3D Systems Is Just Hitting Its Stride
Feb 24th 2012 2:06PM
Updated Feb 24th 2012 5:02PM
3-D printing enthusiasts and tech followers got a nice shot in the arm when 3D Systems (NYS: DDD) reported its earnings yesterday. A huge increase in printer shipments boosted the company's top line, and there was plenty of other juicy news to digest. Let's dive right in and find out why 3D Systems is making a serious push for dominance in this fast-moving industry.
Revenue has been moving ever higher, and 3D Systems is indisputably growing faster than Stratasys (NAS: SSYS) , its chief competitor. Both started out in roughly the same position three years ago, but while Stratasys has nearly doubled its top line with solid first-quarter gains, 3D Systems has grown nearly threefold:
Sources: Morningstar and 3D Systems 10-K filing.
Net income hasn't grown much, but that can be attributed to a couple of factors: 3D Systems' focus on growth and a product line shifting more toward low-cost machines. Its new consumer-facing star printer, the Cube, hasn't even shipped yet and might not have much of an impact for a while, but 3D Systems is putting its weight behind the pint-sized category killer. $3.6 million in research and development went toward building the Cube's online hub, Cubify.com. That's a bold gambit on making a hobbyist niche mainstream, but it could turn out to be well worth it if the device catches on.
Planting seeds for future success
Printer sales increased markedly, both in the most recent quarter and over the full year. 3D Systems shipped an amazing 190% more printers in the fourth quarter than it did a year prior, and 2011's total was up almost 250% from 2010. As I mentioned, this hasn't bumped the bottom line by similar amounts because of the shift to lower-cost machines, but there's something happening that can't be overlooked: 3D Systems is building its mind share.
The company's also partnering with schools to teach kids about the potential of its printers and give them next-gen skill sets, and its current 330-strong distributor network seems to dwarf Stratasys' reported goals of adding 90 resellers this year. It all adds up to a great long-term strategy of making itself the go-to manufacturer for the industry, which ought to pay off in spades once technology and cost reach a mass-adoption tipping point.
3D Systems is also working on digesting its recent acquisitions, including buyouts of fellow 3-D printer maker Z Corporation and Vidar, a medical optical imaging company. This indicates a concerted push into the medical market, which is already embracing the technology; an elderly woman received a 3-D printed jawbone implant not long ago, and there are indications that bio-printing will be viable before long. 3D Systems will probably focus on bone replacement for the time being, leaving Medtronic (NYS: MDT) to handle soft tissues. This might be a good partnership opportunity for both companies.
The company projects $330 million to $360 million in 2012 revenue, a big jump from the $230 million reported for this past year, and more than double its 2012 income of $160 million. That's one big reason shares popped yesterday, but look at the sum of the facts. 3D Systems is just getting started.
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At the time this article was published Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights. The Motley Fool owns shares of Medtronic and 3D Systems. Motley Fool newsletter services have recommended buying shares of 3D Systems and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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