Research and development (“R&D”) expenses increased to kEUR 1,888 in the third quarter of 2019 from kEUR 1,660 in the third quarter of 2018. The increase of kEUR 228 was mainly due to higher personnel expenses related to an increase in headcount in order to support further research and development projects.

Other operating expenses in the third quarter of 2019 were kEUR 36 compared to kEUR 195 in the prior year period. This was mainly due to lower losses from foreign currency transactions of kEUR 22 for the third quarter of 2019 compared to kEUR 105 for the third quarter of 2018.

Other operating income was kEUR 787 for the third quarter of 2019 compared to kEUR 267 in the third quarter of 2018. The increase was mainly due to higher gains from foreign currency transactions amounting to kEUR 642 for the third quarter of 2019, an increase of kEUR 553 compared to last year’s third quarter.

The changes in foreign currency losses and gains were primarily driven by the valuation of the intercompany loans granted by the parent company to our UK and US subsidiaries.

Operating loss was kEUR 3,526 in the third quarter of 2019, compared to an operating loss of kEUR 2,761 in the comparative period in 2018. This was primarily related to significantly lower gross profit accompanied by higher operating expenses in the functions administration and research and development, partially offset by lower selling expenses for the third quarter of 2019 compared to the third quarter of 2018. In addition, other operating income recorded a significant increase in the third quarter year over year. Operating loss was significantly influenced by foreign currency impacts. The net gains and losses from foreign currency transactions on operating loss (considering changes in other operating expenses and other operating income) in the third quarter year over year was positive kEUR 636. The total impact on operating loss related to the restructuring of voxeljet UK amounted to kEUR 531.

Financial result was negative kEUR 370 in the third quarter of 2019, compared to a financial result of negative kEUR 1,042 in the comparative period in 2018. The improvement was mainly related to lower finance expenses related to the revaluation of derivative financial instruments amounting to kEUR 106 compared to kEUR 805 in the last year’s same period. Financial result included interest expense for long-term debt of kEUR 250 (Q3 2018: kEUR 238).

Net loss for the third quarter of 2019 was kEUR 3,914 or EUR 0.80 per share, as compared to net loss of kEUR 3,797, or EUR 1.02 per share, in the third quarter of 2018. This is based on a weighted average number of ordinary shares outstanding of 4.836 million for the three months ended September 30, 2019, as compared to 3.720 million ordinary shares outstanding for last year’s same period.

Based on a conversion rate of five American Depositary Shares (“ADSs”) per ordinary share, net loss was at EUR 0.16 per ADS for the third quarter of 2019, compared to a net loss of EUR 0.20 per ADS for the third quarter of 2018. Earnings per share is computed by dividing net income attributable to stockholders of the parent by the weighted-average number of ordinary shares outstanding during the periods. Earnings per ADS is calculated by dividing the above earnings per share by five as each ordinary share represents five ADSs.

Nine Months Ended September 30, 2019 Results

Revenues for the nine months ended September 30, 2019 decreased by 13.7% to kEUR 15,051 compared to kEUR 17,435 in the prior year period.

Systems revenues were kEUR 6,180 for the first nine months of 2019 compared to kEUR 7,002 for the same period last year. The Company sold seven new and one used and refurbished 3D printers during the first nine months of 2019, compared to four new and three used and refurbished 3D printers in the prior year period. Systems revenues also include all Systems-related revenues from consumables, spare parts and maintenance. The decrease of revenues within the Systems segment is mainly related to lower revenues from the sale of 3D printers, as the Company sold smaller platforms in 2019 compared to the same period in the prior year. This was partially offset by growing Systems-related revenues, reflecting the higher installed base of 3D printers in the market and the associated growth in aftersales activities. Systems revenues represented 41.1% of total revenue for the nine months ended September 30, 2019 compared to 40.2% for the same period in the prior year.

Services revenues were kEUR 8,871 for the nine months ended September 30, 2019 compared to kEUR 10,433 for the same period last year. This decrease of 15.0% was mainly due to significantly lower revenue contributions from the German operation. Revenues from the German operation reflected the slight slowdown of the economy in Western Europe mainly related to the automotive industry. Revenue contributions from voxeljet America as well as voxeljet UK were almost flat. The revenue increase from our Chinese service center was mainly related to a growing market penetration in the Asian sales region, which is accompanied by a larger customer base.

Cost of sales for the nine months ended September 30, 2019 was kEUR 10,747, a decrease of kEUR 394, over cost of sales of kEUR 11,141 for the same period in 2018.

Gross profit and gross profit margin for the nine months ended September 30, 2019 were kEUR 4,304 and 28.6%, respectively, compared to kEUR 6,294 and 36.1% in the prior year period.

Gross profit for our Systems segment decreased to kEUR 1,717 for the nine months ended September 30, 2019 from kEUR 2,051 in the same period in 2018. This decrease was mainly due to the decrease in revenues of kEUR 822. Gross profit from the sale of 3D printers decreases for the nine months ended September 30, 2019 compared to last year’s same period. This was partially offset by increased gross profit from Systems-related revenues. The gross profit margin for this segment was almost flat amounting to 27.8% compared to 29.3% for the prior period.

Gross profit for our Services segment decreased to kEUR 2,587 for the nine months ended September 30, 2019 from kEUR 4,243 in the same period of 2018. This was mainly related to the significant decrease in revenues in our German service center. In addition, gross profit from voxeljet America significantly decreased due to higher depreciation expenses related to a VX4000 system, which was capitalized in the third quarter of 2018. Furthermore, voxeljet UK recorded a restructuring charge of kEUR 284 within the gross profit. The gross profit margin for this segment decreased to 29.2% for the first nine months of 2019 from 40.7% in the same period in 2018. This was mainly related to lower gross profit margin from the German service center as a result of lower utilization but also related to the restructuring of voxeljet UK. Gross profit margin contribution from voxeljet America decreased due to the capitalization of a VX4000 system as mentioned above.

Selling expenses were kEUR 5,125 for the nine months ended September 30, 2019 compared to kEUR 5,384 in the same period in 2018. Shipping and packaging expenses as a main driver of the selling expenses could vary from quarter to quarter depending on quantity and types of products, as well as the destinations where those goods are being delivered. The year over year decrease is mainly due to lower distribution expenses corresponding to the decrease in revenues. The impact on selling expenses for the third quarter of 2019 related to the restructuring of voxeljet UK amounted to kEUR 35.

Administrative expenses increased by kEUR 473 to kEUR 4,591 for the first nine months of 2019 from kEUR 4,118 in the prior year’s period. This was mainly due to the restructuring charges amounting to kEUR 212 which have been recorded at voxeljet UK in the third quarter of 2019. In addition, there was a slight increase in headcount resulting in higher personnel expenses as part of management’s remediation efforts on the material weaknesses in internal controls over financial reporting identified in the prior year.

R&D expenses increased to kEUR 5,295 for the nine months ended September 30, 2019 from kEUR 4,771 in the same period in 2018, an increase of kEUR 524, or 11.0%. The increase was mainly due to increased expenditures for personnel as well as higher material expenses to support existing and future projects. For material expenses, the consumption is usually driven by project type and phase.

Other operating expenses for the nine months ended September 30, 2019 were kEUR 422 compared to kEUR 612 in the prior year period. This was mainly due to lower losses from foreign currency transactions amounting to kEUR 395 for the nine months ended September 30, 2019 compared to kEUR 437 in the prior year’s period.