What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-03-13 · 125 added, 132 removed, 336 unchanged (43% of the section changed)

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For a discussion of the results of operations and financial condition for the years ended December 31, 2023 and year-to-year comparisons between 2023 and 2022, please refer to “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” section of our Annual Report on Form 10-K filed with the SEC on March 13, 2024 .

Subsequent to the filing of the Company’s Notification of Late Filing on Form 12b-25, as part of our year-end financial reporting close process, we made adjustments to certain line items in our financial statements as of and for the year ended December 31, 2023, which are reflected in the discussion below and in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

We are a leading cell analysis solutions company advancing the next generation of cell analysis tools with our novel technical approach of leveraging the full spectrum of fluorescence signatures from multiple lasers to distinguish fluorescent tags on single cells (“Full Spectrum Profiling” or “FSP” technology).

We are a leading cell analysis solutions company advancing the next generation of research and clinical tools with our novel technical approach of leveraging the full spectrum of fluorescence signatures from multiple lasers to distinguish fluorescent tags on single cells (“Full Spectrum Profiling” or “FSP” technology).

Our goal is to become the premier cell analysis company through continued innovation that facilitates scientific advances in biomedical research and clinical applications.

Our FSP platform includes instruments, accessories, reagents, software and services to provide a comprehensive and integrated suite of solutions for our customers.

Our core FSP systems, the Cytek Aurora and Northern Lights flow cytometers, deliver high-resolution, high-content and high-sensitivity cell analysis and addresses the inherent limitations of other technologies by providing a higher level of multiplexing with exquisite sensitivity, more flexibility and increased efficiency, all at a lower cost for performance.

Additionally, our Cytek Aurora cell sorter (“Aurora CS”) leverages our FSP technology to further broaden our potential applications across cell analysis.

Our FSP cell analyzers, the Cytek Aurora and Northern Lights systems, deliver high-resolution, high-content and high-sensitivity cell analysis and addresses the inherent limitations of other technologies by providing a higher level of multiplexing with exquisite sensitivity, more flexibility and increased efficiency, all at a lower cost for performance.

Additionally, our Cytek Aurora cell sorter (“Aurora CS system”) leverages our FSP technology to further broaden our potential applications across cell analysis.

Each system is supported by our highly intuitive, proprietary embedded SpectroFlo software, our reagents, and our service offerings to provide a comprehensive, end-to-end platform of solutions for our customers.

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We manufacture our instruments in our facilities in Fremont, California;

and Seattle, Washington.

Seattle, Washingto n;

and Singapore.

We have designed our operating model to be capital efficient and to scale efficiently as our product volumes grow.

Total revenue for the year ended December 31, 2024 was $200.5 million , representing a 4% increase compared to revenue for the year ended December 31, 2023 of $193.0 million.

Total revenue for the year ended December 31, 2023 included $28.7 million of revenue from the FCI Business.

Excluding revenue from the FCI business unit for the year ended December 31, 2023, organic revenue was $164.3 million, a 0.2% increase compared to the same period of the prior year.

The 0.2% increase in organic revenue was primarily related to sales to pharmaceutical and biotech customers in the United States, and revenue growth in Europe, the Middle East and Africa (“EMEA”).

To date, we have adopted a direct sales model in North America, Europe, China, and several other countries in the Asia-Pacific region, and sell our products through third-party distributors in certain countries in Europe, Latin America, the Middle East, Africa and the Asia-Pacific region.

Revenue from direct sales represented 76%, 79% and 86% of total

revenue for the year ended December 31, 2023, 2022 and 2021, respectively, and revenue from distributors represented 24%, 21% and 14% of total revenue for the year ended December 31, 2023, 2022 and 2021, respectively.

Revenue from direct sales represented 75% , 76% and 79% of total revenue for the years ended December 31, 2024, 2023 and 2022, respectively, and revenue from distributors represented 25% , 24% and 21% of total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.

We focus a substantial portion of our resources on developing new products and solutions to meet our customers’ needs.

Our research and development efforts focus on developing new and complementary instruments, reagents and reagent kits, and continued operating software development.

We incurred research and development expenses of $44.2 million, $34.9 million and 24.4 million for the year ended December 31, 2023, 2022 and 2021, respectively.

We incurred research and development expenses of $39.4 million, $44.2 million and $34.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.

We intend to continue to make significant investments in research and development in the future.

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We also plan to continue to invest in sales, marketing and business development across the globe to drive commercialization of our products.

We incurred sales and marketing expenses of $49.1 million, $33.2 million and $24.7 million for the year ended December 31, 2023, 2022 and 2021, respectively.

We incurred sales and marketing expenses of $49.1 million, $49.1 million and $33.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Since our inception in 2014, we have financed our operations primarily through sales of our securities and revenue from the sale of our products and services.

Our net loss was $12.1 million for the year ended December 31, 2023, our net income was $2.5 million and $3.0 million, for the year ended December 31, 2022 and 2021, respectively.

The change for the year ended December 31, 2023 compared to the year ended December 31, 2022 resulted primarily from expenses driven by an increase in headcount and salaries and efforts in research and development and marketing initiatives.

Our net loss was $6.0 million and $12.1 million f or the years ended December 31, 2024 and 2023, respectively, and our net income was $2.5 million for the year ended December 31, 2022.

The change for the year ended December 31, 2024 compared to the year ended December 31, 2023 resulted primarily from an increase in revenues and gross profit and a reduction in operating expenses.

We expect our expenses will increase substantially in connection with our ongoing activities, as we:

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We are investing in our direct sales organization and commercial support functions and developing third-party distributor relationships to support global expansion and drive revenue growth.

As part of this effort, we increased our direct sales force by approximately 78% in the year ended December 31, 2023 compared to the year ended December 31, 2022.

We intend to continue increasing our workforce in line with our growth.

Recurring revenues

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Revenue mix and gross margin

Our revenue is primarily derived from sales of our instruments and services with our instruments recognizing higher gross margins than our services.

Although we expect sales of our instruments to continue to represent the largest

percentage of our revenue in the future, we expect reagent sales to increase as a percentage of our total revenue and our gross margins to experience a corresponding improvement as we grow our installed base and increase our focus on commercializing reagents.

We also expect a higher gross margin on our instruments as we increase manufacturing efficiency, instrument reliability and training for personnel using our instruments, which we expect to lead to a reduction in warranty claims.

Our sales in certain regions, particularly outside of the United States, are realized through third-party distribution partners that typically receive discounted prices, thus resulting in lower gross margins than those recognized by our direct sales organization.

Furthermore, our gross margins and instrument selling prices may fluctuate in the future as we continue to grow our volume of third-party distribution partners in geographies outside of the United States, introduce new products and reduce our production costs as a result of variability in the timing of new product introductions.

In the near term, we expect the continued optimization of our manufacturing processes related to our instruments and the expansion of product manufacturing distribution facilities to have the greatest impact on our gross margin.

In addition to the impact of competing products entering the market, the future gross margin profiles of our instruments, services and reagents will depend on the outcome of any royalties we are required to pay and the royalty rates and products to which such royalties apply.

Our revenue is primarily derived from sales of our instruments and services with our instruments recognizing higher revenue and gross profit than our services.

Although we expect sales of our instruments to continue to represent the largest percentage of our revenue in the future, we expect service revenue to increase as a percentage of our total revenue and our gross margins to experience a corresponding improvement as we grow our installed base and increase our focus on leveraging our fixed manufacturing and service overhead costs.

Our sales in certain regions, particularly outside of the United States, are largely realized through third-party distribution partners that typically receive discounted prices, thus resulting in lower gross margins than those recognized by our direct sales organization.

Furthermore, our instrument selling prices and gross margins may fluctuate in the future due to the impact of competing products entering the market and fluctuating foreign exchange rates and as we continue to introduce new products and reduce our production costs.

In the near term, we expect the continued leveraging of fixed manufacturing and service overhead costs, optimization of our manufacturing processes, and material cost fluctuations to have the greatest impact on our gross margin.

Expansion into new markets

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Year ended December 31, 2024 vs.

2023 2023 vs.

(In thousands) 2024 2023 2022 Dollar Change Dollar Change

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Known Trends, Events and Uncertainties

The recent trends towards rising inflation may adversely affect our business and corresponding financial position and cash flows.

Inflationary factors, such as increases in the cost of materials and supplies, interest rates and overhead costs may adversely affect our operating results.

The general consensus among economists suggests that we should expect a higher recession risk to continue over the next year, which could result in further economic uncertainty and volatility in the

capital markets in the near term, and could negatively affect our operations.

Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates continue to rise) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with COVID-19 or future public health crises, the ongoing conflict between Russia and Ukraine, the Israel and Palestine conflict or liquidity concerns at, and failure of, banks and other financial institutions.

Many of our pharmaceutical and biotech customers based in the United States have been impacted by macro-economic uncertainties related to the weakening economy, liquidity concerns in the broader financial services industry, such as those caused by recent banking failures, disruptions to and volatility in the credit and equity markets, and rising interest rates.

Recent inflation trends may adversely affect our business and corresponding financial position and cash flows.

Inflationary factors, such as increases in the cost of materials and supplies, labor and benefit costs and overhead costs may adversely affect our operating results.

Certain of our pharmaceutical and biotech customers based in the United States have been impacted by the difficult fundraising environment for small companies and generally high interest rates.

We believe these factors contributed to longer sales cycles, which adversely impacted our operating results for the three months and full year ended December 31, 2024, and may adversely affect our operating results in the future.

The strengthening of the U.S.

dollar in late 2024 against the currencies of other countries where we do business had a negative impact on revenue in the fourth quarter of 2024 and may have a continuing negative impact in the near future.

The Trump administration has signaled changes to existing U.S.

trade policies, including imposing tariffs on imports from Mexico, Canada, and China, announcing plans for reciprocal tariffs on all U.S.

trading partners, and renegotiating or potentially terminating existing bilateral and multi-lateral trade agreements.

Although we cannot predict the ultimate extent

to which the United States or other countries will impose quotas, duties, reciprocal tariffs, taxes, or other similar restrictions upon the import or export of our products, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business, the Trump administration’s imposition of tariffs as well as threatened and actual retaliatory tariffs against U.S.

goods may have a negative impact on our revenue and costs in the future.

In addition, the new license and export controls announced by the U.S.

government in January 2025 that impact exports of certain products and technology, including high-parameter and spectral flow cytometers and cell sorters and certain mass spectrometry equipment to certain countries, including China, may have a negative impact on our sales, manufacturing and research and development activities.

Finally, changes in the National Institute of Health policy with respect to grants for academic research, specifically, the reduction in indirect cost reimbursement, may impact our revenue from academic and government customers in the near term.

Components of our results of operations

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We expect our total revenue to increase in absolute dollars as we expand our sales organization and sales territories, broaden our customer base, and expand awareness of our products with new and existing customers.

Our revenue was $193.0 million, $164.0 million and $128.0 million for the year ended December 31, 2023, 2022 and 2021, respectively.

A portion of our revenue for the three and twelve months ended December 31, 2023 is attributable to the acquired FCI Business.

Our revenue was $200.5 million, $193.0 million and $164.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

A portion of our revenue for the three and twelve months ended December 31, 2024, and December 31, 2023, were attributable to the acquired FCI Business.

Total cost of sales, gross profit and gross margin

Our total cost of sales is comprised of product cost of sales and service cost of sales.

Cost of sales associated with our products primarily consist of manufacturing-related costs incurred in the production process, inventory write-downs, warranty costs, third party royalty costs, personnel and related costs, costs of component materials, overhead, packaging and delivery and depreciation expense.

Cost of sales associated with our products primarily consists of manufacturing-related costs incurred in the production process, inventory write-downs, warranty costs, third-party royalty costs, personnel and related costs, costs of component materials, overhead, packaging and delivery and depreciation expense.

Cost of sales associated with our services primarily consists of personnel and related costs, expenses related to product replacements, product updates and qualification validation of our products and depreciation expense.

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Research and development .

Our research and development expenses primarily consist of salaries, benefits, stock-based compensation costs for employees in our research and development department, independent contractor costs, laboratory supplies, equipment maintenance and materials expenses.

We plan to continue to invest in our research and development efforts, including hiring additional employees to enhance existing products and develop new products.

We expect research and development expense will increase in

absolute dollars in future periods and vary from period to period as a percentage of revenue due to our continuing investment in product development.

Our research and development expenses primarily consist of salaries, benefits, and stock-based compensation costs for employees in our research and development department, independent contractor costs, laboratory supplies, equipment maintenance and materials expenses.

We plan to continue to invest in our research and development efforts.

Research and development expense may increase in absolute dollars in future periods due to our continuing investment in product development.

Sales and marketing .

Our sales and marketing expenses consist primarily of salaries, benefits, and stock-based compensation costs for employees in our sales and marketing department, sales commissions, marketing material costs, travel expenses and costs related to trade shows, trainings and various workshops.

We expect our sales and marketing expense to increase in absolute dollars as we expand our commercial sales, marketing, and business development teams, increase our presence globally and increase marketing activities to drive awareness and adoption of our platform.

Sales and marketing expense may increase in absolute dollars in future periods.

General and administrative .

Our general and administrative expenses primarily consist of salaries, benefits, and stock-based compensation costs for employees in our executive, accounting and finance, legal and human resource functions, as well as professional services fees, such as consulting, audit, tax, legal, general corporate costs, allocated overhead expenses and acquisition costs.

We expect our operating expenses to increase as a public company.

In particular, we expect our accounting, legal, personnel-related expenses and directors’ and officers’ insurance costs reported within general and administrative expense to increase as we establish more comprehensive compliance and governance functions, maintain IT costs, review internal controls over financial reporting in accordance with the Sarbanes-Oxley Act and prepare and distribute periodic reports as required by the rules and regulations of the SEC.

Our general and administrative expenses primarily consist of salaries, benefits, and stock-based compensation costs for employees in our executive, accounting and finance, legal, and human resource functions, as well as professional services fees, such as consulting, audit, tax, legal, general corporate costs, and allocated overhead expenses.

The Company is focused on controlling our general and administrative expenses;

however these may increase in absolute dollars in future periods.

We expect our operating expenses to vary from period to period as a percentage of revenue.

As a result, our historical results of operations may not be indicative of our results of operations in future periods.

We expect these expenses to vary from period to period as a percentage of revenue.

Other income, net

Other income (expense), net

Interest expense.

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Our interest income consists primarily of interest earned on our cash and cash equivalents which are invested in cash deposits and in money market funds.

Other income, net.

Other income (expense), net.

Our income (expense), net consists primarily of foreign exchange gains and losses.

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Results of operations

Comparison of the year ended December 31, 2023 and 2022

Comparison of the years ended December 31, 2024 and 2023

The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

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(20,523) (27,845)

Other income, net

Interest expense (2,071) (2,573)

Other income (expense):

Interest income (expense), net (Notes 11, 12) 5,239 (2,071)

Interest income 5,121 6,413

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Total other income, net

(Loss) income before income taxes (15,709) 1,260

Benefit from income taxes

14,823 12,136

Net (loss) income (12,148) 2,484

Loss before income taxes (5,700) (15,709)

Provision for (benefit from) income taxes 320 (3,561)

Net loss $ (6,020) (12,148)

Foreign currency translation adjustment, net of tax 1,193 (549)

Unrealized (loss) gain on marketable securities (29) 17

Net comprehensive (loss) income $ (12,726) $ 890

Unrealized gain (loss) on marketable securities 97 (29)

Net comprehensive loss $ (4,730) $ (12,726)

Total revenue, net

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Total revenue, net increased by $7.4 million, or 4%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Revenue growth reflects steady revenue from sales of the Cytek Aurora and Cytek Northern Lights systems, an increase in revenue from sales of the Aurora CS system and revenue from the acquired FCI Business.

Revenue from the acquired FCI Business was $28.7 million for the year ended December 31, 2023.

Product revenue increased by $8.1 million, or 5%, to $156.7 million, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

The increase was driven by revenue contribution from the FCI Products, along with steady demand for the Cytek Aurora and Northern Lights systems and an increase in sales of the Aurora CS system.

Revenue growth was primarily driven by growth in service revenue partially offset by a decline in product revenue.

Product revenue decreased by $3.5 million, or 2%, to $153.3 million, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The decrease was primarily driven by less revenue contribution in 2024 from the FCI Products, upgrades, and loaders.

Unit volumes increased 8.5% for spectral and imaging products, including the Aurora and Northern Lights analyzers, Aurora CS cell sorters and Amnis imaging systems.

This was offset by lower average selling prices.

Service revenue increased by $10.9 million, or 30%, to $47.2 million, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The increase in service revenue was mainly driven by continued growth in the instruments installed base with more instruments coming off warranty and the addition of the FCI Business.

The increase in service revenue was mainly driven by continued growth in the instruments installed base with more instruments coming off warranty contributing to greater contract and time and material service revenue.

Total cost of sales, gross profit and gross margin

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Total cost of sales increased by $5.8 million, or 7%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The increase in cost of sales was driven by increases in product and service revenue, primarily due to more instruments shipped, increased material costs, and increased service and manufacturing headcount and associated personnel cost.

Total gross profit margin was 57% and 62% as a percent of total revenue for the year ended December 31, 2023 and 2022, respectively.

Gross profit margin depends on many factors, including market conditions that might affect our pricing;

The increase in cost of sales was driven by increases in product unit volume and service revenue, and was primarily due to increased material costs, increased service and manufacturing headcount and associated personnel cost, partially offset by lower warranty cost.

Total gross margin was 55% and 57% as a percent of total revenue for the years ended December 31, 2024 and 2023, respectively.

Gross margin depends on many factors, including market conditions that might affect our pricing;

product mix changes between instrument configurations;

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Gross margin 57 % 50 %

Product revenue for the year ended December 31, 2023 increased by 5%, as compared to the year ended December 31, 2022.

Product revenue for the year ended December 31, 2024 decreased by 2%, as compared to the year ended December 31, 2023.

Product gross profit for the year ended December 31, 2024 decreased by 8%, as compared to the year ended December 31, 2023.

Product cost of sales for the year ended December 31, 2024 increased by 6% as compared to the same period in 2023.

The lower product gross margins in the year ended December 31, 2023 compared to the year ended December 31, 2022 were driven primarily by higher material costs and by less favorable instrument product mix following the FCI Acquisition.

The lower product gross margins in the year ended December 31, 2024 compared to the year ended December 31, 2023 were driven by higher material costs, less favorable instrument product mix and higher production overhead costs.

Service revenue and service gross profit for the year ended December 31, 2024 increased by 30% and 49%, respectively, as compared to the year ended December 31, 2023.

Service cost of sales for the year ended December 31, 2024 increased by 11% as compared to the same period in 2023.

The higher service gross margins in the year ended December 31, 2023 compared to the year ended December 31, 2022 were mainly driven by continued growth in the instruments installed base with more instrument coming off warranty and the addition of the FCI Business.

The higher service gross margins in the year ended December 31, 2024 compared to the year ended December 31, 2023 were mainly driven by lower overhead costs as a percentage of sales due to higher revenue and greater overhead cost productivity, and lower material costs as a percentage of sales.

Operating expenses

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Research and development expenses were $39.4 million for the year ended December 31, 2024 as compared to $44.2 million for the year ended December 31, 2023.

The increase of $9.3 million in research and development expenses was primarily due to an increase of $8.8 million in headcount and personnel-related expenses, including stock-based compensation increase of $1.6 million.

This was primarily due to increased headcount from the FCI Acquisition.

The increase in research and development expenses for the year ended December 31, 2023 was primarily driven by costs relating to the FCI Business.

We expect our research and development expense to increase in absolute dollars as we continue to develop new products and enhance existing instruments and technologies.

The decrease of $4.7 million in research and development expenses was primarily due to a decrease in research and development compensation and engineering expense driven by efforts to streamline and focus our research and development efforts.

We expect our research and development expense to increase in absolute dollars going forward as we continue to develop new products and enhance existing instruments and technologies.

Sales and marketing

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Sales and marketing expenses were $49.1 million for the year ended December 31, 2024 as compared to $49.1 million for the year ended December 31, 2023.

The increase of $15.9 million in sales and marketing expenses was primarily due to an increase in headcount, commissions, and personnel-related expenses of $11.6 million, including $0.9 million stock-based compensation, an increase of $3.0 million in trade shows and other sales and marketing costs, and an increase of $1.5 million in fixed assets and intangible asset amortization costs.

This was primarily due to increased headcount from the FCI Acquisition.

We expect our sales and marketing expenses to increase in absolute dollars as we hire additional sales and marketing personnel, expand our sales support infrastructure and invest in our brand and product awareness to further penetrate the United States and the international markets.

The flat sales and marketing expenses year-over-year was due to re-organization of the commercial team to drive increased revenue with a more focused and efficient sales team.

We expect our sales and marketing expenses to increase in absolute dollars in the future as we hire additional sales and marketing personnel, expand our sales support infrastructure and invest in our brand and product awareness to further penetrate the United States and the international markets.

General and administrative

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General and administrative expenses were $43.1 million for the year ended December 31, 2024 as compared to $44.0 million for the year ended December 31, 2023.

The increase of $9.3 million in general and administrative expenses was primarily due to an increase of $5.7 million in general corporate personnel-related costs, including an increase of $2.6 million in stock-based compensation and other payroll costs, and $3.0 million of other outside service increase and related acquisition expense.

We expect to continue to incur additional general and administrative expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and the Nasdaq Stock Market, additional insurance costs, investor relations activities and other administrative and professional services.

As a result, we expect general and administrative expenses to increase in absolute dollars in future periods.

Interest expense

The decrease of $0.9 million in general and administrative expenses was primarily due to a one-time benefits of $2.6 million related to change in estimate to the royalty settlement liability, which partially offset by higher stock compensation expense.

See Note 11 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details on the legal settlement liability.

We expect to incur additional general and administrative expenses as a result of operating as a public company and for these expenses to increase in absolute dollars in future periods.

Interest income (expense), net

Year ended December 31, Change

(In thousands, except percentages) 2024 2023 Amount %

Interest expense $ (2,071) $ (2,573) $ 502 (20) %

Interest expense was $2.1 million for the year ended December 31, 2023 as compared to $2.6 million for the year ended December 31, 2022.

The decrease was mainly due to the accretion of the present value discount related to the settlement agreement with Becton, Dickinson and Company (“BD”).

See Note 11 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Interest income (expense), net $ 5,239 $ (2,071) $ 7,310 (353) %

Interest income was $5.2 million for the year ended December 31, 2024 as compared to interest expense of $2.1 million for the year ended December 31, 2023.

The $7.3 million in interest income was primarily due to a one-time benefit of $6.3 million change in estimate to the royalty settlement liability with Becton, Dickinson and Company, and $1.0 million of lower interest expense in 2024 compared to our debt instruments in China in prior year.

See Note 11 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details on the legal settlement liability.

Interest income

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Interest income $ 5,121 $ 6,413 $ (1,292) (20) %

Interest income was $6.4 million and $4.6 million for the year ended December 31, 2023 and 2022, respectively.

The increase of $1.8 million in interest income was the result of higher interest earned on our cash and cash equivalents and short term investment due to an increase in interest rates, as compared to the year ended December 31, 2022.

Interest income was $5.1 million and $6.4 million for the years ended December 31, 2024 and 2023, respectively.

The decrease of $1.3 million in interest income was primarily the result of lower cash and cash equivalents and short term investment balances as compared to the year ended December 31, 2023.

This was a result of the movement of assets from interest bearing accounts to marketable securities investment accounts which are classified as investment income rather than interest income.

Other income, net

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Other income, net was $4.5 million for the year ended December 31, 2024 as compared to other income, net of $7.8 million for the year ended December 31, 2023, respectively.

The increase of $6.8 million was primarily from short-term investment income increase during the year ended December 31, 2023.

The decrease of $3.3 million was primarily due to higher realized and unrealized foreign exchange losses in 2024.

Year ended December 31, Change

(In thousands, except percentages) 2024 2023 Amount %

Benefit from income taxes

$ (3,561) $ (1,224) $ (2,337) 191 %

Benefit from income tax was $3.6 million for the year ended December 31, 2023.

The benefit for income tax was $1.2 million for the year ended December 31, 2022.

The net change of $2.3 million for the year ended December 31, 2023 was the result of a loss in 2023 compared to profit in 2022.

Provision for (benefit from) income taxes $ 320 $ (3,561) $ 3,881 (109) %

Provision for income taxes was $0.3 million for the year ended December 31, 2024.

The benefit from income taxes was $3.6 million for the year ended December 31, 2023.

The net change of $3.9 million for the year ended December 31, 2024 was the result of a lower loss before income taxes (primarily due to the adjustment to the royalty settlement liability), higher nondeductible stock based compensation, and lower R&D and foreign tax credits and benefits due to prior year true ups and global mix of earnings, offset by lower foreign income inclusion and lower tax rates on higher foreign earnings.

Non-GAAP Financial Measure

To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles, we use constant currency revenue, which is a non-GAAP financial measure.

We believe the presentation of revenue on a constant currency basis, in addition to results reported in accordance with accounting principles generally accepted in the United States of America ( “ GAAP ” ), provides useful information about our operating performance because the constant currency presentation excludes the effects of foreign currency volatility and highlights our core operating results.

To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles, we use constant currency revenue, which is a financial measure not reported in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

We believe the presentation of revenue on a constant currency basis, in addition to results reported in accordance with GAAP, provides useful information about our operating performance because the constant currency presentation excludes the effects of foreign currency volatility and highlights our core operating results.

The presentation of revenue on a constant currency basis should be considered in addition to, but not as a substitute for, measures of financial performance reported in accordance with GAAP.

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The following table presents a reconciliation of constant currency revenue to our reported net revenue for the periods indicated (in thousands, except percentages):

Revenue Year ended

December 31, 2023 Year ended

Revenue Twelve months ended

December 31, 2024 Twelve months ended

December 31, 2023

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To date, our primary sources of capital have been through sales of our securities and revenue from the sale of our products and services.

As of December 31, 2023 and December 31, 2022, we had approximately $262.7 million and $344.0

million, respectively, in cash and cash equivalents and short term investments, which were primarily held in U.S.

As of December 31, 2024 and December 31, 2023, we had approximately $277.9 million and $262.7 million, respectively, in cash and cash equivalents and short term investments, which were primarily held in U.S.

short-term bank deposit accounts, money market funds, U.S.

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We have financed our operations primarily through sales of our securities.

In July 2021, we completed our IPO, which resulted in net proceeds to us of approximately $215.7 million.

In July 2021, we completed our initial public offering (“IPO”), which resulted in net proceeds to us of approximately $215.7 million.

We have also benefited from operating cash flows from the sale of our products and services.

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Share repurchases

On May 17, 2023, the Board approved a program for our repurchase of up to an aggregate of $50 million of our outstanding common stock.

During the three months ended December 31, 2023, we repurchased 5,332,769 shares of our outstanding common stock for a total cost of approximately $34.6 million at an average price per share of $6.49.

During the twelve months ended December 31, 2023, we repurchased 6,613,780 shares of our outstanding common stock for a total cost of approximately $44.0 million at an average price per share of $6.66.

The repurchase program was used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards.

On May 17, 2023, our board of directors approved a program for the repurchase by the Company of up to an aggregate of $50 million of its outstanding common stock.

During the three months ended December 31, 2023 , the Company repurchased 5,332,769 shares of its outstanding common stock for a total cost of approximately $34.6 million at an average price per share of $6.49.

During the twelve months ended December 31, 2023 , the Company repurchased 6,613,780 shares of its outstanding common stock for a total cost of approximately $44.2 million at an average price per share of $6.66.

The commission costs related to the repurchases were $0.1 million for both the three months and twelve months ended December 31, 2023 .

The repurchase program was used to return capital to shareholders and to minimize the dilutive impact of stock options and other stock-based awards.

The repurchased shares of common stock were retired.

The repurchase program expired on December 31, 2023 .

The commissions costs related with the share repurchases were $0.1 million for both the three months and twelve months ended December 31, 2023.

On June 6, 2024, our board of directors approved a program for the repurchase by the Company of up to an aggregate of $50 million of its outstanding common stock.

During the three months ended December 31, 2024, the Company repurchased 1,332,950 shares of its outstanding common stock for a total cost of approximately $7.0 million at an average price per share of $5.21 .

During the twelve months ended December 31, 2024 , the Company repurchased 3,971,624 shares of its outstanding common stock for a total cost of approximately $21.6 million at an average price per share of $5.41.

The repurchase program was used to return capital to shareholders and to minimize the dilutive impact of stock options and other stock-based awards.

The repurchased shares of common stock were retired.

The repurchase program expired on December 31, 2024.

Under these two repurchase programs, the Company has purchased an aggregate of 10,585,404 shares of its outstanding common stock for a total cost of approximately $65.5 million at an average price per share of $6.19.

On December 11, 2024, our board of directors approved a new program for the repurchase by the Company of up to an aggregate of $50 million of its outstanding common stock commencing January 1, 2025, to succeed the expiration of the previous $50 million repurchase program on December 31, 2024.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into law.

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Net cash provided by operating activities for the year ended December 31, 2024 was $25.4 million including net loss of $6.0 million.

We also incurred non-cash stock-based compensation expense, depreciation and amortization, amortization of right-of-use assets, interest expenses for accretion of the legal settlement liabilities and provision for excess and obsolete inventory of $22.0 million, $6.0 million, $3.2 million, $1.6 million, and $1.5 million, respectively.

We had gain on investment accretion and amortization of $6.7 million.

Cash provided included an increase in deferred revenue of $6.5 million, a decrease of inventories of $4.3 million and an increase in accrued expenses and other liabilities of $0.7 million.

This was partially offset by an increase of trade accounts receivable of $7.3 million, an increase in prepaid expenses and other assets of $9.5 million, a decrease in the legal settlement liability of $0.3 million, and a decrease of operating lease liabilities of $3.1 million, and a decrease of trade accounts payables of $1.8 million.

We also incurred non-cash stock-based compensation expense, depreciation and amortization, amortization of right-of-use assets, and provision for excess and obsolete inventory of $26.8 million, $7.2 million, $3.3 million, and $1.6 million, respectively.

We had gain on investment accretion and amortization of $5.2 million, and interest expenses for accretion of the legal settlement liabilities $7.2 million, and deferred income taxes of $2.9 million.

Cash provided included an increase in deferred revenue of $3.7 million, a decrease of inventories of $14.8 million and an increase in trade accounts payable of $2.6 million.

This was partially offset by an increase of trade accounts receivable of $5.4 million, an increase in prepaid expenses and other assets of $2.8 million, a decrease in the legal settlement liability of $1.1 million, and a decrease of operating lease liabilities of $3.2 million, and a decrease of accrued expenses and other liabilities of $0.8 million.

Net cash used in operating activities for the year ended December 31, 2023 was $5.3 million including net income of $12.1 million.

We also incurred non-cash stock-based compensation expense, depreciation and amortization, amortization of right-of-use assets, and interest expenses for accretion of the legal settlement liabilities of $16.6 million, $2.5 million, $3.2 million, and $2.2 million, respectively.

Usage of cash included an increase of inventories of $17.7 million, an increase of trade accounts receivable of $19.7 million due to an increase in sales, and an increase in prepaid expenses and other assets of $19.4 million.

This was partially offset by an increase of trade accounts payables of $1.9 million, an increase in deferred revenue of $9.4 million, an increase in accrued expenses and other liabilities of $7.5 million and an increase in the legal settlement liability of $0.4 million.

We also incurred non-cash stock-based compensation expense, depreciation and amortization, amortization of right-of-use assets, and interest expenses for accretion of the legal settlement liabilities and provision for excess and obsolete inventory of $22.0 million, $6.0 million, $3.2 million, $1.6 million, and $1.5 million respectively.

We had gain on investment accretion and amortization of $6.7 million.

Cash provided included an increase in deferred revenue of $6.5 million, a decrease of inventories of $4.3 million, an increase in accrued expenses and other liabilities of $0.7 million.

This was partially offset by an increase of trade accounts receivable of $7.3 million, an increase in prepaid expenses and other assets of $9.5 million, a decrease in the legal settlement of $0.3 million, and a decrease of operating lease liabilities of $3.1 million, and a decrease of trade accounts payables of $1.8 million.

Investing activities

Net cash used in investing activities during the year ended December 31, 2024 was $83.0 million driven by purchases of marketable securities of $274.1 million, the purchase of the Cytometric Engineering Ltd.

FlowCEL) business of $0.5 million, purchases of property and equipment of $3.5 million, purchase of intangible assets of $0.2 million, partially offset by proceeds from maturities of marketable securities of $195.0 million, and proceeds from sales of property and equipment of $0.3 million.

Net cash used in investing activities during the year ended December 31, 2023 was $93.9 million driven by purchases of marketable securities of $175.9 million, the purchase of the FCI business of $44.9 million, purchases of property and equipment of $4.6 million, purchase of intangible assets of $0.2 million, and payment of investments in Japan of $0.2 million, partially offset by proceeds from maturities of marketable securities of $132.0 million.

Net cash used in investing activities during the year ended December 31, 2022 was $55.9 million driven by purchases of marketable securities of $44.5 million, purchases of property and equipment of $9.9 million, and payment of investments of $1.6 million.

Financing activities

Net cash used in financing activities during the year ended December 31, 2024 was $15.8 million driven by $21.6 million of costs related to our share repurchase program, $0.6 million in loan repayment costs and payments for taxes related to net share settlement of equity awards of $0.6 million, partially offset by proceeds from line of credit of $4.2 million, the issuance of our common stock under our equity incentive plans of $1.0 million and the issuance of our common stock under our Employee Stock Purchase Plan of $1.7 million.

Net cash used in financing activities during the year ended December 31, 2023 was $41.8 million driven by $44.2 million of costs related to our share repurchase program, $0.6 million in loan repayment costs and payments for taxes related to net share settlement of equity awards of $0.4 million, partially offset by the issuance of our common stock under our equity incentive plans of $1.5 million and the issuance of our common stock under our Employee Stock Purchase Plan of $1.9 million.

Net cash provided by financing activities during the year ended December 31, 2022 was $5.5 million driven by proceeds from a loan of $2.9 million and issuance of our common stock under our equity incentive plans.

Contractual Obligations and Commitments

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Performance obligations are considered distinct if they are both capable of being distinct, and distinct within the context of the contract.

The Company identified the following performance obligations in the contracts:

Company identified the following performance obligations in the contracts:

product sales of instrument systems, installation on instrument systems, delivery of instrument accessories such as loaders, consumables, reagents, extended service contracts and professional services revenue for post-warranty service contracts, preventative maintenance plans, repairs, installations, training, time and material services and other specialized support services.

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For arrangements where the anticipated period between timing of transfer of services and the timing of payment is one year or less, we have elected to not assess whether a significant financing component exists.

For arrangements with terms greater than one year, payments are received up-front and are for reasons other than financing.

For arrangements with terms greater than one year, payments are either received up-front for reasons other than financing, or received according to financing arrangements and contract terms.

Revenue is recognized only to the extent that it is probable that a significant reversal of the cumulative amount recognized will not occur in future periods.

Certain of our sales contracts involve the delivery or performance of multiple products and services within contractually binding arrangements.

Significant judgment is sometimes required to determine the appropriate accounting for such arrangements, including whether the deliverables specified in a contract with multiple promises should be treated as separate performance obligations for revenue recognition purposes and, if so, how the related sales price should be allocated among the performance obligations, when to recognize revenue for each performance obligation, and the period

over which revenue should be recognized.

For most of our performance obligations, we have established the stand-alone selling prices (“SSP”) as a range rather than a single value, based on standalone sales of products.

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Contract assets are recorded when the amount of revenue recognized exceeds the amount invoiced to the customer and the right to payment is not solely subject to the passage of time.

As of December 31, 2023 and 2022, we had immaterial amounts of contract assets included within prepaid expenses and other current assets on the consolidated balance sheets.

As of December 31, 2024 and 2023, we had

immaterial amounts of contract assets included within prepaid expenses and other current assets on the consolidated balance sheets.

Contract liabilities consist of fees invoiced or paid by our customers for which the associated services have not been performed and revenue has not been recognized based on our revenue recognition criteria described above.

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Deferred revenue that is expected to be recognized during the following 12 months is recorded as a current liability and the remaining portion is recorded as noncurrent.

Business Combinations

The Company uses the acquisition method of accounting under ASC 805, Business Combinations .

Each acquired company’s operating results are included in the Company's consolidated financial statements starting on the date of acquisition.

The purchase price is equivalent to the fair value of consideration transferred.

Tangible and identifiable intangible assets acquired and liabilities assumed as of the date of acquisition are recorded at the acquisition date fair value.

Goodwill is recognized for the excess of purchase price over the net fair value of assets acquired and liabilities assumed.

Amounts allocated to assets and liabilities are based upon their fair values.

Such valuations require management to make significant estimates and assumptions, especially with respect to the identifiable intangible assets.

Management makes estimates of fair value based upon assumptions believed to be reasonable and that of a market participant.

These estimates are based on historical experience and information obtained from the management of the acquired companies and

the estimates are inherently uncertain.

The separately identifiable intangible assets generally include developed technology, customer relationships, trade names, and reagent licenses.

Goodwill and intangible assets

We recognize goodwill in accounting for business combinations based on the amount by which the total consideration transferred, exceeds the fair value of identifiable assets acquired and liabilities assumed.

Identifiable intangible assets other than goodwill are primarily comprised of patents and trademarks which amortize on a straight-line basis over an assigned useful life based on management’s estimate of the period the asset is expected to contribute to future cash flows.

We assess our goodwill and indefinite-lived intangible assets for impairment at least annually in the fourth quarter, or more frequently if factors indicate impairment may exist.

Our qualitative goodwill impairment analysis consists of assessing whether any events or circumstances listed in ASC 350-20-35-3A (“triggering events”) existed or occurred in the year under review to the date of the financial statements.

The qualitative analysis assesses macroeconomic conditions, market, and industry considerations, change in cost factors, overall company financial performance, and any events affecting the reporting unit.

Based on the qualitative analysis results, we determined that it is more likely than not that the fair values of the reporting unit exceed the carrying value and that no triggering events were noted that would require a quantitative impairment assessment in the fiscal year.

Legal Settlement Liability

In the fourth quarter of 2024, we determined that it was necessary to revise our long-term forecasted net sales subject to royalties under the BD settlement as a result of the current macroeconomic conditions and headwinds.

As a result, we remeasured the fair value of the legal settlement liability presented in the Consolidated Balance Sheets as of December 31, 2024.

Based on the updated forecast, we recorded a $7.3 million reduction of the legal settlement liability, with a corresponding change to interest income (expense), net in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2024.

See Note 11 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

Stock-based compensation

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Dividend yield — — —

Expected volatility—Expected volatility is estimated by studying the volatility of selected industry peers deemed to be comparable to our business corresponding to the expected term of the awards.

Expected volatility—Expected volatility is estimated by analyzing the historical volatility of selected industry peers, and the Company's historical market data for the assessment corresponds to the expected term of the awards.

Expected term—Expected term represents the period that our stock-based awards are expected to be outstanding and is determined using the simplified method.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis