RPID - Earnings call 3 2023 | Rapid Micro Biosystems, Inc.

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Operator

Thank you for holding, and welcome, everyone, to the Rapid Micro Biosystems' Third Quarter 2023 Earnings Call. [Operator Instructions] I'll now turn the call over to Mike Beaulieu. Investor Relations. Mr. Beaulieu, go ahead.

Michael Beaulieu

you Earnings the Call. thank Third Micro and XXXX Quarter morning, for Rapid joining Biosystems' Good

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

that Micro's to System, Rapid expectations activities the and Direct year-end planned of runway, cash development and for system balance, to remind results this safe like Private related revenue of Reform securities adoption Securities cash and company's growth, are relate statements future that customer many placements, considered Before performance Any statements business during or Growth and interest condition, Act I'd we and to expectations meaning harbor expectations the Litigation statements financial which to or to, forward-looking the not a future variety you on of RMBNucleus statements Mold Alarm made differ limited the securities forward-looking XXXX. due but call predictions statements, to impact expressed the statements this and forward-looking Rapid Micro's or of relating the factors. macroeconomic those for begin, uncertainty of business. Actual from potential Sterility made including, pursuant events, -- Rapid laws, be may provisions materially may of to of are within the call results federal contained implied in in anticipated

are on these the report or a not the of be is to XXXX, such and We call the broadcast with amended accurate time-sensitive considered Factors should any contains information or these business, whether and SEC. of required new otherwise. XX-K and Micro uncertainties projections by with on March And update today, be please factors consider the statements forward-looking Commission in should as section future aware the to urge that, guarantee the November Rapid to of risk financial statements, events list a conference performance. This that you as as information, refer because call future law, obligation, with or associated Rob. live subsequent updated intention risks revise our annual estimates any with For Rapid are factors only description filings as XX, of I'll turn over and Form Exchange Securities filed our of Micro's you Risk X, to except XXXX. disclaims and only or and

Robert Spignesi

in we growth in revenue, our our year. guidance supported I made Mike. have Good you, results. above then the a million approximately by detailed an growth overview of call morning, to a progress we for $XX revenue The results, the solid Thank results turn of this and our for XXXX on by I million, growth strong representing review our for with was a strength our full sheet, Based $X.X for in of quarter. year-to-date quarter guidance service you broad-based of consecutive least strategy. thank begin and balance product quarter second performance, a review XX% and reaffirming more QX approximately to the over morning's the us at representing will are and review advancing call will everyone, revenue in our third last consecutive was XX% third to outlook. Total Sean XX% financial for followed with third compared both year joining the our increase quarter. and of

top of at Growth X a Direct global included America, North Europe a customer. of This quarter, placed least During we one placement and new Asia. each X the pharma systems, the third including system in with

As base manufacturers. includes a the top pharmaceutical of X/X XX result, our customer now global

to funnel staffed, Biologics the high-volume opportunity, X turnaround as regions sterile and completed segments gene meaningfully the therapy X robust customers for and meaningful cell automation, testing, our these presence has providing and in global data time injectable new fast all is start molecule segments. commercial have year Growth geographically. opportunities in our also remain said, With ideally we in sales quarter. We and validations and where integrity That since being insight as manufacturing Direct expanded full largest such is required balanced the also is the access and opportunities. our well of suited small

trials aware, there you of for trials therapies clinical gene and and As approximately are thousand biologics ongoing several are for many cell X,XXX clinical today.

results, Direct, base. With rapid detection capacity platform improved to greater proposition the customer In integrity, with achieve data these sample using segments, can the automated Growth and only accuracy customers microbial current value time resonates than high-value faster control fully of clearly this methods. quality enhanced the for

manufacturer the currently a X therapy X of X the used therapies this place the being CAR-T to later fact, of quarter. approved expect is Growth with and Direct in In commercially remaining system the

which have opportunity. We system a biologic to placements. Notably, currently large largest XXX manufacturing, FDA, according to footprint creates biologics a for the significant therapies within there are licensed segment also our growth which the on close remains market

XX the biologics the global penetration proposition value within significant cell combined majority Our Growth the speaks companies our into and presence and market, Direct. commercial to and top pharma of of gene the the with progress

pharma of standard to testing on therapies on path trusted us and the Growth this these microbial believe globally. critical Direct proud level a life-saving to QC are establishing the that be partners success industry keeps for We as

one set commercial opened our several comprehensive of our As We opportunity our line facility operations state-of-the-art in manufacturing system the and lab we and This platform accelerating Massachusetts and to our consumable to customers. demonstration generation automated have and specifically our on and hosted of Lexington, funnel new a objectives complements capabilities velocity is lab already prospective our focus placements, showcase customer direct manufacturing direct provides of on customers. increase a engagement. to execution growth to through continue recently

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continue host Germany platinum our the at to PDA Microbiology high-value events customer use we Pharmaceutical October, Munich, Additionally, sponsor a near customers. In to again for lab as our early European demonstration we participated annual Conference.

existing prospective our enable addition key In event and of deeper an conference, and we members to to with are with the paired invite-only leadership decision-makers. hosted executive team commercial engagement where and users customers

bringing and prospective & to late XX attend by customer and current The at will we Growth participants event event, together to the Over will feature the customer Growth approaches this including numerous And over such November, high-quality a multi-day education event Johnson site customers will host and industry-thought customers in of purpose and the Johnson conference Schaffhausen, goals facilitate generated share to panel discuss leads. that their Direct regulatory our is topics finally, X-day anticipate in event collaboration Direct. using discussions and business and best automation on expert We leaders, practices. as Switzerland.

Direct environment. site local tour fully will that Growth validated a a participants in GMP System includes customer a addition, In

development important is growth our another product of New strategy. component

that and and strengthen products new value competitive innovate Growth Direct's customer the partnerships meaningful enhance solve advantage, to proposition. is goal challenges, Our create differentiation

environment, rapid continue drive sterility innovative system we become improve increase we to we we gaining margin Accelerating XX% remains provide revenue to be growth challenges growth expect strategy. respect placement Q make execution Despite next enhance able we demonstrates and our focus to With Additionally, and new continue experience good year-to-date that achieved such summary, and progress to sources have Alarm the actions commercialization more significant sterility, and against on commercial nearly expansion. customer ongoing products the rapid update highest as the priority. taking expect of to our by growth been to macroeconomic through to Mold are a traction. our quarter. In have which posed

we performance. leveraging with drive to quarter are third gross will to improvement. And focused internal Additionally, cost to over scale call now achieve our turn continue beginning discuss which margin I'll with that, initiatives, Sean? to combined we Sean are the the on

Sean Wirtjes

this systems and compared in shipments by Rob, customer placements mainly of was largely the QX second is in to quarter X million XX% basis $X.X million additional last to compared revenue by increase million XXXX. consumables Direct and quarter. in last QX in year everyone. X X million system and of a down Service XX% in to QX revenue, million year. XX% Growth increased following slightly grew comprised by on with which to basis was million record driven increased year-over-year our quarter. increased morning, Consumable in third due to XXXX revenue QX, in year and good year. quarter the compared third the timing revenue on growth increased quarter XX% revenue Thanks, this $X.X almost recap the updated placed to QX results, $X.X contract Systems start The $X.X to a $X.X of last sequential quarter our service the year. last but primarily to a revenue, a of Product $X.X We year. recurring followed which both I'll higher driven in between third was The compared outlook. QX

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

to we enhancements negative a year, are margins to write-off sequential Turning of and the on was basis, third to from consumables of our compared QX point was improvement start third the last higher consumables mix this quarter complete, improvement that million $X.X consumables productivity to partially benefit leverage future improvement manufacturing negative service million and and to a implement by negative them enhancements last volumes basis well QX gross our year. to revenues in XX and a to quarter in in earnings million in due offset as negative This call. year. systems was percentage $X.X in margins compared contribution this $X.X the quarter on combined percentage favorable discussed XX on On as downtime $X.X margins we line last QX an compared year fourth These and improved onetime last were The the making mainly the margins. beginning margin gross quarter in the point margins of impact representing million negative consumables QX a production as better to meaningful product substantially Product materials will margins automated now year. Service year. in expect in planned and XX%, placements our drove in improvement last quarter. the were percentage expired improvement third higher

increased only realized both revenue at higher year-over-year making implementing overhead the same as Looking of total the progress well as services X% cost another benefits in costs. total margin period. efficiencies revenue way, production control our increasing reductions we in revenue, volumes are across in and products of we manufacturing increase compared improvement the in tight the illustrates to cost XX% This and of and

XXXX. loss in this loss to Net lower are with in the of This compares third net expenses QX. a QX in in process third in in review compensation was the improvement activities net of loss compared and third stock We outlook. expense to we last $XX.X and Total in our in of $X.XX R&D to capital amortization our respect per $X.X last drive Net compares long-term was associated million sales quarter. I'll million $X.X per the largely QX Board $X.X down to loss expenses our $X.X third QX higher year. were were in period. the to Directors now of depreciation $X.X decrease margins. Continuing P&L. the the million year significant With quarter due by million capital laser-focused revenue, turn was in and quarter consisting gross that share G&A. expenditures was will prior was operating was noncash operating quarter year margins the million incurred expenditures, and $X.XX million initiated largely of million share in on million of This million due operating of total million, better costs This $XX.X believe expenses in and strategic $X.X to quarter. $XX.X improvement gross in and sustainable marketing, in nonrecurring the and to The year. expenses $XX.X

be to reaffirming system service $XX activity. increased due lower again to shipment at guidance slightly XXXX we once to QX consumable timing consistent, are million, least revenue We revenue we least relatively XX% full be XX revenue represents year our QX, at validation which of growth least expect be to and due revenue Compared to previous mainly and at higher to will of systems. assumes place

at We consistent decisions. persist uncertainty current continue And guidance. of with of the quarter, environment, is continue this complete to light gross validations scrutinize expect to through fourth while X which and and reflect the in of scale purchase our to timing prior the to least our macroeconomic customers our continues our In year. Shifting we navigate margins. to this guidance to headwinds effectively expect end these environment, the the teams

continues volumes productivity as service. sequential higher and a revenue as consumables expect and be QX we objective production We improvement cost reduction in improvement of as to from activities margin us. strategic in well increased top the benefit higher Gross for benefit in

and and manufacturing increasing and services. reduction increasing cost driving in on focused are efficiency productivity We products

sales actions margins as XX% well expansion these the over lead expect volumes XXXX as as higher scale to positive with time. to continue to in to business the continues us to of to benefit We XX% gross

We between be million expenses $XX and operating expect QX $XX to million.

we Finally, we cash investments. in finished In benefits equivalents than quarter, to management. burn the slightly fourth cash third and approximately QX, cash expect $X working $XXX cash, as in burn approximately be period. quarter Cash was from million we less million the capital the with realized

investments provide we concludes remain result, us cash this slightly XXXX. That least end with comments. and at into cash will expect runway $XXX and my a million As with confident XXXX to below that

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

Operator

Stanley. Savant Instructions] [Operator Morgan with Tejas

Unknown Analyst

This is Tejas. for on Edmond

in X guidance -- the with quarter, XQ. remainder implies systems your placed the start, for to [indiscernible] Just in

confidence flush? of in XQ? currently terms underlies you deliver being Just what in And year-end into baked wondering able your guidance what to that do have in budget your

Robert Spignesi

Yes.

the XX. a Rob for -- Thanks the first the got staffed full senior is customers to the from increasing top senior discussed team access delivering into Really, areas, different I global top these we've looks we We've customer us strong of good this we've couple closely got guidance want to timing So comes approaches our into purchasing importantly, The the conversations our And as of at delivering high. full it experience question, a which to another confidence we having measure indicator notably and us in our customers. is we're outlook. Edmund. Globally, top notably, look in the into remarks. confidence way and the and insight large the look in the is which leading give penetration Spignesi. quite And of that we within confidence give leadership funnel, XX. got and

is So these the us gives confidence of outlook. combination elements what in our

call traditional, to you we're budget expect a, flush, it, freeze. -- and seeing don't not budget I we nor we with Now are regard not we're b, flush, what a budget if QX would a seeing will,

it's we've So fairly been that we've what consistent in previous with seen quarters mentioned.

a cases, So not cases, in it corporate-level been some as situation. has initiative. prioritized a really And all, Direct Growth the some is customer-by-customer in

resilient more the bit a to environment. it's So current budget

end some XXXX. customers to push cases, seen in the right projects in we've Although

combined what the us of is gives all our elements confidence QX. in outlook of So for above the

Unknown Analyst

from remind what opportunities customers for dedicated short if shorten of some leveraging existing time That's guys you both Rob. between performing? the terms super ] And you then Great, if are other of of could areas and of Rapid helpful. magnitude I help you fund? the project ] us finally, same how in wondering [ are aside benchmark you was validation the and [ could new platform. are the us, seeing customers Rap And is impact project managers, Project that

Robert Spignesi

Yes.

processes I'll the that through a validation existing. just those environment. designation use good with Rapid multiple elements project customers broad-based have are aren't to various that a seeing manufacturing from manufacturing of that that accelerate up. of with activities installation through back There's processes. umbrella is for to validated new we are of system Project to aware validation an in for our go for we work ensure to need is under record listening set our system and principles this And performance an it. So to we

we've this capability time, our over improved in So regard.

our over only have we've not validated in also glove. GMP globally to XXX worked the harmonize in accelerate We hand environments. customers with to but process. And the learned And process we've systems

done a One exciting large our of is global I with touched And most our that. as processes the our customers validation things both as our from company we've harmonized and on, customers. existing benefit new customers

on Project that activities validation So our to Rapid. some help our of the accelerate

on, touched project got in management have place. I As we've

So this to from effectively get management to product project installation is dedicated this management. is an process global validation. a And

managers. dedicated got we've product So

go improved who data. We've have very and documentation experienced validation personnel our on-site customers. in We with our

able where we're the data challenges just to on process versus understand we customer bear the slow curve. we're to can learning bring where site. We where to typically be and processes are. down data validation accelerated, And accelerate So -- generating they down,

with to sites across do of capabilities, and the one deep order interact So a accelerate we capabilities of this in. we appreciate And to strongly it in we're process. the view able the as fulcrum that experience I with. all that our it's come areas our globally one base customers in

Operator

Dan Arias with Stifel.

Daniel Arias

look experiencing versus the you those that, going? When a Obviously, that there. level next just your Rob, of customer year, at to of just days these to comment some gene are positive companies with and new will when sound downs a there. might how are revenue the therapy accounts they're follow-up does talk the cell expect translate versus ups some those there as kind Can things and there. you conversations you spending you repeat on how side, that think then and And the just orders and about sales new to and maybe placement that funnel on about it those the purchases? existing comes mix follow-up

how to So compare parts of the visibility market? the does other there

Robert Spignesi

Yes, Dan, thanks for question. the

versus regard as imagine, may it's new one towards with you So customers, new balanced. and heard weighted you to on. it's -- existing brought a existing, We we

we So is expand there, said, weighted outlook in across as that the new out we to our That that new given and kind Europe at across our continue chip funnel, our segments with North being larger customers America, funnel full out generating the and existing. Asia, of some of strategy. include and our both and direction opportunities team our away as again, there are land

our way new the like what our we customers excited hearing mentioned, some to rollout So insight looks I of the seeing larger -- about from we're existing. And into both as plans regard and funnel better with and and against their and those. budgets getting with

cell well therapy front, CAR-T think there. in done the in to with and in regard particular, I cell you or we've gene particular, generally heard On CAR-T

Our value well. proposition resonates quite

operate I fully needs their therapy, in with broadly quite gene think and particular that to be are it's the our it's active fits well, well situation a other that CMO real our healthy automated manufacturers as and and business in continue space as, So broader cell and More technology manufacturing needs. healthy obviously, serve their we who is can with the [indiscernible] really that only system view, ecosystem CDMOs the the -- in who as well. where

as space molecule we're call I in it. well, So as which well. segment got We're small is our watching -- in largest obviously on manufacturing, broadly. mentioned biologics the we've footprint as and the good strong a but And

therapy, segment certainly carefully. it And the So we that it's is that mix we're and cell important our isn't while And note only biologics in focused we're our on. segment gene segment. again, largest watch to strong

Daniel Arias

you. Got Yes.

why It then how I X system down quarter, And meant consumables touch you And feel tracks Sean, like Okay. next pretty per on annualized about on sequential think an you think quarters. do consumables will actually down you base seems can just good that's be momentum. on pull-through year-end. into then

just touch on quarters. So next the over consumables [indiscernible] maybe how to X X

Sean Wirtjes

Yes. Sure.

look pull-through we down, the grow when single full to digits it year. in break to at we So still expect effectively year-over-year

we'd a to to but to get we to do we get have timing. a think of getting that mainly it's thought single headwinds -- few we us where from I keep due may ago, digits. couple We quarters high may -- quite

you probably we to thousand record dollars a we working some QX this is QX, So amount and if year-over-year -- that quarter of this hundred a against QX of break kind shipments terms things QX of growth. had last year similar of our One of down us QX a couple couple into with somewhat QX last year. year. from worth from QX pushed And quarter, in pulled

challenged is customers down the both QX mid-December the our most in tend of result actually directions systems shut So about that sense material. a receiving is of as to that opposite of kind in QX, of of terms new comp that. Thinking

be a to a tends relative basis. a quarter lighter it of on little bit So

really and what that in shipments terms more say I'd expect in QX. to timing So some transient driving of see kind we issues are of

pull-through systems and routine we've And on that kind full 'XX. got pick we consumables. to and confidence go court in from those see about kind Rapid, in We're and Rob of up. do really of validation press think through front, to of that as talked that move-in there, it's we'll also move we expect -- I growth up that continue number us gives that Project but hard sequential customers forward use pulling again through not see very a only the working the

Daniel Arias

Okay.

sooner? driven one to the exit thought Or you is by over improvement or positivity cross margins. over next on the at side. you sort that end it's Do year, of I year to in for gross more the side couple product you could quarters, sneak that -- latest that positivity Is then looking of And the next more services 'XX? that could happen margin Okay. the going the you I on If think to here gross you're of be something just think for? see the

Sean Wirtjes

Yes.

us. kind from getting are new service the it's a for placements. placements buying And we of We pretty there going system almost validation And from a contracts, be as I now and need we're customers product talked on now And I an productivity and sight think where think of situation little I to back about as So I service, -- that drive improvement never us. contracts start into stepping expect more bit where one they both improvement service have moving comes is opportunities services. in to improvement quarter service. everything lose other month trajectory a was good up, to this every

that consumables, those about is energy. things an I -- in So systems we across expect lot in X growth but then in talked of call And bit investing services. particular, and a and to the a consumables, products drive both area where we're time

we some things on you we know, couple quarters to the this past the that line benefits As expect of did quarter. yield starting over

So business. come the that areas improvement expect from both come -- the within I'd to to

also We've I look on we mean, about the I up QX we couple not point. placements true. this what points think from outlook I QX to margin, a and get still think the probably to way that what digits into thinking as coming us XX fact us improved about more to at happen expect about I quarters positivity, you QX. think That's happen that's single our over based expect at talked getting bad high to on system percentage a could to

QX to QX. typical of argument's just QX a trend if there expectations. couple So for placements within from assume typically of down points in our to sake, year, we margin relative give quarterly And a on triangulate you then to kind step we

put that some margins. negative on pressure obviously So

I QX, step we'll So QX. we step see down we'll revenue expect when unless we see things talk announce placements But that talk and more would other some down about happening, we'll there guidance that in we that about guidance. depends it normal in business probably on activity. negative and be ramp you'd the placements when really From on we give be trend, the expect But out, I'd -- on assume if QX. typically you'd

So the likely. year more latter is part of

think of But you we for we're ready when could we'll middle more next you give to color there year get the guidance give on that kind of year. I possibly.

Operator

Mah Cowen. TD Steven with

Poon Mah

lines early sterility testing getting in time the It's then the inbounds on on you offering? you time think new some an been give Great. you rapid existing been either can offering Can sterility you beta sales how on And the also about discuss us or in your the have now. customers? funnel from rapid XXXX. update on impact any for And

Robert Spignesi

the Yes, Rob. Steve, for question. thanks It's

So on we rapid sterility. have not given a time line

have we're couple in that focus increasing commercialization. our the mentioned We past on calls of

be increasingly should confidence feedback how -- process. of Development to given customer kind So well. a as our we'll what bit generated We're our and let commercialization indicator tracking has an seeing incredibly the it's we're far us the of data, through of as beta in activities. that from development on gone we're encouraged internally focus

it's As I for excited mentioned, -- be not we'll for next we're we'll being not and have regard a inbounds, And more everyone commercially commercially marketed quarter. significant robust discussion. With update that to currently.

features proposition and of looking the under with So integrity market umbrella believe we for and System a of all clearly, value and there that Direct have is our ages customer voice data is right benefits meaningful the Growth interest and in rapid done sterility automation. We've work and offering. this full

potential marketing mode that move commercial not through time follow right the more been but we haven't we as about for excited to in and But very now, we're again, the it, we're here. So system.

Poon Mah

for now. Great. Sean Yes. question A Okay. actually

strategy? expect QX your the marketing then ASPs, going of like have And On to Maybe either looks versus and you -- they've can some the multi it there. give Do sales Rob. maybe part that of to promotions Is in be a trends discounts. -- to question normalized QX. for discuss or you some

Sean Wirtjes

specifically? Are about Yes. Steve, systems talking you it's Sean.

Poon Mah

Yes.

Sean Wirtjes

Yes.

may So I question, think so Yes. he'll to -- this Rob's lead and have comments, too.

do quarter-to-quarter. that how times pricing board, tie multisystem customers That deals, are happens but directly we impact customers. There on -- can it the that get wouldn't So kind get ASPs specific to to I at I obviously strategic for a standpoint things team. from think certain necessarily we we look them of some so with move from variability, them either on will

at So going is I opportunities to as year. to this our not in We're where up ASPs overall clearly look are the would we happy we're to And that's go with them we expectation say move forward. norm. continue

Robert Spignesi

Steve. Yes,

So price as of elements with is the I will in and big moving become rollouts markets discussions as opportunity, volume pharma. we a larger in our the the enterprise business of one through of of area enterprise be higher think the especially an And many larger and piece focus.

with and volume. engage have those will and the discussions teams about procurement We price

ordinary in that's So course. the

getting ASPs Sean on, with But we a where different where that sure. we're we're And bit As with watch pricing sale we one-off smaller certainly sure touched be value to we endeavor and the we're we we're a are happy going paid rollouts, provide. make than them. with always for larger -- for enterprise and is to trending carefully, the

Poon Mah

Okay. can And one last if I That's sneak Great. helpful. question.

we sales of relatively Or forward? should sort You marketing a it your about flat marketing going steady the increasing? to labs going lot with guys a in OpEx about and sales be Germany talked think be and look to -- Is I demo your at How be Massachusetts. looks and it from XXXX. spend, When marketing activities that state? in going is your to

Sean Wirtjes

Yes.

of then. last restructuring We were had think we kind comparison, year of bit A a Steve, that, that QX things I year-over-year executed of a on onetime. was last came number out of -- anomaly. that an

is more I'd are mentioned, now where Rob as staffed, I'd expect say to So fully we be. where

that activities. comp think and at year. see And organization increased in would the spend us point. if in large invest So wouldn't staffed, on and of that spend I kind area, as I that we've we'll to that term by the last the about near to continue but increases in being I base think fully Since expect was this impacted

Michael Beaulieu

wrap all you time. call going to the for live your now. Thank We're up

Operator

your thank We participation. for call. today's concludes This you

may now You disconnect.

Rapid Micro Biosystems (RPID) 3 Nov 232023 Q3 Earnings call transcript