Hello, everyone. Thank you for joining us, and welcome to the 908 Devices First Quarter 2026 Financial Results Conference Call. The operator provided instructions to participants. I will now hand the conference over to Barbara Russo in Investor Relations. Barbara, please go ahead.

Thank you, and good morning. On this call, we will be discussing our financial results for the first quarter ending March 31, 2026, which were released earlier this morning. Joining me from 908 Devices is Kevin Knopp, Chief Executive Officer and Co-Founder; and Joe Griffith, Chief Financial Officer. During today's call, we will make forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. For a discussion of these risks and uncertainties, please review the forward-looking statement disclosure in the earnings news release as well as in our most recent annual report on Form 10-K and other SEC filings. These forward-looking statements reflect management's beliefs and assumptions as of the date of this live broadcast, May 6, 2026. Except as required by law, we disclaim any obligation to update forward-looking statements to reflect future events or circumstances. Our commentary today will also include non-GAAP financial measures, which should be considered as a supplement to and not a substitute for GAAP financial measures. The non-GAAP reconciliations can be found in today's earnings press release, which is available on the Investor Relations section of our website. With that, I now turn the call over to Kevin.

Thanks, Barbara. Good morning, and thank you for joining our first quarter 2026 earnings call. We entered 2026 from a position of strength with a streamlined cost structure, a solid balance sheet and an expanding recurring revenue opportunity. In the first quarter, we continued to build on that momentum, delivering $13.4 million in revenue, up 14% year-over-year. Sales to U.S. state and local customers remained a key driver, representing approximately 50% of our first quarter revenues. This marks the third consecutive quarter that orders from these customers have exceeded our internal targets. And based on our current pipeline visibility, we believe we can continue this trend in the second quarter. Importantly, this channel is delivering consistent high-quality run rate demand, helping to drive greater visibility and predictability while complementing larger international and U.S. federal enterprise opportunities. Over the past 24 months, we have made deliberate investments to scale this segment alongside the successful integration of our RedWave FTIR portfolio, and we are now seeing those efforts translate into sustained durable growth. FTIR products are becoming a meaningful contributor to agencies expanding their approach nationally, reinforcing a broader and accelerating demand environment. In parallel, we anticipate that the passage last week of the Department of Homeland Security funding bill will provide additional support for our second half objectives. And to kick things off here in Q2, we closed a $3 million order in April with another state Department of Corrections. We are continuing to drive momentum as we execute our law enforcement narcotic strategy. On our last earnings call, we outlined three focus areas for 2026: scaling our proven platforms, extending our handheld leadership through differentiated capabilities and disciplined innovation, and strengthening revenue durability through recurring and program-based opportunities. This morning, we are excited to announce the acquisition of NIRLAB AG. We believe this acquisition is additive to each of our existing initiatives for the year and will be a very strong strategic fit over the short and long term. This acquisition brings together highly complementary drug detection capabilities, increases our international revenue mix and provides a high retention recurring software subscription model. Just as important as the strategic fit is the cultural alignment. NIRLAB is a founder-led, highly technical organization with deep expertise in spectroscopy, data science and cloud-based AI analytics. Their mission-driven focus on enabling safer, faster decision-making in the field closely aligns with our purpose of protecting frontline responders and addressing critical public health challenges. So prior to reviewing our first quarter financial results, I wanted to walk you through a handful of slides about this acquisition and how it aligns to our focus areas and with our broader law enforcement narcotic strategy. Very simply, this acquisition does four things for 908. First, it expands our handheld franchise into a high-volume, widely deployable sub-$40,000 segment, unlocking about a $200 million market. This is a solution purpose-built for frontline narcotics detection, increasing accessibility and driving unit volumes in markets we know well and already serve. And while not yet at scale, it's already validated with 100-plus active customers and approximately $2 million in law enforcement revenue. Second, it strengthens and extends our leadership in narcotics for law enforcement. It builds directly on the momentum we're seeing with MX908 and complements VipIR, expanding a market-leading portfolio that's driving growth at the state and local level. Just as importantly, it completes our end-to-end coverage. With near-IR-based optical spectroscopy, which we have core expertise in, we now span from everyday screening to confirmatory analysis, driving higher customer value and deeper adoption. Third, it accelerates our software and recurring revenue strategy. This is a proven high-retention subscription model, about 50% recurring revenue with a demonstrated annual retention of greater than 99%. It fits directly into our connected services vision with Team Leader and NIRLAB's live cloud-connected AI-driven analysis. This gives us a faster path to scaling recurring revenue, increasing lifetime customer value and improving visibility. And fourth, this is a highly levered growth opportunity. The business today is largely international, and we see a clear path to accelerate U.S. adoption using our commercial infrastructure while also benefiting from the technical know-how to further advance our platform. So taken together, we believe this deal expands our market, strengthens our portfolio, completes our workflow and accelerates our software strategy, all tightly aligned to where we're taking 908. From a financial standpoint, NIRLAB's growth and recurring revenue mix are accretive and support our long-term margin targets as high-margin software subscriptions scale. For the remaining eight months of 2026, we expect approximately $2.5 million in revenue, growing under our model to more than $5 million in 2027. We do expect a modest roughly $1 million adjusted EBITDA headwind in 2026 with the business planned to be profitable and contributing positively in 2027. The upfront transaction value is $15 million, $13 million in cash and $2 million in equity with up to $8 million in additional equity tied to recurring revenue and customer capture performance milestones over the next 20 months. As we step back and look at what we're acquiring, it's important to recognize that this is not just a single product or point solution, but a fully integrated platform that is ready to scale. At its core, NIRLAB combines purpose-built hardware with a cloud-connected software ecosystem and a subscription model, enabling rapid field-based chemical analysis with a simple, scalable workflow. This platform approach is what drives both adoption and long-term customer value. A key component of that value is the underlying data, know-how and IP. NIRLAB has built what we believe is the world's largest near-IR spectral database for narcotics, supported by proprietary AI and machine learning models informed by tens of thousands of laboratory characterized seized drug samples. This creates a meaningful and defensible data moat that strengthens over time as more data is collected in the field. As part of the acquisition, we're also integrating a highly specialized and mission-driven team of 15 people based in Switzerland with deep expertise across spectroscopy, software, cloud infrastructure and machine learning. Their scientific foundation anchored through the relationship with the University of Lausanne brings both credibility and continued innovation to the platform. The NIRLAB experience is designed to be simple, fast and highly accessible for frontline users with a straightforward workflow of just downloading the app from the App Store, pairing the device, analyzing a sample and then receiving results in seconds, users can detect, identify and quantify the most common illicit drug directly in the field, approximately 400 substances, including THC and CBD in cannabis, which are important analytes not covered by our Mass Spec or other optical products. For reference, the initial device will be roughly $10,000 and its required subscription will be roughly half that again per year. Note, these are approximate as pricing varies by market and is still being established. We believe near-IR's ease of use on top of that, the platform leverages AI and advanced compute to continuously improve performance. As more data is collected, the system becomes more accurate, more robust and more valuable to the end user. This creates a powerful flywheel effect with increased usage driving more data, more data driving better insights and better insights driving further adoption. From a strategic perspective, this is also highly aligned with our broader Team Leader software vision. It strengthens our ability to deliver connected data-driven solutions, expands our recurring revenue opportunities and enhances the overall value of our ecosystem to customers. NIRLAB is embedded in the day-to-day workflows of customers with over 1 million analyses performed to date. This level of usage demonstrates both reliability of the technology and the value it delivers in operational settings. NIRLAB's customer base spans across continents from the Australian Federal Police and Oceania to state police forces in Switzerland and Germany, local police forces in the Netherlands, Italy and Spain and more broadly across Europe to a forensics laboratory in Malaysia, customs authorities in Mauritius and anti-narcotics units in Nigeria, among many others. These are not pilot programs or limited trials. This is an active recurring use by frontline personnel who rely on the platform to make fast informed decisions in the field. That consistency of use underpins the strong retention and subscription model we discussed earlier. At the same time, this platform is early in its broader market adoption. It has not yet been scaled globally, has not penetrated the U.S. and has not been fully leveraged through a larger commercial engine, which creates a significant opportunity ahead for us. From our perspective, this combination of proven validation and early-stage scale is particularly compelling. It reduces execution risk while preserving meaningful upside as we expand adoption, especially in the U.S. and connect this installed base into our broader ecosystem. Our combined platforms provide end-to-end coverage for narcotics detection supporting the law enforcement market broadly. This is timely for two reasons. One, global drug markets are expanding in both scale and complexity with cocaine seizures up 68% over the past four years and more than 55 tons of new psychoactive substances seized in Europe alone in 2024. At the same time, over 1,000 emerging compounds, including highly potent synthetic opioids like nitazenes are driving a growing need for traceable detection in complex and hazardous environments. And two, low-cost, widely deployable colorimetric field tests are increasingly falling out of favor and a growing number of U.S. states and jurisdictions are restricting their use for arrest decisions due to accuracy concerns and lack of an electronic record. This is expected to drive a shift towards scientifically validated field-ready alternatives such as our products. With NIRLAB, we now address the full spectrum of use cases from high-frequency in-field screening to advanced confirmatory analysis. NIRLAB enables rapid frontline awareness. Our flagship MX908 supports trace level detection for high-consequence scenarios, including fentanyl and the synthetic opioid crisis and our new product, VipIR, expands our capability in bulk and unknown substance identification with its ability to identify 39,000-plus chemicals, cutting agents and more in customs and clandestine lab response settings. These platforms are becoming increasingly connected through our software ecosystem, enabling data sharing and coordination and insight across users and environments. This transforms isolated measurements into a unified actionable workflow. Importantly, this drives pull-through across the portfolio where routine screening can lead to demand for more advanced capabilities or the opposite, increasing both utilization and customer lifetime value. Overall, this positions us with a differentiated full stack solution that spans everyday to specialist use cases and is difficult to replicate. The acquisition directly aligns with the three strategic priorities we outlined for 2026. First, it scales our proven handheld platforms by expanding to a low-cost, widely deployable segment, enabling broader adoption across law enforcement and global frontline users. Second, it extends our handheld leadership by completing the end-to-end workflow from screening to confirmatory analysis, strengthening what we believe is the most comprehensive handheld detection portfolio in the market. And third, it strengthened the quarter and our updated outlook.

Thanks, Kevin. Total revenue was $13.4 million for the first quarter 2026, increasing 14% from $11.8 million in the prior year period. Handheld product and service revenue was $12.8 million for the first quarter 2026, up 16% from $11 million for the first quarter 2025. The increase was primarily driven by our FTIR products, including more than 25 VipIR shipments, which offset a reduction in Protector shipments. MX908 product and service revenue was up overall, driven by an increase in device placements but was offset by a $0.7 million decrease in service revenue. In total, we shipped 167 devices in the first quarter, bringing our installed base to 3,903. As anticipated, program product and service revenues was 0 in the first quarter of 2026 as we await funding for the next phase of the AVCAD program, and it was $0.1 million in the first quarter of 2025. OEM and funded partnership revenue was $0.6 million for the first quarter of 2026 compared to $0.7 million in the prior year period. Recurring revenue, which consists of consumables, accessories, software and service revenue represented 30% of total revenues this quarter and was $4 million, a 7% decrease over the prior year period, primarily related to the expected reduction in Mass Spec service revenue. Gross profit was $6.9 million for the first quarter of 2026 compared to $5.5 million for the prior year period. Gross margin was 51% for the first quarter of 2026 compared to 47% for the prior year period. The increase was driven by several factors: one, higher product revenue volume; two, a shift in channel mix with fewer international placements that are at a lower gross margin; and three, the decreased facility costs related to the move of our Boston facility in 2025. This was offset in part by a lower service gross margin related to the decreased service contract revenue in the first quarter of 2026. Adjusted gross profit was $7.7 million for the first quarter of 2026 compared to $6.4 million for the prior year period. Adjusted gross margin was 57%, an increase of approximately 290 basis points compared to the prior year period. The increase in adjusted gross margin was driven by the higher revenues, channel mix and the reduced facility costs, as mentioned above. Total operating expenses for the first quarter of 2026 were $19.8 million compared to $16.6 million in the prior year period. The increase was due to a noncash $3.9 million increase in the fair value of contingent consideration. All other operating expenses for the first quarter decreased year-over-year by $0.7 million, driven by a reduction in facility expenses and a $0.2 million decrease in acquisition and integration costs. Net loss from continuing operations for the first quarter of 2026 was $12 million compared to a net loss of $9.8 million in the prior year period. This increase was primarily driven by the $3.9 million noncash charge for revaluing contingent consideration, offset in part by the improved gross margins and reduced operating expenses. Adjusted EBITDA for the first quarter of 2026 was a negative $2.5 million compared to a loss of $4.6 million in the prior year period, representing a $2.1 million improvement. In the first quarter, we cut our adjusted EBITDA loss by 45% due to realizing growth at improved margins with a lower operating cost base. We ended the quarter with $111.7 million in cash, cash equivalents and marketable securities with no debt outstanding. Operationally, we are executing with discipline using only $1.2 million of cash in the quarter. Looking ahead in 2026, we now expect revenue to be in the range of $67 million to $70 million, representing growth of 19% to 25% over full year 2025. Our guidance range has increased $2.5 million and includes the following assumptions. First, we now expect handheld product and service revenue to grow 18% to 21% year-over-year, which equates to a range of $62 million to $64 million. The increase in guidance reflects initial expectations around our acquisition of NIRLAB as we integrate it into our commercial model. Second, we continue to expect OEM and funded partnerships, including contract revenue to be approximately $3 million. And third, we continue to expect revenue contribution from the AVCAD program to be in the range of $2 million to $3 million, likely in the second half of 2026. As previously stated, Smiths Detection has responded to a request for proposal and are negotiating for an anticipated spring award for an initial production run of approximately a few hundred systems with component and subsystem contributions from 908 Devices. This timing and quantities are validated by the Department of Defense's fiscal year 2027 Chemical and Biological Defense program public request to Congress just last week. Moving down the P&L, we continue to expect adjusted gross margins to be in the mid- to high 50% range for full year 2026. And on the bottom line, we expect to reduce our adjusted EBITDA loss to the mid-single-digit millions, making another significant step down year-over-year while we go after the growth opportunity. We expect that NIRLAB will represent approximately $1 million of the adjusted EBITDA loss in 2026. However, as Kevin mentioned, we anticipate it to be adjusted EBITDA positive in 2027. At this point, I would like to turn the call back to Kevin.

Thanks, Joe. The progress we're seeing is a direct result of disciplined execution and a strategy that is working. Only four months into the year, and we're encouraged by the trajectory of the business. We're executing well, building momentum and expanding from a position of strength. Our end goal is clear: to be the number one provider of handheld detection solutions globally. And every move we're making from organic investments to tuck-in M&A is reinforcing that leadership. We're broadening the portfolio with purpose, extending beyond MX and assembling what we believe is the strongest and most comprehensive suite of handhelds in this market. In parallel, we're scaling our commercial organization to match the opportunity and drive consistent execution. Every piece ties back to our narcotics and chemical detection strategy, addressing real pain points across performance and price points, expanding the market while taking share as we solve more of the problem. RedWave is a clear proof point. We identified a unique asset, moved early, integrated successfully, and we're now scaling the business through our sales model. As of March 31, 2026, RedWave exceeded its earn-out threshold, delivering more than $37 million in cumulative revenue over the past two years compared to $13.7 million for the full year prior to our acquisition. This demonstrates our ability to create value through integration and execution under our model. We're also adding depth to our leadership team with the addition of Kola Otitoju as Chief Business and Strategy Officer, bringing proven execution across both organic and inorganic initiatives following six successful years at Repligen, including growing the analytics technology business and executing more than 15 M&A transactions and strategic partnerships for the company. The takeaway is we're building a scaled category-defining handheld platform with greater recurring opportunity positioned to deliver a higher quality, more predictable and more durable growth profile. With that, let's open it up for questions.

The operator provided instructions for the question-and-answer session. Your first question comes from the line of Matt Larew with William Blair.

Joe, I wanted to follow up on NIRLAB. It looks like a really interesting acquisition. Just curious what sort of investments you think you're going to be making this year, maybe from the team perspective, the 15 people, what the mix looks like in terms of product folks versus sales, what they're doing today from a manufacturing perspective and how you might be able to achieve some synergies there? Yes. So just thinking through sort of what the next 12 months looks like as they brought in-house and scale revenue even further.

Yes, Matt. Thanks, I appreciate the question. We're very excited to now have NIRLAB under the fold of 908 Devices. And we're really excited because it fits very clearly into our already established narcotics detection strategy. Because of that, it really drops right into the resources we have on the commercial side. So we're really able to leverage the great talent that we've been developing. We've seen great strength across the U.S. state and local market as we articulated in the prepared remarks and are seeing good scale across Departments of Corrections and others. So we really feel that with the existing resources we have on hand from the commercial side, it's going to really be able to accelerate because they have had very little penetration in the United States.

And as Kevin mentioned, NIRLAB is subscale today, and it is mainly international revenues. In 2026 and beyond, we see it as accretive to the top line. The team is excited to get their hands on the product and visit the customers. We saw a path that NIRLAB can maybe break even in 2027 for adjusted EBITDA, leveraging the 908 channel and those investments in the software model. And on the cash flow side, with the multi-year upfront commitments on software and subscriptions, we expect the cash burn to be minimal here in 2026 and positive thereafter. So it's an exciting opportunity: existing product, solid channel to get access to the devices that really can be accretive over the longer term.

Yes. So not a significant up-front of investments that can't fit in with the profile Joe just described.

Okay. That's great. And then just asking on the VipIR launch, 40 units in Q4 and you did over 25 in Q1. I know that was something you were excited about really ramping this year. So just curious how that kind of that first quarter matched up versus your expectations and what maybe the pipeline or funnel looks like for the balance of the year?

Yes, absolutely. VipIR is our newest product that does unknown and solid and liquid identification. It integrates, as you recall, probably the two technologies of FTIR and Raman and puts it together with what we call Smart Spectral Processing to give a nice increased capability and increased confidence of an answer. We launched it in July. We shipped approximately 50 devices in 2025. And in the first quarter of 2026, we shipped about 25 devices, as you mentioned. Our expectation is that placements will double or potentially triple compared to 2025. So essentially, we're on track to meet that as we've previously articulated. We do expect and continue to expect the full year impact from VipIR to be significant for us in 2026 for the FTIR growth profile. From the technology front, we've got a great roadmap of features and enhancements planned that we think will continue to increase the product value over time and make it even more compelling out there. So a lot of good things to come on that.

Your next question comes from the line of Puneet Souda with Leerink.

You have Michael on for Puneet. Congrats on the quarter. My first question has to do with NIRLAB and your recurring revenue mix. I'm curious how material you think it will be to recurring revenue in 2026, what you're thinking as far as the mix? And as you're augmenting your Team Leader and software capabilities, how should we think about maybe the near-term ramp for the recurring mix growth?

Maybe I'll start with the Team Leader side and pass it to Joe on the numbers of the recurring. But thank you, Michael, for that question. We're very excited because it fits very well in with Team Leader. Together, NIRLAB and Team Leader both create that connected services vision that we've been talking about. So it really accelerates our access on Team Leader. As you may recall, we've got hundreds of devices now with Team Leader and now NIRLAB really adds to that. Together, being able to position that and create more features on Team Leader makes it a paid additional offering. So our recurring revenue over time, we think we're really putting the pieces together to drive it significantly as we go forward. But Joe, do you want to?

Maybe touching on the NIRLAB revenues as a whole: we'll own NIRLAB for eight months, and we increased our guidance by $2.5 million. We see that growth to be accretive to our portfolio overall. It will likely double our current growth on our base products. Given the scale, we feel there is a healthy growth opportunity, and we expect this to really kick in in 2027 as we plug in our U.S. sales team and build pipeline. We expect the revenues to be north of $5 million in 2027 and good growth thereafter. Regarding the mix of recurring and the impact to 2026: on that $2.5 million, maybe 40% to 50% is kind of recurring from the existing installed base and ramping device sales, and we'll really be focused on driving the penetration of the device placements and the ultimate opportunity of scaling that recurring revenue in the future. So definitely some pickup on the recurring side, but much more so as we get to 2027 and beyond.

I got it. And then you talked about the state and local momentum you're seeing. I'm curious if you have any visibility on flow-through from the One Big Beautiful Act grant funding or if that's still to come? And what do you think about the sustainability of the growth momentum throughout 2026 based on the booking?

It's a great question. We certainly are encouraged that we now have the appropriations bills largely complete earlier this year. And then as of last week, we've got the DHS department funded. As you know, DHS provides significant funding from the federal level to state and local entities. Often, that funding is multiyear funding. So we really didn't see any suppression of interest over the first four months of this year. I do think by having that complete, it enables some of our pipeline that we anticipate for the second half of the year, whether that's across the DHS or other related large federal and military accounts. So I think it's all very supportive and better than it's been in past years. Some of that is a direct result of increased funding that's flowing down to our customers, but it's usually trickling down through a grant program, and we'll see what continues to happen in the U.S. military side with some of the reconciliation bills and some of the increases there as well as the international conflicts that inevitably, over time, create opportunity for our types of technologies as people prepare and modernize.

Your next question comes from the line of Brendan Smith with TD Cowen.

Congrats on the deal. I wanted to ask maybe kind of a follow-up on combining a couple of the last questions here. Can you help us understand really from a pricing power standpoint, how some of these planned updates and rollouts even within VipIR and your lab integrating in, but also with Team Leader, if you're able to squeeze some pricing premiums into any of these and how we should think about that over the coming quarters as some of those get to customers?

Great question, Brendan. We are fortunate across the portfolio to have very differentiated products that bring a lot of value to our customers. Whether it be VipIR, which is unique in the marketplace on how it combines results from two technologies to give a more confident answer, or MX, which is the only handheld Mass Spec on the market, and NIRLAB, which we think is quite differentiated in its capabilities and at a lower price point. NIRLAB's device is about $10,000 upfront and then has a required subscription that's about half of that per year, varying by market. That implies strong recurring revenue per device in the following years. So yes, we have a lot of levers on the pricing side. We're really looking at this as a strategic way to increase our recurring percentage. We talked last year that we're operating at about one-third recurring revenue; Q1 was about 30%. A lot of that was driven by service and consumables. We really look at NIRLAB and Team Leader and the other software components as great ways to increase stickiness over time and at the same time provide a lot of value to customers that want interconnectivity and the ability to share data.

Your next question comes from the line of Dan Arias with Stifel.

This is Rohan on for Dan. Thinking about synergies, how quickly do you think your domestic sales force can begin cross-selling NIRLAB products to your U.S. state and local customers?

I think it can be relatively quickly. We're super excited to plug in our U.S. channel that is very experienced and has a great proof point: as we brought on the RedWave products, we were able to plug them in and drive growth over the last two years. NIRLAB has had very few sales to date here in North America, and we really see it as an opportunity. I expect to get the products in our salespeople's hands in the next week or two and then out on the road with customers. It is a lot of the same customers; it's more that end-to-end workflow from a narcotics detection perspective. So we'll be talking to our existing customers and driving penetration. We are super excited to get out there and see a lot of synergies that we can start to plug in. We put out that initial assessment of the $2.5 million guidance increase; a good chunk of that is international, but it does assume some level of ramp-up here in the U.S.

I would further add it's really about the people and culture. I think we have a good combination there and the team at NIRLAB is ready to jump in. That said, it does take a couple of quarters to fully get our arms around it and get into a full understanding of the U.S. markets. RedWave is a great example, and we're going to execute that same playbook. We integrated very efficiently, and we'll apply that same playbook here because we've demonstrated the ability to drive a lot of growth and efficiencies that way.

Okay. And you previously used your manufacturing to the U.S. to mitigate tariff impacts. With the current geopolitical climate, do you see any risk to your European supply chain for NIRLAB components? Or is this business sort of fully insulated?

A lot of the sales today are Europe-based and in Oceania and APAC, and not much in the U.S. We also have an avenue to source the product here in the U.S., which protects some of the device opportunities. So from a tariff perspective, it's somewhat insulated, but we'll continue to monitor and learn as we integrate and ramp up. We don't see it as a major impact right now.

There are no further questions at this time. I will now hand the call over to Kevin Knopp for closing statements.

Okay. Thank you. Thank you all for your attendance today. We are feeling pretty good about our momentum and trajectory and very excited to have NIRLAB and welcome them onto the team. So thank you all for the time today.

This concludes today's call. Thank you for attending. You may now disconnect.