Troy Jensen

Troy Donavon Jensen asked if customers who 'leaned in' for awards went to a competitor or if awards were not granted. He also inquired if the observed SKU growth in general merchandise was broad-based or limited to a few large customers.

Answer

Chris Diorio, Impinj's CEO, clarified that partners did not go to a competitor; instead, the award was oversubscribed, leading partners to build M800 inventory in anticipation of wins, which now needs to be burned down, compounded by the new custom chip. Cary Baker, Impinj's CFO, added that the fungibility of M800 allowed partners to over-order. Chris Diorio stated that the SKU growth in existing and new categories within the general merchandise space was related to a small number of customers.

Troy Donavon Jensen asked if the customers who 'leaned in' for awards went to a competitor, implying a share loss. He also inquired if the observed SKU growth in retail was broad-based or limited to a few larger customers.

Answer

Chris Diorio, CEO, clarified that there was no share loss to a competitor; rather, the awards were 'oversubscribed,' meaning several partners anticipated wins and built inventory for the new IC, while existing M800 inventory also needed to be burned down. Cary Baker, CFO, added that the logistics customer rebids label suppliers annually, and the M800's fungibility allowed partners to build inventory confidently. Chris Diorio stated that the SKU growth in existing and new categories was related to a small number of customers in the general merchandise space.

Troy Jensen from Cantor Fitzgerald inquired about the opportunity pipeline in the logistics vertical, asking if more large deals are expected in the coming quarters. He also asked for the specific amount of licensing revenue recorded in Q2.

Answer

CEO Chris Diorio responded by broadening the definition of the logistics opportunity, stating that it includes not just pure-play logistics firms but any enterprise managing its own supply chain, indicating a vast addressable market. CFO Cary Baker confirmed that Q2 licensing revenue was $16 million.

Troy Jensen of Cantor Fitzgerald asked for clarification on the implied high gross margin for Q2. He also inquired about the gross margin outlook for the second half of the year and requested details on the company's convertible debt.

Answer

CFO Cary Baker confirmed the high implied Q2 gross margin is correct, driven by the annual high-margin license payment, and noted that product-only gross margin is expected to be similar to Q1. He anticipates second-half product gross margins will benefit from the M800 ramp, improved yields, and lower wafer costs. He also provided details on the convertible debt: a ~$111 conversion price, a May 2027 due date, and a notional value of $287.5 million.

Troy Jensen asked for more insight into the "aggressive endpoint price shopping," specifically regarding ASP reductions, and requested clarification on the expected magnitude of the "modest" gross margin decline in Q1.

Answer

CFO Cary Baker explained that pricing negotiations were largely in line with expectations and focused on driving M800 adoption, which is a lower-priced SKU, leading to lower average ASPs but is expected to be accretive to gross margin over time. CEO Chris Diorio added that the price shopping is occurring at the label level due to bonding overcapacity, causing delayed orders. Regarding gross margin, Cary Baker reiterated it would mark the low point for the year but did not provide a specific percentage range.

Troy Jensen asked for an update on the Qualcomm partnership, including its implications for RAIN adoption, the timing for implementation in mobile devices, and its relation to the Digital Product Passport (DPP). He also requested further guidance on Q4 gross margins.

Answer

CEO Chris Diorio explained that Qualcomm's public statement has significantly advanced RAIN's position for the DPP in Europe. He anticipates the first opportunities will be in enterprise mobile devices, with consumer adoption following later as the back-end ecosystem matures. CFO Cary Baker guided to a Q4 gross margin of around 53%, benefiting from a richer systems mix and high-margin authenticity IC sales, and reiterated confidence in long-term targets.

Troy Jensen asked about the remaining CapEx for Fab 1 and the strategy for Fab 2, specifically if it would outsource capacity for thin-film lithium niobate. He also inquired about the share count exiting 2026 and sought updates on QPU stats (Q account, Fidelity), questioning if the near-term opportunity lies more in sensing and other applications versus QPU sales.

Answer

Chris Roberts, CFO, stated Fab 1 is largely built out. Yuping Huang, Interim CEO and Chairman, added that an additional $2 million CapEx is planned for high-speed measurement equipment in Fab 1. Yuping Huang confirmed Fab 2 is being scoped to support both QCI's quantum machine manufacturing and external demand for thin-film lithium niobate chips, aiming for millions of chips annually. Chris Roberts provided the current share count of 224 million (including the Q4 offering) as the best modeling number for Q4. Yuping Huang discussed QPU progress, including Dirac-3 upgrades and building a faster next version for optimization, with hardware development for gate-based machines starting. He confirmed sales in quantum sensors, quantum communication, AI, and foundry services.

Troy Jensen from Cantor Fitzgerald asked about the remaining CapEx for Fab 1 and the strategy for Fab 2, specifically if it would outsource capacity for thin-film lithium niobate. He also inquired about the projected share count exiting 2026 and whether the near-term opportunity lies more in sensing and other applications rather than QPU-type sales, requesting QPU stats like Q account or fidelity.

Answer

CFO Chris Roberts and Interim CEO and Chairman Yuping Huang clarified that Fab 1 is largely built out, with an additional CapEx of about $2 million planned for high-speed measurement equipment. Dr. Huang stated that Fab 2 is scoped to support both internal quantum machine manufacturing and external demand for thin-film lithium niobate chips, aiming for hundreds to millions of chips annually. Mr. Roberts provided the current share count of 224 million outstanding, including the Q4 offering, and noted potential increases from warrant/option exercises but no large new financings. Dr. Huang discussed upgrading the Direct3 system with external users finding advantages, progress on a faster next-version optimization machine, and initial hardware development for gate-based machines. She confirmed sales in quantum sensors (vibrometer), quantum communication (U.S. bank), AI, and foundry services.

Troy Jensen from Cantor Fitzgerald inquired about Quantum Computing Inc.'s most critical technology milestones for the next one to three years and asked about plans for operating expenses, including potential M&A, following a recent major financing.

Answer

CEO & Chairman Yuping Huang identified the primary milestone as integrating quantum machines with nanophotonic chips to reduce size, weight, power, and cost, noting the foundry will support this and serve external customers. CFO Chris Roberts added that the company is accelerating hiring for engineering and sales and is actively evaluating strategic M&A opportunities to enhance its technology roadmap and revenue generation.

Troy Jensen of Cantor Fitzgerald asked about Quantum Computing Inc.'s most important technical milestones for the next one to three years, and followed up with a question on plans for operating expenses and potential M&A after its recent large financing.

Answer

CEO & Chairman Yuping Huang identified the key milestone as integrating their quantum machines with the new nanophotonic chips to reduce size, weight, power, and cost while enhancing performance. CFO Chris Roberts stated that operating expenses are rising due to hiring, and while no M&A is imminent, the company is actively evaluating strategic opportunities to accelerate its technology roadmap and revenue generation.

Troy Jensen asked CFO Eitan Zamir about the non-GAAP operating expense of $62 million, inquiring if it is expected to grow sequentially or if cost controls will continue. He then asked CEO Dr. Yoav Zeif about material pricing as a key variable in part cost, and the company's strategy for forward gross margins on materials and potential pricing structures.

Answer

CFO Eitan Zamir stated that he expects Q4 non-GAAP operating expenses to trend slightly down relative to Q3, as the company continues tight cost management while balancing investments in R&D and sales/marketing. CEO Dr. Yoav Zeif explained that Stratasys is investing in materials, acquiring material players, and consolidating operations to create scale and offer more affordable materials. He noted that for high-performance materials in target applications like aerospace, certification is a greater barrier than material cost, given the significant problems being solved. He acknowledged the long-term need to improve material prices to penetrate more applications.

Troy Donavon Jensen asked CFO Eitan Zamir about the future trajectory of non-GAAP operating expenses, specifically if the $62 million reported in Q3 2025 is expected to grow sequentially or if cost controls will continue. He also asked CEO Dr. Yoav Zeif about the material pricing structure for production applications, considering it a significant variable in part cost, and the outlook for forward gross margins on materials.

Answer

CFO Eitan Zamir stated that non-GAAP operating expenses are expected to trend slightly down in Q4 2025 relative to Q3, as the company continues tight cost management while balancing investments in R&D and sales/marketing. CEO Dr. Yoav Zeif explained that Stratasys is investing in material differentiation and scale to offer more affordable materials. He noted that for high-performance materials in target applications like aerospace, certification is a greater barrier than material cost, allowing for pricing flexibility due to the significant problems being solved. He acknowledged the long-term need to improve material prices to penetrate more applications.

Troy Jensen from Cantor Fitzgerald asked if the delayed large deals were associated with the F3300 system and automotive opportunities, and whether the second-half guidance includes any revenue or OpEx from the recent Forward AM and Nexa3D acquisitions.

Answer

CEO Yoav Zeif clarified that the deal slippage is not connected to the F3300; in fact, the system is a key promoter for these deals due to its reliability and performance. CFO Eitan Zamir added that the new guidance reflects more F3300 sales in 2025 than in 2024. Regarding the acquisitions, Yoav Zeif stated their financial impact is currently immaterial as the businesses are being rebuilt.

Troy Jensen of Cantor Fitzgerald questioned the significant sequential drop in R&D spending and its future run rate, and also asked about the impact of low-end competition, like Bambu Lab, on Stratasys's F123 sales.

Answer

CFO Eitan Zamir explained the change in R&D spending was a 'focus' rather than a 'cut,' consistent with the 2024 restructuring plan, and that spending as a percentage of revenue remains at historical levels. CEO Yoav Zeif asserted that the low-end market is not Stratasys's focus, as their industrial customers in aerospace, automotive, and medical prioritize reliability, accuracy, and service, which low-end systems lack. He views low-end growth as a positive for industry awareness, expecting users to eventually upgrade to Stratasys for industrial-grade applications.

Troy Jensen questioned the consecutive quarterly declines in consumables revenue despite a growing installed base. He also asked about the nature of the decline in long-term investments on the balance sheet and the company's focus for potential acquisitions.

Answer

CFO Eitan Zamir described the Q4 consumables dip as an 'outlier,' expecting full-year 2025 consumables revenue to exceed 2024 levels. He clarified the balance sheet change was mainly a non-cash impairment charge on the Ultimaker investment. CEO Yoav Zeif stated that M&A strategy will focus on shareholder value, leveraging the new Fortissimo investment and favorable market conditions for assets.

Troy Jensen from Cantor Fitzgerald asked about the consumables business, noting the slowing year-over-year growth and two consecutive quarters of sequential decline, and questioned the risk of it turning negative. He also sought clarification on rumors of a second round of workforce reductions.

Answer

CEO Dr. Yoav Zeif reaffirmed the strength of the recurring revenue model, stating that while quarterly results can be lumpy, the year-over-year growth trend is solid, supported by the shift to manufacturing applications and a growing installed base. He firmly denied any new workforce reductions, clarifying that the company executed one restructuring plan ahead of schedule, with benefits already seen in Q3.

Troy Jensen asked about the types of applications Rigetti's 1,000-qubit system, targeted for 2027, would be capable of running. He also inquired why customers are currently purchasing 9-qubit systems instead of the larger 36-qubit systems.

Answer

President and CEO Subodh Kulkarni stated that a 1,000-qubit system with 99.8% fidelity, integrated into a hybrid system with CPUs and GPUs via NVLink, would tackle complex applications like drug discovery, financial forecasting, and material synthesis, which currently challenge traditional computing. He explained that customers buy 9-qubit systems to fundamentally understand quantum hardware, tuning, and recalibration, with clear interest in future upgrades to higher qubit counts.

Troy Jensen of Cantor Fitzgerald inquired why customers are currently purchasing 9-qubit Novera systems instead of the larger 36-qubit systems.

Answer

President and CEO Subodh Kulkarni explained that customers acquire 9-qubit on-premise systems to gain a fundamental understanding of quantum hardware operations for their research. He noted that these systems are upgradable, and customers are expected to pursue upgrades to higher qubit counts, generating additional revenue, once they are proficient with the 9-qubit system.

Troy Jensen of Cantor Fitzgerald inquired about the use of proceeds from the recent equity offering, future operating expense trends, and the status of the strategic partnership with Quanta.

Answer

CEO Subodh Kulkarni stated the primary focus for the new capital is accelerating R&D to reach quantum advantage, a milestone he estimates is 3-4 years away. CFO Jeffrey Bertelsen added that no significant step-up in operating expenses is anticipated in the near term. Kulkarni also detailed that the Quanta partnership is progressing well, with Quanta focusing on the non-QPU hardware stack, particularly control systems, allowing Rigetti to concentrate on its core QPU development.

Troy Jensen from Cantor Fitzgerald asked for more details on D-Wave's gate model product and superconducting computer, including its timeline for launch, expected fidelity, and qubit count.

Answer

CEO Alan Baratz explained that D-Wave is using fluxonium qubits with magnetic flux control for its superconducting gate model, leveraging extensive experience from annealing systems. He highlighted the unique cryogenic control technology, which allows for scalable qubit control. The company has fabricated fluxonium qubit chips and cryogenic control chips, aiming to demonstrate scalable control of gate model qubits. The timeline for a scaled, error-corrected gate model system is projected to be 5-10 years, consistent with other honest quantum computing companies.

Troy Jensen from Cantor Fitzgerald asked for more details on D-Wave's Gate model product and superconducting computer, specifically requesting information on the timeline for launch, expected fidelity, and qubit count.

Answer

CEO Dr. Alan Baratz explained that D-Wave is using fluxonium qubits with magnetic flux control for its superconducting Gate model, leveraging existing experience and cryogenic control technology. He mentioned the fabrication of high-quality fluxonium qubit chips and cryogenic control chips, with a demonstration of cryogenic control for Gate model qubits expected in the coming year. A scaled error-corrected Gate model system is still 5-10 years out.

Troy Jensen of Cantor Fitzgerald requested more details on the Advantage two system, including its deployment in South Korea, the expected number of installations, and its technical improvements.

Answer

CEO Alan Baratz emphasized that Advantage two was the system used to demonstrate quantum supremacy, featuring key upgrades in interconnectivity, coherence time, and energy scale. He projected a total of six or seven Advantage two systems in the near term, including cloud service upgrades and on-premise installations like the one at Jülich and the potential system in South Korea.

Troy Jensen asked about Materialise Medical's relative exposure across existing (CMF, orthopedics, research & engineering) and new (cardiac, respiratory) markets, and the potential growth importance of new segments for the next year. He also inquired about the Materialise Manufacturing segment's recovery prospects, the percentage of revenue from aerospace and defense, and the profitability challenges in manufacturing, including potential cost-cutting measures and market recovery drivers.

Answer

CEO Brigitte de Vet-Veithen clarified that the majority of Materialise Medical's revenue comes from existing, more mature markets like CMF, orthopedics, and research & engineering, while new markets such as cardiac and respiratory are currently smaller but expected to grow faster. Regarding manufacturing, she noted that aerospace has shown continuous growth, while defense is a newer segment with potential, leveraging capabilities built for aerospace, involving both polymer and metal applications (e.g., aerospace interiors, tooling). CFO Koen Berges and CEO Brigitte de Vet-Veithen highlighted that cost reduction measures were implemented earlier in the year, impacting financials despite continued revenue weakness. They emphasized that recovery in European industrial markets and the automotive sector are crucial drivers for manufacturing revenue and profitability.

Troy Jensen of Cantor Fitzgerald inquired about the potential scale of the new Johnson & Johnson respiratory collaboration, the rationale for taking on new debt, and the key drivers behind the strong gross margins.

Answer

CEO Brigitte de Vet-Veithen characterized the Johnson & Johnson deal as a pilot collaboration in a new market, emphasizing it's the start of a long journey with revenue impact not expected until 2026 at the earliest. CFO Koen Berges explained the new debt was a planned drawing from a pre-existing €50 million credit facility, with the cash intended for future M&A or CapEx. Berges also attributed the strong gross margins to a favorable revenue mix with higher medical sales and successful direct cost reductions.

Troy Jensen from Cantor Fitzgerald inquired about the potential impact of tariffs, the outlook for Q2 performance, and the reasons behind the software segment's revenue dip, including the transition to a recurring revenue model.

Answer

Executive Brigitte de Vet-Veithen confirmed minimal direct tariff impact due to local manufacturing but noted potential indirect effects on raw materials and customer costs. She projected a 'flattish' top line for a challenging Q2 with bottom-line pressure, expecting stabilization in H2. CFO Koen Berges explained the software revenue dip was due to increased deferred revenue as the segment's recurring revenue mix surpassed 80% for the first time. Brigitte de Vet-Veithen added this milestone signals progress in the multi-year transition to a subscription model.

Troy Jensen of Cantor Fitzgerald inquired about the significant increase in deferred software revenue, the persistence of higher operating expenses, and the breadth of the economic weakness observed in Europe.

Answer

CFO Koen Berges explained that the nearly €6 million increase in deferred revenue was anticipated, aligning with seasonal patterns where Q1 and Q4 are strong booking quarters, and was amplified by the ongoing shift to a recurring revenue model. CEO Brigitte de Vet-Veithen addressed OpEx, noting that while ACTech startup and FEops integration costs will taper down, investments in Medical R&D will continue, alongside a strong focus on cost control in Manufacturing. She also confirmed the European weakness extends slightly beyond the automotive sector due to broader economic uncertainty.

Troy Jensen from Cantor Fitzgerald asked about the sustainability of the Medical segment's strong growth and profitability, contrasting it with the Manufacturing segment's lower margins and inquiring about improvement strategies. He also questioned the future trend for operating expenses.

Answer

Executive Brigitte de Vet-Veithen explained that the Medical segment has significant untapped potential, particularly in areas like trauma cases, suggesting growth is sustainable with a stable profitability profile. For the Manufacturing segment, she highlighted that scale and a strategic shift from prototyping to complex, high-value end-use parts in aerospace and medtech are key to improving margins. Executive Koen Berges addressed OpEx, noting that while absolute costs will face upward pressure from salaries, the company focuses on cost control and leveraging scale, which should improve OpEx as a percentage of revenue over time.

Troy Jensen of Cantor Fitzgerald inquired about the revenue breakdown of the $80 million MedTech business, the composition of the overall Healthcare segment, the progress of the Dental business with its new NextDent solution, and the calculation of gross margins excluding a one-time milestone payment.

Answer

President and CEO Jeffrey Graves clarified that MedTech revenue is predominantly from personalized health services and parts, with modest printer sales. He confirmed the Healthcare segment comprises MedTech, Dental, and Regenerative Medicine. Graves expressed strong optimism for the new NextDent denture solution, highlighting its favorable economics and large addressable market. EVP and CFO Jeff Creech confirmed that excluding the milestone, gross margin was approximately 38% and would normalize in subsequent quarters.

Troy Jensen inquired about the inventory dynamics in the dental aligner market and the rationale behind potential divestitures of nascent technologies amid the company's cost-cutting initiatives.

Answer

CEO Jeffrey Graves explained that volatility in the aligner market is a symptom of large customers maturing and adopting more sophisticated, just-in-time inventory management, not a sign of weakening end-market demand. Regarding the portfolio, Graves confirmed a strategic focus on core growth areas like healthcare, aerospace, and AI infrastructure, while pausing or reining in more exploratory R&D efforts. He emphasized that the company is not broadly exiting technologies but is prioritizing investments in markets with the highest certainty of growth.

Troy Jensen from Cantor Fitzgerald & Co. asked for an update on cost-cutting initiatives, specifically regarding R&D spending on long-term, non-revenue-generating projects like bioprinting. He also sought clarity on Q1 seasonality and revenue expectations given the pending divestiture of the Geomagic business, and questioned how gross margins could remain stable after selling the accretive software unit.

Answer

CEO Jeffrey Graves explained that the company is focusing its R&D spend and will slow down, pause, or seek partners for some longer-term bioprinting projects outside of the core human lung program. CFO Jeff Creech confirmed that 2025 guidance excludes Geomagic revenue post-Q1. Graves attributed the stable gross margin outlook not just to cost cuts but more significantly to efficiency gains from the completed manufacturing in-sourcing initiative, which improves supply chain and assembly operations.

Troy Jensen asked for an update on the Oqton software platform, inquired about the presence of a 10% customer, and sought information on the timing of the next milestones for the regenerative medicine business.

Answer

CEO Jeffrey Graves highlighted Oqton's progress, particularly its successful implementation with Baker Hughes, which improves productivity and quality for high-reliability parts. He confirmed a 10% customer, related to the dental business, would be detailed in the 10-Q. Regarding regenerative medicine, he expects to announce new milestones in 2025 and noted that technology from this project, like high-resolution projectors, is already benefiting industrial printers like the new PSLA platform.

Troy Jensen asked about the practical applications and encryption-breaking capabilities of an 80,000 logical qubit system, and questioned the company's strategy for integrating numerous acquisitions and potential future M&A.

Answer

CEO & Chairman Niccolo de Masi explained that their roadmap details applications for each stage, with thousands of logical qubits enabling work on problems like logistics optimization and Shor's algorithm around 2027. He emphasized that the greatest value may come from yet-unforeseen applications, particularly in quantum AI. Regarding M&A, he cited his extensive experience, highlighting a focus on cultural fit and the synergistic potential of combined teams. He stated that IonQ will continue to monitor the landscape to expand its leadership in both quantum computing and networking.

Troy Jensen from Cantor Fitzgerald sought clarification on the company's 30-day revenue visibility, which seemed longer than historical levels. He also asked for an update on the progress of the strategic push into production parts and inquired about expectations for Q4 seasonality.

Answer

CFO Dan Schumacher clarified that the longer 30-day visibility applies only to the partner network, which constitutes about 15% of revenue, while the factory business retains very short visibility. He highlighted an 11% increase in revenue per customer and 44% growth in customers using both the factory and network as key success metrics for the production initiative. For Q4, Schumacher stated that the company expects a return to typical seasonality, with revenue likely down slightly from Q3.

Troy Jensen from Cantor Fitzgerald questioned whether the push into production would primarily benefit the factory or the network, inquired about typical revenue seasonality, and asked if tariffs could be a significant factor for growth throughout the year.

Answer

CEO Rob Bodor and CFO Dan Schumacher both emphasized that production growth occurs in both the factory and the network, with the network being well-positioned for production work due to quality controls and a defined partner base. Schumacher outlined typical seasonality (Q1 up from Q4, Q2 up, Q3 flat/up, Q4 down) but was cautious about predicting the full-year impact of tariffs, reiterating the company's strong positioning.

Troy Jensen asked about gross margin expectations for 2025, the potential impact of the network business mix, the percentage of customers utilizing both factory and network services, and the expected full-year tax rate.

Answer

CFO Dan Schumacher stated that while mix is a factor, automation and AI-driven pricing are expected to support margins. CEO Robert Bodor revealed that just over 5% of customers currently use the combined factory and network offering, indicating significant cross-sell potential. Management also confirmed the Q1 guided tax rate of 26.5% to 27.5% is a reasonable expectation for the full year.

Troy Jensen questioned the details of the German facility changes, asking if it was related to the Alphaform acquisition, the extent of DMLS manufacturing in Europe, the expected OpEx savings, and whether other services like Sheet Metal might also be shifted to the Network model.

Answer

CEO Rob Bodor confirmed the changes relate to parts of the Alphaform acquisition and that European DMLS orders will now be fulfilled via North Carolina and network partners. CFO Dan Schumacher clarified that the changes, which include closing a separate precision injection molding facility, will primarily impact gross margin rather than OpEx. Regarding Sheet Metal, Bodor acknowledged the service's headwinds and stated that the new global structure provides more flexibility to consider different fulfillment strategies going forward.

Troy Jensen from Cantor Fitzgerald sought clarification on the new $14.5 million AIC ARR metric, asking about the timing of revenue recognition and how long it took to build that ARR base. He also requested an update on the market opportunity and traction for Kornit's roll-to-roll systems.

Answer

CFO Lauri Hanover explained that AIC revenue recognition begins after a system is shipped and installed, so it is not immediate, and that the program was launched in mid-2024. CEO Ronen Samuel reported that the roll-to-roll segment is seeing growth, particularly in the footwear market where a second customer is buying additional systems. He also noted progress in technical textiles and mainstream fashion, though growth is still below initial expectations.

Troy Jensen sought clarification on the Q1 gross margin outlook, asking if it could be as low as the prior year's Q1. He also requested guidance on financial income to aid in EPS modeling.

Answer

CFO Lauri Hanover clarified her earlier comment, stating that Q1 is typically the lowest gross margin quarter of the year, but did not imply it would be as low as the prior year's level. She declined to provide guidance on financial income, reiterating that Kornit only provides guidance for revenue and adjusted EBITDA.

Sought clarification on a $1.9 million benefit in cost of goods sold, asked about the gross margin outlook for the middle of the year, and questioned if the line of credit draw was related to balance sheet requirements from government customers.

Answer

The $1.9 million was a benefit from reclaiming duties, which is not expected to recur at that level. Gross margins are expected to continue expanding through the year, driven by higher volumes, better absorption, and favorable A&D mix. The credit line draw was not related to any government customer requirements.

Troy Jensen sought clarification on a $1.9 million duty reclaim benefit in cost of goods sold, asked for the gross margin outlook for the middle of the year, and questioned if the credit line draw was related to government customer balance sheet requirements.

Answer

CFO Joe Corso explained the $1.9 million duty reclaim was a significant benefit for the quarter but is not expected to repeat at that level. He guided for continued gross margin expansion, with the Q2 product gross margin midpoint around 30%. Both CFO Joe Corso and CEO Scott Keeney explicitly denied that the credit draw was related to any government customer requirements.

Troy Jensen sought clarification on a $1.9 million benefit in cost of goods sold, asked about the gross margin outlook for the middle of the year, and followed up on whether government customers required the balance sheet enhancement from the credit line draw.

Answer

CFO Joe Corso explained the $1.9 million was a benefit from reclaiming previously paid duties, which he called out to help model normalized margins. He guided for continued margin expansion, with Q2 product gross margin at a midpoint of 30%, driven by higher volumes and a favorable A&D mix. Both Joe Corso and CEO Scott Keeney confirmed the credit draw was not a requirement from any government customer.

Sought clarification on the funded backlog amount and its timeline, the nature of the $230 million in unfunded opportunities, and the expected operating expense run rate following the recent restructuring.

Answer

The company confirmed a $167 million funded backlog shippable in 2025-2026. The additional $232 million represents the unfunded portion of existing contracts. The current operating expense level is considered a reasonable run rate for the foreseeable future, with no significant increases planned.

Troy Jensen sought clarification on the $167 million funded backlog, its shippability timeline, the nature of the $230 million in unfunded opportunities, and the expected trajectory for operating expenses post-restructuring.

Answer

CFO Joe Corso confirmed the $167 million funded backlog is shippable in 2025 and 2026, and the additional $232 million represents unfunded portions of existing contracts. CEO Scott Keeney added that the opportunity pipeline extends beyond these figures. Regarding expenses, Corso stated that current OpEx levels are appropriate to support growth and he does not anticipate meaningful increases, though quarterly fluctuations may occur.

Troy Jensen asked for the potential dollar content per system in the directed energy market, the maximum power laser nLIGHT currently produces, and whether there were any 10% customers during the quarter.

Answer

CEO Scott Keeney explained that nLIGHT's content in directed energy systems ranges from single-digit percentages for components to capturing nearly the full program value at higher integration levels. He also stated nLIGHT produces the world's highest power laser at over 350 kilowatts and is on track to scale it to a megawatt. CFO Joe Corso confirmed they had customers around the 10% level, primarily U.S. government-related, and expect that to continue.

Troy Jensen inquired about the potential dollar content nLIGHT could capture in a directed energy system, the maximum power laser the company currently produces, and whether there was a 10% customer during the quarter.

Answer

CEO Scott Keeney detailed that nLIGHT's content per system can range from single-digit percentages for components to much higher percentages for fully integrated solutions. He stated nLIGHT produces the world's highest power laser at over 350 kilowatts and is on track with its program to scale to a megawatt. CFO Joe Corso confirmed the company had customers around the 10% revenue level, primarily U.S. government primes, and expects this to continue.

Troy Jensen asked about the mix of production versus prototyping revenue, suggesting a low average order value implies a high level of prototyping, and also inquired about the percentage of revenue exposed to overseas tariffs.

Answer

Executive Shawn Milne noted the revenue-per-buyer metric is quarterly and should be annualized for comparison. CEO Randy Altschuler argued that Xometry's strong growth and expansion into production-heavy technologies like injection molding and die casting demonstrate its success beyond prototyping. He also stated that the vast majority of U.S. marketplace revenue is fulfilled by domestic partners.

Troy Jensen sought confirmation on the 2024 automation revenue and 2025 growth forecast, inquired about the drivers of this automation growth, asked about the presence of a 10% customer in 2024, and requested guidance on Q1 revenue seasonality.

Answer

Omar Asali, Chairman and CEO, confirmed automation revenue was ~$30 million in 2024 and is expected to grow over 50% to $45 million+ in 2025, driven by a mix of smaller orders and repeat business from 3-4 large enterprise customers. CFO Bill Drew confirmed there was a 10% customer in Q4 and for the full year 2024. Drew also outlined typical seasonality, with Q1 being the lowest revenue quarter and a likely 47% first-half, 53% second-half split for 2025.

Troy Jensen sought confirmation on the funded backlog amount and timeline, clarification on unfunded opportunities, and the outlook for operating expenses after the recent restructuring.

Answer

CFO Joe Corso confirmed the $167 million funded backlog is shippable in 2025 and 2026, with a total of $399 million in aggregate contract value being worked on. CEO Scott Keeney added that the pipeline extends beyond this, citing the 'Iron Dome for America' initiative as an example. Corso stated that current operating expense levels are appropriate and he does not expect them to increase meaningfully.

Troy Jensen of Lake Street Capital Markets asked about the company's notable shift in messaging towards robotics, AI, and software, questioning the growth outlook for these areas versus Additive Manufacturing and the future focus on M&A versus integrating Desktop Metal.

Answer

Executive Yoav Stern confirmed the strategic shift, stating that software is the key driver for selling all hardware. He projected stable 10-15% growth for established robotics and Industry 4.0, with higher, segment-specific growth in Additive Manufacturing. Stern clarified that over the next 12-24 months, the company will focus on both integrating Desktop Metal and pursuing additional, carefully selected acquisitions.

Troy Jensen from Cantor Fitzgerald inquired about the revenue breakdown between additive and robotics, the status of discussions with Stratasys, and the revenue level required for the company to achieve breakeven.

Answer

CEO Yoav Stern explained that revenue was roughly split half between additive electronics and other additive manufacturing types. He also characterized the ongoing discussions with Stratasys as friendly and intensive. CFO Tomer Pinchas projected that the company could reach breakeven in the second half of 2025, assuming 25-30% annual growth.

Asked for an update on the market traction for the Digital Source platform, an explanation for the strong Q1 gross margins relative to full-year guidance, and clarification on historical legal expenses and their impact on future OpEx.

Answer

The company sees strong engagement for Digital Source from enterprise accounts, though material revenue is not expected yet. The strong Q1 gross margin is encouraging, but full-year guidance remains cautious due to market conditions and the ramp-up of new products. Future OpEx reductions are planned through operational activities separate from any changes in litigation expenses.

Asked for details on the FX10's pricing and revenue timing, and for an update on the Digital Source platform, including its revenue model and expected contribution.

Answer

The FX10 is priced between the X7 and FX20, with shipments beginning in H1 2024 and more meaningful revenue expected in H2. Digital Source is seeing strong customer engagement, but the focus for 2024 is on adoption and scale, not material revenue. Future revenue will come from system expansion and platform utilization fees.

Asked for specifics on the photopolymer products being de-emphasized, an update on the P-50 direct metal printing system, and the future trajectory of non-GAAP operating expenses.

Answer

Executives clarified they are exploring partnerships to improve distribution for photopolymer products rather than shedding them, highlighting the success of Flexcera. Spending on advanced technologies like the P-50 has been moderated to prioritize profitability. Operating expenses are expected to continue decreasing from Q4 levels due to ongoing cost-cutting initiatives.