Between Q1 2020 and Q1 2021, the firm increased its turnover by 234% from $3 million to $11 million, or by 35% when compared on a sequential quarterly basis. Desktop Metal’s rapid growth can largely be put down to the income generated by its EnvisionTEC subsidiary, and a dramatic 65% increase in its dental client base over the period.
The company has published its financials at the same time as fellow binder jetting 3D printer manufacturer ExOne, and its Q1 earnings fall just short of the $13 million generated by its competitor. Germany-based 3D printing firm voxeljet, which also produces binder jetting machines, reported a similar 60% hike in orders earlier this month, but with a considerably lower quarterly revenue of €4 million.
Despite Desktop Metal’s continued expansion drive, its shares have fallen by 9% during premarket trading, potentially reflecting investor concern that it reported a net loss of $59 million for Q1 2021 as well as an EBITDA of -$19.4 million.
“We are pleased with the strong start to the year. Revenue growth accelerated as we captured strong organic momentum and inorganic opportunities,” said Ric Fulop, CEO of Desktop Metal. “Continued innovation in our core business, coupled with our inorganic strategy, strengthens our ability to grow our product portfolio and expand the high-volume applications we can offer customers.”
“We are well-positioned to execute on our long-term growth strategy focused on ‘Additive Manufacturing 2.0’ for high-volume, end-use parts.”
Desktop Metal’s Q1 2021 financials
Desktop Metal reports its revenue across two segments: Products and Services, with the former generating the majority of its annual revenue. Over the course of Q1 2021, the firm’s Products brought in $10 million, which was nearly as much as the $14 million in revenue returned by the division for the whole of FY 2020, while Services generated $1 million, 30% more than the $700,000 seen in Q1 2020.
According to Fulop, the company’s $300 million EnvisionTEC acquisition allowed it to broaden its client base during Q1, and he described the reception of its Xtreme 8K and the Envision One HT systems as “spectacular.” The firm also benefited from the accelerated market adoption of its metal products, and Fulop highlighted how they’ve had a “great reception” in the automotive, oil and gas sectors.
In terms of Desktop Metal’s profit/loss figures, its financials reflect those of a firm focused on expanding its business footprint, and it spent a net $182 million on investing activities during Q1 2021 alone. Given that the company is still growing its revenue, these investments caused it to declare a net loss of $59 million over the same period, 170% more than the $22 million loss reported in Q1 2020.
However, Desktop Metal’s increased spending can be accounted for, not just within its increased revenue but in its headcount, which rose from 180 to 470 between May 2020 and May 2021. On the company’s earnings call, Fulop added that the firm has a robust return on investment strategy, and that acquisitions are necessary to meet its long-term goals.
“The team here has a background investing in getting returns out, so we do look at it as a financial exercise. We are excited about the different activities that we’ve got going on,” said Fulop. “What we’re trying to do is accelerate our timeline that we put out last year, when we initially went public, and try to get to $1 billion in a faster timeframe than our initial target.”
|Desktop Metal’s Financials ($)||Products||Services||Total Revenue||Cost of Sales||Net Profit/Loss|
Mixing organic with acquired growth
Thanks to its expanded product portfolio, Desktop Metal managed to add more new customers during Q1 2021, than it did over the whole of FY 2020. In one such case, oilfield equipment manufacturer DGB Industries has now installed one of its Shop Systems, to produce complex metal parts at reduced lead times of around 80%.
Aerospace-focused 3D printing firm 3D Composites has also adopted one of Desktop Metal’s photopolymer machines as a means of creating flight-ready parts for Boeing. Although the firm didn’t reveal how much revenue had been generated by these deals, Fulop emphasized that SME adoption represents “a real barometer” of the technology’s viability.
In terms of future profitability, Desktop Metal’s decision to acquire Adaptive3D should also enable it to access the growing elastomers market, and better support its Xtreme 8K line of DLP systems. Similarly, earlier in Q1 2021, the company worked with Uniformity Labs to develop and launch a new sinterable aluminum powder, providing users with a low-cost means of printing fully-dense parts.
More recently, the firm has opted to buy and establish its Forust and Desktop Health subsidiaries as well. While the former is set to focus on allowing the adopters of Desktop Metal systems to produce functional end-use parts from recycled wood, the latter recently received FDA clearance to 3D print dentures using its Flexcera Base resin, and is expected to become a key growth driver moving forwards.
“[Desktop Metal’s] dental shipments grew 64% year-over-year from the first quarter of 2020,” said Fulop. “More than $30 billion in dental parts are sold every year by labs to dentists, but only a small percentage are printed today. We expect that this number is going to grow considerably by 2025 to as much as 75% of the overall market.”
Planning ahead for further expansion
While other 3D printer manufacturers continue to be cautious with their guidance for FY 2021, Fulop said that he doesn’t see COVID-19 as a “major impairment” and as such, at the firm’s Boston offices “it’s business as usual.” As a result, the company has reiterated that it expects to generate $100 million in revenue for 2021, and see sequential quarterly growth throughout the year.
With regards to further acquisition opportunities, the firm ended Q1 2021 with $572 million in cash and cash equivalents, and Fulop suggested on the earnings call that Desktop Metal “will continue to target investments,” with a focus on buying up companies which “accelerate its ability to capture share of the additive manufacturing market.”
“We remain very optimistic about sequential acceleration during the second half of the year, as we launch additional products and start shipping our P-50 systems, integrate our recent acquisitions and capitalize on our expanded portfolio,” concluded Fulop. “We’re well-positioned to fast-track growth with momentum in our core business and exciting inorganic opportunities.”
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Featured image shows an engineer alongside a row of Desktop Metal 3D printers. Photo via Desktop Metal.