Two of the biggest global leaders in 3D printing technology, Stratasys and 3D Systems, announced second-quarter 2020 results with reported revenues down, showing signs of struggle mainly due to the impact of the COVID-19 pandemic, which continues to wreak havoc across industries worldwide. Despite the losses, both companies’ CEOs expect to resume rapid growth through operating cost reductions and new strategies that will accelerate the adoption of additive manufacturing (AM) solutions.
Stratasys’ revenue for the period ending June 30, 2020, was $117.6 million, with a net loss of $28 million, a downturn compared to last year’s reported profit of $1.1 million for the same period. A similar fate befell 3D Systems, as the company announced revenues of $112.1 million after the closing bell, with a net loss of $38 million. According to both companies, the reduction was primarily driven by the adverse impact of COVID-19 on industry customers that buy both 3D printing machines and services.
An extended lockdown due to a resurgence of the virus in many parts of the world confirmed fears that the reported earnings would be lower than expected. Both companies’ first-quarter results were already hit hard by the pandemic, Stratasys’ revenue had already fallen 14.4% in the first quarter of 2020 to $132.9 million, with a 7.4% reported loss per share. While 3D Systems’ revenue fell 11.4% in the first quarter to $134.7 million, with a 14% share drop following the earnings release.
The quarterly earnings season begins this week with plenty of companies reporting sharp declines in revenues, proving a turnaround this year might be difficult, but not impossible. Investors looking at stocks will find Stratasys’ earnings per share were down 181.25% over the past year to $0.13, which beat the estimate of $0.20, according to finance reports. 3D Systems has also underperformed the market so far this year, with shares losing close to 21.8% since the beginning of 2020.
Stratasys CEO Yoav Zeif stated that “despite the current macro slowdown due to COVID-19, we remain very optimistic about where our business and our industry is headed. The largest opportunity for us in 3D Printing is in polymers, and the fastest-growing area is manufacturing. We are already a leader in polymer additive manufacturing and expect to increase our presence through new offerings that will focus on delivering incremental customer value, especially in the fast-growing manufacturing applications, where we see the longest runway for growth through new technologies that we will offer,”
While Stratasys continues expanding its ecosystem, resources, and strategy to serve significantly more polymer applications and offer a full suite of solutions for its customers, 3D Systems will be implementing an entirely different strategy. Management commentaries during the earnings report call indicated aggressive cost-cutting measures to reduce operating costs by $100 million per year and a workforce reduction of nearly 20%. But one of the most relevant changes to the company is its new focus to serve applications in two key markets: healthcare and industrial.
During the announcement, 3D Systems president and CEO, Jeffery Graves, revealed that the company will no longer emphasize the individual software, hardware, and materials elements of AM separately, but rather the combination of these elements into specific application solutions within the targeted markets. The company will become laser-focused on overall growth and profitability in healthcare and industrial, rather than measuring the success within every single element that the company provides. Particularly focusing on dental, medical devices, surgical planning, and simulation for healthcare, as well as aerospace, defense, automotive and durable goods industries. Examples include orthopedic implants for healthcare and the manufacture of complex heat exchangers for aerospace.
“To accelerate value creation for our customers, we are simplifying and focusing our organization by realigning the company’s breadth of capabilities into two key market verticals – Healthcare and Industrials. Each of these teams will drive application specific solutions within these market verticals,” informed Graves. “We will focus on markets and applications where a premium is placed upon performance and reliability; with engineering/technology cultures that seek product innovation as a means of delivering value to their customers; and with processes that tend to be highly controlled. We have a demonstrated capability to be successful in these markets, with our technologies and process knowledge today enabling up to half-million production parts to be made through additive manufacturing each day.”
In the two months since joining 3D Systems, Graves claimed he held many reviews to state a clear purpose for the Rock Hill, South Carolina-based company moving forward, mainly building on founder Chuck Hull’s focus on application processes and unique technology. By redirecting the company, Graves intends to bring back a sharp solution for key growing markets that demand high-reliability products. The CEO also explored his view of the near term future, noting that many sites are reopening around the world as production restarted. He considers these fundamental demand drivers could be a good thing for 3D Systems, and expects capital spending to follow. Finally, he said that 3D Systems had a “pretty decent balance sheet” and that he “is taking bold action to look after the equity investor.”
Alternatively, Stratasys’ CEO, who is also new to the job, indicated that the goal is to become the first choice in the growing polymer 3D printing marketplace, claiming polymers demand is growing steadily, and 3D printing is penetrating further into manufacturing across many businesses and governments worldwide, as they begin to reassess their supply chains and implement decisions that will drive increased demand for AM technology.
“Even with the revenue challenge this year, we have been able to manage our strong cash position, demonstrating the resilience of our business model. After a successful J55 launch with initial shipments to customers beginning in late June […], we plan to double the size of our business to offer a broader range of solutions. Results of our analysis show the market is growing, dominated by polymer, the largest value pool,” said Zeif. “We see that the competitive landscape and market offerings are fragmented, there is no silver bullet in AM technology and no clear leader across all major segments. Stratasys serves approximately one third of the 3D printing hardware addressable market, we want to expand our technologies to serve the growing applications for polymer 3D printing.”
The Israeli-based firm will also be investing organically and inorganically in new polymer technologies, such as powder-bed fusion, VAT photopolymerization, and others. As part of the CEO’s new operating model, the company will also be undergoing cost mitigation, with priorities that include four day work weeks across the company, an additional 5% salary reduction for top executives, and an accelerated 10% workforce reduction.
This quarter’s corporate earnings for Stratasys and 3D Systems posted less profit than anticipated. For now, the pace at which industry can return to normal is still quite slow, and uncertainties as to when the virus will cease to circulate means companies will continue to suffer severe disruptions. As soon as the pandemic broke it was clear that 3D printing technology could help tackle many of the challenges that industries face, from supply chain interruptions to on-demand production, and much more – particularly in the medical field. Now, it is up to both companies to take advantage of the growing interest in 3D printing technology and revolutionize the future quicker.
Subscribe to Our Email Newsletter
Stay up-to-date on all the latest news from the 3D printing industry and receive information and offers from third party vendors.
You May Also Like
Velo3D Is the First Metal 3D Printer OEM with the Highest-Level DoD Cybersecurity Compliance
Velo3D, the metal additive manufacturing (AM) original equipment manufacturer (OEM) based in Fremont, CA, has become the first metal AM OEM to achieve Green Security Technical Implementation Guide (STIG) Compliance...
BAE Systems Taps AML3D to 3D Print Metal Frigate Prototype
BAE Systems Maritime Australia (BAESMA), a division of the UK’s BAE Systems, has given a contract to Australian metal additive manufacturing (AM) original equipment manufacturer (OEM) AML3D, to produce and...
Reshaping Global Supply Chains: The UK’s First Advanced Manufacturing Plan
The day before the Biden administration announced around 30 broad-sweeping economic actions planned by the White House for 2024 and beyond — all surrounding the establishment of a new Council...
$138M to Support Ursa Major’s 3D Printed Rocket Engines
Earlier this year, TechCrunch revealed that Ursa Major Technologies, the Colorado-based startup specializing in using additive manufacturing (AM) for modular rocket engines, had taken in $100 million in its Series...
Upload your 3D Models and get them printed quickly and efficiently.