Why it's happening: In the second quarter, 3D Systems generated $170.5 million in revenue, an increase of 13% year over year, translating to a net loss of $0.12 per share, or a $0.03 net profit per share on a non-GAAP basis. Wall Street expected 3D Systems to generate $173.7 million in revenue and earn an adjusted $0.09 per share.
While 3D Systems missed Wall Street estimates and cited ongoing macroeconomic challenges in the release, investors seem to be relieved that the quarter wasn't plagued with any new major negative developments -- an occurrence that's become far too common in recent quarters. Investors may have also found it encouraging that 3D Systems' underlying business showed early signs of stabilization and that the worst of the macroeconomic uncertainty it faced in the previous two quarters could be behind it.
Revenue for its design and manufacturing products and services increased by 12% annually and by 11% sequentially to $161.2 million. 3D Systems' organic growth rate, which measures annual revenue growth outside of acquisitions from the last year, declined by 5% year over year, but increased by 2% after adjusting for currency fluctuations.
What's more, 3D Systems' product revenue increased by 10% year over year, while its order backlog increased by 3% sequentially, indicating that demand for future orders may have stabilized some. Management even noted that industrial healthcare and aerospace customers resumed their purchases after having paused in previous quarters.
Considering nearly one-third of 3D Systems' shares outstanding have been sold short, it's likely that today's price action was at least partially caused by a flood of bears rushing to close their positions after learning that the company's earnings weren't as bad as feared.