SOPHiA Genetics SA Aktie

Good morning. My name is Jenny, and I will be your conference operator today. At this time, I would like to welcome everyone to the SOPHiA GENETICS Third Quarter 2026 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference call over to Kellen Sanger, SOPHiA GENETICS Head of Strategy. You may begin.

Thank you, and good morning, everyone. Welcome to the SOPHiA GENETICS Third Quarter 2026 Earnings Conference Call.

Joining me today to discuss our results are Ross Muken, our Chief Executive Officer; and George Cardoza, our Chief Financial Officer.

I'd like to remind you that management will make statements during this call that are forward-looking statements within the meanings of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements.

Additional information regarding these risks, uncertainties and factors that could cause results to differ appears in the press release issued by SOPHiA GENETICS today and in the documents and reports filed by SOPHiA GENETICS from time to time with the Securities and Exchange Commission. During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of IFRS to non-IFRS measures is included in today's earnings press release, which is available on our website.

With that, I'll now turn the call over to Ross.

Thanks, Kellen, and good morning, everyone. Q3 was another strong quarter for SOPHiA. We delivered 25% year-over-year revenue growth as demand for our platform continues to expand. Growth in the U.S. market remained robust. New products in Liquid Biopsy and Solid Tumor continue to gain adoption and new BioPharma collaborations are establishing SOPHiA as a trailblazer in bringing clinical intelligence to patients around the globe.

In addition to the strong growth, we also improved adjusted EBITDA materially in the third quarter by again dropping nearly 60% of our incremental revenue growth down to the bottom line, bringing us closer to profitability. Today, I'll update you on each of these areas and provide more details on the exciting path ahead. SOPHiA was founded with a vision to transform the world's health care data into actionable clinical intelligence for providers and patients.

We started in genomics, where we've established ourselves as one of the largest diagnostic companies in the world. In Q3, the SOPHiA network performed 118,000 analysis on our platform, up 19% since last year. In other words, we analyzed roughly 40,000 patients per month across a network that spans 75 countries and 551 connected institutions globally. That network and the data flowing through it has allowed us to build one of the most sophisticated intelligence engines in health care. Every analysis run on our platform teaches our AI something new. It learns from a real-time real-world data set that is unmatched in its breadth and diversity, including thousands of clinical contacts from patients in over 75 countries.

And the learning doesn't stop with the data. Every day, pathologists, oncologists and scientists across our community review insights, flag cases and feed their expertise back into the platform. The result is something that no institution can build on its own. We call it collective intelligence. Over the last several months, demand for our intelligence tools has been accelerating. Today, I'll touch briefly on 2 areas where we're seeing outsized growth, the U.S. market and Liquid Biopsy. In Q3, we delivered 41% revenue growth in the U.S. market.

The growth has been especially impressive given the scale of our U.S. business, which is now our largest market globally. And based on the strong demand we're seeing, that growth is well positioned to continue. Recently signed major accounts, including North York, Igenomix and a major West Coast health system are scheduled to ramp significantly in the fourth quarter and into 2027.

New signings also remained strong. In Q3 alone, we signed PathGroup, one of the largest physician-led pathology providers in the U.S. to Solid Tumor and HemOnc applications. We also signed the University of Arkansas, the state's only health sciences university for HemOnc. Beyond landing new accounts, our expand engine was strong as well. In Q3, the University of North Carolina Medical Center, a long-standing partner of SOPHiA, added additional applications across HemOnc, Hereditary Cancer and Rare Disorder testing.

These wins, along with our strong momentum in the U.S. reflect a broader trend. Over the past 12 months, we've seen an inflection in U.S. growth. Reimbursement rates are rising, denial rates are improving and sequencing costs continue to drop. These dynamics have created favorable economic conditions for hospitals and labs to launch their own testing capabilities.

Large central labs have proven that genomic testing is highly profitable and now providers want to participate. SOPHiA makes that possible. We enable institutions to launch their own testing in-house. We also empower institutions to retain control of their patient data, an increasingly valuable asset in the care ecosystem. Together, these trends are driving significant demand for our platform in the U.S. and beyond as institutions look for intelligence tools to help them transform their data into actionable insights while also driving beneficial economics.

The second major growth driver in the third quarter was new products. Bringing compelling products to our customers is critical for the widespread adoption of our platform. However, building products that work in labs across the globe is not easy. In 2023, we launched a revolutionary new Liquid Biopsy test, MSK-ACCESS, which allows any institution in the world to bring Liquid Biopsy testing to their institution.

Making this test perform reliably required innovative new AI techniques to ensure accuracy and consistency. That investment is now paying off. In Q3, we performed 4,200 Liquid Biopsy analysis globally, up more than 100% year-on-year and 41% sequentially versus Q2 levels.

Looking ahead, we expect the Liquid Biopsy business to continue ramping, offering a meaningful catalyst for future growth. To date, we have signed more than 85 institutions to the application, including 6 in the third quarter alone. Of these new signings, a large number are currently implementing the platform and ramping usage. Unlike the U.S., Liquid Biopsy is an emerging technology in the rest of the world. As a leader in Liquid Biopsy outside of the U.S., SOPHiA and its growing network are well positioned to capture this growth as adoption increases.

To accelerate the ex-U.S. adoption trend, we are making a series of strategic investments. This includes adding a new medical affairs function focused on generating evidence, demonstrating clinical utility and advocating for the adoption of Liquid Biopsy testing across Europe, Asia and Latin America. I look forward to sharing more on the team's progress and the growing demand for Liquid Biopsy in the quarters ahead. As our genomics footprint continues to expand and our network becomes larger, BioPharma companies increasingly have come to recognize the value of our unique global reach and the data being streamed through our platform.

This has resulted in a series of large signings with BioPharma over the past 9 months, covering areas such as patient selection and stratification, companion diagnostics, foundational model building, real-world evidence and the sponsored deployment of our tests. This quarter, I'm proud to announce that the success is continuing. During the quarter, we signed a major new collaboration with a top 10 BioPharma company to develop a multimodal AI predictor to help identify which bladder cancer patients are most likely to benefit from immunotherapy.

The project leverages SOPHiA's deep expertise in clinical intelligence as well as our proprietary data to build 2 complementary predictive models aimed at understanding patient response to a targeted therapy. Congratulations to the team on this win. This new business builds on the progress discussed last quarter when we announced the signing of not 1 but 2 diagnostic programs with AstraZeneca, the first in SOPHiA's history.

The first CDx program aims to develop a key Solid Tumor application into a decentralized companion diagnostic for patients with prostate cancer. We announced additional details on this program last month, including that the test will incorporate Myriad Genetics' novel prostate cancer-specific genomic instability score capability into the technology. The second CDx program will leverage a hematological oncology application to support a therapy for patients with blood cancer.

Together, these CDxs demonstrate the value of SOPHiA's network. For BioPharma, the hardest part of a companion diagnostic is improving the biomarker works. It's getting the test to patients who need it, everywhere they are at the moment a treatment decision is being made. And that's the problem SOPHiA was built to solve.

Our platform already sits inside hundreds of hospitals and laboratories across more than 70 countries, analyzing genomic data locally and consistently. This means that a CDx developed with us doesn't depend on shipping samples to a single central lab or waiting weeks for a result. It launches where oncologists are already working. Because the same platform brings together genomic, radiomic and clinical data on one patient, you aren't limited to a single analyte test. You can build software as a medical device that reflects how disease actually behaves across modalities and over time, refine it as real-world evidence that flows back from the same network.

The result is a diagnostic that reaches more patients faster, generates evidence continuously and travels with your therapy into every market you enter. That is what clinical intelligence means in practice, and it is why partners who want their drugs to reach the right patients on day 1 are choosing to build with SOPHiA.

To conclude, our commercial momentum keeps building, new geographies, exciting new products and expanded relationships with BioPharma offer meaningful catalysts for future growth. Given these factors, along with the dynamics we are seeing in our end markets, we now expect our full year 2026 revenue to be at the upper end of the previously issued guidance range of $94 million to $96 million. The updated outlook reflects strong business performance, partially offset by the impact of foreign exchange.

Furthermore, as we continue to grow, it is critical that we do so in a sustainable way. In the third quarter, we improved adjusted EBITDA by an impressive 31% year-over-year, dropping nearly 60% of our incremental revenue down to the bottom line. This performance represents the natural operating leverage of our business. Our tech-first AI-native approach built on a highly efficient intelligence platform scales quickly without a proportional increase in cost.

We remain fully committed to profitable growth. As previously stated, we expect to keep converting growth into further improvement in adjusted EBITDA in the fourth quarter and to cross over to positive adjusted EBITDA in the second half of next year. Underneath it all is a growing network of institutions relying on SOPHiA to turn complex data into clinical intelligence. The more data that flows through our platform, the smarter it gets and the more value we deliver to our customers.

With that, I'll turn the call over to George, who will take you through the results in more detail.

Thank you, Ross. As mentioned, Q3 results were strong and our outlook remains positive. Revenue and volume grew once again, and our new business momentum continues to build. Total revenue for Q3 was $24.3 million compared to $19.5 million in the third quarter of 2025, representing year-over-year growth of 25% or 26% on a constant currency basis.

Platform analysis volume was a record 118,000 analysis in Q3, representing year-over-year growth of 19%. From a regional perspective, we delivered strong growth across geographies. North America and specifically the U.S. market continued to be a primary growth driver. North America delivered 45% revenue growth in Q3. Asia Pacific outperformed as well with 33% revenue growth, and Latin America continues to pick up as more wins come online and ramp with strong growth in Brazil and Colombia.

In EMEA, we continue to outperform in relatively underpenetrated regions. Revenue grew over 200% year-over-year in Norway and over 100% in the U.K. From an application standpoint, Solid Tumor, HemOnc, Rare Disorders and Liquid Biopsy all outperformed. HemOnc volumes were up 28% year-over-year in Q3 and Rare Disorders were up 29%. Solid Tumor testing grew 30% year-over-year, largely driven by new applications like our CGP test, MSK-IMPACT Flex.

In Q3 alone, we signed multiple new customers to MSK-IMPACT Flex, including AOU Pisana, a leading university hospital in Italy, Gentodos, an emerging genomics company in Mexico, and Ruhr University Bochum, a large academic pathology institute in Germany. As Ross highlighted, Liquid Biopsy volumes were up over 100% year-over-year in Q3 as MSK-ACCESS customers continue to come online and ramp usage. This quarter, we signed the University Hospital Augsburg, one of the largest university hospitals in Germany, Agilus Diagnostics, one of the largest diagnostic laboratory networks in India, and Hanusch Krankenhaus, a leading hospital in Austria, among others, to the MSK-ACCESS application.

Beyond ACCESS and IMPACT, we landed many other exciting customers in this quarter among our 30 new logos signed in Q3. These include King Chulalongkorn Memorial Hospital, one of the most prestigious academic medical centers in Thailand for Solid Tumors and HemOnc, HBIOMOL, an established molecular diagnostics network in Brazil for Rare Disorders and the University of Newcastle, a globally recognized research university in Australia for Rare Disorders.

Outside of the core genomics business, BioPharma contributed nicely to overall growth as recently signed projects continue to deliver. As we've previously stated, BioPharma is now an accelerator to our growth rate, and we believe it will continue to be so in future years. Core genomic customers were 551 as of September 30, 2026, up from 488 in the prior year period.

Bookings remain strong and despite strong conversion, pipeline remains healthy. Both clinical and BioPharma businesses carry net new business pipelines of over $100 million. As the number of large opportunities continues to expand, we believe the market is moving in our direction, and we are excited to continue capitalizing on our opportunities. On the expand side, we continue to grow nicely within existing customers as they add more and more applications. Our Net Dollar Retention for the quarter was 118%, up 950 basis points from the 108% in the prior year period.

In addition, annualized revenue churn remained world-class at less than 1% in the third quarter, demonstrating the stickiness of our platform once customers join. Gross profit was $15.9 million compared to $12.9 million in the prior year period, representing growth of 23%.

Gross margin was 65.7% compared with 66.3% for the third quarter of 2025. Adjusted gross profit was $17.6 million, an increase of 24% compared to the prior year period. Adjusted gross margin was 72.8% as compared to 73.1% in the third quarter of 2025. Total operating expenses for Q3 were $33.8 million compared to $30.8 million in the prior year period. Adjusted operating expenses or OpEx, excluding the items in the adjusted EBITDA table, was $23.7 million in Q3 compared to $23 million in Q3 of 2025, relatively flat year-over-year.

In Q3, R&D expenses were down 18% year-over-year, and G&A was roughly flat on an adjusted basis, representing strong cost discipline of the team and the natural operating leverage of the business. Sales and marketing was up slightly as we continue to invest in growth. Specifically, we added a few additional headcount in North America to support the strong growth we are seeing in that market.

Operating loss for the third quarter was $17.8 million compared to $17.9 million in the prior year period. This figure, of course, includes the social charge accrual increase due to our stock price increase, Guardant litigation and the restructuring cost impacts. On the Guardant litigation front, we remain confident in our position, both on non-infringement and on the validity of Guardant's patents. As previously mentioned, the Unified Patent Court in Paris rejected Guardant's request for provisional measures in January and ordered them to pay us to reimburse legal fees.

In July, the UPC issued its final decision rejecting Guardant's appeal in full. The court confirmed that there will be no injunction and that we can continue to commercialize MSK-ACCESS without restriction. In addition, Guardant was ordered to pay us further to reimburse costs. Beyond the Paris Court, U.K. proceedings are still ongoing. In Q3, we incurred approximately $931,000 in related net legal expenses, which is reflected as a litigation adjustment in our adjusted EBITDA reconciliation.

In October, Guardant filed a notice of discontinuance in the U.K. proceedings with respect to some of its infringement claims. Guardant's remaining U.K. infringement claims remain pending, and we will update you more in future quarters. Adjusted EBITDA loss was a loss of $6.1 million compared to the prior year loss of $8.8 million, improving 31% year-over-year.

As Ross mentioned, we are proud of the team for the discipline behind this achievement. Our cash position at the end of the quarter was $94 million, which is sufficient for us to meet our long-term goals. We remain confident in our path to profitability and expect to cross over to positive adjusted EBITDA in the second half of 2027.

I'll now turn to our 2026 outlook. Given the continued strength of our performance in 2026, SOPHiA GENETICS now expects our full year 2026 revenue to be at the upper end of the previously issued guidance range of $94 million to $96 million. The updated outlook reflects strong business performance, partially offset by the impact of foreign exchange rate movements at the end of the third quarter, which, if sustained, would be a headwind to fourth quarter revenue.

Beyond revenue, we are reaffirming our full year adjusted EBITDA loss guidance of $29 million to $32 million compared to $41.5 million in fiscal year 2025. As previously mentioned, we took a series of cost actions earlier this year and have realized the benefits of adopting AI across our teams.

These actions reinforce our conviction to grow revenue without increasing headcount. They also give us confidence that we will be able to continue holding the line on operating expenses and reaching our profitability commitment.

With that, I would like to turn the call back over to Ross for the closing remarks before we take your questions. Ross?

Thank you, George. To summarize, Q3 was a great quarter. We continue to deliver strong revenue growth, improve our bottom line and fuel future growth with a strong business momentum across clinical and BioPharma. The SOPHiA mission remains strong, and I couldn't be more excited to lead the company in its next phase of growth.

Thank you to our employees, our partners and our shareholders for the trust you placed in this next chapter.

With that, operator, please open the line for questions.

[Operator Instructions] Your first question is from Mark Massaro from BTIG.

Congrats on a good quarter. I wanted to start with the -- some of the applications. I know you -- I think you talked about Solid Tumor growing 30%, Rare growing 29%, HemOnc growing 28%. Those are all kind of moving in a similar band. Can you just speak to your confidence about the sustainability of these growth rates as we think about 2027? I'm not asking for guidance, but I'm just curious, when you're growing this quickly in the U.S., I would think that you could -- these are still relatively large -- pardon me, relatively small numbers as a percentage of your overall base. But just maybe walk me through how you're thinking about the sustainability of similar levels of growth in the U.S. going forward.

Thanks, Mark. So obviously, as you said, we're quite excited about the breadth of the growth we're seeing across the portfolio. And obviously, this has been quite planned on our side in terms of some of the new product introductions we've had over the last 2 years plus the amount of commercial attention we paid to a number of these markets. So to kind of unpack a few of your comments. So one, on the Solid Tumor side, certainly, with the MSK-IMPACT Flex product, we are, I would say, quite optimistic that we will continue to take share in that arena.

And actually, this last quarter, and you could see it a bit in the spike in S&M costs, we did have some continued key wins in that market that are competitive. And so I think the momentum we will see on the Solid Tumor side will continue into next year. We've also had a really strong trajectory in kind of the HRR and HRD market, where obviously, we also had a CDx win.

And so I would say, overall, there, quite confident in sort of even potentially accelerating our growth rates in Solid Tumor, which remains for us a real focus. On the hematology side, this is one area, particularly in the U.S., where we've had really great strength for some time, and I don't see that changing. We've got some fantastic new product introductions coming with our comprehensive heme product. So think of that almost as kind of a heme CGP as well as some of the monitoring technologies we have, such as like MRD, AML. And so I would say there, we continue to innovate.

It's not as competitive a market as Solid Tumor. And I would say there, we're looking for the kind of growth rates to probably sustain themselves. And then on the Rare and inherited side, obviously, there's been some real developments in that market as a number of entities have moved to exomes and now obviously, you're seeing folks move to genomes.

I'd say overall, certainly on the exome side, we're quite well positioned, and we've highlighted a number of competitive wins there this year that, again, we expect to ramp into the fourth quarter and then into 2027. And so I would expect certainly volume and revenue growth for that product line to continue. I think on the whole genome side for us, it's still early days.

But that is probably a lesser impact in '27 and probably a bigger impact in '28, just given kind of our customer base and portfolio. But generally, overall, I would say what you're seeing today, we expect to continue and maybe even improve into next year. So overall, I'm super pleased with the momentum, and I'm super pleased with the execution of the team.

Okay. Great. Second question, I wanted to ask about BioPharma. Obviously, you recently signed 2 companion diagnostics programs with AstraZeneca. Can you just speak on where you are with those programs in particular? And then more broadly, how would you characterize your BioPharma funnel and your organization's ability to continue to meet the time lines for what you have on your plate versus going out and winning additional business?

Great, Mark, thanks. So on BioPharma, I would say we've really started to see a pretty material acceleration in our core business. And then I would say we've really found our product market fit in a number of key areas. And as you mentioned, the CDx wins were obviously pretty monumental for us in terms of a signal to other BioPharmas in terms of their risk profile to work with us and showing that we can execute on these highly strategic and important programs.

So today, we're obviously still early stages in both of those. And so they will go on for some time. But I'm incredibly optimistic, particularly coming off of ESMO that we will continue to show progress and broaden out our portfolio of entities we work with as well as the diversity of types of projects we can serve on. And so I'm really pleased with on the diagnostics side, the momentum. And then you also saw this quarter for us in kind of the multimodal or AI space, a really nice win.

And again, that side as well is really finding its way. And I think pharma's kind of openness and interest in adopting AI into their drug development process is increasing. And no one is better positioned, particularly on a global basis to serve them than us. And so again, I think a lot of the story this year has been sort of our gaining momentum across the BioPharma business. I think this will continue to be a nice upside driver into '27. At the moment right now, I'm really optimistic of where the pipeline sits. And honestly, we still have a lot to execute on to make sure we deliver on that promise. But at the moment and coming off ESMO again, the momentum and the excitement in that business continues to grow.

Okay. Fantastic. Last one for me. It looks like you did add a few people in North America, I believe, either in the sales or marketing function. I think you talked about adding a resource in medical affairs, I believe, OUS. Can you just speak to how you're thinking about investment in 2027? Are there any areas where you think you can turn the crank just a little bit more? Or do you think you're in a good position as is?

Yes. So I want to be careful not to give too much color on next year. But I would say, look, we're trying to sort of lean into our strengths at the moment. And obviously, this quarter, you saw the U.S. again outperform and that business is getting much larger, and we need to make sure in what's a very competitive market that we stay, I would say, at the forefront and make sure, again, in terms of feet on the street, we are aggressively postured given that I think we can continue to take share.

So there, we did add, but again, just to reassure you, it's pretty selectively, and so the headcount numbers versus maybe others you cover would be modest. But for us, obviously, where we've kept headcount relatively flat for some time is still additive. And then as you mentioned, particularly on Liquid Biopsy, where, again, you saw a very impressive sequential improvement in year-on-year growth. We want to make sure that the adoption continues, right, at the same or greater rates. And so one of the learnings we've had is that there's still education that needs to happen at the oncologist ex U.S.

You look today and interestingly, a lot of our liquid cases are prostate, and this probably wouldn't be the first guess, you would have thought lung or even maybe now with the ESR1 breast. And so I think there's still a lot of use cases for us to kind of educate the clinician on ex U.S.

And so we're going to have an extra effort on that to make sure that we're also help creating this market that obviously today is very well established and other players did a great job of priming in the U.S., but ex U.S., it's still very nascent stages. And so we want to make sure we don't underinvest against that.

Your next question is from Subbu Nambi from Guggenheim Securities.

This is [ Ethan ] on for Subbu. Congrats on the quarter. Just to start, really impressive quarter for Liquid Biopsy. Can you talk about some of your efforts in building clinical and operational infrastructure that got you there? And how that might continue to, I guess, materialize as revenue moving into 2027, especially with the strategic investments in the medical affairs?

Thank you. So obviously, as you mentioned, Liquid for us remains a really nascent but incredibly exciting opportunity. And so over the last 12 months, we've put a lot of organizational effort into sort of the adoption, right, and making sure that folks obviously became aware that the solution is available and that you could now bring this in-house as well as the fact that we obviously had to implement these labs and bring them online.

So now you're starting to move out of sort of the awareness and implementation phase, so I would say, the scaling and adoption portion, right? And so here, again, given Liquid is typically an oncologist, not a pathologist-driven product, we really need to, again, create kind of the clinical evidence that exists today in the U.S. in these ex-U.S. markets and really also help frame some of the reimbursement conversations as well.

And so I would say we're moving to kind of the next phase of the adoption cycle here. Obviously, we're still at very early penetration levels, even at the accounts that we've entered. And so we just want to make sure that we fully maximize this and really, again, bring the ex-U.S. demand and the ex U.S. clinical understanding to the same levels you see here in the U.S. So I think it's, again, an exciting period, but we still have quite a lot of work to do.

Yes. And then on MSK-IMPACT Flex, can you just dig into, I guess, what's resonating with these customers? And is that opening any doors to labs that maybe wouldn't have adopted the full panel like a larger community practice, somebody who doesn't -- or has the infrastructure to bring testing in-house, but maybe is still cost sensitive?

Sure. So I would say, one, obviously, the product is available on multiple platforms, right? And when you look at many of the newer platforms versus the legacy platform, the cost is materially different, sometimes as much as 50% cheaper. So now you can run a comprehensive genomic profile, sometimes at a level of what it costs you to run a small panel, right?

So you're seeing a major shift in the cost infrastructure to run these assays, which I think is really important and will continue to drive folks to more and more complex solutions like this. I would also say with all of the new approvals on the drug side, the number of actual mutations and markers that exist on the larger panels argue for a more broad genomic scope than what was done previously, right?

So I think, again, all of the factors of what are happening in the ecosystem are all pushing folks to these more complex technologies, which, again, for us is great given how our platform is situated. I would also say that versus some of the legacy capabilities, our ability to detect certain highly complex mutations is also superior. So you look at a new area that's going to be super hot like MTAP, and we just had a player run a head-to-head. It was actually us against both centralized and decentralized players, and we came out #1, right, in terms of sensitivity and specificity.

And so I think the ability to outperform both from a, I would say, accuracy and quality perspective, but also do so at an increasingly lower cost, that combination in the market with the flexibility of the product has really resonated. And I think also the concept of owning your own data and retaining access to that has become critical, particularly given what you're able to do with AI. And so all of these factors coming together, I think, will continue to drive that product line forward.

Your next question is from Dan Brennan from TD Cowen.

It's Kyle on for Dan. I just wanted to ask a question about the backlog. I think you had a notable backlog coming into this year, just given the strong new customer adds you saw in 2025. And I think this year, you've signed just over 70 new customers to date. I guess, can you discuss your backlog of customers waiting to be implemented in the platform? And then I guess, knowing that a customer has to be a user of DDM for a year before they're included in the core genomics customers number, how many total customers are using the platform at the moment?

Sure. Thanks, Kyle. So I would say, in general, and you can take it positively or not depending on how you want to think about it, but the backlog actually still remains quite high. So we've done a good job of obviously working down some of the legacy signings and getting a bunch of new logos live and new applications live. But at the same time, bookings have been incredibly strong. We actually just came off of one of our best quarters ever in terms of bookings.

And so as quickly as we've tried to get things into the revenue, new things are coming into the backlog. And so we're still seeing a bit, I would say, of growth there. And I guess the positive would be it gives us very good visibility into '27. But obviously, we would like to see things continue to convert faster. George, I don't know if you want to comment on sort of how that positions us in terms of visibility going forward, et cetera.

Yes. No, like Ross said, really the nice part of this is we know these clients are going to start. They're actively working with our MaxCare team on their validation. So it's really the timing of when they're going to start. But the nice part of that is when you look at our 2027 numbers, 95% of that growth is basically already covered or signed up. So really, when you look at the revenue growth that you're going to see in 2027, it's from the closes that we've made in 2026. And like I said, our MaxCare team, they're flat out. They're working very hard.

But as fast as they get accounts out, our sales team has been very good about putting new accounts into their bucket. So I think it's generally a very positive quarter in terms of the bookings and the backlog is -- I guess it's a good problem to have, but we continue to migrate accounts out and it increases our confidence and our visibility in our 2027.

Got it. And then maybe ask one more. You mentioned in the press release that you signed an expansion deal in the U.S. valued at over $2 million per year for Rare Disease applications. Can you just give us a little bit more detail on the quantification of that $2 million? And I guess, meaning how long would it typically take for a customer to ramp into that $2 million per year opportunity?

Yes. So historically, I would say to go from signature to actively generating revenue in the early phases of scale up, it could be 6 or 9 months. In this case, it's an existing customer adding a new or a second or third application. And so I would say their familiarity with the platform, it could be a bit faster. But certainly, I think this will, again, as well as with the others we've discussed kind of give confidence to the sustainability or even potential acceleration of that U.S. growth rate. And so this was a really nice competitive win for us.

Again, it's a proof point in an area that remains, I would say, very competitive in terms of type of business that was done through send-out versus today that's coming in-house. And so again, I would say we're very pleased with this expansion, and we're looking forward to it contributing at some point in 2027.

Your next question is from Swayampakula Ramakanth from H.C. Wainwright.

First question is just trying to understand your guidance. You now expect revenue towards the upper end of your annual range despite having an FX headwind. So at $96 million, which roughly gets to $26.7 million in the fourth quarter. So what are you estimating into this? Or what are you anticipating, especially regarding FX headwind? And also what are the pushes and pulls on that range that you're anticipating for the year-end?

So obviously, what we were trying to signal with the guidance is that the underlying performance remains strong and continues to, I would say, improve, albeit -- and George will give you more detail, we did, just given some of the changes in the FX environment, see a fairly, I would say, quick reduction in the euro and franc, which has been a headwind to our reported top line, particularly for the fourth quarter, right, which was not originally contemplated in that guide. So I think the overall point is the underlying is quite healthy.

Now if you think about sort of pushes and pulls, I'll let George go into more detail. But I think the main point, if you think about our business, right, outside of the typical usage of the platform, the pieces that tend to sort of move are BioPharma-related milestones and then as well the ramp of new starts, right? So obviously, we've got a few material things happening in the fourth quarter. So we tend to be conservative. But George, I don't know if you want to give a bit more detail on kind of what's contemplated.

Yes. No, as Ross said, we don't want to pretend that we can predict the foreign exchange markets. But you do see a significant drop relative to the euro, relative to the U.S. dollar in September, and that's carried over into October and early November. So we're really just assuming that foreign exchange rates pretty much stay where they are rather than move dramatically in either direction. But that will be a slight headwind to our revenue growth. So our actual constant currency growth will be a little bit higher than what we actually will report.

So -- and then as Ross said, our overall -- our tone is to be conservative, and we continue to want to do that, and that's why I think we've guided to where we've guided to. Business remains very, very strong, our clinical bookings are strong, and our Pharma business continues to just continue to do very, very well. So we're confident, but I think overall, we just want to be conservative on the overall guide.

Okay. Ross, one more question on the financials. The gross margin improved sequentially, which is nice. But how much of that improvement reflects operation scaling versus -- I remember you stating some of the initiation or the implementation costs were a little bit higher. How much of that is normalizing now as you have been doing this for a longer time in the United States?

Yes. No, we believe our platform is highly scalable. That's why over time, we do believe our gross margins will continue to improve sequentially. Now Pharma projects may come on board and typically Pharma projects at start of a project may have a little bit more on the cost side. And even companion diagnostics, again, you're going to probably have front loaded costs. But you saw the margin sequentially improve, and that's a very positive sign. And again, our platform is scalable. So again, if you think of our revenue doubling, that incremental revenue actually will come in at higher margins than what we see currently. So over time, we do expect gradual improvement in our gross margin percent.

Your next question is from John Wilkin from Craig-Hallum.

I wanted to dive a little bit more into the PathGroup customer signing. I know you guys mentioned it for Solid Tumor and HemOnc, but I was wondering if you're able to quantify the size of what you think that customer can look like once they're fully ramped? And if there's any caveats to their initial use of the platform, like if it's going to be their full amount of HemOnc and Solid Tumor volume running through you guys right off the bat or if it's some subset of that?

So obviously, we don't tend to always comment specifically on customers for a variety of reasons. But obviously, on this one, we're quite excited around bringing them online. This is obviously a fantastic long existing pathology franchise in the U.S. and a really marquee win for us, I would say, on bringing another more centralized player that serves kind of a fairly broad community on board. It is a really nice win for us.

Again, I'm not going to give you the dollar amounts, but it's notable. And so I would say, in general, typically, we will start with a good percentage of someone's volume, and then we will expand over time. And so we expect to sort of, I would say, win their remainder of business that they're doing with other vendors there. But certainly, this is one where the expansion potential is very material. And so we're super excited to be working with them. We're proud of the U.S. team for winning this, and we're looking forward to updating you on as it ramps.

Perfect. That was helpful. And then I know you guys aren't guiding to 2027, but I wanted to ask just on more of a philosophical level, like just given the size of the pipeline you guys have, but also with this commitment to grow profitably and reach that EBITDA breakeven mark, how are you thinking about balancing the investments that might unlock some of the bottlenecks in that large pipeline versus trying to stay on track with the profitability targets?

John, it's the question I feel it every day. So I appreciate you asking it because practically, it's probably one of the more underappreciated things of what we're doing here. I mean you can see the revenue momentum we are driving despite sort of what is not sort of grown on the OpEx side. And so I'm really proud, and we didn't talk a lot about it, but I'm really proud about the EBITDA improvement we showed this quarter. And obviously, we've been very committed to getting to breakeven.

Now you heard it more in the script, we didn't talk about in the Q&A. But obviously, if we think about where clinical intelligence is going and the power of our network in that context, there are some select investments we will want to make just to make sure that we remain at the forefront of some of these new emerging trends. Because I think -- and you see it in some of the very large IPOs coming, this concept of really having unique value and diversified global intelligence, this is going to be a real theme. And we are one, if not the only player within our universe that can play in this arena, right?

And so we want to make sure we don't lose that positioning as most others are very localized in terms of the data sets that they have access to. So we will make some investments in 2027 related to kind of our push into clinical intelligence, but they're going to be quite measured. And so what we're trying to do is fund areas where we see, I would say, force multipliers of growth and really high upside potential where we have unique competitive positioning, similarly on the commercial side, but then use some of the efficiency efforts we've made using AI and other tools internally to sort of scale processes to make sure that we can pay for some of those investments vis-a-vis our existing cost base and not really, again, materially increase the OpEx.

And so I would say 2027, again, is a critical year for us. We've made our commitments. We are making, I would say, bigger bets in some areas, just given the momentum we have and the excitement we see from our customer base in a number of key areas where we're differentiated. But we're certainly not backing off the trend. And I think this quarter, if anything, showed you that we're willing to do the hard work, right? We're willing to continue to try to grow this business well north of 20% or 25% and make sure we continue to drop that down to the bottom line, which is our commitment and remains our commitment.

Your next question is from Bill Bonello from Craig-Hallum.

Sorry, John asked all my questions. I just didn't know how to withdraw.

It's okay, Bill. We're always happy to hear from you.

There are no further questions at this time. I will now hand the call back over to Ross Muken, CEO, for the closing remarks.

Thank you. Obviously, we're incredibly optimistic coming off another solid quarter here at SOPHiA. I want to thank certainly all of our employees and partners and our shareholders for their support. I just want to note, we're going to be participating in a few upcoming conferences. So we'll be at UBS, at Craig-Hallum, at Jefferies in London, Citigroup, Evercore and Piper Sandler. So we look forward to engaging with folks at those upcoming events if you would like to sit down with us and discuss more. Otherwise, I wish everyone a good election day here in the U.S. and then a good day around the world. So thank you so much.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.

Good morning. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the SOPHiA GENETICS Second Quarter 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded on Tuesday, August 4, 2026.

I would now like to turn the conference over to Kellen Sanger, SOPHiA GENETICS Head of Strategy. You may begin.

Thank you, and good morning, everyone. Welcome to the SOPHiA GENETICS Second Quarter 2026 Earnings Conference Call. Joining me today to discuss the results are Ross Muken, our Chief Executive Officer; and George Cardoza, our Chief Financial Officer.

I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. Additional information regarding these risks, uncertainties and factors that could cause results to differ appears in the press release issued by SOPHiA GENETICS today and in the documents and reports filed by SOPHiA GENETICS from time to time with the Securities and Exchange Commission. During this call, we will make -- we will present both IFRS and non-IFRS financial measures. A reconciliation of IFRS to non-IFRS measures is included in today's earnings press release, which is available on our website.

With that, I'll now turn the call over to Ross.

Thanks, Kellen, and good morning, everyone. Today is my first earnings call as CEO. So before we jump into the quarter, let me tell you about where we are as a company and where we're going. Since SOPHiA was founded in 2011, the mission has not changed. Jurgi started SOPHiA with a dream to use genomic and clinical data to improve patient outcomes across the world. Today, the destination is just as clear. We intend to become the AI platform for precision medicine, the connected intelligence layer that makes every clinical decision smarter than the one before it. What has changed over the past decade is how close we are to the destination and how clear the path forward has become.

Our business today is healthier than ever. Revenue is accelerating, the network is built, the platform thesis is proven, and customer trust, which we have earned across more than 1,000 institutions in 75 countries is a moat that cannot be bought or replicated. This is a company built on a proven foundation with a large market ahead of it and everything it needs to operate at scale that it has not yet reached. My job is to deliver that scale for patients who deserve better outcomes, for shareholders who trusted in this platform's long-term potential, and for a team that has spent years earning the right to win.

The plan for getting there was laid out in the founding strategy. Phase 1 was to build. We spent a decade building a network and AI platform driving widespread adoption and delivering value to clinicians and patients along every step of the way. Phase 2 is to leverage. To leverage our network and its data to power biopharma partnerships, build real-world evidence, and bring clinical intelligence closer to the point of care. This is how SOPHiA DDM becomes the AI platform for precision medicine.

As we look ahead, 4 interconnected pillars will fuel our future growth. First, we will continue to scale genomic diagnostics globally, landing new customers and expanding within existing accounts to build the network that powers everything we do. Second, we will evolve our genomic applications into regulated companion diagnostics and software as a medical device to get us closer to the patient, collect even more data, and further extend our network. Third, we will use companion diagnostics and multimodal software as a medical device to evolve our genomic data stream into a true real-world evidence data layer that connects clinical, genomic, and other multimodal data and creates a strategic asset for biopharma and clinicians broadly.

And last, we will leverage our data and AI to pioneer clinical intelligence and create tools like digital twins that power decisions across the full clinical picture. In other words, we are past the existential questions. Is the thesis right? Can the network be built? We have answered both. Now we execute. With that, let me update on what we delivered in the second quarter and how we are setting the tone for expected future performance.

Revenue grew 27% year-over-year in Q2, and analysis volume was up 22%. We demonstrated strong operating leverage in the quarter as adjusted EBITDA loss improved 27% year-over-year, dropping 60% of our revenue growth down to the bottom line. We continue to push to scale genomic diagnostics globally by performing a record 115,000 patient analyses in Q2, while also fueling future growth with new wins. We landed 24 new customers in the second quarter alone and expanded nicely across existing accounts with net dollar retention of 117%, 1,000 basis points versus last year. The primary drivers behind our performance in the second quarter was growth in the U.S. and in liquid biopsy.

In Q2, we delivered 64% year-over-year revenue growth in the U.S. market. This performance was driven by 60% volume growth as many U.S. customers began to come online. The growth has been especially impressive given the increasingly large base in the U.S. To continue fueling this growth, we landed several new customers in the quarter. We signed the Children's Hospital of Philadelphia, the first pediatric hospital in America and a global leader in pediatric oncology. Together, we are developing a new liquid biopsy test optimized for pediatric cancers. I couldn't be more excited for this partnership, and I'm looking forward to working together to help young cancer patients.

This signing, as well as other recent momentum in the U.S., is part of a broader trend. In the past 12 months, we have seen an inflection in demand in the U.S. market. As reimbursement rates become more established and denial rates improve, hospitals and labs are waking up to the benefits of launching their own testing capabilities. Central U.S. labs have proven that testing is immensely profitable and that genomic data has significant value. Now U.S. hospitals and labs are making in-house testing part of their core strategy, and those who adopt SOPHiA are seeing significant benefits.

The second key growth driver in Q2 was liquid biopsy, where we delivered 80% year-over-year revenue growth. We also signed major new customers in the quarter, including AZ Delta Roeselare, one of the largest hospitals in Belgium, Poly Clinical Reunite Hospital at the University of Foggia in Italy, and Sultan Qaboos Cancer Center in Oman. In total, we've now signed 80 liquid biopsy customers globally, more than half of which are still yet to begin generating revenue, giving us substantial runway to support future growth.

As our genomics footprint continues to expand and our network becomes larger, many players in the space have come to recognize the value of our unique global reach and the data being streamed through our platform. AstraZeneca, in particular, has been a key partner of SOPHiA for the past several years. They have contracted us to build AI models for patient selection and trial design, partnered with us to access real-world evidence from our network, and sponsored the deployments of our tests globally.

Today, I'm thrilled to announce the latest collaboration between SOPHiA and AZ. This morning, we announced the launch of not one but 2 companion diagnostic programs with AstraZeneca, the first CDx wins in SOPHiA's history. I'm excited now to share a bit of information about each program. For the first CDx program, we will develop our solid tumor application into a decentralized companion diagnostic. The second CDx program will leverage our hematological oncology application to support a therapy for patients with blood cancer. These 2 CDx programs represent the value of our global network and decentralized model as well as our ability to get even closer to the patient and increasingly regulated products.

These programs will not only provide a meaningful revenue accelerator for years to come, but they will also provide a foundation to collect even more data about the patient, build real-world evidence assets and develop new and unique clinical intelligence tools. And with these two wins, we are just getting started. Beyond biopharma, we also announced a significant evolution of one of our closest clinical partnerships in Q2. In the spirit of pioneering clinical intelligence, Memorial Sloan Kettering and SOPHiA announced the signing of an MOU to form a joint venture. The JV will combine MSK clinical expertise, testing footprint and unmatched multimodal data assets with SOPHiA's AI platform to accelerate the new generation of precision oncology.

Specifically, we will aim to build an AI lab of the future in New York City with infrastructure to develop and launch new applications, support biopharma and build new multimodal clinical intelligence tools. We couldn't be more excited about this partnership, and I look forward to keeping you updated as we move to a definitive agreement in the coming months.

To conclude, Q2 was an outstanding quarter. Revenue growth continues to accelerate, and we continue making great progress towards profitability. The market is reshaping itself around intelligence, and we are perfectly positioned to accelerate this movement. As a result, we are raising our full year revenue guidance to $94 million to $96 million or 22% to 24% growth. This reflects our confidence in both our execution and the opportunity ahead. In addition, we also reaffirm our commitment to profitable growth. As stated previously, we expect to be approaching adjusted EBITDA breakeven by the end of this year and crossing over to positive adjusted EBITDA in the second half of 2027.

In June, we closed an oversubscribed public offering that raised approximately $57.5 million in gross proceeds. This fundraising brings our cash and cash equivalents to $107.7 million at the end of Q2. We believe our current capital is now sufficient to fund our growth plans and will enable us to control our own destiny going forward.

With that, I'll turn the call over to George, who will discuss the results in more detail.

Thank you, Ross. As mentioned, Q2 results were strong and our outlook remains positive. Revenue and volume growth accelerated once again as our momentum continues to build. Total revenue for Q2 was $23.3 million compared to $18.3 million in the second quarter of 2025, representing year-over-year growth of 27%. Platform analysis volume was a record 115,000 analysis in Q2, representing year-over-year growth of 22%. From a regional perspective, we delivered strong growth across geographies. North America and specifically the U.S. market continued to be a primary growth driver.

As Ross highlighted, U.S. volume grew 60% in Q2 and U.S. revenue grew 64%. Asia Pacific outperformed as well with 27% volume growth and 31% revenue growth. EMEA was also strong and volume growth was roughly in line with the company average. And Latin America picked up a few recent wins, which we will begin to come online. From an application standpoint, HemOnc, rare diseases and liquid biopsy all outperformed. HemOnc volumes were up 34% year-over-year in Q2 and rare disorders were up 35%. Solid tumor testing grew slightly above the company average as well, largely driven by new applications like our CGP test and MSK Impact Flex.

Outside of the core genomics business, biopharma contributed nicely to overall growth as recently signed projects continue to deliver, including the major deals announced with AstraZeneca at the beginning of the year. As we've previously stated, biopharma is now an accelerator to our growth rate, and we believe it will continue to be that in future years. Core genomic customers were 542 as of June 30, up from 490 in the prior year period. In the first half of 2026, we implemented 40 new customers who have now entered routine usage. Credit to the team for continuing to manage the recent influx of new customer signings.

Despite the strong bookings, pipeline remains strong and healthy. Both clinical and biopharma businesses carry net new business pipelines of over $100 million as the number of large opportunities continues to expand. We believe the market is moving in our direction, and we are excited to continue capitalizing on our opportunity. On the expand side, we continue to grow nicely within existing customers as they add more and more applications. Our net dollar retention for the quarter was 117%, up 1,000 basis points from 107% in the prior year period. In addition, annualized revenue churn remained world-class at less than 1% in Q2 2026, demonstrating the stickiness of our platform once customers join.

Gross profit was $15.1 million compared to $12.3 million in the prior year period, representing growth of 23%. Gross margin was 64.6% compared with 67% for the second quarter of 2025. The increase in our pharma business and in other services income led to a slight margin decrease in Q2, which I'll talk more about in just a few minutes. Adjusted gross profit was $16.8 million, an increase of 23% compared to the prior year period. Adjusted gross margin was 72.1% compared to 74.4% in the second quarter of 2025. The decline in gross margin was primarily due to an increase in our biopharma business and our services business. Our biopharma business typically has lower margins at the start of projects, and this quarter, it depressed our gross margins by 0.8%.

On the clinical side, we also saw an uptick in our services revenue in Q2 as we help clients set up robotics and efficient NGS workflows in their labs. In this case, we had more R&D resources than usual working on customer implementations. This moves dollars from the R&D line up to the COGS line as they are linked to revenue and we charge for the implementations. These services typically come at smaller margins than our standard analysis margins.

Total operating expenses for Q2 were $35.1 million compared to $30.8 million in the prior year period. Some specific items temporarily impacted reported operating expenses and are worth calling out directly as they do not reflect the company's underlying operating performance and have been removed in order to get to the adjusted EBITDA numbers.

First, we mentioned during our last earnings call that we executed a series of targeted cost actions in April. These actions will drive material savings in the second half of 2026 and future years. But in Q2, we will be absorbing a restructuring cost of approximately $1.25 million related to terminations and severance. Second, as previously disclosed, Guardant Health filed patent infringement claims against us in the United Kingdom and at the Unified Patent Court in Paris last year. We incurred approximately $1.1 million in related net legal expenses during Q2, which is reflected as a litigation adjustment in our adjusted EBITDA reconciliation.

In January, the UPC rejected Guardant's request for provisional measures and ordered them to pay us $700,000 in interim costs. $500,000 of which we received in Q1 and $200,000 of which we received in Q2. On July 2, the UPC Court of Appeals in Paris issued its final decision, rejecting Guardant's appeal in full. The court confirmed that there will be no injunction and that we can continue to commercialize the MSK access test without restriction. Guardant has been ordered to pay us a further $100,000 in interim costs. We remain confident in our position, both on non-infringement and on the validity of Guardant's patents, and the U.K. proceedings remain ongoing.

None these one-off items, we did invest in sales and marketing during the quarter, specifically adding a few headcount in North America to support the strong U.S. growth. You should expect us to make small additions in this team slightly throughout the year to invest in the substantial opportunities we have in the U.S. market. Adjusted operating expenses, our OpEx, excluding items in the adjusted EBITDA table, was $25.6 million in Q2, exactly flat compared to last year. Operating loss for the second quarter was $20.1 million compared to $18.5 million in the prior year period. The figure, of course, includes the litigation and the restructuring cost impacts.

Adjusted EBITDA was a loss of $8.8 million compared to the prior year loss of $12 million, improving 27% year-over-year. As Ross mentioned, we are proud of the team for this achievement. During the quarter, we had year-over-year revenue growth of $5 million and improved adjusted EBITDA by $3.2 million. In other words, we dropped more than 60% of each incremental revenue dollar down to the bottom line. Dropping down this much revenue growth to the bottom line by holding expenses relatively flat is especially impressive in the face of our accelerating revenue growth.

Lastly, total cash burn, which we define as the change in cash and cash equivalents, excluding cash received from borrowings and stock sales as well as FX impacts was $12.9 million compared to $11.9 million in the prior year period. This year-over-year increase includes 2 expected dynamics. First, cash costs related to the restructuring reserve we took based on cost reduction actions in the second quarter of 2026, including severance and separation costs. And the second reason was the net legal costs related to the Guardant Health lawsuits.

In the quarter, we executed an oversubscribed public follow-on offering that raised approximately $57.5 million in gross proceeds, bringing our cash and cash equivalents to $107.7 million at the end of Q2 2026. This raise will enable us to continue investing in our future growth and allow us to control our own destiny going forward. We remain confident in our path to profitability and expect to be approaching adjusted EBITDA breakeven by the end of this year and fully crossing over to positive adjusted EBITDA in the second half of 2027.

I'll now turn to our 2026 outlook. Given the strength of our performance in the first half of 2026, SOPHiA GENETICS is raising our full year revenue guidance for 2026 from $92 million to $94 million to $94 million to $96 million, representing 22% to 24% year-over-year growth. A few notes on second half revenue. As a reminder, our business is typically seasonally stronger in Q4. The CDx deals announced today will impact growth primarily in 2027 as the programs reflect multiyear agreements with tiered milestones. Beyond revenue, we are reaffirming our full year adjusted EBITDA loss guidance of $29 million to $32 million compared to $41.5 million in fiscal year 2025. As previously mentioned, we took a series of cost actions and have realized the benefits of adopting AI across our teams. These actions reinforce our conviction to grow revenue without increasing headcount. They also give us confidence that we will be able to continue holding the line on operating expenses and reach our profitability guidance.

With that, I would like to turn the call back over to Ross for the closing remarks before we take your questions. Ross?

Thank you, George. To summarize, Q2 was an excellent quarter. We continue to accelerate revenue growth, improve our bottom line and fuel future growth with strong new business momentum across clinical and biopharma. The SOPHiA mission remains strong, and I couldn't be more excited to lead the company in its next phase of growth. Thank you to our employees, our partners and our shareholders for the trust you've placed in this next chapter.

With that, operator, please open the line for questions.

[Operator Instructions] Your first question comes from Subbu Nambi with Guggenheim.

This is Ricky on for Subbu. Congrats on the quarter, guys. So 64% revenue growth and 60% volume growth in the U.S. is really impressive. Could you provide some additional color on where you're seeing the most growth here, maybe which types of customers? And how much of this is from existing SOPHiA DDM applications and how much of it is from MSK applications?

Thank you, Ricky. So in terms of the U.S. market, we're incredibly excited about the trends that we're currently seeing. And really, I would say the strength is across the board. And we're seeing, I would say, again, a bias, particularly with sort of what's happening with falling sequencing costs and firming reimbursement rates. We're seeing entities of all sizes really shift their thinking and look at in-house testing as kind of a very viable option. I would say in the immediate term, where we're seeing the most demand is really, I would say, in 2 product lines.

So one, it's in exomes, where we're seeing our enhanced exome product really, I would say, drive great demand relative to a combined offering for rare disease, but also enabling customers to do hereditary cancer testing, pharmacogenomic testing and carrier screening. So, it's really a unique product in the market and one where we're seeing really good demand across the board. I would say the other product for us that's been a strain for some time that we continue to build on is more on the Hem side. And so we're seeing that in many of the traditional areas of myeloid, et cetera, but also increasingly in CLL and AML, MRD. And so we're incredibly excited as well around what we're seeing in blood cancer.

But frankly, across the board now, we're also seeing early signs, to your point on MSK that there's an increased interest in liquid biopsy testing being brought in-house. And then solid tumor testing as well has been done for some time. But I think moving more to the CGP side of things is also a trend. So again, it's really quite broad-based, and we expect the U.S. market to remain a real growth driver for us for the foreseeable future.

That's really helpful. And then in the U.S. and also maybe more broadly, how has the cross-selling of applications been trending so far year-to-date? Is there anything you could share maybe on the average applications used per customer?

It's a good question. So I would say this year, relative to last year, we've been much more focused on the expand than we have the land, right? You see that a bit in the new logo numbers, and it's been intentional. And so we focused on the land side on larger accounts. And sometimes, to your point, that will come with a multi-application land. So we've certainly seen that trend, and that's helped our ACVs in general for the land side. But I would say really on the expand side, there remains massive potential. So we today are a little bit over 2.5 applications per customer, right, of the, I would say, double digits that folks can adopt. And so there's huge room for us, hence why we focus on the NDR for us to continue to upsell even within our existing base.

And so we're seeing really nice, I would say, new examples where people are combining both liquid and solid testing, so MSK ACCESS with MSK IMPACT on the land. We're seeing on the expand side people go from hematological malignancies into solid tumor with us. We're seeing folks that were doing hereditary cancer move into rare disease and other areas. And so there's really some natural places where we can have a multi-app land and/or expand. And so I would expect this to continue to be a really nice trend for us.

And again, if we think about our penetration, to the point I made earlier, in terms of 2.5 applications per user, again, we can grow within our existing base at a very high rate for the foreseeable future. And so that's really nice in terms of having a recurring revenue business. And it's also, I would say, quite good as you're trying to sort of minimize your incremental spend. This is one of the secret sauces of how we've been able to also keep our operating expenses at bay while continuing to accelerate the growth rate.

Your next question comes from Mark Massaro with BTIG.

This is Megan on for Mark. Thank you for taking our question. Our first one has to do with headcount. You touched on it a bit on the call, but I was just hoping we could double-click a bit there. So with almost $110 million in pro forma cash, does that change how you're thinking about adding commercial and implementation resources around the U.S. and maybe also ex U.S.?

Sure. So maybe I'll start with some high-level comments, and then I'll let George give a few specifics on the operating expense side. So I'd say broadly, we've been able to keep FTE count relatively flat. And that's really a testament, again, to the hard work of the SOPHiA team as we've been able to increase our productivity across the organization. Kelly as well has been very focused on us becoming more AI-native. And so he and a number of other individuals in the organization are finding ways for us to use some of these more advanced models and other tools to allow us to be more productive as well.

So I would say, overall, really pleased around our ability to absorb the growth with very minimal headcount additions. To your point on the commercial side, and particularly in the U.S. at the moment, with the growth being elevated and the opportunities that we're seeing, we are investing in that portion of the sales force. And so you're seeing us selectively add headcount there in a number of key geographies as well as covering a few customer bases that historically we have not touched, like community oncology. So I would expect that to continue. You've also seen us globally make select investments. So, we entered Japan. We're continuing to invest in that market. We see it becoming one of the biggest opportunities for SOPHiA over the next few years.

We've invested a bit in the U.K. We've seen great growth actually in Austria and Belgium and have put some feet there as well. And then Germany would be the other big area. So I would say, overall, we've been very targeted with the investments we've made, and we expect high returns on those investments. And so again, a lot of that is in order to continue the acceleration of revenue growth that we've been exhibiting. And then the last part would be also on the pharma side where we had today two tremendous wins. And these are really, for SOPHiA, I would say, landmark contracts and ones that will bring other business. And so there as well, you should expect a modest amount of investment to continue that trajectory.

George, do you want to give maybe a bit more comment on the operating expense side?

Yes. No, I mean, I'll echo what Ross said though on AI. And I do think it is helping us in areas improve productivity across the board, and we've looked at a lot of areas in terms of where we're even targeting things like customer implementations and our plans going forward, which, again, is important for us. We work very hard to be disciplined on the OpEx side. And you can rest assured we're going to continue to be so on that front.

Relative -- obviously, our cash balance now is very strong with over 9 figures in the bank, which is a nice position to have. And certainly, we feel we're now in a good position to control our own destiny and there are great growth opportunities, and we're at 27% growth, but certainly aiming even higher in 2027 and 2028. So, we're optimistic about where this company can go. And as the growth opportunities and the high-ROI opportunities come before us, we're going to take action now, especially now that our balance sheet is strong.

The next question comes from John Wilkin with Craig-Hallum.

Another good quarter. I'm wondering if you could give a little more detail on this Lab of the Future with MSK. It sounds like it's essentially an R&D center to fuel AI-related precision medicine initiatives. But any additional detail you can give there, including if there's any financial impact over the next year or so?

Thanks, John, for the question. Obviously, this is a really exciting development for SOPHiA. We've been incredibly pleased with the progress we've made with MSK, bringing both the IMPACT and ACCESS solutions now to north of 100 accounts globally. And so this is really, I would say, a game changer for us, and it's been, I think, a fantastic partnership as well for MSK. So obviously, as we look at the landscape and particularly what's developing in the U.S. market, and we look at what our pharma customers are asking of us, we want to remain highly innovative. And so you should expect this to be a center where new product development and new tools and new ways of practicing oncology -- and bringing that concept of collective intelligence to the patient, to the clinician -- become a reality.

At the moment, we're still working through the definitive agreement. So I don't want to share too much in terms of our expectations for both the financial contribution and sort of long-term aspects. So John, unfortunately, you're going to have to wait a bit for us to kind of finish some of the points. But I would say for us, this is really a groundbreaking again, kind of concept and one I think that others will see and likely want to follow suit. Again, the U.S. market right now is really looking to transform itself. You see the tremendous value that's been created by the central laboratories.

And I think particularly in oncology, but also in rare disease, this is becoming an area for hospitals where this can be really strategic. And so again, I think this is an expression of that and willing again of a large academic medical center at the top in the world to want to put capital behind it. So again, stay tuned, but we're incredibly excited about what this can become.

And then on the pharma side, one, just wondering if there's any more detail you can give around the 2 new deals that were signed, including if you're able to quantify just the order of magnitude deal size. And then within Q2, if you're able to parse out at all with U.S. growth accelerating to 64%, obviously, very impressive. If you're able to parse out how much of that is coming from pharma versus some of these large new customer wins that you guys have talked about coming online.

Sure. So first, in terms of the CDx deals that we announced today, this is obviously a really important, I would say, development for SOPHiA, not just financially in terms of how it will contribute in '27 and beyond. But frankly, moving into kind of regulated assets and being able to demonstrate that we can go through a regulatory process in three or four geographies around the world, the main ones for pharma. This is a real, I would say, milestone for us. And so we're incredibly excited about what we're embarking on here. We really think for the CDx market broadly, this approach of a global CDx that's truly, I would say, compatible across China, Japan, Europe and Asia -- sorry, the U.S. is really, I would say, differentiated.

And so we would expect this to allow us to kind of build on what we can do with other pharmas as well over time. Now in terms of sizing, I think you guys have a pretty good sense of what a typical CDx relationship would look like on a multiyear basis. Obviously, it's a material amount of revenue. There are sort of milestone and other components to it as it develops. But certainly, these are quite sizable wins. They will be impactful for us in '27. And I would say as they start to contribute and play out in '27, we will update you accordingly.

As George mentioned, there will be only a modest amount of contribution in the second half from both of these contracts. And so you should expect a bigger portion of this to drive growth in '27, '28 and beyond. Now, going back to kind of the U.S. business, the volume growth there was 60%, right? So you can see that the U.S. clinical revenue was also incredibly strong, right?

So, I would say, overall, we're super pleased on how that has kind of played out. And we expect the U.S. again to be a major driver for us in the second half and beyond. Now in terms of some of the new accounts, those are starting to come online. You'll see a little bit of that in some of the pressure on our gross margins as we're bringing on some new business. But I would say, over time, obviously, that will scale up. But certainly, the majority of the contracted revenue that will come from some of those large new contracts in the U.S. will still contribute or as yet to contribute materially this quarter and will contribute to some of that second half step-up as well as our continued momentum into '27.

I don't know, George, if you want to add anything on the growth cadence.

Yes. No, again, the pharma revenue, we're very pleased to win these big contracts. And I think pharma is extremely well positioned for what we're expecting in 2027 and even 2028. So, I think our projections have been significantly derisked based on these wins. But also the pipeline is strong. So, we're very pleased about that as well. So, these contracts are primarily going to be out in '27 and '28. But certainly, I think the contribution here continues to gain. And our pharma business really now is an accelerator of our growth, and I think it's going to be -- it's going to continue to turbocharge it in the future years.

We really think the pharma business has got rocket type potential in terms of what we can build here. So, we couldn't be more excited about what we're doing on the pharma front.

The next question comes from Ramakanth Swayampakula with H.C. Wainwright.

This is RK from H.C. Wainwright. A couple of questions. The first one on the AstraZeneca deals that you announced this morning -- or this is regulated CDx infrastructure that you have been building both with Myriad here in the U.S. and A.D.A.M in Japan, are those the intended submission and deployment to [indiscernible] for this? Or is this going to be a separate build? And part two of that question is the assays and know-how that you develop for AstraZeneca, could you utilize that beyond AstraZeneca?

That's a great series of questions. So obviously, as you mentioned, we have fantastic partners that have helped us certainly become more established in the CDx market. And as you know today, we don't have a core lab business, right? We enable our partners. We don't operate the service ourselves. And so, as you think about CDx, it really sort of depends on the market, and that will really very much determine the model. So, in one of the cases, we're incredibly excited to have Myriad as our partner taking an asset through FDA.

And so certainly, I think that partnership will continue to bear fruit and has been one where we've already made significant strides, and I think we've worked incredibly well together. As you mentioned, A.D.A.M will become critical for Japan and the launch there. Now as you think about the European market, this remains still a decentralized or kitted market. And so there, we are taking the lead and can do so with our own capabilities. And so very much it sort of depends on the geography. But certainly, this was the motivation of why we had the partners. Now we can also deploy in other labs or other CRO. So we didn't announce all the specifics, but you should assume that given our model, we could work with any player that could serve pharma at scale in a clinical trial setting.

And then be able to then turn that assay or capability into a regulated CDx that we can deploy through a various number of models commercially post launch across the large network that we have. So certainly, again, I think this is very differentiated versus what the traditional players do and solves a major challenge pharma has had as that business continues to globalize. Now in terms of what we announced today and its applicability more broadly, certainly, we are hopeful and optimistic that the products we are bringing to can be replicated across other pharmas. And actually, as we started to share confidentially some of the progress we have made with pharma at ASCO, this is something that really came out as a higher interest.

So we see already opportunities in the funnel around both of these indications. And we think, again, this is really a validation event for our business to compete against the largest labs you look at in the world with our sort of differentiated model. And so I'm quite, as George said, optimistic that this will help turbocharge our pharma business and bring other pharma to the table for these types of capabilities. So certainly, we're in a place where I feel quite confident.

And the second question is on the financials. The adjusted gross margin that was announced this morning was 72.1%, down both sequentially and year-over-year. Last quarter, the guidance was that the full year gross margin should actually expand beyond 2025. So what needs to happen in the second half for things to reverse from here to get to that point?

So good question, obviously, and the gross margin did come down sequentially. I would say, ultimately, if we take a step back from when we came public, we've been incredibly proud of the work we've done on the gross margin line, and that showed over 1,000 basis points of expansion over time. So I think we've shown the ability to really drive the business toward profitability under a number of levers.

Now I think if you step back, and I'll let George comment on the specifics, I think you have a couple of things here in play. At the moment. So one, you are seeing some elevation, I would say, in cloud and AI compute costs. And particularly as we launch in new regions of the world, that tends to be a bit dilutive to margins. So that's one piece. And then I would say as well, just the sheer number of new business starts and sort of new account starts, particularly as well on the pharma side, you typically have as well a cadence there where you have to mature into the margin. So George, I don't know if you want to give some specifics.

Yes. No, if you think about our pharma business, typically, our costs are a little bit higher at the start of projects. So we saw a little bit of that in Q2 on the pharma business. Our margins were depressed a bit because we had some projects that we're launching, and our costs do tend to be a little bit higher in the early stages of projects. Ross mentioned our hosting costs. And it's important to realize, too, when you look at our cost -- we do have to build a framework.

So there is sort of a framework, if you would, that we have to build in terms of establishing a cloud, whether it's in the Netherlands or in the United Arab Emirates. And there is sort of a fixed cost component of that. And obviously, as new clients come on, you grow into that, and that piece doesn't change, if you would. So, I think we had a few things in the second quarter that worked against us. But obviously, Q1 was very strong. We said that was probably a little on the strong side. Q2 came down a bit. And certainly, we're going to be working on this in Q3 and Q4 as things balance out. Our long-term guidance certainly has been over time, we expect gross margins to improve gradually, and that's still what we're continuing to work towards.

[Operator Instructions] Your next question comes from Dan Brennan with TD Cowen.

This is Kyle on for Dan. Just wanted to ask a quick one on the updated guidance. You raised your guide by a bit more than the magnitude of the beat, which I think sort of implies second-half growth is pretty similar to the first half if you sort of average it out. So just wondering what some of the puts and takes are of the drivers, maybe of upside in the back half, just given -- it sounds like you have a lot of momentum across a number of different areas of the business. I guess how should we just conceptualize that relative to what the back half implies?

Thanks, Kyle. Obviously, we're really pleased with our first half performance, and we tried to express that in the increase. And obviously, now the lower end of the range is actually above our prior high end of the range, right? So I think ultimately, for us, this was an expression of great confidence in the continuation of the trends you've seen from the first half. Now I think as you look towards the second half, we still have obviously quite a bit of business coming online. We also have pharma that continues to ramp.

So I would say, overall, we're working hard to continue to accelerate the growth rate and as well try to balance that against kind of the cost commitments we've made, right? So I feel as if what we've expressed is quite optimistic and again, consistent with the accelerating trend you've seen. Now I would say we have tended to remain conservative with how we guide. And so you should assume this is the posture that we continue to exhibit as we kind of communicate with the Street. But George, do you want to give some specifics?

Yes. No. I mean, obviously, the last few years, I think we've established a pattern of beating our guidance. And certainly, that's something we take very seriously. So I think we're confident that we can achieve these targets. And we feel that the momentum in the business is building. So I think these are responsible. I think they're reasonably conservative, but I think this is something that we're going to work to achieve. And again, we're positioning the business for a great 2027 and 2028, and we're really managing this business for the long term.

And I would just add maybe with some of the larger contracts coming on, right, timing is critical. And so again, just going to the point of conservatism, we tend to be quite, I would say, conservative with our expectation of when new business starts happening. And so to the degree that they would happen sooner, that typically is where you would see us be able to provide upside to the guided levels.

And maybe just one more on customer implementations. I guess where do you stand right now in terms of implementations? What does the backlog look like? I know you guys have added quite a number of new logos every quarter. But I guess just sort of what does that backlog look like? And how have you been working through that backlog?

So fortunately, Kyle, despite -- and this is a number I look at every month- despite great efforts on behalf of the cans across the business focused on bringing customers into routine and getting them live, where we've done a very good job, we continue to also have really good bookings. And so as we've accelerated backlog conversion, actually bookings remain elevated. And so despite our best efforts, we continue to sustain a pretty significant backlog that's coming online. So again, the good news in that is, obviously, it gives us a high degree of future revenue visibility for the next several quarters. But certainly, we like to shave off, and we've been doing so, implementation time.

Now one of the points I mentioned earlier, Kellen is incredibly focused on our conversion to being a more AI native business, partnering with our people organization and others. And so I think implementation is probably ripe for AI-based assistance. And we do think over the next, call it, 24 months, that's an area where we can continue to make improvement. I will say though, and again, it's always a balance because remember, again, we're trying to basically drop down a super high level of growth to the bottom line. And so to do so, you're a bit more capital constrained than when you add headcount. And so just remember, certainly, we could accelerate that backlog probably a bit more, but at what expense.

And so I think ultimately, we're trying to thread that needle and deliver both top and bottom line growth that's quite appealing and within our commitments. And so I think that's really the sort of balance at the moment and where we are. But generally, I would say we are carrying a very healthy level of backlog now as well, given today's signatures in the pharma business. And so, think about this as giving us a high degree of confidence on kind of the future growth. I don't know, George, if you want to add anything?

We added people last year to the implementation team, and they've done a really good job. The vast, vast majority of the time, we're waiting on the clients, obviously, to do validations to resolve things like IT firewall issues and the like. But our implementation team really has improved, and they've done a really good job. And as Ross said, I think the problem has been the bookings you see coming on, and they've been very, very strong.

So I guess it's a good problem to have, if you would, but I think our -- we call it our MaxCare team-- they've actually done a very good job in terms of turning these around and getting to the point where the customers aren't waiting on us. We're really waiting on the customers. And we try to nudge them along gently, but obviously, there's a balance there in terms of how much you can do. But certainly, I think when you start looking at some of the things we potentially could do with AI, there are exciting opportunities here. But our backlog is strong, and our pipelines are strong. So, this is just something that we're going to have to continue to work with as we try to work to accelerate this.

There are no further questions at this time. I will now turn the call over to management for closing remarks.

Thank you so much for joining us today. Obviously, my first call as CEO. So it's an exciting one for us, and it's really great that we were able to have such fantastic results in that context. I want to thank all of the great SOPHiAns who helped contribute to this really strong outcome, and also thank our patients and our customers who continue to exhibit trust in us. We look forward to engaging with many of you on the investor side in the upcoming conferences in September. So thank you, everybody. Have a good rest of your day.

Ladies and gentlemen, this concludes the conference call for today. We thank you for participating and ask that you please disconnect your lines.

Good morning. My name is Vincent, and I'll be your conference operator today. At this time, I would like to welcome everyone to the SOPHiA GENETICS First Quarter 2026 Earnings Conference Call. [Operator instructions] Kellen Sanger, SOPHiA GENETICS VP of Strategy, you may begin.

Thank you, and good morning, everyone. Welcome to the SOPHiA GENETICS First Quarter 2026 Earnings Conference Call. Joining me today to discuss our results are Dr. Jurgi Camblong, our Co-Founder and Chief Executive Officer; Ross Muken, our Company President; and George Cardoza, our Chief Financial Officer.

I'd like to remind you that management will make statements during this call that are forward-looking statements within the meanings of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. Additional information regarding these risks, uncertainties and factors that could cause results to differ appears in the press release issued by SOPHiA GENETICS today and in the documents and reports filed by SOPHiA GENETIC from time to time with the Securities and Exchange Commission.

During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of IFRS to non-IFRS measures is included in today's earnings press release, which is available on our website. With that, I'll now turn the call over to Jurgi.

Thanks, Ken, and good morning, everyone. I'm pleased to report that SOPHiA is off to a strong start in 2026. In the first quarter, we delivered revenue growth of 22% year-over-year. We also performed a record 108,000 genomic analysis as demand for SOPHiA DDM accelerates across the globe. In addition to processing more data volume than ever, we also achieved adjusted gross margin of 75.4%, demonstrating the unique scalability of our hyper-efficient analytics platform. Ross and George will walk you through the commercial and financial details in a few minutes. But first, let me step back and frame why this quarter matters strategically.

The precision medicine landscape is at an inflection point. Sequencing costs are declining, data per patient is exploding, and AI is becoming essential for delivering the highest standard of care. As a result, hospitals and labs around the world are increasingly looking to scale their genomics testing capabilities. With the right partners, turnaround times become faster, economics become profitable and data generated becomes invaluable for performing research and making discoveries. SOPHiA DDM was built for this moment. Our platform streamlines testing and allows any institution anywhere in the world to quickly scale their own world-class precision medicine capabilities.

SOPHiA DDM provides customers with not just a tool, but an AI native service that delivers workflow outcomes, generating highly accurate insights and faster speeds while also unlocking profitable economics for institutions. But that's not all. SOPHiA DDM also makes patient care more intelligent by breaking data silos and allowing clinicians to tap into a collective intelligence of the smartest minds in health care.

As hospitals use SOPHiA DDM to generate insights and treat patients, they also contribute a stream of data and knowledge back into the platform. As more data flows through the platform, our algorithms become smarter. This in turn enables boost and clinicians to get better insights, building trust along the way. Deeper trust, smarter insights and better outcomes ultimately accelerates new platform adoption, creating a virtuous loop with compounding growth effects.

As of Q1, this adoption loop has enabled us to connect 537 institutions across the globe who use SOPHiA DDM every day for genomic analysis. In the quarter, this institution uploaded real-time real-world genomic data for 108,000 patients. And in March, we set a new company record with more than 40,000 patients analyzed in a single month. This diverse real-time real-world data stream includes patient data from 75 countries worldwide, creating breadth and globe exposure and is unmatched in our space.

Over the past 2 years, our rich diverse data set, which includes nearly 2.5 million genomic profiles since inception has enabled us to build some of the most sophisticated AI in health care. New applications in liquid biopsy, solid tumor, MRD for AML and enhanced exams are impressing our users with their accuracy, flexibility and AI-powered insights. And the good news is we're just getting started.

Our top innovation priorities going forward will focus on deepening clinical relationships and getting closer to the patients. To accomplish this, we will expand platform capabilities to new areas as the market evolves. This includes supporting larger, more complex NGS applications like all transcriptome and methylation, tracking patients longitudinally with MRD, mastering data compute at scale, optimizing the end-to-end workflow and developing increasingly regulated products. It also includes expanding capabilities beyond genomics into multimodal to support clinical decision-making and accelerate the future of data-driven medicine. Our planned innovations are also designed to resonate with biopharma.

Throughout the year, we will invest in evolving our data sets into durable commercial assets for real-world evidence. In addition, we are working hard to create a global decentralized companion diagnostics offering that brings life-saving therapies to patients across our network. In short, our unique positioning and data set are enabling us to build for the future. We have been a technology company since day 1, building real AI to solve the world's most difficult biological challenges. The market is coming to us, and I couldn't be more confident in our ability to deliver products for future growth.

As we continue to invest in the future, we also must remain committed to growing in a sustainable way. Across the organization, our teams are hyper focused on continuous improvement, efficiency and operational excellence. We benefit from a young, agile and tech-centric workforce that has been quick to adopt and deploy emerging productivity tools, including the new AI technologies in the market. Early results from our internal rollout of these AI tools has been overwhelmingly positive.

In Q1, we materialized the benefits of recent efficiency gains and took a series of targeted cost actions, which modestly reduced headcount and nonlabor spend across the business. These actions, which mostly focused on support and operations functions have allowed us to invest even more in high-growth areas while also ensuring that we meet our profitability commitments going forward. As the year continues, we will look forward to updating you on our progress in showcasing the impressive operating leverage that is inmates to our business model.

In closing, Q1 was a strong quarter for SOPHiA. The market is reshaping itself around intelligence, and we are perfectly positioned to accelerate this movement. Our network is compounding and our data is unmatched. We continue to scale and our path to profitability is becoming increasingly clear. As I close out my final earnings call as CEO before I transition to Executive Chair in June, I'm happy to transition leadership of a business that is in excellent shape to a capable leader who will propel SOPHiA to its next stage of growth. With that, I will now turn the call over to Ross, who will provide a more detailed update on the business and growth drivers for the year.

Thanks, Jurgi. I certainly share your excitement about the business. And today, I'm pleased to share an update on our progress to start the year. In the first quarter, 3 major themes defined the quarter. First, the U.S. business continues to gain momentum. Decentralized testing has always been a widely accepted characteristic of the European and global market. However, in the last 12 months, demand for decentralized testing has materially increased in the U.S. as reimbursement rates become more established and denial rates improve, hospitals and labs are waking up to the benefits of scaling their own testing capabilities. Central labs have proven that testing is profitable and that genomic data has significant value. Now U.S. hospitals and labs are making testing part of their core strategy, and those who move are seeing significant benefits.

In the first quarter, we announced an expanded partnership with Mount Sinai, one of the leading academic health systems in the U.S. who is using SOPHiA DDM to bring haemato-oncology and solid tumor testing to the New York market. They joined a growing number of New York area institutions to partner with SOPHia, including NYU Langone Health and Memorial Sloan Kettering Cancer Center. As more institutions adopt SOPHiA DDM, the cost of not having our platform becomes real. Regional density causes patients, providers and even payers to push testing volumes towards sites which offer the best insights at the lowest cost with the fastest turnaround times. We're proud to work with our partners to bring these positive structural changes to the New York testing market and welcome a decentralization revolution to the New York City area.

The second key theme for the quarter was continued growth of new applications such as the MSK Impact and MSK Access test. In Q1, less than 2 years after decentralizing and deploying these tests globally, we have already reached a total of 100 customers worldwide who have signed on to adopt the applications. A few of these include prestigious Q1 signings such as Master UMC, a leading Dutch academic medical center, Hospitalia Niguarda, one of Italy's leading hospitals in Milan and Rural University Bulcum in Germany.

These customers, along with half of the 100 signed accounts are currently implementing SOPHiA PBM, which means they should begin generating revenue over the next 12 months. Among those who have completed implementation, we are pleased to record 3,000 liquid biopsy analysis in Q1, up more than 100% year-over-year. We look forward to this number continuing to grow as more customers finish their implementation, and start using the sophisticated high SP application.

New applications such as liquid biopsy and enhanced exomes help our sales team expand within accounts. As a reminder, we landed a large amount of new customers in 2025 with 124 new signings throughout the year. As we turn to 2026, a major focus will be expanding across these customers by encouraging them to adopt additional applications. I'm proud to say that our expand engine is off to a strong start in the first quarter. Net dollar retention, or in other words, same-store growth increased to 117%, up from 103% in the prior year period. Moreover, forward-looking indicators show no signs of stopping.

In Q1, we signed many notable expand deals, including 3 in Europe that were each valued at over $1 million in annual contract value. This serves as another impressive proof point for the virtuous loop fueling our platform's growth. It also shows that hospitals are excited to consolidate their data strategies with trusted partners in a market where winner take most dynamics are forming.

The final theme for the quarter was substantial increased momentum with biopharma. In the first quarter, biopharma revenue growth was positive and contributed modestly to overall growth as some of the recent new contracts we signed began to generate revenue. We continue to make progress with a growing number of biopharma partners and momentum is strong. Coming out of AACR and World CD and CDx Summit Europe 2026, it is clear that biopharma customers are looking to develop comprehensive AI investment strategies with trusted partners.

It is also clear that every biopharma company we speak to recognizes that SOPHiA provides differentiated value across the drug continuum. They recognize that our diagnostic network is unmatched in global reach and that the data streaming through our platform has incredible value. They also appreciate our deep AI expertise in the field of biology. Our offering is continuing to resonate as one of the only companies in this space that could support a drug across its entire life cycle from companion diagnostics to post-launch monitoring with real-world evidence to patient selection and trial design.

In the last 6 months, increasing momentum has materialized in the recent signing of contracts with major biopharma such as AstraZeneca and Johnson & Johnson as well as biotechs like Kartos and others. Moreover, our partnerships with Myriad Genetics in the U.S. and added innovations in Japan continue to progress as we work on building out the infrastructure for a hybrid global CDx offering. We look forward to updating you more on these items over the coming weeks and months.

Looking ahead to the remainder of 2026, our pipeline across clinical and biopharma remains strong and healthy even after strong bookings conversion. Deal size continues to grow and the number of opportunities in our pipeline above $1 million are becoming even more numerous. The market is moving in our direction, and we are excited to continue capitalizing on our opportunity. With that, I will now turn it over to George, who will provide a more detailed look at our financial results and the outlook for 2026.

Thank you, Ross. As Jurgi and Ross highlighted, Q1 results were strong and our outlook remains positive. Total revenue for the first quarter was $21.7 million compared to $17.8 million for the first quarter of 2025, representing year-over-year growth of 22% I will note that year-over-year revenue growth would have been slightly stronger if not for a onetime benefit in the prior year period from a customer true-up. Platform analysis volume was approximately 108,000 in Q1 compared to 93,000 in the first quarter of 2025, representing solid growth of 16%.

From a regional perspective, U.S. volumes continue to expand at healthy levels, growing 28% year-over-year in Q1. APAC also outperformed with 31% volume growth. In EMEA, revenue grew 30% year-over-year, impressively above the company average, mostly driven by great performance in the U.K., Belgium and Switzerland. In Latin America, revenue remains soft, and we have made changes there to turn around our performance.

From an application standpoint, Hem/Onc revenue grew 24% year-over-year. Rare and inherited growth also picked up in the quarter with volumes growing over 20% as our enhanced exome product begins to come online. As Ross mentioned, liquid biopsy, which carries a higher ASP, continues to ramp and contribute to our revenue growth as well with more growth expected for the second half of the year. Core genomic customers were 537 as of March 31, up from 490 in the prior year period. Annualized revenue churn remained world-class at less than 1% in Q1.

As Ross mentioned, net dollar retention for the quarter was 117%, up from 103% in the prior year period. Gross profit was $14.7 million compared to $12.2 million in the prior year period, representing growth of 21%. Gross margin was 68.0% compared to 68.7% for the first quarter of 2025. Adjusted gross profit was $16.4 million, an increase of 22% compared to adjusted gross profit of $13.4 million in the prior year period. Adjusted gross margin was 75.4% compared to 75.7% for the first quarter of 2025. Total operating expenses for Q1 were $32.0 million compared to $28.2 million in the prior year period.

Some specific items temporarily impacted reported operating expenses and are worth calling out directly as they do not reflect the company's underlying operating performance. First, foreign exchange headwinds continue to negatively impact reported results, primarily due to the strengthening of the Swiss franc. The Swiss franc strengthened approximately 14% against the U.S. dollar from Q1 2025 to Q1 2026, meaningfully increasing the dollar translated costs of our Swiss payroll and facilities. This is a pure translation effect as our underlying cost structure in local currency remains disciplined.

Second, as previously disclosed, Guardant Health filed patent infringement claims against us in the United Kingdom and at the Unified Patent Court in Paris during Q3 last year, alleging that our MSK access application infringes their patents. We incurred approximately $1.4 million in related legal expenses during Q1, which is reflected as a litigation adjustment in our adjusted EBITDA reconciliation.

Importantly, in January, the UPC rejected Guardant's request for provisional measures and ordered them to pay us $700,000 in interim costs, $500,000 of which we received in mid-March and an additional $200,000, which we received in mid-April. Net of this recovery, litigation impact on Q1 operating expenses was approximately $700,000. Operating loss for the first quarter was $17.3 million compared to $16 million in the prior year period. Adjusted EBITDA was a loss of $9.2 million compared to the prior year loss of $9.5 million. Lastly, cash burn, which we define as the change in cash and cash equivalents, excluding cash received from borrowings and stock sales as well as FX impacts, was $19.5 million compared to $11.7 million in the prior year period.

This year-over-year increase reflects 2 expected dynamics. First, coming off a strong 2025, annual bonus and commission payouts were meaningfully higher than the prior year, and these were paid in March. Secondly, we also invested in the build-out of a new lab at our Swiss headquarters with increased capacity to support revenue growth for years to come. This impacted our cash burn by approximately $1 million in the quarter. Third, we continue to vigorously defend ourselves against the patent infringement lawsuit filed by Guardant Health, and we paid several bills for expenses incurred in the first quarter of 2025.

The $500,000 from Gardens in Q1 and the additional $200,000 received in April only cover a portion of our total litigation costs. We ended Q1 with cash and cash equivalents of $65.4 million as of March 31, which includes $14.5 million in ATM proceeds received in the first quarter of 2026. In January, as previously disclosed, we also expanded our credit facility with Perceptive Advisors, increasing total available liquidity by $25 million. We remain confident in our current capital position with respect to the achievement of our long-term goals. I'll now turn to the 2026 outlook.

Given the promising revenue growth in Q1, SOPHiA GENETICS is reaffirming our full year revenue guidance for 2026 of $92 million to $94 million, representing 20% to 22% growth on a reported basis. We still expect 2026 growth to be mostly back half weighted as new business signed in 2025 comes online in the second half of the year and as more MSK ACES, MSK IM PACFLEX and enhanced exome business ramps up to routine usage. We also expect that exchange rates will remain volatile due to macro uncertainties, which may have an impact to reported results.

Beyond revenue, we are also reaffirming our full year adjusted EBITDA loss guidance of $29 million to $32 million compared to $41.5 million in full year 2025. As demonstrated this quarter, we continue to make targeted investments in our platform to further optimize cloud compute and storage costs and expect gross margins to slightly expand beyond 2025 levels. As a global company, we are monitoring the ongoing conflict in the Middle East closely, particularly with respect to shipping and customer activity in the region. So far, the conflict has not materially impacted our results, and we do not believe it will have a material impact this year.

In Q1, as Jurgi mentioned, we took a series of cost actions and realized benefits of adopting AI across our teams. These actions reinforce our conviction to grow revenue without increasing headcount. They also give us confidence that we will be able to continue holding the line on operating expenses in local currencies and reach our profitability guidance. All said, we continue to believe that we are on track to be approaching adjusted EBITDA breakeven by the end of 2026 and crossing over to positive adjusted EBITDA in the second half of 2027. With that, I would like to turn the call back over to Jurgi for closing remarks before we take your questions.

Thank you, George. As I wrap up my last earnings call as CEO of SOPHiA GENETICS I feel confident as ever in our long-term trajectory. Forward-looking indicators remain strong across the business. We continue to see a steady stream of customer signings across new and existing customers. Biopharma interest is growing and our pipeline is expanding across regions and applications. At the same time, we continue to be laser-focused on optimizing costs and delivering sustainable growth.

Thank you to the SOPHiA team, customers, partners and investors for your continued trust and partnership. 15 years ago, we had an ambitious vision to transform health care through data and AI. Today, we operate the most widely used AI-driven platform in precision medicine, impacting 40,000 patients per month and 2.5 million patients since inception. I'm so proud of what our team has accomplished over the past 15 years, and I know we are just getting started. Operator, you may now open the line for questions.

[Operator Instructions] Your first question comes from the line of Mark Massaro from BTIG.

Congrats on the quarter. Jurgi, I appreciate the network that you've built globally to decentralize this testing and look forward to working with you as you move to the Executive Chairman role. Sure thing. Yes. So moving into my question, I guess, the adjusted gross margin of 75% was certainly a key highlight of this print. Can you just give us a sense, guys, for your degree of confidence to maintain or how do you think about this gross margin profile going forward? I know that you are planning to onboard some higher mix applications. So is this something that you think you can build on here? Or were there some onetime items that might be lumpy on the gross margin line?

Ross?

So Mark, we've really spent quite a lot of effort modernizing the platform over the past 24 months as we've talked about our Gen 2 transition, and I think you're seeing the benefits of that. And I think there's a lot more scalability left even as we bring on more complex solutions that require a lot more compute. And so in general, I'm super happy with how the team has executed here.

I think fundamentally as well, we're seeing positive pricing dynamics in our environment. So you have both the mix of trade up to more complex solutions as well as more value realized for solutions like ours as a percentage of total cost of diagnostic or as a percentage of revenue. So I think on both of those parameters, this is quite constructive for us. And so I'll let George comment on what's contemplated going forward. But for me, I still think there's some room to go, but certainly, we're very pleased with how we've executed.

Yes. No, Mark, as Ross said, I mean, we're very pleased with the performance of our tech team, and we were pleased with where gross margin came in for the quarter. We do have some pharma business. And if anything could be lumpy on the margin side, it would probably be more of the pharma business. Our full year guidance was modest improvement in gross margins, and we're still holding to that. But certainly, we were pleased with where Q1 came in.

Okay. Great. And it looks like you guys took some cost reduction actions in the month of April. It looks like it's a small action, but can you just speak to which regions were impacted? Anything in the U.S. that was material? And how should we think about that in terms of headcount?

So a couple of things, Mark. So one, the action was quite small, right? So it was a very modest change to the cost structure. We are an organization very focused on continuing improvement. We've also seen some gains in parts of the business from -- and so we wanted to be able to drop some of that down and then reinvest other parts. So I would say, in general, again, this was quite isolated and generally, I would say, in the G&A functions where we gained efficiency. And so this was our ability to show that, obviously, we're an organization very committed to our profitability targets. And also as a software and AI business, we're one that could not only obviously deploy games to our customers, but also utilize some of that on our own operations, which will help us again, as we scale as growth continues to reaccelerate here. George?

Yes. No. And again, we've -- in our guidance for the year, we said EBITDA -- adjusted EBITDA of $29 million to $32 million. And this was an important part is maintaining that cost discipline across the organization. And like Ross said, that's just part of what we're doing and making sure that we continue to have that discipline going forward. And as mentioned, Mark, regionally, most of it was G&A. So I would say probably a bit more concentrated in the Swift operations. But honestly, no real geographic bias to it. And actually, the U.S. is where some of the headcount redeployment, particularly on the commercial side will go. It will be modest. And that's because we're seeing really great characteristics in that business and really are confident in our ability to continue to grow market share in the territory.

Great. And maybe just my last question. You alluded to the fact that you signed a lot of new customers in 2025, many of which are planning to turn on to the DDM platform in the second half. I just wanted to get a sense for -- obviously, you did reaffirm the revenue guidance, but I just want to get a sense for whether or not you believe that you're tracking to initiating the go-lives for many of these customers and wanted to test your degree of confidence on these folks coming on to the platform.

So Mark, we came in ahead of our plan in the first quarter. So we're very happy with our performance. You know we're conservative. And so given it's early in the year, despite we're really pleased with the signals and we remain extremely confident in sort of the customer onboarding and progression. We want to make sure that we're well set up for the year. So I would say stay tuned. But ultimately, we're feeling very good around delivering on our commitments and ideally, obviously outperforming.

I would say, overall, on the onboarding side, I'm really pleased with our implementation team on our tech side and our bioinformatics group as well as in services. We've seen the pacing of some of the large customers pick up. We have quite a number of them coming online, including some that came on late in March, which helped with that record month that you saw. and helped us have a record quarter. And so my expectation is that we will -- that cadence will continue to improve. Again, a lot of the AI and other initiatives we have are focused on speeding up that time to revenue.

And so again, as George talks about the back half ramp, a good portion of that is highly visible and is obviously tied somewhat to some of those customers, particularly some of the large U.S. ones coming online, and we remain super confident on our ability to execute on that. And ideally, if they ramp consistent with what we've seen historically, that may provide some cushion for upside as we tend to initially guide fairly conservatively for the on-ramp of new business. So again, a lot to look forward to on our side as that growth ideally continues to move in a favorable direction.

Your next question comes from the line of Dan Brennan from TD Cowen.

This is Kyle on for Dan. I wanted to jump into your net dollar retention, which accelerated again this quarter to 117%. Can you just discuss some of the drivers a little bit more? I mean is this more driven by customers expanding into multiple applications on DDM? Or is it more a mix of the uptake of higher ASP tests like MSK ACES that's driving that performance?

Thanks, Kyle. Obviously, we're happy to see that metric get back to, I would say, really high-quality standard among software businesses. So we're quite pleased with the organic growth. As you mentioned, it's coming from a mix, right? So we were very intentional this year versus the last 2 years of really focusing on the expand -- and so that obviously will benefit the NBR line. And ideally, this will continue into next year. This is a very high ROI acceleration as well as it carries with it very little incremental cost. And so it helps as we think about our shift to EBITDA profitability.

I would also say, and you can see it by the strong EMEA results, the underlying growth in our industry, I think, has become healthier. You see it in one of the large equipment vendors numbers relative to clinical consumable growth. But I think overall, customers are healthy. New technologies are coming online. For us, that would be things like liquid biopsy or exomes. And in general, pricing remains, as I mentioned, favorable. So I think the component of all of that with incredibly low churn all of that comes together to give us confidence that the improvement in sort of that organic underlying growth rate will sustain.

Got it. And then maybe just on your Latin America business. You noted it was soft in the first quarter. I think in your 6-K, it said it was down over 30%, but I believe you had a really tough comp there year-over-year. Can you just dig into some of the trends that you're seeing in Latin America and just expand upon that a bit?

Yes. So thank you for the question. Obviously, we've been disappointed in that region, albeit it's a small one, but it's strategically important for the last number of quarters. So we did make a change there in leadership. I was actually just there myself very recently as was our CSO in Brazil and Colombia and Argentina, all 3 critical countries. I would say Brazil at the moment is where some of that softness is kind of isolated. And so we've got some ideas and thoughts of how we're going to reaccelerate the territory. I would say I'm quite optimistic on Mexico and Colombia and to a lesser degree, Argentina.

But I think overall, we expect the region to return to growth. We think we're going to make the necessary changes there, and we think the portfolio is also well positioned. It's also a region that's highly pharma sensitive. And so sometimes as well, it's dependent on where pharma pipelines are, and there are a few key new drugs coming online that will be highly relevant for Latin America. And so we would expect that as well to drive an increase in testing in some of the geographies. And so overall, I would say we're cautiously optimistic, but certainly, we've taken actions to ensure that we get back on track in this strategic territory.

Your next question comes from the line of Bill Bonello from Craig-Hallum.

A couple of questions here. First of all, I want to follow up on one of the questions that Mark asked just about implementation time. But more specifically to MSK ACES. I'm just curious what you're seeing these days in terms of sort of typical onboarding time once a customer has said that they want to adopt MSK Access? And then what you're kind of seeing as a typical ramp once they're up and running the test?

Bill, it's a great question. Thank you. So obviously, as you know, MSK Access is incredibly important to us. We're really proud of the 100 accounts that have come online, if you just put that in context. the world didn't really have liquid biopsy testing outside of the United States. And so we're really pleased to see it adopted at this great rate. And we're also really proud to have great pharma partners in that journey that have helped us in that adoption rate. And so I would say, overall, I wish I could tell you that there's a pattern on some of the adoption. I would say several accounts have come online and oncologists have really, I would say, understood how to utilize the technology, and we've seen volumes ramp. I think others take more education.

And so again, there's varying degrees of sophistication and understanding on different sort of cancer types dependent on where we look around the world. But at the moment, about half of the accounts are online. I would say they're all ramping. We continue to believe this will be a very material part of the incremental growth. And so overall, I would say we're pleased. But certainly, you start to see some of that impact the revenue line, but I would say more is to come over the next several quarters and into 2027.

And so far, it's hitting our internal expectations, but we'd obviously like to see that inflect more materially. And we think we, again, better doctor education or oncologist education in some of the territories. And then if you see some of what's going to be presented at ASCO as well as at ESMO, our expectation is all of this will help drive with that utilization to much higher levels over time. But it's been pretty broadly adopted, right? And so you should expect to see different adoption curves in each of the different nations.

That's helpful. And then just a follow-up on the pharma side. And you touched on this just slightly in your response to that question. It's great to see the recovery there. It does seem like typically pharma revenue might capture a lower multiple just because it's not seen -- it is seen as potentially less recurring. Could you maybe talk to us about how you think about the pharma business vis-a-vis the clinical business? In other words, how does pharma drive clinical if it does?

Bill, it's another great question. So -- and it ties, frankly, into your first question because a product like MSK ACES, which is really a platform for pharma, does have a fantastic flywheel between biopharma and clinical usage, as you alluded to. So I would say, overall, we're very pleased finally with where our pharma business is performing. We've now gotten back into the green, and we're starting to see some nice momentum where I think over the next several quarters, you'll see that acceleration play out in the total revenue performance. So certainly, quite a different picture than where we were 24 months ago. As you know, we made some tough decisions in that business, and we really refocused and we're seeing the benefits now of that play out in the numbers.

And so I would say, again, one of the key things we've strategically decided to do is less kind of large one-off project type business that doesn't yield strategic and/or recurring revenue benefits. So we're much more confident that the type of business we're bringing online is recurring, can be repeated and can be scaled. And as you think about, again, some of the types of CDx projects even that we do, much of that is done with the intent of not only being able to serve pharma through the CTA and CDx portion, but obviously, on the clinical side thereafter. And the idea that you can have one harmonized global solution in all markets, right? Think about that in liquid biopsy that doesn't require large bridging studies that doesn't require some hybrid mix of 7 or 10 laboratories around the world solving for a geographic or a global picture. I think it's a super compelling offering.

And it's also different in that for us, we're already embedded in so many of these accounts. And so once we flip the switch from some of the pharma work into the clinical market, it's the same solution, right? And we can start relatively quickly serving customers in that market post approval for a drug. So I think for us, again, that flywheel is hypercritical. We're really happy with the progress pharma has made. And I would say, overall, you can hear from us our confidence is up. Again, we're not declaring victory. We're just starting to show kind of the right level of performance here, but it's certainly materially better than where we were even 12 months ago.

Your next question comes from the line of Subu Nambi from Guggenheim Securities.

This is Ricky on for Subu. So in the slides, you have the average price per analysis ranging from $100 to $500. And for the first quarter, just some back of the envelope math here, it comes in around $195 per sample analysis -- per analysis. So what is your expectation for the ASP trend through the remainder of the year? And what are you assuming for this in guidance?

George?

Yes. If we exclude the pharma business and just look at the clinical business, our price sequentially was up $2. So as Ross said, we're building in terms of selling more higher-value tests. So our expectation is to continue to see that lift as the quarters go on during the year. And we continue to see the access clients, the 100 clients that we booked ramp up. So we're optimistic about ASP. Now there's a balance there because, obviously, we are expecting growth now in our Latin America business and some emerging markets like India and Turkey. But still, in terms of modeling, we do expect the ASP to have lift in it for the remaining quarters of the year.

Got it. That's helpful. And a lot has been asked on biopharma, but maybe just a slightly different approach of the question. You mentioned how this is a modest positive contributor to growth in the quarter, and there was lots of positive color on signings and outlook. But did the quarter turn out the way you expected? Or was it above your expectations? And did it change what you're expecting for the remainder of the year?

Yes. So as I mentioned before, we're quite conservative, Ricky. So despite the fact that pharma performed quite well, and I would say we're optimistic for continued sequential improvement and a step-up in the second half of the year as well. We did not change our expectation in the guide. I'll let George give some color. But I think just fundamentally there, since we're early in that reacceleration, we want to remain conservative. But what we're trying to convey is if we look at the picture in terms of -- and even for myself, I was at two large conferences during the quarter.

If we look at the level of interactions we're having with pharma and what we're discussing and the comprehensive nature of that, if we look at the RFPs we're responding to, if we're looking at what's in the pipeline and what's late stage and then what we've now executed on over the last several quarters in terms of new pharma customers as well as new contracts with our existing customers. It's a much better mix than what we've seen in the past, both across, frankly, diagnostics and data. And we haven't talked about data or our evidence generation business in a while, but we're actually seeing as well there subtle improvements. And so I think overall, what we're trying to kind of point to is our increased confidence that, that will improve, but we remain conservative, right, George, in terms of how we factor that into the forecast.

Yes. We're very pleased with the performance of the Pharma business. As Ross said, I mean, it's really been building momentum. It's tangible. We can see it. And again, I think in 2026, it's going to be an accelerator, but it's really going to be an accelerator in 2027 and beyond as that business just continues to build and build.

There are no further questions. Please continue.

Well, thank you so much for joining us today and for joining us and me in a journey of 15 years. I'm very happy to basically let the driving seats to a fantastic leader who sits next to me here in Switzerland today, surrounded by a very talented team and with a technology that is better than ever to be able to capture even more opportunities in the market. So I'm very, very pleased with what we have achieved, and please continue following us. As you will see, we will continue to transform precision medicine over the next years. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Good morning. My name is Angeline, and I will be your conference operator today. At this time, I would like to welcome everyone to the SOPHiA GENETICS Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions]. I will now turn the conference call over to Kellen Sanger, SOPHiA GENETICS VP of Strategy. You may begin.

Thank you, and good morning, everyone. Welcome to the SOPHiA GENETICS Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining me today to the results for Dr. Jurgi Camblong, our Co-Founder and Chief Executive Officer; Ross Muken, our Company President; and George Cardoza, our Chief Financial Officer.

I'd like to remind you that management will make statements during this call that are forward-looking statements within the meanings of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. Additional information regarding those risks, uncertainties and factors that could cause results to differ appears in the press release issued by SOPHiA GENETICS today and in the documents and reports filed by SOPHiA GENETICS from time to time with the Securities and Exchange Commission. During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of IFRS and non-IFRS measures is included in today's earnings press release, which is available on our website.

With that, I'll now turn the call over to Jurgi.

Thanks, Kellen, and good morning, everyone. I will start today's call with a brief overview of how exiting 2025 SOPHiA sits at the center of some of the most exciting megatrends in health care. I will then turn the call over to Ross, who will provide a detailed update on Q4 performance and what's ahead in 2026. George will close with a review of our financial results and guidance. .

2025 was a defining year for SOPHiA. We reaccelerated revenue growth and signed several of the largest commercial deals in our company's history. We also continued building one of the most sophisticated AI engines in health care. In 2025, our platform broke many records. We analyzed over 391,000 patients with cancer or rare diseases using AI to deliver life-saving insights for diagnosis and treatment.

We also reached a total of 993 customers globally. Congratulations to the SOPHiA team on this accomplishment and the incredible impact our platform is adding across the world. However, building disruptive AI in health care does not happen overnight. Health care and like other industries, requires rigorous validation, clinical evidence and deep institutional trust before change is enacted. At SOPHiA, we have been AI in health care for over a decade.

For 15 years, we have gone from institution to institution slowly and sometimes painfully, bringing their genomic workflows onto a single technology platform. As we've added customers over the years, our network and the collective intelligence behind it has been getting stronger and stronger. Top clinicians across the globe depend on SOPHiA DDM each day to generate insights for the patients. In doing so, they contribute a constant stream of data and knowledge to the platform.

The data stream in our platform every day makes up one of the most unique and powerful data assets in health care. It includes a real-time real word genomic data from over 30,000 patients per month or almost 400,000 patients per year. It is also a diverse, complex and matching breadth and global exposure covering patients from 75 countries across the globe. This rich stream of diverse real-world data has enabled us to build what we believe is some of the most sophisticated AI in health care.

For over a decade, our R&D team, which includes many of the top AI/ML data scientists and mathematicians in the world, have been solely focused on building proprietary AI algorithms on top of this data. These algorithms provide advanced multilayered analysis of genomic and multiomic data, enabling clinicians to transform raw data into precise actionable insights for patients. This AI house in SOPHiA DDM offers our customers an invaluable tool kit of analytical capabilities across a wide range of clinical use cases.

Over the last 12 months, demand has been accelerating for these capabilities. We signed a record 124 new customers in 2025 and significantly outperformed all internal booking targets, setting up strong to hit our revenue goals in 2026 and beyond. As more customers adopt the platform, patient volumes have grown substantially. However, volume only tells part of the story. While volumes are growing, the amount of data processed by our platform has increased materially.

In 2025, we processed nearly 1 petabyte of genomic data in routine usage. To put that in perspective, that's roughly equivalent to 1 billion books or 30 years of continuous high-definition streaming. It is also nearly double the amount of data we processed just 2 years ago. This step-wise change in genomic data production reflects a shift in customer demand. Customers are increasingly moving from small targeted panels to large comprehensive tests, multiomic analysis logical monitoring and in general, more sophisticated computational interpretations.

All those emerging use cases do not only produce exponentially more data per patient, but they also can only be handled by highly scalable AI-enabled approaches. In response to these trends, we launched a major initiative back in 2022 to drastically modernize our platform. This report included moving the platform from Java to web and microservices, integrating the latest AI tools into our architecture and significantly upgrading our compute techniques.

I'm proud to share that the new generation of SOPHiA DDM already adopted by 1/3 of our customers now deliver 10x greater capacity program than standard systems. As a result, we can double the amount of data we can process per week without impacting margins. Compared to other systems where genome analysis can take over 24 hours, we can now complete a well genome analysis in less than 6 hours. This increased scalability also makes our platform much more cost efficient than standard systems, enabling us to scale advanced genomics analytics in a sustainable way for institutions across the globe.

This faster, scalable and sustainable approach has been a driving force behind our ability to win larger and larger customers, including the recent signing of 2 of the largest health care systems in the U.S. It also has enabled us to expand our adjusted gross margin by 140 basis points to 74.2% in 2025 despite the huge increase in data compute which, to me, is an incredible accomplishment. Beyond scalability and operational excellence, our platform continues to delight customers.

Our Net Promoter Score is a remarkable 67. Our customer satisfaction score is over 97%, and annualized revenue churn is below 1%. These metrics underscore the speed, scalability and stickiness of SOPHiA DDM. In addition, our decentralized approach provides an unparalleled ability to deploy AI models directly into the clinical setting. This enables faster innovation and more efficient launch of new applications.

A few examples we will investigate in 2026 are MRD solid tumor and In addition, we also announced a partnership with MD Anderson in January to leverage our AI algorithms to explore the codevelopment of the Together, these initiatives reflect the expanding capabilities of our platform and sets the stage for the next generation of applications we are bringing to market, which brings me to my final point.

Last quarter, we launched SOPHiA DDM Digital Twins. Digital Twins leverages genomic, clinical and real-world data to create dynamic AI-driven virtual representations of individual patients. These models allow clinicians and researchers to simulate potential treatment scenarios before decisions are made, helping oncology select the most effective therapy based on real-world evidence from patients with similar genomic and clinical profiles.

I'm proud to announce today that we've already begun onboarding our first lung cancer users. Starting with lung cancer and expanding over time, Digital Twins represent a foundational step towards deploying multi-model AI models, which deliver differentiated care to patients.

As we approach the 15th year anniversary since we founded SOPHiA GENETICS, I am more optimistic than ever about our trajectory. We have built a differentiated business with one of the largest, most defensible networks in the world. We also sit at the center of the most exciting trends in health care and have more demand than ever among our customers.

As SOPHiA continues to grow from a vision into a global business, I recognize that it's the right time to bring in a new leader for the next phase of the company's growth. As announced in January, I'm thrilled to promote Ross Muken to Chief Executive Officer effective July 1. Ross, who currently serves as our company President, has been instrumental in SOPHiA success over the past 5 years. He led our company through the IPO and helped scale the company from $28 million of revenue to $77 million today. Ross brings a data-driven commercial-orientated leadership style that is perfect for our next phase of growth and needed for scaling the enterprise. I'm confident he is the right person to lead the company to even greater height, expand our impact for patients and create lasting value for our employees and shareholders.

As for me, I will transition to the position of Executive Chairman subject to election at the company's Annual General Meeting in June 2026. In this new role, I remain 100% committed to SOPHiA as a full-time employee. I will focus my time primarily on science and technology innovation and being a thought leader in precision medicine.

With that, I will now turn the call over to Ross, who will provide a more detailed update on each of these areas and make a few new enhancements on the new business going into 2026.

Thank you, Jurgi. I'm grateful for your continued involvement as Executive Chairman and excited for the future. Over the past 5 years, I've come to recognize how unique SOPHiA is and how there's truly no other company like it. From our technology to our customers, to our employees, SOPHiA as a category-defining company that is reshaping precision medicine and I couldn't be more excited to lead this next chapter.

will begin with an update on our fourth quarter performance as we close 2025 with sustained commercial strength across the business, I'll then cover our 2026 growth drivers before handing it over to George for a detailed look at the financials.

First, we delivered 22% revenue growth in the fourth quarter, reaccelerating the business toward historical levels. Excluding biopharma, clinical revenue grew an impressive 31% year-over-year, reinforcing the strength of our core business. I'm looking forward to this continuing throughout 2026. And for biopharma could pick up after the major recent signings, which we saw over the second half of the year.

From a regional perspective, EMEA grew 22% in the fourth quarter. Excluding biopharma, EMEA clinical revenue was up a robust 35% year-over-year. Belgium and Germany contributed significantly, as the countries grew 93% and 66%, respectively, as major recent wins, such as came online.

North America analysis volumes were exceptional in the fourth quarter, growing 45% year-over-year. On a reported basis, you may notice that revenue growth is lower, as we booked a onetime large vendor payment in the fourth quarter of 2024, which created a challenging prior year comp. Excluding this, underlying regional growth remained strong. Asia Pacific also continued to outperform in the fourth quarter with 44% revenue growth in the period, driven primarily by India and Australia. We also saw revenue from Japan begin to ramp as our new partnership with A.D.A.M. Innovations is now underway and gaining traction.

In Latin America, we were happy to see recovery in the fourth quarter with 49% revenue growth Mexico and Brazil contributed significantly as the countries grew 95% and 48%, respectively. From an application standpoint, we continue to establish ourselves as a global leader in hemato-oncology testing. HemOnc volumes grew 27% year-over-year in the fourth quarter off an increasingly large space. Beyond HemOnc, liquid biopsy continues to grow as more MSK-ACCESS customers come online.

In the fourth quarter, we recorded just over 2,400 liquid biopsy analysis. We look to 2026 for new higher ASP products like MSK-ACCESS, MSK-IMPACT and enhanced exomes to meaningfully drive overall growth.

Moving to new business on the clinical side. I'm happy to share that we continue to book new business at record levels. We landed 30 new customers in the fourth quarter, bringing total new customers signing 2025 to 124. Average contract value of the new customers signed in 2025 was up 120% year-over-year.

I'll now take a moment to update you on recent major wins across the region. Starting in North America. Last month, we announced the signing of 2 of the largest integrated health system in the United States, one based on the West Coast and another in the Midwest. The 2 networks are adopting SOPHiA DDM to support genomic testing for up to 60,000 patients annually with their communities. Both customers are initially adopting SOPHiA DDM for rare disorders utilizing a 20,000 gene-enhanced exome application.

We expect these clients to be what we call routine usage by the fourth quarter of 2026. It's also worth noting that together, the 2 systems serve nearly 1 million oncology rare disease patients each year, creating meaningful long-term expansion potential, as we integrate our solutions into their workflows. Beyond these 2 large wins, we also landed NYU Langone Health in New York City and in Florida's new customers.

As Jurgi mentioned, we announced a strategic collaboration with MD Anderson. Through this alliance, we will bring together MD Anderson's world-class oncology research arm and SOPHiA's world-class AI and algorithm capabilities to develop, test, which we can then activate across our customer base.

From an expand perspective in North America, many customers signed to adopt additional applications in the fourth quarter including Vanderbelt University School of Medicine, the Icon School of Medicine and Mount Sinai and Memorial Health care system in Florida, which is adding MSK-ACCESS.

In EMEA, MSK-ACCESS all builds continue to attract major interest. In the fourth quarter, we signed Lab Point Medical Lab in Switzerland, the Royal & of Edinburg Scottland and Cytogen in Spain to the application, among others. We also saw a large amount of interest in our newly launched solid tumor application MSK-IMPACT Flex, signing in Austria, AZ Delta in Belgium and Hospital and Foundation in Italy, among others.

In total, we have now signed 21 customers to MSK-IMPACT. In Latin America, we continue to see new business in Brazil and signed the human genomic and stem cell research center. We also added the National Institute of Genomic Medicine for Mexico for our MSK-ACCESS test. In Asia Pacific, we signed the National Taiwan University Hospital who is adopting multiple applications for solid tumor testing, including MSK-IMPACT. We also expanded our footprint in Peter MacCallum Cancer Center, one of the top hospitals in Australia. Congratulate the team on these wins.

I cannot be more pleased with the momentum we're carrying into 2026. I look forward to seeing the new customers complete implementation and begin generating revenue over the coming months. Speaking of implementation, we implemented a record 102 new customers in 2025, including 29 in the fourth quarter, who are now moving to routine usage. This reflects the impact of the actions we took to expand and strengthen our implementation capabilities and shorten time to revenue.

While we have made meaningful progress, we continue to optimize this function throughout the year. Looking ahead to 2026, we expect to continue accelerating growth within these 3 growth drivers: first, continuing to execute and grow in the United States; second, continuing to expand our liquid biopsy application, MSK-ACCESS; and third, capitalizing on the renewed momentum in our biopharma offering.

Starting with our first driver. U.S. analysis volume grew at nearly 50% year-over-year in the fourth quarter. Recent large wins and a strong and growing pipeline give us confidence that this will continue to grow into 2026. Our U.S. commercial team continues to perform at a very high level and with a robust pipeline, we are well positioned to repeat our record bookings performance this year. Liquid biopsy offers a second meaningful driver for growth as we have now signed 70 customers for MSK-ACCESS across 29 countries to the application.

Of these customers, only about half of completed implementation and begun to ramp usage, giving us a large base to grow in 2026. We also continue to develop our partnerships with Myriad Genetics in the U.S. and A.D.A.M. Innovations in Japan to develop MSK-ACCESS into a regulated global panning diagnostic offering. Activities are progressing well and interest from biopharma in this product is very high, which brings me to our final growth driver for 2026, biopharma.

Biopharma demand continues to build at the JPMorgan Healthcare Conference in January with over 20 biopharma companies exploring partnerships with SOPHiA, our value proposition is now well understood and we believe we're approaching the inflection point as biopharma recognizes the value of a decentralized partner, our massive global network and the rich data and AI ecosystem it fuels.

I'm excited to announce today that we recently renewed our global commercial agreement with AstraZeneca. As you know, AZ has been a major collaborator with us. As in 2025 alone, we signed several new contracts. These include AD sponsored deployment of MSK-ACCESS across 30 sites globally, the development of an AI-driven NGS solution for the P10 pathway and the signing of a multiyear AI-driven evidence generation project for breast cancer, which we mentioned was the largest contract in SOPHiA's history.

Today, I'm also proud to announce that beyond AZ, we recently signed for the first time ever a global commercial agreement with a new top 5 global pharmaceutical company. Congrats to the team on this advancement, and I look forward to updating you as details progress. As we enter 2026, we are fueled with substantial new wins across clinical and biopharma. Despite strong bookings conversion, our pipeline remains incredibly strong and is at record levels. Field size continues to grow, and the number of opportunities in our pipeline above $1 million is expanding materially. Overall, we're pleased with the business' trajectory and look forward to updating you throughout the year.

With that, I will now turn it over to George, who will provide a more detailed look at our financial results and outlook for 2026.

Thanks, Ross, and good morning, everyone. As Jurgi and Ross highlighted, 2025 was an exciting year of growth for SOPHiA GENETICS. Before I discuss our outlook for 2026, I will start by providing a brief overview of our fourth quarter financial results.

Total revenue for the fourth quarter was $21.7 million, compared to $17.7 million in the fourth quarter of 2024, representing year-over-year growth of 22%. Platform analysis volume was over 105,000 in Q4 compared to 91,000 in the fourth quarter of 2024, representing growth of 16%. Gross profit was $14.7 million in Q4 compared to $12.1 million in the prior year period, representing year-over-year growth of 21%.

Gross margin was 67.7% compared with 68.2% for the fourth quarter of 2024. Adjusted gross profit was $16 million in Q4, an increase of 22% compared to adjusted gross profit of $13.2 million in the prior year period. Adjusted gross margin was 73.9% decreasing slightly by 30 basis points year-over-year. Total operating expenses for Q4 were $33.2 million compared to $29.5 million in the prior year period.

It is worth pointing out that our Q4 results were adversely impacted by certain items, which temporarily impacted results, but do not reflect the company's underlying operating performance. For example, adverse foreign exchange movements continue to negatively impact reported OpEx, primarily due to the strengthening of the Swiss franc. The Swiss franc is appreciated by 14% since the start of 2025, which means that our payroll and rent expenses in Switzerland are translating 14% higher when viewed in U.S. dollars.

In addition, Garden Health filed patent infringement claims in the United Kingdom and at the Unified Patent Court in Paris during Q3, alleging that our MSK-ACCESS application infringes their patents. This litigation resulted in legal expenses of approximately $1.8 million, which is reflected as an adjustment for litigation in our adjusted EBITDA table. However, in January, the UPC rejected Garden's request for provisional measures and ordered them to pay us EUR 400,000 in interim costs, which we expect to receive by mid-March.

Last, we also activated an at-the-market, or ATM, facility with TD Cowen in Q4. We incurred $450,000 of costs associated with the ATM facility in Q4, but I am pleased to announce that we have raised $15.5 million in net proceeds, including $1.1 million raised in Q4 2025 and $14.4 million raised in Q1 of 2026, executed at a weighted average price of $5.12 per share.

Operating loss for the fourth quarter of 2025 was $18.5 million compared to $17.4 million in the prior year period. EBITDA loss for the fourth quarter was $16.1 million compared to $15.2 million in the prior year. Adjusted EBITDA was a loss of $9.9 million compared to a prior year loss of $9.1 million.

Lastly, total cash burn, which we define as the change in cash and cash equivalents, excluding cash received from borrowings and stock sales as well as FX impacts was $12.3 million compared to $12.8 million in the prior year quarter, representing a year-over-year improvement of 4% despite the Garden litigation cost impact that we discussed.

Now turning to the 2025 full year results. Total revenue for the full year 2025 was $77.3 million, representing year-over-year growth of 19%. Platform analysis volume was over $391,000 for the full year 2025 compared to $352,000 in 2024. customers were 528 as of December 31, 2025, up from 472 in the prior year period and up sequentially by 17 customers relative to Q3. Annualized revenue churn was at a record low of less than 1% for 2025. Net dollar retention for the year increased to 115% in 2025, up from 104% in 2024.

This impressive same-store growth demonstrates the stickiness of the platform as well as our continued ability to expand within accounts by encouraging them to adopt additional applications. Gross profit for the full year 2025 was $52.1 million compared to $43.9 million in 2024, up 19% year-over-year. Gross margin was 67.4% for the full year 2025 and flat to prior year. Adjusted gross profit was $57.3 million, an increase of 21% compared to adjusted gross profit of $47.5 million in the full year 2024.

Adjusted gross margin was 74.2% for the full year 2025 compared to 72.8% for 2024, increasing 140 basis points due to ongoing compute optimizations. As Jurgi mentioned, targeted platform improvements by our tech team have driven and storage costs lower throughout 2025, an achievement we remain proud of and expect to continue into 2026, despite the increase in data processed with larger panels being run.

Beyond cloud compute, we also had a significant reduction in our scrap costs related to bundles, which helped drive gross margin improvements. Total operating expenses for the full year 2025 were $123 million compared to $110.5 million in 2024 as reported in U.S. dollars. While constant currency costs have remained fairly flat year-over-year, the appreciation of the Swiss franc and euro have resulted in higher expenses when reported in U.S. dollars.

These foreign exchange movements have significantly and adversely impacted our reported results throughout the year, as our expenses still exceed our revenue. Beyond foreign exchange rates, we also made a targeted investment in our sales and marketing team in 2025. We have seen the results of this and accelerated growth, which is reflected in our 2026 guidance. We continue to be very focused on our expenses and operating as efficiently as possible while still making strategic long-term investments in R&D and continuously improving our platform.

Operating loss for the full year was $70.9 million compared to $66.6 million in 2024. EBITDA loss for the year was $61.4 million compared to $58 million in 2024. Adjusted EBITDA loss for the year was $41.5 million compared to $40.2 million in 2024. Lastly, total cash burn for 2025 was $50.4 million compared to $53.7 million in the prior year, improving 6% year-over-year. These numbers exclude cash received from borrowings and stock sales as well as FX impacts.

We finished the year with cash and cash equivalents of $70.3 million as of December 31. Note that this does not include the Q1 2026 proceeds from the ATM of $14.4 million to date, and this will be reflected in our Q1 update. In January, we also expanded our credit facility with Perceptive Advisors increasing total available liquidity by $25 million. We remain confident in our current capital position with respect to the achievement of our long-term goals.

Now I'll turn to our 2026 outlook. As we announced in January, SOPHiA GENETICS expects full year reported revenue to be between $92 million and $94 million, representing 20% to 22% growth. Let me provide a few key underlying assumptions relative to our revenue forecast for 2026.

First, with respect to seasonality, we expect 2026 growth to be mostly back-half weighted as new business signed in 2025 comes online in the second half of the year and as more MSK-ACCESS business continues ramping up to routine usage. We mentioned the 2 large U.S. wins that we had. However, these clients will not produce meaningful revenue in the first half of the year. As a reminder, Q1 tends to be seasonally softer from a revenue standpoint, where Q4 is seasonably stronger.

Second, we currently contemplate that exchange rates will remain volatile due to macro uncertainties. Since January 1, we've seen the U.S. dollar sink further against the Swiss franc and euro, which had the impact of increasing both our sales and operating expenses when reported in U.S. dollars. The company expects adjusted EBITDA loss to be between $29 million and $32 million compared to $41.5 million in 2025. This guidance is based on the following expectations: we continue to make targeted investments in our platform, which should further optimize cloud compute and storage costs and therefore, expect gross margins to expand slightly in 2026.

We also expect to hold the line on operating expenses in local currency and excluding social charges as we currently have the correct team size to support our medium-term growth objectives. In addition, we are looking at targeted opportunities to flatten our organization structure and reduce our headcount in certain areas. Lastly, we will continue to revisit our discretionary expenses and execute on identified savings in systems professional services and certain public company costs throughout 2026.

Overall, in 2026, we expect to drop 60% of every incremental revenue dollar down to the bottom line and demonstrate improved operating leverage throughout the year. We continue to believe that we are on track to be approaching adjusted EBITDA breakeven by the end of 2026 and crossing over to positive adjusted EBITDA in the second half of 2027.

With that, I would like to turn the call back over to Jurgi for the closing remarks before we take your questions.

Thank you, George. I am confident as ever in our long-term trajectory, and I am excited for the year ahead as the momentum in our business continues to build. As we enter 2026 and approach the 15th year anniversary of our funding, SOPHiA GENETICS is entering its next phase of scale, 1 that positions us to reach important milestones in the years ahead. Our forward-looking indicators remain strong across the business.

We continue to see a steady stream of new customer signings, expanding biopharma interest, rising average contract size and a healthy expansion in pipeline across regions and applications. At the same time, we continue to be laser focused on optimizing cost and delivering sustainable growth. Thank you to the SOPHiA team, customers, partners and investors for your continued trust and partnership. 15 years ago, we had an ambitious vision to transform health care through data and AI; today, we operate the most widely used AI-driven platform in precision medicine, impacting 391,000 patients in 2025 and over 23 million patients since inception.

I'm so proud of what we've accomplished over the past 15 years, and I know we are just getting started. Please note, we are presenting at the TD Cowen Healthcare Conference tomorrow in Boston. We all look forward to continuing to update you on SOPHiA's future success.

Operator, you may now open the line for questions.

[Operator Instructions]. The first questions come from Subbu Nambi with Guggenheim.

Your guidance is for 21% growth at the midpoint. Can you walk us through what contributions you're expecting from key growth drivers such as MSK-ACCESS, IMPACT and from rare disease?

Yes, absolutely reiterate to that. So first, to recap, we ended up the year very strong with a 31% revenue growth year-on-year in Q4 and with as well signings for the ACB has been very, very strong, 120% better in 2025 versus 2024 full year. And so this is now well positioning us for basically a 2026 performance of I know as for George, if you want to comment on the guide.

Yes. So maybe just specifically to the point you made, so the ramping of MSK-ACCESS continues to be a really nice driver for us. Sequentially, we had some sizable customers start to come online in the fourth quarter, and you'll see that ramp continue in Q1 and beyond. And so we've only seen roughly half of the total cohort start to contribute and even those that come online the volumes are relatively modest as it does take time to ramp and liquid it.

So I would say that is certainly a really nice area of expansion for us. You mentioned IMPACT or CGP, we've had some really material wins, both in ex-U.S. as well as in our native markets. So I feel quite confident we're gaining share in that vertical. And I think in general, you're seeing a shift again to kind of larger and larger panels in solid tumor, and we're well positioned for that, particularly with our Flex product, which I think has some really unique characteristics.

Outside of that, I would say overall, as to Jurgi's point, the entire platform has had really nice growth across almost all of the application sets, right? So it's really been quite balanced. Those points you made are obviously some of the true highlights. But even on the rare and inherited side, we're seeing really great uptake in our product and that was one of the key drivers behind the 2 being U.S. wins we called out several weeks ago. So I would say, in general, it's really balanced.

We've got quite a number of drivers. And I would say we're really levered to a number of the key, I would say, mega trends you're seeing across oncology, diagnostics and NGS that you see with many of the other key players that you cover. So certainly, a balance and exciting period for us on the growth side.

I feel like you probably answered my second question and switch, but the net dollar retention was up meaningfully to 115%. Can you speak to a bit to what drove the gross selling strength here? And if you expect this to continue in 2026?

Yes. So we're super pleased, Subbu, with the reacceleration in This is really a metric quite critical to us and to any other software company, where you're obviously looking at same-store organic growth. And so first part that we're incredibly proud of the churn is now actually under 1%. I mean this is like 99 percentile performance for software. And so it just really shows how sticky the platform has become and really how hard it would be to sort of move to other opportunities just because, again, the uniqueness of what we're able to do from a computing scalability and cost perspective and efficiency perspective is really unmatched. .

Say above and beyond that, and you've seen this in general, there isn't a reacceleration of volumes within sort of NGS, oncology and rare disease. And so we are benefiting from that. And then I would say as well, -- we've done a much better job on the expand, right, which is really where this is also a key metric to make sure that we're enabling our customers to scale not just with the data compute or higher ASPs, but also with bigger volumes and then moving to more applications, right?

And so I would say, overall, you'll see that continue into 2026 and beyond, particularly given the great number of new logos or new accounts we've brought online north of 200 over the last 2 years. So there's just huge expansion potential, which you'll see come through on the

The next question comes from Bill Bonello with Craig-Hallum.

So a couple here. On the pharma side, obviously, exciting to see the number of contracts that you're signing. I'm just wondering when you sort of add them all up, beginning with the step that you -- the expansion that you did with AZ and then the new contracts that you've added, can you give us any kind of sense of the potential annual contribution from those contracts? And then maybe sort of the time period over which we would see that revenue begin to roll in?

Thank you, Bill. So I would say, obviously, considering we had obviously challenging performance in the pharma business going back to 2024. We're really pleased to see improved momentum in terms of new contracts and new logos coming online. Coming off of JPMorgan, I spend quite a bit of time with very senior members of many of the top 20 pharma, and I would say, finally, our story is really resonating.

And I think there's really, I would say, specific areas of repeatable business where we could scale. So I think on the product market fit and on the sort of ability to have a much more material contribution to our overall revenue and growth, we're moving in the right direction. That being said, pharma business, as you know, does take time, right, to sort of come online and ramp and also So it is a long-cycle business. We are trending in the right direction.

I do think, obviously, the contribution into '26 will be a net positive for biopharma, which is important. But certainly, we're not in a position yet where we're looking for a hockey stick, right? So obviously, we're doing all of the right, I would say, strategic steps to lay the groundwork for a pretty nice reacceleration in later '26-'27 and beyond. But we're not yet kind of at a point where I would say the critical mass is enough to where I can declare this will be X percent of revenue to aspirationally. We think pharma could be a much higher percentage of total revenue, certainly much greater than where it is today.

But I wouldn't say we're at a point yet where we can exactly point to that. But certainly, as we see more and more evidence of kind of that momentum continuing and building, we'll be happy to share more specific figures to allow you guys to model better that business, which I know has been a bit challenged over the last 2 years.

Sure. And then just on the 2 large health systems that you added, and thanks for talking about what indication it is that they're using. What -- how do you sort of assess the potential for those based on your discussions with those health systems, the potential that those customers may want to eventually expand into additional indications and the sort of what the key components would be to influence their decision one way or another?

Sure. So it's a great question, Bill, and I appreciate you pointing this out because obviously, we're incredibly excited to be able to serve 2 of the 4 largest health systems in the United States. But this is starting with just 1 application, right? So if you look at the growth we had in the period, particularly in volume in the U.S., nearly 50%. This isn't even sort of, I would say, contemplating any of that volume starting to contribute.

So again, we're really excited about just the size and magnitude that this can bring just again with one application. So to give you a sense, we actually have already and expand opportunity in the pipeline from 1 of these 2 parties, and it's also fairly significant. And I'm super, I would say, optimistic that we'll be able to grow these accounts materially over time, where we're looking and we'll share in the investor deck, some of the cohort analysis over time. And I think what you'll see is our ability to really, over multiple periods, to grow that initial land by multiples, right?

So 2x, 3x, 4x, 5x through the volume uptick, through the increased ASP and through application expand. I mean these are both accounts that, if we were to fully penetrate them, could be certainly in the 8-figure range. So these are very, very sizable initial, I would say, starts for us, and we're really optimistic we'll be able to convert them on the platform as that remains, I would say, a really attractive opportunity.

And if you think coming off of last week in APT, particularly with all of the new platforms coming online on the sequencing side and the complexity of the chemistry and all the new applications LRD transcriptomics, et cetera, the ability to do all of that in one platform at massive scalability at a cost that makes sense with sort of the labor savings these institutes can save, given where reimbursement has been attractive. This is a very favorable medium- to near-term trend for us, and we would expect this to accelerate to others.

The next question comes from Daniel Brennan with TD Cowen.

Congrats, Jurgi and Ross. Maybe first one, just on volume price/mix for the '26 guide. So volumes, I think, grew, what, 16% in Q4, up low double digits in '25. What does the guide contemplate for volumes to price/mix in '26? And given the push with MSK and liquid biopsy, should we expect price/mix growth to accelerate as we go forward from here?

Thank you, Daniel. Yes, we've recommended that people do continue to assume that our ASPs are going to increase. Again, we're concentrated on selling higher-priced tests like MSK-ACCESS, MSK-IMPACT and the IMPACT Flex product that we have. So we do expect for those higher -- these ASPs are much higher, in some cases, 2x what our average ASP is. So you should model some increases. Realize too though, we're also going to be putting on volumes in areas like Latin America, India, Turkey, that do have a little bit of lower ASP, so that sort of tempers it out a bit.

But generally speaking, I think you saw the 16% in the fourth quarter. I think we feel good about that in terms of the volume growth. So figuring the rest of that revenue growth is going to be coming from the ASP lift.

Okay. Maybe a second 1 for Ross. So as new CEO of the company, can you just speak to a little bit about your approach philosophy, I assume, given the trajectory of the business is probably going to continue on what you've been doing, but if we look out a year or 2 and then we're looking back at what transpired, do you think we'll see any potentially meaningful changes, kind of what type of, not stamp, how will your approach possibly be similar to Jurgi and/or maybe different?

Thanks, Dan, and I still got a few months before I take over. And so I'm super excited. Also, I would say, to have Jurgi remain involved in an Executive Chairman function. I think the 2 of us will make a very good partnership going forward, being able to really help scale this business. So look, I would say, in general, I'm fortunate in that the transition is happening in a period of great strength for the business, right?

And so we have a ton of momentum at the moment. I think the real focus is, all right, so obviously, we're very focused on getting to the $100 million barrier of revenue whether that's on an ARR or a full year basis, how do we then scale materially from there, right? And so a lot of the effort, a lot of the focus of myself is preparing the organization for that next level of substantial growth and expansion.

I would say we have a lot of the pieces in place. But certainly, as you get bigger, you need to put systems and people and technology in place to allow that to continue in a way where the return on that capital is quite appealing and to create shareholder value. And so I would say that is a good part of it. The other side, I would say is we're still not fully tapping the full value of the platform and the network and the ability to have, again, nearly 1,000 institutions connected around the world, right?

And so what we're starting to see as we get to the scale is one labs of all sizes really see us as someone they will need to continue to compete in the future, but not just in sort of the traditional business and precision medicine, but you look at again where AI is going with software as a medical device or with multimodal algorithms think about what's happening in the ADC category with computational pathology and digital biomarkers or you look at the desire to create, again, these more complex algorithms for patient stratification or patient segmentation in clinical trials, it's just a lot more areas where I would say AI and having a network of the size and the data that we touch becomes really unique on a global basis, given its diversity.

And so we need to figure out how to obviously unlock and scale that. One of the things in the interim that, I would say, has limited us somewhat as, obviously, as we're trying to get to be profitable, right, you have to be very disciplined with the investments you make. I would say, with our confidence in that crossover to profitability in the near to medium term, you start to get a lot more capital freed up to make some of those investments in that.

So I would expect to see us take products like the Digital Twins and others and really use that to scale into some of those multimodal and other data-related capabilities and really truly build this kind of intelligence layer for health care so that I think could be incredibly differentiated on a global basis.

The next question comes from Mark Massaro with BTIG.

Congrats on all the momentum. One of the key levers to your business, I think, over the years has been your ability to turn on customers. So can you just give us a sense for where you are now with your go-live implementation time lines? And can you speak to maybe the infrastructure or boots on the ground that you have, perhaps any metrics you could share about taking all these customers you've signed on to make them go live in 2026?

Yes. Absolutely right, turning customers in routine has always been part of our business model. As you know, we're being paid on usage. So first, we land customers, we sign them, then we implement the platform on the customer side and then we start seeing revenue coming up, right? So as you understand, most of the bookings we've been doing in 2025 are going to contribute in our revenue story from mid to end of 2026.

And so the KBA you're highlighting in terms of means obviously something we scrutinize a lot, and it's very important. And Ross will share with you where we stand on the momentum and remind you maybe what were some of the actions we have taken last year as well to speed it up the implementation.

Yes. So Mark, if you look, we were able to complete north of 100 implementations this year and that was up pretty materially year-on-year. But if you look at the sequential cadence of what we did in the second half it was materially above the first half, right? So the actions we took starting in kind of the first part of this year, particularly in the second quarter, really started to pay off.

And we'll see that momentum continue into 2026. So we're starting to see essentially the amount of revenue released per month similar to the amount of bookings signed per month, which is more ideal, right? We had a period where more was coming into the funnel that was coming out just because we were sort of at this material acceleration period. So it doesn't mean that growth isn't continuing to sequentially improve. It is, but we're getting much better in handling the volume and optimizing a number of steps in that process and essentially managing the customer to a quicker time to revenue

We're also getting better, I would say, at enabling customers to choose products that are in -- from a long-term perspective, future-proof and things that are more standard for us. So if you think about, again, MSK-IMPACT, MSK-ACCESS, enhanced exome, et cetera, these are products or our comprehensive hematology product that we can bring online faster that we're doing multiple of at the same time, and it's allowing again for that quicker speed to revenue.

So I won't declare victory. I think we still have plenty of places to get more efficient and improve, but I think the trend is favorable and that will help again in terms of that sequential revenue acceleration that we're obviously implying in the guidance over the balance of this year as well, similar to what we saw last year in terms of the cadence.

Okay. That's really helpful. And then you guys have been driving really strong growth in the U.S. market with analysis volume up 50% in Q4. You indicated you expect it to continue in 2026. Since U.S. is still a relatively small portion of your business, do you think you can build off of the 50%? And then related to that, you guys do compete with some other labs in the U.S. market, some of which have really juiced up their commercial teams, some of which in 2025, others are doing it now this year. How do you think about the right size of your U.S. sales operation? And could that be an area where you look to expand?

Yes, absolutely, Mark, right? Actually, the U.S. clinical market should be our biggest market. As you remember, we started in Europe, developing technology there, and really penetrated the U.S. on 2022 post COVID. But yes, to your point, the U.S. market should be significantly bigger with our model. And given that there is more and more data, more and more complexity on the data, we expect to make inroads into many more new customers and grow those volumes.

Ross?

So Mark, I'm really proud of our performance here in the U.S. I think, obviously, it's taken some time for our model to really scale and resonate. I think there's also a bunch of other favorable trends happening in the space with reimbursement, getting more certain on many of these tests as well as the sequencing equipment and consumables getting more affordable, right? So I think with a platform like ours, the ability to generate precision medicine data at scale close to the patient has never been easier, right?

And so we're seeing a lot of large institutions start to see the benefits of that and really move in that direction outside even just the traditional academics that have done so in the past. And so in that name, Mark, again, just to remind you, we don't necessarily view ourselves competing, right, with the sendouts because, in general, some of them actually use us as well, right? So it's really our customers that are competing with each other. So for example, those 2 large entities we talked about in the U.S. right, I guess you can say they are going to compete for exome volumes with others in the space, but we don't really see ourselves as necessarily that competitor, right?

We're happy to also work with large laboratories doing exomes as well, right? So for us, our belief is ultimately with our scale and cost advantage and with the size of our network and the size of just the compute we're doing based on the number of patients will, at some point, be the largest sort of precision medicine platform and laboratory in the world, right, just because we're serving an entire globe, not just regions of the U.S., et cetera.

So I think with that, it gives us a lot of flexibility. But I will say, Mark, in the last 12 months, you're really seeing an inflection in the U.S., right? So we're proud of that growth number. To me, there's no reason why that can't even accelerate at some point in 2026, as some of these large customers come online. But I'll tell you, and we were meeting yesterday as an executive team, and this is one of the questions. It was with the performance of that business, do we need to add headcount? And I think we probably will is the answer. But when I look at what others are doing versus us, it's a very different sale, right?

So for us, if I add 2 FTEs to the U.S. business, right, that's pretty material for us because they're not calling on clinicians, right? They're not calling on oncologists. We're signing entire health systems, right? So we pick up 1 million patients or in this case, in the 2 institutions, 60,000 patients, that's 1 salesperson, right?

And so to do that at a send-out laboratory, you'd need many, right, because you'd be calling on the clinicians. And so we get much better operating leverage on that. And so I would say it's a student view. We're certainly going to be adding. And I think it's one of the only few places of the entire organization. We're adding headcount. But again, if you're thinking of quantum I don't think we're going to be adding 100 feet on the street.

I think in our model, we're pretty well scaled, and we can add incrementally at that new salesperson and productivity adds quite a bit of revenue. right, per salesperson. And so we're very excited about that from an efficiency standpoint as well.

We have reached the end of the question-and-answer session. Let me transfer the call over to Jurgi Camblong, Co-Founder and CEO, for closing remarks. Please go ahead, sir.

Thank you so much for joining us today. Thank you to all the SOPHiAns for the great work in 2025 and Q4 2025. We're very much looking for the [indiscernible] impact in 2026. And to remind you, tomorrow, we are attending the TD Cowen Health Care Conference in Boston, and we will be happy to see you there and take your questions. Have a good day.

This concludes today's conference, and you may now disconnect your lines at this time. Thank you for your participation.

Good morning. My name is Kelsey, and I'll be your conference operator today. At this time, I would like to welcome everyone to the SOPHiA GENETICS Third Quarter 2025 Earnings Conference Call. Kellen Sanger, SOPHiA GENETICS Head of Strategy, Investor Relations, you may begin.

Thank you, and good morning, everyone. Welcome to the SOPHiA GENETICS Third Quarter 2025 Earnings Conference Call. Joining me today to discuss the results are Dr. Jurgi Camblong, our Co-Founder and Chief Executive Officer; Ross Muken, our Company President; and George Cardoza, our Chief Financial Officer.

I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities law. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. Additional information regarding these risks, uncertainties, and factors that could cause results to differ appears in the press release issued by SOPHiA GENETICS today and in the documents and reports filed by SOPHiA GENETICS from time to time with the Securities and Exchange Commission.

During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of IFRS to non-IFRS measures is included in today's earnings press release, which is available on our website.

With that, I will now turn the call over to Jurgi.

Thanks, Kellen, and good morning, everyone. I will start with a brief recap of Q3 performance and an update on major growth drivers. I will then turn the call over to Ross, who will provide a more detailed update on the business. George will close with a review of our Q3 financial performance before we take your questions.

For the last several quarters, we've highlighted that the business momentum has been strong. New customer signings have been at record levels, and bookings have exceeded expectations. In Q3, these efforts continue to pay off as revenue growth accelerated for a third consecutive quarter. Revenue grew 23% year-over-year in Q3. Given the strong performance and the accelerating momentum we're seeing across the business, we are raising our 2025 revenue guidance to $75 million to $77 million.

Our performance continues to be driven by the 3 growth drivers we outlined at the start of the year, implementing and expanding across new accounts, growing in the U.S. market, and capitalizing on new applications such as MSK-ACCESS. Starting with the first growth driver. In Q3, we signed 31 new customers. This brings our total new customers signed in 2025 to 94, surpassing the 92 customers we signed in all of last year. Our focus remains on implementing and expanding across these new accounts. From an expand perspective, we had an excellent quarter as we successfully encouraged many of our existing customers to adopt additional applications.

In Q3, we expanded our footprint at several top-ranked institutions. Gustave Roussy in Paris is adding new solid tumor applications to the broad suite of SOPHiA apps they use today. Institut Paoli-Calmettes in Marseille signed a major expand deal to [indiscernible] hereditary cancer and solid tumor applications. In addition, New South Wales Pathology in Australia is adding a HemOnc application, and Tulane University in the U.S. is adding new applications in solid tumors.

Congratulations to the team on this major expand as well as the 31 new customers landed in the quarter. I look forward to this customer implementing SOPHiA DDM and beginning to generate revenue over the next few months.

On implementations, we were happy to see 15 sizable new customers move to routine in Q3. We also implemented an abnormally large number of expand opportunities during the quarter. Between both land and expand, total new business implemented in Q3 was strong. The second growth driver I will highlight is our continued growth in the U.S. market. In Q3, U.S. revenue grew an impressive 30% year-over-year on top of an increasingly larger base. We also signed a strong cohort of new customers to fuel growth.

In Q3, we landed Geisinger Health System in Pennsylvania, who is adopting SOPHiA DDM for pharmacogenomics, Baylor Scott & White Health in Texas, who is adopting SOPHiA DDM for HemOnc, and Thermo Fisher Lights Labs, who is adopting solid tumor liquid biopsy and rare disorders applications. Welcome all to the SOPHiA community.

The third growth driver I will cover is the continued success of our liquid biopsy application, MSK-ACCESS. As part of the update today, I will take a moment to reflect on liquid biopsy business overall, the progress we have made, and what the future holds. Two years ago, we partnered with Memorial Sloan Kettering to industrialize their world-renowned test and make liquid biopsy testing accessible to every lab in the world. This presented a series of challenges, not only due to the very small amount of circulating tumor DNA in the blood sample, but also because of workflow heterogeneity from lab to lab.

In other words, reliably decentralizing liquid biopsy is complex and many variables are at play. To solve for this complexity, we leveraged decades of experience in our diverse data network to build proprietary AI agents that standardize, harmonize and analyze liquid biopsy data. These agents, which power MSK-ACCESS and other SOPHiA applications, apply AI to find signal in the noise and deliver actionable insights to our customers.

Thanks to these AI capabilities, MSK-ACCESS is now available to labs across the globe. Since its launch last year, we have now signed more than 60 liquid biopsy customers worldwide. As our liquid biopsy network has grown, biopharma companies have recognized the value of such a network. Several months ago, we announced that AstraZeneca would sponsor the global deployment of MSK-ACCESS.

For AZ, high-quality and affordable liquid biopsy testing is critical for expanding market access. In addition, the data generated from the network offers immense value for drug development and commercialization. During the quarter, we announced the next phase of our liquid biopsy strategy. In September, we announced a partnership with Myriad Genetics to develop MSK-ACCESS into a regulated companion diagnostic in the U.S. And then in October, we announced a collaboration with A.D.A.M. Innovations to do the same in Japan.

Together, along with SOPHiA's robust regulated footprint in Europe, SOPHiA and its partners will offer biopharma a first-of-its-kind hybrid global CDx assay fit for purpose, depending on the needs of the local market. This innovative CDx will provide biopharma companies with a unique and cost-effective offering to potentially expedite drug development and approval. Post approval, it will also enable more patients to gain access to tumor profiling benefits from liquid biopsy.

As we continue our mission to expand access to best-in-class cancer care, I would like to take a moment to look towards the future. Last month, at ESMO, we announced a breakthrough technology called SOPHiA DDM Digital Twins. Digital Twins goes beyond genomics by leveraging multimodal data to help oncologists make better treatment decisions. The AI-powered research tool creates dynamic virtual representations of individual patients to simulate potential outcomes and help oncologists select the best treatment.

Starting with noncancer, oncologists can now generate Digital Twins for genomic patients analyzed with SOPHiA DDM, including MSK-ACCESS. This revolutionary tool takes SOPHiA's mission of data-driven medicine to the new age by leveraging AI and the collective intelligence for our community to provide oncologists with real-time real-world decision support based on multimodal data. Please stay tuned for more updates on the development of Digital Twins and the expansion of this exciting technology.

Before I hand it over to Ross, I would like to recognize the SOPHiA team for their continued ability to deliver amazing new products like Digital Twins and drive revenue growth without increasing costs. In Q3, we held gross margin strong at 73.1% on an adjusted basis despite the data processed by our platform growing over 40% year-over-year. This performance was driven by innovation from our tech and data sales teams who continue to engineer new ways to optimize the data compute and processing power of SOPHiA DDM.

I was also proud that we carried growth down to the bottom line. In Q3, we improved adjusted EBITDA 13% year-over-year after excluding the impact of elevated Swiss social charges on stock-based compensation. Excluding these charges, operating expenses remained mostly flat on a constant currency basis, a testament to the natural operating leverage in our business and strong expense control across our teams.

In conclusion, Q3 was an excellent quarter for SOPHiA. Revenue accelerated once again and cost performance improved. We have built an expansive global network of customers who use SOPHiA DDM each day to generate insights for their patients. In Q3 alone, SOPHiA DDM analyzed over 99,000 patients across 70 countries worldwide. Thank you again to the team for an excellent quarter and for the impact you're making.

With that, I will now turn the call over to Ross, who will provide a more detailed update on Q3 business performance.

Thanks, Jurgi. The go-to-market teams share your excitement and confirm there is broad and growing demand for the SOPHiA offering. Along those lines, I'll start today by giving a brief update on our third-quarter performance as 2025 continues to be a strong year across both new and existing business. I'll then cover broader market dynamics before closing with a look at what we are seeing in the pipeline.

First, we delivered 23% revenue growth in the third quarter as biopharma headwinds subsided and the continued strength of the core business was able to shine. From a regional perspective, EMEA returned to historic growth levels with 24% revenue growth in the period. Major markets such as the United Kingdom and Belgium contributed significantly to regional growth as the countries grew 120% and 70% in the period, respectively. As Jurgi mentioned, North America continued to outperform in the third quarter with 29% revenue growth year-over-year. Asia Pacific also continued to outperform in Q3 as analysis volume grew 35%, driven by Australia and Taiwan. Of note, we also saw the first revenue from Japan come online as our partnership with A.D.A.M. Innovation begins to ramp.

In Latin America, we continue to experience softness, but recent booking momentum gives us confidence that the region will return to meaningful growth in the medium term. From an application standpoint, we continue to establish ourselves as a global leader in hemato-oncology testing. HemOnc analysis volumes grew 18% year-over-year in the third quarter off an increasingly large base. Beyond HemOnc, we saw an initial wave of liquid biopsy testing coming online as we passed 2,000 liquid biopsy analysis in the quarter. As a reminder, more sophisticated applications like MSK-ACCESS carry a substantially higher ASP than other product lines. We will look to the fourth quarter and into 2026 for MSK-ACCESS to meaningfully drive overall growth as customers complete implementations and ramp up usage.

With biopharma headwinds now behind us, revenue from biopharma returned to positive growth in the third quarter and is no longer a drag on our overall performance. We view biopharma as an additive contributor going forward as we deliver on recently signed biopharma wins, including the multiple projects signed with AstraZeneca this quarter.

Moving to the new business side of clinical. I'm happy to share that we continue to book new business at record levels. We landed 31 new customers in the quarter, up from 22 signed in Q3 last year. As Jurgi mentioned, the expand engine was also exceptionally strong. We will continue updating you on the expansions going forward, as this will be a major strategic focus for us as we move into 2026.

In North America, Jurgi highlighted our incredible momentum in the U.S. Beyond the U.S., we also expanded our partnership with Sunnybrook Health Sciences Center in Toronto. Sunnybrook is adding a sixth DDM application, now adopting MSK-ACCESS. Our expansion to 1 to 6 applications with Sunnybrook over a short period of time is a great example of our land and expand strategy in action. In EMEA, MSK-ACCESS continued to attract major interest. In the third quarter, we signed the University Hospital of Nice in France and HSL in the United Kingdom to the application, amongst others. We also signed the American University of Beirut to our newly launched solid tumor application, MSK-IMPACT Flex.

In Latin America, we continued our expansion in the South and signed Clinica MEDS in Chile to our whole exome solution. We also continue to see new business momentum in Brazil and signed the Carlo Chagas Institute who will be adopting SOPHiA DDM to support HemOnc testing. We look forward to LatAm picking up growth in quarters to come as we implement the recently signed new business. In Asia Pacific, we were proud to announce the developments of our entry into Japan. A.D.A.M. Innovations is currently working on implementing a full suite of SOPHiA applications, including solid tumor, hereditary cancer, rare disorders, and liquid biopsy.

As mentioned earlier by Jurgi, A.D.A.M. will also play an important role in the global CDx offering we are developing. I'm happy to say we are already seeing strong demand across Japan on both clinical and biopharma sides. On that note, I'll take a second to highlight our refreshed momentum with biopharma.

As discussed in detail last quarter, we signed the largest contract in SOPHiA's history with AstraZeneca in August, kicking off a multiyear project to improve outcomes for breast cancer patients. In addition, in September, we signed a separate deal with AZ to enhance detection of breast and prostate cancer. As part of the partnership, AZ tapped SOPHiA to leverage our AI algorithms to develop an application which detects mutations in the P10 pathway, a key molecular signaling network linked to the development of breast and prostate cancer. The pathway is also notoriously complex from a variant calling perspective, and we were proud that AZ chose SOPHiA as its partner on this project. This project should also serve as yet another proof point of the value of SOPHiA's AI and our reputation as a leading data science and tech player in the space.

Broadly across markets in the business, customers are increasingly turning to SOPHiA to help them make sense of complex data. Over the past 3 years, we've seen an explosion of data production in healthcare. Sequencers and other multimodal equipment are becoming cheaper, and capabilities are becoming more advanced. Illumina, Ultima, MGI, Element, and now Roche have all deployed products that are producing increasingly larger, deeper, and more complex data. In addition, as data capabilities increase, more sophisticated therapies and tests are emerging.

Among other indicators, ctDNA is increasingly recognized as a valuable way to follow patients longitudinally and determine proper treatment. Further, sophisticated tests like liquid biopsy, MRD, ENHANZE exomes, and HRD are all in high demand. Broadly, these trends mean one thing, hospitals, labs, and health systems are increasingly looking for partners like SOPHiA to help them analyze processes that make sense of complex data. As a company that has invested more than $450 million in bringing an AI platform to help clinicians analyze complex health data, SOPHiA is perfectly positioned to take advantage of these trends.

At ESMO last month, we constantly heard these dynamics echoed by our customers. Data is exploding. Data complexity is rising, and these new sophisticated tests continue to excite. In addition, it has become clear that the decentralized approach like SOPHiA are reaching an inflection point. Biopharma companies clearly prefer a decentralized testing landscape over one that is controlled by a few larger players. In addition, large hospitals and health systems, especially in the U.S. and U.K., are waking up to the benefits of in-house testing. It enables them to get closer to the patient, build local expertise, and make better use of valuable patient data. In-house testing also drives operational efficiencies by reducing test turnaround times, making better use of labor resources, and keeping testing profits in-house instead of giving them up to a centralized player.

Combining all of these trends, what does it mean for SOPHiA? In short, it means that demand is higher than ever. Pipeline in the third quarter is up substantially since last year. Bookings in the first 3 quarters of 2025 are more than double those of 2024. Not only are we landing more customers than ever, but our customers are getting larger. Average contract value of the 31 customers in Q3 was up over 180% year-on-year. Additionally, the number of $1 million opportunities in our pipeline has expanded materially. I continue to be pleased with our positioning as well as the growth of our pipeline and of our end markets. And I look forward to updating you on these items in the coming months.

With that, I will now turn the call over to George, who will provide a more detailed look at our third-quarter financial results.

Thanks, Ross, and good morning, everyone. As Jurgi and Ross highlighted, Q3 results came in ahead of expectations as the influx of new business begins to come online. Total revenue for the third quarter was $19.5 million compared to $15.9 million for the third quarter of 2024, representing year-over-year growth of 23%. As a reminder, revenue grew by 13% in the first quarter and 16% in the second quarter, so the growth momentum continues to build.

Platform analysis volume was approximately 99,000 during the quarter, compared to 91,000 in the third quarter of 2024, representing year-over-year growth of 9%. Core genomic customers were 488 as of September 30, up from 462 in the prior year period, but down 2 customers relative to Q2 2025. As Ross mentioned, we have intentionally focused our sales team on winning larger accounts. While we moved 15 new customers into routine this quarter, we also churned out small accounts. The average revenue across all churn customers in Q3 was less than $8,000. Going forward, we will continue to focus our sales team on larger accounts, and the favorable results are showing.

Net dollar retention for the quarter was 108% with strong performance in Europe, Asia Pac, and North America, partially offset by a decline in growth in Latin America. Annualized revenue churn remains at approximately 4%. Gross profit for the quarter was $12.9 million compared to $10.7 million in the prior year period, representing year-over-year growth of 21%. Gross margin was 66.3% for the third quarter compared with 67.2% for the third quarter of 2024. Adjusted gross profit was $14.2 million in Q3, an increase of 23% compared to adjusted gross profit of $11.6 million in the prior year period. Adjusted gross margin was 73.1% for the third quarter, remaining flat year-over-year despite the substantial increase in volume of data computed by the platform.

As Jurgi mentioned, targeted platform improvements have driven cloud compute and storage costs lower throughout 2025, an achievement we remain proud of and expect to continue going forward. Total operating expenses for Q3 were $30.8 million compared to $26 million in the third quarter of 2025. However, Q3 results were adversely affected by a series of items during the quarter, which temporarily impacted results but do not reflect the company's underlying operating performance. I will take a moment to walk through each item.

First, share price depreciation of 54% at the end of the third quarter resulted in higher Swiss social charges on share-based compensation, as these are remeasured with the company's share price under local regulations. These elevated social charges accounted for a $1.3 million increase to OpEx this quarter as compared to a $700,000 benefit last year in Q3. These costs are not reflected as an adjustment in our adjusted EBITDA table per SEC guidelines. Second, adverse foreign exchange movements at the end of the quarter negatively impacted reported OpEx by approximately $700,000, primarily due to the strengthening of the Swiss franc. The Swiss franc has appreciated by 14% since the start of the year, which means that our payroll and rent expenses in Switzerland are translating 14% higher when viewed in U.S. dollars.

Third, Guardant Health filed suit against us in Europe and the United Kingdom, alleging patent infringement in the MSK-ACCESS application, which we believe to be without merit. This resulted in higher legal expenses in the quarter of approximately $600,000, which is reflected as an adjustment for litigation in our adjusted EBITDA table. Fourth, during the quarter, we completed an at-the-market facility with TD Cowen, along with completing a shelf offering that the SEC declared effective on August 8. There were $445,000 of costs associated with the A.D.A.M. facility and the shelf that we have adjusted for in our adjusted EBITDA table, as they are not expected to recur in 2026.

After adjusting for these items and other standard IFRS adjustments, operating expenses grew only 1%, driven by sales and marketing investments, which continue to deliver high returns. Despite these temporary charges, we remain proud of our ability to grow revenue 23% without substantially increasing headcount or OpEx.

Moving down the P&L., Operating loss for the quarter was $17.9 million compared to $15.4 million in the prior year period. EBITDA loss for the third quarter was $15.4 million compared to $13.2 million in the prior year period. Adjusted EBITDA loss was $10.2 million, up 8% from the prior year loss of $9.4 million. Excluding Swiss social charges and share-based compensation for both years, adjusted operating loss and adjusted EBITDA would have improved 13%, demonstrating our ability to deliver operating leverage. As with previous quarters, we remain laser-focused on driving efficiency gains across the business and reducing costs down the P&L.

Lastly, total cash burn, which we define as the change in cash and cash equivalents for the third quarter of 2025, was $13.1 million compared to $9.6 million in the prior year quarter, representing a year-over-year increase of 36.5%. The cash outflows in the third quarter of 2025 include $500,000 invested in ATM Innovations in Japan, a $1.7 million reduction in our accounts payable balance as some large vendor payments were processed, and interest expense, which increased by $1.1 million from the prior year due to increased borrowings under the Perceptive credit agreement.

We finished the quarter with cash and cash equivalents of $81.6 million as of September 30. We remain confident in our current capital position with respect to the achievement of our long-term goals.

I'll now turn to our 2025 outlook. Given the promising reacceleration of revenue growth we've had in the last 3 quarters, SOPHiA GENETICS is updating our full-year revenue guidance for 2025. We are raising our full-year revenue guidance range as revenue is now expected to be in the range of $75 million to $77 million, representing growth of 15% to 18%. This compares to the previous range of $72 million to $76 million. Adjusted EBITDA loss guidance has been revised to a loss of $39 million to $41 million compared to $40.2 million in fiscal year 2024. The primary drivers of the change are the Swiss social taxes on our stock-based compensation, along with the appreciation of the Swiss franc and the euro, and the impact that they have on our European-based expenses, such as payroll and rent when translated over into U.S. dollars.

On a constant currency basis, our expenses remain as expected, excluding the social taxes. Despite these impacts, we expect we'll be able to continue to show operating leverage for future revenue growth. We continue to make targeted investments in our platform and optimize cloud compute and storage costs, and expect to have modest gross margin expansion beyond current levels. We expect to continue to hold the line on operating expenses in local currencies and excluding social charges as we currently have the correct team size to support our medium-term growth objectives. This excludes some high ROI investments we will continue to make related to marketing activities, as well as certain investments in the commercial team, including commission payments for overperformance.

We also expect a modest increase in our implementation teams to handle the increased volumes of new accounts. Our growth has been accelerating, and we believe these investments will pay off in 2026 and beyond. Finally, we will continue to revisit our discretionary expenses and execute on identified savings in systems, professional services, and certain public company costs throughout 2025. We continue to believe that we are on track to be approaching adjusted EBITDA breakeven by the end of 2026 and crossing over to positive adjusted EBITDA in the second half of 2027.

With that, I would like to turn the call back over to Jurgi for closing remarks before we take your questions.

Thank you, George. To close, this quarter marked another period of accelerated revenue growth with 23% year-over-year revenue growth, reflecting strong execution of our teams and the growing impact of our platform. Forward-looking indicators remain strong across the business as we continue to see a steady stream of new customer signings, substantial new biopharma partnerships, rising average contract size, and a healthy expansion in pipeline across regions and applications.

On top of this, we continue to be laser-focused on optimizing costs and delivering sustainable growth. I am confident as ever in our long-term trajectory, and momentum in our business is building. I look forward to continuing to update you all on our progress in the future. With that, thank you to the SOPHiA team, customers, partners, and investors for joining us on our mission to transform patient care by expanding access to data-driven medicine globally.

Operator, you may now open the line for questions.

[Operator Instructions] And your first question comes from Bill Bonello from Craig-Hallum.

So just a couple of things I'd love to follow up on. So first of all, in terms of the guide, and I think I get what you're doing here and appreciate it, but I just want to make sure. The midpoint of the guide sort of implies a mid-teens growth for Q4 versus the 23% growth that you had this quarter. Is there any particular reason that we would expect growth to decelerate next quarter? Or is this just kind of prudence?

Thanks, Phil, and good question. I would say, obviously, all year, we've been generally conservative with our approach to guidance, right? Coming off of 2024, we wanted to make sure we were set up well to be able to continue to overachieve. And obviously, you see us do that this quarter and raise our guidance. I think in general, the business has fantastic momentum. We had another tremendous quarter of bookings. We're bringing quite a lot of business online. I think we wanted to just be prudent, right, heading into the year-end. But frankly, though, we don't see any change in kind of the key drivers of the business and feel very confident that our growth overall will continue to perform in line with our expectations and/or continue to accelerate.

And then MSK, you talked about 60 customers now signed up. Can you give us a sense of how many of those customers are already performing analysis or generating revenue, and how many are yet to go live? And then maybe -- I know you talked about it a little bit, but maybe a little more color or commentary on the pipeline of potential customers that you might be able to add going forward?

Yes, sure. I will start, Bill, and then Ross Christos. But I will start by telling that indeed to your point on the pipeline, the demand in liquid biopsy is growing, right? ctDNA is becoming more and more adopted clinically, more and more important for diagnosis, for monitoring, but eventually, as well for mRNA testing. So definitely, this is a platform where we see a lot of demand. When it comes to the numbers, we highlighted that this quarter, we did over 2,000 analyses on MSK-ACCESS. So basically, this gives you a sense as well of our numbers are ramping up. We grew more than triple digit on more than 100% basically on liquid biopsy, actually over 300% year-on-year. So again, there is a lot of demand there. And when it comes to the number of sites that were implemented, it's still a minority. So Ross, maybe you want to give us some more color to give.

Yes. Thanks, Bill. So obviously, as Jurgi said, liquid biopsy remains, I would say, a super hot area for diagnostics in general and one where we're seeing a lot of demand. Certainly, we're very happy with the rate of adoption over the last 12 months in terms of the 60 signed logos. So assume about 20% of those have started to enter routine, although still based on the numbers we shared in terms of the monthly cadence, it's still quite modest. We expect that to ramp pretty materially over the next 1 to 2 quarters. We have some very large accounts coming online in the fourth quarter and into the first quarter of next year. And so we're quite confident that that trajectory will continue to inflect.

And then for 2026, we will see very strong growth from this product and one as well, as we think about CDx and our announcements there, and we can touch on that we continue to see a multiyear trajectory that's going to be driving this business for the foreseeable future.

And if you'll allow me, just one last question. You mentioned Thermo Fisher as a customer. Can you just talk a little bit more about what they'll be doing, how they're using the product?

So Thermo is using it in one of their laboratories. I would say we're probably not at liberty to share a ton more. But certainly, as you think about many of the typical vendors and they are one who does CDx, you tend to do orthogonal studies and work, and also tend to use other technologies of other competitors, of which you do not have sort of applications and/or bioinformatic capabilities. And so I would say, think about it in that vein, we're very excited to have them as a customer. Obviously, we already serve quite a lot of thermal instruments as well in the field. And so I would say in this vein, this is sort of a new avenue for us and an important one. But unfortunately, I can't give you a ton more detail on the project just because of its confidential nature.

And your next question comes from Subbu Nambi from Guggenheim.

What is your outlook for biopharma R&D spending and overall funding for 2026?

Subbu, we have been speaking a bit about the biopharma penalizing in the past, right, and us changing the strategy, being focusing on things that were very well, I would say, defined around data, around diagnostics. And as we've been highlighting in the previous quarter, this strategy has been taking off. We announced last quarter as well a deal we made with AstraZeneca on the data side, which we qualified as being the bigger deal in the biopharma historically. But beyond that on '26, Ross, what can we share?

Yes. So I would say, Subu, coming out of ESMO, I was super encouraged. So if you think about a lot of where we're positioned relative to pharma pipelines as well as where pharma is allocating dollars, we're in a very favorable position, right? Pharma is increasingly, I would say, looking to support a hybrid centralized, centralized approach for CDx, and us with our partner, Myriad, have fantastic, I would say, capabilities in that front and also to do CDx and other sponsored testing.

Additionally, I would say, if you look at what they're doing with AI, we have really unique capabilities in terms of algorithm development and unique data sets that we have access to that, as you saw in the breast example, garner a lot of interest, and we would expect to see more of that. Additionally, again, being well positioned in liquid biopsy, which is an area that's inflecting at the moment. I would say also, we're having quite a lot of conversations and discussions around a myriad of different opportunities there. And so across the board for us at least, biopharma year-on-year and certainly on a 2-year running basis is materially healthier. Our pipeline is in fantastic shape.

Again, we still need to execute and drive some of these large deals home. But I would say for us right now, the positioning is quite good and the budgets are there. And we're seeing not only heightened activity level, but for us, and again, this -- I'm not sure as a read on the market, but more specific to us, we're engaged with most of the top 20, right? And so if you think about many of the large names that have had a lot of pipeline success, obviously, AstraZeneca being at the foremost, but many of the other large names are ones that we have active dialogue and very, I would say, concrete potential deals in the pipeline with. And so we're quite encouraged about what that could contribute in '26 and beyond.

How did customers' onboarding setup times trend in 3Q? Did you notice the macro environment elongating this in any way? Or do you have concerns about this? Any U.S. government shutdown impacts?

So first, as you know, Subbu, for us, signing deals is great, and we have been highlighting that actually bookings and ACVs of bookings have been very good, but then we don't generate revenue until our platform is being implemented, given we're being paid on usage, right? So more color on the implementations and the impact of the macro.

Yes. So in general, we're actually seeing healthy activities across the entire funnel. So pipeline remains robust. Bookings were very good in the quarter, and implementation, certainly on a dollar basis, continue to accelerate. So this quarter, we had a bit more expand applications come live than new logos, but I would expect Q4 to be quite strong. We actually just had a record October, and so on that level, activity levels, again, and this is across multiple geographies, continue to be quite good. So for us, on the macro side, the environment is super healthy. And I think you've heard this from some of the sequencing providers as well. We've talked about clinical volumes being strong. And so obviously, with that and the increased data production on those volumes, for us at the moment, things are continuing to be quite strong. Yes. So no impact from the government shutdown so far, at least on our side.

And your next question comes from Mark Massaro from BTIG.

Congrats on the strong quarter. I wanted to ask a little bit about the large pharma customer you have in AstraZeneca. How much -- was there a benefit in Q3? And if not, should we -- I think we're expecting that to pick up here in Q4. I was hoping if you could just sort of walk me through that. And then related to that, can you just speak to the strength in biopharma if you exclude AstraZeneca?

Yes. So Mark, George will start on your question regarding the financial side, and then Ross will give you some more color on the recent activities we have.

Yes, there was a fairly small amount of pharma in Q3, and we had said that last quarter that pharma was really going to ramp up in the fourth quarter. Again, typically, these type of contracts take a couple of months to get projects going, and the revenue is typically recognized when milestones are hit. So -- but we do expect to hit some of those milestones in the fourth quarter. And as Jurgi said, really, the thing that we're excited about with the pharma side is really when you start to look out in 2026 and 2027, we're still very bullish on this business and what it can become. And it's exciting to see the projects that we've already won, and the pipeline is not -- you think you signed a lot of contracts, maybe your pipeline to be down. The exact opposite has happened. The pipeline has actually even gotten stronger at the same time. So we're -- we remain very bullish about the pharma business. We've talked about the Myriad partnership, what we're doing in Japan, and we believe wholeheartedly, there's a great business here.

Yes. So Mark, I would say, obviously, AstraZeneca is a fantastic partner, particularly given the health of their pipelines, right? So being tied to one of the large pharmas that has a ton of new product introductions is obviously as a diagnostic and data player, incredibly beneficial. But to your point, obviously, we've been super focused on broadening out the pipeline, as I was mentioning before, that has expanded pretty materially, not just in size, but also in the sheer number of pharmas in the pipeline. I can also confirm we won other deals outside of AstraZeneca, some that are quite significant. But I would say for various reasons, you can't always press release depending on where the drug is or where the project is in its stage sort of the wins. But I would say, overall, we're quite happy with that momentum, and we would expect, again, to see further adds on that side over the upcoming quarters and into 2026 as the business continues its recovery.

And between Myriad Genetics and the customer formerly known as Genesis Healthcare, I think you've got companion diagnostics with both. Can you just give us a sense on timing, how you're thinking about regulatory, and when you think these might start contributing to your business?

Yes. So as you understand, right, depending on the regions, regulatory basically frameworks are different. So the partner we have in Japan is to fulfill basically the regulatory authorities in Japan, and the one we have in the U.S. is to fulfill as well regulatory duties and opportunities in the U.S. market, right? And the why we've been expanding our offering. As you know, Mark, we've been very successful with our decentralized model. But in some instances, premarket, pharma wants to do that in a single site P&L. So hence, like the inception of this partnership. Anything else you would like to add?

Yes. So I'd say, Mark, again, coming out of ESMO and even more so than ASCO, we heard consistently at drumbeat of huge interest in MSK-ACCESS as kind of a global CDx tool. And again, if you think about the existing environment, typically today, if you hire one of the current vendors who are centralized, you're normally having to hire probably another 5 to 7 vendors to cover the diagnostics globally through commercialization, whereas now with a strong partner at Myriad is obviously very well known in this space, having delivered really strong results with myChoice and other products in the past. So they have great regulatory experience for the U.S. market. We have Genesis or now A.D.A.M. Innovations, who's generating quite a lot of interest, honestly, in Japan as well, and obviously, our ability to sort of deliver applications for the rest of the world. I think that's garnered quite a lot of kind of curiosity of pharma that's now turning into real opportunities.

We actually already have several opportunities we're involved in, in the market. Again, it doesn't mean we will win. But certainly, we're already engaged. So that should give you a sense of our preparation and timing of when we expect this to be able to be available as certainly we're already in sort of that process. But I would say, certainly, we want to take our time. We obviously work with our partners closely on bringing these tools to market. But again, I would say on a multiyear basis, this has the potential to be a really significant driver for SOPHiA going forward.

And just one last one for me. You made some really good progress signing new customers, including the MSK-ACCESS on SOPHiA DDM. You talked about the majority are expected to complete implementation and begin generating revenue in the next 3 to 6 months. I'm just trying to get a sense, as we think out to 2026, is there -- in your view, do you think you'll continue to onboard new MSK-ACCESS customers each quarter? Or do you think there's a big bolus sort of like Q4 into Q1, and then that will start to level off? I'm just trying to get a sense for the business in '26.

Yes. So I would say, in general, Mark, we're obviously quite enthusiastic about this product ramp. As we've said, these will come online, as you mentioned. I would say it's never perfectly linear, as you would expect. So there will be some step function changes. But ultimately, the potential here with the existing signed accounts is quite significant to contribute to our business, and then obviously, CDx as well. And so we remain very confident in that contribution to the '26 growth rate and beyond.

And Mark, if I may add, I know you're interested in knowing what our plans for MRD as well. In a decentralized world, what would be the MRD applications, both clinically and technologically? But typically, MSK-ACCESS, which enables as well to measure ctDNA could become an MRD application.

And your last question comes from Dan Brennan from TD Cowen.

This is Kyle on for Dan. Just wanted to build off the last question a little bit on the customer implementation. You added over 30 customers this quarter. And I believe exiting Q2, you had somewhere around 100 customers in the backlog waiting to be implemented. Can you discuss what this backlog is today?

Yes. So the backlog remains for better or worse at the highest levels in our history. Certainly, I would say we did a good job in the third quarter of continuing to make progress and accelerate go-lives in terms of accounts coming online in the third and fourth quarter and into Q1 of next year. And we have some, as I mentioned, quite significant ones coming online over the next 2 months. Certainly, you can always improve and get better. And so we're spending a lot of time and effort to optimize the end-to-end process. Some of that also at times, is outside of our control, whether it's someone needing a regulatory approval or something on the reimbursement side. But generally, I would say the trend is favorable. The backlog is substantial. It gives us a lot of forward visibility. And again, it's why we remain confident in continuing in our path to kind of growth acceleration in the fourth quarter and into 2026.

And then maybe on that then, maybe it's too early to tell, but looking at where consensus is for '26 right now, I think it implies somewhere around mid-teens growth. And I mean, if you add the clinical momentum, pharma getting better, not being a headwind next year, is there any reason to think that growth couldn't be better than that next year?

George?

We've always tried to guide conservatively. And I think, as Ross said, sometimes things aren't always linear. You kind of have a bit of the trends going one way or another. So I think we want to put out guidance that is reasonable. And then certainly, yes, I think you've just seen this past quarter where we put up a very nice number, and we're going to continue to try to overachieve. But I think in terms of the 2026 expectations, where the consensus is, is probably reasonable, and we're going to do everything we can to overperform.

Yes. And so Kyle, I would say, certainly, we're several quarters into a reacceleration. There's no reason to think that there's anything changing in that trajectory in our business. Obviously, we've talked about strong new business momentum all year. And this quarter, we're talking a bit as well around the pharma reacceleration and recovery. But as George said, obviously, we want to be prudent. But at the moment, we're obviously feeling quite confident on our trajectory. And again, our long-term goal is to get back to more historical growth rates that you saw from us in the past. And so that's the ambition. And so we're going to continue to push towards that.

There are no further questions at this time. You may proceed.

Thank you very much for joining us today, and please continue following up. And once again, congrats to the SOPHiA team who delivered a fantastic quarter.

Ladies and gentlemen, this concludes today's conference call. We thank you very much for your participation, and you may now disconnect. Have a great day.