3D Systems Faces Revenue Challenges Amid Accounting Changes

3D Systems' Q4 2024 results reflect revenue pressure due to an accounting estimate change, impacting future growth. Investors should note EPS loss and cost management strategies moving forward.

Date: 27-03-2025

AI Rating: 5

Overview of Q4 2024 Financials
3D Systems reported consolidated revenues of $111 million for Q4 2024, down 3% year-over-year, primarily due to a $9 million hit from a change in accounting estimate. This adjustment reflects ongoing challenges in revenue growth, which may have substantial implications for stock performance in the near term.

Earnings Per Share (EPS)
The company experienced a fully diluted loss per share of $0.25, an improvement from a loss of $2.25 in the previous year. However, on a non-GAAP basis, the loss per share was $0.19, indicating that while the situation is somewhat improving, the company remains in a fragile state financially.

Revenue Growth Insights
The company's revenue for the entire year of 2024 declined by 10% to $440 million, significantly impacted by macroeconomic pressures affecting customer capital expenditure. The anticipated stabilization in customer demand may signal future growth potential across various segments, particularly within industrial solutions, which saw 11% growth in Q4. This would elevate the stock's appeal if the upward momentum continues.

Profit Margins and Free Cash Flow (FCF)
Q4 gross margins dropped to 31.3% from 39.8% year-over-year due to lower revenues and the accounting change. Adjusting for this discrepancy, the core healthcare and industrial performance indicates non-GAAP margins of 36.3%. The focus on cost control measures aiming for $50 million in savings may restore margins, aiding FCF generation over time. The strategic divestiture of the Geomagic software platform is expected to enhance liquidity significantly.

Market Position and Future Outlook
The company demonstrated potential in expanding into high-value segments such as dental and bioprinting, which could translate to higher profitability in the long run. Yet, investors must remain cautious regarding the uncertainties related to overall macroeconomic conditions and client capex hesitation.

Stocks: DDD