MKFG - Earnings call transcript Q1 2024 | Markforged Holding Corporation

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Operator

Hello, and welcome to the Markforged First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Austin Bohlig, Director of Investor Relations. Please go ahead.

Austin Bohlig

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

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

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

President Also issued measures. turn a in which schedule call today's refer the call, during CEO now the found at currently showing Markforged. and results versus Terem, can after of release over on There's market GAAP be non-GAAP close our I'll reconciliation also non-GAAP certain press the available course to website investors.markforged.com. to of financial we today, Shai our

Shai Terem

for the call. Thank a foundation execution, started ahead. strong joining on XXXX setting Austin, us our QX you, thank We XXXX earnings you, and for everyone, solid year with

remained optimistic in has very to opportunities products about challenging encouraging, half. environment and bring QX, in the response product are the been second will our the these we the new While market CapEx

we of providing costs additive increase are by adoption improve With made factory believe FXXX, patent Markforged. want for on Composites. as we infringement to Source, the manufacturing XXXX, with resiliency. Continuous and April chain to an efficiency, Digital the XX begin positioned reduce of In lawsuit drive XX the growth claims update we the supply PXXXX and FXXX, We the eliminated patent on court against the floor

Last seek district through found amount and had X all judgment court. the infringed strongly the $XX.X available overturn and disagree million. intend forthright including awarded the in claims remaining X to jury damages on with of to month, monetary process. that seeking to in We're appeals motions of verdict exploring overturn result with Markforged options, the a the verdict We in the this

XX. print sizes XD high and by the factory speeds nearly floor. factory first market believe of to compared large Markforged is bring initial product and opportunity is been to there management the parts are we the on cost help printing feedback of delivers the controls, the future pivotal effective factory reached cash which new at remain manufacturing floor. massive and and FXXX that up that that a its a with FXXX to to twice to prudent manufacturers line, point company innovative floor. We as twice are are print predecessor, Customers continue focused printer additive as next-generation print need, shipping We industrial the to the continue of production adoption excited the drive in encouraging. to has milestone QX for quality ability mission-critical our units, already The about with the fast

their towing is accelerated our with fact, one application or production FXXX. on line customers, assembly ] of part In Toyota first [

a remain and massive Forge production. our build to the continue quarters scale floor. pipeline QX, in cost to demand enter our secular we As Manufacturers FXXX up deliveries reduce the believe Digital We driving to factory grow, need the to coming Digital as we and supply continues remain FXXX opportunity on accelerate the plan on and more we tailwind, the Forge. chains, enhances for meaningfully resilient

world design additive of and provides Digital automation and produce factory at customer vacuum a a the customized goals the for Markforged engineering specializing across achieve a customers example lines. increasingly manufacturing Forge solution robots Our recognize on another Harvestance to lightweight and as powerful production in Harvestance, to the grippers floor. more. needed platform and these strong collaborative

Forge for Only the meet certification. these required with the strength Harvestance parts could impact structural and Digital

grippers' With the X and combination to reinforcement, X repairs. and delivery reducing time conventional strength weight XX% Onyx improving the fiber Harvestance machine when weeks days of carbon reduced from to compared

grippers to automation larger technologies the they to robotic as customized turned to factory and tailwind industrial demand large is print the robots. FXXX across We heavy the carry tools growing industrial as tools, robust palletizing Forge a for similar Digital floor. such Harvestance with for for continue spread applications needed when believe and pick

believe our on to driven remain out the we half We currently, we achieve the at second our in we utilization go-to-market products, plan the in for positioned improving of robust operations. ahead, are of and Looking growth year. XXXX new the beginning XXXX, efficiencies by targets laid fleet

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

Assaf Zipori

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

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

So was XXXX. Revenue QX down begin. for million, quarter of which $XX.X first is XX% let's from the

were, positively rates. by driven utilization a up environment scaling rates by up macroeconomic and in X by from efficiencies operational revenue to which growing software services from points first Our positive year-over-year interest revenues margin challenging XXXX. revenue with year-over-year. mix. performance product in flat healthy That goal even in and the are momentum, and with margin quarter us for of quarter impacted percentage QX efficiencies revenue, A the expansion XX% our our first and for quarter. essentially, points the remained high quarter. Gross we rate business Consumable XXXX with largely the is XX.X%, said, continues of X.X sustain representing be was the operational lower subscription-based key adoption impacted enhancing system further. was Furthermore, to was pleased this increase This

Operating optimize expenses in to our were expenses $XX.X efforts improvement million in $XX.X first of XXXX. of million quarter the cash This result the first XXXX, operating ongoing utilization. from reduce and our down quarter is a of

lower rate in operational run our expect efficiencies to quarterly We our further OpEx XXXX.

improvement a in the of of Operating OpEx quarter an Furthermore, XXXX loss of XXXX. we million continue in first $XX.X our lower loss the $XX.X $XX.X the was XXXX, million from QX to Net of million quarter an improvement take XXXX. loss to for in in was XXXX. million, from first actions first $XX.X quarter

and the quarter outstanding million. Driven operational loss share $X.XX QX on from our of used an by $X.X is capital XX% of First million. of per in net was improving quarter the approximately improvement This for was quarter average activities in cash weighted XXX.X efficiencies, based shares working XXXX. our operating first

higher controls result expect strong our QX in our capital as payout, improve as efficiencies. a utilization working and we of cash cash expansion, compensation result While OpEx annual XXXX revenue, utilization to of increase a expect to in margin gross we

$X.X cash QX the XXXX. Our million equivalents million end from $XXX.X end down at cash and from were of QX, the of

the Composites to verdict the provide want We QX in lawsuit impact XXXX. financial related Continuous to also

cash awarded and to disagree the we all actively payment our First, No jury. to by reflect has $XX.X strongly overturn GAAP this we judgment results. with verdict. In we options made a the are the this accrued million possible verdict, XXXX, been is exploring from at of point. This excluded QX expense non-GAAP

or Given guidance of the that does beyond publicly we Continuous not revenue commenting as described ongoing our may relief payments future XX royalty post-trial on which nature through include limited matter stated. our what seeking Furthermore, reflect additional press we on dispute, Composites this take, have in in April additional may release. are this action motions

Now guidance. moving on to our

beginning reiterating are XXXX guidance at the We year. the of our provided

fiscal of continue throughout $XXX macroeconomic revenues year acknowledges anticipate XXXX year. headwinds of which to the within range the to We be million, persistence $XX million to the

revenue and FXXX. by half, digits to we in an QX, accelerated the opportunity to for quarter-over-quarter expect products We underpinned and growth see second the grow new particularly mid-single continue in

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

We upper end the are path encouraged our half by of of our strong a QX gross our and to margin and revenue the performance in the guidance see second year. in performance

$X.XX which per turn, to we We expect of in the be a range expect in loss full for $XX $XX.X an million the a for range year, is non-GAAP the from improvement loss to of share. $X.XX EPS million In operating results year in XXXX. to non-GAAP of million loss $XX.X the

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

Operator

[Operator Instructions] is from coming Our Greg question first Palm from today Craig-Hallum.

Greg Palm

stands just of capacity shipments initial us year. more the Kind in the of end give some the maybe you you the sense on playing pipeline And of sort how of sort color is of today? bit like? a little Congrats that see on out what throughout Can FXXX. where

Shai Terem

Sure. quarter strong. the We're ship Greg, good I would from able of initial FXXX. and great. really this is to say customers first the was some The feedback

print building We able as and Toyota, even and as discussed more, prints were up that long suggested. The expected before. the pipeline out parts, to as customers very, amazing is right very have we of including great maybe box, we

be to this product. our flagship expect We next

would course say, take production the And to so regular supply from meet And probably up to demand. quarter be the it's that, I perspective, will a X a far, correctly. going or we're until going the business. building in of it's after

Greg Palm

run demand maybe of at theoretically, year? kind a QX this rate you full matches be So where could supply by

Shai Terem

Potentially, Yes. even earlier.

Greg Palm

Yes.

regarded in of verdict, lines a Just can of scenario and what us product trying Okay. worst-case or to ones just those is you patent And comprised here. what of? but affected get some the maybe sense to are the which can give the geographies sense you say are can't what like cognizant

Assaf Zipori

Thank is Assaf. you, This Greg.

to it's additional of we we can I to give are that this verdict we the evaluating and point, U.S. at So and to an just verdict, is are -- or all can tell hardware. we -- to our And you with this related this related is And specifically, related in the the This hardware. based overturn fiber indications. options. the technology more claim disagree carbon continuous the too our doing IP our we're obviously to within is the And whatever acting is early

Operator

Your next from Drab coming William question is Brian Blair. from

Tyler Hutin

is on This Brian. for Tyler

kind they a in pretty Just year-over-year Can looks your international looking it at explain had and impact. you performance, Asia? like just on of going what's large Europe

Shai Terem

Sure.

-- going think we're at and of see EMEA U.S. the and well mean, the to I that very industry, of I you quarters from regions a think see, world. And least couple see the these the we saw changes go Americas ago, these soon the do the in on in it's I as cycles And we based I pipeline around my now we the common, but recovery that APAC. see. believe what with

Tyler Hutin

the That's when FXXX customers new Okay. be customers? shipments, did that shipped And will kind in go those so, to great. to they start put if orders? to mostly out of And existing

Shai Terem

Sure.

usual, to continue make sure I a product, ship So our field. the we demand, the closer printer printers the we and the to of to new that release as customers, we would create say, network channel some to partners bring when the to first distribution

as well. would So QX in that continue

to solution. initial are orders, of the customers Toyota. to due are We're new both. that customers expecting But from like existing there capabilities lot also the the a QX are of And coming see usually, expanding

Operator

[Operator from next from coming Capital. is Instructions] Our Street Troy Jensen Lake question

Troy Jensen

you're on start results just you -- decent a that for Maybe on love success Digital Shai, with tough environment. and here stories traction just just getting to I'd Source in the maybe I'd customer more Gentlemen, and hear congrats you, or...

Shai Terem

Sure.

how actually the enterprise And business see accounts, they're to and the the model their new especially floors. great looking are to do Digital really say, we supply around engagement that manufacturing going chain I would and MRO Source. for way which change So around their

solution. the the stage, very going and we current but around their and of so at model engagement of it. material to revenue there's be are the the we As not solution But base adoption high, changing is very encouraged far, into expected,

Troy Jensen

were we But Okay. full Perfect. here I dilutive a well range guys you for probably to are I the more at going margins, you dilute guys year would bit get where I I once I on QX. press is above And gross it. FXXX's little in would the accretive assume just the margins. mean, gross shipping volumes, to not it's launch now. to mean, FXXX

kind QX are you be in square of the with think Or help just the do So -- sense can for FX on launch? maybe a kind where circle just gross you going to margins me. of

Assaf Zipori

a Yes. Troy, that's great question.

expansion reach long-term And our with targets in very ability a in to margins. of to seen terms are QX. indication that encouraged mid-XXs great that's of we've We the our gross

look it, gross up we're we put release And our and the are that way market. are ramping the that at about the on margins. at PXXXX, we more a facing all release Now to of FXXX. We're we pressure the that moment, tough to going is technologies, could still and

So we have to the the range with the up opportunity as the be provided, see that there's currently, comfortable picking closer year. we we range feel to of in revenue but upper second half an

Troy Jensen

And much the legal know about much you numbers? I how -- you has tell about in OpEx the us been how talk Great. just Can can't litigation. historical expense

Assaf Zipori

Historic, we're out. I it say would not something… not breaking it's

Troy Jensen

the OpEx this just to dramatically lack G&A lower of or just... is wondering mean, expense lower, be you because have drives XXXX litigation, I to give get going what I'm can't color. guess of it, I Yes, I hopefully? that's the but going just you're if

Assaf Zipori

Yes.

Shai Terem

there's Troy, think, few more I -- a sorry.

Troy Jensen

Go ahead, Shai.

Shai Terem

There with is, believe, over a has what do directly. time. to litigation more we that the lower we that doing to the It operational going drive OpEx are are few nothing activities

Operator

the back closing end question-and-answer or our of session. like for further floor to any the I'd reached We turn comments. over

Shai Terem

call. for QX much, you everyone, earnings very joining the for us Thank

to in Thank forward quarter. Looking see the next you. you

Operator

and you. conclude webcast. Thank That today's does teleconference

today. line may wonderful at thank and You your for you day. time, disconnect We your a have this participation

Markforged Holding (MKFG) 8 May 242024 Q1 Earnings call transcript