3D Systems Corporation
08/03/2026 | Press release | Distributed by Public on 08/03/2026 14:26
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide a reader of our financial statements with a narrative from the perspective of management and is intended to help the reader understand the results of operations and financial condition of the Company. Our MD&A should be read in conjunction with our MD&A and Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "2025 Annual Report on Form 10-K") and our Condensed Consolidated Financial Statements as of and for the three and six months ended June 30, 2026 included in this Form 10-Q.
Information Relating to Forward-Looking Statements
Certain statements contained in this MD&A may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from historical results or from any future results expressed, or implied by, such forward-looking statements. In many cases, you can identify forward-looking statements by terms such as "believes," "belief," "expects," "may," "will," "estimates," "intends," "anticipates," or "plans" or the negative of these terms or other comparable terminology.
Forward-looking statements are based upon management's beliefs, assumptions and current expectations concerning future events and trends, using information currently available, and are necessarily subject to uncertainties, many of which are outside our control. Although we believe that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not, and should not be relied upon as a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. A number of important factors could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements. These factors include without limitation:
•impact on our business as a result of macroeconomic events and other geopolitical risks, recession, supply chain disruptions, inflation, interest rates and foreign exchange volatility;
•our ability to deliver products that meet changing technology and customer needs;
•our ability to identify strategic acquisitions, to integrate such acquisitions into our business without disruption and to realize the anticipated benefits of such acquisitions;
•our ability to realize anticipated benefits for future dispositions;
•impact of future write-off or write-downs of goodwill and intangible assets;
•the concentration of revenue and credit risk exposure from our largest customer;
•our ability to acquire and enforce intellectual property rights and defend such rights against third-party claims;
•our ability to protect our intellectual property rights and confidential information, including our digital content, from third-party infringers or unauthorized copying, use or disclosure;
•failure of our information technology infrastructure or inability to protect against cyber-attack;
•our ability to predict quarterly sales and manage product inventory due to uneven sales cycle;
•our ability to generate net cash flow from operations;
•our ability to service our debt and ability to raise funds necessary to settle conversions of the 5.875% convertible senior secured notes due 2030 ("the 2030 Notes") and the 0% convertible senior notes due 2026 ("the 2026 Notes") (collectively, "the Notes") in cash, repay the Notes at maturity or repurchase the Notes in the case of a fundamental change;
•our ability to comply with the covenants contained in our 2030 Indenture, 2026 Indenture and other current or future debt agreements, including the limitations, restrictions and prohibitions such covenants may impose on the way we conduct our business, including certain financial covenants, prohibitions on incurring additional debt if certain covenants are not met and restrictions on our ability to make certain investments and restricted payments;
•our ability to remediate material weaknesses in our internal controls over financial reporting and maintain effective internal controls;
•fluctuations in our gross profit margins, operating income or loss and/or net income or loss;
•our ability to efficiently conduct business outside the U.S.;
•our dependence on our supply chain for components and sub-assemblies used in our 3D printers and other products and for raw materials used in our print materials;
•our ability to manage the costs and effects of litigation, investigations or similar matters involving us or our subsidiaries;
•product quality problems that result in decreased sales and operating margin, product returns, product liability, warranty or other claims;
•our ability to retain our key employees and to attract and retain new qualified employees, while controlling our labor costs;
•our ability to successfully develop and commercialize regenerative medicine products ourselves, or in conjunction with development partners;
•disruption in our management information systems for inventory management, distribution, and other key functions;
•compliance with U.S. and other anti-corruption laws, data privacy laws, trade controls, economic sanctions, and similar laws and regulations;
•our ability to maintain our status as a responsible contractor under federal rules and regulations;
•changes in, or interpretation of, tax rules and regulations;
•the other factors discussed in the reports we file with or furnish to the SEC from time to time, including the risks and important factors set forth in additional detail in Item 1A. "Risk Factors" in the 2025 Annual Report on Form 10-K.
Readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included herein are made only as of the date of this Form 10-Q and we undertake no obligation to publicly update or revise any forward-looking statement made by us or on our behalf, whether as a result of new information, future developments, subsequent events or circumstances or otherwise, except as required by law. All subsequent written or oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by the cautionary statements referenced above.
Business Overview
3D Systems Corporation ("3D Systems" or the "Company" or "we," "our" or "us") markets our products and services through subsidiaries in North America and South America ("Americas"), Europe and the Middle East ("EMEA") and Asia Pacific and Oceania ("APAC"). We provide comprehensive 3D printing and digital manufacturing solutions, including 3D printers for plastics and metals, materials, software, and services, including maintenance, advanced manufacturing and applications engineering.
Our solutions support advanced applications in two key industry verticals: Healthcare Solutions (which includes dental, medical devices, personalized health services and regenerative medicine) and Industrial Solutions (which includes aerospace, defense, transportation and general manufacturing). We have more than 35 years of experience and expertise, which have proven vital to our development of an ecosystem and end-to-end digital workflow solutions that enable customers to optimize product designs, transform workflows, bring innovative products to market and drive new business models.
Recent Developments and Updates Regarding Strategic Initiatives
2025 Restructuring Plan
In 2025, in response to continuing macroeconomic challenges impacting the Company's financial performance, the Company implemented a series of cost savings and restructuring initiatives (the "2025 Restructuring Plan") as part of its ongoing multi-faceted transformation strategy. The Company does not expect to incur significant additional restructuring charges in 2026 related to the 2025 Restructuring Plan.
Divestitures
In December 2024, the Company entered into a definitive agreement with Hexagon AB for the sale of its Geomagic software business ("Geomagic"), which was included in our Industrial Solutions segment. On April 1, 2025, the Company completed the sale of Geomagic and received $119.4 million in cash, which reflected applicable purchase price adjustments under the Asset Purchase Agreement and Business Transfer Agreement. The Company recorded a pre-tax gain of $125.7 million from the sale of Geomagic in the second quarter of 2025.
In September 2025, the Company entered into a definitive agreement with Hubb Global Holdings, LLC for the sale of its 3DXpert and Oqton businesses, which were included in our Industrial Solutions segment. On October 31, 2025, the Company completed the sale of the 3DXpert and Oqton businesses for $3.3 million in cash, which reflected applicable purchase price adjustments, plus a revenue-based royalty receivable which had a present value of $7.1 million.
Background
We earn revenue from the sale of products and services through our Healthcare Solutions and Industrial Solutions segments. The product categories include 3D printers and corresponding materials, digitizers, software licenses, 3D scanners and haptic devices. The majority of materials used in our 3D printers are proprietary. The services categories include maintenance contracts and services on 3D printers, software maintenance, software as a service subscriptions and healthcare solutions services.
Given the relatively high price of certain 3D printers and a corresponding lengthy selling cycle, as well as relatively low unit volume of the higher-priced printers in any particular period, a shift in the timing and concentration of orders and shipments from one period to another can materially affect reported revenue in any given period.
In addition to changes in sales volumes, there are two other primary drivers of changes in revenue from one period to another: (i) the combined effect of changes in product mix and average selling prices and (ii) the impact of fluctuations in foreign currencies. As used in this MD&A, the price and mix effects relate to changes in revenue that are not able to be specifically attributed to changes in unit volume or changes in foreign exchange rates.
RESULTS OF OPERATIONS
Comparison of Results of Operations
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| (in thousands) | June 30, 2026 | June 30, 2025 | Change | June 30, 2026 | June 30, 2025 | Change | |||||||||||||||||||||||||||||
| Revenue | $ | 94,579 | $ | 94,838 | $ | (259) | $ | 190,117 | $ | 189,378 | $ | 739 | |||||||||||||||||||||||
| Cost of sales | 60,117 | 58,688 | 1,429 | 121,312 | 120,539 | 773 | |||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 35,135 | 34,139 | 996 | 66,483 | 83,908 | (17,425) | |||||||||||||||||||||||||||||
| Research and development expenses | 9,972 | 17,361 | (7,389) | 19,607 | 37,044 | (17,437) | |||||||||||||||||||||||||||||
| Loss from operations | $ | (10,645) | $ | (15,350) | $ | 4,705 | $ | (17,285) | $ | (52,113) | $ | 34,828 | |||||||||||||||||||||||
Revenue
The following table sets forth changes in our revenue for the three and six months ended June 30, 2026.
| (Dollars in thousands) | Products | Services | Total | ||||||||||||||||||||||||||||||||
|
Revenue - three months ended June 30, 2025
|
$ | 53,801 | $ | 41,037 | $ | 94,838 | |||||||||||||||||||||||||||||
| Change in revenue: | |||||||||||||||||||||||||||||||||||
| Volume | 871 | 1.6 | % | (1,581) | (3.9) | % | (710) | (0.7) | % | ||||||||||||||||||||||||||
| Price/mix | (208) | (0.4) | % | - | - | % | (208) | (0.2) | % | ||||||||||||||||||||||||||
| Foreign currency translation | 378 | 0.7 | % | 281 | 0.7 | % | 659 | 0.7 | % | ||||||||||||||||||||||||||
| Net change | 1,041 | 1.9 | % | (1,300) | (3.2) | % | (259) | (0.3) | % | ||||||||||||||||||||||||||
|
Revenue - three months ended June 30, 2026
|
$ | 54,842 | $ | 39,737 | $ | 94,579 | |||||||||||||||||||||||||||||
| (Dollars in thousands) | Products | Services | Total | ||||||||||||||||||||||||||||||||
| Revenue - six months ended June 30, 2025 | $ | 108,524 | $ | 80,854 | $ | 189,378 | |||||||||||||||||||||||||||||
| Change in revenue: | |||||||||||||||||||||||||||||||||||
| Volume | 3,697 | 3.4 | % | (4,952) | (6.1) | % | (1,255) | (0.7) | % | ||||||||||||||||||||||||||
| Price/mix | (1,898) | (1.7) | % | - | - | % | (1,898) | (1.0) | % | ||||||||||||||||||||||||||
| Foreign currency translation | 2,287 | 2.1 | % | 1,605 | 2.0 | % | 3,892 | 2.1 | % | ||||||||||||||||||||||||||
| Net change | 4,086 | 3.8 | % | (3,347) | (4.1) | % | 739 | 0.4 | % | ||||||||||||||||||||||||||
| Revenue - three months ended June 30, 2026 | $ | 112,610 | $ | 77,507 | $ | 190,117 | |||||||||||||||||||||||||||||
For the three months ended June 30, 2026, revenue decreased $0.3 million, or 0.3%, compared to the three months ended June 30, 2025. The decrease in revenue was driven by a $1.3 million decrease in service revenue primarily due to the impacts of lower recurring service revenue and divestitures, partially offset by higher revenue for personalized healthcare services and a favorable impact of foreign currency. The decrease in service revenue was mostly offset by an increase in product revenue of $1.0 million driven by higher printer volume to customers in the dental and medical technology markets and a favorable impact of foreign currency, which was partially offset by unfavorable price/mix and the impact of divestitures.
For the six months ended June 30, 2026, revenue increased $0.7 million, or 0.4%, compared to the six months ended June 30, 2025. The increase in revenue was driven by an increase in product revenue of $4.1 million primarily due to higher printer and materials volume to customers in the dental and medical technology markets and a favorable impact of foreign currency, which was partially offset by unfavorable price/mix and the impact of divestitures. Service revenue decreased $3.3 million due to the impacts of lower recurring service revenue and divestitures, partially offset by increases in parts manufacturing and personalized healthcare services and a favorable impact of foreign currency.
Cost of sales and gross profit
For the three months ended June 30, 2026, cost of sales increased to $60.1 million compared to $58.7 million for the three months ended June 30, 2025. For the three months ended June 30, 2026, gross profit decreased $1.7 million, or 4.7%, and gross profit margin decreased to 36.4% compared to 38.1% in the prior year period. The increase in cost of sales and decrease in gross profit and gross profit margin were primarily related to unfavorable mix due to higher printer sales during the current period and the impact of divestitures, which was partially offset by the recovery of tariffs of approximately $2.6 million during the three months ended June 30, 2026.
For the six months ended June 30, 2026, cost of sales increased to $121.3 million compared to $120.5 million for the six months ended June 30, 2025. For the six months ended June 30, 2026 and June 30, 2025, gross profit was $68.8 million, however, gross profit margin decreased to 36.2% compared to 36.4% in the prior year period. The increase in cost of sales and decrease in gross profit margin was primarily related to unfavorable mix during the current period and the impact of divestitures, partially offset by the recovery of tariffs of approximately $2.6 million during the six months ended June 30, 2026.
Selling, general and administrative expenses
For the three months ended June 30, 2026, selling, general and administrative expenses ("SG&A") increased $1.0 million, or 2.9%, compared to the three months ended June 30, 2025. The year-over-year increase in SG&A was primarily due to the reversal of annual incentive compensation in the prior year period, partially offset by decreases due to the impact of our restructuring actions and divestitures.
For the six months ended June 30, 2026, SG&A decreased $17.4 million, or 20.8%, compared to the six months ended June 30, 2025. The year-over-year decline in SG&A was primarily due to:
•$10.9 million decrease in compensation and benefits expense primarily related to lower compensation expense due to the impact of our restructuring actions and divestitures;
•$4.7 million decrease in third-party service provider and consulting costs primarily due to lower audit and accounting fees; and
•$1.6 million decrease in other corporate costs primarily related to reductions in facilities, and travel and entertainment costs due to the impact of our cost saving actions.
Research and development expenses
For the three months ended June 30, 2026, research and development expenses ("R&D") decreased $7.4 million, or 42.6%, compared to the three months ended June 30, 2025. The year-over-year decline in R&D was primarily due to:
•$5.0 million decrease in compensation and benefits expense primarily due to improved operating efficiency and cost reductions realized from our restructuring activities and divestitures; and
•$2.2 million decrease primarily due to lower operating supplies cost and lower outside services costs due to the impact of our cost saving actions.
For the six months ended June 30, 2026, R&D decreased $17.4 million, or 47.1%, compared to the six months ended June 30, 2025. The year-over-year decline in R&D was primarily due to:
•$10.6 million decrease in compensation and benefits expense primarily due to improved operating efficiency and cost reductions realized from our restructuring activities and divestitures; and
•$5.3 million decrease primarily due to lower operating supplies cost and lower outside services costs due to the impact of our cost saving actions.
Segment Results
|
Segment Revenue
|
Segment Gross Profit | ||||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||||||
| (in thousands) | June 30, 2026 | June 30, 2025 | Change | June 30, 2026 | June 30, 2025 | Change | |||||||||||||||||||||||||||||
| Healthcare Solutions | $ | 48,096 | $ | 45,020 | $ | 3,076 | $ | 19,204 | $ | 20,382 | $ | (1,178) | |||||||||||||||||||||||
| Industrial Solutions | 46,483 | 49,818 | (3,335) | 15,258 | 15,768 | (510) | |||||||||||||||||||||||||||||
| Total Company | $ | 94,579 | $ | 94,838 | $ | (259) | $ | 34,462 | $ | 36,150 | $ | (1,688) | |||||||||||||||||||||||
| Segment Revenue | Segment Gross Profit | ||||||||||||||||||||||||||||||||||
| Six Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| (in thousands) | June 30, 2026 | June 30, 2025 | Change | June 30, 2026 | June 30, 2025 | Change | |||||||||||||||||||||||||||||
| Healthcare Solutions | $ | 98,229 | $ | 86,336 | $ | 11,893 | $ | 41,501 | $ | 36,406 | $ | 5,095 | |||||||||||||||||||||||
| Industrial Solutions | 91,888 | 103,042 | (11,154) | 27,304 | 32,433 | (5,129) | |||||||||||||||||||||||||||||
| Total Company | $ | 190,117 | $ | 189,378 | $ | 739 | $ | 68,805 | $ | 68,839 | $ | (34) | |||||||||||||||||||||||
Healthcare Solutions
Revenue
For the three months ended June 30, 2026, Healthcare Solutions revenue increased $3.1 million, or 6.8%, compared to the three months ended June 30, 2025. The increase in revenue was primarily due to an increase in printer volume in the medical technology market, increased personalized healthcare services and a favorable price/mix.
For the six months ended June 30, 2026, Healthcare Solutions revenue increased $11.9 million, or 13.8%, compared to the six months ended June 30, 2025. The increase in revenue was primarily due to increases in printer volume in the medical technology market, materials volume in the dental market, including volume with a key customer, parts manufacturing services and a favorable impact of foreign currency, which was partially offset by an unfavorable price/mix.
Gross profit
For the three months ended June 30, 2026, Healthcare Solutions gross profit decreased $1.2 million, or 5.8%, compared to the three months ended June 30, 2025. The decrease in gross profit was primarily due to an unfavorable price/mix partially offset by the impact of the recovery of tariffs.
For the six months ended June 30, 2026, Healthcare Solutions gross profit increased $5.1 million, or 14.0%, compared to the six months ended June 30, 2025. The increase in gross profit was primarily due to increases in sales volume and the impact of the recovery of tariffs.
Industrial Solutions
Revenue
For the three months ended June 30, 2026, Industrial Solutions revenue decreased $3.3 million, or 6.7%, compared to the three months ended June 30, 2025. The decrease was primarily due to the impact of divestitures and an unfavorable price/mix.
For the six months ended June 30, 2026, Industrial Solutions revenue decreased $11.2 million, or 10.8%, compared to the six months ended June 30, 2025. The decrease was primarily due to the impact of divestitures, which was partially offset by a favorable impact of foreign currency.
Gross profit
For the three months ended June 30, 2026, Industrial Solutions gross profit decreased $0.5 million, or 3.2% compared to the prior period. The decrease in gross profit was primarily due to unfavorable mix partially offset by the impact of the recovery of tariffs.
For the six months ended June 30, 2026, Industrial Solutions gross profit decreased $5.1 million, or 15.8% compared to the prior period. The decrease in gross profit was primarily due to divestitures partially offset by the impact of the recovery of tariffs.
Non-operating (loss) income
The following table sets forth the components of non-operating (loss) income:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| (in thousands) | June 30, 2026 | June 30, 2025 | Change | June 30, 2026 | June 30, 2025 | Change | |||||||||||||||||||||||||||||
| Foreign exchange gain (loss), net | $ | 1,464 | $ | (1,591) | $ | 3,055 | $ | 4,102 | $ | (452) | $ | 4,554 | |||||||||||||||||||||||
| Interest income | 575 | 1,717 | (1,142) | 1,159 | 2,670 | (1,511) | |||||||||||||||||||||||||||||
| Interest expense | (2,155) | (697) | (1,458) | (4,319) | (1,278) | (3,041) | |||||||||||||||||||||||||||||
| Gain on disposition | - | 125,681 | (125,681) | - | 125,681 | (125,681) | |||||||||||||||||||||||||||||
| Other (loss) income, net | (839) | 7,020 | (7,859) | 2,689 | 6,860 | (4,171) | |||||||||||||||||||||||||||||
| Total non-operating (loss) income | $ | (955) | $ | 132,130 | $ | (133,085) | $ | 3,631 | $ | 133,481 | $ | (129,850) | |||||||||||||||||||||||
Foreign exchange gain (loss), net
Foreign exchange gain, net increased by $3.1 million and $4.6 million for the three and six months ended June 30, 2026, respectively, compared to the same prior year periods, primarily due to realized and unrealized gains related to our foreign operations.
Interest income
Interest income decreased by $1.1 million and $1.5 million for the three and six months ended June 30, 2026, respectively, compared to the same prior year periods, due to the Company's lower average cash and cash equivalent balances.
Interest expense
Interest expense increased by $1.5 million and $3.0 million for the three and six months ended June 30, 2026, respectively, compared to the same prior year periods, primarily due to interest expense related to the 2030 Notes.
Gain on disposition
Gain on disposition decreased $125.7 million for the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, due to the sale of Geomagic in the prior period.
Other (loss) income, net
Other (loss) income, net, decreased $7.9 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to the gain on repurchase of debt recognized in the three months ended June 30, 2025 related to the extinguishment of a portion of the 2026 Notes.
Other (loss) income, net, decreased $4.2 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a $2.6 million gain on our equity method investment in the National Additive Manufacturing Innovation ("NAMI") joint venture because of a dilution in our ownership share in the three months ended June 30, 2026 and the gain on repurchase of debt in the three months ended June 30, 2025.
Income Taxes
For the three and six months ended June 30, 2026, the Company's effective tax rate was (3.1)% and (13.5)%, respectively. For the three and six months ended June 30, 2025, the Company's effective tax rate was 9.4% and 14.4%, respectively. The differences between the U.S. statutory tax rate and the effective tax rates for the three and six months ended June 30, 2026 and 2025 were primarily driven by the recognition of a full deferred tax asset valuation allowance in various jurisdictions in both years.
Liquidity and Capital Resources
The following table sets forth the Company's operating working capital at June 30, 2026 and December 31, 2025.
| Change | |||||||||||||||||||||||
| (in thousands) | June 30, 2026 | December 31, 2025 | $ | % | |||||||||||||||||||
| Cash and cash equivalents | $ | 127,951 | $ | 95,635 | $ | 32,316 | 33.8 | % | |||||||||||||||
| Accounts receivable, net | 80,174 | 83,806 | (3,632) | (4.3) | % | ||||||||||||||||||
| Inventories | 121,847 | 127,496 | (5,649) | (4.4) | % | ||||||||||||||||||
| 329,972 | 306,937 | 23,035 | 7.5 | % | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Current operating lease liabilities | 9,266 | 11,583 | (2,317) | (20.0) | % | ||||||||||||||||||
| Accounts payable | 32,425 | 41,017 | (8,592) | (20.9) | % | ||||||||||||||||||
| Accrued and other liabilities | 39,781 | 46,656 | (6,875) | (14.7) | % | ||||||||||||||||||
| 81,472 | 99,256 | (17,784) | (17.9) | % | |||||||||||||||||||
| Operating working capital | $ | 248,500 | $ | 207,681 | $ | 40,819 | 19.7 | % | |||||||||||||||
We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory turns, capital expenditure commitments and accounts payable turns. Our cash requirements primarily consist of funding working capital and capital expenditures. Differences between the amounts of working capital item changes in the cash flow statement and the balance sheet changes for the corresponding items are primarily the result of foreign currency translation adjustments.
At June 30, 2026, cash and cash equivalents totaled $128.0 million and increased $32.3 million since December 31, 2025. This increase resulted primarily from cash received from the equity raise of $53.8 million, partially offset by cash used in operations of $14.1 million and capital expenditures of $5.9 million during the six months ended June 30, 2026.
Cash held outside the U.S. at June 30, 2026 was $35.8 million, or 28.0% of total cash and cash equivalents, compared to $33.0 million, or 34.5% of total cash and cash equivalents, at December 31, 2025. As our previously unremitted earnings have been subjected to U.S. federal income tax, we expect any repatriation of these earnings to the U.S. would not incur significant federal and state taxes. However, these dividends are subject to foreign withholding taxes that are estimated to result in the Company incurring tax costs in excess of the cost to obtain cash through other means.
Cash equivalents are comprised of funds held in money market instruments and are reported at their current carrying value, which approximates fair value due to the short-term nature of these instruments. We strive to minimize our credit risk by investing primarily in investment grade, liquid instruments and limiting exposure to any one issuer depending upon credit quality. See "Cash Flow" discussion below.
Cash Flow
The Company currently funds its operations, including working capital requirements, capital expenditures and investments by using cash; cash equivalents; cash flow from operations, which can vary widely from quarter to quarter; and investing and financing activities, as necessary. We expect that cash flow from operations, cash and cash equivalents, and other sources of liquidity, such as issuing equity or debt securities, subject to market conditions, will be available and sufficient to meet all our cash requirements over the next twelve months. Cash requirements for periods beyond the next twelve months will depend on, among other things, the Company's profitability and its ability to manage working capital requirements and, if needed, its ability to identify and secure other potential sources to fund future working capital needs and meet capital expenditure requirements. See Item 1A, "Risk Factors" in the 2025 Annual Report on Form 10-K.
We are subject to a financial covenant under the Indenture governing the 2030 Notes (the "2030 Indenture") requiring us to maintain at least $20.0 million in qualified cash. As of June 30, 2026, we were in compliance with the covenants included in the 2030 Indenture. However, if we are unable to generate sufficient cash flow in the future, we may be non-compliant which could result in an event of default making the 2030 Notes, with an outstanding principal balance of $92.0 million as of June 30, 2026, due immediately. See Item 1A "Risk Factors" in the 2025 Annual Report on Form 10-K.
The following is a summary of the changes in the Company's cash flows followed by a brief discussion of these changes:
| Six Months Ended | |||||||||||||||||
| (in thousands) | June 30, 2026 | June 30, 2025 | Change | ||||||||||||||
| Cash flow used in operating activities | $ | (14,106) | $ | (59,630) | $ | 45,524 | |||||||||||
| Cash flow (used in) provided by investing activities | (5,870) | 112,931 | (118,801) | ||||||||||||||
| Cash flow provided by (used in) financing activities | 51,942 | (97,340) | 149,282 | ||||||||||||||
Operating Activities
Cash flows used in operating activities were $14.1 million during the six months ended June 30, 2026, a decrease of $45.5 million, as compared to the six months ended June 30, 2025. The year-over-year change in operating cash flows was primarily attributable to more favorable business performance during the current year due to our 2025 Restructuring Plan and other cost savings initiatives, partially offset by higher cash taxes paid of $6.1 million driven by foreign taxes related to the 2025 divestiture of the Geomagic business and $2.9 million in higher interest paid on the 2030 Notes as interest payments did not start until December 2025.
Investing Activities
Net cash used in investing activities was $5.9 million during the six months ended June 30, 2026, compared to net cash provided by investing activities of $112.9 million during the six months ended. The change was driven primarily by proceeds from the sale of the Geomagic business during the six months ended June 30, 2025.
Financing Activities
Net cash provided by financing activities was $51.9 million during the six months ended June 30, 2026, compared to net cash used in financing activities of $97.3 million during the six months ended June 30, 2025. The change was driven primarily by the proceeds of $53.8 million from the equity raise during the six months ended June 30, 2026 and the net repayments of long term debt of $81.4 million and stock repurchases of $15.0 million during the six months ended June 30, 2025.
Material Cash Requirements
The Company's material cash requirements consist of the following contractual and other obligations:
Indebtedness
Convertible senior secured notes due 2030
The 2030 Notes are senior secured obligations, guaranteed by certain U.S. subsidiaries of the Company and bear interest semiannually at a rate of 5.875%, payable on June 15 and December 15 of each year, beginning December 15, 2025.
Convertible senior notes due 2026
The 2026 Notes have an annual effective interest rate of 0.594%, reflecting original issue discounts, commissions, and offering expenses. The 2026 Notes are scheduled to mature on November 15, 2026, unless earlier redeemed, repurchased, or converted in accordance with their terms
At June 30, 2026, we had $96.0 million of outstanding principal balance of debt, comprised of $3.9 million of 2026 Notes and $92.0 million of 2030 Notes. Management may consider pursuing additional long-term financing if it is appropriate in light of cash requirements for operations or strategic opportunities, which could result in higher financing costs.
Purchase Commitments
We have purchase commitments under legally enforceable agreements for goods and services with defined terms as to quantity, price and timing of delivery. The Company has certain purchase commitments under agreements with remaining terms in excess of a year, which primarily relate to software licenses, printer assemblies, inventory and capital expenditures. As of June 30, 2026, such purchase commitments totaled $21.7 million, with approximately $9.4 million, expected to be due within the next twelve months.
Leases
The Company had operating and financing lease obligations (inclusive of interest) of $78.4 million at June 30, 2026, primarily related to real estate and equipment leases, of which, approximately $15.0 million in payments are expected over the next twelve months.
Sources of Funding to Satisfy Material Cash Requirements
The Company believes that it has the financial resources needed to meet its anticipated cash requirements during the next twelve months. Cash requirements for periods beyond the next twelve months will depend on, among other things, the Company's profitability and its ability to manage working capital requirements and if needed, its ability to identify and secure other potential sources to fund future working capital needs and meet capital expenditure requirements.
Other Contractual Commitments
Indemnification
In the normal course of business we periodically enter into agreements to indemnify customers or suppliers against claims of intellectual property infringement made by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant. We are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations.
To the extent permitted under Delaware law, we indemnify our directors and officers for certain events or occurrences, when the director or officer is, or was, serving at our request in such capacity, subject to limited exceptions. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we have directors' and officers' insurance coverage that may enable us to recover future amounts paid, subject to a deductible and to the policy limits. There is no assurance that the policy limits will be sufficient to cover all damages, if any.
Critical Accounting Estimates
Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
For a discussion of critical accounting estimates at December 31, 2025, refer to Item 7 "Critical Accounting Estimates" in our 2025 Annual Report on Form 10-K. During the six months ended June 30, 2026, there have been no material changes to our critical accounting estimates described in our 2025 Annual Report on Form 10-K.
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