Title

Presentation

Operator: Good day and thank you for standing by. Welcome to the Teknova Second Quarter 2025 Financial Earnings Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Jennifer Henry, Senior Vice President, Marketing. Please go ahead.

Jennifer Henry: Thank you, operator. Welcome to Teknova’s Second Quarter 2025 Earnings Conference Call. With me on today’s call are Stephen Gunstream, Teknova’s President and Chief Executive Officer; and Matt Lowell, Teknova’s Chief Financial Officer, who will make prepared remarks and then take your questions. As a reminder, the forward-looking statements that we make during this call, including those regarding business goals and expectations for the financial performance of the company, are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning these risk factors is included in the press release that the company issued earlier today, and they are more fully described in the company’s various filings with the SEC.

Today’s comments reflect the company’s current views, which could change as a result of new information, future events or other factors, and the company does not obligate or commit itself to update its forward-looking statements, except as required by law. The company’s management believes that in addition to GAAP results, non-GAAP financial measures can provide meaningful insight when evaluating the company’s financial performance and the effectiveness of its business strategies. We will therefore use non- GAAP financial measures of certain of our results during this call. Reconciliations of GAAP to non-GAAP financial measures are included in the press release that we issued this afternoon, which is posted on both Teknova’s and the SEC’s website.

Non-GAAP financial measures should always be considered only as a supplement to and not as a substitute for or as superior to financial measures prepared in accordance with GAAP. The non-GAAP financial measures in this presentation may differ from similarly named non-GAAP financial measures used by other companies. Please also be advised that the company has posted a supplemental slide deck to accompany today’s prepared remarks. It can be accessed on the Investor Relations section of Teknova’s website. And now I will turn the call over to Stephen.

Stephen Gunstream: Thank you, Jen. Good afternoon, and thank you, everyone, for joining us for our second quarter 2025 earnings call. This is our 16th quarterly earnings call since our initial public offering in June 2021, and I want to kick off by discussing the progress we made in preparing Teknova for long-term sustainable above-market growth. First, we designed, built and validated a state-of-the-art facility for the manufacture of custom clinical reagents in batch sizes smaller than 2,000 liters. This purpose-built facility has enabled us to grow the number of clinical customers we support from 13 in 2020 to 48 in 2024. With this new facility, we can not only generate more than $200 million in annualized revenue without significant additional capital investment but also deliver custom clinical-grade reagents in weeks instead of months.

Second, we developed and validated automated manufacturing processes, integrated new IT infrastructure and implemented lean production methods to drive operational efficiencies. These new capabilities will scale with the business generating significant leverage in the P&L as revenue increases. Third, we established Teknova as a recognized leader in custom research and clinical reagents through our commercial investments, which included rebranding and repositioning the company, website enablement, lead generation and establishing an efficient and effective commercial organization. These investments have allowed us to attract and onboard customers developing new therapies across multiple modalities, including cell therapy, gene therapy, mRNA and monoclonal antibodies.

Much like our operational infrastructure, our commercial infrastructure is set up to scale with minimal additional investment. Finally, we have achieved all of that while reducing our headcount by about 40% from its peak, cutting our annual operating expenses by approximately $18 million over the past 3 years and exceeding consensus revenue estimates 15 out of 16 reported quarters during one of the most tumultuous periods in our industry’s history. So I’m very confident about what we’ve built here at Teknova and about the value we’re positioned to deliver for our customers and shareholders in the long term. Now let’s talk about the second quarter. We delivered strong results across both top and bottom line. Revenue increased by 7% compared to the same period last year, making the fourth — marking the fourth consecutive quarter of year-over-year growth.

The growth was driven by strength in sales of our catalog products, revenue from which again grew in the low double digits. We also executed extremely well operationally, achieving an adjusted EBITDA of negative $0.8 million, which is our best quarterly result since we began reporting as a public company in mid-2021. Matt is going to talk about the outlook for the year. But before I turn it to him, I would like to provide my perspective on the progress we’re making with our growth strategy and an update on the current end markets we serve. Our strategy is built on two fundamental beliefs. First, we will continue to be a leader in essential research reagents by providing a diverse portfolio of catalog products that are critical to the life science community.

And second, our ability to manufacture custom research and clinical grade reagents will enable us to acquire and support emerging therapeutic and diagnostic developers as they advance their products to commercialization. Revenue from sales of our catalog products, which contributes approximately 60% of our annual revenue from more than 3,000 accounts, increased low double digits from the same period last year and has grown in the high single digits on a trailing 12-month basis. The revenue growth from the first half of 2025 is now in line with our average historical growth rate from 2009 to 2019 of 12% for this portion of our business. While we serve nearly every end market with these reagents, the past quarter’s growth was driven by key accounts in large pharma and life science tools.

We do believe this growth is above market rates, and we attribute that to the investments we’ve made in the past couple of years into portfolio optimization, integration with third-party purchasing systems, targeting marketing campaigns and channel management. With respect to custom products, our strategy is to engage with early-stage developers and support them as they move through clinical trials to commercialization. As a reminder, our market research suggests that the average spend by a Teknova customer buying custom products increases approximately 30-fold between Phase I and the therapy’s commercialization. Of course, this increase in spend plays out over years, not quarters, because clinical trials typically take 5 to 10 years to complete.

We, therefore, view the number of clinical customers as a leading indicator of our success. Recent market conditions have been challenging for our small to midsized biotech customers with early-stage therapy. And unfortunately, we expect that to remain the case for the remainder of 2025. Under the circumstances, we find it promising that the number of clinical customers we support continues to grow, including several with therapies in later stages and that we are also attracting clinical customers in adjacent markets like monoclonal antibody therapeutics and diagnostics. With the strong foundation in our catalog products, we therefore believe that Teknova is well positioned for high-value creation as the more than 60 therapies we already support move closer to commercialization.

Lastly, we believe we can drive additional scale and profitability by executing on inorganic opportunities we are pursuing that leverage our operational and commercial infrastructure. These opportunities include both collaborations where we work closely with early-stage companies to bring products into our portfolio to build out robust bioprocessing workflows and M&A, where we identify and integrate tuck-in acquisitions. We’re excited about the progress of our pipeline and expect to have further announcements in the coming quarters. Taken all together, we feel good about both our 2025 guidance and about how the company is positioned for long- term growth. I will now hand the call over to Matt to talk through the financials.

Matthew C. Lowell: Thanks, Stephen, and good afternoon, everyone. Revenue was up 7% for the second quarter of 2025 compared to the same quarter of prior year. I’m also pleased with our progress on key profitability measures and cash usage. Overall, we delivered great financial results for the second quarter of 2025. Total revenue for the second quarter of 2025 was $10.3 million, a 7% increase from $9.6 million in the second quarter of 2024. Lab Essentials products are targeted at the research use only or RUO market and include both catalog and custom products. Lab Essentials revenue was $7.8 million in the quarter of — second quarter of 2025 and a 2% increase from $7.6 million in the second quarter of 2024. The increase in Lab Essentials revenue was attributable to an increased number of customers, partially offset by slightly lower average revenue per customer.

Clinical Solutions products are made according to Good Manufacturing Practices, or GMP quality standards and are primarily used by our customers as components or inputs in the development and manufacture of diagnostic and therapeutic products. Clinical Solutions revenue was $2.1 million in the second quarter of 2025, a 32% increase from $1.6 million in the second quarter of 2024. The increase in Clinical Solutions revenue was attributable to an increased number of customers, partially offset by lower average revenue per customer. We expect revenue per customer to increase over time as a subset of these customers ramp up their purchase volumes as they move through clinical trial phases. However, this metric can be affected by the addition of newer clinical or catalog customers who typically order less.

Just as a reminder, due to the larger average order size in Clinical Solutions compared to Lab Essentials, there can be more quarter-to- quarter revenue lumpiness in this category. To the income statement now, gross profit for the second quarter of 2025 was $4.0 million compared to $2.8 million in the second quarter of 2024. Gross margin was 38.7% in the second quarter of 2025, which is up from 29.2% in the second quarter of 2024. The increase in gross profit was driven by manufacturing efficiency gains and higher revenue. Operating expenses for the second quarter of 2025 were $7.4 million compared to $7.9 million for the second quarter of 2024. Excluding the nonrecurring charge of $0.1 million recorded in the second quarter of 2024 related to the loss contingency, operating expenses were down $0.5 million.

The decrease was driven primarily by reduced spending, primarily on insurance and facility costs. At the end of the second quarter of 2025, we had 171 total associates compared to 169 a year prior. Net loss for the second quarter of 2025 was $3.6 million or negative $0.07 per diluted share compared to a net loss of $5.4 million or negative $0.13 per diluted share for the second quarter of 2024. Adjusted EBITDA, a non-GAAP measure, was negative $0.8 million for the second quarter of 2025 compared to negative $2.6 million for the second quarter of 2024. To cash flow and balance sheet. Capital expenditures for the second quarter of 2025 were $0.2 million compared to $0.1 million for the second quarter of 2024. Free cash flow, a non-GAAP measure, which we report as cash used in operating activities plus purchases of property, plant and equipment, was negative $2.3 million for the second quarter of 2025 compared to negative $3.0 million for the second quarter of 2024.

As planned, this quarter included a onetime use of $0.4 million of cash to settle our previously accrued loss contingency. Turning to the balance sheet. As of June 30, 2025, we had $24.0 million in cash and cash equivalents and short-term investments and $13.2 million in total borrowings. Now on to our 2025 guidance and outlook. We are reiterating 2025 total revenue guidance of $39 million to $42 million at the midpoint, this implies 7% revenue growth compared to 2024. As mentioned in previous calls, given our limited exposure to NIH funding and limited business outside the United States, we experienced very little direct impact from the geopolitical environment. Revenue from sales of our catalog products, which represent a very broad customer base, was up low double digits again and higher than expected in the second quarter as spending on discovery work continues to be robust in certain pockets of the market.

On the other hand, growth is lower than expected from custom products as the macro environment remains unfavorable for early-stage small to midsized biopharma customers and for their clinical work in particular. If current trends persist for the year, we would expect higher growth in catalog products and lower growth in custom products than anticipated. Our overall revenue guidance remains between $39 million and $42 million for 2025. As mentioned before, second quarter gross margin performance was driven by manufacturing efficiency gains and higher revenue compared to last year. We’re particularly proud of the improvements in efficiency as the team has worked hard to capitalize on identified opportunities. While gross profit improved more than our previously communicated expectations of about 70% of incremental revenue, we still believe this is the best estimate over longer periods of time.

We expect some of these efficiency gains to continue into the second half, but with less impact. Therefore, we are now increasing our gross margin target to the low 30s for fiscal year 2025. Although we ended the second quarter below target spending levels, partly due to timing considerations, we continue to expect operating expenses of at least $8 million per quarter in the second half, allowing us to moderately increase our investment in sales and marketing compared to last year, positioning ourselves for the market’s broader recovery. At these spending levels, we continue to believe we will become adjusted EBITDA positive in the range of $50 million to $55 million in annualized revenue. The company continues to expect free cash outflow of less than $12 million for the full year 2025.

As we have communicated previously, based on reasonable assumptions about future growth and spending plus current liquidity, we believe that we do not need to raise additional capital to execute on our organic growth strategy. With that, I will turn the call back to Stephen.

Stephen Gunstream: Thanks, Matt. We believe the long-term outlook for our end markets remains positive, and we are committed to helping our customers accelerate the introduction of novel therapies, diagnostics and other products that improve human health. We will now take your questions.

Operator: [Operator Instructions] Our first question comes from Mark Massaro of BTIG.

Vidyun Bais: This is Vivian on for Mark. Congrats on the good print. I’m just curious, biotech funding landscape has been more of a mixed bag. So curious if you could lay out what you believe has helped you manage through these headwinds over some of your peers. I think you’ve previously discussed minimal exposure to NIH funding, tariffs as well as less price sensitivity from your customers. So just curious if I have those variables right.

Matthew C. Lowell: Yes. Thanks, Vivian. I would say biotech funding probably directly — well, direct or indirectly impacts our custom biopharma segment of our business, which represents about 25% of the total revenue the most. And what we’re seeing there is very similar to Q1, which is that the early-stage small, midsized biotech companies are struggling the most there. Fortunately, we started the strategy 5 years ago, and now we’re supporting over 48 customers and over 60 therapies and some of which are later stage. So we’re able to balance some of those losses out with some expected spend from the larger companies or the later-stage therapies. And we continue to add. So we are finding new customers in this segment. Often, they’re not just cell and gene therapy.

As I mentioned, they’re finding some monoclonal antibodies and some other opportunities there. That still is a pretty challenged group, though, right? So the fact that we’re able to not be so far down in that segment is a pretty big positive for us. But the other side of the business, really these broad-based essential reagents for the life science community is where we kind of buoy the entire foundation here. And that’s where we’re seeing some nice double-digit growth, and that is really along the execution internally on the marketing side, on the channel management, the portfolio optimization as well as the fact that we serve all those diverse end markets. And again, like you said, we do not face the headwinds directly from the geopolitical environment.

So taken together, that’s why we feel pretty good about where we sit right now.

Vidyun Bais: Okay. Perfect. And just one follow-up. I think you discussed in your prepared remarks that you see inorganic opportunities and potential tuck-ins. Just curious if you could expand a little bit on where you think you see holes in your product portfolio today?

Stephen Gunstream: Yes. Particularly on the therapeutic side, we’ll talk about first, right? From an inorganic opportunity, we kind of put it in two buckets. One is collaborations, similar to what we’ve done with Pluristyx, where we’re looking at smaller companies with great technologies that need either commercial or operational scale, we can bring those in, and they can fill out some gaps there. And then on the M&A side, it’s a lot more around things we can manufacture in-house or leverage our commercial organization and get some pretty big cost synergies out. From a portfolio whole perspective, we tend to do a lot of downstream. So a lot of the GMP custom buffers for purified antibodies or for gene therapies or whatever in that downstream side.

On the upstream side, the cell culture media, obviously, transfection reagents, cryopreservation reagents, those types of things would be really nice and there are formulations that we can make internally. So we’re working to build out, obviously, a cell therapy one, maybe some gene therapy, maybe monoclonal antibody, but we can go all the way through even life science there.

Operator: Our next question is from Mac Etoch of Stephens Inc.

Steven McLaurin Etoch: Maybe to start, just on the RUO+ initiative, I know it’s been a handful of quarters since you all launched that, but any updated thoughts on how these efforts are trending now?

Matthew C. Lowell: Yes, I would say that they’re trending as anticipated for us. And I think from an RUO, RUO+, GMP as the three different essentially quality opportunities for customers to select into, introducing RUO+ was a really nice solution for us because we had many customers that are bridging towards clinical, didn’t want to finalize their formulations, wanted to try it maybe some smaller batches, but really wanted it made in our new facility in animal-origin-free environment and with the same equipment and processes that we would do under GMP, so it’s quicker to scale, but give them the flexibility there. So we have a number of customers actually purchasing in that, which is really nice for us because it gets them into our processes, maybe a little bit stickier.

But then when they want to go to GMP, it will be pretty quick. So a lot of our preclinical customers choose that as an option. And of course, we do more there, so we can charge a little bit more for that rather than just the RUO side. So I think that’s playing out really well for us, and it helps us see that pipeline coming through.

Steven McLaurin Etoch: Appreciate it. And apologies I’ve been jumping between calls this afternoon. But — and so if you’ve addressed this in the prepared remarks, my apologies. But is there any timing or abnormal order patterns to call out within Clinical Solutions?

Stephen Gunstream: Yes, I’ll take that one, Steven. Yes, I would say that — I mean, that’s still a phenomenon for us, Mac, right? We have larger order sizes in that part of the business and relatively fewer customers compared to the Lab Essentials. So last quarter, the clinical part of our business was lower than the previous few quarters. This time, it’s up a little bit. So I mean I think overall, we’re seeing general long- term improvement in that area. But sometimes there’s just timing issues related to when customers want product or when they’re conducting internal activities that require the product at a certain time. So I would say that’s the case here. We’re kind of right in range where we would expect to be, and it’s a bit higher than where we were a year ago and even more so compared to the previous quarter, but all more or less within the normal fluctuations.

Operator: Our next question is from Brendan Smith of TD Cowen.

Brendan Mychal Smith: Congrats on the quarter. It’s really good to see. I wanted to actually ask maybe more qualitatively. I think just given recent trends kind of across biopharma spending and priorities in general, kind of talk about slowing down certain programs and focusing more on others. I’m kind of just wondering if there’s anything you’re noticing in conversations with those guys that maybe you call out as especially notable in driving some of those decisions. I fully appreciate it’s maybe not the first thing that’s coming up when you guys talk to them, but really just trying to understand how we should think about to what extent any of those shifting priorities could potentially push orders towards certain segments versus others.

Stephen Gunstream: Yes. Thanks, Brendan. There’s nothing specific that they call out. I think almost every customer we talk to has a different view of which modality is going to be the best. And I think the reality there is that there’s a different modality that’s the best depending on the target disease that you’re after. But I will say there’s obviously a trend here, which is whether or not they can raise money. And there are certain areas where it’s very difficult for some of these small ones to raise money in right now. And I think you can see the shift towards less risky modalities, whether it’s some of the sort of the newer monoclonal antibodies like ADCs and multispecifics or just proven other vehicles that are out there.

But at this point in time, it’s very much around the early stage. I think the positive side of this is that if you’re in a later-stage therapy for the most part, not entirely across the board, but for the most part, those are continuing on, and they are able to get funding and go. And so those customers that we had in that — in those sorts of later stage are executing to the plan they laid out at the beginning of the year.

Operator: Our next question is from Matt Larew of William Blair.

Matthew Richard Larew: Your customers perhaps aren’t affected by NIH and you don’t really sell in China, but they obviously are affected by maybe this set of clouds overhang in the space, concerns around MFN, pharma tariffs, obviously, the ability to raise money in part tied to interest rates and risk appetite. As you’re talking to customers and Stephen, in your comments, you referenced end market conditions, tough for all small customers. What are you hearing from those customers who might be hesitant or waiting on orders about how that spend is going to be unlocked and may be kind of a mosaic of all those things. But as you kind of stack rank what you’re hearing the most and what’s most important, what do you hear from customers?

Stephen Gunstream: Yes, it’s a pretty broad answer across the board. I think in many cases, I would say it’s just predictability and stability, which we haven’t had yet this year. So — and I think when we get some of these moments where things feel like they’re about settled, you can start to feel things pick up. And I would say that even the last 2 or 3 weeks, we’ve seen some positive engagement from customers. And if that continues for a couple of months, I will say that could be potentially upside to things recovering, but I’m hesitant to even think about it that way at the moment. The rest are very much around, okay, when do we want to pull the trigger to actually start executing this. At some point, we had a couple of conversations with customers when it was just kind of in the mode of, well, we’re going to have to do something this year.

We got to get going. So at some point, they decided either we’re going to spend or we’re not going to spend. And I think we’re in that mode now where maybe the first half of the year or the first quarter or third of the year was very much around let’s wait and see. And I think now people are making decisions. And you can see it coming through in terms of either massive cost cuts in some of these customers or cost cuts in an action. And we’re starting to get less of the — we’re just going to wait and see. Hopefully, that helps a little bit there.

Matthew Richard Larew: That helps. You referenced also in your comments, your belief that you’re taking share in part evidenced by your growth. In both of your segments, the dollar per customer was down year-over-year, and I’m sure, again, some of that may be macro in nature and obviously, Clinical Solutions is lumpy. So it sounds like a lot of this is new account growth. So I would just be curious, a couple of years ago when you came public, you didn’t have much in the way of a sales force, online presence. You’ve done, as you alluded to quite a bit of work there. Maybe just give a sense for what kind of the account growth has looked like and maybe the inbound versus outbound work and how that’s changed based on some of the investments you’ve made?

Stephen Gunstream: Yes. I think there is some product mix in there in terms of spend, right? So you say average spend per customer, I think like you said, we are gaining customers. And I mentioned that both on the clinical side, but also the research side where we’re attracting new customers. I think that’s directly related to the efforts we put on the commercial side, right, whereas I think we’re a lot more reactive 4 or 5 years ago. We’re now proactive. The brand is out there. People are recognizing us before people knew us for agar plates. And now we’re getting people proactively finding us as a solution provider on these types of things. And so I think that’s helped quite a bit. So those efforts are helping us attract these new customers.

And I think if we didn’t have those new customers, we wouldn’t be growing as fast. I think thing that’s driving the spend per customer down is just the macro environment, right? The limited funding, while we have a little exposure to the government NIH, we can definitely see some impact there. There’s other areas like in the small, midsized biotech in the discovery side that you can see some impact there as well. So I think the commercial efforts that we put in and the investment is paying off. It’s just hard to see because it’s masked a little bit by the general macro environment.

Matthew Richard Larew: Okay. And maybe last one for Matt. You just printed a gross margin quarter almost at 39%, 31% last quarter. I think to get to the midpoint of your guidance, in that range, low 30s, gross margins would step down pretty decently in the back half of the year. It sounds like maybe there’s some mix from catalog versus custom, but it also sounds like there wasn’t a big pull forward in the second quarter. So just as you’re thinking about gross margin drop-through in the back half and then, I guess, into ’26 and beyond, do you feel like there’s an opportunity to continue to expand gross margins pretty sequentially? Or again, as we’re thinking Q2 to Q3 in the back half, what are maybe the seasonal or other pieces that might push it down?

Matthew C. Lowell: Yes, sure, Matt. And — yes, we’re really excited about the performance that we had this quarter, of course. And that was for very good reasons. Of course, the biggest reason is the one we’ve talked about, which is we’ve got these high fixed cost base incremental revenue drops through, and that’s definitely happening, right? And we did have year-on-year revenue growth. So definitely a significant portion was due to that. We also had some other things in this quarter and a little bit last quarter as well where we had — there’s always these — some favorable and unfavorable items at the lower levels and sometimes a few of those shine through more than others. In this case, we had a few more of the favorables than the unfavorables, which was great.

And I think it’s really the culmination of work that our team has been doing not just in this quarter, but over the last several quarters to become a very effective manufacturing organization compared to where we used to be. And that’s been paying off. So we’ve got things like where we had some lower scrap rates and better management of inventory, and less reserving required there. We’ve looked at some of our processes and made improvements where we’re able to use fewer supplies or use — make — run fewer tests, for example, things that don’t affect the product quality. So there’s been a lot of little stuff as it happens for people that know manufacturing companies that have been adding up. And I think what we’re saying is we don’t want to bet on all those things continuing to go the right way for the rest of the year.

There could be some still good things left that skew towards that direction. So I would characterize it as saying there could be some upside in the second half gross margin compared to what I’ve said. But I think given that a few of these are not as easy to predict, we’re just saying that at this point, we’re not expecting it to go as well as it did in this quarter, but still making those improvements and heading towards higher gross margins with that 70% drop-through in the long term as you think about ’26 and beyond. So we have a great opportunity there, and we’re seeing a peak here early, but it’s — I think it’s going to keep going.

Operator: Our next question is from Matthew Parisi of KeyBanc.

Matthew Moriarty Parisi: This is Matthew Parisi on for Paul Knight at KeyBanc. Congrats again on the great quarter. Started off, I just wanted to ask about the catalog business. You had mentioned on the first quarter call that you expect mid-single-digit growth in 2025. However, you saw low double-digit growth in that quarter. And then you said again today that you saw low double-digit growth in that quarter. Can we assume still mid-single-digit growth for the catalog business for the remainder of the year?

Matthew C. Lowell: No I think that this…

Stephen Gunstream: Go ahead, Matt.

Matthew C. Lowell: Yes, I’ll go ahead and say that — yes. Yes, I did make some reference to this in my remarks. And we’ve been really pleased, obviously, with the performance in the catalog business at low double digits. We did start off the year saying that we were expecting more in the mid-single digits. So at this point, it looks like we’re going to be doing better than mid-single digits for the year. Depending on how the back half turns out, it could be high single digits, it could be double digits throughout the year. So I think we’re still — not pinning it exactly because the environment is very fluid. But if we were to continue, obviously, we’ve had 2 quarters of double digits. And so we’re expecting something above the mid-single digits, either high or low doubles as we continue throughout the year.

Matthew Moriarty Parisi: Awesome. And then a quick question about the Clinical Solutions segment. So I know you had a 30% increase this quarter, and that’s following a 30% decline in Q1. On the Q1 call, you referenced that this 30% decline was due to a large order delivered to a single customer in 2024, and it was attributable to customer timing. So it wasn’t — did not take place in 1Q ’25. I’m wondering, is this customer order what took place in 2Q to cause the 30% increase?

Matthew C. Lowell: Yes. I would say that — I would just kind of chalk this up to that general trend of lumpiness. There wasn’t one particularly large order in this quarter. I mean we have orders of all sizes, of course. So it wasn’t one particular customer driving this. But in any case, in any quarter, there are things that come in and out. And when you have a large one, it’s notable, and we called it out last quarter when we had one in the year-on-year comparison. In this case, there’s no large order a year ago or in this quarter in particular that really skewed it. Again, a combination of a bunch of smaller things adding up. But in terms of a driver, I wouldn’t say that was a factor in either the Q2 this year or last year.

Matthew Moriarty Parisi: So you could kind of say that like kind of higher like 1, low 2s would be kind of the new base for clinical?

Matthew C. Lowell: Yes. I mean we’re kind of in this range now in the last several quarters where we’ve been usually in the $1.5 million to $2 million range, and that’s kind of where the business is at the moment. But in any given quarter, it could be in that range or below it or maybe we’ll get even above that at some point here, but that’s kind of the normal pacing of the business in this environment and where we are right now.

Matthew Moriarty Parisi: All right. And then just one last question, kind of with the phasing of revenue for the back half. I know we normally see a dip in the fourth quarter. I’m just wondering if we should expect to see that again.

Matthew C. Lowell: Yes. I would just say general outlook for the revenue for the second half. I mean we have maintained our guidance. So I’d say we’re probably expecting the second half to be very similar to the first half in terms of revenue. The environment hasn’t changed that much. We are seeing some signs, as Stephen referenced to, that could be good. But as we sit here today, too early to call that, that would push us anywhere other than what we’ve seen for the second half. And I would say, to your point, we generally have a softer Q4 in terms of revenue compared to Q3 only because of the fact that we have fewer business days and the shutdown week in there where that affects the kind of run rate catalog type of revenue that we have in a quarter generally. So we do say that the fourth quarter is usually lower than the third quarter.

Matthew Moriarty Parisi: Congrats again on the great quarter.

Operator: [Operator Instructions] This does conclude the question-and-answer session. I would now like to thank you for participating in today’s conference. This does conclude the program. You may now disconnect.