Oxford Nanopore Technologies Plc · LSE:ONT
Oxford Nanopore Technologies — FY2023 Earnings Presentation
42 slides from Oxford Nanopore Technologies's earnings presentation, Mar 6, 2024
Slide 1: FY23 Results Presentation
FY23 Results Presentation 6 March 2024
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Oxford Nanopore Technologies plc Oxford Nanopore products are not intended for use for health assessment (“Oxford Nanopore”) for information purposes only and does not constitute or to diagnose, treat, mitigate, cure or prevent any disease or conditi
Slide 3: Resilient LSRT growth in FY23 driven by differentiated platform
Resilient LSRT growth in FY23 driven by differentiated platform FY23 numbers £170m £147m £170m 74% 9% : ~3 £127m LSRT revenue LSRT revenue accounted AGR for by consumables C R 5Y 39% £472m £66m Underlying LSRT Cash, cash equivalents £52m revenue growth and liquid investments £33m >7,600 >2,800 Activ
Slide 4: FY24 Guidance
FY24 Guidance Underlying LSRT 6-15%1 LSRT 20-30%1 COVID EGP revenue underlying growth in FY24 £180-195m1 £169.7m 20-30%1 underlying LSRT gross ~57% margin FY2024 Adjusted Adj. EBITDA breakeven EBITDA moved from FY26 to FY27 FY23 FY24 1At constant currency FY24 guidance is 6-15% on a constant currenc
Slide 5: Medium to long-term targets
Medium to long-term targets Medium term Disruptive innovation Commercial operations financial guidance >30% CAGR1 FY24-FY27 Continue to expand global customer base LSRT Sample to answer workflows directly or through channel partners revenue 10-20% of LSRT revenue from clinical and applied industrial
Slide 6: FY23 Financial performance
FY23 Financial performance Nick Keher, CFO
Slide 7: FY23 key numbers
FY23 key numbers £169.7m 53.3% £(104.9)m £472.1m FY22: £146.8m FY22: 56.3% FY22: £(78.6)m FY22: £558.0m LSRT revenue LSRT gross margin Adjusted EBITDA Strong Balance Sheet 16% growth driven by strong One-off headwinds offset Higher LSRT profit offset by Company remains strongly underlying growth, +3
Slide 8: Balanced and global customer base with scope to grow further
Balanced and global customer base with scope to grow further FY23 LSRT revenue by region APAC £34.1m (2)% reported 20% +13% underlying Americas £61.5m 36% +27% reported +48% underlying EMEAI £74.0m +16% reported 44% +50% underlying Underlying LSRT revenue excludes EGP and COVID sequencing revenues.
Slide 9: Continued robust underlying LSRT revenue growth
Continued robust underlying LSRT revenue growth +15.6% £169.7m £169.7m COVID: £8.0m £146.8m EGP: £12.0m £146.8m COVID Includes £18m COVID headwind £26.1m EGP: £13.2m Consumables £124.9m Consumables +11% Underlying £112.5m LSRT £149.7m Underlying LSRT £107.5m Underlying revenue1 Devices and Devices a
Slide 10: Underlying revenue growth across all franchises
Underlying revenue growth across all franchises 58.8 £m 51.5 48.8 Key drivers 42.2 • PromethION franchise underlying revenue growth 36.4 of 83% driven by new device placements, increased FY21 flow cell utilisation and the PromethION 2 Solo 29.4 FY22 launch to commercial. 26.6 27.7 FY23 • MinION fran
Slide 11: Strong underlying revenue growth across all customer groups
Strong underlying revenue growth across all customer groups £m 16.7 3.3 17.5 169.7 169.3 -18.1 -1.2 -0.3 4.7 146.8 Strong underlying growth in all customer groups led by S3 • S1 up 20% • S2 up 42% • S3 up 69% • Indirect up 19% FY22 S1 S2 S3 Indirect COVID EGP FY23 FX FY23 at CC Underlying LSRT reven
Slide 12: Gross margin bridge
Gross margin bridge (300)bps +250bps Stable underlying gross 56.3% 53.3% margin of 58.8% (230)bps (90)bps impacted by; (230)bps • EGP contract • Provision against legacy devices and excess inventory of COVID sequencing kits • Impact of the compute upgrade on PromethION devices Positive underlying mo
Slide 13: Continued investment in innovation and commercial infrastructure in FY23
Continued investment in innovation and commercial infrastructure in FY23 £105.5m1 £134.6m1 Total adjusted R&D expenses and Adjusted SG&A expenses capitalised development costs 79% of LSRT sales 62% of LSRT sales +22% +21% Principally due to a 22% increase in Principally due to a 49% increase in R&D
Slide 14: Invested in scaling the business to drive long-term, sustainable growth
Invested in scaling the business to drive long-term, sustainable growth Revenues have grown 422% since 2018 to £169.7m Adjusted Operating Expenses as a % of LSRT sales will reduce from H2 2024 1133 134% 126% 124% 922 100% 102% 90% 705 76% 79% 73% 527 59% 62% 466 405 50% 2018 2019 2020 2021 2022 2023
Slide 15: Adjusted EBITDA
Adjusted EBITDA FY23 FY22 £m £m Loss for the period (154.5) (91.0) Income tax expense 4.7 7.6 Depreciation 23.1 20.4 Amortisation 18.5 11.4 Finance Income (18.9) (5.9) Other 2.2 1.6 EBITDA (124.8) (55.9) Founder LTIP 20.9 53.2 Employers Social Security on Founder LTIP and pre-IPO Share Awards (0.9)
Slide 16: Cash, cash equivalents and other liquid assets
Cash, cash equivalents and other liquid assets £m 558.0 64.5 472.1 (112.7) 10.9 (11.7) (25.6) (11.1) (0.4) Cash flow from operations Assets at customers Tax Financing Cash at 31 Dec 2022 Working capital Purchase of PPE Investing Cash at 31 Dec 2023
Slide 17: Guidance
Guidance Nick Keher, CFO (NANOPORE
Slide 18: FY24 Guidance
FY24 Guidance • 20-30% underlying growth at CC reflecting end market dynamics, equivalent to £180-195m1 LSRT revenue 20-30% underlying at CC1 • Underlying growth offset by headwinds from COVID and 6-15% at CC1 the EGP of up to £20m • Revenue expected to return to historic 45:55 H1:H2 split • Operati
Slide 19: Medium-term guidance
Medium-term guidance LSRT revenue >30% CAGR1 FY24 - FY27 • Growth driven by continued roll out of the PromethION in-line with previous guidance product range. LSRT gross margin >62% by FY27 • Operational improvements expected to be offset by mix previously >65% by FY26 • Business is strongly capital
Slide 20: Medium term revenue outlook
Medium term revenue outlook Underlying COVID EGP Key drivers 3YR CAGR • Higher volume customer wins >30%1 • Uptake of Q-Line from H2 2024 6-15%1 • Success with partners in non-LSRT markets • Continued growth in underlying LSRT market £180-195m1 • Timing of larger projects £169.7m • Continued Prometh
Slide 21: Medium term margin outlook
Medium term margin outlook >62% Drivers 25-30% CAGR Mix of Device and Consumable revenues Higher volume customers +500bps ~57% Yield improvements and recycling Mix of MinION and PromethION flow cell sales Switch to consumable reordering 53.3% Industrialisation of manufacturing process and automation
Slide 22: Medium term cost base
Medium term cost base 3YR CAGR 3-8% Key drivers 25-30% CAGR Annualisation of headcount increases in FY24 to see growth in spend in FY24 Absolute and relative level of spend to slow through FY24-27 to a single digit CAGR through mix of increased focus and selective investments. Future investments to
Slide 23: Capital allocation and expected operational leverage across the P&L
Capital allocation and expected operational leverage across the P&L Total spend to date has been weighted As we look forward, an increasing towards building infrastructure to support proportion of that revenue will be geared a materially higher revenue line towards profitability Operational infrastr
Slide 24: A solid, long term growth outlook
A solid, long term growth outlook >30% >62% 2027 £472m CAGR1 LSRT revenue LSRT gross margin Adjusted EBITDA Strong Balance Sheet Medium term revenue growth Material scope for margin Breakeven profitability A strong balance sheet to support underpinned by differentiated improvement over the in 2027 w
Slide 25: Business highlights and outlook
Business highlights and outlook Gordon Sanghera, CEO
Slide 26: Commercial execution driving strong growth across the business
Commercial execution driving strong growth across the business 13% 17% 20% 26% 36% Customer Consumables Geography 33% group 37% 74% 44% 3YR CAGR (2020-2023) 3YR CAGR (2020-2023) 3YR CAGR (2020-2023) AMR +46% S1 +16% Devices & services +40% EMEAI +34% S2 +38% APAC +31% S3 +46% Consumables +36% Indire
Slide 27: Innovation highlights of 2023
Innovation highlights of 2023 Innovation continues to be a key driver of growth Q20+ Chemistry uptake PromethION Basecalling keep up Integrated Analysis MinION: Apple M1 max or M2 max Real-time Q20+ basecalling of 1 MinION flow cell GridION: GV100 S 3 O 3 3 M 3 Real-time Q20+ A 3 Fe 3 A 3 N 3 Ju 3 M
Slide 28: Focus areas for 2024
Focus areas for 2024 How innovation will continue to drive growth Sample to answer Q-Line MinION - 10 years Next platform improvements Sequence entire plasmids with Oxford Nanopore Technologies • Deliver fully integrated experiences • Accelerate adoption of Nanopore PromethION • Launch of MinION Mk1
Slide 29: Multi-omics for broad applications: customers can have more with nanopore
Multi-omics for broad applications: customers can have more with nanopore Small variants • SNPs and INDELs • Short reads and nanopore both deliver • E.g. Sickle cell disease and cystic fibrosis Research market: Larger, more complex variants Across • inc Copy Number Variants, Repeats, Expansions. 1/3
Slide 30: Substantial opportunities arise from multi-omics approach
Substantial opportunities arise from multi-omics approach Life Science customers utilise Currently addressed by multi- Oxford Nanopore opportunity to more than DNA information billion $ industries penetrate, reshape and expand Genomics: SBS ONT DNA sequencing: SNV • Richer info – (multi omic) DNA SV
Slide 31: Translated to our core commercial focus areas
Translated to our core commercial focus areas Priority research applications act as foundation for emerging clinical applications Human Cancer Infectious High Throughput WGS at Cancer Research & Viral, Microbial, Infectious Scale from High-N-to-PopGen Immuno-Oncology Applications & Synthetic Genomes
Slide 32: We are at the beginning of our transformational journey
We are at the beginning of our transformational journey DISCOVERY TRANSLATION TRANSLATION TRANSLATION TRANSLATION SCIENCE TO HUMANS TO PATIENTS INTO PRACTICE TO COMMUNITY Breakthrough Forging new ground in Move to specialist Deploy in Next generation of research clinical research centres hospitals h
Slide 33: Partnership strategy enables broader access to clinical and industrial markets
Partnership strategy enables broader access to clinical and industrial markets Oncology Announced Partnerships in Clinical & Applied Industrial Nanopore Human Genetics Research Community Infectious Disease Vet & Ag Biopharma QC Large Companies Food & Env © 2024 Oxford Nanopore Technologies plc Oxfor
Slide 34: Highly differentiated platform will drive long-term value creation
Highly differentiated platform will drive long-term value creation Richer insights Faster time to result Accessible & affordable Multi-omics data Complement rapid sample prep with Fully accessible with starter pack model Sequence Native DNA/ RNA of any length data streaming & no need for batching an
Slide 35: Appendix
Appendix (NANOPORE
Slide 36: LSRT revenue growth driven by strong sales in EMEAI and the Americas
LSRT revenue growth driven by strong sales in EMEAI and the Americas 19.5 £m 3.7 169.7 169.3 19.0 -18.1 -1.2 -0.3 146.8 Strong underlying growth across all regions led by the Americas • EMEAI up 50% • Americas up 48% • APAC up 13% FY22 Americas APAC EMEAI COVID EGP FY23 FX FY23 at CC Underlying LSRT
Slide 37: Underlying revenue reconciliation by customer group
Underlying revenue reconciliation by customer group FY23 FY22 Growth Customer group £m £m (%) S1 29.4 26.4 11% Less COVID sequencing (0.8) (2.5) Underlying S1 revenue 28.6 23.9 20% S2 62.3 51.7 20% Less COVID sequencing (3.1) (10.0) Underlying S2 revenue 59.2 41.7 42% S3 55.3 46.7 19% Less COVID seq
Slide 38: FY23 LSRT revenue driven by direct customer acquisition
FY23 LSRT revenue driven by direct customer acquisition FY23 FY22 Change S1 (<$25k) Number of active customer accounts 6,298 5,786 +9% Avg. revenue per customer account ($000s) 5.8 5.7 +2% S2 ($25k-$250k) Number of active customer accounts 1,210 968 +25% Avg. revenue per customer account ($000s) 64.
Slide 39: Underlying revenue reconciliation by region
Underlying revenue reconciliation by region FY23 FY22 Growth Region £m £m (%) Americas 61.5 48.3 27% Less COVID sequencing (3.1) (8.9) Underlying Americas revenue 58.4 39.4 48% APAC 34.1 34.8 -2% Less COVID sequencing (1.2) (5.6) Underlying APAC revenue 32.9 29.2 13% EMEAI 74.0 63.7 16% Less COVID s
Slide 40: Summary income statement
Summary income statement FY23 FY22 £m £m Revenue 169.7 198.6 Cost of Sales (79.2) (74.8) Gross Profit 90.5 123.8 Gross margin % 53% 62% £105.5m1 Total adjusted R&D expenses Operating expenses Research and development expenses (103.8) (69.2) +22% Selling, general & administrative expenses (155.2) (15
Slide 41: Continued investment in innovation and commercial infrastructure
Continued investment in innovation and commercial infrastructure FY23 FY22 £m £m Research and Development expenses 103.8 69.2 Adjusting Items: Employer’s social security taxes on pre-IPO share awards 0.6 9.9 Adjusted research and development expenses 104.4 79.1 Amortisation of capitalised developmen
Slide 42: Balance sheet
Balance sheet FY 2023 FY 2022 £m £m Other Financial Assets 208.3 84.1 Other Non- Current Assets 121.6 101.7 Non-current assets 329.9 185.9 Other non-current assets includes higher capital expenditure on assets held under Current assets operating leases. Inventory 101.5 87.7 £13.8m increase in invent
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