Nano Dimension Ltd. (“Nano Dimension” or the “Company”), an industry leader in Additively Manufactured Electronics, additive PCB assembly & printhead drivers and software (AME), and a supplier of Additive Manufacturing machines and materials (AM), announced financial results for the first quarter ended March 31st, 2024.
Revenue:
- Q1/2024 was $13.36 million
- Q1/2023 was $14.97 million (unusual Q1/2023, spillover from Q4/2022)
Gross Margin (GM):
- Q1/2024 was 46%
- Q1/2023 was 44%
- 235 bps improvement
Adjusted Gross Margin1 (Adjusted GM):
- Q1/2024 was 50%
- Q1/2023 was 47%
- 265 bps improvement
Adjusted EBITDA:
- Q1/2024 was negative $13.6 million
- Q1/2023 was negative $23.7 million
- 43% improvement
Net cash burn2:
- Q1/2024 was $7.0 million
- Q1/2023 was $27.4 million
- 75% reduction
Details regarding Adjusted GM and Adjusted EBITDA can be found below in this press release under “non-IFRS measures.”
CEO MESSAGE TO SHAREHOLDERS:
Dear Shareholders,
This was a quarter in which we have seen evidence that the financial results are reflecting our long-term planning. What we said will happen, has happened. I will separate my note into two main pillars in which we assess our business, and we hope you do as well: our income statement and our capital allocation – each being distinct but highly interrelated.
Income statement
Our income statement is naturally a key metric. We have often said it is not about one quarter, but quarters over time, and what story the numbers reveal about the direction of the business. On this note, for shareholders focused on financial discipline and moving towards profitability, there is a positive story emerging that is the product of a methodical plan.
Top-line
In 2021, we set a goal to increase revenue considerably. This should not be the sole goal of any business, nor was or is it of Nano Dimension. But it was an interim goal as a means of reaching a minimal threshold to achieve efficiencies.
We have done this.
In Q1/2021, the last-twelve-month (LTM) revenue was $3.5 million; in Q1/2024 the LTM revenue was $55 million, displaying compound annual growth rate (CAGR) of 150%.
On a comparable basis, while Q1/2023 was nontypically high as a result of spillover from Q4/2022, we expect our budgeted growth to continue on an annual basis.
Gross Margins
While simultaneously making progress on our revenue growth objective, we set out another one: Increasing gross margins, which reflect how we price our sophisticated hi-tech products and our efficiency in manufacturing them vis-à-vis our costs of goods sold (COGS). Surely, this is not our end-goal either, but a critical intermediate step.
We have done this.
We improved our gross margins from 10% in Q1/2022 to 46% in Q1/2024, for a relative expansion of approx. 360%.
Operating Expenses
After growing our revenue and expanding our gross margins, we shifted our focus to reducing our operating expenses, which is critical for the ultimate goal of profitability. Our work in this area comes largely from our Reshaping Nano Initiative, which we announced in Q4/2023. We developed a detailed plan to evolve our global workforce based on the benefits of organizational synergies following a robust M&A program, while not forgoing progress in R&D innovations and go-to-market effectiveness.
We have done this.
We finished Q1/2024 with a notable reduction in our net cash burn down to $7 million. This is not the end of the story. With this, I want to reaffirm our guidance that we announced in our 2023 full year results: our reduced cash used in operations along with our strong cash management means our effective cash burn will be no more than $20 million for the year, and perhaps as low as $12 million.
This is critical. Even without any other big developments, Nano Dimension can maintain its position of strength with minimal cash usage.
Capital allocation
Our balance sheet is our strategic advantage. How we manage and allocate the capital, is perhaps the greatest indicator of future success.
R&D and Innovation
The list of accomplishments over the last three years is long, but one focal area has been our industrial AI work coming out of our DeepCube Group that has created differentiated, secure IP to serve the business long into the future.
We have done this.
Even if we just limit ourselves to Q1/2024, we have filed an important patent related to our industrial AI work from our DeepCube Group and large language models (“LLMs”).
Transformational M&A
This is arguably the only area where there is not a publicly disclosable Q1/2024 development. But I want to say this clearly: This is a feature, not a bug. As we have always been, our team and banking advisors are pursuing transactions at the right cost, not at any cost. While we believe more than ever that there are great consolidation opportunities in the scope of our M&A search, it is critical we don’t fall into the same mistake that many others have made and that is not thinking critically about a return-on-investment (ROI).
Valuable opportunities are becoming more likely as many companies are seeing their own cash reserves dwindle with limited and arguably prohibitively costly mechanisms for securing additional capital.
We are in strong AND ACTIVE positions, which are only getting stronger.
Share Repurchase Program
We continually assess the best use of our cash. Considering that our current shares trade at a discount to cash value, we believe a share buyback should be considered in comparison to other alternatives, as it also provides value to shareholders. We said we would do this in 2023.
We have done this.
Outstanding Shares Reduced by 15% to 219 Million, Over the Last 15 months.
We have purchased 51,064,088 ordinary shares at approx. $2-$3 per share below cash and investments value since February 2023. Our program has brought our current outstanding share count to 219,237,825 ordinary shares as of March 31st, 2024; presenting a cash and investment value of approximately $4.1 per share (without considering the value of the $55-$60 million revenue business) as of Q1/2024.
In closing
Our markets and their macro environments are neither perpetuum mobile, nor are they static, and so is our business. On many important items and especially those clearly within our control, what we said will happen, has happened. This is not to say there is no more to do, and some of the most important things still lie ahead. It is just the beginning.
Thank you for your support.
Yoav Stern
Chief Executive Officer and a Member of the Board of Directors
Nano Dimension
FINANCIAL RESULTS:
First Quarter 2024 Financial Results
- Total revenues for the first quarter of 2024 were $13,364,000, compared to $14,965,000 in the first quarter of 2023. The decrease is attributed to decreased sales of the Company’s product lines.
- Total cost of revenues for the first quarter of 2024 was $7,186,000, compared to $8,399,000 in the first quarter of 2023. The decrease resulted primarily from the above-mentioned decrease in revenues and cost reductions that improved the gross margin.
- As a result of the reorganization plan executed by the Company in the fourth quarter of 2023 and other cost reduction efforts taken in 2024, the Company’s operating expenses across all departments have decreased in the first quarter of 2024 compared to the first quarter of 2023.
- R&D expenses for the first quarter of 2024 were $9,133,000, compared to $19,250,000 in the first quarter of 2023. The decrease is mainly attributed to a decrease in payroll and related expenses, share-based compensation expenses, materials for R&D use and subcontractor services.
- Sales and marketing expenses for the first quarter of 2024 were $6,517,000, compared to $7,486,000 in the first quarter of 2023. The decrease is attributed mainly to payroll and related expenses, as well as share-based compensation expenses.
- General and administrative expenses for the first quarter of 2024 were $9,602,000, compared to $11,033,000 in the first quarter of 2023. The decrease is mainly attributed to a decrease in professional services, payroll and related expenses, and is partially offset by an increase in share-based compensation expenses.
- Net loss for the first quarter of 2024 was $34,772,000, or $0.15 loss per share, compared to net income of $22,222,000, or $0.09 per share, in the first quarter of 2023, with gains that quarter mainly attributed to the re-valuation of our investment in securities.
Conference call information
The Company will host a conference call to discuss these financial results today, June 3rd, 2024, at 9:00 a.m. EDT (4:00 p.m. IDT).
The call can be accessed via webcast link or phone as detailed below.
For webcast link with presentation viewing:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=GmLH60ir
For phone:
U.S. Dial-in Number (Toll Free): 1-844-695-5517
International Dial-in Number: 1-412-902-6751
Israel Dial-in Number (Toll Free): 1-80-9212373
Please request the “Nano Dimension NNDM call” when prompted by the conference call operator.
For those unable to participate in the conference call, there will be a replay available from a link on Nano Dimension’s website at http://investors.nano-di.com/events-and-presentations.
