On November 9, 2023, Desktop Metal Inc (DM, Financial), a leader in additive manufacturing technologies, disclosed its financial results for the third quarter ending September 30, 2023. The company acknowledged that the revenue for the quarter was below expectations, not only for Desktop Metal but for the additive manufacturing industry as a whole. Despite the top-line setback, CEO Ric Fulop expressed pride in the company's execution of its $100 million annualized cost reduction plan, which was announced in June 2022.
Financial Performance Overview
Desktop Metal reported a decline in product revenues to $37.5 million from $42.9 million in the same period last year, while service revenues saw a modest increase to $5.2 million from $4.1 million. The total revenue for the quarter stood at $42.75 million, down from $47.08 million year-over-year. The company's net loss widened to $46.37 million, or $0.14 per share, compared to a net loss of $60.77 million, or $0.19 per share, in Q3 2022.
Balance Sheet and Cash Flow Statements
As of September 30, 2023, Desktop Metal's balance sheet showed cash and cash equivalents of $107.43 million, a significant increase from $76.29 million at the end of 2022. Total assets decreased to $644.26 million from $754.34 million, while total liabilities stood at $238.69 million, up from $226.84 million at the end of the previous year. The company's stockholders' equity decreased to $405.57 million from $527.50 million as of December 31, 2022.
The cash flow statements revealed that net cash used in operating activities for the nine months ended September 30, 2023, was $91.85 million, compared to $150.78 million for the same period in 2022. Cash flows from investing activities were a net positive of $118.56 million, mainly due to proceeds from sales and maturities of marketable securities.
Management Commentary
Revenue in the third quarter was disappointing for Desktop Metal and also for the entire additive manufacturing industry. However, while we are dissatisfied with our top-line performance, I am incredibly proud of the progress that Team DM has made in executing our $100 million of annualized cost reductions announced in June 2022," said Ric Fulop, Founder and CEO of Desktop Metal.
Despite softer revenue in the third quarter, our recurring revenue streams continue to perform well, contributing to a positive shift in adjusted EBITDA and a path towards reaching breakeven in the fourth quarter of 2023," Fulop noted.
Outlook and Strategic Focus
Desktop Metal did not provide specific financial guidance but emphasized its focus on achieving profitability and navigating the current economic challenges. The company's management remains confident in the strength of its recurring revenue streams and the ongoing cost reduction efforts, which are expected to contribute to an improved financial performance in the future.
For investors and potential members of GuruFocus.com, Desktop Metal's commitment to cost savings and the growth of recurring revenue streams may present a compelling narrative of a company adapting to industry headwinds with a clear strategy for profitability.
For further details and updates on Desktop Metal Inc (DM, Financial), stay tuned to GuruFocus.com.
Explore the complete 8-K earnings release (here) from Desktop Metal Inc for further details.
