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 and six months ended June 30, 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 nine months ended September 30, 2026 included in this Form 10-Q.

Previous wording

•our ability to realize anticipated benefits for future dispositions;

Current wording

•our ability to realize anticipated benefits from future dispositions;

Previous wording

•impact of future write-off or write-downs of goodwill and intangible assets;

Current wording

•impact of future write-offs or write-downs of goodwill and intangible assets;

Previous wording

•the concentration of revenue and credit risk exposure from our largest customer;

Current wording

•the concentration of revenue and credit risk exposure from our largest customers;

Previous wording

•our ability to comply with the covenants contained in our 2030 Indenture, 2026 Indenture and other current or future debt agreements, including the limitations, restrictions and prohibitions such covenants may impose on the way we conduct our business, including certain financial covenants, prohibitions on incurring additional debt if certain covenants are not met and restrictions on our ability to make certain investments and restricted payments;

Current wording

•our ability to comply with the covenants contained in the indenture governing the 2030 Notes (the "2030 Indenture"), the indenture governing the 2026 Notes (the "2026 Indenture") and other current or future debt agreements, including the limitations, restrictions and prohibitions such covenants may impose on the way we conduct our business, including certain financial covenants, prohibitions on incurring additional debt if certain covenants are not met and restrictions on our ability to make certain investments and restricted payments;

Previous wording

Our solutions support advanced applications in two key industry verticals: Healthcare Solutions (which includes dental, medical devices, personalized health services and regenerative medicine) and Industrial Solutions (which includes aerospace, defense, transportation and general manufacturing). We have more than 35 years of experience and expertise, which have proven vital to our development of an ecosystem and end-to-end digital workflow solutions that enable customers to optimize product designs, transform workflows, bring innovative products to market and drive new business models.

Current wording

Our solutions support advanced applications in two key industry verticals: Healthcare Solutions (which includes dental, medical devices, personalized health services and regenerative medicine) and Industrial Solutions (which includes aerospace, defense, transportation and general manufacturing). We have over 35 years of experience and expertise, which have proven vital to our development of an ecosystem and end-to-end digital workflow solutions that enable customers to optimize product designs, transform workflows, bring innovative products to market and drive new business models.

Previous 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.

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 $7.4 million and $7.1 million as of September 30, 2026 and December 31, 2025, respectively.

Previous wording

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

Current wording

The following table sets forth changes in our revenue for the three and nine months ended September 30, 2026:

Previous 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.

Current wording

For the nine months ended September 30, 2026, revenue increased $8.8 million, or 3.1%, compared to the nine months ended September 30, 2025. The increase in revenue was driven by an increase in product revenue of $10.0 million primarily due to higher dental material sales and a favorable foreign currency impact, which was partially offset by unfavorable price/mix and the impact of divestitures. Service revenue decreased $1.2 million due primarily to the impacts of divestitures, partially offset by increases in parts manufacturing and personalized healthcare services and a favorable foreign currency impact.

Previous wording

For the six months ended June 30, 2026, cost of sales increased to $121.3 million compared to $120.5 million for the six months ended June 30, 2025. For the six months ended June 30, 2026 and June 30, 2025, gross profit was $68.8 million, however, gross profit margin decreased to 36.2% compared to 36.4% in the prior year period. The increase in cost of sales and decrease in gross profit margin was primarily related to unfavorable mix during the current period and the impact of divestitures, partially offset by the recovery of tariffs of approximately $2.6 million during the six months ended June 30, 2026.

Current wording

For the three months ended September 30, 2026, cost of sales increased to $64.5 million compared to $61.8 million for the three months ended September 30, 2025. For the three months ended September 30, 2026, gross profit increased $5.4 million, or 18.2%, and gross profit margin increased to 35.0% compared to 32.3% in the prior year period. The increase in cost of sales, gross profit and gross profit margin were primarily related to higher sales volume in products and parts manufacturing.

Previous wording

For the three months ended June 30, 2026, cost of sales increased to $60.1 million compared to $58.7 million for the three months ended June 30, 2025. For the three months ended June 30, 2026, gross profit decreased $1.7 million, or 4.7%, and gross profit margin decreased to 36.4% compared to 38.1% in the prior year period. The increase in cost of sales and decrease in gross profit and gross profit margin were primarily related to unfavorable mix due to higher printer sales during the current period and the impact of divestitures, which was partially offset by the recovery of tariffs of approximately $2.6 million during the three months ended June 30, 2026.

Current wording

For the nine months ended September 30, 2026, cost of sales increased to $185.8 million compared to $182.4 million for the nine months ended September 30, 2025. For the nine months ended September 30, 2026 gross profit increased $5.3 million, or 5.4%, to $103.6 million and gross profit margin increased to 35.8% compared to 35.0% in the prior year period. The increase in cost of sales was primarily related to increased sales volume, partially offset by the impact of divestitures. Gross profit and gross profit margin increased primarily due to higher sales volume, the benefits of prior cost reduction initiatives, and the recovery of approximately $2.6 million of tariffs during the nine months ended September 30, 2026.

Previous wording

For the three months ended June 30, 2026, selling, general and administrative expenses ("SG&A") increased $1.0 million, or 2.9%, compared to the three months ended June 30, 2025. The year-over-year increase in SG&A was primarily due to the reversal of annual incentive compensation in the prior year period, partially offset by decreases due to the impact of our restructuring actions and divestitures.

Current wording

For the three months ended September 30, 2026, selling, general and administrative expenses ("SG&A") increased $11.6 million, or 33.5%, compared to the three months ended September 30, 2025. The year-over-year increase in SG&A was primarily due to $12.5 million in litigation expense recorded in the current period.

Previous 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:

Current wording

For the nine months ended September 30, 2026, SG&A decreased $5.8 million, or 4.9%, compared to the nine months ended September 30, 2025. The year-over-year change in SG&A was primarily due to the following:

Previous 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;

Current wording

•$9.6 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

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

Current wording

•$3.9 million decrease in third-party service provider and consulting costs primarily due to lower audit and accounting fees; and

Previous 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.

Current wording

•$4.4 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; partially offset by

Previous 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:

Current wording

For the three months ended September 30, 2026, research and development expenses ("R&D") decreased $6.0 million, or 37.2%, compared to the three months ended September 30, 2025. The year-over-year decline in R&D was primarily due to:

Previous 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

Current wording

•$4.1 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

•$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.

Current wording

•$2.7 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 six months ended June 30, 2026, R&D decreased $17.4 million, or 47.1%, compared to the six months ended June 30, 2025. The year-over-year decline in R&D was primarily due to:

Current wording

For the nine months ended September 30, 2026, R&D decreased $23.4 million, or 44.1%, compared to the nine months ended September 30, 2025. The year-over-year decline in R&D was primarily due to:

Previous wording

•$10.6 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

•$14.6 million decrease in compensation and benefits expense primarily due to improved operating efficiency and cost reductions realized from our restructuring activities and divestitures; and

Previous wording

•$5.3 million decrease primarily due to lower operating supplies cost and lower outside services costs due to the impact of our cost saving actions.

Current wording

•$8.0 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 June 30, 2026, Healthcare Solutions revenue increased $3.1 million, or 6.8%, compared to the three months ended June 30, 2025. The increase in revenue was primarily due to an increase in printer volume in the medical technology market, increased personalized healthcare services and a favorable price/mix.

Current wording

For the three months ended September 30, 2026, Healthcare Solutions revenue increased $6.2 million, or 14.4%, compared to the three months ended September 30, 2025. The increase in revenue was primarily due to an increase in materials volume in the dental market, including increased volume with a key customer and an increase in parts manufacturing sales.

Previous 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.

Current wording

For the nine months ended September 30, 2026, Healthcare Solutions revenue increased $18.1 million, or 14.0%, compared to the nine months ended September 30, 2025. The increase in revenue was primarily due to an increase in materials volume in the dental market, including increased volume with a key customer and an increase in parts manufacturing sales, which was partially offset by unfavorable product price/mix.

Previous 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.

Current wording

For the nine months ended September 30, 2026, Healthcare Solutions gross profit increased $7.9 million, or 14.9%, compared to the nine months ended September 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 June 30, 2026, Healthcare Solutions gross profit decreased $1.2 million, or 5.8%, compared to the three months ended June 30, 2025. The decrease in gross profit was primarily due to an unfavorable price/mix partially offset by the impact of the recovery of tariffs.

Current wording

For the three months ended September 30, 2026, Industrial Solutions revenue increased $1.9 million, or 3.9%, compared to the three months ended September 30, 2025. The increase was primarily due to increases in sales volume and a favorable price/mix, partially offset by the impact of divestitures.

Previous 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.

Current wording

For the nine months ended September 30, 2026, Industrial Solutions revenue decreased $9.3 million, or 6.1%, compared to the nine months ended September 30, 2025. The decrease was primarily due to the impact of divestitures, which was partially offset by a favorable impact of price/mix and foreign currency.

Previous wording

For the three months ended June 30, 2026, Industrial Solutions gross profit decreased $0.5 million, or 3.2% compared to the prior period. The decrease in gross profit was primarily due to unfavorable mix partially offset by the impact of the recovery of tariffs.

Current wording

For the three months ended September 30, 2026, Industrial Solutions gross profit increased $2.6 million, or 19.8% compared to the prior year period. The increase in gross profit was primarily due to favorable price/mix and increases in sales volume.

Previous wording

For the six months ended June 30, 2026, Industrial Solutions gross profit decreased $5.1 million, or 15.8% compared to the prior period. The decrease in gross profit was primarily due to divestitures partially offset by the impact of the recovery of tariffs.

Current wording

For the nine months ended September 30, 2026, Industrial Solutions gross profit decreased $2.6 million, or 5.6% compared to the prior year period. The decrease in gross profit was primarily due to the impact of divestitures, partially offset by the impact of the recovery of tariffs.

Previous 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.

Current wording

Foreign exchange gain, net decreased by $8.9 million and $4.4 million to a foreign exchange loss, net for the three and nine months ended September 30, 2026, respectively, compared to the same prior year periods, primarily due to realized and unrealized losses related to our foreign operations.

Previous 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.

Current wording

Interest income decreased by $0.1 million and $1.6 million for the three and nine months ended September 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 $1.5 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.

Current wording

Interest expense increased by $0.2 million for the three months ended September 30, 2026, as compared to the same prior year period, primarily due to higher debt issuance cost amortization related to the 2030 Notes.

Previous wording

Gain on disposition decreased $125.7 million for the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, due to the sale of Geomagic in the prior period.

Current wording

Gain on disposition decreased $125.7 million for the nine months ended September 30, 2026 as compared to the same prior year period, due to the sale of Geomagic in the prior year period.

Previous 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.

Current wording

Other income, net, decreased $4.4 million for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to the gain on repurchase of debt recorded in the nine months ended September 30, 2025, partially offset by a $2.6 million gain on our equity method investment in the National Additive Manufacturing Innovation ("NAMI") joint venture resulting from dilution of our ownership share recorded in the nine months ended September 30, 2026.

Previous 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.

Current wording

For the three and nine months ended September 30, 2026, the Company’s effective tax rate was (2.9)% and (6.0)%, respectively. For the three and nine months ended September 30, 2025, the Company’s effective tax rate was 13.6% and 14.6%, respectively. The differences between the U.S. statutory tax rate and the effective tax rates for the three and nine months ended September 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 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.

Current wording

At September 30, 2026, cash and cash equivalents totaled $91.3 million and decreased $4.3 million compared to December 31, 2025. This decrease resulted primarily from (i) cash used in operations of$17.5 million (ii)cash invested in short-term and long-term investments of$28.7 million and (iii) capital expenditures of $8.3 million, partially offset by gross proceeds from the equity raise of $53.8 million during the nine months ended September 30, 2026.

Previous 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.

Current wording

Cash held outside the U.S. at September 30, 2026 was $35.8 million, or 39.2% 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

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 limiting exposure to any one issuer depending upon credit quality. See “Cash Flow” discussion below.

Current wording

Cash equivalents are comprised of funds held in money market and other instruments with original maturities under 90 days 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 limiting exposure to any one issuer depending upon credit quality. See “Cash Flow” discussion below.

Previous 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.

Current wording

We are subject to a financial covenant under the 2030 Indenture requiring us to maintain at least $20.0 million in qualified cash. As of September 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 September 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 $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.

Current wording

Cash flows used in operating activities were$17.5 million during the nine months ended September 30, 2026, a decrease of $55.6 million, as compared to the nine months ended September 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 $7.8 million driven by foreign taxes related to the 2025 divestiture of the Geomagic business and$2.7 million in higher interest paid on the 2030 Notes as interest payments did not start until December 2025.