Markforged Announces Second Quarter 2024 Results

Rhea-AI Summary

Markforged (NYSE: MKFG) announced Q2 2024 financial results and a $25M cost reduction initiative. Key highlights:

- Revenue: $21.7M (vs $25.4M in Q2 2023)
- Gross margin: 50.2% (vs 47.0%)
- Net loss: $14.4M (vs $19.0M)
- Cash and equivalents: $93.9M

The company shipped its first PX100 metal binder jetting system and accelerated FX10 shipments. Markforged updated its 2024 outlook, expecting revenues between $90-95M and non-GAAP gross margins in the upper range of 48-50%. The company anticipates returning to year-over-year revenue growth in H2 2024.

Positive

• Gross margin improved to 50.2% from 47.0% in Q2 2023
• Non-GAAP gross margin increased to 51.9% from 48.3% in Q2 2023
• Operating expenses decreased to $27.9M from $32.1M in Q2 2023
• Net loss reduced to $14.4M from $19.0M in Q2 2023
• Shipped first PX100 metal binder jetting system
• Accelerated FX10 shipments in Q2
• Qualified two additional materials for FX series printers

Negative

• Revenue decreased to $21.7M from $25.4M in Q2 2023
• Cash and cash equivalents declined to $93.9M from $109.4M in Q1 2024
• Lowered 2024 revenue guidance to $90-95M from previous $95-105M
• Expects non-GAAP operating loss of $42.5-47.0M for 2024
• Facing persistent macroeconomic headwinds affecting sales

Financial Analyst

Markforged's Q2 2024 results reveal a challenging period with revenue declining to $21.7 million from $25.4 million year-over-year. However, there are some positive indicators:

• Improved gross margin at 50.2% (vs 47.0% in Q2 2023)
• Reduced operating expenses to $27.9 million (from $32.1 million)
• Narrowed net loss to $14.4 million (from $19.0 million)

The $25 million cost reduction initiative is a strategic move to align with current market conditions. While the revised 2024 revenue outlook of $90-95 million indicates ongoing challenges, the company's focus on new product launches (PX100, FX10) and material innovations could drive growth in H2 2024. The legal situation with Continuous Composites remains a concern, potentially impacting future financials.

Tech Expert

Markforged's product innovations are promising amid challenging market conditions. The shipment of the first PX100 metal binder jetting system marks a significant milestone, potentially opening new markets in automotive, medical and aerospace sectors. The accelerated shipments of the FX10 and introduction of new materials like Onyx FR and high temperature continuous fiber (CF-HT) for the FX20 demonstrate Markforged's commitment to innovation. These advancements could differentiate Markforged in the competitive 3D printing market, especially in high-demand industrial applications. The company's ability to execute on its product roadmap, despite financial headwinds, is important for its long-term competitiveness and growth prospects.

Legal Expert

The ongoing legal battle with Continuous Composites poses significant risks for Markforged. The $17.3 million verdict and additional $1.8 million in estimated interest have been secured by a surety bond, impacting the company's cash position. More concerning are the post-trial claims by Continuous Composites for royalty payments on certain U.S. sales after December 31, 2023. While Markforged strongly disagrees with the verdict and claims, the outcome of the appeal and final ruling expected in H2 2024 could have material financial implications. Investors should closely monitor this situation, as it could affect Markforged's future profitability and product offerings, particularly if royalty payments are mandated on key product lines.

Announcing $25M Cost Reduction Initiative

WALTHAM, Mass., Aug. 08, 2024 (GLOBE NEWSWIRE) -- Markforged Holding Corporation (NYSE: MKFG) (the “Company”), the company strengthening manufacturing resiliency by enabling industrial production at the point of need, today announced its financial results for the second quarter ended June 30, 2024.

Second Quarter 2024 Financial Results Compared To Second Quarter 2023

• Revenue was $21.7 million compared to $25.4 million.
• Gross margin was 50.2% compared to 47.0%.
• Non-GAAP gross margin was 51.9% compared to 48.3%.
• Operating expenses were $27.9 million compared to $32.1 million.
• Non-GAAP operating expenses were $23.3 million compared to $26.6 million.
• Net loss was $14.4 million compared to net loss of $19.0 million.
• Non-GAAP net loss was $10.8 million compared to a loss of $12.5 million.
• Cash and cash equivalents including restricted cash were $93.9M million as of June 30, 2024, compared to $109.4 million as of March 31 2024. The balance at the end June 30, 2024 includes the funding of a $19.1 million surety bond recorded as restricted cash on the Company's balance sheet. This surety bond includes the $17.3 million verdict awarded in the Continuous Composite lawsuit in April 2024, plus $1.8 million of estimated interest on the judgment for the prejudgment period and duration of the appeal process.

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 below under the heading “Non-GAAP Financial Measures.”

“We demonstrated strong execution in Q2 while effectively navigating the persistent macroeconomic headwinds,” said Shai Terem, President and CEO of Markforged. “During the quarter we shipped the first PX100 metal binder jetting system, the latest in a series of innovations Markforged is bringing to market. FX10 shipments have also accelerated in the 2nd quarter. The positive feedback and growing pipeline underscore the strength of our recent innovations, and positions the Company to return to growth in the second half of year. The continued rollout of new products, combined with our cost realignment initiatives, keeps us on a path to achieve sustainable growth.”

Business Updates

• $25 million Cost Reduction Initiative: Given the macroeconomic challenges and Markforged’s commitment to achieve sustainable growth, the Company is announcing a $25 million cost reduction initiative that Markforged expects to reduce the Company’s operating expenses to a yearly run rate of approximately $70 million. Markforged expects that most of these cost reductions will be completed in the second half of this year.
  
  
• 1st PX100 Shipped: Markforged shipped the first PX100 metal binder jetting system in Q2. The PX100’s innovative technology offers customers in the automotive, medical, aerospace, luxury goods, and other demanding markets a cost effective way to mass produce precise metal parts that would be challenging or impossible using traditional manufacturing methods. Markforged remains on plan to ship additional units in the second half of the year.
  
  
• New Material Innovations: Markforged qualified two additional materials for FX series printers in the second quarter. Onyx FR, a flame retardant variant of Onyx® designed for aerospace and other applications on the factory floor requiring non-flammable parts, is now available for the FX10. And, high temperature continuous fiber (CF-HT) now enables FX20 customers to reinforce parts printed with Vega™ to achieve the strength of aluminum for aerospace and other demanding manufacturing applications.
  
  
• Accelerating FX10 Shipments: Markforged also accelerated shipments of the FX10 in Q2, underscoring the product's innovative features and superior capabilities for printing mission critical parts for the factory floor. The Company enters Q3 with a robust pipeline and intends to release additional capabilities prior to the IMTS conference in Q3 to drive growth in the second half of the year.
  

2024 Financial Outlook

Markforged anticipates fiscal year 2024 revenues to be between $90 and $95 million, compared to its prior expectation of between $95 and $105 million, which reflects more persistent macroeconomic headwinds than previously anticipated. The Company expects to see year-over-year revenue growth return in the second half of the year, including low-single digit quarter-over-quarter growth in Q3, underpinned by its new products, particularly the FX10. Given strong execution over the first half of this year, Markforged now expects non-GAAP gross margins to be in the upper range of their previous 48% - 50% guidance. Non-GAAP operating loss is expected to be in the range of $42.5 million - $47.0 million for the year, resulting in a non-GAAP loss per share in the range of $0.19 - $0.22 per share.

This guidance does not reflect any additional relief Continuous Composites may receive as a result of its post-trial claims. Continuous Composites has asserted through post-trial motions claims for royalty payments for sales of certain products manufactured or sold in the United States after December 31, 2023. Markforged anticipates a final ruling to occur in the second half of 2024. Markforged strongly disagrees with the verdict handed down in the Continuous Composites litigation and with the associated post-trial royalty claims. Markforged has retained a leading law firm to support efforts to overturn the verdict.

Conference Call and Webcast Information

The Company will host a webcast and conference call at 5:00 p.m. ET today, Thursday, August 8, 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 1-877-407-9039 or 1-201-689-8470 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 till Thursday, August 22, 2024, 11:59 PM ET by dialing 1-844-512-2921 or 1-412-317-6671, passcode 13743375.

About Markforged

Markforged (NYSE:MKFG) is enabling more resilient and flexible manufacturing by bringing industrial 3D printing right to the factory floor. Our additive manufacturing platform The Digital Forge allows manufacturers to create strong, accurate parts in both metal and advanced composites. With over 10,000 customers in 70+ countries, we’re bringing on-demand industrial production to the point of need. We are headquartered in Waltham, Mass where we design the hardware, software and advanced materials that makes The Digital Forge reliable and easy to use. 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 each of non-GAAP gross margin, non-GAAP operating profit (loss), non-GAAP net 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.

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 gross profit (loss), less stock-based compensation expense, amortization, 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, amortization, 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, amortization, 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, amortization, 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; the contributions of our directors; the timing of launches and the rate and extent of adoption of our products, including, but not limited to, our most recently introduced products and the FX10; market trends in the manufacturing industry; the duration and impact of macroeconomic factors; the benefits to consumers, functionality and applications of Markforged’s products; statements regarding our expectations concerning any impact to our business, balance sheet and cost structure; any statement regarding post-trial motions and appeal related to the Continuous Composites litigation; our disagreement with the Continuous Composites verdict; and our intention to challenge the Continuous Composites judgment. 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; 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.

MediaSam Manning, Public Relations Manager
sam.manning@markforged.com

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

MARKFORGED HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2024 and December 31, 2023
(In thousands, except share data and par value amounts) (Unaudited)
		June 30, 2024				December 31, 2023
Assets
Current assets
Cash and cash equivalents		$	73,390			$	116,854
Restricted cash			19,122				—
Accounts receivable, net of allowance for expected credit losses ($438 and $360, respectively)			21,605				24,059
Inventory			22,557				26,773
Prepaid expenses			2,052				2,756
Other current assets			1,940				2,022
Total current assets			140,666				172,464
Property and equipment, net			16,945				17,713
Intangible assets, net			15,596				17,128
Right-of-use assets			34,819				36,884
Other assets			3,768				3,763
Total assets		$	211,794			$	247,952
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$	8,749			$	13,235
Accrued expenses			11,276				9,840
Litigation payable			17,511				—
Deferred revenue			8,997				8,779
Lease liabilities			7,361				7,368
Other current liabilities			—				1,526
Total current liabilities			53,894				40,748
Long-term deferred revenue			5,187				6,083
Contingent earnout liability			245				1,379
Long-term lease liabilities			33,420				35,771
Other liabilities			1,652				2,361
Total liabilities			94,398				86,342
Commitments and contingencies
Stockholders’ equity
Common stock, $0.0001 par value; 1,000,000,000 shares authorized at June 30, 2024 and December 31, 2023; 202,549,293 and 198,581,263 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively			19				19
Additional paid-in capital			373,397				366,281
Accumulated deficit			(255,008	)			(204,664	)
Accumulated other comprehensive income			(1,012	)			(26	)
Total stockholders’ equity			117,396				161,610
Total liabilities and stockholders’ equity		$	211,794			$	247,952

MARKFORGED HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2024 and 2023
(In thousands, except share data and per share data)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenue		21,688				25,449			$	42,235			$	49,539
Cost of revenue		10,810				13,476				21,224				25,984
Gross profit		10,878				11,973				21,011				23,555
Operating expenses
Sales and marketing		8,526				9,666				16,370				20,242
Research and development		9,060				10,286				18,995				20,666
General and administrative		10,334				12,120				22,499				24,248
Litigation judgment		—				—				17,300				—
Total operating expenses		27,920				32,072				75,164				65,156
Loss from operations		(17,042	)			(20,099	)			(54,153	)			(41,601	)
Change in fair value of derivative liabilities		95				125				126				314
Change in fair value of contingent earnout liability		1,295				(817	)			1,134				(7	)
Other expense, net		(84	)			(16	)			(219	)			(222	)
Interest expense		(170	)			(116	)			(324	)			(116	)
Interest income		1,230				1,577				2,630				3,268
Loss before income taxes		(14,676	)			(19,346	)			(50,806	)			(38,364	)
Income tax (benefit) expense		(278	)			(358	)			(462	)			(357	)
Net loss	$	(14,398	)		$	(18,988	)		$	(50,344	)		$	(38,007	)
Weighted average shares outstanding - basic and diluted		201,252,969				196,372,157				200,273,880				195,873,471
Net loss per share - basic and diluted	$	(0.07	)		$	(0.10	)		$	(0.25	)		$	(0.19	)

MARKFORGED HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
For the Three and Six Months Ended June 30, 2024 and 2023
(In thousands)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net loss	$	(14,398	)		$	(18,988	)		$	(50,344	)		$	(38,007	)
Other comprehensive loss, net of taxes:
Unrealized loss on available-for-sale marketable securities, net		—				25				—				(25	)
Foreign currency translation adjustment		55				(1,704	)			(986	)			(1,546	)
Total comprehensive loss	$	(14,343	)		$	(20,667	)		$	(51,330	)		$	(39,578	)

MARKFORGED HOLDING CORPORATION
DISAGGREGATED REVENUE BY NATURE OF PRODUCTS AND SERVICES
(In thousands) (Unaudited)
		Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)			2024			2023			2024			2023
Hardware		$	12,650		$	16,506		$	23,924		$	31,701
Consumables			5,914			6,482			12,318			12,937
Services			3,124			2,461			5,993			4,901
Total Revenue		$	21,688		$	25,449		$	42,235		$	49,539
MARKFORGED HOLDING CORPORATION
DISAGGREGATED REVENUE BY GEOGRAPHIC LOCATION
(In thousands) (Unaudited)
		Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)			2024			2023			2024			2023
Americas		$	9,688		$	11,982		$	19,783		$	22,440
EMEA			6,785			7,618			13,120			16,110
APAC			5,215			5,849			9,332			10,989
Total Revenue		$	21,688		$	25,449		$	42,235		$	49,539

MARKFORGED HOLDING CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In thousands) (Unaudited)
	​	Three Months Ended June 30,							​	Six Months Ended June 30,
	​		2024				2023		​		2024				2023
Net loss	​	$	(14,398	)		$	(18,988	)	​	$	(50,344	)		$	(38,007	)
Stock compensation expense	​		3,245				1,690		​		6,706				6,046
Change in fair value of derivative liabilities			(95	)			(125	)			(126	)			(314	)
Change in fair value of contingent earnout liability			(1,295	)			817				(1,134	)			7
Amortization			371				254				749				531
Litigation judgment			—				—				17,300				—
Non-recurring costs1			1,395				3,812				3,841				5,893
Non-GAAP net loss	​	$	(10,777	)		$	(12,540	)	​	$	(23,008	)		$	(25,844	)
1Non-recurring costs incurred during the three and six months ended June 30, 2024 and 2023 relate to litigation expense.
	​	Three Months Ended June 30,							​	Six Months Ended June 30,
Non-GAAP Cost of Revenue	​		2024				2023		​		2024				2023
Cost of revenue	​	$	10,810			$	13,476		​	$	21,224			$	25,984
Stock compensation expense	​		35				89		​		84				162
Amortization			351				218				708				446
Non-GAAP Cost of Revenue			10,424				13,169				20,432				25,376
	​	Three Months Ended June 30,							​	Six Months Ended June 30,
Non-GAAP Gross Profit	​		2024				2023		​		2024				2023
Gross profit	​	$	10,878			$	11,973		​	$	21,011			$	23,555
Stock compensation expense	​		35				89		​		84				162
Amortization			351				218				708				446
Non-GAAP gross profit			11,264				12,280				21,803				24,163
	​	Three Months Ended June 30,							​	Six Months Ended June 30,
Non-GAAP Sales and Marketing Expenses	​		2024				2023		​		2024				2023
Sales and marketing expenses	​	$	8,526			$	9,666		​	$	16,370			$	20,242
Stock compensation expense	​		387				499		​		792				975
Amortization			20				36				41				85
Non-GAAP sales and marketing expenses			8,119				9,131				15,537				19,182
	​	Three Months Ended June 30,							​	Six Months Ended June 30,
Non-GAAP Research and Development Expenses	​		2024				2023		​		2024				2023
Research and development expenses	​	$	9,060			$	10,286		​	$	18,995			$	20,666
Stock compensation expense	​		1,009				1,160		​		2,110				2,329
Non-GAAP research and development expenses			8,051				9,126				16,885				18,337
	​	Three Months Ended June 30,							​	Six Months Ended June 30,
Non-GAAP General and Administrative Expenses	​		2024				2023		​		2024				2023
General and administrative expenses	​	$	10,334			$	12,120		​	$	22,499			$	24,248
Stock compensation expense	​		1,814				(58	)	​		3,720				2,580
Non-recurring costs1			1,395				3,812				3,841				5,893
Non-GAAP general and administrative expenses			7,125				8,366				14,938				15,775
	​	Three Months Ended June 30,							​	Six Months Ended June 30,
Non-GAAP Operating Loss	​		2024				2023		​		2024				2023
Operating loss	​	$	(17,042	)		$	(20,099	)	​	$	(54,153	)		$	(41,601	)
Stock compensation expense	​		3,245				1,690		​		6,706				6,046
Amortization			371				254				749				531
Litigation judgment			—				—				17,300				—
Non-recurring costs1			1,395				3,812				3,841				5,893
Non-GAAP operating loss			(12,031	)			(14,343	)			(25,557	)			(29,131	)
1Non-recurring costs incurred during the three and six months ended June 30, 2024 and 2023 relate to litigation expense.

FAQ

What were Markforged's (MKFG) Q2 2024 revenue and net loss?

Markforged reported Q2 2024 revenue of $21.7 million and a net loss of $14.4 million.

How much is Markforged's (MKFG) cost reduction initiative targeting?

Markforged announced a $25 million cost reduction initiative aimed at reducing operating expenses to a yearly run rate of approximately $70 million.

What is Markforged's (MKFG) updated revenue guidance for 2024?

Markforged updated its 2024 revenue guidance to between $90 and $95 million, down from the previous expectation of $95 to $105 million.

When did Markforged (MKFG) ship its first PX100 metal binder jetting system?

Markforged shipped its first PX100 metal binder jetting system in Q2 2024.