Rapid Micro Biosystems, Inc.

Thank you for standing by. My name is Dee and I will be your conference operator today. At this time, I would like to welcome everyone to the Rapid Microbiosystems second quarter 2024 earnings conference 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 star 1 again. Thank you. I would now like to turn the call over to Michael Boulder with Investor Relations. Please go ahead.

Good morning, and thank you for joining the Rapid Microbiosystems second quarter 2024 earnings call. Joining me on the call are Rob Spignessi, President and Chief Executive Officer, and Sean Wurchis, Chief Financial Officer. Earlier today, we issued a press release announcing our second quarter 2024 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 are 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, assumptions regarding future financial performance, anticipated future cash usage and cash runway, guidance for 2024, including revenue, expenses, gross margins, system placements, and validation activities, the anticipated impact of our operational efficiency program, our efforts to reduce our use of cash for operating activities with the goal of enabling the company to achieve positive cash flow without additional financing, expectations for and planned activities related to the company's business development and growth, customer interest in adoption of the growth direct system, statements regarding rapid sterility, and the potential impact of macroeconomic uncertainty 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 most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission as updated from time to time 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, August 2nd, 2024. 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 turn the call over to Rob.

Thank you, Mike. Good morning, everyone, and thank you for joining us. As Mike mentioned, we issued a press release announcing our second quarter financial results this morning. These results exceeded our guidance and included a statement that reaffirmed our full year 2024 revenue outlook. As part of today's earnings release, we also announced an operational efficiency program. I will begin my discussion this morning with a review of our second quarter performance and highlights. followed by an update on the progress we are making against our 2024 priorities. I will then discuss the operational efficiency program announced this morning, and the key drivers we believe will meaningfully increase long-term shareholder value. I will then turn the call over to Sean, who will provide a more detailed review of our Q2 financial results, as well as our financial outlook. Starting with our second quarter performance, total revenue increased to $6.6 million, representing growth of 32% compared to the second quarter of 2023. Total revenue exceeded the guidance we provided in May and was a record quarter for the company. We placed five growth direct systems in the second quarter with placements in North America, Europe, and Asia Pacific. In June, we held our first growth direct rapid sterility day hosting potential customers at our Lexington Innovation Center and Demonstration Lab. Additionally, we are excited to announce that we placed our first growth direct rapid serility system with one of our existing customers during the second quarter. With respect to gross margins, we continue to increase manufacturing efficiencies and reduce product costs. These initiatives resulted in near break-even margins in the second quarter, which represented a significant sequential improvement from Q1. We remain on track for further margin improvement in Q3 and Q4. Now, I would like to discuss the progress we have made against our 2024 strategic priorities, starting with accelerating system placements. During the second quarter, our customer engagement efforts resulted in several significant advancements. We continue to move forward with multiple customers who are planning further deployment of the GrowthDirect platform across our global manufacturing networks. These are existing customers who have already realized the value proposition of our technology at multiple sites and are now planning to further standardize their workflows and processes across their global organizations. Also, one of our largest customers who has deployed growth direct systems globally has selected our platform as a core technology for their lab of the future strategy and is planning significant further system deployments over future quarters. This customer strategy incorporates the most advanced technology and automation into state-of-the-art biomanufacturing facilities and better positions it for the increasing demands and complexity of drug development. These are exciting developments that are expected to drive system orders and continue to strengthen the GrowthRx position as the clear standard in pharmaceutical quality control globally. Also, I would like to recognize a notable milestone In July, we placed our 150th growth direct system with one of our existing customers. This system also represented our ninth placement for the year, putting us in a strong position to achieve our full year guidance of at least 20 system placements. Looking forward to the balance of 2024, we once again have two of our largest and best attended customer events upcoming. In October, we will be exhibiting at the PDA Pharmaceutical Microbiology Conference in Washington, D.C. And in November, we will be holding our annual Growth Direct Day in partnership with one of our major customers. Similar to last year's Growth Direct Day, which was hosted by Johnson & Johnson, we are excited to announce that this year's two-day event will be hosted by Lonza, one of the world's largest CDMOs near their Maastricht site in the Netherlands. Current and prospective customers will discuss the operational and data integrity benefits of the Growth Direct system, as well as share best practices for global deployment. Participants will also hear a variety of customer success stories, including patient impact stories from their peer companies in attendance. Additionally, our new rapid serility application will be a highlight of the event, and we expect strong customer interest. Participants will also tour the local Lonza site that includes a fully validated growth direct system in a GMP environment. With approximately 100 attendees expected, we look forward to this exciting event. Turning to gross margins, we continue to make significant progress and deliver near break-even gross margins in the second quarter. We continue to drive leverage in our business through the combination of high revenue growth and focused cost reduction. To highlight this dynamic, our second quarter cost of revenue decreased 1%, while our revenue increased 32% as compared to the second quarter of 2023. We expect to sustain these trends and remain confident in our ability to achieve positive gross margins in the second half of 2024. Next, we are excited to announce the commercial availability of GrowthDirect Rapid Serility. In fact, During the second quarter, we placed our first rapid serility system with one of our existing top 10 global pharma customers. During the quarter, we hosted two serility-focused online webinars and an in-person rapid serility day. This event included a hands-on demonstration of the new application, as well as expert-led discussions on topics that included rapid product release, automating workflows in a regulatory environment. We continue to plan customer events and scale our manufacturing capability in the second half of 2024. So, in summary, our performance through the first half of 2024 has been strong, and we are encouraged by our outlook. We are on track for a positive inflection in gross margins in the second half of 2024, and customer interest and rapid stability is high. Building on our strong business momentum, we recently completed an enterprise-wide review of opportunities to realize operational efficiencies. Based on the results of this review, we are implementing actions that are expected to enable the company to achieve positive cash flow by the end of 2027 without additional financing. This operational efficiency program is consistent with our priority to prudently manage our cash and improve the company's financial strength. This program is an addition to our ongoing and focused efforts to reduce product costs, drive higher manufacturing efficiencies, and increase service productivity. Sean will provide some additional details, but before turning over the call, I would like to highlight why we continue to believe Rapid and RightGrow is well positioned to deliver significant shareholder value. These key drivers and catalysts include our leading, highly differentiated growth-direct technology as undergoing global adoption by the world's largest and most sophisticated biopharmaceutical companies, oftentimes implemented in their mission-critical, high-value biologics and cell and gene therapy products. A clear value proposition that becomes embedded in workflows, which enables customers to operate more efficiently and securely, and allows them to move their microbial quality control operations into the 21st century with a fully automated data-secure platform. Broad commercial penetration, including a global growing base of 150 systems across North America, Europe, and Asia, which represents clear progress against our goal of becoming the industry standard in pharmaceutical quality control. A powerful business model, which includes not only strong revenue growth, but a significant and growing base of durable recurring revenue with rapidly improving gross margins. And finally, our operational efficiency program announced today, further increases the company's financial strength by providing a clear path to achieving positive cash flow. Based on these drivers, our consistent performance over the last two years and expected outlook, we strongly believe we are positioned to create substantial shareholder value. We will reinforce these messages about our business momentum, outlook, and strong customer value proposition through increased investor outreach, including upcoming meetings and conferences. And with that, I will now turn the call over to Sean to discuss our second quarter performance and outlook in more detail. Sean?