Industry Overview - The Zacks Computer-Peripheral Equipment industry is facing challenges due to weakening IT spending caused by macroeconomic uncertainties, high inflation, and geopolitical risks [1] - Demand for remote working and online learning-related computer peripherals has declined in the post-pandemic era [1] - The industry comprises companies offering computer input, output, and storage devices, including keyboards, mice, LCD panels, smart glass, 3D printers, and transaction-based printer products [3] - The industry is highly competitive, with companies focusing on innovation to meet current demand trends and strengthen product portfolios [4] Key Trends Shaping the Industry - Shift in consumer preference from mobile gaming to professional gaming experiences, driven by advanced gaming devices and the popularity of e-sports leagues [5] - Growing demand for 3D printing solutions across industries like medical, aerospace, and automotive, driven by engineers, designers, and entrepreneurs [6] - Expansion into price-sensitive regions like Asia Pacific and the Middle East & Africa through low-cost quality products [7] - Delayed PC refresh cycle due to the pandemic-led work-from-home trend, negatively impacting demand for computer peripherals [9] - Elevated operating expenses from R&D and sales force expansion, likely to dent margins in the near term [10] Industry Performance and Valuation - The Zacks Computer-Peripheral Equipment industry has underperformed the S&P 500 and the broader Zacks Computer and Technology sector, plunging 30.4% in the trailing 12 months [14] - The industry is currently trading at a forward 12-month P/S of 0.68X, compared to the S&P 500's 5.46X and the Zacks Computer and Technology sector's 7.02X [15] - The industry carries a Zacks Industry Rank 157, placing it in the bottom 37% of over 250 Zacks industries, indicating dim near-term prospects [11][12] Companies to Watch Stratasys (SSYS) - Manufacturer of 3D printers and rapid prototyping systems for industries like automotive, aerospace, defense, and medical [16] - Benefiting from increased demand for 3D printed equipment, with cost-control initiatives and innovative product introductions driving growth [17][18] - Consensus earnings estimate for 2025 remains unchanged at 33 cents per share, with the stock depreciating 35.6% in the past year [19] Mercury Systems (MRCY) - Provider of sensor and safety-critical mission processing subsystems for aerospace, defense, and intelligence programs [20] - Benefiting from modernization in radar, electronic warfare, and C4I, with a revised upward earnings estimate of 31 cents per share for fiscal 2025 [21][22] - Stock has soared 36.2% in the past 12 months [22] Logitech (LOGI) - Global leader in PC peripherals and digital platforms, with products in PC navigation, gaming, and video security [22] - Experiencing recovery from the post-pandemic downturn, with three consecutive quarters of year-over-year sales growth [23] - Increasing hybrid work trends and partnerships with cloud providers like Zoom and Microsoft are key growth drivers [24] - Consensus earnings estimate for fiscal 2025 remains unchanged at $4.63 per share, with the stock declining 9.1% over the past year [25] TransAct Technologies (TACT) - Manufacturer of transaction-based printers and related products for vertical markets like gaming, financial services, and kiosks [26] - Benefiting from accelerated digital transformation and business automation, with trusted printers for transaction records [27] - Consensus earnings estimate for 2025 remains unchanged at a loss of 17 cents per share, with the stock plunging 41.7% over the past year [28]

Stratasys (SSYS) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.The power ...

Company Performance and Financials - The Zacks Consensus Estimate for SSYS' 2025 earnings is 33 cents per share, remaining steady over the past 30 days [1] - The consensus mark for SSYS' 2025 revenues is $579.64 million, indicating a year-over-year growth of 1.73% [1] - SSYS shares have lost 34.9% over the past year, underperforming the Zacks Computer and Technology sector's appreciation of 30.4% and the Zacks Computer – Peripheral Equipment industry's decline of 31.5% [2] - SSYS shares have underperformed industry peers like Immersion (IMMR), Alps Electric (APELY), and Logitech International (LOGI) over the past year [2] Technological Innovations and Product Portfolio - The Stratasys Neo Build Processor, developed in collaboration with Materialise, accelerates high-quality investment casting production and boosts SSYS' top-line growth [1] - SSYS' F3300 industrial platform offers faster print speeds, superior thermoplastic accuracy, and reduced downtime, making it a standout for factory floor manufacturing across industries [5] - SSYS' Origin 2 printer and Origin Cure system cater to demands for injection-molding quality in short production runs [5] - In the dental sector, SSYS' TrueDent solution is highly regarded for its disruption in both cost and fit for dentures [5] Growth Prospects and Industry Focus - SSYS' growth prospects remain strong with its technological innovations and expanding portfolio, focusing on high-growth industries like automotive, defense, aerospace, medical devices, and dental applications [3] - Despite recent stock underperformance, SSYS' innovative technologies, expanding product portfolio, and strong growth prospects in high-demand industries position it for sustained growth [6] Earnings Performance - SSYS beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters, was in line once, and missed the other one, with an average surprise of 37.50% [4] Investment Opportunity - SSYS currently flaunts a Zacks Rank 1 (Strong Buy) and a Growth Score of B, offering a strong investment opportunity according to the Zacks proprietary methodology [6]

It has been about a month since the last earnings report for Stratasys (SSYS) . Shares have added about 12.3% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Stratasys due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Stratasys' Q3 Earnings Beat Estimates, Revenues Fa ...

Company Performance - Stratasys Ltd (SSYS) saw its share prices climb after raising its earnings outlook for the year and unexpectedly turning an adjusted profit in the third quarter [1] - The company has become the official 3D Printing Partner of NASCAR, which will exclusively use Stratasys 3D printing technology for the design and production of parts and tools [1] Industry Impact - 3D printing impacts multiple industries, offering potential upside to Stratasys, including Aerospace, Automotive, Consumer Products, Dental, Medical, Education, Art and Fashion, Agriculture, Applications, Manufacturing, Investment Casting, Jigs and Fixtures, Production Parts, Rapid Prototyping, Packaging, Design, Composite Tooling, and Dentures [1] Market Performance - SSYS outperforms SPY [4] - Momentum is improving [5] - The price is above the 200-DMA and the July 6-month calendar range high, with the distance between the 50 and 200-DMAs narrowing [3]

Company Performance - Stratasys Ltd reported Q3 numbers showing decent improvement in efficiency, but top-line growth remains a concern [1] Analyst Perspective - The analyst focuses on long-term horizon investing with a 5-10 year outlook and prefers a portfolio mix of growth, value, and dividend-paying stocks, with a tendency to lean towards value investments [1] - The analyst occasionally engages in selling options as part of their investment strategy [1]

Earnings Performance - The company reported Q3 2024 earnings of 1 cent per share, beating the Zacks Consensus Estimate of a loss of 2 cents per share [1] - Non-GAAP earnings were 4 cents per share in the year-ago quarter [1] - The company has beaten the Zacks Consensus Estimate in three of the trailing four quarters with an average surprise of 37.5% [1] Revenue Performance - Quarterly revenues fell 13.6% year over year to $140 million, missing the consensus mark by 3.08% [2] - Product revenues declined 16.9% year over year to $94.1 million, with System revenues plunging 38.4% to $31.7 million and Consumables revenues increasing 1% to $62.4 million [3] - Services revenues declined 6.1% year over year to $45.9 million, with Customer Support revenues advancing 1.3% to $31 million [3] Profitability Metrics - Non-GAAP gross profit fell 8.8% year over year to $69.5 million, while the non-GAAP gross margin expanded 130 bps to 49.6% [4] - Non-GAAP operating expenses dropped 6.1% year over year to $69.6 million [4] - Non-GAAP operating loss was $0.1 million, compared to a profit of $4.1 million in the year-ago quarter, with the margin contracting 260 bps to negative 0.1% [4] - Adjusted EBITDA plunged 47.9% to $5.1 million [4] Product and Market Developments - The company saw significant growth driven by the launch of new products, including Origin 2, Stratasys Neo Build Processor for Investment Casting, and TechStyle Fabric Alignment Station, which expanded manufacturing applications and use cases [5] - Offerings like F3300 and TrueDent showed strong demand, with F3300 driving demand for the flagship F3300 industrial platform and delivering high-quality thermoplastic parts [6] Financial Position - The company exited Q3 with cash and short-term deposits of $143.95 million, down from $150.9 million at the end of the previous quarter [7] - Operating cash outflow increased significantly to $4.5 million, compared to $2.4 million in the previous quarter [7] 2024 Outlook - Management expects 2024 revenues to be between $570 million and $580 million, with non-GAAP earnings per share forecasted in the range of 3-7 cents [8] - Gross margins are anticipated to be between 49% and 49.2%, and the non-GAAP operating margin is expected to be in the range of 0.6-1.3% [8] - Operating expenses are estimated to be between $276 million and $278 million, with adjusted EBITDA anticipated in the range of $25-$28 million [9] - The company's 2024 forecast for revenues and operating expenses remains unchanged [10] Stock Performance and Sector Comparison - The company's shares have lost 29.3% year to date, underperforming the Zacks Computer & Technology sector's growth of 30% [2] - In comparison, Arista Networks (ANET) has gained 68.1% year to date, Accenture (ACN) has gained 5.5%, and Adobe (ADBE) has declined 10.7% [12]

Financial Data and Key Metrics - Consolidated revenue for Q3 2024 was $140 million, down from $162.1 million in Q3 2023, primarily due to softness in capital equipment spending [25] - Product revenue was $94.1 million, compared to $113.2 million in the same period last year, with system revenue at $31.7 million, down from $51.5 million in Q3 2023 [26] - Consumables revenue grew 1% to $62.4 million, marking the eighth consecutive quarter of year-over-year growth [27] - Service revenue, including Stratasys Direct, was $45.9 million, down from $48.9 million in Q3 2023 [28] - GAAP gross margin expanded to 44.8% in Q3 2024, up from 40.5% in Q3 2023, while non-GAAP gross margin grew to 49.6%, the highest since Q4 2019 [29] - GAAP operating loss was $25.5 million, an improvement from a loss of $42.8 million in Q3 2023, while non-GAAP operating loss was $0.1 million, compared to operating income of $4.1 million in Q3 2023 [31] - GAAP net loss for Q3 2024 was $26.6 million, or $0.37 per diluted share, compared to a net loss of $47.3 million, or $0.68 per diluted share, in Q3 2023 [32] - Adjusted EBITDA was $5.1 million, down from $9.8 million in Q3 2023 [32] - Cash utilization improved, with $4.5 million used in operations during Q3 2024, compared to $12.7 million in Q3 2023 [33] Business Line Performance - The F3300 industrial platform generated significant interest and orders, with shipments to key customers in automotive, aerospace, and defense sectors [16] - The Origin 2 printer and Origin Cure post-processing system were launched, targeting industries like connectors where manufacturing costs are high [17] - The Neo Build Processor for investment casting was introduced, offering up to 50% faster file processing and enhanced print speeds [18] - TrueDent solution in dental continued to gain traction, with plans to expand into EMEA and APAC regions [89][90] Market Performance - The company maintained a strong presence in key industries such as automotive, aerospace, defense, medical devices, and dental [9][10] - The F3300 platform was showcased at the International Manufacturing Technology Show, generating interest from leading companies in automotive, aerospace, and defense [16] - The company is focusing on high-growth target industries that benefit from megatrends like supply chain risks, onshoring, new mobility, and sustainability [15] Strategic Direction and Industry Competition - The company is focusing on targeted innovation across materials, knowledge, and workflow solutions in high-growth industries [15] - A $50 million share repurchase plan was approved and executed, reflecting the company's commitment to maximizing shareholder value [19] - The company implemented a restructuring plan, including a 15% workforce reduction, to align operational costs with current market dynamics and achieve $40 million in annual cost savings [20][21] - The company is positioning itself to benefit from megatrends like onshoring, localization of manufacturing, and digitalization of manufacturing [58][71] Management Commentary on Operating Environment and Future Outlook - The company expects full-year 2024 revenue to range between $570 million to $580 million, with improved gross margins and profitability [35] - The company anticipates achieving an 8% EBITDA margin in 2025, even without revenue growth, and potentially reaching a 10% EBITDA margin with moderate revenue growth [36] - Management highlighted the resilience of the company's operating model and the ability to deliver improved profitability despite challenging market conditions [24][38] Other Important Information - The company launched new products like the F3300, Origin 2, and Neo Build Processor, which are expected to drive future growth [16][17][18] - The company is focusing on expanding its software offerings, which are expected to drive high-margin revenues in the coming years [11] - The company is committed to delivering increased profitability and cash flow in 2025, with a focus on maintaining a strong balance sheet [21][38] Q&A Session Summary Question: Implied Q4 revenue guidance and EPS expectations [41] - The company clarified that Q4 EPS is expected to be in the range of $0.08 to $0.12, driven by cost-saving initiatives [42][44] Question: Year-over-year improvement in Q4 and outlook for Q1 [45] - The company noted that Q4 is typically strong due to seasonality, but it is too early to provide guidance for Q1 2025 [46] Question: Concerns about consumables growth [48] - Management emphasized the stability of the recurring revenue model and the growing installed base, which supports continued consumables growth [49][50] Question: Workforce reduction and restructuring progress [52] - The company confirmed that the restructuring plan is ahead of schedule, with significant savings expected in Q4 [53][87] Question: Impact of macro factors on demand [56] - Management highlighted that the current macro environment, including high capital costs, is delaying customer investment in new technologies, but pent-up demand remains strong [57][58] Question: Gross margin guidance for Q4 [61] - The company expects Q4 gross margin to be slightly higher than Q3, driven by a mix of hardware and consumables sales [62][63] Question: Share repurchase program [64] - The company has started buying back shares in Q4 and will provide updates in the Q4 results [65] Question: F3300 rollout progress [68] - The F3300 platform is performing well, with shipments to key customers like Toyota and BAE Systems, and a strong pipeline of orders [69] Question: Impact of onshoring and US manufacturing focus [70] - The company sees onshoring and localized manufacturing as tailwinds, particularly in industries like aerospace and defense [71] Question: Demand trends for new product lines [74] - Demand for new products like Origin 2 and Neo remains strong, but sales cycles are longer due to the macro environment [75][77] Question: Additional cost-saving opportunities [79] - The company is focused on completing non-headcount-related cost-saving initiatives, with significant savings expected in Q4 [80][81] Question: TrueDent milestones [85] - The company plans to expand TrueDent into EMEA and APAC regions and increase penetration in clinics, with key milestones expected in 2025 [89][90] Question: Early signs of recovery in end markets [94] - Management noted that government and defense, aerospace, and automotive tooling are showing early signs of recovery, while other verticals remain cautious [95] Question: Revenue contribution from GrabCAD Print Pro [96] - The company is seeing significant growth in software revenue, with high gross margins and strong customer attachment rates [97][99]

| --- | --- | --- | --- | |--------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | Q3 2024 | | | | | Results | | | | | Speakers | | | | | Dr. Yoav Zeif, CEO | | | | | Eitan Zamir, CFO | | | | | Yonah Lloyd, CCO & VP IR | | | | | November 13, 2024 | | | | Make additive work for you Conference Call | --- | --- | --- | |------------------------------------------|-------|-------| | | | | | and Webcast Details | | | | | | | | | | | | US Toll-Free Dial-In | | | | 1-877-407-06 ...

Earnings Performance - Stratasys reported quarterly earnings of $0 01 per share, beating the Zacks Consensus Estimate of a loss of $0 02 per share, representing an earnings surprise of 150% [1] - The company's earnings per share (EPS) for the same quarter last year was $0 04 per share [1] - Over the last four quarters, the company has surpassed consensus EPS estimates two times [2] Revenue Performance - Stratasys posted revenues of $140 01 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 3 08% [2] - This compares to year-ago revenues of $162 13 million [2] - The company has not been able to beat consensus revenue estimates over the last four quarters [2] Stock Performance - Stratasys shares have lost about 41 3% since the beginning of the year, compared to the S&P 500's gain of 25 5% [3] - The stock's immediate price movement will depend on management's commentary on the earnings call [3] Earnings Outlook - The current consensus EPS estimate is $0 10 on $145 14 million in revenues for the coming quarter [7] - For the current fiscal year, the consensus EPS estimate is breakeven on $571 68 million in revenues [7] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions [5] Industry Outlook - The Zacks Industry Rank for Computer - Peripheral Equipment is currently in the bottom 39% of the 250 plus Zacks industries [8] - The top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [8] Peer Performance - Dragonfly Energy Holdings Corp (DFLI) is expected to post a quarterly loss of $0 18 per share, representing a year-over-year change of -5 9% [9] - The company's revenues are expected to be $14 12 million, down 11 1% from the year-ago quarter [10] - The consensus EPS estimate for the quarter has remained unchanged over the last 30 days [9]