Company: RPID
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001380106-25-000102
Chunk: 298

Company: RAPID MICRO BIOSYSTEMS, INC.
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 1
Chunk 298
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 the one-year assurance warranty period. We recognize revenue from installation services, one-time paid field service, and preventative maintenance service during the assurance warranty period over time as these services are provided to the customer.

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Table of Contents

We expect service revenue to increase in future periods as the number of placed and validated Growth Direct systems grows and we are able to generate increasing non-recurring revenue from validation services and field service for newly placed systems and increasing recurring revenue from service contracts for validated systems. 

Costs and operating expenses

In July 2024, we completed an enterprise-wide review of opportunities to realize operational efficiencies. Based on the results of this review, we implemented in August 2024 certain actions to reduce costs and expenses across the business (collectively, the "Operational Efficiency Program").  As part of our Operational Efficiency Program, we implemented actions to reduce employee-related expenses and certain other non-employee related costs.  The reduced headcount and lower labor costs reflected in costs of revenue and the operating expense categories below was the result of the Operational Efficiency Program announced in August 2024.  Our headcount at the end of the first quarter of 2025 was lower than our headcount at the end of the year ago quarter.

Costs of revenue

Cost of product revenue primarily consists of costs for raw material parts and associated freight, shipping and handling costs, salaries and other personnel costs including stock-based compensation expense, contract manufacturer costs, scrap, warranty cost, inventory reserves, royalties, depreciation and amortization expense, allocated information technology and facility-related costs, overhead and other costs related to those sales recognized as product revenue in the period. 

Cost of service revenue primarily consists of salaries and other personnel costs including stock-based compensation expense, travel costs, materials consumed when performing installations, validations and other services, allocated information technology and facility-related costs, costs associated with training, and other expenses related to service revenue recognized in the period.

For future periods, we expect our costs of revenue to increase or decrease commensurate with product and service volumes. Such costs may be further impacted by our ongoing efforts to reduce product costs and increase manufacturing productivity and efficiencies as well as service productivity. In addition, our product costs may be adversely impacted by recently enacted and potential future tariffs by the U.S. and other jurisdictions in which we conduct business. At this time, while we do not expect such impacts on our product costs to rise to levels that are material to our results of operations in the near-term, future changes in policies and other macroeconomic conditions could