Markforged Holding Corp (MKFG) 2022 Q2 法說會逐字稿

Welcome to the Markforged Second Quarter 2022 Earnings Conference Call. (Operator Instructions) I would now like to turn the conference over to Austin Bohlig, Director of Investor Relations of Markforged. Please go ahead.

Good afternoon. I'm Austin Bohlig, Director of Investor Relations of Markforged Holding Corporation. Welcome to our second quarter fiscal year 2022 results conference call. We will be discussing the results announced in our earnings press release issued after market close today.

With me on the call is our President and CEO, Shai Terem, and our CFO, Mark Schwartz.

Before we get started, I'd like to remind everyone that management will be making statements during this call that include estimates and other forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. These statements represent management's views as of today, August 11, 2022, and are subject to material risks and uncertainties that could cause actual results to differ materially. Markforged disclaims any intention or obligation, except as required by law, to update or revise forward-looking statements.

Also during the course of today's call, we refer to certain non-GAAP financial measures. There's a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued after market close today, which can also be found on our website at investors.markforged.com.

I'll now turn the call over to Shai Terem, President and CEO of Markforged.

Thank you, Austin, and thank you, everyone, for joining us on our Q2 2022 earnings call. I'm pleased to share that once again, Markforged delivered a strong performance in the second quarter. We continue to execute against our long-term strategy and delivered robust results across all segments and geographies.

Revenue for the second quarter of 2022 was $24.2 million, increasing 19% year-over-year. Demand for the Digital Forge remains strong globally, and our pipeline of opportunities continues to grow across our complete portfolio. Our customers begin to realize the supply chain advantages of printing industrial strength parts at the point of need as soon as they install our solution. From there, the number of mission-critical applications our customers are able to solve with the technology starts to expand, and that, in turn, increases the number of digital inventory parts our customers manage through our cloud-based software. We see this pattern of growth and usage across the Americas, EMEA and APAC regions.

We recently published a case study in collaboration with the U.S. Air Force and especially the Cannon Air Force Base in New Mexico, where they deployed an X7 industrial printer to support the elite airmen who ran over 300 special op screening activities each year. The onsite team relies on Markforged materials, such as OnyX reinforced with fiberglass, carbon fiber and Kevlar to rapidly build devices in training environments to match real-world combat zones. On specific application is night vision goggle mounts, affixed to the airmen's tactical helmets. By using the X7 to print a replacement mount in OnyX, the Air Force was able to improve pilot stamina and agility while also saving money. The conventional aluminum part ranges from $100 to several hundred dollars with several weeks lead time to build. While the Markforged printed parts cost less than $5 and is ready in just a few hours. The time savings and cost savings have both been impactful to the Air Force. They told us, bringing the Markforged printer is one of the best things we've ever done.

As manufacturers look to solve more mission-critical applications through the Digital Forge, they are increasingly looking to our latest product release, the large format FX20, with its size, speed and ability to print high temperature resistant parts, stronger than metals. Demand for the FX20 has exceeded our expectations.

We already have examples of customers that have ordered multiple units. We have been fulfilling orders globally for the past few months and continue to ramp towards volume production by the end of the year, as we committed.

Our strategy focuses on empowering our customers to solve industrial manufacturing challenges at the point of need. Last month, reached another important milestone on the journey by entering into a definitive agreement with Hoganas AB to acquire Digital Metal, the creator of a leading binder jetting solution known to be precise and reliable. This acquisition is consistent with our long-term strategy to extend Markforged capabilities into complementary technologies for high throughput production of metal additive parts.

Digital Metal binder jetting technology complement our existing Metal X solution while also expanding our addressable market, within manufacturing industries that includes automotive, medical and luxury goods. We believe this strategic acquisition advances our long-term vision of distributed manufacturing. And we look forward to seeing our teams collaborate together to deliver on our now shared vision.

In addition to the pending Digital Metal acquisition, we continue to make great strides with our internal innovation efforts. Our strong balance sheet has enabled us to build the powerful product development engine driven by a team of engineers and product innovators that are developing multiple programs in parallel. This effort ensure that we continue to deliver the most innovative additive solutions to the market with a planned major product or feature release every year.

Combined with our strategic acquisition, I believe we have a very exciting product portfolio roadmap that will continue to expand our addressable market and amplify the value proposition of our Digital Forge.

We continue to see strong interest in our current product and excitement about the future. However, the volatility of the current global economy is having a short-term impact on customer purchasing decision and timing of pipeline conversion. While our pipeline of opportunities is stronger than ever, this has the net effect of lengthening sales cycles. We view this as a natural behavior. The current economic uncertainty has led us to scrutinize our own internal cost controls even more diligently and reprioritize our own investments. Mark will walk through the specific shortly, but we realize that adjusting our near-term expectations accordingly is a prudent and wish decision.

We remain committed to our strategy. It is working. I firmly believe that the current environment is actually an opportunity for us. We're driving efficiency for other organization and continuing on plan to strengthen our product portfolio.

With a strong balance sheet and exciting product strategy, we continue to keep our sightline focused on achieving breakeven in 2024. We are here for the long-term journey and are eager and prepared to take advantages of near-term opportunities to solidify our advantage.

I believe in a future where supply chains are resilient and sustainable, and I think the best way to realize this future is by pushing digital manufacturing capability directly to the point of need. Changing the order of manufacturing won't happen overnight. It is a long-term mission. That is why even during this period of macroeconomic uncertainty, we're investing in our product portfolio and continuing to build robust pipeline of demand.

With that, I now turn the call over to Mark Schwartz, Our CFO who'll offer more details on our financial performance and guidance for the remainder of the year.

Thanks, Shai. I will now review our financial results for the second quarter and 6 months ended June 30, 2022, as well as update our full year outlook for 2022. Please note that my comments reflect our non-GAAP results and outlook. For your reference, our earnings press release issued earlier this afternoon and posted to our investor relations website, includes our GAAP to non-GAAP reconciliation to assist with my commentary.

Revenue increased 19% for the second quarter of 2022 to $24.2 million compared with revenue of $20.4 million for the second quarter of 2021. Gross profit in Q2 was $13 million compared to $12 million for the second quarter of 2021. As a result, we generated a gross profit margin of 54% compared to 59% in the first quarter of 2021. For the 6 months ended June 30, 2022 revenue increased 14% to $46.1 million compared with revenue of $40.5 million for the 6 months ended June 30, 2021.

Gross profit for the 6 months ended June 30, 2022 was $24.7 million compared to $24.2 million for the same period in 2021. As a result, we generated a gross profit margin of 54% compared to a 60% gross margin generated in the first half of 2021. Our gross margin in the first half and the second quarter of 2022 has been impacted by broad ranging increases in direct material costs, indirect costs, including freight and logistics, as well as the launch of the FX20 in Q1 2022, which continues to experience higher component material and labor costs as we ramp this exciting new product to commercial production.

Rising labor and component material costs continue to exert pressure on the cost of goods sold. But as I’ve mentioned previously, against this inflationary backdrop, the Digital Forge platform continues to create a powerful advantage for our customers, a value they continue to demand and one that supports our gross margin differentiation.

Moving on. Operating expenses for the quarter were $30 million compared to $20 million for the second quarter in 2021. We incurred $56.4 million of operating expenses during the first half of 2022 compared to $36.3 million in the first half of 2021. The year-over-year increase in both the first half and second quarter of 2022 was a planned increase, driven largely by accelerated innovation efforts, investments in our go-to-market activities and public company infrastructure costs, as we continue to execute on our long-term growth strategy.

In line with these plans, we continue to grow our research and development teams in the second quarter, increasing R&D spend by 46% to $8.8 million compared with $6.1 million for the second quarter in 2021. Similarly, for the first half of 2022, we increased R&D spend by 64% to $18 million compared with $11 million for the first half of 2021. We will continue to grow our innovation teams and are excited with the strength of the current team that is now working on our future products for 2023 and 2024.

For the second quarter of 2022, our net loss was $16.8 million or a loss of $0.09 per share. For the 6 months ended June 30, 2022, our net loss was $31.7 million or a net loss of $0.17 per share. Finally, we exited the first half of the year with a cash balance of $243 million, on plan and well positioned to execute on our long-term goals.

Now onto guidance. We are updating our 2022 financial guidance to reflect our updated forecast, which considers the current macroeconomic volatility. We anticipate revenue for the year to be within the range of $100 million to $115 million. This represents year-over-year growth of approximately 18% compared to 2021 at the midpoint of that range. We expect gross margin for the year to fall within the range of 52% to 54%. Given our reduced revenue forecast, we have also revised operating profit and EPS, anticipating an operating loss in the range of $54 million to $59 million for the year and EPS results for the full year to be a loss in the range of $0.29 to $0.32 per share.

Finally, we’d like to reiterate our continuing expectation that our strong balance sheet coupled with discipline cost controls and the strength of our product portfolio will carry us through to sustained profitability without the need to raise further capital.

That concludes our prepared remarks today. Operator, please open up the call for questions.

(Operator Instructions) Your first question is from Brian Drab with William Blair.

The first area I wanted to discuss is gross margin. Mark, can you maybe just drill into gross margin and the headwind somewhat and call out the component parts? More specifically, what I'm trying to drive at, of course, is what are the temporary areas of headwind right now, and where would we be without these headwinds? So if you can break it out into -- I don't know, whichever way you might be able to, at expedite fees, inflation costs, materials, et cetera?

Yes. Thank you, Brian, for your question. I think we are seeing very, very similar challenges to what we highlighted last quarter and in previous quarters across the board with logistics costs being a specific call out, higher component costs and the ramping of the FX20.

In the case of the FX20, we think that costs are back in line for us Q1 next year, really by the end of this year, but you'll see the impact of that Q1 of next year as we are reaching what we would call commercial volumes. And in terms of higher component costs, I think we've seen that begin to wane in certain areas. But overall, I would still tell you that the pricing pressure is still very strong and the challenges are still very real. But there are pockets where we're starting to see some relief. I think that will continue at least through the end of this year for us and potentially into next year.

And then the higher logistics costs, I don't think are materially higher than they were in previous quarters, but we've seen at least in the first half of this year. But we've seen a sustained increase in the cost of freight and moving goods around the world and warehousing those goods around the world, that hasn't subsided. And to be honest, I'm not certain if that is going to subside or not. So it's difficult to tease out how much of this is here to stay versus how much of this is perhaps temporary.

The ramping of the FX20 is temporary. We'd have to do a little bit of work to quantify what that means. But I would suggest it's not more than a percentage point.

On the FX20, not more than 1 percentage point?

Right.

Okay. Yes, I'm just trying to bridge between the -- originally, I was modeling 58% or so for gross profit, I think 58% or 59% and I'm just trying to bridge that to the 53% that we're expecting for the year. And I mean it just feels like -- obviously, everyone is feeling the same headwinds. I'm just trying to figure out if things somehow -- I'm not trying to get you to predict when it gets back to normal. I'm just trying to think -- I'll make the call in my model where I think it might be getting back to normal, but who knows? But just trying to understand the components.

And then just the last question I'll ask for now is, how has the pipeline held up lately in terms of interest or orders for the FX20? A lot of companies are seeing pushouts of orders and just wondering if you're seeing some of that there?

Yes. Thank you, Brian. I would say that the pipeline in general continues to increase. We are still in record levels for us, especially for the FX20 as we shared, it's exceeding our expectations, and we are definitely see ramping up in the next few quarters. We do see a little bit of longer sales cycles due to the macroeconomics. I think our customers want to see a little bit more what's going on with inflation and your current situation in other places before they make the final call. But from a pipeline perspective, the demand is in record level for us.

The next question is from Jacob Stephan with Lake Street Capital Markets.

Maybe just to piggyback off of Brian's question on the FX20. You said you had global demand, was strong for the printer. What were the highlights, the strongest areas? And what were some of the weaker areas or channels, geographic channels?

Of course, I would say the strong demand of the FX20 is globally, really globally to a level that we have been ordered from New Zealand, for example. So it's really across the board. I would say the strongest industry is around aerospace and manufacturing and especially machine shops and others that are looking to replace real mission-critical metal parts with the solution. So the demand for the FX20 is really solid. I do not see anywhere that I can say that it's weak.

And I would add to that, that we are now, for the first time, starting to see orders in multiple units coming in, which is really exciting for us.

Great. Maybe just on consumables. It looks like consumables were up nicely. What have been some of the stronger materials in that segment?

I don't think there is one that we would call out. Our largest selling material is our OnyX material, and we're certainly seeing robust demand for that. But I would tell you that there is demand across the board. Last quarter, we released a new series of materials and there's new revenues from those materials that are ramping nicely as well. That's our precise PLA materials. So it's really across the board. I think what we would -- how we view this is a very healthy usage across the board of our printers, not in any specific material.

Got it. Maybe just one last one. Guidance implies, if I'm counting the numbers right, OpEx will be relatively flat quarter-over-quarter. Maybe just can you walk me through how you're thinking about sales and marketing expense and research in general?

Yes. I think what we've said, and hopefully, you all are seeing is that we have control of our costs. We have what we believe to be fairly strong cost disciplines across our business. Look, it enables us to be fiscally responsible while maintaining and growing areas of our business that we're attempting to grow to reach our goals. We definitely remain focused on our innovation efforts. We are absolutely slowing our spend in G&A. And I would tell you that our sales and marketing efforts, our go-to-market efforts are probably somewhere in the middle. There's opportunities for us to optimize our sales and marketing spend, but we're certainly not taking our foot off the gas.

Maybe I'll add. We are, as we shared, looking to get to breakeven in 2024. And as such, we committed to show operational leverage. So we did a significant investment in infrastructure across R&D, SG&A in 2021. And I think you're going to see this year and in the year to come, the operational leverage building up and I think that's part of it.

The next question is from Jim Suva with Citigroup.

As we looked at your adjusted outlook for the full year now, what were the key performance indicator or key variables that kind of caused you to adjust things down on kind of both of the items? And then I have a follow-up question kind of around the timing of them about, were they like very recent in the past couple of weeks or, kind of, mid-quarter? Because I guess the concern would be, do these metrics have a risk of potential even softening some more? So if you could let us know what were the KPIs for, kind of, the revenues and the margins that really caused you to take it lower, so we can just, kind of, be aware of those?

Yes. Thank you, Jim. Thanks for your question. This is a really challenging time from a forecasting perspective, but it's a more challenging time from our perspective in trying to share what we believe this year looks like. We have really, really strong conviction around our pipeline. What we don't have conviction around are folks sitting in my chair that I can tell you, for example, we mentioned it in our prepared remarks, but we are taking a very close look at our own expenses internally. And I think it's fiscally responsible to do so when there's so much macroeconomic uncertainty. We don't know what others sitting in my chair are doing. And I think that, from our perspective, causes us to reflect in the near term and to bring down our guidance.

And then the timing of that, did it happen in the past week or 2 or a month or 2? Just because I'm trying to allocate about the risk of -- could things actually worsen up here in the next 30 days? Or are those like very fresh updates that you put together?

How we think about this and how we guide and the level of information that we attempt to share is our best and most recent thinking. And that's always the case, Jim. That's always what we strive to do. So this is our best and most recent thinking even up to late last week and early this week.

The next question is from Rod Hall with Goldman Sachs.

This is Anmol on for Rod. I also wanted to dig a little into the full year guidance. And I just wanted to check where is the more shortfall for H2? I mean is it -- I understand that the order growth is strong for FX20, but how is it tracking versus your original plan? Is it slower than expected? And I also wanted to check about the visibility in terms of order pipeline in the second half. What are the confidence levels there, like if they're binding orders or any comments that you can provide us with?

Yes. So a couple of things. Thank you for your question. I think, first and foremost, we build to a forecast. So that when we get an order from a customer, we are able to fulfill it. We don't leave the quarter with any significant backlog. As we get binding orders, we are then fulfilling them. We had what we believe to be a very strong quarter. We were very excited about our results for last quarter and even more excited about the optimism from our existing and expected customer base.

Folks are really excited about our product portfolio and what we have to offer today, including on the material side. So we feel great about the direction we're headed. We just feel it is prudent for us to really consider what's happening around the planet, what others in this seat are doing and not getting out over our skis a bit.

So from our perspective, the demand continues to be very encouraging. Our pipeline is stronger than ever. The only variable that we're -- maybe not the only, but the most significant variable that we are considering as we have brought down our guidance for the year is the conversion of that pipeline, and how quickly folks in my seat determine that they want to push out that spend for a quarter or not. We're not seeing an awful lot of that, as you can see from our results, but we're attempting to be prudent.

All right. I appreciate it, Mark. Just a follow-up on that. So at this moment, according to -- are you expecting being a little prudent in FX20 and other product lines, too? Or is it more skewed towards one way or the other? I mean, do you expect the other products to be more slower than the FX20? Or is it like being prudent all the way around?

No. We think that the current economic uncertainty impacts across our product line. I don't think there's any one in particular. So no, I hope that answers your question, but we're not seeing in any particular product line.

The next question is from Greg Palm with Craig-Hallum.

I wanted to follow-up on gross margin guidance for the second half. So by my math, you're running at about 54% year-to-date. You're guiding 53% at the midpoint. So it implies that things are actually going to worsen, and I understand the comments on component costs and everything, but you'll get a little bit of lift presumably from volume. And it sounds like input costs are more or less stabilizing. So what am I missing specifically?

Yes, thanks for your question. You're not missing anything. Again, this is us, sort of, trying to share what we're seeing today. If you look at our gross margin for the first half of the year out a percentage point, it's 53.7%. And we were actually up very modestly, about 20 basis points from the first quarter to the second quarter. We see gross margins to be sequentially flat. We're continuing to navigate all of these supply chain challenges. But we see it coming in fairly similar to where we've seen it in the first couple of quarters.

Okay. So maybe just a little bit of conservatism there. And I guess, as it relates to this slowdown or maybe the expected slowdown that you're talking about, are you seeing any changes yet in consumable usage patterns? Or are you mostly expecting this to impact the hardware revenue?

I would say to the extent that there is a slowdown and an impact as you've suggested, then it wouldn't be on the consumables side. Our consumable business is very consistent relatively easy to model and something that, again, another area where we're really excited because once our printers are out in the field, our customers are taking advantage of it and they're using them.

Yes. I would add maybe, Greg, I'm here almost 3 years now, the only month ever that we saw a drop in the material usage is March of 2020 with COVID when everyone went home. Other than that, it's always growing.

Yes. Okay. Good. And then last one, inventory took another big jump up sequentially. It looks like that's mostly finished goods. Anything to get concerned about that? I mean, do you have visibility in working off some of that level over the next couple of quarters?

We do exactly, Greg. Yes, thanks for paying attention to that. So I think from our perspective -- we use contract manufacturers. Again, as I said, we build to forecast. And much of that is finished goods as you suggested. We expect over the next 3, maybe 4 quarters maximum that inventory will come back in line to what we've experienced historically.

The next question is from Noelle Dilts with Stifel.

I was hoping just to shift gears a little bit, that you could comment a bit on the Digital Metal acquisition, sort of, I guess, maybe commenting on why this is the right fit and how to think about -- how we should think about it from a quantitative perspective in terms of ramping over the next few years?

Sure. Thank you, Noelle. So as we communicated all the time, we're looking for complementary strategic acquisitions, especially technologies that will help us expand our offering for our customers. And again, we are still focused on manufacturing, focused on mission-critical applications. When we're looking around, we identified binder jetting is a key technology that we believe would scale fast for high-volume production of metal parts. And specifically with Digital Metal, they have very high level of reliability and accuracy and precision for the parts that are going out of the system.

It's still in early stages, I would say, of go-to-market. And I think this is where it's very synergetic with Markforged. We have, I would say, a significantly wider global coverage and go-to-market. And this is why we chose to do it. We believe it's very, very complementary to our solution. It's still focused on high-end mission-critical application, but it's really helping us now to move to high-volume production and into a few other industries like medical, luxury goods that we didn't play before, in addition to automotive. So I think it's a really good acquisition for us.

To answer maybe the second part of your question, Noelle, tagging on to what Shai said. This is a mature technology, a great team, almost 2 decades of experience, focused in metals and binder jetting. We can't disclose specific details on revenue, specifically because the transaction hasn't closed yet, but we're not expecting the revenues to be material in 2022.

Okay. I guess, the associated question there would be, given that revenues aren't material, how should we think about the at least near-term headwind from a cost perspective?

So we're not expecting it to actually impact our OpEx for the -- call it, for Q4 in any material way either.

Yes. Okay. And then just, I guess, shifting back to the outlook a little bit. Could you comment on your backlog? You've talked about the strong backlog for the FX20. How do you sort of gauge the risk of cancellations or get comfortable with the backlog, if you could comment again on some of the indicators of the metrics around that? That would be great.

Sure. So as Mark shared before, we usually produce and have inventory so we can ship to our customers. The one caveat is the FX20. So from that perspective, we continue to see the increase in the pipeline, and we believe that we will ship orders as planned. On the FX20, we do have backlog. There are great orders waiting for shipments and this continue to build up. We did not see any cancellations yet or even signs of it, and vice versa. We see more and more orders coming in. And as Mark shared, there's actually now orders of multiple systems in the same order. So it still looks very, very strong from our perspective.

The next question is from Jared Maymon with Berenberg Capital Markets.

First one, just going back to gross margin, sorry to harp on it, but I think it's important. So Mark, you talked costs and correct me if I'm wrong here or if I have bad info. But it sounds like there were also some price increases on consumables during the quarter towards the end of the quarter. So I'm just wondering if we adjust out, sort of, the FX20 ramp and we're looking at some of these, kind of, underlying sticky inflationary items like freight and labor, I guess, the longer term, do you think there's more you can do to offset those sticky inflated costs with price on systems and consumables? Or is this, kind of, a permanent headwind because maybe you're near a point where increasing price could materially impact demand?

Yes. I'll let Shai take some of this as well. I think from the financial perspective, this is something we talk about all the time and internally, as you can imagine. And we're managing through the supply chain challenges, providing as little impact as possible to our customer base and particularly on materials because our customers, when you're buying an additive manufacturing printer or any piece of CapEx for that matter, you're looking at, what is it going to cost me per part to build, the items that I need, per application, per part? And your input materials become a significant driver of that. So to the extent that we can limit surprises to our customer base, it's something we're really focused on.

Yes. I think maybe to add on top of it. But once someone is making a decision to buy our equipment, after that, any day that it's not used, he is losing money. And the reason to buy our solution is because it really helps to build reliable supply chain and resiliency and the parts you need. So from that perspective, I believe we would continue to see very strong material growth, especially now when we go into higher volume production with FX20, by the way.

Got it. Yes. That makes sense. And I think there's been a lot of other examples of companies that at points in their growth story have gone from having the best margin to folks then having the worst margin. So I can appreciate that.

Maybe just one other question. The Digital Metal acquisition, I think I'll ask you a question, but just following up on that, is -- I know you guys have talked about you want to, kind of, invest more in R&D, if you can try to release a new product or a new printer every year. So I'm curious, do you think this is, kind of, the printer or product for 2023 or 2024? Or are you also developing something organically for those years.

That's a very good question to clarify. So as we shared in our remarks, it's both, meaning we have inorganic activities, Digital Metals that will add more capabilities into our product portfolio, but we're also working very diligently in-house to continue to develop organically our next set of products. So we invested significantly in 2021, in infrastructure. The majority of that went into R&D. So we are working on multiple programs in the same time. So you should expect new product or new feature every year organically as well. So in addition to Digital Metal, we still continue to develop and innovate. And 2023 and 2024 are going to be very, very interesting years.

Okay. Got it. And then just one quick follow-up on the Digital Metal. Do you think there's going to be any cannibalization of your current metal offerings? Or do you believe the value prop is different enough where there's going to be pretty minimal customer overlap?

I think it's definitely complementary. It's not even close from, I would say, cost price and definitely not from output. One is more dedicated into higher volume and mass production basically. And our Metal X is more aimed into smaller volume and more tools and features also from the size of the parts. So I think they're definitely complementary. I don't see any cannibalization between them.

One quick follow-up. We noticed that your guidance for share count is up about 5 -- I think 5 million from last quarter. Are you guiding to reflect the shares issued as a result of the acquisition of Digital Metal? Or is there something else going on?

Greg?

One quick follow-up. We noticed that your guidance for share count is up about 5 million, I think 4 million from last quarter. Are you guiding to reflect the shares issued as a result of the acquisition of Digital Metal? of is there something else going on?

No, there's -- there'll be fairly significant in terms of the delta there, tranche of restricted stock and options that vest in Q3 and Q4. We are looking at a year-end number that we're guiding to, that's based off of 192 million shares. That is exclusive of Digital Metal. We won't count that until after they close. From a weighted average perspective, we'll see about 1/3 of those Digital Metal shares appear at the end of the year.

Okay. That's what I assumed. So what would be the, I don't know, the weighted average exceeding the year if you want to call it that.

It will be that 192 million and then, call it, 1.3 million or 1.4 million shares from Digital Metal.

This concludes the question-and-answer session. I would now like to turn the conference back over to Shai Terem for any closing remarks.

Thank you very much, everyone, for joining us for this call. I'm looking forward to see you soon or in the next quarter. Thank you.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.