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Fathom’s First Earnings Report Reflects Strong Q4 Revenue

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Fathom (NYSE: FATH) reported revenue of $44.3 million in its 2021 fourth-quarter earnings report, a 132.8% increase from the same period in 2020. The on-demand 3D printing service provider also issued full-year 2021 revenue totaling $152.2 million, up 148.5% from the year before. Just over two months ago, the company began trading on the New York Stock Exchange (NYSE) under the ticker “FATH” and anticipated a 147% revenue increase for the full year 2021, compared to 2020. Quite on target, Fathom now foresees 2022 revenue to range between $182 million and $192 million, representing a year-over-year increase of approximately 23%.

“We believe our successful public listing enhances our ability to achieve continued market penetration for our additive and advanced traditional manufacturing technologies and take full advantage of the Industry 4.0 digital manufacturing revolution. Our focus remains on further strengthening Fathom’s breadth of leading offerings as we continue to invest in the business. Additionally, we intend to maintain Fathom’s role as an active consolidator in a large and highly fragmented $25 billion industry. By leveraging our proven business model and attractive financial profile, we expect to build upon our solid performance and drive long-term profitable growth in 2022 and beyond for the benefit of our shareholders,” pointed out Fathom CEO Ryan Martin.

Ryan Martin at Fathom's manufacturing facility.

Fathom Manufacturing CEO Ryan Martin at the company’s headquarters in Hartland. Image courtesy of Fathom Manufacturing.

Focused on high-margin rapid prototyping and low- to mid-volume production, Fathom works with many Fortune 500 companies to help them develop their initial product, transforming their digital file into a physical product by leveraging additive manufacturing (AM) as well as other traditional processes.

A pioneer in the on-demand digital manufacturing space and an early adopter of both plastic and metal AM, Fathom saw revenue climb in the fourth quarter as it continued to take advantage of the strong demand for its services. The additive manufacturing segment, in particular, was up 4.5% to $4.5 million or 10.2% of the total revenue. Moreover, total orders in the fourth quarter increased year-over-year by approximately 26% to a record $49.1 million, further expanding the new business backlog.

During an earnings call with investors, Martin said he expects the growth in record orders in the fourth quarter of 2021 to contribute to revenue throughout 2022 as shipments for new orders often extend beyond a quarter or two, depending on the size and order type. Also, in Q4, the company continued to deliver profitable growth with reported adjusted EBITDA increasing to $10.5 million, representing a margin of 23.8%.

For the year ended December 31, 2021, the company reported a net income of $13 million compared to a net loss of $8 million for 2020. On an organic basis, revenue for the entire year increased approximately 9% to $162.6 million, which surpassed the high end of Fathom’s previously stated guidance range issued in early January.

According to Martin, Fathom’s comprehensive capabilities provide corporate customers with the ability to capitalize on their increasing adoption of Industry 4.0 practices, including the digitization of manufacturing, further adoption of AM, and the re-shoring of company supply chains.

“These evolving macro trends are shortening product life cycles driven not only by higher consumer demands but also by the advanced technologies that allow new products to be developed faster than ever before.”

As for 2022, the company expects to accelerate its financial performance to take advantage of future growth opportunities and hopes to benefit from favorable tailwinds in the industry. Specifically, executives anticipate a continued acceleration in plastic and metal AM.

To enhance its additive broad platform, Fathom plans to introduce new technologies, including its Evolve additive solution. This Selective Thermoplastic Electrophotographic Process (STEP) technology is a disruptive advancement in AM, enabling parts production within hours or days without compromising quality, throughput, scalability, or cost, providing a significant advantage over the typical multi-month lead time for traditional injection-molded tools and parts. Chief Financial Officer (CFO) Mark Frost said the technology could be launched throughout North America by the end of the second quarter of 2022.

Commenting on 2022 expectations, Frost expects to build steady momentum throughout the year with 30 percent to 40 percent growth in the first quarter on a base of $30.4 million, mainly based on the current order flow and backlog and ramp-up of sales and marketing activities. Additionally, Frost believes a higher percentage of the public company costs will be incurred in the first quarter. Moreover, Fathom says it will continue to explore new acquisition opportunities to accelerate its growth strategy.

Fathom goes public on the NYSE on December 27, 2021.

Fathom goes public on NYSE. Image courtesy of Fathom.

Serving at the inflection between traditional manufacturing and 3D printing to solve the complex challenges for some of the world’s most product-driven companies continues to be Fathom’s core business. Helping customers iterate faster and often shortening their development cycles from months to days is the ultimate goal for the company. Now that Fathom has completed the merger deal with blank check firm Altimar Acquisition Corp. II; the Wisconsin-based manufacturer is now valued at an estimated $1.5 billion.

Moreover, following the completion of the transaction, Fathom now has a market cap of roughly $900 million and can solidify its position at the forefront of the fast-growing on-demand digital manufacturing sector. As expectations run high, growth and innovation will remain the company’s pillars, especially as Fathom continues to be the go-to unified supplier for sourcing and to meet ongoing company needs.

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