Markforged growth slows down in Q3, at +5% YoY

Markforged Holding Corporation (NYSE : MKFG), which is a company that aims to enable industrial production at point of need, has good news. Revenues grew by 5% YoY to $25.2 Million in its fiscal Q3, which ended September 30, 2022. The not-as-good news is that growth slowed significantly if compared to Q3 2021 when the company’s revenues had grown by 53.8%, to $24.0 million compared to the previous year.

“Despite the difficult macro environment, we delivered another strong quarter as global demand for The Digital Forge continues growing. Our Digital Forge platform, which brings industrial production to the point where it is needed, continues to be a driver for demand despite ongoing supply chain challenges.,” said Shai Terem, President & CEO of Markforged. “Excitement for our newest production-grade printer, the FX20, has been tremendous, and we are pleased to have expanded our addressable market by adding high-volume metal application capabilities to our technology offerings with the closing of the Digital Metal acquisition. While challenges including inflation, geopolitical tensions and supply chain disruption are putting near-term pressure on our margins, we are confident in our long term strong fundamentals, which are supported by our growing pipeline and market opportunity.”

Despite a challenging macro environment, we delivered another solid quarter as demand for The Digital Forge continues to grow globally. Ongoing supply chain challenges continue to be a catalyst for demand for our Digital Forge platform which brings industrial production to the point of needShai Terem, President and CEO of Markforged

Markforged’s newest production-grade printer the FX20 is generating unprecedented excitement and orders continue to exceed the company’s expectations as manufacturers seek solutions to make their supply chains more resilient and flexible. However, as supply chain challenges continued globally, Markforged was not able to meet the demand for the FX20 and the cost of production of the FX20 exceeded the company’s estimates.

Markforged also completed the acquisition in Q3 of Digital Metal. The addition of this new metal binder jetting technology expands Markforged’s addressable market into the mass production of end-use metal parts. The demand is growing in automotive, luxury products, and MIM applications.

In the Americas and EMEA, inflation and geopolitical pressures continued to impact the company’s business, as macroeconomic uncertainty led businesses to delay purchase decisions. However, the APAC region met the company’s expectations for significant growth in the second half of 2022. Revenue in APAC increased 51% in the nine months ending September 30, 2022 compared with the same period 2021 and 82% in the three months ending September 30, 2022 compared with the same period 2021. This was due to strong demand for mature products as well as accelerated demand to FX20.

Tight cost controls allow for operating leverage. Markforged was able to achieve its Q3 EPS target thanks to strong cost controls. The company reorganized its go to market team and reprioritized those initiatives that have the potential to have the greatest impact upon profitable growth. The company believes that this cost control will lead to a strong balance sheet which will allow it to continue on its path towards profitability by 2024.
2022 Guidance

Markforged is updating the full-year 2022 financial guideline to reflect its updated fiscal outlook, which takes into account current market conditions. The Company anticipates revenue for the fourth quarter to be in the range of $28 – $32 million which, at the midpoint, would result in 2022 full-year revenue near the lower end of the range the Company provided previously. Non-GAAP gross margin in the fourth quarter is anticipated to be in the range of 48% – 50%, which equates to full-year 2022 non-GAAP gross margin within the range of 50% – 52%.

Non-GAAP operating loss in the fourth quarter is expected to be in the range of $13.2 – $14.7 million, which equates to full year 2022 non-GAAP operating loss in the range of $61 – $62.5 million for the year. Non-GAAP earning per share results for the fourth quarter are expected to be a loss in the range of $0.06 – $0.07 per share, which equates to full year 2022 non-GAAP earning per share results to be a loss in the range of $0.31 – $0.32 per share, based on the outstanding share count of approximately 193.6 million shares.