Rapid Micro Biosystems, Inc.

Good day, and thank you for standing by. Welcome to the Rapid Microbiosystems second quarter 2025 Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Bollier with Investor Relations. Please go ahead.

Good morning, and thank you for joining the Rapid Microbiosystems second quarter 2025 earnings call. Joining me on the call are Rob Spignesi, President and Chief Executive Officer and Sean Worches, Chief Financial Officer. Earlier today, we issued two press releases, the first announcing a new $45 million five-year term loan facility with Trinity Capital, and the second announcing our Q2 2025 financial results. Copies of both releases are 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, statements relating to the company's newly announced term loan facility, guidance for 2025, including revenue, expenses, gross margins, system placements, and validation activities, expectations for and planned activities related to Rapid Micro's business development and growth, including the expected benefits from our distribution and collaboration agreement with Millipore Sigma, customer interest and adoption of the Growth Direct system and the impact of the Growth Direct system on their businesses and operations, and statements regarding the potential impact of general macroeconomic conditions on our business and that of our customers. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors, including our ability to meet publicly announced guidance, the impact of our existing and any future indebtedness on our ability to operate our business, our ability to access any future tranches under our debt facility and to comply with all obligations thereunder, our ability to deliver products to customers and recognize revenue and market and macroeconomic conditions. For a more detailed list and description of the risks and uncertainties associated with Rapid Micro's business, please refer to the risk factor 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 kind, sensitive information and is accurate only as of the live broadcast today, August 12, 2025. 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'll begin my prepared remarks with an overview of the new term loan facility we announced this morning, followed by a review of our second quarter highlights. I will then provide a brief update on the Millipore Sigma partnership and my current perspectives on customer and market conditions before turning the call over to Sean for a more detailed review of our financial results and our 2025 outlook. As Mike mentioned, we issued a press release this morning announcing a new five-year, $45 million term loan facility with Trinity Capital. After careful evaluation by management and the board, and with consideration for all stakeholders, we determined that this was a good time to raise additional capital. The facility supports our continued execution against our long-term strategy and reinforces our ability to achieve positive cash flow. Importantly, The loan does not include financial or liquidity covenants and is non-diluted to shareholders. We drew down the initial $20 million contract closing, which will be reflected in our third quarter financials. Now, turning briefly to our second quarter performance, total revenue increased 10% year over year to $7.3 million, slightly above the midpoint of our guidance range. We were pleased with the strength across the broader business, including mid to high-teens growth in both consumables and service. Of note, recurring revenue increased 15 percent. Turning to systems, we placed four growth direct systems in the second quarter, which was within the guidance range we provided in May. As we noted on our first quarter call, our guidance reflected the potential for customer site readiness delays, including ongoing construction, It's ultimately pushed several system placements into the second half of the year. Those margins were 4% in the second quarter, affecting an improvement of 7 percentage points from the prior year. This marks our fourth consecutive quarter of positive gross margins, a trend we expect to continue as we drive further operational improvements. Turning to our partnership with Millipore Sigma, we remain excited about the relationship and continue to make meaningful progress across key commercial and supply chain work streams. Our teams are engaging on a regular cadence, jointly developing commercial opportunities and supporting the advancement of the global growth direct sales funnel. Over the past few months, we conducted training and educational sessions with their automation specialists in North America, Europe, and Asia. We share a collective view that a long-term industry shift is well underway to advance automation, robotics, and digital tools within the micro QC lab. The Growth REC platform plays a central role in this transformation, serving as a key solution for modernizing QC workflows and increasing efficiency in microbial QC testing. Beyond our commercial partnership, we have identified and are pursuing several initiatives focused on lowering our product costs, enhancing supply chain efficiency, to support gross margin expansion. Additionally, we are discussing a number of areas with exciting potential for joint innovation and product development. As a reminder, this is a five-year agreement, and we are just five months in. We are confident in the long-term potential of this partnership to meaningfully accelerate Go Direct system placements, improve gross margins, and drive product innovation. Before I wrap up my prepared remarks and turn the call over to Sean, I'd like to share a few thoughts on the market. I continue to be encouraged by ongoing industry trends, including increasing investments in global pharmaceutical manufacturing capacity and a growing shift towards new technologies and automation. We're hearing strong customer support for these developments. Importantly, We are well positioned to benefit from the significant investment in and build out of new pharmaceutical manufacturing capacity that is starting to take place within the U.S. market. These new facilities will typically incorporate advanced technologies and automation, and the Growth Direct platform is a clear fit to meet the demands of modern pharmaceutical manufacturing and ensure safe and effective patient care. At the same time, global trade dynamics are adding further uncertainty to the timing and scale of some customer purchase decisions, especially for larger capital investments. That said, I'd like to highlight a few of the key business drivers as we look ahead into 2026 and beyond. These include a robust sales funnel with multiple customers planning global multi-system rollouts and our strong customer engagement efforts to provide solid visibility into future demand. Increasing contributions from Millipore Sigma driven by their meaningful system purchase commitments beginning in 2026. Consistent execution for over 10 quarters, which has been supported by our diverse revenue model, which includes systems, software, and services, generating durable recurring revenue from consumables and annual service contracts. Significant and consistent gross margin expansion. Since the positive inflection we reached in Q3 of last year, we've been delivering on our cost reduction initiative and remain on track to deliver significant margin improvement going forward. And our strong financial position, reinforced by the new term loan facility we announced today, positions us to build on the meaningful progress we have made across our business. Collectively, these elements reinforce our confidence in the strength of our long-term strategy and our ability to deliver sustained shareholder value. I'll close with a quick look ahead at the strong line of industry and customer events we had planned for the second half of 2025. In October, we will be exhibiting at the annual PDA Micro Conference in Washington, D.C., followed by the Pharma Lab Congress in Germany in November. We will also hold our annual Growth Direct Day in November, which in the past was hosted by customers such as Lanza and Johnson & Johnson. This year, we're excited to announce that Daiichi Sankyo will host this two-day event near their facility outside of Munich, Germany. As in prior years, Growth Direct Day is a two-day event that will feature existing and prospective customers discussing the benefits of a Growth Direct platform, sharing best practices, success stories, and the positive impact on their workflows. The event will also include a hands-on workshop and a customer site tour. We look forward to providing further updates on our third quarter earnings call. And with that, I will now turn the call over to Sean.