3D Systems Corp: Form 10-Q for the period ended Mar 31, 2026

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, 2025 (the "2025 Annual Report on Form 10-K") and our Condensed Consolidated Financial Statements as of and for the three months ended March 31, 2026 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 5.875% convertible senior secured notes due 2030 ("the 2030 Notes") and the 0% convertible senior notes due 2026 ("the 2026 Notes") (collectively, "the Notes") in cash, repay the Notes at maturity or repurchase the 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;
• 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;
• 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 2025 Annual Report on Form 10-K.

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 (“Americas”), Europe and the Middle East (“EMEA”) and Asia Pacific and Oceania (“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 (which includes dental, medical devices, personalized health services and regenerative medicine) and Industrial Solutions (which includes aerospace, defense, transportation and general manufacturing). We have more than 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.

Recent Developments and Updates Regarding Strategic Initiatives

2025 Restructuring Plan

In 2025, in response to continuing macroeconomic challenges impacting the Company’s financial performance, the Company implemented a series of cost savings and restructuring initiatives (the "2025 Restructuring Plan") as part of its ongoing multi-faceted transformation strategy. In March 2025, the Company authorized and began executing the next phase of its cost savings and restructuring initiative which 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. In May 2025, the Company announced and began executing an incremental cost reduction initiative focused on labor force reductions in response to continued uncertainty in the economy and our industry and the related potential negative impact on our financial performance.

The Company incurred $0.2 million and $1.0 million in severance and termination benefit costs related to headcount reductions during the three months ended March 31, 2026 and March 31, 2025, respectively. These costs were primarily cash charges and were generally recognized when probable and estimable consistent with the Company’s past practices or statutory law. The Company does not expect to incur significant additional restructuring charges in 2026 related to the 2025 Restructuring Plan.

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 second quarter of 2025.

In September 2025, the Company entered into a definitive agreement for the sale of its 3DXpert and Oqton businesses, which were included in our Industrial Solutions segment, to Hubb Global Holdings, LLC. On October 31, 2025, the Company completed the sale of the 3DXpert and Oqton businesses for $3.3 million in cash, which reflected applicable purchase price adjustments, plus a revenue-based royalty receivable which had a present value of $7.1 million.

Background

We earn revenue from the sale of products and services through our Healthcare Solutions and Industrial Solutions segments. 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: (i) the combined effect of changes in product mix and average selling prices and (ii) 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.

RESULTS OF OPERATIONS

Comparison of Results of Operations

(in thousands)

Revenue

The following table sets forth changes in our revenue for the three months ended March 31, 2026.

(Dollars in thousands)

For the three months ended March 31, 2026, revenue increased $1.0 million, or 1.1%, compared to the three months ended March 31, 2025. The increase in revenue was primarily due to an increase in product revenue of $3.0 million driven by higher materials and printer volume to customers in the dental and aerospace and defense markets and a favorable impact of foreign currency which was partially offset by unfavorable price/mix, lower volume in the jewelry market and the impact of divestitures. Service revenue decreased $2.0 million due to the impact of the divestitures which was partially offset by increases in parts manufacturing.

Cost of sales and gross profit

For the three months ended March 31, 2026, cost of sales decreased to $61.2 million compared to $61.9 million for the three months ended March 31, 2025. The decrease was primarily related to the impact of divestitures in the prior year which was partially offset by increased volumes in printers and materials.

For the three months ended March 31, 2026, gross profit increased $1.7 million, or 5.1%, compared to the three months ended March 31, 2025. The increase in gross profit was primarily due to increased volume including higher materials volume with a key customer in the dental market which was partially offset by the impact of divestitures. Gross profit margin increased to 35.9% compared to 34.6% in the prior year period, primarily due to increased volume.

Selling, general and administrative expenses

For the three months ended March 31, 2026, selling, general and administrative expenses ("SG&A") decreased $18.4 million, or 37.0%, compared to the three months ended March 31, 2025. The year-over-year decline in SG&A was primarily due to:

• $12.4 million decrease in compensation and benefits expense primarily related to lower compensation expense due to the impact of our restructuring actions and divestitures and lower cash and stock-based annual incentive compensation;
• $4.4 million decrease in third-party service provider and consulting costs primarily due to lower audit and accounting fees during the three months ended March 31, 2026; and
• $1.2 million decrease in other corporate costs primarily related to reductions in facilities and travel and entertainment costs due to the impact of our cost saving actions completed in the prior year.

Research and development expenses

For the three months ended March 31, 2026, research and development expenses ("R&D") decreased $10.0 million, or 51.0%, compared to the three months ended March 31, 2025. The year-over-year decline in R&D was primarily due to:

• $5.6 million decrease in compensation and benefits expense primarily due to improved operating efficiency and cost reductions realized from our restructuring activities and divestitures; and
• $4.5 million decrease in other R&D expenses primarily due to lower operating supplies cost and lower outside services costs due to the impact of our cost saving actions in the prior year.

Segment Results

(in thousands)

Healthcare Solutions

Revenue

For the three months ended March 31, 2026, Healthcare Solutions revenue increased $8.8 million, or 21.3%, compared to the three months ended March 31, 2025. The increase in revenue was primarily due to an increase in materials volume in the dental market including volume with a key customer, increases in parts manufacturing and increased printer sales which was partially offset by unfavorable price/mix.

Gross profit

For the three months ended March 31, 2026, Healthcare Solutions gross profit increased $6.3 million, or 39.1%, compared to the three months ended March 31, 2025. The increase in gross profit was primarily due to higher materials volumes.

Industrial Solutions

Revenue

For the three months ended March 31, 2026, Industrial Solutions revenue decreased $7.8 million, or 14.7%, compared to the three months ended March 31, 2025. The decrease was primarily due to the impact of divestitures and lower product volume in the jewelry market which was partially offset by favorable price/mix and increased sales in the aerospace and defense market.

Gross profit

For the three months ended March 31, 2026, Industrial Solutions gross profit decreased $4.6 million, or 27.7% compared to the prior periods. The decrease in gross profit was primarily due to the impact of divestitures, lower sales volumes and unfavorable price and mix.

Non-operating income (expense)

The following table sets forth the components of non-operating income:

(in thousands)

Foreign exchange gain, net

Foreign exchange gain, net increased by $1.5 million for the three months ended March 31, 2026 compared to the prior year period, primarily due to realized and unrealized gains related to our foreign operations.

Interest income

Interest income decreased by $0.4 million for the three months ended March 31, 2026 compared to the prior year period, due to the Company's lower average cash and cash equivalent balances.

Interest expense

Interest expense increased by $1.6 million for the three months ended March 31, 2026, compared to the prior year period, primarily due to interest expense related to the 2030 Notes.

Other income, net

Other income, net, increased $3.7 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to a $2.6 million gain on our equity method investment in the National Additive Manufacturing Innovation ("NAMI") joint venture because of a dilution in our ownership share in the three months ended March 31, 2026.

Income Taxes

For the three months ended March 31, 2026, the Company’s effective tax rate was (72.2)%. For the three months ended March 31, 2025, the Company’s effective tax rate was (1.9)%. The differences between the U.S. statutory tax rate and the effective tax rates for the three months ended March 31, 2026 and 2025 were primarily driven by the recognition of a full deferred tax asset valuation allowance in various jurisdictions in both years.

Liquidity and Capital Resources

The following table sets forth the Company's operating working capital at March 31, 2026 and December 31, 2025.

(in thousands)

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 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.

At March 31, 2026, cash, cash equivalents and restricted cash totaled $86.5 million. Cash and cash equivalents totaled $85.1 million and decreased $10.6 million since December 31, 2025. This decrease resulted primarily from cash used in operations of $7.2 million and capital expenditures of $2.1 million.

Cash held outside the U.S. at March 31, 2026 was $32.6 million, or 38.3% of total cash and cash equivalents, compared to $33.0 million, or 34.5% of total cash and cash equivalents, at December 31, 2025. 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. would not incur significant federal and state taxes. However, these dividends are 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.

Cash Flow

The Company currently funds its operations, including working capital requirements, capital expenditures and investments by using cash; cash equivalents; cash flow from operations, which can vary widely from quarter to quarter; and financing activities, as necessary. We expect that cash flow from operations, cash and cash equivalents, and other sources of liquidity, such as issuing equity or debt securities, subject to market conditions, will be available and sufficient to meet all our cash requirements over 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 and, if needed, its ability to identify and secure other potential sources to fund future working capital needs and meet capital expenditure requirements. See Item 1A, "Risk Factors” in the 2025 Annual Report on Form 10-K.

We are subject to a financial covenant under the 2030 Indenture governing the 2030 Notes (the "2030 Indenture") requiring us to maintain at least $20.0 million in qualified cash. As of March 31, 2026, we were in compliance with the covenants included in the 2030 Indenture. However, if we are unable to generate sufficient cash flow in the future, we may be non-compliant which could result in an event of default making the 2030 Notes, with an outstanding principal balance of $92.0 million as of March 31, 2026, due immediately. See Item 1A "Risk Factors” in the 2025 Annual Report on Form 10-K

The following is a summary of the changes in the Company’s cash flows followed by a brief discussion of these changes:

(in thousands)

Operating Activities

Cash flows used in operating activities were $7.2 million during the three months ended March 31, 2026, a decrease of $26.6 million, as compared to the three months ended March 31, 2025. The year-over-year change in operating cash flows was primarily attributable to the following factors:

• Year-over-year increase of $27.2 million in operating cash flows from net earnings, net of non-cash items due to favorable business performance as a result of our restructuring actions in the prior year.
• The aggregate changes in trade accounts receivable, inventory, and trade accounts payable used $9.8 million of cash during the three months ended March 31, 2026 as compared to using $5.9 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 $4.5 million in the three months ended March 31, 2026 as compared to using $7.8 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 used in investing activities was $2.2 million during the three months ended March 31, 2026, a decrease of $1.3 million, as compared to the three months ended March 31, 2025, driven primarily by lower spending on property and equipment and an increase in our Enhatch equity method investment in the prior year.

Financing Activities

Net cash used in financing activities was $0.9 million during the three months ended March 31, 2026, an increase of $0.3 million, as compared to the three months ended March 31, 2025, driven primarily by the purchase of the remaining shares of a non-controlling interest in the current year.

Material Cash Requirements

The Company's material cash requirements consist of the following contractual and other obligations:

Indebtedness

Convertible senior secured notes due 2030

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.

Convertible senior notes due 2026

The 2026 Notes have an annual effective interest rate of 0.594%, reflecting original issue discounts, commissions, and offering expenses. The 2026 Notes are scheduled to mature on November 15, 2026, unless earlier redeemed, repurchased, or converted in accordance with their terms

At March 31, 2026, we had $96.0 million of outstanding long-term debt, comprising $3.9 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 March 31, 2026, such purchase commitments totaled $20.4 million, with approximately $8.0 million, expected to be due within the next twelve months.

Leases

The Company had operating and financing lease obligations (inclusive of interest) of $80.5 million at March 31, 2026, primarily related to real estate and equipment leases, of which, approximately $14.9 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 and if needed, its ability to identify and secure other potential sources to fund future working capital needs and meet capital expenditure 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.

For a discussion of critical accounting estimates at December 31, 2025, refer to Item 7 “Critical Accounting Estimates” in our 2025 Annual Report on Form 10-K. During the three months ended March 31, 2026, there have been no material changes to our critical accounting estimates described in our 2025 Annual Report on Form 10-K.

For a discussion of market risks at December 31, 2025, refer to Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” in our 2025 Annual Report on Form 10-K. During the three months ended March 31, 2026, there were no material changes or developments that would materially alter the market risk assessment performed as of December 31, 2025.

Evaluation of Disclosure Controls and Procedures

As of March 31, 2026, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) pursuant to Rules 13a-15 and 15d-15 under the Exchange Act. Based on this evaluation, management has concluded that our disclosure controls and procedures were not effective as of March 31, 2026 due to the material weaknesses discussed in our 2025 Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

We are in the process of implementing certain changes to our internal controls to remediate the material weaknesses described in our 2025 Annual Report on Form 10-K. Related to these efforts was the development of a remediation plan to specifically address processes and activities intended to rectify the issues identified as part of the material weaknesses. These plans include, but are not limited to, increased training, enhanced documentation associated with existing policies, and talent enhancements designed to specifically address the identified material weaknesses. Aside from these activities, the results of which continue to be evaluated, there were no changes in the Company’s internal control over financial reporting during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Information regarding risk factors appears in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Information Relating to Forward Looking Statements," in Part I - Item 2 of this Form 10-Q and in "Risk Factors" in Part I - Item 1A of our 2025 Annual Report on Form 10-K. There were no material changes during the three months ended March 31, 2026 to the risk factors reported in our 2025 Annual Report on Form 10-K.