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Rapid Micro Biosystems (RPID)

Participants
Michael Beaulieu CFA Vice President, Investor Relations and Corporate Communications
Robert Spignesi President and Chief Executive Officer
Sean Wirtjes Chief Financial Officer
Yuko Oku Morgan Stanley
Noah Burhance JPMorgan
Call transcript
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Operator

Good day, and thank you for standing by. Welcome to the Rapid Micro Biosystems First Quarter 2022 Earnings Conference Call. [Operator Instructions]. Please be advised today's conference may be recorded. [Operator Instructions] I'd now like to hand the conference over to your host today, Mike Beaulieu with Investor Relations.

Michael Beaulieu

you Earnings the Call. thank First Micro and XXXX Quarter morning, for Rapid joining Biosystems Good

Officer. issued Joining under at Spignesi, first release and and Financial is Chief News on quarter Investors Executive today, me the copy section. the Events Officer; in Sean call financial results. available Wirtjes, the of announcing on press rapidmicrobiome.com release a are A Rob Earlier our we the Chief website company's

statements limited like or meaning of of to statements, to this remind factors. Micro's and and this results laws, Before made we Act forward-looking adoption but that many business. financial forward-looking the during harbor the to may including, of that to implied potential within results Actual which or direct of from begin, Reform expressed in due in COVID-XX Litigation on expectations of may call relate of considered be provisions predictions I'd events, Securities the safe pursuant call of impact future or are Any you XXXX. growth, contained a securities expectations for Private condition, forward-looking Rapid Rapid are the those performance statements development Micro's the statements and system business made statements not materially federal variety relating the differ to interest growth customer to statements

XXXX. please BARDA, are only Biomedical performance. Micro's you of law, company's future call with quarter Securities we'll broadcast Also, factors March XX-K information comparing a is excluding and and impact time or to on conference statements list This to be Form from consider today, discussions, Micro obligation, and We and quarterly our was in revise I live over U.S. the statements business, Rapid should you or these information, that, accurate projections BARDA of XX, revenue XXXX. Rapid guarantee a completed aware to May by future description or in required call risk should For financial sensitive fourth any refer because by be not revenue of or Research XXXX. urge the Authority, intention the otherwise. XXXX. forward-looking contains considered contract update the Commission Development with And or the estimates factor and of Advanced of be XXXX except and revenue XXth, total the to Exchange as will performance Throughout disclaims new risks the of any Rob. as these associated events the non-commercial only the with filed our turn and to commercial with section uncertainties that

Robert Spignesi

to Thank you, business and Mike. our first for financial XXXX joining review everyone, and thank you Good results. morning, us performance quarter

began Both system of most to be in guidance which we trends X with resulted limited, our of to were meetings later elements March quarter. pleased Direct weaker. and Systems, While access we performance very were in the in were which Growth with customer sites in but as placement customer Access systems improve disappointing. placements the nonetheless still with was consistent placed QX, business continued in-person March, to marginally in provided the

Micro. are System results Growth improving satisfied these remains Rapid wide we focused are enterprise with high, at our placements in interest not and system While on

or growth revenue Consumables exceeded than X grew placements, our XX%, the system quarter. validations our by of expectations. we the more led Recurring first performance completed nearly in And XXX%. system Excluding in met quarter

compared last significantly efficiency to improved both margins QX Operations manufacturing advancing reflecting our progress gross Consumables the year, is making and our team Systems Additionally, in initiatives.

as is offerings. we key new pipeline Product Development milestones our of achieving which performance product the of with pleased also our I'm progress Finally, team, innovative

customer in began last months, few to site see a improvement the gradual access. we Over

and access customers in-person and As sales we site understand more control to have with because important quality work allows their selling the to and to closely our process challenges our us system is discussed manufacturing it in past, opportunities.

growth about customers and allows of which improve how I deliver real importance some team can of customers. demonstrate had We are provide we capabilities our like top our Chief of I the in better able interest being and XX and April, the also to reinforced with world existing Most with differentiated expect. opportunity to weeks prospective In with This along technology visit on customer systems of we workflows to of existing operations. met the have and direct, existing who at customers traveled showcase the spent were to sites. pharma to site the X across with site value multiple examples recently multiple meeting Commercial some Europe Keys, would underscored the customers you customers. importance deploying customer our the Andy our Officer, and customers trip access

there came these visits. were points Specifically, from important X away I with

to starting improve. First, customer access is site

that of were leaders customer in welcomed into facilities visitors first years. and Growth senior strong the X included the many System had Direct over meetings RMB. we our substantiate These customers, onsite For in interest [would] their

reminded While are COVID was ready to who that not due this in-person for encouraging, some precautions. customers are ongoing we there still meetings were also

existing we and to with months. continue meetings look over will to virtual new coming where We increasing pursue forward meetings customers the as appropriate onsite

with our with we future have was access and we vision collaboration the spoke and is operations. consistent our their XXXX. our quality it up launches. X-week sterility an our highly addressable the our our mold are positive some upcoming we received with opportunity. products Direct summary, platform. foremost, Asia Growth shared ability strategy, with service It's that, excited to products be feedback Growth current note and many detection important initiatives placements discuss across a commercial and in opportunity, personally beginning expand have this are strengthened new rapid and making we organization, new large, our of focused and about placements site took and and in is growth my improved organization. right follow-on customers end, teams systems value customer's Europe, in strong, variable where customers field-based prepared on benefits out are these hiring intensely operations. expect system multiple as they And our complex to productive ad meeting make adopt with manufacturing expand opportunity our strong our the be placing there and reinforce focused our product to meaningful we prospective leadership is are who commercial These multiple wrap our level I'm as routine on resonating marketing for and team looking remain by the discussions we customers and once team building product a To proposition and was and trip rollout broad Direct Direct commercial global impact in-person The our their while third, update And existing in Second, be proposition Systems. We customers' drive may the world-class our our benefits are brief as value to we'll of purchases, first a our land on use. well support remarks of future our to key In roles to excitement on to as positively North new this working innovative total a well value with our and sales and organizations. their across on that ramping more as a back as will customers. innovation. intensely investments and we broadly see of our I'll system are America technology technology for near new with resonating and Growth providing To term, market this customers of

pace our sterility with are we global the very developing commercialization commercial it track critical capability strategy. with growth products, discussed, development remain component we on are strongly the mold at which, view rapid as and We are Also, our excited the of plans of customers. resonating about and as most our detection and which

mold of so other can decisions mold more enable of an capability contamination customers a reminder, such our sooner will who and giving is bacteria. categories microorganisms, they events as differentiate important from make supports quickly. that products to our respond goal This information As customers detection

coming begin enrolling to testing. in plan we the beta customers months, Over

sterility pharmaceutical customers, rapid global top placed been beta has with system beta installed Our and expected convince XX our existing with later to of second testing one quarter. the in

be vaccines, biologics, product sterility important rapid and offers time cell injectables products, therapies. and and sterile Our differentiation as compelling gene for such existing sterility products sensor versus will especially

system plan. With customers to remain XX we on customers our of on turn new ramping one With half about and resonating strongly; the excited important Sean pharmaceutical proposition global move to focused of providing value new working this I We our I as excited ever We forward significantly discuss are the our our new closely on and against Sean? and placements; executing growth focused with manufacturers laser over high application you an will results. updates call our as be look commercial forward. top a over that, Rapid to exciting top as future to product Micro. gross quality remain margins, improving as pipeline of team financial

Sean Wirtjes

reported compared which This QX and million was The to of the of Thanks, growth revenue of consists the in Product Direct XXXX. to we commercial reported Consumables, $X.X of decline Systems but continued by Systems, million million. $X.X to morning, and in Consumables. everyone. Growth strong quarter year. This in due last million first offset revenue, good we XXXX compares placements was that fewer $X.X first Rob, morning, $X.X quarter revenue was in partially QX

on timing to in and pandemic-related to limitations discussed specific and issues first customer our quarter. QX systems sell we ability ship access impact call, continued As the our site earnings customer

exceeded pushed due nearly at still compared as but utilization the QX benefit and systems a was standpoint, continue the a customers. first headwinds, from X the XXX% extended holiday for to of in provided our quarter QX first year, last X X placed systems From quarter in increased placement QX were the to in a we which that systems, expectations, in limited result existing As were guidance as QX validated were March, with consistent disappointing. increasing systems placements XXXX but we to Revenue including last to pandemic. these base shutdowns XXXX, into of we scheduled year, of Consumables growing result originally our comparison from

Over XX XX, number field an revenue Consumables systems XX%. the cumulative XX%. validated of increased system validated average the And of in per increase grew the past X quarters, to from

reminder As months a a routine they recently, go through use. transition full several commercial last before move period that typically validated systems into

Consumables over while important in make QX sequentially in and factors well confidence both to give rates These an at in run systems revenue individual to only us $XXX,XXX year-over-year customer per growth. average we revenue to annualized and expect annual systems contribution $XXX,XXX. those several forecasting metrics Looking our on be routine and considered basis, system with at the was increased use, long-term in we our are recurring over

$X.X validation the validated of our in process and continues Contracts. we $X.X quarter Service the was and growth first the compared several factors, systems. do in to compared to revenue service Recurring spot of in quarter QX, validations contracts to driven higher of validation over both a our While revenue last $X.X in million revenue up million in time, base XX% Service of QX with and to attached revenue new was to Consumables use well bright metrics expect to The of as growing continue from grew during million a trend completed Non-Recurring systems. in to million and were in on transition growth QX, to vary primarily was validated system as XX. year. by first the to placements they systems service XXXX. X from total by QX in We bringing QX to the quarter, strong for new volume business, which can due and higher $X.X lower revenue, to be quarter validations these cumulative revenue including completed pace systems higher timing routine driven our

product and year, lower last were QX million margins this year revenue Turning both this to negative gross margins, in $X.X quarter. despite

and validation of the benefit and recent year, offset seeing We $X.X were of progress number field this revenue in tangible in in are are the Consumables, activity by plan. where support last base and negative Systems. personnel successfully this year-to-date manufacturing Service executing and against cost ahead initiatives with benefits, of across efficiency and associated year is to of with both million both particularly Growth of year costs the Direct higher our margins QX Systems investments travel-related growing service Consumables

expect through to gross the and the initiatives to increase. margins of manufacturing progress to offset with this basis, largely remainder we product of improvements drive continue continue declined as activity a our impact On relative compared mix currently by our year, combined slightly efficiency work the negative to way meaningful We in in volumes quarter XXXX productivity first QX we have our year efficiency QX last product initiatives. on underway

as continue We logistics actively some operations. in any chain manage impact supply experience costs, and our to well labor We and inflationary materials, headwinds did the from either in freight quarter. as material business not

charge the higher operate in as the G&A. down public XXXX as of million net commercial the G&A was XXXX. consisting Net $X.X loss our loss incurred included million to IPO product adjust $X.X conversion their total the sales first increase XXXX, million. to into compares million of to in company. fair value and of Class largely $XX.X in as in July. $XX.X investments quarter in due were $XX.X warrants with to million the outstanding preferred to total quarter, was stock expenses development, stock of of P&L, which quarter R&D $X.X compares This common last Moving quarter first in of and operating well a an to of expenses and This warrants operating X.X prior connection expenses a million $XX.X the our million first in marketing, first A in This in million

CapEx, last the the operating was net and in loss XXXX. shareholders increase QX the expenses common year, per were of expense share was in year million million, and compared just and With Excluding quarter in warrant expenditures higher depreciation $XX.XX to million in loss I to the capital quarter. prior the impact $X.X was to due respect Net adjustment primarily to $X.X comp attributable as discussed. $X.XX of valuation amortization cents the expense expenses stock noncash first $X.X XXXX was

million $XXX.X March equivalents XX, investments, our of and invest we to As which in to cash we continue had in initiatives. cash, deploy growth

plan excluding year. for guidance last comparable of burn I'll our the activities year actively full to cash cash to full business year. expect to the are to to QX now our managing and and impact and be We account financing continue performance outlook XXXX for XXXX, shift

million. of between are $XX guidance and We revenue reaffirming our million full year range $XX

low between this the system of high reminder, range. the roughly a XX% represent As placements of potential variability and end end

relative moving to see access Rob customer lagging to bit to the As past Asia with we've a improvement pace improve few mentioned be the a compared behind. started Europe, the sites earlier, slightly over basis, months. to at in faster On appears a US

in placement it with additional our While which are for have placements, QX. we be could this teams do upside our expect is to year, to currently that, benefit provide said full outlook encouraging Having not line working, opportunities expect system system in that QX we the QX. very of number that to our a we placement

our deliver well recent commercial placement includes opportunities continue of productivity. new forward up fully continue placements as are and multi-system mature timeframe, as the year, expect potential advancing that system number world more optimistic customers, will increasing the second that to accelerate to existing to with of a half we as and placements to funnel, result. Over same Looking we that customers. open the investments with which our our many second customers also contains a This around will half

these higher give the placements the be half in us of year. confidence system All factors will second that of significantly

placements year in XX% year, of second roughly in XX% roughly and will result, made in we the placements our the peaking a that first QX. half, full the system of As with half be expect

stages year. are our loaded, a back-end As each quarter the taking system place typically latter in reminder, of placements in

the For XX% the example, XX% placements placements of half and of in our system in XXXX XXXX in place year. of took second

from Contracts Moving grow increasing recurring to and driven commercial Service validated expect systems year by as use. sequential base quarterly as increases and we to revenue, continue well our the we as revenue into them to routine continue of as placements, move system progresses, Consumables

based year will with first remaining performance, XX% of XXXX in on at in half. the XX% our the in second delivered assumes our outlook that half QX the our year, roughly revenue the be and of halves Looking the

the Service, over we with quarterly did In sequential of in are QX. over variation overall to XXXX expecting are mid did driven favorable the mix. in few validation in expecting number we in are of comps. we in more are on In basis of of be QX be digits validated gross a be continued growth quarters. QX progress efficiency QX the the as sequential revenue the growth From standpoint, expect in line XXXX. systems in new expecting volume timing number reaching quarters a the than by we validations higher an roughly rates validations then revenue margin positive the the we placements We some improvement double XX to as quarterly manufacturing QX, average year-over-year from between on initiatives, expecting X well in QX than gross system our due Consumables, standpoint, new to new with tougher in services. prior QX, QX product continued year increasing by to leverage starting in sales and From lower due margins sequential XX% expect the with driven past to We growth QX, mainly to we approximately period

QX of our over the operating concludes on be outlook. That balance expenses consistent basis to relatively are my year. we XXXX comments on expecting with the Finally, a quarterly

this Operator? for the point, open we'll at up So questions. call

Operator

Stanley. a with from question line a Morgan Tejas [Operator of Instructions] We have Savant

Yuko Oku

will X in half like to our half. Tejas. in amount call -- have second is single-digit on Xx the first we're This quick and By that seeing you Yuko math, for placements

First right? up what math of will second, cadence all, gives is that half? you materially that in And confidence about second pick the placement

Sean Wirtjes

your I Yes, visibility guiding mean, right. quarter we're basically into upside to think this that is it's have there's don't math Yuko, we're We but X. that Sean clear working we on, here. point. in the so the second at

we're XX% So represented the those conservative but X. is being on by year a of the quarter, little

for comment. think that's with which starting the consistent point is I your So math, the

Robert Spignesi

to Rob. half, [including] second elements Yuko, give the And With multiple confidence regard confidence. on here to it's us the

the the prepared was few very is the turning quite We're we're strong The out as you even access as corner. well, heard a trip during certainly past, woods Asia us process. but bit. contributor yet, see discussed, improving as times of U.S. access in then opening. the first, not The site started you've heard is remarks, starting -- Europe, and a our to recent to very And And to open enlightening. to the as mentioned in has up a sales site I

Again, customers. is prop element important business, in was meetings in strong being used. with you is Another other evidence, but are reminder, our in-person Europe the systems our value as a resonating see very our can

through expectations. being or Our pulled Consumables our are at above

sizeable tell some us you ramping, a I team. that, would And customers new likely. that geographies. does nice deals us And As than our existing as high with with confidence the include existing confidence, that quality funnel, as balanced is gives a our Sean gives and customers fourth well well. shape and funnel, new more our mentioned, a customers element the they'll is which do customers across between element systems follow-on purchase our third And balance funnel is multi-system of commercial

previously, we a Officer As new last year. discussed Commercial Chief onboarded

last plan. people we deliver good direct tail they as -- to been sales mature productivity direct the and Our role marketing for in new QX of increased hiring's end selling against year this the and in expect and

Yuko Oku

With you on just for follow-up. right top you And so increase inflation prices Thank on color. Consumables? your or Great. a that then of ability minds on to services now, instrument could much quick comment

Sean Wirtjes

Sure. Yes.

from seeing were we in terms uniform, of we that general, many hikes] say So it's to think price a are We're that. across we call the some benefit out from market. charging some in fact about planning I'd take this seeing recent year but this in of in [price not our completely ASPs talked I year. products the we're benefits that the

Operator

[Operator Rachel from JPMorgan. We with question line of have Vatnsdal the a Instructions]

Noah Burhance

on Rachel. is This for Noah

my the system, have digging additional that I Just of you be like can mix funnel changing, or And bit the smaller first in might of sort follow-up. larger little then in any shift of provide market applications sort the between customers? end a Yes, either color a sort any placements point. be to of on how and would

Robert Spignesi

Yes.

regard So with regard talk about -- with -- customer market to can actual applications. to with I test this applications end Rob, regard to and as is well our

the I you're I customer more interested think think complexion. in -- but

current the well large Okay, of and tends both. for manufacturing our of so XX, top the our funnel, most out customers, and, bulk our Yes, XX as larger customer top part and to enterprises CDMOs principle as base biopharma the -- there, well. be as

Now, we said, sizes. in do that all being modalities address all

monitoring that. in XX% more The consists reflects environments, any of those water our And majority of using in test have funnel and also monitoring, our our also or and market of our we other those market can current bioburden your environmental particular companies, such waterfront customer, environmental we towards generally towards part principal least application as and do as volume, to But question, in the injectables. modalities both -- cover. well. customers course applications end cell funnel of address also large manufacturing and funnel we customer, And mostly of weighted a have mid-size manufacturing small application. and -- as across of CDMO sterile also across more But routine With we're at modality therapy. be regard not applications, funnel and gene in the biologics B most funnel. that So we but only customer types but customers current our our

funnel this from just North of well well the the like historically the a -- markets, as a but geography I'll standpoint. ask bit across feel relative we pretty relative So America been to We've didn't volume end our balanced. at team show and Europe, color team applications to just generally we're outlook And least there. a good little Asia market. Early add regard getting out with our we with balanced started you very place our as in team have that -- market in time. is days and and optimistic what being that as there. short could starting to progress for But But a an grows, yield some health

Noah Burhance

Awesome. And consistent more therapy sort little market a maybe since and digging the cell of IPO? you confidence see bit gene being therapy has cell And side. you the still your and the the you into in felt How gene funding like with sort of IPO'd? evolved how do when

Robert Spignesi

more Yes, up speaking, and about I as in ever as that think therapy. we got are, cell segment. running excited We've gene and generally customers

and incredibly that. therapies, They healthy. those pipelines and to patient-centric where we sizeable do to attract have with for are customers how and is have making is them are therapy new build continue value strong. us of our quite to patient-passion market, frequently. proposition. a cell technology gene approach our enough customers to at, cell unbelievable speak their We Certainly value still business The again, regard especially our an gene look business prop difference. We and an helping and to And and strong our real

Noah Burhance

medium sort sort threats throughput have And any then of about competition of Awesome. do related? anything you or potential finally,

Robert Spignesi

market. this -- we historically, Well, said, we've in believe competitive as low quite intensity we the is

the XXX-year-old is the the XXst competitor view century converting anyway. the top you to by if we how method will, competitor method, is competitive far landscape is Our manual right largest the now,

Operator

in turn I'm further at showing closing to the remarks. queue this no time. I'd call Robert to like questions Spignesi back for

Robert Spignesi

to joining our thank We great. many you us for coming interest with and in company in look your forward appreciate of Well, today. the weeks. you Well, speaking

Operator

concludes you Thank conference for participating. call. This today's

may You now disconnect.