Desktop Metal Reports Decline in Q3 FY23 Revenue, Adjusts Full-Year Outlook

Desktop Metal, Inc. DM, a prominent player in the 3D printing industry, headquartered in Burlington, Massachusetts, has reported its financial outcomes for the third quarter of fiscal year 2023. A notable 9.2% year-over-year reduction in revenue, amounting to $42.75 million, was announced, falling short of the industry consensus forecast of $49.77 million.

Factors Influencing Q3 Earnings

The lower-than-expected revenues can be chiefly attributed to diminished product sales, alongside the strategic shift by the company towards prioritizing high-margin product sales. However, this downturn was partly mitigated by an uptick in service sales.

Performance Metrics

Adjusted net loss per share stood at $0.08, a deviation from the predicted $0.05. The adjusted net loss narrowed to $24.51 million from the previous year's $33.05 million. Reflecting improvements, the Q3 GAAP gross margin was reported at 4.5%, with an adjusted gross margin of 21.9%, marking an improvement of 193 basis points year-over-year. Adjusted EBITDA recorded at $20.5 million also noted substantial enhancement, by $7.7 million when compared to the third quarter of the previous year.

Leadership Commentary

Ric Fulop, Founder and CEO of Desktop Metal, remarked on the third-quarter revenue as being unsatisfactory not only for Desktop Metal but for the additive manufacturing sector at large. Yet, he expressed pride in the cost reduction measures amounting to $100 million on an annualized basis, executed by the team since June 2022. Despite the revenue softness in the quarter, Fulop underscored the sturdy performance of recurring revenue streams and their contribution to the adjusted EBITDA's positive shift, paving the way towards an anticipated breakeven in the final quarter of 2023.

Revised Fiscal Year 2023 Outlook

Consequently, Desktop Metal has recalibrated its revenue expectations for fiscal year 2023 to range between $187 million and $207 million, scaled down from the prior projection of $210 million to $260 million, as opposed to a consensus estimate of $212.18 million. Additionally, the forecast for Adjusted EBITDA has been adjusted to lie between $(70) million and $(50) million, compared to the previous outlook of $(50) million to $(25) million. The company maintains optimism about accomplishing Adjusted EBITDA breakeven before the end of 2023.

Stock Performance

In the wake of these announcements, DM shares experienced a rise, trading higher by 6.05% at $0.9606 in the latest session.

3DPrinting, Earnings, Revenue