At a Glance
- The 3D printing space performed generally as expected, with revenues falling slightly from the unexpectedly great 2022 year-end results. However, printing services and software are still spurring growth in the sector.
- 3D scanners continue their march toward ever-greater success, with companies reporting exceptional growth.
- The desktop manufacturing space saw some drama, with PCB machine maker Nano Dimension and Stratasys wrangling over an unsolicited acquisition offer.
- Moving into Q2 2023, we’ll likely see 3D printer manufacturers slash workforce and implement other cost-cutting measures, but growth should still be there, despite challenging economic conditions.
Market Overview
The predictions from Q4 2022 have come true in the additive manufacturing market. As projected, growth in 3D printers themselves slowed — although that’s simply because most companies surpassed all expectations in 2022.
That’s not to say there’s no growth. Across the board, companies are seeing decent to healthy demand that is likely to keep the line creeping upward.
The biggest surprise to me in this quarter was the financial and legal back-and-forth in the desktop manufacturing segment. This usually rather quiet sector suddenly blew up with a surprise acquisition offer and the ensuing fallout.
Here are my insights into the Q1 2023 in the additive manufacturing market and what we can expect moving forward.
3D Printing Market
Overall, I would say the 3D printing segment continued its established tradition of living up to expectations. In Q4 2022, the upcoming quarter was met with “mixed outlooks” as difficult macroeconomic conditions continue to prevail (for reasons I probably don’t have to explain).
Revenues were projected to fall — just because 2022 ended up on such a high note for many companies.
That seems to be exactly what happened, at least among 3D printer manufacturers. Velo3D’s Q1 2023 results are a perfect example — the company’s revenue fell 10% from Q4 2022 but was up nearly 120% year-over-year (y-o-y).
Some companies took a bigger hit, though. 3D Systems reported an 8.8% decrease in revenue y-o-y due to continued weakness in the dental orthodontics segment. Yet, it could’ve been worse — double-digit growth in medical and industrial sectors offset some of the losses.
Similarly, Desktop Metal’s revenues dropped 5.5% y-o-y. The company doesn’t seem worried, though, as founder and CEO Ric Fulop said 2023 was “off to a solid start” due to resilient demand. Stratasys, as well, reported a 8.6% drop in revenue y-o-y, although CEO Yoav Zeif still called the results “excellent.”
Other manufacturers started 2023 off on a high note. Markforged (which also moved to a new HQ at the end of Q1) saw a 10% y-o-y revenue increase with “another record first quarter,” according to the president and CEO Shai Terem. Massivit, meanwhile, gave a preliminary report of a 60% boost in sales y-o-y.
If the results for printer makers were a mixed bag, you can’t say the same for printing bureaus. They reported varying levels of growth across the board.
Xometry saw a 26% y-o-y and 10% quarter-over-quarter revenue increase, as did Forward AM (43% growth y-o-y) and Protolabs (1.4% y-o-y). Are manufacturers embracing printing services instead of buying their own printers? It will be interesting to see whether this trend continues into Q2 and beyond.
Like printing bureaus, the software segment also saw solid growth. Materialise reported 24.4% y-o-y total revenue growth, with software-specific revenue being up 8.3%. Solidworks (owned by Dassault Systemes) celebrated a 6% software revenue boost y-o-y, while total revenue grew 6%.
So, what’s the takeaway? The 3D printing segment is growing, pushed mostly by services and software. 3D printer manufacturers are navigating more difficult waters, but the demand is there — we’ll have to see if the companies can supply it.
Slashing costs may become a defining feature of Q2 2023. 3D Systems said it will cut its workforce by 6% in the coming quarter, and Desktop Metal intends to continue its cost-reduction efforts. We’re also seeing reports of semiconductor shortages ramping up by Q3 2023, so we may start seeing those effects already in Q2.
In machine releases, the big thing of Q1 2023 was the Ultimaker S7. Although we don’t have any public sales figures yet, the machine has garnered some positive reviews. BCN3D also launched a new generation of its Epsilon printer series, featuring a custom-designed main board, new quiet motor drivers, and a revamped ventilation system.
3D Scanning Market
Somebody, stop 3D scanners! The segment finished last year on a high mark, with revenues and sales growing across the board.
The speed of growth showed no signs of slowing down in Q1 2023. In fact, the 3D scanning segment is only growing faster.
Ametek, which owns the Peel 3D and Creaform scanner brands, had a “record year” in 2022. Yet, its Q1 results show that the company is doing better than in the previous quarter.
Ametek’s Electronic Instruments Group (EIG), which covers its 3D scanner brands, delivered “tremendous results,” improving its sales by 13% y-o-y and beating the 10% growth seen in Q4 2022.
“EIG’s sales growth was driven by broad-based organic sales growth and the contributions from recent acquisitions, while the operating performance reflects the quality of our differentiated businesses and the strength of our operating capabilities,” said Ametek chairman and CEO David A. Zapico.
In total, Ametek’s sales grew by 10%, matching the results from the previous quarter.
“Ametek’s first quarter performance was exceptional. Demand remains strong, resulting in solid orders growth in the quarter and a record backlog,” said Zapico.
Hexagon (the owner of the Leica 3D scanners) didn’t get left in the dust. The company’s 8% total revenue growth was on par with that from Q4 2022.
And, just like in the last quarter, Hexagon’s industrial enterprise solutions segment — covering 3D scanners — grew faster than the company as a whole. The 11% sales growth was only one percentage point lower than the previous quarter’s, while earnings in the segment grew by 14%.
“I am pleased to report a strong Q1 with standout performance from our Industrial Enterprise Solutions business,” said Hexagon president and CEO Paolo Guglielmini.
Moving into Q2 2023 and beyond, it seems unlikely that we’ll see a slowdown with 3D scanners — barring some massive global financial upheaval. The companies in the segment are aiming for mid to high single-digit growth compared to last year. Although the macro situation remains challenging, 3D scanning appears set for a strong year.
Desktop Manufacturing Market
As I’ve said before (and will likely say again), the desktop manufacturing segment is challenging to observe due to many of the companies being private. This quarter, however, saw some drama.
Nano Dimension, a manufacturer of 3D-printed circuit board machines (3DPCB), offered to acquire Stratasys. The company is already the largest Stratasys shareholder with a 14.5% share, but the acquisition would have merged the two firms entirely.
Nano Dimension certainly has the money to pay for its initial offer of $18/share. The PCB 3D printer maker saw a 40% y-o-y increase and a 21% quarterly boost in revenues in Q1 2023, making this the company’s “best quarter in revenue ever,” said chairman and CEO Yoav Stern.
The Stratasys board of directors, however, unanimously rejected Nano Dimension’s offer, even after two consecutive increases from $18 per share to a final offer of $20.05 per share. Stratasys called into question who is actually leading Nano Dimension, but an Israeli court ruled that Nano Dimension’s board of directors is in charge of the company.
For its part, Nano Dimension is accusing Stratasys of spreading misinformation about its offer’s details and may be gearing up for a hostile takeover, according to a Reuters report. Anything past the initial offer technically happened in Q2 2023, though. I’ll definitely be keeping a close eye on this case.
Otherwise, not much has changed in the desktop manufacturing space since Q4 2022. The same drivers are still projected to spur growth in the market, namely consumer goods for desktop laser cutters, automotive applications for desktop CNC machines, and ongoing supply chain challenges for PCB machines. We’ll have more news on the Desktop Metal – Stratasys merger in our next quarterly report.
Voltera, which released its new Nano PCB printer in Q3 2022, showed that it hasn’t forgotten about its older (but still high-performance) V-One model. The company released a new Conductor 3 ink for the machine toward the end of Q1 2023. The new ink cures up to 44% faster than the Conductor 2 material and need no burnishing, which reduces the likelihood of production errors.
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