Desktop Metal Announces Second Quarter 2022 Financial Results

Rhea-AI Summary

Desktop Metal (NYSE: DM) reported record revenue of $57.7 million for Q2 2022, marking a 204% increase year-over-year and a 32% rise sequentially. The company announced a strategic cost optimization initiative anticipating $40 million in annual savings and introduced FreeFoam, a new 3D printable resin. Despite the positive revenue growth, Desktop Metal experienced a net loss of $297.3 million, largely due to a non-cash goodwill impairment charge. The company maintains its full-year revenue guidance of $260 million, projecting a 131% increase from 2021.

Positive

• Record revenue of $57.7 million in Q2 2022, up 204% YoY.
• Non-GAAP gross margin improved to 26.7%, a 170 basis points increase from Q2 2021.
• Strategic initiative expected to achieve $40 million annualized cost savings.
• Introduction of FreeFoam, a new product aimed at enhancing production capabilities.

Negative

• Net loss of $297.3 million, including a $229.5 million goodwill impairment charge.
• Adjusted EBITDA of $(27.5) million reflects ongoing financial challenges.

• Record revenue of $57.7 million, up 204% from second quarter 2021, and an increase of 32% sequentially from first quarter 2022
• GAAP gross margin of 14.6%; non-GAAP gross margin of 26.7%, increasing over 170 basis points from second quarter 2021
• Announced Strategic Integration and Cost Optimization Initiative to accelerate AM 2.0 growth, support path to profitability, and drive value to shareholders
• Unveiled FreeFoam, a revolutionary, expandable 3D printable resin designed for volume production of foam parts
• 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 second quarter ended June 30, 2022.

“Desktop Metal continued to build on its momentum in the second quarter, delivering record revenue of $57.7 million and expanding non-GAAP gross margins to 26.7%,” said Ric Fulop, Founder and CEO of Desktop Metal. “Our strong financial results represent the strength and breadth of our unmatched AM 2.0 portfolio as our team continues to execute at a high level in a dynamic macro environment.”

Fulop continued, “We enter the second half of the year with a more streamlined and efficient operating model, combining continued revenue growth at scale with a disciplined strategy to optimize our expense structure, in order to achieve our financial commitments and support our path to profitability.”

Second Quarter 2022 and Recent Business Highlights:

• Announced Strategic Integration and Cost Optimization Initiative to accelerate AM 2.0 growth, support path to profitability, and drive value to shareholders including expectation of approximately $40 million of annualized run rate non-GAAP cost savings, $20 million of which is expected to take place in the second half of 2022, and at least $100 million of aggregate cost savings over the next 24 months
• Unveiled FreeFoam, a revolutionary, expandable 3D printable resin designed for volume production of foam parts
• Awarded a sub-contract under the Defense Logistics Agency (DLA) of the Department of Defense prime contract worth a potential $15 million
• Began effort to monetize dominant IP portfolio of over 650 patents and pending applications

Second Quarter 2022 Financial Highlights:

• Revenue of $57.7 million, up 203.9% from second quarter 2021 revenue of $19.0 million, and an increase of 32.0% sequentially from first quarter 2022
• Revenue growth driven by strength from metals platform and contributions from acquisitions
• GAAP gross margin of 14.6%; non-GAAP gross margin of 26.7%, increasing over 170 basis points from second quarter 2021
• Net loss of $297.3 million, primarily due to a non-cash goodwill impairment charge of $229.5 million as a result of the Company’s and comparable companies’ stock price declines and including $2.4 million of restructuring charges in connection with the Strategic Integration and Cost Optimization Initiative
• Adjusted EBITDA of $(27.5) million
• Cash, cash equivalents, and short-term investments of $255.7 million as of June 30, 2022
• Successfully completed $115 million convertible notes offering in May 2022, bolstering liquidity in an uncertain macro environment and providing sufficient runway to reach cash flow breakeven

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 Monday, August 8, 2022 at 4:30 p.m. ET to discuss second quarter 2022 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, 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 August 8, 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)
		June 30,				December 31,
		2022				2021
Assets
Current assets:
Cash and cash equivalents		$	107,966			$	65,017
Current portion of restricted cash			3,152				2,129
Short‑term investments			147,774				204,569
Accounts receivable			37,291				46,687
Inventory			88,609				65,399
Prepaid expenses and other current assets			21,086				18,208
Total current assets			405,878				402,009
Restricted cash, net of current portion			1,112				1,112
Property and equipment, net			57,667				58,710
Goodwill			377,710				639,301
Intangible assets, net			238,069				261,984
Other noncurrent assets			30,713				25,480
Total Assets		$	1,111,149			$	1,388,596
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	29,309			$	31,558
Customer deposits			12,050				14,137
Current portion of lease liability			5,169				5,527
Accrued expenses and other current liabilities			29,154				33,829
Current portion of deferred revenue			17,746				18,189
Current portion of long‑term debt, net of deferred financing costs			587				825
Total current liabilities			94,015				104,065
Long-term debt, net of current portion			430				548
Convertible notes			111,420				—
Contingent consideration, net of current portion			1,160				4,183
Lease liability, net of current portion			18,040				13,077
Deferred revenue, net of current portion			4,326				4,508
Deferred tax liability			7,961				10,695
Other noncurrent liabilities			2,657				3,170
Total liabilities			240,009				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 June 30, 2022 and December 31, 2021, respectively			—				—
Common Stock, $0.0001 par value—500,000,000 shares authorized; 315,292,925 and 311,737,858 shares issued at June 30, 2022 and December 31, 2021, respectively, 315,147,677 and 311,473,950 shares outstanding at June 30, 2022 and December 31, 2021, respectively			32				31
Additional paid‑in capital			1,851,836				1,823,344
Accumulated deficit			(935,827	)			(568,611	)
Accumulated other comprehensive loss			(44,901	)			(6,414	)
Total Stockholders’ Equity			871,140				1,248,350
Total Liabilities and Stockholders’ Equity		$	1,111,149			$	1,388,596

DESKTOP METAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share amounts)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2022				2021				2022				2021
Revenues
Products		$	52,672			$	17,560			$	92,148			$	27,871
Services			5,002				1,417				9,232				2,419
Total revenues			57,674				18,977				101,380				30,290
Cost of sales
Products			44,913				15,490				86,815				25,977
Services			4,364				1,115				7,496				2,528
Total cost of sales			49,277				16,605				94,311				28,505
Gross profit			8,397				2,372				7,069				1,785
Operating expenses
Research and development			31,370				15,651				55,975				26,509
Sales and marketing			20,406				10,894				40,070				16,343
General and administrative			19,691				13,142				43,573				26,988
In-process research and development assets acquired			—				10,400				—				10,400
Goodwill impairment			229,500				—				229,500				—
Total operating expenses			300,967				50,087				369,118				80,240
Loss from operations			(292,570	)			(47,715	)			(362,049	)			(78,455	)
Change in fair value of warrant liability			—				—				—				(56,576	)
Interest expense			(633	)			(51	)			(601	)			(125	)
Interest and other (expense) income, net			(5,013	)			268				(6,766	)			630
Loss before income taxes			(298,216	)			(47,498	)			(369,416	)			(134,526	)
Income tax benefit			944				4,318				2,200				32,238
Net loss		$	(297,272	)		$	(43,180	)		$	(367,216	)		$	(102,288	)
Net loss per share—basic and diluted		$	(0.95	)		$	(0.17	)		$	(1.17	)		$	(0.41	)
Weighted average shares outstanding, basic and diluted			313,556,886				255,097,905				312,798,328				246,717,400

DESKTOP METAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) (in thousands)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2022				2021				2022				2021
Net loss		$	(297,272	)		$	(43,180	)		$	(367,216	)		$	(102,288	)
Other comprehensive (loss) income, net of taxes:
Unrealized gain (loss) on available-for-sale marketable securities, net			(41	)			(5	)			(29	)			(4	)
Foreign currency translation adjustment			(27,411	)			130				(38,458	)			117
Total comprehensive (loss) income, net of taxes of $0		$	(324,724	)		$	(43,055	)		$	(405,703	)		$	(102,175	)

DESKTOP METAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (in thousands, except share amounts)
		Three Months Ended June 30, 2022
																Accumulated
																Other
		Common Stock						Additional								Comprehensive				Total
		Voting						Paid‑in				Accumulated				(Loss)				Stockholders’
		Shares			Amount			Capital				Deficit				Income				Equity
BALANCE—April 1, 2022		312,825,572			$	31		$	1,833,998			$	(638,555	)		$	(17,449	)		$	1,178,025
Exercise of Common Stock options		234,307				—			364				—				—				364
Vesting of restricted Common Stock		29,171				—			—				—				—				—
Vesting of restricted stock units		1,962,846				1			—				—				—				1
Net settlement of shares for employee tax withholdings upon vesting of restricted stock units		(16,421	)			—			(31	)			—				—				(31	)
Issuance of Common Stock related to settlement of contingent consideration		112,202				—			500				—				—				500
Stock‑based compensation expense		—				—			17,005				—				—				17,005
Net loss		—				—			—				(297,272	)			—				(297,272	)
Other comprehensive income (loss)		—				—			—				—				(27,452	)			(27,452	)
BALANCE—June 30, 2022		315,147,677			$	32		$	1,851,836			$	(935,827	)		$	(44,901	)		$	871,140
		Six Months Ended June 30, 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		1,021,000				—			1,264				—				—				1,264
Vesting of restricted Common Stock		113,555				—			—				—				—				—
Vesting of restricted stock units		2,483,111				1			—				—				—				1
Repurchase of shares for employee tax withholdings		(56,141	)			—			(189	)			—				—				(189	)
Issuance of Common Stock related to settlement of contingent consideration		112,202				—			500				—				—				500
Stock‑based compensation expense		—				—			26,917				—				—				26,917
Net loss		—				—			—				(367,216	)			—				(367,216	)
Other comprehensive income (loss)		—				—			—				—				(38,487	)			(38,487	)
BALANCE—June 30, 2022		315,147,677			$	32		$	1,851,836			$	(935,827	)		$	(44,901	)		$	871,140

		Three Months Ended June 30, 2021
																Accumulated
																Other
		Common Stock						Additional								Comprehensive				Total
		Voting						Paid‑in				Accumulated				(Loss)				Stockholders’
		Shares			Amount			Capital				Deficit				Income				Equity
BALANCE—April 1, 2021		252,436,919			$	25		$	1,326,945			$	(387,385	)		$	(21	)		$	939,564
Exercise of Common Stock options		2,683,506				—			3,485				—				—				3,485
Vesting of restricted Common Stock		56,015				—			—				—				—				—
Vesting of restricted stock units		28,656				—			—				—				—				—
Repurchase of shares for employee tax withholdings		(6,931	)			—			(91	)			—				—				(91	)
Issuance of Common Stock for acquisitions		4,013,196				1			49,141				—				—				49,142
Issuance of common stock for acquired in-process research and development		334,370				—			4,300				—				—				4,300
Stock‑based compensation expense		—				—			3,999				—				—				3,999
Net loss		—				—			—				(43,180	)			—				(43,180	)
Other comprehensive income (loss)		—				—			—				—				125				125
BALANCE—June 30, 2021		259,545,731			$	26		$	1,387,779			$	(430,565	)		$	104			$	957,344
		Six Months Ended June 30, 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		2,846,734				—			3,665				—				—				3,665
Vesting of restricted Common Stock		112,030				—			—				—				—				—
Vesting of restricted stock units		43,921				—			—				—				—				—
Repurchase of shares for employee tax withholdings		(9,172	)			—			(145	)			—				—				(145	)
Issuance of Common Stock for acquisitions		9,049,338				1			208,988				—				—				208,989
Issuance of common stock for acquired in-process research and development		334,370				—			4,300				—				—				4,300
Stock‑based compensation expense		—				—			6,216				—				—				6,216
Vesting of Trine Founder shares		1,850,938				—			—				—				—				—
Exercise of warrants		20,690,975				2			320,567				—				—				320,569
Net loss		—				—			—				(102,288	)			—				(102,288	)
Other comprehensive income (loss)		—				—			—				—				113				113
BALANCE—June 30, 2021		259,545,731			$	26		$	1,387,779			$	(430,565	)		$	104			$	957,344

DESKTOP METAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
		Six Months Ended June 30,
		2022				2021
Cash flows from operating activities:
Net loss		$	(367,216	)		$	(102,288	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			25,602				9,524
Stock‑based compensation			26,917				6,216
Goodwill impairment			229,500				—
Change in fair value of warrant liability			—				56,576
Change in fair value of subscription agreement			—				474
Amortization (accretion) of discount on investments			390				1,304
Amortization of debt financing cost			—				9
Amortization of deferred costs on convertible notes			39				—
Provision for bad debt			554				164
Acquired in-process research and development			—				10,400
Loss (gain) on disposal of property and equipment			156				(7	)
Foreign exchange (gains) losses on intercompany transactions, net			443				—
Net increase (decrease) in accrued interest related to marketable securities			917				(1,062	)
Net unrealized (gain) loss on equity investment			5,080				—
Net unrealized (gain) loss on other investments			800				(517	)
Deferred tax benefit			(2,188	)			(32,535	)
Change in fair value of contingent consideration			4				—
Foreign currency transaction (gain) loss			(13	)			—
Changes in operating assets and liabilities:
Accounts receivable			8,250				(3,584	)
Inventory			(25,384	)			(6,635	)
Prepaid expenses and other current assets			(2,994	)			(3,732	)
Other assets			1,117				(170	)
Accounts payable			(2,767	)			(155	)
Accrued expenses and other current liabilities			(7,337	)			(5,119	)
Customer deposits			(1,412	)			(1,372	)
Current portion of deferred revenue			(70	)			693
Change in right of use assets and lease liabilities, net			(1,467	)			(92	)
Other liabilities			30				—
Net cash used in operating activities			(111,049	)			(71,908	)
Cash flows from investing activities:
Purchases of property and equipment			(6,747	)			(1,355	)
Purchase of other investments			—				(3,620	)
Proceeds from sale of property and equipment			6				—
Purchase of marketable securities			(126,771	)			(281,438	)
Proceeds from sales and maturities of marketable securities			177,150				66,741
Cash paid to acquire in-process research and development			—				(6,050	)
Cash paid for acquisitions, net of cash acquired			(23	)			(161,837	)
Net cash provided by (used in) investing activities			43,615				(387,559	)
Cash flows from financing activities:
Proceeds from the exercise of stock options			1,266				3,665
Proceeds from the exercise of stock warrants			—				170,665
Payment of taxes related to net share settlement upon vesting of restricted stock units			(191	)			(145	)
Repayment of loans			(231	)			—
Proceeds from issuance of convertible notes			115,000				—
Costs incurred in connection with the issuance of convertible notes			(3,619	)			—
Repayment of term loan			—				(10,000	)
Net cash provided by financing activities			112,225				164,185
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(819	)			20
Net increase (decrease) in cash, cash equivalents, and restricted cash			43,972				(295,262	)
Cash, cash equivalents, and restricted cash at beginning of period			68,258				484,137
Cash, cash equivalents, and restricted cash at end of period		$	112,230			$	188,875
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		$	107,966				188,199
Restricted cash included in other current assets			3,152				—
Restricted cash included in other noncurrent assets			1,112				676
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows		$	112,230			$	188,875
Supplemental cash flow information:
Interest paid		$	—			$	125
Taxes paid		$	—			$	150
Non‑cash investing and financing activities:
Net unrealized (gain) loss on investments		$	29			$	4
Exercise of private placement warrants		$	—			$	149,904
Common Stock issued for acquisitions		$	—			$	208,989
Common Stock issued for acquisition of in-process research and development		$	—			$	4,300
Common Stock issued for settlement of contingent consideration		$	500			$	—
Cash held back in acquisitions		$	—			$	50
Additions to right of use assets and lease liabilities		$	7,784			$	852
Purchase of property and equipment included in accounts payable		$	1,022			$	—
Purchase of property and equipment included in accrued expense		$	—			$	33
Contingent consideration in connection with acquisitions		$	—			$	6
Transfers from property and equipment to inventory		$	1,954			$	—
Transfers from inventory to property and equipment		$	1,531			$	—
Deferred contract costs		$	1,341			$	—

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.

DESKTOP METAL, INC. NON-GAAP RECONCILIATION TABLE
		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
(Dollars in thousands)		2022				2021				2022				2021
GAAP gross margin		$	8,397			$	2,372			$	7,069			$	1,785
Stock-based compensation included in cost of sales(1)			671				128				1,158				245
Amortization of acquired intangible assets included in cost of sales			5,950				2,235				11,940				3,326
Restructuring expense in cost of sales			41				—				41				—
Acquisition-related and other transactional charges included in cost of sales			10				—				1,148				—
Inventory step-up adjustment in cost of sales			315				—				1,496				—
Non-GAAP gross margin		$	15,384			$	4,735			$	22,852			$	5,356
GAAP operating loss		$	(292,570	)		$	(47,715	)		$	(362,049	)		$	(78,455	)
Stock-based compensation (2),(3)			19,218				3,999				29,130				6,216
Amortization of acquired intangible assets			9,669				4,268				19,453				6,568
Restructuring expense			2,001				—				2,001				—
Inventory step-up adjustment in cost of sales			315				—				1,496				—
Acquisition-related and other transactional charges			1,171				3,127				5,157				8,313
In-process research and development assets acquired			—				10,400				—				10,198
Goodwill impairment			229,500				—				229,500				—
Non-GAAP operating loss		$	(30,696	)		$	(25,921	)		$	(75,312	)		$	(47,160	)
GAAP net loss		$	(297,272	)		$	(43,180	)		$	(367,216	)		$	(102,288	)
Stock-based compensation (2),(3)			19,218				3,999				29,130				6,216
Amortization of acquired intangible assets			9,669				4,268				19,453				6,568
Restructuring expense			2,384				—				2,384				—
Inventory step-up adjustment in cost of sales			315				—				1,496				—
Acquisition-related and other transactional charges			1,171				3,127				5,157				8,313
In-process research and development assets acquired			—				10,400				—				10,198
Goodwill impairment			229,500				—				229,500				—
Change in fair value of investments			4,741				(18	)			6,441				(18	)
Change in fair value of warrant liability			—				—				—				56,576
Non-GAAP net loss		$	(30,274	)		$	(21,404	)		$	(73,655	)		$	(14,435	)
(1) Includes $0.1 million of liability-award stock-based compensation expense in 2022.
(2) Includes $7.3 million of stock-based compensation expense associated with the restructuring initiative in 2022.
(3) Includes $2.2 million of liability-award stock-based compensation expense in 2022.

DESKTOP METAL, INC. NON-GAAP OPERATING EXPENSE RECONCILIATION TABLE
		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
(Dollars in thousands)		2022				2021				2022				2021
GAAP operating expenses		$	300,967			$	50,087			$	369,118			$	80,240
Stock-based compensation included in operating expenses(1),(2)			(18,547	)			(3,871	)			(27,972	)			(5,971	)
Amortization of acquired intangible assets included in operating expenses			(3,719	)			(2,033	)			(7,513	)			(3,241	)
Restructuring expense included in operating expenses			(1,960	)			—				(1,960	)			—
Acquisition-related and other transactional charges included in operating expenses			(1,161	)			(3,127	)			(4,009	)			(8,111	)
In-process research and development assets acquired			—				(10,400	)			—				(10,400	)
Goodwill impairment			(229,500	)			—				(229,500	)			—
Non-GAAP operating expenses		$	46,080			$	30,656			$	98,164			$	52,517
(1) Includes $7.3 million of stock-based compensation expense associated with the restructuring initiative in 2022.
(2) Includes $2.1 million of liability-award stock-based compensation expense in 2022.

DESKTOP METAL, INC. ADJUSTED EBITDA RECONCILIATION TABLE
		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
(Dollars in thousands)		2022				2021				2022				2021
Net loss attributable to common stockholders		$	(297,272	)		$	(43,180	)		$	(367,216	)		$	(102,288	)
Interest (income) expense, net			633				(140	)			601				(182	)
Income tax benefit			(944	)			(4,317	)			(2,200	)			(32,238	)
Depreciation and amortization			12,719				5,679				25,602				9,571
In-process research and development assets acquired			—				10,198				—				10,198
EBITDA			(284,864	)			(31,760	)			(343,213	)			(114,939	)
Change in fair value of warrant liability			—				—				—				56,576
Change in fair value of investments			4,741				(18	)			6,441				(18	)
Inventory step-up adjustment			315				—				1,496				—
Stock-based compensation expense(1),(2)			19,218				3,999				29,130				6,216
Restructuring expense			2,384				—				2,384				—
Goodwill impairment			229,500				—				229,500				—
Acquisition-related and other transactional charges			1,171				3,329				5,157				8,313
Adjusted EBITDA		$	(27,535	)		$	(24,450	)		$	(69,105	)		$	(43,852	)
(1) Includes $7.3 million of stock-based compensation expense associated with the restructuring initiative in 2022.
(2) Includes $2.2 million of liability-award stock-based compensation expense in 2022.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220808005648/en/

Investor Relations:

Jay Gentzkow

(781) 730-2110

jaygentzkow@desktopmetal.com

Source: Desktop Metal, Inc.

FAQ

What were Desktop Metal's Q2 2022 earnings results?

Desktop Metal reported record revenue of $57.7 million for Q2 2022, a 204% increase year-over-year.

What is Desktop Metal's revenue guidance for 2022?

The company reaffirmed its full-year revenue guidance of approximately $260 million, representing 131% growth from 2021.

What recent initiatives has Desktop Metal announced?

Desktop Metal announced a strategic cost optimization initiative expected to yield approximately $40 million in annual savings.

What was the impact of goodwill impairment on Desktop Metal's financials?

The company incurred a net loss of $297.3 million in Q2 2022, primarily due to a non-cash goodwill impairment charge of $229.5 million.