SOPHiA GENETICS SA (SOPH) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates positive aspects such as revenue growth, strong net dollar retention, and strategic partnerships. The Q&A section adds confidence in customer onboarding and ASP trends, despite some regional challenges. The company's strategic focus on biopharma and platform expansion, along with optimistic guidance, suggests a favorable market reaction. While cash burn increased, it was due to strategic investments. Overall, the sentiment is positive, with strong growth drivers and strategic partnerships likely supporting a stock price increase.
Key Financial Performance
Revenue Total revenue for the first quarter was $21.7 million compared to $17.8 million for the first quarter of 2025, representing year-over-year growth of 22%. The growth would have been slightly stronger if not for a one-time benefit in the prior year period from a customer true-up.
Platform Analysis Volume Approximately 108,000 in Q1 compared to 93,000 in the first quarter of 2025, representing solid growth of 16%.
U.S. Volume Growth U.S. volumes grew 28% year-over-year in Q1.
APAC Volume Growth APAC volumes grew 31% year-over-year in Q1.
EMEA Revenue Growth Revenue grew 30% year-over-year, driven by strong performance in the U.K., Belgium, and Switzerland.
Hem/Onc Revenue Growth Hem/Onc revenue grew 24% year-over-year.
Rare and Inherited Growth Volumes grew over 20% as the enhanced exome product begins to come online.
Liquid Biopsy Analysis 3,000 liquid biopsy analyses were performed in Q1, up more than 100% year-over-year.
Core Genomic Customers 537 as of March 31, up from 490 in the prior year period.
Net Dollar Retention 117%, up from 103% in the prior year period.
Gross Profit $14.7 million compared to $12.2 million in the prior year period, representing growth of 21%. Gross margin was 68.0% compared to 68.7% for the first quarter of 2025.
Adjusted Gross Profit $16.4 million, an increase of 22% compared to adjusted gross profit of $13.4 million in the prior year period. Adjusted gross margin was 75.4% compared to 75.7% for the first quarter of 2025.
Operating Loss $17.3 million compared to $16 million in the prior year period.
Adjusted EBITDA Loss of $9.2 million compared to the prior year loss of $9.5 million.
Cash Burn $19.5 million compared to $11.7 million in the prior year period. The increase reflects higher bonus and commission payouts, investment in a new lab, and litigation costs.
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Operating Highlights
SOPHiA DDM: Achieved record 108,000 genomic analyses in Q1 2026, with 40,000 patients analyzed in March alone. Expanded capabilities to include liquid biopsy, solid tumor, MRD for AML, and enhanced exomes. Focused on supporting larger NGS applications, multimodal capabilities, and regulated products.
New Applications: MSK Impact and MSK Access tests reached 100 customers globally within two years. Liquid biopsy analysis grew over 100% year-over-year in Q1 2026.
Global Expansion: Connected 537 institutions across 75 countries, with real-time genomic data from 108,000 patients in Q1 2026. Expanded partnerships with Mount Sinai and other U.S. institutions for decentralized testing.
Biopharma Partnerships: Signed contracts with AstraZeneca, Johnson & Johnson, and others. Developed a global decentralized companion diagnostics offering.
Operational Efficiency: Achieved adjusted gross margin of 75.4%. Implemented AI tools for productivity, reduced headcount and non-labor costs, and optimized cloud compute and storage costs.
Strategic Shifts: Focused on deepening clinical relationships, expanding platform capabilities, and evolving data sets into commercial assets for real-world evidence. Targeting profitability by the end of 2026 and positive adjusted EBITDA in the second half of 2027.
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Risk or Challenges
Foreign Exchange Headwinds: The strengthening of the Swiss franc against the U.S. dollar has increased the dollar-translated costs of Swiss payroll and facilities, negatively impacting reported operating expenses.
Patent Infringement Litigation: Guardant Health filed patent infringement claims against SOPHiA GENETICS, leading to significant legal expenses and potential financial and operational risks.
Cash Burn Increase: Year-over-year cash burn increased due to higher bonus and commission payouts, investments in new lab infrastructure, and litigation costs, potentially impacting liquidity.
Middle East Conflict: Ongoing conflict in the Middle East poses potential risks to shipping and customer activity in the region, though no material impact has been observed yet.
Volatile Exchange Rates: Exchange rate volatility due to macroeconomic uncertainties could impact reported financial results.
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Guidance & Outlook
Revenue Guidance for 2026: SOPHiA GENETICS reaffirmed its full-year revenue guidance for 2026 at $92 million to $94 million, representing 20% to 22% growth on a reported basis. Growth is expected to be back-half weighted as new business signed in 2025 comes online in the second half of the year.
Adjusted EBITDA Guidance for 2026: The company reaffirmed its full-year adjusted EBITDA loss guidance of $29 million to $32 million, compared to $41.5 million in full-year 2025. SOPHiA GENETICS expects to approach adjusted EBITDA breakeven by the end of 2026 and achieve positive adjusted EBITDA in the second half of 2027.
Gross Margin Outlook: Gross margins are expected to slightly expand beyond 2025 levels due to targeted investments in platform optimization, including cloud compute and storage costs.
Market and Regional Trends: The U.S. market is experiencing increased demand for decentralized testing, with hospitals and labs scaling their testing capabilities. APAC and EMEA regions are also showing strong growth, with APAC volumes growing 31% and EMEA revenue growing 30% year-over-year in Q1 2026.
New Applications and Product Expansion: The company plans to expand platform capabilities to support larger, more complex NGS applications, track patients longitudinally with MRD, and develop increasingly regulated products. Additionally, SOPHiA GENETICS aims to expand beyond genomics into multimodal capabilities to support clinical decision-making.
Biopharma Partnerships: SOPHiA GENETICS is seeing increased momentum with biopharma, with recent contracts signed with AstraZeneca, Johnson & Johnson, and others. The company plans to develop a global decentralized companion diagnostics offering and evolve its data sets into durable commercial assets for real-world evidence.
Operational Efficiency and Cost Management: The company is focused on growing sustainably by optimizing costs, adopting AI tools, and maintaining operating expenses in local currencies. Recent cost actions have allowed for reinvestment in high-growth areas while ensuring profitability commitments are met.
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Shareholder Return Plan
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Key Q&A
Q:Can you provide insights into the adjusted gross margin of 75% and its sustainability moving forward?
A:The management highlighted the benefits of modernizing their platform over the past 24 months, leading to scalability and positive pricing dynamics. They noted that the mix of more complex solutions and value realization is constructive. While there might be some lumpiness due to the pharma business, they are holding to their full-year guidance of modest improvement in gross margins.
Q:What regions were impacted by the cost reduction actions in April, and how does this affect headcount?
A:The cost reduction was small and focused on G&A functions, with no significant geographic bias. Some headcount redeployment will occur in the U.S., particularly on the commercial side, to grow market share. The actions align with maintaining cost discipline and profitability targets.
Q:Are you confident in onboarding new customers to the DDM platform in the second half of the year?
A:Management expressed confidence in customer onboarding and progression, citing strong signals and a record quarter. They emphasized the visibility of the back-half ramp and the role of AI initiatives in speeding up time to revenue. They remain conservative but optimistic about exceeding commitments.
Q:What drove the net dollar retention rate of 117%, and what are the contributing factors?
A:The retention rate was driven by a mix of customers expanding into multiple applications and uptake of higher ASP tests like MSK ACES. Management highlighted organic growth, low churn, favorable pricing, and new technologies like liquid biopsy as contributing factors.
Q:Can you elaborate on the trends in the Latin America business, which was down over 30% in Q1?
A:The Latin America business faced challenges, particularly in Brazil, leading to a leadership change. Management is optimistic about Mexico, Colombia, and Argentina and expects the region to return to growth. They noted the region's sensitivity to pharma pipelines and upcoming new drugs as potential growth drivers.
Q:What is the typical onboarding time and ramp for MSK ACES, and how is it performing?
A:MSK ACES has been adopted by 100 accounts globally, with varying onboarding times and ramp rates. About half of the accounts are online and ramping, with more impact expected over the next several quarters. Management is focused on improving oncologist education to drive higher utilization.
Q:How does the pharma business compare to the clinical business, and what is its strategic importance?
A:The pharma business has shown recovery and is now contributing positively to growth. Management emphasized its strategic importance, particularly in driving clinical adoption through platforms like MSK ACES. They are focusing on recurring and scalable business rather than one-off projects.
Q:What are the expectations for average selling price (ASP) trends for the remainder of the year?
A:Management expects ASP to increase due to higher-value tests and growth in emerging markets like India and Turkey. They noted a $2 sequential increase in clinical ASP in Q1 and anticipate continued lift throughout the year.
Q:Did the pharma business perform as expected in Q1, and what are the expectations for the rest of the year?
A:The pharma business performed well, meeting expectations. Management remains conservative in their guidance but is optimistic about sequential improvement and a step-up in the second half of the year. They highlighted the improved mix of diagnostics and data as a positive indicator.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact timeline for onboarding new customers to the DDM platform and the precise impact of cost reduction actions on headcount. Additionally, while they expressed optimism about the Latin America business and pharma business recovery, they did not provide concrete data or timelines for these improvements.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
GENETICS Conference
Guardant Health
Johnson
MRD
New York
SOPHiA GENETICS
adoption loop
application biopsy
care hospital
companion diagnostics
conflict
cost action
drug
dynamic
economics
effect
expand
facility
genomics
hospital lab
innovation
institution SOPHiA
institution world
life
litigation
mid
outcome
patent infringement
profitability
result outlook
series cost
strategy partner
testing capability
theme momentum
tool AI
trust
turnaround time
world evidence
SOPH Transcript
SOPHiA GENETICS SA (SOPH) Q1 2026 Earnings Call Transcript
Positive5-5
The earnings call summary indicates positive aspects such as revenue growth, strong net dollar retention, and strategic partnerships. The Q&A section adds confidence in customer onboarding and ASP trends, despite some regional challenges. The company's strategic focus on biopharma and platform expansion, along with optimistic guidance, suggests a favorable market reaction. While cash burn increased, it was due to strategic investments. Overall, the sentiment is positive, with strong growth drivers and strategic partnerships likely supporting a stock price increase.
SOPHiA GENETICS SA (SOPH) Q4 2025 Earnings Call Transcript
Positive3-3
The earnings call summary and Q&A highlight strong growth prospects, including raised revenue guidance, increased customer base, and strategic investments in high ROI activities. Despite uncertainties in the pharma segment, the company shows balanced growth across sectors and a positive trend in net dollar retention. Cost optimizations and improved cash burn, along with optimistic guidance, contribute to a positive outlook. The market expansion and customer growth further support a positive sentiment, likely leading to a stock price increase in the short term.
SOPHiA GENETICS SA (SOPH) Q3 2025 Earnings Call Transcript
Positive11-4
The earnings call presents a positive outlook with strong financial metrics, including a 13% YoY improvement in adjusted EBITDA and stable customer retention. The AstraZeneca partnership and growth in clinical and biopharma segments are promising, despite conservative guidance. The Q&A reveals strong momentum and optimism for 2026, with significant potential from MSK-ACCESS and biopharma segments. While some details remain confidential, overall sentiment is positive, suggesting a potential stock price increase of 2% to 8% over the next two weeks.
SOPHiA GENETICS SA (SOPH) Q2 2025 Earnings Call Transcript
Positive8-5
The earnings call highlights strong U.S. market growth, improved gross margins, and significant partnership expansion with AstraZeneca, which is the largest in the company's history. Despite an increase in operating loss, the company's strategic focus on new applications, customer growth, and cost management reflect a positive outlook. The Q&A section reinforces this sentiment with optimistic guidance on product adoption and contract value increases. Although management was conservative about disclosing specific contract sizes, the overall narrative suggests positive momentum, warranting a 'Positive' sentiment rating.
SOPH Report
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