Financial Data and Key Metrics - Q2 2022 revenue was $166.6 million, up 13.3% YoY and 16.4% on a constant currency basis [7] - System revenue grew 29.2% YoY to $58.9 million, the highest Q2 total in four years [16] - Consumables revenue increased 3.9% YoY to $56.9 million [16] - Service revenue rose 9% YoY to $50.9 million [16] - GAAP gross margin was 40.5%, down from 43% YoY, while non-GAAP gross margin was 47.6%, flat YoY [17] - GAAP operating loss was $23.5 million, compared to a loss of $22.7 million YoY [18] - Non-GAAP operating income was $1.9 million, compared to a loss of $2.6 million YoY [18] - Adjusted EBITDA was $7.4 million, up from $3.5 million YoY [19] Business Line Performance - System sales growth was driven by the ramp of the Origin One and H350 mass production systems [16] - Dental segment saw strength in the J5 DentaJet line, with an updated version doubling throughput [11] - Medical segment launched radiometric capabilities for the digital anatomy printer, enhancing healthcare applications [12][13] Market Performance - The company expanded its presence in aerospace, automotive, healthcare, and fashion industries [8] - Stratasys became a NASCAR competitive partner and the official 3D printing partner of Toyota Racing Development [9][10] - The company is leveraging its H350 system for automotive parts production, targeting mainstream vehicle production [11] Strategic Direction and Industry Competition - Stratasys is focused on growing its leadership position in polymer additive manufacturing [8] - The company is advancing its materials ecosystem strategy, opening up more automotive use cases [11] - The merger of MakerBot with Ultimaker is expected to close in Q3 2022, with Stratasys holding 45.6% of the combined company [13] Management Commentary on Operating Environment and Future Outlook - The company is operating in a challenging environment with supply chain constraints, inflation, and economic uncertainty [8] - Stratasys expects full-year 2022 revenue in the range of $675 million to $685 million, with growth driven by higher system sales and recurring consumables [20][21] - Long-term, the company targets double-digit non-GAAP operating margins as revenue scales [22] Other Important Information - The company ended Q2 with $441.5 million in cash and equivalents, with no debt [7] - Inventory purchases increased by over $20 million, impacting cash flow in Q2 [19] - The company expects gross margins to rebound above 50% as logistics and material cost pressures ease [21] Q&A Session Summary Question: Demand trends and geographic market performance [27] - Stratasys is seeing strong customer engagement and demand, with a diversified product and geographic portfolio [28][30] Question: Long-term operating margin targets [31] - The company expects to achieve double-digit operating margins through scalability and operational efficiencies, driven by double-digit revenue growth [32][33] Question: Cash flow and inventory investments [35] - Negative cash flow in Q2 was deliberate, aimed at meeting customer demand and improving future gross margins through inventory management [36][37] Question: Revenue growth beyond $700 million and gross margin recovery [38] - Stratasys is confident in surpassing $700 million in revenue, driven by its innovative technologies and material platform [39][40] - Gross margins are expected to recover to 50% within 2-3 years, despite current inflation pressures [52][53] Question: Demand in the dental segment [55] - The company is building a strong dental portfolio, leveraging its technologies and materials expertise [56][57] Question: Service gross margin improvement [59] - Service gross margins improved due to price increases and higher-margin deals [60] Question: MakerBot merger impact [62] - The MakerBot merger is expected to close in Q3 2022, with immaterial revenue impact but a positive effect on margins [63] Question: Supply chain constraints [65] - Supply chain challenges persist, particularly in electronics and raw materials, but the company expects easing by year-end [66][68] Closing Remarks [70] - Stratasys is optimistic about its growth trajectory and ability to create long-term shareholder value [70]

Financial Data and Key Metrics Changes - The company reported revenues of $163.4 million, a 22% increase compared to the prior year quarter, with systems revenue growing by 37% [8][20] - GAAP gross margin was 42.6%, up from 41.4% year-over-year, while non-GAAP gross margin improved to 47.3% from 46.7% [23] - GAAP net loss for the quarter was $20.9 million, or $0.32 per diluted share, compared to a net loss of $18.9 million, also $0.32 per diluted share, in the same period last year [25] Business Line Data and Key Metrics Changes - Product revenue was $113.1 million, a 45.2% increase year-over-year, with system revenue at $54.5 million, up 36.7% [21] - Consumables revenue increased by 16.1% to $58.6 million compared to the same period last year [21] - Service revenue was $50.3 million, a 14.8% increase year-over-year [22] Market Data and Key Metrics Changes - The company expanded its penetration into aerospace, automotive, and fashion applications, with notable partnerships including Lockheed Martin and Radford Motors [9][10] - The company launched a fashion solution with Techstyle, marking its entry into the fashion industry [9] Company Strategy and Development Direction - The company aims to grow its leadership position in polymer 3D printing, focusing on high-volume production systems [8][10] - A new entity was created from MakerBot and Ultimaker to concentrate on industrial and healthcare applications, allowing the company to focus on its core business [10][11] - The company published its inaugural ESG report, outlining its commitment to sustainability and responsible production [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong demand despite macroeconomic challenges, indicating a robust inventory build to meet this demand [54] - The company expects revenue growth to continue sequentially throughout the year, with the second half anticipated to be stronger than the first half [27] - Management acknowledged potential impacts from global issues such as supply chain constraints and currency fluctuations [27] Other Important Information - The company ended the quarter with over $475 million in cash and no debt, positioning itself well for future opportunities [8][26] - The company plans to launch 16 new materials throughout the year, enhancing its product offerings [62] Q&A Session Summary Question: Are you seeing synergies in your product portfolio? - Management confirmed that the strategy is working well, leveraging infrastructure and technology to capture synergies across customers and technologies [33][34] Question: Can you provide dollar amounts for systems and consumables? - Total system revenue was $64.5 million, and consumables revenue was $58.6 million [38] Question: How are gross margins affected by inflation and supply chain issues? - Gross margins were pressured by approximately 200 basis points due to inflation and material costs, but price increases helped mitigate some of these pressures [41][42] Question: What is the outlook for consumables following strong system sales? - Management expects continued growth in consumables as hardware sales increase, with the highest consumable revenue since Q2 2018 [48] Question: What is the company's strategy for the textile printing market? - The company is targeting the high-end fashion market with its PolyJet technology, focusing on use cases to drive adoption [56][57] Question: What are the geographic trends in demand? - Demand remains strong across all geographies, with particularly strong performance in the EMEA region [67]

Stratasys Ltd. (NASDAQ:SSYS) Q4 2021 Earnings Conference Call February 23, 2022 8:30 AM ET Company Participants Yonah Lloyd - Chief Communications Officer & Vice President of Investor Relations Yoav Zeif - Chief Executive Officer Eitan Zamir - Chief Financial Officer Conference Call Participants Greg Palm - Craig-Hallum Capital Group Troy Jensen - Lake Street Capital Jared Maymon - Berenberg Jim Ricchiuti - Needham & Company Ashley Ellis - Cross Research Paul Chung - JPMorgan Wamsi Mohan - Bank of America A ...