3D Systems Corporation
11/04/2025 | Press release | Distributed by Public on 11/04/2025 15:42
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide a reader of our financial statements with a narrative from the perspective of management and is intended to help the reader understand the results of operations and financial condition of the Company. Our MD&A should be read in conjunction with our MD&A and Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "2024 Annual Report on Form 10-K") and our Condensed Consolidated Financial Statements as of and for the three and nine months ended September 30, 2025 included in this Form 10-Q.
Information Relating to Forward-Looking Statements
Certain statements contained in this MD&A may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from historical results or from any future results expressed, or implied by, such forward-looking statements. In many cases, you can identify forward-looking statements by terms such as "believes," "belief," "expects," "may," "will," "estimates," "intends," "anticipates," or "plans" or the negative of these terms or other comparable terminology.
Forward-looking statements are based upon management's beliefs, assumptions and current expectations concerning future events and trends, using information currently available, and are necessarily subject to uncertainties, many of which are outside our control. Although we believe that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not, and should not be relied upon as a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. A number of important factors could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements. These factors include without limitation:
•impact on our business as a result of macroeconomic events and other geopolitical risks, recession, supply chain disruptions, inflation, interest rates and foreign exchange volatility;
•our ability to deliver products that meet changing technology and customer needs;
•our ability to identify strategic acquisitions, to integrate such acquisitions into our business without disruption and to realize the anticipated benefits of such acquisitions;
•our ability to realize anticipated benefits for future dispositions;
•impact of future write-off or write-downs of goodwill and intangible assets;
•the concentration of revenue and credit risk exposure from our largest customer;
•our ability to acquire and enforce intellectual property rights and defend such rights against third-party claims;
•our ability to protect our intellectual property rights and confidential information, including our digital content, from third-party infringers or unauthorized copying, use or disclosure;
•failure of our information technology infrastructure or inability to protect against cyber-attack;
•our ability to predict quarterly sales and manage product inventory due to uneven sales cycle;
•our ability to generate net cash flow from operations;
•our ability to service our debt and ability to raise funds necessary to settle conversions of the 2030 Notes or 2026 Notes in cash, repay the 2030 Notes or 2026 Notes at maturity, repurchase the 2030 Notes upon the exercise of the holders' one-time put right or repurchase the 2030 Notes or the 2026 Notes in the case of a fundamental change;
•our ability to comply with the covenants contained in our 2030 Indenture, 2026 Indenture and other current or future debt agreements, including the limitations, restrictions and prohibitions such covenants may impose on the way we conduct our business, including certain financial covenants, prohibitions on incurring additional debt if certain covenants are not met and restrictions on our ability to make certain investments and restricted payments;
•our ability to remediate material weaknesses in our internal controls over financial reporting and maintain effective internal controls;
•fluctuations in our gross profit margins, operating income or loss and/or net income or loss;
•our ability to efficiently conduct business outside the U.S.;
•our dependence on our supply chain for components and sub-assemblies used in our 3D printers and other products and for raw materials used in our print materials;
•our ability to manage the costs and effects of litigation, investigations or similar matters involving us or our subsidiaries;
•product quality problems that result in decreased sales and operating margin, product returns, product liability, warranty or other claims;
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•our ability to retain our key employees and to attract and retain new qualified employees, while controlling our labor costs;
•our ability to successfully develop and commercialize regenerative medicine products ourselves, or in conjunction with development partners;
•disruption in our management information systems for inventory management, distribution, and other key functions;
•compliance with U.S. and other anti-corruption laws, data privacy laws, trade controls, economic sanctions, and similar laws and regulations;
•our ability to maintain our status as a responsible contractor under federal rules and regulations;
•changes in, or interpretation of, tax rules and regulations;
•our inability to use a Form S-3 Registration Statement; and
•the other factors discussed in the reports we file with or furnish to the SEC from time to time, including the risks and important factors set forth in additional detail in Item 1A. "Risk Factors" in the 2024 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.
Readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included herein are made only as of the date of this Form 10-Q and we undertake no obligation to publicly update or revise any forward-looking statement made by us or on our behalf, whether as a result of new information, future developments, subsequent events or circumstances or otherwise, except as required by law. All subsequent written or oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by the cautionary statements referenced above.
Business Overview
3D Systems Corporation ("3D Systems" or the "Company" or "we," "our" or "us") markets our products and services through subsidiaries in North America and South America (collectively referred to as "Americas"), Europe and the Middle East (collectively referred to as "EMEA") and Asia Pacific and Oceania (collectively referred to as "APAC"). We provide comprehensive 3D printing and digital manufacturing solutions, including 3D printers for plastics and metals, materials, software, and services, including maintenance, advanced manufacturing and applications engineering. Our solutions support advanced applications in two key industry verticals: Healthcare Solutions and Industrial Solutions. We have over 35 years of experience and expertise, which have proven vital to our development of an ecosystem and end-to-end digital workflow solutions that enable customers to optimize product designs, transform workflows, bring innovative products to market and drive new business models.
The Company has two reportable segments: Healthcare Solutions and Industrial Solutions. Our reportable segments are based upon the industry verticals that they serve. For Healthcare Solutions, those industry verticals include dental, medical devices, personalized health services and regenerative medicine. For Industrial Solutions, those industry verticalsinclude aerospace, defense, transportation and general manufacturing. We architect solutions specific to customers' needs through a combination of materials, hardware platforms, software, professional services and advanced manufacturing - creating a path to integrating additive manufacturing into traditional production environments. As a result, manufacturers achieve design freedom, increase agility, scale production and improve their overall total cost of operation. Our technologies and process knowledge enable over a million production parts to be made through additive manufacturing each day.
Recent Developments and Updates Regarding Strategic Initiatives
2025 Restructuring Plan
In March 2025, the Company authorized the next phase of its multi-faceted cost savings and restructuring initiative (the "2025 Restructuring Plan"). The 2025 Restructuring Plan includes initiatives to deliver sustainable growth and profitability, enabled by a streamlining of both infrastructure and business processes, while consistently investing in core research and development activities to support long-term growth opportunities. Additionally, in May 2025, in response to the uncertain macroeconomic environment, the Company announced an incremental cost reduction initiative focused on labor force reductions that is expected to deliver significant cost savings in the second half of the year.
The Company expects to incur approximately $8.5 million to $14.5 million in pre-tax restructuring and other related costs by the end of the second fiscal quarter of 2026. The charges under the 2025 Restructuring Plan are expected to be primarily cash charges.
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Divestitures
In December 2024, the Company entered into a definitive agreement with Hexagon AB for the sale of its Geomagic software business ("Geomagic"), which was included in our Industrial Solutions segment. On April 1, 2025, the Company completed the sale of Geomagic and received $119.4 million in cash, which reflected applicable purchase price adjustments under the Asset Purchase Agreement and Business Transfer Agreement. The Company recorded a pre-tax gain of $125.7 million from the sale of Geomagic in the nine months ended September 30, 2025.
No loss was recognized to measure the disposal group at the lower of its carrying value or fair value less costs to sell. The disposal group has not been presented as a discontinued operation in the accompanying condensed consolidated financial statements because the sale of Geomagic does not represent a strategic shift that will have a major effect on the Company's operations.
In September 2025, the Company entered into a definitive agreement for the sale of its 3DXpert and Oqton businesses to Hubb Global Holdings, LLC for $3.5 million plus a revenue-based royalty of up to $12.9 million. 3DXpert and Oqton are included in our Industrial Solutions segment.
On October 31, 2025, the Company completed the sale of the 3DXpert and Oqton businesses, subject to customary adjustments.
The Company determined that the associated assets and liabilities met the held for sale criteria during September 2025, with approval by the Company's Board of Directors and the signing of the purchase agreement. Accordingly, the Company classified $1.6 million of assets and $5.1 million of liabilities as held for sale in the Company's Consolidated Balance Sheet as of September 30, 2025. No loss was recognized to measure the disposal group at the lower of its carrying value or fair value less costs to sell. The disposal group has not been classified as a discontinued operation in the accompanying condensed consolidated financial statements, as the sale of 3DXpert and Oqton does not constitute a strategic shift that would have a major effect on the Company's operations.
Goodwill
In the second quarter of 2025, based primarily on macroeconomic uncertainties, our updated strategic plans and restructuring initiatives and the decline in our stock price, we concluded that changes to the timing and amount of expected future cash flows, among other factors, indicated a triggering event requiring an interim goodwill impairment assessment on our Healthcare reporting unit. As a result of the quantitative interim impairment test performed in the second quarter of 2025, we concluded that there was no impairment, as the estimated fair value of the Healthcare reporting unit exceeded the carrying value.
While there was no impairment found during our interim goodwill impairment test in the second quarter of 2025, changes in our future operating results, cash flows, share price, market capitalization or discount rates used when conducting future goodwill impairments tests could affect the implied fair value of goodwill and may result in additional impairment charges in the future.
Background
We earn revenue from the sale of products and services through our Healthcare Solutions and IndustrialSolutionssegments. The product categories include 3D printers and corresponding materials, digitizers, software licenses, 3D scanners and haptic devices. The majority of materials used in our 3D printers are proprietary. The services categories include maintenance contracts and services on 3D printers, software maintenance, software as a service subscriptions and healthcare solutions services.
Given the relatively high price of certain 3D printers and a corresponding lengthy selling cycle, as well as relatively low unit volume of the higher-priced printers in any particular period, a shift in the timing and concentration of orders and shipments from one period to another can materially affect reported revenue in any given period.
In addition to changes in sales volumes, there are two other primary drivers of changes in revenue from one period to another: (1) the combined effect of changes in product mix and average selling prices and (2) the impact of fluctuations in foreign currencies. As used in this MD&A, the price and mix effects relate to changes in revenue that are not able to be specifically attributed to changes in unit volume or changes in foreign exchange rates.
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RESULTS OF OPERATIONS
Comparison of Results of Operations
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| (in thousands) | September 30, 2025 | September 30, 2024 | Change | September 30, 2025 | September 30, 2024 | Change | |||||||||||||||||||||||||||||
| Revenue | $ | 91,249 | $ | 112,940 | $ | (21,691) | $ | 280,627 | $ | 329,097 | $ | (48,470) | |||||||||||||||||||||||
| Cost of sales | 61,818 | 71,227 | (9,409) | 182,357 | 199,364 | (17,007) | |||||||||||||||||||||||||||||
| Selling, general and administrative expenses ("SG&A") | 34,716 | 57,974 | (23,258) | 118,624 | 166,772 | (48,148) | |||||||||||||||||||||||||||||
| Research and development expenses ("R&D") | 16,025 | 20,764 | (4,739) | 53,069 | 66,260 | (13,191) | |||||||||||||||||||||||||||||
| Asset impairment charges | - | 143,733 | (143,733) | - | 143,733 | (143,733) | |||||||||||||||||||||||||||||
| Loss from operations | $ | (21,310) | $ | (180,758) | $ | 159,448 | $ | (73,423) | $ | (247,032) | $ | 173,609 | |||||||||||||||||||||||
Revenue
The following tables sets forth changes in our revenue for the three and nine months ended September 30, 2025.
| (Dollars in thousands) | Products | Services | Total | ||||||||||||||||||||||||||||||||
|
Revenue - three months ended September 30, 2024
|
$ | 72,968 | $ | 39,972 | $ | 112,940 | |||||||||||||||||||||||||||||
| Change in revenue: | |||||||||||||||||||||||||||||||||||
| Volume | (21,689) | (29.7) | % | (1,761) | (4.4) | % | (23,450) | (20.8) | % | ||||||||||||||||||||||||||
| Price/mix | (85) | (0.1) | % | - | - | % | (85) | (0.1) | % | ||||||||||||||||||||||||||
| Foreign currency translation | 1,117 | 1.5 | % | 727 | 1.8 | % | 1,844 | 1.6 | % | ||||||||||||||||||||||||||
| Net change | (20,657) | (28.3) | % | (1,034) | (2.6) | % | (21,691) | (19.2) | % | ||||||||||||||||||||||||||
|
Revenue - three months ended September 30, 2025
|
$ | 52,311 | $ | 38,938 | $ | 91,249 | |||||||||||||||||||||||||||||
| (Dollars in thousands) | Products | Services | Total | ||||||||||||||||||||||||||||||||
|
Revenue - nine months ended September 30, 2024
|
$ | 208,752 | $ | 120,345 | $ | 329,097 | |||||||||||||||||||||||||||||
| Change in revenue: | |||||||||||||||||||||||||||||||||||
| Volume | (45,201) | (21.7) | % | (1,496) | (1.2) | % | (46,697) | (14.2) | % | ||||||||||||||||||||||||||
| Price/mix | (4,258) | (2.0) | % | - | - | % | (4,258) | (1.3) | % | ||||||||||||||||||||||||||
| Foreign currency translation | 1,542 | 0.7 | % | 943 | 0.8 | % | 2,485 | 0.8 | % | ||||||||||||||||||||||||||
| Net change | (47,917) | (23.0) | % | (553) | (0.4) | % | (48,470) | (14.7) | % | ||||||||||||||||||||||||||
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Revenue - nine months ended September 30, 2025
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$ | 160,835 | $ | 119,792 | $ | 280,627 | |||||||||||||||||||||||||||||
For the three months ended September 30, 2025, revenue decreased $21.7 million, or 19.2%, compared to the three months ended September 30, 2024. The decrease in revenue was primarily due to a decline in product revenue of $20.7 million driven by lower materials volume to customers in the dental, service bureaus, and jewelry markets, unfavorable price/mix, and the impact of the Geomagic divestiture. Service revenue decreased $1.0 million due to the impact of decreased volumes because of the Geomagic divestiture. Excluding the impact of the Geomagic divestiture, service revenue increased due to increased volumes.
For the nine months ended September 30, 2025, revenue decreased $48.5 million, or 14.7%, compared to the nine months ended September 30, 2024. The decrease in revenue was primarily due to a decline in product revenue of $47.9 million driven by lower materials volume to customers in the dental, service bureaus, and jewelry markets, and the impact of the Geomagic divestiture. Service revenue decreased $0.6 million due to the impact of decreased volumes because of the Geomagic divestiture. Excluding the impact of the Geomagic divestiture, service revenue increased due to increased volumes although we saw decreased sales to a certain key customer in the dental market
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Cost of sales and gross profit
For the three months ended September 30, 2025, cost of sales decreased to $61.8 million compared to $71.2 million for the three months ended September 30, 2024. Declines primarily related to lower sales volumes in printers and materials which were partially offset an increase in service volume.
For the three months ended September 30, 2025, gross profit decreased $12.3 million, or 29.4%, compared to the three months ended September 30, 2024. The decrease in gross profit was primarily due to a combination of lower sales volumes and the impact of the Geomagic divestiture. Gross profit margin decreased to 32.3% compared to 36.9% in the prior year period, primarily due to the Geomagic divestiture and lower sales volumes.
For the nine months ended September 30, 2025, cost of sales decreased to $182.4 million compared to $199.4 million for the nine months ended September 30, 2024. This decline was primarily attributable to a lower volume of printer and material sales.
For the nine months ended September 30, 2025, gross profit decreased $31.5 million, or 24.3%, compared to the nine months ended September 30, 2024. The decrease in gross profit was primarily due to a combination of lower sales volumes and the impact of the Geomagic divestiture. Gross profit margin decreased to 35.0% compared to 39.4% in the prior year period, primarily due to the Geomagic divestiture and lower sales volumes.
Selling, general and administrative expenses
For the three months ended September 30, 2025, selling, general and administrative expenses ("SG&A") decreased $23.3 million, or 40.1%, compared to the three months ended September 30, 2024. The year-over-year decline in SG&A was primarily due to:
•$7.6 million decrease in third-party service provider and consulting costs due to the increased cost to complete our fiscal 2023 audit during the three months ended September 30, 2024 and decreased legal fees;
•$7.5 million decrease in compensation and benefits expense primarily related to lower compensation expense due to the impact of our restructuring actions and lower stock-based compensation expense due to the timing of awards and lower annual incentive compensation; and
•$7.3 million decrease in amortization expense related to intangible assets due to lower intangible asset balances which were reduced by prior-year impairment charges; which were partially offset by
•$1.4 million increase due to costs associated with our restructuring actions which were primarily related to severance.
For the nine months ended September 30, 2025, SG&A decreased $48.1 million, or 28.9%, compared to the nine months ended September 30, 2024. The year-over-year decline in SG&A was primarily due to:
•$24.8 million decrease in compensation and benefits expense primarily related to lower compensation expense due to the impact of our restructuring actions and lower stock-based compensation expense due to the timing of awards;
•$16.5 million decrease in third-party service provider and consulting costs due to the increased cost to complete our fiscal 2023 audit during the nine months ended September 30, 2024; and decreased legal fees; and
•$10.1 million decrease in amortization expense related to intangible assets due to lower intangible asset balances which were reduced by prior-year impairment charges; which were partially offset by
•$4.7 million increase due to costs associated with our restructuring actions which were primarily related to severance.
Research and development expenses
For the three months ended September 30, 2025, research and development expenses ("R&D") decreased $4.7 million, or 22.8%, compared to the three months ended September 30, 2024. The year-over-year decline in R&D was primarily due to:
•$2.3 million decrease in compensation and benefits expense and other R&D expenses primarily due to improved operating efficiency and cost reductions realized from our restructuring activities.
For the nine months ended September 30, 2025, R&D decreased $13.2 million, or 19.9%, compared to the nine months ended September 30, 2024. The year-over-year decline in R&D was primarily due to:
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•$9.1 million decrease in compensation and benefits expense and other R&D expenses primarily due to improved operating efficiency and cost reductions realized from our restructuring activities.
Segment Results
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Segment Revenue
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Segment Gross Profit | ||||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||||||
| (in thousands) | September 30, 2025 | September 30, 2024 | Change | September 30, 2025 | September 30, 2024 | Change | |||||||||||||||||||||||||||||
| Healthcare Solutions | $ | 42,787 | $ | 55,056 | $ | (12,269) | $ | 16,420 | $ | 23,322 | $ | (6,902) | |||||||||||||||||||||||
| Industrial Solutions | 48,462 | 57,884 | (9,422) | 13,011 | 18,391 | (5,380) | |||||||||||||||||||||||||||||
| Total Company | $ | 91,249 | $ | 112,940 | $ | (21,691) | $ | 29,431 | $ | 41,713 | $ | (12,282) | |||||||||||||||||||||||
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Segment Revenue
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Segment Gross Profit | ||||||||||||||||||||||||||||||||||
| Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| (in thousands) | September 30, 2025 | September 30, 2024 | Change | September 30, 2025 | September 30, 2024 | Change | |||||||||||||||||||||||||||||
| Healthcare Solutions | $ | 129,123 | $ | 149,369 | $ | (20,246) | $ | 52,826 | $ | 62,739 | $ | (9,913) | |||||||||||||||||||||||
| Industrial Solutions | 151,504 | 179,728 | (28,224) | 45,444 | 66,994 | (21,550) | |||||||||||||||||||||||||||||
| Total Company | $ | 280,627 | $ | 329,097 | $ | (48,470) | $ | 98,270 | $ | 129,733 | $ | (31,463) | |||||||||||||||||||||||
Healthcare Solutions
Revenue
For the three months ended September 30, 2025, Healthcare Solutions revenue decreased $12.3 million, or 22.3%, compared to the three months ended September 30, 2024. The decrease in revenue was primarily due to a decline in materials revenue of $11.6 million. The decline in materials revenue was primarily due to lower sales in the dental market, including lower materials volume with a key customer.
For the nine months ended September 30, 2025, Healthcare Solutions revenue decreased $20.2 million, or 13.6%, compared to the nine months ended September 30, 2024. The decrease in revenue was primarily due to a decline in materials revenue of $25.3 million which was partially offset by an increase in service revenue of $4.5 million. The decline in materials revenue was primarily due to lower sales in the dental market, including lower materials volume with a key customer. Service revenue increased due to growth in parts manufacturing and personalized healthcare solutions revenue.
Gross profit
For the three months ended September 30, 2025, Healthcare Solutions gross profit decreased $6.9 million, or 29.6%, compared to the three months ended September 30, 2024. The decrease in gross profit was primarily due to lower sales volumes.
For the nine months ended September 30, 2025, Healthcare Solutions gross profit decreased $9.9 million, or 15.8%, compared to the nine months ended September 30, 2024. The decrease in gross profit was primarily due to lower sales volumes and unfavorable price/mix.
Industrial Solutions
Revenue
For the three months ended September 30, 2025, Industrial Solutions revenue decreased $9.4 million, or 16.3%, compared to the three months ended September 30, 2024. The decrease in revenue related to lower product, materials, and service revenue of $6.2 million, $1.9 million, and $1.3 million, respectively. The decline in product revenue was driven by the impact of the Geomagic divestiture and lower materials and printer sales to customers in the service bureaus and jewelry markets which was partially offset by increased sales in the aerospace and defense market. The decline in service revenue was primarily due to the impact of the Geomagic divestiture.
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For the nine months ended September 30, 2025, Industrial Solutions revenue decreased $28.2 million, or 15.7%, compared to the nine months ended September 30, 2024. The decrease in revenue related to lower product, materials and service revenue of $15.7 million, $7.4 million, and $5.0 million, respectively. The decline in product revenue was driven by lower printer and materials sales to customers in the service bureaus and jewelry markets and the impact of the Geomagic divestiture which was partially offset by increased sales in the aerospace and defense market. The decline in service revenue was primarily due to the impact of the Geomagic divestiture.
Gross profit
For the three and nine months ended September 30, 2025, Industrial Solutions gross profit decreased $5.4 million, or 29.3%, and $21.6 million, or 32.2%, respectively, compared to the prior periods. The decrease in gross profit was primarily due to the impact of the Geomagic divestiture, unfavorable price and mix, and lower sales volumes.
Non-operating income (expense)
The following table sets forth the components of non-operating income:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| (in thousands) | September 30, 2025 | September 30, 2024 | Change | September 30, 2025 | September 30, 2024 | Change | |||||||||||||||||||||||||||||
| Foreign exchange gain (loss), net | $ | 2,623 | $ | (1,960) | $ | 4,583 | $ | 2,171 | $ | (774) | $ | 2,945 | |||||||||||||||||||||||
| Interest income | 784 | 1,550 | (766) | 3,454 | 5,800 | (2,346) | |||||||||||||||||||||||||||||
| Interest expense | (1,924) | (606) | (1,318) | (3,202) | (1,944) | (1,258) | |||||||||||||||||||||||||||||
| Gain on disposition | - | - | - | 125,681 | - | 125,681 | |||||||||||||||||||||||||||||
| Other income (loss), net | 475 | (51) | 526 | 7,335 | 21,719 | (14,384) | |||||||||||||||||||||||||||||
| Total non-operating income (loss) | $ | 1,958 | $ | (1,067) | $ | 3,025 | $ | 135,439 | $ | 24,801 | $ | 110,638 | |||||||||||||||||||||||
Foreign exchange gain, net
Foreign exchange gain, net increased by $4.6 million and $2.9 million for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, primarily due to realized and unrealized gains related to our foreign operations.
Interest income
Interest income decreased $0.8 million and $2.3 million for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, due to the Company's lower average cash and cash equivalent balances.
Interest expense
Interest expense increased by $1.3 million for both the three and nine months ended September 30, 2025, compared to the prior year periods, primarily due to interest expense related to the 2030 Notes.
Gain on disposition
The gain on disposition of $125.7 million for the nine months ended September 30, 2025 was due to the sale of Geomagic business on April 1, 2025.
Other income, net
Other income, net, increased $0.5 million for the three months September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to a gain on the repurchase of debt in the three months ended September 30, 2025.
Other income, net, decreased $14.4 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to a higher gain on the repurchase of debt in the nine months ended September 30, 2024.
Income Taxes
For the three and nine months ended September 30, 2025, the Company's effective tax rate was 13.6% and 14.6%, respectively. For the three and nine months ended September 30, 2024, the Company's effective tax rate was 2.4% and 1.1%, respectively. The differences between the U.S. statutory tax rate and the effective tax rates for the three and nine months ended September 30, 2025 and 2024 were primarily driven by the recognition of a full deferred tax asset valuation allowance in various
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jurisdictions in both years. Additionally, the nine months ended September 30, 2025, were impacted by a gain recognized in connection with the divestiture of Geomagic and some foreign return to provision adjustments recorded in the period.
Liquidity and Capital Resources
The following table sets forth the Company's operating working capital at September 30, 2025 and December 31, 2024.
| September 30, 2025 | December 31, 2024 | Change | |||||||||||||||||||||
| (in thousands) | $ | % | |||||||||||||||||||||
| Cash and cash equivalents | $ | 95,542 | $ | 171,324 | $ | (75,782) | (44.2) | % | |||||||||||||||
| Accounts receivable, net | 88,074 | 101,471 | (13,397) | (13.2) | % | ||||||||||||||||||
| Inventories | 132,469 | 118,530 | 13,939 | 11.8 | % | ||||||||||||||||||
| 316,085 | 391,325 | (75,240) | (19.2) | % | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Current operating lease liabilities | 11,789 | 9,514 | 2,275 | 23.9 | % | ||||||||||||||||||
| Accounts payable | 39,182 | 41,833 | (2,651) | (6.3) | % | ||||||||||||||||||
| Accrued and other liabilities | 48,521 | 45,488 | 3,033 | 6.7 | % | ||||||||||||||||||
| 99,492 | 96,835 | 2,657 | 2.7 | % | |||||||||||||||||||
| Operating working capital | $ | 216,593 | $ | 294,490 | $ | (77,897) | (26.5) | % | |||||||||||||||
We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory turns, capital expenditure commitments and accounts payable turns. Our cash requirements, excluding acquisitions, primarily consist of funding working capital and capital expenditures. Differences between the amounts of working capital item changes in the cash flow statement and the balance sheet changes for the corresponding items are primarily the result of foreign currency translation adjustments, acquisitions and divestitures.
At September 30, 2025, cash, cash equivalents and restricted cash totaled $114.2 million. Cash and cash equivalents totaled $95.5 million and decreased $75.8 million since December 31, 2024. This decrease resulted primarily from cash used in operations of $73.1 million, capital expenditures of $8.0 million, and cash used in financing activities of $98.3 million which was partially offset by proceeds from the sale of Geomagic of $119.4 million. Restricted cash totaled $18.7 million and is primarily related to the requirements of our 2030 Notes and reflected in other assets.
Cash held outside the U.S. at September 30, 2025 was $40.5 million, or 42.4% of total cash and cash equivalents, compared to $63.8 million, or 37.7% of total cash and cash equivalents, at December 31, 2024. As our previously unremitted earnings have been subjected to U.S. federal income tax, we expect any repatriation of these earnings to the U.S. (e.g., via dividends) would not incur significant federal and state taxes. However, these dividends would be subject to foreign withholding taxes that are estimated to result in the Company incurring tax costs in excess of the cost to obtain cash through other means. Cash equivalents are comprised of funds held in money market instruments and are reported at their current carrying value, which approximates fair value due to the short-term nature of these instruments. We strive to minimize our credit risk by investing primarily in investment grade, liquid instruments and limit exposure to any one issuer depending upon credit quality. See "Cash Flow" discussion below.
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Cash Flow
The Company currently funds its operations, including working capital and capital expenditures, and acquisitions through cash on hand, cash equivalents, and financing activities as necessary. While challenging macroeconomic conditions, both in general and specific to the 3D printing industry, have had an impact on our financial performance and cash flows, we expect that cash, cash equivalents, and other sources of liquidity, such as issuing equity, equity-linked, and/or debt securities, subject to market conditions, will be available and sufficient to meet our anticipated cash requirements. The following is a summary of the changes in the Company's cash flows followed by a brief discussion of these changes:
| Nine Months Ended | |||||||||||||||||
| (in thousands) | September 30, 2025 | September 30, 2024 | Change | ||||||||||||||
| Cash flow used in operating activities | $ | (73,131) | $ | (37,109) | $ | (36,022) | |||||||||||
|
Cash flow provided by (used in) investing activities
|
108,276 | (13,152) | 121,428 | ||||||||||||||
| Cash flow used in financing activities | (98,340) | (90,747) | (7,593) | ||||||||||||||
Operating Activities
Cash flows used in operating activities were $73.1 million during the nine months ended September 30, 2025, an increase of $36.0 million, as compared to the nine months ended September 30, 2024. The year-over-year change in operating cash flows was primarily attributable to the following factors:
•Year-over-year decrease of $49.6 million in operating cash flows from net earnings, net of non-cash items due to unfavorable business performance and restructuring actions.
•The aggregate changes in trade accounts receivable, inventory, and trade accounts payable used $2.0 million of cash during the nine months ended September 30, 2025 as compared to using $1.4 million during the prior year comparable period. The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories, and trade accounts payable depends upon how effectively we manage the cash conversion cycle, which generally represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers, and can be significantly impacted by the timing of collections and payments in a period.
•The aggregate change in prepaid expenses, other assets, accrued expenses, and other liabilities used $21.5 million in the nine months ended September 30, 2025 as compared to using $7.1 million in the prior year comparable period. The year-over-year changes were driven by the timing of accruals and payments and tax-related amounts.
Investing Activities
Net cash provided by investing activities was $108.3 million during the nine months ended September 30, 2025, an increase of $121.4 million, as compared to the nine months ended September 30, 2024, driven primarily by proceeds from the sale of the Geomagic business.
Financing Activities
Net cash used in financing activities was $98.3 million during the nine months ended September 30, 2025, an increase of $7.6 million, as compared to the nine months ended September 30, 2024, driven primarily by net repayments of long-term debt of $81.4 million and stock repurchases of $15.0 million.
Material Cash Requirements
The Company's material cash requirements consist of the following contractual and other obligations:
Indebtedness
Convertible senior secured notes due 2030
Pursuant to an indenture dated June 23, 2025 (the "2030 Indenture"), the Company issued $92.0 million aggregate principal amount of 5.875% convertible senior secured notes due 2030 (the "2030 Notes") in a private placement to a limited number of qualified institutional buyers. The net proceeds from the 2030 Notes, along with $78.0 million of cash on hand, were used to repurchase an aggregate principal amount of $179.7 million of the Company's outstanding 0% convertible senior notes due 2026 (the "2026 Notes").
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The 2030 Notes are senior secured obligations, guaranteed by certain U.S. subsidiaries of the Company (the "Note Parties"), and bear interest semiannually at a rate of 5.875%, payable on June 15 and December 15 of each year, beginning December 15, 2025. The 2030 Notes are secured on a first-priority basis by substantially all assets of the Note Parties, subject to certain exceptions (including with respect to the intellectual property of the Note Parties; provided that, certain breaches by the Company or any of its subsidiaries of the limitation on liens covenant in the 2030 Indenture with respect to liens on its intellectual property will cause the 2030 Notes to automatically become secured by a prior security interest in all the intellectual property of the Note Parties). The 2030 Indenture also includes certain financial covenants, including a requirement for the Note Parties to maintain certain minimum cash, accounts receivable and inventory balances each quarter. As of the last day of each fiscal quarter, the Note Parties must maintain at least $40.0 million in qualified cash; maintain a combined minimum of $75.0 million in accounts receivable and inventory; and maintain at least $16.8 million in restricted cash until the remaining balance on the 2026 Notes is paid.
The initial conversion rate was 445.6328 shares per $1,000 principal amount, equivalent to a conversion price of approximately $2.24 per share, which reflected a 20% premium over the $1.87 closing price of the Company's common stock on June 17, 2025. The 2030 Notes are set to mature on June 15, 2030, unless earlier converted, redeemed, or repurchased. The 2030 Notes will be convertible into cash, shares of the Company's common stock or a combination of cash and shares of common stock, at the election of the Company.
Holders of the 2030 Notes have a one-time put right on June 23, 2028, to require the Company to repurchase all or a portion of their 2030 Notes for cash at 100% of the principal amount, plus accrued and unpaid interest. Additionally, upon a fundamental change (as defined in the 2030 Indenture), holders may require repurchase on the same terms. The Company is required to increase the conversion rate for holders who convert in connection with certain fundamental changes or in connection with a redemption.
On or after June 23, 2028 and prior to the 41stscheduled trading day immediately preceding the maturity date, the 2030 Notes will be redeemable, in whole or in part, at the Company's option, for cash, provided that the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for a specified period, as described in the 2030 Indenture.
Convertible senior notes due 2026
The 2026 Notes were issued pursuant to an indenture dated November 16, 2021 (the "2026 Indenture") between the Company and The Bank of New York Mellon, N.A., as trustee (the "Trustee"), in an initial aggregate principal amount of $460.0 million. Although the 2026 Notes do not bear regular interest and their principal does not accrete, they have an annual effective interest rate of 0.594%, reflecting original issue discounts, commissions, and offering expenses. The 2026 Notes had an initial conversion rate of 27.8364 shares of common stock per $1 principal amount of Notes (which is subject to adjustment in certain circumstances). This is equivalent to an initial conversion price of approximately $35.92 per share. The conversion rate is subject to customary adjustments under certain circumstances in accordance with the terms of the Indenture. The 2026 Notes are scheduled to mature on November 15, 2026, unless earlier redeemed, repurchased, or converted in accordance with their terms.
Prior to August 15, 2026, the 2026 Notes will only be convertible upon the occurrence of certain events and will be convertible thereafter at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
The 2026 Notes are redeemable, in whole or in part, for cash at the Company's option at any time, and from time to time, on or after November 20, 2024 and before the 41st scheduled trading day immediately preceding the maturity date, but only if the last reported sale price per share of the Company's common stock has been at least 130% of the conversion price then in effect for a specified period of time.
At September 30, 2025, we had $126.7 million of outstanding long-term debt, comprising $34.7 million of 2026 Notes and $92.0 million of 2030 Notes. Management may consider pursuing additional long-term financing if it is appropriate in light of cash requirements for operations or strategic opportunities, which could result in higher financing costs.
Purchase Commitments
We have purchase commitments under legally enforceable agreements for goods and services with defined terms as to quantity, price and timing of delivery. The Company has certain purchase commitments under agreements with remaining terms in excess of a year, which primarily relate to software licenses, printer assemblies, inventory and capital expenditures. As of September 30, 2025, such purchase commitments totaled $17.4 million, with approximately $9.0 million, expected to be due within the next twelve months.
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Leases
The Company had operating and financing lease obligations (inclusive of interest) of $91.2 million at September 30, 2025, primarily related to real estate and equipment leases, of which, approximately $18.0 million in payments are expected over the next twelve months.
Sources of Funding to Satisfy Material Cash Requirements
The Company believes that it has the financial resources needed to meet its anticipated cash requirements during the next twelve months. Cash requirements for periods beyond the next twelve months will depend on, among other things, the Company's profitability and its ability to manage working capital requirements.
Other Contractual Commitments
Indemnification
In the normal course of business we periodically enter into agreements to indemnify customers or suppliers against claims of intellectual property infringement made by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant. We are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations.
To the extent permitted under Delaware law, we indemnify our directors and officers for certain events or occurrences, when the director or officer is, or was, serving at our request in such capacity, subject to limited exceptions. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we have directors' and officers' insurance coverage that may enable us to recover future amounts paid, subject to a deductible and to the policy limits. There is no assurance that the policy limits will be sufficient to cover all damages, if any.
Critical Accounting Estimates
Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
Goodwill & other long-lived assets, including intangible assets
Long-lived assets, including intangible assets
We review long-lived assets (or asset groups), including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset (or asset group) may not be recoverable. We assess the recoverability of the carrying value of assets (or asset groups) held for use based upon a review of undiscounted projected cash flows. Impairment losses, where identified, are measured as the excess of the carrying value of a long-lived asset (or asset group) over its estimated fair value, as determined using discounted projected cash flows. Our estimation of discounted projected cash flows requires us to make certain assumptions, including long-term revenue and expense forecasts, profit margins, discount rates and terminal growth rates.
Goodwill
Goodwill represents the amount by which the purchase price paid to consummate a business combination exceeds the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in the business combination. Goodwill is required to be assigned to a reporting unit for purposes of subsequent measurement and, as of September 30, 2025 and December 31, 2024, all of our reported goodwill was assigned to our Healthcare reporting unit.
We assess goodwill for impairment at least annually and, between annual impairment assessments, when circumstances indicate that there is a likelihood of greater than 50% that the carrying value of a reporting unit, inclusive of any assigned goodwill, exceeds the reporting unit's fair value. On a forward-looking basis, such circumstances may include (1) a significant and sustained decrease in the trading price of our common stock that may suggest that the fair value of the Company and, accordingly, the fair value of our Healthcare reporting unit has declined, (2) a significant adverse change in the business climate for our Healthcare reporting unit, (3) a significant adverse change in the performance of our Healthcare reporting unit and/or (4) a decision to dispose of a significant portion of our Healthcare reporting unit.
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When required to be performed, a quantitative goodwill impairment test compares the carrying value of a reporting unit to its fair value, and a goodwill impairment charge results when the reporting unit's carrying value exceeds its fair value. The performance of a quantitative goodwill impairment test requires management to apply significant estimates and judgment - particularly to (1) estimate the fair value of the Company and each of our reporting units and (2) determine the carrying value of each of our reporting units, since we do not maintain separate balance sheets for our reporting units.
We estimate the fair value of our reporting units based primarily upon discounted cash flow projections for their underlying operations, which requires us to make significant assumptions regarding estimated cash flows, including long-term revenue and expense forecasts, profit margins, discount rates and terminal growth rates. We develop these assumptions based on the market risks unique to each reporting unit. In addition to the use of discounted cash flow projections, when appropriate, our estimates of the fair values of our reporting units include the results of applying the guideline company valuation method, which is a market approach. The application of the guideline company valuation method requires us to make judgments regarding (1) the appropriate set of comparable publicly traded guideline peer companies for which observable market multiples should be considered and (2) the appropriate multiple(s) to select from the range of multiples that may be observed for those guideline companies. We separately use reasonable and consistent allocation methodologies and approaches to allocate asset and liability balances to our reporting units when an account balance is not directly attributable to a specific reporting unit.
The remaining goodwill assigned to our Healthcare reporting unit could become subject to impairment upon any decrease in the estimated fair value of the Healthcare reporting unit or any increase in the estimated carrying value of the Healthcare reporting unit. Accordingly, over time, the key estimates, assumptions, and judgments that were used to estimate the fair value of our Healthcare reporting unit may change due to factors such as changes in market conditions and/or the actual performance of our Healthcare reporting unit. Similarly, over time, the carrying value of our Healthcare reporting unit could increase due to factors such as capital expenditures and/or the composition of the assets and liabilities of the Company and the underlying process and estimates required to allocate assets and liabilities that are not directly attributable to a specific reporting unit between/amongst our reporting units. Any unfavorable changes to the key estimates, assumptions, judgments or inputs utilized in our most recent quantitative goodwill impairment test - either on an individual basis or in the aggregate - could result in the recognition of impairment charges in the future.
There have been no material changes to our critical accounting estimates described in our 2024 Annual Report on Form 10-K.
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