Shapeways to make “strategic growth” investments after revenue falls in Q4 2021

3D printing service provider Shapeways (SHPW) has announced fresh plans to expand its business following a fall in its revenue over Q4 2021. 

During the course of Q4 2021, Shapeways brought in $8.3 million, 5% less than the $8.7 million it reported in Q4 2020. Following this decline, which was at least partially caused by the lower sales generated by its marketplace business, the firm has committed to investing in new “hardware and go-to-market initiatives,” that could result in the “ramping up of sales in the back half of the year [FY 2022].”

“As we move through 2022, we will continue to execute on our strategic growth plan and make investments to help us capture and expand our market share,” Greg Kress, CEO of Shapeways, said on its earnings call. “We continue to see the market shifting towards the digitization of manufacturing, and we believe it’s approaching an inflection point in the overall adoption of digital manufacturing solutions.”

A range of components that were 3D printed using Shapeways' existing online platform. Image via Shapeways.
A set of components 3D printed via Shapeways’ online platform. Photo via Shapeways.

Shapeways’ FY 2021 financials 

While breaking down Shapeways’ revenue on its earnings call, its CFO Jennifer Walsh steered clear of the 5% decline seen in Q4 2021, choosing to focus on its slightly rosier FY 2021 financials instead. Dividing the firm’s revenue by Direct Sales and Marketplace Sales segments, Walsh explained that the former had brought in $25.6 million over FY 2021, an 8% improvement on its FY 2020 performance. 

Over the same period, Shapeways’ Marketplace Sales division, which includes any income generated by shop owners selling their products via its e-commerce site, saw its revenue decline 2% to $7.8 million. Although Walsh didn’t disclose exactly how much of this fall happened in Q4 2021, she did suggest that it was a natural consequence of the company’s shift towards targeting larger enterprises. 

Elsewhere, on the spending front, Shapeways’ operating expenses rose from $16.5 million in FY 2020 to $24 million in FY 2021, while its SG&A costs increased to $17.6 million from $10.8 million as well. According to the company, this jump was caused by the rising staff, marketing and other corporate spending necessitated by its expansion, as well as costs related to its merger with SPAC Galileo Acquisition

That being said, Shapeways’ IPO yielded a significant amount of funding, meaning that it remained in a relatively strong capital position as of December 31, 2022, with $79.7 million in cash and equivalents. On the firm’s earnings call, Walsh explained that this would allow it to “purchase new hardware, build out its sales team,” and potentially even “make targeted strategic acquisitions” in FY 2022.

Shapeways ($)FY 2020 FY 2021 Difference (%) 
Revenue 31.8m33.6m+6
Cost of Revenue 17.9m17.7m-1
Gross Profit 13.9m16m+14
Operating Expenses16.5m24m+45
Net Income/Loss -3.2m+1.8m

Developing “levers for growth”

Shapeways’ FY 2021 revenue may have fallen short of the $44 million it projected ahead of its IPO in April 2021, but it still delivered annual growth during a period impacted by ongoing COVID-related challenges. Kress attributed this relative success on the firm’s earnings call to the “multiple levers for growth” it has built via “years of investment” in its platform, which he described as “highly-scalable.”

Arguably, one of Shapeways’ main achievements in this area last year, was the deepening of its ties with Desktop Metal. Across Q4 2021 and Q1 2022, the company installed three more Desktop Metal systems, and this figure could rise to eight by the end of the year. Hailing the units as having a “significant role to play” in Shapeways’ growth, Kress said they’re expected to become “an important new revenue source.”

Additionally, having built out its capacity, Kress emphasized on the firm’s earnings call that it’s now “well-positioned to fill the demanding needs of high performance end-use parts.” Given that 89% of Shapeways’ revenue still comes from recurring users, many of which it describes as ‘self-service,’ it now sees an opportunity to expand its industrial, medical, automotive and aerospace manufacturer base. 

However, such orders naturally come with longer closing times than the sales typically generated by the company, hence Kress revealed that “it has been talking with many new potential middle-market customers” and it “expects to see new business wins” soon, but for now, he’s just “pleased to be growing its pipeline.”

In terms of shorter-term ‘wins,’ Shapeways did launch ‘Otto’ in Q4, a platform designed to provide traditional manufacturers with an easier way of adopting 3D printing. The software’s roll-out is expected to continue for two more years, bringing several functionality updates with it, culminating in an offering built to capitalize on what Kress called an upcoming “inflection point” for digital manufacturing. 

The Shapeways team pointing at the firm's logo outside the NYSE.
Shapeways went public on September 30, 2021, but it raised less funding than hoped in the transaction. Photo via Shapeways.

Shapeways’ unclear road ahead 

Ahead of its IPO, Shapeways projected that it could generate up to $86 million in FY 2022, but since missing its $44 million target last year, it appears to have ditched this goal. When questioned about the lack of guidance issued on the firm’s earnings call, Kress explained that its projections had been impacted by delays to its merger, and that the move had actually managed to raise less funds than expected. 

“One, the timing of our transaction was delayed 6 to 9 months, so you’re going to see that push out also push out revenue over a couple quarters as well,” explained Kress. “The second thing is, we didn’t raise the total amount of money that we wanted. We did raise a considerable amount of money, but we didn’t raise 100% of what we could have. So those two things definitely impact that number.”

The only guidance that was provided on the call came from Walsh, who said that despite seeing inflationary pressures, supply chain issues and geopolitical unease, the firm was “optimistic about its progress.” With this in mind, Shapeways’ CFO projected revenue of $7.3 million to $7.4 million for Q1 2022, adding that she expects its new Desktop Metal systems and Otto to begin bearing fruits in H2 2022. 

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Featured image shows the Shapeways sign from inside its New York warehouse. Photo via Gizmodo.