Motley Fool Rule Breakers investors were thrilled to hear the news last week that recent portfolio inductee Stratasys (Nasdaq: SSYS) was finally making good on its potential. Not only did sales rise 12%, profits beat expectations, and management predicted it would "grow the market by making [its 3-D printing] systems more affordable." Shareholders saw an immediate benefit in the form of a double-digit jump in the stock's price.

Not so with 3D Systems (Nasdaq: TDSC). Revenue at the Stratasys rival slipped 14% in comparison with last year's Q1. Profits proved increasingly elusive, as the company's net loss widened to $0.17 per share. To add injury to insult, shareholders suffered the pain of a greater than 40% loss on their investment.

Reviewing the results, CEO Abe Reichental pronounced himself "deeply disappointed with the revenue decline ... that affected our entire operating results for the quarter." In selling fewer machines, 3D was unable to maximize production efficiencies, and as a result its gross margin shed 1% to arrive at 42%. (By comparison, Stratasys is generating gross margins more than 10% higher.) On the plus side, 3D did manage to cut its operating costs. Unfortunately, the 7% decline here was only half the rate at which sales fell -- rolling the operating margin downhill as well.

Reichental attributed 3D's weak sales performance to "U.S. soft demand for end-user parts during the quarter," and noted that the lack of demand was compounded by the "relatively lower selling prices [on] ... mid-range prototyping systems and 3-D printers" that 3D did manage to sell. Meanwhile, sales of higher-margin large-frame systems were "anemic." That's  a word Reichental also applied to the decline in sale of "materials" (the gunk that goes into 3D's printers to be transformed into physical objects).

All of which makes for quite a contrast with Stratasys' depiction of the quarter. Last week, Stratasys CEO Scott Crump agreed with Reichental that he was seeing "some small signs of weakness in our domestic markets." But unlike Reichental, Crump described global demand as "strong." Also unlike 3D, Stratasys enjoyed a "favorable product mix ... led by the standout performance of our proprietary high-end system business." Finally, as 3D's "materials" sales slipped 3%, Stratasys' rumbled ahead 14%.

A to-go box of Foolishness
Reviewing 3D's client list, and comparing it to Stratasys' rolling tally of customers landed, I'm struck by the fact that alongside names like Hewlett-Packard (NYSE: HPQ) and Nokia (NYSE: NOK), the latter list includes at least two names from the former: Sony (NYSE: SNE) and 3M (NYSE: MMM). Based on their overlapping customer bases, and their diametrically opposed operating results, it looks to me like Strata is systematically stealing share from its opponent.

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