MKFG - Earnings call transcript Q4 2023 | Markforged Holding Corporation

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Operator

Greetings, and welcome to the Markforged Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Austin Bohlig, Director of Investor Relations. Thank you, Austin.

You may begin.

Austin Bohlig

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

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

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

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

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

Shai Terem

on the our for everyone, execute as us year continue momentum you, our positive We XXXX a we thank and strategy. joining Austin, you, with earnings QX Thank call. ended to

fourth the end target sequential by system delayed drive of our sales, sales revenue to of encouraged high the While environment helped challenging growth the in which CapEx XX% XXXX range. quarter, XXXX we're

our cost effective also we operating and to Thanks cost targets. XXXX gross exceeded margin controls,

as the FXXX, we revenue increase a chain Digital growth aided believe we PXXXX to the and path Source by combined on on factory manufacturing the reduce continued positioned of drive new focus efficiency, growth supply remain resiliency. control, floor We are With profitability. expense to with adoption the additive for costs we well improve clear and on

customers and of QX, positive is existing Alley Alley augmenting fleet Digital printers of with During between saw the This Project a Automation the Project and Automation parts. partnership our with globe. win acquired originally additional example DIAMOnD relationship the expanded part across XXX OnyxPro certified with XXX sale momentum Source, One XXXX. for platform in our strategic an printers, is on-demand printing, we OEM DIAMOnD many XD of

secure control include We software this validation. expansion management, that our cloud-based fleet capabilities quality validates believe and part

Source. Automation are our about We vision advancing with for excited the Digital and partnership Alley

repair remained XXXX, maintenance, As industrial opportunity production and to Forge. the to need the build tailwind, point move we or driving digital supply and MRO, from for resilient operations, a need manufacturers physical to massive opportunity. reduce market more The provides enter a costs to Digital chains inventory demand and of bring

achieving increasingly customers goals. platform is global Forge these for powerful recognize Our Digital a the

Dairy own by use Danone challenges leading printed across the Danone's and The both and essential of ease availability their to their XX Poland disruptions, example. plant XXX first domestic issues. Forge The is Digital due to equipment by industrial parts strength milk the factory market from more farms. printers Danone, and Danone spare plant chain supply reduced cost estimates, maintenance dairy year, the Europe, parts. XX% sourced plant-based a at Polish turn In another and response, product boards. In reliability, manufactured provides Factory center and facility production nutrition, XX great faced dairy in leader Byrne other to distributed this in countries. than are global processing products Byrne

current the including be to XXXX, look rates. As spending result capital into challenging we environment continue the of will elevated environment, ahead macroeconomic as interest expect we a

guidance, half efficiencies we believe and by the XXXX are our for positioned operations. go-to-market our these driven persisting growth in second While our in utilization we robust challenges, of improving fleet year, the new through factoring product introductions,

Markforged new Innovation in the half At to about we year, factory shipping the November year. drive remain Vega this schedule for Formnext the demand excited launched Digital first FXXX, for X products: forward. strong and of We're initial last FXXX, floor on the begin Source. and we in important

we growth the the company's history. new in product with FXXX, portfolio rest strongest products, in new industrial our PXXXX beyond. and lineup, alongside These XXXX products position and us these With the for entered of printer the XXXX help

health network and our using strong as the composite even more the are in will streams We utilization solutions. with growth pleased drive in remained result our factory grow the The revenue which strong robust in sales, up global year-over-year we metal and advanced applications solve helped rates subscription revenues customers XX% services XXXX. believe in of printer XXXX. floor recurring Furthermore,

on our with XXXX, confident profitability. not focused on achieving and working exceeded sequential just can navigate fourth environment we margin which operational Coupled particularly by continued cash improving challenging efficiencies laser margins, and expansion We're gross encouraged we strong macroeconomic in with capital in the the non-GAAP prudent quarter. balance improvement but also remains management growth sheet. are XX% and Markforged throughout

with PXXXX chains. printers, strengthen the manufacturing to proven critical FXXX, the that Digital and the of meet Source, industrial FXXX, rest needs industry our factory believe strongly along resiliency We and the supply

capital realize our growth As platform positioned to expenditure we the opportunities well global are that loosen, substantial provides. constraints

Financial been very that the pleased Officer. since named Before Acting I'm Officer turning company Zipori, call Assaf XXXX Chief Financial the to over, Chief announce May has

key member acumen has leadership financial in continued business to profitable leadership a organization. I'm confident years us the help growth. to our Assaf his and demonstrated X on repeatedly head of and over has our for to journey team our executive been

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

Assaf Zipori

inspired to industrial our to production been for joining Thank now fourth financial by am of be will point confident in I've am that grateful the quarter good evening, for our our of team, and our need. and said, of the and Markforged, power fantastic and you, bring opportunity, this mission I Shai, I year XXXX. full the Since to technology team's ability covering drive With I our everyone. success. results

reflect results my that and comments note our outlook. non-GAAP Please

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

XXXX Revenue was and for million, from So fourth QX XX% let's of down up XXXX. begin. quarter XX% the from QX $XX.X

by Our revenue impacted rates. a performance challenging was environment high interest still with macroeconomic

also adoption subscription-based rate That with a in fourth growth services, XX% software are which the of consumable impacted we predominantly decline pleased year-over-year year-over-year to are and that system our quarter. revenues hardware tied purchases. sales the The said, drove in new

is which of from million midpoint but Total in above revenue the $XXX our XXXX. was down $XX.X guidance, million,

high momentum, range to XXXX. the our a margin positive enhancing XX.X% compared Gross end up is operational further. was quarter for This margin efficiencies guidance quarter representing for impacted for is and of of the was the by was in from XXXX. even in this X% mix margins margin sustain in above XX.X%, to product our scaling gross which up us XXXX business margin goal and Gross A fourth positively efficiencies. XX.X%, XXXX expansion, expansion a of key operational XX.X%

expenses million million, This $XX.X the for XXXX. in XXXX, $XXX.X OpEx optimize $XX.X an Operating ongoing the $XXX.X from to reduce a utilization. is of operating efforts were fourth quarter and in of quarter from expenses XXXX expenses result reduction fourth million Operating million. of cash representing the million down were of full year XXXX, $XX.X in our down improvement our

from improvement loss for XXXX, million fourth Operating the of the $XX was quarter an quarter million $XX.X of in fourth XXXX.

for $XX in loss full from the XXXX operating showing was improvement $XX.X Our an loss a XXXX. year of million million,

between we This operating rate rightsize effort further annual leverage build our XXXX. expected run to an XXXX, million took is decrease in structure. steps our $XX.X million and to $XX operating multiple and In to of expenses cost

loss quarter loss in the of Net 'XX $XX.X from million QX of $XX.X an was XXXX. million, a in improvement fourth

$XX.X XXXX improvement $XX.X in for XXXX. the million, full was loss net year an Our from million

the average based million. of shares loss outstanding our for per Fourth $X.XX share quarter XXX.X was weighted quarter on

Our loss for of compared XXXX. full per share $X.XX year share $X.XX 'XX full for year loss per the to a was the

efficiencies, operating in XX% of decreased operational net activities XXXX. 'XX by million and improving capital approximately in our by Driven cash from used $XX.X working

and from the Our million short-term by million $XXX.X the last equivalents investments were the cash, cash year, quarter day $X.X down at of of third end the of XXXX.

and We modest OpEx in higher expect our improve XXXX efficiencies. cost expansion, capital continue strong to working as cash to of utilization control gross result a margin revenue,

commitment on to balance between our our dedication and to for Before success market strong guidance, balance want to moving innovation, sheet. underscore to maintaining a our capacity a successful striking our I

million to million. to anticipate We fiscal Now the moving on to range $XX year be revenues within our of XXXX guidance. $XXX

or While half see of year, throughout accelerated the growth our of second in the headwinds persistence opportunity acknowledges guidance we the the macroeconomic year. an

the of underpinned introduction new is the and Our outlook products FXXX. by particularly

In seasonal driven the the our line QX. new second in products. encouraged see sequential as we expect indicated decline expect growth quarter industry with prospects in previously, we the in normal modestly of first sequentially trends, percentage to mid-teens are revenue And by revenue grow half year to and the I by

to new continue we margins ramp to be lines. to within of gross expect our range as XX% the We up product XX%

make and in anticipate we structure to We continue disciplines the in impact also realignment XXXX. undertook cost will expense that XXXX positive a

for in the the $XX.X of loss operating non-GAAP million year. expect range $XX million to We

expect share. we to non-GAAP per to EPS be the loss $X.XX a results range Finally, year full of the for $X.XX in

the today. That prepared concludes Please remarks our for questions. open call up

Operator

first Street Jensen [Operator question Our Markets. is Lake with Troy Instructions] from Capital

Troy Jensen

of know It's here on great first guys that, Cantor all, now. I Fitzgerald you know congrats in but QX. results guys

on [indiscernible]. too CFO the you position. Assaf,

Shai Terem

Troy. you, Thank

Troy Jensen

I XX remind FXXX. you, of us just revenues I please? difference things Shai, pricing you between FXXX the again, hit, for want the Can to timing two and and guess,

Shai Terem

Yes.

the the up more are on the half this FXXX. such, year XX. as the expensive the it the and to first And somewhat and between FXXX half. see to ship we ramping is of XX track So slightly mid-range start the to first starting in It's revenue than still

to the half. meaningful I think become it's in more second going

Troy Jensen

pretty Okay. Formnext, Perfect. I it remember at the was launch impressive.

with So that. good luck

I'd Digital update. also to then get Source, an And love

and of contribution, they're also You on mentioned awesome. kind timing it. I update Alley, But using revenue kind Automation would think that be any of

Shai Terem

trying than for how to excited are adoption. be around potential year, focus into We're their excitement engagement this from and with their platform customer expected. solution going the We're But And this The very them Source. Sure. Digital into bigger scale. to this work actually will on on to we is with collaborate problems. we on much we a focusing

material So I contribution we the is think Source, not but expected would we much stronger the from year, traction before. revenue than see this Digital

Troy Jensen

annuity people stream? the going for system to kinks are just revenue, then putting of and there? to you sales there's that of there's working Are them ongoing me, be an Remind the be out going all up-front still kind to kind on partners

Shai Terem

So there's revenues Digital few the a from Source.

definitely the I think will is because expansion solution it their one the into sell customers customers. through first our

of will So come later expansion utilization in it, to see core we and of and of the itself, the that adoption our addition see platform solution. to we revenue the from expect in years. But

Troy Jensen

Awesome. Okay.

I think good everyone. I've floor luck, and the see to got

Shai Terem

you, Thank Troy.

Operator

question next Our Palm is Craig-Hallum. with Greg from

Danny Eggerichs

I Greg This on back for Wanted hit Alley, $X original looked think I that is printers. those in Eggerichs to XXX that -- today. was around million for for Danny on sale Automation

got expected guess, I was million you to to quarter was sale $X mentioned it out? that last that that around say this million is of that of one this $X hit them to a So you And contribution? pushed kind fair

Shai Terem

So actually not.

units stated, we XXX OnyxPro. is As this of

other than deals in smaller you it's play. are we are the working still suggested. on big And So what

are So a I think is Alley strategic Automation they we play, in still great are partnership happy for us. but

supporting Digital into in that's into chain serious partnership of serious here Source. adoption looking see adoption are automotive. the We supply a We the

kind a hundreds So across in partnership the users now. of and continuous direction of with by it's us, it's for important going right adoption very

Assaf Zipori

I'd asking then you're it's answer deal, Assaf. a the for like if dependency have terms that this chime a seeing Danny, if the no. is minute. sequential on in growth you're we to in And of

QX this from QX deal. are to rate with that growth the We irrespective sequentially seen very pleased of we've

Danny Eggerichs

the steady? cycles, the Obviously, environment. demand But months, and wondering That's new last all? contract couple over of kind seen kind just guess Okay. some products. expecting sales hitting challenging you've in they're seeing. the of perfect. second them staying of on maybe especially recovery half, you've the of broader kind at what with seen just of driven I what maybe still you're overall Or whether Just kind by

Shai Terem

Yes.

as continue. definitely there And a this great path of you on you But stated, think challenging QX will QX, can reduce are everyone ready be can that think I as help But floors we times I'm bid show see here that to when can factory millions there's going other and for are between cautiously the and focus industrial factory them out And optimistic a an we I go them still like have there's challenged and it's environment, and companies to improvement, in with. floor. this, being resiliency. have we is there. solution in and that challenged, cost as

still getting better. tough, think it's but I it's So slightly

Operator

Brian Our next question Drab is William from with Blair.

Unknown Analyst

see timing is just going Pat the full for wondering with is FXXX, the for help we inventory since [ And on high-cost of that? year? margin keep the quick I'm some This burn-through follow-ups ] I'll where Brian. you Horton have associated with expansion if that after with it this. the to do that's

Assaf Zipori

we're you've the but And the And should XXXX, be FXXX we to XX% QX. introduced of we range need very with in also ramp during steel. to up we the help, expansion is It to up. seen margin pleased the XX% as ramp within that FXXX gross we going that

term, ramp-up we've of gross XX% will us take XXXX, be margins XX%. there. FXXX and guidance longer why targeting but we're time are under it of So the to still within FXXX. mid-XXs, the to the get we That's given this to

Unknown Analyst

on sounds you It and the leave there, congrats good. and to right. talk All soon. it I'll quarter

Assaf Zipori

Thank you.

Shai Terem

Thank you.

Operator

Capital Our with Lake is next from Stephan question Jacob Street Markets.

Jacob Stephan

vertical-wise? you we'll on just Assaf, bit just the FXXX? strength out, there. start could are Maybe where announcement. talk the the you a Maybe seeing start little congrats Just official about to

Shai Terem

Yes, one. I try would this

end-use So builders. ], being MRO and machine Two to composite know, fixtures solid into and but around Mark XX around with more costs, probably factory solution digital look, tools used and the reduce advanced into core solution floor to you in our inventory [ is move more used into GX parts be

into and higher like Now more need material of lot on It's on FXXX a steroids lot where XX an lot productivity, on parts customers with the this And is need of the they a versatile even composites. goes functionality. this side. of advanced our bigger time, And a the with picture. automation,

Formnext to So big in We to since the advantage great launch this of in solution. demand demand. going and diligently see the fulfill is work November, that this we're

And gets very also, solution of value to the very, attractive. customer is that the it is point very price this high. And the

it that even will tough I think materially be believe to total of the growth a solution. will with increase solution So be in environment, CapEx an our we that attractive able revenue

Jacob Stephan

services. of strength what strength? Okay. Got kind it. was And lies subscriptions? maybe just maybe customer touch maybe on, just but adoption strong where driving the kind Or the talk Automation Alley? the you Is further could obviously, Growth a of about in like what's subscription that growing year-over-year, by --

Shai Terem

Sure.

X drivers. I So there are think

to higher years. of solution think The first ago, I has a start remember, that our with one, solution years with our couple multiple food we you are of partnership us for because given to are into transitioned subscribe that, if effect our we of value more to the choosing multiple And and customers subscription-based years. going to customers to to to the choosing this And real see solution. more they and

The deeper we're into floor. manufacturing going second is and deeper the

achieve adoption. path these increase is is we the Our recurring really customers we the enterprise need increase significant if important simulation, and level service, very the the this profitability. And it's to if the require to multiyear around that cetera. have, they which differentiation solution, contracts, where And our see level software our this in of -- this revenue, around it's of SLA, et in which also sometimes are

Operator

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

Shai Terem

much, for very joining the you to quarter us fourth you. and call, Thank you one. we'll see the everyone, Thank in next

Operator

today's conference. concludes This

you your may You Thank for participation. disconnect lines time. at your this

Markforged Holding (MKFG) 7 Mar 242023 Q4 Earnings call transcript