Greetings, and welcome to the Markforged's Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Austin Bohlig, Director of Investor Relations. Thank you, Austin. You may begin..

Good afternoon. I'm Austin Bohlig, Director of Investor Relations of Markforged Holding Corporation. Welcome to our fourth quarter and 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 fact should be deemed to be forward-looking statements. These statements represent management's views as of today, March 6, 2023 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'll 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 Q4 2022 earnings call. We ended the year strong with a record quarterly revenues as demand for the Digital Forge continue to grow worldwide despite the challenging operating environment.

Throughout 2022, we saw more and more manufacturers solve mission critical metal applications on their factory floor using combinations of our metal and advanced composite solutions. And with our effective cost controls, we met our earnings per share target keeping us on our path to profitability.

The long term fundamentals of our business continue to be a powerful differentiator as we gain further momentum in our target markets. Additionally, supply chain disruption has been a catalyst for growth as manufacturers shortened their supply chains through industrial point of need production.

I couldn't be more excited about our vision to make manufacturing more resilient and flexible by using the Digital Forge to address the $43 billion market opportunity available to us today. A great example of a customer harnessing the innovation of the Digital Forge is Texas based Dixie Iron Works.

The user solution to achieve an edge in the globally competitive oil and gas industry. When Dixie needed to make an engineering change, their critical o-ring, their supplier quarter the price that would have made their products too expensive.

Instead, they designed a better and less expensive version of the part using our X7 printer and since then expanded to a fleet of 6 Markforged X7 printers producing parts on-site in Texas around the clock. Based on their early success with Markforged, Dixie expanded even further with our Metal X solution.

And are now producing critical steel parts with our solution instead of using traditional CNCs. This is a great example of how onshoring industrial production at the point of need can be a competitive advantage for manufacturers.

With that said, we still feel a wait-and-see mentality with our manufacturing customers who are concerned by the macroeconomic uncertainty. As such, we have yet to realize what we see as the full growth potential of our product lineup.

While we are confident that once the world gets out of the cycle, this bottleneck will open up and our growth will accelerate, we have already taken the required actions to adjust our cost base and ensure we're still in our path to profitability.

Since the second quarter of 2022, we have taken nearly $20 million out of our cost structure after giving effect to the two acquisitions completed in 2022. Notably, we reduced our costs while investing over $70 million in our innovation pipeline through M&A and R&D.

And in 2023, we expect increased operational leverage resulting in a $30 million decline in our cash burn.

While in the Americas, we are experiencing delayed purchased decisions as a result of near term macro uncertainty we executed on our growth strategy in both the EMEA and APAC regions in the fourth quarter of 2022, with revenues growing 36% in EMEA and 20% in APAC year-over-year.

We anticipate that both of these regions will again achieve outside growth in 2023. In the Americas, we are taking actions to optimize our go-to-market model to accelerate the return to growth and anticipate the benefits of onshoring in the years to come. In 2022, we made a meaningful progress towards achieving profitable growth.

We materially expanded our addressable market organically through the introduction of the FX20 and inorganically for acquisitions of Teton Simulation and Digital Metal.

We are confident that in the next couple of years, we will see accelerated growth from our enhanced product offering and continue to build operational leverage via strong cost control until we get to profitability.

In 2022, we began commercializing the FX20, our largest production ready composite solution for manufacturers requiring parts of industrial strength and high temperature resistance. As we mentioned previously, demand for the FX20 has exceeded our expectations.

In fact, in its first year of general availability, we received multisystem orders for the FX20 from multiple customers. We continue to ramp FX20 capacity to meet the expected levels of demand in 2023. But while demand was robust, we were short of our FX20 cost target. This shortfall resulted in a decrease of our gross margins in Q4.

We expect cost improvements in Q1 and throughout 2023 and intend to reach our production cost target in the next year. We successfully executed on our M&A strategy in 2022 acquiring two companies with products that we expect to expand our addressable market opportunity in 2023 and beyond.

The first, Tetan Simulation enabled manufacturers to have a greater confidence that their part will meet certain specification in mission critical applications, removing a key barrier to additive manufacturing adoption.

We integrated the technology into the Digital Forge for a feature known as Simulation and rolled out a free beta to all of our customers in Q4. The response from our customers has been positive with thousands of trial registrants to date and part simulated in our software prior to production.

We expect to offer simulation as a component of a tiered SaaS subscription offering that we plan to launch in Q2 this year. Our second acquisition, Digital Metal closing Q3 2022 and expands our addressable market into high throughput production of precise and use metal parts, a key long term growth strategy.

In Q1 2023, we plan to launch the TX100, which doubles the speed compared to the previous model up to 1,000 CC per hour and build size up to 10 liters to ensure high volume production of end use metal parts for lower cost per part.

Initial customer reaction has been positive and we expect this line to contribute to our revenue growth in 2023 and beyond. A great example of our digital metal solution is open new markets for Markforged comes from our customer Distalmotion, a Swiss based medical device company that manufactures cutting edge robotic surgical systems.

Serial production parts from our metal binder jetting solution are used in real life medical procedures. This is a great example of how our solution gives manufacturers the flexibility in their supply chains that is needed to make life changing break for us. Manufacturing has changed.

We are at the inflection point as manufacturers use our Digital Forge to deliver more resilient and flexible solutions for the manufacturing shore. Supported by our robust balance sheet and strong innovation pipeline, we continue to execute on our strategy towards profitable growth and feel confident in our business fundamentals.

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

Thanks, Shai. Let's turn to our financial results for the fourth quarter and the full year of 2022, as well as our guidance for fiscal year 2023. 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. For the fourth quarter 2022, revenue increased 11% to $29.7 million compared with revenue of $26.6 million for the fourth quarter 2021.

Gross profit for the fourth quarter 2022 was $14.1 million compared to $15.3 million in the fourth quarter of 2021. As a result, we achieved a 47.5% gross profit margin for the fourth quarter 2022 compared to 57.6% for the fourth quarter of 2021.

Operating expenses in the fourth quarter 2022 were $29.4 million compared to $26.3 million for the fourth quarter 2021. Research and development expenses in the fourth quarter 2022 increased to $10.7 million compared with $8.8 million in the fourth quarter 2021.

Net loss for the fourth quarter 2022 was $13.3 million or $0.07 per share based on our weighted average shares outstanding for the quarter of 194.3 million shares. For the fiscal year 2022, our revenue increased 11% to $101 million compared with revenue of $91.2 million for the full year 2021.

We experienced growth across hardware, consumables and services with the EMEA and APAC regions growing 18% and 41% respectively for the year as compared to fiscal year 2021.

For fiscal year 2022, gross profit was $51.3 million compared to $53.4 million for fiscal year 2021 reflecting a 50.8% gross profit margin in 2022 compared to 58.5% in the prior year.

We believe, we will sustain our strong gross margins as a result of our cost control and our focus on serving the demanding markets for machinery and automation, maintenance, repair and operations and mission critical part production. For fiscal year 2022, our operating expenses were $114.3 million.

Our research and development expenses were $37.8 million in 2022, compared with $27.5 million in 2021 as we ramped up our R&D teams consistent with our commitment to accelerate new product time to market.

We remain committed to our strategy of increasing our addressable market through product innovation with every software development, system release or additional material, thus increasing the value of our Digital Forge platform to our customers.

For the fiscal year 2022, our net loss was $60.1 million or $0.32 per share based on our weighted average shares outstanding of 189.7 million shares. Now onto our guidance, we anticipate fiscal year 2023 revenues to be within the range of $101 million to $110 million.

As we cannot predict the macro environment, this guidance assumes a continuation of the existing global economic uncertainties and challenges. As I mentioned before, we expect our strong gross margins to be sustainable with fiscal year 2023 non-GAAP gross margin expected to be in the range of 47% to 49%.

The expense disciplines we exert over our operating expenses will continue to show leverage in 2023. We expect operating expenses to decline as a percentage of our revenue including the impact of the two acquisitions we completed in 2022, resulting in a non-GAAP operating loss in the range of $55 million to $58 million for the full year.

Finally, we expect non-GAAP EPS results for the full year to be a loss in the range of $0.27 to $0.29 per share. As Shai mentioned earlier in his remarks, Since the second quarter of 2022, we have removed approximately $20 million of our cost structure after giving effect to the two acquisitions completed in 2022.

However, our cost controls are not simply the result of realizing cost synergies through M&A. We rationalize our operating expenses through a rigorous prioritization of innovation and customer facing activities, first regularly realigning our teams to these priorities from moats operational leverage and a focus on our most important initiatives.

Further in 2023, we expect to reduce our annual cash burn, excluding any potential M&A activities by $32 million or 39% to approximately $50 million. This will be realized through added gross profit from higher revenues, inventory reductions, working capital improvements and increased yields on our cash and equivalents and short-term instruments.

We expect to end 2023, with a balance of approximately $120 million in cash and equivalents and short-term investments. We invested heavily in 2021 and 2022, to create an infrastructure that supports our long-term innovation and go-to-market objectives for profitable growth.

We continue to believe our plans are achievable particularly given the strength of our innovation roadmap, our product portfolio and disciplined cost controls. We are excited for the future. That concludes our prepared remarks today. Operator, please open up the call for questions..

[Operator Instructions] Thank you. Our first question is from Greg Palm with Craig Hallum Capital Group. Please proceed with your question..

Yes. Good afternoon, everybody. Thanks for taking the questions here. I guess just starting off with the actual quarter, the geographic disparity was quite large.

I'm just curious if you can go a little bit more detail on what you saw across the various geographies, specifically in EMEA, which was the real standout?.

Sure. So as we shared, Greg, in the U.S. we still see the sensitivity to the SMO inflation recession. But other than that in EMEA, I think once -- I think manufacturing there clear view that we would actually manufacture during the winter and energy prices went down. Our customers came back into work.

We also had some good changes there on the leadership, which also helped. And I think we saw a very good growth there across the entire product portfolio. APAC, I think it's usually a year after what we've seen in the rest of the world. And I think for them, it's still a business as usual.

Maybe slight, I would say, decreasing the growth there in Australia. But all in all, I think very good growth worldwide..

I'll add to that a little bit, Greg, and thanks for the question. EMEA and APAC were unplanned internally for us anyway in Q4. And we anticipate both of these regions will again achieve good growth in 2023. Specifically in APAC, we're seeing success in factory automation and in automotive. I think in EMEA, it's more or less across the board.

We see it in defense and automation in automotive, et cetera..

That's helpful.

And I'm curious specific to the FX20, this somewhat ties back into the geographic question, but can you just comment on where you're seeing the most interest whether that be geographically whether that's by end market or vertical? And I guess in terms of new versus existing customers, do you have any sense of maybe the breakdown of shipments last year?.

Yes, we still see very strong demand for the FX20. I would say even better than expected. And I think because it's a very unique product that has some capabilities which are differentiated, we still see strong demand even in the U.S. route, with sometimes multisystem orders.

Yes, we feel a big believer that this is just the beginning with FX win and especially as we continue to add more materials into it..

And just to be clear in terms of the multi system orders that you alluded to, were those initial multi-unit orders or were those follow-ons?.

Follow-ons. So that's why we are a little bit positively surprised because it's mainly going into aerospace applications, we expected the certification process to be longer, but we see some cases that it was proven fairly fast. And moved into higher level production even within the first year.

So this is why we're a little bit positive with the price here..

Okay. Makes sense. I will leave it there. Best of luck. Thanks..

Thanks, Greg..

Thank you, Greg..

Thank you. Our next question is from Shannon Cross with Credit Suisse. Please proceed with your question..

Hi. This is Ashley Lessen on for Shannon today. Mark, could you discuss how much conservatism is baked into your revenue guide? Are you sort of assuming what you saw in fourth quarter will maybe play out and improve? Are you expecting a lengthening of sales cycles before things get better? And then I have a follow-up..

Yes. I think our guidance, Ashley - thanks for the question. It reflects the uncertainty we're seeing in the market today. So I think if the economy improves, we could certainly see an improvement in our outlook. But you've heard us talk about this in the past. We want to share with you all what we're seeing.

And so this reflects what we're seeing today in the market..

Okay, understood. And then for gross margin guidance is somewhat surprised that you're guiding down for the full year, I mean, just slightly. But could you walk through the puts and takes for gross margin in '23, yes. Supply chain is getting better and input costs should be coming down.

So what's the offset? And then should we consider 50% for the new normal going forward? Or do you think you can get back to the high 50% which by the way 48% is still good, but just surprise, it was just a bit lower than what we were expecting? Thanks..

Yes. Thanks, Ashley. I think, again, this reflects the reality that we're seeing today amidst the macro uncertainty. I'll answer your second question maybe first. So our long term target and expectation continues to be gross margins returning into the 55% range as we've said previously. So that hasn't changed for us.

It's the timing of it that has changed. And in terms of the inputs and outputs on gross margin for the year, again, we've talked about it before FX20, I think Shai mentioned in his prepared remarks, FX20 was a significant contributor to that.

It resulted in about a 4 percentage point impact on our gross margin against where we expect the target cost of the FX20 to be for us. That will take another year or so to flatten out. I think supply chain pressures are beginning -- maybe more than beginning to be relieved.

We're certainly seeing warehousing and freight costs coming down, freight in particular coming back down in line.

But we still continue to see a variety of challenges throughout the supply chain, while it does -- while it has been loosening up, you only need one part of a machine to continue to have a lengthy delay in order to push the delivery of that machine out. So it is still a challenge.

We expect these challenges to continue to persist in 2023 absolutely getting better to be sure on the supply chain..

Okay. Thank you..

Thank you. Our next question is from Brian Drab with William Blair. Please proceed with your question..

Hi. Thanks for taking my questions.

So just to first be clear on the profitability target that you said we're still aiming for profitability, I think in the next couple of years, but what more specifically are we talking about there? Is it end of 2024 and can you just remind me is that profitable on an EBITDA basis or EPS?.

Yes. So we've said before we're not moving off of that statement, Brian. So we're committed to reaching breakeven by the end of 2024. I think the fourth quarter for us, we believe, is an opportunity for us to be profitable for the quarter. Certainly not for the full year of '24, but we would expect that in future years.

So that continues to be the direction we're headed. Again, we talk about it all the time. We've had good cost controls in place. For some number of quarters now, really since we came public. And we feel like we can manage through any significant changes in the macro environment to continue to meet that target..

Okay. And then just can we talk a little bit more about gross margin and just with the goal here of trying to understand where the sources of improvement could come from the company was running at like 58% gross margin and then going into '22 and then '22 originally you're expecting 56% in the supply chain, it's the cost of the FX20.

If you could kind of just bridge from that original 56% expectation for this year to the 48 level or 47 or 48 level we're at now.

How much is supply chain, how much FX20, et cetera?.

Brian, this is Shai, thanks for the question. Look, I think as you can see on our product portfolio, we are moving upstream into more and more, I would say, heavy solution that can help our customers to do real industrial production in the point of need. And these solutions are heavier and they are more expensive.

And the new product introduction from that perspective is a little bit more, heavier on our balance sheet. And from - it takes time until we get to the normalized cost of them. And so, the FX money is a little bit longer than we expected, but we already see the light. I think we took the right action there.

And do you see that we are launching a new product now with the PX100, which is a very, very fast binder jetting solution for metal parts, can do up to 1,050 per hour, it's also just over $0.5 million solution that we believe will have some impact during 2023.

But for both of them, we are already working behind the scenes to ensure that we go back as Mark suggested to the 65% plus gross margin in 2024..

Hi, Brian, I'll give you maybe more - two more concrete data points in support of Shai's comments. So maybe to answer your question specifically, of that 8% delta between 56% and 48%, I think you can divide that almost equally between FX20 and a combination of supply chain and inflationary - pressures that we're seeing.

And in terms of 2023, yes, we expect cost improvements on the FX20. We are continuing to expect the global supply chain pressures will. But that there will still be some pressure and it will continue to act as a headwind even if it's more modestly than previously.

As an example Q1, we didn't talk about this in our prepared remarks, but we're expecting our margins to be flat to maybe slightly down in Q1 of this year due to lower revenues that we typically see in Q1. As you know, seasonality in this business is significant.

Q1 is often 20% to 25% below the previous Q4, but having said that, we expect this sort of to be the trough, and that our cost improvements will translate into improved gross margins sequentially throughout 2023 and then beyond..

Okay, thanks both of you. That's very helpful..

Thanks, Brian..

Thank you, Brian..

Thank you. Our next question is from Troy Jensen with Lake Street Capital Markets. Please proceed with your question..

Hi gentlemen, congrats on the good fourth quarter here?.

Thanks, Troy..

Hi, Troy..

Hey Shai, I want to ask you a little bit about metals specifically.

I mean, I always thought of you as the carbon reinforced fiber, company and the Mark Two - or the X7, but how successful has Metal X has been? I'm kind of want to tie this all into Digital Metal here, so channel sales, how effective is your channel at selling metal products? Can you talk about maybe the metals that are currently qualified on the Digital Metal platform also?.

Sure, I would say our focus is on industrial production, Troy, as we discussed before. And usually in industrial production, we are trying to replace metal parts.

Some of these parts, we replace with advanced composites and some of them will have to be metal steel, especially if they need to go through very high temperatures or very high strength, that you cannot get with advanced composites. Of this still the majority of our solution today is in advanced composites.

So still most of our customers come with a metal problem and we are able to solve it with advanced composites. But as you can see from our portfolio, metal is still very, very important part of it.

And with the PX100, we intend to increase maturity our solution and application into the metal side of it, especially when we talk about high volume production in hundreds or thousands of parts. That you need to produce in a very reliable way, and still need to be very, very precise with minor kind of fancy or work after that for post processing.

So, metal is still very, very important. It's a very big element of our solution. And because, we are going right into the manufacturing floor, sometimes advanced composites is the best solution, sometimes it's metal..

Hi, Shai, can you remind me, I didn't see it on your new investor slides, but does that Digital Metal had its own furnace too or you just work with partners?.

We work with partners on that front. We currently produce and develop the printing technology and some of the work before and after the print, for the preparation of the powder, et cetera, and the center is the pocket..

Okay, perfect. Then switching gears to just a follow-up on FX20.

Is it currently just two materials that are qualified on the platform?.

No, we have more than that. We have some of the Onyx materials. We have the ULTEM. We have continuous Fiber. And we will continue to add more materials..

I guess, I guess, something in high-temp specifically outside of ULTEM?.

You will please allow me to share with you, the - but I can tell you that we did not stop releasing new materials into the FX20 and because it's a hard chamber and has a lot of potential. So some of them will be high time materials..

Okay. Understood. Good luck guys..

Thanks, Troy..

Thank you so much, Troy..

Thank you. Our next question is from Jim Suva with Citigroup. Please proceed with your question..

Thank you. On your prepared comments, you mentioned some gross margin challenges associated with the rollout I believe you said it was the FX20.

Can you help us understand why was that, was that like you had to expedite the end product for shipping or parts were in shortage and you had to go to the extra market, scalpel market or secondary market? Or was it like reworking or acceptances or installations or what were the challenges with the FX20?.

Yes. Thanks for the question. I think first, there's definitely the combination because in the beginning of 2022, supply chain was still a big challenge. And even just to get the parts, we had to go through bidding wars, and pay a lot more than usual for the parts.

But I think more than that, usually in the new product introduction, it takes time until you stabilize the product and that's why you produce in smaller batches. And using smaller batches, you don't get the scale, you don't get the scale and the cost efficiency, which we expect to see building up through 2023.

So I think that's the majority of it, I would say, going into 2023. But we already see the light from that perspective..

Yes. Just to add a little bit, maybe more color to that, Jim. And thanks for the question. I think number one, inflation hit us to a greater degree than we expected. We mentioned middle of last year and this is tempered somewhat, but we were paying $100 square part that should cost us $10.

Some of that is absolutely come back down, but we're nowhere near our target on material costs yet. And to that point a little bit further, when you're buying materials for production at a certain cost, you have to bleed through all of those materials before you reach a lower material cost on the next procurement cycle. And then the second is labor.

Isn't where we want it to be yet. The cost of labor has increased due to inflation over the last year 18 months as we were thinking through this late last year. And we're not as efficient yet in our labor as we need to be. And there's path forward in both of those cases, but it's going to take us some time to get there..

Thank you. And then the reason I asked that question about the FX20 rollout is as we look ahead to -- on the slide deck number 10 about the PX100, the rollout of that.

I'm just wondering your full year sales and margin guidance, does it include similar inefficiencies of the rollout and the ramp as expected? Or is it expected to have a smoother rollout just so we can kind of monitor it as it rolls out in 2023 for the PX100?.

So yes, we are anticipating similar, but I also would expect to answer your question both ways that it should be smoother for us because the unit volumes are expected to be lower in that product early on. So I think just how we procure materials for that will be a little bit different than we do for other product rollouts..

Great. And my last question is, I see you're giving quarterly guidance as well as full year guidance. Is that due to better visibility, more supply chain being able to calibrate it better or helping investor expectations be more aligned with kind of how you see it.

I'm just kind of curious about the slight change of giving additional details, which I'm sure the investing community will appreciate..

Yes. Thanks, Jim. So we continue to be focused on annual and really even the long term, you've heard us talk both Shai and I about this long term journey that we're undertaking and still in the early innings. So we focus on annual and I think to your point, we've given a little bit of color maybe on gross margin and some other areas on the quarter.

But our intent and our go forward plan is to really focus on the year. I think maybe I'll take that a step further. When we think about this current year of 2023 and then beyond, we mentioned getting back to a 55% plus gross margin. We also think that we will get back to 25% plus year-over-year growth.

Given the demand and the interest we see from not only our existing products, but from the new products that we've shared with customers, as well as this paradigm shift we're seeing in manufacturers increasingly seeking to be more resilient, increasingly seeking more reliable supply chains we -- as we've said, we're very excited about the outlook.

We just want to get past this current level of uncertainty in the marketplace..

Great. And my last part is, you mentioned profitability 2024. I think to be clear, you fully said breakeven end of 2024, not the full year.

And is that on an operating income adjusted or EBITDA or EPS? Or how do you actually define the breakeven '24 comment?.

We'll look at that as Q4 not for the full year. As you said, that's correct. And we're looking at it on a non-GAAP basis..

Great. Thank you so much for the details. That's appreciated..

Yes. Thanks, Jim..

Thank you..

Thank you. Our next question is from Noelle Dilts with Stifel. Please proceed with your question..

Hi guys. Good afternoon..

Hi, Noelle..

Hi, I recognize that kind of the trends in your expected EBITDA and cash flow will sort of move hand-in-hand.

But any additional thoughts or guidance you can give us on how you're thinking about sort of managing cash as you move through 2023? And sort of how you're thinking about where you'd like the balance to be as we look toward the end of the year? Thanks..

So Noelle, thank you for the question. I think as you can see, we are still very confident about the fundamentals. And we don't think they are changing maybe even for the better with all the insurance coming back and manufacturing needs to build more resilience into it. And I think we're part of the solution.

With that, there is still uncertainty around yes, I know this inflation recession. And we already took the right adjustment on cost basis to ensure that we will get to the breakeven point in the end of '24 as we discussed before. We shared before that we believe together with a very strong balance sheet.

And as you can see from some of the comments that Mark shared before, we're looking to reduce materially the cash burn during this year. So if we're finishing this year with about [168], we are currently expecting about $15 million burn rate this year versus about $120 million last year.

So it's significant reduction in the cash burn and we believe this will continue once we will be able to meet the full potential of the growth with our new product portfolio..

Okay, great. Thanks. And then just in terms of your R&D investments, anything you can sort of highlight in terms of priorities or things we're sort of excited about for '23, whether that's on the software front materials hardware any thoughts on sort of how you're prioritizing investments? Thanks..

Sure. This is a great question. Thank you so much. So as you can see over the last two years or so, we own more than doubled, I think, our R&D investment. And if you take M&A to it, we're even more than that. And the outcome of it is a very strong pipeline of innovation.

So you can see that we are starting the year already with launching the PX100 and launching simulation and putting it into a tier size model with software and service into our customers. But we believe it's only the beginning. And you can probably assume if we invest more in R&D, our product portfolio innovation pipeline is accelerating.

And we shared before publicly that we intend to release a new product almost every year. So it's coming. So we are very, very excited when we see what we have coming this year and in 2024. About our ability to really help our customers, to move real production to the point of need on every manufacturing for wherever they are..

Thanks very much..

Thank you, Noelle..

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Shai Terem for any closing comments..

Thank you very much everyone for joining us and looking forward to a great year..

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation..