[Management View]
Alpha Teknova reported a 9% year-over-year revenue growth for Q3 2025, driven primarily by Lab Essentials products. Management emphasized operational improvements and strategic investments in distributor management, purchasing integration, and price optimization. The company aims to scale up to $200 million in annualized revenue without significant additional capital investments.

[Outlook]
Revenue guidance for 2025 remains at $39 million–$42 million, with expectations slightly below the midpoint due to persistent softness in demand for clinical solutions products from biopharma customers. Management anticipates modest growth in custom biopharma products and low double-digit growth in other segments. Gross margin target for fiscal year 2025 remains in the low 30s.

[Financial Performance]
Total Revenue: $10.5 million, up 9% YoY
Lab Essentials Revenue: $8.3 million, up 16% YoY
Clinical Solutions Revenue: $1.7 million, down 13% YoY
Gross Profit: $3.2 million, up from $0.1 million YoY
Operating Expenses: $7.2 million, down from $7.5 million YoY
Net Loss: $4.3 million, compared to $7.6 million YoY
Adjusted EBITDA: Negative $1.6 million, compared to negative $2.2 million YoY
Free Cash Outflow: $2.4 million, unchanged YoY
Cash and Short-Term Investments: $22.1 million at quarter end
Total Borrowings: $13.2 million
Employee Headcount: 161, down from 165 YoY

[Q&A Highlights]
Question 1: How have customer conversations trended with recent MFN pharma tariffs and onshoring capacity announcements?
Answer: Optimism exists, but actual purchasing ramp-up has not been observed. Growth is seen in large pharma and emerging therapeutic companies acquired by larger firms, while capital-constrained companies are rationalizing pipelines.

Question 2: Update on the RUO plus initiative?
Answer: The initiative fills a gap, offering improved quality similar to GMP at a lower price. Customers use the facility for flexibility in formulations, aiming to migrate to GMP eventually. The initiative is part of the Lab Essentials business.

Question 3: Expected product mix in custom portfolio amid biotech funding slowdown?
Answer: 75% of the business is growing double digits across all market segments. Increased interest in tools and diagnostics side, with predictable baseline growth in double digits. Strategy focuses on therapeutic side and onboarding more customers in other segments.

Question 4: Tracking new customer acquisitions in clinical solutions relative to past years?
Answer: Increasing larger-sized customers despite some companies no longer operating. Mix changes between end markets, but onboarding significant revenue potential customers continues.

Question 5: Exposure to new modality world like cell gene therapy and impact of fast track efforts?
Answer: Exposure includes 23 cell and gene therapy customers out of 39 biopharma-related. Participation in various programs with mixed results. Specialty in custom small batches of reagents allows participation across the market.

Question 6: Gross margin improvement trajectory and impact of efficiency projects?
Answer: High fixed cost, low variable cost mix drives margin performance. 70% of incremental revenue flows through, with variations due to inventory and production accounting. Continued strong performance expected.

Question 7: Areas for driving more efficiencies?
Answer: Constant focus on operational and supporting functions efficiency. Significant work has driven efficiency across the board, with ongoing optimization of processes and metrics.

Question 8: Incremental spend on Salesforce and right-sizing levels?
Answer: Modest increases in commercial organization headcount, less than 10 overall, driven by process improvements for efficiency.

[Sentiment Analysis]
Analysts showed cautious optimism, focusing on operational efficiency and market diversification. Management maintained a confident tone, emphasizing strategic investments and long-term growth potential.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 | YoY Change |
|---------------------------|---------------|---------------|--------------|
| Total Revenue | $10.5 million | $9.6 million | +9% |
| Lab Essentials Revenue | $8.3 million | $7.2 million | +16% |
| Clinical Solutions Revenue| $1.7 million | $2 million | -13% |
| Gross Profit | $3.2 million | $0.1 million | +3100% |
| Operating Expenses | $7.2 million | $7.5 million | -4% |
| Net Loss | $4.3 million | $7.6 million | -43% |
| Adjusted EBITDA | -$1.6 million | -$2.2 million | +27% |
| Free Cash Outflow | $2.4 million | $2.4 million | 0% |
| Cash and Short-Term Investments | $22.1 million | N/A | N/A |
| Total Borrowings | $13.2 million | N/A | N/A |
| Employee Headcount | 161 | 165 | -2% |

[Risks and Concerns]
Persistent funding delays in biopharma limit large custom product orders, affecting Clinical Solutions revenue. Gross margin remains sensitive to cost fluctuations due to smaller company scale. Revenue guidance slightly below midpoint due to demand softness.

[Final Takeaway]
Alpha Teknova's Q3 2025 results reflect strong operational execution and strategic investments driving growth in Lab Essentials products. Despite challenges in the biopharma market, the company remains confident in its ability to scale and achieve long-term growth. Management's focus on efficiency and market diversification positions Alpha Teknova well for future success.