Letter from the CEO

Growth, acquisitions and continuing global expansion

It’s with joy and pride that I share CELLINK is finishing its fourth quarter and third year as a public company with continued growth, newly completed acquisitions and continued global expansion. During the fourth quarter, net sales increased to 32 mSEK and total operating revenue to 48 mSEK, resulting in a 94% growth in net sales compared to last year. The net sales during the fiscal year increased to 105 mSEK and total operating revenue to 149 mSEK, corresponding to a growth of 131% compared to last year. The company’s position in the global market has strengthened as a result of our continued focus on product development, two strategic acquisitions and the effective work of our global sales team. Our employees do a fantastic job every day and it is rewarding to see our company culture scale up with our incredible growth the past year. CELLINK is now beginning a new and exciting year with expanded markets through acquired and developed products, the implementation of our growth and acquisition strategy and global expansion through new sales channels and active customer work.

Growth

Demand for CELLINK’s products continues to grow globally. According to BCC research, the market is expected to grow 43.9% per year for the next few years. Our sales team has developed extremely well this year. Our digital presence also strengthens our impact and generates a lot of visibility.

The slightly weaker organic growth in the fourth quarter can be explained by a generally weak season and our transition from relying on distributors to focusing on direct sales for larger parts of the European market. CELLINK’s future today and in the future is dependent on how well and closely we work with our customers. We have already emphasized customer relations in the way we develop products, offers and technologies that are then well received by the market. This goes best with our own sales team. We have succeeded with this in our biggest market, the United States. To reach the global market, CELLINK also works with the most reputable distributors for medical technology. In the fourth quarter, the company started building its own sales organization in Europe – we have now established our own offices in France and the United Kingdom. These offices are expected to be up and running by the first quarter of 2019/2020.

This year, direct sales make up 49% of the company’s revenue, up from 40% during Q1 to 60% in Q4, and the plan is to continue to build a global sales team for strategically important markets and continue working with good distributors on the markets that are relevant to business.

This year, the company has supported a complete product portfolio in more than 50 countries around the world, with the United States as its largest market, followed by Europe and Asia. As our user base increases, so do sales of bioink, for which margins are higher. CELLINK has worked to internally develop a large product portfolio of tissue-specific bioinks to generate high value both for CELLINK and its customers.

During the year, CELLINK and its daughter company successfully entered the pharmaceutical market and sold technology platforms to the majority of the world’s 25 largest pharmaceutical companies. Demand for CELLINK’s total product offering in pharmaceutical research increased significantly during the year with the help of new research areas being explored by our current academic customers and scientific publications that describe leveraging CELLINK’s products. Today, pharmaceutical companies make up 15% of our global sales, compared to 5% 12 months ago. The plan is to continue expanding our work in this market, where there is a significant need for our products.

 

Acquisitions

In the fourth quarter, we finished acquiring the German company cytena GmbH, which produces single-cell printing technologies. The focus this quarter has been on achieving sales synergies as identified during the acquisition process. Acquiring cytena can expand the use of CELLINK’s technologies in the pharmaceutical industry, which has been a communicated strategy for CELLINK since 2018. The majority of cytena’s customers are pharmaceutical companies. Many of the customers who use cytena’s products are also potential customers for CELLINK’s products. CELLINK offers bioinks, bioprinters, fast dispensing solutions and a live-cell imaging system to enable creation and monitoring human tissues and 3D cell models. cytena’s single-cell-printing platform not only enables pharmaceutical companies to develop antibodies and cell lines – it also offers an excellent complementary technology to our bioprinting platform and the workflow that pharmaceutical companies need for printing functional tissues. Profit in the fourth quarter was affected by acquisition costs around 2.1 mSEK.

 

Global expansion

CELLINK focuses on expanding globally, and our efforts are driven by passion for our customers and their research that is, in many cases, revolutionary. This year, the company went from 74 full-time employees to 157. This rate of growth and expansion is only possible thanks to our talented team and company culture. When delivering products, we focus on ensuring the highest quality and lowest lead times possible. The company increased the production level and production capacity during the financial year to maintain our delivery rate. We want to thank all of our suppliers for their excellent work and their ability to deliver according to our needs.

In the fourth quarter, the company continues with its talent recruitment with a strong focus on qualified sales executives and application specialists. We are a global company and we recruit the best talent from all over the world. From an employee-branding perspective, we can say that today, we have received thousands of applications to our advertised positions. We pride ourselves on sourcing top talent from all around the globe and having built a team that represents more than 30 different nationalities. We have created a diverse and open workplace where everyone can thrive, grow professionally and do their best. CELLINK’s entrepreneurial company culture plays a vital role in the company’s growth and success. The constant synergistic energy between the departments ensures that the entire company is working toward the same, unified vision.

I want to thank the entire CELLINK team for their fantastic work, the board for their support and all of the shareholders and investors who have showed continued confidence in the company and in me. Now it’s time for the start of a new and exciting year.

 

Gothenburg, Sweden

October 24

 

 

 

Erik Gatenholm, CEO