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)

9 Months Ended

Sep. 30, 2023

Summary of Cash Equivalents and Short-term Investments

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


	September 30, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	91,347	$	—	$	—		$	91,347
Total cash equivalents		91,347		—		—			91,347
Commercial paper		6,956		—		—			6,956
Government bonds		15,872		—		(9	)		15,863
Corporate bonds		3,003		—		(1	)		3,002
Asset-backed securities		1,981				(2	)		1,979
Total short-term investments	$	27,812	$	—	$	(12	)	$	27,800
Total cash equivalents and short-term investments	$	119,159	$	—	$	(12	)	$	119,147

	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 September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023			2022
Balance at beginning of period	$	183	$	1,158	$	1,559		$	1,021
Provision adjustment		300		155		(566	)		299
Write – offs		—		—		(510	)		(7	)
Balance at end of period	$	483	$	1,313	$	483		$	1,313

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 September 30, 2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation:


	Fair Value Measurements
	September 30, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds included in cash and cash equivalents	$	91,347		—		—	$	91,347
Total cash and cash equivalents	$	91,347	$	—	$	—	$	91,347
Commercial paper		—		6,956		—		6,956
Government bonds		—		15,863		—		15,863
Corporate bonds		—		3,002		—		3,002
Asset-backed securities		—		1,979		—		1,979
Total assets	$	91,347	$	27,800	$	—	$	119,147
Liabilities:
Contingent earnout liability	$	—	$	—	$	4,924	$	4,924
Private placement warrant liability		—		—		441		441
Teton acquisition contingent earnout liability		—		—		602		602
Total liabilities	$	—	$	—	$	5,967	$	5,967

	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
Fair Value as of December 31, 2021	$	59,722		$	2,646		$	—		$	62,368
Change in fair value		(50,982	)		(1,701	)		480			(52,203	)
Additions		—			—			1,602			1,602
Settlement of liability acquired as part of acquisitions		—			—			(1,480	)		(1,480	)
Fair Value as of September 30, 2022	$	8,740		$	945		$	602		$	10,287

Fair Value as of December 31, 2022	$	2,415		$	661		$	602		$	3,678
Change in fair value		2,509			(220	)		—			2,289
Fair Value as of September 30, 2023	$	4,924		$	441		$	602		$	5,967

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 September 30,						Nine Months Ended September 30,
(in thousands)	2023			2022			2023			2022
Balance at beginning of period	$	556		$	790		$	620		$	658
Additions to warranty reserve		444			245			975			672
Claims fulfilled		(292	)		(313	)		(887	)		(608	)
Balance at end of period	$	708		$	722		$	708		$	722