Earnings call transcript Q4 2022

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Operator

Good afternoon and welcome to the Shapeways Fourth Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the call to Nikki Sacks of Investor Relations. ahead. go Please

Nikki Sacks

to this welcome mode. quarter earnings remarks. XXXX question-and-answer Greetings all Shapeways participants At prepared the time, will listen-only are call. session and follow fourth in A a

conference a is As this being recorded. reminder,

this Before Securities that will everyone made Laws, call include which be to the within to this management forward-looking during are we statements started, statements meaning get Any call like Private that remind the I'd making are Securities Reform of statements of pursuant Federal contained historical Provisions XXXX. in statements. of deemed Harbor Safe statements the be to that forward-looking Act not Litigation should of fact, be

actual Our forward-looking risks undue NYSE's from involve standards growth, continued that forward-looking these recent for acquisitions, projected regarding performance, could are These financial by the place business implied you statements, assumptions. results opportunity compliance based statements. in statements. new for with offerings, impact statements on strategy, of to market quarter various these statements and upon expected our Accordingly, estimates should future the uncertainties plans listing financial and anticipated XXXX, and operating without including or and results not differ reliance first material current limitation of result those materially

close, EBITDA, There's reconciliation in can www.shapeways.com. versus results be call, on of website, Also, statements. non-GAAP schedule showing market during release this the as risks for description any obligation call financial we'll year filings, see speaks the found which available ended Shapeways measure. including by March disclaims with XX, For company's course a conference the XX, and law XX-K to broadcast forward-looking our a today, December revise of currently Information required SEC press on only report refer after adjusted to is update the issued associated uncertainties our business, today's GAAP our except non-GAAP in provided Form XXXX. please which or to company's the XXXX. annual the

On Recchi, call Officer; today, and Alberto the Chief Kress, Officer. Executive Financial Chief are Greg

to I'd Greg. now, And over call Greg? the like to turn

Greg Kress

everyone. and full year strategic us for a initiatives Thanks our discuss I'll outlook our CFO, Good and will Shapeways Alberto key for our to quarter. and update Recchi, afternoon, business fourth joining providing financial by and XXXX begin results on progress growth results then the financial fourth quarter discuss first plan. quarter and

new our fourth with as are We a we as quarter revenue our well materials, for areas anticipated which in made XXXX, us continuing positioned which X% our believe technologies These of delivered in number software with that refine pleased as we solutions software. guidance. manufacturing enhancing came include results, growth the in and focus commercializing we certifications, Notably line investments, enterprise and opportunity, platform those to our greatest growth. our offer particularly well to as

the acquisitions we In give our manufacturing offer XX pre-production and our XXXX, of XXX need extended across everything finishing. metals and and we a industries. acquisition customers of expansion that industrial successful advance materials our the we AMS, technologies including hardware certifications to integration the and than including three And they delivery manufacturing and technologies we more range design from finishes, and and of accelerated materials, Today Linear completed customers. offer which capabilities and

to range industry dollar manufacturing. manufacturers to disrupt seeking high on-demand flexible manufacturing on manufacturing project-focused an extremely Building our experience solution engineers Shapeways we compelling years from these reliable multi-trillion is ideally large provides of of customers, more the their enterprises flexible as and believe global seek having a situated solutions made needs. and investments, Shapeways for to quality,

that small deploy and required capture are their and digital to size invest medium opportunity meaningful to to own a support the capabilities. have we unlikely from manufacturers Furthermore, business capital

in an focused solution in low-volume, is speed on part competency customization and mass core Shapeways environment production of a increasingly compelling high-mix scale, delivery. at

prototyping not we low-volume production. Importantly, in limited are to

our scale, Through to our traditional support able we acquisition needs methods. their of injection with growing we gained are traditional capabilities. customers molding As linear AMS,

us allows our with customers’ customers’ to our a larger efficiently of broad and spend to capture Our portion needs. solution grow

Martin few I'd both illustrate manufacturing and to key Shapeways injection digital support like of to support Dragonfly, processes Shapeways the design designs. leveraged in to medical, leveraging started highlight in low we using their Also, just applications such for markets aerospace. particularly Whirlpool production. as achieve metal and additive recently molds in NASA industrial, production of create manufacture a parts Shapeways traditional manufacturing, drone expertise using which Project cost-effective demand which volume and in operate and also to flight-qualified Lockheed automotive,

customers Our build other from like to including are I XXX seeking companies, solutions with specific pipeline for large continues for just needs. various described, enterprise Fortune manufacturing interest growing which opportunities

to We moving are the of are orders. encouraged as customers by production qualification expand momentum, scope scaled orders their the as size and initial and

story, software. growth our particularly our of excited element commercializing is makes us other which The

one Shapeways from As key differentiators proprietary process delivery”. digitizes end-to-end which we've the discussed, software, is of the “through

necessary part Our and is low-volume, traditional manufacturers in digitize sized invest high specifically not production, offer medium the complex software their also us global a businesses. able small it enables to manufacturers, valuable but capital and quality, to to tool that for time are

enhanced of our invest capture hardware. software grow and product our more tools as validated completed launching and last which checkout a streamlined helps accessibility, commercialized capabilities process optimization, manufacturing and capabilities. their we manufacturing customer our Since in accelerated services offering, file manufacturing which have customers without This and by for manufacturing business software moving and such wallet, In can and enables short, phased offline upload, expanded online software acquisition we the year. the instant of more enabling MakerOS, Our market their auto, all them need the expand to having increased fulfilment. enable to improved rollout throughput, pricing, productivity, to We further share MFG increases with processes customer customers product. capabilities software and leverage should plan

we market of XXXX amount in the year pleased realized and reaching reception the times million. revenue six are $X.X software the prior from We with

subscriptions, opportunity capture manufacturing marketplace demand supply revenue other as and and prospects by increased to through are we partners. see and we legacy We processing stabilizing capabilities Shapeways overflow a services the with With about SaaS continue transaction generation chain business, e-commerce optimistic channels our those regard self-service focus continued and meaningful competition. fees, to growth to continue to on

focus to manufacturing We solid expect our continued business. and from contribution enterprise a see demand growth and on our software But to businesses. this is realize

for remain believe have the already this prioritizing we greatest that that have and we already move we the growth. investments we prior focused As market on on track. initiatives XXXX, believe profitable I made We our have we put the us discussed present burn the opportunity while through cash completed improving validation will

encouraged are believe have we and by well positioned We we we that momentum growth. built for the are continued

investors, stakeholders would the detail. team, of our I support. our the customers, and to in our discuss all Shapeways entire more Alberto results ongoing will now for thank like our financial

Alberto Recchi

a was our our increased guidance offering, Thanks million capabilities primarily $X.X software of performance, our The in position with Greg. contributions scaling our balance attributable on prior XXXX revenue our positive additive update expectations. in to In traditional manufacturing million and an first line compared revenues year, in increase from fourth manufacturing the to to services. I'll quarter provide give quarter, fourth of the quarter. X% provide for $X.X recap sheet the and

to XX% quarter quarter of Our gross XX% the compared in margins the in fourth fourth were XXXX.

Fourth to deliver mix. to technologies change primarily more of inflationary to product gross to quarter was a loss varied or million of margin loss top recently million the a was $X.X year. quarter in new continue compared continue year-over-year fourth of in EBITDA last a tier We and due $X.X the ramping pressures deploy adjusted

million $X.X the in year, SG&A recent primarily reflecting prior to for personal professional the expenses acquisition compared fourth increases were the quarter costs, increased and million fees. to $X.X

Island of the During largely Detroit. the City, transition completed facility quarter, manufacturing New to we our Livonia, Long York fourth in

balance of Turning marketable December XX, our as XXXX, equivalents cash, securities million. cash and sheet $XX.X to totaled our

During consolidation in normalized to to timing to We anticipated largely burn such in QX expenses premiums. the Livonia we annual completed higher as $X.X manage our D&O million a cash. deployed the insurance quarter, facility manufacturing as compared we our burn of approximately

market new near-term compared our continued to continue in go-to some anticipate invest levels. we we on historical to margins As both gross initiatives, pressure hardware and

focused cash additional burn managing cash our burn strength our sheet without continued believe profitability on improving to to allow achieving near-term raise further balance remain the us and and on will execute the on and capital. strategic We need our plan organic focus our

approval seek Exchange, the With we by with our we stockholders and intend deficiency listing into continued Details split reverse at annual determine of respect our the meeting split to our our big common Stock annual payment the stock. and price cure in to in be ratio and to compliance of our included split intend of minimum affecting York a New to a come the June. the plan proxy to on

Looking ahead million. anticipate for to $X.X of range million quarter $X.X XXXX, of revenues to be first in the we the

we we’re Greg As believe for continued well-positioned discussed, growth.

enterprise as on ramp up commercializing focused our accelerator We’re solutions the including anticipate areas manufacturing greatest opportunity, areas and offer and these those and software progresses. that the in year

the we’ve Operator? call completed now we’ll this, our remarks questions. With and for open prepared

Operator

the Greg from begin with session. Our Palm question-and-answer will We Instructions] now come question [Operator will Craig-Hallum. first

go ahead. You now may

Greg Palm

if in that ramp Yes. visibility Thanks related pipeline its terms you the confidence this related, I ramp questions in we’ll revenue or year. revenue a customer of gives maybe don’t of kind start the see year. I guess to but know the here. what for taking have outlook, new you throughout that what

Greg Kress

for joining. appreciate Hey asking thanks the guys you I Greg, question.

inside So I at the think we’re there’s things looking business. that three

optimizing to legacy that’s a we the that’s seen our And core and perspective. most channels, we’ve on First continue some pressure is line we’ve from But some work year-over-year. competition seen e-commerce right? top of where that where

is I is that position. took biggest expected here us good But was us I The forward. business, to build we enterprise traction, time really pipeline, sizable it new visibility and have find we go-to-market our thing our and order and think seeing good than pipeline this for looking more and are second the

to models guidance and out. predictable in associated working more we’re stand that. does rolling it, because on Now we’re on And our SaaS working real up have that being kind said, specifically revenue with we’re then commercializing is a with it still being the good provide And interesting get that of with last, this to confidence software. able

and we our to funnel on up tightening we focus on and at can yet. acquisition place where starting more point, aren’t value, focus more guidance. we feel to we start get at level able retention to and that on a lifetime focusing that this driving guidance be But more as providing And to provide to we’re like

gaining feel again, good guidance seeing provided we we’re like so the and business full the year those momentum do yet. that traction. inside we are haven’t initiatives across And But three we for

back amount once our because we had we considerable And that – a facility time that spent also we’ve margins gross our gross on Livonia also some just in have planned But redundancies pressure as as is we’ll say margin the had of in as consolidated. roadmap. we planned we’ve Long of for our expected this QX would we moved a of I that’s margin see structure. from of cost thing we to QX, City second have had to and Island right drop historically, facility the our gross The on more bit for little that in in just we’ll stabilization complete, getting or now

that’s to continue the executing start end of QX, we’ll be And that. able complete on to so at once

right? we’re that, our and We our also costs. that margin and to And controlling managing to our to gross all our then want be do base, able to want path cost profitability revenue, show driving by while optimizing we doing a we’re

the of you’ll And more rest throughout so year. and of see this that more

Greg Palm

Makes sense.

of how specifically, piece, And customers you of SaaS number just software maybe are viewing this sort give revenue guess associated it, with $X.X speaking, did the I million growth you On but generating software a specifically that missed I of year? amount? broadly

Greg Kress

Yes.

the We’re have. that really excited with we momentum

how starting three with retention do I we very on, it period The in acquire the things customers I features been way? do but very and has do we how value more and the a that model focused really we’re on of exciting And drive adoption just of then associated and the the revenue? you think to customers out, been customers that And you working time roll to customer second retain in strong there’s has drive that of but them. lifetime over how those kind that things effective touched was there’s those very retention functionality more been with layering by was good. on that some

but it’ll business. allows only a acquisition that better and not And additional provide the I think lines also have rollout we for for strategy feature retention, increased revenue

that so lifetime And value. should drive

more But of starting as we’ve completing moving start are – into that completed things so QX, model models right stabilize. QX, completed provide where our forward insight those and we’re to about feel And metrics right, as to to we’ve better we going. expect better now, we’re to as

to And so more see you that should as we visibility forward. expect to move

Greg Palm

Got it.

Thanks. it Okay. there. I’ll leave

Greg Kress

Thanks, Greg.

Operator

next Jim with Our Ricchiuti will question come Company. Needham from

may now You go ahead.

Jim Ricchiuti

afternoon. Good Thanks.

the wondering year gave color just XXXX. you Just exiting software you the revenue appreciate if give can the full us year QX, for the

Just trying where sense QX. for to get was a it

Greg Kress

For you’re like the why on get QX would we pull moved like. to like started year. I the – of at numbers pull my have what tongue. ramping, But little now. it ramp rest yet. asking have not you probably with higher. right those information you And those look that QX, significantly you We we that obviously can don’t me follow up just with that’s of we to provided probably can sense it’s numbers, and I so that was don’t would’ve we – do, the what so a been into we look as them we But have would’ve of tip with better as think I

Jim Ricchiuti

similar Greg, major such to in be Again, actually XXXX. just in I the question it because a – what starting or XXXX, it’s point QX for focus you point have only enterprise for I it’s QX. ending the a the know to relates would actually as useful was revenue

Greg Kress

Yes.

yet. we’re to a get we are talking point that And – I segment about right? reporting, where to provided we starting ultimately you’re haven’t think

to I be but yet. able do to year, to want think commit it’s something that that we able that throughout move haven’t we to this as been we

earnings so asking we’ll ultimately And that but ramp good looks this because more future. not that each ramping. individual to providing really provide I you’re you level call, detail, But think one are think how questions, add for like. we’re what in it’s Jim, like with that the of be where able I these we ultimately of guys initiatives that’s But want to about feedback growth about

Jim Ricchiuti

Well, so pretty say your but enterprise in you healthy. pipeline is –

there’s percentage… revenues anticipating that as So QX a some you’re from in presumably meaningful that

Greg Kress

a of that good is any that but provided haven’t we Yes, have pipeline closing. detail, we do

book to business start in percentage. And you’ll top in kind orders so that see sticky out which lot larger that of XXXX and like of that a historically we’ve grow of more the with XX% to of what customers, talked more XXXX a it we in you’ll bigger our that Like XX% represent customers customers. higher to more see see revenue, about was continues What our margin as XXX that’s enterprise those go more our revenue, finished is, right? gross of have. you with And just growing opportunity and is

And it years. be last CAGR, so call to that at several – over the continues growing let’s XX%, XX%

we to can perspective, like And more be information you sales. it’s into a so of see in and grow that that the From will what continues how it’s our piece healthy revenue looks a some business. so that translating pipeline future good, of of and it providing

Jim Ricchiuti

to how OpEx give Okay. sounds can in I’m a with to just What forward that, to is were with bit obviously of should thinking maybe on it you we little – the what us a like on us how Livonia, there help OpEx the because where go move unusual, was unusual it’s about going you sense to be also manufacturing can OpEx the basis? – a related just

Alberto Recchi

Greg? I can Maybe that take

Greg Kress

can just that. Alberto was answer I about to probably Yeah, say,

Alberto Recchi

this think you Thanks. look Yes. at I Hey, it way. should Jim. Look,

indicator also that the right, be my in felt will increase factors in And right? remarks, SG&A the in over be so to decent a will in opening of QX, probably SG&A side some QX think and expense remain contributed will I valid QX.

spending always costs From a we spillover increase. I some move So facility. fees is be of remain though any some being [ph] as the to specifically a cost in Island actually you expect of bucket a example. quarters. there’ll and related previous Even our Long which should perfect those City say out further big be other costs these perspective, being significantly, were public in the not to Professional reduce line company, personal a able restructuring to things, just related of

Jim Ricchiuti

on since thinking And be what we any should a burn along go cash lines? Alberto basis, about forward those

Alberto Recchi

Yes, this model you rest so will perhaps cash the I profitability? make here me think year. position, the let out a how the of burn do see around to couple remarks past cash help we

ongoing sufficient than with we So, balance, a I right? the right to which of support well talk the burn, which profitability. think million First strategic do more strong plan, cash, on a closed company our our the positions path also our as all, in couple liquidity year with I’ll things, normalized about a outlined, of execution and cash of provides just $XX which support to Greg second, cash

aligning said, and our while, what historically. resources highest maintain Now, our areas growth tightly to revenue opportunity levels the as drive structure margin Greg to aligned been aiming right, growth our cost we’ll they’ve managing to with keep

Okay.

we’re a cash $X burn average per quarter. to $X for of perspective, from million looking Now in solve a the million burn normalized range cash to

Okay.

the City in some City I that first insurance, D&O move and – related Island burn part the bit right. throughout to to usually again, Long last expenses mainly in to in be this did from is grow. the call Now happened, a the last of That – point happened slightly what QX of previous due overall year. Island as end and to exactly that’s good decrease out was said, expenses. the the a revenue we annual to year earnings And our will Long higher, relocation example year little that in going right. Again, cash Livonia

by the years to we compared to reduce ago, of second that able a peaks cited were XX% ago. I Okay. two

Now Again, the [ph] around again, manufacturing burn. due to looking some burn, do color above facility in we give mainly and the to expect to you land XXXX U.S. carryover prospectively some our related QX normalized consolidation to here cost

So you you this some give helps perspective. hopefully

Jim Ricchiuti

it. Got

very Thanks Okay. much.

Alberto Recchi

Sure.

Operator

Lake Our Jensen with next Capital. from come Troy Street question will

You may now go ahead.

Troy Jensen

gentlemen. kind gross does Thanks little March? up roughly little when bounce of a the and higher margins. XX-ish Hey, it’s So said color back we Do a in think Greg, move go to my QX. I and guys just are throughout XX% margin gross ties I Michigan with year? go give kind a profile Alberto, But bit us of taking just because for more like it dive mean, to Detroit QX less you I you in wanted you the can same margin question in how back think margins now the for New here. we in expensive better endorsing gross how York? than the or on it be facilities trend maybe

Alberto Recchi

Yes.

hold to in So we the XXs. strong expect margins do look, gross

to looking think a I question, at as answer use probably proxy. QX, I Right. QX would your

Now the historical which optimization and becomes of XX% high we effects our which our plan business perspective start has XXs, consolidation pointed plus from as also, mid right software is Greg out, gross a the the back revenue our And a margins represent of material levels, ripping to we manufacturing into happen will. And will that right, year, which improved as right? throughout process. a margin the

Troy Jensen

in XXXX? I software your us you to Can but you excited going a are do guidance, I software. million think I just lot What give we’re it business? know you Is million? on you to want how I’d mean, is X Perfect. And love don’t all? million? X of $X.X give All it hear, a right. number Greg, do maybe to at in mean,

Greg Kress

it business and No, about continue we excited I’m to see really software scale. the

bit to able guidance. but lifetime I and are that exceeding acquire customers there’s will throughout guidance point tell that I right? help at found bit We clearer value be that’s know want QX very something we April key it’s frustrating little Retention haven’t you see But good our and strong. expectation more few ways comfortable this a guys. because again, to remains continue providing commit feel us We've yet really provided But with to and to to we a things are more happening efficiently. a models little we into can't anything very momentum, think

growth that And is so a looks the model initiatives be to we us. to provide expect for this like more color what lot one to again as, able of newer

strong out the the hoped momentum but in we of business. into the year and year we're so, definitely played as back this have a with And things moving of had behind half lot

Troy Jensen

Understood. good All luck. right guys,

Greg Kress

Troy. Thanks

Troy Jensen

Excellent.

Operator

next Our from Noelle Dilts Stifel. will with question come

You may now go ahead.

Noelle Dilts

taking question. guys. Thanks for Hi my

past you does direct marketplace in think thoughts and for I quarters? in quarters. of that – about this in mentioned been XXXX? where stable Do leg but on from continued and do just going significant And you're pressure growth revenue this stabilized in to see guidance, perspective that should just we're you going over then another again, has that what's pattern sales steady think you've a a not break-out So the had you think any of or But know we're of sales. some business giving of that, you flat to were kind have point things at your marketplace software, we down think relatively couple expect through the of last again how XX-K sales year-over-year. looking And kind of going direct three relatively I drive kind

Greg Kress

I appreciate Noelle. joining. you Thanks Yes. guys

enterprise to services from So from and the the your growth really sales that in we one, manufacturing enterprise first answer from and see question, coming plan software. is

we've and that have the – going to I more be it's as gross we channel is and much in not push so lot the legacy models to we've to for think maintain want it, more focus talked customers, has business, strong we on know talked don't as driver we that and we ultimately forward. business. pipelines a It's competition. sensitive continue to that the drop as focus past, ball some on price that'll which of on want those to What e-commerce business, continuing now we are both right have our but from the continue to

is And go very learned software so know it. if is we've what we predictable I how drive think to

on working that. to are accelerate We continuing

could the significantly then cycle sale orders longer larger. a of have sales, on does much but the take originally qualification than had we buying based – you're tackle go that process And you're those sales the the able seeing a and complete in really is customers. month-over-month to pipeline we we from enterprise And once really solutions than thought. reps is enterprise it we're encouraging. It longer, that a on The is customer more have but are basis our sales

And us. so may driving growth had that’s second be I’m to question think where we’ll I the related for was you And have… the sorry, I

Noelle Dilts

cut, think I hit just, I you it. of you kind on

sorry, You the looks back in were here the the more stable hit was Because XQ, just in talking, have like $X.X million $X.X XQ sales on on it, I’m XQ half in the of from while on there side. it the, up been enterprise levels. It marketplace year. you on pretty million

was stable a, of like sure felt wasn’t kind of more you that maybe I level. So if

Greg Kress

our very other we’re always that’s and drive mean working some go to pieces we that business past areas. right? that I and channel are so but the that. always the drive, being harder growth of And to we of a significantly in ultimately very we’re making success where Yes, seeing drive channel, focused we’re on profitability go profitable sure right? working on prudent, harder We’re on just Yes, it’s

Noelle Dilts

more that I for anything curious on for us obviously additive trends for demand side, just you’re How, Okay. or would And notable even kind then on molding understand? with be you could to even, additive of out terms that technologies, seeing important I’m the guess sort are metal? there’s the side anything on, Thanks. various if but I that’s, the of though any, you seeing, guess demand new, point of injection any in notable just

Greg Kress

Yes.

we’ve have types and think, started metals to I those deployed wrap. all of several different year last

access without to really injection giving example, benefits using think and I a additive that production where production molds, scaled metal including create, cooling printing technology. conformal lot with processes a for very they multiple which to, good be manufacturing interesting right, molds wouldn’t is injection we’re to them of able them application a on was do Whirlpool

enterprise quite our think for about and, be also I usual, as great even we’re EOS and seen right? good of usage right? Nylon But bit those, of us capabilities us both products customers is full and and moved can to things and across that access Shapeways and started another. or one you XX that got materials giving them and access we’ve HP the to interesting may finishes into move to that When think seeing with move to get that on I think business, thing is they on they we products technologies one a core new demand continues there across have

And continue so mix. to a, good we see

Noelle Dilts

Thank Great. you.

Operator

for turn question-and-answer our closing concludes over session. Kress Greg any back to This remarks. I would conference like the to

Greg Kress

join us to We Thank for taking the Yes, me, to months. you today. everyone I just Shapeways team. look forward updates the want to thank on behalf time in providing of myself coming and additional entire the all

Operator

concluded. you presentation. is The conference now Thank attending today’s for

may disconnect. now You

Shapeways (SHPWQ) 30 Mar 232022 Q4 Earnings call transcript