SLM Solutions announced their revenue grew an astonishing 90% in the first half of the year. How did they accomplish this during a pandemic?
The German manufacturer of high-end metal 3D printers reported revenue almost doubled during January-June 2020 as compared to the same period in 2019. This year’s revenue is €31.2M (US$37M) vs 2019’s €16.4M (US$19.5M). There was a corresponding increase in company earnings as well.
During the pandemic it is relatively rare for a company to experience a sudden boost in business, unless it is one of the obvious “lucky” companies such as those involved in food delivery, toilet paper manufacturing, cleaning supplies or others. Nevertheless, SLM Solutions officially posted these huge revenue numbers in the first half of 2020.
How did they do this?
I think there are several converging factors at play here.
3D Printer Order Backlog
One factor is “backlog”. While SLM Solutions reports a slowdown in orders after March, they had quite a backlog of previous orders that were fulfilled during the first half of the year. In other words, there’s a bit of a lag between order and delivery that spans quarters. Remember, SLM Solutions’ equipment are high-end devices that have a relatively long sales cycle and thus are quite unlike the “off the shelf” products available at far lower price points.
SLM Solutions’ CFO Dirk Ackermann said:
“After a significant slowdown starting in March, we experienced an uptake of customer activities towards the end of the first half of the year. So far, this trend continued in the third quarter. For the remaining second half of 2020, we expect customer activities to intensify and our business to pick up further.”
Shift To 3D Printing
Another factor could be the shift to 3D printing that’s been occurring in manufacturing. The pandemic threw everyone’s supply chains into chaos, as they were optimized for cost efficiency, not resilience. In the resulting panic, many manufacturers discovered that 3D printing can fill the gap in some cases due to its ability to quickly produce low volumes of parts without the need to “tool up” or incur long shipping journeys. This is particularly true for metal 3D printers, which are often used to produce end-use production parts. It’s likely at least some of SLM Solutions’ sales are based on this effect.
On the other hand, the aerospace industry, a heavy user of metal 3D printing, has been hit very hard by the pandemic due to travel restrictions and the lack of interest in travel by individuals worldwide. However, SLM Solutions themselves report savings of €0.5M (US$600K) in travel expenses.
Despite the ongoing pandemic, SLM Solutions feels they will be able to maintain business for the foreseeable future. Ackermann said:
“With the funds generated in July from the first tranche of our new convertible bond, we believe that we are currently well positioned to steer SLM Solutions through these challenging times and to continue our turnaround.”
Finally, another factor with SLM Solutions’ business is their large prices per unit sold. Some companies make their revenue by selling many low-priced units, while others sell few units, but at far higher cost each. SLM Solutions is one of the latter, as are most industrial 3D printer manufacturers.
When there are relatively few sales transactions, the presence (or absence) of even a handful of units can notably change the picture, and quickly.
For example, earlier, this year SLM Solutions announced they’d signed a deal with BEAMIT, an Italian service bureau, for the purchase and delivery of no fewer than 15 devices over the next three years. This is a very significant number of machines for SLM Solutions, and could be contributing to the boost in revenues.
The pandemic is causing grief among many companies, and SLM Solutions seems to be doing well.
Via SLM Solutions
These past years SLM Solutions often reported H1 sales in the range of €30m (2017H1: 29.0m, 2018H1: 29.6m). So sales are simply back to their traditional levels (+5% over 2018H1) – which is a great performance in the current economic context.