NanoString Technologies, Inc.

Third quarter 2023 total revenue was $48.1 million, up 63% year over year. Spatial Biology revenue was $28.9 million, up more than 200% year over year, with spatial instrument revenue of $21.1 million (about 350% year over year) and spatial consumables revenue of $7.8 million (70% year over year). nCounter revenue was $19.2 million, including $2.5 million of instruments, $10.5 million of consumables, and $6.2 million of service revenue. Adjusted gross margin was 41%; adjusted R&D was $13.4 million; adjusted SG&A was $26.7 million; and adjusted EBITDA loss was $20.2 million. Cash, cash equivalents and short-term investments were approximately $97 million at September 30, 2023. For Q4, management guided to revenue of $47 million-$52 million, including $27 million-$31 million of spatial biology revenue and $20 million-$21 million of nCounter and service revenue. Full-year 2023 revenue guidance was narrowed to $175 million-$180 million, with spatial biology revenue of $96 million-$100 million and nCounter revenue of $79 million-$80 million. Full-year 2023 adjusted EBITDA loss is now expected to be approximately $80 million-$85 million. Management said full-year gross margins should be in the low to mid-40% range, with improvement expected in 2024 as consumables mix rises and production costs improve; 2024 operating expenses are expected to be at least $15 million below Street models.

Brad Gray emphasized that the quarter showed strong execution and strategic progress across the business. He highlighted record revenue, a faster cash-burn reduction, a leaner cost structure after the reorganization, and the note exchange as steps that remove a near-term overhang and support a 2025 profitability target. His tone was confident and constructive, with repeated emphasis on NanoString’s positioning in what he described as a rapidly growing spatial biology market.

Tom Bailey focused on the financial mechanics behind the quarter and outlook. He detailed Q3 adjusted gross margin of 41%, adjusted R&D of $13.4 million, adjusted SG&A of $26.7 million, and adjusted EBITDA loss of $20.2 million, then said fourth-quarter adjusted EBITDA loss should improve by about 50% or more versus Q3 because of reorganization savings. He also said cash was about $97 million at quarter-end, the new notes bear 6.95% interest, and the company can elect to pay interest in kind during the first year, which could save about $15 million of cash expense.

Analysts pressed management on why the 2023 guide was narrowed despite consistent top-line beats, and Brad Gray said the main reasons were the Europe injunction affecting CosMx deliveries and some elongation in sales cycles, plus broader caution around macro conditions and possible budget flush timing. Questions also focused on backlog visibility, 2024 gross margin recovery, and cash needs; Tom Bailey said the company still aims to reach cash breakeven on existing resources and expects 2024 operating expenses to be at least $15 million below Street models, while gross margins could move back toward the historical low-50% range. Management was less quantitative on backlog and orders, saying they remain robust but that the company is no longer reporting those metrics publicly.