Announcing Cost Restructuring Initiatives

WALTHAM, Mass. — (BUSINESS WIRE) — November 13, 2023 — Markforged Holding Corporation (NYSE: MKFG) (the “Company”), the company strengthening manufacturing resiliency by enabling industrial production at the point of need, today announced its financial results for the third quarter and nine months ended September 30, 2023.

Third Quarter 2023 Financial Results Compared To Third Quarter 2022

• Revenue was $20.1 million compared to $25.2 million.
• Gross margin was 45.7% compared to 48.6%.
• Non-GAAP gross margin was 46.9% compared to 49.2%.
• Operating expenses were $59.6 million, inclusive of a non-cash goodwill impairment charge of $29.5 million as a result of the Company’s performance during the third quarter and decline in forecasted revenue in 2023, compared to $35.1 million.
• Non-GAAP operating expenses were $24.9 million compared to $28.5 million.
• Net loss was $51.4 million compared to net loss of $23.0 million.
• Non-GAAP net loss was $13.8 million compared to a loss of $15.1 million.
• Cash, cash equivalents, and short-term investments were $126.0 million as of September 30, 2023 compared to $136.0 million as of June 30, 2023.

Nine Months Ended September 30, 2023 Financial Results Compared To Nine Months Ended September 30, 2022

• Revenue was $69.6 million compared to $71.3 million.
• Gross margin was 47.0% compared to 51.6%.
• Non-GAAP gross margin was 48.2% compared to 52.1%.
• Net cash used in operating activities was $40.0 million compared to $65.3 million.

Reconciliations of the non-GAAP financial measures provided in this press release to their most directly comparable GAAP financial measures are provided in the financial tables included at the end of this press release. An explanation of these measures and how they are calculated is also included under the heading “Non-GAAP Financial Measures.”

“While the medium-to-long-term opportunity for Markforged to help manufacturers reduce costs and strengthen supply chain resiliency remains intact, our third quarter results reflect worsening macroeconomic headwinds in the final weeks of the quarter, which delayed several large deals that we had expected to close,” said Shai Terem, President and CEO of Markforged. “We remain laser focused on profitability. In light of these headwinds, which have persisted into the fourth quarter, we have implemented cost reduction efforts to align our operating expenses to match anticipated near-term demand. With that, the overwhelming excitement surrounding our new product introductions at Formnext 2023 last week is a testament to the transformative impact our offerings are set to make in the manufacturing industry. In particular, the customer enthusiasm surrounding the FX10 is reinforcing our confidence that Markforged is well-positioned for strong growth as macroeconomic uncertainty clears.”

Business Updates

• Accelerated Macroeconomic Uncertainty Impacts Near-Term Demand. In line with Markforged’s preliminary announced results, revenue for the third quarter was $20.1 million. Stronger than expected macroeconomic headwinds impacted demand for the Digital Forge and delayed orders toward the end of the quarter. These challenges have continued into the fourth quarter. The persistent high cost of capital and uncertainty in the macro environment is restricting capital investment in the short term, more than previously anticipated.

• Accelerating Cost Reduction Efforts. In response to these continuing economic headwinds, Markforged has completed a restructuring that coupled with other cost reduction efforts is expected to deliver operating costs savings of approximately $9 - $12 million in 2024, mostly driven by an approximately ~10% headcount reduction.

• Digital Source Launch. In the third quarter, Markforged achieved another critical milestone toward the future of distributed manufacturing with the launch of 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 the Company’s focus in 2024 is building out the Digital Source platform, the Company believes the opportunity for high margin revenue streams will be a growth catalyst in the years to come as Markforged is already seeing early engagement from customers.

• New Innovations Expand Addressable Market. Continuing Markforged’s track record of innovation, the Company introduced two new products last week at Formnext. The first, the FX10, is Markforged’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, the FX10 is built to supercharge manufacturing productivity and profitability by boosting production yields while decreasing operating costs. The company started building a backlog of orders for the FX10 into 2024. Markforged also introduced Vega, an ultra high-performance, carbon fiber filled PEKK material for 3D printing critical aerospace parts. These innovations complement the Digital Forge, and further increase the Company’s addressable market by helping customers solve more applications on the factory floor.

2023 Financial Outlook

The uncertain macro environment and relatively high cost of capital have weighed on Markforged’s customers’ purchasing behavior more than expected. Therefore, Markforged is maintaining its revised revenue guidance the Company shared with preliminary results of $90.0 - $95.0 million.

Markforged expects Non-GAAP gross margins to be within the range of 47% to 48%, which is within the range of the Company’s previous guidance.

Markforged is committed to pursuing profitable growth over time. As such, Markforged has recently announced a company-wide reorganization that coupled with additional cost reduction efforts is expected to generate annualized opex savings of $9 to $12 million in 2024. Including a one time restructuring costs, estimated at approximately $0.9 million, operating loss for the year is expected to be within the range $59 - $61 million.

Non-GAAP EPS loss per share is expected to be between $0.26 - $0.28 including restructuring costs.

Conference Call and Webcast Information

The Company will host a webcast and conference call at 5:00 p.m. ET today, Monday, November 13, to discuss the results.

Participants may access the earnings press release, related materials and the audio webcast by visiting the investors section of the Company's website at https://investors.markforged.com/

To participate in the call, please dial 1-877-407-9039 or 1-201-689-8470 ten minutes before the scheduled start.

For those unable to listen to the live conference call, a replay will be available on the Company's website and telephonically until Monday, November 27, 2023, 11:59 PM ET by dialing 1-844-512-2921 or 1-412-317-6671, passcode 13737743.

About Markforged

Markforged (NYSE: MKFG) is enabling more resilient and flexible supply chains by bringing industrial 3D printing right to the factory floor. Our additive manufacturing platform The Digital Forge allows manufacturers to create strong, accurate parts in both metal and advanced composites. With over 10,000 customers in 70+ countries, we’re bringing on-demand industrial production to the point of need. We are headquartered in Waltham, Mass where we design the hardware, software and advanced materials that makes The Digital Forge reliable and easy to use. To learn more, visit www.markforged.com.

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe that non-GAAP gross margin, non-GAAP operating profit (loss), and non-GAAP earnings per share, each a non-GAAP financial measure, is useful in evaluating the performance of our business.

These non-GAAP measures have limitations as an analytical tool. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors should also note that the non-GAAP financial measures we use may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies, including other companies in our industry.