What Management Said
Read the full Q2 2025 transcript ↗Reconciliations to the most direct comparable GAAP financial measures can be found in today's earnings press release, which is available in the investor relations section of our website. Revenue from continuing operations was $13 million, an increase of 14% over the prior year period. Growth was driven by strong device sales, with our mass spec devices again this quarter accounting for roughly 60% of revenue and our FTR products making up the other 40%. Our adjusted EBITDA loss was $3.9 million for the quarter, an improvement of more than 45% year-over-year compared to our previously disclosed adjusted EBITDA for Q2 2024 prior to our transformation.
We are advancing with urgency and discipline towards the 908 Devices 2.0 vision outlined earlier this year, positioning the company for sustained growth and impact. Our first focus is to increase adoption of our devices to address global threats to public health and safety. We delivered another strong quarter in Q2, placing 164 devices, including a record number of XplorlR units. Our results in the first half and our pipeline give us confidence in meeting our full-year targets.
In Q2, the majority of XplorlR orders were funded through this Firefighters Assistance Grant. Combined, these grant funding levels exceed $1.7 billion, representing an approximate 11% increase from 2024 levels. legislative outcomes will institutionalize demand, support our addressable market, and clarify a growth path across our core customer segments for 2026 and beyond. In response to mounting global threats, allied nations agreed at the NATO summit in June to significantly increase defense spending, committing to invest 5% of GDP annually by 2035.
- Revenue from continuing operations was $13.0 million, up 14% year over year and ahead of internal expectations, driven by strong handheld device sales (mass spec ~60% of revenue, FTIR ~40%).
- Record XplorIR placements: 45 of the 164 devices shipped were XplorIR units, the product's highest quarter, with the majority funded through the federal Assistance to Firefighters Grant.
- Adjusted EBITDA loss narrowed to $3.9 million, an improvement of more than 45% versus pre-transformation Q2 2024 and down 15% sequentially, keeping the company on track for its Q4 adjusted-EBITDA-positive goal.
- Recurring revenue grew 28% to $4.7 million (36% of total revenue), led by service revenue and accessories such as the XplorIR quantification module and MX908 Aero modules.
- Launched VipIR, a three-in-one FTIR + Raman handheld chemical analyzer, in July with positive early feedback from multiple customs agencies.
- Acquired the assets of KAF Manufacturing for $2.75 million to insource precision machining (about $5 million of prior annual external spend) and signed a three-year, $6.6 million OEM optical-component supply agreement ($750,000 upfront), de-risking the $2 million+ OEM revenue goal.
- Completed major structural cost actions: consolidated MX908 manufacturing into Danbury, Connecticut, relocated the corporate office from Boston to Burlington, Massachusetts, cut facility square footage 44% and headcount 39% year over year.
- Ended the quarter with $118.6 million in cash, cash equivalents and marketable securities and no debt.
- GAAP gross margin fell to 49% from 54%, driven by RedWave acquisition intangible amortization, restructuring charges and higher warranty costs from a growing installed base; adjusted gross margin declined about 220 basis points to 56%.
- Net loss from continuing operations widened to $12.9 million from $7.6 million, driven mainly by a $6.8 million non-cash contingent-consideration fair-value charge and about $1 million of facility shutdown and restructuring charges.
- Total operating expenses rose to $21.5 million from $14.7 million a year earlier.
- The company consumed approximately $5.7 million of cash during the quarter.
- No meaningful revenue was assumed from the U.S. DoD AVCAD program in 2025, with full-rate production pushed to 2026.
- Second-half revenue was now expected to skew toward Q4 (roughly a 45%/55% split between Q3 and Q4) on the timing of a few large orders.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| FY2025 revenue from continuing operations | FY2025 | $54-$56 million, representing 13%-17% growth over FY2024 |
| FY2025 handheld product & service revenue | FY2025 | grow 17%-21% year over year, equating to $52-$54 million |
| FY2025 OEM & funded partnerships (incl. contract revenue) | FY2025 | ~$2 million |
| FY2025 adjusted gross margin | FY2025 | mid-to-high 50% range |
| Q4 revenue / adjusted EBITDA | Q4 FY2025 | ~$17 million revenue supporting a target of adjusted-EBITDA positive in Q4 |
| 2026 revenue growth | FY2026 | expected to accelerate above 20% |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Total revenue (continuing ops) | +14% to $13.0 million | Strong handheld device sales, led by record XplorIR placements |
| Handheld product & service revenue | +13% to $12.5 million | Higher device placements (164 vs. 143 units) |
| Recurring revenue | +28% to $4.7 million (36% of revenue) | Service revenue and accessories (XplorIR quant module, MX908 Aero) |
| Adjusted EBITDA | loss of $3.9 million (>45% better vs. pre-transformation Q2 2024) | Cost discipline and structural cost actions |
| Gross margin | 49%, down from 54% | RedWave intangible amortization, restructuring and higher warranty costs |
| Installed base | 3,336 devices | 164 devices shipped in the quarter |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| 908 Devices 2.0 transformation | Strategy outlined earlier in 2025 | Executing three focus areas - device adoption, next-gen portfolio, and financial discipline | — |
| Path to profitability | Targeting adjusted-EBITDA positive by Q4 2025 | Q2 adjusted EBITDA loss down 15% sequentially; Q4 target reiterated | — |
| Legislative and funding tailwinds | Emerging federal support | One Big Beautiful Bill and appropriations provide $1.7B+ in grant funding (~+11% vs 2024); DHS +7%; NATO 5%-of-GDP commitment | — |
| Next-gen portfolio | VipIR in development | VipIR launched in July; next-gen MX908 on track for 2026 | — |
| Vertical integration and OEM | Reliance on external machining | KAF asset acquisition insources precision machining and a $6.6M OEM supply deal supports the $2M+ OEM revenue goal | — |
Q&A Summary
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