Desktop Metal Announces Fourth Quarter and Full Year 2022

Desktop Metal Announces Fourth Quarter and Full Year 2022 Financial Results and Initiates 2023 Guidance

DESKTOP METAL, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts)

	December 31,
	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	76,291		$	65,017
Current portion of restricted cash		4,510			2,129
Short‑term investments		108,243			204,569
Accounts receivable		38,481			46,687
Inventory		91,736			65,399
Prepaid expenses and other current assets		17,155			18,208
Total current assets		336,416			402,009
Restricted cash, net of current portion		1,112			1,112
Property and equipment, net		56,271			58,710
Goodwill		112,955			639,301
Intangible assets, net		219,830			261,984
Other noncurrent assets		27,763			25,480
Total Assets	$	754,347		$	1,388,596
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	25,105		$	31,558
Customer deposits		11,526			14,137
Current portion of lease liability		5,730			5,527
Accrued expenses and other current liabilities		26,723			33,829
Current portion of deferred revenue		13,719			18,189
Current portion of long‑term debt, net of deferred financing costs		584			825
Total current liabilities		83,387			104,065
Long-term debt, net of current portion		311			548
Convertible notes		111,834			—
Contingent consideration, net of current portion		—			4,183
Lease liability, net of current portion		17,860			13,077
Deferred revenue, net of current portion		3,664			4,508
Deferred tax liability		8,430			10,695
Other noncurrent liabilities		1,359			3,170
Total liabilities		226,845			140,246
Commitments and Contingencies (Note 17)
Stockholders’ Equity
Preferred Stock, $0.0001 par value—authorized, 50,000,000 shares; no shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively		—			—
Common Stock, $0.0001 par value—500,000,000 shares authorized; 318,235,106 and 311,737,858 shares issued at December 31, 2022 and December 31, 2021, respectively, 318,133,434 and 311,473,950 shares outstanding at December 31, 2022 and December 31, 2021, respectively		32			31
Additional paid‑in capital		1,874,792			1,823,344
Accumulated deficit		(1,308,954	)		(568,611	)
Accumulated other comprehensive loss		(38,368	)		(6,414	)
Total Stockholders’ Equity		527,502			1,248,350
Total Liabilities and Stockholders’ Equity	$	754,347		$	1,388,596

DESKTOP METAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)

	Years Ended December 31,
	2022			2021			2020
Revenues
Products	$	190,248		$	105,994		$	13,718
Services		18,775			6,414			2,752
Total revenues		209,023			112,408			16,470
Cost of sales
Products		178,952			87,450			26,945
Services		15,000			6,665			4,574
Total cost of sales		193,952			94,115			31,519
Gross profit (loss)		15,071			18,293			(15,049	)
Operating expenses
Research and development		96,878			68,131			43,136
Sales and marketing		68,091			47,995			13,136
General and administrative		83,065			78,041			20,734
In-process research and development assets acquired		—			25,581			—
Goodwill impairment		498,800			—			—
Total operating expenses		746,834			219,748			77,006
Loss from operations		(731,763	)		(201,455	)		(92,055	)
Change in fair value of warrant liability		—			(56,576	)		56,417
Interest expense		(1,743	)		(149	)		(328	)
Interest and other (expense) income, net		(8,335	)		(11,822	)		1,011
Loss before income taxes		(741,841	)		(270,002	)		(34,955	)
Income tax benefit		1,498			29,668			940
Net loss	$	(740,343	)	$	(240,334	)	$	(34,015	)
Net loss per share—basic and diluted	$	(2.35	)	$	(0.92	)	$	(0.22	)
Weighted average shares outstanding, basic and diluted		314,817			260,770			157,906

DESKTOP METAL, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands)

	Years Ended December 31,
	2022			2021			2020
Net loss	$	(740,343	)	$	(240,334	)	$	(34,015	)
Other comprehensive (loss) income, net of taxes:
Unrealized gain (loss) on available-for-sale marketable securities, net		(290	)		(40	)		(84	)
Foreign currency translation adjustment		(31,664	)		(6,365	)		—
Total comprehensive (loss) income, net of taxes of $0	$	(772,297	)	$	(246,739	)	$	(34,099	)

DESKTOP METAL, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except share amounts)

																Accumulated
																Other
										Additional						Comprehensive			Total
	Legacy Convertible Preferred Stock					Common Stock				Paid‑in			Accumulated			(Loss)			Stockholders’
	Shares		Amount			Shares		Amount		Capital			Deficit			Income			Equity

BALANCE—January 1, 2020	100,038,109		$	436,553		26,813,113		$	3	$	16,722		$	(294,262	)	$	75		$	(277,462	)
Retroactive application of recapitalization (Note 1)	(100,038,109	)		(436,553	)	128,100,821			13		436,520			—			—			436,533
Adjusted balance, beginning of period	—			—		154,913,934			16		453,242			(294,262	)		75			159,071
Exercise of Common Stock options	—			—		521,925			—		325			—			—			325
Vesting of restricted Common Stock	—			—		5,307,357			1		6			—			—			7
Issuance of Common Stock in connection with acquisitions	—			—		61,060			—		500			—			—			500
Repurchase of shares for employee tax withholdings	—			—		(9,308	)		—		(101	)		—			—			(101	)
Stock‑based compensation expense	—			—		—			—		8,006			—			—			8,006
Common Stock warrants issued and exercised	—			—		692,366			—		1,915			—			—			1,915
Reverse recapitalization, net of transaction costs	—			—		63,139,263			6		380,295			—			—			380,301
Net loss	—			—		—			—		—			(34,015	)		—			(34,015	)
Other comprehensive income	—			—		—			—		—			—			(84	)		(84	)
BALANCE—December 31, 2020	—		$	—		224,626,597		$	23	$	844,188		$	(328,277	)	$	(9	)	$	515,925
Exercise of Common Stock options	—			—		5,732,247			1		6,425			—			—			6,426
Vesting of restricted Common Stock	—			—		491,293			—		—			—			—			—
Repurchase of shares for employee tax withholdings - RSA	—			—		(109,150	)		—		(958	)		—			—			(958	)
Vesting of restricted share units	—			—		650,777			—		—			—			—			—
Repurchase of shares for employee tax withholdings - RSU	—			—		(61,498	)		—		(541	)		—			—			(541	)
Issuance of Common Stock in connection with acquisitions	—			—		57,267,401			5		620,585			—			—			620,590
Issuance of Common Stock in connection with acquired in-process research and development	—			—		334,370			—		4,300			—			—			4,300
Stock‑based compensation expense	—			—		—			—		28,778			—			—			28,778
Vesting of Trine Founder Shares	—			—		1,850,938			—		—			—			—			—
Common Stock issued in connection with warrants exercised	—			—		20,690,975			2		320,567			—			—			320,569
Net loss	—			—		—			—		—			(240,334	)		—			(240,334	)
Other comprehensive loss	—			—		—			—		—			—			(6,405	)		(6,405	)
BALANCE—December 31, 2021	—		$	—		311,473,950		$	31	$	1,823,344		$	(568,611	)	$	(6,414	)	$	1,248,350
Exercise of Common Stock options	—			—		2,310,931			—		3,190			—			—			3,190
Vesting of restricted Common Stock	—			—		157,131			—		—			—			—			—
Vesting of restricted share units	—			—		4,153,939			1		—			—			—			1
Repurchase of shares for employee tax withholdings - RSU	—			—		(74,719	)		—		(243	)		—			—			(243	)
Issuance of common stock related to settlement of contingent consideration						112,202			—		500			—			—			500
Stock‑based compensation expense	—			—		—			—		48,001			—			—			48,001
Net loss	—			—		—			—		—			(740,343	)		—			(740,343	)
Other comprehensive loss	—			—		—			—		—			—			(31,954	)		(31,954	)
BALANCE—December 31, 2022	—		$	—		318,133,434		$	32	$	1,874,792		$	(1,308,954	)	$	(38,368	)	$	527,502

DESKTOP METAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

	Years Ended December 31,
	2022			2021			2020
Cash flows from operating activities:
Net loss	$	(740,343	)	$	(240,334	)	$	(34,015	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		50,767			24,854			8,589
Stock‑based compensation		48,001			28,778			8,006
Goodwill impairment		498,800			—			—
Change in fair value of warrant liability		—			56,576			(56,417	)
Change in fair value of subscription agreement		—			2,920			—
Expense related to Common Stock warrants issued		—			—			1,915
Amortization (accretion) of discount on investments		(888	)		3,021			75
Amortization of debt financing cost		—			9			19
Amortization of deferred costs on convertible notes		453			—			—
Provision for bad debt		975			447			377
Provision for slow-moving, obsolete, and lower of cost or net realizable value inventories, net		(45	)		—			—
Acquired in-process research and development		—			25,581			—
Loss on disposal of property and equipment		224			74			18
Foreign exchange (gains) losses on intercompany transactions, net		259			182			—
Net increase (decrease) in accrued interest related to marketable securities		847			(819	)		(3	)
Net unrealized (gain) loss on equity investment		6,332			9,660			—
Net unrealized (gain) loss on other investments		1,595			(130	)		—
Deferred tax benefit		(1,498	)		(29,668	)		(940	)
Change in fair value of contingent consideration		(1,567	)		(429	)		—
Foreign currency transaction (gain) loss		44			7			—
Changes in operating assets and liabilities:
Accounts receivable		6,737			(18,299	)		(2,370	)
Inventory		(28,183	)		(16,962	)		(1,303	)
Prepaid expenses and other current assets		1,787			(8,937	)		901
Other assets		2,505			(3	)		—
Accounts payable		(6,595	)		12,797			(2,637	)
Accrued expenses and other current liabilities		(10,613	)		(8,761	)		(2,391	)
Customer deposits		(2,037	)		(2,569	)		(845	)
Current portion of deferred revenue		(4,749	)		5,989			774
Change in right of use assets and lease liabilities, net		(4,298	)		(641	)		(328	)
Other liabilities		(41	)		1,609			—
Net cash used in operating activities		(181,531	)		(155,048	)		(80,575	)
Cash flows from investing activities:
Purchases of property and equipment		(11,517	)		(7,683	)		(1,429	)
Purchase of other investments		—			(3,620	)		(3,000	)
Proceeds from other investments		3,155			—			—
Purchase of equity investment		—			(20,000	)		—
Proceeds from sale of property and equipment		6			44			—
Proceeds from policy buyout		—			333			—
Purchase of marketable securities		(158,404	)		(330,873	)		(136,286	)
Proceeds from sales and maturities of marketable securities		248,150			243,349			109,016
Proceeds from capital grant		200			—			—
Cash paid to acquire in-process research and development		—			(21,220	)		—
Cash paid for acquisitions, net of cash acquired		(23	)		(287,624	)		(5,284	)
Net cash provided by (used in) investing activities		81,567			(427,294	)		(36,983	)
Cash flows from financing activities:
Proceeds from reverse recapitalization, net of issuance costs		—			—			534,597
Proceeds from the exercise of stock options		3,190			6,426			325
Proceeds from the exercise of stock warrants		—			170,665			—
Payment of taxes related to net share settlement upon vesting of restricted stock units		(243	)		(541	)		—
Repayment of loans		(542	)		—			—
Proceeds from issuance of convertible notes		115,000			—			—
Costs incurred in connection with the issuance of convertible notes		(3,619	)		—			—
Proceeds from PPP loan		—			—			5,379
Repayment of PPP loan		—			—			(5,379	)
Repayment of term loan		—			(10,000	)		—
Net cash provided by financing activities		113,786			166,550			534,922
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(167	)		(87	)		—
Net increase (decrease) in cash, cash equivalents, and restricted cash		13,655			(415,879	)		417,364
Cash, cash equivalents, and restricted cash at beginning of period		68,258			484,137			66,773
Cash, cash equivalents, and restricted cash at end of period	$	81,913		$	68,258		$	484,137

Supplemental disclosures of cash flow information
Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total shown in the condensed consolidated statements of cash flows:
Cash and cash equivalents	$	76,291		$	65,017		$	483,525
Restricted cash included in other current assets		4,510			2,129			—
Restricted cash included in other noncurrent assets		1,112			1,112			612
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	81,913		$	68,258		$	484,137

Supplemental cash flow information:
Interest paid	$	3,488		$	148		$	322
Taxes paid	$	—		$	150		$	—

Non‑cash investing and financing activities:
Net liabilities assumed from Trine Business Combination	$	—		$	—		$	152,395
Accrued reverse recapitalization transaction costs	$	—		$	—		$	1,901
Net unrealized (gain) loss on investments	$	290		$	40		$	—
Exercise of private placement warrants	$	—		$	149,904		$	—
Common Stock issued for acquisitions	$	—		$	620,590		$	500
Common Stock issued for acquisition of in-process research and development	$	—		$	4,300		$	—
Common Stock issued for settlement of contingent consideration	$	500		$	—		$	—
Accrued purchase price related to acquisitions	$	—		$	1,800		$	200
Additions to right of use assets and lease liabilities	$	10,812		$	5,582		$	—
Purchase of property and equipment included in accounts payable	$	516		$	90		$	—
Purchase of property and equipment included in accrued expense	$	—		$	38		$	—
Transfers from property and equipment to inventory	$	4,993		$	1,068		$	—
Transfers from inventory to property and equipment	$	4,513		$	1,435		$	—
Accrued contingent consideration in connection with acquisitions	$	—		$	6,083		$	—
Taxes related to net share settlement upon vesting of restricted stock awards in accrued expense	$	—		$	958		$	—
Tax liabilities related to withholdings on Common Stock issued in connection with acquisitions	$	—		$	—		$	102
Deferred contract costs	$	1,341		$	—		$	—
Equipment financing	$	175		$	—		$	—

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