Markforged Holding Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Summary of Significant Accounting Policies (Tables)

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2023

Summary of Cash Equivalents and Short-term Investments

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


	December 31, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	110,775	$	—	$	—		$	110,775
Total cash equivalents	$	110,775	$	—	$	—		$	110,775

	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:


	Year Ended December 31,
(in thousands)	2023			2022
Balance at beginning of period	$	1,559		$	1,021
Provision adjustment		(688	)		545
Write – offs		(511	)		(7	)
Balance at end of period	$	360		$	1,559

Summary of Fair Value Hierarchy of the Valuation

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


	Fair Value Measurements
	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds included in cash and cash equivalents	$	110,775		—		—	$	110,775
Total cash and cash equivalents	$	110,775	$	—	$	—	$	110,775
Total assets	$	110,775	$	—	$	—	$	110,775
Liabilities:
Contingent earnout liability	$	—	$	—	$	1,379	$	1,379
Private placement warrant liability		—		—		189		189
Teton acquisition contingent earnout liability		—		—		1,500		1,500
Total liabilities	$	—	$	—	$	3,068	$	3,068

	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. The Teton business milestone was determined to have a high probability of attainment and the liability was increased by $0.9 million to the maximum value of $1.5 million as of December 31, 2023, the impact of which is recorded within sales and marketing expense. 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
Fair Value as of December 31, 2021	$	59,722		$	2,646		$	—		$	62,368
Change in fair value		(57,307	)		(1,985	)		500			(58,792	)
Additions		—			—			1,602			1,602
Settlement of liability acquired as part of acquisitions		—			—			(1,500	)		(1,500	)
Fair Value as of December 31, 2022	$	2,415		$	661		$	602		$	3,678

Fair Value as of December 31, 2022	$	2,415		$	661		$	602		$	3,678
Change in fair value		(1,036	)		(472	)		898			(610	)
Fair Value as of December 31, 2023	$	1,379		$	189		$	1,500		$	3,068

Summary of Property and Equipment Depreciated

The cost of property and equipment is depreciated based upon the following asset lives:


Asset Classification	Estimated Useful Life
Machinery and equipment	5 years
Leasehold improvements	Shorter of estimated useful life or remaining lease term
Computer equipment	3 years
Computer software	3 years
Furniture and fixtures	3 years

Summary of Balance of The Company's Warranty Reserve

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


	Year Ended December 31,
(in thousands)	2023			2022
Balance at beginning of period	$	620		$	658
Additions to warranty reserve		1,397			812
Claims fulfilled		(1,131	)		(850	)
Balance at end of period	$	886		$	620