908 Devices Inc. (NASDAQ:MASS) Q3 2022 Earnings Call Transcript

Kevin Knopp: Yes. And if you think specifically in Europe, as we’ve been really trying to Bolster over this year what we’re doing internationally, broadly, mainly in Europe, but some in the Middle East and a bit in APAC. Yes, as Joe said, the EMEA is probably around 15% of our revenues, but we do see that there’s additional opportunity there. And we’re selling through distributors today and so less an exchange impact, but we can talk through any dynamics there. So not all downside, I would say, across that Europe region, specifically if you think about some of the pressures from the Ukraine war and U.S. partner nations and it’s causing a bit of a look around to see if they have the best-of-class them detection capabilities. APAC, APAC has been a bit harder for us have been about a small percentage of revenues.

It’s maybe 5% of our year-to-date revenues. But we sell through distributors there, but we’re not seeing the upside due to those changes that multiple parties have mentioned there out there, say, being able to get our small team to be able to transit and support applications and board our units across the region. So we’re we actually have our Head of Commercial in right now as we speak.

Max Masucci: That makes sense. One final one for me. The gross margins have delivered solid outperformance versus our expectations over the past few quarters. Like rising ASPs for devices was cited as a contributing factor to the strong gross margins this quarter. So would just be curious, if you could give us a bit more detail around how pricing has trended maybe both on the devices and the consumables side?

Kevin Knopp: Happy to have been pleased with the gross margins year-to-date and within the quarter and ASPs have been a piece of that. And an element to… And whether it’s to distribute more direct here in the U.S. and with about 80% here in the Americas. But we did put some price increases in effect at the beginning of the year that started to kick in earnest here in Q3, a bit in Q2 as we elevate as and other consumables where we did not increase that pricing for 2022. So a lot of that ASP benefit is coming through the device themselves. We’ll take a hard look at it going forward based on the different market factors and what we do for ’23, but it is good to see our customers see the value of the technology and leaning forward to purchase at that higher price point.

Max Masucci: Great, appreciate taking the questions.

Operator: Our next question comes from the line of Daniel Arias from Stifel.

Daniel Arias: Kevin, on the MX side, can you just talk about the services revenue stream that you expect to come out of the Army Trough contract and then be represented in the 2023 revenue base? And then just on overall revenue growth, given the way that we’re finishing here on the year, and the roll-off of the Army contract, but also some of the order growth numbers that I think you mentioned. How should we just think about growth next year? To what extent do you think the additional MX system deals can offset the Army contract? And then when you look at total year-over-year growth, realizing that you’re going to guide formally in 4Q, what is the right way to think about the year-over-year there?

Kevin Knopp: Yes, have a little bit on the Army side. As we mentioned, about 20% of our Q3 revenue was Army and 80% was from other business outside of that. With that said, there is ongoing responsibilities on the service the service side.