Desktop Metal Announces First Quarter 2023 Financial Results

• Revenue of $41.3 million, with a growing number of repeat purchases from customers with multi-machine fleets of our Additive Manufacturing 2.0 systems
• Cost reduction plan delivered significant year-over-year improvements to adjusted EBITDA and operating cash flow in first quarter 2023
• Combined $100 million in annualized savings from cost reduction plans remain on-track in order to reduce expense structure, expand margins, and drive to profitability
• Reaffirming full year 2023 guidance of revenue between $210 to $260 million, and adjusted EBITDA between $(50) to $(25) million, with expectation to achieve adjusted EBITDA breakeven before year end 2023

Desktop Metal, Inc. (NYSE: DM) today announced its financial results for the first quarter ended March 31, 2023.

“Desktop Metal is off to a solid start to 2023 following very strong growth last year,” said Ric Fulop, Founder and CEO of Desktop Metal. “Customer demand trends for our unique portfolio of AM 2.0 mass production solutions remain resilient, despite an unsteady macro environment, giving us confidence in our growth projections for this year. Additionally, we’ve made significant progress on our cost reduction efforts initiated last year and expanded in February 2023. Going forward, we expect to demonstrate continued reductions in our cost structure in order to expand margins and deliver on our adjusted EBITDA commitments. We believe we can differentiate ourselves as we navigate a difficult economic backdrop relative to our industry peers.”

First Quarter 2023 and Recent Business Highlights:

• Continued and expanded the cost reduction plan announced in 2022 to add an additional $50 million in annualized savings, as announced in February 2023, after successfully completing $50 million in annualized savings in 2022. Total combined $100 million in annualized cost savings remain on-track in order to reduce expense structure, expand margins, and drive to profitability
• Expanding customer relationships with a growing number of high adoption Super Fleet customers, or those with three or more AM 2.0 printing systems. We now have more than 370 Super Fleet customers producing a high volume of end-use parts
• Continued progress on Production System^TM platforms including expanding relationships with various consumer electronics customers, a segment we believe we can generate eight figures of revenue over next 18 months
• Launched Live Suite^TM, a highly differentiated end-to-end software hub delivering generative AI solutions for AM 2.0
• Expanded technical ceramic offerings across our portfolio of binder jet systems, where we're seeing increasing adoption for silicon carbide applications
• Continued expansion of leading production materials library including Copper Alloy C18150 and Titanium Alloy Ti64 on the Production System^TM and 304L Stainless Steel on the Shop System^TM

First Quarter 2023 Financial Highlights:

• Revenue of $41.3 million, down 5.5% from first quarter 2022 revenue of $43.7 million
• GAAP gross margin of (3.3)%; non-GAAP gross margin of 18.0%, an improvement of 90 basis points from first quarter 2022
• GAAP net loss of $52.6 million including $10.4 million amortization of acquired intangibles; non-GAAP net loss of $27.7 million
• Adjusted EBITDA of $(24.4) million, an improvement of $17.1 million from first quarter 2022
• Cash, cash equivalents, and short-term investments of $149.8 million as of March 31, 2023

Financial Outlook:

• Reaffirming revenue expectation of between $210 to $260 million for full year 2023
• Reaffirming Adjusted EBITDA expectation of between $(50) to $(25) million for full year 2023, with expectation to achieve Adjusted EBITDA breakeven before year end 2023

Desktop Metal has not provided a reconciliation of its Adjusted EBITDA outlook to net income because estimates of all of the reconciling items cannot be provided without unreasonable efforts. See “Non-GAAP Financial Information.”

Conference Call Information:

Desktop Metal will host a conference call on Wednesday, May 10, 2023 to discuss first quarter 2023 results. Participants may access the call at 1-877-407-4018, international callers may use 1-201-689-8471, and request to join the Desktop Metal financial results conference call. A simultaneous webcast of the conference call and the accompanying summary presentation may be accessed online at the Events & Presentations section of ir.desktopmetal.com. A replay will be available shortly after the conclusion of the conference call at the same website.

About Desktop Metal:

Desktop Metal (NYSE:DM) is driving Additive Manufacturing 2.0, a new era of on-demand, digital mass production of industrial, medical, and consumer products. Our innovative 3D printers, materials, and software deliver the speed, cost, and part quality required for this transformation. We’re the original inventors and world leaders of the 3D printing methods we believe will empower this shift, binder jetting and digital light processing. Today, our systems print metal, polymer, sand and other ceramics, as well as foam and recycled wood. Manufacturers use our technology worldwide to save time and money, reduce waste, increase flexibility, and produce designs that solve the world’s toughest problems and enable once-impossible innovations. Learn more about Desktop Metal and our #TeamDM brands at www.desktopmetal.com.

Forward-looking Statements:

This press release contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical facts contained in these communications, including statements regarding Desktop Metal’s future results of operations and financial position, financial targets, business strategy, plans and objectives for future operations, are forward-looking statements. Forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including but not limited to risks associated with the integration of the business and operations of acquired businesses, our ability to realize the benefits from cost saving measures, and supply and logistics disruptions, including shortages and delays. For more information about risks and uncertainties that may impact Desktop Metal’s business, financial condition, results of operations and prospects generally, please refer to Desktop Metal’s reports filed with the SEC, including without limitation the “Risk Factors” and/or other information included in the Form 10-Q filed with the SEC on May 10, 2023, and such other reports as Desktop Metal has filed or may file with the SEC from time to time. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Desktop Metal, Inc. assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

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Non-GAAP Financial Information

This press release contains non-GAAP financial measures, including non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA.

• We define non-GAAP gross margin as GAAP gross margin excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring, acquisition-related and integration costs, and inventory step-up adjustments
• We define non-GAAP operating loss as GAAP operating loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring, inventory step-up adjustments, and acquisition-related and integration costs
• We define non-GAAP net loss as GAAP net loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring, inventory step-up adjustments, acquisition-related and integration costs, and change in fair value of investments
• We define non-GAAP operating expense as GAAP operating expense excluding the effect of stock-based compensation, amortization of acquired intangible assets, restructuring, and acquisition-related and integration costs including in operating expenses
• We define EBITDA as GAAP net income (loss) excluding interest, income taxes, and depreciation and amortization expense
• We define Adjusted EBITDA as EBITDA excluding change in fair value of investments, inventory step-up adjustments, stock-based compensation, restructuring, and acquisition-related and integration costs

In addition to Desktop Metal’s results determined in accordance with GAAP, Desktop Metal’s management uses this non-GAAP financial information to evaluate the Company’s ongoing operations and for internal planning and forecasting purposes. We believe that this non-GAAP financial information, when taken collectively, may be helpful to investors in assessing Desktop Metal’s operating performance.

We believe that the use of Non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends because it eliminates the effect of financing, capital expenditures, and non-cash expenses such as stock-based compensation and warrants, and provides investors with a means to compare Desktop Metal’s financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, investors should be aware that when evaluating non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA, we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of these measures may not be comparable to other similarly titled measures computed by other companies because not all companies calculate these measures in the same fashion.

Because of these limitations, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA on a supplemental basis. Management uses, and investors should consider, our non-GAAP financial measures only in conjunction with our GAAP results. Desktop Metal has not provided a reconciliation of its Adjusted EBITDA outlook to net income because estimates of all of the reconciling items cannot be provided without unreasonable efforts.

Set forth below is a reconciliation of each non-GAAP financial measure used in this press release to its most directly comparable GAAP financial measure.

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