3D Systems Corporation Q2 FY2026 earnings call

• Leadership Transition

  • Outgoing President and CEO Jeffrey Graves announced his planned transition after more than six years leading the company. The CEO search process is just getting underway and may take multiple months, with Graves remaining fully engaged to support a smooth transition. The timing was chosen because the company has emerged from an industry recession, completed cost cutting, refreshed its product portfolio, and positioned itself for growth, creating an attractive opportunity for a new CEO with a long growth runway.

• Product Portfolio and Core Market Momentum

  • Customer capital spending in the four priority high-growth markets (medtech, dental, aerospace and defense, data center infrastructure) has resumed, and Q2 2026 total printer sales grew more than 45% year-over-year, led by the DMP350 metal printer, SLA825 polymer printer, and Next Dent 300 denture printer. DMP350 sales grew ~90% year-over-year, while SLA825 sales grew ~125% year-over-year.
  • In aerospace and defense, the company received one of the largest industrial printer orders in its history for SLA825 systems used to produce casting patterns for next-generation reusable rocket engines, a market expected to grow nearly 10x over the next decade. Demand is being driven by rapidly accelerating global launch cadence for space applications including satellite constellations and interplanetary travel.
  • In dental, the Next Dent 300 denture printer received full EU MDR approval in Q2 2026 following 2025 FDA clearance. The company expects to have installed systems in more than 100 top dental labs by the end of 2026, with initial installed units already generating $2 million in annual recurring revenue at high accretive gross margins. The total annual addressable market for the product is over $150 million in the U.S. alone, with a comparable opportunity in Europe, and current penetration is less than 2%.
  • In data center infrastructure, Q2 2026 semiconductor and high performance computing revenue grew almost 30% year-over-year, driven by demand for directly printed high-performance metal components, with a healthy pipeline of new printer orders. The company also sees growing demand for 3D printed components for next-generation power solutions for data centers, including small modular nuclear reactors and fusion energy components.
  • The company executed a Cooperative Research and Development Agreement (CRADA) with Savannah River National Laboratory to collaborate on development of new materials, component design, and AI-optimized manufacturing for 3D printed components for nuclear fission and fusion energy applications.
  • Metal printer sales in the first half of 2026 already exceed full-year 2025 sales, with the company developing a new large-scale 1-meter metal printing system that will be fully designed and manufactured in the U.S. for targeted industrial and defense markets.

• Operational Expansion

  • To meet rapidly rising demand for finished direct metal printed parts, the company is expanding production capacity, adding 50,000 square feet of production space at its Littleton, Colorado facility (opening in fall 2026), bringing total global metal printing space to over 270,000 square feet. The expansion leverages the company's existing rigorous medical-grade quality infrastructure to serve high-demand aerospace, defense, and industrial customers.

• Cost and Balance Sheet Updates

  • The company completed its six-quarter cost reduction initiative, delivering over $60 million in annualized cost savings via facility footprint optimization, operating model streamlining, and ongoing cost controls. Q2 2026 non-GAAP operating expenses were $39.5 million, an 11% year-over-year decrease. The company completed an equity offering in Q2 2026 with $53 million in net proceeds, ending the quarter with $129 million in total cash and $96 million in outstanding debt.

1. Healthcare Solutions: This is the company's largest segment for the quarter, with revenue of $48.1 million, representing a 6.8% year-over-year increase, contributing 50.8% of total Q2 2026 revenue. Growth was driven by strong demand for medtech metal printers for orthopedic implants, growth in personalized healthcare solutions for surgical planning and trauma applications, steady dental material sales, and rising adoption of the Next Dent 300 denture printer. For the first half of 2026, the segment grew 14% year-over-year, with double-digit growth in dental and strong medtech demand.

2. Industrial: The segment generated Q2 2026 revenue of $46.5 million, a 3.7% year-over-year decrease, and a 2.4% sequential increase, contributing 49.2% of total Q2 2026 revenue. The year-over-year decline came from the discontinuation of a non-core product last year and lower services revenue on legacy installed bases. Aerospace and defense was the largest industrial market, with strong growth driven by space and defense applications; data center infrastructure also posted healthy year-over-year growth, with additional solid growth in automotive and motorsports materials and services. For the first half of 2026, the segment saw a 1% year-over-year revenue decline, with softer demand in consumer-facing and general manufacturing markets offset by strong growth in aerospace and defense and automotive.

• For Q3 2026, management expects total revenue in the range of $96 million to $99 million, and adjusted EBITDA in the range of -$3 million to -$1 million.
• Management expects ongoing strength across all four core growth markets, with continued growth in both printer hardware and finished part sales, sustained adoption of the Next Dent 300 denture printer, and ongoing growth in personalized healthcare solutions.
• Gross margins in the second half of 2026 will be slightly impacted by a higher mix of printer hardware sales, particularly in the Q4 2026 typical year-end capital spending cycle.
• Operating expense levels in the second half of 2026 are expected to remain stable, consistent with levels seen in the first half of 2026.
• Management maintains a conservative approach to long-term guidance, only guiding one quarter out, but notes that sustained double-digit company-wide growth is the expected long-term trajectory as core high-growth markets continue to expand.

• Consumer-facing and general industrial end markets (outside of the four core growth markets) remain weak, particularly service bureaus supporting consumer products and the jewelry market, which also faces additional geopolitical and competitive pressure. These weaker end markets offset some of the growth from the core priority segments in the industrial segment.
• Supply chain constraints for electrical components have created production rate limits for new Next Dent 300 printers, requiring the company to adjust purchasing plans to secure sufficient components to meet rising demand.
• Quarterly revenue and performance can still be lumpy due to variable timing of large customer printer orders, leading to quarter-to-quarter fluctuations. Actual future results may differ materially from forward-looking statements due to general macroeconomic and market volatility.

Q: Given the strong early reception for the Next Dent 300, what is the outlook for denture deployments in 2027?

A: Management reports extremely strong end-user and dentist feedback, with higher patient comfort and reduced need for adjustments, improving dentist productivity. Uptake has exceeded expectations, with Q3 and Q4 production plans revised upward twice already. The company is securing supply chain to meet demand and expects significant revenue growth in 2027 and beyond, with dentures potentially becoming the company's largest single revenue stream over the next few years.

Q: Why is the CEO transition happening now, and what is the status of the search?

A: The search is just getting underway and will take multiple months, with the outgoing CEO remaining in place through the transition. The timing was chosen intentionally: the company has now completed cost cutting, refreshed its product portfolio, and emerged from the industry recession, creating an attractive position for a new CEO to lead with a long growth runway, rather than forcing a transition during a crisis.

Q: Can you share details on the large SLA825 order for reusable rocket engine casting patterns?

A: The order is correct for this application, and it spans multiple quarters, with initial shipments completed in Q2 2026 and more deliveries scheduled for coming quarters. It represents a long-term potential revenue stream including recurring high-margin consumable material sales, and validates 3D printing's growing role in the fast-growing space launch market.

Q: What are the key levers to reach positive adjusted EBITDA, and when can that happen?

A: The primary lever is continued volume growth from printer sales, which drives volume efficiencies and pulls through recurring, higher-margin consumable material sales on the polymer side, and growing finished metal part production on the metal side. Both of these follow naturally from current printer sales growth, and the company is already very close to positive EBITDA.