Release Date: May 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross margins improved to 44.4% GAAP and 48.6% non-GAAP, reflecting better operational efficiency and a higher mix of consumables.
- Consumables recurring revenue reached a record high, indicating strong utilization of existing systems.
- Generated over $7 million in operating cash and $4 million in free cash flow, demonstrating strong financial discipline.
- Healthy balance sheet with $161.1 million in cash, providing stability and optionality for growth through organic investments and acquisitions.
- Strong interest and engagement in the new F3300 3D printer, with orders surpassing expectations and notable customers like Toyota, BAE Systems, Sikorsky, and Nissan.
Negative Points
- Consolidated revenue of $144.1 million was down 3.5% compared to Q1 2023, reflecting ongoing macroeconomic challenges.
- System revenue declined by 17.8% excluding divestitures, indicating a slowdown in new system sales.
- GAAP operating loss increased to $24.5 million from $16.8 million in the same period last year, driven by higher operating expenses.
- Non-GAAP operating loss of $1.2 million compared to operating income of $1.5 million in the same period last year, reflecting increased OpEx.
- Service revenue, including Stratasys Direct Service Bureau, decreased to $44.9 million from $48.4 million in the same period last year, indicating a decline in service-related income.
Q & A Highlights
Q: Could you talk to us about Q2 seasonality and if we will see incremental revenues from the F3300 this quarter?
A: We expect a slight increase compared to Q1, reflecting normal seasonality. However, the macroeconomic situation still creates some headwinds. Regarding the F3300, we expect revenue in Q2 but more significant contributions in the second half of the year. - Eitan Zamir, CFO
Q: Why have long-term deferred revenues been down for a couple of quarters?
A: There is no specific trend; it often depends on the mix of contract durations. - Eitan Zamir, CFO
Q: Can you provide more details on the strategic review process?
A: We are making progress but are precluded from sharing specific details at this time. We will update when appropriate. - Yoav Zeif, CEO
Q: Any changes in overall visibility or sales cycles?
A: Sales cycles are stabilizing but not yet showing a breakthrough. There is market appetite, especially for the F3300, but large customers are still holding back on CapEx. - Yoav Zeif, CEO
Q: How did Covestro contribute to consumables revenue, and will this trend continue?
A: Covestro contributed $4 million to $5 million per quarter. The growth was both from Covestro and organic growth, indicating strong printer utilization. - Eitan Zamir, CFO
Q: What is driving the significant step-up in consumables revenue from Q4 to Q1?
A: The trend shows higher utilization of our printers, creating confidence in achieving levels above $63 million. Specific deals can influence quarterly figures. - Eitan Zamir, CFO
Q: What is the consumables usage attach rate for the F3300 compared to other machines?
A: The F3300 targets manufacturing with large parts, using high-performance materials at high utilization rates, similar to our F900 machines. - Yoav Zeif, CEO
Q: Can you clarify your comment on orders surpassing expectations in the first half of the year?
A: This refers to the F3300, where we are on plan and exceeding expectations in terms of purchase orders and customer quality. - Yoav Zeif, CEO
Q: What traction are you seeing with mid-market companies for the F3300?
A: The F3300's doubled speed and throughput, along with reduced costs, are driving adoption even among mid-market companies. - Yoav Zeif, CEO
Q: Have you seen any notable changes in customer conversations?
A: Engagements are more specific, focusing on real requirements and standards, which helps customers understand the benefits of additive manufacturing. - Yoav Zeif, CEO
Q: What should we focus on in the second half of 2024?
A: Focus on how the additive manufacturing industry delivers real value through reliable machines, cost-effective parts, and comprehensive software solutions. - Yoav Zeif, CEO
Q: Are customers replacing existing systems or expanding fleets with new systems?
A: It's a combination of both. We maintain strong relationships with our installed base while also targeting new customers. - Yoav Zeif, CEO
Q: Does the outlook assume no change in customer CapEx patterns?
A: The outlook is based on current visibility and expectations for the second quarter and the second half of the year. - Eitan Zamir, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
