SOPH - Earnings call 4 2023 | SOPHiA GENETICS SA

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Operator

Good morning. My name is Drew, and I will be your conference operator today. At this time, I would like to welcome everyone to the SOPHiA GENETICS Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kellen Sanger, SOPHiA GENETICS' Head of Strategy and Investor Relations.

You may begin.

Kellen Sanger

morning, good and you, everyone. Thank SOPHiA Welcome Year Quarter Full Fourth Earnings to Conference the XXXX Call. and GENETICS

Joining me Ross today Camblong, to Operating discuss our results and Financial and Executive Officer. Chief our are Chief Officer; our and Muken, Officer Chief Co-Founder Dr. Jurgi

to laws. will statements materially I'd that material and These call statements remind statements. during meaning the could that anticipated, statements and place not on those results from uncertainties to forward-looking involve differ are within you or cause of this management like should make that federal events reliance actual securities risks you undue forward-looking

reports information differ by time from and time appears uncertainties factors SOPHiA GENETICS Commission. with these press to to the the and results SOPHiA release cause in filed Additional in and regarding issued GENETICS that and risks, Exchange Securities today could documents the

present is we of in and During which release, IFRS will our non-IFRS financial reconciliation today's measures to this both is included website. available measures. press A IFRS call, on earnings non-IFRS

With to Jurgi. the call that, over turn will I now

Jurgi Camblong

Kellen, everyone. and good Thanks, morning,

our call, of with performance QX. I start XXXX, quick in at an will in by overview our today's look followed During a progress

highlight look and upcoming will Then for priorities a more business provide year. detailed Next, XXXX. guidance will at I results, our financial the our Ross trends for

AI industries. that what we powerful access across started, the first in broadly health was to I public reflect XXXX. the models year a take do. they trend also and of can want general can of was I the more the saw It Before on care get a way, time learn momentum to some AI. to And XXXX in In

been XXXX. company building of precision moment medicine working in has in GENETICS a inception care genetics and an health This for co-founder experience me. who leader the SOPHiA in on been fulfilling As since AI AI-driven has

of the opportunity health over take in capabilities million most since some the to inception invested advanced have care highlight $XXX years to ago, will we build AI that this sector. I XX

the a world to top world-class recruited SOPHiA have of the partners as professionals and by than leading its building and scientists analytical widely XXX DDM. our our care. SOPHiA contribute by performance is data We and some AI care developing for health platform, engineers the team in of today in DDM recognized of platform more health who

of that at SOPHiA rather we technology, of XXXX the progress development in is of turn the adoption to technologies innovation the those in DDM. not but However, spirit, GENETICS, and adoption SOPHiA the market. new let's driving made And

year to customers genomic used number COVID-related SOPHiA record grew SOPHiA tremendous was XXXX, year-over-year represents continuing volume. of XX% across to our XX% adoption This In over growth globe when DDM the We XXX,XXX a GENETICS. revenue by analysis. platform. perform year-over-year by analysis a XXX to was for wider XXXX remarkable $XX.X of drive million spread core excluding

of the laid primary we At achieve XXXX, our drivers ambitious beginning objectives. to growth out X

innovative large we we HRD deep applications. performance due learning DDM, over market potential exhibiting tumor which an workplace SOPHiA we the for GIInger. highlighted expressed Especially, to solid First, called algorithm developed was analytical excitement

value data for our every computed addition for growth market. day in explained being partners. highlighted these on and platform in we biopharma would potential U.S. that sets multimodal AI create the Second, our third, high to genomic data And on trained algorithms our we the advanced meaningful

impressive in respect say X DDM we these that HRD, we areas. and to delivered saw tumors of growth. applications to each in particular, SOPHiA proud solid I'm With

existing pleased adopt average company growth to and above grew new applications. HRD driver major was revenue see customers solid DDM period. in tumor tumor XXXX and both for the during with revenue over SOPHiA a We're Solid XXX%

to analytical proud DDM world-class performance. total the by HRD, new using impressive core group XX genomics applications we tumor customers an nearly end logos attracted SOPHiA in And solid were This XX the tumor XXXX. of solid includes for customers using a application's of applications. signed have all of XXX for by were We QX, which

to driver welcome million, In genomic on the in and our for XXXX, X labs XX% to SOPHiA new We cancer $X.X the revenue and U.S. grew from the market. of top U.S. we're XXXX, up second to DDM U.S. centers the Moving network. signed XXXX. proud growth $X.X in customers U.S. million core XXXX, to in some

we also we to partners our relationships, the Apart with from Sloan year build Kettering. in continue U.S. landmark with strategic Memorial had namely, customers' our a partnership

liquid to institutions with across help we MSK their a MSK-ACCESS to to and the XXXX, make entered this and tumor task available care decentralize them test, globe. MSK-IMPACT, to During biopsy health into partnership test solid their

MSK-ACCESS on We capitalizing pleased and officially SOPHiA market. looking DDM number going we into been forward with for in December in powered and XXXX. are announced powered strong DDM see demand signings with this for this launched In SOPHiA MSK-ACCESS to new U.S., a to I've the momentum the of application

third focus was driver XXXX on The in value customers. our to growth biopharma we delivering

by deals we SOPHiA to the The with Biopharma in expanding cancer are customers this DDM. this partners because where of of accomplished was a testing. deployment to motivated they first interested access number mutually sponsored biopharma are way do they

Spain of proof we the application deployment been in Our announced a area. HRD XXXX partnership resounding point month, this DDM's has that SOPHiA with across success. in AZ with AstraZeneca sponsored Last major

complement focus us have of the biopharma continues be we our key capabilities for partners, genomics to our with and intended multimodal While analytics. deployment genomics computing offering always a our to

CarePath, year which enables analysis of was to biopharma capabilities. data of analyzing of therapy XXXX significant We a launched decisions. longitudinal multimodal data. SOPHiA models DDM designed includes patient predict algorithms Multi-model a treatment different customers to our This and provides in that model SOPHiA multimodal perform data landmark to multimodal effects multimodal building for us value companies.

patient data these analyzes are and multimodal value the our willing to to which differentiated can to customers multimodal access you imagine, the algorithms, As for capabilities to biopharma pay provide them. who

a treatment effects XXXX, SOPHiA for momentous the where our which key subpopulations Towards drug. of one different indicate of of patients partners, biopharma cancer identified with a completed project specific lung could CarePath in signature a end we

use We continue mission. biopharma the cancer. this expand SOPHiA our about remain value our which of In beyond recently partnerships offering to progress cancer cases to We plan to the these for and footprint lung XXXX, our prostate to announced kidney CarePath excited capabilities customers. we data will accelerate multi-model bring X and in breast, these

valuable First, our customers to biopharma XX and with will through second partners CarePath survivorship. across with Canada help be to dedicated ingested innovation, data assets, use of for will improving a access. MSK, which network to access SOPHiA hospitals us multimodal into gain cancer These Exact

provided In overview have as to a or minute year-over-year, I analysis including XX% year-over-year that we up revenue million. XX% performance of analysis. year-over-year COVID-related XXXX growth, performed Now more COVID-related detail. excluding spend like XX% well. to a in We approximately analysis, grew QX, QX brief $XX XXXX I XX,XXX would discussing

As we XX% our had customers up analyze using platform rare from of to for sequentially December XX, and year XXX XXX cancer diseases, who from in regularly core patients and up genomics QX. prior are the

add XX DDM. XXXX over quarter, logos. terms of customers. quarter we customers to number they a of customers will genomics are our the the genomic In fourth the new core Nucor great total of was onto course in SOPHiA as landed These resounding landing QX onboarded

our enter existing After routine. takes more strategy it previously, be landing X typically logo, continues to X effective adopt more applications. to months mentioned expense new and customers customers a As to as

our ago are customers QX, As of who XX% from at applications, year and XX% end from basis end using customers proof from XX% from of dollar were importance was landing of X of year more XXXX. The up at ability expand of the the the existing retention ago. customers XXX% XX% using in customers or more a year X QX ago. up across of globe. or the or XX% Moreover, XXXX new using our to a points of applications, net up exemplifies a were applications, within XX% X,XXX XXX% continued more X

key our I XX% our the to platform in comment market take trip recently quick I across warming XXXX for grew hard that our fantastic us, India, from to a from will progress highlight where a On of usage in returned note, India, a Cancer in our XXXX. million time Delhi. as growth and Hospital estimated partner, New in I spent cancer Tata partners Hospital cases Healthcare, with an Rotary over Mumbai year. Karkinos each X platform addressing oncology such there, the newest Institute also the India Memorial broadly visiting

range we the Together, testing addition SOPHiA between the shared work objectives. excited for across SOPHiA what broad provide I strategic this am I and applications DDM for by of and genomic other population will of India India. the with to am means Karkinos, inspired of a especially to vision GENETICS deployment Karkinos in to

a dozens additional locations few analytical we a hospitals to signed the Beyond workflow. ability of into network their recently India, and Health SOPHiA Lifespan and to seamlessly to today due of the states. would I performance integrate expansions. multiple like signings Rhode in our System, top In Island adopted DDM with applications U.S., Lifespan announce platform's award-winning across major

in for to new in company we top America. powered landed Oncology, recently testing, these tumor X excited with SOPHiA customers HRD. we other with This Dasa X, be during of SOPHiA in and relationship joins Latin including of our expanded European the excited Spain, adopting diagnostic Ljubljana Dasa's In DDM comprehensive application logos expanded Europe to in XXXX DDM the is we beginning I'm centers Gustave DDM with top namely QX clinical will up adopting liquid usage Royal Ljubljana the cancer LatAm, that the SOPHiA XX XXXX. solid our access the Roussy Dasa, centers SOPHiA relationship also DDM for applications. ramping one Morton. biopsy using cancer of We're testing. Institute top to MSK in see the addition largest with announce DDM SOPHiA

on allow X profitability discipline and growth upcoming XXXX, the move fiscal priorities will I along touch I outlook will us to achieve years. drivers growth Similar to our Speaking for the of in year, with highlight let's last how primary drivers. these will next continued then to on year. X-plus

liquid on of with new our are excited SOPHiA DDM. MSK-ACCESS we capitalize First, including to launch powered offering biopsy the

We in double-digit for the are sales millions. market for approaching the it, pleased is seeing by and we our with which pipeline are demand application strong are excited this

in which growth to customers of catalyst across an the will recently globe additional applications, As MSK-ACCESS they SOPHiA sponsor XXXX. with of deployment we collaboration DDM AstraZeneca during on our announced the for a liquid the biopsy

is [indiscernible]. sophisticated tumors. us signature for been increasing of solid Our second complexity the growth tumor solid detection continue signatures. A significant see more to complex, more we for becomes has XXXX algorithm opportunity A space the tailwind the major in driver in

our ability signature. for medicine the is Reports algorithm in Cell unique example published was HRD its recently detect proprietary One GIInger which to

detect [indiscernible] in like we complex as of HRD, customers which additional Beyond also to using cancer are other algorithms DNA, about present chromosomal signatures, are XX% such help extra cases.

genomic to work but Not only will solid equipped growing MSK-ACCESS, this includes we Similar portfolio algorithmically comprehensive with to to applications and This decentralize customers launch have well our are powered of to meet MSK's, DDM. CGP strong customers' also tumors, our deploy it upcoming MSK-IMPACT the of in profiling test, worldwide. needs. a address SOPHiA we we demand with MSK-IMPACT

the AstraZeneca to of plan. contribute joins us in across the customers application the mission the to and also will deployment

of third The the is continuing trend in U.S. for strong priority XXXX growth key in us the

we to names significant leveraging momentum on in other earlier, customers XXXX. in looking marquee our capitalizing the In As forward up to U.S. and to XXXX, attract picked momentum mentioned network. U.S. this we are

acute growth X high-impact measure to delivering XXXX. today, series with an drivers application capabilities in launch ] platform Iran of the in from we're plan new Apart meloid application residual targeted, to minimal launches We and [ mentioned for leukemia. a disease also

launch to genome new needs our plan innovative to whole sequencing features and rare disorders also We on serve pharmacogenomics. in and customers'

technology platform move are From DDM full we SOPHiA a we web modernization and micro as a of services. perspective, launching to

that current will upgrades value continue pipeline, and Based deliver even confident its launches multimodal to create on SOPHiA order making also for long-term new value these we're business. We commercial capability our more our to to will our in CarePath customers. biopharma

on from to are the in year to our exciting our momentum well an for in path biopsy world-class is solid and as we our XXXX liquid XXXX X-plus equipped to profitability tumor years. we U.S., the applications capabilities continue summary, In we next are the building

financial Ross, provide full our will and guidance who over more So look for it a to now trends the at I with that, detailed will results, business XXXX year. turn

Ross Muken

million XX%. fourth morning, good was share of sustainable environment, delivered our quarter despite and everyone. fourth that the you, for growth challenging compared the XXXX the to Thank of fourth representing pleased year-over-year of Total performance to macro strong GENETICS Jurgi, growth. SOPHiA quarter, for I'm in commitment XXXX, $XX the revenue million continuing to quarter $XX.X

Constant currency revenue growth also revenue our as second as excluded internal within in expected currency XX%. note, revenue in trends growth related plan and constant COVID out was played line the revenue clinical was fell XX% Of consumption half.

have did small a to the XXXX. the amount from of quarter we fourth first biopharma-related However, revenue half shift of

stated As growth quarter for strength decline the core medium XXXX offset attributable small by previously, continued of XX,XXX you over to volume timing-related the I've of is XX% stages, biopharma the COVID-related for in fourth XXXX, still to XX,XXX nascent the analysis thus, volume, to expect expected was of analysis compared year-over-year to quarter volume. platform should continue fourth of our the analysis approximately our was near term. its revenue recognition impacts Platform and

XXXX. overall rare an applications for applications. Asia tumor in the a slight despite Strength the given America, From highlighted which inherited strong from outperformance disease geographic Latin moderation had outperformed strong solid in and and in in an Excluding liquid analysis biopsy standpoint, broad exomes the hemonc year-over-year America grew period. application COVID-related and volume, North quarter, oncology XX% healthy offsetting in Pacific a platform contributions period, applications demand

for profit Gross in representing XXXX, fourth was the million XXXX profit the of quarter of quarter XX% million, growth XX%. XXXX. $XX.X margin to the quarter of of XX% fourth $XX fourth of $X.X the was XX% quarter an of gross gross for Adjusted compared of XXXX. of in gross adjusted XXXX. fourth gross profit margin million to for XXXX fourth XX% fourth of profit was the Gross compared to million XX% quarter with fourth quarter year-over-year Adjusted of for the of the was XXXX $XX.X increase compared compared quarter for

favorable period related to costs to capture, of by to storage sizable partially scale as Microsoft price compute cloud comparable Azure prior and We benefit storage-related offsetting related as in from continued the a economies our and computational challenging offset credits cloud-based well year cost.

Total this for would headcount, XXXX. benefit lower year-on-year. as increased FX both have continue quarter the the basis. $XX.X Excluding benefit, operating we headwind Across well to a period, gross million onetime XXXX $XX.X to expenses points compared notable expenditures. of functions, quarter-on-quarter million quarter for from of was in the margins basis fourth were XXX the particularly on as a year-over-year R&D impacting fourth

was broadly. compensation share-based also basis, reported headwind a On a notable

Lastly, I side, our the proud for the service fourth in where $XX.X loss million work of company G&A hard to we public million costs. $XX.X am on our of from to of the benefit fourth fees quarter continue also XXXX professional lower and XXXX. was optimization quarter Operating compared of

for compared the loss fourth for $XX.X of of quarter quarter fourth was operating million million Adjusted $XX.X XXXX the XXXX. to

trajectory half to the additional We we the believe XXXX. towards the to necessary took the first our sustain pleased continue trend be half second profitability of in with XXXX headcount were into and actions of

a in charge Swiss have an This exchange intercompany the to see losses. and material related as the the primarily overall. quarter, is utilization due is Of appreciation this did franc related significant we to note, impact you cash below immaterial of receivables, will on euro this foreign our line period. the to

to XX% Lastly, computational agreement with related a total This the QX $X.X an XXXX. prior the to of expenses fourth for in to represents and year when quarter XXXX credit burn $XX.X our even quarter. factoring improvement cash in in million year-over-year strategic storage-related million, was Microsoft compared

We on utilization medium-term trajectory. overall with and to track with liquidity our remain happy and trends respect cash our are

growth XXXX the was million million revenue XXXX and currency $XX.X XX% line and year in despite XXXX was for Total in XX%. visibility year Now excluding growth turning This Constant have currency was headwinds. XX%. representing COVID-related year-over-year we growth, industry-specific revenue generally with of to to our in to compared initial forecast level outcome the speaks macro and revenue of revenue constant full full financials. $XX.X revenue ongoing the to business continue was

for XXXX, $XXX,XXX to year-over-year year Platform in was analysis represented $XXX,XXX XX% growth. the volume compared XXXX full

platform XX% the a volume, COVID-related period. year-over-year analysis Excluding grew strong at in

inherited led year, was the strength outperformed APAC representing full applications than exception, growth XX% regional with liquid solid oncology growth. in and generally tumors by and growth the greater balanced rare disease biopsy, application delivering For

COVID currency line XXX% prior XX basis period of points XXX up relative with net COVID-related XX, customers to our QX Constant from XXXX. XXX% expectations. the in for Net excluding XXX% in sequentially dollar and genome as were X,XXX as compared customers retention, dollar to year revenue, XXXX. revenue X% to XXX XXX%, XXXX, the December in up improved We in was annualized up retention from was by year rate XXXX. in XXXX, churn

NBR Strong gross Gross the for XXXX, forward. Gross XX%. of year for XX% us year-over-year provide to healthy revenue million with million was XXXX full margin level visibility for $XX.X $XX.X backlog continued with XX% compared the to a in compared level XXXX. of growth and high profit year of a XXXX profit going was full representing of

to increase was of year margin profit million adjusted medium-term entire XX% now gross outcome for incredibly respect encouraged XX% full million, of moving for profit with of for gross Adjusted $XX.X an compared XXXX XX% forward. as I to have to opportunities continued XXXX. year. this the I outperformed year proud $XX was the expansion an our remain full Adjusted guidance am compared XXXX. in gross we

$XXX.X were million and operating XXXX. $XXX.X $XX in in Total were were million expenses million XXXX. compared XXXX $XX.X year Sales XXXX. the million compared $XX.X the million to for in million year R&D to for for XXXX $XX.X the full compared expenses expenses full to full year marketing

to $XX.X compared full to compared in Operating loss General for in XXXX XXXX the was million full year million and the were administrative was operating compared year Adjusted $XX.X year million $XX.X for expenses XXXX million million full XXXX. $XX to in for 'XX. loss million $XX.X $XX.X XXXX. the

was year, cash XX%. in total prior full the year $XX.X compared Lastly, burn down million for million $XX.X XXXX the to

proud and are growth moving forward. this million December Cash cash and achievement to XX, as of approximately of quite sustainable $XXX.X equivalents We were remain committed XXXX.

SOPHiA full reported turning and to between GENETICS on year expects million to Now our million, XX% XXXX XX% to outlook. basis. revenue $XX a growth representing be reported $XX

anticipating XXXX revenues impact few ceasing will very assumptions would assumptions a guidance impact to new expect reported customer we XXXX. rates exchange Two, a combined the reported rate to XXXX. relative in to volatile, our a contribution. our also our headwind XXXX. moderate of a are forecast such, modest organic provide negative This COVID-related of me as One, is Let despite excellent related for exhibited XX%. key currently results XX% of that we low contemplate and these highly revenue we remain to reported growth momentum of implied The towards place to end medium-term in underlying

revenue attribute X as conservative more would guidance. to We XXXX we a factors key approach stance

testing. we to help adding months from key implementation up add samples workflow liquid the have biopsy access implementation assumed wins time customers our to recent may XXXX. see to of for tissue, to First, as elongated X reference a for gain we normal complication complexity We this the the applications likely impact currently is believe to compared need times proficiency lines, will given larger tumor in further meaning

seeing new PacBio, Element. sequencers Second, Nanoporin adoption Ultima, that increased Oxford of Genomics, market. in the This includes we companies Complete are

this welcome we GENETICS, SOPHiA As diversity.

is of our platform agnostic. One founding technology to principles the be of

XXXX NDR customers. historical growth a their pattern of consistent the XXX% to prevalence as expansion existing from new adoption driving our changing XXX%. warrants conservatism need solutions about transition. opportunity first is the Thus, to implement in of our also our some of to sequencer the sequencers manage This they is offering, forecasted the of majority While across customer readiness these is with

as that expect the With and you update of to trending. logos percent be XQ with to year our tend are revenue XQ how year as of our full recently point. ramping XXXX typical from stronger begin will and course new a likely to would up at to contribution of will seasonality, largest of revenue tend XQ follow respect XQ to seasonally We seasonally signed be the over the implementations whereby softer in while terms cadence, being standpoint, XQ many to we the

continue be of our larger We in revenue to half overall second to recognized expect the of year. XXXX the portion a

is currently SOPHiA the range representing basis on GENETICS from XXXX margins XXXX. comp in forecast strong challenging XX.X% in Microsoft despite up of XX.X% to to quarter Following XXXX to gross remaining the in expansion prior year and expects adjusted cost levels for due our first XX further an margin performance improvement the a XXXX This gross credit. of in We points.

less currently XXXX. loss drove loss. from operating respect again another operating between a to million $XX a to yet expect adjusted of to We This improvement $XX headcount, notable despite fall improvement million. benefit Turning levels year-over-year XXXX loss and in which majority is material with our

that We the are path we in actions have profitability, our to efficiency. required obsessed remain confident taken and goal expedite medium-term to with capital

high half frame XXXX, operations further but continuing second communicated our difficult took the our increasingly efforts while our a generation. at projects, time we cash some ensuring previously revenue ROI actions flow In tactical were medium-term reasonable on prioritized targeted focus decisions, momentum sustaining optimize to of while these to levels to headcount R&D we also

systems, costs. and next will natural on these we X-plus identified the leverage growth professional savings our services strong will and our years. further business the profitability revenue XXXX, public execute to in items company in The certain discretionary revisit from In operating nature of and continue expenditures in the combined

the like take to turn the your to before back would we call With I closing for over Jurgi remarks that, questions.

Jurgi Camblong

of customers and proud more execute Thank our our our which stands our on of and to vision We're delight continue we you, believe ahead. ability the opportunity driving on ability SOPHiA's performance, to continued success reflects future Ross. towards a thoughts few our will for platform. priorities as key near and to the more I feature. a focused just X successful XXXX, SOPHiA's XXXX. look we shift final After with our usage share

applications SOPHiA deploy partners. growth with help our the the significant biopsy DDM customers of from including MSK-ACCESS as new forward we biopharma to powered to First, with seeing liquid worldwide look we applications,

continue the third, set although XXXX. complex our growing increasingly XXXX, we're excited high from continue we the of SOPHiA Second, to the bar to of tumor applications growth and plan in U.S. on leverage we trajectory solid demand we GENETICS capitalize strong in signatures. as momentum And

you of be customers Without you, SOPHiA's continuing and Please future journey. thank would to that data closing, none in us are look tomorrow to our SOPHiA week analyzing. we're this attending to Miami. investors Boston Cowen In Conference possible. in for you our on partners, update note Barclays colleagues, joining we and next I forward in Healthcare success of democratizing

for you Operator, may now the open questions. line

Operator

I'd to turn it Before we a statement. back for Ross over begin, brief like to

Ross Muken

weekend. Jurgi him it minor sends make Thanks. be portion back us we today. call forward We regards the medical being soon. the having a Please joining won't the for to had not and for apologizes note his today able look procedure over Q&A as of to He

Now back to Drew. you,

Operator

Instructions] with question comes first [Operator The from TD Dan Brennan Cowen.

Daniel Brennan

question Ross, the on guide. just on Jurgi first I okay. is -- hope just Maybe

bit just platforms. for there? just newer implementation and elongated just the the Could frame contextualize on business on kind liquid like a give the biopsy, And today then you the a little second quarter, exactly will of what's Could color follow-ups. like how is in new something this? then this widespread adoption? lingers going for And the year you be about more platform a size liquid throughout few that this little talked have talking the You I sequencing side, guys? that And about be we like biopsy

Ross Muken

Thanks, Dan.

the put terms in guidance. we of into the of So factors some

in to point terms the adding a new that I one, of period. fact in XX right? you we would tremendous logos, the added core So we So had quarter

We also we had number -- again, typically this not and share. is a

year. of incredibly end strong towards the We had also bookings the

is new A of that the in environment liquid is coming portion in biopsy. healthy. demand So quite general good

And a a normal so complex, given relative right? I think end, again, both And to on solution. tissue tumor our is think that it's I solution, bit more

added our relative so and challenging, our a also conservative assumption months. that typical months X the acquisition means bit wanted say, of to would I We customers but customer. to just is about adoption in X bit the And a workflow the for essentially process sample more, more ramping to be

we're contribution in Again, just quarter get would mean X of the getting roughly typically new year, that we to. those customers mathematically of would some only from whereas

So that's liquid biopsy.

this players the obviously, essentially We been no player being side, the the within but we with the you've seeing change having position in leadership of in see, a of for years market, On where of of sequencer different number last X quite number dominant. market the the obviously, success quite new vendors sort has still are had applications market. majority X a

not so obviously for We applications new sequencer solely have But right? a of nice the because degree, is a and to welcome development. diversity us, is, bit And new say, types for this that would really vendors. certainty we this and there seen I us before, less

bit because right? of than as we entered slightly that's And business, the think elongated, wrinkle in we to of both on so a developments again, bit new in case, faced of we're And cushion different terms long-term extra it's typically it in we these us, just again, I past. times but setup the ultimately but just we wanted wouldn't be say there's add anything necessarily have for positive a ends seeing wanted very I our so a conservative to introduce does year in

Daniel Brennan

Okay. Got just go then it. just And as would follow-up, part, and maybe then X queue. in the be back a I'll

the the in XX-F, about how on was contribution the And think noted give Could impact just up us base biopharma thinking any we're I million you in color and you Just year-on-year. it what some 'XX? was? color the biopharma, $X

discussed given distinct haven't is, needs And what us in long, around to taking whether what you medium-term you guys that in the the base the then or like, that timetable, a order color ensure are actions remarks that path looks path more you any prepared I but happen? revenue to profitability medium-term how the and what to know date

Ross Muken

question. the for Thanks Dan. Excellent,

seeing next terms broken in revenue biopharma, the about of lot stages. still amount I you'll our year. note a there. have incredibly from that success we're the the out period business, pharma partnerships on clinical slight remains was of not that We're nascent of in having some synergy first this call us updates so excited shifted of So we we I of a there the to its think, still And opportunity there. in biopsy year, see business you'll new where between half say and liquid again, that that We're out. particularly obviously in would also quite and did continued

think for we're what us terms for of of stay present on, on term is say testing, in pharma obviously, the of some very the within of us very top done overall, already that's would types I sponsored But And we're longer landscape. tuned excited and projects of I working where other multimodal multimodal for right? we've sort about

I'm this actually to I not small internal But It quite pleased as how point say of still business overall, performed the so at relative outperformed a would the And enough expectations. our we're it's it breaking pharma year. whole out. with where

as you the And you still a I platform nice so a about whole. where show the as having, we point disclosures, we're want at think the momentum to but we're

this Microsoft points. a of of to basis your proud credit, team. of question the profitability, margins really great I'm the over to gross path the We were terms work second on XXX did up relative margins. In In gross quarter, job excluding our this year

We also the which made great expense. our is year throughout headcount, progress on main

And improvement that out. see so continue play to we'll

of majority entity As mix. terms you we're know, in headcount a our European

work to time the it headcount does actions their so way some through P&L. And for take

systems OpEx estate, professional very year. you'll the first spend, benefit see on of then discretionary continue And part our services we disciplined continue in to cetera. of or be next our to on that's or real whether et rest the So that

to areas we're for constantly so looking target. And

I So incremental be revenue, say good is path said, biggest of from So we to strong going to here, growth, for being retention visible, would to the That the contributor net being news the is for the have drop-down XXX% us profitability year. about organic right? incredibly dollar the talked right? we

which forward base that very with So us sort our a to gives growth. nice model of

our in the but again, drive long-term so and year, increasingly we obviously haven't to margin expansion. talk or sort medium-term target, ability our this expansion, And with confident gross we're we continued about margin target updated of

net gross With drop strong portion the we to EBIT those of expect off high incrementals line. that down very a to revenue of profit growth, incremental the

help with materially will so profitability. our And to that, path that

spoke sort you back can now to 'XX, about know of So cash that in And JPMorgan, sort breakeven. a for into should say, the loss. with those some you this year of into at trajectory see and Yuri can pretty continued capital our be years I in so again, least flow -- base would sufficient improvement visible, X-plus and range cross at assumptions of a you 'XX now with of terms over that

Operator

Morgan The next with comes from question Stanley. Tejas Savant

Tejas Savant

Ross and to wishes best you.

to Just there a and just path guide the couple of on the you made quick some breakeven. on comments the cleanups of

as good is guess for XX% even my I question been now, adjusted for progress a So really, you've GMs while the fourth you dynamic. north of as mentioned, in the Microsoft well really in well, quarter

on So margin let's the what's from line? that XX% perhaps holding you target say, back plus to, bumping

follow-up, to related go X-plus plus I on a want focus the talked you in breakeven. as operating years to about the the profit And then --

lean of else really in over just couple phrasing? years? there Or be is be something reading to should optionality you into more of invest opportunities there that So currently should degree terms and is of in of anticipate that a next we sort than that the preserve

Ross Muken

Tejas, thanks for the question.

take your first. would second -- I'll say So one I

it environment, freedom. think business on obviously incredibly a is headcount, as the a right? frankly, bit given I So way you the But a market us we're focused company, right, of plus, practical ultimately, yes, sort of but degree primarily this give I end reality the does on that's think initiative it of public the characterized

objectives, want sure control also is our where before, top hit we high balance to that momentum. As to of much that we of have land, mentioned of to we line make a growth but comes degree right? drop-down that so the We relative I

need that that our our And or to it's so standpoint, really And operating we to to able that but don't sight we I sustain within still really the momentum drive crucial for to think good invest be leverage, contain revenue also need future, from we we lose targeted right? need range.

think that shareholder balance. creation. I to value balance it's again, always and trying a We're delicately maximize So

on job deliver we've and I so done think, good to that of we're ahead. far, relatively a And execute the on that and future. again, focused continuing maniacally so in go Yes,

Sorry.

Tejas Savant

Go no, ahead. No, ahead. go

Ross Muken

to side. back, store, labor And has as very very in of had the gross say, We've is majority absorption. overall, just business momentum right, a take in which was we good a just the on margin step job going I COGS. of No. I fantastic a think good We've compute done our terms

question of well are only time. over is elements are the there business, as of There somewhat I think for us focused. mix We right? our sort

the say, there laboratories started the We say, ourselves of customers further have, of tone, I number on push items. on would haven't them opportunities nice our services at really professional our number we our ingrain size help to and touch, are, and a to we but really with about scale effort I within talked would and

today, I the like potentially can So will we if legislation, you think think be example, this where for LDT an about area help.

elements over on business Additionally, some could pharma there have side, I of service would time say, that the that components. be

ability And so parts, waited drive better on would expansion. of have pieces But of terms our we where quite continued to in we frankly, understand feel mix. confident will given GM to overall those those in, sort say, I fit overall, moving

X would to You and can be, to path see profit versus to figure it's gross that over which, in dollars, end time, X sort the of that at being year this that the plus. the certainly, to maximize again, the say, closer crucial I going day, profitability of guide

business. we're I in and predict would our super accuracy focused degree a again, high it. ability our visibility So We say, to of, on we -- just have

can right the it, business. perspective would of And within all commit developments. again, the other so don't until of sure argue we deliver sort I the the business from it's we're positive and demand mix are seeing a And something and want some that to to given we're we today for pulls XXX% pushes

Tejas Savant

more color out land more to once to in base Ross. expand expand it and your willing customer as question little related of here called land existing You them? you're doing Got guide. what cross-selling is in into to conservative be you assumptions And a incentivize share part bit it. would Super of the really next My terms helpful, the sort you of right? algo, your

saw came for SOPHiA much accounts volumes before. solutions So versus that could from you haven't used I'm you. of accounts that of you accounts to in you existing 'XX, just on think assuming And it's parse area in your legacy the an leg solution, third important it focus how new growth do out adding for the so us and new they ramping speak, being existing terms

Ross Muken

Sure. already is crucial because visibility, would I gives X.X cost but crucial CAC selling in with a think year our I it's And business. differentiation again, a us, dollar you're it's this terms remains because seen really software And a applications obviously great to with that to this prepared as expand, applications company, share Because net landed And of we've multiple us, having right, kind metric right? retention remarks it a would also expanded high acquisition from very speaks the on high for health X.X to more, of in us, it of right? customer. past, that return so of the of a and of question sort very that I the again, incredibly of truly average say, shows the the did customer an right, our say, customer the per number many Jurgi degree in

that, real HRD in year a expand. we're solid and even are this I had see X you so we can seeing And overall. the over months, more say, focus on would put tumor I so really think we the nice dividends. And And growth in the last

are of client is norm, us a going XX folks the there at remain for expand 'XX adopt. us. the for really There number not with gives story good how call, on much with actually I to right? accounts. a liquid I out it there applications, you this applications Jurgi just think would 'XX, sense called biopsy to was a the many it will quite But potential is. is say start but of frankly,

markets. So expansion to friction see bit high, I is is it in times doing does we're behavior, more say, general, right? now so better that still you're the not it's And most this if using would much a because with albeit you're the why of you it, challenging of job but us, it benefits churn I would at would make, also elongated I if so solution our is although happy a an even change say caveat than and would you and existing say, pace in incentivizing

of sustain contribute growth is other came But was came that would solely in sort of growth positions a will expand to between year still, X% obviously more of us essentially because 'XX, in the proportion 'XX this to is a a materially situation question one visible from term, thing again, for elongated of on this This us of the middle. I for anywhere proportion, would XX-plus because that is year, right? the sort ideal is say, positive. longer say The all good it elevated your existing I period they those year. much say, us would the typically customers, us of and land customers our The I high X% a quite this for very growth. our right from

the And the assuming much conservative we ones the we are In obviously that. thereafter. end land this this guide, more of amount year. lower towards year a It's

very have contribution. we So little

And to to point there? year again, key maybe just seeing, feel it that this add Kelyn, want wanted we but maybe those And so will to call so conservative, a right? we're prove out good dynamics of ultimately, that about that. some you we do relative

Unknown Executive

Thanks, Ross. Yes, sure.

be our proven I as exciting. QX, are within today existing up the customers we customers ramping to mentioned, DDM adding a announcement XX genomics expand new even next core genomics we've to think over a makes to SOPHiA had we customers, months These X within XXXX. are implementing in -- that and we more landed customers new we've X are I that ability which going demonstrated had who XX core the

drivers. around that so other And growth see biopsy or or potential the those expand even in more solid those, accounts after mentioned landing we we tumors the within to liquid areas

Tejas Savant

-- you implementation. on adapt? include should any pushouts one LDT for here. customers your your regulation Last are SOPHiA imminent. Ross, to rule appears What guys. me from or grandfathering further any helpful, hearing And Very it. customers? the on FDA Got can that to not now increasingly thoughts the from this final do What help

Ross Muken

I IVDR. right? been view would Europe quite if great And as for the about so a positive. say, This as well us has you overall, result in good regulation think That's question, we a

other of to using playbook although higher a for pace bit my that's there several the what essentially say, would we're than service more, we've I out with expedited potential LVT, albeit on might the with with so probably as seen is IVDR, a the saw component transition And professional margins, U.S. times. point pushed we be same IVDR gross been

And so track I all do to already and think platform stuff degree. QMS This the ability to need the validated events, right? we some is for a

so it's now more And formalizing.

pipelines own because pipelines think a ability I think so validated And customers to disparate move pressure higher challenge. quite be and to a the will the multiple to on our approaches, just be maintain I essentially platform will your are

obviously, be, monitor situation. And say, net would this the we'll the of positive. will I a so ultimate that But view it's our

see We're the end, as our tends I'm final profile. you to would are. larger rule. the have But We in sure to be eagerly fits favorable scale regulation players, to I awaiting which say,

Tejas Savant

it. Appreciate helpful. Super

Operator

comes question next BTIG. Massaro The Mark with from

Vidyun Bais

Vidyun is on for This Mark.

in do been are is I how think, you've growth the you think adoption you seeing just the think time strong now, and of some growth where sustainable that in you terms that HRD So for curve? just

Ross Muken

Sure.

in relative the been good share markets So I quite ovarian, to And many we're I high. think think very key opportunity our has making in initial progress.

will indications. about out as other we've PARPs spoken moves into class kind of of before, as so next come of for ovarian HRD phases of the the growth the And

not And us of as growth really this remain so can as platform. a But particularly kind product right? with quite and cycle. remains we continue sustain ultimately, partners We over of quite, and sure, a quite think pharma application time. that incredibly of for obviously pipeline, the look HRD continue say, to our We solid will would as the we signature important. category, closely. this we're overall we're monitoring sort It to in year popular in key us, overall, the phases we're this work for I'm I eager tumor element a to the at saw our early be

Ruizhi Qin

BioReference along then the has ad on there, for customer helped early MSK-ACCESS conversations move Okay. how winning quarter, been U.S. Perfect. what feedback just large account with and is other And as last the that customers?

Ross Muken

Yes.

want both would overall, say, the say, the well as So I I on we're quite I for with don't happy would a seeing to in customer. R&D both early our bring as of we're experience as starting to of well as our what early we're we've to it solution own the some lab we specifically customers. access But comment pipeline decentralize MSK-ACCESS as, built

So here. stay more to have hope tuned. updates We

the just months we world of types are would I from take not quite institutions. we for and quite hard say, do I'm for again, in decentralized our business conversations think, team the I say of time unique an really, asset with are and partnership remains of of this that even the world, we're really But proud incredibly I And would over a would in us, could this but places say things thought ago. the with can payer elements, think would the is I have having progressing a that X the I expanded really overall, transform us, work well, what

revenue, in us do us encouraged but into as 'XX to comment And so year. and on of as out I early interest, this well opportunity? I'm say, again, that Kelyn, and around well. into will primarily And it's be we'll interest now right? this move maybe biopharma so to want something half would incredibly activity the turn the you that for second plays on the

Unknown Executive

sure. Yes,

who customers new speaking where as application a customer well you Ross market. as the might to. So to getting our Sloan we're for name as and and want liquid Memorial existing interest, those add biopsies both It's bring up customers Kettering specifically the that the MSK-ACCESS, lot immediately of of solutions one clinical perks almost in mentioned, that we're

BioReference. mentioned You

also attraction we're announced But biopharma. from of at market, JPMorgan. of getting clinical Tennessee We outside lot the also Oncology a

Spain, collaboration update a is partnership. who it on deployment approximately mentioned of be with deployment and that successful And all think, expanding both year in AstraZeneca, sponsored sponsoring of announced gave which now, testing patients globally. incredibly today HRD of we application partnership last not We an XX% great So they'll later we're be Spain. that I our was MSK-IMPACT going an has We're AstraZeneca, with and earlier the that been HRD a we MSK-ACCESS and the year announced in to success. last that

us. for exciting really is this So

In the also to that And to their more later globally. will space slated as they which offer help reach this clinical launch liquid footprint biopsy with then year. help customers MSK-ACCESS, is

Operator

question next Conor comes Markets. McNamara RBC The from Capital Instructions] [Operator with

Conor Noel McNamara

technology implement and as vendors? Just switch about you down anticipating it slows impacts a -- a and their overall how potentially you customers quick new function it actually you that did Or your it vendor validate -- guidance sequencing evaluate just they follow-up on the volume? is are losing or customers new talked as more that a of they

Ross Muken

Yes. It's really the second, Conor.

past. to as in I very as of is not our we we're in be in actually an want It's bookings again, more think practice. seeing seeing in assumption well different and pipeline we're than in sequencer general, as clear. something the our mix I did This

know the platform delivery report if and obviously again, and by those is of historical had many the the But our market And not track our sequencers, the again, businesses, may that these will our longer. or of the clear onboarding right, installation so you with to it's case. last of been just And lack sequencers of decade. dominated assumption of of for those the context part the We'll X the that it balance of players thus, better year. given over the take be well us X

again, market more new up geographical so more for the But are in pop not different suggesting players margin, a clinical I I'm we the and players significant shift. requests many And think seeing seeing at we're in markets.

the us. we onboarding there's that typical so the to some be case And for of cadence in change want in just prepared

anything, business. overall, as plays market our into for the and term, strengths expands longer if no And again, a we us, the loss, this diversity think, so

Conor Noel McNamara

Great. That's all I have.

Operator

question-and-answer This closing the I remarks. like concludes our for any to would back over session. Ross turn Muken conference to

Ross Muken

us. joining for everyone, you, Thank

that to look We an forward back year. incredibly are SOPHiAns And shortly. all I'm us proud pleased the have here Jurgi on end of strong of it. contributed to we call very the to having with of

send So we'll thank to soon to best I all our and you, . and everyone, week. conferences next wishes you talk Jurgi, at

Operator

for now concluded. attending conference presentation. has Thank you The today's

You may now disconnect.

SOPHiA GENETICS (SOPH) 5 Mar 242023 Q4 Earnings call transcript