You can see this very clearly simply by looking at our year-over-year revenue decline of 16%. This decline is clearly correlated to the uncertainty around tariffs, which has given our large OEM customers pause on where to invest their capital most economically. Fortunately, we've had the scale and balance sheet flexibility to navigate this large-scale restructuring while maintaining core R&D investments that are so essential for long-term growth. While our year-over-year revenue decline was significant, we were pleased to see the stabilization of these pressures in our sequential quarterly results.
While I don't want to overstate its significance, as I do expect continuing revenue volatility quarter-to-quarter until the tariff situation subsides, it was certainly a welcome outcome. Importantly, these are soon to reach a point of critical mass that we believe will drive meaningful revenue growth in the years ahead. All of this is supplemented by a reinforced balance sheet following our Q2 transactions, which include the sale of our non-core Geomagic software platform, our June debt transaction, and share repurchase. Taken in combination with our restructuring actions, we believe this places the company well in the path to sustainable profitability and long-term growth.
We're focusing on those that deliver the most compelling ROI that matches our internal mandate to return to profitability. We put this effort on the shelf for now, having developed some unique IP, and we'll return to it in the future if the market dynamics become more favorable. Before I begin, I would remind you that we divested our Geomagic software business on April 1, 2025. Second quarter consolidated revenue was $95 million, down 16% year-over-year or 11% when excluding Geomagic.
| Metric | Period | Current guidance |
|---|---|---|
| Non-GAAP operating expense | Year-end 2025 | Low $40 million, with continued sequential reductions through the remainder of 2025 |
| Annualized cost savings | Mid-2026 | Over $85 million in annualized savings |
| Gross margin | Balance of 2025 | More normalized, akin to where the year started (~38%) |
| Cash flow | 2026 | Targeting positive cash generation |
| Metric | YoY | Note |
|---|---|---|
| Consolidated revenue | Down 16% (down 11% excluding Geomagic) to $95M | Rapid drop in customers' CapEx spending for new production capacity tied to tariff uncertainty |
| Industrial Solutions revenue | Down 23% (down 13% excluding Geomagic) to $50M | Printer and material softness in consumer-facing end markets, partially offset by aerospace and defense momentum |
| Healthcare Solutions revenue | Down 8% to $45M | Predominantly dental, with 2024 representing a significant year of purchases by a specific aligner customer |
| Non-GAAP gross margin | 39% vs. 41% prior year | Included ~$2M benefit from regenerative medicine milestone recognition plus favorable manufacturing variances from higher volume |
| Non-GAAP operating expense | Down 27% to $47M | Restructuring actions driving efficiencies across nearly every function and geography, reduced external services, and a one-time compensation adjustment |
| GAAP EPS | $0.57 vs. -$0.21 prior year | Gains related to the Geomagic asset sale and proactive debt repayment at a discount, yielding GAAP net income of $104M |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Profitability First restructuring | $50M wave announced in March 2025 | Over $85M annualized savings targeted by mid-2026, executed through first half of next year | — |
| Tariff-driven CapEx hesitation | Pre-April sluggishness from interest-rate worries | Customers dragging feet on CapEx because they don't know where to locate production amid volatile tariffs | — |
| Dental / NextDent dentures | Protracted beta testing, FDA certification achieved | Ramping production in Q3/Q4 with POs arriving; expected to be a material dental contributor in 2026, targeting a $400M U.S. market | — |
| Bridging customers via parts production | — | Growing demand for short-term limited-quantity part supply (the 'three Ps': process, parts, printers) while customers defer CapEx | — |