Rapid Micro Biosystems, Inc. Q2 FY2025 earnings call

• Announced a new $45 million 5-year term loan facility with Trinity Capital, drew down initial $20 million tranche. - Second quarter total revenue $7.3M, up 10% y-o-y, slightly above guidance midpoint; 4 Growth Direct Systems placed, within guidance range. - Gross margins 4%, 7 pp improvement y-o-y, fourth consecutive quarter of positive gross margins. - Partnership with MilliporeSigma making progress, teams engaging on commercial and supply chain work streams, conducting training sessions, seeing industry shift towards automation in Micro QC lab. - Market trends: encouraged by pharma manufacturing capacity investments and shift to new tech/automation, but global trade dynamics add uncertainty. - Key business drivers for 2026 and beyond: robust sales funnel, increasing contribution from MilliporeSigma, diverse revenue model, consistent gross margin expansion, strong financial position from new loan facility.

Total revenue increased 10% year-over-year to $7.3 million. Product revenue increased 6% to $4.8 million. Service revenue of $2.5 million increased 18% compared to Q2 2024. Recurring revenue increased 15% to $4.4 million. Nonrecurring revenue slightly increased to $2.8 million. Gross margins were 4% in the second quarter, an improvement of 7 percentage points from the prior year, marking the fourth consecutive quarter of positive gross margins. Product margins were negative 11% in the quarter, down slightly compared to Q2 2024 due to one fewer system placement and revenue mix, but service margins were 32% in the second quarter compared to 9% in Q2 2024, improved by higher revenues, productivity, and lower costs.

• Reaffirm full year revenue guidance of at least $32 million. - Systems outlook adjusted to likely finish 2025 towards low end of 21-25 system placements range due to near-term uncertainty in customer purchase decisions. - Q3 revenue expected to be in range of $7.25 million to $8 million, assuming 4-6 system placements. - Consumables revenue expected to step up sequentially in Q3 and Q4. - Service revenue expected to be relatively consistent in Q3 and Q4 with Q2. - Expect to complete at least 18 validations in 2025, at least 3 in Q3. - Q3 gross margins expected to be in line with or slightly better than Q2, then meaningfully improve in Q4; full year gross margins expected in high single digits to low teens. - Operating expenses expected to step down from Q2 to Q3, full year operating expenses between $46M and $48M. - Full year depreciation and amortization expense $3M, stock compensation expense $4M, CapEx $2M. - Expect full year other income and expense to be $1M of income.

• Uncertainty around timing and scale of customer purchase decisions, especially for larger capital investments, due to global trade dynamics. - Impact of existing and future indebtedness on ability to operate business and access future debt tranches. - Ability to deliver products to customers and recognize revenue affected by market and macroeconomic conditions.

Q: Paul Knight with KeyBanc Capital Markets asked about pharma delaying decisions and Q3 trend.

A: Rob Spignesi said encouraged by pharma conversations, some near-term timing uncertainty but high ROI projects like Growth Direct making the cut, with some encouraging signs in pharma decision-making and build-outs.

Q: Paul Knight also asked about CAR-T capacity build and retrofit.

A: Rob Spignesi said majority of installations are in existing facilities, excited about new build-outs as pharma companies seek current edge, especially in high-cost regions like U.S. where automation is likely higher.

Q: Dan Arias with Stifel asked about systems outlook low end and consumables stability.

A: Sean Wirtjes said it's about near-term focus on funnel and trade dynamics, but service and consumables businesses performing well in second half.

Q: Brendan Smith with TD Cowen asked about near-term levers for gross margins.

A: Sean Wirtjes said focused on product cost, including procurement, manufacturing efficiency, leveraging volume, and working with MilliporeSigma on opportunities, with potential tailwinds in 2026.

Q: Brendan Smith also asked about onshoring initiatives timing.

A: Rob Spignesi said broadly excited about onshoring, but specific timing unclear, with supply and demand dynamics in pharma build-outs affecting it.

Q: Thomas Flaten with Lake Street Capital Markets asked about difference in attitude between adopted and funnel customers.

A: Rob Spignesi said existing customers with Growth Direct are more resilient, having ongoing projects and ROI, with larger opportunities in funnel potentially landing this year