Rapid Micro Biosystems, Inc. (NASDAQ:RPID) Q4 2022 Earnings Call Transcript

Having said that, we do have a bit of a contribution. I’d say it’s very modest in our forecast for this year in our guidance to them. But I’d expect that to be much more meaningful as we move out of €˜23 and get more into those annual subscription periods in €˜24 and beyond.

Yuko Oku: Got it. That was helpful. And your prior comments indicated gross margin positive potentially by late €˜23 if you place high single digit placements in 4Q, is achieving gross margin positive and late €˜23 embedded into your guidance?

Rob Spignesi: Yes. So I’d say it, we — the guidance would get us very close, but not quite there in Q4. I think, high single digit systems would likely get us there in Q4. I think what we have said, and just to reiterate is if we look at the full year €˜24, we expect the year to be positive. So, based on where that our guidance is right now, we would not anticipate getting there in Q4. We’d be very close and with some upside we could potentially get there.

Yuko Oku: Okay, great. And then one more, if I may, you mentioned 14 validations except expected in €˜23, but given lag between system placements and validation and soft system placements last year, could you help us think about how you’re thinking about pace of validating systems in €˜23? Should we expect that to be spread roughly evenly across the quarters or more backend weighted?

Rob Spignesi : A bit more backend weighted, but I wouldn’t overstate that. I think there’s a couple important things to say on this topic, , that I’ll hit. One is we do have more than the number of systems we validated last year, kind of in our validation backlog, either in process or waiting to start. Just to kind of hit that question head on, we do have some customers, I’d say it’s the minority, but there are some where they’re waiting for some type of construction, anything from getting air and power and data into a room to a complete site build. That means the customer’s got a system that’s waiting to go in and there’s the delay as we wait for that construction to be completed. So that is a factor that you should be aware of that contributes to that number being a little bit higher than what we’ve placed in the last year plus.

And then as we go forward, as you think about the systems that we placed this year, we are working very hard as to shrink the time to get a validation completed, and that differs between new customers in existing customers typically. So that’s an important mix question, as you think about modeling it. But typically, as you look at placements in the second half of the year, there aren’t many of those that are going to get fully validated before you hit the end of the year. So our opportunity to complete validation on systems placed this year is really going to be focused on the front part of the year. And you know that as we’ve indicated that the sequencing for the guidance is going to be the lower end of the system placements in the year. So just, those are important things I think to keep in mind as you think about the question you asked.

Operator: Our next question comes from Rachel Vatnsdal from JP Morgan.

Rachel Vatnsdal: This is Casey on for Rachel. Thanks for taking my questions. I guess can you elaborate on the unplanned downtime that contributed to flat sequential margins here on the gross line? Can you maybe quantify how much of a headwind this was, why it was unplanned, and then just maybe the cadence of gross margin expansion embedded in the guide. I think, you mentioned that you’re going to see flat gross margins in 1Q. Is there more downtime kind of embedded in there and how should we think about that?