Q4 2025 Rapid Micro Biosystems Inc Earnings Call

March 12, 2026

Speaker #1: Good day and thank you for standing by . Welcome to the RAPID MICRO BIOSYSTEMS, INC. and full year 2025 Earnings Conference call At this time , all participants are in listen only mode .

Operator: Good day, and thank you for standing by. Welcome to the Rapid Micro Biosystems Q4 and full year 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Mike Beaulieu of Investor Relations. Please go ahead.

Operator: Good day, and thank you for standing by. Welcome to the Rapid Micro Biosystems Q4 and Full Year 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Mike Beaulieu of Investor Relations. Please go ahead.

Speaker #1: After the speaker's presentation , there will be a question and answer session . To ask a question during the session , you will need to press star one one on your telephone .

Speaker #1: You will then hear automated message advising your hand is raised . To withdraw your question , please press star one one again . Please advised that today's conference is being recorded .

Speaker #1: I would like to hand the conference over to your first speaker today, Mike Boyer of Investor Relations. Please go ahead.

Speaker #2: Good morning, and thank you for joining the Rapid Micro Biosystems, Inc. fourth quarter and full year 2025 earnings call. Joining me on the call are Robert Spignesi, President and Chief Executive Officer, and Sean Wirtjes, Chief Financial Officer. Earlier today, we issued a press release announcing our fourth quarter and full year 2025 financial results. A copy of the release is available on the company's website at Rapid Micro Biosystems, Inc.

Michael Beaulieu: Good morning, and thank you for joining the Rapid Micro Biosystems Q4 and full year 2025 earnings call. Joining me on the call are Rob Spignesi, President and Chief Executive Officer, and Sean Wirtjes, Chief Financial Officer. Earlier today, we issued a press release announcing our Q4 and full year 2025 financial results. A copy of the release is available on the company's website at rapidmicrobio.com under Investors in the News & Events section. Before we begin, I'd like to remind you that many statements made during this call may be considered forward-looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker #2: Under investors in the News and Events section Before we begin , I'd like to remind you that many statements made during this call may be considered forward looking statements within the meaning of federal securities laws , which are made pursuant to the safe harbor provisions of the private Securities Litigation Reform Act of 1995 .

Speaker #2: Any statements contained in this call that relate to expectations or predictions of future events , results or performance are forward looking statements including but not limited to , statements relating to Rapid Micro's financial condition , assumptions regarding future financial performance , anticipated future cash usage , statements relating to the company's term loan facility guidance for 2026 , including revenue expenses , gross margins , system placements and validation activities .

Michael Beaulieu: Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements, including but not limited to statements relating to Rapid Micro's financial condition, assumptions regarding future financial performance, anticipated future cash usage, statements relating to the company's term loan facility, guidance for 2026, including revenue, expenses, gross margins, system placements, and validation activities, expectations for and plan activities related to Rapid Micro's business development and growth, including the expected benefits from our distribution and collaboration agreement with MilliporeSigma, customer interest and adoption of the Growth Direct System, and the impact of the Growth Direct System on their businesses and operations, and statements regarding the potential impact of general macroeconomic conditions on our business and that of our customers.

Speaker #2: Expectations for and planned activities related to Rapid Micro's business development and growth , including the expected benefits from our distribution and collaboration agreement with Millipore Sigma customer interest and adoption of the growth Direct System and the impact of the Growth Direct System on their businesses and operations and statements regarding the potential impact of general macroeconomic conditions on our business and that of our customers Actual results may differ materially from those expressed or implied in the forward looking statements due to a variety of factors , including our ability to meet publicly announced guidance .

Michael Beaulieu: Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors, including our ability to meet publicly announced guidance, the impact of our existing and any future indebtedness on our ability to operate our business, our ability to access any future tranches under our debt facility and to comply with all of its obligations thereunder, our ability to deliver products to customers and recognize revenue, and market and macroeconomic conditions. For a more detailed list and description of the risks and uncertainties associated with Rapid Micro Biosystems' business, please refer to the Risk Factors section of our most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission, as updated from time to time in our subsequent filings with the SEC.

Speaker #2: The impact of our existing and any future indebtedness on our ability to operate our business , our ability to access any future tranches under our debt facility and to comply with all of its obligations thereunder .

Speaker #2: Our ability to deliver products to customers and recognize revenue and market and macroeconomic conditions . For a more detailed list and description of the risks and uncertainties associated with Rapid Micro's business , please refer to the Risk Factors section of our most recent quarterly report on Form 10-q filed with the Securities and Exchange Commission , as updated from time to time in our subsequent filings with the SEC .

Speaker #2: We urge you to consider these factors , and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance .

Michael Beaulieu: We urge you to consider these factors, and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance. Please note that today's remarks include certain non-GAAP financial measures. These non-GAAP measures should not be considered in isolation or as a substitute for or superior to financial information presented in accordance with GAAP. They are provided as supplemental information to enhance investors' understanding of our operating performance and may differ from similarly titled measures used by other companies. Reconciliations between these non-GAAP measures and the most directly comparable GAAP measures are available in our earnings release issued this morning. We encourage you to review these reconciliations carefully. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, 12 March 2026.

Speaker #2: Please note that today's remarks include certain non-GAAP financial measures . These non-GAAP measures should not be considered in isolation or as a substitute for or superior to financial information presented in accordance with GAAP .

Speaker #2: They are provided as supplemental information to enhance investors understanding of our operating performance and may differ from similarly titled measures used by other companies Reconciliations between these non-GAAP measures and the most directly comparable GAAP measures are available in our earnings release issued this morning .

Speaker #2: We encourage you to review these reconciliations carefully This conference call contains time sensitive information and is accurate only as of the live broadcast today , March 12th , 2026 .

Speaker #2: Rapid micro disclaims any intention or obligation except as required by law , to update or revise any financial projections or forward looking statements , whether because of new information , future events or otherwise , and with that , I'll turn the call over to Rob

Michael Beaulieu: Rapid Micro Biosystems disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. With that, I'll turn the call over to Rob.

Speaker #3: Thank you . Mike . Good morning everyone . I will begin with a brief overview of our fourth quarter performance . In recent commercial wins , as well as an update on our key priorities .

Robert Spignesi: Thank you, Mike. Good morning, everyone. I will begin with a brief overview of our Q4 performance and recent commercial wins, as well as an update on our key priorities. I'll then share a few comments on our 2026 outlook before turning the call over to Sean for a detailed review of our Q4 financial results and 2026 expectations. Before reviewing our Q4 results, I'd like to highlight the first press release we issued this morning announcing that Samsung Biologics is expanding its deployment of the Growth Direct platform through a new multi-system order received in Q1 of 2026. This follow-on order builds on our existing strong partnership, and we are proud to support Samsung's next-generation manufacturing strategy.

Rob Spignesi: Thank you, Mike. Good morning, everyone. I will begin with a brief overview of our Q4 performance and recent commercial wins, as well as an update on our key priorities. I'll then share a few comments on our 2026 outlook before turning the call over to Sean for a detailed review of our Q4 financial results and 2026 expectations. Before reviewing our Q4 results, I'd like to highlight the first press release we issued this morning announcing that Samsung Biologics is expanding its deployment of the Growth Direct platform through a new multi-system order received in Q1 of 2026. This follow-on order builds on our existing strong partnership, and we are proud to support Samsung's next-generation manufacturing strategy.

Speaker #3: I'll then share a few comments on our 2026 outlook before turning the call over to Sean for a detailed review of our Q4 financial results.

Speaker #3: And 2026 expectations before reviewing our fourth quarter results . I'd like to highlight the first press release we issued this morning , announcing that Samsung Biologics is expanding its deployment of the Growth Direct platform through a new multisystem order received in the first quarter of 2026 .

Speaker #3: This follow on order builds on our existing strong partnership , and we are proud to support Samsung's next generation manufacturing strategy . This expansion , yet again highlights the impact the both Direct delivers to the world's leading pharmaceutical manufacturers as they seek to automate and modernize their critical quality and manufacturing workflows Now , turning to our performance this morning , we reported total fourth quarter revenue of $11.3 million .

Robert Spignesi: This expansion yet again highlights the impact that Growth Direct delivers to the world's leading pharmaceutical manufacturers as they seek to automate and modernize their critical quality and manufacturing workflows. Now, turning to our performance. This morning, we reported total Q4 revenue of $11.3 million, representing 37% year-over-year growth and a quarterly record. These results exceeded the increased guidance we provided in November and mark our 13th consecutive quarter of meeting or exceeding expectations. We placed 16 Growth Direct systems in the quarter and ended the year with 190 systems placed globally, of which 155 are fully validated. A highlight of the quarter was a record multi-system order from Amgen, reflecting their continued investment in the global rollout of the Growth Direct platform.

Rob Spignesi: This expansion yet again highlights the impact that Growth Direct delivers to the world's leading pharmaceutical manufacturers as they seek to automate and modernize their critical quality and manufacturing workflows. Now, turning to our performance. This morning, we reported total Q4 revenue of $11.3 million, representing 37% year-over-year growth and a quarterly record. These results exceeded the increased guidance we provided in November and mark our 13th consecutive quarter of meeting or exceeding expectations. We placed 16 Growth Direct systems in the quarter and ended the year with 190 systems placed globally, of which 155 are fully validated. A highlight of the quarter was a record multi-system order from Amgen, reflecting their continued investment in the global rollout of the Growth Direct platform.

Speaker #3: Representing 37% year over year growth and a quarterly record . These results exceeded the increased guidance we provided in November and mark our 13th consecutive quarter of meeting , or exceeding expectations .

Speaker #3: We placed 16 growth erect systems in the quarter and ended the year with 190 systems placed globally , of which 155 are fully validated .

Speaker #3: A highlight of the quarter was a record multisystem order from Amgen , reflecting their continued investment in the growth in the global rollout of the Growth Direct platform Amgen is deploying systems across multiple sites in North America , Europe , and Asia , and fully leveraging all applications to include environmental monitoring , bioburden and water testing .

Robert Spignesi: Amgen is deploying systems across multiple sites in North America, Europe, and Asia, and fully leveraging all applications to include environmental monitoring, bioburden, and water testing. Additionally, Amgen will sponsor our first ever North American Growth Direct Day in Q2. Product revenue increased 78% in Q4, with outperformance driven by strong system placements. For the full year, consumable revenue increased 17%, reflecting continued strong utilization across our installed base. Consumable growth remains one of the clearest indicators that customers are actively using their systems and realizing meaningful ROI. Importantly, consumable strength underpins recurring revenue, which increased 15% for the full year and accounted for 53% of total revenue, highlighting the durability and visibility of our business model. Turning to gross margin, Q4 gross margin was impacted by inventory-related charges that Sean will discuss shortly.

Rob Spignesi: Amgen is deploying systems across multiple sites in North America, Europe, and Asia, and fully leveraging all applications to include environmental monitoring, bioburden, and water testing. Additionally, Amgen will sponsor our first ever North American Growth Direct Day in Q2. Product revenue increased 78% in Q4, with outperformance driven by strong system placements. For the full year, consumable revenue increased 17%, reflecting continued strong utilization across our installed base. Consumable growth remains one of the clearest indicators that customers are actively using their systems and realizing meaningful ROI. Importantly, consumable strength underpins recurring revenue, which increased 15% for the full year and accounted for 53% of total revenue, highlighting the durability and visibility of our business model. Turning to gross margin, Q4 gross margin was impacted by inventory-related charges that Sean will discuss shortly.

Speaker #3: Additionally , Amgen will sponsor our first ever North American Growth Direct Day in the second quarter Product revenue increased 78% in the fourth quarter , with outperformance driven by strong system placements For the full year , consumable revenue increased 17% , reflecting continued strong utilization across our installed base Consumable growth remains one of the clearest indicators that customers are actively using their systems and realizing meaningful ROI Importantly , consumable strength underpins recurring revenue , which increased 15% for the full year and accounted for 53% of total revenue , highlighting the durability and visibility of our business model Turning to gross margin .

Speaker #3: Fourth quarter gross margin was impacted by inventory related charges that Sean will discuss shortly . This does not diminish the significant progress we made throughout 2025 in reducing product costs , improving manufacturing efficiencies , and increasing service productivity As I look back at our performance over the last three years , total gross margin has improved by over 50 percentage points .

Robert Spignesi: This does not diminish the significant progress we made throughout 2025 in reducing product costs, improving manufacturing efficiencies, and increasing service productivity. As I look back at our performance over the last 3 years, total gross margin has improved by over 50 percentage points, a trajectory we are confident we can sustain. Now, turning to the MilliporeSigma collaboration. Our partnership is entering its second year, and we are pleased with the progress to date. In support of their commercial growth strategy, we have completed specialist training, and MilliporeSigma has established customer demo labs across Europe and Asia. These labs will serve as an important part of the sales process to give customers hands-on experience with the Growth Direct System. As a reminder, Rapid Micro operates demo labs in North America, Europe, and Asia as well.

Rob Spignesi: This does not diminish the significant progress we made throughout 2025 in reducing product costs, improving manufacturing efficiencies, and increasing service productivity. As I look back at our performance over the last 3 years, total gross margin has improved by over 50 percentage points, a trajectory we are confident we can sustain. Now, turning to the MilliporeSigma collaboration. Our partnership is entering its second year, and we are pleased with the progress to date. In support of their commercial growth strategy, we have completed specialist training, and MilliporeSigma has established customer demo labs across Europe and Asia. These labs will serve as an important part of the sales process to give customers hands-on experience with the Growth Direct System. As a reminder, Rapid Micro operates demo labs in North America, Europe, and Asia as well.

Speaker #3: Our trajectory we are confident we can sustain Now turning to the Millipore segment collaboration , our partnership is entering its second year and we are pleased with the progress to date in support of their commercial growth strategy .

Speaker #3: We have completed specialist training and Millipore Sigma has established customer demo labs across Europe and Asia These labs will serve as an important part of the sales process to give customers hands on experience .

Speaker #3: With the growth of our X system . As a reminder , Rapid Micro operates demo labs in North America , Europe , and Asia as well .

Speaker #3: We continue to work closely with the Millipore Sigma team as they expand their funnel and drive sales, which we expect will meaningfully contribute to our 2026 system placements. Turning to our supply chain, we are advancing opportunities to reduce product costs and leverage.

Robert Spignesi: We continue to work closely with the MilliporeSigma team as they expand their funnel and drive sales, which we expect will meaningfully contribute to our 2026 system placements. Turning to our supply chain, we are advancing opportunities to reduce product costs and leverage MilliporeSigma's broader logistics network and other capabilities. Combined with our internal efforts, we have already secured meaningful consumable cost reduction benefits that will positively impact product margins starting in the first half and accelerating in the second half of 2026. Now, I'd like to briefly review our priorities in 2026 outlook. We are off to a strong start of the year, and our priorities remain consistent. Accelerating system placements, expanding gross margins, continuing to innovate new products, and prudently managing our cash, all while maintaining disciplined and consistent execution. On the commercial front, we remain focused on expanding and converting our sales funnel.

Rob Spignesi: We continue to work closely with the MilliporeSigma team as they expand their funnel and drive sales, which we expect will meaningfully contribute to our 2026 system placements. Turning to our supply chain, we are advancing opportunities to reduce product costs and leverage MilliporeSigma's broader logistics network and other capabilities. Combined with our internal efforts, we have already secured meaningful consumable cost reduction benefits that will positively impact product margins starting in the first half and accelerating in the second half of 2026. Now, I'd like to briefly review our priorities in 2026 outlook. We are off to a strong start of the year, and our priorities remain consistent. Accelerating system placements, expanding gross margins, continuing to innovate new products, and prudently managing our cash, all while maintaining disciplined and consistent execution. On the commercial front, we remain focused on expanding and converting our sales funnel.

Speaker #3: Millipore . Sigma's broader logistics network and other capabilities . Combined with our internal efforts , we have already secured meaningful consumable cost reduction benefits that will positively impact product margins starting in the first half and accelerating in the second half of 2026 .

Speaker #3: Now , I'd like to briefly review our priorities in 2026 . Outlook . We are off to a strong start of the year , and our priorities remain consistent .

Speaker #3: Accelerating system placements , expanding gross margins , continuing to innovate new products and prudently managing our cash . All while maintaining disciplined and consistent execution .

Speaker #3: On the commercial front, we remain focused on expanding and converting our sales funnel. The multisystem global rollout at Amgen and today's announcement that Samsung Biologics is meaningfully expanding its deployment of the Growth Platform underscore the substantial opportunity we see across the global pharmaceutical market.

Robert Spignesi: The multi-system global rollout at Amgen and today's announcement that Samsung Biologics is meaningfully expanding its deployment of the Growth Direct platform underscore the substantial opportunity we see across the global pharmaceutical market. In addition, our partnership with MilliporeSigma continues to complement our direct sales efforts by broadening our global reach in our core pharmaceutical segments and providing access to attractive adjacent customer segments. As we work to expand the sales funnel, our annual Growth Direct Day remains one of the most effective customer-focused forums. This year, we are expanding the impact by adding events in North America and Asia, in addition to our premier recurring event in Europe. As a reminder, these sessions bring current and prospective customers together to showcase how automation and improved data management delivered by the Growth Direct can drive meaningful operational improvements and compliance within manufacturing and quality control.

Rob Spignesi: The multi-system global rollout at Amgen and today's announcement that Samsung Biologics is meaningfully expanding its deployment of the Growth Direct platform underscore the substantial opportunity we see across the global pharmaceutical market. In addition, our partnership with MilliporeSigma continues to complement our direct sales efforts by broadening our global reach in our core pharmaceutical segments and providing access to attractive adjacent customer segments. As we work to expand the sales funnel, our annual Growth Direct Day remains one of the most effective customer-focused forums. This year, we are expanding the impact by adding events in North America and Asia, in addition to our premier recurring event in Europe. As a reminder, these sessions bring current and prospective customers together to showcase how automation and improved data management delivered by the Growth Direct can drive meaningful operational improvements and compliance within manufacturing and quality control.

Speaker #3: In addition, our partnership with Millipore Sigma continues to complement our direct sales efforts by broadening our global reach in our core pharmaceutical segments and providing access to attractive adjacent customer segments. As we work to expand the sales funnel, our annual Growth Direct DE remains one of the most effective customer-focused forums.

Speaker #3: This year . We are expanding the impact by adding events in North America and Asia . In addition to our premier recurring event in Europe .

Speaker #3: As a reminder , these sessions bring current and prospective customers together to showcase how automation and improved data management delivered by the Growth Direct can drive meaningful operational improvements and compliance within manufacturing and quality control .

Robert Spignesi: We are especially pleased Amgen will sponsor the North American event in Q2, reflecting their confidence in and commitment to the Growth Direct platform. Looking at the broader market landscape, there are strong tailwinds augmenting our consistent commercial execution. These include increased adoption of full automation, a greater focus on data integrity by industry and regulators, advanced manufacturing modalities driving the need to modernize, and growing investment in the onshoring of pharmaceutical manufacturing in the US. We believe these tailwinds will remain strong and durable, which will contribute to position us well for sustained long-term growth. In addition to staying highly focused on our priorities of accelerating Growth Direct placements and expanding gross margins, we continue to innovate to provide new value add solutions to our customers.

Rob Spignesi: We are especially pleased Amgen will sponsor the North American event in Q2, reflecting their confidence in and commitment to the Growth Direct platform. Looking at the broader market landscape, there are strong tailwinds augmenting our consistent commercial execution. These include increased adoption of full automation, a greater focus on data integrity by industry and regulators, advanced manufacturing modalities driving the need to modernize, and growing investment in the onshoring of pharmaceutical manufacturing in the US. We believe these tailwinds will remain strong and durable, which will contribute to position us well for sustained long-term growth. In addition to staying highly focused on our priorities of accelerating Growth Direct placements and expanding gross margins, we continue to innovate to provide new value add solutions to our customers.

Speaker #3: We are especially pleased Amgen will sponsor the North American event in Q2 , reflecting their confidence in and commitment to the growth Direct platform Looking at the broader market landscape , there are strong tailwinds augmenting our consistent commercial execution These include increased adoption of full automation , a greater focus on data integrity by industry , and regulators , advanced manufacturing modalities , driving the need to modernize and growing investment in the onshoring of pharmaceutical manufacturing in the US We believe these tailwinds will remain strong and durable , which will contribute to position us well for sustained long term growth In addition to staying highly focused on our priorities of accelerating growth , direct placements and expanding gross margins , we continue to innovate to provide new value , add solutions to our customers .

Robert Spignesi: To this end, we expect to release our next generation cloud native software platform in the second half of 2026, which will redefine the Growth Direct experience for our customers. Our AI engineers have spent 15 years developing and refining the industry leading algorithm for microbial growth detection, and this new platform will leverage that experience to deliver significant additional value through AI driven analytics and insights across our customers' global data. As the Growth Direct installed fleet expands globally and generates increasing volumes of digital data, this new software and data platform will provide meaningful value to our customers by enabling deeper insights and faster decision making power for global quality and manufacturing operations. Against this backdrop, we are initiating full year 2026 revenue guidance of $37 to 41 million, including 30 to 38 system placements.

Rob Spignesi: To this end, we expect to release our next generation cloud native software platform in the second half of 2026, which will redefine the Growth Direct experience for our customers. Our AI engineers have spent 15 years developing and refining the industry leading algorithm for microbial growth detection, and this new platform will leverage that experience to deliver significant additional value through AI driven analytics and insights across our customers' global data. As the Growth Direct installed fleet expands globally and generates increasing volumes of digital data, this new software and data platform will provide meaningful value to our customers by enabling deeper insights and faster decision making power for global quality and manufacturing operations. Against this backdrop, we are initiating full year 2026 revenue guidance of $37 to 41 million, including 30 to 38 system placements.

Speaker #3: To this end , we expect to release our next generation cloud native software platform in the second half of 2026 , which will redefine the growth direct experience for our customers Our AI engineers have spent 15 years developing and refining the industry , leading algorithm for microbial growth detection , and this new platform will leverage that experience to deliver significant additional value through AI driven analytics and insights across our customers .

Speaker #3: Global data. As our Growth Direct installed fleet expands globally and generates increasing volumes of digital data, this new software and data platform will provide meaningful value to our customers by enabling deeper insights and faster decision-making power.

Speaker #3: For global quality and manufacturing operations , again , to this backdrop , we are initiating full year 2026 revenue guidance of 37 to $41 million , including 30 to 38 system placements .

Robert Spignesi: We expect meaningful gross margin expansion and expect to achieve approximately 20% gross margin for the full year, with performance accelerating in the second half. We believe this guidance is both prudent and achievable and reflects our track record of consistent execution. Sean will provide some additional details around the assumptions included in our outlook as well as potential upside opportunities, and we look forward to updating you as the year progresses. With that, I'll turn the call over to Sean to discuss our Q4 performance and 2026 outlook in more detail. Sean.

Rob Spignesi: We expect meaningful gross margin expansion and expect to achieve approximately 20% gross margin for the full year, with performance accelerating in the second half. We believe this guidance is both prudent and achievable and reflects our track record of consistent execution. Sean will provide some additional details around the assumptions included in our outlook as well as potential upside opportunities, and we look forward to updating you as the year progresses. With that, I'll turn the call over to Sean to discuss our Q4 performance and 2026 outlook in more detail. Sean.

Speaker #3: We expect meaningful gross margin expansion and expect to achieve approximately 20% gross margin for the full year, with performance accelerating in the second half.

Speaker #3: We believe this guidance is both prudent and achievable and reflects our track record of consistent execution Sean will provide some additional details around the assumptions included in our outlook , as well as potential upside opportunities .

Speaker #3: And we look forward to updating you as the year progresses And with that , I'll turn the call over to Sean to discuss our fourth quarter performance and 2026 outlook .

Speaker #3: In more detail, Sean, thanks, Rob, and good.

Sean Wirtjes: Thanks, Rob, and good morning, everyone. I'll begin my comments this morning with a review of our Q4 2025 results, and then discuss our Q1 and full year outlook for 2026. We'll then open the call up for questions. Q4 revenue increased 37% to a record $11.3 million compared to $8.2 million in Q4 2024. During Q4, we placed 16 Growth Direct systems, which was also a record compared to six systems in Q4 last year. We also completed three validations in Q4 compared to four in Q4 last year. Product revenue, which is comprised of systems and consumable revenue, increased 78% to $9.3 million in Q4, compared to $5.2 million in Q4 2024.

Speaker #4: Morning , everyone I'll begin my comments this morning with a review of our fourth quarter 2020 results . And then discuss our first quarter and full year outlook for 2026 .

Speaker #4: We'll then open the call up for questions Fourth quarter revenue increased 37% to a record $11.3 million , compared to $8.2 million in Q4 2020 .

Speaker #4: During the fourth quarter, we placed 16 Growth Direct systems, which was also a record compared to six systems in the fourth quarter last year.

Speaker #4: We also completed three validations in the quarter , compared to four in Q4 last year Product revenue , which is comprised of systems and consumable revenue , increased 78% to $9.3 million in the fourth quarter , compared to $5.2 million in Q4 2020 .

Sean Wirtjes: This was primarily driven by the increase in system placements. Consumable revenue grew 11% in Q4 compared to Q4 last year. Service revenue was $2 million in Q4, which was in line with the guidance we provided in November, compared to $3 million in Q4 2024. As a reminder, the timing of validations tends to be the largest driver of quarter-to-quarter variability in service revenue, and the validation revenue we generated in Q4 2024 remains a company record. Q4 recurring revenue, which consists of consumables and service contracts, increased 10% to $4.6 million compared to $4.2 million in Q4 2024. Non-recurring revenue, which is comprised mainly of systems and validation revenue, increased 65% to $6.7 million.

Speaker #4: For this was primarily driven by the increase in system placements . Consumable revenue grew 11% in the fourth quarter compared to Q4 last year Service revenue was $2 million in the fourth quarter , which was in line with the guidance we provided in November .

Speaker #4: Compared to $3 million in Q4 2020 . For as a reminder , the timing of validations tends to be the largest driver of quarter to quarter variability in service revenue and the validation revenue we generated in Q4 2020 .

Speaker #4: Four remains a company record fourth quarter recurring revenue , which consists of consumables and service contracts , increased 10% to $4.6 million compared to $4.2 million in Q4 2020 .

Speaker #4: For non-recurring revenue , which is comprised mainly of systems and validation revenue increased 65% to $6.7 million . Turning to margin , product margin was -8% in Q4 This includes a $1.1 million , or 12 percentage point impact related to the right off of unusable , consumable inventory in the period Our manufacturing team has addressed the underlying situation , and we do not expect any further charges related to this .

Sean Wirtjes: Turning to margin, product margin was negative 8% in Q4. This includes a $1.1 million or 12 percentage point impact related to the write-off of unusable consumable inventory in the period. Our manufacturing team has addressed the underlying situation, and we do not expect any further charges related to this in 2026. Excluding the impact of this write-off, Q4 product margin was positive 4%, which was consistent with our guidance. Service margins were 22% in Q4 compared to a record 47% in Q4 last year. The lower service margins in Q4 this year were due to the lower service revenue in the period, which more than offset the positive impact of service productivity improvements and cost reductions made during 2025.

Speaker #4: In 2026 , excluding the impact of this write off , Q4 product margin was positive 4% , which was consistent with our guidance Service margins were 22% in the fourth quarter compared to a record 47% in Q4 last year The lower service margins in Q4 this year were due to the lower service revenue in the period , which more than offset the positive impact of service productivity improvements and cost reductions made during 2025 .

Sean Wirtjes: On a combined basis, Q4 gross margin was -$0.3 million or -3% compared to $1 million or 12% in Q4 last year. Excluding the impact of the inventory related charges we recorded in the period, total Q4 gross margin was 7%. This was in line with our guidance and slightly lower than the Q4 last year due to the impact of lower service revenue on service margins. Moving down the P&L, total operating expenses were $11.9 million in Q4 compared to $11.2 million in Q4 2024. Within OpEx, R&D expenses were $3.2 million, sales and marketing expenses were $3.3 million, and G&A expenses were $5.3 million.

Speaker #4: On a combined basis . Fourth quarter gross margin was -$0.3 million , or -3% , compared to positive $1 million , or 12% in Q4 last year .

Speaker #4: Excluding the impact of the inventory related charges we recorded in the period Total Q4 gross margin was positive 7% . This was in line with our guidance and slightly lower than the Q4 last year due to the impact of lower service revenue on service margins Moving down the total operating expenses were $11.9 million in the fourth quarter , compared to $11.2 million in Q4 2020 .

Speaker #4: For within opex , R&D expenses were $3.2 million . Sales and marketing expenses were $3.3 million and G&A expenses were $5.3 million . For the full year .

Sean Wirtjes: For the full year, total operating expenses decreased by 3% while revenue increased by 20%. Interest income was $0.5 million, and interest expense was $0.8 million in Q4. Q4 net loss was $12.5 million. This compares to a net loss of $9.7 million in Q4 last year. The larger net loss in Q4 this year was primarily attributable to the inventory charges we recorded as well as the lower service margin, and higher interest expense in the period.

Speaker #4: Total operating expenses decreased by 3% , while revenue increased by 20% . Interest income was $0.5 million in interest expense was $0.8 million .

Speaker #4: In the fourth quarter . Q4 net loss was $12.5 million . This compares to a net loss of $9.7 million in Q4 last year .

Speaker #4: The larger net loss in Q4 this year was primarily attributable to the inventory charges we recorded, as well as the lower service margin and higher interest expense in the period.

Sean Wirtjes: Net loss per share was $0.28 in Q4 compared to net loss per share of $0.22 in the prior year quarter. With respect to non-cash expenses and capital expenditures, depreciation and amortization expenses were $0.8 million, stock compensation expense was $0.6 million, and capital expenditures were $0.1 million in Q4. We ended the year with $39 million in cash and investments, which was in line with our guidance, as well as $25 million of unused capacity under our debt facility with Trinity Capital. Our net cash burn was $3 million in Q4. As a reminder, Q4 is typically our lowest burn quarter, while Q1 is typically our highest burn quarter each year. Now I'll turn to our 2026 outlook.

Speaker #4: Net loss per share was $0.28 in Q4 compared to net loss per share of $0.22 in the prior year quarter . With respect to non-cash expenses and capital expenditures , depreciation and amortization expenses were $0.8 million .

Speaker #4: Stock compensation expense was $0.6 million , and capital expenditures were $0.1 million . In the fourth quarter . We ended the year with $39 million in cash and investments , which was in line with our guidance , as well as $25 million of unused capacity under our debt facility .

Speaker #4: With Trinity Capital Our net cash burn was $3 million in Q4 As a reminder , Q4 is typically our lowest burn quarter , while Q1 is typically our highest spring quarter each year Now , I'll turn to our 2026 outlook for the full year 2026 , we expect total revenue to be in a range of 37 to $41 million , which assumes we place between 30 and 38 systems .

Sean Wirtjes: For the full year 2026, we expect total revenue to be in a range of $37 to 41 million, which assumes we place between 30 and 38 systems. This system placement range reflects a few key variables. First, our guidance continues to account for some ongoing uncertainty around the timing and scale of customer purchase decisions, particularly with respect to larger multi-system opportunities which often involve more complex purchasing considerations. Second, the low end of our guidance range assumes we do not place any new large multi-system orders in 2026 other than the Samsung order announced this morning. Third, we continue to expect MilliporeSigma to contribute meaningfully to system placements in 2026. However, the low end of our guidance range does not assume they satisfy their full year two system commitment since some of those systems may be placed in Q1 2027.

Speaker #4: This system placement range reflects a few key variables First , our guidance continues to account for some ongoing uncertainty around the timing and scale of customer purchase decisions , particularly with respect to larger multi-system opportunities , which often involve more complex purchasing considerations Second , the low end of our guidance range assumes we do not place any new large multi-system orders in 2026 other than the Samsung order announced this morning .

Speaker #4: And third , we continue to expect Millipore Sigma to contribute meaningfully to system placements in 2026 . However , the low end of our guidance range does not assume they satisfy their full year two system commitment , since some of those systems may be placed in Q1 2027 for Q1 , we expect revenue of at least $7.5 million , including at least five system placements consistent with historical trends .

Sean Wirtjes: For Q1, we expect revenue of at least $7.5 million, including at least 5 system placements. Consistent with historical trends, we expect at least 30% of our system placements to be made in the first half of the year, with the remainder in the second half. We also expect revenue and placements to peak in Q4 in line with typical seasonality. Turning to consumables, we expect revenue in Q1 and Q2 2026 to be slightly higher than Q4 2025, and then increase gradually over the remaining quarters with variability driven by the timing of customer orders and shipments. Looking at service, we expect revenue between $2.3 and $2.6 million in Q1.

Speaker #4: We expect at least 30% of our system placements to be made in the first half of the year , with the remainder in the second half .

Speaker #4: We also expect revenue and placements to peak in Q4 , in line with typical seasonality Turning to consumables , we expect revenue in Q1 and Q2 2026 to be slightly higher than Q4 2025 , and then increased gradually over the remaining quarters with variability driven by the timing of customer orders and shipments Looking at service , we expect revenue between 2.3 and $2.6 million in Q1 .

Sean Wirtjes: We then expect service revenue to step down slightly in Q2, followed by meaningful increases in Q3 and again in Q4 based on our current expectations with respect to the timing of installation and validation activities. We expect to complete at least 25 validations in 2026, with at least three in Q1. Turning to margins, we expect our Q1 gross margin as a percentage of revenue to be in the mid-single digits with product margin of negative single digits and service margin above 30%.

Speaker #4: We then expect service revenue to step down slightly in Q2 , followed by meaningful increases in Q3 and again in Q4 . Based on our current expectations .

Speaker #4: With respect to the timing of installation and validation activities, we expect to complete at least 25 validations in 2026, with at least three in the first quarter.

Speaker #4: Turning to margins, we expect our Q1 gross margin as a percentage of revenue to be in the mid-single digits, with product margin of negative single digits and service margin above 30%.

Sean Wirtjes: Thereafter, we expect to reach and maintain positive product gross margin in each of the remaining quarters of 2026, led by improving consumable gross margin, which we expect to turn positive in the second half of the year as we fully realize the benefit of meaningful material cost reductions we recently locked in, as well as benefits from other cost reduction and manufacturing efficiency initiatives. For the full year, we expect total gross margin of approximately 20%, with a Q4 exit rate in the mid-20% range or better, product margin in the high single digits to low teens, and service margin above 40%. Consistent with prior years, we expect quarter-to-quarter variability in gross margin to be driven by progress on our product cost reduction and service productivity initiatives, overall revenue volumes, and the revenue mix between systems, consumables, and service in each period.

Speaker #4: Thereafter, we expect to reach and maintain positive product gross margin in each of the remaining quarters of 2026, led by improving consumable gross margin, which we expect to turn positive in the second half of the year.

Speaker #4: As we fully realize the benefit of meaningful material cost reductions , we recently locked in , as well as benefits from other cost reduction and manufacturing efficiency initiatives .

Speaker #4: For the full year , we expect total gross margin of approximately 20% with a Q4 exit rate in the mid 20% range or better Product margin in the high single digits to low teens and service margin above 40% .

Speaker #4: Consistent with prior years, we expect quarter-to-quarter variability in gross margin to be driven by progress on our product cost reduction and service productivity initiatives. Overall revenue volumes, and the revenue mix between systems, consumables, and service in each period, will also have an impact. We expect operating expenses to be between $47 million and $51 million for the full year.

Sean Wirtjes: We expect operating expenses to be between $47 and $51 million for the full year. We expect $10 million in non-cash expenses, including depreciation and amortization expense of $3 million and stock compensation expense of $7 million. We also expect CapEx of $2 million, interest income of $1 million, and interest expense of $2 million. Looking further ahead, our strategic priorities of accelerating system placements, improving gross margin, innovating new products, and prudently managing our cash remain unchanged. We continue to build momentum in our business, including our partnership with MilliporeSigma, which we expect will further accelerate progress on these strategic priorities over the coming years, including the meaningful contribution to system placements we've incorporated into our guidance for this year. That concludes my comments. At this point, we'll open the call up for questions. Operator?

Speaker #4: We expect $10 million in non-cash expenses , including depreciation and amortization , expense of $3 million and stock compensation expense of $7 million .

Speaker #4: We also expect CapEx of $2 million interest income of $1 million and interest expense of $2 million . Looking further ahead , our strategic priorities of accelerating system placements , improving gross margin , innovating new products , and prudently managing our cash remain unchanged .

Speaker #4: We continue to build momentum in our business, including our work with Millipore, which we expect will further accelerate progress on these strategic priorities over the coming years, including the meaningful contribution to system placements we've incorporated into our guidance for this year.

Speaker #4: That concludes my comments . So at this point , we'll open the call up for questions Operator .

Operator: Thank you. At this time, we'll conduct a question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Thomas Stephan of Lake Street Capital Markets. Your line is now open.

Speaker #1: Thank you . At this time , we'll conduct a question and answer session As a reminder to ask a question , you will need to press star one 100 , telephone and wait for your name to be announced .

Speaker #1: To withdraw your question , please press star one one again . Please stand by while we compile the Q&A roster . And our first question comes the line of Thomas Flaatten of Lake Street Capital Markets .

Speaker #1: Your line is now open .

Thomas Stephan: Hey, good morning. I appreciate you taking the questions, and thanks, Sean, for all the detail on the guide. The gap between placed and validated systems has widened since 2023. What are you guys doing to, or are you doing anything to shrink that gap over time? Is that just more engineers to complete the validation? Can you help us think about that a little bit?

Tom Flaten: Hey, good morning. I appreciate you taking the questions, and thanks, Sean, for all the detail on the guide. The gap between placed and validated systems has widened since 2023. What are you guys doing to, or are you doing anything to shrink that gap over time? Is that just more engineers to complete the validation? Can you help us think about that a little bit?

Speaker #5: Hey . Good morning . I appreciate you taking the questions . And thanks for all the detail on the guide The gap between placed and validated systems has widened since 2023 .

Speaker #5: What are you guys doing to or are you doing anything to shrink that gap over time ? Is that just more engineers to complete the validation ?

Speaker #5: Can you help us think about that a little bit

Sean Wirtjes: Yeah, Thomas, I'll take a shot at that. I think part of that, a lot of that has to do with timing actually, in terms of, you know, there can be variation between when we deliver a system and when that validation process gets started, depending on the customer's plans and resourcing that goes along with that. You know, I think we'd expect to see that come down. I think, you know, we talked about Amgen this time. I think as we look at that, you know, some of the color we gave in the call, prepared remarks really ties into how we expect that to roll out, which, I think, the majority of that work is right now. Our plan working with them would be that a lot of that would happen at the end of this year.

Speaker #4: Yeah , Thomas , I'll take a shot at that , I think part of that , a lot of that has to do with timing actually , in terms of , you know , there can be variation between when we deliver a system and when that validation process gets started , depending on the customer's plans and resourcing that goes along with that .

Speaker #4: So I think we'd expect to see that come down . I think we talked about Amgen this time . I think as we look at that , some of the color we gave in the call prepared remarks really ties into how we expect that to roll out , which I think the majority of that work is right now .

Speaker #4: Our our plan working with them would be that a lot of that would happen at the end of this year . So I think if you look at a deal like that , the expectation would be , you know , you'll see that placed in Q4 last year .

Sean Wirtjes: I think if you look at a deal like that, the expectation would be, you know, you'll see that placed in Q4 last year. We'll get most, if not all, of that work done with them by the end of this year. You know, that gives you some indication of how these things can typically go. There is a natural lag in there. I think you'll see that variance come back in a bit as we work through that and a few other customer situations. It's nothing we're concerned about. It is something we keep our eyes on, and it's something that we will continue to work to keep tight as much as we can. I don't know, Rob, if you have any comments.

Speaker #4: We'll get most , if not all of that work done with them by the end of this year . So that gives you some indication of how these things can typically go .

Speaker #4: So, there is a natural lag in there. I think you'll see that variance come back in a bit as we work through that and a few other customer situations.

Speaker #4: So it's nothing we're concerned about . It is something we keep our eyes on , and it's something that we will continue to work to , to keep tight as much as we can .

Robert Spignesi: No, it's clearly a robust validation year as well. You can see that the backlog being worked. Some of this is, to Sean's point, driven by order timing, size, and timing of orders and just the sequencing of our team and our customers' teams and working through the validations.

Rob Spignesi: No, it's clearly a robust validation year as well. You can see that the backlog being worked. Some of this is, to Sean's point, driven by order timing, size, and timing of orders and just the sequencing of our team and our customers' teams and working through the validations.

Speaker #4: So Rob , if you have any comments .

Speaker #3: No , it's clearly a robust validation here as well . So you can see that that backlog being being worked and , and some of this is deshaun's driven by order timing , size and timing of orders and just the sequencing of our team and our customers teams and working through the validations .

Thomas Stephan: That's great. I appreciate that color. Just with the Samsung announcement this morning, could you just comment on the percentage of your placed systems that are within CDMOs and how you see that space evolving over time relative to the manufacturer or to the drug originators themselves?

Tom Flaten: That's great. I appreciate that color. Just with the Samsung announcement this morning, could you just comment on the percentage of your placed systems that are within CDMOs and how you see that space evolving over time relative to the manufacturer or to the drug originators themselves?

Speaker #5: That's great. I appreciate that color. And then just with the Samsung announcement this morning, could you just comment on the percentage of your PLAY systems that are within CDMOs, and how you see that space evolving over time?

Speaker #5: Relative to the to the manufacturer or to the drug originators themselves

Robert Spignesi: Yeah. It's interesting. Well, I don't know the exact percentage, so I don't wanna put that out, but it's sizable. You know, we previously announced Lonza is a customer, Samsung. We have obviously and other CDMOs as well. We have a very strong value proposition for CDMOs as well as probably called principal manufacturers. You know, we're growing. Clearly today is a good example of both Amgen and Samsung. You've got both a principal manufacturer and a CDMO. CDMOs in particular are benefiting from our ability to turn their lines faster or at least produce product faster.

Rob Spignesi: Yeah. It's interesting. Well, I don't know the exact percentage, so I don't wanna put that out, but it's sizable. You know, we previously announced Lonza is a customer, Samsung. We have obviously and other CDMOs as well. We have a very strong value proposition for CDMOs as well as probably called principal manufacturers. You know, we're growing. Clearly today is a good example of both Amgen and Samsung. You've got both a principal manufacturer and a CDMO. CDMOs in particular are benefiting from our ability to turn their lines faster or at least produce product faster.

Speaker #3: Yeah . So it's a , it's interesting . I don't know the exact percentage . So I don't want to put that out , but it's a , it's sizable .

Speaker #3: You know , we've , we've previously announced Lonza as a customer , Samsung obviously , and other , other Cdmos as well . We have a very strong value proposition for Cdmos as well as , as well as you know , principal manufacturers , we're growing .

Speaker #3: Clearly today is a good example . So both Amgen and Samsung . So you've got you've got both a principal manufacturer and a CDMO .

Speaker #3: But CDMO is in particular are benefit from our ability to turn their lines faster , release product faster , and also to a certain extent , in some cases , market .

Robert Spignesi: Also, to a certain extent, in some cases, market the use of advanced technologies in their quality control and manufacturing operations. Yeah, quite strong in CDMOs, and we plan to stay that way and grow with the CDMO space. We don't talk about it significantly on these calls. We also have, you know, small mid CDMOs globally as well. Generally, it's a very strong segment for us as well as the principal manufacturers. I can't say one is stronger than the other. They're both strong right now, and we tend to be in both segments, as we've said, generally more in the advanced modalities, primarily biologics, and also in the cell and gene categories within CDMOs and also principal manufacturers.

Rob Spignesi: Also, to a certain extent, in some cases, market the use of advanced technologies in their quality control and manufacturing operations. Yeah, quite strong in CDMOs, and we plan to stay that way and grow with the CDMO space. We don't talk about it significantly on these calls. We also have, you know, small mid CDMOs globally as well. Generally, it's a very strong segment for us as well as the principal manufacturers. I can't say one is stronger than the other. They're both strong right now, and we tend to be in both segments, as we've said, generally more in the advanced modalities, primarily biologics, and also in the cell and gene categories within CDMOs and also principal manufacturers.

Speaker #3: The use of advanced technologies in their quality control and manufacturing operations . So yeah , quite strong in Cdmos . And we , we plan to stay that way .

Speaker #3: And grow with the , the CDMO space . We also have , we don't talk about it significantly on these calls . We also have small and mid seeds globally as well .

Speaker #3: So generally it's a very strong segment for us as well as the as well as the principal manufacturers . I can't say one is stronger than the other .

Speaker #3: They're both strong right now and we tend to be in both segments . As we've said , generally more in the advanced modalities , primarily biologics , and also in the cell and gene categories within Cdmos , and also principal manufacturers .

Thomas Stephan: That's great. Appreciate that. Thanks, guys.

Tom Flaten: That's great. Appreciate that. Thanks, guys.

Speaker #5: That's great. I appreciate that. Thanks, guys.

Robert Spignesi: Sure. Thank you.

Rob Spignesi: Sure. Thank you.

Speaker #3: Sure . Thank you .

Operator: Thank you. One moment for our next question. Our next question comes from the line of Dan Arias of Stifel. Your line is now open.

Speaker #1: Thank you . One moment for our next question Our next question comes from the line of Dan areas of CFO . Your line is now open .

Dan Arias: Hey, good morning, guys. Thanks. Sean, on gross margins, where is the confidence in the 20% number for 2026? Kinda felt like a good Q4 number would be the jumping off point for what you're gonna do this year. I understand it was due to an inventory charge, but the number is sort of the number. What are the key moving pieces and risks when it comes to your own process? Then as we think about product gross margins being back to negative in Q2, how do we get comfortable with the idea that as we start to feel better about placement momentum, which has been good, we can also feel good about gross margins, that there doesn't have to be an offset there?

Speaker #5: Hey , good morning guys . Thanks , Sean . On gross margins , where is the confidence in the 20% number for 2026 ?

Speaker #5: Kind of felt like a good four Q number would be the jumping off point for for what you're going to do this year .

Speaker #5: I understand it was due to an inventory charge, but the numbers—sort of the numbers. So, what are the key moving pieces and risks when it comes to your own process?

Speaker #5: And then as we think about product gross margins being back to negative in two . Q how do we get comfortable with the idea that as we start to feel better about placement momentum , which is which has been good , we can also feel good about gross margins that there doesn't have to be an offset .

Speaker #5: There .

Sean Wirtjes: Yep. I'll take that one, Dan. Thinking about it, there's a couple key drivers to focus on from my perspective. One is, I talked in my comments about the fact that we have recently locked in some meaningful product cost reductions with some vendors that will benefit us beginning in Q2, but that will accelerate in Q3 and Q4. That is a substantial reduction from what we're paying for some of the key materials in our product, and that's consumables specifically. That's number one. Number two, I'd say is, you know, I talked a minute ago about, you know, how we expect the year to roll out from a validation and service revenue standpoint.

Speaker #4: Yep , yep . I'll take that one . Dan , I think thinking about it , there's a couple key drivers to focus on from my perspective .

Speaker #4: One is, we talked to—or I talked to in my comments—the fact that we have recently locked in some meaningful product cost reductions with some vendors that will benefit us beginning in Q2, but that'll accelerate in Q3 and Q4.

Speaker #4: So that that is a substantial reduction from what we're paying for some of some of the key materials in our product . And that's consumables specifically .

Speaker #4: So that's , that's number one . Number two , I'd say is I talked a minute ago about how we expect the year to roll out from a validation and service revenue standpoint .

Sean Wirtjes: You know, you kinda see in recent quarters what lower service revenues can do from a leverage standpoint in our service margins. We expect to see that go back the other way as we work our way through this year. To get to 20%, I think the two of the largest drivers, if not the largest drivers, are that those cost reductions kinda kicking in full bore in the second half and us getting our service revenues back up to levels where they can generate meaningful margins beyond where we've been over the past quarter or two. Volume is also a big part of it. You know, as we progress through the year, we're manufacturing more, we expect to sell more. You know, I talked about peaking in placements in Q4. Those things also contribute.

Speaker #4: You know, you kind of see in recent quarters what lower service revenues can do from a leverage standpoint in our service margins. We expect to see that go back the other way as we work our way through this year.

Speaker #4: So to get to 20% , I think the two of the largest drivers , if not the largest drivers , are that those cost reductions kind of kicking in full bore in the second half .

Speaker #4: And getting our service revenues back up to levels where they can generate meaningful margins beyond where we've been over the past quarter, or to volumes.

Speaker #4: Also , a big part of it . So , you know , as we progress through the year , we're manufacturing more . We expect to sell more .

Speaker #4: I talked about peaking in placements in Q4 . Those things also contribute . So , you know , I think it's important to note the comment that we expect Q4 exit to be mid 20s or above .

Sean Wirtjes: You know, I think it's important to note the comment that we expect Q4 exit to be mid-20s or above. You know, that trend should be, you know, growing as we work our way through the year overall for total margins. Those are the kind of key factors that give us confidence in being able to achieve those kinds of numbers for the year and exiting the year.

Speaker #4: So that trend should be, you know, growing as we work our way through the year overall for total margins. And those are the key factors that give us confidence in being able to achieve those kinds of numbers for the year.

Robert Spignesi: Yeah. Dan, just to put maybe an exclamation point on one thing Sean said, on the product cost in particular, with regard to execution risk, we have contractual-

Rob Spignesi: Yeah. Dan, just to put maybe an exclamation point on one thing Sean said, on the product cost in particular, with regard to execution risk, we have contractual-

Speaker #4: And exiting the year .

Speaker #3: Yeah . And Dan , just to put an exclamation point on one thing , Sean said on the on the product cost in particular with regard to execution risk , we have contractual agreements in place with the supply base , which is which is meaningful with regard to how we get comfortable and confident in that cost out .

Dan Arias: Yep.

Robert Spignesi: agreements in place with the supply base, which is meaningful with regard to how we get comfortable and confident in that cost out, in addition to the other elements that Sean mentioned.

Rob Spignesi: agreements in place with the supply base, which is meaningful with regard to how we get comfortable and confident in that cost out, in addition to the other elements that Sean mentioned.

Speaker #3: In addition to the other elements that that Sean mentioned .

Dan Arias: Yep. Okay. Okay, that's helpful. All right. Then maybe on these systems to Samsung and Amgen, how do you see utilization ramping there? Then just on overall utilization, can you maybe just talk to consumables pull-through per system? You know, consumables growth has been pretty good here. We all presumably have this placement and pull-through driven model. Sean, we've talked a little bit about this. Can you just maybe

Speaker #5: Yep . Okay . Okay . That's helpful . All right . And then maybe on these systems to Samsung and Amgen , how do you see utilization ramping there ?

Speaker #5: And then just on overall utilization , can you maybe just talk to consumables ? Pull through per system , you know , consumables growth has been has been pretty good here .

Speaker #5: We all presumably have this placement and pull through driven model . So Sean , we've talked a little bit about this . Can you just maybe set a baseline for where 2025 pull through came in ?

Dan Arias: Set a baseline for where 2025 pull-through came in, and then to what extent that number might be higher in 2026.

Speaker #5: And then to what extent that number might be higher in 2026 ?

Robert Spignesi: Yep. Yeah. I guess on the first question, Dan, yeah, I think in terms of what will happen with Amgen and Samsung in terms of pull-through, I think, you know, I talked about Amgen a little bit ago, you know, latter part of the year, likely when we get those fully validated. Samsung, I don't know that we have a fixed timetable for that yet, but I'm sure it kind of follows that similar timeline, would be my best guess. In terms of where we get with them, I think validations are definitely in play for 2026, our expectation, frankly. In terms of when they start to contribute to recurring revenue, I'd expect that to be more a 2027 factor.

Rob Spignesi: Yep. Yeah. I guess on the first question, Dan, yeah, I think in terms of what will happen with Amgen and Samsung in terms of pull-through, I think, you know, I talked about Amgen a little bit ago, you know, latter part of the year, likely when we get those fully validated. Samsung, I don't know that we have a fixed timetable for that yet, but I'm sure it kind of follows that similar timeline, would be my best guess. In terms of where we get with them, I think validations are definitely in play for 2026, our expectation, frankly. In terms of when they start to contribute to recurring revenue, I'd expect that to be more a 2027 factor.

Speaker #4: Yep . Yeah . So I guess on the first question , Dan , I think in terms of what will happen with Amgen in Samsung , in terms of pull through , I think I talked about Amgen a little bit ago .

Speaker #4: Latter part of the year , likely when we get those fully validated . Samsung , I don't know that we have a fixed timetable for that yet , but I'm sure it kind of follows that similar timeline would be my best guess .

Speaker #4: So in terms of where we get with them , I think validations are definitely in play for 2026 . Our expectation , frankly , in terms of when they start to contribute to recurring revenue , I'd expect that to be more a 2027 factor in terms of pull through .

Robert Spignesi: In terms of pull-through, you know, I think we've continued recently, I'd say, to be kind of in that single digit year-over-year improvement range that we've talked about historically. I'd expect that will be similar. I think with big orders and kind of a bolus of validations like we're talking about with these larger orders, I think there is an opportunity for us to see more meaningful step-ups in that as we bring those systems online, kind of in short periods of time. For now, I'd say think about it as single digits in 2026. I think as we look at 2027, that we would potentially have opportunity to see a better, a bigger step up than that in 2027.

Rob Spignesi: In terms of pull-through, you know, I think we've continued recently, I'd say, to be kind of in that single digit year-over-year improvement range that we've talked about historically. I'd expect that will be similar. I think with big orders and kind of a bolus of validations like we're talking about with these larger orders, I think there is an opportunity for us to see more meaningful step-ups in that as we bring those systems online, kind of in short periods of time. For now, I'd say think about it as single digits in 2026. I think as we look at 2027, that we would potentially have opportunity to see a better, a bigger step up than that in 2027.

Speaker #4: I think we've we've continued recently , I'd say , to be kind of in that single digit year over year improvement range that we've talked about historically .

Speaker #4: So I'd expect that that will be similar . I think with big orders and kind of a bolus of , of validations like we're talking about with these larger orders , I think there is an opportunity for us to see more meaningful step ups in that as we bring those systems online .

Speaker #4: Kind of in short periods of time . So for now , I'd say think about it as single digits in 2026 . I think as we look at 27 , that we would potentially have opportunity to to see a better , a bigger step up than that in 27 .

Dan Arias: Okay. Very good. Thank you, guys.

Speaker #5: Okay . Very good . Thank you guys .

Robert Spignesi: Thanks.

Rob Spignesi: Thanks.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Anna Snopkowski of KeyBank. Your line is now open.

Speaker #6: Thanks .

Speaker #1: Thank you. One moment for our next question. Our next question comes from the line of Anna Koski of KeyBanc. Your line is now open.

Anna Snopkowski: Hi. Thanks for taking my question. Congrats on the quarter and the exciting announcement with Samsung. Maybe to start-

Speaker #7: Hi . Thanks for taking my question . And congrats on the quarter and the exciting announcement with Samsung . Maybe to start .

Robert Spignesi: Thanks, Anna.

Rob Spignesi: Thanks, Anna.

Anna Snopkowski: Do you think you could share more insight on the Samsung multi-system order? Maybe would you say it's fair that this is in the double digit range? Should we expect this to roll out over the course of 2026 or just Q1? Just also on this, more on the strategy. Is this one site, is this part of the global rollout or maybe a therapeutic area? I have one follow-up. Thank you.

Speaker #3: Thanks ,

Speaker #7: Do you think you could share more insight on the Samsung multi-system order? Maybe. Would you say it's fair that this is in the double-digit range?

Speaker #7: And should we expect this to roll out over the course of 2026 or just Q1 ? And then just also on this , more on the strategy .

Speaker #7: Is this one site , is this part of the global rollout or maybe a therapeutic area ? And then I have one follow up .

Robert Spignesi: Yeah. Generally on Samsung, we won't get into the specific quantum of it, but it's a next phase of rollout. I think many of you may remember we had the initial launch with Samsung a couple years ago. This is a second wave, which is actually a larger order size, and it's focused primarily on their principal area in South Korea. Although some of you may know that Samsung is also acquiring around the world, so those are also in scope. As I mentioned a couple of years ago, we expect to grow with Samsung in the quarters and years ahead. I'll say it again, we expect to grow with Samsung in the quarters and years ahead.

Rob Spignesi: Yeah. Generally on Samsung, we won't get into the specific quantum of it, but it's a next phase of rollout. I think many of you may remember we had the initial launch with Samsung a couple years ago. This is a second wave, which is actually a larger order size, and it's focused primarily on their principal area in South Korea. Although some of you may know that Samsung is also acquiring around the world, so those are also in scope. As I mentioned a couple of years ago, we expect to grow with Samsung in the quarters and years ahead. I'll say it again, we expect to grow with Samsung in the quarters and years ahead. Interestingly, which we didn't talk about, in the prepared remarks, but we're also discussing other collaboration opportunities with Samsung, which we're quite excited about. More to follow on that. Part B, Anna?

Speaker #7: Thank you .

Speaker #3: Yeah . Generally on Samsung , we won't get into the specific quantum of it , but it's it's a it's a next phase of rollout .

Speaker #3: I think many of you may remember we had the initial launch with Samsung a couple of years ago . This is a second wave , which is actually larger order size .

Speaker #3: And it's focused, focused primarily on their principal area in South Korea, although some of you may know that Samsung is also acquiring around the world.

Speaker #3: So those are also in scope . And as I mentioned a couple of years ago , we expect to grow with Samsung in the quarters and years ahead .

Speaker #3: And I'll say it again , we expect to grow with Samsung in the quarters and years ahead . Interestingly , which we didn't talk about in the prepared remarks , but we're also discussing other collaboration opportunities with Samsung , which were which were quite , quite excited about .

Robert Spignesi: Interestingly, which we didn't talk about, in the prepared remarks, but we're also discussing other collaboration opportunities with Samsung, which we're quite excited about. More to follow on that. Part B, Anna?

Speaker #3: So more to follow on that and part B , Anna .

Anna Snopkowski: Okay, perfect. My second question, just more in general on repeat orders versus new customers. Do you expect these customers, repeat customers like Samsung to move through your pipeline quicker? Just in terms of validation, is that usually a quarter lag or what should we expect, both from Samsung and just repeat customers in general?

Speaker #7: Okay , perfect . And then my second question , just more in general on repeat orders versus new customers , do you expect these customers repeat customers like Samsung to move through your pipeline quicker ?

Speaker #7: And then just in terms of validation, is that usually a quarter lag or what should we expect both from Samsung and just repeat customers in general?

Robert Spignesi: Yeah. A general rule of thumb is repeat customers go faster, generally, both in the sales process and the validation process. It's a general takeaway. Now, certain things like, you know, some of these large orders, you know, Amgen is an example and other large customers we haven't specifically mentioned by name, across several sites around the world. You know, the sites have projects going on at any given time, so the timing could be, you know, throttled by, you know, a site-based activity. Generally, it's quite faster. Generally, we have what's called a modular validation, which basically leverages the knowledge and work we've done on the initial validation usually at a starter site, and we can roll that out in an expedited fashion to accelerate the process.

Rob Spignesi: Yeah. A general rule of thumb is repeat customers go faster, generally, both in the sales process and the validation process. It's a general takeaway. Now, certain things like, you know, some of these large orders, you know, Amgen is an example and other large customers we haven't specifically mentioned by name, across several sites around the world. You know, the sites have projects going on at any given time, so the timing could be, you know, throttled by, you know, a site-based activity. Generally, it's quite faster. Generally, we have what's called a modular validation, which basically leverages the knowledge and work we've done on the initial validation usually at a starter site, and we can roll that out in an expedited fashion to accelerate the process.You know, as you may imagine, our land-and-expand strategy is focused on that. Also to your point, the team's also out there focused on acquiring new customers as well, which can be a bit longer both in the sales process and the initial validation.

Speaker #3: Yeah . So a general rule of thumb is repeat customers go faster generally both in the sales process and the validation process It's a general takeaway .

Speaker #3: Now , certain things like some of these large orders , you know , Amgen , you is an example . And other large customers we haven't specifically mentioned by name across several sites around the world .

Speaker #3: You know , the sites have projects going on at any given time . So the the timing could be , you know , throttled by a site based activity , but generally it's quite faster .

Speaker #3: Generally , we have what's called a modular validation , which , which basically leverages the knowledge and work we've done on the initial validation .

Speaker #3: Usually at a starter site . And we can roll that out in an expedited to , to accelerate the process and , and as you may imagine , our land expand strategy is focused on that , but also to your point , we're also the teams also out there focused on acquiring new customers as well , which can be a bit longer both in the sales process and the initial validation

Robert Spignesi: You know, as you may imagine, our land-and-expand strategy is focused on that. Also to your point, the team's also out there focused on acquiring new customers as well, which can be a bit longer both in the sales process and the initial validation.

Anna Snopkowski: Perfect. Thank you.

Robert Spignesi: Thank you.

Rob Spignesi: Thank you.

Speaker #7: Perfect . Thank you

Operator: Thank you. One moment for our next question. Our last question comes from the line of Brendan Smith of TD Cowen. Your line is now open.

Speaker #3: Thank you

Speaker #1: Thank you . One moment for our next question In our last question comes from the line of Brandon Smith of TD . Your line is now open

Brendan Smith: Great. Thanks for taking the questions, guys. I wanted to actually first ask about the kinda next gen cloud native software platform you referenced in the prepared remarks. Can you maybe just give us a bit more color on, you know, how this gets integrated into devices moving forward? Is this something that, you know, all new orders will automatically include some of these analytics capabilities? Is it a software update push you can monetize into existing install bases? Just kinda wondering how we should think about that contributing to growth. Thanks.

Speaker #8: Great . Thanks for taking the questions , guys . I wanted to actually first ask about the next gen cloud native software platform .

Speaker #8: You referenced in the prepared remarks . Can you maybe just give us a bit more color on , you know , how this gets integrated into devices moving forward ?

Speaker #8: Is this something that all new orders will automatically include ? Some of these analytics capabilities ? Is that a software update push ? You can monetize into existing installed bases ?

Speaker #8: Just kind of wondering how we should think about that contributing to growth Thanks

Robert Spignesi: Yeah. Thanks for the question, Brendan. Think of it as a bit of a phased approach. Out of the box, first of all, it's a complete rewrite of our application software for the Growth Direct. It's a completely different architecture. Day one, customers benefit from a modern UI, much easier integration into some of their IT infrastructure. By cloud native, it's been built around a cloud infrastructure. We envision the customer's cloud will run it, but from a future revenue standpoint, we could also provide cloud services. Right now, the system is in a pre-launch phase with a major customer operating in their cloud, running the Growth Directs, and the feedback has been exceptional. We're quite excited about that.

Rob Spignesi: Yeah. Thanks for the question, Brendan. Think of it as a bit of a phased approach. Out of the box, first of all, it's a complete rewrite of our application software for the Growth Direct. It's a completely different architecture. Day one, customers benefit from a modern UI, much easier integration into some of their IT infrastructure. By cloud native, it's been built around a cloud infrastructure. We envision the customer's cloud will run it, but from a future revenue standpoint, we could also provide cloud services. Right now, the system is in a pre-launch phase with a major customer operating in their cloud, running the Growth Directs, and the feedback has been exceptional. We're quite excited about that.

Speaker #3: Yeah . So thanks for the question , Brendan . It's a think of it as a , a , a bit of a phased approach .

Speaker #3: So out of the box It's a first of all , it's a complete rewrite of our application software for the growth direct So it's a completely different architecture .

Speaker #3: So day one, customers benefit from a modern UI, much easier integration into some of their IT infrastructure, and by cloud native, it's—

Speaker #3: It's been built around a cloud infrastructure. We envision the customer's cloud will run it, but from a future revenue standpoint, we could also provide cloud services.

Speaker #3: Right now , the system is in a pre-launch phase with a major customer operating in their cloud , you know , running the growth or X and the feedback has been exceptional .

Robert Spignesi: Out of the box, a couple of benefits. First, you know, a complete rewrite, so customers benefit from easier navigation, easier integration, you know, a more modern UI. The ability to access data from the cloud, from any device, versus, you know, through their, you know, IT infrastructure attached to their LIMS. Over time, we see the ability to provide services against that cloud data. Imagine a fleet of Growth Directs generating. The idea came from, we have these Growth Directs around the world generating all this data, how can we help customers benefit from that? The Growth Direct would be effectively an appliance. Other technologies can also plug into this technology and feeds into a cloud infrastructure. Then against that, we could provide services against that.

Rob Spignesi: Out of the box, a couple of benefits. First, you know, a complete rewrite, so customers benefit from easier navigation, easier integration, you know, a more modern UI. The ability to access data from the cloud, from any device, versus, you know, through their, you know, IT infrastructure attached to their LIMS. Over time, we see the ability to provide services against that cloud data. Imagine a fleet of Growth Directs generating. The idea came from, we have these Growth Directs around the world generating all this data, how can we help customers benefit from that? The Growth Direct would be effectively an appliance. Other technologies can also plug into this technology and feeds into a cloud infrastructure. Then against that, we could provide services against that.

Speaker #3: So we're we're quite excited about that . So out of the box , a couple of benefits . First , you know , a complete rewrite .

Speaker #3: So customers benefit from easier navigation , easier integration . You know , a more modern UI , the ability to access data from the cloud , from any device versus , you know , through their , you know , it infrastructure attached to their limbs .

Speaker #3: Over time, we see the ability to provide services against that cloud data. So, imagine a fleet of Growth or X generating.

Speaker #3: And the idea came from, we have these growth effects around the world generating all this data. How can we help customers benefit from that?

Speaker #3: So the growth rate would be effectively in appliance . Other technologies can also plug into this technology and feeds into a cloud infrastructure .

Speaker #3: And then against that , we could provide services against that predictive analytics , other types of insights on seasonality , quality failures , you know , potentially speciation in ID , you know , services .

Robert Spignesi: You know, predictive analytics, you know, other types of insights on seasonality, quality failures, you know, potentially, speciation and ID, you know, services. That's really part of the vision. We're not gonna get into too much detail on what those are and how we plan to monetize it. Think of this as step one to a couple step, you know, multi-year process to really advance from the automation side into the, I'll call it the AI sort of higher powered, analytics and cloud-enabled side of our business. The goal is to continue to drive to recurring, high margin recurring revenue over time.

Rob Spignesi: You know, predictive analytics, you know, other types of insights on seasonality, quality failures, you know, potentially, speciation and ID, you know, services. That's really part of the vision. We're not gonna get into too much detail on what those are and how we plan to monetize it. Think of this as step one to a couple step, you know, multi-year process to really advance from the automation side into the, I'll call it the AI sort of higher powered, analytics and cloud-enabled side of our business. The goal is to continue to drive to recurring, high margin recurring revenue over time.

Speaker #3: And that's really part of the vision . We're not going to get into too much detail on what those are and how we plan to monetize it .

Speaker #3: But think of this as step one to a a couple step , you know , multi-year process to really advance from the automation side into the , I'll call it the , the AI sort of higher powered analytics and cloud enabled side of our business , which we'll , the goal is to continue to drive to recurring high margin , recurring revenue over time .

Robert Spignesi: What we've seen is that customers are, especially in pharma, which can be a little conservative, are open to discussing how AI and cloud, in particular, can enable their environment. We're not really pushing against a closed door. It's really it feels like we're pushing against an open door. In some cases, customers are asking us for, you know, services in this general category.

Rob Spignesi: What we've seen is that customers are, especially in pharma, which can be a little conservative, are open to discussing how AI and cloud, in particular, can enable their environment. We're not really pushing against a closed door. It's really it feels like we're pushing against an open door. In some cases, customers are asking us for, you know, services in this general category.

Speaker #3: And what we've seen is that customers are , especially in pharma , which can be a little conservative , are are open to discussing how AI and cloud in particular , can enable their environment .

Speaker #3: So we're not we're not really pushing against a closed door . It's really it feels like we're pushing against an open door . And in some cases , customers are asking us for , you know , services in this in this general category .

Brendan Smith: Got it. Super helpful. Thanks. Maybe just one last one on some of the consumable cost reduction benefits I think you guys spoke to starting to see now. Can you maybe just expand a bit on what some of the moves you guys have made on your side, even, you know, within the Millipore network, I know you referenced maybe what else you're planning there this year to kinda drive the added reduction in the second half? Thanks.

Speaker #8: Got it . Super helpful . Thanks . And then maybe just one last one on some of the consumable cost reduction benefits . I think you guys spoke to starting to see now , can you maybe just expand a bit on what some of the moves you guys have made on your side , even within the Millipore network ?

Speaker #8: And you referenced and maybe what else you're planning there this year to kind of drive that added reduction in the second half . Thanks .

Sean Wirtjes: Yeah. Hey, Brendan, it's Sean. Yes, we are still working with MilliporeSigma on several different opportunities. I think, you know, some could benefit this year. Some are more longer term focused in terms of things we could do. As we've talked about in the past, it's quite a broad palette of things that we're looking at in terms of things that could benefit our margins, not just material cost reduction.

Speaker #4: Yeah . Hey , Brendan , it's Sean . Yeah . So we , we are still working with with Merck Millipore Sigma on several different opportunities .

Speaker #4: I think , you know , some could benefit this year . Some are more longer term focused in terms of things we could do in as we've talked about in the past , it's quite a broad palette of things that we're looking at in terms of things that could benefit our margins , not just material cost reduction .

Sean Wirtjes: I'd say the locked-in savings that we have at this point that are gonna benefit consumables in 2026 are not with Merck Millipore directly, but they are things that are direct inputs with other vendors that we have in place that our procurement team has done a really good job with kinda leveraging our growth, leveraging other relationships to be able to get us what I would say is kind of a step change reduction in cost for, you know, a couple of different key inputs into the material that will benefit us this year. We're excited about that. As I said earlier, it's gonna be a key driver of our gross consumable margin expansion by association, you know, overall gross margin expansion.

Speaker #4: I'd say that the locked-in savings that we have at this point that are going to benefit consumables in 2026 are not with Merck Millipore directly, but they are things that are direct inputs with other vendors that we have in place that our procurement team has done a really good job with, and leveraging our growth, leveraging other relationships to be able to get us.

Speaker #4: What I would say is kind of a step change reduction in cost for, you know, a couple of different key inputs into the material that will benefit us this year.

Speaker #4: So we're excited about that. As I said earlier, it's going to be a key driver of our gross margin expansion.

Speaker #4: And by association . Overall gross margin expansion . And we think it's something that we can use as a template to drive future reductions in other areas in the future .

Sean Wirtjes: We think it's something that we can use as a template to drive future reductions in other areas in the future and continue to drive those consumable margins up.

Speaker #4: And continue to drive those consumable margins up

Brendan Smith: Got it. Makes sense. Thanks, guys.

Robert Spignesi: Okay. Thanks, Brendan. Well, thanks everyone for your time and attention. We'll wrap the call up at this point. Thanks again and look forward to speaking with many of you shortly.

Rob Spignesi: Okay. Thanks, Brendan. Well, thanks everyone for your time and attention. We'll wrap the call up at this point. Thanks again and look forward to speaking with many of you shortly.

Speaker #8: Got it . Makes sense . Thanks , guys .

Speaker #3: Okay . Thanks , Brandon . Well , everyone for your time and attention . We'll wrap the call up at this point . Thanks again and look forward to speaking with many of you shortly .

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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