DEFA14A: Desktop Metal Announces Q2 2024 Results and Merger Agreement with Nano Dimension

Desktop Metal reported a revenue decrease in Q2 2024 and announced a definitive merger agreement with Nano Dimension.

Summary

• Desktop Metal announced its Q2 2024 financial results, reporting revenue of $38.9 million, a decrease from $53.3 million in the same period last year.
• The company's Q2 net loss was $(103.4) million, impacted by one-time noncash charges related to accelerated amortization and depreciation.
• Adjusted EBITDA was $(13.2) million, an improvement from $(15) million in Q2 2023.
• GAAP operating expenses increased to $69.1 million due to accelerated amortization and depreciation from discontinued operations, while non-GAAP operating expenses were $27 million, a 22% year-over-year improvement.
• Services revenue increased 27% to $7.5 million.
• Desktop Metal announced a definitive merger agreement with Nano Dimension.
• The company has withdrawn its financial guidance for the remainder of the year due to the pending acquisition by Nano Dimension.

Sentiment

Score: 4

Explanation: The sentiment is mixed. While there are some positive aspects like improved Adjusted EBITDA and cost reductions, the significant revenue decrease and net loss weigh heavily on the overall sentiment. The merger announcement adds uncertainty but is presented as a positive strategic move.

Positives

• Adjusted EBITDA improved year-over-year, decreasing from $(15) million to $(13.2) million.
• Services revenue increased by 27% to $7.5 million.
• Non-GAAP operating expenses decreased 22% year-over-year to $27 million.
• The company continued execution of cost reduction plans.
• Desktop Metal launched the all-new PureSinter Furnace.
• Platinum is now customer-qualified on the DM Production System.
• The rate of operating cash consumption declined 40% compared to the same year-ago quarter.

Negatives

• Revenue decreased from $53.3 million to $38.9 million compared to the same quarter last year.
• The company reported a net loss of $(103.4) million.
• GAAP gross margin was (83)%, impacted by one-time noncash charges.
• GAAP operating expenses increased to $69.1 million.

Risks

• The company faces risks related to demand for its products and services.
• The global macro-economic environment poses a risk.
• Rapid technological change in the additive manufacturing industry could impact the company.
• The company's ability to realize the benefits from cost-saving measures is a risk.
• Supply and logistics disruptions, including shortages and delays, could impact the company.
• There are risks related to the completion of the proposed transaction with Nano Dimension.

Future Outlook

The company has withdrawn its financial guidance for the remainder of the year due to the pending acquisition by Nano Dimension. The proposed combination with Nano Dimension represents the best path forward for Desktop Metal and all of its stakeholders.

Management Comments

• Ric Fulop, Founder and CEO of Desktop Metal, stated that the company has worked tirelessly to align its cost structure with macroeconomic realities.
• Ric Fulop noted a concerning trend towards the end of the quarter with customers becoming hesitant to engage in closing deals due to the company's weakening financial outlook.

Industry Context

The announcement comes amid a challenging business environment with rising rates and slowing capex budgets, impacting the additive manufacturing industry. The merger with Nano Dimension is aimed at strengthening Desktop Metal's competitive position.

Comparison to Industry Standards

• It is difficult to compare Desktop Metal's results directly to industry standards without detailed competitor data.
• However, companies like 3D Systems and Stratasys are key competitors in the additive manufacturing space.
• These companies are also facing similar macroeconomic challenges, including supply chain disruptions and slowing capital expenditures.
• The merger with Nano Dimension could potentially create a stronger competitor in the long run.

Stakeholder Impact

• Shareholders face uncertainty due to the proposed merger and the company's financial performance.
• Employees may experience changes as a result of cost reduction plans and the merger.
• Customers may be affected by the company's financial stability and the potential changes resulting from the merger.
• Suppliers may be impacted by the company's cost reduction efforts and any changes in its business strategy.

Next Steps

• Desktop Metal intends to file a proxy statement with the SEC regarding the proposed transaction with Nano Dimension.
• The definitive proxy statement will be mailed to stockholders of Desktop Metal.
• Investors and security holders are urged to read the proxy statement and any other relevant documents that may be filed with the SEC.

Key Dates

Keywords

Desktop Metal, Nano Dimension, merger, financial results, additive manufacturing, 3D printing, revenue, EBITDA, net loss