Stratasys' Q3 Earnings Beat Estimates, Revenues Fall Y/Y

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]