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  • 8/10/2019 Piper Jaffray CES 2015

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    I N D U S T RY N O T EJ a n u a r y 1 2 , 2 0 1 5

    Networking Technologies, 3D Printing & Robotics3D Printing, Robotics, and Drones See Strong Interest At CES 2015

    Troy D. Jensen, CFA

    Sr Research Analyst, Piper Jaffray & Co.612 303-6291, [email protected] R. BohligResearch Analyst, Piper Jaffray & Co.612 303-6987, austin.r.bohlig @pjc.com

    Related Companies: Share Price:AVAV 26.14DDD 32.63IRBT 32.80MTLS 9.57SSYS 77.76

    RISKS

    Competition, macro sl owdown, FAAregulation, ASP erosion.

    CONCLUSION

    We recently attended CES 2015, and left the conference with the conclusion that theinterest for 3D printing, robotics, and drones is starting to gain significant momentum.Although we still believ e that the 3D consumer market is a ways out unti l mainstreamadoption, we walked away from our meetings with MakerBot, 3D Systems, andMaterialise incrementally more positive about the consumer space and believe interestfor this technology continues to grow. However, we still believe near-term growth inthis industry will be driven by industrial applications. With the recent launch of ournew Robotics universe, we were glad to see that interest/demand is growing for robotand unmanned system technology. Specifically, we are big believers in the unmannedaerial vehicle space, and feel the market potential could be huge for various commercialapplications, however tight FAA regulation has continued to drag on this market.

    Increased Competition In The 3D Consumer Space. Most of the big names in the3D industry attended the expo including 3D Systems, MakerBot (Stratasys) andMaterialise, as well a s a number of up and coming brands. We did not see anythingindustry changing introduced this year, but were surprised with the number of newconsumer companies presenting at the show (15). While we believe the consumer 3Dspace is bound to be much more competitive going forward, we feel this market is stillin its early stages and too small to determine a market leader. We still believe growthin the overall 3D industry will be driven by industrial applications.

    Autodesk Reveals Ember and Spark Platform. Autodesk was also in attendance thisyear showing off their new Ember DLP printer, as well as their new Spark operatingplatform. After talking with representatives from the company we continue to believethat Autodesk will be more focused on the 3D software market, and using thecompany's Ember printer to showcase the software capabilities. Since Spark is stillyet to be released for broader distribution, we were unable to determine how thesoftwares computing functions compare to other platforms including Materialisessoftware packages.

    UAVs Fly Away With CES Headlines. This years conference was filled with a diverselineup of robots, which included entertainment, home cleaning, telecommunication,and industrial robots, however the unmanned system marketplace stole the headlines.The unmanned system portion of the show covered over 6,500 square feet of space,where unmanned aerial vehicles (UAV) took center stage with about 16 high-endcommercial and consumer drone companies presenting. Unfortunately, the FAA stillhas tight restrictions put on UAV use in the U.S. air space and it is still against the law to

    use UAVs for commercial applications without prior authorization, but after talkingwith representatives from these companies we continue to believe the commercial UAVmarket potential could be massive.

    Page 1 of 16

    Piper Jaffray does and seeks to do business with companies covered in its research reports. As a result, investors should be awarethat the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as

    only a single factor in making their investment decisions. This report should be read in conjunction with important disclosureinformation, in cluding an attestation under Regulation Analyst certification, found on pages 12 - 16 of this report or at thefollowing site: http://www.piperjaffray.com/researchdisclosures

    http://www.piperjaffray.com/researchdisclosureshttp://www.piperjaffray.com/researchdisclosureshttp://www.piperjaffray.com/researchdisclosureshttp://www.piperjaffray.com/researchdisclosureshttp://www.piperjaffray.com/researchdisclosureshttp://www.piperjaffray.com/researchdisclosureshttp://www.piperjaffray.com/researchdisclosureshttp://www.piperjaffray.com/researchdisclosuresmailto:[email protected]:[email protected]
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    COMPANY NOTEJanuary 12t h , 2015

    We recently attended the Consumer Electronics Show (CES), the largest consumerelectronics show in world, to see what is new in the consumer side of the 3D printing space.Most of the big names in the industry attended the expo including 3D Systems, MakerBot(Stratasys), Materialise, and a host of newer start-ups including Formlabs, Mcor, XYZPrinting, Airwolf 3D, MarkForged and numerous others. We were fortunate to chat withthe executives from most of these companies and discussed the current state of the 3Dprinting market. While we still believe the consumer 3D printing market is a ways out untilmainstream adoption, we walked away from our meetings incrementally more positiveabout the space and believe interest for this technology will continue to grow. We did notsee anything industry changing introduced this year, but we were surprised with thenumber of new consumer companies presenting at the show. There were over 15 differentconsumer 3D exhibitors this year and the majority of their machines ran on fuseddeposition modeling (FDM) technology, but a few were displaying liquid basedtechnologies. While we believe the consumer 3D printing space is bound to be much morecompetitive going forward, we feel this market is still in its early stages and too small tohave a material impact on some of the established players. We continue to believe growth inthis industry will be driven by industrial applications.

    With the launch of our new Robotics coverage universe, we also toured the expo examiningnew robot and unmanned system technology. This years conference was filled with adiverse lineup of robots, which included entertainment, home cleaning, telecommunication,and industrial robots. However, in our opinion the unmanned system marketplace seemedto steal all the headlines. The unmanned system portion of the show covered over 6,500square feet of space, where unmanned ariel vehicles (UAV) took center stage with about 16high-end commercial and consumer UAV companies presenting. With the emergingcommercial market hopefully gaining traction once favorable regulations are put in place,we believe small UAV companies and drone developers all around the world will benefithandsomely including AeroVironment. In the following paragraphs we highlight the keytakeaways from our meetings with a variety of 3D printing, robotics, and UAV companies.

    3D Systems made some noise prior to the CES show when they announced the acquisitionof botObjects, which is a U.K.-based 3D printer startup that develops a desktop 3D printercapable of blending colors. The company uses a 5-color cartridge system, and utilizes FDMtechnology to produce plastic parts. The blending occurs within the extruder nozzle whichallows the company to produce multiple different colors one layer at a time. We have yet tosee this type of blending FDM technology and were impressed with its initial capabilities.The botObjects system will be made available immediately, and 3D Systems will bring thisprinter to market under the name CubePro C. While the company has only been in businesssince 2013, 3D Systems expects the acquisition to be accretive to its business in 2015.

    3D Systems also announced the release of their new eco-friendly printer, Ekocycle, whichuses recycled plastic bottles as its building material. The CubePro C and Ekocycle will beadded to the c ompanys current line of consumer printers : the CubePro, Cube Pro Duo, andCube Pro Trio. 3D Systems also had the ChefJet on display again, and plans to launch thissystem in second half of 2015. The ChefJet is a food printer that uses sugar and a bindingagent to develop unique sugar candies. New to the show was the CocoJet, which printschocolate pieces of candy, however this technology is still under development and does notexpect to start shipping until 2016 (we expect to see it next year at CES 2016) . Below weexhibit the recently acquired botObject CubePro C printer, as well as a printed object fromthe new machine to show the system s color blending capabilities.

    CES 2015 Overview

    3D Systems Displays

    New FDM Color Printer

    Page 2 of 16

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    COMPANY NOTEJanuary 12t h , 2015

    To summarize, 3D Systems has brought plenty of new products to market, but only timewill tell if these products will turn into meaningful revenues. In the previous two quarters,consumer sales have dragged on the companys organic growth rate, but management feelsthat all quality issues have been fixed and ready to ramp shipping. We do believe increasedconsumer sales could help the companys organic growth rate, but we believe there is moreto the story that makes us cautious on DDD shares.

    We were also able to sit down with Materialise CEO, Fried VanCraen, to discuss their roleat CES. While Material ises core business does not target the consumer market, one of thecompanys growth businesses, i.materialise, is trying to connect consumers with 3D printedproducts. This segment of the business is still emerging, but the company has seencontinued growth. The company recently sold its first franchise license for i.materialise to

    a company located in China. Interest in 3D technology has grown drastically in the Asiaregion, and Materialise feels that the most cost-effective way to penetrate that market is tofranchise the name. As i.materialise continues to gain further interest, the company willcontinue to franchise i.materialise around the globe.

    For the companys other segments, we came away from the meeting believing software andindustrial sales are continuing to see strong demand and tracking in line with the companysexpectations. In fact, it sounds like the company may have seen an unexpected uptick inindustrial sales due to an increase in prototypes and end-used part orders. The companyhad believed starting in 2014 prototyping sales would flatten out and demand for end-usedparts would drive the segment. We believe 3D printed prototypes have remained strong andmay result in higher than expected industrial sales, but are uncertain if they would bematerial to the bottom line. We also believe the companys growth business, RapidFit, iscontinuing to see strong growth. While software and industrial sales have been strong inrecent quarters, the flattening medical sales have been the real issue. To get the medicalsegment rolling again, the company continues to expand their medical channels anddistribution network throughout the United States and Europe, as well as investing in theirnext generation X-ray knee guide technology that they hope to launch in mid-2015. Weview the X-ray offering as a very large market opportunity and the most important growthdriver for the company.

    Exhibit 1

    B O TO B J E C T S C U B E P R O C

    Source: PJC Research, 3Dprintr.com

    Materialise - Softwareand Industrial SalesContinue To Grow

    Page 3 of 16

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    COMPANY NOTEJanuary 12t h , 2015

    Autodesk was also in attendance this year, showing off their new Ember SLA printer, aswell as their new Spark operating platform. After talking with representatives from thecompany we continue to believe that Autodesk will be more focused on the 3D softwaremarket, and using the company s Ember printer to show off the software capabilities. SinceSpark is still yet to be released for broader distribution, we were unable to determine howthe softwares computing functions compares to other platforms including Materialises

    software packages. We do not expect the company to release any new hardware in the nearfuture, but do believe that the company has new technologies in the pipeline.

    Of all the 3D printing exhibits we visited , MakerBots (Stratasys) booth was definitely oneof the largest. On display was the companys 5 th generation of portfolio printers, as well asa variety of printed parts made from MakerBot systems. Although there was not much newto show at the MakerBot booth, the theme of this years CES show was to explain tocustomers the numerous applications 3D printing technology can add value to, as well asrevealing the added professional services MakerBot now offers to its customers. To helpincrease adoption rates and help customers understand the technology, MakerBot nowoffers an entire 3D eco -system of services including expert consulting, education, designservices, and various new software applications. We feel education and software skills arethe two factors dragging on the consumer market, and we were pleased to see MakerBottake action and try and shorten the gap.

    MakerBot e xecutives in attendance at this years CES conference were CEO Jenny Lawtonand President Frank Alfano, whom we hosted at our investor dinner Tuesday night. Afterdiscussions with management, we feel the companys strategy will be to continue to developthis entire 3D eco -system, focusing on material, software, and hardware innovation.After the acquisition of GrabCAD, we are believers that Stratasys and MakerBot have madesoftware development a high priority. Demand trends seem to be stable in the quarter,which the company has historically seen higher sales coming in Q4 as well as in Q2. Withmore consumer 3D printers coming to market at a lower price point, we were curious ifMakerBot has seen any pricing pressure. They did mention that the competition is heatingup in the consumer space and has seen some pricing pressure, but they believe their newprofessional service offerings will bring unprecedented value to the MakerBot brand andjustify the company selling their printer higher than the competition. Also the consumermarket is still in its early stages, and there is no need to race to the bottom of the marketthis early in the market cycle.

    As previously mentioned, the unmanned aerial system marketplace received some of thebiggest headlines coming out of CES, and we were specifically impressed with the foottraffic and interest UAVs received this year. There were about 16 different UAV companieswhich are mostly located outside of the United States. The top names in the consumer UAVmarket include DJI, 3D Robotics and Ehang Inc, but in the past few months more and morecompanies are entering the space. Unfortunately, the FAA still has tight restrictions put onUAV use in the U.S. air space and it is still against the law to use UAVs for commercialapplications without prior authorization, but after talking with representatives from thesecompanies we continue to believe the commercial UAV market potential could be massive.The industry contacts we spoke to are starting to see UAVs used for a number of differentapplications including surveying wildlife, farming, search and rescue missions, as well assports filming.

    We were also very impressed with the technological innovation behind the dronetechnology. We spoke to a couple UAV companies that have GPS built into the drone,which helps prevent the drone from breaking any of the current FAA flying regulations. Forexample, drones are not currently allowed to fly above 400ft or within five miles ofairports. If a drone tries crossing one of these restricted areas, the GPS will not allow the

    Autodesk ShowcasesEmber and Spark For TheFirst Time

    MakerBot ExpandsProfessional ServiceOffering

    UAVs Flying Away WithCES Headlines

    Page 4 of 16

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    COMPANY NOTEJanuary 12t h , 2015

    drone to fly further up or towards the airport. We believe GPS technology could be crucialin the implementation of drones into the United States airspace, and at the same time helpthe public feel safer about drones. Also, nearly every drone had a camera attached andcapable of streaming live video, and some drones were even capable of being controlled bypersonal smartphones or tablet devices. It is truly amazing how advanced some of thisdrone technology is and we are big believers in the space, but until we receive a bit more

    color on future FAA regulation we cannot tell when that inflection point for UAVs willcome. Below we exhibit two examples of drone technology that were being shown at CES isthis year.

    We left CES 2015 extremely impressed with the interest and foot traffic 3D printing,robotics, and unmanned aerial vehicles received at this years expo. Although we stillbelieve that the 3D consumer market is a ways out until mainstream adoption, we walkedaway from our meetings with MakerBot, 3D Systems, and Materialise incrementally morepositive about the 3D printing space and believe interest for this technology continues togrow. Although nothing industry changing came from 3D names, we were surprised to seethe number of new companies at the show this year. While we believe the consumer 3Dspace is bound to be much more competitive going forward, we feel this market is still in itsearly stages and too small to determine a market leader and that growth in this industrywill be driven by industrial applications for the foreseeable future. With the recent launchof our new Robotics universe, we were glad to see that interest/demand is growing forrobot and unmanned system technology. In our opinion, the unmanned systemmarketplace seemed to have stolen most of the headlines. We are big believers in futurerobot adoption, but feel the market potential could be huge for various UAV commercialapplications, however, tight FAA regulation has continued to drag on the commercial dronemarket.

    Exhibit 2

    D J I P H A N TO M D R O N E ( L E F T ) A N D G H O S T D R O N E ( R I G H T )

    Source: PJC Research, DJI, Ehang

    Conclusion

    Page 5 of 16

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    COMPANY NOTEJanuary 12t h , 2015

    We recently attended the Consumer Electronics Show (CES), the largest consumerelectronics show in world, to see what is new in the consumer side of the 3D printing space.Most of the big names in the industry attended the expo including 3D Systems, MakerBot(Stratasys), Materialise, and a host of newer start-ups including Formlabs, Mcor, XYZPrinting, Airwolf 3D, MarkForged and numerous others. We were fortunate to chat withthe executives from most of these companies and discussed the current state of the 3Dprinting market. While we still believe the consumer 3D printing market is a ways out untilmainstream adoption, we walked away from our meetings incrementally more positiveabout the space and believe interest for this technology will continue to grow. We did notsee anything industry changing introduced this year, but we were surprised with thenumber of new consumer companies presenting at the show. There were over 15 differentconsumer 3D exhibitors this year and the majority of their machines ran on fuseddeposition modeling (FDM) technology, but a few were displaying liquid basedtechnologies. While we believe the consumer 3D printing space is bound to be much morecompetitive going forward, we feel this market is still in its early stages and too small tohave a material impact on some of the established players. We continue to believe growth inthis industry will be driven by industrial applications.

    With the launch of our new Robotics coverage universe, we also toured the expo examiningnew robot and unmanned system technology. This years conference was filled with adiverse lineup of robots, which included entertainment, home cleaning, telecommunication,and industrial robots. However, in our opinion the unmanned system marketplace seemedto steal all the headlines. The unmanned system portion of the show covered over 6,500square feet of space, where unmanned ariel vehicles (UAV) took center stage with about 16high-end commercial and consumer UAV companies presenting. With the emergingcommercial market hopefully gaining traction once favorable regulations are put in place,we believe small UAV companies and drone developers all around the world will benefithandsomely including AeroVironment. In the following paragraphs we highlight the keytakeaways from our meetings with a variety of 3D printing, robotics, and UAV companies.

    3D Systems made some noise prior to the CES show when they announced the acquisitionof botObjects, which is a U.K.-based 3D printer startup that develops a desktop 3D printercapable of blending colors. The company uses a 5-color cartridge system, and utilizes FDMtechnology to produce plastic parts. The blending occurs within the extruder nozzle whichallows the company to produce multiple different colors one layer at a time. We have yet tosee this type of blending FDM technology and were impressed with its initial capabilities.The botObjects system will be made available immediately, and 3D Systems will bring thisprinter to market under the name CubePro C. While the company has only been in businesssince 2013, 3D Systems expects the acquisition to be accretive to its business in 2015.

    3D Systems also announced the release of their new eco-friendly printer, Ekocycle, whichuses recycled plastic bottles as its building material. The CubePro C and Ekocycle will beadded to the c ompanys current line of consumer printers : the CubePro, Cube Pro Duo, andCube Pro Trio. 3D Systems also had the ChefJet on display again, and plans to launch thissystem in second half of 2015. The ChefJet is a food printer that uses sugar and a bindingagent to develop unique sugar candies. New to the show was the CocoJet, which printschocolate pieces of candy, however this technology is still under development and does notexpect to start shipping until 2016 (we expect to see it next year at CES 2016) . Below weexhibit the recently acquired botObject CubePro C printer, as well as a printed object fromthe new machine to show the system s color blending capabilities.

    CES 2015 Overview

    3D Systems Displays

    New FDM Color Printer

    Page 7 of 16

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    COMPANY NOTEJanuary 12t h , 2015

    To summarize, 3D Systems has brought plenty of new products to market, but only timewill tell if these products will turn into meaningful revenues. In the previous two quarters,consumer sales have dragged on the companys organic growth rate, but management feelsthat all quality issues have been fixed and ready to ramp shipping. We do believe increasedconsumer sales could help the companys organic growth rate, but we believe there is moreto the story that makes us cautious on DDD shares.

    We were also able to sit down with Materialise CEO, Fried VanCraen, to discuss their roleat CES. While Material ises core business does not target the consumer market, one of thecompanys growth businesses, i.materialise, is trying to connect consumers with 3D printedproducts. This segment of the business is still emerging, but the company has seencontinued growth. The company recently sold its first franchise license for i.materialise to

    a company located in China. Interest in 3D technology has grown drastically in the Asiaregion, and Materialise feels that the most cost-effective way to penetrate that market is tofranchise the name. As i.materialise continues to gain further interest, the company willcontinue to franchise i.materialise around the globe.

    For the companys other segments, we came away from the meeting believing software andindustrial sales are continuing to see strong demand and tracking in line with the companysexpectations. In fact, it sounds like the company may have seen an unexpected uptick inindustrial sales due to an increase in prototypes and end-used part orders. The companyhad believed starting in 2014 prototyping sales would flatten out and demand for end-usedparts would drive the segment. We believe 3D printed prototypes have remained strong andmay result in higher than expected industrial sales, but are uncertain if they would bematerial to the bottom line. We also believe the companys growth business, RapidFit, iscontinuing to see strong growth. While software and industrial sales have been strong inrecent quarters, the flattening medical sales have been the real issue. To get the medicalsegment rolling again, the company continues to expand their medical channels anddistribution network throughout the United States and Europe, as well as investing in theirnext generation X-ray knee guide technology that they hope to launch in mid-2015. Weview the X-ray offering as a very large market opportunity and the most important growthdriver for the company.

    Exhibit 1

    B O TO B J E C T S C U B E P R O C

    Source: PJC Research, 3Dprintr.com

    Materialise - Softwareand Industrial SalesContinue To Grow

    Page 8 of 16

  • 8/10/2019 Piper Jaffray CES 2015

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    COMPANY NOTEJanuary 12t h , 2015

    Autodesk was also in attendance this year, showing off their new Ember SLA printer, aswell as their new Spark operating platform. After talking with representatives from thecompany we continue to believe that Autodesk will be more focused on the 3D softwaremarket, and using the company s Ember printer to show off the software capabilities. SinceSpark is still yet to be released for broader distribution, we were unable to determine howthe softwares computing functions compares to other platforms including Materialises

    software packages. We do not expect the company to release any new hardware in the nearfuture, but do believe that the company has new technologies in the pipeline.

    Of all the 3D printing exhibits we visited , MakerBots (Stratasys) booth was definitely oneof the largest. On display was the companys 5 th generation of portfolio printers, as well asa variety of printed parts made from MakerBot systems. Although there was not much newto show at the MakerBot booth, the theme of this years CES show was to explain tocustomers the numerous applications 3D printing technology can add value to, as well asrevealing the added professional services MakerBot now offers to its customers. To helpincrease adoption rates and help customers understand the technology, MakerBot nowoffers an entire 3D eco -system of services including expert consulting, education, designservices, and various new software applications. We feel education and software skills arethe two factors dragging on the consumer market, and we were pleased to see MakerBottake action and try and shorten the gap.

    MakerBot e xecutives in attendance at this years CES conference were CEO Jenny Lawtonand President Frank Alfano, whom we hosted at our investor dinner Tuesday night. Afterdiscussions with management, we feel the companys strategy will be to continue to developthis entire 3D eco -system, focusing on material, software, and hardware innovation.After the acquisition of GrabCAD, we are believers that Stratasys and MakerBot have madesoftware development a high priority. Demand trends seem to be stable in the quarter,which the company has historically seen higher sales coming in Q4 as well as in Q2. Withmore consumer 3D printers coming to market at a lower price point, we were curious ifMakerBot has seen any pricing pressure. They did mention that the competition is heatingup in the consumer space and has seen some pricing pressure, but they believe their newprofessional service offerings will bring unprecedented value to the MakerBot brand andjustify the company selling their printer higher than the competition. Also the consumermarket is still in its early stages, and there is no need to race to the bottom of the marketthis early in the market cycle.

    As previously mentioned, the unmanned aerial system marketplace received some of thebiggest headlines coming out of CES, and we were specifically impressed with the foottraffic and interest UAVs received this year. There were about 16 different UAV companieswhich are mostly located outside of the United States. The top names in the consumer UAVmarket include DJI, 3D Robotics and Ehang Inc, but in the past few months more and morecompanies are entering the space. Unfortunately, the FAA still has tight restrictions put onUAV use in the U.S. air space and it is still against the law to use UAVs for commercialapplications without prior authorization, but after talking with representatives from thesecompanies we continue to believe the commercial UAV market potential could be massive.The industry contacts we spoke to are starting to see UAVs used for a number of differentapplications including surveying wildlife, farming, search and rescue missions, as well assports filming.

    We were also very impressed with the technological innovation behind the dronetechnology. We spoke to a couple UAV companies that have GPS built into the drone,which helps prevent the drone from breaking any of the current FAA flying regulations. Forexample, drones are not currently allowed to fly above 400ft or within five miles ofairports. If a drone tries crossing one of these restricted areas, the GPS will not allow the

    Autodesk ShowcasesEmber and Spark For TheFirst Time

    MakerBot ExpandsProfessional ServiceOffering

    UAVs Flying Away WithCES Headlines

    Page 9 of 16

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    COMPANY NOTEJanuary 12t h , 2015

    drone to fly further up or towards the airport. We believe GPS technology could be crucialin the implementation of drones into the United States airspace, and at the same time helpthe public feel safer about drones. Also, nearly every drone had a camera attached andcapable of streaming live video, and some drones were even capable of being controlled bypersonal smartphones or tablet devices. It is truly amazing how advanced some of thisdrone technology is and we are big believers in the space, but until we receive a bit more

    color on future FAA regulation we cannot tell when that inflection point for UAVs willcome. Below we exhibit two examples of drone technology that were being shown at CES isthis year.

    We left CES 2015 extremely impressed with the interest and foot traffic 3D printing,robotics, and unmanned aerial vehicles received at this years expo. Although we stillbelieve that the 3D consumer market is a ways out until mainstream adoption, we walkedaway from our meetings with MakerBot, 3D Systems, and Materialise incrementally morepositive about the 3D printing space and believe interest for this technology continues togrow. Although nothing industry changing came from 3D names, we were surprised to seethe number of new companies at the show this year. While we believe the consumer 3Dspace is bound to be much more competitive going forward, we feel this market is still in itsearly stages and too small to determine a market leader and that growth in this industrywill be driven by industrial applications for the foreseeable future. With the recent launchof our new Robotics universe, we were glad to see that interest/demand is growing forrobot and unmanned system technology. In our opinion, the unmanned systemmarketplace seemed to have stolen most of the headlines. We are big believers in futurerobot adoption, but feel the market potential could be huge for various UAV commercialapplications, however, tight FAA regulation has continued to drag on the commercial dronemarket.

    Exhibit 2

    D J I P H A N TO M D R O N E ( L E F T ) A N D G H O S T D R O N E ( R I G H T )

    Source: PJC Research, DJI, Ehang

    Conclusion

    Page 10 of 16

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    COMPANY NOTEJanuary 12t h , 2015

    3D Systems (DDD) is Neutral rated with a $35 PT based on a 4.2x EV/S multiple applied toour FY15 estimate. Risks include competition for other suppliers, potential market shareloses, integration risk and inability to reach operating margin targets.

    Materialise (MTLS) is Overweight rated with an $15 PT based on a 5.3x EV/S multipleapplied to our FY15 estimate. Risks include customer concentration within the Medical

    segment, increased competition, economic slowdown

    Stratasys (SSYS) is Overweight rated with a $120 PT based on 30x fully taxed 2016operating income + Cash. Risks include margin pressure, competition from low costprinters, macro-economic slowdown.

    iRobot (IRBT) is Overweight rated with a $42 PT based on 20x fully taxed 2016 operatingincome + Cash. Risks include lump Revenues, increased Competition, macroeconomicslowdown, ASP erosion

    AeroVironment (AVAV) is Neutral rated with a $28 PT based on 1.6x EV/FY16E Sales.Risks include Lumpy revenues, DoD budget spending, increasing competition, macroslowdown

    Price Target

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    I N D U S T RY N O TJ a n u a r y 1 2 , 2 0 1

    IMPORTANT RESEARCH DISCLOSURES

    Page 12 of 16

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    I N D U S T RY N O TJ a n u a r y 1 2 , 2 0 1

    Notes: The boxes on the Rating and Price Target History chart above indicate the date of the Research Note, the rating, and the price target. Each

    box represents a date on which an analyst made a change to a rating or price target, except for the first box, which may only represent the first Notewritten during the past three years.

    Legend:I: Initiating CoverageR: Resuming CoverageT: Transferring CoverageD: Discontinuing CoverageS: Suspending CoverageOW: OverweightN: NeutralUW: UnderweightNA: Not AvailableUR: Under Review

    Distribution of Ratings/IB ServicesPiper Jaffray

    IB Serv./Past 12 Mos.

    Rating Count Percent Count Percent

    BUY [OW] 383 61.28 96 25.07

    HOLD [N] 228 36.48 21 9.21

    SELL [UW] 14 2.24 0 0.00

    Note: Distribution of Ratings/IB Services shows the number of companies currently in each rating category from which Piper Jaffray and its affiliatesreceived compensation for investment banking services within the past 12 months. FINRA rules require disclosure of which ratings most closely

    correspond with "buy," "hold," and "sell" recommendations. Piper Jaffray ratings are not the equivalent of buy, hold or sell, but instead represent

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    I N D U S T RY N O TJ a n u a r y 1 2 , 2 0 1

    recommended relative weightings. Nevertheless, Overweight corresponds most closely with buy, Neutral with hold and Underweight with sell. SeeStock Rating definitions below.

    Analyst Certification Troy D. Jensen, CFA, Sr Research AnalystAnalyst Certification Austin R. Bohlig, Research AnalystThe views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.

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    I N D U S T RY N O TJ a n u a r y 1 2 , 2 0 1

    Research DisclosuresPiper Jaffray usually provides bids and offers for the securities of AeroVironment, Inc. and will, from time to time, buy and sell AeroVironment,Inc. securities on a principal basis.

    Piper Jaffray was making a market in the securities of 3D Systems Corporation at the time this research report was published. Piper Jaffray will buyand sell 3D Systems Corporation securities on a principal basis.Within the past 3 years Piper Jaffray participated in a public offering of, or acted as a dealer manager for, 3D Systems Corporation securities.

    Piper Jaffray usually provides bids and offers for the securities of iRobot Corporation and will, from time to time, buy and sell iRobot Corporationsecurities on a principal basis.Piper Jaffray was making a market in the securities of Materialise NV at the time this research report was published. Piper Jaffray will buy and sellMaterialise NV securities on a principal basis.

    Piper Jaffray has received compensation for investment banking services from or has had a client relationship with Materialise NV within the past12 months.

    Within the past 12 months Piper Jaffray was a managing underwriter of a public offering of, or dealer manager of a tender offer for, the securitiesof Materialise NV or the securities of an affiliate.Within the past 3 years Piper Jaffray participated in a public offering of, or acted as a dealer manager for, Materialise NV securities.

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    Rating DefinitionsStock Ratings: Piper Jaffray ratings are indicators of expected total return (price appreciation plus dividend) within the next 12 months. At timesanalysts may specify a different investment horizon or may include additional investment time horizons for specific stocks. Stock performanceis measured relative to the group of stocks covered by each analyst. Lists of the stocks covered by each are available at www.piperjaffray.com/researchdisclosures. Stock ratings and/or stock coverage may be suspended from time to time in the event that there is no active analyst opinionor analyst coverage, but the opinion or coverage is expected to resume. Research reports and ratings should not be relied upon as individualinvestment advice. As always, an investors decision to buy or sell a security must depend on individual circumstances, including existing holdings,time horizons and risk tolerance. Piper Jaffray sales and trading personnel may provide written or oral commentary, trade ideas, or otherinformation about a particular stock to clients or internal trading desks reflecting different opinions than those expressed by the researchanalyst. In addition, Piper Jaffray technical research products are based on different methodologies and may contradict the opinions contained

    in fundamental research reports. Overweight (OW): Anticipated to outperform relative to the median of the group of stocks covered by the analyst. Neutral (N): Anticipated to perform in line relative to the median of the group of stocks covered by the analyst. Underweight (UW): Anticipated to underperform relative to the median of the group of stocks covered by the analyst.

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