In a surprising social media post, Greg Mark, founder and former CEO of Markforged (NYSE: MKFG), suggested that Formlabs merge with what was once his company. Additionally, Mark expressed negative sentiments about the carbon fiber and metal 3D printing company, posing that it could be in a “doom spiral.”
Indeed, Markforged has been struggling financially after the company went public via a merger with a special purpose acquisition company in 2021. The total revenue soared from $71.9 million in 2020 to $91.2 million in 2021, depicting growth, but it experienced a slight decrease to $101 million in 2022 before dipping to $99.3 million in the trailing twelve-year period. There has been a similar pattern in gross profit, peaking at $52.9 million in 2021, followed by a decline to $46.6 million, implying a reduction in profitability. The net income saw a significant decrease, shifting from a profit of $3.9 million in 2020 to huge losses of $25.4 million in 2021, deteriorating further to $100 million.
In spite of recent economic setbacks, Markforged has consistently held a unique position in the industry. It has not only developed groundbreaking 3D printing processes but also built a desirable software ecosystem and a strong reseller network. With the invention of continuous fiber filament 3D printing, Markforged publicized it in 2014, continued to innovate, and ultimately introduced a type of bound metal extrusion. Later, it acquired Metal Binder Jetting firm Digital Metal in 2022.
All of this was supported by software capable of optimizing material deposition for reinforcement fibers. This extended to incorporate machine learning, in-process quality management, and more, forming the backbone of the Digital Forge. This network of Markforged products is meant to serve both as a means of training those same products via AI and to become a method of distributed manufacturing.
From the outside, it’s difficult to get a sense for what Mark suggests is management issues. However, there’s no doubt that the current macroeconomic climate is negatively impacting any number of AM companies, particularly those that are publicly traded. If it is in the doom spiral that Mark claims it is—a claim that is sure to impact the company’s stock when markets open—then Formlabs could be an ideal merger candidate.
The specifics of Formlabs’ financials are not publicly available, as the company is privately held.
One estimate put their 2022 revenues at $82.5 million. There were some
layoffs this year, indicating that the company was not immune to the economic environment, but they appeared to be comparatively small. A
double unicorn, the company has been undoubtedly successful in proliferating its
desktop stereolithography machines and growing into the
low-cost polymer powder bed fusion space. Its materials have become significant and prolific as the company has conquered the medical and dental segments. Moreover, its automation technologies demonstrate no obstacles to future innovation.
In many ways, a Markforged and Formlabs combination makes too much sense. Both companies, Boston-area based, generally have a focus on low-cost, high-end 3D printers driven by ideal software. Their products do not overlap and are highly complementary. A Form 8K filing made at the beginning of 2023 would suggest that Markforged was hoping that someone would help lighten the financial burden of the company. Regardless of the current financial situations of these two companies individually, their combination would be perfect and, for the sake of the 2023 narrative, would make for a happy ending to this year’s merger saga.
“Why did the 3D printer go to therapy? Because it had too many layers of unresolved issues!”
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