3D Systems vs Stratasys
Stratasys and 3D Systems could be squaring up to each other in a battle to become 3D printing champion.
Since emerging on the scene more than two decades ago, 3D Systems has been the biggest fish in the relatively small 3D printing pond.
But in recent years, the industry has burgeoned, engaging not only manufacturers and consumers, but investors and the markets - and it is this latest phase in the evolution of the growing sector that has seen contenders to 3D Systems' throne emerge.
This month, Stratasys revealed encouraging quarterly and full-year results, positioning the company as the possible rival to heavyweight champion 3D Systems. Indeed, chief executive officer (CEO) at Stratasys David Reis has indicated his business will become the market leader. But is it possible to predict whether 3D Systems will remain the top dog, or be beaten by Stratasys? And are there other 3D printing firms arriving on the scene that could also wade into this battle?
A tale of two companies
3D Systems was founded 26 years ago in California by Chuck Hull. Mr Hull is the inventor and patent-holder of the first stereolithography (SLA) and rapid prototyping system. After making steady progress over the next 23 years, the company burst into action under Abe Reichental, who took over from Mr Hull in 2003, with the latter holding an active place on the company's board of directors.
In late 2009, 3D Systems began what was to become a string of major acquisitions, which have helped it expand to become the 3D printing juggernaut it is considered in the industry today.
Stratasys was founded a short time after its rival in 1989, with S Scott Crump and his wife Lisa setting up the 3D printer manufacturer in Minnesota. Mr Crump came up with the idea of making tools that could build up objects layer by layer after using a glue gun to create shapes at his home and the founder still holds the position of chairman at the organisation, while David Reis is CEO.
Mergers and acquisitions
3D Systems' history shows it has been prolific in merging with and acquiring other companies, with these shrewd business moves contributing greatly to the company's overall success.
Last year the Californian firm confirmed it had completed its acquisition of Z Corporation (Z Corp) and Vidar Systems for $135.5 million (£89.79 million, €103.89 million) in cash. The deal integrated Z Corp and Vidar's products and services with 3D Systems' portfolio, positioning 3D Systems for accelerated growth in the 3D concept-to-print market.
At the time the merger was signed off, Mr Reichental called the development "historic" and a "game-changing event".
Including Z Corp and Vidar, 3D Systems has acquired some 16 firms since 2011, with other deals including My Robot Nation, Paramount Industries, Bespoke Innovations and Huntsman's SLA line - and its appetite for mergers has shown no signs of abating.
By contrast, Stratasys may not have made as many headline-grabbing deals as its rival, but where the dotted line has been signed, the company has made sure it counts.
This is true of its massive merger with Objet, which was completed at the beginning of December 2012. The new company - which has kept Stratasys' name - was worth £3 billion when the acquisition was completed, making a business with potentially enough power to rival 3D Systems. This is thanks to Stratasys' impressive 3D printing and direct digital manufacturing solutions prowess and Objet's inkjet-style 3D printers.
Good on paper
But how are both these companies looking on paper? Both have released key results reports in the last week or so indicating they are in rude health to the delight of investors who are engaged in 3D printing on the markets.
On February 25th, 3D Systems reported non-GAAP (generally accepted accounting principles) earnings of 39 cents per share for the final quarter of last year and GAAP earnings of 19 cents per share.
The firm reported that its October-December revenue expanded by 45.5 per cent year-on-year to $101.6 million on an incredible 93 per cent surge in printers' and other products revenue and 18.8 per cent organic expansion.
For the full year, revenue rose by 53.5 per cent to $353.6 million and in its guidance for 2013, 3D Systems expects revenue to be in the region of $440 million to $485 million and its non-GAAP earnings per share to be between $1 and $1.15.
At the beginning of this week (March 4th), Stratasys impressed the markets enough to close seven per cent higher on the NASDAQ thanks to its encouraging earnings data.
The company's first post-Objet merger report revealed revenue of $96.4 million for the final quarter of 2012, representing a 23 per cent rise over the $78.3 million recorded for the same three-month period in 2011. Non-GAAP net income of $16.3 million for the fourth quarter was logged, which is 40 cents per share and represents a 40 per cent rise over the $11.7 million (30 cents per unit) recorded for the same period in 2011.
Revenue of $359 million for the 2012 financial year represented nearly one-third (30 per cent) of a rise over the $277 million logged for the same period the previous year.
Furthermore, its financial guidance for the 2013 fiscal year is set for between $430 million and $445 million, with non-GAAP earnings per share coming in at between $1.80 and $1.95.
All to play for?
The companies have strong business strategies and have produced results that did not fail to please the markets, while growth appears to be on the cards for both - particularly if further mergers are on the horizon. But the technology sector moves fast and with emerging 3D printing organisations such as ExOne arriving on the scene, 3D Systems and Stratasys could find their lead on the rest of the market is narrowed in a relatively short space of time.
Put simply, there is a great deal to play for and Piper Jaffray analyst Troy Jensen is just one of the market commentators to highlight suggest this.
Commenting on Stratays' latest report, he told Investor's Business Daily that the strong results indicate the growing demand for the "underpenetrated market" and that "the only scepticism about this industry is on the consumer side. There has never been any doubt about corporate and commercial use."