- Revenue of $53.3 million, up 29% sequentially
- GAAP gross margin of 11%; non-GAAP gross margin of 31%
- Best quarter of adjusted EBITDA since going public
- Year-over-year improvements to non-GAAP gross margins,
operating expenses, adjusted EBITDA, and operating cash flow in
second quarter 2023
- Cash, cash equivalents, and short-term investments closed
second quarter 2023 at $127.6 million, down $22.2 million from the
close of first quarter 2023
- Reaffirming full year 2023 guidance of revenue between $210 to
$260 million, and adjusted EBITDA between $(50) to $(25) million,
with expectation to achieve adjusted EBITDA breakeven before year
end 2023
- Announced definitive agreement to combine with Stratasys in an
approximately $1.8 billion all-stock transaction
Desktop Metal, Inc. (NYSE: DM) today announced its financial
results for the second quarter ended June 30, 2023.
“We are very pleased with our operational execution this quarter
as we delivered strong sequential revenue growth, driving
significant gross margin expansion and the best adjusted EBITDA
since going public,” said Ric Fulop, Founder and CEO of Desktop
Metal. “Desktop Metal continues to execute on our cost reduction
plans, and with strong growth drivers and customer demand trends
entering second half 2023, we are confident in our growth
projections, improving margin profile, and adjusted EBITDA
commitments.”
Fulop continued, “We also recently signed a definitive agreement
to combine with Stratasys in an approximately $1.8 billion
all-stock transaction, establishing a powerhouse in global
industrial additive manufacturing. We are very committed to this
combination as we believe the combined company’s scale,
complementary portfolio with minimal overlap, and enhanced growth
and profitability are well-positioned to serve the evolving needs
of customers in manufacturing.”
Second Quarter 2023 and Recent Business Highlights:
- Continued execution of cost reduction plans with year-over-year
improvements to non-GAAP gross margins, operating expenses,
adjusted EBITDA, and operating cash flow in second quarter
2023
- Production System™ P-50 continues strong commercial progress in
consumer electronics
- New Production System™ P-50 order from Ryerson (NYSE: RYI)
targeting heavy equipment, transportation, industrial, energy,
medical, and aerospace and defense value-added parts
- Progress on monetizing DLP intellectual property portfolio,
including signed commercial supply agreement of Flexcera™ materials
for Carbon 3D
- Desktop Health introduced PrintRoll™ rotating build platform
for the 3D-Bioplotter®, a first-of-its-kind bioprinting tool to
develop tubular solutions for vascular, digestive, respiratory, and
other channels
- Successfully showcased the leadership of our ExOne digital
casting brand at GIFA, the world's leading foundry trade fair held
every four years in Germany, where our S-Max printer brand
dominates digital casting market share
Second Quarter 2023 Financial Highlights:
- Revenue of $53.3 million, up 29.0% from first quarter 2023
revenue of $41.3 million
- GAAP gross margin of 11.4%; non-GAAP gross margin of 31.0%, an
improvement of 1,300 basis points from first quarter 2023, and 435
basis points from second quarter 2022
- GAAP net loss of $49.7 million, including $10.5 million
amortization of acquired intangibles; non-GAAP net loss of $19.3
million
- Adjusted EBITDA of $(15.0) million, an improvement of $12.5
million from second quarter 2022, and the best quarter of adjusted
EBITDA since going public
- Cash, cash equivalents, and short-term investments of $127.6
million as of June 30, 2023, down $22.2 million from the close of
first quarter 2023
Financial Outlook:
- Reaffirming revenue expectation of between $210 to $260 million
for full year 2023
- Reaffirming Adjusted EBITDA expectation of between $(50) to
$(25) million for full year 2023, with expectation to achieve
Adjusted EBITDA breakeven before year end 2023
Desktop Metal has not provided a reconciliation of its Adjusted
EBITDA outlook to net income because estimates of all of the
reconciling items cannot be provided without unreasonable efforts.
See “Non-GAAP Financial Information.”
Combination with Stratasys:
- As announced on May 25, 2023, Stratasys and Desktop Metal
entered into a definitive agreement whereby the companies will
combine in an all-stock transaction valued at approximately $1.8
billion. The proposed agreement has been unanimously approved by
the Boards of Directors of both companies, and is expected to close
during the fourth quarter of 2023, subject to customary closing
conditions, including regulatory and shareholder approval of both
companies
- Under the terms of the agreement, Desktop Metal stockholders
will receive 0.123 ordinary shares of Stratasys for each share of
Desktop Metal Class A common stock. Following the closing of the
transaction, legacy Desktop Metal stockholders will own
approximately 41% of the combined company, and existing Stratasys
shareholders will own approximately 59% of the combined company, in
each case, on a fully diluted basis
Conference Call Information:
Desktop Metal will host a conference call on Thursday, August 3,
2023 to discuss second quarter 2023 results. Participants may
access the call at 1-888-999-3182, international callers may use
1-848-280-6330, and request to join the Desktop Metal financial
results conference call. A simultaneous webcast of the conference
call and the accompanying summary presentation may be accessed
online at the Events & Presentations section of
ir.desktopmetal.com. A replay will be available shortly after the
conclusion of the conference call at the same website.
About Desktop Metal:
Desktop Metal (NYSE:DM) is driving Additive Manufacturing 2.0, a
new era of on-demand, digital mass production of industrial,
medical, and consumer products. Our innovative 3D printers,
materials, and software deliver the speed, cost, and part quality
required for this transformation. We’re the original inventors and
world leaders of the 3D printing methods we believe will empower
this shift, binder jetting and digital light processing. Today, our
systems print metal, polymer, sand and other ceramics, as well as
foam and recycled wood. Manufacturers use our technology worldwide
to save time and money, reduce waste, increase flexibility, and
produce designs that solve the world’s toughest problems and enable
once-impossible innovations. Learn more about Desktop Metal and our
#TeamDM brands at www.desktopmetal.com.
Forward-looking Statements:
This press release contains forward-looking statements within
the meaning of the federal securities laws. All statements other
than statements of historical facts contained in these
communications, including statements regarding Desktop Metal’s
future results of operations and financial position, financial
targets, business strategy, plans and objectives for future
operations, and statements relating to the proposed transaction
between Stratasys Ltd. (“Stratasys”) and Desktop Metal, including
statements regarding the benefits of the transaction and the
anticipated timing of the transaction, are forward-looking
statements. Forward-looking statements generally are identified by
the words “believe,” “project,” “expect,” “anticipate,” “estimate,”
“intend,” “strategy,” “future,” “opportunity,” “plan,” “may,”
“should,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions. Forward-looking statements are
predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a
result, are subject to risks and uncertainties. Many factors could
cause actual future events to differ materially from the
forward-looking statements in this document, including but not
limited to: risks associated with the integration of the business
and operations of acquired businesses; Desktop Metals’ ability to
realize the benefits from cost saving measures; supply and
logistics disruptions, including shortages and delays, the ultimate
outcome of the proposed transaction between Stratasys and Desktop
Metal, including the possibility that Stratasys or Desktop Metal
shareholders will reject the proposed transaction; the effect of
the announcement of the proposed transaction on the ability of
Desktop Metal to operate its business and retain and hire key
personnel and to maintain favorable business relationships; the
timing of the proposed transaction; the occurrence of any event,
change or other circumstance that could give rise to the
termination of the proposed transaction; the ability to satisfy
closing conditions to the completion of the proposed transaction
(including any necessary shareholder approvals); other risks
related to the completion of the proposed transaction and actions
related thereto. For more information about risks and uncertainties
that may impact Desktop Metal’s business, financial condition,
results of operations and prospects generally, please refer to
Desktop Metal’s reports filed with the SEC, including without
limitation the “Risk Factors” and/or other information included in
the Form 10-Q filed with the SEC on August 3, 2023, and such other
reports as Desktop Metal has filed or may file with the SEC from
time to time. These filings identify and address other important
risks and uncertainties that could cause actual events and results
to differ materially from those contained in the forward-looking
statements. Forward-looking statements speak only as of the date
they are made. Readers are cautioned not to put undue reliance on
forward-looking statements, and Desktop Metal, Inc. assumes no
obligation and does not intend to update or revise these
forward-looking statements, whether as a result of new information,
future events, or otherwise.
Risks related to the proposed transaction are included in the
registration statement on Form F-4, including the preliminary joint
proxy statement/prospectus, that has been filed with the Securities
and Exchange Commission (“SEC”) in connection with the proposed
transaction. While the list of factors presented here is, and the
list of factors presented in the registration statement on Form F-4
are, considered representative, no such list should be considered
to be a complete statement of all potential risks and
uncertainties. For additional information about other factors that
could cause actual results to differ materially from those
described in the forward-looking statements, please refer to
Stratasys’ and Desktop Metal’s respective periodic reports and
other filings with the SEC, including the risk factors identified
in Stratasys’ and Desktop Metal’s Annual Reports on Form 20-F and
Form 10-K, respectively, and Stratasys’ most recent Form 6-K report
that published its quarterly results, and Desktop Metal’s most
recent Quarterly Reports on Form 10-Q. The forward-looking
statements included in this press release are made only as of the
date hereof. Neither Stratasys nor Desktop Metal undertakes any
obligation to update any forward-looking statements to reflect
subsequent events or circumstances, except as required by law.
No Offer or Solicitation
This press release is not intended to and shall not constitute
an offer to buy or sell or the solicitation of an offer to buy or
sell any securities, or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made, except by
means of a prospectus meeting the requirements of Section 10 of the
U.S. Securities Act of 1933, as amended.
Additional Information about the Transaction and Where to
Find It
In connection with the proposed transaction, Stratasys filed
with the SEC a registration statement on Form F-4 that includes a
joint proxy statement of Stratasys and Desktop Metal and that also
constitutes a prospectus of Stratasys. Each of Stratasys and
Desktop Metal may also file other relevant documents with the SEC
regarding the proposed transaction. This document is not a
substitute for the joint proxy statement/prospectus or registration
statement or any other document that Stratasys or Desktop Metal may
file with the SEC. The registration statement has not yet become
effective. After the registration statement is effective, the
definitive joint proxy statement/prospectus will be mailed to
shareholders of Stratasys and Desktop Metal. INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE JOINT
PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT
MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS
TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN
THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and
security holders will be able to obtain free copies of the
registration statement and definitive joint proxy
statement/prospectus (if and when available) and other documents
containing important information about Stratasys, Desktop Metal and
the proposed transaction, once such documents are filed with the
SEC through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with, or
furnished, to the SEC by Stratasys will be available free of charge
on Stratasys’ website at
https://investors.stratasys.com/sec-filings. Copies of the
documents filed with the SEC by Desktop Metal will be available
free of charge on Desktop Metal’s website at
https://ir.desktopmetal.com/sec-filings/all-sec-filings.
Participants in the Solicitation
Stratasys, Desktop Metal and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies in respect of the proposed
transaction. Information about the directors and executive officers
of Stratasys, including a description of their direct or indirect
interests, by security holdings or otherwise, is set forth in
Stratasys’ proxy statement for its 2023 Annual General Meeting of
Shareholders, which was filed with the SEC on July 12, 2023, and
Stratasys’ Annual Report on Form 20-F for the fiscal year ended
December 31, 2022, which was filed with the SEC on March 3, 2023.
Information about the directors and executive officers of Desktop
Metal, including a description of their direct or indirect
interests, by security holdings or otherwise, is set forth in
Desktop Metal’s proxy statement for its 2023 Annual Meeting of
Stockholders, which was filed with the SEC on April 25, 2023 and
Desktop Metal’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2022, which was filed with the SEC on March 1,
2023. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, is contained in the
joint proxy statement/prospectus and other relevant materials filed
with the SEC regarding the proposed transaction. Investors should
read the joint proxy statement/prospectus carefully before making
any voting or investment decisions. You may obtain free copies of
these documents from Stratasys or Desktop Metal using the sources
indicated above.
DESKTOP METAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(in thousands, except share
and per share amounts)
June 30,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
121,660
$
76,291
Current portion of restricted cash
824
4,510
Short‑term investments
5,933
108,243
Accounts receivable
41,235
38,481
Inventory
100,330
91,736
Prepaid expenses and other current
assets
17,041
16,325
Assets held for sale
—
830
Total current assets
287,023
336,416
Restricted cash, net of current
portion
612
1,112
Property and equipment, net
42,307
56,271
Goodwill
112,741
112,955
Intangible assets, net
199,609
219,830
Other noncurrent assets
34,806
27,763
Total Assets
$
677,098
$
754,347
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
25,041
$
25,105
Customer deposits
9,275
11,526
Current portion of lease liability
5,931
5,730
Accrued expenses and other current
liabilities
28,724
26,723
Current portion of deferred revenue
12,799
13,719
Current portion of long‑term debt
389
584
Total current liabilities
82,159
83,387
Long-term debt, net of current portion
187
311
Convertible notes
112,199
111,834
Lease liability, net of current
portion
23,196
17,860
Deferred revenue, net of current
portion
3,711
3,664
Deferred tax liability
8,060
8,430
Other noncurrent liabilities
3,127
1,359
Total liabilities
232,639
226,845
Commitments and Contingencies (Note
17)
Stockholders’ Equity
Preferred Stock, $0.0001 par
value—authorized, 50,000,000 shares; no shares issued and
outstanding at June 30, 2023 and December 31, 2022,
respectively
—
—
Common Stock, $0.0001 par
value—500,000,000 shares authorized; 322,656,280 and 318,235,106
shares issued at June 30, 2023 and December 31, 2022, respectively,
322,630,201 and 318,133,434 shares outstanding at June 30, 2023 and
December 31, 2022, respectively
32
32
Additional paid‑in capital
1,893,548
1,874,792
Accumulated deficit
(1,411,323)
(1,308,954)
Accumulated other comprehensive loss
(37,798)
(38,368)
Total Stockholders’ Equity
444,459
527,502
Total Liabilities and Stockholders’
Equity
$
677,098
$
754,347
See notes to condensed consolidated financial
statements.
DESKTOP METAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per
share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Revenues
Products
$
47,398
$
52,672
$
84,095
$
92,148
Services
5,888
5,002
10,507
9,232
Total revenues
53,286
57,674
94,602
101,380
Cost of sales
Products
43,224
44,913
82,115
86,815
Services
3,973
4,364
7,762
7,496
Total cost of sales
47,197
49,277
89,877
94,311
Gross profit
6,089
8,397
4,725
7,069
Operating expenses
Research and development
21,223
31,370
44,367
55,975
Sales and marketing
10,440
20,406
20,047
40,070
General and administrative
22,944
19,691
41,145
43,573
Goodwill impairment
—
229,500
—
229,500
Total operating expenses
54,607
300,967
105,559
369,118
Loss from operations
(48,518
)
(292,570
)
(100,834
)
(362,049
)
Interest expense
(1,109
)
(633
)
(1,920
)
(601
)
Interest and other (expense) income,
net
(78
)
(5,013
)
(149
)
(6,766
)
Loss before income taxes
(49,705
)
(298,216
)
(102,903
)
(369,416
)
Income tax benefit (expense)
(23
)
944
534
2,200
Net loss
$
(49,728
)
$
(297,272
)
$
(102,369
)
$
(367,216
)
Net loss per share—basic and diluted
$
(0.15
)
$
(0.95
)
$
(0.32
)
$
(1.17
)
Weighted average shares outstanding, basic
and diluted
321,655,818
313,556,886
320,382,809
312,798,328
See notes to condensed consolidated financial
statements.
DESKTOP METAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Net loss
$
(49,728
)
$
(297,272
)
$
(102,369
)
$
(367,216
)
Other comprehensive loss, net of
taxes:
Unrealized gain (loss) on
available-for-sale marketable securities, net
148
(41
)
337
(29
)
Foreign currency translation
adjustment
(1,316
)
(27,411
)
233
(38,458
)
Total comprehensive loss, net of taxes of
$0
$
(50,896
)
$
(324,724
)
$
(101,799
)
$
(405,703
)
See notes to condensed consolidated financial
statements.
DESKTOP METAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in thousands, except share
amounts)
Three Months Ended June 30,
2023
Accumulated
Other
Common Stock
Additional
Comprehensive
Total
Voting
Paid‑in
Accumulated
(Loss)
Stockholders’
Shares
Amount
Capital
Deficit
Income
Equity
BALANCE—April 1, 2023
320,401,389
$
32
$
1,883,764
$
(1,361,595
)
$
(36,630
)
$
485,571
Exercise of Common Stock options
472,235
—
560
—
—
560
Vesting of restricted Common Stock
50,218
—
—
—
—
—
Vesting of restricted stock units
1,266,620
—
—
—
—
—
Repurchase of shares for employee tax
withholdings
(5,054
)
—
(11
)
—
—
(11
)
Issuance of Common Stock related to
settlement of contingent consideration
444,793
—
797
—
—
797
Stock‑based compensation expense
—
—
8,438
—
—
8,438
Net loss
—
—
—
(49,728
)
—
(49,728
)
Other comprehensive income (loss)
—
—
—
—
(1,168
)
(1,168
)
BALANCE—June 30, 2023
322,630,201
$
32
$
1,893,548
$
(1,411,323
)
$
(37,798
)
$
444,459
Six Months Ended June 30,
2023
Accumulated
Other
Common Stock
Additional
Comprehensive
Total
Voting
Paid‑in
Accumulated
(Loss)
Stockholders’
Shares
Amount
Capital
Deficit
Income
Equity
BALANCE—January 1, 2023
318,133,434
$
32
$
1,874,792
$
(1,308,954
)
$
(38,368
)
$
527,502
Exercise of Common Stock options
968,111
—
1,157
—
—
1,157
Vesting of restricted Common Stock
75,593
—
—
—
—
—
Vesting of restricted stock units
3,075,042
—
—
—
—
—
Repurchase of shares for employee tax
withholdings
(66,772
)
—
(109
)
—
—
(109
)
Issuance of Common Stock related to
settlement of contingent consideration
444,793
—
797
—
—
797
Stock‑based compensation expense
—
—
16,911
—
—
16,911
Net loss
—
—
—
(102,369
)
—
(102,369
)
Other comprehensive income (loss)
—
—
—
—
570
570
BALANCE—June 30, 2023
322,630,201
$
32
$
1,893,548
$
(1,411,323
)
$
(37,798
)
$
444,459
See notes to condensed consolidated financial
statements.
DESKTOP METAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Six Months Ended June
30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(102,369
)
$
(367,216
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
26,965
25,602
Stock‑based compensation
19,016
26,917
Goodwill impairment
—
229,500
Amortization (accretion) of discount on
investments
(484
)
390
Amortization of deferred costs on
convertible notes
365
39
Provision for bad debt
962
554
Provision for slow-moving, obsolete, and
lower of cost or net realizable value inventories, net
—
—
Loss on disposal of property and
equipment
496
156
Net increase (decrease) in accrued
interest related to marketable securities
238
917
Net unrealized (gain) loss on equity
investment
148
5,080
Net unrealized (gain) loss on other
investments
—
800
Deferred tax benefit
(534
)
(2,188
)
Change in fair value of contingent
consideration
—
4
Foreign currency transaction (gain)
loss
97
430
Changes in operating assets and
liabilities:
Accounts receivable
(3,661
)
8,250
Inventory
(8,760
)
(25,384
)
Prepaid expenses and other current
assets
(675
)
(2,994
)
Other assets
1,595
1,117
Accounts payable
(407
)
(2,767
)
Accrued expenses and other current
liabilities
1,097
(7,337
)
Customer deposits
(2,322
)
(1,412
)
Deferred revenue
(918
)
(70
)
Change in right of use assets and lease
liabilities, net
(3,110
)
(1,467
)
Other liabilities
1,767
30
Net cash used in operating
activities
(70,494
)
(111,049
)
Cash flows from investing
activities:
Purchases of property and equipment
(1,305
)
(6,747
)
Proceeds from sale of property and
equipment
9,942
6
Purchase of marketable securities
(4,973
)
(126,771
)
Proceeds from sales and maturities of
marketable securities
107,719
177,150
Cash paid for acquisitions, net of cash
acquired
(500
)
(23
)
Net cash provided by investing
activities
110,883
43,615
Cash flows from financing
activities:
Proceeds from the exercise of stock
options
1,157
1,266
Payment of taxes related to net share
settlement upon vesting of restricted stock units
(108
)
(191
)
Repayment of loans
(328
)
(231
)
Proceeds from issuance of convertible
notes
—
115,000
Costs incurred in connection with the
issuance of convertible notes
—
(3,619
)
Net cash provided by financing
activities
721
112,225
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
73
(819
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
41,183
43,972
Cash, cash equivalents, and restricted
cash at beginning of period
81,913
68,258
Cash, cash equivalents, and restricted
cash at end of period
$
123,096
$
112,230
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
$
121,660
$
107,966
Restricted cash included in other current
assets
824
3,152
Restricted cash included in other
noncurrent assets
612
1,112
Total cash, cash equivalents and
restricted cash shown in the condensed consolidated statements of
cash flows
$
123,096
$
112,230
Supplemental cash flow
information:
Interest paid
$
—
$
—
Taxes paid
$
—
$
—
Non‑cash investing and financing
activities:
Net unrealized (gain) loss on
investments
$
(337
)
$
29
Common Stock issued for settlement of
contingent consideration
$
797
$
500
Deferred contract costs
$
—
$
1,341
Additions to right of use assets and lease
liabilities
$
8,489
$
7,784
Purchase of property and equipment
included in accounts payable
$
365
$
1,022
Purchase of property and equipment
included in accrued expense
$
32
$
—
Transfers from property and equipment to
inventory
$
841
$
1,954
Transfers from PP&E to Asset
Held-For-Sale
$
—
$
—
Transfers from inventory to property and
equipment
$
1,345
$
1,531
See notes to condensed consolidated financial
statements.
Non-GAAP Financial Information
This press release contains non-GAAP financial measures,
including non-GAAP gross margin, non-GAAP operating loss, non-GAAP
net loss, non-GAAP operating expense, EBITDA and Adjusted
EBITDA.
- We define non-GAAP gross margin as GAAP gross margin excluding
the effect of stock-based compensation, amortization of acquired
intangible assets, restructuring, acquisition-related and
integration costs, and inventory step-up adjustments
- We define non-GAAP operating loss as GAAP operating loss
excluding the effect of stock-based compensation, amortization of
acquired intangible assets, restructuring, inventory step-up
adjustments, and acquisition-related and integration costs
- We define non-GAAP net loss as GAAP net loss excluding the
effect of stock-based compensation, amortization of acquired
intangible assets, restructuring, inventory step-up adjustments,
acquisition-related and integration costs, and change in fair value
of investments
- We define non-GAAP operating expense as GAAP operating expense
excluding the effect of stock-based compensation, amortization of
acquired intangible assets, restructuring, and acquisition-related
and integration costs including in operating expenses
- We define EBITDA as GAAP net income (loss) excluding interest,
income taxes, and depreciation and amortization expense
- We define Adjusted EBITDA as EBITDA excluding change in fair
value of investments, inventory step-up adjustments, stock-based
compensation, restructuring, and acquisition-related and
integration costs
In addition to Desktop Metal’s results determined in accordance
with GAAP, Desktop Metal’s management uses this non-GAAP financial
information to evaluate the Company’s ongoing operations and for
internal planning and forecasting purposes. We believe that this
non-GAAP financial information, when taken collectively, may be
helpful to investors in assessing Desktop Metal’s operating
performance.
We believe that the use of Non-GAAP gross margin, non-GAAP
operating loss, non-GAAP net loss, non-GAAP operating expense,
EBITDA and Adjusted EBITDA provides an additional tool for
investors to use in evaluating ongoing operating results and trends
because it eliminates the effect of financing, capital
expenditures, and non-cash expenses such as stock-based
compensation and warrants, and provides investors with a means to
compare Desktop Metal’s financial measures with those of comparable
companies, which may present similar non-GAAP financial measures to
investors. However, investors should be aware that when evaluating
non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss,
non-GAAP operating expense, EBITDA and Adjusted EBITDA, we may
incur future expenses similar to those excluded when calculating
these measures. In addition, our presentation of these measures
should not be construed as an inference that our future results
will be unaffected by unusual or non-recurring items. Our
computation of these measures may not be comparable to other
similarly titled measures computed by other companies because not
all companies calculate these measures in the same fashion.
Because of these limitations, non-GAAP gross margin, non-GAAP
operating loss, non-GAAP net loss, non-GAAP operating expense,
EBITDA and Adjusted EBITDA should not be considered in isolation or
as a substitute for performance measures calculated in accordance
with GAAP. We compensate for these limitations by relying primarily
on our GAAP results and using non-GAAP gross margin, non-GAAP
operating loss, non-GAAP net loss, non-GAAP operating expense,
EBITDA and Adjusted EBITDA on a supplemental basis. Management
uses, and investors should consider, our non-GAAP financial
measures only in conjunction with our GAAP results. Desktop Metal
has not provided a reconciliation of its Adjusted EBITDA outlook to
net income because estimates of all of the reconciling items cannot
be provided without unreasonable efforts.
Set forth below is a reconciliation of each non-GAAP financial
measure used in this press release to its most directly comparable
GAAP financial measure.
DESKTOP METAL, INC.
NON-GAAP RECONCILIATION
TABLE
(in thousands)
For the Three Months
Ended
For the Six Months
Ended
June 30,
June 30,
(Dollars in thousands)
2023
2022
2023
2022
GAAP gross margin
$
6,089
$
8,397
$
4,725
$
7,069
Stock-based compensation included in cost
of sales(1)
590
671
1,270
1,158
Amortization of acquired intangible assets
included in cost of sales
6,928
5,950
13,855
11,940
Restructuring expense in cost of sales
2,488
41
3,205
41
Acquisition-related and integration costs
included in cost of sales
434
10
913
1,148
Inventory step-up adjustment in cost of
sales
—
315
—
1,496
Non-GAAP gross margin
$
16,529
$
15,384
$
23,968
$
22,852
GAAP operating loss
$
(48,518
)
$
(292,570
)
$
(100,834
)
$
(362,049
)
Stock-based compensation(2),(3)
9,703
19,218
19,016
29,130
Amortization of acquired intangible
assets
10,457
9,669
20,899
19,453
Restructuring expense
2,850
2,001
6,469
2,001
Inventory step-up adjustment in cost of
sales
—
315
—
1,496
Acquisition-related and integration
costs
7,359
1,171
8,765
5,157
Goodwill impairment
—
229,500
—
229,500
Non-GAAP operating loss
$
(18,149
)
$
(30,696
)
$
(45,685
)
$
(75,312
)
GAAP net loss
$
(49,728
)
$
(297,272
)
$
(102,369
)
$
(367,216
)
Stock-based compensation(2),(3)
9,703
19,218
19,016
29,130
Amortization of acquired intangible
assets
10,457
9,669
20,899
19,453
Restructuring expense
2,850
2,384
6,469
2,384
Inventory step-up adjustment in cost of
sales
—
315
—
1,496
Acquisition-related and integration
costs
7,359
1,171
8,765
5,157
Goodwill impairment
—
229,500
—
229,500
Change in fair value of investments
107
4,741
286
6,441
Non-GAAP net loss
$
(19,252
)
$
(30,274
)
$
(46,934
)
$
(73,655
)
(1) Includes $0.2 million and $0.4 million of liability-award
stock-based compensation expense for the three and six months ended
June 30, 2023, respectively. Includes $0.1 million of
liability-award stock-based compensation expense for the three and
six months ended June 30, 2022.
(2) Includes $1.3 million and $2.9 million of liability-award
stock-based compensation expense for the three and six months ended
June 30, 2023, respectively. Includes $2.2 million of
liability-award stock-based compensation expense for the three and
six months ended June 30, 2022.
(3) Includes $0.0 million of stock-based compensation expense
associated with the restructuring initiative for the three and six
months ended June 30, 2023. Includes $7.3 million of stock-based
compensation expense associated with the restructuring initiative
for the three and six months ended June 30, 2022.
DESKTOP METAL, INC.
NON-GAAP OPERATING EXPENSE
RECONCILIATION TABLE
(in thousands)
For the Three Months
Ended
For the Six Months
Ended
June 30,
June 30,
(Dollars in thousands)
2023
2022
2023
2022
GAAP operating expenses
$
54,607
$
300,967
$
105,559
$
369,118
Stock-based compensation included in
operating expenses(1),(2)
(9,113
)
(18,547
)
(17,746
)
(27,972
)
Amortization of acquired intangible assets
included in operating expenses
(3,529
)
(3,719
)
(7,044
)
(7,513
)
Restructuring expense included in
operating expenses
(362
)
(1,960
)
(3,264
)
(1,960
)
Acquisition-related and integration costs
included in operating expenses
(6,925
)
(1,161
)
(7,852
)
(4,009
)
Goodwill impairment
—
(229,500
)
—
(229,500
)
Non-GAAP operating expenses
$
34,678
$
46,080
$
69,653
$
98,164
(1) Includes $1.1 million and $2.5 million of liability-award
stock-based compensation expense for the three and six months ended
June 30, 2023, respectively. Includes $2.1 million of
liability-award stock-based compensation expense for the three and
six months ended June 30, 2022.
(2) Includes $0.0 million of stock-based compensation expense
associated with the restructuring initiative for the three and six
months ended June 30, 2023. Includes $7.3 million of stock-based
compensation expense associated with the restructuring initiative
for the three and six months ended June 30, 2022.
DESKTOP METAL, INC.
NON-GAAP ADJUSTED EBITDA
RECONCILIATION TABLE
(in thousands)
For the Three Months
Ended
For the Six Months
Ended
June 30,
June 30,
(Dollars in thousands)
2023
2022
2023
2022
Net loss attributable to common
stockholders
$
(49,728
)
$
(297,272
)
$
(102,369
)
$
(367,216
)
Interest (income) expense, net
1,109
633
1,920
601
Income tax expense (benefit)
23
(944
)
(534
)
(2,200
)
Depreciation and amortization
13,530
12,719
26,965
25,602
EBITDA
(35,066
)
(284,864
)
(74,018
)
(343,213
)
Change in fair value of investments
107
4,741
286
6,441
Inventory step-up adjustment
—
315
—
1,496
Stock-based compensation
expense(1),(2)
9,703
19,218
19,016
29,130
Restructuring expense
2,850
2,384
6,469
2,384
Goodwill impairment
—
229,500
—
229,500
Acquisition-related and integration
costs
7,359
1,171
8,765
5,157
Adjusted EBITDA
$
(15,047
)
$
(27,535
)
$
(39,482
)
$
(69,105
)
(1) Includes $0.0 million of stock-based compensation expense
associated with the restructuring initiative for the three and six
months ended June 30, 2023. Includes $7.3 million of stock-based
compensation expense associated with the restructuring initiative
for the three and six months ended June 30, 2022.
(2) Includes $1.3 million and $2.9 million of liability-award
stock-based compensation for the three months ended June 30, 2023
and 2022, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803541079/en/
Investor Relations: Jay Gentzkow (781) 730-2110
jaygentzkow@desktopmetal.com Media Relations: Sarah Webster
(313) 715-6988 sarahwebster@desktopmetal.com
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