Markforged Holding Corp (MKFG)·Q3 2024 Earnings Summary

Executive Summary

• Q3 2024 revenue grew 2% YoY to $20.5M, with non-GAAP gross margin at 50.9% and GAAP EPS of $(1.15); management cited “persistently tough market conditions” but healthy consumables/services growth and continued PX100 traction .
• Markforged reached a comprehensive settlement of the Continuous Composites IP litigation (upfront $18M in Q4 2024 plus $1M/$2M/$4M in 2025/2026/2027) and terminated the related surety bond, removing a major overhang on margins and cash visibility .
• The company announced metal printing capability for FX10 at IMTS and shipped a second PX100, underscoring product momentum despite macro headwinds .
• In light of the pending $5.00/share all-cash acquisition by Nano Dimension, Markforged did not host a Q3 earnings call and withdrew forward guidance; closing targeted by Q1 2025 subject to shareholder and regulatory approvals .
• Cash and equivalents including restricted cash were $79.5M at quarter-end (down from $93.9M in Q2), reflecting bond-related restricted cash that was subsequently terminated post-settlement, a key liquidity catalyst .

What Went Well and What Went Wrong

What Went Well

• Consumables and services growth: Consumables +11.8% YoY and services +13.2% YoY supported mix and non-GAAP gross margin uplift (“operational efficiencies and product mix”) .
• Product innovation traction: “Positive momentum” with FX10 metal capability launch; “world’s first industrial 3D printer for metals and composites,” and continued PX100 traction (second system shipped) .
• Litigation resolution: Settlement and cross-licenses eliminated uncertainty; CEO: “bring this litigation to a successful conclusion… eliminate this distraction” .

What Went Wrong

• Systems softness: Management highlighted “persistently tough market conditions” impacting system sales (macro/interest-rate headwind persisted) .
• Revenue down QoQ: Q3 revenue of $20.5M fell from $21.7M in Q2, reflecting continued pressure on capital equipment demand .
• Guidance withdrawn: No earnings call and no forward guidance due to merger, limiting near-term visibility for investors and analysts .

Financial Results

Quarterly comparisons (oldest → newest):

Segment (product category) revenue trend:

Geography revenue trend:

Non-GAAP adjustments (Q3 illustration): add-backs include stock-based comp, amortization, change in fair value of contingent earnout and derivative liabilities, litigation judgment, and certain non-recurring costs; reconciliations provided in press release tables .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO (Q3 PR): “We are pleased with our results in Q3… adoption of our latest product innovations… positive momentum following the successful launch of metal printing capability for the FX10…” .
• CEO (Settlement PR): “bring this litigation to a successful conclusion… eliminate this distraction… excited after the successful launch of metal printing capability for the FX10 at IMTS” .
• CFO (Q2 call): “Gross margins… up 3.6% YoY driven by operational efficiencies and product mix… cost reduction initiative reduces annual OpEx run rate to ~$70M in 2025” .
• CFO (Q2 call on royalties): “If royalty payments… awarded, we would expect… 5 to 7 percentage point reduction in our gross margins” .

Q&A Highlights

• Legal costs and non-GAAP treatment: Legal fees excluded from non-GAAP P&L; analysts directed to reconciliation tables (Q2) .
• Cost reduction detail: Majority of savings from R&D after releasing three new platforms; aimed at sustainable growth (Q2) .
• H2 revenue bridge: Pipeline growth and new innovations (FX10, PX100) underpin expected H2 growth despite capital equipment headwinds (Q2) .
• FX10 supply/demand ramp: Capacity expected to meet demand by Q3/Q4 (Q1) .
• Litigation scope: Impact tied to continuous carbon fiber technology; US-focused; too early for more detail at that time (Q1) .
• Regional dynamics: EMEA/APAC softness seen; recovery expected based on pipeline (Q1) .
• Gross margin outlook: Encouraged by Q1 expansion; room to reach upper-end of 48–50% as revenue picks up (Q1/Q2) .

Estimates Context

• Wall Street consensus (S&P Global Capital IQ): Q3 2024 EPS and revenue consensus were not available due to a missing CIQ mapping for MKFG in the SPGI system at query time; Markforged did not provide Q3 guidance and did not host an earnings call in light of the pending merger .
• As a result, we cannot assess beats/misses vs S&P Global consensus for Q3 2024 (consensus unavailable).

Key Takeaways for Investors

• Non-GAAP margin resilience: Despite macro pressure, non-GAAP gross margin held ~51% in Q1/Q2 and 50.9% in Q3, aided by efficiencies and mix—a constructive datapoint for medium-term model normalization post-merger .
• Litigation overhang removed: Settlement terms (total $25M over 4 years) and cross-licenses eliminate potential 5–7 pp gross margin headwind from royalties and reduce risk around IP—improving cash and margin visibility .
• Product catalysts: FX10 metal capability and PX100 shipments demonstrate innovation cadence and early traction; watch for continued adoption in industrial verticals as macros improve .
• Revenue mix shift: Hardware revenue remains pressured; consumables/services growth supports margins—monitor the balance as systems demand recovers .
• Liquidity: $79.5M cash and equivalents including restricted at Q3 (vs $93.9M in Q2); restricted cash tied to bond was terminated post-settlement—cash profile should improve as litigation cash commitments are scheduled and bond is removed .
• Guidance withdrawn: With pending $5.00/share cash acquisition by Nano Dimension, near-term fundamentals are secondary to closing conditions and timing (target Q1 2025), reducing estimate-based trading catalysts .
• Operational discipline: $25M cost reduction targeting ~$70M OpEx run rate in 2025 provides a structurally leaner cost base—supportive for margin leverage in recovery scenarios .