Repligen Corp Q3 FY2025 Earnings Call

Thank you for joining us. My name is Kayla, and I will be your conference operator today. I would like to welcome everyone to the Repligen Corporation Earnings Release for the Third Quarter of 2025. I will now turn the call over to Jacob Johnson, VP of Investor Relations. You may begin.

Thank you, operator, and welcome, everyone, to our 2025 third quarter report. On this call, we will cover business highlights and financial performance for the 3-month period ended September 30, 2025, and we'll provide financial guidance for the full year 2025. Joining us on the call today are Repligen's President and Chief Executive Officer, Olivier Loeillot; and our Chief Financial Officer, Jason Garland. As a reminder, the forward-looking statements that we make during this call, including those regarding our business goals and expectations for the financial performance of the company, are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning risks related to our business is included in our quarterly reports on Form 10-Q, our annual report on Form 10-K for the fiscal year ended December 31, 2024, and our current reports, including the Form 8-K that we are filing today and other filings that we make with the Securities and Exchange Commission. Today's comments reflect management's current views, which could change as a result of new information, future events or otherwise. The company does not oblige or commit itself to update forward-looking statements, except as required by law. During this call, we are providing non-GAAP financial results and guidance unless otherwise noted. Reconciliations of GAAP to non-GAAP financial measures are included in the press release that we issued this morning, which is posted to Repligen's website and on sec.gov. Adjusted non-GAAP figures in today's report include the following: non-COVID and organic revenue and/or revenue growth, cost of goods sold, gross profit and gross margin; operating expenses, including R&D and SG&A, income from operations and operating margin, tax rate on pretax income, net income, diluted earnings per share, EBITDA, adjusted EBITDA and adjusted EBITDA margin. These adjusted financial measures should not be viewed as an alternative to GAAP measures but are intended to best reflect the performance of our ongoing operations. With that, I'll turn the call over to Olivier.

Thank you, Jacob. Good morning, everyone, and welcome to our 2025 third quarter call. We had another outstanding quarter in quarter 3 with 18% organic growth. This quarter, every franchise grew double digits, which is a testament to our differentiated broad portfolio and diversified customer base. Our portfolio of products enables us to sell one of the most comprehensive suites of innovative solutions across the bioprocessing workflow. We saw strength across our extensive customer base as both biopharma and CDMOs grew over 20% and all geographies grew double digits. The continued growth from CDMOs is very encouraging as it reflects the health of the ecosystem. From a franchise perspective, analytics led the way with over 50% growth, including more than 30% growth at CTech, while Filtration grew over 20%. Consumable demand remained very robust with greater than 20% growth in the quarter, while capital equipment had another strong quarter with over 20% growth. The better-than-expected performance in analytics and proteins this quarter underscores that growth opportunities exist across our entire portfolio, driven by our innovation engine. In particular, analytics revenue growth was aided by the launch of SoloVPE PLUS earlier this year. This new generation of at-line protein concentration analytics offers customers increased data collection speed and enhanced sensitivity and reproducibility with a streamlined workflow. This has started to drive an upgrade cycle that will last for several years as we have a sizable installed base. Transitioning to orders. Total company orders grew sequentially for the sixth straight quarter and grew over 20% year-over-year, including double-digit order growth across all of our franchises. With customer ordering patterns back to historical trends, we believe quarterly orders are a less relevant metric and plan to provide less detail around orders going forward. We will remain transparent about the trends we are seeing in our business and within the industry as we have always been. We think our Q3 results highlight the broad strength we are seeing across our franchises, customers and geographies, and our 18% organic growth continues to outpace industry growth. In fact, this marks the fourth straight quarter of 14% or better organic non-COVID growth. Both our Q3 and year-to-date overall performance was not based on a single customer or product line, but rather the totality of our portfolio. We think this is a testament to our commercial execution as our team capitalizes on the growth strategies for each of our franchises. As a result, we are again raising the midpoint of our organic growth guidance for 2025. Unpacking our performance by end market, Q3 '25 biopharma revenues grew over 20% year-over-year with broad growth across all biopharma customers. Emerging biotech revenue was at the highest level in nearly 3 years. While we're hesitant to call this a trend as growth benefited from some specific opportunities in the quarter, we are encouraged by the recent funding trends we have seen. CDMO revenues also grew over 20%, driven by outperformance from our larger CDMO customers in the quarter. From a geographical point of view, we saw particular strength in Asia Pacific with approximately 50% growth, while the Americas grew 20% and EMEA was up low double digits. New modalities revenue was consistent with our expectation for a muted back half. We saw growth in cell therapy, while AAV and mRNA trends were fairly consistent with last quarter. Turning to strategy. We mentioned last quarter that digitization is a key pillar of our strategic plan. Our analytics franchise is the foundation of this strategy, so we wanted to expand on this effort and provide more detail on the very strong performance in Q3. Digitization will be a multistep and a multiyear journey. Currently, we enable measurement of protein concentration in downstream processes using our innovative solution from C Technologies, then glucose, lactate and biomass upstream with the acquisition of the 908 bioprocessing assets. With the successful in-line integration of CTech FlowVPX into our downstream TFF systems, we can provide real-time monitoring and process control. These are key enablers of continuous manufacturing, which is still in its early days, particularly in downstream applications. We're actively working to develop additional PAC-enabled solutions. Beyond this, we are looking at opportunities to leverage digital twins to utilize this real-time process data with advanced modeling to optimize process development and manufacturing. As a step in this direction, we announced a partnership with Novasign during the third quarter to integrate our system with Novasign's digital twin capability, starting with our bench scale TFF. We aim to deliver solutions that significantly reduce process development time and cost and support a more efficient and reliable scale-up for our customers. We also saw strong growth in overall service revenue in quarter 3. Services currently represent 5% of our consolidated revenue. We have a particularly high attachment rate in analytics, so we benefit from both new installations and annual maintenance. Commercially, a strong service organization allows us to best serve and delight our customers while bringing us closer to them. There is a sizable opportunity for us to grow this business in the coming years as we expand our services offerings across our entire capital equipment portfolio. Our strategic account strategy initiative launched 3 years ago is a real success story. We are now covering 20 large pharma and CDMO accounts. The focus of our key account team is to engage with key decision-makers at our customers to better understand their needs while demonstrating the breadth of our capabilities. We are seeing great traction here with more of these customers buying multiple products from Repligen. And as a result, many of these strategic accounts are accretive to our growth. In addition to our strategic account strategy, our commercial team is also incentivized to cross-sell products across the entire portfolio. As it pertains to tariffs, we continue to evaluate opportunities to better leverage our global footprint. We are working to have dual manufacturing for the vast majority of our portfolio by the end of next year. This includes a focus on ensuring we have the right footprint to benefit from capital equipment opportunities in the coming years, including potential U.S. onshoring projects. Before I turn the call over to Jason, I'll provide some more detail on our franchise level performance. Filtration revenue grew over 20% in the quarter. Flagship cassettes, fluid management, Flow Path along with ATF, all contributed meaningfully to growth this quarter. We continue to see a long runway of growth in ATF, but we think it's important to highlight that multiple products have been key drivers of year-to-date filtration growth. This highlights the breadth of our filtration franchise, which is our largest and most diverse. In addition, we have a strong backlog for fluid management, so we continue to expect robust growth from this product line in the coming quarters. After a record Q2, chromatography revenue grew mid-teens in Q3 as resin mix returned to more normal levels. This was mostly driven by continued strength in large column demand from key CDMOs and pharma accounts globally. Protein revenue grew low double digits in quarter 3, driven by chromatography resin. This franchise outperformed our expectations in the quarter and is an area where we are making additional investments to drive future growth. We have several innovative solutions for the new modality market with our Avitide assets and for the monoclonal antibody market by our Protein A ligand capabilities. We plan to launch additional innovative solutions across this portfolio in the coming years. While it will take some time for this opportunity to grow into more meaningful revenues, we think the investment we are making today will position us well for growth in this higher-margin franchise for years to come. Finally, and as already mentioned, Process Analytics had a standout Q3 with more than 50% growth, including $3 million of revenue from the 908 bioprocessing acquisition and over 30% growth at CTech. This was driven by strength across consumables, equipment and services. With strong orders in the quarter, we are encouraged by the momentum in our analytics franchise. As it relates to the 908 bioprocessing assets, we remain on plan with the integration. To wrap up, while the last several years have been a unique period for the bioprocessing market, we believe the dynamics of this year have created additional opportunities for Repligen. Customers are looking for products that enable them to improve yield and productivity. Our product portfolio and customer centricity have opened several doors in recent years, and we believe the results we are seeing this year are a testament to our strategy. We remain focused on capitalizing on our growing funnel. Given the opportunities we see across our portfolio, we will continue to invest as needed to ensure we have the right foundation to support sustainable future growth. This includes planned investment in application labs to better serve our customers with differentiated solutions, investments in technology to increase productivity and investment across our business to ensure we have robust processes and tools to continue to delight customers and scale our growing business. We'll balance these initiatives with a commitment to driving margin expansion over the medium term. We're excited about the customer traction across our business as highlighted by our year-to-date performance, which demonstrates the differentiated nature of Repligen. It also reflects the execution on the 5 strategic priorities we outlined at the beginning of the year. We remain focused on closing out a very strong 2025. Now I'll turn the call over to Jason for the financial highlights.

Thank you, Olivier, and good morning, everyone. Today, we are reporting our financial results for the third quarter of 2025 and providing an update to our financial guidance for the full year. Unless otherwise noted, all financial measures discussed reflect adjusted non-GAAP measures. As shared in our press release this morning, we delivered third quarter revenue of $189 million, a reported year-over-year increase of 22%. This is 18% organic growth, excluding the impact of acquisitions and currency. Acquisitions contributed approximately 2 points of the reported growth, while foreign currency was also a 2-point tailwind. As Olivier offered details on our product franchise performance, I'll provide more color on our regional performance. Starting with quarterly revenue. North America represented approximately 50% of our total, Europe represented 30% and Asia Pacific and the rest of the world represented approximately 20%. Asia Pacific grew nearly 50% year-over-year, driven by Fluid Management, Analytics and ATS. Americas grew 20% with strength across the portfolio and EMEA grew low double digits driven by OPUS and TangenX. After strong orders in Q2, we saw China revenue return to growth in Q3, though not a key driver for the overall strength in Asia Pacific; it was encouraging to see growth even off a low prior year base. We remain optimistic that China will return to growth in 2026, but we still expect China to be slightly down this year as orders declined in the quarter after the order acceleration in Q2. Transitioning to profit and margin. Adjusted gross profit was $101 million, up 28% year-over-year or 25% excluding foreign currency and acquisitions. Adjusted gross margin of 53.3% increased 260 basis points year-over-year and 210 basis points sequentially. The year-over-year increase was driven by volume leverage, price and productivity. The sequential increase benefited primarily from improved mix as Repligen procured resin for OPUS columns were at more normal levels and from revenue growth of proteins in the quarter. This dynamic of gross margin fluctuation being driven by changes in sales mix is to be expected quarter-to-quarter. We are more focused on full year trends. Year-to-date, gross margin is 52.7%, which shows 230 basis points of margin expansion over the same period in the prior year and is in line with our gross margin outlook of 52% to 53% for 2025. FX was a benefit to margin in the quarter, while tariffs remained a slight headwind. Continuing through the P&L, our adjusted income from operations was $27 million in the third quarter, up 16% year-over-year on a reported basis and up about 20%, excluding the impact from foreign currency and M&A. This growth was driven by a $22 million increase in gross profit on higher volume and margin improvement, offset by $18 million higher OpEx. Q3 represented our lowest OpEx quarter last year, and growth this quarter included $3 million from M&A, $1 million from foreign currency. It also includes about $2 million of one-time expenses in SG&A that will not repeat in the fourth quarter. The remaining increase includes strategic investments, which we will continue to make to support future growth. Year-to-date, OpEx has grown 14%, excluding the impact of M&A and foreign exchange versus our 16% organic non-COVID revenue growth. This translated to an adjusted operating margin of 14.2%. Margins declined 70 bps year-over-year, largely due to M&A. Our third quarter adjusted EBITDA margin was 19%, a year-over-year decline of 160 basis points, which also included a $1 million headwind from foreign currency transaction losses. Adjusted net income was $26 million, a $2 million year-over-year increase. Higher adjusted operating income was offset by $3 million of lower interest income. Our third quarter adjusted effective tax rate was 17%, which benefited from actions executed within our tax planning strategy. We now expect to see an adjusted effective tax rate between 21% to 22% for the year, about 100 basis points lower than our previous guidance. Adjusted fully diluted earnings per share for the third quarter were $0.46 compared to $0.43 in the same period in 2024. Finally, our cash position at the end of the third quarter was $749 million, up $40 million sequentially from the second quarter. This was driven by incredibly strong operating cash flow performance in the quarter, driven mostly by improved working capital. We are very happy with our strong year-to-date results, delivering above-market revenue growth and margin expansion, which positions us to deliver upon our updated outlook. I'll speak to adjusted financial guidance, but please note that our GAAP to non-GAAP reconciliations for our 2025 guidance are included in the reconciliation tables in today's earnings press release. Our guidance includes tariffs and our latest foreign currency assumptions. As highlighted earlier by Olivier and on the strength of our portfolio, we are increasing the midpoint of our revenue growth guidance as we narrow towards the high end of the guidance range. We now see 14% to 15.5% organic non-COVID growth or 12% to 13.5% organic revenue growth with the midpoint of both increasing 75 basis points from our prior guidance. Our new guidance assumes just over a 1 point tailwind from foreign exchange, while our M&A assumptions are unchanged. Putting this together, we are increasing our 2025 revenue guidance to $729 million to $737 million, up from $715 million to $735 million, or an increase of $8 million at the midpoint. To summarize the update clearly, of the $8 million increase, $6 million is due to overall portfolio strength and $2 million is from foreign currency benefit. Our guidance implies 4Q revenue will grow low double digits organically at the midpoint while overcoming the headwind from a gene therapy platform mentioned last quarter. In terms of growth by franchise, we now expect the following reported growth rates: Filtration growth of approximately 10% versus our prior expectation of 10% to 12%. This represents approximately 13.5% non-COVID growth. Chromatography growth of approximately 25% versus our prior estimate of 20%. Proteins growth of 15% to 20% versus 10% to 15% previously. And finally, Analytics will grow north of 30% versus our prior guidance of 25%. This includes the 908 bioprocessing acquisition. We continue to expect adjusted gross margins in the range of 52% to 53%, which represents 210 basis points of year-over-year margin expansion at the midpoint, driven by volume leverage, price and manufacturing productivity, offset primarily by inflation and some 2024 COVID sales drag. We assume a slight headwind from tariff charges, offset by the benefit of foreign currency. We expect fourth quarter gross margin to be closer to the second quarter, following the impact of sales mix fluctuations discussed earlier. The fourth quarter includes a mix shift to products that are below our corporate average. We now expect our adjusted income from operations to be between $98 million to $100 million. This assumes a roughly 13.5% operating margin. As Olivier mentioned earlier, given the strength and traction we are seeing across our portfolio, we continue to make strategic investments today to support tomorrow's growth. This includes investments in specific product lines and geographies like Asia Pacific. In addition, we continue our Fit for Growth journey, and we'll invest to ensure we have the right infrastructure to deliver on these opportunities for our customers, stakeholders and shareholders. These include investments in operations and support functions. They also include investments in digital capabilities that will help drive efficiencies in the future. We will continue to balance cost efficiency and margin expansion with investments that are critical to support future growth. Continuing through the P&L, we are updating our adjusted other income guidance to $21 million, down from $22 million to $23 million due to lower interest income assumptions, along with some impact from foreign currency. As we explained earlier, our 2025 adjusted effective tax rate expectation is now 21% to 22%, a point lower than our prior guidance. Given these dynamics, we now expect our adjusted fully diluted earnings per share to be between $1.65 and $1.68. Our balance sheet remains strong as we ended the third quarter with $749 million of cash, as mentioned earlier. We will remain prudent in our spending while maintaining flexible dry powder for potential acquisitions. We still expect CapEx to be down 20% to 25% versus 2024, with our spending below pre-COVID levels. As we wrap, we are encouraged by our strong year-to-date results, especially considering the headwinds and new modalities that we overcame. We believe this performance reflects solid execution on our growth strategy and broader portfolio. Olivier and I would like to thank our Repligen teammates for helping us to deliver above-market growth yet again. With that, I will turn the call back to the operator to open the line for questions.

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

Olivier, can you maybe just talk about the cadence of order momentum across the quarter and out of the quarter? I mean, obviously, positive industry developments recently. Jason mentioned the China trajectory coming in as maybe a bit of an offset. So how would you sum up purchasing activity here? To what extent does the organic midpoint capture what you're seeing? And then how do you feel like that positions you into next year, just given where expectations seem to be?

Yes, Dan. I believe you were inquiring about the cadence of orders in the third quarter. Our orders performed exceptionally well, growing over 20%, marking the second consecutive quarter of such growth and the sixth quarter in a row with sequential order increases. Notably, every single franchise experienced double-digit growth during this quarter. There was consistent growth throughout July, August, and September, without any significant changes. Regarding the industry, particularly in China, we believe we have returned to a normal operating environment. It began with biopharma about 1.5 years ago and transitioned to CDMOs roughly 3 to 4 quarters ago. This quarter showed a promising recovery in small biotech, which is encouraging, although it's still early to fully celebrate, as this segment has reached its highest level in three years. Geographically, we saw strong performance overall. China showed growth in sales for the first time in several quarters, although orders were slightly softer. As we anticipate a full recovery, we expect to return to growth in China next year. That's the overall situation as it stands.

And your next question comes from the line of Dan Leonard with UBS.

A lot of moving parts on the margin side. Jason, I was hoping you could better help me reconcile the sales guidance increase versus narrowing your EBIT margin to the bottom end of prior guide. And wondering also if you can make a comment on what's the right level of operating margin expansion for a high teens revenue growth rate in the Repligen model?

Yes, overall we are pleased with our margin performance this quarter. As you mentioned, we are observing trends in margin expansion. Gross margins, as previously noted, may fluctuate based on our business mix for the quarter. We are performing quite well in the third quarter. More significantly, year-to-date, we have increased by 230 basis points. Regarding operating income, it was up around 20% this quarter if we disregard the effects of mergers and acquisitions as well as currency fluctuations. That compares to roughly 18% for non-organic sources. We continue to gain leverage. For the overall operating margin this year, if we consider our full guidance, operating income is expected to rise about 25% excluding the impacts of mergers and acquisitions and foreign exchange, corresponding to approximately 16% organic revenue growth excluding COVID effects. There is significant leverage here. Specifically, regarding why some sales did not translate through entirely, we noted about $2 million in one-time operating expenses for the quarter primarily related to leadership changes as part of our Fit for Growth initiative. There was also slight foreign exchange pressure. Additionally, we will keep investing in infrastructure and operations to effectively support future growth, taking a long-term perspective. When considering our overall guidance, we adjusted our earnings per share by about a penny at the midpoint. In light of the investments we can make today to foster future growth, we are adopting a balanced view.

And your next question comes from the line of Matt Larew with William Blair.

Olivier, maybe following up on Dan's question relative to potential onshoring activity or certainly a pickup in the equipment opportunity over the next couple of years. Obviously, it's still recent since some of the pharma tariffs and MFN have come out. But what do you make of any change in cadence or nature of customer conversations? And how would you evaluate Repligen's ability today to potentially participate in larger-scale projects relative to certainly before you joined, but maybe 5 years ago when there was a resurgence in capital equipment related to COVID?

Yes, really good question. Obviously, we're all very encouraged to see a couple of recent announcements that were taking place agreement between those 2 pharma companies and the administration. You nailed it down very well. I mean the big difference for Repligen today versus where we were 2 to 3 years ago. So we have become a real broad actor in the field of hardware solutions, and we are now receiving RFPs for a lot of these big hardware investments that are happening around the world. So obviously, these onshoring projects are going to represent a huge opportunity for all of us in the industry and for us in particular, with our very differentiated hardware portfolio that is, as you know, very well, combined with our PAT technology, which is a huge differentiator. So yes, we are starting to hear more about it. We would expect probably first orders to come towards the second half of 2026 and probably sales from '27, '28 onwards, and we're definitely going to be playing a big role in that exercise here for sure.

And your next question comes from the line of Doug Schenkel with Wolfe Research.

Really just a couple on guidance. So first, as I look back over the past 4 years, recognizing it's been a weird period. But if I just average things, revenue has been, I think, about 9% higher in Q4 versus Q3 on average. I think guidance implies revenue is only about 2% to 3% higher in Q4 this year versus Q3. I'm guessing this is just conservatism given the environment we continue to be in, but there's a lot of positive commentary here. You're coming off a good quarter. It's been a series of good quarters. So I just want to make sure there's no timing dynamics that we should be contemplating. So that's the first question. The second is, in your prepared remarks, I think you noted that we should expect filtration revenue growth at the lower end of the range. And I just want to make sure I heard that right. If so, one, can you delineate between ATF and non-ATF? And two, what does that mean about product mix more broadly? Specifically, are resins tracking stronger than expected? And again, I may have just heard it wrong.

I believe your two questions are somewhat related, which makes it easier to answer. This year, we're seeing significantly less seasonality compared to the period before COVID. Additionally, the strong performance in the third quarter is unusual, as we rarely see Q3 outpace Q2 in the past 10 to 15 years. This suggests less seasonality between Q3 and Q4 as well. Our guidance indicates an organic growth range of 18% to 13% in Q4, but keep in mind there's about a 3% headwind from that gene therapy customer, which reported very high sales in Q4 of last year. This is one of the primary reasons for our outlook. Furthermore, the comparison this year is much tougher in Q4 compared to Q3, with the comparison being nine points more challenging sequentially. This is another factor contributing to our expectation that organic growth in Q4 will likely be closer to the 8% to 13% range we discussed. On a more specific note regarding filtration, we delivered the hardware for that significant ATF project we signed about a year ago towards the end of Q3, which also factors into the reduced seasonality between Q3 and Q4.

And your next question comes from the line of Puneet Souda with Leerink Partners.

So I appreciate the momentum you're seeing here now. It seems like 6 quarters of continued order growth even sequentially and the momentum you have here. But just trying to capture that for 2026, I think The Street is close to about 13% organic growth here. Given what you're seeing, is that a sort of right number to think about? And then on the gene therapy side, you pointed out the headwinds for the second half of this year. There was some more news on that yesterday, not necessarily that this is an in vivo product, so maybe it doesn't affect you from CRISPR products. But just trying to understand how are you thinking about that piece of the modality overall for you? And how should we expect that to trend in 2026?

Thanks, Puneet. Starting with the first question, we will provide our 2026 guidance during our Q4 call, which is typically at the end of February. We are pleased with the sequential order growth we've experienced over the last six quarters, growing more than 20% year-over-year. We expect to outpace industry growth by 5% over the medium term and anticipate being slightly above that this year. However, we anticipate a 200 basis point headwind next year from a specific gene therapy customer. We will provide detailed guidance at the end of February. Regarding new modalities, everything has progressed as we expected this year. Our diversified portfolio, with over 80% of our products directed toward monoclonal antibodies, enables us to grow even if we face headwinds in other areas. Despite some challenges with one specific gene therapy project, we have seen positive developments in other programs. There have been several funding announcements related to various gene therapy programs, providing us with significant opportunities. This year, we've successfully diversified our focus on various new modalities, placing more emphasis on cell therapy and antibody-drug conjugates, which has resulted in numerous successes that we are very pleased about.

And your next question comes from the line of Mac Etoch with Stephens Inc.

Maybe just a few for me. But as you look towards your geographical performance, specifically Asia Pacific, up 50% this quarter. Maybe I'd like to get a sense of how your recent investments in the region are trending? What variables are driving that performance? And then given the long-term strategic focus here, do you intend on investing additional resources in the region?

Asia Pacific represents about 15% of our annual sales, which is too low compared to our competitors who range from 20% to 25%. This year, we recognize the need to increase our investments in the region. I would like to differentiate China from the rest of Asia Pacific, as it presents unique challenges. We have decided to appoint a global leader for Asia, along with a new leader specifically for China. We are currently implementing a new and distinct strategy for both areas. In China, our focus is on rebuilding our team and addressing the stronger local competition that has developed since COVID. Meanwhile, for the rest of Asia, we are concentrating on building infrastructure, which includes enhancing various aspects of our business and adding more personnel in the field to engage directly with customers, as we have largely relied on distributors in some areas. Our strategies for these two markets are quite different. We have experienced excellent growth outside of China for several quarters, and it is encouraging to see China returning to growth in sales this quarter, though we still have considerable work ahead. Investment in the region is a priority. We just opened our first office in Singapore yesterday, will open a new office in Japan in the next few weeks, and are exploring further investments across Asia in the upcoming quarters.

And your next question comes from the line of Casey Woodring with JPMorgan.

I wanted to follow up on some of the ATF comments. So you said you delivered hardware for the second blockbuster towards the end of 3Q. Just want to understand if you would expect revenue to fall in 4Q or in 1Q '26 there. And then my second question would just be, you called out emerging biotech revenue was the highest level you've seen in 3 years. Just talk towards trends there in terms of orders. You said you didn't really want to call out a trend there, but obviously, significant improvement. So just any further color there.

Yes, regarding ATF, we cannot provide a definitive timeline at this moment. We have delivered the equipment, and now it depends on how long it takes for them to fully commission the line and get it operational. Different customers may purchase consumables sooner or later, so right now it's uncertain. I wouldn’t anticipate it occurring as early as Q4, but mid-next year seems like a reasonable expectation. As for ATF specifically, we are gaining a lot of late-stage commercial customers and our customer base is very diversified. Currently, we are integrating over 50 late-stage and commercial drugs, and we continue to acquire more every quarter, indicating a solid growth potential supported by recent order trends. Moving to small biotech, it was a pleasant surprise this quarter. Although it constitutes less than 10% of our sales, witnessing such a strong rebound in Q3 was encouraging. This aligns with the increase in biotech funding, which rose from $9 billion in Q2 to $13 billion in Q3, signaling a recovery in biotech funding. Additionally, there has been notable M&A activity, with pharmaceutical companies acquiring small to midsized biotech firms in the last two quarters, which may provide more resources to accelerate promising early-stage projects that we are eager to see develop. We are thrilled to observe these positive developments.

And your next question comes from the line of Daniel Markowitz with Evercore ISI.

I had a quick 2-parter. First, I wanted to ask on the equipment strength. It was another quarter of really strong results, especially when you compare versus peers. I know there were some ATF equipment placements. Is that what explains the better equipment trends versus peers? Or would you say it's more broad-based across different product lines as well? And then the second part related, can you just remind us roughly the revenue contribution from these placements in 3Q? And as we look forward to 2026, how should we think about the consumable pull-through and what this means for broader momentum in the ATF product line?

I will focus more on the first question since I won’t address the second one. Our capital equipment performance was very encouraging, with revenue growth exceeding 20% and orders increasing in the high teens for the quarter. This growth was primarily driven by both ATF and our analytical equipment. Overall, the performance this year has been strong across the board. While downstream hardware was a bit lower than both ATF and analytics in the third quarter, our year-to-date orders have been robust, including for downstream hardware. It’s important to note that we are viewing the hardware market from a different perspective than others, as we are relatively small and new to the field. We have made significant strides in the past couple of years. Also, we are differentiating ourselves by pairing our systems with our PAT technologies. This year, one out of every four downstream systems is now being combined with our PAT technologies. Customers who previously purchased hardware from competitors have been approaching us to gain access to our PAT technologies. However, it’s fair to say that capital equipment spending has not yet returned to historical global levels. This is why we are all eager to see the onshoring projects over the next couple of years, which should boost overall market growth and offer us additional opportunities for further and faster growth. Regarding the specific ATF project, I cannot provide any specific numbers, but it is only a small part of the reason behind our strong growth in the quarter. Overall, hardware performed very well for us in the third quarter.

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

Congratulations on the quarter, it's great to see the progress. I wanted to follow up briefly on the comments regarding process analytics, specifically about the integration of the MAVERICK device from 908 into ATF. Could you provide more details on the current status of that integration and your thoughts on the timing? Additionally, how do you see this impacting your growth opportunities across the franchises, especially if it develops as anticipated?

Yes, obviously, you heard us talking a lot about analytics. I mean, again, because it's a perfect showcase of the breadth of the portfolio we have. But really, I have to say this year, one of the most important launch we had was the SoloVPE PLUS, which is a real new generation of our at-line protein concentration piece of hardware. And in quarter 3, this has just enabled us to sell the highest amount of units we've ever sold in the history of CTech. And what's very encouraging is we have a very, very important installed base, and it's probably only less than a couple of portions of that installed base that has been upgraded to the new SoloVPE PLUS. So you would think like this is going to be a real big tailwind for us for the next several years here, which we are very excited about. And then the only other stuff I would add on the CTech side is the first 2 quarters where we saw a huge rebound on both consumable and services as well. And then we will start to have a lot of focus on services with the successes we are seeing here. But it was great to see hardware now being back to this very high growth that we are expecting and with a very strong funnel. As far as the 908 is concerned, I mean, the integration is running as expected. So we've merged now the 2 sales organization, and we start to see a really nice growing funnel for the 908 part of the portfolio. And yes, we are progressing on the R&D side to combine ATF with MAVERICK. So you'll hear us talking more about it in a quarter from now. But at this stage, it looks absolutely promising.

And your next question comes from the line of Anna Snopkowski with KeyBanc Capital Markets.

Congrats on the quarter. This is Anna on for Paul Knight, and I have 2 questions. So maybe first, I think at recent conferences in your last quarter, you mentioned strength in CD and maybe more muted activity with those midsized CDMOs. So I was wondering if we could get an update around midsized CDMOs and if you're seeing activity progressing there? And then my second question is on the protein side. I was wondering how the recent launches have been for your own resins. And I think you mentioned some launching in the second half of this year. So maybe an update there.

Yes. No, I mean, on CDMOs, again, a really great quarter for us, both from a sales and an order point of view. We did mention like the strength was particularly visible on the large-scale CDMOs. So I have to tell you, openly, I didn't really specifically look at the midsized ones, so I can't answer you very specifically. But I know this quarter, really large-scale CDMOs were the one driving that more than 20% growth we had on the CDMO side. As far as protein is concerned, that was really one of the great surprises in the quarter because we expected protein growth to be pretty muted in quarter 3. And in fact, it grew double digits. And for me, that was a great testimony of a very successful strategy that we started developing now 2 to 3 years ago, where we had to switch from being a pure OEM partner delivering protein ligands to start developing custom ligands and custom resin with the acquisition of Tantti Lab. And I mean, the traction we're having on that side is absolutely great. I mean the reason why we delivered more than expected in quarter 3 on the protein side was because of chromatography resins. We know that's a business that can still be lumpy from quarter-to-quarter, but we are working on so many custom projects right now, like we know that's going to become a huge tailwind for us over the next several years. And just to close on product launches, yes, we are still aiming to launch 2 to 3 new resins before the end of this year, and then we're going to make this announcement probably in the next couple of months now. But we are also having a pretty ambitious plan to launch several new resins in 2026. So we really want to have both a broader catalog of products for new modalities, but also working more and more on custom projects on different types of applications for big pharma customers as well here.

And your next question comes from the line of Tom DeBourcy with Nephron Research.

You mentioned the strategic accounts and 20 key CDMO and pharma accounts. I just was wondering what trends in particular you're seeing at those accounts? Are you seeing similar strong equipment growth? And anything that, I guess, maybe differentiates those larger strategic accounts versus, I guess, the portfolio as a whole?

Tom, great question. I mean strategic accounts have been an incredible success story for us, I have to say. I mean it has really enabled us to really cross-sell our portfolio better and better. And equipment that you just mentioned is a perfect example. I mean these accounts didn't really have a clue about what our capabilities were in terms of hardware probably a couple of years ago. They knew us for ATF. They knew us for prepack column. Now I mean, the vast majority of these people now have either bought a couple of pieces of equipment, if not more than that, or at least had a chance to get trained on how to use our equipment and are sending us RFPs for the big expansion they are working on. But across the board, the strategic accounts have been really, really accretive to growth both from a top line and from an order point of view as well on the quarter. So we are really delighted by the successes we've had. And I know we mentioned several times for a company like ours, which is very focused on innovation, we absolutely need to get access to the key decision makers, and this is what this team of key account management has brought us over the last couple of years. So really delighted about the progress here.

And your next question comes from the line of Luke Sergott with Barclays.

I wanted to discuss the relationship between the new modalities and the mAbs, particularly as we look ahead to next year. For my second question, I’d like to consider your current core growth of about 13%. Given all the variables from investments, M&A, foreign exchange, and tariffs, should we anticipate an opportunity for margin expansion next year in the range of 100 to 150 basis points, or possibly more in a more normalized setting?

Yes, the new modalities performed largely as we anticipated in the third quarter, reflecting the expected subdued demand. Consequently, we are facing a notable headwind in the latter half of this year due to the gene therapy program. Aside from that specific project, we are doing quite well. The strength of our highly diversified portfolio, with over 80% of our products focused on monoclonal antibodies, allows us to grow in certain areas even if we encounter challenges elsewhere. Despite the challenges with the gene therapy project, we have experienced a positive year overall. While there may be some setbacks with one particular program, we also see positive developments in other areas. On the gene therapy front, there have been several significant funding announcements for various programs in recent months, which have provided us with great opportunities. This year, we have successfully broadened our focus on various new modalities, with an increased emphasis on cell therapy and antibody-drug conjugates. We've achieved numerous successes in both areas, which we are very pleased about.

And your next question comes from the line of Brandon Couillard with Wells Fargo.

Jason, just real quick. Could you quantify what's embedded in the guide for net pricing this year? And just kind of quantify the tariff surcharges and whether or not those may or may not recur in '26?

Yes. Price has been pretty consistent at this low single digit. We've seen that through the year and expect that to wrap up in 4Q as well embedded in the overall guide and really kind of see that as we move forward. For tariffs, again, minimal impact in '25, a couple of million or so from a surcharge side in terms of, hey, I see the sales, but I'm going to have an equal amount of cost. And again, from what we see today, I don't think that changes much next year. Every day, we see new headlines. So we'll continue to watch that, but still see a little bit of, I'll say, marginal dilution at the profit level with tariffs as surcharges will remain.

And I would now like to turn the call back over to Olivier Loeillot.

Well, many thanks for joining our call today. I really want to congratulate our Repligen team for executing brilliantly in the quarter 3. We are really looking forward to meeting you all at the upcoming conference. Have a great day today.

And this concludes today's conference call. You may now disconnect.