Shapeways slashes FY guidance by up to 26% as revenue dips below 2020 levels in Q3 2021

3D printing service provider Shapeways (SHPW) has published its first financials since going public via a merger with SPAC Galileo Acquisition in September 2021. 

Over the course of Q3 2021, the company’s results show that it generated $7.7 million, 5% less than the $8.1 million it reported during the pandemic-hit period of Q3 2020. Citing continued COVID-related disruption and the “inconvenient timing” of its IPO, which left it unable to invest in growth as quickly as it would’ve liked, the firm says it has suffered from a “delay in the start of its expected revenue ramp.”

Following its below-par Q3, Shapeways has been forced to revise down its guidance for FY 2021, from the $44 million it had initially projected to between $32.5 and $33.5 million, a drop of 24 to 26%. Predictably, this resetting of expectations hasn’t gone down well with investors, and the company’s shares fell 28% to a post-IPO low of $4.96 in the week after its Q3 financials were made public. 

Despite the clear headwinds faced by Shapeways, its CEO Greg Kress has reiterated that its merger has provided it with more than enough funding, to carry out the expansion needed to achieve “multi-year and period [revenue] growth.” 

“I want to highlight that while the tightening of expectations has shifted, our conviction has not,” Kress maintained on the firm’s earnings call. “We have exciting opportunities ahead of us, as we add manufacturing capacity, capture more share of wallet with additional hardware and materials, and grow our proprietary software platform.”

The Shapeways team pointing at the firm's logo outside the NYSE.
Shapeways went public on September 30 2021, in a deal that saw it raise $90 million in funding. Photo via Shapeways.

Shapeways’ Q3 2021 results 

Although Shapeways’ financials aren’t broken down by business division like those of many 3D printing peers, the firm’s CFO Jennifer Walsh was able to shine some light on the results during its earnings call. Walsh explained that the company’s production business generated $6 million in Q3 2021 or 78% of its total revenue, which was flat against Q3 2020, but this was offset by a fall in its ‘marketplace sales.’

This e-commerce offering, in which Shapeways provides a platform for shop owners to sell their products, brought in just $1.7 million during Q3 2021, $400,000 less than it did in Q3 2020. Rather than attributing the segment’s decline to COVID or IPO delays, Walsh blamed its “historic customer base with lower economics,” and emphasized that it was now targeting “more profitable enterprise customers.”

As a first step in this high-value strategy, Kress highlighted on the call that Shapeways’ gross margins improved by ‘180 base points,’ from 45.7% in Q3 2020 to 47.5% in Q3 2021. Over the same period, however, the firm’s net loss also rose from $0.4 million to $15.6 million (due largely to IPO-related earnouts), and at $25 million, its YTD revenue remains adrift of the $44 million FY guidance issued earlier in 2021. 

A bureau expansion in-waiting?

Even though Shapeways hasn’t been able to fulfill its own revenue projections so far this year, it has still managed to reach several milestones, including initiatives that could serve as a platform for future growth. Back in February, the company not only revealed that it had 3D printed over 20 million parts, but it was able to showcase some “groundbreaking products” which have facilitated its landmark achievement. 

In terms of recently-acquired clientele, Shapeways began 3D printing patient-specific models for Armor Bionics in July 2021, which are set to be used for gaining more accurate medical diagnoses, and better planning surgical procedures.

To enable it to meet an anticipated growth in user demand, the company has also expanded its partnership with Desktop Metal. As part of this collaboration, the former has committed to building on its Desktop Metal system capacity at its Long Island, New York and Eindhoven facilities, while the latter has agreed to offer its users Shapeways’ ‘Otto’ fully-digitized workflow platform.

On Shapeways’ prospects for 2022, Kress struck an upbeat tone on its earnings call, telling analysts that it’s “already building its pipeline” in higher value markets such as the industrial, medical, automotive and aerospace sectors. Although the CEO added that the closing time for these orders would be “longer than typical,” he suggested these efforts would bring rewards as next year progresses. 

“As we look forward, we believe there are multiple growth opportunities for Shapeways’ platform,” added Kress. “We believe that Shapeways is well-positioned, as customers turn to digital manufacturing for quick-turn, part production to mitigate increasingly-common supply chain disruptions.”

“We are positioned to scale across materials, markets, technologies and through our offering of software as a service.”

A range of components that were 3D printed using Shapeways' existing online platform. Image via Shapeways.
Shapeways has committed to expanding its manufacturing capabilities as a means of broadening its addressable market. Photo via Shapeways.

Shapeways’ future investment plans

Shapeways’ balance sheet at the end of Q3 2021 showed that it had $90.3 million in cash and equivalents, but in keeping with its strategy to-date, Kress refused to commit the firm to investments in inorganic growth. Instead, Kress emphasized that the company is considering “complementary tick-in acquisitions,” but it also needs to expand on its capacity, in a way that allows it to “accelerate its growth over time.”

The CEO reiterated that the firm sees growth potential in broadening its ‘go-to-market’ strategy as well, and moving beyond its current “self-service capabilities.” To address what he describes as higher-value ‘middle-market’ and enterprise clients, Kress added that Shapeways needs to start by expanding its internal team, before beginning to identify acquisition targets after gaining a “little more traction.”

“Over the years, we have developed many relationships, and as appropriate, we will work to execute on those new acquisitions,” concluded Kress. “We have a roadmap that we believe will help us accelerate our pipeline, develop new initiatives and deliver the innovative and high quality solutions our customers have come to expect over the last ten years.”

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Featured image shows some of the Shapeways team pointing at the firm’s logo outside the NYSE. Photo via Shapeways.