3D Systems Corporation Year-Over-Year Growth, but Sequential Results Raise Questions

3D Systems reported headline first-quarter earnings results that were in line with expectations, with revenue of $148 million and adjusted EPS of $0.15. Strong year-over-year revenue growth was driven by 28% reported organic growth and 17% related to acquisitions. Printers and products increased 53% year-over-year, while materials revenue grew 41% and services revenue grew 39%.

Operating expenses increased 75% year-over-year, to $49 million, and expanded 570 basis points year-over-year, to 32.2%. The substantial increase in operating expenses was due to accelerated new product launches, additional joint development partnerships, salesforce and channel expansion, and operating costs from recently acquired companies.

Management reaffirmed 2014 guidance (first announced on February 5) for revenue and EPS. Full year 2014 revenue is expected to fall within a range of $680 million to $720 million, compared with the consensus estimate of $702 million. Organic revenue growth is expected to be at least 30% in 2014. Management anticipates greater organic revenue growth in the second half of 2014. The company maintained the full year 2014 adjusted EPS guidance range of $0.73-$0.85 compared with the consensus estimate of $0.82. GAAP EPS are expected to be $0.44-$0.56 in 2014.

The stock declined 9% following the earnings release and conference call.



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