Q3 2023 908 Devices Inc Earnings Call

Hello, and welcome to today's no no wait devices third quarter 'twenty 'twenty free financial results Conference call. My name is Jordan and I'll be coordinating your call today, if you'd like to register an audio question you may do so by pressing star.

Followed by one on your telephone keypad.

Now going to hand over to Mr. Kelly <unk> of Investor Relations to begin Kelly. Please go ahead.

Thank you. This morning, 98 devices released financial results for the third quarter ended September 32023, if you have not received this news release or if you'd like to be added to the Companys distribution list. Please send an email to IR at 908 devices dotcom.

Joining me today from nine way, Kevin Cox, Chief Executive Officer, and co founder Joe Griffith, The Chief Financial Officer before.

Before we begin I'd 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 or events to materially differ from those anticipated.

Information regarding these risks and uncertainties appears in the section titled forward looking statements in the press release 98 devices 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, 2022, and its other filings within the Securities and Exchange Commission.

Except as required by law nine light devices disclaims any intention or obligation to update or revise any financial projections or forward looking statements.

Because of new information future events or otherwise.

This conference call contains time sensitive information and is accurate only as of the live broadcast November 7th 2023.

With that I would like to turn the call over to Kevin.

Thanks, Kelly good morning, and thank you for joining our third quarter 2023 earnings call. We delivered solid execution during the third quarter and I'd like to thank our committed team for their efforts and progressing our goals as we continue to navigate the headwinds of the life sciences instrumentation and bio processing market looking at.

Back on the first nine months of 2023 challenges in the bio processing space were even more pronounced than we anticipated at the outset of the year. However, this impact has been significantly offset by the growth of our handheld devices, serving the forensics market.

Over the first nine months of 2023, our topline revenue increased 2% year over year to $35 $9 million buoyed by the strength in our handheld devices, which have increased 19% year over year.

We expect our handheld to continue to contribute meaningfully and drive our overall growth into the mid to high single digits for the year.

For the third quarter revenue was $14 3 million revenue was again, primarily driven by our handhelds, which increased 7% year over year with rising geopolitical uncertainties. The ongoing fentanyl crisis and counterfeit pharmaceuticals. There has been continued demand for handheld trace analysis in <unk>.

<unk> applications at the point of need.

We continued to deliver on our commitment to provide a full portfolio of complementary desktop devices for bio processing and in September we launched Maverick are first in line Robin based device.

During the launch week, we hosted members of the Investor community at our bio processing day in our Boston headquarters. It was great to see many of you in person provide an update on our roadmap and show you our Maverick device along with our new bio processing lab, where we did live demos of how all our process analytical technology.

Devices are used in concert.

Innovation is a core component of our mission at nine <unk> am.

I'm pleased to share that 98 devices was named analytical solutions provider of the year for the introduction of our Maven and Maverick devices in the third annual biotech breakthrough awards, which recognizes disruptive innovation in the global life Sciences and biotechnology industry. This is a great validation of the <unk>.

Neatness of our technology and the ultimate impact it can have as the industry progresses to biopharma for pointed out.

Now I'd like to provide a brief update on the progress we've made across our three focus areas for 2023.

Starting with our first objective penetrate and radiate across key accounts.

Our focus is to penetrate new accounts to create a foothold and then radiate across these accounts to drive broader enterprise adoption.

At the start of the year, we said we were committed to making significant progress on enterprise adoption. During the third quarter. We made some important advancements on that front first we recently announced an award from the U S Air Force and Air National Guard fire and emergency services totaling $10 4 million.

We're pleased to see the continued expansion of this enterprise account.

Our <unk> device has been deployed within the air National Guard for hazardous chemical response, and approximately a third of these orders represent Aero module upgrades, along with training and support for their existing devices.

Our Aero module add capability to the Max nine away, enabling response teams to quickly detect and identify aerosolize chemical hazards.

With this award the active reserve and Air National Guard components of the U S. Air Force will now utilize the <unk> device and Aero module at more than 130 installations around the world for hazardous materials operations and pre emergency medical response.

Joe will provide more details on this order and its revenue recognition in a moment, we're extremely proud that the U S. Air Force has chosen our <unk> device and Aero module as their standard paving the way for enhanced emergency medical response and hazardous materials operations.

In September we announced the exciting news on the next phase of our multiyear project with the U S Department of defense in conjunction with our partner on the project Smiths detection. We were selected to provide initial production of 122, affordable aerosol and vapor chemical agent detectors, otherwise known as <unk>.

Our high pressure mass spectrometry technology enables these next generation chemical detector systems, which are designed to detect identify alarm and report the presence of traditional and advanced threat vapors in aerosols.

CAD, which can be mounted or portable includes a wireless remote alarm capability will support missions for the U S military.

Our project partner Smiths detection has provided the Dod with more than 91000 joint chemical agent detector J cat units over 16 years in the predecessor program to add Ken we.

We believe that being selected for the next generation <unk> validates our technology as a new standard for chemical detection. This next phase of the program will include production verification and multiple service operation testing.

Successful transitioned to full rate production could have a meaningful impact on our revenue in later years.

Pleased to be working with Smiths detection, a global leader in threat protection and we are truly honored to help protect U S military personnel in their worldwide mission.

Turning to our desktops, we recently announced a collaboration with to remote blood and cell technologies to integrate our maven online analyzer with their quantum flex cell expansion system for real time monitoring and control of glucose in lactate without the risk of manual sampling and with less labor.

Drew mob ect's quantum flex cell expansion systems are used throughout the cell therapy process from process development through clinical manufacturing.

The addition of online analytics enhance this process understanding critical and autologous applications, such as car T cell therapies, we're patient to patient variability increases the difficulty of implementing robust and reproducible processes for.

For example, lactate concentrations must be carefully monitored during the manufacturing process as they can inhibit cell growth and induce toxicity manufacturing failure rates reported in car T. Clinical trials can be significant without a spec cell viability being one of the failure causes with maven lactic.

<unk>, which are highly correlated indicator of cell viability can be continuously monitored and feeding strategies can be adjusted to control cell growth.

<unk> with its novel Aseptate sampling probe also enables cell therapy developers to reduce contamination risk and save operator time scientists no longer need to enter the clean room to perform manual sampling.

We are excited to collaborate with <unk> to enable cell therapy developers to gain valuable process insights that importantly, help them reduce cost of goods and accelerate progress for these personalized lifesaving treatment.

Turning to our second objective advancing and broadening our product portfolio.

Our product strategy is to develop devices that are simple to use and connected for improved process understanding in order to provide customers with robust answers at the point of need.

We were thrilled to launch our second game changing device this year for bio processing at the Bioprocess any international conference and exhibition in September Maverick utilizes Raman spectroscopy for real time inline monitoring of multiple bioprocess parameters mulch.

A multi variant optical sensing technologies, such as Robin spectroscopy are well suited for inline continuous monitoring of a range of parameters yet.

Yet many robyn based systems require experts in Q, a metric modeling for setup, which can take months at substantial expense Maverick can be set up in minutes. The device utilizes purpose built de novo models that automatically process Robyn spectra from a wide variety of cell culture media types and cell line.

And thereby delivering actionable process parameters.

We are also providing open access to the raw spectral data that enables AI and machine learning experts to extend maverix capability for more advanced predictive control of critical process parameters for quality attributes importantly, as a spectroscopic based device Maverick is extensible to other analytes and parameters.

Through software updates.

One of our better placements.

At the University of Massachusetts in La where Dr. Sung Kyu Yoon is the award in doubt Professor in Biomedical Sciences Doctor Yoon previously held senior positions in manufacturing Sciences at Biogen and multivariate data analysis and design at Sartorius.

He noted that with Maverick all the hurdles of traditional Robyn had been overcome Dr. <unk>. Further noted that our device provides very good measurements independently of cell line media and scale.

We're also continuing to foster our pharma and academic analytical lab customer base. Our team recently facilitated successful early access evaluations for our improved ZIP chip charge variance analysis kit with three key pharma accounts and one academic accounts our mass spec.

<unk> charged variance analysis complements ICIS workflows from our collaborator biotech me by providing more in depth protein characterization.

We're pleased to report that the new kit demonstrated a 3% to 20 fold improvement in sensitivity and additional robustness as the pharmaceutical industry continues to adopt process analytical technologies to drive the advancements of Biopharma for Plano scientists need an array of simple tools that provide.

Robust analytics to enable them to monitor and control their processes in real time.

We're addressing this need with a full portfolio of devices centered around rebel with our mass spec platform and complemented by May have been in Maverick for monitoring and control of critical process parameters plus Zip chip for the measurement of critical quality attributes. We believe we are well positioned with the suite of devices to take advantage of the impending recovery in.

The bio processing market.

And finally, turning to our third objective laying in Ohmic Foundation we.

We see a clear an emerging need for accelerating mass spec based workflows to address proteomics and metabolomics opportunities.

In the area of multi Omics, our collaborator Professor Matthew Foster at Duke University recently presented as NIH funded research on multi Omics analysis of sepsis at the U S. Human Proteome 2023, and the American Thoracic Society 2023 meetings.

In his presentation Professor Foster noted how our ZIP chip device enabled the analysis of metabolites and native peptides from the same extract preserving precious sample cutting sample preparation time in half and speeding time to results.

We further expanded our collaborations in the area of multi omics with Doctor Luca for nail assistant Professor at biology at the University of Oklahoma. He is extending the boundaries of top down proteoform sequencing and pursuing a tenfold improved throughput analysis, using our Zip chip device.

We're excited to see the outcome of Dr. <unk> work.

Overall I am pleased with our progress this quarter as we broadened our bioprocess, Inc portfolio with an exciting new product and progressive penetration of our handhelds and enterprise accounts with that I'll now turn the call over to Joe for more details on our financials.

Thanks, Kevin revenue for the third quarter, 2023 was $14 3 million decreasing 9% compared to $15 8 million in the prior year period.

Handheld revenue from our <unk> device was $11 7 million, an increase of 7% compared to $11 million in the prior year period.

During the third quarter, we shipped 117, <unk> nine away handheld devices.

The increase in handheld revenue was primarily driven by $4 2 million in revenue from initial device shipments for the recently announced U S Air Force purchase orders.

As well as revenue related to component shipments with our initial production phase under the U S Department of Defense <unk> program.

Desktop revenue from our products, serving the life Sciences instrumentation, and bio processing markets was $2 5 million decreasing from $4 4 million in the prior year period. This.

This year over year decline in desktop revenue was primarily due to a decrease in device placements as we continued to navigate a challenging funding environment.

During the third quarter, we shipped seven desktop devices, including three rebel and for us It chip interfaces.

As a reminder, we will continue to breakout placements by device for the remainder of the year starting in 2024, we will focus more on overall revenue and combine desktop placements as the key metrics for growth for our broadened desktop portfolio.

Recurring revenues, which consists of consumables accessories and service revenue decreased 21% to $3 6 million compared to $4 5 million in the prior year period and represented 25% of total revenue in the quarter.

The decrease was primarily driven by a decline in accessory and consumable revenue for our handheld devices offset in part by growth in service revenue.

Regarding desktop recurring revenue, we continue to be running at about <unk> <unk> per month for our active rebel customers.

Looking ahead, we continue to expect recurring revenue to be around 30% for the full year 2023.

Gross profit was $7 9 million for the third quarter of 2023 compared to $9 3 million for the prior year period.

Gross margin was 55% for the third quarter 2023, as compared to 59% for the prior year period.

The decline in gross margin year over year was due to several factors, including lower revenue higher service costs with training obligations charges for excess and obsolete inventory and to a lesser extent higher noncash charges for intangible amortization and stock compensation.

We continue to expect our full year gross margin to be in the lower end of our target range of mid fifties, when excluding non cash charges for intangible amortization and stock compensation.

Total operating expenses for the third quarter of 2023 were $17 million compared to $16 5 million in the prior year period.

This was driven by an increase of zero point $6 million and noncash stock based compensation.

We're committed to being very thoughtful on our cash spend and we will continue to tightly manage our head count throughout the remainder of the year and as we think about 2024 investments.

Net loss for the third quarter of 2023 was $7 1 million compared to $6 3 million in the prior year period.

We ended the third quarter of 2023 was approximately $148 million in cash cash equivalents in marketable securities and had no debt outstanding.

Importantly, we efficiently manage the consumption of cash cash equivalents in marketable securities over the quarter to less than $5 million.

We expect to end the year with a strong cash balance to support our ongoing operations.

Looking ahead to the remainder of 2023, we have narrowed our range. We now expect full year revenues to be in the range of $49 million to $51 million representing growth of 4% to 9% over full year 2022.

This compares to our previous range of $49 million to $52 million for the full year of 2023.

This guidance range contemplates two key factors.

Our progress with our handheld enterprise accounts. This includes the recently announced U S Air Force purchase orders, which were anticipated and are supportive of our current guidance.

We recognized $4 2 million in the third quarter and expect to recognize approximately $1 million in Q4 with the remainder of the revenue upon fulfillment of our training upgrade and support obligations, we're making great progress expanding our enterprise accounts, but have more work to do.

We have a handful of U S and international deals that we're working to deliver here in the fourth quarter.

Second we are expecting the ongoing pressures in the bio processing space will persist and have adjusted our expectations around availability of year end funding.

Overall, we have maintained positive growth during the first nine months of the year due to the strength and over performance of our handheld some forensics market as we look to 2024, we believe that our diversified and broad technology platform will continue to be an asset and a unique differentiator.

At this point I would like to turn the call back to Kevin for closing comments.

Thanks, Joe overall, we made important progress this quarter across our core growth areas. Despite the macro climate impacting the life sciences instrumentation and bio processing markets for desktops are handheld revenues have grown 19% over the first nine months and further acceleration is expected in.

In the fourth quarter.

As the headwinds on our desktop subside, we believe we will be well positioned to capitalize on the opportunity with a full set of differentiated products in the bio processing.

Space to drive strong topline growth in.

In the interim as we've demonstrated this quarter, we remain good stewards of our cash and ensure we retain a healthy balance through a focus on strong operational execution with that we'll now open it up for questions.

As a reminder, if you'd like to register an audio question. Please press star followed by one on your telephone keypad. If you change your mind. Please press star followed by two am please ensure your unlimited when speaking.

Our first question comes from Steven Mah of TD Cohen, Steven the line is yours.

Oh, great. Thanks for taking the questions.

So how should we think about the U S Air force ordering cadence.

<unk> 5 million or so orders are.

John what you announced here in 2023.

Okay.

This is Steven.

The Air Force purchase orders these were contemplated as part of our guidance that we set earlier this year.

<unk> purchase orders to take some time in nurturing with our team to come to fruition and become official but we're really excited about this expansion within our existing enterprise accounts.

I mentioned these purchase orders multiple elements.

<unk> device placements upgrades of previously deployed devices, which include the latest hardware narrow modules some training for the new and existing users of the <unk>.

Now.

Extended service for five years from shipment.

Timing, we did recognized $4 2 million in the third quarter and expect to recognize approximately $1 million in the fourth quarter, which will count for all the new device placements under these purchase orders.

Just thinking about the remainder of the revenue it will be recognized as we fulfill the service obligations specifically when the upgrades are completed and delivered the training is completed and the fixed service revenue will be over a five year timeframe.

Really a reminder.

We sell a good portion of our handouts with an extended service arrangement.

Upfront and a great way to secure commitment and investment in technologies with our customers, we think about U S Air Force.

U S Army and before that both saw good.

From this and as we ended the third quarter, we did have $20 million in deferred revenue. The majority related to service revenue like this and we like this is it really helps us get the cash upfront too predictable recurring revenue over time, and a great measure of customer commitment.

Net net about 5 million here in 2023, and the rest over time.

Okay I appreciate the color.

Maybe pivoting over to the Maverick and then again congrats congrats on the launch in September can you give us a little color on the early Maverick traction with customers and how should we should think about a.

Potential sales this quarter and next year.

Yes, sure Steven happy to do it yes, we're super excited that we got this launched at the bio processing show here recently and it adds to what we're trying to do it right. We're trying to build out a complementary set of products in this <unk>.

Base.

There is certainly near term challenges in that space, but we're confident that we've got the right products to positioned there so with any new product. It takes a bit of time to ramp up there may be some contribution this year and we are seeing some movement there but really.

It's about getting in People's budgets right now and this was a good time to launch in September so that over this before youre getting in People's capital budgets, and you're really looking for it as a 2024 growth driver for it.

We think again it really complements what we're doing with rebel and Maven and Super excited I would say that we've been having a lot of strong conversations with it and internally here, we talk about 30% to 30, meaning we've created a pipeline of 30 plus opportunities in the first 30 days. So we're thrilled by that response, obviously it takes time.

Theres some conversion of it but there is some good global pharma groups that we're having conversations with them and we think we're setting ourselves up well into 2024, so if maverick as an overall barometer of 24 I think it's a good sign and we have some concrete measurement points, there, but definitely early days.

Okay I appreciate the color thanks for taking the questions.

Our next question comes from Matt Larew of William Blair. Please go ahead.

Hey, good morning, maybe just hopping following up on that.

Kevin you referenced.

Good to get Maverick out ahead of it.

The budgeting cycle for next year, just curious as you've had conversations with customers what youre hearing about.

How customers are thinking about 2024 budgets I think throughout this earnings season on the bio processing side, we've heard.

<unk> set the destocking phenomenon, maybe coming to a close but the broader secular pressures are still in place. So just kind of curious what you've heard from customers that you're talking.

Talking about potential private placements next year.

Yes, Thanks, Matt I think Youre right I mean, there definitely is that backdrop of a challenging macro and we think of it as both in the bio processing, but also that life science instrumentation customers and certainly consistent with what we're what we're hearing there as you know we're trying to get new technologies.

<unk> into that preclinical early stage process development right. So the bar is.

These hard there youre definitely seeing people still with the situation where.

Capital has been reduced on hold a bit more scrutinized all of which is really kind of prolonged in the sales cycle.

We are staying tight with customers monitoring having having good dialogue about individual situations there.

But that said I think we're confident there will be a recovery here in that we've got the right tools in place to take advantage of that to kind of build on the strength of our handhelds as we progress that and see that market recovery.

If you think about 'twenty four I would say, it's a bit early for us and we're going to see how Q4 plays out but we're cautiously optimistic we've had a series of productive conferences. This fall.

And but how those budgets translate into the opportunities and closing time and whether that's H, one H two et cetera.

Next year, a little bit remains to be seen there.

Okay fair enough.

And then on the opportunity.

Cat opportunity could.

Could you maybe help us think about the sort of the economic opportunity per unit and how that might compare to the traditional placement, but the first part and then the second part. Thank you referenced 60000 placements with MIT sort of legacy opportunity.

I guess over what timeframe did that did that get placed have get placed sort of on a typical quarterly cadence or are there a few large orders that comprise that just trying to think about how that might materialize and it does over time.

Going through some of the details as you can imagine we're very excited.

Moving into this initial production phase.

Which began in the third quarter and is likely to span into the first half of 2025 from a timing perspective.

Deliver those initial products in Q3 were approximately $2 5 million and expect to deliver an additional million dollars in Q4, and there's additional product and support in 2020 for maybe about $1 million as currently contracted in the.

The deliverables are front end loaded basically to enable smiths our partner to complete their build and delivery. So the U S government and we will support those initial deployments and any services required ultimate goal is to get into the full rate production for 2025 and beyond sort of the cost per unit. These are components to your amount of full <unk> and <unk>.

<unk> based upon quantities, especially as you get into future full rate production phase.

It's a great opportunity and thinking more broadly for Jay Chad I think you alluded to and it represented a full rate production and extended years on the initial commitment to estimates have previous Jake had a program for <unk> and the goal is a successful transition to full rate production.

Have a meaningful impact on our revenue in later years by 2025 and beyond and at this time, we're really focused on that initial production phase and there are no firm commitments for full rate production to full rate production could be or up to or even over $10 million plus a year an opportunity. If we were to get to full rate production.

There's a lot of potential for this to be an important driver as you can imagine for our handhelds and we're excited to be a part of the program.

Yes.

Okay, great to hear thank you.

Our next question comes from Puneet Suiter of Leerink partners <unk>.

Please go ahead.

Hi, guys you have Michael on for Puneet.

<unk>.

Thanks for taking my question I was wondering if you could help bridge for us.

The change in the guide that you mentioned that the Air Force order was contemplated earlier, so I just want to know what's driving the delta.

Yeah, Hi, Michael Yes. Thanks, Thanks for the question, yes, we narrowed the guidance a bit here in part that we didn't see the recovery from the desktops in Q3, and we expect that to persist now into Q4. So we're not really assuming any large capital flush at this time.

And certainly challenges in that overall bio processing space, maybe more pronounced than we anticipated at the outset of the year.

However, as we've been discussing today, you really have been significantly offset by the strong growth of our handheld devices in the forensics market, which really has buda all buoyed our overall growth. So we feel good on the handheld handheld side strong pipeline. Some enterprise orders, we've been talking about some others that we're working through.

<unk>.

And we really expect it to drive our revenue for Q4 and expect the handheld that continue to contribute meaningful Li and really drive that overall growth into the mid to high single digits for the year. So really good booking progress here as well in the first 30 days of the quarter Theres certainly more left to do but we're encouraged but maybe Joe you want to add.

Add some other color I think just to hit on the points.

Narrowing of the guide is mainly from the desktops perspective, both Q3 and as we look to Q4 and the budget flush estimates at the time back in August.

Okay, yes that makes sense.

I was wondering if it gets a bit more color on the two remote deal do you have any ideas about.

I guess, how that can translate to the P&L if it gives.

Given your exposure to new customers that are negative.

Hey could you offer any color on that.

Yeah happy to Yeah, we're super excited to be able to talk about now it's a great collaboration with <unk> and their quantum flex cell expansion system.

Used throughout the wholesale cell therapy workflow from process development through clinical manufacturing and across a wide range of cell types from stem cells and let the viral vector and all the way to car T processes. So we talked earlier in the year about a driver for us is to get made and into and connected to somebody need integrated.

Cell therapy platforms and I think this is one example.

The nonexclusive way that we've got a great collaboration with to remote and really think about it as us were really kind of keeping up our maven and the consumable and the single use perfusion module.

To me directly into their into their system, and we think theres a lot of value there for the end customer because if you. If you look at what we're able to do we're really reducing the risk of manual sampling so reducing cost of goods, taking labor out of it but importantly, we're using it to be able to help determine when the.

The endpoint of the processes really using it as a surrogate for cell viability. So these are the types of areas from applications that we think maybe can contribute in the cell therapy space and so I think it's a it's a great example of how we can work with partners out there to bring complete solutions to this to these customers.

Space and this is in that cell therapy area and you might recall, we have a relationship with sartorius that we're continuing to foster to do very similar with the technology. That's in our in our maven and related products.

Into their ecosystem of Bioreactors and customers.

Yeah.

Great. Thanks.

Our next question comes from Jacob Johnson of Stephens, Jacob Golan is yours.

Hey, Thanks, Good morning, maybe just Kevin a follow up on that term that partnership I heard you mentioned it is nonexclusive and so is this something that we should expect to see you kind of expand maybe expand on this with other providers and is that that kind of the go to market strategy for maven, where it's good.

To partner with.

For lack of a better term kind of bioreactor type offerings for cell therapy.

Yes, I think youre right on all accounts I mean, we really see maven as being a strong contributor to online analytics and giving these process development teams at least kind of call. It actionable insights and made and with the streaming out glucose and lactate and then actually being able to also control.

We think it makes a lot of sense to be partnered in various forms in various ways, whether it's an OEM, whether it's being friendly whether it's co marketing agreements collaboration agreements really trying to have a full spectrum there to extend the reach of our of our sales team and really look to provide customers with more of a solution rather than just a device if you will.

So yes, I think we hope to show more examples of that as.

As we go forward and Super excited to be working with <unk> and as I've mentioned already working with sartorius as well the biologic space.

Got it that's helpful. And then maybe Kevin I'll kind of bigger picture capital allocation type question, obviously, a lot of effort on the desktop side at the last couple of years.

In terms of sales and marketing kind of new product development I'm just curious in the current macro environment, where that business is a little more challenged than youre seeing these opportunities on the handheld side are you focusing more of your time in the company's resources on the handheld side of the business.

Yes.

We're doing two things I mean, one in this desktop space. We are absolutely trying to use this time to build out that foundation build out a really compelling chapter of complementary technologies and devices that can bring a holistic.

Set of products to the <unk> space, and really kind of marching towards that try quarter scanner like device that is just providing process and quality attributes. So we are absolutely doubling down in that and we're spending a lot of time, making sure that we've got customers successful with all of our product and they are really experiencing the benefits and <unk>.

<unk> to remote today, but we work every day with each and every one of our customers out there for for rebel and all of our devices. So absolutely a major focus major resource area.

And deployment for us, but with that said handhelds has been impressive to us and it's been over performing to us in our in our plans to date and we don't see that stopping we really see a lot of opportunity a fentanyl crisis.

Opioid crisis counterfeit pharmaceuticals, a lot of drivers out there that our team is able to help with our customers and our solution. So we're absolutely want to win in that space and we're investing in that space and we want to own that space. So we are we are continuing to make investments there and work on both R&D roadmap sales <unk>.

<unk> market development.

Got it thanks for that perspective, and taking the question.

Okay.

As a reminder, that star followed by one to register a question. Our next question comes from Dan <unk> of Stifel. Please go ahead.

Hey, good morning, guys. Thanks, Kevin maybe to your to your last point there you have done a nice job. This year back filling the handheld order book post the army contract roll off obviously, we're getting to the point in a year, where we're starting to look ahead. So.

I know, we will need to wait for a little bit to get details on the outlook, but you. Both UN general made comments on the things that Youre working here working on here in <unk> can you just maybe touch on the way in which you see the sales funnel heading into 2024 for handhelds and then how you might compare the strength of that funnel to this time.

Last year.

Yes, sure sure sure absolutely.

All of these are working to build up that pilot to enterprise conversion and have opportunities on deck here to expand within the enterprise accounts and we are pleased that over the first nine months, we did get that 19% growth out of the handhelds there, but it certainly has has buoyed our overall performance.

We have big enterprise orders each year that promote that growth that we're always working to navigate but we certainly have a number of enterprise and pilots being transitioned and always have a heavier reliance on those we feel we've got plenty of time to work with here plenty of sockets and really just paced by by budget priority and are working through the pipeline.

And how it's really broadened with our with our offerings over the last 18 months, whether it be the accessories and the arrows beacons and other elements. So we think theres a lot. There. If we think about 2024, we think kind of holistically about our offerings at 908 here and were really diversified we've got a broad technology platform that.

We think as an asset and a unique differentiator and.

We're cautiously optimistic.

We're seeing for 2024 here at these early at these early moments, but we're hearing some positive indicator and anecdotes and things seem to be moving in the right direction no.

We can't really predict when the recovery in the bio processing headwinds really subside, but I would say that we're very confident in our product portfolio and working towards getting back to being a 20 plus percent grower as soon as we can and got a lot of good momentum there with their handheld devices, serving forensics, we're going to keep investing keep that going in.

And we think we've been doing a decent job managing our cash and so we've got a long runway of growth and importantly, now we really do have many more shots on goal without foundation in process analytical technology tool. So look I mean, if you think about 2024 in these early days if you combine the durability of our <unk>.

Ship handheld here and have demonstrated some good growth and you think about the macros lessening a bit and our expanded desktop portfolio.

Things will get exciting here in the not too distant future.

Yes, so it would be great.

And then maybe just on a rebel usage and where that tends to be higher or lower cell and gene therapy and <unk> customers.

Those seem to be the areas, where the intensity that workflow is a good thing for you, but that has been a choppy market. This year. So as we again as we look to next year do you see that bucket is additive to the utilization average because of that intensity or are you not ready to say that that would be the case, just given the ups and downs that we're talking about there.

Yes.

Yes, I'd say its hard for us to slice and dice. It I mean, we're continuing to see about a half a kit per month on average for our active users ultimate goal as we've discussed in the past kind of getting to more one kit per month.

I forget a month.

Is it on average is about $24000 worth of consumables.

We're working to of course get that to increase and you're right. Some of the dynamics in some of the modalities could be could be strong drivers. There. We do think it's a good sign that during these these macro times. It has been hanging in there at the half obviously liked it to increase from there and are working.

To drive that but yeah, I don't think we can slice and dice bye.

By modality just yet.

Got it okay. Thank you.

Okay.

With that I'll hand back for any closing remarks.

Well. Thank you. Thank you very much and we appreciate your time today and with that we'll end the call.

Thank you for joining ladies and gentlemen, you may now disconnect your lines.

[music].

Yeah.

Okay.

Yeah.