Rapid Micro Biosystems, Inc.

Good morning and welcome to the RAPID Microbiosystems first quarter financial results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Mike Villier of Investor Relations to begin the conference. Mike, over to you.

Good morning, and thank you for joining the Rapid Microbiosystems first quarter 2023 earnings call. Joining me on the call are Rob Spignesi, President and Chief Executive Officer, and Sean Werches, Chief Financial Officer. Earlier today, we issued a press release announcing our first quarter 2023 financial results. A copy of the release is available on the company's website at rapidmicrobio.com under Investors in the News and Events section. Before we begin, I'd like to remind you that many statements made during this call may be considered forward-looking statements within the meaning of federal securities laws which were made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements, including but not limited to statements relating to Rapid Micro's financial condition, anticipated year-end cash balance, cash runway, future revenue and system placements, expectations for business development and growth, customer interest and adoption of the growth direct system, expectations for our new RMB nucleus mold alarm, and the potential impact of macroeconomic uncertainty and the coronavirus pandemic on Rapid Micro's business. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. For a list and description of the risks and uncertainties associated with Rapid Micro's business, please refer to the risk factors section of our annual report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2023, as such risk factors are updated in our subsequent filings with the SEC. We urge you to consider these factors, and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 5, 2023. Rapid Micro disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I'll now turn the call over to Rob. Thank you, Mike.

Good morning, everyone, and thank you for joining us to review our first quarter 2023 results. I will begin this morning's call with a summary of our first quarter performance, followed by a brief discussion of the progress we are making to both accelerate growth direct system placements and advance our new product development opportunities. I will then turn the call over to Sean for a more detailed discussion of our financial results. Our execution in the first quarter was solid across systems, consumables, and services. First quarter total revenue was $5 million, representing growth of 21% compared to the first quarter last year. We placed three systems and completed the validation of two customer systems in a quarter. Recurring revenue increased 22% to $3.3 million compared to Q1 last year. On our fourth quarter earnings call in March, we indicated that we had confidence in our plan to accelerate system placements in 2023 and return rapid and micro to solid growth. We believe our first quarter performance is an early indicator of the effective execution against those plans. Based on our solid first quarter performance, the progress we've made to improve execution, and our funnel of system placement opportunities, we are reaffirming our full year 2023 revenue guidance of at least $22 million, representing growth of at least 30% compared to 2022. That said, and as we discussed in March, we are still operating in a dynamic macroeconomic environment, and our guidance reflects some of the uncertainty that this presents. Our highest priority remains accelerating growth direct system placements. Now I want to discuss some of the progress that we have made, as well as customer engagement activities that we have activated to support this priority. During the first quarter of 2023, I had the opportunity to visit customers across Europe and North America as we seek to strengthen existing partnerships and establish new relationships. With each visit, I am reminded of the challenges our customers face in keeping up with an increasingly complex manufacturing environment. Through these visits, my understanding of how our customers utilize the Growth Direct system continues to develop. I believe that the value proposition of the Growth Direct system, including faster time to results, automation, and data integrity, continues to resonate with our customers, which gives me confidence in our potential to grow both our recurring revenue and additional system placements. In March, we had the pleasure of hosting the quality leadership team of one of our key account customers at our Lexington facility. We believe that key account customers tend to be some of our strongest users of Growth Direct systems and represent a meaningful portion of our future multi-system order opportunities. We were pleased to receive positive customer feedback on the Growth Direct system and overall rapid micro-experience. and we are excited about the prospect of collaborating with customers on future global manufacturing expansion plans. While meeting at our Lexington facility, we were also able to share the progress we have made expanding our own manufacturing capabilities. Once completed, Lexington will complement our primary manufacturing site in Lowell, Massachusetts, and will include a backup consumable manufacturing line, full R&D capabilities, and importantly, a new growth direct customer demo lab. Construction and validation is expected to be completed by mid-year 2023. More recently in Europe, we held a two-day workshop for prospective customers which covered the theory and practice of rapid micro-methods, including regulatory compliance and a roundtable discussion of best practices. We believe that in-person customer workshops are a highly effective element of our sales process that hands-on experience with a growth direct demonstrates its value proposition to prospective customers. And finally, over the coming weeks, we plan to host industry professionals, customers, and prospective customers for site tours at our local facility. And as we move into the second half of the year, we continue to plan for growth direct days and to work with customers who are advocating on our behalf by presenting globally at industry events. These high-value events include robust Q&A sessions, and our structure to educate customers on the real-world benefits of automating their MQC processes and the value of the Growth Direct system. Now, I would like to provide an update on our new product development efforts, which are another key element of our growth strategy. Following the recent launch of RMB Nucleus Mold Alarm, we have transitioned into our product commercialization strategy. This plan includes focusing on customer education, increasing awareness and driving utilization of this new software product offering. I'm excited to report that we are off to an encouraging start. New customers have a high level of interest in MoldAlarm, and we are working with existing customers to educate them on the value of this product. Briefly, on our rapid sterility program, we have continued to make substantial progress with a top 20 global customer. We recently achieved an important development milestone and remain on track with our internal plans. We expect to provide additional details on this development program on future earnings calls. So, to summarize a few key takeaways, we believe that our first quarter performance was solid across the business and above expectations in many respects. We are executing against our plan to accelerate growth direct system placements. Our recurring revenue is growing meaningfully. Our funnel of new growth direct system opportunities remains solid, and we are gaining traction on the commercial release of mold alarm and advancing development of rapid sterility. Before turning the call over to Sean, I want to highlight the press release we put out last night announcing the appointment of Mike Wasacki as our Senior Vice President of Sales and Marketing, effective Monday, May 8th. Mike spent nearly two decades at General Electric and GE Healthcare and is a recognized commercial leader with a proven track record of implementing successful sales strategies that have driven significant revenue growth. Mike will be a member of our executive leadership team, and we are excited to have him on board. Now... I would like to turn the call over to Sean to discuss our first quarter performance. Sean?