Q1 2024 908 Devices Inc Earnings Call

April 30, 2024

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Operator: Hello everyone, and welcome to the 908 Devices First Quarter 2024 Financial Results Conference call. My name is Seb, and I'll be the operator for your call today. If you would like to ask a question during the Q&A session, please press star 1 on your telephone keypad or press star 2 if you would like to withdraw your question. I will now hand the floor over to Kelly Gura, Investor Relations, to begin the call.

Speaker Change: Hello, everyone and welcome to the nine Oh wait devices first quarter 2020 full financial results conference call.

Seth: My name is Seth and I'll be the operates us take a cold today, if he would like to ask a question during the Q&A session. Please press star one on your telephone keypad or press star two if he would like to withdraw your question.

Seth: I'll now hand, the floor over to Kelly <unk> Investor relations to begin the call.

Kelly Gura: Thank you. This morning, 908 Devices released financial results for the first quarter ended March 31, 2024. If you've not received this news release, or if you'd like to be added to the company's distribution List, please send an email to addr@908devices.com. Joining me today from 908 are Kevin Knopp, Chief Executive Officer and Co-Founder, and Joe Griffith, Chief Financial Officer. Today's call includes a slide presentation which is viewable to those joining via webcast. The slides will also be available after the call ends at ir.908devices.com under the menu header events and presentations.

Kelly: Thank you. This morning, Ninoy devices released financial results for the first quarter ended March 31, 2020 for it if you've 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 98 devices Dot com joining.

Kelly: Joining me today from 970, <unk>, Chief Executive Officer, and co founder and Joe Griffith Chief Financial Officer.

Speaker Change: Today's call includes a slide presentation, which is beautiful to those joining via webcast.

Speaker Change: The slides will also be available after the call and I aren't that nine or eight devices dot com under the menu had or events and presentation.

Kelly Gura: 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. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements in the press release 908 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, 2023, and its other filings with the Securities and Exchange Commission.

Speaker Change: 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.

Speaker Change: Information regarding these risks and uncertainties appears in the section entitled forward looking statements in the press release and Android devices issued today for a more complete listing discussion. Please see the risk factors section of the company's annual report on Form 10-K for the year ended December 31, 2023, and its other filings with the Securities and Exchange Commission.

Kelly Gura: Except as required by law, 908 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, April 30, 2024.

Speaker Change: 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 April 30th 'twenty 'twenty four.

Speaker Change: I would like to turn the call over to Kevin.

Kevin J. Knopp: Thanks, Kelly. Good morning, and thank you for joining our first quarter 2024 earnings call. We had a solid start to the year with top-line revenue of $10 million for the first quarter, representing 8% product and service growth year over year. We continue to see robust demand for our handheld devices in Q1 and anticipate this trend to persist throughout the year as applications for chemical detection and identification at the point of need gain further traction in the U.S. and internationally.

Thanks Kelly.

And thank you for joining our first quarter 2024 earnings call.

Kevin: We had a solid start to the year with topline revenue of $10 million for the first quarter, representing 8% product and service growth year over year, we continued to see robust demand for handheld devices in Q1 and anticipate this trend to persist throughout the year as applications for chemical detection and identification.

Kevin: At the point of being gained further traction in the U S and internationally.

Kevin J. Knopp: Over the past several years, our team has built a robust product portfolio that serves the forensics and bioprocessing markets through both our own innovation, as well as strategic acquisitions. On our last earnings call, we outlined three clear objectives for 2024.

Kevin: Over the past several years our team has built a robust product portfolio that serves the forensics and bio processing market through both our own innovation as well as through a strategic acquisition on.

Kevin: On our last earnings call, we outlined the three clear objectives for 2024.

Kevin J. Knopp: First, to expand our market reach. Second, to leverage our expanded product portfolio. And third, to execute under a framework for sustained growth with a path to profitability.

Kevin: First to expand our market reach.

Kevin: Second to leverage our expanded product portfolio and.

And third to execute under a framework for sustained growth with a path to profitability.

Kevin J. Knopp: This morning, we are excited to announce the acquisition of RedWave Technology. This acquisition is additive to each of our existing initiatives for the year, and we believe it will be a very strong strategic fit over the near and long term. As you will see momentarily, there is very strong strategic rationale and synergies between the two companies, which makes this a very compelling acquisition. Importantly, our teams have very similar cultures and ethos, which makes me extremely confident of the fit as we welcome the Red Wave team into our organization.

Kevin: This morning, we were excited to announce the acquisition of Red wave technology.

Kevin: This acquisition is additive to each of our existing initiatives for the year and we believe will be a very strong strategic fit over the near and long term.

Kevin: As you will see momentarily.

Kevin: Strong strategic rationale and synergies between the two companies, which makes us a very compelling acquisition.

Kevin: Importantly, our teams have very similar cultures, and ethos, which makes me extremely competent of the fit as we welcomed the red wave team into our organization.

Kevin J. Knopp: 908 Devices has a mission of creating a positive impact in people's lives through our efforts to help our customers rid our communities of fentanyl and counterfeit pharmaceuticals and advance life-changing personal medicine. Similar to our mission, RedWave thrives on helping increase the safety of first responders and other frontline workers that must answer the call each day. It is a founder-led, highly technical organization that we believe matches well culturally with our innovative team at 908 Devices.

Kevin: 908 devices has a mission of creating positive impact in People's lives with our efforts to help our customers Ritter communities.

Kevin: So and counterfeit pharmaceuticals, and advance life changing personal medicines similar to our mission Red wave thrives on helping increase the safety of first responders and other frontline workers that must answer the call each day.

It is a founder led highly technical organization that we believe matches well culturally with our innovative team at 98 devices.

Kevin J. Knopp: Further, our Chief Product Officer, our VP of Government Sales, and I, along with many others in our management, commercial, and technical teams, have immense experience with optical spectroscopy from product development to large-scale commercial penetration. This is a well-understood technology space, set of products, and applications for our team, which we believe will significantly lower the execution risk of the acquisition and enable us to focus on the positive financial impacts we expect to materialize.

Kevin: Further our chief product officer, our VP of government sales and I, along with many others in our management commercial and technical teams have immense experience with optical spectroscopy from product development to large scale commercial penetration.

Kevin: This is a well understood technology space set of products and applications for our team, which we believe will significantly lower the execution risk of the acquisition and enable us to focus on the positive financial impacts we expect to materialize.

Kevin J. Knopp: So prior to reviewing our first quarter results, I wanted to walk you through a set of slides that outline why we are so excited about this acquisition and the positive synergies we expect to see for our business. We believe there are many compelling points that highlight the strong rationale for this acquisition, which I will summarize into five key areas.

Kevin: So prior to reviewing our first quarter results I wanted to walk you through a set of slides that outlines why we are so excited about this acquisition and the positive synergies, we expect to see for our business.

Kevin: We believe there are many compelling points that highlight the strong rationale for this acquisition, which I will summarize into five key areas.

Kevin J. Knopp: First, RedWave, as a standalone company, has an attractive financial profile. It is a profitable, high-growth, privately-owned business with unaudited 2023 full-year revenues of approximately $13.7 million, attractive gross margins of approximately 52%, and a positive operating margin of approximately 15%. Last year, they grew revenue 20% plus year over year and operated as a cash flow positive business. Second, RedWave expands its toolkit of handheld chemical analysis devices to serve broader forensics workflows spanning unknown solids, liquids, gases, and aerosols from initial detection through their identification.

Kevin: First red wave as a Standalone company has an attractive financial profile it.

Kevin: It is a profitable high growth privately owned business with unaudited 2023 full year revenues of approximately $13 7 million attractive gross margins of approximately 52% and a positive operating margin of approximately 15%.

Kevin: Last year, they grew revenue, 20% plus year over year and operating cash flow positive business.

Kevin: Second Red wave expands our toolkit of handheld chemical analysis devices to serve broader forensics workflows spanning unknown solids liquids gases and aerosols from initial detection through their identification.

Kevin J. Knopp: With this acquisition, our handheld portfolio goes from one to four market-leading handheld products. With the comprehensive capabilities of this expanded handheld portfolio, we expect to accelerate penetration of the addressable forensics market, which we estimate to be more than $1.3 billion.

With this acquisition our handheld portfolio goes from one to four market leading handheld products.

Kevin: With the comprehensive capabilities of this expanded and held portfolio, we expect to accelerate penetration of the addressable forensics market, which we estimate to be more than $1 3 billion.

Kevin: Third.

Kevin J. Knopp: The RedWave products immediately add to the bags of our 908 Direct Sales and Applications team, enhancing our efficiency and scale while supporting RedWave's growth trajectory with our robust commercial platform and global reach. Fourth, in addition to the synergies for our forensics customers, RedWave's products also bolster our bioprocessing business. Their technology is based on an infrared optical spectroscopy platform called FTIR that is additive to our newly released Raman product, Maverick, that operates on a related scientific principle. Process analytical technology customers in pharma often leverage FTIR, Raman, and other related infrared spectroscopy technologies for QC, upstream, and downstream applications.

Kevin: The Red wave products immediately add to the bag of our 908 direct sales and applications team enhancing our efficiency and scale, while supporting <unk> growth trajectory with a robust commercial platform and global reach.

Fourth in addition to the synergies for our forensics customers Red waste products also bolster our bio processing business. Their technology is based on an infrared optical spectroscopy platform called FTIR that is additive to our newly released Robin product Maverick that operates on a related scientific principle.

Kevin: Process analytical technology customers in pharma, often leverage FTIR, Robyn and other related infrared spectroscopy technologies for QC upstream and downstream applications.

Kevin J. Knopp: RedWave has a small presence already here today, and we see future opportunities to leverage the RedWave technology to further enhance our existing bioprocessing portfolio. And finally, fifth, this combination significantly enhances our financial profile. RedWave is profitable and cash flow generating. Immediately, it is accretive to our gross margin. We've also identified more than $5 million in forecasted annual cost synergies that we expect to be realized in 2026. The contribution of Red Wave revenue, the leverage of 908 sales infrastructure, and the identified cost synergies are expected to accelerate our path to reach $100 million in annual revenues and accelerate our crossover to cash flow break even with a steeper profitability ramp thereafter.

Kevin: <unk> has a small presence already here today, and we see future opportunity to leverage the red wave technology to further enhance our existing bio processing portfolio.

And finally fifth this combination significantly enhances our financial profile Red with is profitable and cash flow generating immediately read way that is accretive to our gross margins. We have also identified more than $5 million in forecasted annual cost synergies that we expect to be realized in 2026.

Kevin: The contribution of Red wave revenue the leverage of 90 weight sales infrastructure and the identified cost synergies are expected to accelerate our path to reach $100 million in.

Kevin: Annual revenues and accelerate our crossover the cash flow breakeven with a steeper profitability ramp thereafter.

Kevin J. Knopp: And importantly, we continue to expect that we'll be able to reach breakeven with our cash on hand. The upfront transaction value is $53.5 million, which is comprised of $45 million in cash and 1.5 million shares, representing $8.5 million using our closing stock price as of April 26. In addition, there is the potential for milestone consideration totaling up to 4 million additional shares, representing $22.7 million, using our closing stock price as of April 26th, for accelerated growth over the next 24 months. An annualized approximate 22% growth is required to meet the minimum threshold for these payments.

Kevin: And importantly, we continue to expect that we'll be able to reach breakeven with our cash on hand.

The upfront transaction value is $53 5 million.

Kevin: Which is comprised of $45 million in cash and $1 5 million shares representing $8 5 million using our closing stock price as of April 26.

Kevin: In addition, there is the potential for milestone consideration totaling up to 4 million additional shares representing $22 7 million using our closing stock price as of April 26 for accelerated growth over the next 24 months.

Kevin: And annualized approximate 22% growth is required to meet the minimum threshold for these payments as red waves growth then becomes on par with 900 devices historic handheld revenue growth levels. Additional consideration is earned over 24 months achieving the full earn out.

Kevin J. Knopp: As RedWave's growth then becomes on par with 908 Devices' historic handheld revenue growth levels, additional consideration is earned over the 24 months, achieving the full earn out at an approximate 38% annualized growth rate. We believe this structure creates long-term value for our shareholders and rewards RedWave for accelerated growth with stock issuance upon performance. RedWave is a leader of innovation in optical spectroscopy. The company was founded in 2016 by a well-known and respected team in the detection space and is headquartered in a modern and cost-efficient 38,000 square foot facility in Danbury, Connecticut. They've developed a compact and mobile technology variant of infrared spectroscopy called FTIR. FTIR is renowned for its specific substance identification abilities across a broad range of bulk materials.

Kevin: Approximately 38% annualized growth rate. We believe this structure creates long term value for our shareholders and reward thread wave for accelerated growth with stock issuance upon performance.

Kevin: <unk> is a leader of innovation in optical spectroscopy. The company was founded in 2016 by well known and respected team in the detection space and is headquartered in a modern and cost efficient 38000 square foot facility in Danbury, Connecticut.

Kevin: They've developed a compact and mobile technology variance of infrared spectroscopy, FTIR FTIR is renowned for its specific substance identification abilities across a broad range of bulk materials using this technology red wave products can identify more than 22000 chemicals and bulk including visible amounts of drug.

Kevin J. Knopp: Using this technology, RedWave products can identify more than 22,000 chemicals in bulk, including visible amounts of drugs, white powders, and other unknown solids and liquids. This is a very complementary capability, as our mass spec technology is highly regarded for its tremendous sensitivity, providing unparalleled detection and identification capabilities at trace and invisible levels for a focus list of chemical species. Given the complementary capabilities of our devices, RedWave products target the same types of customers as our handheld products, including first responders, law enforcement, and other frontline workers, including customs and postal inspection agents globally.

<unk> white powder, and other unknown solids and liquids.

Kevin: This is a very complementary capability as our mass spec technology is highly regarded for its tremendous sensitivity, providing unparalleled detection identification capabilities at Tres and invisible levels for a focus list of chemical species.

Kevin: Given the complementary capabilities of our devices red waste products target the same types of customers as our handheld products, including first responders law enforcement and other frontline workers, including customs and postal inspection agents globally.

Kevin J. Knopp: There's a long runway of opportunity ahead for growth. WEDRA products are well positioned to replace more than the 15,000 legacy FTR products that are lacking modern conveniences, such as remote connectivity and app integration. In addition to the significant opportunity to replace legacy FTI products, there is an opportunity to address an expanded use case for unknown gas identification. RedWave offers products that can identify 5,500 toxic and DOC gases to help track down the source of a leak in industrial and hazardous material situations.

Kevin: There's a long runway of opportunity ahead for growth wed rate products are well positioned to replace more than the 15000 legacy <unk> products that are lacking modern conveniences, such as remote connectivity and App integration.

Kevin: In addition to the significant opportunity to replace legacy FTR products. There is an opportunity to address an expanded use case for unknown gas identification.

Kevin: <unk> offers products that can identify 5500 toxic and boc gases to help track down the source of the leak and industrial and hazardous materials situations they've.

Kevin J. Knopp: They've built three innovative handheld products that pair well with our MX908 and fortify our MX Aero offerings and our roadmap in the air monitoring space. Our sales team is excited to add these complementary Red Wave products to our handheld product offerings immediately. As I mentioned moments ago, our products are highly complementary for analyte detection and identification. For example, forensics customers use both MassSpec and FTIR to rapidly assess and monitor their environment for dangerous trace chemicals and possible bulk chemical hazards. In the most general sense, our MX mass spec handheld focuses on the invisible and unseen, targeting fentanyl, its many analogs, and hundreds of such highly toxic analytes.

Kevin: They've built three innovative handheld products that pair well with our nx nine away and fortify our MF aero offerings and our roadmap in the air monitoring space.

Kevin: Our sales team is excited to add these complementary red wave products to our handheld product offerings immediately.

As I mentioned moments ago, our products are highly complementary for analyte detection and identification forensics customers use both mass spec and <unk> to rapidly assess and monitor their environment for dangerous trace chemicals and possible bulk chemical hazards.

Kevin: General sense, our amex mass spec handheld focuses on the invisible and unseen targeting Sentinel, it's many analogues and hundreds of such highly toxic analyte redwood.

Kevin J. Knopp: RedWave's FTIR-based products expand our detection capability to more than 22,000 and are ideally suited for visible bulk sample identification. Together, the two technologies offer a fast and comprehensive field forensics toolkit, supporting our customers' broader workflow. By bringing RedWave's market-leading handheld technology to 908 Devices, we can leverage our existing scale and platform to serve both new and existing customers more efficiently. Strong relationships and support through the sales cycle are key to our customers.

Red waves FTIR based products expand our detection capability to more than 22000 and are ideally suited for visible bulk sample identification.

Kevin: Together, the two technologies offer a fast and comprehensive field trends ex toolkit supporting our customers broader workflows.

Kevin: By bringing red waves market, leading handheld technology to 900 devices, we can leverage our existing scale and platform to serve both new and existing customers more efficiently strong relations and support through the sales cycle are key to our customers by bringing their team onto our existing commercial platform, we can better.

Kevin J. Knopp: By bringing their team on to our existing commercial platform, we can better serve customers across the sales cycle, from technology and application to offering world-class support and service. And we can now offer a combined situational awareness view through our 24-7 reachback service with multiple data modalities available.

Kevin: Serve customers across the sales cycle from technology and application to offering world class support and service.

Kevin: And we can now offer a combined such awareness view throughout $2004 seven reach back service with multiple data modalities available. Additionally.

Kevin J. Knopp: Additionally, with the scale of RedWay's cloud-based fleet management offering, we have the potential to offer new value-add data services for additional recurring revenue. The existing RedWave devices already in the field significantly expand our base. Collectively, we now have over 3,600 units deployed and more than 18,000 trained users.

Kevin: Additionally, with scale of Red waves cloud based fleet management offering we have the potential to offer new value add data services for additional recurring revenue.

Kevin: The existing Red wave devices already in the field significantly expand our base collectively we now have over 3600 units fielded and more than 18000 trained users.

Kevin J. Knopp: Over the last few years, we focused on creating a portfolio of desktop devices to serve biopharma, and we released two products just last year, as we believe that desktops will be a significant contributor going forward. With this acquisition, we are adding three products to create a light portfolio of handhelds for forensics to gain efficiency and scale in that space as well. For both our desktops and handhelds, we see great benefits in having complete and complementary suites of products to offer our customers. We believe the strategic rationale here is incredibly clear.

Kevin: Over the last few years, we focused on creating a portfolio of desktop devices to serve Biopharma and we released two products just last year as we believe their desktops will be a significant contributor going forward.

Kevin: With this acquisition, we are adding three products to create a portfolio of handhelds for forensics to gain efficiency and scale in that space as well.

For both our desktops and handhelds, we see great benefits by having complete and complementary suites of products to offer our customers.

Kevin: We believe.

Kevin: The strategic rationale here is incredibly clear first we believe this acquisition will meaningfully accelerate our revenue growth and an end market that has been performing well.

Kevin J. Knopp: First, we believe this acquisition will meaningfully accelerate our revenue growth in an end market that has been performing well. Second, the overlapping customers and call points enable significant sales and marketing synergies. Third, it is projected to improve scale and efficiency in a large addressable forensic market, opening access to a broader portfolio of capabilities for our customers. Fourth, it expands our tech toolbox; we have now created a leading point-of-need analysis platform, MassSpec, Raman, and FTRR, three lab-grade technologies supporting a robust roadmap long-term in forensics and bioprocessing.

Kevin: Second the overlapping customers and call points enabled significant sales and marketing synergies.

Kevin: Third it is projected to improve scale and efficiency in a large addressable forensics market opening access with a broader portfolio of capabilities for our customers.

Kevin: Fourth it expands our tech toolbox and have now created a leading point of need analysis platform mass spec Robyn and FTR three lab, great technologies supporting a robust roadmap long term in forensics and bio processing.

Kevin J. Knopp: And finally, it is forecasted to be accretive to both the top line and gross margin. We are acquiring a profitable cash-generating business, which accelerates our path to break even. As I touched on earlier, RedWave offers a compelling financial profile with meaningful revenue and margins, growth rates, and earnings above our own corporate averages. RedWave and 908 Devices have an overlapping customer base and call points, supporting improved scale and leverage of sales and marketing efforts.

Kevin: And finally.

Kevin: It is forecasted to be accretive to both the topline and gross margins, we are acquiring a profitable cash generating business, which accelerates our path to breakeven.

As I touched on earlier Red wave offers a compelling financial profile with meaningful revenue and margin growth rates and earnings above our own corporate averages red wave in 98 devices have an overlapping customer base and call points supporting improved scale and leverage of sales and marketing efforts red.

Kevin J. Knopp: RedWave has just begun to sell into U.S. federal government accounts, and we believe that our success with large enterprise accounts will help to further penetrate this opportunity. Internationally, RedWave and 908 Devices share many of the same channel partners. We estimate an 80% overlap, again creating efficiencies of scale. As mentioned, beyond mass spec, pharma PAT customers often leverage FTR, Raman, and related infrared spectroscopy technologies for applications in QC, upstream, and downstream.

Kevin: <unk> has just begun to make sales into U S. Federal government accounts, and we believe that our success with large enterprise accounts will help to further penetrate this opportunity.

Kevin: Internationally Red wave in 900 devices share many of the same channel partners, we estimate 80% overlap again, creating efficiencies of scale.

Kevin: As mentioned beyond mass spec pharma customers, often leverage FTR, Robyn and related infrared spectroscopy technologies for applications and QC upstream and downstream.

Kevin: 900 devices desktop portfolio includes our new Robyn based Maverick device for upstream bio processing and Red wave now adds a line of Robyn and FTR accessories for.

Kevin J. Knopp: The Desktop Portfolio includes our new Raman-based Maverick device for upstream bioprocessing, and RedWave now adds a line of Raman and FTR accessories for PAT and industrial QC, with the potential for optionality to extend FTR devices into downstream pharma. These accessories represented approximately $2 million of their full year 2023 sales. We are positioning ourselves for accelerated growth through our selective acquisition strategy and new product launches. RedWave is our second acquisition as an organization following the successful acquisition and technology integration of Trace Analytics GMBH in 2022.

Kevin: In industrial QC with the potential for Optionality to extend FTR devices into downstream pharma. These accessories represented approximately $2 million of their full year 2023.

Kevin: We are positioning ourselves for accelerated growth through our selective acquisition strategy and new product launches Red wave is our second acquisition as an organization. Following the successful acquisition and technology integration of trace analytics GMB H in 2022.

Kevin J. Knopp: Since our IPO in late 2020, we've developed and launched a suite of innovative desktop devices, two just last year, to position us for growth as the headwinds for life science instrumentation and bioprocessing subside and advanced therapeutic modalities take hold. Over time, we have grown total top-line revenue at a three-year CAGR of 23%, supported in large part by our flagship handheld device for the detection of fentanyl and related In 2023, Anhealt represented 76% of our revenues and grew 28% year over year. We absolutely want to continue to win in that space while we nurture and grow our desktops for bioprocessing.

Kevin: Since our IPO in late 2020, we developed and launched a suite of innovative desktop devices to just last year to position us for growth as the headwinds for life science instrumentation, and bio processing subside and advanced therapeutic modalities take hold.

Kevin: Over time, we have grown total topline revenue had a three year CAGR of 23% supported in large part by our flagship handheld device for the detection of fentanyl and related trace applications in 2023, and helped represented 76% of our revenues and grew 28% year over year.

Kevin: Year, we absolutely want to continue to win in that space, while we nurture and grow our desktops for bio processing. We believe the acquisition of <unk> does just that by solidifying our handheld market position and driving accelerated growth in a market we have seen with durable success.

Kevin J. Knopp: We believe the acquisition of RedWave does just that by solidifying our handheld market position and driving accelerated growth in a market we have seen with durable success. With the contributions from 8 months of RedWave revenue for 2024, we now expect full year reported revenues to be between $63 to $65 million, an increase of 25 to 29% compared to 2023. Joe will address the details of this guidance in a moment.

Kevin: With the contributions from eight months of <unk> revenue for 2024, we now expect full year reported revenues to be between <unk> $63 million to $65 million, an increase of 25% to 29% compared to 2023.

Kevin: Joe will address the details of this guidance in a moment.

Kevin J. Knopp: We project favorable financial impact from this acquisition, including higher growth, improved margins, and a faster path to profitability. In 2024, we expect to add $11 million in revenue, representing eight months of ownership on top of the revenue guidance we provided for the core 908 business earlier this year. Over time, we expect Red Wave to contribute strong gross margins above 908 Devices' corporate average. We are absorbing a cash flow positive business, and going forward, we've identified more than $5 million in forecasted annual cost synergies to be realized in 2026.

Kevin: We project favorable financial impact from this acquisition, including higher growth improved margins and a faster path to profitability.

Kevin: 24, we expect to add $11 million in revenue representing eight months of ownership on top of the revenue guidance. We provided for the core <unk> business earlier this year.

Kevin: Overtime, we expect <unk> to contribute strong gross margins above 900 devices corporate average.

Kevin: Absorbing a cash flow positive business and going forward, we have identified more than $5 million in forecasted annual cost synergies to be realized in 2026.

Kevin J. Knopp: The acquisition is fully funded with cash from the balance sheet, and an additional consideration will be paid in stock contingent on RedWave meeting a minimum annual growth target of approximately 22% over 24 months. We continue to believe that our cash on hand is sufficient to reach cash flow breakeven.

The acquisition is fully funded with the cash from our balance sheet and an additional consideration will be paid in stock contingent on red wave meeting a minimum annual growth target of approximately 22% over 24 months.

Kevin: We continue to believe that our cash on hand is sufficient to reach cash flow breakeven.

Kevin J. Knopp: At 908 Devices, we have always operated our business with the goal of building a solid financial foundation for durable, long-term, profitable growth. This acquisition is squarely in line with that vision and further fortifies the foundation we are building. We now have multiple lab-grade analytical platforms at hand to power point of need chemical analysis today and well into the future.

Kevin: Either way it devices.

Kevin: We have always operated our business with the goal to build a solid financial foundation for durable long term profitable growth. This acquisition is squarely in line with that vision and further fortified the foundation we are building.

Kevin: Now have multiple lab grade analytical platforms at hand to Powerpoint of neat chemical analysis today and well into the future.

Kevin J. Knopp: We have a consolidated portfolio of handheld desktop devices to address greater than $6 billion of forensics research, QAQC, and bioprocessing TAM. And we believe we've accelerated our path to reach more than $100 million in annualized revenues with improved U.S. and international scale. Further, we continue to project the ability to reach cash flow break even with our current cash on hand. I'm so proud of what our team has been able to accomplish over the last several years.

Kevin: Consolidated portfolio of handheld and desktop devices to address greater than $6 billion of forensics research QA QC and bio processing Tim.

Kevin: And we believe we have accelerated our path to reach more than $100 million and Andy.

Kevin: Annualized revenues with improved U S and international scale further we continue to project the ability to reach cash flow breakeven with our current cash on hand.

Kevin: I am so proud of what our team has been able to accomplished over the last several years and with the addition of Red wave technology.

Kevin J. Knopp: And with the addition of RedWave technology, I am even more excited for what's next. With that, I'll now turn the call over to Joe for more details on our first quarter and on our updated guidance. Thanks, Kevin.

Kevin: Even more excited for what's next with that I'll now turn the call over the Joe for more details on our first quarter and on our updated guidance.

Thanks, Kevin revenue for the first quarter 2024 was $10 million up 5% from $9 5 million in the prior year period, primarily driven by an increase in handheld device revenue.

Joseph H. Griffith: Revenue for the first quarter 2024 was $10 million, up 5% from $9.5 million in the prior year period, primarily driven by an increase in handheld device revenue. Handheld revenue was $7.4 million for the first quarter 2024, up 20% from $6.2 million for the first quarter 2023. This increase was driven primarily by component shipments in support of the initial production phase of the U.S. Department of Defense Next Gen Chemical Detector Program, also known as AvCAD, and an increase in service revenue.

Joseph H. Griffith: <unk> revenue was $7 4 million for the first quarter 2024 up 20% from $6 2 million for the first quarter 2023.

Joseph H. Griffith: This increase was driven primarily by component shipments in support of the initial production phase of the U S Department of Defense Nextgen Chemical detector program also known as <unk> and an increase in service revenue.

Joseph H. Griffith: We shipped 53 MX908 handheld devices in the first quarter. Our pipeline remains strong for our handheld devices in the US and internationally. The fentanyl crisis and the emergence of new and evolving analogs have been a key driver of handheld adoption in the US. We are now seeing this crisis expand and drive urgency internationally. This was confirmed by U.S. Secretary of State Anthony Blinken, who warned of exactly this in March during a United Nations conference.

Joseph H. Griffith: We shipped 53, Amex 908 handheld devices in the first quarter.

Joseph H. Griffith: Our pipeline remains strong for our handheld devices in the U S and internationally, a fentanyl crisis and the emergence of new and evolving analogs. There has been a key driver of handheld adoption in the U S.

Joseph H. Griffith: We are now seeing this crisis expand and drive urgency internationally.

Joseph H. Griffith: This was confirmed by U S Secretary of state Anthony Blanken, who warned of exactly this in March during the United Nations Conference.

Joseph H. Griffith: Now turning to our desktops serving the life science instrumentation and bioprocess market. Revenue from our desktop products for the first quarter of 2024 was $2.6 million, down 17% from $3.1 million in the prior year period, primarily related to a decrease in device sales, with eight desktop devices placed in the first quarter comprised of Rebel, Zipchip, and Maven. Despite customers continuing to remain cautious in their first half capital expenditures, we are seeing positive engagement.

Joseph H. Griffith: Now turning to our desktop serving the life science instrumentation and bio processing markets.

Revenue from our desktop products for the first quarter 2024 was $2 6 million down 17% from $3 1 million in the prior year period, primarily related to a decrease in device sales with eight desktop devices placed in the first quarter comprised of rebel Zip chip and maven.

Joseph H. Griffith: Despite customers continuing to remain cautious in their first half capital expenditures were seeing positive engagement.

Joseph H. Griffith: One of our core objectives has been to launch and leverage an expanded product portfolio to maximize opportunities and strengthen customer engagement. Our product portfolio now includes four desktop devices in the PAT, which we launched just last year, and we're seeing quoting activity reflect a combination of products now, one product driving another. For instance, in the first quarter, we received an order from a top 20 BioPharma customer for multiple desktop devices, Rebel and Maven, demonstrating the value of our expanded portfolio and validating the complementary nature of our PAT desktop devices.

Joseph H. Griffith: One of our core objectives has been to launch and leverage and expanded product portfolio to maximize opportunities and strengthening customer engagements.

Joseph H. Griffith: Our product portfolio now includes four desktop devices in the <unk> space to launch just last year and we're seeing quoting activity reflect combination of products now one product driving another.

Joseph H. Griffith: For instance in the first quarter, we received an order from a top 20 biopharma customer for multiple desktop devices rebel and Nathan demonstrating the value of our expanded portfolio and validating the complementary nature of our <unk> desktop devices.

Joseph H. Griffith: And over the first quarter, our sales engagements reflected this trend, with an approximate two to one weighting toward our newest products, which is also consistent with trends seen in the second half of 2023. Although it is still early days, we continue to see traction and positive engagement with MAP. In early April, we hosted a successful webinar with over 250 registrants, highlighting how process control impacts critical quality attributes, or CQA. We reviewed how Maverick was readily deployed for cell culture monitoring and control without any bioprocess specific model building.

Joseph H. Griffith: And over the first quarter, our sales engagements reflected this trend with an approximate 2% to one waiting toward our newest products, which is also consistent with trends seen in the second half of 2023.

Joseph H. Griffith: Although it is still early days, we continue to see traction and positive engagement with the Maverick in early April we hosted a successful webinar with over 250 registrants, highlighting how process control impacts critical quality attributes or <unk>.

Joseph H. Griffith: We reviewed how maverick was readily deployed in cell culture monitoring and control without any bioprocess specific model building.

Joseph H. Griffith: We showcased a strategy of continuous dynamic feeding to enhance process performance and improve product quality. Furthermore, we have engaged in a number of qualified evaluations where biopharma customers install a Maverick and test it across multiple bioreactors. Maverick's ability to connect to multiple bioreactors is a key capability, and we are encouraged to see customers supporting and prioritizing evaluations for this novel technology. We ended the first quarter 2024 with a cumulative handheld and desktop installed base of 2,914 devices, up 18% from 2,468 at the end of the first quarter 2023.

Joseph H. Griffith: We showcased the strategy of continuous dynamics, leading to enhanced process performance and improved product quality.

Joseph H. Griffith: Further we are engaged in a number of qualified evaluations or biopharma customers install in maverick and test across multiple bioreactors.

Joseph H. Griffith: Maverix ability to connect to multiple bioreactors as a key capability and we are encouraged to see customers supporting and prioritizing evaluations for this novel technology.

Joseph H. Griffith: We ended the first quarter 2024, with a cumulative handheld and desktop installed base of 2914 devices up 18% from 2468 at the end of the first quarter 2023.

Joseph H. Griffith: Recurring revenue, which consists of consumables, accessories, and service revenue, represented 45% of total revenues. It was $4.5 million, a $0.4 million increase over the prior year period, driven by service and rental consumables. Recurring revenue in the first quarter consisted of $2.8 million relayed to handhelds and $1.7 million relayed to desktops. Rebel utilization remained at approximately half a kit per month per active user, which has been a consistent run rate for nine quarters.

Joseph H. Griffith: Recurring revenue, which consists of consumables accessories and service revenue.

Joseph H. Griffith: Presented 45% of total revenues this quarter. It was $4 5 million zero point $4 million increase over the prior year period, driven by service and consumables.

Joseph H. Griffith: Recurring revenue in the first quarter consisted of $2 8 million related to handhelds and $1 $7 million related to desktops.

Joseph H. Griffith: Rebel utilization remained at approximately half per month per active users, which has been a consistent run rate for nine quarters.

Joseph H. Griffith: Looking ahead, we continue to expect recurring revenue for our product portfolio to be around a third of product and service revenue for the full year 2024. Gross profit was $5 million for the first quarter of 2024, compared to $4.4 million for the prior year period. Gross margin was 50% for the first quarter of 2024, compared to 46% for the prior year period.

Joseph H. Griffith: Looking ahead, we continue to expect to recurring revenue for our product portfolio to be around a third of product and service revenue for the full year 2024.

Joseph H. Griffith: Gross profit was $5 million for the first quarter of 2024 compared to $4 4 million for the prior year period.

Joseph H. Griffith: Gross margin was 50% for the first quarter 2024, compared to 46% from the prior year period.

Joseph H. Griffith: The increase in gross margin was largely due to favorable timing of production, driving higher absorption and lower material costs during the first quarter of 2020. Over the longer term, we expect volume-based improvements in our gross margins as we achieve better leverage over fixed costs. Additionally, with the integration of RedWave, we expect a modest benefit in the back half of 2024 and further impact in 2025. Total operating expenses for the first quarter of 2024 were $17.7 million, compared to $17.4 million in the prior year period.

Joseph H. Griffith: The increase in gross margin was largely due to favorable timing of production driving higher absorption and lower material costs. During the first quarter of 2024.

Joseph H. Griffith: Over the longer term, we expect volume based improvements to our gross margins as we achieve better leverage over fixed costs.

Joseph H. Griffith: Additionally, with the integration of <unk>, we expect modest benefit in the back half of 2024 and further impact in 2025.

Joseph H. Griffith: Total operating expenses for the first quarter of 2024 were $17 7 million compared to $17 4 million in the prior year period.

Joseph H. Griffith: This increase was driven by a $0.4 million increase in non-cash stock-based compensation and $0.3 million in legal fees related to our acquisition, offset in part by a reduction in third-party commissions and salary and related costs. Net loss for the first quarter of 2024 was $10.9 million, compared to $12.5 million in the prior year period, a 13% improvement. We ended the first quarter of 2024 with $134.2 million in cash, cash equivalents, and marketable securities with no debt outstanding.

Joseph H. Griffith: This increase was driven by a zero point $4 million increase in noncash stock based compensation and <unk> $3 million in legal fees related to our acquisition offset in part by a reduction in third party commissions and salaries and related costs.

Joseph H. Griffith: Net loss for the first quarter of 2024 was $10 9 million compared to $12 5 million in the prior year period, a 13% improvement.

Joseph H. Griffith: We ended the first quarter of 2024 with $134 2 million in cash cash equivalents and marketable securities with no debt outstanding.

Joseph H. Griffith: Subsequent to quarter end, we used an additional $45 million for our acquisition of RedWay. We anticipate exiting 2024 with multiple years of cash to support our path to cash flow breaking. Looking ahead in 2024, we now expect revenue to be in the range of $63 to $65 million, representing reported growth of 25% to 29% over full year 2023. Our updated revenue guidance includes an expected $11 million of revenue from RedWave, representing eight months of ownership, layered on top of our prior guidance of $52 to $54 million for the core 908 business.

Joseph H. Griffith: Subsequent to quarter end, we used an additional $45 million for our acquisition of Redwood.

Joseph H. Griffith: We anticipate exiting 2024 with multiple years of cash to support our path to cash flow breakeven.

Joseph H. Griffith: Looking ahead in 2024, we now expect revenue to be in the range of 63% to $65 million, representing reported growth of 25% to 29% over full year 2023.

Joseph H. Griffith: Our updated revenue guidance includes an expected $11 million of revenue from Red wave, representing eight months of ownership layered on top of our prior guidance of $52 million to $54 million for the quarter 908 business.

Joseph H. Griffith: Our updated revenue guidance includes the following assumptions. First, we expect $11 million in 2024 reported revenue from RedWave, which reflects eight months of ownership. On an annualized basis, this represents approximately 20% growth in 2024 Red Wave revenues, in line with the company's 2023 growth pro plan. We see potential for RedWave's growth to accelerate once the company's products and services gain traction within 908's commercial engine, likely by the end of 2024. Our second quarter results will include two months of revenue contribution from RedWave.

Joseph H. Griffith: Our updated revenue guidance includes the following assumptions.

Joseph H. Griffith: First we expect $11 million in 2024 reported revenue from resume which reflects eight months of ownership.

Joseph H. Griffith: On an annualized basis. This represents approximately 20% growth for 2024 Red waiver revenues in line with the company's 2023 growth profile we.

Joseph H. Griffith: We see potential for <unk> growth to accelerate once the company's products and services gained traction within nine months <unk> commercial engine likely by the end of 2024.

Joseph H. Griffith: Our second quarter results will include two months of revenue contribution from <unk> and given similar customer and funding dynamics, we anticipate red waves seasonality to mirror that of our handhelds being back half weighted.

Joseph H. Griffith: And given similar customer and funding dynamics, we anticipate RedWave seasonality to mirror that of our handhelds being back halfway. Second, we are reiterating our $52 to $54 million revenue guidance for the core 908, and while we continue to see some indicators of positivity for the life science instrumentation and bioprocessing markets, the pressures we experienced in 2023 have, as expected, persisted and likely will continue through at least the first half. The industry is reporting some promising signs related to bioprocessing inventory de-stocking and Q1. However, 908's bioprocessing recovery will be driven by rebounding CapEx spending for instrumentation in preclinical biopharma, which has remained relatively muted to this point.

Joseph H. Griffith: Second we are reiterating our $52 million to $54 million revenue guidance for the core 900 business. While we continue to see some indicators of positivity for the life science instrumentation and bio processing markets. The pressures we experienced in 2023 half as expected persistence and likely will continue through at least the first half.

Joseph H. Griffith: The industry is reporting some promising signs related to bio processing inventory destocking in Q1.

Joseph H. Griffith: However, nine weights bioprocess recovery will be driven by a rebound in capex spending for instrumentation and preclinical biopharma, which has remained relatively muted to this point, but we do continue to expect a step up in total desktop device placements during 2024 with sales of newer products building through the year as our <unk>.

Joseph H. Griffith: But we do continue to expect a step-up in total desktop device placements during 2024, with sales of newer products building through the year as our sales engagements convert to orders. And lastly, we expect the strength of our handheld devices, which serve the forensics market, to continue to bolster our overall growth. However, the delay in and approval of the US federal government budget may result in some of our enterprise opportunities shifting into the second half of the year.

Joseph H. Griffith: Sales engagements convert to orders.

Joseph H. Griffith: And lastly, we expect the strength of our handheld devices, which served the forensics market to continue to bolster our overall growth. However, the delay in approval of the U S. Federal government budget May result, in some of our enterprise opportunities shifting into the second half of the year.

Joseph H. Griffith: With the timing of the U.S. federal government budget and the acquisition of RedWave, we expect a slight shift from our previous assumptions for 2024 revenue. We now expect revenue to be slightly more back half-weighted compared to our prior assumption of a 40% to 60% first half to second half split. Touching on gross margins, we continue to expect 2024 to be in the low 50s range due to the impact of pricing, higher material costs, and overall product, service, and channel net. We anticipate that RedWave will have a small positive benefit to second half gross margins with rising contributions expected in 2025. At this point, I would like to turn the call back to Kevin. Thanks, Joe.

Joseph H. Griffith: With the timing of the U S Federal government budget and the acquisition of <unk>, We expect a slight shift from our previous assumptions for 2024 and revenue split.

Joseph H. Griffith: We now expect revenue to be slightly more back half weighted compared to our prior assumption of a 40% to 60% first half to second half split.

Joseph H. Griffith: Touching on gross margins, we continue to expect 2024 to be in the low $50 range due to the impact of pricing higher material costs, and overall product service and channel mix.

Joseph H. Griffith: We anticipate that <unk> will have a small positive benefit to second half gross margins with ryzen contributions expected in 2025.

Joseph H. Griffith: At this point I would like to turn the call back to Kevin.

Kevin: Thanks, Joe again as previously communicated on our fourth quarter call.

Kevin J. Knopp: Again, as previously communicated on our fourth quarter call, we are laser focused on three key areas for 2024, including market expansion, leveraging our expanded product portfolios, and executing to a framework for sustained growth with a path to profitability. Our acquisition announcement today directly and meaningfully addresses each of these three key areas. Furthermore, we are pleased with our unplanned Q1 results and the new trajectory we have set for 2024 and beyond. I'd like to thank our team for their hard work towards our Q1 achievement. Lastly, I'm excited to welcome our new colleagues from RedWave Technology to the 908 Devices team, and I look forward to our bright future together.

Kevin: You are focused on three key areas for 2024, including market expansion, leveraging our expanded product portfolio and executing to a framework for sustained growth with a path to profitability.

Kevin: Our acquisition announcement today directly and meaningfully addresses each of these three key areas.

Kevin: Further we are pleased with our unplanned Q1 results and the new trajectory, we have set for 2024 and beyond.

Kevin: I'd like to thank our team for their hard work towards our Q1 achievement.

Kevin: Astley I'm excited to welcome our new colleagues from Red wave technology to the Android devices team and I look forward to a bright future together.

Speaker Change: We'll now open it up to questions.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. Our first question is from Matt Larew at William Blair. Please go ahead.

Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question. Please press star two.

Speaker Change: Last question is from Matt.

Speaker Change: William Blair. Please go ahead.

Matt Larew: Hi, good morning; I wanted to start on Redway. And, you know, two things.

Matt: Hi, good morning.

Matt: Wanted to start on runway.

Matt: And to.

Kevin J. Knopp: One would be, I think back to the last acquisition trace, obviously, we just saw the product in Maverick that features the asyptic sampling technology from Trace, so clearly incorporating the technology in product development. And you referenced, obviously, the impressive portfolio that Red Wave has of their own products and how the sales channels overlap. But I'm just curious as to what you think about potential collaboration on the R&D or product development side over time.

Matt: Two things one would be if I think back the last acquisition trace obviously, we just saw.

William Blair: The product in Maverick.

Matt: Dave Styptic sample technology from trace so clearly.

Matt: Incorporating into technology and product development and you referenced obviously the impressive portfolio the right way of has their own products.

Matt: And how the sales channels overlap, but I'm just curious as.

Matt: You looked at the deal what Youre thinking about from potential collaboration on the R&D or product development side.

Kevin J. Knopp: Hi Matt. Yeah, thanks for the question. You're right. I mean, we did the acquisition of Trace Analytics GmbH in 2022, and it was a really successful one that we're really happy we did. It is fully integrated now. As you know, it's become our base of operations in Europe and allows us to take orders directly across Europe. And then, as you mentioned, the technology; we took the sampling technology and released the product Maven, and now that's on the market, and it's the basis of the online capabilities for next generations of rebels when we get to that point.

Matt: Overtime.

Speaker Change: Yeah, Hi, Matt Thanks for the question.

Speaker Change: Youre right I mean, we did the acquisition of <unk> in 2022, and really a successful one that we're really happy we did it is fully integrated now as you know it's become a base of operations in Europe, and allowing us to take orders directly across Europe, and then as you mentioned the technology, we took the sampling technology and relief.

Speaker Change: The product May then and then that's on the market and it's the basis of the online capabilities for next generations of rebel when you get to that point, so lots of lots of good there arent.

Kevin J. Knopp: So lots of good there on the R&D side, and then plugging it in and having a base of operations in Europe. From the Red Wave perspective, we're super excited that now we have a portfolio of products in the bioprocessing life science instrumentation space for said products, and we really built a nice foundation for that growth as we move along. But if you look at our handhelds, we have had one product and a series of accessories.

Speaker Change: <unk> side, and then plug it in and having a base of operations in Europe for the Red way perspective, we're super excited that now we have a portfolio of products in the bio processing life science instrumentation space for certain products and we really built a nice foundation for it.

Speaker Change: For that growth.

Speaker Change: As we move along but if you look at our handhelds, we've had one product in a series of accessories. So with Redwood that adds three additional products that have that high overlap with our customers and sales channel, which we can get immediately into the bag of our team from our R&D collaborations perspective, we briefly touched on it in the prepared.

Kevin J. Knopp: So with Red Wave, that adds three additional products that have that high overlap with our customers and sales channel, which we can get immediately into the hands of our team. From an R&D collaboration perspective, we briefly touched on it in the prepared remarks, but we're also excited that Red Wave had approximately $2 million of their sales last year in the pharma PAT space, selling accessories and selling Raman probes, FTR probes, and the like into industrial QAQC and pharma PAT applications. So I would imagine that as we continue to go, and the market justifies it, we'll be able to work more together on integrating and looking to offer additional FTR-based products into our desktop portfolio.

Speaker Change: Remarks, but we're also.

Speaker Change: Excited that regulated pads approximately $2 million of their sales last year in the pharma space selling accessories and <unk>.

Speaker Change: Selling Robyn <unk> FTR approach and the like to industrial QA, QC and pharma PMT application. So I would imagine as we continue to go in the market justifies that we'll be able to work more together on integrating and looking to offer additional FTIR based products into our desktop portfolio.

Kevin J. Knopp: OK, that's great to hear. And you referenced, obviously, or Joe did, I suppose, in his comments, CapEx recovery being key, obviously, to your own bioprocessing recovery. Just curious what you're hearing from customers about budgets for capital equipment, any indicators of shifts in the sales cycle or availability of capital. And you referenced, obviously, some placements of a top 20 biopharma, any patterns or trends that you would call out in terms of customer groups and how they're perhaps viewing their capital purchasing ability this year.

Speaker Change: Okay.

Speaker Change: That's great to hear and you referenced obviously, Joe that I suppose in his comments.

Speaker Change: Capex recovery.

Speaker Change: The key obviously to your own bio processing recovery, just curious what youre hearing from customers about budgets for capital equipment, adding any indicators of shifts in sales cycle or availability of capital and you referenced that was there.

Speaker Change: Some placements at a top 20, biopharma any patterns or trends that you would call out in terms of customer groups and how there perhaps.

Speaker Change: Perhaps view in their capital purchasing ability of this year.

Kevin J. Knopp: Yeah, sure. I'm happy to give a few comments there.

Speaker Change: Yeah sure happy to give a few comments there. So yes, absolutely it's really not the destocking dynamic of consumables that impacts 900 eights as you know it's more around the capex spending for small scale instrumentation.

Kevin J. Knopp: So yes, absolutely. But it's really not the de-stocking dynamic of consumables that impacts 908. As you know, it's more around the CapEx spending for small-scale instrumentation, like 908 does here in the life science instrumentation market and bioprocessing. As you know, we're very much in the PD labs, process development labs. So that's an upstream preclinical world, and we've been seeing a particular pause there to adopt novel technologies in that space. I would say two things.

Speaker Change: 98 does here in life science instrumentation market in bio processing as you know we're very much in the PD lab process development labs, so thats in the upstream preclinical world.

Speaker Change: We've been seeing particularly pause there to adopt novel technologies in that space.

Kevin J. Knopp: I mean, from a conversation with customers regarding budgets, I think there's still uncertainty on the timing of the release of CapEx within organizations. I've had direct conversations with several customers, and it's hard to draw conclusions by group as you asked for, just because our numbers are fairly modest here. But I have definitely seen larger organizations as well as smaller organizations showing that uncertainty. Last comment on that, in fact, one of the customers I have been talking to of late is very much ready to pull the trigger, but is waiting for their biotech funding to come through an additional series raised for that organization. So it's directly coupled.

Speaker Change: I would say two things I mean, one from from our conversations with customers regarding budget I think there is still uncertainty on the timing of the release of Capex within the organizations.

Speaker Change: Direct conversations with several customers hard to draw conclusions by group as you asked for just because our numbers are fairly modest here, but I have definitely seen larger organizations as well as smaller organization showing that uncertainty.

Speaker Change: Last comment on that in fact, one of our customers talking to ablate is very much ready to pull the trigger but is waiting for their biotech funding to come at an additional series rates for that organization. So it's directly coupled so we are pleased that the world has been showing some positive signs in the bio tech funding.

Kevin J. Knopp: So we are pleased that the world has been showing some positive signs in the biotech funding arena, as you know, in the first quarter. So we're pleased about that. And it'll take some time for that to ripple down, I'm sure, but I think that is a positive thing. And the other thing that we mentioned, our prepared remarks, we are getting a lot of engagement. While that engagement isn't translating directly to desktop orders as fast as we would, of course, all like lots of engagement, Joe called a few things out with prepared remarks regarding great engagement on a Maverick webinar, and great engagement with customers doing evaluations, in some cases, funded evaluations. So we'll call it that.

Speaker Change: Arena.

Speaker Change: As you know over the first quarter. So we're pleased with that and what it will take some time for that through April that Im sure, but I think that is a positive thing and the other thing that we mentioned in our prepared remarks, we are getting a lot of engagement while that engagement is translating directly to desktop order it's fast.

Speaker Change: Of course, all like lots of engagement, Joe called a few things out in his prepared remarks regarding great engagement on our Maverick webinar, great engagement with customers doing valuations in some case funded evaluation so.

Matt Larew: That's great. I'll jump back in the queue. Congratulations on what looks like a really nice fit in terms of the record deal. Thanks.

Speaker Change: A little color there for you.

Speaker Change: That's great I'll jump back into queue. Congrats on what looks like a really nice fit in terms of directly to deal. Thanks.

Operator: The next question comes from Jacob Johnson from Stephens. Please go ahead.

Speaker Change: Thanks Matthew.

Speaker Change: The next question comes from Jacob Johnson from Stephens. Please go ahead.

Jacob K. Johnson: Hey, thanks. Good morning, and congrats on the deal.

Jacob K. Johnson: Hey, Thanks, good morning.

Jacob K. Johnson: Congrats on the deal I guess I've got a couple on runway, maybe just first on the Red wave technology versus the Max nine away and use applications can you just talk about how complementary.

Jacob K. Johnson: I guess I've got a couple on RedWave. Maybe just first on the RedWave technology versus the MX908 and use applications. You just talked about how complementary your products are with theirs. And then is there any risk of any kind of cannibalization between these two product portfolios?

Jacob K. Johnson: Your products are with theirs, and then is there any risk of kind of cannibalization between these two product portfolios.

Kevin J. Knopp: Yeah, yeah, happy to. Thanks, Jacob, for the congratulations there.

Speaker Change: Yes, yes happy to thanks, Jacob congratulations there.

Kevin J. Knopp: We're really excited about the RedWave side. First, from a technology perspective, they are very complementary, and it very much expands the toolkit. We mentioned that about 80% of our international distributors represent both, and we would only do that if they were not in a competitive situation and that they were, in fact, complementary. So it's a little bit of a proof point there.

Speaker Change: We're really excited for the Red wave side, I mean first from a technology perspective, they are very complementary and very much expands the toolkit.

Speaker Change: We mentioned that about 80% of our international distributors represent both and we would only do that if they were not in a competitive situation and that they were in fact complementary so that's a little bit of a proof point there, but in the simplest way you can think of the IMAX technology is.

Kevin J. Knopp: But in a simplest way, you can think of the NX technology as a new product class. It's taking mass spec, so it has immense sensitivity. So it can measure things at very, very low trace levels, so invisible amounts, a residue, a minute particulate aerosol in the air.

Speaker Change: New product class is taking mass spec so it hasnt immense sensitivity. So it can measure things at very very low traced level, so invisible amounts of residue.

Speaker Change: My particular aerosols in the air now if you think of the Red wave technology. It can measure a bulk quantities, but it can measure many mining more chemical 22000, plus chemicals. It can measure. So the two are often used by our customers in concert depending on the situation and where they got so we really don't see.

Kevin J. Knopp: Now, if you think of the RedWave technology, it can measure bulk quantities, but it can measure many, many more chemicals, 22,000 plus chemicals it can measure. So the two are often used by our customers in concert, depending on the situation and where they go. So we really don't see that they're a competitive nature to those products from their positioning. And then, as you know, obviously, we're excited for RedWave as well, due to its financial profile.

Speaker Change: The competitive nature to those products from their positioning.

Speaker Change: And then as you know obviously, we're excited for <unk>.

Speaker Change: Our red wave as well due to its financial profile, we had pretty high benchmarks that we've been trying to stay true to and this acquisition really kind of showcases those in terms of being very synergistic from a cost perspective that we touched on as well as.

Kevin J. Knopp: We have pretty high benchmarks that we've been trying to stay true to, and this acquisition really kind of showcases those in terms of being very synergistic from a cost perspective that we touched on, as well as in the complete financial portfolio profile that's a bit accretive in many, many different ways. And maybe a little bit helpful, too, is just a little bit more color on the RedWave products. As Kevin mentioned, there are three today: ThreadID, ProtectIR, and ExploreIR.

Speaker Change: Sure.

Speaker Change: Complete financial portfolio profile, Thats, a bit accretive in many many different ways.

Speaker Change: And maybe just a little bit helpful to us just a little bit more color on the regulated products as Kevin mentioned Theres three today, the threat I'd protect IR and explore IR.

Joseph H. Griffith: And those U.S. list prices of those products range from $45K up to $75K, so at the high end close to the MX list price today. And the majority of the RedWave placements in the U.S. industry have come through distribution channels to date, usually come with discounting, right, lower ASPs, kind of discount levels from five, maybe up to 30% on international sales. And the ThreadID, where the majority of the placements have been today, the first launch product by RedWave, is where the majority of the placements are and are at the higher end of that ASP range. But I'll give you a little bit more color on the products themselves.

Speaker Change: <unk> list prices of those products range from 45, K up to 75 K. So at the high end close to the Amex list price today and the majority of the regulated placements in the U S administrative come through distribution channels to date.

Speaker Change: Usually it comes with discounting lower Asps.

Speaker Change: The discount levels from five maybe up to 30% on the international sales.

Speaker Change: Threat idea, where the majority of the placements have been today. The first launched product by regulators is where the majority of the placements are in or at the higher end of that ASP range, but it can be a little bit more color on the products themselves.

Kevin J. Knopp: Thanks for that, Kevin and Joe. And I guess maybe just kind of following up there, you guys laid out some pretty robust growth outlook potentially for RedWave, at least to get the contingent consideration. It seems to me there's kind of two or three big opportunities there, one in two being kind of the bioprocessing industrial applications. And then the other one kind of leveraging the large enterprise account. As we think about that, the growth outlook going forward for this business, can you just kind of talk about the relative size of those opportunities in terms of growth drivers between the kind of bioprocessing industry versus the large enterprise?

Speaker Change: Thanks for that Kevin and Joe and I guess, maybe just kind of following up there.

Speaker Change: You guys laid out some some pretty robust.

Speaker Change: Growth outlook potentially for red wave at least to get the contingent consideration.

Speaker Change: It seems to me, there's kind of two or three big opportunities. There one one and two being kind of the bio processing industrial applications.

Speaker Change: And then the other one kind of leveraging the large enterprise accounts as we think about that growth outlook going forward for this business could you just kind of talk about the relative size of those opportunities in terms of growth drivers.

Speaker Change: Between kind of bio processing industrial versus the large enterprise accounts.

Kevin J. Knopp: Yeah, absolutely. I'll start, and then maybe Joe can add some additional remarks. But yes, you're absolutely right.

Speaker Change: Yeah, absolutely I'll start and then maybe Joe can add some additional remarks.

Joseph H. Griffith: But yes, youre absolutely right, we think there's a lot of growth potential with this business and you can see the resolve that the red wave team has in this combination based on that.

Kevin J. Knopp: We think there's a lot of growth potential for this business, and you can see the result that the RedWave team achieved in this combination based on that structure and earn out consideration that's contingent upon beating growth targets. So first and foremost, those growth targets are going to be driven and met through plugging into our commercial engine, which we think is pretty robust on our handheld side. So we're working even on day one to make sure that it plugs into that channel.

Speaker Change: Structure and earn out consideration that's contingent upon meeting.

Joseph H. Griffith: Targets, so first and foremost those growth targets are going to be driven back through and pursued through plugging into our commercial engine, which we think is pretty robust on our.

Joseph H. Griffith: Our handheld side, so were working even on day, one to make sure that it plugs into that channel and we mentioned very briefly in the slides, but they haven't really done too much yet in the larger federal accounts those larger enterprise accounts and we feel we have.

Kevin J. Knopp: And we mentioned very briefly in the slides that they haven't really done too much yet in the larger federal accounts, those larger enterprise accounts. And we feel we have a pretty skilled team there. So we believe we can make good progress getting into those enterprise accounts. They take a little bit of time, but they can be quite large as we go.

Joseph H. Griffith: Pretty skilled team there. So we believe we can make good progress getting into those enterprise accounts, they take a little bit of time, but they can be quite large as we go and we think the earn out structure being cumulative over 24 months is helpful in that regard.

Joseph H. Griffith: And we think the earn-out structure of being cumulative over 24 months is helpful in that regard. The areas of bioprocessing, the areas of the PAT accessories that they sell, particularly into pharma, industrial, QA, QC, I think that's something that we'll be looking to leverage over time, but see the biggest benefit coming from putting into our handheld commercial engine. And there are a variety of additional pieces.

Joseph H. Griffith: The areas of bio processing the areas of the accessories that they sell particularly in pharma and industrial QA QC I think that's something that we'll be looking to leverage over time, but see the biggest benefit coming from putting into our handheld commercial engine.

Joseph H. Griffith: And maybe provide additional pieces, we did highlight in our prepared remarks that regulators.

Joseph H. Griffith: We did highlight in our prepared remarks that RedWave's 20% plus year-end growth in 2023 and for 2024, our revenue expectation is at $11 million, which contemplates RedWave growing at that similar level on an annualized basis. There is certainly potential for RedWave revenues to accelerate towards the end of 2024 once the product's gained traction and it's within our commercial engine, but it won't be measured in our approach. You know, we're excited by the growth potential that RedWave brings, but we're setting achievable expectations, we believe, that we can plan to revisit once these products have a few quarters of integration within our commercial engine.

Joseph H. Griffith: 3%, plus CRM growth and 23 and 'twenty four our revenue expectation is that $11 million.

Joseph H. Griffith: <unk> run rate growing at that similar level on an annualized basis. There is certainly potential for red wave revenues to accelerate towards the end of 2020 for once the products gained.

Joseph H. Griffith: Traction within our commercial engine, but it won't be measured in our approach.

Joseph H. Griffith: We are excited by the growth potential that <unk> brings but.

Joseph H. Griffith: Now something achievable expectations, we believe that we can plan to revisit once these products are a few quarters of integration within our commercial engine and in terms of their pacing and seasonality.

Joseph H. Griffith: And in terms of their pacing and seasonality, it's probably seen as similar to our current customers, selling to the same customers, and we're working through similar budget processes as the MX, so I do expect similar pacing and more revenue in the second half.

Joseph H. Griffith: It's pricing is similar to our current customers selling to the same customers and we're working through somewhat budget processes as the IMAX. So I do expect similar pacing more revenue in the second half as we go.

Jacob K. Johnson: Got it. Thanks for taking the questions, guys.

Speaker Change: Got it thanks for taking my questions guys.

Joseph H. Griffith: Jacob.

Operator: The next question comes from Stephen Marr from TD Cowan. Please go ahead.

Joseph H. Griffith: The next question comes from Steven Mah from TD Cowen. Please go ahead.

Stephen Marr: Great. Good morning. Can you hear me?

Poon Mah: Great. Thanks, Good morning can you hear me.

Poon Mah: Yes, Hi, Stephen how are you doing.

Kevin J. Knopp: Yes, hi Stephen, how are you doing?

Steven Mah: Okay.

Stephen Marr: Okay, thanks for taking the questions. So maybe to build on what Jacob asked, there does seem to be some overlap with the handheld MX908 in terms of some use cases, you know, such as fentanyl. You know, can you give us a little bit more color on, you know, and I know you guys said that customers use both FTIR and mass spec, but, you know, give us a little bit more color on the marketplace landscape. What percentage of users use both FTIR and mass spec?

Poon Mah: Thanks for taking the questions.

Steven Mah: Maybe to build on what Jacob as.

Steven Mah: There does seem to be some overlap.

Steven Mah: The hand handheld Nx 19 weight in terms of some use cases.

Steven Mah: Such a spend symbols.

Steven Mah: Can you give us a little bit more color on and I know you guys said that customers use both FTIR and mass spec, but give us give us a little bit more color in the marketplace landscape and what percentage of users.

Steven Mah: Both FTIR and mass spec.

Kevin J. Knopp: Yeah, sure. Happy to do it.

Speaker Change: Yeah sure happy to I would say, it's a pretty large percentage of customers that have access and use both and they do after its a toolkit right. So people will pick us pick what's the right tool for the right job at the right time in the cases of something like Fat mass spec is just <unk>.

Kevin J. Knopp: I would say it's a pretty large percentage of customers that have access to and use both. And they do often; it's a toolkit, right? So people will pick what's the right tool for the right job at the right time. In the case of something like fentanyl, mass spec is just absolutely well positioned there because of its extreme sensitivity and the minute quantities, invisible quantities that are really required to detect for something like fentanyl.

Speaker Change: Absolutely well positioned there because of it.

Speaker Change: <unk> Street insensitivity and the minute quantity available quantities that are really required to detect or something like that now if you think about how it compliments and applications like that if you think of a counterfeit pill the excipient the binders.

Kevin J. Knopp: Now, if you think about how it complements in applications like that, if you think of a counterfeit pill, the excipient, the binders, the mix, what you would provide around that fentanyl can be a unique identifier of that counterfeit construction. And so those bulk components being measurable on FTIR are very much complementary, even in that one use case here, really around fentanyl and counterfeit drugs. There are many, many applications that people employ FTIR for, from really unknown materials of all sorts, from benign to something toxic that they're looking to identify.

Speaker Change: <unk>.

Speaker Change: You would provide around that can be a unique identifier of that counterfeit construction.

Speaker Change: And so those bulk components being measurable on FTIR is very much complementary even in that one use case here really around federal and counterfeit drugs. There are many many applications that people employee <unk> from really unknown materials are all sort from benign to something something toxic that theyre looking to.

Speaker Change: Two identify we spoke that Theres about 15000, as we estimate legacy <unk> instruments that are out there in the field.

Kevin J. Knopp: We estimate that there are about 15,000 legacy FTIR instruments out there in the field. And if you think about a five to 10 year useful life of these, that would imply that there are maybe 1,500 to 3,000 per year as an opportunity to replace or upgrade. And we really see the theme that you can look at a lot of opportunities since they only have placed 700 thus far. And we believe, just like we've communicated in the past for our MX, that as you offer more modern conveniences, size reduction, speed improvements, other modern connectivity options, it drives upgrade cycles.

Speaker Change: And if you think about a five to 10 year useful life of these that would imply that there's maybe 500 to 3000 per year as an opportunity to replace or upgrade in and we really see the same that you can look at a lot of opportunity since they help me have placed 700, thus far and we believe just like we've communicated.

Speaker Change: In the past for our Nx that as you offer more modern conveniences size reduction speed improvements other modern connectivity options.

Speaker Change: <unk> upgrade cycles.

Kevin J. Knopp: And we see that the Red Wave team is able to take advantage of that. And we're looking forward to, again, plugging it into our commercial engine to see if we can support that and get its growth trajectory to be meaningful. But that's the same as we've talked about, that as our MX goes to its next generation, we would expect it to spawn upgrade cycles as well. So I really do believe the two are absolutely complementary, even in application and use cases like that fentanyl counter-drug situation I tried to depict.

Speaker Change: See that the Redwood team is able to take advantage of that and we're looking forward to again plugging it into our commercial engine to see if we can if we can support that and get its growth trajectory to be meaningful here, but thats. The same as we've talked about that as our FX goes to its next generation, we would expect that.

Speaker Change: The spa upgrade cycles as well so I really do believe the two are absolutely complimentary even in the application and use cases like that fentanyl counter drug situation I've tried to pick.

Stephen Marr: Yeah, okay. Yeah, that's really helpful. Thanks for that. And I might have misheard, but did you guys say RedWave just uses distributors, or do they have internal sales?

Speaker Change: Okay, Yes, that's fair.

Speaker Change: Really helpful. Thanks for that.

Speaker Change: And.

Speaker Change: My name is heard but did you guys say red wave just uses distributors or do they have an internal sales force.

Joseph H. Griffith: They have both. They have some internal sales folks, about four that plug into our 70 folks that we have across our combined organization coming into the year. They leverage, you know, based upon their size and efficiency, a lot of channel managers, channel opportunities here in the US, also internationally, which is similar to us internationally for our handhelds. We use distribution channels, so we are very well known within the market. But yes, they do have sales people for us, and we're excited to partner with them and get the combined scale to drive the growth of the Red Wave and MX products.

Speaker Change: Do they have.

Speaker Change: So you have some internal sales folks about for that.

Speaker Change: Plug into our 70 folks that we have across our combined organization coming into the year.

Speaker Change: The leverage based upon their size and efficiency a lot of channel managers channel opportunities here in the U S. Also internationally, which is similar to us internationally for our handhelds, we use distribution channels, so very much known within the market.

Speaker Change: But yes, they do have a sales folks for us and we're excited to partner with them and get the combined scale to drive the growth of the Redwood and amex product.

Stephen Marr: Okay, got it. So do they have direct sales, or is it mostly all distributors? Or I guess I should ask differently, you know, how much of that $13.7 million in revenues last year were from distributors?

Speaker Change: Okay got it so is it and so do they have a direct sales force.

Speaker Change: Distributors or I guess asked a different way how much of that $13 7 million in revenues last year were from distributors.

Joseph H. Griffith: Yeah, from the direct sales perspective, they do have some direct sales, but it's a low percent, right? I don't want to put an exact percent on it. It's higher than single digits, but it's a low double digit type level. Really, just from where they are today, 39 people today have focused on leveraging smartly with distributors out of the box. We think we have an opportunity to go direct, which is part of our synergies as we think about the opportunity to expand our ASB going forward.

Speaker Change: Yes, so on the direct sales perspective, they do have some direct sales, but it's.

Speaker Change: Our low percent right I don't want put exact.

Speaker Change: <unk> on it.

Speaker Change: It's higher than single digits, but it's low double digit type level really just from where they are 39 people today are focused on leveraging smartly with distributors out of the box. We think we have an opportunity to go direct which is part of our synergies as we think about the opportunity.

Speaker Change: Expand our MSP going forward.

Stephen Marr: Okay, yeah, that's my next question. You know, the potential revenue synergies. Yes, it seems like it's very complementary.

Speaker Change: Yes, Okay, yes.

Speaker Change: And my next question.

Speaker Change: The potential revenue synergies, yes, it seems like it's very complementary.

Joseph H. Griffith: You know, when do you think you'll start seeing revenue synergies? You know, I appreciate you said cost synergies would hit fully by 2026. But when do you think revenue synergies will hit? And you know, I appreciate it takes time to cross-train the sales forces across the different products.

Speaker Change: When do you think youll start seeing revenue synergies.

Speaker Change: Great you said cost synergies would would hit fully by 2026, but when do you think revenue synergies well ahead and I. Appreciate it takes time to cross train the sales forces.

Speaker Change: Lots of different products.

Joseph H. Griffith: It does take time. We're looking to hit the ground running, you know, today, but maybe to give you a little bit of additional details on both the costs and maybe thoughts on the top line. You know, you probably heard that we're forecasting, you know, $5 million plus in potential cost synergies in 2026, and we expect roughly $2 million of those synergies to be realized in 2025, kind of in the shorter term. And those $2 million include, you know, savings anticipated from prioritization of personnel across organizations, mainly, you know, marketing, R&D, and leverage. Together, we need to hire fewer people.

Speaker Change: It does take time were looking to hit the ground running today, but maybe to give you a little bit of additional details on both the cost and maybe thoughts on top line.

Speaker Change: You probably heard that we're forecasting 5 million plus in potential cost synergies in 2026, and we expect roughly $2 million of those synergies to be realized for 2025 kind of in the shorter term and that was $2 million include savings anticipated from prioritization of personnel across organization, mainly selling marketing R&D leverage.

Speaker Change: Together, we need to hire less.

Joseph H. Griffith: It also contemplates an improvement in channel discounts that we were just talking about related to international distributor alignment and some opportunity for margin improvement in our direct sales. And the remaining $3 million will probably be realized starting in 2026 related to the utilization of the 38,000-square-foot Danbury facility that we're acquiring here today and the manufacturing scale of potential high-volume programs that we've talked about, like APCAD, versus expanding, you know, space here in Boston for that.

Speaker Change: It also contemplates an improvement in channel discounts that were just talking about related to international distributor alignment and some opportunity for margin improvement in our direct sales.

Speaker Change: And the remaining $3 million will probably be realized starting in 2026 related to the utilization of the 38000 square foot Denver facility.

Speaker Change: We're acquiring here today in the manufacturing scale up of potential high volume programs that we've talked about like <unk>.

Speaker Change: Versus expanding space here in Boston for that.

Joseph H. Griffith: But a big part of the value in the transaction is what you're asking about the ability to plug regulated products into our 908 sales channel and drive that sustainable, exciting growth. And we're working to get going on that, I'd say, immediately. I expect there to be the ability to drive cross-selling for the Forensics Portfolio, and the trends will be easier to understand probably in a few quarters, and our return revenue profile will improve after the commercialization of a possible cloud-based enterprise management software and the potential to increase the right way of participation in our life science instrumentation and bioprocessing PIP space.

Speaker Change: But a big part of the value and the transaction is what you are asking about is the ability to deploy grid related products into our 908 sales channel and drive that sustainable exciting growth, we're working to get going on that I would say immediately.

Speaker Change: There is the ability to drive cross selling.

Speaker Change: Forensics portfolio and these trends will be easier to understand program, a few quarters, but we see an opportunity to improve our recurring revenue profile as well from the commercial utilization possible cloud based enterprise management software.

Speaker Change: The increase or the right way to participation in our life science instrumentation of bio processing Phe space. So I would expect near term cost changes that I mentioned is really to show up in opex in the longer term sand used to be more balanced between opex and Cogs will work to get those top line synergies as soon as we can and maybe just layering into that Chris that can Steven.

Joseph H. Griffith: So we expect the near-term cost synergies that I mentioned really to show up in OPEX, and the longer-term synergies to be more balanced between OPEX and COGS. And we'll work to get those top-line synergies as soon as we can. Yeah, and maybe just layering on top of that for a second, Stephen, I hope it's coming across on the call today, but, you know, we see so many synergies even beyond what we touched on, and you can probably see the dimensions of that from how complementary this is.

Speaker Change: I hope, it's coming across on the call today, but we see so many synergies even beyond what we touched on and you can you can probably see the dimensions of that from how complementary. This is so so we're going to be working on that now that it's under our ownership to quantify the timing impact we really don't underestimate it because there is so many here we've quantified.

Joseph H. Griffith: So we're going to be working on that now that it's under our ownership to quantify their time and impact. We really don't want to underestimate it because there are so many here. We've quantified some on the call today, but there's a lot that have been qualified and more qualitative. But, yeah, we don't want to underestimate the impact, and we'll certainly report as we progress.

Speaker Change: On the call today, but there's a lot that had been call. It qualified in more qualitative, but we don't want to underestimate the impact and certainly reports as we progressed.

Stephen Marr: Okay, great. Thanks for all the questions.

Speaker Change: Okay, great. Thanks for all the questions.

Operator: Our next question comes from Dan Arias from Stiefel. Please go ahead.

Speaker Change: Our next question comes from Dan <unk> from Stifel. Please go ahead.

Daniel Anthony Arias: Good morning, guys. Thank you.

Dan: Hi, Good morning, guys. Thank you.

Kevin J. Knopp: Kevin, maybe on desktops. I know you said last quarter that you wouldn't be breaking out system placements by instrument, but is there anything that you can say about the Rebel in order to put it in some context, since that's the product that we have a bit of an install history with? And then I think you said that the total for desktops was made up of Rebel, Maven, and Zipchip, if I'm not mistaken.

Dan: Kevin maybe on desktops I know you said last quarter that you wouldn't be breaking out system placements by instrument, but is there anything that you can say about the rebel in order to put it in some context since that's the product that we have a bit of install history with and then I think you said that the total for desktops was made up of rebel Maven Zip chip.

Kevin J. Knopp: So no Mavericks. Anything we can use when it comes to the mix across the year for the different systems? Or is it, at the end of the day, just sort of up one quarter and down another for the various components of that myth?

Dan: I'm not mistaken so no mavericks anything we can use when they just come to the mix across the year for the different systems or is it at the end of the day, just sort of up one quarter and down another for the various components of that mix.

Joseph H. Griffith: Dan, this is Joe. A little bit of color on Rebel. It continues to tick along, right where we've been kind of in that low single-digit range. As you mentioned, we're not specifically breaking it out, 78 placements, but it is continuing to see some of those pressures. And, you know, as I talked about the placements within the specific quarter, our desktops include Rebel, Zipchip, and Maven. Kevin, do you want to give a little bit more color on Maverick? I am excited by that opportunity. Yeah, yeah, absolutely.

Dan: Hey, Dan This is Joe a little bit of color on rebel continues to tick along right, where we've been kind of that low single digit range. As you mentioned, we're not specifically breaking it out 78 placements.

Joseph H. Griffith: But it is continuing to see some of those pressures.

Dan: And as I did talk to the placements within the specific quarter or desktops include rebel ZIP chip and May then kind of a drag a little bit more color on maverick excited by the opportunity yeah, Yeah, absolutely I mean, we called out a little bit in the prepared remarks that the sales engagement. We are seeing here in Q1, it's similar to what we saw in Q4 in terms of that.

Kevin J. Knopp: I mean, we call that a little bit in the prepared remarks that the sales engagement we're seeing here in Q1 is similar to what we saw in Q4 in terms that it is more weighted, more 2-to-1 weighted, to our newer products in the pipeline as we're gaining momentum and excitement, again, just from a sales engagement funnel perspective. You know, I think it's absolutely early days, but lots of engagement on Ma We mentioned briefly that in April, we had a webinar with 250-some registrants, and that was centered around Maverick and how it impacts, like, quality attributes, and how it doesn't take investments in modeling.

Dan: There is more weighted more to the one weighted to our newer products in the pipeline is regaining momentum and excitement again, just about say obligate engagement funnel perspective.

Dan: I think it's absolutely early days, but lots of engagement on Maverick, We mentioned briefly that in April we had a webinar with 250, some risk register and some that are centered around maverick and how it impacts like pretty good quality attributes.

Dan: And how it doesn't take investments in bottling. So good engagement on that end and then further.

Dan: A number of qualified evaluations ongoing and planned in many ongoing and this is where our biopharma customer and some in some cases, we'll be purchasing or consumables and we'd like to support a demo across multiple bioreactors and kind of testing and qualifying that and the ability to connect the cross there so lots of encouraging.

Kevin J. Knopp: So, good engagement on that. And then further, we have a number of qualified evaluations ongoing right now, being planned, and many ongoing. And this is where a biopharma customer, in some cases, will be purchasing equipment or consumables and would like to support a demo across multiple bioreactors and kind of testing and qualifying that, and the ability to connect across there. So, lots of encouraging parts to evaluate it, but as we've talked about, certainly the CapEx spending for novel technologies has been muted, but we're really excited that we've seen a lot of this engagement And then obviously, we've got a diversified portfolio, and the handhelds have been performing to bolster our overall growth of 8% this quarter in products and services.

Dan: Hard to evaluate it but as we've talked about certainly the capex spending for novel technologies has been muted, but we're really excited that we've seen a lot of this engagement and then obviously, we've got a diversified portfolio and the handhelds have been performing to bolster our overall growth at 8% this quarter our products and service.

Speaker Change: Okay and Joe Your point was that total desktop system placements whatever that mix is just sequentially in march higher across the year correct.

Joseph H. Griffith: Yes, that's our expectation and ultimately by the end of the year to see an increase in placements driven mainly by Maverick in May then.

Joseph H. Griffith: But it will progress throughout the year, Okay, and then if I could just ask.

Speaker Change: Yes, I got you. Thank you for that.

Speaker Change: Maybe just on the handheld side you had mentioned last quarter that the budget delays were a factor when you were thinking about the beginning of the year in <unk> I am curious if once the federal budget was released you saw some loosening when it comes to spending in deals.

Joseph H. Griffith: Okay, and Joe, your point was that total desktop system placements, whatever that mix is, should sequentially march higher across the year.

Joseph H. Griffith: Yes, that's our expectation. And ultimately, by the end of the year, we should see an increase driven mainly by Maverick and Maven, that will progress throughout the year. Okay, and then if I could just... Yeah, I got you.

Speaker Change: Late March early April show.

Speaker Change: Any pickup in activity in any way.

Speaker Change: And then I guess Relatedly is there anything you could say a bit help us with the modeling exercise when it comes to Nx systems across the year.

Speaker Change: Yes.

Speaker Change: Yes from a timing perspective, it is good to see it finally get over the line because March 'twenty.

Joseph H. Griffith: Thank you for that. Maybe just on the handheld side, you mentioned last quarter that the budget delays were a factor when you were thinking about the beginning of the year and 1Q. I'm curious if once the federal budget was released, you saw some loosening when it comes to spending and deals? Did late March, early April show any signs of that? any pickup in activity in any way. And I guess, relatedly, is there anything you could say that would help us with the modeling exercise when it comes to MX systems worldwide?

Speaker Change: The funding was released of course, that's in many ways just the start of the process with our customers. So lots of conversations with our sales team to tee up the funding mechanisms and the timing and understand the procurement cycle, which is likely pushing a lot of those government.

Speaker Change: Government opportunities more into the back half in Q3 versus Q2 opportunities were really didn't start to free up until March. So I would say, we're seeing a pickup in the conversations.

Speaker Change: But the timing is working against us some beds, where it would be more I'd say back half Q3, Q4, even more so than we initially thought back in March.

Joseph H. Griffith: From a timing perspective, it was good to see it finally get over the line. You know, I think it was March 22nd when the funding was released. Of course, that's, in many ways, just the start of the process with our customers. So lots of conversations with our sales team to tie up the funding mechanisms and the timing and understand the procurement cycle, which is likely pushing a lot of those government opportunities more into the back half of Q3 versus Q2 opportunities where it really didn't start to free up until March.

Speaker Change: Okay.

Speaker Change: Okay. Thank you.

Speaker Change: Yeah.

Speaker Change: Our next question is from Puneet <unk> from Leerink partners. Please go ahead.

puneet: Yeah, Hi, guys. Thanks for the questions here so.

Speaker Change: Kevin.

puneet: It's good to see the acquisition, but.

puneet: On the flip side of that are getting a number of questions here.

puneet: What brought about this acquisition.

puneet: At this point and sort of why now and can you talk to us about the level of investments that you might have to do in order to drive the red wave technology into some of the other applications and make.

Joseph H. Griffith: So I would say we're seeing a pickup in the conversations, but the timing, you know, is working against us a bit where people are, I'd say, back half of Q3, Q4, even more so than we initially thought back in March.

Speaker Change: I know you pointed out to some of the cost synergies, but just I think the big question here is given your cash balance and sort of the dilution youre taking on for this deal how should we be thinking about the overall sort of cash burn this year and next.

Operator: Our next question is from Puneet Souda from Lerink Partners. Please go ahead.

Puneet Souda: Yeah, hi, guys. Thanks for the questions here. So, Kevin, you know, it's good to see the acquisition, but on the flip side of it, I'm getting a number of questions here on, you know, what brought about this acquisition at this point and sort of why now? And can you talk to us about the level of investments that you might have to do in order to drive the RedWave technology into some of the other applications and make, you know, I know you pointed out to some of the cost synergies, but just I think the big question here is, given your cash balance and the, you know, sort of the dilution you're taking on for this deal, you know, how should we be thinking about the overall sort of cash burn this year and next?

Speaker Change: Yes, sure absolutely great great questions I'll start and pass to Joe, but yes, we're super excited about the Redwood acquisition.

Joseph H. Griffith: We have done an acquisition in our past in that.

Speaker Change: That helped grow as a nice portfolio of products in the bio processing. So we've got really and life science instrumentation. So we've got a really nice foundation there in our portfolio, but looking to drive scale and benefit from our investments in sales and marketing with our handheld devices, which have been durable and their success and their growth.

Speaker Change: Serving the market as a point of need chemical analysis, and we absolutely want to keep winning there. So when we go out and search from inorganic perspective and look.

Kevin J. Knopp: Yes, sir. Absolutely. Great, great questions. I'll start, and I'll pass them to Joe.

Speaker Change: This asset was very unique to us it's profitable it's highly growing many many synergies that directly plugged into our sales channels. So we think it's accretive in many different directions. So it's a it's a strong fit for us and again, it fits well into our drive to.

Kevin J. Knopp: But yeah, we're super excited about the Redwood acquisition. As you know, we have done an acquisition in the past, and that helped grow us a nice portfolio of products in bioprocessing. So we've got really good foundations there in a portfolio, but we are looking to drive scale and benefit from our investments in sales and marketing with our handheld devices, which have been durable. You know, in their success and their growth and serving the markets for point of need chemical analysis.

Speaker Change: The win across point of new chemical detection and that can be in forensics that can be in bio processing.

Speaker Change: Theres, just a lot of opportunity that we see in that space.

Speaker Change: Maybe you can touch on some of the cash concept in path.

Speaker Change: For breakeven in.

Speaker Change: 2023, we used approximately $25 million in operating cash flows.

Kevin J. Knopp: And we absolutely want to keep winning there. So when we go out and search from an inorganic perspective and look, you know, this asset is very unique to us. It's profitable. It's highly growing. Many, many synergies that directly plug into our sales channels. So we think it's creative in many different directions.

Operator: Fourth the business I mean, Q1, typically our largest quarter for cash flows during Q1 2024, our cash used for operating purposes was about $10 million, where we would expect to be in the $30 million range on a full year basis here in 2024.

Speaker Change: We do expect to finish 2024 with multiple years of cash available to support our operations.

Kevin J. Knopp: And the key factor to our path to profitability is cash burn, is top-line growth, and we're continuing to see the path to double-digit top-line growth for the core dynaway business once the by-processing recovery plays out, and the structure of our red wave acquisition rewards strong 22 percent plus growth over the two-year consideration period. So we expect to improve, you know, lowering our burn with scale in 2025 and beyond. And to think about that as it translates over to a possible path to cash flow break-even, we believe that this acquisition does pull forward our cash flow break-even timeline, given that we're adding scale with red wave revenues, bolstering our top-line growth profile, and adding an accretive gross margin and cash flow positive business.

Kevin J. Knopp: A key factor to our path to profitability is the cash burn as the top line growth.

Turning to the CTO and the path to double digit top line growth from our core <unk> business once the bond pricing recovery plays out in the structure of our regulated acquisition reward is strong at 22% plus growth over the two year considerations.

Kevin J. Knopp: So we expect to improve lowering our burn with scale in 2025 and beyond.

Kevin J. Knopp: And to think about that as it translates over to possible path to cash flow breakeven.

Kevin J. Knopp: We believe that this acquisition does pull forward our cash flow breakeven timeline, given that we're adding scale of red Red wave revenues bolstering, our topline growth profile and having an accretive gross margin and cash flow positive business.

Kevin J. Knopp: We previously had indicated that we probably needed to be a low three-digit revenue number to cross into profitability, but it's likely that somewhere less than $150 million in revenue we can get. And with the addition of Redway, we can reach this level faster than before. So, definitely excited about that.

Kevin J. Knopp: We previously indicated that we probably used to be a low three digit revenue number to cross into profitability.

Kevin J. Knopp: But we will likely look somewhere less than $150 million of revenue, we can get there and with the additional runway as we can reach this level faster than before so definitely excited about that.

Puneet Souda: Got it. That's helpful, Joe.

Speaker Change: Got it.

Speaker Change: Helpful. Joe.

Kevin J. Knopp: And my follow up is on you. What are you seeing from the cell therapy accounts? Those have been some of the early adopters, but obviously impacted by the biotech impact over the last couple of months, and, in fact, the last year. Can you talk a little bit about the sort of adoption you're seeing in those accounts? And I'm wondering, Kevin, how should we think about closed loops or automated systems? How do your products position themselves in bioprocessing applications? And just lastly, if I could squeeze in one more question, is there anything that we ought to think about in terms of biosecure or impact from biosecure? Thank you.

Speaker Change: And my follow up is on.

Kevin J. Knopp: Yes.

Kevin J. Knopp: What are you seeing from the cell therapy accounts.

Kevin J. Knopp: There've been some of the early adopters, but obviously impacted.

Kevin J. Knopp: The biotech impact over the last couple of months and the impact of last year can you talk a little bit about sort of adoption you're seeing in those accounts and.

Kevin J. Knopp: I'm wondering.

Kevin J. Knopp: Kevin how should we think about the closed loop automated systems how does.

Kevin J. Knopp: Do your products position into into bio processing applications, there and just lastly, if I could squeeze in one more.

Kevin J. Knopp: There anything.

Kevin J. Knopp: We ought to think about in terms of bio secure impact from both secure thank you.

Kevin J. Knopp: touch on those. So first, on the cell therapy side, our focus has been on the latter, as you mentioned. We do have a dedicated BD professional under our commercial leader that's engaging the innovative hardware equipment companies in the cell therapy space. As you know, we announced a relationship with Terumo, and then in February, we announced a relationship with Solaris. And those efforts, in particular, are really around creating a fully integrated device that automates the whole process and increases the number of dosages available while lowering the cost of goods while doing so.

Speaker Change: Yes happy to touch on those.

Kevin J. Knopp: So first on the cell therapy side, our focus has been the latter as you mentioned, we do have a dedicated BD professional under our commercial leader that's engaging the innovative.

Kevin J. Knopp: Innovative hardware equipment companies in the cell therapy space as you know we announced the relationship with <unk> and then in February as it relates to our relationship with Soliris and.

Kevin J. Knopp: And those efforts Soliris in particular is really around creating a fully integrated device that automates the whole process and increases the number of doses available and lowering the cost of goods, while doing so so that efficiency in our mind. It is very synergistic with our products and very much aligned to how were positioning our maven and maverick.

Kevin J. Knopp: So that efficiency, in our mind, is very synergistic with our products and very much aligned to how we're positioning our Maven and Maverick products to actually help control processes, help control and determine when you harvest, and help improve yields and other quality attributes along the way.

Kevin J. Knopp: Products to actually help control processes help control and determine when you harvest help improve yields and other quality attributes along the way. So we do have a focused effort to engage such organizations. We're very pleased to be working with Soliris. You can see in the news are getting good traction with BMS and others They announced here recently.

Kevin J. Knopp: So we do have a focused effort to engage such organizations. We're very pleased to be working with Solaris. You can see in the news; they're getting good traction with BMS and others. They've been announced here recently.

Kevin J. Knopp: So we're working to get designed into their processes, but we have a number of others that we're working with as well. So we're really working between the innovative hardware providers and also the innovators on the therapeutic side, and then we're bringing the innovation on the analytics. So we're trying to close those loops.

Kevin J. Knopp: Lee So we're working to get designed into their to their processes, but we have a number of others that we're working with as well. So we're really working between the innovative.

Kevin J. Knopp: Hardware providers.

Kevin J. Knopp: Also the innovators on the therapeutic side and then we're bringing the innovation on the analytics. So we're trying to close those look so again early days more of a.

Kevin J. Knopp: So it's, again, early days, more of an OEM scale relationship we're looking to build. But I can say that we've had good engagements in the quarter with a number of groups in that area. Regarding biosecure, real quickly, you know, we work with many organizations in the government with our handheld. So those, of course, are going after small molecule analysis, drug analysis in many cases, counterfeits, and the like. So we work on a variety of additional security applications and are well-versed in things like export control and the like.

Kevin J. Knopp: On the OEM with scale relationships, we're looking to build but I can say that we've had good engagements in the quarter with a number of groups in that area.

Kevin J. Knopp: Regarding buyer secure real real quickly.

Kevin J. Knopp: Work with the with many organizations and the government with our handheld so.

Kevin J. Knopp: Of course are going after the small molecule analysis drug analysis in many cases counterfeits and the like.

Kevin J. Knopp: So we worked on a variety of additional security applications.

Kevin J. Knopp: And well versed on things like export control and the like so I think as bio security opportunities develop we do have a very good dedicated capable government sales channel.

Kevin J. Knopp: So I think as biosecurity opportunities develop, we do have a very good, dedicated, capable government sales channel. We are in some conversations with the U.S. government around some initiatives for the military as well as just for the economy around initiatives to onshore and have a strong, vibrant economy here in the United States for biopharmaceuticals. So we'll have to see how that develops. You know as well that we work with groups like National Resilience, where this has been a part of their government strategy as well, and they've been a strong partner, customer, and collaborator with 908. So maybe not an immediate direct impact we see there, but we certainly stand poised to help out where we can.

Kevin J. Knopp: Or in some conversations with the U S government around some initiatives on the military as well as just for the economy around.

Kevin J. Knopp: Initiatives to onshore and have a strong vibrant economy here in the United States for Biopharma <unk>, so well have to see how it develops.

Kevin J. Knopp: You know as well that we work with groups like National resilience, where this has been a part of their government strategy as well and they've been a strong partner and customer and collaborator with by the way so.

Kevin J. Knopp: Maybe not an immediate direct impact we see there, but we certainly stand poised to help out where we can on that.

Operator: Okay. Thanks, guys. We currently have no further questions on the call, so I will hand the floor back to management.

Speaker Change: Okay. Thanks, guys.

Operator: <unk>.

Operator: Okay.

Operator: We currently have no further questions on the call. So I will hand, the floor back to management.

Kevin J. Knopp: All right, well, thank you very much. Thank you very much for joining our call today, and we appreciate all the questions.

Speaker Change: Alright, well. Thank you very much. Thank you very much for joining.

Kevin J. Knopp: Our call today and we appreciate all the questions.

Operator: This concludes today's conference call. Thank you all very much for joining us.

Speaker Change: Good day.

Operator: This concludes today's conference call. Thank you all very much for joining.

Operator: Yeah.

Operator: [music].

Operator: Okay.

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