MINNEAPOLIS & REHOVOT, Israel--(BUSINESS WIRE)--Stratasys Ltd. (Nasdaq: SSYS) (“Stratasys” or the “Company”), a leader in polymer 3D printing solutions, today announced that its Board of Directors has unanimously adopted a limited duration shareholder rights plan (the “Rights Plan”). The Rights Plan, which replaces the Company’s shareholder rights plan that was set to expire on December 31, 2023, contains enhanced shareholder protections that are intended to limit the scope of the Rights Plan. The Rights Pl ...

Stratasys Ltd. (NASDAQ:SSYS) Q3 2023 Earnings Call Transcript November 16, 2023 8:30 AM ET Company Participants Yonah Lloyd - VP, IR Yoav Zeif - CEO Eitan Zamir - CFO Conference Call Participants James Ricchiuti - Needham & Company Danny Eggerichs - Craig-Hallum Ananda Baruah - Loop Capital Jacob Stephan - Lake Street Capital Operator Hello, and welcome to the Stratasys Q3 2023 Earnings Conference Call and Webcast. [Operator Instructions] A question and answer session will follow the formal presentation. [O ...

Q3 2023 Results Speakers Dr. Yoav Zeif, CEO Eitan Zamir, CFO Yonah Lloyd, CCO & VP IR Conference Call and Webcast Details ...

Financial Performance - Total assets decreased from $1,259.79 million in December 2022 to $1,181.765 million in September 2023[4][5] - Cash and cash equivalents decreased from $150.47 million in December 2022 to $104.563 million in September 2023[4] - Revenues for the three months ended September 30, 2023, were $162.133 million, compared to $162.192 million in the same period in 2022[8] - Net loss for the three months ended September 30, 2023, was $47.279 million, compared to a net income of $18.749 million in the same period in 2022[8] - Gross profit for the three months ended September 30, 2023, was $65.649 million, down from $70.749 million in the same period in 2022[8] - Operating loss for the three months ended September 30, 2023, was $42.798 million, compared to an operating loss of $15.626 million in the same period in 2022[8] - Net loss per share for the three months ended September 30, 2023, was $0.68, compared to earnings per share of $0.28 in the same period in 2022[8] - Comprehensive loss for the three months ended September 30, 2023, was $47.566 million, compared to a comprehensive income of $17.88 million in the same period in 2022[8] - Net loss for the nine months ended September 30, 2023, was $108.118 million, compared to $26.584 million for the same period in 2022[13] - Comprehensive loss for the nine months ended September 30, 2023, was $47.566 million, compared to a comprehensive income of $17.880 million in 2022[9][11] - Net loss per share for Q3 2023 was $(0.68), compared to $0.28 in Q3 2022, and for the nine months ended September 30, 2023, it was $(1.58), compared to $(0.40) in the same period of 2022[53] Expenses and Costs - Research and development expenses for the three months ended September 30, 2023, were $23.567 million, slightly up from $23.145 million in the same period in 2022[8] - Selling, general, and administrative expenses for the three months ended September 30, 2023, were $84.88 million, up from $63.23 million in the same period in 2022[8] - Stock-based compensation for the nine months ended September 30, 2023, was $23.744 million, slightly lower than $24.755 million in 2022[13] - Stock-based compensation expenses for Q3 2023 were $7.5 million, compared to $7.4 million in Q3 2022, and for the nine months ended September 30, 2023, they were $23.7 million, compared to $24.8 million in the same period of 2022[66] - The Company recorded restructuring charges of $18.4 million during the nine months ended September 30, 2023, including $12.0 million under Cost of sales[31] Cash Flows and Liquidity - Cash flows from operating activities resulted in a net cash used of $53.912 million for the nine months ended September 30, 2023, compared to $57.289 million in 2022[13] - Cash flows from investing activities provided $10.845 million in 2023, a significant improvement from a net cash used of $23.987 million in 2022[13] - Cash flows from financing activities used $1.084 million in 2023, slightly lower than $1.407 million in 2022[13] - Cash, cash equivalents, and restricted cash at the end of September 30, 2023, were $104.832 million, down from $150.823 million at the end of September 30, 2022[13] Equity and Investments - Total equity as of September 30, 2023, was $883.143 million, down from $948.726 million as of September 30, 2022[9][11] - Accumulated deficit as of September 30, 2023, was $2.18497 billion, compared to $2.074462 billion as of September 30, 2022[9][11] - Stock-based compensation plans issued 1,017 shares in 2023, compared to 731 shares in 2022[9][11] - Stratasys completed the merger of MakerBot with Ultimaker, recording a net gain of $39.1 million from the deconsolidation of MakerBot[19][20] - The Company recognized an equity method investment in Ultimaker totaling $105.4 million, representing a 46.5% share in the new entity[20] - As of September 30, 2023, the equity investment in Ultimaker amounted to $88.4 million, down from $100.2 million at December 31, 2022[21] - Stratasys acquired Covestro AG's additive manufacturing materials business for a total consideration of $59.7 million, including $53.8 million in cash payments and $5.2 million in ordinary shares[23][24] - The Covestro acquisition included intangible assets valued at $21.5 million and goodwill of $20.2 million[27] - Goodwill as of September 30, 2023 was $90.2 million, an increase from $65.0 million as of January 1, 2023, primarily due to acquisitions[48] Revenue Breakdown - Total revenues for the three months ended September 30, 2023 were $162.1 million, compared to $162.2 million in the same period in 2022[39] - Total revenues for the nine months ended September 30, 2023 were $471.3 million, compared to $492.2 million in the same period in 2022[39] - Americas region revenues for the three months ended September 30, 2023 were $101.8 million, a decrease from $107.5 million in the same period in 2022[39] - EMEA region revenues for the three months ended September 30, 2023 were $40.6 million, an increase from $31.5 million in the same period in 2022[39] - Asia Pacific region revenues for the three months ended September 30, 2023 were $19.7 million, a decrease from $23.3 million in the same period in 2022[39] - Revenues recognized at a point in time for the three months ended September 30, 2023 were $126.6 million, compared to $125.7 million in the same period in 2022[40] - Revenues recognized over time for the three months ended September 30, 2023 were $35.6 million, compared to $36.5 million in the same period in 2022[40] - Deferred revenue as of September 30, 2023 was $80.3 million, compared to $75.4 million as of December 31, 2022[42] - Remaining Performance Obligations (RPO) as of September 30, 2023 amounted to $93.5 million, with $61.8 million expected to be recognized in the next 12 months[43] Legal and Strategic Matters - Stratasys terminated its merger agreement with Desktop Metal, incurring a $10.0 million termination fee[33] - Nano Dimension launched a hostile tender offer for Stratasys shares, ultimately offering $25.00 per share, but the offer expired without completion[34] - 3D Systems made multiple merger proposals to Stratasys, with the final offer being $7.00 in cash and 1.6387 newly issued shares of 3D Systems per Stratasys share[36] - Stratasys initiated a strategic alternatives process following the termination of the Desktop Metal merger agreement[37] - The Rights Plan expiration date was extended through December 31, 2023, to protect shareholder interests and prevent unauthorized control accumulation[72] - Nano Dimension filed a lawsuit against the company on April 25, 2023, challenging the legality of the Rights Plan, which remains unresolved as of November 15, 2023[73][75] Stock-Based Compensation and Equity - As of September 30, 2023, the company had 1,358,721 stock options outstanding with a weighted average exercise price of $21.03[67] - Unrecognized compensation cost related to unvested stock options was $2.5 million as of September 30, 2023, expected to be recognized over 2.4 years[67] - The unrecognized compensation cost related to unvested RSUs and PSUs as of September 30, 2023, is $51.26 million, expected to be recognized over a weighted-average period of 2.52 years[69] - The weighted average grant date fair value of RSUs and PSUs as of September 30, 2023, is $18.71[69] - The total accumulated other comprehensive loss as of September 30, 2023, is $12.958 million, compared to $14.223 million as of September 30, 2022[70] Foreign Exchange and Hedging - Foreign exchange forward contracts not designated as hedging instruments had a notional amount of $57.2 million as of September 30, 2023, with gains of $1.3 million and $2.6 million recognized for the three and nine months ended September 30, 2023, respectively[61] - The company had $51.6 million in foreign exchange forward contracts designated as cash flow hedges for payroll and operating expenses denominated in NIS as of September 30, 2023[62] - Foreign exchange forward contracts designated as cash flow hedges for revenue included $20.0 million Euro to be converted into U.S. dollars as of September 30, 2023[63] Tax and Geographic Impact - The company's effective tax rate as of September 30, 2023, was impacted by geographic earnings mix, valuation allowance movements, and uncertain tax positions[56] Operational and Regional Impact - The company's manufacturing facility and global headquarters in Israel remain largely unaffected by the ongoing war as of the financial statement date[79]

Stratasys Ltd. (NASDAQ:SSYS) Q2 2023 Earnings Conference Call August 9, 2023 8:30 AM ET Company Participants Yonah Lloyd - VP, IR Yoav Zeif - CEO Eitan Zamir - CFO Conference Call Participants Greg Palm - Craig-Hallum Shannon Cross - Credit Suisse Brian Drab - William Blair Troy Jensen - Lake Street Capital Markets Operator Greetings and welcome to the Stratasys Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the fo ...

Q2 2023 Results Speakers Dr. Yoav Zeif, CEO Eitan Zamir, CFO Yonah Lloyd, CCO & VP IR Conference Call and Webcast ...

[Condensed Consolidated Interim Financial Statements](index=1&type=section&id=Condensed%20Consolidated%20Interim%20Financial%20Statements) [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2023, Stratasys' total assets were $1.23 billion, a slight decrease from $1.26 billion at the end of 2022, driven by reduced cash and short-term deposits, partially offset by increases in inventories, goodwill, and other intangible assets from acquisitions, while total liabilities increased modestly to $307.2 million and total equity declined to $923.2 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash and cash equivalents | $144,366 | $150,470 | ($6,104) | | Inventories | $211,186 | $194,054 | $17,132 | | Goodwill | $92,946 | $64,953 | $27,993 | | Other intangible assets, net | $148,613 | $121,402 | $27,211 | | **Total Assets** | **$1,230,425** | **$1,259,790** | **($29,365)** | | **Liabilities & Equity** | | | | | Total current liabilities | $208,797 | $210,654 | ($1,857) | | Total non-current liabilities | $98,401 | $89,704 | $8,697 | | **Total Liabilities** | **$307,198** | **$300,358** | **$6,840** | | **Total Equity** | **$923,227** | **$959,432** | **($36,205)** | [Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the three and six months ended June 30, 2023, Stratasys reported decreased revenues and a widened operating loss, leading to increased net loss per share due to higher operating expenses, particularly in selling, general, and administrative costs Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$159,751** | **$166,603** | **$309,128** | **$330,032** | | Gross Profit | $66,222 | $67,393 | $131,617 | $137,070 | | Operating Loss | ($33,659) | ($23,545) | ($50,456) | ($43,129) | | Net Loss | ($38,615) | ($24,385) | ($60,839) | ($45,333) | | **Net Loss Per Share** | **($0.56)** | **($0.37)** | **($0.89)** | **($0.69)** | - Selling, general and administrative expenses increased to **$75.6 million** in Q2 2023 from **$66.6 million** in Q2 2022, contributing to the wider operating loss[8](index=8&type=chunk) [Consolidated Statements of Changes in Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity decreased from $959.4 million at the beginning of 2023 to $923.2 million by June 30, 2023, primarily due to a comprehensive loss of $60.7 million, partially offset by equity increases from stock-based compensation and share issuances Reconciliation of Total Equity (in thousands) | Description | Amount | | :--- | :--- | | **Balance as of December 31, 2022** | **$959,432** | | Comprehensive loss (H1 2023) | ($60,692) | | Stock-based compensation | $16,263 | | Issuance of shares (stock plans & acquisition) | $8,219 | | **Balance as of June 30, 2023** | **$923,227** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2023, net cash used in operating activities was $41.2 million, while investing activities provided $36.6 million, primarily from short-term bank deposits, with a significant outflow of $66.5 million for acquisitions, resulting in a decrease in cash and cash equivalents to $144.4 million Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($41,167) | ($38,909) | | Net cash provided by investing activities | $36,628 | $63,172 | | Net cash used in financing activities | ($682) | ($864) | | **Net change in cash and cash equivalents** | **($6,045)** | **$15,986** | - The company paid **$66.5 million** for acquisitions during the first six months of 2023, a significant use of cash in investing activities[13](index=13&type=chunk) [Notes to Condensed Consolidated Interim Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Interim%20Financial%20Statements) The notes detail the basis of presentation, significant accounting policies, and key events during the period, including the acquisition of Covestro's additive manufacturing business, the pending merger with Desktop Metal, corporate actions involving tender offers and proposals from Nano Dimension and 3D Systems, and provide disaggregation of revenue, details on goodwill, intangible assets, equity components, and ongoing legal contingencies [Note 1. Business Description and Basis of Presentation](index=9&type=section&id=Note%201%2E%20Business%20Description%20and%20Basis%20of%20Presentation) Stratasys is a global leader in connected, polymer-based 3D printing solutions, focusing on the entire manufacturing value chain, with financial statements prepared under U.S. GAAP and reflecting management's estimates subject to macroeconomic uncertainties - The company focuses on the manufacturing sector, which it views as having the largest and fastest-growing total addressable market for its 3D printing solutions[15](index=15&type=chunk) [Note 3. Certain Transactions](index=10&type=section&id=Note%203%2E%20Certain%20Transactions) This note details significant transactions, including the 2022 merger of its MakerBot subsidiary with Ultimaker, resulting in a 46.5% equity method investment, and the April 2023 acquisition of Covestro AG's additive manufacturing materials business for $59.2 million - On April 3, 2023, the company acquired Covestro AG's additive manufacturing materials business for a total consideration of **$59.2 million**, which included **$53.3 million** in cash, **$5.2 million** in shares, and **$0.7 million** in contingent consideration[23](index=23&type=chunk)[25](index=25&type=chunk) - The preliminary purchase price allocation for the Covestro acquisition resulted in **$23.1 million** of goodwill and **$22.4 million** of intangible assets[27](index=27&type=chunk) - The company holds a **46.5% stake** in Ultimaker, accounted for using the equity method, with the investment valued at **$92.9 million** as of June 30, 2023[20](index=20&type=chunk)[22](index=22&type=chunk) [Note 4. Recent developments](index=13&type=section&id=Note%204%2E%20Recent%20developments) The company has been involved in significant M&A activities, including a definitive merger agreement with Desktop Metal, a hostile partial tender offer from Nano Dimension that expired unsuccessfully, and ongoing discussions regarding unsolicited merger proposals from 3D Systems - Announced a merger agreement with Desktop Metal on May 25, 2023, where Stratasys shareholders would own **59%** of the combined company[31](index=31&type=chunk) - Faced a hostile tender offer from Nano Dimension, which was raised to **$25.00 per share** before expiring unsuccessfully on July 31, 2023[32](index=32&type=chunk) - Received and entered into discussions regarding an unsolicited merger proposal from 3D Systems after its board deemed it a potential 'Superior Proposal' to the Desktop Metal deal[34](index=34&type=chunk) [Note 5. Revenues](index=14&type=section&id=Note%205%2E%20Revenues) Total revenue for Q2 2023 was $159.8 million, down from $166.6 million in Q2 2022, with the Americas remaining the largest region but experiencing a decline, while EMEA was the only region to show growth, and Remaining Performance Obligations totaled $107.4 million as of June 30, 2023 Revenue by Geography (in thousands) | Region | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Americas | $102,195 | $107,225 | $192,275 | $205,792 | | EMEA | $36,884 | $35,212 | $74,764 | $75,267 | | Asia Pacific | $20,672 | $24,166 | $42,089 | $48,973 | | **Total** | **$159,751** | **$166,603** | **$309,128** | **$330,032** | - As of June 30, 2023, Remaining Performance Obligations (RPO) totaled **$107.4 million**, representing contracted revenue yet to be recognized[41](index=41&type=chunk) - Deferred revenue increased to **$79.3 million** as of June 30, 2023, from **$75.4 million** at the end of 2022[39](index=39&type=chunk)[40](index=40&type=chunk) [Note 6. Inventories](index=16&type=section&id=Note%206%2E%20Inventories) Total inventories increased to $211.2 million as of June 30, 2023, up from $194.1 million at December 31, 2022, primarily driven by a rise in raw materials and finished goods Inventory Breakdown (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Raw materials | $110,790 | $104,928 | | Work-in-process | $11,429 | $7,562 | | Finished goods | $88,967 | $81,564 | | **Total** | **$211,186** | **$194,054** | [Note 7. Goodwill and Other Intangible Assets](index=16&type=section&id=Note%207%2E%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill increased by $28.0 million during the first six months of 2023, reaching $92.9 million, primarily due to acquisitions, while other intangible assets, net, also grew to $148.6 million from $121.4 million, with amortization expense for intangible assets totaling $13.3 million for the six-month period - Goodwill increased from **$65.0 million** on January 1, 2023, to **$92.9 million** on June 30, 2023, with **$27.8 million** added from acquisitions[47](index=47&type=chunk) Other Intangible Assets, Net (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Developed technology | $114,603 | $103,932 | | Customer relationships | $19,100 | $6,684 | | Patents | $8,318 | $8,538 | | Trademarks and trade names | $6,592 | $2,248 | | **Total** | **$148,613** | **$121,402** | [Note 12. Equity](index=20&type=section&id=Note%2012%2E%20Equity) This note covers equity-related activities, including stock-based compensation expense of $16.3 million for the first six months of 2023, details on stock option and RSU/PSU activity with $57.6 million in unrecognized compensation cost, and the company's shareholder Rights Plan designed to protect against hostile takeovers - Total stock-based compensation expense was **$16.3 million** for the six months ended June 30, 2023, compared to **$17.4 million** for the same period in 2022[66](index=66&type=chunk) - As of June 30, 2023, there was **$57.6 million** of unrecognized compensation cost related to unvested RSUs and PSUs, expected to be recognized over a weighted-average period of **2.72 years**[69](index=69&type=chunk) - The company has a shareholder Rights Plan that becomes exercisable if a person or group acquires **15% or more** of outstanding shares without board approval, with its expiration extended in connection with the Desktop Metal merger agreement[73](index=73&type=chunk) [Note 13. Contingencies](index=22&type=section&id=Note%2013%2E%20Contingencies) The company is involved in litigation with Nano Dimension in an Israeli court regarding Stratasys' shareholder Rights Plan and Nano's tender offer, with the court expressing a preliminary view that rights plans are permissible under Israeli law but requiring the board to justify their adoption - Stratasys is in litigation with Nano Dimension over its shareholder rights plan and Nano's tender offer[74](index=74&type=chunk) - An Israeli court expressed a preliminary view that shareholder rights plans are permissible under Israeli law, but the board must justify their adoption[76](index=76&type=chunk)

Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2023 was $149.4 million, down 2.6% compared to Q1 2022 when adjusted for divestitures and at constant currency, and down 8.6% compared to unadjusted revenues [23] - GAAP gross margin was 43.8% for the quarter, compared to 42.6% for the same period last year, while non-GAAP gross margin was 47.3%, flat compared to the same period last year [25] - GAAP net loss for the quarter was $22.2 million or $0.33 per diluted share, compared to a net loss of $20.9 million or $0.32 per diluted share for the same period last year [27] Business Line Data and Key Metrics Changes - Product revenue declined by 10.7% to $101 million compared to the same period last year, with system revenue down 25.8% to $40.5 million [23][24] - Consumables revenue rose by 3.3% to $60.5 million, marking a record level for Stratasys, indicating strong utilization rates of sold systems [24] - Services revenue was $48.4 million, down 3.9% compared to the same period last year, but customer service revenue reached its highest ever [24] Market Data and Key Metrics Changes - The ongoing macroeconomic challenges are causing longer sales cycles and occasional order deferrals, impacting OEM revenue which was relatively flat compared to the first quarter of last year [10] - The manufacturing trend of on-shoring and de-globalization is creating growth opportunities for Stratasys, particularly in manufacturing applications [11] Company Strategy and Development Direction - The company aims to surpass $1 billion in revenue by 2026 with substantial profitability, focusing on new technologies and expanding its customer reach [9][31] - Stratasys is committed to enhancing shareholder value and executing its growth strategy despite unsolicited acquisition proposals from Nano Dimension [7][8] - The company is expanding its software capabilities, introducing GrabCAD Print Pro to enhance productivity and integrate into Industry 4.0 infrastructure [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth potential despite a challenging macro backdrop, noting strong engagement with customers and a balanced sales cycle [48] - The outlook for 2023 includes revenue guidance raised to between $630 million to $670 million, with expectations for improved growth in the second half of the year [29] - Management anticipates achieving non-GAAP gross margins above 50% starting in 2024, driven by increased manufacturing revenue and the acquisition of Covestro [31][66] Other Important Information - The company ended the quarter with $288 million in cash and equivalents, supporting growth through organic investments and acquisitions [13] - Stratasys has introduced new products in the dental sector, including the TrueDent solution, which is expected to disrupt the market and generate significant revenue [14][54] Q&A Session Summary Question: Can you provide more specifics on the billion-dollar target? - Management emphasized a structured long-term planning approach and confidence in achieving the target based on established growth drivers and new technologies [35][36] Question: What are the main drivers for consumables revenue growth? - The main drivers include increased utilization rates and a shift towards manufacturing applications, particularly in the dental sector [39] Question: What is the status of the Covestro acquisition? - The acquisition closed in early April, with no contribution to Q1 revenues, but expected to have a full impact starting Q2 [43] Question: How is the demand landscape evolving? - Management noted high levels of engagement and improved top-of-funnel demand, leading to confidence in the second half of the year [48] Question: What are the expectations for operating expenses throughout the year? - Operating expenses are expected to remain tight, with a slight increase due to the Covestro acquisition, but overall efficiency is maintained [50] Question: How does the company plan to penetrate the dental market? - The strategy includes a multi-channel approach, focusing on building confidence with dental labs and working with dental equipment distributors [58]

Exhibit 99.1 STRATASYS LTD. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 (UNAUDITED) INDEX TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 (UNAUDITED) | --- | --- | |--------------------------------------------------------------------------|-------| | Item | Page | | Consolidated Balance Sheets | 2 | | Consolidated Statements of Operations and Comprehensive Loss | 3 | | Consolidated Statements of Changes in Equ ...

Financial Data and Key Metrics Changes - For Q4 2022, consolidated revenue was $159.3 million, down 4.6% year-over-year, and down 2.8% on a constant currency basis. Adjusted for the MakerBot divestment, revenue grew 1.7% at constant currency [23] - Full-year 2022 consolidated revenue increased by 7.3%, 9.6% on a constant currency basis, and 11.4% at constant currency after excluding MakerBot [25] - GAAP gross margin for Q4 was 43.1%, slightly down from 43.7% in the same period last year. Non-GAAP gross margin was 48.4%, compared to 48.7% year-over-year [26] - GAAP net loss for Q4 was $2.4 million or $0.04 per diluted share, an improvement from a net loss of $4.8 million or $0.07 per diluted share in the same period last year [28] Business Line Data and Key Metrics Changes - Product revenue in Q4 fell by 5.8% to $111.2 million, but grew 1.6% excluding divestitures on a constant currency basis. Systems revenue was down 11.1% to $54.9 million, while consumables revenue was flat at $56.3 million [23][24] - For the full year, product revenue grew by 8.3% compared to 2021, with system revenue increasing by 12.6% [25] - Service revenue for Q4 was $48.1 million, down 1.9% year-over-year, but customer support revenue grew by 1.9% [24] Market Data and Key Metrics Changes - The OEM business grew 3.2% in Q4 2022 on a constant currency basis compared to Q4 2021 [22] - Recurring revenue increased significantly in 2022, with consumables up 7.7% and customer support up 11% on a constant currency basis [11] Company Strategy and Development Direction - The company aims to be the leading innovator in polymer-based additive manufacturing solutions, focusing on both organic and acquired technology offerings [7] - The acquisition of Riven and Axial3D positions the company for growth in AI-driven 3D printing solutions, particularly in healthcare [11] - The company plans to unlock new sales opportunities in materials through the Covestro AM acquisition and has formed a partnership with Ultimaker [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing inflationary pressures and potential recession concerns impacting customer capital spending, leading to longer sales cycles [10] - The company expects 2023 revenue to range between $620 million to $670 million, with a stronger second half due to new product launches [32][33] - Gross margins are expected to improve modestly in 2023, with a target range of 48% to 49% [33] Other Important Information - The company ended Q4 with $327.8 million in cash and cash equivalents, down from $348.7 million at the end of Q3 2022 [31] - The company anticipates a GAAP net loss of $78 million to $57 million for 2023, with non-GAAP net income expected to be between $9 million to $17 million [35] Q&A Session Summary Question: What is the current market situation and any specific strengths or weaknesses? - Management noted a microeconomic slowdown across the board but highlighted the company's diversification across geographies and verticals, which helps mitigate risks [40] Question: How confident is the company in the second half of the year? - Management expressed confidence due to new product launches and a strong installed base, despite macroeconomic challenges [43] Question: Can you elaborate on the Ricoh partnership? - The partnership aims to democratize access to 3D printing in medical applications, leveraging AI to transform medical files into 3D printable formats [47] Question: What is the outlook for gross margins? - Management indicated a path towards improving gross margins, with expectations to reach 50% as operational efficiencies improve and new products are introduced [49] Question: How does the company view long-term revenue growth? - Management emphasized the transition from prototyping to manufacturing, which is expected to drive significant growth in the coming years [53]