908 Devices Third Quarter 2026 Financial Results Conference Call - 908 DEVICES INC

Hello, everyone. Thank you for joining us, and welcome to the 908 Devices Third 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 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Matt Roach, Vice President, Investor Relations. Matt, please go ahead. Thank you and good morning. On this call, we will be discussing our financial results for the third quarter of 2026, which were released earlier this morning. Joining me from 908 Devices are Kevin Knopp, Chief Executive Officer and Co-Founder, and Joe Griffith, Chief Financial Officer. During today's call, will make four looking statements within the meeting 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 discussion of these risks and certainties, please review the forelooking statement disclosure in the earnings news release, as well as in our most recent annual report on Form 10-K, quarterly report on Form 10Q, and other SEC filings. These forelooking statements reflect management's beliefs and assumptions as of the date of this live broadcast, November 10th, 2026. Except as required by law, we disclaim any obligation to update forelinking 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-GAP reconciliations can be found in today's earnings press release, which is available in the investor relations section of our website. With that, I'll now turn the call over to Kevin. Thanks, Matt. Good morning, and thank you for joining our third quarter 2026 earnings call. Q3 was a strong quarter across the board. We delivered revenue of $19 million, up 35% year-over-year, driven by continued strength in our core business and underscoring the durability and momentum of the platform we've been building. Reflecting that momentum, we're raising the low end of our full-year 2026 revenue guidance and now expect revenue of $68.5 to $70 million. We shipped more than 300 devices in the quarter, a new company record, bringing our installed base to approximately 4,400 devices in the field. This milestone reflects broadening adoption across frontline responders, fire and hazmat teams, law enforcement, and federal and military customers in the U.S. and abroad as customers accelerate efforts to modernize their detection capabilities and stay ahead of an evolving threat landscape. On profitability, the structural changes we made in 2025 fundamentally reset our cost base. We're now operating with the control and discipline to invest behind our growth opportunity without overspending, prioritizing growth while making steady progress towards adjusted EBITDA break-even. Our Q3 adjusted EBIDDA loss was $1.7 million, and we remain on track to reduce our full-year loss to the mid-single-digit millions, cutting it roughly by one-third from 2025, inclusive of NearLab. Turning to NearLab, the integration is on track and executing well. Commercial synergies are already translating into accelerated adoption, and the pipeline continues to build. We're seeing strong interest in the U.S. and are making good progress with international law enforcement agencies, giving us confidence in the trajectory ahead. Stepping back, I'm proud of how our team executed in Q3. We expanded our market footprint and continued to demonstrate operating discipline as we build a category-defining company. In the quarter, we made solid progress on our three focus areas for 2026, scaling our proven platforms, extending platform leadership, and strengthening revenue durability through connected services, and were well-positioned to deliver a strong finish to the year. Let me now walk through our progress in each of those areas. First, scale our proven platforms. Our product platforms are the engine of our growth and Q3 demonstrated what they can deliver. We shipped more than 200 FTR devices in the quarter, including approximately two-thirds of the $6 million protector order from an Asia-Pacific corrections agency we highlighted on our Q2 earnings call. In Europe, we secured two meaningful Protector wins with government customers, both with explosive ordnance disposal or EOD teams. The first is a framework agreement worth more than $2 million with a defense customer replacing legacy equipment. The second is a competitive displacement win with another European government. Together, these wins demonstrate that Protector is earning trust in demanding environments and capturing share in the global EOD modernization cycle. International customers represented 40% of total revenues in the third quarter, double the prior year, reflecting the strength of our technology, our investments in international channels, and expanding global defense budgets. Viper is also scaling. We remain on track to ship more than 100 Viper units this year. In Q3, a major U.S. transportation agency placed its first Viper order, notable because it already deploys our MX-908 Explorer and Threat ID devices. This is a land and expand in action. Each of our our platforms serves a distinct detection or identification mission, and our products don't compete with one another. They work together. When a customer adds another 908 platform, they're expanding their detection coverage and addressing more of their workflow, not replacing what they already have. This agency is a clear example of that dynamic, multi-system orders and adoption, and it's a pattern we're increasingly seeing across our customer base. Our flagship MX908 is another proven platform that continues to scale with our customers' needs, and the illicit drug landscape is making that more apparent than ever. On our last call, we mentioned a new class of synthetic opioids called orphans. The latest example is cyclorphine, estimated to be up to 10 times more potent than fentanyl. A recent Newsweek article highlighted that has been linked to deaths across the U.S. and detected in 17 countries. It's frequently found in counterfeit pills and often requires multiple doses of Narcan to reverse an overdose. What makes cyclorafine and the many new synthetic compounds like it particularly dangerous is that they can outpace fixed field detection methods. Responders need programmable technology that evolves with the threat, and that's what MX908 uniquely delivers. Because it uses mass spectrometry to identify substances by molecular signature, we can update its library as new threats emerge, giving frontline responders the ability to identify these drugs in the field at trace levels in real time. This is a compelling example of how our install base becomes more valuable over time. The same device helping responders address fentanyl today is already helping them get ahead of the next wave of threats. As we extend connected services across our portfolio, cloud subscriptions will make keeping customers current faster and more seamless. A model NearLab already delivers today, as I'll discuss later in my remarks. Turning to our second focus area, extend platform leadership, a clear example of our differentiated capabilities is in aerosol detection. The chemical threat landscape is shifting. A-series nerve agents and pharmaceutical-based agents are a growing concern, and they can be deployed as aerosols, a form that conventional vapor detectors aren't designed to catch. As a handheld mass spectrometer, MX908 is uniquely able to detect and identify these threats at trace levels in both aerosol and vapor form, and that capability is resonating with customers. In Q3, a U.S. military customer purchased dozens of MX-908 devices to close an immediate capability gap, working to get the technology quickly into the hands of warfighters, and we're already discussing follow-on orders. In parallel and building on the next steps we outlined last quarter, we made tangible progress on avcat we delivered mx908 devices to the office of the u.s army's capability program executive sir cbrn defense for analytical testing and evaluation this is the organization responsible for the avcat program and as we discussed last quarter the government is considering commercially available products as part of a broader department of defense procurement reform prioritizing speed and program flexibility we view this testing as a constructive signal for the program's trajectory and believe it positions us well for potential commercial off-the-shelf or COTS orders in 2027. We believe our aerosol and vapor detection technology is best in class, extensively government tested and validated, and can win this opportunity regardless of the chosen path. We continue to see meeting the military's next generation aerosole and vapor detection needs as a significant long-term opportunity. And with a commercial path, more the program economics would come to 908 devices meeting next generation needs is what drives our roadmap starting with our next generation mx908 which we're targeting to begin shipping to early access customers by year end it is significantly smaller and lighter more selective simpler to operate and features enhanced connected services building on the capabilities that make mx 908 the trusted choice in the field today pilot manufacturing is underway beta feedback from users in the U.S. and internationally has been overwhelmingly positive, and our partners across Europe, the Middle East, and Latin America are already asking for demo units. We expect the next generation MX908 to be a meaningful growth driver in 2027, winning new customers and over time driving upgrades across our install base of more than 3,000 MX909 devices. Finally, our third strategic focus area is strengthening revenue durability building a more predictable revenue mix for recurring revenue from connected services alongside our oem and funded partnerships today i'll focus on near lab which is central to our connected services vision and q3 showed real momentum we sold approximately 100 near lab devices in the quarter up from approximately 35 devices in first two months of ownership more than half went to customers new to near lab including u.s state and local agencies some of of them new to 908 devices entirely, as well as law enforcement agencies across Europe, Australia, Africa, and Asia. Demand is broad-based, not concentrated in any single market. Platform usage is growing even faster, and that's a key metric for us. The more agencies rely on NearLab every day, the more durable and valuable the subscription becomes. In Q3, we surpassed 1 million cumulative scans on the NearLab narcotics platform. Daily scan volume now averages roughly one per minute, up 74% year over year. We've also begun collaborating with U.S. forensics labs, giving NEAR Labs AI-powered models more U.F. data to train on, so identification keeps getting more refined and stays current as we grow in the U.C. That matters because the drug landscape changes quickly, and NEAR Lab's cloud-connected architecture is purpose-built for exactly that reality. The deaths of two Mississippi college students in September, linked by authorities to synthetic kratom, are another tragic reminder of how rapidly new threats emerge. Policy is responding. Earlier this year, a bipartisan group of U.S. senators urged the DEA and FDA to accelerate controls on synthetic klatom compounds, and the DEa has since proposed new federal limits. As regulation tightens, agencies will need fast, reliable field identification. Nearlab has unique capabilities to create them today, and its cloud-connected library allows us to push updates to customers as new threats emerge without requiring new hardware. Longer term, we envision a connected experience where customers can share results and trends, manage their fleet, and analyze data across every 908 device. One workflow, whichever device is in hand. Team Leader connects our FDR products today and will extend to our next generation MX908 with NearLab's cloud infrastructure and advancements helping us bring that experience across the entire portfolio. This is the blueprint for where we're taking the broader business. Rugged hardware paired with connected software that generates recurring revenue backed by the 24-7 expert reachback support from our scientists that our customers consistently rank as most valuable. That integrated model of hardware, software, and expertise is the template we intend to apply across the portfolio. With that, I will turn it over to Joe to walk through the detailed financial results for the quarter. Thanks, Kevin. Total revenue was $19 million for the third quarter of 2026, increasing 35% from $14 million in the prior year period, which included 1.2 million from near lab our ftir products represented 55 percent of revenues for the third quarter of 2026. on a year-to-date basis the mix was more balanced for the first nine months of 20 26 ftir was 49 mass spec was 47 percent and near lab was four percent of total revenue handheld product and service revenue was 17.8 million for the third quarter 2026 up 35 percent from 13.2 million for the third quarter of 2025. The increase was primarily driven by our FTIR products and NEAR Lab law enforcement revenue. In total, we shipped over 300 devices in the third quarter excluding NEAR lab bringing our install base to approximately 4,400. OEM and funded partnership revenue was 1.1 million for third quarter 2026 of 42% from $0.8 million for the third quarter 2025. The increase was primarily driven by revenues from component sales to a large analytical instrumentation customer and $0,1 million from near lab OEM channels. Recurring revenue was $5.1 million in the third quarter, an increase of $0.,2 million year over year and represented 27% of total revenues. This increase was primarily related to software and subscriptions related to NearLab and higher FTIR service revenue, offset in part by the expected reduction in mass spec service revenue. Strong device placements lowered recurring as a share of total revenue this quarter, but build our opportunity base for future service and subscription revenue. Gross profit was $10 million for the third quarter of 2026, compared to $7.4 million for the prior year period. Gross margin was 53% for the 3rd quarter of 2016, consistent with the prior-year period. Adjusted gross profit was 10.9 million for 3rd-quarter of 2027, compared to $8.1 million for prior-period. Adjusted Gross Margin was 58%, a decrease of 40 basis points compared with the previous year period The slight decrease in adjusted gross margin despite the higher revenue volume was primarily driven by the impacted mix led by lower margin international product revenues in the quarter. Total operating expenses for the third quarter of 2026 were $15.5 million compared to $23.7 million in the prior year period. The reduction was primarily driven by an $11 million non-cash reduction in expense related the change in fair value of contingent consideration partially offset by a 2.8 million increase in selling general and administrative expenses which includes near lab operating costs net loss from continuing operations for the third quarter of 2026 was 4.6 million compared to a net loss of 14.9 million in the prior year period this decrease in loss was primarily driven by 2.7 million in higher gross profit and the reduction in non-cash charges for revaluing contingent consideration partially offset by higher selling general and administrative expenses adjusted EBITDA loss for the third quarter of 2026 was 1.7 million compared to a loss of 1.8 million in the prior year period Within the third quarter of 2026, we consumed $2.4 million in cash and ended the quarter with $99.1 million in cash, cash equivalents, and marketable securities with no debt outstanding. Looking ahead in 2026 we now expect revenue to be in the range of $68.5 to $70 million, representing growth of 22 to 25% over full year 2025. Our guidance range includes the following assumptions. First, we now expect handheld product and service revenue to grow 24% to 27% year over year, which equates to a range of 65.5 to 67 million. Second, we continue to expect OEM and funded partnerships, including contract revenue, to be approximately 3 million. And third, consistent with last quarter, we have not included any FCAD program revenue given the potential transition to our commercial product. Moving down to P&L, we continue to expect adjusted gross margins to be in the mid to high 50% range for full year 2026, with the product and channel mix driving the adjusted gross margin. For the first nine months of 2026 adjusted gross margin was 57% in line with our expectations. And on the bottom line, we continued to expect to reduce our adjusted EBITDA loss to the mid-single-digit millions, cutting it roughly by one-third from 2025, closing the gap on achieving break-even while balancing investments to enable the growth opportunity. At this point, I would like to turn the call back to Kevin. Thanks, Joe. To wrap up, Q3 was a strong quarter, and we're pleased with the progress across the business. Revenue grew 35% to a record $19 million. We shipped more devices than ever, expanded our installed base to approximately 4,400 devices, and made steady progress towards breakeven. We advanced all three strategic focus areas. Our proven platforms are winning more orders globally. Our differentiated technology keeps us ahead in the field, and NearLab is accelerating our connected services vision. In the near term, our priority is execution. With a strong pipeline, healthy customer funding, and a team that continues to deliver, we were focused on finishing 2026 on a high note. That finish also sets the foundation for 2027, where we see three key growth drivers. First, Nearlab, with a growing pipeline across federal, state, local, and international customers. Second, the next generation MX908, with early access shipments this year, creates opportunities to win new customers and drive upgrades within our installed base. And third, AFCAD, where ongoing testing and evaluation of our MX908 positions us for potential orders as a commercial off-the-shelf alternative. Together with continued contributions from our newest optical products, Viper and Explorer, these drivers give us confidence in sustained growth and long-term value creation for our shareholders. The problems we solve are getting harder. Drug threats are evolving faster, chemical risks are growing more complex, and agencies are being asked to do more with less our job is to give frontline responders the answers they need when they need them across our portfolio hardware connected software and expert reach back we are working towards complete situational awareness for every responder at every scene we intend to keep earning that responsibility thank you to our employees for their dedication to that mission and to our customers and shareholders for their continued trust operator please open the line for questions we will now begin the question and answer session please limit yourself to one question and one follow-up 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&A roster. Your first question comes from the line of Puneet Soda with Learink Partners. Your line is open. Please go ahead. Yeah. Hi, guys. Thanks for the questions here. Maybe the first one, you're raising the low end of the guide, but I just wanted to focus on the fourth quarter. Was there any pull forward in terms of the instruments in the quarter? 300 devices was good, but you had a higher concentration. I think 41% of your revenue came from two customers. So just wondering if there are some order dynamics that we need to keep in mind here and maybe just remind us what would it take for you to be on the upper end of that upper end of the full year guide? No, it sounds good. Yeah, Q3 was a strong quarter, you know, record quarter, you know reflecting the strength in the core business, really underscoring the durability and momentum of the platform. You know, we've been building revenue up 35%. It was driven by the FTIR products and near lab law enforcement revenue. And you're right, we narrowed the low end aligned with the Q3 performance at the midpoint. So really no order shifts or movement. Q4 would be 20% growth in Q4 at that midpoint. And to get to the high end of our revenue growth, we need to be closer to 24% in the fourth quarter. Really require execution across some key customers and opportunities, mainly with Viper and our mass spec products. And we like how we're positioned here in November. It's typical, as we always were working for a handful of larger enterprise opportunities to deliver on the quarter. And where we land will ultimately depend on the securing of the funding and the time of the closure. So, you know, we feel good about where we're at in finishing up. As far as customer concentration, we typically use channel partners. We did mention, you now, the Asia Pacific, you kno, about 4 million came from that protector opportunity. So that was a high concentration. And we also use some channel partners here in the U.S., which was that other significant customer. But often there's multiple end users behind those channel partners, especially in the US. Got it. That's helpful. And then as we look to 27, you pointed out in their lab and also next generation MX-908, wondering, Kevin, if you could talk about how the replacement cycle for MX-808 could look like and any early thoughts um you know that you're willing to provide in terms of uh how to think about 27. thank you yeah sure um thanks for the question um we'll provide uh obviously the the full outlook for 2027 early next year but as as we head and close out this year you're right there's kind of those three drivers one is near lab really coming to speed super happy with the pipeline there and how it's been developing a significant second significant one certainly could be our next generation mx908 i can give more color on that in a second and then third the avcat that we've started to do some ongoing testing and evaluation as a potential cot solution on next gen mx as you know our our current generation m x is is is really a category defining uh product we have over 3 000 of them installed out there and we're really working now to to get a a new platform that will carry us forward for many many many years uh very pleased with the the progress on that we're running to make sure we really get that right we're getting it out there to early access customers in in q4 um and uh we'll we'll get uh additional feedback but at the same time we're scaling with pilot manufacturing uh we've already got a lot of beta feedback across our partners in in europe middle east latin america are asking for their demo units and uh We do expect MX-908 to be a meaningful growth driver in 2027. In the case of the upgrade cycle, I mean, it is an installed base. It's a pretty significant long-term opportunity. We do respect the upgrades to build over time alongside with new customer wins. You know, we do expect to be having the MX- 908 in the market as well as the next generation, and we'll maintain a commitment to customers on that. So, you know, stay tuned. More to come, but definitely a driver for 2027, Your next question comes from the line of Max Masucci with Roth Capital Partners. Your line is open. Please go ahead. Hey. Thanks for taking the question, guys. Great to hear about the strong start for NearLab. Can you just share how is that sales funnel building and how much of the Q3 placements went to customers that are new to 908 versus those that are existing FTIR or trace detection users. Yeah, the pipeline for NearLab Max has been going really well. I think we're super pleased with how the integration's been going. Yes, we've sold a product in the quarter to customers that are completely new to 808 and then also certainly to customers of 808 that have had some of our other products. So we really like to see that mix. More than half of those placements went to customers that were new to Nearlab, including U.S. state and local agencies. And then some, as I mentioned, that are entirely new to 908. So, we think that's a great gateway to our broader portfolio. So good pipeline development there. We are seeing enterprise scale opportunities develop domestically and internationally. As we mentioned on the call, we saw a nice step up in in unit volume in the quarter here for our first full quarter of ownership and and as you as you know there's a great opportunity there because there's connected services cloud subscription platform that really can demonstrate some some great value to these customers by having that continued connection the data sharing the model updates target updates lots of interesting vectors there for us to build on with recurring revenue over time definitely a solid quarter you know as we saw about 100 devices in the quarter that's on top of our 308 for all of our rest of our devices as a reminder we don't count that in our device track but seeing 1.2 million in in q3 if we can repeat that in q4 we're kind of getting closer to 3 million uh for for the year which is great out of the box and see an opportunity as a key growth driver to get to 5 million plus in 2027 so still early but it's looking like near lab will be another you know strong contributor over time just like our red wave acquisition has become with ftir that's great and on avcad so it sounds like you see the program progressing towards a commercial off-the-shelf approach um so how how does that factor into you know the potential timing you know for an official full-rate production decision um and just even the the margin that you could see on AvCAD revenues under that COTS approach? Yeah, absolutely. We feel we've made some tangible progress in the quarter on Avcad within Q3. As we mentioned, we delivered some MX908 devices, our COTS product, to the office responsible there for analytical testing and evaluation. We do view this as a very constructive signal that the program's trajectory is seriously considering a COTS solution, and that would impact us most likely in 2027, should they decide to go that route. Absolutely happy to continue on the route with Smith's. As you know, the contract did close, as we stated last quarter, and it's run its course. But if they choose that way, we really feel we're positioned to win either way. You are right that if it is a cot solution, we're providing more of the content of that solution, of that product. So you would expect the economics to be more favorable in that solution for 908 because we wouldn't be providing just subsystems and components. We'd be providing the finished COTS commercial product that's already at nice scale. They'd expect the commercial margins to be More in that mid 50s, mid to high 50s that we see with our other products on their COTS versus more OEM level margins that might have been in the 30 to 40 percent range. your next question comes from the line of chad viatrofsky with td cowan your line is open please go ahead hey guys uh appreciate the strategy with uh software and service that's often an underappreciated aspect of the competitive moat but i guess are there any software offerings today that you see a potential to monetize or looking down the line is that sort of a growing area of the r d spend and do you expect maybe next year to um continue to build out capabilities there yeah no great question chad yeah i mean so starting yes i mean from an r d perspective very much it's getting a lot of our r d team's attention it's an area that's really resonating with customers as we get more and more of these nodes out there we mentioned some great stats on near lab in terms of its usage frequency that is monetized today right you sell a device um and then it's about uh after that's about 50 then again in a subscription fee each year thereafter to maintain connection to get into the ai models to to get the latest secure cloud storage um getting a complete chain of custody of the data etc all all in the cloud so very much that is a step we're pursuing aggressively with the NearLab product. And then we're learning from that and putting it across our entire portfolio. We have a product called Team Leader today that interfaces with our FTIR product line. And dann as we roll out our next generation MX, we expect Team Leader to connect there. So we're really working to have this connection across all our devices. In some cases it kind of accelerates the the need and driver to be on support service and uh with our next generation mx we'll be looking to ascribe more value to that going forward as we get more features rolled out for our next gen uh mass spec devices so yeah lots of excitement there around where that could go because people really want the ability to manage the fleet and see the trends of what's happening in their regions. That's helpful. And just on MX 908 2.0, is this a commercial effort that's going to require any additional sales reps? If not, can you just remind us kind of the commercial footprint today and maybe where the emphasis will be in terms of geographies? You mentioned new customers. So how do you kind to penetrate the MX908 naive perspective customers. Thanks. And Steven, great question. As we roll out the next generation MX, it'll plug right into our sales channel today, be sold alongside by MX907, especially in 27 and then over time. And it is nice having a portfolio of products. I think with any launch we'll look at, does it make sense to layer in maybe some inside sales resources or maybe some additional regions. I think more broadly across our portfolio, we've been investing on the international side here in 2026 to set us up for growth in 27 and start to see some of that in Q3 in the back half. So I think we'll balance across our primary channels of federal defense, state, local, and international and look to go direct where we can. Our footprint today, really, I think, we're in the mid 40s from a selling and marketing and that includes everything from sales, direct inside sales, marketing, product management, really a top-notch team going after the opportunity with our customers. Yeah, just to clarify, Chad, they're selling not just the MX, but selling the entire portfolio. So that really is what helps us get scale and get some synergies across the team. Your next question comes from the line of Austin Moeller with Canaccord Genuity. Your line is open, please go ahead. Hi, good morning. I was just wondering if you've heard anything about the reimbursement funds and block grants to the states and municipalities from the DHS reconciliation bill. Is that starting to become available to some of your customers? Yeah. Hi, Austin. Great question. You know, the funding environment is something we stay very, very close to, especially with the post-election side of things. You know, I think on a general comment for that, I would say that generally we're working on applications and priorities that have a broad bipartisan support. So we've been kind of running the traps with existing customers and confirming exactly that. On the grant basis, you're right, a lot of our state and local funding comes from a variety of grant sources, federal grants and state municipal budgets, et cetera. But a lot are from those grants from the federal government side. You know, I think the really good thing there is that the major grant programs like UASI and AFG and COPS and the HIDA programs, they were all refreshed in June and July, and they were funded over multiple years to about $1 billion in total across those grant programs that our customers pursue. So we do think they're a bit insulated from the federal budget timeline, and they can keep going during a CR. Yes, grant funding is multi-year, so it has been flowing. And yes, there were some of those grants, COPS in particular, that had more recent activity and releases to our customers. That should be a positive for us here in Q4. Okay. And I was wondering if you could talk about how the establishment of the US sales channels going for NearLab and maybe where some of those 100 NearLab devices were shipped or to what customer? Yeah, absolutely. I mean, I think the great thing about the NearLab product is that tremendous channel synergy. So we're able to really put it in the exact team that's performing, that's really been focused on the US markets. And then as Joe mentioned, we've been doing more investments internationally. So it's great to see our team have this in their offering and being able to put it in the hands of our existing customers. I would say that it was pretty broad-based, the demand for the customers for the Neolab product over Q3. We definitely saw across U.S., state, and local, but we also saw international law enforcement agencies across Europe and Asia adopting the product and platform, and very happy that we're seeing that. It's got really some very unique capabilities. And as you know, the Kratom has been in the news a lot lately and then an unfortunate tragedy in Mississippi and cannabis is a continued concern and regulatory controls are continuing to evolve on that. So yeah, we think that it's going to have a continued big impact. But from a sales side, it's great to see the team being able to execute with it and it just naturally fits right next in the rest of the portfolio. your next question comes from the line of matt larue with william blair your line is open please go ahead hi good morning um a couple more questions on uh nexen uh mx908 you're our friend doing some pilot manufacturing so just just curious um you know kind of what capacity will look like at the start and how comfortable you feel with sort of, you know, supply chain, ability to scale up with demand. That's kind of part one. The second piece of it would be, I guess I imagine you've, as maybe a part of some of the beta discussions, floated sort of a team leader and what the new capabilities of team leader might look like and how you might want to monetize that. And just would be curious what a customer's response has been as they think about purchasing a next gen MX and then potentially starting to pay a subscription for Team Leader. Yeah, absolutely. I'll start with the Team Leader aspects and then pass to Joe here in a moment. But yeah, across all of our devices, particularly new devices like our NextGen MX, the discussion is becoming more and more about the data, the trends, the fleet. How do they know their investment is being used by the purchaser is handing it out or the manager is handing it off to many field offices, right? These are field tools. Where do they see what units being productive? What units are being maybe underutilized? Which ones are maxed out? And then importantly, what are they seeing in those regions and geographies? And how do they connect the dots? And we just had some nice discussions last week with customers on this that are enterprise level customers that are really trying to piece together all that data to give them a more coherent picture. So that resonates for the next generation of our mass spec, but also resonates for Viper and also very much resonates for NearLab. So very excited about that. You know, from a pricing, you can expect that we'll be ascribing more value to that as we go and then particularly bundling it with support and service packages. As you know, today we offer something called Reachback, which is really an expert service that we do some of these functions for them, but in a more manual way. And so we're very excited to have Team Leader connected and the features it's going to offer. And related to kind of pilot manufacturing and supply chain, I mean, manufacturing is underway. We have it up and running down in Danbury, Connecticut, where all of our manufacturing takes place. You know, the beta feedback has been very positive on the device, and partners in Europe, Middle East, Latin America are already asking for 10 million units, and as Kevin mentioned, we'll share that pricing and positioning, you know, post full launch, but we expect next-gen MX to be a meaningful growth driver in 27, but we do expect some first sales here in late 2026. Okay, that's great to hear, and then I guess maybe the slightly higher one if i think back just over the last you know several years of of 908 um you know the the commercial goal has sort of to do from you know pilot to enterprise sales and we've seen that you know successfully occur and i think if i go back to kind of 2024 was the first multi-system mx ftir order you've continued that was after red wave but then you've you know continued to add new products in the portfolio just curious because i know there can be a long timeline sometimes pilot to enterprise. Just curious, as you've added things into the portfolio, what kind of the funnel looks like from things in pilot stage up to getting closer to what might be an enterprise type sale from a multi-system standpoint, multi-technology standpoint? And it sounds like you're really seeing the benefits of the broader portfolio kind of manifest now in the commercial opportunity. Yeah, for sure. We've been doing a ton of work to call it diversify our revenue streams. And some of that comes from having that broader portfolio. Some of that is coming from channels, which is becoming much more balanced between state and local, international and federal and military. I'm very pleased to see, as Joe stated, that we're getting more traction internationally and expect that to be helpful to us in the back half of this year, but also into 27. So I think those things really help a lot. Recurring revenue, right? You're hearing us amplify a lot around the software, the expert reach back services, the more support and infrastructure that we can help customers with, that helps with our recurring, which was around 27% this quarter. And we see definitely roads to expanding that. And then you are right, we're always working these, call it smaller, one, two, five more stochastic run rate orders at the same time developing larger enterprise orders. And enterprise order could be someone that buying 50 units, But we know they've got need for 300 units and they're going to work on that over time. We do historically put out pipeline metrics for the pilot and enterprise accounts at year end because there's a lot of ebbs and flows throughout the year. So we'll be working on tallying those up as we enter the new year. What we put out there in the past is that there's more than a thousand units in pilot stage. And then there's over 1300 units in those enterprise accounts with ongoing potential. So a lot of action and opportunity there. Your next question comes from the line of Dan Arias with Stiefel. Your line is open. Please go ahead. Hi, guys. This is Rohan. I'm for Dan. Thanks for the questions. Kevin, I think you noted international was 40% of revenue. On the other side, state and local revenue was down about 20% year over year. setting the protector order aside, how did state and local orders turn in the quarter and so far in Q4? Is that mainly timing or has anything changed in funding or demand? Yeah, Ron, thanks for the question. On the U.S. state and local side, it did represent approximately 25% of the revenues in Q3. Year-to-date, it's over 40% total revenues, which is in line with our expectations. As I looked at the team, they're tracking above their internal sales target year-to date, so we're continue to see that momentum with the funding and should enable growth as we look out into the future here in Q4 and 2027. So the decrease in state and local in Q3 was mainly driven by some MX908 placements where they're a really strong first half with some large wins, 10 plus per customer over Q1 and Q2. So still pretty energized on the state and local side. And we also had that factor of the focus on getting the international protectors out the door a good chunk of them here in the third quarter okay thanks for that for my next question um on the mass spec uh service decline you called expected um has the pause defense service coverage resumed i'm sorry if i missed that and as you laugh it in q4 when should recurring revenue excluding near lab return to growth thanks yeah you're right i mean ftir service has been growing the mass speck has been decreasing here and you're you're right, that's related to that customer funding that went away, and I think it was December of 2025. So we'll be lapsing that here in the Q4, so less of an impact. We're working with that customer on opportunities to potentially get them back under contract in some form or fashion. So that's something we're looking at for 2027 as an opportunity. But mass spec excluding that has been growing, FTIR service has been going. On the overall recurring revenue metric, You know, get excited on the number of device placements and the opportunity to sell service in the future, and especially in your lab with that 50% recurring opportunity. So I think good times ahead there. But you're right, that was a bit of a drag on service historically. Yeah, and I think, you know, over our long-term goal, it really hasn't changed. And that's to be in the 30s and see if we can bring that up into the 40s as these subscriptions and connected services continue to grow with the install base. There are no further questions at this time. I will now turn the call back to Kevin Knopp for closing remarks. Thank you. Thank you all for your time today. Really pleased with being able to give you the report and thank you for the questions. This concludes today's call. Thank You for attending. You may now disconnect.