Desktop Metal (NYSE: DM) disclosed a mixed first-quarter earnings report for 2021, with revenue up 234% year-over-year and 35% quarterly to $11.3 million, mainly due to the acquisition of EnvisionTEC and an increase in metal product shipments. However, the Massachusetts 3D printer manufacturer fared worse than expected: net losses of $59.1 million or 25 cents per share, plummeting past Wall Street estimates by $30 million. According to the company’s management team, the heavy losses were a direct consequence of a rise in general and administrative expenses from Desktop going public in December 2020 and investments in its core business.
Shares of the 3D printing company dropped 11% the day after quarterly earnings were announced at market closing on May 17, 2021. Later on in the day, the stock bounced back, most likely thanks to reassurance from the company, saying it added more customers in the first quarter of 2021 than all of 2020 combined and expecting to generate more than $100 million for the full year. The encouraging guidance, paired with an announcement of its latest acquisition of elastomer resin manufacturer Adaptive3D, was enough to calm investors.
This is the 3D printing company’s second quarterly report after it went public via a reverse merger deal with a special purpose acquisition company (SPAC). Since then, Desktop has been actively engaging new customers, increasing its workforce from 180 employees to over 470, and leveraging additive technologies and materials. The company claims it has increased customer adoption at scale in the government sector, academics, and dozens of industries, including big names like Delta Airlines, Mayo Clinic, Amazon, Cartier, and Harvard University.
Among the wide range of customer segments, Desktop particularly saw strong continued momentum in the dental business, with first-quarter dental shipments going up by 64% year-over-year and strong demand for the D4K Pro and Envision One printer platforms. Through its new healthcare business, Desktop Health, the key is to capture part of the dental market, leading with the launch of its first major product line to create 3D printed dental prosthetics and dentures. Called Flexcera, the line has already received FDA 510(k) clearance for one of its proprietary resins used in the 3D fabrication of high-quality dental prosthetics and has begun commercializing it.
During the earnings call, Fulop said “we expect to accelerate the timeline that we put out last year, when we initially went public, and try to get to $1 billion in a faster timeframe than our initial target. So, everything we’re doing is with a view of having a double-digit share of that $1,406 billion (3D printing) market by the end of the decade, whether it’s a transaction that we would pursue on the print engine side, on the vertical integration into the material side, or into a particular advanced parts technology or business that we may acquire.”
Focused on developing systems and processes that enable cost-effective, volume production of end-use parts with additive, Desktop has continued innovation efforts across its core business and strengthened its product portfolio by acquiring new companies and expanding its offerings. During the first quarter of 2021, it grew the materials portfolio to more than 225 products, introduced the Forust process to print wood out of waste, launched its first major product line for dental applications, and began shipping two new area-wide photopolymer printers from its EnvisionTEC acquisition.
One of the most relevant highlights of the report was the announcement of the business’ latest acquisition of Adaptive3D, a startup that began as a military-funded Defense Advanced Research Projects Agency (DARPA) program and is now a category leader in printable elastomers and rubber materials. On the company’s earnings call, Desktop Metal CEO and Founder Ric Fulop said the buyout gives them proprietary access to a new class of polymers that are not only printable but provide elastomeric properties enabling applications such as digital forms through micro architected design. Desktop hopes to combine Adaptive3D’s elastomer capabilities with EnvisionTEC’s Xtreme 8K DLP production-grade 3D printer to accelerate high-volume creations.
Desktop Metal Chief Financial Officer James Haley said the 3D printing firm is not only reiterating its expectation to generate revenue of more than $100 million for the full year but also expects to see sequential quarterly growth throughout 2021 and projects an annual run rate of $160 million. Haley pinpointed a sequential acceleration during the second half of the year to coincide with launches of additional products, shipping of the single-pass jetting (SPJ) P-50 systems, integration of recent acquisitions, and capitalization on its expanded portfolio of material capabilities.
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