Markforged Holding Corporation

Hello, and welcome to the Markforged first quarter 2023 earnings conference call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Austin Bollig, Director of Investor Relations. Please go ahead, Austin.

Good afternoon. I'm Austin Bollig, Director of Investor Relations of Mark Forge Holding Corporation. Welcome to our first quarter of 2023 Results Conference Call. We will be discussing the results announced in our earnings press release issued after market closed today. With me on the call is our President and CEO, Shai Turem, and our CFO, Mark Schwartz. Before we get started, I'd like to remind everyone that management will be and other forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. These statements represent management's views as of today, May 11, 2023, and are subject to material risks and uncertainties that could cause actual results to differ materially. Mark Forge disclaims any intention or obligation, except as required by law, to update or revise forward-looking statements. Also during the course of today's call, we refer to certain non-GAAP financial measures. There is a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued after market close today, which can also be found on our website at investors.markforge.com. I'll now turn the call over to Shai Taram, President and CEO of Markforged.

Thank you, Austin, and thank you, everyone, for joining us on our Q1 2023 earnings call. We've started the year strong with yet another record first quarter revenues and the largest pipeline in our company's history. We've shared our strategy before around product innovation, go-to-market and financial efficiency gains, and infrastructure buildup. We believe our Q1 revenue and our gross margin results, in particular, are a reflection of strong execution of our strategy and an early indicator of the meaningful opportunity for Mark Forge in the coming quarters. Demand for the Digital Forge grew across all geographies in Q1, as an increasing number of manufacturers are choosing our method metal applications at the point of need. But especially great to see strong pipeline buildup in the Americas, which is our biggest region and can support our plant growth. The incremental improvements we've made to our FX20 cost structure, coupled with our strong operating expense controls, enabled us to make our Q1 EPS target. As we spoke before, a couple of macro trends in manufacturing for a digital-forged platform. The first, manufacturers across the globe are focused on creating more resilient and flexible production by investing in solutions that de-risk their supply chains. The second is its increased focus on digital transformation and industrial automation. We believe our platform is uniquely positioned to address the 40 billion market opportunity available to us on the manufacturing floor today. Our customers tell us that DigitalForge is the perfect tool for the manufacturing floor and accelerates the production of new and replacement parts. For example, our customer, Rapid Robotics, provides automation tools through robotics as a service offering to manufacturers to automate production sales. With a fleet which grew over time to 10 Mark Forge printers, Rapid Robotics produces on-site custom grippers and end effectors for their robotic arms, saving in some cases months of production cycles to improve overall performance. Another example in Arizona is our customer handy written. which develops robots to autonomously create personalized, handwritten notes that stand out with a personal touch. Handwritten uses a flip of 5-mark porch printers for iterative robotic design and faster production times. We even have customers applying advanced robotics to increase production, Athena 3D Manufacturers, who operate as a service bureau that produces critical parts for other manufacturers, has developed a system capable of true lights-out manufacturing by automating the processes of starting print and removing parts with robotic arms. This automation has enabled them to double output and achieve a 40% increase in utilization of the digital technology suite. I encourage you to check out the video we have uploaded to our YouTube channel, showing these robots in action. Truly amazing. As manufacturers seek production-grade solutions for the factory floor, revenue for the FX20 continue to exceed our expectations, and the pipeline of new orders continues to grow. Entering 2023, our focus was improving the cost of producing the FX20s. Thanks to the diligent work by our engineering and operation teams, the costs to produce the FX-20 are declining, which is helping to drive sequential gross margin expansion. We expect FX-20 production costs to continue to decline throughout this year, which will support our objectives to meet our historical gross margin rates. With the ability to print large, high-temp resistant parts, the aerospace market is a key target for the FX20, and we are pleased with our early traction and strong interest. We are already scaling with customers utilizing the FX20 for maintenance, repair, and operations, or MRO, applications. What is extremely encouraging is the interest we are seeing in utilizing into the production of new aircraft. While these have lengthy development cycle, we are already seeing aerospace companies begin to stack the digital forge into their next-gen aircraft. For example, U.S.-based Hermes is working with the U.S. Air Force and NASA on a multiyear plan to radically accelerate air travel by developing a Mach 5 aircraft capable of commercial flight. Early in their development process, they began using RX-5 and have recently added an FX-20 to their fleet to produce the types of advanced composite parts required to achieve hypersonic passenger flights. By adopting our technology early in their product lifecycle, we are helping to enable next-gen air travel and planting the seeds for future growth. At the end of Q1, we moved into our new global headquarter in Wolfpack, just outside of Boston. It is new, state-of-the-art R&D labs, and we can already feel the excitement that comes from collaborating in person every day and believe this move will drive even more operational efficiencies over time. We remain laser-shot focused on margin expansion and driving profitable growth. We are particularly encouraged by the sequential improvement in gross margins, which exceeded 49% in the first quarter. We are committed to reaching profitability without needing to raise additional capital. Manufacturing is changing significantly, and we are well positioned to benefit from the full potential of this inflection point. Given our upcoming new product introductions, growing pipeline, and healthy margins, We're even more confident in our ability to achieve this objective. As you have probably seen in our announcement earlier today, this will be our last earnings call with Mark as our CFO. I want to thank Mark for his service to Mark Ford and helping us on our journey from a private startup to a public company. For me personally, Mark has been a great partner. He will continue to support us for the next few months while we search for our next CFO. For continuity, Asaf Sibori, our previous CFO and current head of strategy and corporate development, who has been with us for the past three and a half years, will assume the role on an interim basis. Mark is not leaving us just yet, but we wish him well on his next project. With that, I now turn the call over to Mark Schwartz, our CFO, who will offer more details on our financial performance and guidance for the remainder of the year.