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Transcript Summary

Rapid Micro Biosystems reported Q1 2026 revenue of $8 million, an 11% year-over-year increase, driven by 30% growth in consumables and 6 new system placements. The company’s recurring revenue now accounts for 63% of total sales, reflecting a growing installed base of 196 systems. CEO Robert Spignesi emphasized strategic expansion in Asia, specifically highlighting a follow-on order from Samsung Biologics and a new placement in China. The company is also deepening its collaboration with MilliporeSigma to target adjacent markets like personal care and medical devices. Financial results showed a gross margin of 5% and a net loss of $14.3 million. However, management reaffirmed full-year 2026 revenue guidance of $37M–$41M and system placements of 30–38. CFO Sean Wirtjes projected a margin inflection toward a 20% annual average, supported by cost-reduction initiatives and increased service productivity. While cash burn was high at $15 million this quarter, leaving $23 million on the balance sheet, the company expects sequential improvements and has access to an additional $25 million credit facility. With an 86% penetration rate in the CAR-T manufacturing market, the company remains optimistic about long-term growth and its path to 50% gross margins.

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Rapid Micro Biosystems: Minimalist Reporting Masking Potential Liquidity Constraints

Full Earnings Call Transcript — Q1 • 2026-05-13

Operator: Good day, and thank you for standing by. Welcome to the Rapid Micro Biosystems First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Beaulieu, Investor Relations. Please go ahead.
Michael Beaulieu: Thank you, Shannon. Good afternoon, and thank you for joining the Rapid Micro Biosystems First Quarter Earnings Call. We apologize for the delay as we are experiencing some technical difficulties on our end. Joining me on the call are Rob Spignesi, President and Chief Executive Officer; and Sean Wirtjes, Chief Financial Officer. This afternoon, we issued a press release announcing our first quarter 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 related to the company's term loan facility, guidance for the second quarter and full year 2026, 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 MilliporeSigma, 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 assess any future tranches under our debt 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 and 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, May 13, 2026. 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.
Robert Spignesi: Thank you, Mike. Good afternoon, everyone. I'll begin today's call with a brief overview of our first quarter performance and then discuss our priorities for the year before turning the call over to Sean for a more detailed review of our first quarter results and our Q2 and full year 2026 outlook. Today, we reported total revenue of $8 million, representing 11% year-over-year growth, driven by continued momentum across system placements and recurring revenue. During the quarter, we placed 6 Growth Direct systems. And as of March 31, we had 196 systems placed globally, including 160 fully validated systems. Placement activity in the quarter was led by multisystem follow-on order from Samsung Biologics, highlighting continued success with larger key customers. Product revenue increased 36% in the first quarter, driven by a record quarter for consumables, which grew more than 30%, reflecting increased utilization in a growing installed base. Service revenue was in line with the guidance we provided in March. Recurring revenue increased 28%, driven by strong growth across both consumables and service contract revenue and represented 63% of total revenue in the quarter. First quarter gross margin was 5%, consistent with our guidance, representing an 8 percentage point improvement from the fourth quarter of 2025. With that overview, I'll now turn to our priorities and review our progress thus far in 2026, starting with accelerating Growth Direct system placements. We're off to a solid start in 2026. Our commercial team is expanding the funnel with continued momentum in multisystem opportunities and strong engagement, including global rollout discussions with large customers. In early April, we hosted a Japan Growth Direct Day event in Tokyo that brought together current users and prospective customers, the first of 3 regional Growth Direct Day customer events planned for 2026. The program enabled robust peer-to-peer discussions regarding implementation and validation and highlight the operational benefits of automating and standardizing microbial QC on the Growth Direct platform. Following Japan, I visited South Korea and met with customers to discuss their QC automation road maps. Across these conversations, we discussed a clear intent in scaling Growth Direct deployments as customers accelerate their plans to adopt automation and enterprise-wide standardization of microbial QC. The Asia Pacific region is an important growth driver for Rapid Micro as we work to accelerate system placements and deepen relationships with large biopharma manufacturers. The engagement we're building in the region positions us well to become a long-term technology partner as the imperative to automate continues to broaden. We're also expanding our installed base across the region with system placements in markets such as Singapore and Australia. In addition, we placed our first Growth Direct system in China, where investment in advanced therapies, including cell and gene therapies, continues to increase and regulatory pathways are evolving to support accelerated review. Overall, our activities in Asia Pacific are strengthening customer relationships, building reference sites and supporting continued acceleration of system placements over time. Looking ahead, in June, Amgen will sponsor our first North American Growth Direct Day. We expect the event to bring together existing and prospective customers and further support momentum in our core biopharma market. I look forward to providing an update on our second quarter earnings call. In addition to our direct commercial channel, our collaboration with MilliporeSigma continues to expand the opportunity for Growth Direct placements, not only in our core pharmaceutical market, but also adjacent markets such as personal care and medical devices. MilliporeSigma is prioritizing automation and digital technologies to help shape the future of the pharma QC lab. This effort centers on improving productivity, reliability and data integrity. These are areas where the Growth Direct excels and delivers clear customer value. The Growth Direct platform complements MilliporeSigma's product portfolio, and we are pleased to be included within this broader automation framework. We also entered into a services agreement with MilliporeSigma that makes Rapid Micro the exclusive provider of validation, qualification and maintenance services to their customers that purchase Growth Direct systems. In parallel, we are progressing toward a supply agreement as part of our margin expansion initiatives and continue to collaborate on joint new product development opportunities and enhancements to existing products. Turning to our priority of expanding gross margins. Our performance in 2026 continues to track in line with our expectations and within the framework we've previously outlined. Our primary driver for our full year 2026 gross margin guidance of approximately 20% is a meaningful improvement of consumable margins. We have already begun to realize more favorable pricing from several key suppliers, which is lowering our cost structure and meaningfully improving our visibility. Combined with additional actions underway to improve systems manufacturing efficiency, this gives us confidence in an inflection to positive product gross margins beginning in the second quarter. Service margins, where we are currently meaningfully positive, are also expected to accelerate further in the second half of 2026 as revenue ramps, supporting our outlook for an overall gross margin rate in the fourth quarter in the mid-20% range. Looking further out, we remain focused on our long-term goal of 50% plus gross margins, supported by internal initiatives and our work with MilliporeSigma to reduce costs across systems and consumables. These efforts include manufacturing efficiencies, improved sourcing and supply chain optimization and overhead leverage as volume scale. Service margins are expected to continue improving through productivity gains and improved headcount leverage across a growing installed base. To conclude my remarks, customer demand remains strong with purchasing decisions increasingly strategic in nature and in many cases, focused on the Growth Direct as an enterprise priority. Our direct commercial organization is executing well and our collaboration with MilliporeSigma continues to advance. Supported by favorable industry tailwinds, including increased automation, U.S. reshoring initiatives and the growing complexity of advanced biomanufacturing, these dynamics are enhancing our visibility into our longer-term commercial pipeline extending into 2027 and 2028. Based on our first quarter performance and outlook, we are reaffirming our full year 2026 revenue guidance of $37 million to $41 million, including 30 to 38 system placements. With that, I'll turn the call over to Sean to discuss our first quarter performance and 2026 outlook in more detail. Sean?
Sean Wirtjes: Thanks, Rob, and good afternoon, everyone. I'll begin with an overview of our first quarter 2026 results, followed by our outlook for the second quarter and full year. We will then open the call for questions. Total revenue for the first quarter increased 11% to $8 million compared to $7.2 million in the prior year period. We placed 6 Growth Direct systems in the quarter compared to 3 in Q1 2025. Product revenue, which includes systems and consumables, increased 36% to $5.6 million compared to $4.1 million in Q1 2025. The increase was driven by strong consumable growth of more than 30% and higher system placements. Service revenue was $2.4 million compared to $3.1 million in Q1 2025. This was within the guidance range we provided in March. As a reminder, the timing of validation activities is typically the largest driver of quarter-to-quarter variability in service revenue. We completed 5 validations in the first quarter compared to 9 in the prior year period. Recurring revenue increased 28% to $5.1 million compared to $4 million in Q1 2025. Nonrecurring revenue, which is primarily comprised of systems and validation revenue, was $2.9 million compared to $3.2 million in the prior year period. Turning to margin. Total first quarter gross margin and gross margin percentage were relatively flat compared to Q1 last year at $0.4 million and 5%, respectively. This was in line with our guidance. Within this, Q1 product margin was negative 8% compared to negative 23% in Q1 last year. The 15 percentage point improvement was mainly driven by a 33 percentage point improvement in consumable margins resulting mainly from direct material cost reduction activities, increased manufacturing productivity and efficiency and operating leverage from higher volumes. Q1 service margin was 34% in the first quarter compared to 43% in Q1 last year. The lower service margin was due to the lower service revenue in the period, which is partially offset by the positive impact of productivity improvements made over the past year. Moving down the P&L. Total operating expenses were $14.2 million in the first quarter compared to $12.1 million in Q1 2025. Within OpEx, R&D expenses were $3.4 million, sales and marketing expenses were $3.4 million and G&A expenses were $7.4 million, which included $0.9 million of severance and other nonrecurring corporate expenses. Interest income was $0.3 million and interest expense was $0.6 million in the first quarter. Q1 net loss was $14.3 million. This compares to a net loss of $11.3 million in Q1 last year. The larger net loss in Q1 this year was primarily attributable to the nonrecurring G&A costs I just mentioned as well as interest expense on the debt we issued in Q3 last year, lower interest income and higher noncash stock-based compensation expense. In Q2, we expect net loss to step down and be comparable to the second quarter last year and then show progressive improvement in Q3 and Q4 compared to the comparable periods last year. Net loss per share was $0.31 in Q1 compared to net loss per share of $0.26 in the prior year quarter. With respect to noncash expenses and capital expenditures, depreciation and amortization expenses were $0.7 million, stock compensation expense was $1.2 million and capital expenditures were $0.4 million in the first quarter. Now I'll turn to our outlook for the second quarter and full year. For the full year 2026, we are reaffirming our total revenue guidance of $37 million to $41 million, which assumes 30 to 38 system placements. For Q2, we expect revenue of at least $7.7 million, which includes at least 4 system placements. We continue to expect to complete at least 25 validations in 2026. Turning to margins, we expect our Q2 gross margin as a percentage of revenue to be in the mid- to high teens. For the full year, we continue to expect total gross margins of approximately 20% with a Q4 exit rate in the mid-20% range or better, product margin in the high single digits to low teens and service margin above 40%. We continue to expect quarter-to-quarter variability in gross margin to be driven by progress on our product cost reduction and service productivity initiatives, overall revenue volumes and the revenue mix between systems, consumables and service in each period. Continuing down the P&L for the full year, we now expect operating expenses of between $48 million and $52 million and $8 million in noncash expenses, including depreciation and amortization expense of $3 million and stock compensation expense of $5 million, $7 million of noncash expenses in OpEx and $1 million in cost of revenue. We also expect CapEx of $2 million, interest income of $1 million and interest expense of $2 million for the full year. I'll now turn to our balance sheet. We used $15 million of cash in the first quarter and ended the period with $23 million. Q1 is typically our highest cash use quarter due to seasonal revenue and margin patterns and certain annual payments. This year, Q1 cash usage also reflects 2 notable timing items. First, Q1 cash collections were lower than usual due to stronger collections in Q4 2025, including the receipt of 100% of the cash associated with our record 16 system placements, which helped reduce Q4 cash usage to $3 million. And second, the previously mentioned $0.9 million of severance and other nonrecurring corporate expenses included in our G&A expense. For the balance of 2026, we expect cash usage to decline sequentially each quarter as revenue increases, margins continue to expand and operating expenses step down to levels generally consistent with the comparable quarterly periods in 2025. We also expect lower cash usage to be supported by disciplined management of CapEx and working capital. With our $23 million in existing cash and $25 million of remaining availability under our Trinity Capital credit facility, we are well positioned to execute our strategy and we'll continue to actively and prudently manage our balance sheet. That concludes my comments. So at this point, we'll open the call up for questions. Operator?
Operator: [Operator Instructions] our first question comes from the line of Paul Knight with KeyBanc.
Paul Knight: Rob, can you talk to the Millipore JV expansion by what more services? Could you help us understand what that is all about?
Robert Spignesi: Yes, Paul. So basically, that agreement is linked to Growth Directs that MilliporeSigma sells that we will be the provider of all services associated, installation, qualification, all the way through routine use services. So the takeaway is that, that service revenue would be recorded by us. The best way to think about it is no matter where a Growth Direct is sold in the world, we will perform all the installation and qualification services, whether it's through our direct channel or through the MilliporeSigma channel.
Paul Knight: And then the scale on consumables, is it you need more volume of consumables? Or is it some technical issue that they're getting solved on the Millipore side?
Sean Wirtjes: Yes. In terms of margin improvement opportunity, Paul?
Paul Knight: Yes.
Sean Wirtjes: Yes. I think -- yes, it's a little bit of both. I think there's clearly opportunity for us to work with them and source from them over time. So that's the expectation that we have. We do not source anything from them for our consumables right now, and they make some of the largest components of the products. So that's a very large opportunity for us. But they have expertise in that product as well. And part of the deal with them on distribution is that they're going to increase the volume and the growth. So I think all of that fits together into a nice package for us that we expect is going to help drive margin improvement going forward.
Robert Spignesi: As I touched on in my remarks, Paul, we're collaborating with them now on what that could look like with regard to that purchasing to drive gross margin improvement. Separately, the team has done a nice job with our current supply base to make sure we've got the right leverage, which we've given the forward view for the full year on margins. So that was incorporated. Then of course, the -- we have quite a bit of operating leverage in our business, whether it's consumables or systems manufacturing, given our fixed cost leverage in the business. So all that is colluding to come together to present our gross margin outlook, which Sean walked through.
Paul Knight: Okay. And then lastly, Sean, the trending line of credit remaining available of $25 million, what are the terms on that?
Sean Wirtjes: Yes. So we have -- which terms are specifically interested in, Paul, I'm happy to kind of walk through the things that will be helpful.
Paul Knight: I mentioned $25 million line of credit available...
Sean Wirtjes: So the remaining $25 million, we have 2 different tranches that are potentially available to us, and then there's $5 million of additional capital there that is at the lenders' option. So if you think about the structure of the tranches, the first tranche is potentially available to us later this year. There are some financial metrics that we would need to satisfy to unlock it. We expect to do that by the end of the year and have that be available to us. The next tranche is another $10 million that we could unlock as early as roughly middle of 2027, and we are trending towards that as well. So $10 million toward the end of this year, another $10 million middle of next year, potentially available to us and then $5 million of unallocated that we could work with the lender to unlock as well.
Operator: Our next question comes from the line of Dan Arias with Stifel.
Daniel Arias: Rob, is there something to be said or a conclusion to be drawn from the kind of performance that you saw in consumables this quarter, 30-plus percent growth? Is that part of an acceleration trend? Or do you see that as more episodic to start the year?
Robert Spignesi: It's -- what we're seeing, Dan, is a few things in the business, the continued growth in the Growth Direct footprint, efficiencies and our ability to validate. It's one of our fulcrum capabilities. So the faster we validate and the more efficiently we do it, the faster our customers get into routine use. But I would say the most exciting thing is that customers are really using these systems to drive ROIs in their business, which is extending conversations to more Growth Direct rollouts. So it's a really good leading indicator. If you see that in our business, it means customers are happy in using the system and most importantly, getting an ROI and that activates more and more discussions. And increasingly, I touched on my trip in Asia and other conversations. Increasingly, the discussions have become more strategic in nature at senior levels. And it's exciting to see many of our customers thinking about enterprise-wide automation and integration of automation technology. So the market is definitely trending in the right direction.
Daniel Arias: Okay. All right. And then, Sean, on the 30 to 38 systems for the year, what portion of that comes from systems that are part of orders that you have in hand, Samsung, et cetera? Basically, I'm trying to understand how much new business you need to win in order to get there. It feels like you're on a pretty decent trajectory here, but curious to how you explain it.
Sean Wirtjes: Yes. So Samsung was in Q1. I think you're asking about backlog, which isn't something we've historically talked about. But I think it's -- if we look out over the balance of the year, Rob talked about the funnel. I think we feel good about the funnel. Obviously, MilliporeSigma is part of that as well, and we have very tight connectivity with them. So I'd say we feel good about where that range is set at this point. That's why we're reiterating it. And a good part of that is based on what we see out over the balance of the year. So -- and remember, we tried to clarify a little bit last quarter. There's some variability in that range, right? 8 systems is a decent sized range there. And I think there are opportunities for us to drive some good movement within that range by getting large multisystem orders that we haven't assumed and where we end up with MilliporeSigma this year in terms of what they deliver against their commitment and the overall environment, which we're obviously watching closely these days. So we're trying to drive to the top end of it, but we feel good about the range in general.
Daniel Arias: Okay. But no additional Samsung placements after 1Q?
Sean Wirtjes: Yes, I don't think we can comment on that at this point. I mean there's definitely opportunity with Samsung going forward. Whether that happens this year or not, I don't think we comment on at this point, Dan.
Operator: [Operator Instructions] Our next question comes from the line of Brendan Smith with TD Cowen.
Brendan Smith: Maybe just another one on kind of margin story here. I guess wondering how we should think about any potential inflection and kind of the impact from consumables and services revenue over the coming quarters? I guess is there maybe a sweet spot number of total placements that you expect to ultimately kind of hit that tipping point where consumables read-through starts to kind of outweigh new device placements? Or really just any kind of color on how to think about the push and pull there on margins?
Sean Wirtjes: So Brendan, it's Sean. So for consumable margins, I think if you go back to what we said back in March, it still holds true. I think we expect to see that moving in a positive direction in the second half, driven in part by volume, but I think also driven very much by the other factors that I think both Rob and I have talked about, which is getting material costs out of the products, including the significant vendor pricing reductions we achieved recently, but also increasing volume and leverage that goes with that from an operating standpoint. Service, I think as we've talked about before, is driven -- it is sensitive to volume. And as we said last quarter, the expectation right now is that we're going to have a heavier second half than the first half in terms of service revenue with validations. But we had the big Q4 last year. Those systems seem to be teeing up to be more second half than first half in terms of validation. So that revenue is going to come in the second half, and that will have a positive impact on margins in the second half.
Brendan Smith: Got it. Great. And then maybe just -- I know you noted some of the acceleration in cell and gene therapy programs. I guess just wanted to maybe get your take on kind of the recent overhaul in leadership at FDA. Do you expect any kind of notable changes there? Or just anything you're kind of watching over the coming weeks to maybe signal how that momentum shifts if it does?
Robert Spignesi: Yes, it's Rob. We watch actively the approvals. As you know, we have very high penetration into the cell therapies CAR-T market in particular. I think our last reading was 86% of the FDA-approved manufacturers are using our system. So as you know, it's a very, very, very good fit. So we watch it actively. And I'm not sure if there's anything we've observed in the past few weeks as far as acceleration or deceleration of approvals. But we like generally the pipeline, as I touched on, also regionally speaking, to include Asia. So we are -- we believe we're well positioned to win cell and gene business broadly, whether it's through the principal manufacturers or through the CDMOs. As you know, we've got a good footprint there. And we're also very well positioned to win that business globally, sort of region independent. So we'll continue to report out on what we see. But the takeaway for us right now is we are -- and our intent is to remain well positioned to win in the cell and gene market and cell therapy in particular.
Operator: Our next question comes from the line of Thomas Flaten with Lake Street Capital Markets.
Thomas Flaten: I was wondering if there's any way you could characterize the Millipore sales funnel from an industrial vertical perspective, what's their focus? What are they looking at? And any way you could -- and I know you don't talk about backlog, but just give us a sense of what kind of number of potential placements you're looking at in the coming months here, however you want to phrase it?
Robert Spignesi: Yes. Kind of in reverse order, I won't -- this is Rob. Thomas, I won't speak to the placement number. We haven't released that via -- with regard to Millipore. But I can tell you one thing I'm extremely excited what I'm seeing with regard to the global connectivity and activity and momentum that team is building, the Merck Millipore team. Very happy with how our teams are collaborating. It's a larger company. It's a much larger sales force. So it took a little bit of time to, if you will, get up to flying speed, but we're there, and I'm very, very excited about it. MilliporeSigma has hired and focused specialists within their regions, North America, Europe and Asia. Their funnels are growing and their relationships are deep and broad, which is activating and building funnel. The next step will be seeing that funnel convert and close and potentially the acceleration of sales cycle. So that's TBD at this point, to be fair. But the -- I would say the conditions are present and the predicate steps have been put in place for this to be a very successful collaboration. The story is still being written, of course, but I think it's -- I'm very excited about the leading indicators that I'm seeing, and that's globally. It's not in any one region. With regard to end markets, there is focus currently, not complete, but I would say a majority of focus within the broader pharmaceutical markets. We're in a lot of places, but we're also not in a lot of customers, and they have reach far beyond ours and there are many, many labs. So there's a net to match. We've got good brand in pharma. So that's a natural starting area. But they also can go deep in other verticals, which are also very large markets, such as personal care, cosmetics, medical device. Those can tend to be, in some cases, more scattered markets. You need a broader and larger team to get after and brand and capability. So that was another reason why this partnership made sense for us. So that expands our TAM meaningfully. So more to tell there, but the report card right now with regard to the, I'll call it, the leading indicators, actual activities I'm seeing is I'm personally very, very excited about it. Okay. No other questions, we're going to wrap today's call. Thanks, everyone, for your time and attention, and we look forward to speaking with many of you shortly. Thank you.
Operator: This concludes today's conference. Thank you for your participation. You may now disconnect.