Desktop Metal Announces Third Quarter 2023 Financial Results

  • Completed $100 million in cost reductions announced in June 2022 ahead of schedule
  • Revenue of $42.8 million compared to $47.1 million in the same quarter a year ago
  • GAAP gross margin of 4.5%; non-GAAP gross margin increased 190 basis points to 21.9%
  • Year-over-year improvements to non-GAAP gross margins, operating expenses, adjusted EBITDA, and operating cash flow in third quarter 2023 – with improvements expected to continue through year end
  • Cash, cash equivalents, and short-term investments closed third quarter 2023 at $108.2 million, a reduction of $19.4 million from the close of second quarter 2023 and the lowest period-over-period cash reduction since Q2 2022
  • Revising full year 2023 guidance to revenue of between $187 to $207 million, and adjusted EBITDA between $(70) to $(50) million, with expectation to achieve adjusted EBITDA breakeven in Q4 2023

BOSTON--(BUSINESS WIRE)-- Desktop Metal, Inc. (NYSE: DM), a global leader in Additive Manufacturing 2.0 technologies for mass production, today announced its financial results for the third quarter ended September 30, 2023.

“Revenue in the third quarter was disappointing for Desktop Metal and also for the entire additive manufacturing industry. However, while we are dissatisfied with our top-line performance, I am incredibly proud of the progress that Team DM has made in executing our $100 million of annualized cost reductions announced in June 2022,” said Ric Fulop, Founder and CEO of Desktop Metal. “Desktop Metal continues to take aggressive steps to ensure we have sufficient capital to navigate this challenging period. There are several strong, positive currents running through our results today, which adds to our confidence in the future of Desktop Metal as a profitable, high-growth leader in additive manufacturing.

“The entire Desktop Metal team is driving to profitability on the cash we have.”

Importantly, Fulop noted that recurring revenue in the first three quarters increased 34% to $49.2 million compared to the same three-quarter period a year ago. "Despite softer revenue in the third quarter, our recurring revenue streams continue to perform well, contributing to a positive shift in adjusted EBITDA and a path towards reaching breakeven in the fourth quarter of 2023.," Fulop noted.

Third Quarter 2023 and Recent Business Highlights:

Corporate

  • Continued execution of cost reduction plans with year-over-year improvements to non-GAAP gross margins, operating expenses, adjusted EBITDA, and operating cash flow in third quarter 2023
  • Desktop Metal agreement with Stratasys has been terminated; company remains focused on path to profitability – with improvements in non-GAAP gross margins, operating expenses, adjusted EBITDA, and operating cash flow expected to continue through year end

Product Performance

  • Pennsylvania-based FreeFORM Technologies placed orders for a DM Production System P-50 and a full fleet of metal binder jet systems, targeting metal part production in industrial, defense, medical, robotic, and consumer goods markets
  • Wisconsin-based DSB Technologies has adopted the complete X-Series metal binder jetting product lineup, including DM Live Sinter software
  • Launched the ETEC Pro XL, a cost-competitive premium DLP polymer printer that delivers extreme accuracy, resolution, and surface finish in a large build area with high throughput speeds
  • Launched Live Monitor™, a software application that provides useful real-time data from printing systems to improve efficiency and management of a single printing system or a full fleet
  • Desktop Health launched the PrintRoll™ rotating build platform for the 3D-Bioplotter®, a first-of-its-kind bioprinting tool to develop and manufacture tubular solutions for vascular, digestive, respiratory, and other channels of the body
  • Signed a commercial supply agreement for Flexcera™ dental resins to be offered on Carbon 3D hardware, demonstrating progress with monetizing the Company’s DLP intellectual property portfolio

Third Quarter 2023 Financial Highlights:

  • Revenue of $42.8 million, compared to $47.1 million in the third quarter of 2022 driven by lower product sales, a focus on sales of products with higher margins, and partially offset by increased services sales
  • GAAP gross margin of 4.5%; non-GAAP gross margin of 21.9%, an improvement of 190 basis points from third quarter 2022
  • GAAP net loss of $46.4 million, including $10.4 million amortization of acquired intangibles; non-GAAP net loss of $24.3 million
  • Adjusted EBITDA of $(20.5) million, an improvement of $7.7 million from third quarter 2022
  • Cash, cash equivalents, and short-term investments of $108.2 million as of September 30, 2023, down $19.4 million from the close of second quarter 2023

Financial Outlook:

  • Revising Revenue expectation to between $187 to $207 million for full year 2023
  • Revising Adjusted EBITDA expectation of between $(70) to $(50) million for full year 2023, with expectation to achieve Adjusted EBITDA breakeven before year end 2023

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. See “Non-GAAP Financial Information.”

Conference Call Information:

Desktop Metal will host a conference call on Thursday, November 9, 2023 to discuss third quarter 2023 results. Participants may access the call at 1-877-407-4018, international callers may use 1-201-689-8471, 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 (NYSE:DM) is driving Additive Manufacturing 2.0, a new era of on-demand, digital mass production of industrial, medical, and consumer products. Our innovative 3D printers, materials, and software deliver the speed, cost, and part quality required for this transformation. We’re the original inventors and world leaders of the 3D printing methods we believe will empower this shift, binder jetting and digital light processing. Today, our systems print metal, polymer, sand and other ceramics, as well as foam and recycled wood. Manufacturers use our technology worldwide to save time and money, reduce waste, increase flexibility, and produce designs that solve the world’s toughest problems and enable once-impossible innovations. Learn more about Desktop Metal and our #TeamDM brands at www.desktopmetal.com.

Forward-looking Statements:

This press release contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical facts contained in these communications, including statements regarding Desktop Metal’s future results of operations and financial position, financial targets, business strategy, and plans and objectives for future operations, are forward-looking statements. 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; Desktop Metals’ ability to realize the benefits from cost saving measures; 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 August 3, 2023, 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.

 

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share amounts)

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

107,432

 

 

$

76,291

 

Current portion of restricted cash

 

 

841

 

 

 

4,510

 

Short‑term investments

 

 

803

 

 

 

108,243

 

Accounts receivable

 

 

40,088

 

 

 

38,481

 

Inventory

 

 

107,196

 

 

 

91,736

 

Prepaid expenses and other current assets

 

 

24,987

 

 

 

16,325

 

Assets held for sale

 

 

 

 

 

830

 

Total current assets

 

 

281,347

 

 

 

336,416

 

Restricted cash, net of current portion

 

 

612

 

 

 

1,112

 

Property and equipment, net

 

 

38,387

 

 

 

56,271

 

Goodwill

 

 

108,651

 

 

 

112,955

 

Intangible assets, net

 

 

178,802

 

 

 

219,830

 

Other noncurrent assets

 

 

36,465

 

 

 

27,763

 

Total Assets

 

$

644,264

 

 

$

754,347

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

32,114

 

 

$

25,105

 

Customer deposits

 

 

6,918

 

 

 

11,526

 

Current portion of lease liability

 

 

6,644

 

 

 

5,730

 

Accrued expenses and other current liabilities

 

 

27,899

 

 

 

26,723

 

Current portion of deferred revenue

 

 

17,015

 

 

 

13,719

 

Current portion of long‑term debt

 

 

368

 

 

 

584

 

Total current liabilities

 

 

90,958

 

 

 

83,387

 

Long-term debt, net of current portion

 

 

120

 

 

 

311

 

Convertible notes

 

 

112,382

 

 

 

111,834

 

Lease liability, net of current portion

 

 

23,680

 

 

 

17,860

 

Deferred revenue, net of current portion

 

 

3,780

 

 

 

3,664

 

Deferred tax liability

 

 

4,693

 

 

 

8,430

 

Other noncurrent liabilities

 

 

3,077

 

 

 

1,359

 

Total liabilities

 

 

238,690

 

 

 

226,845

 

Commitments and Contingencies (Note 17)

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

Preferred Stock, $0.0001 par value—authorized, 50,000,000 shares; no shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

 

 

 

 

Common Stock, $0.0001 par value—500,000,000 shares authorized; 323,658,575 and 318,235,106 shares issued at September 30, 2023 and December 31, 2022, respectively, 323,642,480 and 318,133,434 shares outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

32

 

 

 

32

 

Additional paid‑in capital

 

 

1,901,931

 

 

 

1,874,792

 

Accumulated deficit

 

 

(1,457,696

)

 

 

(1,308,954

)

Accumulated other comprehensive loss

 

 

(38,693

)

 

 

(38,368

)

Total Stockholders’ Equity

 

 

405,574

 

 

 

527,502

 

Total Liabilities and Stockholders’ Equity

 

$

644,264

 

 

$

754,347

 

See notes to condensed consolidated financial statements

 

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

37,502

 

 

$

42,937

 

 

$

121,597

 

 

$

135,085

 

Services

 

 

5,248

 

 

 

4,149

 

 

 

15,755

 

 

 

13,381

 

Total revenues

 

 

42,750

 

 

 

47,086

 

 

 

137,352

 

 

 

148,466

 

Cost of sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

 

37,175

 

 

 

43,639

 

 

 

119,290

 

 

 

130,454

 

Services

 

 

3,651

 

 

 

3,756

 

 

 

11,413

 

 

 

11,252

 

Total cost of sales

 

 

40,826

 

 

 

47,395

 

 

 

130,703

 

 

 

141,706

 

Gross profit (loss)

 

 

1,924

 

 

 

(309

)

 

 

6,649

 

 

 

6,760

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

20,455

 

 

 

22,382

 

 

 

64,822

 

 

 

78,357

 

Sales and marketing

 

 

8,549

 

 

 

16,204

 

 

 

28,596

 

 

 

56,299

 

General and administrative

 

 

9,528

 

 

 

18,924

 

 

 

50,673

 

 

 

62,472

 

Impairment charges

 

 

6,062

 

 

 

 

 

 

6,062

 

 

 

 

Goodwill impairment

 

 

2,450

 

 

 

 

 

 

2,450

 

 

 

229,500

 

Total operating expenses

 

 

47,044

 

 

 

57,510

 

 

 

152,603

 

 

 

426,628

 

Loss from operations

 

 

(45,120

)

 

 

(57,819

)

 

 

(145,954

)

 

 

(419,868

)

Interest expense

 

 

(1,045

)

 

 

(680

)

 

 

(2,965

)

 

 

(1,281

)

Interest and other expense, net

 

 

(349

)

 

 

(1,677

)

 

 

(498

)

 

 

(8,443

)

Loss before income taxes

 

 

(46,514

)

 

 

(60,176

)

 

 

(149,417

)

 

 

(429,592

)

Income tax benefit (expense)

 

 

141

 

 

 

(598

)

 

 

675

 

 

 

1,602

 

Net loss

 

$

(46,373

)

 

$

(60,774

)

 

$

(148,742

)

 

$

(427,990

)

Net loss per share—basic and diluted

 

$

(0.14

)

 

$

(0.19

)

 

$

(0.46

)

 

$

(1.36

)

Weighted average shares outstanding, basic and diluted

 

 

323,187,608

 

 

 

316,007,716

 

 

 

321,328,016

 

 

 

313,901,704

 

See notes to condensed consolidated financial statements.

 

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

 

$

(46,373

)

 

$

(60,774

)

 

$

(148,742

)

 

$

(427,990

)

Other comprehensive loss, net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale marketable securities, net

 

 

 

(211

)

 

 

(389

)

 

 

126

 

 

 

(418

)

Foreign currency translation adjustment

 

 

 

(684

)

 

 

(15,866

)

 

 

(451

)

 

 

(54,324

)

Total comprehensive loss, net of taxes of $0

 

 

$

(47,268

)

 

$

(77,029

)

 

$

(149,067

)

 

$

(482,732

)

See notes to condensed consolidated financial statements.

 

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

Common Stock

 

Additional

 

 

 

 

Comprehensive

 

Total

 

 

Voting

 

Paid‑in

 

Accumulated

 

(Loss)

 

Stockholders’

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Income

 

Equity

BALANCE—July 1, 2023

 

322,630,201

 

 

$

32

 

$

1,893,548

 

 

$

(1,411,323

)

 

$

(37,798

)

 

$

444,459

 

Exercise of Common Stock options

 

37,935

 

 

 

 

 

46

 

 

 

 

 

 

 

 

 

46

 

Vesting of restricted Common Stock

 

9,779

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

986,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of shares for employee tax withholdings

 

(22,360

)

 

 

 

 

(39

)

 

 

 

 

 

 

 

 

(39

)

Stock‑based compensation expense

 

 

 

 

 

 

8,376

 

 

 

 

 

 

 

 

 

8,376

 

Net loss

 

 

 

 

 

 

 

 

 

(46,373

)

 

 

 

 

 

(46,373

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

(895

)

 

 

(895

)

BALANCE—September 30, 2023

 

323,642,480

 

 

$

32

 

$

1,901,931

 

 

$

(1,457,696

)

 

$

(38,693

)

 

$

405,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

Common Stock

 

Additional

 

 

 

 

Comprehensive

 

Total

 

 

Voting

 

Paid‑in

 

Accumulated

 

(Loss)

 

Stockholders’

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Income

 

Equity

BALANCE—January 1, 2023

 

318,133,434

 

 

$

32

 

$

1,874,792

 

 

$

(1,308,954

)

 

$

(38,368

)

 

$

527,502

 

Exercise of Common Stock options

 

1,006,046

 

 

 

 

 

1,203

 

 

 

 

 

 

 

 

 

1,203

 

Vesting of restricted Common Stock

 

85,372

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

4,061,967

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of shares for employee tax withholdings

 

(89,132

)

 

 

 

 

(147

)

 

 

 

 

 

 

 

 

(147

)

Issuance of Common Stock related to settlement of contingent consideration

 

444,793

 

 

 

 

 

797

 

 

 

 

 

 

 

 

 

797

 

Stock‑based compensation expense

 

 

 

 

 

 

25,286

 

 

 

 

 

 

 

 

 

25,286

 

Net loss

 

 

 

 

 

 

 

 

 

(148,742

)

 

 

 

 

 

(148,742

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

(325

)

 

 

(325

)

BALANCE—September 30, 2023

 

323,642,480

 

 

$

32

 

$

1,901,931

 

 

$

(1,457,696

)

 

$

(38,693

)

 

$

405,574

 

See notes to condensed consolidated financial statements.

 

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(148,742

)

 

$

(427,990

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

40,322

 

 

 

38,294

 

Stock‑based compensation

 

 

26,699

 

 

 

37,826

 

Goodwill impairment

 

 

2,450

 

 

 

229,500

 

Amortization (accretion) of discount on investments

 

 

(490

)

 

 

(305

)

Amortization of deferred costs on convertible notes

 

 

548

 

 

 

276

 

Provision for bad debt

 

 

640

 

 

 

1,038

 

Loss on disposal of property and equipment

 

 

501

 

 

 

209

 

Net increase (decrease) in accrued interest related to marketable securities

 

 

238

 

 

 

771

 

Net unrealized (gain) loss on equity investment

 

 

286

 

 

 

6,172

 

Net unrealized (gain) loss on other investments

 

 

 

 

 

745

 

Deferred tax benefit

 

 

(675

)

 

 

(1,602

)

Change in fair value of contingent consideration

 

 

 

 

 

(254

)

Foreign currency transaction loss

 

 

392

 

 

 

1,202

 

Impairment charges

 

 

6,062

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(2,446

)

 

 

3,166

 

Inventory

 

 

(16,052

)

 

 

(31,195

)

Prepaid expenses and other current assets

 

 

(8,716

)

 

 

(969

)

Other assets

 

 

2,425

 

 

 

1,196

 

Accounts payable

 

 

7,397

 

 

 

(2,959

)

Accrued expenses and other current liabilities

 

 

1,009

 

 

 

(3,855

)

Customer deposits

 

 

(4,542

)

 

 

2,360

 

Deferred revenue

 

 

3,590

 

 

 

(1,589

)

Change in right of use assets and lease liabilities, net

 

 

(4,456

)

 

 

(2,850

)

Other liabilities

 

 

1,706

 

 

 

24

 

Net cash used in operating activities

 

 

(91,854

)

 

 

(150,789

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,709

)

 

 

(8,157

)

Proceeds from other investment

 

 

 

 

 

3,155

 

Proceeds from sale of property and equipment

 

 

9,942

 

 

 

6

 

Purchase of marketable securities

 

 

(4,973

)

 

 

(158,404

)

Proceeds from sales and maturities of marketable securities

 

 

112,719

 

 

 

205,650

 

Proceeds from disposal of subsidiaries

 

 

4,089

 

 

 

 

Proceeds from capital grant

 

 

 

 

 

200

 

Cash paid for acquisitions, net of cash acquired

 

 

(500

)

 

 

(23

)

Net cash provided by investing activities

 

 

118,568

 

 

 

42,427

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from the exercise of stock options

 

 

1,203

 

 

 

3,036

 

Payment of taxes related to net share settlement upon vesting of restricted stock units

 

 

(147

)

 

 

(230

)

Repayment of loans

 

 

(337

)

 

 

(421

)

Proceeds from issuance of convertible notes

 

 

 

 

 

115,000

 

Costs incurred in connection with the issuance of convertible notes

 

 

 

 

 

(3,619

)

Net cash provided by financing activities

 

 

719

 

 

 

113,766

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(461

)

 

 

(1,491

)

Net increase in cash, cash equivalents, and restricted cash

 

 

26,972

 

 

 

3,913

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

81,913

 

 

 

68,258

 

Cash, cash equivalents, and restricted cash at end of period

 

$

108,885

 

 

$

72,171

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total shown in the condensed consolidated statements of cash flows:

 

 

 

 

 

 

Cash and cash equivalents

 

$

107,432

 

 

$

66,987

 

Restricted cash included in other current assets

 

 

841

 

 

 

4,072

 

Restricted cash included in other noncurrent assets

 

 

612

 

 

 

1,112

 

Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows

 

$

108,885

 

 

$

72,171

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

Interest paid

 

$

 

 

$

 

Taxes paid

 

$

 

 

$

 

 

 

 

 

 

 

 

Non‑cash investing and financing activities:

 

 

 

 

 

 

Net unrealized (gain) loss on investments

 

$

(339

)

 

$

418

 

Common Stock issued for settlement of contingent consideration

 

$

797

 

 

$

500

 

Deferred contract costs

 

$

 

 

$

1,341

 

Additions to right of use assets and lease liabilities

 

$

11,443

 

 

$

10,742

 

Purchase of property and equipment included in accounts payable

 

$

326

 

 

$

1,507

 

Purchase of property and equipment included in accrued expense

 

$

90

 

 

$

 

Transfers from property and equipment to inventory

 

$

1,647

 

 

$

2,470

 

Transfers from inventory to property and equipment

 

$

1,370

 

 

$

3,475

 

See notes to condensed consolidated financial statements.

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, acquisition-related and integration costs, 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, inventory step-up adjustments, and acquisition-related and integration costs
  • We define non-GAAP net loss as GAAP net loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring, inventory step-up adjustments, acquisition-related and integration costs, and change in fair value of investments
  • We define non-GAAP operating expense as GAAP operating expense excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring, and acquisition-related and integration costs including in operating expenses
  • We define EBITDA as GAAP net income (loss) excluding interest, income taxes, and depreciation and amortization expense
  • We define Adjusted EBITDA as EBITDA excluding change in fair value of investments, inventory step-up adjustments, stock-based compensation, restructuring, and acquisition-related and integration costs

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.

 

DESKTOP METAL, INC.

NON-GAAP RECONCILIATION TABLE

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30,

 

September 30,

(Dollars in thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

GAAP gross margin

 

$

1,924

 

 

$

(309

)

 

$

6,649

 

 

$

6,760

 

Stock-based compensation included in cost of sales(1)

 

 

517

 

 

 

734

 

 

 

1,787

 

 

 

1,892

 

Amortization of acquired intangible assets included in cost of sales

 

 

6,889

 

 

 

5,877

 

 

 

20,744

 

 

 

17,817

 

Restructuring expense in cost of sales

 

 

16

 

 

 

3,085

 

 

 

3,221

 

 

 

3,126

 

Acquisition-related and integration costs included in cost of sales

 

 

 

 

 

 

 

 

913

 

 

 

1,148

 

Inventory step-up adjustment in cost of sales

 

 

 

 

 

 

 

 

 

 

 

1,496

 

Non-GAAP gross margin

 

$

9,346

 

 

$

9,387

 

 

$

33,314

 

 

$

32,239

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating loss

 

$

(45,120

)

 

$

(57,819

)

 

$

(145,954

)

 

$

(419,868

)

Stock-based compensation(2),(3)

 

 

7,683

 

 

 

12,040

 

 

 

26,699

 

 

 

41,170

 

Amortization of acquired intangible assets

 

 

10,398

 

 

 

9,069

 

 

 

31,297

 

 

 

28,522

 

Restructuring expense

 

 

142

 

 

 

3,085

 

 

 

6,610

 

 

 

5,086

 

Inventory step-up adjustment in cost of sales

 

 

 

 

 

 

 

 

 

 

 

1,496

 

Acquisition-related and integration costs(4)

 

 

(5,452

)

 

 

1,476

 

 

 

3,313

 

 

 

6,633

 

Goodwill impairment

 

 

2,450

 

 

 

 

 

 

2,450

 

 

 

229,500

 

Impairment charges

 

 

6,062

 

 

 

 

 

 

6,062

 

 

 

 

Non-GAAP operating loss

 

$

(23,837

)

 

$

(32,149

)

 

$

(69,523

)

 

$

(107,461

)

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(46,373

)

 

$

(60,774

)

 

$

(148,742

)

 

$

(427,990

)

Stock-based compensation(2),(3)

 

 

7,683

 

 

 

12,040

 

 

 

26,699

 

 

 

41,170

 

Amortization of acquired intangible assets

 

 

10,398

 

 

 

9,069

 

 

 

31,297

 

 

 

28,522

 

Restructuring expense

 

 

142

 

 

 

3,085

 

 

 

6,610

 

 

 

5,469

 

Inventory step-up adjustment in cost of sales

 

 

 

 

 

 

 

 

 

 

 

1,496

 

Acquisition-related and integration costs(4)

 

 

(5,452

)

 

 

1,476

 

 

 

3,313

 

 

 

6,633

 

Goodwill impairment

 

 

2,450

 

 

 

 

 

 

2,450

 

 

 

229,500

 

Impairment charges

 

 

6,062

 

 

 

 

 

 

6,062

 

 

 

 

Change in fair value of investments

 

 

775

 

 

 

2,052

 

 

 

1,061

 

 

 

8,493

 

Non-GAAP net loss

 

$

(24,315

)

 

$

(33,052

)

 

$

(71,250

)

 

$

(106,707

)

(1) Includes $(0.1) million and $0.3 million of liability-award stock-based compensation expense for the three and nine months ended September 30, 2023, respectively. 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, respectively.

(2) Includes $(0.7) million and $2.2 million of liability-award stock-based compensation expense for the three and nine months ended September 30, 2023, respectively. 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.

(3) Includes $7.3 million of stock-based compensation expense associated with the restructuring initiative for the nine months ended September 30, 2022.

(4) For the three months ended September 30, 2023, the Company incurred an additional $4.3 million in merger expenses related to the Stratasys transaction and recognized a $10.0 million reduction in expenses as a result of the reimbursement from Stratasys. The net gain of $5.6 million is included in the adjustment for Acquisition-related and integration costs for the three months ended September 30, 2023. For the nine months ended September 30, 2023, we incurred $10.0 million in merger expenses related to the Stratasys transaction and recognized a $10.0 million reduction in expenses as a result of the reimbursement from Stratasys, with no net impact to the adjustment for Acquisition-related and integration costs for the nine months ended September 30, 2023.

 

DESKTOP METAL, INC.

NON-GAAP OPERATING EXPENSE RECONCILIATION TABLE

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30,

 

September 30,

(Dollars in thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

GAAP operating expenses

 

$

47,044

 

 

$

57,510

 

 

$

152,603

 

 

$

426,628

 

Stock-based compensation included in operating expenses(1),(2)

 

 

(7,166

)

 

 

(11,306

)

 

 

(24,912

)

 

 

(39,278

)

Amortization of acquired intangible assets included in operating expenses

 

 

(3,509

)

 

 

(3,192

)

 

 

(10,553

)

 

 

(10,705

)

Restructuring expense included in operating expenses

 

 

(126

)

 

 

 

 

 

(3,389

)

 

 

(1,960

)

Acquisition-related and integration costs included in operating expenses(3)

 

 

5,452

 

 

 

(1,476

)

 

 

(2,400

)

 

 

(5,485

)

Goodwill impairment

 

 

(2,450

)

 

 

 

 

 

(2,450

)

 

 

(229,500

)

Impairment charges

 

 

(6,062

)

 

 

 

 

 

(6,062

)

 

 

 

Non-GAAP operating expenses

 

$

33,183

 

 

$

41,536

 

 

$

102,837

 

 

$

139,700

 

(1) Includes $(0.6) million and $1.9 million of liability-award stock-based compensation expense for the three and nine months ended September 30, 2023, respectively. 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.

(2) Includes $7.3 million of stock-based compensation expense associated with the Initiative for the nine months ended September 30, 2022.

(3) For the three months ended September 30, 2023, the Company incurred an additional $4.3 million in merger expenses related to the Stratasys transaction and recognized a $10.0 million reduction in expenses as a result of the reimbursement from Stratasys. The net gain of $5.6 million is included in the adjustment for Acquisition-related and integration costs for the three months ended September 30, 2023. For the nine months ended September 30, 2023, we incurred $10.0 million in merger expenses related to the Stratasys transaction and recognized a $10.0 million reduction in expenses as a result of the reimbursement from Stratasys, with no net impact to the adjustment for Acquisition-related and integration costs for the nine months ended September 30, 2023.

 

DESKTOP METAL, INC.

NON-GAAP ADJUSTED EBITDA RECONCILIATION TABLE

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30,

 

September 30,

(Dollars in thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss attributable to common stockholders

 

$

(46,373

)

 

$

(60,774

)

 

$

(148,742

)

 

$

(427,990

)

Interest (income) expense, net

 

 

1,045

 

 

 

680

 

 

 

2,965

 

 

 

1,281

 

Income tax expense (benefit)

 

 

(141

)

 

 

598

 

 

 

(675

)

 

 

(1,602

)

Depreciation and amortization

 

 

13,357

 

 

 

12,692

 

 

 

40,322

 

 

 

38,294

 

EBITDA

 

 

(32,112

)

 

 

(46,804

)

 

 

(106,130

)

 

 

(390,017

)

Change in fair value of investments

 

 

775

 

 

 

2,052

 

 

 

1,061

 

 

 

8,493

 

Inventory step-up adjustment

 

 

 

 

 

 

 

 

 

 

 

1,496

 

Stock-based compensation expense(1),(2)

 

 

7,683

 

 

 

12,040

 

 

 

26,699

 

 

 

41,170

 

Restructuring expense

 

 

142

 

 

 

3,085

 

 

 

6,610

 

 

 

5,469

 

Goodwill impairment

 

 

2,450

 

 

 

 

 

 

2,450

 

 

 

229,500

 

Impairment charges

 

 

6,062

 

 

 

 

 

 

6,062

 

 

 

 

Acquisition-related and integration costs(3)

 

 

(5,452

)

 

 

1,476

 

 

 

3,313

 

 

 

6,633

 

Adjusted EBITDA

 

$

(20,452

)

 

$

(28,151

)

 

$

(59,935

)

 

$

(97,256

)

(1) Includes $7.3 million of stock-based compensation expense associated with the Initiative for the nine months ended September 30, 2022.

(2) Includes $(0.7) million and $2.2 million of liability-award stock-based compensation expense for the three and nine months ended September 30, 2023, respectively. 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.

(3) For the three months ended September 30, 2023, the Company incurred an additional $4.3 million in merger expenses related to the Stratasys transaction and recognized a $10.0 million reduction in expenses as a result of the reimbursement from Stratasys. The net gain of $5.6 million is included in the adjustment for Acquisition-related and integration costs for the three months ended September 30, 2023. For the nine months ended September 30, 2023, we incurred $10.0 million in merger expenses related to the Stratasys transaction and recognized a $10.0 million reduction in expenses as a result of the reimbursement from Stratasys, with no net impact to the adjustment for Acquisition-related and integration costs for the nine months ended September 30, 2023.

 

Investor Relations:
(857) 504-1084
DesktopMetalIR@icrinc.com

Media Relations:
Sarah Webster
(313) 715-6988
sarahwebster@desktopmetal.com

Source: Desktop Metal, Inc.