Stratasys Ltd. (NASDAQ:
SSYS
Q1 2025 Earnings Call Transcript from May 8, 2025
Stratasys Ltd. surpasses earning forecasts with an EPS of $0.04 compared to the anticipated $0.03.
Operator:
Hello and welcome to the Stratasys First Quarter 2025 Earnings Call. Currently, all attendees will be listening only. Please remember that this call is being recorded. I’m pleased to hand things over to our host today, Yonah Lloyd, who serves as the Chief Communications Officer and Vice President of Investor Relations. Over to you. Feel free to start.
Yonah Lloyd:
Good morning, everybody, and thanks for coming together to go over our projected financial outcomes for the first quarter of 2025. Today’s meeting includes our CEO, Dr. Yoav Zeif, along with our CFO, Eitan Zamir. Just a reminder that you can find both live stream access and the accompanying slides via the link shared in yesterday’s announcement. A recording of this session, complete with the slideshow, will remain accessible under the Investors tab on our official site later on. Do keep in mind though that we’ll touch upon certain predictions concerning anticipated revenues, profit margins, spending plans, tax considerations, overall fiscal health, and general company prospects throughout today’s talk—these projections should not necessarily be taken as guarantees but rather estimates based on current forecasts.
Any assertions about upcoming performance, occurrences, anticipations, or outcomes constitute forward-looking statements. The true results or patterns might diverge considerably from what has been predicted. To understand the risks that may lead to substantial discrepancies between these predictions and real outcomes, consult the risk elements detailed in Stratasys’ annual filings on Form 20-F for the fiscal year 2024. Additionally, review this yearly filing as well as our submissions made to or provided to the Securities and Exchange Commission during 2025 for further insights into our operations and finances. Quarterly updates and periodic notifications on Form 6-K submitted to the SEC furnish recent data pertaining to the corporation’s operational metrics and significant happenings related to our organization.
Stratasys assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. As in previous quarters, today’s call will include GAAP and non-GAAP financial measures. The non-GAAP financial measures should be read in combination with our GAAP metrics to evaluate our performance. Non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today’s press release. I will now turn the call over to our Chief Executive Officer, Dr. Yoav Zeif. Yoav?
Yoav Zeif:
Thank you, Yonah. Good morning, everyone, and thank you for joining us. Our solid first quarter performance continues to demonstrate the resilience of our recurring revenue model and the high utilization rates across our customer base. Our results reinforce our confidence in expanded implementation for years to come. The robust demand for consumables, which grew 7% sequentially, underscores the enduring value placed in Stratasys additive manufacturing systems. Our strategic positioning remains excellent as we continue benefiting from our ongoing investments in R&D that support the introduction of innovative products, materials and software solutions to several customers and enhance our presence as a digital manufacturing leader.
Our strategy for generating long-term value centers on catering to high-growth customer segments propelled by strong global trends. Key among these are enhancing supply chains via nearshoring, advancing next-generation transportation solutions, implementing environmental practices, and relentlessly pursuing operational efficiencies and cost savings through a targeted market focus based on the strongest opportunities. Throughout this process, we maintain careful oversight of our profit margins as we lay down the groundwork for sustainable expansion at Stratasys. In the early part of Q2, we finalized an agreement securing a $120M strategic stake from Fortisseno Capital, which bolstered our liquidity position up to about $270 million without any associated debts. This major deal also welcomed Yuval Cohen—Fortissimo’s founding partner and seasoned finance professional—to join us on our board after his extensive career spanning more than 30 years.
His groundbreaking strategy has generated significant value for both his company and their investment portfolio, and we eagerly anticipate Yuval’s contributions to our board. Let me first address our thoughts on the current tariff developments before discussing the quarterly report. Previously, we mentioned that tariffs do not significantly affect us due to most of our products being manufactured either domestically within the U.S., or internationally in Israel. We remain vigilant regarding media updates but currently foresee minimal financial repercussions.
Regarding expenses, we’re examining several contingency plans ready for implementation when necessary. It should also be noted that additive manufacturing presents an optimal response to high-tariff environments since it supports localized production efficiently and economically.
Tariffs have the potential to act as a sustained positive driver for businesses over the long term, and we anticipate heightened engagement with our clients as we showcase these advantages. Moving on to recent technological advancements and client achievements starting with hardware innovations; we introduced the Neo800 Plus—an enhanced stereolithography 3D printer—that expands upon the legacy of the Neo800 through notable improvements in functionality tailored specifically for sectors requiring precise, high-quality components.
This updated version integrates cutting-edge tech capable of increasing printing velocity by up to half while still ensuring accuracy remains intact. Added dependability functions along with ongoing environmental surveillance ensure maximum operational continuity even when operating at accelerated scanning rates, all without sacrificing output excellence. Paired with our comprehensive suite including GrabCAD Print for preparatory work, supplementary finishing processes, and an upgraded selection of raw materials, the Neo800 Plus delivers a full-service SLA framework designed to optimize manufacturing procedures across various fields such as automobile design, aviation engineering, aerodynamic simulation chambers, preliminary modeling, and equipment fabrication.
We introduced this innovative new tech together with Rivian Automotive—a key core client—at the Rapid Trade Show held in April. Within the aerospace sector, one notable instance showcasing high-rate production through manufacturing is BOOM Supersonic. Here, our FDM lineup plays a crucial role in crafting the upcoming wave of supersonic commercial planes. The XB-1 jet they developed surpassed the speed of sound earlier this year, and we felt honored knowing more than thirty-five critical components aboard utilized our systems. Additionally, over seven hundred fifty drilling templates used throughout the aircraft’s construction process along with the Starlink mounts installed on the pursuit airplane—utilized for real-time broadcasting of events—were all created via our FDM method. This demonstrates clearly how adopting additive manufacturing can yield significant financial benefits; specifically, producing flight control testing ring tools for the XB-1 led to savings up to ninety percent when comparing costs and timelines against traditionally manufactured counterparts.
We’re excited to celebrate the 10th anniversary of our Fortus 450mc with the release of the Gen 3 version. This updated machine is built ready-for-use right from the factory, specifically tailored for demanding tools and production tasks. With 92% of all previously deployed units continuing to operate today, this system has earned a solid reputation as a dependable FDM powerhouse. Building upon that success, the new Gen 3 comes equipped with reinforced components capable of handling advanced materials such as Nylon 12CF. It also includes a license granting complete access to the entire Fortus 450mc material lineup along with improved operational efficiency thanks to integrated GrabCAD Print Pro software, which ensures exceptional accuracy and performance.
Future updates scheduled later this year will introduce compatibility with heat- and flame-retardant composite materials, alongside enhancements aimed at speeding up build times. These improvements aim to broaden the device’s utility across various industrial settings, making it ideal for producing specialized equipment including jigs, fixtures, and more.
The Fortus 450mc Gen 3 reinforces Stratasys’ commitment to delivering reliable, connected solutions that help manufacturers boost output, reduce costs and streamline operations. On the material side, we reached another significant milestone in our effort to scale and accelerate adoption of qualified additive manufacturing with the launch of two new validated Antero materials for the Stratasys F900. These were developed through rigorous qualification collaboration with industry leaders, including Northrop Grumman, Boeing and BAE Systems and several defense organizations, including U.S. Navy and Air Force. The advanced industrial solution materials meet stringent requirements for mission-critical applications in aerospace, defense and other high regulated industries.
The materials offer exceptional resistance to extreme temperatures and harsh chemicals, enabling manufacturers to confidently adopt 3D printing with proven reliability, reduced qualification costs and consistent performance across production sites, empowering faster innovation and deployment of additive manufacturing for qualified end-use applications throughout enterprise operations. We also introduced PolyJet ToughONE, an advanced material that addresses a key point of feedback from our customers, providing PolyJet with functional prototyping capabilities to expand the amount of use cases. The material combines exceptional design precision with functional strength for our high-end platforms, enabling engineers and designers to create prototypes and end-use parts without compromising between aesthetics and durability.
ToughONE enables engineers to transition more quickly from design conception to operational testing, all while ensuring accuracy and efficiency. It also blends effortlessly with other PolyJet materials, facilitating the creation of hybrid prototypes that incorporate various mechanical traits or color variations within one component. Over to Eitan for a discussion on our finances now. Eitan?
Eitan Zamir:
Thank you, Yoav, and good morning to all. This quarter showcased the enduring strength of our operational framework, which sets us apart from peers within our industry. Additionally, the swift responses of our team enabled us to achieve notable reductions in operating expenses along with increased profitability at the bottom line, even amid revenue challenges. These robust outcomes can be attributed partly to an uptick in sequential sales of consumables and the complete impact of cost-saving measures initiated halfway through the previous year. Let me now delve deeper into these figures. In the initial quarter, total revenue stood at $136 million versus $144.1 million during the corresponding period in 2024, reflecting customer hesitance towards substantial capital expenditures pending resolution of current economic uncertainties.
In the first quarter, product revenue stood at $93.8 million versus $99.2 million for the corresponding time frame from the previous year. For services, revenues amounted to $42.2 million as opposed to $44.9 million during the comparable prior-year timeframe. Breaking down the product revenue further, systems generated $31.2 million contrasted with our output of $32.9 million seen previously over this period. Revenue from consumables reached $62.6 million against $66.3 million recorded in the equivalent segment last year; however, when measured sequentially across quarters, sales of these items increased roughly by 7%. The utilization rate for systems dispatched has stayed robust, and we foresee an uptick in consumable-related earnings on a yearly comparison between 2025 and 2024.
Regarding service income, client support brought in $30 million compared to $31.4 million reported in the like-for-like part of the preceding fiscal year.
Shifting focus now to gross margins: For this quarter, the GAAP gross margin stood at 44.3%, down slightly from 44.4% recorded over the comparable time frame last year. In terms of non-GAAP metrics, the gross margin came out as 48.3%, marking a minor drop from 48.6% seen previously within the corresponding timeframe. This slight dip can be attributed largely to reduced revenues.
In relation to operating expenses under Generally Accepted Accounting Principles (GAAP), these amounted to $72.6 million, representing 53.4% of total revenue—this contrasts sharply against $88.4 million or an expenditure rate of 61.3% observed in the previous similar interval. Such reductions stem directly from ongoing efforts aimed at cutting operational expenditures alongside avoiding additional spending linked specifically to strategies assessed throughout fiscal 2024.
Nonetheless, when adjusting for certain accounting practices and considering Non-GAAP figures instead, operating expenses dipped further to $62.6 million, equating to just 46% of overall sales; notably less than the $71.2 million which accounted for around 49.4% of revenue reported earlier. These improvements predominantly arise because of decreased personnel costs, partly resulting from efficiency measures introduced towards the latter portion of the preceding year.
Concerning our combined financial performance, we reported a GAAP operating loss of $12.4 million this quarter versus a loss of $24.5 million during the corresponding period from the previous year. On a non-GAAP basis, however, we achieved an operating profit of $3 million as opposed to an operating deficit of $1.2 million over the comparable timeframe before, highlighting reductions in operational costs stemming from our austerity measures. In terms of overall profitability under GAAP standards, we incurred a net loss totaling $13.1 million or $0.18 per diluted common stock share for the current quarter against a prior-year equivalent net shortfall of $26 million or $0.37 per diluted common stock share. From a non-GAAP perspective, though, our quarterly net revenue stood at $2.9 million or $0.04 per diluted share relative to a former shortcoming of $1.7 million or $0.02 per diluted share within the like-for-like seasonality-adjusted span previously mentioned. Lastly, adjusted EBITDA came out at $8.2 million for these three months contrastingly with $4.1 million throughout those identical days one fiscal cycle ago.
In terms of cash flow, we produced $4.5 million from operational activities this time around, down from $7.3 million during the corresponding timeframe previously. As of quarter’s end, we held onto $150.1 million in cash, including equivalents and short-term deposits—a figure that hasn’t changed much since December 2024. The strength of our financial position stands firm at $270 million without any debts following an injection of $120 million into Stratasys via Fortissimo investments back in early April, which has enhanced our readiness to pursue lucrative ventures.
Looking ahead to 2025, we maintain our forecast predicting annual revenues within the bracket of $570 million to $585 million, showing sequential growth over the course of the year. Additionally, we stand by our projections regarding non-GAAP gross margin, operating costs, profit margins, adjusted EBITDA figures, and planned capital expenditure levels.
We anticipate seeing year-on-year increases in both operational and free cash flow. For further information, please consult the press release. Consequently, we are upgrading our earnings per share projections. Due to the Fortissimo investment, our number of shares increased by around 11.65 million as of April 8th. The outlook anticipates that the Fortissimo investment will yield interest income across all quarters of 2025, which should compensate for the reduction in earnings caused by the rise in share numbers. Therefore, we are elevating our earnings forecasts accordingly. Now, we project a GAAP net loss within the range of negative $64 million to negative $49 million—an enhancement over the prior projected range of negative $68 million to negative $53 million.
We now anticipate GAAP earnings per share to rise to a range between negative $0.80 and negative $0.61 from the prior forecast of negative $0.93 to negative $0.72. Additionally, we are raising our non-GAAP net income outlook to a new span of $24 million to $30 million, up from the earlier estimate of $20 million to $26 million, along with an upward revision of EPS to a band of $0.30 to $0.37 per diluted share versus the former projection of $0.28 to $0.35 per diluted share. Now, I will hand the discussion back to Yoav for his concluding comments. Over to you, Yoav.
Yoav Zeif:
Thank you, Eitan. The beginning of 2025 has laid down a robust base for what lies ahead. Thanks to our strategic efforts in cutting costs, constant innovations in products, and deeper incorporation into our clients’ production processes, Stratasys is excellently poised. This readiness is further strengthened by the Fortisseno investment, which amplifies our ability to explore internal development prospects as well as targeted buyouts consistent with our strategy for profitable growth. We’ve sharpened our concentration on high-potential areas while improving how we engage with customers via better market approaches and thorough educational resources. Our steadfast dedication to boosting profit margins alongside fiscal prudence guarantees an emphasis not only on immediate outcomes but also future wealth generation.
Given our robust lineup spanning systems, consumables, and software solutions, Stratasys is well-placed to benefit from increased market activity once the capital expenditure cycle picks up speed. Now, we can move on to taking some questions. Over to you, operator.
To proceed with the Q&A session, kindly continue below.
click here
.
