3D printing company 3D Systems (NYSE: DDD) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 8.1% year on year to $94.54 million. Its non-GAAP EPS of $0.21 per share was 44.8% below analysts’ consensus estimates.

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StockStory’s Take

3D Systems’ first quarter results reflected a challenging demand environment, with management attributing the sales decline primarily to customer capital spending freezes across most industrial markets. CEO Jeffrey Graves pointed to the ongoing uncertainty around global tariffs as a key factor delaying customer investments, noting that with the exception of healthcare and defense, customers are hesitant to deploy new manufacturing capacity. Graves emphasized that the company’s recent completion of a multi-year refresh of its polymer and metal product lines required sustained R&D spending, which set 3D Systems apart from its peers. However, he acknowledged that this investment came at a cost, as the company must now shift focus toward expense reduction given the current market backdrop.

Looking ahead, 3D Systems’ outlook remains cautious, with management withdrawing full-year guidance due to continued volatility in customer spending and unresolved tariff issues. Graves stated, “Given the continuation of economic and geopolitical instabilities and the rapidly shifting tariff landscape, we decided to approach our outlook for the remainder of 2025 with a conservative view.” The company plans to accelerate cost-cutting initiatives, targeting $70 million in annualized savings, and aims to reach profitability at current revenue levels. While core growth opportunities in personalized healthcare, dental solutions, and high-reliability industrial sectors were highlighted, management indicated that further R&D investments will be selectively prioritized as the company adapts to an uncertain demand environment.

Key Insights from Management’s Remarks

Management cited weak customer capital spending and delayed orders, particularly in dental materials and end-of-quarter shipments, as the main drivers behind the revenue shortfall.

• Tariff-driven capital spending pause: Customers in most industrial markets are deferring investments due to tariff uncertainty, resulting in frozen capital expenditures and delayed purchase orders, especially for large equipment and materials.
• Dental and aligner market volatility: The dental segment saw pronounced quarter-to-quarter swings as major aligner manufacturers shifted to just-in-time inventory models, leading to reduced material sales and unpredictable demand patterns.
• Cost reduction initiatives expanded: In response to continued sales pressures, management detailed incremental cost-cutting measures—on top of previously announced actions—to achieve $70 million in annualized savings and restore profitability at current revenue levels.
• Growth in metal printing and healthcare: Despite the overall sales decline, the company’s metal printing platforms posted double-digit revenue growth, and medical parts manufacturing and personalized healthcare revenues rose 18% and 17%, respectively, driven by demand in high-reliability industries and specialized medical applications.
• Divestiture strengthens balance sheet: The sale of the Geomagic software portfolio added over $100 million in net proceeds, improving the company’s net cash position and providing flexibility as it addresses upcoming debt maturities and ongoing restructuring.

Drivers of Future Performance

Management expects recovery to depend on stabilization in global tariffs, successful execution of cost reductions, and targeted expansion in resilient markets like healthcare and high-reliability industrial sectors.

• Market rebound tied to tariffs: The pace of recovery in hardware and materials sales will depend heavily on clarity regarding global trade policies. Management indicated that customer willingness to invest remains subdued until tariff uncertainties are resolved, particularly affecting industrial and consumer-facing segments.
• Execution of cost savings program: Achieving targeted profitability at current sales levels is contingent on delivering $70 million in annualized cost reductions, with actions spanning operational footprint consolidation, back-office streamlining, and selective R&D reprioritization. Management stated these moves are necessary to offset ongoing sales softness.
• Focus on resilient growth segments: The company is prioritizing growth in personalized healthcare, dental solutions, aerospace, defense, and AI infrastructure, where customer demand and regulatory approvals are less impacted by macroeconomic volatility. Management noted that further investments in exploratory R&D will be limited until broader demand stabilizes.

Catalysts in Upcoming Quarters

In the next few quarters, the StockStory team will monitor (1) the impact of cost reduction initiatives on operating margins and cash flow, (2) the commercial launch and market reception of the NextDent 300 jetting system for dental applications, and (3) continued growth in metal printing and personalized healthcare segments. We will also track customer capital spending trends as tariff developments unfold.

3D Systems currently trades at a forward price-to-sales ratio of 0.6×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

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