Desktop Metal Announces Third Quarter 2023 Financial Results

• Completed $100 million in cost reductions announced in June 2022 ahead of schedule
• Revenue of $42.8 million compared to $47.1 million in the same quarter a year ago
• GAAP gross margin of 4.5%; non-GAAP gross margin increased 190 basis points to 21.9%
• Year-over-year improvements to non-GAAP gross margins, operating expenses, adjusted EBITDA, and operating cash flow in third quarter 2023 – with improvements expected to continue through year end
• Cash, cash equivalents, and short-term investments closed third quarter 2023 at $108.2 million, a reduction of $19.4 million from the close of second quarter 2023 and the lowest period-over-period cash reduction since Q2 2022
• Revising full year 2023 guidance to revenue of between $187 to $207 million, and adjusted EBITDA between $(70) to $(50) million, with expectation to achieve adjusted EBITDA breakeven in Q4 2023

Desktop Metal, Inc. (NYSE: DM), a global leader in Additive Manufacturing 2.0 technologies for mass production, today announced its financial results for the third quarter ended September 30, 2023.

“Revenue in the third quarter was disappointing for Desktop Metal and also for the entire additive manufacturing industry. However, while we are dissatisfied with our top-line performance, I am incredibly proud of the progress that Team DM has made in executing our $100 million of annualized cost reductions announced in June 2022,” said Ric Fulop, Founder and CEO of Desktop Metal. “Desktop Metal continues to take aggressive steps to ensure we have sufficient capital to navigate this challenging period. There are several strong, positive currents running through our results today, which adds to our confidence in the future of Desktop Metal as a profitable, high-growth leader in additive manufacturing.

“The entire Desktop Metal team is driving to profitability on the cash we have.”

Importantly, Fulop noted that recurring revenue in the first three quarters increased 34% to $49.2 million compared to the same three-quarter period a year ago. "Despite softer revenue in the third quarter, our recurring revenue streams continue to perform well, contributing to a positive shift in adjusted EBITDA and a path towards reaching breakeven in the fourth quarter of 2023.," Fulop noted.

Third Quarter 2023 and Recent Business Highlights:

Corporate

• Continued execution of cost reduction plans with year-over-year improvements to non-GAAP gross margins, operating expenses, adjusted EBITDA, and operating cash flow in third quarter 2023
• Desktop Metal agreement with Stratasys has been terminated; company remains focused on path to profitability – with improvements in non-GAAP gross margins, operating expenses, adjusted EBITDA, and operating cash flow expected to continue through year end

Product Performance

• Pennsylvania-based FreeFORM Technologies placed orders for a DM Production System P-50 and a full fleet of metal binder jet systems, targeting metal part production in industrial, defense, medical, robotic, and consumer goods markets
• Wisconsin-based DSB Technologies has adopted the complete X-Series metal binder jetting product lineup, including DM Live Sinter software
• Launched the ETEC Pro XL, a cost-competitive premium DLP polymer printer that delivers extreme accuracy, resolution, and surface finish in a large build area with high throughput speeds
• Launched Live Monitor™, a software application that provides useful real-time data from printing systems to improve efficiency and management of a single printing system or a full fleet
• Desktop Health launched the PrintRoll™ rotating build platform for the 3D-Bioplotter®, a first-of-its-kind bioprinting tool to develop and manufacture tubular solutions for vascular, digestive, respiratory, and other channels of the body
• Signed a commercial supply agreement for Flexcera™ dental resins to be offered on Carbon 3D hardware, demonstrating progress with monetizing the Company’s DLP intellectual property portfolio

Third Quarter 2023 Financial Highlights:

• Revenue of $42.8 million, compared to $47.1 million in the third quarter of 2022 driven by lower product sales, a focus on sales of products with higher margins, and partially offset by increased services sales
• GAAP gross margin of 4.5%; non-GAAP gross margin of 21.9%, an improvement of 190 basis points from third quarter 2022
• GAAP net loss of $46.4 million, including $10.4 million amortization of acquired intangibles; non-GAAP net loss of $24.3 million
• Adjusted EBITDA of $(20.5) million, an improvement of $7.7 million from third quarter 2022
• Cash, cash equivalents, and short-term investments of $108.2 million as of September 30, 2023, down $19.4 million from the close of second quarter 2023

Financial Outlook:

• Revising Revenue expectation to between $187 to $207 million for full year 2023
• Revising Adjusted EBITDA expectation of between $(70) to $(50) million for full year 2023, with expectation to achieve Adjusted EBITDA breakeven before year end 2023

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. See “Non-GAAP Financial Information.”

Conference Call Information:

Desktop Metal will host a conference call on Thursday, November 9, 2023 to discuss third quarter 2023 results. Participants may access the call at 1-877-407-4018, international callers may use 1-201-689-8471, 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 (NYSE:DM) is driving Additive Manufacturing 2.0, a new era of on-demand, digital mass production of industrial, medical, and consumer products. Our innovative 3D printers, materials, and software deliver the speed, cost, and part quality required for this transformation. We’re the original inventors and world leaders of the 3D printing methods we believe will empower this shift, binder jetting and digital light processing. Today, our systems print metal, polymer, sand and other ceramics, as well as foam and recycled wood. Manufacturers use our technology worldwide to save time and money, reduce waste, increase flexibility, and produce designs that solve the world’s toughest problems and enable once-impossible innovations. Learn more about Desktop Metal and our #TeamDM brands at www.desktopmetal.com.

Forward-looking Statements:

This press release contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical facts contained in these communications, including statements regarding Desktop Metal’s future results of operations and financial position, financial targets, business strategy, and plans and objectives for future operations, are forward-looking statements. 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; Desktop Metals’ ability to realize the benefits from cost saving measures; 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 August 3, 2023, 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.

See notes to condensed consolidated financial statements

See notes to condensed consolidated financial statements.

See notes to condensed consolidated financial statements.

See notes to condensed consolidated financial statements.

See notes to condensed consolidated financial statements.

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, acquisition-related and integration costs, 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, inventory step-up adjustments, and acquisition-related and integration costs
• We define non-GAAP net loss as GAAP net loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring, inventory step-up adjustments, acquisition-related and integration costs, and change in fair value of investments
• We define non-GAAP operating expense as GAAP operating expense excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring, and acquisition-related and integration costs including in operating expenses
• We define EBITDA as GAAP net income (loss) excluding interest, income taxes, and depreciation and amortization expense
• We define Adjusted EBITDA as EBITDA excluding change in fair value of investments, inventory step-up adjustments, stock-based compensation, restructuring, and acquisition-related and integration costs

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.

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