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, 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.

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, 2025 (the "2025 Annual Report on Form 10-K") and our Condensed Consolidated Financial Statements as of and for the three and six months ended June 30, 2026 included in this Form 10-Q.

Previous wording

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.

Current wording

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. The Company does not expect to incur significant additional restructuring charges in 2026 related to the 2025 Restructuring Plan.

Previous wording

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.

Current wording

In September 2025, the Company entered into a definitive agreement with Hubb Global Holdings, LLC for the sale of its 3DXpert and Oqton businesses, which were included in our Industrial Solutions segment. 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.

Previous wording

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

Current wording

The following table sets forth changes in our revenue for the three and six months ended June 30, 2026.

Previous wording

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.

Current wording

For the six months ended June 30, 2026, revenue increased $0.7 million, or 0.4%, compared to the six months ended June 30, 2025. The increase in revenue was driven by an increase in product revenue of $4.1 million primarily due to higher printer and materials volume to customers in the dental and medical technology markets and a favorable impact of foreign currency, which was partially offset by unfavorable price/mix and the impact of divestitures. Service revenue decreased $3.3 million due to the impacts of lower recurring service revenue and divestitures, partially offset by increases in parts manufacturing and personalized healthcare services and a favorable impact of foreign currency.

Previous wording

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:

Current wording

For the six months ended June 30, 2026, SG&A decreased $17.4 million, or 20.8%, compared to the six months ended June 30, 2025. The year-over-year decline in SG&A was primarily due to:

Previous wording

•$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;

Current wording

•$10.9 million decrease in compensation and benefits expense primarily related to lower compensation expense due to the impact of our restructuring actions and divestitures;

Previous wording

•$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

Current wording

•$4.7 million decrease in third-party service provider and consulting costs primarily due to lower audit and accounting fees; and

Previous wording

•$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.

Current wording

•$1.6 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.

Previous wording

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:

Current wording

For the three months ended June 30, 2026, research and development expenses ("R&D") decreased $7.4 million, or 42.6%, compared to the three months ended June 30, 2025. The year-over-year decline in R&D was primarily due to:

Previous wording

•$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

Current wording

•$5.0 million decrease in compensation and benefits expense primarily due to improved operating efficiency and cost reductions realized from our restructuring activities and divestitures; and

Previous wording

•$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.

Current wording

•$2.2 million decrease primarily due to lower operating supplies cost and lower outside services costs due to the impact of our cost saving actions.

Previous wording

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.

Current wording

For the six months ended June 30, 2026, Healthcare Solutions revenue increased $11.9 million, or 13.8%, compared to the six months ended June 30, 2025. The increase in revenue was primarily due to increases in printer volume in the medical technology market, materials volume in the dental market, including volume with a key customer, parts manufacturing services and a favorable impact of foreign currency, which was partially offset by an unfavorable price/mix.

Previous wording

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.

Current wording

For the six months ended June 30, 2026, Healthcare Solutions gross profit increased $5.1 million, or 14.0%, compared to the six months ended June 30, 2025. The increase in gross profit was primarily due to increases in sales volume and the impact of the recovery of tariffs.

Previous wording

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.

Current wording

For the three months ended June 30, 2026, Industrial Solutions revenue decreased $3.3 million, or 6.7%, compared to the three months ended June 30, 2025. The decrease was primarily due to the impact of divestitures and an unfavorable price/mix.

Previous wording

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.

Current wording

For the six months ended June 30, 2026, Industrial Solutions revenue decreased $11.2 million, or 10.8%, compared to the six months ended June 30, 2025. The decrease was primarily due to the impact of divestitures, which was partially offset by a favorable impact of foreign currency.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

Foreign exchange gain, net increased by $3.1 million and $4.6 million for the three and six months ended June 30, 2026, respectively, compared to the same prior year periods, primarily due to realized and unrealized gains related to our foreign operations.

Previous wording

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.

Current wording

Interest income decreased by $1.1 million and $1.5 million for the three and six months ended June 30, 2026, respectively, compared to the same prior year periods, due to the Company's lower average cash and cash equivalent balances.

Previous wording

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.

Current wording

Interest expense increased by $1.5 million and $3.0 million for the three and six months ended June 30, 2026, respectively, compared to the same prior year periods, primarily due to interest expense related to the 2030 Notes.

Previous wording

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.

Current wording

Other (loss) income, net, decreased $4.2 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 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 June 30, 2026 and the gain on repurchase of debt in the three months ended June 30, 2025.

Previous wording

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.

Current wording

For the three and six months ended June 30, 2026, the Company’s effective tax rate was (3.1)% and (13.5)%, respectively. 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, 2026 and 2025 were primarily driven by the recognition of a full deferred tax asset valuation allowance in various jurisdictions in both years.

Previous wording

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.

Current wording

At June 30, 2026, cash and cash equivalents totaled $128.0 million and increased $32.3 million since December 31, 2025. This increase resulted primarily from cash received from the equity raise of $53.8 million, partially offset by cash used in operations of $14.1 million and capital expenditures of $5.9 million during the six months ended June 30, 2026.

Previous wording

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.

Current wording

Cash held outside the U.S. at June 30, 2026 was $35.8 million, or 28.0% 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.

Previous wording

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.

Current wording

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 investing 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.

Previous wording

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

Current wording

We are subject to a financial covenant under the Indenture governing the 2030 Notes (the "2030 Indenture") requiring us to maintain at least $20.0 million in qualified cash. As of June 30, 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 June 30, 2026, due immediately. See Item 1A "Risk Factors” in the 2025 Annual Report on Form 10-K.

Previous wording

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:

Current wording

Cash flows used in operating activities were $14.1 million during the six months ended June 30, 2026, a decrease of $45.5 million, as compared to the six months ended June 30, 2025. The year-over-year change in operating cash flows was primarily attributable to more favorable business performance during the current year due to our 2025 Restructuring Plan and other cost savings initiatives, partially offset by higher cash taxes paid of $6.1 million driven by foreign taxes related to the 2025 divestiture of the Geomagic business and $2.9 million in higher interest paid on the 2030 Notes as interest payments did not start until December 2025.

Previous wording

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.

Current wording

The 2030 Notes are senior secured obligations, guaranteed by certain U.S. subsidiaries of the Company and bear interest semiannually at a rate of 5.875%, payable on June 15 and December 15 of each year, beginning December 15, 2025.

Previous wording

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.

Current wording

At June 30, 2026, we had $96.0 million of outstanding principal balance of debt, comprised of $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.

Previous wording

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.

Current wording

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 June 30, 2026, such purchase commitments totaled $21.7 million, with approximately $9.4 million, expected to be due within the next twelve months.

Previous wording

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.

Current wording

The Company had operating and financing lease obligations (inclusive of interest) of $78.4 million at June 30, 2026, primarily related to real estate and equipment leases, of which, approximately $15.0 million in payments are expected over the next twelve months.

Previous wording

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.

Current wording

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 six months ended June 30, 2026, there have been no material changes to our critical accounting estimates described in our 2025 Annual Report on Form 10-K.