Desktop Metal Q2 2024 Earnings Review Following Nano Dimension Merger

Desktop Metal, a prominent player in the additive manufacturing sector, reported a revenue of $38.9 million for the second quarter of 2024, showing a decline compared to the same period last year. The company, listed under the ticker DM, has been grappling with economic challenges, such as rising interest rates and a sluggish market, which have negatively impacted its financial results and hardware sales. In response to these difficulties, Desktop Metal announced a proposed merger with Nano Dimension, a move expected to create a strong entity in the industry and enhance its financial stability for future operations. Due to the ongoing acquisition, Desktop Metal has suspended its financial guidance for the remainder of 2024.

Key Takeaways:

• Desktop Metal’s revenue for Q2 2024 decreased to $38.9 million, significantly impacted by lower hardware sales.
• Non-GAAP gross margins fell to 29.2%, while non-GAAP operating expenses were trimmed to $27.0 million.
• The company concluded the quarter with $46.7 million in cash, although it faced increased cash outflows linked to transaction-related costs.
• Adjusted EBITDA improved by $1.8 million compared to the same quarter in the previous year.
• The merger with Nano Dimension is designed to propel the transition toward mass production within the additive manufacturing sector.

Company Outlook:

• The merger with Nano Dimension is expected to hasten the move towards mass production in additive manufacturing.
• Desktop Metal anticipates that this deal will enhance its financial profile, allowing for better customer support.

Bearish Highlights:

• The company’s financial standing has come under strain due to escalating interest rates and a general market slowdown.
• A decline in hardware sales and mounting customer apprehensions regarding financial stability have complicated the closing of deals.

Bullish Highlights:

• Revenue from consumables and services remained steady year-over-year.
• Non-GAAP operating expenses saw a successful reduction as part of cost-control initiatives.

Misses:

• Year-on-year revenue decreased alongside a drop in non-GAAP gross margins.
• The company has halted future financial guidance in light of the pending acquisition.

Q&A Highlights:

• Desktop Metal acknowledged a significant cash burn in Q2 due to expenses related to the merger with Nano Dimension and discussions with potential partners.
• There are concerns regarding managing interest payments as part of their revised financial strategy.

In light of Desktop Metal’s recent financial performance and the upcoming merger, investors should carefully evaluate real-time data and expert analyses to inform their decisions. As of now, the organization’s market capitalization stands at approximately $156.85 million, reflecting investor sentiment following the announced merger. The price to earnings (P/E) ratio is currently negative, indicating a lack of net income, while the company reported $188.98 million in revenue over the last twelve months.

As Desktop Metal navigates this critical juncture, it faces challenges related to cash flow and maintaining its financial commitments, making strategic management imperative for long-term success.

The call concluded with acknowledgments from CEO Ric Fulop and CFO Jason Cole, emphasizing the transformative potential of the merger as they prepare to address the evolving market landscape.