Fathom Digital Manufacturing Corp. (NYSE: FATH), an industry leader in on-demand digital manufacturing services, generated $31.458 million in revenue for Q3 2023 and and $100.939 million for nine months ended September 30, 2023.
Compared to $40.2 million in the third quarter of 2022, revenue for the third quarter of 2023 registered a decrease of 21.8% due to lower order volumes, primarily impacting Fathom’s production precision sheet metal and CNC product lines. For the nine months ended September 30, 2023, revenue also declined by 17% versus the comparable period last year.
On October 23, 2023, Fathom appointed Carey Chen as Chief Executive Officer of the company succeeding Ryan Martin. Mr. Chen has significant global manufacturing experience and an extensive background in supporting companies across the industrial landscape. He has served as a member of Fathom’s Board of Directors since April 2021 and as a Director to Fathom’s predecessor companies since 2019.
“I am optimistic that there are opportunities to return to revenue growth and sustainable profitability over time. We’ve added new sales and operating leadership,” said Carey Chen, Fathom’s Chief Executive Officer. “Together with the valued employees throughout Fathom, we will move with urgency to optimize the performance of the company.”
In commenting on the third quarter financial results, Mark Frost, Chief Financial Officer, said, “Revenue in the quarter came in at the low-end of our expectations. We saw more stable order rates as the quarter progressed and believe we are set up to return to profitable growth in 2024 as we realize the full benefits of our cost optimization efforts.”
Gross profit for the third quarter of 2023 totaled $8.3 million, or 26.3% of revenue, compared to $15.1 million, or 37.5% of revenue, in the same period a year ago. Gross profit for the nine months ended September 30, 2023, was $30.7 million, or 30.5% of revenue, compared to $42.6 million, or 34.7% of revenue, which includes approximately $3.2 million in non-cash purchase accounting adjustments, for the same period in 2022.
Net loss for the third quarter of 2023 was $(8.6) million compared to a net loss of $(1,039.0) million in the third quarter of 2022. Excluding the revaluation of Fathom warrants and earnout shares, stock compensation expense, optimization plan expenses, and other costs, Fathom reported an adjusted net loss in the third quarter of 2023 of $(7.2) million compared to an adjusted net income of $5.4 million for the same period in 2022.
Net loss for the nine months ended September 30, 2023, was $(17.2) million compared to net loss of $(985.7) million in the comparable period last year. For the nine months ended September 30, 2023, the adjusted net loss was $(18.3) million compared to the adjusted net income of $6.1 million for the same period in 2022.
Adjusted EBITDA for the third quarter of 2023 was $3.1 million versus $7.1 million for the same period in 2022 primarily due to lower volume leverage, partially offset by cost savings from the execution of Fathom’s optimization plan. The Adjusted EBITDA margin in the quarter was 9.8%.
For the nine months ended September 30, 2023, Adjusted EBITDA and Adjusted EBITDA margin were $12.0 million and 11.9%, respectively, compared to Adjusted EBITDA loss of $21.9 million and 17.8% for the same period in 2022.