Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the Rapid Micro Biosystems First Quarter Financial Results Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you.

I'd now like to welcome, Mike Beaulieu, of Investor Relations to begin the conference. you. to over Mike,

Mike Beaulieu

thank XXXX joining earnings and Biosystems Rapid first quarter call. you morning, the for Micro Good

Joining section. me Financial at company's on our of and the we Chief the the in a rapidmicrobio.com first call are Officer; issued & available results. News Sean under Rob quarter and release XXXX Investors Wirtjes, A release is website Chief press Officer. financial today, Executive Earlier Events announcing Spignesi, copy President the on

you remind within that statements we federal begin, provisions to Before Private Litigation be pursuant statements like this of during forward-looking securities made Securities may Harbor Reform the many call the were I'd made of Safe Act to the laws, of considered which meaning XXXX.

that and future and potential predictions expectations on impact for business. uncertainty year-end forward-looking condition, call for Mold Micro's relate the cash statements expectations performance and limited placements, are financial cash Direct the the coronavirus Alarm, and Any to events, our new revenue including, or customer to runway, expectations statements of but adoption growth, business of not system relating anticipated balance, statements, to, System, Growth Rapid in or of RMBNucleus results Micro's contained Rapid this and development pandemic interest macroeconomic future

materially Actual implied in expressed factors. a differ those results the may to or from of forward-looking statements, variety due

filings such to SEC. are Factors description and XX, risks in Risk XX-K uncertainties risk as Micro's and refer Securities with Form and please the associated subsequent Report updated the on the Exchange list of Rapid a factors March our of the filed our on XXXX, with For business, Commission section Annual with

or or revise be This today, to statements whether new factors and intention call as aware forward-looking as or by any that performance. contains you a information any update statements, future broadcast future be or XXXX. financial guarantee should should and Rapid conference accurate urge because is only you May required otherwise. estimates these live not are events law, only time-sensitive and the except obligation, to these projections of of X, consider considered of Micro disclaims information, We

And the turn to now that, call Rob. with I'll over

Rob Spignesi

us of first brief detailed financial call thank XXXX turn Thank development you, you results. discussion to progress product then both a joining I Good quarter everyone, review this morning's with System results. Growth our our morning, will and and for followed summary performance, will first our opportunities. Sean making to a by begin we Mike. are call discussion quarter accelerate over of Direct the placements our advance I more a to the for of new

across in and consumables, the first solid quarter execution Our systems, was services.

the to quarter the compared placed was in $X.X compared of completed representing to million, $X QX year. Recurring million, quarter. First revenue validation the systems growth total systems and year. XX%, first quarter We three increased customer two revenue last of to last XX%

at first reaffirming $XX placements Based Rapid quarter million, our guidance On to confidence quarter plans. and placement growth March, XXXX. funnel execution least return of solid our performance our We quarter our to growth. our made revenue compared had call performance, we improve opportunities, fourth the earnings XXXX at effective plan least those the we an of XX%, we progress and of solid to we've indicated system execution to on are system full-year accelerate first representing Micro our that of indicator believe XXXX is early against in in in

we operating the March, are in dynamic that discussed environment, our we still as in and and macroeconomic uncertainty a of presents. guidance reflects said, That some this

System Direct Growth accelerating remains priority highest Our placements.

we well we have this that discuss the activated support progress some as have customer of that to to activities made, Now, engagement priority. as I want

across environment. Europe relationships. manufacturing America challenges increasingly With am customers XXXX, of of customers quarter strengthen as partnerships to establish seek our to we I I the and in During an reminded visit, existing face new complex with first North the each up had the visit and opportunity keeping

my Growth gives how believe automation, the Direct Direct both our visits, to time and utilize proposition recurring to develop. additional including to in the I with of continues system placements. understanding these our confidence our customers, resonate our System value grow of continues integrity System, faster customers that Through data and potential Growth results, the which to revenue me

to had and portion we account represent one future feedback quality our key the pleased some strongest leadership global tend of a on at March, our and of the we Lexington customers the Rapid hosting be positive believe to prospect order collaborating are of about customer key We manufacturing Micro team the expansion Growth System Direct customers were experience. In receive pleasure multisystem with excited account that of Growth And meaningful our customers overall future opportunities. of on of plans. users We of our System facility. Direct

complement Massachusetts XXXX. line, and is full direct to by at meeting have also our completed, completed and facility, a will growth our Construction site include Lexington progress be demo we to were Lexington share customer manufacturing expanding primary Lowell, a and expected Once importantly, in While capabilities. our new will able validation mid-year R&D backup capabilities the made lab. consumable manufacturing own we manufacturing

customers, proposition its customer and Direct Rapid which Europe, highly sales of that of for effective in-person practice experience workshops perspective two-day our a customers. theory prospective hands-on discussion including element We believe methods, roundtable cover practices. More a the best recently Micro that value of to and regulatory the we process demonstrates in are Growth workshop held a compliance with

customers, plan to to we educate prospective into advocating the over tours of value move as host of MQC our Direct and who the we customers for site second at structure Direct we professionals, and on for our globally the Lowell Growth events on facility. days, weeks, half And presenting benefits Q&A their plan coming industry industry processes, continue of System. customers behalf the sessions These by and Growth high-value real-world with are the our and customers work at robust the include to to automating And finally, year, events.

like to provide Now, of our another on key efforts, development new product strategy. which are our I update growth element would an

recent on the new includes of strategy. RMBNucleus This encouraging education, start. plan product offering. increasing have awareness, excited software customer this report focusing into commercialization to Alarm, launch driving product of off we transitioned Mold to are our Following and an I'm that we utilization

on Mold with recently top with a New customer. development Alarm, an we to of on with substantial remain educate we a are value have Briefly, working continued achieved interest Rapid Sterility global high progress on-track the existing customers We in program, internal plans. have XX product. and make and of our to this important customers them level our milestone

on details on program calls. We this expect development future to additional earnings provide

So, many above We takeaways. to respects. few our expectations a across believe first that business and summarize was in quarter key performance the solid

to accelerate executing are plan our against placements. Direct Growth We System

growing recurring revenue Our is meaningfully.

funnel Direct gaining Our System development commercial are traction and of and the of new of Alarm Rapid Growth Mold advancing solid, Sterility. on opportunities release remain we

at leader May our Before appointment is Electric our turning excited will revenue have night to X. the announcing want be Sales board. we decades he and team, effective nearly Monday, strategies that call track out and Wysocki over Marketing, Mike release of to Sean, growth. member driven of the Healthcare executive put proven Vice General a Mike commercial implementing spent and Mike have him sales President a two recognized Senior a as press record highlight GE we on significant to and leadership of with successful of are I last the

like would turn I Sean? over Sean to first Now, our to to the discuss quarter performance. call

Sean Wirtjes

everyone. morning, in of in the Direct XXXX QX to We in we year. two first This Good morning, $X.X million, XXXX. X three placed first quarter which quarter, revenue compared Systems revenue last of Rob. Thanks, $X.X reported compares Growth million to QX

Our pull one that QX, we but QX into XXXX we're to included placements QX. previously in forecasted system able

systems was to XXXX, million revenue, majority this was The million to $X.X year. in last is consumables accounted in grew comprised the Consumables $X.X million for year QX of the $X.X QX of million in compared in revenue. increase in XX%, Product to system last compared year-over-year compared Service last year. in QX, placed product which QX year. QX revenue additional and revenue QX $X.X

validation last QX compared to Validation primarily system XXXX, which the several nine in activity reminder, placements resulted volume revenue a comparison. the year, in year of that validations versus quarter, of complete two in year QX XXXX prior this quarter. in in validation was lower to in lower as Also, completed the were We systems in the fewer impacting into as the of delayed a a expected QX result XXXX we period.

lower of QX validation in almost of of March XXX validated XXXX, systems, than offsetting in more XX, the contract a had quarter. which service the total in XX% revenue we revenue drove growth As

and million First the in year compared increased million to revenue contract driven growth million $X.X XX% both was quarter. $X.X to million, $X.X QX year, $X.X QX, last quarter compared consumables in revenue. service prior by Non-recurring in revenue recurring to in

Turning progress The of $X.X were to product placement, by and was system negative lower be million last efficiency continue in they lower million QX, Despite quarter the reduction benefit to gross margins improvement the Product incremental production consumables. continued year negative QX manufacturing one to as volumes. margins and cost margins. compared by $X.X in were year. first on driven our in initiatives impacted this

first year-over-year year. XXXX, $X.X compared largely benefit cost of year. was was which our by our flat, manufacturing The negative validation was higher The revenue percentage to last On a good a both service QX and ongoing consumables Service in basis, improvement negative last of lower systems. initiatives and control quarter product XX%, and negative efficiency combined QX margins service were essentially million in on XX% progress contract QX reduction gross revenue year. in offset were cost this margin to result compared

increasing are also on and service in We focused business. productivity our efficiency

activities, volumes as to increasing gross as well lead continue XXXX. these positive margins expect We to in us to

quarter, Total million and G&A. down were $XX.X first sales P&L. Moving million R&D, operating expenses in million in consisting and the $X.X of million $X.X $X.X in in marketing, the

related the the total This announced in $XX.X in OpEx last in million million QX. first Excluding quarter was costs $X.X million August expenses retention to plan of we to total compares restructuring year, $XX.X of operating in XXXX. the

due was of loss higher year-over-year XXXX. earned $XX.X first interest and to of a share year $XX.X in on to was quarter. share $X.XX This quarter was QX loss primarily income short to net compared loss our million $X.XX compares long-term to The Net million Net in loss prior due last in XXXX, year. investments. in improvement the higher QX rates per net per the

non-cash and XXXX. of quarter $X.X expenditures, million. capital were depreciation Stock to million With expense expenditures the compensation expenses and amortization capital first was in $X.X respect and $X.X was million

for turn quarter. now XXXX the to second our the I'll and outlook full-year

our reaffirming XXXX are We previous revenue full-year guidance.

$XX million, place at of assumes represents least at at to growth of continue which we XX%. We systems and expect revenue least least XX will

we As environment. Rob dynamic mentioned, are in a still macroeconomic operating

scale We seeing which customer the and decisions revenue budgets create are affecting could scrutiny, receive of and purchase some variability, is especially increased in systems. timing

reflects decisions. we purchasing and and guidance are interactions for this monitoring the customer some in Our environment of continuously changes uncertainty, assessing

quarter, revenue the second to we million, build into accelerating two placements least assumes half there, continue system to which and as the we the move commercial through placements. revenue expect second For XXXX. momentum move expect of least at at year of with we system $X From we as

XX in quarter. to complete least at continue in We least validations two to with XXXX at second the expect

to the variability in new between of for validation the system placements to QX. expect may previously system although then be well there timing first be balance over quarter-to-quarter based similar as With second respect year, validation on and the we expect some increase compared or the revenue as revenue, validation validation QX customer We half related work of systems, to activities to to lag placements. the the placed half,

volume due our in and margin cost as revenue revenue especially Based to system And then volumes. generate our lower consumables benefits, and manufacturing on QX lower to than improve increases. as leverage production and the we our XXXX reduction outlook, QX expect initiatives progresses additional be year lower gross efficiency

of of per quarter With will XX.X timing operating respect of million severance the expect balance and development continue this as XXXX, year, by and expenses we QX new driven over the non-recurring expenses, with million QX variability, mainly activities. between to product certain to impact well XX.X that as

XX. of Finally, we investments $XXX and million had cash cash, equivalents, March approximately as in

the XXXX included XXXX the do large year, several review QX burn Our to to of outflows the to and related not recur we strategic we annual of bonuses, expect payment alternatives completed costs related the over in expenses that QX. balance including cash

activities capital also realize We the inventory benefits expect balance particularly reduction year. ongoing of cash from to over significant working the management,

expect consistent to us provided continue we that confident the to guidance at slightly remain result, end with below March. in this a XXXX million, with investments is As runway and or We we with least XXXX. $XXX at which cash cash into provides

comments QX and my concludes our on That full-year outlook.

open So, at up this point, for the Operator? we'll questions. call

Operator

first Tejas Your from Savant the Morgan line Instructions] of comes Stanley. [Operator question of

Your line is open.

Yuko Oku

This Maybe to Thank customers? is Tejas. call around for another you're at what worse start, comment point? across it similar pretty on do could among our it in you see you you board your the for is on, on or Yuko versus questions. this budgets taking one tightening hearing region the And

Rob Spignesi

some been question, slashed, – Yes. differences as we talked This haven't across And as primary be budgets through There's cases, is have with there's more of feels scrutiny, operate. we going on are, first could any our we're not extend regions some far It about our the filter no in – gets of perceiving considered the Rob, processes as just in in Yuko. the a been processes. like part not which some the remarks, of customers. the three some can our what internal tighter certainly they of which

Yuko Oku

then color. several you single multi-unit customers? trended could about a you describe somewhat When And the share mix current versus And related Okay. months? between existing proportional you the of maybe funnel, new would that units? last That's think question. and your how how over the potential And helpful

Rob Spignesi

Yes.

as metric to now and America, have we the to We way that excited look good in it talent by North talent. balance about this a customers. way, board and break incredibly quite that bringing it, best a but best it the existing is the it, staffed we're nearly Europe Asia. a I'm existing our often. joining with between the encouraged of in about way fully So, at as talent some incredibly on commercial Think quantitative down won't I customers new three and as new think about regions well top and think

best our got reflects direct growth new with we've is customers funnel see and continuing proposition working value our regions we our of that to recurring developing have consumables our evidence online. revenue the opportunities And We're So, and and existing consumption customer our are that. services.

our into regions mix existing. funnel, got we've our So a that propagates and and both of healthy new across

Clearly, region. bit we're a newer Asia in our

don't to on got mix The also vast majority balance, more XX, a the little of the and around towards have that exposure. note but very bit newer our existing. we early So, mostly new emerging exposure. customer that's base, top biotech have in world, I it, think, to a customers. XX, all as larger weighted little it's But important you much global the good top we've between early-stage biotech know, at be tends we And that customers call

Yuko Oku

enhancements, feedback, consumable in improvements think workflow about just product me. then Alarm Got for on it. future product Based last you And one underway. Mold Makes we of sense. low-hanging customer and With launched Sterility one RMBNucleus fruit the pipeline? terms where testing beta see do as

Rob Spignesi

Yes.

Sterility, Mold question? product is pipeline So, the beyond and future

Yuko Oku

right. That's Yes.

Rob Spignesi

Okay. Yes.

is view growth So, fundamental. we it The a platform strategy our technology. is direct as product

are it that manual So, to view automate, legacy integrity. with and of data to the we workflow able in improve middle a significantly accelerate, regard we

So, our provide value strategy workflow. to that is in more

So, our that upstream product informs into workflow strategy. workflow, in which our product to downstream and move

routine an workflow, current step seek but organism as will majority downstream to pharmaceutical is well our very of on of as of example the any a is majority a, used further giving automated strategy. into well. the identify that that's down environment. steer fully Typically, as daily customers vast have downstream. them use Mold our part automates product And also an providing value system early that consumables. And – the of kind any that more manufacturing of So, one a kind step Sterility much automating tests a of routine strategy in vast is in to

future development detail get that of And data too and and data now, as general very So, into enable I look, won't future, we thinking and in part for much moving about upstream is category product but the our also, release. much – analytics, downstream.

Yuko Oku

you. Thank

Rob Spignesi

Well, thanks, now. us to to Yuko. the today. call We're joining call the live – Thanks everyone for wrap going up

Operator

This now concludes today's conference call.

disconnect. may You now

Rapid Micro Biosystems (RPID) 5 May 232023 Q1 Earnings call transcript