CSBR - Earnings call transcript Q4 2019 | Champions Oncology, Inc.

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Operator

Greetings. Welcome to the Champions Oncology Fourth Quarter Fiscal Year 2019 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-answer session will follow the formal presentation. (Operator Instructions) Please note this conference is being recorded.

the to turn Morris, host, now Mr. CEO, will conference your over Ronnie I begin. may you Morris,

Ronnie Morris

Good Ronnie our I year joined for afternoon. am us end today I Champions joining by am XXXX Oncology. earnings David our Miller, for CFO. call. you Morris, Thank fiscal CEO of

will is and I could actual Before I differ I described statements forward-looking materially remind will making start, what in results statements. those during that from you be the call

differ is that and factors could to Forms cause of in information XX-Q available results Form Additional our XX-K.

call may Reconciliation GAAP of measures in financial is the the measures non-GAAP be that discussed earnings release. on the financial available to

SEC yearend numbers on finalized please annual subject be this press report in that our will the two to and change. statements not our discussed and approximately Therefore weeks. audited for Additionally, issued release another the our call be not and will preliminary note with are financial filed

year the major another achieving of progress, Champions had of we evolution Overall, significant continuing and milestones Oncology.

the our We growth. develop of simultaneously further to expansion record launch future services investing resources to revenue levels business bookings new sustain and reaching offerings while continued and product our core of

acceleration to $XX we annual were year easily of some challenges. Financially, year revenue and multiple maintain both a GAAP XX%. it on record both rapid growth, fronts, and on another XX% expect achieving profitability profitable basis, revenue surpassing exceeding we of recorded guidance did the our come million We for non-GAAP the with and on

both were revenue these single is in and our for call, issues one experience led the we These some of increase did operational explanation and discussed expenses to during As year. in no our some control. recognition. QX issues challenges out a delay There earnings on an

always the we've growth, of quarterly with tumor can multiple and we and biology, uncertainty times, scheduling. are which stated be does cooperate with unpredictable our not dealing As results

those in PDX the our studies costly failures and our control were of more particularly studies, expensive operational studies, mouse are mostly than humanized to typical out Specifically, company.

some to our resources. a on In strain addition, our by putting of challenges contributed rapid our operational growth

can year. be nevertheless have that the pain, did last of high problem to While class specifically as in cause half it viewed our some a

much our and have strong here. advanced QA/QC technology our We enhancing and training processes, effort tools, developing ensuring spent teams compliances

feel we in this will And operations more quality year. efficient all of that these result enhancements cost better and

However, Therefore to can revenue, the inherent mentioned, predict to when biologic there take in important a bookings conversion fluctuations results. the due to long it variability lead is studies, term our a which remains to challenge of financials. our view to as in accurately evaluating

our forward, As we several growth. that think about Champions will levers enable continued see going we

First is products the continued our and services. expansion of

introduced new mentioned services X the As during year, year during XXXX. we fiscal

vivo our in PDX. The platform as first complementary a services to robust was ex-vivo

Our will ex-vivo the and up include expand revenue our to to continue We growth other contribute platform ex-vivo and during to this is XXXX. assets year. to in running plan platform

to negotiations and anticipate on have a revenue year. and we cycle, to are of contracts. to CLIA launched develop cytometry But was to have GCP took us anticipated than expected offerings. preclinical in meaningful longer do a currently GCP expand cytometry bookings longer flow a services It conversion The those and contribution include fully second to offering offering fiscal flow than in flow handful our capabilities. not this we revenue

as opportunities the and for with along services, markets the strategically taking advantage of our forging are working untapped demand pursuing sales yet our in growing deeper with for pharmaceutical relationships relationship -- we Champions. of Secondly, companies, expanding force,

strong. healthy Budgets preclinical demand development to for we lastly, continues services. a continue our And for relevance services for a drug on translating see the and specialized the And be pace. demand this oncology to

development drug who view pharma, in their expertise benefit scientific continues Our as partners pathway. to us consultative

a In on core summary, built we differentiated strong platform. have a business

We services clear. imprints. is and of The our our geographical enhancing are suite message to expanding both adding and

grown revenues. updates the We the we continuing forward more years, and substantially year. look to While our our we of over over are have the course even committed providing increasing expanding to to reach

Now over let Miller more me results. financial of call to turn review David the for a our detailed

David Miller

Thanks Ronnie.

$XX was XX XX% million $X.X sustained full basis, to in last of and XXXX set before strong an and be in Our on same be up period XX. than during a revenue results SEC Form July on high Bookings increase XXXX. increase year, growth us filed up our recorded K with revenue annual the QX million a XX% particularly continue XX% for higher the QX sequential year-over-year. will on saw the QX. or million, to revenue bringing $X.X

to As number. slipping into QX, QX we along completion high call, [ph] revenue than an of quarter revenue expected recent weaker usual than bookings third revenue revenue combination QX quarter was the and unusually The indicated on because the a of contributed recognition. study some second stronger with

the XXXX off about which we approximately revenue, think we of fiscal $X per million as and coming run it baseline XXXX average view the revenue or out QX the forecast to quarter. prudent be QX of As would rate of our for

as However, continued two quarters, evidenced will these revenue there variability. last by be

fourth and year. year of for and of for our a Including Excluding $XXX,XXX our for compared fourth fourth depreciation, XXXX loss total year. for and for to a $XXX,XXX the compared $X.X quarter million, depreciation comp the a $X.X breakeven last the $XXX,XXX, XXXX comp we of stock-based loss a basis, of recorded $XXX,XXX quarter, year, to to million stock-based income profitable loss of and XXX,XXX bringing operating all quarter the we results QX loss and quarter consecutive earning an and of income net recorded on

is is on million quarter and an same QX in stock-based which results, gross last been our to of in were excluding period and margin sales, due to growth. $X.X million majority increase year. expectations. depreciation, Focusing the challenges as with Approximately do a the $X million due of $X.X cost line discussed of for we not the total sales XX.X% included result is $X.X Had we costly expenses our $XXX,XXX of million would million for the more $X.X or our our increase quarter increase have The for comp operating earlier. our expenses, cost those operational of some in a of

and force. of expense resulting along were growing quarter salaries Sales total $XXX,XXX XX% in bookings the marketing $XXX,XXX paid for as a the result year, on our with compared from sales prior a with increase commissions

Looking anticipate expansion XXXX. fixed ahead XXXX we we challenges leverage business resolve operating in we in the the improving as margin to costs and had continue the to

was XX the months ended for generated net to same $X.X XXXX, turn the activities April last $X.X million by position me a XX, cash let million use Now with to cash million, year. $X.X net cash, from year year. ended of the cash up $XXX,XXX period We for operating compared last of

there fluctuations overall, to in operations, cash could expansion next anticipate while operating always from ahead from year, be in continued we generated cash quarterly Looking activities.

Over in additional the our investing months, to business. we coming equipment will be flow support

are our the necessary ability fund to in confident investments. We

XX% fiscal up results, revenue growth $X.X sum of revenue year, along operational To profitability. hitting QX full our with in the financial million record we growth year, for revenue and strong for quarterly a had the

us positioning year the well for throughout strong were bookings fiscal XXXX. Our

be anticipate decline quarter. levels guidance, the we generally followed our an quarterly revenue do of QX second quarter in first we in by off While do a to provide increase not XXXX

full fiscal deliver between the year, track and XX% growth XX%. to on For are we

of year especially prospects flow our strong least While offering. year our with more growth when exact revenue introduction for achieved are last the we at the the growth, unpredictable, as coming XX% as is our timing

business However, the like the message We're call underlying should our for open questions. look to of extension long to our would now confident We your the results term. clear. in the be product and strength term over contributing to the forward long

Operator

we'll your At Hewitt, Please Instructions) (Operator this session. from be conducting time, first comes question question. Our with question-answer Craig-Hallum. proceed a Matt

Matthew Hewitt

taking our gentlemen. Good questions. afternoon, for Thank you

Ronnie Morris

Matt. Hi,

Matthew Hewitt

So I've here. a got few

to individually, issues like Is into you look Or that do results it kind working sometimes sounds off, next year, in correct? were for just as were of run QX, somewhat expect And and and by is that really issues. QX. contract the those of third return? each had First through the it quarter in issues upon the them contract you resolved the you that hit at you posted operational based you that the

Ronnie Morris

going had we in way the specific some issues actually back -- all QX, So QX.

of Some had, good of some issues of lot it we those. a some QX. had, on handle we those a to spilled we really to attributed have I But core think products over into that I think attributed that some the growth, newer

So we're anticipating not those issues.

when think that issues two there's we talk operational we sets I talk of issues. about about

I have control think, of we that issues I some is for. those one think

going more type and some lead And biology. to in continue The and consider growth we And other fluctuations. better over variability of better not those the there's the don't they But just issues operational be years. therefore seen of I the there. issues, to are of actually to are to we've the the that think couple going we're still get fluctuations I and last some predictive. but still

Matthew Hewitt

right. All Okay.

there about moving of new markets. Or the helpful. out if So markets be could. wanted comments untapped that at that to Maybe made remarks your expanding, meaning one untapped looking are in you these certain or that's And Are I services? then ask you may break you into? geographies prepared regarding

Ronnie Morris

both. really the Yeah, to is so geographies. true what really, for I was referring it's But

focused continuing relationships of end very bottom on relationships based that year preclinical opportunity at a expansion, services. just a a both the we think end our I of maybe can products lot the ago, on our line on on focused there's we deeper now that were in the the whole I on very, profitability, develop whereas we're with looking think based and to pharma, and lot

we're in that looking couple we're very certainly very, we're looking areas places at in carefully at. but also that that expanding currently But Europe, expanding Asia at the we're in, that very, more at, So only looking also expansion. not a

to are that have think opportunity there we we certain really big expand geographies a business the in. So

Matthew Hewitt

Okay, along exit, sales on and lines, guess, that then current and 'XX. we you update envision as an maybe where those headcount, your I fiscal

Ronnie Morris

members our XXXX XX. fiscal probably to team, team. of that of somewhere have sales terms and think We XX marketing currently XX, by end in in sales range So year that of have the marketing and will in the we we

Matthew Hewitt

And maybe more, Okay, and hop then great. in back one the queue. I'll

of announce the maybe when that think excitement longer could But think at flow a there? the sit record pipeline I Thank realize far pipeline seeing to start today? little have are it that to to least how built, was you community. the the if concerned, to in a lot from revenues. you do days, to As as And investment that's maybe you're bit going and least where that how tail that's early today, And is we it's still, there's at compares a does cytometry might even you. you that very last But about quarter have discussion. you something soon talk

Ronnie Morris

Yeah, thanks, Matt.

pipeline, to our clients. I think early having, we that the the little for about a are terms in [ph] excited talk it's we're of except SOWs we're say preparing conversations, to early the too actual that results the about

So it's not just conversations.

gives that some cause think lot I of and optimism. excitement lot So cautious of us for a a

So next flow from the first within perspective, cytometry maybe about talk that or think GCC yet hopefully, I about to ready our actual announcements not will finding to make two, we're quarter be pipelines some able or we services. bookings. actually But

Matthew Hewitt

you. great. Thank That's

Operator

question Instructions) question. Thanks. comes Ventures. Our Merano, next with Please your [ph] from proceed George Corredo (Operator

Unidentified Analyst

of taking things. call. to Thank couple a you afternoon. for Good I my want clarify

fiscal sort that a full linear year, So in and growth, XXXX Is if XX% question kind that's necessarily not right? about, on although guidance any basis, I a order. correctly, heard ** plus year general is [ph] your of of for for

David Miller

XX% said XX%. we said we so Yeah, to

just you said think XX%. I So

So just you said XX%, XX%. clear. want to be to because I say Did XX%

Unidentified Analyst

the XX% to for year, XX% okay.

forward. to your didn't assuming been Now due creep have it I'm want from sounds of other than up, it up sort -- you Then the medical that. of a operational lot the cash ones be cleared positive expect flow XXXX that And clarify I to to I then going of always all. like could issues for -- nature

David Miller

Yeah.

Unidentified Analyst

on ready then to could up portion back just and the on well for the traction ex-vivo me to -- in backlog flow let -- the and the business, on give any And Okay, pipeline get -- new and color you business. ex-vivo,

Ronnie Morris

is, in already We've we come The -- dollars opportunity, describe actual our so Yeah, million huge platform had ex of tumors. would actually we've vivo. that the way couple of a already have some we revenue. I a on the because as booked have ex-vivo

in our have ex-vivo or say the bank. we the well We a kind early us ex-vivo in have consumer And Where gives platform products very platform. the we're differentiated stages that of one are is I we advantage. two in would where

year other to over products. the to multiple multiple products, expect expand that next We

see So expand a But team in platform. bring stages stages. early us expertise I large we products we're we've the this kind platform we're out, Still early continuing to expand of company. a getting kind very of the being in ex-vivo. to the see And now team, eventually still right the in that of for the as

Unidentified Analyst

of surprised bookings is pretty early kind million stages. sounds That already. I'm Well, in that good X pretty,

happy I'm So hear to that.

Ronnie Morris

Yeah, I for going to It's we couple have mean, high lead the next years. ex-vivo hopes contribution. a to meaningful of

Unidentified Analyst

the -- on trying million then was there's related related I million that more a of due was to about a said to was million phase $X.X sales. to not you cost to sales, increase, and how scale sales, then? What portion of XXX was how the of Okay, costs half and growth [ph] which

David Miller

sales, was had sales. was -- our out repeat in so But was to cost we it things it if It if a embedded it our out cost perfectly. of had study, but worked worked stayed unnecessary, in of

Unidentified Analyst

see. I Oh,

Okay. that that… you or are issues that think of out, that that the expense, under increased is the operational And category is ironed

David Miller

Correct.

Unidentified Analyst

Correct.

at that end? So the hopefully expense of is type

David Miller

Correct.

Unidentified Analyst

Okay.

but increase That's high. had I of million $XXX,XXX. $XXX,XXX, a last of big in record sales a think you dollars what, number, like sounds sounds cost that -- So was goods quarter a that

David Miller

indication a so Yeah, well, our but it terms obviously, if growth. sales time of incurring those sales even increase, and later we in sales with recognize is are we're period an And growing. that growing, the are revenue, along expenses, our of the until don't yeah, our

Unidentified Analyst

you outstanding. Okay, guys. thank right, All that's

Operator

Our Please Janney next question Montgomery proceed question. Knight, comes from Paul Scott. with your

Paul Knight

a to to end make you we would have that rate what range Hi, guess guys. right that I to XX%, what versus happen? out do what happen But XX% has figure to the guidance. we Can growth I upper know could envision XX% for XX% say? I is. all the go say you of

Ronnie Morris

Yeah.

-- will So lot extra of of us it timing a there's and in regular I excited the I course an to a months strong. And are you or orders. the pipelines is what bookings for about, what's but two. coming be issue sometimes just could continue question terms bookings and The talking for for be revenue, generally PBX, here. six in, the think of it's talked we about We're really hard an month from study to about think

it's So an issue an think is recognized? to for that for us, the reason going the get I is swing of of coming the issue not not an of in, issue of when work more revenue bookings,

Paul Knight

at do do where are capacity to stand your [ph], and need build right Johns more? now, near you Okay, you near, in Hopkins you

Ronnie Morris

Rockville, up about years to of Yeah, Maryland, our opened and so opened a second a John two ex-vivo in a facility you, half We remind facility We work. cytometry up all away a just left to large Hopkins we state-of-the-art about state-of-the-art Rockville, in mile flow Maryland, year ago. about ago. a do

the work a have on work as and we mice we the amount capacity of we do, vivo vivo the well in that fair the non as cytometry. the So with flow side, do ex mouse both

be So while. we okay, for should a

Paul Knight

Okay, the be utilization and increasing that outlook year? margin, then would operating I increased what, with expect your this to

David Miller

expenses, R&D you of some resources extension how well. on margin depends all It operating we on seeing -- an but our R&D of start should term, long as much spend Correct. overall, the

Paul Knight

you. thank Okay,

Operator

We question-answer have end the the reached session. of

closing would Morris turn back for the to I Now call remarks. over to like Ronnie

Ronnie Morris

going We're you thank update. lumpiness. for about at to the listen bit to things a of Thank Champions, everybody time you, little are taking excited and how our

my lot worse. our a possibilities is see for and think lens, in of But wise growth. a expansion general of a We a bit view it exciting little growth. remarks, to a opportunity said But We lot pathway take of would us. in quarters as the I Some be opening and quarters longer I longer a out better, there. of some see lot

wish and good So I with joining you for evening that, our thank everybody call.

Champions Oncology (CSBR) 15 Jul 192019 Q4 Earnings call transcript