Hello, welcome to 3D Systems fourth quarter and full year 2025 earnings conference call. I'll focus very specifically on our strategy and key growth initiatives, the early stages of which you can see reflected even now in our operating trends. I'll provide specific details on these markets in a few moments, Phyllis will summarize the impact of both our cost actions and growth initiatives on our financial performance and trends. What was unusual this year was the additional top-line benefits specifically related to our 3 key growth initiatives.
Given their importance, I'll cover these key growth areas in some detail in a few moments. Within our industrial solutions business, we saw sequential double-digit growth in several of our more traditional consumer-oriented end markets, including both automotive and jewelry manufacturing. These factors are very important to manufacturers as they provide dramatic reductions in gold loss during final polishing of the product, particularly at a time when gold prices are at record levels. Within our healthcare solutions business, we saw sequential growth in dental material sales, driven largely by stabilization of demand for aligners.
Looking beyond these trends in our traditional markets, I'd like to now spend a few minutes on what I believe are the three most exciting growth markets that are opening before us. One of our key growth markets is aerospace and defense, which has become the largest and one of the fastest-growing segments within our industrial solutions business. On a full year basis, our aerospace and defense revenue, which includes production printing systems, consumable materials, and custom metal parts, achieved 16% growth, and we continue to expect over 20% growth for 2026. What technologies are required to deliver sustainable revenue growth in aerospace and defense?
| Metric | Period | Current guidance |
|---|---|---|
| Financial guidance scope | 2026 | Limited to the first quarter of 2026 given the geopolitical environment and potential macro impact |
| Operating expense | 2026 (Q1/Q2 vs. H2) | Slight increases in Q1 and Q2 with a steep drop-off in Q3 and Q4; year-over-year reductions less than in 2025 |
| Aerospace and defense growth | 2026 | Over 20% growth expected; on track to be the largest industrial segment within fiscal 2026 |
| Q1 gross margin | Q1 2026 | Anticipated improvement, supported by cost savings and better pricing |
| Q1 revenue | Q1 2026 | Down modestly year-over-year at the midpoint; pretty consistent with prior year excluding Geomagic |
| Metric | YoY | Note |
|---|---|---|
| Q4 consolidated revenue | +3% adjusting for Geomagic (-5% also adjusting for RegMed) to $106.3M; +16% sequentially | Strengthening printer and material sales from new product launches, plus normal seasonality and returning demand in priority markets |
| Q4 Industrial Solutions revenue | $55.8M, +15% sequentially | Continued aerospace and defense strength plus higher new printer sales in consumer end markets, including the new NGP jewelry printer |
| Q4 Healthcare Solutions revenue | $50.5M, +18% sequentially | Strengthening dental material sales (aligner stabilization) and continued positive PHS performance |
| Full-year consolidated revenue | Down 7% ex-Geomagic (down 9% also ex-RegMed) to $387M | Strong macroeconomic headwinds impacting customer spending across the additive manufacturing industry |
| Full-year non-GAAP gross margin | 34.3%, down 70 bps ex-Geomagic (down 2 pts also ex-RegMed) | Lower sales volume and less favorable product mix |
| Full-year non-GAAP operating expense | $196M, down 19% (-$46M) ex-Geomagic | Cost reduction initiatives delivering ~$55M annualized savings completed in 2025 |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Return to growth / inflection | Stabilization noted in Q3 | Q4 sequential improvement of 16% viewed as a return to growth as the company exits 2025 and enters 2026 | — |
| Three key growth markets | Aerospace/defense, PHS, dental emphasized | Same three markets highlighted as most exciting, all benefiting from mass customization and declining manufacturing cost | — |
| Balance sheet / debt | $35M due Q4 2026 plus 2030 notes (Q3) | Equitization transaction retired majority of the 2026 maturity, leaving only $3.9M due then and $92M due 2030 | — |
| R&D investment cycle | Historically ~20% of revenue heavy spend | Throttling back after three-year refresh; still double-digit but lower, right-sized to current portfolio for 2026 | — |
| NextDent dentures | Full U.S. release, labs onboarded (Q3) | Beginning to see sales from commercial release; very well received, European approval targeted mid-2026 | — |