Yesterday, 3D Systems (DDD) reported their quarterly earnings and as is customary with all public companies, held a conference call for analysts after. I’m not writing to comment on their tremendous earnings, as others do a better job than I. However, I will say that the wild ride the stock price has seen, and saw yesterday after earnings were released, is quite typical with super growth stocks. Once such a stock is “discovered” the excitement builds and very high expectations are set for future top and bottom line earnings. And if those expectations are not met, even by a penny, the stock can be hit hard, as 3D Systems was yesterday. But look back at the early days of other growth companies and you’ll see this is to be expected. — smaller companies growing quickly do not have perfectly predictable revenues and earnings. And for those who really understand the promise of the technology, and not focused completely on quarter-to-quarter details, uneven earnings and Wall Street disappointments present buying opportunities. Not saying this is such a time. It may very well be or the price could head lower — I’m no good at calling intermediate bottoms.
But the reason for my posting is I wanted to alert you to the transcript of the conference call, which you can find in a number of places, including over at Seeking Alpha. Experienced investors will be thinking right now: “I know there’s a conference call transcript, you don’t have to tell me.” But 3D printing has brought in a lot of new investors who are unfamiliar with how earnings announcements work. To the novice investors: if you are interested in investing in a company, you should always read the conference call transcripts; better yet, listen in on the call so you can pick up on the nuances of what’s said. The call is where you can get unvetted answers from management to questions from analysts.
I’m not allowed to repost the entire transcript for copyright reasons, but I am allowed to post an excerpt. And there is one part I found particularly enlightening. Needham & Company analyst James Ricchiuti asks 3D Systems management to talk about what types of things can get the company to the high range of revenue expectations for fiscal year 2013. President and CEO Abe Reichental provides the answer:
Abraham Reichental: Okay. What gets us to the high end is, where we are seeing unprecedented interest. And I kind of touched on it in our remarks. We are seeing unprecedented interest of the highest levels of companies, at a sea level of companies for a variety of business developments and joint development around advanced manufacturing. To the extent that some of those materialized, that’s going to get us to the higher end. We believe that healthcare is going to continue to grow at a healthy rate and we expect that, including some of the Bespoke products that we’re going to commercialize in the second half (inaudible). And we certainly expect both our consumers’ solutions and our 3D authoring solutions to meaningfully contribute towards the second half of this year. And there is another element, Jim. With the addition of Geomagic, we’re going to have another opportunity to add somewhere in the range of another 80 to 100 channel partners. That gets us to now a channel of nearly 500 resellers and with that, we see that there’s lots of opportunity for cross selling and upselling and opportunities to generate incremental growth rate, very similar to the growth rate that we enjoyed in printers and other products in 2012 which was for the year 90%, for the quarter 93% and organically 40%. That comes from those incremental cross selling and upselling opportunities. So that’s what gets us to the higher and over the guidance.
The Geomagic acquisition, which I believe formally closes this week, will add up to 100 new channel partners, bringing their total to nearly 500 resellers. And here’s the kicker: Reichental thinks that the new cross-selling and upselling opportunities can provide another year of 90% growth in printers and other products. And don’t forget what else they get with the purchase of Geomagic — the company’s founder and CEO Ping Fu, has now become VP and Chief Strategy Officer of 3D Systems. This purchase could be a very big deal.
Wish I could post the entire transcript for you here, but just click the link below. Next up: Stratasys (SSYS) on March 4, before the open.
Transcript: Seeking Alpha
Disclosure: I own shares of DDD but have not purchased any recently. Today, I purchased additional shares of SSYS.