3D printing or additive manufacturing continues to be an attractive industry for investors looking to capitalize on the future anticipated growth of 3D printing. This industry currently sees firms with large valuations—even with losses. Investors are anticipating these firms will generate substantial profits in the future, as 3D printing adoption grows.
Stratasys Ltd. (SSYS), headquartered in Minnesota, focuses on both the commercial 3D printing market and also the consumer, desktop, 3D printing market. Stratasys Ltd. was formed through the 2012 merger of two prominent 3D printing firms, Stratasys Inc., and Objet Ltd. In 2013, SSYS completed the acquisition of MakerBot Industries, a leader in desktop 3D printing.
According to Statasys’s quarterly and annual filings, the firm divides its business into two categories: products and services. Products include commercial and desktop 3D printers, filament, and other accessories. Services include custom 3D printing performed by SSYS and installation, maintenance, and training of its systems. SSYS derives about 71% of its revenue from products, while services make up the remaining 29%.
Stratasys has produced generally consistent revenue over the previous six quarters with revenues being around $200 million per quarter. Net income has varied widely over the same period with a high of a loss of $173,000 in Q3 2014 to a low of a loss of $937 million in Q3 2015. The large loss in Q3 was largely due to a goodwill write down of $868 million.
Stratasys could be an attractive investment for investors looking to gain exposure to the desktop 3D printing market as SSYS is a leader in this market with its MakerBot brand.
3D Systems Corporation
3D Systems Corporation (DDD) invented 3D printing in 1989 with its invention and patenting of its stereolithography technology. DDD has also developed additional technologies, including selective laser sintering, multi-jet printing, film transfer imaging, color jet printing, direct metal printing and plastic jet printing.
According to 3D Systems Corporation’s quarterly and annual filings, it divides its business into three segments: products, materials, and services. The products category includes 3D printers, software, and other products. DDD’s 3D printers comprise a wide variety of printers including small desktop printers, direct metal printers and commercial printers that print in plastics and other materials. Software offerings include computer-aided design (CAD) and other design and manufacturing software. Other products include 3D scanners for both consumer and commercial applications.
3D Systems’ materials segment includes the various materials that the DDD’s printers use. This creates a recurring revenue stream for the firm. 3D Systems also offers various services including warranty, maintenance, training and contract manufacturing.
3D Systems has produced consistent quarterly revenues the prior six quarters between $147.7 million to $187.4 million while net income has shown a steady decline from a $4.8M profit in Q1 2014 to a $32.2M loss in Q3 2015.
3D Systems Corporation has historically been an innovation leader in the 3D printing industry. The company appears motivated to maintain its innovation culture. For investors looking to be on the leading edge of the 3D printing industry, an investment in DDD may be a good choice.
Materialise NV is a Belgium-headquartered 3D printing company that trades on the NASDAQ Exchange, under the ticker MTLS. According to Materialise’s 20-F filing, it divides its business into three segments: 3D printing software, medical, and industrial production.
The 3D printing software segment includes software that “enable and enhance the functionality of 3D printers and of 3D printing operations.” This includes software that interfaces with printers, design software and multiple printer management. MTLS derived 22% of its 2014 revenue from the 3D printing software segment.
Materialise’s medical segment focuses both on software and 3D printed products. Printed products consist of 3D printed surgery guides and also 3D printed medical implants, both of which are customized to the patient. MTLS generated 37% of its 2014 revenue from the medical segment.
The industrial production segment of Materialise’s business consists of 3D printing parts for Materialise’s commercial customers. The industrial production segment generated 41% of MTLS’s 2014 revenue. Of additional interest, 82% of the industrial production revenue was from rapid prototyping and 18% of the revenue came from manufacturing end parts.
Materialise is an interesting investment for investors looking to gain exposure to the medical 3D printing market while also having strong positions in other areas of the industry.
The Bottom Line
3D printing is a dynamic and growing industry which may be attractive for investors looking for exposure to a growing technology industry. These three companies likely will see additional competition as established firms begin to devote more resources to the 3D printing industry and additional start-ups enter the field. Stratasys, 3D Systems Corporation, and Materialize will be three companies to watch as the industry grows and matures.