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spk05: Good day and welcome to the Shapeway's fourth quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Nikki Sachs. Please go ahead, ma'am.
spk03: Greetings and welcome to Shapeway's fourth quarter and year-end 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the prepared remarks. As a reminder, this conference is being recorded. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements within the meaning of federal securities laws. 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. All forward-looking statements, including without limitation statements regarding our business strategy, future financial and operating performance, projected financial results for the first quarter of 2022, expected growth, and market opportunity are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by those forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a description of the risks and uncertainties associated with our business, please see the company's SEC filings, including the company's annual report on Form 10-K for the year ended December 31, 2021. The information provided in this conference call speaks only to the broadcast today, March 31st, 2022. Shapeways disclaims any obligations 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 be found on our website at shapeways.com. On the call today are Greg Kress, Chief Executive Officer, Jennifer Walsh, Chief Financial Officer, and also available for Q&A is Miko Levy, Chief Revenue Officer. And now I would like to turn the call over to Greg. Greg?
spk07: Good afternoon, everyone. Thank you for joining us to discuss Shapeways results for the fourth quarter and year-end 2021. and our strategic priorities. 2021 was an exciting year for us as we completed our business combination and became a publicly traded company on September 29th, 2021. We continued to execute on our strategic plan and are well positioned with the financial flexibility to make strategic investments to drive long-term growth as we expand our additive manufacturing capabilities, further broaden our garden market strategy, and continue to roll out our software as a service. Shapeways is a leader in a large, fast-growing digital manufacturing industry. We provide high-quality, flexible, on-demand manufacturing powered by our purpose-built proprietary software. We make industrial-grade additive manufacturing accessible by providing a broad range of manufacturing solutions to our customers. We currently utilize 11 additive manufacturing technologies and approximately 100 materials and finishes. and we continue to scale new innovations. Significantly, our manufacturing platform is agnostic to hardware technologies and materials, which allows us to quickly adapt to market shifts and customer needs. Over the years, we have built the best-in-class digital manufacturing platform and have delivered over 23 million parts and approximately 100 materials and finishes to 1 million customers in over 175 countries. Our success has been powered by our proprietary software, which supports the end-to-end process, including automating production and supporting orders, part analysis, manufacturing planning, pre-production, and manufacturing for our customers. While 2021 brought some challenges, including the pandemic, we continue to advance our strategy and execute on the core competencies of delivering low volume, high mix production at scale for our customers. For 2021, we delivered full-year revenues of $33.6 million, representing a 6% increase from prior year and slightly above our guidance provided on last quarter's call. We also grew gross margin by 14% and expanded our GAAP gross profit margins by 360 basis points from the prior year to top tier gross margins of 47.3%. As we look ahead, we have multiple levers for growth as we leverage our years of investment across our highly scalable platform and software. We remain committed to capturing and expanding market share and making important investments which align with our long-term strategic growth plan. During our fourth quarter and to date in 2022, we have made progress on each of these key initiatives, which we believe will allow us to accelerate growth in the coming quarters. First, we continued the expansion of additive offerings and material capabilities. In the fourth quarter of 2021, And in the first quarter of 2022, we began the rollout of desktop metal machines to expand our global manufacturing footprint across metals, elastomers, polymers, and composites, wood, and digital casting applications. These printers will play a significant role in our growth initiative and expand our additive capabilities. To date, we have begun utilizing three new machines and anticipate implementing up to eight by the end of the year. As is typical with the launch of new technologies, we anticipate the investment will initially have an impact on our margins, but as they come online and increase capacity, we expect them to be an important new revenue source. Added manufacturing remains a small component of the overall digital manufacturing market, and by increasing our manufacturing capabilities, we can leverage our software and supply chain capabilities to capture more share of wallet from our customers and increase our market penetration. Second, we are making progress in our go-to-market expansion. As we focus on middle market and enterprise opportunities, we have been increasing our sales team and have recently added five new business development professionals. Shapeway has historically been a self-service business, and we have a large and loyal customer base that we will continue to serve. However, we also see a compelling opportunity to build out our go-to-market strategy and expand our offering into new verticals and geographies. In particular, we believe we are well positioned to fill the demanding needs of high performance and used parts and have an opportunity to utilize our technology and accelerate adoption in key markets, including industrial, medical, automotive, and aerospace segments. The closing times for these orders take longer than our typical inbound sales, but we're pleased with our growing pipeline. To date in 2022, we have been talking with many new potential middle market customers. And with our increased sales force, we expect to see new business wins. We view this investment in our sales team as a continuation of our objective to align our sales strategy with hardware printer OEMs and material OEMs. We continue to see about 89% of our revenue come from repeat customers that were acquired prior to 2021. But with an increased sales team, we envision accelerated growth by expanding into new markets. The third element of our growth strategy is software. The platform that we've built is Shapeway's differentiating factor. We are beginning to offer that software to manufacturers to reap the same types of benefits that we enjoy, including efficiency and better economics with an off-the-shelf solution. We are confident that our software can help accelerate the digital transformation by traditional manufacturers, particularly small and medium-sized manufacturers, that are not able to invest the capital and time necessary to digitize their processes. In the fourth quarter of 2021, we publicly rolled out the first phase of our SaaS offering under the brand Auto to gain feedback on product market fit, pricing, and optimal use case. Auto is a purpose-built software platform that provides traditional manufacturers with a simpler, faster, and more flexible path to 3D printing for industrial-grade productions. The target customers are small and midsize manufacturing businesses that are never going to be able to make the investments to fully digitize their platform and can leverage our SaaS for their manufacturing needs. We expect to roll out additional phases of this software over the next two years, which will include expanded ordering capabilities and additional end-to-end functionality to digitize manufacturing processes. As we move through 2022, we will continue to execute on our strategic growth plan and make investments to help us capture and expand our market share. We continue to see the market shifting towards digitization of manufacturing, and we believe it is approaching an inflection point in the overall adoption of digital manufacturing solutions. We believe Shapeways is well positioned to capture this demand. We have developed a roadmap to help us accelerate our strong pipeline, develop new initiatives, and deliver the innovative and high-quality solutions our customers have come to expect over the last 10 years. We are also looking at complementary strategic acquisitions that will not only add capacity and manufacturing capabilities, but would also increase our reach with an already installed base. Through the combination of our planned investments, additive manufacturing capabilities, and the continued rollout of our software offerings, Along with the execution of our targeted acquisition strategy, we expect to capture more share of Wallet. As always, I want to thank the entire Shapeways team, our investors, and all of our stakeholders for their trust and support. We are confident that we have the right strategic plan in place to capture and expand market share and further our position as a leader in digital manufacturing. Jennifer will now discuss our financial results in more detail.
spk04: Thanks, Greg. I'll provide a recap of the fourth quarter and full year 2021 performance and give an update on our balance sheet position. For 2021, we delivered a 6% increase in revenues to $33.6 million, which was slightly above our guidance as our existing customers continued with their spending. For 2021, Direct sales, where Shapeways provides additive manufacturing services directly to the customer who selects the model specifications, accounted for approximately 76% of revenue, or $25.6 million, and that was an increase of 8% year over year. Slightly offsetting this was revenue from marketplace sales, where we provide a platform for shop owners to sell their products to their customers utilizing the Shapeways e-commerce website. For 2021, marketplace sales accounted for about 24% of revenue, or $7.8 million, and that was down 2% year over year. In the fourth quarter, revenue was $8.3 million compared to $8.7 million in the prior year period. As we have shifted our growth focus to middle market and enterprise opportunities, which have longer sales cycles, we are prioritizing our resources and spend towards growing this aspect of the business. Our GAAP gross margins saw improvement for both the year and the fourth quarter over prior year, with the full year increasing by 360 basis points to 47.3%, and the fourth quarter by 250 basis points to 46.8%. We are pleased to deliver growth on our top-tier gross margins even as we ramp our business development efforts and continue to implement new technologies. Full year adjusted EBITDA was a loss of $4.5 million compared to a loss of $1.4 million last year. Fourth quarter adjusted EBITDA was a loss of $3.1 million compared to a gain of $0.2 million last year. SG&A expenses for the full year were $17.6 million compared to $10.8 million in the prior year. And for fourth quarter, SG&A expenses were $7.3 million compared to $2.6 million in the prior year. These results include more personnel, higher marketing spend, and other corporate expenses to drive future growth and an increase in audit and other spending related to becoming a publicly traded company. We also had an increase in stock-based compensation. Turning to our balance sheet, as of December 31st, 2021, our cash and cash equivalents totaled $79.7 million, reflecting a net transaction proceeds from the business combination. The strength of our balance sheet positions us to fund increased investment towards our strategic growth initiatives, including purchasing new hardware and building out our sales team during the fourth quarter and into 2022, and to potentially make targeted strategic acquisitions. As we look ahead, there continues to be some macro uncertainty, including potential inflationary pressures, supply chain challenges, and geopolitical unease. Additionally, we are just beginning to more broadly roll out the strategies that Greg discussed. As such, we will not be providing full-year guidance at this time. However, we are optimistic about our progress. In the first quarter of 2022, the company anticipates revenue to be between $7.3 and $7.4 million. In addition, so far we have seen limited inflationary pressures as we had executed forward buys on materials, but we could see an impact depending on the continued trajectory. As our investments in both hardware and our go-to-market initiatives continue to ramp, we anticipate some near-term impact on our gross margins. With our investments in new desktop metal machines, an increase in business development resources, and the continued rollout of our auto software product, we remain confident that we will see a ramp up of sales in the back half of the year and position ourselves for growth in the years ahead as we successfully execute on our long-term strategic plan. This completes our prepared remarks. We will now open the call for questions. Operator?
spk05: We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assume our roster. And the first question will come from Craig Palm with Craig Hallam Capital Group. Please go ahead, sir.
spk02: Yeah, thank you. This is Danny Egerich on for Greg today. Congrats on good end of the year guys and thanks for taking the questions. I guess I will just start on the metals side. I know it's early stages of deploying that desktop metal equipment. Just wondering how traction has been early and what kind of feedback you're getting. Um, have you been seeing new customers come to the table based on that? And maybe some existing customers are using polymer, uh, start to utilize both.
spk07: Well, thanks for joining the call today. And, uh, and the question is great. Yeah, we got, we got started with the desktop metal capacity and Q4, and then we continue to ramp that into Q1, uh, with both metal capabilities in our Eindhoven manufacturing facility and our Long Island city facility. We also complemented that with a few different machine types, and we started to look at both the EnvisionTech capacity and product line and the wood product line with desktop metal. And so the investment that we're making there is somewhat comprehensive across all those product lines. And what we've seen so far is what we typically see when we launch a brand new technology. There's a learning process of bringing that up to speed and learning how to optimize the build process. And right now we have some machines that have quite a bit of... I should say are limited in capacity because we have orders that really have consumed those machines for the first, I would say, couple quarters. But again, I think it's still too early to get a really good sense because the way we entered the market with this was really just to get started slower. We wanted to make sure that we were able to deliver high-quality products to our customers. And so... We didn't necessarily do a very, very big push with customers right after that. We started slow with very specific applications to ensure that we were ready for it. But what I expect to see between, you know, through Q2 and through the rest of the year is more traction across those products. And I think there's still a lot for us to learn there, and I would consider us just getting started.
spk02: Got it. Yep, that makes sense. I guess moving on to the margin commentary, I appreciate the commentary that you gave there. In terms of the pressures that you're expecting, I guess what exactly does that mean? Is that all coming from those kind of investments there? And is there any way to kind of quantify that impact, whether in Q1 or how that moves throughout the year?
spk07: Yeah, ultimately when we launch a brand new technology, what you'll see is there's – until that machine or that asset is fully utilized, we're not going to be able to optimize gross margin. And so in our forecast and in our plan, what we do is we plan accordingly and we allow for depressed gross margin percentage when we first launch a brand new technology and allow it to build with capacity over time. And so it really comes down to how fast things are ramping and how well we control our cost model as we do it. And so what you'll see us do is control the rollout of technologies tightly so that we can manage the gross margin implications as we do it. And so right now we aren't able to provide any guidance until we've really validated a lot of our assumptions in the beginning half of this year. But once we get through that, I think we'll be in a better stable position to be able to talk about some of the pressures that we would see throughout the rest of the year once we see more capacity kind of being utilized with that new technology.
spk02: Got it. Maybe just one last one from me with everything kind of going on in the world right now. Any specific end markets geographies that may be outperformed or underperformed what you were expecting this quarter and so far into Q1?
spk07: Yeah, I think ultimately you still see a lot of pressure coming from our marketplace customers. And As much as we love these customers, these are probably the most price-sensitive customers. They're more consumer-facing. And this probably has a lot more implications driven by things that are happening going on in the world. Ultimately, COVID, the conflict that's occurring in Ukraine, all of those things ultimately put pressure on those customers. And so we see pressure there. But again, I think these are things that a lot of businesses are dealing with right now. And we're working hard to refocus a lot of our sales efforts on really focusing on those enterprise customers because we know that those customers really have a strong product market fit associated with additive manufacturing, and they value the services that we have and are less maybe reactive to some of those pressures that are happening in the market. So we continue to focus on that, and we're building a really strong pipeline associated with it. And I'm happy to see the progress to date, and I'm excited about what's to come over the next several quarters.
spk02: All right. Thank you. I'll leave it there.
spk05: Thank you. The next question will come from Troy Jensen with Lake Street Capital. Please go ahead, sir.
spk01: Hey, thanks for taking my questions. I guess either for Greg or for Jennifer, you know, the full year guidance, if you go back during the SPAC process, you guys talked about $86 million in revenues for 2022. And any color you can give us, any range on what you think the full year number is going to look like?
spk07: Yeah, thanks, Troy, for joining. One, we're still reluctant to give any forward guidance until we've really validated the assumptions that we have in our model. I think if we take a step back, there's a couple things that impact that original projection that we had provided. One, the timing of our transaction was delayed six to nine months, and so a lot of that funding is definitely pushed out. And so you're going to see that also push out revenue over a couple quarters as well. The second thing is we didn't raise the total amount of money that we wanted. We did raise a considerable amount of money, and we're putting that to work, but we didn't raise 100% of what we could have. And so those two things definitely impact that number. But what we're focused on right now is making sure that we invest in the four strategic initiatives in our business. And one, we're getting a lot of good traction on the additive manufacturing expansion. And not only is there a lot of opportunity for us to do that organically, but There's a lot of opportunity from an M&A perspective as we look at inorganic consolidation to help go accelerate certifications and finishes and materials and technologies that we want in our portfolio. And that's a very cost-effective way for us to go do that. And so we've been spending a lot of time and energy really looking for good inorganic opportunities that could be complementary to that strategy. The second thing is we are focused on building out that go-to-market strategy beyond our self-service business. And we've made good traction here. We have five full-time business development professionals. They've built an incredible pipeline so far. And this is a strategy I think that will pay dividends. But one of the things that we need to validate in this process is, one, how long does it take to actually close these deals? Because these are larger, more enterprise deals that are different than our more traditional self-service model. And we need to validate those assumptions the first half of the year. The third thing we're focused on is really looking at those traditional manufacturing methods. and really capturing more customer share of wallet. And so looking at CNC injection molding and sheet metal and how can we support our existing customer base with those needs because we know they have those needs, but they're getting them done somewhere else. And so we've been working on supply chain development and software to go and help support that. And then the last focus for us is software and really focusing on monetizing our software. And in the fourth quarter, we deployed that under the brand AUTO. We gained traction in Q1 so far with small manufacturers utilizing the front-end ordering service, which we consider kind of the phase one of our rollout. And, yeah, I think it's showing good potential. But, again, we want to see and validate a lot of the assumptions across those four initiatives. And then once we have a good sense of that, we'll be able to provide a better insight and guidance for the business.
spk01: Well, Greg, how about your conviction on a second half inflection or a ramp in the second half? What specifically is going to drive that? Is it new additive technologies? Is it auto-ramping more? You don't have visibility kind of for a full year to give us numbers, but you're talking about a second half inflection here.
spk07: Yeah, and I think it comes down to we're pushing on all four of those initiatives, and any one of those four initiatives could drive that inflection point for us. I think what we want to do is allow each one of those to kind of validate the assumptions adjust as necessary and double down where we're seeing the most success and scale it as much as possible. And each one of those kind of have their own ramp associated with it. And I think you'll see a lot more of that as we look forward.
spk01: Okay. A couple questions here for Jennifer. So SG&A was $7.3 million in the quarter. Will you expect that to grow sequentially throughout 2022? Can you just give any guidance on what OpEx is going to look like on a quarterly basis or a full year basis?
spk04: Hey, how are you?
spk01: I'm good. How are you?
spk04: Thanks for the question. Good, thanks. Thanks for the question. Again, we're not giving forward-looking guidance. I think Q1 is a decent indicator of where SG&A will be. But as Greg mentioned, we are going to be investing. So we're going to be hiring additional salespeople, and GNA resources and making investments in marketing operating spend. So I do anticipate that SG&A expenses will ramp throughout the year.
spk01: Sequentially, you think it ramps and same question on R&D. Would you expect the same given the investments here?
spk04: I do expect R&D to grow, but not at the same clip. So again, we're investing there as well. We're hiring engineers and product people. But I think you'll actually see bigger increases in SG&A versus R&D.
spk01: Okay, perfect. And could you put a number at all on gross margins, maybe what you think it's going to look like for the year or for the quarter? I mean, all of us need to publish models for the morning, right? So I think you get a little bit more visibility on what Q1 margins look like and what the year would look like than we do.
spk04: Again, we're not giving forward-looking guidance, but what we saw – Last year, Q4 and last year was around between 46% and 47%. We're seeing something very similar in Q1. So I do think we'll see some pressure in there, as Greg mentioned, as we continue to ramp new technologies and potentially execute build versus buy strategies throughout the year. But, I mean, again, I don't anticipate it to plummet. I think we might see a couple of points of, of declines there, but again, not dramatic changes.
spk01: Okay, that's helpful. Thank you so much and good luck going forward.
spk05: Thank you. The next question will come from Jim Rusciutti with Needleman Company. Please go ahead.
spk00: Hi, good afternoon. Jennifer, can you give us the direct sales and marketplace sales for the quarter?
spk04: So our business is generally about 75-25, give or take a couple of points here and there. So you can use that rough estimate against the quarter.
spk00: You gave it to us for Q3, didn't you? I think you did.
spk04: In fourth quarter, it's about... or the year, it was about 75-25. I think it was actually 76-24. It was right around there. So I think that's a reasonable estimate for Q4.
spk00: Okay. So we're pretty much at the end of the quarter. How do we think about the breakdown in Q1, direct versus marketplace?
spk04: I think would anticipate us being a little higher in direct versus marketplace. As we mentioned, we've seen, you know, more decline in marketplace versus direct business. But I wouldn't, you know, again, I wouldn't expect it to be dramatically different. It might be a couple of points different from the 75-25. Again, with a higher, a slightly higher proportion of direct versus marketplace, but not dramatically different in terms of proportion.
spk00: Okay. You talked about, Greg, I think you talked about you sound excited about what you're seeing in terms of the pipeline as you're pursuing some of these larger enterprise deals. I understand you can't really predict when these close, but can you give us a little bit more color on what you're seeing out there, which verticals, and how we might be judging your progress in that area as we look through Q1 into Q2.
spk07: Yeah, thanks for joining, Jim. I think that's a great question. What we've seen so far is it kind of aligns with the hiring strategy we put in place. We went very specific with specific talent in verticals and geographies to help support basically us testing and validating a lot of the assumptions as we bring in a more business development and outside-focused resource on more of a technical sale. And what we've seen is traction across each one of them. I think that there's good pipelines being generated. And what it really speaks to holistically is ultimately our customers need more help on the enterprise level to be able to go and utilize Shapeway services. And a lot of the self-service business that we've had in the past, we've been lucky because we've had very technical users that have been able to utilize Shapeway. And as we move into the medical and aerospace and industrial verticals, we've seen customers utilizing us and coming to us with much larger opportunities I think the key thing there is they take time to close. They're moving targets, and they are looking at multi-year levels of deals. We're looking at much bigger, more strategic transactions with those types of customers. We're learning a lot, and I think that it is encouraging to see the pipeline that we've developed so far, and we're continuing to expand that team as we look into Q2. It's showing all the right signs, but I think that there's some key assumptions that we need to validate. But I think as we validate them, we'll continue to move very quickly and double down on what's working and what verticals are showing the most problems.
spk00: And so when you talk about more confidence in a second half ramp, are you assuming that you'll be in a position to close the some of this enterprise business, these larger deals that you're talking about?
spk07: Yeah, I would fully expect so. I think that we have closed some. Again, not enough for us to stand up and say, like, we've fully proven out the model. But those are orders that have, you know, ongoing sales associated with them and ongoing revenue associated with them. And so what we expect to see is we'll be closing more and more of those, and those start to compound on themselves and utilize more and more of Shapeway's capacity and supply chains. and we'll expect to see that in the back half of the year.
spk00: And it looks like you're going to be adding some additional headcount in this area?
spk07: Yes, we are ramping business development resources and the support around those resources, specifically on the technical, more user application side, marketing resources, to be able to go help support those teams.
spk00: So if we think about... expense levels looking beyond q1 and not looking necessarily for specifics but just in general how should we be thinking about how expenses do begin to scale in the q2 and into the second half is there any anything any color you could provide on that yeah i think that we're reluctant to give forward-looking guidance on expenses but i will say that q q1 expenses will be a good
spk07: measure of how we're pacing. And I think to the question and the answer that Jennifer had provided earlier, I think they'll continue to grow, but they're not going to grow at the same clip, right? And so I think for modeling purposes, I think it's something you guys could put in your plan as you guys are looking forward to, you know, continued investment in headcount, but maybe not at the same pace in which we did in Q1. Okay.
spk05: Thanks a lot. The next question will come from Noel Diltz with Stifel. Please go ahead.
spk06: Hi, guys. Thanks. So first I was hoping that you could just, now that you've kind of launched Auto and have been gaining some traction in the first quarter, any sort of early feedback that you're getting or adjustments that you're making as you kind of move forward with the software? Thanks.
spk07: No, thanks. That's a great question, Noel, and thanks for joining. First, just to recap with Stifel, our auto strategy, what we launched in Q4 was phase one of our rollout. And it really targeted small manufacturers that didn't offer additive manufacturing services today. And what this allowed them to do is utilize our service and our software in a white-labeled fashion so they would be able to brand the software under their own brand and offer their customers access to additive manufacturing services. fulfilled by Shapeways. And we're providing them with a discounted model behind the scenes, and they're able to make a markup on those orders and be able to generate their own gross margin through that process. And what we've seen so far is, one, there's a tremendous amount of interest. It requires an outbound sales rep to actually facilitate the sale. And it is... We've been able to scale, but we really need to make it a lot more self-service when we look at the software platform. And so... In Q1, what we did is we spent a lot of time really trying to minimize and accelerate some of the things from an onboarding process to get them started. And we onboarded customers throughout Q1. And again, they're all kind of utilizing the service in a little bit different way. And I'd like to get to a little bit broader customer base before I jump into any real validated assumptions on usability and how much manufacturing revenue flows over to Shapeways. And then as you look to the back half of the year, what you'll see is expanding that to actually get to drive SaaS revenue associated with that as well. And so between those two things, I think we have a lot to learn between now and the end of the year. But I will say that I'm excited about the progress that we've made. And there's a lot of interesting things that I think we'll be able to share with you between now and the end of the year.
spk06: Okay. So that kind of touched on my second question, I think you sort of answered it, which is that, which was going to be, do you kind of see a path to start, you know, generating SaaS revenues this year? And it sounds like that's still sort of on the table and something you're thinking about for the back half.
spk05: Yes, it is.
spk06: Okay. And then just in terms of, you know, adding to business development, adding business development folks and adding to the Salesforce, any kind of general thoughts I don't know if it's a rule of thumb, but any thoughts on when those folks typically start really generating revenue, generating change? How do you think about sort of the payback period on those investments?
spk07: Yeah, I think we're still proving out the payback period on those investments right now. But what I will say is we started hiring in mid Q4. Obviously, it's a hard time to be hiring sales reps, specifically ones that are trying to close out a quarter. and finish out their bonus structure. And so we were able to close out a lot more until we built out the team in Q1. And I've been really impressed with the pipeline that they've been able to create and some of the initial sales that they've been able to close. And the way the sales process is working is they tend to close a handful of test orders right off the bat. And those test orders go through a validation process, and we become an approved supplier at We work through that process. And so I think that over the next three months and in Q2, it'll be very validating to the timeline associated with a lot of those orders because we're kind of in the middle of that process right now. And so then based off of that, I think we'll be able to answer some of those ROI-based questions a little bit easier as we look at building out our sales force. But I will say I think we're going through this very methodically, and I'm excited about the progress that we're making, and I think this proves out that you know, the steps that we've taken so far are showing the right sign.
spk06: Okay. And then last question is, I know you mentioned pre-buying some materials, but given what's going on with commodity prices, maybe could you expand on that a little bit, you know, sort of how much pre-buying you were able to complete, how you're thinking about the potential risk of, you know, facing higher prices for input materials into printing? Thanks.
spk07: Yeah. That's a great question as well, and typically we do have some stock and forward-looking stock associated with each technology that we use. With that being said, we don't want to stock up on too much material. It's part of our business model. We don't need that just sitting around not being put to use. And so I do think that if you look at the individual cost model or the COGS model associated with each individual machine, the material percentage in that COGS model – is a portion of it. And so slight price adjustments going up and down in that price model don't have dramatic implications on our business. With that being said, we should be aware that there could be pressures in raw material costs that will eventually flow through the market. And I fully expect that to impact gross margins specifically over time. But keep in mind that is a small portion of the COGS model if we look at that across the machine capacity, overhead, labor as the full picture.
spk06: Okay. Thank you.
spk05: This concludes our question and answer session. I would like to turn the conference back over to Mr. Greg Kress for any closing remarks. Please go ahead.
spk07: Yeah, thank you. First off, I just want to thank everybody for joining the call. On behalf of myself and the entire Shapeways team, thank you all for taking the time to join us. We look forward to providing you more updates over the next coming months. We're making great progress here at Shapeways, and I appreciate everyone's support.
spk05: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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