Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the Markforged's Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions].

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Austin Bohlig. Austin. you, Thank

begin. You may

Austin Bohlig

I'm Markforged Austin of Investor afternoon. Director results Bohlig, Corporation. Welcome of Holding quarter call. Relations to conference Good of our XXXX second

press results We discussing the Zipori. and call and today. announced our release President on issued our Shai in With will me after the our CEO, be is active close market Assaf earnings Terem; CFO,

These other that be XXXX I'd statements, as today, and Before Markforged remind will or that differ Securities Private to during to of forward-looking statements not statements. in made contained as started, represent historical disclaims are are be and provisions could to or to forward-looking Any required intention revise call by Act facts XXXX. management risks should management's August like cause of Safe statements. deemed and making we include statements XX, that this pursuant materially. call to get that any forward-looking everyone statements to are material Litigation subject Harbor results Reform of uncertainties this statements update except estimates actual views the obligation, which law, the of be

at of can measures. also the currently be found showing which today's refer during our non-GAAP our we'll investors.markforged.com. press site, financial in available course Also, GAAP versus certain market after There's today, close to schedule reconciliation results a call, the non-GAAP release Web issued on

the turn call Shai President now I'll Markforged. to CEO Terem, and over of

Shai Terem

in not of quarter we we on I'm path to through production bring industrial on this QX And costs you, keeping managed profitability. execute us XXXX you, us second our to grow earnings thank call. as performance our of firm the team Austin. part need. point to our to a long-term well, everyone, as and joining for important, on continue our innovation Thank prudently strategy the And

in the critical time, to as more have physical resiliency manufacturing, inventories grow reduce market production demand to building Forge and long our own feels believe efficiencies The more to save their supply continues need ahead, journey identify Mark we solution a costs, chains. and and strengthen cut customers we lines. While a our while to opportunities for

capital and even upcoming our continue confident of growth in accelerate are face platforms XXXX. new conversions the the forge our grow ability releases. capabilities, projection, Demand growth in environment, especially restricting confident the we globally challenging term With while product deals is longer our in to our our for QX, of in are upcoming with expense short-term, which investments capital still to high in digital cost such, as we're close to in

our continues of regulated the future done high growth Our prospects, composite pipeline not FXXX markets Coupled within globally, with bundle newest specifically remain automotive. we about solution, jetting to but growing yet. metal printer latest the PXXXX order industrial like our customers are innovation, and aerospace excited and excite our

have we you these the new need believe production last work go-to-market I the product our hard point to we've of on accelerate look over in products new new two coming with truly that these innovations engine sharing place increase market. the addressable at multiple at quarters. innovations. forward scale and For been to years, the We

reshaping automation. their as heavily in transformation around more by and manufacturers seeing resiliency industrial investing seek flexibility world We're the supply digital chains they and

tool is their their for tell accelerates floor customers need on them. where demand us and industrial to produce that the Digital right they perfect manufacturing Our Forge ability parts

our with is recent action in trends win Tier automotive these of X a example OEM. one Just

flexibility on by QX, leader completed a reducing and savings In important automotive a reliance and the drive we very global inventory. transaction with physical strategic to cost

point initiative. This of includes and the how systems a of great of proof market metal over printers as distributed are and growing of capitalize multi-year is need growing point dozen part to network uniquely composite of positioned platforms advanced software for printers sale proactively production. industrial two our on hardware, strategic materials, This a both and of win opportunity

out print delivering the to mission fleet the the at in required of to IT real the scale this manage with by same teams we multiple strengths continue across opportunities parts competition in beat critical needed securely of win excited size systems. engineers we Markforged reliability leverage advanced future. deal, We extremely is a this time the to can software believe similar and and about to

of to customers producing systems. methods PERF polymer is and for SQP example challenges in printer produced not XD are manufacturing equipment did were a was SQP provider too faced complex an our cover parts slow machining perform. cost-effective, Another their not our value Australia. solution mining and innovations Engineering, which existing providing industrial Traditional

address their the expand FXXX, these system Markforged printer, polymer X existing XD issues compared Metal integrated They turned To to improving is print to which reduced and additive performance the SQP finish. surface our their to also significantly time capabilities. vastly while

turnaround now solutions, these can better parts production machined, With that manufacture pricing wide range offering a times. and be of cannot grade SQP

use FXXX into sectors. and aviation X The agriculture to Metal medical plans and the the company expand systems to

margins remain While guidance. grow, market efficiencies in expansion, tracking the supply mindful upper margin in of profitable sustainable resilient end chains to of XX target of more continue to gross and Non-GAAP as towards our we billion are we driving our growth. opportunity the make pursuit flexible, operational XXXX

the on remain achieve production for FXXX. track we While to scale full

we external funding. to which balance without sheet down remain operating dependency non-GAAP to remain management continue and on additional on focused capital finding a our profitability And on year-over-year were committed healthy key Capital achieving the basis. expenses, on efficiencies. working with XX% We is and

be of for second super exciting XXXX is us. up The half shaping to

which enhance introductions multiple to in contribute we current platform As accelerated new further plan should XXXX. product and our growth our

tirelessly you point get our of working right every new are accelerate I our showcase chance we'll the day where at our to meet adoption people to industrial the day investor products the fall need. to to some can't production welcome who the wait headquarters, a in of and of

of and the now I for guidance that, a more CFO Assaf With financial on Zipori, over the acting to our year. turn the performance our will remainder offer details call

Assaf Zipori

good Thank of you, note non-GAAP our Please quarter my outlook. XXXX. for evening, reflect Shai, results results financial that and covering I everyone. our be will comments the and second

press with reference, includes release earlier our our and and your website non-GAAP For commentary. this afternoon GAAP earnings our assist relations issued posted reconciliation to to investor my

So let's begin.

$XX.X with quarter $XX.X We another the quarter X% representing of second million, reaching had to of in compared XXXX. growth increase a million revenue

the We traded space. companies These with remain consistent results also for in gross compared of XX.X% XXXX. a second our of highest quarter publicly margin our generated are plan profit and among the XX.X% in to operational

have we the to the were margins continue As past, ramp in up FXXX. discussed gross we impacted of production as

start will we expand XX% are levels confident in to However, gradually that above are 'XX and beyond. that gross to historical margins

on average quarter incremental loss or down Our of expenses commitment a quarter reflect 'XX in Net in operating expenses quarter efficiencies weighted focus the share This for for of the $X.XX on outstanding of based second the $XX loss is operating XXXX. second of were XXXX, second our $XXX.X which the to on was from based took, per shares million. execution. $XX.X million and we of quarter $XX.X our million million, for improvement actions

from of activities in 'XX. $XX.X in the net half by cash decreased of half the approximately used first million first Our operating XX% 'XX or

a of working continue to revenue, expand, hope efficiencies. decrease to over capital result the our quarters expect coming cash higher We prudent utilization as and

Now to moving guidance. on our

range on to Our line of million. anticipate are QX maintaining cost weigh $XXX relatively our In QX. and seasonality the the revenue of half industry. of $XXX behavior. year in we our for mostly continue high within our revenue be million with be first with the The with capital guidance similar results of accordance Therefore, are purchasing to our expectations. to line in uncertain macroenvironment to customer's We

in to typical revenue end year-end of the expect We QX. see

of progress half execution the as of disciplined for more there our continue within in believe We margins the guidance XXXX. for upper approach we our to to now to that we Considering to range opportunity is strong of the year. be expenses through XX% operating the year, XX% the plan to gross mid first

operating of to in operating as expenses as percentage absolute of resulting million terms, as year-over-year, a $XX expect range million. We loss revenue in in expected lower to the $XX decline well a

loss expected Accordingly, and between $X.XX per be share EPS share. $X.XX to our per is

that confident puts technologies to innovative accomplishments date on right new us and release consistently are to ongoing to our We commitment profitability. focus path execution the and

for That call concludes our up prepared remarks today. Operator, questions. please open the

Operator

Thank you.

Our Hallum. will We question a from Palm now session. be Craig is of [Operator question-and-answer Greg conducting Instructions] first

Unidentified Analyst

for [indiscernible] Danny more just today. touch market. for I the to in seeing of wanted is what Thanks taking the you're out first Greg maybe on This questions.

well. as Maybe talking lower visibility customer more peers cycles to into some about outs. revenue maybe got lengthening the guidance You've and it'll tie push sales

that for flatter a a QX. So, broad of QX kind sequentially range leaves

to right are end you guess, What to go or now? needs for year there I to So QX fiscal top right of get that guidance range? what or out seeing wrong

Shai Terem

I capital we to also decision-making our do disappear. agree, increase with we we investment don't on in year-over-year. see lengthening, longer. previous that higher With the think in equipment of see see that see in capital that the is cost pipeline that, And a we continue general; years, materially and we than that is but takes deals increasing

definitely deals especially so some actually improving. the on strategic very if saw, on coming. side, environment based especially continues the about what's And it's And good improve we feel the to of we

in are optimistic between that is and the currently expect and the about the very are half year second so half, predicting seasonality for grow we we versus more we So traditional half us, did. first think I the of And first side. we to half second the the

Unidentified Analyst

big continue Maybe to kind there I FXXX the quarter? Did on know was see production that? go should one the How we on you quarter that improving. costs more a margin. Is look trend that? point last at of gross into talking

Shai Terem

call, we I actions the gross margins to the think 'XX. stable. plus to go right taking With that, said in in XX% fairly back are it's the we

on based in track on right and the see what it's So, then direction. we going

Unidentified Analyst

supposed of have one yet. on QX or that Maybe those started got to of early what? on betas or early have kind feedback shipping in If we're one last just you shipping QX, they start system? TXXXX, What

Shai Terem

this year. perspective have system a them going it's orders good we to of before, half of excitement, were for material XXXX, shipping yet. to in still a them successfully revenue ship We definitely in not said lot of started We but be And think book I expect don't as the XXXX. and in the there's from to able build we second

Operator

is question The of next Credit Shannon from Suisse. Cross

Shannon Cross

a question. follow-up had I on the PX

terms curious are today, how the you they receive order telling when it think of delivery? XX? to if Just order people could I about trying that pipeline, through In I'm ramps

Shai Terem

to probably QX. QX going be If today, it's or you order

Shannon Cross

should be so that or So decent second I from on a, uplift. year-over-year get there Is some we first 'XX? to guess basis, from quarter a fair when

Shai Terem

uplift PXXXX. Yes. with 'XX mean, 'XX we I on expect over the That's correct.

Shannon Cross

budgets? I metal have ideal come seen are replacing weigh, your the customers CapEx seen you customers versus you you parts your share given as any to gain manufacturing options? metal tighter And Have maybe guess, as systems for

Shai Terem

us think manufacturing on automotive see solution such, to customers, what is see fortunate reduce on customers the the meet reduce the is come And months a for to between especially we capture somewhere is manufacturing and per equipment. packaging success them automated this was are able our nine with to And we I of find our most very customers sometimes they and the cost that, to as trying biggest which So by and of very from store, floor. problems I significant. the to three the is costs. part others, with XXx, the where RI lot

Shannon Cross

state of was I CapEx share I what challenges metal options the, the that. it guess demand to are no, rates? tighter understand you the trying out Yes, terms or given of seeing, you're sort steady gaining figure do budget is is, that in think people vis-a-vis I in

Shai Terem

mean traditional manufacturing? versus You

Shannon Cross

printers or question some again, you've I'm ask. price given of right the metal the your your maybe AM even others? are the gain traditional if shift versus terms there to Well, seen options just not the share in products differentials out it's maybe And any versus side. perspective, of wondering on that a from

Shai Terem

That's fine.

on I been at And communicating. compared we based think that look industry. growth that yes to that you the growth rate believe we should that have rate the the we've is the answer had

Assaf Zipori

to of that is mainly the by that It that we're CNC. these line think used replacing manufactured parts used. I all are be traditionally bottom

composite replace So, sometime we with them parts. sub

manufacturing. and metal parts. from with continue good And this more actually Sometime we we more them a time share replace market that solution, grow, think our very I quarter. metal to metal we take With each and traditional had we do we

Shannon Cross

mean, balance balance. then, announced And you're but I'm business? a guess obviously about Just structure at know the you velo of do is you're, rough general, burning I a a run cash a large your going the to about capital trying general I think this silly point your and your you sufficient have I just sheet, still cash, have what offering. cash just sheet but obviously your, cash, patch? you're to feeling how question, balance you comfort of in level industry in bit level is given need a through

Shai Terem

have and expected you we top-line to a operational our on maintain lot more continue of improve to to confidence We see focus our plans ability as cash efficiencies. is in and utilization volume our as

and meet So our ability targets. balance to we feel our very our comfortable sheet with

Assaf Zipori

still profitability to very sheet that we easily we're external operate to and raise business. to the allow I to We us have balance before Maybe get just would when need see the there, we any going get a healthy funds add. don't

Operator

Brian of next question William Blair. The is from Drab

Brian Drab

Can of which the the and flat equipment, leading sales into you of good generally when that someone's obviously going you, are it gives next is the about utilization being view to a I'm indicator machines I looks one. good with a just quarter-over-quarter. connected the buy consumable know like wondering,

Just trend it's comment can cetera? what of all of importantly, the in your what, field utilization utilization the equipment sense flat, your at is like about for the increasing trend, and you et more if

Shai Terem

definitely. to Yes, utilization The increase continues quarter-over-quarter.

system. all course of see we active So the

of XX% we all And see I know, are there. you connected, over our solutions say the utilization them. As would of all

So we quarter-over-quarter. to increase continue

that going softness think consuming of going I a the we many trend we're and continues people higher to having from year-over-year than to coming, little the to tough we're Europe is it which bit increase. of still utilization first and a there Europe these times to bit even was I to but continue materials. more get or and second levels are still think and improve see little the FXXX in days, see we growth see And of as year other much

Brian Drab

And then you around previous question flow breakeven? related comment reach expect updated the company can to cash you just an when of to kind the provide

Shai Terem

comfortable the with that Yes, very absolutely. We feel communicated. plans we have

we and us very with control cost that of great into ahead have have, opportunity are we We the heading is excited XXXX.

our terms of previous and to the communications that had we've So, cash. plan our we the confirmed ability and breakeven in manage

Brian Drab

than And that's, I guess are or end to be specific, like of 'XX more saying? we specific

Shai Terem

Correct. no. No,

in the end the reaffirming are operational cash quarter no flow last There's 'XX of change of there. and We breakeven positive in 'XX.

Brian Drab

I just needed there. a reminder

lot. Okay. That's a perfect. Thanks

Operator

no I like closing over for are questions time. There floor at further turn comments. would the to Shai to Terem this back

Shai Terem

joining Thank the much very you for us call. for quarterly everyone

quarter. to see forward next you. you Thank Looking

Operator

joining concludes This today's Thank us. event. for you

disconnect now lines. may You your Goodbye.

Markforged Holding (MKFG) 10 Aug 232023 Q2 Earnings call transcript