Quantum-Si Q3 2026 Earnings Call Transcript

Quantum-Si (NASDAQ:QSI) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.

View the webcast at https://edge.media-server.com/mmc/p/rshabvx2/

Summary

Quantum-Si reported a decline in revenue to $212,000 in Q3 2026 from $552,000 in Q3 2025, attributed to preparation for the Proteus launch and reduced activity for the existing product, Platinum Pro.

The company is on track to launch its new Proteus platform in Q2 2027, with significant progress in instrument development, amino acid detection, and AI integration, enhancing performance and capabilities.

Operational expenses have been reduced as part of a restructuring plan, aligning with the Proteus timeline and preserving financial resources for launch, with expected annualized savings of $12 million.

The Proteus pre-order program has been launched, receiving positive customer engagement, and the company is advancing supply chain readiness to mitigate risks associated with AI-driven component demand.

Management highlighted strong progress in detecting 19 out of 20 amino acids, improving system consistency, and expanding library preparation capabilities, which are expected to enhance the platform’s application range.

Full Transcript

OPERATOR

Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Risa Lindsey. Please go ahead.

Risa Lindsey (Investor Relations)

Good afternoon everyone and thank you for joining us. Earlier today, Quantum-Si released financial results for the third quarter and nine months ended September 30, 2026. 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, November 5, 2026 at 1:30 p.m. Pacific Time. 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.

Alan Jeffrey Hawkins (President and CEO)

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 third quarter of 2026. After that, we will open the call for questions. The call will be organized around our three corporate priorities for 2026, which are to deliver Proteus with the capabilities customers need, to prepare the market for Proteus launch, and to preserve our financial strength. Our first priority is to deliver Proteus with the capabilities customers need. First, let’s start by diving a bit deeper into the Proteus instrument development program. Last quarter we discussed our decision to add an additional integrated instrument design cycle before moving into production. That decision was driven by our desire to further reduce manufacturing risk, improve system repeatability, and ensure a positive customer experience at launch.

Since then, we have made strong progress across several fronts. Most importantly, based on the recent performance data generated, including the data presented at World HUPO in September, we believe we have substantially addressed the instrument variability issues that were identified earlier in the development process. The consistency and quality of the sequencing data generated from our integrated units are encouraging and support our confidence in the underlying instrument architecture.

We have also made meaningful progress on the instrument design cycle itself. As the work advanced during the quarter, we were able to significantly limit the number of design changes required relative to our original expectations. We view this as an important outcome because it both reduces risk within the current design cycle and increases our confidence as we move toward future manufacturing builds. Design activities are now complete, all major components have been released and ordered, manufacturing of sub-assemblies is underway, and we expect to begin receiving the first instruments from this build cycle during the current quarter.

In addition, given the reduced scope of design changes and the encouraging performance data we have generated, we have begun parallel tracking select production readiness activities. These efforts include long-lead component procurement and other manufacturing preparation work intended to support an efficient transition into production. As many of you are aware, supply chain planning is an increasingly important focus area for all companies in the current AI-driven procurement environment, and we believe taking these steps now appropriately balances risk reduction with cost and maintaining development momentum.

Overall, we are encouraged by the progress we have made. The additional instrument cycle is proceeding as planned, performance continues to improve, and we believe we are taking the right steps to further de-risk the platform as we move toward our commercial launch in the second quarter of 2027. Turning now to recognizer development, since our last earnings call we demonstrated detection of the 18th and 19th amino acids. Additionally, we incorporated detection of the 18th amino acid into a developmental sequencing kit, which was used to successfully generate data presented at World HUPO. Based on the progress we have made and the pace of advancement we are seeing, we believe we are well positioned to demonstrate detection of the 20th amino acid before the end of the year.

What is particularly encouraging is not just the number of amino acids we have added, but the increasing rate at which we are able to develop new recognizers. The protein engineering capabilities and infrastructure established over the past several years are now translating into substantially faster development cycles, enabling us to expand coverage at a pace that materially exceeds what we have achieved historically. To put that progress in perspective, our commercially available sequencing kit supported detection of 15 amino acids at the end of 2025.

Today, we have demonstrated 19 amino acids, with the 20th now within reach. We believe this acceleration reflects the growing maturity of the platform, the value of the underlying proprietary training data we have generated, and the increasing efficiency of our recognizer development process. Before moving to library preparation, I want to briefly touch on our AI initiatives within our algorithm development team. Over the past quarter we have rapidly transitioned from the traditional rules-based analysis approaches used on Platinum Pro today to incorporating AI and machine learning throughout our data analysis pipeline. We believe this represents a significant inflection point for the platform, with the potential to extract substantially more information from our sequencing data while improving overall performance and data quality.

As we discussed at World HUPO, we believe the combination of AI-driven analysis and detection of all 20 amino acids creates a path toward delivering reference-free sequencing in 2027. While this work remains in development, the results we have seen to date are highly encouraging and we look forward to sharing more details as we move closer to launch. Finally, I want to provide an update on our library preparation strategy. As a reminder, library preparation is the process used to prepare a customer’s sample for sequencing. Historically, we approached library preparation as a generic solution designed to work across a wide range of proteins and applications. Through both our internal development efforts and our experience supporting Platinum customers, we have continued to expand our understanding of how proteins behave during sample preparation and how library preparation can be optimized for different research objectives.

Building on those learnings, our team is actively advancing multiple library preparation innovations focused on improving protein coverage and enabling deeper characterization of proteoforms. We are excited by the progress we have made and expect to complete the current phase of technology development by the end of this year. We believe these advances have the potential to significantly expand the range of applications that can be addressed on our platform and further enhance the value of Proteus for customers pursuing increasingly complex biological questions.

Upon completion of this development phase, we expect to be in a position in early 2027 to outline a more comprehensive library preparation product roadmap for 2027 and beyond, including how application-specific workflows and kits can be deployed individually or in combination to optimize performance across different use cases. We increasingly view library preparation not simply as a sample preparation step, but as a strategic component of the overall workflow.

As we continue to advance these capabilities, we believe they will play an important role in increasing protein coverage, enabling deeper proteoform characterization, and expanding the addressable applications of the Proteus platform. Our second corporate priority is to prepare the market for Proteus launch. In September, we attended World HUPO in Singapore. During the conference, we presented a direct comparison between Proteus and Platinum Pro. The data presented at World HUPO was generated using a developmental version of Proteus, including an interim chemistry capable of detecting 18 amino acids. While development remains ongoing, the results provide an early indication of the performance trajectory we are seeing as we advance towards commercialization.

While we are very pleased with the World HUPO results, we firmly believe the Proteus platform will ultimately launch with performance that meaningfully exceeds the performance demonstrated in this interim study. First, Proteus delivered approximately 30 times more sequencing output per chamber than Platinum Pro, demonstrating that the performance gains extend beyond the increase in well count alone. Second, the quality of sequencing results from Proteus also exceeded Platinum Pro.

The interim results demonstrated Proteus had a 1.36% false discovery rate compared to 6.58% on Platinum Pro. This represented an approximately 80% reduction in false discovery rate versus Platinum Pro. Third, Proteus successfully identified all proteins contained within both a 10-plex and 24-plex reference mixture while simultaneously generating deeper peptide coverage and greater overall amino acid content. Next, I want to provide an update on our commercial initiatives to build awareness of Proteus in advance of launch. Our commercial team has been executing well and we continue to receive very positive feedback on Proteus and the wide range of applications it is designed to address. Since announcing the Proteus Roadshow in April, we have completed events in more than 35 cities, reaching more than 800 attendees across the United States, Canada, and Europe.

These events are designed to educate prospective users, expand awareness of single-molecule protein sequencing, and build our commercial pipeline ahead of launch. We continue to see strong attendance and engagement, and the positive reception to the new World HUPO data has further increased customer interest in learning more about the platform. Based on customer feedback and the positive reception to the World HUPO data, we recently launched our Proteus Pre-Order program.

The program is designed to help customers plan for adoption and secure priority pricing and access to the platform following commercial launch. While still early, we are encouraged by the level of customer engagement and the quality of discussions underway with prospective customers. Our third priority is to preserve our financial strength. The restructuring actions announced in August have now been implemented and are achieving their intended objectives. We have aligned our expense base with the revised Proteus timeline while preserving the resources and capabilities required to execute the program successfully. Importantly, the actions have not adversely impacted Proteus development. We continue to make strong progress across the program, have accelerated execution in several key work streams, and remain on track for a second quarter 2027 commercial launch.

With that, I will now turn the call over to Jeff to review our financial results.

Jeff Keyes (Chief Financial Officer)

Thanks, Alan. I’ll now review our third quarter and year-to-date financial results, discuss how we are preparing our manufacturing operations and supply chain for the Proteus launch, and then provide an update on our full-year outlook. Revenue in the third quarter of 2026 was 212,000 compared to 552,000 in the third quarter of 2025. Revenue for the first nine months of 2026 was 814,000 compared to 2 million in the prior year period. Results continue to reflect the dynamics we have discussed throughout 2026, including limited near-term capital purchasing activity for Platinum, ongoing consumable utilization from our installed base, customer awareness of the anticipated Proteus launch, and deliberate commercial decisions designed to position customers for a successful transition to Proteus. Gross profit was 74,000 in the third quarter of 2026, resulting in gross margin of 35%.

For the first nine months of 2026, gross profit was 320,000, resulting in a gross margin of 39%. Gross margin continues to be affected by the mix and timing of instruments, consumables, and service revenue as well as the commercial choices we are making to support the market readiness for Proteus. Turning to expenses, GAAP total operating expenses for the third quarter of 2026 were 23.9 million compared to 40 million in the third quarter of 2025, which included net lease termination and legal settlement expenses. Adjusted operating expenses were 18.2 million compared to 21.4 million in the prior year quarter. For the first nine months of 2026, GAAP total operating expenses were 73.8 million compared to 96 million in the prior year period, and adjusted operating expenses were 62.1 million compared to 68.1 million in the prior year period.

We continue to manage expenses with discipline while prioritizing the investments required to complete Proteus development, scale internal testing, support manufacturing readiness, and prepare the commercial organization for launch. Adjusted operating expenses also declined sequentially from the second quarter, reflecting in part the restructuring actions announced in August. Those actions have now been implemented and are achieving their intended objectives.

As Jeff has mentioned, aligning our expense base with the revised Proteus timeline while preserving the resources and capabilities required to execute the program, we continue to expect approximately 12 million in annualized operating expense savings from these actions. Net loss was 22.3 million in the third quarter of 2026 compared to a net loss of 35.7 million in the same period of the prior year. Adjusted EBITDA was negative 17 million compared to negative 20.1 million in the prior year quarter. Dividend and interest income was 1.5 million compared to 2.6 million in the prior year quarter, reflecting the rate environment and changes in invested balances. As of 9-30-2026, we had 149.4 million in cash, cash equivalents and investments in marketable securities.

We continue to believe we have sufficient capital to execute the key activities required for the Proteus launch and fund operations into the fourth quarter of 2028. This runway allows us to remain focused on the highest-return uses of capital, including platform readiness, manufacturing and supply chain readiness, customer sample evaluations, and commercial launch execution. With Proteus on track for commercialization in the second quarter of 2027, we are aligning our manufacturing readiness and supply chain investment. With the development progress Jeff described, selective production readiness activities are now advancing in parallel with the additional instrument design cycle, including procurement of long-lead components.

From a financial perspective, our focus is on supporting an efficient transition into production. Working well means managing supply risk and the timing of cash commitments. A central part of that work is staying ahead of long lead-time parts, and that has become even more important over the past several months as the development and use of artificial intelligence has ramped up globally. Supply chains have become constrained and, like many companies that build hardware, we are seeing the effects.

AI-driven demand is competing for the same manufacturing capacity we rely on, and the impact reaches well beyond specialized semiconductor and memory, extending to more common components and in some cases underlying raw materials. Certain Proteus components now carry meaningfully longer lead times than when we first planned the program. To manage these lead times, we are placing orders earlier, committing volume with key suppliers and, where practical, qualifying second sources and building safety stock for critical components.

We also review supply status with our contract manufacturing partners every week to identify and address issues early. These selected production readiness activities are intended to reduce supply risk while balancing cost and development momentum. Based on what we see today, we do not anticipate these supply chain dynamics affecting our ability to launch Proteus in the second quarter of 2027. We’re also taking the same disciplined approach with consumables planning inventory to support customers from installation through the initial data generation and ongoing utilization. Ordering selected components and inventory earlier and in larger quantities than originally planned may slightly increase near-term working capital needs. We believe that is an appropriate tradeoff to support product availability at launch.

Our cash outlook includes these inventory investments, and we will continue to size purchases against our launch plan and customer engagement, including discussions through the recently launched Proteus pre-order program, while balancing supply readiness with disciplined use of capital. Our full-year 2026 outlook remains focused on these three financial priorities: maintaining spending discipline, funding the activities required to deliver Proteus with capabilities customers need, and preserving the balance sheet strength necessary to support launch and adoption for the full year 2026.

We’re reiterating our revenue guidance of approximately $1 million, which continues to reflect our planned transition period from Platinum Pro to Proteus, with nearly all sales and marketing focus centering on Proteus customer engagement and market development. We’re also lowering our guidance for adjusted operating expenses to $87 million or less from $98 million or less and our guidance for total cash usage to $87 million or less from $93 million or less.

The lower outlook for cash and adjusted OPEX reflect continued expense discipline and the cost actions we took earlier this year while preserving the investments in manufacturing readiness and inventory needed to support the launch. We are very confident in our long-term cash outlook and will continue to maximize our investments to accelerate growth while managing overall OPEX spend. The key financial takeaway is that we are funding the remaining Proteus development work, selected production readiness activities and commercial launch preparations while maintaining spending discipline. Our capital allocation supports these three priorities Jeff outlined: delivering Proteus with capabilities customers need, preparing the market for launch and preserving our financial strength.

Finally, as I’ve mentioned in the past, we’re fortunate to have a large and diverse shareholder base including a significant number of retail investors alongside our institutional holders, and we appreciate their continued support. We pay close attention to the questions investors raise, including those we see from time to time in online investor forums such as Reddit, StockTwits and Yahoo Finance, and we try to use these calls to address themes we hear most often.

One of those themes is how to think about our current revenue, which is derived from Platinum Pro hardware placements and consumable sales. We firmly believe the current revenue does not capture Quantum-Si’s long-term value potential. We continue to support Platinum Pro customers and deploy sequencing kits, generating important data and customer feedback that informs Proteus development, including library preparation and application-specific workflows.

However, we believe that our long-term opportunity is driven by the successful development and launch of Proteus and its substantially greater sequencing output and the broader range of applications we expect it to enable. To that end, nearly all of our commercial team’s time over the course of this year and coming up to the planned launch is preparing the market for Proteus. As Jeff mentioned earlier, we have spent a significant amount of time educating potential customers during our Proteus roadshow events and related events such as World HUPO, with interest and excitement from these events prompting the launch of our pre-order program.

We are excited about this upcoming launch and believe the capabilities and initiatives Jeff outlined position us to build meaningful long-term value for our shareholders. In summary, we remain focused on using capital efficiently, funding the critical path of Proteus launch, including manufacturing and supply chain readiness, and making the right long-term tradeoffs to support the adoption of the Proteus platform. With that, I want to turn the call back to Jeff for a few closing remarks before opening the line for questions.

Alan Jeffrey Hawkins (President and CEO)

I want to take a moment to bring these developments together and put them in the context of the opportunity ahead of us. First, Proteus remains on track for launch in the second quarter of 2027. Given our confidence in that timeline, we have initiated a formal pre-order program for prospective customers. Second, we have a clear path to detecting all 20 amino acids. As we have discussed on prior calls, complete amino acid coverage is an important requirement for many customers. Considering the adoption of protein sequencing, delivering this capability at launch would significantly broaden the range of applications we can address and expand the commercial opportunity for Proteus.

Third, we are moving aggressively to leverage AI and machine learning across our analysis pipeline. We demonstrated the initial impact of this transition in our World HUPO data, where Proteus scaled sequencing output beyond the increase in nanowell density alone. But the longer-term opportunity is even more significant. The combination of AI-driven analysis and 20 amino acid coverage creates a path towards reference-free sequencing. We believe that capability could represent a fundamental differentiation for Quantum-Si.

Finally, we are pursuing this opportunity in a global proteomics research market that exceeds $20 billion annually. But the scale of the opportunity goes well beyond the number of proteins themselves. Tens of thousands of proteins, both human and non-human, can give rise to millions of proteoforms through sequence variation, post-translational modifications and other molecular differences. For researchers, the ideal platform is one that can interrogate any protein without requiring a reference and resolve differences at the individual amino acid level, including post-translational modifications.

That is the vision behind Proteus and, with the progress we discussed today, we believe we are meaningfully closer to delivering it. With that, operator, please open the line for questions.

OPERATOR

Thank you very much. At this time we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Michael King of Rodman and Renshaw. Michael, your line is open.

Michael King (Analyst)

Hi, good afternoon, guys. Thanks for taking the question. A couple of quick ones for you with regard to, you know, the early access versus pre-order. Are those two mutually exclusive? Are they, you know, overlapping circles? How should we think about that part of it?

Alan Jeffrey Hawkins (President and CEO)

Yeah, Michael, I see them as—they’re slightly different to me. So pre-order gives customers the opportunity to, if they place an order now with a deposit, gain, as we talked about in our remarks, some preferred pricing as well as access, meaning when we are able to get into the early access stage or into the early commercial launch, they’ll be at the top of the list to get their machine before anybody else. So it sort of gets them to the front of the line with some financial benefits of sort of moving now versus waiting for commercial launch, where we expect less of those sort of benefits to be extended.

Michael King (Analyst)

So if I’m somebody who’s on an early access program, I could also be eligible for the pre-order program.

Alan Jeffrey Hawkins (President and CEO)

Yeah, the pre-order program has been offered broadly to any customer who’s interested in, as I said, sort of securing that opportunity in advance of any formal placements or shipments of instruments. Yeah, so I would say two things to that. The first is we would expect at launch to have specific specifications that we launch with for a customer, in terms of the amount of sequencing output they might get, the number of alignments, the coverage, or the read depth—these sort of types of metrics. I would expect us to have definitive specifications at launch.

I think what you see in the hoopoe data and what we touched on in our remarks today is we think what we’re showing here is not the fully optimized final product. I think on the control peptides, obviously the performance is very strong and that’s a very sort of clean and ideal system. So we would expect that at this phase, the data—we provided data on a series of different protein mixtures that really show how that sort of controlled system translates into real proteins.

And on that data, we expect there to only be upside from here to launch. We think that will improve in that area. That was some of our earliest real protein work on the Proteus platform. So we would expect in that area to see improvements in complexity of the sample, the number of alignments, the number of unique peptides. We think all of those metrics are bound to rise as we get further through the development process and into the commercial launch.

Thank you.

OPERATOR

One moment for our next question. Our next question comes from the line of Kyle Mixon of Canaccord Genuity. Kyle, your line is open.

Alex D. Kason (Analyst)

Hi, this is Alex D. Kason. I’m on the line for Kyle Mixon. Congratulations on the Proteus pre-order program, and apologies in advance—we’re jumping around a few calls tonight. So you continued to progress on amino acid detection capabilities, expanding to 19 out of 20 recently. I guess just to start on the technology aspect of things, what is it about this process of gradually expanding towards complete amino acid detection that gives you confidence you’re building a technological moat here?

And can you just provide a brief reminder on your patent protections to that end? Thank you.

Alan Jeffrey Hawkins (President and CEO)

Yeah, thanks for the question, Alex. So in terms of amino acid coverage, maybe let’s take that first and then we’ll talk about broader technology moat. So in terms of the coverage, I think we’ve mentioned this on prior calls, there are two aspects of getting to 20 that we think matter. One is there are applications where having complete coverage of all 20 amino acids is very important, especially when you think about people wanting to operate reference-free, whether that be in non-human samples, whether that be in antibody sort of engineering, and wanting to sequence variable regions—areas where people are trying to get the most complete coverage of their protein and may or may not know the reference. Both of those sort of applications exist.

That coverage is really important. The second piece is, just as we talked about on prior calls, sequencing to customers I think mentally implies complete coverage. And there are some customers who have engaged with us over the last three years, have remained interested in the technology and sought updates from us, but for them to make the move to sequencing, it’s just critical to know that our sequencing reagents can cover the entire 20 amino acid alphabet. So there’s both, I think, a practical reason and more of a buyer behavior reason.

In terms of the technology moat—we could fill the next hour talking about this aspect of our broader strategy—but we have patents across all attributes of what we do, from the core technology of kinetically detecting the N-terminal amino acid and the foundational IP around that, to the patents around our consumables and our instrument and hardware. And when you get down to the amino acid recognizers themselves—and we’ve talked about this in previous calls—we have a broad patent estate that covers those recognizers down to the sequence level, and there’s hundreds and hundreds of sequences that are captured in those.

So we believe that we are stamping out, in the most responsible way we can, an IP moat that covers everything we’re doing. And we think it’s broad and it’s growing every year. We are still actively filing at this stage of our development and would expect to continue to be actively filing in 2027 and beyond.

Alex D. Kason (Analyst)

Thank you. One more from me. So, just understanding that you have ongoing partnerships that could help with the Proteus launch, just curious if there are plans to meaningfully expand the internal sales force prior to the broad commercial launch, and if so, what type of hiring levels could we be seeing? Thanks.

Alan Jeffrey Hawkins (President and CEO)

Yeah, so Alex, we talked about this on some prior calls. I think the team we have in place today covers the major markets. So we have direct presence in terms of sales in the US and in Canada and in major Western European markets. We have our distribution network that’s in place to cover the other markets within Europe as well as some of the key markets in Asia, and we feel like the network we have puts us in a good position to get the launch. Now, we do think there’s some smaller amount of adds to do—some fine-tuning, adding the field service engineering capabilities that we don’t have today, perhaps a territory or two. But we don’t really expect a major ramp-up in hiring to get to the launch. We think we have that. We think the team we have can build that early funnel and execute that in 2027. And really we’ll look at the early results in our first couple quarters of launch to really dictate how we think about scaling that group in 2028 and beyond.

Alex D. Kason (Analyst)

Got it. Thank you very much.

OPERATOR

One moment for our next question. Our next question comes from the line of Charles Wallace of H.C. Wainwright. Charles, your line is open.

Charles Wallace (Analyst)

Hi, this is Charles on for R.K. Thanks for taking my questions. So first question from me: you demonstrated the 19 amino acids and in the kit you currently have 18. So just curious first, how long until the 19th amino acid is available in the kit? And then also, do you expect the 20th amino acid to be ready by commercial launch in a kit? Thank you.

Alan Jeffrey Hawkins (President and CEO)

Thanks, Charles. So, yeah, I think the way to think about how we communicate our progress: when we say we demonstrate detection, that to us means that we’ve got enough real sequencing data in some form of an R&D formulation where we are confidently making amino acid calls. We understand the frequency of that and any limitations that might exist. From there, we do additional reagent development work before we put it into a kit and deploy it to the rest of our R&D staff.

So think of demonstration as our folks who are developing the recognizers do that work, then it goes into a kit, which means all of R&D has access, before ultimately being in a product. So in terms of the timing on 19, we haven’t communicated yet the exact timing of that. We’re obviously, as we said in our remarks, feeling very good about the path to 20. So whether we do a kit with 19 or wait to capture that 20th in our developmental kit is a decision we haven’t made yet. In terms of launch, we feel very good that we are in a solid position to have 20 at the launch of Proteus. So really, at this point, the key gating milestone is demonstrating that 20th amino acid detection before this year is over.

And assuming we’re able to achieve that, that would put us in position to have all 20 at launch. But feeling really good about where we are versus the timescale left to get that into a kit for launch.

Charles Wallace (Analyst)

Yeah, that’s super helpful and clear. And then the next question from me: you mentioned that the instrument variability issues are, I think you said, substantially addressed. So can you quantify maybe how many of these new instruments have been tested in the internal fleet, and how long have they kind of demonstrated this consistency? Thank you.

Alan Jeffrey Hawkins (President and CEO)

So we’ve not given out the exact size of our internal fleet. I can tell you it’s many systems—it’s not one or two. And in terms of the consistency, we’re seeing consistent performance against that entire fleet. So we do not have a scenario where we’ve got a handful of units that look really good and a handful that are not performing as well. I think what we’ve accomplished—real credit to our R&D team—what has been accomplished over the last quarter is really a normalizing of that performance, so that now we have, no matter which machine any R&D person is running on, they’re getting a very similar and consistent level of performance across that fleet.

From here, it’s really about expanding that fleet. That next integrated cycle is where we’re focused now to get those machines coming in the door here this quarter, so that we can expand that fleet and continue to accelerate our development efforts. But feeling good about where we’re at, feeling very consistent across the fleet. But it is a complex development program, so we said “substantially” because you can always get a surprise or two. But we definitely feel very good about where we are and the consistency we’re seeing across the fleet that’s deployed.

Charles Wallace (Analyst)

Great. And then maybe one final question from me. You mentioned the AI-driven demand extending the lead times. So when you’re implementing the procurement plan, do you expect this to extend beyond a pre-order program, or just enough inventory to get the initial launch? Or how long are you thinking there? Thank you.

Jeff Keyes (Chief Financial Officer)

Yeah, this is Jeff. So we’re planning out the supply chain well into the future, past the launch. And it comes down to some component-by-component items. But what we’ve decided internally is that we’re going to go well beyond kind of launch capabilities to ensure that we get ahead of supply chain activities associated with the AI-driven demand. We’re not sure how long this will go, and it could ebb and flow just depending on the state of affairs of AI out there in industry.

But I guess bottom line for us and how we look at it is that we’re just getting ahead of all the supply chain items to make sure that we have an appropriate amount of instruments both internally and available to sell. And we have gotten ahead of all these supply chain challenges. I think we’re pretty much there now, though we’re rounding out a few items. And the only comment on that additionally is that it is absorbing a little bit of working capital, but that’s all planned as part of our cash runway into Q4 2028.

Charles Wallace (Analyst)

Great. Thanks for the additional color and answering all my questions.

OPERATOR

One moment for our next question. Our next question comes from the line of Scott Henry of A.G.P. Scott, your line is open.

Scott Henry (Analyst)

Thank you, and good afternoon. A couple questions with regards to manufacturing. I believe you mentioned that the first instruments could be arriving this quarter. How close are those instruments to being finished inventory? Meaning, once they arrive, are there any other bottlenecks to making them available for sale? And then at that point, does it become more of a volume issue than other things? Just trying to get a sense of that. Thank you.

Alan Jeffrey Hawkins (President and CEO)

Yeah, thanks for the question, Scott. So the instruments that are coming are still, you know, targeted for development. Right. So those instruments, as we mentioned in our remarks, are in the assembly process right now. So we’re, you know, we’re very comfortable that everything is moving forward. We have all the parts to make those devices. It’s really just the assembly and qualification process coming out of our manufacturing partner. But as those come in, those will go straight to R&D. I think when you think about sellable inventory, that ties a bit more into what Jeff was just talking about with some of the proactive ordering we’re doing to make sure that as we go into 2027 and shift to making production instruments, those then would have the flexibility to either be deployed in R&D if we needed more capacity, or be placed into inventory and sellable to customers. So that’s really a 2027 sort of set of activities for us.

But in that regard, we’re already acting on some of the longer-lead component buying that’s necessary to ensure that we have a clear line of sight to the number of machines we’ll need both internally and to support the commercial adoption throughout 2027.

Scott Henry (Analyst)

Okay, great. Thank you for that color. And when we think about 2027, it sounds like the launch, it’ll start in Q2 and there’ll be a lot of preparing the market with more of an impact, it sounds like, in the second half of the year as we watch it from afar. Are there any leading indicators that you’ll be able to give us as far as launch progress or will it simply be reported revenues when they come in? Thank you.

Alan Jeffrey Hawkins (President and CEO)

Thanks, Scott. So obviously revenue is going to be the ultimate thing that everybody on this call is going to want to measure. I think between here and the launch, obviously with the pre-order program in place, I think we’ll look at how that is accepted and that could represent an opportunity for us going into early next year to sort of give some visibility to any pre-orders we may have received. I think in terms of other activities or milestones, obviously a big milestone for the early part of next year will be us placing a couple machines in customer site to do some of that early access work and generate some of that early data. Those are obviously key milestones on the way to launch. And then as we hit launch, then we’ll be in a position to obviously reporting revenue, but also talking more about the funnel and the progress and those types of things as we get into the active commercial phase in the second half of 2027.

Scott Henry (Analyst)

Okay, great. Thank you for that color. Final question, more of a clerical question for the other Jeff, when we look at adjusted operating expenses versus GAAP expenses, what should I think about as a delta there for the full year?

Jeff Keyes (Chief Financial Officer)

Well, for the full year, I mean, we got details in our earnings release that reconciles the total OPEX to adjusted OPEX. I don’t know if that’s what you’re referring to, Scott, but the big items in there. Yeah, I—

Scott Henry (Analyst)

I think it’s mostly just in the fourth quarter. Would be helpful.

Jeff Keyes (Chief Financial Officer)

Oh yeah, it’s going to be stock-based compensation would probably be the biggest delta between the two of them from a market standpoint.

Scott Henry (Analyst)

Okay, so I gather 2 to 3 million. Is that kind of the number we’re looking at somewhere in there?

Jeff Keyes (Chief Financial Officer)

Yeah, it’s kind of right in that range.

Scott Henry (Analyst)

Okay, great. Thank you for taking the question.

Alan Jeffrey Hawkins (President and CEO)

Thanks, Scott.

OPERATOR

Our next question comes from the line of Michael Okunewitch of Maxim Group. Michael, your line is open.

Michael Okunewitch (Analyst)

Hey guys, thank you so much for taking my questions today. Congrats on all the progress.

Alan Jeffrey Hawkins (President and CEO)

Thank you.

Michael Okunewitch (Analyst)

I guess just to start off, I’d like to see if you could expand a little bit on your early launch targeting strategy. Are you primarily looking to convert Platinum Pro users or are you looking more at de novo placements that actually need the Proteus’s capability to become viable users?

Alan Jeffrey Hawkins (President and CEO)

Yeah, thanks for that question. So I would say two things. The first thing I would say is that our sales force has a broad mandate to educate both of the user types that you described. So both getting in and talking to existing Platinum users and Platinum Pro users, as well as prospecting and going into institutions that have not previously had our platform. So sort of those de novo or new customers. I would say as we look at, you know, how the funnel is shaping up and where the interest is coming from, you know, it’s a nice, healthy mix. Obviously some of the early interest is going to come from people who have been regular users of the Platinum Pro platform. But I’ve been pleasantly surprised or pleasantly seeing the funnel come together. And it is very evenly mixed between de novo new accounts and existing users. And I think that has a lot to do with the platform, its capability, its throughput, that clearer path to the 20 amino acid detection.

I think there’s a lot of aspects of what we’re going to deliver with Proteus that were the things that people were ultimately looking for when they maybe met us at some other point in time in the last few years. So nice even balance today as we’re looking at how the funnel shapes up.

Michael Okunewitch (Analyst)

Thank you. That makes a lot of sense. And now that you do have a little bit more experience when it comes to the market education aspect, can you just talk a little bit about what some of the biggest hurdles you’re seeing are there when it comes to market education? Where are you getting either pushback or what’s the least understood by the target customer base when it comes to the Proteus capabilities?

Alan Jeffrey Hawkins (President and CEO)

Yeah. So I can tell you we did the roadshow, Michael, to address sort of the answer to a few of the questions you’re asking there. The number one thing we recognized very early on with Proteus was just how different it is and importantly, not just a different engineering architecture, but a fundamental sort of step function in performance. And we talked about a little bit in our prepared remarks that that data from HUPO really shows the amount of sequencing information you’re getting is far more than just taking Platinum Pro and multiplying it by the number of additional wells in Proteus.

So knowing that that was going to be the case, we really thought about what’s going to be the best way to help people understand that, to really help them understand how fundamentally different this is. This isn’t just Platinum Pro times some number of additional wells. So the roadshows have allowed us to do that. They give us a longer period of time with customers to really get deep into the technology and educate them on that, answer a lot of live questions.

I can tell you I was personally at World HUPO and we in a one-hour symposium left ourselves 25 minutes for questions and we ran over until the point that the organizers had to have us stop so that they could prepare the room for the next people. So the questions were very thoughtful and very insightful. I think what people are now really looking into is I think they understand the core tech and they’re starting to get down into really exploring some of the new capabilities we’re talking about. Reference-free sequencing was a source of a lot of questions and interest while we were at HUPO. People often want to talk about PTMs and how we think about those capabilities rolling out. So I think today we feel like the education is there. The next most important thing we can do is begin to make customers have access to the ability to send us some samples so we can generate real data for them on their samples.

I think us continuing to push out data for various sets of proteins, various applications, will of course help, and customers really appreciated that we did that at World HUPO. But I think to the last question you asked, sort of what would be the next big driver for customers? Some customers are going to always want data on their own samples. Won’t matter how much we put out, they’ll want their own data. So I think that would be the next most useful thing we can do beyond keeping a nice consistent flow of developmental data coming out of our R&D.

Michael Okunewitch (Analyst)

Thank you. And then one last one for me, more on the operational side. It seems like a lot of the plans in the supply chains are around better planning, better execution. Definitely makes sense in the near term. But do you see any longer-term paths that could lead to a more AI demand-proof supply chain or is this just going to come down to execution on your end for the foreseeable future?

Alan Jeffrey Hawkins (President and CEO)

Yeah, I would tell you that right now I would be banking on companies like ours are going to have to be very execution focused. I can tell you that the AI boom is not just impacting your access to a GPU or some memory or something like that. It’s really having a broad impact on supply chain. So I think what we’ve really, you know, learned and done and are proactive about is we’re just constantly checking that component list to see if it’s changing.

So I think, you know, in this environment with the potential for some component to change in lead time, that maybe isn’t, you know, intuitive. Like why is AI affecting that? I think in those environments you just have to be proactive. You gotta be systematic. You gotta just have a routine cadence of doing that. You know, Jeff is doing that with our operations leadership and our contract manufacturing partners. I think right now that’s the key. You know, we took the first step this quarter and got some of those long-lead components, you know, on order and getting into the flow.

And I think going forward to, you know, avoid any potential risk, we’ll just continue to have this routine cadence of monitoring, you know, constantly checking and monitoring our supply chain networks where the lead times of parts and where necessary, you know, place those orders and have things sort of proactive versus, you know, taking the risk that, you know, timelines could move out unexpectedly.

Michael Okunewitch (Analyst)

Yes, certainly. Well, thank you so much for addressing my questions and I appreciate the additional color.

Alan Jeffrey Hawkins (President and CEO)

You’re welcome. Thank you.

OPERATOR

Thank you. At this time I’m showing no further questions. Thank you for your participation in today’s conference. This does conclude the program and you may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.