908 Devices Inc. Price & Performance (MASS)

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward Looking Statements in the press release of Nanoid Devices issued today. For a more complete list and description, please see the Risk Factors section of the company's annual report on Form 10 ks for the year ended 12/31/2023, and in its other filings with the Securities and Exchange Commission. Except as required by law, Nine Way Devices disclaims any intention or obligation to update or revise any financial or forward looking statements, whether because of new information, future events or otherwise. This conference call contains time sensitive information and is accurate only as of the live broadcast 03/04/2025. With that, I would like to turn the call over to Kevin.

Thanks, Kelly. Good morning and thank you for joining our fourth quarter and full year 2024 earnings call. We have a lot of exciting updates to share today, so let's kick things off with a look at our agenda. Today, we are taking a decisive step forward to focus our efforts and dramatically improve our financial profile. With the announcement of the divestiture of our desktop file processing portfolio to Repligen. But I'd like to take some time to walk through a set of slides that clearly outlines the strategic transformation of nine zero eight devices through this divestiture the immense value creation we feel it catalyzes, I will then hand the call over to Joe, to walk through our Q4 and 2024 results as well as the compelling financial profile of our continuing operations. Finally, I'll close the call our actions and new trajectory have fortified the thesis for our investors. Before we dive in, want to say I'm so proud of the nine zero eight devices team for continuing to execute, staying focused on our customers and delivering a solid close to the year. This includes the successful commercial integration of Red Wave, Revenue from acquired FTR products came in slightly ahead of our initial post acquisition target of $11,000,000 and was an important contributor to our Q4 and full year performance.

And in so many ways that was the first step of the transformation we are talking about today. The strategic transformation we're bold leap forward darkening our focus strengthening our financial position, accelerating profitability. We are doubling down on our higher growth handheld markets aligning with key industry tailwinds in opioid crisis response defense and border security. At the same time, we're making decisive mood. Divesting our biopharma desktop portfolio to Repligen for $70,000,000 nearly doubles our cash reserves and eliminates any financing or NIH healthcare related overhang. This paves the way for positive adjusted EBITDA by Q4 twenty twenty five and cash flow positivity in 2026. Driven by stronger margins a more streamlined agile operation. Importantly, as we have a platform technology we retain flexibility to operate in broader life science markets ensuring long term growth opportunities beyond the divested bioprocessing PAT segment. Let me walk you through each of these four areas in more detail. Nine zero eight devices is receiving $70,000,000 in cash from Luphigen for the asset purchase [indiscernible] PAT products, Maven, Maverick, [indiscernible] having a combined installed base of over four fifty units. These products generated $11,900,000 in revenue in 2024 with the sale reflecting a strong 6x multiple underscoring the differentiation of this innovative technology.

The deal includes Repligen assuming lease obligations for our Morrisville North Carolina and Brundshlang, Germany sites. Most PAT dedicated team members including Chief Product Officer, Chris Brown, will transition to Repligen. Reducing our total headcount by about one third. From two forty six to approximately 165. In the coming weeks, we'll collaborate closely with Repligen to ensure a seamless transition. We're excited to continue as a key supplier of mass spec components and to see our cutting edge desktop portfolio thrive under a global bioprocessing leader. This divestment of the desktop portfolio catalyzes value creation as it sharpens our focus on our highest growth handheld markets, where revenue growth has outpaced our desktop devices by approximately 2x since our 2020 IPO. There are three important points here that I'd like to make. First, there's unprecedented opportunity ahead for our handheld devices with secular tailwinds aligning in our favor. Unlike anything I've seen in more than twenty years in this industry, the market is attractive, growing as estimated to reach $2,500,000,000 by 2027. Second, with the Red Wave acquisition last year, we now have a comprehensive set of handheld products to fully address the opportunity ahead. We expanded our handheld device offering growing from one device to a portfolio of four with more on the near horizon.

And third, the proceeds from the divestiture secure our balance sheet. Giving us flexibility to pursue new growth opportunities for our broad platform including through partnerships. Today, we have a solid foundation of OEM and funded partnerships including an industrial QAQC and pharma. Our Repligen relationship now adds to this. Our focus enables a step change our projected financials and positions us to accelerate top line growth. For 2025, we expect revenue from continuing operations to be in the range of $53 growing 11% to 15% compared to the prior year. We expect this growth to be a baseline that accelerates above 20 I'll share more about the catalyst we expect to drive this acceleration in a few minutes. We are also targeting adjusted gross margins in the mid to high 908 range for 2025, improving over last year. With further expansion in 2026 following our planned manufacturing consolidation in Connecticut. We now expect to be kind of adjusted EBITDA positive by Q4 of this year. And to become cash flow positive the full year 2026. Supported by our facility consolidation, and reduction in headcount. And finally, this divestiture greatly strengthens our balance sheet providing a healthy margin of safety as we expect as we drive towards full year cash flow breakeven in 2026.

Taken together, think our financial trajectory is now pretty compelling. Now I'd like to shift gears and reintroduce you to our handheld devices and give a big picture perspective of the overall opportunity. Since our founding, nine zero eight devices has taken on hard challenges developing innovative instrument technologies with broad use cases. We are an analytical instrumentation company. We create next generation tools designed specifically for point of need use in vital health and safety context. Our products serve a multitude of critical to life use cases including the fentanyl and opioid crisis, with users spanning from frontline workers to law enforcement and including informing life safety, with their use to detect identify toxic industrial materials, and volatile organic compounds to help prevent acute exposure of emergency personnel to these carcinogens. Being a platform technology, continue to see opportunity across broader life science applications some of which we are adjusting today through OEM and other funded partnerships. At our core is our MX-nine zero eight device, It introduced a completely new product class that moved mass spec spectrometry out of the confines of the lab and to the point of need. Bringing true lab grade results to the field for the first time.

Following its full year of introduction in 2018 through 2024, and has delivered a revenue CAGR of 21%. We now have over 2,800 devices fielded, but in so many ways, I feel like we're just getting started. Our portfolio has expanded significantly over the past ten months. From this one device to four handheld devices today. And there's unprecedented macro drivers aligning the global need in our favor. We are facing global threats to public health and safety on a scale that we've not seen before. To start, the opioid tranche is evolving. Now encompassing other illicit drugs and synthetic substances. Emerging threats like nifuzemes, xylazine and pink cocaine spreading globally. Undetectable precursor chemicals designed to bypass regulations and screening are fueling the rise of synthetic opioids. In 2023, overdose deaths exceeded one hundred thousand making it the leading cause of injury related fatalities surpassing auto accidents This figure is likely underestimated as the crisis extends beyond fentanyl. These preventable poisonings have led to the renewal of the nationwide public health emergency this past June. Addressing this challenge requires adaptable detection and identification technology, we believe our MX-nine zero eight is well suited for the path. Beyond the opioid crisis, the prevalence of toxic industrial materials is exploding.

In California alone, the proliferation of these cancer causing materials in consumer products is causing more than 5,000 tons of hazardous DOCs to be released annually. The recent California wildfires burned synthetic materials from furniture, clothing and building materials along with lithium ion batteries for vehicles and consumer electronics. In such environments or in everyday house fires, emergency professionals can receive acute exposures to cartonages. Cancer is a leading cause of work related deaths in The EU and accounts for seventy two of firefighter line of duty deaths in The U. S. Detecting and mitigating acute carcinogen exposure is critical. It requires broad and sensitive gas detection which we believe our Explorer IR device and its underlying FTIR technology uniquely address it. Now each of these on their own is a large scale concern, but if you consider the access and availability of such materials, and the rising global tensions can see the global security concerns. With evolving technologies for AI driven chemical synthesis, novel delivery methods like drones, becoming an imperative to modernize detection equipment to address this evolving threatscape To support this, funding is needed. Aggregate public safety spending has shown to be robust both in The U. S. And globally.

We believe the unprecedented macro needs will drive an even further increase in funding. Last year, 23 NATO allies [indiscernible] the minimum target of investing more than 2% of their GDP in defense compared to only three allies in 2014. 20% of this defense busting is targeted for equipment modernization. This increase is in part attributed to U. S. Foreign policy. Importantly, indications are that the new Trump administration will prioritize spending on the border customs, military law and drug enforcement, which will likely spur similar spending globally. We now have a comprehensive portfolio of devices to capture the massive opportunity ahead. Our modern tools can be used in concert to provide exceptional coverage. Hundreds of trace analytes thousands of toxic gases, [indiscernible] They provide a broad analyte panel and offer detection to ID, from in air and aerosols to surfaces, piles and puddles. Together, our devices form a fast and comprehensive toolkit support our customers' full workflow. And importantly we are doing more with the data and analytics our devices provide our customers and enable them to identify trends and better manage their fleet of devices. I'm really excited for the roadmap we have in this area and over time we expect this to be sticky and a driver of increased pull through.

These products fit into a landscape of detection and chemical awareness tools used by our customers that can be split into two broad categories: The first is low tech sensor based products that provide a minimally selective response with no ID capabilities and are valid for a few analytes. Think test strips and smoke alarm tests. The second is advanced chemical detection. The major participants in this portion of the market are life science tools and analytical instrument companies. We are competitively positioned with modern products spanning advanced detection applications offering customers a single source for hardware and support, Our competitive positioning is a result of our culture of innovation. With our new broader portfolio of handheld devices and continued innovation we are setting up supported by three clearly defined catalysts. First is equipment modernization. With the macro driver supporting demand across all our handheld devices, outdated FTIR products in need of upgrades we see a significant near term opportunity As of year end, FTIR products are now fully integrated into our commercial operation and are already contributing positively to our pilot and enterprise opportunity pipeline. Across all handhelds, we now have 18 accounts engaged in pilot programs representing a potential of 700 units.

A sevenfold increase since the end of twenty twenty three.

In enterprise accounts, we've expanded to 34 accounts with over 1,100 units in active [indiscernible] up from 22 accounts at 1,000 units at year end 2023. Second is the planned launch of our next generation handheld mass spec 2026. This next generation product will provide a step change in performance and simplicity. We are targeting a near 50% reduction in size and weight a lower cost of goods, and a higher pull through opportunity through consumables and connected services. With more than 2,800 MX-nine zero eight devices fielded, we plan to spawn an upgrade cycle with this product launch. And third is the next phase of Avcat, For over a decade, we have partnered with Sniff's detection to develop a next generation chemical detector for the U. S. Department of Defense Over the last eighteen months, we've delivered more than 100 component sets to Smith in support of the initial low rate production phase. This year, we expect to receive notice to proceed to full rate production begin to ramp deliveries. At full production, we have the potential to reach more than $10,000,000 of annual revenue from this program. We believe these three defined catalysts coupled with our alignment to powerful secular trends including the fentanyl and opioid crisis, the global rise in defense budgets and the U. S. Border crisis will propel our growth near and long term.

Collectively, our technologies comprise a broad analytical instrumentation platform. With their announcement today, we are focusing on our core handheld applications, That said, we do recognize that there is a sizable additional opportunity in pharma and other applied markets that can be efficiently unlocked through partnership. Beyond government programs and integrations, we see future tangential areas of opportunity for handhelds in GMP QAQC, industrial hygiene and environmental monitoring, and other applied markets. We have a presence through existing OEM supplier relationships in the industrial QAQC and pharma space and now we are a supplier and partner to Repligen as well.

Post our divestiture of our desktops, OEM and funded partnerships, will make up nearly 5% of 2025 continuing operations revenue. But importantly, a foothold for future growth and market expansion. With that, I'll now turn the call over to Joe to review our Q4 and full year 2024 results our outlook for 2025. Thanks, Kevin.

Starting with our fourth quarter results, revenue for the fourth quarter twenty twenty four was $18,800,000 up 31% from $14,400,000 in the prior year period. Primarily driven by an increase in handheld device revenue. This included approximately $4,900,000 of revenue from our acquired FTIR products.

Notably, during the fourth quarter, we received significant international orders for our handheld devices. This included an order from Finland for 90 FTIR devices as part of an EU strategic stockpile program. Which was partially recognized in the fourth quarter. We also shipped 27 MX-nine zero eight devices to the General Customs Directorate of Romania. As Kevin mentioned, we are seeing strong engagement in pilot programs, It was exciting to see some of these opportunities transition into enterprise accounts in the fourth quarter. Handheld revenue was $13,600,000 for the fourth quarter twenty twenty four, up 22% from 11,100,000.0 for the fourth quarter twenty twenty three.

This increase was driven primarily by revenue related to our recently acquired FTIR products, offset by a $1,000,000 decrease in AVCAD a mix shift in MX-nine zero eight shipments towards international opportunities. Which have a lower ASP. We shipped two nineteen handheld devices in the fourth quarter. Up from 116 devices in the fourth quarter of twenty twenty three bringing our installed base to 3,015. Revenue from our desktop products for the fourth quarter twenty twenty four was $5,000,000 increasing 56% from $3,200,000 in the prior year period. Driven by OEM and partnership opportunities. In total, 32 desktop devices were placed in the fourth quarter. We ended the fourth quarter twenty twenty with a cumulative handheld and desktop installed base, of 3,504 devices.

Up 23% from 2,853 at the end of the fourth quarter twenty twenty three. Recurring revenue, which consists of consumables, accessories and represented 39% of total revenues this quarter Fourth quarter consisted of $4,300,000 related to handhelds and $3,100,000 related to desktops. Gross profit was $9,100,000 for the fourth quarter of twenty twenty four, compared to $7,300,000 for the prior year period. Gross margin was 48% for the fourth quarter twenty twenty four compared to 51% for the prior year period. Adjusted gross profit was $10,000,000 for the fourth quarter of twenty twenty four compared to $7,500,000 for the prior year period. Adjusted gross margin was 54% as compared to 53% for the prior year period. The slight uptick in gross margin was primarily due to leverage on our fixed cost with higher overall revenues in the fourth quarter. Offset by the impact of a higher mix of service revenue and international sales in handhelds both contributing lower gross margin. Total operating expenses for the fourth quarter of twenty twenty four were 29,400,000.0 compared to $17,000,000 in the prior year period. The increase in operating expenses was driven by a $10,100,000 non cash goodwill impairment charge a $2,800,000 increase in operating expenses primarily related to Red Wave and a $500,000 increase in stock based compensation.

This was offset in part by a $1,100,000 credit for an adjustment to the valuation of our contingent consideration liability. Excluding the impact of the non cash goodwill impairment charge and contingent consideration liability, Total operating expenses for the fourth quarter of twenty twenty four increased $3,300,000 Net loss for the fourth quarter of twenty twenty four was 19,400,000.0 compared to $7,400,000 in the prior year period. This increase was largely due to the $10,100,000 non cash charge for an impairment of goodwill. Adjusted EBITDA for the fourth quarter was a loss of 6,200,000.0 compared to $7,000,000 for the prior year period. Now moving on to our full year results. Revenue for the full year 2024 was $59,600,000 increasing 19% from $50,200,000 for the full year 2023. This was primarily driven by an increase in revenues from our FTIR products which generated $11,200,000 of revenue. Handheld revenue was $46,100,000 for the full year 2024. Up 22% from $37,900,000 for the full year 2023. Revenue from our desktop products for the full year 2024 was $13,200,000 increasing 10% from $12,000,000 for the full year 2023. Recurring revenue, which consists of consumables, accessories and service revenue, represent 39% of total revenues this year Service and OEM revenues.

Recurring revenue in full year 2024 related to handhelds, and $8,900,000 related to desktops. Gross profit was $29,900,000 for the full year 2020 compared to $25,300,000 for the full year 2023. Gross margin was 50% for the full year 2024 flat compared to the full year 2023. Adjusted gross profit was $32,800,000 for the full year 2020 compared to $26,300,000 for the full year 2023. Adjusted gross margin was 55% as compared to 52% for the full year 2023. The increase in gross margin was partly due to improved service gross margins which increased over 1,200 basis points for the full year 2024 and to a lesser extent higher levels of product revenue. Total operating expenses for the full year 2024 were 106,600,000.0 compared to $68,100,000 in full year 2023. The increase in operating expenses was driven by a $40,700,000 non cash goodwill impairment charge the inclusion of operating expenses related to Red Wave, and stock based compensation This was offset in part by a $13,200,000 credit for an adjustment to the valuation of our contingent consideration liability. Net loss for the full year 2024 was 72,200,000.0 compared to $36,400,000 in the full year 2023. This increase was largely due to the $40,700,000 non cash charge for an impairment of goodwill.

Adjusted EBITDA for the full year 2024 was a loss of $29,600,000 compared to $30,000,000 for the full year 2023. We ended 2024 with $69,600,000 in cash cash equivalents and marketable securities with no debt outstanding. We consumed approximately $2,000,000 of cash in the fourth quarter of twenty twenty four. Today, we announced the sale of our desktop port dollars These net proceeds combined with the streamlined cost structures we implemented in Q4 and our growth drivers for 2025 MBR gives us confidence we will cross over to cash flow breakeven on a full year basis in 2026 with a healthy cash balance. Looking ahead in 2025, we expect revenue from continuing operations to be in the range of $53,000,000 to 55,000,000 representing growth of 11% to 15% over full year 2024 revenue from continuing operations In addition, we expect to recognize approximately 1,000,000 of desktop revenues in Q1, which brings our expected 2025 total revenue to be in the range of $54,000,000 to $56,000,000 Moving forward, we will report revenue across three categories: with our 2025 guidance aligned to the structure. For 2025, First, we expect handheld product and service revenue to grow 11% to 15% year over year which equates to a range of $51,000,000 to $53,000,000 Second, we expect OEM and funded partnerships including contract revenue, to be approximately $2,000,000 And third, we are not assuming any meaningful revenue contribution from US Department of Defense AVCAD program in 2025.

As we completed the initial low rate production deliveries in Q3 twenty twenty four, and are preparing for potential pull rate production in 2026. As Kevin shared earlier, we expect total revenue growth to accelerate above 20% in 2026 driven by our three growth catalysts. Moving down the P and L, we expect adjusted gross margin to increase to the mid to high 50s range for full year 2025 with further expansion in 2026. Following our planned manufacturing consolidation in Connecticut. We expect to become adjusted EBITDA positive by Q4 of this year and reach cash flow positivity in 2026. Supported by our facility consolidation combined with the desktop portfolio divestiture which includes an approximate 33% reduction in headcount. And finally, this divestiture meaningfully strengthens our balance sheet and we expect to exit 2025 with more than $110,000,000 in cash and cash equivalents. Up from $70,000,000 at the end of twenty twenty four. At this point, I would like to turn the call back to Kevin. Thanks, Joe. Today marks a transformative moment of value creation for MASK. I could not be more excited about the road ahead. We are laser focused on tackling the most urgent public health and safety crisis of our time.

Fentanyl, carcinogens and other critical security threats. No one is better positioned than nine zero eight devices to lead this space we are seizing the opportunity with conviction this is a unique moment in time. We have taken bold steps to reshape our cost structure and by Q4, we expect to be adjusted EBITDA positive setting the stage for a projected full year cash flow positivity in 2026. The momentum is building following our strong Q4 our revenue growth forecast of 11% to 15% in 2025 paves the way for 20% plus growth 2026 With a secured balance 908, are doubling our cash reserves and removing any financing overhead concern, we are well equipped to fuel innovation, scale operations and execute on our vision. We're not just evolving, strategic transformation we announced today is really the launch of nine zero eight devices two point zero. To close, I think it is now clear as to why we believe our actions taken and new trajectory have fortified the thesis for our investors. With that, we'll now open it up question. Thank you. Our first question is from Dan Arias from Stifel.

Your line is now open. Please go ahead.

Hi, good morning, guys. Thank you. Kevin, within that set of ancillary opportunities that exist for the handhelds, which do you think are the most accessible in the near and the mid term? And then along those lines, can you maybe talk specifically about pharma There are applications that seem nicely aligned with what you offer, but those can be tough nuts to crack, so to speak, in terms of penetration. So curious to hear just how optimistic you are there.

Yes, absolutely. Thanks, Dan. Yes, really we're repositioning ourselves to capture these highest growth, highest margin opportunities on the technology today for the handhelds. As you put it, right, the core applications for us are the fentanyl response, the opioid crisis, measuring toxic industrial materials across the board with our FTIR products. And then all of that couples into security concerns. So these are here and now Apple service of life science customers in the near term. We're doing that really through OEM and partnership agreements today, areas like reaction mod monitoring and small molecule analysis, we do through partnership today. If you think forward for where our handheld can go, you're right, there's a tremendous amount of opportunity we see there doing things like cleaning validation or GMP incoming materials inspection and purity analysis Those could take time. Absolutely, our focus today is around those core app applications of the fentanyl, the carcinogens and the associated security threats and concerns.

Okay. And then Joe, maybe on the guide for the year. I mean, obviously, just government organizations in general are pretty up in the air right now. To what extent has the guide for the year accounted for the downsizing that's taking place, the fact that spending is pretty hung up right now and just general uncertainty that you have at the federal level, do you feel like there's a level of conservatism embedded when it comes to that stuff? Thanks.

Yes, definitely a lot of uncertainty in today's world, but we do believe our initial 25 guide adequately reflects our assumptions for government funding. Taking account various puts and takes within the year. It's a It's a bit challenging today to determine how the 25 funding environment will compare to last year, but we feel the guidance range is appropriate.

We do mention and see potential tailwinds from the increased focus on the border security and combating the fentanyl crisis. We aren't including any aggressive assumptions in our initial guidance that we put out there today. Yes. Maybe if I just add on to that, Dan. So about a third of our business comes from the U. S. Federal government and military style accounts. Another third comes from state and local accounts. And the last third being from international. As Joe said, we do see tailwinds across some of these segments. You're right, there is a little bit of a timing new administration coming into form. We certainly believe we are well aligned to the priorities of that administration. Again, fentanyl response, the foreign policy further drives use and need from international customers as a little bit of a rippling effect there. We announced on the call today a couple of examples of that with a large scale order to Finland with our protector devices as well as to Romania.

Okay. Thank you.

Thank you. Our next question is from Puneet Souda from Leerink Partners. Your line is now open. Please go ahead.

Yes. Hi, Kevin, Joe. Thanks for taking the questions. So, the first one is, I mean, I appreciate the upside to the balance sheet and cash flow being positive now. But you were taking a long term view on the healthcare business. So trying to understand sort of [indiscernible] how the process evolved here, how things came about Was this a competitive process? I mean, I don't see you having a large academic position, so I don't think NIH impact was part of that. Obviously, market the macro has been tough. And in bioprocess I mean, overall in biopharma as well. So I understand that. But just trying to understand how the process came about and if you could provide any more details Yes, happy to. Thank you for that for that question. Yes, absolutely, we really do believe there's a quite a bright future for this set of products, the whole space of the PAT initiative that we've worked to really develop these four class leading products in our opinion that now we've sold those assets to Repligen. We do believe that it while it's a large mark and while we had a strong Q4 performance, it does take time to develop those markets.

We are absolutely subscale in that area for us. It represented about one fifth of our total business in 2024. If you look forward to where our handhelds have been positioned in the last year, we expanded from one handheld to four handhelds. And if you look back in time, our one handheld grew out of 20% CAGR between its initial launch and last year 2024. And if you look at the three new handhelds we've added those had had strong pro form a growth in 2024 of 17%. So I think when you look at it in total, we see a massive opportunity for both areas of our business and really believe we could could unlock more through this process with Repligen by by separating the business at this time. We really do see that there's a lot of conviction here around the highest growth highest margin opportunity with our handheld devices. And then you further lay on the secular trends, it makes this decision very clear And then of course, what that transposes into the financial benefits for us. Yes, from a process approach, we were approached by a potential acquirer. We ran a a process, a competitive bidding process, received multiple bids and Repligen won out, which I personally am excited for because I do think it's a great fit for our technologies and the people that will be driving it forward.

Got it. Thanks for that. And then just there are a number of noise in the market place right now with regards to tariffs. So I just want to clarify anything you're baking in for tariffs for Canada and Mexico and also if you could elaborate the MX-nine zero eight installed in the quarter, I'm not sure if I heard that correctly. And what are the expectations for, the handheld NMX-nine zero eight in the full year guide? So maybe just real quick on the tariffs, right, so much news out there and uncertain tariff side, Canada and Mexico going to affect today.

Definitely going to let it shake out and we are monitoring it closely.

We are seeing traction with our international customers. And are focused on providing the unique capabilities of our technologies. If there are significant tariffs and the kick in for extended period of time, then it may have some impact on our international opportunities as we continue to expand. But on the supplier side, we're primarily U. S. Based materials and production with sourcing. So there might be some impact but not as much on the insourcing side. Yeah. Talking about placements and kind of how we finished up the year, kind of overall with the FTIR and MX combined, it was a really exciting year as far as placement, especially with FTIR. So stepping up in the back half. So we see growth across both placements. We'll continue to report them on a combined basis. Moving forward, but great placements. The Romania opportunity was MXN driven and the Protector was FTIR driven. With $90,000,000 in order in Q4. So great opportunity for growth, excited by the multiple products and driving those to market.

Got it. All right. Thanks guys. I'll hop back in the queue.

Thank you. Our next question is from Chad Wertzalski from TD Callen. Your line is now open. Please go ahead. Hey, guys. This is Chad on for Brendan Smith.

I know you're investing R and D dollars into MX-nine zero eight two point zero.

Within the next couple of years expected to be released Did progress there or the opportunity there give you that extra conviction to feel you could be opportunistic about selling the bioprocessing portfolio And could you just kind of outline what improvements you're focusing on and what that upgrade cycle could look like?

Yes, sure. Happy to chat. Yes, that's definitely an element of our conviction If you step back, I mean, we really have a strong roadmap of futures, next generation of MX is part of that. That's one of the three growth catalysts we called out. Another product called AVCAD is a third growth catalyst we called out.

But I would bring you back to the first growth catalyst, which is we moved massively from having one product as we sit here a year ago to now having four on the market. So that first growth catalyst fundamentally for us is execution. Now that by the end of last year, we've gotten those products fully into our commercial channel, So we see a tremendous opportunity there to take those Red Wave technology products the FTR based products into the market We estimate there's about 15,000 FTIRs in the market that are a bit dated and could use modernization. As well, our MX-nine zero eight has a fielded installed base of 2,800 devices. So you're right that as we get the next gen MX out, we do expect it to spawn an upgrade cycle.

Our customers expect to have useful lives up in the five to seven year capital equipment cycles, we're well into that now. With our current first generation of the MX-nine zero eight, which is still very much a class leading product. But you're right that with the performance gains that we expect to be about 50% the size importantly simpler to use, and then have more opportunity to leverage some of the connected services. So we have a software program called Team Leader that allows fleet management that we leverage across our FTR technologies and we're looking to build more and more out. So very exciting roadmap is how I see it on the innovation front. And a compelling set of products that are here and now we can execute on.

And as Red Weight's executing, I know there were some earnouts in that acquisitions. Are they on track to receive those earnouts? Yes, they are tracking. Within the contingent valuation, it's through April of twenty twenty six. That the opportunity runs through. It's accumulative through that date There's different thresholds. But yes, we're excited at the traction and what lays ahead. We'll need a strong year. Here in 2025 and into 2026 to achieve, but it's still on the cards, which I think if they're able to achieve, we all win. And achieve from a revenue growth perspective. It's fairly aggressive growth, if you recall, in those earn outs. So post divest post tax acquisition in 2024, we saw over $11,000,000 I think it was $11,200,000 So good start out of the gate and really as we ramp and have integrated the commercial channels at this point, see a key opportunity here in 2025 and beyond. Thanks for the questions guys.

Thank you. Our next question is from Matt Lareau from William Brat. Your line is now open. Please go ahead.

Hi, thanks. This is Jacob Brambulon for Matt.

Thanks for the questions here. I wanted to start on the divestment of the desktop assets.

Appreciate that you gave some of the profitability targets in the press 908. And the path to breakeven there. But just as we look at the long term P and L and margin structure, as Now more of a pure play forensic [indiscernible] [indiscernible] bioprocessing a combination of the two bioprocessing in forensics. Can you just help us think about what the long term P and L market structure should look like?

Sure. Happy to. So part of the key rationale for the divestiture was the fact that the desktop segment is still subscale as part of mass within our walls and required a significant cost burden to continue to grow.

As a result of the divestiture, we'll be eliminating roughly $20,000,000 in annualized operating losses for 09/2008. And we expect to be adjusted EBITDA positive in Q4 this year and cash flow positive for the full year 2026.

Our revenue growth have been historically back half weighted. So Q4 is often the strongest quarter of the year. And I think our business will continue to remain back half weighted, especially with the government spending timelines as we see it today. So I think as we think about the opportunity this really transforms nine zero eight's focus on profitability and a clear path to get there. And then gross margin improvement, continued leverage is an opportunity for 2026, 2027 and beyond with some of the key growth drivers that Kevin laid out.

Got it. Thanks. And then, obviously now after the divestment, you're flushed with cash on the balance sheet. So just wondering what your priority for investment is going forward now? Do you see adding sales and marketing resources as a high ROI opportunity or just kind of get into the sales process of selling into forensics market, maybe that's not the highest ROI, so maybe it's R and D initiatives that you couldn't M and A is a better use and more tuck ins down the road like Red Wave to kind of grow the bag products and tech and services that you can sell on the same account. So just kind of wondering what priority for investment is with with NAVA extra cash Yes, a good challenge to have, right? And we think through best to deploy proceeds and manage our investments, So definitely focused organically, I'd say in the near term and we expect to exit 2025, as we mentioned, with over $110,000,000 and we're targeting the full year adjusted EBITDA positively in 2026.

We do feel like the go forward organization is right sized with the forensics business.

Our goals from a top line growth from profitability perspective across selling and marketing.

Yes.

And maybe if I just add on to that, Joe, I mean, we're very excited that the balance sheet has taken a fundamental dramatic increase change here step and then that connected with the cost, we don't expect to be in the need cash or depleting such a balance. We said we'd end the year with over $110,000,000 of cash in the balance sheet. It's great because it does give us flex flexibility to pursue particular opportunities where maybe we're a little more hamstrung if it puts position or two comes up as we go. As Joe said, we're feeling very comfortable the size of our commercial organization today. And if you remember, it was a separate commercialization group compared to our desktop efforts. So it's a standalone very experienced government sales driven driven team of about 30 individuals, so great team there. From an M and A side, super happy with how the Red Wave integration has been going. Super happy about that. We're happy that we exceeded the initial post acquisition target that we put out 908 The Street of $11,000,000 We just slightly ticked over that, super happy about that. The integration now as of the end of the last year is really fully done in terms of the commercial team and having it in our in our hands of our commercial team that can be kind of a force multiplier [indiscernible] We'll certainly have our eyes open.

We'll continue to be opportunistic and see how there are things that are very synergistic and aligned with this financial profile. But as Joe said, the organic effort that's in front of us, we have a lot now that really that we can execute upon.

Awesome. Thanks for the questions, guys.

Thank you. We currently have no further questions. So I'll hand back to Kevin for closing remarks.

Well, thank you. Thank you everyone for joining us on the call today. Very important call in a step of the journey for nine zero eight devices. Very excited to tell you a little bit about how we see this transforming our business and making a much stronger compelling financial profile for it. And and we really see a lot of conviction around the growth with the secular trend. So appreciate you taking the time to learn about it and really it was a bit of an introduction of nine zero eight devices two point zero. So thank you for that.

This concludes today's call.