Desktop Metal reveals its Q2 earnings amidst the Stratasys merger rumors in the 3D printing industry.

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Last time we talked about Desktop Metal’s earnings and the impending merger with Stratasys. However, the landscape has changed dramatically between June and August of 2023. The merger that was predicted to be beneficial for both companies is now uncertain. Despite the uncertainty, Desktop Metal released its second quarterly earnings report.

The report showed a decline in revenue compared to the previous year. This was partially attributed to the company’s decision to focus on product lines with higher revenue prospects and better gross margins. Additionally, the company continued to experience net losses in the second quarter.

Although the report did confirm an agreement to merge with Stratasys, the final decision is still up in the air. Stratasys has entered discussions with 3D Systems to determine if their proposal is superior to the existing agreement with Desktop Metal. The situation is further complicated by the presence of Nano Dimension, a company with a significant stake in Stratasys and over $1.2 billion in cash reserves. There were initial rumors of a potential merger between Nano Dimension, Stratasys, and 3D Systems, but recent announcements suggest a change in strategy for Nano Dimension.

In the midst of all these merger complications, Desktop Metal’s financial performance tells its own story. While the company saw a positive trajectory in revenue, it was lower than the previous year. Additionally, Desktop Metal reported a net loss of $49.7 million and a decline in cash and short-term investments.

Looking ahead, Desktop Metal has projected a revenue range of $210 million to $260 million for 2023 and aims to reach an adjusted EBITDA breakeven point by the end of the year. The company has been successful in areas such as binder jetting and metals, and has made progress in producing consumer electronics.

During the earnings call, the CFO and treasurer noted that while the first half of the year may have slightly missed expectations, there is evident growth in various business areas. Binder jetting, digital casting, and metals have shown particular strength, and there is enthusiasm for growth in the dental and healthcare sectors.

Desktop Metal remains cautious but optimistic about future demand and growth opportunities. CEO Ric Fulop expressed satisfaction with the Q2 results and emphasized the company’s strong revenue growth. With cost reduction plans in place and positive customer demand trends, Desktop Metal is confident in its growth projections and improving financial outlook.

In conclusion, despite the uncertain merger situation, Desktop Metal’s financial performance shows signs of improvement. The company is focused on reducing losses and achieving a balanced financial position by the end of 2023. With strong growth drivers and positive trends, Desktop Metal is optimistic about its future prospects.

The Stratasys-Desktop Metal Merger: A New Era in Additive Manufacturing

There has been a lot of buzz surrounding the recent merger between Stratasys and Desktop Metal. During an earnings call with investors on August 3, Desktop Metal CEO, Fulop, addressed the merger and emphasized the collaborative power of this partnership. He described it as the birth of a “powerhouse in global industrial additive manufacturing” and stressed that it was not a forced move for Desktop Metal.

Fulop spoke highly of Stratasys’ major position in polymer 3D printing and its “exceptional strength” in the aerospace, automotive, and healthcare sectors. On the other hand, he highlighted Desktop Metal’s leadership in mass production of metals, sand, ceramics, and dental printing solutions. He expressed his enthusiasm for the synergy between the two companies, pointing out the lack of product overlap and the pooling of over 800 scientists and engineers from both sides.

Financially, Fulop estimated that the potential transaction could result in approximately $50 million in annual cost synergies and a similar figure in annual revenue synergies by 2025. However, he made it clear that the deal is not an outright acquisition, with Desktop Metal shareholders receiving about 41% of the combined company and a near-even board representation.

While Fulop is confident in the merger, he acknowledged that the final decision lies with Desktop Metal’s shareholders. He maintained a cautious tone, stating, “If ultimately, our shareholders decide this isn’t the best path, we remain confident in our long-term outlook.”

During the Q&A session of the earnings call, an analyst inquired about a potential termination fee if Stratasys were to withdraw from the deal. One of Desktop Metal’s executives confirmed that the termination fee would be “in excess of $32 million.”

The additive manufacturing industry is closely observing the ongoing story between these two giants. Their actions have the potential to reshape the industry and impact investors and the broader manufacturing community. Currently, all eyes are on Desktop Metal, Stratasys, 3D Systems, and Nano Dimension as we eagerly wait to see what they will do next.

For the latest updates and news from the 3D printing industry, as well as information and offers from third-party vendors, stay tuned and stay informed.

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