Q1 2024 Summary
Published Jan 15, 2025, 6:03 PM UTC- Rapid Micro Biosystems is experiencing strong customer interest exceeding expectations for the upcoming mid-2024 launch of Rapid Sterility, a product with differentiated features such as faster time to detection, full automation, and improved data integrity. These features are not available in other solutions currently in the market, reaffirming the market need and potentially driving significant growth.
- The company has confidence in meeting or exceeding their full-year guidance of at least 20 system placements, supported by a strong sales funnel, customer diversity, and the fact that automation is being viewed as a critical strategic priority by customers. They are gaining better access to senior-level decision-makers, providing additional insight and confidence in achieving their targets.
- Consumable sales increased by 22% year-over-year, achieving a record quarter, which indicates that customers are actively using their Growth Direct systems. The pull-through rate was above 80% in the quarter. Additionally, they expect to see revenue contributions in the second half from a customer site previously sold, suggesting further upside in consumable revenues.
- The company is experiencing increased budget scrutiny from customers on large CapEx purchases, leading to longer approval processes and slower sales cycles, which may delay or reduce system placements and impact revenue growth.
- Consumable revenue growth may be negatively impacted due to the loss of sales from a significant customer site that was sold last year, with limited recovery expected in the near term, potentially resulting in lower-than-expected consumable sales.
- The launch of Rapid Sterility may face delays as the company is still completing the final stages of R&D and transferring to manufacturing, without formalized published data or white papers, which could impact customer adoption and sales ramp-up.
-
System Placements Confidence
Q: Can you discuss your confidence in accelerating instrument placements?
A: The company is confident in meeting its full-year guidance of at least 20 system placements. This confidence is driven by fully staffed global sales teams executing effectively, a strong sales funnel with desired size and diversity, and customers increasingly viewing automation as a critical strategic priority, including the company's solutions. They are gaining better access to senior-level executives at customer organizations, providing further insight and confidence. While not expecting significant impact from the Sterility product this year, they are reserving upside potential from it. -
Budget Scrutiny Impact
Q: Are you experiencing budget pressures affecting sales cycles?
A: The company is seeing continued budget scrutiny regarding capital expenditures, especially for large purchases in quality control labs. Although there are more approval cycles and slightly slower decision-making, their experience with customer budgets remains similar to previous quarters. They are executing through these dynamics, and because their Growth Direct system is often considered a strategic project impacting multiple global sites, they have seen their purchases continue to be prioritized despite budget pressures. -
Rapid Sterility Launch and Interest
Q: What are the remaining steps before the Rapid Sterility launch, and how is customer interest?
A: The remaining tasks before the commercial launch of Rapid Sterility are the final stages of the development process, including transfer to manufacturing and scaling up for commercial release. The company has been actively communicating with customers about the upcoming launch, including at the PDA Annual Show earlier this year. Customer interest is strong, reaffirming the market need for a Rapid Sterility automated system with features like faster time to detection, full automation, and data integrity, which are not available in other solutions or legacy manual methods. -
Consumable Sales and Customer Site Recovery
Q: Can you discuss the consistency of consumable sales and the impact of the customer site sale?
A: Consumable sales growth was 22%, the highest among product and service lines, despite a tough comparison due to a customer site sale last year. Without this challenging comparison, growth would have been higher. They have guided down sequentially for Q2 based on timing of orders and shipments, noting fluctuations quarter-to-quarter but emphasizing the importance of annual trends. The pull-through was above 80% in the quarter, and they expect some revenue contribution from the previously sold customer site in the second half of the year, though not at prior levels. Looking ahead to 2025, they believe this situation may become a tailwind and not a negative discussion item. -
Rapid Sterility Customer Engagement
Q: Who is attending the Rapid Sterility June demo events?
A: They expect attendance from their current customer base, which includes biologics and cell and gene therapy companies, as well as customers from other segments like sterile injectable manufacturing where they are less represented. The goal is to penetrate within current significant customers and attract new global top 20 companies, expecting a broad and diverse group for these events. -
Rapid Sterility Technical Presentation
Q: Was the technical presentation at a trade show, and is the data published?
A: Yes, the technical presentation was at a recent trade show. They have internal documentation that was publicly furnished at the show, but they do not yet have a formalized white paper. They plan to produce one in the future with internal groups or a customer and currently have internal test data and top-level product claims available. -
Rapid Sterility Sales Force
Q: Is the dedicated Rapid Sterility sales force fully staffed and ready?
A: The company is leveraging its existing sales force, which has been trained and continues to be trained on the platform. They may have sterility specialists to assist with specific application discussions, but they do not plan to establish a dedicated, stand-alone sterility sales force.