Greetings, and welcome to Q4 and Year End 2023 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the prepared remarks. As a reminder, this conference is being recorded. Before we get started, I'd like to remind everyone that management will be making statements during this call that include forward looking statements within the meaning of federal securities laws, 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 facts should be deemed to be forward looking statements. All forward looking statements, including without limitation, statements regarding our business strategy, future financial and operating performance, projected financial results for the Q1 of 2024, timing or results of any strategic transactions or future cost cutting measures, new offerings and market opportunity are based on current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements. For a description of the risks and uncertainties associated with our business, please see the company's SEC filings, including the company's Annual Report on Form 10 ks for the year ended December 31, 2023.

The information provided in this conference call speaks only to the broadcast today, March 28, 2024. Shapeways disclaims any obligation, except as required by law, to update or revise forward looking statements. Also during the course of today's call, we refer to adjusted EBITDA, which is a non GAAP financial measure. There is a reconciliation schedule showing GAAP versus non GAAP results currently available in our press release issued after market close, which can be found on our website, shakeways.com. On the call today are Greg Kress, Chief Executive Officer and Alberto Recchi, Chief Financial Officer. And now, I'd like to turn the call over to Greg. Greg?

Good afternoon, everyone. Thanks for joining us to discuss Shapeways 4th quarter year end 2023 financial results, progress on our key initiatives and an update on our strategic alternatives. I will begin by providing a business update and Alberto Reque, our CFO will then discuss our financial results. In the Q4 year to date 2024, we have continued to execute our strategy to grow enterprise manufacturing and software revenues, as well as make progress on exploring strategic alternatives to maximize shareholder return. Our 4th quarter results were in line with our expectations as we grew revenues by 9% from the prior year quarter to $9,500,000 and realized 500 basis points of gross margin expansion to 46% compared to the same period in 2022. These results reflect the progress of our enterprise manufacturing sales efforts and higher contribution from our software offering. In terms of enterprise sales, we have continued to provide our high quality enterprise level manufacturing solutions to customers focusing on our target industries of automotive as well as medical, robotics and other industries. For example, we have made traction in the automotive industry as our solutions force dynamic production demand with both additive and traditional manufacturing capabilities. We have seen success with Tier 1 supplier and OEM direct multiyear production contracts and post year end signed a $1,500,000 multiyear contract with an industry leading American automotive manufacturer.

This was an expansion of a prior contract with this customer who leverages Shapeways expansive additive and traditional manufacturing capabilities. This is just one example of how we have continued to increase our share of wallet with existing customers on multi year revenue projects. For the full year 2023, revenue from our top 250 customers grew 29% compared to the prior year. Shapeways solutions support companies across the globe with their supply chain challenges by providing enhanced flexibility in production. This includes offering additive manufacturing, which we have discussed previously, but also traditional manufacturing methods such as computer numerical control or CNC, which has an estimated $68,000,000,000 global market in 2023. To further expand this market subsequent to the year end, we launched a new CNC Instant Quote feature, which enables our customers to seamlessly access CNC manufacturing capabilities and enhance our robust suite of enterprise manufacturing solutions. In terms of software business, during the year we launched several key features to create a more comprehensive software offering, including an enhancement to our ordering service and the ability for customers to source discounted material using MFG Materials platform. Finally, I will provide an update on our cost saving initiatives and strategic alternatives process.

We are seeing ongoing near term challenges including an elongated sales cycle for enterprise sales and longer than anticipated adoption of software features. In light of this backdrop, as we previously disclosed, we implemented cost savings measures to better align our cost structure with our growth expectations over the near term to reduce cash burn. These measures include reductions in force completed in the Q4 of 2023, a reduction in new hires and a reduction in non critical capital and discretionary operating expenditures. Additionally, as we discussed last quarter, we have been working with advisors and considering strategic alternatives including without limitation a sale of a material portion of the company's assets, a merger, business combination, liquidation of certain assets or other strategic transactions to maximize shareholder value. Based on market checks conducted by our advisors as well as preliminary discussion with and feedback from potential purchasers and in light of the continued macroeconomic and industry pressures, the company is actively taking steps to sell a material portion of the company's assets. In the course of these preliminary discussions, potential purchasers have indicated an interest in acquiring either the company's manufacturing business or the software business, but not both. We continue to evaluate strategic alternatives with regard to both the manufacturing and software businesses, including ongoing discussions with potential acquirers.

The Company has not yet signed a definitive agreement with respect to either the manufacturing or software assets And we can provide no assurances that any of these processes will result in any transaction. However, we will provide updates as appropriate. While we are exploring what is best to maximize shareholder value, we will remain disciplined and prudent as we execute our operating plan. I would like to thank the entire ShapeWay's team, our customers, our investors and all of our stakeholders for their ongoing support. Alberto will now discuss our financial results in more detail.

Thanks, Greg. I'll provide a recap of the 4th quarter and full year 2023 performance, give an update on our balance sheet position and provide guidance for the Q1. In the Q4, revenue increased to $9,500,000 up 9% from the prior year period. For the full year, revenue was up 4% to $34,500,000 with growth in software enterprise sales, partially offset by lower sales from marketplace and self-service. Our gross margins in the 4th quarter were 46% compared to 41% in the Q4 of 2022 and were 42% for the full year as we saw more contribution from higher margin software sales, the benefits from the consolidation of our U. S. Manufacturing operation and increased volumes from our enterprise sales. 4th quarter adjusted EBITDA was a loss of $5,100,000 an improvement from a loss of $5,600,000 in the Q4 of last year. And full year adjusted EBITDA was a loss of $22,500,000 compared to a loss of $19,800,000 in the prior year period. SG and A expenses for the Q4 were $9,200,000 compared to $7,300,000 in the prior year period. As Greg mentioned, in the Q4, we implemented cost alignment initiatives, including a reduction in force of 15% of our total global employees included in OpEx.

We anticipate realizing approximately $6,200,000 in annualized cost savings as a result of the reduction in force combined with the elimination of certain open positions. In the Q4, we recognized non cash impairment charges. These included $3,000,000 related to equipment that was being held for sale. In addition, we recognized a $1,100,000 goodwill impairment charge related to goodwill recorded at the time of the purchase of MFG, which we believe has declining value in the current market conditions and based on the feedback from our strategic alternatives process. Turning to our balance sheet, as of December 31, 2023, our cash and cash equivalents and marketable securities totaled $12,200,000 During the quarter, we deployed approximately $5,400,000 in cash, which was an improvement on cash deployed in the previous quarter and demonstrates our focus on further improving our cash Looking ahead, for the Q1 of 2024, we anticipate revenues to be in the range of $8,300,000 to 8,600,000 With this, we have completed our prepared remarks and we'll now open the call for questions. Operator?

Thank Your first question comes from the line of Greg Palm from Craig Hallum Capital Group. Please go ahead.

Yes, thanks. Good afternoon, everybody. Greg, you talked about a strategic or I guess a revenue growth number from your top accounts. I know strategic or enterprise has been a key focus. So wondering if you can kind of give us an overall update there. And I missed exactly what that number is. So if you could clarify.

Hey, thanks for joining, Greg. Yes, so we've seen a considerable momentum on the enterprise side of our business. As you know, throughout the year, we've spent time and energy focusing on that. If we carve out and just kind of isolate our top 250 customers, they grew over 29% year over year versus the prior year. So we see the continued investment in those sales resources that are focused on very specific industries and bringing real solutions to our customers, not only are we bringing on new customer acquisition, but we are seeing those customers continue to expand their wallet. So we're happy with the progress there, and we're seeing good results so far.

Got you. And then just a follow-up on the process, curious how you view kind of the timeline from here and how you're measuring success from the potential sale of either asset or more assets and again just how you're thinking about creating shareholder value from that going forward?

Yes. I mean, ultimately, we're taking a big step back and thinking about what we should be doing with the company. The company continues to show have a really, really strong foundation, continues to show momentum in certain areas, but remains small and somewhat subscale for the expenses of being a public company, right? And so we evaluate how do we approach that, right? And so right now, we can't share too much, but we are having conversations and we wanted to make sure people were aware of it. I think over the next quarter, we'll be able to provide another update as we make more progress having conversations with strategic alternatives.

Okay. And then just one quick one, cash burn expectations for the year, what should we think?

I mean, right now, we're still seeing about $1,600,000 of cash burn per month. That does improve as we continue to grow top line revenue, conserve cash from reducing operating expenses. But right now from a modeling perspective, I would say we're currently running at that 1,600,000 Bye.

Thank you. There are no further questions at this time. Mr. Kress, please proceed.

I just wanted to take the time and thank everyone for joining us today. On behalf of myself and the Shapeways team, thanks for joining the call. We look forward to providing additional updates in the coming months. Thanks everyone.

Thank you. That concludes our conference today. Thank you for participating. You may all disconnect.