908 Devices Inc. Q1 FY2025 earnings call

• Strategic transformation to higher-growth handheld markets aligned with secular tailwinds like national security funding and opioid crisis response.
• Divestiture of biopharma desktop portfolio to Repligen completed, fortifying cash position and reducing operating costs.
• Revenue from continuing operations grew 59% year-over-year to $11.8 million, with mass spec at 60% and FTIR at 40% of revenue. Recurring revenue up 54% to 37% of total revenues.
• Adjusted EBITDA loss improved nearly 50% year-over-year in Q1 2025.
• Released software update for ProtectIR with improved mixture analysis. Next-gen FTIR devices in development, next-gen handheld mass spec set for 2026 launch.
• Shifted supply chain to domestic sources, with manufacturing in US to mitigate tariff impact.
• Targeting positive adjusted EBITDA by Q4 2025 and full-year cash flow positivity in 2026, with manufacturing consolidation in Connecticut.

Revenue from continuing operations was $11.8 million, an increase of 59% over the prior-year period. Growth was driven by strong device sales with mass spec devices accounting for roughly 60% of revenue and FTIR products making up the other 40%. Recurring revenue increased 54% from the previous year and represented 37% of total revenues. Handheld product and service revenue was $11 million for the first quarter 2025, up 86% from $5.9 million in Q1 2024. Program product and service revenue was $0.1 million in Q1 2025, down $1.4 million year-over-year. OEM and funded partnership revenue was $0.7 million in Q1 2025, with no comparable revenue in the prior-year period. Recurring revenue, consisting of consumables, accessories, and service revenue, was $4.4 million, 37% of total revenues, and up 54% from the prior year.

• Full-year revenue from continuing operations expected in range of $53M to $55M, up 11%-15% from 2024.
• Handheld product and service revenue expected to grow 11%-15% to $51M-$53M.
• Adjusted gross margins expected in mid-to-high 50% range for 2025, with further expansion in 2026.
• Target to be adjusted EBITDA positive by Q4 2025 and cash flow positive full-year in 2026.
• No significant tariff impacts assumed for 2025 due to US-manufactured products and domestic supply chain.

• Material risks and uncertainties related to forward-looking statements, which could cause actual results to differ from projections.
• Risks detailed in the company's Form 10-K and SEC filings, including those related to federal securities laws and financial projections.

Q: On the commercial side, any additional benefits from RedWave integration and infrastructure for global demand?

A: Integration with RedWave has diversified revenue streams. Sales team is effective, with cross-selling opportunities seen in follow-on orders. Infrastructure and team in place to tackle global demand.

Q: Update on transition to Danbury and annual savings?

A: Mid-stride on move, expected to complete by midyear. Facility savings approach $2M annually, with 40% of savings in gross margin line.

Q: Timing for AVCAD full production and revenue recognition?

A: Expect decision on full-rate production by end of government fiscal year. Revenues from AVCAD expected to ramp, potentially reaching $10M annually, with a gradual ramp.

Q: Full-year guide breakdown by half and Texas DPS order timing?

A: H1 carried by state, local, and international opportunities. Texas DPS order is a Q2 opportunity. Back half weighted by pipeline development, strong Q4 expected.

Q: View on pricing and Danbury facility capacity?

A: Plan to hold pricing in 2025, monitor tariff impact. Move to Danbury has immediate cost benefits, with capacity to increase production and future product launches filling out space quickly.