Markforged Holding Corporation (NYSE:MKFG) (the "Company"), the company strengthening manufacturing resiliency by enabling industrial production at the point of need, today announced its results from the third quarter ended September 30, 2022.

Financial Highlights

Revenue increased by 5%, to $25.2 million, in the third quarter of 2022 from $24.0 million in the third quarter of 2021.
Gross margin was 48.6% in the third quarter of 2022 compared to 57.0% in the third quarter of 2021.
Non-GAAP gross margin was 49.1% in the third quarter of 2022 compared to 57.6% in the third quarter of 2021.
Net loss was $23.0 million in the third quarter of 2022, compared to net profit of $21.7 million in the third quarter of 2021.
Non-GAAP net loss was $15.2 million in the third quarter of 2022, compared to a loss of $11.7 million in the third quarter of 2021.
GAAP earnings per share was a loss of $0.12 for the third quarter of 2022, compared to income of $0.13 in the third quarter of 2021.
Non-GAAP earnings per share was a loss of $0.08 for the third quarter of 2022, compared to a loss of $0.07 in the third quarter of 2021.
Cash and cash equivalents were $181.8 million as of September 30, 2022.

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."

"Despite a challenging macro environment, we delivered another solid quarter as demand for The Digital Forge continues to grow globally. Ongoing supply chain challenges continue to be a catalyst for demand for our Digital Forge platform which brings industrial production to the point of need," said Shai Terem, President and CEO of Markforged. "Excitement for our newest production-grade printer, the FX20, has been tremendous, and we are pleased to have expanded our addressable market by adding high volume metal application capabilities to our technology offerings with the closing of the Digital Metal acquisition. While challenges including inflation, geopolitical tensions and supply chain disruption are putting near-term pressure on our margins, we are confident in our long term strong fundamentals, which are supported by our growing pipeline and market opportunity."

Business Highlights

Robust FX20 demand. Markforged's newest production-grade printer the FX20 is generating unprecedented excitement and orders continue to exceed the company's expectation as manufacturers seek solutions to make their supply chains more resilient and flexible. However, as supply chain challenges continued globally, Markforged was not able to meet the demand for the FX20 and the cost of production of the FX20 exceeded our estimates.
Addressable market expansion with metals technology. The company completed the acquisition of Digital Metal in the third quarter. The addition of this new metal binder jetting technology expands Markforged's addressable market into the mass production of end-use metal parts. Demand is building in automotive, luxury goods, medical and MIM applications.
Strength in the APAC region. In the Americas and EMEA, inflation and geopolitical pressures continued to impact the company's business, as macroeconomic uncertainty led businesses to delay purchase decisions. However, the APAC region met the company's expectations for significant growth in the second half of 2022. Revenue in APAC grew 51% during the nine months ended September 30, 2022 compared to the same period in 2021, and 82% during the three months ended September 30, 2022 compared to the same period in 2021, led by strong demand for mature products and accelerated demand for the FX20.
Operating leverage from tight cost controls. Strong cost controls allowed Markforged to see sequential operating leverage and deliver on its EPS target in Q3. The company reorganized its go-to-market team and reprioritized initiatives with the potential for the greatest impact on profitable growth. These cost controls resulted in a strong balance sheet that the company anticipates will keep it on the path to profitability in 2024.

2022 Guidance

Markforged is updating its full-year 2022 financial guidance to reflect its updated fiscal year outlook, which considers the current market conditions. The Company anticipates revenue for the fourth quarter to be in the range of $28 - $32 million which, at the midpoint, would result in 2022 full year revenue near the lower end of the range the Company provided previously. Non-GAAP gross margin in the fourth quarter is anticipated to be in the range of 48% - 50%, which equates to full year 2022 non-GAAP gross margin within the range of 50% - 52%. Non-GAAP operating loss in the fourth quarter is expected to be in the range of $13.2 - $14.7 million, which equates to full year 2022 non-GAAP operating loss in the range of $61 - $62.5 million for the year. Non-GAAP earning per share results for the fourth quarter are expected to be a loss in the range of $0.06 - $0.07 per share, which equates to full year 2022 non-GAAP earning per share results to be a loss in the range of $0.31 - $0.32 per share, based on the outstanding share count of approximately 193.6 million shares.

Conference Call and Webcast Information

The Company will host a webcast and conference call at 5:00 p.m. ET today, Wednesday, November 9, 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 1-800-954-0692, or 1-212-231-2907 for international participants, 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 through Wednesday, November 23, 2022 by dialing 1-844-512-2921 (U.S. domestic) or 1-412-317-6671 (International), passcode 152520.

About Markforged

Markforged (NYSE:MKFG) is making manufacturing more resilient and flexible by bringing on-demand industrial production to the point of need. The Markforged Digital Forge – the reliable, intelligent and easy-to-use additive manufacturing platform – empowers any manufacturer to create robust end-use parts in both metal and composites anywhere and anytime. Over 10,000 customers across 70+ countries use The Digital Forge to overcome limitations of traditional manufacturing while strengthening their supply chains. Markforged is headquartered in Watertown, Mass., where it designs the hardware, software and materials that powers its platform. 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.

We recommend that you review the reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures provided in the financial statement tables included below in this press release, and that you not rely on any single financial measure to evaluate our business. Additionally, to the extent that forward-looking non-GAAP financial measures are provided, they are presented on a non-GAAP basis without reconciliations of such forward-looking non-GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.

Investors should note that beginning with the second quarter of 2022, we have modified the presentation of "non-recurring costs" included in non-GAAP gross margin, non-GAAP operating profit (loss), non-GAAP net profit (loss) and non-GAAP earnings per share metrics to include certain non-recurring litigation costs. We use these metrics to provide an understanding of the results of its core business performance and believe these non-recurring litigation costs are reflective of one-time expenses that are not indicative of the performance of our core business' operations. This change increases "non-recurring costs" by $0.6 million, $1.0 million, and $0.8 million in the first through third quarters of 2022, respectively, and by $3.7 million, $0.9 million, and $2.3 million in the first through third quarters of 2021, respectively. To conform to the current period's presentation, we have included non-recurring litigation costs as "non-recurring costs" when presenting the foregoing non-GAAP figures for the year to date period and periods presented for 2021.

The following are the non-GAAP financial measures referenced in this press release and presented in the tables below:

Non-GAAP gross margin is defined as GAAP operating profit (loss), less stock-based compensation expense and certain non-recurring costs, divided by revenue.
Non-GAAP operating profit (loss) is defined as GAAP operating profit (loss) less stock-based compensation expense and certain non-recurring costs.
Non-GAAP net profit (loss) is defined as GAAP net profit (loss) less stock-based compensation expense, net change in fair value of warrant liabilities and contingent earnout liabilities, and certain non-recurring costs.
Non-GAAP earnings per share is defined as GAAP net profit (loss) less stock-based compensation expense, net change in fair value of warrant liabilities and contingent earnout liabilities, and certain non-recurring costs, divided by diluted weighted average shares outstanding for the period.

Special Note Regarding Forward-Looking Statements

This press release contains forward-looking statements that are based on beliefs and assumptions and on information currently available. In some cases, you can identify forward-looking statements by the following words: "may," "will," "could," "would," "should," "expect," "intend," "plan," "strategy," "anticipate," "believe," "estimate," "predict," "project," "potential," "continue," "ongoing," "opportunity" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although Markforged believes that it has a reasonable basis for each forward-looking statement contained in this press release, Markforged cautions you that these statements are based on a combination of facts and factors currently known by it and its projections of the future, about which it cannot be certain. Forward-looking statements in this press release include, but are not limited to, future growth rate, revenue, gross profit margin and earnings guidance; timing for achieving profitability; our ability to fulfill orders for our products in a timely fashion in the future; expected growth, the size of and opportunity to increase our addressable market; the anticipated benefits of the acquisition of Digital Metal, the rate and extent of adoption of our products, including, but not limited to, our most recently introduced products; market trends in the manufacturing industry; the effects of macroeconomic factors; and the benefits to consumers, functionality and applications of Markforged's products. Markforged cannot assure you that the forward-looking statements in this press release will prove to be accurate. These forward looking statements are subject to a number of risks and uncertainties, including, among others, general economic, political and business conditions; the ability of Markforged to maintain its listing on the New York Stock Exchange; the effect of COVID-19 on Markforged's business and financial results; the outcome of any legal proceedings against Markforged; and those factors discussed under the header "Risk Factors" in Markforged's most recent periodic and other filings with the SEC. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that Markforged will achieve its objectives and plans in any specified time frame, or at all. The forward-looking statements in this press release represent Markforged's views as of the date of this press release. Markforged anticipates that subsequent events and developments will cause its views to change. However, while Markforged may elect to update these forward-looking statements at some point in the future, Markforged has no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing Markforged's views as of any date subsequent to the date of this press release.


MARKFORGED HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2022 and December 31, 2021
(In thousands, except share data and par value amounts) (Unaudited)

	September 30, 2022			December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	181,805		$	288,603
Accounts receivable, net		30,135			26,777
Inventory		24,561			10,377
Prepaid expenses		3,647			3,921
Other current assets		2,918			511
Total current assets		243,066			330,189
Property and equipment, net		13,409			6,349
Goodwill		31,249			—
Intangible assets		15,377			—
Right-of-use assets		45,615			—
Other assets		3,150			776
Total assets	$	351,866		$	337,314
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	10,792		$	11,403
Accrued expenses		9,878			7,411
Deferred revenue		6,781			6,288
Operating lease liabilities		7,778			—
Other current liabilities		21			310
Total current liabilities		35,250			25,412
Long-term deferred revenue		4,535			3,742
Deferred rent		—			1,623
Contingent earnout liability		8,740			59,722
Long-term operating lease liabilities		40,333			—
Other liabilities		4,944			2,646
Total liabilities		93,802			93,145
Commitments and contingencies
Stockholders' equity
Common stock, $0.0001 par value; 1,000,000,000 shares authorized at September 30, 2022 and December 31, 2021; 193,643,855 and 185,993,058 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		19			19
Additional paid-in capital		350,022			319,859
Accumulated deficit		(90,365	)		(75,709	)
Accumulated other comprehensive income (loss)		(1,612	)		—
Total stockholders' equity		258,064			244,169
Total liabilities and stockholders' equity	$	351,866		$	337,314


MARKFORGED HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2022 and 2021
(In thousands, except share data and per share data) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2022			2021			2022			2021
Revenue	$	25,208		$	24,045		$	71,294		$	64,584
Cost of revenue		12,959			10,330			34,514			26,729
Gross profit		12,249			13,715			36,780			37,855
Operating expenses
Sales and marketing		11,783			10,399			35,104			25,711
Research and development		10,421			9,761			31,375			21,487
General and administrative		12,873			15,935			38,094			32,770
Total operating expenses		35,077			36,095			104,573			79,968
Loss from operations		(22,828	)		(22,380	)		(67,793	)		(42,113	)
Change in fair value of warrant liabilities		(448	)		1,418			1,221			170
Change in fair value of contingent earnout liability		(656	)		42,710			50,982			42,710
Other expense		(39	)		(48	)		(429	)		(168	)
Interest expense		(2	)		(6	)		(11	)		(15	)
Interest income		1,006			6			1,380			9
Profit (loss) before income taxes		(22,967	)		21,700			(14,650	)		593
Income tax benefit		3			(3	)		6			(1	)
Net profit (loss)	$	(22,970	)	$	21,703		$	(14,656	)	$	594
Weighted average shares outstanding - basic		189,766,945			162,942,990			188,225,543			81,373,265
Weighted average shares outstanding - diluted		189,766,945			167,091,320			188,225,543			85,407,166
Net profit (loss) per share - basic	$	(0.12	)	$	0.13		$	(0.08	)	$	0.01
Net profit (loss) per share - diluted		(0.12	)		0.13			(0.08	)		0.01


MARKFORGED HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the three and nine months ended September 30, 2022 and 2021 (In thousands) (Unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2022			2021		2022			2021
Net income (loss)	$	(22,970	)	$	21,703	$	(14,656	)	$	594
Other comprehensive loss, net of taxes:
Foreign currency translation adjustment		(1,612	)		—		(1,612	)		—
Total comprehensive income (loss), net of taxes of $0	$	(24,582	)	$	21,703	$	(16,268	)	$	594


MARKFORGED HOLDING CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
For the Three and Nine Months Ended September 30, 2022 and 2021
(In thousands) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2022			2021			2022			2021
Net profit (loss) and comprehensive income (loss)	$	(22,970	)	$	21,703		$	(14,656	)	$	594
Stock compensation expense		5,286			8,424			15,620			11,395
Change in fair value of warrant liabilities		448			(1,418	)		(1,221	)		(170	)
Change in fair value of contingent earnout liability		656			(42,710	)		(50,982	)		(42,710	)
Non-recurring costs¹		1,427			2,329			4,411			6,962
Non-GAAP net loss ²	$	(15,153	)	$	(11,672	)	$	(46,828	)	$	(23,929	)

¹Non-recurring costs primarily relate to transaction and litigation expenses.

²Stock-based compensation expense and non-recurring costs were included in the following GAAP consolidated statement of operations categories:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of revenue	$	130	$	129	$	347	$	218

Sales and marketing		917		856		2,540		1,176
Research and development		1,326		2,043		4,317		2,768
General and administrative		4,340		7,725		12,827		14,195
Total operating expense		6,583		10,624		19,684		18,139
Total adjustments	$	6,713	$	10,753	$	20,031	$	18,357


MARKFORGED HOLDING CORPORATION
NON-GAAP RECONCILIATION
THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(In thousands, except share data and per share data) (Unaudited)

	Three Months Ended September 30, 2022								Three Months Ended September 30, 2021
	GAAP			Adjustments		Non-GAAP			GAAP			Adjustments		Non-GAAP
Revenue	$	25,208		—		$	25,208		$	24,045		—		$	24,045
Cost of revenue		12,959		(130	)		12,829			10,330		(129	)		10,201
Gross profit		12,249		130			12,379			13,715		129			13,844
Operating expenses
Sales and marketing		11,783		(917	)		10,866			10,399		(856	)		9,543
Research and development		10,421		(1,326	)		9,095			9,761		(2,043	)		7,718
General and administrative		12,873		(4,340	)		8,533			15,935		(7,725	)		8,210
Total operating expenses		35,077		(6,583	)		28,494			36,095		(10,624	)		25,471
Loss from operations		(22,828	)	6,713			(16,115	)		(22,380	)	10,753			(11,627	)
Change in fair value of warrant liabilities		(448	)	448			—			1,418		(1,418	)		—
Change in fair value of contingent earnout liability		(656	)	656			—			42,710		(42,710	)		—
Other expense		(39	)	—			(39	)		(48	)	—			(48	)
Interest expense		(2	)	—			(2	)		(6	)	—			(6	)
Interest income		1,006		—			1,006			6		—			6
Profit (loss) before income taxes		(22,967	)	7,817			(15,150	)		21,700		(33,375	)		(11,675	)
Income tax (benefit) expense		3		—			3			(3	)	—			(3	)
Net profit (loss) and comprehensive income (loss)	$	(22,970	)	7,817		$	(15,153	)	$	21,703		(33,375	)	$	(11,672	)
Weighted average shares outstanding - basic		189,766,945					189,766,945			162,942,990					162,942,990
Weighted average shares outstanding - diluted		189,766,945					189,766,945			167,091,320					167,091,320
Net profit (loss) per share - basic	$	(0.12	)			$	(0.08	)	$	0.13				$	(0.07	)
Net profit (loss) per share - diluted		(0.12	)				(0.08	)		0.13					(0.07	)


MARKFORGED HOLDING CORPORATION
NON-GAAP RECONCILIATION
NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(In thousands, except share data and per share data) (Unaudited)

	Nine Months Ended September 30, 2022								Nine Months Ended September 30, 2021
	GAAP			Adjustments		Non-GAAP			GAAP			Adjustments		Non-GAAP
Revenue	$	71,294		—		$	71,294		$	64,584		—		$	64,584
Cost of revenue		34,514		(347	)		34,167			26,729		(218	)		26,511
Gross profit		36,780		347			37,127			37,855		218			38,073
Operating expenses
Sales and marketing		35,104		(2,540	)		32,564			25,711		(1,176	)		24,535
Research and development		31,375		(4,317	)		27,058			21,487		(2,768	)		18,719
General and administrative		38,094		(12,827	)		25,267			32,770		(14,195	)		18,575
Total operating expenses		104,573		(19,684	)		84,889			79,968		(18,139	)		61,829
Loss from operations		(67,793	)	20,031			(47,762	)		(42,113	)	18,357			(23,756	)
Change in fair value of warrant liabilities		1,221		(1,221	)		—			170		(170	)		—
Change in fair value of contingent earnout liability		50,982		(50,982	)		—			42,710		(42,710	)		—
Other expense		(429	)	—			(429	)		(168	)	—			(168	)
Interest expense		(11	)	—			(11	)		(15	)	—			(15	)
Interest income		1,380		—			1,380			9		—			9
Profit (loss) before income taxes		(14,650	)	(32,172	)		(46,822	)		593		(24,523	)		(23,930	)
Income tax (benefit) expense		6		—			6			(1	)	—			(1	)
Net profit (loss) and comprehensive income (loss)	$	(14,656	)	(32,172	)	$	(46,828	)	$	594		(24,523	)	$	(23,929	)
Weighted average shares outstanding - basic		188,225,543					188,225,543			81,373,265					81,373,265
Weighted average shares outstanding - diluted		188,225,543					188,225,543			85,407,166					85,407,166
Net profit (loss) per share - basic	$	(0.08	)			$	(0.25	)	$	0.01				$	(0.29	)
Net profit (loss) per share - diluted		(0.08	)				(0.25	)		0.01					(0.28	)


MARKFORGED HOLDING CORPORATION
DISAGGREGATED REVENUE BY NATURE OF PRODUCTS AND SERVICES
(In thousands) (Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Hardware	$	17,571	$	17,469	$	48,098	$	46,039
Consumables		5,568		4,899		16,913		14,295
Services		2,069		1,677		6,283		4,250
Total Revenue	$	25,208	$	24,045	$	71,294	$	64,584


MARKFORGED HOLDING CORPORATION
DISAGGREGATED REVENUE BY GEOGRAPHIC LOCATION
(In thousands) (Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Americas	$	12,591	$	14,937	$	34,150	$	35,169
EMEA	$	5,353	$	5,118	$	19,618	$	17,804
APAC	$	7,264	$	3,990	$	17,526	$	11,611
Total Revenue	$	25,208	$	24,045	$	71,294	$	64,584

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