Markforged Holding Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies (Tables)

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Summary of Cash Equivalents and Short-term Investments

The Company’s cash equivalents and short-term investments are invested in the following:


	June 30, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	78,169	$	—	$	—		$	78,169
Total cash equivalents		78,169		—		—			78,169
Commercial paper		22,784		—		—			22,784
Government bonds		18,164		—		(16	)		18,148
Corporate bonds		3,984		—		(8	)		3,976
Asset-backed securities		2,989				(6	)		2,983
U.S. Treasury bills		2,498		1		—			2,499
Total short-term investments	$	50,419	$	1	$	(30	)	$	50,390
Total cash equivalents and short-term investments	$	128,588	$	1	$	(30	)	$	128,559

	December 31, 2022
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	119,721	$	—	$	—		$	119,721
Commercial paper		3,077		—		—			3,077
Total cash equivalents		122,798		—		—			122,798
Government bonds		21,719		51		—			21,770
Commercial paper		12,568		1		—			12,569
Corporate bonds		3,927		—		—			3,927
Asset-backed securities		2,921		—		(1	)		2,920
U.S. Treasury bills		2,447		3		—			2,450
Total short-term investments	$	43,582	$	55	$	(1	)	$	43,636
Total cash equivalents and short-term investments	$	166,380	$	55	$	(1	)	$	166,434

Summary of Allowance For Doubtful Accounts

The following presents the changes in the balance of the Company’s allowance for doubtful accounts:


	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands)	2023			2022		2023			2022
Balance at beginning of period	$	786		$	971	$	1,559		$	1,021
Provision adjustment		(343	)		187		(866	)		144
Write – offs		(260	)		—		(510	)		(7	)
Balance at end of period	$	183		$	1,158	$	183		$	1,158

Summary of Fair Value Hierarchy of The Valuation

The following table presents information about the Company’s assets and liabilities that are measured at fair value as of June 30, 2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation:


	Fair Value Measurements
	June 30, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds included in cash and cash equivalents	$	78,169		—		—	$	78,169
Total cash and cash equivalents	$	78,169	$	—	$	—	$	78,169
Commercial paper		—		22,784		—		22,784
Government bonds		—		18,148		—		18,148
Corporate bonds		—		3,976		—		3,976
Asset-backed securities		—		2,983		—		2,983
U.S. Treasury bills		2,499		—		—		2,499
Total assets	$	80,668	$	47,891	$	—	$	128,559
Liabilities:
Contingent earnout liability	$	—	$	—	$	2,422	$	2,422
Private placement warrant liability		—		—		347		347
Teton acquisition contingent earnout liability		—		—		602		602
Total liabilities	$	—	$	—	$	3,371	$	3,371

	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds included in cash and cash equivalents	$	119,721		—		—	$	119,721
Short-term investments included in cash and cash equivalents		—		3,077		—		3,077
Total cash and cash equivalents	$	119,721	$	3,077	$	—	$	122,798
Government bonds		—		21,770		—		21,770
Commercial paper		—		12,569		—		12,569
Corporate bonds		—		3,927		—		3,927
Asset-backed securities		—		2,920		—		2,920
U.S. Treasury bills		2,450		—		—		2,450
Total assets	$	122,171	$	44,263	$	—	$	166,434
Liabilities:
Contingent earnout liability	$	—	$	—	$	2,415	$	2,415
Private placement warrant liability		—		—		661		661
Teton acquisition contingent earnout liability		—		—		602		602
Total liabilities	$	—	$	—	$	3,678	$	3,678

Summary of Changes in Fair Value of the Derivative Warrant Liabilities

The significant assumptions used in preparing the above models are disclosed in Note 12 Stock Warrants and Note 11 Earnout. The Teton Software Simulation ("Teton") contingent earnout is related to development and business milestone metrics estimated using a scenario-based approach discussed in Note 2, Contingent Earnout Liability. The Teton development milestone was met and settled in 2022. There were no transfers between levels during the periods presented.


(in thousands)	Contingent Earnout Liability			Private Placement Warrant Liability			Teton Acquisition Contingent Earnout Liability		Total Other Liabilities
Fair Value as of December 31, 2021	$	59,722		$	2,646		$	—	$	62,368
Change in fair value		(51,638	)		(1,669	)		—		(53,307	)
Additions		—			—			1,602		1,602
Fair Value as of June 30, 2022	$	8,084		$	977		$	1,602	$	10,663

Fair Value as of December 31, 2022	$	2,415		$	661		$	602	$	3,678
Change in fair value		7			(314	)		—		(307	)
Fair Value as of June 30, 2023	$	2,422		$	347		$	602	$	3,371

Summary of Balance of The Company's Warranty Reserve

Warranty reserves are included within accrued expenses on the condensed consolidated balance sheets. The following table presents changes in the balance of the Company’s warranty reserve:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2023			2022			2023			2022
Balance at beginning of period	$	484		$	805		$	620		$	658
Additions to warranty reserve		358			141			531			427
Claims fulfilled		(286	)		(156	)		(595	)		(295	)
Balance at end of period	$	556		$	790		$	556		$	790