Desktop Metal announced a -12% employee reduction and consolidation of its manufacturing facilities to “simplify its operating structure, reduce expenses and support continued revenue growth.” The company says the changes will deliver approximately $ 40 million in annual non-GAAP cost savings, of which $ 20 million is expected to be seen in the second half of 2022. Savings are expected to reach at least $ 100 million over the next two years. Employees in the US are informed about how the layoffs will affect them today, and the company continues to review changes among workers from overseas affiliates – layoff dates will vary depending on local laws.
Desktop Metal’s “Strategic Integration and Cost Optimization Initiative” is the result of several strategic acquisitions made in 2021, including ExOne, Aidro, EnvisionTEC, Aerosint and Adaptive3D. The initiative was taken to align the operating structure of Desktop Metal and the acquired companies under the company’s corporate umbrella – engineering, manufacturing, finance, law, human resources and customer service will now be fully consolidated under Desktop Metal.
The company says the initiative will allow it to focus more on products and development programs that “prioritize short-term revenue and margin growth in fast-growing applications,” while customers of the above-mentioned brands – as well as divisions such as Forust and Desktop Health – will be “take advantage of with better responsiveness and quality of support ”.
“We showed significant growth in 2021 by expanding our product portfolio to new markets and innovative materials,” commented Ric Fulop, Founder and CEO of Desktop Metal. “While the acquisitions we completed in 2021 contributed to this growth and better market opportunities as we initially focused on product harvesting and go-to-market synergies, they also increased our cost base and global footprint of the facilities. Today’s announcement of our strategic integration and cost optimization initiative is the result of a comprehensive portfolio and business operations review carried out across all functions in Desktop Metal.”
As indicated in previous financial performance announcements, the company is optimizing its spending structure while maintaining growth opportunities. In the first quarter of 2022, Desktop Metal grew + 286% year-on-year and the company’s revenues were $ 43.7 million, compared to $ 11.3 million in revenues in the first quarter of 2021. Desktop Metal generated a loss of -69.5 million dollars, which caused the company’s shares on the stock exchange to decline by -65%. The company’s operating loss increased by $ 18.3 million year-on-year, as did EBITDA, which fell to $ 41.6 million over the period. To improve its financial health, the company announced a $ 100 million convertible bond offer.