Bruker Corp (NASDAQ: BRKR) Q4 2025 Earnings Call dated Feb. 12, 2026
Corporate Participants:
Joe Kostka — Director of Investor Relations
Frank Laukien — Chairman, Chief Executive Officer and President
Gerald Herman — Executive Vice President and Chief Financial Officer
Analysts:
Puneet Souda — Analyst
Michael Ryskin — Analyst
Tycho Peterson — Analyst
Subhalaxmi Nambi — Analyst
Douglas Schenkel — Analyst
Daniel Brennan — Analyst
Brandon Couillard — Analyst
Jake — Analyst
Presentation:
operator
Good morning everyone and welcome to The. Baruker Corporation fourth quarter 2025 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation there will be an opportunity to ask questions. To ask a question you may press star and then one Using a touchstone telephone. To withdraw your questions you may press. Star and 2 please also note today’s event is being recorded at this time. I’d like to turn the floor over. To Joe Koska, Director of Investor Relations. Please go ahead.
Joe Kostka — Director of Investor Relations
Good morning. I would like to welcome everyone to Bruker Corporation’s fourth 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 Frank Laukene, our President and CEO, and Gerald Herman, our EVP and cfo. 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@ir.bruker.com before we begin, I would like to reference Bruker’s Safe Harbor Statement which is shown on slide two of the presentation.
During this conference call, we will or may 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 our recent acquisitions, geopolitical risks, market demand, tariffs, currency exchange rates, competitive dynamics or supply chains. The Company’s actual results may differ materially from such statements. Factors that may cause such differences include, but are not limited to, those discussed in today’s earnings release and in our Form 10K for the period ending December 31, 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 to our outlook as of today, 2-12-20. 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 first quarter 2026 financial results expected in early May 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 fourth quarter and full year of 2025 in more detail and share our full year 2026 financial outlook. Now I’d like to turn the call over to Bruker CEO Frank Lautken.
Frank Laukien — Chairman, Chief Executive Officer and President
Thank you Joe Good morning everyone and thank you for joining us on today’s fourth quarter 25 earnings call. At the conclusion of a difficult year 2025 with headwinds from academic funding, tariffs and currencies, we are pleased that in the fourth quarter we delivered revenues ahead of our expectations. DSI or Brooker Scientific Instruments book to bill in the fourth quarter was again over 1.0x, providing more confidence that we are past the trough in demand seen in the middle of 2025. We also saw strong free cash flow in Q4 over 200 million after admittedly weaker cash flow earlier in 2025.
The year 2025 was the first full year of ownership for the three large strategic acquisitions that we completed in 1H24. Both EliteC and Kempspeed delivered robust mid to high single digit percentage organic revenue growth year over year while nanostring was approximately flat due to pressure on US academic funding in fiscal year 25. Encouragingly, spatial biology including nanostring orders were up in the double digit percentages organically in 4Q25 year over year. Our innovation engine continued to shine in 2025 with outstanding and very competitive product launches at the AGBT, AACR and ASMS conferences last year. Many of these recent launches have seen strong initial demand which we expect to drive revenue growth in fiscal year 26 and beyond.
Looking to 2026, we expect continued improvements in our markets to drive demand for our differentiated post genomic discovery, translational and diagnostic solutions. We start the year with solid BSI segment backlog of over seven months of revenue and good bookings momentum resulting from two consecutive quarters with BSI book to bill greater than 1.0. We are pleased to see the fiscal year 26 NIH budget pass Congress with an increase in funding year over year and barriers to grant overhead cuts and multi year grant funding. But for now there is still some lingering uncertainty in the US Acaga market the second half improvements in 25 in biopharma and industrial research order trends and robust semi metrology orders in Q4 position these end markets for improved revenue performance in 2026.
Finally, best which was a headwind to our overall revenue growth in 2025 should turn into a tailwind in 2026 having booked major multi year agreements worth more than half a billion dollars over multiple years. Accordingly, we are establishing Our fiscal year 2026 guidance for reported revenue growth of 45% with 1 to 2% organic revenue growth for the full year and an approximate 1.5% revenue growth contribution from an M and A. This all implies constant exchange rate revenue growth of 2.5 to 3.5% year over year in fiscal year 26. As we explained in our press release, we still expect a mid single digit organic revenue decline in Q1 of 26 primarily due to the strong Q1 25 year over year comparison.
After our first quarter this year, we now expect to resume organic revenue growth in the second quarter and for the remainder of the year. We remain very committed to rapid non GAAP operating profit margin expansion and we aim for 250 to 300bps operating profit margin improvement in 26 despite and including a 50bps currency headwind. This implies in principle 300 to 350 dips of expected organic operating margin expansion driven by our major cost saving initiatives which we now expect to exceed the upper end of our previously stated range of 100 to 120 million. Finally, in fiscal year 26 we expect non GAAP EPS growth of 15 to 17% despite and including a strong 8% or approximately $0.15 expected currency headwind which again implies 23 to 25% constant exchange rate non GAAP EPS growth compared to 25.
Turning to current results now on slide 4, in 4Q25 Bruker delivered stronger revenues than expected and above the preliminary range we provided at JPM in early January. Bruker’s fourth quarter 25 reported revenues of 977.2 million were approximately flat year over year including a currency tailwind of 4.1%, a growth contribution from MA of 0.8% and an organic decline of 5.1%. Organic declines in BSI and at best net of intercompany eliminations were also both at 5.1% in the quarter. In the fourth quarter our non GAAP operating margin was 15.7% down 240bps year over year as lower revenue volume, additional tariff costs and currency headwinds were only partially mitigated in Q4 by our earlier cost and pricing actions.
Fourth quarter 25 non GAAP diluted EPS was $0.59 down from $0.76 in Q4 of 24. Gerald will discuss the drivers for margins and EPS later in more detail. As I said earlier, fourth quarter BSI book to bill was again meaningfully greater than 1.0 and our fourth quarter free cash flow was good at 207 million. Moving on to our 2025 full year performance on slide 5 fiscal year 25 reported revenues increased by 2.1% to 3.44 billion. On an organic basis, revenues declined 3.7% year over year consisting of a 3.5 organic decline in scientific instruments and a 5.4% organic decline at best.
As always net of intercompany eliminations acquisitions added 3.5% to revenue growth and there was a 2.3% currency revenue tailwind for the year. Our 2025 non GAAP growth and operating margin and GAAP and non GAAP EPS performance are all summarized on some Slide 5 margins and EPS were down year over year as a result of dilution from our strategic acquisitions that closed in the first half of 24 volume deleverage and strong currency and tariff headwinds. So please turn to slide 6 and 7 where we highlight the 2025 constant exchange rate performance of our three scientific instruments groups and of our best segment year over year.
In 2025 BioSpin Group revenue was 879 million and declined in the mid single digit percentage solid revenue growth in chem speed lab automation was more than offset by declines in NMR instrumentation. Biopharma revenues were weak resulting from soft bookings in 1H25. In 4Q25 we had revenue from a 1.2 GHz NMR in the UK. Our second gigahertz class NMR of 2025 compared to 4 GHz NMRs in 2024. The two fewer gigahertz systems resulted in a roughly 25 million revenue headwind for 225 revenues. We’re expecting just one just one gigahertz NMR system in revenue in 26 as present gigahertz class NMR funding activity which is healthy but would likely not yet come in as revenue in 26 but may well refill our gigahertz NMR pipeline for 27 and beyond.
For 2025 the Cali Group had revenue of 1.2 billion and constant exchange rate growth in the high single digit percentage with growth in microbiology and infection diagnostics driven by ELITEC Molecular Diagnostics as well as by our Optics division driven by our applied market security detection growth. This was partially offset by softness in mass spectrometry as strong orders for the recently launched TIMS Omni and TIMS Metabomass spectrometers were expected to start to convert into revenue mostly in 2026. On slide 7, Bruker Nano 25 revenues was 1.1 billion and declined in the low single digits percentage as solid growth in spatial biology driven by nanostring and robust biopharma growth was more than offset by declines in ECHEGOV in industrial markets.
Semi revenue semiconductor metrology revenues were flat for the year with a strong semi order book in Q4 of 25 which is expected to drive stronger semi performance in 26. Finally 2025 best revenues declined in the mid single digits percentage net of intercompany eliminations due to soft superconducting demand for clinical MRI systems. However, we received major multiyear orders at the end of 4Q25 and at the very beginning of Q1 of 26 for superconducting wire from large MRI manufacturers totaling more than 500 million. This is over multiple years. Also, our research instruments business which is part of BEST, received more than 40 million in orders for enabling technology for the Extreme Light infrastructure, something that we had a press release on previously and this will also is expected to go into revenue mostly late in 2026.
Moving to slide 8 now we highlight our Project Accelerate 3.0 portfolio expansion strategy and we talked about that a little bit at the JPMorgan conference. We remain very focused on our leadership and expanding our leadership in post genomic disease research and drug discovery tools, primarily proteomics and multiomics and of course a core focus also on spatial biology. We continue to expand and focus in novel diagnostics, novel and differentiated diagnostics opportunities with novel microbiology and infectious disease molecular diagnostics opportunities. I’ll highlight that our Elitech molecular diagnostics business had very strong placements in fiscal year 25, which bodes well for fiscal year 26 revenue growth.
In microbiology, we’re entering the rapid AST market with E Wave platform, hoping to get FDA clearance for the first claim in this year in 2026. And in molecular diagnostics we intend to expand into second generation affordable syndromic panels on our GENIUS systems. Finally, a very important trajectory for us is that our proteomic and spatial biology translational research tools increasingly are expected to enter laboratory developed tests or LDT markets here in the US and elsewhere. In CLIA laboratories we’re excited about our next gen automated and digitized self driving labs, something that we just announced on Monday at the SLAS conference here in Boston.
And as I’ve mentioned earlier Our security, defense and airport detection business, something that was lingering for a number of years, but where we have differentiated capabilities is growing nicely at this point, particularly in Europe and overseas. And finally, we continue to benefit from the AI boom indirectly in that our semiconductor metrology tools for new nodes and advanced packaging have seen solid order growth and particularly strong order growth in the fourth quarter. With that, let me conclude soon on Slide 9 where you see where we give you our annual update on our revenue mix for the BSI segment, which as you know is 93% of our revenue.
We are pleased that step by step our aftermarket component of revenue is increasing. A year ago in 24 it was 35%, now it’s at 38% and in fact that part was growing organically. Also in 2025 our end market growth is as you would expect now more than 60% of our revenue coming from the project accelerate 3.0 focus areas and with particularly good growth that we’re expecting also in terms of orders and revenue from biopharma, from diagnostics and from semiconductor metrology. Finally, by geography, as you all know, US Biopharma and industrial growth looked stronger certainly in orders in the second half of the year.
US Acagaaf is still weak and had been year throughout 2020 weak throughout 2025 except for the first quarter. The rest of APEC has been very, very resilient and strong and China, which used to be 16 to 17% of our revenue, has continued to decline, although we saw some nice order growth in Q4 and it’s now about just under 14% of our revenue. Right? In summary, 2025 was indeed a challenging year for Bruker. We faced multiple unexpected significant headwinds and we responded by continuing to innovate, launching novel and differentiated high value solutions. We have also focused on cost efficiencies, taking very significant costs out in order to take a large step in 26 towards greater than 20% operating margins in the next few years.
In the medium term, beyond 2026, we expect our organic growth profile to return to a CAGR that is 2 to 300 bps above the LSTDX market growth rate. And we will continue to focus on continued major margin expansion steps in 27 and 28 as well. While driving continued double digit non GAAP EPS growth. We believe that our transformed portfolio is now poised to achieve EBITDA margins greater than 25% over time. With that, let me turn the call over to Gerald, our cfo.
Gerald Herman — Executive Vice President and Chief Financial Officer
Thank you Frank. And thanks everyone for joining us today. Before I get into the details of our financial performance I wanted to provide a high level view of how the fourth quarter played out versus our expectations. the time of our last earnings call, we’re pleased that revenue for the quarter came in about $20 million above our guide expectations. However, despite the top line outperformance, our non GAAP operating margin of 15.7% came in below our expectations by about 100 basis points. This was driven by headwinds of approximately 50 basis points from unfavorable mix, 30 basis points from delayed tariff offsets and about 20% bips.
Sorry, 20 basis points from a stronger foreign exchange headwind relative to our prior guidance. Our guide for fiscal year 26 reflects an improved mix profile as well as pricing and supply chain actions more fully mitigating the tariff impact going forward. Now some further details on Brooker’s fourth quarter and full year 2025 financial performance. Starting on slide 11 in 4Q25, Bruker’s reported revenue decreased 0.2% to $977.2 million, which reflects an organic revenue decline of 5.1% year over year. Acquisitions contributed 0.8% to our top line while foreign exchange was a 4.1% tailwind. Both our BSI and BEST segments had organic revenue declines of 5.1% in 4Q25 with organic revenue declines across all groups.
BSI 4Q25 instruments revenue declined in the mid to high single digits while aftermarket revenue saw growth in the low single digit range year over year. As Frank mentioned, for the full year of 2025, aftermarket revenue now represents 38% of BSI revenues, up from 35% in 2024. Geographically and on an organic basis in 4Q25 our Americas revenue declined in the low teens percentage, European revenue declined in the high single digits percentage and Asia Pacific revenue grew in the high single digits percentage including double digit growth in China all year over year. For Our EMEA region Q4 2025 revenue was up high single digits percentage year over year.
Non GAAP gross margin decreased 310 basis points in 4Q25 to 49.4%. Factors impacting our gross margin in 4Q25 are essentially similar to those impacting the operating margin in the quarter. In 4Q25 we posted a non GAAP operating margin of 15.7%, down 240 basis points compared to 4Q24. This decline was driven by a combined 490 basis points declined from lower volume unfavorable mix tariffs and strong currency headwinds. These headwinds, which are described in more detail on the slide, were partially offset by a 250 basis point benefit from our fiscal year 25 cost saving initiatives as we realized approximately $25 million of cost savings in the quarter on a non GAAP basis.
Fourth quarter 25 diluted EPS was $0.59 down 22.4% from $0.76 in 4Q24. Our non GAAP effective tax rate was 29.9% compared to 32.5% in 4Q24, with the decrease driven primarily by discrete items. In 4Q25 on a GAAP basis, we reported diluted EPS of $0.10 versus $0.09 in 4Q24. Weighted average diluted shares outstanding in 4Q25 were 171.7 million, an increase of 19.7 million shares or 13% compared to 4Q24, reflecting the accounting for the mandatory convertible preferred stock offering we completed in September of 2025. Turning now to Slide 12, we had an excellent cash generation quarter in 4Q25 with approximately $230 million of operating cash flow generated in the quarter, actually the highest in our history.
We delivered over $100 million in improved working capital performance in 4Q25 and with CapEx investments at 22.6 million drove free cash flow of $207.3 million in 4Q25 up about $54 million over 4Q24. We finished the fourth quarter of 2025 with cash cash equivalents and short term investments of approximately $300 million. During the fourth quarter. We used cash to fund selected project Accelerate 3.0 investments, capital expenditures and continued our delevering actions with a debt repayment of approximately $145 million in the quarter we ended fiscal year 25 with a leverage ratio of approximately 3.1. Slide 13 shows our non GAAP P and L results for the full year of 2025.
Revenue was up 2.1% to $3.44 billion including an organic revenue decline a 3.7%. Acquisitions added 3.5% to our top line resulting in constant exchange rate revenue to be roughly flat year over year. Foreign Exchange was a 2.3% tailwind to revenue growth in fiscal year 25. Fiscal year 25 non GAAP operating margin was 12.6%, down 280 basis points year over year. This decrease reflects net headwinds from M and a approximately 65 basis points tariffs of approximately 65 basis points, foreign exchange 70 basis points as well as the impact from lower estimated volume impact of approximately 80 basis points which includes the partial benefits from our pricing and cost.
The remainder of the non GAAP P and L results for the full year of 2025 are summarized on slide 13 with the drivers as explained earlier and on the slide turning now to slide 15. We enter the year with a healthy backlog of approximately seven months and solid order momentum after two consecutive quarters of BSI book to bill above 1.0. We are initiating guidance for fiscal year 26 as follows. Reported revenue of 3.57 to $3.60 billion representing reported growth of 4 to 5% compared to fiscal year 2025 organic revenue growth of 1 to 2% year over year plus acquisitions contributing 1.5% plus an estimated currency tailwind of 1.5%, all contributing to reported revenue growth.
For operating margins in fiscal year 26, we expect organic non GAAP operating margin expansion of 300 to 350 basis points in the year offset by approximately 50 basis points of currency headwind resulting in a net non GAAP operating margin expansion of 250 to 300 basis points compared to the 12.6% posted in fiscal year 25. We expect to take a major step up in operating margin performance in fiscal year 26 with much of this margin improvement driven by our previously announced $120 million cost actions taken in fiscal year 25 which we now expect to exceed. With markets signaling further recovery and our new products and solutions gaining traction, we expect to take another meaningful step up in operating margins in fiscal year 27 and beyond.
On the bottom line, we’re guiding to non GAAP EPS for fiscal year 26 in a range of 210 to 215 or non GAAP EPS growth of 15 to 17% compared to fiscal year 25. Using current foreign exchange rates, we’re estimating a currency headwind of approximately 8% to fiscal year 26 EPS, implying non GAAP CER EPS growth of 23 to 25% year over year. Other guidance assumptions are listed on the slide. Our fiscal year 2026 ranges have been updated for foreign currency rates as of December 31, 2025. Finally, a bit of color on Q1 of 26 we have a strong year over year comparison as we delivered mid single digit VSI organic revenue growth in the first quarter of 2025 and margins in EPS in Q1 of 25 were not yet impacted by US import tariffs or ACAGOV funding disruptions.
Therefore, we anticipate first quarter 2026 organic revenue to be down in the mid single digits percentage and operating margin and EPS to be down meaningfully compared to the first quarter of 2025. We then expect operating margins and EPS stepping up each quarter thereafter throughout the rest of 2026 to wrap up. We’re encouraged by the order momentum we now see in many of our end markets. This, combined with some stability in the US Academic funding environment, gives us confidence that we’re positioned to return to organic revenue growth in the second quarter of 2026, and we plan robust operating margin expansion and non GAAP EPS growth in fiscal year 26 and beyond.
With that, I’d like to turn the call over to Joe. Thank you very much.
Joe Kostka — Director of Investor Relations
Thank you, Gerald. We’ll now begin the Q and 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 operator.
Questions and Answers:
operator
Ladies and gentlemen, at this time we will begin that question and answer session. To ask a question, you may press STAR and then one on your touch tone telephones. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. To withdraw your questions, you may press STAR and two. At this time, we’ll pause momentarily to assemble the roster. Our first question today comes from Puneet Sudha from Leering Partners. Please go ahead with your question.
Puneet Souda
Yeah, hi guys. Thanks for the questions here. Frank, the margin question has been a frequent and obviously a focus in the quarter. Could you talk about, you know, just given the 4Q margins you came in below, you’re expecting a number of cost. Initiatives to push margins higher in 26. Maybe just tell us where are those cost initiatives focused? How much reduction? How should we think about that beyond. That 120 million that you’ve talked about? And also for Gerald, if you could talk about the off margin cadence, just given the significant ramp you have throughout the year and anything you can provide on your comment around the meaningful 1Q off margin impact.
Frank Laukien
Okay, Puneet, I’ll start. Good morning. So as Gerald had explained of the 100bps lower margin than what we had expected in Q4 of 25, the way we look at it is that the 50bps from unfavorable mix is not likely to repeat itself. Those were idiosyncratic factors in Q4. 30bps from delayed terrorist offset I think will offset that successfully in 2026 and the 20bps of stronger currency headwind is here to stay for now.
Right. And in fact as you will see, as you will have seen from our guidance by now, both on the operating margin expansion in 26 as well as on the EPS growth, we have acknowledged significant headwinds from currency accordingly. And that leads to the second part of your questions. We have gone even stronger or even further on the cost initiatives. We now expect these to yield on an annualized basis between closer to 140 million or even higher than that. That will not all these additional cost reductions will not all be active or effective. Excuse me, in Q1 or Q2, but certainly by Q3 that should be all effective and then become annualized.
So we’ve been pushing that, if you like, by an additional 10 to 15% and that’s about the right amount. We don’t want to underinvest in our opportunities, but we also of course are very committed to this 250 to 300 FPS of operating margin expansion and the double digit in this case reported 15 to 17% reported EPS growth, which is all in including currency headwinds which are strong and including obviously also some of the dilution we had from the mandatory convert. So that’s hopefully that addressed your questions. I think you had something for Gerald on Cadence.
Gerald Herman
Yeah, hi Puneet, it’s Gerald. I’ll just comment just generally as I mentioned in my prepared remarks we we had a quite strong Q1 of 25 you may recall. While we sort of hit the mid single digits range of total broker organic growth at the VSI level, it was actually mid single digits and quite substantial. We don’t expect to hit that in the first quarter especially on our organic performance. So we are expecting a softer Q1 and we expect to pick up the pace pretty dramatically starting in Q2 3 and stronger again finish again in the fourth quarter.
The step up in operating margin growth is quite significant largely due to what Frank was just describing. Some of we do have in 4Q25 about $25 million of cost savings that are reflected mostly in the OPEX category. You’ll see that again in the other quarters as we move forward. But some of our European based cost actions will take effect more in the first quarter and in the second. So you’ll start to see a more significant ramp starting in Q2 and thereafter Q3 and Q4 and talk more about the details. But fundamentally that’s the direction.
Puneet Souda
Okay, that’s super helpful, thanks for that. Just a quick Follow up on Frank, the new and competitive renewal awards are coming in lower. Maybe it’s due to the at NIH mainly and maybe it’s due to the political challenges that we have and getting. Those grants out and whatnot. But NIH is supposed to be 1%. Better this year versus last year. So just any, any feedback on the Acagov customers in your, you know, interactions in the and so far in the first quarter would appreciate any context there.
Frank Laukien
Thank you. Yeah, I mean the, you know it’s nobody’s talking about a strong tailwind yet, but the absence of the strong headwind from last year feels a little bit better for us. EchoGov US EchoGov orders in Q4 were still quite weak but I think you know that’s so that’s bottoming out later than the trough in biopharma and industrial research demand where we probably saw the trough mid year of last year.
It’s so, so there’s still that that’s why everybody, including us in particular are still cautious on growth rates this year. Right. 1 to 2% organic growth rate isn’t a snapback to our typical growth rates. So we’re still, we’re still cautious on that. But I am obviously compared to a really tough year 25 I’m encouraged that things are likely going to get better but I think until academia gets more confidence and that I think it’ll maybe a couple of quarters even if an NIH budget that’s flat or up plus 1% and with prohibitions against overhead cuts and multi year grants or at least limitations on those if this will pass and you know, I think there’s a reasonable chance of that.
Similarly also encouraging on NSF and other science budgets by the way, NASA, doe, you name it. So I’m encouraged with that. But I think it may not help us with orders all that much till the second half.
Puneet Souda
Got it. Okay. Thank you.
operator
Thank you. Our next question comes from Michael Rieskin from Bank of America. Please go ahead with your question.
Michael Ryskin
Hey, thanks for, thanks for the question guys. I want to dig into the margin. A little bit in terms of the 2026 versus 4Q. I think you talked about 4Q coming in a little bit lighter and you. Shifting some of those. I guess asking it qualitatively, just, you know, you pointed to the higher end of the range. What gives you confidence in your ability to take that given that you weren’t able to execute on all the margin cost outs in the fourth quarter. Just sort of just confidence on ability to execute that and then I’ve got a follow up.
Frank Laukien
Thanks. Well, we’ve taken out the high end of the 100 to 120 million in cost already and we are in the process of taking out additional cost which will let’s say that becomes fully effective or by mid year.
So that’s why we have a lot of confidence in that. And then some of the other margin idiosyncrasy, some of that has to do with pricing, supply chain, these things, you know, when we increase pricing and until we then get an order and until that order turns into revenue can in many cases be three or four quarters. So the effect of all these things, those good steps that we did take and have taken or continue to take on the supply chain, have a longer lead time and we noticed that in Q4. But you know they really are happening and they have happened.
So that gives us a lot of confidence in next year. And as I said we had some, we really did have some unfavorable mix in Q4 so we don’t think that will repeat itself.
Michael Ryskin
Okay, okay, I appreciate that. And then for the follow up I want to talk about your comments you. Made about revenue pacing through the year. I think you pointed to down mid single in the first quarter but you expect revenues to be positive starting in two. Q. Just clarify how much of that is. The comps from prior year. I know there were, you know one Q25 was surprisingly good. You know I think we didn’t see. The hit from the end market slowdown from the NIH concern until later in the year. So how much of that is the prior year comps versus underlying assumptions on. Any end market improvement this year or. Just sort of, you know how your. Order book visibility factors into that. Just you know, the confidence between that one Q jumping.
Frank Laukien
Yeah, both. Yeah, you’re right, it’s both. I mean you know the, there’s, I can’t, I cannot really disentangle that quantitatively but qualitatively both your question already implies they both play a role. So yes, the comps get easier and in some cases a lot easier. In fact Q2. Right. Q2 was Q225 was not good for us. So the comps do get easier and even through the remainder of the year. So with easier comps and with picking up with improving gradually improving order momentum in many of the segments, even if not all of them, even China bookings were better in Q4.
Applied semi was very strong. Biopharma was very solid in bookings in Q3 and Q4 of last year industrial research which came to A was very, very slow. The orders in Q2 as everybody was trying to figure out what’s the new geopolitical and tariff landscape as that has now become solidified or stabilized for the time being. I think these markets have all picked up really the little bit the outlier is still US EchoGov, but at least even there from what I see reading more than tea leaves reading NIH budgets, I think it may begin to benefit us in the second half in bookings.
That however may then mean that it could be a Q4 or mostly 27 effect in revenue. Which is why we think longer term we return to our 200 to 300bps above market revenue organic cagrade. But not yet this year. But even this year you do the math pretty easily. With a mid single digit decline in Q1, obviously the organic growth rates for the remainder of the year, the remaining three quarters are better than the full year growth rate. Obviously that’s the easy math for you and for us. But even at that level they’re not fully back at our long term growth rates.
We hope to achieve those in 27 and beyond. I hope that helps. No, that’s super helpful.
Michael Ryskin
Much appreciated. Thanks. Thanks Frank.
operator
Our next question comes from Tycho Peterson from Jefferies. Please go ahead with your question.
Tycho Peterson
Hey, thanks Frank. Maybe just can we do a quick walk on the assumptions for some of. The other end markets? I appreciate you hit on academic already, but what are you assuming for Biopharma this year? What are you assuming for semi? You know, anything in microbiology that could be a headwind. We’ve heard about, you know that from some of your peers. So maybe just give us a walk on some of the end markets.
Gerald Herman
Echo, it’s Gerald. I’ll just, I’ll just talk just generally about the end markets assumed in the guide. For Biopharma we’re not assuming a significant snapback. We’re assuming low single digits organic growth. Our semi business which was relatively flat on a revenue level for 2025, we’re expecting to be in the low single digits and growth clinical a little bit stronger for us from our microbiology based business and academic and government research, largely driven by continued softness for the first quarter or so, we are expecting to be sort of flat or low single digits down industrial flat and applied about the same.
So generally speaking we are not expecting a significant snapback in any of our end markets. We think strength coming from Biopharma and certainly semi in 2026.
Frank Laukien
Okay. And then I would add maybe one fine point. Molecular diagnostics, which is of course part of infectious disease diagnostics. We’re expecting very good growth there this year because we had nearly, nearly 30% now, about 30% more placements of these Genius platforms last year in 25 than what we had anticipated, what we had planned. So that was excellent. So that tends to then bring in the pull through in the following year. So I think diagnostics and biopharma and semi will be the highlights for the year 26 and others are recovering and stabilizing. And us, ACAGAB perhaps turning in our revenues.
And PNL, not really much of a corner until Q4, perhaps even into next year, but with improving trends and less headwinds. Sorry. Yeah,
Tycho Peterson
and then, Gerald, I know you. Had a number of questions on margins. Can you just comment on gross margins for this year? Are you expecting gross margin expansion? Yeah, we are. I mean, as you already heard, specifically on the fourth quarter, we were somewhat below our expectations on the gross margin level. And that was partly being driven by the mix issues and the tariff and of course the foreign exchange pieces I highlighted earlier. So, yeah, we’re, we’re not going to be able to do too much further on the foreign exchange piece, but on the mix, our view is that this is going to improve for us and certainly from the tariff side, as you heard from Frank, we’re expecting to, you know, recover that and mitigate any tariffs going forward.
Frank Laukien
I think, I think it’s fair to say that of our operating profit margin expansion, about half of it comes from gross margin expansion.
Gerald Herman
Yes. And of course our opex.
Frank Laukien
Right, right. But it’s, it’s about, it’s about half, half this year, 26 and probably beyond. And beyond that as well.
Tycho Peterson
Okay, and then Frank, on the M and A contributions, you flagged proteomics and spatial entering LDT and clia. Can you maybe just elaborate a little bit more on, you know, how you think about that opportunity?
Frank Laukien
Sorry, those were not MA contributions. Those were.
Tycho Peterson
I didn’t know if it was related to nanostring or something. Okay, can you just comment on what.
Frank Laukien
No, no, no. Those were, this is just our higher growth and higher margin opportunities which we bundle under the now further evolved Project Accelerate. Much of that or some of that was M and A, but it was prior M and A that we’ve now owned for one or two years in these areas.
Tycho Peterson
Okay, thank you.
operator
All right, thank you. Our next question, Our next question comes. From Subu Nambi from Guggenheim. Please go ahead with your question.
Subhalaxmi Nambi
Hey guys, thank you for taking questions. What are your Expectations this year for book to bill and backlog to hover at. Will it be noisy with some end market rebound? Just how should we be thinking about the trend of customer spending interest in 2026?
Frank Laukien
Yeah, we expect continued gradual improvements. So while we don’t specifically forecast backlog or book to bill, we hope that, we believe actually that the book to bill trends of the last two quarters, which in BSI were, you know, above 1.0, will continue into this year also aided of course by easier comps, at least again in Q2 through Q4. And we may need, we may use a little bit of our still high backlog this year. But you know, we’re not, we’re not modeling anything that, that becomes all normalized to, you know, perhaps the 5 and a half or 5x level, 5 months level that we, that we, that we think it would be a normalized level for the way BSI is configured now.
Subhalaxmi Nambi
Thank you for that. And then you mentioned some new products in microbiology and diagnostics. Exiting 2026. What do these businesses look like, like from a product roadmap perspective and a revenue growth perspective. Thank you.
Frank Laukien
Okay. Exiting 26. Okay. Yeah. So in microbiology I assume that we’ll have the first rapid astro gram negative positive blood culture claim approved by the FDA this year, 2026, hopefully before mid year, and that we will be in clinical trials for additional claims on that rapid AST platform. So that will be a nice buildup over the next couple of years as more and more content is becoming available on that wave platform. Of course, there’s a lot of content coming out on our existing genius platforms, both in Europe. And then we’re also doing a first essay going into clinical trials for entering the US market with these genius platforms.
Again, that won’t move the needle in 26. It’ll include still some investments obviously in OPEX investments, but that will begin to mostly help us then for further growth in 27, 28 and beyond. And what was the second part of your question or what did that address? Your question?
Subhalaxmi Nambi
The diagnostics business.
Frank Laukien
Yeah, well, the genius is the diagnostics business. Right. Syndromic panels will begin to roll out and get through regulatory approvals in Europe in, in late 2627. So they’ll begin to affect our larger installed base in Europe first Europe and Latin America and a few other countries actually. And then there’ll be a series of syndromic panel, affordable syndromic panels coming out and making it through the regulatory processes, IVDR in this case in 2728. So these are, you know, that’s just a flywheel. You add something every year, it doesn’t make a big difference in one year. But the cumulative effect over time is just very, very nice.
As we’ve seen with molecular diagnostics. Even in 25, that was a very nice growth market. Mid to high single digit growth market for us.
Subhalaxmi Nambi
Perfect. Thank you so much.
operator
Our next question comes from Doug Schenkel from Wolf Research. Please go ahead with your question.
Douglas Schenkel
Good morning guys. Thank you for taking my question. So regarding first quarter organic revenue growth guidance, your description of the difficult comparison is accurate. However there’s you know, two or three discrete items that seem like those should render the number a bit better. What I’m thinking about are, you know, firsts, the recovery of at least part of the $40 million in semiconductor related revenue that you previously told us had slipped out of Q4 and you expected to recapture largely in Q1 but over the course of the first half. The second is the impact of pricing which you started to get more aggressive with last May.
And it takes time for that to come through quarter by quarter. But it seems like at this point that should be more meaningful. And then, you know, I guess the third I would point to is you did talk about an NMR placement slipping out of Q4 and you know, maybe. That gets recaptured in Q1. So when I think about those things, that doesn’t seem consistent with mid single digit organic declines in Q1 even with the comp. Can you help us out?
Gerald Herman
Yes, Doug, it’s Gerald. With respect to the Q1 story, I think it’s important to understand that some of our organic performance in Q1 of 25 was pretty significant in terms of both mix and the actual operating profit performance. So we had strong order performance in semi in particular in in the first quarter of 2025 and very strong bookings performance in that quarter. So we think that the timing of our existing orders that are principally driven by what happened in H1 really of 2025 will not significantly improve our ability to execute on orders in the first quarter.
So that becomes a headwind in its own right. It’s just the timing of our orders and the lead time required in order for those to execute into revenue. I would say secondly, with respect to the semi orders that got pushed out, I mean I think our commentary has been pretty consistent about hitting the first half of 2026. Not all of that is going to impact in the in Q1. So I think we are expecting to see some improvement in Q2 from those, but not all of it hits in the, in Q1 of 26 and then on the NMR side, I mean we don’t have any specific NMR pushouts.
We had some challenges in Biosim for sure from a mix perspective. We saw some of that in the fourth quarter, but we don’t really.
Frank Laukien
The 1.2 gigahertz did not get delayed. It was in Q4, the UK 1.2 gigahertz maybe Doug, I mean you’re, you know us really well. You know, you know a lot of the moving pieces obviously a, as we’ve said, a mid single digits. That’s obviously quite a range right. Of, of outcomes for Q1. But we just wanted to highlight that it will still be our revenue almost certainly will still be down. And, and I think mid single digits, which is a bit of a range. We realize that is, is, is, is, is not just prudent and conservative.
I think that’s the right number. It puts a little bit into perspective the obviously greater optimism that we have in resuming organic growth and not only at the 1 to 2% level, but more meaningfully in the subsequent 3/4 of this year.
Douglas Schenkel
Okay. All right, thank you guys. Thank you.
operator
Our next question comes from Luke Sergat from Barclays. Please go ahead with your question.
Jake
Hey, this is Jake on prluk. Thanks for the question. I wanted to dig more in on China and that double digit growth. Your mix there is historically leaned towards industrials but with your build out on the pharma portfolio and this part of the market picking up there, what does your end market mix in China look like now and how should we think about it going forward?
Frank Laukien
Yeah, after, after a bit of a lull there when the CRO business went away and, and then that was indeed we had very little on that. Now China has recovered on the CRO side and China is becoming a drug discovery and development biopharma powerhouse in its own right. So that’s beginning to become noticeable. And academic spending there was, I mean we don’t talk about it much anymore but there was decent academic spending and bookings in Q4 better than the year before. Whether some of that was stimulus or not is now not so clear. People can’t really just this is stimulus, this is other academic funding.
It’s become more nebulous and diffused. But anyway it was healthier. So we didn’t know what expectations to have for China in Q4 but it ended up being one of the better performers in terms of bookings. And also at the end of the year we had some Decent revenues there. Great, thanks for that. Hard to read any trends into that. Clearly the biopharma piece in China is growing. No questions about that. Of course there’s also some of that is growing also in India and also the rest of apac. You know, from Korea to Taiwan to Japan, they all have improving biopharma trends for our particular tools. And of course there’s a lot of semiconductor metrology in APAC outside of China, obviously Taiwan, Korea, but also Japan. So we’re benefiting from that mostly on the order side, which should bode well for bodes well for gradual step ups in 26.
Gerald Herman
And I would just add that our guide for 2026 related to China is not strong. I mean we are assuming that the basic revenue performance is largely flat, which is not a good, certainly not a snapback from where it was several years ago. So we’re not assuming strong growth in China in our current guide position.
Jake
Great, thank you.
operator
Our next question comes from Dan Brennan from TD Cowan. Please go ahead with your question.
Daniel Brennan
Great, thank you. Thanks for the questions. So maybe the first one would just be on US Academic and government. Frank and Darrell, I know you made some comments already. Just did you guys say what the instrument growth or trend was for you from that customer base in 25 and what’s assumed in 26? And I think Frank, you mentioned multi year funding was capped. I’m just wondering like is that multi year funding no longer a headwind or just how do we think c
Frank Laukien
Yeah, good question. On the multi year funding, quite honestly, I’m not so sure. I’m a little confused by that as well. I know that all plays itself out. You know, even if it’s multi year funding, it is more funding into the system and and some of that funding is a little bit fungible in some of these big academic research or disease research centers. If they get more funding in one area, it alleviates pressures elsewhere to transfer budgets so it makes more money available. So even the multi year grants aren’t bad for us even if they don’t always immediately and directly fund another NMR or mass spec or microscope before the to your first part of your question, bookings in Acagov in the US for the year were down in the high teens.
So not the worst outcome, but not a great outcome. Right. So that’s clearly significant headwind. We also felt it in revenues, but bookings were down significantly in high teens for the year. Right. It means in some quarters it was down more than 20%.
Daniel Brennan
And I think you said earlier Frank, it was flat. The outlook is expected flat in 26, is that right?
Frank Laukien
This is for all of our. Yeah, yeah, yeah. So this is not. This was not a US Specific comment, but as you know, China and Japan and Europe, Echagov and almost everywhere else was much more, much better than in the U.S. right. Some were, some were strong, some were just solid, you know, solid and good. So that was a comment for all of AKA Gov. Not. Not a U. S Specific comment. I don’t know that we broke that out. Therefore, you’d still expect US Gov to be down organically in revenue for the year 26.
Daniel Brennan
Got it. Am I going to speak one more just on semis. Just so the guide is flat for semis. I know that business have been growing double digits. You were very positive on kind of the AI connection. Can you just elaborate a little bit just to be sure that.
Gerald Herman
Yeah, just to be clear. So with respect to full year 25 revenue performance, semi was flat for full year 26 in our guide, we’re expecting actually to be up in the low single digits range. And that’s, that’s what we’re currently thinking. By the way. Just to your. Just to clarify, even on the Ichagov side, we’re not expecting a significant growth level in Acagov, either in the US or globally in our guide.
Daniel Brennan
Right. Okay. Thank you very much. You’re welcome.
operator
And our last question comes from Brandon Coillard from Wells Fargo. Please go ahead with your question. Hey, thanks.
Brandon Couillard
Good morning. Frank, just directionally, which of the three BSI segments do you expect to lead in terms of revenue growth this year? And just one clarification on the ultra. High Field NMR systems. You know, I think you said one install expected in 26. You used to carry a pretty large backlog there. Do you expect to go back to say three or four installations in 27? Is there just a timing thing or dynamic.
Frank Laukien
Right, so thank you. Brandon, you were asking about the groups, right? Yeah. So we think the weakest growth in the groups this year in 26 will be in BioSpin. Whereas Benano and Khalid and Best are expected to grow organically comparable. They’ll all three grow. But BioSpin because of the longer term bookings and also because of. For instance. No, I’ll try field or maybe only 1 in revenue in 26. BioSpins going to be the laggards this year in revenue growth and not normalized until 27. Indeed. To your second part of your question, Brandon, there is some good activity but you know, trying to find funding building consortia, etc.
So I don’t know that we’ll go back to four a year but I think we’ll be hopefully be able to go back to 2 or 3 a year in revenue by you know, 26. 20, sorry, 27 and beyond. That’s sort of our expectations. So 26 will be a bit of a lull which goes hand in hand. But it’s not the only reason that Biospin will be the growth laggard in 26 for us.
Brandon Couillard
Okay, great. And then Gerald, what do you have penciled in for net interest and other expense for 26? And free cash flow was a bright spot in the fourth quarter. How do we think about free cash flow conversion this year? Thanks. Yeah, I mean we’re just on the last point. We’re quite pleased with how the fourth quarter came in as far as working capital conversion and our actual cash flow for the quarter came in about 207 on the free cash flow. 207 million on the free cash flow number. So quite pleased about that. As you already know, we’ve had a lot of effort related to inventory actions and happy to see that it is resulted in something positive.
I mean we could talk further more about that. When you look at just interest expense line, we’re thinking somewhere around this, you know, 35 to $40 million range for interest expense and then we have some offsets on that other other income line. We can talk about more of this offline but there’s some nets that get you to I think a better performance on the other income line, net interest, other income line for us in 26.
operator
Okay. And with that ladies and gentlemen, we’ll be ending today’s question and answer session. I’d like to turn the floor back over to Joe Koska for closing comments.
Joe Kostka
Thank you for joining us today. Bruker’s leadership team looks forward to meeting with you at an investor event or speaking with you directly during the first quarter. Feel free to reach out to me to arrange any follow up.
operator
Have a good day ladies and gentlemen. With that will conclude today’s conference call and presentation. We do thank you for joining. You may now disconnect your lines.