Stratasys sees trouble in maker sales

Oct 22, 2015 | Hot Topics

Late yesterday, Stratasys announced that Q3 results would be well below expectations, coming in at around $167 million (versus earlier guidance of $155 million to $190 million), with a GAAP net loss of  $155 million to $190 million that’s largely due to asset impairment charges of $140 million to $180 million for its MakerBot unit. That write-down in MakerBot basically reduces the business’ remaining goodwill to near zero. (Goodwill is the amount paid for an acquisition above its base value; it’s the “location location location” premium paid in a real estate transaction, for example. By taking goodwill down to zero, Stratasys is basically admitting that it got caught in the hype and overpaid. This write-down, by the way, is all accounting magic; it doesn’t affect cash flow.)

Stratasys’ press release says that it saw weak capital investment “across all regions and most product and service lines” during the first half of 2015, which continued into Q3. Here’s the telling bit: “In addition, the Company believes that during 2013 and 2014, Stratasys and the overall 3D printing industry experienced a period of extraordinary growth that may have created excess capacity in the market, and that this is contributing to the current slowdown as that excess is worked off. Reflecting the low visibility of the current market environment, typical order trends did not materialize as expected at the end of the quarter.”

Translated: the hype has worn off, and business-as-normal doesn’t reflect the massive maker boom the 3D printer manufacturers were hoping for. The makers in my crowd bear this out. Many were incredibly excited about the potential for 3D printing, but find themselves now looking for reasons to use their printers. They’re unlikely to buy a next-gen model until there’s either radical improvement or a compelling new project that they can’t accomplish with what they already have. Their gear is under-utilized; they’re making it available to their friends, who might otherwise buy their own. In both cases, we get a market stall. I do see usage growing in the small biz market, but not enough to offset the current bust among makers. What’s your experience? Are you looking for a new 3D printer? Why? Why not? Comment away!

It’s not all gloomy at Stratasys, however. CEO David Reis said he’s disappointed in Q3, but remains “convinced of the long-term growth opportunity within 3D printing. We will continue to make the adjustments to our structure and operating costs in light of market conditions, but we are moving forward with the longer-term initiatives that we believe will help position our company for future growth, including enhancements to our go-to-market strategy and aggressive investments around new product development.”

Final numbers and more detail on November 4.

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