Desktop Metal Announces First Quarter 2022 Financial Results

Rhea-AI Summary

Desktop Metal reported a remarkable revenue increase of 286% year-over-year, reaching $43.7 million for Q1 2022. The company launched its new S-Max Flex for scalable digital sand casting and commenced shipments of its Production System P-50. The initial P-1 system was installed in China, enhancing its market presence. Despite a net loss of $69.9 million, Desktop Metal reaffirms its 2022 revenue guidance of approximately $260 million, projecting 131% growth from 2021, along with adjusted EBITDA of $(90) million.

Positive

• Revenue of $43.7 million, up 286% from Q1 2021
• Reaffirmed full year 2022 revenue guidance of approximately $260 million, representing 131% growth
• Launched S-Max Flex for scalable digital sand casting
• Commenced shipments of Production System P-50
• Installed initial Production System P-1 in China, expanding market reach

Negative

• Net loss of $69.9 million, including $9.8 million in amortization of acquired intangible assets
• Adjusted EBITDA of $(41.6) million

• Revenue growth of 286% from the first quarter of 2021 to $43.7 million
• Commenced shipments of Production System P-50
• Installed initial Production System P-1 in China at a hyperscale account with technical and commercial developments across multiple sizable opportunities
• Launched the all-new S-Max Flex for affordable and scalable digital sand casting
• Reaffirming full year 2022 guidance of approximately $260 million for revenue, representing 131% growth from 2021, and approximately $(90) million for adjusted EBITDA

BOSTON--(BUSINESS WIRE)-- Desktop Metal, Inc. (NYSE: DM) today announced its financial results for the quarter ended March 31, 2022.

“Following a revolutionary year in which we made significant progress building a foundation of AM 2.0 technologies to achieve our goal of double-digit share of the additive market by the end of the decade, we are off to a great start to 2022,” said Ric Fulop, Founder and CEO of Desktop Metal. “We delivered strong topline growth of 286% year-over-year as we continue to capture market share and rapidly grow revenue at scale. With several exciting product launches to kick off the year, and demand as strong as ever for our broad portfolio of AM 2.0 solutions, we are well-positioned for outsized growth and margin expansion through the balance of 2022.”

First Quarter 2022 and Recent Business Highlights:

• Commenced shipments of Production System™ P-50
• Installed initial Production System™ P-1 in China at a hyperscale account with technical and commercial developments across multiple sizable opportunities
• Launched the all-new S-Max Flex^® for affordable and scalable digital sand casting, integrating Desktop Metal Single Pass Jetting™ technology with ExOne sand binder jetting process and materials expertise
• Awarded a major sub-contract through the Defense Logistics Agency (DLA) of the Department of Defense
• Significant uptick in demand to support onshoring projects and help customers respond to supply chain disruption
• Launched Einstein™ series of high-precision 3D printers designed for volume production of dental and healthcare parts
• Launched Flexcera™ Smile Ultra+, a hybrid nanoceramic resin for permanent restorations and one of the strongest dental resins in the market

First Quarter 2022 Financial Highlights:

• Revenue of $43.7 million, up 286% from first quarter 2021 revenue of $11.3 million, including broad-based growth and contributions from acquisitions
• GAAP gross margin of (3.0)%; non-GAAP gross margin of 17.1%, increasing more than 1,150 basis points from 5.5% in first quarter 2021
• Net loss of $69.9 million, including $9.8 million in amortization of acquired intangible assets
• Adjusted EBITDA of $(41.6) million
• Cash, cash equivalents, and short-term investments of $206.5 million as of March 31, 2022

Outlook for Full Year 2022:

• Reaffirming revenue expectation of approximately $260 million for 2022, representing 131% growth from 2021
• Reaffirming adjusted EBITDA expectation of approximately $(90) million for 2022

Conference Call Information:

Desktop Metal will host a conference call on Tuesday, May 10, 2022 at 8:00 a.m. EST to discuss first quarter 2022 results. Participants may access the call at 1-855-560-2573, international callers may use 1-412-317-5237, 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 https://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 May 10, 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.

DESKTOP METAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share amounts)

		March 31,			December 31,
		2022			2021
Assets
Current assets:
Cash and cash equivalents		$	103,590		$	65,017
Current portion of restricted cash			2,166			2,129
Short‑term investments			102,895			204,569
Accounts receivable			36,661			46,687
Inventory			81,876			65,399
Prepaid expenses and other current assets			22,446			18,208
Total current assets			349,634			402,009
Restricted cash, net of current portion			1,112			1,112
Property and equipment, net			58,082			58,710
Goodwill			630,022			639,301
Intangible assets, net			251,000			261,984
Other noncurrent assets			32,143			25,480
Total Assets		$	1,321,993		$	1,388,596
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	30,431		$	31,558
Customer deposits			16,911			14,137
Current portion of lease liability			5,326			5,527
Accrued expenses and other current liabilities			31,615			33,829
Current portion of deferred revenue			19,261			18,189
Current portion of long‑term debt, net of deferred financing costs			731			825
Total current liabilities			104,275			104,065
Long-term debt, net of current portion			523			548
Warrant liability			—			—
Contingent consideration, net of current portion			2,596			4,183
Lease liability, net of current portion			19,856			13,077
Deferred revenue, net of current portion			4,047			4,508
Deferred tax liability			9,506			10,695
Other noncurrent liabilities			3,165			3,170
Total liabilities			143,968			140,246
Commitments and Contingencies (Note 17)
Stockholders’ Equity
Preferred Stock, $0.0001 par value—authorized, 50,000,000 shares; no shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively			—			—
Common Stock, $0.0001 par value—500,000,000 shares authorized; 312,999,991 and 311,737,858 shares issued at March 31, 2022 and December 31, 2021, respectively, 312,825,572 and 311,473,950 shares outstanding at March 31, 2022 and December 31, 2021, respectively			31			31
Additional paid‑in capital			1,833,998			1,823,344
Accumulated deficit			(638,555)			(568,611)
Accumulated other comprehensive loss			(17,449)			(6,414)
Total Stockholders’ Equity			1,178,025			1,248,350
Total Liabilities and Stockholders’ Equity		$	1,321,993		$	1,388,596

DESKTOP METAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share amounts)

		Three Months Ended
		March 31,
		2022			2021
Revenues
Products		$	39,476		$	10,311
Services			4,230			1,002
Total revenues			43,706			11,313
Cost of sales
Products			41,902			10,487
Services			3,132			1,413
Total cost of sales			45,034			11,900
Gross profit/(loss)			(1,328)			(587)
Operating expenses
Research and development			24,605			10,858
Sales and marketing			19,689			5,449
General and administrative			23,857			13,846
Total operating expenses			68,151			30,153
Loss from operations			(69,479)			(30,740)
Change in fair value of warrant liability			—			(56,576)
Interest expense			32			(73)
Interest and other (expense) income, net			(1,753)			361
Loss before income taxes			(71,200)			(87,028)
Income tax benefit			1,256			27,920
Net loss		$	(69,944)		$	(59,108)
Net loss per share—basic and diluted		$	(0.22)		$	(0.25)
Weighted average shares outstanding, basic and diluted			312,016,627			238,243,779

DESKTOP METAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(in thousands)

		Three Months Ended
		March 31,
		2022			2021
Net loss		$	(69,944)		$	(59,108)
Other comprehensive (loss) income, net of taxes:
Unrealized gain (loss) on available-for-sale marketable securities, net			12			1
Foreign currency translation adjustment			(11,047)			(13)
Total comprehensive (loss) income, net of taxes of $0		$	(80,979)		$	(59,120)

DESKTOP METAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in thousands, except share amounts)

		Three Months Ended March 31, 2022
													Accumulated
													Other
		Common Stock					Additional						Comprehensive			Total
		Voting					Paid‑in			Accumulated			(Loss)			Stockholders’
		Shares		Amount			Capital			Deficit			Income			Equity
BALANCE—January 1, 2022		311,473,950		$	31		$	1,823,344		$	(568,611)		$	(6,414)		$	1,248,350
Exercise of Common Stock options		786,693			—			900			—			—			900
Vesting of restricted Common Stock		84,384			—			—			—			—			—
Vesting of restricted stock units		520,265			—			—			—			—			—
Repurchase of shares for employee tax withholdings		(39,720)			—			(158)			—			—			(158)
Issuance of Common Stock for acquisitions		—			—			—			—			—			—
Stock‑based compensation expense		—			—			9,912			—			—			9,912
Vesting of Trine Founder shares		—			—			—			—			—			—
Exercise of warrants		—			—			—			—			—			—
Net loss		—			—			—			(69,944)			—			(69,944)
Other comprehensive income (loss)		—			—			—			—			(11,035)			(11,035)
BALANCE—March 31, 2022		312,825,572		$	31		$	1,833,998		$	(638,555)		$	(17,449)		$	1,178,025

		Three Months Ended March 31, 2021
													Accumulated
													Other
		Common Stock					Additional						Comprehensive			Total
		Voting					Paid‑in			Accumulated			(Loss)			Stockholders’
		Shares		Amount			Capital			Deficit			Income			Equity
BALANCE—January 1, 2021		224,626,597		$	23		$	844,188		$	(328,277)		$	(9)		$	515,925
Exercise of Common Stock options		163,228			—			180			—			—			180
Vesting of restricted Common Stock		56,015			—			—			—			—			—
Vesting of restricted stock units		15,265			—			—			—			—			—
Repurchase of shares for employee tax withholdings		(2,241)			—			(54)			—			—			(54)
Issuance of Common Stock for acquisitions		5,036,142			—			159,847			—			—			159,847
Stock‑based compensation expense		—			—			2,217			—			—			2,217
Vesting of Trine Founder shares		1,850,938			—			—			—			—			—
Exercise of warrants		20,690,975			2			320,567			—			—			320,569
Net loss		—			—			—			(59,108)			—			(59,108)
Other comprehensive income (loss)		—			—			—			—			(12)			(12)
BALANCE—March 31, 2021		252,436,919		$	25		$	1,326,945		$	(387,385)		$	(21)		$	939,564

DESKTOP METAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

		Three Months Ended March 31,
		2022			2021
Cash flows from operating activities:
Net loss		$	(69,944)		$	(59,108)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			12,883			3,892
Stock‑based compensation			9,912			2,217
Change in fair value of warrant liability			—			56,576
Amortization (accretion) of discount on investments			413			406
Amortization of debt financing cost			—			4
Provision for bad debt			419			72
Loss on disposal of property and equipment			2			—
Foreign exchange (gains) losses on intercompany transactions, net			185			—
Net increase (decrease) in accrued interest related to marketable securities			949			(240)
Net unrealized (gain) loss on marketable securities			—			(25)
Net unrealized (gain) loss on equity investment			1,700			—
Deferred tax benefit			(1,256)			(27,921)
Change in fair value of contingent consideration			(114)			—
Foreign currency transaction (gain) loss			10			—
Changes in operating assets and liabilities:
Accounts receivable			9,489			(61)
Inventory			(15,506)			(2,381)
Prepaid expenses and other current assets			(4,087)			(4,276)
Other assets			(210)			(30)
Accounts payable			(1,333)			(3,856)
Accrued expenses and other current liabilities			(3,391)			(5,247)
Customer deposits			2,980			(1,234)
Current portion of deferred revenue			721			105
Change in right of use assets and lease liabilities, net			(108)			(22)
Other liabilities			12			—
Net cash used in operating activities			(56,274)			(41,129)
Cash flows from investing activities:
Purchases of property and equipment			(4,074)			(262)
Proceeds from sale of property and equipment			6			—
Purchase of marketable securities			—			(92,386)
Proceeds from sales and maturities of marketable securities			98,625			48,241
Cash paid for acquisitions, net of cash acquired			(23)			(137,646)
Net cash provided by (used in) investing activities			94,534			(182,053)
Cash flows from financing activities:
Proceeds from reverse recapitalization, net of issuance costs			—			(1,239)
Proceeds from the exercise of stock options			900			180
Proceeds from the exercise of stock warrants			—			158,308
Payment of taxes related to net share settlement upon vesting of restricted stock units			(158)			(54)
Repayment of term loan			(43)			—
Net cash provided by financing activities			699			157,195
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(349)			26
Net increase (decrease) in cash, cash equivalents, and restricted cash			38,610			(65,961)
Cash, cash equivalents, and restricted cash at beginning of period			68,258			484,137
Cash, cash equivalents, and restricted cash at end of period		$	106,868		$	418,176
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		$	103,590			416,379
Restricted cash included in other current assets			2,166			1,021
Restricted cash included in other noncurrent assets			1,112			776
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows		$	106,868		$	418,176

Supplemental cash flow information:
Interest paid		$	—		$	73
Non‑cash investing and financing activities:
Net unrealized (gain) loss on investments		$	(12)		$	(1)
Exercise of private placement warrants		$	—		$	149,904
Common Stock issued for acquisitions		$	—		$	159,847
Additions to right of use assets and lease liabilities		$	7,784		$	364
Purchase of property and equipment included in accounts payable		$	313		$	50
Transfers from property and equipment to inventory		$	1,721		$	—
Transfers from inventory to property and equipment		$	605		$	—
Receivable for warrants exercised		$	—		$	12,357

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, 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, acquisition-related and other transactional charges and inventory step-up adjustments
• We define Non-GAAP net loss as GAAP net loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, acquisition-related and other transactional charges, inventory step-up adjustments, 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 and acquisition-related and other transactional charges
• 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, inventory step-up adjustments, change in fair value of warrant liability, change in fair value of investments 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, 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.

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

		For the Three Months Ended
		March 31,
(Dollars in thousands)		2022			2021
GAAP gross margin		$	(1,328)		$	(587)
Stock-based compensation included in cost of sales			487			117
Amortization of acquired intangible assets included in cost of sales			5,990			1,091
Acquisition-related and other transactional charges included in cost of sales			1,138			—
Inventory step-up adjustment in cost of sales			1,181			—
Non-GAAP gross margin		$	7,468		$	621
GAAP operating loss		$	(69,479)		$	(30,740)
Stock-based compensation			9,912			2,217
Amortization of acquired intangible assets			9,784			2,299
Inventory step-up adjustment in cost of sales			1,181			—
Acquisition-related and other transactional charges			3,986			4,984
Non-GAAP operating loss		$	(44,616)		$	(21,240)
GAAP net loss		$	(69,944)		$	(59,108)
Stock-based compensation			9,912			2,217
Amortization of acquired intangible assets			9,784			2,299
Inventory step-up adjustment in cost of sales			1,181			—
Acquisition-related and other transactional charges			3,986			4,984
Change in fair value of investments			1,700			—
Change in fair value of warrant liability			—			56,576
Non-GAAP net loss		$	(43,381)		$	6,968

DESKTOP METAL, INC.
NON-GAAP OPERATING EXPENSE RECONCILIATION TABLE

		For the Three Months Ended
		March 31,
(Dollars in thousands)		2022			2021
GAAP operating expenses		$	68,151		$	30,153
Stock-based compensation included in operating expenses			(9,425)			(2,100)
Amortization of acquired intangible assets included in operating expenses			(3,794)			(1,208)
Acquisition-related and other transactional charges included in operating expenses			(2,848)			(4,984)
Non-GAAP operating expenses		$	52,084		$	21,861

DESKTOP METAL, INC.
ADJUSTED EBITDA RECONCILIATION TABLE

		For the Three Months Ended
		March 31,
(Dollars in thousands)		2022			2021
Net loss attributable to common stockholders		$	(69,944)		$	(59,108)
Interest (income) expense, net			(32)			(42)
Income tax benefit			(1,256)			(27,920)
Depreciation and amortization			12,883			3,892
EBITDA			(58,349)			(83,178)
Change in fair value of warrant liability			—			56,576
Change in fair value of investments			1,700			—
Inventory step-up adjustment			1,181			—
Stock compensation expense			9,912			2,217
Acquisition-related and other transactional charges			3,986			4,984
Adjusted EBITDA		$	(41,570)		$	(19,401)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220510005292/en/

Investor Relations:

Jay Gentzkow

(781) 730-2110

jaygentzkow@desktopmetal.com

Press Contact:

Lynda McKinney

(978) 224-1282

lyndamckinney@desktopmetal.com

Source: Desktop Metal, Inc.

FAQ

What are Desktop Metal's Q1 2022 financial results?

Desktop Metal reported a revenue of $43.7 million for Q1 2022, marking a 286% increase year-over-year.

What is Desktop Metal's revenue guidance for 2022?

The company has reaffirmed its revenue guidance of approximately $260 million for 2022, which represents a growth of 131% from 2021.

What products were launched by Desktop Metal in 2022?

Desktop Metal launched the S-Max Flex for digital sand casting and the Einstein series of high-precision 3D printers, among other products.

What is Desktop Metal's adjusted EBITDA for 2022?

Desktop Metal anticipates an adjusted EBITDA of approximately $(90) million for 2022.

How did Desktop Metal's gross margin change in Q1 2022?

The non-GAAP gross margin increased to 17.1%, up from 5.5% in Q1 2021.