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Markforged overcomes “supply chain challenges” to achieve 54% revenue growth in Q3 2021

Metal and carbon fiber 3D printer manufacturer Markforged (MKFG) has revealed that it achieved revenue growth of 54% in Q3 2021, despite facing “supply chain challenges” during the quarter. 

In the face of global shipping volatility, which reduced the availability of certain raw materials, the firm was still able to bring in $24 million worth of revenue in Q3 2021, compared to the $16 million it reported in Q3 2020. 

According to Markforged’s CEO Shai Terem, this was possible thanks to the sales generated by its ‘Digital Forge,’ a platform that during the quarter, enabled users to in-source their production and avoid supply chain instability, while “increasing Markforged’s market adoption and creating it opportunities for revenue growth.” 

“The supply chain disruptions felt by manufacturers all over the world are amplifying the need for solutions like the Digital Forge,” explained Terem. “Our customers continue to recognize the value of our end-to-end platform and its ability to address mission critical problems at the point of need, overcome the global shortage of parts and ensure their production line resiliency.”

“We see great opportunities to continue helping our customers reinvent manufacturing today so they can build anything they imagine tomorrow.”

A print farm of Markforged 3D printers.
Markforged’s revenue rose 54% between Q3 2020 and 2021, even though it continues to face COVID-induced supply issues. Photo via Markforged.

Markforged’s Q3 2021 results 

Although Markforged doesn’t break its top-line figures down by country or individual lines, it says that it achieved revenue growth across all its products, services and regions between Q3 2020 and 2021, with its hardware sales growing by 58%. 

On the firm’s earnings call, Terem explained how its Digital Forge, now complete with Blacksmith AI software and sixteen materials, has become a viable end-use alternative for traditional manufacturers. In fact, Terem said that Continuous Fiber Reinforced (CFR) parts are so much lighter and stronger, that Markforged’s machines are finding “mission-critical” aerospace and defense applications. 

In meeting demand for such high-value parts, Markforged was able to grow its gross profit margin from the 45% achieved in Q3 2020, to 47% in Q3 2021, and bring in a total of $14 million. However, the firm’s overall gross margins also dropped from 60% to 57% over the same period, due to worldwide supply disruptions, which increased the costs of its materials.

To get around these challenges, Markforged says that it stockpiled certain materials during the quarter, and where necessary, paid over the odds to ensure its supply. Moving forwards, the company also expects this shipping instability to continue, but maintains that its “gross margins remain strong,” and its expanding Digital Forge offering will continue to “drive revenue growth and support its gross margin.”

Elsewhere, in terms of the company’s bottom line, it was able to turn over a net profit from its operations of $24 million during Q3 2021, despite increasing its R&D, marketing and admin spending. Markforged was able to achieve this due to a change in the fair value of its contingent earnout liability, which saw it add an additional $43 million to its balance sheet. 

Financials ($)  Q3 2020 Q3 2021 Difference (%)  9M YTD 2020 9M YTD 2021 Difference (%) 
Revenue 16m 24m +54 48m 65m +36
Cost of Revenue  6m 10m +63 21m 27m +25
Gross Profit  9m 14m +47 26m 38m +44

Expanding the Digital Forge 

Towards the end of Q3 2021, Markforged unveiled its Eiger Fleet workflow management software at the RAPID+TCT trade show. Designed to act as a global cloud-based distributed manufacturing monitoring system, the program enables businesses to remotely optimize their part quality and throughput, while effectively scaling their 3D printing operations. 

Although its launch came too late to generate a significant amount of quarterly revenue, there was time for the software to be adopted by eco-energy specialist Vestas. The Markforged customer is said to have acquired Eiger Fleet to create a ‘digitized carbon inventory,’ through which it’s now able to automate the production of parts such as turbine blade assemblies, dramatically reducing their lead times. 

Just last month, the company unveiled its FX20 3D printer and ULTEM 9085 filament as well, both of which have been optimized for the production of aerospace, defense, automotive or energy parts, while during Markforged’s earnings call, Terem also revealed that its new Onyx and Carbon Fiber FR-A materials are currently undergoing qualification at Wichita State University’s ‘NCAMP’ facility.

Once completed in 2023, the program is expected to broaden the filaments’ applications within highly-regulated industries. Meanwhile, in the nearer-term Terem told analysts on the earnings call, that the FX20 is set to launch in H2 2022, at which point it will “drive growth, amplify the normal seasonality that Markforged experiences in Q3 and Q4,” and allow it to expand into new verticals. 

“We anticipate this innovation will allow us to materially increase our addressable market into bigger parts and higher-volume production,” added Terem, “[including] in mission-critical applications that require stronger, lighter and heat-resistant parts.”

Traders looking up at a Markforged sign outside the NYSE.
Given that Markforged only went public in July 2021, its Q4 2020 figures aren’t available, making its guidance difficult to contextualize. Photo via Markforged.

Markforged’s wary Q4 guidance 

In his closing remarks on Markforged’s earnings call, Terem said that the firm’s supply chain pressures were “out of its control,” thus he expects them to “continue, at least through the first half of next year.” As a result, Terem added that “the market is just too volatile” for the company to issue guidance for the year ahead, and it has therefore delayed doing so until the release of its Q4 financials. 

With regards to its revenue for FY 2021, the company has set initial guidance of $88-90 million, with gross margins of 57-58%, and EBITDA expected to be within its previously published range. Given that Markforged went public in July and hasn’t released its Q4 2020 financials, it is difficult to assess these figures in terms of growth, but the firm has at least provided clarity on its future growth strategy. 

“Our third quarter R&D expenses increased 134.5% year-over-year to $9.5 million compared with $4 million in the year ago quarter,” Markforged’s CFO Mark Schwartz added on the earnings call. “We are intent on increasing our spend in innovation, to expand and accelerate our R&D efforts, and ultimately increase the velocity of new product introduction, which will fuel our longer-term growth.”

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Featured image shows traders looking up at a Markforged sign outside the NYSE. Photo via Markforged.



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