Desktop Metal Announces Third Quarter 2022 Financial Results

• Revenue of $47.1 million, up 85% from third quarter 2021
• Announced strategic collaboration with Align Technology to bring digital dentistry and workflows for printing to the mass market
• Accelerating and expanding Strategic Integration and Cost Optimization Initiative to reduce expense structure, drive margin expansion, and prioritize path to profitability

BOSTON--(BUSINESS WIRE)-- Desktop Metal, Inc. (NYSE: DM) today announced its financial results for the third quarter ended September 30, 2022.

“Our team continued to work diligently in the third quarter to drive adoption of our AM 2.0 mass production solutions with continued traction from both customers and major strategic partners,” said Ric Fulop, Founder and CEO of Desktop Metal. “This was demonstrated by a promising new strategic collaboration with Align Technology, the market leader in clear aligners.”

Fulop continued, “Although we continue to make meaningful progress on our long-term growth strategy, third quarter results did not meet our expectations as macroeconomic environment headwinds accelerated during the quarter, leading some customers to delay purchase decisions. To address this change to our operating backdrop, we have taken decisive actions to accelerate and expand our cost optimization initiative, and will continue to evaluate opportunities to reduce our expense structure and prioritize our path to profitability.”

Fulop concluded, “Despite short-term challenges, the long-term trends supporting broad adoption of additive manufacturing and market growth to over $100 billion in the next decade remain intact, particularly for mass production. Supported by an unmatched portfolio of AM 2.0 solutions, Desktop Metal is well-positioned to continue capturing share of this growing market, and take advantage of the next stage of long-term secular growth.”

Third Quarter 2022 and Recent Business Highlights:

• Announced strategic collaboration with Align Technology to accelerate adoption of digital dentistry in the $30 billion annual dental parts market. Align’s market-leading iTero intraoral scanners will be offered as a seamless managed service to dentists in a subscription model with recurring revenue, enabling a gateway for a connected suite of digital dentistry solutions with a workflow backed by Desktop Labs’ experienced network of dental laboratories and premium Desktop Health 3D printers and materials
• Accelerating and expanding Strategic Integration and Cost Optimization Initiative to reduce expense structure, drive margin expansion, and prioritize path to profitability
• Announced multi-faceted partnership with Siemens to accelerate adoption of AM 2.0 with large manufacturers for scalable production applications
• Expanded partnership with Henkel to qualify additional industrial photopolymer resins on the Xtreme 8K
• Actively engaged with some of the largest companies in the world on Production System^TM P-50 while remaining steadfast in building a pipeline for this platform
• Demonstrated monetization opportunity of IP portfolio of over 950 patents and pending patent applications with successful injunctive action and initiation of royalty-bearing license structure
• Expanded lineup for world’s best-selling metal binder jet system with Shop System+ and Shop System Pro
• Launched Figur G15, the first commercial platform of its kind to shape standard sheet metal on demand using patent-pending Digital Sheet Forming (DSF) technology

Third Quarter 2022 Financial Highlights:

• Revenue of $47.1 million, up 85.1% from third quarter 2021 revenue of $25.4 million
• GAAP gross margin of (0.7)%; non-GAAP gross margin of 19.9%
• GAAP net loss of $60.8 million; non-GAAP net loss of $33.1 million
• Adjusted EBITDA of $(28.2) million
• Cash, cash equivalents, and short-term investments of $217.3 million as of September 30, 2022

Financial Outlook:

• Fourth quarter 2022 revenue expectation between $51 to $62 million, representing revised full year 2022 revenue expectation between $200 to $210 million, or 78% to 87% growth from 2021
• Fourth quarter 2022 adjusted EBITDA expectation between $(20) to $(26) million, representing revised full year 2022 adjusted EBITDA expectation between $(117) to $(123) million

Conference Call Information:

Desktop Metal will host a conference call on Wednesday, November 9, 2022 at 4:30 p.m. ET to discuss third quarter 2022 results. Participants may access the call at 1-888-999-5318, international callers may use 1-848-280-6460, and request to join the Desktop Metal financial results conference call. A simultaneous webcast of the conference call and the accompanying summary presentation may be accessed online at the Events & Presentations section of ir.desktopmetal.com. A replay will be available shortly after the conclusion of the conference call at the same website.

About Desktop Metal:

Desktop Metal, Inc., based in Burlington, Massachusetts, is accelerating the transformation of manufacturing with an expansive portfolio of 3D printing solutions, from rapid prototyping to mass production. Founded in 2015 by leaders in advanced manufacturing, metallurgy, and robotics, the company is addressing the unmet challenges of speed, cost, and quality to make additive manufacturing an essential tool for engineers and manufacturers around the world. Desktop Metal was selected as one of the world’s 30 most promising Technology Pioneers by the World Economic Forum, named to MIT Technology Review’s list of 50 Smartest Companies, and the 2021 winner of Fast Company’s Innovation by Design Award in materials.

For more information, visit www.desktopmetal.com.

Forward-looking Statements:

This press release contains certain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including but not limited to risks associated with the integration of the business and operations of acquired businesses, our ability to realize the benefits from cost saving measures, and supply and logistics disruptions, including shortages and delays. For more information about risks and uncertainties that may impact Desktop Metal’s business, financial condition, results of operations and prospects generally, please refer to Desktop Metal’s reports filed with the SEC, including without limitation the “Risk Factors” and/or other information included in the Form 10-Q filed with the SEC on November 9, 2022, and such other reports as Desktop Metal has filed or may file with the SEC from time to time. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Desktop Metal, Inc. assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

NON-GAAP FINANCIAL INFORMATION

This press release contains non-GAAP financial measures, including non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA.

• We define non-GAAP gross margin as GAAP gross margin excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring expenses, acquisition-related and other transactional charges, and inventory step-up adjustments
• We define non-GAAP operating loss as GAAP operating loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring expenses, acquisition-related and other transactional charges, inventory step-up adjustments, in-process research and development assets acquired and goodwill impairment
• We define non-GAAP net loss as GAAP net loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring expense, inventory step-up adjustments, acquisition-related and other transactional charges, in-process research and development assets acquired, goodwill impairment, change in fair value of investments and change in fair value of warrant liability
• We define non-GAAP operating expense as GAAP operating expense excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring expense, acquisition-related and other transactional charges, in-process research and development assets acquired and goodwill impairment
• We define EBITDA as GAAP net income (loss) excluding interest, income taxes and depreciation and amortization expense
• We define Adjusted EBITDA as EBITDA excluding stock-based compensation, restructuring expense, change in fair value of warrant liability, change in fair value of investments, inventory step-up adjustments, goodwill impairment, and acquisition-related and other transactional charges

In addition to Desktop Metal’s results determined in accordance with GAAP, Desktop Metal’s management uses this non-GAAP financial information to evaluate the Company’s ongoing operations and for internal planning and forecasting purposes. We believe that this non-GAAP financial information, when taken collectively, may be helpful to investors in assessing Desktop Metal’s operating performance.

We believe that the use of non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends because it eliminates the effect of financing, capital expenditures, and non-cash expenses such as stock-based compensation and warrants, and provides investors with a means to compare Desktop Metal’s financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, investors should be aware that when evaluating non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA, we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of these measures may not be comparable to other similarly titled measures computed by other companies because not all companies calculate these measures in the same fashion.

Because of these limitations, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA on a supplemental basis. Management uses, and investors should consider, our non-GAAP financial measures only in conjunction with our GAAP results. Desktop Metal has not provided a reconciliation of its Adjusted EBITDA outlook to net income because estimates of all of the reconciling items cannot be provided without unreasonable efforts.

Set forth below is a reconciliation of each Non-GAAP financial measure used in this press release to its most directly comparable GAAP financial measure.

⁽¹⁾ Includes $0.1 million and $0.2 million of liability-award stock-based compensation expense for the three and nine months ended September 30, 2022.
⁽²⁾ Includes $7.3 million of stock-based compensation expense associated with the restructuring initiative for the nine months ended September 30, 2022.
⁽³⁾ Includes $1.2 million and $3.4 million of liability-award stock-based compensation expense for the three and nine months ended September 30, 2022, respectively.

⁽¹⁾ Includes $7.3 million of stock-based compensation expense associated with the Initiative for the nine months ended September 30, 2022.
⁽²⁾ Includes $1.1 million and $3.2 million of liability-award stock-based compensation expense for the three and nine months ended September 30, 2022, respectively.