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3D Systems' (DDD) Q3 Earnings Beat Estimates, Shares Soar
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Continuing its volatile earnings history, 3D Systems Corporation (DDD - Free Report) posted another incredible earnings beat in its third-quarter 2016 results. The company reported adjusted earnings (including share-based compensation expense) of 9 cents per share for the quarter, miles ahead of the Zacks Consensus Estimate of breakeven earnings.
Shares climbed nearly 9% in the aftermath of the results, as investors cheered the company’s year-over-year earnings growth.
The company posted a GAAP loss of 19 cents per share, much narrower than the loss of 29 cents reported in the year-ago quarter. Decent revenue growth, driven by robust growth in software and healthcare solutions, boosted the company’s earnings. Lower administrative expenses further bolstered the bottom line.
Inside the Headlines
The 3D printer maker reported revenues of $156.4 million for the quarter, reflecting year-over-year growth of 3.2%. The top line benefited from robust demand for the company’s software and health care solutions, as well as higher 3D printers and materials orders from industrial clients. However, a consistent challenging operating environment and lower demand for 3D printers and on-demand manufacturing restricted top-line growth to some extent.
Revenues missed the Zacks Consensus Estimate of $162 million by a small margin.
Adjusted gross margin for the quarter expanded 40 basis points on a year-over-year basis to 51%, helped by the company’s shift from consumer products to materials, software and healthcare solutions, which carry higher margins.
Also, the company’s operating expenses plunged drastically (down 13.9%) to $91 million, as SG&A (down 22%) expenses fell significantly on lower amortization and legal expenses. R&D expense (up 16.4%) increased year over year only due to a non-recurring asset write-off charge.
Despite challenging growth conditions, 3D Systems continues to focus on expanding its market share and exploring diverse market opportunities. Its recent partnerships with two major healthcare companies to expand its Simbionix training product line for women will fortify its competitive position in the healthcare market and drive results.
In fact, the quarter saw 3D Systems forge an important partnership with PTC. This alliance will see the two leaders joining forces to integrate 3D Systems’ 3D Sprint SDK into PTC’s flagship Creo CAD platform. This will, in turn, deliver seamless CAD-to-print functionality to Creo users, in addition to an entire set of print management tools. Further, the leading 3D printing player launched its 3DXpert software for direct metal 3D printing.
During the quarter, 3D Systems released the Geomagic Control X software for 3D inspection and metrology — an easy-to-use solution that meets the measurement analysis requirements of manufacturers globally. The leading 3D printing player also launched its 3DXpert software for direct metal 3D printing. In addition, the company undertook operational restructuring initiatives like improving the sales network as well as undertaking lean manufacturing initiatives in supply-chain operations.
Particularly, precision healthcare offerings like printers and materials, surgical simulation and planning and printing of devices and tools contributed to growth. This apart, the company’s other four growth channels, namely expansion of quickparts services, accelerating 3D printer penetration through channel expansion, launch of integrated 3D authoring solutions platform and strengthening of partnerships proved conducive to the company’s operations.
3D Systems is committed to channelizing its resources toward more profitable markets. 3D Systems recently announced its decision to cease the production of Cube, the entry-level consumer 3D printer. Although it might hurt revenues in the short term, we believe that it will direct the company’s resources toward higher-margin products, and accelerate next-generation capabilities and thus enhance profitability over the long run.
Cash Flow and Balance Sheet
3D Systems ended the quarter with cash and cash equivalents of $179.4 million, up from $157.5 million a year back. For the first nine months of 2016, cash generated from operating activities came in at $38.2 million, as against cash used in operating activities of $10.6 million in the comparable period last year.
Over the past few quarters, 3D Systems has been experiencing unfavorable broader market conditions that have badly hit its financial performance. The company has been grappling with strong volatility in macroeconomic factors such as economic slowdown, inflation, currency fluctuations, commodity prices and credit availability. These conditions continue to affect the company’s performance.
However, the company is taking initiatives to channelize its resources into more lucrative areas in professional and industrial markets. 3D Systems also conducted numerous successful product launches and strategic deals, which could aid the company to combat these persistent challenges in the near future.
Also, 3D Systems’ healthcare business continues to gain traction, driven by rising demand from customers who print medical and dental devices. The company is also focusing on enhancing its existing 3D printers’ line, reinforcing partnerships and boosting productivity.
3D Systems presently carries a Zacks Rank #3 (Hold).
Adobe Systems is a leading player in the computer software space. The company has a striking earnings surprise history over the trailing four quarters, having beaten estimates all through, for an average beat of 5.6%.
InterDigital develops and markets advanced digital wireless telecommunications systems, using proprietary technologies for voice and data communications. The company has a good earnings surprise history over the trailing four quarters, beating estimates thrice for an average positive surprise of 30%.
Cisco Systems is the worldwide leader in networking for the Internet, and provides the broadest line of solutions for transporting data, voice and video. The company has beaten estimates consistently each time over the trailing four quarters, with an average positive surprise of 8%.
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3D Systems' (DDD) Q3 Earnings Beat Estimates, Shares Soar
Continuing its volatile earnings history, 3D Systems Corporation (DDD - Free Report) posted another incredible earnings beat in its third-quarter 2016 results. The company reported adjusted earnings (including share-based compensation expense) of 9 cents per share for the quarter, miles ahead of the Zacks Consensus Estimate of breakeven earnings.
Shares climbed nearly 9% in the aftermath of the results, as investors cheered the company’s year-over-year earnings growth.
The company posted a GAAP loss of 19 cents per share, much narrower than the loss of 29 cents reported in the year-ago quarter. Decent revenue growth, driven by robust growth in software and healthcare solutions, boosted the company’s earnings. Lower administrative expenses further bolstered the bottom line.
Inside the Headlines
The 3D printer maker reported revenues of $156.4 million for the quarter, reflecting year-over-year growth of 3.2%. The top line benefited from robust demand for the company’s software and health care solutions, as well as higher 3D printers and materials orders from industrial clients. However, a consistent challenging operating environment and lower demand for 3D printers and on-demand manufacturing restricted top-line growth to some extent.
Revenues missed the Zacks Consensus Estimate of $162 million by a small margin.
Adjusted gross margin for the quarter expanded 40 basis points on a year-over-year basis to 51%, helped by the company’s shift from consumer products to materials, software and healthcare solutions, which carry higher margins.
Also, the company’s operating expenses plunged drastically (down 13.9%) to $91 million, as SG&A (down 22%) expenses fell significantly on lower amortization and legal expenses. R&D expense (up 16.4%) increased year over year only due to a non-recurring asset write-off charge.
Despite challenging growth conditions, 3D Systems continues to focus on expanding its market share and exploring diverse market opportunities. Its recent partnerships with two major healthcare companies to expand its Simbionix training product line for women will fortify its competitive position in the healthcare market and drive results.
In fact, the quarter saw 3D Systems forge an important partnership with PTC. This alliance will see the two leaders joining forces to integrate 3D Systems’ 3D Sprint SDK into PTC’s flagship Creo CAD platform. This will, in turn, deliver seamless CAD-to-print functionality to Creo users, in addition to an entire set of print management tools. Further, the leading 3D printing player launched its 3DXpert software for direct metal 3D printing.
During the quarter, 3D Systems released the Geomagic Control X software for 3D inspection and metrology — an easy-to-use solution that meets the measurement analysis requirements of manufacturers globally. The leading 3D printing player also launched its 3DXpert software for direct metal 3D printing. In addition, the company undertook operational restructuring initiatives like improving the sales network as well as undertaking lean manufacturing initiatives in supply-chain operations.
Particularly, precision healthcare offerings like printers and materials, surgical simulation and planning and printing of devices and tools contributed to growth. This apart, the company’s other four growth channels, namely expansion of quickparts services, accelerating 3D printer penetration through channel expansion, launch of integrated 3D authoring solutions platform and strengthening of partnerships proved conducive to the company’s operations.
3D Systems is committed to channelizing its resources toward more profitable markets. 3D Systems recently announced its decision to cease the production of Cube, the entry-level consumer 3D printer. Although it might hurt revenues in the short term, we believe that it will direct the company’s resources toward higher-margin products, and accelerate next-generation capabilities and thus enhance profitability over the long run.
Cash Flow and Balance Sheet
3D Systems ended the quarter with cash and cash equivalents of $179.4 million, up from $157.5 million a year back. For the first nine months of 2016, cash generated from operating activities came in at $38.2 million, as against cash used in operating activities of $10.6 million in the comparable period last year.
3D SYSTEMS CORP Price, Consensus and EPS Surprise
3D SYSTEMS CORP Price, Consensus and EPS Surprise | 3D SYSTEMS CORP Quote
To Conclude
Over the past few quarters, 3D Systems has been experiencing unfavorable broader market conditions that have badly hit its financial performance. The company has been grappling with strong volatility in macroeconomic factors such as economic slowdown, inflation, currency fluctuations, commodity prices and credit availability. These conditions continue to affect the company’s performance.
However, the company is taking initiatives to channelize its resources into more lucrative areas in professional and industrial markets. 3D Systems also conducted numerous successful product launches and strategic deals, which could aid the company to combat these persistent challenges in the near future.
Also, 3D Systems’ healthcare business continues to gain traction, driven by rising demand from customers who print medical and dental devices. The company is also focusing on enhancing its existing 3D printers’ line, reinforcing partnerships and boosting productivity.
3D Systems presently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the sector include Adobe Systems Inc., (ADBE - Free Report) , InterDigital, Inc. (IDCC - Free Report) and Cisco Systems, Inc. (CSCO - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Adobe Systems is a leading player in the computer software space. The company has a striking earnings surprise history over the trailing four quarters, having beaten estimates all through, for an average beat of 5.6%.
InterDigital develops and markets advanced digital wireless telecommunications systems, using proprietary technologies for voice and data communications. The company has a good earnings surprise history over the trailing four quarters, beating estimates thrice for an average positive surprise of 30%.
Cisco Systems is the worldwide leader in networking for the Internet, and provides the broadest line of solutions for transporting data, voice and video. The company has beaten estimates consistently each time over the trailing four quarters, with an average positive surprise of 8%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>