3D Systems Sells Geomagic Software Division to Hexagon AB

December 12, 2024 by Joris Peels 3D Printing 3D Software Business Europe Featured Stories North America Quality Control

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Additive manufacturing (AM) stalwart 3D Systems (NYSE: DDD) has announced the sale of its Geomagic assets to Swedish software giant Hexagon AB for $123 million. The deal includes Design X, Control X, Freeform, and Geomagic Wrap. However, 3D Systems will retain its 3D Sprint and 3DXpert 3D printing productivity software, along with the Oqton Industrial Manufacturing OS.

Geomagic is a leader in 3D scanning, meshing, and reverse engineering software for AM and beyond. The sale represents a significant coup for Hexagon, which already boasts substantial assets in scanning and metrology. For Hexagon, Geomagic presents a valuable cross-sell opportunity within its existing portfolio and enhances its ability to develop an integrated asset management solution for 3D files, extending further into QA, scanning, and authoring workflows.

This acquisition enables Hexagon to create end-to-end products across numerous verticals. Geomagic aligns perfectly with Hexagon’s existing CT, CAD, CAD/CAM, and simulation tools, offering the potential to become a cornerstone of an integrated package suite. Alternatively, if Hexagon opts not to integrate the software, Geomagic remains a strong complement to its existing offerings, enhancing sales opportunities, market reach, and product integration. This acquisition is likely to deliver substantial benefits to the company.

3D Systems originally acquired Geomagic for $55 million in cash in 2013. At first glance, selling the assets for $123 million may seem like an attractive return on investment for the firm.

Geomagic is deeply embedded in the 3D scanning community, serving as a vital everyday tool for many users. At the sale price, it raises the question of whether Materialise, Autodesk, or Dassault missed an opportunity to capitalize on or at least drive up the cost for Hexagon. Geomagic functions as a key piece of connective tissue within the scanning ecosystem and has significant growth potential.

It is also notable that 3D Systems chose to retain Oqton and 3DXpert while divesting Geomagic. This decision prompts questions about the company’s broader strategy. Why not exit the software market entirely if focusing elsewhere? Conversely, why not double down on this high-margin software segment and expand its capabilities?

3D Systems is focusing on its Application Innovation Group (AIG) to combine its expertise with Oqton and 3DXpert to drive printer sales and stimulate overall industry growth. By encouraging clients to use Oqton for transitioning from prototype to production, the company aims to create a significant force multiplier for its offerings.

Additionally, 3D Systems’ alliance with Baker Hughes highlights a strategic move to offer services around its products. Together, they aim to streamline customer onboarding and accelerate part production.

3D Systems CEO Jeffrey Graves said,

“The additive manufacturing (AM) industry is rapidly evolving, and we believe there are significant opportunities to drive innovation that is critical to the wide-spread adoption of 3D printing in production environments. While advanced printing hardware and engineering materials are essential to the new applications that are of most interest to our customers, software is equally important to the mass adoption of the technology. As the company that commercialized the first 3D printing technology nearly four decades ago and has the most extensive experience in mass production of custom components, 3D Systems is well-positioned to be a leader in moving AM from the lab to the factory floor. The changes we’re announcing today will sharpen our focus on those software platforms that are most critical to our customers’ success in this new-use environment. By streamlining our software operations, focusing exclusively on our core platforms, and leveraging the exceptional capabilities that AI is now making available to us, we will be better positioned to support our customers’ most critical requirements as they move 3D printing into high-volume production environments. For those thousands of loyal Geomagic customers who have been essential to our growth, we believe that Hexagon is an ideal strategic owner for these assets and that the future will be bright under their stewardship. For 3D Systems’ stakeholders, this transaction leaves the Company very well-positioned for the future, with the broadest technology base in the industry, the scale needed to support our customers in production environments, and a fortified balance sheet to continue driving our industry leading innovation.”

This acquisition is a strong strategic move for Hexagon, placing it on a direct collision course with major CAD vendors like Autodesk and Dassault, who must have been too busy putting up their Christmas trees to notice. It also underscores a missed opportunity for those firms, who could have significantly enhanced platforms like Fusion 360 by enabling scan-to-part workflows across multiple platforms on a subscription basis.

For 3D Systems, this decision appears more driven by necessity than by long-term strategy. A complete divestment of its software assets followed by a partnership with Hexagon, or alternatively, a stronger commitment to its software offerings, would have seemed more logical and cohesive.

It is indeed an exciting time in 3D land at the moment. Hexagon’s acquisition of Geomagic aligns well with its potential restructuring into two focused entities: one centered on Measurement & Reality Capture, now bolstered by Geomagic, and the other on design and asset management. While the two segments might appear to complement each other, this division may make them more manageable and potentially attractive for acquisition by larger firms. The speed and decisiveness of Hexagon’s acquisition under interim leadership, following the recent departure of its CEO, sends a reassuring message of stability and strategic focus.

Separately, either of Hexagon´s units could be more bite-sized prey for other firms. Although at $4 billion and $1 billion in revenue, only the largest sharks need apply. The chess pieces have been thrown all over the board once again in the CAD and 3D software world. Ladies and gentlemen, fire up your spreadsheets.