Rapid Micro Biosystems(US:RPID)2025-05-09 20:21Part I Item 1. Financial Statements Unaudited Q1 2025 financial statements show a net loss of $11.3 million and total assets of $85.4 million Condensed Consolidated Balance Sheets Total assets decreased to $85.4 million, driven by reduced short-term investments, while liabilities and equity also declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $18,906 | $16,911 | | Short-term investments | $22,764 | $33,821 | | Total current assets | $69,182 | $80,917 | | Total assets | $85,434 | $98,169 | | Liabilities & Equity | | | | Total current liabilities | $14,996 | $17,565 | | Total liabilities | $19,943 | $22,817 | | Total stockholders' equity | $65,491 | $75,352 | Condensed Consolidated Statements of Operations Total revenue increased to $7.2 million, narrowing the loss from operations to $11.7 million and net loss to $11.3 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $7,205 | $5,611 | | Product Revenue | $4,101 | $3,713 | | Service Revenue | $3,104 | $1,898 | | Total Costs and Operating Expenses | $18,866 | $19,884 | | Loss from Operations | $(11,661) | $(14,273) | | Net Loss | $(11,263) | $(13,322) | | Net Loss Per Share | $(0.26) | $(0.31) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities decreased to $9.1 million, with overall cash increasing by $2.0 million to $19.3 million Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,065) | $(15,525) | | Net cash provided by investing activities | $10,681 | $13,515 | | Net cash provided by financing activities | $379 | $158 | | Net increase (decrease) in cash | $1,995 | $(1,852) | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, significant customer concentrations, and the company's liquidity outlook for the next twelve months - The company expects its existing cash, cash equivalents, and investments will be sufficient to fund operating expenses and capital expenditure requirements for at least twelve months from the financial statement issuance date39 - For Q1 2025, three customers represented a significant concentration of revenue: Customer A (17.4%), Customer B (15.6%), and Customer C (12.3%), totaling 45.3% of total revenue43 Disaggregated Revenue (in thousands) | Revenue Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Recurring | $3,969 | $3,743 | | Non-recurring | $3,236 | $1,868 | | Total Revenue | $7,205 | $5,611 | - As of March 31, 2025, total unrecognized compensation expense was $3.0 million for stock options and $4.5 million for restricted stock units, expected to be recognized over a weighted average period of 1.1 and 1.3 years, respectively92 - The company has minimum purchase commitments with suppliers of $1.1 million for the remainder of 2025, $1.8 million for 2026, and $1.6 million for 2027108 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 performance, highlighting 28.4% revenue growth, positive gross margin, and reduced expenses Overview and Recent Developments Automated MQC platform provider entered global distribution agreement with MilliporeSigma despite Q1 2025 net loss - In February 2025, the company entered into a Distribution and Collaboration Agreement with MilliporeSigma, granting it a global, co-exclusive right to sell Rapid Micro's products, with MilliporeSigma committed to purchasing a minimum number of Growth Direct systems over the first two years120121 Key Business Metrics Key business metrics show steady system placements, a significant increase in validated systems, and 6.0% growth in recurring revenue Key Business Metrics Comparison | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Systems placed in period | 3 | 3 | 0.0% | | Cumulative systems placed | 165 | 144 | 14.6% | | Systems validated in period | 9 | 3 | 200.0% | | Cumulative systems validated | 146 | 124 | 17.7% | | Recurring revenue (in thousands) | $3,969 | $3,743 | 6.0% | Results of Operations Comparison (Q1 2025 vs. Q1 2024) Total revenue increased by 28.4% to $7.2 million, driven by service revenue growth, while operating expenses decreased by 5.1% - Service revenue increased by $1.2 million (63.5%) due to more validations, installations, and higher service contract revenue from a larger base of validated systems169 - Cost of product revenue decreased by 2.8% and cost of service revenue decreased by 9.6%, driven by lower labor and headcount-related costs from cost reduction initiatives170 - Sales and marketing expenses decreased by $0.5 million (16.2%), and R&D expenses decreased by $0.2 million (5.7%), primarily due to lower headcount-related costs from the August 2024 cost reduction program171172 Liquidity and Capital Resources The company held $42.0 million in cash and investments, deemed sufficient for the next 12 months, with improved operating cash flow Cash and Investment Balances (in thousands) | Asset Type | March 31, 2025 | | :--- | :--- | | Cash and cash equivalents | $18,906 | | Short-term investments | $22,764 | | Restricted cash | $365 | | Total | $42,035 | - Net cash used in operating activities decreased by $6.5 million year-over-year, from $15.5 million in Q1 2024 to $9.1 million in Q1 2025, primarily due to lower personnel-related costs and improved working capital management182 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure, primarily from interest rates and inflation, remains unchanged since its 2024 Form 10-K filing - The company's primary market risk exposures are related to fluctuations in interest rates and inflationary pressure192 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The principal executive officer and principal financial officer concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at the reasonable assurance level194 - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls195 Part II Item 1. Legal Proceedings The company is not currently involved in any material litigation or legal proceedings expected to adversely affect its business - The company is not currently a party to any material litigation or legal proceedings197 Item 1A. Risk Factors The company faces significant risks including historical losses, platform dependence, supply chain vulnerabilities, and IP challenges Risks Related to Financial Position and Capital The company has a history of significant losses and may not achieve profitability, facing risks from reliance on its platform and public guidance - The company has incurred significant losses since inception, with an accumulated deficit of $486.5 million as of March 31, 2025, and may not achieve or maintain positive cash flow and profitability200 - The company has failed in the past and may fail in the future to meet publicly announced guidance, which could adversely affect its stock price207210 Risks Related to Business and Strategy Business risks include market position, new product development, cybersecurity, data privacy, AI use, and the complexities of strategic partnerships - The company's business relies on establishing and maintaining its position as a leader in automated MQC testing, and it may not be successful in expanding with existing customers or driving adoption with new ones216217 - The use of AI technologies introduces risks related to unauthorized data disclosure, flawed outputs, and a complex, evolving regulatory landscape that could increase compliance costs and legal liability268 - The strategic collaboration with MilliporeSigma carries risks, including dependence on the distributor's performance, potential channel conflicts, adverse impacts on margins, and challenges in expanding to new fields and geographies273274275 Risks Related to Manufacturing and Supply Manufacturing risks include facility concentration, dependence on single-source suppliers for critical components, and inventory management challenges - The company relies on single-source suppliers for certain critical components of its Growth Direct system and consumables; for example, the manufacturer of the camera used in the system has discontinued its production, requiring the company to manage its existing supply while qualifying a new supplier296 Risks Related to Intellectual Property IP risks include limited patent protection, potential government 'march-in rights,' litigation, and technology compromise from open-source software - Patents have a limited lifespan; while the company's patent portfolio extends through 2045, certain earlier U.S. patents are scheduled to expire in 2032, which could open the company to competition308 - The U.S. government retains certain rights, including potential 'march-in rights,' to inventions developed with federal funding from BARDA, which could allow the government or third parties to use the technology310 Risks Related to Common Stock Common stock risks include price volatility, potential Nasdaq delisting, limited Class A stockholder influence, and reduced disclosure as an 'emerging growth company' - The company has previously received non-compliance notifications from Nasdaq for its stock price falling below the $1.00 minimum bid requirement; while compliance was regained, there is a risk of future non-compliance and potential delisting329330 - The company has been and may continue to be subject to actions by activist stockholders or unsolicited acquisition proposals, which can be costly, time-consuming, and divert management's attention348 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities No unregistered sales or issuer purchases of equity securities occurred, and the IPO proceeds' intended use remains unchanged - There were no unregistered sales of equity securities or purchases of equity securities by the issuer during the quarter363 Item 5. Other Information No Rule 10b5-1 trading arrangements were adopted or terminated, though officers entered sell-to-cover arrangements for tax obligations - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the quarter ended March 31, 2025367 - Company officers have entered into sell-to-cover arrangements to authorize pre-arranged sales of shares to satisfy tax withholding obligations arising from the vesting of restricted stock units368 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications