Rapid Micro Biosystems Inc.

08/07/2026 | Press release | Distributed by Public on 08/07/2026 05:33

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated condensed financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited Consolidated Financial Statements and related notes thereto for the year ended December 31, 2025, included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 12, 2026 (the "2025 Form 10-K"). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are an innovative life sciences technology company that enables the safe and efficient manufacture of pharmaceutical products through our rapid automated microbial quality control ("MQC") detection platform. We develop, manufacture, market and sell the Growth Direct system and related proprietary consumables, and value-added services to enable rapid MQC testing in the manufacture of biologics and cell and gene therapies, vaccines, sterile injectables, and other healthcare products. Our system delivers the power of industrial automation to bioprocessing and pharmaceutical manufacturing firms by modernizing and digitizing their MQC operations. Our Growth Direct platform, developed with over 15 years of active feedback from our customers, was purpose-built to meet the growing demands posed by the increasing scale, complexity, and regulatory scrutiny confronting global pharmaceutical manufacturing. Our Growth Direct platform comprises the Growth Direct system, optional laboratory information management system ("LIMS") connection software (which the majority of our customers purchase), proprietary consumables, and comprehensive field service, validation services and post-warranty service contracts. Once embedded and validated in our customers' facilities, our Growth Direct platform provides for recurring revenues through ongoing sales of consumables and service contracts.
Our technology fully automates and digitizes the process of pharmaceutical MQC and is designed to enable our customers to perform this critical testing process more efficiently, accurately, and securely. Our Growth Direct platform accelerates time to results by 50% or more compared to the traditional method, and reduces MQC testing to a simple two-step workflow, eliminating up to 85% of the manual steps of traditional MQC, generating significant time, operational, and cost savings for our customers. We seek to establish the Growth Direct as the trusted global standard in automated MQC by delivering the speed, accuracy, security, and data integrity compliance that our customers depend on to ensure patient safety and consistent drug supply.
Since our inception, we have devoted a majority of our resources to designing, developing, and building our proprietary Growth Direct platform and associated products, launching our Growth Direct platform commercially, expanding our sales and marketing infrastructure to grow our sales, building global customer service and support teams to deliver our value-added services, investing in robust manufacturing and supply chain operations to serve our customers globally, and providing general and administrative support for these operations.
In May 2026 we issued and sold to certain investors in an underwritten public offering (i) 3,581,000 shares (the "Shares") of Class A common stock and accompanying Series A warrants ("Series A Warrants") to purchase an aggregate of 3,581,000 shares of Class A common stock and Series B warrants ("Series B Warrants") to purchase an aggregate of 3,581,000 shares of Class A common stock, and, (ii) pre-funded warrants to purchase an aggregate of up to 1,463,000 shares of Class A common stock (the "Pre-Funded Warrants") and accompanying Series A Warrants to purchase an aggregate of 1,463,000 shares of Class A common stock at an exercise price of $1.955 per share and Series B Warrants to purchase an aggregate of 1,463,000 shares of Class A common stock at an exercise price of $2.340 per share. Each Share was offered and sold together with an accompanying Series A Common Stock Warrant and a Series B Common Stock Warrant at a combined offering price of $1.955, and each Pre-Funded Warrant was offered and sold together with an accompanying Series A Common Stock Warrant and a Series B Common Stock Warrant at a combined offering price of $1.945.
Concurrently, we also issued and sold to certain of our directors and officers in a registered direct offering 71,607 shares of Class A common stock and accompanying Series A Warrants to purchase an aggregate of 71,607 shares of Class A common stock with an exercise price of $1.955 per share and Series B Warrants to purchase an aggregate of 71,607
shares of Class A common stock with an exercise price of $2.34 per share. Each Share was offered and sold together with an accompanying Series A Warrant and a Series B Warrant at a combined offering price of $1.955.
In lieu of exercising warrants from the underwritten and registered direct offerings for Class A common stock, holders may exercise instead for the equivalent number of pre-funded warrants.
Proceeds received from the underwritten and registered direct offerings, net of underwriting discounts and estimated third-party fees were $8.8 million and $0.1 million, respectively.
We generated revenue of $8.1 million and $7.3 million for the three months ended June 30, 2026 and 2025, respectively, and incurred net losses of $12.9 million and $11.9 million for those same periods, respectively.
We believe that our cash, cash equivalents and investments as of June 30, 2026 and additional borrowing capacity expected to become under the LSA that is subject to the satisfaction of certain commercial and operational milestones and other conditions will be sufficient to fund our operating expenses and capital expenditure requirements for at least 12 months following the issuance date of the unaudited interim condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026. Access to the first additional tranche under the LSA is expected in January 2027 after initial satisfaction of certain revenue and gross margin metrics in the six months ending December 31, 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See "Liquidity and Capital Resources."
MilliporeSigma partnership
In February 2025, we entered into a Distribution and Collaboration Agreement (the "Distribution Agreement") with Millipore S.A.S., a subsidiary of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates in the U.S. as MilliporeSigma ("MilliporeSigma"). Pursuant to the Distribution Agreement, we granted MilliporeSigma a global, co-exclusive right to sell our products, initially consisting of our Growth Direct systems and related consumables, into all fields related to industrial quality control applications in the pharmaceutical, medical device, personal care, cosmetics and food and beverage spaces in all regions of the world. During the term of the Distribution Agreement, MilliporeSigma will receive tier-based transfer pricing on such products. We will continue to directly market, sell, manufacture and distribute our products and provide all services to customers, including in respect of system installation, validation, maintenance and support.
Over the first two years of the Distribution Agreement, MilliporeSigma has committed to purchase a minimum number of Growth Direct systems. Thereafter, we and MilliporeSigma will evaluate and mutually agree on additional purchase commitments, if any. Pursuant to the Distribution Agreement, we are permitted to continue to sell our products independently and through our existing distributors, but we may not grant the right to sell the products covered by the Distribution Agreement to other third parties so long as a purchase commitment by MilliporeSigma is in place. The initial term of the Distribution Agreement is five years, unless earlier terminated by us or MilliporeSigma in accordance with its terms.
The Distribution Agreement also contemplates future collaboration by the parties, including with respect to sourcing materials and service delivery. In that regard, the parties are negotiating towards a supply agreement, pursuant to which the parties are exploring cost-saving measures within our supply chain focused on accelerating gross margin improvement, particularly with respect to consumables. The focus of such supply agreement may include raw materials and components as well as manufacturing and supply chain services. The parties intend to share in any cost savings achieved in the supply of the products through this supply agreement. Additionally, the parties have signed a services agreement which permits MilliporeSigma to engage us to provide certain of our services to their customers. The parties also intend to explore additional opportunities for collaboration, such as joint development efforts for the enhancement of our products or introducing new products to be covered by the distribution arrangement. We expect to make incremental investments in our manufacturing and service organizations as our sales volumes increase over time, including as a result of increased sales volumes related to the Distribution Agreement.
Factors affecting our performance
We believe that our financial performance has been, and in the foreseeable future will continue to be, primarily driven by multiple factors as described below, each of which presents growth opportunities and challenges for our business. Our ability to successfully address these opportunities and challenges is subject to various risks and uncertainties, including those described under the heading "Risk Factors."
New customer adoption of the Growth Direct platform
Our financial performance has largely been driven by, and a key factor to our future success will be, our ability to increase the global adoption of our Growth Direct platform in our key markets. We plan to drive global customer adoption through both direct and indirect sales and marketing organizations in North America, Europe, and the Asia-Pacific region.
We are focused on enhancing customer engagement and experience and improving the efficiency and effectiveness of our sales team. We are making targeted investments in these organizations and expect to continue to do so in the future. Examples of these investments include new tools and training for the sales organization, targeted marketing initiatives, expanding lead generation capabilities and hosting Growth Direct demonstrations and other customer-focused events.
Expansion within our existing customer base
There is an opportunity to broaden adoption and increase utilization of our Growth Direct platform throughout our existing customers' organizations as our existing customers purchase more systems. These additional systems will allow our existing customers to convert more of their test volume at existing locations, to support multiple locations, to meet redundancy requirements, or to increase capacity. As of June 30, 2026, over 40% of our customers have purchased Growth Direct systems for multiple sites, and nearly 60% of our customers have purchased multiple Growth Direct systems. Increased utilization amongst existing customers can also occur as customers advance through the Growth Direct platform adoption cycle, from early validation of initial applications to validation and conversion of multiple applications on the Growth Direct platform, or as the result of new product approvals or increases in their manufacturing volumes for existing products.
Revenue mix
Our revenue is derived from sales of our Growth Direct systems, our LIMS connection and other software, proprietary consumables, and services. Growth Direct system revenue involves a capital selling process and tends to be somewhat concentrated within a relatively small (but varied) group of customers each year, so it is subject to variability from quarter to quarter.
Gross margin improvement
We have made significant investments to build infrastructure and develop capabilities in areas such as procurement, manufacturing, distribution, quality and after-sales service. Given our current business scale, our revenues are not yet sufficient to fully cover these costs, impacting our current gross margin profile. For additional information, see Item 1. Business - Gross margin improvement included in our Annual Report on Form 10-K.
We have experienced positive trends in gross margin percentage, improving from (24.4)% to (0.4)% to 3.1% for the years ended December 31, 2023, 2024 and 2025, respectively, from 3.8% to 15.0% for the three months ended June 30, 2025 and June 30, 2026, respectively, and from 4.7% to 9.9% for the six months ended June 30, 2025 and June 30, 2026, respectively. While we expect our gross margin percentage to continue to trend positively in the future, expansion in future periods may not be linear and is subject to variability from period to period.
Key business metrics
We regularly review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe that the following
metrics are representative of our current business; however, we anticipate these may change or be substituted for additional or different metrics as our business grows and evolves.
Three Months Ended June 30, Change
2026 2025 Amount %
(dollars in thousands)
Systems placed:
Systems placed in period 4 4 - - %
Cumulative systems placed 200 169 31 18.3 %
Systems validated:
Systems validated in period 9 2 7 350.0 %
Cumulative systems validated 169 148 21 14.2 %
Product and service revenue - total $ 8,054 $ 7,262 $ 792 10.9 %
Product and service revenue - recurring $ 5,049 $ 4,419 $ 630 14.3 %
Six Months Ended June 30, Change
2026 2025 Amount %
(dollars in thousands)
Systems placed:
Systems placed in period 10 7 3 42.9 %
Cumulative systems placed 200 169 31 18.3 %
Systems validated:
Systems validated in period 14 11 3 27.3 %
Cumulative systems validated 169 148 21 14.2 %
Product and service revenue - total $ 16,056 $ 14,467 $ 1,589 11.0 %
Product and service revenue - recurring $ 10,117 $ 8,388 $ 1,729 20.6 %
Growth Direct system placements
We consider a Growth Direct system to be "placed" upon transfer of control of the system to the customer, at which point the revenue for that system is recognized. We regularly review the number of Growth Direct systems placed and cumulative Growth Direct system placements in each period as a leading indicator of our business performance. Our revenue has historically been driven by, and in the future will continue to be impacted by, the rate of Growth Direct system placements as a reflection of our success selling and delivering our products. We expect our Growth Direct system placements to continue to grow over time as we increase penetration in our existing markets and expand into new markets.
The number of Growth Direct system placements and rate of growth varies from period-to-period due to factors including, but not limited to, Growth Direct system order volume and timing as well as access to customer sites (including the timing of customer site construction activities). As a result, we expect to experience continued variability in our period-to-period number of Growth Direct system placements due to the aforementioned factors.
Validated systems
We regularly review the number of Growth Direct systems validated and cumulative Growth Direct systems validated in each period as indicators of our business performance. Management focuses on validated Growth Direct systems as a leading indicator of likely future recurring revenue as well as a reflection of our success supporting our customers in validating placed systems. We expect our validated Growth Direct systems to continue to grow over time as we increase our base of cumulative systems placed and then install and validate those systems. After a Growth Direct system is placed with a customer and installed, we work with the customer to validate the system, which typically has taken anywhere from three to nine months. Once a validation has been completed, we generally expect our customers to transition from their legacy manual method to our automated method and begin regular utilization of consumables over a period of up to three
months after the validation is completed. However, the timeline for such transition may be longer depending on the specific circumstances of each individual customer. In addition, in exceptional cases, we have reacquired Growth Direct systems from customers that were previously placed and, in some cases, previously validated. Our metrics showing cumulative systems placed and cumulative systems validated are not reduced to reflect these reacquired systems.
The number of validated Growth Direct systems and rate of growth varies from period-to-period due to factors including, but not limited to, Growth Direct system placement volume and timing, whether customers have previously validated Growth Direct systems within their site or global network, access to customer sites, customer site readiness, availability of required customer personnel and the time to install and validate each individual system. As a result, we expect to experience continued fluctuations in our period-to-period number of Growth Direct systems validated due to the aforementioned factors.
Recurring revenue
We regularly assess trends relating to our recurring revenue, which is the revenue from consumables and service contracts, based on our product offerings, our customer base and our understanding of how our customers use our products. Recurring revenue was 62.7% and 60.9% of our total revenue for the three months ended June 30, 2026 and 2025, respectively. Recurring revenue was 63.0% and 58.0% for the six months ended June 30, 2026 and 2025, respectively. Our recurring revenue as a percentage of the total product and service revenue will generally vary based upon the cumulative number of validated Growth Direct systems in the period, as well as other variables such as the volume of tests being conducted and the test application(s) being used on customers' Growth Direct systems.
Components of results of operations
Revenue
We generate revenue from sales of our Growth Direct system (including our LIMS connection and other software), consumables, validation services, service contracts, and field service. We sell our products and services directly to customers and through distributors. Our sales arrangements are noncancellable and nonrefundable after ownership passes to the customer.
Three Months Ended June 30, 2026 Percentage
of total
revenue
Three Months Ended
June 30, 2025
Percentage
of total
revenue
(in thousands) (in thousands)
Product revenue $ 5,286 65.6 % $ 4,802 66.1 %
Service revenue 2,768 34.4 % 2,460 33.9 %
Total revenue $ 8,054 100.0 % $ 7,262 100.0 %
Six Months Ended June 30, 2026 Percentage
of total
revenue 		Six Months Ended
June 30, 2025 		Percentage
of total
revenue
(in thousands) (in thousands)
Product revenue $ 10,864 67.7 % $ 8,903 61.5 %
Service revenue $ 5,192 32.3 % $ 5,564 38.5 %
Total revenue $ 16,056 100.0 % $ 14,467 100.0 %
Product revenue
We derive product revenue primarily from the sale of our Growth Direct systems and related consumables as well as our LIMS connection software, which the majority of our customers purchase. As of June 30, 2026, we had placed 200 Growth Direct systems with approximately 50 customers globally, including 75% of the top 20 largest pharmaceutical companies as measured by revenue, and the manufacturers of a number of globally approved cell and gene therapies, including manufacturers of 86% of approved gene-modified autologous CAR-T cell therapies.
Growth Direct systems
Growth Direct system revenue is a non-recurring product revenue stream that we recognize as revenue upon transfer of control of the system to the customer. The Growth Direct system is fully functional for use by the customer upon delivery. Although we do not require our customers to use our installation and validation services, our customers typically elect to purchase those services from us. As such, transfer of control occurs at shipment or delivery depending on contractual terms.
We expect our Growth Direct system revenue to continue to grow over time as we increase system placements into our existing customers and markets and expand into new customers, markets and products. For instance, we announced the receipt of large, multi-system customer orders from Amgen and Samsung Biologics that contributed to our results for the quarters ended December 31, 2025 and March 31, 2026, respectively.
Consumables
Our consumable revenue is a recurring product revenue stream composed of three proprietary consumables to capture test samples for analysis on the Growth Direct system, an Environmental Monitoring ("EM") consumable, consumables for use in Water or Bioburden ("W/BB") applications, and a Sterility ("ST") consumable. Our proprietary consumables support the growth-based compendial method for MQC testing mandated by global regulators and provide results that are comparable to traditional consumables. Our consumables are designed with features that enable automation on the Growth Direct system, with bar coding for tracking and data integrity, and physical characteristics for robotic handling, to support vision detection, and to prevent counterfeiting.
We expect consumable revenue to increase in future periods as our base of cumulative validated Growth Direct systems grows and those systems enter routine use and utilize our consumables on a recurring, ongoing basis.
LIMS connection and other software
Our LIMS connection software is a non-recurring product revenue stream. Although optional, the majority of our customers elect to purchase this software, which allows Growth Direct systems to export result reports and securely link to a customer's two-way LIMS connection software to completely eliminate manual data entry and drive productivity.
We also offer other software to our customers for use with our Growth Direct platform that adds features or expands capabilities, such as our Mold Alarm software.
To the extent our sales of Growth Direct systems increase in future periods, we would also expect LIMS connection and other software revenue to increase.
Service revenue
We derive service revenue from validation services, field service including installations, and service contracts sold to our customers. Revenue from validation services and field service are non-recurring service revenue streams, while revenue from service contracts is a recurring service revenue stream.
We offer our customers validation services (including related documentation) that enable them to replace their existing manual testing method and utilize their Growth Direct systems in compliance with relevant MQC regulations. Validation services are recognized as revenue over time as these services are provided to the customer.
We offer our customers service contracts that can be purchased after the expiration of the one-year assurance warranty that all of our customers receive with the purchase of a Growth Direct system. Under these contracts, they are entitled to receive phone support, emergency on-site maintenance support and preventative maintenance visits. These service contracts generally have fixed fees and a term of one year. We recognize revenue from the sale of service contracts over time as these services are provided over the respective contract term.
We also offer our customers field service which primarily consists of services provided by our field service engineers to install Growth Direct systems at customer sites. We recognize revenue from field service over time as these services are provided to the customer.
We expect service revenue to increase in future periods as the number of placed and validated Growth Direct systems grows and we are able to generate increasing non-recurring revenue from validation services and field service for newly placed systems and increasing recurring revenue from service contracts for validated systems.
Cost of revenue, gross margin, and gross margin percentage
Cost of product revenue primarily consists of costs for raw material parts and associated freight, shipping and handling costs, salaries and other personnel costs including non-cash stock-based compensation expense, contract manufacturer costs, scrap, warranty cost, inventory reserves, non-cash depreciation and amortization expense, allocated information technology and facility-related costs, overhead and other costs related to those sales recognized as product revenue in the period.
Cost of service revenue primarily consists of salaries and other personnel costs including non-cash stock-based compensation expense, travel costs, materials consumed when performing installations, validations and other services, allocated information technology and facility-related costs, costs associated with training, and other expenses related to service revenue recognized in the period.
For future periods, we expect our costs of revenue to increase or decrease commensurate with product and service volumes. Such costs may be further impacted by our ongoing efforts to reduce product costs and increase manufacturing productivity and efficiencies as well as service productivity. In addition, our product costs may be adversely impacted by recently enacted and potential future tariffs by the U.S. and other jurisdictions in which we conduct business. Disruptions to international logistics and to the supply and cost of fuel resulting from recent conflicts in the Middle East also can contribute to increases in our costs. While we do not expect such impacts on our costs to rise to levels that are material to our results of operations in the near-term, future changes in policies and other macroeconomic conditions could materially and adversely affect our results of operations.
Gross margin is calculated as revenue less cost of revenue. Gross margin percentage is gross margin expressed as a percentage of revenue. Our gross margin in future periods will depend on a variety of factors, including market conditions that may impact our pricing, sales mix among systems, consumables, and services, excess and obsolete inventories, our cost structure for manufacturing operations relative to volume, and product warranty obligations.
We expect that our gross margin percentage will increase over time as our future revenues from both products and services grow at rates significantly higher than the costs related to providing and supporting those products and services. However, expansion in gross margin percentage in future periods may not be linear and is subject to variability from period to period.
We expect to achieve these increases through direct material cost reductions, increased manufacturing efficiencies for our products, including higher throughput on our automated consumables manufacturing line, leveraging our current cost structure to support future growth with minimal incremental investment, and by increasing productivity and efficiency in our service organization. We are also pursuing gross margin expansion opportunities through our MilliporeSigma partnership.
Operating expenses
Research and development
Research and development expenses consist primarily of costs incurred for our research activities, product development, hardware and software engineering and consultant services and other costs associated with our technology Growth Direct platform and products, which include:
•employee-related expenses, including costs for salaries, bonuses and other personnel costs including non-cash stock-based compensation expense, for employees engaged in research and development functions;
•the cost of developing, maintaining and improving new and existing product designs;
•the cost of hardware and software engineering;
•research materials and supplies;
•external costs of outside consultants engaged to conduct research and development associated with our technology and products; and
•allocated information technology and facility-related costs, which include headcount-related costs for those functions as well as expenses for information technology systems and services, software, rent, facilities maintenance, and insurance as well as related non-cash depreciation and amortization.
Our research and development costs are expensed as incurred. We believe that our continued investment in research and development is essential to our long-term competitive position. For future periods, we expect our research and development expenses to increase or decrease commensurate with the size, scope and complexity of our research and development activities.
Sales and marketing
Sales and marketing expenses consist primarily of salaries, commissions, benefits and other personnel costs including non-cash stock-based compensation expense as well as costs relating to travel, consulting, trade shows, customer events and demonstrations, information services, advertising and allocated information technology and facility-related costs for our employees engaged in sales and marketing activities. For future periods, we expect sales and marketing expenses to increase or decrease commensurate with the number of sales and marketing personnel, our geographic sales and marketing footprint, and the size of our customer base.
General and administrative
General and administrative expenses consist primarily of salaries, bonuses and other personnel costs including non-cash stock-based compensation expense for our executive, finance, legal, human resources and general management employees, as well as director and officer insurance costs and professional fees for legal, patent, accounting, audit, investor relations, recruiting, consulting, regulatory, compliance, board of directors' fees and other services. General and administrative expenses also include direct and allocated information technology and facility-related costs. For future periods, we expect these expenses to increase or decrease commensurate with the size, scope and complexity of our general and administrative functions.
Other income (expense)
Interest income
Interest income is comprised primarily of interest income from cash equivalents and investments.
Interest expense
Interest expense is comprised primarily of expense incurred from long-term debt and leases.
Other expense, net
Other expense, net, primarily consists of other miscellaneous income and expense unrelated to our core operations.
Income tax expense
We generated significant taxable losses during each of the three and six months ended June 30, 2026 and 2025, and therefore have not recorded any U.S. federal or state income tax expense during those periods. However, we did record an immaterial amount of foreign income tax expense during each of those periods.
Results of operations
Comparison of the three months ended June 30, 2026 and 2025
The following table summarizes our results of operations for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30, Change
2026 2025 Amount %
(dollars in thousands)
Revenue:
Product revenue $ 5,286 $ 4,802 $ 484 10.1 %
Service revenue 2,768 2,460 308 12.5 %
Total revenue 8,054 7,262 792 10.9 %
Cost of revenue:
Cost of product revenue 5,434 5,315 119 2.2 %
Cost of service revenue 1,408 1,672 (264) (15.8) %
Total cost of revenue 6,842 6,987 (145) (2.1) %
Gross margin 1,212 275 937 340.7 %
Operating expenses:
Research and development 3,332 3,230 102 3.2 %
Sales and marketing 3,436 3,114 322 10.3 %
General and administrative 6,766 6,079 687 11.3 %
Total operating expenses 13,534 12,423 1,111 8.9 %
Loss from operations (12,322) (12,148) (174) 1.4 %
Other income (expense):
Interest income 140 351 (211) (60.1) %
Interest expense (646) (12) (634) 5,283.3 %
Other expense, net (50) (38) (12) 31.6 %
Total other income (expense), net (556) 301 (857) (284.7) %
Loss before income taxes (12,878) (11,847) (1,031) 8.7 %
Income tax expense 45 11 34 309.1 %
Net loss $ (12,923) $ (11,858) $ (1,065) 9.0 %
Revenue
Product revenue increased by $0.5 million, or 10.1%, with the increase primarily attributable to higher consumable shipment volumes due to the higher number of cumulative validated systems.
Service revenue increased by $0.3 million, or 12.5%. The increase in service revenue was primarily driven by an increase in validation revenue and higher service contract revenue as a result of an increase in the cumulative number of systems validated and under such contracts. Service revenue from validations, which is recognized when those services are provided, generally lag the related system placements by three to nine months.
Cost of revenue, gross margin, and gross margin percentage
Three Months Ended June 30, Change
2026 2025 Amount %
Cost of product revenue $ 5,434 $ 5,315 $ 119 2.2 %
Cost of service revenue 1,408 1,672 (264) (15.8) %
Total cost of revenue $ 6,842 $ 6,987 $ (145) (2.1) %
Gross margin $ 1,212 $ 275 $ 937 340.7 %
Gross margin percentage 15.0 % 3.8 %
Cost of product revenue increased by $0.1 million, or 2.2%. The increase was primarily driven by higher consumables sales volume and an unfavorable mix of products sold, namely a higher rate of growth in consumables as compared to systems, partially offset by a reduction in direct material costs for our products.
Cost of service revenue decreased by $0.3 million, or 15.8%. The decrease was primarily attributable to lower service headcount and related costs.
Gross margin and gross margin percentage increased by $0.9 million and 11.2 percentage points, respectively. The increase was driven by an improvement in both product margin and service margin.
Operating expenses
Research and development
Three Months Ended June 30, Change
2026 2025 Amount %
(dollars in thousands)
Research and development $ 3,332 $ 3,230 $ 102 3.2 %
Percentage of total revenue 41.4 % 44.5 %
Research and development expenses increased by $0.1 million, or 3.2%. The increase was primarily driven by timing of spending related to new product development activities.
Sales and marketing
Three Months Ended June 30, Change
2026 2025 Amount %
(dollars in thousands)
Sales and marketing $ 3,436 $ 3,114 $ 322 10.3 %
Percentage of total revenue 42.7 % 42.9 %
Sales and marketing expenses increased by $0.3 million, or 10.3%. This increase was primarily driven by higher headcount-related costs and third-party consulting costs.
General and administrative
Three Months Ended June 30, Change
2026 2025 Amount %
(dollars in thousands)
General and administrative $ 6,766 $ 6,079 $ 687 11.3 %
Percentage of total revenue 84.0 % 83.7 %
General and administrative expenses increased by $0.7 million, or 11.3%. This increase was primarily attributable to higher headcount related costs and consulting fees.
Other income (expense)
Interest income
Interest income for the three months ended June 30, 2026 and 2025 was $0.1 million and $0.4 million, respectively. The decrease of $0.3 million, or 60.1%, was due to lower interest rates earned on our cash equivalents and investments balances, as well as lower cash equivalents and investment balances during the year.
Interest expense
Interest expense for the three months ended June 30, 2026 and 2025 was $0.6 million and less than $0.1 million, respectively. The increase of $0.6 million was due to interest incurred with our long-term debt.
Other expense, net
Other expense, net, which is comprised of miscellaneous expenses unrelated to our core business, was less than $0.1 million for each of the three months ended June 30, 2026 and 2025.
Income tax expense
Income tax expense was less than $0.1 million for each of the three months ended June 30, 2026 and 2025. The expense recorded related to our German and Swiss subsidiaries.
Comparison of the six months ended June 30, 2026 and 2025
The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30, Change
2026 2025 Amount %
(dollars in thousands)
Revenue:
Product revenue $ 10,864 $ 8,903 $ 1,961 22.0 %
Service revenue 5,192 5,564 (372) (6.7) %
Total revenue 16,056 14,467 1,589 11.0 %
Cost of revenue:
Cost of product revenue 11,459 10,344 1,115 10.8 %
Cost of service revenue 3,014 3,444 (430) (12.5) %
Total cost of revenue 14,473 13,788 685 5.0 %
Gross margin 1,583 679 904 133.1 %
Operating expenses:
Research and development 6,691 6,854 (163) (2.4) %
Sales and marketing 6,858 5,865 993 16.9 %
General and administrative 14,208 11,769 2,439 20.7 %
Total operating expenses 27,757 24,488 3,269 13.3 %
Loss from operations (26,174) (23,809) (2,365) 9.9 %
Other income (expense):
Interest income 396 817 (421) (51.5) %
Interest expense (1,285) (24) (1,261) 5254.2 %
Other expense, net (82) (87) 5 (5.7) %
Total other income (expense), net (971) 706 (1,677) (237.5) %
Loss before income taxes (27,145) (23,103) (4,042) 17.5 %
Income tax expense 53 18 35 194.4 %
Net loss $ (27,198) $ (23,121) $ (4,077) 17.6 %
Revenue
Product revenue increased by $2.0 million, or 22.0%. The increase was driven primarily by a higher volume of system placements as well as higher consumable shipment volumes due mainly to an increase in cumulative validated systems.
Service revenue decreased by $0.4 million, or 6.7%. The decrease in service revenue was primarily driven by a decrease in validation revenue, offset by higher service contract revenue as a result of an increase in the cumulative number of systems validated and under such contracts. Service revenue from validations, which is recognized when those services are provided, generally lag the related system placements by three to nine months.
Cost of revenue, gross margin, and gross margin percentage
Six Months Ended June 30, Change
2026 2025 Amount %
Cost of product revenue $ 11,459 $ 10,344 $ 1,115 10.8 %
Cost of service revenue 3,014 3,444 (430) (12.5) %
Total cost of revenue $ 14,473 $ 13,788 $ 685 5.0 %
Gross margin $ 1,583 $ 679 $ 904 133.1 %
Gross margin percentage 9.9 % 4.7 %
Cost of product revenue increased by $1.1 million, or 10.8%. The increase was driven by higher system and consumables sales volume, as well as an unfavorable mix of products sold, namely a higher rate of growth in consumables as compared to systems. This increase was partially offset by a reduction in direct material costs for our products.
Cost of service revenue decreased by $0.4 million, or 12.5%. The decrease was primarily attributable to lower service headcount and related costs.
Gross margin and gross margin percentage increased by $0.9 million and 5.2 percentage points, respectively. The increase was driven by an improvement in both product margin and service margin.
Operating expenses
Research and development
Six Months Ended
June 30, 		Change
2026 2025 Amount %
(dollars in thousands)
Research and development $ 6,691 $ 6,854 $ (163) (2.4) %
Percentage of total revenue 41.7 % 47.4 %
Research and development expenses decreased by $0.2 million, or 2.4%. The decrease was primarily driven by lower headcount and headcount-related costs as well as the timing of spending related to new product development activities.
Sales and marketing
Six Months Ended
June 30, 		Change
2026 2025 Amount %
(dollars in thousands)
Sales and marketing $ 6,858 $ 5,865 $ 993 16.9 %
Percentage of total revenue 42.7 % 40.5 %
Sales and marketing expenses increased by $1.0 million, or 16.9%. This increase was primarily driven by higher headcount-related costs and third-party consulting costs.
General and administrative
Six Months Ended
June 30, 		Change
2026 2025 Amount %
(dollars in thousands)
General and administrative $ 14,208 $ 11,769 $ 2,439 20.7 %
Percentage of total revenue 88.5 % 81.4 %
General and administrative expenses increased by $2.4 million, or 20.7%. This increase was primarily attributable to higher headcount related costs, including non-cash stock compensation expense and severance, partially offset by a reduction in consulting fees.
Other income (expense)
Interest income
Interest income for the six months ended June 30, 2026 and 2025 was $0.4 million and $0.8 million respectively. The decrease of $0.4 million, or 51.5%, was due to lower interest rates earned on our cash equivalents and investments balances, as well as lower cash equivalents and investment balances during the year.
Interest expense
Interest expense for the six months ended June 30, 2026 and 2025 was $1.3 million and less than $0.1 million, respectively. The increase of $1.3 million was due to interest incurred with our long-term debt.
Other expense, net
Other expense, which is comprised of miscellaneous expenses unrelated to our core business, was less than $0.1 million for each of the six months ended June 30, 2026 and 2025.
Income tax expense
Income tax expense was less than $0.1 million for each of the six months ended June 30, 2026 and 2025. The expense recorded related to our German and Swiss subsidiaries.
Liquidity and capital resources
Since our inception, we have incurred operating losses. To date, we have funded our operations primarily through proceeds from sales of redeemable convertible preferred stock, borrowings under loan agreements, revenue from sales of our products and services, proceeds from our IPO, proceeds from registered offerings, and proceeds from our "at-the-market" ("ATM") facility.
In August 2026, we completed an enterprise-wide review of opportunities to realize operational efficiencies. Based on the results of this review, we are implementing certain cost actions including a reduction in our current workforce, the closure of certain open and planned positions and reductions in other non-headcount-related expenses across the business. These actions are part of our ongoing efforts to prudently manage our cash resources and are expected to result in approximately $3 million in cash savings for the full year 2027 and approximately $1 million over the balance of 2026. We plan to continue to invest in key initiatives that are expected to drive future revenue growth and gross margin improvement, including customer sales and support, product development and product cost reduction programs. We expect to record a charge of approximately $0.4 million in the third quarter of 2026 related to this initiative.
We believe that our cash, cash equivalents and investments and additional borrowing capacity expected to become available under the LSA that is subject to the satisfaction of certain commercial and operational milestones and other conditions will be sufficient to fund our operating expenses and capital expenditure requirements for at least 12 months following the date the condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 were issued. Access to the first additional tranche under the LSA is expected in January 2027 after initial satisfaction of certain revenue and gross margin metrics in the six months ending December 31, 2026. However, if our expectations and underlying assumptions of business performance, including revenue growth, gross margin improvements, and/or control of operating costs are not realized, we may need to raise additional funding, which could be through equity offerings, debt financings or a combination thereof. If we are unable to raise capital as, if and when, needed, or cannot draw down the first additional tranche of the LSA, we may have to significantly delay, scale back
or discontinue our expansion plans including further development and commercialization efforts of one or more of our products.
As of June 30, 2026, we had the following cash and investment-related assets on our condensed consolidated balance sheet (in thousands):
June 30, 2026
Cash and cash equivalents $ 14,687
Short-term investments 5,079
Restricted cash 284
Total $ 20,050
ATM facility
On December 15, 2023, we entered into a sales agreement to establish an ATM facility with Cowen and Company, LLC, pursuant to which we may sell and issue shares of our Class A common stock. During the quarter and year ended December 31, 2025, we sold 113,217 shares of Class A common stock under this facility resulting in net proceeds of $0.4 million. During the three and six months ended June 30, 2026, we did not issue or sell any shares of our Class A common stock under this facility.
Contractual obligations and commitments
In October 2013, we entered into an operating lease for office and manufacturing space in Lowell, Massachusetts. In March 2022, we amended the lease to increase the amount of facility space subject to the lease and extend the expiration of the lease from July 2026 to July 2029. The terms of the amendment include options for a one-time, five-year extension of the lease. Monthly rent payments are fixed and future minimum lease payments under the lease (as amended) are $2.1 million as of June 30, 2026, including $0.7 million in short-term obligations.
In June 2021, we entered into a sublease agreement for our Lexington, Massachusetts headquarters, which expires in June 2029 (the "sublease agreement"). Monthly rent payments are fixed and future minimum lease payments over the term of the sublease are $2.3 million as of June 30, 2026, including $0.8 million in short-term obligations. Concurrent with entering into the sublease agreement, we executed an option agreement with the property owner which provides us the option to enter into a new direct lease for our Lexington, Massachusetts facility for an additional five years following expiration of the sublease.
For additional information on our contractual obligation and commitments please see Note 15 - Commitments and Contingencies to our consolidated financial statements.
Cash flows
The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):
Six Months Ended June 30,
2026 2025
Net cash used in operating activities $ (27,760) $ (18,765)
Net cash provided by investing activities 12,817 20,025
Net cash provided by financing activities 9,600 81
Net (decrease) increase in cash and cash equivalents and restricted cash $ (5,343) $ 1,341
Operating activities
During the six months ended June 30, 2026, net cash used in operating activities was $27.8 million, an increase of $9.0 million compared to the six months ended June 30, 2025. The higher use of net cash was primarily due to the volume and timing of collections from customers and payments to vendors, including for inventory purchases, as well as higher personnel-related costs.
Investing activities
During the six months ended June 30, 2026, net cash provided by investing activities was $12.8 million, a decrease of $7.2 million compared to the six months ended June 30, 2025. Higher investment maturities in the prior-year period coupled with an increase in investment purchases in the current period contributed to the reduction in cash provided by investing activities.
Financing activities
During the six months ended June 30, 2026, net cash provided by financing activities was $9.6 million, an increase of $9.5 million compared to the six months ended June 30, 2025. The primary driver of this increase was net proceeds from the registered offerings in May 2026 and a decrease in tax withholdings on settlement of restricted stock units, partially offset by reduced stock option exercises in the current period.
Seasonality
Our revenues vary from quarter to quarter as a result of factors such as our customers' budgetary cycles and extended summer vacation periods that can impact our ability to progress system sale processes, deliver products and provide onsite services to our customers during those periods. We expect this variability to continue for the foreseeable future, which may cause fluctuations in our operating results and financial metrics.
Critical accounting policies and significant judgments and estimates
Our condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements. Our estimates are based on our historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are described in more detail in Note 2 - Summary of Significant Accounting Policies to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the 2025 Form 10-K, other than as disclosed in Note 2 - Summary of Significant Accounting Policies - to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Recently issued accounting pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 - Summary of Significant Accounting Policies - to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Emerging growth company status
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected to use this extended
transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies, and our financial statements may not be comparable to other public companies that comply with new or revised accounting pronouncements as of public company effective dates. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.
We will cease to be an emerging growth company on December 31, 2026, at the latest. Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company," which would allow us to take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
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