3D Printing Financials: Stratasys Reports Flat Revenue, Higher Losses, and Busy Printers

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Stratasys‘ (Nasdaq: SSYS) first quarter results of 2024 were mixed. The company saw strong sales of consumables, indicating that customers are heavily using its printers, which boosts recurring revenue. Improved profit margins show that Stratasys is managing its costs well. It also reported positive cash flow and strong demand for its new F3300 system from major customers like Nissan and BAE Systems. However, total revenue fell, operating losses increased, and net losses grew compared to last year. Additionally, the company posted a loss per share, missing earnings expectations and highlighting ongoing financial struggles.

Revenue was $144.1 million, down from $149.4 million in the same quarter last year, suggesting challenges in maintaining sales growth, possibly due to adverse market conditions and pressure from competing firms. Despite the slight drop in total revenue, record sales of consumables indicate customers’ strong ongoing use of its 3D printers, which helped lighten some of the revenue declines. Consumables revenue grew 9.6% to $66.3 million, and within the service revenue segment, customer support revenue remained at strong levels and was up 3.3%, further indicating strong use of the machines.

During an earnings call with investors, CEO Yoav Zeif highlighted this, stating: “Our customers are using their systems at a high level, displaying a promising indication of their increasing reliance on 3D printing, as they expand usage in manufacturing applications while also managing costs.”

The executive underscored Stratasys’ financial discipline and strong balance sheet as key strengths, helping the company manage current economic challenges. He told investors he is confident that once capital spending returns to normal, Stratasys’ advanced printer technologies and materials will drive significant growth and long-term shareholder returns.

Stratasys CEO Yoav Zeif giving the AMS 2024 Keynote Speech. Image courtesy of Sarah Saunders/3DPrint.com.

Net losses presented a more concerning picture. The period witnessed $26 million in losses, up from $22.2 million in the first quarter of 2023. This increase in net loss points to continuing struggles with profitability, potentially driven by higher operational costs or lower efficiency. Stratasys also reported an adjusted (non-GAAP) net loss of $1.7 million, while in the same quarter last year, it had an adjusted net income of $1.1 million. Last year, it made an adjusted profit, but this year, it faced an adjusted loss, stressing the financial difficulties the company is currently experiencing.

Stratasys improved its profit margins this quarter, with gross margins reaching 44.4%, thanks to more sales of consumables and better operational efficiency. However, operating expenses went up to $88.4 million due to recent acquisitions and costs associated with strategic reviews. Despite operational gains, the company’s losses increased, showing struggles to balance costs and revenue.

Stratasys F3300 at work.

Stratasys F3300. Image courtesy of Stratasys

Even with the financial challenges, Stratasys is making significant strides in innovation and market adoption with its new F3300. Hailed as “a breakthrough in FDM industrial 3D printing,” the F3300, launched at the end of 2023, offers up to twice the speed and throughput of standard systems.

The Market response has been strong, with major customers like Toyota, BAE Systems, Sikorsky Aircraft, and Nissan adopting the technology. These companies are leveraging the F3300 to boost production, reduce costs, and improve time to market. Zeif pointed out that the sales funnel for the F3300 is growing, and orders have exceeded expectations in the first half of this year.

Regarding environmental initiatives, Zeif also noted that the company is dedicated to “mindful manufacturing,” partnering with major manufacturers to decarbonize operations and optimize supply chains. In line with this, Stratasys published its second ESG and sustainability report, with achievements in environmental impact, employee health and safety, and ethical conduct.

The Stratasys Parts Provider Network (PPN) provides access to volume discounts on Stratasys systems, materials, service contracts, software, and wholesale pricing for on-demand parts printed through Stratasys Direct Manufacturing.

As for the full-year outlook, Stratasys has reiterated its guidance for 2024, projecting revenue between $630 million and $645 million, compared to $616 million in 2023, excluding divestments. The company expects adjusted gross margins to improve and anticipates full-year operating expenses of $292 million to $297 million.

The forecast also includes a net loss ranging from $88 million to $72 million, or $1.24 to $1.01 per share, which accounts for one-time costs related to exploring strategic options such as mergers, acquisitions, or other financial strategies. Meanwhile, the company projects an adjusted net income between $9 million and $14 million, or $0.12 to $0.19 per share. Also, Stratasys expects adjusted EBITDA of $40 million to $45 million and plans capital expenditures of $20 million to $25 million, with positive cash flow from operations.

University Hospital Birmingham is improving patient outcomes and reducing surgery times with Stratasys printer. Image courtesy of Stratasys.

Since the beginning of the year, Stratasys shares have declined by about 36%, while the S&P 500 has gained 11.2%, showing that Stratasys has performed worse than the overall market. However, on May 29, after the stock market closed at $8.82, Stratasys released its Q1 earnings, with the after-hours market already showing an improvement in the stock price. The next day, the stock opened higher at $9.50. Although the short-term outlook for Stratasys is uncertain, Zeif maintains the company is well-positioned to capitalize on market opportunities once economic conditions stabilize, potentially leading to long-term shareholder returns.

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