Desktop Metal(US:DM)2022-08-09 01:00Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2022 was $57.7 million, representing over 200% year-over-year growth and 32% sequential growth from Q1 2022 [8][30] - Non-GAAP gross margins increased to 26.7%, an improvement of over 170 basis points year-over-year [10][31] - Non-GAAP operating expenses were $46.1 million, representing 80% of revenue, a significant improvement from 162% in Q2 2021 [32] - Adjusted EBITDA for Q2 2022 was negative $27.5 million, showing a sequential improvement of $14.1 million from Q1 2022 [33] Business Line Data and Key Metrics Changes - Revenue performance was driven by strength in metal product platforms and contributions from acquisitions [9][30] - The introduction of FreeFoam, a new 3D printable foam solution, expands Desktop Metal's total addressable market opportunity [12][24] - Strong traction was noted across all metal platforms, including the production system P-50 [17] Market Data and Key Metrics Changes - Desktop Metal is seeing increased adoption from blue-chip customers across various industries, including automotive and aerospace [13][14] - The defense business is growing rapidly, with a potential $15 million contract awarded by the Defense Logistics Agency [16] Company Strategy and Development Direction - The company is focused on strategic integration and cost optimization initiatives, aiming for $40 million in annualized run rate non-GAAP cost savings [21] - The strategic initiative includes a workforce reduction and consolidation of global facilities to increase efficiencies [20] - Desktop Metal aims to maintain a strong balance sheet and improve cash flow breakeven to support long-term growth in the additive manufacturing market [34][40] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed full-year 2022 revenue guidance of approximately $260 million, while closely monitoring macroeconomic conditions [36] - The company expects continued sequential improvement in adjusted EBITDA and aims to exit 2023 breakeven on an adjusted EBITDA basis [37][39] - Management highlighted the strong demand for additive manufacturing solutions, driven by supply chain disruptions and a secular shift towards digital production [52][54] Other Important Information - Desktop Metal has a robust IP portfolio of over 650 patents and pending applications, which the company plans to monetize [17] - The company has achieved undisputed market share leadership in several fast-growing segments of additive manufacturing [41] Q&A Session Summary Question: Changes to the go-to-market strategy - Management indicated no dramatic changes to the go-to-market strategy, emphasizing a more focused effort and strong cross-selling opportunities [43][44] Question: Monetization of the IP portfolio - Management acknowledged the potential value in the IP portfolio and indicated ongoing efforts to monetize it [45] Question: Revenue trends in the back half of the year - Management expects strong demand and a revenue distribution of approximately 40% in the first half and 60% in the second half of the year, with Q4 anticipated to be the strongest [48] Question: Customer activity amid macroeconomic concerns - Management noted that the company benefits from a growing market segment and continues to see strong customer adoption of additive manufacturing solutions [52][54] Question: Progress on the P-50 product - Management confirmed ongoing activity and progress with the P-50 product, with expectations for further announcements [55][57] Question: Cost expectations and share count - Management expects non-GAAP operating expenses to decrease in the second half of the year and provided details on interest expense and share count [58][60]