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Markforged Announces Third Quarter 2022 Results

WATERTOWN, Mass., November 09, 2022--(BUSINESS WIRE)--Markforged Holding Corporation (NYSE: MKFG) (the "Company"), the company strengthening manufacturing resiliency by enabling industrial production at the point of need, today announced its results from the third quarter ended September 30, 2022.

Financial Highlights

  • Revenue increased by 5%, to $25.2 million, in the third quarter of 2022 from $24.0 million in the third quarter of 2021.

  • Gross margin was 48.6% in the third quarter of 2022 compared to 57.0% in the third quarter of 2021.

  • Non-GAAP gross margin was 49.1% in the third quarter of 2022 compared to 57.6% in the third quarter of 2021.

  • Net loss was $23.0 million in the third quarter of 2022, compared to net profit of $21.7 million in the third quarter of 2021.

  • Non-GAAP net loss was $15.2 million in the third quarter of 2022, compared to a loss of $11.7 million in the third quarter of 2021.

  • GAAP earnings per share was a loss of $0.12 for the third quarter of 2022, compared to income of $0.13 in the third quarter of 2021.

  • Non-GAAP earnings per share was a loss of $0.08 for the third quarter of 2022, compared to a loss of $0.07 in the third quarter of 2021.

  • Cash and cash equivalents were $181.8 million as of September 30, 2022.

Reconciliations of the non-GAAP financial measures provided in this press release to their most directly comparable GAAP financial measures are provided in the financial tables included at the end of this press release. An explanation of these measures and how they are calculated is also included under the heading "Non-GAAP Financial Measures."

"Despite a challenging macro environment, we delivered another solid quarter as demand for The Digital Forge continues to grow globally. Ongoing supply chain challenges continue to be a catalyst for demand for our Digital Forge platform which brings industrial production to the point of need," said Shai Terem, President and CEO of Markforged. "Excitement for our newest production-grade printer, the FX20, has been tremendous, and we are pleased to have expanded our addressable market by adding high volume metal application capabilities to our technology offerings with the closing of the Digital Metal acquisition. While challenges including inflation, geopolitical tensions and supply chain disruption are putting near-term pressure on our margins, we are confident in our long term strong fundamentals, which are supported by our growing pipeline and market opportunity."

Business Highlights

  • Robust FX20 demand. Markforged’s newest production-grade printer the FX20 is generating unprecedented excitement and orders continue to exceed the company’s expectation as manufacturers seek solutions to make their supply chains more resilient and flexible. However, as supply chain challenges continued globally, Markforged was not able to meet the demand for the FX20 and the cost of production of the FX20 exceeded our estimates.

  • Addressable market expansion with metals technology. The company completed the acquisition of Digital Metal in the third quarter. The addition of this new metal binder jetting technology expands Markforged’s addressable market into the mass production of end-use metal parts. Demand is building in automotive, luxury goods, medical and MIM applications.

  • Strength in the APAC region. In the Americas and EMEA, inflation and geopolitical pressures continued to impact the company’s business, as macroeconomic uncertainty led businesses to delay purchase decisions. However, the APAC region met the company’s expectations for significant growth in the second half of 2022. Revenue in APAC grew 51% during the nine months ended September 30, 2022 compared to the same period in 2021, and 82% during the three months ended September 30, 2022 compared to the same period in 2021, led by strong demand for mature products and accelerated demand for the FX20.

  • Operating leverage from tight cost controls. Strong cost controls allowed Markforged to see sequential operating leverage and deliver on its EPS target in Q3. The company reorganized its go-to-market team and reprioritized initiatives with the potential for the greatest impact on profitable growth. These cost controls resulted in a strong balance sheet that the company anticipates will keep it on the path to profitability in 2024.

2022 Guidance

Markforged is updating its full-year 2022 financial guidance to reflect its updated fiscal year outlook, which considers the current market conditions. The Company anticipates revenue for the fourth quarter to be in the range of $28 - $32 million which, at the midpoint, would result in 2022 full year revenue near the lower end of the range the Company provided previously. Non-GAAP gross margin in the fourth quarter is anticipated to be in the range of 48% - 50%, which equates to full year 2022 non-GAAP gross margin within the range of 50% - 52%. Non-GAAP operating loss in the fourth quarter is expected to be in the range of $13.2 - $14.7 million, which equates to full year 2022 non-GAAP operating loss in the range of $61 - $62.5 million for the year. Non-GAAP earning per share results for the fourth quarter are expected to be a loss in the range of $0.06 - $0.07 per share, which equates to full year 2022 non-GAAP earning per share results to be a loss in the range of $0.31 - $0.32 per share, based on the outstanding share count of approximately 193.6 million shares.

Conference Call and Webcast Information

The Company will host a webcast and conference call at 5:00 p.m. ET today, Wednesday, November 9, to discuss the results.

Participants may access the earnings press release, related materials and the audio webcast by visiting the investors section of the Company's website at https://investors.markforged.com/.

To participate in the call, please dial 1-800-954-0692, or 1-212-231-2907 for international participants, ten minutes before the scheduled start.

For those unable to listen to the live conference call, a replay will be available on the Company's website and telephonically through Wednesday, November 23, 2022 by dialing 1-844-512-2921 (U.S. domestic) or 1-412-317-6671 (International), passcode 152520.

About Markforged

Markforged (NYSE:MKFG) is making manufacturing more resilient and flexible by bringing on-demand industrial production to the point of need. The Markforged Digital Forge – the reliable, intelligent and easy-to-use additive manufacturing platform – empowers any manufacturer to create robust end-use parts in both metal and composites anywhere and anytime. Over 10,000 customers across 70+ countries use The Digital Forge to overcome limitations of traditional manufacturing while strengthening their supply chains. Markforged is headquartered in Watertown, Mass., where it designs the hardware, software and materials that powers its platform. To learn more, visit www.markforged.com.

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), we believe that non-GAAP gross margin, non-GAAP operating profit (loss), and non-GAAP earnings per share, each a non-GAAP financial measure, is useful in evaluating the performance of our business.

These non-GAAP measures have limitations as an analytical tool. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors should also note that the non-GAAP financial measures we use may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies, including other companies in our industry.

We recommend that you review the reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures provided in the financial statement tables included below in this press release, and that you not rely on any single financial measure to evaluate our business. Additionally, to the extent that forward-looking non-GAAP financial measures are provided, they are presented on a non-GAAP basis without reconciliations of such forward-looking non-GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.

Investors should note that beginning with the second quarter of 2022, we have modified the presentation of "non-recurring costs" included in non-GAAP gross margin, non-GAAP operating profit (loss), non-GAAP net profit (loss) and non-GAAP earnings per share metrics to include certain non-recurring litigation costs. We use these metrics to provide an understanding of the results of its core business performance and believe these non-recurring litigation costs are reflective of one-time expenses that are not indicative of the performance of our core business’ operations. This change increases "non-recurring costs" by $0.6 million, $1.0 million, and $0.8 million in the first through third quarters of 2022, respectively, and by $3.7 million, $0.9 million, and $2.3 million in the first through third quarters of 2021, respectively. To conform to the current period’s presentation, we have included non-recurring litigation costs as "non-recurring costs" when presenting the foregoing non-GAAP figures for the year to date period and periods presented for 2021.

The following are the non-GAAP financial measures referenced in this press release and presented in the tables below:

  • Non-GAAP gross margin is defined as GAAP operating profit (loss), less stock-based compensation expense and certain non-recurring costs, divided by revenue.

  • Non-GAAP operating profit (loss) is defined as GAAP operating profit (loss) less stock-based compensation expense and certain non-recurring costs.

  • Non-GAAP net profit (loss) is defined as GAAP net profit (loss) less stock-based compensation expense, net change in fair value of warrant liabilities and contingent earnout liabilities, and certain non-recurring costs.

  • Non-GAAP earnings per share is defined as GAAP net profit (loss) less stock-based compensation expense, net change in fair value of warrant liabilities and contingent earnout liabilities, and certain non-recurring costs, divided by diluted weighted average shares outstanding for the period.

Special Note Regarding Forward-Looking Statements

This press release contains forward-looking statements that are based on beliefs and assumptions and on information currently available. In some cases, you can identify forward-looking statements by the following words: "may," "will," "could," "would," "should," "expect," "intend," "plan," "strategy," "anticipate," "believe," "estimate," "predict," "project," "potential," "continue," "ongoing," "opportunity" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although Markforged believes that it has a reasonable basis for each forward-looking statement contained in this press release, Markforged cautions you that these statements are based on a combination of facts and factors currently known by it and its projections of the future, about which it cannot be certain. Forward-looking statements in this press release include, but are not limited to, future growth rate, revenue, gross profit margin and earnings guidance; timing for achieving profitability; our ability to fulfill orders for our products in a timely fashion in the future; expected growth, the size of and opportunity to increase our addressable market; the anticipated benefits of the acquisition of Digital Metal, the rate and extent of adoption of our products, including, but not limited to, our most recently introduced products; market trends in the manufacturing industry; the effects of macroeconomic factors; and the benefits to consumers, functionality and applications of Markforged’s products. Markforged cannot assure you that the forward-looking statements in this press release will prove to be accurate. These forward looking statements are subject to a number of risks and uncertainties, including, among others, general economic, political and business conditions; the ability of Markforged to maintain its listing on the New York Stock Exchange; the effect of COVID-19 on Markforged’s business and financial results; the outcome of any legal proceedings against Markforged; and those factors discussed under the header "Risk Factors" in Markforged’s most recent periodic and other filings with the SEC. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that Markforged will achieve its objectives and plans in any specified time frame, or at all. The forward-looking statements in this press release represent Markforged’s views as of the date of this press release. Markforged anticipates that subsequent events and developments will cause its views to change. However, while Markforged may elect to update these forward-looking statements at some point in the future, Markforged has no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing Markforged’s views as of any date subsequent to the date of this press release.

MARKFORGED HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of September 30, 2022 and December 31, 2021

(In thousands, except share data and par value amounts) (Unaudited)

September 30,
2022

December 31,
2021

Assets

Current assets

Cash and cash equivalents

$

181,805

$

288,603

Accounts receivable, net

30,135

26,777

Inventory

24,561

10,377

Prepaid expenses

3,647

3,921

Other current assets

2,918

511

Total current assets

243,066

330,189

Property and equipment, net

13,409

6,349

Goodwill

31,249

Intangible assets

15,377

Right-of-use assets

45,615

Other assets

3,150

776

Total assets

$

351,866

$

337,314

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

10,792

$

11,403

Accrued expenses

9,878

7,411

Deferred revenue

6,781

6,288

Operating lease liabilities

7,778

Other current liabilities

21

310

Total current liabilities

35,250

25,412

Long-term deferred revenue

4,535

3,742

Deferred rent

1,623

Contingent earnout liability

8,740

59,722

Long-term operating lease liabilities

40,333

Other liabilities

4,944

2,646

Total liabilities

93,802

93,145

Commitments and contingencies

Stockholders’ equity

Common stock, $0.0001 par value; 1,000,000,000 shares authorized at September 30, 2022 and December 31, 2021; 193,643,855 and 185,993,058 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

19

19

Additional paid-in capital

350,022

319,859

Accumulated deficit

(90,365

)

(75,709

)

Accumulated other comprehensive income (loss)

(1,612

)

Total stockholders’ equity

258,064

244,169

Total liabilities and stockholders’ equity

$

351,866

$

337,314

MARKFORGED HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine Months Ended September 30, 2022 and 2021

(In thousands, except share data and per share data) (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

Revenue

$

25,208

$

24,045

$

71,294

$

64,584

Cost of revenue

12,959

10,330

34,514

26,729

Gross profit

12,249

13,715

36,780

37,855

Operating expenses

Sales and marketing

11,783

10,399

35,104

25,711

Research and development

10,421

9,761

31,375

21,487

General and administrative

12,873

15,935

38,094

32,770

Total operating expenses

35,077

36,095

104,573

79,968

Loss from operations

(22,828

)

(22,380

)

(67,793

)

(42,113

)

Change in fair value of warrant liabilities

(448

)

1,418

1,221

170

Change in fair value of contingent earnout liability

(656

)

42,710

50,982

42,710

Other expense

(39

)

(48

)

(429

)

(168

)

Interest expense

(2

)

(6

)

(11

)

(15

)

Interest income

1,006

6

1,380

9

Profit (loss) before income taxes

(22,967

)

21,700

(14,650

)

593

Income tax benefit

3

(3

)

6

(1

)

Net profit (loss)

$

(22,970

)

$

21,703

$

(14,656

)

$

594

Weighted average shares outstanding - basic

189,766,945

162,942,990

188,225,543

81,373,265

Weighted average shares outstanding - diluted

189,766,945

167,091,320

188,225,543

85,407,166

Net profit (loss) per share - basic

$

(0.12

)

$

0.13

$

(0.08

)

$

0.01

Net profit (loss) per share - diluted

(0.12

)

0.13

(0.08

)

0.01

MARKFORGED HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
For the three and nine months ended September 30, 2022 and 2021
(In thousands) (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

Net income (loss)

$

(22,970

)

$

21,703

$

(14,656

)

$

594

Other comprehensive loss, net of taxes:

Foreign currency translation adjustment

(1,612

)

(1,612

)

Total comprehensive income (loss), net of taxes of $0

$

(24,582

)

$

21,703

$

(16,268

)

$

594

MARKFORGED HOLDING CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

For the Three and Nine Months Ended September 30, 2022 and 2021

(In thousands) (Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2022

2021

2022

2021

Net profit (loss) and comprehensive income (loss)

$

(22,970

)

$

21,703

$

(14,656

)

$

594

Stock compensation expense

5,286

8,424

15,620

11,395

Change in fair value of warrant liabilities

448

(1,418

)

(1,221

)

(170

)

Change in fair value of contingent earnout liability

656

(42,710

)

(50,982

)

(42,710

)

Non-recurring costs1

1,427

2,329

4,411

6,962

Non-GAAP net loss 2

$

(15,153

)

$

(11,672

)

$

(46,828

)

$

(23,929

)

1Non-recurring costs primarily relate to transaction and litigation expenses.
2Stock-based compensation expense and non-recurring costs were included in the following GAAP consolidated statement of operations categories:

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

Cost of revenue

$

130

$

129

$

347

$

218

Sales and marketing

917

856

2,540

1,176

Research and development

1,326

2,043

4,317

2,768

General and administrative

4,340

7,725

12,827

14,195

Total operating expense

6,583

10,624

19,684

18,139

Total adjustments

$

6,713

$

10,753

$

20,031

$

18,357

MARKFORGED HOLDING CORPORATION

NON-GAAP RECONCILIATION

THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(In thousands, except share data and per share data) (Unaudited)

Three Months Ended September 30, 2022

Three Months Ended September 30, 2021

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments

Non-GAAP

Revenue

$

25,208

$

25,208

$

24,045

$

24,045

Cost of revenue

12,959

(130

)

12,829

10,330

(129

)

10,201

Gross profit

12,249

130

12,379

13,715

129

13,844

Operating expenses

Sales and marketing

11,783

(917

)

10,866

10,399

(856

)

9,543

Research and development

10,421

(1,326

)

9,095

9,761

(2,043

)

7,718

General and administrative

12,873

(4,340

)

8,533

15,935

(7,725

)

8,210

Total operating expenses

35,077

(6,583

)

28,494

36,095

(10,624

)

25,471

Loss from operations

(22,828

)

6,713

(16,115

)

(22,380

)

10,753

(11,627

)

Change in fair value of warrant liabilities

(448

)

448

1,418

(1,418

)

Change in fair value of contingent earnout liability

(656

)

656

42,710

(42,710

)

Other expense

(39

)

(39

)

(48

)

(48

)

Interest expense

(2

)

(2

)

(6

)

(6

)

Interest income

1,006

1,006

6

6

Profit (loss) before income taxes

(22,967

)

7,817

(15,150

)

21,700

(33,375

)

(11,675

)

Income tax (benefit) expense

3

3

(3

)

(3

)

Net profit (loss) and comprehensive income (loss)

$

(22,970

)

7,817

$

(15,153

)

$

21,703

(33,375

)

$

(11,672

)

Weighted average shares outstanding - basic

189,766,945

189,766,945

162,942,990

162,942,990

Weighted average shares outstanding - diluted

189,766,945

189,766,945

167,091,320

167,091,320

Net profit (loss) per share - basic

$

(0.12

)

$

(0.08

)

$

0.13

$

(0.07

)

Net profit (loss) per share - diluted

(0.12

)

(0.08

)

0.13

(0.07

)

MARKFORGED HOLDING CORPORATION

NON-GAAP RECONCILIATION

NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(In thousands, except share data and per share data) (Unaudited)

Nine Months Ended September 30, 2022

Nine Months Ended September 30, 2021

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments

Non-GAAP

Revenue

$

71,294

$

71,294

$

64,584

$

64,584

Cost of revenue

34,514

(347

)

34,167

26,729

(218

)

26,511

Gross profit

36,780

347

37,127

37,855

218

38,073

Operating expenses

Sales and marketing

35,104

(2,540

)

32,564

25,711

(1,176

)

24,535

Research and development

31,375

(4,317

)

27,058

21,487

(2,768

)

18,719

General and administrative

38,094

(12,827

)

25,267

32,770

(14,195

)

18,575

Total operating expenses

104,573

(19,684

)

84,889

79,968

(18,139

)

61,829

Loss from operations

(67,793

)

20,031

(47,762

)

(42,113

)

18,357

(23,756

)

Change in fair value of warrant liabilities

1,221

(1,221

)

170

(170

)

Change in fair value of contingent earnout liability

50,982

(50,982

)

42,710

(42,710

)

Other expense

(429

)

(429

)

(168

)

(168

)

Interest expense

(11

)

(11

)

(15

)

(15

)

Interest income

1,380

1,380

9

9

Profit (loss) before income taxes

(14,650

)

(32,172

)

(46,822

)

593

(24,523

)

(23,930

)

Income tax (benefit) expense

6

6

(1

)

(1

)

Net profit (loss) and comprehensive income (loss)

$

(14,656

)

(32,172

)

$

(46,828

)

$

594

(24,523

)

$

(23,929

)

Weighted average shares outstanding - basic

188,225,543

188,225,543

81,373,265

81,373,265

Weighted average shares outstanding - diluted

188,225,543

188,225,543

85,407,166

85,407,166

Net profit (loss) per share - basic

$

(0.08

)

$

(0.25

)

$

0.01

$

(0.29

)

Net profit (loss) per share - diluted

(0.08

)

(0.25

)

0.01

(0.28

)

MARKFORGED HOLDING CORPORATION

DISAGGREGATED REVENUE BY NATURE OF PRODUCTS AND SERVICES

(In thousands) (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2022

2021

2022

2021

Hardware

$

17,571

$

17,469

$

48,098

$

46,039

Consumables

5,568

4,899

16,913

14,295

Services

2,069

1,677

6,283

4,250

Total Revenue

$

25,208

$

24,045

$

71,294

$

64,584

MARKFORGED HOLDING CORPORATION

DISAGGREGATED REVENUE BY GEOGRAPHIC LOCATION

(In thousands) (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2022

2021

2022

2021

Americas

$

12,591

$

14,937

$

34,150

$

35,169

EMEA

$

5,353

$

5,118

$

19,618

$

17,804

APAC

$

7,264

$

3,990

$

17,526

$

11,611

Total Revenue

$

25,208

$

24,045

$

71,294

$

64,584

View source version on businesswire.com: https://www.businesswire.com/news/home/20221109005946/en/

Contacts

Media
Kellie Woods, Media Relations Manager
markforged@pancomm.com

Investors
Austin Bohlig, Director of Investor Relations
investors@markforged.com