WALTHAM, Mass. - Markforged Holding Corporation (NYSE:MKFG), a leading industrial 3D printing company, has reached a settlement in its patent infringement litigation with Continuous Composites Inc., the company announced Monday. The agreement concludes the legal dispute pending before the United States District Court for the District of Delaware, involving claims of patent infringement initially brought by Continuous Composites in July 2021.
As part of the settlement, Markforged will make an upfront payment of $18 million to Continuous Composites in the fourth quarter of fiscal year 2024, followed by additional payments totaling $7 million over the subsequent three years. The agreement also includes cross-licensing of the parties' respective patent portfolios and a mutual release of claims.
The lawsuit saw a reduction of the original nineteen patent claims against Markforged to four, with a jury trial in April 2024 resulting in one claim being invalidated and the other being ruled as infringed, leading to a $17.34 million damages award to Continuous Composites. The settlement supersedes the need for further litigation and provides both companies with a clear path forward.
Shai Terem, President and CEO of Markforged, expressed satisfaction with the resolution, stating that the settlement eliminates distractions and uncertainty for stakeholders. The company remains focused on advancing its strategic objectives, including the implementation of a $25 million cost reduction initiative and the promotion of its industrial 3D printing capabilities, as demonstrated by the recent launch of the FX10 printer.
The Settlement Agreement is subject to review by the District Court, and neither party has admitted to any wrongdoing or liability in connection with the claims alleged in the lawsuit.
This development follows Markforged's continued efforts to strengthen manufacturing resiliency through its additive manufacturing platform, The Digital Forge, which enables the production of strong, accurate parts in both metal and advanced composites for over 10,000 customers worldwide.
The information reported is based on a press release statement by Markforged Holding Corporation.
In other recent news, Markforged Holding Corp has announced a 1-for-10 reverse stock split, reducing the total number of outstanding shares from approximately 203 million to about 20.3 million. This move has been approved by the board of directors and is in line with the New York Stock Exchange's minimum bid price requirement. As a result of this, the company's equity incentive plans and warrants have been adjusted proportionally.
In financial updates, Markforged's Q2 2024 revenue decreased from $25.4 million to $21.7 million year-over-year, despite an increase in gross margins to 51.9%. The company has initiated a $25 million cost reduction plan primarily targeting R&D expenses. Despite facing potential legal challenges from Continuous Composites that could lead to a reduction in gross margins, Markforged projects full-year revenues between $90 million and $95 million.
These are the recent developments that could have implications for the company's future performance.
InvestingPro Insights
In light of Markforged Holding Corporation's recent settlement in its patent infringement litigation, investors and stakeholders may be keen on understanding the financial health and market performance of the company. According to InvestingPro data, Markforged currently holds a market capitalization of $38.82 million. Despite facing challenges, the company has maintained impressive gross profit margins of 48.42% over the last twelve months as of Q2 2024. This indicator of financial efficiency is crucial as the company navigates post-settlement operations.
InvestingPro Tips highlight several key aspects of Markforged's financial position. The company is trading at a low Price / Book multiple of 0.33, which could signal that the stock is potentially undervalued relative to its assets. Additionally, Markforged holds more cash than debt on its balance sheet, providing a degree of financial stability. These factors are pertinent as the company plans to make a significant upfront payment as part of the settlement agreement.
However, it's important to note that Markforged's stock has experienced significant price volatility, with a one-month price total return of -28.49% and a six-month price total return of -74.95%. The company's share price has also fallen to 12.99% of its 52-week high, reflecting recent market sentiment. Moreover, analysts do not anticipate the company will be profitable this year, which is a consideration for investors looking at the long-term prospects of Markforged.
For those seeking a deeper dive into Markforged's financials and market performance, InvestingPro offers additional insights and tips, which can be found at https://www.investing.com/pro/MKFG.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.