Additive Manufacturing Strategies

3D Printing Financials: Markforged Revenue and Profits Surge in Third Quarter 2021

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Boston 3D printer developer Markforged (NYSE: MKFG) posted strong third-quarter profit and revenue growth for 2021, just four months after going public on the New York Stock Exchange (NYSE) through a merger deal with a blank-check company. The manufacturer of 3D metal and continuous carbon fiber printers reported revenues of $24 million in the quarter ending September 30, 2021, a 54% jump from the $15.6 million in the same period last year, when 3D printer manufacturers were grappling with the pandemic’s effect on supply chains and businesses in general.

Experiencing growth across all products and services and geographic regions, Markforged reported hardware sales increased 58.4% year-on-year. Moving on to net profits, the company said it grew seven-fold to $23.9 million in its third quarter, which is a massive improvement from the $3.7 million loss it reported for the same period last year.

Following the November 10, 2021, financial announcement, shares rose more than 6% in after-hours trading before dipping 5% when markets opened on the next day. Markforged began trading on July 15, 2021, at $7.76 and has since seen the stock price drop up to 22% in October. However, the release of the latest upbeat earnings announcement could help stabilize the market price between $7 and $8, as the company readies for end-of-year revenues and pipeline milestones in 2022.

Other highlights in the quarter include a workforce expansion to 361 employees and a new VP of engineering and former Amazon executive John Howard. The company also posted gross margins of 57%, a year-over-year decline compared to 59.6% in Q3 of 2020, which is largely attributed to the high costs of materials resulting from global supply chain disruptions.

During an earnings call with investors, Chief Financial Officer (CFO) Mark Schwartz said the company continues to address supply chain challenges in a number of ways, including procuring larger order quantities, adding complementary sources of certain materials, and otherwise mitigating manufacturing constraints to fulfill demand and meet growth objectives. In fact, Markforged has even purchased materials at higher prices to secure sources of supply, something we have heard from other companies as well during these last two years.

Markforged has the world’s largest connected fleet of industrial 3D printers after the launch of its Digital Forge platform.

Markforged has the world’s largest connected fleet of industrial 3D printers after the launch of its Digital Forge platform. Image courtesy of Markforged.

Targeting high-value mission-critical manufacturing applications from the most demanding industries, Markforged now supports more than 10,000 customers and has printed over 10 million parts through its connected platform, the Digital Forge. The company believes its AI-based 3D printing software has an opportunity to sustain the highest gross margin in the industry and generate greater demand for new printers and consumables.

Released in late 2020, the Digital Forge serves as a “mini-factory” that can be placed anywhere in the world to help customers overcome challenges–like disrupted global supply chains–and print parts at the point of need. To ensure the creation of parts on-demand instead of shipping them from all over the world, Markforged has gone as far as to test the Digital Forge by 3D printing components on every production line, and in turn, reducing outside dependencies and ensuring business continuity for its customers.

“The supply chain disruptions felt by manufacturers all over the world are amplifying the need for solutions like the Digital Forge, which should translate directly into increasing market adoption and customer penetration and create opportunities for revenue growth. Our customers continue to recognize the value of our end-to-end platform and its ability to address mission-critical problems at the point of need, overcome the global shortage of parts, and ensure their production line resiliency,” said Shai Terem, President and CEO of Markforged.

Other quarterly launches include the introduction of two innovations in software and materials. First, Markforged released its Eiger Fleet software designed to provide access control, management, and visibility and accelerate the adoption of additive manufacturing operations at a global scale. Followed by the launch of aerospace-ready materials Onyx FR-A and Carbon Fiber FR-A, which are currently undergoing qualification through the National Center for Advanced Materials Performance, to increase Markforged’s addressable market by strategically supporting highly regulated industries like aerospace and defense.

Markforged's Eiger Fleet software.

Markforged’s Eiger Fleet software. Image courtesy of Markforged.

During the upcoming Formnext 2021 event in Frankfurt, Germany, Markforged will showcase its newest printer, the FX20. Aimed at solving robust production requirements, particularly in the aerospace, defense, and automotive industries, FX20 is by far the biggest, fastest, hottest, and smartest printer built by the brand.

Discussing the new machine with investors, Terem anticipates it will allow the company to materially increase its addressable market into bigger parts and higher volume production parts, especially for mission-critical applications requiring stronger, lighter, and heat-resistant parts. The CEO said he expects to “ship the FX20 in volume in the second half of 2022,” driving growth and amplifying the normal seasonality generally experienced in the third and fourth quarters of the year.

Now that Markforged has its key products in place, it is ready for future growth and foresees 2021 revenues to be around $90 million, with year-end gross margins of 57%. So far, revenue for the first nine months of the year has generated $64.6 million in revenue, thereby, given the current rate at which sales have been posted, the estimated guidance looks solid. At this rate, revenue is forecast to grow 43.98% per year based on estimates from analysts at Simply Wall Street.

As for 2022, management still considers it early to provide any guidance. However Terem speculated that there is an opportunity for Markforged to continue on its growth path and meet the strong expectations it has set for the company, but he insists it’s “too early to tell and the market is just too volatile.”

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