The positive momentum for 3D printing companies continues on. Both Stratasys, Ltd. (NASDAQ:SSYS) and ExOne Co (NASDAQ:XONE) reported strong revenue growth in the first quarter of this year. Fueled by the recent acquisitions, Stratasys, Ltd. (NASDAQ:SSYS)’ revenue increased 118% to $98 million, marking the 11th straight quarter of double-digit growth. ExOne Co (NASDAQ:XONE) also reported solid revenue growth, with its revenue jumping to $7.9 million (up from $2.7 million in the first quarter of 2012). In late April, 3D Systems Corporation (NYSE:DDD) also reported double-digit revenue growth in the first quarter, with its revenue rising 31% to $102.1 million and marking the company’s 13th straight quarter of double-digit growth. As seen in the chart below, all three companies continue to see growth acceleration through 2012 and have maintained their positive momentum in early 2013.
When it comes to research and development, Stratasys, Ltd. (NASDAQ:SSYS) stands out. Stratasys continues to invest heavily in new product development, where its R&D investment jumped to $10.8 million in the first quarter and which was the highest among the three 3D printing companies. While both 3D Systems Corporation (NYSE:DDD) and Stratasys had rapidly increased their R&D investments since 2010, 3D Systems Corporation (NYSE:DDD)’ R&D investment declined in early 2013 after topping out in late 2012 as seen from the chart below. Stratasys, Ltd. (NASDAQ:SSYS)’ R&D spending is indeed unmatched within the industry, as claimed by the management.
Free cash flow
The free cash flow comparison will mainly be between Stratasys, Ltd. (NASDAQ:SSYS) and 3D Systems Corporation (NYSE:DDD) due to the limited data for ExOne Co (NASDAQ:XONE).
Free cash flow remains a concern for Stratasys as it continues to decline since mid-2012. 3D Systems, on the other hand, has significantly increased its free cash flow since early 2009. At the time of this writing, the author was not able to obtain the latest free cash flow update for the first quarter of 2012 after reviewing Stratasys’ first quarter report and earnings call transcript. However, according to the first quarter report, GAAP net income for the first quarter was a loss of $15.5 million versus a pro forma loss of $8.4 million in the first quarter of 2012.
M&A and recent developments
In December 2012, Stratasys, Ltd. (NASDAQ:SSYS) and Objet Ltd. completed their merger. Stratasys expects to be generating between $7 and $8 million of annual net cost synergies and between $3 and $4 million in annual tax savings after the merger. By combining with Objet, Stratasys can add to its roster inkjet-style 3D printers, which offer faster printing with finer detail. With the merger, the new company is able to pull more resources into R&D. Stratasys continues to integrate according to its plan.
On the other hand, 3D Systems Corporation (NYSE:DDD) is going mainstream by working with Staples to sell its Cube 3D printers. The printers, which can print items up to 5.5 cubic inches in size, will be available in select stores and online for $1,299 at the end of June. The selling of the Cube 3D printers at Staples will increase the public awareness of 3D printing. Although it is unclear yet how much sales will be generated for 3D Systems in the near-term, more retailers are expected to carry 3D printers as more options become available and pricing becomes more affordable for the general public. Going mainstream is an important step for 3D printing companies if they hope to grow continuously and expand their margins.