3D Printing Financials: Markforged Gross Profits up 31.9%

Ahead of its upcoming SPAC merger, Markforged has announced the financial results for its first quarter of 2021. Those watching the 3D printing market, will likely be watching how it tracks against Desktop Metal, what was previously a comparable startup before it began acquiring companies.

Markforged is off to a good start for the year, reporting revenues of $20.3 million, an increase of 14.7 percent from last year’s $17.7 million in Q1 2020. Gross profits also jumped, with the company reporting $12.4 million, a 31.9 percent increase from Q1 last year, which it attributes to greater revenues and improved operational efficiencies that reduced costs. Markforged noted that gross margins grew 61 percent compared to 53 percent in Q1 2020. In turn, the company is reaffirming its guidance of $87.6 million in revenues and gross profit of $50.7 million. This information can be seen in the table below:

		Quarter Ended March 31,
Unaudited (in thousands)		2021				2020
Revenue		$	20,329			$	17,701
Gross profit		$	12,390			$	9,424
Gross margin			61	%			53	%
Loss from operations		$	(8,789	)		$	(5,313	)

“We are pleased with our results from the first quarter of the year, building on our strong momentum from 2020,” said Shai Terem, Markforged’s President and Chief Executive Officer. “These results reflect the growing demand for our unique Digital Forge platform and the strength of our partners and team. Earlier this year we achieved an important milestone with the release of our AI-powered Blacksmith software. Blacksmith inspects parts in real-time while printing and learns through AI to streamline workflow and give manufacturers accurate, repeatable parts on our Markforged X7 printers. We continue to add deep industry expertise to our sales channels through the addition of global partners such as Phillips Corporation, a manufacturing-focused reseller with a strong Haas footprint. The addition of seasoned leaders such as Mark Schwartz, our Chief Financial Officer, and Ken Clayton, our SVP, Global Sales, speaks volumes to our ability to scale and meet the requirements of our customers, partners and investors. We’re committed to continuing to accelerate product innovation and expand customer adoption as we finalize the merger transaction with one and begin trading under the Markforged ticker MKFG.”

While now a very different type of business, Markforged and Desktop Metal (NYSE: DM) once seemed quite similar. They both released office-friendly bound metal 3D printing systems and offered carbon fiber 3D printers. They were so similar, in fact, that, before Desktop Metal was established, its CEO, Ric Fulop, sat on the board of Markforged.

Several lawsuits and an IPO later, Desktop Metal has differentiated itself quite significantly. In addition to offering its flagship binder jetting technology, the firm now hosts EnvisionTEC’s DLP and bioprinting portfolio, as well as a wood binder jetting platform.

It may still be worth comparing their financials, given their similar trajectories. Desktop Metal just published its quarterly numbers and, while there was a 35% increase to $11.3 million from the previous year, net losses were $59.1 million. It is still expecting to generate over $100 million for the full year.

We’ll see how the two companies continue to evolve after Markforged begins trading on the New York Stock Exchange under the symbol “MKF”” this summer. Because the firm has already been selling equipment since 2014, it will have a longer track record and not require the acquisition of other companies to generate profits, as Desktop Metal did when it quickly initiated its IPO after only selling systems for three years.

That doesn’t mean that Markforged won’t begin initiating inorganic growth when it’s flush from public funds. Exactly who is difficult to say. Given the relationship between Shapeways and Desktop Metal, I’m thinking there has to be a service bureau deal of some kind in the works.