3D Systems reports earnings for 2018, shifts focus to 3D printer materials and software

South Carolina-headquartered, award-winning 3D printer manufacturer 3D Systems (NYSE: DDD) has announced its financial results for the fourth quarter and full year 2018.

Headline revenue for FY2018 was reported at $687.7 million, up 6% on FY2017 which was $646.1 million. Of this total, Q4 2018 revenue accounted for $180.7 million. Q4 2017’s revenue was $177.3 million.

The strong theme of the investor call that followed the results was that throughout 2019 the company will be doubling down its efforts in materials creation and software development instead of focusing on machines. In addition, as explained by executive vice president and CFO John McMullen:

“We are very focused on reducing our cost structure and driving cash generation during 2019.”

3D Systems revenue by division

3D Systems revenue is reported in two divisions: Products and Services. Year on year the Products division generates the majority of revenue. In Q4 2018 Products revenue was reported at $113 million, up 10% on Q4 2017 revenue, which was $102.3 million. For the full year ended December 31, 2018, Products revenue was reported at $429.2 million, a rise of 9.6% on FY2017’s total revenue for Products which was $391.6 million.

Across this division for the whole year, 3D Systems reported a 25% growth in 3D printer revenue on a 76% increase in printer unit sales, compared to the previous year.

Revenue Q4 2018 Q4 2017 Variance $ millions %
Products 113,062 102,349 10,713 10.47%
Services 67,650 74,915 -7,265 -9.70%
Total 180,712 177,264 3,448 1.95%

Services revenue for Q4 2018 was reported at $67.7 million down 9.7% on Q4 2017’s $74.6 million. For the full year 2018, Services constituted $258.4 million in revenue, which can be compared to 2017’s Services revenue of $254.5 million. 3D Systems healthcare solutions and the company’s general on demand manufacturing capabilities are some of the functions accounted for in the Services division. Over the full year 2018, 3D Systems on demand manufacturing experience a 2% growth, whereas healthcare solutions reported 20% growth.

Revenue FY 2018 FY 2017 Variance $ millions %
Products 429,215 391,596 37,619 9.61%
Services 258,445 254,473 3,972 1.56%
Total 687,660 646,069 41,591 6.44%

Commenting on the performance over the past 12 months Vyomesh Joshi (VJ) president and CEO at 3D Systems, said, “We are pleased with our continued strong growth in printer revenue and units across platforms, in both plastics and metals, as well as continued growth in healthcare and software solutions.”

“We are also pleased with the significant portfolio enhancements we made throughout 2018, our improved execution and the cost structure opportunities available to us as we enter 2019.”

From hardware to materials and software

3D Systems hardware launches over the past year have included the introduction of the Figure 4 Standalone system and the NextDent 5100. Speaking to analysts on the earnings call, VJ confirmed that new materials and workflow software solutions will be coming to the market in 2019, and already the company has launched FabPro Elastic BLK liquid resin for the FabPro 1000 this year.

Sample of FabPro Elastic BLK. Photo via 3D Systems

“What we are doing now is to really align our application engineering [with] our materials science developers in saying, “Okay. Let’s pick two or three very important production workflows just like what we have done in dental” explains VJ.

“”Can we come up with some new production workflow that we are inventing new materials for that?” That’s the innovation R&D that will really enable us to scale our figure-four platform for production workflows.”

Also on the call, McMullen added, “[…] from a cost structure point of view, there’s an opportunity for us right now to save because we put so much money into product development over the last year, year and a half with all these launches. So, we’re able to scale back there and now put some of that to these two areas. And that was the message we were trying to get across in terms of the shift.”

Complete Fourth Quarter and Full Year 2018 Financial Results for 3D Systems can be found online here.

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Featured image shows  Vyomesh Joshi onstage during IMTS 2016, putting the customer at the center of strategy. Photo by Michael Petch