Markforged Holding Corporation

Greetings and welcome to the Mark Forge Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow a formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Austin Bollig, Director of Investor Relations. Thank you. You may begin.

Good afternoon. I'm Austin Bollig, Director of Investor Relations of Mark Forged Holding Corporation. Welcome to our third 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 Acting CFO, Asaf Sapori. Before we get started, I'd like to remind everyone that management will be making statements during this call that include estimates 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, November 13th, 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's a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued after market closed today. which can also be found on our website at investors.markforged.com. I'll now turn the call over to Shai Turem, President and CEO of Markforged.

Thank you, Austin, and thank you, everyone, for joining us on our Q3 2023 earnings call. While the medium to long-term opportunity for Markforge to help manufacturers reduce costs and strengthen supply chain resiliency remains intact, we were disappointed with our third quarter results with top line of $20 million. The current macroeconomic uncertainty and increasing interest rates had a material impact on our ability to close deals in the last two weeks of the quarter. As we shared on our October 23rd prayer release, we have also updated our full year 2023 outlook to reflect our current view. At our investor day in mid-September, we still believed our 2023 targets were attainable, but macroeconomic headwinds dramatically accelerated in the final weeks of the quarter, and we saw delays in several large deals that we had expected to close. As we progress into the fourth quarter, we believe that the persistent high cost of capital and uncertainty in the macro environment will continue to restrict capital investment in the short term. In light of these headwinds, we remain laser-focused on our path to profitability and have accelerated cost reduction efforts to align our operating expenses to match anticipated near-term demand. These efforts supported our ability to reduce our cash burn in the third quarter to $10 million and end-of-quarter cash balance of $126 million. Today, in addition, we're announcing a restructuring initiative that we believe will improve operating efficiencies and strengthen our balance sheet resiliency even further, but without compromising on our ability to innovate and grow to profitability. This initiative, coupled with other cost reduction efforts, is expected to deliver operating cost savings of approximately $9 to $12 million in 2024, driven by an approximate 10% headcount reduction. With that, remain confident in our long-term growth trajectory. The fundamentals driving manufacturers to reduce costs and seek more resilient and flexible supply chains remain. And as we heard directly from our customers, Ford, Vesta Swing Systems, Ezut, Triumph Aerospace, Musashi Auto Parts, Dana, and Automation Alley at our investor day, the Digital Forge provides a powerful platform for achieving these goals. This strengthens our conviction that as macroeconomic uncertainty clears, Mark Forge is well positioned for growth. To expand on one of these examples, Musashi Auto Parts, a leading manufacturer of differential gears and assemblies, has gained substantial benefit from its investment in the digital forge. Musashi began by printing grippers and other industrial end-effectors using our Mark II and Atelex printers in their Michigan facility. Over 80% cost savings and significant operational efficiencies achieved led Musashi to expand their Markforge deployment to three additional facilities across the globe. Musashi now uses DigitalForge for over 40 different manufacturing applications, with over 34 facilities worldwide who are excited about further expansion opportunities with Musashi. In Q3, we achieved another critical milestone towards the future of distributed manufacturing with the launch of the Digital Source. Digital Source is an on-demand parts platform for the licensing and 3D printing of manufacturer-certified parts when and where they are needed, without the cost or hassle of physical inventory. While our focus in 2024 is building out the platform, we believe the opportunity for high-margin revenue streams will be a growth catalyst in the years to come, as we are already seeing early signs of excitement from customers who help us expand Markforged's solution into their own customer base. One of our early digital source adopters is BMF. a specialized manufacturer of complex sandblasting machines with over 200 installations worldwide. Each BMS machine features 60 printed components, which are typically replaced every three to four months when the machines are running at full capacity. With Digital Source, BMS customers can print replacement components on-site the moment a failure or wear is detected minimizing downtime as well as shipping and inventory costs. Continuing our track record of innovation, Markforge announced two new products last week at Formics. The first, the FX10, is Markforge's next-generation composite 3D printer for the factory floor. Building on the precision and reliability of the X7, but nearly twice as large and twice as fast as its predecessor. FX10 is built to supercharge manufacturing productivity and profitability. The excitement in our booth around this product was beyond words. We are already building a backlog of orders as the balance between value and price to our customers is extremely attractive, even under challenging cost-of-capital times. In addition, we also announced Vega, an ultra-high-performance carbon fiber-filled pack material for 3D printing aerospace parts. Vega is highly compatible with carbon fiber reinforcement, unlocking aluminum strength parts for aerospace applications and high-value tooling. Our aerospace FX20 customers visiting Formex were highly impressed and eagerly waiting for first shipment. Both these new innovations are complementary to the digital forge. and further increase our addressable market by helping our customers solve more applications and deliver strong, accurate parts on the factory floor. So while the current macroeconomics environment is challenging, especially after coming back from Formlex last week, we strongly believe that the FX10, the FX20, the PX100, and the digital source, on top of our legacy solution, are meeting critical industry needs to strengthen manufacturing resiliency and supply chain. There is clearly pent-up demand which is waiting for new platforms to start shipping. I am very proud of the one-team effort over the last few years to reach this critical innovation milestone that will position the company for long-term success. With strong cost controls in place and a sharp focus on achieving profitability, we believe our future is bright. With that, I now turn the call over to Asaf Tipori, our Acting CFO, who will offer more details on our financial performance and guidance for the remainder of the year.