Prepared remarks
Thank you for standing by, and welcome to the Quantum-Si Fourth Quarter and Year-End 2025 Earnings Call. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Lindsay Risa. Please go ahead.
Good afternoon, everyone, and thank you for joining us. Earlier today, Quantum-Si released financial results for the fourth quarter and full year ended December 31, 2025. A copy of the press release is available on the company's website. Joining me today are Jeff Hawkins, our President and Chief Executive Officer; as well as Jeff Keyes, our Chief Financial Officer. Before we begin, I would like to remind you that management will be making certain forward-looking statements within the meaning of the federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements of our press release. For a more complete list and description of risk factors, please see the company's filings made with the Securities and Exchange Commission. This conference call contains time-sensitive information that is accurate only as of the live broadcast date today, March 3, 2026. Except as required by law, the company disclaims any intention or obligation to update or revise any forward-looking statements. During this call, we will also be referring to certain financial measures that are not prepared in accordance with U.S. generally accepted accounting principles or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the press release filed earlier today. With that, let me turn the call over to Jeff Hawkins.
Good afternoon, and thank you for joining us. On today's call, we will provide a business update and review our operating results for the fourth quarter and full year of 2025, and provide an outlook for 2026. After that, we will open the call for questions. Before diving into specific updates, I want to first frame at a high level how we are thinking about 2026. We expect that 2026 will be a transition year, with revenue primarily driven by consumable utilization from our installed base and some new placements, very modest new capital sales, and a laser focus on Proteus development and preparing the market for a strong commercial ramp in 2027 and beyond. As a reminder, our three corporate priorities for 2025 are as follows: to accelerate commercial adoption, to deliver on our innovation roadmap, and to preserve our financial strength. Our first corporate priority was to accelerate commercial adoption. Our revenue for the fourth quarter was $451,000 as top-line results continued to be impacted by the capital sales headwinds in the market. As we look to 2026, we believe that our placement program will continue to allow us to engage with new customers and capture consumable revenue, but that capital sales of our first-generation Platinum Pro instrument will be very limited, given the deliberate focus on market preparation for the Proteus launch at the end of 2026. We will provide more color on this topic throughout the call. As a reminder, during the second quarter of 2025, we announced the launch of an expanded set of instrument acquisition options that allow customers to have our instrument in their lab and purchase and run consumables without having to find the capital dollars to acquire the instrument upfront. By all measures, this program has been a success, and we view it as a key market development program to continue with during 2026 as we build momentum into the Proteus launch. Since launching the program, we have secured 17 new customers spanning academic labs, pharma, and biotech. It has allowed us to access key opinion leaders in some of our direct markets that we had not had access to prior to this program. We view these labs as strong long-term prospects for Proteus, and we believe that being able to engage with them now and have their laboratory staff get hands-on experience with our technology will improve the prospects of them adopting Proteus once launched. In addition to capturing consumable revenue from these 17 customers, we are also building a strong publication pipeline that will help to further demonstrate the value of our technology across a range of applications. Turning now to scientific affairs. As we have previously shared, developing a publication pipeline takes focus and effort over an extended period of time. During 2025, we had five manuscripts submitted for publication and built a strong pipeline of additional studies and manuscripts for future publication. The time we invested in this area in 2025 continues to yield results, and we have already seen three new manuscripts released via publication or preprints in the first two months of 2026. More important than the number of new manuscripts is the range of applications we are beginning to see emerge. One of the papers from Dr. Lowe of Stanford University showcased the potential of our technology to be applied in the field of clinical proteomics to address complex conditions like hemoglobinopathies that are not easily resolved using current technologies. The second example of a new application of our technology was captured in a manuscript from the researchers at the U.S. Naval Research Laboratory. They described a modified workflow that enabled biological samples to yield results in under 24 hours for rapid pathogen and toxin detection, an area that is underserved by existing technologies. We believe that these papers and others in the pipeline will continue to demonstrate that the potential opportunity for our technology extends well beyond the basic research markets that we operate in today. We believe that this is important since these new applications move us towards customers who typically have high consumable utilization rates and repeat ordering patterns. Beyond these initiatives, we continue to monitor and evaluate several partnership opportunities that may further accelerate certain components of our development activities spanning from new customer applications to sample preparation and enrichment and applications of artificial intelligence tools that could extract deeper insights from the protein sequencing data our system generates. Novel enrichment technologies for very low abundance, high-value biomarker analysis is a key area of interest for us, and we are currently exploring some promising partnership opportunities in this space. As I stated earlier, our focus in 2026 is on the development of the market for Proteus, which we expect to launch at the end of this year. This started in earnest at our October 2025 Investor and Analyst Day, where we showed data demonstrating that Proteus is surpassing our first-generation technology across all key performance metrics. While we indicated during the event that sharing the early Proteus data would likely impact Platinum Pro sales, we believed that sharing this data would allow us to more effectively engage with potential customers and channel partners about budgeting for Proteus well in advance of its launch. Based on customer and channel partner feedback to date and to continue to advance the Proteus pre-launch discussions, we decided to pull forward the announcement of our list price from the second quarter of 2026 to today. Accordingly, we announced that the list price for Proteus will be $425,000. We believe this list price strikes the appropriate balance between capturing the premium value of Proteus and the expected launch capabilities while also making the platform more accessible to a larger number of potential customers than existing technologies. Our second priority was to deliver on our innovation roadmap. 2025 was a successful year across all of our development programs. We launched our version 4 sequencing kit and an expanded set of 24 barcodes during the third quarter of 2025, our version 3 library prep kit in the fourth quarter of 2025, and most importantly, demonstrated sequencing on a prototype Proteus system, which exceeded our current system across all performance metrics at our November 2025 Investor and Analyst Day. We also shared our progress and plans for expanded proteome coverage and PTM analysis capabilities, as well as the feasibility of a controlled cleavage chemistry, a critical piece of core technology that ensures we have a clear, executable path to our long-term goal of enabling de novo protein sequencing at scale. As we look to 2026, our full focus is on Proteus development. I am pleased to report our instrument development efforts remain on track. Our prototype systems continue to perform well and are fully deployed within our internal R&D efforts. We have also received our first fully integrated Proteus instruments and are working with our partners to continue to manufacture and deliver additional instruments to support the scale-up of our internal development work. Next, I want to provide an update on our efforts to improve proteome coverage, which spans two key areas: one, expanding the number and frequency at which we detect individual amino acids, and two, the sequencing read length we achieved. I would like to take a few minutes to touch on both areas. First, during our November 2025 Investor and Analyst Day, we shared details about our proprietary amino acid recognizer development program. Specifically, we shared about how we had recently seen a significant improvement in our performance of developing new amino acid recognizers through a combination of applying state-of-the-art artificial intelligence tools trained on our proprietary data and by scaling up the throughput of our candidate screening and selection process. At the November 2025 event, we stated that we believe we would be able to launch Proteus with detection of 18 amino acids and would further demonstrate detection of all 20 amino acids in 2026. I am pleased to report that we are progressing ahead of expectations on both goals and expect to provide a more quantitative update on this topic in the near future. The second component to proteome coverage is sequencing read length. Prior to sequencing, customers prepare their protein sample using our library prep kit. The library prep process digests the proteins into smaller pieces called peptides and then attaches a linker that allows the peptides to bind to the nano-wells on our consumable. Based on the method of digestion our library prep kit deploys, the average length of the peptides generated is approximately 18 to 20 amino acids. As we shared at our November 2025 event, the early data on Proteus indicated that the average sequencing read length on Proteus was superior to our existing platform. This means that the number of amino acids we can sequence per peptide was more than we can with Platinum. A longer sequencing read length is important as we look to unlock certain high-value applications for customers, like deep PTM analysis and profiling. I'm pleased to report that we are continuing to observe longer sequencing on Proteus, and based on continued promising results, we have dedicated some members of our R&D team to focus on maximizing sequencing read length. We look forward to providing more quantitative updates on this area in the months ahead. Finally, I want to take a moment to review our progress and forward plans with library prep. We launched our version 3 library prep kit during the fourth quarter of 2025. The version 3 kit enables customers to sequence samples with as little as 1 to 2 nanograms of protein. Overall, the version 3 kit delivered more than a 100-fold reduction in input required over our prior library prep kit. As part of that development effort, the R&D team identified some potential avenues to explore for even further reduction in input requirements. We have a small team working on technical feasibility now, and we'll have more updates to provide on our next earnings call. Our third priority was to preserve our financial strength. We believe that the data will continue to demonstrate that Proteus is not only a new architecture with greater throughput and automation, but also a significant leap forward in terms of sequencing performance and application breadth. We also believe that Proteus is well positioned to be the long-term driver of commercial adoption, revenue growth, and our path to profitability. We are fortunate to have a strong balance sheet that allows us to execute on this strategic plan with a focus on long-term value creation, but also acknowledge that the Proteus focus in 2026 will impact top-line results. We are committed to continuing to operate with a high level of fiscal discipline while ensuring the core strategic initiatives are appropriately funded to deliver on time and with the capabilities customers are asking for. I will now turn the call over to Jeff to review our financial results.
Thanks, Jeff. I'll now walk through our operating results for the fourth quarter and full year 2025 and then provide our outlook for 2026. Revenue in the fourth quarter of 2025 was $451,000, consisting of revenue from our Platinum line of instruments, consumable kits, and related services. Gross profit was $122,000, resulting in a gross margin of 27%. Gross margin in the quarter was primarily impacted by revenue mix with a higher proportion of consumable revenue to hardware as well as certain inventory adjustments recorded during the period. For the full year 2025, revenue was $2.4 million, gross profit was $1.2 million, and gross margin was 47%. Full year gross margin benefited from a higher mix of instrument sales and a lower overall impact from inventory adjustments compared to the fourth quarter. As Jeff stated earlier, we have been impacted by capital headwinds throughout 2025, first starting with delays in NIH funding and concern over the overall NIH budget and indirect reimbursement rates, as well as general uncertainty around tariffs and putting customer capital budgets in limbo as they look to prioritize what they spend capital dollars on in an uncertain environment. Turning to expenses. GAAP total operating expenses for the fourth quarter of 2025 were $21.2 million compared to $31.3 million in the fourth quarter of 2024. Adjusted operating expenses were $18.3 million compared to $26.7 million in the prior year quarter. For the full year 2025, GAAP total operating expenses were $117.3 million compared to $110.2 million in 2024, while adjusted operating expenses were $86.3 million, down from $99 million in the prior year. The year-over-year reduction in adjusted operating expenses reflects continued cost discipline, more focused R&D activities, and targeted resource allocation towards advancing the Proteus platform. Included in full year GAAP operating expenses were charges of approximately $18.7 million, primarily related to the accounting adjustment of a net termination payment and associated asset write-off from a leased facility in New Haven, Connecticut, as well as settlement and preliminary settlement of certain legacy litigation matters. Dividend and interest income was $2.2 million in the fourth quarter of 2025, consistent with the prior year quarter, and $9.7 million for the full year of 2025 compared to $11.4 million in 2024. The year-over-year decrease for the full year reflects lower interest rates and changes in invested balances. As of December 31, 2025, we had $215.8 million in cash, cash equivalents, and investment in marketable securities. Turning to our outlook for 2026. We are anticipating total revenue to be approximately $1 million, with adjusted operating expenses of $98 million or less and total cash usage of $93 million or less. We view 2026 as a deliberate transition year for the company as we prepare for the anticipated launch of Proteus at the end of 2026. We are making intentional choices that prioritize long-term platform adoption over near-term revenue maximization. This includes embedding upgrade paths into Platinum Pro units, which has a near-term revenue impact, as well as impacts of customer delayed purchases as they plan for Proteus as we continue to educate and prepare the market about the leapfrog capabilities of our next platform. From an operating expense standpoint, our guidance reflects the activities required to complete the development in support of the successful commercial launch of Proteus by the end of the year, while continuing to manage costs with discipline. Our expected cash usage also includes modest inventory build and commercial readiness efforts ahead of the launch. With $215.8 million in cash and investments at year-end, we believe we are well-positioned to execute on our strategy and support operations into the second quarter of 2028. As we look past 2026, I will remind you that we have built our operating expense structure that leverages key external partners for development-related activities. As we complete these activities, including launching Proteus, we have the ability to reclaim this operating expense spend to augment our cash runway or strategically redeploy some to other activities such as commercialization activities. I will reiterate what Jeff said on how we're thinking about the business in 2026 and as we move forward. Again, 2026 reflects a transition year with intentional trade-offs. We're expanding our installed base in a capital-efficient way, maintaining customer engagement and data generation, and positioning the company for the Proteus launch rather than optimizing for near-term instrument revenue. Importantly, we are executing the strategy from a position of financial strength. We have the flexibility to fund development, commercial readiness, and ongoing operations without being forced into near-term capital decisions. Finally, management and the Board remain deeply aligned with shareholders. Insider ownership remains very meaningful, and recent Form 4 activity reflects routine tax-related mechanics associated with equity compensation vesting, with no management team members selling shares outside of planned mandated selling for required tax withholdings. Overall, we believe we are making the right trade-offs, prioritizing long-term platform value over short-term optics and positioning Quantum-Si for what we believe will be a highly meaningful next phase of growth. With that, we're happy to take your questions.
Questions and answers
Certainly. And our first question for today comes from the line of Scott Henry from Alliance Global Partners.
Just a couple of questions. First, what are you seeing as far as consumable trends, as far as the trends within the installed base?
Yes, Scott. We are observing that customers are purchasing at a steady rate. As mentioned previously, academic customers tend to make purchases intermittently, acquiring consumables, completing a set of experiments, and then publishing data before making their next purchase. Other market segments display a more consistent ordering pattern. In terms of our revenue guidance for this year, we anticipate only modest capital expenditures, but we expect a greater than 25% increase in the number of consumable kits being utilized by our customers. This indicates improved usage, and we believe that understanding and optimizing this process will be crucial as we move forward with Proteus and seek to enhance its utilization as well.
Okay. So if I'm interpreting that correct, for 2026, in anticipation of the Proteus launch, we should really factor in very few placements with almost all the revenue coming from consumables and service revenue?
Yes, I think that's correct. A lot of the revenue obviously coming from consumables or the services revenue. In terms of the capital equipment side, maybe just a couple of pieces of information. The first is, yes, we expect a fairly modest number of Platinum Pro machines being purchased for capital. The other point to make on that, that's a little bit of a nuance, but it's important, Jeff talked about in his remarks that in some instances, customers might want to buy a Platinum Pro, but they'll be asking for a credit for a future Proteus machine. And if we offer that credit it can sort of alter the revenue recognition in the short term, capturing it over the full period of time when they eventually purchase a Proteus. So there is that component to it as well if people have that credit, it sort of reduces the recognized revenue in the short term.
Okay. And then I know you're not looking to give guidance into 2027. But in a bigger picture type of way, can you talk a little bit about how we should think about the launch curve for the Proteus? Would you expect early adopters to use it right away and then kind of the typical S-curve? Or just how we should think about the traction, given that you already have the Platinum on the market, so it's somewhat educated customer base. But just kind of qualitatively, how you would think about that?
Yes, I think about it in a couple of distinct sort of groups of customers. To your point, we have existing Platinum users and some number of those people will certainly move over to the Proteus over the course of the first year or 2 of the launch. I think it really is going to depend upon exactly which applications are available at launch. And then sort of what are the other potentially transitional financial incentives we might give to those customers to help them move with us earlier in the launch curve. So I think about the existing installed base in that way. A lot of people do know about Platinum and Platinum Pro, but I can tell you from the early feedback I'm hearing from our team in the field as they're out talking about Proteus, we are also getting in front of a lot of people that we've had no access to or fairly limited access to prior because the applications that we are offering on Platinum Pro might not have met their needs, where now with some of those capabilities being communicated as coming with Proteus is opening the door to be able to talk with those potential customers. I think that's a new sort of set of customers that don't have a Platinum today and are now engaging with us. So I think about those folks, they'll probably follow a more sort of sequenced. Some people will adopt early, some will wait to see. So that group probably moves in a more classic new technology introduction sort of way. And I think the third piece, the third sort of leg of the stool in this case is really our channel partners. As we've talked about on prior calls, we've built a global channel partner network. We think we've got all of the major markets covered with that. Will every one of those markets be a good fit for Proteus? That's something we're really working through. We do have a really important channel partner meeting coming up this month where we're going to get together in person with these partners. I think we'll learn a lot at that meeting about really which of those partners and which of the markets are going to be good opportunities for Proteus. And obviously, that access to those markets can help us early in the launch as our partners are also investing and working to build out their installed bases. So that's how I think about it. I mean, there will always be some stepwise fashion to the commercialization. But I think this year and what we're committed to is really helping you understand exactly how we're building that momentum towards that launch to try to have that sort of curve go efficiently and sort of reach that inflection point we want over sort of maybe a longer early access period that we went through with the Platinum machine.
Okay. Great. And just a final question, which is just more clarification. The $98 million in guidance for operating expenses, does that include stock compensation? Or is that more of just a cash expense guidance number?
Yes, that includes our adjusted operating expense number. For adjusted operating expense, we exclude stock-based compensation. We believe that on an adjusted basis, it's a more reasonable way to evaluate operating expenses with a focus on cash as we look ahead.
And our next question comes from the line of Swayampakula Ramakanth from HCW.
With the announcement of the price point for Proteus, I'm trying to understand what it signifies. Does this indicate that you have secured preorders or letters of intent that make you confident enough to reveal the price at this early stage?
Yes. Good question, RK. We don't have any secured orders to communicate at this time. I think we're putting the price out because what we're seeing as we're out talking with customers and some of the questions we're getting from our channel partners in preparation for our meeting this month is they're looking for that price point to be able to do their capital planning. We are aware of a few grants that some customers are working on that are going to be due over the next couple of months for their sort of regular capital planning cycle. And to ensure we get incorporated in those submissions, we need to be able to provide that price. So we see this as sort of helping to continue that dialogue with customers, help them have the data they need at the time frame when their grants or their tenders if they're located in international locations are due, they're going to need that price point. So that's why we're releasing it now is to ensure we get incorporated into those proposals and that we get incorporated at the right level in that to the extent they get funded, they've got the right amount of dollars set aside to purchase the machine.
Okay. Based on your comments about the challenges people are facing with capital expenditures, especially in 2025, as we look ahead to 2026 with this particular price point, do you think customers will opt for the lease purchase method? Or do you anticipate that there will be a good number of potential clients willing to make a cash purchase?
Yes, RK. So maybe the first point to make here is at this time, we've only communicated a list price and an ability to purchase a Proteus through a straight capital purchase. We haven't extended some of the other purchase or acquisition sort of models to Proteus at this time. We're going to continue to do those other models with Platinum Pro, but we haven't yet committed to doing that with Proteus. I think we're watching a couple of things. I think the first thing is, obviously, some of the NIH uncertainties, at least appear on paper to be improving. The most recent NIH budget is about a 1% reduction over the prior year, so much less dramatic cuts than originally thought. I think importantly, and Jeff called this out in his remarks, to reiterate, the indirect overhead rates are not changing in 2026. That was a pretty significant concern for customers in '25 as indirects often are a source of the funding for new equipment. So I think we're sort of fortunate in that regard. Proteus is probably the bigger impact on Platinum sales. But on the flip side, we'll get to see sort of a more stable NIH environment for a year here before we're in the market with Proteus. And again, taking steps deliberately in our engagement with customers, including with the list price to really try to get into those grant applications, those tender proposals here early such that those capital dollars would be ready when we get to launch in our delivering units out into 2027 and beyond. So that's really how we're thinking about it and sort of the things we're watching.
Okay. And then the last question for me is, when you're talking about trying to identify more amino acids than what you thought you would have by the time you get Proteus into the market. So are we thinking that we could be closer to 20 amino acids by the time you launch? Or I know you didn't give specifics, but I'm just trying to understand from your excitement. So where do you think we'll be heading by that time?
Yes, we are approaching this from several angles. I previously mentioned our focus on detecting as many of the 20 amino acids as possible. We believe we can launch Proteus with the ability to detect 18 amino acids and aim to demonstrate detection of all 20 this year. When we shared that information, our expectation was to achieve this by the end of the year as outlined in our Investor Relations materials. If we achieve the demonstration later in the year, it could delay the delivery into 2027, providing additional time for reagent development. However, if we make quicker progress, it might enable us to include all 20 amino acids in the Proteus kit sooner than we initially planned. We're also closely examining the combinations of various amino acids, their detection frequency in different sequencing contexts, and the sequencing read lengths. By analyzing these factors, our goal is to see how much of the protein we are sequencing and to what extent. The more we can observe, the broader the potential applications become, enhancing our ability to analyze samples for post-translational modifications and other aspects. We're seeing positive advancements across all these areas, ahead of the timeline we set during our Investor and Analyst Day. We are committed to keeping you and other analysts and investors updated with more specific milestones throughout the year to clarify the progress made compared to the current commercial kit. We plan to share this information as we progress, and we feel optimistic about our teams' capabilities and the full delivery of detection by launch and shortly thereafter.
And our next question comes from the line of Michael King from Rodman & Renshaw.
Congratulations on the advancements in technology. I would like to know, regarding Proteus, what is the overlap between your current customer base and the potential customer base for Proteus? Are they similar, the same, or quite different? If they are different, will each of your sales be primarily new customers rather than repeat customers?
It's a good question, Michael. So we haven't really tried to quantify exactly what the overlap is. But maybe I'd speak about it a little more qualitatively. So we've talked about before our Platinum machine is in sort of a wide range of labs. So a good number of our Platinum machines, as you can sort of pick up on by looking at the publications, are in what I would call a core lab, a large academic center, who's got mass spec and other technologies and a lot of sort of proteomic analysis capabilities. So a good number of our machines, both in academia, but also in pharma, are in what I would call more classic proteomics core labs. Those folks are, in our view, are going to be a very good potential fit to move from the Platinum or Platinum Pro machine and into the Proteus. Some of our machines, though, because of the price point of the Platinum Pro machine are in what I would call smaller basic research laboratories, perhaps a single investigator with a fairly small laboratory staff. So some of those folks might not quite have the volume of research or the level of funding needed to move to Proteus. That said, there could be groups of, say, two or three investigators in some of those institutes that may pool funds together to purchase a Proteus. So a little harder to figure out the exact ratio of those smaller individual investigator labs converting to Proteus, but we think some of them will. Really where we're focused with some of this initial sort of transition or upgrading will be amongst those larger core labs, proteomic centers of excellence that really are pretty ideal fits and where we think that overlap between use of Platinum today and use of Proteus in the future could be a pretty high level.
I'm curious about the client interactions you mentioned earlier regarding the design or conceptualization of kits. Are there a few applications that are relatively easy to pursue, like kinase pockets or other GPCRs, validated drug targets, or detection technologies for biomarker work? Which top two or three applications do you believe will provide significant support upon launch?
Yes. We are working with customers across various segments and disease areas thanks to the Platinum machines in the market. We mentioned some recent data from Stanford related to hemoglobinopathies, which is a clinical application we hadn't initially considered for Platinum, but it's a great example of how sequencing can drive diagnostic and treatment outcomes through a single amino acid change. Regarding Proteus, I view it as having a broader set of capabilities that we will refine as we get closer to market. One significant opportunity with Proteus is enhancing sequencing output to handle more complex biological samples, which is currently a limitation of our existing platform. This capability could facilitate the identification of new biomarkers in academic, pharmaceutical, and biotech settings. Our focus on post-translational modifications is crucial, even though it currently requires more effort from customers to utilize our technology effectively. We are dedicating considerable time to improving this area, as better proteome coverage will enhance biomarker discovery and validation across numerous samples, whether for therapeutic targets or diagnostic purposes. Furthermore, the translational lab is a space where we have less presence at the moment. While we often operate in core labs or basic biology research labs focused on fundamental research, translational labs aim to scale up work on defined biomarkers for validation concerning disease linkages or diagnostic potential. Expanding our capabilities in analyzing post-translational modifications and complex samples can align us more closely with translational labs, which are typically more consistent users of consumables than fundamental research labs.
Great. And then sorry, if you just indulge me one more. Just as far as the total spend is concerned, does that include or anticipate some increase in the field sales force? Are you going to be adding bodies to get out there?
Michael, this is Jeff Keyes. Yes. So for 2026, our total spend includes completing out the Proteus development program and augmenting our commercial team to be able to be launch-ready as we get into the end of the year and into 2027. As I mentioned as well, once we're done with the development of the Proteus program, we've utilized a lot of outside spend for development activities. And once the program is concluded, we have the ability to pull a lot of that outside spend back and then either bank it for additional cash runway or redeploy it to other activities. So there's also an opportunity to redeploy to commercial activities. But as we plan for our 2026 guidance, we are fully funded from a commercialization standpoint. And obviously, that will be evaluated over the course of 2026 to make sure we have the right resources, right partners, and right deployment for the Proteus launch.
And our next question comes from the line of Kyle Mikson from Canaccord Genuity.
I noticed you didn’t share many details on this, so I’d like to ask what feedback you've received from customers that led to the decision to slow down on the Platinum side and focus entirely on Proteus. Could you elaborate a bit on that feedback? Did it come from new customers attracted by Proteus or from your existing customer base?
Yes. I think, Kyle, the way to think about it is for some of the customers, it's really a question of do they deploy capital dollars today or a Platinum when the Proteus is coming. I think for those customers who see an opportunity to use the existing technology for their work today and eventually grow into the Proteus, we are taking advantage of our ability to use the placement program to get access to them. As we said in the prepared remarks, I think it's a good data point since we launched that program, we've placed 17 instruments in unique customer endpoints. So I think when the current tech fits, and it's really more about they don't want to purchase today, knowing something new is coming, we do have that placement option to work with them, get them on the technology, get them utilizing it and then convert them in the future. I did mention earlier, if someone is purchasing a Platinum machine and wants to make sure they're protected from sort of the Proteus launch and making sure they have some financial benefit of that, we're certainly prepared to extend credits to those folks. And then I think there are a third bucket of customers, which are they want to be able to do something in terms of maybe the complexity of the sample or the throughput of work that just doesn't match up well to Platinum. So Proteus will be their entry point to working with Quantum-Si. So I sort of break people into those three buckets, and I think many people fit in either the first one where we access them today with the placement, moving them into a Proteus in the future or they're going to be Proteus first because it really is more about aligning what they're trying to accomplish with the capabilities of that platform.
It's interesting to consider that labs willing to purchase a Platinum for less than $100,000 are likely comfortable with this price point. I wanted to ask about the list price. I know you mentioned it earlier in a previous question, but the price is nearly equal to your fourth-quarter revenue. There are various dynamics at play, but perhaps there are new customers you can target who have more funding or are more affluent. Overall, I'm curious about what makes you confident that this price point will be appropriate given the uptake of Platinum so far.
Yes. There are a couple of factors at play here. There are new customers that we currently cannot reach. For instance, in core labs, we often serve as a complementary platform to others, and many of our labs are smaller individual investigator labs. Therefore, Proteus may not be a suitable price point for those smaller labs. However, in the core labs, considering our price point and the capabilities we offer, $425,000 is essentially in the middle range, possibly on the lower end. High-end mass spec machines can cost upwards of $850,000 to over $1 million each. We believe that $425,000 is not a barrier for those core labs and higher volume sites. It really depends on whether our platform's capabilities can address challenging tasks that their existing technology cannot. If we can answer crucial questions that researchers want to explore, and we believe Proteus will have those capabilities, including handling post-translational modifications, complex biological samples, and increased proteome coverage, then we will be positioned well. These tasks often require a $1 million mass spec machine and a custom infrastructure. When we present Proteus in that context, the $425,000 price point seems very reasonable. It reflects our value while being more accessible than the $1 million options. That said, smaller individual investigators with limited funding may not be ideal targets. However, it is possible that two or three such investigators might consider pooling their resources to purchase a machine to access these capabilities, similar to practices in our industry where smaller researchers collaborate to acquire necessary equipment when it isn't available at local core labs.
Got it. Can you just clarify, would you launch Proteus with the reagent rental kind of program as well? Or would it just be solely kind of direct instrument sales?
Yes. Currently, we have only announced the list price and our intention to conduct direct capital sales. We plan to start with this approach, gather market feedback, and then decide whether to explore additional acquisition models. Our intent right now is to launch solely with the direct capital acquisition option, and then we'll evaluate feedback before considering other options in the future.
Okay. And then Jeff Keyes, it sounds like the mix will be mostly consumables this year, almost entirely consumables. So that would typically mean higher margins for most tools companies. But I think in your case, consumables seem to have a lower margin compared to the instrumentation. So I guess, I know you're not guiding to gross margin, but how low could it get to this year relative to the mid- to high 40s that you've been at recently in the past couple of years?
Yes. So I think your comments are reasonable, and everything else being equal, our consumables have a lower margin than capital equipment. But there's a couple of things going on here, too, because during the course of 2026, we expect to have some capital sales and some placements as well as consumable revenue, but the caveat on that is on the capital sales. We anticipate a lot of them to have this credit towards Proteus for future acquisition of a Proteus model that has deferred revenue that will be impacting our overall margin as well. So I don't think we're going to have specific guidance for margin specifically. But having said that, I think you can expect reasonably it's going to be lower than that kind of 40% to 50% range that we've had for the full year. And it will evolve and be impacted simply on the number of credits that we provide for Proteus for the actual capital equipment sales, if that helps, Kyle.
I can add one additional piece of information. Our production volumes for consumables are still quite modest at this time. In our industry, scaling up is essential for achieving the desired gross margins for consumables. However, it's important to remember that one of the key reasons for transitioning to the new architecture with Proteus was not only for sequencing output and automation but also for the consumable architecture. We moved from a CMOS-based chip to a passive nano-well array, which significantly reduces our production costs at scale and even during the early stages of building that product. Therefore, there are several factors at play, including our current consumable architecture and the low production volume. We took both of these into account when making the technology decision for developing Proteus and its related consumable architecture.
Okay, Jeff Hawkins, I have a question regarding Proteus. What are the biggest risks you foresee in launching Proteus this year? In this R&D ramp you have underway, what could potentially cause a delay until 2027? Additionally, how critical is it to achieve the 20 amino acid milestone? While it may not be a major factor in 2027 or 2028, could it be more significant for long-term growth drivers like de novo sequencing or PTM detection?
I agree with you that the detection of 20 amino acids is not the key factor for the initial launch of Proteus. While having greater coverage is beneficial for customers as it aids in de novo sequencing, I believe that the difference between detecting 18 or 20 amino acids will not significantly impact customer adoption at launch. Regarding the risks associated with the launch, I categorize product development into two main phases. The first phase is about overcoming technical risks, which we have successfully done. We have made significant innovations, demonstrated sequencing with prototypes, and are progressing with multiple integrated units. The technical breakthroughs have been achieved, and now our focus is on hardware integration, enhancing manufacturing capabilities, and improving performance and reliability. While delays can occur, they are generally limited to a few months in this phase, unlike the longer delays possibly seen in the earlier innovation stage. We are optimistic about a launch by the end of 2026. However, any delays in performance, reliability, or manufacturing quality could impact our timeline, though I anticipate these delays will still be relatively brief compared to those faced during the innovation phase.
Awesome. And then just final one. I think you guys are one of the last tools companies to report earnings here, and it's timely given the White House OMB, the Office of Management and Budget. They've been slow to authorize the release of NIH awards. We obviously have had this new budget that you referenced, Jeff. There might be a deadline kind of soon for this for OMB. So are you hearing anything on that front? And maybe any risk or more uncertainty with respect to kind of NIH academic funding like this year?
We haven't received any new updates beyond what I've already shared. We're aware of your concerns, but we haven't heard anything specific from our customers about needing to submit budgets by a certain time. Our focus with customers tends to revolve around their capital budgeting cycles. For instance, they need to submit their requests by April or May to secure funding within a particular timeframe, or for international tenders, those requests need to be in by a specific time in the summer to fund the next year. So, we're primarily navigating financial calendars rather than responding to any immediate pressures from the Office of Management and Budget or the NIH. However, we'll stay attentive to developments in the field as they arise. So far, we haven't seen any incoming requests from customers, and we'll need to monitor if that changes as information circulates in the market and reaches our customers.
This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Jeff Hawkins for any further remarks.
Thank you for joining our call today. We look forward to providing more updates on the Proteus program and the continued progress towards commercial launch on our next earnings call. Thank you.
Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.