Release Date: April 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Q-linea AB (FRA:3F8, Financial) achieved a record high top line net sales of 3.7 million in Q1 2025, surpassing the total sales of 2024.
- The company successfully signed 5 new customer contracts in Q1 2025, exceeding the total number of contracts signed in the entire year of 2024.
- Q-linea AB (FRA:3F8) reported a 20% year-on-year reduction in operating costs due to a cost-saving program implemented last year.
- The company has expanded its installed base to 7 instruments in routine clinical use, which is expected to drive recurring revenues.
- Q-linea AB (FRA:3F8) secured a master service agreement with one of the largest US reference lab networks, indicating strong market demand and potential for further expansion.
Negative Points
- The contracting process with customers remains complex and time-consuming, with significant variability in timing due to administrative functions and third-party purchasing partners.
- Despite the commercial progress, Q-linea AB (FRA:3F8) is still far from reaching break-even, which is projected for 2027.
- The company faces challenges in securing non-dilutive funding and relies on various financing activities, including a warrant scheme, to support its growth.
- There is uncertainty in the timing of customer evaluations and installations, which can impact the speed of revenue generation.
- Gross margins are not yet reflective of future potential, and achieving industry-standard margins will depend on scaling production and reducing costs per unit.
Q & A Highlights
Q: Could you provide more details on the pipeline and expected conversion rates?
A: Yes, we have over 100 active customers considering our rapid ASD solution. These customers have either budgeted or are working to secure budgets for evaluations. We typically don't proceed with evaluations unless a customer has a budget. We expect a conversion rate of over 50% from evaluations to installations, aiming for higher. The contracting stage can be complex and timing is uncertain, but we have a good sense of our win rate potential. (Respondent: Unidentified_1)
Q: How do you plan to manage the installation and clinical use stages efficiently?
A: The installation phase is moving quickly as we work with operations teams on planning and training. LIS integration has been smooth, which is crucial for clinical use. We aim for 1,000 tests per instrument on average. Institutions may start with a smaller set of physicians and expand usage over time. We remain active with customers to ensure full test utilization. (Respondent: Unidentified_1)
Q: Will you need to increase operational expenses significantly to support growth?
A: We are committed to keeping operational expenses under 15 million. While we expect commercial growth, the ATA's reliability means we don't need a linear increase in field engineers. We will offset increased commercial efforts with cost reductions in other areas and aim to decrease operational costs over time. (Respondent: Unidentified_1)
Q: Can you provide insights into gross margin expectations as you approach break-even in 2027?
A: While I can't provide a specific 2025 gross margin number, we aim for industry-standard gross margins of 60-80%. Our test is unique and of high clinical value, so we expect to be at the higher end of that range as we achieve operating leverage and complete scaling activities. (Respondent: Unidentified_1)
Q: What measures are you taking to secure non-dilutive funding and manage costs?
A: We are actively seeking non-dilutive funding, including grants and development funding from stakeholders like pharma companies and antimicrobial resistance groups. These funds could help defray development costs. We are also balancing increased commercial efforts with cost reductions in other areas. (Respondent: Unidentified_2)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
