Desktop Metal - Q4 2021
March 8, 2022
Transcript
Speaker 0
Greetings, and welcome to Desktop Metals 4th Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr.
Jay Gentzkow, Vice President, Investor Relations. Please go ahead.
Speaker 1
Thank you, and thanks to everyone for joining today's call. With me today are Rick Fulop, CEO and Co Founder of Desktop Metal and James Koehle, CFO of Desktop Metals. Please note that our financial results, press release and presentation slides referred to on this call are available under the Events and Presentations section of our Investor Relations website. This call is also being webcast live with a link at the same website. The webcast and accompanying slides will be available for replay for 12 months following this call.
The content of today's call is the property of Desktop Metal. It cannot be reproduced or transcribed without our prior consent. I'd like to start by letting our listeners know that our independent public accountants are in the process of completing our audit for 2021 and the results announced today for Q4 and full year 2021 are preliminary unaudited and subject to audit adjustments. We have filed a Form 12b-twenty 5 notice with the SEC To extend our deadline for filing our Form 10 ks for 2021 due to the tighter deadlines associated with our recent transition to large accelerated filing status as well as the inclusion of ExOne's financial information in our consolidated audited financial statements for the first time since the November 12, 2021 acquisition. We fully expect to file the 10 ks within the 15 day extension period.
Now I'd like to refer you to our safe harbor disclaimer Slide 2 of the presentation. Today's call will include forward looking statements. These forward looking statements reflect Desktop Metals' views and expectations only as of today, March 8, 2022, and actual results may vary materially based on a number of risks and uncertainties. For more information about the risks that may impact in addition to the company's other filings with the SEC. We assume no obligation to update the forward looking statements.
Additionally, during this presentation and Following Q and A session, we may refer to non GAAP measures, including EBITDA, adjusted EBITDA and non GAAP gross profit. These measures are intended to supplement, but not substitute for performance measures calculated in accordance with GAAP. Our financial results release contains The financial and other quantitative information to be discussed today as well as a reconciliation of the GAAP measures. With that, it's my pleasure to turn the call over to Rick Fulb, CEO and Co Founder of Desktop Metal.
Speaker 2
Thank you, Jay. Good morning, everyone. I'm excited to host everyone on our Q4 2021 call. Today, I plan to review the results for the Q4 and full year 2021, provide our financial outlook and detail our strategic priorities for 2022. In addition, as we have evolved as a public company and have made a number of important Beginning the presentation on Slide 3, we started Desktop Metal to enable mass production via additive manufacturing in a cost effective way versus conventional production processes.
We call this AM 2.0. Our long term goal is to use this technology to achieve double digit share of this $100,000,000,000 plus market by the end of the decade. Mass production is the fastest growing segment in the additive manufacturing space as businesses around the world seek to overcome supply chain disruption, Decrease production costs and release breakthrough in new products. We make every decision at Desktop Metal through the lens of achieving this call. Shifting to our financial results on Slide 4.
Desktop Metal concluded 2021 with the best quarter in the company's history. Consolidated revenue for the Q4 2021 was $56,700,000 representing sequential quarterly growth of 100 and We saw broad based growth across all our AM brands and all our technologies underpinned by a record quarter of revenue from our metal platforms. Excluding contributions from the ExOne acquisition, revenue for the Q4 was $41,200,000 representing 62% quarter over quarter growth. We saw yet another quarter of gross margin expansion with non GAAP gross margins increasing to 31% in the 4th quarter, up more than 460 basis points sequentially. This was our 6th consecutive quarter of gross margin expansion.
Highlighting full year results on the right side of the slide, consolidated revenue was $112,400,000 for 2020 Excluding contributions from ExOne Acquisition in the 4th quarter, full year revenue was $96,900,000 representing more than 480% growth over 2020. Overall revenue growth was driven by very strong performance in our metal offerings, including 163% organic growth year over year. Desktop Metal was the fastest growing publicly traded additive manufacturing company in 2021. Non GAAP margins for the year expanded to 27%, a meaningful increase over 2020. And we ended the year with a Turning to our financial outlook.
We continue to see robust growth across our full portfolio and expanding customer base. We expect 2022 to be another record year for Dust Off Petal. As a result, we're announcing guidance of approximately $260,000,000 in revenue for 2022. This represents 131% growth over 2021. We also expect adjusted EBITDA to be approximately negative $90,000,000 We believe now is the time to prioritize investing to capture market share as the added manufacturing market inflects in order to reach the potential of our long term business model.
We do have our eye on long term profitability and therefore we are reaffirming our commitment to exit calendar year 2023 breakeven On an adjusted EBITDA basis as well as exceeding $1,000,000,000 in revenue by 2025. We will provide more color on our plan to reach these calls in a moment. Turning to Slide 5. 2021 was a revolutionary year for Despot Metal and I could not be prouder of what team DM has accomplished In our 1st year as a public company, we made huge progress both organically and inorganically towards positioning company will achieve double digit share of the additive market by the end of the decade. We now have over 20 print platforms, which allows to target a large number of applications across volume and performance requirements.
We have a highly refreshed Product portfolio, including 9 product launches in the past 5 quarters that we expect to contribute meaningfully to this year's results. And I can't understate the team's relentless hard work to launch the production system P50, which just started shipping a few weeks ago. We dramatically expanded the number of materials principal in our systems by 12 times. We now have one of the widest portfolios of Our total installed base across our platform is now 14 times larger from the beginning of the year, providing us with a large and diverse set of customers which we can drive both consumables revenue and upsell or cross sell our platforms as we look for high performance systems or new material offerings. We executed on the M and A strategy we articulated when we went public.
These transactions varied in size and strategic purpose, At all, we're geared towards increasing our share of the additive manufacturing market in the long term and positioning the company for leadership in mass production of Endy's parts. Between these acquisitions and internal R and D, we have bolstered our IP portfolio to over 650 patents and patent spending, arming us with a robust defensible technology platform with a significant competitive moat. Early in the year, we launched Desktop Health to focus on patient specific additive manufacturing solutions for the healthcare and dental industry. This is a massive market with over $80,000,000,000 in healthcare implants that over time will become patient specific and over $30,000,000,000 in annual spend for the end use parts in the dental market. Over the course of the year, Desktop Health became an established brand supporting thousands of dental labs and practices, cemented by the launch of a revolutionary new Einstein photopolymer printer series specifically designed for the healthcare market.
We also launched an initiative to build out Desktop Labs, a vertically integrated parts platform that provides digital solutions, design services and parts production capabilities for healthcare. We view dental and biofabrication as critical killer apps for additive because parts in these market segments are typically unique to the patient and only a small percentage are printed today. This strategy reinforces our leadership position in dental and is also highly accretive to our overall margin structure, while it accelerates our path to profitability. In 2021, we also introduced Forest, a new process that leverages our existing print end use wood parts in volume using traditional wood manufacturing waste products. We've seen great success with FORUS I've already sold 1,000,000 of dollars of printers to produce parts through this process.
This is a very exciting opportunity and it's still in its early stages. But our goal is to flip a portion of the $1,300,000,000,000 a year spent on wood parts to a more sustainable manufacturing process we added. And finally, TIMPM grew from 200 to over 1,000 team members as we collectively and passionately work We enabled mass production of Endyus parts via AM 2.0. Customer reduction continues to be really exciting As more and more companies of all sizes are embracing the benefits of additive and specifically our high volume production capabilities, We made significant increases to our customer installed base last year through a combination of horizontal and vertical focus areas across a range of industries including automotive, healthcare And Dental, Consumer Products, Industrials, Aerospace, Defense and Machine Design among others. This It's a blue chip customer base that in many cases is just beginning their journey in additive.
One of the benefits of the strategic moves we've made over the last year is that our wider portfolio of print platforms addresses a more diverse set of applications in end to end markets, Reducing our exposure to any one industry. We have a fast growing, robust business with very little account concentration, which we believe provides us with better Moving on to Slide 7. We made great progress in 2020 We're also laser focused on 5 key strategic priorities for 2022. First, we are dedicated to maintaining our pace of organic revenue growth at scale. Desktop Metal is a growth focused company and after achieving triple digit organic revenue growth last year, we're determined to maintain that momentum preserving at the top of the industry for growth.
2nd, we're focused on growing our market share across key verticals. While we have been very encouraged to see broad based industry adoption 3 in particular, automotive, consumer electronics and dental and healthcare. 3rd, We're intensifying our go to market efforts on land and expand opportunities with hyperscale customers. More specifically, This means cultivating and maturing applications with major strategic accounts that have hyperscale potential over the next 3 to 5 years. These opportunities with brand name Fortune 100 Companies have the potential to not only be needle moving financially, but attract awareness to Our 4th strategic priority for 2022 is to demonstrate our path to profitability to fund continuous This includes reaffirming our commitment to exit calendar year 2023 breakeven on an adjusted EBITDA basis.
These steps to achieve this goal include combining top line growth with controlled expenses and operating leverage to maintain our annual margin expansion. We also plan to drive operational efficiencies expense reductions throughout the business, including rationalizing the current portfolio, optimizing expense structures and consolidating our global facilities footprint, just to name a few initiatives. Finally, we're focused on managing the cash on our balance sheet. While our current cash position is strong, We will be disciplined in our capital allocation efforts, focused on investing only in opportunities where we see potential for both outsized growth and operating margin expansion. Additionally, as we mature, we're also targeting opportunities for working capital improvements through increased focus on inventory reduction and supply chain synergies.
We will measure our success this coming year not only based on our financial results, but also on how we execute on these 5 key strategic priorities. Moving on to Slide 8. 2021 was a phenomenal year for our industrial business. We saw strong diversified demand across All of our available print platforms who made important strides in extending our competitive moat in binder jetting, the fastest growing segment in production parts. In 2021, we grew to become the number 1 metal binder jet company by unit share in the world.
In its 1st full year, the SHOP system was the number one selling product in the metal binder jetting market. We're very proud of that. We expanded our materials portfolio across 7 different metal print platforms to offer the industry's largest portfolio of compatible alloys. We're the absolute market share leader in metal binder jet any way you slice the data. As we ramp P50 in 2020 and beyond, we're poised to extend our lead with this revolutionary system that creates a new category of throughput and cost performance for metal additive manufacturing.
Last year, we also entered the industrial photopolymer space through our acquisitions of EnvisionTek, now rebranded Etech and Adaptive3d. These acquisitions opened the aperture of our materials portfolio outside just metals and now positions the M to offer a host of exciting new applications. Following these, we launched the Extreme 8 ks, the largest production grade DLP 3 d printer in the world for high volume production. And in conjunction with the 8 ks launch, we introduced a portfolio of best in class elastomers that outperformed all major competitors on tear strength and elongation. We're just beginning to scratch the surface of the growth opportunity created by these solutions.
And finally, We made a landmark acquisition in the purchase of ExOne, cementing our leadership in area wide AM technologies for mass production. We've been hyper focused executing our integration strategy and we're already creating near term value where possible and see significant opportunities for value accretion long term, some of which James will speak to in this section. 2022 is setting up to be another exciting year for our industrial platforms, And we have a few strategic priorities that we're specifically targeting within this market segment. First, we're focused on scaling our metal mass production solutions. 2nd, we want to maintain the momentum within the SME customer segment by accelerating deployment of the SHOP system.
3rd, we're well positioned to grow market share of our industrial polymer platforms. There's a lot of opportunity for our solutions in this segment. 4th, this year we're especially focused on driving broader adoption in digital castings. This is a process where you 3 d print models used to cast high volume parts such as vehicle or aerospace components. This is an underrated opportunity in additive.
In this market, we plan to leverage our technology to drive mass market adoption by sending high performance capabilities of our S MAX and S MAX PRO platforms. And finally, we plan to strengthen our foothold in strategic industrial verticals by developing hyperscale opportunities that offer powerful long term growth. Turning to Slide 9. We are thrilled to announce that we have started shipping the production system P50. Our initial customer is Stanley Black and Decker, one of the landmark grade American manufacturing companies.
This is a significant milestone for Desktop Metal. And while it took a little bit longer to develop than initially anticipated, these careful investments of time and capital will yield a major competitive moat. Groundbreaking products such as the Tesla Model 3, Apple Macintosh and IBM 360, each required multi year development efforts. But in each case, these products leapfrog competitive offerings and ushered in a new era for the respective companies and industries. Like these other products, we believe P50 represents a watershed moment for additive manufacturing.
Speaker 0
The 3
Speaker 2
d printing industry has been characterized by continuous incremental efforts, where products offered by legacy players have steadily improved a little bit every year. With 4 years of development and nearly $100,000,000 in investment and a robust equity portfolio behind it, The P50 is a groundbreaking platform that opens exponential improvement in performance and will create a massive competitive mode for Desktop Metal. The system prints a layer in roughly 3 seconds, leading to batches of 100 of 1000 of parts in a matter of a few hours. This speed enables throughputs up to 100 times and cost as low as 1 20th dose of legacy laser powder bed fusion systems. The P50 does all of this without sacrificing part quality or repeatability.
The system's unparalleled performance and economics are enhanced by the world's largest library of fully characterized production materials in metal binder We build our long term business around and we're delighted to have Stanley Black and Decker as the first customer of this landmark system. Shifting to our healthcare and dental business. In a little under a year since its launch and leveraging EnvisionTek's leading DLP printer platforms post acquisition, Desktop Health has made tremendous strides to position us extremely favorably in the healthcare and dental market. In February, Desktop Health introduced the Einstein series of dental 3 3 d printers, including 3 all new systems designed for the production of anti dental parts. Leveraging patented technology, The Einstein series brings exceptional speeds, industry leading accuracy and innovative features like closed loop printing and heated chambers to this market.
Desktop Health also recently launched several new materials. In particular, FlexeraSmile Ultra Plus received FDA clearance for permanent dental indication. When used in tandem with Einstein 3 d printers, this new materials allowed dental providers to print same day smiles, including crowns, bridges, veneers and full and partial dentures. The iStent and Flexera product launches position us to continue our already strong momentum in dental. And finally, we launched and expanded our Desktop Labs platform, an end use 3 d printed parts offering under desktop health that vertically integrates digital solutions, design services and parts production capabilities for the dental market today.
This is a huge rapidly growing market that's an emerging killer app for Additive because these parts are patient specific. Desktop Labs is a strategic priority. 1st, it immediately accelerates our growth in dental, where we have strong competitive technology and material advancements. Thank you. Rapidly digitizing Desktop Lab Properties enhances their profitability by improving efficiency relative to milling or analog production.
Desktop Labs is accretive to our overall margins and it accelerates our path to profitability. 3rd, Desktop Labs has unique digital workflows and technology enhanced support that we plan to bundle with our new Einstein printers to deliver Seamless chairside printing inside a dental practice. Effective chairside capabilities will unlock an unique competitive advantage for desktop health. And finally, these efforts will create a digital first and single visit treatment options for dental clinicians to improve patient outcomes in dental practice economics. Over time, We also intend to leverage this platform to provide biofabrication solutions with proprietary materials currently in advanced stages of research and development.
It was an exciting year for Desktop Health. And as we've hit the ground running in 2022 with the Einstein launch, We're also focused on a few key strategic priorities. 1st, we aim to accelerate the transition of the dental industry to additive through our category leading hardware and differentiated material capabilities. 2nd, we plan to focus on growing Desktop Labs platform for all those reasons just discussed. 3rd, we intend to launch and scale hit products and killer applications in the dental and healthcare space.
Executing to these goals will position us for continued depth of health and with that, I will now turn it over to our CFO, James Haley to cover our financials. James?
Speaker 3
Thanks, Rick. Before I get to our financial results and outlook, I'd like to step back and provide a little more color on our operating model. Our business went through significant evolution and transformation in our 1st year as a public company. And as a result, I think it is worthwhile to update the investor community on our financial strategy and provide more support on how we intend to close the gap From where we are today to our long term revenue and margin targets as well our path to profitability. I'll start on Slide 12 with revenue growth.
Today, the bulk of our top line revenue is generated through sales of our Additive Manufacturing Systems, so our primary focus to maximize our growth is driving accelerated adoption of our technology solutions. We have invested aggressively to diversify our print platforms across price points, capabilities and materials, which we believe best positions us to land customers with an initial application for 3 d printing before expanding across materials or into higher volumes with additional systems. These cross selling and up selling opportunities will be a key revenue across our wider customer base and we're already seeing early examples of metal customers evaluating Photopolymer solutions and vice versa. We sell these solutions through a hybrid distribution approach. We augment our leading global distribution network of resellers with an internal direct sales force.
We have crafted this hybrid approach to accommodate our broad product portfolio, which has easy to install and service platforms ideally suited for resellers as well as higher ASPs and longer sales cycle platforms more suited to direct selling. In 2022, we are placing a heavy emphasis on positioning our channel partners for strong growth By doubling down on channel sales enablement, including more robust inside sales activities, deeper reseller engagements, Enhance training and additional marketing resources. While ramping the channel on new products takes Significant time and effort, we believe that the channel is a critical path to scaling our growth in years to come, especially as our resellers Cover more than 65 countries around the world and are within a short drive of a significant portion of the worldwide manufacturing sector location. Our direct sales force complements the channel with a focus on major accounts expanding our footprint in multinational organizations and sales of our larger more complex solutions such as the Production System P50, X150 Pro and S Max Pro. This team is key to establishing lighthouse customers in key verticals and will work closely with major accounts to cultivate Applications that will yield hyperscale opportunities, Rick discussed earlier.
We also view the supply chain as a lever to accelerate revenue growth. At Desktop Metal, we have concentrated our efforts In technology development, mostly outsourcing manufacturing to 3rd parties through a built to forecast model that creates minimal lead times From order to delivery, this has been a competitive advantage for our sales teams and has resulted in shorter sales cycles For our equipment, we believe that by shifting relevant products from our acquired portfolios towards this model, we can capture CapEx budgets At the moment of interest, accelerate sales cycles across the business and expand the deal capacity of our reseller network and direct sales force. Finally, in 2022, we are focused on driving outsized growth in EMEA and APAC by expanding our go to market Infrastructure in these regions. While these two regions combined generated roughly 30% of revenue in 2021, we anticipate Their contribution will increase as a percentage of overall revenue in 2022 as a result of our efforts. Next, maintaining a focus on long term gross margin expansion is critical to our path to profitability.
Over the past year, scaling out of fixed overhead costs like customer support and manufacturing operations included in COGS Through top line growth has been the biggest factor in our 6 consecutive quarters of gross margin expansion. Additional scale will continue to be the primary factor that drives gross margin improvements into 2022. Now that our business is at a larger scale, we expect seasonality to become a more significant consideration. While we expect gross margins to continue improving on an annual basis, we anticipate quarterly fluctuations as a result of this seasonality. That said, we are also taking proactive steps to realize gross margin improvement.
The first is a focus on product mix Through product rationalization and consolidation, this is a multiyear effort that we have already started. We are constantly evaluating Which platforms we should continue to evolve going forward and we plan to concentrate our go to market efforts around higher margin offerings. Related to product mix, as we grow our installed base of mature up and running customers, the high margin consumable stream of powder, binder and resins that they generate will be accretive to margins as well. While our growth in system sales will continue to outpace our consumables in 2020 We are already starting to see consumable revenue become more meaningful on an absolute basis and this razor razorblade strategy Multi sourcing and volume purchasing, and we see great opportunity to improve product margins by optimizing our manufacturing supply chain efforts. We intend to transition manufacturing to either our in house teams or third parties based on what makes Over time, we anticipate this reallocation and consolidation of our manufacturing footprint will yield significant gross margin accretion for the company and accelerate the path to our long term gross margin percentage target in the 50s.
Moving on to our expense structure. While we continue to invest to prioritize growth, we are placing a greater emphasis on controlling costs in 2022. As a result, we expect expenses to continue to meaningfully decrease as a percentage of revenue this year. That said, we believe additional investments are critical to position ourselves for longer term growth. In R and D, we anticipate Incremental increases in spend as we continue to drive new product development, while dedicating meaningful resources to enhancements and cost reductions of our existing platforms.
Our business will always be R and D focused, but as we mature, we expect to be able To harvest these early investments in R and D, which will glide down both as a percentage of revenue and of total operating expenses over time. 2022 increases in sales and marketing spend are critical to executing Our growth plans, in particular launching and ramping sales of new products. We also continue to invest and our long term go to market infrastructure. We believe now is the time to invest here so that we are Best positioned to capture sales opportunities as we hit inflection points in the adoption of additive across various industries. Finally, While G and A spend jumped in 2021 to support our 1st full year operating as a public company and acquisition integration activities, We anticipate that growth in this expense category will be more limited going forward as our existing infrastructure scales nicely with expected top line growth.
Turning now to Slide 13. I will now discuss our Q4 and full year 2021 financial results. Please note, we will be referring to several financial metrics on a non GAAP basis. Reconciliations to GAAP data is included in the filed appendix. Starting with the Q4, we're very pleased with how the team finished off the year.
Consolidated revenue was 56,700,000 Excluding ExOne, revenue was $41,200,000 up 62% sequentially from the Q3 of 2021. Revenue strength was broad based across all of our offerings and particularly strong in our metal offerings. We also saw our 6th consecutive quarter of GAAP and non GAAP gross margin expansion. Non GAAP gross margin increased Over 460 basis points sequentially to 31% for the quarter, the highest in the company history. Gross margin expansion was primarily driven by operating leverage as revenue continue to scale across overhead costs as well as favorable product mix From metals platform strength, going forward, integration of recent acquisitions and ongoing supply chain challenges may result in quarter to quarter Adjusted EBITDA for the Q4 of 2021 was negative $25,700,000 versus negative $18,500,000 in the 4th Quarter 2020.
The adjusted EBITDA decline was due to investment initiatives I detailed on the previous slide that began in the Q4 2021 as well as absorbing losses from recent acquisitions as we invest with a long term growth opportunity for our business. Turning to full year financial results. We hit our marks on all revenue guidance figures we provided on our last earnings call. Consolidated revenue was $112,400,000 for the full year 2021, including core revenue our Just AutoML and EnvisionTAC businesses of $76,500,000 Excluding the ExOne acquisition, revenue was 96 $900,000 including year over year growth of 163% in our organic metal offerings. Non GAAP margins jumped to 27% for 2021 compared to being negative for 2020, Driven by operating leverage as revenues began to scale out of fixed overhead costs and adjusted EBITDA for 2021 was negative $96,100,000 And finally, we are well capitalized to end the year with $271,700,000 in cash, cash equivalents and short term investments as of December 31, 2021.
Managing cash is a key priority for 2022 and beyond, and we will be judicious on program spend and any other activities and evaluate these on a return of invested capital point of view. Turning to this year, we have outlined our 2022 revenue outlook On Slide 14, as Rick discussed, we expect to generate total revenue of approximately $260,000,000 for the full year of 2020 2, representing 131 percent growth over 2021 and an adjusted EBITDA of approximately negative $90,000,000 Well, this adjusted EBITDA outlook does include moderate increases to our operating expense run rate Exiting the Q4 of 2021, we believe now is the time to maintain investments in the growth opportunity of the business in order to accelerate market I'd like to reiterate our financial goals as a company. We are committed to achieving $1,000,000,000 in revenue by the year 2025. We expect to exit of the additive manufacturing market by the end of the decade. With that, I will turn the call back over to Rick.
Speaker 2
Thank you, James. In summary, our business performed exceptionally well in the Q4 and throughout the year. We moved swiftly in 2021 to our core capabilities to Desktop Metal. We added end use photopolymer technologies to our portfolio, Entering the healthcare and dental space in a major way, we also consolidated our market share in Metal Binder Jet into an undisputed leadership position, adding key technical capabilities to strengthen our competitive moat while delivering industry leading growth across the business. Enghi's part production continues to be the fastest growing segment in additive and we're extremely well positioned to take share of the overall industry and continue growing faster than our competitors.
We expect another outstanding year of growth in 2022 with a solid financial position, Strong secular tailwinds in a world class go to market and technical talent. We asked a lot of our teams in 2021 as the pandemic led to disruption and uncertainty. As always, Team DM stepped up to these challenges and delivered tremendous results. Thank you everyone at Desktop Metal for your hard work and tremendous contributions to our success. With that, let's open it up for questions.
Operator?
Speaker 0
Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. And then re queue for more questions. Our first question comes from the line of Greg Palm with Craig Hallum. Please proceed with your question.
Speaker 4
Yes. Thanks and good morning everyone. Just starting with the quarter, I guess if my math is right, it looks like the Majority of upside was maybe driven by better contribution from ExOne and maybe a little bit of upside from non core revenue. Can you confirm that and anything else that positively or negatively surprised you relative to prior expectations?
Speaker 3
Good morning and thanks for the question. So just for clarity sort of what we put out for guidance Previously on excluding ExOne was 92 to 102. So we are right in Middle of that. So I would say we did very well on our metal offerings. ExOne was definitely a contributor, but that wasn't Within our previous guidance.
Speaker 4
Okay. Fair enough. And can you confirm, number 1, if there were any acquisitions that were made in the quarter and number 2, if you had any percent plus customers in the quarter?
Speaker 3
So in terms of 10% customers, We evaluate that on a full year basis, if you will. We did not have any that exceeded that 10% threshold, if you will. And I'm sorry, the first question was?
Speaker 4
If you made any acquisitions in the quarter?
Speaker 3
So there were certainly X1 had closed and we did 2 dental labs that also closed in the early part of the quarter. But X1 in the Middle of November was the last acquisition we did for the year.
Speaker 4
Yes. I was sorry, I should clarify. I was thinking more on the Dental website. Okay.
Speaker 2
I'll leave it there. Great.
Speaker 0
Our next question comes from the line of Josh Sullivan with The Benchmark Company. Please proceed with your question.
Speaker 5
Hey, good morning.
Speaker 2
Good morning.
Speaker 5
Just on the expectation exit 2023 around breakeven, can you just bucket the major drivers there For us, synergies, investments, growth, maybe how many P50 systems you expect to have in the wild by then? Just looking for some metrics going into that assumption.
Speaker 3
So we don't provide forecasts on unit volumes. I would say we certainly expect continued growth from 2022 to And traditionally, the vast majority of our revenue does come in the Q4 of the year. But as Rick and I both highlighted in our prepared remarks. The key drivers for us over the next few years really are margin expansion. We don't expect We'll be introducing lots of new products into the market.
It's really more focused on the products that we are now have launched and really driving margins. Similarly, on the OpEx side, don't see a lot of additional spending. I think that the rates you're seeing for Q4 here Really, we're going to try to hold firm as a company, but certainly we want to invest in R and D portfolio as well. So really, we're just going to start to get that leverage, if you will, based on a much higher revenue number.
Speaker 2
Got it. And then just as far
Speaker 5
as the approach to desktop health and the dental industry, vertical integration, Yes. How do you see or what do you see the need for non additive related kind of infrastructure within that as Just trying to understand what's infrastructure to build out the industry versus direct additive type product sales in your overall strategy?
Speaker 2
I think that in a restrictive dental market, most parts, The majority of that $30,000,000,000 worth of parts will transition to an additive type process this decade, almost all of it, From the polymer components that are used in dentures and other type of Retro parts to ceramics and metal components, all of them can be printed more efficiently in a patient specific environment. So we see huge synergy and the ability to take a property that would have had, let's say, 11 points EBITDA to something that's double that plus over a full transformation period and the ability to eliminate double marginalization, etcetera. So all of them are accretive. It's a highly accretive play. And it's highly regional as well.
Speaker 0
Our next question comes from the line of Martin from Oppenheimer. Please proceed with your question.
Speaker 6
Yes, good morning. Thank you for taking my question. First question EnvisionTek in 4Q and for the whole year, did EnvisionTek grow Year over year in 2021 and was it bigger than Exos' contribution for the year for the quarter?
Speaker 2
It definitely grew. EnvisionTek had some sales of COVID related items in 2020 that didn't happen in 2021. So on the actual core business Printers and resins, it was definitely a growing business and we are positioning it for Dramatic growth and over the next 2 years by really shifting the product portfolio to More productive systems, high performance systems and investing in the Material set that you can enable through there, particularly the FDA cleared resins like our permanent Flexera Ultra Smiling products like that. Overall, It was not larger, the next one in Q4, but it's a fantastic business that we're building on the photopolymer space.
Speaker 3
I think it's worth noting again to as we go forward, I think we truly need to stop Thinking about things company by company, polymer, metal and so forth. I mean, we are truly integrating the teams across the board. So We have engineering resources that are shuffled around, the sales people go to market, everything. So I think especially as we enter 2022, it's going to be less meaningful than it's ever been.
Speaker 6
Got it. My next question is on your 2022 guidance. Is there any inorganic Growth embedded in the assumption and if so, how much?
Speaker 2
No, the guidance we're giving is for the business constituted right now. Got it. Thank you.
Speaker 6
If we
Speaker 2
acquired a company in 2022, we would change the guidance. But Right now, the guidance is for the business as is.
Speaker 6
Thank you.
Speaker 0
Our next question comes from the line of Troy Jensen with Lake Street Capital. Proceed with your question.
Speaker 7
Hey, gentlemen, congrats on great results in shipping the P50.
Speaker 2
Thank you, Troy.
Speaker 7
Hey, Rick. So how about just focus on the P50. If memory serves me correct, a year and a half ago, you guys first came out, you talked about 84 reservations, wood machine or some number like that. I'm just curious, Could you give us an update on kind of where you are with backlog and visibility on the 3/50 and thoughts on how many more machines are going to ship this year?
Speaker 2
Absolutely. So I think your number is in the correct range. We continue to make progress there. We don't actually in a facility to triple our ability to get machines out, and that facility is humming and scaling up very nicely, and We hope to continue our conversions and success in that part. P50 is definitely going to be a big important pillar of our long term growth.
And we have very high interest from a long customer list. You'll be hearing more about it as the year progresses and With major corporations like the example of Stanley Black and Decker.
Speaker 0
Our next
Speaker 6
So can you maybe talk about Stanley Black and Decker, how are they using T-fifty? Do you know if The tool is being put in for high volume production?
Speaker 2
Yes, it is for high volume production of actual end use parts. And if you can make components with this technology at a much lower cost than the analog processes that exist today and this is going to allow you to switch your mode of production Having one factory does something and then ships it to all parts of the world, you'll be able to have more localized production closer to the customer At a more cost effective approach with inventory of 1 and eventually get the ability to mass So it is a fantastic case study and we just did this a couple of weeks ago. Yes, I'm expecting to do some more exciting press with them in the future as they get their things In volume production, after running. I'll stay tuned.
Speaker 6
Got it. Thank you, Rick. Another follow-up, if I may. So can you maybe provide an overview of your supply chain challenges? Is there any improvement on whether or not the improvement is embedded for the 2022 guidance?
Speaker 2
I think that all of our guidance has the current landscape built in. I would say that there isn't a company in the U. S. That hasn't had some level of supply chain challenges. We had some of ours in Q3, But I am proud of the work that our team did in Q4 despite a challenging environment, they were able to get things done.
And It did affect our ability to ship Q4 I'm sorry, ship P50 before the end of Q4, but a few weeks later At middle of Q1, we were able to get that out. And I think we're in a better position today in supply season, we were in Q3, but it's not A significant task I think that the whole world is going through. I would have to say one silver lining to this whole thing is This is what drives demand. We get calls from CEOs and senior people at major corporations or SMEs Because they can't get parts that they need, they can't make progress in supply chain and additive is A big part of that potential solution and it really allows you to modernize the way that you make your products And simplify the way you make your products, get around tariffs. It's a very flexible technology that is growing and we're proud of our growth.
It's Not a coincidence that we that we're focused on end use part mass production and at the same time we're the fastest growing Company organically and inorganically and additive over the past year. We continue we'll continue that effort this year and We make systems and are designing a product portfolio that is a winning portfolio, which has lowest cost per part per volume production We have a variety of processes in metals, ceramics, polymers, etcetera. So we're positioning the company for that For this decade, I think it's exciting to see broad based demand being driven by supply chain disruption.
Speaker 0
Our next question is a follow-up question from the line of Greg Palm from Craig Hallum. Please proceed with your question.
Speaker 4
Yes, thanks. If I missed the commentary, apologies, but can you give us a little bit of the Underlying assumptions within the guidance for fiscal 2022 on the revenue, and I'm not sure if the right way to think about it is Contribution from ExOne, contribution from core and contribution from non core, but that's essentially what I'm looking if you can give us a little bit more color.
Speaker 2
Absolutely. Let me take the first part of the question and I'll hand it off to James. I mean, I think we are taking this firm portfolio, which is The original driver of the guidance and making some moves. We've taken our metal products That were sold direct line are now fully integrated into the DM products. They gained new software and functionality that was developed by DM, which like our LifeCentric Technology.
And at the same time, we have one operations team now, we have one customer support team. We have one engineering team that's been fully integrated. We see very strong demand in binder jetting On the products that we've got both in metal and other components, it's a huge opportunity to cross sell and up sell across this portfolio of customers. We now have 6,000 customers that are part of this full family of products. We did acquire some key assets last year and they're starting to bear fruit.
And we when we do our forecasting in our funnel, we feel very good about the guidance that I think it's possible to continue this level of growth. And We also see very strong demand on the sand side for the applications that we're going after in production of digital castings and other components like that. And the dental market It has just completely new refreshed portfolio with Einstein, which is a best in class, highest price performance with the best materials portfolio for Endy's part dental products. And so that part is also seeing great demand. So all this picture gives us the full view of What we're planning to do this year, our dental business on the parts side is growing organically in addition to what we added to it.
That was, I would say, started initially in one initial region of the Midwest. I think our assumptions are proving right That is a highly accretive play and we're really happy with the results of it. So that I mean, maybe James has additional Scott,
Speaker 3
go ahead. Yes. So we're not giving any additional factor on sort of the companies, if you will. As I mentioned earlier, we're really looking at integrating more and more. As Rick and I both touched on, one of the key initiatives for 2022 is product rationalization As well, I think what we can comfortably say is metal is going to be a key driver for us for 2022 and will be the biggest sort of Pillar, if you will, on our revenues, but we're not in a position to give any more additional texture beyond that.
Speaker 4
Okay, fair enough. I'll add my congratulations on getting the P50 out. I know that's a big event for the company and the industry. So congrats again on that.
Speaker 2
Thank you, Greg, and very grateful for that. Thank you.
Speaker 0
Our next question comes from the line of Noelle Dilts with Stifel. Please proceed with your question.
Speaker 8
Hi, thanks. And again, congrats on the accomplishments this year. So I know, James, you said you weren't going to add too much additional color on the businesses, but I was hoping that generally, you could speak to The trends and how you're thinking about demand for direct and then indirect printers for X1 As you look at 2022, specifically, if there's any sort of goals or programs that you're undertaking on the indirect side as well?
Speaker 2
Thanks. Absolutely. Look, Noel, the indirect side is a really interesting part of our business. We're the leader in that side of the business. And there's a large number of programs that have been developing over many years that are now starting to come to fruition.
We feel really good about where we're taking the indirect side of the business, have upcoming products And the capabilities that will be introduced throughout the year, that is a fantastic part of the business. It has synergies with products like forest Because you'll now be able to do giant parts out of wood and other components and we have very good business developing there. This is the Q1 that we actually for the whole year, we did Several $1,000,000 in forest related equipment revenue, but a lot more than what we paid for the company. So we're very That we've gotten into that part of the business. And on the direct side, the Applications are broader in terms of there being a more horizontal utilization for the products than because the parts can be used for Many, many, many more applications than castings or wood parts.
So we've got pull on our SME products like SHOP that's Quite strong and then we've integrated the Exline products now with our portfolio and then we've got P50. We're really excited to start to The unit is out and it's been a long time in the making. It's best in class products with much higher end capabilities than what Anybody else has in the market. So I'm very excited to get that in the hands of customers after all this work. And I think 2022 is going to be a fantastic year for this business.
I'm really excited about what we're putting together.
Speaker 8
Okay. Thanks. And then second, James, You mentioned sort of some seasonality in the Q1 when you're talking about margins. But also given the X1 transaction, I know sometimes that When you go through something that made a transaction like this, it can kind of slow demand in the short term and then things start to accelerate. Is that happening and does that sort of enhance the seasonality further?
If you could comment on that, that would be great. Thank you.
Speaker 3
Yes. No, I think that was a very clear point, Manuel. I mean, as we look at the year in total, I think traditionally in terms of the revenues for Q1, it tends to be in that 15% of total revenues for the year. I think certainly with these integration efforts, that's where we would likely be somewhere in that 15% to 20% neighborhood. That said, I think the pipeline is looking incredibly strong, and we do see lots of promising upside In the second half of the year, keep in mind too that ExOne's business was built around Build to order, if you will.
And what we're really focused on is trying to shorten that sort of timeline, if you will. So we're expecting Lots of potential in the second half.
Speaker 8
Okay. Thank you very much.
Speaker 0
Our next question is a follow-up question from the line of Troy Jensen with Lake Street Capital. Please proceed with your question.
Speaker 7
Hey, guys. I guess I just want to go back one question on the P50. I know you guys have capacity to make a lot of machines and get a lot of reservations. But Can we think of it as a controlled rollout here for the first half, very few machines upfront and before kind of a broader adoption or Hi. I do have a follow-up for James.
Speaker 2
Absolutely. Look, we it is a very good point. I mean, it's a complex system. It's bigger than our I mean it's the size of a bus with lots of ancillary equipment and components, a lot of custom parts. It's the fastest production system ever built to make added parts.
So yes, like all scale ups and manufacturing, You scale them up at a particular cadence and we're not going to have a wipeout. Our goal is to do this In a thoughtful manner, and just like any other product that got scaled, whether it was the Model 3 For the products, you sold less iPhones in the 1st year than you did on the 5th year of introduction. So I'm very happy with the demand for the product. I'm very happy with the internal plans, but we're going to Do it in a judicious way so that we get happy customers on the other side. Now this is a product that's sold differently than our channel based approach.
It is sold through our production team. We have a go to market team now of 70 people at the end. 70 people are in our go to market team, Which is fantastic. And we've now integrated the leadership of that team. So that's complete by Making the right choices between the expertise of the folks that we had across the board.
And I'm really excited about The progress that we're seeing there on the production. We have basically a production sales team that sells systems like P50 or We've got a strategic accounts team that looks at hyperscale applications and multi year. They're not quarterly driven, they're like multi year, Very large application driven. And then we have our channel, which we've expanded over the past year. We went from about 90 partners at the beginning Well over 200 and it's a refreshed young channel that's very hungry and we've got Great leadership across the board in this group and we're very excited about the forecast and final we're building for this year.
Speaker 7
And if I could just get a follow-up in for James here.
Speaker 2
Absolutely.
Speaker 7
James, I saw a 311,000,000 share count number in your press release. I guess I'm trying to figure out, is that fully diluted, GAAP profitable, kind of the all in share count number would be helpful?
Speaker 3
Yes. So that is the all in Share count, Troy, as of December 31, we wouldn't expect much in the way of changes From those numbers except any sort of option exercises, RCs investing and so forth. So that's the all in number.
Speaker 0
There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.
Speaker 2
Thank you. Look, I want to thank everybody for joining the call as well as Everybody that works at VM for their continued dedication, passion in advancing our vision of AM 2.0 for mass production. This is a great mission and it's an honor to work together with all of you. And we really look forward to speaking again on the next call. Thank you very much.