3D Printing Financials: Amid Nasdaq Transition, Shapeways Software Revenues Surge along with Overall Losses

Shapeways (NASDAQ: SHPW) reported revenues of $8.4 million for the three months ending June 30, 2023, matching the figures from the same period in 2022. The company, however, experienced a net loss of $6.8 million during this quarter, a higher loss compared to the $4.7 million loss from the same period in the previous year.

Delving deeper into the second quarter’s performance, the revenue figure was consistent with the company’s guidance, although flat from the prior year. Also, a key order, initially slated for the second quarter, was postponed to the third quarter, resulting in deferred revenue recognition. This delay played a part in the quarter-over-quarter revenue growth not aligning with the company’s initial vision. Nonetheless, Shapeways is hopeful about the order’s shipment in Q3.

Gross margins were at 40%, a decline from 43% from the same period in 2022, and remained consistent sequentially. The change was primarily due to inflationary pressures, integration of new technologies, and product mix diversification. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) recorded a loss of $6 million—deteriorating from a loss of $4.3 million in the corresponding quarter of the previous year—with Selling, General and Administrative (SG&A) expenses rising to $8.1 million, reflecting increased fees and expenses linked to acquisitions in 2022.

Shapeways has launched new software features in recent months, leading to a 40% quarter-over-quarter rise in software revenues. Features like the 3D Model Viewer and MFG Materials have not only increased customer acquisition and retention but also facilitated cost-saving.

Delving deeper into the company’s progress, CEO Greg Kress emphasized on an earnings call with investors Shapeways’ commitment to achieving long-term profitability. He attributed much of the software revenue growth to its integration and leverage of the MFG platform, acquired last year. Historically linking small- to medium-sized manufacturers with custom part buyers, Shapeways has used MFG to robustly deploy its auto software features. Kress detailed that alongside rebranding MFG in the second quarter, Shapeways unveiled transformative software enhancements like Transactions and Orders, further amplifying customer acquisition, retention, and potential revenue channels.

An emphasis on the middle market and enterprise segments has led Shapeways to secure several multi-year contracts, suggesting a positive trajectory in its targeted industries. The company believes that the digital manufacturing industry is on the cusp of significant growth and that Shapeways is ideally placed to leverage this potential.

Highlighting this strategic decision, Kress gave details of the restructured go-to-market approach, which includes a sales force centered on high-value opportunities. Over half of Shapeways’ revenues in the second quarter stemmed from enterprise clients. This segment witnessed double-digit growth and led to the acquisition of several major multi-year, multi-million-dollar contracts. For instance, it secured two new Tier 1 supplier contracts with leading players in the automotive and transportation sectors, projected to generate over $2.8 million annually over the next seven years. Furthermore, in the medical field, Shapeways locked in two key contracts anticipated to generate around $2.5 million annually for the upcoming three years.

A pivotal move for the company was the transfer of its listing from the New York Stock Exchange (NYSE) to the Nasdaq. This transition is expected to offer a more cost-effective platform, expanding their market presence and further accelerating their growth.

Shapeways CFO Alberto Recchi said on an earnings call with investors: “On the cost side, we’re looking at cost savings everywhere we can. For example, the recent move to Nasdaq is part of the strategy. Specifically, on that, our forecast has us reducing security exchange-related expenses by 6% to 7%.”

Financially, Shapeways envisions a robust growth trajectory, emphasizing high-margin software sales and a close watch on expenditure. The company projects third-quarter revenues to be between $8.5 million and $9.0 million and is optimistic about doubling its software revenues in 2023 compared to 2022. Investments from the previous year are prepared to boost sales, suggesting improved margins and decreased expenditure by the end of 2023.