3D Systems (DDD) Q2 Loss Meets Estimates, Revenues Miss
3D Systems DDD reported mixed second-quarter 2023 results, wherein the bottom line matched the Zacks Consensus Estimate, but the top line fell short of the same. The company reported a second-quarter 2023 non-GAAP loss of 7 cents per share, in line with the consensus mark.
The bottom line was also flat with the year-ago quarter as the negative impact of reduced revenues was fully offset by the benefits of an improved gross margin and higher interest income earned on cash and cash equivalents due to an increased interest rate.
In the second quarter of 2023, 3D Systems reported revenues of $128.2 million, down 8.5% from the year-ago quarter, which missed the consensus mark of $134.3 million. On a constant-currency basis, revenues decreased 8.7% year over year. The dismal top-line performance reflects lower sales to certain dental orthodontic market customers due to macroeconomic headwinds that are negatively impacting the demand for elective dental procedures.
3D Systems Corporation Price, Consensus and EPS Surprise
3D Systems Corporation price-consensus-eps-surprise-chart | 3D Systems Corporation Quote
Second-Quarter in Detail
In the second quarter, Product revenues represented 69.6% of the total revenues and decreased 14.1% to $89.2 million. Revenues from Services, which accounted for the remaining 30.4% of revenues, climbed 7.6% year over year to $39 million. Our estimates for the Product and Services segments revenue were pegged at $95.6 million and $40.9 million, respectively.
On the basis of market type, revenues from the Healthcare segment fell 15.2% year over year to $60.9 million. On a constant-currency basis, the segment’s revenues plunged 15.4% year over year, mainly due to continued softness across the dental orthodontic market. Our model estimate for Healthcare division was pegged at $63.4 million.
The Industrial Division’s revenues decreased 1.4% year over year to $67.3 million. On a constant-currency basis, the segment’s revenues declined 1.7%. Our model estimate for Industrial division was pegged at $73.1 million.
In the second quarter of 2023, 3D Systems’ non-GAAP gross profit decreased 6.3% year over year to $49.9 million. However, the non-GAAP gross profit margin expanded 110 basis points to 39%, mainly driven by favorable pricing, a product mix and the benefits of cost optimization initiatives.
Adjusted EBITDA was negative $6.9 million, $4.3 million higher than the year-ago quarter. An increased adjusted EBITDA loss reflects the negative impact of lower sales volumes, an inflationary impact on input costs and continued investments for portfolio & business growth.
Balance Sheet Details
The company exited the second quarter with cash, cash equivalents and short-term investments of $491.6 million, lower than the previous quarter's $529.9 million. As of Jun 30, 2023, 3D Systems had total debt of $450.8 million, slightly up from the previous quarter’s $450.2 million.
In the first half of 2023, the company utilized $46.3 million of cash from operational activities.
Lowered 2023 Guidance
Battered by the dismal second-quarter performance, 3D Systems lowered its revenue guidance for the full-year 2023. The company now expects 2023 revenues in the range of $525-$545 million, down from the previous guidance in the band of $545-$575 million.
It now projects to exit the fourth quarter with positive adjusted EBITDA. Earlier, the company had projected adjusted EBITDA of $2 million or better in 2023.
However, 3D Systems still forecasts the non-GAAP gross profit margin in the 40%-42% range.
Zacks Rank & Stocks to Consider
Currently, 3D Systems carries a Zacks Rank #3 (Hold). Shares of DDD have increased 9.2% year to date (YTD).
Some better-ranked stocks from the broader technology sector are NVIDIA NVDA, CrowdStrike CRWD and Salesforce CRM. NVIDIA sports a Zacks Rank #1 (Strong Buy), while CrowdStrike and Salesforce each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA's second-quarter fiscal 2024 earnings has been revised upward by a couple of cents to $2.06 per share in the past 30 days. For fiscal 2024, earnings estimates have increased by 13 cents to $7.79 per share in the past 30 days.
NVIDIA’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 0.3%. Shares of NVDA have surged 205.7% YTD.
The Zacks Consensus Estimate for CrowdStrike’s second-quarter fiscal 2024 earnings has been revised a penny northward to 56 cents per share in the past 60 days. For fiscal 2024, earnings estimates have moved a penny upward to $2.39 per share in the past 60 days.
CrowdStrike’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 19.2%. Shares of CRWD have rallied 38.6% YTD.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has been revised upward by a penny to $1.90 per share in the past 60 days. For fiscal 2024, earnings estimates have moved upward by a couple of cents to $7.44 per share in the past 60 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have surged 59.6% YTD.
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