Q4 2024 908 Devices Inc Earnings Call
Operator: Hello and welcome to the 908 Devices fourth quarter 2024 financial results. My name is Becky and I'll be your operator today. During the presentation, you can register a question by pressing star followed by one on your keypad. If you change your mind, please press star followed by two.
Hello, and welcome to the nano eight devices fourth quarter at 22, and she will find out two results. My name is they can't all be operated today. During the presentation. You can register a question by pressing Star Phillip I want I know keypad. If you changed your mind. Please press star followed by Chi.
Kelly Gura: I'll now hand over to your host, Kelly Gura, investor relations to begin. Please go ahead. Thank you.
Speaker Change: I will now hand over to your host Kelly Kara Investor Relations to begin. Please go ahead. Thank you. This morning 98 devices released financial results for the fourth quarter and full year ended December 31st 2024.
Kelly Gura: This morning, 908 Devices released financial results for the fourth quarter and full year ended December 31st, 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 IR at 908 Devices dot com.
Speaker Change: 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 908 devices dotcom. So.
Kelly Gura: Joining me today from 908 is 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.
Speaker Change: Joining me today from 908, as Kevin said, I'm, the Chief Executive Officer, and co founder and Joe Griffith Chief Financial Officer.
Speaker Change: Today's call includes a slide presentation, which is viewable to those joining via webcast. The slides will also be available after the call and I are like 98 Goodbye uses dotcom under the menu had our events and presentations.
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 31st, 2023, and in 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.
Speaker Change: 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 and I did I just issued today.
Speaker Change: 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 31st 2023 and in 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.
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 because of new information future events or otherwise. This conference call contains time sensitive information and is accurate only as of the live broadcast March 25, but that I would like to turn the call over to Kevin.
Kelly Gura: This conference call contains time-sensitive information and is accurate only as of the live broadcast March 4th, 2025.
Kevin Knopp: With that, I would like to turn the call over to Kevin. Thanks, Kelly. Good morning, and thank you for joining our fourth quarter and full year 2024 earnings call. We have a lot of exciting updates to share today, so let's kick things off with a look at our agenda.
Kevin: Thanks, Gary Good morning, and thank you for joining our fourth quarter and full year 2024 earnings call. We have a lot of exciting updates to share today, so let's kick things off with a look at our agenda.
Kevin Knopp: Today, we are taking a decisive step forward to focus our efforts and dramatically improve our financial profile with the announcement of the divestiture of our desktop file processing portfolio to Replica. So I'd like to take some time to walk through a set of slides that clearly outlines the strategic transformation of 908 devices through this divestiture and the immense value creation we feel it catalyzes.
Kevin: Today, we are taking a decisive step forward to focus our efforts and dramatically improve our financial profile with the announcement of the divestiture of our desktop bio processing portfolio to replicate.
Kevin: I'd like to take some time to walk through a set of slides that clearly outlines do strategic transformation of 90 week devices through this divestiture and the immense value creation, we feel it satellite.
Kevin Knopp: I will then hand the call over to Joe to walk through our Q4 and 2024 results, as well as the compelling financial profile of our continuing operation.
Kevin: I will then hand, the call over to Joe to walk through our Q4, and 2024 results as well as the compelling financial profile of our continuing operations.
Kevin Knopp: Finally, I'll close the call with a review of why we believe our actions and new trajectory have fortified the thesis for our investors. Before we dive in, I want to say that I'm so proud of the 908 Devices team for continuing to execute, staying focused on our customers, and delivering a solid close to the year. This includes the successful commercial integration of RedWave, revenue from acquired FDR products came in slightly ahead of our initial post-acquisition target of $11 million, and was an important contributor to our Q4 and full-year performance. And in so many ways, that was the first step of the transformation we are talking about today.
Kevin: Finally, I'll close the call with a review of why we believe our actions in new trajectory afforded by the thesis for investors.
Speaker Change: Before we dive in I want to say that I am so proud of the 98 devices team for continuing to execute staying focused on our customers and delivering a solid close to the year. This includes the successful commercial integration of Redwood revenue from acquired FTR products came in slightly ahead of our initial post acquisition target of $11 million and was an important.
Speaker Change: A contributor to our Q4 and full year performance in so many ways that was the first step of the transformation we're talking about today.
Kevin Knopp: The strategic transformation we're unveiling today is a bold leap forward, sharpening our focus, strengthening our financial position and accelerating profitability. We are doubling down on our higher growth handheld markets, aligning with key industry tailwinds in opioid crisis response, defense and border security. At the same time, we're making decisive moves.
Speaker Change: The strategic transformation, we are in daily today is a bold leap forward sharpening our focus strengthening our financial position and accelerating profitability. We are doubling down on our higher growth markets aligning with key industry tailwind and opioid crisis response defense and border security at the same time, we're making.
Speaker Change: I said mood divesting, our biopharma desktops portfolio through replica and for $70 million nearly doubles, our cash reserves and eliminates any financing or in a health care related overhang is paved the way for positive adjusted EBITDA by Q4, 2025, and cash flow positivity in 2026, driven by stronger margins and a more streamlined.
Kevin Knopp: Divesting our biopharma desktop portfolio to Repligen for $70 million nearly doubles our cash reserves and eliminates any financing or NH healthcare related overhang. This paves the way for positive adjusted EBITDA by Q4 2025 and cash flow positivity in 2026, driven by stronger margins and a more streamlined, agile operation. Importantly, as we have a platform technology, we retain flexibility to operate in broader life science markets, ensuring long term growth opportunities beyond the divested bioprocessing segment.
Speaker Change: <unk> operations.
Speaker Change: Importantly, as we have a platform technology, we retain flexibility to operate in broader life science markets, ensuring long term growth opportunities beyond the divested bio processing segment. So let me walk you through each of these four areas in more detail.
Kevin Knopp: So let me walk you through each of these four areas in more detail. 908 Devices is receiving $70 million in cash from Ruppegen for the asset purchase of four desktop KFC products, Maven, Maverick, Rebel, and Zipkit, having a combined installed base of over 450 units. These products generated $11.9 million in revenue in 2024, with the sale reflecting a strong 6X multiple, underscoring the differentiation of this innovative technology. The deal includes Repligen, assuming lease obligations for our Morrisville, North Carolina and Brunschwein, Germany sites. Most PAT dedicated team members, including Chief Product Officer Chris Brown, will transition to Repligen, reducing our total headcount by about one third from 246 to approximately 165.
Speaker Change: 908 devices is receiving $70 million in cash from up again for the asset purchase of war desktop products Nathan Maverick Rebalances at kit.
Speaker Change: Combined installed base of over 450 units.
Speaker Change: These products generated $11 $9 million in revenue in 2024 with the sale, reflecting a strong six X multiple underscoring the differentiation of this innovative technology the.
Speaker Change: The deal includes replica assuming lease obligations for our Morrisville, North Carolina, and <unk>, Germany sites, most dedicated team members, including Chief product Officer, Chris Brown will transition to replicate reducing our total head count by about one third from 246 to approximately 165.
Kevin Knopp: In the coming weeks, we'll collaborate closely with Repligen to ensure a seamless transition. We're excited to continue as a key supplier of mass spec components and to see our cutting edge desktop portfolio thrive under a global bioprocessing leader. This divestment of the desktop portfolio catalyzes value creation as it sharpens our focus on our highest growth handheld markets, where revenue growth has outpaced our desktop devices by approximately 2x since our 2020 IPO.
Speaker Change: In the coming weeks, we will collaborate closely with replica and to ensure a seamless transition. We're excited to continue as a key supplier of mass spec components and to see our cutting edge desktop portfolio thrive under a global bio processing leader.
Speaker Change: This divestment of the desktop portfolio catalyze this value creation as it sharpens, our focus on our highest growth and health markets, where revenue growth has outpaced our desktop devices by approximately <unk> since our 2020 IPO.
Kevin Knopp: There are three important points here that I'd like to make. First, there's unprecedented opportunity ahead for our handheld devices with secular tailwinds aligning in our favor, unlike anything I've seen in more than 20 years in this industry. The market is attractive, growing, and is estimated to reach $2.5 billion by 2027. Second, with the RedWave acquisition last year, we now have a comprehensive set of handheld products to fully address the opportunity ahead. We expanded our handheld device offering, growing from one device to a portfolio of four, with more on the near horizon. And third, the proceeds from the divestiture secure our balance sheet, giving us flexibility to pursue new growth opportunities for our broad platform, including through partnerships.
Speaker Change: There are three important points here that I'd like to make.
Speaker Change: Bert.
Bert: Unprecedented opportunity ahead for our handheld devices with secular tailwind aligning in our favor unlike anything I've seen in more than 20 years in this industry. The market is attractive growing is estimated to reach $2 $5 billion by 2027.
Bert: Second with the Red wave acquisition last year, we now have a comprehensive set of handheld products to fully address the opportunity ahead, we expanded our handheld device offerings growing from one device to our portfolio of four with more on the near Horizon.
Bert: And third the proceeds from the divestiture secure balance sheet, giving us flexibility to pursue new growth opportunities for our broad platform, including through partnerships. Today, we have a solid foundation of OEM and funded.
Kevin Knopp: Today, we have a solid foundation of OEM and funded partnerships, including an industrial QAQC and pharma. A replicant relationship now adds to this. Our focus enables a step change in our projected financials and positions us to accelerate top-line growth. For 2025, we expect revenue from continuing operations to be in the range of $53 to $55 million, growing 11% to 15% compared to the prior year. We expect this growth to be a baseline that accelerates above 20% in 2026. I'll share more about the catalyst we expect to drive this acceleration in a few minutes. We're also targeting adjusted gross margins in the mid to high 50s range for 2025, improving over last year, with further expansion in 2026, following our plan manufacturing consolidation in Connecticut.
Bert: Including an industrial QA, QC and pharma, a rep, losing relationships now adds to that.
Bert: Our focus enables a step change in our projected financials and positions us to accelerate top line growth.
Bert: For 2025, we expect revenue from continuing operations to be in the range of $53 million to $55 million growing 11% to 15% compared to the prior year. We expect this growth to be a baseline that accelerates above 20% in 2026 I'll share more about the catalyst we expect to drive this acceleration in a few minutes.
Bert: We're also targeting adjusted gross margins in the mid to high Fifty's range for 2025, improving over last year with further expansion in 2026, following our planned manufacturing consolidation in Connecticut.
Kevin Knopp: We now expect to be kind of adjusted EBITDA positive by Q4 of this year and to become cash flow positive for the full year of 2026, supported by our facility consolidation and reduction in headcount. And finally, this divestiture greatly strengthens our balance sheet, providing a healthy margin of safety as we expect to end the year with more than $110 million in cash as we drive towards full-year cash flow break-even in 2026. Taken together, we think our financial trajectory is now pretty compelling.
Bert: Now, we expect to be kind of adjusted EBITDA positive by Q4 of this year and to become cash flow positive for the full year of 2026 supported by our facility consolidation and reduction in head count.
Bert: And finally, this divestiture greatly strengthens our balance sheet, providing a healthy margin of safety as we expect to end the year with more than $110 million in cash as we drive towards full year cash flow breakeven in 2026 cases, together, we think our financial trajectory is now pretty compelling.
Kevin Knopp: Now, I'd like to shift gears and reintroduce you to our handheld devices and give a big picture perspective of the overall opportunity. Since our founding, 908 Devices has taken on hard challenges developing innovative platform instrument technologies with broad use cases. We are an analytical instrumentation company. We create next-generation tools designed specifically for point-of-need use in vital health and safety contexts. Our products serve a multitude of critical-to-life use cases, including the fentanyl and opioid crisis, with users spanning from frontline workers to law enforcement and including informing life safety with their use to detect and identify toxic industrial materials and volatile organic compounds to help prevent acute exposure of emergency personnel to these carcinogens.
Now I'd like to shift gears and reintroduce you handheld devices and give a big picture perspective of the overall opportunity.
Bert: Since our founding <unk> devices has taken on hard challenges developing innovative platform instrument technologies with broad use cases, we arent analytical instrumentation company. We create next generation tools designed specifically for point of need us in vital health and safety context, our products serve a multitude of critical to life use cases, including.
Bert: The fentanyl and the opioid crisis with either spanning from frontline workers to law enforcement and including informing life safety with they are used to detect and identify toxic industrial materials and volatile organic compounds to help prevent the acute exposure of emergency personnel. These carcinogens.
Kevin Knopp: Being a platform technology, we continue to see opportunity across broader life science applications, some of which we are addressing today through OEM and other funded partnerships. At our core is our MX908 device. It introduced a completely new product class that moved mass spectrometry out of the confines of the lab and to the point of need, bringing true lab grade results to the field for the first time. Following its full year of introduction in 2018 through 2024, it has delivered a revenue figure of 21%. We now have over 2,800 devices fielded.
Bert: Platform technology, we continue to see opportunity across broader life science applications, some of which we are addressing today through OEM and other funded partnerships.
Bert: Outer core is our <unk> device.
Bert: It introduced a completely new product class that move mass spectrometry out of the confines of the lab and to the point of need bringing true lab grade results to the field for the first time.
Bert: Knowing its full year of introduction in 2018 through 2024 and has delivered a revenue CAGR of 21%. We now have over 2800 devices field, but in so many ways I feel like we're just getting started our portfolio has expanded significantly over the past 10 months from this one device beforehand held devices today and there is.
Kevin Knopp: But in so many ways, I feel like we're just getting started. Our portfolio has expanded significantly over the past 10 months, from this one device to four handheld devices today. And there's unprecedented macro drivers aligning the global need in our favor. We are facing global threats to public health and safety on a scale that we've not seen before. To start, the opioid crisis is evolving, now encompassing other illicit drugs and synthetic substances. Emerging threats like nitrosines, xylosine, and pink cocaine are spreading globally. Undetectable precursor chemicals designed to bypass regulations and screening are fueling the rise of synthetic opioids.
Precedented macro drivers aligning the global need in our favor.
Bert: We are facing global threat to public health and safety on a scale that we've not seen before you start the opioid drugs is evolving now encompassing other illicit drugs and synthetic substances emerging threats like mid <unk> xylazine and seek to obtain are spreading globally undetectable precursor chemicals designed to <unk>.
Bert: <unk> regulations and screening are fueling the rise of synthetic opioids.
Kevin Knopp: In 2023, overdose deaths exceeded 100,000, making it the leading cause of injury-related fatalities, surpassing auto accidents. This figure is likely underestimated as the crisis extends beyond fentanyl. These preventable poisonings have led to the renewal of the nationwide public health emergency this past June. Addressing this challenge requires adaptable detection identification technology, and we believe our MX908 is well suited for the task. Beyond the opioid crisis, the prevalence of toxic industrial materials is exploding. In California alone, the proliferation of these cancer-causing materials in consumer products is causing more than 5,000 tons of hazardous VOCs to be released annually.
Bert: In 2023 overdose deaths exceeded 100000, making it the leading cause of injury related fatalities, surpassing auto accident. This figure is likely underestimated at the crisis extends beyond Sentinel. These.
Bert: These preventable poisonings have led to the renewal of the nationwide public health emergency this past June.
Bert: Addressing this challenge requires adaptable detection and identification technology, and we believe our <unk> nine away is well suited for the task.
Bert: Beyond the opioid crisis, the prevalence of toxic industrial materials is exploding in California alone. The proliferation of these cancer, causing materials and consumer products is causing more than 5000 tons of hazardous POC to be released annually. The recent California wildfires burn synthetic materials from furniture clothes.
Kevin Knopp: The recent California wildfires burned synthetic materials from furniture, clothing, and building materials, along with lithium-ion batteries from vehicles and consumer electronics. In such environments or in everyday house fires, emergency professionals can receive acute exposures to carcinogens. Cancer is the leading cause of work-related deaths in the EU and accounts for 72% of firefighter line-of-duty deaths in the U.S. Detecting and mitigating acute carcinogen exposure is critical. It requires broad and sensitive gas protection, which we believe our Explorer IR device and its underlying FTIR technology uniquely address.
Bert: <unk> building materials, along with lithium ion batteries for vehicles and consumer electronics in such environments or in everyday house fires emergency professionals can receive acute exposures to curts images cancer is a leading cause of work related deaths in the EU and accounts for 72% a firefighter line of duty deaths in the U S.
Bert: Testing and mitigating acute carcinogen exposure is critical it requires broad insensitive gas detection, which we believe are explore IR device and its underlying FTIR technology uniquely address it.
Kevin Knopp: Now, each of these on their own is a large scale concern. But if you consider the access and availability of such materials and the rising of global tensions, you can see the global security concerns with evolving technologies for AI driven chemical sensitive and novel delivery methods like drones is becoming an imperative to modernize detection equipment to address this evolving threatscape. To support this, funding is needed. Aggregate public safety spending has shown to be robust both in the U.S. and globally. We believe the unprecedented macro needs will drive an even further increase in funding. Last year, 23 NATO allies met the minimum target of investing more than 2% of their GDP in defense, compared to only three allies in 2014.
Bert: Now each of these on their own is a large scale concern, but if you consider the access and availability of such materials and the rising of global tension you can see the global security concerns with evolving technologies for AI, driven chemical synthesis and novel delivery methods like drones is becoming an imperative to modernize detection equipment.
Bert: We address this evolving threat skip.
Bert: To support this funding is needed.
Bert: Aggregate public safety spending is shown to be robust both in the U S and globally. We believe the unprecedented macro needs will drive an even further increase in funding last year 23, NATO allies met the minimum target of investing more than 2% of their GDP.
Bert: In defence compared to only three <unk> in 2014.
Kevin Knopp: 20% of this defense funding is targeted for equipment modernization. This increase is in part attributed to US foreign policy. Importantly, indications are that the new Trump administration will prioritize spending on the border, customs, military law, and drug enforcement, which will likely spur similar spending globally.
Bert: <unk>, 8% of this defense busting is targeted for equipment modernization. This increase is in part attributed to U S. Foreign policy importantly, indications are that the new Trump administration will prioritize spending on the border customs military law and drug enforcement, which will likely spur similar spending globally.
Kevin Knopp: We now have a comprehensive portfolio of devices to capture the massive opportunity ahead. Our modern tools can be used in concert to provide exceptional coverage, hundreds of trace analytes, thousands of toxic gases, tens of thousands of bulk compounds. They provide a broad analyte panel and offer detection to ID from air and aerosols to surfaces, piles, and puddles. Together, our devices form a fast and comprehensive toolkit to support our customers' full workflow. And importantly, we are doing more with the data and analytics our devices provide to support our customers and enable them to identify trends and better manage their fleet of devices.
Bert: We now have a comprehensive portfolio of devices to capture the massive opportunity ahead, our modern tools can be used in concert to provide exceptional covered hundreds of trace analytes thousands of toxic gases tens of thousands of bulk compounds. They provide a broad analyzed panel and offer detection to from.
Bert: <unk> are an aerosol to surfaces pilots and puzzle.
Bert: Together, our devices form a fast and comprehensive toolkit to support our customers full workflow and importantly, we're doing more with the data and analytics our devices provide to support our customers and enable them to identify trends and better manage their fleet of devices I'm really excited for the roadmap we have in this area and over time.
Kevin Knopp: I'm really excited for the roadmap we have in this area. And over time, we expect this to be sticky and a driver of increased pull-through.
Bert: We expect this to be sticky and a driver of increased pull through.
Kevin Knopp: These products fit into a landscape of detection and chemical awareness tools used by our customers that can be split into two broad categories. The first is low-tech sensor-based products that provide a minimally selective response with no ID capabilities and are valid for a few analytes. Think test strips and smoke alarm tests. The second is advanced chemical detection. The major participants in this portion of the market are life science tools and analytical instrument companies. We are competitively positioned with modern products, spanning advanced detection applications, offering customers a single source for hardware and support. Our competitive positioning is a result of our culture of innovation.
Bert: These products fit into a landscape of detection and chemical awareness tools used by our customers that can be split into two broad categories.
Bert: The first is low tech sensor based products that provide a minimally selective response with no I'd capabilities and are valid for a few analysts.
Bert: Strips and smoke alarm test this.
Bert: Second is advanced chemical detection.
Bert: Major participants in this portion of the market our life science tools and analytical instruments company, we're competitively positioned with modern products spanning advanced detection applications offering customers a single source for hardware and support our competitive positioning as a result of our culture of innovation.
Kevin Knopp: With our new broader portfolio of handheld devices and continued innovation, we are setting up for accelerated growth supported by three clearly defined catalysts. First is equipment modernization. With the macro driver supporting demand across all our handheld devices and an estimated 15,000 outdated FTIR products in need of upgrades, we see a significant near-term opportunity. As of year-end, FTIR products are now fully integrated into our commercial operation and are already contributing positively to our pilot and enterprise opportunity pipeline. Across all handhelds, we now have 18 accounts engaged in pilot programs representing a potential of 700 units, a seven-fold increase since the end of 2023.
Bert: With our new broader portfolio of handheld devices and continued innovation, we are setting up for accelerated growth supported by three clearly defined catalyst.
Bert: First as equipment modernization.
Bert: With the macro drivers supporting demand across all our handheld devices and an estimated 15000 outdated FTIR products in need of upgrades, we see a significant near term opportunity.
Bert: As of year end SCR products are now fully integrated into our commercial operation and our <unk>.
Bert: Contributing positively to our pilot and enterprise opportunity pipeline across all handhelds. We now have 18 accounts engaged in pilot programs, representing a potential of 700 units a seven fold increase since the end of 2023.
Kevin Knopp: In enterprise accounts, we've expanded to 34 accounts with over 1,100 units in active opportunities, up from 22 accounts and 1,000 units at year-end 2023.
Bert: In enterprise accounts, we've expanded to 34 accounts with over 100 units and active opportunities up from 22 accounts 1000 units at year end 2023.
Kevin Knopp: Second is the planned launch of our next generation handheld mass spec in 2026. This next generation product will provide a step change in performance and simplicity. We are targeting a near 50% reduction in size and weight, a lower cost of goods, and a higher pull-through opportunity through consumables and connected services. With more than 2,800 MX908 devices fielded, we plan to spawn an upgrade cycle with this product launch.
Bert: Second is the planned launch of our next generation handheld mass spec in 2026. This next generation product will provide a step change in performance and simplicity, we are targeting a near 50% reduction in size and weight of lower cost of goods and a higher pull through opportunity through consumables and connected services with more than 2800.
Bert: <unk> 908 devices steel that we plan to spud an upgrade cycle with this product launch.
Kevin Knopp: And third is the next phase of AFCAT. For over a decade, we have partnered with Smith Detection to develop a next generation chemical detector for the US Department of Defense AFCAT program. Over the last 18 months, we've delivered more than 100 component sets to Smith in support of the initial low rate production phase. This year, we expect to receive notice to proceed to full-rate production and begin to ramp deliveries. At full production, we have the potential to reach more than $10 million of annual revenue from this program. We believe these three defined catalysts, coupled with our alignment to powerful secular trends, including the fentanyl and opioid crisis, the global rise in defense budgets, and the U.S.
Bert: And third is the next phase of <unk> for over a decade, we have partnered with Smiths detection to develop a next generation chemical detector for the U S Department of defense, our Cat program.
Bert: Over the last 18 months, we have delivered more than 100 components sets dismissed in support of the initial low rate production phase.
Bert: This year, we expect to receive notice to proceed to full rate production and begin to ramp deliveries at full production, we have the potential to reach more than $10 million of annual revenue from this program.
Bert: We believe these three defined catalyst coupled with our alignment to powerful secular trends, including the fentanyl and opioid crisis. The global Ryzen defense budgets in the U S border crisis will propel our growth near and long term.
Kevin Knopp: border crisis, will propel our growth near and long term.
Kevin Knopp: Collectively, our technologies comprise a broad analytical instrumentation platform. With our announcement today, we're focusing on our core handheld applications. That said, we do recognize that there is a sizable additional opportunity in pharma and other applied markets that can be efficiently unlocked through partner. Beyond government programs and integrations, we see future tangential areas of opportunity for handheld in GMP QAQC, industrial hygiene and environmental monitoring, and other applied markets. We have a presence through existing OEM supplier relationships in the industrial QA, QC, and pharma space. And now we are a supplier and partner to Repligen as well.
Bert: Collectively our technologies comprise abroad analytical instrumentation platform with our announcement today, we are focusing on our core handheld applications that said, we do recognize that there is a sizeable additional opportunity in pharma and other applied markets that can be efficiently unlock through partnerships.
On government programs and integrations, we see future tangential areas of opportunity for handhelds in GMP, QA, QC, industrial hygiene, and environmental monitoring and other applied markets.
Bert: We have a presence through existing OEM supplier relationships in the industrial QA, QC and pharma space and now we are supplier and partner to replicate as well.
Kevin Knopp: host our divested share of our desktops. OEM and funded partnerships will make up nearly 5% of 2025 continuing operations revenues. But importantly, they represent a foothold for future growth and market expansion.
Bert: Post our divestiture of our desktops OEM and funded partnerships will make up nearly 5% of 2025, continuing operations revenues, but importantly, they represent a foothold for future growth and market expansion.
Joe Griffith: With that, I'll now turn the call over to Joe to review our Q4 and full year 2024 results and our outlook for 2025. Thanks, Kevin. Starting with our fourth quarter. Revenue for the fourth quarter 2024 was $18.8 million, up 31% from $14.4 million in the prior year period, primarily driven by an increase in handheld devices. This included approximately $4.9 million of revenue from our acquired FJR products. Notably, during the fourth quarter, we received significant international orders for our handheld devices. This included an order from Finland for 90 FTIR devices as part of an EU strategic stockpile program, which was partially recognized in the fourth quarter.
Bert: With that I'll now turn the call over to Joe to review, our Q4 and full year 2024 results and our outlook for 2025. Thanks.
Thanks, Kevin starting with our fourth quarter results revenue for the fourth quarter 2024 was $18 8 million up 31% from $14 4 million in the prior year period, primarily driven by an increase in handheld device revenue.
Bert: This included approximately $4 9 million of revenue from our acquired FTIR products.
Bert: Notably during the fourth quarter, we received significant international orders for our handheld devices.
Bert: This included an order from Finland for 90, FTIR devices as part of an EU strategic stockpile program, which was partially recognized in the fourth quarter we.
Joe Griffith: We also ship 27 MX908 devices to the General Customs Directorate of Romania. As Kevin mentioned, we are seeing strong engagement in pilot programs and it was exciting to see some of these opportunities transition into enterprise accounts in the fourth quarter. Handheld revenue was $13.6 million for the fourth quarter 2024, up 22% from $11.1 million for the fourth quarter 2023. This increase was driven primarily by revenue related to our recently acquired FTIR products, offset by a $1 million decrease in AvCAD, and a mixed shift in MX908 shipments towards international opportunities, which have a lower ASP. We shipped 219 handheld devices in the fourth quarter, up from 116 devices in the fourth quarter of 2023, bringing our installed base to 3,015.
Bert: We also shipped 27 X 900, <unk> devices to the general Customs Directorate of Romania.
Bert: As Kevin mentioned, we are seeing strong engagement and pilot programs and it was exciting to see some of these opportunities transition into enterprise accounts in the fourth quarter.
Bert: Handheld revenue was $13 6 million for the fourth quarter 2024 up 22% from $11 1 million for the fourth quarter 2023.
Bert: This increase was driven primarily by revenue related to our recently acquired FTIR products offset by a $1 million decrease in out of CAD and a mix shift in <unk> shipments towards the international opportunities, which have a lower ASP.
Bert: We shipped 219 handheld devices in the fourth quarter up from 116 devices in the fourth quarter of 2023, bringing our installed base to 3015.
Joe Griffith: Revenue from our desktop products for the fourth quarter 2024 was $5 million, increasing 56% from $3.2 million in the prior year period, driven by OEM and partnership opportunities. In total, 32 desktop devices were placed in the fourth quarter. We ended the fourth quarter of 2024 with a cumulative handheld and desktop installed base of 3,504 devices, up 23% from 2,853 at the end of the fourth quarter of 2024. Recurring revenue, which consists of consumables, accessories and service revenue, represented 39% of total revenue. and with 7.4 million, a 56% or 2.7 million increase over the prior year period, largely driven by service.
Bert: Revenue from our desktop products for the fourth quarter 2024 was $5 million, increasing 56% from $3 2 million in the prior year period, driven by OEM and partnership opportunities.
Bert: In total 32 desktop devices replaced in the fourth quarter.
Bert: We ended the fourth quarter 2024, with a cumulative handheld and desktop installed base of 3504 devices up 23% from 2853 at the end of the fourth quarter of 2023.
Bert: Recurring revenue, which consists of consumables accessories and service revenue represented 39% of total revenues this quarter.
Bert: Seven 4, million% to 56% or $2 7 million increase over the prior year period, largely driven by service.
Joe Griffith: Recurring revenue in the fourth quarter consisted of $4.3 million related to handhelds and $3.1 million related to dust. Gross profit was $9.1 million for the fourth quarter of 2024, compared to $7.3 million for the prior year period. Gross margin was 48% for the fourth quarter 2024, compared to 51% for the prior year period. Adjusted gross profit was $10 million for the fourth quarter of 2024, compared to $7.5 million for the prior year period. adjusted gross margin was 54% as compared to 53% for the prior year period. The slight uptick in gross margin was primarily due to leverage on our fixed costs with higher overall revenues in the fourth quarter, offset by the impact of a higher mix of service revenue in international sales and handhelds, both contributing a lower gross margin.
Bert: Recurring revenue in the fourth quarter consisted of $4 $3 million related to handhelds and $3 1 million related to desktops.
Bert: Gross profit was $9 1 million for the fourth quarter of 2024 compared to $7 3 million for the prior year period.
Bert: Gross margin was 48% for the fourth quarter 2024, compared to 51% to the prior year period.
Bert: Adjusted gross profit was $10 million for the fourth quarter of 2024 compared to $7 5 million for the prior year period.
Bert: Adjusted gross margin was 54% as compared to 53% for the prior year period.
Bert: The slight uptick in gross margin was primarily due to leverage on our fixed costs with higher overall revenues in the fourth quarter offset by the impact of a higher mix of service revenue and international sales and handhelds, both contributing a lower gross margin.
Joe Griffith: Total operating expenses for the fourth quarter of 2024 were $29.4 million, compared to $17 million in the prior year period. The increase in operating expenses was driven by a $10.1 million non-cash goodwill impairment. A $2.8 million increase in operating expenses primarily related to Redwood. and a half million increase in stock-based compensation. This was offset in part by a $1.1 million credit for an adjustment to the valuation of our contingent consideration liability. Excluding the impact of the non-cash goodwill impairment charge and contingent consideration liability, total operating expenses for the fourth quarter of 2024 increased $3.3 million.
Bert: Total operating expenses for the fourth quarter of 2024, or $29 4 million compared to $17 million in the prior year period.
The increase in operating expenses was driven by a $10 1 million noncash goodwill impairment charge of $2 8 million increase in operating expenses primarily related to redwood.
Bert: $5 million increase in stock based compensation.
Bert: This was offset in part by a $1 1 million credit for an adjustment to the valuation of our contingent consideration liability.
Bert: Excluding the impact of the noncash goodwill impairment charge in contingent consideration liability.
Bert: It'll operating expenses for the fourth quarter of 2024 increased $3 3 million.
Joe Griffith: Net loss for the fourth quarter of 2024 was $19.4 million, compared to $7.4 million in the prior year period. This increase was largely due to the $10.1 million non-cash charge for an impairment of goodwill. Adjusted EBITDA for the fourth quarter was a loss of $6.2 million compared to $7 million for the prior year period.
Bert: Net loss for the fourth quarter of 2024 was $19 4 million compared to $7 4 million in the prior year period.
Bert: This increase was largely due to the $10 1 million noncash charge for impairment of goodwill.
Bert: Adjusted EBITDA for the fourth quarter was a loss of $6 2 million compared to $7 million for the prior year period.
Joe Griffith: Now moving on to our full year results. Revenue for the full year 2024 was $59.6 million, increasing 19% from $50.2 million for the full year 2023. This was primarily driven by an increase in revenues from our FTIR products, which generated $11.2 billion of revenue. Handheld revenue was $46.1 million for the full year 2024, up 22% from $37.9 million for the full year 2023. Revenue from our desktop products for the full year 2024 was $13.2 million, increasing 10% from $12 million for the full year 2023. Recurring revenue, which consists of consumables, accessories, and service revenue, represent 39% of total revenues this year and was $23.3 million, a 42% or $6.8 million increase over the prior year period, largely driven by service and OEM revenue.
Bert: Now moving onto our full year results.
Revenue for the full year of 2024 was $59 6 million, increasing 19% from $50 2 million for the full year 2023.
Bert: This was primarily driven by an increase in revenues from our FTIR products, which generated $11 2 million of regulated revenue.
Bert: Handheld revenue was $46 1 million for the full year 2024 up 22% from $37 9 million for the full year 2023.
Bert: Revenue from our desktop products for the full year 2024 was $13 2 million, increasing 10% from $12 million for the full year 2023.
Bert: Recurring revenue, which consists of consumables accessories and service revenue represented 39% of total revenues this year and was $23 3 million or 42% or $6 8 million increase over the prior year period.
Bert: Largely driven by service and OEM revenues.
Joe Griffith: Recurring revenue in full year 2024 consisted of $14.4 million related to handhelds and $8.9 million related to Gross profit was $29.9 million for the full year 2024, compared to $25.3 million for the full year 2023. First margin was 50% for the full year 2024. Flat compared to the full year. Adjusted gross profit was $32.8 million for the full year 2024, compared to $26.3 million for the full year 2023. adjusted gross margin was 55% as compared to 52% for the full year 2020.
Bert: <unk> revenue in full year 2024, and consisted of $14 4 million related to handhelds and $8 9 million related to desktops.
Bert: Gross profit was $29 9 million for the whole year of 2024 compared to $25 3 million for the full year 2023.
Bert: Gross margin was 50% for the full year 2024 flat compared to the full year 2023.
Bert: Adjusted gross profit was $32 8 million for the full year 2024, compared to $26 3 million for the full year 2023.
Bert: Adjusted gross margin was 55% as compared to 52% for the full year 2023.
Joe Griffith: The increasing gross margin was partly due to improved service gross margins, which increased over 1200 basis points for the full year 2024, and to a lesser extent, higher levels of product Total operating expenses for the full year 2024 were $106.6 million compared to $68.1 million in full year 2023. The increase in operating expenses was driven by a $40.7 million non-cash goodwill impairment charge. The inclusion of operating expenses related to Red Wave and stock-based compensation. This was offset in part by a $13.2 million credit for an adjustment to the valuation of our contingent consideration liability. Net loss for the full year 2024 was $72.2 million compared to $36.4 million in the full year 2023.
Bert: The increase in gross margin was partly due to improved service gross margins, which increased over 200 basis points for the full year 2024 and to a lesser extent higher levels of product revenue.
Bert: Total operating expenses for the full year, 2024, or $106 6 million compared to $68 1 million and full year 2023.
Bert: The increase in operating expenses was driven by a $40 7 million noncash goodwill impairment charge the inclusion of operating expenses related to Red Lake and <unk>.
Bert: <unk> based compensation.
Bert: This was offset in part by a $13 2 million credit for an adjustment to the valuation of our contingent consideration liability.
Bert: Net loss for the full year 2024 was $72 2 million compared to $36 4 million in the full year 2023.
Joe Griffith: This increase was largely due to the $40.7 million non-cash charge for an impairment of goodwill.
Bert: This increase was largely due to the $40 7 million noncash charge for an impairment of goodwill.
Joe Griffith: Adjusted EBITDA for the full year 2024 was a loss of $29.6 million, compared to $30 million for the full year 2020.
Bert: Adjusted EBITDA for the full year 2024 was a loss of $29 6 million compared to $30 million for the full year 2023.
Joe Griffith: We ended 2024 with $69.6 million in cash, cash equivalents, and marketable securities with no debt We consumed approximately $2 million of cash in the fourth quarter of 2024.
Bert: We ended 2024, $69 6 million in cash cash equivalents and marketable securities with no debt outstanding.
Bert: We consumed approximately $2 million of cash in the fourth quarter of 2024.
Joe Griffith: Today, we announce the sale of our desktop portfolio for $70 million. These net proceeds, combined with the streamlined cost structures we implemented in Q4 and our growth drivers for 2025 and beyond, gives us confidence we will cross over to cash flow breakeven on a full-year basis in 2026 with a healthy cash balance. Looking ahead in 2025, we expect revenue from continuing operations to be in the range of $53 to $55 million, representing growth of 11% to 15% over full year 2024 revenue from continuing operations. In addition, we expect to recognize approximately $1 million of desktop revenues in Q1, which brings our expected 2025 total revenue to be in the range of $54 to $56 million.
Bert: Today, we announced the sale of our desktop portfolio for $70 million.
Bert: These net proceeds combined with streamlining cost structures, we implemented in Q4 and our growth drivers for 2025 and beyond gives us confidence we will cross over to cash flow breakeven on a full year basis in 2026 with a healthy cash balance.
Bert: Looking ahead in 2025, we expect revenue from continuing operations to be in the range of $53 million to $55 million representing growth of 11% to 15% over full year 2020 for revenue from continuing operations.
Bert: In addition, we expect to recognize approximately $1 million of desktop revenues in Q1, which brings our expected 2025 total revenue to be in the range of $54 million to $56 million.
Joe Griffith: Moving forward, we will report revenue across three categories. with our 2025 guidance line. For 2025, first, we expect handheld product and service revenue to grow 11% to 15% year over year, which equates to a range of 51 to 53 million. Second, we expect OEM and funded partnerships, including contract revenue, to be approximately $2 million. And third, we are not assuming any meaningful revenue contribution from the U.S. Department of Defense AFCAD program in 2025, as we completed the initial low-rate production deliveries in Q3 2024 and are preparing for potential full-rate production in 2026.
Bert: Moving forward, we will report revenue across three categories with our 2025 guidance lines of the structure.
Bert: For 2025, first we expect handheld product and service revenue to grow 11% to 15% year over year, which equates to a range of $51 million to $53 million.
Bert: Second, we expect OEM and funded partnerships, including contract revenue to be approximately $2 million in.
Bert: And third we are not assuming any meaningful revenue contribution from the U S Department of Defense <unk> program in 2025.
Bert: We completed the initial low rate production deliveries in Q3, 2024 and are preparing for potential full rate production in 2020.
Joe Griffith: As Kevin shared earlier, we expect total revenue growth to accelerate above 20% in 2026 driven by our 3E growth. Moving down the P&L, we expect adjusted gross margin to increase to the mid to high 50s range for full year 2025, with further expansion in 2026. following our planned manufacturing consolidation in Connecticut. We expect to become adjusted EBITDA positive by Q4 of this year, and reach cash flow positivity in 2026, supported by our facility consolidation, combined with the desktop portfolio divestiture, which includes an approximate 33% reduction in headspace.
Kevin: As Kevin shared earlier.
Kevin: We expect total revenue growth to accelerate above 20% in 2026, driven by our three growth catalysts.
Kevin: Moving down the P&L, we expect adjusted gross margin increased to the mid to high Fifty's range for full year 2025 with further expansion in 2026, following our planned manufacturing consolidation in Connecticut.
Kevin: We expect to become adjusted EBITDA positive by Q4 of this year and reach cash flow positivity in 2026 supported by our facility consolidation combined with the desktop portfolio divestiture, which includes an approximate 33% reduction in head count.
Joe Griffith: And finally, this divestiture meaningfully strengthens our balance sheet and we expect to exit 2025 with more than $110 million in cash and cash equivalents, up from $70 million at the end of 2025.
Kevin: And finally, this divestiture meaningfully strengthens our balance sheet, we expect to exit 2025 with more than $110 million in cash and cash equivalents up from $70 million at the end of 2024.
Kevin Knopp: At this point, I would like to turn the call back. Thanks, Joe.
Kevin: At this point I would like to turn the call back to Kevin.
Kevin Knopp: Today marks a transformative moment of value creation for Mass. I could not be more excited about the road ahead. We are laser focused on tackling the most urgent public health and safety crises of our time, fentanyl, carcinogens, and other critical security threats. No one is better positioned than 908 Devices to lead this space, and we are seizing the opportunity with conviction as this is a unique moment in time. We have taken bold steps to reshape our cost structure, and by Q4, we expect to be adjusted EVA to positive, setting the stage for a projected full-year cash flow positivity in 2026.
Kevin: Thanks, Joe.
Matt: <unk> marks a transformative moment of value creation for Matt I could not be more excited about the road ahead we.
Matt: We are laser focused on tackling the most urgent public health and safety crisis of our time Sentinel carcinogens and other critical security threats no. One is better positioned than 900 device to lead this space and we're seizing the opportunity with conviction as this is a unique moment in time we.
Matt: We have taken bold steps to reshape our cost structure and by Q4, we expect to be adjusted EBIT positive setting the stage for our projected full year cash flow positivity in 2026.
Kevin Knopp: The momentum is building following our strong Q4, and our revenue growth forecast of 11 to 15 percent in 2025 paves the way for 20 percent plus growth in 2026. With a secured balance sheet, nearly doubling our cash reserves, and removing any financing overhead and concern, we are well equipped to fuel innovation, scale operations, and execute on our vision.
Matt: Momentum is building following our strong Q4, and our revenue growth forecast of 11% to 15% in 2025 paves the way for 20% plus growth in 2026.
Matt: With the secured balance sheet, nearly doubling our cash reserves and removing any financing overhang and concern we are well equipped to fuel innovation scale operations and execute on our vision, we're not just evolving the strategic transformation, we announced today is really the launch of 900 devices to point out.
Kevin Knopp: We're not just evolving. The strategic transformation we announced today is really the launch of 908 Devices 2.0.
Kevin Knopp: To close, I think it is now clear as to why we believe our actions taken and new trajectory have fortified the thesis for our investors.
Matt: Close I think it is now clear as to why we believe our actions taken a new trajectory have fortified the thesis for our investors with that we'll now open it up for questions.
Operator: With that, we'll now open it up to questions. Thank you. If you wish to ask a question, please press star followed by one on your telephone keypad now. If for any reason you want to remove a question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally.
Matt: Thank you if you wish to ask a question. Please press star followed by one telephone keypad now if any reason you want to make a question. Please press star followed by <unk>.
Matt: Trying to ask a question. Please ensure your devices Amit it likely.
Dan Arias: Our first question is from Dan Arias from Stiefel. Your line is now open, please go ahead. Good morning, guys. Thank you.
Speaker Change: Our first question is from Dan Arias from Stifel. Your line is now open. Please go ahead.
Dan Arias: Hi, Good morning, guys. Thank you Kevin within that set of ancillary opportunities that exist for the handhelds, which do you think are the most accessible in the near and the midterm and then along those lines can you maybe talk specifically about pharma there are applications that seem mostly aligned with what you offer but those can.
Kevin Knopp: Kevin, within that set of ancillary opportunities that exist for the handhelds, which do you think are the most accessible in the near and the midterm? And then along those lines, can you maybe talk specifically about pharma? You know, there are applications that seem nicely aligned with what you offer, but those be tough nuts to crack, so to speak, in terms of penetration. So, curious to hear just how optimistic you are. Yeah, absolutely. Thanks, Dan. Yeah, really, we're repositioning ourselves to capture these highest growth, highest margin opportunities in the technology today for the handhelds. As you put it, right, the core applications for us are the fentanyl response, the opioid crisis, measuring toxic industrial materials across the board with our FTIR products.
Dan Arias: Be tough nuts to crack so to speak in terms of penetration. So curious to hear just how optimistic you are there.
Yeah, absolutely thanks, Dan Yes.
Dan Arias: Yes, really we are repositioning ourselves to capture these highest growth highest margin opportunities and the technology to stay for the handhelds as you put it right the core applications for us.
Dan Arias: Are the central response, the opioid crisis measuring toxic industrial materials across the board with our FTIR products and then all of that coupled into security concerns. So these are here and now applications that we are indeed, serving.
Kevin Knopp: And then all of that couples into security concerns. So these are here and now applications that we are indeed serving. We do have a continued service of life science customers in the near term. We're doing that really through OEM and partnership agreements today. Areas like reaction monitoring and small molecule analysis, we do through through partnership today.
Dan Arias: Do have a continued service of life science customers in the near term, we're doing that really through OEM and partnership agreements today areas like reaction.
Dan Arias: Monitoring and small molecule analysis, we do through through partnership today. If you think forward for where our handhelds can go youre right. There is a tremendous amount of opportunity we see there doing things like cleaning validation or GMP incoming materials inspection and purity analysis those could take time.
Kevin Knopp: If you think forward for where our handhelds can go, you're right, there's a tremendous amount of opportunity we see there doing things like cleaning validation or GMP incoming materials inspection and purity analysis. Those couldn't take time. Absolutely. Our focus today is around those core applications of the fentanyl, the carcinogens and the associated security threats and concerns.
Dan Arias: Absolutely our focus today is around those core applications of the Sentinel, the carcinogens and the associated security threats and concerns.
Joe Griffith: Okay, and then Joe, maybe on the guide for the year, I mean, obviously government budgets and just government organizations in general are pretty up in the air right now. To what extent has the guide for the year accounted for the downsizing that's taking place, the fact that spending is pretty hung up right now, and just general uncertainty that you have at the federal level? Do you feel like there's a level of conservative embedded when it comes to that stuff. Yeah, definitely a lot of uncertainty in today's world. But we do believe our initial 25 guide adequately reflects our assumptions for government funding, taking account various puts and takes within the year.
Speaker Change: Okay, and then Joe maybe on the guide for the year I mean, obviously government budgets and government organizations in general are pretty up in the air right now to what extent is the guide for the year accounted for the downsizing that's taking place. The fact that spending is pretty hung up right now and just.
Speaker Change: General uncertainty that you have at the federal level do you feel like there is a level of conservatism embedded when it comes to that stuff.
Speaker Change: Yeah definitely a lot of uncertainty in today's world, but we do believe our initial 25 guide adequately.
Speaker Change: Flex our assumptions for government funding checking account various puts and takes within the year.
Joe Griffith: Which is a bit challenging today to determine how the 25 funding environment will compare to last year, but we feel the guidance range is appropriate. We do mention and see potential tailwinds from the increased focus on the border security and combating the fentanyl crisis. We aren't including any aggressive assumptions in our initial guidance that we put out there today.
Speaker Change: Which is a bit challenging today to determine how the 25 funding environment will compare to last year, but we feel the guidance range is appropriate.
Speaker Change: We do mentioned and see potential tailwind from the increased focus on the border security in combating the.
Speaker Change: Crisis, we are including any.
Speaker Change: Aggressive assumptions and our initial guidance that we put out there today, yes, maybe if I just add onto that Dan. So about a third of our business comes from the U S. Federal government military style accounts. Another third comes from state and local accounts and the last third being from international as Joe said, we do see <unk>.
Kevin Knopp: Yeah, maybe if I just add on to that, Dan. So about a third of our business comes from the US federal government and military style accounts. Another third comes from state and local accounts and the last third being from international. As Joe said, we do see tailwinds across some of these segments. You're right, there is a little bit of a timing new administration coming into form. We certainly believe we are well aligned to the priorities of that administration. Again, fentanyl response, the foreign policy further drives use and need from international customers as a little bit of a rippling effect there.
Speaker Change: And across some of these segments you're right. There is a little bit of a timing new administration coming into two two form. We certainly believe we are well aligned to the priorities of that administration again personal response, the foreign policy further drives use and need from international customers.
Speaker Change: <unk> is a little bit of a rippling effect, there we announced on the call today, a couple of examples of that with a large scale order to Finland, with our protector devices as well as to Romania.
Kevin Knopp: We announced on the call today a couple of examples of that with a large scale order to Finland with our protector devices, as well as to Romania.
Dan Arias: Okay, thank you.
Speaker Change: Okay. Thank you.
Operator: Thank you.
Puneet Souda: Our next question is from Puneet Souda from Lyrinc Partners. Your line is now open, please go ahead. Yeah, hi, Kevin, Joe, thanks for taking the questions. So the first one is, I mean, I appreciate the upside to the balance sheet and cash flow being positive now, but you were taking a long term view on the healthcare business. So trying to understand sort of what, how the process evolved here, how things came about, was this, you know, a competitive process? I mean, I don't see you having a large academic position, so I don't think NIH impact was part of that.
Speaker Change: Thank you. Our next question is from Puneet <unk> familiar partners. Your line is now open. Please go ahead.
Speaker Change: Yes, hi, Kevin Thanks for taking the questions. So.
puneet: First one is I mean, I appreciate the upside to the balance sheet and cash flow being positive now.
puneet: But you were taking a long term view on the health care business. So.
puneet: And to understand sort of what.
How the process evolved here.
puneet: How things came about was this.
puneet: Competitive process.
puneet: I mean, I don't see you, having a large academic positions. So I don't think NIH impact was part of that obviously markets. The macro has been tough and.
Kevin Knopp: Obviously, markets, the macro has been tough and in bioprocess, I mean, overall in biopharma as well. So I understand that, but just trying to understand how the process came about and if you could provide any more details. Yeah, happy to. Thank you for that for that question. Yeah, absolutely. We really do believe there's a quite a bright future for this set of products, the whole space of the PAT initiative, that we've worked to really develop these four class leading products, in our opinion, that that now we've we've sold those assets to Repligen. We do believe that it that it while it's a large market, and while we had a strong Q4 performance, it does take time to develop those markets.
puneet: In Bioprocess, I mean overall in Biopharma as well, so I understand that but just trying to understand.
puneet: How the process came about and if you could provide any any more details.
puneet: Okay.
puneet: Yes happy to thank you for that for that question.
puneet: Yes, absolutely we really do believe there is a quite a bright future for this set of products the whole space of the initiatives.
puneet: Initiatives that we've worked to really develop these four class leading products in our opinion.
puneet: That now we've sold those assets to replicate.
puneet: We do believe that while it's a large market and while we had a strong Q4 performance. It does take time to develop those markets were absolutely sub scale in that area for us. It represented about one fifth of our of our total business in 2024.
Kevin Knopp: We're absolutely subscale in that area for us, it represents about one fifth of our of our total business in 2024. If you look forward to where our handhelds have been positioned, in the last year, we expanded from one handheld to four handhelds. And if you look back in time, our one handheld grew at a 20% CAGR between its initial launch and last year 2024. And if you look at the three new handhelds, we've added, those had had strong pro forma growth in 2024 of 17%. So I think when you look at it in total, we see a massive opportunity for both areas of our business and really believe we could unlock more through this process with Repligen by separating the business at this time.
puneet: If you look forward to where our handhelds have been positioned in the last year, we expanded from one handheld to forehand helds and if you look back in time or one handheld grew at 20% CAGR between its initial launch in last year 2024, and then if you look at the three new handheld.
puneet: So we've added those had had strong pro forma growth in 2024 of 17%. So I think when you look at it in total we see a massive opportunity for both the areas of our business and really believe we could unlock more through this process with replicate in by by separating the business at this time.
Kevin Knopp: We really do see that there's a lot of conviction here around the highest growth highest margin opportunity with our handheld devices. And then you further lay on the secular trends, it makes this decision very clear. And then of course, what that transposes into the financial benefits for us.
puneet: We really do see that there is a lot of conviction here around the highest growth highest margin opportunity with our handheld devices and then you further lay on the secular trends. It makes this decision very clear and then of course, what that transposed into the financial benefits for us.
Puneet Souda: Yes, from a process approach, we were approached by a potential acquirer, we ran a process, a competitive bidding process, received multiple bids and Repligen won out, which I personally am excited for, because I do think it's a great fit for our technologies and the people that will be driving it forward. Got it. Thanks for that. And then just there, there are a number of, you know, noise in the marketplace right now with regards to tariffs. So I just want to clarify anything you're baking in for tariffs for Canada and Mexico. And also, if I if you could elaborate the MX-908 installs in the quarter.
puneet: From a process approach we were.
puneet: Approached by potential acquirer, we ran a.
puneet: Process, a competitive bidding process received multiple bids and replica and one out which I personally really excited for it because I do think it's a great fit for our technologies and the people that will be driving it forward.
puneet: Got it thanks for that and then.
puneet: There are a number of and noise in the marketplace right now with regards to tariffs. So I just wanted to clarify anything youre baking in for tariffs for Canada, and Mexico and also.
puneet: If you could elaborate the amex 900 installs in the quarter.
Kevin Knopp: Not sure if I heard that correctly. And what are the expectations for the handheld NMX908 in the full year guide? So maybe just real quick on the tariffs, right? So much news out there and uncertainty on the tariff side, you know, Canada and Mexico going into effect today. We're definitely going to let it shake out and we are monitoring it closely. We are seeing traction with our international customers and are focused on providing the unique capabilities of our technologies. If there are significant tariffs and they kick in for extended period of time, then it may have some impact on our international opportunities as we continue to expand.
puneet: Not sure if I heard that correctly.
puneet: And what is the expectations for the handheld and IMAX 908.
puneet: In the full year guide.
puneet: So maybe just real quick on the tariffs so much news out there and uncertainty on the tariff side, Canada and Mexico go into effect today, we're definitely gonna, let it shake out and we are monitoring it closely.
puneet: We are seeing traction with our international customers and are focused on providing the unique capabilities of our technologies.
puneet: If there are significant tariffs and the chicken for extended period of time, but it may have some impact our international opportunities as we continue to expand on the supplier side were primarily U S based materials and production with sourcing so there might be some impact, but not as much on the on the in sourcing side.
Kevin Knopp: But on the supplier side, we're primarily U.S.-based materials and production with sourcing, so there might be some impact, but not as much on the insourcing side. Talking about placements and kind of how we finished up the year, you know, kind of overall, you know, with the FGIR and MX combined, you know, it was a really exciting year, as far as placements, especially with FGIR, you know, stepping up in the back half. So we see growth across both placements, we'll continue to report them on a combined basis. Moving forward, great placements. The Romania opportunity was MX driven and the Protector was FTIR driven with 90 and in order in Q4, so great opportunity for growth, excited by the multiple products and driving those to market.
Yeah.
puneet: Talking about placements and kind of.
puneet: How we finished up the year kind.
puneet: Kind of overall with the <unk> and <unk> combined.
puneet: It was a really exciting year as far as placements, especially with FTIR.
puneet: Stepping up in the back half so we see growth across both our placements will continue to report them on a combined basis.
puneet: Moving forward, but saw a great placements of Romania opportunity was that mix driven and the protector was FTIR driven.
puneet: With 90% and an order in Q4, so great opportunity for growth excited by the multiple products and driving those to market.
Puneet Souda: Got it. All right. Thanks, guys. I'll pop back in a few. Thank you.
puneet: Got it alright, thanks, guys I'll hop back in the queue.
Chad Wyrowski: Our next question is from Chad Wyrowski from TD Kallen. The line is now open, please go ahead. Hey guys, Chad on for Brendan Smith. I know you're investing R&D dollars into MX908 2.0 within the next couple years expected to be released. Did progress there or the opportunity there give you that extra conviction to feel like you could be opportunistic about selling the bioprocessing portfolio? And could you just kind of outline what improvements you're focusing on and what that upgrade cycle could look like? Yeah, sure. Happy to, Chad. Yeah, that's definitely an element of our conviction.
Speaker Change: Thank you. Our next question is from charge why Celski from TD Cowen. Your line is now open. Please go ahead.
Speaker Change: Hey, guys chat on for Brendan Smyth.
Speaker Change: I know, you're investing R&D dollars into like IMAX, and I know a two point out within the next couple of years is expected to be released.
Speaker Change: Did progress there or the opportunity there give you that extra conviction to feel like you can be opportunistic about selling the bio processing portfolio and could you just kind of outline what improvements you are focusing on and what that upgrade cycle could look like.
Speaker Change: Yes, sure happy to chat.
Speaker Change: Definitely an element of our conviction.
Kevin Knopp: If you step back, I mean, we really have a strong roadmap of futures. The next generation of MX is part of that. That's one of the three growth catalysts we called out. Another product called AvCAD is the third growth catalyst we called out.
Speaker Change: Step back I mean, we really have a strong roadmap of features next generation <unk> as part of that that's one of the three growth catalysts, we called out another product called <unk> is a third growth catalyst, we called out but I would bring you back to the first growth catalyst, which is we moved massively from having one.
Kevin Knopp: But I would bring you back to the first growth catalyst, which is we moved massively from having one product, as we said here a year ago, to now having four. But you're right that with the performance gains that we expect to be about 50% the size, importantly simpler to use, and then have more opportunity to leverage some of the connected services. So we have a software program called Team Leader that allows fleet management that we leverage across our FTIR technologies. And we're looking to build more and more out. So very exciting roadmap is how I see it on the innovation front and a compelling set of products that are here and now that we can execute on.
Speaker Change: Product as we sat here a year ago to now having four on the market. So that first growth catalyst fundamentally for US is execution now that by the end of last year, we've gotten those products fully into our commercial channel.
Speaker Change: So we see a tremendous opportunity there to take those red wave technology products. The FTIR based products into the market. We estimate there's about 15000 <unk> in the market that are a bit dated and could use modernization.
Speaker Change: As well our.
Speaker Change: <unk> has a fielded installed base of 2800 devices. So you're right that as we get the next Gen. <unk> out we do expect to spud an upgrade cycle our customers expect to have useful lifes of in the five to seven year capital equipment cycles, we're well into that now with our with our current first.
Speaker Change: Generation of the Amex nine weight, which is still very much a class leading product, but you are right that with the performance gains that we expect to be about 50%. The size importantly, simpler to use and then have more opportunity to leverage some of the connected services. So we have a software program called <unk>.
Speaker Change: Team leader that allows fleet management that we leverage across our FTR technologies, and we'll be looking to build more and more out so very exciting roadmap is.
Speaker Change: How I see it on the innovation front and a compelling set of products that are here and now that we can execute on.
Kevin Knopp: And as Red Wave's executing, I know there's some earnouts in that acquisition. So are they on track to receive those earnouts? Yeah, they're, they are tracking, you know, within the continued valuation, it's through April of 2026, that the opportunity runs through, it's a cumulative through that date, there's different thresholds. But yes, we're excited at the traction and what lays ahead. We'll need a strong year here in 2025 and into 2026 to achieve, but it's still on the cards, which I think if they're able to achieve, we all win and achieve from a revenue growth perspective.
Speaker Change: And as Red waves executing I know there was some earn outs and that acquisitions are they on track to receive those earn outs.
Speaker Change: They are tracking.
Speaker Change: Within the contingent valuation it's through April of 2026 that the opportunity runs through its accumulative through that date, there is different thresholds, but.
Speaker Change: But yes, we're excited at the traction and what lays ahead.
Speaker Change: Due to strong year here in 2025 and into 2026 to achieve but it's still on the cards, which I think if they are able to achieve we all win and achieve from a revenue growth perspective is fairly aggressive growth if you recall and those earn out so.
Kevin Knopp: There's fairly aggressive growth, if you recall, in those earnouts. So, you know, post divest, post acquisition in 2024, we saw over 11 million, I think it was 11.2 million. So good start out of the gate. And really, as we ramp and have integrated the commercial channels at this point, see a key opportunity here in 2025 and beyond. Thanks for the question. Thank you.
Speaker Change: Posted diverse post acquisition in 2024, we saw over 11 million I think it was $11 2 million. So a good start out of the gate and really as we ramp and have integrated the commercial channels at this point see a key opportunity here in 'twenty five and beyond.
Speaker Change: Thanks for the questions guys.
Matthew Larew: Our next question is from Matt Larew from William Bratt. Your line is not open, please go ahead.
Speaker Change: Thank you. Our next question is from Matt Lewis from William Brown.
Speaker Change: Line is now please go ahead.
Speaker Change: Okay.
Jacob Granville: I think this is a Jacob Granville on for Matt. Thanks for the questions here. So I wanted to start on the divestment of the desktop as Appreciate that you gave some of the probability targets and the pressure. the path to break even there. But just, you know, as we look at the long term P&L and margin structure as now, you know, more of a pure play for forensics player versus know, bioprocessing, a combination of the two bioprocessing forensics. Can you just help us think about what the long-term P&L margin structure should look like? Sure, happy to.
Speaker Change: Hi, Thanks. This is Jason <unk> on for Matt. Thanks for the questions here. So I wanted to start on the divestment of the desktop assets.
Speaker Change: Appreciate that you gave some of the profitability targets in the press release and the path to breakeven there but.
Speaker Change: As we look at the long term P&L and margin structure as now more of a pure play forensic.
Speaker Change: <unk> player.
Speaker Change: Versus.
Speaker Change: Bio processing a combination of the two bioprocess inferencing can you just help us think about what the long term P&L margin structure should look like.
Speaker Change: Sure Yeah happy to so yeah part of the key rationale for the divestiture was the fact that the desktop segment is still subscale as part of mass within our walls and required a significant cost burden to continue to grow.
Kevin Knopp: So yeah, part of the key rationale for the divestiture was the fact that the desktop segment is still subscale as part of mass within our walls and required a significant cost burden to continue to grow. As a result, the divestiture will be eliminating roughly $20 million in annualized operating losses for 908. We expect to be adjusted EBITDA positive in Q4 this year, and cash flow positive for the full year 2026. You know, our revenue growth have been historically back half-weighted. So Q4 is often the strongest quarter of the year. And I think our business will continue to remain back half-weighted, you know, especially with the government spending timelines as we see it today.
Speaker Change: As a result of the divestiture will be eliminating roughly $20 million in annualized operating losses for nine away and we expect to be adjusted EBITDA positive in Q4, this year and cash flow positive for the full year 2026.
Speaker Change: Our revenue growth have been historically back half weighted so Q4 is often our strongest quarter of the year.
Speaker Change: And I think our business will consider remains back half weighted, especially with the government spending.
Speaker Change: <unk> as we see it today, so I think as we think about the opportunity that's really transforms nine ways to focus on profitability and a clear path to get there and then gross margin improvement continued leverage as an opportunity for 'twenty six 'twenty seven and beyond some of the key growth drivers to Kevin laid out.
Kevin Knopp: So I think as we think about the opportunity, this really transforms 908's focus on profitability and a clear path to get there. And then gross margin improvement, continued leverage is an opportunity for 26, 27 and beyond with some of the key growth drivers that Kevin laid out.
Speaker Change: Yeah.
Kevin Knopp: Got it, thanks. And then, obviously, now after the divestment, you're flush with cash on the balance sheet. So just kind of wondering what your priority for investment is going forward now. Do you see, you know, adding sales and marketing resources as a high RRI opportunity or, you know, just kind of given the sales process of, you know, selling in the forensics market? Maybe that's not the highest RRI, so maybe it's R&D initiatives that you couldn't necessarily invest in before, but now you can with the extra cash, or maybe it's M&A is a better use and more tuck-ins down the road, like Redway, to kind of grow the bagged products and tech and services that you can sell on the same account.
Speaker Change: Got it thanks and then.
Speaker Change: Now after the divestment year, you're flushed with cash on the balance sheet. So just kind of wondering what your priority for investment is going forward now do you see adding sales and marketing resources as high or opportunity or just kind of get into.
Speaker Change: The sales process of selling into forensics market.
Speaker Change: Maybe that's not the highest maybe it's R&D initiatives.
Speaker Change: Necessarily invest in before but now you can with the extra cash or maybe it's <unk>.
Speaker Change: M&A is a better use in more tuck ins down the road like Red way to kind of grow the bank products and tech and services that you can sell them. The same account. So just kind of wondering what your priority for investment as with with the extra cash.
Joe Griffith: So just kind of wondering what, you know, your priority for investment is. and now the extra time. A good challenge to have, right? And we think, you know, through best to deploy proceeds and manage our investments. So definitely focused organically, I'd say in the near term, and we expect, you know, to exit 2025, as we mentioned, with over 110 million, and we're targeting the full year adjusted EBITDA positively in 2026. We do feel like the Go Forward organization is right-sized with the forensics business to our goals from a top-line growth and profitability perspective across selling and marketing R&D.
Speaker Change: Yes, a good challenge to have right and we think through how best to deploy proceeds and manage our investments.
Speaker Change: Definitely focused organically I'd say in the near term and we expect.
Speaker Change: To exit 2025, as you mentioned with over $110 million and we're targeting full year adjusted EBITDA positively and <unk>.
Speaker Change: <unk> thousand 26, so we still feel like the go forward organization is right sized with the forensics business to our goals from a topline growth with profitability perspective across selling and marketing.
Kevin Knopp: Yeah, and maybe if I just add on to that, Joe, I mean, we're very excited that the balance sheet has taken a fundamental dramatic increase change here, a step, and then that connected with the cost. We don't expect to be in the need of cash or depleting such a balance. We said we'd end the year with over $110 million of cash in the balance sheet. It's great because it does give us flexibility to pursue particular opportunities where maybe we're a little more hamstrung if a position or two comes up as we go. As Joe said, we're feeling very comfortable with the size of our commercial organization today.
Speaker Change: Yeah, and maybe if I just add onto that Joe I mean, we're very excited that the balance sheet has taken a fundamental dramatic increase change here step and then that connected with the the costs. We don't expect to be in the needed cash are depleting such a balance we said we'd end the year with over $110 million of cash in the balance.
Speaker Change: It is great because it does give us flexibility to pursue particular opportunities where maybe we're a little more and strong if a position there to comes up as we as we go as Joe said, we're feeling very comfortable with the size of our commercial organization today and if you remember it was a separate commercialization group compared to our desktop effort. So it's a standalone.
Kevin Knopp: And if you remember, it was a separate commercialization group compared to our desktop efforts. So it's a standalone, very experienced government sales driven team of about 30 individuals. So great team there. From an M&A side, super happy with how the RedWave integration has been going, super happy about that. We're happy that we exceeded the initial post-acquisition target that we put out to the street of $11 million. We just slightly ticked over that, super happy about that. The integration now as at the end of the last year is really fully done in terms of the commercial team and having it in our hands of our commercial team that can be kind of a force multiplier now to the efforts that RedWave started.
Speaker Change: One very experienced government sales driven driven team of about 30 individuals. So a great team there from an M&A side Super happy with how the Red wave integration has been going Super happy about that we're happy that we exceeded the initial post acquisition target that we put out to the street of $11 million, we just slight.
Speaker Change: It ticked over that Super happy about that the integration now as at the end of the last year is really fully fully done in terms of the commercial team and having it in our.
Speaker Change: Our hands of our commercial team that can be kind of a force multiplier now to that to the efforts that red wave started we'll certainly have our eyes open will continue to be opportunistic and see how if there are things that are very synergistic and aligned with this financial profile, but as Joe said the organic effort. That's in front of US we have a lot now that <unk>.
Kevin Knopp: We'll certainly have our eyes open. We'll continue to be opportunistic and see how there are things that are very synergistic and align with this financial profile. But as Joe said, the organic effort that's in front of us, we have a lot now that really that we can execute upon.
Speaker Change: That we could execute upon.
Speaker Change: Yeah.
Puneet Souda: Awesome, thanks for the questions.
Speaker Change: Awesome, Thanks for the questions guys.
Kevin Knopp: Thank you, we currently have no further questions so I'll hand back to Kevin for closing remarks. Well, thank you.
Speaker Change: Thank you. We currently have no further questions so how about to Kevin for closing remarks.
Kevin Knopp: Thank you, everyone, for joining us on the call today. Very important call in a step of the journey for 908 Devices. Very excited to tell you a little bit about how we see this transforming our business and making a much stronger, compelling financial profile for it. And we really see a lot of conviction around the growth with the secular trend. So I appreciate you taking the time to learn about it.
Kevin: Well. Thank you. Thank you everyone for joining us on the call today are very important call step of the journey for 900 devices very excited to tell you a little bit about how we see this transforming our business and making a much stronger compelling financial profile for it.
Kevin: And we really see a lot of conviction around the growth, but the secular trend. So I. Appreciate you taking the time to learn about it and and really it was a bit of an introduction of 98 devices to point out. So thank you for that.
Kevin Knopp: And really, it was a bit of an introduction of 908 Devices 2.0. So thank you for that.
Operator: This concludes today's call. Thank you for joining us. You may now disconnect your line.
Kevin: This concludes today's call. Thank you for joining US you may now disconnect your lines.
[music].