Hello and good morning, and thank you for joining us for Rapid Micro Biosystems presentation. My name is Anna Snopkowski from the Life Science Tools and Diagnostic team here at KeyBanc, and today I am joined by Rob Spignesi, CEO, and Sean Wirtjes, CFO at Rapid. Just to start, if you have any questions, please feel free to email me. My email is anna.snopkowski@key.com. You can also utilize the chat feature, and I will try to get to your question. I think we can jump right into Q&A to start. I thought maybe for those who aren't as familiar with Rapid Micro, you're automating a process that hasn't been automated in 100 years.
Maybe could you just walk the audience through what microbial quality control is, why it matters, and why the Growth Direct is different from what's on the market today?
Sure. Happy to, Anna. Good morning, everyone. This is again Rob Spignesi, CEO, and joined by our CFO, Sean Wirtjes. To Anna's question, we are automating a critical process in global pharmaceutical quality control and manufacturing called microbial quality control. This is a mandatory regulated step in the process that's designed to ensure the finished product, the finished pharmaceutical drug or medicine is actually safe for patient use. Many of the drugs are injectable, and if it had a microbial contamination, such as a bacteria or a mold, and that's injected into a patient, it could lead to significantly adverse effects. There are regulations to ensure the safety against it.
The fundamental challenge and the problem that we're going after is the methods applied in the vast majority of cases globally, in the vast majority of pharmaceutical companies and locations globally, they haven't evolved. It's the same slow Petri dish method that Louis Pasteur invented about 100 years ago. Think high school biology, Petri dishes, a lot of people, pencils, paper, incubators, slow, a week or more to get a result. Humans will read out the actual Petri dishes. You've probably seen photos of scientists looking at Petri dishes, counting what's called a CFU or colony-forming unit, writing that down on a piece of paper, ultimately keying it into an information management system for that pharmaceutical batch release. It's again very, very slow. It's error-prone, it's human error.
It's also got data integrity problems, what the regulators are pushing against. Think of data integrity as can you trust that result, that test result. With human error, and unfortunately in some cases, falsification or error, and falsification of tests, it is a problem and the regulators have implemented guidelines against it, you know, pushing industry towards automation. As a consequence, this has caused risks and costs to the industry, and it's just an incongruent situation with modern pharmaceutical manufacturing. Our technology, the Growth Direct platform, fully automates the process.
It accelerates the process much, much faster, results, and brings this critical process, into the 21st century via the platform, which is our system itself, the Growth Direct, as well as proprietary consumables and services which create our business model, which has a high rate of recurring revenue.
Yeah, that's great. Very helpful. I think one of the cool things about Rapid is you host this Growth Direct Day. I think this year it was at Daiichi Sankyo.
Mm-hmm.
Could you just walk through how attendance was this year, maybe versus prior? Is this an event where you usually receive some orders at? I know you saw some pretty significant orders in 2025, so just wanted to get into the Growth Direct Day.
Yeah. Growth Direct Day is among our most favorite events. It's personally, lately my personal favorite event. It's an event that started in Europe. We touched on this on our last earnings call, but we are now hosting these in North America and Asia for the first time, so we're quite excited about that. So to your question about attendance, record attendance this year, upwards of 100 people joined largely from Europe, but we had customers from North America and Asia also attend. It typically isn't, Anna, an acute selling event necessarily.
Mm-hmm.
You know, think of it as bringing together customers, prospective customers, it's two days long, all things Growth Direct. A lot of, there's a lot of peer coaching involved, best practices discussion, how to roll the system out, what applications are being used, how they're being used, you know, business case, you know, type discussions. I would say it's not necessarily a selling event where you're getting orders at the meeting necessarily, but it's certainly a strong accelerator of opportunities either into our funnel or through the funnel ultimately to close. At the end of the day, I think more importantly, it builds a sense of community around our company and around our technology and the global adoption of it.
Perfect. Yeah. That makes total sense. I know you recently reported your Q4 earnings and released your 2026 guidance, so I was hoping to get your perspective on guidance of, I think, 16% revenue growth at the midpoint, gross margins reaching 20% for the year. Could you just walk us through some of the assumptions getting you to the lower and upper end of guide, and just what are your confidence in achieving that midpoint of 16%?
Sure, Anna, I'll take that one. We guided to $37 million-$41 million of revenue in 2026, that's underpinned by a range of 30-38 system placements. There's really three key variables in the ranges, I'll kind of hit them one by one. The first variable would be kind of the customer environment that we're operating within. We've been talking now for a few years that the environment with customers has been a little more challenging in the sense that the bar is a little bit higher in terms of getting capital projects approved. There's more competition for capital within some of those customers. And the economic environment has been a little choppy. You know, the lower end of the range would assume that continues.
I think where we could see some beneficial movement toward the higher end of the range is if the environment starts to open up a bit. We start to see more stability, you start to see more budget dollars being freed up and seeing processes become a little more streamlined from what we've been experiencing for the past few years. That's variable one. Variable two is large multi-system orders. The lower end of the guide implies that the only large multi-system order we get this year is the Samsung order we announced last week. The higher end of the range would imply that we get more than that in terms of large multi-system orders, as we work our way through 2026.
The third variable is the MilliporeSigma commitment, and I think there may be some confusion coming out of our call last week, so hopefully I'll be able to clarify some of that today. As a reminder, we have a five-year agreement in place with MilliporeSigma. One of the primary reasons we put that in place is because they are acting as a distributor for our systems and our consumables. We just entered year two, or the second year of that arrangement with them, and they have a what we've referred to as a meaningful commitment to buy systems in that plan year. That year runs from basically now, beginning of March 2026, through the end of February 2027.
The lower end of the range therefore would imply in calendar year 2026 that they make a meaningful contribution to placements, but they don't get at or near the high end of their full commitment. There's some contribution from Merck Millipore, but they don't give us everything that they are committed to give us in the year that ends next February. The higher end of the range would imply they do get at or close to that full commitment in the calendar year 2026. That's the third main variable there. You know, I think we've gotten a lot of questions about how big is that commitment. We are contractually prohibited from disclosing what that commitment is.
We're trying to give people some more qualitative information to help get a feel for what that looks like, and how it relates to the overall guidance range that we put out last week.
Okay. Yeah, that's very clear. Thank you for clarifying those moving parts in the guidance, but I think that should.
Sure
help investors. I just wanna go a little bit deeper on the systems placements you've seen in 2025. I think you increased over 30% in those systems placements. Could you just walk us through what is driving this increase? I know land and expand is a big part of your strategy. Is it customers are rolling out in new sites? Is it you're winning new customers? A combination of both?
Okay
That would be very helpful.
Yeah, so you sort of answered the question. It's really a combination of both, although the majority of it will depend by quarter and from a year you look at the full year, it's going to be the majority are gonna be existing customers rolling out, if you will. I wanna be, you know, clear about that. A rollout could be the next phase of the rollout. It could be the next application. It could be the next site, for example. The rollouts take different forms and flavors.
We also are using our, you know, with our sales team, our direct sales team, and of course, Merck MilliporeSigma, you know, seeking new customers to start the process of landing and expanding. I think it's, again, from a customer complexion standpoint, it's majority is existing customers expanding, and then a decent portion is new customers as well. We endeavor to keep doing that to continue to build the layers, if you will, with regard to our global growth and growth plan, recurring revenue plan. It's also a testament to the value proposition and the
Mm-hmm
...our approach to the technology, because customers are rolling the technology out because it's achieving its ROIs, it's meeting the value prop targets, it's helping with standardization and ultimately quality of product to patient for patient care.
Yeah, that makes sense. I feel like Amgen, the order we saw, in the fourth quarter is kind of a perfect example of your strategy and, a global rollout using all three applications. Maybe when you take a look at your pipeline of customers, your existing customer base, what does the funnel look like in terms of customers that could reach this level of commitment of global rollouts and, environmental bioburden and water testing rollouts?
To your point, you know, Amgen is an interesting, I'll call it exemplar of how we endeavor to seek a global rollout and also clarify what a rollout is. Again, a rollout might not be every site everywhere in phase one. Customers, you know, as our vision will ultimately get to a deep penetration within their site network. To answer your question, none of our customers are fully penetrated. Even Amgen, after this order across all three applications, we still will continue to grow with new orders and new revenue growth with Amgen beyond this order.
New customers and either in our funnel, but even our existing customer base, which as some of you know, we have the majority of the global top 20, there's significant runway. I mean, we are just really getting started with the commercial penetration in these companies. Sometimes I think folks think that, well, you have X, Y, Z customer base, you need new customers. Well, we have significant amount of penetration yet to go in our existing customers. Not only in new system growth across regions, across sites, across their you know, global network, but also, to your question about Amgen, the application breadth is another dimension and avenue through which we're expanding.
I think that the takeaway for investors should be, yes, we've got a phenomenal, I would say, initial customer base, but the penetration in that customer base is, we've got a lot of runway to go and, we're just getting started in the vast majority of cases. There's not a single customer I can think of that we're fully penetrated into or even close for that matter.
Okay. Perfect. Just sticking on Amgen.
Mm-hmm.
I believe you said in 2H, that's when we should start seeing the validations kick in for those systems.
Right.
Maybe how quickly should we start to see those consumables ramp? Is this kind of a gradual ramp throughout 2027 or more immediate, getting those systems into routine use?
Yeah, I think about that starting in the early part of 2027 based on the current timeline we're working on with them for their sites. Yeah, I think there are, you know, several different sites around the world, as we've talked about before. Not everybody's gonna be in lockstep with each other, although I do expect that they'll be relatively close in terms of the timelines they're operating on. Some have construction, some don't. There are some variables there that I think are gonna drive different timing and rates of adoption.
I think as we get, you know, start meaningfully into 2027, I think we're gonna see all of them ramping up, and I think our goal at this point would be that by the middle of the year, we have those sites up and running for the most part, if not completely.
Okay. Thank you. That's helpful. You touched a little bit on it during your talk about 2026 guide, but just circling back to Millipore. I know you probably cannot size what the order is, but I'm pretty sure in the past, I think you've said it's a double-digit order. If you did say that, what are the milestones you're tracking internally to see whether this is on track, given that you said, like, the high end of guidance, it seems all of those come through versus the midpoint and the lower?
Yeah. Maybe a bit about milestones process. We have a governance structure in place with the Merck Millipore team where we call it a monthly business review, and we review the global funnel. We discuss ways that we can help each other with you know we have a way to avoid channel conflict, but we also have a mechanism to work with each other to assist each other with opportunities. That's the principal, I would say, governance structure about understanding where Merck Millipore is specifically on closing and moving deals through their funnel and any assistance that we have that we can offer to help.
Separately, there's an active and daily, weekly ongoing dialogue with our teams and the Merck Millipore teams in our field leadership levels as well. It's a very tight and close working relationship where we have, I would say, you know, active dialogue and activity with each other, and then a monthly milestone, if you will, review to understand how we're de-risking the funnel and moving things forward to close.
Yeah. I think it's important to remember too, this is a distribution relationship when it comes to systems. You know, the commitment they have, that March to February commitment is a commitment. That they're gonna need to place those orders no matter what. It really comes
Okay.
slowdown over the next 12 months to a matter of timing, and when do they place those orders. That's really the thing that drives the variation in the range that I talked about. Do they place orders sooner?
Right.
Do they wait and hold some of them toward the end into early 2027? We don't have perfect visibility of that right now. We'll continue to improve that visibility, working with them as we go forward in 2026. Coming out of the gate here, that is a swing factor for us right now.
Right.
Okay, got it. The other part of the Millipore partnership, you touched on distribution. There's also some of the cost savings, I believe procurement, supply chain, that could help drive some costs lower. I guess from your perspective, what do you see as the biggest impact from Millipore over the next 2-5 years?
To just kinda back up a step, to remind folks, we entered into this relationship to accelerate and further activate our key priorities of accelerating Growth Direct system placements.
Improving gross margins and advancing our innovation. As a reminder, it has those three elements attached to it. I think most notably revenue growth and gross margin improvement would be, you know, it's hard to parse. I think, you know, revenue growth will lead to margin expansion as well as direct margin expansion through the procurement and supply chain activity. We do envision a direct and meaningful impact on our P&L. Separately, there are significant opportunities, and this is a little bit a longer term or, you know, kind of over the horizon in the medium term, to jointly innovate products. [Merck MilliporeSigma] in most of the labs in which we operate.
How do we get [RMB to grow through work] you know better if you will with their portfolio? How do we jointly develop new solutions for customers that we both view as needed in the market. We view the entire package as quite strategic. That will not only generate direct benefit in our P&L in the near term and longer term but also enhance our strategic position in the market with regard to our product portfolio.
That's great. It's an interesting point that you raised about innovating products together with Millipore. Would that be more on the consumable side or the product side, or is this a completely different end market maybe that you're thinking of? Just anything you can share on the innovation.
Yeah, it could be both. You know, Merck Millipore has been quite public about their endeavors in automation. You know, lab automation, you know, automation is accelerating from our view. The Growth Direct, you know, one reason that this relationship makes a lot of sense for both parties is the Growth Direct, fully automated system fits very well into Merck Millipore's automation strategy. There's natural synergies there with regard to, I would say, the automation side of it. Certainly, Merck is quite strong in consumables, so as we look at that part of the, I would say, the enhanced value chain or workflow, there's opportunities there.
Clearly with regard to data informatics, as these automated systems continue to generate more and more digital data, you know, how do we work as RMB and then more broadly with Merck Millipore to harvest that information to make that usable in a product/service type of format as well.
Yeah, that makes sense. You mentioned when you were talking about Millipore some of the margin savings. I just wanted to get a little bit more specific on overall margins. I think you've expanded gross margins over 60% since 2022, so definitely a meaningful milestone. In your last quarter, I think ex that one-time charge, you would have seen positive product margins for the first time in your company history. Just given those big achievements you've received, what do you still see as the biggest levers in front of you? Just where do you think overall margins could go over the next five years?
Yep. No. We're over 50% since 2022. We're almost to 60%, so we hope to be there soon. Yeah. If we guided to 20% for the full year in terms of overall gross margin, that's all in, with an exit rate in the mid-20s% or higher. Obviously implying that we'll exit the year in Q4 at something, you know, getting closer to 30% at that point, which I think would be very good for us. It's. You know, I think we look at things and say that's another step in the process. That's not the end game. We think there's a lot of room to run still on margins, and there's a lot of different areas we're focused on there.
I think just to come back to the guide for a minute, if you look at kind of the key things that we see happening and how they happen, we guided to product margins turning positive in Q2 this year and then staying positive from that point forward. We also pointed to, which I think is a really important milestone for us, consumables margins turning positive in the second half, I think is what we said. You know, that I think is a good step for us. Obviously, breaking even is a long way from where we want to be, so there's still a lot to do there.
Now, the good news on that, I think, is that we talked, also talked on the call about how we do that, and a big part of doing that ties into material cost reduction in our products. Consumables for sure. We have, with a couple of different vendors, we have locked in meaningful cost reductions on the material that go into our consumables. That will be the biggest driver of consumable margin improvement in 2026. We also have a roadmap that we're acting on in systems as well. As we work our way through the year, we do expect to see improvement in system margins that will add to the product margin story for us.
Overall, I think that, you know, it's a holistic story for us, and that's on top of other things we're doing around cost reduction, line efficiency for automation, scrap reduction. We have a big portfolio, I'd say, of different activities that we have going on to improve our product margins. Service margins is important as well. I mean, service margins last quarter and what we're guiding to for Q1 have kind of come down with revenue. They are more sensitive to revenue, just given it's a relatively fixed cost base.
I think the important part as we look out over 2026 is that as we get kind of through the first half and with Amgen leading us, but with other customers adding on, that we expect to see a pretty significant uptick in service revenue in the second half, and that'll lead to what we expect to be significant uptick in margins as well. You know, kind of looking holistically, that's the whole story of how we see the margins moving forward and getting us to where we expect to get to for the full year and exiting the year. I think as we look ahead, you know, there's no question for us that we can get this company to 50% gross margins and beyond.
You know, when we get there, I think, you know, based on current trajectory, by the end of 2028 is probably a good timeframe to think about in terms of a goal for when we would expect to get there based on where we are right now and what we're seeing both in 2026 and opportunities we have beyond that, including with Merck MilliporeSigma.
Okay. Thank you. That was very helpful. You mentioned the material reduction in consumables that should help your gross margin for the consumables in 2026. Is there still opportunity for Merck to step in on the consumable side, or is this new vendor relationship probably getting you to where you wanna be with consumables?
Yeah. One clarification is these are existing vendors, so we're actually not switching vendors. These are vendors that we've been partnering with for number of years who we've been able to negotiate pretty aggressive cost reductions with. A few of those things do impact some of the opportunities we've talked with Merck in the near term. For 2026, I think there's some opportunity I think we could see late in the year with Merck on some things. I would think it's probably more a 2027 and beyond opportunity with Merck there. It's not just material. I think Rob touched on some of it earlier. It's logistics, it's a broader supply chain activity, it's distribution. There are a number of different areas that we think there's opportunity.
Some opportunity later this year. You know, I think some of it has been kinda co-opted by what we've done with these existing vendors, which is gonna be very positive for us. I think as we look out beyond 2026, there's still a lot of opportunity with Merck for us that we're exploring now that could come to fruition starting next year.
Makes sense. Just on the cash side, you've stated that you want to reduce the cash burn in 2026. I think a lot of this will be top-line driven, also your costs coming down. Could you just walk us through what the key assumptions are to get to cash flow break even?
Yeah. I think you're right. You know, the way I think about it is, you know, top-line growth, I think we look at that and say, you know, I think we publicly said before, 20% is probably a reasonable number to think about for growth for us looking out over the next several years. You know, we grew 20% in 2025. Over the three years that ended in 2025, we grew 25% on average. I think that is in the ballpark of where we would expect to grow going forward as well over the next several years. Margin expansion, we just talked about. You know, getting to 50% in the timeframe, by the end of 2028, helps us a lot in getting there as well.
I think the third major piece there is operating expenses. We got it to $47 million-$51 million this year. In our expense pool, there's overall for the business, there's about $10 million of non-cash expense in our P&L. In kind of factoring that all in, what do we look at from an OpEx standpoint going forward? I'd expect very little growth in that spend as in the aggregate at least. You know, we may have some shifting between lines as we kinda harvest from one area to invest in another. I would expect, you know, inflationary type increases in total OpEx out over that same time period over the next several years as we really tightly manage the business and utilize capacity we have in the business today to get things done as we move forward.
I think those three areas are the three big levers we have to pull there to drive us to break even over the next several years.
Okay, when do you expect to get to that break-even point?
Yeah, you know, I think it's probably in the same vicinity as what I mentioned for the 50% gross margins.
Okay.
We haven't given an updated date for that, but it's that kind of timeframe that I would think about for that.
Okay. We actually have some questions from the audience, if you guys don't mind. The first one is, do you expect any stock dilution in 2026 and 2027?
We have stock dilution every year. We give employees equity. You know, there's that kind of dilution that goes in there. You know, do we have any current plans to sell equity and dilute the shareholder base? There's no plan at this point in time. We do watch the markets and monitor where they are, what opportunities are out there, kind of what our needs might look like. Hopefully everyone knows, we do have a debt facility with Trinity Capital in place right now. We've got $25 million of capacity there. I think that would be the first place we would look, and we will likely look for cash needs as we go forward. I think that would kinda cover the question from my perspective.
Okay. Just stepping back a little bit, looking at the number of placements you have today versus the total addressable market size for placements. First, what is the total market? Does this seem achievable over the long term as these global rollouts kind of push in? Would you need to, like, expand capacity to get to this larger number of systems?
Yeah, you cut out, but I think the question was to repeat it, so we're at about, you know, just under 200 placements now, about 190 placements globally. What is the size of, if you converted the entire market across water, EM, bioburden, and sterility, we size that at, you know, thousands of systems. You know, 8,000+ systems. This dovetails to my previous discussion or comment about we're just getting started within our customers as far as the ultimate expansion into it. There's a lot of runway left. I think you cut out as well. I think your question was about manufacturing capacity. We have significant capacity on both. We run a fully automated consumable line.
Sean and I are actually at our Lowell site today, where we have a full clean room manufacturing with full automation with significant capacity on that. We also, in our Lexington facility, have backup consumable manufacturing. Also here in Lowell, we have a manufacturing floor where we assemble and manufacture the Growth Direct, and we have significant capacity in the current instance. Expanding, you know, floor space and part availability and labor is relatively straightforward there, so we don't view that as anything close to a limiter on our growth as far as ultimately growing our manufacturing base. Strategically, again, we'll invoke the Merck Millipore relationship.
You know, there's been dialogue on how we can efficiently not only in cost reduction, but efficiently scale manufacturing. I'll call it longer term in potential partnership with them as well.
Makes sense. Hopefully you can hear me better. Maybe just on the last question, U.S. onshoring has been a big topic of conversation. Given you're one of the highest automated devices in the market, I think it would be a great addition to some of these newer facilities. Do you think you're positioned to capture this phenomenon, and is it contemplated in your 2026 guide or is it a longer-term tailwind?
Yeah. I think I've mentioned this before. You know, could we benefit in 2026? Potentially, but it's more of a leading edge. I think it's gonna start in 2026, and you're gonna see more of it featured in 2027 and beyond. To the question, I think we're exceptionally well-positioned to benefit from this trend. First of all, again, having many of the top 20, the majority of the top 20 already as customers, there's that built-in existing relationship and knowledge and use of the Growth Direct. That's point one. Point two is these new sites, in our view, are going to be at the margin of automated significantly, right? It's a great time to bring in new technology.
A lot of these sites in the U.S., and the U.S. has relatively high labor rates. These companies are gonna seek to automate a lot of the processes to include manufacturing, especially manufacturing and quality control. We think we are in a very good position. I've touched on this in recent calls as well, is we're already in dialogue with customers who are planning on putting us into their new build facilities. Had a conversation yesterday with a customer who hasn't even started to put a shovel in the ground, and we're talking about how the Growth Direct's gonna impact their site and their manufacturing and quality operations.
Great. Thank you so much. With that, I think we're all out of time, but we really appreciate you guys for being here. This was very helpful to me, and I'm sure everyone in the audience. Thank you, and thanks everyone for listening.
Thank you.