Rapid Micro Biosystems, Inc. (RPID) Earnings

Management highlights

- Commercial Expansion & Customer Engagement * Accelerating Growth Direct system placements, with 6 placements in Q1 2026 (up from 3 in Q1 2025), bringing the global installed base to 196 total systems, 160 of which are fully validated. The quarter included a multi-system follow-on order from Samsung Biologics, demonstrating success with large key customers. * Prioritizing growth in the Asia-Pacific region: hosted the first of three 2026 regional Growth Direct Day events in Tokyo, completed the first system placement in China, and expanded placements to Singapore and Australia. Customer conversations show clear intent to scale deployments as organizations adopt enterprise-wide microbial QC automation. * Planning a North American Growth Direct Day sponsored by Amgen for June 2026 to further build momentum in the core biopharma market. - Millipore Sigma Collaboration Progress * The distribution collaboration expands Growth Direct placement opportunities beyond core pharma into adjacent markets including personal care and medical devices. A new services agreement makes Rapid Micro the exclusive provider of validation, qualification, and maintenance services for all Growth Direct systems sold through Millipore Sigma, with all service revenue recorded by Rapid Micro. * The collaboration is progressing toward a supply agreement to support margin expansion, and teams are collaborating on joint new product development and enhancements to existing products. - Gross Margin Expansion Initiatives * 2026 performance is tracking in line with expectations, with improved supplier pricing already lowering cost structures and improving visibility. Combined with manufacturing efficiency improvements, management expects positive product gross margins starting in Q2 2026. * Long-term target is gross margins of 50% or higher, supported by manufacturing efficiencies, optimized sourcing and supply chain, and overhead leverage as volume scales. Service margins are expected to improve via productivity gains and headcount leverage across the growing installed base. - Industry Tailwinds * Favorable industry dynamics include broad adoption of lab automation, U.S. biomanufacturing reshoring, and growing complexity of advanced biomanufacturing, which have enhanced visibility into the commercial pipeline extending through 2027 and 2028.

Guidance

- Full-year 2026 total revenue guidance of $37 to $41 million is reaffirmed, with an expected 30 to 38 total system placements for the year, and at least 25 completed validations. - Full-year 2026 total gross margin guidance of approximately 20% is maintained, with a Q4 2026 exit rate of mid-20% or better. Full-year product margin is expected to be in the high single digits to low teens, and service margin is expected to be above 40%. - Q2 2026 revenue is expected to be at least $7.7 million, including at least 4 system placements, with gross margin expected to be in the mid to high teens. Net loss in Q2 is expected to decline to levels comparable to Q2 2025, with progressive net loss improvement in Q3 and Q4 2026 vs the 2025 comparable periods. - Full-year 2026 operating expenses are now projected to be between $48 and $52 million, with non-cash expenses of $8 million, capital expenditures of $2 million, interest income of $1 million, and interest expense of $2 million. - Cash usage is expected to decline sequentially each quarter for the remainder of 2026 as revenue grows and margins expand, with disciplined capital expenditure and working capital management. The company ended Q1 with $23 million in cash and $25 million in remaining availability under its Trinity Capital credit facility.

Segment performance

Rapid Microbiosystems' total Q1 2026 revenue was $8 million, an 11% year-over-year (YoY) increase. Product revenue (systems and consumables) was $5.6 million, a 36% YoY increase, representing 70% of total revenue. Within product revenue, consumables grew more than 30% YoY to a record quarter, driven by higher utilization of the expanding installed base. Product margin improved 15 percentage points YoY to negative 8%, with consumable margins up 33 percentage points YoY due to cost reduction and higher volume. Service revenue was $2.4 million, down from $3.1 million YoY, representing 30% of total revenue, with the decline driven by lower validation volume (5 completed validations vs 9 in Q1 2025). Service margin was 34% YoY, down from 43% YoY due to lower revenue volume, partially offset by productivity improvements. Recurring revenue (consumables and service contracts) increased 28% YoY to $5.1 million, representing 63% of total Q1 2026 revenue. Non-recurring revenue (primarily systems and validation) was $2.9 million, down from $3.2 million YoY. Overall gross margin was 5% in Q1 2026, consistent with guidance and an 8 percentage point improvement from Q4 2025.

Risks & headwinds

- Forward-looking statements are subject to material risks that could cause actual results to differ materially, including the ability to meet publicly announced guidance, the impact of existing and future indebtedness on operations, the ability to unlock future tranches of the debt facility and comply with debt covenants, the ability to deliver products and recognize revenue, and general macroeconomic and market conditions that impact the company and its customers. - Quarter-to-quarter variability in gross margin is expected, driven by progress on cost reduction initiatives, overall revenue volume, and changes in revenue mix across systems, consumables, and service each quarter. Quarter-to-quarter variability in service revenue is also expected, driven primarily by the timing of validation activities. - Conversion of the growing Millipore Sigma sales funnel into closed placements and acceleration of sales cycles through the collaboration is still unproven at this stage, with final results still to be determined.

Analyst Q&A

• Q: Can you explain the expanded services agreement with Millipore Sigma, and how does the collaboration impact consumable margins? /

  A: The agreement states Rapid Micro will provide all installation, qualification, and routine maintenance services for any Growth Direct system sold through Millipore Sigma, and all associated service revenue will be recorded by Rapid Micro. For margins, the collaboration creates two benefits: Millipore Sigma produces major consumable components, so sourcing from them over time will drive meaningful margin improvements, and higher sales volume from the partnership will increase fixed cost operating leverage for both consumables and systems manufacturing. Recent vendor pricing improvements with existing suppliers were already incorporated into the current full-year margin guidance.

• Q: What conclusion can be drawn from 30%+ YoY consumables growth in Q1—Is this an acceleration trend or episodic? /

  A: The growth is a positive leading indicator of sustainable acceleration. It is driven by a growing installed base, faster more efficient validation that gets customers into routine use sooner, and high customer ROI that drives follow-on scaling discussions. Demand has increasingly become strategic at the enterprise level, with more customers planning company-wide microbial QC automation, which points to continued long-term growth.

• Q: For the 30-38 full-year system placement guidance, how much is already backed by orders in hand, and how much new business is needed to hit the range? /

  A: The company does not disclose backlog, but management reaffirmed the guidance range because they are confident in the current sales funnel, which includes contributions from Millipore Sigma. The 8-unit range accommodates variability from potential large multi-system orders not yet assumed in guidance and uncertainty around Millipore Sigma's 2026 contribution. Management is focused on driving results to the top end of the range.

• Q: What is the current status of Millipore Sigma's sales funnel, what verticals are they targeting, and how is the collaboration progressing? /

  A: The collaboration is now fully up to speed after an initial onboarding period, with dedicated regional specialists in North America, Europe, and Asia building a growing funnel. The majority of current focus is on the core pharma market, where Millipore's broader reach expands access to new customers beyond Rapid Micro's existing footprint. The partnership also enables expansion into large adjacent verticals including personal care, cosmetics, and medical devices, meaningfully expanding the company's total addressable market. Leading indicators for the collaboration are positive, though final conversion results are still pending.