Sign in

You're signed outSign in or to get full access.

9D

908 Devices Inc. (MASS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $18.8M, up 31% year over year and +12% sequential; adjusted EBITDA loss improved to $(6.25)M from $(6.92)M in Q3, while GAAP gross margin declined to 48% on mix (more service and international handheld) .
  • Company announced a strategic transformation: divested the desktop bioprocessing portfolio to Repligen for $70M (~6x multiple), eliminating ~$20M annual operating losses and reducing headcount ~33%, sharpening focus on higher-growth handheld markets .
  • 2025 guidance (continuing ops): revenue $53–55M (reported $54–56M incl. ~$1M desktop in Q1), adjusted gross margin mid-to-high 50s, adjusted EBITDA positive by Q4 2025, ending 2025 cash >$110M; acceleration to >20% revenue growth expected in 2026 on equipment modernization, MX908 next-gen, and AVCAD full-rate production .
  • International demand and recurring revenue were strong: 39% of Q4 revenue was recurring; notable orders included 90 FTIR devices for Finland and 27 MX908 devices for Romania, supporting the handheld-led growth narrative .

What Went Well and What Went Wrong

What Went Well

  • Double-digit top-line momentum: Q4 revenue +31% YoY to $18.8M; full-year 2024 revenue +19% to $59.6M, with handhelds +22% YoY and recurring revenue +42% YoY (39% of FY revenue) .
  • Strategic portfolio focus: $70M sale of desktop assets to Repligen, eliminating ~$20M in annual operating losses and aligning resources to handheld markets; management expects adjusted EBITDA positive by Q4 2025 and cash flow positive in 2026 .
  • Strong demand indicators: Q4 placements rose to 219 handhelds and 32 desktops; installed base reached 3,504; management highlighted Finland (90 FTIR devices) and Romania (27 MX908 devices) orders as proof points .

What Went Wrong

  • Margin compression: GAAP gross margin fell to 48% in Q4 (from 51% YoY and 53% in Q2) due to higher service mix and international handheld sales; operating expenses surged on a non-cash goodwill impairment .
  • Profitability still negative: Q4 net loss widened to $(19.4)M vs $(7.4)M YoY; adjusted EBITDA was a $(6.25)M loss (albeit improved vs Q3) .
  • 2024 guidance reset earlier: full-year revenue guidance was reduced at Q3 (to $56–58M) from Q2 (to $63–65M) due to delayed federal budgets, international contract timing, and bioprocessing softness; final FY revenue came in at $59.6M .

Financial Results

Income Statement and Profitability (Quarterly)

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$14.351 $14.047 $16.773 $18.820
Gross Profit ($USD Millions)$7.275 $7.418 $8.332 $9.103
GAAP Gross Margin (%)51% 53% 50% 48%
Adjusted Gross Profit ($USD Millions)$7.549 $8.150 $9.298 $10.070
Adjusted Gross Margin (%)53% 58% 55% 54%
Operating Expenses ($USD Millions)$16.988 $20.978 $38.549 $29.356
Net Loss ($USD Millions)$(7.429) $(12.548) $(29.295) $(19.446)
EPS ($USD)$(0.23) $(0.37) $(0.84) $(0.56)
Adjusted EBITDA ($USD Millions)$(6.961) $(7.321) $(6.919) $(6.249)

Segment and Revenue Mix

Segment/KPIQ2 2024Q3 2024Q4 2024
Handheld Revenue ($USD Millions)$11.1 $14.0 $13.6
Desktop Revenue ($USD Millions)$2.9 $2.8 $5.0
Recurring Revenue ($USD Millions)$5.3 $6.1 $7.4
Recurring Revenue Mix (%)38% 36% 39%
Handheld Units Shipped (Units)143 178 219
Desktop Units Shipped (Units)10 8 32
Installed Base (Total Devices)3,067 3,253 3,504

Additional KPIs

KPIQ2 2024Q3 2024Q4 2024
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$77.383 $71.686 $69.600
Preliminary Q4 Revenue ($USD Millions)——$17.2 (prelim)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (reported)FY 2024$63–65M (Q2’24) $56–58M (Q3’24) Lowered
Revenue (reported)FY 2024$56–58M (Q3’24) Actual $59.6M Above midpoint
Revenue (continuing ops)FY 2025N/A$53–55M New
Revenue (reported)FY 2025N/A$54–56M (incl. ~$1M desktop in Q1) New
Adjusted Gross MarginFY 2025N/AMid-to-high 50s New
Adjusted EBITDAQ4 2025N/APositive by Q4 New
Cash BalanceFY 2025 (EOY)N/A>$110M New
AVCAD ContributionFY 2025N/ANot assuming meaningful revenue New
OpEx/Cost StructureFY 2025 onwardN/AEliminate ~$20M annual operating losses via divestiture New
Manufacturing SavingsFY 2026 onwardN/A~$2.4M annual savings from manufacturing consolidation New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Portfolio focus & divestitureStructural adjustments, integration of RedWave; reiterated handheld-led strategy Divested desktops to Repligen for $70M; focus on handhelds; EBITDA positivity pulled forward Accelerating strategic focus
International demandAPAC MX908 order (Vietnam) Finland 90 FTIR devices; Romania 27 MX908 devices Broadening globally
Recurring revenue & servicesRecurring mix 33–38% earlier Recurring mix 39% in Q4; service strength Improving mix quality
Manufacturing footprintAnnounced consolidation to NC/CT; expected ~$2.4M savings from 2026 Consolidation supports margin expansion (mid/high-50s GM guide) Execution underway
R&D execution (MX908 next-gen)Noted innovation roadmap Next-gen MX908 planned for 2026; ~50% size/weight reduction; upgrade cycle expected Product catalyst building
Macro/tariffs/fundingDelayed FY24 federal budget, international contract timing headwinds Monitoring Canada/Mexico tariffs; tailwinds from border security and fentanyl response Cautious near-term; supportive medium-term
Defense programs (AVCAD)Initial low-rate deliveries completed by Q3’24 Preparing for full-rate production; >$10M annual revenue potential at full production (2026 target) Visibility improving

Management Commentary

  • “Divesting our biopharma desktops portfolio to Repligen for $70 million nearly doubles our cash reserves and eliminates any financing... This paves the way for positive adjusted EBITDA by Q4 2025 and cash flow positivity in 2026.”
  • “We expect revenue from continuing operations to be in the range of $53 million to $55 million... and adjusted gross margins in the mid- to high 50s range for 2025.”
  • “Across all handhelds, we now have 18 accounts engaged in pilot programs... potential of 700 units... enterprise accounts expanded to 34 with over 1,100 units in active opportunities.”
  • “At full [AVCAD] production, we have the potential to reach more than $10 million of annual revenue.”

Q&A Highlights

  • Near- and mid-term handheld opportunities: Focus on fentanyl response, toxic industrial materials detection (FTIR), and security; pharma applications via OEM/funded partnerships for now .
  • Guide conservatism vs government funding uncertainty: Guidance reflects puts/takes; tailwinds from border security and fentanyl crisis; revenue mix roughly one-third federal, one-third state/local, one-third international .
  • Tariff exposure: Monitoring Canada/Mexico tariffs; limited supplier impact due to primarily U.S.-based sourcing; international demand remains solid .
  • MX908 next-gen and upgrade cycle: Targeting 2026 launch with ~50% size/weight reduction, simplicity gains, and greater pull-through from connected services .
  • Long-term margin structure and capital deployment: Divestiture eliminates ~$20M annual operating losses; targeting adjusted EBITDA positive Q4’25 and FY26 cash flow positive; EOY 2025 cash >$110M supports organic execution, with tuck-ins opportunistically .

Estimates Context

  • Wall Street consensus via S&P Global (SPGI) was unavailable at the time of retrieval (API limit exceeded), so we cannot provide Q4 2024 EPS and revenue consensus figures or beats/misses versus estimates [GetEstimates error].
  • Given management’s 2025 continuing ops revenue ($53–55M) and margin guidance (mid–high 50s), sell-side models will likely need to rebase to the continuing-ops footprint, reflect divestiture-related OpEx savings, and incorporate the 2026 catalysts (MX908 next-gen, AVCAD full-rate) .

Key Takeaways for Investors

  • Strategic reset is a clear positive: $70M asset sale, elimination of ~$20M annual operating losses, and ~33% headcount reduction materially improve the path to profitability; adjusted EBITDA targeted positive by Q4 2025, cash flow positive in 2026 .
  • Top-line momentum sustained: Q4 revenue $18.8M (+31% YoY, +12% QoQ), with recurring revenue mix at 39% and strong international orders demonstrating handheld demand breadth .
  • Margin trajectory supportive: 2025 adjusted gross margin guide in mid–high 50s, aided by manufacturing consolidation (NC/CT) and mix; watch for execution on consolidation milestones .
  • 2025 setup: Continuing ops revenue $53–55M; reported $54–56M (incl. ~$1M desktop in Q1); monitoring tariff developments and government budget timing as potential near-term variables .
  • 2026 catalysts: Equipment modernization (15,000 outdated FTIRs), MX908 next-gen launch, and AVCAD full-rate production (>$10M annual potential) provide visible acceleration drivers (>20% growth) .
  • Liquidity strong: End-2024 cash $69.6M; EOY 2025 expected >$110M, offering flexibility for organic investment and selective partnerships .
  • Watch KPI conversion: Pilot programs (700 units potential) and enterprise pipelines (1,100+ units) should translate to placements; recurring revenue growth and installed base expansion are key leading indicators .