• Revenue: Increased 24% to $7.6 million compared to Q3 2023.
• Product Revenue: Increased 25% to $5.3 million.
• Service Revenue: Increased 21% to $2.3 million.
• Recurring Revenue: Increased 8% to $3.7 million.
• Nonrecurring Revenue: Increased 44% to $3.9 million.
• Gross Margin: Improved to positive 8%, a 35% point improvement year over year.
• Product Margins: Near break-even at negative 1%.
• Service Margins: Positive 29%, a 36% point improvement year over year.
• Operating Expenses: $12.7 million, flat year over year.
• Net Loss: $11.3 million, compared to $13.4 million in Q3 2023.
• Net Loss Per Share: $0.26, compared to $0.31 in the prior year quarter.
• Cash and Investments: Approximately $61 million at the end of the quarter.
• System Placements: Seven growth direct systems placed in the quarter.
• Full Year Revenue Guidance: At least $27 million for 2024.
• Cash Burn: Expected to be roughly $40 million for the full year 2024.

• Warning! GuruFocus has detected 5 Warning Signs with RPID.

Release Date: November 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Rapid Micro Biosystems Inc (NASDAQ:RPID) reported a 24% increase in total revenue for the third quarter, reaching $7.6 million, marking a quarterly revenue record.
• The company placed seven Growth Direct systems across North America, Europe, and Asia Pacific, marking their strongest placement quarter since Q3 2021.
• Gross margins improved significantly, with a 35% point improvement year-over-year, resulting in positive 8% gross margins.
• The company reaffirmed its full-year 2024 revenue outlook of at least $27 million, indicating confidence in continued growth.
• Rapid Micro Biosystems Inc (NASDAQ:RPID) is actively engaged with several customers planning to expand their Growth Direct footprint, demonstrating strong business momentum and customer interest.

Negative Points

• The company is still facing elongated purchasing cycles and more scrutiny in the purchasing process, indicating potential market headwinds.
• Operating expenses remained flat compared to Q3 last year, with $0.6 million in one-time severance and other expenses impacting the quarter.
• Net loss for the third quarter was $11.3 million, compared to a net loss of $13.4 million in Q3 last year, indicating ongoing financial challenges.
• The company expects to burn roughly $40 million in cash for the full year 2024, highlighting ongoing cash flow concerns.
• Despite improvements, product margins were near break-even at negative 1%, indicating room for further cost reductions and efficiency improvements.

Q & A Highlights

Q: How should we think about system placements in Q4, and are there any trends heading into next year? A: Sean Wirtjes, CFO, mentioned that the guidance remains prudent due to market headwinds, such as elongated purchasing cycles and scrutiny in the purchasing process. However, there is room for upside if execution in Q4 exceeds expectations. Robert Spignesi, CEO, added that high ROI projects are being prioritized and funded, which underpins confidence for the balance of the year and into 2025.

Q: What are your expectations for accounts focused on new modalities like biologics and cell and gene therapies? A: Robert Spignesi, CEO, stated that the bulk of their business is in biologics and cell and gene therapies, with strong uptake and a positive outlook. The funnel includes large and mid-size biopharmaceutical companies and CDMOs, with sterility reinforcing funnel growth and access to new areas like sterile injectables.

Q: Can sterility be an incremental positive at the revenue line for 2025? A: Sean Wirtjes, CFO, noted that while it's early days, the value proposition of sterility is resonating well with customers, leading to high interest and positive feedback. The company is focused on translating this interest into business and revenue for 2025, with current leading indicators and funnel build meeting expectations.

Q: Have you crossed the threshold to achieve positive gross margins for products on a quarterly basis? A: Sean Wirtjes, CFO, indicated that while they are on the right trajectory, achieving positive gross margins consistently will depend on product mix and volume. There is a chance to reach positive margins in Q4, with further improvements expected as volumes increase and cost efficiencies are realized.

Q: What is driving the trends in consumables usage among higher-end users like biologics and cell and gene therapies? A: Robert Spignesi, CEO, explained that these categories tend to be higher volume, yielding significant consumable usage. The funnel is largely driven by global pharma companies, with many segments expected to be high yielding, potentially accretive to current consumable usage levels.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.