Shapeways Holdings, Inc. (NYSE:SHPW) Q3 2022 Earnings Call Transcript

Shapeways Holdings, Inc. (NYSE:SHPW) Q3 2022 Earnings Call Transcript November 15, 2022

Shapeways Holdings, Inc. beats earnings expectations. Reported EPS is $-0.09, expectations were $-0.1.

Operator: Good morning. And welcome to the Shapeways’ Third Quarter 2022 Earnings Call. All participants will be in a listen-only mode. Please note that this event is being recorded. I would now like to turn the call over to Ms. Nikki Sacks. Please go ahead.

Nikki Sacks: Greetings and welcome to Shapeways’ third quarter 2022 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 would 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 fact, 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 fourth quarter of 2022, expected growth, impact of recent acquisitions, new offerings, market opportunity and plans for compliance with the NYSE’s continued listing standards are based upon current estimates and assumptions.

These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by those forward-looking statements. Accordingly, you should not place undue reliance on these statements. For description of the risks and uncertainties associated with our business, please see the company’s SEC filings, including the company’s quarterly report on Form 10-Q for the quarter ended September 30, 2022. The information provided in this conference call speaks only to the broadcast today, November 15, 2022. Shapeways disclaims any obligations except as required by law to update or revise forward-looking statements. Also, during the course of today’s call, we will refer to adjusted EBITDA which is a non-GAAP financial measure.

There is a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued after market close, which can be found on our website at shapeways.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?

Greg Kress: Good morning everyone. Thanks for joining us to discuss Shapeways’ third quarter 2022 financial results and progress during the quarter. I will begin by providing a business update and share the progress that we have made with regard to our strategic growth plan. Alberto Recchi, our CFO, will then discuss our third quarter financial results and outlook for the fourth quarter. During the third quarter, we continued to focus on executing our key growth initiatives while integrating the three strategic acquisitions we completed in the first half of the year. We are pleased to have delivered almost 10% revenue growth from the prior year period, as we begin to realize the benefits of our strategic initiatives. We remain focused on profitable growth, aligning our resources with the highest opportunity areas to drive revenue growth while tightly managing our cost structure.

I would like to specifically call out our continued focus on the commercialization of our software offering, as we are seeing strong momentum and progress. Shapeways was created to fully digitize the end-to-end manufacturing process. In order to accomplish this vision, we developed a proprietary software platform, which gives us the ability to deliver high-quality, low-volume manufacturing at compelling economics for our customers, and also provide Shapeways with a meaningful opportunity to commercialize that software. We have made significant progress towards the overall commercialization of our software in 2022. Specifically in the third quarter, we focus on the integrations of the most recent MFG and MakerOS acquisitions and their positive contributions to the auto SaaS roadmap.

By the end of this year, we expect to realize more than 500 active SaaS revenue generating customers and reach over $1.5 million of revenue, which is up from only $300,000 last year. We have made strong progress optimizing new customer acquisition and existing customer retention, and are currently working to unify the product offering across Shapeways MFG and MakerOS. The vision for our software is to provide a suite of tools and services that will digitize manufacturers. We are currently focused on building on the momentum we achieved this year and plan to deliver revenue generating features to our customer base throughout 2023. We expect these features to allow us to capture revenue through SaaS subscription, transaction and processing fees, demand generation services and overflow manufacturing capabilities by Shapeways and other supply chain partners.

We see significant growth potential for our software offering in both the near-term and long-term. In terms of expanding our go-to-market strategy, we are continuing to execute on our strategy to develop and scale outbound business development resources to support enterprise customers. We are encouraged by our progress and growing pipeline across our target automotive, medical, aerospace, and industrial segments. The buying cycle for these customers has been longer than expected, but we are seeing initial qualification orders move to scaled production orders. Additionally, we have seen these customers expand the scope and scale of their original projects. We’ve seen strong momentum in the automotive industry facilitated by our acquisition of Linear AMS, this business has deep domain expertise in sophisticated manufacturing processes and has provided us with access to a customer vertical, which would have been challenging to penetrate organically.

By integrating Linear AMS onto the Shapeways platform, we believe we can further accelerate the growth of that business by leveraging the broader Shapeways manufacturing and software capabilities. This tuck-in acquisition has proven to be an efficient use of capital to drive growth, expanding manufacturing capabilities, and expanding our go-to-market strategy. We also continue to optimize and scale the additive manufacturing capabilities that we have added over the past several quarters, in hardware, materials, post production processes, and certifications. We have been focused on driving quality, gross margin optimization and working directly with our customers on application development. We have invested to drive growth and the results are already emerging.

While current macro and geopolitical pressures could result in delayed buying decisions. We believe this environment also present the potential tailwind for Shapeways as strategies around managing supply chains continue to shift and manufacturers strive to diversify and have more control over their supply chain. We believe Shapeways provides a clear and compelling solution. We are helping companies solve their manufacturing needs in a highly efficient way. We do this by providing a broad range of industrial grade manufacturing solutions to our customers, and by acting as a marketplace, connecting buyers and manufacturers across additive and traditional, leveraging the power of our software and digitized platform. We believe we have a massive market opportunity within $1 trillion global manufacturing industry.

And with our enhanced capabilities from our recent investments, our addressable market continues to expand. With the focus on achieving profitable growth we are allocating resources into initiatives that we believe will deliver the highest results, such as commercializing our software and deepening our efforts and key verticals as we evolve our focus towards enterprise customers. Additionally, we are further optimizing our cost structure with the consolidation of our Long Island City, New York manufacturing facility with our Livonia, Michigan facility. The consolidated facility will provide us with a more centralized location for our U.S. customers and an optimized manufacturing footprint that can easily be expanded over time. We have a strong cash balance, which supports our normalized cash burn, positioning us well on our path towards profitability.

I would like to formally welcome Alberto Recchi, who joined the Shapeways Management Team as our New CFO, October 1st. Alberto has been a Board Member and Investor since our IPO and continues in those capacities. We are excited to have him on Board; he is an important member of our executive team. We are making tangible progress through strategic investments in people, facilities, technology and manufacturing capabilities. As we execute on our opportunity to capture and expand our market share using a highly scalable digital manufacturing platform and software. I would like to thank the entire Shapeways’ team, our customers, our investors, and all of our stakeholders for their ongoing support. Alberto will now discuss our financial results in more detail.

Alberto Recchi: Thanks Greg. I’ll provide a recap of our third quarter 2022 performance. Give an update on our balance sheet position and provide guidance for the fourth quarter. In the third quarter, revenue increased 9.5% to $8.4 million compared to $7.7 million in the prior year in line with our expectations. The increase in revenue was primarily attributable to positive contributions from our software offering, scaling over additive manufacturing capabilities and traditional manufacturing services. Our gross margins in the third quarter were 44% compared to 47% in the third quarter of 2021. We continued to deliver top tier gross margins and a year-over-year change was primarily due to inflationary pressures to continue ramping of recently deploying new technologies in a more varied product mix.

Third quarter adjusted EBITDA was a loss of $4.6 million compared to a loss of $1.8 million in the third quarter of last year. SG&A expenses for the third quarter were $7.6 million compared to $4.4 million in the prior year. The increase in SG&A expenses primarily resulted from increases to personal cost, amortization expense related to the intangibles acquired as part of the acquisitions of Linear AMS, MFG and MakerOS. Increased professional fees and other spending related to being a public company and onetime restructuring costs related to our move out of the Long Island City facility. The completion of this move and consolidation of our U.S. manufacturing capabilities in Livonia, Michigan we anticipate will result in reduced cost structure and gross margin benefits for the business as we move through 2023.

Turning to our balance sheet, as of September 30, 2022, our cash and cash equivalence totaled $46.9 million. During the quarter, we deployed approximately $3.5 million reflecting a reduced cash burn this quarter as compared to cash utilization earlier in the year when the company made meaningful investments in acquisitions and best of manual equipment. We expect a high burn in Q4 as we complete our manufacturing facility consolidation and cover expenses such as D&O insurance, annual premiums. We believe the continuous strength of our balance sheet and our focus on achieving profitability and managing cash burn will allow us to execute on our organic strategic plan without the near-term need to raise additional capital. However, to provide additional financial flexibility and as part of our focus on good corporate governance, given we’d reach shelf eligibility, we’ve filed a 50 million universal shelf filing along with an at the market offering, both of which have been declared affected by the SEC.

While we do not anticipate growing down on the ATM in the near-term, the program will allow us to opportunistically access the capital markets and also potentially funding organic growth. Looking ahead for the fourth quarter of 2022 we anticipate revenue to be in the range of $8.7 million to $9.1 million. As we continue to invest in both new hardware and our go-to-market initiative. We anticipate some continued near-term pressure on gross margins. We continue to anticipate a ramp up of sales over time from our investment in new technologies and materials, to continue rollout of our auto SaaS offering, along with an increase in investment in business development resources and the positive impact of our recent acquisition. Lastly, I would like to address the notice that we have received from New York Stock Exchange on August 17, 2022 indicating we’re not in compliance with a continued listing standard as the average closing price of our common stock was less than $1 per share over a consecutive 30-day trading period.

We timely responded to the New York Stock Exchange, we respect to our intent to cure the deficiency no later than at our next annual meeting of stock holders. Our Board of Directors has approved the company calling a special stockholder meeting Q1 next year to approve a reverse stock split. Our intention is to file a preliminary proxy statement with the SEC before the end of this month. And with this, we’ll be completing completed our prepared remarks and we’ll now open the call for questions. Operator?

Q&A Session

Operator: Our first question comes from Greg Palm with Craig-Hallum Capital Group. Please go ahead.

Danny Eggerichs: Yes, thanks. This is Danny Eggerichs on for Greg today. Thanks for taking the questions. I guess just starting on kind of the overall what you’re seeing in the demand environment, maybe if you could give some detail on monthly cadence throughout Q3 and how you’ve seen that progress through early October and November here. Any end markets or that stick out to the positive or negative, anything there?

Greg Kress: Hey, Danny, thanks for the question. Thanks for joining today. I think if we take a step back, there’s really two areas that I would want to touch on. One is Shapeways historic kind of self-service business, and that tends to see quite a bit of seasonality in the fourth quarter supporting a lot of our consumer businesses around the Black Friday, Cyber Monday and then the holiday season. And then we also have a lot of engineering teams that are trying to finish up orders before the end of the year and close out budgets. And so we tend to see a spike in our core business and some higher seasonality occur in Q4. We are also starting to build more enterprise, business development focused, customer acquisition model and I think it’s too early for us to really make a call on whether that has any seasonality or not.

Now with that being said, I think we have a strong pipeline, a lot of orders through qualification and moving into more production type orders, and so we expect that to continue over Q4 to Q1, but in the very, very near-term we do expect to see so seasonality driven by our €“ Software-as-a-Service business.

Danny Eggerichs: Okay, great. Maybe if I can just touch on, on auto you gave some good metrics about customers and revenues that you’re kind of expecting by the end of this year. I guess what kind €“ are we still in Phase 2 of the rollout on that? You mentioned adding more revenue generating features in the upcoming year, so how should we think about additional customers and additional contribution based off of kind of these planned new features that that are coming in the coming year?

Greg Kress: Yes. I think there’s a couple of things which I think about. When we think about auto, we’re still in the very early stages of this rollout with that being said, I think we’ve seen €“ we’ve been able to monetize quite a bit of customer base through series of features, and there’s a lot of additional customers that we have access to based off of the acquisition that we did with the MFG customer base. And so what we expect is to continue to drive customer acquisition and retention and then also start to roll out additional features that have additional revenue. And we’re not really ready to talk through that in detail yet, that we’re still in a lot of testing phases associated with those features, but I do think that there’s a tremendous amount of opportunity sitting in front of the business, both in the short-term and the long-term with the rollout of those features.

And I think we’ll have be able to talk a lot more to that as we move into the first half of next year.

Danny Eggerichs: Got it. Maybe if I can just get one more in here on the metal side, how is that ramp going? Maybe what you’re seeing from the Desktop Metal side and then maybe on the other side of like the GE and EOS?

Greg Kress: Yes. I would say like there’s different levels of maturity in those different technologies. I would say that we’ve had some challenges rolling out some of the Desktop Metal equipment, at least at the beginning. It takes time for us to kind of optimize those machines and then get that working in a way €“ working in a way where we feel like the reprints are in a controllable state and we feel like we’re delivering good quality printing back to our customer. We are seeing some volume, like right, I did a BD review just last week and there’s quite a bit of opportunities sitting in the pipeline supporting basically some of our metal printing. But with that being said, I think this is still relatively new for us. We’re seeing traction and we’ll continue to focus on the optimization of it.

But again, we don’t want to go too fast. We want to make sure that we roll out these products to our customers in a way where we’re delivering high quality at good costs and good gross margins for them.

Danny Eggerichs: Yes, makes sense. All right, thanks. I’ll leave it there.

Greg Kress: Thank you, Danny.

Operator: Our next question comes from Troy Jensen with Lake Street Capital. Please go ahead.

Troy Jensen: Hey gentlemen thanks for taking my questions. Maybe I guess maybe for Alberto, just curious to know can you guys quantify the revenue contribution you’ve had from the acquisitions, and what I’m trying to get to is figure out an organic growth rate for you guys?

Alberto Recchi: Yes. Hi Troy, good speaking to you again. I’d say this is probably around $6 million €“ $5 million, $6 million, $7 million on a runway basis?

Troy Jensen: So like on a quarterly, so you’re talking $1.5 million to $2 million in like a September quarter?

Alberto Recchi: About something like that, I can walk you through maybe on a separate call specifically on the business.

Troy Jensen: Okay, that’s fine.

Alberto Recchi: Yes. Yes, totally.

Troy Jensen: And then could you, Greg, know you gave some information on auto, could you repeat kind of the timing of the revenue ramp and kind of go through those metrics one more time? I’m sorry, I missed it?

Greg Kress: No, yes, that’s fine. We in the €“ in previous remarks we had mentioned that we closed about $300,000 worth of revenue last year. We expect to exceed over $1.5 million in revenue this year, coming from the different features on the auto platform will also achieve over 500 customers €“ active customers paying customers on the platform by the end of the year. And so right now we’re focused on the funnel on the front-end, customer acquisition and then also focused on just a stronger retention model. And then as we do that we’ll start to layer in more and more additional features that drive revenue for the business on top of it. And so there’s a €“ I would say right now that because of the MFG acquisition and the MakerOS acquisition, we’re really focused on unifying the platform and rolling out those features to drive customer acquisition and retention.

And so we see a lot of upside potential in the business for next year as we continue to roll that out. But things are rolling out as we expected and we’re feeling really, really good about the progress.

Troy Jensen: Okay. A couple more for me and thank you for that info; the Michigan move timing of completion when you expect to open that facility up and shutdown Long Island?

Greg Kress: Yes, I would say we’re about halfway through it right now. We decided to take the approach of doing it kind of in phases. Right now the build-out of the Detroit facility is almost complete. I expect it to be completely done by the end of first quarter. We’re definitely, probably ahead of schedule on that, but we want to make sure that we’re well prepared for it. So we’re giving ourselves a little bit of wiggle room, but we should be completely done by the end of the Q1.

Troy Jensen: Okay, perfect. Last question here may be multi-parts, but to follow up on the last question about metals, are you guys running more than two shot machines currently?

Greg Kress: Yes. Right now we have three shop machines machines operating out of both the Long Island City facility and our Eindhoven facility. We are relocating the Long Island City equipment to the Detroit area. And so there will be a little bit of a shutdown for probably a handful of weeks as that process goes on, but we have enough capacity to offset it Eindhoven during that time period.

Troy Jensen: Got it. Understood. So just and follow-up on the DM €“ go ahead.

Greg Kress: And I was going to say we also have a Wood Shop System as well Forest Shop System that’s also set up in Detroit, but that’s more in its infancy space. But to your specific questions on metals, we have three Shop Systems set up for metal right now.

Troy Jensen: Yes. Okay. I guess what I was ultimately getting to is, I think you spent the entire $20 million that you’re required to Desktop Metal. I guess are all those machines being used? It just doesn’t seem like you’re having organic growth to justify such a big investment in more additive equipment?

Greg Kress: Yes. The investment that we made in Desktop Metal that tier that was placed at the end of last year covers not only Desktop Metal equipment, but also in Vision Tech and some of the products that they got from X1 as well. So there’s €“ it’s not just in the Desktop Metal equipment, but we are still in the very beginning of rolling out those technologies. And so we have I’d say we’re €“ we’re at the very beginning of the rollout of that full buy. But we do not want to roll that out too aggressively either. We want to make sure that we’re rolling that out and pacing it with the demand of the business so that we’re also meeting the expectations of our customers.

Troy Jensen: Awesome. I got some follow-up, but I’ll take it offline with you guys. Congrats and good luck.

Greg Kress: Yes. Thanks Troy.

Operator: Our next question comes from Jim Ricchiuti with Needham and Company. Please go ahead.

Jim Ricchiuti: Thanks. Good morning. First question’s on operating expense, which was up quite a bit from Q2 levels despite the revenues flat sequentially, was this mainly acquisition related amortization expense or how much of this reflects investments in go-to-market €“ your go-to-market strategy? and I guess what I’m asking is how should we be thinking about OpEx in the current quarter as well as over the next few quarters if you’re in a position to discuss that?

Alberto Recchi: Yes. Maybe I’ll take this Greg.

Greg Kress: Yes, that’s fine.

Alberto Recchi: Yes. Look, I think Q3 is a decent indicator where SG&A will be in Q4 and some of the factors I decided in my opening remarks that contributed to the increase in SG&A expenses I think remain valid and will be felt this quarter. Specifically, there’s one timeless structuring costs related to a move out of the Long Island City facility. There’s professional fees and other spending related to being a public company which again will remain in line as we work for Q3. And however, we do not expect personal costs to increase further. Okay. So again, I would probably just use Q3 as a proxy for Q4.

Jim Ricchiuti: Okay. And as you phase out the Long Island City facility and ramp the Michigan operation, maybe you could talk to the potential drag on margins in Q4 and Q1? I guess this is all expected to be completed by the end of Q1 next year.

Greg Kress: Yes, so that’s €“ go ahead Albert.

Alberto Recchi: No, I was just going to say, I’m going to pick it up where you left, right where we began transitioning our U.S. manufacturing capabilities to the facility in Livonia, Michigan. I think this is definitely expected to resolve in third optimization, right, of our manufacturing processes, reduce cost structure and gross margin benefits for the business. But again, we expect this transition to be completed in the first quarter of 2023 and therefore the positive impact on gross margins will be visible throughout next year. I don’t know Greg, if you wanted to add anything else?

Greg Kress: No, the only other point I would make, Jim, is there will be some increased labor where we are running almost two facilities in tandem, but we’ve already been experiencing that because we’ve had some redundancy in that plan as we move it phase to phase. So from a planning perspective, there is a small amount of pressure on a gross margin in Q4 driven by that, but it’s in the grand, in the big picture, it’s actually quite small from an implication standpoint.

Jim Ricchiuti: Got it. And when you talk about the scale up of initial qualification orders to production orders I wanted to if we could go into that a little bit more, is this tied to a set production schedule or are these qualification orders providing customers with maybe an insurance policy and the event they experience supply chain challenges with specific parts?

Greg Kress: Yes, it’s a great question, Jim. I think what we’ve seen so far is quite a bit of qualification orders, right, where you go through the first article inspection, you go through qualification, you become certified supplier, and there has been a handful of customers, unfortunately we haven’t been able to talk about those customers yet because of confidentiality, but they are similar, they are using additive manufacturing for the value that it really does create. So on-demand manufacturing where there is fluctuations on demand from their business on a week-to-week basis. But I will say the programs are quite large and they are growing month-over-month for the couple customers that we’ve €“ the couple sizable customers that have really transitioned into production.

And so we’re feeling really good about it, but I don’t think that we’re going to get to a point where every part is still different. The volume, it still fits our value proposition very strong which also allows us to capture strong gross margin from it, right? If it was more of a at scale production part where there would be less the need for differentiation, we probably have more pressure from a price perspective. And so we’re still targeting those applications where we have differentiation. And I think we’ll learn more as we move into the first half of next year because those €“ we will have more customers close and we’ll have more orders. So we can take a look at the cohorts of those customers and how they are performing on a month-to-month basis.

But as of right now, they are continuing to grow and expand and we’re happy with the results that we’re seeing.

Jim Ricchiuti: Got it. And final question for me is just on that topic of customers, you alluded to the 500 active auto customers by the end of the year. I wonder if you could talk to, give some a little sense as to what the profile of these types of customers are?

Greg Kress: Yes, it’s great. I think the profile is still small and mid-size manufacturers, mostly on the traditional side. We do have some customers on the additive side as well. And they are using €“ the features that we have been rolling out so far are a mix of what we consider more ordering services to everything from demand generation flowing to them to also the ordering platform and transactions that will be flowing out through the platform. And so it’s really small, mid-size, non-digitized manufacturers that we see becoming customers. And I think the interesting thing for us is MFG came with about 15,000 active non-paying customers that we can start to slowly roll out those features to over time and migrate those customers. So from an acquisition standpoint, I think, there is a lot of very interesting things that we can do for customer acquisition as we move into the first half of next year.

Jim Ricchiuti: Got it. Thank you.

Greg Kress: Thanks, Jim.

Operator: Our next question comes from Noelle Dilts with Stifel. Please go ahead.

Noelle Dilts: Hi guys. Thanks for taking my question. Just on the gross margin front, I was hoping you could expand a little bit in terms of what you are seeing on the inflationary front and I guess your success in passing that through via pricing. I guess in other words, how willing has the market been to accept price increases and how are you thinking about that heading into 2023? Thanks.

Greg Kress : Yes, thank you Noelle. Thanks for joining us. Great question. I think if we take a step back, there is a couple of things that have been impacting our gross margins. One, we do see some inflationary pricing from a material perspective, but in general that’s a relatively small component to the overall cost structure. And most of those costs can pretty be easily be transferred over to our customers. Now there has been a few places where that hasn’t been as easy, specifically on some of the metal products that we outsource. So we do outsource some metal part production. We’ve seen some pretty significant cost increases there, and that’s been a little bit more challenging to pass on all of that price to the customer without losing volume from a revenue perspective.

And then the other point that I would make is we have seen increased energy costs specifically in our Eindhoven facility where just overall overhead costs are up. But with that being said, we are confident that we can continue to strategically roll this out to our customers. The good news is most of our customers are the vast majority of our volume is on-demand, and so it’s easy for us to test new price increases or different upsells throughout the process to offset some of the implications from an inflation standpoint.

Noelle Dilts: Okay, great.

Alberto Recchi: May be Greg, if I can add something no, I guess for helping you model this through, right for Q4, again, we expect grows margin to hold strong, right. And so looking at Q4, I would most certainly use Q3 as a proxy similar to what we told you for SG&A. And as Greg had just said we might feel a slight pressure on margins compared to Q3, but again, use Q3 as a proxy.

Noelle Dilts: Okay. And I guess another question I had was, and I think you kind of touched on this with one of Jim’s questions, but when you’re going through this sort of facility transition, I understand that there is direct costs that you have called out, but sometimes I know there can also be sort of inefficiencies or you have to build up some inventory, or I guess backup capacity in order to support that move. Anything like that that we should be mindful of as you transition to the Michigan facility?

Greg Kress: I would say there is nothing really to call out specifically.

Noelle Dilts: Okay.

Greg Kress: I think the biggest thing that we’re seeing right now is because we’re doing it in phases, there is some redundancy in our labor model. But the beauty of this transition is we’re leveraging floor space that’s already in place today at Linear AMS. So there is very limited additional overhead costs in structure. We do have the redundancy in some of the labor model. And from an equipment and material standpoint, it’s relatively flat. We’re able to do this in a way where there isn’t a ton of unnecessary overlap. And so I think we’re managing the process very well. And that’s why we’ve been doing this for quite a while and we’ve seen so far good results. Now with that being said, we still have another maybe four to five months of this transition before it’s absolutely complete. But we don’t expect any significant issues related to the migration.

Noelle Dilts: Okay, great. And last one for me, I know you discussed your expectations for fourth quarter cash burn being a bit higher, but could you just kind of revisit how you are thinking about your cash needs on a quarterly basis? I think in the past you’ve talked about kind of a $4 million to $5 million burn rate. Is that still the way we should think about that?

Alberto Recchi: Yes, right now we’re looking at more like $3.5 million to $4.5 million burn rate, normalized burn rate on a quarter-by-quarter basis. Obviously that improves over time as we grow our revenue, and gross margin models and the mix of our gross margin and we see our cost structure being controlled. And so, at this point in time, we do not need additional capital to achieve our goals and reach positive EBITDA. And so we continue to really focus on just maintaining that tight cost structure and pushing on our growth initiatives. And so we feel like we’re in a really good spot, but you will see cash improve over time as we execute on the plan.

Noelle Dilts: Great. Thank you.

Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Greg Kress for any closing remarks.

Greg Kress: Well, thanks again everyone. I appreciate everyone joining the call. On behalf of myself and the entire Shapeways’ team thanks for taking the time and joining us today. We look forward to providing additional updates in the coming months. Talk soon.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.