DM
Desktop Metal, INC
NYSE
8-K: Desktop Metal Reports Q2 2024 Results, Announces Merger with Nano Dimension
Sentiment:
Quarterly Report
30 July 2024 4:35 PM
Desktop Metal's Q2 2024 financial results show a revenue decrease and a significant net loss, alongside the announcement of a definitive merger agreement with Nano Dimension.
Worse than expected
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.
Summary
- Desktop Metal announced its second quarter 2024 financial results, revealing a revenue of $38.9 million, down from $53.3 million in the same period last year.
- The company reported a net loss of $(103.4) million, significantly impacted by one-time non-cash 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, while non-GAAP operating expenses were $27 million, a 22% year-over-year improvement.
- Services revenue increased by 27% to $7.5 million, up from $5.9 million a year ago.
- Desktop Metal also announced a definitive merger agreement with Nano Dimension.
- The company's cash, cash equivalents, and short-term investments closed the quarter at $46.7 million, with a 40% decrease in the rate of operating cash consumption compared to the same quarter last year.
- Due to the pending acquisition, the company has removed financial guidance for the remainder of the year.
Sentiment
Score: 3
Explanation: The document presents a mix of positive and negative information, but the significant revenue decline, large net loss, and the need for a merger due to a weakening financial outlook weigh heavily on the sentiment. The positive aspects, such as improved adjusted EBITDA and cost reductions, are overshadowed by the overall poor financial performance.
Positives
- Adjusted EBITDA improved to $(13.2) million from $(15) million year-over-year.
- Non-GAAP operating expenses decreased by 22% year-over-year.
- Services revenue increased by 27% year-over-year.
- The rate of operating cash consumption decreased by 40% compared to the same quarter last year.
- The company launched the PureSinter Furnace and qualified platinum on its DM Production System.
- Desktop Health validated Flexcera Smile Ultra+ Dental Resin for dental implantology.
Negatives
- Revenue decreased to $38.9 million from $53.3 million year-over-year.
- The company reported a significant net loss of $(103.4) million.
- GAAP gross margin was (83)%, impacted by one-time non-cash charges.
- GAAP operating expenses increased to $69.1 million due to accelerated amortization and depreciation.
- The company removed financial guidance for the remainder of the year due to the pending acquisition.
Risks
- The company faces challenges due to a weakening financial outlook, causing customers to hesitate in closing deals.
- Macroeconomic factors such as rising rates and slowing capex budgets are impacting the business.
- The company is subject to risks related to the completion of the proposed transaction with Nano Dimension.
- There are risks associated with demand for Desktop Metal's products and services, rapid technological change in the additive manufacturing industry, and supply and logistics disruptions.
Future Outlook
The company has removed financial guidance for the remainder of the year due to the pending acquisition by Nano Dimension. The proposed merger is expected to strengthen the company's competitive position and preserve shareholder value.
Management Comments
- Ric Fulop, Founder and CEO of Desktop Metal, stated that the company has worked to align its cost structure with macroeconomic realities and has delivered nine quarters of non-GAAP opex reduction.
- Ric Fulop also noted that the company faced an increasingly challenging business environment due to rising rates and slowing capex budgets.
- Management indicated that customer hesitation to close deals due to the company's weakening financial outlook was a key factor in pursuing the merger with Nano Dimension.
Industry Context
The announcement comes amid a challenging macroeconomic environment impacting the additive manufacturing industry, with rising rates and slowing capital expenditure budgets affecting customer demand and deal closures. The merger with Nano Dimension suggests a consolidation trend in the industry to strengthen competitive positions.
Comparison to Industry Standards
- Desktop Metal's revenue decline of approximately 27% year-over-year is significant and suggests the company is facing headwinds compared to some competitors in the additive manufacturing space.
- Stratasys, a major competitor, reported a 1.6% revenue increase in their most recent quarter, indicating a stronger performance in the current market conditions.
- 3D Systems, another competitor, reported a 10.8% revenue decrease, suggesting that the industry is facing challenges, but Desktop Metal's decline is more pronounced.
- The adjusted EBITDA of $(13.2) million for Desktop Metal is a significant loss, while other companies in the sector have reported positive or less negative EBITDA figures.
- For example, Stratasys reported an adjusted EBITDA of $10.8 million, and 3D Systems reported an adjusted EBITDA of $(1.9) million, highlighting Desktop Metal's relatively weaker profitability.
Stakeholder Impact
- Shareholders face uncertainty due to the significant net loss and the pending merger.
- Employees may experience changes due to the merger and cost reduction plans.
- Customers may be concerned about the company's financial stability and the impact of the merger on product and service offerings.
- Suppliers and creditors may be affected by the company's financial performance and the merger.
Next Steps
- Desktop Metal will host a conference call on July 31, 2024, to discuss the second quarter 2024 results.
- The company intends to file a proxy statement with the SEC in connection with the proposed transaction with Nano Dimension.
- The company will work towards completing the proposed merger with Nano Dimension.
Key Dates
- March 15, 2024: Desktop Metal's Form 10-K was filed with the SEC.
- March 21, 2024: Nano's Annual Report on Form 20-F was filed with the SEC.
- April 23, 2024: Desktop Metal's proxy statement for its 2024 Annual Meeting of Stockholders was filed with the SEC.
- June 30, 2024: End of the second quarter for which financial results are reported.
- July 30, 2024: Date of the 8-K filing and press release announcing Q2 2024 financial results.
- July 31, 2024: Date of the conference call to discuss Q2 2024 results.
Keywords
Additive Manufacturing, 3D Printing, Merger, Nano Dimension, Financial Results, Revenue, EBITDA, Net Loss, Cost Reduction, Operating Expenses
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.
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 4:24 PM
Merger Announcement
- The combined company expects negative cash flow for the next six to eight quarters.
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
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
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.
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.
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.
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
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.
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.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.