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Will Formlabs Merge with Markforged? — Dream 3D Printing Mergers and Acquisitions

Markforged new HQ. Image courtesy of Markforged.

In a surprising social media post, Greg Mark, founder and former CEO of Markforged (NYSE: MKFG), suggested that Formlabs merge with what was once his company. Moreover, Mark had negative comments about the carbon fiber and metal 3D printing company, suggesting that it was in a “doom spiral.”

Certainly, Markforged has suffered financially since it went public via merger with a special purpose acquisition company in 2021. Total revenue increased from $71.9 million in 2020 to $91.2 million in 2021, showing growth, but then slightly decreased to $101 million in 2022 before dipping to $99.3 million in the twelve years trailing period. Gross profit followed a similar pattern, peaking at $52.9 million in 2021 and then declining to $46.6 million, indicating a reduction in profitability. Most striking is the net income, which experienced a significant drop, moving from a profit of $3.9 million in 2020 to substantial losses of $25.4 million in 2021 and worsening to $100 million. 

Despite recent economic setbacks, Markforged has continually maintained a unique position in the industry. Not only has it developed multiple innovative 3D printing processes, but it has created an enviable software ecosystem and a robust reseller network. Having invented continuous fiber filament 3D printing and introducing it to the public in 2014, Markforged continued to innovate, ultimately releasing a form of bound metal extrusion. It then acquired metal binder jetting firm Digital Metal in 2022.

The ruggedized Markforged X7 FE. Image courtesy of Markforged.

All of this was supported by software capable of optimizing material deposition for reinforcement fibers. This extended to incorporate machine learning, in-process quality management, and more, forming the backbone of the Digital Forge. This network of Markforged products is meant to serve both as a means of training those same products via AI and to become a method of distributed manufacturing. 

From the outside, it’s difficult to get a sense for what Mark suggests is management issues. However, there’s no doubt that the current macroeconomic climate is negatively impacting any number of AM companies, particularly those that are publicly traded. If it is in the doom spiral that Mark claims it is—a claim that is sure to impact the company’s stock when markets open—then Formlabs could be an ideal merger candidate. 

The specifics of Formlabs’ financials are not publicly available, as the company is privately held. One estimate put their 2022 revenues at $82.5 million. There were some layoffs this year, indicating that the company was not immune to the economic environment, but they appeared to be comparatively small. A double unicorn, the company has been undoubtedly successful in proliferating its desktop stereolithography machines and growing into the low-cost polymer powder bed fusion space. Its materials have become significant and prolific as the company has conquered the medical and dental segments. Moreover, its automation technologies demonstrate no obstacles to future innovation. 

restor3D operates a fleet of over 25 Formlabs 3D printers. Image courtesy of Formlabs.

In many ways, a Markforged and Formlabs combination makes too much sense. Both companies, Boston-area based, generally have a focus on low-cost, high-end 3D printers driven by ideal software. Their products do not overlap and are highly complementary. A Form 8K filing made at the beginning of 2023 would suggest that Markforged was hoping that someone would help lighten the financial burden of the company. Regardless of the current financial situations of these two companies individually, their combination would be perfect and, for the sake of the 2023 narrative, would make for a happy ending to this year’s merger saga.

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