Q4 2022 Desktop Metal Inc Earnings Call
Incremental growth opportunities for our business as we scale. These offerings commercially in 2023 and beyond after years of development and nearly 100 million in investment we started shipments of last year of our production system P. 50, a truly groundbreaking product that introduces performance and speed characteristics unmatched in the binder jetting market.
We continue to see traction with automotive industrial and all of our major end markets and now we have a master supply agreement with one of the largest consumer electronic companies in the world will continue to scale the solution as the year progresses.
We launched the <unk> flex and digital testing solution that Leverages, a single fast jetting technology and an affordable architecture.
Offering a larger and more scalable build volume with improved tolerances and higher speeds.
We unveiled three fund.
A new family of Photopolymer residence that for the first time produces dimensionally accurate flow cell phone parts without tooling to reduce cost versus conventional manufactured home parks.
We also launched the <unk> <unk>.
First commercial platform of its kind fixed standard sheet metal on demand directly from a digital design file.
Producing a fully formed part in less than an hour without major investment in time and money.
Lastly, best.
Desktop health introduced the <unk> series of dental three D printers designed for the production of end use dental parts as well as two industry, leading materials like Sarah Smiled guard, maintaining a very strong momentum in the dental market.
And finally with two crashes in the past year to significantly reduce our expense structure and prioritize our path to profitability is.
These efforts are ongoing but we've already successfully completed $50 million annualized cost savings and with the recent announcement of an additional $50 million in cost reductions expected for 2023, bringing the total annualized cost savings to $100 million.
When a very strong position to achieve adjusted EBITDA breakeven by year end.
Just as important the actions we took in the past year streamline our operations and insulated our strategic priorities, creating a stronger more resilient company.
Turning to slide six I'd like to take a step back and revisit the long term strategy and opportunity for desktop metal.
A detailed on the previous slide it was a successful year on many fronts.
Mr dynamic backdrop, our long term mission remains the same to enable mass production via AMC now to cost effectively compete with conventional manufacturing <unk>.
Globally, there's more than $6 trillion a year in manufacturing industry spent.
With estimates projecting the additive manufacturing market to grow to a 100 billion by the end of the decade, there's still represents less than 1% penetration and overall manufacturing.
We believe we're just scratching the surface for the market's potential and.
And as we disrupt the overall end market with our unique mass production technologies expect a large art of multi decade growth for desktop metal.
Importantly, mass production is the fastest growing segment of the added manufacturing space, because unlocks benefits of lower cost production onshoring.
In supply chain flexibility inventory of one in part design possibilities unavailable through traditional manufacturing among other benefits desktop metal is the pure play on the AMC now mass production opportunity just beginning to inflect.
We're in a strong position in this space to drive outsized growth at scale by leveraging our highly differentiated mass production technologies that are unmatched in the industry. Our A&P portfolio has enabled us to gain rapid scale in the market and we believe it will propel desktop metal towards our goal of double digit share of the added a matter of fact.
During market by the end of the decade.
Turning to the following slide we've made tremendous progress since going public.
Lending to become the clear leader in.
In market share in the added manufacturing for mass production technologies, including Binder jet and DLP.
We've demonstrated the success of our <unk> strategy by growing revenue from $16 million in 2022.
$209 million in 2022, and gaining significant scale, we are beginning to demonstrate the strength of the economics of our business model is high margin consumables services and subscription revenue has grown to 24% of total revenue.
We expect these razor razorblade revenue contributions to expand over time, creating a tailwind for margins and profitability.
We also own one of the industry's.
The industry's largest libraries of production materials with over 250 materials across metals polymers ceramics, Biocompatible band word forms and elastomers, whose portfolio is a key enabler for engine part mass production and supports a broad range of applications across verticals, allowing us to diversify our end markets and customer base with <unk>.
<unk> platforms.
We offer the industry's broadest array of production print platforms focused on high volume end use part applications. This is an unparalleled product portfolio across speed materials and parts size that pushes the boundaries of printing speeds and production volumes compared to legacy <unk> printing competitors.
The differentiation in our integrated solution has led to rapid customer adoption.
Today, our installed base includes over 7000 customers over a diverse set of end use markets with little or no customer concentration risk, providing us an expansive set of customers through which we can drive both consumables revenue upsell and cross sell of our platforms.
We're also committed to protecting the competitive differentiation around desktop metal products.
We've built a robust and defensible intellectual property portfolio at over 950 issued patents and pending applications and it's one of the largest and most valuable IP portfolios in additive manufacturing.
This is a snapshot of the company was still today.
We believe these early proof points serve as validation of our ability to quickly disrupt the added market again and.
And quickly gain scale.
We're building this business with a 20 year horizon.
We're just getting started and our best days are ahead of us.
Turning to the following slide I'd like to outline desktop metals four strategic pillars.
We believe these unique differentiators have enabled us to quickly gain leadership and share in the added manufacturing market and will facilitate expanding that leadership going forward.
Turning to the next stage of our growth.
First our most important.
<unk> competitive advantage is our highly differentiated technology capability.
We are the fastest prints lackluster in the market focused on mass production and can support a step function improvement in throughput up to 100 X of legacy AAM processes delivering parts up to 120th the cost of laser based solutions.
We're solely focused on area wide technologies that improving performance over time benefiting from Moore's law, allowing us to continually increase our competitiveness versus conventional manufacturing.
This leadership and production technologies is underpinned by an extensive materials library with best in class properties and proprietary software centric solutions that make our systems easy to use and adopt.
Our leadership in mass production was propelled us to rapid scale and will serve as the foundation to achieve our goal of double digit share in the additive manufacturing market by the end of the decade.
Second.
We have a deep customer engagement model hyper focused on helping customers solve their manufacturing problems with.
We've experienced and continue to believe that if you know your customers and tailor solutions to fit their needs growth will take care of itself.
Does that and who have built a leading portfolio of platforms and materials focused on mass production to serve our diverse set of applications.
And we also have a robust team of materials development professionals application engineers and process developers to support our growing installed base of customers.
It is important to emphasize this end to end complete customer engagement model.
Be replicated.
Second time investment and focus to build out.
And we consider it a critical differentiator for our business.
Third.
Innovation is in our DNA.
Our culture has been about reshaping the additive manufacturing industry by introducing solutions that pushed the performance capabilities of three D printing speeds and throughput in order to compete with conventional manufacturing.
We built a team of the smartest people in three D printing.
And have the premier destination for talent.
As a result, we believe we are the innovation leader in additive manufacturing.
Talent is a key ingredient to our success and that's going to help us continue to push the envelope on flywheel of innovation and set the stage for our next step function of growth in.
In addition, our focus on innovation and engineering Excellence has resulted in a robust portfolio of over 950 patents and pending applications and will defend our position in the market going forward.
Finally.
Desktop metal has a massive long term growth opportunity that we're just beginning to scratch the surface on.
Our market is expected to grow at a compounded annual growth rate of over 20% to reach approximately $100 billion by the end of the decade.
And the trends supporting broad adoption of additive manufacturing remains solidly intact. Importantly, we believe we are the leaders in the fastest growing segment of the market mass production.
We remain focused on leveraging our differentiated technology for this massive opportunity in order to extend our leadership in this space and maximize our long term growth.
Turning to slide nine I'd like to outline how we view our business in terms of two core technologies.
The jetting and photopolymer printing.
Both area wide technologies that improve performance over time benefiting from Moore's law.
And both focused on mass production end use part applications versus prototyping tooling.
We've established clear leadership positions.
In this large end markets as a result of competitive advantages and expect these businesses to serve as the foundation for our continued scaling.
First desktop metal offers the worlds leading portfolio of Binder jetting systems.
By the most experienced <unk> team in the industry with the largest installed base of <unk>.
<unk> is one of the fastest growing segments in production applications in large part because as the highest throughput process in three D printing.
<unk> unlocks mass production at higher volumes lower cost with more materials flexibility.
<unk> is a highly flexible technology that can be used to do castings indirect printer parts in mass production at a fraction of the cost of alternative out of solutions.
It is the first additive technology being used at scale in high volume with metal products for example.
Binder jetting today is the only technology being used at scale in automotive, where many vehicle Oems as customers and.
An example of which is our large deployments inside BMW, where they produce aluminum parts for hundreds of thousands of vehicles per year with better performance and lower cost than conventional manufacturer.
Parts made with this process are also now flying and jet engines like the Rolls Royce Trent engine with a dual stage gear pump housing is made with our bonded assistance.
At the high end of automotive if you order carbon ceramic brakes with a Lamborghini <unk>. Porsche. These are now made through binder jetting with our systems.
We have countless of customer examples.
Please refer to the appendix section of this quarter's earnings slides as well as our investor presentation for more examples.
We have a strong competitive moat in this space with number one selling binder jet products across the board within our array of end use applications that differentiate us from our competitors.
Not only do we have the largest installed base inbounded yet we believe we have sold more binder jetting systems last year than all of our competitors combined.
And with our superior product and materials portfolio, we expect to continue to grow our dominant position in this important segment.
Second photopolymer printing.
We view this space in two segments health care, and dental and industrial for apartments.
Led by desktop health, we've grown to a leadership position in the dental space cemented by the launch of the Einstein and best in class series of for our polymer printers with exceptional speeds industry, leading accuracy and innovative features designed for the production of Indias parts. In addition, desktop Hells owns a catalog of differentiated materials that set it apart in the market.
Including class III, FDA cleared flex, Sarah and Smile Guard.
Furthermore.
We recently announced our partnership with align technology that will add a new growth vector to this business.
In dental are massive markets with over $90 billion in healthcare implants that will over time, the patient specific and over $30 billion of annual current spent in restaurants and just parts in the dental market.
We believe these markets.
Been reached at least 75% penetration of digital am workflows by the end of the decade and desktop health one of the leading integrated solutions to support continued strong momentum in this space as these markets accelerate their transition to additive manufacturing.
In the industrial segment, we have the leading for our polymer platforms led by the extreme 8-K, the largest production grade DLP printer in the world for high volume production.
Our industrial print platforms have significant price performance benefits versus previous generation systems, creating similar differentiation for mass production that we experienced in the binder jetting side.
The industrial polymer market is quite large at a $70 billion market opportunity.
And we are well positioned to grow our market share through a combination of our category, leading for our polymer printers and broad industrial polymers materials portfolio.
Turning to the following slide as I referenced in our strategic pillars innovation continues to be the core of our business model.
Through driving A&P panel mass production technology forward and looking for ways to disrupt the added manufacturing industry. We have unlocked three new markets that bring added manufacturing into new applications not traditionally accessible to legacy AAM processes offered by our peers.
Commercially these opportunities are still early in their potential.
As a result of these efforts we've expanded desktop metals total addressable market and added incremental long term growth drivers to the business first.
We recently introduced what we believe is one of the more exciting new solutions in the industrial <unk> printing market. Our <unk> technology is an expandable <unk> principal form for mass production that for the first time produces dimensional accurate flow cell phone parts without tooling.
The conventional Palmer farm space is $170 billion total addressable market with very little penetration from traditional three D printing.
We see many exciting opportunities for this unique materials family to disrupt current traditional perform applications, including automotive seating mattresses, and furnishing products footwear sporting goods and health care among others.
As the only company in the world with mass production solutions for print platforms.
The long term potential for this business is very exciting.
We aim to make considerable progress scaling opportunities and Jordan 23. This is a market, where we have very strong intellectual property and barriers to entry.
Next we.
We entered the sheet metal forming market with the recently launched <unk> for.
For the first time in this space bigger offers a digital solution.
Our standard sheet metal forming on demand that we believe will disrupt the $300 billion a year sheet metal forming spend.
Using patent pending technology manufacturers in automotive aerospace and appliances and other industries.
Can now purchase assistant that gives them a competitive way to form sheet metal parts and products quickly without the high upfront cost associated with stamping dies impressive.
While early in its commercialization figure faces little to no competition for digital solutions in this space offering a true greenfield opportunity.
We're very excited to explore the potential for figure.
And finally, the global hydraulics market.
The opportunity for printed hydraulics as well as manifolds feed pumps and fluid power systems is ideal for additive approaches because of the complex part geometries required that in many cases can only be achieved through three D printing.
We believe we're the best in the World that three D printed hydraulics and are the first company that has dnb certifications for three D printed hydraulic parts.
We've you've printed hydraulics is the killer app for metal <unk> printing.
<unk> to lead in this space as we believe a substantial portion of the $50 billion in annual spend will tip towards three D printing over the next decade.
They are printed hydraulic parts are already being adopted by major customers like Saudi Aramco <unk> and Schlumberger.
Moving to slide 11, 2023 will be a pivotal year for desktop metal.
Our year, requiring a sharp focus on execution we.
We have several initiatives in place that will drive our success for 2023 and position us for the long term to startup organic growth will be the number one focus in 2023.
Last year's growth was strong and regardless of macro conditions, we think there's a terrific opportunity to maintain our momentum and significantly grow the organic business at scale in 2023.
We will be relentless in leveraging our differentiated mass production portfolio to drive adoption in the added manufacturing market and position the business to capitalize on the next stage of this market's secular growth opportunity.
Second.
As we've communicated since the start of last year.
Committed to achieving adjusted EBITDA breakeven before the end of this year.
Have a plan to achieve this goal regardless of macro conditions, primarily through the $100 million in annualized cost savings.
As a result of these cost reduction plans as well as optimizing inventory levels and overall working capital management, we're focused on dramatically lowering our cash burn this year.
Third amidst an uncertain macro environment and some operational changes we.
We do not want to lose sight of what drives success in our business.
The customer.
As we continue combining our differentiated portfolio of integrated solutions with our deep customer engagement model to deliver for our customers. We believe growth will follow.
Therefore.
We're as focused as ever and growing our total customer count.
As well as repeat customer count by maximizing the ability of our customers to transform their manufacturing settings through the benefits of additive manufacturing for mass production.
And finally.
We're focused on streamlining our operations to position the business for the long term.
Many of these initiatives were outlined in our cost reduction plans, but there are many everyday actions that will drive operational efficiencies as we mature as an organization.
These improvements will create a stronger more resilient company for the long term as.
As well as show up in the financial efficiency of the business.
With that I'll hand over the call to a wonderful CFO , Jason call to take a closer look at the numbers as well as our 2023 financial outlook.
Hey, Jason.
Thanks, Rick beginning on Slide 13, you will see highlights of our financial performance for the fourth quarter and full year 2022.
Please note, we will be referring to several financial metrics on a non-GAAP basis reckon.
A reconciliation to GAAP data is included in the filed appendix.
Consolidated revenue for the fourth quarter 2022.
With a record for the company at $60 6 million up six 8% year over year from $56 7 million in the fourth quarter of 2021.
Leading revenue drivers, where industrial photo polymers digital casting solutions and growth in consumables services and subscription.
On the right side of the slide consolidated revenue was $209 million for the full year 2022, representing 86% year over year growth over $112 4 million in 2021.
Revenue growth was driven by broad based strength across all our offerings and contributions from acquisitions.
non-GAAP gross margins were 24, 3% for the fourth quarter 2022 gross.
Gross margins improved 440 basis points sequentially.
<unk> third quarter, 2022, driven by higher sales volumes, which drove improved absorption of fixed costs.
Gross margins declined 710 basis points versus fourth quarter of 2021 impacted by weaker cost absorption and product mix.
On the right side of the slide full year 2022, non-GAAP gross margins were 22, 5% representing a decline of 410 basis points from 2021 again impacted by weaker cost absorption across 2022.
Third quarter demand volatility revealed areas, where we could make meaningful improvement to our fixed cost challenges.
While gross margins made a nice recovery in fourth quarter of 2022, you may recall, we recently announced additional cost reductions rolling out over 2023, reflecting our commitment to continued gross margin improvements.
On the next slide non-GAAP operating expenses were $37 9 million for the fourth quarter 2022.
Through actions under our initial 2022 cost optimization initiatives, we reduced non-GAAP operating expenses sequentially by $3 6 million versus the third quarter of 2022.
And a total of $14 2 million since first quarter of 2022.
Fourth quarter 2022, non-GAAP operating expenses as a percentage of revenue were 63%.
Which is a sequential improvement versus 88% in the third quarter of 2022 and year over year improvement versus 81% in the fourth quarter of 2021.
We're showing good progress on improving our expense structure and expect the recent additional $50 million in cost savings announced last month to continue the trend of reducing operating expenses on a sequential basis.
Adjusted EBITDA for fourth quarter of 2022 was negative $21 1 million improving sequentially by $7 1 million compared to third quarter of 2022, and improving year over year by $4 $7 million versus fourth quarter of 2021 adjust.
Adjusted EBITDA is trending in the right direction is the $50 million and cost reduction actions undertaken last year begin to positively impact adjusted EBITDA and we expect to realize continued improvements from these cuts in the coming quarters.
<unk>, the incremental $50 million in cost savings announced last month will create a further tailwind for adjusted EBITDA as results from those cuts contribute to financial results in the first half of 2023, and then more meaningfully in the back half of 2023.
Combined $100 million in annualized cost reduction initiatives will put us in a strong position to fulfill our commitment to achieve adjusted EBITDA breakeven before year end, regardless of the macro environment.
We remain well funded ending the year with $184 5 million in cash cash equivalents and short term investments and have adequate financial flexibility based on our internal forecast.
Managing cash is a top priority in 2023, and we expect ongoing expense reduction efforts and prudent in our internal investments spend will drive significant cash flow improvements, even if the current challenging macro environment persists. We also ended the quarter with $91 7 million in inventory that we intend to monetize.
Over the next several quarters, freeing up working capital and providing further improvements to our cash position.
Shifting to our 2023 financial outlook on slide 18.
A quick note on our current approach to financial expectations.
As a management team, we are committed to creating a more predictable business model with desktop metal and we expect to demonstrate that in 2023. However, we continue to operate in a challenging macro environment, where our visibility is weaker than usual.
With that said, we expect to generate revenue in the range of $210 million to $260 million for 2023, we.
We have intentionally crafted a wider range to accommodate for unknowns related to the depth and breadth of the recessionary environment. We currently find ourselves in.
Our customer engagement validates our growth thesis on 2023, and we are scaling several new revenue streams. This year.
Also revenue guidance reflects the historical seasonality, we see in the first quarter typically the lowest quarter of annual revenue contribution and we expect that to be the case again in 2023.
Next we expect adjusted EBITDA in the range of negative $50 million to negative $25 million in 2023.
In addition to year over year EBITDA improvements in any revenue scenarios second half of 2023, adjusted EBITDA will significantly outstripped. The first half as we've reiterated we are focused on driving significant continued improvements to our expense structure on our way to reaching adjusted EBITDA breakeven before the end of 2023.
With that I'll turn the call back over to Rick for his closing remarks.
Thanks, Jason in summary, despite a challenging macro environment in the second half of the year, our business performed well through the end of 2022, which is a testament to the team's consistent execution in a dynamic operating environment.
Well positioned for another year of growth as we leverage our superior portfolio of A&P No mass production solutions to continue taking share in the large and growing additive manufacturing market.
And we've taken Swift actions that the organization given the current set of circumstances in order to reach profitability on our committed timeframe.
And be in a position to take advantage of the next stage of growth and deliver value to all stakeholders, while 2020 to underperform our original expectations, we seize the opportunity to make the company stronger and more resilient as a result desktop metal is in a solid position to get profitable and grow faster than our competitors, we look forward to.
Dating you on our progress throughout this year with that let's open it up for questions operator.
Thank you and at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
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One moment, please while we poll for questions.
Our first question comes from the line of Paul Chung with Jpmorgan. Please proceed with your question.
Hi, Thanks for taking my question. So can you talk about.
Some of the momentum you're seeing in the P 50, how many shipments have been made year to date.
And what your expectations for shipments this year kind of based on when the order interest you're getting in.
How is the pricing also trended as of late and can.
Can this product be become more meaningful impact on margins and top line throughout the year.
And I'll follow up.
Thank you Paul.
We continue to see great interest in the product, we just had a.
Fantastic.
Yeah.
Open house with customers, who get to see the machine.
The systems running and Youre going to get further updates in the year as we continue to ship machines.
It is a very high end system the.
<unk>.
<unk> configured in a couple of million dollars. So the type of companies that acquired our larger companies.
We've got many programs with vehicle Oems industrial customers consumer electronic companies several.
I think we highlighted that we have a large consumer electronics company.
That we have a master agreement with and it's a significant opportunity for that business I think.
The opportunity for that product.
Just as big now as it always has been and Youre going to see us talk more about it with <unk>.
Customer names as the year progresses so.
We remain very bullish on it.
Great.
And then just on gross margins can you expand on some of the restructuring benefits you'll see on gross margins and then any kind of potential scale benefits you get throughout the year, maybe some benefits from lower component of inflation and how do we think about gross margin levels as we exit.
Fourth quarter.
And can we start to see.
More material contribution from materials and services side as well.
<unk>.
Yes. Thanks, Paul This is Jason I'll take that one.
Both the first $50 million announced in 'twenty, two and the $50 million, we announced last month, both have an element that touch on cost of sales. The second tranche is a little bit more biased towards cost of sales and that is a reflection of what we saw in <unk>, we saw a little bit of a revenue dip and we saw our gross margins lower we've put a lot of focus into the fixed cost base and those who are going to be.
Up pretty quickly across the first part of 2023. So you should expect to see gross margins model higher in.
In <unk> over <unk> and certainly in the back half of 2023, which is consistent with the remarks that were made in the call.
<unk>.
I think.
Yes.
I'll, probably stop short of giving a number on what portion of the 50, but you should you should certainly expect to see north of 30% gross margins as the year progresses.
We'll be growing consistently.
And all of that is accretive to margins as well.
The relationship we have with align.
Should should have a positive impact on margins.
Okay, great. Thank you.
Our next question comes from the line of Troy Jensen with Lake Street Capital markets. Please proceed with your question.
Hey, gentlemen, thanks for the time congrats on the quarter.
Maybe first for you given kind of one of your peers.
Reported this morning and talked about weakness in dental I mean, obviously, you guys arent seeing it so geeks.
Can you expand a little bit on Einstein and then specific to align can you just help us out with the application you are doing with those guys.
Absolutely well I think.
We are not seeing that weakness, we actually are seeing significant growth in our dental we have the most competitive material.
The portfolio on the dental space we've got.
<unk> best in class products, both in the chair side and a new product just introduced to.
The dental show last week called the <unk> cell that has also best in class price performance.
We continue to see growth I just saw the numbers today are our dental business is strong and.
We could you could look at the court from Joe Hogan.
The CEO of align on his last earnings call, referring to us. So we have a growing partnership with them.
And.
One of the great things about desktop metal as we have no account concentration in our business we have.
Large.
Group of customers, but we have many hyperscale.
Our business online is a hyper scaler.
Opportunity that is significant.
Looking to take adventure.
More advanced technology, and then we have that also with all the large customers like BMW is hyperscale with Astro conference in the consumer electronics space that are.
Doing that as well, so we will youre going to be pleasantly surprised.
We don't have any weakness whatsoever, which is the significant growth and if you look at the.
Uh huh.
The retrofit market in dental to $30 billion opportunity that will completely migrate this decade or mostly migrate this decade to printed so it's an area where we're leading in.
And we expect.
Significant growth.
As the year progresses, and the decade continues to the long term planning Rick.
If I can just interject so specific with align how are they doing a chair side application consistent with your dental that acquisitions that you guys did last year.
Devon is exactly what they're going to be.
Great.
What we've announced to date is R. R.
First line, which is a.
Full service digital offering that we're doing in the restaurant space.
It is a significant recurring revenue subscription business.
That puts together products that go with aligned together would put us from DM, but we have.
This is just the beginning we have.
Many things under development at DM in the dental space and.
That's all I can say at the moment.
Okay perfect.
And then maybe just one on just kind of the seasonality I think last year you guys provided us some kind of color on how you thought the year was going to go.
If I remember correctly in between like 20% in Q1, and then 25% in Q2 and Q3 and then 30% in Q4. So are you expecting to see a normal a consistent type of distribution press a year for your revenue guidance.
Yes.
Go ahead.
Jason unless you take this one I think.
It's certainly north of 20% in <unk>, maybe not by much. So once you certainly the weakest quarter. Historically, that's been the case I do think <unk> also will be a period, where our visibility we expect to be the weakest.
Consistent with the remarks on the call.
We are going to navigate this with a lot of caution we're doing that on the expense side. We believe we have a lot of growth drivers, we expect to see that but <unk>.
Closer to baked and the rest so theres more growth that we believe will unfold in <unk> in the second half.
But yes, I think it's fair to say, it's going to be a little less than 25%.
Okay, Okay, well good luck going forward.
Thank you.
Okay.
Our next question comes from the line of Greg Palm with Craig Hallum. Please proceed with your question.
Yeah afternoon, everybody. Thanks for taking the questions here.
To follow up on that.
Master supply agreement and not sure what you can or can't say, but what exactly it is a master supply.
Agreement mean and can you confirm whether orders had been placed today.
We're not that's not as much as we can say about this particular customer we have.
Several companies, we work with them comes from electronics, but we're not at Liberty to.
Talk in more detail than this.
Okay Firstly.
Yeah.
You mentioned.
Go ahead.
No I mean, we we have a.
Sold billions of dollars of equipment into the consumer electronic space.
We have machines around the world that plants that make these types of products today.
No.
But but it's.
An industry, where secrecy is important and we have agreements that don't allow us to discuss in any more detail.
You did mention I think on an earlier question around <unk> 50 that we might.
Might actually here actual customer names as we progressed throughout the year were you alluding to this specific opportunity or is that more of a general comment. Yes. We have we have several large customers.
I can think of to automotive opportunities.
I think we'll be able to talk about the customer when it ships and we have other things in development.
Thermal management opportunity also where it could be possible to perhaps discuss it we'll see.
We let our customers do the marketing.
<unk>.
Okay.
I would definitely like to do it.
Yes.
Let's see how the year goes.
How much we can say as we make progress.
And the last question around this topic.
We can do.
Expanding on that.
We have 1100 metal installations, we have.
The largest installed base at scale advantages the number one selling products across.
Different categories, whether it's research machine chops production.
You name it.
And so we I know theres a lot of interest in what we can particularly in P. 50 goes it's a system that's.
Rough math.
Many times faster than anything else that's out there.
And we have a full portfolio of products and.
You know if we will kind of run rate, that's like a quarter billion dollars.
Lots of stock of which.
A significant portion of his binder jet. So we are the de facto leader in advantage of space and.
I am very happy with.
Our progress in it and I think that we have technology in this area that nobody else has with more engineers working on it and all of our competitors combined.
Yes.
This is this is a segment that we are complete.
Leadership in.
Yeah, I appreciate that color.
Then maybe if I can follow up on some of the comments around cost cuts.
Maybe a little bit more color on that.
The progression of that as we go throughout the year when you might see the full run rate.
Of those cuts and then is there a specific level of revenue that you think you can reach EBITDA breakeven at.
Yes, thanks for that.
So I think I would think about the cartilage trying to take the first part first.
We should have a very meaningful portion of the full 100 in hand mid year, but there are elements of it that will rollout across the second half, but you should see.
Consistent with our opening remarks.
Pretty strong improvement entering the second half of the year and that's that's a pretty rapid deployment given the fact, we just announced a month ago and we're pretty proud of that but really there was a sense of urgency for us around really trying to make sure we can control our own destiny.
In terms of breakeven we're positioned to breakeven, we believe we're positioned to breakeven and anywhere across the range that we guided by the end of the year we.
We believe there are growth drivers, we believe we will outperform the bottom end of that range, but nevertheless, we put it wide because there arent there is uncertainty out there, but we are committed to delivering breakeven results by the end of the year.
But is there I guess, what I'm getting at is there a level of revenue quarterly revenue.
After you've reached the full run rate of the cost cuts that you feel comfortable breaking even at.
Yes, maybe.
I don't think were not really prepared to kind of give it by quarter, but I think you can see from pre cuts right, we just announced.
And thats, another big tranche, but you can see the improvement.
Let's get it out there I think I think we get to $60 million, that's a pretty critical level right sub $60 million a quarter.
It will be pretty tough for us to probably deliver that but I still think it's possible, but if you need a number I'd say model at over $60 million a quarter and we'll be doing it.
Perfect. Okay. Thank you.
Yep got it okay I will leave it there thanks.
Awesome.
Our next question coming from the line of Noelle Dilts with Stifel. Please proceed with your question.
Hi, Thanks.
This is sort of tied to the last line of questioning.
But Jason I was hoping you could expand a little bit on how you're thinking about cash management.
As we look into 2023, how do we think about cash cash burn.
Through the air.
And maybe you could touch on how you're thinking about R&D and how youre choosing what to invest in your priorities.
Yes, Thanks, Paul I appreciate the question so.
Directionally cash burn and adjusted EBITDA will trend together, but they are not a perfect proxy for one another and we don't give guidance on cash, but I can still speak about of Directionally and what I think you should expect to see consistent with the comments on EBITDA is in the opening remarks in the interest of some of these questions is that youre going to see cash burn dramatically reduced in the second half of this year.
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I think we're not concerned about.
We're concerned to manage cash very very carefully, but we're not concerned that the current environment of running out of cash, but we think thats because we took dramatic action, we did as swiftly and we're getting these results really really quickly in the first part of the year. So.
You're going to see cash burn dropped dramatically in <unk>, and we expect it to be even more dramatic than <unk>.
Okay, Great and then.
Just a housekeeping question on the 86% growth that you all highlighted for 2022.
Did you give a kind of a sense of the organic.
Gross number and how we should think about how organic growth is trending.
Were you still feel like the business is growing at a very healthy pace organically in Q4 of last year. If you remember we had a large.
With shape ways, if you take that out it's still.
Like north of.
And that was a one time thing.
A recorded its north of 30% so.
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This is the backbone or people in this industry that are shrinking and are more focused on prototyping, our tooling or or that are legacy companies that need our total portfolio refresh we are in our portfolio number one share.
And dominant in technologies that benefit from Moore's law that have.
Yeah.
Benefiting.
A significant percentage of their usage for mass production, which is a faster growing segment then.
So the industry. So we're very well positioned for continued growth and with very innovative technology. If you look at our spend in R&D versus our competitors.
We spend more as a percentage of revenue in R&D and most of the companies in our market. So despite these cuts we have.
Very healthy innovation pipeline, and we modulate the things between horizon, one horizon, two horizon, three which were talking about last quarter I feel very good about our ability to continue to grow organically faster than the market and our competitors.
Okay. Thanks very much appreciate it.
Okay.
And we have reached the end of the question and answer session I will now turn the call back over to Rick for closing remarks.
Wonderful well.
I really would like to thank everyone again for joining our call today and your interest in desktop metal.
I, especially want to extend my gratitude to all the team DM across the globe, including all of our sales partners six hiccup in over 65 countries for their relentless efforts and dedication.
And I look forward to speaking to you again on our first quarter earnings call. So thank you.
Okay.
And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
Okay.
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