s have the best product possible, and we had a natural advantage with the silicon chip where we always had the cost advantage that now that we have the best products out there, and we can focus maybe a little bit less on new product introduction and a bit more on continuous process improvement to start taking cost out and get better and better at gross margins.
So hopefully, that that helps.
Operator: Thank you. Our next question comes from Puneet Souda with Leerink Partners. Your line is open.
Puneet Souda: Yes. Thanks, again, Emily. I just wanted to follow up on – on a broader question around Express Genes. What’s your expectation for a competitor response on Express Genes are these fast genes? I mean it’s a great strategy to manufacture it all at once and deliver it right away or later. And modulate your pricing accordingly. But just thinking about the industry overall for oligo’s, how do you think about the sort of the competitive response would be from the competitors and the sort of the defensibility you have to that competitive response. Appreciate that. Thank you.
Emily Leproust: Thank you. The way I think about it is our competitors have been in business way longer than MDF, right? And so we’ve really have optimized all of their processes using their next fiscal plate. And now there’s not much more they can do. What we have is really the advantage of the silicon chip that gives us a tremendous advantage and then we build the back-end around it to – to make at-scale Express Gene and so at this point, we are the only company that can make all of their gene fast and I think that you have a very, very difficult – it would be a very difficult task for competitors to tried to match it, so we will see what the responses, but we are ready. We think we have an absolute great, great product in terms of its great quality, its customer experience, speed and actually even great pricing. And so we provide tremendous value to our customers and yes, we look forward, we’ll see anybody on the playground and if I need anything.
Puneet Souda: You need a playground. Okay. Thanks, Emily.
Operator: Thank you. There are no further question. I’d like to turn the call back over to Emily for any closing remarks.
Emily Leproust: Thank you very much. So in closing, we reported a record quarter and our first quarter continues to resonate with our customers. We introduced the full Express Genes portfolio last week and we have more product launches planned for the next week at AGBT. As we will forward, we’ll continue to focus on revenue growth, margin expansion and financial disciplines to drive our path to profitability. We look forward to seeing some of you at AGBT, all conferences in the March timeframe. Thank you very much.
Operator: Thank you for participating in today’s conference. This does conclude the program and you may now disconnect. Everyone have a great day.
