Fathom Digital Manufacturing financials show 133% revenue growth

On-demand manufacturing service provider Fathom Digital Manufacturing (FTHM) has revealed that its revenue grew by 133.1% in Q4 2021. 

Fathom’s first financials since it went public on the NYSE, reveal that it generated $44.3 million in revenue during Q4 2021, more than twice the $19 million it brought in over Q4 2020. According to the firm’s CEO Ryan Martin, this rapid growth was due to “increased penetration among its existing base,” as well as the gaining of multiple new clients, which together yielded “several multi-million dollar orders.”

“Fathom’s strong fourth quarter and full year 2021 financial results reflect the increasing demand for our comprehensive on-demand digital manufacturing services,” said Martin. “Our scalable, technology-agnostic platform for prototyping and low-to-mid-volume production uniquely positions Fathom to accelerate new product development and manufacturing innovation, for some of the largest and most innovative companies in the world.”

A selection of 3D printers in FATHOM's expansive technology offering. Photo via FATHOM.
Fathom’s Q4 revenue growth was largely driven by CNC Machining, but it sees strong growth ahead for its other services too. Photo via Fathom Digital Manufacturing.

Fathom’s Q4 2021 financial results 

Broadly speaking, Fathom reports its revenue across five key product segments: Additive Manufacturing, Injection Molding, CNC Machining, Precision Sheet Metal and ‘Other Revenue.’ Over the course of Q4 2021, the firm’s best-performing division was CNC Machining, which brought in $14.2 million, accounting for 32% of its total. 

This 5.7-fold increase compared to Q4 2020, was largely driven by the five CNC Machining acquisitions Fathom made in FY 2021, although its CFO Mark Frost was keen to point out on its earnings call, that even without these deals, its overall revenue still rose by 18.4% on an organic basis during the quarter, owing to its strong service demand and growth strategy execution. 

The company’s next-highest revenue generator in Q4 2021 was Precision Sheet Metal, which brought in $13.9 million, around 138% more than it did in Q4 2020, followed by Injection Molding at $9 million and Additive Manufacturing at $4.5 million. Frost added on the call that the former two segments enjoyed an “uptick in shipments” during the quarter, due to the realization of cross-selling opportunities. 

Elsewhere, on the profitability front, Martin explained that the firm encountered purchase accounting implications, as well as on-site shift and supply chain issues across FY 2021 which affected its gross margins. However, Fathom’s CEO also emphasized that it was “already addressing these factors,” and its adjusted EBITDA rose to $10.5 million during Q4 2021, representing an adjusted margin of 23.8%.

Financials ($) Q4 2020Q4 2021Variance (%) FY 2020 FY 2021Variance (%) 
Revenue 19m44.3m+133.161.2m152.2m+148.7
Net Income/Loss-6.9m21m+404.3-8m13m+262.5
Adjusted EBITDA 1.5m10.5m+60011.2m34.4m+207.1
Adjusted EBITDA (%)  7.923.8+201.318.322.6+23.5

Expanding in lucrative verticals

On Fathom’s earnings call, Martin revealed that it had recently attracted four significant orders from existing clients, as well as two from new ones, which reflect how it’s services are continuing to grow in popularity among “blue chip customers,” and highlighted how they’re helping those operating in a “diversity of end markets” improve their supply chain agility. 

Likely due to NDAs, Martin didn’t reveal these customers’ identities but did explain that the deals from existing accounts brought in $20.9 million in orders, while its new accounts could generate another $10.2 million. Again, without revealing too much, Fathom’s CEO also said that these customers come from the high-growth medical, EV, and robotics sectors, making their rising custom a promising development. 

Moving forwards, while the company hasn’t ruled out further acquisitions, Martin said on the call that “organic growth is its biggest opportunity.” Citing an example of a semiconductor manufacturer his firm had worked with during Q4, he explained how it had moved from using Fathom’s CNC machining to 3D printing services, and this could serve as a model for entering other “fast-growing end markets” too.

“What we’re hearing from these large enterprise customers, is they have a lot of challenges in their supply chains and they’re looking to unify their suppliers,” added Martin. “That’s an incredible growth opportunity for us, and that’s why we focus on large enterprise customers because we know they have complex manufacturing needs, they have a large spend, and this is really low hanging fruit for us.”

“We’ve got multiple examples of customers we’ve introduced to Fathom’s broader manufacturing platform and capabilities.”

A set of integrated circuit boards.
Fathom has hailed the rising adoption of its services within lucrative areas such as the semiconductor sector. Photo via Magnascan, Pixabay.

3D printing-led growth ahead in 2022? 

Alongside its financials, Fathom has issued revenue guidance of $182 million to $192 million for FY 2022, which if realized, would represent up to 26.1% annual growth. Although Q1 is typically a slow quarter for the firm, it expects demand for its higher-margin Additive Manufacturing and Injection Molding offerings to pick up as the year goes on, hence it has set a projected adjusted EBITDA of $40-45 million. 

Cash-wise, despite having raised a reported $80 million from its SPAC merger last year, Fathom finished FY 2021 with $20.1 million in cash and equivalents following its M&A activities last year. That being said, Fathom still has another $23 million to draw upon from a $50 million revolving credit facility, and in his closing remarks, Martin refused to rule out making more acquisitions to drive growth in 2022. 

“We continue to see a lot of opportunities in the M&A side of things. For us, it’s about providing a differentiated customer experience, as we look at potential acquisition opportunities,” concluded Martin. “We have a proven track record of identifying, acquiring, integrating, and growing acquisitions, so we anticipate continuing to be very focused on that.”

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Featured image shows a selection of 3D printers from Fathom’s expansive technology offering. Photo via Fathom Digital Manufacturing.