Olink Holding AB (publ) Q4 2022 Earnings Call Transcript

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Provided by Quartr
February 21, 2023

Key Takeaways

  • In Q4, Olinx reported revenue of $57.9 million, up 33% YoY, and full-year 2022 revenue of $139.8 million, a 47% increase over 2021.
  • Kits revenue doubled to $30.6 million in Q4 and kit mix rose to 53% of total revenue, reflecting strong progress in product-mix goals.
  • Olinx placed 12 new Explore instruments and 28 Signature Q100 systems in Q4, ending 2022 with 52 and 91 placements respectively to expand its install base.
  • The company launched OlinxInsight, an open-access data‐sharing platform, and OlinFlex, custom protein panels, to broaden customer offerings and accelerate proteomics research.
  • For 2023, Olinx reaffirmed guidance of $192 million–$200 million in revenue (37–43% growth) and expects to achieve profitability on an EBITDA basis.
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Earnings Conference Call
Olink Holding AB (publ) Q4 2022
00:00 / 00:00

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Olink Proteomics fourth quarter 2022 earnings conference call. At this time, all participants are on a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automatic message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker host today, Jan Medina, Vice President of Investor Relations and Capital Markets. Please go ahead, sir.

Jan Medina
VP of Investor Relations, and Capital Markets at Olink

Thanks, Livia. Good morning, everyone. Thank you all for participating in today's conference call. On the call from Olink, we have Jon Heimer, Chief Executive Officer, Carl Raimond, Chief Commercial Officer, and Oskar Hjelm, Chief Financial Officer. Earlier today, Olink released financial results for the fourth quarter ended December 31st, 2022. A copy of the press release and an updated corporate presentation are available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the U.S. federal securities laws, which are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements.

Jan Medina
VP of Investor Relations, and Capital Markets at Olink

Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. For a list and description of the risks and uncertainties associated with Olink's business, please refer to the Risk Factors section on Form 20-F, commission file number 001-40277, filed with the U.S. Securities and Exchange Commission on March 17, 2022, and in our other filings with the SEC. We urge you to consider these factors, and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance. In our remarks or responses to questions, management may mention some non-IFRS financial measures.

Jan Medina
VP of Investor Relations, and Capital Markets at Olink

Reconciliations of adjusted gross profit and EBITDA, constant currency revenue growth, and certain other non-IFRS financial measures to the most directly comparable IFRS measures are available in the recent earnings press release available on the company's website. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 21st, 2023. Olink disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise, except as required by law. With that, I'll turn the call over to Jon. Jon.

Jon Heimer
CEO at Olink

Thank you, Jan, and good morning, everyone, and thanks for joining Olink's fourth quarter 2022 earnings call. I'll begin with a review of Olink's 2022 accomplishments, including recent operational, financial, and strategic milestones. I'll then turn the call over to Carl for details on our very strong commercial results and guidance, and then Oscar will discuss the company's financial performance. Q4 was another strong quarter, and 2022 was another strong year for Olink. Our performance would not be possible without the enormous talent and drive of the entire organization. Olink met or exceeded every major corporate goal and put even more distance between us and competitors. Through science and customer-based market development, product design and industry-leading execution, Olink has become the leader of the modern proteomics field, creating new insights at unprecedented scale across the entire research and development continuum.

Jon Heimer
CEO at Olink

Over time, we expect Olink will enable proteomics to define a new approach to treating disease, providing new options for patients and all healthcare stakeholders. Proteomics is quickly becoming the most relevant omics for researchers and drug developers worldwide. In the fourth quarter, we delivered revenue of $57.9 million, representing 33% growth over the fourth quarter of 2021. While full year 2022 revenues was $139.8 million, a 47% increase compared to full year 2021. Once again, the quarter was highlighted by strong growth from Explore Kits and Kits revenue overall, demonstrating strong progress in our product mix goals. Other quarterly highlights included profitability, another record number of Explore externalizations, continued strong performance in the low- and mid-plex markets by Signature Q100 and Target.

Jon Heimer
CEO at Olink

We continue to see an expansion of proteomic workflows within customer accounts throughout the entire Olink portfolio. This includes Explore users adopting the Signature and Target platforms as their work demands, as well as low to mid-plex user moving towards high-plex projects. As we showcased on our Investor Day last November, Q4 was not simply about exemplary financial performance, but also about innovation. We continue to make progress in expanding the number of validated PEA assays, and by the end of 2022, we had a library of more than 5,000 carefully validated biomarker targets, surpassing an important internal R&D milestone to our goal of increasing throughput and simplifying workflows with the Olink platform.

Jon Heimer
CEO at Olink

In Q4, we launched Olink Insight, an open access platform for the global research community and Olink customers to share data and insights that will accelerate the value created by proteomics. We also launched Olink Flex, a made-to-order product that allows customers to create small protein panels from our library while offering both relative and absolute quantification. After achieving the significant milestone of 1,000 published research studies in November, the number of PA-based publications continued to increase, with a total now reaching more than 1,100, covering every major therapeutic category from research and discovery to the downstream clinical settings. One such publication from Professor Charlotte Teunissen's group in Amsterdam provides a striking example of large-scale biomarker discovery can be used to identify and validate protein signature using one scalable technology, in this case, PEA.

Jon Heimer
CEO at Olink

In a study looking at different stages of AD, non-AD dementia, and healthy controls, her team characterized CSF proteomes of people using 11 Olink Target 96 panels. The discovery phase identified over 100-proteins dysregulated in AD, and with data-driven modeling, identified an 8-protein signature and a 19, 9-protein signature, both discriminating AD from non-AD dementia with strong area under the curves. 12-proteins were then selected to construct a custom biomarker panel that showed high performance in a validation study with an AUC of 0.95 for AD versus controls, and 0.79 for AD versus non-AD dementia. With the incredible challenge that Alzheimer's disease poses to human health, new advances such as this will be needed to improve outcomes. In summary, Olink continues to drive both the science and innovation of proteomics, delivering for customer and patients across life sciences and around the world.

Jon Heimer
CEO at Olink

we look forward to continuing this tradition in the months and years ahead. I'll now turn the call over to Carl to provide a few more details on the quarter. Carl?

Carl Raimond
CCO at Olink

Thank you, John. First, I'd like to thank the entire commercial team for their incredible efforts yet again during the fourth quarter and the entire year. Your efforts and results have been truly remarkable. As for the quarter, fourth quarter growth was driven by strength broadly across our customer base with a high level of interest from both academic and biopharma customers. We continue to see significant interest from service providers for both Explore and Signature. While our presence with service providers is still in its early innings, we believe this growing interest bodes very well for the future. Regarding the year-end spending environment, during the quarter, we noticed that the end of year budget flush environment was not quite as robust as we had seen in previous years.

Carl Raimond
CCO at Olink

The appetite for proteomic spending, and Olink specifically, continued to be strong, leading us to believe that in our segment of omics, spending remained a priority for customers, even as headwinds arose on a macro basis. To specifics of the quarter's results. Driven by the robust performance of our kit business and Explore platform, total revenue grew 33% and 47% in Q4 and full year 2022 respectively. In Q4, this total was comprised of $30.6 million in kit revenue, $23.4 million in analysis services revenue, and $3.9 million in other. Kit mix strongly improved quarter-over-quarter and for the full year, reaching 53% and 39% for Q4 and full year 2022 respectively. Kits revenue doubled in 2022 versus 2021.

Carl Raimond
CCO at Olink

Other revenue totaled SEK 3.9 million in Q4 2022, which incorporated reduced Agrisera revenue as it focused on internal Olink R&D activities rather than external sales. For full year 2022, other revenue was SEK 11.7 million, up 48%. Total Explore revenue of SEK 43.2 million was 75% of our total revenue in Q4. On a trailing 12-month basis, represented 71% of total revenue. We doubled Explore externalizations in 2022, adding 12 in Q4 alone and 23 in the second half, reaching 52 by year-end 2022. Q4 Explore externalizations were the most ever during a single quarter. These installations in aggregate represents a nearly 1.1 million in annual sample volume potential. We achieved roughly 800,000 in average customer pull-through during the 12 months ended December 31st, 2022.

Carl Raimond
CCO at Olink

We also delivered 28 new Signature instruments to customers in Q4 and more than tripled the installed base during 2022, reaching a total of 91 by the end of the year. Signature adoption continues to show our strength in the mid-plex and low-plex segments with uptake by new and existing customers. We have also seen an increasing number of institutions that now have multiple Signature instruments, which bodes well for 2023 prospects. In addition to the strong performance from both Signature and Explore in the fourth quarter, we also introduced Olink Insight and Olink Flex, which allow for a more customized proteomics research process, and both addressing eager customer needs. We view continued product development like this to be a key differentiator for Olink as the leader of the modern proteomics era.

Carl Raimond
CCO at Olink

In addition to continued investment in our internal product development pace and capability, we are also actively monitoring external investment opportunities, including bolt-on M&A, to augment our antibody antigen development and supply chain capabilities. We're focused and disciplined in our valuation of external opportunities. We believe it is imperative to find a partner who shares Olink's cultural commitment to innovation and value to customers. Investing in talent remained a top priority in 2022 as well. We started the fourth quarter with 548 employees and reached 582 upon entering the new year, including 208 full-time employees on the commercial team. Lastly, as you recall, we provided 2023 guidance just over a month ago. We are reiterating that guidance today.

Carl Raimond
CCO at Olink

We expect full year 2023 reported revenue to be in the range of SEK 192 million-SEK 200 million, representing growth of approximately 37%-43% over 2022. In 2023, we expect another year of strong execution in the sizable and expanding proteomics market that offers significant runway for Olink's growth. I'll now turn the call over to Oscar to provide additional financial details.

Oskar Hjelm
CFO at Olink

Thanks, Carl. Hello, everyone. As we announced last month, revenue growth was strong once again in the fourth quarter of 2022, up 33% on a reported basis and up 37% on a constant currency basis. For the full year, 2022 reported revenue growth was 47% and constant currency growth was 53%. We continue to invest in line with our strategic plan, reporting adjusted EBITDA of positive $14.9 million for the fourth quarter of 2022, as compared to negative $1.4 million for the fourth quarter of 2021. Full year adjusted EBITDA was negative $3.9 million in 2022 versus negative $18.5 million in 2021, clearly demonstrating the inherent leverage in our business model. As Carl mentioned, at the end of Q4, we had 52 externally placed revenue generating Explore installations.

Oskar Hjelm
CFO at Olink

Even with a significant number of new external stations in the fourth quarter and second half of 2022, average customer pull-through over the last 12 months was a strong 800 in quarter-to-quarter pull-through, which could be further impacted by our customer spending seasonality. Overall, though, we anticipate continued growth over time. Driven by very strong performance from Explore as well as Target, the total kits revenue for the fourth quarter doubled to $30.6 million as compared to $15.3 million for the fourth quarter of 2021. Analysis service revenue for the fourth quarter of 2022 was $23.4 million versus $23.7 million for the fourth quarter of 2021, in line with Olink's goal of driving product next to our kits.

Oskar Hjelm
CFO at Olink

While year-over-year analysis services revenue declined 1% in Q4 2022 on a reported basis, it grew approximately 30% when adjusting for the completion of the UKB project. The mix of kits versus analysis services continued to improve quarter-over-quarter from 42% of total revenue in Q3 to 53% of total revenue in Q4, with the kit mix for all of 2022 representing 39% of total revenue, increasing from 28% for the full year of 2021. Led by sale of Signature Q100 instrument, other revenue was SEK 3.9 million for the fourth quarter as compared to SEK 4.7 million for the fourth quarter of 2021. Full year 2022, other revenues totaled SEK 11.7 million versus SEK eight million for 2021.

Oskar Hjelm
CFO at Olink

As Carl discussed, other revenue was impacted by Agrisera and our strategic focus on internal Olink R&D activities rather than external sales. By geography, revenue during the fourth quarter of 2022 was SEK 31.9 million in North America, SEK 20 million in EMEA, including Sweden, and SEK six million in China, and rest of the world, including Japan. Year-over-year revenue in EMEA decreased 1% for the fourth quarter on a reported basis and grew approximately 40% when adjusting for the completion of the UK Biobank project. By geography, revenue during the full year of 2022 was SEK 66.5 million in North America, SEK 57.7 million in EMEA, and SEK 15.6 million in China and rest of the world.

Oskar Hjelm
CFO at Olink

Consolidated adjusted gross profit was $44 million in the fourth quarter of 2022, as compared to $26.5 million in the fourth quarter of 2021. Full year 2022 adjusted gross profit totaled $97.9 million versus $61.3 million for 2021. Adjusted gross profit margin for kits was 87.6% for the fourth quarter of 2022, as compared to 85.1% for the fourth quarter of 2021. Full year 2022 adjusted gross profit margin for kits was 88.4% versus 86.4% for 2021. Q4 2022 adjusted gross profit margin for analysis service was 66.9% as compared to 50.2% in Q4 of 2021.

Oskar Hjelm
CFO at Olink

The increase in analysis service margin in Q4 of 2022 was due to the completion of the UK Biobank project earlier in the year and continuous improved operational efficiency in the service lab. The analysis services team has performed tremendously well over the past couple of years with the delivery of the UK Biobank project and the continuous efforts to improve efficiency in operations. As we enter Q4, service margins reverted to the more normalized levels observed historically. Full year 2022 adjusted gross profit margin for analysis service was 60.1% versus 57.3% for 2021. Adjusted gross profit margin for other was 40.6% in Q4 of 2022 as compared to 34.1% for Q4 of 2021.

Oskar Hjelm
CFO at Olink

Total operating expenses for the fourth quarter of 2022 were SEK 34.9 million, as compared to SEK 33.1 million for the fourth quarter of 2021. Full year 2022 total operating expenses were SEK 125.1 million compared to SEK 102.9 million for 2021. The increase in full year 2022 was largely due to the continued investment into Olink's commercial organization, research and development, and additional public company costs. Operating expenses are broken out as follows. Selling expenses for Q2 of 2022 were SEK 13.4 million versus SEK 12 million for Q4 2021. Administrative expenses for Q2 2022 were SEK 13.9 million versus SEK 11.8 million for Q4 2022. R&D total of SEK 6.6 million and SEK 8.7 million for Q4 2022 and Q4 2021 respectively.

Oskar Hjelm
CFO at Olink

Other operating loss was SEK 1.1 million in the quarter as compared to other operating loss of SEK 600,000 in Q4 of 2021. Net income for the fourth quarter was SEK 5.4 million, as compared to a net loss of SEK eight million for the fourth quarter of 2021. Net income per share was SEK 0.05, as compared to a loss of SEK 0.07 per share for the fourth quarter of 2021. Net loss for the full year of 2022 was SEK 12.9 million, as compared to a net loss of SEK 38.3 million for the full year of 2021. Net loss per share was SEK 0.11, as compared to a net loss per share of SEK 0.43 in the full year of 2021. We ended 2022 with SEK 75 million in cash and cash equivalents.

Oskar Hjelm
CFO at Olink

After the close of the fourth quarter, we successfully executed on a private new offering that raised $95 million, which brought our cash balance following the financing to more than $170 million. With respect to our cash balance, we will remain focused and disciplined with the use of the balance sheet and expect to operate within our profitability guidance. Included in our plan is the acceleration of investment in several internal strategic initiatives, such as the further expansion of our protein library and asset development. Additionally, we will continue to evaluate external opportunities to augment our capabilities to achieve our long-term strategic goals. As we enter 2023, the external opportunity set continues to evolve with both quality asset availability and pricing seeming to be more reasonable than in prior per-periods.

Oskar Hjelm
CFO at Olink

As with our pre-previous investments, we intend to remain focused on delivering value to our customers and shareholders over time, with a continued discipline around the use of our balance sheets. Now to our guidance. When considering the continued presence of the multiple macroeconomic headwind this year, Olink expects another strong year of growth with industry-leading growth in 2023. We expect 2023 full year reported revenue growth to be in the range of SEK 192 million-SEK 200 million, representing growth of approximately 37%-43% on a reported basis, and roughly 38%-44% on a constant currency basis. Olink also expects revenue in 2023 will continue to progress along a seasonal pattern similar to 2021, that is weighted to the second half of the year and fourth quarter specifically.

Oskar Hjelm
CFO at Olink

Olink believes it will turn to profitability in 2023 as measured by EBITDA, excluding share-based compensation expenses. Looking further ahead, Olink has only just started penetrating the proteomic market segments it operates in from high to low plex, and sees tremendous headroom for continued strong growth. I'll now turn the call over to John for his concluding remarks.

Jon Heimer
CEO at Olink

Thank you, Oskar, and thank you, Carl and Jan. Olink's leadership in proteomics continues to grow, benefiting from increasingly broad adoption across plex and across customer segments, and across the globe. At this point, we'll open up the call for questions. Operator?

Operator

Thank you. Ladies and gentlemen, as a reminder, to ask a question, you will need to press star one one on your touchtone telephone. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question coming from the line of Puneet Souda with SVB Securities. Your line is open.

Puneet Souda
Senior Research Analyst at SVB Securities

Yeah. Hi, John, Oskar. Thanks for taking the questions. First of all, you know, congrats on the quarter and impressive 2022, especially with respect to the Explorer installs. Maybe if I could start there. You know, I think the important question, given the growth in the Explorer installs that you have seen in the second half is, you know, how should we think about the cadence of those installs this year? I think you have commented in the past, obviously, these could be lumpy. It takes times to get these externalizations completed. Maybe just, you know, talk to us about that, and how should we think about, you know, the cadence of installs and Explorer installs for 2023.

Carl Raimond
CCO at Olink

Hey, Puneet, this is Carl. I'll take that. Yeah, we continue to see, you know, a good pipeline. We continue to see demand. I think, as you indicate, there are some seasonality associated with that, but we expect to see the Explorer install base continue to expand. You know, it's clear that there is demand out there, even though, as noted, we have over one million samples worth of external capacity now for Explorer in the marketplace, which is tremendous. We're continuing to see a sort of broad interest across all of our segments, service providers, academic, biopharma, et cetera, to continue adopting the Explorer platform. Yeah, you should expect to continue seeing growth of externalizations. Yeah, it will not be, as I like to say, linear.

Carl Raimond
CCO at Olink

You know, we'll see, a little bit of lumpiness, a little bit of seasonality.

Puneet Souda
Senior Research Analyst at SVB Securities

Okay. You know, as these Explore installations have happened, I mean, how should we think about those, that 800,000 pull-through number? Usually when, you know, instruments are installed, or new installation happens, there is impact to the average pull-through. Just wanted to get your sense as to, you know, how should we think about the overall, you know, pull-through number for 23.

Carl Raimond
CCO at Olink

Yeah. I think, we'll continue to see a, I think, strong pull-through, although again, I think that number will move a bit tied to seasonality. As just discussed, we had a, you know, a nice strong surge in the second half. We'll, you know, we'll be into our seasonality for this year as well, but we expect, you know, pull-through again to remain relatively strong. Of course, it'll be, you know, it'll be attached largely to, you know, the total number of installs that we have and averaged out over that. I think that last 12-month figure is a good figure to continue to look at, to think about pull-through overall.

Puneet Souda
Senior Research Analyst at SVB Securities

Okay. That's helpful. Last one for me, and maybe for John. You know, I appreciate the focus is obviously on growth, but you do have flexibility now, valuations have come down. Oskar talked about a little about, you know, deploying capital. Can you talk a bit about sort of the focus areas, the progress that you have made so far with the Agrisera antibodies and, you know, what, you know, how are you looking at that overall landscape and the capabilities that you need to bring in in order to drive the next Explore panel? Thank you.

Jon Heimer
CEO at Olink

Sure. Hey, good morning, Puneet. Yeah, no, as we said in the past that, the acquisition of Agrisera has been an extremely successful one for Olink and tremendously important and strategic. As we noted in our formal notes here, you know, we're a bit ahead of the curve in terms of developing, generating and validating new antibodies to develop new assays to build out the platform in a very, you know, accelerated fashion. Yeah, we're super excited with the acquisition of Agrisera and what that, you know, really helps Olink progress. As we discussed as well, we're looking into further opportunities similar to Agrisera to expand our capabilities. It could be continued expansion to develop more antibodies, but also on the antigens.

Jon Heimer
CEO at Olink

You know how important the antigens are, in particular as we, as customers move toward prospective clinical decision-making, where you need to introduce those antigens as calibrators to do the standard curves and the absolute quantitative readout for every assay. Obviously, antigens are very important part in both generating antibodies as well as validating the assays as well. Antigens are also very important in what we do. If that gives you any clues in terms of how we're thinking to potentially further strengthening, so the upstream work and supply chain that is essential for what we do, that is, yeah, where we're basically focusing most of those efforts. Yeah, and it's, you can't plan M&A, right?

Jon Heimer
CEO at Olink

We're definitely, you know, thinking along those lines and very excited about the opportunity now since we raised that additional capital and have a strong balance sheet.

Puneet Souda
Senior Research Analyst at SVB Securities

Helpful. Okay. Thanks, guys.

Jon Heimer
CEO at Olink

Thank you.

Operator

Thank you. Our next question coming from the line of Sung Ji Nam with Scotiabank. Your line is open.

Sung Ji Nam
Sung Ji Nam
Director and Senior Equity Research Analyst at Scotiabank

Hi. Thanks for taking the questions, congratulations on the quarter, and also the year. Just a couple for me. Could you talk about the potential timeline for the library of 5,000-proteins? I don't know if I heard that correctly. When that kind of might be available, you know, at a commercial scale.

Jon Heimer
CEO at Olink

Good morning, Sung Ji. Yes, as we said, or, you know, for some time that, we're super excited by, being a little bit ahead of the curve on what we communicated around developing, generating, and validating new assays. As we also said that we see an ever-increasing demand for increasing throughput as well as, you know, trying to simplify protocols as much as possible. We are doing amazing development across all those fronts. We are very, very excited internally, we are not, you know, giving any timelines to date. You, so you have to basically stay tuned on that one for now. We are, we're very excited where we're at.

Sung Ji Nam
Sung Ji Nam
Director and Senior Equity Research Analyst at Scotiabank

Gotcha. Then just one for Oskar. Was curious, it's nice to see, you know, very strong underlying growth for your service business, excluding for the UK Biobank project. I was wondering if there might be other kind of largish projects that are in the pipeline that could impact your service revenue throughout this year?

Oskar Hjelm
CFO at Olink

Yeah. Hi, Sung Jin. As I said, tremendous sort of underlying growth for the service business. As we look ahead, and I think Carl talked about the sort of the, I mean, the sort of large set of You know, larger sort of cohort studies that are sort of out there. I think we would sort of, you know, approach those from sort of a kit perspective. I mean, I find it sort of unlikely to do sort of something in the service lab of that sort of scale again, sort of where we are sort of sitting today. I think we would sort of look to do that sort of as a kit business and sort of partner up with other sort of service folks on that.

Sung Ji Nam
Sung Ji Nam
Director and Senior Equity Research Analyst at Scotiabank

Got it. Thank you so much.

Oskar Hjelm
CFO at Olink

Thank you.

Operator

Thank you. Our next question coming from the line of Kyle Mikson with Canaccord. Your line is open.

Kyle Mikson
Kyle Mikson
Director and Senior Equity Research Analyst at Canaccord Genuity

Thanks. Hey, guys. Thanks for taking the questions. Congrats on the year, better than the preliminary results by a touch. On 2023 revenue guidance assumptions, impressive range that you're reiterating. Was wondering if you could just talk about the kit revenue, maybe as a percent of the total for the full year. For comparison, that was like about 50% for the second half of 2022. Then it was 22% or so over the first half of the year. You know, obviously a big kind of swing there. You covered Olink Explore a bit before, but how about the dynamics in the mid to low plex business segment with, you know, Olink Signature kind of continuing to ramp? Then Inside and Olink Flex building momentum? Thanks.

Carl Raimond
CCO at Olink

Hey, Kyle, this is Carl. I'll take that one. Looking ahead here for 2023, we expect kits to be roughly 50% of revenue for the year. We'll continue to shift that mix further towards kit as we progress throughout the year. We should see that advance sort of throughout the year. The mid-plex dynamic, so we saw growth in sort of the mid-plex kit space as well, which is great. You know, Signature is a big driver of that. We continue to see good demand for Signature.

Carl Raimond
CCO at Olink

The launch of the Flex product has been, I think, created tremendous potential for us as well as that expands the capability of Signature and improves our capabilities overall to serve a broader swath of the total proteomics market. We expect actually, you know, to see both continue down a positive path in terms of the shift and drive towards more kit in our mix.

Kyle Mikson
Kyle Mikson
Director and Senior Equity Research Analyst at Canaccord Genuity

All right. Thanks, Carl. That was great. On that note, I guess I was curious about the customer reception to Flex versus Focus. Both products are relatively similar. Maybe just thinking about this a couple of different ways. First, have there been different types of customers or uses for Flex than Focus? Has the low-plex business line kind of accelerated given the introduction of Flex? Has there been any, like, cannibalization between the two products? Maybe, like, over the long term, do you guys see Flex having, like, a higher ceiling?

Carl Raimond
CCO at Olink

Yeah, I think they're different product lines in some ways. Olink Focus, you know, is a more bespoke product that allows customers to access the entire library that we have. That's a little bit of a different use case, I think as far as customer use and development. Olink Flex and the purpose is really to make a sort of a much simpler sort of off-the-shelf type custom product with a library of, you know, roughly 200-proteins that are in the sweet spot for what most of our customers want, a lot of key inflammation markers and so on. We see that as sort of a more mass market product that has very broad appeal and a very large and existing market out there.

Carl Raimond
CCO at Olink

Yeah, I think the, you know, so the revenue mix will shift over time, certainly, more heavily toward Flex as it's, I think a great product that just serves a big need in the marketplace for high quality, mid low plex protein analysis.

Kyle Mikson
Kyle Mikson
Director and Senior Equity Research Analyst at Canaccord Genuity

Last one for me on the 5,500 plex, just that you mentioned a moment ago. Can you guys just kind of speak to your level of confidence that the lack of a commercially available 4,500 plex menu is not going to be a headwind, like the market share gains as your competitor approaches 10,000 plex this year?

Jon Heimer
CEO at Olink

Yeah. Morning, Kyle. Yeah, I think what we saw quite clearly last year is that quality is very important. You have to be able to trust every assay, every data point across every sample that you run to really trust the data to be able to make actionable decisions on that data, driving science or research projects, forward. I think that's a much more important metric than a total number. Are total numbers important? Absolutely. Do we see, you know, unmet needs and desire to expand? Absolutely. That's why we are investing aggressively and focusing a lot on that. You have to marry that with data quality.

Jon Heimer
CEO at Olink

Yeah, I guess the short answer to your question is that we think we were doing quite well in 2022 with our current offering, and we are super excited looking ahead to continue to expand that. No, I mean, we feel, we feel good where we're at and really trying to meet what we think are the sweet spots of customer demands and unmet needs, and are continuing to focus solely on that.

Kyle Mikson
Kyle Mikson
Director and Senior Equity Research Analyst at Canaccord Genuity

Perfect. Thanks, Jon. Thanks, guys. Appreciate it.

Jon Heimer
CEO at Olink

Thank you.

Operator

Thank you. Our next question coming from the line of Matthew Sykes with Goldman Sachs. Your line is open.

Matthew Sykes
Matthew Sykes
Research Analyst at Goldman Sachs

Hey, good morning. Thanks for taking my questions. Congrats on the year. Maybe my first question, just high level on the funding landscape, both for biopharma, academic. Noting your comments, the budget flush in Q4 was not as strong as you expected. How do you see the overall funding dynamics for both of those customer segments playing out in 2023? Do you think proteomics, in terms of research dollars being spent, can detach from any kind of, you know, slowdown in funding for the broader scientific community?

Carl Raimond
CCO at Olink

Yeah. Hey, Matt, it's Carl. I'll take that one. Yeah, I think, you know, what we saw in Q4, and I think, you know, what, you know, we could expect ahead in general is, I think more... I like to call it selective spending. I mean, there's still budgets, people are still spending, but I think there's a bit more scrutiny on expenditures and such. A bit like we saw in Q4 though, however, I think that, you know, what you see is then customers, you know, ultimately prioritize how they're spending their budgets, you know, to the highest value, you know, type of research they can do. I think we feel good about that because I think the...

Carl Raimond
CCO at Olink

You know, as we've seen in our numbers and we see in the marketplace, I think the demand for high quality proteomics is very high. For sure, again, as noted in Q4, the, you know, the, the big go-go budgets of a few years ago are, you know, are probably a little more constrained than they used to be. I think that's what we'll see is a, you know, is a slightly more sort of cautious environment. I think that actually, to your question about biopharma and academic, I think it's about the same in both cases. Yeah, that's where we see things right now.

Matthew Sykes
Matthew Sykes
Research Analyst at Goldman Sachs

Thank you. Oscar, just on analysis services margins. As UK Biobank rolled off, obviously you had a margin improvement there. Should we look at that sort of Q4 analysis services margins as being more of a normalized run rate for that business? I think in your press release, you mentioned increasing lab efficiency. Can we expect some level of margin expansion within analysis services as we move through 2023?

Oskar Hjelm
CFO at Olink

Hi, Matt. I think, as I said in the market, I think sort of, you know, the Q4 is sort of a good marker where sort of our run rate is and, you know, we've driven a lot of efficiency in that business and, you know, offset some of these sort of, you know, external sort of inflation pressures. I think sort of where we were sort of in Q4 is sort of a good sort of margin for us sort of looking ahead in that part of the business.

Matthew Sykes
Matthew Sykes
Research Analyst at Goldman Sachs

Just one more, if I could squeeze it in. Just following up on Puneet's question on Explore installations. As we think about the cadence for 2023, should we think about perhaps maybe in the first half, sort of higher lows in terms of Explore installations? I think there were, you know, low single digits in Q1 and Q2 of last year. Should we think of that coming up a little bit? Obviously still not linear and lumpy, but as we just think about sort of the level of Explore installations first half to second half, should we think about that first half of being sort of higher lows when you look at installations?

Carl Raimond
CCO at Olink

Yeah. Hey, Matt. well, we're not providing specific guidance on that, but, the demand has certainly grown over time, and the pipeline also looks good. So I think we'll see good demand throughout the year, but for sure, I think it will be, I think we'll see some seasonality in that demand. Maybe not to the exact extent as last year, yeah.

Matthew Sykes
Matthew Sykes
Research Analyst at Goldman Sachs

Thank you.

Operator

Thank you. Our last questioner in queue coming from the line of Tejas Savant with Morgan Stanley. Your line is now open.

Tejas Savant
Tejas Savant
Executive Director and Healthcare Equity Analyst at Morgan Stanley

Hey, guys, good morning. John, maybe to start on the, on the kit side of things, good traction there. Would you be able to give a sense for the number of end users for the kit solution today versus, say, a year ago? You know, I know Carl talked about sort of growing traction with the CROs and the service providers. I was just curious as to get a sense of, you know, the breadth of demand here across the customer set beyond just the academic pharma versus service provider split.

Carl Raimond
CCO at Olink

I don't think we. Hey, this is Carl. I'll take that one. We don't have a specific number on the number of actual end users. In fact, to your point, it's actually well beyond what you would count with the number of externalizations or customers, because as we see in many cases, even if they're not a dedicated service provider, they may be a service provider for their department, or their function. The technology is reaching many, many end users via this strategy, which is what makes it quite a successful one. Our reach is, you know, many folds, broadly beyond the number of, you know, external customers we speak about or, you know, signature placements and so on. I hope that helps. It's, yeah, it's broad.

Tejas Savant
Tejas Savant
Executive Director and Healthcare Equity Analyst at Morgan Stanley

Got it. Helpful. On the antigen library development effort, you spoke about either via bolt-on M&A or perhaps even internal efforts. Do you have a sense for just, you know, how you envision that being complementary to your current portfolio or perhaps how customers could use both antibody and antigen approaches together? I think that would be helpful as well.

Jon Heimer
CEO at Olink

Yeah. Morning, Tejas. No, exactly, two points and what we stated, right? I mean, antigens are a very important starting point. You know, to develop high quality antibodies, you really want a full length, correctly folded antigen that mimics native human biology to raise a high quality antibody to build a high quality assay. That antigen is used also to purify the antibodies. You're using them to develop the assay to, you know, dilute, for example, you know, do the standard curves, set the upper load limits of quantification, the linearity of the assay and so forth. At the end, you're gonna use that antigen as a calibrator for an absolute quantitative readout.

Jon Heimer
CEO at Olink

As I'm sure you're seeing, you know, with Olink Explore, when you do thousands of samples across thousands of proteins, a relative quantification is a very appropriate readout. I mean, you always compare groups. For example, you know, norm healthy versus disease or responder versus non-responder. As you walk through our library of products and down towards, more clinical, use cases, you definitely need that absolute quantitative readout. It's a tremendously important aspect of protein science. As you know, when you talk to clinician, they're used to picogram milliliter or milligram milliliter readout for every protein. That's why antigens are, you know, super important all the way from raising antibodies and developing assays for high-plex, but also for those, clinical, use cases downstream.

Jon Heimer
CEO at Olink

Very important part of everything we do.

Tejas Savant
Tejas Savant
Executive Director and Healthcare Equity Analyst at Morgan Stanley

Got it. Super helpful. Then John, can you just give us a sense for the flavor of customer feedback on Olink Insight here? Clearly that was an important launch. I mean, you know, highlighted that at the Analyst Day as well. Just curious as to what you're hearing from the broader community.

Jon Heimer
CEO at Olink

Yes. Thanks for bringing that up, Tejas. Yeah, we are as excited as our customer base. I mean, the feedback that we're getting are excellent. You know, proteomics is very early days, as you know, and to interpret these large data sets that we now have enabled, you know, quite big data sets and complex, you know, proteins across pathways and so forth. A super helpful tool to get to much faster, actionable insights. On top of that, as I'm sure, I mean, we discussed with you over time as well, it's like one of the most common questions we get from customers, and that also is a very good highlight of the early stage of this field. It's like, do you know the normal concentration of your proteins across your library?

Jon Heimer
CEO at Olink

That's sort of where we're at. We don't even know what the normal concentration rate should look like. As you know, that type of data, we have that in Olink Insight and now we're expanding, very exciting. Of course, now with the disease atlas that we also have included there, and we continue to expand as well with some dramatic results from Mathias Uhlén's group, and in particular now the first data set around cancer. Extremely exciting to see how proteomics can contribute to, for example, increase the area under curves in early detection and prognosis of cancer. Yeah, all around, an amazing tool which we get very strong customer feedback on. Yeah, very exciting. Thanks, Tejas.

Tejas Savant
Tejas Savant
Executive Director and Healthcare Equity Analyst at Morgan Stanley

Got it. One final one on my end for Oskar, if I may. Just wanted to clarify the comment around phasing, Oskar. I think, you talked about 2021 being a better benchmark for the fourth quarter here. Should we think of revenues closer to sort of the mid-40s range in the fourth quarter versus the 41% or so you did in 2022 as the right framework?

Oskar Hjelm
CFO at Olink

Yeah. Yeah. As, as we said in the script, sort of, you know, 2021, and I think especially when sort of comparing sort of the H1 to H2 seasonality, I think, you know, looking at sort of how the year is sort of from an operational standpoint sort of for us, sort of 2021 is a good benchmark as we look at 2023.

Tejas Savant
Tejas Savant
Executive Director and Healthcare Equity Analyst at Morgan Stanley

Perfect. Thank you so much.

Oskar Hjelm
CFO at Olink

Thank you.

Operator

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Mr. Jon Heimer for any closing remarks.

Jon Heimer
CEO at Olink

Great. Thanks for joining us today and for your interest in Olink. We look forward to keeping you updated on our progress and wish everyone a great day. Thank you so much.

Operator

Ladies and gentlemen, that does end our conference for today. Thank you for your participation. You may now disconnect.

Analysts
    • Carl Raimond
      CCO at Olink
    • Jan Medina
      VP of Investor Relations, and Capital Markets at Olink
    • Jon Heimer
      CEO at Olink
    • Kyle Mikson
      Director and Senior Equity Research Analyst at Canaccord Genuity
    • Matthew Sykes
      Research Analyst at Goldman Sachs
    • Oskar Hjelm
      CFO at Olink
    • Puneet Souda
      Senior Research Analyst at SVB Securities
    • Sung Ji Nam
      Director and Senior Equity Research Analyst at Scotiabank
    • Tejas Savant
      Executive Director and Healthcare Equity Analyst at Morgan Stanley
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