Good afternoon, everyone. My name is Ryan Rice, and I'm an associate with the JP Morgan Healthcare Investment Banking team. Welcome to the session for Rapid Micro Biosystems. Presenting today, we have the President and CEO, Rob Spignesi, and also the CFO, Sean Wirtjes. As a reminder, the presentation will be roughly 25 minutes, followed by about 15 minutes of Q&A, so we please just ask that you hold your questions until the end. With that being said, I'll turn it over to Rob so we can get started. Thank you.
Thanks, Ryan. Good morning, everyone. Again, I'm Rob Spignesi, CEO of Rapid Micro Biosystems, and joined by our CFO, Sean Wirtjes. Thank you for joining this morning. So to get things for those online, our deck is available on our website under Investors. It won't sequence automatically, so I'll do our best to keep us all in sync. So slide three, if we can dive right in. And by way of background and context on our business, we're focused on a critical part of the global pharmaceutical quality control infrastructure called microbial quality control. So this is a regulated process mandated by the global regulators, and all pharmaceutical companies go through this process. It's a high-volume testing process to ensure their products are free of microbial contamination, so think bacteria, fungi, and other organisms, to ultimately ensure their products are safe for patients.
The problem with the current methods used in most locations around the world is that it hasn't advanced, literally using the same slow Petri dish method invented by Louis Pasteur about 100 years ago or so. And it's causing risks and costs, as you may imagine, for the industry. So we've developed a technology called the Growth Direct Platform that automates this legacy process and brings it into the 21st century where it belongs. And we'll chat about that today. So slide four, we thought we'd get started and just give you a sketch, a high-level sketch of our company by the numbers, if you will. So finished 2025 with about $34 million in revenue, with 20% growth, so a strong growth year, and about $18 million in recurring revenue.
An important note about our company, and we'll talk about this today several times, is we have a strong base of recurring revenue, and this is in the form of recurring consumables, proprietary consumables, and service contracts that help feed our business model. We have 190 Growth Direct systems placed globally. We are a global business. We'll go through our customer base and where they are around the world, and importantly, 155 validated systems, so this is the validated system is important because that's the point in time where the pharmaceutical company has adopted our technology as the system of record and is being used in what's called routine use or routine testing, and it's at that point, subsequent to that point, where we achieve the high rate, high yield of recurring consumables and service contracts. As I touched on, we're global.
We operate in about 20 countries around the world. We have a fantastic customer base. We're proud to count around 75% of the global top 20 pharma companies as customers. We'll go into our, again, the types of modalities that we serve, the manufacturing modalities. So we're modality agnostic . We serve all types of manufacturing modalities. We are, however, especially strong in the advanced modalities of biologics and cell and gene therapy manufacturing. In fact, around 86% or so of approved FDA-approved commercial CAR T manufacturers are using our technology in routine testing and drug release for patients. We pre-released our Q4 and full year earnings on slide five now, Tuesday after market close. It was a consequential year, a strong year for us. So we announced record quarterly revenue, and we exceeded our full year guidance, which was a raise after our Q3 earnings.
It was our 13th quarter of meeting or exceeding our revenue guidance, this track record that we're quite proud of. We announced strong recurring revenue, as I touched on, which is double-digit growth in 2025. We also announced a multi-record system order from one of our existing customers, a very exciting order. The customer is rolling out our system globally and adopting all of our core applications of environmental monitoring, water, and bioburden. And this was the one we had previously announced during our Q3 earnings call. We had strong gross margin growth throughout the year, and we also reinforced our balance sheet with a $45 million facility from our capital partner. And earlier in the year, and we'll talk a bit about this today, we announced a partnership with MilliporeSigma to help drive our growth, our margin expansion, and our innovation.
Quickly, with regard to the numbers, we announced about $11.3 million in total revenue in Q4, which is 37% growth year on year, $4.6 million in recurring, 16 systems placed, and three validated. On the full year, 33.6%, as I touched on, 20% growth, $17.8 million, roughly $18 million of that recurring, which is over half of our revenue, is recurring revenue, 28 systems placed, and 18 systems validated. So a bit about us from a financial standpoint. Kind of diving back into the business on slide six, this slide helps orient you to how we see the market and the value chain in context of the problem that we are trying to solve or are solving. So I think we can all agree scientific and technology innovation has impacted how we discover drugs around the world, upstream, and certainly how we manufacture drugs across various modalities downstream in the manufacturing environment.
But the quality control, the fundamental quality infrastructure hasn't changed, as I mentioned. There's still a very old legacy, error-prone, manual Petri dish method. So you can see by the slide, hopefully it's obvious, it's a pretty clear incongruent situation that you have. And these therapies, these modalities are putting pressure on this legacy system. In fact, this method, the fundamental Petri dish method, was invented when these modalities weren't even a vision. So we have this situation, and again, it's causing pressure and costs and risk for the industry. And this is what we're going after to solve. On slide seven, for those of you to get a little more down into the gritty part of how this actually works, if those of you haven't been into a micro QC lab in a pharmaceutical site, this is what one looks like.
Imagine it scaled up to be much larger depending on the site size. But when you'll walk in, what you'll invariably see, no matter where you are, you'll see plenty of people. You'll see Petri dishes, paper, pencil, incubators. You might see a computer. You might not. But again, this is effectively a high-volume testing process that's mandated by regulators, a stack that we like to throw out. At some of the higher volume sites, they consume enough Petri dishes in a year that if you stacked them, would go eight miles into the air. So just think of the sheer volume that's handled manually. So really quickly, the way this works is it could be a handful. It could be dozens of quality control technicians will come in. They'll grab their media Petri dishes.
There's different forms and flavors, but imagine a Petri dish, and they'll fan out across the clean rooms or the sites and test the air, the water systems, the personnel. Human beings are typically the top source of contamination in pharmaceutical environments. The actual manufacturing surfaces themselves, they'll bring all those Petri dishes back, and they'll put it into basically a giant incubator, some of the size of this room that we're in right now, and labeled Monday, Tuesday, Wednesday around the room, come back a week later, two weeks later, and visually inspect each Petri dish, count if there's any organisms, manually count, write that down on a piece of paper, and ultimately type that into a computer system for record keeping and batch release. So as you can probably tell from that description, it's incredibly manual. It's slow because you're waiting for the organisms to grow.
It's visually inspected by human beings. And we're designed to do a lot of things well, but the repetitive, high-demand accuracy probably isn't top of that list. It is open to falsification and just error and lacks the data integrity that the regulators are focused on. And clearly paper-based and slow. So this is the day-to-day activity used to release drugs around the world in locations where the Growth Direct is not installed, of course. So to address this problem, we have developed the Growth Direct Platform. So it's the only fully automated high-throughput system available and consists of the Growth Direct system itself, on slide eight now, as you can see on the left, a suite of proprietary consumables. So it's important to note we developed a system to automate the vast majority of daily routine use consumables.
Many of our customers have multiple systems across multiple sites to absorb all this volume. So this isn't a niche tabletop type of analyzer. This is meant to be the workhorse of the pharmaceutical, in some cases, campuses. So we have consumables that automate all the various tests. We have a full data and software complement that seamlessly interconnects our systems to our customers' information management systems for secure, two-way, seamless data exchange, inbound and outbound. And we have teams of people around the world that do the validation, the installation services, the maintenance services, and all the validation. So we also provide that service, which is part of our revenue model. The customers get a very robust value proposition, which is what's driving our success.
So first, data integrity, as I touched on, this is a very important part of all of our customers' focus with regard to our technology adoption. This is a consequence of global regulators writing regulations and enforcing against data integrity requirements against which we are compliant quite nicely. So our system can help a customer go from a challenged data integrity environment to a quite robust one. Operational efficiency is a core area as well. This is where a lot of the hard dollar ROI comes from. So our system is fully automated and walk away. Once the sample goes on the system with one of our consumables, that's the last time a human being will typically see it. It's automatically processed. Our vision systems do all the visual inspection. The data is automatically managed. And we're also a rapid system.
So we're able to provide a result to the customer in half the time or less. And in many cases, it's far less than half the time. So at the end of the day, the customer gets a very accurate, trustworthy piece of data they can make a decision with, ship to market faster, ship to the next bioprocessing step faster, for example, or find problems faster. You find a problem in your operation, you can shut down or remediate that problem faster. You can avoid manufacturing scrap. There's clearly a labor leverage model here as well. So this is where a lot of the hard dollar ROI comes from. And then insight and accuracy, machine-driven, computer-driven, vision-driven, AI-driven system that is extremely accurate and eliminates the current challenge with human error and the current microbial QC process I walked through.
So on slide nine, this is the transformation that our customers go through. On the top half of the slide is that legacy workflow I walked through. It's a 15-step, as I touched on, very manual, completely manual, error-prone, long, slow, insecure process to a leaned-out, fully automated walk-away process with very high data integrity. This is why customers adopt our technology. And on slide 10, it's just this is our vision to juxtapose to the previous slide in the deck with the quality control infrastructure fundamentally being replaced by the Growth Direct. And that's really our vision is to create a new microbial quality control infrastructure for global pharma and to bring this critical function up to contemporary standards and on par with how discovery and research works and certainly downstream and how manufacturing and bioprocessing work.
There are a number of tailwinds driving our business forward, as well as the pharma industry generally to automation. And these are not only powerful, but we believe are and will be long-lasting. First, it's a large market. Global pharma is a large market. The testing market's large. We size it at about $5 billion of recurring consumables and service opportunity and about $5 billion in total system opportunity globally. As I touched on a few times already, there's regulatory pressure to adopt automation with regard to data integrity standards. The industry is changing. It's moving more towards advanced modalities, biologics, cell and gene therapy, mRNA therapy. These therapies, in many cases, and the manufacturing modalities that support them require faster turnaround time. They're higher value therapies. So there's more at risk and requires higher accuracy. And it's a perfect fit for automation.
And finally, expanding manufacturing globally, in particular, the onshoring into the U.S. I mean, new sites, as you may imagine, tend to have a higher preponderance of automation put into them, especially in higher-cost labor markets like the U.S. So this is a trend that we expect to benefit from as well. On slide 12, an overview of our growth, of our organic growth strategy. We have a land and expand commercial strategy. So we land in a customer environment and then seek to expand with that customer across their network. So a customer will typically start with between one and a handful of Growth Direct systems. They will validate those systems and then expand across their manufacturing networks. This can be across the manufacturing networks with regard to a single type of assay. They can also expand via onboarding more of our applications. For example, they started with water.
They can move to environmental monitoring or bioburden or sterility. And they also expand notably geographically. Many of our customers seek to automate their full manufacturing network. And I'll go through our customer list in a couple of slides. Many of them are the large global enterprises. Another important part of our growth strategy is innovation. So think of our technology as a platform technology in the middle of a mission-critical workflow. How do we move upstream and downstream with regard to new products and services, including data, to help our customers achieve more of the benefits and the ROI regarding the Growth Direct and, of course, capture more share of wallet and revenue and margin? And then finally, adjacent markets. So we are focused right now in pharmaceutical manufacturing, but there's also a strong opportunity in other markets such as food and beverage, personal care, medical device.
So this is also a great opportunity for us to partner with MilliporeSigma on expanding our ability to access adjacent markets. So on slide 13, for those of you in the room can see our customer logos. For those of you online, you cannot. But our value proposition and our growth strategy has led to this customer network. So as you can see, again, 75% of the global top 20 pharma companies are our customers. We're very, very proud of that, but not all. So we have mid-sized companies. We have some government entities. We have a mix of we're very strong in biologics and cell and gene therapies, but we also serve the CDMO market quite well, as well as small molecule manufacturing as well. From a geographic distribution standpoint, we're pretty balanced between North America and Europe.
So think of us as between 40%-45% or so in North America and in Europe, pretty evenly balanced, and the balance of about 10% of our installations in Asia and growing. Again, this is a consequence generally of larger companies adopting the technology and rolling them out across their global networks. It's also important to note, while we like this chart a lot, and we think it's impressive, it's important to note that we are not fully penetrated in this customer base. There's a long runway to go for additional systems and a lot more consumables and services in our current customer base, and clearly, we're going after those customers who are not yet on this slide. Slide 14, so we make connecting with our customers a priority, and one of the most powerful ways we do that is through our annual Growth Direct Day.
This is a two-day event. We host it in Europe. Every year, we have a partner customer that is a co-sponsor. This past year, it was Daiichi Sankyo. It's an annual two-day event. Customers from around the world come in. It's centered in Europe, so it's mostly European, but customers from the U.S. and Asia come as well. It's grown over the years. It started with a handful of people. And it's about 100 we had this most recent year. And imagine, if you will, it's customers, current customers, prospective customers talking about the Growth Direct for two days and how to implement it, how they thought about the onboarding strategy, sharing case studies, sharing examples of how they use the technology.
Typically, the sponsor company, again, in this case, Daiichi, will bring the attendees to their actual site and walk the customers around the site to show where the Growth Directs are across the site campus and answer any questions in context of how they adopted the technology, so it's a fantastic event. We're very proud of it and thrilled with how it's grown. We also had a chance to invite our partner, MilliporeSigma, to the event this year, which was quite exciting, so slide 15 overviews our historic growth, and we've had strong growth, as I touched on, so over the past several years, think of our growth rate, our revenue growth rate as about 25% compounded over the years. So quite strong growth driven primarily by our land and expand strategy and that strong value prop I walked through.
It's also important to note on the revenue slide, the recurring revenue strength that you see year over year over year. Not only is that great from a business model standpoint, but it's also indicative of the fact that the customers are using our systems. They're generating value from our systems, and we anticipate they'll continue to purchase and deploy growth because they're getting the ROIs that they expect. Gross margin is also a high priority for the business, and you can see we've expanded gross margins by 64 percentage points over the past several years. We've had extreme focus on increasing gross margin through efficiency initiatives, product cost reductions, productivity, and other focused efforts, and we are fully committed to continue these trends into the future, both from a revenue standpoint and a gross margin standpoint as well.
So on slide 16, as we look into 2026 and beyond, we believe we're set up very well as a business. We have the right product. It's clear to us with the right adoption, the right commercial momentum against that. We have secular and strong tailwinds driving the business forward. Our business model is working. It's clear. We place our capital equipment. We pull through recurring revenue and services. Our business model is very healthy and working. We continue to drive margin expansion. You saw the history. And we fully plan on continuing those margin expansion trends into the future. We have a fantastic relationship with MilliporeSigma. It's about 10 months old and performing well. And we expect that there is a commitment from MilliporeSigma that will impact 2026 meaningfully, which we're excited about. And we also strengthened our balance sheet in 2025 as well.
We're a financially healthy business. We're set up well to continue to grow and drive margins forward. To wrap up on slide 17, we're excited for a number of reasons about our business. Again, a large market, growing and under pressure to change. We have strong barriers to entry, first-mover advantage in particular. First-mover advantage is very important in this market because as customers adopt a technology and validate it and put it into routine use in GMP, it becomes quite durable and quite sticky. We have the right product, the right value proposition, as we've chatted about, and the adoption by our customer base, we believe, is clear evidence to support that. Again, we address all modalities of manufacturing, but we're especially strong in the high-growth areas of biologics manufacturing and cell and gene therapy manufacturing. We've a proven high-growth business model.
I think hopefully we've demonstrated that today with our history of where we place the Growth Direct, the capital equipment, and pull through a very high rate and high yield of recurring consumables and service contracts, creating that strong recurring revenue base. So with that, that is formal comments complete, Ryan, so I think there might be a question or two.
Yeah. No, we can go ahead and wrap up the Q&A session here. And I think we've got a few questions already here. So Rob, you pre-announced your Q4 and fiscal year 2025 revenue this past Tuesday afternoon. Your performance included a record multi-system order. Can you provide any additional details on this that you'd like to share?
I mean, I think on the quarter and the year, I'll touch on that first. I had a couple of comments in the prepared remarks. First, I want to congratulate and thank the Rapid Micro Biosystems team members and employees. It was a fantastic year across multiple dimensions. Revenue, not only system growth, but also recurring revenue growth, the margin expansion. I touched on balance sheet reinforcement. It was a good balanced approach throughout the year. The large order that we announced is fantastic news in general, but I think it also highlights, again, the strength of our business and our value proposition. That customer was an existing customer, basically going through that land and expand process I touched on.
It was an existing customer who had bought a system, put it into routine use, bought another system, put it into routine use, and then is expanding across their global manufacturing network, and we anticipate this customer will continue to buy even more systems. I think what's also very exciting about this process with this particular customer is they're adopting all of our applications, so environmental monitoring, water, and bioburden, so it's a fantastic case study of how we like to see our customers adopt our technology global and in-depth across the applications.
Okay. Out of newly installed base for the last year, what percentage is through MilliporeSigma? And how do you see the percentage go up on a three or five-year basis?
Yeah, the question was what % of our installed base was driven by MilliporeSigma? So we're not releasing the MilliporeSigma contribution. But I can tell you this. The MilliporeSigma relationship, it's only about 10 months old. So the vast, vast, vast, vast, vast majority of our installed base is via our direct sales channel. Now, that being said, we are very excited about the partnership with MilliporeSigma and looking forward. We anticipate a meaningful contribution. That's helpful.
Thanks for the presentation. I was wondering if you can comment on how much of your revenue is recurring and also do you pursue lease versus sale? And then finally, just any color on the sales cycle itself?
Yep. Yeah. So over half, I think it was 55% last year was recurring revenue. So we have a very strong recurring revenue base. So I think half or more. So when it comes to the actual relationship with the customer, we're pretty flexible. I mean, the vast majority are arm's length sale. But we have done some leases for certain customer segments. That's of interest. But it's probably 95+% is just a standard capital acquisition. And there's a third question there. I'm not sure. Oh, sales cycle. Yeah. So think of it as a standard capital equipment sales cycle. I would divide it into existing customers and new customers. So for a brand new customer, as you may imagine, it's going to fall into a capital budgeting and annual cycle. So it's a 12-month, 18-month type of sales cycle for the first one.
Follow-on orders and the expand phase of our land and expand strategy, those can come much quicker than that as customers buy the subsequent tranches of systems from us.
Thank you. So we have a few more questions here. Sean, you achieved pretty meaningful gross margin improvement in 2025. What are some of the drivers to sustain this trend in 2026 and beyond?
Yep. Thanks. Yeah, I think as Rob said earlier, gross margin improvement is a very significant strategic area of focus for us. With good improvement in 2025, I think a highlight to share with the group here that we haven't talked about, didn't have in our pre-announcement, is that we in the fourth quarter of 2025, kind of a next step on our journey in margin expansion is we've reached positive gross margins on products. So we look at things between product margin, service margin. Service margins have been meaningfully positive for a pretty significant period of time. We've been on a journey kind of moving our product margins up. We have now turned positive there, and that's on a pretty steep trajectory, as Rob mentioned. If you look at the total business over the past three years, we've expanded our overall gross margins over 60 percentage points.
So we expect to continue on a pretty significant trajectory as we go forward. And looking at how we do that, I think, is an important part of what we're kind of doing to execute against that. So how do we do that? How do we increase gross margins from where we are now, mid- to high-single digits for 2025, up into the 50-plus% range, which is our midterm goal? I think we start with material cost reductions in our products. We have a number of initiatives, short-, medium-, long-term, to do things related to procurement, vendor changes, vendor negotiations, engineering changes. There's a very broad portfolio of things that we are doing to try to get cost out of both our systems and our consumables. We also have opportunities across both our systems and our consumables to drive increased efficiency through the manufacturing processes.
We have an automated manufacturing line we use to build our consumables. There are opportunities to increase throughput and to be more efficient with things like waste on that line. There are process changes we're looking at in our systems manufacturing. So there are lots of different ways that we have and we will continue to reduce the amount of material in our products. I think volume is a really important part of it as well. So as we continue to grow the business, the base of kind of overhead costs that we have to support the manufacturing of our systems, our consumables is relatively fixed. We have capacity to grow multiple years into the future, adding very little cost to support that. So as volumes go up, the amount of overhead we're allocating to our products is going down in a meaningful way.
So lots of different levers we're pulling through different aspects of the business to drive product margins up. But service margins are important too. They're around 40% for 2025. There's room to expand there. I think there's productivity initiatives that we can continue to drive in our service business and efficiency in terms of how we do our work and work with our customers. So I think taking all of that, I'd add to that the Merck Millipore partnership that Rob referred to. Merck is a supplier of a lot of materials we use, particularly in our consumables. So we're talking with them about opportunities to potentially replace existing vendors with them and get preferred pricing on some of those materials, which could accelerate some of our cost reduction initiatives related to those products. But we're also talking to them about their broader supply chain capabilities, logistics partners, distribution.
They have a very significant distribution network across the world, opportunities for us to kind of piggyback on some of the things that they have in place already to help drive margin expansion for us. So as we look forward, I think we're really excited about what we can do. One thing I can also share is we're off to a really good start in terms of the key initiatives we have in some of these areas in 2026. And as we look out, we'll guide around margins when we give our full-year guidance later this quarter. But I can already tell you that the amount of margin expansion we expect in our products, which is where the bulk of our focus is right now, we expect that to be more in 2026 versus 2025 than it was in 2025 versus 2024.
We expect to see some acceleration on a year-over-year basis.
Thank you, and then we've got one more here for you, Sean. In mid-2025, you strengthened your balance sheet with a term loan facility, as Rob touched on in the presentation. How do you feel about your balance sheet and cash position as we begin 2026?
Yep. Yeah, so as you said, Rob touched on our debt facility we put in place in Q3. It's a $45 million debt facility. We drew down $20 million, so there's $25 million of capacity left there. We finished the year with about $38 million in cash. That was in line with our guidance that we had put out there, so in line with expectations, and we expect the burn in 2026 to step down from 2025 as we continue to grow sales, expand margins, and we hold spending tightly. That is a core part of what we're doing here to try to manage cash and move ourselves towards break-even, so when you put all that together, I think we look at that and say that positions us well to get to cash flow break-even with where we are right now.
What's the balance sheet last year?
It was in the $30 million range, a little bit more than $30 million.
Excuse me?
Sorry. Just to clarify for the webcast, this gentleman is asking about the cash burn for the year?
Yeah. What was the second question?
What's the balance? After you withdraw $25 million, remaining $25 million.
I think with that, with reduced burn, I think we believe that we have a trajectory to get to break-even without additional financing.
All right. Well, thank you, everyone, for coming to the presentation today. If there's no further questions, I think we can conclude.
Thank you.