On May 3, 2023 NanoString Technologies, Inc. (NASDAQ:NSTG), a leading provider of life science tools for discovery and translational research, reported its financial results for the first quarter ended March 31, 2023 (Press release, NanoString Technologies, MAY 3, 2023, View Source [SID1234630934]).

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"2023 is off to a strong start, with spatial biology revenue up more than 75% over the prior year," said Brad Gray, President and CEO of NanoString. "Demand for our CosMx Spatial Molecular Imager is robust, with new orders driving an increase in CosMx backlog even as we accelerated shipments in the first quarter. We also generated sequential and year-over-year growth in consumable revenue across all our platforms."
First Quarter Financial Highlights
•Total revenue of $35.8 million
•Spatial biology revenue of $17.1 million
•nCounter revenue, inclusive of all service and other revenue, of $18.7 million
•Cash, cash equivalents and short-term investments balance of $154.6 million as of March 31, 2023
Spatial Biology
•Accelerated CosMx shipments during Q1, resulting in Q1 spatial biology instrument revenue growth of 110% year-over-year
•Increased CosMx revenue backlog in Q1, with revenue to be recognized in future periods from cumulative orders received exceeding $40 million
•Grew total spatial biology system installed base to approximately 385 systems, an increase of approximately 31% year-over-year
•Recorded spatial biology consumables revenue growth of 44% year-over-year, with steady GeoMx consumables pull-through over a larger installed base supplemented by growing shipments of CosMx consumables
•Approximately 120 abstracts highlighted at the American Association of Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting. Nearly 60 spatial abstracts using GeoMx or CosMx, an increase of more than 40% over the prior year
•Total peer-reviewed publications featuring our spatial biology platforms were approximately 232 as of March 31, 2023, representing an increase of approximately 122 publications in the last 12 months
nCounter
•Total installed base of our nCounter platforms of approximately 1,130, an increase of approximately 6% year-over-year
•Total peer-reviewed publications featuring nCounter were approximately 6,820 as of March 31, 2023, representing an increase of approximately 1,570 publications in the last 12 months

2023 Outlook
The company updated its previous financial outlook for 2023, with results now expected as follows:
•Total revenue of $175 to $185 million, as compared to the previous range of $170 to $180 million.
◦Spatial biology revenue of $100 to $105 million, as compared to the previous spatial biology revenue range of $95 to $100 million
◦nCounter revenue, inclusive of all service and other revenue, of $75 to $80 million, unchanged from the previous guidance range
•Adjusted EBITDA loss of $65 to $75 million, unchanged from the previous range
Financial Results
We have elected to present selected non-GAAP, or adjusted, financial measures, including Adjusted EBITDA. These adjusted financial measures are calculated excluding certain items that may make it more challenging to compare our GAAP operating results across periods. Such items may include stock-based compensation, depreciation and amortization, or one-time charges such as transaction related fees and expenses or restructuring charges and severance costs. A reconciliation of adjusted financial measures to the nearest comparable GAAP financial measure can be found in the tables at the end of this press release.
(dollars in thousands) Three Months Ended March 31,
GAAP Non-GAAP
2023 2022 2023 2022
Total revenue $ 35,805 $ 31,080 $ 35,805 $ 31,080
Cost of revenue 22,871 14,778 20,552 13,789
Gross margin 36 % 52 % 43 % 56 %
Research and development 16,118 17,417 12,655 14,956
Selling, general and administrative 37,366 36,355 29,762 29,397
Adjusted EBITDA N / A N / A (27,164) (27,062)
Non-operating expense, net (688) (2,030) (688) (2,030)
Net loss $ (41,238) $ (39,500) $ (27,852) $ (29,092)

Supplemental Information

As a supplement to the table above, we have posted to the investor relations section of our website, at View Source, supplemental financial data that include our adjusted financial measures as compared to the nearest comparable GAAP financial measures, for the first quarter of 2023 and for each quarter of and the full year of 2022.

Conference Call

Management will host a conference call today beginning at 1:30 pm PT / 4:30 pm ET to discuss these results and answer questions. Investors and other interested parties can register for the call in advance by visiting View Source After registering, an email confirmation will be sent including dial-in details and unique conference call codes for entry. Registration is open throughout the call, but to ensure connection for the full call, registration in advance is recommended. The link to the webcast and audio replay will be made available at the Investor Relations website: www.nanostring.com. A replay of the call will be available beginning May 3, 2023 at 7:30pm ET through midnight ET on May 17, 2023. To access the replay, dial (866) 813-9403 or (929) 458-6194 and reference Conference ID: 573494. The webcast will also be available on our website for one year following the completion of the call.

Non-GAAP, or Adjusted, Financial Information

We believe that the presentation of non-GAAP, or adjusted, financial information provides important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. Reconciliation of adjusted financial measures to the most directly comparable financial result as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. A reconciliation of adjusted guidance measures, including Adjusted EBITDA, to corresponding GAAP measures is not available without unreasonable effort due to the uncertainty regarding certain expenses that may be incurred in the future, and we are also unable to predict the probable significance of such adjusted guidance measures. Accordingly, in reliance on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K, we have not provided a reconciliation for adjusted guidance measures provided in this press release. For further information regarding why we believe that these adjusted measures provide useful information to investors, the specific manner in which management uses these measures and some of the limitations associated with the use of these measures, please refer to "Notes Regarding Non-GAAP Financial Information" at the end of this press release.