3D Systems Corp. Q1 FY2026 earnings call

• Overall Market & Strategy

• The additive manufacturing industry is emerging from a multi-year downturn driven by reduced customer capital spending amid global economic and geopolitical challenges, with green shoots of growth visible across core high-value markets.
• 3D Systems sustained targeted R&D investment through the downturn, resulting in a fully refreshed product portfolio spanning direct metal printing and five major polymer printing platforms that no competitor can match in breadth or performance.
• The company focuses R&D and commercial efforts on three high-growth, high-value markets: aerospace and defense, medtech, and dental, which have demanding regulatory and quality requirements that 3D Systems is already positioned to meet via its long-standing market presence.

• MedTech Operational Updates

• Medtech achieved double-digit year-over-year growth in medical parts manufacturing, printer sales, and surgical planning services, driven by demand for titanium spinal implants and cobalt chrome joint replacement implants.
• DMP350 metal printer sales grew as medical device customers entered a refresh and expansion cycle; a temporary demand disruption from one key customer was resolved by the end of the quarter, with a rebound expected in Q2.
• The company is supporting a large global healthcare customer through a three-phase growth model (process development, low-to-intermediate volume production, full system purchase) that is expected to conclude in 2027.
• Improved turnaround speed and cost reduction have opened the new trauma surgery market, and oncology bone cancer treatment using 3D printed PEAK implants is an emerging growth driver.

• Dental Operational Updates

• Dental achieved double-digit year-over-year growth driven by expanding demand for aligner materials and Vertex brand prosthetic repair materials; U.S. regulatory and trademark approval for Vertex, gained in late 2025, doubled the addressable market for this product line.
• The NextDent 300 denture printing platform, launched in the U.S. in Q4 2025, has become the company's most successful new product launch of the past five years, with strong customer adoption: major U.S. dental lab Rho Dental has deployed a multi-site fleet and tripled its denture manufacturing capacity.
• EU Phase IIa regulatory approval for the denture solution was received two months ahead of schedule, expanding the total addressable market to more than 60 million edentulous patients, representing a multi-billion dollar long-term opportunity. A solid order backlog exists entering Q2, and internal production targets for H2 2026 have been raised.

• Aerospace and Defense Operational Updates

• 3D Systems is unique in offering two complementary high-reliability metal component manufacturing technologies: high-performance direct metal printing (DMP) for fully dense, contaminant-free parts, and high-precision SLA printed patterns for investment casting, which gives customers flexibility across part size, cost, and design requirements.
• The refreshed metal printer portfolio includes the DMP Flex 200, DMP 350 Triple, DMP 500, and a next-generation large-format metal printer developed via a $28 million U.S. government-funded program.
• Aerospace and defense is the largest and fastest growing segment within industrial solutions, expected to grow over 20% in 2026 to ~$35 million in annual revenue, driven by demand from space, naval, aero propulsion, unmanned aerial vehicles, and precision munitions.
• An 80,000 square foot manufacturing expansion at the company's Littleton, Colorado facility for aerospace and defense metal component production is on track for a late summer 2026 opening.

• Financial Operational Updates

• The company completed divestiture of legacy software businesses in 2025, so all year-over-year comparisons are adjusted to exclude these assets.
• Consolidated Q1 2026 revenue was $95.5 million, up 11% year-over-year, with double-digit growth for all core product categories (printers, materials, parts manufacturing).
• Non-GAAP gross margin was 36.1%, up 6 percentage points year-over-year, driven by improved manufacturing absorption from higher volume, favorable consumables mix, improved printer margins, and prior cost reduction initiatives.
• The company has delivered more than $55 million in annualized cost savings from 2025 restructuring initiatives, with programs expected to conclude by the end of Q2 2026. Non-GAAP operating expenses were $36.6 million, down 35% year-over-year, and are expected to remain stable for the rest of 2026 with normal seasonal fluctuations.
• Adjusted non-GAAP EBITDA was positive $2.1 million, a $26 million year-over-year improvement, while non-GAAP loss per share was $0.01, an improvement from a $0.21 per share loss in Q1 2025.

3D Systems operates two core business segments. The Industrial Solutions segment generated $45.4 million in revenue in Q1 2026, representing a 1.6% year-over-year increase, and contributed 47.5% of total consolidated revenue. Within this segment, the aerospace and defense end market delivered over 20% year-over-year growth, while automotive and semiconductor markets returned to growth; these gains were partially offset by lower demand in the jewelry business due to regional conflicts in the Middle East. The Healthcare Solutions segment generated $50.1 million in revenue in Q1 2026, growing 21% year-over-year, and surpassed Industrial Solutions to become the larger segment, contributing 52.5% of total consolidated revenue. Growth was driven by strong double-digit expansion across both medtech and dental sub-segments, with increases in printer sales, material sales, and healthcare parts manufacturing, particularly for orthopedic medical implants.

• Second quarter 2026 revenue is guided to a range of $93 million to $95 million, with an adjusted EBITDA loss expected between $2 million and $4 million. The cautious guidance reflects a normal seasonal dip in Q2 for healthcare procedures, as patients defer elective dental and orthopedic procedures to avoid recovery during summer vacation periods, and management's deliberate measured approach amid ongoing global volatility, rather than any pull-forward of demand from Q1.
• Full year 2026 guidance targets adjusted EBITDA of break-even or better, with operating expenses expected to remain largely stable for the remainder of the year after cost restructuring is completed in Q2.
• R&D spending will transition from the elevated levels of the multi-year product portfolio refresh to a balanced, targeted level focused on incremental product enhancements going forward.
• Aerospace and defense revenue for full year 2026 is expected to grow more than 20% year-over-year to approximately $35 million.

• Ongoing regional conflict in the Middle East has disrupted regional demand for the company's jewelry business and created global logistics disruptions that impact the delivery of printers, parts, and materials to customers worldwide.
• The company faces ongoing macroeconomic and geopolitical volatility that can impact customer capital spending plans and supply chain operations, which informed management's decision to maintain a cautious, measured approach to guidance.
• Modest foreign exchange and tariff impacts negatively affected Q1 2026 bottom line performance, offsetting some of the gains from higher volume and cost reductions.

Q: Management's tone is more positive than in recent years. What is the key lever to reaccelerate growth, and what green shoots are visible in the market?

A: Management confirmed the more positive outlook, noting that the multi-year bet to sustain R&D investment through the industry downturn to refresh the full product line has paid off, with new products launching just as the industry begins to recover. Growth is broad across core high-reliability markets: dental is growing as customization drives adoption, medtech is expanding in orthopedics, and aerospace and defense is increasingly adopting 3D printing for difficult-to-fabricate exotic material parts. Management feels more optimistic about the business than at any point in the past two to three years, with healthcare now the largest segment and aerospace and defense growing rapidly.

Q: Why is Q2 revenue guidance lower than Q1 results, given the resolution of the Q1 key customer disruption? Is there any pull-forward of demand that explains the cautious outlook?

A: There was no pull-forward of demand from Q1; the Q1 revenue overperformance relative to prior guidance stemmed from a legitimate, unexpected uptick in customer demand across multiple sectors. The lower Q2 guidance reflects normal seasonality, as a larger share of the company's business is now healthcare, and patients typically defer elective dental procedures and orthopedic surgeries to the summer vacation season, creating a predictable Q2 seasonal dip. Management also chose to maintain a cautious, measured guidance amid ongoing global volatility and ongoing logistics disruptions stemming from the Middle East conflict, to avoid overestimating near-term results.

Q: What drove the year-over-year growth in the healthcare segment, between medtech/personalized healthcare and dental?

A: Both sub-segments delivered strong double-digit growth. Medtech grew across surgical planning, guides, and orthopedic implants, with only a temporary Q1 disruption from one customer that has now been resolved; new growth drivers include faster response times that opened the trauma surgery market, and growing demand for 3D printed implants for bone cancer treatment. Dental growth was driven by newly gained U.S. trademark approval for Vertex repair materials, which doubled the addressable market for this high-margin product line, alongside stabilization and modest growth in the aligner materials business. Barriers to entry from regulatory requirements make this a stable, attractive market for 3D Systems.

Q: What is the scope and purpose of the Littleton, Colorado facility expansion for metal additive parts?

A: The company is adding 80,000 square feet of dedicated manufacturing space adjacent to its existing Littleton campus, with opening planned for late summer 2026. The existing facility was originally built for healthcare manufacturing and had become overcrowded with additional industrial aerospace production, so the new facility will be dedicated exclusively to high-end industrial metal part manufacturing for aerospace and defense, leveraging the existing quality systems already in place for healthcare. The expansion will add capacity for high-demand parts including titanium for satellites and drones, nickel-based alloys for aircraft and rocket propulsion, and copper-nickel alloys for U.S. Navy applications, as current capacity cannot meet existing customer demand.