SOPHiA GENETICS Q1 2025 Earnings Call Transcript

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May 6, 2025
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Operator

Good morning, ladies and gentlemen, and welcome to the Sofia Genetics q one twenty twenty five earnings call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, please press 0 for the operator. This call is being recorded on Tuesday, 05/06/2025.

Operator

I would now like to turn the conference over to Kellen Singer, Sofia Genetics Head of Strategy and Investor Relations. Please go ahead.

Kellen Sanger
Kellen Sanger
Sr. Director, Head of Strategy at SOPHiA GENETICS

Thank you, and good morning, everyone. Welcome to the Sofia Genetics First Quarter twenty twenty five Earnings Conference Call. Joining me today to discuss the results are Doctor. Jurgen, our Co Founder and Chief Executive Officer Ross Muken, our Company President and George Cardoso, our Chief Financial Officer. I'd like to remind you that management will make statements during this call that are forward looking statements within the meaning of federal securities laws.

Kellen Sanger
Kellen Sanger
Sr. Director, Head of Strategy at SOPHiA GENETICS

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. And you should not place undue reliance on forward looking statements. Additional information regarding these risks, uncertainties and factors that could cause results to differ appears in the press release issued by Sophia Genetics today and in the documents and reports filed by Zephygenetics from time to time with the Securities and Exchange Commission. During this call, we will present both IFRS and non IFRS financial measures. A reconciliation of IFRS and non IFRS measures is included in today's press release, which is available on our website.

Kellen Sanger
Kellen Sanger
Sr. Director, Head of Strategy at SOPHiA GENETICS

With that, I'll now turn the call over to Jirky.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Thanks, Kellen, and good morning, everyone. I will start today's call with a brief recap of Q1 performance, which came in slightly ahead of our expectations, as growth reaccelerated and cost management continued to improve. I will then turn the call over to Ross, who will give a more detailed update on the business. George will close with a review of our Q1 financial performance before we take your questions. Last quarter, we highlighted that 2024 was a foundational year for Sofia.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

We laid the groundwork for accelerated growth in 2025 by signing an impressive cohort of new customers, continuing to penetrate The U. S. Market and launching new and exciting applications such as MSK Access and MSK Impact. In Q1, these efforts began to materialize. Revenue grew 15% on a constant currency basis and 13% on a reported basis, representing a solid movement towards near historical growth levels.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Going forward, we expect to deliver accelerating revenue growth along the three drivers we outlined at the beginning of the year. First, we will capitalize on new customer signings by expediting implementation times and expanding across those new accounts over time. In 2024, we signed an impressive 92 new core genomic customers, and in Q1 twenty twenty five, we added 28 new customers to that total. Our focus continues to be on implementing these new customers as quickly as possible so that they begin generating revenue faster. We implemented 33 new customers in the first quarter, up from an average of 23 per quarter last year.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

I look forward to these customers ramping up usage over the next few months and adopting additional applications over time. The second growth driver we will continue to focus on is The US market. In Q1, revenue and analysis volume from US core genomic customers grew over 30% year over year. The impressive growth was delivered off an ever expanding revenue base, as the country is becoming one of our largest markets globally. On the new business side, we also announced major expands at two of the leading hospitals in The US, with Henry Ford Hospital adopting additional solid tumor and EMOCC applications, and the Mayo Clinic adopting additional applications in EMOCC.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Congrats to the team for this impressive Q1 achievement. Our third focus area for 2025 is MST access and impact, our new liquid biopsy and solid tumor applications. While clinical adoption continues at impressive rates, I am happy to highlight that these applications are also attracting material interest from biopharma partners. Last week, we expanded our 2024 partnership with AstraZeneca to accelerate the deployment of MSK access globally. The expansion extends the scope of the partnership to 30 total sponsored institutions worldwide.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

The agreement also highlights the growing demand for somatic testing, as applications like MSK access are becoming invaluable to biopharma for purposes of drug deployment and market access. In addition, the data generated from these tests and the diverse patient population they reach offer immense value to biopharma for drug development and commercialization. In Q1, it was great to see the clinical and biopharma flywheel spinning again, as our growing network began attracting new interest from biopharma. I am excited to keep you updated over the course of the year as our flywheel gains speed and revenue growth continues to accelerate. Beyond starting the year strong on the revenue side, I am also proud of the team for continuing to excel at cost management.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

In Q1, we delivered an impressive 24% year over year improvement to adjusted EBITDA loss, bringing the figure down to $9,800,000 in the quarter. As we continue on our path to profitability, we believe this achievement serves as a proof point for a scalable nature of our business and our ability to drop incremental revenue growth down to the bottom line. In many ways, scalability was a theme this quarter. In Q1, we delivered a record 75.7% adjusted gross margin, up five twenty basis points year over year. The achievement was made possible by innovations from our tech and data science teams who continue to discover new ways to optimize the data compute and processing power of our platform.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

These improvements are especially impressive because they were delivered despite massive increases in the amount of data processed by Sofia Djem over the years. Total tests processed by the platform have increased at a CAGR of over 50% from 21 to 24. While analysis volumes continue to grow, so does the complexity of data. Gene panels are becoming larger, additional modalities are becoming more useful, and more sophisticated tests are being deployed each day. Our scalable cloud based platform is designed to support the medical innovations of today and tomorrow, deploying new innovations with accuracy and efficiency.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Whether it is liquid biopsy testing, HRD, whole genome sequencing, or MRD, the scalable nature of our platform and its AI factories enable us to bring bioinformatics breakthroughs from the research lab to the clinical market with relative ease. In this way, we are perfectly positioned to push waves of innovation in healthcare for years to come. However, this ability and the AI that enables it has not been achieved by chance. In Q1, we reached an impressive milestone for our platform. As of March, Sofia DDM has now analyzed over 2,000,000 genomic patient profiles since inception.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

This means that the AI powering Sofia DDM is uniquely trained on one of the most diverse and globally representative data sets available, learning from a constant flow of real world data from over 800 institutions in 70 countries worldwide. Technology companies across the space are increasingly recognizing the breadth and diversity of our data sets and how our network and AI capabilities are nearly impossible to replicate. In March, I spoke at NVIDIA JTCES conference in San Jose, California about how Sofia is pioneering the practical use of AI in healthcare. The conference reinforced what we are already seeing in the market. AI is no longer a future promise, but the present force reshaping how we diagnose, treat and understand disease.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

It also reinforced that Sofia is a leader in this space. Our platform, AI factories and global network places us soundly at the center of the future of healthcare. With that, I will now turn the call over to Ross, who will provide a more detailed update on what we're seeing in the market and our business performance to start the year.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Thanks, Jirgi. The go to market team share your excitement and confirm there is broad and growing demand for the Sofia offering. Along those lines, I'll start today by giving a brief update on our first quarter performance, including a strong start to the year across both new and existing business. I'll then cover some of the broader market dynamics before closing with a look at what we're seeing in the pipeline. First, the core business returned to healthy levels as revenue grew 15% on a constant currency basis in the first quarter despite biopharma continuing to present some modest headwinds.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

We are proud to have reaccelerated the growth engine of the core business and the biopharma pipeline is again developing well. On the clinical side, from a regional perspective, North America and Asia Pacific continued to outperform in q one with 3240% year over year volume growth respectively. Latin America declined slightly due to the acquisition of one of our top customers in the region by another lab, which we covered in detail in 2024. EMEA volume growth remained solid with The United Kingdom as a notable driver. Last year, we announced a series of new customer signings across The UK, including five of the seven NHS genomic laboratory hubs adopting Sofia DDS.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Due to these signings and others, UK analysis volume grew over 60% year over year and UK revenue was up approximately 80%. From an application standpoint, we continue to establish ourselves as a global leader in hem onc testing. Hem onc volumes grew 34% year over year in the first quarter, often increasingly large base. With over 180 Hemong customers globally, we believe we are one of the largest providers of blood based cancer testing in the world, an area of critical importance to both our clinical and biopharma constituents. We're confident t monk will continue to be a growth driver of our future growth.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Beyond t monk, we also started the year strong in solid tumors as volumes grew well above the company average. New applications such as MSK impact and an upgraded CGP offering are solidifying our offering as the gold standard for comprehensive tissue testing. Last, the first wave of liquid biopsy testing began to come online in Q1, albeit in very modest initial volume. We will look to the back half of the year for liquid biopsy applications such as MSK access to meaningfully drive overall growth as customers complete implementation and ramp up usage over 2025. Moving to the new business side, I'm happy to share that in Q1, we continued to book new business at record speed.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

We landed 28 new core genomic customers in the quarter, up from 20 new customers signed in the first quarter of twenty twenty four. In addition, we also had many notable expands as the influx of new customers over the past year looked to adopt initial applications. In North America, Yurgi announced our recently expanded partnerships at Henry Ford and the Mayo Clinic. In addition, we also expanded our scope with Sunnybrook Health Science Center in Toronto, Canada. Sunnybrook was already using the Sofia DDM for solid tumor HRD testing, and now they are adopting additional applications for hemos.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

On the land side, we side LifeLabs in Q1, a major central reference lab in Canada. LifeLabs, Canada's largest community lab, which performs over a hundred million lab tests annually is adding to be a DDM for solid tumor testing. Lastly, we also announced the signing of Mount Sinai during the quarter, adding to the growing list of leading institutions in The US using Sofia. In EMEA, I'm excited to highlight the signing of JESA in Belgium. JESA is one of the largest hospitals in Belgium located in Hassel, and they will adopt Sofia DDM for solid tumor liquid biopsy and hem onc testing.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

This signing represents one of the largest wins of the last year. Congrats to the EMEA team on this significant new addition. Beyond Western Europe, we continue to see growing adoption across The Middle East. During the quarter, we announced our partnership with N42, an Abu Dhabi based world health leader that is implementing MSK access at select hospitals throughout The UAE. Through this collaboration, we look forward to bringing best in class liquid biopsy testing to patients across The Middle East.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Moving to Asia Pacific, we continue to see strong and growing interest. In the first quarter, we announced a new partnership with Genesis Healthcare to bring Sofia solutions to the Japanese market. We look forward to keeping you updated on our progress as this would be a critical new market for us in the coming years. Beyond Japan, I'd like to highlight the signing of premier integrated lab, a leading diagnostic lab in Malaysia that is adopting numerous applications in hereditary cancer, hem onc and inherited disorders. In addition to MSK access.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Lastly, in Latin America, we continue to make strides across the region. In Q1, we signed Bioma Genetics, a Brazilian based precision medicine provider that is adopting Sofia DDM for HRD solid tumors and Hospitals Damore in Baretos, Brazil that is adopting MSK access. Welcome Bioma and Hospitals Damore to the Sofia community. In conclusion, new business remains strong across all geographies. We continue to sign new customers an impressive rate.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

In addition, the average contract value of signings continues to increase with ACVs on new business up materially year on year. This is due in part to increasing success at enterprise level sales pitching and in part due to industry wide shift toward more sophisticated bioinformatics applications. We continue to see demand in the market for large gene panels, bigger sequencers and more depth. Our liquid biopsy application MSK access is a perfect proof point. MSK access covers over 140 genes and relies on an advanced proprietary molecular and bar coding algorithm called human to detect variants and generate insights.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

On the solid tumor side, we're also seeing demand for larger CGPs as well as the ability to track disease over time. Last year, we announced the launch of MRD capabilities on Sofia VDM for acute myeloid leukemia, and we plan to expand the MRD features to additional applications such as solid tumors over time to serve our customers across the globe, including in Europe. So in short, clinical new business pipeline continues to reach record levels as bioinformatics insights become more and more valuable. But growing demand doesn't stop with our clinical users. On the biopharma side, our pipeline is also reaching record highs.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

The revamped diagnostic offering is attracting more interest than ever. Opportunities range from sponsored testing partnerships like the expanded collaboration we recently signed with AstraZeneca to other projects focused on helping biopharma strengthen their clinical developed programs and improve market access. I joined the team at World CB and CDX Conference in London last month and was thrilled to see activity level and number of meetings we have with top 20 biopharma, including names such as J and J and Cartos. On the biopharma data side, we are beginning to see promising momentum as well. Our multimodal data offering, including the use of our AI factories to produce data structuring and predictive analytics is gaining interest from top biopharma, particularly in the areas of lung kidney cancer.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

We look forward to keeping you updated this year on the overall progress of the biopharma business. To conclude, I'm proud of the team for delivering an excellent quarter and I'm also encouraged by the growth of our pipeline and of our end markets. Markets. With that, I will now turn the call over to George who will provide a more detailed look in our Q1 financial results.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

Thank you, Ross, and good morning, everyone. As Jiri and Ross highlighted, Q1 results came in slightly ahead expectations, as new business from 2024 begins to come online. Total revenue for the first quarter of twenty twenty five was $17,800,000 compared to $15,800,000 for the first quarter of twenty twenty four, representing year over year growth of 13%. On a constant currency basis, year over year revenue growth was 15% as foreign exchange headwinds negatively impacted reported revenue by approximately $400,000 Platform analysis volume was approximately 93,000 for the first quarter of twenty twenty five, compared to approximately 84,000 for the first quarter of twenty twenty four, representing year over year growth of 11%. Core genomic customers were four ninety as of March 31, up from four sixty three in the prior year period and up sequentially by 18 customers relative to Q4 twenty twenty four.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

While we added 33 new customers in the quarter, we churned out a few smaller accounts who had not generated revenue over the past twelve months. Nonetheless, Q1 revenue churn remained low at approximately 4%, which is in line with our historical averages. Net dollar retention for the quarter was 103%, driven primarily by the decline in growth in Latin America. Gross profit for the quarter was $12,200,000 compared to gross profit of $10,400,000 in the prior year period, representing year over year growth of 17%. Gross margin was 68.7% for the first quarter of twenty twenty five compared with 65.9% for the first quarter of twenty twenty four, up two seventy three basis points year over year.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

Adjusted gross profit was $13,400,000 an increase of 21% compared to adjusted gross profit of $11,100,000 in the prior year period. Adjusted gross margin reached a record high of 75.7% for the first quarter of twenty twenty five, up five twenty basis points from 70.6% in the first quarter of twenty twenty four. As Jirgi mentioned, targeted platform improvements throughout the year continue to drive cloud compute costs and storage costs lower, an achievement we remain proud of and plan to continue throughout the year. Total operating expenses for Q1 were $28,200,000 compared to $29,200,000 in the first quarter of twenty twenty four, representing an improvement of 3% year over year. R and D expenses decreased during the quarter as we increasingly focused on high ROI projects.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

Additionally, I remain pleased with our progress on the G and A side, where we also continue to benefit from targeted process improvements, system investments, and the optimization of our public company costs. Sales and marketing expenses were up a touch, primarily due to select investments oriented at accelerating penetration of several key markets, as well as marketing initiatives to support our robust new product momentum. Operating loss for the quarter was $16,000,000 compared to $18,800,000 in the prior year period. Adjusted operating loss was $10,800,000 compared to $14,100,000 for the first quarter of twenty twenty four, representing an improvement of 23% year over year. EBITDA loss for the first quarter was $13,700,000 compared to $16,700,000 in the prior year period.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

Adjusted EBITDA loss for Q1 was $9,800,000 compared to $12,900,000 in Q1 of twenty twenty four, an improvement of 24% year over year. We remain proud of our ability to drop revenue growth down to the bottom line, while also reducing costs across the P and L. We continue to be highly disciplined with respect to headcount, where we have focused on optimized growth and scalability. We also continue to scrutinize all direct and indirect expenditures, ensuring a balanced focus on hitting our growth targets and achieving the operational efficiencies desired. We hope this performance serves as a proof point for our ability to reach our commitment to be approaching adjusted EBITDA breakeven by the end of 'twenty and crossing over to positive adjusted EBITDA in the second half of twenty twenty seven.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

Lastly, total cash burn, which we defined as the change in cash and cash equivalents for the first quarter of twenty twenty five was $11,700,000 compared to $19,500,000 in the prior year quarter. Excluding the impact of exchange rate differences, cash burn improved approximately $3,000,000 in Q1 as compared to the prior year period. We finished the quarter with cash and cash equivalents of approximately $68,500,000 as of 03/31/2025. As a reminder, we currently have access to an additional $35,000,000 of capital through the financing line with Perceptive Advisors. We remain confident in our current capital position with respect to the achievement of our goals.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

I'll now turn to the 2025 outlook. Given the promising reacceleration of clinical growth in Q1, Sofia Genetics is reaffirming our full year revenue guidance for 2025 of '70 '2 million dollars to $76,000,000 representing 10% to 17% growth on a reported basis. Despite a slightly stronger than expected quarter, we still maintain that 2025 will be mostly back half weighted as new business signed in 2024 comes online in the second half of the year and as MX Pay access business begins to ramp up to routine usage. As a reminder, we expect Q4 to continue being the strongest quarter seasonably during the year. We also expect that exchange rates will be volatile due to macro uncertainties, which may have an impact to reported results.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

Beyond revenue, we are also reaffirming our full year adjusted EBITDA loss guidance of $35,000,000 to $39,000,000 As demonstrated this quarter, we continue to make targeted investments in our platform to optimize cloud compute and storage costs and expect to expand gross margin beyond twenty twenty four levels. As a global company, we are watching the developments on the tariff front as most are. First, I'll remind you that Sofia DDM is an AI software as a service platform. We offer our customers three methods of accessing the platform with dry lab, bundle, and integrated access modes. The bundle access mode includes Sofia DDM plus consumables.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

We have one assembly line located in Ruhl, Switzerland, and we ship consumables globally from there. This includes some shipments to The United States. Of our $9,000,000 in U. S. Revenue in 2024, the total value of consumable shipments to The U.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

S. Was only approximately $800,000 Even with growth in 2025, a 10% tariff would be manageable. The tariff also apparently is to be reduced by raw materials sourced in The US, and in fact many of our raw materials are sourced there. While the situation is fluid at this present time, we don't believe the impact to Sofia genetics to be very material. We also expect to continue to largely hold the line on operating expenses, as we currently have the correct team size to support our medium term growth objectives.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

This excludes some high ROI investments we will continue to make related to marketing activities, as well as certain investments in the commercial team. Lastly, we will continue to revisit our discretionary expenditures and execute on identified savings in systems, professional services, and certain public company costs throughout 2025. The combined nature of these items and the natural operating leverage in the business from strong revenue growth will further our path to profitability in the next two years. With that, I would like to turn the call back over to Jirgi for the closing remarks before we take your questions. Jirgi?

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Thank you, George. I'm proud of what the team achieved this quarter. We took a major first step during Q1, accelerating revenue growth to 15% constant currency, expanding adjusted gross margins again, now up to 75.7% and improving adjusted EBITDA by 24% year over year. The quarter sets the tone for a strong 2025. Looking ahead, bookings momentum remains strong and end markets continue to grow.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Our offering sits at the center of concentric trends in healthcare. We have built an expansive global network of customers and dynamic AI capabilities, which generate critical insights for a growing number of cancer and rare disease patients globally. Better therapies are being developed each day, and data driven medicine has become new bases for diagnosis, therapy selection, and follow on testing in addition to drug development and deployment. Given our business sits at the center of these innovations, we remain confident on our long term growth. In closing, I want to say thank you to our Sofia colleagues, partners, customers and investors for joining us in our journey to transform patient care with data driven medicine.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Please note, we are presenting at the RBC Conference on May in New York City. We all look forward to continuing to update you on Sofia's future success of democratizing data driven medicine around the world. Operator, you may now open the line for questions.

Operator

Thank you. And ladies and gentlemen, we will now begin the question and answer session. Your first question comes from the line of Bill Bunnelli with Craig Hallum. Nice

William Bonello
Senior Research Analyst at Craig-Hallum

quarter. Just a couple of follow-up questions. First, you talked about accelerating the time frame for implementation, and we're seeing that in the good implementation numbers. Can you talk just a little bit about the kinds of actions that you've been able to take that actually allow you to implement more quickly than maybe you have been able to do so in the past?

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Yes, good morning and thank you, Bill. So indeed, to start with the numbers first, as we highlighted this quarter, we implemented 33 new customers versus an average of 23 customers per quarter for 2024. And obviously, this is as well the result of bookings that are being improving over time. So, specifically on the implementations, Ross as being scaling up team capabilities, and we give you a bit more color.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Thanks, Bill. So obviously, this has been a big focus. All of last year, we spoke to you about accelerating bookings momentum. And so obviously, we knew that that would yield some pressure on the implementation teams as the both number of implementations were going up and also the complexity. So you can see our deal size is going up.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

And so with that, also these are more complicated, particularly in liquid biopsy implementations. And so we've created some tooling and automations and different aspects of the process to enable us to better execute and speed up elements. And also we've, would say from a process perspective, added in some industrialization to make sure that at different stages, we understand sort of how much time and date should be, what do we do to troubleshoot if there's challenges in the lab. We've increased a little bit our headcount in terms of some of the wet lab and field application scientists that go into the field in the labs and work hand in hand with the clinicians, right? Because obviously sorry, with the pathologists, because obviously there's a complexity to some of these capabilities.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

And so I think between tooling and systems process and then some select headcount, we've been able to speed up this process materially.

William Bonello
Senior Research Analyst at Craig-Hallum

Okay. That's really helpful. And then just my second one is, you talked about the average contract value increasing, and and, you know, certainly, we would expect that with the the more complicated analyses that are coming on board. But you also talked about enterprise sales, and I I first of all, I want to make sure I understand that right. I'm assuming you're talking about customers that are coming on and instead of just coming on initially with one or two applications, they're essentially using DDM for all of the NGS testing that they're doing.

William Bonello
Senior Research Analyst at Craig-Hallum

But can you, first of all, if that is what you mean by enterprise sales? And then if you know, you think you might be seeing an uptick in that? Is that a is there something changing in the overall environment that's making it just that much more difficult for clients to do the bioinformatics on their own? Or is there a specific push that you've been making as a company to try and sell sort of at the enterprise level? Maybe just elaborate a bit on that.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Yes, sure, Bill. So I will start and then let Ross further develop. So indeed, as you know, our platform has multiple capabilities, right, for multiple disease areas in monks, solid tumor, hereditary cancer, liquid biopsy and rare ignorant disorders. And for each of these areas, our platform can be used for multiple type of applications, multiple type of test kits. So today, it's fifty eight percent of our customers who are using two or more applications.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

So definitively, there is room to expand the utilization of applications per customer. And you're absolutely right in your understanding of the enterprise concept. These are deals where when we get in, we're basically signing for a majority of all the applications they're covering, right? And like when we are landing a customer only for liquid biopsy. So, Ross, maybe you want to give a bit more color on what you're seeing, especially when it comes to the bioinformatics in the field and guide, bill whether, the ACV being doubled year on year on a contract basis will primarily come from that or from more complex solutions or a mix?

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Thanks, Shervi. And it's a really good question, Bill. This is probably one of the most important dynamics of what's happening in market. And it really speaks to a point Yogi touched on and you made around the complexity of what is being analyzed now in many laboratories. And so if you think about the evolution of the market as we've gone from single gene to multi gene or tumor, and then more complex capabilities like CGP exome, whole genome, MRD, etcetera.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Now many laboratories have multiple type of sequencers, multiple type of assays or chemistry they're running, maybe different automates and a mix of homegrown and then maybe Sofia or other solutions, right? And as the complexity continues to go up, it becomes completely unmanageable from a efficiency and cost perspective. Particularly as data is growing, let's say north of 50% in terms of output in many of these laboratories. And so the desire to then simplify across the workflows and harmonize on a common platform will gain you massive leverage in your laboratory where many still are, I would say, human capital constrained. And so that's really playing to our strength, particularly with our universal library prep and then with the uniformity of our workflows around different applications.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

And so this is attracting more and more laboratories to basically sunset either existing homebrew solutions and or consolidating competitor solutions to us. And we think this will only accelerate as we have more examples of this. Obviously in Q1, we called out Jessa, very large lab in Belgium. This is a great example, but we'll have many more over the coming quarters. If I look at my pipeline, the number of multi application deals is up materially year on year.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

And this is quite important. I would say on top of that, if you think as well about what's happening in the sequencer market and just the higher output per sequencer, which again is moving people to more and more sophisticated applications internally, That as well begs a lot of the question of driving that shift. And so I think the more you see multi manufacturer sequencers present in accounts and then higher throughput sequencers present in accounts, this will continue to push things in our favor. And lastly, I would just say this has also been a concerted effort, right? So we really spent a lot of time this year from a targeting and focus perspective from a go to market team at Salesforce.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

And say, all right, we won some really mega names right around the world. If you look at our presence in the top 20, top 50, top 100 cancer institutions, in central laboratories. We really have now the right to compete in these much bigger accounts. So we put a real onus on driving higher ACVs. And I think that will continue to tick up throughout the year and particularly with success we're having in The U.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

S. Market and in markets like The UK and Germany, etcetera, and eventually Japan. Think that will also positively benefit that metric and allow for us to not only grow at the rates we expect, which are improved, but also become more efficient. As obviously, you can service for us a million dollar account similarly as you can service a $200,000 account. And so you get operating leverage in that as well.

William Bonello
Senior Research Analyst at Craig-Hallum

Excellent. Thank you so much.

Operator

And your next question comes from the line of Connor McNamara with RBC Capital Markets. Congrats

Conor McNamara
Conor McNamara
Equity Research Analyst at RBC Capital Markets

on a solid quarter. Just on the gross margins, they came in a lot stronger than anticipated. Was there anything onetime in there? Are these GM gross margins sustainable above 75% going forward?

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Thank you, and good morning, Connor. So first, maybe you remember that we've been continuously speaking on improving as well our algorithms, right? So that, while the data compute becomes more intense, the efficiency of the algorithms will become as well better and better. And so to some extent, this is being materialized well in the gross margin. But I will let George to further develop. Yes, we

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

did have a relatively favorable mix in the first quarter. So I do think gross margins did come in on the high side in the first quarter. We said year over year they would be up sequentially and we still believe that. But I do think the first quarter margin was probably a little bit better than expected. Again, we had a couple of one time items in there.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

But I do think ultimately you'll see it still improve on a year over year basis. So they're not quite this high in the out quarters.

Conor McNamara
Conor McNamara
Equity Research Analyst at RBC Capital Markets

Great. Thanks, George. And then on the biopharma side of the business, is there any large contract wins or large contribution considered in your guidance? And where is the biggest medium term opportunity you've seen with biopharma? Is it an early, drug discovery and development?

Conor McNamara
Conor McNamara
Equity Research Analyst at RBC Capital Markets

Or are you starting to see a lot more interest on the, targeted medicine companion diagnostic side from your biopharma customers?

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

So, thanks for the question, Ross, Connor. So, Ross was just at the AACR conference, right? Which is one of the biggest conference around cancer research. So, he's going to let you know where we stand today.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Thanks, Sharki. So, Connor, as you recall, we did a bit of changes in our biopharma business last summer. And with that, we've seen a material improvement in pipeline. And now in this quarter, you're starting to see bookings come through. And so, I think in general, we're quite pleased with the progress we've made, particularly in CTAs, CDx and sponsored testing sort of more on the traditional diagnostic side of things.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

I think the reality is, we've shown good momentum. We're quite pleased with the progress. We're where we expected to be on that side of the business. But I would say in general, obviously this is still in its nascent stages as a business. And so from that perspective, we are aggressively pursuing business, but I'll let George maybe comment on how we're reflecting that in the guidance.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

We guided before that we expected pharma to be flat in 2025. Even though they were very excited about some of the opportunities in the pipeline, at least at this point, we are expecting pharma to be flat year over year and then ideally a significant benefit in 2026.

Conor McNamara
Conor McNamara
Equity Research Analyst at RBC Capital Markets

Got it. Thanks. And just last one for me. Appreciate the color you guys gave on the tariff impacts and kind of what's going on from a macro environment. But is there a medium term opportunity for you guys just because you're not selling capital to customers where either your customers may be looking to maximize the capital investments they've made or, you know, if they were considering building out an offering a software offering on their own that required a larger investment, you may be able to pick up some of that business just because they're, you know, trying they may be budget constrained or trying to save money on any capital expenses. And that's all I've got. Thanks for the questions.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Yes. Thank you, Connor. So indeed, right? It looks like there is a trend on being, I would say, to some extent constraint on CapEx investments, obviously, in the world of research activities, maybe to some extent in the world of hospitals. But as you know, well, we are diagnostics, right?

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

We are not tools. So, we don't sell as a CapEx, we go into the OpEx of the hospitals who are being paid on use. So I would say today, we don't see a pressure. And to your point, this might be an opportunity as well, right? Because it could be that some hospitals or different labs, given those new, dilemma, don't want to invest themselves on making their own developments and they want to use a software like Sofia.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Ross, we've been interacting with a number of customers around those constraints recently. Maybe you want to highlight where we stand and I guess the little friction we see on our side.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Yeah, so, and maybe just to be super clear, we today see very healthy budgets across our customers. So in general, it's quite a solid environment for us, essentially in most geographies around the world. So in general, it's quite strong. I would say probably the biggest immediate or near term impact we're seeing is if you have bought a sequencer, right, and upgraded, you have great desire to fill, right, those flow cells. And so that means more applications, more content, which means players like Sofia need to step up and provide you with menu to be able to make the economics of that purchase viable.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

And so increasingly, you see those interactions benefiting us. And it's also brought us closer to some of the cap equipment players as I think a number of them see us, right, as a key partner to bring that venue and to bring the validation and to show the ROI. So that when you're bringing in house certain capabilities, you can show that that level of investment was prudent. And that you can ultimately not just bring obviously care closer to the patient and improve turnaround times, but you can drive a financial benefit and an ROI, which is obviously critical for CapEx investment in the current environment. So again, I think it's a net positive for us.

Conor McNamara
Conor McNamara
Equity Research Analyst at RBC Capital Markets

Great. Thanks for all that color.

Operator

And your next question comes from the line of Savant with Morgan Stanley. Please go ahead.

Analyst

Hi. This is Jason on for Tejas. Thank you for taking our questions. So maybe just start off a question on the collaboration with AstraZeneca. So you originally began this collaboration with AstraZeneca in 2023.

Analyst

Could you just talk about the traction you've had from this collaboration in that timeframe? What has it meant for the company's volume and ASP profile? Also, does this new collaboration include MSK impact? And if not, could including MSK impact be in the cards? And how are you thinking about other collaboration opportunities in the future, in particular with large pharma? Thank you.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Yes. Thank you, Jason. I will start and then let it talk to Ross. As you may remember, our partnership with AstraZeneca on the diagnostic side started with HRD testing, which was something that the market was missing for prescription of PARP inhibitors, right? So this was our initial, collaboration, where we have worked together on market access needs so that more patients could be properly tested in Europe on HRD.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

And then this collaboration was expanded to your point with MSK access and MSK impact. Ross, do you want to give a status on where we stand on access impact and the new collaboration agreement we just signed?

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Thanks, Jiri. And Jason, thanks for the question. So I would say, one, it's great to be aligned with AZ around these efforts, given obviously they today have an incredibly robust pipeline. And one that matches very well with our offering in menu. So there's a ton of fantastic overlap between the two organizations and our missions.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

And they obviously have a real desire well to bring care closer to the patient, improve market access, and we're happy to help them on that journey. So it's a really good partnership up and down in the organization. Now, if you look at the success we've had with Access and now Impact, obviously they, as well as our own efforts, have been really critical to getting that into as many labs as we've penetrated quickly, right? So I would say this is probably for the company one of the fastest and best new product launches in history. And so in that vein, obviously some of their efforts have helped us there.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

So we're really appreciative of the partnership. From that standpoint, you can see the recent expansion is kind of evidence of the success, right? And so we expect that to bear very nice fruit over the not just upcoming periods, but over the next several years. This is really a key partnership and product for us. Now, I'm also pleased to say, as I hinted at before, we've also expanded our outreach with other top pharma.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

We will have hopefully later this year some further disclosures. But I think you can sort of ascertain that there are others as well that see the world similar to AZ and see the value that Sofia can bring, particularly around CGP testing and liquid biopsy. And so we expect this now to broaden out to others. We publicly talked a bit about J and J as an increasing, I would say, other partner for us. But I think there'll be more.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

And so again, as Jirky mentioned, coming off of World CDX and AACR, we really have seen an uptick in interest. And now we've got to translate that obviously into bookings and revenue. And so again, we've been conservative as George stated in our assumptions for this year. But I'm quite confident that the trajectory is pointing in the right direction for us.

Analyst

Great. Thanks. That was helpful. Then maybe just a follow-up question. The question on the balance sheet.

Analyst

So I guess last quarter, Sofia, you reframed your adjusted operating profitability target from year end 2026 to adjusted EBITDA breakeven in 2027. So is the current balance sheet sufficient to reach this new target? And how are thinking about opportunities to strengthen the balance sheet? Thank you.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Yes. George, that's for you.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

Yes. No, again, we finished the quarter with $68,000,000 in cash plus another 35,000,000 in undrawn credit lines. So that's a total of over 100,000,000 of available liquidity. Very pleased that we continue to shrink our EBITDA losses. And I think you've seen all the work and the efforts we've done around expense control and improving our gross margins on the COGS side.

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

And again, our loss was less than $10,000,000 this quarter. So certainly, think that frames us up fairly well. And again, we think our losses will be quite small by the end of twenty twenty six and we'll cross over into adjusted EBITDA profitability into 2027.

Analyst

Great. Congrats on the quarter.

Operator

And your next question comes from the line of Dan Brennan with TD Cowen. Please go ahead.

Kyle Boucher
Kyle Boucher
Analyst at Cowen

Hey, good morning guys. This is Kyle on for Dan. Thanks for taking the questions. I wanted to go back to the guide and sort of pacing. So you reiterated the guide this year and the implementations were pretty strong in the first quarter.

Kyle Boucher
Kyle Boucher
Analyst at Cowen

Does this change any of the I mean, know you're still guiding for a back half weighted year, but does this sort of smooth out some of that back half waiting since implementation has been stronger?

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Yes, George?

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

Yes. No, we're still expecting while we're pleased certainly with first quarter results, we think it is prudent to maintain the guidance at this point. And we do still feel again given our contracts that we've signed that are still haven't really transferred into routine that will happen more in the back half of this year. So we do think we're going to see more growth in Q3 and certainly in Q4. And clearly in the first quarter, revenue growth was within the 10% to 17% guidance range that we established. So at this point, we are maintaining our guidance.

Kyle Boucher
Kyle Boucher
Analyst at Cowen

Got it. And then is there any detail you really provide on the new customer signings? What percentage of the new signings are U. S. Versus OUS?

Kyle Boucher
Kyle Boucher
Analyst at Cowen

And earlier you talked about the average size of contracts getting bigger. Can you quantify that at all?

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Yeah, we can give you some more color on the new logos in terms of the number of logos where they come from. As you know, we don't disclose dollar values of bookings, right? So, Ross, on logos, on new logos?

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Yeah, thanks, Shirky. So, in terms of the new customer signings, obviously, we've had frankly success around the globe. But I would say there is sort of notable strength coming in North America. And as you think about this year and into next year, I do think relative to our revenue mix, a disproportionate amount will come from The US. And those tend to be much larger lands or expands several times larger than our average.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

So that is pulling up that ACV number. And I think that number, which again doubled year on year, will continue to trend favorably for the remainder of the year. So I would say in total, this will obviously show up eventually in our North American revenue growth, which on the clinical side was quite robust in the first quarter and we expect to be strong throughout the year. But I can tell you the dynamics in general are really strong in terms of The U. S.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

Business and we're really pleased where that is. And we think again, this will be one of the key growth drivers for us in the back half of the year and into 2026.

Kyle Boucher
Kyle Boucher
Analyst at Cowen

Got it. Thanks guys.

Operator

Your next question comes from the line of Subbu Nambi with Guggenheim. Please go ahead.

Subbu Nambi
Managing Director at Guggenheim Securities

Hey, guys. Good morning. Thank you for taking my questions. You churned out a few smaller customers who weren't contributing revenue. So we were wondering what is the split on customer number who aren't material contributors versus those who are?

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Ross? So,

Ross Muken
Ross Muken
President at SOPHiA GENETICS

yes, Subbu, so obviously, you think about different regions, an IDN or an AMC in The US or UK or even France is going to be quite different than someone in Costa Rica or in Thailand or Malaysia, etcetera, right? So I would say in total, it's sometimes challenging, particularly more of the emerging markets to know when we sign a customer, what the full potential is. But I would say increasingly, again, and this is around this ACV comment, we've been more focused on, let's say the top 500 cancer centers in the world. And there, obviously, we know the size and we know the patient levels. And so I think, again, you will probably see some dynamic change in that mix.

Ross Muken
Ross Muken
President at SOPHiA GENETICS

But again, when you're running a network model and the diversity of what we have, you're trying to play for the broadest network. And so, we'll continue to obviously entertain customers in all of these emerging markets for oncology. But obviously, it will at times lead to at least the churn customer number being elevated, but not the churn percentage. We're still very pleased with where that remains in the low single digits, which is a world class number for software.

Subbu Nambi
Managing Director at Guggenheim Securities

That's awesome. Can you provide some color on cross selling the MSK Access and MSK impact offerings? I know MSK access had 34 adopters as of February 2025. I'm just wondering how many doctors of both assays you have today.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Yes. Thank you, Subbu. So, indeed, MSK Access and MSK Impact are, we believe, applications which have a bright future, but it's still pretty early. So, on MSK Access, the launch has We have had adoption of MSK Access in all continents, as you said for about 30 customers already.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

And we expect basically the numbers to really pay out as we progress and we get more and more utilization. But I would say, we're still very much at the beginning. And with a decentralized solution that everyone can adopt probably MSK access is pretty unique in its category. So we have high expectations, but still work to do so that on the market access side, we see more and more volume adoption. When it comes to MSK impact, say the competitive landscape is different.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

You already had some people that adopted comprehensive genomic profiling solutions, in the market. So the market already exists, more competitive, but the capabilities of MSK INPCT because of its nature with tumor normal are pretty unique. And so there we are as well very confident that in conjunction with MSK access, we will have a number of customers that is going to grow in the adoption of MSK Impact. The two tends to go very well together, MSK Impact for the first diagnosis and often MSK Access for the longitudinal follow-up of the patient as the patient is being treated.

Subbu Nambi
Managing Director at Guggenheim Securities

Hopefully, okay. And one last one. You guys announced the expanded agreement with AstraZeneca to increase the number of MSK access adopters from 20 to 30 this year. Was this already contemplated in your guide, given you didn't raise your guidance today? Or if not, would completing this just present an upside to the guide?

Subbu Nambi
Managing Director at Guggenheim Securities

Or is the time frame about committing to adopt the solution and not necessarily ramping up engine writing revenue?

George Cardoza
George Cardoza
EVP & CFO at SOPHiA GENETICS

George? Yeah, again, when we sign somebody for MSK access, I mean, is a rather detailed application and it's a lot goes into the validation and bringing it live. So, it does have probably a little bit longer of a runway in terms of somebody signing a contract to actually going live. But we're still quite bullish about the opportunities here going forward.

Subbu Nambi
Managing Director at Guggenheim Securities

That makes sense. Thank you, guys.

Operator

And your next question comes from the line of Mark Mazzaro with BTIG. Please go ahead.

Vidyun Bais
Equity Research - Vice President at BTIG

Hey, guys. This is Vivian on for Mark. Thanks for taking the questions.

Vidyun Bais
Equity Research - Vice President at BTIG

I'll just keep it to one, actually. So just on your competitor fabric recently being acquired, I know the revenue base is much less mature, but could you just share any new views on how you're thinking about the competitive landscape? I think in the past, you've also called out, increasing mix shift to exome applications. So just any views there. Thanks.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

Yes. Thank you, Vivian. So I guess this acquisition highlights the value of data analytics and bioinformatics, right? And we are being often speaking about the fact that over time probably data production, although there is subtility on pre sequencing steps would become more and more automated and that knowledge and dollars would move more towards data analytics. So I would say this definitively highlights in my opinion, the value of data analytics recognized in that case by GeneDx.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

And indeed, 20 of our business is on right neuritis disorders, where with one of the applications called enhanced exome, we're seeing a significant demand in the market.

Vidyun Bais
Equity Research - Vice President at BTIG

Great. Thanks for taking the questions.

Operator

No further questions at this time. I would like to turn it back to Jyordi Kablon for closing remarks.

Jurgi Camblong
Jurgi Camblong
Co-Founder, CEO & Director at SOPHiA GENETICS

So thank you all for the questions, and looking forward to update you in the next events. We're soon, in an event in New York, ready to meet investors. Have a good day.

Operator

This concludes today's conference call. Thank you all for joining. You may now disconnect.

Executives
    • Kellen Sanger
      Kellen Sanger
      Sr. Director, Head of Strategy
    • Jurgi Camblong
      Jurgi Camblong
      Co-Founder, CEO & Director
    • Ross Muken
      Ross Muken
      President
    • George Cardoza
      George Cardoza
      EVP & CFO
Analysts
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Key Takeaways

  • Revenue growth: Q1 revenue reached $17.8 million, up 15% on a constant currency basis (13% reported), slightly above expectations, and full-year guidance of $72 million–$76 million was reaffirmed.
  • Customer signings and implementations: Sofia added 28 new core genomic customers and implemented 33 in Q1 (vs. 23 quarterly average in 2024), driving net dollar retention of 103% and low revenue churn of ~4%.
  • U.S. market expansion: Revenue and analysis volume from U.S. customers grew over 30% year-over-year, highlighted by major application expansions at Henry Ford Hospital and the Mayo Clinic.
  • New applications & biopharma partnerships: Adoption of MSK Access (liquid biopsy) and MSK Impact (solid tumor) accelerated, including an expanded collaboration with AstraZeneca covering 30 sponsored institutions globally.
  • Improved profitability & efficiency: Adjusted gross margin hit a record 75.7%, adjusted EBITDA loss narrowed by 24% to $9.8 million, and operating expenses declined 3% year-over-year, underscoring scalable platform economics.
AI Generated. May Contain Errors.
Earnings Conference Call
SOPHiA GENETICS Q1 2025
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