[Updated 2/3/15 5:30 pm. See below.] Last evening, 3D printing company Stratasys lowered its expectations for its 2014 financial results, putting its subsidiary MakerBot Industries, based in Brooklyn, in a different kind of spotlight.
In its preliminary 2014 financials, Stratasys (NASDAQ: [[ticker:SSYS]]) said it would take a write-down, which is a reduction in the book value of an asset, of $100 million to $110 million for the fourth quarter after taking another look at MakerBot’s performance.
At around 1:30 p.m. on Tuesday, Stratasys shares were down some 30 percent, at $56.36. In an emailed statement to Xconomy, MakerBot said “It’s important to note that the 3D printing industry is a dynamic and growing market. MakerBot’s sales have had explosive growth and have expanded by more than 600 percent from 2012 to 2014.” The company said it has sold more than 80,000 of its desktop 3D printers.
MakerBot was acquired by Stratasys in 2013 for $403 million. Stratasys has a penchant for buying up companies that develop new ideas in 3D printing, product design, and imaging, including last September’s acquisition of GrabCAD in Cambridge, MA, for $100 million.
Though the potential for 3D printing has stirred media attention—with possible uses that include the creation of custom medical devices and couture dresses—the technology has yet to be used by the mainstream in a major way.
[Paragraph added with comments from Zack Schildhorn.]
As the stock market reacted to Stratasys, one industry watcher tried to put the announcement in perspective. “This is classic hype cycle behavior,” says Zack Schildhorn, partner with Lux Capital. “Public investors had extremely high hopes and the incumbents simply couldn’t keep up with the hype.” Lux Capital is an investor in Shapeways, a New York-based 3D printing service and online marketplace. Schildhorn expects more new developments to come from private companies in 3D printing, rather than large public companies. “I believe we’re going to start seeing exciting applications and huge opportunities emerge in the coming few years,” he says.
While Stratasys said the write-down should not affect its ongoing business, it did take note that MakerBot’s slower than expected growth put a pinch on the fourth quarter.
Revenue at MakerBot grew 7 percent for the quarter, and the business unit represented some 12 percent of revenue for Stratasys for the period. MakerBot had been investing in the rollout of new desktop 3D printers as well as new distribution plans, Stratasys said. But “challenges” associated with those efforts put a damper on MakerBot’s performance, the report said.
In an effort to scale up, MakerBot started more partnerships in the second half of 2014 to sell its 3D printers through such retail outlets as Staples, Sam’s Club, and Home Depot. Though that should mean access to more potential customers, Stratasys said this led to less predictable sales patterns and reorder rates.
Regardless, Stratasys maintained its optimism about MakerBot in the report, stating it still expects growth to ramp up at the business.
