The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: David Joshua Saxon - Needham & Company, LLC, Research Division - Analyst
: Yes. Steve, Lindon, congrats on the quarter. One on SRS and one on margins. First on SRS, can you give us a sense of how much progress you've
made with bringing the samples from those 2 large pharma contracts? It sounds like you're still working on bringing them in. So is it fair to assume
some sort of modest sequential growth in SRS over the next few quarters? And then any additional color you can give on traction you're getting
with other potential customers?
Stephen Schwartz
Sure. I'll take that. This is Steve. So thanks, David. A couple of things. You should expect increases in SRS, and it's exactly, as you said. We have a
number of contracts that we always bring in. But in particular, the 2 large contracts that we've been working on, these are tens of thousands of
samples on a weekly basis typically. We've almost exhausted one of the North American sites, and now we've ramped up in Europe. And the other
one is behind that by 6 months. And this is an onboarding, if you will, of millions of samples. And I'd say we're probably halfway through. But things
are on schedule and on plan.
On one of the contracts, it involves a pretty significant on-site presence for us to help them to get organized before they ultimately send the samples
to us. Everything is on track. But yes, you should anticipate that we'll continue to see revenue expansion from those 2 contracts through the duration
of the fiscal year.
And the pipeline, we think, is pretty significant. As we prove capability for a large contract capability, it brings more interest from customers who
can now consider somebody who could handle millions of samples as opposed to somebody who could handle maybe thousands or a few hundred
thousand samples.
So we're bullish about the business. We'll be cautious as we guided, but North American progress is good. Europe has now picked up on both
contracts.
Question: Jacob K. Johnson - Stephens Inc., Research Division - Analyst
: Congrats on becoming the pure-play life and tools company. Maybe first on the Product side and freezer specifically, I think you posted another
record quarter here. I believe Lindon just called it a growth engine. Certainly, when we think about freezers, those are the large stores, but a lot of
focus on the B3 cryo for cell and gene therapy.
But I think you launched a new cryo freezer recently. Maybe just talk broadly about the potential for continued innovation, especially, I guess, as
it relates to cryogenic freezers as we look out the next couple of years?
Stephen Schwartz
Sure, Jacob. We've got a pretty significant initiative around all manner of cryogenic automated stores. So it's a necessary tool we see for all cell and
gene therapy applications. The ramp is pretty significant.
As you mentioned, we just launched a modest-sized one that we think is comfortable for many lab configurations. So it will wheel through a door.
It's a stand-up tool that somebody can put in like an appliance, but it's fully automated cryogenic system.
And we think the promise for this tool -- the demand is very strong. The promise for the tool, we think, is great. We actually were showing it at the
SLAS conference here in Boston this week, and it's been received particularly well.
So we have a complete portfolio, a range of sizes. And the demand just -- demand continues to build. And we talked about doubling year-over-year
volume. We anticipate that this will continue. We have customers now, some with more than 20 units. And we see nothing but continued acceptance
of the technology because it's a necessity. We think to really -- the fidelity of the cells and samples, we think it's critical. And we think automation
is the way that customers are going.
And on the large automated stores -- just to comment on the large automated stores, we just see a general trend toward automation, both because
of the complexity and the number of samples, but also, once again, the fidelity of samples as we go forward. And we can feel it building in the
second half of calendar '22 in the pipeline. That's as strong as we can ever remember it for the large stores.
So these always take a little bit of time to build, to book and to close, but we're fully engaged with customers like we've never been before. And
we have a complete offering from a portfolio standpoint across temperature ranges and across sizes. And we're really confident about what the
back half of the year looks like across the portfolio of all automated stores.
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