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Good morning, and thank you for standing by. Welcome to the Olink Proteomics Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Jan Medina, Vice President of Investor Relations and Capital Markets. Please go ahead.
Thanks, Michelle, and good morning, everyone. Thank you all for participating in today's conference call. On the call from Olink, we have Jon Heimer, Chief Executive Officer; Carl Raimond, President; and Oskar Hjelm, Chief Financial Officer. Earlier today, Olink released financial results for the first quarter ended March 31, 2023. A copy of the press release and an updated corporate presentation are available on the company's website.
Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the U.S. federal securities laws, which are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. For a list and description of the risks and uncertainties associated with Olink's business, please refer to the Risk Factors section on Form 20-F, Commission file number 001-40277 filed with the U.S. Securities and Exchange Commission on March 27, 2023, and in our other filings with the SEC. We urge you to consider these factors and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance.
Also in our remarks or responses to questions, management may mention some non-IFRS financial measures. Reconciliations of adjusted gross profit and EBITDA, constant currency revenue growth, and certain other non-IFRS financial measures to the most directly comparable IFRS measures are available in the recent earnings press release available on the company's website.
This conference call contains time-sensitive information and is accurate only as of live broadcast today, May 11, 2023. Olink disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise, except as required by law.
And with that, I will turn the call over to Jon. Jon?
Thank you, Jan, and good morning, everyone, and thank you for joining Olink's first quarter 2023 earnings call. I'll start by discussing recent highlights and milestones we achieved during the quarter. I'll then turn the call over to Carl for details on our strong commercial performance and trends Olink can see in the product Olink's market. Then Oskar will discuss the company's financials.
During the early months of the year, Olink continued to make major strides in the next-generation proteomics market, delivering an industry-leading combination of revenue growth, financial momentum, and operational execution. We posted total revenue of $27.5 million, representing growth of 21% compared to the first quarter last year, in line with our expectations.
Q1 2023 was highlighted by strong growth from kits overall and specifically explore kits with continued progress toward our product weeks goes. We also posted strongest stabilizations with the robust performances by Explore in high-plex and signature in the low and mid-plex segment. proteomics remains a priority for customers driving an expansion of [indiscernible] were exposed along Olink's entire product line from high to low-plex, explore signature and target.
With more than 1,200 PA-based manuscripts now published and a growing footprint at major medical meetings, Olink is making significant contributions to the science of proteomics every day. In addition, the U.K. biobank recently made the first tranche of data available from the pioneering proteomics work conducted on the Olink platform. Releasing data from the first 1,500 proteins from roughly 54,000 individuals.
We are proud that Olink Explore platform could be part of this tremendous journey and anticipate this landmark research will be a meaningful early step in harnessing the power of next-gen proteomics in combination with genetic information to improve human health. In the interim, biopharma is already making decisions based on the data being generated by this effort.
I want to thank the whole organization for yet another very successful quarter. It's clear that our commercial organization is executing exceptionally well, and we're also very excited to see the tremendous advances our R&D teams are making with our pioneering PA technology. Olink continues to innovate across our entire platform with clever molecular designs generating new and exciting opportunities spanning the entire proteomic spectrum. We're enabling new use cases and unlocking fresh value for drug researchers, developers, and patients. We're also opening up new market segments and applications across existing and incumbent fleet of sequencers.
Olink is committed to expanding its lead as a next-generation proteomics ecosystem. We're targeting a several fold increase in multiplexing and throughput over time, drastically simplifying all PA protocols from high to low-plex, increasing the dynamic range for the most low abandoned proteins, resulting in even higher sensitivity assays, boosting customer data interpretation capabilities, and streamlining the paths actionable results, creating new applications and customer acquisition opportunities with new product designs through mid to high throughput sequencers.
And as we previously discussed, our assay development efforts continue to advance ahead of plan and the LIBOR validated by market targets continue to increase rapidly. We expect some of these innovations to begin yielding exciting new product launches over the coming months and years. Further lowering barriers and increasing opportunities for scientists around the world to apply proteomics as a strategy in the work. We believe this will continue to fuel the tailwind we've created in the age of modern proteomics. Very exciting time ahead. Stay tuned for more details.
I will now turn the call over to Carl to provide more details on our commercial team's strong execution and what we're seeing in the market. Carl?
Great. Thank you, Jan. Olink's first quarter showed solid growth of 21% year-over-year. Total revenue was made up of $13.5 million in kits revenue, $10.4 million in analysis services revenue and $3.5 million in other. Kit sales were very strong, growing almost 240% year-over-year with Explore and Target performing very well to start 2023.
First quarter kit mix was also strong at 49% of total revenue versus 18% in Q1 2022. We believe the timing of some analysis services orders boosted product mix towards kits in Q1 2023 with a tough analysis services comparison in Q1 2022, impacting year-over-year metrics as well. However, underlying kit fundamentals remain very good, and we continue to make strong progress towards our product mix goal, led by Explore kit sales of $9.4 million.
Explore revenue of $16.9 million was 61% of our total revenue in Q1 and 69% on a trailing 12-month basis. It was another strong quarter for Explore externalizations with 11 new sites and the total reaching 63 at the end of March. These sites in aggregate represent more than $1.2 million in annual sample volume potential, and we achieved roughly 780,000 in average customer pull-through during the 12 months ended March 31, 2023, stepping down only modestly from Q4 2022.
Other revenue totaled $3.5 million, led by Signature Q100, and we delivered 26 new instruments to customers during Q1, reaching an installed base of 117. It was another strong quarter for the mid and low-plex market segments with significant signature placements as noted and solid uptake by new and existing customers. We also began shipments of Olink Flex during the quarter, marking a significant expansion of our capability in the mid and low-plex market and meeting market demand for scalable next-generation protein measurement solutions.
Regarding the spending environment. As we previously discussed, the year-end 2022 budget flush environment was not as strong as we had seen in previous years given an increase in macroeconomic headwinds. During the first quarter of 2023, these headwinds increased somewhat impacting the timing of biopharma spending, including in the EMEA region, where the effect on this customer segment has been greater.
That said, we expect year-over-year growth in EMEA to improve in Q2 versus Q1 2023. We also note that EMEA was very strong in Q1 2022, growing more than 90% in the year ago quarter and making for a tough comparison. Headwinds aside customer appetite on a global basis continue to be supportive, leading us to believe that in our segment of OMEC spending on next-generation proteomics remains a priority for our customers.
Our commercial team executed with strength in the first quarter and remains focused on navigating the current environment. Olink's commitment to innovation is evident in the rapid pace of new product launches we've delivered in a relatively short period of time, since our IPO about two years ago. We've delivered low to high-plex products, new assays, new instrumentation, new software solutions, and significant protein library expansion. I'd like to thank everyone at Olink and our collaborators who have contributed their incredible efforts in service of improving our understanding and management of human health.
As we discussed previously, we're actively monitoring external investment opportunities, including bolt-on M&A to augment our antibody, antigen development and supply chain capabilities. We'll be disciplined in our evaluation of these opportunities, seeking partners that share in our commitment to innovation and providing customers with exceptional value. We continue to strengthen our human capital as well, ending the first quarter with 630 employees, including 215 full-time employees on the commercial team.
And last month, we were delighted to bring Bruno Rossi on Board as Olink's Chief Commercial Officer. We expect his considerable industry experience to be a significant advantage to our rapidly growing company. Upon Bruno's arrival, I have moved into the role of President of Olink. My immediate priorities will be supporting Bruno's transition and ensuring the success of our commercial team at Olink. Beyond that, I'll be serving a broader role where I will lead and oversee the Chief Commercial Officer, Chief Operating Officer, Chief People Officer and Chief Strategy and Product Officer functions.
Lastly, we are reiterating our full-year 2023 guidance of reported revenue to be in the range of $192 million to $200 million, representing growth of approximately 37% to 43% year-over-year. Beyond 2023, we see prospects for strong growth with Olink continuing to operate and execute on the very sizable and growing proteomics and protein measurement market opportunity.
I'll now turn the call over to Oskar to provide additional financial details.
Thanks, Carl, and hello, everyone. And first quarter revenue grew 21% on a reported basis and 25% on a constant currency basis. We reported adjusted EBITDA of negative $9.4 million versus negative $9.1 million in Q1 2022 with positive cash flow from operations. Negative adjusted EBITDA and positive cash flow from operations in the first quarter are in keeping with our typical seasonal cadence. We finished the quarter with $173 million in cash.
As Carl mentioned, at the end of Q1, we had 63 externally placed revenue generating explore installations. Even with a significant number of new externalizations over the past three quarters, average customer proof throughout the last 12 months was a strong 780,000, an indication that the quality of our Explore externalization remains high.
We continue to expect variability in quarter-to-quarter pull-through, which could be further impacted by our customer spending seasonality, though we anticipate continued growth over time. Driven by a very strong performance from Explore Kits as well as Target, total kits revenue for the first quarter grew 239% to $13.5 million as compared to $4 million for the first quarter of 2022.
Analysis services revenue for the first quarter was $10.4 million versus $16.6 million in the first quarter of 2022. This brought mix -- product mix to 49% kits and 38% services. As Carl previously discussed variability in customer buying drove a higher kit mix in Q1 than we anticipated, we expect Q2 to regard to a more typical seasonality. This means we expect kit mix -- Q2 kit mix to decline from Q1, but still expect kits to be approximately 50% of total revenue for 2023, helping drive strong improvement in our corporate margins.
Led by sales of Signature Q100 instruments, other revenue was $3.5 million as compared to $2.1 million for the first quarter last year. By geography, revenue during the first quarter was $14.7 million in North America, $8.8 million EMEA and $3.9 million in China and rest of the world. EMEA decreased year-over-year, though the Americas and APAC both saw impressive growth of 59% and 39%, respectively. On EMEA trends in the current quarter, we expect year-over-year revenue growth will improve in Q2 versus Q1 and with the organic rate improving even more significantly when excluding U.K. Biobank revenue booked in Q2 of 2022.
Consolidated adjusted gross profit margin was 67% during Q1 as compared to 63% in Q1 of 2021. Adjusted gross profit margin for kits was 83% for the first quarter of 2023 as compared to 89% in the -- for the first quarter of 2022. The decrease, which was in line with our internal planning, but primarily due to increased supplier cost and logistics expenses. Over the long-term, we continue to see strong opportunity for kits gross margin to improve as we increase our own content on the platform.
Adjusted gross profit margin for analysis service was 62% compared to 58% in Q1 2022, with the completion of the U.K. Biobank project last year, in addition to the tremendous improvement in efficiency made by our services team over the past couple of years, we expect service margin will improve on a year-over-year basis and following a seasonal cadence, be it a bit higher in the second half of the year. Adjusted gross profit margin for other was 21% in Q1 2023 as compared to 47% for Q1 2022, with the decrease primarily due to Chip and Hardware segment and Signature.
Total operating expenses for the first quarter were $34.9 million as compared to $29.5 million for Q1 2022. The increase was largely due to expansion and investment in the overall Olink organization as well as costs related to our capital rates. Operating expenses are broken out as follows. Selling expenses were $12 million versus $9.5 million for Q1 2022. Administrative expenses were $16.4 million versus $14.4 million for Q1 2022, and R&D totaled $6.4 million versus $6.8 million for Q1 2022. Net loss for the first quarter was $14 million as compared to a net loss of $12.2 million for the first quarter of 2022, while net loss per share was $0.11 as compared to a net loss of share of $0.10 in the first quarter of 2022.
During the first three months of the year, we successfully completed a primary equity offering and also achieved positive free cash flow exiting the quarter with $173 million in cash. As we consider our options to further accelerate investment into strategic internal initiatives and the evaluation of external opportunities would remain disciplined with the use of our balance sheet, and we expect to operate with our previously issued profitability guidance. As with our previous investments, we intend to remain focused on delivering value to our customers and shareholders over time.
Now to our guidance. When considering the dynamic macroeconomic environment and its headwinds, Olink continues to expect another year of strong industry leading growth. We are reiterating our 2023 reported guidance to be in the range of $192 million to $200 million, representing growth of approximately 37% to 43% on a reported basis and roughly 38% to 44% on a constant currency basis. Olink also expects revenue will progress along a seasonal pattern weighted slightly more towards the second half of the year than in recent years, but with fundamentals that continue to be positive.
In addition, Olink believes it will return to profitability this year as measured by our adjusted EBITDA. Looking further ahead, we're still in the very early phases of penetrating our core markets in low, mid, and high-plex proteomics with exceptional room for growth over the near to long-term horizon.
I will now turn the call back to Jon for his concluding remarks.
Thank you, Oskar. Thank you, Karl and Jan. During the early months of 2023, we continued to strengthen our leadership in the next-generation proteomics market, delivering exceptional value to customers and the community.
And at this point, we'll open up the call for questions. Operator?
[Operator Instructions]. The first question comes from Puneet Souda with SVB Securities. Your line is open.
Hey guys. Thanks for taking the questions. And congrats on the strong quarter here. And so let me ask about that. The kits performance obviously came in ahead of us. Explore installs were strong in the quarter. Jon, could you tell us a bit about where those installs are coming from? There are obviously a number of questions in the market, given what's happening with capital funding, early biotechs. So would love to get your thoughts around where you're seeing momentum among the Explore. And what are you seeing in terms of the overall growth expectations from the emerging biotechs and overall, what are you hearing from your customers? Would love your thoughts on that first.
Hey, good morning, Puneet. Thank you very much. Good question. I'll let Carl lean that one.
Hey, Puneet. Good morning. Yes. So we continue to see demand pretty balanced across our end markets for Explore. So regardless of any headwind commentary you're hearing, I think, again, the demand remains strong across all of our segments. I think that's very positive and speaks to the overall trend and demand for next-generation proteomics.
As far as biotech, we are sort of much more established in the top-tier biopharma and larger biopharma. We have significantly less exposure, I think the start-up type biotech. So that's not a significant part of our business and not creating any meaningful headwinds for us is, of course, that the funding environment there looks a little bit different. But again, that's not an area of high exposure, for our customers and then by region. Again, somewhat balanced. Quarter-by-quarter, it's just left and right of it. But overall, it's been -- we've had strong growth in all regions.
Got it. And then in terms of visibility, obviously Q1 is given the seasonality, generally, your lowest quarter, second half is much more heavier. So what sort of visibility that you have into that? Obviously, you have more Explore installs this year versus last year. I don't know if that gives you more confidence, but maybe just talk about the visibility that you have into the second half and especially maybe the fourth quarter.
Yes. So the pipeline continues to develop in a healthy way and similar to prior commentary -- it won't be exactly consistent every quarter. It will bounce around a bit, but the trend of demand that we spoke to earlier, remain fully intact. And those Q1 numbers as we just reported are sort of back that up, it was significant progress that we made. And we expect the business to keep growing as we've talked about through the year, we haven't changed our guidance. And so we expect the same trends that we spoke of to continue throughout the year.
Okay. And then last one for me is on the service side that came in below our estimate. Was there a push out in the quarter that we should now expect in second quarter? How should we think -- and when we think about in full-year sort of timeline, I think Oskar alluded to this being 50% kit. Maybe just give us a sense of sort of how that cadence for service versus kits plays out through the year? Thank you.
Yes. So as you stated, our thesis on the full-year kit mix remains the same. Q1 came in quite strong. And we did see some service opportunities shift quarters a little bit. So I think we'll see a little bit step up in AS in the second quarter. And again, just sort of as we stated, it tends to move around a little bit, but I would expect, based on some of those service deals, where we saw a little softness in Europe around the biopharma services business, we'll see that shift a little bit in Q2. We'll see more strength in the AS business there.
Yes, super. All right, thanks guys.
Thank you.
[Operator Instructions]. The next question comes from Sung Ji Nam with Scotiabank. Your line is now open.
Hi, thanks for taking the questions. For your external kit customers, would you have a sense of what the split is between the high throughput or customers that are using high-throughput versus mid-throughput sequencers, and also with the recent launch of NovaSeq X, do you have a sense of whether that could drive further growth acceleration over the next year or so?
Yes. Sung Ji, this is Carl. I'll take that. Yes. So most of our customers are leveraging high throughput sequencers or certain we have capability on the NextSeq system as well, but we see -- due to the throughput and economics, I think the higher throughput sequencers has been a more attractive option in general, but I think that speaks to a larger market opportunity out into the future as there's quite a large installed base that we could leverage in theory for our portfolio.
And then NovaSeq X more specifically, I think is actually, I mean, it's great for the genomics market. It's great for the next-generation proteomics market as it drives down the cost of sequencing for end-user customers. So any benefit that they have in the market and that knock-on benefit as some of new competitors enter that market is just a net positive for our customers overall. So NovaSeq X specifically, I don't think recommend is necessarily a dramatic difference in what we'll see in our business, but some incremental opportunities for our customers for sure is the sequencing costs continue to have pressure.
Got it. And then in terms of your next-gen product development pipeline, could you kind of comment on how that's shaping up, if you're anticipating any near-term milestones there?
Yes. No, absolutely. Good morning, Sung Ji and Jon here. So yes, and as I alluded to in my formal script, I'm super excited by the amazing innovation we continue to do in this organization. I mean the clever molecular designs and tricks, we haven't continued to explore our super exciting across the entire spectrum of our portfolio, everything from Explore through target and focus and how we can apply these on top of sort of the additional advancements that we're doing on generating new antibodies and validating new assays, et cetera.
So yes, in particular, I think what we've seen over the past year or so internally, we've really done some amazing work. And this will propel itself into some really exciting new things coming out. As we said also that we expect new product launches this year. So yes, we couldn't actually be more excited on how we continue to really lead and drive this next-generation proteomics market with our truly disruptive and unique top-of-class technology PA.
Got it. And then if I could squeeze in one more question. With the recent positive data coming out of the Alzheimer's disease drugs, I was kind of curious if you're seeing any uptick in terms of the demand for your neurology panel or just kind of other kind of development efforts?
Yes. No, very good point, right. We've seen that for some time. I mean, Neuroscience is a super important deal that really needs new molecular tools and strategies, what we actually provide to better define subgroup of patients to develop smarter targets to predict response and modify treatment over time.
So you're right. We're actually seeing an uptick in discussions with customers across the neuroscience space, and Alzheimer's is very high on that agenda. So yes, spot on, and it's super exciting for us. And the community that with novel technologies as ours that we hopefully can help to unveil new opportunities to really improve patient outcomes. So yes, very nice and exciting momentum for sure.
Great, thank you so much.
Thank you.
[Operator Instructions]. The next question comes from Kyle Mikson with Canaccord. Your line is now open.
Hey guys, thanks for taking the question. Congrats on the quarter. I wanted to talk about the Explore mix dynamics, I guess. So congrats on the Explore revenue. The kits revenue came in pretty impressive. That's, I think, 300% growth year-over-year. But the overall Explore growth of 7% was less in your total business, that would imply the service revenue for Explore declined 45% year-over-year. That's -- I know it's a pretty tough comp accounted like compared to 1Q '22, but I mean, was that expected, like maybe that was a blip given the order dynamics or the macro headwinds affecting analysis services? Or was there something actually happening in that Explore segment that could be like a longer-term trend?
Hey Kyle, it is Oskar here. So I think, yes, it's a very good question. So I think, I mean, as Carl alluded to in his part of the script, we saw some weakness in Europe and in pharma, and that was sort of in particular, in services. So I think that is sort of really what is sort of driving the sort of the year-on-year decrease in services as a whole. And you clearly would sort of Explore being sort of a large part of the business that's going to sort of impact the store as well.
And then I think if you peel that onion a bit further, I mean, we were seeing Q1 last year was exceptionally strong in Europe in the Service segment. We had some -- a couple of really, really sort of for many sort of big projects that are sort of slated for sort of later this year or that didn't sort of materialize in the same way this Q1, as we saw, last Q1.
So it's also a very sort of tough comp for pharma services in Europe. And I think that is sort of a putting a dent in the overall growth number. I think if you look at sort of the growth in Americas and in APAC, I mean 51% and 39%, I think it's a good momentum in that part of the business.
Okay. Thanks, Oskar. That was great. And then maybe just kind of jumping off that the EMEA biopharma trends. I think this was touched on earlier, but basically, is that primarily small biotech, large pharma? Is that mainly kits and services? I know that was -- sounded like a 1Q kind of issue, but -- can you just share some more detail on what you're experiencing most recently in EMEA in that Biopharma segment? It sounded like it's ticking back up, but I mean how persistent could that be? And is that affecting others in the space more broadly, do you think?
Yes. Hey Kyle, it's Carl. Yes, so that was -- as Oskar stated, it was more in the sort of in the services space. And some of those headwinds, I think we talked a little bit about this last quarter, I think it's really friction in the buying cycle for pharma. And I think we've heard this from some peers in the life science tools market. So I think that's more of a sort of stretching of business cycle type of issue more than anything else. We're not experiencing anything, any losses, et cetera in regard to that. So it's more of a timing type thing. So again, I think the overall trends in next-generation proteomics and the demand there remains intact and just some timing things.
And again, the Europe comments are again off of extraordinarily strong comps from the year prior with the growth we had in Europe, especially in services as Oskar had noted. So when the headwinds start to reside in biopharma, we'll see. But again, we remain positive overall on that segment. And in the prior comments, we're not highly exposed to early biotech. So that's not a significant concern for us.
Okay, thanks Carl. And then just lastly, one technical question, maybe for Jon. Could you guys just clarify the dynamic range of the Explore offering with and without dilution? I think it's eight to 10 logs is what your materials typically state. I think that assumes some level of dilution. If that's the case, would it be beneficial to increase that like the non-diluted dynamic ranges or a path to do that in the future iteration of Explore?
Thanks, Kyle. Great to hear you picked up on the technical details. Yes. So our approach is we've been very clear with most importantly to our customers, but also, of course, to investors, right? So we try to be very particular in the assay development of each and every assay. So our approach is to ensure when we develop those assays that we have the appropriate relevant dynamic range to measure proteins in a healthy, but also a severe disease state.
So that sort of put the requirements on the dynamic range of the assay sales. And that's what we verify and validate in our assay development and product development efforts price to releasing new products. So a quite unique approach in the very part market and a very thorough basically single-plex assay validation across each and every biomarket target. With that said, as I somewhat alluded to with molecular tricks. So for example, capturing non-bound only goes to increase signal to noise, which will actually increase dynamic range and sensitivity.
Are those things that we can do and are working on absolutely. Where is it most applicable for our product portfolio. So those are the type of sort of molecular designs that we are developing and contemplating and also we're applying into the products, we think would make most sense for science.
So hopefully, that's sort of in a broad perspective, answer that questions that yes, we definitely have capabilities and that we are led by science and customer needs and applying those efforts to review with their product.
Perfect, thanks Jon, thanks guys.
Thank you.
Please standby for the next question. The next question comes from Matt Sykes with Goldman Sachs. Your line is now open.
Hi, this is Ivy Kozlowski on for Matt. Thanks for taking the question. Could you talk a bit about the kits business and specifically Explore as it relates to customer onboarding and installation time? Have you been able to shorten the duration of the installation process given the momentum you've seen in that business?
Yes, hi. Ivy it's Carl. Yes, we're always looking at ways to optimize onboarding and to make it as seamless to our customers. And as Jon alluded to, we're always working on innovations and opportunities to make that better and better over time. That's our intention. And so I guess the simple answer is yes, we continue to work on this and develop it. So right now, we feel good about where we are with that. And of course, there's always more opportunity to continue innovating and improving.
Okay. That's helpful. Thank you. And then can you talk about the growth you're seeing in the mid to low plex with the target and focused kits and what type of growth you're seeing in these products?
Yes. I mean we're really excited about that. I think it's -- we talk a lot about Explore. We get a lot of questions on that as you hear, but we're very excited about that business. As you saw that the signature unit sales were incredibly strong in Q1. Kits sales were up substantially triple digits. So we're seeing great uptick. And I think this is a really very important part of the Olink story that we can uniquely serve our customers from the very high plex to the low plex.
And there are lot of companies in the life science space, which we'll talk about having solutions from soup to nut, but often moving on to different technology platform, where it's sort of a one plus one equals two. But when you can really deliver the same technology at the same level of quality and specificity and performance from one end of the spectrum to the other. That is truly unique, and that's more of a one plus one equals three type of situation. And I think we're getting recognition of that in our business as our customers clearly have needs that span from, again, discovery all the way down to wishing to apply that in some meaningful way.
Great, thanks so much.
Please stand by for our next question. Our next question comes from Tejas Savant with Morgan Stanley. Your line is now open.
Hi, this is Edmund on for Tejas. Thank you for taking my questions. I just wanted to circle back on the spending environment headwind increases in 1Q. I think you guys have previously mentioned seeing headwinds on both the biopharma and academic side and a lot of talk was made on the biopharma side. So I was just wondering what you guys are seeing in terms of the academic side and if there's any sort of bifurcation in the trends that you're seeing?
Yes, good question. I didn't comment on that. And this is maybe a fairly easy one to address. It remains largely intact, and we're not seeing any significant change in trends in academic and government spending. So I think that's sort of the positive end of the end markets, while there's some of those headwinds in the biopharma space, not so much in academic and government spending.
Sounds good. And then on circling back to the kit gross margin part, what are your underlying assumptions that drive supplier and logistic cost improvements throughout the year?
Yes, hey Edmund it's Oskar here. So I think I mean, looking at the Q1 kits gross margin, I mean, it came just in line with our own expectations. So I think sort of at this level we're currently seeing, I think sort of mid-80s. I think it's sort of we know what's sort of the level of margin that we're sort of planning for in the near-term. And then I think as we've sort of discussed in the past, looking at sort of our extensive sort of R&D efforts in sort of expanding our library and building that out with our own content. Over time, we'll provide pretty strong sort of tailwind for the corporate and kit gross margin.
Got it. And then finally for me, you guys have previously noted that you're actively monitoring your M&A opportunities with interest in bolt-on acquisitions to augment your antigen development and supply chain capabilities. I was wondering if you could provide some commentary on your M&A pipeline today and also some progress update on your antigen library development efforts?
Yes. I will go ahead and take that. Yes, so we're -- I mean no specific to add there aside from the fact that we're prospectively looking at opportunities to strengthen that supply chain. As Oskar was alluding to, I think that's sort of a good opportunity for our business over time. So we'll continue to look at those -- our thesis there remains the same. So any sort of bolt-on opportunities that can strengthen our position there. And then of course, our internal innovation is an area of focus as well.
I think we -- speaking of M&A, the Agrisera acquisition that we did some time ago has been very fruitful and that team performs extraordinarily well, and we're continuing to develop and build that capability as well, which has been a real shining star for the company. So we're excited about our internal efforts. And as noted, yes, we're going to keep our eye open for some great but smart additions to the Olink business.
Great, thank you for the time.
Thank you.
I show no further questions at this time. I would now like to turn the call back to Jon Heimer for closing remarks.
Great. Thanks to everyone for joining us today and for your interest in Olink. We look forward to keeping you updated on our progress, and have a great day, everyone. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.