Desktop Metal (DM +0.00%) is slated to report its first-quarter 2021 results after the market close on Monday, May 17. An analyst conference call is scheduled for the same day at 4:30 p.m. EDT.
This will be the 3D printing company's second quarterly report as a public entity. It went public in December 2020 via a reverse merger with a special purpose acquisition company (SPAC). (This method is faster and less expensive than the traditional initial public offering route.)
Some investors might view 3D Systems' (DDD +2.92%) better-than-expected first-quarter results, released on Monday, as an indication that Desktop Metal's results could also surprise to the upside. There is some logic here, as 3D Systems got a boost from U.S. economic conditions being more favorable for its business relative to last year, when it was hit hard by the fallout from the COVID-19 pandemic.
That said, company-specific factors were also at play. 3D Systems' results suggest that it executed well in the quarter. Moreover, it's a well-established company, whereas Desktop Metal is not. In addition, the two companies' business profiles have some differences.
Image source: Getty Images.
Key numbers
Below are Wall Street's estimates and the company's results for the prior quarter to use as benchmarks. (Such a chart would typically provide year-ago results rather than prior-quarter ones, but Desktop Metal wasn't publicly traded at that time.)
|
Metric |
Q4 2020 Result |
Q1 2021 Wall Street Consensus Estimate |
Projected Sequential Change |
|---|---|---|---|
|
Revenue |
$8.4 million |
$9.4 million | 12% |
|
Adjusted earnings per share (EPS) |
($0.08) |
($0.12) | N/A. Loss expected to widen 33%. |
Data sources: Desktop Metal and Yahoo! Finance.
For additional context, for full-year 2020, Desktop Metal's revenue dropped 38% year over year to $16.5 million. Management attributed last year's revenue decline primarily to the pandemic, which caused some customers and potential customers to pause their ordering. In 2020, net loss narrowed 13% to $90.4 million, or $0.57 per share.
For even more context, in Q1, 3D Systems' revenue grew 7.7% year over year, and 17% excluding the impact of divestitures. Moreover, it posted a profit on an adjusted basis and on the basis of generally accepted accounting principles (GAAP).
Organic revenue
Investors will want to pay attention to Desktop Metal's organic revenue, not just total revenue. Hopefully, management discloses this metric in the earnings release or on the earnings call. (Organic revenue doesn't include the impact of acquisitions or divestitures made over the last year.)
Desktop Metal acquired EnvisionTEC in February, so the first quarter's total revenue will get a boost from this acquisition. Organic revenue will exclude the revenue contribution from EnvisionTEC and enable investors to gauge how Desktop Metal's core metal 3D printing business is performing. That said, keep in mind that the first quarter is usually the lowest-revenue quarter for companies in the 3D printing industry.
The EnvisionTEC acquisition expanded Desktop Metal's business into the polymer 3D printing market. (I suspect the company will eventually change its name to better reflect its business.)
Market reception to new products in the metals business
The company began shipping its Shop System and Production System P-1 solutions in the fourth quarter of 2020. Investors will want to know what the early market reception has been for these new products. Management will probably provide color on this topic on the call.
Desktop Health
Last quarter, the company announced the launch of Desktop Health, a new business unit. Hopefully, management will break out the revenue generated from this unit and continue to do so.
As a point of reference, in Q1, 3D Systems' healthcare segment revenue surged 39% year over year, while its industrial segment revenue was about flat with the year-ago period excluding the impact of divestitures.
