Rapid Micro Biosystems, Inc.

Thank you for standing by. My name is Novi, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rapid Microbiosystems third 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 Mike Bollier with Investor Relations. Please go ahead.

Good morning, and thank you for joining the Rapid Microbiosystems third 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 third 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, Rapid Micro's goal of achieving positive cash flow without additional financing and the timing thereof, expectations for and planned activities related to Rapid Micro's business development and growth, customer interest and adoption of the growth direct system, and statements regarding rapid sterility. 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 as estimates only and are not a guarantee of financial future performance. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 1st, 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. I will begin this morning's call with an overview of our third quarter performance and highlights, including a review of our progress in advancing our 2024 priorities. I will then turn the call over to Sean who will provide a more detailed review of our financial results as well as our full year guidance. Third quarter total revenue increased 24% to $7.6 million compared to Q3 last year. This marked a quarterly revenue record for the company in their eighth consecutive quarter of exceeding our guidance. Based on the strong performance, we are reaffirming our full year 2024 revenue outlook of at least $27 million. We've placed seven growth direct systems across North America, Europe, and Asia Pacific, marking our strongest placement quarter since Q3 2021. Through September, we have now placed a total of 15 growth direct systems in 2024, bringing our total to 156 placed systems. On recent earnings calls, we have discussed our progress with customers deploying growth direct systems across our global manufacturing networks. This morning, we reported third quarter results that included a multi-system order from one of our existing top 20 pharma customers that is part of an ongoing global rollout. This placement is a clear example of our land and expand commercial strategy and is typical of how customers execute growth direct global rollouts. I'd like to provide additional context on this commercial win. Our partnership with this customer began a few years ago with a multi-system order at a single site in North America. This customer is a global leader in the development of biologics and cell and gene therapies. They are focused on automating manufacturing processes, including quality control, to accelerate turnaround times and to ensure patients receive life-saving therapies. As the customer recognized the benefits of the Growth Direct, such as full automation, fast turnaround times, reduced labor costs, and increased accuracy, they placed a second order for another U.S. site. This past quarter, they expanded to a third site within their network through another multi-system Growth Direct order, including software, services, and consumables. We anticipate continued growth with this customer in the near term. including further expansion across our global network. Importantly, we remain actively engaged with several other customers planning to expand their growth direct footprint across our manufacturing networks. We believe this momentum, together with our existing base of nearly 160 place systems, our strong presence among the top 20 global pharma companies, and our 100% position in FDA-approved CAR T therapy manufacturers, establishes the Growth Direct platform as a clear industry standard in automating pharmaceutical microbial quality control. Later this month, we will attend our annual Growth Direct Day. Last quarter, we announced that Lonza, one of the world's largest CDMOs, will host this event near one of their manufacturing sites in the Netherlands. As a reminder, this unique two-day event will bring current and prospective customers together to share best practices, gained firsthand experience, and increased their understanding of the value proposition of using the growth direct. We expect up to 100 attendees and look forward to this exciting event. Turning to gross margins, the guidance we provided earlier this year included a positive inflection beginning in the third quarter. I'm pleased to report that we achieved a 35 percentage point improvement year over year, resulting in positive 8% gross margins. To expand on this point, the total cost of revenue in the third quarter declined 10% year over year, while total revenue increased by 24%. The improvement in our cost structure reflects our ongoing efforts to reduce product costs, enhance manufacturing efficiencies, and improve service productivity. This positive inflection in our gross margin marked a significant milestone for the company. Looking ahead, we anticipate further improvements to our cost structure, which will enable us to capitalize on the operating leverage in our business model. Now, I'd like to shift to a brief update on the commercial launch of Growth Direct Rapid Sterility. We continue to expand customer engagement through conferences, such as last month's PDA Microbiology Conference, sterility-focused webinars, and on-site demonstrations at our Lexington and European customer labs. Our commercial teams are receiving positive feedback on the Ravis Realty value proposition, and these efforts continue to drive growth in our sales funnel. So, wrapping up my prepared remarks, I'd like to summarize our key messages and takeaways from the third quarter. We are pleased to report record quarterly revenue, marking our strongest quarter for system placements in the past three years and clearly demonstrating our strong business momentum. We continue to make significant progress with multiple customers who are planning global deployments of growth direct systems. Our focused efforts on costs and efficiencies have resulted in a positive inflection in gross margins, which we expect to continue to expand. We remain disciplined with respect to cash management with a focused goal of achieving positive cash flow by the end of 2027 without additional financing. These strong fundamentals are underpinned by a business model that includes the highly differentiated growth direct system that is clearly the industry standard and is the only fully automated, high capacity, high throughput data secure platform. A demonstrated customer value proposition that can address all pharmaceutical manufacturing modalities and becomes embedded in manufacturing workflows. And a robust business model with multiple revenue streams, including a growing base of durable recurring revenue. We are confident that, collectively, these fundamentals and business drivers, combined with our consistent performance, position us to create substantial shareholder value. And with that, I will turn the call over to Sean to discuss our third quarter performance and outlook in more detail. Sean?