I throw it in the presentation. We should have time at the end for Q&A, so if you do have a question, you can type it into that Q&A box at the bottom of your screen. With that out of the way, it's all yours, Kevin.
Well, thank you. Thanks, Jim, for having us today. We're happy to be here and tell you about 908 Devices. In many ways, it's a great time to be here 'cause we really feel like we're at an inflection point in our journey, which I think will become obvious as we walk through today. Just take a moment here to review our forward-looking and non-GAAP financial measurement statement, please. 908 Devices makes handheld and portable products that bring lab-grade analytical technologies to the field. These are analytical tools that are used at the point of need for public health, safety, and defense applications.
The use cases range from detection and identification of illicit drugs and fentanyl to customs and postal inspection, onto air monitoring and the detection of toxic VOCs and advanced chemical agents. Our customers are our frontline responders. We serve law enforcement, federal and military customers globally. We have over 3,700 devices deployed across 700 accounts, and we have over 18,000 trained users and growing. Frontline responders of all types need the immediate actionable insights that our broad chemical detection devices provide. About a year ago, we undertook a transformation of our business. We divested our desktop products that were experiencing headwinds in the academic and biopharma industry, allowing us to secure our balance sheet, fundamentally reset our cost structure, and double down in our growth areas.
For our continuing operations in 2025, we grew 18% year-over-year, and we demonstrated a new cost structure by achieving positive adjusted EBITDA in the fourth quarter, and we finished the year with $113 million in cash on our balance sheet. We really believe that 908 Devices 2.0, as we call it, is now well-positioned. We're backed by some secular tailwinds in opioid crisis response, defense budgets, and border security, and we have a very strong innovation pipeline with an expanding installed base. We're pursuing platform technologies that are quite broad and have some significant potential, and we have active OEM and funded partnerships, including across industrial QAQC, pharma, and integrations for drones and UGVs.
Maybe if we start with our flagship product, it's based on an innovative form of mass spec that allows us to move that gold standard technique out of the lab and into a handheld. We created a disruptive form factor, we removed hardware complexities, and we added intelligence and machine learning for immediate insights, opening access to the non-expert. We have fielded more than 3,100 of our MX908 mass spec devices. We haven't stopped there. We've really been working to expand and form a broad forensics toolkit of very highly complementary products that span trace detection and ID of hundreds of priority targets through to bulk identification of 22,000+ analytes using our FTIR technologies.
In 2025, about 50% of our placements were beyond that core mass spec, and we're seeing good growth with our newest products that are based on FTIR optical technologies. Taken together, we offer this comprehensive suite of five products, detection to ID, from air and aerosols to surfaces, piles, puddles, all from one company. We're also working to do more with the data. We provide high-value services and support offerings today, and we're working to layer on an ecosystem of more connected services to assist our customers and integrate into their workflows. For reference, in 2025, about 35% of our revenues were recurring in nature. Innovation very much drives our growth, and we believe we've got best-in-class products and technologies.
A great example is our XplorIR product that's shown in the top left of this slide that can identify and quantify 5,000 VOCs. In 2025, it was the first full year that we offered this product with quantification, and we shipped more than 150 devices, and we experienced 40% year-over-year growth. We expect this to continue to be a strong growth driver here in 2026. Also, additionally, our newest device, our newest product, is shown in the middle there. We call that VipIR. We released VipIR in July, and in Q4, we shipped more than 40 devices, representing about $3 million in revenue. VipIR is unique because it brings together two orthogonal optical technologies to focus on the same spots in an unknown sample and provide the best, most integrated result through our proprietary algorithms.
It creates a simple confirmatory workflow that is a benefit to our customers in global customs organizations and hazardous materials teams. VipIR is anticipated to be another important driver for us here in 2026. We're tackling some of the world's most urgent and escalating threats to public health and safety, and demand for modern detection tools is accelerating as a result. If we start with the opioid crisis, we're seeing a dramatic evolution in both the scale and complexity of the threat. It's no longer just fentanyl. It's nitazenes, xylazine, pink cocaine, and undetectable precursors that are all fueling a synthetic drug crisis, with some of these drugs having a potency of a hundred x that of morphine. Just in December, an executive order declared fentanyl as a weapon of mass destruction.
This further opens funding and prioritizes advanced technologies to equip frontline responders to stop the flow and prevent overdose deaths. Now, beyond drugs, toxic industrial materials represent a growing unappreciated public health risk. Consumer goods that we all have, battery fires of EV vehicles, industrial processes all release hazardous VOCs. Emergency professionals are increasingly being exposed to these compounds. These are now leading contributors to occupational cancer and firefighting fatalities. Just in December, the Honoring Our Fallen Heroes Act was passed, recognizing this growing threat to our nation's firefighters. Our device enables fast on-site identification of these hazardous gases and materials, supporting fast decisions and better protection of frontline workers. Now, each of these on their own is a pretty large-scale concern.
When you combine them with the ease of the access of these materials and the availability of these dangerous substances with the rise of global tensions, you can see the scale of the global security concerns. Now, with evolving threats like AI-driven chemical synthesis and drone-based delivery methods, it's becoming an imperative to modernize detection equipment. This is already triggering expanded preparedness across the EU and NATO. The common thread to this all, it's really about the evolving threat and the demand to have an adaptable, mobile, and field-ready solution for advanced chemical detection, and that's where we've been focused at 908 Devices. This slide outlines the drivers of our next phase of growth. At a macro level, demand is strengthening, driven by the increased U.S. funding, rising exposure risks, and expanding NATO defense budgets.
Against that is a backdrop where we've been executing across multiple levers. Starting at the bottom, we have a base of recurring revenue, which as I referenced, is about 35% for 2025, and we're working to increase the opportunity over time with more software and service offerings. If you move up a layer, we're capturing large equipment modernization cycle with our XplorIR product that's been performing, and we expect VipIR to follow suit. Moving up another further, our flagship MX908 product is expanding in enterprise accounts, and it's extending greenfield placements. It's setting up a next wave for us with our next generation platform. Now, if you layer in our U.S. Army AVCADD program of record and emerging platform integrations, I hope you can see we feel we've got a clear path to sustained multi-year growth.
Now I wanna walk you through how this strategic transformation is having a clear multidimensional impact on the business. I think it's helpful to start by looking back at where we ended 2023. At that point, we had only one handheld product, an install base of about 2,400 devices, $38 million in revenue from continuing operations, an adjusted gross margin of 52%, Adjusted EBITDA of -$30 million, and a cash balance of $146 million. We had a lot of cash position, but we were consuming approximately $30 million in cash annually for operations. Fast forward to year-end 2025, we have gone from one to four handheld products entering 2025. We have over 3,700 device placements. That's a 54% increase since year-end 2023.
We achieved a meaningful step-up in 2025 revenue from continuing operations with 18% year-over-year growth. We increased our adjusted gross margin to 57%, and most importantly, we radically improved our cost structure and proved by hitting our target of reaching positive Adjusted EBITDA for Q4 2025. This represents a dramatic improvement in our path to profitability. We've also secured our cash balance, ending with $113 million at year-end 2025, up from $70 million at year-end 2024. In short, we've expanded the portfolio, grown our install base, improved margins, and now profitability trajectory is firmly in our control. Looking ahead to 2026, we have gone from one to five products, six with our AVCADD program.
There is massive opportunity for device placements, which we estimate to be in the tens of thousands, including approximately 15,000 outdated FTIR units that are ripe for modernization and upgrade. Our top line growth is projected to be 15%-20%. We also anticipate further adjusted gross margin expansion, continued year-over-year improvement, and the full year of benefit from our facility consolidation initiatives. We are also targeting another step change improvement in our Adjusted EBITDA loss, cutting it in half year-over-year to the mid-single digit millions. We're also targeting exiting the year with a healthy cash balance. We're not just evolving, we are delivering on 908 Devices 2.0. Across many dimensions of our business, we've solidified our position or created a step change for the better.
We are driving to continue to deliver outpaced growth, more predictable revenue, stronger margins, and cost leverage, all while maintaining a healthy balance sheet and positioning ourselves to take advantage of the favorable macro environment and the secular tailwinds across public safety, security, and defense tech. This is truly a transformative moment of value creation for MASS.
This chart highlights the core of the 908 Devices 2.0 transformation I've been speaking about, sustained revenue growth paired with improving profitability. We've grown from under $20 million in 2020 at our IPO to the projected mid-$60 million range in 2026, while expanding gross margins and significantly narrowing EBITDA losses. As we scale, the model is inflecting, with 2026 representing a key crossover towards sustainable profitability backed by a healthy balance sheet. Thank you, and please reach out with any questions to Kevin or myself at kevin@908devices.com or joe@908devices.com.
Great. Thank you. Thank you, Kevin and Joe. Can you talk a little bit about the VipIR? It sounds like that's one of the key drivers for 2026. Why is that product better, and is that responsible for the bulk of the growth in 2026?
Yeah, we're very excited about our new products and innovations. The innovations absolutely drive our growth. We've been seeing a lot of good growth from our XplorIR product, which is also from that family of FTIR optical technologies. VipIR, we announced in July, and we shipped our first 40 units in Q4, and it was about $3 million of our Q4 revenue, so definitely high expectations for 2026 for that product. Now, why it does well is, like all our products, it's innovation, it's taking a very modern approach. In particular, for VipIR, it's a product that can take a spot of an unknown sample, a solid or liquid sample that a customer might have. Picture a customs organization or a border crossing.
If they come across a compound or a divided material, a powder per se, you can place a tiny amount onto this device. Two orthogonal technologies look at the sample simultaneously in the same spot. Each of the technologies kind of has a Venn diagram of its sweet spot, and that's what's important. Customers really just want a simple confirmatory workflow. By marrying the two technologies, looking at the same spot in the sample, we can give them the best, most robust answer with our algorithms tying it all together and confirmatory in many ways if both technologies can see signs to identify that sample. The library, if you will, that's inside the VipIR is pretty vast.
It covers everything from benign materials, alpha-lactose, sugar substances, all the way through to very toxic industrial compounds. Could be a chemical weapon, could be an explosive. It covers a very, very wide swath of capability. We're excited about it, and then importantly, it opens up some new communication options for us and ties into an ecosystem we've been developing called Team Leader, which is essentially a way to manage all of your devices through a connected service, then provide things like fleet management, provide understanding of who's using the device, what are the trends that they're seeing, location information, an audit trail of results. Yeah, we have a lot of excitement for all of our products and in particular VipIR for 2026.
Is that unique to you, that marrying two different technologies to identify material? If it is, you know, how do you protect it? Do you have patents or what IP protection do you have?
Yeah, across 908, we do have a lot of patent protection across our portfolio. For VipIR in particular, marrying the two technologies to look at the same spot is unique. There are other technologies, other products that have the two technologies in the same box, but ours is not a Swiss Army knife. The two are brought together automatically, so the user doesn't have to decide which one to use at a particular moment. They're brought together to look at that one spot on the sample. Press button, and analysis occurs. So yes, it is very unique.
What is the impact of the war in Iran on it? Does that spur demand or is it now more demand for other devices? I mean, what do you have any sense on what the impact will be?
Yeah. Yeah, for sure. About 27% of our revenues last year were in the international markets. It's definitely an area that we would like to continue to invest in, and we are for 2026, and we believe there's a lot more growing opportunity there. If you just look at the macros that are causing kind of a lift of a tide, if you will, across Europe in particular, there's new growth targets to spend a higher percentage of GDP. There's a target now that's crept up a couple of times last year, and now is about 5% of GDP for NATO spending on equipment modernization by the year 2035. That's a significant step up.
I think if we look at the war in Ukraine as maybe a parallel example to some extent, what we saw there were the countries that were along the eastern flank of NATO started to modernize quickly. We saw orders and contracts last year from Poland, Czech Republic, Finland. This isn't necessarily just for defense spending, but it's for safety and security, public safety, public health and safety, meaning a fire brigade would modernize their detection technology to be used for in case of any industrial or accidental spill, but also in case of an adversary and an intentional attack.
I do believe, and we further saw that in Ukraine, we publicly were able to say there was about a $2 million order received last year in that phase of the conflict for air monitoring equipment with our technology. Now if we fast-forward to Iran, a bit harder to predict. We're in the first phases of this. We do significant business across the Middle East. It is one of our largest areas of pipeline as well as placements across the Middle East for us.
I do expect that this will probably cause some prioritization. It may cause some initial delay as the early stages of a conflict, but I do expect that security and modernization will be prioritized across that region going forward. Perhaps it accelerates some of the longer term projects.
The plant you've consolidated operations in Danbury, you know, what's the status of that plant? Is that fully functional at this point, running at capacity? What has been the impact on margins from the consolidation?
Yes. At this point, our transition of all manufacturing and all of our products are now manufactured out of Danbury, Connecticut. It is complete. You know, we wrapped it up midyear of 2025, you know, as we moved our corporate headquarters out of Boston to here in Burlington, Massachusetts, but our manufacturing down to Danbury, Connecticut. It leveraged an acquisition that we'd done back in 2024. It was called RedWave, where some of those optical spectroscopy, our FTIR products, were initially founded. We've really built up a highly functioning manufacturing operations. I get down there quite often, and it enables us to scale in a low-cost footprint area.
You know, we have a lot of capacity today and expanding, you know, for the next few years, to be able to ramp up production of our devices across the whole portfolio. Today we operate, you know, one shift, but we could do two shifts if needed or beyond. Yeah, excited at the talent that we've been able to pull together there, and we had some key individuals relocate from Boston down to Danbury to help with the transition. It should help with margin improvement as we think about 2025 into 2026.
You know, I touched on approximately 100 basis points improvement in our adjusted gross margin in 2026, which is driven partly by, you know, the midyear move, so we're now in Danbury for a full year, and then the mix of, you know, channel and product mix, you know, come into play as well.
Have there been any supply chain issues as a result of the conflict or?
No, there haven't. You know, knock on wood here, but we're primarily U.S. built here. You know, the majority of the materials and componentry is sourced here in the U.S. We do have some international materials, but none currently out of the Middle East. The impact on some of the conflicts and on some of the tariff situations has not been significant for 908. Hope and plan on that being the case going forward, that we don't have that impact.
We also did a small precision machining acquisition last year that really enables us to do more insourcing and control that channel, enable us to build internally and have that margin capture as we are looking to provide a business that is scalable and has attractive gross margins contributing to the bottom line.
You know, you have, I think, some pretty aggressive revenue targets for 2026. You know, what are the real, the main drivers that, you know, that are leading you to get to those numbers?
Yeah. I'll touch on a few of them, and Kevin, feel free to jump in. As we think about going after the 15%-20% growth, you know, since our IPO, our CAGR's been about 23%. We did 18% growth for 2025, so 15%-20% I think is in the sweet spot given the catalysts that we walked through in the presentation. To touch on them, I'd say one of the big elements is the new product growth. We touched on VipIR. You know, we launched it midyear 2025. You know, initial shipments in September, you know, and really the first full quarter we had 40+ devices in the fourth quarter of 2025. We see an opportunity.
You know, some of those 40+ devices, I'd say about half of them, were through distribution channel as they're purchased devices to our international distribution channel, where they're using those with end customers to drive trials and testing to drive end user opportunities we've started to see come together already. Can we see that approaching 50 devices last year double and maybe even triple here in 2026? I believe we can, and that's kinda built into our guidance range that we set out earlier in September of this month. Other drivers I'd say are our XplorIR, that gas-based device that Kevin touched on. First full year with the Quant had over 150 devices. It was an attractive grower, 40%. We see continued opportunity there across our channels.
Continued strength in state and local internationally, but also starting to see more and more in the federal defense side. I'd say the last lever or catalyst that's in 2026 is we talked $2 -3 million of revenues from our AVCADD program, which is a partnership with Smiths Detection, where we're a component supplier of those components. It's something we've been working on for, call it 10 years, and it's gone through different phases. It's a next generation opportunity where Smiths Detection had the JCAD program historically and are looking to replace their IMS technologies with our high pressure mass spec here with the AVCADD program. Excited, and should learn more here in the early spring on the exact timing, but we did bake in $2 -3 million of revenue here in 2026.
Yeah, I know Smiths Detection is waiting for a decision on an RFP that they have in. I mean, is that the timing you're talking about?
Yes. That's right. Smiths Detection is our partner on the AVCADD program. They're the prime contractor. We are a sub to them where we sell components, and yes, we're expecting to hear a decision on some of those details this spring.
Have you given a target for what revenue level you need to get to to get to cash flow breakeven?
We haven't given specifics. I think what we have talked about is, you know, that 15%-20% growth in 2026 is a good stepping stone, and if you think about, you know, 15%+ as you get to 2027 and 2028 and some of the catalysts that were in that slide in the build-up that Kevin touched on, I think it gives investors a bit of an insight of the opportunity, and we are investing in that opportunity and investing a bit in selling and marketing some targeted investments here in 2026 on international, state and local, and building out that opportunity on the R&D side to launch the next generation handheld product as we get towards the end of the year.
You know, we think with that, you know, that foundational growth and getting to, you know, mid-single-digit million EBITDA loss, it sets the table to cross over, potentially in 2027 and 2028 and beyond, get to cash flow positivity as we work through the net working capital requirements. Yeah, exciting times really to have it in the nearer term, you know, window's great, where I think about, you know, twenty-two years ago we were burning $30 million a year. I think we've crossed, ticked off a lot of boxes and have really set the table for investors to see that path to profitability in the near term. We haven't stated a specific revenue level, and I think we wanna make sure to drive the longer term growth and balance that, but it's getting close.
With the existing cash you have on hand, it seems like you have more than enough cash.
I do, yeah.
... to get to that point. Are you actively looking at acquisitions, or what are some of the uses for that cash?
Yeah, I mean, we're definitely very pleased, as Joe said, to be in this new realm and situation post our transformation. We do have some success of some good acquisitions like RedWave that we touched on that now are our base of operations. We're able to leverage that on the operations side as well as put those products into our commercial engine. We're always gonna be thoughtful and look and see if there's a pipeline of other things that could fit in there. Certainly we're pleased with where we've come with our margin profile, our growth profile, our cash, so we're gonna be very thoughtful if we were to act in the future on an M&A. Yeah, that could be an interesting way.
I hope it came across, but, you know, we've done a ton of work to ensure that we have the organic growth levers. We've done a ton of work to lay out some of those drivers that Joe just walked through. Importantly, we did a ton to diversify our business, so we showed in the slides that back in 2023, we had one product. We had one product and a high customer concentration. Now if you fast-forward to where we are today, we're able to talk about all those different levers. We're able to talk about the diversification of our channels, more from state and local, more from recurring, less dependency on the lumpier, larger federal and military accounts and orders. We're quite pleased with where we've come.
You mentioned the recurring revenue. I think you said it's about a third of your overall business. You know, is that a trend you think continues or, you know, where do you expect that to be over the next five years?
From a profitability perspective?
Recurring.
Oh, recurring revenue.
Recurring.
I'm sorry. Yeah, yep, recurring revenue. Yeah, it's exciting that it was at 35% in 2025. We do see it as a key element, you know, kinda not having to go and get capital money and access to budgets every year. It's great to see customers, you know, commit to multiple years up front of that service offering that includes software updates and, you know, the access to our PhD scientists in a support perspective. Some folks buy it every year, some folks buy it up front. You know, with Team Leader that Kevin touched on, enhancing capabilities going forward. You know, trying to keep it at that, you know, third of the business level is, I think, a goal we have and continue to build out.
You know, as we see device traction, you know, it might come down a bit, but, yeah, it is a key element and important and really a key element as our customers look at the value that 908 brings maybe versus a big box player as far as our application team, our service folks, the ability to handhold them through their adoption cycle and use cases within the market.
Yeah, recurring is a big element that helps with our predictability. As Joe said, many people commit to three to five years up front of those support and service offerings. More opportunity we're creating on our roadmap. The programs, AvCADD, OEM, those also help greatly with the diversification and predictability of the business, so we're working hard on all those.
All right, finally, can you talk a little bit about distribution? I know you recently consolidated to, I think it's Mountain Horse, you know.
Mm.
What was the reason for that?
Yeah.
You know, just in general, what's your distribution model?
Yeah. In the United States, we really, we drive demand directly. In this case of the state and local, which was 43% of our revenues, often those orders can come direct or maybe they'll go through someone that's got a particular vehicle that makes it move faster. In the case of federal military, while we again drive the demand, that was about 30% of 2025. A much smaller percentage than I mentioned way back in the way back machine of 2023. Those are complicated sales. They're usually to large enterprise accounts across federal and military. Mountain Horse, we down selected from four partners to one. These contracting partners bring a lot of procurement specialty capabilities.
They work with our customer to find the most efficient way to get the budget, to route the budget. They help us with forecasting, logistics. Some of these things are quite complicated, where they have to go to multiple sites and shipping to an Air Force base in Guam, et cetera, so they can help with those things too. It's great to have them as a partner, 'cause selling it and the demand is half of it, and then the other half is working through the budget and contracting side. Internationally, we do use distributors, and then we have a handful of people that support our partners there, and they support with application expertise, some service, and channel management abroad.
Great. All right. Well, we are at time, but thank you again. I appreciate the three of you being here, Kevin, Joe, and Barbara, and we hope to hear from you again soon to get an update. It sounds like you're really on a strong trajectory at this point.
Yeah. Thanks, Jim. We appreciate it.
Okay. No problem.