- Revenue: $138 million, down 13.6% year-over-year.
- Product Revenue: $93.6 million, down 14.2% year-over-year.
- System Revenue: $29 million, down 40% year-over-year.
- Consumables Revenue: $64.6 million, up 6.3% year-over-year.
- Service Revenue: $44.4 million, down 12.2% year-over-year.
- GAAP Gross Margin: 43.8%, up from 41.5% year-over-year.
- Non-GAAP Gross Margin: 49%, up from 48.5% year-over-year.
- GAAP Operating Expenses: $86.5 million, down from $99.9 million year-over-year.
- Non-GAAP Operating Expenses: $70.9 million, down from $72.5 million year-over-year.
- GAAP Operating Loss: $26 million, improved from a loss of $33.7 million year-over-year.
- Non-GAAP Operating Loss: $3.2 million, compared to operating income of $5 million year-over-year.
- GAAP Net Loss: $25.7 million or $0.36 per diluted share, improved from a net loss of $38.6 million or $0.56 per diluted share year-over-year.
- Non-GAAP Net Loss: $3 million or $0.04 per diluted share, compared to net income of $2.5 million or $0.04 per diluted share year-over-year.
- Adjusted EBITDA: $2.3 million, down from $10.6 million year-over-year.
- Cash Flow from Operations: Used $2.4 million, improved from the use of $23.2 million year-over-year.
- Free Cash Flow: Negative $5.4 million.
- Cash and Equivalents: $150.9 million, down from $161.1 million at the end of the previous quarter.
- Full Year 2024 Revenue Guidance: $570 million to $580 million.
- Full Year 2024 Gross Margin Guidance: 48.7% to 49%.
- Full Year 2024 Operating Expenses Guidance: $276 million to $278 million.
- Full Year 2024 Non-GAAP Operating Margin Guidance: 0.5% to 1%.
- Full Year 2024 GAAP Net Loss Guidance: $106 million to $91 million or $1.50 to $1.29 per diluted share.
- Full Year 2024 Non-GAAP Net Income Guidance: $1 million to $4 million or $0.01 to $0.05 per diluted share.
- Full Year 2024 Adjusted EBITDA Guidance: $24 million to $27 million.
- Full Year 2024 Capital Expenditures Guidance: $20 million to $25 million.
Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stratasys Ltd (SSYS, Financial) achieved margin improvement and maintained a healthy balance sheet despite continued softness in hardware sales.
- Growth in consumables reflected strong utilization for existing systems, indicating a shift from prototyping to manufacturing applications.
- The company introduced new SAF High-Def printing capabilities and groundbreaking materials, enhancing their product offerings.
- Stratasys Ltd (SSYS) launched the J5 Digital Anatomy 3D printer, addressing the growing demand for high-fidelity anatomical models in the medical field.
- The company announced a strategic restructuring expected to produce approximately $40 million in annual cost savings, aiming for an 8% EBITDA margin at current revenue levels.
Negative Points
- Consolidated revenue for Q2 2024 was down 13.6% compared to Q2 2023, reflecting a challenging macroeconomic environment.
- System revenue decreased by 40% year-over-year, indicating prolonged sales cycles and reduced capital equipment spending.
- Service revenue, including Stratasys Direct, decreased by 12.2% compared to the same period last year.
- GAAP net loss for the quarter was $25.7 million, or $0.36 per diluted share, compared to a net loss of $38.6 million, or $0.56 per diluted share, in the same period last year.
- The company announced a 15% headcount reduction by the end of the year, which may impact employee morale and operational efficiency.
Q & A Highlights
Q: Can you provide insights on the strategic alternatives process and what you learned from it?
A: We analyzed several opportunities and concluded that investing in Stratasys is the best path forward. We have the right technologies and focus on the right use cases. While we still believe in consolidation, it must be at reasonable valuations. Our current strategy is to invest in our own services to create shareholder value. - Yoav Zeif, CEO
Q: Can you quantify the pent-up demand for your products and provide visibility on future customer investments?
A: We don't quantify this, but we observe increased utilization of existing machines, evidenced by rising consumables sales. Once interest rates ease, we expect pent-up demand to translate into new machine purchases as customers ramp up their additive manufacturing capabilities. - Yoav Zeif, CEO
Q: Why is the gross margin outlook for the second half of the year not higher despite expected revenue growth?
A: The slight difference in gross margin is due to the mix of hardware, consumables, and services. We expect to maintain high gross margins around 49%, which is promising for the future, especially with the restructuring savings. - Eitan Zamir, CFO
Q: What gives you confidence in the hardware pipeline for the second half of the year?
A: We have new products like the F3300 and TrueDent, a stronger pipeline, and seasonal factors that typically boost second-half performance. Our guidance reflects moderate growth, and we aim to be conservative in our approach. - Yoav Zeif, CEO
Q: How will the $40 million cost savings from restructuring be split between COGS and OpEx?
A: The majority of the savings will be in OpEx, but there will also be improvements in gross margin. - Eitan Zamir, CFO
Q: How does the restructuring initiative align with your strategy, and what impact will it have on growth?
A: The restructuring is strategy-led, focusing on proven use cases and customer adoption. We are narrowing our focus to ensure profitability while maintaining growth potential. We aim for an 8% EBITDA margin and positive cash flow starting in Q4 2024. - Yoav Zeif, CEO
Q: How does the current installed base compare to 2020, and what changes have you observed?
A: The installed base now includes more high-end machines used for manufacturing rather than rapid prototyping. This shift aligns with our strategy to focus on industrial applications. - Yoav Zeif, CEO
Q: Can you confirm the revenue level for the 8% EBITDA margin target and the timing of achieving the $40 million savings?
A: The 8% EBITDA margin is based on the mid-range of our annual guidance. The $40 million savings will be realized over time, with the full benefits seen in 2025. - Eitan Zamir, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
