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3D Printing’s Financial Challenges and Opportunities in 2024

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As we step into 2024, the 3D printing industry reflects on a year of significant financial challenges. From supply chain disruptions to inflationary pressures, 2023 tested the resilience and adaptability of this innovative sector. However, with challenges come opportunities. Let’s explore the financial hurdles of the past year and how they pave the way for potential growth and innovation in 2024.

In 2023, the 3D printing industry faced severe supply chain disruptions. The production of 3D printers and the procurement of essential materials like resins and metals were hindered, leading to increased costs and delays. Companies struggled to maintain steady supply chains, affecting their production schedules and financial stability. Moreover, the industry was not immune to the broader economic climate of rising inflation and financing costs. These factors increased the financial burden on 3D printing businesses, particularly affecting startups and smaller firms reliant on external capital for growth and operations.

Amidst economic uncertainties, companies witnessed reduced investment in new technologies. The downturn in consumer spending, especially in non-essential sectors like dental 3D printing, illustrates the challenges businesses face in adapting to changing market conditions.

High inflation and adverse foreign exchange rates posed significant challenges for customers’ capital budgets. This made selling capital-intensive 3D printing machines increasingly difficult, impacting many companies’ revenue streams.

IperionX is making a 100% recyclable metal supply chain. Image courtesy of IperionX.

Industry evolution

In 2023, evidence emerged suggesting that new 3D printing machines weren’t being used as extensively as anticipated, indicating a slower uptake of this technology in standard manufacturing processes. This trend affected the industry’s profit-making ability. Earnings data from some of the industry’s biggest players suggests that while some have managed to maintain stable revenues or achieve some level of profitability, many have also faced challenges, as reflected in net losses and other financial metrics.

For example, during the third quarter of 2023, Shapeways (Nasdaq: SHPW) managed to maintain steady revenue but also reported a decrease in gross profit and margin. Similarly, Velo3D’s (NYSE: VLD) revenue climbed to $22.4 million while the company registered a loss of 12 cents per share. Stratasys (Nasdaq: SSYS) also faced a net loss of $47.3 million, or 68 cents per share. Markforged’s (NYSE: MKFG) net loss deepened, reaching $51.4 million, or 26 cents per share, a stark contrast to the $23 million, or 12 cents per share, loss reported in the third quarter of 2022.

Navigating challenges

With sales taking longer to complete and amid economic uncertainties, several of these firms have begun cost reduction measures, restructuring initiatives, and divestitures, including Markforged, 3D Systems (NYSE: DDD), Stratasys, Desktop Metal (NYSE: DM) and Shapeways. Many of these measures involve reductions in workforce and non-essential spending. For example, Shapeways CFO Alberto Recchi told investors in November 2023 that there will be a 15% staff cut, which could roughly mean at least 25 employees losing their jobs. Others like 3D Systems and Velo3D also announced layoffs.

At the same time, many of these publicly held companies committed to achieving profitability in 2024 and 2025. For example, Markforged management said it remains “laser-focused on profitability” despite these headwinds. Meanwhile, Desktop Metal’s Ric Fulop remarked that he is confident of the company’s road toward breaking even in the fourth quarter of this year.

However, an increase in net losses stresses the tough road to profitability in the sector. Moreover, this difference in earnings highlights the financial strain from the restructuring efforts and market challenges many companies in the 3D printing ecosystem are working to streamline while improving their bottom line. The 3D printing industry also saw decreased investor confidence, reflecting the challenging share performance of publicly traded companies within the sector. This investor skepticism highlighted the need for the industry to demonstrate sustained demand and profitability.

Adapting strategies

One of the most significant challenges was the pressure to reduce the cost per part to stay competitive with traditional manufacturing while maintaining quality standards. This required balancing innovation with cost efficiency.

In 2023, non-public 3D printing companies navigated a complex landscape marked by economic challenges. To counter these difficulties, many focused on scaling their manufacturing processes, advancing technological capabilities, and diversifying into new applications, particularly in sectors like healthcare and aerospace. However, as 3DPrint.com Executive Editor Joris Peels explains in his “RIP 3D Printing” series: “A troubling number of otherwise promising startups—with revenue, if not profits—are teetering on the edge.”

Peels also indicate, “We’ve barely scratched the surface in terms of new use,” and “While there’s been some improvement in cost and part quality, it’s marginal at best. We’re still prohibitively expensive for most applications and plagued by problems of accuracy, yield, and repeatability. Instead of forging ahead and disrupting traditional manufacturing, we find ourselves directionless and stagnant. The mood is grim.”

Much of this situation is echoed in a 2023 research report by Materialise (Nasdaq: MTLS), which found that manufacturing companies understand the benefits of 3D printing but face hurdles in integrating and scaling the technology for mass production. The study, involving 327 manufacturers from Germany, Japan, and the US, revealed that while many companies are familiar with the advantages of 3D printing, they often lack the necessary skills and knowledge to implement and expand its use effectively. The report highlights the challenges in recruiting skilled workers and integrating 3D printing into existing production workflows. Despite these obstacles, the survey has a silver lining, indicating a growing interest in 3D printing, with companies planning to increase their usage and investment in the coming years.

Materialise engineer at one of the company's facility.

Materialise annonces Q4 2021 earnings results. Image courtesy of Materialise.

Turning challenges into opportunities

The supply chain issues of 2023 have highlighted the benefits of localized production. In 2024, this trend could accelerate, with companies leveraging 3D printing for on-demand, local manufacturing. This shift would promise to reduce logistics and transportation costs and minimize the impact of global supply chain disruptions.

Furthermore, the financial pressures of the past year could lead to the development of innovative financing models, making technology adoption more feasible for small and medium-sized enterprises. This includes options like leasing 3D printers or pay-per-use models, which could open up new avenues for growth.

With reduced consumer spending in specific sectors, there is an opportunity for businesses to expand into industries that are less affected by economic downturns. Sectors like aerospace, defense, and healthcare, which have shown a steady demand for 3D printing, could offer more stable revenue incomes for the industry. In addition, the need to make each 3D printed part cheaper could lead to new and better technology. This means 3D printing could become more efficient and cost less. These advances have the potential not only to reduce operational costs but also to improve product quality and speed up production times.

Growth prospects

In response to fluctuating investor confidence, companies might strengthen their investor relations and communicate transparently about their growth strategies, innovation pipelines, and plans for long-term profitability.

Also, a greater focus on sustainability could become a significant market advantage. Companies that adopt environmentally friendly practices in 3D printing and use sustainable materials are likely to attract customers and investors who are environmentally responsible.

As the 3D printing industry moves into 2024, it stands at a crossroads between ongoing financial challenges and emerging opportunities. The ability of companies to adapt, innovate, and evolve in the face of these challenges will be key. Embracing new business models, diversifying into robust sectors, and focusing on sustainability could be the keys to transforming these challenges into stepping stones for future success. In this context, the upcoming Additive Manufacturing Strategies (AMS) 2024 event, from February 6-8 in New York City, organized by 3DPrint.com and Additive Manufacturing Research, emerges as a pivotal gathering. Offering a platform for industry leaders to share insights and forge connections, AMS 2024 will feature panels and networking opportunities that could provide even deeper understanding and strategic guidance, building on the strategic discussions and connections initiated at AMS 2023.

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