3D SYSTEMS CORP

Previous wording

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, 2024 (the "2024 Annual Report on Form 10-K") and our Condensed Consolidated Financial Statements as of and for the three months ended June 30, 2025 included in this Form 10-Q.

Current wording

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, 2024 (the "2024 Annual Report on Form 10-K") and our Condensed Consolidated Financial Statements as of and for the three and nine months ended September 30, 2025 included in this Form 10-Q.

Previous wording

In March 2025, the Company authorized the next phase of its multi-faceted cost savings and restructuring initiative (the “2025 Restructuring Plan”). The 2025 Restructuring Plan 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. Additionally, in May 2025, the Company announced an incremental cost reduction initiative focused on labor force reductions in response to the uncertain macroeconomic environment that is expected to deliver significant cost savings in the second half of the year.

Current wording

In March 2025, the Company authorized the next phase of its multi-faceted cost savings and restructuring initiative (the “2025 Restructuring Plan”). The 2025 Restructuring Plan 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. Additionally, in May 2025, in response to the uncertain macroeconomic environment, the Company announced an incremental cost reduction initiative focused on labor force reductions that is expected to deliver significant cost savings in the second half of the year.

Previous wording

The Company expects to incur approximately $11 million to $20 million in pre-tax restructuring and other related costs by the end of the second fiscal quarter of 2026. The charges under the 2025 Restructuring Plan are expected to be primarily cash charges.

Current wording

The Company expects to incur approximately $8.5 million to $14.5 million in pre-tax restructuring and other related costs by the end of the second fiscal quarter of 2026. The charges under the 2025 Restructuring Plan are expected to be primarily cash charges.

Previous wording

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 three months ended June 30, 2025.

Current wording

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 nine months ended September 30, 2025.

Previous wording

Based primarily on macroeconomic uncertainties, our updated strategic plans and restructuring initiatives and the decline in our stock price during the second quarter of 2025, we concluded that changes to the timing and amount of expected future cash flows, among other factors, indicated a triggering event requiring an interim goodwill impairment assessment on our Healthcare reporting unit. As a result of the quantitative interim impairment test performed in the second quarter of 2025, we concluded that there was no impairment, as the estimated fair value of the Healthcare reporting unit exceeded the carrying value.

Current wording

In the second quarter of 2025, based primarily on macroeconomic uncertainties, our updated strategic plans and restructuring initiatives and the decline in our stock price, we concluded that changes to the timing and amount of expected future cash flows, among other factors, indicated a triggering event requiring an interim goodwill impairment assessment on our Healthcare reporting unit. As a result of the quantitative interim impairment test performed in the second quarter of 2025, we concluded that there was no impairment, as the estimated fair value of the Healthcare reporting unit exceeded the carrying value.

Previous wording

The following tables sets forth changes in our revenue for the three and six months ended June 30, 2025.

Current wording

The following tables sets forth changes in our revenue for the three and nine months ended September 30, 2025.

Previous wording

For the three months ended June 30, 2025, revenue decreased $18.4 million, or 16.3%, compared to the three months ended June 30, 2024. The decrease in revenue was primarily due to a decline in product revenue of $17.9 million driven by lower materials volume to customers in the dental, service bureaus, and jewelry markets, unfavorable price/mix, and the impact of the Geomagic divestiture. Service revenue decreased $0.5 million as volume increases were more than offset be the impact of the Geomagic divestiture and lower sales to a key customer in the dental market.

Current wording

For the three months ended September 30, 2025, revenue decreased $21.7 million, or 19.2%, compared to the three months ended September 30, 2024. The decrease in revenue was primarily due to a decline in product revenue of $20.7 million driven by lower materials volume to customers in the dental, service bureaus, and jewelry markets, unfavorable price/mix, and the impact of the Geomagic divestiture. Service revenue decreased $1.0 million due to the impact of decreased volumes because of the Geomagic divestiture. Excluding the impact of the Geomagic divestiture, service revenue increased due to increased volumes.

Previous wording

For the six months ended June 30, 2025, revenue decreased $26.8 million, or 12.4%, compared to the six months ended June 30, 2024. The decrease in revenue was primarily due to a decline in product revenue of $27.3 million driven by lower materials volume to customers in the dental, service bureaus, and jewelry markets, unfavorable price/mix, and the impact of the Geomagic divestiture. The decline in product revenue was partially offset by a $0.5 million increase in service revenue due to higher volume which was mostly offset by the Geomagic divestiture.

Current wording

For the nine months ended September 30, 2025, revenue decreased $48.5 million, or 14.7%, compared to the nine months ended September 30, 2024. The decrease in revenue was primarily due to a decline in product revenue of $47.9 million driven by lower materials volume to customers in the dental, service bureaus, and jewelry markets, and the impact of the Geomagic divestiture. Service revenue decreased $0.6 million due to the impact of decreased volumes because of the Geomagic divestiture. Excluding the impact of the Geomagic divestiture, service revenue increased due to increased volumes although we saw decreased sales to a certain key customer in the dental market

Previous wording

For the three months ended June 30, 2025, cost of sales decreased to $58.7 million compared to $66.2 million for the three months ended June 30, 2024. Declines primarily related to lower sales volumes in printers and materials which were partially offset by unfavorable price/mix.

Current wording

For the three months ended September 30, 2025, cost of sales decreased to $61.8 million compared to $71.2 million for the three months ended September 30, 2024. Declines primarily related to lower sales volumes in printers and materials which were partially offset an increase in service volume.

Previous wording

For the three months ended June 30, 2025, gross profit decreased $10.9 million, or 23.2%, compared to the three months ended June 30, 2024. The decrease in gross profit was primarily due to a combination of lower sales volumes, the impact of the Geomagic divestiture and unfavorable price/mix.

Current wording

For the three months ended September 30, 2025, gross profit decreased $12.3 million, or 29.4%, compared to the three months ended September 30, 2024. The decrease in gross profit was primarily due to a combination of lower sales volumes and the impact of the Geomagic divestiture. Gross profit margin decreased to 32.3% compared to 36.9% in the prior year period, primarily due to the Geomagic divestiture and lower sales volumes.

Previous wording

For the six months ended June 30, 2025, cost of sales decreased to $120.5 million compared to $128.1 million for the six months ended June 30, 2024. This decline is primarily attributable to a lower volume of product sales from period to period.

Current wording

For the nine months ended September 30, 2025, cost of sales decreased to $182.4 million compared to $199.4 million for the nine months ended September 30, 2024. This decline was primarily attributable to a lower volume of printer and material sales.

Previous wording

For the six months ended June 30, 2025, gross profit decreased $19.2 million, or 21.8%, compared to the six months ended June 30, 2024. The decrease in gross profit was primarily due to a combination of lower sales volumes, the impact of the Geomagic divestiture and unfavorable price/mix.

Current wording

For the nine months ended September 30, 2025, gross profit decreased $31.5 million, or 24.3%, compared to the nine months ended September 30, 2024. The decrease in gross profit was primarily due to a combination of lower sales volumes and the impact of the Geomagic divestiture. Gross profit margin decreased to 35.0% compared to 39.4% in the prior year period, primarily due to the Geomagic divestiture and lower sales volumes.

Previous wording

For the three months ended June 30, 2025, selling, general and administrative expenses ("SG&A") decreased $17.4 million, or 33.7%, compared to the three months ended June 30, 2024. The year-over-year decline in SG&A was primarily due to:

Current wording

For the three months ended September 30, 2025, selling, general and administrative expenses ("SG&A") decreased $23.3 million, or 40.1%, compared to the three months ended September 30, 2024. The year-over-year decline in SG&A was primarily due to:

Previous wording

•$3.2 million decrease in third-party service provider and consulting costs due to the increased cost to complete our fiscal 2023 audit during the three months ended June 30, 2024; and

Current wording

•$7.6 million decrease in third-party service provider and consulting costs due to the increased cost to complete our fiscal 2023 audit during the three months ended September 30, 2024 and decreased legal fees;

Previous wording

•$16.3 million decrease in compensation and benefits expense primarily related to lower compensation expense due to the impact of our restructuring actions and lower stock-based compensation expense due to the timing of awards and lower incentive compensation;

Current wording

•$7.5 million decrease in compensation and benefits expense primarily related to lower compensation expense due to the impact of our restructuring actions and lower stock-based compensation expense due to the timing of awards and lower annual incentive compensation; and

Previous wording

•$1.6 million decrease in amortization expense related to intangible assets due to lower intangible asset balances which were reduced by prior-year impairment charges; which were partially offset by

Current wording

•$7.3 million decrease in amortization expense related to intangible assets due to lower intangible asset balances which were reduced by prior-year impairment charges; which were partially offset by

Previous wording

•$2.7 million increase due to costs associated with our restructuring actions which were primarily related to severance.

Current wording

•$1.4 million increase due to costs associated with our restructuring actions which were primarily related to severance.

Previous wording

For the six months ended June 30, 2025, SG&A decreased $24.9 million, or 22.9%, compared to the six months ended June 30, 2024. The year-over-year decline in SG&A was primarily due to:

Current wording

For the nine months ended September 30, 2025, SG&A decreased $48.1 million, or 28.9%, compared to the nine months ended September 30, 2024. The year-over-year decline in SG&A was primarily due to:

Previous wording

•$17.3 million decrease in compensation and benefits expense primarily related to lower compensation expense due to the impact of our restructuring actions and lower stock-based compensation expense due to the timing of awards;

Current wording

•$24.8 million decrease in compensation and benefits expense primarily related to lower compensation expense due to the impact of our restructuring actions and lower stock-based compensation expense due to the timing of awards;

Previous wording

•$8.9 million decrease in third-party service provider and consulting costs due to the increased cost to complete our fiscal 2023 audit during the three months ended June 30, 2024; and

Current wording

•$16.5 million decrease in third-party service provider and consulting costs due to the increased cost to complete our fiscal 2023 audit during the nine months ended September 30, 2024; and decreased legal fees; and

Previous wording

•$2.8 million decrease in amortization expense related to intangible assets due to lower intangible asset balances which were reduced by prior-year impairment charges; which were partially offset by

Current wording

•$10.1 million decrease in amortization expense related to intangible assets due to lower intangible asset balances which were reduced by prior-year impairment charges; which were partially offset by

Previous wording

•$3.3 million increase due to costs associated with our restructuring actions which were primarily related to severance.

Current wording

•$4.7 million increase due to costs associated with our restructuring actions which were primarily related to severance.

Previous wording

For the three months ended June 30, 2025, research and development expenses ("R&D") decreased $4.7 million, or 21.1%, compared to the three months ended June 30, 2024. The year-over-year decline in R&D was primarily due to:

Current wording

For the three months ended September 30, 2025, research and development expenses ("R&D") decreased $4.7 million, or 22.8%, compared to the three months ended September 30, 2024. The year-over-year decline in R&D was primarily due to:

Previous wording

•$3.5 million decrease in compensation and benefits expense and other R&D expenses primarily due to improved operating efficiency and cost reductions realized from our restructuring activities.

Current wording

•$2.3 million decrease in compensation and benefits expense and other R&D expenses primarily due to improved operating efficiency and cost reductions realized from our restructuring activities.

Previous wording

For the six months ended June 30, 2025, R&D decreased $8.5 million, or 18.6%, compared to the six months ended June 30, 2024. The year-over-year decline in R&D was primarily due to:

Current wording

For the nine months ended September 30, 2025, R&D decreased $13.2 million, or 19.9%, compared to the nine months ended September 30, 2024. The year-over-year decline in R&D was primarily due to:

Previous wording

•$6.8 million decrease in compensation and benefits expense and other R&D expenses primarily due to improved operating efficiency and cost reductions realized from our restructuring activities.

Current wording

•$9.1 million decrease in compensation and benefits expense and other R&D expenses primarily due to improved operating efficiency and cost reductions realized from our restructuring activities.

Previous wording

For the six months ended June 30, 2025, Healthcare Solutions revenue decreased $8.0 million, or 8.5%, compared to the six months ended June 30, 2024. The decrease in revenue was primarily due to a decline in materials revenue of $13.7 million which was partially offset by an increase in service revenue of $4.2 million. The decline in materials revenue was primarily due to lower sales in the dental market, including lower materials volume with a key customer. Service revenue increased due to growth in personalized healthcare solutions and parts manufacturing revenue.

Current wording

For the three months ended September 30, 2025, Healthcare Solutions revenue decreased $12.3 million, or 22.3%, compared to the three months ended September 30, 2024. The decrease in revenue was primarily due to a decline in materials revenue of $11.6 million. The decline in materials revenue was primarily due to lower sales in the dental market, including lower materials volume with a key customer.

Previous wording

For the three months ended June 30, 2025, Healthcare Solutions revenue decreased $3.9 million, or 7.9%, compared to the three months ended June 30, 2024. The decrease in revenue was primarily due to a decline in materials revenue of $6.9 million which was partially offset by an increase in service revenue of $2.2 million. The decline in materials revenue was primarily due to lower sales in the dental market, including lower materials volume with a key customer. Service revenue increased due to growth in personalized healthcare solutions and parts manufacturing revenue.

Current wording

For the nine months ended September 30, 2025, Healthcare Solutions revenue decreased $20.2 million, or 13.6%, compared to the nine months ended September 30, 2024. The decrease in revenue was primarily due to a decline in materials revenue of $25.3 million which was partially offset by an increase in service revenue of $4.5 million. The decline in materials revenue was primarily due to lower sales in the dental market, including lower materials volume with a key customer. Service revenue increased due to growth in parts manufacturing and personalized healthcare solutions revenue.

Previous wording

For the three months ended June 30, 2025, Industrial Solutions revenue decreased $14.5 million, or 22.6%, compared to the three months ended June 30, 2024. The decrease in revenue related to lower product, materials, and service revenue of $9.6 million, $2.2 million, and $2.7 million, respectively. The decline in product revenue was driven by lower materials sales to customers in the service bureaus and jewelry markets and the impact of the Geomagic divestiture which was partially offset by increased sales in the aerospace and defense market. The decline in service revenue was primarily due to the impact of the Geomagic divestiture.

Current wording

For the three months ended September 30, 2025, Industrial Solutions revenue decreased $9.4 million, or 16.3%, compared to the three months ended September 30, 2024. The decrease in revenue related to lower product, materials, and service revenue of $6.2 million, $1.9 million, and $1.3 million, respectively. The decline in product revenue was driven by the impact of the Geomagic divestiture and lower materials and printer sales to customers in the service bureaus and jewelry markets which was partially offset by increased sales in the aerospace and defense market. The decline in service revenue was primarily due to the impact of the Geomagic divestiture.

Previous wording

For the six months ended June 30, 2025, Industrial Solutions revenue decreased $18.8 million, or 15.4%, compared to the six months ended June 30, 2024. The decrease in revenue related to lower product, materials and service revenue of $9.5 million, $5.5 million, and $ 3.8 million, respectively. The decline in product revenue was driven by lower materials sales to customers in the service bureaus and jewelry markets and the impact of the Geomagic divestiture which was partially offset by increased sales in the aerospace and defense market. The decline in service revenue was primarily due to the impact of the Geomagic divestiture.

Current wording

For the nine months ended September 30, 2025, Industrial Solutions revenue decreased $28.2 million, or 15.7%, compared to the nine months ended September 30, 2024. The decrease in revenue related to lower product, materials and service revenue of $15.7 million, $7.4 million, and $5.0 million, respectively. The decline in product revenue was driven by lower printer and materials sales to customers in the service bureaus and jewelry markets and the impact of the Geomagic divestiture which was partially offset by increased sales in the aerospace and defense market. The decline in service revenue was primarily due to the impact of the Geomagic divestiture.

Previous wording

For the three months ended June 30, 2025, Industrial Solutions gross profit decreased $8.9 million, or 36.1%, compared to the three months ended June 30, 2024. The decrease in gross profit was primarily due to the impact of the Geomagic divestiture, unfavorable price and mix, and lower sales volumes.

Current wording

For the three and nine months ended September 30, 2025, Industrial Solutions gross profit decreased $5.4 million, or 29.3%, and $21.6 million, or 32.2%, respectively, compared to the prior periods. The decrease in gross profit was primarily due to the impact of the Geomagic divestiture, unfavorable price and mix, and lower sales volumes.

Previous wording

Foreign exchange gain, net decreased by $0.9 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to realized and unrealized gains related to our foreign operations.

Current wording

Foreign exchange gain, net increased by $4.6 million and $2.9 million for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, primarily due to realized and unrealized gains related to our foreign operations.

Previous wording

Interest income decreased $1.6 million for the six months ended June 30, 2025 as compared to the three months ended June 30, 2024, due to the Company's lower cash and cash equivalent balances.

Current wording

Interest income decreased $0.8 million and $2.3 million for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, due to the Company's lower average cash and cash equivalent balances.

Previous wording

Interest expense increased $0.1 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, due to interest expense related to the 2030 Notes.

Current wording

Interest expense increased by $1.3 million for both the three and nine months ended September 30, 2025, compared to the prior year periods, primarily due to interest expense related to the 2030 Notes.

Previous wording

Gain on disposition, increased $125.7 million for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, due the sale of Geomagic.

Current wording

The gain on disposition of $125.7 million for the nine months ended September 30, 2025 was due to the sale of Geomagic business on April 1, 2025.

Previous wording

Other income, net, increased $6.6 million for the three months June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to a gain on the repurchase of debt in the three months ended June 30, 2025.

Current wording

Other income, net, increased $0.5 million for the three months September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to a gain on the repurchase of debt in the three months ended September 30, 2025.

Previous wording

Other income, net, decreased $14.9 million for the six months June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to a higher gain on the repurchase of debt in the six months ended June 30, 2024.

Current wording

Other income, net, decreased $14.4 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to a higher gain on the repurchase of debt in the nine months ended September 30, 2024.

Previous wording

For the three and six months ended June 30, 2025, the Company’s effective tax rate was 9.4% and 14.4%, respectively. The differences between the U.S. statutory tax rate and the effective tax rates for the three and six months ended June 30, 2025 were primarily driven by the recognition of a full deferred tax asset valuation allowance in various jurisdictions and a gain recognized in connection with the divestiture of Geomagic.

Current wording

For the three and nine months ended September 30, 2025, the Company’s effective tax rate was 13.6% and 14.6%, respectively. For the three and nine months ended September 30, 2024, the Company’s effective tax rate was 2.4% and 1.1%, respectively. The differences between the U.S. statutory tax rate and the effective tax rates for the three and nine months ended September 30, 2025 and 2024 were primarily driven by the recognition of a full deferred tax asset valuation allowance in various jurisdictions in both years. Additionally, the nine months ended September 30, 2025, were impacted by a gain recognized in connection with the divestiture of Geomagic and some foreign return to provision adjustments recorded in the period.

Previous wording

At June 30, 2025, cash and cash equivalents totaled $116.4 million and decreased $55.0 million since December 31, 2024. This decrease resulted primarily from cash used in operations of $59.6 million, capital expenditures of $5.7 million, and cash used in financing activities of $97.3 million which was partially offset by proceeds from the sale of Geomagic of $119.4 million.

Current wording

At September 30, 2025, cash, cash equivalents and restricted cash totaled $114.2 million. Cash and cash equivalents totaled $95.5 million and decreased $75.8 million since December 31, 2024. This decrease resulted primarily from cash used in operations of $73.1 million, capital expenditures of $8.0 million, and cash used in financing activities of $98.3 million which was partially offset by proceeds from the sale of Geomagic of $119.4 million. Restricted cash totaled $18.7 million and is primarily related to the requirements of our 2030 Notes and reflected in other assets.

Previous wording

Cash held outside the U.S. at June 30, 2025 was $56.9 million, or 48.9% of total cash and cash equivalents, compared to $63.8 million, or 37.3% of total cash and cash equivalents, at December 31, 2024. 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. (e.g., via dividends) would not incur significant federal and state taxes. However, these dividends would be 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.

Current wording

Cash held outside the U.S. at September 30, 2025 was $40.5 million, or 42.4% of total cash and cash equivalents, compared to $63.8 million, or 37.7% of total cash and cash equivalents, at December 31, 2024. 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. (e.g., via dividends) would not incur significant federal and state taxes. However, these dividends would be 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.