• Revenue: $14 million, up 16% year-over-year.
• Handheld Device Revenue: $11.1 million, up 26% year-over-year.
• Desktop Product Revenue: $2.9 million, down 9% year-over-year.
• Recurring Revenue: $5.3 million, representing 38% of total revenues.
• Gross Margin: 53%, up from 48% in the prior year period.
• Adjusted Gross Margin: 58%, up from 50% in the prior year period.
• Net Loss: $12.5 million, compared to $9.3 million in the prior year period.
• Adjusted EBITDA: Loss of $7.3 million, compared to $7.7 million in the prior year period.
• Cash and Equivalents: $77.4 million, with no debt outstanding.
• Revenue Guidance for 2024: Expected to be in the range of $63 million to $65 million.

• Warning! GuruFocus has detected 5 Warning Signs with MASS.

Release Date: August 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• 908 Devices Inc (NASDAQ:MASS) reported a 16% year-over-year revenue growth, reaching $14 million for the second quarter of 2024.
• The acquisition of RedWave technology contributed $3.1 million to the quarter's revenue, enhancing the company's product portfolio.
• Recurring revenue represented 41% of total revenues for the first half of the year, indicating strong customer retention and consistent demand.
• The company successfully completed the commercial integration of RedWave technology, including product training and CRM integration.
• 908 Devices Inc (NASDAQ:MASS) expanded its board with Michele Leonhart, bringing extensive government knowledge to support market penetration efforts.

Negative Points

• The desktop product revenue decreased by 9% year-over-year, indicating challenges in the life science instrumentation and bioprocessing markets.
• The company reported a net loss of $12.5 million for the second quarter, an increase from the $9.3 million loss in the prior year period.
• Ongoing macroeconomic pressures have led to a conservative approach towards adopting innovative technologies and CapEx spending.
• The sales cycle for desktop instruments is taking longer than expected, impacting immediate revenue contributions.
• Operating expenses increased to $21 million, driven by acquisition costs and increased stock-based compensation.

Q & A Highlights

Q: Have the sales reps from both 908 Devices and RedWave been fully cross-trained on all products, and when can we expect to see revenue synergies from the combined commercial operation? A: Yes, the sales reps have been cross-trained, and we have integrated CRM and website systems. We added four direct sales reps from RedWave to our forensics team. We are starting to see initial benefits, such as our first multisystem order within 60 days of integration. However, it will take a few more quarters to fully realize the potential synergies. - Kevin Knopp, CEO

Q: How do you reconcile the longer sales cycle for desktop instruments with reports of improvement in bioprocessing? Are sales cycles longer for early-stage versus large-stage customers? A: The macro environment remains a headwind, with a reliance on device placements for growth. While there is some recovery in the bioprocessing space, particularly in consumables, CapEx spending remains cautious. Large biopharma companies are more thoughtful about instrumentation spend, and smaller biotechs are waiting for funding. Sales cycles are prolonged, but customer interest remains strong. - Kevin Knopp, CEO

Q: With biotech funding improving, what is the outlook for desktop portfolio demand, and when do you expect to see improved ordering activity? A: Despite improved biotech funding, macro pressures persist, particularly in CapEx spending for innovative technologies. We have multiple products in our portfolio, which helps engage customers broadly. However, customers are taking their time with evaluations, and we expect a more muted growth recovery in 2025. - Kevin Knopp, CEO

Q: Can you discuss the confidence in closing 20-plus unit handheld orders in the second half of the year? A: We need to continue delivering with large enterprise accounts to meet our second-half revenue targets. We feel confident about our guidance, although there is some uncertainty with desktop sales. Our sales team is working hard to capitalize on these opportunities, and we will have better visibility by our Q3 call. - Kevin Knopp, CEO and Joseph Griffith, CFO

Q: Are there any effects on forensic orders due to the upcoming elections, and what are you hearing from state and US agencies? A: Demand for handhelds remains strong due to global insecurity and the fentanyl crisis. We don't expect a material impact from the elections. Historically, budgets for agencies like the DEA and military have grown regardless of administration, and international pipelines are expanding. - Kevin Knopp, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.