DM
Desktop Metal, INC
NYSE
10-Q: Desktop Metal Reports Q2 2024 Results Amidst Nano Dimension Merger Agreement
Sentiment:
Quarterly Report
30 July 2024 4:53 PM
Desktop Metal's Q2 2024 results reveal a net loss of $103.4 million and a revenue of $38.9 million, while the company also announced a merger agreement with Nano Dimension Ltd.
Worse than expected
The company's revenue decreased by 27% compared to the same quarter last year.
The company's gross margin was -83%, indicating significant losses on sales.
The company's net loss increased significantly compared to the same quarter last year.
Capital raise
The company plans to raise additional capital through a combination of potential options, including equity and debt financings.
Nano Dimension agreed to provide a multi-draw term loan credit facility in an aggregate principal amount not to exceed $20.0 million, subject to certain conditions.
Summary
- Desktop Metal reported a net loss of $103.4 million for the three months ended June 30, 2024, and $155.5 million for the six months ended June 30, 2024.
- The company's revenue for the three months ended June 30, 2024, was $38.9 million, and $79.5 million for the six months ended June 30, 2024.
- Product revenue decreased by 34% in Q2 2024 compared to Q2 2023, while service revenue increased by 28% over the same period.
- The company's gross loss for Q2 2024 was $32.2 million, compared to a gross profit of $6.1 million in Q2 2023.
- Operating expenses totaled $69.1 million for Q2 2024, compared to $54.6 million in Q2 2023.
- As of June 30, 2024, Desktop Metal had $45.9 million in cash and cash equivalents and $0.2 million in short-term investments.
- The company has an accumulated deficit of $1.8 billion as of June 30, 2024.
- Desktop Metal entered into a merger agreement with Nano Dimension Ltd. on July 2, 2024, with a cash consideration of $5.50 per share, subject to adjustments.
- A 1-for-10 reverse stock split was effected on June 11, 2024.
Sentiment
Score: 3
Explanation: The document reflects a negative sentiment due to significant losses, declining revenue, and concerns about the company's ability to continue as a going concern. The merger agreement provides a potential exit strategy, but the downward adjustments to the merger consideration and the uncertainty surrounding the deal temper any positive outlook.
Positives
- Service revenue increased by 28% in Q2 2024 compared to Q2 2023, indicating growth in support and installation services.
- The company anticipates at least $50 million of aggregate annualized cost savings resulting from the 2024 Initiative.
- The merger agreement with Nano Dimension Ltd. provides a potential exit strategy for shareholders.
Negatives
- Product revenue decreased by 34% in Q2 2024 compared to Q2 2023, reflecting a decline in unit shipments.
- The company's gross margin was -83% in Q2 2024, indicating significant losses on sales.
- Operating expenses increased by 27% in Q2 2024 compared to Q2 2023.
- The company has incurred significant net losses and has an accumulated deficit of $1.8 billion as of June 30, 2024.
- The company's cash and cash equivalents have decreased to $45.9 million as of June 30, 2024, raising concerns about liquidity.
- The merger consideration of $5.50 per share is subject to downward adjustments, creating uncertainty for shareholders.
Risks
- The company's ability to continue as a going concern is in substantial doubt due to negative cash flows and limited financial resources.
- The merger with Nano Dimension Ltd. is subject to various conditions and may not be completed.
- The company's financial performance is subject to fluctuations due to market conditions, product mix, and competition.
- The company faces risks related to the integration of acquired businesses and the commercialization of new products.
- The company's operations are subject to various legal, regulatory, and compliance risks.
- The company's intellectual property may be challenged or infringed upon by third parties.
- The company relies on third-party contract manufacturers and suppliers, which exposes it to supply chain risks.
- The company's indebtedness could limit its financial flexibility and increase its vulnerability to adverse economic conditions.
- The company's stock price may be volatile and subject to decline due to various factors.
Future Outlook
The company expects to continue to incur additional losses and negative cash flows from operations in the near term. Management plans to raise additional capital through a combination of potential options, including but not limited to, equity and debt financings. The company anticipates at least $50 million of aggregate annualized cost savings resulting from the 2024 Initiative. The company anticipates that the 2024 Initiative will be substantially complete by the end of 2024.
Management Comments
- Management plans to raise additional capital through a combination of potential options, including but not limited to, equity and debt financings.
- The company anticipates at least $50 million of aggregate annualized cost savings resulting from the 2024 Initiative.
- The company anticipates that the 2024 Initiative will be substantially complete by the end of 2024.
Industry Context
The announcement comes amidst a challenging period for the additive manufacturing industry, with macroeconomic conditions impacting customer spending and capital investments. The merger with Nano Dimension Ltd. reflects a trend of consolidation in the industry as companies seek to gain scale and market share.
Comparison to Industry Standards
- Desktop Metal's Q2 2024 results show a significant decline in revenue and profitability compared to the same period last year, which is worse than some of its competitors in the additive manufacturing space.
- Companies like 3D Systems and Stratasys have also faced challenges, but Desktop Metal's gross margin of -83% is particularly concerning compared to industry averages.
- The merger with Nano Dimension Ltd. is a strategic move to address financial challenges, similar to how other companies in the industry have pursued acquisitions or partnerships to strengthen their market position.
- The company's cost-cutting initiatives, including workforce reductions and facility consolidations, are in line with industry trends as companies seek to improve efficiency and profitability.
Stakeholder Impact
- Shareholders face uncertainty due to the potential downward adjustments to the merger consideration and the company's financial challenges.
- Employees may be affected by ongoing restructuring and workforce reductions.
- Customers may experience disruptions due to the company's financial instability and restructuring efforts.
- Suppliers and creditors may face increased risks due to the company's financial challenges.
Next Steps
- The company will seek stockholder approval for the merger with Nano Dimension Ltd.
- The company will continue to implement cost-saving measures under the 2024 Initiative.
- The company will explore strategic alternatives for its photopolymer business.
- The company will work to complete the merger with Nano Dimension Ltd.
Legal Proceedings
- The company is involved in ongoing litigation related to the ExOne merger and alleged securities violations.
- The company is defending against a class action lawsuit alleging false or misleading statements regarding EnvisionTEC's manufacturing and product compliance practices.
Related Party Transactions
- The company has lease agreements with related parties for facilities across the United States.
- The company sells products to Lightforce Orthodontics, Bloom Energy, and Viewray Systems, which are affiliated with members of the company's Board of Directors or a shareholder.
Key Dates
- May 25, 2023: Desktop Metal entered into a merger agreement with Stratasys Ltd., which was later terminated.
- September 28, 2023: Stratasys shareholders did not approve the merger agreement, leading to its termination.
- September 29, 2023: Desktop Metal completed the sale of Aerosint SA.
- June 10, 2024: Desktop Metal's stockholders approved a 1-for-10 reverse stock split.
- June 11, 2024: Desktop Metal effected a 1-for-10 reverse stock split of its common stock.
- July 2, 2024: Desktop Metal entered into a merger agreement with Nano Dimension Ltd.
- July 24, 2024: The NYSE notified Desktop Metal that it had regained compliance with listing requirements.
Keywords
additive manufacturing, 3D printing, merger, Nano Dimension, financial results, revenue, net loss, cost optimization, restructuring, reverse stock split, convertible notes, stock based compensation, photopolymer, goodwill impairment
DM
Desktop Metal, INC
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
26 March 2025 5:20 PM
8-K Filing
- Revenue decreased from $189.7 million to $148.8 million year-over-year.
Worse than expected
31 October 2024 7:00 AM
Quarterly Report
- The company's revenue decreased by 15% year-over-year.
- The company reported a net loss of $35.4 million for the quarter and $191.0 million for the first nine months.
- The company's gross margin, while improved, is still relatively low at 9%.
Capital raise
31 October 2024 7:00 AM
Quarterly Report
- The company may need to raise additional capital through arrangements with Nano or from other sources, including equity and debt financings.
- The company has a multi-draw term loan credit facility with Nano for up to $20 million, available after January 7, 2025.
- The company may need to issue additional shares of capital stock or offer debt or other equity securities if the merger is not completed.
Worse than expected
23 September 2024 4:24 PM
Proxy Statement
- The company warns of potential dilutive financings or bankruptcy if the merger fails.
- Desktop Metal expects to run out of cash by the end of the first quarter of 2025 if the merger is not approved.
Worse than expected
13 September 2024 4:02 PM
Proxy Statement
- The company expects to run out of cash by the end of the first quarter 2025 if the merger is not approved.
- The company may need to undertake financings that may be severely dilutive to stockholders if the merger is not approved.
- There is a risk of bankruptcy if the merger is not approved.
Capital raise
13 September 2024 4:02 PM
Proxy Statement
- The document mentions that if the merger is not approved, Desktop Metal may need to undertake financings.
- These financings may be severely dilutive to stockholders.
Worse than expected
6 September 2024 4:38 PM
Proxy Statement
- Desktop Metal expects to run out of cash by the end of the first quarter of 2025 if the merger is not approved.
Capital raise
15 August 2024 7:00 AM
Definitive Proxy Statement
- The merger agreement includes a provision for a multi-draw term loan credit facility (Bridge Loan Facility) from Nano to Desktop Metal, up to $20 million, to provide working capital and liquidity.
Worse than expected
31 July 2024 4:15 PM
Earnings Conference Call Transcript
- The company's Q2 2024 revenue was down compared to the previous year.
- The company's non-GAAP gross margins were down compared to the previous year.
- The company's adjusted EBITDA was negative.
Worse than expected
30 July 2024 4:53 PM
Quarterly Report
- The company's revenue decreased by 27% compared to the same quarter last year.
- The company's gross margin was -83%, indicating significant losses on sales.
- The company's net loss increased significantly compared to the same quarter last year.
Capital raise
30 July 2024 4:53 PM
Quarterly Report
- The company plans to raise additional capital through a combination of potential options, including equity and debt financings.
- Nano Dimension agreed to provide a multi-draw term loan credit facility in an aggregate principal amount not to exceed $20.0 million, subject to certain conditions.
Worse than expected
30 July 2024 4:36 PM
Quarterly Report
- 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.
Worse than expected
30 July 2024 4:35 PM
Quarterly Report
- The company's revenue decreased significantly year-over-year.
- The company reported a substantial net loss, primarily due to one-time non-cash charges.
- The company's GAAP gross margin was negative, indicating poor profitability.
Worse than expected
3 July 2024 4:24 PM
Merger Announcement
- The combined company expects negative cash flow for the next six to eight quarters.
Delay expected
3 July 2024 4:24 PM
Merger Announcement
- The transaction is expected to close at the end of the year, but based on delays, maybe a few months later.
Worse than expected
3 July 2024 7:32 AM
Merger Announcement
- The final purchase price is subject to downward adjustments based on transaction expenses and potential draws on a loan facility, which could reduce the value of the deal for Desktop Metal shareholders.
Delay expected
3 July 2024 7:32 AM
Merger Announcement
- The closing of the transaction is expected in the fourth quarter of 2024, but is subject to customary closing conditions, including regulatory approvals, which could cause delays.
Capital raise
3 July 2024 7:32 AM
Merger Announcement
- Nano Dimension has committed to providing Desktop Metal with a $20 million secured loan facility if the closing of the transaction extends into 2025.
- The purchase price may be adjusted based on the amount drawn from the loan facility prior to closing.
Worse than expected
9 May 2024 6:02 AM
Quarterly Report
- The company's revenue decreased by 2% year-over-year, indicating worse than expected sales performance.
- The company reported a gross loss of $2.2 million, indicating worse than expected profitability.
- The company's net loss of $52.1 million was significant, indicating worse than expected financial results.
Capital raise
9 May 2024 6:02 AM
Quarterly Report
- The company entered into an Open Market Sale Agreement with Cantor Fitzgerald & Co. to sell shares of common stock for an aggregate offering price of up to $75.0 million.
- The company may need to further increase its capital resources by issuing additional shares of its capital stock or offering debt or other equity securities.
Better than expected
9 May 2024 6:00 AM
Quarterly Report
- The company's adjusted EBITDA improved by 44% year-over-year, indicating better than expected cost management.
- Non-GAAP operating expenses decreased for nine consecutive quarters, showing better than expected cost control.
- Cash consumption decreased by 47% year-over-year, demonstrating better than expected cash management.
Capital raise
23 April 2024 7:15 AM
Proxy Statement
- The company may offer common and preferred stock, debt securities, warrants, and units of up to $250.0 million in the aggregate under a shelf registration statement.
- The company may sell shares of its Class A common stock having aggregate sales proceeds of up to $75.0 million pursuant to an at the market offering program.
- The company intends to raise capital through equity or debt financing to fund its current operations.
Worse than expected
23 April 2024 7:15 AM
Proxy Statement
- The company needs to implement a reverse stock split to regain compliance with the NYSE minimum bid price requirement, indicating that the share price has fallen below acceptable levels.
Capital raise
15 March 2024 4:12 PM
Annual Results
- The company may need to further increase its capital resources by issuing additional shares of its capital stock or offering debt or other equity securities.
- The company may not be able to obtain additional financing on terms favorable to it, if at all.
Worse than expected
15 March 2024 4:12 PM
Annual Results
- The company experienced a net loss of $323.3 million in 2023, which is worse than the previous year.
- The company's revenue decreased by 9% in 2023 compared to 2022.
- The company's gross profit decreased by $25.2 million in 2023 compared to 2022.
Better than expected
15 March 2024 7:00 AM
Quarterly Report
- The company's net loss significantly decreased year-over-year, indicating improved financial performance.
- Adjusted EBITDA showed a substantial improvement, reaching the company's strongest quarterly performance to date.
- Non-GAAP gross margins improved significantly year-over-year.
Worse than expected
24 January 2024 8:05 AM
Strategic Business Review
- The company is implementing a significant workforce reduction and restructuring plan, indicating that the current financial performance is worse than expected.
- The company is facing a downturn in the additive manufacturing industry and a softer demand environment, which are contributing to the need for these cost-cutting measures.
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