Scientific Industries Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 14, 2025

There are 5 speakers on the call.

Operator

Good day, and welcome to the Scientific Industries First Quarter Fiscal Year twenty twenty five Financial Results Conference Call. All participants will be in listen only mode. Today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Joe Dorme, Managing Partner.

Operator

Please go ahead.

Speaker 1

Thanks, Michael. Good morning, and thank you all for joining us today to review Scientific Industries' first quarter twenty twenty five financial results for the period ended 03/31/2025. With us today on the call are Helena Santos, Chief Executive Officer Daniel Donadie, CEO of SBI and John Moore, Chairman. After the conclusion of today's prepared remarks, we'll open the call for questions. Before we begin with prepared remarks, I would like to remind everyone certain statements made by the management team of Scientific Industries during this conference call constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Speaker 1

Except for the statements of historical fact, this conference call may contain forward looking statements that involve risks and uncertainties, some of which are detailed under Risk Factors in documents filed by the company with the Securities and Exchange Commission, including the annual report on Form 10 ks for the year ended 12/31/2024. Forward looking statements speak only as of the date the statements were made. The company can give no assurance that such forward looking statements will prove to be correct. Scientific Industries does not undertake and specifically disclaims any obligation to update any forward looking statements, except as required by law. Now I'd like to turn the call over to Helena Santos, CEO of Scientific Industries.

Speaker 1

Helena?

Speaker 2

Thank you, Joe, and thank you everyone for joining us today. We entered our calendar year 2025 in our first quarter in very turbulent macroeconomics environment, which is full of uncertainties and to some extent still exists today. What was our focus during quarter number one in this fiscal year? Our focus was one, securing additional financing to allow us to focus on the growth of our bioprocessing business. And two, and just as important, was navigating the current uncertain environment that we have been facing over the past few months.

Speaker 2

Regarding number one, thank you to our unwavering support of our existing shareholders. We were able to successfully raise $1,500,000 and this enables us to continue the important development work of our new FBI DOTS multi parameter sensor platform as we prepare for an important launch of our first in class optical pH sensor and high performance liquid injection system at the end of this year. Mr. Daniel Donadillo will provide further detail on our efforts in a few minutes. Q1 twenty twenty five was a good quarter for benchtop lab equipment, and this was despite all the challenges that we all know of.

Speaker 2

Our Genie brand products did well, with a notable shift towards US based customers versus overseas customers. We began shipping our first Vivid workstation, and we put out several units at key accounts, and this was for real world pill counting training data for our future AI enabled pills over the counter, which will be a pioneer in the industry when we launch it in January 2026. For our bioprocessing business segment, our revenues came in quite low as we encountered headwinds in closing the deals, And this was due to disruptions in financing of small biotech startup customers, challenges in the academic markets due to government funding, particularly in The United States, tariff related uncertainties and the pharma sector and also the fact that since we are focusing on mammalian cell culture market customers, the sales cycle just tends to be longer because the trial periods tend to take longer than our traditional microbial market customers. But, as Mr. Donadiel will point out, we are confident that we will be able to capitalize on a record number of leads and opportunities and close those deals in the latter part of the year.

Speaker 2

And this is expected to already start in our Q2 as we see activity starting to pick up. And with that, I thank you, and I will turn it over to Daniel Donadee. Daniel?

Speaker 3

Thank you, Helena. As we step into 2025, the laboratory tools and bioprocessing instrument sector continues to operate within a complex and cautious market environment. Following consecutive growth throughout the last four quarters, the first quarter reflected a subdued start to the year, shaped by economic conservatism, prolonged funding delays and shifts in procurement behavior. That, while broadly in line with our expectations, proved somewhat more muted than initially expected. At Scientific Bioprocessing, we recorded $180,000 year over year revenue decline this quarter, driven primarily by frozen academic grants, delayed startup financing and restrained capital spending across much of our customer base.

Speaker 3

Yet, while revenue performance was impacted, we are also seeing a strong and growing wave of customer engagement, strategic dialogue and demand for integrated solutions signaling that the downturn is not one of this interest, but of deferral. In fact, this intensifying interest reaffirms a core shift taking place across our industry. Customers today are seeking fully integrated digitally native platforms that can drive industrial efficiency, maximize output and reduce operational complexity with a proven return on investment. In other words, they need to generate more output and must be more innovative at much lower costs. We believe this shift plays directly to our strength.

Speaker 3

The historical CapEx heavy model is giving way to a more agile recurring business model with customers favoring solutions that deliver continuous value, real time insights and scalable performance. With the upcoming completion of our integrated bioprocessing platform, SBI is well positioned to meet these demands. Our platform is designed not only to support modern bioproduction needs, but to enable new use cases in digital R and D, real time analytics and AI driven process optimization. Industry wide companies like Sartorius, Danaher or Thermo Fisher have echoed similar patterns in their Q1 results, reporting softness in lab instrumentation and in analytical tools, but holding firm on their long term growth projection. Customers may be holding off on purchases now, but they are actively planning for the next phase of bioprocessing, one that will be built on data, speed, integration and resilience.

Speaker 3

That is precisely the future we're building for. And while we remain clear eyed about the near term challenges, this period is also proving to be a pivotal one, a time of platform completion and expansion, of strategic positioning and the evolution of our business model to meet where the market is headed. Our focus remains on execution, customer partnership and capturing the upside of the rebound we and many of our peers anticipate for the second half of twenty twenty five and into 2026. Despite the broader market conditions, our internal execution has remained highly focused and aligned with our long term strategy. In Q1, we continued to build the foundation for our integrated bioprocessing platform, advancing critical R and D projects that are central to the evolution of both our technology and our business model.

Speaker 3

Building on the initial market reception of our current dissolved oxygen pill, we made further progress in broadening the versatility and applicability of our oxygen sensing technologies. Several new DO sensor variants were developed to support a wider range of flash geometry and operating conditions. Notably, our nanoparticle based chemosensors moved beyond the proof of concept phase, completing a first round of successful pilot studies. These new formulations open the door to applications in highly sensitive or high OTR environments, and expanding the scope of real time oxygen monitoring and shaken bioprocesses. In parallel, we introduced a softer material composition for our DOPIDS that demonstrates a clear performance advantage in vessel flash formats, an important step in responding to user feedback and toward achieving vessel agnostic compatibility, which is essential for scalable adoption across diverse lab setups.

Speaker 3

In our effort to address one of the most persistent challenges in shaker plus bioprocessing, namely precise and reproducible feeding, we made significant progress on LISS two, our next generation liquid injection system. Building on the conceptual groundwork laid in 2024, we filed a new patent this quarter to secure a novel approach to feeding a non pressurized agitated system. Prototyping, on the other hand, advanced rapidly across all key domains, including electronics, mechanics, and UX, which are now integrated into functioning modules. With this progress, we remain on track to deliver a system that is not only more robust and accurate, but also highly intuitive for end users, aligning well with our goal to address the customer demands for user friendly plug and play bioprocess tools. The market demand for higher throughput analytics continues to grow, particularly in small scale bioreactor environments.

Speaker 3

In response, we've entered the next development cycle of a miniaturized biomass sensor for parallel bioreactors such as the Sartorius AMBER system. In Q1, we completed a new hardware iteration based on feedback from initial pilot testing. The updated version brings enhanced sensitivity and improved vessel compatibility for small scale cultivation formats. These prototypes are now undergoing optimization and internal validation before entering the next phase of customer evaluation, most likely in the second half of twenty twenty five. On the software side, we continue to advance DARZAL proprietary monitoring and control platform.

Speaker 3

Several impactful features were added in Q1, including cell culture specific templates for tracking VO biomass and fluorescence, shaker integration enabling real time feedback based environmental control, license expiry notifications to support future recurring revenue streams, and an enhanced fluorescence measurement capability for greater reliability in highly environments. Taken together, the progress across our R and D pipeline in Q1 reflects more than technical advancement. We are shaping the core of a fully integrated intelligent platform designed for the demands of modern bioprocessing to deliver on both the immediate needs and long term aspirations of our customers. On the commercial side, as previously outlined, the first quarter was notably soft in terms of revenue recognition sorry, revenue generation, reflective of the broader slowdown across the bioprocessing tools and laboratory instrumentation sector. Nonetheless, our continued efforts at cost control and operational focus allowed us to mitigate the financial impact of the lower quarterly revenue.

Speaker 3

Specifically, the Bioprocessing segment reported a slightly improved year over year net loss due to lower operating expenses. At the same time, we achieved a 17% reduction in quarterly cash demand without compromising on strategic and innovation initiatives. In parallel, we had an important commercial and strategic milestone with the launch of our platform for cell culture applications. This expansion into upstream mammalian workflows significantly broadens our addressable market going forward and lays the groundwork for deeper engagement with customers in RET biotech and pharma. Looking ahead, we are entering the second quarter with a more optimistic outlook.

Speaker 3

April marked our strongest sales month so far in 2025, providing first encouraging signs of slightly recovered purchasing activities and customer movement across key segments. At the same time, our pipeline remained steady. And in fact, the total value of opportunities forecasted for the year slightly increased since the beginning of Q1 as deals mature through the sales funnel. We also continue to see positive traction in terms of commercial reach and customer interest. Lead volume increased by 65% year over year with more than 300 new contacts added to our pipeline during the quarter.

Speaker 3

This growth was broad based with momentum across all major marketing and sales channels, including digital direct and partner led outreach. A standard example of this engagement came from our newly launched marketing asset, An Expert Guide to ShakeSelf Fermentation, an e book that has not only driven meaningful web page traffic, but also serves as a door opener into many accounts existing and new. Assets like this do not only help us to be recognized as a technology and thought leader in the space, but more importantly, to move from awareness to consideration with greater speed and relevance, which is particularly critical in an environment where purchasing decisions are prolonged. As we look to the remainder of the year, we recognize that the central challenge is not generating interest, but converting that interest into closed orders under tighter than usual and prolonged budget cycles and in an environment that is conservative in capital investment. That said, the demand signals we are tracking, the strength of our pipeline and the interest we are generating with our technology vision give us confidence that we are positioned not just to weather the current environment, but to accelerate later in the year and into 2026 as the platform comes together, as our business model evolves towards a more agile recurring one and as conversion rates normalize and market activity returns.

Speaker 3

And with that, I'd like to hand the call back to Joe.

Speaker 1

Thank you, Daniel. Michael, we're ready to take questions. Can you please provide the instructions to queue up?

Operator

Certainly. We'll now begin the question and answer session. Seeing no questions in the queue, this concludes our question and answer session. And I would like turn the conference back over to John Moore for any closing remarks.

Speaker 4

Well, first of all, you so much to our shareholders for over the past five years providing us with the capital that we've needed to transform this 70 year old iconic company into a potential leader in the fields of artificial intelligence and machine learning. It's it's been five years. We've been focused on both at the bench top product line level, at the end of this year, we're gonna have the world's first automated pill counting system based on, machine learning, and we think that's gonna be a substantial competitive advantage in the pharmaceutical field targeting the 85,000 retail pharmacies, and, and we have the only cloud based infrastructure, and therefore, we're gonna be the first company to market in that field. We currently have 85% of all prescription drugs, input into our machine learning system with the last 15% requiring till the end of the year to complete that database. But that we believe is gonna be a a very deep economic moat for that product line and should be a driver for future growth.

Speaker 4

Second of all, we anticipated this new AI era in digital biology and synthetic biology and so we're investing to complete the product line and we believe that all the pieces are in place, whether it's the, you know, computing power, the AI models, the customer budgets, seeking to accelerate the growth and speed of new drug products to market, we have component which is shifting the number one reaction vessel in science, the shake flask, into an affordable system for delivering high quality, repeatable, reproducible, sensitive data that will enable faster drugs to be brought more affordably to market. We think that's going be a very exciting opportunity for us and our customers and the future is extremely bright. So thank you all so much for attending and listening to our story. Thank you very much.

Operator

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

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Earnings Conference Call
Scientific Industries Q1 2025
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