On August 3, 2023 NanoString Technologies, Inc. (NASDAQ:NSTG), a leading provider of life science tools for discovery and translational research, reported financial results for the second quarter ended June 30, 2023 (Press release, NanoString Technologies, AUG 3, 2023, View Source [SID1234633759]).

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"Strong growth in our spatial biology business and continued durability in our nCounter business helped us generate record revenue during the second quarter," said Brad Gray, President and CEO of NanoString. "We expect to continue to benefit from substantial CosMx instrument order backlog through the back half of the year and into 2024, providing visibility into revenue growth and anticipated reductions in our working capital requirements, cash burn and operating loss."

Second Quarter Financial Highlights

•Total revenue of $44.2 million
•Spatial biology revenue of $23.3 million
•nCounter revenue, inclusive of all service and other revenue, of $20.9 million
•Cash, cash equivalents and short-term investments balance of $117.6 million as of June 30, 2023
Spatial Biology
•Accelerated CosMx shipments during Q2, resulting in Q2 spatial biology instrument revenue growth of 188% year-over-year
•Successfully defended substantial CosMx instrument order book, fulfilling or retaining approximately 97% of cumulative orders as of June 30, 2023
•Captured new orders for spatial biology instruments at a rate exceeding the Q1 pace, and retained more than $35 million in CosMx instrument order backlog as of June 30, 2023
•Recorded spatial biology consumables revenue growth of 44% year-over-year, and approximately $85,000 of annualized pull-through, driven by a steady GeoMx consumables pull-through over a larger installed base supplemented by growing shipments of CosMx consumables
•Partnered with Owkin and world-leading cancer research institutions and announced the launch of Multi Omic Spatial Atlas in Cancer (MOSAIC) at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper)’s annual meeting. MOSAIC is a project designed to revolutionize cancer research and unlock potential new breakthrough treatments through the use of spatial omics, which can leverage AI to help reveal the location and molecular activity of tumor and immune cells by providing a spatial atlas of cancer cells
•Partnered with Acrobat Genomics and the Illumina Accelerator to collaborate with Stanford Medicine to discover new drug targets for gene editing-based therapeutics using GeoMx Digital Spatial Profiler (DSP) technology
•Grew total spatial biology system installed base to approximately 445 systems, an increase of approximately 41% year-over-year
•Total peer-reviewed publications featuring our spatial biology platforms were approximately 280 as of June 30, 2023, representing an increase of approximately 150 publications in the last 12 months
nCounter
•Recorded nCounter consumables revenue growth of approximately 8% year-over-year and approximately $46,000 of annualized pull-through
•Total installed base of our nCounter platforms of approximately 1,135, an increase of approximately 5% year-over-year
•Total peer-reviewed publications featuring nCounter were approximately 7,075 as of June 30, 2023, representing an increase of approximately 1,275 publications in the last 12 months
Guidance
Management reiterated its full year guidance, which remains as follows:
•Total revenue of $175 to $185 million
◦Spatial biology revenue of $100 to $105 million
◦nCounter revenue, inclusive of all service and other revenue, of $75 to $80 million
•Adjusted EBITDA loss of $65 to $75 million

Financial Results

We have elected to present selected non-GAAP, or adjusted, financial measures, including Adjusted EBITDA. These adjusted financial measures are calculated excluding certain items that may make it more challenging to compare our GAAP operating results across periods. Such items may include stock-based compensation, depreciation and amortization, or one-time charges such as transaction related fees and expenses or restructuring charges and severance costs. A reconciliation of adjusted financial measures to the nearest comparable GAAP financial measure can be found in the tables at the end of this press release.
(dollars in thousands) Three Months Ended June 30,
GAAP Non-GAAP
2023 2022 2023 2022
Revenue $ 44,157 $ 32,219 $ 44,157 $ 32,219
Cost of revenue 29,757 15,852 27,168 14,756
Gross margin 33 % 51 % 38 % 54 %
Research and development 18,214 17,346 14,428 14,474
Selling, general and administrative 39,076 36,112 29,260 30,224
Adjusted EBITDA N / A N / A $ (26,699) $ (27,235)
Non-operating expense, net (778) (2,148) (778) (2,148)
Net loss $ (43,668) $ (39,239) $ (27,477) $ (29,383)

Six Months Ended June 30,
GAAP Non-GAAP
2023 2022 2023 2022
Revenue $ 79,962 $ 63,299 $ 79,962 $ 63,299
Cost of revenue 52,628 30,630 47,720 28,545
Gross margin 34 % 52 % 40 % 55 %
Research and development 34,332 34,763 27,083 29,430
Selling, general and administrative 76,442 72,467 59,022 59,621
Adjusted EBITDA N / A N / A $ (53,863) $ (54,297)
Non-operating expense, net (1,466) (4,178) (1,466) (4,178)
Net loss $ (84,906) $ (78,739) $ (55,329) $ (58,475)

Supplemental Information
As a supplement to the table above, we have posted to the investor relations section of our website, at View Source, supplemental financial data that include our adjusted financial measures as compared to the nearest comparable GAAP financial measures, for the second quarter of 2023 and the six months ended June 30, 2023, and for each quarter of and the full year of 2022.

Conference Call

Management will host a conference call today beginning at 1:30 pm PT / 4:30 pm ET to discuss these results and answer questions. Investors and other interested parties can register for the call in advance by visiting View Source Following registration, an email confirmation will be sent including dial-in details and unique conference call codes for entry. Registration is open throughout the call, but to ensure connection for the full call, registration in advance is recommended. The link to the webcast and audio replay will be made available at the Investor Relations website: www.nanostring.com. A replay of the call will be available beginning August 3, 2023 at 7:30pm ET through midnight ET on August 17, 2023. To access the replay, dial (800) 770-2030 or (647) 362-9199 and reference Conference ID: 72369. The webcast will also be available on our website for one year following the completion of the call.