Nano Dimension (Nasdaq: NNDM) continues to strengthen its position in the 3D printing industry, holding strong in a challenging economic environment. The company’s second quarter of 2024 stands out as its best yet, driven by strategic moves, including the upcoming acquisition of Desktop Metal—a deal that CEO Yoav Stern openly revealed as the result of calculated patience and strategic timing. Alongside advances in AI-driven technologies, this acquisition is a cornerstone of Nano Dimension’s growth strategy.
This quarter saw Nano Dimension achieve a record revenue of $15 million, a slight increase from $14.7 million in the same period last year, despite broader industry challenges such as high interest rates and economic headwinds, particularly in central Europe.
Financially, the company posted a gross margin of 45.4% for the second quarter, up from 44.1% in the same period last year. However, despite these gains, Nano Dimension reported a net loss of $44.3 million for the quarter, or 20 cents per share, largely due to the revaluation of its investment in securities. This contrasts with the $9.4 million loss, or 4 cents per share, reported in the same quarter last year.
In addition to this, the adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for the period showed improvement, narrowing to a loss of $16.1 million from a loss of $23.5 million in the same quarter last year. This reduction in EBITDA loss reflects the company’s efforts to cut costs and improve operational efficiency under its Reshaping Nano Initiative, which was introduced in late 2023.
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Building on the progress from the second quarter, the Reshaping Nano Initiative also had a big impact in the first half of 2024. The company managed to cut its net cash burn by an impressive 69% compared to the same period last year. This major improvement shows how effective the cost-cutting strategies have been, helping Nano Dimension move towards a more stable financial path during tough economic times.
During an earnings call with investors, Stern pointed out that, “More important than everything else to us, because we’re aiming at positive cash and profits, is that our cash burn was down 54% from $31 million to $11 million in Q2, a result of a turnaround and reduction of expense plan that we implemented in the first quarter of this year. Not because we don’t have the cash to fulfill our business plan for the next four years but because we believe a business plan and a business model should lead to positive cash flow as fast as possible. We’re now 64% of the way towards reaching our goal of positive cash flow.”
Beyond the financials, Stern pointed out the company’s strategic vision, which involves focusing on digital Industry 4.0 and consolidating its leadership in additive manufacturing. The acquisition of Desktop Metal is a key step in that direction, expected to close by the end of 2024, with the deal valued between $135 million and $180 million.
While Nano Dimension’s acquisition of Desktop Metal marks a pivotal moment in the company’s expansion strategy, it’s the behind-the-scenes strategy that truly stood out during Nano Dimension’s earnings call. Stern revealed to investors that Nano Dimension had been eyeing Desktop Metal for over two years, making a total of nine proposals before finally securing the deal. Interestingly, the final offer, which was accepted, was the lowest of all, highlighting how Nano Dimension capitalized on changing market conditions.
“Desktop Metal, if you read their proxy statement going to a shareholders vote for this deal, describes the process we went through with them. We gave them nine proposals over the last two years to acquire them, ladies and gentlemen, nine proposals,” points out Stern. “The last proposal, which is the one they took, is the lowest proposal of all the lines. Think about it: traditionally, when you bid for a house and you don’t get it, you increase your price until you get it. Well, here’s the opposite: we reduced the price on every new proposal we made because the market shrunk in valuations. After all, the companies did not make money and were not growing at the right pace.”
Stern explains that Nano Dimension had previously made seven smaller acquisitions but held off on larger deals because the market valuations were too high and did not align with Nano Dimension’s strategic goals. This patience allowed the executives to eventually negotiate a lower price for Desktop Metal as the market conditions changed.
“We did seven acquisitions before Desktop Metal, but those were smaller acquisitions, and we waited for a long time for the big ones to come because prices were totally out of whack and totally unacceptable,” the CEO went on.
Stern’s openness about the acquisition strategy offers a clear look at how Nano Dimension carefully waited for the right moment, leading to what he describes as a great deal. In fact, this move could significantly boost the company’s revenue potential, according to the executive, from $70 million to $230 million almost overnight.
As Stern explained, the acquisition broadens Nano Dimension’s technology portfolio and positions the company for higher growth potential, aligning with its long-term strategy of driving profitability through scale and advanced technology integration. The CEO also mentioned that the Desktop Metal acquisition “was not the end of Nano Dimension’s acquisition trail.” The company is likely to pursue further strategic acquisitions to strengthen its market position and technological capabilities, with a clear focus on consolidating its role in the digital manufacturing landscape.
Nano Dimension specializes in 3D printers capable of producing electronics. Photo via Nano Dimension.
In fact, the company is also prioritizing technological advances, especially in software and AI, which are critical drivers for future growth. These developments are expected to integrate seamlessly with Nano Dimension’s existing product lines, further establishing its footprint in the Industry 4.0 landscape.
As Nano Dimension continues to execute its turnaround plan, which includes a share buyback program valued at $150 million, the company remains focused on boosting shareholder value. The market response has been cautiously optimistic, with Nano Dimension’s stock showing slight improvement following the earnings report, though it has faced volatility over the past year.
However, with strategic acquisitions and more to come, Nano Dimension is laser-focused on positioning the brand for long-term success. While the company has not set specific revenue targets for the full year, its leadership says it is committed to achieving positive cash flow and profitability as primary objectives.
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