Rapid Micro Biosystems, Inc.

Good day, and thank you for standing by. Welcome to the Rapid Microbiosystems third 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 that 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 turn the conference over to your first speaker today, Mike Bollier of Investor Relations. Please go ahead.

Good morning, and thank you for joining the Rapid Microbiosystems third 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 a press release announcing our third quarter 2025 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, statements relating to the company's 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 death facility and to comply with all its 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 factors section of our most recent quarterly report on Form 10-Q filed with the Securities 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, November 7, 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 this morning's call with a brief overview of our third quarter performance. Next, I will discuss the record multi-system order we announced this morning, and then review our middle and poor sigma partnership. I'll conclude my prepared remarks with a few comments on our updated 2025 outlook, and then turn the call over to Sean for a more detailed review of our financial results and outlook. This morning, we reported total third quarter revenue of $7.8 million, above the midpoint of our guidance range, representing our 12th consecutive quarter of leading or beating revenue guidance. Within product revenue, consumables, which are a key indicator of customer demand and usage, increased 40% to a quarterly record. This strong performance helped offset a difficult comparison in system revenue which included five growth direct placements versus seven in the prior year. Service revenue grew 12 percent compared to Q3 2024. Recurring revenue, which is comprised of consumables and annual service contracts, increased more than 30 percent year over year. Third quarter growth margins were 9 percent, reflecting a 70 basis point improvement from the prior year quarter. Higher revenue and productivity gains drove service margins to 40% in the quarter. While product margins were slightly negative, we expect progress on our product cost reduction and manufacturing efficiency initiatives to deliver positive product margins in Q4. Looking forward, we expect continued meaningful gross margin improvement in 2026. Now, I'd like to turn to the significant commercial win we announced earlier this morning. In October, we secured a record multi-system order from an existing top 20 global biopharma customer, with contributions beginning in the fourth quarter and extending into 2026 and beyond. This customer is deploying GrowthDirect systems across multiple sites in North America, Europe, and Asia Pacific. Additionally, the customer will utilize a GrowthDirect platform across several manufacturing modalities and fully leverage all of our applications including environmental monitoring, water, and BioBird. This milestone underscores the Growth Direct Platform's position as a leading, fully automated solution capable of meeting the demands of increasingly complex, large-scale, and global biopharmaceutical manufacturing. It also reflects the trust and strong partnerships we've built with our customers and illustrates how customers have and will continue to adopt the Growth Direct Platform. Importantly, we expect this customer to make additional purchases as they continue to expand and standardize across their network. This achievement is a testament to the outstanding work of our commercial team, and we are now focused on timely and efficient execution as our operations and service teams support this global deployment. In addition to this multi-system order, broader customer engagement remains strong. Last week, we attended the annual PDA Pharmaceutical Microbiology Conference. the largest global industry event focused on microbiology and pharmaceutical manufacturing. Our key takeaways were twofold, confirmation of the accelerating industry trend towards automation and validation from existing and prospective customers that the Growth Direct platform is the right product for modernizing pharmaceutical manufacturing and quality control. Now, turning to our collaboration with Millipore Sigma. We remain closely engaged with their commercial team as they develop their global sales funnel. In the third quarter, they began to order Growth Direct systems. Though as previously indicated, their purchase commitments will remain modest in 2025 and become more meaningful in 2026. Next week, Daiichi Sankyo will support our annual Growth Direct Day near their facility outside Munich, Germany. As you'll recall, this event will feature existing and prospective customers discussing the benefits and sharing the best practices of the Growth Direct platform. And this year, we're pleased to welcome colleagues from Millipore Sigma and several of their prospective customers, making it our largest Growth Direct day ever. In addition, later in November, our sales and marketing colleagues will work alongside the Millipore Sigma team in the Jason Boos at the Pharma Lab Congress, also taking place in Germany. This will be a valuable opportunity to jointly engage customers and further accelerate commercial momentum for both organizations. Turning to the second component of our Millipore Sigma collaboration, we are nearing completion of an initial product supply agreement. We are currently conducting material validation studies and assessing additional areas to potentially expand the scope of the agreement. This agreement is a meaningful step towards driving margin improvement, as these programs are expected to lower our direct product costs and improve gross margins, with financial benefits starting in the second half of 2026. In summary, we're pleased with our execution and very encouraged by the momentum building as we exit 2025. With strong year-to-date performance across the business and initial contributions from the recent multi-system order, we are raising our full year total revenue guidance to at least $33 million, which includes at least 27 growth direct system placements. As we look ahead to 2026, there will be three core drivers of revenue growth. First, a robust pipeline. Our sales funnel remains strong with multiple customers planning multi-system global rollouts. These opportunities are similar to our recent record order, motivated by a compelling ROI and a drive to standardize and automate global manufacturing networks. Second, our business model is anchored by an expanding global installed base of over 150 fully validated growth direct systems, generating durable recurring revenue from consumable and service contracts. And third, our collaboration with Millipore Sigma continues to progress well. They have begun to order growth direct systems and are building a global funnel of opportunities that we expect to contribute meaningfully to system placements in 2026. In addition to these revenue growth drivers, we remain equally focused on improving profitability. Margin expansion will accelerate in 2026, driven by internal product cost reductions and manufacturing efficiency initiatives, as well as anticipated benefits from the Millipore Sigma Supply collaboration. Finally, We are well-positioned to capitalize on industry tailwinds, including the accelerating use of automation technology and increased investments in the onshoring of U.S. pharmaceutical manufacturing. The growth of REC's strong customer value proposition, combined with our growing global top-tier customer base, optimally positions us for future pharma industry investment and growth. And with that, I'll turn the call over to Sean.