3D Systems (DDD) today reported record revenue for both Q4 and fiscal 2012, as the hype around rapid prototyping continued to drive demand for its 3D printers and supplies. Q4 revenue was up 45% to $102
million; organic revenue was up 19%. For the year, revenue grew 54% to $354 million; organic revenue was up 22% organic growth.
CEO Avi Reichental told investors that new products, key acquisitions and expanded channels were the keys to 2012 growth. The company also ramped up its investment in R&D, adding $9 million to the budget for 2012 (though the total R&D spend is still only 6.5% of total revenue). Nonetheless, new product (acquired and developed in-house) revenue rose 70% to $132 million in 2012, as the company introduced 16 new products.
It’s interesting to look at DDD’s progression, as shown in this slide from today’s earnings conference call:
Top line growth has clearly been driven by printer sales, a trend that DDD expect to continue in 2013. Consumer sales are expected to really kick in in the second half of 2013, as the next generation of the Cube becomes more widely available. Also in the products category is 3D authoring software such as Rapidform and Alibre, acquired earlier, and Geomagic, which is expected to close later this week. DDD expects software (and its nice profit margins) to become more significant contributors in 2013.
Print materials has not grown as fast as expected, in part because the cost of the materials themselves has come down, but DDD expects accelerated unit shipments to boost growth. Services growth has been primarily via acquisition; this category includes field services/maintenance which has actually been harmed by improved printer quality. DDD has also shifted a lot of this work to channel partners to improve its own profitability and to enhance the value proposition for its resellers.
For 2013, DDD expects total revenue of between $440 million and $485 million, or an increase of 24% to 37%. This total is mostly organic, though it does include planned contributions from Rapidform and Paramount Industries and an anticipated $17 million from Geomagic (prorated from the date of close). No other acquisitions are included in this forecast, so there is the potential for upside if DDD keeps to its dealmaking pace.
Mr. Reichental says that he’s confident about the higher end of this guidance because of “unprecedented interest at the C-level of companies in the development of additive manufacturing; ‘healthy’ growth in the health care business and the commercializing of bespoke products in the second half of 2013; meaningful contributions from consumer and 3D authoring solutions in H2.” Too, “the addition of Geomagic’s 80 to 100 channel partners gets us to the neighborhood of 500 partners, which gives us a significant opportunity for cross-selling and upselling, leading to incremental growth.”
DDD is a complicated company; I’ve covered here what I found most interesting. There’s all sorts of kerfuffle about bond conversions, valuation allowances, interest expense reductions and so on. For more details on 2012, see DDD’s press release.