Mid-single-digit organic bookings growth and book-to-bill above 1.0x preceded a 4%-5% 2025 organic revenue decline.
| Quarter | Q3 FY25 |
|---|---|
| Call date | 2025-11-03 |
| Results reported | 2025-11-03 |
| Length | 64 minutes |
| Speakers | Joe Koska, Investor Relations; Frank Laukeen, CEO; Gerald Herman, CFO |
Results, guidance and Q&A analysis for this call
Operator (Operator)
Good day and welcome to the Bruker Corporation 3rd quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch To withdraw your question, please press star and then 2. Also, please limit yourself to one question and one follow-up. Please note this event is being recorded. I would now like to turn the conference over to Joe Costa, Director of Bruker Investor Relations. Please go ahead.
Joe Koska (Investor Relations)
Good morning. I would like to welcome everyone to Bruker Corporation's 3rd quarter 2025 earnings conference call. My name is Joe Koska, and I am the Director of Bruker Investor Relations. Joining me on today's call are our President and CEO, Frank Laukeen, and our EVP and CFO, Gerald Herman. In addition to the earnings release we issued earlier today, during today's conference call, we will be referencing a slide presentation that can be downloaded from the Events and Presentations section of Bruker's Investor Relations website. During today's call, we will be highlighting non-GAAP financial information. Reconciliations of our non-GAAP to GAAP financial measures are included in our earnings release and are posted on our website at ir.bruker.com. Before we begin, I would like to reference Bruker's safe harbor statement, which is shown on slide 2 of the presentation. During this conference call, we will make forward-looking statements regarding future events and the financial and operational performance of the company that involve risks and uncertainties. Including those related to acquisitions, geopolitical risks, tariffs, foreign currency, market demand, or supply chains. The company's actual results may differ materially from such statements. Factors that might cause such differences include, but are not limited to, those discussed in today's earnings release and in our Form 10-K for the period ending December 31st, 2024, as updated by our other SEC filings, which are available on our website and on the SEC's website. Also, please note that the following information is based on current business conditions and on our outlook as of today, November 3rd, 2025. We do not intend to update our forward-looking statements based on new information, future events, or for other reasons, except as may be required by law prior to the release of our 4th quarter and full year 2025 financial results expected in February 2026. You should not rely on these forward-looking statements as necessarily representing our views or outlook as of any date after today. We will begin today's call with Frank providing an overview of our business progress. Gerald will then cover the financials for the 3rd quarter of 2025 in more detail and share our updated full-year 2025 financial outlook. Now I'd like to turn the call over to Bruker CEO Frank Laukeen.
Frank Laukeen (CEO)
Thank you, Joe. Good morning, everyone, and thank you for joining us on today's 3rd quarter 2025 earnings call. As forecasted, our 3rd quarter revenues and earnings were down year over year, primarily due to weaker academic and research instruments demand in the first half of 2025. However, our Q3 '25 performance was quite a bit better than expected, and represents a meaningful sequential step up from our Q2 performance. In this, in this 3rd quarter, we were encouraged by our mid-single-digit percentage organic bookings growth. For the first time this year, we saw strength in bookings in the academic government market segment as well as improving biopharma and applied market orders. Interestingly, In Q3 of '25, we saw the stark contrast of a double-digit percentage organic revenue decline in the AkaGov markets year over year compared to a double-digit percentage organic improvement in AkaGov bookings year over year. In fact, our AkaGov orders grew in the high teens percentage in Q3 '25. As very robust order growth outside of the United States more than offset a continued year-over-year softness in the U.S. A lot of moving pieces. Anyway, notably, our innovative spatial biology proteomics and multi-omics solutions launched at AGBT, AACR, and ASMS earlier this year are being very well received by our biopharma and academic customers and enhance our leadership in enabling tools for drug discovery and disease biology research in the post-genomic era. Biopharma and Applied also saw organic bookings growth in Q3, with Biopharma having the strongest organic order growth of all of our end markets, both in Q3 and year-to-date. Organic scientific instruments orders in China increased by double-digit percentage in the 3rd quarter year over year, and we saw what may be green shoots of stimulus funding in China beginning to be dispersed. So this stronger Q3 '25 order performance drove our scientific instruments segment book-to-bill ratio to greater than 1.0x— greater than 1.0 for the first time in several quarters. While one quarter of improved orders is too early to call a trend, we are encouraged that our 2 divisions most directly tied to macroeconomic factors, which happens to be Bruker Optics and AXS, also saw strong bookings in Q3 of '25, These 2 divisions often serve as a leading indicator within Bruker for changing macro market trends. However, due to the late timing of Q3 orders and certain customer site delays, we are reducing our organic revenue growth expectations for the 4th quarter and our guidance for the full year. This also de-risks our implied 4th quarter forecast to levels that we are very confident we can achieve. Finally, our major cost— finally, on this slide, our major cost savings initiatives announced last quarter are progressing very well towards the high end of our $100 million to $120 million cost-down targets for 2026, and they are expected to deliver significant margin expansion And double-digit EPS growth in 2026. All right, turning to slide 4 now. In Q3 '25, continued softness in EchaGov revenues led to year-over-year declines throughout the P&L. However, we noted sequential improvements in biopharma, microbiology, and diagnostic revenues, which led to both top and bottom line coming in better than our expectations in early August. Bruker's Q3 '25 reported revenues decreased 0.5% to $860.5 million, which included a currency tailwind of 2.9%. On an organic basis, revenues decreased 4.5%, which included a 5.4% organic decline in scientific instruments and 6.9% organic growth at best net of intercompany eliminations. Revenue growth from acquisitions added 1.1%. Our 3rd quarter '25 non-GAAP operating margin was 12.3%, a decrease of 260 bps year over year, as lower revenue absorption, additional tariff costs, and currency headwinds were only partially mitigated in Q3 by our earlier cost and pricing actions. Our 3rd quarter '25 non-GAAP operating margin of 12.3% represented a meaningful sequential improvement over the 9.0% we reported in the 2nd quarter. Our 3rd quarter diluted non-GAAP EPS was $0.45, down 25% from $0.60 in Q3 of '24. but up sequentially compared to the $0.32 we reported in the 2nd quarter of '25. Darryl will obviously discuss the drivers for margin and EPS later in more detail. Moving to slide 5, our year-to-date Q3 revenue increased by 3.0% to $2.5 billion. Organic revenue declined 3.1% with a 2.9% organic decline in scientific instruments and a 5.5% percent organic decline at best, net of intercompany eliminations. Our first 9 months 2025 non-GAAP growth in operating margin and GAAP and non-GAAP EPS performance are all summarized on slide 5. So please turn to slides 6 and 7 where we highlight the year-to-date 3rd quarter performance of our 3 Scientific Instruments Group and of our BEST segment, all on a constant currency and year-over-year basis. Year-to-date 2025, Biospin Group CER revenue of $612 million was shown— excuse me, was down mid-single digits percentage. Biospin saw growth in lab automation and services offset by a tough comparison with 2 GHz-class NMR systems in Q3 '24 revenue versus none in Q3 of '25. Biospin saw weakness in Akagov and biopharma revenues but improved order growth in both end markets in the 3rd quarter of '25. Year-to-date 2025, Calig Group revenue of $879 million increased in the low double-digit percentage driven by microbiology and infection disease diagnostics, with strength in both the MALDI Biotyper and the Elitech Molecular Diagnostics franchises. Life science mass spectrometry is seeing early traction for recently launched products, including the new TIMS Omni and the new TIMS Metabo, both from— launched at ASMS, while our molecular spectroscopy revenues remain stable but with strong applied markets orders in Q3 '25, as was mentioned earlier. Right, turn to slide 7 now, please. Year-to-date 2025, Bruker Nano revenue of $775 million declined in the low single digits percentage. Revenues from advanced X-ray and nano— nanoanalysis tools were down year over year partially offset by growth in spatial biology. Strength in biopharma year-to-date revenues was offset by weakness in Echogov and software industrial research and semi markets. Finally, year-to-date 2025, BEST revenues declined in the mid-single-digit percentage net of intercompany eliminations. The clinical MRI superconducting wire market improved in Q3, and is now flat year-to-date, while our best research instruments business has been weaker due to a very strong prior year comparison. So moving on to slide 8, you may have seen our press release that we had some recent NIH and NSF funded orders for advanced NMR instruments. I won't go through all of them, but here are several very unique enabling and breakthrough tools listed on this page with the respective customers that are really very important for fundamental scientific research and very much, very much so also for drug discovery and disease biology research. The aggregate value of these orders was disclosed previously. It's about $10 million. It's expected— they're all expected to be installed and in revenue next year, not in Q4. And maybe the bigger message here is in that last bullet on slide 8, that our scientific instrument, Agar.Gov orders, as I mentioned earlier, we were pleased, were all up mid-teens percentage organically year over year in Q3. And this was despite lingering U.S. weakness. There have been some improvements in the U.S., but primarily there are significant improvements outside of the U.S.—
Gerald Herman (CFO)
Europe, Japan, And in China.
Frank Laukeen (CEO)
Right. Another press release, if you go to slide 9, that we stressed yet recently, there are some new, if you like, applied markets. This is not food testing. This is security and defense and homeland security. And in this case, we have a very, very nice product line that's sort of growing rapidly, 30% year over year. And we were highlighting some recent orders. From explosive trace detectors that you will find at a lot of European airports, an increasing number of those, but also in South Korea and in the Middle East. They have particularly performance and usability advantages. This, by the way, isn't just an instrument sale. This is then 5 or 7 years of consumables and service sales. So it's a nice steady business, and we have been gaining market share and are pleased with those orders. And because of tensions and rearming in Europe, we also got some significant defense detection orders from a Central European Ministry of Defense. This was not for Ukraine, but others are worried as well and are obviously— this serves a smaller part of Bruker that, if you like, is part of Applied Markets that's growing very nicely. We thought we'd highlight that for you because obviously Akagav was weaker this year. So to wrap up, our 3rd quarter P&L was still impacted by the various headwinds we've seen across the industry earlier this year. However, the results came in ahead of our expectations. Our improved bookings in Q3 '25 and Scientific Instruments book-to-bill ratio above 1.0 make us optimistic that we may be past the trough in demand. We look to build on this performance in Q4, and we are increasingly confident in a fiscal year '26 partial recovery. We expect significant improvements in our organic revenue performance compared to our meaningful decline, organic decline in '25. Importantly, we are taking up to $120 million in cost out of our business in fiscal year '26 in order to drive significant margin expansion and strong double-digit EPS growth. So, in perspective, our Transform Project Accelerate 2.0 portfolio is fundamentally very strong in post-genomic drug discovery and disease biology research, leveraging both proteomics and multiomics, as well as spatial biology. In innovative diagnostic solutions for microbiology, molecular diagnostics, and now also therapeutic drug monitoring. And finally, emerging, really an emerging $100 million area for us is now the fast growth area of automated digitized or digital labs ready for AI or perhaps even driven by AI, the automated AI labs if you'd like. These are 4 major profitable growth opportunities and they are complemented by our healthy diversification in industrial research, QC markets, semiconductor metrology, and as you've seen, some applied and security markets. Combining this outstanding portfolio with operational excellence and strong execution, I am confident that by 2027 we can outgrow our markets again by 200 to 300 bps per year on average and continue our rapid margin expansion and double-digit EPS growth after overcoming The multiple, aka Gov demand, new tariffs, and strong currency headwinds in 2025, with a partial recovery in 2026. So with all of that, let me turn the call over now to our CFO, Gerald Herman, who will review things in more detail.
Joe Koska (Investor Relations)
Gerald.
Gerald Herman (CFO)
Thank you, Frank, and thank you everyone for joining us today. Pleased to provide some more detail on Bruker's 3rd quarter and year-to-date 2025 financial performance. Starting on slide 11. In the 3rd quarter of 2025, our results came in above our expectations on both the top and bottom lines. In the 3rd quarter of '25, Brookings reported revenue decreased 0.5% to $860.5 million, which reflects an organic revenue decrease of 4.5% year over year. Acquisitions contributed 1.1% to our top line, While foreign exchange was a 2.9% tailwind. Geographically and on a year-over-year organic basis, in the 3rd quarter of '25, our Americas revenue declined in the low single-digit percentage. European revenue was roughly flat, while Asia-Pacific revenue declined in the mid-single-digit percentage, including flat performance in China. For our EMEA region, revenue declined by over 20%. Scientific Instruments organic revenue group segment declined 5.4% in the 3rd quarter of '25 as mid-single-digit organic growth in Calid was more than offset by a double-digit organic decline in Biospin and a high single-digit organic decline in Bruker Nano. BSI Systems revenue declined roughly 10%. While BSI aftermarket revenue increased mid-single-digit percentage organically year over year. As Frank mentioned earlier, our order bookings performance in the BSI segment was up organically in the mid-single-digit percentage year over year, and our BSI book-to-bill ratio for the 3rd quarter was above 1.0. Non-GAAP gross margin decreased 110 basis points to 50.1%. Q3 2025 non-GAAP operating margin was 12.3%, impacted by tariffs, foreign exchange, and the headwind from the prior year comparison of 2 GHz class NMRs in our 3rd quarter '24 revenue. On a non-GAAP basis, Q3 '25 diluted EPS was $0.45, down 25% from the $0.60 we posted in the 3rd quarter '24. but improved sequentially and well ahead of our expectations. Our EPS in the 3rd quarter of '25 includes a 1-cent dilution from the mandatory convertible preferred offering we completed in September and benefited from a lower non-GAAP effective tax rate of 24.4%. On a GAAP basis, we reported diluted loss per share of $0.41, reflecting non-cash goodwill and intangibles impairment charges of $119.4 million and restructuring charges in the 3rd quarter of $34.5 million. Non-GAAP weighted average diluted shares outstanding in the 3rd quarter of 2025 were 152 million, flat compared to the 3rd quarter of 2024. Slide 12 shows Brookers' performance on a year-to-date basis for 2025, which has similar drivers to those in the 3rd quarter. Turning now to slide 13. In the first 9 months of 2025, we had operating cash outflow of $95.7 million, driven by lower profitability, timing of tax and key vendor payments, and restructuring expenses. We expect to see improved cash flow in the 4th quarter, our largest and most profitable quarter of the year, and always our strongest cash flow quarter. Turning now to slide 15, we are updating our full-year 2025 forecast and outlook to reflect Q3 results, order timing, and the impact of our September mandatory convertible preferred offering. Our outlook for the full year of 2025 now assumes revenue in a range of $3.41 to $3.44 billion. reflecting an organic revenue decline of 4 to 5%. Late order bookings in the 3rd quarter, as well as certain customer site readiness issues, are expected to push a portion of revenue we previously expected in the 4th quarter into fiscal year 2026. The full year '25 revenue growth contribution from acquisitions is expected to be approximately 3.5%. And we expect a foreign currency tailwind of about 2.5%. This leads to updated reported revenue growth guidance of 1 to 2%. For operating margins in 2025, we now expect approximately 250 basis point decline in operating margins year over year. This consists of headwinds of 60 basis points from M&A, 60 basis points from tariffs, 65 basis points from foreign exchange, as well as a 65 basis point decline in organic operating margin. On the bottom line, our updated full-year 2025 guide now reflects non-GAAP EPS in a range of $1.85 to $1.90. This includes a 7-cent dilution from our mandatory convertible preferred offering we completed in September. For your modeling, we expect the MCP offering to have a roughly 20-cent dilutive impact on our fiscal year 2026 EPS. Despite this dilution, we continue to expect double-digit non-GAAP EPS growth in fiscal year '26 due to the significant cost savings initiatives we're implementing this year. Other guidance assumptions are listed on the slide. Our full year 2025 ranges have been updated for foreign currency rates as of September 30th, 2025. With respect to the 4th quarter of '25, we still expect relatively soft organic revenue performance with a mid to high single-digit percentage decline year over year due to lingering effects of weaker orders earlier in the year. We expect non-GAAP EPS for the 4th quarter to show significant sequential improvement but still be down meaningfully year over year, as implied by our guidance. To wrap up, first half 2025 market headwinds adversely impacted our financial performance in the full year of 2025. However, we're encouraged by our solid order performance in the third quarter of '25 and expect to drive improved P&L performance in full year '26 and beyond. With our cost savings plans well on track, we're fully committed to significant margin expansion and double-digit EPS growth in fiscal year '26. With that, I'd like to turn the call back over to Joe. Thanks very much.
Joe Koska (Investor Relations)
Thanks, Gerald. We will now begin the Q&A portion of the call. As a reminder, to allow everyone time for questions, we ask that you limit yourself to one question and one follow-up.
Frank Laukeen (CEO)
Operator?
Operator (Operator)
We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up the handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. Our first question comes from Puneet Sodha with Please go ahead.
Frank Laukeen (CEO)
Yeah, hi, Frank. Thanks for taking my questions here. First one on the book-to-bill. Good to see more than 1, and congrats on the quarter, just given the order momentum you're seeing here. But just wondering, how has that trended in 4th quarter? Are you continuing to see the mid-teens organic order growth here? And maybe could you elaborate a bit, just a number of moving parts here. How is the international momentum continued? Is it more academic versus pharma? And maybe tell us a bit more on the academic side of the US. Are you starting to see some, you know, some recovery there given the points you mentioned, DMP and a couple of other points you mentioned in the slide? Yes, thank you very much, Puneet. So we really don't have Q4 data yet. It's too early. So I just can't comment on Q4. There's no meaningful data available yet. Moving parts, AkaGov, the strength in AkaGov orders was primarily outside of the United States, but the United States were less weak. All right, less soft. Is that a word? Anyway, so Q3 was better in the United States for AkaGov orders than— Q2, and we saw some orders come through. I gave you some NMR examples, but of course it was more— it was broader than that, also included TEM stuff and microscopes and other stuff. They're hard to say what's the trend in the US because they're clearly— in the US there was a little bit of catch-up in Q3 compared to Q2 and maybe even Q1. In, I can give Orders in Europe and Japan and a little bit in China also. That's why there might be green shoots were quite encouraging, and that's why our AkaGov orders year over year were up considerably in Q3. Don't don't don't think that we're now on a high teens growth trend all of a sudden. That's just a quarter, and Q3 24 was not the strongest. But anyway, it was it was. It was very encouraging, and we hope that will continue in Q4. But I wouldn't— and yeah, the activity and opportunities are great and are encouraging, but I wouldn't read anything into that yet. Just too early to comment on Q4. We do need Q4 to then give more meaningful growth and margin numbers for 2026. We're not going to do that today. We're not able to do that today until we really see how Q4 comes in, particularly the orders, obviously. To the other moving pieces, Puneet, yes, biopharma has been reasonable in— or okay, not great, but okay in the first half of the year, much better in the third half of the year in terms of orders. A particular strength there in the U.S., but also outside of the U.S. But biopharma particularly in the U.S. And the applied market strength, which is a good sign of macroeconomic trends, that was pretty— that had a pretty broad international distribution. I don't know that I would highlight any geography there. So that may add some color to the admittedly multiple moving pieces. And the effect of RUPR, that prior order weakness now shows up in the P&L. Whereas, you know, the new order improvements and encouragement and maybe it is momentum if Q4 goes well, you know, it's more likely to show— it will show up all in 2026. Hope that helps.
Joe Koska (Investor Relations)
Got it.
Operator (Operator)
That's very helpful.
Frank Laukeen (CEO)
And anything on the ultra-high frequency gigahertz NMRs? How are you thinking about those? Obviously, the tougher comp in the 3rd quarter, but as you go into '26, how is the momentum there? I know we've been waiting for U.S. to acquire more of those instruments. Thank you. Yeah, the U.S. is the enigma there, but, you know, obviously there's also other geographies, and I still can't call the U.S. trends. Obviously nothing has come through so far, so we'll see. We're expecting at least one order for the gigahertz class in Q4. Not in the U.S. And there's a number of cases brewing around the world and including in the U.S. But I, you know, today's too early to do that. So when we give guidance for '26 and, you know, presumably in early February of '26, we can also comment on, you know, what has come in or where we have clear line of sight for ultra-high field for the gigahertz class. So yes, nothing in revenue in Q3. We expect hopefully one order in Q4. Sometimes these things get delayed by a quarter. Anyway, it's just not such a big part of our business anymore. I know they're easier to count. And indeed, in Q3, a lot of our organic decline had to do with these 2 gigahertz class systems in Q3 '24 revenue. which accounted for more than $25 million of our revenue and comes with nice operating profits and margins. So it did have an effect on Q3. And anyway, that's the color I can give you. More to come when we give guidance in early February.
Joe Koska (Investor Relations)
Got it.
Operator (Operator)
Thank you. And the next question comes from Michael Reiskin. with Bank of America. Please go ahead. Michael, your line may be on mute.
Frank Laukeen (CEO)
Hi, this is Mike on for— this is Avantika on for Mike. Could you give us the impact of the government shutdown that you're seeing in 4Q, and is that baked into the updated outlook?
Joe Koska (Investor Relations)
Thank you.
Frank Laukeen (CEO)
Well, that's a good question, and it's not formally baked into our outlook. So far, we have assumed that the effect will be relatively minor, but, you know, indeed, if this were to continue for a full second month or so, then this may delay some new grants, some orders. It could also delay some installations. So far, we haven't become aware of anything that gets— we think that our Q4 guidance is now appropriately conservative to absorb some of that and maybe what we've seen so far. But no, if there was a further multi-week or multi-month shutdown, That could have additional impacts that are not presently in our guidance.
Joe Koska (Investor Relations)
Understood.
Operator (Operator)
Thank you.
Frank Laukeen (CEO)
And then I know that you're not formally guiding on 2026 today, but, you know, you called out meaningful improvement versus the -4% to -5% organic in '25.
Gerald Herman (CFO)
Can—
Frank Laukeen (CEO)
is it fair to assume that you can grow revenues in 2026, or Are we looking at flat year over year? Thank you. We're not making that assumption yet. It's a fair question, of course. We really do want to see our Q4 '25 bookings in order then to give, you know, hopefully reliable guidance in February of '26. So yes, I mean, this year, this year '25, we're coming down organically quite a bit, right? We undoubtedly can do much better than that next year, but we're not presently— I don't want to state any assumptions because then you will take them as guidance and they're not. But we just want to make sure that with the significant cost cutting that we're doing, even without growth, which isn't our assumption, but even without growth, we can expand our operating profit margins very significantly. So, you know, 250 to 300 bps or something like that. And yes, we expect— we continue to expect double-digit EPS growth even after absorbing the roughly 20-cent dilution that Gerald mentioned during his prepared remarks for the additional dilution from the mandatory convert that we did in September. So we still expect to do double-digit non-GAAP EPS growth next year. And with that, that's without— that's simply for mathematically, that's simply where we're not— this is without growth. Without growth is not our preliminary guidance, period. But that's what we're looking at right now. We cannot— preliminary guidance for us right now on growth does not make sense until we've seen our Q4 orders for Bruker. That's going to be very important for next year.
Joe Koska (Investor Relations)
Understood.
Frank Laukeen (CEO)
Thank you for the color. Thank you.
Operator (Operator)
And the next question comes from Taicha Peterson with Jefferies. Please go ahead.
Taicha Peterson (Analyst)
Hey, thanks. Frank, I want to pick up on that margin point. So it sounds like you are committing to the 300 basis points of margin expansion even if top line's flat. I guess, you know, given that you're running at the high end of the $100 to $120 million cost savings target, you know, in the near term, should we interpret, you know, the upper end of savings as simply kind of increasing confidence in hitting that margin target next year, or could you think you could potentially do better?
Frank Laukeen (CEO)
Okay. So nice question, Taeko. I wasn't confirming a number. I know you've mentioned one. I'm not saying take that number out of your model, but I'm not confirming it either. We are— I think the second part of your question, I think it's fair to say we hope to, you know, have increased confidence in getting to very significant margin expansion and double-digit EPS growth all in, including the MCP. And that's exactly why we're driving towards the high end of our cost-cutting targets. So you're spot on with that one.
Taicha Peterson (Analyst)
Okay. And then just probing a little bit on your assumptions, you know, we're not talking numbers for '26, but just ANG, the outlook there, assuming flattish NIH budget. I mean, just talk a little bit about some of the gives and takes around, you know, multi-year grants. I assume you're not expecting any budget flush here in the near term, but then as we think about next year, do you think, you know, ANG orders, you know, will grow? And then can you flesh out your comments on China stimulus? You know, how material was that and how do you think about that for next year?
Frank Laukeen (CEO)
Yeah, these are all very important questions, right? So, so there was a little bit of a budget flush for fiscal year '25, and orders— sorry, and funding coming out of NIH, you all report that very well, did improve in the 3rd quarter, and particularly in September. I'm aware of a cancer center that had fantastic NIH funding and cash coming in the door to where they even were flat or higher than the previous year. So there was a mini budget flush. It went into a lot of multi-year grants. It went into things that they could fund readily. It went into a few instruments too. You know, we sold some NMRs and some TIMS-TOF and some other stuff. It wasn't very strong yet, which is why the strength in academic bookings in for us in Q3 came from outside the US, but I— but the US did improve a little bit sequentially. It just wasn't a growth driver yet year over year. So that was that. NIH budget for '26 and NSF budget while we're at it. We are not necessarily assuming that it's flat. We'd be delighted that it's flat. You know, if we have to take 10 or 15% down, I think that'll Not— that'll work for us too. I just want to be— it's hard to predict these things, these things. So we're not necessarily baking in an NIH budget flat. Again, delighted if it happens, but we can also work with it being down 10 or 15%. As you know, it's then actually more important whether the stuff actually gets disbursed regularly or gets held up for the majority of the year. But we are, along with Q4 bookings, we're also looking forward to clarity on NIH and NSF and DOE budgets for research for fiscal year '26. Hopefully that all comes in, in calendar Q4 to give us more visibility. China, yeah, some green shoots. Yeah, so they were less than $10 million in—
Gerald Herman (CFO)
Orders.
Frank Laukeen (CEO)
Clearly, well, in orders anyway, but in clearly seemingly stimulus-related orders where customers said, yeah, this is stimulus money being released. So less than $10 million, not— and, you know, again, I think that's a green shoot. And we'll need to again see how that continues in Q4. But I think in Q2 there was none of that. So it's a little bit better, right? So China contributed, but Japan and quite honestly Europe were really strong. in EKGov orders in Q3. So that's the color around the world.
Gerald Herman (CFO)
Yeah.
Taicha Peterson (Analyst)
Okay, thanks. And then lastly, you just mentioned an order pushout. Can you quantify how large that was, the one you mentioned in your prepared comments?
Frank Laukeen (CEO)
Oh, you mean rev— oh, revenue pushout from— yeah, there's a few sites that, you know, have that want delivery in Q1 rather than in Q4. So that also added to some of the more conservative guidance that we now have for the full year, but really implied for Q4 because that's all that's left.
Taicha Peterson (Analyst)
Okay.
Frank Laukeen (CEO)
Next. And I think I mentioned a lot— it is true that— I mean, it's always true that we get more than half the orders in a quarter in the 3rd month of every quarter. But yes, a lot of the orders, I mean, the order improvement really became clear in September. So, you know, if all of these orders had come in in July, maybe some of them would have made it into Q4. But now there is— I mean, there's some small stuff will go into Q4 and all this does, but most of the larger orders go into next year. Most of the larger orders that came in in September will be revenue in next year, I should be precise.
Taicha Peterson (Analyst)
Thank you.
Joe Koska (Investor Relations)
Thanks.
Operator (Operator)
The next question comes from Luke Sergott with Barclays. Please go ahead.
Joe Koska (Investor Relations)
Great.
Frank Laukeen (CEO)
Thanks for the questions. I just want to talk on China. You're coming in flat here. Things kind of improved sequentially. Just talk about what you're seeing there more broadly. Pull forward, you talked a little bit about the stimulus, you know, the, the murderer's row of key questions. But, You know, how are you guys thinking about 4Q and the exit rate? And ultimately, are we kind of seeing some type of stabilization here, or is this just kind of like a one-off? Well, good questions. I wouldn't read too much into— starting backwards, Luke— I wouldn't read too much into the Q4 '25 exit rate. That's just, you know, Q3 and Q4 relatively weak on the P&L. Pretty much the result of weak orders and yes, and some, you know, current new currency and tariff challenges early in the year. We can work our way through those and offset them and more than offset them by next year, but only partially this year. So I wouldn't— I would hesitate to take any given quarter this year as modeling something for next year. On China, yeah, China was a little bit better, right, sequentially. Not only in academic, not only some of the, you know, less than $10 million, I think it was closer to $6 or something like that, in stimulus green shoots. China felt a little better in Q3, perhaps all around, than in Q2 when they were probably staring down a trade war barrel and maybe now— But maybe now there's— maybe that gets— that seems to have— even before the meeting that just happened recently, that maybe the whole world's getting a little bit more optimistic that, well, we know the new tariff setup and there are some— there are not likely to be major trade wars. But hard to say, right? So China was a little better in Q3 than in Q2.
Operator (Operator)
All right, thanks.
Gerald Herman (CFO)
And then I—
Frank Laukeen (CEO)
from Turning to the spatial and the demand that you guys are seeing there, you know, can you talk a little bit about the cadence for the instruments versus the consumables? And then, you know, the push here and ability to use your existing scale as this kind of hits the core to push further with academic government customers or deeper into pharma? Yeah, good question. Yeah, spatial biology was all right, slightly better orders or somewhat better orders than Q3. Including international, I believe, as well. That's both consumables and instruments. Remember, some of the new workflows, like the whole transcriptome on the COSMICs, of course, also will run on existing systems. They may need some upgrades, but you don't always need a new system for that. But I think there was also strength in COSMICs and CellScape orders. Painscape is still very new. So a lot of that is sort of, will take a little while and have a number of labs that are going to have placements of the Painscape, do this new spatial genomics and look at, you know, dysfunction and cancer and infectious disease before that turns into papers, before that turns into revenues. That's super interesting, but it's not going to be a big contributor yet. Whereas cosmetics and cellscape are doing well, also including some of the consumables. So, yeah, spatial biology is doing better. Of course, we could use more U.S. academic funding. It was quite, quite dependent on— well, 2/3 of that is academic government, and 1/3 is biopharma. And so that strengthening in biopharma also is good for spatial biology. And as you know, that so far in the US, that's stronger than the e-gov growth. Yeah, great. Thanks.
Operator (Operator)
And the next question comes from Subbu Nambi with Guggenheim. Please go ahead.
Frank Laukeen (CEO)
Hey, thank you for taking my question. Frank, some of the niche end markets in 2026, like diagnostics and maybe semis, What do those look like next year? Can EllieTech be a low double-digit grower in your mind? Yeah, I mean, diagnostics is very important for us, right? It's well above $500 million. They both are— they've done well in '25, both in clinical microbiology and the molecular diagnostics that are both in that infectious disease division. While the biotyper Good growth, good, good, very good growth in consumables and software and so on. Now in that business, I think it's 60% aftermarket, which is, you know, service consumables but also database subscriptions. So very healthy there. The diagnostics business, the Elitech business primarily, is a delight this year. It's growing nicely, it's expanding, it's this year 25, so it's growing its margins. It's growing, it's growing, which is nice this year. It's actually— I don't know the exact growth rate. It's growing somewhere in the single digits, maybe even high single digits, which is lovely. Its placements have really outperformed significantly. I know you can't take placements to the bank, but next year you will be. So they had a lot of placements of their InGenius and BeGenius stations. The commercial synergies with Bruker are really working, and they're getting into countries and into labs they previously couldn't get. So I think their placements are something like 20% or more ahead of their business plan, which isn't revenue this year. And when these things— systems are placement under reagent rentals, then it takes 6 months until you really have the revenue ramp. But, you know, hopefully then you have 5 to 7 years of really solid revenue. And consumables pull through. So that's going really well. Semi is— you have to look at it on an annual basis. I think we had 2— this year we'll have 2 quarters of fantastic orders and 2 quarters of not so fantastic orders. Over the year, it's all right. I think it's flattish this year. I don't think there's anything structural there. And Revenue-wise, it's been a little weaker. We expect that to improve next year. So semi, semi, one really has to look at on an annual level, and it's a very nice margin contributor. Semi now all is approaching or is around $300 million in annual revenue. So it's also pretty meaningful for us and has very, along with the diagnostics business, has some of the best incremental margins. So those are very core to us. These are not niches for us, even though we love the post-genomic era. Both of those are just really important core businesses. Thank you for that, Frank. Just to follow up, can you unpack where you saw orders incrementally positive from a product perspective? Is it the lower-priced equipment? And then how have consumables been impacted? Any color you could share there. So it's prime for the— for diagnostics, for molecular diagnostics and the Alitek. Remember, they're primarily active in Europe, in selected countries in Asia, like not in China, for instance, in parts of Africa, parts of Latin America. And the strength there has been particularly in Europe, the placement strength that I mentioned.
Joe Koska (Investor Relations)
And—
Frank Laukeen (CEO)
Can you repeat the question, Subbu?
Joe Koska (Investor Relations)
I'm sorry.
Frank Laukeen (CEO)
What was— I thought you were referring to diagnostics, but—
Taicha Peterson (Analyst)
Yes.
Gerald Herman (CFO)
Was there—
Frank Laukeen (CEO)
what was the question? My first question was diagnostics. Yeah, sorry, backing up. In general, the order strength that you saw this quarter, Where did you see the strength coming from, from a product perspective, either diagnostics or outside of diagnostics?
Gerald Herman (CFO)
And I think, Sue, it's Gerald. I'd say that the orders strength in the 3rd quarter was coming from larger ASP-based instruments. We did have some volume particularly coming out of our optics and AXS businesses, which tend to have lower ASPs, but I'd say the The bulk of the performance in the orders was particularly, you know, coming out of the European markets as well, just to clarify that. I mean, we saw considerable strength in the European markets, both in the agri-gov side particularly.
Frank Laukeen (CEO)
So I think I can answer it now. I'm sorry it took me a second. The strength in orders in Q3 of '25 had very little to do with diagnostics. Diagnostics was just coming along and it's fine, but The more discrete items were strength in academia outside of the US, biopharma, and applied.
Gerald Herman (CFO)
That's right.
Frank Laukeen (CEO)
And so that is— none of those include diagnostics.
Operator (Operator)
Thank you for that.
Frank Laukeen (CEO)
Sure.
Operator (Operator)
And the next question comes from Casey Woodring with JPMorgan. Please go ahead.
Taicha Peterson (Analyst)
Great.
Frank Laukeen (CEO)
Thank you for taking my questions. On orders, historically orders improve sequentially in 4Q in your business, but you've talked here today about some catch-up in academic and government in 3Q. So can you just maybe walk through what the range of outcomes looks like in 4Q from an order exit rate perspective? How safe is it to assume orders step up sequentially, or are there scenarios wherein orders could be flagged down in 4Q? Then I have a follow-up. Thanks.
Operator (Operator)
Sure, Casey.
Frank Laukeen (CEO)
Okay, so the— in eCAGov, where we observed a little bit of catch-up was in the US. You— I don't think that, you know, there wasn't any holdback. And well, actually, in the US and in China a little bit. In the rest of the world, I think that catch-up, I'm not aware of that. But China and the US on eCAGov have been holding holding back, and that's why Q2 orders, for instance, in both of those geographies were weak. So to your second part of your question, Q4 is always strong. So there's— the question for Q4 will not be will it be up sequentially over Q3. That's pretty much a given. But whether, you know, what the trend will be year over year compared to Q4 of last year.
Joe Koska (Investor Relations)
Got it. I hope that helps. And then—
Frank Laukeen (CEO)
yeah, no, no, that definitely helps. And then my second one, just quickly on backlog, I think last quarter you noted you had 6.5 months and you talked about that going down to 5 months in a normalized environment. Maybe just walk through kind of how you're seeing that play out over the course of '26. Thank you.
Gerald Herman (CFO)
Well, we—
Joe Koska (Investor Relations)
what I can—
Gerald Herman (CFO)
this is Gerald. What I can comment on is that, you know, we currently have about 7 months of backlog through the 3rd quarter of 2025, which is actually up now from the, um, the 6.5 months we quoted at the end of the 2nd quarter. I mean, I guess to a large extent it really depends on our '26 performance, is really going to depend on how we— how it looks like for the 4th quarter in terms of revenue performance. Based on our guide, it looks like we will still carry considerable backlog into the 2026 period.
Frank Laukeen (CEO)
Right. Okay, great. Thank you.
Gerald Herman (CFO)
You're welcome.
Frank Laukeen (CEO)
Thank you.
Operator (Operator)
And the next question comes from Brandon Collard with Wells Fargo, please go ahead.
Gerald Herman (CFO)
Hey, Gerald, thanks for taking the questions.
Frank Laukeen (CEO)
Just a couple of housekeeping items.
Gerald Herman (CFO)
You gave us an updated interest expense number for the year. What's the run rate for the 4th quarter, and is that a good figure to assume for '26? And is the impact to the share count from the MCP offering about 13 million shares? Thanks. Yeah, to answer your last question first, the answer is yes. Roughly. And then on the first part, you know, we'll go through, Brendan, a little more modeling on the interest because it gets a little complicated, partly because we— you may know we had some gains, some foreign exchange gains that get covered in that line as well. So somewhere in that range that you're quoting on interest is correct, but we'll talk more about that in our modeling discussions.
Frank Laukeen (CEO)
Okay.
Operator (Operator)
And the next question comes from Josh Waldman with Cleveland Research. Please go ahead.
Gerald Herman (CFO)
Hey, 2 for you.
Frank Laukeen (CEO)
First, I wondered if you could talk a bit more about what you're seeing in Europe. Was it primarily acadgov accounts that improved there, or did you also see pharma and applied accounts improve as well?
Gerald Herman (CFO)
And then I guess at this point, what's your confidence level on the sustainability and stronger orders?
Frank Laukeen (CEO)
I mean, were there any one-off funding programs or anything like that that released in the 3rd quarter that leave you, I guess, nervous about the durability of stronger orders there?
Gerald Herman (CFO)
Yeah, I guess I'd say generally speaking, Europe was stronger. We did see strength in both pack-a-gov as well as applied and biopharma. So, um, those are good signs, and I don't think there were specific one-offs related to those, um, trends. So I think we're more confident, but I would say we need to see, as Frank has repeated a couple of times here, we need to see the 4th quarter, um, order performance in order to confirm that specifically. But, but all of those markets, in particular on the Akigab side, European, were not being driven by one-off improvements or orders.
Joe Koska (Investor Relations)
Got it.
Operator (Operator)
Okay.
Frank Laukeen (CEO)
And then a follow-up. I wondered if you could provide more color on what you're seeing out of pharma.
Gerald Herman (CFO)
I mean, it sounds like you saw sequential improvement in bookings.
Frank Laukeen (CEO)
I forget if you commented what orders look like year over year. And does it seem like accounts are trying to push orders through by year-end, or does this seem like maybe a change in how they're viewing medium-term investment and research tools? Good questions, Josh. This is Frank. I'm not aware of any particular drives to get orders in placed in before the end of the calendar year, so I would take this as biopharma having invested less now for, you know, so there was a kind of a COVID or post— immediate post-COVID boom. Well, then there was a hangover, right? This was— and then some concerns about most favored nations pricing and then how much CapEx did they need to move things in production to the US, and then many of them have now committed to do that over, you know, it doesn't happen overnight. So maybe that has cleared the decks a little bit to where they are investing in in tools that will, you know, make drug discovery more efficient and give them better insights. And those tools, that's exactly what we provide you. Yes, you need, you need sequencers, but you need a hell of a lot more than that to really have deeper disease biology and then drug, drug target, drug mechanism of action insights, so that hopefully the still very poor yield and enormous expense and length of bringing a successful drug to market will improve, and that requires— they're the biggest integrated fans of this hypothesis or thesis or fact, I would say, that we, you know, that we are in the post-genomic era and we need to understand the disease biology and the drug mechanisms a lot better to get better, to get less attrition and more yield and better drug discovery. So they completely agree with that. They may not use the same terminology, but that's how they're investing.
Gerald Herman (CFO)
And I would just add that the 3rd quarter performance on revenue was, was good. Okay. And the order performance from biopharma across the globe was strong in the 3rd quarter from an order perspective. Got it. Thanks, guys.
Operator (Operator)
And the next question comes from Doug Shank with Wolfe Research. Please go ahead.
Frank Laukeen (CEO)
Hey, good morning, guys. Thanks for fitting me in. Gerald, how do we balance, you know, what you've talked about in terms of on the cost savings initiatives? And, you know, like, you sound as good as ever on those. You've exhibited some confidence about what you can do in 2026 from a margin expansion standpoint, seemingly in any growth environment. I mean, at one point, I think last quarter, you talked about getting 300 basis points of margin expansion next year, even in a flat growth environment.
Gerald Herman (CFO)
Yep.
Frank Laukeen (CEO)
On the other hand, I think you increased your assumption for organic operating margin headwinds by 45 basis points for the year, which is pretty material with one quarter to go. So I'm just trying to figure out, like, how do we balance these things? And is there some risk that the benefits that you expect to occur over time are going to take a little bit longer to show up in the P&L just because of maybe the environment we're in and the fact that I think a lot of these changes that you're making are being done outside the US where regulation can work against you. Again, I'm just trying to think about this as we, you know, try to set you guys up to succeed with realistic targets for 2026.
Operator (Operator)
Thank you.
Gerald Herman (CFO)
Yeah, sure. Nice to hear from you, Doug. So here's what I'd say. First, our cost-saving initiatives will be, and we expect them to be, at the high end of the range we quoted, this $100 to $120 million. For fiscal year 2026. And we're fully committed to that. And actually, we're well on track with that. 95% of the actions that needed to be taken to realize that are already underway or have been fully implemented. So very confident with respect to that. And I think, you know, more generally, our expectation around margin expansion of closer to 300 is where we are, even under relatively weaker revenue conditions for '26. That's the position we've taken, and I think we're holding to that. I think the issue for us, as you already know, I think, Doug, is, you know, some of these activities around cost savings do take a bit of time just because we have to go through a process, particularly in Europe, and a lot of our cost-saving actions are driven around Europe because of our footprint. So there's going to be a slight likely delay in some of this as we we're going to see more of it hitting in the second quarter of 2026 as opposed to in the first. So that doesn't— but that doesn't take us off the target at this point.
Frank Laukeen (CEO)
And let me also— I mean, so we did get— Europe, there are other economic problems and layoffs by other companies. So we got very good cooperation, for instance, in Germany and France, which can be difficult, from our workers councils and comité d'entreprise, they've agreed, they've approved that what we're doing is reasonable and protects the core and all of that. So good cooperation. When Gerald said that, yeah, Q1 will have— so the $120 million for the year, we're very committed to that. And Q1 will have, I don't know, 90% or 95% of the run rate cost savings implemented. A few things, just the way they're timed, will come in in Q2, but it's not going to be a big modeling difference, Doug, or anybody else. But yes, that's how it flows. And the $120 million is not some sort of a Q4 run rate, that's for the full year.
Gerald Herman (CFO)
Exactly. Yeah. Well, and just to your earlier part of your question, I mean, we did have, you know, with respect to the 4th quarter of '25, we do have some mix challenges in the 4th quarter for '25 that we didn't see in the previous year as well. So I think you're going to see some— you did see a change in the overall guide from an organic operating margin impact with respect to the 4th quarter. So that's the explanation for that, Doug.
Frank Laukeen (CEO)
Okay, I'll leave it there. Thank you, guys.
Gerald Herman (CFO)
Thank you.
Frank Laukeen (CEO)
Thank you all.
Operator (Operator)
This concludes our question and answer session. I would like to turn the conference back over to Joe Koska for any closing remarks.
Joe Koska (Investor Relations)
Thank you for joining us today. Bruker's leadership team looks forward to meeting with you at an event or speaking with you directly during the 4th quarter. Feel free to reach out to me to arrange any follow-up. Have a good day.
Operator (Operator)
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Other transcripts: Q2 FY26 transcript · Q2 FY25 transcript
All BRKR earnings · Back to BRKR overview
Transcript produced by Signals.AI from the company's own earnings call audio; speech recognition can mishear a word. Not personalized investment advice.