Where's he gonna sit? Let's ask Brendan where. Okay. Hey, Brendan, do you want that or this?
Yeah.
Okay. I'll go here. Okay.
You guys, I'll just let you guys do it. I'll just introduce this.
Okay, fantastic.
All right, guys, we are gonna get started here. Thanks for joining us. Welcome back to TD Cowen's 46th Annual Health Care Conference. Excuse me, I'll get out of the way first of all. I'm Brendan Smith, Tools/Dx analyst, it's my pleasure to introduce the team from Rapid Micro Biosystems. They're gonna give a presentation for a majority of the time, we will have a few minutes at the end for Q&A. On my left, your right is the CEO of Rapid, Rob Spignesi. Thanks, Spignesi. Excuse me. Thank you for joining. To his right, Excuse me, to his left is Sean Wirtjes, the CFO. Thank you guys so much. I'll turn it over to you.
Great. Thanks, Brendan. Thank you. Well, good morning, everyone. Thanks for your time this morning. Again, I'm Rob Spignesi. I'm CEO of Rapid Micro Biosystems, joined by my colleague and CFO, Sean Wirtjes. Look forward to walking you through our business today. For those of you listening online, this deck is available on our website under Investors. It will not automatically sequence, so I'll do my best to keep us synced up. Disclaimers, you can all read it, but with regard to just kind of a headline statement, we have not released 2025 and Q4 earnings yet. That is next week, so we are not gonna be speaking about forward-looking statements during the presentation or Q&A today.
The next slide, just our vision and background and context of what we do. We're focused on a critical part of the global pharmaceutical quality control infrastructure called microbial quality control. This is a regulated process. Every pharmaceutical company in the world has to do this by regulation, and it's essentially a high volume testing process to ensure the actual pharmaceutical product, many of which are injectable, are free of microbial contamination. Think bacteria, fungi, and other organisms. The challenge with the current processes that are performed in the vast majority of sites around the world is it hasn't innovated. The process is basically the same process that Louis Pasteur invented about 100 years ago. Think high school biology, effectively, Petri dishes and people running around collecting samples.
It's causing risks and costs for the industry that we'll walk through today. We, as a consequence, have developed technology that fully automates that process and accelerates that process and brings it into the 21st century where it belongs. The next slide, it's slide 4. This is just a flyover of our business by the numbers, if you will, to give you a sense of who we are. About $34 million in 2025 revenue, 20% growth, it's a high growth business. A notable piece of our business is our recurring revenue. I'll get into our business model, we place our Growth Direct System, which is, you can see the picture in the bottom right of the slide.
Then we validate that with our customers, and then we pull through a high yield of recurring consumable and services revenue. That the business model is proven. Again, we'll walk through our revenue and recurring revenue in later slides. This creates a very durable recurring revenue stream as these systems get validated inside GMP manufacturing environments in our customers. We have 190 system placements around the world, 155 of which are validated. Also an important point to know about our business. Validation is the point in time in which the system, our Growth Direct System, becomes a system of record for that manufacturing and quality control process.
It's fully validated under GMP, and after it's validated, that's when we expect to have that high yield of recurring revenue. That's a really, really important milestone in our business. We're global, so we go to where global pharma is. I'll walk you through our customers. It's global, it's a global industry. Our customers are global, and we are present where they are around the world. We're proud to count 75% of the global top 20 pharma companies as our customers. We'll go through our customer list in a couple slides. I think you'll be able to see, at least those in the room can see the actual logos. Those online will see more of a, of a sanitized view.
The headline is the vast majority of the top scale companies are our customers. It's also important to note we serve all modalities in manufacturing, large molecules, small molecules, cell and gene therapy. We're especially strong, I would say, in the more advanced modalities of biologics and cell and gene manufacturing. You can see here about 86% or so of approved CAR T manufacturers are using our system. In our view, we're becoming the de facto standard in cell and gene therapy generally and cell therapy specifically in manufacturing. Okey-dokey, slide 5. In early January, we pre-announced Q4 and 2025 revenue. It was a notable year.
I'll tick through our highlights quickly here, as you can see on the left side of the slide. We had record quarterly revenue in Q4. We exceeded our full year guidance, followed a raise for the quarter and for the year. It was our 13th consecutive quarter of meeting or exceeding our revenue guide. As I touched on, recurring revenue was strong, double-digit growth throughout the year. We also announced a record single order. Just to give you a sense of I think the vitality of our customer base and how automation is resonating in the market today, our largest order ever, we announced, and this is an exciting order.
It's with an existing customer who's expanding their global footprint, and not only is the size and scale of the order exciting, but also this particular customer is validating across all of our applications, and we'll go through that. It's also a global deployment. It ticks all the boxes that we like to see in these rollouts. Strong margin improvement, which is a really important story about our trajectory, and we strengthened our balance sheet with a $45 million term loan from Trinity Capital. We also, about a year ago, earlier in the year, announced a partnership with Merck Millipore Sigma. I'll go through the elements of that in a slide or two.
I won't read all the results, you can see them. It was a strong, very strong Q4 with 37% growth, recurring revenue for both the quarter and the year are strong and very strong placement quarter and on the year as well. We're happy with certainly Q4 and the full year 2025. I touched on our distribution and collaboration agreement with MilliporeSigma. We entered into this global relationship to address our key priorities, and this partnership is aligned against our top priorities, which are accelerating growth through ecosystem placements, improving our gross margins, and driving continued innovation and growth in the market. The agreement has these three elements.
You know, at the core is a distribution agreement, and MilliporeSigma has an actual purchase commitment for the first two years. We're now in year two, and the commitment is meaningful. So they have the ability to sell the Growth through, I think, consumables, on a co-exclusive basis with us, globally. And as you may imagine, their sales force is quite a bit larger than ours. So we like the way that's set up with regard to the scale. We also envision the MilliporeSigma team, where they're strong in addition to pharma in other adjacent markets, which are significant for us.
For example, personal care, potentially some food and bev markets, medical device, other areas that our, the scale of our sales team just isn't focused on those areas. We also view this as a strategic move to get into adjacent markets. The second element is gross margins, which is a incredibly important part of our, of our business. Much of what we procure from vendors, MilliporeSigma sells, especially in our consumables business. The focus here is to procure at preferred rates, if you will, to accelerate gross margins. Lastly, innovation. As we continue to grow our footprint, MilliporeSigma is obviously a large company and is in many, if not, most of labs around the world. How can we, in the near term, have our products and services work well together?
In a bit, in the medium or longer term, how can we co-develop innovations that at the market needs and desires. Very excited about this. Again, entering year 2, pretty much as we speak, as about a year ago, and have high expectations for the partnership. Slide 7. Just want to orient you all to, you know, maybe a high-level view of the value chain, pharmaceutical development value chain, and the problem that we're solving. We can all probably agree that scientific and technology innovations over the past decades have impacted how we discover drugs, upstream in the process, the technologies applied there, and certainly downstream in the manufacturing of drugs has changed dramatically over the years.
I touched on in the introduction, the actual quality control process hasn't moved. It's essentially. Next slide, I'll get a little bit more a micro kind of view of the world, but it hasn't changed. You have this incongruent situation where the speed and quality of drug discovery and the manufacturing is advanced and the fundamental infrastructure globally about the quality control, which is part and parcel to both manufacturing and to a certain extent R&D, is just not keeping pace. We're solving this problem of this incongruent situation. On slide 8, again, beaming you maybe into a Micro QC lab. For those of you who have never spent quality time in a pharmaceutical Micro QC lab, here's a quick snapshot into a piece of one.
If you walk in, and pretty much no matter which one you walk in around the world, they all kind of look the same from a certain standpoint. You'll see people, you'll see papers and pens and pencils and lots of Petri dishes and incubators. You may see a computer, you might not. Again, this is a, it's a high volume, you know, testing process. I'll walk through it, I'll walk through it quickly just to give you a sense of the of the process. Folks will come to work. It could be a dozen, it could be hundreds for a large site. They'll have stacks and stacks of Petri dishes like you can see in this photo. They'll fan out across typically the manufacturing environments.
Everything is tested, the air, the water systems, the personnel. People are typically the number one source of contamination in pharmaceutical manufacturing. We just bring bioburden with us, into the environment. Manufacturing services, just everything is tested. The product itself as it goes through the process. The tests are brought back typically to a central lab, and then they're brought into an incubator. In this case, it's a Petri dish format test. For those of you online can't see, but we're in a pretty large room now. In some cases, I would say it's probably as large as the room that you're in now, listening to us.
For those of you in this room, it may be half this size, which we're in a large room, which is an incubator. They'll bring them into an incubator with a bunch of shelves around the room, Monday, Tuesday, Wednesday, Thursday, and put all their samples up, and then come back after a few days, a week, sometimes 2 weeks, and physically pick up each Petri dish, look at to see if there's growth, count what's called a CFU, which is basically an organism growing, write that down on a piece of paper and ultimately type it into a computer system. Ultimately, that computer system will release the batch for release to the market or to the next processing process. I'm just tired walking through what it is.
Like, you know, doing that on a, on a daily basis, and the volume is significant, so it can be hundreds of tests per day for a site or thousands. One fun fact we like to throw out is at high volume sites, if you took the number of Petri dishes that site, just that site consumes on an annual basis and stacked them, it would rise to 8 miles high in the air, to give you a sense of just the sheer volume that's going through these sites. Clearly it's a, it's a subjective process. There's human error, you know, throughout. You know, we're designed to do a lot of things well, but repetitive, high accuracy tasks just tends not to be one of them. It's, it's perfect, it's custom-made for automation.
Enter automation. Slide 9, I'm on now. This is our, this is our solution to this problem, which is the Growth Direct platform. It's the only fully automated, the high throughput system available. It consists of the Growth Direct itself, proprietary consumables. We automate. Think of our system, you know, the system itself is about 6.5, 7 feet tall. People are always a bit amazed by the scale of it. Think of what we're trying to solve as think of it as almost industrial automation solving a life sciences problem versus a tabletop type of analyzer. Think of high volume, full automation, high capacity. Our consumables, we design it so we automate the vast majority of daily routine use.
We want all the volume of the labs that I chatted about. Our data and software packages and systems that seamlessly interconnect to Growth Direct, to the customer's information management systems to remove all that paper and a lot of the labor and error out of the process. Validation. Under pharmaceutical manufacturing, it's really important to have a strong validation package that can withstand internal regulatory demands as well as external regulatory demands. We have people around the world that specialize in this, and we've done it, again, 155 times. We've gotten quite good at it. We generate revenue across all of this. We place the Growth Direct, it's typically a capital sale. Validation is the service revenue.
We pull through a high yield of recurring consumables. We also have an annual service contract as well. All that creates our business model. What do customers get from it? Data integrity is really important. This is basically can you trust the quality of that sample in that test? With all that human, you know, labor and error involved in that process, mistakes are made and unfortunately, falsification happens. The FDA and the EMA have issued regulations that basically say, or standards against data integrity, and our system dramatically helps customers in many cases, be compliant. Operational efficiency.
It's a fully automated rapid system, so we give answers, for example, on environmental monitoring tests and, you know, as early as, you know, 2 days full answers versus 5 or 6 or 7 days. Customers can ship to market faster, move to the next processing step faster, or find problems faster. Lastly, it's machine driven, computer driven, and we were using AI, I think before AI was a thing, a backbone in our system. The elimination of human error is certainly part of it as well. In slide 10, it just gives you an overview of what the transformation in the customer's workflow they go through. This, as I walk through this 15-step convoluted process, to a leaned out, basically 2-step process.
The customer takes a sample with our consumable, puts it onto our system, and that's it. It's a dramatic change in how this process works. In slide 11, just our vision of bringing the quality control process around the world to the contemporary standards of R&D and manufacturing. Another way of thinking about our business is we're replacing and improving the quality control infrastructure globally for pharmaceutical manufacturing, and we're well on the way there. There are a number, from a macro standpoint, a number of forces, market forces pushing pharmaceutical, our customers, to adopt automation, and we view these as very powerful and enduring, in some cases accelerating, which is great for our business.
The market's large, about $5 billion recurring, and about $5 billion additional in, you know, system opportunity. As I touched on, regulatory pressure. Sometimes, this market can move somewhat slowly. A regulatory pressure can accelerate that, and we're seeing that now, especially around data integrity requirements. The industry change. This is under a very powerful and interesting one where, you know, as I, as I touched on, in many cases, it's a hundred-year-old process invented before cell and gene and even biologics were really a thing. The fundamental manufacturing requirements and needs around test volume, speed, accuracy have fundamentally changed. You have, again, this another incongruent situation between the demands of the fundamental manufacturing modality and the current processes around microbial quality control. It just can't keep up.
Lastly, you know, some of you, I'm sure, have heard about this, is the onshoring. From what we can tell, it's real. We've already been approached by customers for their newer sites in North America. It's our view that automation is going to be more deeply penetrating in the new sites, especially in higher cost areas like the US. All of these create a nice tailwind for our business. Slide 13 just gives you a sense of our growth strategy and why and how we've been successful in growing our business. We have a land and expand commercial/sales strategy where we land in a customer, we acquire a customer, and then expand through that customer through additional systems and applications around the world.
As you may imagine, our system is used to create a compliance environment, right? So it's, you know, customers don't buy just one. They wanna deploy these around their sites and in some cases around the world. So we land, and then a customer's gonna expand across applications, sites, many more systems and geographies, for example. We have several customers who have systems in all the major geographies around the world. So that's the core of our organic growth strategy. Our R&D strategy is, you know, think of it as adjacent steps around our core. So we're automating the legacy workflow. How can we move upstream and downstream in that workflow, especially around data and providing more information to our customers about their manufacturing process and their environment?
Both again, both downstream and upstream, as you can see in slide 13. Lastly, adjacent markets. As I touched on, personal care is just about the size of pharmaceutical manufacturing. A bit more fragmented market. You know, we as a direct team will unlikely go there in the near term, but our partnership with Merck MilliporeSigma, we're quite excited about the opportunity to enter into and expand in adjacent markets. Slide 14 is our customer list. Those in your room can see the logos. Those of you online cannot. You know, from a headline standpoint, as I touched on, you know, 75% of the top 20 global pharma companies are customers. It's really important to note, some folks go, "Well, you already got those. What's next?" Well, we don't.
It's really important to understand that we have only begun to penetrate these customers. Yes, they're customers, but no one is fully expanded around the world. A lot of runway left certainly in just this customer base, and of course, we're always looking to acquire new customers. You can see we've got good geographic dispersion. We're about balanced between North America and Europe, call it 45% of our installations. Each green dot's an installation. Some of those have multiple systems. Asia is a newer market but growing strongly. You know, from, as I touched on, we address all modalities in manufacturing, but we're especially strong on biologics, which is our first size market, our largest market, cell and gene therapy, CDMOs. We really address the gamut.
We're agnostic to modality, is the takeaway. Slide 15, it gives you a sense of our intimacy that we have with our customers. We always seek to connect with customers around the world, our Growth Direct Day is probably one of the better ways in which we do it. This is an annual 2-day event. Historically, for the past 7 years, it's been in Europe. This year we're actually expanding it to the U.S. We're having a Growth Direct Day in Asia as well. This concept is growing, we're very excited about it. We had our largest ever in Europe this past in 2025. Each year, a different customer sponsors it. This year it was Daiichi Sankyo.
We're really excited about that. Just imagine an environment where, you know, current customers and prospective customers come together and talk about the Growth Direct for two days, how they've acquired it, how they've deployed it, regulatory questions. It's really a fantastic environment with customers helping potential new customers think about the technology and also existing customers trading ideas and concepts and how they continue to expand with regard to our various, our various tests and regulatory considerations, geographic considerations, et cetera. Typically, the host site will bring folks onto their site to see how the Growth Direct was installed and used on that site. This year we had a chance to invite our partners at MilliporeSigma for the first time as well. We're very excited about that.
Slide 16 just demonstrates our strong financial performance over the past several years. You know, starting with revenue on top, 25% compounded annual growth rate over the past, you know, several years, driven primarily by that organic sales and growth strategy I went through. Our land and expand strategy. You know, new products have been, you know, certainly part of that as well. Also, just clear evidence that our recurring business model, our consumable pull-through and our service pull-through is working. The dark blue bars are the recurring revenues. You can see very strong growth there. While our Merck MilliporeSigma partnership has not had a material impact on the previous years, we expect it to in the forward-looking years, which we're very excited about.
At the lower part of the slide, our gross margins, a very important part of our business where we have a very, very sharp focus on. You can see a meaningful improvement over the past several years as well. 60 total percentage point improvement, we continue to drive that northward as we go north as we go forward. Reducing our product costs, increasing efficiencies, increasing our service productivity in the field. We're both product and service efficiency. Our volume is helping us as well. We also expect, again, our Merck Millipore segment partnership to impact our gross margin trajectory. We'll start the wrap-up process here. On slide 17, we believe we're very well-positioned for continued success in 2026 and beyond.
We've got the right customer base with the right product category and the right value proposition. We've got momentum coming out of 2025 headed into 2026. Our business model is working well with regard to the capital placement and the pull-through. As you saw on the previous slide, our margin expansion is definitely on track, and we continue to drive that higher as we go through the coming quarters and years. We're excited about our MilliporeSigma partnership, and it's set to make a meaningful impact in 2026 and beyond. We're financially healthy with a strong balance sheet.
Lastly, it's our team is focused and Sean and I for sure on making sure that we deliver, you know, sustainable and meaningful long-term shareholder value creation. To wrap up, then we'll have time, I think, maybe for a question or two. The reasons why we're excited about our business. It's a large market, as I touched on, and growing that's under pressure by the regulators and industry to change, and we're providing that change. The strong barriers to entry, you know, first-mover advantage when you get in first, which we are, you become incumbent and validated in the process, which is a fantastic position to be in. The Growth Direct is the leading platform, you know, as evidenced by our growth and our customer footprint.
We are strong or can address any modality, but we are especially strong in the advanced modalities of biologics and cell and gene therapy, where you tend to have the higher consumable requirements and needs. That gets translated into our high-growth business model, where we've proven we sell the capital equipment, and we pull through that durable high-yield recurring revenue. With that, as the shot clock says three minutes left, if you wanna ask a few questions.
Yeah, that's perfect. Yeah. I think, thanks for this, guys. This is always good to kind of hear the updates across the entire franchise. I know you touched on a few of these earlier in the presentation, but really just as it relates to onshoring and really this kind of more secular trend of automation across the board, how should we think about this in 2026, 2027, 2028? Like, what kind of a tailwind should we expect? Really maybe more so on timing. Is this a 2027 type thing, 2028? How are you kind of thinking about the potential ramp there?
Yeah, it's a good question. I think to start, it's, I might have touched on it in the presentation. It's real, from what we can tell. The headline value, I'm not sure where it was, $500 billion, 7. I mean, it's a big number. Not sure if we'll ultimately get there, but we definitely have customers that have started the process and who are engaging us in addressing their sites. That's feels real. Now, as far as timing, I think it's You may see the leading edge in 2026, so I wouldn't call it a tailwind yet. With acceleration, 2027, 2028, 2029. You know, these sites don't go up that quickly. You know, who knows the supply and demand of the A&E firms out there.
I think that'll all have to kinda sort and settle. The trend seems real. The commitments definitely seem real. It's our position that especially in the US, where labor costs are not cheap and a new site is a fantastic opportunity to put automation in, it's our view and the feedback is starting to suggest that it's working this way, that these will be highly automated sites, not only in quality control, but manufacturing and in other parts of the value chain as well, which is exciting.
Yeah. I mean, I think that kind of lends itself to the other thing I wanted to follow up on is it feels like, you know, if you're breaking ground in a new factory or even expanding your existing infrastructure, whether that's this year, next year after, automation's kind of just needs to be part of the conversation, right, across the board. As you guys are kind of looking at some of these trends now, is it just a matter of raising brand visibility, getting in front of some of these folks, like making sure people are aware of the differentiation of this product itself, or is there actually some kind of competitive conversation to be had amongst other people in this space?
With regard to... I think the... It's a question around competition and what's... Yeah. The...
Why would you not realistically work with you guys? Is it just a familiarity thing, or is there actual kind of competitive conversation to be had? That's really what I'm getting at.
With regard to the Growth Direct. Yeah. The good news is we're established in the vast majority of the top companies. You know, that being said, our success, we believe, has attracted some competition. The fact that we are incumbent in so many companies and we've been adopted and validated the marginal site, the marginal sites, the marginal geography, it just makes sense that they would install the Growth Direct. You know, for certain sites and certain applications, could some existing technologies in the market create some type of competitive environment? Sure. We can't say we can get 100% market share.
Again, as I touched on in our first-mover advantage, having that incumbency and as customers expand the familiarity, the training, the data, the interconnectivity that we've already solved those problems, it just becomes a lot harder to adopt a newer or different technology versus rolling out to the marginal or next set of sites or geographies, if that makes sense.
Maybe just one last one.
Sure.
-in, in the last minute here. I know you've spoken a little bit to this in the past, and it's something I'm sure I'll ask you guys again in the future as it continues to evolve. Just kinda given the type of data you all are able to generate internally, and through kind of broader usage of the Growth Direct, what kind of insights do you think could realistically be made kind of leveraging AI in this capacity to really continue to integrate a lot of this into the product software moving forward?
Yeah. We're generating an enormous amount of digital data, lot of metadata, and as companies around the world deploy, now you've got a fleet of Growth Directs generating insights and data inside all these sites around the world. There's different fauna, different types of microorganisms, different quality cultures, different products. On our next generation software that we're releasing in the second half of this year is cloud-enabled.
Our view of the world is pulling all this metadata into a data lake or a common area that can be interrogated by AI to get insights into quality failures, what type of organisms are showing up, when do they show up, and linking it to discrete events like, you know, employee turnover or preventative maintenance on equipment to help customers look into their, A, get a status and health check of their quality control globally, which they don't really have now in a clear way. More importantly, how do you prevent a quality problem in the first place? To save money, increase capacity and throughput of the environment.
Interestingly, where this industry, as I touched on, can be slow to change, the AI and data part of it, we're actually seeing very, very strong interest in it. We even have some customers who have done it basically on their own, where they have a bunch of Growth Directs, and they in their own infrastructure, have driven all the data into a data lake and analyze it that way. We're facilitating the data that will ultimately be used by these advanced and even AI systems to create a global sort of view into how to run a better pharmaceutical company effectively.
Awesome. Well, thank you guys very much for joining.
Yeah. Thank you.
Thank you guys for paying attention. Always good to see you guys.
Yep, likewise.
Stay tuned.
Thanks for your time and attention.