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Nano Dimension reports record FY 2023 revenue of $56.3 million

Corresponding to 29% organic growth year on year

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Nano Dimension Ltd. (Nasdaq: NNDM), a leading supplier of Additively Manufactured Electronics (AME) and multi-dimensional polymer, metal & ceramic AM generated $56.3 million in FY 2023, up 29% compared to FY 2022. Gross margin for FY 2023 was 45%; up 41% from 32% in FY 2022. Other results include a reduction in the key “Net Cash Burn” metric, which was down 42% from 2022 to 2023, from $146 million to $84 million. The company expect to bring this down to $12-20 million in 2024, as a result of Q4/22 Reshaping Nano Initiative. Q4 2023 revenue was $14.5 million, up 19% compared to Q4 2022.

“We would like to update you – our shareholders and prospective shareholders – with additional perspective on our continued record performance, organizational changes, and an outlook on exciting times to come,” said CEO Yaov Zeiv in a message to shareholders. “To start with – we want to emphasize that in contrast to many hi-tech corporations’ reporting results, especially industries like AM/3D printing where no public company is profitable and most are shrinking in revenues – we relate to this document as well as to our “results” conference calls, as their name indicates: Update on Financial Results, with minimal “cosmetics” such as pictures and graphics of exciting products and the machines that manufacture them. Most of those can be found on our website: www.nano-di.com, which all of you are invited to visit and see. Nano Dimension has a breadth of technologies and product assortment, yet a narrow and focused span of synergistic vertical markets. Both of those characteristics are critical to our success and major differentiators from many other AM/3D Printing players.”

FY 2023 results

In the fiscal year ending December 31, 2023, Nano Dimension reported a significant increase in total revenues from $43.6 million in the previous year to $56.3 million, which can be attributed to the company’s enhanced and more effective sales efforts across its product lines. While the increase in revenues is promising, it’s important to note the corresponding rise in the cost of revenues, which climbed from $24.9 million to $30.8 million. This suggests that while Nano Dimension is successfully generating higher revenues, it’s also facing increased costs associated with production and operations. Managing these costs effectively will be crucial for maintaining profitability and sustainable growth in the future.

The decrease in Research and Development (R&D) expenses from $75.8 million to $62.0 million reflects the company’s efforts to optimize its spending in this area. By reducing expenses related to share-based payments, subcontractors, and payroll, Nano Dimension is demonstrating a commitment to operating more efficiently without compromising innovation and product development.

Similarly, the decline in Sales and Marketing (S&M) expenses from $38.8 million to $31.7 million indicates a more streamlined approach to sales and marketing activities. This reduction in expenses, particularly in share-based payments and payroll, suggests that Nano Dimension is finding more cost-effective ways to promote its products and reach customers.

On the other hand, the substantial increase in General and Administrative (G&A) expenses from $30.5 million to $58.3 million raises some concerns. This surge is primarily driven by higher professional services expenses related to proxy contest matters, along with increases in payroll and share-based payments.

Despite these considerations, Nano Dimension’s ability to secure other income, net, of $1.6 million for the year is a positive development. This additional compensation from government authorities for damaged inventory, coupled with lower reorganization costs, contributes positively to the company’s bottom line.

Total revenues for the fourth quarter of 2023 were $14.5 million, compared to $12,2 million in the third quarter of 2023, and $12,1 in the fourth quarter of 2022. The increase is attributed mostly to increased and more effective sales efforts across the Company’s product lines.

Overall, especially considering the unique and highly complex characteristics of the AM market, Nano Dimension has made significant strides in revenue growth and cost management.

“Reshaping Nano”

The company launched this initiative in mid-Q4 2023 highlighting that after much focus on revenue over the last 2-4 years, the market is returning to some element of reasonableness in realigning attention around the bottom line. The Reshaping Nano initiative is specifically designed to enable Nano Dimension to become operating income positive in 2025, and potentially cash flow positive earlier. Nano Dimension’s strategy will continue to think highly critically about operating expenses across R&D, sales & marketing, and general & administrative costs. Some notable changes were made in Q4 2023, including reducing the Company’s workforce worldwide by approximately 25% and shrinking the Executive Management group by 25%.

This Initiative has produced an estimated annualized savings of $30 million, which is expected to start reflecting in Q1/2024 results. Nano Dimension also emphasizes that while it is not yet delivering a positive bottom-line, this is a choice based on our capital allocation to secure R&D innovation and establish go-to-market channels and customer relationships. As such, Nano Dimension is itself with a sharp focus on gross margin, which grew to 45%. This improvement indicates a clear direction toward a goal of over 50% gross margin, preferably close to 60%. At that level, Nano Dimension’s management expects the company to be profitable. From there onward, the management expects to see savings in operating expenses.

Nano Dimension reports record FY 2023 revenue of $56.3 million corresponding to 29% organic growth year on year

Customer and R&D successes

In 2023, Nano Dimension experienced a multitude of customer success stories, as evidenced by various new relationships established with customers. These include sales transactions with prominent entities such as NASA, the Fraunhofer Institute (with repeat sales), one of the world’s largest computer hardware companies, Western Armies, Western Secret Services, and other defense establishments. Additionally, Nano Dimension achieved a significant milestone with a multi-system sale, resulting in the company’s largest single order to date. Furthermore, these success stories span across Nano Dimension’s product portfolio, encompassing systems for Additive Manufacturing Electronics (AME), micro-Additive Manufacturing (micro-AM), and Automated Electronics (AE) robotics.

Nano Dimension reports an increase in customer engagement, particularly regarding its deep learning-based AI capabilities. This surge in interest coincides with the company’s announced endeavors to enhance its industrial AI solution through its DeepCube Group. Originally designed for Nano Dimension’s proprietary manufacturing systems, this AI solution is now being developed as a standalone offering for third-party customers operating non-Additive Manufacturing (non-AM) industrial systems. Alongside this initiative, Nano Dimension has secured several patents or filed applications in this domain.

In tandem with its AI advancements, Nano Dimension underscores the significance of its breakthroughs in material science. Notably, the company highlights its INSU 200 dielectric material for Additive Manufacturing Electronics (AME), unveiled in late 2023, with a corresponding patent application submitted in 2024. This material plays a crucial role in AME by facilitating the passage of printed PCBs through critical processes, thereby enhancing their thermo-mechanical properties. Consequently, Nano Dimension anticipates significant growth opportunities stemming from these developments.

Nano Dimension reports record FY 2023 revenue of $56.3 million corresponding to 29% organic growth year on year

The financial engine continues to run

Nano Dimension is increasingly prioritizing its decisions based on bottom-line considerations, although acknowledging the critical importance of top-line growth for overall success. The company closed out 2023 with yet another record-setting year, propelled by a robust performance in Q4 2023, which marked a series of quarterly records throughout the year compared to previous periods. For instance, Q4 2023 generated $14.5 million in revenue, reflecting a substantial 19% increase over the same period in the preceding year. Importantly, this revenue surge is entirely organic, underscoring Nano Dimension’s proficiency in acquiring, integrating, and capitalizing on synergies, exemplifying the concept of “1 + 1 = 3”.

As stewards accountable to shareholders, Nano Dimension remained actively engaged with its shareholder base throughout 2023, particularly in the lead-up to the Annual General Meeting held on September 7th, 2023. The company’s slate and incumbent stewards received overwhelming support from thousands of shareholders, reaffirming their roles as directors.

In a proactive move, Nano Dimension implemented changes to its Board of Directors. Firstly, the roles of Chairman and CEO were separated, with the CEO stepping down from the Chairman position but continuing to serve as a director. Dr. Yoav Nissan-Cohen assumed the role of Chairman, bringing extensive experience in advanced technology innovation and corporate leadership, including a tenure as CEO of Tower Semiconductor for over a decade.

Additionally, Nano Dimension welcomed a new voice to the board with the appointment of 4-Star General Michael X. Garrett (Ret.), formerly the Commanding General of the United States Army Forces Command (“FORSCOM”). As part of this board refresh, two directors stepped down from their positions.

Nano Dimension reports record FY 2023 revenue of $56.3 million corresponding to 29% organic growth year on year

Since raising $1.5 billion in capital in 2021, Nano Dimension’s management has consistently operated under the belief that this capital was entrusted to them by the shareholders for a period of several years to generate significant added value. With this guiding principle, the management team has diligently sought to allocate this capital in a manner that ensures a favorable short-, medium-, and long-term return on investment (ROI).

The company has frequently discussed capital allocation through two primary avenues. The first involves organic investments, particularly in Research and Development (R&D) and go-to-market strategies. The second avenue pertains to inorganic growth, specifically through mergers and acquisitions (M&A). However, Nano Dimension has also pursued a third option: returning capital to shareholders while concurrently enhancing the enterprise value of the company. This has been achieved notably through a share buyback program, amounting to approximately $96 million in 2023. Additionally, the company has an ongoing share repurchase plan with approval for up to $200 million, which is currently in progress

Time for consolidation

M&A has long been part of Nano Dimension’s strategy, as evidenced by its seven acquisitions since April 2021. However, the company emphasizes that it has been prudent in its approach, unwilling to pay unreasonable valuations. The company’s management believes that making money lies not in selling, but in buying at the right price.

In a departure from the financial reports of other AM industry public companies, Nano Dimension does not observe a systemic reduction in demand for its products. Instead, the company identifies an issue with many AM companies lacking gross margins sufficient to support necessary R&D, machine building, and marketing budgets. This lack of profitability stems from an overcrowded domain that was over-financed and over-valued during the 2021 SPAC-and-micro-cap-markets-and-small-AM-companies-MANIA. These companies have failed to sell synergistically or focus on solving well-defined and large yet coherent application domains and vertical markets. As a result, they operate across various markets without profitability, draining cash annually and depleting reserves.

The solution to the lack of profits among numerous AM companies over recent years is consolidation. Nano Dimension believes that general realignment through consolidation will enhance its competitive advantage, increase gross margins, and focus on synergetic business lines rather than selling everything related to 3D printing.

Nano Dimension reports record FY 2023 revenue of $56.3 million corresponding to 29% organic growth year on year
The Dragonfly system in operation within the LDM process workflow.

Nano Dimension sees itself as positioned to be one of the main leaders in this consolidation effort. The company emphasizes the importance of acquisitions at compelling valuations to drive ROI for shareholders, as well as proper merger and amalgamation of management teams and rationalization of product lines and go-to-market networks.

Despite imperfections, Nano Dimension acknowledges the strengths of many companies in the AM industry, particularly their cutting-edge technologies and meaningful customer relationships. However, poor business models have led to high costs, consuming much of the capital raised by these companies. Nano Dimension views this as a unique opportunity for itself and its shareholders.

With close to $56.3 million in revenue, Nano Dimension is the fastest-growing among publicly traded AM/3D printing companies. Unlike reports from other companies, Nano Dimension does not perceive “industry headwinds” affecting its growth. The company notes that various industries it serves, such as defense, aerospace, dental, and electric/electronic transportation, did not experience slowdowns in 2023.

Stern concluded, “Bottom line: Nano is the only company that grew, and substantially so; this year 29% organically vs. 2022 when we generated $43.7 million in revenue. And we are not shy to say that we were short from our original goal of $60 million. It is not because of headwinds; it is because we performed to an extent of 95% of our 2023 revenue goal.

“We aim for go-to-market led consolidation AM/3D Printing and materials companies. This is the only way to accelerate toward profitability as fast as possible. Suppose we can complete this M&A strategy as soon as we can at reasonable prices. In that case, we shall see a Nano Dimension that is well in the hundreds of millions of revenue and in a position to deliver to the bottom-line magnitudes more with greater scale and efficacy as practically one of very few AM companies that is not only well managed and innovative, but also properly financed and positioned to deliver value to shareholders.”

 

 

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Davide Sher

Since 2002, Davide has built up extensive experience as a technology journalist, market analyst and consultant for the additive manufacturing industry. Born in Milan, Italy, he spent 12 years in the United States, where he completed his studies at SUNY USB. As a journalist covering the tech and videogame industry for over 10 years, he began covering the AM industry in 2013, first as an international journalist and subsequently as a market analyst, focusing on the additive manufacturing industry and relative vertical markets. In 2016 he co-founded London-based VoxelMatters. Today the company publishes the leading news and insights websites VoxelMatters.com and Replicatore.it, as well as VoxelMatters Directory, the largest global directory of companies in the additive manufacturing industry.

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