Hello, everyone. Welcome. My name is Zack Conte. I'm a member of the Healthcare Investment Banking team here at J.P. Morgan. It is my pleasure to introduce Cytek today. Today we'll be joined by Wenbin Jiang, CEO, and Bill McCombe, CFO. Thank you.
Good morning. Thanks to the J.P. Morgan team for giving us an opportunity to tell you about the Cytek story. And also, thanks for everyone here to stay through the last day to have an opportunity to hear from us. And just the normal things here we have to present, say a proper statement. So who is Cytek? Cytek is a technology innovator empowering the scientific and medical community with leading cell analysis tools. This is validated by the award we received in 2024 as the overall BioTech Company of the Year. That's a great honor for the company, for our team. So just some summary to walk you through our journey. We released our first product, the company's first product, in 2016, our Athena, which is a conventional flow cytometer. Right afterwards, a year later, we launched our flagship product, Aurora, which has driven us to where we are today.
A year later, 2018, we launched an entry-level product based on the same technology, full spectral profiling technology, inside the Aurora, same engine. And that's to enable us to serve for the entry-level market. And then, 2019, we got into the reagent space, as you all know, and as we continue to deploy our instrument in the field and more and more opportunity for the company to leverage the recurring revenue opportunity through consumables. And then, thereafter, 2021, we launched the sorter. That's the same year Cytek went public on Nasdaq. Then after, we acquired the reagent outfit, Tonbo Biosciences, to further enable us to serve for the consumable business for the company. And then, we received our IVDD for the European market to serve for the clinical applications based on our Northern Lights entry-level products, Northern Lights CLC. And 2023, clearly, we launched multiple products.
The most important part of 2023 is we acquired Luminex technology and the products that enable us to broaden our offering. I will have one slide to summarize the Luminex acquisition, basically as an example to see how we have been doing with that acquisition. Last year, we launched the ESP module, which enabled us to serve for the small particle applications based on our full spectral technology. Overall, over the last 10 years, since the company was first founded, we have already deployed more than 2,800 instruments, which include the Luminex instruments we shipped since the acquisition, more than 2,000 publications on the top-tier reviewed journals, and citing the use of Cytek full spectral products. We have more than 1,500 customers across the world, in more than 70 countries. The company's trailing 12-month revenue through the end of third quarter: $200 million.
The company is profitable, actually. We are one of the few companies of our size in the life science space that's actually profitable, making money, OK, so we have a strong cash position now, $278 million. We are not burning through, actually. In fact, we have leveraged our cash generated from our normal operation to buy back our own stocks, and the board just approved another $50 million purchase through the end of the year, and of course, we are also optimistic, continue to look for opportunities to acquire business. Over the last three, four years, we acquired Tonbo and the Luminex assets. We are continuing to look at opportunities to enable us to continue to expand our offerings in addition to the organic investment and development internally through our own R&D effort.
We just pre-released last year, actually yesterday, of our last year's revenue within 200 to 200, about $200-$201 million overall for 2024. So the question comes down to, is always lots of questions, how Cytek can continue to grow in that market, judging from the success we have encountered, we have experienced over the last seven to 10 years from nothing to $200 million. In fact, we are serving a very large market. Looking at the overall here business, one is the initial TAM, which flow cytometer can serve directly. It's about $7.5 billion, which includes single-cell analysis and a few others. And plus the adjacent opportunities, another $8.5 billion, altogether $16 billion opportunities in the cell analysis space that enables us to serve. That basically paved a baseline for Cytek. So $200 million among that $16 billion is a small part.
And that means we have a long way to go, great opportunity going forward. Another data point that we look at is overall, there are about 50,000 flow cytometers currently in the field. Many of those instruments are up for replacement. And today, when they do replace, guess what technology are we going to go for? That's full spectral profiling tools Cytek has pioneered. And we are a leader in this space. Clearly, it's a no-brainer for them to think about Cytek first. And in the long term, our growth driver is based on all the applications relying upon full spectral technology, looking at from research side, ranging from stem cell to oncology, and pharma side for new drug discoveries, for cancer immunotherapy, and for clinical, including in particular leukemia diagnosis, MRD. All those applications that are going to drive the continued growth of Cytek business.
And to attack that market, Cytek has laid out a four business pillar. Our whole R&D dollars are invested to continue to drive those four business pillars, which include instruments. This is how Cytek starts from. We're going to continue to invest and to improve the performance and the more intelligence, make it more easier to use, and make it more compact and cost-effective. Of course, also more reliable. And on the application side, that helps us to drive the recurring revenue. We focus on the areas which conventional reagents are not available. We focus on kits, applications, functionalities that help us to continue to drive the reagent business. And then bioinformatics, I will have a slide to talk further about it, which in fact is a great success for the company, which was launched two years ago. Clinical is another aspect of our technology, our products.
One nice feature of our tool is because of the sensitivity, the number of parameters it can do from a single tool that can really make our tool much far better than the conventional technology can afford to do. And I will talk more about it. Our complete platform portfolio includes here instruments, reagents, services, and software, among which instruments, of course, are capital expenses. This is about 70% of our business revenue today. And then services, reagents, software are all recurring, about 30% of our business. Going forward, this is an area we hope to continue to grow on the recurring side. And an ideal situation pretty much is capital recurring, 50/50%.
To really serve our customers, to enable them to leverage, utilize the Cytek's full spectral profiling technology, we have developed a standard workflow process starting from sample collection, sample preparation, labeling, experiment, running the actual experiment, doing the in-situ real-time data analysis, and the more advanced study analysis thereafter. That whole workflow we have worked out. This is very much appreciated by our user base. Many of our customers have embedded this into their own workflow to go through the process. This is how the customers appreciate our technology and appreciate what we can do for them. Going back further regarding to our offering on the instrument side, our flagship technology, flagship products, Aurora and Aurora cell sorter, running from three laser to five laser, driving today more than 50 colors it can support. In fact, one is analyzer, the other sorter.
We are the only company today providing a complete full spectrum of solutions that enable customers to develop panel on analyzer, for example, first, then move the panel back to the sorter and back and forth. It's fully compatible. That's the solution we are providing to our customers. And the Northern Lights is based on the same technology, driving the Aurora to serve for the entry-level applications. In fact, when we say entry-level Northern Lights, really it's about a cost structure equivalent to the entry-level products. But in terms of performance, it can go way beyond the 20 colors. In the conventional sense, it's a high-end application. Talking further about conventional versus Cytek's full spectral technology, if you look at the conventional, on the clinical side, pretty much capped by about 12-13 colors today. On the research side, 20 color-ish, plus-minus.
But with Cytek technology, we have really break the barriers. And both clinical and the research side, we can drive through to about 50 colors. In particular, our technology really enables users to remove the autofluorescence. This is very important. In a conventional sense, this is always a problem and really to stop them from getting more sensitive data, more better data due to those what we say the dirty data from conventional technology spill over as well as autofluorescence. And in the flow cytometry with full spectral, we can really improve all of those to provide users very clean data. This is why people come to Cytek. And earlier I mentioned, I'm going to talk about the Luminex acquisition two years ago. Some of you may remember at that time we said the reason for the acquisition, three benefits.
One is to add to Cytek portfolio of the imaging technology and leverage the Cytek Aurora customer base to drive the further application of imaging and adding imaging to our spectrum and to enable our users. Second benefit is a large installed base, adding on top of Cytek now that really enables us to deploy our field service more effectively to help drive the service operation efficiency. The last one is a larger customer base for the Guava. We can leverage that customer base to drive the revenue growth in that area based on both Guava and Northern Lights, which we would like to get to today. Taking a look at how we have what kind of performance we have achieved. Through the third quarter 2024, comparing to the same period a year ago, our imaging revenue grew by 46%.
That basically is the outcome of leveraging Cytek's high end of the customer base. And our service operation growth margin has improved during the same period from 43% to 58%. This is one of the highest in the industry with the kind of operation efficiency for the service business. And then low end of the market, combining Northern Lights and Guava, our revenue grew by 41%. So this is the benefits of the two businesses coming together, how we have leveraged the business and showing the success of this acquisition. Coming to the second part, application. As I said, we in fact are not really trying to compete against many of the catalog companies in the reagent flow cytometry reagent space or in this market. We focus on key reagents, which is not available from the conventional sense. And we focus on kits, applications.
Over the last few years, we launched quite a lot of individual reagents to serve for our customer base. In fact, one of the reasons we have achieved the 40-color, remember, there's a paper in the flow cytometry space that 40-color paper is actually a milestone that has really changed the whole landscape of the flow cytometry, which was published a few years ago and becomes a paper of the year that has changed the whole industry today. The whole industry is moving toward the full spectrum. OK, nobody's thinking it's conventional will have any long going forward, and that paper indeed is a milestone today. All of the competitors coming to this space, they always would like to compare their data with our 40-color data. The reason we get to that 40-color in fact involves the reagents we developed internally together.
We have our own reagents for the clinical applications today. We have our one laser and a two-laser six-color TBNK clinically approved for the China market. We have our single-color six-color single-laser six-color TBNK approved for the European clinical applications. These are the kind of applications we have been focusing on, plus the leukemia diagnostics, MRD type of applications. Earlier I mentioned I want to talk about this cloud, Cytek Cloud, Bioinformatics Program. We launched this two years ago. In a very short period of time, we have accumulated more than 15,000 users on this platform. These are the users working on Cytek instruments on a daily basis. This platform really has changed the whole landscape of how flow cytometer is being used. Now they can optimize the panel on our platform before they purchase the reagent and actually run on the actual instrument.
That really helps improve the efficiency on this platform. It helps them to automate the panel design and the total change of how the kind of workflow. This platform also enables users to do the data analysis, data management, and all kinds of needs, and it also allows users to purchase reagents through that pipeline and to drive their applications. Quite a few of our users have already embedded Cytek Cloud in their standard workflow. This platform enables users to stay with Cytek, stay with Cytek technology. Because of the full solution, Cytek is enabling them. Cytek is providing, helping them, and my mention about clinical application, one of the reasons why clinical is good based on Cytek tool is because of the so many parameters that can be drawn from a single tube. That's important.
Because a single tube, so many parameters, that means you don't really have to split your sample into multiple tubes. That really helps to improve the efficiency, improve the sensitivity, and save the cost on the reagent side since multiple tubes, you need the redundancies. Here you don't need. And it enables you to support applications like MRD to improve the sensitivity to the level just like PCR and sequencing can achieve. And of course, it opens up many of the new opportunities. Today, many of our users are studying, leveraging Cytek technology for the type of applications, clinical diagnostic applications. Talking about the application, flow cytometer, we mentioned about a large market. One of the reasons why the market is so big, so large, we talk about many usages here. In reality, it is driven by all the kind of applications involved embedded into those needs.
We have analyzed the more than 2,000 publications on those top-tier journals, citing the use of Cytek technology, Cytek tools. And as you can see, the application being driven behind it, including infectious disease, immunology, immuno-oncology, COVID-19, of course, that's a few years ago. And plus neurobiology, drug, new drug discovery, all kinds of applications, so many varieties of application. The reason why flow cytometer is a basic life science tool is going in almost everywhere, all places. Another trend we are seeing through the years of work is we notice many of the pharmas are starting to look at Cytek as the place to go to help them to harmonize, standardize their flow cytometry tools across their different labs in the world.
As you know, pharma, as they move from early discovery to the translational to clinical trial, they want to make sure the data coming from different instruments, from different labs are consistent, accurate. This is a tool. Cytek technology is enabling it, a reason why they come to Cytek. And that's also a reason why, as we can see, Cytek is now our customer portfolio going more and more toward the commercial side, pharma CRO, which I have one slide to show thereafter. So standardization, harmonization is critical, important, mandatory for the clinical trial and also for the industry applications. For those type of applications, where do they go? Cytek. So just to summarize why customers choose Cytek, first is with such large parameters, we provide a deep cell analysis, deep assessment of the cells. And we enable the standardization, which I just mentioned is important.
It's more powerful at lower cost. Not because we provide 50 colors, it becomes far more expensive. It's not. Actually, it costs lower than the conventional. It allows to isolate rare cells. That means it can support applications like MRD, one very important aspect, important applications potentially for Cytek technology. It really enables us to get to the data, maximize the efficiency, and much shorter, quicker time. All of those are validated by the more than 2,000 publications. Of course, these are the publications in the scientific journal by the academic customers today. Many of our customers are from industry. They don't really publish. Take a look at the global scale of Cytek today. When we first started, of course, 100% are from academia. But now 60% of our customers are from pharma, CRO, biotech companies.
That shows the success migration of our technology into varieties of applications. And second part, taking a look at the geographic locations. When we first started, 100% of our customers are U.S.-based. Today, U.S. is less than 50%. That shows as the revenue continues to grow, our growth really coming from other parts of the world. International sales now more than 50%, including one-third from Europe and APAC, rest of the world, close to 20%. This just shows a steady growth since 2019 of the deployment of Cytek tools through third quarter. As you can see, it continued to grow quarter by quarter. We have also seen throughout the year we have really reached an inflection point as we continue to drive the top line. Now we are starting to see the improvement on our gross margin, improvement on our bottom line, our EBITDA.
This is what you will continue to see throughout 2025 and going forward. This is also a focus of the company. This is a company. As earlier I mentioned, one of the few companies today is profitable, is generating cash. This is our focus. It's not just a top line. More importantly, the bottom line. The theme to our shareholder is we continue to run cost and capital efficiency throughout our operation. We really focus on our operational efficiency and improve our profit margin. Throughout the whole operation process, we maximize our free cash flow. We acquired a few companies. We'll continue to do so, looking for opportunities. We are not going to acquire any companies. We look for opportunities. We do smart acquisitions. In the end, it has to match our overall business direction, our overall strategy. We focus on our execution.
As I mentioned, most importantly, profitable growth. Cytek is not a company to grow revenue at any cost. It's a profitable growth. That's what we have been focusing on. This is what I'd like to summarize. Cytek is a technology platform leader which has changed the whole industry, changed the whole flow cytometry industry. We have changed that, as I mentioned, that $16 billion business market from a conventional to full spectrum. We are serving a really large and growing market. This is not a market that's going down. It's continued to grow. Cytek is one of only a few companies with a very strong financial portfolio. Thank you for your patience to get to where we are today.
Thanks a lot, Wenbin. That was an excellent presentation. Just to kind of touch on the last slide that you talked about, the flow cytometry market has really evolved over the last five years. Could you kind of talk about how Cytek has been a main player in that and how that evolution has driven to full spectral flow cytometry?
As you have seen, a few years ago before Cytek, the whole flow cytometer is dominated by the conventional technology and with very limited capabilities. At that time, it really has hit a limit, a threshold of what flow cytometer can do, and we came along, developed this technology. Through what we have done, we have really broken the threshold, broken the barrier. At that time, 20-ish colors got to, as I earlier mentioned, about 40-color paper became really a milestone paper in the space. Through that process, we changed the whole industry, whole direction of the flow cytometry. Today, everybody is saying the whole industry is going to be spectral. Nobody is going to continue to invest on a conventional technology. Spectral can cover everything conventional can do, and plus lots of additional benefits, lots of flexibility, and much easier to use, and it's even more cost-effective.
This is how we have changed. Looking at all our competitors have been doing, and they are chasing behind Cytek. We are way ahead. Looking at full spectral with 50,000 installed base, most of them, of course, conventional, Cytek actually has probably 20% of that due to the Luminex acquisition. Going forward, all the high-end of the acquisition purchase, I don't think anyone is going to buy the conventional tool. They're all about spectral.
Awesome. And then this week, you guys pre-announced your 2024 revenue, which is a slight miss from your prior guidance. Could you talk a little bit about the dynamics behind that?
Yeah, sure. So our revenue came in for the quarter, came in $2.5 million below, I think, consensus expectations. $1.5 million of that differential came from the appreciation of the U.S. dollar that happened in the fourth quarter versus the other currencies of countries where we do business. So that was something that we obviously weren't able to anticipate. And the other $1 million resulted from a delay of a few orders. We had one particular order in the U.S., which was delayed, and a slightly softer tone in Europe. And that really made the difference.
Great. And then you kind of touched on it in your presentation. A lot of the peers in your space have been seeing, or equipment peers in your space have seen struggles in China. And it looks like you guys have actually done very well in the space. Could you kind of talk about how Cytek sees that as an opportunity and continues to perform well?
In fact, China is embedded into the overall APAC business. We are not breaking out China alone, and the overall growth, I don't think Cytek is that much different from many other peers, but relatively speaking, our business in China is kind of more stable instead of going down, but our growth in the whole APAC region is primarily from other parts of the area, such as Australia, New Zealand, Japan, Southeast Asia.
Awesome. And then, just staying on China, do you guys have a local manufacturing footprint there, or how does that look?
Yes, we have local manufacturing. Our clinical instrument for the China market, as well as for the European market, made in China.
Awesome. And then I guess turning to the rest of the world, primarily the Americas and Europe, you guys have noticed that equipment purchasing patterns have kind of returned to normal. Could you kind of talk a little bit about the dynamics between the Americas and Europe and how you see this going forward?
We saw a slower growth in Europe compared to a very strong Q4 in 2023, so on a full year basis, we still see decent growth in Europe. The Americas was weak in Q2. We had a nice recovery there in Q3. If you look at North America in total, including Canada, we had actually a pretty good Q4, but much of that strength was based in Canada, so we're hoping it becomes the 51st state.
That's great. And then you guys recently just touching back to financials, you announced your third $50 million stock buyback. Could you kind of talk about the rationale behind that?
Sure. As Wenbin mentioned, we're a profitable company. We generate excess cash flow, and so we view our stock as a very attractive investment opportunity at current prices, and so we use our excess cash flow to take advantage of that. We have continued to maintain around $280 million of cash, so we have balance sheet capacity available for acquisitions, and we've preserved that, but at the same time, we continue to generate free cash, so we're using that to invest in our stock.
That's a good problem to have. And then you kind of touched on it in the presentation, your Cytek Cloud offering along with your bioinformatics offering. Could you kind of talk about how that increases stickiness with existing customers?
Cytek Cloud really has made it so easy for our user base to design the panel. Traditional process involves lots of trial and error and typically takes a long time to optimize something and costs them a lot. And also not only on the materials, also the resource. And now with Cytek Cloud, in fact, it's an automated process. If, let's say, users are interested in, let's say, 30 different panels, 30 different antibodies, they can just input those specific antibodies into the system. Then we will propose and optimize the panel around basic reagents to match those antibodies. And then they can try and do at least on the system, on the platform, to do some analysis and to see what's good. Then also enable them to make some change on top if they want to make some tweak.
Thereafter, it allows them to purchase reagents through our platform, or if they want to buy their own, that's fine too.
Understood. And then you mentioned that you wanted to raise your gross margin. Could you talk about, I guess, how you're going to be able to do that and what the cadence will be going forward?
Sure. The basic driver of that is leveraging our fixed cost of our manufacturing and service operations over a larger base of business. So of our cost of goods sold, a portion is fixed, a portion is variable. As we grow revenue, that fixed cost portion of total cost becomes smaller and our gross margin goes up. And that's the basic driver. This year, we've also benefited from a little more efficient inventory management, and that helped us recover from Q1 into Q2. But going forward, it would basically be leveraging that fixed cost where we don't need much more investment in order to grow at the rates we've been growing. So that fixed portion will stay pretty stable.
Sorry. Just a question. Just one second. Sorry.
Thank you. Thanks for taking the question. Could you address the proposed export rules from yesterday and how you view the impact to you? Thank you.
Sure, so we export actually very little from the U.S. to China. So we've only had since yesterday to review this rule, and based on our preliminary analysis, we believe that less than 4% of our revenue in 2024 would have been subject to a licensing requirement, so firstly, it's a small portion of total revenue. Secondly, we would seek to obtain licenses for whatever is required.
And then touching on capital deployment, in terms of inorganic versus organic, how do you guys think of this going forward?
Because we're a profitable company, we have the resources to be able to invest in R&D, to invest in growing our service network. We've done that. We continuously look for ways to boost our organic growth through these investments and obviously through the market opportunities that Wenbin talked about. That's a continued focus, and we look for every opportunity to boost organic growth that we can. With respect to inorganic growth, we also continue to evaluate acquisition opportunities. We have a substantial cash balance, around $280 million. We have preserved that. As I talked about before, our stock buyback is funded through excess cash flow that operations generate. We continue to evaluate M&A opportunities actively. But as Wenbin said, we're very disciplined about our criteria for M&A, and we're only going to pursue opportunities that are strategically relevant to us and that meet our financial criteria.
So we can't predict when those are going to come up, but we're certainly looking as hard as we can for those opportunities as well.
In conclusion, I guess what are the key takeaways that you want investors to know as we look over the next 12-24 months?
I think what's important here is first, we are in a large market and even though today we are about $200 million among the whole big market, we are still a small portion. That just means there's a long way for us to continue to capture the opportunities in that big market. We can continue to grow throughout the years. That's number one. Second, we are a leader in that market. We have changed the whole landscape, the direction of the flow cytometry. That just means when customers really are trying to make a decision, guess who they are going to choose, who will they go for? As the market comes back, especially for the capital expenditure market, clearly we're destined to benefit from that opportunity and third, you can see Cytek is one of only a few companies cash flow positive.
We are very disciplined in managing our business, managing our operation. And lastly, it means we don't invest on R&D. We continue to invest substantially on R&D to drive the new products. And you are going to see we are going to continue to have new technology, new products to be developed, to be launched, to help support our revenue growth.
Appreciate it. Thank you both for the presentation and good luck in the future.
Thank you.