Olink Holding AB (publ)

F:6XA

Earnings Call Transcript 2022-Q4

[Operator]

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Olink Proteomics Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there’ll be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker host today Jan Medina, Vice President, of Investor Relations and Capital Markets. Please go ahead, sir.

[Jan Medina]

Thanks, Libya, and good morning, everyone. Thank you all for participating in today's conference call. On the call we have from Olink, we have Jon Heimer, Chief Executive Officer; Carl Raimond, Chief Commercial Officer; and Oskar Hjelm, Chief Financial Officer.

Earlier today, Olink released financial results for the fourth quarter that ended December 31, 2022, and a copy of the press release and an updated corporate presentation is available on the company's website.

Before we begin, I'd like to remind you that Management will make statements during this call that include forward-looking statements within the meaning of the U.S. federal securities laws, which are made pursuant to the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Any statements contained in this call that relate to expectations or predictions of future events, results, or performance, are forward-looking statements. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. For a list and descriptions of the risks and uncertainties associated with Olink's business, please refer to the risk factors section on Form 20-F, commission file number 001-40277, filed with the U.S. Securities and Exchange Commission on March 17, 2022, and in our other filings with the SEC. We urge you to consider these factors and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance.

Also in our remarks or responses to questions, management may mention some non-IFRS financial measures. Reconciliations of adjusted gross profit and EBITDA, constant currency revenue growth, and certain other non-IFRS financial measures to the most directly comparable IFRS measures, are available in the recent earnings press release available on the company's website.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 21, 2023. Olink disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise, except as required by law.

And with that, I will turn the call over to Jon. Jon?

[Jon Heimer, Chief Executive Officer]

Thank you, Jan, and good morning, everyone, and thanks for joining Olink's fourth quarter 2022 earnings call. I'll begin with a review of Olink's 2022 accomplishments, including recent operational, financial, and strategic milestones. I'll then turn the call over to Carl, for details on our very strong commercial results and guidance. And then Oskar will discuss the company's financial performance.

Q4 was another strong quarter and 2022 was another strong year for Olink. Our performance would not be possible without the enormous talent and drive of the entire organization. Olink met or exceeded every major corporate goal and put even more distance between us and our competitors.

Through science and customer-based market development, product design, and industry-leading execution, Olink has become the leader of the modern proteomic field, creating new insights at an unprecedented scale across the entire research and development continuum.

Over time, we expect Olink will enable proteomics to define a new approach to treating disease, providing new options for patients and all healthcare stakeholders. Proteomics is quickly becoming the most relevant OMNIC [ph] for researchers and drug developers worldwide.

In the fourth quarter, we delivered revenue of $57.9 million, representing 33% growth over the fourth quarter of 2021. While the full-year 2022 revenues were $139.8 million, a 47% increase compared to the full year 2021. Once again, the quarter was highlighted by strong growth from Explore Kits, and Kits revenue overall, demonstrating strong progress in our product mix goals.

Other quarterly highlights included profitability, another record number of explorer externalizations, and continued strong performance in the low and mid-plex markets by Signature Q100 and Target. We continue to see an expansion of proteomic workflows within customer counts throughout the entire Olink portfolio. This includes exploring users adopting the Signature and Target platforms as their work demands, as well as low to mid-plex users moving towards hi-plex projects.

As we showcased on our investor day last November, Q4 was not simply about excellent financial performance, but also about innovation. We continue to make progress in expanding the number of validated PA assays, and by the end of 2022, we had a library of more than 5,000 carefully validated by our market Targets. Surpassing an important internal R&D milestone toward our goal of increasing throughput and simplifying workflows with the Olink platform.

Also, in Q4, we launched Olink Insight, an open-access platform for the global research community and Olink customers to share data and insights that will accelerate the value created by proteomics. We also launched Olink Flex, a made-to-order product that allows customers to create small protein panels from our library while offering both relative and absolute complication.

After achieving the significant milestone of 1,000 published research studies in November, the number of PA-based publications continues to increase, with a total now reaching more than 1100, covering every major therapeutic category from research and discovery to the downstream clinical settings.

One such publication from Professor Charlotte Teunissen Group in Amsterdam provides a striking example of large-scale biomarker discovery that can be used to identify and validate protein Signature using one scalable technology, in this case, PA.

In a study, looking at different stages of AD, non-AD dementia, and healthy controls, her team characterize CSF proteomes or people using 11 Olink Target 96 panels. The discovery phase identified over 100 proteins dysregulated in AD and with data-driven modeling identified an eight-protein Signature and a 99-protein Signature, both discriminating AD from non-AD dementia with the strong area under the curves.

12 proteins were then selected to construct a custom biomarker panel that showed high performance in a validation study, with an AUC of 0.95 for AD versus controls, and 0.79 for AD versus non-AD dementia. With the incredible challenge that Alzheimer's disease poses to human health, new advances such as this will be needed to improve outcomes.

In summary, Olink continues to drive both the science and innovation of proteomics, delivering for customers and patients across life sciences and around the world, and we look forward to continuing this tradition in the months and years ahead.

I'll now turn the call over to Carl to provide a few more details on the quarter. Carl?

[Carl Raimond, Chief Commercial Officer]

Thank you, Jon. First, I'd like to thank the entire commercial team for their incredible efforts yet again during the fourth quarter and the entire year, your efforts and results have been truly remarkable. As for the quarter, fourth quarter growth was driven by strength broadly across our customer base with a high level of interest from both academic and biopharma customers. We continue to see significant interest from service providers for both Explore and Signature, while our presence with service providers is still in -- its early innings, we believe this growing interest bodes very well for the future.

Regarding the year-end spending environment, during the quarter, we noticed that the end-of-year budget flush environment was not quite as robust as we had seen in previous years. However, the appetite for proteomic spending and Olink specifically continued to be strong, leading us to believe that in our segment of omics [ph], spending remained a priority for customers, even as headwinds arose on a macro basis.

Now to specifics of the quarter's results driven by the robust performance of our Kit business and Explore platform, total revenue grew 33% and 47% in Q4 and full year 2022 respectively. In Q4, this total was comprised of $30.6 million in Kit revenue, $23.4 million in analysis services revenue, and $3.9 million in other.

Once again, Kit mix strongly improved quarter-over-quarter and for the full year, reaching 53% and 39% for Q4 and full year 2022 respectively. Overall Kits revenue doubled in 2022 versus 2021.

Other revenue totaled $3.9 million in Q4 2022, which incorporated reduced Agrisera revenue as it focused on internal Olink R&D activities rather than external sales. For the full year 2022, other revenue was $11.7 million up 48%.

Total Explore revenue of $43.2 million was 75% of our total revenue in Q4 and on a trailing 12-month basis represented 71% of total revenue. We doubled Explore externalizations in 2022, adding 12 in Q4 alone and 23 in the second half, reaching 52 by year-end 2022. Q4 Explore externalizations were the most ever during a single quarter. These installations in aggregate represent nearly $1.1 million in annual sample volume potential and we achieved roughly $800,000 in average customer pull-through during the 12 months that ended December 31, 2022.

We also delivered 28 new Signature instruments to customers in Q4 and more than tripled the installed base during 2022, reaching a total of 91 by the end of the year. Signature adoption continues to show our strength in the mid and low-plex segments with uptake by new and existing customers. We've also seen an increasing number of institutions that now have multiple Signature instruments, which bodes well for 2023 prospects.

In addition to the strong performance from both Signature and Explore, in the fourth quarter, we also introduced Olink Insights and Olink Flex, which allow for a more customized proteomics research process and both addressing eager customer needs. We view continued product development like this to be a key differentiator for Olink as a leader of the modern proteomics era.

In addition to continued investment in our internal product development pace and capability, we are also actively monitoring external investment opportunities, including bolt-on M&A to augment our antibody antigen development and supply chain capabilities. We are focused and disciplined in our valuation of external opportunities and we believe it is imperative to find a partner, who shares Olink's cultural commitment to innovation and value to customers.

Investing in talent, remained a top priority in 2022 as well. We started the fourth quarter with 548 employees and reached 582, upon entering the New Year, including 208 full time employees on the commercial team.

Lastly, as you recall, we provided 2023 guidance, just over a month ago and we are reiterating that guidance today. We expect full year 2023 reported revenue to be in a range of $192 million to $200 million, representing growth of approximately 37% to 43% over 2022. In 2023, we expect another year of strong execution in the sizable and expanding proteomics market that offers significant runway for Olink's growth.

I'll now turn the call over to Oskar to provide additional financials.

[Oskar Hjelm, Chief Financial Officer]

Thanks, Carl, and hello, everyone. As we announced last month, revenue growth was strong once again in the fourth quarter of 2022, up 33% on a reported basis and up 37% on a constant currency basis. For the full year 2022 reported revenue growth was 47% and constant currency growth was 53%. We continue to invest in line with our strategic plan, reporting adjusted EBITDA of positive $14.9 million for the fourth quarter of 2022, as compared to negative $1.4 million for the fourth quarter of 2021.

Full year adjusted EBITDA was negative $3.9 million in 2022 versus negative $18.5 million in 2021. Clearly demonstrating the inherent leverage in our business model.

As Carl mentioned, at the end of Q4, we had 52 externally placed revenue generating Explore installations, even with a significant number of new externalizations in the fourth quarter and second half of 2022, average customer pull through over the last 12 months was a strong 800

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in quarter-to-quarter pull through, which could be further impacted by our customer spending seasonality. Overall, though, we anticipate continued growth over time.

Driven by a very strong performance from Explore as well as Target, the total Kits revenue for the fourth quarter doubled to $30.6 million as compared to $15.3 million for the fourth quarter of 2021. Analysis Service revenue for the fourth quarter of 2022 was $23.4 million versus $23.7 million for the fourth quarter of 2021. In line with Olink's goal of driving product mix to Kits.

In addition, while year-over-year analysis services revenue declined 1% in Q4 2022 on a reported basis, it grew approximately 30% when adjusting for the completion of the UKB project. The mix of Kits versus analysis services continue to improve quarter-over-quarter from 42% of total revenue in Q3 to 53% of total revenue in Q4, with a kit mix for all of '22, representing 39% of total revenue increasing from 28% for the full year of 2021.

Led by sale of Signature Q100 instrument, other revenue was $3.9 million for the fourth quarter, as compared to $4.7 million for the fourth quarter of '21. Full year 2022 other revenues totaled $11.7 versus $8 million for 2021. As Carl discussed, other revenue was impacted by Agrisera and our strategic Focus on internal Olink R&D activities rather than external sales.

By geography, revenue during the fourth quarter of 2022 was $31.9 million in North America, $20 million in EMEA including Sweden, and $6 million in China, the rest of the world, including Japan. The year-over-year revenue in EMEA decreased 1% for the fourth quarter on a reported basis and grew approximately 40% when adjusting for the completion of the UK Biobank project.

By geography revenue during the full year of 2022 was $66.5 million in North America, $57.7 million in EMEA, and $15.6 million in China and the rest of the world. Consolidated adjusted gross profit was $44 million in the fourth quarter of 2022 as compared to $26.5 million in the fourth quarter of 2021. Full-year 2022 adjusted gross profit totaled $97.9 million versus $61.3 million for 2021.

The adjusted gross profit margin for Kits was 87.6% for the fourth quarter of 2022, as compared to 85.1% for the fourth quarter of 2021. The full-year 2022 adjusted gross profit margin for Kits was 88.4% versus 86.4% for 2021.

Q4 2022 adjusted gross profit margin for analysis service was 66.9% as compared to 50.2% in Q4 2021. The increase in analysis service margin in the fourth quarter of '22 was due to the completion of the UK Biobank project earlier in the year, and continuous improved operational efficiency in the service lab. The analysis services team has performed tremendously well over the past couple of years with the delivery of the UK Biobank project and the continuous efforts to improve efficiency in operations.

As we enter the fourth quarter, service margins reverted to the more normalized levels of service historically. Full-year 2022, the adjusted gross profit margin for analysis service was 60.1% versus 57.3% for 2021. The adjusted gross profit margin for others was 40.6% in Q4 of 2022 as compared to 34.1% in Q4 of 2021.

Total operating expenses for the fourth quarter of 2022 were $34.9 million as compared to $33.1 million for the fourth quarter of 2021. Full-year 2022 total operating expenses were $125.1 million compared to $102.9 million for 2021. The increase in full-year 2022 was largely due to continued investment in Olink's commercial organization, research and development, and additional public company costs.

Operating expenses are broken out as follows: Selling expenses for Q2 of 2022 were $13.4 million versus $12 million for Q4 2021, administrative expenses for Q2 2022 were $13.9 million versus $11.8 million for Q4 2022, and R&D total $6.6 million and $8.7 million for Q4 2022 and Q4 2021 respectively.

Other operating loss was $1.1 million in a quarter as compared to otherwise in loss of $600,000 in Q4 2021. Net income for the fourth quarter was $5.4 million as compared to a net loss of $8 million for the fourth quarter of 2021. Net income per share was $0.05 as compared to a loss of $0.07 per share for the fourth quarter of 2021. The net loss for the full year of 2022 was $12.9 million as compared to a net loss of $38.3 million for the full year of 2021. The net loss per share was $0.11 as compared to a net loss per share of $0.43 in the full year of 2021.

We ended 2022 with $75 million in cash and cash equivalent, after the close of the fourth quarter, we successfully executed a primary offering that raised $95 million with both our cash balance following the financing to more than $170 million. With respect to our cash balance, we will remain focused and disciplined with the use of the balance sheet and expect to operate within our profitability guidance.

Including our plan is the acceleration of investment in several internal strategic initiatives such as the further expansion of our protein library and asset development. Additionally, we will continue to evaluate external opportunities to augment our capabilities to achieve our long-term strategic goals.

As we enter 2023. The external opportunity set continues to evolve with both quality asset availability and pricing seeming to be more reasonable than in prior periods. As with our previous investments, we tend to remain focused on delivering value to our customers and shareholders over time with a continued discipline around the use of our balance sheets.

Now to our guidance. When considering the continued presence of multiple macroeconomic headwinds this year, Olink expects another strong year of growth with industry-leading growth in 2023. We expect 2023 full-year reported revenue growth to be in the range of $192 million to $200 million, representing growth of approximately 37% to 43% on a reported basis, and roughly 38% to 44% on a constant currency basis.

Olink also expects revenue in 2023 will continue to progress along a seasonal pattern similar to 2021 that is weighted to the second half of the year and fourth quarter specifically. In addition, Olink believes it will turn to profitability in 2023 as measured by EBITDA excluding share-based compensation expenses. Looking forward ahead, Olink has only just started penetrating the proteomic market segments it operates in from high to low-plex and sees tremendous headroom for continued strong growth.

I'll now turn the call over to Jon for his concluding remarks.

[Jon Heimer, Chief Executive Officer]

Thank you, Oskar, and thank you, Carl and Jan. Olink's leadership in proteomics continues to grow, benefiting from increasingly broad adoption across Flex and across customer segments. And across the globe. At this point, we'll open up the call for questions. Operator?

[Operator]

Thank you. [Operator Instructions]. And our first question coming from the line of Puneet Souda with SVB Securities. Your line is open.

[Puneet Souda, SVB]

Hi, John and Oskar. Thanks for taking the questions. So first of all, congrats on the quarter and impressive 2022, especially with respect to the Explore installs. So maybe if I could start there. I think the important question, given the growth in the Explore installs that you have seen in the second half is, how should we think about the cadence of those installs this year? I think, you have commented in past, obviously, these could be lumpy. It takes times to get these externalizations completed.

So maybe just talk to us about that and how should we think about the cadence of installs and Explore installs for 2023?

[Carl Raimond, Chief Commercial Officer]

Puneet, this is Carl. I'll take that. Yes. So, yes, we continue to see a good pipeline. We continue to see demand. I think as you indicate, there will be -- there is some seasonality, associated with that. But we expect to see the Explore install base continue to expand. It's clear that, there is demand out there. Even though as noted we have over $1 million samples worth of external capacity now for Explore the marketplace, which is tremendous. But we are continuing to see a sort of broad interest across all of our segments, service providers, academic, biopharma et cetera, to continue adopting the Explore platform.

So yes, you should expect to continue seeing growth of externalizations. But yes, it will not be as, I'd like to say linear. We will see a little bit of lumpiness, a little bit of seasonality.

[Puneet Souda, SVB]

Okay. And then as these Explore installations have happened, I mean, how should we think about those that $800,000 pull-through number, usually when instruments are installed or new installation happens, there is impact to the average pull through, but just wanted to get your sense as to how should we think about the overall pull through number for '23?

[Carl Raimond, Chief Commercial Officer]

Yes. I think the -- we will continue to see I think strong pull through. Although again, I think that number will move a bit tied to seasonality. As just discussed, we had a nice strong surge in the second half. And then we will be into our seasonality for this year as well.

But we expect pull through again to remain relatively strong, and of course, it will be attached largely to the total number of installs that we have and averaged out over that. But I think that, last 12-month figure is a good figure to continue to look at to think about pull through overall.

[Puneet Souda, SVB]

Okay, that’s helpful, and then, last one for me, and maybe for Jon. I appreciate the focuses obviously on growth, but you do have flexibility now. Valuations have come down. Oskar talked about a little bit about deploying capital. Can you talk a bit about sort of the focus areas, the progress that you have made so far with the Agrisera antibodies and what -- how are you looking at that overall landscape and the capabilities that you need to bring in order to drive the next explorer panel? Thank you.

[Jon Heimer, Chief Executive Officer]

Sure. Hey, good morning, Puneet. As we said in the past that, the acquisition of Agrisera has been an extremely successful one for Olink, and tremendously important and strategic. And as we noted in our formal notes here, we're a bit ahead of the curve in terms of developing, generating and validating new antibodies to develop new assays to build out the platform in a very accelerated fashion.

So yes, we're super excited with the acquisition of Agrisera and what that really helps Olink progress. So, as we discussed as well, we're looking into further opportunities similar to Agrisera to expand our capabilities. It could be continued expansion to develop more antibodies, but also on the antigens, how important the antigens are in particular as we -- as customers move toward prospective clinical decision making where you need to introduce those antigens as calibrators to do the standard curves and the absolute quantitative readout for every assay.

And obviously, antigens are very important part in both generating antibodies as well as validating, the assets as well. So, antigens are also very important in what we do. So, if that gives you any clues in terms of how we're thinking to potentially further strengthening sort of the upstream work and supply chain that is essential for what we do.

That is -- yes, where we're basically focusing most of those efforts. So, yes, and you can't plan M&A, right? So -- but we're definitely thinking along those lines and very excited about the opportunity now since we raised that additional capital and have a strong balance sheet.

[Puneet Souda, SVB]

Helpful, again thanks, guys.

[Operator]

Our next question coming from the line of Sung Ji Nam with Scotiabank. Your line is open.

[Sung Ji Nam, Scotiabank]

Hi, thanks for taking my question, and congratulations on the quarter and also the year. So just a couple for me. So, could you talk about the potential timeline for the library of 5,000 proteins? I don't know if I heard that correctly, but when that kind of might be available at a commercial scale?

[Jon Heimer, Chief Executive Officer]

Good morning, Sung Ji. Yes, and as we said for some time, that we're super excited by being a little bit ahead of the curve on what we communicated around developing, generating, and validating new assays. As we also said that, we see an ever-increasing demand for increasing throughput, as well as trying to simplify protocols as much as possible. So, we are doing amazing development across all those fronts. We are very, very excited internally but we are not giving any timelines to date. But so, you have to basically stay tuned on that one for now, but we're very excited where we're at.

[Sung Ji Nam, Scotiabank]

And then just one for Oscar, was curious, it's nice to see very strong underlying growth for your service business, excluding for the UK Biobank project. I was wondering if there might be other kind of largest projects that are in the pipeline that could impact your service revenue throughout this year.

[Jon Heimer, Chief Executive Officer]

Hi, Sung Ji. So yeah, as I said, tremendous sort of underlying growth for the service business, and as we look ahead then I think Carl talked about the sort of the I mean the sort of large set of sort of -- larger sort of cohort studies that are sort of out there. I think we would sort of approached us from sort of a kit perspective.

So, I mean, I find it sort of unlikely to do sort of something in the service lab of that sort of scale again, sort of where we are sort of sitting today. So, I think we would sort of look to do that sort of as a kit business and sort of partner up with other sort of service folks on that.

[Sung Ji Nam, Scotiabank]

Got it. Thank you, so much.

[Operator]

And our next question coming from the line of Kyle Mikson with Canaccord. Your line is open.

[Kyle Mikson, Canaccord Genuity]

Hi, guys. Thanks for taking my question. Congrats on the year. Better than the preliminary results by touch. On the ‘23 revenue guidance assumptions, impressive range that you already rerating. Was wondering if you could just talk about the kit revenue maybe as a percent of the total for the full year? For comparison that was like about 50% for the second half of ‘22, and then it was 22% or so over the first half of the year. So, obviously a big kind of swing there.

And you covered Explorer a bit before, but how about the dynamics in the mid-total Flex business segment with signature kind of continuing to ramp and then inside Flex building one that done? Thanks.

[Carl Raimond, Chief Commercial Officer]

Hi, Kyle, this is Carl. I'll take that one. So, looking ahead, here for 2023, we expect tips to be roughly 50% of revenue for the year. So, we'll continue to shift that mix further towards, kit as we progressed throughout the year. So, we should see that advance sort of throughout the year and the mid-plex dynamic. So, we saw a growth in sort of the mid-plex kit space as well, which is great.

Signature is a big driver of that. We continue to see good demand for Signature. The launch of the Flex product has been I think a tremendous -- created tremendous potential for us as well as that expands the capability of signature and improves our capabilities overall to serve a broader swath of the total proteomics market.

So, we expect actually to see both continue down a positive path in terms of the shift and drive towards more kit in our mix.

[Kyle Mikson, Canaccord Genuity]

And then on that note, I guess was curious about the customer reception to Flex versus Focus. Both products are relatively similar. Maybe just thinking about this a couple of different ways. First, have there been different types of customers or uses for Flex than Focus? And then has the low-plex business line kind of accelerated, and then given the introduction of Flex, has there been any like, cannibalization between the two products? And maybe like over the long term, do you guys see Flex having like a higher ceiling?

[Jon Heimer, Chief Executive Officer]

Yeah, I think, they're different product lines in some ways Focus as a more bespoke product, that allows customers to access the entire library, that we have. So that's a little bit of a different use case, a think as far as customer use and development. Flex is -- the purpose is really to make a sort of a much simpler sort of off-the-shelf type custom product, with a library of roughly 200 proteins that are in the sweet spot for what most of our customers wants, a lot of key inflammation markers and so on.

So, we see that as sort of a more mass-market product, that has very broad appeal and a very large and existing market out there. So, yes, I think the revenue mix will shift overtime certainly more heavily toward Flex. It's I think a great product that just serves a big need in the marketplace for high-quality mid low-plex protein analysis.

[Kyle Mikson, Canaccord Genuity]

All right, great. And then last one for me on the 5k [ph] products as just that you mentioned a moment ago. Can you guys just kind of speak to your level of confidence that the lack of a commercial available 4,500 trucks menu is not going to be a headwind like the market share gains as your competitor approaches 10,000 trucks this year?

[Oskar Hjelm, Chief Financial Officer]

Good morning, Kyle. I think what we saw quite clearly last year is that, quality is very important. You have to be able to trust every assay, every data point across every sample that you run to really trust the data to be able to make actionable decisions on that data, driving science or research projects forward.

So, I think that's a much more important metric than a total number. Are total numbers important? Absolutely. Do we see unmet needs and desire to expand? Absolutely. And that's why we are investing aggressively, focusing a lot on that. But you have to marry that with data quality.

So yes, I guess the short answer to your question is that, we think we were doing quite well in 2022 with our current offering and we are super excited looking ahead to continue to expand that. So, no, I mean, we feel good where we are at and really trying to meet what we think are the sweet spots of customer demand and unmet needs and are continuing to focus solely on that.

[Kyle Mikson, Canaccord Genuity]

Perfect. Thanks, Jon. Thanks, guys. I appreciate it.

[Operator]

Thank you. And our next question coming from the line of Matt Sykes with Goldman Sachs. Your line is open.

[Matt Sykes, Goldman Sachs]

Hi, good morning. Thanks for taking my questions. Congrats on the year. Maybe my first question is just high level on the funding landscape both for biopharma, academic. Noting your comments, the budget flush in Q4 was not as strong as you expected, how do you see the overall funding dynamics for both of those customer segments playing out in 2023? And do you think proteomics in terms of research dollars being spent can detach from any kind of slowdown in funding for the broader scientific M&A?

[Carl Raimond, Chief Commercial Officer]

Yes. Hey, Matt. It's Carl. I'll take that one. Yes, I think what we saw in Q4 and I think what we could expect ahead in general is, I think more, I like to call it, selective spending. So, I mean, they are still budgets, people are still spending, but I think there is a bit more scrutiny on expenditures and such. So, a bit like we saw in Q4, though however I think that, what you see is than customers ultimately prioritize how they're spending their budgets, to the highest value type of research they can do.

So, I think we feel good about that, because I think the -- as we've seen in our numbers and we see in the marketplace, I think the demand for high quality proteomics is very high. But for sure, again, as noted in Q4, the big go-go budgets of a few years ago are probably a little more constrained than they used to be.

So, I think that's what we'll see as a slightly more sort of cautious environment. And I think that actually to your question about biopharma and academic, I think it's about the same in both cases. So, yes, that's where we see things right now.

[Matt Sykes, Goldman Sachs]

Thank you. And then Oskar, just on analysis services margins, as UK Biobank rolled off, obviously, you had a margin improvement there. Should we look at that sort of Q4 analysis services margins as being more of a normalized run rate for that business? And then, I think in your press release you mentioned increasing lab efficiency. Can we expect some level of margin expansion within analysis services as we move through ‘23?

[Oskar Hjelm, Chief Financial Officer]

Hi Matt. So, I think, as I said in the remark, I think sort of the Q4 is sort of a good mark where sort of our run rate is, and we've driven a lot of efficiency in that business and offset some of this sort of external, sort of inflation pressures. But I think sort of where we were sort of in Q4 is sort of a good sort of margin for us sort of looking ahead in that part of the business.

[Matt Sykes, Goldman Sachs]

And just one more, if I could squeeze it in, just following up on Puneet's question on explore installations. As we think about the cadence for ‘23, should we think about perhaps maybe in the first half, sort of higher lows in terms of explore installations? I think there were low single digits in Q1 and Q2 of last year.

Should we think of that coming up a little bit? And obviously, still not linear and lumpy, but as we just think about sort of the level of explore installations, first half, second half, should we think about that first half of being sort of higher lows when you look at installations?

[Jon Heimer, Chief Executive Officer]

Yes. Hey, Matt. Well, we're not providing specific guidance on that, but the demand has certainly grown over time. And the pipeline also looks good. So, I think, we'll see good demand throughout the year, but for sure, I think it will be -- I think, we'll see some seasonality in that demand. Maybe not to the exact extent as last year, but yes.

[Matt Sykes, Goldman Sachs]

Thank you.

[Operator]

Thank you. And our last question in queue coming from the line of Tejas Savant with Morgan Stanley. Your line is now open.

[Tejas Savant, Morgan Stanley]

Hi, guys. Good morning. Jon, maybe to start on the kit side of things, good traction there. Would you be able to give us a sense for the number of end users for the kit solution today versus say a year ago? I know Carl talked about sort of growing traction with the CROs and the service providers, so I was just curious as to get a sense of the breadth of demand here across the customer set beyond just the academic pharma versus service provider split.

[Carl Raimond, Chief Commercial Officer]

I don't think -- this is Carl. I'll take that one. We don't have a specific number on the number of actual end users. In fact, to your point, it's actually well beyond what you would count with the number of externalizations or customers, because as we see in many cases, even if they're not a dedicated service provider, they may be a service provider for their department, or their function. So, the technology is reaching many, many end users via this strategy, which is what makes it quite a successful one.

So, our reach is many folds broadly beyond the number of external customers we speak about or Signature placements and so on. So, I hope that helps, but it's -- yes, it's broad.

[Tejas Savant, Morgan Stanley]

Got it. Helpful. And then on the antigen library development effort, you spoke about either via bolt-on M&A or perhaps even internal efforts. Do you have a sense for just -- how you envision that being complimentary to your current portfolio, or perhaps how customers could use both antibody and antigen approaches together? I think that would be helpful as well?

[Carl Raimond, Chief Commercial Officer]

Hi, good morning, Tejas. Yeah, no, exactly two points and what we stated, right? I mean, antigens are a very important starting point to develop high-quality antibodies, you really want a full length correctly folded antigen that mimics native human biology to raise a high-quality antibody to build a high-quality assay.

And that antigen is used also to purify the antibodies, to using them to develop the assay to dilute, for example, do the standard curves, set the upper load limits of quantification, the linearity of the assay and so forth.

And then, at the end, you're going to use that antigen calibrator for an absolute quantity readout. And as I'm sure you're seeing with explorer, when you do thousands of samples across thousands of proteins a relative quantification is a very appropriate readout.

You should -- I mean, you always compare groups. So, for example, norm healthy versus disease or responder versus non-responder. But as you walk through our, our library or products and down towards more clinical use cases, you definitely need that absolute quantitative readout.

So, it's a tremendously important aspect of protein science. And as you know, when you talk to clinician, they're used to pictogram milliliter or milligram milliliter readout for every protein. And that's what why antigens are super important all the way from raising antibodies and developing assays for hi-plex but also for those clinical use cases downstream. So, very, very important part of everything we do.

[Tejas Savant, Morgan Stanley]

Got it. Super helpful. And then Jon, can you just give us a sense for the flavor of customer feedback on Olink insight here? Clearly that was an important launch. I mean, you highlighted out of the analyst there as well, just curious as to what you're, hearing from the broader community.

[Jon Heimer, Chief Executive Officer]

Yes, no, thanks for bringing that up, Tejas. Yeah, we are as excited as our customer base. I mean, the feedback that we're getting are excellent. Proteomics is very early days, as you know, and to interpret these large data sets that we now have enabled quite big data sets and complex proteins across pathways and so forth. So, a super helpful tool to get to much faster actionable insights.

On top of that, as I'm sure, I mean we discussed with you over time as well, it's like one of the most common questions we get from customers, and that also is a very good highlight of the early stage of this field. It's like -- do you know the normal concentration of your proteins across your library. So that's sort of where we're at. We don't even know what the normal concentration ratio looks like.

And as you know that type of data where we have that in Olink Insights and are expanding, so very exciting. And of course, now with the disease as labs that we also have included there and we continue to expand as well, with some dramatic results from Mathias Helium’s [ph] Group and in particular now the first data set around cancer.

So, extremely exciting to see how proteomics can contribute to, for example, increasing data on the curves in early detection and prognosis of cancer. So, yes, all around an amazing tool, which we get very strong customer feedback on. So yes, very exciting. Thanks, Tejas.

[Tejas Savant, Morgan Stanley]

Got it. And one final one on my end for Oskar, if I may. Just wanted to clarify the comment around [indiscernible] Oskar. I think you talked about 2021 being a better benchmark for the fourth quarter here. So should we think of revenues closer to sort of the mid-40s range in the fourth quarter versus the 41% or so you did in '22 as the right framework?

[Oskar Hjelm, Chief Financial Officer]

Yes. So as we said in the script sort of 2021 and I think especially when sort of comparing sort of the H1 to H2 seasonality, I think, looking at sort of how the year is sort of from an operational standpoint sort of for us, sort of, 2021 is a good benchmark as we look at 2023.

[Tejas Savant, Morgan Stanley]

Perfect. Thank you so much.

[Operator]

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Mr. Jon Heimer for any closing remarks.

[Jon Heimer, Chief Executive Officer]

Great. Thanks for joining us today and for your interest in Olink. We look forward to keeping you updated on our progress and wish everyone a great day. Thank you so much.

[Operator]

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.