Sophia Genetics SA’s Gross Margin Shift, Pharma Timing Spark Earnings Call Contradictions

Date of Call: Aug 4, 2026

Financials Results

• Revenue: $23.3M, up 27% YOY
• Gross Margin: 64.6%, compared to 67% in Q2 2025

Guidance:

• Full-year 2026 revenue guidance raised to $94M-$96M (22%-24% growth).
• Expect to approach adjusted EBITDA breakeven by year-end 2026 and cross to positive adjusted EBITDA in second half of 2027.
• Full-year 2026 adjusted EBITDA loss guidance reaffirmed at $29M-$32M.

Business Commentary:

Revenue Growth and Operating Leverage:

• SOPHiA GENETICS reported revenue of $23.3 million for Q2, representing a year-over-year growth of 27%.
• The company demonstrated strong operating leverage with adjusted EBITDA loss improving by 27% year-over-year, reducing to a loss of $8.8 million.
• Revenue growth was driven by strong demand in the U.S. market and liquid biopsy applications, with U.S. revenue growing 64% and liquid biopsy revenue growing 80% year-over-year.

U.S. Market and Liquid Biopsy Expansion:

• U.S. volume grew by 60% in Q2, contributing significantly to the 64% year-over-year revenue growth in the U.S. market.
• The company signed several new customers, including the Children’s Hospital of Philadelphia, and saw an increase in demand for liquid biopsy testing.
• Growth was driven by the adoption of in-house testing capabilities by hospitals and labs, as reimbursement rates become more established.

Customer Growth and Retention:

• SOPHiA GENETICS added 24 new customers in Q2 and achieved a net dollar retention rate of 117%, up 1,000 basis points from the prior year period.
• The company's core genomic customers increased to 542, with annualized revenue churn remaining below 1%.
• Growth was fueled by the expansion of existing customer accounts and the signing of new customers in various regions.

Pharma Partnerships and CDx Programs:

• The company announced two companion diagnostic programs with AstraZeneca, marking SOPHiA’s first CDx wins.
• These programs are expected to provide a meaningful revenue accelerator and a foundation for collecting more data and building real-world evidence.
• The partnership reflects the value of SOPHiA’s global network and decentralized model, enhancing its capabilities in the precision medicine space.

Strategic Investments and Financial Position:

• SOPHiA GENETICS completed an oversubscribed public offering, raising approximately $57.5 million, bringing cash and cash equivalents to $107.7 million.
• The company is focused on strategic investments in commercial and implementation resources, particularly in the U.S. market and Japan.
• The strong financial position allows SOPHiA to control its growth trajectory and capitalize on high-return opportunities.

Sentiment Analysis:

Overall Tone: Positive

• CEO called Q2 'outstanding' and 'an excellent quarter,' citing accelerating revenue growth, strong customer momentum, major partnership wins, and raised guidance. Management expressed confidence in path to profitability and controlling their own destiny with strong cash position.

Q&A:

• Question from Ricky (Guggenheim): Could you provide additional color on where you’re seeing the most growth in the U.S., which types of customers, and how much is from existing SOPHiA DDM applications vs. MSK applications?
  Response: Growth is broad-based across exome and hematological malignancies (including blood cancers like CLL and AML), with early signs of increased interest in liquid biopsy and solid tumor CGP testing. U.S. market remains a major growth driver.

• Question from Ricky (Guggenheim): How has cross-selling of applications been trending year to date, and what is the average applications used per customer?
  Response: Focus has shifted to expanding within existing customers; average applications per customer is over 2.5, with significant room for multi-application lands and expands, driving high net dollar retention.

• Question from Megan (BTIG): With nearly $110M in pro forma cash, does that change how you’re thinking about adding commercial and implementation resources?
  Response: Headcount kept relatively flat via productivity and AI; targeted investments are being made in U.S. commercial sales, Japan, U.K., and to support new biopharma deals. Cash position allows for controlling their own destiny and pursuing high ROI opportunities.

• Question from John Wilkin (Craig-Hallum): Can you give more detail on the 'lab of the future' joint venture with MSK, including any financial impact?
  Response: It is a groundbreaking partnership for new product development and clinical intelligence, but specifics on financial contribution and long-term aspects are pending definitive agreement; it is expected to be a major driver for future growth.

• Question from John Wilkin (Craig-Hallum): Can you provide more detail on the two new AstraZeneca CDx deals, including deal size, and parse U.S. growth between pharma and new customer wins?
  Response: CDx deals are material multi-year contracts, with revenue impact primarily in 2027 and beyond; they represent a milestone for SOPHiA's regulated asset capabilities and are expected to turbocharge the pharma business. U.S. volume growth of 60% was driven by strong clinical revenue, with new accounts contributing to future growth.

• Question from RK (H.C. Wainwright): Are the regulated CDx infrastructure partnerships (Myriad, ADAM) the submission vehicles for the new AstraZeneca deals, and can the assays be utilized beyond AstraZeneca?
  Response: CDx model depends on geography; partnerships like Myriad and ADAM handle specific regions, while SOPHiA leads in decentralized markets. The assays and capabilities are intended to be replicated across other pharma partners, validating SOPHiA's differentiated model.

• Question from RK (H.C. Wainwright): What needs to happen for adjusted gross margin to reverse from 72.1% and expand as previously guided?
  Response: Margin decline in Q2 due to higher cloud/AI compute costs from new region launches and elevated biopharma project start-up costs. Long-term, gross margins are expected to improve gradually as projects mature and scale.

• Question from Kyle (TD Cowen): What are the puts and takes for second half growth given the raised guidance implies similar growth to first half?
  Response: Guidance reflects confidence in continued trends; conservatism is applied to new business timing, so upside potential exists if new contracts ramp sooner. Focus remains on accelerating growth while managing costs.

• Question from Kyle (TD Cowen): What is the status of customer implementations and the backlog?
  Response: Backlog remains significant due to strong bookings, providing high future revenue visibility. Implementation team improved, but timing is often client-dependent; AI is seen as a potential tool to accelerate conversions, balancing growth with capital constraints.

Contradiction Point 1

Gross Margin Trajectory and Expectations

Guidance on gross margin movement shifts from steady improvement to near-term pressure.

RK (Rahmat Khan Quaikula) (H.C. Wainwright) - RK (Rahmat Khan Quaikula) (H.C. Wainwright)

2026Q2: Q2 gross margin was impacted by: 1) Elevated cloud/AI compute costs from launching in new regions, and 2) The higher costs associated with starting new projects (especially in pharma). As these new projects mature and scale, margins should improve gradually. - [Ross Muken](CEO), [George Cardoza](CFO)

What needs to happen in H2 to reverse the Q2 adjusted gross margin decline and meet full-year guidance? - Mark Massaro (BTIG, LLC)

2026Q1: The Q1 performance was strong. Potential lumpiness could come from the pharma business. Full-year guidance is for modest gross margin improvement, which remains unchanged. - [George Cardoza](CFO)

Contradiction Point 2

Pharma Business Revenue Timing and Contribution

Expectation for pharma revenue contribution shifts from 2026/2027 near-term focus to a major 2027/2028 acceleration.

John Wilkin (Craig-Hallum) - John Wilkin (Craig-Hallum)

2026Q2: The strong U.S. clinical revenue was driven by... The pharmacy business is now a key accelerator for growth, with significant potential for 2027 and 2028. - [Ross Muken](CEO)

Could you provide details on the two new AstraZeneca CDx deals (size, financial impact) and break down the 64% U.S. growth between pharma and new customer wins? - Subhalaxmi Nambi (Guggenheim Securities, LLC)

2026Q1: The pharma business is building tangible momentum and will be an accelerator in 2027 and beyond. - [George Cardoza](CFO)

Contradiction Point 3

U.S. Market Growth Drivers and Customer Base

Inconsistent portrayal of whether US growth stems from new customers or expansion within existing ones.

Ricky (Guggenheim Securities) - Ricky (Guggenheim Securities)

2026Q2: Growth is broad-based... The U.S. market is expected to remain a major growth driver. - [Ross Muken](CEO)

Can you provide more details on the U.S. market growth (64% revenue, 60% volume), including customer types and whether it's driven by existing SOPHiA DDM or MSK applications? - Subhalaxmi Nambi (Guggenheim Securities, LLC)

2025Q4: MSK-ACCESS ramping continues to be a key driver... Sequential contributions are expected in Q1 and beyond. - [Jurgi Camblong](CEO), [Ross Muken](CEO)

Contradiction Point 4

Implementation Backlog Status and Management

Inconsistent reporting on the severity and management of the customer implementation backlog.

Kyle (TD Cowen) - Kyle (TD Cowen)

2026Q2: Despite efforts, a significant backlog remains due to strong bookings. - [Ross Muken](CEO)

What is the current status of customer implementations and the backlog, and how have you been working through it? - Mark Massaro (BTIG, LLC)

2025Q4: Implementation improvements made in 2025 are paying off... Sequential cadence improved in the second half, aligning revenue release with bookings signed per month. - [Jurgi Camblong](CEO), [Ross Muken](CEO)

Contradiction Point 5

Timeline and Financial Contribution of AstraZeneca CDx Deals

Contradiction on when revenue from AstraZeneca partnerships begins to materialize significantly.

John Wilkin (Craig-Hallum) - John Wilkin (Craig-Hallum)

2026Q2: These are landmark, multi-year contracts... expected to be a major revenue accelerator starting in 2027 and beyond, with only modest contribution in the second half of 2026. - [Ross Muken](CEO)

Can you provide details on the size and financial impact of the two new AstraZeneca CDx deals, and break down how much of the 64% U.S. growth came from pharma versus new customer wins? - Mark Massaro (BTIG, LLC)

2025Q3: The contribution from AstraZeneca in Q3 was fairly small. Revenue typically recognizes upon hitting project milestones, with a ramp expected in Q4. - [George Cardoza](CFO) & [Ross Muken](CEO)