Desktop Metal (DM 0.96%) is slated to report its second-quarter 2022 results after the market close on Monday, Aug. 8. An analyst conference call is scheduled for the same day at 4:30 p.m. ET.
Fellow 3D-printing company 3D Systems also plans to release its report following the closing bell on Aug. 8, while Stratasys is on deck for before the market open on Wednesday, Aug. 3. (Click to read 3D Systems' earnings preview and Stratasys' earnings preview.)
Investors will probably be approaching Desktop Metal's upcoming report with caution. Shares plunged 61% following the release of last quarter's report. The main catalyst was likely the company's announcement of a $150 million offering of convertible senior notes due in 2027. Its brisk cash-burn rate necessitated this offering and continued at a fast pace in the first quarter. A related issue is shareholder dilution, as the company has been issuing new shares to help fund some of its acquisitions.
Some investors are also likely growing increasingly uneasy about the growth prospects for the P-50 production system, as we'll explore in a moment. That unease might have intensified after the company's recent announcement that its CFO resigned. Such a happening could be meaningless or a negative sign.
Here's what to watch in Desktop Metal's upcoming Q2 report.
Image source: Getty Images.
Desktop Metal's key numbers
| Metric | Q2 2021 Result | Wall Street's Q2 2022 Consensus Estimate | Wall Street's Projected Change |
|---|---|---|---|
| Revenue | $19.0 million | $54.7 million | 188% |
| Adjusted earnings per share | ($0.10) | ($0.08) | (25%) |
Data sources: Desktop Metal and Yahoo! Finance.
The quarter to be reported will be the second quarter that revenue will get a full quarter's boost from the company's acquisition of ExOne, which occurred in November. Revenue will also get a lift from other acquisitions. The company has not been providing organic revenue results on a quarterly basis, so investors probably won't learn how much revenue came from acquisitions made over the last year.
For context, in the first quarter, Desktop's revenue surged 286% year over year to $43.7 million. This result included a full quarter of contribution from ExOne and contributions from other acquisitions. Adjusted for one-time items, net loss was $43.4 million, or $0.14 per share, compared with net income of $7 million, or $0.03 per share, in the year-ago period.
Cash burn
In the first quarter, Desktop used $56.3 million running its operations, compared with using $41.1 million in the year-ago period. It ended Q1 with $206.5 million in cash, cash equivalents, and short-term investments. That figure is before the cash received from the $150 million convertible senior notes offering.
Cash burn should continue to be investors' No. 1 focus. Liquidity will be even more important than usual if the U.S. economy slips into a recession. If this occurs, many industrial companies will cut back on their ordering, including of 3D printers.
P-50 sales
In February, Desktop shipped its first P-50 to Stanley Black & Decker. The P-50 is its flagship 3D printing system for mass production of end-use metal parts.
While it's still early days, some investors are no doubt concerned about the market's reception to this product, whose launch was pushed back several times over the past few years.
Annual guidance
Any notable changes to Desktop Metal's 2022 guidance would likely move the stock. Here's its current annual outlook:
- Revenue of about $260 million, representing 131% annual growth.
- Earnings before interest, taxes, depreciation, and amortization (EBITDA) of approximately negative $90 million. In 2021, adjusted EBITDA was negative $96.1 million, so management expects this loss to narrow by about 6%.
