3D Systems revenue dips 15.2% in Q3 2022 as dental declines and divestitures hit earnings

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US 3D printer manufacturer 3D Systems (DDD) has reported a 15.2% revenue decline in its Q3 2022 financial results. 

During Q3 2022, 3D Systems generated $132.3 million, a significant fall against the $156.1 million it brought in over the same period last year. According to the firm’s CEO Dr. Jeffrey Graves, these results “were consistent with its recent expectations,” and reflect the continued impact of reduced consumer spending, which in turn, has led to a decline in demand from major dental clientele. 

“We are seeing steady demand for our industry-leading suite of additive manufacturing solutions in core end markets such as energy, commercial space, precision micro-castings, and medical devices,” explained Graves. “However, as we had expected, the difficult global macroeconomic and geopolitical environment has put pressure on consumer discretionary spending, which led to significantly lower sales to key dental market customers during the quarter.” 

3D Systems Figure 4 Modular. Photo by Michael Petch.
3D Systems’ Figure 4 Modular platform. Photo by Michael Petch.

3D Systems’ Q3 2022 financials 

Since 3D Systems’ strategic restructuring in Q3 2020, it has reported its financials both in its traditional Products and Services divisions, and its Industrial and Healthcare verticals. Last quarter, the firm’s Products business generated $96.3 million, 11.6% less than the $108.9 million it reported in Q3 2021, while its Services brought in $35.9 million, a revenue decline of 23.9% over the same period. 

Ahead of its earnings call, the company hasn’t provided much insight into the reasons behind these revenue dips, beyond macroeconomic circumstances, reduced dental sales and its recent divestitures. 3D Systems sold Quickparts in September 2021, after divesting Cimatron and Simbionix in deals that have raised it over $450 million in funding. 

While this cash has allowed the firm to expand within key verticals, by buying Allevi, Oqton, Kumovis, Titan Robotics, Additive Works and Volumetric Biotechnologies, selling its on-demand parts business has impacted Service revenue. 

Excluding divestitures and currency fluctuations, 3D Systems has been keen to point out that its revenue decline was not as steep as it first appears. Though the company’s Industrial revenue fell 14.6% to $68.1 million between Q3 2021 and Q3 2022, this drop was just 9.0% when these factors are taken into account. Similarly, 3D Systems’ Healthcare revenue dipped 16.0% to $64.2 million over the same period, but when measured on a like-for-like basis, its earnings only fell by 3.5%. 

Revenue ($) Q3 2021Q3 2022Difference ($) Difference (%) Q2 2022Q3 2022Difference ($) Difference (%) 
Products 108.9m96.3m-12.6m-11.6103.8m96.3m-7.5m-7.2
Services 47.2m35.9m-11.3m-23.936.3m35.9m-0.4m-1.1
Industrial 79.7m68.1m-11.6m-14.668.3m68.1m-0.2m-0.3
Healthcare 76.4m64.2m-12.2-16.071.7m64.2m-7.5m-10.5
Total 156.1m132.3m-23.8m-15.2140.0m132.3m-7.7m-5.5

Silver linings in a difficult Q3 2022 

When measured on a non-GAAP, constant currency basis, without divestitures, 3D Systems’ Healthcare and Industrial revenue rose 2.7%, despite the macro-headwinds it faced during the quarter. The firm says this reflects the “solid demand” seen in both its core verticals, and in Q3 2022, it took several steps towards advancing its reach in these areas. 

In Healthcare, 3D Systems spun out Systemic Bio, a company set up to use the technologies developed as part of its Print to Perfusion program, as well as those of its other subsidiary Allevi, to 3D bioprint vascularized models from human cells.

To boost its Industrial business, meanwhile, 3D Systems bought dp polar. When the deal was agreed, Graves said combining dp polar’s single-pass technology with the firm’s material and software portfolio, would allow it to better address the medical, aerospace and automotive sectors. 3D Systems’ new Figure 4 and DuraForm materials also launched over the period. Featuring strong durability properties, Figure 4 Tough Clear and DuraForm PAx Black are designed for industrial use cases. 

A part 3D printed from 3D Systems' Figure 4 Tough Clear material. Photo via 3D Systems.
A part 3D printed from 3D Systems’ Figure 4 Tough Clear material. Photo via 3D Systems.

3D Systems’ revised-down guidance

Assuming there are no macroeconomic changes that impact its demand or disrupt its supply chain, 3D Systems has set its FY 2022 guidance at $535 – $545 million, down from the $530 – $570 million it initially projected. That said, the company has kept its Non-GAAP gross profit margin projection at 39% – 41%, while its Non-GAAP operating expenses are expected to come in at around $240 – $245 million. 

3D Systems also finished Q3 2022 with $609.4 million in cash, positioning it well to make future investments, although Graves says its top priority remains taking advantage of its past acquisitions, as well as opportunities in emerging markets. 

“Our focus on operational execution to capitalize on our past investments remains our highest priority, while our strong balance sheet positions us well to continue investing in high margin, high growth areas of our businesses,” added Graves. “With new opportunities for large-scale adoption of additive manufacturing opening before us, and entirely new markets being created in bioprinting, we believe we are very well positioned to deliver on our commitment to become a $1 billion revenue company in five years.”

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Featured image shows 3D Systems’ Figure 4 Modular platform. Photo by Michael Petch.