Nano Dimension Ltd. (NNDM) Q3 2025 Earnings Report, Transcript and Summary

Good evening, and welcome to the Nano Dimension Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Purva Sanariya, Director of Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to Nano Dimension's Third Quarter 2025 Earnings Conference Call. Joining me today is CEO, Dave Stehlin; and our new CFO, John Brenton. Before we begin, I will remind you that certain information provided on this call may contain forward-looking statements. Forward-looking statements are not guarantees and involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The safe harbor statement outlined in today's earnings press release also pertains to statements made on this call. In addition, I would like to point out that we will be discussing non-GAAP results, which exclude certain items. I encourage you to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP measures, which can be found in the press release available on the company's website. If you have not received a copy of the press release, please view it in the Investor Relations section of the company's website. A replay of today's call will also be available on the Investor Relations section of the company's website. With that, I will turn the call over to Dave.

Thank you, Purva, and good afternoon, everyone. We appreciate you joining us today. I want to begin by formally welcoming John Brenton as Nano's new Chief Financial Officer. John previously served as our VP of Finance and Controller, and he earned this promotion to CFO. He's been with Nano and Markforged for the past 5 years and brings more than 30 years of experience leading finance and accounting, M&A and corporate control functions. I've had the opportunity to work closely with him over the past 6 months, and his disciplined approach and operational depth will be critical as we advance the next phase for the company. I became CEO on September 8, approximately 3 weeks before the end of Q3 and have been extremely focused on improving and growing the business over these past weeks. Even in this short period, we've taken meaningful steps forward. We're strengthening how we manage the organization, operating with discipline as we drive toward profitability, pressing aggressively to grow revenue with critical customers and maximizing the value of our assets. As we align our reporting processes with U.S. GAAP standards, we're establishing a more consistent and timely cadence. Today's earnings release reflects meaningful progress toward those standards, and we remain committed to providing visibility into our performance driven by our focus on transparency and operational discipline. During the third quarter, following the open trading window after our Q2 earnings call, we repurchased approximately $5.6 million or 3.5 million of our shares under our existing authorization, which allows for up to $150 million in repurchases. Subsequent to the quarter end, we repurchased an additional $11.5 million worth or 6.6 million of our shares. We repurchased shares because we believe they remain significantly undervalued. You'll also hear shortly in John's remarks that we're providing guidance for the first time this year. Sharing our expectations for the fourth quarter represents an important step forward and reflects the operational improvements underway across the business. Turning to the strategic alternatives review process announced in September. Our Board with support from Guggenheim Securities and Houlihan Lokey is conducting a structured data-driven evaluation of all alternatives. The process is active, rigorous and aligned with our objectives to maximize shareholder value and unlock the potential of our technology assets and our operations. Although no time line has been set for completing this review, the Board remains engaged in the process, and we're committed to sharing updates when there is something definitive to report. We have engaged top-tier advisers to ensure we receive the best possible expertise as we explore and evaluate all options. Now turning back to Q3. And while the macro environment presented challenges from tariff uncertainties and cautious capital spending, we achieved strong improvements in the operating expenses, especially when compared to including a full quarter of Markforged expenses. As we moved into the fourth quarter, we're beginning to see signs of stronger performance through a more focused approach on key segments. Our teams are concentrating on the markets and products that best position us for sustained growth. We're being deliberate in identifying areas where our platforms provide meaningful differentiation and acting on that differentiation to win new opportunities and strengthen relationships with key partners. At the same time, we're accelerating cost reduction initiatives, which are already having an impact. We believe Q3 represents a high point in operating expenses with ongoing efforts expected to drive further improvement in future quarters. Now turning to the markets we serve. As I said earlier, the demand environment remains mixed with pockets of strength in areas where customers remain cautious in their spending. We're prioritizing segments where additive manufacturing can scale and where customers are ready to adopt new approaches that deliver speed, flexibility and creativity. Our target segments include defense, aerospace, automotive, food and beverage and next-generation networking. We're seeing wins across each of these areas, not only in legacy R&D or prototyping applications, but also in manufacturing opportunities. In these segments, our ability to deliver tangible operational and financial benefits, including reduced cycle time, cost savings, improved quality and IP secure wide network production sets us apart. Our solutions enable customers to make an impact today while also supporting forward-leaning applications for tomorrow. We believe these differentiators will support our growth in the years to come. Our defense business continues to expand as we deepen relationships with existing customers and extend in new ones. We're seeing strong growth driven by momentum across these programs, expansion with existing accounts and increased adoption of our FX10 and our FX20 platforms. Applications include producing critical components for new systems and supporting maintenance, repair and operations for forward deployed forces. We're also collaborating with leading contractors and technology manufacturers to build the defense systems of the future. In aerospace and other high reliability applications, adoption continues to expand as customers aim to accelerate innovation, shorten prototype to production cycles and maintain rigorous quality and certification standards. Our platforms enable faster iteration, IP protection and production of complex geometries that would otherwise be difficult or cost prohibitive to manufacture traditionally. Markforged continues to gain traction across advanced manufacturing. Customers such as ALOFT AeroArchitects and Spectrum Networks, LLC are using Markforged composite 3D printing system to produce certified and flight-ready components for high-profile government and special VIP aircraft. Using our FX10 platform and continuous fiber reinforcement technology, parts can be produced in weeks instead of months, improving operational readiness, accelerating certification cycles and reducing dependency on outsourced machining. Our flexibility and our fast surface mount technology systems have had great success in new product introduction and high mix, low-volume applications, which are critical in aerospace and in next-gen networking and in other forward-leaning market segments. In automotive, demand continues to rise for advanced lightweight and high-strength components that enhance efficiency and performance on factory floors. Markforged integrated composite and metal printing systems empower manufacturers to design and produce critical parts when and where they're needed with greater precision and reliability. This expanding adoption across multiple customer sites highlights the versatility of our enterprise-level platform and the scalability of our technology across adjacent industrial markets. Our Essemtec business, which delivers adoptive SMT pick-and-place, jet dispensing and smart material management systems is winning new business to support programs that underscore growing demand for advanced electronics assembly, including applications in data center networking and high-speed connectivity. Essemtec was also recently recognized with the Mexico Technology Award for our PUMA Ultra platform, further validating our leadership in adaptive SMT solutions that scale from prototype to high-mix production. Across the broader additive manufacturing industry, we continue to see a shift toward integrated ecosystems that combine hardware, software and materials into connected data-driven platforms. Customers are prioritizing solutions that deliver strong ROI, end-to-end traceability and secure compliant workflows, areas where our portfolio is extremely well positioned. Markforged's footprint continues to expand across automotive and consumer packaging good manufacturers, including companies like Volkswagen, Dana Incorporated, Nestlé and Danone, who are using our Digital Forge platform to localize production, reduce tooling lead times and achieve measurable efficiency gains. This industrial adoption underscores the maturity of our technology to scale with blue-chip companies additive manufacturing across multiple locations as they adopt more spare parts in our secure ecosystem. Taken together, while macro conditions remain uneven, our technology value proposition continues to resonate where precision, security, agility and total cost of ownership matter most. By maintaining customer focus, advancing platform integration and executing our road map, we remain confident in the company's ability to expand adoption and drive durable growth. We remain focused on execution, integration and disciplined capital allocation while positioning the company to capitalize on growing demand for these advanced digital manufacturing solutions that merge additive manufacturing with adoptive electronic assembly. With that, I will now turn the call over to John, who will both review our third quarter financial results and provide guidance for our fourth quarter. John?

Thanks, Dave. It is a pleasure to be here with you all today. While I only recently transitioned into the CFO role, I have already been working closely with our teams to align operations, identify cost synergies and strengthen financial discipline. Together with Dave and the global leadership team, we're focused on executing on key priorities to improve the company and enhance shareholder value. Unless stated otherwise, all numbers I will be discussing today are on a non-GAAP basis and reflect continuing operations. The third quarter marks the first full quarter of Markforged being included in our consolidated financial results. Desktop Metal is excluded from our non-GAAP results as it is classified as discontinued operations. The deconsolidation of its assets occurred during the third quarter on July 28, following its filing for bankruptcy under Chapter 11. Revenue for the third quarter was $26.9 million, representing a year-over-year growth of approximately 81% compared to $14.9 million in the third quarter of 2024. This increase was driven primarily by the inclusion of Markforged, which contributed $17.5 million, partially offset by lower revenues from our European business due to tariffs. Excluding Markforged, Nano Dimension's stand-alone revenue was approximately $9.4 million, down approximately 37% year-over-year, driven by strategic divestitures and softer demand amid macroeconomic uncertainties, including tariffs. Gross profit for the quarter was $12.7 million with an adjusted gross margin of approximately 47.4% compared to 50% in the prior year. The decline primarily reflects lower revenue as just discussed in product mix. Operating expenses for the quarter were $29.2 million, representing a year-over-year increase of approximately 29% from $22.7 million in the third quarter of 2024, mainly due to the inclusion of Markforged. However, on a stand-alone basis, Nano Dimension's operating expenses decreased approximately 42% year-over-year, reflecting the benefits of divestments and disciplined cost management. Adjusted EBITDA for the quarter was a loss of $16.6 million compared to a loss of $15.3 million in the third quarter of 2024, primarily due to the inclusion of Markforged. Turning to the balance sheet. Our financial position remains exceptionally strong. As of September 30, 2025, total cash, cash equivalents and investment securities were approximately $515.5 million, down from about $551 million at the end of the prior quarter. This change of roughly $35.5 million includes approximately $16.2 million attributable to the deconsolidation of Desktop Metal, and $5.1 million of cash used for share repurchases during the quarter. Looking ahead, I'd like to take a moment to outline our guidance, which, as Dave mentioned, we are providing for the first time this year. Our business generates revenue from recurring book-and-ship activity and larger strategic orders, which can create some variability in quarterly results. Importantly, this variability reflects timing differences rather than lost revenue. With that in mind, we are taking a disciplined approach to providing guidance, and we'll continue to evaluate providing additional metrics over time. For the fourth quarter, we expect revenue in the range of $31.5 million to $33.5 million, representing nearly 21% sequential growth at the midpoint. This outlook reflects moderate recovery across most markets as macroeconomic uncertainties ease along with positive momentum in key industries such as defense, aerospace and automotive. We expect, on a non-GAAP basis, gross margin between 47% and 48.5%, reflecting improved operating leverage and efficiency across our cost structure. Operating expenses on a non-GAAP basis are expected to be between approximately $28 million and $29 million, reflecting continued progress in aligning operations following the Markforged acquisition. Our teams have been focused on identifying synergies since the acquisition. And while these initiatives have been ongoing, we are now providing formal OpEx guidance for the first time. We expect savings of approximately 10% to 15% calculated based on the second quarter's reported results adjusted to reflect what a full quarter of Markforged would have contributed using a baseline of roughly $32.5 million. For the third quarter, operating expenses were already about 10% lower than this baseline, and we expect the full run rate savings to be realized in 2026. Adjusted EBITDA loss is expected to be between approximately $12 million and $14 million, which at the midpoint represents approximately a 22% improvement compared to the third quarter. We remain focused on our core markets, disciplined execution and cost management. I will now hand it back to Dave.

Thank you, John. Nano has taken significant steps forward in a very short period of time. We've strengthened our operations by focusing on products and market segments that position us for scalable growth. We have significantly reduced operating expenses, and we'll continue these efforts to drive toward profitability while preserving our strong cash position. We're increasing transparency by being more aligned with U.S. GAAP reporting requirements and for the first time, providing guidance. We believe in the value of our company and have repurchased a significant amount of shares. We will continue to pursue opportunities to unlock additional value for our shareholders, and we look forward to keeping you updated on our progress. Now we're ready for questions.

[Operator Instructions] At this time, we are showing no questions. I would like to turn the call back over to Dave Stehlin for closing remarks.

Great. Thank you very much. Listen, before we wrap up, I do want to thank everyone for joining us today. Our team is available to discuss any questions or follow-ups you may have. And we appreciate your continued interest in Nano. I think we've come a long way in a short period of time. And yes, there's a lot of work to do, but I like the trend that we're on. So have a good evening. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.