It’s not exactly a great time for some of the major US-based digital manufacturing service providers. Their actual companies are doing quite well, even given the complex geopolitical and macroeconomic situation, but their appalling stock performance after their recent IPO is generating significant headwinds. That was certainly the case for Fast Radius, which just filed voluntary Chapter 11 bankruptcy petitions, and it’s now the case for Fathom, a California-based manufacturing services provider that went public at the following the merger with SPAC Altimar Acquisition Corp.
The company continued to grow in terms of revenue, but posted a net loss of $1 billion ($1,046.1 million) in the third quarter due to “a goodwill impairment charge non-cash of $1,066.6 million following an interim impairment review, which was triggered by a sustained decline in Fathom’s share price, lower market multiples for a relevant peer group , a higher discount rate due to rising interest rates and difficult macroeconomic conditions.
Impairment of goodwill is an accounting charge that companies record when the carrying value of goodwill in the financial statements exceeds its fair value. When testing an asset for impairment, the total profit, cash flows or other benefits that may be generated by the asset are periodically compared to its current carrying amount. If the book value of the asset exceeds the future cash flows or other benefits of the asset, the difference between the two is canceled out and the value of the asset decreases on the company’s balance sheet. The interim impairment analysis adjusted the value of Fathom’s assets for their impairment.
Stock market performance aside, which follows its own financial logic, the actual business performance is still strong with Fathom’s revenue growing 13.8% to $122.7 million in the first nine months of 2022 and a slight drop in revenue (from $41.5 million to $40.2 million). ) in the third trimester. The company’s adjusted net loss (excluding the non-cash goodwill impairment charge of $1,066.6 million) was $1.8 million.
“Our third quarter results were in line with management’s expectations as Fathom extended its proven track record of profitability in core business and cash generation despite the challenging macroeconomic environment,” said Ryan Martin. , CEO of Fathom. “We also continue to build positive momentum for our new business, with orders and revenue showing sequential monthly growth throughout the quarter, highlighted by record orders for our additive manufacturing services in September. Our goal remains to accelerate engagement with Fortune 500 customers and increase the scalability of our robust on-demand digital manufacturing platform to drive long-term profitable growth.
Gross profit for the third quarter of 2022 totaled $15.1 million, or 37.5% of revenue, compared to $14.9 million, or 35.9% of revenue, in the third quarter of 2021. gross profit for the nine months ended September 30, 2022 was $42.6. million, or 34.7% of revenue, which includes approximately $3.2 million of non-cash purchase accounting adjustments, compared to $41.8 million, or 38.7% of revenue, for the same period in 2021. Excluding $3.2 million of non-cash purchase accounting adjustments, gross profit for the nine months ended September 30, 2022 totaled $45.8 million, or 37.3% of income.
Excluding the impairment of goodwill as well as the revaluation of warrants and complementary shares of Fathom, stock-based compensation expense and other costs, Fathom reported an adjusted net loss in the third quarter of 2022 of (1.8) million dollars, compared to an adjusted net loss of ($)1.1) million for the same period in 2021.
Adjusted EBITDA for the third quarter of 2022 totaled $7.1 million compared to $8.6 million for the same period in 2021, mainly due to lower volumes as well as the company’s expenditure commitment open totaling approximately $2.1 million. Adjusted EBITDA margin in the quarter was 17.5%, compared to 20.8% in the third quarter of 2021.
For the nine months ended September 30, 2022, adjusted EBITDA totaled $21.9 million compared to $23.8 million for the same period in 2021, primarily due to recurring public company expenses totaling approximately $6.4 million. of dollars. Adjusted EBITDA margin for the nine months ended September 30, 2022 was 17.8%, compared to 22.1% for the same period in 2021.
For the full year 2022, Fathom expects revenue to be between $163 million and $165 million, representing year-over-year growth of approximately 7% to 8, 5%. Fathom also expects Adjusted EBITDA to be between $30 million and $32 million, representing a year-over-year decrease of approximately (12.5%) at (7%) and an implied adjusted EBITDA margin of 18.4% to 19.4%. This outlook, as of November 14, 2022, reflects management’s current projections and macroeconomic outlook, and excludes the impact of any potential acquisitions.
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