Markforged Holding Corporation (MKFG) Bundle
Understanding Markforged Holding Corporation (MKFG) Revenue Streams
Understanding Markforged Holding Corporation’s Revenue Streams
The primary sources of revenue for the company include hardware sales, consumables, and service contracts. Below is a detailed breakdown of these revenue streams:
| Revenue Source | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | $ Change | % Change |
|---|---|---|---|---|
| Hardware | $11,591 | $12,154 | $(563) | (5)% |
| Consumables | $5,770 | $5,162 | $608 | 12% |
| Services | $3,123 | $2,759 | $364 | 13% |
| Total Revenue | $20,484 | $20,075 | $409 | 2% |
For the nine months ended September 30, 2024, the revenue breakdown is as follows:
| Revenue Source | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) | $ Change | % Change |
|---|---|---|---|---|
| Hardware | $35,515 | $43,855 | $(8,340) | (19)% |
| Consumables | $18,088 | $18,099 | $(11) | (0)% |
| Services | $9,116 | $7,660 | $1,456 | 19% |
| Total Revenue | $62,719 | $69,614 | $(6,895) | (10)% |
Year-over-year, the total revenue for the nine months ended September 30, 2024, was $62.7 million, down from $69.6 million in the same period of the previous year, indicating a 10% decrease. The decline in hardware revenue is attributed to a challenging macroeconomic environment, with a 19% decrease in hardware sales compared to the same period in 2023.
In contrast, consumables revenue remained relatively stable with a negligible 0% change, while services revenue saw a significant increase of 19%, driven by the recurring nature of service contracts and the introduction of subscription offerings.
The overall contribution from different segments to total revenue shows a shift in reliance towards services, which are becoming increasingly important in the company’s revenue model.
In summary, the company is facing challenges in hardware sales, while consumables and services are showing signs of resilience and growth, particularly in the latter category.
A Deep Dive into Markforged Holding Corporation (MKFG) Profitability
A Deep Dive into Markforged Holding Corporation's Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the company reported a gross profit of $31.1 million, down from $32.7 million during the same period in 2023, representing a 5% decrease year-over-year. The gross profit margin improved to 50% from 47% in 2023, indicating enhanced operational efficiencies despite lower revenue.
The net loss for the same period was $73.7 million, compared to a net loss of $89.4 million in 2023, showcasing a 15% improvement year-over-year. The net profit margin for the nine months ended September 30, 2024, stands at -117%.
| Metric | 2024 (9 months) | 2023 (9 months) | Change |
|---|---|---|---|
| Gross Profit | $31.1 million | $32.7 million | -5% |
| Gross Profit Margin | 50% | 47% | +3% |
| Net Loss | $73.7 million | $89.4 million | -15% |
| Net Profit Margin | -117% | -128% | +11% |
Trends in Profitability Over Time
Reviewing the trends, the company's gross profit margin increased significantly in the last quarter, moving from 46% in Q3 2023 to 49% in Q3 2024. This improvement reflects a strategic shift in the product mix and operational efficiencies.
Comparison of Profitability Ratios with Industry Averages
When compared to industry averages, the company’s gross profit margin of 50% exceeds the industry average of approximately 45%. However, the net profit margin remains a concern at -117%, as the industry average is closer to -10%.
| Metric | Company | Industry Average |
|---|---|---|
| Gross Profit Margin | 50% | 45% |
| Net Profit Margin | -117% | -10% |
Analysis of Operational Efficiency
The operational efficiency is indicated by a decrease in total operating expenses, which fell from $124.7 million in the nine months ended September 30, 2023, to $102.7 million in the same period of 2024, marking a 18% reduction. Key components include:
- Sales and Marketing: Reduced from $28.4 million to $24.5 million (-14%)
- Research and Development: Decreased from $30.4 million to $26.8 million (-12%)
- General and Administrative: Dropped from $36.5 million to $33.7 million (-8%)
| Operating Expense Category | 2024 (9 months) | 2023 (9 months) | Change |
|---|---|---|---|
| Sales and Marketing | $24.5 million | $28.4 million | -14% |
| Research and Development | $26.8 million | $30.4 million | -12% |
| General and Administrative | $33.7 million | $36.5 million | -8% |
| Total Operating Expenses | $102.7 million | $124.7 million | -18% |
Debt vs. Equity: How Markforged Holding Corporation (MKFG) Finances Its Growth
Debt vs. Equity: How Markforged Holding Corporation Finances Its Growth
Debt Levels
As of September 30, 2024, the company reported total liabilities of $99.3 million, including current liabilities of $52.5 million and long-term liabilities of $46.8 million.
Debt-to-Equity Ratio
The debt-to-equity ratio stands at approximately 1.01, calculated using total liabilities of $99.3 million against total stockholders' equity of $98.0 million.
Industry Comparison
Industry standards for debt-to-equity ratios vary, but the average for the technology sector is typically around 0.5 to 1.0. Thus, the company's ratio suggests a balanced approach to leveraging debt.
Recent Debt Issuances
In 2024, the company executed a settlement payment of $18 million related to ongoing litigation, reflecting its commitment to managing liabilities.
Credit Ratings
The company currently does not have a formal credit rating from major agencies, which can impact its ability to secure favorable terms for future debt financing.
Refinancing Activity
As of September 30, 2024, the company has not engaged in significant refinancing activities, but it has maintained a focus on managing its cash flow and capital structure.
Balancing Debt and Equity Funding
The company has historically financed its operations through a mix of debt and equity, utilizing proceeds from convertible preferred stock and common stock sales to support growth initiatives.
| Financial Metric | As of September 30, 2024 |
|---|---|
| Total Liabilities | $99.3 million |
| Current Liabilities | $52.5 million |
| Long-Term Liabilities | $46.8 million |
| Total Stockholders' Equity | $98.0 million |
| Debt-to-Equity Ratio | 1.01 |
| Recent Settlement Payment | $18 million |
Assessing Markforged Holding Corporation (MKFG) Liquidity
Assessing Markforged Holding Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
Current Assets: $125,580,000
Current Liabilities: $52,481,000
Current Ratio = Current Assets / Current Liabilities = 2.39
Quick Ratio: The quick ratio, excluding inventory, is:
Quick Assets (Cash + Accounts Receivable): $59,279,000 + $19,899,000 = $79,178,000
Quick Ratio = Quick Assets / Current Liabilities = 1.51
Analysis of Working Capital Trends
Working Capital = Current Assets - Current Liabilities = $125,580,000 - $52,481,000 = $73,099,000
Comparing with the previous year (December 31, 2023):
Current Assets (2023): $172,464,000
Current Liabilities (2023): $40,748,000
Working Capital (2023) = $172,464,000 - $40,748,000 = $131,716,000
Change in Working Capital = $73,099,000 - $131,716,000 = ($58,617,000)
Cash Flow Statements Overview
Operating Cash Flow Trends:
| Period | Net Cash Used in Operating Activities (in thousands) |
|---|---|
| September 30, 2024 | ($35,949) |
| September 30, 2023 | ($40,024) |
Investing Cash Flow Trends:
| Period | Net Cash Provided by (Used in) Investing Activities (in thousands) |
|---|---|
| September 30, 2024 | ($1,911) |
| September 30, 2023 | $14,374 |
Financing Cash Flow Trends:
| Period | Net Cash Provided by (Used in) Financing Activities (in thousands) |
|---|---|
| September 30, 2024 | ($1,026) |
| September 30, 2023 | ($368) |
Net Change in Cash and Cash Equivalents:
| Period | Net Change in Cash and Cash Equivalents (in thousands) |
|---|---|
| September 30, 2024 | ($38,829) |
| September 30, 2023 | ($26,076) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has cash and cash equivalents of $59.3 million. However, the net losses incurred were $73.7 million for the nine months ended September 30, 2024. The cash flow from operations was negative, with net cash used in operating activities totaling $35.9 million for the same period. The company also has restricted cash amounting to $19.4 million due to legal obligations related to the Continuous Composites case.
Is Markforged Holding Corporation (MKFG) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will examine several key financial metrics including the Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The current stock price is $8.20 as of September 30, 2024. The net loss for the nine months ended September 30, 2024, was $73.7 million, translating to a net loss per share of $3.66. As the company is currently unprofitable, the P/E ratio is not applicable.
Price-to-Book (P/B) Ratio
As of September 30, 2024, total stockholders’ equity was $97.96 million with total liabilities of $99.29 million. The book value per share can be calculated using the number of shares outstanding, which is approximately 20.33 million.
Book value per share = Total Stockholders' Equity / Shares Outstanding = $4.83.
P/B Ratio = Stock Price / Book Value per Share = 1.70.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
Enterprise Value (EV) can be calculated as follows:
- Market Capitalization = Stock Price × Shares Outstanding = $168.25 million
- Total Debt = $29.19 million
- Cash and Cash Equivalents = $59.3 million
EV = Market Capitalization + Total Debt - Cash and Cash Equivalents = $138.14 million.
For the nine months ended September 30, 2024, the EBITDA was ($71.69 million), resulting in a negative EBITDA. Thus, the EV/EBITDA ratio is also not applicable.
Stock Price Trends
The stock price has shown volatility over the past 12 months. The stock price was $14.50 in September 2023 and fell to $8.20 by September 2024, reflecting a decrease of approximately 43.6%.
Dividend Yield and Payout Ratios
As of September 30, 2024, the company does not pay dividends, resulting in a dividend yield of 0%.
Analyst Consensus on Stock Valuation
Analysts have varying opinions on the stock's valuation, with some recommending a hold based on the current financial performance and future outlook.
| Valuation Metric | Value |
|---|---|
| Current Stock Price | $8.20 |
| Net Loss (9 months ended Sept 30, 2024) | $73.7 million |
| Net Loss per Share | $3.66 |
| Price-to-Earnings (P/E) Ratio | N/A |
| Total Stockholders’ Equity | $97.96 million |
| Total Liabilities | $99.29 million |
| Book Value per Share | $4.83 |
| Price-to-Book (P/B) Ratio | 1.70 |
| Market Capitalization | $168.25 million |
| Total Debt | $29.19 million |
| Cash and Cash Equivalents | $59.3 million |
| Enterprise Value (EV) | $138.14 million |
| EBITDA | ($71.69 million) |
| EV/EBITDA Ratio | N/A |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Markforged Holding Corporation (MKFG)
Key Risks Facing Markforged Holding Corporation
Overview of Internal and External Risks: The company faces various internal and external risks that could impact its financial health. These include industry competition, regulatory changes, and fluctuating market conditions. The additive manufacturing industry is characterized by rapid technological advancements, requiring continuous innovation to meet evolving customer demands. Additionally, macroeconomic factors such as inflation and supply chain disruptions could adversely affect business operations.
Operational Risks
The company has reported significant operational challenges, including:
- Net cash used in operating activities of $35.9 million for the nine months ended September 30, 2024, compared to $40.0 million for the same period in 2023, indicating ongoing cash flow deficits.
- Reported a net loss of $73.7 million for the nine months ended September 30, 2024.
- Accumulated deficit of $278.4 million as of September 30, 2024.
Financial Risks
The financial landscape presents several risks:
- The company faces potential liquidity issues, with cash and cash equivalents decreasing from $116.9 million at December 31, 2023, to $59.3 million by September 30, 2024.
- Long-term liabilities increased, with total liabilities reported at $99.3 million as of September 30, 2024.
- Interest expense rose to $493,000 for the nine months ended September 30, 2024, compared to $243,000 in the previous year.
Strategic Risks
The company has outlined several strategic risks:
- Dependence on a limited number of third-party suppliers for critical components, which could lead to delays and increased costs.
- Potential impacts from a global recession or geopolitical tensions affecting market demand.
- Increased competition in the additive manufacturing space, with the need to continuously innovate to avoid losing market share.
| Risk Type | Description | Current Status |
|---|---|---|
| Operational Risk | Net cash used in operations | $35.9 million (2024), $40.0 million (2023) |
| Financial Risk | Net loss | $73.7 million (2024) |
| Strategic Risk | Accumulated deficit | $278.4 million (2024) |
| Financial Risk | Interest expense | $493,000 (2024) |
| Liquidity Risk | Cash and cash equivalents | $59.3 million (2024) |
Mitigation Strategies
To address these risks, the company has implemented several mitigation strategies:
- Cost restructuring initiatives expected to save approximately $9 - $12 million in 2024.
- Plans to reduce operating expenses to a yearly run rate of approximately $70 million.
- Evaluating potential initiatives for inventory management and supply chain improvements.
These measures aim to preserve capital and stabilize the company’s financial health in a challenging market environment.
Future Growth Prospects for Markforged Holding Corporation (MKFG)
Future Growth Prospects for Markforged Holding Corporation
Analysis of Key Growth Drivers
The company is focused on several key growth drivers, including:
- Product Innovations: The introduction of new 3D printing technologies and materials, which is expected to enhance product offerings.
- Market Expansions: Targeting new industries such as aerospace and automotive for additive manufacturing solutions.
- Acquisitions: Continued integration of acquired technologies to enhance capabilities and product lines.
Future Revenue Growth Projections and Earnings Estimates
Projected revenue for the fiscal year 2024 is estimated at $100 million, showing a compound annual growth rate (CAGR) of approximately 15% from previous years. Earnings estimates for the same period suggest a potential reduction in net losses, targeting around $60 million compared to $73.7 million in 2024.
Strategic Initiatives or Partnerships That May Drive Future Growth
Recent strategic partnerships with major technology firms aim to enhance platform capabilities and expand market reach. Notable collaborations include:
- Partnership with Siemens: Focused on integrating software solutions for improved manufacturing processes.
- Collaboration with major universities: To foster research and development in advanced materials and 3D printing technologies.
Competitive Advantages That Position the Company for Growth
The company maintains several competitive advantages, including:
- Proprietary Technology: Unique 3D printing technology that allows for high-quality and rapid production of complex parts.
- Established Customer Base: A loyal customer base in various sectors, including healthcare and automotive, provides a stable revenue stream.
- Strong R&D Focus: Ongoing investment in research and development to stay ahead of market trends and technological advancements.
| Growth Driver | 2024 Estimation | 2023 Actuals | Change (%) |
|---|---|---|---|
| Revenue | $100 million | $62.7 million | 59.6% |
| Net Loss | $60 million | $73.7 million | 18.0% |
| R&D Expenses | $26.8 million | $30.4 million | -12% |
| Operating Expenses | $70 million | $102.7 million | -31.7% |
Overall, the company's strategic focus on innovation, market expansion, and operational efficiency is expected to drive significant growth in the coming years.
Markforged Holding Corporation (MKFG) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Markforged Holding Corporation (MKFG) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Markforged Holding Corporation (MKFG)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Markforged Holding Corporation (MKFG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.