Today we're going to compare the second-quarter 2018 results of the two leading 3D printing companies, 3D Systems (DDD 6.49%) and Stratasys (SSYS 3.41%). (You can read my earnings recaps on 3D Systems here and Stratasys here.)
There are several caveats -- most notably that qualitative factors can be just as meaningful as quantitative ones and one quarter is just one quarter. Nevertheless, the findings from this face-off should help you make investing decisions in the 3D printing space.
Image source: Getty Images.
Revenue
|
Company |
Q2 2018 Result |
|---|---|
|
3D Systems |
$176.6 million, up 10.7% year over year. |
|
Stratasys |
$170.2 million, approximately flat with the year-ago period. |
Data sources: Q2 2018 earnings reports.
Advantage: 3D Systems.
3D Systems is the clear winner here. And it's worth noting that we're comparing apples to apples, since neither company made an acquisition within the past year.
Moreover, 3D Systems' revenue from sales of 3D printers jumped 41% year over year, while Stratasys' revenue from sales of 3D printers declined 8.2% year over year. This is a key metric to consider, because sales of 3D printers drive sales of high-margin print materials over the useful life of the printer.
GAAP earnings per share
|
Company |
Q2 2018 Result |
|---|---|
|
3D Systems |
($0.08), flat with ($0.08) in the year-ago period. |
|
Stratasys |
($0.08), up 27% from ($0.11). |
Data sources: Q2 2018 earnings reports. GAAP = generally accepted accounting principles.
Advantage: Stratasys.
We can't directly compare EPS results, because the companies don't have the same number of shares outstanding.
Both companies are unprofitable on a GAAP basis, so neither is performing well. Stratasys, however, wins this category because its GAAP earnings notably improved, whereas 3D Systems' were unchanged.
Non-GAAP or adjusted EPS
|
Company |
Q2 2018 Result |
|---|---|
|
3D Systems |
$0.06, down 25% from $0.08 in the year-ago period. |
|
Stratasys |
$0.15, down 12% from $0.17. |
Data sources: Q2 2018 earnings reports.
Advantage: Stratasys.
Image source: Stratasys.
The same comment as before applies to directly comparing adjusted EPS results. Relative to the year-ago quarter's results, neither company did well, since both experienced declines. That said, Stratasys takes this category, since its percentage decline was lower.
GAAP gross margin
|
Company |
Q2 2018 Result |
|---|---|
|
3D Systems |
48.8%, down from 50.6% in the year-ago period. |
|
Stratasys |
49.1%, flat with the year-ago quarter. |
Data sources: Q2 2018 earnings reports.
Advantage: Stratasys.
Both companies had approximately the same gross margin, but Stratasys' gross margin was flat with the year-ago quarter, while 3D Systems' declined 180 basis points (1.8 percentage points), which is why Stratasys has the edge here.
Liquidity -- net cash on hand and operating cash flow
|
Company |
Q2 2018 Result |
|---|---|
|
3D Systems |
It had $119.3 million in unrestricted cash and no long-term debt at the end of 2017. Generated $10.7 million in cash from operations during the quarter. |
|
Stratasys |
It had $346.7 million in cash and no long-term debt at the end of 2017. Generated $13.0 million in cash from operations during the quarter. |
Data sources: Q2 2018 earnings reports.
Advantage: Stratasys.
Stratasys easily takes this category. It had about twice as much cash on hand as did 3D Systems at the end of the quarter. It also generated somewhat more cash from operations in the quarter, despite taking in slightly less revenue than 3D Systems.
Research and development spending
|
Company |
Q2 2018 Result |
|---|---|
|
3D Systems |
$22.7 million, or 12.9% of revenue. Down about 7% from the year-ago period. |
|
Stratasys |
$23.7 million, or 13.9% of revenue. Up about 2% from the year-ago quarter. |
Data sources: Q2 2018 earnings reports.
Advantage: tie.
Both companies spent roughly the same percentage of their revenue on research and development. Investing in R&D is crucial in fast-evolving tech spaces.
Investors should keep an eye on 3D Systems' R&D spending, as it decreased 7% from the year-ago period despite the company's revenue increasing nearly 11%.
2018 guidance
|
Company |
2018 Guidance |
Projected Year-Over-Year Changes |
|---|---|---|
|
3D Systems |
Did not provide. |
N/A |
|
Stratasys |
Revenue of $670 million to $700 million, adjusted EPS of $0.30 to $0.50, and a GAAP loss per share of $0.75 to $0.46. |
Revenue: approximately flat to 4.7%; adjusted EPS: flat to loss narrowing by $0.29; GAAP EPS: (33%) to 11%. |
Data sources: Q2 2018 earnings reports and conference calls.
Advantage: N/A.
We can't determine a winner here, since 3D Systems didn't provide a 2018 outlook.
The winner is... Stratasys.
Score: Stratasys: 4; 3D Systems: 1; tie: 1; N/A: 1.
Keep in mind that qualitative factors can be at least as important as quantitative ones and one quarter is just one quarter. Moreover, we didn't look at stock valuations.
