Massachusetts-based industrial 3D printer manufacturer Desktop Metal (DM) has released its financial results for the second quarter of 2024.
These are the first quarterly figures the company has published since announcing a planned $183 million takeover by Nano Dimension last month.
During the Q2’24 investor earnings call, DM CEO Ric Fulop offered new insights into the motivations behind the deal. He outlined that the company has been actively seeking a merger with multiple companies over the last two and a half years, amid “concerning” sales performance and a weakening financial outlook.
Failing to complete the deal with Nano Dimension could lead to a “fatal prognosis” for Desktop Metal, Fulop added.
In Q2’24, Desktop Metal recorded revenue of $38.9 million, a 26.9% decrease from $52.3 million in the same period last year. Revenue also fell 4.1% from $40.6 million in the previous quarter.
Despite working “tirelessly” to align its cost structure with the “macroeconomy realities,” Q2’24 saw DM’s operating loss grow to -$101.3 million. This represents a 108.8% Y/Y increase from a loss of -$58.5 million in Q2’23. Losses grew 105.2% from -$49.4M in Q1’24.
According to Fulop, this poor performance has been driven by an increasingly challenging business environment characterized by rising interest rates and slowing capital expenditure budgets.
The CEO believes the proposed combination with Nano Dimension “represents the best path forward” for Desktop Metal and its stakeholders.” He argued that the merger offers key benefits that will “strengthen our competitive position and preserve shareholder value,” leading to profitability.
New insights into Nano Dimension and Desktop Metal merger
The planned takeover is set to create what Nano Dimension CEO Yoav Stern has called a “larger, more diversified global innovative company.” This will reportedly generate “long-term value creation for shareholders.”
Worth approximately $183 million, or $5.50 per share, the deal represents a 27.3% premium on Desktop Metal’s closing price and a 20.5% premium to the 30-day VWAP as of July 2, 2024. The transaction may be adjusted to $4.07 per share or as little as $135 million in total.
According to Fulop, the last one and a half years have seen significant pressure exerted on DM’s financial position. The company’s results have been trending downwards, with their FY 2023 revenue of $189.7 million representing a 9.3% decrease Y/Y from $209.0 million in FY 2022.
This has seen the firm take significant action to cut costs. In January, DM announced a $50 million cost-reduction plan which saw the company reduce its workforce by 20%. At the end of Q1’24, the company delivered nine consecutive quarters of OpEx reduction.
Despite these efforts, DM’s poor financial position is limiting its ability to invest in growth and innovation. According to Fulop, customers are hesitant to close deals due to the company’s weakening financial outlook, making it difficult to reach profitability targets.
This has been viewed as a “clear signal that we needed to take action,” explained Fulop. “[It] became increasingly apparent that remaining a stand-alone company with a constrained balance sheet was not a viable long-term strategy.”
Fulop also highlighted the widespread lack of profitability across public 3D printer manufacturers. “Not a single one of the public companies in additive manufacturing has achieved meaningful profitability or scale.” This underscores the need for a “bold move” toward consolidation to “maximize the equity value to our shareholders.”
According to Fulop, the past two and a half years have seen DM discuss potential combinations with ten different companies. This includes Stratasys’ deal to acquire Desktop Metal. The merger was terminated after 78.6% of Stratasys’ shareholders voted against the move in September 2023.
Fulop noted that none of the other potential combinations resulted in actionable offers or deals that the board deemed superior to remaining an independent company. While there was hope in Q1’24 that market recovery would result in more hardware sales, it became clear in Q2 that a deal was needed “to protect the value of the equity.”
While the Nano Dimension deal has been approved by the boards of both companies, the merger is subject to the approval of Desktop Metal’s stockholders.
In the earnings call, Fulop emphasised that completing the merger is a matter of life and death for the company. He stated that failing to close a transaction with Nano Dimension, and its strong balance sheet, may lead to a “fatal prognosis in results for our company’s existence.”
Fulop believes the merger represents the “best path forward” for DM shareholders, offering benefits that will strengthen its competitive position and create long-term shareholder value. As of Q2’24, the only alternatives to a merger would have reportedly distorted much of the company’s equity value, putting its customer base at risk.
The Desktop Metal CEO contends that the deal will create a well-capitalized company with increased scale and operational efficiencies, providing a “clear path to profitability.” He is confident that the new combined company will become a “true leader in the additive manufacturing space, allowing it to better serve customers and “accelerate the industry’s transition into mass production.”
Desktop Metal’s Q2’24 financial results
Desktop Metal reports its revenue through two segments: Products and Services. Q2’24 saw the Products segments report a revenue decline compared to Q2’23, however services revenue grew.
| Revenues $ Thousands | Q2’24 | Q2’23 | Y/Y change (%) |
| Products | 31,411 | 47,398 | -33.7% |
| Services | 7,521 | 5,888 | +27.7% |
| Total Revenues | 38,932 | 53,286 | -26.9% |
The products segment generated $31.4 million in revenue, down 33.7% Y/Y from $47.4 million in Q2’23. This represented an 11.8% decrease from $47.4 million in the previous quarter. Desktop Metal experienced weak hardware sales in Q2’24, driven by macroeconomic conditions including high interest rates and lower CapEx budgets.
Services generated $7.5 million in revenue, a 27.7% increase from $5.9 million in Q2’23. Services revenue increased 50.8% Q/Q from $5.0 million in Q1’24.
Overall, the company’s gross margin was -83%, down from -5.4% in Q1’23. Net loss for the quarter came to -$103.4 million, a 108% increase from $49.7 million in Q2’23. Net loss grew 98.6% from -$52.1 million in the previous quarter. Both results were impacted by one-time noncash charges related to accelerated amortization and depreciation on certain intangible and fixed assets.
In Q2’24, DM launched the new PureSinter Furnace. Unveiled for the first time at RAPID + TCT 2024, this product offers high-purity, one-run debinding and sintering of metal parts. The first unit has been sold to Texas-based manufacturing service provider AmPd Labs.
DM also announced that Wisconsin-based Evology Manufacturing has installed a fourth Figur G-15 Digital Sheet Forming system. Evology is an ITAR-registered full-service contract manufacturer with over 30 years of experience in additive and conventional manufactory.
Due to the pending merger with Nano Dimension, DM will no longer provide financial guidance for the rest of FY 2024.
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Featured image shows Desktop Metal 3D printers. Image via Desktop Metal.
