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3D Printing Financials: Markforged’s Q3 Earnings Drop Spurs Workforce Reduction and Restructuring

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Markforged (NYSE: MKFG) revealed its financial results for the third quarter of 2023, facing a challenging economic landscape that significantly impacted its performance. This period was marked by a pronounced decrease in revenue, operational challenges, and strategic responses to an evolving economic environment.

The company’s revenue for the third quarter was $20.1 million, a decline from the $25.2 million reported in the same quarter of the previous year. This reduction in revenue is a reflection of the broader economic challenges that have been affecting the industry, including macroeconomic uncertainties and delays in finalizing significant deals. Gross margin also saw a slight dip, coming in at 45.7% compared to 48.6% in the third quarter of 2022.


Operating expenses increased dramatically to $59.6 million, up from $35.1 million in the same period last year. This rise was partly due to a non-cash goodwill impairment charge of $29.5 million, a special accounting adjustment that reflects a decrease in the company’s long-term value but doesn’t involve actual cash spending. Meanwhile, the net loss for the company deepened. It reached $51.4 million, or 26 cents per share, a stark contrast to the $23 million, or 12 cents per share, loss reported in the third quarter of 2022. On a non-GAAP basis, the net loss was $13.8 million, slightly better than the $15.1 million loss a year earlier.

Markforged’s financial stability remains solid, with cash, cash equivalents, and short-term investments totaling $126 million as of September 30, 2023. However, this decreased from $136 million at the end of the second quarter.

Looking at the nine months ending September 30, 2023, the company’s revenue was $69.6 million, marginally lower than the $71.3 million in the same period in 2022. The gross margin for this period was 47%, a decline from 51.6% in the previous year. Net cash used in operating activities showed a positive trend, decreasing to $40 million from $65.3 million, signaling improved operational efficiency.

“While the medium- to long-term opportunity for Markforged to help manufacturers reduce costs and strengthen supply chain resiliency remains intact, we were disappointed with our third quarter results,” indicated Markforged’s CEO, Shai Terem, during an earnings call with investors. “The current macroeconomic uncertainty and increasing interest rates had a material impact on our ability to close deals in the last two weeks of the quarter. At our Investor Day in mid-September, we still believed our 2023 targets were attainable, but macroeconomic headwinds dramatically accelerated in the final weeks of the quarter, and we saw delays in several large deals that we had expected to close.”

Markforged moves into its new headquarters in Waltham, MA. Image courtesy of Markforged.


Despite these setbacks, the company remains focused on achieving profitability and has implemented cost reduction measures, including a restructuring initiative expected to save between $9 million and $12 million in 2024. This restructuring includes a reduction of approximately 10% of the workforce. With an estimated 460 people employed at the Massachusetts-based business, at least 46 workers would be cut across all departments.

Unfortunately, this is not the first company to announce a headcount reduction in 2023. Earlier this month, Velo3D (NYSE: VLD) revealed a similar realignment strategy that led to a 20% employee downsize. Other companies like Essentium also faced a new round of layoffs. reported last July that the company was letting go at least 16 people, with some anonymous sources suggesting that the number could be as high as in the 30s.

This year’s economic conditions also led 3D Systems (NYSE: DDD) to move into its multi-faceted restructuring initiative, which reduced its global workforce by approximately 6%, predominantly affecting Corporate and Business support functions in the US and Europe. In every case, these initiatives are undertaken to reduce operating expenses. Although it’s a common strategy for companies looking to quickly lower operating expenses, it’s not necessarily the easiest or the only way.

Workforce reductions can lead to immediate savings in salaries and related costs, making it an attractive option during a financial rollercoaster year like 2023. However, this approach can also have long-term implications, such as loss of expertise, lower morale, and diminished capacity for future growth. In fact, the Society for Human Resource Management (SHRM) suggests alternatives to headcount reductions, like cuts in unnecessary benefits or perks, reviewing marketing budgets, or considering virtual offices. Of course, each company will have its own set of challenges and benefits, and ultimately, the choice depends on their specific circumstances and strategic goals.


In addition to cost-cutting measures, Markforged continues to innovate. The company launched Digital Source, an on-demand parts platform. It introduced two new products at Formnext 2023: the FX10, a next-generation composite 3D printer, and Vega, a high-performance material for 3D printing aerospace parts. These innovations are expected to expand Markforged’s addressable market and strengthen its long-term growth prospects.

Markforged’s FX10. Image courtesy of Markforged.

Markforged’s financial outlook for 2023 remains cautious due to the uncertain macroeconomic environment and high cost of capital. The company anticipates revenues between $90 million and $95 million, with gross margins expected to be in the range of 47% to 48%. Markforged projects its operating loss for the year to be between $59 million and $61 million, including restructuring costs. Simultaneously, the company expects its earnings per share (EPS) loss to range between 26 and 28 cents.

Markforged faces significant challenges in the current economic climate, with decreased revenues and increased losses. However, Terem believes that the opportunity for high-margin revenue streams will be a “growth catalyst” in the years to come. Management concluded that it remains “laser focused on profitability,” even in light of these headwinds, which have persisted into the fourth quarter. To that end, they have accelerated cost reduction efforts to align operating expenses to match anticipated near-term demand.

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