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)

3 Months Ended

Mar. 31, 2023

Summary of Cash Equivalents and Short-term Investments

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


	March 31, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	82,704	$	—	$	—		$	82,704
Total cash equivalents		82,704		—		—			82,704
Commercial paper		27,447		—		—			27,447
Government bonds		20,440		17		—			20,457
Corporate bonds		4,966		—		(11	)		4,955
U.S. Treasury bills		4,944		1		—			4,945
Asset-backed securities		2,955		—		(3	)		2,952
Total short-term investments	$	60,752	$	18	$	(14	)	$	60,756
Total cash equivalents and short-term investments	$	143,456	$	18	$	(14	)	$	143,460

	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 March 31,
(in thousands)	2023			2022
Balance at beginning of period	$	1,559		$	1,021
Provision adjustment		(523	)		(43	)
Write – offs		(250	)		(7	)
Balance at end of period	$	786		$	971

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


	Fair Value Measurements
	March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds included in cash and cash equivalents	$	82,704		—		—	$	82,704
Total cash and cash equivalents	$	82,704	$	—	$	—	$	82,704
Commercial paper		—		27,447		—		27,447
Government bonds		—		20,457		—		20,457
Corporate bonds		—		4,955		—		4,955
Asset-backed securities		—		2,952		—		2,952
U.S. Treasury bills		4,945		—		—		4,945
Total assets	$	87,649	$	55,811	$	—	$	143,460
Liabilities:
Contingent earnout liability	$	—	$	—	$	1,607	$	1,607
Private placement warrant liability		—		—		472		472
Teton acquisition contingent earnout liability		—		—		602		602
Total liabilities	$	—	$	—	$	2,681	$	2,681

	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		(24,896	)		(693	)		—		(25,589	)
Fair Value as of March 31, 2022	$	34,826		$	1,953		$	—	$	36,779

Fair Value as of December 31, 2022	$	2,415		$	661		$	602	$	3,678
Change in fair value		(808	)		(189	)		—		(997	)
Fair Value as of March 31, 2023	$	1,607		$	472		$	602	$	2,681

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 March 31,
(in thousands)	2023			2022
Balance at beginning of period	$	620		$	658
Additions to warranty reserve		173			286
Claims fulfilled		(309	)		(139	)
Balance at end of period	$	484		$	805

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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