908 Devices (NASDAQ:MASS) reported second-quarter revenue growth of 23% as demand from U.S. state and local government customers, FTIR product shipments and its recently acquired NIRLab platform supported results. The company also raised the low end of its full-year revenue outlook while continuing to exclude potential revenue from the U.S. military’s AVCAD program from its core guidance.
Revenue for the quarter ended June 30 totaled $16.1 million, up from $13.0 million a year earlier. Handheld product and service revenue increased 24% to $15.5 million, driven primarily by FTIR products, including more than 35 VipIR shipments, and NIRLab law-enforcement revenue. The company shipped 198 devices during the quarter, bringing its installed base to 4,101 devices.
Margins Improve as EBITDA Loss Narrows
Gross profit rose to $8.3 million from $6.4 million in the prior-year quarter, while gross margin increased to 52% from 49%. Adjusted gross margin was 57%, up about 85 basis points year over year.
Chief Financial Officer Joe Griffith said the margin improvement reflected higher product revenue, lower facility costs following the company’s 2025 Boston facility move and a channel mix shift toward U.S. state and local placements, which carry lower channel costs than international placements. Those benefits were partly offset by lower service gross margin associated with reduced mass spectrometry service revenue.
Total operating expenses declined slightly to $21.2 million from $21.5 million. The decrease reflected lower contingent-consideration fair-value adjustments, reduced facility costs and lower research-and-development program spending, partially offset by NIRLab operating costs and acquisition-related transaction costs.
Net loss from continuing operations narrowed to $11.9 million from $12.9 million a year earlier. Adjusted EBITDA loss improved to $1.9 million from $3.9 million, which Knopp characterized as a reduction of more than 50%.
The company ended the quarter with $101.5 million in cash equivalents and marketable securities and no debt. Cash consumed during the quarter was $10.2 million, primarily reflecting $13.5 million used for the NIRLab acquisition, partly offset by $3.5 million received from the release of escrow related to the desktop divestiture to Repligen.
Product Deployments and Large ProtectIR Order
Knopp said the company has shipped more than 750 FTIR devices over the past 24 months. VipIR, its newest FTIR product, shipped more than 35 units during the second quarter, and 908 Devices said it expects to ship more than 100 units for the full year.
Among the quarter’s wins, a South Asian law-enforcement agency purchased more than 15 VipIR units after a trial, displacing an incumbent competitor. The Bureau of International Narcotics and Law Enforcement Affairs also ordered its first VipIR unit to support narcotics interdiction in Mexico using U.S. State Department funding.
The Texas Department of Criminal Justice purchased 15 MX908 devices for corrections facilities statewide after a two-device trial with the Texas Office of Inspector General. Knopp said the company expects additional orders could follow as the program’s results become more visible across Texas.
Following the quarter, 908 Devices secured a $6 million ProtectIR order in July from a corrections agency in the Asia-Pacific region. Griffith said the order is expected to be recognized across the third and fourth quarters as devices are built and shipped. He added that the opportunity had been anticipated in the company’s pipeline but was larger than its initial expectations.
Separately, the company said XplorIR placements increased nearly 70% over the 12 months ended June 30. The Danish Defence Acquisition and Logistics Organisation selected XplorIR for long-range chemical detection, with an initial multi-unit procurement and a framework agreement for potential future purchases.
NIRLab Adds Subscription Model and Cross-Selling Potential
908 Devices acquired NIRLab on May 6, adding a cloud-connected, near-infrared spectroscopy platform designed for drug identification. Knopp said the product complements the company’s MX908 and VipIR offerings by supporting a workflow from screening to confirmatory analysis.
In roughly two months after the acquisition closed, the company engaged 30 agencies and hundreds of prospects across federal, state and local markets through demonstrations and field evaluations. The outreach included seven HIDTA task forces. More than 35 NIRLab devices were sold during that period, each with a multi-year software subscription, with shipments to law-enforcement agencies in Colorado and California and customs agencies in Morocco and Iceland.
Management sees the platform as an opportunity to expand recurring revenue and address demand for alternatives to colorimetric drug test kits. Knopp noted that Colorado voted to prohibit custodial arrests based solely on colorimetric results and said reform efforts were underway in at least seven other states.
Recurring revenue totaled $4.9 million, or 31% of total revenue, up 4% from a year earlier. Griffith said the company’s recurring revenue mix may fluctuate with device sales but that management aspires to move into the 30% range and toward 40% over time. He said NIRLab’s model includes approximately $10,000 for the device and about $5,000 annually for subscriptions at nominal list prices, with recurring revenue representing about 50% of the product’s opportunity.
Outlook Raised; AVCAD Remains Potential Upside
908 Devices raised the low end of its 2026 revenue guidance and now expects full-year revenue of $68 million to $70 million, representing growth of 21% to 25% over 2025. The outlook calls for handheld product and service revenue of $65 million to $67 million, or growth of 23% to 27%, while OEM and funded partnerships, including contract revenue, are still expected to contribute approximately $3 million.
The company maintained its expectation for adjusted gross margin in the mid- to high-50% range and for an adjusted EBITDA loss in the mid-single-digit millions for the full year.
Management excluded the AVCAD program from core guidance because the current U.S. military contract has run its course and the government is evaluating next steps. Knopp said the Department of War is considering commercially available products alongside the existing development path with Smiths Detection as part of procurement reforms intended to increase speed and flexibility.
Knopp said 908 Devices believes it can compete for the opportunity either through its Smiths Detection partnership or directly through the commercial MX908 platform. Management continues to view AVCAD as a long-term opportunity of more than $10 million, though the timing of any revenue ramp remains uncertain.
About 908 Devices (NASDAQ:MASS)
908 Devices Inc (NASDAQ: MASS) is a developer and manufacturer of portable analytical instruments designed to deliver rapid chemical detection in field and laboratory environments. The company’s core focus lies in miniaturizing high-performance mass spectrometry and ion mobility spectrometry technologies, enabling users to perform on-site analysis that traditionally required benchtop equipment.
Key products in 908 Devices’ portfolio include the MX908, a handheld high-resolution mass spectrometer capable of detecting and identifying a broad range of chemicals and explosives; the M908 portable mass spectrometer for laboratory or mobile units; and the ZipChip capillary electrophoresis system for high-throughput, microfluidic separations.
