3D Printing Financials: Do Nano Dimension’s Q1 Earnings Pave the Road to Profitability?

Nano Dimension (Nasdaq: NNDM) is gaining traction. The company’s first-quarter 2024 results show a significant boost in gross margins, and it’s also spending less cash overall. Despite a slight drop in revenue to $13.36 million from $14.97 million in the same quarter in 2023, Nano Dimension has managed to cut its net loss to $34.8 million down from $57.6 million. While the company is not yet profitable and still faces challenges, these positive trends, seen over the past few quarters, indicate that it is making steady progress toward its goal of profitability.

Meanwhile, the results, released on June 3, 2024, before the market opened, were met with a mixed reaction from investors, as Nano Dimension’s stock price oscillated between $2.70 and $2.55.

Some of the company’s key achievements include a gross margin of 46.2%, up from 43.9% last year. Even more interesting is the adjusted gross margin, which increased to 49.8%, compared to 47.1% in the previous year, which reflects good cost management and strategic pricing of its high-tech products.

Moreover, the company’s net cash burn saw a substantial reduction, decreasing by 75% to $7 million, down from $27.4 million in the same period last year. This improvement is attributed to the “Reshaping Nano Initiative,” announced in the previous quarter of 2023, and aims to make Nano Dimension’s workforce more efficient. By combining teams from recent mergers, the company wants to improve how employees work together and streamline roles. However, this initiative reduced the global workforce by about 25% and is expected to save between $12 million and $20 million in 2024.

3D printed board. Image courtesy of Nano Dimension.

“This was a quarter in which we have seen evidence that the financial results are reflecting our long-term planning. What we said will happen has happened,” indicated CEO Yoav Stern. “In 2021, we set a goal to increase revenue considerably. This should not be the sole goal of any business, nor was or is it of Nano Dimension. But it was an interim goal as a means of reaching a minimal threshold to achieve efficiencies. We have done this.”

One of Nano Dimension’s strategies has been its focus on reducing operating expenses. The company reported a decline in research and development (R&D) costs, which fell to $9.1 million in the first quarter from $19.3 million in the same period in 2023. This reduction was primarily due to decreased payroll, share-based compensation expenses, and lower material costs for R&D use. Similarly, sales and marketing expenses dropped to $6.5 million from $7.5 million, and general and administrative expenses decreased to $9.6 million from $11.0 million in the same period.

Despite these cost-saving measures, Nano Dimension’s total revenues for the period were $13.4 million, slightly down from $15 million in the year before. The decline was driven by decreased sales across the company’s product lines. However, there is still optimism around revenue growth, having achieved a compound annual growth rate (CAGR) of 150% from the first quarter of 2021 to the first quarter of 2024.

In addition to these financial updates, Nano Dimension recently welcomed Ambassador Georgette Mosbacher to its Board of Directors. Mosbacher, a former U.S. Ambassador to Poland and CEO of companies like LaPrairie and Borghese, has an impressive resume with decades of experience in both the public and private sectors. Her incredible background is expected to drive Nano Dimension’s global outreach.

Georgette Mosbacher participated in Warsaw during her tenure as an ambassador in Poland. Image courtesy of the U.S. Embassy and Consulate in Poland.

Nano Dimension’s innovation is still a driving force behind its growth. Its DeepCube Group has been at the forefront of developing industrial AI and large language models (LLMs), securing important patents.

Stern highlighted the importance of these advances, stating, “Our industrial AI work coming out of our DeepCube Group has created differentiated, secure IP to serve the business long into the future.”

In another significant development, Nano Dimension’s micro-3D printing technology has proven crucial in a breakthrough biomedical research project. The company partnered with leading research centers in Canada and France to create a miniature medical device that accurately records neuronal activity in mice.

NanoFabrica’s technology. Image courtesy of Idan Gil/Nano Dimension.

With this collaboration, Nano Dimension’s Fabrica micro-3D printing systems take center stage. To deliver a functional part that met the specific requirements for implantation into a mouse, Nano Dimension used its biocompatible Fabrica Medical M-810 material. With its clearance for cytotoxicity, which ensures that it is not toxic to human cells, the material was the perfect fit for the device the team needs. The intricacy of the design challenge required precise dimensions, including 110µm holes for electrodes in a part that was merely 2.7mm in width.

“Recording the electrical activity of neurons in the spinal cord of a conscious animal is not easy, mainly due to the movements induced by walking and breathing of the mouse, as well as the accessibility of the area in question,” explains Louison Brochoire, a doctoral student at the University of Bordeaux in France who is participating in the study.

Nano Dimension used its Fabrica micro-3D printing technology to produce create a miniature medical device that accurately records neuronal activity in mice. Image courtesy of Nano Dimension.

Looking ahead, Nano Dimension has reaffirmed its guidance for a net cash burn of $12 million to $20 million for the year. Management considers this critical, stating that even without any other big developments, the company can maintain its position of strength with minimal cash usage.

Stern told shareholders “Our markets and their macro environments are neither perpetuum mobile, nor are they static, and so is our business. On many important items, especially those clearly within our control, what we said will happen has happened.”

While there were no major M&A developments in Q1 2024, Stern assured shareholders that the company is actively pursuing transactions that offer a strong return on investment (ROI) as part of its capital management strategy.