Business

Increased Sigma Labs software sales drive over 100% annual revenue growth

Quality assurance software developer Sigma Labs has revealed within its FY 2020 financials that its annual revenue more than doubled between 2019 and 2020. 

Over the course of 2020, the company generated total revenue of $807,000, more than twice the $402,000 reported in FY 2019. Sigma Labs has primarily attributed its annual growth to the increased sales of its PrintRite3D product, which were driven by a number of new client contracts, including a deal to install the system at Mississippi State University

Since the company published its financials, its shares have dipped by around 5%, from $4.32 to $4.10. However, given that Sigma Labs’ shares had generally begun to plateau since the spike caused by its announcement of a contract from Lockheed Martin, their decline is unlikely to be representative of a broader market trend. 

In a statement issued alongside the results, the firm’s CEO Mark K. Ruport hailed Sigma Labs’ recent progress, in spite of the economic headwinds caused by COVID-19. “The industries that we focus on were hit hard by COVID-19, and caused almost every opportunity we were pursuing to be delayed, reduced in scope and in a few instances, cancelled,” said Ruport.

“Despite the negative impact on our pipeline, we still doubled revenue, put together a very experienced AM sales team to support our partners, and greatly improved our balance sheet,” he added. “For our long-term shareholders and investors, we are proud to contrast the Sigma Labs of yesterday, an R&D focused company, to where we stand today.”

“We were able to achieve almost all of our objectives in a very difficult operating environment.”

A part being printed while also being monitored by Sigma Labs' PrintRite3D software.
Sigma Labs’ revenue doubled between FY 2019 and FY 2020 thanks to the increased sales of its PrintRite3D software. Photo via Sigma Labs.

Sigma Labs’ FY 2020 results 

While Sigma Labs doesn’t provide a revenue breakdown by product line, it does report more broadly on its top-line inventory, sales, and profitability numbers. Of course, the firm’s 100% revenue increase between FY 2019 and FY 2020 hasn’t translated directly into profit, but it did manage to turn a $172,000 gross loss into a $216,000 gross profit over the same period. 

Despite this, Sigma Labs still reported an overall pre-tax loss of $5.2 million for FY 2020, with employee salaries forming the bulk of its expenditure, at $2.6 million. The figures show that while larger manufacturing-oriented firms like Stratasys and 3D Systems were forced to cut their workforces last year, Sigma Labs hasn’t found itself in this position just yet. 

The company has largely managed to avoid the need for such efficiency savings thanks to its extensive financing activity, which saw it raise $8.7 million in 2020 from the sale of shares. As of December 31st 2020, Sigma Labs had retained $3.7 million of this funding in capital, while its recent $4.5 million share offering will be accounted for in its Q1 2021 financials. 

Sigma Financials ($)FY 2019FY 2020Variance ($)Variance (%)
Revenue402k807k+405k+101
Cost of Revenue574k592k +18k+3
Gross Profit-172k+216k+388k+255
Net Loss-6.3m-5.2m-1.1m-17.5

PrintRite3D takes off in 2020

Sigma Labs’ flagship product, PrintRite3D, is an in-process quality assurance (IPQA) package for metal 3D printers, composed of multi-sensor modules and a software component that provides users with real-time monitoring capabilities. Although the company hasn’t put a precise figure on just how much revenue PrintRite3D generated last year, it’s understood to be one of the main factors behind its growth. 

In October 2020, Sigma Labs partnered with IN4.OS as part of a ‘Smart Factories of the Future’ initiative, in which its PrintRite3D software was optimized for use with DMG MORI’s LASERTEC 3D printers. The project saw the firm work closely with DMG MORI, and it has since been contracted to provide melt pool monitoring systems for its machines. 

Sigma Labs has also been awarded further contracts by global laser supplier Coherent Inc, to install its PrintRite3D Lite system, and defense contractor Lockheed Martin to use the standard product within its space division. Although the revenue from the latter deal won’t be factored into Sigma Labs’ financials until Q1 2021, it sent its share price soaring at the time, by as much as 125%. 

In a further boost to the firm’s upcoming financials, Ruport has told analysts on an earnings call that the company recently received two more contracts: one from a European aerospace client, and another from Turkish OEM Armox. According to Ruport, the deals “reinforce Sigma Labs’ position” as a market leader, and effectively reflect the dividends paid by its newly-established distribution model. 

A broadening software portfolio

During the early stages of 2021, Sigma Labs has already expanded on its product offering, and it now offers Lite and DED variations of PrintRite3D, which broaden its addressable market. The company is also preparing to update its flagship software this spring, bringing new temperature calibration features that should serve to reinforce its existing client base. 

As a means of generating further growth in 2021, Sigma Labs now aims to leverage its ties with DMG MORI as well as Materialise and Additive Industries, to build independent revenue streams. In particular, the firm sees greater opportunities ahead when it comes to gaining multiple system contracts, from global manufacturers going into serial production.

“We will continue to seek out new and expanded strategic partnerships with 3D printer OEMs, software companies, and integrators,” concluded Ruport. “Anticipated upcoming milestones include leveraging our sales team to expand sales through our current partnerships, and through direct sales to global end-user manufacturers, universities and R&D organizations.”

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Featured image shows a part being 3D printed while also being monitored using Sigma’s PrintRite3D software. Photo via Sigma Labs.

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