908 Devices Inc. (MASS) Q1 2026 Earnings Call Transcript

Hello, everyone. Thank you for joining us and welcome to the 908 Devices first quarter 2026 financial results conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. 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 Knott, 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 and other SEC filings. These forward-looking statements reflect management's beliefs and assumptions as of 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 in 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've 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 this and represented 43 percent of our first quarter total revenues, while mass spec revenues represented the remaining 57 percent. Now I want to highlight an example that captures both the real-world impact of our products and the positive demand environment we're seeing. In March, a New York Times investigation highlighted the growing threat of drug-laced papers entering correctional facilities by mail, substances that are invisible to the naked eye and increasingly linked to rising overdose fatalities. States are acting. In Virginia, leaders have implemented a comprehensive program called Operation Free that includes the use of our MX908 device for trace narcotics detection. We were recently honored by Virginia officials with a state flag recognizing our role in supporting their initiative, an integrated model of enforcement, intelligence, and treatment that as reduced fatal overdoses in their correction system from 24 in 2024 to zero in 2025. This need for advanced inspection and screening is not isolated. The leaders behind Operation Free are now 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 NeerLab 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 our subscription model. Just as important as the strategic fit is the cultural alignment. NearLab 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 aligned 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 narcotics 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 Viper, 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, 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 Neuralab'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 leveraged 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, Neuralab'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 plan 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 near lab 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 near lab 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 seed drug samples. This creates a meaningful and defensible data mode 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 their relationship with the university of lausanne brings both credibility and continued innovation to the platform the near lab 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 drugs directly in the field, approximately 400 substances, including THC and CBD and 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, low training requirements, and safer operating profile versus Raman are critical competitor differentiators in this product segment. This platform is purpose-built for broad deployment across generalist users, enabling everyday use cases at scale. What further differentiates this platform, however, is what happens beyond the handheld device. Each measurement taken in the field is captured and aggregated into a centralized cloud-based ecosystem, transforming what would otherwise be isolated data points into a continuously expanding intelligence layer. This allows agencies and organizations to identify patterns across locations, users, and time, turning decentralized field activity into actionable insights can inform both real-time decisions and longer-term strategy. 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. Neuralab 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. Neuralab's customer base spans across continents. the Australian Federal Police in 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 nitazine, are driving a growing need for traceable detection in complex and hazardous environments. And two, low-cost, widely deployable colimetric 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 NEARLAB, we now address the full spectrum of use cases, from high-frequency in-field screening to advanced confirmatory analysis. Neuralab enables rapid frontline awareness. Our flagship MX-908 supports traits-level detection for high-consequence scenarios, including fentanyl and the synthetic opioid crisis. And our new product, Viper, 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 every day 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 low-cost, widely deployable segments, 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 strengthens revenue durability by adding a high-quality subscription-based revenue stream and expanding our software and data layer. So taken together, this is exactly how we're executing the strategy, broadening the portfolio with purpose, scaling from a position of strength, and reinforcing our leadership in handheld detection. I'm so proud of what the team has been able to accomplish over the last 12 months, the trajectory we are on, our Q1 performance, our outlook, and with the addition of NeeraLab, I'm even more excited for what's next. With that, I'll now turn the call over to Joe for more details on our first 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 VIPER shipments, which offset a reduction in protector shipments. MX-908 product and service revenue was up overall. Driven by an increase in device placements, it 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 zero in the first quarter of 2026, as we await funding for 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 non-cash 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 non-cash 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 in 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 to $70 million, representing growth of 19 to 25 percent 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 to $64 million. The increase in guidance reflects initial expectations around our acquisition of NEAR Lab 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 ADCAP program to be in the range of $2 to $3 million, likely in the second half of 2026. As previously stated, Smith's 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 War'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 NEARLAB 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 red wave 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 31st 2026 red wave 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 cola ot talju as chief business and strategy officer bringing proven execution across both organic and inorganic initiatives following six successful years at replogen including growing the analytics technology business and executing more than 15 mna 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 we will now begin the question and answer session your line will remain open for follow-ups

if you would like to ask a question please press star one to raise your hand to withdraw your question press star one again we ask that you pick up your handset when asking a question to allow for optimum sound quality if you are muted locally please remember to unmute your device please stand by while we compile the q and a roster your first question comes from the line of matt larue with william blair matt your line is open please go ahead hi good morning uh kevin and joe i wanted to follow up on your level looks like a really interesting acquisition um just

just curious you know what sort of investments you think um 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. Yeah, so just thinking through sort of what the next 12 months looks like as they broaden house and scale revenue even further.

Yeah, thanks, Matt. I I appreciate the question. Yeah, we're very excited to now have Nealab under the fold of 908 devices. And we're really excited because it fits very clearly into our established narcotics detection strategy. And so because of that, it really dropped 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 in the prepared remarks and are seeing good scale across Department of Corrections and others. So we really feel that with the existing resources we have on hand from the commercial side, it's gonna really be able to accelerate because they have had very little penetration in the United States.

And as Kevin mentioned, I mean, Near Labs is at subscale today and it is many international revenues. You know, in 2026 and beyond, we see it as accretive to the top line. I know the team is excited to get their hands on the product and visit the customers. We saw a path that NearLab 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.

Yeah, so not a significant up of investments that can all fit in with the profile Joe just described.

Okay, that's great. And then just asking on the Viper launch, you know, 40 units in Q4, I think you did over 25 in Q1. I know that was, you know, something you were excited about really ramping this year.

So just curious how that kind of that first quarter matched up for your expectations and what maybe the the pipeline or funnel looks like for the balance of the year yeah absolutely um so so viper is our our newest product uh that does uh unknown solid and liquid id and it integrates as you recall probably the two technologies of ftr and ramen and and puts together with what we call smart spectral processing to give a to give a nice increased capability and increased confidence of an answer yeah we launched it in july we shipped approximately 50 devices in 2025 and in the first quarter of 26, we did, as you mentioned, we shipped about 25 devices there. And our expectation is that that will double or potentially triple the placements for 2025. So essentially, we're on track to meet that as we previously articulated. So we do expect and continue to expect the full year impact from Viper to be significant for us in 2026 for the FTIR growth profile. And then And I also get excited from the technology front because we've got a great roadmap of features and enhancements planned that we think that's going to 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 up.

Okay, great.

Your next question comes from the line of Puneet Suda with Lyric. Puneet, your line is open. Please go ahead.

You have Michael on for Puneet. Congrats on the quarter. Sure. My first question has to do with NearLab and your recurring revenue mix. I'm curious how material you think it'll 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, like how should we think about maybe towards 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. So together, NearLab 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 NearLab really adds to that. And together, being able to position that and create more features on Team Leader, that 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? Yeah, maybe touching on the NearLab revenues as a whole, and we'll own NearLab for eight months, and we increased our guidance by $2.5 million. and we see that growth to be accretive to our portfolio overall. It'll 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. You asked specifically about kind of the mix of recurring and the impact to 26. So on that $2.5 million, maybe 40% to 50% is kind of recurring from the existing install 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 27 and beyond.

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

Yeah, it's a great question. We certainly are encouraged that we now have all the appropriations bills were complete, all but one essentially earlier this year, and then now as 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 multi-year 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, very supportive and better than it's been in past years. Now, some 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 metric, or 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.

Great. Thank you very much.

Your next question comes from the line of Brendan Smith with TD Cowan. Brendan, your line is open. Please go ahead.

Thanks for taking the questions, guys. And congrats on the deal. Wanted to ask maybe kind of a follow-up on kind of combining a couple of the last questions here.

But can you just help us maybe understand really from kind of a pricing power standpoint how some of these planned updates and rollouts, even within Viper and NearLab integrating in, but also a team leader? like if you're able to squeeze some pricing premiums into any of these and really just how we should think about that over the coming quarters as some of those get to customers yeah great question uh thank you brandon the uh pricing power you know i think we are very fortunate across the portfolio to have very differentiated products um and that that bring a lot of value to our customers so whether it be viper uh very unique in in the marketplace on how it combines the results, integrated them from two technologies to give a more confident answer, whether it's our IMAX, which is really the only handheld mass spec that's on the market. And NeerLab, we think as well, it's quite differentiated in its capabilities, and it has a lower price point that's very, very different there. So it's about a $10,000 upfront device, and then it has a required subscription that's about half of that, again, per year. So that then implies that each in the following years, it's 100% recurring, right? Because you're just buying a subscription on a device per device look and basis. So I think collectively, we feel we have a lot of levers on the pricing side. And we are combining your questions, as you said. We are really looking at this as a strategic way to increase our recurring percentage. We've talked last year that we're kind of operating in about a third of our revenues. Q1 was about 30%. A lot of that was driven by service and consumables, some accessories that are in there. And we really look at NearLab and Team Leader and the other software components as great ways to increase the stickiness of this over time. At the same time, provide a lot of value to the customers that want that interconnectivity and want the ability to share that data.

Got it.

Thanks a lot. Thanks. Thanks, guys.

Your next question comes from the line of Dan Arias with Stifle. Dan, your line is open. Please go ahead.

Hey guys, this is Rohan Offer, Dan. Thanks for the question. Thinking about Synergy, how quickly do you think your domestic sales force can begin cross-selling Neuralab products to your U.S. state and local customers?

Yeah, I think it can be relatively quickly. We're super excited to plug in, especially our U.S. channel that is very experienced, has a great proof point that as we brought on the Redway products, we're able to plug it in and drive growth over the last two years. And, you know, NearLab has had very few sales to date here in North America and really see it as an opportunity. So, you know, expect to get the products in our customers' hands, or I should say in our salespeople's hands in the next week or two, and then out on the road with customers. And it is a lot of the same customers, right? It's more that end-to-end workflow from a necrotic's, you know, detection perspective. So, talking to our existing customers, driving the penetration. So, super excited to get out there and see a lot of synergies that we can start to plug in. And we put out that initial assessment of the 2.5 million. A good chunk of that is international, but it does assume some level of ramp up here in the U.S., but I think there's a lot of opportunity as we move forward.

Yeah. And I would just further add it. It's really about that people and culture. And I think we have a good combination there. And the team on Near Lab is ready to really to jump in on that. You know, that said, it does take a couple of quarters to kind of get our arms fully around it and get it into our understanding and get it into the U.S. markets. I think RedWave, though, is a great example, and we're going to execute that same playbook. You know, we integrated very efficiently, and we're going to apply that same playbook here because I think that we've demonstrated that we've been able to drive a lot of growth that way and a lot of efficiencies in scale.

Okay, thanks, guys. And you previously moved 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 near-left components, or is this business sort of fully insulated? yeah it is a lot of the sales today are europe-based and as kevin mentioned you know in oceana and apac and not much in the us we also have an avenue to to source the product here in the us which protects some of the device opportunities too so i think from a tariff perspective it's a bit insulated but we'll continue to monitor it and learn as we integrate and ramp up but don't see it as a major impact gotcha thank you guys you're welcome there are no

further questions at this time i will now hand the call over to kevin knopp for closing statements kevin please go ahead okay thank you thank you all for your attendance today and and hopefully you can uh understand that we're feeling pretty good about our momentum and trajectory and and very excited to have near lab and and welcome them onto the team so thank you all for the time today And this concludes today's call.

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