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Desktop Metal Announces Third Quarter 2022 Financial Results

  • Revenue of $47.1 million, up 85% from third quarter 2021
  • Announced strategic collaboration with Align Technology to bring digital dentistry and workflows for printing to the mass market
  • Accelerating and expanding Strategic Integration and Cost Optimization Initiative to reduce expense structure, drive margin expansion, and prioritize path to profitability

Desktop Metal, Inc. (NYSE: DM) today announced its financial results for the third quarter ended September 30, 2022.

“Our team continued to work diligently in the third quarter to drive adoption of our AM 2.0 mass production solutions with continued traction from both customers and major strategic partners,” said Ric Fulop, Founder and CEO of Desktop Metal. “This was demonstrated by a promising new strategic collaboration with Align Technology, the market leader in clear aligners.”

Fulop continued, “Although we continue to make meaningful progress on our long-term growth strategy, third quarter results did not meet our expectations as macroeconomic environment headwinds accelerated during the quarter, leading some customers to delay purchase decisions. To address this change to our operating backdrop, we have taken decisive actions to accelerate and expand our cost optimization initiative, and will continue to evaluate opportunities to reduce our expense structure and prioritize our path to profitability.”

Fulop concluded, “Despite short-term challenges, the long-term trends supporting broad adoption of additive manufacturing and market growth to over $100 billion in the next decade remain intact, particularly for mass production. Supported by an unmatched portfolio of AM 2.0 solutions, Desktop Metal is well-positioned to continue capturing share of this growing market, and take advantage of the next stage of long-term secular growth.”

Third Quarter 2022 and Recent Business Highlights:

  • Announced strategic collaboration with Align Technology to accelerate adoption of digital dentistry in the $30 billion annual dental parts market. Align’s market-leading iTero intraoral scanners will be offered as a seamless managed service to dentists in a subscription model with recurring revenue, enabling a gateway for a connected suite of digital dentistry solutions with a workflow backed by Desktop Labs’ experienced network of dental laboratories and premium Desktop Health 3D printers and materials
  • Accelerating and expanding Strategic Integration and Cost Optimization Initiative to reduce expense structure, drive margin expansion, and prioritize path to profitability
  • Announced multi-faceted partnership with Siemens to accelerate adoption of AM 2.0 with large manufacturers for scalable production applications
  • Expanded partnership with Henkel to qualify additional industrial photopolymer resins on the Xtreme 8K
  • Actively engaged with some of the largest companies in the world on Production SystemTM P-50 while remaining steadfast in building a pipeline for this platform
  • Demonstrated monetization opportunity of IP portfolio of over 950 patents and pending patent applications with successful injunctive action and initiation of royalty-bearing license structure
  • Expanded lineup for world’s best-selling metal binder jet system with Shop System+ and Shop System Pro
  • Launched Figur G15, the first commercial platform of its kind to shape standard sheet metal on demand using patent-pending Digital Sheet Forming (DSF) technology

Third Quarter 2022 Financial Highlights:

  • Revenue of $47.1 million, up 85.1% from third quarter 2021 revenue of $25.4 million
  • GAAP gross margin of (0.7)%; non-GAAP gross margin of 19.9%
  • GAAP net loss of $60.8 million; non-GAAP net loss of $33.1 million
  • Adjusted EBITDA of $(28.2) million
  • Cash, cash equivalents, and short-term investments of $217.3 million as of September 30, 2022

Financial Outlook:

  • Fourth quarter 2022 revenue expectation between $51 to $62 million, representing revised full year 2022 revenue expectation between $200 to $210 million, or 78% to 87% growth from 2021
  • Fourth quarter 2022 adjusted EBITDA expectation between $(20) to $(26) million, representing revised full year 2022 adjusted EBITDA expectation between $(117) to $(123) million

Conference Call Information:

Desktop Metal will host a conference call on Wednesday, November 9, 2022 at 4:30 p.m. ET to discuss third quarter 2022 results. Participants may access the call at 1-888-999-5318, international callers may use 1-848-280-6460, 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, Inc., based in Burlington, Massachusetts, is accelerating the transformation of manufacturing with an expansive portfolio of 3D printing solutions, from rapid prototyping to mass production. Founded in 2015 by leaders in advanced manufacturing, metallurgy, and robotics, the company is addressing the unmet challenges of speed, cost, and quality to make additive manufacturing an essential tool for engineers and manufacturers around the world. Desktop Metal was selected as one of the world’s 30 most promising Technology Pioneers by the World Economic Forum, named to MIT Technology Review’s list of 50 Smartest Companies, and the 2021 winner of Fast Company’s Innovation by Design Award in materials.

For more information, visit www.desktopmetal.com.

Forward-looking Statements:

This press release contains certain forward-looking statements within the meaning of the federal securities laws. 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, our ability to realize the benefits from cost saving measures, and supply and logistics disruptions, including shortages and delays. 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 November 9, 2022, 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.

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share amounts)

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2022

 

2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

66,987

 

 

$

65,017

 

Current portion of restricted cash

 

 

4,072

 

 

 

2,129

 

Short‑term investments

 

 

150,268

 

 

 

204,569

 

Accounts receivable

 

 

41,390

 

 

 

46,687

 

Inventory

 

 

91,223

 

 

 

65,399

 

Prepaid expenses and other current assets

 

 

18,781

 

 

 

18,208

 

Total current assets

 

 

372,721

 

 

 

402,009

 

Restricted cash, net of current portion

 

 

1,112

 

 

 

1,112

 

Property and equipment, net

 

 

57,755

 

 

 

58,710

 

Goodwill

 

 

365,253

 

 

 

639,301

 

Intangible assets, net

 

 

225,438

 

 

 

261,984

 

Other noncurrent assets

 

 

29,073

 

 

 

25,480

 

Total Assets

 

$

1,051,352

 

 

$

1,388,596

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

29,211

 

 

$

31,558

 

Customer deposits

 

 

15,491

 

 

 

14,137

 

Current portion of lease liability

 

 

5,421

 

 

 

5,527

 

Accrued expenses and other current liabilities

 

 

31,430

 

 

 

33,829

 

Current portion of deferred revenue

 

 

16,309

 

 

 

18,189

 

Current portion of long‑term debt, net of deferred financing costs

 

 

444

 

 

 

825

 

Total current liabilities

 

 

98,306

 

 

 

104,065

 

Long-term debt, net of current portion

 

 

343

 

 

 

548

 

Convertible notes

 

 

111,657

 

 

 

 

Contingent consideration, net of current portion

 

 

1,088

 

 

 

4,183

 

Lease liability, net of current portion

 

 

18,788

 

 

 

13,077

 

Deferred revenue, net of current portion

 

 

3,778

 

 

 

4,508

 

Deferred tax liability

 

 

7,994

 

 

 

10,695

 

Other noncurrent liabilities

 

 

2,646

 

 

 

3,170

 

Total liabilities

 

 

244,600

 

 

 

140,246

 

Commitments and Contingencies (Note 17)

 

 

 

 

Stockholders’ Equity

 

 

 

 

Preferred Stock, $0.0001 par value—authorized, 50,000,000 shares; no shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Common Stock, $0.0001 par value—500,000,000 shares authorized; 317,193,388 and 311,737,858 shares issued at September 30, 2022 and December 31, 2021, respectively, 317,069,926 and 311,473,950 shares outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

32

 

 

 

31

 

Additional paid‑in capital

 

 

1,864,477

 

 

 

1,823,344

 

Accumulated deficit

 

 

(996,601

)

 

 

(568,611

)

Accumulated other comprehensive loss

 

 

(61,156

)

 

 

(6,414

)

Total Stockholders’ Equity

 

 

806,752

 

 

 

1,248,350

 

Total Liabilities and Stockholders’ Equity

 

$

1,051,352

 

 

$

1,388,596

 

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenues

 

 

 

 

 

 

 

 

Products

 

$

42,937

 

 

$

23,949

 

 

$

135,085

 

 

$

51,820

 

Services

 

 

4,149

 

 

 

1,489

 

 

 

13,381

 

 

 

3,908

 

Total revenues

 

 

47,086

 

 

 

25,438

 

 

 

148,466

 

 

 

55,728

 

Cost of sales

 

 

 

 

 

 

 

 

Products

 

 

43,639

 

 

 

20,450

 

 

 

130,454

 

 

 

46,427

 

Services

 

 

3,756

 

 

 

1,033

 

 

 

11,252

 

 

 

3,561

 

Total cost of sales

 

 

47,395

 

 

 

21,483

 

 

 

141,706

 

 

 

49,988

 

Gross profit

 

 

(309

)

 

 

3,955

 

 

 

6,760

 

 

 

5,740

 

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

 

22,382

 

 

 

19,311

 

 

 

78,357

 

 

 

45,820

 

Sales and marketing

 

 

16,204

 

 

 

13,224

 

 

 

56,299

 

 

 

29,567

 

General and administrative

 

 

18,924

 

 

 

19,833

 

 

 

62,472

 

 

 

46,821

 

In-process research and development assets acquired

 

 

 

 

 

15,181

 

 

 

 

 

 

25,581

 

Goodwill impairment

 

 

 

 

 

 

 

 

229,500

 

 

 

 

Total operating expenses

 

 

57,510

 

 

 

67,549

 

 

 

426,628

 

 

 

147,789

 

Loss from operations

 

 

(57,819

)

 

 

(63,594

)

 

 

(419,868

)

 

 

(142,049

)

Change in fair value of warrant liability

 

 

 

 

 

 

 

 

 

 

 

(56,576

)

Interest expense

 

 

(680

)

 

 

(12

)

 

 

(1,281

)

 

 

(137

)

Interest and other (expense) income, net

 

 

(1,677

)

 

 

(3,796

)

 

 

(8,443

)

 

 

(3,166

)

Loss before income taxes

 

 

(60,176

)

 

 

(67,402

)

 

 

(429,592

)

 

 

(201,928

)

Income tax (expense) benefit

 

 

(598

)

 

 

523

 

 

 

1,602

 

 

 

32,761

 

Net loss

 

$

(60,774

)

 

$

(66,879

)

 

$

(427,990

)

 

$

(169,167

)

Net loss per share—basic and diluted

 

$

(0.19

)

 

$

(0.26

)

 

$

(1.36

)

 

$

(0.67

)

Weighted average shares outstanding, basic and diluted

 

 

316,007,716

 

 

 

260,555,655

 

 

 

313,901,704

 

 

 

251,467,644

 

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

Net loss

 

$

(60,774

)

 

$

(66,879

)

 

$

(427,990

)

 

$

(169,167

)

Other comprehensive (loss) income, net of taxes:

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale marketable securities, net

 

 

(389

)

 

 

(7

)

 

 

(418

)

 

 

(11

)

Foreign currency translation adjustment

 

 

(15,866

)

 

 

(1,216

)

 

 

(54,324

)

 

 

(1,099

)

Total comprehensive (loss) income, net of taxes of $0

 

$

(77,029

)

 

$

(68,102

)

 

$

(482,732

)

 

$

(170,277

)

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

Common Stock

 

Additional

 

 

 

Comprehensive

 

Total

 

 

Voting

 

Paid‑in

 

Accumulated

 

(Loss)

 

Stockholders’

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Income

 

Equity

BALANCE—July 1, 2022

 

315,147,677

 

 

$

32

 

$

1,851,836

 

 

$

(935,827

)

 

$

(44,901

)

 

$

871,140

 

Exercise of Common Stock options

 

1,147,289

 

 

 

 

 

1,771

 

 

 

 

 

 

 

 

 

1,771

 

Vesting of restricted Common Stock

 

21,786

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

765,093

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net settlement of shares for employee tax withholdings upon vesting of restricted stock units

 

(11,919

)

 

 

 

 

(39

)

 

 

 

 

 

 

 

 

(39

)

Issuance of Common Stock related to settlement of contingent consideration

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock‑based compensation expense

 

 

 

 

 

 

10,909

 

 

 

 

 

 

 

 

 

10,909

 

Net loss

 

 

 

 

 

 

 

 

 

(60,774

)

 

 

 

 

 

(60,774

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

(16,255

)

 

 

(16,255

)

BALANCE—September 30, 2022

 

317,069,926

 

 

$

32

 

$

1,864,477

 

 

$

(996,601

)

 

$

(61,156

)

 

$

806,752

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

Common Stock

 

Additional

 

 

 

Comprehensive

 

Total

 

 

Voting

 

Paid‑in

 

Accumulated

 

(Loss)

 

Stockholders’

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Income

 

Equity

BALANCE—January 1, 2022

 

311,473,950

 

 

$

31

 

$

1,823,344

 

 

$

(568,611

)

 

$

(6,414

)

 

$

1,248,350

 

Exercise of Common Stock options

 

2,168,289

 

 

 

 

 

3,035

 

 

 

 

 

 

 

 

 

3,035

 

Vesting of restricted Common Stock

 

135,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

3,248,204

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

1

 

Repurchase of shares for employee tax withholdings

 

(68,060

)

 

 

 

 

(228

)

 

 

 

 

 

 

 

 

(228

)

Issuance of Common Stock related to settlement of contingent consideration

 

112,202

 

 

 

 

 

500

 

 

 

 

 

 

 

 

 

500

 

Stock‑based compensation expense

 

 

 

 

 

 

37,826

 

 

 

 

 

 

 

 

 

37,826

 

Net loss

 

 

 

 

 

 

 

 

 

(427,990

)

 

 

 

 

 

(427,990

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

(54,742

)

 

 

(54,742

)

BALANCE—September 30, 2022

 

317,069,926

 

 

$

32

 

$

1,864,477

 

 

$

(996,601

)

 

$

(61,156

)

 

$

806,752

 

 

 

Three Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

Common Stock

 

Additional

 

 

 

Comprehensive

 

Total

 

 

Voting

 

Paid‑in

 

Accumulated

 

(Loss)

 

Stockholders’

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Income

 

Equity

BALANCE—July 1, 2021

 

259,545,731

 

 

$

26

 

$

1,387,779

 

 

$

(430,565

)

 

$

104

 

 

$

957,344

 

Exercise of Common Stock options

 

1,615,484

 

 

 

 

 

1,576

 

 

 

 

 

 

 

 

 

1,576

 

Vesting of restricted Common Stock

 

295,599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

259,735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net share settlement related to employee tax withholdings upon vesting of restricted stock units

 

(40,299

)

 

 

 

 

(309

)

 

 

 

 

 

 

 

 

(309

)

Issuance of Common Stock for acquisitions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for acquired in-process research and development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net share settlement related to employee tax withholdings upon vesting of restricted stock awards

 

(109,150

)

 

 

 

 

(958

)

 

 

 

 

 

 

 

 

(958

)

Stock‑based compensation expense

 

 

 

 

 

 

9,951

 

 

 

 

 

 

 

 

 

9,951

 

Net loss

 

 

 

 

 

 

 

 

 

(66,879

)

 

 

 

 

 

(66,879

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

(1,223

)

 

 

(1,223

)

BALANCE—September 30, 2021

 

261,567,100

 

 

$

26

 

$

1,398,039

 

 

$

(497,444

)

 

$

(1,119

)

 

$

899,502

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

Common Stock

 

Additional

 

 

 

Comprehensive

 

Total

 

 

Voting

 

Paid‑in

 

Accumulated

 

(Loss)

 

Stockholders’

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Income

 

Equity

BALANCE—January 1, 2021

 

224,626,597

 

 

$

23

 

$

844,188

 

 

$

(328,277

)

 

$

(9

)

 

$

515,925

 

Exercise of Common Stock options

 

4,462,218

 

 

 

 

 

5,241

 

 

 

 

 

 

 

 

 

5,241

 

Vesting of restricted Common Stock

 

407,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

303,656

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net settlement of shares related to employee tax withholdings upon vesting of restricted stock units

 

(49,471

)

 

 

 

 

(454

)

 

 

 

 

 

 

 

 

(454

)

Issuance of Common Stock for acquisitions

 

9,049,338

 

 

 

1

 

 

208,988

 

 

 

 

 

 

 

 

 

208,989

 

Issuance of common stock for acquired in-process research and development

 

334,370

 

 

 

 

 

4,300

 

 

 

 

 

 

 

 

 

4,300

 

Net share settlement related to employee tax withholdings upon vesting of restricted stock awards

 

(109,150

)

 

 

 

 

(958

)

 

 

 

 

 

 

(958

)

Stock‑based compensation expense

 

 

 

 

 

 

16,167

 

 

 

 

 

 

 

 

 

16,167

 

Vesting of Trine Founder shares

 

1,850,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of warrants

 

20,690,975

 

 

 

2

 

 

320,567

 

 

 

 

 

 

 

 

 

320,569

 

Net loss

 

 

 

 

 

 

 

 

 

(169,167

)

 

 

 

 

 

(169,167

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

(1,110

)

 

 

(1,110

)

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

Nine Months Ended

September 30,

 

 

2022

 

2021

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(427,990

)

 

$

(169,167

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Depreciation and amortization

 

 

38,294

 

 

 

15,576

 

Stock‑based compensation

 

 

37,826

 

 

 

16,167

 

Goodwill impairment

 

 

229,500

 

 

 

 

Change in fair value of warrant liability

 

 

 

 

 

56,576

 

Change in fair value of subscription agreement

 

 

 

 

 

2,920

 

Amortization (accretion) of discount on investments

 

 

(305

)

 

 

2,189

 

Amortization of debt financing cost

 

 

 

 

 

9

 

Amortization of deferred costs on convertible notes

 

 

276

 

 

 

 

Provision for bad debt

 

 

1,038

 

 

 

316

 

Acquired in-process research and development

 

 

 

 

 

25,581

 

Loss on disposal of property and equipment

 

 

209

 

 

 

19

 

Foreign exchange (gains) losses on intercompany transactions, net

 

 

1,261

 

 

 

 

Net increase (decrease) in accrued interest related to marketable securities

 

 

771

 

 

 

(414

)

Net unrealized (gain) loss on equity investment

 

 

6,172

 

 

 

1,880

 

Net unrealized (gain) loss on other investments

 

 

745

 

 

 

(639

)

Deferred tax benefit

 

 

(1,602

)

 

 

(32,761

)

Change in fair value of contingent consideration

 

 

(254

)

 

 

(166

)

Foreign currency transaction (gain) loss

 

 

(59

)

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

3,166

 

 

 

(8,476

)

Inventory

 

 

(31,195

)

 

 

(11,067

)

Prepaid expenses and other current assets

 

 

(969

)

 

 

(3,096

)

Other assets

 

 

1,196

 

 

 

(118

)

Accounts payable

 

 

(2,959

)

 

 

4,243

 

Accrued expenses and other current liabilities

 

 

(3,855

)

 

 

(9,294

)

Customer deposits

 

 

2,360

 

 

 

(1,298

)

Deferred revenue

 

 

(1,589

)

 

 

1,295

 

Change in right of use assets and lease liabilities, net

 

 

(2,850

)

 

 

(340

)

Other liabilities

 

 

24

 

 

 

6

 

Net cash used in operating activities

 

 

(150,789

)

 

 

(110,059

)

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

 

(8,157

)

 

 

(4,145

)

Purchase of other investments

 

 

 

 

 

(3,620

)

Proceeds from other investments

 

 

3,155

 

 

 

 

Purchase of equity investment

 

 

 

 

 

(20,000

)

Proceeds from sale of property and equipment

 

 

6

 

 

 

 

Purchase of marketable securities

 

 

(158,404

)

 

 

(330,873

)

Proceeds from sales and maturities of marketable securities

 

 

205,650

 

 

 

163,882

 

Proceeds from capital grant

 

 

200

 

 

 

 

Cash paid to acquire in-process research and development

 

 

 

 

 

(21,220

)

Cash paid for acquisitions, net of cash acquired

 

 

(23

)

 

 

(191,146

)

Net cash provided by (used in) investing activities

 

 

42,427

 

 

 

(407,122

)

Cash flows from financing activities:

 

 

 

 

Proceeds from the exercise of stock options

 

 

3,036

 

 

 

5,241

 

Proceeds from the exercise of stock warrants

 

 

 

 

 

170,665

 

Payment of taxes related to net share settlement upon vesting of restricted stock units

 

 

(230

)

 

 

(454

)

Repayment of loans

 

 

(421

)

 

 

 

Proceeds from issuance of convertible notes

 

 

115,000

 

 

 

 

Costs incurred in connection with the issuance of convertible notes

 

 

(3,619

)

 

 

 

Repayment of term loan

 

 

 

 

 

(10,000

)

Net cash provided by financing activities

 

 

113,766

 

 

 

165,452

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(1,491

)

 

 

(56

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

3,913

 

 

 

(351,785

)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

68,258

 

 

 

484,137

 

Cash, cash equivalents, and restricted cash at end of period

 

$

72,171

 

 

$

132,352

 

 

 

 

 

 

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

 

$

66,987

 

 

 

131,676

 

Restricted cash included in other current assets

 

 

4,072

 

 

 

 

Restricted cash included in other noncurrent assets

 

 

1,112

 

 

 

676

 

Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows

 

$

72,171

 

 

$

132,352

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

Interest paid

 

$

 

 

$

137

 

Taxes paid

 

$

 

 

$

150

 

 

 

 

 

 

Non‑cash investing and financing activities:

 

 

 

 

Net unrealized (gain) loss on investments

 

$

418

 

 

$

11

 

Exercise of private placement warrants

 

$

 

 

$

149,904

 

Common Stock issued for acquisitions

 

$

 

 

$

208,989

 

Common Stock issued for acquisition of in-process research and development

 

$

 

 

$

4,300

 

Common Stock issued for settlement of contingent consideration

 

$

500

 

 

$

 

Cash held back in acquisitions

 

$

 

 

$

50

 

Additions to right of use assets and lease liabilities

 

$

10,742

 

 

$

891

 

Purchase of property and equipment included in accounts payable

 

$

1,507

 

 

$

77

 

Purchase of property and equipment included in accrued expense

 

$

 

 

$

33

 

Contingent consideration in connection with acquisitions

 

$

 

 

$

6,083

 

Transfers from property and equipment to inventory

 

$

2,470

 

 

$

 

Transfers from inventory to property and equipment

 

$

3,475

 

 

$

 

Deferred contract costs

 

$

1,341

 

 

$

 

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 expenses, acquisition-related and other transactional charges, 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 expenses, acquisition-related and other transactional charges, inventory step-up adjustments, in-process research and development assets acquired and goodwill impairment
  • We define non-GAAP net loss as GAAP net loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring expense, inventory step-up adjustments, acquisition-related and other transactional charges, in-process research and development assets acquired, goodwill impairment, change in fair value of investments and change in fair value of warrant liability
  • We define non-GAAP operating expense as GAAP operating expense excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring expense, acquisition-related and other transactional charges, in-process research and development assets acquired and goodwill impairment
  • We define EBITDA as GAAP net income (loss) excluding interest, income taxes and depreciation and amortization expense
  • We define Adjusted EBITDA as EBITDA excluding stock-based compensation, restructuring expense, change in fair value of warrant liability, change in fair value of investments, inventory step-up adjustments, goodwill impairment, and acquisition-related and other transactional charges

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 Nine Months Ended

 

 

September 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2021

 

2022

 

2021

GAAP gross margin

 

$

(309

)

 

$

3,955

 

 

$

6,760

 

 

$

5,740

 

Stock-based compensation included in cost of sales(1)

 

 

734

 

 

 

341

 

 

 

1,892

 

 

 

586

 

Amortization of acquired intangible assets included in cost of sales

 

 

5,877

 

 

 

2,515

 

 

 

17,817

 

 

 

5,841

 

Restructuring expense in cost of sales

 

 

3,085

 

 

 

 

 

 

3,126

 

 

 

 

Acquisition-related and other transactional charges included in cost of sales

 

 

 

 

 

 

 

 

1,148

 

 

 

 

Inventory step-up adjustment in cost of sales

 

 

 

 

 

 

 

 

1,496

 

 

 

 

Non-GAAP gross margin

 

$

9,387

 

 

$

6,811

 

 

$

32,239

 

 

$

12,167

 

 

 

 

 

 

 

 

 

 

GAAP operating loss

 

$

(57,819

)

 

$

(63,594

)

 

$

(419,868

)

 

$

(142,049

)

Stock-based compensation(2),(3)

 

 

12,040

 

 

 

9,951

 

 

 

41,170

 

 

 

16,167

 

Amortization of acquired intangible assets

 

 

9,069

 

 

 

4,604

 

 

 

28,522

 

 

 

11,172

 

Restructuring expense

 

 

3,085

 

 

 

 

 

 

5,086

 

 

 

 

Inventory step-up adjustment in cost of sales

 

 

 

 

 

 

 

 

1,496

 

 

 

 

Acquisition-related and other transactional charges

 

 

1,476

 

 

 

5,675

 

 

 

6,633

 

 

 

13,786

 

In-process research and development assets acquired

 

 

 

 

 

15,181

 

 

 

 

 

 

25,581

 

Goodwill impairment

 

 

 

 

 

 

 

 

229,500

 

 

 

 

Non-GAAP operating loss

 

$

(32,149

)

 

$

(28,183

)

 

$

(107,461

)

 

$

(75,343

)

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(60,774

)

 

$

(66,879

)

 

$

(427,990

)

 

$

(169,167

)

Stock-based compensation(2),(3)

 

 

12,040

 

 

 

9,951

 

 

 

41,170

 

 

 

16,167

 

Amortization of acquired intangible assets

 

 

9,069

 

 

 

4,604

 

 

 

28,522

 

 

 

11,172

 

Restructuring expense

 

 

3,085

 

 

 

 

 

 

5,469

 

 

 

 

Inventory step-up adjustment in cost of sales

 

 

 

 

 

 

 

 

1,496

 

 

 

 

Acquisition-related and other transactional charges

 

 

1,476

 

 

 

5,675

 

 

 

6,633

 

 

 

13,786

 

In-process research and development assets acquired

 

 

 

 

 

15,181

 

 

 

 

 

 

25,581

 

Goodwill impairment

 

 

 

 

 

 

 

 

229,500

 

 

 

 

Change in fair value of investments

 

 

2,052

 

 

 

4,204

 

 

 

8,493

 

 

 

4,186

 

Change in fair value of warrant liability

 

 

 

 

 

 

 

 

 

 

 

56,576

 

Non-GAAP net loss

 

$

(33,052

)

 

$

(27,264

)

 

$

(106,707

)

 

$

(41,699

)

(1) Includes $0.1 million and $0.2 million of liability-award stock-based compensation expense for the three and nine months ended September 30, 2022.

(2) Includes $7.3 million of stock-based compensation expense associated with the restructuring initiative for the nine months ended September 30, 2022.

(3) Includes $1.2 million and $3.4 million of liability-award stock-based compensation expense for the three and nine months ended September 30, 2022, respectively.

DESKTOP METAL, INC.

NON-GAAP OPERATING EXPENSE RECONCILIATION TABLE

(in thousands)

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2021

 

2022

 

2021

GAAP operating expenses

 

$

57,510

 

 

$

67,549

 

 

$

426,628

 

 

$

147,789

 

Stock-based compensation included in operating expenses(1),(2)

 

 

(11,306

)

 

 

(9,610

)

 

 

(39,278

)

 

 

(15,581

)

Amortization of acquired intangible assets included in operating expenses

 

 

(3,192

)

 

 

(2,089

)

 

 

(10,705

)

 

 

(5,330

)

Restructuring expense included in operating expenses

 

 

 

 

 

 

 

 

(1,960

)

 

 

 

Acquisition-related and other transactional charges included in operating expenses

 

 

(1,476

)

 

 

(5,675

)

 

 

(5,485

)

 

 

(13,786

)

In-process research and development assets acquired

 

 

 

 

 

(15,181

)

 

 

 

 

 

(25,581

)

Goodwill impairment

 

 

 

 

 

 

 

 

(229,500

)

 

 

 

Non-GAAP operating expenses

 

$

41,536

 

 

$

34,994

 

 

$

139,700

 

 

$

87,511

 

(1) Includes $7.3 million of stock-based compensation expense associated with the Initiative for the nine months ended September 30, 2022.

(2) Includes $1.1 million and $3.2 million of liability-award stock-based compensation expense for the three and nine months ended September 30, 2022, respectively.

DESKTOP METAL, INC.

ADJUSTED EBITDA RECONCILIATION TABLE

(in thousands)

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2021

 

2022

 

2021

Net loss attributable to common stockholders

 

$

(60,774

)

 

$

(66,879

)

 

$

(427,990

)

 

$

(169,167

)

Interest (income) expense, net

 

 

680

 

 

 

(104

)

 

 

1,281

 

 

 

(286

)

Income tax expense (benefit)

 

 

598

 

 

 

(523

)

 

 

(1,602

)

 

 

(32,761

)

Depreciation and amortization

 

 

12,692

 

 

 

6,488

 

 

 

38,294

 

 

 

15,576

 

In-process research and development assets acquired

 

 

 

 

 

15,181

 

 

 

 

 

 

25,581

 

EBITDA

 

 

(46,804

)

 

 

(45,837

)

 

 

(390,017

)

 

 

(161,057

)

Change in fair value of warrant liability

 

 

 

 

 

 

 

 

 

 

 

56,576

 

Change in fair value of investments

 

 

2,052

 

 

 

4,204

 

 

 

8,493

 

 

 

4,186

 

Inventory step-up adjustment

 

 

 

 

 

 

 

 

1,496

 

 

 

 

Stock-based compensation expense(1),(2)

 

 

12,040

 

 

 

9,951

 

 

 

41,170

 

 

 

16,167

 

Restructuring expense

 

 

3,085

 

 

 

 

 

 

5,469

 

 

 

 

Goodwill impairment

 

 

 

 

 

 

 

 

229,500

 

 

 

 

Acquisition-related and other transactional charges

 

 

1,476

 

 

 

5,675

 

 

 

6,633

 

 

 

13,786

 

Adjusted EBITDA

 

$

(28,151

)

 

$

(26,007

)

 

$

(97,256

)

 

$

(70,342

)

(1) Includes $7.3 million of stock-based compensation expense associated with the Initiative for the nine months ended September 30, 2022.

(2) Includes $1.2 million and $3.4 million of liability-award stock-based compensation for the three and nine months ended September 30, 2022, respectively.

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