Shapeways Holdings, Inc.

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.

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?

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.