3D Systems Corporation (NYSE:DDD) Q3 2023 Earnings Call Transcript

But it’s going by definition to be a bit lumpy over time, and we won’t be able to give you a lot of warning. I will tell you, it’s not going to be material, it’s not going to be grossly material numbers as they flow through, but as they hit, there may be a certain bump. So Andy, do you want to comment on this?

Andrew Johnson: Yeah, I’ll just build off of that slightly. Jacob, so think of it this way. We’ve got a handful, call it up to 10 milestones related to long progress. If you go back a couple of years, you would note that we reflected in our revenue and at that margin level, I had 100% obtainment and achievement of a milestone and a portion of a second milestone. But the way these are recognized is via progress. So even if a milestone isn’t even 100% achieved, once it becomes probable and it’s deemed probable at a certain threshold, you start to account for it based on the progress. So if a milestone is, for example, 60% achieved and it’s probable, you may not have the milestone paid out yet, because you’re not at 100%, but you do have recognition of the milestone.

And that’s exactly what happened in this quarter, and it’s why Jeff commented that you’re not going to see this as material to any particular quarter is spot on, because these things get recognized as progress is made. So they’re not binary where they’re just hit in one quarter and they’re gone the next, but as you deem progress, you begin to account for it. This particular quarter, we had contribution from three different milestones, huge validation of the technical progress in printing a human lung, and you’ll continue to see progress on those milestones and others over the next several years. So not material to any particular quarter from a revenue or margin standpoint, but as Jeff said, periodic, perhaps lumpy, but at the end of the day, absolute validation that we’re making progress in partnership with United Therapeutics.

Jeffrey Graves: And Jacob, one last comment, because it would not be obvious from what we’re looking at from the outside is the technological synergies that we’re finding between our biological work on human organs and even our industrial printers. The level of precision we’re now able to attain and speed of printing, we can directly transfer with minor modifications now to some of our industrial printers. And that work is just underway, but it’s really exciting because it will drive the next generation of printing technology on the industrial side as well. So we’re not just dependent on these incredible, you know, implantable organs being approved by the FDA and getting it into production, there will be spinoff benefits to our other industrial and even healthcare printing systems and materials knowledge as we go through the next few years. So we feel very blessed and very excited about this entire body of work.

Jacob Stephan: Yeah, awesome. Certainly excited to see what happens there. You know, best of luck going forward to you, guys. Thanks.

Jeffrey Graves: Thanks, Jacob.

Operator: Thank you. Next question is coming from Troy Jensen from Cantor Fitzgerald. Your line is now live.

Troy Jensen: Hey, gentlemen, thanks for taking my question and congrats on the nice margin performance here.

Jeffrey Graves: Thanks, Troy.

Troy Jensen: For you, Jeff, I just want to — you’re very welcome. I want to just drill down a little bit on healthcare accidental. You know, your European competitor had a very strong core there. They’re up 13% year-over-year. You understand there are more parts and less printers, but can you just talk about the services business from Littleton versus the printer sales. I’m assuming this is like SLS and metal printers that are weak for you, but just more color would be helpful.