Q2 2022 908 Devices Inc. Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Yeah.
Hello, Thank you for standing by and welcome to the <unk> devices second quarter 2022 financial results Conference call. At this time all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session Cascade.
Question. During this session you will need to press star one on your telephone. Please be advised that today's conference may be recorded I would now like to hand, the conference over to your speaker today, Kelly <unk> Investor Relations.
Please go ahead.
Thank you good morning.
Financial results for the second quarter ended June 32022.
If you have not received this news release or if you'd like to be added to the Companys distribution list.
Ladies and IR dot.
Dot com joining.
Joining me today from <unk> Chief.
Chief Executive Officer, and co founder and Joe Griffith Chief Financial Officer.
Before we begin I would like to remind you that management will make statements. During this call that are forward looking statements within the meaning of federal securities laws.
These statements involve material risks and uncertainties that could cause actual results.
To materially differ from those anticipated.
Additional information regarding these risks and uncertainties appear in the section entitled forward looking statements in the press release issued today.
For a more complete list and description. Please see the risk factors section of the company's annual report on Form 10-K for the year ended December 31, 2021, and its other filings with the Securities and Exchange Commission.
Except as required by law 900 devices disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information and is accurate only as of the live broadcast August nine 2022.
With that I would like to turn the call over to Kevin.
Thanks, Kelly good morning, and thank you for joining our second quarter 2022 earnings call. Since we last updated you in early May the 908 devices team has continued to make great progress across our business to start our second quarter revenue increased 34% over the prior year period to $11 1 million we play.
The 124 devices, bringing our installed base to more than 2100 handheld and desktop devices I'm really pleased with our team's effort to deliver on our commitments to customers in the face of ongoing macroeconomic and supply chain challenges.
In June our team had a strong showing at the American Society for mass spectrometry conference our ASML.
We presented 11 posters and one oral presentation, many alongside our collaborators, including Ingelheim University of Connecticut, Dan University, Dana Farber Cancer Institute.
There were multiple additional posters by customers in academic institution that noted the speed and sensitivity of our Microfluidics separations technology. It is exciting to see us enabling their work and investigation.
A week later, we held our inaugural discovery day for the Investor community at our Boston headquarters. It was great to see many of you in person show off our team's expertise in providing opportunity for investors to get their hands on our products and truly see the ease of use and value they bring to our customers.
And earlier today, we were excited to announce the acquisition of trace analytics Gmbh's based in <unk>, Germany, we look forward to bringing this online by our processing capability to our customers and we'll talk more about how this technology enables and broadens our bio analytics roadmap.
Discovery technology and innovation makeup the ethos at 98 devices since our founding 10 years ago, we've been focused on transforming how and where mass spec technology is being used im delighted that we have recognized this month is one of the 100 best workplaces for innovators by fast Company magazine truly honored to work.
With such a dedicated inspiring team of people and I share this recognition with all of them.
Now I'll give you an update on our progress across the five focus areas that are driving growth for 2022 and over the longer term.
With their first objective of driving customer adoption.
For handhelds, we continue to build our pipeline of testing trials and pilot programs to drive enterprise adoption.
Previously noted our efforts in Ohio, which is often referenced is ground zero for the nation's opioid crisis multiple drug task forces in the Attorney General's office began deploying the <unk> device for field testing of their products in early 2021, and later that year. The Ags office implemented the Amex 98 pilot program for police.
In three cities in May of this year, we held a half day for 45 state prosecutors to educate them on how the Amex 900. It works how it is used for enforcement and the potential for case backlog reduction. This group has significant influence in driving statewide adoption of the amex nine week, including legislative action in funds.
Allocation.
Recently, the Ohio State Prosecutor's office and the Bureau of clinical investigation stated their objectives, which include ensuring that the current backlog of cases will not increase by more than 20% data from the <unk> pilot program for the first five months of this year shows a 72% reduction in laboratory submissions for.
The period prior to the pilot program.
Also in May and in Ohio U S Representative Kevin Mccarthy The house minority leader attended a round table on border security, where attendees received a demo of the Nx night, a week for drug detection and identification.
The Roundtable, Ohio Attorney General, Dave Yost noted that our device can change the pace and prosecuting people that bring poison into our communities.
We are working to replicate the success of Ohio across other states and within various local health safety and enforcement organizations. In fact, we have received more orders from such organizations to date this year than all of 2021.
We see organization to acquire <unk> for a broad range of use cases, including for trace detection of chemicals and incoming mail as an example in bowling Green, Kentucky are handheld device was recently procured by the Warren County Regional jail, which has seen a huge increase in drugs coming in personal mail and legal correspondence.
And after extensive testing and evaluation the U S. Postal inspection service has placed their first order for several amex valuate devices to be used within their dangerous mail investigations program. Overall, we are pleased with the continued adoption of the <unk> in these organizations and the breadth of use cases are handheld customers have for trace chemical detection.
At the point of need.
For desktops, we are employing a penetrate and radiate strategy in which we work to penetrate new accounts, creating foothold and then radiate across these enterprise accounts driving broader adoption and acceptance.
To that end, we have seen over the past several quarters, a fairly even split between new and existing customers and during the second quarter approximately two thirds of orders for our desktops came from new customers I'm really pleased with our commercial team's ability to penetrate new accounts.
In terms of radiating across accounts, we saw great traction for rebel during the second quarter and several of the top 20 pharma companies with some of these companies ordering their fifth and sixth rebel devices fate Therapeutics, a biopharma company developing cell therapies for cancer patients received the second and third rebel devices in.
In addition to driving multiple device sale. We are also seeing traction for consumable usage in fact more than a third of our global installed base for rebel has opened blanket purchase orders for consumable with a nominal one per month consumption plan devices are adopted into their workflow and process.
Turning to our second objective accelerating commercialization at the end of the second quarter, we reached a milestone surpassing 200 employees as we thoughtfully expand our commercial team and add employees across key region with the acquisition of Tracy analytics, we have bolstered our European presence with the legal entity at a base of operations in Germany to bet.
Serve our European customers and to support our growing sales and applications team in the region.
Turning to our third objective developing advancing our product portfolio I'm. So excited by the acquisition of <unk> analytics, which strengthens our core technology and unlocks more of our total addressable market trace analytics provides us with online a septic bioreactor sampling and biosensor technology, which is essential.
<unk> two our Microfluidic technology pillar.
Their team consists of nine people, who bring more than 20 years of technical experience in bioprocess sampling and analysis their technology and single use and reusable configuration has been proven in mammalian cell culture and microbial fermentations at all levels of the bioprocess chain from research and development to large scale production.
Tracy analytics technology includes devices for cell free sterile and safe sampling online with no prep required or even sample consumed in many cases. They also manufactured novel biosensors for glucose and lactate.
Adding additional priority analytes, we can measure to our portfolio combine these technologies allow online a septic sampling online analysis and automated bioprocess or feedback control.
Importantly, these technologies are validated by third party customers trace analytics as an OEM partner to check Torres, providing its online sampler and sensors for bioreactor monitoring and control and has a legacy program with Sanofi for online sampling and monitoring their insulin production, we will look to foster those relationships.
As well as established additional OEM relationships for future generations of the base trace analytics technology.
We've previously shared elements of our future product roadmap that include development of an online rebel and we are confident that the addition of <unk> analytics technology will help us realize our online development efforts.
It also allows us to take a measurable step forward in our goal to build out our connected and comprehensive bio analytics platform, thereby unlocking our existing total addressable market.
Turning to our fourth objective broadening our bio analytics platform.
Shared how Tracey analytics will expand our bio analytics capability and now I would like to provide some recent examples on how our rebel and zipped chip devices are enabling our customers to measure and monitor both process and product attributes researchers at Emory University are striving to prolonged antitumor activity in car T cell therapies for cancer patients with.
The development of novel microbial libraries for car T cell manufacturing, our rebel devices being used at line to measure amino acids as process attributes for car T cell activating using these microbes researchers now have a tool quickly monitoring inform feeding strategies to control and optimize T cell activation.
<unk> researchers that are optimizing recombinant AAV processes, using gene therapy to enable higher yields and efficiency through the monitoring and control of key process attribute.
These have designed a continuous perfusion processes and have employed rebel to rapidly monitor and profiled nutrient consumption of recombinant producer.
Producing cells.
As mentioned earlier, we have had nearly a dozen posters at the major mass spec conference in.
In June many with collaborators from academic and research institutions as well as Biopharma company. Several posters highlighted the use of our ZIP chip for analysis of oligonucleotide and their quality attributes traditional workflows for all ago analysis required the use of lengthy liquid chromatograph methods, along with harsh impairing reagents.
Ah Boehringer Ingelheim scientist noted that our ZIP chip device provided rapid high resolution analysis of Oligos with extremely low amount of sample and without the use of corrosive reagents.
And finally, our fifth objective laying in AUM ex foundation as proteomics and Metabolomics research steadily increases there's a rising demand for accelerating mass spec based workflows, which is critical when working with large sample sets as.
As we have shared we are advancing our microfluidic chip to address the limitations of liquid chromatograph fee for these unmet need we are defining our directions of research with world leaders on our scientific Advisory Board, who convened in Q2 for collaborative exchange.
We have a further partnering with leading research institutions and mass spec instrument companies to evaluate the speed and sensitivity of our prototype chip during the second quarter. There were several collaborative presentations and publications that highlight our progress in this area.
Dr. Jared Marco and his team at the Dana Farber Cancer Institute or one of our collaborators through posters at the path to SMS conferences, a presentation at the HPLC 2022 conference and a recent peer reviewed paper published in analytical chemistry, Dr. Mardis team have demonstrated what they term warp speed.
Profiling of small molecule protein inhibitors, using our prototype chip coupled with the broker mass spec, which is 5% to 10 times faster than traditional chromatography method.
In collaboration with the University of Washington, and Thermo Fisher scientific we are evaluating the coupling of our prototype chips with very fast ion trap mass spec for proteomics application.
The oral presentation at SMS in June titled pushing the boundaries of speed and sensitivity in proteomics. Dr will Thompson principal scientist at 98 devices demonstrate the ability to target hundreds of proteins from dilute plasma samples and just six minutes.
We are excited about the direction and research progress reported this quarter to the scientific community with these advanced Microfluidic chips. While these are prototypes. These results serve to demonstrate that ultimately reach of our technology platform overall I am encouraged by the enthusiasm we're seeing across our end market for real time analytics at the point of need.
And I'm very excited to welcome the trace analytics team and technology, both of which will no doubt accelerate our online bio analytics roadmap with that I will turn the call over to Joe for more detail on our financials.
Thanks, Kevin revenue for the second quarter, 2022 was $11 1 million compared to $8 3 million in the prior year period, representing growth of 34%.
This increase was primarily driven by product revenue from an increase in both handheld and desktop devices.
Revenue from our <unk> 908 products was $6 9 million, an increase of $1 6 million compared to the prior year period, representing growth of 31%.
Desktop revenue from our rebel and ZIP chip products for the second quarter 2022 was $3 7 million compared to $2 6 million in the prior year period, representing growth of 39%.
Recurring revenues consisting of consumables accessories and service revenue for the second quarter 2022 was $2 9 million compared to $1 7 million in the prior year period, representing growth of 65%.
Our installed base grew to 2142 units with 124 devices shipped during the second quarter. This included a 100 to Amex 90 ways handheld devices.
<unk> rebel desktop devices, and eight ZIP chip interface desktop devices.
Gross profit was $6 6 million for the second quarter of 2022 compared to $4 4 million for the prior year period. The increase gross profit was driven by an increase in product and service revenue.
Gross margin was 60% for the second quarter 2022, as compared to 53% for the prior year period.
The increase in gross margin was due to higher revenue volume, but also a result of favorable channel mix with our <unk> 900, <unk> and higher selling prices for our rebel devices.
Gross margin was 55% for the first half and we continue to expect gross margins to be in the mid <unk> for the full year 2022.
Total operating expenses for the second quarter of 2022 were $15 million compared to $11 8 million in the prior year period.
The increase was driven primarily by head count expansion across our business and a $1 3 million increase in noncash stock based compensation as well as expenses related to marketing activities materials spend and travel.
Net loss for the second quarter of 2022 was $8 1 million compared to $7 4 million in the prior year period.
We ended the second quarter of 2022 with approximately $213 million in cash and cash equivalents. In addition, we had approximately $15 million of debt outstanding.
Overall, we are pleased with our first half 2022 performance and the progress we've made toward our stated goals.
Looking ahead for the remainder of 2022, we continue to expect full year revenue to be in the range of $52 million to $55 million representing growth of 23% to 30% over the prior year.
Embedded within this range, we expect desktop devices relating to Biopharma and bio processing applications to grow at approximately 50% nearly two times the growth rate of the overall business.
With regards to trade analytics, we do not expect material revenue or earnings impact for 2022.
As we progress through the balance of the year, we are keeping a close eye on potential macroeconomic factors that could impact our execution.
Specifically our team is laser focused on driving strong adoption of our handhelds through the end of the U S government fiscal year, capturing year end biopharma spending and mitigating continued disruptions in APAC.
At this point I would like to turn the call back to Kevin for closing comments.
Thanks, Joe we've made significant progress in the first half of 2022 as we continued to execute on our growth strategy.
Im really encouraged by the momentum we are seeing from customers in adopting our technology across their organizations. I'm also pleased with our team's efforts to foster collaborations with leading research and academic institutions as we develop the next generation of our product and I'm delighted to advance our product portfolio and broadened our bioanalytics capabilities through the <unk>.
Acquisition of trade analytics, we look forward to building on this momentum into the second half of the year as we expand the reach of our technology platform with that we'll now open it up to questions.
Okay.
As a reminder to ask a question you will need to press star one one on your telephone please stand by while we compile the Q&A roster.
Our first question.
Please proceed.
Yes, hi, guys.
Hopefully you can hear me.
Thanks for taking my question so.
First one is really around the guide I mean youre maintaining the guide despite a solid quarter can you just remind us on the army contract whats your expectation for that in the third quarter.
Contribution and when we look at the fourth quarter, it's still a bit of a.
Uptake from.
Your prior quarter's end.
Slightly steeper so just wanted to get a sense of how should we think about the contributions from rebel and versus <unk> and then I have a few follow ups.
Sure.
Yes.
Yes, we feel good about the first half performance.
We have made toward our <unk> goals.
So overall growth in the first half was 40%, 52% from our desktops would you like to see and there are a number of factors going into contemplating the guidance right. Now we think it's most likely will end up closer to the middle of the range, we need to execute as I mentioned in the call earlier on on Q3, he worked to secure year ends.
Government funding and into Q quarter captured yet.
Pharma capital spend.
Drilling down a bit more on that U S government funding and budget factor. Given these are often larger orders that presents a potential risk, but also some potential upside depending on when these orders come through.
Customers' ability to secure funding.
On the desktop side, we're offering new tech not something that has been designed in for years.
We'd be.
Is susceptible to potential slowness or conservatism from biopharma spending in the second half of the year, particularly in the fourth quarter.
And another factor that we are working to mitigate here over the back half was possible impact of the APAC from further COVID-19 shutdowns that should limit our growth opportunities for both the handhelds and the desktops.
Pacifically you mentioned in the U S Army.
Just into the guide we did have some shipments in Q2.
To fulfill all of the remaining devices in the course of Q3.
Warranty and service revenue and expense further in time through 2025.
We continue to work with the U S only an additional and incremental opportunities in our pipeline and we're excited about those.
<unk> is rolling out across their users through exciting.
I have proven to be a great reference across our customer base.
Hopefully that gives you a little bit of flavor on the Q3, Q4 and released the full year guidance.
At the midpoint.
That's helpful. Joe.
Kevin just following up on the rest half of the year.
In terms of commercial organization. It appears to me that that commercial organization should be reaching their one year anniversary.
Soon so.
How should we think about the pick up.
In the core rebel franchise.
And sort of just maybe elaborate for us on a high level sort of what are some of the key efforts that you have ongoing you had 14 instruments in the quarter, which was largely in line with us but wanted to get a sense of how should we think about both the rebel installs and then the <unk>.
One kid of.
Months that you have talked about could that potentially sort of accelerated now that salesforce has more experience with the product.
Yes, sure happy to give more details on that yes. The commercial org as you know we added a fair bit of hires in the back half of last year.
We have doubled the sales team sales and marketing team since the IPO in 2020, we put out there that youre going to have a go.
For 2022 to get to about 80% of sales and marketing reps, we've added about nine individuals thus far.
Seven here at the end of the first half.
I think those folks are coming up.
Well, obviously anybody hired now really effects.
And not in the second half we are trying to be really thoughtful.
Add obviously in these times and particularly outside the commercial organization.
But yes, so we still expect though that will be we'll be rounding and towards us.
By the end of the year in terms of the rebel side of things.
Absolutely been focused first on the desktop placements.
We have been in 'twenty, one and continuing into 2022, we were able to site. This morning. Some good adds.
Pharma companies some assistance.
<unk> in the quarter and others, both state exciting cell therapy companies that in their second and third of deliveries in the quarter.
From a cash usage.
Sumption.
We're pleased that about a third of our of our customers are now on a blanket.
Purchase order and as we can get them into routine workflows and thats been nominal usage plan, but we've got work to do with them to experience the value and ensure that they are on that new spot, we're still driving hard towards the goal of one per month to achieve that across our active user base.
Yes happy to go into all the work we're doing.
Hello.
To enable that okay.
Got it Super helpful. Kevin just the last one for me trade analytics.
On the acquisition can you give us a.
View into how does this improve your timeline for online rebel launch and then also on glucose and lactate Twitch.
Correct me, if I'm wrong, they're not in the current menu for rebel.
How do you.
Rebel.
How do you expect that to be integrated data wise is this something thats going to fold into rebel just thinking about sort of how the products would be integrated and how the data and analytics is going to be integrated for the bioreactor theres going to be integrated for the bio reactors for the online systems. Thank you.
Yes, I mean, we're super excited about having chase analytics now with us on our journey here.
<unk> been talking since the IPO about the smart plumbing and that's.
That's what you need to to enable a mass spec online and we think theres different ways to go for partnership for internal development, but after months of evaluation, we think bringing trace analytics under our umbrella here gives us great opportunities for rebel online and solidifies a timeline there, but nothing beyond that.
You mentioned that Theres other sensors, yes, youre right glucose uptake, we don't do out of the box today on our on our rebel box. So we do look forward and think about bio processing for Plano and bringing together a robust roadmap that has sampling technologies the analytics.
Sensors altogether to drive predictive models and also the feedback control for the bioreactor. So we think this plays really well into a shorter term and then longer term roadmap that hiccup.
Yes.
Got it thanks guys.
Okay.
Thank you one moment for questions.
Our next question comes from Dan areas of Stifel. You May proceed.
Good morning, guys. Thanks for the questions Kevin Congrats on trace deal maybe another business development question.
As you push further down the road on just opening up the market for rebel what kind of additional partnership activity either on the R&D side or on the commercial side should we expect I think that was something that was part of the roadmap for you. So just curious how important that is now in.
If there are things you would point us to in terms of what we might expect.
Yes, Sir and thank you again, we're really excited.
The roadmap, we've got here in front of us.
<unk> had the center of that ecosystem.
Great.
Partnerships are required to get there.
That product to market and fulfill their full potential obviously <unk> analytics with one extreme.
And we think the technology as multiple endpoint users.
Our roadmap overtime, but we also think there's great relationships just through collaboration and working with the industry leaders in the spaces, we've talked before about work we're doing with.
So how predictive modeling being more favorable.
Often the sartorius.
At the forefront.
Of that we're also working heavily with groups like CPI.
The U K and also at that big collaborations with MLP and Emory and other groups like that.
That are really working to help on the use modeling of deaths in the meat and what you can do with frequent standpoint, and what we do is just streaming this data off of our rebel and then future sensors and feature analytics that we're working on our roadmap. So we do think there are important part of it.
I don't think were gated by particular partnership, but I do think they are good at and.
Therefore.
Okay, and then maybe on the <unk> side could you talk just to spend a little bit on the sales funnel there and the opportunity that you have and the reason I ask because you obviously have the army contract coming off those big deals do create some lumpiness, but it sounds like there are some good things in the Hopper that you have so I'm just curious if you feel like.
In aggregate together the activity has placements tracking to some level of consistency or.
Do you perceive some meaningful ups and downs in the next 12 months.
Great question as you recall, we do work through our pilots and enterprise wide adoption.
Jeremy and can be a long sales cycle for some of the opportunities with our our handhelds.
As we sit here in Q3, we're seeing that pipeline build but have some work to do to deliver on the results, especially our new handheld orders.
Roll off from Army as you mentioned, it's a really a heavy reliance on being able to secure year ends on government funding, which is September 30, we're working on a handful of larger handheld opportunities 20, plus.
And it's each and we need to see our sales team bring those home.
<unk> achieve our full year guidance here in 2022, while we think we've made some great progress, but certainly some work left to do and it will continue to be something that we focus on here in 2022 and beyond.
Hopefully that helps give a little bit more color, but it is.
At the time of the year.
To execute.
Yes fair enough. Okay. Thank you guys.
Okay.
Thank you one moment for questions.
Our next question comes from Max issue as Cowen You May proceed.
Hey, thanks for taking the questions.
First one on.
On tracer congrats on the acquisition.
It would be great to hear whether you see integrations operations in Germany as being more of a.
Eight way or an opening of the spigot.
Hum.
Customer wins in that region or whether the German facility would be used more firm call it R&D or manufacturing and whatnot.
On one of Mark's question.
And we think probably minimal impact out of the gate as far as Europe , but there is definitely that opportunity to build out our Europe organization and have the central operation for logistics and customer interactions.
It's useful to now have a legal entity in Europe to enable direct selling as we go forward today, we operate through a distribution channel.
You've heard us talk about it over the last year as far as adding application service field sales would you be able to bring them together with the central base, we see advantages to that an opportunity on a go forward basis.
Got it a final one for me.
It sounds like demand from challenging therapy customers.
Remaining.
<unk> strong.
And that's in light of.
Rumblings around pretty Biopharma spending and whatnot, so I would just be curious.
Yes, the demand that youre seeing here.
Sure.
In August from cell and gene therapy customers, how it stacks up from a demand from other customers that are exploring applications and other.
Other non cell and gene therapy biologic drug categories.
Yes, yes, we're certainly watching the macro is closely across the prosser broader biopharma environment and what's the impact there.
For our rebel device that you are right.
Foothold.
Cell and gene therapy efforts and a great foothold in general.
Biopharma ample opportunity ability to expand to new accounts there.
In terms of selling game in particular, yes, we do.
I will pick up through the quarter of Celgene, but also with traditional mass in the other other modality.
So I don't think we have any particular trend to call out.
The numbers, we have here in front of us for Q2.
We did point out that about two thirds of our placements this quarter with some new customers. So that's exciting for us and Thats the opportunity.
What we say it radiate across that.
The requirements of our commodities are fairly minimal and fit into existing workflow and can have adoption of commercials with weather.
I'll, let LNG or on a map.
We continue to watch that closely here.
We've got new technologies that we want to make sure we're remaining top of mind for these customers.
Evolution of.
Churn of employees and the like but nothing specific I can call out on <unk>.
Versus versus mass.
<unk> signed the across the board our level for the quarter.
Great. Thanks for taking the questions.
Okay.
Thank you one moment for questions.
Our next question comes from Brian Weinstein with William Blair You May proceed.
Hey, Good morning. This is current on for Brian . Thanks for the questions. Maybe just on utilization that you've talked about one per month on average and reiterated that today. Some key this morning that maximum potential capacity with the continuous operation. It goes from one ship per day.
Something we called out potential of 30.
<unk> per day versus one killer months. So when you think about this when we ultimately get the continuous monitoring capabilities and what should we be thinking about.
A potential for 30 times increase in the rebel Volcker.
Yes, I think thanks for the question I think it is definitely early days to be able to give you something accurate Darrin I think we are pleased that do have consumable model that at one a month. It represents about a 40% pull through for our for our users and Youre right with online it does enable more frequent.
Sampling less labor you can program it to do it at particular integral.
Today remember, we our new technology and new use cases.
So we've got to get customer at very comfortable with device you've got to get them working to have it part of their workflows and proven in and meeting their expectations.
And I think we'll see where it goes I think the other important part is that.
To drive our foundation, there, it's showing that value and we're doing a lot of work as I've mentioned in the past with those key opinion leaders and CPI and <unk> earlier, and we're starting to see some great results from that I think which will ultimately impact utilization.
Now we have dataset of it becoming public publicly available through community showing increased tighter reduced amino acid depletions in the ability to inform bidding strategies and importantly informed and photo predictive model so people start coming in.
The pump with our utilization.
Okay, and then on the gross margin over 10% sequentially. The mix of service revenue is pretty similar to Q1, you called out the favorable mix of IMAX in the distributor channel and the higher Asps rebel can you just talk a bit more about that and maybe give us a sense of how much higher the rebel asps came in versus what you were expecting.
Well, thank you Griffin, yeah, a little bit more color on the gross margin. We were pleased as you may recall last year, we are cyclically those 52% to 58% finished the year at 55 and you do have some quarters based upon volume of mix that might be higher. So we benefited at 60% very pleased with where it came out a big piece of that is on the Max nine.
We saw strength within our state and local here in the U S sales a lot of.
Nice adoption, but with those they are close to full list price opportunity right with the U S list price to be north of 65000 for the nine week, so with that heavy state local versus through our international distribution channels are.
Federal our military type opportunities that really helped the mix.
Size from a mix perspective, specifically on rebel.
As the technologies become more entrenched and to help mitigate some of the supply chain and cost overall, we did increased the list price for this year and we start to see some of that kick in and that helps.
The ASP overall, probably won't put a specific percent surround it but it was a meaningful pickup that we hope to be able to replicate going forward, but a big element is mix there too.
<unk> one of the factors of <unk>.
APAC as far as going forward and some of the Covid shutdowns and with those those are more heavily discounted devices and we didn't have any here in Q2.
But we will have some on a go forward basis. So hopefully that helps give you a little bit more flavor on gross margin, but definitely pleased to see that 60 wish it was repeatable.
Really looking at the mid <unk> from a overall blend for the year.
Okay, that's great if I could just get one more in.
Maybe a bigger picture question can you just talk a little bit about the clinical applications of mass spec in your interest there or sell Roche, we sort of launched a co box mass spec IBD platform at the end of 2024.
Do you view launching your technology, maybe more diagnostics applications.
Yes, yes. Thank you for that so for today, we're absolutely focused on tools that really focused on getting these things out to upon the need to serve a biologist, but also a forensic scientist with required somebody that has a sample that one can answer and we call. It pointed me we need to take our products are attractive and they're pulling back.
Thinking about their application, it's not something we currently have on our roadmap.
We do have a wonderful board member DSO of Labcorp, Marc Eisenberg. So we're always on the lookout for again, we're working the area today that we can put there.
I think we talked a little bit about some areas of the lowest in proteomics.
That area of analysis.
As we get into the diagnostics.
But very much at RMB and prototyping, but.
Can stand walked through that segment.
Okay. Thanks for the questions.
Okay.
<unk>.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Kevin for any closing remarks.
Thank you. Thank you all for your time really appreciate it and appreciate the thoughtful questions and have a great day.
Yes.
Thank you this.
This concludes today's conference call. Thank you for participating you may now disconnect.
And during Q&A, you can dial one one.
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