Markforged published their very first corporate financial results.
This is an entirely new thing for the company, which only weeks ago announced their intention to become a publicly-traded corporation. While they haven’t actually appeared on the stock market quite yet, it is responsible of them to publish their quarterly financial results in any case.
This means this is the very first time we can get a glimpse of their financial situation, and this happens only once in a company’s history.
What’s inside their documents? Let’s find out.
I perused their release, and noted the following:
Their revenue for the first quarter of 2021 was US$20.3M, suggesting their annual revenue is in the US$80M range. More importantly, their recorded gross profit for the quarter was an amazing US$12.4M. That’s a very hefty margin of 61%, quite profitable indeed.
The company also indicated these factors grew significantly from the corresponding quarter in 2020, with an almost 15% rise in revenue. That’s quite interesting, because the first quarter of 2020 was the last one in the pre-pandemic era. Evidently Markforged has been able to not only recover from whatever damage occurred during the pandemic, but also grow significantly.
However, it’s not all roses, as the company also reported a Loss From Operations in the first quarter of US$8.8M. How can they be profitable and have a loss at the same time? The profit is the “gross profit”. Gross profit represents the gain from product sales less the cost associated with making and selling that product. It does not account for other expenses, such as one-time corporate expenses, taxes, factory expansions and other factors. In reality, it’s the net profit that counts, the figure that accounts for ALL the expenses.
However, having a positive gross profit is totally necessary, and that’s good news. It’s likely that Markforged is still building their operations, hence the net loss.
You might be wondering about how this release may affect the company’s stock price. Unfortunately, it does and it doesn’t.
At this time, Markforged is not yet publicly traded; their stock symbol, MKFG, does not appear on the NYSE. Therefore this announcement cannot affect the stock price.
On the other hand, at some point the stock will be listed. Typically the stocks will be pre-sold via brokers just ahead of the public listing in large batches. Knowledge of the company’s financial state could affect the pricing of the pre-listing stock sales.
The financials could also affect general stock buyers ahead of the listing. Typically on the first day of trading popular stock prices rise dramatically before finding their “level”. That rise (or in some cases, a fall) depends a great deal on the state of mind of investors.
A positive set of financials ahead of time could potentially provide a boost to the stock price on the opening day of trading.
We cannot know what that price will be, but I will be watching closely when the stock is finally made public.