Q4 2021 Markforged Holding Corp Earnings Call
[music].
Greetings and welcome to the Mark for its fourth quarter 2021 earnings Conference call. At this time, all participants are in a listen only mode.
greetings and welcome to the Mark Forge fourth quarter 2021 earnings conference call. At this time all participants are in a listen-only mode.
question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference please press star zero on your telephone keypad.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note that this conference is being recorded.
I will now turn the conference over to our host, Stephen Karp, General Counsel. Thank you.
I will now turn the conference over to our host Steven Carp General Counsel. Thank you you may begin.
Stephen Karp: Good afternoon. I am Steven Karp, General Counsel of Mark Forge Tolling Corporation. Welcome to our fourth quarter and fiscal year 2021 results conference call.
Good afternoon, I am Stephen Carp General Counsel of Mark forged holding corporation welcome to our fourth quarter and fiscal year 2021 results conference call.
Stephen Karp: We will be discussing the results announced in our earnings press release issued after market close today.
We will be discussing the results announced in our earnings press release issued after market close today.
Stephen Karp: With me on the call is our President and CEO , Shai Karam, and our CFO , Mark Schwartz.
With me on the call is our president and CEO , Shai tariffs and our CFO Mark Schwartz.
Shai Karam: Before we get started, I would like to remind everyone that management will be making statements during this call that include forward looking statements within the meaning of federal securities law, which are made pursuant to the safe harbor provisions of the private securities litigation reform act of 1995.
Before we get started I would like to remind everyone that management will be making statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Shai Karam: Any statements contained in this call that are not statements of historical facts should be deemed to be forward.
Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements.
Stephen Karp: All forward looking statements, including without limitation, statements regarding our business strategy and future financial and operating performance, projected revenue and gross profit for the current year. Expected growth, our new product introductions and market opportunity are based upon current estimates and various assumptions.
All forward looking statements, including without limitation statements regarding our business strategy and future financial and operating performance projected revenue and gross profit for the current year expected growth, a new product introductions and market opportunity are based upon current estimates and various assumptions.
Stephen Karp: These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements.
These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward looking statements.
Stephen Karp: Accordingly, you should not place undue reliance on these statements.
Accordingly, you should not place undue reliance on these statements for a description of the risks and uncertainties associated with our business. Please see our most recent periodic and other filings with the SEC.
Stephen Karp: For a description of the risks and uncertainties associated with our business, please see our most recent periodic and other filings with the SEC.
Stephen Karp: The information provided in this conference call speaks only as of the date hereup.
The information provided in this conference call speak only as of the date hereof.
Stephen Karp: Mark Forge disclaims any intention or obligation, except as required by law, to update or revise forward-looking statements.
Mark forged disclaims any intention or obligation, except as required by law to update or revise forward looking statements.
Stephen Karp: Also during the course of today's call, we refer to certain non-GAAP financial measures.
Also during the course of today's call, we refer to certain non-GAAP financial measures.
Stephen Karp: There is a reconciliation schedule showing the gap versus non-gap results currently available in our press release issued after market close today, which can be found on our website at investors.markforged.com.
There is a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued after market close today, which can be found on our website at investors <unk> Mark forged dot com.
I'll now turn the call over to <unk>, President and CEO of Mark forged.
Speaker Change: I'll now turn the call over to Shai Tarim, President and CEO of Markforged.
Shai Tarim: Thank you, Steve. I would like to thank everyone for joining us today. This has been a tremendous growth year for Markford.
Thank you, Steve I would like to thank everyone for joining us today.
It's been a tremendous growth year for mark for it.
Shai Tarim: We are proud to share that we executed on the plan we shared a year ago and beat our targets for 2021.
We are proud to share that we executed on the plan, we shared a year ago and beat our targets for 2021.
Shai Tarim: Markforged is one of the fastest organically growing additive manufacturing companies with industry-leading gross margins.
Mark Ford is one of the fastest organically growing additive manufacturing company with industry, leading gross margin in.
In particular in the fourth quarter, we delivered $26 6 million in revenue.
Shai Tarim: In particular, in the fourth quarter, we delivered $26.6 million in revenue, which brings total revenue for 2021 to $91.2 million.
Which brings total revenue for 2021 to $91 2 million.
Shai Tarim: We exceeded our guidance for both the quarter and the full year, resulting in 27% annual organic growth with 58% gross margin.
We exceeded our guidance for both the quarter and the full year, resulting in 27% annual organic growth with 58% gross margins.
Mark Ford was founded on the premise that additive technologies can create the part I'm sure on how we as humans manufacture product.
Shai Tarim: Mark Ford was founded on the premise that additive technologies can create a paradigm shift on how we, as humans, manufacture products.
Mark <unk> is building the largest network of connected digital factories to lead the future of distributed manufacturing.
Shai Tarim: Markforged is building the largest network of connected digital factories to lead the future of distributed manufacturing.
Our technology helps customers overcome global supply chain challenges and move from physical to digital inventory.
Shai Tarim: Our technology helps customers overcome global supply chain challenges and move from physical to digital inventory.
Shai Tarim: The digital forge, our integrated metal and carbon fiber, additive manufacturing platform powered by cloud native. Of net production.
The digital forge, our integrated metal and carbon fiber additive.
<unk> platform powered by cloud native.
Inputs.
<unk> production.
Shai Tarim: which also helps reduce the negative carbon emission impact of logistics and transportation on our planet.
Which also helps reduce the negative carbon emission impact of logistics and transportation on our planet.
A detailed forge is designed to solve for high value mission critical applications, our customers rely on the G to forge for demanding rigorous and youth sports, which cannot break between maintenance cycles.
Shai Tarim: The Digital Forge is designed to solve for high-value, mission-critical applications.
Shai Tarim: Our customers rely on the Geotab Forge for demanding, rigorous, and used parts, which cannot break between.
The detail for to provide a reliable and repeatable manufacturing solution that accelerates deeper adoption of our technology.
Shai Tarim: The digital forge provides a reliable and repeatable manufacturing solution that accelerates deeper adoption of our technology.
Shai Tarim: With over 12,000 active printers, which are printed over 11 million parts.
With over 12000 active printers, which are printed over 11 million parts.
Shai Tarim: The digital forge solves for these applications directly on the manufacturing floor.
The diesel Ford sold for these applications directly on the manufacturing floor.
Our continuous fiber reinforcement technology is a unique differentiator for mark for <unk>.
Shai Tarim: Our continuous fiber reinforcement technology is a unique differentiator for Markford.
Shai Tarim: It enables our customers to utilize advanced composites in the production of parts that are stronger and lighter than metal.
It enables our customers to utilize advanced composites in the production of parts to that.
Stronger and lighter than metal.
Shai Tarim: We understand the critical importance of strength in creating a new sport.
We understand the critical importance of strength in creating Andrew sport.
Shai Tarim: We have been leaders in this field with our proprietary materials since our founding.
We have been leaders in this field with our proprietary materials since our founding.
And we have seen the transition and increased demand for continuous fiber technology and advanced composites further highlighting our significant market opportunity, where our customers need to produce stronger certified parts in a shorter timeframe.
Shai Tarim: And we have seen the transition and increased demand for continuous fiber technology and advanced composites.
Shai Tarim: further highlighting a significant market opportunity where customers need to produce stronger certified parts in a shorter timeframe.
Shai Tarim: Markfort is primed for scalable growth in large due to our AI driven cloud software platform, which connects our global
Mark 14th Bryan for scalable growth in large U two our AI driven cloud software platform.
Which connects our global fleet of printers.
Shai Tarim: Each printer is a standalone digital factory. Secure. Remotely controlled.
Each printer is a standalone digital factory.
Secure remote to control <unk>.
Collecting data at all times.
And using our proprietary blacksmiths software to complete its own quality assurance testing.
Shai Tarim: and using our proprietary blacksmith software to complete its own quality assurance testing.
The data generated from every single print is used to improve the printers on the entire network, increasing part accuracy and therefore, increasing demand for our solution.
Shai Tarim: The data generated from every single print is used to improve the printers on the entire network, increasing part accuracy, and therefore increasing demand for our solution.
Shai Tarim: With our approach, Markforged customers are using better solutions tomorrow from the learnings of today.
With our approach mark towards customers are using better solution tomorrow from the learnings of today.
In 2020 , one we saw approximately 50% year over year increase in sales of our industrial solution.
Shai Tarim: In 2021, we saw approximately 50% year-over-year increase in sales of our industrial solution.
Shai Tarim: This group is especially noticed in the aerospace and automotive industries.
This growth was especially notice in the aerospace and automotive industries.
Global supply chain challenges are creating shortage everywhere.
Shai Tarim: Global supply chain challenges are creating shortage everywhere.
Shai Tarim: validating the need for printing unused parts at the point of need.
Holiday didn't need for printing Andrew sports at the point of need.
Shai Tarim: and accelerating our vision of distributed manufacturing.
And accelerating our vision of distributed manufacturing.
Our customers are facing compounding pressures across their operations.
Shai Tarim: Our customers are facing compounding pressures across their operations.
And are quickly realizing the high value of digital forge ability to produce what you need when you need it where you need it.
Shai Tarim: and are quickly realizing the high value of the digital forge ability to produce what you need, when you need it, where you need it.
We were able to use digital forward on our own manufacturing line.
Shai Tarim: in our development cycles, and even for end-use parts that go into building the digital forge itself.
In our development cycles, and even for end use parts that go into building the detailed 40 itself.
Shai Tarim: Navigating these challenges, accelerated by the complicated nature of a global pandemic, is no easy task.
Navigating these challenges accelerated by the complicated nature of the global pandemic is no easy task.
Shai Tarim: Our ability to meet customer demand for product is an accomplishment that our team is very proud of and is reflected in our performance.
Our ability to meet customer demand for our products.
Complishments that our team is very proud of and is reflected in our performance.
Speaking of our team.
Shai Tarim: We ended the year with approximately 400 employees, nearly doubling in size.
We ended the year with approximately 400 employees.
Nearly doubled in size.
Good.
Shai Tarim: We're focusing our hiring efforts on our go-to-market and engineering teams.
We're focusing our hiring efforts our go to market and engineering teams.
Shai Tarim: to develop multiple products at the same time to expand our addressable market.
To develop multiple products at the same time to expand our addressable market.
We also built out our executive leadership team in 2021, and now the team capable of scaling Mark Ford to the next stage of maturity.
Shai Tarim: We also built out our executive leadership team in 2021, and now have a team capable of scaling Markforged to the next stage of maturity.
Speaker Change: Most recently, we appointed Andrew Haley as our Chief Marketing Officer.
Most recently, we appointed Andrew Haley as our Chief marketing Officer.
Speaker Change: With deep technology experience, Android is helping us refine our strategies around the digital force and help us accelerate our growth.
With deep technology experience Android is helping us refine our strategies around the <unk> and help us accelerate our growth.
As we look forward, we feel confident in our ability to execute on our plans for 2022, just as we did in 2021.
Speaker Change: As we look forward, we feel confident in our ability to execute on our plans for 2022, just as we did in 2021.
Speaker Change: Increasing the addressable market through the introduction of new capabilities to the digital forge is our top priority and we are already executing on that plan.
And Chris <unk> addressable market through the introduction of new capabilities to the digital forge is our top priority and we're already executing on that plan.
As you recall, we announced the release of the ethics, 'twenty printer and <unk> 90, 85 filament with continuous fiber reinforcement in November of last year.
Speaker Change: As you recall, we announced the release of the FX-20 printer and Ultem 9085 filament with continuous fiber reinforcement in November of last year.
Speaker Change: Since that announcement, we are seeing robust demands from our customers for this solution and building a strong backlog all over the world.
Since that announcement, we are seeing robust demand from our customers for this solution and building a strong backlog all over the world.
The early excitement for <unk> 'twenty and welcome filament.
Speaker Change: The early excitement for the FX20 and Ultem filament validates our view, the need for high-strength, heat-resistant, and higher-performance parts in demanding industries such as aerospace, defense, and automotive.
While it is our view the need for high strength heat resistant and higher performance sports in demanding industries, such as aerospace defense and automotive.
<unk> is the biggest fastest and smartest freedom printer our team has ever produced.
Speaker Change: The FX20 is the biggest, fastest, and smartest 3D printer our team has ever produced.
Speaker Change: and grows the DigitalForge platform for an accessible industrial-grade solution to high-volume, robust production of mission-critical applications at the point of need.
And growth digital forge platform for an accessible industrial grid solution to high volume robust production of mission critical application at the point of need.
Speaker Change: We expect to see a significant increase in the volume of FX20 shipping in the second half of the year.
We expect to see a significant increase in the volume of ethics 20 shipping in the second half of the year.
Speaker Change: We see accelerated adoption within our enterprise accounts, which continue to certify more and more applications with the digital forge.
We see accelerated adoption, we do not enterprise accounts, which continue to certified more and more applications with the digital forge.
Speaker Change: For example, one of the world's leading automotive manufacturers.
For example.
One of the world's leading automotive manufacturers, who use the full offering of the digital Ford.
Speaker Change: who used the full offering of the digital forge across its operation, almost doubled their connected fleet to over 40 printers last quarter, including an FX20 with over 700 hours of printing time log to date.
Ross its operation almost doubled their connected fleet to over 40 printers last quarter <unk>.
Including in FY 'twenty with over 700 hours of printing time local date.
Speaker Change: This is a strong example of our customers extending its usage of our printer and the application they are solving.
This is a strong example of our customers expanding usage of our printer and application theyre solving.
They are even overcoming supply chain disruption.
Speaker Change: They are even overcoming supply chain disruption by printing, as needed, end-use parts that go directly into the cars they manufacture.
By printing as needed and Dysport that go directly into the cars the manufacturer.
As our customers increase their use of the digital forge, we're expanding our addressable market and tapping new applications.
Speaker Change: As the customers increase their use of the digital forge, we're expanding our addressable market and tapping new applications.
Speaker Change: from accessible product design with our new precise PLA to higher and robust production with the FX20 and Ultem 9085 filament with continuous fiber reinforcement.
From accessible product design with our new precise BLA too.
Two higher and robust production.
The <unk> 20, and <unk> 1985, filament with continued fiber reinforcement.
Speaker Change: As I reflect on 2021, I look at what fueled our success. The growth.
As I reflect on 2021, I look at what fueled our success there.
The growth of our customer base.
Speaker Change: the expansion of the digital forge capabilities for our hardware, software, and materials.
The expansion of the digital forge capabilities for hardware software and materials.
Speaker Change: Our ability to solve for mission critical applications in the face of supply chain challenges.
Our ability to solve for mission critical applications in the face of supply chain challenges.
And our talented team.
These same elements give me great confidence in our ability to deliver strong performance in 2022.
Speaker Change: These same elements give me a great confidence in our ability to deliver strong performance in 2022.
Speaker Change: I now turn the call over to Mark to offer a more detailed overview of our financial performance.
I'll now turn the call over tomorrow to offer a more detailed overview of our financial performance.
Mark: Thanks, Shai. Let's turn to our financial results for the fourth quarter and the full fiscal year of 2021, as well as our guidance for fiscal year 2022.
Thanks Shai.
Let's turn to our financial results for the fourth quarter and the full fiscal year 2021, as well as our guidance for fiscal year 2022.
For the year, our revenue increased 27% to $91 2 million compared with revenue of $71 9 million for the year ended December 31 2020.
Mark: For the year, our revenue increased 27% to $91.2 million, compared with revenue of $71.9 million for the year ended December 31, 2020.
Mark: We experienced growth across all products and services and across all geographic regions.
We experienced growth across all products and services and across all geographic regions.
Mark: For the 4th quarter 2021, revenue increased 9.5% year-over-year to $26.6 million compared with revenue of $24.3 million for the quarter ended December 31st, 2020.
For the fourth quarter 2021 revenue increased nine 5% year over year to $26 6 million compared with revenue of $24 3 million for the quarter ended December 31 2020.
Mark: Notable for the comparison is the impact of Automation Alley, an $8 million transaction that remains the single largest sale in our history. Removing the impact
Notable for the comparison is the impact of automation Alley and.
An $8 million transaction that remains the single largest sale in our history.
Removing the impact of automation alley.
Mark: representing $4.4 million in revenues recognized in the fourth quarter of 2020.
Representing $4 4 million in revenues recognized in the fourth quarter of 2020.
Mark: fourth quarter 2021 revenue increased 33 percent as compared to the fourth quarter of 2020.
Fourth quarter, 2021 revenue increased 33% as compared to the fourth quarter of 2020.
For the year gross profit increased to $52 9 million compared to $41 9 million for the year ended December 31 2020.
Mark: For the year, gross profit increased to $52.9 million compared to $41.9 million for the year ended December 31, 2020.
As a result.
Mark: As a result, we achieved a 57.9% gross profit margin for the year, compared to 58.4%.
We achieved a 57, 9% gross profit margin for the year.
Compared to 58, 4% in 2020.
Mark: Our gross margin was strong, despite the challenges presented by global supply chain pressure.
Our gross margin was strong despite the challenges presented by global supply chain pressures.
Mark: which we expect will continue through calendar year 2022.
Which we expect will continue through calendar year 2022.
Nonetheless, our long term view remains unchanged.
Mark: Nonetheless, our long-term view remains unchanged.
Mark: We believe we will continue to maintain industry-leading gross margin.
We believe we will continue to maintain industry, leading gross margins attributable to our focus on serving mission critical needs of industrial automation and the broader manufacturing industry.
Mark: attributable to our focus on serving mission-critical needs of industrial automation and the broader manufacturing industry.
Moving on we maintained strong controls over our operating expenses in 2021.
Mark: Moving on, we maintained strong controls over our operating expenses in 2021, spending less than our target.
Spending less than our target for the year.
We incurred $113 9 million in operating expenses during the year.
Mark: We incurred $113.9 million in operating expenses during the year.
Mark: which when adjusted for stock-based compensation charges of $18.4 million and one-time transaction expenses of $2 million related to our public merger.
Which when adjusted for stock based compensation charges of $18 4 million and one time transaction expenses of $2 million related to our public merger.
Mark: was $93.5 million, compared with $57.7 million the previous year.
Was $93 5 million compared with $57 7 million the previous year.
Our full year operating expenses also included $5 3 million of public company expenses that were noted but deliberately excluded from our 2021 forecast published in our S. Four document.
Mark: Our full year operating expenses also included 5.3 million of public company expenses that were noted, but deliberately excluded from our 2021 forecast published in our S4 document.
Mark: This was due to the uncertainty of the timing and magnitude of those public expenses.
This was due to the uncertainty of the timing and magnitude of those public expenses.
Our research and development expenses for the year increased 87, 2% to $32 2 million compared with $17 2 million in the previous year.
Mark: Our research and development expenses for the year increased 87.2% to $32.2 million, compared with $17.2 million in the previous year.
Mark: the result of our commitment to accelerate new product time to mark.
The result of our commitment to accelerate new product time to market.
For the fourth quarter operating expenses were $34 million compared to $18 9 million for the quarter ended December 31 2020.
Mark: For the fourth quarter, operating expenses were $34 million, compared to $18.9 million for the quarter ended December 31, 2020.
Adjusted for stock based compensation charges of $7 2 million.
Mark: Adjusted for stock-based compensation charges of $7.2 million.
Mark: Operating expenses for the fourth quarter were $26.8 million compared with $18.1 million for the fourth quarter of 2020.
Operating expenses for the fourth quarter were $26 8 million compared with $18 1 million for the fourth quarter of 2020.
Mark: research and development expenses in the fourth quarter increased to $10.7 million compared with $4.3 million in the fourth quarter of 2020.
Research and development expenses in the fourth quarter increased to $10 7 million compared with $4 3 million in the fourth quarter of 2020.
Mark: We remain committed to our strategy of increasing our addressable market through innovation.
We remain committed to our strategy of increasing our addressable market through innovation.
With every software development system release or additional material.
Mark: with every software development, system release, or additional material.
Mark: thus increasing the value of our digital Forge platform to our customers.
It's increasing the value of our digital forge platform to our customers.
For the year.
Mark: For the year, adjusted EBITDA was a loss of $38.7 million, or $0.21 per share, based on 186 million shares outstanding as of December 31st, 2021.
Adjusted EBITDA was a loss of $38 7 million or <unk> 21 per share based on 186 million shares outstanding as of December 31, 2021.
Mark: or a loss of $0.36 per share based on the weighted average outstanding share count of $108 million as of the end of the year.
Or a loss of 36 per share based on the weighted average outstanding share count of $108 million as of the end of the year.
Adjusted EBITDA excludes stock based compensation expense of $18 9 million.
Mark: Adjusted EBITDA excludes stock-based compensation expense of $18.9 million.
Mark: non-recurring audit, legal, and other expenses associated with the SPAC transaction of $2 million and other income of $65,000.
<unk> nonrecurring audit legal and other expenses associated with the spec transaction of $2 million.
And other income of $65 2 million.
Mark: As a reminder, the other income line item represents the mark to market adjustment of derivative liabilities related to our SPAC merger.
As a reminder, the other income line item represents the mark to market adjustment of derivative liabilities related to our spec merger.
For the fourth quarter, adjusted EBITDA was a loss of $11 million or <unk> <unk> per share based on our weighted average outstanding share count of $186 million.
Mark: For the fourth quarter, adjusted EBITDA was a loss of $11 million, or $0.06 per share, based on our weighted average outstanding share count of $186 million.
Mark: Adjusted EBITDA excludes stock-based compensation expense for the quarter of $7.5 million and other income of $22.3 million, again related to the mark-to-mark adjustment of derivative liability.
Adjusted EBITDA excludes stock based compensation expense for the quarter of $7 $5 million and other income of $22 3 million again related to the mark to market adjustment of derivative liabilities.
Mark: Before we get to guidance, I want to highlight some reporting.
Before we get to guidance.
Want to highlight some reporting changes.
Mark: On a go-forward basis, we intend to supplement the reporting of our gap results.
On a go forward basis, we intend to supplement the reporting of our GAAP results with certain non-GAAP results intended to provide broader insight into how we manage our business.
Mark: with certain non-GAAP results intended to provide broader insight into how we manage our business.
non-GAAP reporting will exclude share based compensation.
Mark: non-GAAP reporting will exclude share-based compensation, other income, and other non-recurring, unusual, and infrequent charges from our GAAP results.
Other income.
And other nonrecurring unusual and infrequent charges from our GAAP results.
Mark: we will provide this supplemental non-GAAP reporting for gross profit, operating profit, and earnings per share, and believe this will provide a more meaningful set of data points for comparison purposes than our prior non-GAAP reporting of adjusted EBITDA.
We will provide this supplemental non-GAAP reporting for gross profit operating profit and earnings per share and believe this will provide a more meaningful set of data points for comparison purposes than our prior non-GAAP reporting of adjusted EBITDA.
Now onto our guidance.
Mark: We anticipate full year 2022 revenues to be within the range of $114 to $123 million.
We anticipate full year 2022 revenues to be within the range of $114 million to $123 million.
Mark: representing year-over-year growth of 30% at the midpoint of that range.
Representing year over year growth of 30% at the midpoint of that range.
Mark: With the expected commercial availability of the FX-20 the second half of this year, we continue to expect 60 to 65 percent of our revenues in 2022 will be recognized during the second half of the year.
With the expected commercial availability of the FX 22nd half of this year we.
We continue to expect 60% to 65% of our revenues in 2022 will be recognized during the second half of the year.
Mark: We expect to continue to generate industry-leading gross margins, even factoring in the challenges of the global supply chain.
We expect to continue to generate industry, leading gross margins.
Even factoring in the challenges of the global supply chain.
Mark: with full-year non-GAAP gross margin expected to be in the range of 55 to 57 percent.
With full year non-GAAP gross margin expected to be in the range of 55% to 57%.
Our accelerating top line growth combined with the control we exert over our operating expenses will begin to show operating leverage in 2022.
Mark: Our accelerating top-line growth, combined with the control we exert over our operating expenses, will begin to show operating leverage in 2022.
We expect operating expenses to decline as a percentage of our revenue.
Mark: We expect operating expenses to decline as a percentage of our revenue resulting in a non-gap operating loss in the range of 52 to 57 million dollars for the year.
Resulting in a non-GAAP operating loss in the range of $52 million to $57 million for the year.
Finally, we expect non-GAAP EPS results for the full year to be a loss in the range of 28 to 31 per share.
Mark: Finally, we expect non-GAAP EPS results for the full year to be a loss in the range of $0.28 to $0.31 per share.
That concludes our prepared remarks today.
Mark: That concludes our prepared remarks today. Operator, please open up the phone call for questions.
Operator, please open up the phone call for questions.
Thank you.
Speaker Change: And ladies and gentlemen, at this time we will be conducting a question and answer session.
And ladies and gentlemen at this time, we will be conducting a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: A confirmation tone will indicate that your line is in the question queue.
A confirmation tone will indicate that Youre line is in the question queue.
Speaker Change: You may press the star key followed by the number two key if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, to ask a question, press star one on your telephone keypad.
You May press the Star key followed by the number two key if you would like to remove your question from the queue for.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys once they got to ask a question press star one on your telephone keypad.
Our first question comes from Brian Drab with William Blair. Please state your question.
Speaker Change: Our first question comes from Brian Drab with William Blair. Please state your question. Hey, Shai. Hey, Mark. Thanks for taking my questions here.
Hey, Hey, Mark Thanks for taking my questions here.
Thanks, Brian and just wanted Brian Okay.
On the gross margin.
Brian Drab: On the gross margin, I've discussed this with you a little bit, but can you just talk about some of the challenges that you're seeing? I mean, obviously, I understand supply chain, but maybe with a little more granularity, some of the specific challenges, so we can get a sense for
I've discussed this with you a little bit but can you just talk about.
Some of the challenges that you're seeing I mean, obviously.
In supply chain, but maybe with a little more granularity some of the specific challenges. So we can get a sense for.
Brian Drab: Um, you know, how and when you'll move past those. And is this, it looks like it's like a 200 or 300 basis point headwind that you're experiencing at the moment. And it's either break that down at all. Like, you know, which, uh, challenges contributing how many basis points or something like that would be great. Yeah.
How and when Youll move past those and is this like it looks like it's like a 200 or 300 basis point headwind that youre experiencing at the moment I mean, if you could break that down at all like which.
Challenges contributing how many basis points or something like that.
Right.
Yes, Thank you Brian so.
Speaker Change: Without getting too granular, I can give you.
Without getting too granular I can give you.
A couple of examples perhaps to highlight.
Speaker Change: a couple of examples perhaps to highlight, maybe extreme examples of highlighting some of the challenges we're facing. So we're seeing mechanical components with a 10 to 14 week lead time in what we would consider to be sort of business as usual times, having lead times extended out to over 100 weeks.
Extreme examples of highlighting some of the challenges we're facing so.
We're seeing mechanical components with a 10 to 14 week lead time in what we would consider to be sort of business as usual times.
Having lead times extended out to over 100 weeks.
Speaker Change: We're also seeing, I can think of an example for a specific microchip controller that was a $10 item, which is now approximately a $100 item. Now that is short-term and it's because of air freight and other things that are impacting the ability for the supplier to get that chip into the U.S.
We're also seeing I can think of an example for a specific micro chip controller.
That was a $10 item, which is now approximately 100 dollar item now that is short term and it's because of air freight and other things that are impacting the ability for the supplier to get that chip into the U S.
Speaker Change: But these are two extreme examples of what we're seeing in both cases.
But these are two extreme examples of what we're seeing in both cases.
Speaker Change: there is the the increased cost from labor and materials but there's the increased cost from accelerating freight.
There is the the increased costs from labor and materials, but there is the increased costs from accelerating freight.
Speaker Change: from a ship to air, for example, to make certain that we continue to meet our growth targets. We've said this before, Brian , and we've chatted about it a bit. We have prioritized our growth.
From a ship to air for example to make certain that we continue.
To meet our growth targets.
<unk> said this before Brian and we've chatted about it a bit.
We have prioritized our growth.
Speaker Change: And, as a result, we've made proactive measures that have, in some cases, impacted negatively our gross margin. And we've done so because of the importance that we believe in capturing the market with our innovative products.
And as a result, we.
We've made proactive measures that have in some cases impacted negatively our gross margin and we've done so because of the importance that we believe in capturing the market with our innovative products.
Speaker Change: Um, so in terms of where that, that basis, uh, where the, how do you break down that two to 300 basis point?
So in terms of where that that basis, where the.
How does that breakdown that two to 300 basis points.
Speaker Change: It's really a combination of longer lead time items that are getting pulled in.
It's a it's really a combination of.
Of longer lead time items that are getting pulled in.
Speaker Change: It is obviously increased labor costs and inflation that we're seeing across the board.
It is obviously increased.
Labor costs and inflation that we're seeing across the board.
Speaker Change: And then it's also attributable to our new product introduction of the FX-20, and the FX-20 itself, as it becomes commercially available, we've got a couple of units out, as Shai mentioned.
And then it's also attributable to our new product introduction of the FX 'twenty and the FX 20 itself.
As it becomes commercially available we've got a couple of units out as Shai mentioned.
Speaker Change: And we're expecting that to be in commercial ramp by the second half of this year.
And we're expecting that to be in commercial ramp by the second half of this year.
Speaker Change: and contribute meaningfully to our revenue the second half of the year. But that's at a price tag. You know, we'll be building early numbers of these units. Small numbers of units mean higher per unit components.
And tribute meaningfully to our revenue the second half of the year.
But that's at a price tag.
We will be building early numbers of these units small numbers of units being higher.
Per unit <unk>.
<unk> costs and that will start to level out later in the year and into next year, and that's having a meaningful impact on our gross margin as well.
Speaker Change: And that will start to level out later in the year and into next year. And that's having a meaningful impact on our gross margin as well.
Okay. Thanks, Thanks for all of that detail.
Speaker Change: Thanks for all of that detail, and I'll just ask one follow-up then for now.
I'll just ask one follow up then pronounced.
Okay.
Speaker Change: How confident do you feel about the ability to get all the parts that you need given that you have some that have a hundred week lead time to build the FX-20?
How do you feel how confident do you feel about the ability to get all the parts that you need given that you have some that have 100 week lead time.
There'll be FX twenties.
Speaker Change: and the other printers that you want to hit the revenue target.
And the other printers that you want to do it to hit the revenue target for.
For the year.
Yeah, I'll touch on that and then maybe shai can add something to it but.
Speaker Change: Yeah, I'll touch on that and then maybe Shai can add something to it. But, you know, we're not alone in these challenges. I think lots of companies are facing these shortages and push outs of lead times, etc. We we fight these battles every day and we have very good confidence in our ability to overcome them. We did a lot of work last year, as we talked about in terms of buying ahead.
We're not alone in these challenges I think lots of companies are facing these shortages and push outs of lead times et cetera.
Fight these battles everyday and we have very good confidence in our ability to overcome them.
A lot of work last year as we talked about in terms of buying ahead and securing parts.
Speaker Change: and securing parts that impacted our balance sheet but gave us
That that impacted our balance sheet, but gave us.
Speaker Change: you know, certainty and comfort that we would have part availability through 2022. So we work these problems every day, but today there is nothing that causes us a concern that would impact our revenue expectations.
Certainty and comfort that we would have part availability through.
Through 2022, so we work these problems everyday but today there is nothing that.
It causes us concern that would impact our revenue expectations.
Speaker Change: Yeah, maybe I will let Brian , as you know, I'm very proud of our team here, and I think that's one of our key differentiators.
Yes, maybe I will let Brian as you know I'm very proud of our team here and I think that's one of our key differentiators.
Brian Drab: and our team was able to be very agile, very flexible, very creative in finding the right solutions over all of last year. And we're able to deliver on every order that we had. So I believe that with this team, we still see a lot of confidence into 2022 as well. Okay, thanks very much.
And our team was able to be very agile very flexible very creative in finding the right solutions all of last year and were able to deliver on every order that we had.
So I believe that with this team we didn't see a lot of confidence into 2022 as well.
Okay. Thanks, very much Bob.
Thanks, Brian Thank you.
Our next question comes from Rod Hall with Goldman Sachs. Please state your question.
Yeah, Hi, guys. Thanks for the question I picked up the I guess the positive commentary on the FX 'twenty, but I wonder if there's anything you guys can say about that order pipeline, given kind of where we stand today I know that.
Speaker Change: You know, hi, guys, thanks for the question. I picked up the, I guess, the positive commentary and the effects 20, but I wonder if there's anything you guys could say about that order pipeline given kind of where we stand today. I know that. You know, things probably have moved on since the point of this back and. Just curious if you could tell us, you know, that pipeline on track the way you thought it would be at the point that.
Things probably moved on since the point of this back and just curious if you could tell us is that pipeline on track the way you thought it would be at the point that.
Speaker Change: You came public, has it improved, not improved, you know, just kind of help us understand more quantitatively, not qualitatively. Uh, if you can, where that FX 20 pipeline, you know, sits and then I've got a follow up.
You came public has it improved not improved just kind of help us understand more quantitatively not qualitatively.
If you can where that FX 'twenty pipeline sets and then I've got a follow up.
Sure so.
Speaker Change: Sure. So we are very pleased. I think the demand is robust. I would say we are working by now on over 100 opportunities in the field, some of them in more, I would say progress stages, some of them is less. But we are very pleased with the current demand that we see in the market. But more importantly, we are very happy to hear the feedback from the
We are very pleased I think it would be.
Mens is robust.
I'd say, we are working by now on over 100 opportunities in the field some of them in more I would say progress stages some of them as this.
But we are very pleased with the current demand that we see in the market, but more importantly, we are very happy to hear the feedback from the customers.
Speaker Change: So we have customers that are printing with this solution. They love it. They're printing hundreds of hours. You need to understand that these hours are later on being converted into usage of a lot of materials as well. They are very happy with the solution. They feel the difference from very accessible solution to robust production. So a part that used to take six hours now take one hour. So they can move into high volume production with this solution. And we are very happy about it.
We have customers with the solutions they love it they are printing hundreds of hours you need to understand that these hours are being converted into usage of a lot of materials as well. They are very happy with the solution. They feel the difference from their existing solution to robust production saw a part that used to take six hours now takes one hour.
So they can move into high volume production with the solution and we are very happy about it.
Speaker Change: What I would add to that Rod is, you know, there are not a lot of units in the field and we were able in the middle of COVID last November .
What I would add to that Rod is.
There are not a lot of units in the field and we were able in the middle of Covid last November to share the FX 'twenty at form next in Germany, but outside of that and outside of what folks are able to see on our website or occasionally having an opportunity to see our part produced from the FX.
Speaker Change: to share the FX20 at Formnext in Germany. But outside of that and outside of what folks are able to see on our website or occasionally having an opportunity to see a part produced from the FX20, customers haven't been able to touch or feel it for the most part. And the fact that we have the opportunities that are lining up as they are has even surprised us positively and we're excited about the future of that product.
<unk>.
Our customers haven't been able to touch or feel it for the most part and the fact that we have the opportunities that are lining up as they are has has even surprised us positively and we're excited about the future of that product.
Speaker Change: So when you, just to clarify that, when you guys say opportunities, are those, is that a hundred people who are just speaking to you about? I mean, have any of these people actually placed orders for the product?
So when you just to clarify that when you guys say opportunities are those is that a 100 people who.
Just speaking to you about I mean have any of these people actually placed orders for the product.
Speaker Change: It gives some ideas, you know, what the order book looks like. Do you have any orders at this stage? Are you still in the process of just talking to people? And like you say, it's been hard to get machines into people's hands, so you have to do that. Just kind of trying to understand what the actual order book looks like for that product.
You can give us some ideas what the order book looks like do you have any orders at this stage are you still in the process of just talking to people and like you say, it's been hard to get machines into People's hands, you have to do that it just kind of trying to understand what the actual order book looks like for that product.
Speaker Change: Yeah, we will not be able to go to this level of detail, but I can share with you that we do have more than a couple of dozens of reloaders, so now we are trying to build the printers and ship them out and continue to increase the pipeline.
Yes, we will not be able to go through this level of detail, but I can share with you that we do have more than a couple dozen reorders. So now we are trying to build a printers and ship them out and continue to increase the pipeline.
Okay, that's great and then.
Speaker Change: Okay, that's great. And then I appreciate that. And then I just wanted to double check the...
I appreciate that and then I just wanted to double check the.
The share comp is higher than we had anticipated I'm just curious.
Speaker Change: The share comp is a bit higher than we had anticipated. I'm just curious.
Speaker Change: kind of what you guys are thinking, you know, for Sharecomp in 22, I mean, we have our ideas and we talked a little bit about it with you guys as well, but just kind of, can you elaborate on thoughts there and then, you know, what's your general philosophy on share-based compensation is?
Kind of what you guys are thinking for share comp in 'twenty. Two I mean, we have our ideas and we've talked a little bit about it with you guys as well, but just kind of can you elaborate on the thoughts there and then whats your general philosophy on share share based compensation is thanks.
Speaker Change: Yeah, sure. So just a general philosophy, equity is a meaningful component of the compensation for just about all of our employees.
Yes, sure so just a general philosophy.
Equity is up is a meaningful component of the compensation for for just about all of our employees.
Speaker Change: and we want our employees to participate in the success of the company, and they want to be able to participate in that success.
And we want our employees to participate in the success of the company and they want to be able to participate in that success.
Speaker Change: So it is something that will continue to be important for us in incentivizing our teams. And I think that, you know, in terms of how you model that, I think fiscal 2021 is not an outlier in terms of share-based comp on a go-forward basis.
So it is something that will continue to be important for us in incentivizing our teams.
And I think that.
In terms of how you model that I think fiscal 2021.
<unk> is not an outlier in terms of.
Share based comp on a go forward basis.
Okay. Thanks, a lot guys I appreciate the chance to ask a question there.
Speaker Change: Okay, thanks a lot guys. Appreciate the chance to ask a question there. Yeah, thanks Rod.
Yes, thanks, Rob Thanks for calling in.
Our next question comes from Troy Jensen with Lake Street Capital. Please state your question.
Speaker Change: Hey, gentlemen, first off, congrats on a great quarter and a great year.
Hey, gentlemen, asked first of all congrats on the great quarter and great year.
Thanks Troy.
Speaker Change: Hey, how about I guess for you, I'd like to ask a few on the FX 20 and.
Yes.
Yes for you I'd like to ask a few on the FX 'twenty.
I guess I am curious if there is more interest in producing all temp parts or is it just larger on X.
Speaker Change: And I guess I'm curious if there's, you know, more interest in producing all temp parts, or is it just larger on X, or is the answer probably.
Or is the answer probably all of the above.
It's all of the above.
Speaker Change: It's all of the above. So as you know, we have a lot of customers that love the X7 and today need to print multiple parts and then assemble them later. But with the FX20, they can do it all in one build. And they like the speed of the printer that can really move to high volume of robust production.
As you know we have a lot of customers that love the <unk>.
Kevin.
Today need to print multiple parts and then assemble them later, but we definitely need that can do it all in one build and they like the speed of the printer that can really move to high volume of robust production.
Speaker Change: On the other hand, we see new customers, especially on the aerospace and automotive, which are extremely excited about Ultem, and especially Ultem with the continuous fiber, which is for the first time in our world, can be printed and can really replace aluminum parts that can go into the aircraft.
The other hand, we see new customers.
Especially on the aerospace and automotive, which are extremely excited about all of them.
Especially with them with the continuous fiber, which is for the first time in kind of in our world can be printed and can really replace aluminium parts. It can go into the aircrafts.
So it's definitely one of them.
Yes totally understand that quick thoughts on like maybe next materials here just curious if medical is kind of in the pipeline.
Speaker Change: Yep, totally understand. Quick thoughts on like maybe next materials here. Just curious if medical is kind of in the pipeline and, you know, some stuff like peak impact and others.
Some stuff like pizza.
And others.
Speaker Change: So, so as you know, the digital forge has a free main component around hardware, software and materials, and we'll continue to develop and push the envelope on all three in part. And in time, we're going to share about the new materials, but we always continue to work and develop new.
So as you note that due to forge has three main components around the hardware software and materials and we will continue to develop and push the envelope on all three in parallel and in time, we're going to share anything about the new materials, but we always continue to work and develop new materials.
Okay, perfect Alright, how about maybe just last one for UGI.
Speaker Change: Perfect. All right. How about maybe just last one for you, Shai?
Shai: thoughts on the percentage of your parts that are being used in production applications? Maybe how that's changed this year versus last year?
Thoughts on the percentage of your parts that are being used in production applications, maybe how that's changed this year versus last year.
Yes, we did not do this survey again, yet we probably should.
Speaker Change: Yeah, we did not do the survey again yet. We probably should. But with that, we did see a significant increase in our industrial printers, meaning the X7. And I shared it in the comments before. It's about 50%.
But with that we did see a significant increase in our industrial printers, Many index and I shared in the comments before it's about 50%, which means more and more of our customers' printing with the X seven versus our desktop solution.
Speaker Change: which means more and more of our customers printing with the X7 versus our desktop solution. So I would say intuition wise, it's probably the same or higher because we're going to higher grade the materials and higher grade platforms, but we definitely need to do this survey again. Yeah, and just to be clear, last time that we looked at that, Troy, 72% of our customers had indicated to us that they were replacing metal parts, steel and aluminum parts with our advanced composites.
So I would say intuition wise, it's probably the same or higher because we're going to higher grade materials and hardware platforms, but we definitely need to do this survey again, yeah and just to be clear.
Last time that we looked at that Troy.
72% of our customers had indicated to us that they were replacing metal parts steel and aluminum parts with our advanced composites.
<unk>.
Yes, exactly let me see that survey again.
Speaker Change: Yep, yep, exactly. Love to see that survey again. I'll just throw out one more and then see the floor.
I'll just add one more just and then see the floor but.
Just thoughts on open material opportunities remark forge is that something you would ever pursue shay here.
Speaker Change: Thoughts on open material opportunities for Mark Forge? Is that something you would ever pursue, Shai, or do you always kind of keep it locked up in proprietary?
<unk> always kind of keep it locked up in proprietary.
I think it goes back to the biggest differentiator for March which when total prototype company, we're hoping our customers to solve mission critical applications.
Speaker Change: I think it goes back to the biggest differentiator for Mark.
Speaker Change: We're not a prototype company, we're helping a customer to solve mission critical applications and permission can mission.
And permission mission critical applications.
Speaker Change: They cannot break between maintenance cycles, but they must withhold the most rigorous requirements.
They cannot break between maintenance cycles at a mosque withheld the most rigorous requirements.
Speaker Change: And as such, it must come as a full solution. And our customers want it as a full solution. They don't want to take pieces and bites from different places. And then if something goes wrong, you don't know what's your problem. We are certifying a full solution, a part that goes into an aircraft, into a car, into the manufacturing line, and it just cannot break. And I think as such, we will continue to provide the full solution and certify the full solution with our customers. You know, some of them in automotive, for example, before they put it on the manufacturing line, they do over 100,000 tests.
And as such it must come at the full solution and our customers wanted the flexibility they don't want to take pieces and bites from different places and then if something goes wrong. You don't know what is the problem. We are certifying the full solution and part that goes into an aircraft into a car into the manufacturing line and it just cannot break and I think as such we will continue to provide.
<unk> the fluid solutions certified the fluid solution with our customers some of them in automotive for example, before the patent on the manufacturing line due to over 100000 deaths.
Speaker Change: Okay, how can you do 100,000 sets each time you want to change material? You have to, you must have the full solution. Well, stated alright, guys, keep up the good work.
Okay. How can you do 100000, each time, you want to change materially.
It must have the full solution.
Well stated alright, guys keep up the good work.
Thank you Tamara Thank you Troy.
Thank you and just a reminder to ask a question press star one.
Speaker Change: Our next question comes from Greg Palm with Craig Hallam Capital Group. Please state your question.
Our next question comes from Greg Palm with Craig Hallum Capital Group. Please state your question.
Yeah. Thanks for taking the questions starting off kind of a follow up on an earlier question, but clearly a lot happened in terms of global events over the last few weeks so.
Greg Palm: Yeah, thanks for taking the questions. Starting off, you know, kind of a follow up on an earlier question, but clearly a lot's happened in terms of global events over the last few weeks. So, A, are you seeing any change in demand or supply chains, you know, ability to procure parts? And I guess, secondly, I know you gave some color on, you know, first half versus second half revenue, but any more color on what you're seeing specifically here in Q1?
A are you seeing any change in demand or supply chain's ability to procure parts and I guess secondly, I know you gave some color on first half versus second half revenue, but any more color on what youre seeing specifically here in Q1.
Yes, I would say that we definitely see.
Speaker Change: Yeah, I would say that there would definitely be a.
A bigger need to overcome supply chain challenges and a video visit with them.
Speaker Change: a bigger need to overcome supply chain challenges. And I can tell you, I visited a very large automotive customer of ours, and they have dozens and dozens of our solutions all over the manufacturing line. And you see, they're using it again and again in more and more applications. By now, they have over 3,000 digital files, over 3,000 parts.
The customer of ours, and they have dozens and dozens of our solution all over the manufacturing line and do you see they are using it again and again and more and more applications by now they have over 3000 digital files over 3000 parts.
Speaker Change: printed with our solution across the manufacturing line. And the majority of it is because they cannot find the part any other way, or it's more efficient to do it with the Markforged to the level that sometimes they actually put the part in the car if they cannot get it in regular ways. So I think the supply chain is a huge, I would say, driver for increasing demand for our solution.
<unk> solution across their manufacturing line. The majority of it is because they cannot find the parts any underway or it's more efficient to do it.
Mark <unk> to deliver that sometimes to actually put a part in the car. If you don't get it in regular ways. So I think the supply chain is a huge driver for increasing demand for our solution.
Speaker Change: For the second question, as you know, usually it's a cyclical industry, so we do see, anyhow, the second half, which is bigger from the first half, I think this year is going to be a little bit more magnified because of the FX20 shipment.
For the second question as you know, we usually to cyclical industry. So we do see anyhow.
It can have which is bigger from the first half I think this year is going to be a little bit more magnified because of the FX 20 shipments.
Got it and should we also take that as as.
Speaker Change: Got it. And should we also take that as.
Speaker Change: You know, Q2 at some amount larger than Q1 as well, just based on normal seasonality trends.
Q2 at some.
About larger than Q1, as well just based on normal seasonality trends.
Speaker Change: I think that's right, Greg. You know, you have a good sense of the industry. It's fair to think that historically it's been the case and we don't see any change.
I think thats right Greg.
Have a good a good sense of the industry.
It's fair to think that historically, it's been the case and we don't see any any change to that.
Greg Palm: Got it. And have you made any changes to pricing given what's happened to input costs or are you really just kind of taking the brunt of that ahead of everything going on?
Got it.
And have you made any changes to pricing given what's happened to input costs or are you really just kind of taken the brunt of that ahead of everything going on here.
Greg Palm: We have a little bit, especially on the industrial series, on the metal series, but just minor changes to try to overcome the increasing prices or the increasing cost on our side. But we try to play with it where we can. There are some areas we see less.
We have a little bit, especially on the industrial the serious fundamental serious but just minor changes to try to overcome the increasing prices or the increase in cost on our side.
But we try to play with where we can do some areas, we see less flexibility.
Speaker Change: Okay, and then last one on FX 20 you made some I guess some broad comments on on material consumption patterns. I know it's really early. There's only a handful of units out in the field, but.
Okay, and then last one on FX 'twenty, you've made some I guess some broad comments on material consumption patterns I know, it's really early theres only a handful of units out in the field, but how.
Speaker Change: How are you seeing material consumption patterns versus your initial expectations? And can you just give us any sense on how that compares to X7 maybe?
How are you seeing material consumption patterns versus your initial expectations and can you just give us any sense on how that compares to seven.
<unk> maybe.
Sure I would say, it's as I said, it's a little bit too early to understand it because just a few systems out there usually by the way it takes about a year until we see a normalized level of consumption in each printer.
Speaker Change: Sure, I would say, as you said, it's a little bit too early to understand it, because just a few systems out there. Usually, by the way, it takes about a year until we see a normalized level of consumption in each printer.
Speaker Change: But compared to the X7, we are talking about multiples. The spools are much bigger. The pace of the system, the speed is much faster. The size of the build is much bigger. So we're going to see a significant increase of normalized consumption of the FX20, but really significant compared to the X7. There's no doubt about that.
But compared to the seven we are talking about multiples.
Foods are much bigger the pace of this has been the speed is much faster the size of the build is much bigger so we're going to see a significant increase of normalized consumption of <unk>, but really significant compared to the extent that there is no doubt about that.
Speaker Change: We can already see it now with the size of the parts that some of the customer print and the speed.
We can already see it now with the size of the parts did some of their customer Brent and dispute due to just a few months over 800 hours of print by now for Ob and it keeps on going there is a lot of consumption of materials with this system in.
Speaker Change: In just a few months, over 800 hours of print by now, probably, and it keeps on going. There's a lot of consumption of materials with this system. And it's rightfully so. It's a production system. Makes sense.
I know, it's the rightfully so it's the production system.
Makes sense all right I'll leave it there thanks and best of luck going forward.
Thank you thanks, Greg.
Thank you.
Speaker Change: Thank you. Our next question comes from Jim Suva with Citigroup. Please stay with us.
Our next question comes from Jim Suva with Citigroup. Please state your question.
Jim Suva: Thank you so much, and I want to express my appreciation for the seasonality information that you gave us, which is very helpful, especially since we have been a long time since a world of normal seasonality. So thank you for that.
Thank you so much and I want to express my appreciation for the seasonality information that you gave us which is very helpful, especially since we have been a long time since a world of normal seasonality. So thank you for that.
Jim Suva: On your comments regarding gross margins, you mentioned that you know there's a lot of moving parts there and you gave us some gross margin detailed guidance which is appreciated. Is it fair for me to assume correctly and investors that you've kind of built in current oil prices into that gross margin full year I believe you said 55 to 57 percent and the reason why I ask is it's just literally within the past week it's it's moved tremendously.
On your comments regarding gross margins you mentioned that there's a lot of moving parts. There and you gave us some gross margin detailed guidance, which is appreciated is it fair for me to assume correctly and investors that you've kind of built in current oil prices into that gross margin full year. I believe you said, 55% to 57% in the <unk>.
And why I ask is it just literally within the past week, it's moved tremendously, which probably impacts shipping costs materials resins consumables. So I just wanted to kind of check in on that.
Jim Suva: probably impacts shipping costs, materials, resins, consumables, so I just wanted to kind of check in on that.
Speaker Change: Yes, thank you, Jim, because you give me an opportunity to to to play that up a little bit. But I would tell you that that we've done our best to factor it in, you know, even over the last few days, we've now seen oil moving in the other direction. So this this information.
Yes. Thank you Jim because you give me an opportunity to.
To play that up a little bit but.
I would tell you that that we've done our best to factor it in.
Even over the last few days, we've now seen oil moving in the other direction.
So this this information we've given you.
Speaker Change: takes into account the very most recent and best information we have.
It takes into account the very most recent and best information, we have to date, and obviously not having a crystal ball to be really difficult to speculate otherwise, but we've tried to take into account.
Speaker Change: to date and obviously not having a crystal ball. It'll be really difficult to speculate otherwise, but we've tried to take into account.
All of those inputs.
Great and as my follow up you mentioned that you implemented a little bit of.
Speaker Change: Great, and as my follow up, you mentioned that you implemented a little bit of price increases to your customers. Was that on the machine side or the consumable side or like a shipping line surcharge item at the bottom of the invoice? I was just kind of curious how you went about that because it can be pretty sensitive.
Price increases to your customers was that on the machine side or the consumable side or like a shipping line surcharge item at the bottom of the invoice I was just kind of curious how you went about that because it can be pretty sensitive with customers.
Speaker Change: Correct. We went only on the machine side and just with a few of them, as you said, it could be very, very sensitive. We have by now over 12,000 customers that are using our solution and they are counting on us for their profitability as well. It's a long term journey. So it's a very sensitive situation.
Alright.
On the on the machine side and just read a few of them as you said it could be very very sensitive we have by now over 12000 customers that are using our solution and they are counting on us for their profitability as well into long term journey. So it's a very sensitive situation.
Speaker Change: And then lastly, the reason not to increase consumables based upon oil and resin prices is that you just want to maintain a more consistent market out there and not have it move around a lot and then have stocking, restocking, destocking, buffer inventories and all that. Is that the logic behind not changing material prices?
And then lastly, the reason not to increase consumables based upon oil and the resin prices as you just want to maintain a more consistent market out there and not have it move around a lot and then have stocking restocking destocking buffer inventories and all of that is that the logic behind not changed.
Material prices.
Speaker Change: You know, these data points are coming at us all fast and furiously, Jim, as you can imagine. So, we're not precluding from making any adjustments. But to date, we haven't seen that it's, that we have a real need to do that. And we focused on an adjustment in the fourth quarter of 2021 on the machines themselves.
These.
These data points are coming at us all fast and furiously Jim as you can imagine so.
Were not precluding from from making any adjustments.
But to date, we haven't.
We haven't seen that it's.
But we have a real need to do that and and we focused on and adjustments in the fourth quarter of 2021 on the machines themselves.
Okay, maybe I will add.
Jim.
Speaker Change: Jim, we need to remember again the key differentiator. We are not a prototyping company. We are certified.
We need to remember again, the key differentiator, we are not a product tanker company, we are certifying our solution.
Jim Suva: Okay, and this solution is based on a lot of testing and eventually goes down to a cost per part.
And the solution is based on a lot of testing and eventually it goes down to a cost per part.
Jim Suva: So we understand it. We understand what our customers are doing in order to certify solution. And once it's in, it's going to be there for the next 10 years. As long as we will be able to help them keep the same levels of ROI they need, it's going to be there for a long time. So this way, it's a very sensitive area for us. We are helping to solve mission critical applications. We're helping to overcome, okay, kind of traditional manufacturing cost per part cost.
So we understand it we understand what our customers are doing in order to certify solution and once it's in it's going to be there for the next 10 years as long as we will be able to help them keep the same level of ROI. They need it's going to be there for long time. So this way, it's a very sensitive area for us we are helping to solve mission critical applications, we are hoping to overcome.
Okay kind of traditional manufacturing cost per port cost.
Speaker Change: So there's an area that we need to be very, very careful and help our customers be very successful. Great, thank you, Shai.
So there is an area that we need to be very very careful and help our customers be very successful.
Great. Thank you shy and mark. Thank you so much for the details.
Thanks, Jim.
Speaker Change: Thank you. There are no further questions at this time. I'll turn the floor back to Shai Taram for closing remarks.
Thank you there are no further questions at this time I'll turn the floor back to Shai <unk> for closing remarks.
Thank you very much everyone for joining us we had a great during 2021 and looking forward for even a better year in 2022.
Shai Taram: Thank you very much everyone for joining us. We had a great year in 2021 and looking forward for even a better year in 2022. Thank you.
Thank you. This concludes today's call all parties may disconnect have a great day.