Earnings call transcript Q1 2024

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Operator

Hello, and welcome to 23andMe’s Fiscal Year 2024 First Quarter Financial Results Conference Call.

As a reminder, this call is being recorded. At this time, all participants are in a listen-only mode. After the prepared remarks, there will a question-and-answer session.

I would now like to turn the call over to Katie Watson, Vice President of Communications at 23andMe to lead off the call. you. Thank ahead. go Please

Katie Watson

you. Thank

replay begin, SEC to I today or Web forward-looking go predictions we quarter. everyone which a for We future These our applies to be entitled facts, forward-looking based will matters periods, is section available to on the regarding outlook are solely that on encourage us. now within statements review available the press to, investors.XXandme.com statements. A first find information the in earlier results release, are to that press not to today's you historical encourage release webcast statements financial limited may our our Web a but site also performance. Before XX our for to of Web can we reporting to event. Also, not the found management's be refer call that our after for site SEC's this during call. factors site that impact note this for please the numerous filings, which including and future limited Please certain time of our hours statements discussion on made are issued

US discuss in measures information of Important We and non-GAAP be our may on use reconciliations our certain also earnings measures. release. to GAAP found these

join Joining Officer Officer. Accounting Kenneth us Wojcicki, and for Anne our on Executive Chief our Therapeutics Q&A. Financial and Hillan, will call our Co-Founder; Officer, Selsavage, Chief us today are Chief Interim and Joe our

now like the I'd to turn over to call Anne.

Anne Wojcicki

Katie. you, Thank

combining strategy additional value product concluded phase partners than generate look now success business make GSK programs. drug based on enable quarter XX genetic the first was unique of therapeutics scientific our advancing fiscal to expertise companies providing margins. discovery. to in our our therapeutics customer consumer executing a our and to exclusive skills, more of work both of of a and opportunities July and progress The expanding with large collaboration collaboration the XXandMe discovery resources forward drug XXXX, continued we to number our broadly and we on to During by therapeutic

the to XXandMe advance partnering therapeutics continue target is for discovery. on programs, companies will with both We and of multiple number now independently. collaboratively focused ongoing

we GSK with XXandMe and our validated ability for partners going to feel partnership, work and number enormous aid confident the we therapeutics with of the potential to discovery both independently forward. During a in

We be new are will opportunities biotech pharmaceutical Details available. shared pursuing actively with and companies. on future as now collaborations

our discovery resourcing. our end it the to was therapeutic strategy important company period, drug and reassess of With overall GSK for the

last the for of to our need restructured we we April a built to which the X, a set long reduction Based the to have years, employees X%. our XX significantly and this, that success. remind XX% people investors, our size XXXX. term us today, infrastructure up have of and business in by we on Over or realign organization, size five included large were support nearly in the and work reduced To right the since we therapeutics recognize the we XXX Overall, of by reduced workforce. the nearly impacted. team headcount therapeutics we June, G&A announced consumer organization collaboration,

two with the business. and clear us will strategic provide we therapeutics us a plan insights for areas data One focus to the our that focused enable have believe in greatest We advantage. where

to continuing advance on immuno-oncology wholly focus to is assets. our owned first The

scientific share enrollment with this program our of the pleased the patient and hope calendar at of a information trial conference in Xa year. to progress be additional to portion X/Xa medical the on for XXandMe-XXX continue later clinical We Phase Phase

update We on one partnerships. second that that novel options antibody tumors enhances killer activity. mediated that asset, program continue are potential today a a to I/O we We cell mechanism various this natural explore provide through at including anti-tumor are also excited later solid date to to an and targets announce progressing a intend

discovery on to focus the The is tailor area therapeutics the organization therapeutic immunology second to area. and inflammation

We immunology inflammatory of looking a programs our are toward runway. therapeutic our our and in with are leading to longer immunology and the us and to and provides the A position strength smaller, data diseases advance breadth cash burn excited business allows of overall therapeutics organization clinic. cash more to a focused them number about reduce the

with our retiring of effective He advance will Hillan XXandMe Lowe Jennifer today, we Bill will on that our Therapeutics Richards from Chief up February transition. be will to the as I'm Kenneth lead Officer stepping to pleased continue provide will directly be of In be addition, both as announce down to through Head the Therapeutics Xth. and serve continue of intention to as as pipeline, Development will reporting Discovery organization me. to stepping Therapeutics Discovery Head support

seeing business. we increased consumer We value. for long XXandMe+ subscription of our focused margins price and to May, and our positive average are strategy part remain In improve selling XXXX, we efficiency. marketing Last to new price we results. the also the ongoing Shifting product our term updates customer margins members, kits. product PGS increased are and of prices These on month, higher our increasing of delivering through

of to base we mental subscription data by and customers a for information key medical XXandMe+ value future customer This help with integrates customers. Lemonaid that with added exclusive to strategy XXandMe our to ED, is to next phenotypic by to expand Lemonaid, the looking to and services of continue engaged services, states XX and our of hair new on loss, depression, With that the other unique contributed platform part pharmacy We provide genetic offer actions risk health on actionable our remain in with and conditions focused conditions. grow our launching improve allow reports we genetic quarter, attacks. past premium meet three on important now of take take and subscribers our subscribers and customers. health. impact member features overall of demand allowing continue medical polygenic our customers insights steps. lupus their the an that and XX for We score delivering have crowdsourced millions reports We panic

also added Over finer our including indigenous the indigenous quarter, customers, American past Composition details and PGS for Caribbean Ancestry populations. we

of the now for This power Composition research more able Harvard at previously ancestry slave ancient groundbreaking cover by story Last erased to of individuals Using DNA fill in led XXandMe Maryland demonstrates potential African-Americans living were our researchers free to in living Catoctin to and Ancestry the relatives. XXth atrocities labored Science a X,XXX on than between in connections Harvard learn along enslaved offers their DNA to the DNA and featured on Furnace relatives. and regions. the trade XXandMe XX,XXX geographic research Our where XXth collaborators Catoctin by and week, database, connections the their centuries. Magazine ancient the benefit service and the to XXandMe team, find the with site of Smithsonian collected individuals and the from past gaps like and research

In cell access offer cell service addition, School awareness resources of group a carrier with to quarter increase past sickle trait of on launched carrier Cell aiming information status cell sickle program to Medicine, disease. status sickle Foundation Georgia, to research and sickle our this cell Sickle and individuals with Morehouse

strategy language AI, talk to not about our remiss be would and models large XXandMe. at We

human deep well database with the has unique and health data have AI of and advancements of we and is in information. largest human are XXandMe recognized always We able genetic therapeutics XXandMe, data We as meaningful the and with XX significant growing million health. to positioned genetic a our database self-reported believe the both of going capitalize businesses. play recontact the customers annually. serves At for consumer over to on understanding genetic given AI a role future phenotypes, cornerstone for that

that of or language database positioned into the the that and same review scale testing, help and financial are health the large the the customers AI application can new And reached that and scale to quarter. a to making bring genetic see call accessible patterns completely our through Joe way results treat charge prevent, for in a I'll to genetics models. truly in turn healthcare that, can to research. empower to emerging range AI preventative of scalable over models. we far conditions opportunities with has more uncovering relationships our now diagnose consumer and Our we and We large led bear growing In

Joe Selsavage

Thanks, Anne.

Our first quarter of line guidance. in fiscal our year with 'XX was

We on our EBITDA margin increased date, and during year headway of improving continue our subscriptions, research deficit services which adjusted accretive fiscal margin. to to made to also and these segments XXXX. have and therapeutic prices our kits and our for we discipline, expect consumer operating been have We through and PGS expense

PGS volume GSKs decrease product to over in prices in a and the our orders. fifth selling continued ended June XX, XXXX the higher focus provides services prior margins for year, year. $XX was our marketing The average of subscription extend prior These decreases driving year-over-year the and of improved kits months revenue in which by greater overall were due exclusive partially than efficiency, revenue decrease primarily million, its growth through period years. on same X% offset for election a and resulting to Our in three revenue discovery representing was lower telehealth

same XX% of services GSK ended for primarily period. revenue total from revenue composition the the approximately revenue, Looking XX, research for for was revenue, revenue at total XXXX which of our accounted months the services of and XX% consumer the approximately three June derived represented collaboration,

improved relinquishment quarter primarily by of period non-cash compensation was accelerated an expense departure June year. was profit connection the terms the in improve same subscription grant aimed employee month for million prior XXXX Operating $XXX mentioned first increase million period three by the for in previously. $XX the to services the in XXXX an advertising the of in efficiency portfolio equity revenue, increase compared million, revenue stock with $XXX with were operating in as XX% The investment the expenses advertising first in advancement, over gross for $XX expenses vesting noted the PGS reductions was associated services of a therapeutics prices profit ended an gross Our months based a the to and three the along in same The increase partially XX, in by June marketing representing prior the ended kit research million with period continued agreement, quarter our primarily selling increase XX, driven previously. driven spend under offset year.

cash quarter first and interest net of partially line, at loss income to Looking an money net in the for mainly the bottom by gross in increase in increase year period end $XXX loss previously, from million at higher prior mentioned offset same June in by for the The the operating three was loss XX, market XXXX the million. expenses compared driven $XX held net months margin was improvement funds.

the well as release. EBITDA, our the June the XX, to EBITDA XXXX $XXX Next, XXXX. in adjusted ended million our three as $XXX details with was cash and for March we adjusted to quarter same $XX to cash deficit earnings on how We of the compared see prior Total press at year. please corresponding month EBITDA million end adjusted the equivalents reconciliations define as flat GAAP, XX, in million for period

we consumer are both and always, or programs market including therapeutics of businesses, opportunity, evaluating on out our for actively As given our and returns in as based use timing capital of appropriate of opting potential therapeutic conditions. responsibly

recognizing XXXX company's on financial our conservative guidance markets. approach, current Now to turning uncertainties guidance. and general in the is economy a fiscal full The based the

and the on consumer of The capital plans future business to services businesses and burn those include the subscription allocation of most minimization drive the financially of Within is and valuable our prioritizing growth, and invest focus of expansion company appropriately. to areas cash XXandMe+ the the existing telehealth, company expected strategically therapeutics. which margin PGS and for

to contribution the revenue company's foresee consumer shift GSK collaboration, higher from areas XXXX. not well the end in term the the as company of as of these Given target discovery in focus fiscal does margins the of meaningful

million to result assets year we year Revenue loss Within is is our to the of updated the is million in $XXX be structure. cash fiscal that is improving in million deficit that burn. $XXX updated our its XXXX for $XXX range, the end net to XXXX. focus million through improve and first of for a $XXX key is EBITDA net same to Full range deficit guidance ends adding XXXX. come continue guidance assumes at that currently to strategic projected following, guidance our year quarter's will fiscal EBITDA loss. range of be value on with fiscal now company products, XX, the and to of to partnerships. $XXX continuing range therapeutic to a reaffirmed from the results year The more for in likely that the of to which lower while Also, $XXX an adjusted margin million adjusted to adjusted us, growth adjusting behind for March full time our best is to EBITDA reminder million This reducing us the cost included advance no guidance proxy additional revenue new on XXXX,

I'll turn Anne. call over now to And the back

Anne Wojcicki

We our on year the exciting the and let's up development. advantage Joe. optimistic it that, rest drug pipeline to current therapeutic open of fiscal you, questions. remain take Thank advance execute into heading With consumer in of ability business, our and new opportunities the for

Operator

comes with first Instructions] [Operator from Lebowitz question David Our Citi.

David Lebowitz

for I'm on Daniel Grosslight.

prior Prime July, there in any First change Prime your versus marketing in or adaptation question, respect strategy Days? with was to Days

Joe Selsavage

in to talk quarter. We Prime the recent Day which the results part is that are the can of Day occurred of confirm interest. reflected appreciate our guidance planning updated it we about David, But as second not we're our fiscal in July, for today, Prime the year.

David Lebowitz

the subscriptions? given price there been in churn increase, Also any recent has

Joe Selsavage

we new our subscribers consistent that for date, and increased been have projections. churn the seen in not any subscriptions. prices To We with has

David Lebowitz

specifically as care? could us and primary Lemonaid the you app, of to the then update to rollout status just relating XXandMe And the

Anne Wojcicki

something just is something the experience I'll that going deprecated that how Lemonaid jump the think XXandMe The and absolutely we bit with app the little integrate into entire about to in a future. app. in we're definitely we

to the be genomic enhance comprehensive to we we Lemonaid offerings. reiterate and to the more for more able why demand just bought that -- again, was reason the So see purpose

is So there's XXandMe continuing. the is a term services can strategic are Lemonaid ED, long a care that deliver, pharmacogenomics, really for value have get to best vision that number of that to genomic see have long to able genomic people information. the be their ability from help and experience, have loss the what dermatology with customers really obviously term we comprehensive hair I But and and their a help genetics partnership them do to what experience understand with those the us

continuing you to So else were absolutely say? work are Joe, we on. going something that what to

Joe Selsavage

it, think Anne. I that covers

Operator

And a Markets. question coming with from Capital Berenberg Goparaju have Gaurav we

Gaurav Goparaju

and new well? as a to stage stage therapeutics Just given prioritizing On me. couple earlier from you more you discovery current able strategy still specifically, capital focus later are business Are climate. programs allocation on or macro the programs or

Anne Wojcicki

Kenneth, do you wanna take that?

Kenneth Hillan

we our therapeutics areas advantage. Yes, where we the we've into have absolutely that greatest strategic prioritized two feel business

first programs. very advanced much The is on most those I/O

then that So we've talked action, with is before differentiated priority. of about antibody PXXX, that's currently we're in its a today, our new immuno-oncology. Phase X And is really about first-in-class for mechanism that a a we potential study shared excited an that program Anne as have also top program

that's So one. priority area

and in discovery. be primary we've efforts priority the focus And deprioritized other inflammation, as second to restructuring, recent and immunology in our is The area area we've restructure so essentially the in that's gone going of I&I. all through therapeutics,

yes, organization. And the really so focused trimmed down and

Gaurav Goparaju

on one do to And the prepared internally? out development phase clinical program plan Pending favorable data through you for you it take commercialization just quick or two XXX, follow-up. are later to license then

Kenneth Hillan

and with can them ability then you value really to and the that's maximize free Yes, partner that in reach are combination the to partners We've opportunities I given of for because programs, their perform take as asset global have particularly in as believe you'd important add immuno-oncology. immuno-oncology. Anne, those said anything that which ability feel Pharma know, we actually the pharma see studies, to total like. lead our always we programs companies, providing to their

for be So partnership to opportunities. strategy would our look there

Corporate Reza I/O is discussions Development those will and you as our remember, programs. joined us Head those leading with Afkhami of recently As

Operator

for I'll over Now any Katie further questions. it turn to

Katie Watson

ask from We have to a questions Q&A questions received the came management few Say top our, platform. we platform. investors Technologies to that I'm that in through team address going now the through the

what deal announce GSKN can new with the first is, The when exclusive and or deals does partners now? question you

Anne Wojcicki

that I can then some in take can Kenneth I and as well. have So jump

that has GSK many collaboration continuing it So with July a to is programs and -- collaboration that are the in ended mature.

collaboration that type imagine in will you continue So a form. of different can

doing be are but me that post will GSK the genomic be novel not discovery support there. the in is interest will the anymore discovery. programs in we for What's really based We to explosion exciting continuing world of

So And database. productivity been really there what companies are with prove the we of out the lots of pharma biotechs, really engine. opportunity to fundamental can able lots genetics their discovery that with see collaboration get having now of from is a incredible our GSK that part during this we've as

discovery adept incredibly novel with to and are target we leading through capable and programs. So that

So of the as data collaborations, discovery. but discovery XXandMe phenotypes, partnerships partnerships types access for for Kenneth, database to a really we see anything real those as focusing on now research specific add? we're target well demand in to

Kenneth Hillan

that's think a I No, great summary. Thanks.

Katie Watson

maturation you is, do question increased next when from The revenue of pharmaceutical and pipeline? expect therapeutics the the

Joe Selsavage

owned are future. parties generating as they partnerships announce and drug partnerships collaborations as and the advancing well earlier also for updates to referencing our our database parties. continue on pursuing therapeutics just wholly We're happen non-exclusive was programs with in therapeutic Anne third We'll as on other as with focused discovery collaborations, programs. provide We third revenue

Katie Watson

ME at next share repurchases is is the share since IPO? question down is, price looking XX% The since

Joe Selsavage

quarter. at strong with a million cash current have We the cash in end and position $XXX of the cash equivalent

as fiscal of and $XXX projected million position on will good Our goals reasonably be full time of evaluate that it the the to XXXX. therapeutics to period give us upon in fundraising. and runway you lot and cash EBITDA that our for million as options opportunistic gives is consumer a relates of $XXX and execute With we well deficit our as year This portfolio. a of will sense deficit to our the it's be year adjusted to the range a said, ability

Katie Watson

collaboration therapeutics question, please The on programs, GSK plus XX yielded? comment more has the next the

Kenneth Hillan

both programs, immunology XXandMe the following therapeutic neurology. the and immuno-oncology, cardiovascular areas; programs, including broadly, GSK metabolic, and span and So wholly owned

of and and as multiple therapeutic large across really to, company very areas. capabilities So think, breadth and of speaks depth the it's a then the pharma that interesting GSK's broad database I course, XXandMe

is five on companies collaboration skills combined both of incredible a really has more the been productivity which success. therapeutic As over Anne XX the shared It call, and resources programs, the than generate large to years. the

We will has its independently. of to from the royalties XXandMe on the that both ongoing came importantly, GSK continue to the option advances a receive advance programs, and And collaboratively number from own programs database. that

And are collaboration. in this revenue multiple the future are be so there streams we from still that believe to realized

In we solid killer that provide to be a second enhances a this to tumors various mediated one novel to the GSK program to we'll potential also immuno-oncology intend really in partnerships about targets date. and continue, that I program, as addition potential natural believe cell first-in-class update on progressing the And space. an announced including activity. explore antibody a that spoke has anti-tumor a our programs, we're I/O through that We at we PXXX, later options with

Katie Watson

this development going? How believe program your I you. drug wholly the owned is of also for question is XXandMe-XXX

Kenneth Hillan

clinical malignancies, medical around will at later escalation or the the of including to It's with of solid we first expansion overall phase of Phase as tumor tumors data We've and solid clear Those cancers of continue the adolescent for survival addition tumors, that the dose escalation mutation conference later sharing kidney, be a patients. survival cancer, patients Xa this we to types a XXandMe-XXX. cell enrollment lung in anticipate burden, at a a date completed, high small cell cover the responses, you Phase and We advanced progression the human. X different plan looking pleased evidence We that with and cohorts of in for ovarian progress neuroendocrine year. the cohort in portion fiscal of trial the free be know, cohorts. for scientific portion solid study number carcinoma of we're with now and in malignancies, objective metastatic expansion in

Katie Watson

How plan do address cash to the you burns? current

Joe Selsavage

fiscal adjusted EBITDA been our PGS margin improving deals increased actively and our date, the XXXX. continue for which consumer these partnerships. have to other prices our research and both kits and discipline, subscriptions and we're services segments we on We expect working headway of to accretive to through have throughout operating database and deficit made year And We've therapeutic continue expense on margin. and non-exclusive to

focused to therapeutics As also therapeutics with overall us restructured overall a announced, business business, burn longer the and cash runway. organization more the including the company our company, the we've cash reduce a allows provide smaller,

Katie Watson

question, and providing what it AI your to are the next see value? what part do The the business incorporate plans of most you

Anne Wojcicki

large segment and are care, LLM very getting opportunities the in they're broadly drug the experience access LLM interacting set data, excited We being the think be of transformative And of We be we been the for have large opportunity apply has how to potentially to really it incredible really with are not the language other, discovery data. It to un to have areas phenotypic see And drug used models well consumer or can for about as see important up it's the really in consumers business the with we We're insights that data they're like that AI. and to application the one we models genomic genetic discovery. structured and that folding. how just protein applicable getting. their amounts with then to datasets able already consumer well. of

in again, both to and see, and more announcements the But applications, you keep do side, have dedicated in the consumer we we So updating we continue that. on as both therapeutic broad areas. side teams we'll have

Katie Watson

the coming? And are they you no you're them, on or simple yes able are speak new a or income what if provide way? services can question, to new Final to products, not streams that

Joe Selsavage

efficiencies service it XXandMe+ margins. continue long term make costs subscription and optimizing to deliver customers. We're the better pricing in compelling and value offering to customer to We invest a for also acquisition

revenue we model previously and optimization a with partnerships collaborations focus I personally members. information happen. to Also, we'll for margin This drug discovery. recurring as this more non-exclusive also on generating relevant mentioned, and also bring is includes database continued they collaborations new as our parties. partnerships as pursuing these other for XXandMe announce We expect And revenue growth consistent third

Katie Watson

progress the both efforts consumer forward Q&A. submitted That business. therapeutics We concludes our updating and on XXandMe’s to look on you

Operator

for Thank us. conference concludes you participating. you This joining for today's Thank call.

You may now great disconnect. day. Everyone, a have

23andMe Holding (ME) 8 Aug 232024 Q1 Earnings call transcript