When 3D Systems put out a preliminary financial report for its full year 2013 results revising non-GAAP earnings downwards yesterday morning, the markets went somewhat haywire and 3D printing stocks tumbled across the board.
3D Systems had previously suggested earnings of $0.93 to $1.03 per share, but yesterday saw these numbers reduced to $0.83 to $0.87 per share. However, this is still projection, based on unaudited results, and the actual numbers, which could be different, will be released 28th February. It begs the question, why not just wait for the actual results?
The same announcement from 3DS also anticipated full year revenues “to be in the range of $513 million to $514 million, within its previously raised revenue guidance range of $500 million to $530 million,” and reported “much stronger professional 3D printers and materials demand and softer on-demand parts and consumer demand during the fourth quarter.” The industrial machines are obviously still 3D Systems’ bread and butter. The decline in services is a bit of a surprise — the consumer market, not so much.
CEO, Avi Reichental, as would be expected, went on the record to highlight the positives: “Consistent with our previous comments, during the fourth quarter we made very significant R&D, manufacturing and marketing investments designed to accelerate revenue growth that resulted in substantially compressed earnings for the fourth quarter. As we previously stated, we are willing to tolerate earnings reduction and even slight gross profit margin compression during this period to substantially accelerate our growth rate and market share. We firmly believe that these accelerated investments that already resulted in the announcement of 24 new products over the past nine weeks position the company to double its revenue over the next couple of years on organic growth of at least 30% going forward and to achieve greater earnings power and profitability over the long term.”
There is still a question mark over the “consumer” market — a couple of them actually, depending on who you talk to. The first is whether the consumer market will ever develop at all, but for those that believe it will, the second is how long it will take. 2014 is unlikely to be the year, and it is, IMO, the mid to long term that will see returns from the consumer. I do agree with Avi on that. However, I would personally suggest that there are still legitimate untapped (and huge) markets for this ‘entry-level’ type of machine. I’ve said it before and I’ll say it again, they (all of them not just 3DS) need to penetrate schools, studios and makers, with conviction and with commitment. That’s to say, they need to offer value for money in terms of capital costs, consumables and printer capability.
It’s all about walking before you can run! But the markets don’t like that very much it seems, and besides, it gives the analysts yet another opportunity to write frenzied reports and disagree with one another.
Rachel, I completely agree. Indeed, analysts are akin to economists, i. e., if you lined them all up circling the globe, they wouldn’t come to a conclusion. 3D Printing (the company and the industry) are here for the long haul, and all that quibbling about eps is the analysts’ way of proving their “worth.”