3D Printing Financials: Profits Elude, Revenues Rally in MKFG, XMTR, AM3D, and DM Earnings Reports

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In the first quarter of the year, Markforged (NYSE: MKFG), Xometry (NASDAQ: XMTR), and SLM Solutions (AM3D: Xetra) all reported increasing revenues, which is a positive sign of growing market demand for their offerings. Despite this, they also reported net losses and negative adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), indicating they are currently spending more than they’re earning from operations due to high costs related to acquisitions and other expansion efforts.

On the other hand, Desktop Metal (NYSE: DM), while also reporting net losses and negative adjusted EBITDA, showed a decrease in its revenues. Although Desktop Metal CEO Ric Fulop assured investors during an earnings call on May 10, 2023, that customer engagement “remains very strong” across the brand’s AM 2.0 mass production portfolio, evidenced by repeat business, he also said this “was not the easiest quarter that we’ve had to date.”

Offset by weaknesses in metal binder jetting solutions, revenue was $41.3 million, representing a 5.5% decline year-over-year; it reflects what Fulop describes as a “continuation of the recessionary headwinds we started experiencing in the back half of last year.” The executive also highlighted that even though he is proud of the team’s effort to drive down costs to increase profitability, the period was “seasonally the lightest quarter,” considering that between $5 million and $8 million of the forecasted revenue “slipped out of Q1.”

Desktop Metal CEO Ric Fulop. Desktop Metal CEO Ric Fulop. Image courtesy of Desktop Metal.

Last quarter, Desktop Metal offered a wider 2023 guidance range (between $210 and $260 million)  to accommodate for this recessionary environment and is now reaffirmed. Adjusted EBITDA for the year is also expected to be between negative $50 and $25 million, with the outlook to achieve adjusted EBITDA breakeven before the end of the year. To get there, Desktop Metal announced in mid-February 2023 plans to reduce its workforce by 15%. The decision comes on the heels of a similar plan announced in November 2022 to eliminate 12 percent of its staff.

During the earnings call, Desktop Metal Chief Financial Officer (CFO) Jason Cole explained that the company is in the “midst of closing six production sites.” As a result, this measure could save the firm $50 million to double its target outlined in 2022, generating $100 million in aggregate savings.

According to Fulop, the combination of Desktop Metal’s cost reduction efforts in the last year places the firm in a “very strong position” to achieve breakeven by the end of 2023. Regardless of the general macroeconomic conditions, Fulop said he expects to see a continued trend of “lowering our cash burn on a consistent quarterly basis” with the ultimate goal of reaching cash flow breakeven on the existing balance sheet. These actions are expected to create a stronger, more resilient organization and streamline the business to yield a more efficient and effective operating model for the long term.

Performance Snapshot

Posting revenue of $24.1 million for the first quarter of the year, Markforged reported a 10% increase from last year’s revenue of $21.9 million. The company also announced a gross profit of $11.9 million and net losses of $19 million.

With demand for the Digital Forge growing across all geographies, revenue for the FX20 exceeding the company’s expectations, and the pipeline of new orders rising, the company believes the strength of its current balance sheet is sufficient to reach profitability by the end of 2024.

Markforged is reiterating its full-year 2023 guidance, with revenues expected between $101 million and $110 million. The Waltham, Massachusetts-based original equipment manufacturer (OEM) also expects the fiscal year 2023 gross margin to remain between 47% and 49% and is confident that gross margins will continue to improve toward historical levels in the longer term.

Markforged FX20 3D printer. Markforged FX20 3D printer. Image courtesy of Markforged.

Quarterly Overview

As for Xometry, it disclosed a revenue increase of 26% year-over-year to $105.3 million, driven by stronger-than-expected marketplace growth of 35%. Adjusted EBITDA resulted in a loss of $11.8 million for the quarter, reflecting a decrease of $1 million year-over-year, while the net loss was $18.3 million (or 38 cents per share) and included a $4.7 million stock-based compensation.

According to CEO Randy Altschuler, in the period ending March 31, 2023, Xometry reported the highest revenue in its history and added a record number of active buyers (4,052).

“The continuing shift to the digital is inevitable, and Xometry’s digital marketplace creates efficiencies and value for buyers and suppliers alike,” indicated Altschuler. “Artificial intelligence is at the heart of Xometry, generating prices for buyers and suppliers across a range of on-demand manufacturing processes. We continue to develop our proprietary machine learning algorithms, adding support for additional features such as new materials and finishes and training our models on an increasingly large data set of custom manufactured parts.”

Xometry part production. Image courtesy of Xometry.

Revenue update

With revenues of Є24 million ($26 million), SLM Solutions’ top line reflects a year-over-year increase of 47%. In addition, the company reported order intake up 50% versus last year’s first quarter at Є25.3 million ($27 million) and a negative EBITDA of Є4.3 million ($4.7 million), improving by 3%. The strong topline and order intake performance was driven by the NXG XII 600 additive manufacturing machine, capable of producing large and heavy metal parts.

Net cash flows from operating activities during the three months ending March 2023 were negative Є14.2 million ($15.4 million), deteriorating compared to the same period in 2022. This is mainly due to expenses in connection with the Nikon acquisition and the increase in inventories and contract assets.

Sam O’Leary, CEO of SLM Solutions, concluded: “Once again, we were able to achieve significant revenue and order intake growth in the first quarter of 2023. Whilst we experienced a headwind in our operational profitability, we expect this to improve significantly during the rest of the year. In addition, we have been working closely with Nikon since the closing of the transaction in January and remain excited about the possibilities of our collaboration which already start to be realized.”

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