908 Devices Inc. (MASS) Earnings

Management highlights

- Entered 2026 with strength, streamlined cost structure, solid balance sheet, expanding recurring revenue opportunity. - First quarter revenue up 14% y/y, sales to U.S. state and local customers key driver, 50% of revenues, third consecutive quarter orders exceeded internal targets. - FTIR products 43% of first quarter revenues, mass spec 57%. - Highlighted example of Virginia's Operation Free using MX-908 device, reducing fatal overdoses. - Announced acquisition of NearLab AG, which expands handheld franchise, strengthens leadership in narcotics for law enforcement, accelerates software and recurring revenue strategy, is a highly leveraged growth opportunity. - NearLab brings complementary drug detection capabilities, international revenue mix, high retention recurring software subscription model. - NearLab's platform enables rapid frontline awareness, has over 1 million analyses performed to date, customer base spans continents. - Global drug markets expanding, shift towards scientifically validated field-ready alternatives driving demand for products. - 2026 revenue expected in range of 67-70M, growth of 19-25% over 2025. Handheld product and service revenue expected to grow 18-21% y/y. OEM and funded partnerships expected ~$3M. Program revenue expected 2-3M. Adjusted gross margins expected mid to high 50% range. Adjusted EBITDA loss expected mid-single-digit millions in 2026, NEAR Lab expected to represent ~$1M of adjusted EBITDA loss in 2026, anticipated adjusted EBITDA positive in 2027.

Guidance

- 2026 revenue expected in range of 67-70M, growth of 19-25% over 2025. - Handheld product and service revenue expected to grow 18-21% y/y, range 62-64M. - OEM and funded partnerships expected ~$3M. - Program revenue expected 2-3M, likely in second half of 2026. - Adjusted gross margins expected mid to high 50% range for full year 2026. - Adjusted EBITDA loss expected mid-single-digit millions in 2026, NEAR Lab expected to represent ~$1M of adjusted EBITDA loss in 2026, anticipated adjusted EBITDA positive in 2027.

Segment performance

First quarter revenue was $13.4 million, up 14% year over year. Sales to U.S. state and local customers were 50% of first quarter revenues. FTIR products represented 43% of first quarter total revenues, while mass spec revenues represented 57%. Handheld product and service revenue was $12.8 million, up 16% year over year. Recurring revenue was 30% of total revenues, $4 million, a 7% decrease over prior year period. Gross profit was $6.9 million, gross margin 51%. Adjusted gross profit was $7.7 million, adjusted gross margin 57%.

Analyst Q&A

• Q: Hi, good morning, Kevin and Jill. I wanted to follow up on your level. It looks like a really interesting acquisition. Just curious, you know, what sort of investments do you think you're going to be making this year? Maybe from the team perspective, the 15 people, what the mix looks like in terms of product folks versus sales, what they're doing today from a manufacturing perspective and how you might be able to achieve some synergies there. Yeah, so just thinking through sort of what the next 12 months looks like as they are brought in-house and scale revenue even further.

  A: Yeah, we're very excited to now have Nearlab under the fold of 908 devices. And we're really excited because it fits very clearly into our already established narcotics detection strategy. And so because of that, it really dropped right into the resources we have on the commercial side. So we're really able to leverage the great talent that we've been developing. We've seen great strength across the US state and local market, as we articulated in the prepared remarks, and are seeing good scale across Department of Corrections and others. So we really feel that with the existing resources we have on hand from the commercial side, it's going to really be able to accelerate because they have had very little penetration in the United States. And as Kevin mentioned, I mean, Near Labs is at subscale today and it is making international revenues. In 2026 and beyond, we see it as accretive to the top line. I know the team is excited to get their hands on the product and visit the customers. We saw a path that Near Lab can maybe break even in 2027 for adjusted EBITDA, leveraging the 908 channel and those investments in the software model. And on the cashflow side with the multiple year upfront commitments on software and subscriptions, we expect the cash burn to be minimal here in 2026 and positive thereafter. So it's an exciting opportunity, you know, the existing product, you know, solid channel to get access to the devices that really can be accretive over the longer term. Yeah. So not a significant up of investments. It can all fit in with the profile Joe just described.

• Q: Just asking on the Viper launch, you know, 40 units in Q4 and over 25 in Q1. I know that was, you know, something you were excited about really ramping this year. So just curious how that kind of that first quarter matched up for your expectations and what maybe the pipeline or funnel looks like for the balance of the year.

  A: Yeah, absolutely. So Viper is our newest product that does unknown solid and liquid ID. And it integrates, as you recall, probably the two technologies of FTR and Raman and puts it together with what we call smart spectral processing to give a nice increased capability and increased confidence of an answer. Yeah, we launched it in July. We shipped approximately 50 devices in 2025. And In the first quarter of 26, we did, as you mentioned, we shipped about 25 devices there. And our expectation is that that will double or potentially triple the placements for 2025. So essentially, we're on track to meet that as we previously articulated. So we do expect and continue to expect the full year impact from Viper to be significant for us in 2026 for the FTIR growth profile. And then I also get excited from the technology front because we've got a great roadmap of features and enhancements planned that we think that's going to continue to increase the product value over time and make it even more compelling out there. So a lot of good things to come on up.

• Q: Hi, guys. You have Michael on for Puneet. Congrats on the quarter. My first question has to do with NearLab and your recurring revenue mix. I'm curious how mature you think it'll be to recurring revenue in 2026, what you're thinking as far as the mix. And as you're augmenting your team leader and software capabilities, like how should we think about maybe for the near-term ramp for the recurring mix growth? Maybe I'll start with the team leader side and pass it to Joe on the numbers of the recurring.

  A: I mean, we're very excited because it fits very well in with team leader. So together, NearLab and team leader both create that connected services vision that we've been talking about. So it really accelerates our team. access on Team Leader. As you may recall, we've got hundreds of devices now with Team Leader, and now Mirror Lab really adds to that. Together, being able to position that and create more features on Team Leader, that makes it a paid additional offering. So our recurring revenue over time, we think we're really putting the pieces together to drive it significantly as we go forward. But Joe, do you want to maybe touching on the near lab revenues as a whole? And we'll own near lab for eight months. And we increased our guidance by two point five million. And we see that growth to be accretive to our portfolio overall, likely double our current growth. on our base products you know given the scale we feel there is a healthy growth opportunity and we expect this to really kick in in 2027 as we plug in our u.s sales team and build pipeline we expect the revenues to be north of 5 million in 2027 and good growth uh thereafter you asked specifically about kind of the mix of recurring and the impact to 26 so on that 2.5 million maybe 40 to 50 percent is kind of recurring from the existing install base and in ramping device sales and we'll really be focused on driving the penetration of the device placements and the ultimate opportunity of scaling that recurring revenue in the future so definitely some pickup on the recurring side but much more so as we get to 27 and beyond

• Q: you talked about the state and local momentum you're seeing I'm curious if you have any visibility on flow-through from the One Day Beautiful Act grant funding, or if that's still to come, and what you think about the sustainability of the growth momentum throughout 2026 based on the bookings.

  A: It's a great question. We certainly are encouraged that we now have all the appropriations bills were complete all but one essentially earlier this year. And then now as of last week, we've got the DHS department funded. As you know, DHS provides significant funding from the federal level to state and local entities. Often that funding is multi-year funding, so we really didn't see any suppression of interest over the first four months of this year. I do think by having that complete, it enables some of our pipeline that we anticipate for the second half of the year, whether that's across the DHS or other related large federal and military accounts. So I think it's all uh, very, very supportive and, uh, better, uh, than it's been in past years. Now, some of that is a, is a direct result of, of increased funding that that's flowing down to our, our customers. Um, but you know, it's usually a trickling down through a, through a grant program metric, or we'll see what continues to happen in the U S military side with some of the reconciliation bills and some of the increases there, and as well as the international conflicts that, uh, inevitably over time create opportunity for our types of technologies as people prepare and modernize

• Q: great thanks for taking the questions guys and congrats on the deal uh wanted to ask maybe kind of a follow-up on kind of combining a couple of the last questions here But can you just help us maybe understand really from kind of a pricing power standpoint how some of these planned updates and rollouts, even within Viper and NearLab integrating in, also with Team Leader, like if you're able to squeeze some pricing premiums into any of these and really just how we should think about that over the coming quarters as some of those get to customers?

  A: Great question. Thank you, Brandon. The pricing power, you know, I think we are very fortunate across the portfolio to have very differentiated products and that bring a lot of value to our customers. So whether it be Viper, very unique in the marketplace on how it combines the results, integrated them from two technologies to give a more confident answer. Whether it's our MX, which is really the only handheld mass spec that's on the market. And NearLab, we think as well, it's quite differentiated in its capabilities and it has a lower price point. That's very, very different there. So it's about a ten thousand dollar upfront device and it has a required subscription. That's about half of that again per year. So that that then implies that each in the following years, it's 100 percent recurring. Right. Because你're just buying a subscription on a device per device look and basis. So, you know, I think collectively we feel we have a lot of levers on the pricing side and we are. uh combining your questions as you said you know we are really looking at this as a strategic way to increase our recurring percentage we've talked last year that you know we're kind of operating in the about a third of our revenues q1 was about 30 percent a lot of that was driven by by service and consumables some accessories that are in there and we really look at near lab and team leader and the other software components as great ways to increase the stickiness of this over time at the same time provide a lot of value to the customers that want that interconnectivity and want the ability to share that data.

• Q: Hey, guys. This is Rohan off for Dan. Thanks for the question. Thinking about synergies, How quickly do you think your domestic sales force can begin cross-selling their lab products to your U.S. and local customers?

  A: Yeah, I think it can be relatively quickly. We're super excited to plug in, you know, especially our U.S. channel that is very experienced, you know, has a great proof point that as we brought on the Red Wave products, we're able to plug it in and drive growth. over the last two years. And, you know, NearLab has had very few sales to date here in North America and really see it as an opportunity. So, you know, expect to get the products in our customers' hands, or I should say in our salespeople's hands in the next week or two, and then out on the road with customers. And it is a lot of the same customers, right? It's more that end-to-end workflow from a narcotics, you know, detection perspective. So, talking to our existing customers, driving the penetration. So super excited to get out there and see a lot of synergies that we can start to plug in. And we put out that initial assessment to the 2.5 million. Good chunk of that is international, but it does assume some level of ramp up here in the U.S., but think there's a lot of opportunity as we move forward. Yeah, and I would just further add, it's really about that people and culture. And I think we have a good combination there. And the team at NearLab is ready to really to jump in on that. You know, that said, it does take a couple of quarters to kind of get our arms fully around it and get it into the our understanding and get it into the U.S. markets. I think Red Wave, though, is a great example, and we're going to execute that same playbook. You know, we integrated very efficiently, and we're going to apply that same playbook here because我think that we've demonstrated that we've been able to drive a lot of growth that way and a lot of efficiencies in scale.

• Q: you previously moved your manufacturing to the U.S. to mitigate tariff impacts. With the current geopolitical climate, do you see any risk to your European supply chain for near life components or is this business sort of fully insulated?

  A: Yeah, it is. A lot of the sales today are Europe-based. And as Kevin mentioned, you know, in Oceana and APAC and not much in the U.S. We also have an avenue to source the product here in the U.S., which protects some of the device opportunities, too. So I think from a tariff perspective, it's a bit insulated, but we'll continue to monitor it and learn as we integrate and ramp up. But don't see it as a major impact.