Desktop metal announces third quarter 2021 financial results
Boston--(business wire)--desktop metal, inc. (nyse: dm) today announced its financial results for the third quarter ended september 30, 2021. “during the third quarter, we delivered solid financial performance underscored by sequential top-line growth of 34% and more than a 180 basis point sequential increase in our gross margins as we continue to gain scale,” said ric fulop, founder and ceo of desktop metal. “our core metals business was a key driver of this success, which demonstrates the market enthusiasm for our am 2.0 technology. with the addition of exone, and the production system p-50 progressing toward initial shipments, we are extremely well-positioned as we head into our second year as a public company to deliver on our long-term commitments to shareholders.” third quarter 2021 and recent business highlights: production system™ p-50 targeted for shipment in the fourth quarter of 2021, with final component procurement and assembly of initial builds underway tripled manufacturing capacity dedicated to the p-50 to accelerate production ramp and meet early demand closed exone acquisition, cementing leadership in additive manufacturing for mass production acquired meta additive, adding next-generation functional binder technology focused on reducing part shrinkage during sintering acquired aidro, adding am design expertise and volume production capabilities for manifolds, hydraulics, and fluid power systems launched a new initiative under desktop health to develop a dental and biofabrication parts platform with additive manufacturing at its core, including completing initial acquisitions towards this strategy third quarter 2021 financial highlights: revenue of $25.4 million, up 34% sequentially from the second quarter of 2021, and up 907% year-over-year from the third quarter of 2020, including strength in core metals business and contributions from recent acquisitions gaap gross margin of 16%; non-gaap gross margin of 27%, increasing more than 180 basis points sequentially from 25% in the second quarter of 2021 net loss of $66.9 million, including $15.2 million of in-process research and development assets related to acquisitions adjusted ebitda of $(26.0) million strong liquidity position with cash, cash equivalents, and short-term investments of $423.9 million as of september 30, 2021 outlook for full year 2021: revising expectation to between $92 and $102 million of revenue for 2021, excluding the effects of acquiring exone, representing between 459% to 519% year-over-year growth from 2020 revising expectation to between $(80) and $(90) million of adjusted ebitda for 2021, excluding the effects of acquiring exone conference call information: desktop metal will host a conference call on monday, november 15, 2021 at 4:30 p.m. est to discuss third quarter 2021 results. participants may access the call at 1-844-826-3033, international callers may use 1-412-317-5185, 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 https://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 acquisition and integration of the business and operations of exone and other acquired businesses, and risks associated with supply and logistics, 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 15, 2021, 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, 2021 2020 assets current assets: cash and cash equivalents $ 131,676 $ 483,525 short‑term investments 292,272 111,867 accounts receivable 22,878 6,516 inventory 32,730 9,708 prepaid expenses and other current assets 7,250 976 total current assets 486,806 612,592 restricted cash 676 612 property and equipment, net 23,782 12,160 capitalized software, net 179 312 goodwill 262,343 2,252 intangible assets, net 180,129 9,102 other noncurrent assets 17,679 4,879 total assets $ 971,594 $ 641,909 liabilities and stockholders’ equity current liabilities: accounts payable $ 16,985 $ 7,591 customer deposits 2,876 1,480 current portion of lease liability 2,677 868 accrued expenses and other current liabilities 20,686 7,565 deferred revenue 5,530 3,004 current portion of long‑term debt, net of deferred financing costs 1,030 9,991 total current liabilities 49,784 30,499 long-term debt, net of current portion 680 — warrant liability — 93,328 contingent consideration, net of current portion 4,528 — lease liability, net of current portion 7,802 2,157 deferred tax liability 7,881 — other noncurrent liabilities 1,417 — total liabilities 72,092 125,984 commitments and contingencies (note 16) stockholders’ equity preferred stock, $0.0001 par value—authorized, 50,000,000 shares; no shares issued and outstanding at september 30, 2021 and december 31, 2020, respectively — — common stock, $0.0001 par value—500,000,000 shares authorized; 261,914,672 and 226,756,733 shares issued at september 30, 2021 and december 31, 2020, respectively, 261,567,100 and 224,626,597 shares outstanding at september 30, 2021 and december 31, 2020, respectively 26 23 additional paid‑in capital 1,398,039 844,188 accumulated deficit (497,444 ) (328,277 ) accumulated other comprehensive income (loss) (1,119 ) (9 ) total stockholders’ equity 899,502 515,925 total liabilities and stockholders’ equity $ 971,594 $ 641,909 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, 2021 2020 2021 2020 revenues products $ 23,949 $ 1,888 $ 51,820 $ 6,113 services 1,489 639 3,908 1,988 total revenues 25,438 2,527 55,728 8,101 cost of sales products 20,450 3,732 46,427 18,145 services 1,033 1,096 3,561 3,365 total cost of sales 21,483 4,828 49,988 21,510 gross profit/(loss) 3,955 (2,301 ) 5,740 (13,409 ) operating expenses research and development 19,311 9,195 45,820 31,362 sales and marketing 13,224 2,542 29,567 9,994 general and administrative 19,833 5,415 46,821 11,004 in-process research and development assets acquired 15,181 — 25,581 — total operating expenses 67,549 17,152 147,789 52,360 loss from operations (63,594 ) (19,453 ) (142,049 ) (65,769 ) change in fair value of warrant liability — — (56,576 ) — interest expense (12 ) (98 ) (137 ) (253 ) interest and other (expense) income, net (3,796 ) 94 (3,166 ) 995 loss before income taxes (67,402 ) (19,457 ) (201,928 ) (65,027 ) income tax benefit 523 — 32,761 — net loss $ (66,879 ) $ (19,457 ) $ (169,167 ) $ (65,027 ) net loss per share—basic and diluted $ (0.26 ) $ (0.12 ) $ (0.67 ) $ (0.41 ) weighted average shares outstanding, basic and diluted 260,555,655 159,968,300 251,467,644 158,120,826 desktop metal, inc. condensed consolidated statements of comprehensive loss (unaudited) (in thousands) three months ended nine months ended september 30, september 30, 2021 2020 2021 2020 net loss (66,879 ) (19,457 ) $ (169,167 ) $ (65,027 ) other comprehensive (loss) income, net of taxes: unrealized gain (loss) on available-for-sale marketable securities, net (7 ) (43 ) (11 ) (70 ) foreign currency translation adjustment (1,216 ) — (1,099 ) — total comprehensive loss, net of taxes of $0 (68,102 ) (19,500 ) $ (170,277 ) $ (65,097 ) desktop metal, inc. condensed consolidated statements of stockholders’ equity (unaudited) (in thousands, except share amounts) 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 ) balance—september 30, 2021 261,567,100 $ 26 $ 1,398,039 $ (497,444 ) $ (1,119 ) $ 899,502 three months ended september 30, 2020 accumulated other legacy convertible common stock additional comprehensive total preferred stock voting paid‑in accumulated (loss) stockholders’ shares amount shares amount capital deficit income equity balance—july 1, 2020 100,038,109 $ 436,533 29,937,631 $ 3 $ 21,254 $ (339,832 ) $ 48 $ (318,527 ) retroactive application of recapitalization (note 1) (100,038,109 ) (436,533 ) 128,792,027 13 434,672 — — 434,685 adjusted balance, beginning of period — — 158,729,658 16 455,926 (339,832 ) 48 116,158 exercise of common stock options — — 184,447 — 131 — — 131 vesting of restricted common stock — — 1,751,364 — 2 — — 2 stock‑based compensation expense — — — — 1,895 — — 1,895 common stock warrants issued — — — — — — — — net loss — — — — — (19,457 ) — (19,457 ) other comprehensive income (loss) — — — — — — (43 ) (43 ) balance—september 30, 2020 — $ — 160,665,469 $ 16 $ 457,954 $ (359,289 ) $ 5 $ 98,686 nine months ended september 30, 2020 accumulated other legacy convertible common stock additional comprehensive total preferred stock voting paid‑in accumulated (loss) stockholders’ shares amount shares amount capital deficit income equity balance—january 1, 2020 100,038,109 $ 436,533 26,813,113 $ 3 $ 16,722 $ (294,262 ) $ 75 $ (277,462 ) retroactive application of recapitalization (note 1) (100,038,109 ) (436,533 ) 128,100,821 13 436,520 — — 436,533 adjusted balance, beginning of period — — 154,913,934 16 453,242 (294,262 ) 75 159,071 exercise of common stock options — — 499,256 — 267 — — 267 vesting of restricted common stock — — 5,252,279 — 6 — — 6 stock‑based compensation expense — — — — 4,228 — — 4,228 common stock warrants issued — — — — 211 — — 211 net loss — — — — — (65,027 ) — (65,027 ) other comprehensive income (loss) — — — — — — (70 ) (70 ) balance—september 30, 2020 — $ — 160,665,469 $ 16 $ 457,954 $ (359,289 ) $ 5 $ 98,686 desktop metal, inc. condensed consolidated statements of cash flows (unaudited) (in thousands) nine months ended september 30, 2021 2020 cash flows from operating activities: net loss $ (169,167 ) $ (65,027 ) adjustments to reconcile net loss to net cash used in operating activities: depreciation and amortization 15,576 6,525 stock‑based compensation 16,167 4,228 change in fair value of warrant liability 56,576 — change in fair value of subscription agreement liability 2,920 — expense related to common stock warrants issued — 43 amortization (accretion) of discount on investments 2,189 34 amortization of debt financing cost 9 14 provision for bad debt 316 333 acquired in-process research and development 25,581 — (gain) loss on disposal of property and equipment 19 10 net increase in accrued interest related to marketable securities (414 ) 162 net unrealized loss on equity investment 1,880 — net unrealized gain on other investments (639 ) — deferred tax benefit (32,761 ) — change in fair value of contingent consideration (166 ) — changes in operating assets and liabilities: accounts receivable (8,476 ) 2,881 inventory (11,067 ) (1,958 ) prepaid expenses and other current assets (3,096 ) 1,082 other assets (118 ) — accounts payable 4,243 (5,800 ) accrued expenses and other current liabilities (9,294 ) 430 customer deposits (1,298 ) (547 ) deferred revenue 1,295 (1,094 ) change in right of use assets and lease liabilities, net (340 ) (243 ) other liabilities 6 — net cash used in operating activities (110,059 ) (58,927 ) cash flows from investing activities: purchases of property and equipment (4,145 ) (1,039 ) purchase of other investments (3,620 ) — purchase of equity investment (20,000 ) — purchase of marketable securities (330,873 ) (62,810 ) proceeds from sales and maturities of marketable securities 163,882 94,116 cash paid to acquire in-process research and development (21,220 ) — cash paid for acquisitions, net of cash acquired (191,146 ) — net cash (used in) provided by investing activities (407,122 ) 30,267 cash flows from financing activities: proceeds from the exercise of stock options 5,241 255 proceeds from the exercise of stock warrants 170,665 — payment of taxes related to net share settlement upon vesting of restricted stock units (454 ) — proceeds from ppp loan — 5,379 repayment of ppp loan — (5,379 ) repayment of term loan (10,000 ) — deferred financing costs paid — (400 ) net cash provided by (used in) financing activities 165,452 (145 ) net (decrease) increase in cash, cash equivalents, and restricted cash (351,729 ) (28,805 ) effect of exchange rate changes (56 ) — cash and cash equivalents at beginning of period 483,525 66,161 restricted cash at beginning of period 612 612 cash and cash equivalents at end of period 131,676 37,356 restricted cash at end of period 676 612 total cash, cash equivalents and restricted cash, end of period $ 132,352 $ 37,968 supplemental cash flow information: interest paid $ 137 $ 253 taxes paid $ 150 $ — non‑cash investing and financing activities: net unrealized loss on investments $ 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 $ — cash held back in acquisitions $ 50 $ — additions to right of use assets and lease liabilities $ 891 $ — purchase of property and equipment included in accounts payable $ 77 $ — purchase of property and equipment included in accrued expense $ 33 $ 79 contingent consideration in connection with acquisitions $ 6,083 $ — taxes related to net share settlement upon vesting of restricted stock awards in accrued expense $ 958 $ — forgiveness of ppp loan $ 3,376 $ — 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, 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, acquisition-related and other transactional charges included in general and administrative expenses and change in fair value of warrant liability we define non-gaap operating loss as gaap operating loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, acquisition-related and other transactional charges included in general and administrative expenses and change in fair value of warrant liability we define non-gaap net loss as gaap net loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, acquisition-related and other transactional charges included in general and administrative expenses and change in fair value of warrant liability 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, warrant expenses and transaction costs associated with acquisitions 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, 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, 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, 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, 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. 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) 2021 2020 2021 2020 gaap gross margin $ 3,955 $ (2,301 ) $ 5,740 $ (13,409 ) stock-based compensation included in cost of sales 341 68 587 220 amortization of acquired intangible assets included in cost of sales 2,515 — 5,841 — non-gaap gross margin $ 6,811 $ (2,233 ) $ 12,168 $ (13,189 ) gaap operating loss $ (63,594 ) $ (19,453 ) $ (142,049 ) $ (65,769 ) stock-based compensation 9,951 1,894 16,167 4,227 amortization of acquired intangible assets included in cost of sales 2,515 — 5,841 — amortization of acquired intangible assets included in operating expenses 2,089 160 5,330 484 acquisition-related and other transactional charges included in general and administrative expenses 5,675 — 13,786 — in-process research and development assets acquired 15,181 — 25,581 — non-gaap operating loss $ (28,183 ) $ (17,399 ) $ (75,344 ) $ (61,058 ) gaap net loss $ (66,879 ) $ (19,457 ) $ (169,167 ) $ (65,027 ) stock-based compensation 9,951 1,894 16,167 4,227 amortization of acquired intangible assets included in cost of sales 2,515 — 5,841 — amortization of acquired intangible assets included in operating expenses 2,089 160 5,330 484 acquisition-related and other transactional charges included in general and administrative expenses 5,675 — 13,786 — in-process research and development assets acquired 15,181 — 25,581 — change in fair value of investments 4,204 — 4,186 — change in fair value of warrant liability — — 56,576 — non-gaap net loss $ (27,264 ) $ (17,403 ) $ (41,700 ) $ (60,316 ) 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) 2021 2020 2021 2020 net loss attributable to common stockholders $ (66,879 ) $ (19,457 ) $ (169,167 ) $ (65,027 ) interest (income) expense, net (104 ) 12 (286 ) (651 ) income tax benefit (523 ) — (32,761 ) — depreciation and amortization 6,488 2,050 15,576 6,525 in-process research and development assets acquired 15,181 — 25,581 — ebitda (45,837 ) (17,395 ) (161,057 ) (59,153 ) change in fair value of warrant liability — — 56,576 — change in fair value of investments 4,204 — 4,186 — stock compensation expense 9,951 1,895 16,167 4,228 warrant expense — — — 211 transaction costs associated with acquisitions 5,675 — 13,786 — adjusted ebitda $ (26,007 ) $ (15,500 ) $ (70,342 ) $ (54,714 )
