Cytek Biosciences Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 8, 2025

Key Takeaways

  • First quarter revenue was $41.5 million, down 7.6% year-over-year as weakness in U.S. and EMEA instrument sales was partially offset by a 24% increase in service revenue and strength in APAC and other international regions.
  • Full-year 2025 revenue guidance was revised to $196 million–$210 million (–2% to +5% growth) and is expected to be back-end loaded due to ongoing spending constraints in the U.S. and EMEA driven by academic funding uncertainties and government budget pressures.
  • Recurring revenue (service plus reagents) now represents 31% of total revenue and grew 17% on a trailing-12-month basis, highlighting the durability of expanded instrument installed base and rising reagent adoption.
  • The installed base reached 3,149 instruments after adding 115 units in Q1, and the launch of the MUSE microsystem targets emerging markets like cell and gene therapy with an affordable flow cytometry solution.
  • A global manufacturing footprint in the U.S., China and Singapore enables region-for-region production to mitigate tariff exposure, capping gross margin impact at 1–3%, while a strong balance sheet supported $10.6 million in share repurchases and retains capacity for M&A and R&D investments.
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Earnings Conference Call
Cytek Biosciences Q1 2025
00:00 / 00:00

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Operator

Thank you for standing by. At this time, I would like to welcome everyone to the Cytek Biosciences First Quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the conference over to Paul Goodson, Head of Investor Relations. Please go ahead, sir.

Paul Goodson
Paul Goodson
Head of Investor Relations at Cytek Biosciences

Thank you, Operator. Earlier today, Cytek Biosciences released financial results for the first quarter ended March 31, 2025. If you have not received this news release, or if you would like to be added to the company's distribution list, please send an email to investors@cytekbio.com. A copy of the news release is also available on the Investor Relations section of Cytek's website at investors.cytekbio.com. Joining me today from Cytek are Wenbin Jiang, CEO, and Bill McCombe, CFO. Please note that we will be referencing a slide presentation during the call today that has been posted to the Investor section of our corporate website. As a reminder, we will make statements during the call that are forward-looking statements within the meaning of the federal securities laws, including statements regarding Cytek's business plans, strategies, opportunities, and financial projections.

Paul Goodson
Paul Goodson
Head of Investor Relations at Cytek Biosciences

These statements are based on the company's current expectations and inherently involve significant risks and uncertainties that could cause actual results or events to materially differ from those anticipated in these statements. Additional information regarding these risks and uncertainties appears in our slide presentation in the section entitled Forward-Looking Statements in the press release Cytek issued today and in Cytek's filings with the SEC. This call will also include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles. Additional information regarding our use of non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures, may be found in our slide presentation and in today's press release.

Paul Goodson
Paul Goodson
Head of Investor Relations at Cytek Biosciences

While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Except as required by law, Cytek disclaims any duty to update any forward-looking statements, whether because of new information, future events, or changes in its expectations. This conference call contains sensitive information and is accurate only as of the live broadcast May 8th, 2025. Finally, I would like to invite analysts and institutional investors to attend any of the six user group meetings Cytek will be hosting in 2025. These are typically all-day meetings where Cytek scientists and users of Cytek's instruments meet to discuss research initiatives, advances in the field, and use cases for Cytek's products.

Paul Goodson
Paul Goodson
Head of Investor Relations at Cytek Biosciences

The next meeting will be in La Jolla on May 15th at the Estancia Hotel. In addition to Cytek's user group meetings this year, there will be a variety of industry and academic conferences, meetings, and seminars where we will be exhibiting Cytek's products in the U.S. and around the world. While these events are primarily geared to the scientific community, they may offer an opportunity to interact with users of our technologies to learn why Cytek's instruments are so highly valued by our customers. We have a limited number of spaces to accommodate members of the financial community, so if you are interested in attending any of these events, please contact me. With that, I would like to turn the call over to Wenbin.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Thanks, Paul. Welcome, everyone, and thank you for your interest in Cytek. On today's call, I will discuss our performance during the first quarter, including factors impacting our business, provide an update on our 2025 outlook, and share details on how we are navigating this dynamic macro environment. Next, I will provide highlights on how our progress in the quarter across our strategic priorities for 2025 before ending the call over to Bill for a more detailed look at our financials and our 2025 outlook. Starting with our first quarter revenue on slide three. First quarter revenue in 2025 was $41.5 million, down 7.6% compared to the first quarter of 2024. The year-over-year decline was driven mainly by weakness in instrument sales in the U.S. and EMEA, partially offset by strength in instrument sales in APAC and the rest of the world regions.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Service revenue worldwide reached $13.3 million and increased by 24% versus a year ago. The growth in service revenue continued its strong performance and was driven by the expansion of our instrument installed base and active usage of our tools across a broad range of disciplines. Turning to slide four. Diving into the underlying factors towards the last month of the first quarter, we again see a broad-based slowdown in instrument orders across our U.S. and EMEA regions. Among the academic and government customers in the U.S., instrument placements declined driven by uncertainties with academic funding from U.S. policy change. In EMEA, pressure due to government funding priorities affected purchasing trends. Sales across our Biotech Pharma and CRO customers declined due to some orders being postponed to the second quarter, and the customer buying decisions being influenced by the uncertainties across the industry due to the U.S. policy environment.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Geographically, we continued to benefit from a stronger demand environment for instruments in the APAC and in the rest of the world region, which include Canada and Latin America. Total revenue in APAC and the rest of the world region together was $11.4 million, up 35.6% year-over-year. While we are viewing future sales in China with a level of conservatism, we continued to experience an increase in orders in the first quarter related to the China Stimulus Program. Due to the recent change in the market environment as a result of these macroeconomic and policy-related factors, we now anticipate full-year 2025 revenue to be in the range of $196 million-$210 million. We continue to expect some strength on capital equipment spending in the U.S. and EMEA due to these conditions. Bill will provide more details on this outlook shortly.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

While we continue to operate in a dynamic market environment, the durable foundation we have built enables us to be agile and to drive prices forward through uncertain times. Importantly, we remain confident in our positioning. We are serving a large and growing cell analysis market with our industry-leading cell analysis portfolio, global diversification, and the critical first-mover advantage we have in FST technology. More than 50% of our product sales are outside of the U.S. To support our customers worldwide, we have established manufacturing operations in three countries: the U.S., China, and Singapore. This manufacturing footprint enables region-for-region manufacturing and allows us to optimize product flows for any global talent environment. We further believe that having multiple manufacturing locations enhances the resilience of our supply chain, thereby ensuring more reliable and cost-effective product availability for our customers.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Our current manufacturing capacity for instruments and reagents can more than adequately support our customers for the foreseeable future without additional capital investments in production facilities. I would now like to update you on the progress our team has made across our core strategic pillars: instruments, applications, bioinformatics, and clinical, to solidify Cytek's position as a market leader in next-gen cell analysis solutions. Starting with our core instruments on slide five. In the first quarter, we expanded our global footprint by 115 instruments, bringing Cytek's total installed base to 3,149 units. In the first quarter, we also announced the launch of the Cytek MUSE Micro system. The MUSE Micro Cell Analyzer is an affordable option that simplifies flow cytometry while enhancing ease of use, precision, and versatility.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

This latest instrument expands assay capabilities to drive adoption in new emerging markets such as cell and gene therapy and drug discovery by enabling smaller labs and resource-limited facilities to access high-quality flow cytometry at a cost-effective price. While revenues were down in this Q1 2024 in both the academic and government and the biopharma market segments, we believe this was largely due to market weakness rather than market share loss. Our competitive position as a leader in the FST market segment remains strong. We have established a significant commercial footprint and brand identity in the U.S. and EMEA and are expanding our market leadership in APAC and in the rest of the world regions. The large installed base of high-parameter analyzer instruments we have built over time provides a durable foundation for driving recurring revenue growth in our service and reagents businesses.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

To expand our addressable market and accelerate growth, we have made strategic investments to advance our product pipeline with newer generations of products such as our sales product and entry-level to mid-level instruments, including our Northern Lights line and MUSE Micro system. The resilience of our product portfolio amidst a challenging macroeconomic backdrop is demonstrated by the 15% trailing 12-month growth in our sales soldier unit placements and 17% TTM growth in Northern Lights units installed. Within our portfolio, Aurora sales soldier revenue grew 15% year-over-year, and the Northern Lights revenue increased 6% year-over-year in the first quarter. Northern Lights research-use-only sales grew 8% year-over-year. Notably, both Aurora sales soldier and Northern Lights instrument sales have continued the growth trend that we saw in the fourth quarter of 2024.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Collectively, these instrument placements represent growth across a diverse customer base, offering comprehensive and better solutions tailored to meet their needs. Moving to bioinformatics on slide six, I'm pleased to report that the Cytek growth continues to grow as a vital resource in the research community. Our main goal is to enable our customers to streamline their experiment workflow through our software tools, which drive adoption and utilization of our sale analysis solutions and growth in our reagent and service businesses. We now have over 18,000 users, which grew by 2,000 users in the first quarter alone. This represents an average of about 6 users per installed Cytek FSP instrument, which validates the loyalty our users have to our product portfolio and demonstrates the halo effect of our platform.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

The increase in Cytek Cloud users reflects growth in the usage of our products and is directionally correlated with long-term recurring revenue growth drivers from our reagents and service businesses. Turning to our next growth pillar, applications. While we are in the early innings with our reagent businesses, we continue to believe that it has strong growth potential. We plan to drive growth by accelerating our new reagent product introduction engine, which will expand our reagent offerings and application specific kits. The share of reagents we supply as a percentage of total reagent volumes used on our instruments is still at the onset of its growth trajectory. We believe there is a significant growth potential ahead as we continue serving our expanding installed base, improving our execution and delivery time to customers, leveraging the Cytek Cloud as a reagent sales platform, and introducing new reagent products and applications.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Notably, I believe we have reached an inflection point with recurring revenue, including reagent and service revenue combined, leveraging our established and expanding installed base. In the first quarter, we were pleased to see our reagent sales positively contribute to our recurring revenue wave at a percentage of our total revenue. Specifically, our trailing 12-month recurring revenue is steadily growing, representing 31% of our total revenue in the first quarter, up from 26% a year ago. Further, our trailing 12-month recurring revenue grew 17% in the first quarter compared to the prior year. Longer term, we expect our recurring service and reagents revenue to be stronger growth drivers for Cytek. Turning next to clinical, we continue to believe the clinical market represents an attractive business opportunity for Cytek, and we have seen considerable growth in the EU and APAC for clinical applications.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

In the EU, one academic hospital fully validated our minimal residual disease or MRD panel for leukemia and lymphoma and will begin implementing it in their routine clinical testing this quarter. As a key opinion leader, this institution has also supported our outreach to other clinical sites in the Netherlands, Australia, and Brazil. Overall, I'm encouraged by our results despite challenging macro headwinds in the U.S. and EMEA. We have areas of strength in high-growth regions, including in Asia-Pacific, and strength in our sales soldier and Northern Lights instruments. The large installed base we have built worldwide provides the basis for long-term growth in our recurring services and reagent businesses and offers the opportunity to scale our instrument offerings. I believe that we are well positioned to emerge from this period even stronger than we are today, leveraging our industry-leading sale analysis portfolio and strong business fundamentals.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

With that, I will now turn the call over to Bill for more details about our financials.

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

Thanks, Wenbin. Turning to slide seven and our first quarter financial results. Total revenue for the first quarter of 2025 was $41.5 million, a 7.6% decrease compared to the first quarter of 2024. Product revenue, which is instruments and reagents, decreased 18% versus Q1 of 2024. This decrease was driven by a weaker instrument market in the U.S. and EMEA. As Wenbin described earlier, this was primarily due to academic funding uncertainties in the U.S., pressure on government budgets in EMEA causing delays in academic and research funding, and a cautious capital spending environment in the biotech and pharma industries. Service revenue was a bright spot, growing 24% versus Q1 of 2024. Growth in service revenue reflects continued expansion of our installed base of instruments and active usage of our systems.

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

Turning to our geographic market performance, total U.S. and EMEA revenue declined 13% and 24% respectively, driven by lower instrument sales for the reasons I mentioned. On the other hand, Asia-Pacific grew very strongly, up 40%, driven by particularly strong growth in China. Other international markets, primarily Canada and Latin America, also grew strongly off a small base. We believe this growth reflects the strength of Cytek's brand and customer preference for our technology globally. GAAP gross profit was $20.2 million for the first quarter of 2025, a decrease of 12% compared to gross profit of $23 million in the first quarter of 2024. GAAP gross margin was 49% in the first quarter compared to 51% in the prior year. Non-GAAP adjusted gross margin in the first quarter was 52% compared to 55% in the prior year quarter.

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

The declining GAAP and adjusted gross margin was primarily due to lower product revenues and higher manufacturing overhead. This was offset by a higher service gross margin compared to a year ago. We expect quarterly gross margin to improve for the balance of the year as quarterly revenue increases consistent with typical seasonal patterns. Operating expenses were $35.1 million for the first quarter, an increase of $1.4 million from the prior year. Research and development expenses were $9.7 million for the first quarter, down $0.1 million from the first quarter of 2024. Sales and marketing expenses were $12.5 million for the first quarter, flat versus the first quarter of 2024. General and administrative expenses were $12.9 million for the first quarter, up $1.5 million from the first quarter of 2024 due to higher outside services and headcount expense.

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

Loss from operations was $15 million for the first quarter compared to the $10.7 million loss from operations in the prior year quarter. GAAP net loss was $11.4 million in the first quarter compared to GAAP net loss of $6.2 million in the prior year quarter. This was primarily due to a larger loss from operations of $15 million in the current quarter versus $10.7 million a year ago, and a tax expense of $0.1 million versus a tax benefit of $2.8 million a year ago, offset by higher other income due to $1.3 million foreign exchange gain in the current quarter compared to a $1.1 million FX loss in the prior year quarter.

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

Adjusted EBITDA, which excludes stock-based compensation and foreign currency impacts, decreased to a loss of $3.3 million for the first quarter due to lower gross profit compared to a loss of $0.7 million in Q1 of last year. Adjusted EBITDA included investment income of $2.3 million. Excluding this amount, adjusted EBITDA loss was $5.5 million in Q1 compared to a loss of $2.6 million in Q1 of last year. We expect adjusted EBITDA to improve on a quarterly basis as revenues and gross margins increase consistent with typical seasonal patterns. Total cash and marketable securities decreased $12.3 million versus Q4 to $265.6 million as of March 31, 2025. The decline was primarily driven by our investment of $10.6 million to researchers' shares during Q1. Lastly, turning to our full-year guidance on page eight.

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

As Wenbin described earlier, due to the significant change in our market environment since our last earnings call in late February, we are revising our full-year 2025 revenue outlook to a range of $196 million-$210 million, representing overall growth of -2% to +5% over full-year 2024, assuming no change in currency exchange rates. Consistent with our typical seasonal pattern, and especially given the current uncertainties in the market and geopolitical environment, we expect this growth to be back-end loaded to the second half of 2025. As Wenbin further noted, our market leadership position remains strong, and we believe we will perform well relative to the overall flow cytometry market. Our strong balance sheet also gives us the ability to continue investing for growth. With that, I'll turn it back over to Wenbin.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Thanks, Bill.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Turning to slide nine, I want to take a moment to thank our team at Cytek for their dedication to our mission and the overall resilience amidst a very difficult market backdrop. It is this shared belief that positions us well as we strengthen our foundation for the future. We are serving a large and growing cell analysis market as a market leader. We continue to make thoughtful investments in our product pipeline and our service teams to drive growth and innovation and to strengthen our competitive position. Our strong balance sheet underpins our foundation, which provides us with options and further flexibility in the future. We have a clear roadmap to expand our market leadership position in cell analysis. These powerful attributes provide us with confidence in our long-term objective of delivering sustainable growth and profitability.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

I want to thank everyone for joining today's call, and we will now open it up for questions.

Operator

Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Tejas Savant with Morgan Stanley. Your line is open.

Operator

Hi, this is Jason for Tejas. Thank you for taking our questions. Tariffs have been a key focus for investors. They sound manageable for Cytek, but I just want to confirm, should we expect any gross margin impact because of the recent tariff policy? Apologies if I misheard.

Operator

I believe you said Cytek could potentially use some of your current available inventory to provide a buffer, but obviously that is just temporary. I was wondering if you could quantify a gross margin impact from the current administration's tariff policy. You talked about some supply chain mitigants. I do not believe I heard you talk earlier about pricing. Is pricing something Cytek could turn to also as a mitigant to the tariffs? The third part would be there are currently 125% tariffs from China and U.S. exports. Obviously, it is very hard to sell any products there. I am wondering how much of the 2025 revenue guidance cut could be because of this dynamic, the inability to sell your products in China. Thank you.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Okay. Let me try to take those in order.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

It is important to understand that we have established manufacturing facilities that are all producing and shipping product in three regions: the U.S., Singapore, which is our new facility, and Wuxi, China. Our primary strategy for managing tariffs is what we call region-for-region manufacturing. We make product for sale in a particular region in the region that would be least impacted by tariffs. Making product for Asia and Europe in Asia and U.S. product for sale in the U.S. Obviously, we cannot do that 100%, but we are able to mitigate a substantial portion of the potential tariff liability that way. The other thing that we can do is reorganize where we source components from. Thirdly, we are recovering some costs from customers through surcharges. Those are the strategies for dealing with the tariffs.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

We do not think that that will have any significant impact on our revenues in 2025. When I say that, I am obviously putting to one side the uncertainties created by the economic and market environment that we are in. In terms of tariffs specifically, we do not think that will have an impact. In terms of gross margin, the impact, I think, will be fairly limited and in the range of 1%-3%. In that regard, we would expect, as I mentioned in my remarks, that gross margin will improve over the ensuing quarters because we expect that revenues will follow the typical seasonal pattern where they will be stronger in Q2, Q3, and Q4. With higher revenues, we will see a benefit at the gross margin line. Did I cover all your questions?

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Yeah, most of it.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Then the third part, just about the 125% tariff from China and U.S. exports. Are you still able to sell your products in China? Thank you.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

We are able to sell products in China, absolutely. The way that we deal with that tariff is through our region-for-region manufacturing. Obviously, products sold in China do not incur a tariff if they are manufactured in China or if they are manufactured in Singapore.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Great. Thank you for clarifying that. If I may ask just a follow-up, the academic government and market, it seems like the policy situation just might have gotten worse since you last guided in the fourth quarter. We are seeing significant disruption in government funding at universities with some of the country's largest research budgets. There was also a proposed 40% cut in the proposed 2026 budget to the NIH.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

I'm just wondering, how are you thinking about this potential risk to your 2025 guide? What was your overall outlook for this end market? Do you think maybe a minus mid-single-digit decline could be reasonable? Thank you.

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

Look, the uncertainties associated with university funding in the U.S. are factored into our revised guidance. That's one of the new issues that caused us to come out with this revised guidance. The short answer to your question is it's factored into what we've told you about revenue expectations. I would make a couple of points there. One is that more than 50% of our revenue is outside the United States. Obviously, that revenue isn't affected by U.S. university funding.

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

Thirdly, and most importantly, we think about our revenue in three buckets: service, which is growing strongly; reagents, which also saw some nice growth in Q1, particularly in the U.S. and EMEA. The instrument portion of our revenue is the one that is most impacted by issues like the one that you mentioned. The other two revenue sources or revenue streams are not particularly affected by U.S. university funding issues. All that said, we are continuing to sell instruments to U.S. universities here in the second quarter.

Operator

Your next question comes from the line of Matt Sykes with Goldman Sachs. Your line is open.

Operator

Hi, this is Evian from Matt. Thanks for taking my questions. The first one on the Aurora sales order, what drove the double-digit growth there?

Operator

Are there any specific end markets you would call out that may be differentiated versus your other instruments?

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

I think we are seeing nice growth across all territories for our sales orders. Part of the reason is clearly we see the benefit of Cytek's order matches very well with our analyzer now already and widely being adopted by both academic and industry users. This matching of the panels between Cytek's order and Cytek's analyzer clearly demonstrated the benefits for our users and made it very easy for them. That is one reason. The second part is clearly the performance of our sales orders and has been very well demonstrated. Many of our users can easily go with our orders directly and go beyond the 40-color panels. This is something they would like to see.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Even under today's, we know the tight budget situations, they see the benefits and they are jumping to Cytek technology.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Okay, great. Thank you. Another one on phasing. You noted that you expected growth would be back half loaded this year. What's driving this assumption? Is there any specific end market you expect to improve as we move throughout the year?

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

There are two factors. One is that typically our second half of the year represents more than 50% of total sales. It is generally usually somewhere in the mid-50%. That is point one. That is just a function of the buying patterns of our customers. They tend to buy more, particularly in the fourth quarter than in the first quarter. The first quarter tends to be a light quarter, fourth quarter significantly more active. Obviously, there are some new uncertainties in the market environment.

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

We can't sort of predict the future with respect to overall economic growth and the broader market. Beyond that, we don't see anything that would suggest that there's going to be a fundamental shift or difference in that normal quarterly pattern. That's point one. Point two is that the impact that we've seen on the first quarter has been clearly there's been some signaling of direct reductions in funding. To a large part, the driver of reduced spending has been uncertainty about what the future may hold. It's not unreasonable to expect that as we get further into the year, our customers' individual funding situations will be clearer and that some of that uncertainty might lessen. I think that's also an overlay of how we think about it.

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

I also want to come back to this point that our revenue outlook is a function of and is formulated based on three different revenue streams: service, where we think that the install base and the usage and activity of our systems is going to drive continued growth; reagents, where we've been seeing nice solid growth trends. Those revenue streams should continue to see steady growth. The seasonal variation and the lessening uncertainty is primarily going to affect the instrument portion of our business.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Yeah. The recurring revenue from service and reagents has now already exceeded 30% of our total revenue, up from 26% a year ago to 31%. That recurring portion is growing 17%. That should continue to grow at similar rates. The service revenue growth rate, just as the install base increases, that's going to moderate slightly.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

But that's an effect that will take some years to.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Great. Thank you.

Operator

Your next question comes from the line of David Westenberg with Piper Sandler. Your line is open.

Operator

Hi. This is John on for Dave. Thanks for taking the questions. Could you just comment on whether or not you're seeing any of your competitors raising prices due to tariffs? Also, could you give any color on your R&D spending? Are you looking more into imaging or spectral for new product innovation? Thank you.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

On the pricing side, things are still in the early stage, right? I think we do see a report talking about passing around some of the tariff cost over to the customers. We still wait to see how it's going to impact the overall market situation.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

With regarding to R&D, we continue to spend between 15%-20% of our revenue to R&D and to drive new products. Imaging clearly is one of the directions of the company, which we are working on within the R&D department.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Okay. Thank you.

Operator

Your next question comes from the line of Chad Wiatrowski with TD Cowen. Your line is open.

Chad Wiatrowski
Chad Wiatrowski
Analyst at TD Cowen

Hey, guys. This is Chad Wiatrowski down from Brendan Smith. Just on the share repurchases this quarter, obviously, the balance sheet is still healthy. How do you sort of reconcile doing share repurchases versus M&A or organic investment? And what's sort of the plan throughout the remainder of the year?

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

We plan to do both share repurchase and have capital available for M&A. We think we have plenty of cash available to do both.

Bill McCombe
Bill McCombe
CFO at Cytek Biosciences

With respect to specific share repurchase plans, I can't say much more than that we did renew our authorization late last year. We purchased $10.5 million worth of shares in the first quarter, approximately 2.1 million. And that's basically all I can say for the time being. In terms of capital allocation priorities, our plan is to have capital available to do both.

Operator

Again, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Andrew Cooper with Raymond James. Your line is open.

Operator

Hey, everyone. This is Noah on for Andrew. First question, just wanted to get a feel for what are customers saying about the Cytek MUSE Micro Cell Analyzer? Are you seeing a lot of interest? I just want to get an idea of what you're seeing in that new product launch. Yeah.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Cytek MUSE being a new product line and is to support gene and cell therapy. This is a new product. Currently, it's still in the sampling and evaluation stage. We do have some early products based on the technology acquired from Luminex. That's the part that has been selling very well. Normally, they match certain needs, for example, like cell counting and live dead cell, that kind of testing. MicroMUSE, the one we're going to launch, will add new features, new functionalities to support new applications and enable us entering into a new market in the meantime to help drive our reagent revenue as well.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Awesome. Maybe if I can just get one more. You mentioned pharma biotech, and I think the CRO market postponing orders.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Just kind of want to get an idea of what you're seeing now that we're about a week into May. Is there a little bit more optimism? Is it still just about the same as April? And then also, how does that compare to what you're hearing from your academic and government customers as it relates to funding?

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

Look, we incorporated everything that we're seeing into our quarterly guide, sorry, into our annual guidance. I also mentioned that we expect to see a typical seasonal pattern between the quarters. There's nothing that we've seen so far in May that would be at odds with that. We don't typically comment on month-by-month or give quarterly guides. Just suffice it to say that typically, our Q2 is stronger than our Q1. I think, as we've mentioned in the past, we're primarily a third-month company.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

The significant majority of our sales for each quarter happens in the third month of the quarter. Obviously, we have not seen June yet. The evidence around second quarter so far is limited, but it is consistent with and supports the views that we have expressed here. Pharma customers versus academic and research, I think you will see from our 10-Q that revenue from those two sectors was down by a similar amount. We saw a cautious spending environment from the pharma industry. There are some macro reasons for that related to tariffs and drug pricing concerns and so on. Generally speaking, we have not seen much different other than just a more cautious tone around capital spending. Our systems, big pharma still has a strong preference for our systems because they are uniquely capable of being harmonized. That is very important to them.

Wenbin Jiang
Wenbin Jiang
CEO at Cytek Biosciences

We continue to see multiple system orders from big pharma for that reason.

Operator

Seeing no further questions at this time, that does conclude today's conference call. Thank you all for joining, and you may now disconnect.

Executives
    • Paul Goodson
      Paul Goodson
      Head of Investor Relations
    • Bill McCombe
      Bill McCombe
      CFO
    • Wenbin Jiang
      Wenbin Jiang
      CEO
Analysts
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