What Do We Know About the Desktop Metal Layoffs and Other Cost Optimization Measures?

Desktop Metal has announced that, among other cost optimization measures, it will be reducing its global workforce by approximately 12%. These layoffs from Desktop Metal are a result of a need to cut costs after a number of acquisitions the previous year. The company claims that thanks to their new strategic integration and cost optimization initiative, they will see a result of $40 million of annualized run rate non-GAAP cost savings and at least $100 million of aggregate cost savings over the next 24 months.

Since going public in 2020, Desktop Metal has seemingly grown rapidly. Indeed, just last year the company acquired a number of other companies, from start-ups up to large companies including leaders in their individual fields like EnvisionTEC (now ETEC) and ExOne. And at least in the case of the two latter, the deals were a significant investment. Desktop Metal acquired EnvionTEC for $300 million in January while they acquired ExOne for $575 million in August. Since, despite reporting a revenue growth of 286% from the first quarter of 2021, the company has seen a number of net losses. This includes a net loss of $240.3 million from the Full Year 2021 financial highlights as well as a reported net loss of $69.9 million in the first quarter of this year.

The S-Max Flex sand 3D printer was the first to be released by ExOne after its acquisition by Desktop Metal (photo credits: ExOne)

These losses, as well as the need to generate profit for shareholders, has prompted the company to undertake these cost optimization measures, including a reduction of their global workforce. Ric Fulop, the Founder and CEO of Desktop Metal commented, “In 2021, we demonstrated significant growth, expanding our portfolio of products into new markets and innovative materials. While the acquisitions we completed in 2021 contributed to this growth and to our total market opportunity as we focused initially on harvesting product and go-to-market synergies, they also increased our cost base and global facilities footprint. Today’s announcement of our strategic integration and cost optimization initiative is the result of a comprehensive portfolio and business operations review conducted across all functions at Desktop Metal.”