Sigma Additive Solutions publishes financial and operating results for Q3 2022

Sigma Additive Solutions, Inc.  (NASDAQ:SASI), a developer of quality assurance software to the commercial 3D printing industry, has reported its financial and operational results for the quarter ended September 30, 2022.

Key Third Quarter and Subsequent 2022 Highlights and Business Update

• Sigma expands its OEM footprint with in-process quality assurance software to be certified as PrintRite3D Ready to work with SLM Solutions’ industrial metal additive manufacturing machines utilizing SLM’s open architecture and SLM.Quality API
• Partnered with Novanta, a premier global supplier of laser photonics, to pioneer the first fully integrated scan head with quality assurance – agnostic of original equipment manufacturer (OEM) printer
• Launched software-only module, PrintRite3D® Machine Health in beta, focused on standardizing machine health data logs, which will be connected to our future broader software product base that includes Process Health and Part Health modules
• Announced agreement with Dyndrite allowing connection of Dyndrite-generated tool paths to in-process quality data for the first time
• Appointed Stephan Kuehr, founder of 3YOURMIND and additive industry veteran, as General Manager of European Operations to help bring our digital quality assurance future to the next level, deepening OEM and independent software vendor (ISV) relationships

“As noted last quarter, we are tracking the following key performance indicators (KPIs) to monitor the progress and execution of our new business plan: (1) revenue; (2) order backlog; (3) pipeline growth; (4) deal closure time reduction; and (5) partner expansion. These are the KPIs we see as critical to achieving our business plan over the next two years. To be clear, we are focused on moving away from only selling an individual printer solution, to supporting the additive industry, as a whole, at scale,” stated Jacob Brunsberg, President and Chief Executive Officer of Sigma.

KPIs to Monitor Progress:

• Revenue of $188 thousand in Q3, tracking with a shift to subscription pricing heading into the launch of our first software-only product in Q4, with others targeted first half of 2023
• Order backlog for the fourth quarter, defined as firm orders received but not yet shipped, totaled $334 thousand of both perpetual and subscription sales. This represents an increase in our order backlog of 39% from the second quarter
• Pipeline remained strong, with over 250 active qualified leads, and aging/stagnant leads are re-emerging as a result of our software only path
• Average deal cycle closure time showing continued reduction at 4.4 months
• Partner additions increased ahead of plan, bringing the total to 6 OEM/hardware partners (Novanta, Additive Industries, DMG Mori, Aconity, amace, and SLM Solutions) and 4 ISV partners (Materialise, AMFG, Sentient Science, and Dyndrite)

Management Commentary

“We continue to move with urgency in our business transition. We have a mission to accelerate the adoption of additive manufacturing by setting the standard for quality, and we have charted our path to deliver the first holistic digital quality experience for the additive industry with the following objectives.”

These being:

• Simplifying the quality experience from up to twelve disparate software licenses and multiple manual spreadsheets, to a single user experience that is integrated with production workflow
• Building strategic partnerships, expanding our partner ecosystem, and best ensuring success of existing customers as they move into production
• Offering products that are easier to use and less expensive, both for initial purchases and as expansion opportunities
• Attracting a strategic corporate investment partner with clear product, customer, and financial synergies

“Consistent with our new business model, during the quarter we developed new partnerships, software and hardware solutions that simplify quality workflow, and the setup of networks to further enable us to deploy our technology at scale,” said Brunsberg.

We have begun to launch our new software only suite of solutions. In addition to the just announced beta release of our machine health module, a future “process” health module, together with our melt pool analytics for the “part”, will provide a holistic in-process quality base for us to connect to the broader digital quality ecosystem.

Further, we have re-aligned resources to accelerate our strategy, including a focus on reducing operating expenses and the addition of strategic talent, increased our OEM and software footprint, and continued work to close on our corporate development initiatives around strategic investment and M&A.

We believe the industry is evolving. Application programming interfaces (APIs) are opening up as some of our relationships with OEMs have become public. There is also a trend toward consolidation in additive manufacturing as companies align for profitability. Sigma has made demonstrable progress in 2022 connecting to other products in the AM digital quality stream, and a connection to a strategic partner paired with near term execution can augment our ability to scale, support the market, and create value. Further, we believe alignment with a strategic partner would allow for common growth, vision, and funding of the Company to achieve its mission, but would also provide an opportunity for other strategic relationships, including potential future acquisitions that could further accelerate the execution of our digital quality vision.

Looking ahead, we continue to make progress on our evolution to a subscription pricing model and transform to software only product options. We believe this transition will make Sigma accessible at scale for supporting qualification and production across thousands of machines at hundreds of customer sites, and significantly impact the additive manufacturing quality with scalable solutions that improve machine, process, and part quality,” Brunsberg concluded.

Third Quarter 2022 Financial Results

Revenue for the third quarter of 2022 totaled $188,245 as compared to $700,237 for the third quarter of 2021. The decrease was primarily due to fewer PrintRite3D® unit sales, and a decrease in contract additive manufacturing revenue partially offset by an increase in annual maintenance contract renewals, as compared to the third quarter of 2021.

Gross profit for the third quarter of 2022 was $108,532, which resulted in a gross margin of 58% as compared to $535,471, or 76%, in the third quarter of 2021.

Operating expenses for the third quarter of 2022 were $2.4 million as compared to $3.0 million for the same period in 2021. The decrease in operating expenses was primarily attributable to a decrease in stock-based compensation expense and organization costs.

Cash used in operating activities for the nine months ended September 30, 2022 totaled $6.4 million as compared to $4.8 million in the nine months ended September 30, 2021, an increase of $1.6 million.

Net loss for the third quarter of 2022 was $2.3 million, or $0.22 per share, as compared to a net loss of $2.5 million, or $0.24 per share, in the third quarter of 2021.

Cash totaled $4.8 million at September 30, 2022, as compared to $11.4 million at December 31, 2021.

Third Quarter 2022 Results Conference Call

Sigma Additive Solutions CEO Jacob Brunsberg and CFO Frank Orzechowski have hosted a conference call, followed by a question-and-answer period. A replay of the conference call will be available here after 11:30 a.m. Eastern time through November 28, 2022.

Find out more about Sigma Additive Solutions at sigmaadditive.com.