[Press Release Overview](index=1&type=section&id=Press%20Release%20Overview) Stratasys Ltd. announced its Q4 and full-year 2024 financial results, highlighting strategic advancements, improved profitability, and a strong balance sheet [Company Announcement](index=1&type=section&id=Company%20Announcement) Stratasys Ltd. announced its fourth quarter and full-year 2024 financial results, focusing on polymer 3D printing solutions - Stratasys Ltd. (NASDAQ: SSYS) announced its **fourth quarter and full-year 2024 financial results** on March 5, 2025[2](index=2&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Dr. Yoav Zeif highlighted key actions in 2024 and early 2025 to enhance leadership in additive manufacturing, expanding adjusted gross margin, achieving adjusted net profitability, and positive operating cash flow with a healthy balance sheet - In 2024 and early 2025, the company took key measures to strengthen its leadership in additive manufacturing[3](index=3&type=chunk) - Successfully expanded adjusted gross margin by **100 basis points**, achieved adjusted net profitability, and generated positive operating cash flow in 2024, with further cash flow increases expected in 2025[3](index=3&type=chunk) - The company holds **$150.7 million** in cash, cash equivalents, and short-term deposits with **no debt**, providing stability and growth options[3](index=3&type=chunk) - Anticipates a **$120 million investment** from Fortissimo Capital, further solidifying future growth[3](index=3&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) Stratasys reported a decline in revenue for Q4 and full-year 2024, but achieved positive non-GAAP net income and adjusted EBITDA, with healthy year-end cash balances and positive full-year operating cash flow Key Financial Highlights (USD Million) | Metric | Q4 2024 | Q4 2023 | Full Year 2024 | Full Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $150.4 | $156.3 | $572.5 | $627.6 | | GAAP Net Loss | $(41.9) | - | $(120.3) | - | | GAAP Diluted Loss Per Share | $(0.59) | - | $(1.70) | - | | Non-GAAP Net Income | $8.5 | - | $4.2 | - | | Non-GAAP Diluted Earnings Per Share | $0.12 | - | $0.06 | - | | Cash Flow from Operations | $7.4 (Positive) | - | $7.8 (Positive) | - | | Adjusted EBITDA | $14.5 | - | - | - | | Adjusted EBITDA as % of Revenue | 9.6% | - | - | - | | Year-End Cash & Cash Equivalents | $150.7 | - | $150.7 | - | | Debt | None | - | None | - | | Fortissimo Capital Investment | $120 (Pending) | - | - | - | [Summary of Financial Results](index=2&type=section&id=Summary%20of%20Financial%20Results) Stratasys reported a decline in revenue for Q4 and full-year 2024, yet demonstrated improved profitability metrics and a positive shift in operating cash flow [Fourth Quarter 2024 vs. 2023](index=2&type=section&id=Fourth%20Quarter%202024%20vs.%202023) In Q4 2024, Stratasys's revenue decreased year-over-year, but both GAAP and non-GAAP gross margins improved, with significant growth in non-GAAP operating income and net income, nearly doubling adjusted EBITDA, and a positive shift in operating cash flow Q4 2024 vs. Q4 2023 Financial Performance (USD Million) | Metric | Q4 2024 | Q4 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $150.4 | $156.3 | -3.8% | | GAAP Gross Margin | 46.3% | 44.7% | +1.6 pp | | Non-GAAP Gross Margin | 49.6% | 48.8% | +0.8 pp | | GAAP Operating Income (Loss) | $(9.7) | $5.7 | Shift from income to loss | | Non-GAAP Operating Income | $9.4 | $2.0 | +370% | | GAAP Net Loss | $(41.9) | $(15.0) | Loss widened | | GAAP Diluted Loss Per Share | $(0.59) | $(0.22) | Loss widened | | Non-GAAP Net Income | $8.5 | $1.6 | +431.3% | | Non-GAAP Diluted Earnings Per Share | $0.12 | $0.02 | +500% | | Adjusted EBITDA | $14.5 | $7.7 | +88.3% | | Cash Flow from Operations | $7.4 (Inflow) | $(7.7) (Outflow) | Shift from outflow to inflow | [Full Year 2024 vs. 2023](index=2&type=section&id=Full%20Year%202024%20vs.%202023) For the full year 2024, Stratasys's revenue decreased year-over-year, but GAAP and non-GAAP gross margins improved, GAAP operating loss slightly narrowed, non-GAAP operating income and net income declined, and operating cash flow shifted from negative to positive Full Year 2024 vs. 2023 Financial Performance (USD Million) | Metric | Full Year 2024 | Full Year 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $572.5 | $627.6 | -8.8% | | GAAP Gross Margin | 44.9% | 42.5% | +2.4 pp | | Non-GAAP Gross Margin | 49.2% | 48.2% | +1.0 pp | | GAAP Operating Loss | $(85.7) | $(87.6) | Loss narrowed | | Non-GAAP Operating Income | $4.9 | $12.6 | -61.1% | | GAAP Net Loss | $(120.3) | $(123.1) | Loss narrowed | | GAAP Diluted Loss Per Share | $(1.70) | $(1.79) | Loss narrowed | | Non-GAAP Net Income | $4.2 | $7.7 | -45.4% | | Non-GAAP Diluted Earnings Per Share | $0.06 | $0.11 | -45.5% | | Adjusted EBITDA | $26.0 | $35.0 | -25.8% | | Cash Flow from Operations | $7.8 (Inflow) | $(61.6) (Outflow) | Shift from outflow to inflow | [Financial Outlook 2025](index=3&type=section&id=Financial%20Outlook%202025) Stratasys anticipates improved revenue, enhanced non-GAAP margins, and significant growth in non-GAAP net income and adjusted EBITDA for 2025 [2025 Outlook Details](index=3&type=section&id=2025%20Outlook%20Details) Stratasys projects year-over-year revenue improvement in 2025, with enhanced non-GAAP gross and operating margins, significant growth in non-GAAP net income and adjusted EBITDA, and higher operating and free cash flow 2025 Financial Outlook (USD Million) | Metric | 2025 Outlook (Low) | 2025 Outlook (High) | | :--- | :--- | :--- | | Full Year Revenue | $570 | $585 | | Full Year Non-GAAP Gross Margin | 48.8% | 49.2% | | Full Year Operating Expenses | $254 | $257 | | Full Year Non-GAAP Operating Margin | 4.0% | 5.0% | | GAAP Net Loss | $(68) | $(53) | | GAAP Diluted Loss Per Share | $(0.93) | $(0.72) | | Non-GAAP Net Income | $20 | $26 | | Non-GAAP Diluted Earnings Per Share | $0.28 | $0.35 | | Adjusted EBITDA | $44.0 | $50.0 | | Adjusted EBITDA Margin | 7.8% | 8.5% | | Capital Expenditures | $25 | $30 | - Higher operating and free cash flow are expected in 2025 compared to 2024[10](index=10&type=chunk) - The investment from Fortissimo Capital is anticipated to close in the **second quarter of 2025**[10](index=10&type=chunk) [Company Information & Disclosures](index=3&type=section&id=Company%20Information%20%26%20Disclosures) This section provides details on the earnings call, Stratasys's business, cautionary statements regarding future projections, and the use of non-GAAP financial measures [Webcast and Conference Call Details](index=3&type=section&id=Webcast%20and%20Conference%20Call%20Details) Stratasys plans a webcast conference call on March 5, 2025, at 8:30 AM ET to discuss its Q4 and full-year 2024 financial results, with investor participation available via the company website or a dedicated link - The company plans a webcast conference call on **March 5, 2025, at 8:30 AM ET** to discuss its fourth quarter and full-year 2024 financial results[9](index=9&type=chunk) - Investors can participate via the Stratasys website at investors.stratasys.com or directly through https://event.choruscall.com/mediaframe/webcast.html?webcastid=NYpcz3qp[9](index=9&type=chunk) [About Stratasys](index=3&type=section&id=About%20Stratasys) Stratasys is a leader in polymer 3D printing solutions, providing additive manufacturing solutions across various industries through smart, connected 3D printers, materials, software ecosystems, and on-demand parts, helping clients transform product design and enhance manufacturing and supply chain agility - Stratasys is a leader in polymer 3D printing solutions, dedicated to driving the global transformation of additive manufacturing[10](index=10&type=chunk) - The company provides solutions through smart, connected 3D printers, polymer materials, software ecosystems, and on-demand parts for industries including aerospace, automotive, consumer products, healthcare, fashion, and education[10](index=10&type=chunk) - Stratasys's solutions aim to help leading global organizations transform product design, enhance manufacturing and supply chain agility, and improve patient care[11](index=11&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) Forward-looking statements in this press release reflect management's current expectations and beliefs, but actual results may differ materially due to business risks and uncertainties; the company undertakes no obligation to publicly update or revise any forward-looking statements unless required by law - Forward-looking statements in this press release reflect management's current expectations and beliefs, but actual results may differ materially due to business risks and uncertainties[14](index=14&type=chunk) - Risks and uncertainties include new product success, 3D printing industry growth, macroeconomic environment, strategic changes, competition, completion of Fortissimo Capital investment, asset impairment, acquisition integration, supply chain disruptions, geopolitical conflicts, litigation and regulatory procedures, intellectual property risks, liquidity and financing, and tax regulations[14](index=14&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statements unless required by law[15](index=15&type=chunk) [Use of Non-GAAP Financial Measures](index=5&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP financial measures to help investors and shareholders better assess operating performance by excluding certain non-cash items, restructuring charges, M&A-related expenses, and foreign exchange impacts, providing a more comparable view of performance as a supplement to, not a substitute for, GAAP measures - Non-GAAP financial measures are used to help investors and shareholders evaluate the company's operating performance, excluding non-cash or non-recurring items such as M&A, restructuring, legal provisions, share-based compensation, intangible asset amortization, asset impairment, and investment revaluation[16](index=16&type=chunk) - These non-GAAP metrics aim to provide a view of performance used by management for internal planning and forecasting, but their limitations include not encompassing all items and potentially not being fully comparable to other companies[16](index=16&type=chunk) - Investors should consider non-GAAP measures as a supplement to, not a substitute for or superior to, GAAP financial results[16](index=16&type=chunk) [Investor Relations Contact](index=5&type=section&id=Investor%20Relations%20Contact) The investor relations contact is Yonah Lloyd, CCO and VP of Investor Relations - Investor Relations Contact: **Yonah Lloyd**, CCO and VP of Investor Relations[17](index=17&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) Stratasys's consolidated financial statements show a decrease in total assets and liabilities, alongside a mixed performance in revenue and profitability for 2024 [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2024, Stratasys's total assets and liabilities both decreased, with reductions in cash and cash equivalents and accounts receivable, alongside declines in long-term investments and goodwill; total equity decreased year-over-year Consolidated Balance Sheets (USD Thousands) | Metric | December 31, 2024 | December 31, 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash and Cash Equivalents | $70,200 | $82,585 | -15.0% | | Short-Term Bank Deposits | $80,500 | $80,000 | +0.6% | | Accounts Receivable, Net | $152,979 | $172,009 | -11.1% | | Inventories | $179,809 | $192,976 | -6.9% | | Total Current Assets | $512,961 | $560,095 | -8.4% | | Long-Term Investments | $80,205 | $115,083 | -30.3% | | Goodwill | $99,082 | $100,051 | -1.0% | | Other Intangible Assets, Net | $106,253 | $127,781 | -16.9% | | Total Non-Current Assets | $516,785 | $573,810 | -9.9% | | **Total Assets** | **$1,029,746** | **$1,133,905** | **-9.2%** | | **Liabilities** | | | | | Accounts Payable | $44,977 | $46,785 | -3.9% | | Deferred Revenue - Short-Term | $46,347 | $52,610 | -11.9% | | Total Current Liabilities | $167,214 | $176,426 | -5.2% | | Deferred Revenue - Long-Term | $19,057 | $23,655 | -19.4% | | Total Non-Current Liabilities | $69,541 | $72,640 | -4.3% | | **Total Liabilities** | **$236,755** | **$249,066** | **-4.9%** | | **Equity** | | | | | Total Equity | $792,991 | $884,839 | -10.4% | | **Total Liabilities and Equity** | **$1,029,746** | **$1,133,905** | **-9.2%** | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) For Q4 and full-year 2024, Stratasys's total revenue decreased year-over-year, with reductions in both product and service revenue; GAAP gross profit remained relatively stable, but GAAP operating and net losses widened in Q4 and slightly narrowed for the full year, with diluted loss per share widening in Q4 and slightly improving for the full year Consolidated Statements of Operations (USD Thousands) | Metric | Q4 2024 | Q4 2023 | Change (YoY) | Full Year 2024 | Full Year 2023 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | | | | | | | | Products | $105,035 | $110,388 | -4.9% | $391,917 | $433,741 | -9.6% | | Services | $45,324 | $45,949 | -1.4% | $180,541 | $193,857 | -6.9% | | **Total Revenue** | **$150,359** | **$156,337** | **-3.8%** | **$572,458** | **$627,598** | **-8.8%** | | **Gross Profit** | **$69,689** | **$69,758** | **-0.1%** | **$256,816** | **$267,024** | **-3.8%** | | Research and Development Expenses, Net | $24,785 | $25,078 | -1.2% | $99,142 | $94,425 | +5.0% | | Selling, General and Administrative Expenses | $54,604 | $39,006 | +40.0% | $243,335 | $260,179 | -6.5% | | **Operating Income (Loss)** | **$(9,700)** | **$5,674** | **Shift from income to loss** | **$(85,661)** | **$(87,580)** | **-2.2%** | | Financial Income, Net | $176 | $846 | -79.2% | $1,676 | $2,993 | -44.0% | | Share of Loss from Affiliates | $31,766 | $20,839 | +52.4% | $33,325 | $32,705 | +1.9% | | **Net Loss** | **$(41,943)** | **$(14,956)** | **+180.4%** | **$(120,283)** | **$(123,074)** | **-2.3%** | | Diluted Loss Per Share | $(0.59) | $(0.22) | +168.2% | $(1.70) | $(1.79) | -5.0% | [Non-GAAP Reconciliations](index=10&type=section&id=Non-GAAP%20Reconciliations) This section reconciles GAAP to non-GAAP financial measures for both quarterly and annual periods, including forward-looking guidance adjustments [Non-GAAP Reconciliations - Three Months Ended December 31](index=10&type=section&id=Non-GAAP%20Reconciliations%20-%20Three%20Months%20Ended%20December%2031) In Q4 2024, Stratasys's non-GAAP gross profit, operating income, and net income were significantly higher than GAAP reported figures, with non-GAAP net income shifting from a GAAP loss to a profit, by excluding adjustments such as intangible asset amortization, share-based compensation, restructuring costs, investment revaluation, and equity method related amortization Non-GAAP Reconciliations - Three Months Ended December 31 (USD Thousands) | Metric | GAAP 2024 | Non-GAAP Adjustments 2024 | Non-GAAP 2024 | GAAP 2023 | Non-GAAP Adjustments 2023 | Non-GAAP 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $69,689 | $4,866 | $74,555 | $69,758 | $6,565 | $76,323 | | Operating Income (Loss) | $(9,700) | $19,144 | $9,444 | $5,674 | $(3,659) | $2,015 | | Net Income (Loss) | $(41,943) | $50,462 | $8,519 | $(14,956) | $16,604 | $1,648 | | Diluted Net Income (Loss) Per Share | $(0.59) | $0.71 | $0.12 | $(0.22) | $0.24 | $0.02 | | **Key Adjustments (2024)** | | | | | | | | Intangible Asset Amortization Expense | | $4,496 (Gross Profit) | | | $1,153 (Operating) | | | Share-Based Compensation Expense | | $198 (Gross Profit) | | | $2,856 (Operating) | | | Restructuring and Related Costs | | $172 (Gross Profit) | | | $5,275 (Operating) | | | Investment Revaluation | | | | | $4,697 (Operating) | | | Equity Method Related Amortization, Divestitures and Impairment | | $30,910 (Net Income) | | | | | [Non-GAAP Reconciliations - Twelve Months Ended December 31](index=11&type=section&id=Non-GAAP%20Reconciliations%20-%20Twelve%20Months%20Ended%20December%2031) For the full year 2024, Stratasys's non-GAAP gross profit, operating income, and net income were significantly higher than GAAP reported figures, with non-GAAP net income shifting from a GAAP loss to a profit, after excluding adjustments such as intangible asset amortization, share-based compensation, restructuring costs, investment revaluation, and equity method related amortization Non-GAAP Reconciliations - Twelve Months Ended December 31 (USD Thousands) | Metric | GAAP 2024 | Non-GAAP Adjustments 2024 | Non-GAAP 2024 | GAAP 2023 | Non-GAAP Adjustments 2023 | Non-GAAP 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $256,816 | $24,948 | $281,764 | $267,024 | $35,764 | $302,788 | | Operating Income (Loss) | $(85,661) | $90,594 | $4,933 | $(87,580) | $100,207 | $12,627 | | Net Income (Loss) | $(120,283) | $124,520 | $4,237 | $(123,074) | $130,783 | $7,709 | | Diluted Net Income (Loss) Per Share | $(1.70) | $1.76 | $0.06 | $(1.79) | $1.90 | $0.11 | | **Key Adjustments (2024)** | | | | | | | | Intangible Asset Amortization Expense | | $18,576 (Gross Profit) | | | $5,847 (Operating) | | | Share-Based Compensation Expense | | $3,072 (Gross Profit) | | | $22,546 (Operating) | | | Restructuring and Related Costs | | $3,300 (Gross Profit) | | | $17,419 (Operating) | | | Investment Revaluation | | | | | $6,597 (Operating) | | | Equity Method Related Amortization, Divestitures and Impairment | | $31,262 (Net Income) | | | | | [Reconciliation of GAAP Net Loss to Adjusted EBITDA](index=12&type=section&id=Reconciliation%20of%20GAAP%20Net%20Loss%20to%20Adjusted%20EBITDA) For Q4 and full-year 2024, Stratasys adjusted its GAAP net loss to positive adjusted EBITDA by adding back financial income, income tax expense, share of loss from affiliates, depreciation, amortization, share-based compensation, investment revaluation, net loss on sale of investments, contingent consideration, legal and other expenses, and restructuring costs Reconciliation of GAAP Net Loss to Adjusted EBITDA (USD Thousands) | Metric | Q4 2024 | Q4 2023 | Full Year 2024 | Full Year 2023 | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Loss | $(41,943) | $(14,956) | $(120,283) | $(123,074) | | Financial Income, Net | $(176) | $(846) | $(1,676) | $(2,993) | | Income Tax Expense | $653 | $637 | $2,973 | $5,782 | | Share of Loss from Affiliates | $31,766 | $20,839 | $33,325 | $32,705 | | Depreciation Expense | $5,033 | $5,653 | $21,030 | $22,417 | | Amortization Expense | $5,649 | $7,134 | $24,423 | $28,770 | | Share-Based Compensation Expense | $3,054 | $7,876 | $25,618 | $31,614 | | Investment Revaluation | $4,697 | — | $6,597 | $4,880 | | Net Loss on Sale of Investments | $4,760 | — | $4,760 | — | | Contingent Consideration | $(9,148) | $(23,206) | $(7,595) | $(22,331) | | Legal and Other Expenses | $4,685 | $3,836 | $16,072 | $37,723 | | Restructuring and Related Costs | $5,447 | $701 | $20,719 | $12,460 | | Impairment of Long-Lived Assets | — | — | — | $7,087 | | **Adjusted EBITDA** | **$14,477** | **$7,668** | **$25,963** | **$35,040** | [Forward-Looking Guidance Reconciliations](index=13&type=section&id=Forward-Looking%20Guidance%20Reconciliations) Stratasys provides forward-looking guidance for fiscal year 2025, adjusting GAAP net loss and operating loss to derive non-GAAP net income, adjusted EBITDA, and non-GAAP operating income, by including share-based compensation, intangible asset amortization, restructuring and other expenses, and tax impacts [GAAP Net Loss to Non-GAAP Net Income Guidance](index=13&type=section&id=GAAP%20Net%20Loss%20to%20Non-GAAP%20Net%20Income%20Guidance) For fiscal year 2025, Stratasys expects to adjust GAAP net loss to non-GAAP net income by accounting for share-based compensation, intangible asset amortization, restructuring and other expenses, and related tax impacts GAAP Net Loss to Non-GAAP Net Income Guidance (USD Million) | Metric | Low | High | | :--- | :--- | :--- | | GAAP Net Loss | $(68) | $(53) | | Share-Based Compensation Expense | $25 | $27 | | Intangible Asset Amortization Expense | $22 | $24 | | Restructuring and Other | $30 | $34 | | Tax Impact of Non-GAAP Adjustments | $2 | $3 | | **Non-GAAP Net Income** | **$20** | **$26** | | GAAP Loss Per Share | $(0.93) | $(0.72) | | Non-GAAP Diluted Earnings Per Share | $0.28 | $0.35 | [GAAP Net Loss to Adjusted EBITDA Guidance](index=13&type=section&id=GAAP%20Net%20Loss%20to%20Adjusted%20EBITDA%20Guidance) For fiscal year 2025, Stratasys expects to adjust GAAP net loss to adjusted EBITDA by accounting for share-based compensation, intangible asset amortization, restructuring and other expenses, tax impacts, other non-operating expenses, and depreciation GAAP Net Loss to Adjusted EBITDA Guidance (USD Million) | Metric | Low | High | | :--- | :--- | :--- | | GAAP Net Loss | $(68) | $(53) | | Share-Based Compensation Expense | $25 | $27 | | Intangible Asset Amortization Expense | $22 | $24 | | Restructuring and Other | $30 | $34 | | Tax Impact of Non-GAAP Adjustments | $2 | $3 | | Other Non-Operating Expenses | $4 | $4 | | Depreciation | $20 | $20 | | **Adjusted EBITDA** | **$44** | **$50** | [GAAP Operating Loss to Adjusted Non-GAAP Operating Income Guidance](index=14&type=section&id=GAAP%20Operating%20Loss%20to%20Adjusted%20Non-GAAP%20Operating%20Income%20Guidance) For fiscal year 2025, Stratasys expects to adjust GAAP operating loss to non-GAAP operating income by accounting for share-based compensation, intangible asset amortization, and restructuring and other expenses GAAP Operating Loss to Adjusted Non-GAAP Operating Income Guidance (USD Million) | Metric | Low | High | | :--- | :--- | :--- | | GAAP Operating Loss | $(57) | $(43) | | GAAP Operating Margin | (10)% | (7)% | | Share-Based Compensation Expense | $25 | $27 | | Intangible Asset Amortization Expense | $22 | $24 | | Restructuring and Other | $26 | $30 | | **Non-GAAP Operating Income** | **$24** | **$30** | | Non-GAAP Operating Margin | 4% | 5% |

Exhibit 99.1 STRATASYS LTD. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 (UNAUDITED) 1 STRATASYS LTD. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) INDEX TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 (UNAUDITED) | Item | Page | | --- | --- | | Consolidated Balance Sheets | 3 | | Consolidated Statements of Operations and Comprehensive Loss | 4 | | Consolidated Statem ...

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 ...

STRATASYS LTD. Exhibit 99.1 CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 (UNAUDITED) 1 STRATASYS LTD. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) INDEX TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 (UNAUDITED) | Item | Page | | --- | --- | | Consolidated Balance Sheets | 3 | | Consolidated Statements of Operations and Comprehensive Loss | 4 | | Consolidated Statements of Chan ...

Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2024 was $138 million, down 13.6% compared to Q2 2023 [28] - Product revenue decreased by 14.2% to $93.6 million from $109.1 million year-over-year [28] - System revenue fell by 40% to $29 million compared to $48.3 million in the same period last year [28] - Consumables revenue grew by 6.3% to $64.6 million, indicating strong utilization of existing systems [29] - GAAP gross margin improved to 43.8% from 41.5% year-over-year, while non-GAAP gross margin increased to 49% from 48.5% [30] - 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 [32] Business Line Data and Key Metrics Changes - Consumables revenue growth reflects strong utilization rates of existing systems, primarily from FDM technologies [8][29] - Service revenue, including Stratasys Direct, decreased by 12.2% to $44.4 million compared to $50.7 million in the same period last year [29] - Customer support revenue within service revenue was down 3.8% year-over-year [29] Market Data and Key Metrics Changes - The company noted ongoing softness in hardware sales due to high interest rates and macroeconomic uncertainty affecting capital equipment spending [8] - The utilization of consumables is expected to remain resilient despite hardware sales weakness, as the installed base continues to be well utilized [29] Company Strategy and Development Direction - The company is committed to innovation in materials and workflow to address adoption opportunities, focusing on key end-use applications [9] - A strategic review led to restructuring actions expected to produce approximately $40 million in annual cost savings starting Q1 2025 [22] - The company aims to strengthen market penetration by helping customers overcome barriers to additive manufacturing adoption [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about hardware sales growth in the second half of 2024 due to an improved pipeline and expected higher government sales [33] - The ongoing macroeconomic challenges are anticipated to persist, causing delays in purchases and longer sales cycles [33] - Management highlighted strong utilization rates and engagement levels despite current purchase constraints, indicating potential for future growth [26] Other Important Information - The company plans to relocate its US headquarters to enhance collaboration and efficiency [18] - New product introductions include the H350 version 1.5 and the J5 Digital Anatomy 3D Printer, aimed at expanding manufacturing applications [12][13] Q&A Session Summary Question: Insights from the strategic alternatives process - Management learned the importance of investing in strategies and focusing on unique assets to create shareholder value [39] Question: Quantifying pent-up demand - Management refrained from quantifying demand but noted increased utilization rates and a shift towards manufacturing applications [40][41] Question: Gross margin outlook for the second half - Management indicated that gross margin expectations are influenced by a mix of hardware, consumables, and services, maintaining a solid outlook [44][45] Question: Impact of workforce reduction on revenue growth - Management emphasized that the restructuring is strategy-led and focused on proven use cases to maintain growth while ensuring profitability [56][63] Question: Utilization of machines sold during COVID - Management noted that while tracking utilization is challenging, material sales growth indicates a shift towards manufacturing and tooling applications [70] Question: Revenue expectations and restructuring savings - Management clarified that the expected 8% EBITDA margin is based on mid-range annual guidance, with savings from restructuring to be realized over time [74]

Revenue Performance - Fourth quarter revenue of $156.3 million, 1.3% higher than Q4 2022 excluding divestitures, and 1.9% lower than actual Q4 2022 revenues[1] - Full year revenue of $627.6 million, 1.3% higher than 2022 excluding divestitures, and 3.7% lower than actual full year 2022 revenues[1] - Total revenues for the twelve months ended December 31, 2023, were $627,598 thousand, down from $651,483 thousand in 2022, a decrease of 3.7%[20] - 2024 revenue outlook of $630 million to $645 million, improving sequentially through the year[6] Net Income and Loss - Fourth quarter GAAP net loss of $15.0 million, or $0.22 per diluted share, and non-GAAP net income of $1.6 million, or $0.02 per diluted share[1] - Full year GAAP net loss of $123.1 million, or $1.79 per diluted share, and non-GAAP net income of $7.7 million, or $0.11 per diluted share[1] - Net loss for the twelve months ended December 31, 2023, was $123,074 thousand, compared to a net loss of $28,974 thousand in 2022, a substantial increase in loss[20] - Net income for 2023 under GAAP was a loss of $123,074 million, but Non-GAAP adjustments resulted in a profit of $7,709 million[22] - For 2024, the company expects a GAAP net loss of $88 to $72 million, but Non-GAAP adjustments are projected to result in a net income of $9 to $14 million[24] - The company anticipates a GAAP loss per share of $1.24 to $1.01 for 2024, with Non-GAAP diluted earnings per share expected to be $0.12 to $0.19[24] Gross Margin - Fourth quarter GAAP gross margin of 44.7%, compared to 43.1% in Q4 2022[3] - Full year GAAP gross margin of 42.5%, compared to 42.4% in 2022[4] - 2024 full year gross margins expected to be 49.0%-49.5%, improving sequentially[7] - Gross profit for the twelve months ended December 31, 2023, was $267,024 thousand, down from $276,467 thousand in 2022, a decrease of 3.4%[20] - Gross profit for 2023 was $267,024 million under GAAP, with Non-GAAP adjustments adding $35,764 million, resulting in a total Non-GAAP gross profit of $302,788 million[22] Operating Income and Expenses - Operating income (loss) for the twelve months ended December 31, 2023, was a loss of $87,580 thousand, compared to a loss of $57,159 thousand in 2022, a worsening of 53%[20] - Operating income for 2023 under GAAP was a loss of $87,580 million, but Non-GAAP adjustments turned this into a profit of $12,627 million[22] - Research and development expenses increased from $92,876 thousand in 2022 to $94,425 thousand in 2023, reflecting a 1.7% rise[20] - Selling, general, and administrative expenses rose from $240,750 thousand in 2022 to $260,179 thousand in 2023, an increase of approximately 8%[20] - Stock-based compensation expense for 2024 is projected to be between $29 and $31 million[24] - Intangible assets amortization expense for 2024 is expected to range from $26 to $28 million[24] - Reorganization and other expenses for 2024 are estimated to be between $29 and $35 million[24] - Tax expense related to Non-GAAP adjustments for 2024 is forecasted to be $2 to $3 million[24] Financial Position - Total assets decreased from $1,259,790 thousand in 2022 to $1,133,905 thousand in 2023, a decline of approximately 10%[17] - Cash and cash equivalents dropped significantly from $150,470 thousand in 2022 to $82,585 thousand in 2023, a reduction of about 45%[17] - Total current liabilities decreased from $210,654 thousand in 2022 to $176,426 thousand in 2023, a reduction of about 16%[17] - Accumulated deficit increased from $2,076,852 thousand in 2022 to $2,199,926 thousand in 2023, indicating a growing financial shortfall[18]

Financial Data and Key Metrics - Consolidated revenue for Q1 2024 was $144.1 million, down 3.5% YoY, but relatively flat excluding divestitures [17] - Product revenue was $99.2 million, down 0.9% YoY excluding divestitures, with system revenue declining 17.8% and consumables revenue growing 9.6% to $66.3 million [17][18] - Service revenue was $44.9 million, up 1.8% YoY excluding divestitures, with customer support revenue up 3.3% [18] - GAAP gross margin improved to 44.4% from 43.8% YoY, while non-GAAP gross margin increased to 48.6% from 47.3% [19] - GAAP operating loss was $24.5 million, compared to a loss of $16.8 million YoY, while non-GAAP operating loss was $1.2 million, compared to income of $1.5 million YoY [20] - GAAP net loss was $26 million, or $0.37 per diluted share, compared to a net loss of $22.2 million, or $0.33 per diluted share YoY [20] - Adjusted EBITDA was $4.1 million, down from $7 million YoY, with $7.3 million generated from operating cash flow and $4.3 million in free cash flow [21] Business Line Performance - Consumables revenue reached a record high of $66.3 million, reflecting strong system utilization and customer reliance on 3D printing for manufacturing applications [9][18] - The F3300, a new industrial 3D printing system, has seen growing sales momentum with key customers like Toyota, BAE Systems, Sikorsky, and Nissan [11][12] - The company introduced new SAF HighDef printing capabilities with the H350 version 1.5, expanding manufacturing applications [12] Market Performance - The company maintained stability in a challenging macroeconomic environment, with flat YoY revenue excluding divestitures and increased market share over the past three years [9][39] - The F3300 pipeline is strong, with accelerating interest and engagement levels, and orders surpassing expectations in the first half of 2024 [12] Strategy and Industry Competition - The company is focused on driving innovation in additive manufacturing, with investments in technology, sales channels, and partnerships to support long-term industry leadership [15] - The F3300 is positioned as a disruptive technology in the high-end, large-part FDM market, offering double the speed and throughput at half the cost [53] - The company is leveraging its ESG leadership and sustainability initiatives to support customer decarbonization and supply chain optimization [13][14] Management Commentary on Operating Environment and Future Outlook - Management highlighted the resilience of the business model despite constrained capital spending across the industry, with strong consumables performance and system utilization [9][10] - The company expects the challenging macroeconomic environment to persist in 2024, with delayed purchases and longer sales cycles, but anticipates sequential revenue growth in the second half of the year [22][23] - Full-year 2024 guidance includes revenue of $630 million to $645 million, gross margins of 49% to 49.5%, and adjusted EBITDA of $40 million to $45 million [23][24] Other Key Information - The company promoted Amir Kleiner to COO, strengthening the connection between customer success and operations [13] - Stratasys published its second ESG and sustainability report, emphasizing its commitment to environmental impact, employee health, diversity, and governance [13][14] - The company is conducting a strategic review to maximize shareholder value, with updates to be provided when appropriate [16] Q&A Session Summary Question: Q2 seasonality and F3300 revenue impact [27] - Q2 revenue is expected to show slight improvement sequentially, with F3300 revenue becoming more significant in the second half of the year [28][30] Question: Long-term deferred revenue trends [31] - No specific trend in long-term deferred revenue, with fluctuations due to contract mix [32] Question: Strategic review update [33] - The company is making progress on the strategic review but cannot share details until it culminates [34] Question: Sales cycle and market visibility [37] - Sales cycles are stabilizing, with no significant improvement yet, but the company is leveraging new products like the F3300 to drive engagement [38] Question: Covestro's contribution to consumables growth [40] - Covestro contributed $4 million to $5 million per quarter, with overall consumables growth driven by higher system utilization [41][42] Question: F3300 consumables usage [47] - The F3300 is designed for high-performance materials and high utilization, targeting manufacturing applications with large parts [48] Question: F3300 order performance and mid-market opportunities [50][52] - F3300 orders have surpassed expectations, with strong interest from blue-chip customers and traction in the mid-market for manufacturing applications [51][53] Question: Customer engagement trends [55] - Customer engagement has become more specific, focusing on application requirements and the value of additive manufacturing [56][57] Question: Key focus areas for the second half of 2024 [58] - The industry should focus on delivering real value through reliable machines, materials, and software, with Stratasys well-positioned to lead [59][60] Question: System shipment trends [61] - System shipments are a mix of replacements, fleet expansions, and new customers, with a strong install base supporting sales even in tough times [62] Question: Outlook assumptions on customer CapEx [63] - The outlook assumes no significant change in customer CapEx patterns, based on current visibility [64]

[FORM 20-F Filing Information](index=1&type=section&id=FORM%2020-F) Stratasys Ltd. filed its Annual Report on Form 20-F for FY2023, incorporated in Israel, trading on Nasdaq under SSYS, with **69.66 million** shares outstanding as a large accelerated filer [General Information and Filing Status](index=1&type=section&id=FORM%2020-F) Stratasys Ltd. filed its Annual Report on Form 20-F for FY2023, incorporated in Israel, trading on Nasdaq under SSYS, with **69.66 million** shares outstanding as a large accelerated filer - Stratasys Ltd. is filing its Annual Report on Form 20-F for the fiscal year ended December 31, 2023[2](index=2&type=chunk) General Information and Filing Status | Metric | Value | | :----- | :---- | | Trading Symbol | SSYS | | Exchange | Nasdaq Global Select Market | | Outstanding Ordinary Shares (as of Dec 31, 2023) | 69,656,074 | | Filer Status | Large accelerated filer | | Well-known seasoned issuer | Yes | [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) Forward-looking statements are subject to risks from product success, market growth, macroeconomics, competition, IP, and geopolitical events [Forward-Looking Statements and Risk Factors](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns that forward-looking statements are subject to various risks, including product success, market growth, macroeconomic conditions, competition, intellectual property, and geopolitical events - Forward-looking statements are identified by terms like 'may,' 'will,' 'expect,' 'anticipate,' 'estimate,' 'continue,' 'believe,' 'should,' 'intend,' 'project'[8](index=8&type=chunk) - Important factors that could cause actual results to differ materially include[8](index=8&type=chunk): * Success in introducing new products and gaining market share * Growth of the 3D printing market generally * Global macro-economic environment (inflation, interest rates, currency exchange rates) * Impact of competition and new technologies * Outcome of strategic alternatives exploration * Potential adverse effects of Israel's war against Hamas - The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[9](index=9&type=chunk) [Use of Trade Names](index=5&type=section&id=USE%20OF%20TRADE%20NAMES) Clarifies that names like Stratasys, PolyJet, FDM are company trademarks, and third-party trade names do not imply endorsement [Trademark and Service Mark Information](index=5&type=section&id=USE%20OF%20TRADE%20NAMES) This section clarifies that various names and product names used in the annual report, such as 'Stratasys,' 'PolyJet,' 'FDM,' 'Origin,' and 'SAF,' are trademarks and service marks owned by Stratasys Ltd., some of which are registered. The use of other companies' trade names does not imply a relationship or endorsement - Key trademarks and service marks include: Stratasys, PolyJet, J8 Series, FDM, Fortus, Origin, SAF, GrabCAD, TrueDent, Neo, Somos, Addigy[10](index=10&type=chunk) - All rights to these trademarks and service marks are reserved, even if the '®' and '™' designations are sometimes omitted[10](index=10&type=chunk) - The use of other companies' trade names, trademarks, or service marks does not imply a relationship with or endorsement by those companies[10](index=10&type=chunk) [Certain Terms and Conventions](index=5&type=section&id=CERTAIN%20TERMS%20AND%20CONVENTIONS) Defines key terms and conventions, including company references, historical entity meanings, and currency terms, for report clarity [Definitions of Key Terms](index=5&type=section&id=CERTAIN%20TERMS%20AND%20CONVENTIONS) Defines key terms and conventions, including company references, historical entity meanings, and currency terms, for report clarity - References to 'Stratasys', 'our company', 'the Company', 'the consolidated company', 'the registrant', 'we', 'us', and 'our' refer to Stratasys Ltd. and its consolidated subsidiaries[11](index=11&type=chunk) - References to 'Objet' generally refer to Objet Ltd. and its consolidated subsidiaries prior to the December 1, 2012 merger, or to the product line and ongoing operations[11](index=11&type=chunk) - Currency references: 'dollars', 'U.S. dollars', 'U.S. $' and '$' are to United States Dollars; 'shekels' and 'NIS' are to New Israeli Shekels[11](index=11&type=chunk)[12](index=12&type=chunk) Part I [ITEM 1. Identity of Directors, Senior Management and Advisers](index=6&type=section&id=ITEM%201.%20IDENTITY%20OF%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20ADVISERS) Information on directors, senior management, and advisers is not applicable in this section, as covered elsewhere - Information regarding the identity of directors, senior management, and advisers is not applicable in this section[13](index=13&type=chunk) [ITEM 2. Offer Statistics and Expected Timetable](index=6&type=section&id=ITEM%202.OFFER%20STATISTICS%20AND%20EXPECTED%20TIMETABLE) Information on offer statistics and expected timetable is not applicable for this annual report - Information related to offer statistics and expected timetable is not applicable[13](index=13&type=chunk) [ITEM 3. Key Information](index=6&type=section&id=ITEM%203.%20KEY%20INFORMATION) Provides key information, including significant risk factors for business, IP, Israeli operations, and share investment, with other items not applicable - Sections A (Reserved), B (Capitalization and Indebtedness), and C (Reasons for the Offer and Use of Proceeds) are marked as 'Not applicable'[13](index=13&type=chunk) [D. Risk Factors](index=6&type=section&id=D.%20Risk%20Factors) Details risks to business, financial condition, and operations, categorized by business/financial, intellectual property, Israeli operations, and share investment - Risks related to business and financial condition include: failure to introduce new products, fluctuating operating results, slow market growth for 3D printing, adverse macroeconomic trends (inflation, interest rates), competition, goodwill impairment, acquisition integration failures, inability to retain key employees, supply chain disruptions, and reliance on recurring revenue from consumables[15](index=15&type=chunk)[16](index=16&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk)[23](index=23&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[42](index=42&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[47](index=47&type=chunk)[49](index=49&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[57](index=57&type=chunk)[59](index=59&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[73](index=73&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) - Risks related to intellectual property include: infringement by others, inability to obtain patent protection, and market entry of competitors as patents expire[17](index=17&type=chunk)[77](index=77&type=chunk)[79](index=79&type=chunk)[81](index=81&type=chunk) - Risks related to operations in Israel include: impact of the Israel-Hamas war, exchange rate fluctuations (USD/NIS), and potential termination or reduction of Israeli government tax benefits[18](index=18&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) - Risks related to an investment in ordinary shares include: market price fluctuation, no anticipated cash dividends, and potential dilution from future capital raises[19](index=19&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk)[105](index=105&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) [ITEM 4. Information on the Company](index=30&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) Comprehensive company information covering history, business overview, structure, property, evolution, core business, strengths, strategy, and operations - Stratasys is a global leader in polymer-based 3D printing solutions, focusing on manufacturing applications[114](index=114&type=chunk) - The company holds approximately **2,600** granted and pending additive technology patents[114](index=114&type=chunk) - Key technologies include: P3™ Programmable PhotoPolymerization (from Origin), Neo® stereolithography (from RPS), SAF™ powder-based technology (from Xaar), and materials from Covestro's AM business[114](index=114&type=chunk) - Stratasys' ecosystem includes 3D printers, materials, software, expert services, and on-demand parts production[114](index=114&type=chunk) [A. History and Development of the Company](index=36&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Formed by 2012 merger, Stratasys expanded via acquisitions (Origin, RPS, Xaar, Covestro AM) and divested MakerBot, with **$15.0 million** capex in 2023 - Stratasys Ltd. was formed by the 2012 merger of Stratasys, Inc. and Objet Ltd[110](index=110&type=chunk) - Key acquisitions include: Solid Concepts (2014), Harvest Technologies (2014), Origin Inc. (2020), RP Support Ltd. (RPS) (2021), Xaar 3D Ltd. (2021), Riven (2022), Covestro Additive Manufacturing business (2023)[110](index=110&type=chunk)[112](index=112&type=chunk) - Divested MakerBot in September 2022, merging it with Ultimaker, resulting in a **46.5%** equity interest in the combined company[112](index=112&type=chunk) Capital Expenditures (in million USD) | Year | Capital Expenditures (in million USD) | | :--- | :---------------------------------- | | 2023 | $15.0 | | 2022 | $19.8 | | 2021 | $26.8 | - In 2023, Nano Dimension Ltd. launched a hostile, unsolicited tender offer to acquire a majority interest, which ultimately expired due to insufficient acceptances. Nano re-initiated a preliminary proposal on December 23, 2023, which the board is considering as part of a strategic alternatives process[112](index=112&type=chunk) [B. Business Overview](index=38&type=section&id=B.%20Business%20overview) Global leader in polymer 3D printing, offering an ecosystem of solutions for manufacturing, leveraging diverse technologies, materials, and market access [Industry Overview](index=40&type=section&id=Industry%20overview) The 3D printing industry is shifting to direct digital manufacturing, offering efficiency, cost, speed, and sustainability advantages, expanding market - The 3D printing market is transitioning from prototype development to direct digital manufacturing (DDM)[120](index=120&type=chunk) - Advantages of 3D printing over traditional methods include: improved functionality, quality, ease of use, speed, and cost-effectiveness[120](index=120&type=chunk) - New technologies like P3 and SAF are increasing the competitive advantage of additive manufacturing for higher production volumes[122](index=122&type=chunk) - 3D printing offers sustainability benefits by reducing carbon emissions, enabling lightweight parts, and minimizing waste[122](index=122&type=chunk) [Stratasys Solutions](index=41&type=section&id=Stratasys%20solutions) Offers integrated 3D printing solutions across the product lifecycle, utilizing FDM, PolyJet, P3, SAF, and stereolithography for diverse applications - Solutions include 3D printing systems, consumables, software, paid parts, and professional services[123](index=123&type=chunk) - Key technologies: FDM (thermoplastics, durable parts), PolyJet (high-resolution, multi-material, full-color, medical applications), Stereolithography (Neo line, Somos materials, large prototypes, tooling), P3 (mass production, detail, mechanical properties, strong materials), SAF (industrial-grade, production-level throughput, consistent parts)[126](index=126&type=chunk)[128](index=128&type=chunk)[130](index=130&type=chunk) - PolyJet technology enables over **600,000** color and texture combinations, including FDA-cleared TrueDent resin for dental parts[128](index=128&type=chunk) [Our Competitive Strengths](index=44&type=section&id=Our%20competitive%20strengths) Strengths include five 3D printing technologies, extensive materials, application expertise, global market access, marquee customers, and GrabCAD software - Five 3D printing technology platforms: FDM, PolyJet, P3, SAF, and Stereolithography, optimized for specific industry applications[132](index=132&type=chunk)[133](index=133&type=chunk) - Materials ecosystem: Stratasys Preferred (engineered for best performance), Stratasys Validated (basic reliability testing), Open (unvalidated, unique attributes)[132](index=132&type=chunk) - Possesses the most industry application engineers globally, providing expertise for tier-1 manufacturing OEMs in aerospace (**500,000+** Stratasys parts flying) and healthcare[132](index=132&type=chunk) - Unparalleled market access through a network of over **130** exclusive resellers and value-added channel partners[132](index=132&type=chunk) - Marquee customer base includes General Motors, TE Connectivity, Airbus, and the U.S. Army[132](index=132&type=chunk) - GrabCAD Additive Manufacturing Platform provides a smart, connected software ecosystem for digital manufacturing, integrating with various software solutions and offering remote features[132](index=132&type=chunk) - Stratasys Direct Manufacturing is a leading AM parts service provider, enhancing manufacturing offerings and creating synergies with 3D printer sales[134](index=134&type=chunk) [Our Growth Strategy](index=47&type=section&id=Our%20growth%20strategy) The 'North Star' strategy focuses on a complete polymer AM portfolio, future metal expansion, materials R&D, software integration, and global market access - The 'North Star' strategy aims to provide a complete offering of polymers, with future expansion to metals, to solve all customer 3D printing needs[136](index=136&type=chunk) - Key elements include[136](index=136&type=chunk)[138](index=138&type=chunk]: * Offering a full suite of five polymer technologies for the entire product lifecycle * Continuously bolstering the materials portfolio through in-house R&D, strategic partnerships, and acquisitions * Adding value through Industry 4.0-ready systems with API integration to manufacturing software solutions (GrabCAD platform) * Leveraging deep application engineering expertise to educate customers and drive innovation * Utilizing an unmatched global go-to-market infrastructure of **130+** channel partners * Maintaining a resilient business model not dependent on any single client or end market [Products and Services](index=48&type=section&id=Products%20and%20services) Offers comprehensive products and services, including 3D printing systems (FDM, PolyJet, SLA, P3, SAF), materials, GrabCAD software, and support services [Printing Systems](index=49&type=section&id=Printing%20systems) Offers diverse 3D printing systems (FDM, PolyJet, SLA, P3, SAF) for prototyping to mass production, with varied capabilities and recent additions - FDM printers (F-Series, Fortus Series) are designed for prototyping, manufacturing tools, and production parts, using production-grade thermoplastic materials. Over **35,000** FDM printers installed[143](index=143&type=chunk) - PolyJet printers (J8 Series, J55, J35 Pro) offer high-resolution, multi-material, full-color 3D printing, including FDA-cleared TrueDent resin for dental applications and Digital Anatomy printers for medical models[146](index=146&type=chunk)[148](index=148&type=chunk) - Stereolithography printers (Neo line) provide high-quality, durable parts with an open resin system and large build volumes, complemented by Somos® materials from the Covestro acquisition[149](index=149&type=chunk) - Origin P3 printers (Origin One) deliver best-in-class detail, mechanical properties, and throughput for mass production, with a strong materials portfolio from partners like BASF and Henkel[150](index=150&type=chunk) - SAF printers (H350) are industrial-grade for production-level throughput of end-use parts, offering consistent quality and predictable economics for high volumes[152](index=152&type=chunk) [Consumable Materials](index=52&type=section&id=Consumable%20materials) Provides a wide range of proprietary and third-party 3D printing materials (filaments, resins, powders) for diverse applications, supported by a hybrid ecosystem - Materials portfolio includes: **61+** FDM spool-based filament materials, **49** PolyJet cartridge-based resin materials, **41** hybrid photopolymer resins (SL/DLP), and **4** powder materials (PBF)[154](index=154&type=chunk) - These materials yield over **600,000** color variations, transparency, opacity, and flexibility levels[154](index=154&type=chunk) - Stratasys Material Ecosystem categories[154](index=154&type=chunk)[155](index=155&type=chunk]: * **Stratasys Preferred:** Engineered for best material and printer performance * **Stratasys Validated:** Basic reliability testing, expanding material options * **Open:** Unvalidated materials via OpenAM™ Software License, offering unique attributes - Acquisition of Covestro's AM materials business added the SOMOS™ portfolio for stereolithography and Addigy® powder materials for PBF systems[159](index=159&type=chunk)[160](index=160&type=chunk) [Software](index=54&type=section&id=Software) GrabCAD Platform is an open, enterprise-ready software ecosystem for production AM, offering job programming, workflow management, and third-party integrations - The GrabCAD Additive Manufacturing Platform is an open and enterprise-ready software platform for production-scale additive manufacturing[163](index=163&type=chunk) - Components include[163](index=163&type=chunk)[164](index=164&type=chunk]: * **GrabCAD Print:** Job programming software for FDM and PolyJet, supporting CAD and 3D file formats, with advanced features for quality and cost reduction * **GrabCAD Shop:** Simplifies 3D printing shop workflows, offering work order management, scheduling, job tracking, and analytics * **GrabCAD Software Development Kit (SDK):** Enables two-way integrations with third-party software and business systems Software Data for GrabCAD Platform (as of Feb 2024) | Metric | Value (as of Feb 2024) | | :----- | :--------------------- | | Application Users | 42,200+ | | 3D Printers | 19,000+ | | Workflow Users | 6,300+ | | Data Streams | 35 GB/day | [Online Community](index=55&type=section&id=Online%20Community) GrabCAD Community is an online platform for over **13 million** engineers, fostering best practice sharing, and providing access to CAD models and software - The GrabCAD Community has over **13 million** members and **1.7 million** free CAD files available for download as of end of 2023[166](index=166&type=chunk) [Our Services](index=55&type=section&id=Our%20services) Provides comprehensive customer support, including installation, training, maintenance, warranties, leasing, and on-demand 3D printed parts services - Customer support includes: Stratasys-certified engineers, direct and indirect support, phone/on-site support in multiple languages, service logistics, training facilities, CRM/LMS systems, and an e-commerce platform for materials[167](index=167&type=chunk) - Printing systems come with warranties ranging from **90** days to one year, with extended support programs available[170](index=170&type=chunk)[171](index=171&type=chunk) - Stratasys Direct Manufacturing offers contract manufacturing services for on-demand polymer 3D printed parts, with an e-commerce platform for quick-turn orders[174](index=174&type=chunk) - The company offers a 'Try and Buy' program for businesses to trial 3D printers[172](index=172&type=chunk) [Customers](index=57&type=section&id=Customers) Serves a diverse global customer base across industries, with no single client exceeding **10%** of sales, indicating a diversified portfolio - Diverse customer base includes: General Motors, BAE Systems, Boeing, Blue Origin, U.S. Navy, and Mayo Clinic[175](index=175&type=chunk) - No single customer or affiliated group accounted for more than **10%** of sales in 2021, 2022, or 2023[175](index=175&type=chunk) [Marketing, Sales and Distribution](index=57&type=section&id=Marketing,%20sales%20and%20distribution) Employs a multifaceted marketing strategy and worldwide sales infrastructure, primarily through resellers, complemented by direct sales and digital channels - Marketing objectives: elevate awareness, establish thought leadership, solidify brand position, expedite sales growth, enhance customer loyalty[176](index=176&type=chunk) - Marketing channels: blogs, social media, SEO/SEM, webinars, white papers, digital/print campaigns, PR, direct mail/email, tradeshows, roadshows, thought leadership events[176](index=176&type=chunk) - Sales distribution methods: (i) sales to resellers who resell products and provide support, (ii) direct sales to end-users via independent sales agents, and (iii) direct sales of systems/services by the company[179](index=179&type=chunk) - An online customer/partner digital hub serves as a direct digital distribution method for consumables, software, and spare parts[180](index=180&type=chunk) [Manufacturing and Suppliers](index=58&type=section&id=Manufacturing%20and%20suppliers) Manufactures 3D printing systems and consumables, adhering to ISO QMS standards, with a sole supplier (Ricoh) for PolyJet printer heads requiring risk mitigation - Core competencies: FDM, PolyJet, SLA, and DLP systems assembly and integration, software installation, and resin/filament manufacturing[182](index=182&type=chunk) - Employs a Quality Management System (QMS) that meets ISO 9001:2008 and ISO 13485:2003 (for medical devices) international quality standards[184](index=184&type=chunk) - Relies on Ricoh Printing Systems America, Inc. as the sole supplier for printer heads for PolyJet 3D printers, maintaining excess inventory to mitigate supply risks[185](index=185&type=chunk)[186](index=186&type=chunk) - The Ricoh Agreement automatically renews annually unless terminated with six months' notice, and Ricoh can discontinue models with **18** months' notice[188](index=188&type=chunk) [Research and Development](index=60&type=section&id=Research%20and%20development) Maintains active R&D for new systems, materials, and software across FDM, PolyJet, P3, SAF, and SLA technologies, with **$94.4 million** net expenses in 2023 - R&D focuses on new systems, materials, and enhancements for FDM, PolyJet, P3, SAF, and SLA technologies, including integrated software[189](index=189&type=chunk) Net R&D Expenses (in million USD) | Year | Net R&D Expenses (in million USD) | | :--- | :-------------------------------- | | 2023 | $94.4 | | 2022 | $92.9 | | 2021 | $88.3 | - Consumable materials development and production operations are located in multiple facilities across the US, Israel, Netherlands, and Switzerland[189](index=189&type=chunk) [Intellectual Property](index=61&type=section&id=Intellectual%20property) Protects proprietary technology via patents (expiring 2024-2039), trade secrets, and trademarks, emphasizing success beyond just patent rights - Proprietary technology is protected through patents, trade secrets, confidentiality agreements, and contractual arrangements[191](index=191&type=chunk) - Patents cover FDM systems, PolyJet technologies, 3D printing processes, and consumables, with expiration dates from **2024** to **2039**[191](index=191&type=chunk) - Holds various registered and unregistered trademarks, including 'Stratasys', 'PolyJet', 'FDM', 'Origin', 'SAF', 'GrabCAD', and 'TrueDent'[191](index=191&type=chunk) - Success depends on marketing, business development, applications know-how, and R&D, in addition to patent rights[191](index=191&type=chunk) [Competition](index=61&type=section&id=Competition) Competes in a dynamic market against AM and traditional technologies, differentiating through quality, diverse materials, multi-color systems, reliability, and expertise - Principal competitors include: 3D Systems Corporation, EOS GmbH, HP, Carbon, Inc., Formlabs, Markforged, Inc., and Desktop Metal[192](index=192&type=chunk) - Competitive advantages: material properties (heat resistance, toughness, color, flexibility), quality (resolution, accuracy, surface), multiple production-grade materials, multi-color/multi-material systems, reliability, ease of use, automatic support removal, high customer service, and deep application know-how[194](index=194&type=chunk) - End-users make purchasing decisions based on characteristics they value most, often application-specific[192](index=192&type=chunk) [Seasonality](index=62&type=section&id=Seasonality) Historical Q4 demand strength has been disrupted since 2019, with no steady pattern, though intra-quarter seasonality persists in the last month - Historical seasonality: stronger demand in Q4 (capital expenditure cycles, sales incentives), weaker in Q1 and Q3[195](index=195&type=chunk) - Since 2019, the historical seasonality pattern has been disrupted, with no steady demand pattern observed[195](index=195&type=chunk) - Intra-quarter seasonality: a substantial percentage of system sales often occur within the last month of each fiscal quarter[195](index=195&type=chunk) [Global Operations](index=63&type=section&id=Global%20operations) Operates globally across Americas, EMEA, and APAC, with **62.1%** of 2023 revenues from Americas, exposing it to currency, market, and inflation risks - Global offices in: Brazil, China, Germany, Hong Kong, Israel, Japan, Korea, India, Mexico, UK, US[197](index=197&type=chunk) - Geographic regions for operations: Americas, Europe and Middle East (EMEA), Asia Pacific (APAC)[197](index=197&type=chunk) Revenues by Region | Region | % of 2023 Revenues | | :----- | :----------------- | | Americas | 62.1% | | EMEA | 24.8% | | Asia Pacific | 13.0% | - Stratasys Direct Manufacturing services are primarily based in the United States[197](index=197&type=chunk) [Employees](index=63&type=section&id=Employees) Had **1,980** employees globally in 2023, a slight decrease due to divestiture, with shifts in regional distribution and good employee relations Employee Count by Region | Region | 2023 | 2022 | 2021 | | :----- | :--- | :--- | :--- | | Americas | 926 | 1,098 | 1,148 | | Israel | 537 | 531 | 477 | | Europe | 371 | 302 | 269 | | Asia Pacific | 146 | 131 | 145 | | **Total** | **1,980** | **2,062** | **2,039** | Employee Count by Division | Division | 2023 | 2022 | 2021 | | :------- | :--- | :--- | :--- | | Operations and support | 607 | 620 | 689 | | Research and development | 393 | 360 | 358 | | Customer service | 281 | 241 | 264 | | Sales and marketing | 353 | 495 | 353 | | General and administrative | 346 | 346 | 375 | | **Total** | **1,980** | **2,062** | **2,039** | - The decrease in workforce in 2023 was mainly due to the divestiture of part of the SDM division[391](index=391&type=chunk) [Government Regulation](index=63&type=section&id=Government%20regulation) Subject to various regulations including environmental, health, safety, and export control laws, and now U.S. FDA medical device regulations since Feb 2023 - Subject to regulations from: federal and state environmental/health agencies, OSHA, U.S. Foreign Corrupt Practices Act, labor laws, export control regulations, Israeli tax regulations, and CE regulations for Europe[199](index=199&type=chunk) - Effective February 2023, the company is subject to U.S. FDA medical device regulations due to the launch of its first certified medical device with TrueDent resin[199](index=199&type=chunk) [Environmental, Social and Governance Matters (ESG)](index=64&type=section&id=Environmental,%20Social%20and%20Governance%20Matters) Committed to 'Mindful Manufacturing' and ESG, focusing on responsible consumption, innovation, climate action, and education, aligning with UN SDGs and ISO 14001 - Stratasys' mission is 'Mindful Manufacturing™' and '3D Printing a Better Tomorrow™', focusing on positive social and environmental impact[201](index=201&type=chunk) - Prioritized UN Sustainable Development Goals (SDGs): Responsible consumption and production, Industry infrastructure and innovation, Climate action, Quality education[201](index=201&type=chunk) - Environmental efforts: promoting sustainability in AM, targeting a circular economy (digital inventories, naturally sourced materials, recycling), and driving innovation for reduced carbon footprint (e.g., lightweight parts)[202](index=202&type=chunk)[204](index=204&type=chunk) - Israel headquarters and manufacturing locations are ISO 14001 environmental management systems (EMS) compliant as of 2023, with plans for global ISO certification by H1 2024[206](index=206&type=chunk) - Social initiatives include: 'People First' approach, EHS as top priority, Corporate Social Responsibility (CSR) activities, partnerships for STEM education (FIRST Robotics), and a robust Diversity, Equity, and Inclusion (DE&I) program[209](index=209&type=chunk) - Governance practices include: standardized ESG & Sustainability reports (GRI Standards), Code of Ethics, supplier code of conduct, and transparent internal updates[212](index=212&type=chunk) [Israeli and Multinational Tax Considerations and Government Programs](index=68&type=section&id=Israeli%20and%20Multinational%20Tax%20Considerations%20and%20Government%20Programs) Subject to Israeli tax laws, benefiting from investment encouragement programs, evaluating technology enterprise benefits, and assessing OECD Pillar Two impact - Israeli corporate tax rate is **23%** since 2018[217](index=217&type=chunk) - Benefits under the Investment Law include: tax exemptions for undistributed income and reduced corporate tax rates (e.g., **10-25%** for Approved/Beneficiary Enterprises, **7.5-16%** for Preferred Enterprises, **6-12%** for Preferred Technology Enterprises)[221](index=221&type=chunk)[224](index=224&type=chunk)[226](index=226&type=chunk)[228](index=228&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) - Stratasys waived the Approved/Beneficiary Enterprise regime starting from tax year 2021 and is considering qualification for the 2017 Amendment's Technology Enterprise benefits[228](index=228&type=chunk)[232](index=232&type=chunk) - In November 2022, the company released **$44.8 million** of Exempt Profits, paying **$2.9 million** in reduced tax[233](index=233&type=chunk) - As of December 31, 2023, accumulated tax-exempt income was **$157.6 million**, which if distributed, would incur approximately **$15.8 million** in tax liability[234](index=234&type=chunk) - The company is evaluating the potential impact of OECD's Pillar Two global minimum tax rules, effective as early as January 1, 2024, but does not expect a material impact on its effective tax rate or financial statements in the foreseeable future[235](index=235&type=chunk) [C. Organizational Structure](index=75&type=section&id=C.%20Organizational%20Structure) Israeli parent company with wholly-owned subsidiaries globally and a **46.5%** equity interest in Ultimaker (post-MakerBot merger) - Main wholly-owned subsidiaries: Stratasys, Inc. (Delaware), Stratasys Direct, Inc. (California), Stratasys AP Limited (Hong Kong), Stratasys GMBH (Germany), Stratasys Latin America Representacao De Equipamentos Ltd. (Brazil)[237](index=237&type=chunk) - Holds a **46.5%** equity interest in Ultimaker, which includes the operations of former subsidiary MakerBot[237](index=237&type=chunk) [D. Property, Plants and Equipment](index=75&type=section&id=D.%20Property,%20Plants%20and%20Equipment) Maintains dual headquarters in Minnesota and Israel for offices, production, and R&D, owning and leasing global properties, with new sites from 2023 acquisitions - Dual headquarters: Eden Prairie, Minnesota (**308,646** sq ft owned/leased), and Rehovot, Israel (**284,713** sq ft owned)[238](index=238&type=chunk)[239](index=239&type=chunk) - As of December 31, 2023, total investment in the new Israeli facility and equipment was **$119.5 million**[112](index=112&type=chunk) - Acquired three new sites in 2023 as part of the Covestro acquisition: Elgin, Illinois (**27,384** sq ft), Geleen, Netherlands (**6,941** sq ft), and Shanghai, China (**2,799** sq ft)[239](index=239&type=chunk) [ITEM 4A. Unresolved Staff Comments](index=77&type=section&id=ITEM%204A.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments from the SEC to report - There are no unresolved staff comments[241](index=241&type=chunk) [ITEM 5. Operating and Financial Review and Prospects](index=78&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) Detailed analysis of financial condition and operations for 2023 and 2022, covering business performance, strategic developments, liquidity, and accounting estimates - Stratasys is a global leader in connected, polymer-based 3D printing solutions, with over **34.0%** of 2023 revenues derived from manufacturing solutions[243](index=243&type=chunk) Key Financial Highlights (2023 vs. 2022) | Metric | 2023 (in million USD) | 2022 (in million USD) | Change (%) | | :----- | :-------------------- | :-------------------- | :--------- | | Revenues | $627.6 | $651.5 | (3.7)% | | Operating Expenses | $354.6 | $333.6 | 6.3% | | Net Loss | $(123.1) | $(29.0) | 324.8% | | Basic and Diluted Net Loss Per Share | $(1.79) | $(0.44) | (55.4)% | | Cash, Cash Equivalents & Short-term Deposits (End of Year) | $162.6 | $328.1 | (50.5)% | - Revenue decrease driven by MakerBot divestment (**$18.9 million** decrease) and longer sales cycles, partially offset by recent acquisitions and higher consumables usage (**$22.9 million** increase)[272](index=272&type=chunk) - Operating expenses increased due to M&A-related costs (**$32.9 million**), restructuring, and recent acquisitions, partially offset by MakerBot divestiture[263](index=263&type=chunk)[285](index=285&type=chunk) - Net loss significantly increased due to M&A-related costs, termination fees for Desktop Metal merger, and increased losses from associated companies (Ultimaker impairment)[264](index=264&type=chunk)[296](index=296&type=chunk) [A. Operating Results](index=78&type=section&id=A.%20Operating%20Results) 2023 operating results show a **3.7%** revenue decrease to **$627.6 million** and a net loss of **$123.1 million**, driven by divestments, sales cycles, and M&A costs [Overview of Business and Trend Information](index=78&type=section&id=Overview%20of%20Business%20and%20Trend%20Information) Global leader in polymer 3D printing for manufacturing, leveraging **2,600** patents and an ecosystem of products and services, strengthened by recent acquisitions - Stratasys is a global leader in connected, polymer-based 3D printing solutions, with a focus on manufacturing[243](index=243&type=chunk) - Approximately **2,600** granted and pending additive technology patents are used for models, prototypes, manufacturing tools, and production parts[243](index=243&type=chunk) - Over **34.0%** of 2023 revenues were derived from manufacturing solutions[243](index=243&type=chunk) - Recent acquisitions (Origin, RPS, Xaar, Covestro AM business) and the Ultimaker merger have strengthened leadership and added growth engines[243](index=243&type=chunk) [Recent Developments - Potential Business Combinations and Strategic Alternatives](index=78&type=section&id=Recent%20Developments-%20Potential%20Business%20Combinations%20and%20Strategic%20Alternatives) In 2023, Stratasys terminated a Desktop Metal merger, rejected 3D Systems' offers, and fended off Nano Dimension's tender, initiating a strategic alternatives review - Merger agreement with Desktop Metal was terminated on September 28, 2023, after shareholder disapproval, incurring a **$10.0 million** termination fee[246](index=246&type=chunk) - Nano Dimension's hostile partial tender offer (initially **$18.00**, raised to **$25.00** per share) expired on July 31, 2023, without sufficient acceptances[247](index=247&type=chunk) - Nano Dimension's attempt to replace Stratasys' directors was unsuccessful at the August 8, 2023 annual general meeting[247](index=247&type=chunk) - 3D Systems' unsolicited merger proposals (including **$7.50** cash + **1.5444** shares, later **$7.00** cash + **1.6387** shares) were rejected by Stratasys' board as significantly undervaluing the company[248](index=248&type=chunk) - On September 28, 2023, Stratasys initiated a comprehensive process to explore strategic alternatives[250](index=250&type=chunk) [Business Performance in Macro-Economic Environment](index=80&type=section&id=Business%20Performance%20in%20Macro-Economic%20Environment) 2023 revenues decreased **3.7%** due to macroeconomic pressures, though consumables grew; company implements cost controls and price increases, expecting margin improvement - 2023 revenues decreased by **3.7%** YoY, driven by MakerBot divestment and SDM business divestments, and macroeconomic pressure on customer capital expenditure budgets[250](index=250&type=chunk) - Consumables revenue increased due to stronger utilization of installed systems and sales to recently acquired entities' customers[250](index=250&type=chunk) - Macroeconomic headwinds: inflation, increased interest rates, potential recessionary conditions, and geopolitical developments (Israel-Hamas war, U.S.-China trade war)[250](index=250&type=chunk)[55](index=55&type=chunk) - The company uses price increases to offset cost pressures from inflation and expects gross and operating margins to improve as these pressures ease[250](index=250&type=chunk) Cash, Cash Equivalents, and Short-term Deposits | Metric | Amount (as of Dec 31, 2023) | | :----- | :-------------------------- | | Cash, Cash Equivalents, and Short-term Deposits | $162.6 million | [Key Measures of Our Performance](index=80&type=section&id=Key%20measures%20of%20our%20performance) Performance measured by product and service revenues, influenced by adoption, usage, and capital budgets, with costs covering materials, labor, and amortization - Revenue sources: (i) AM systems and related consumable materials, (ii) related services, and (iii) direct manufacturing service[252](index=252&type=chunk) - Product revenues are influenced by adoption rates, end-user design/manufacturing activity, and capital expenditure budgets[253](index=253&type=chunk) - Consumables sales are linked to the number of installed AM systems and system usage[253](index=253&type=chunk) - Service revenues derive from: (i) maintenance contracts and initial systems warranty, (ii) direct manufacturing paid-parts services, and (iii) other professional service contracts[254](index=254&type=chunk) - Costs of revenues include: components, raw materials (thermoplastic, photopolymer), royalties, manufacturing labor, indirect production costs, depreciation, and amortization of developed technology assets[255](index=255&type=chunk) - Amortization expense from acquired developed technology was **$19.6 million** in 2023, **$28.2 million** in 2022, and **$22.4 million** in 2021[257](index=257&type=chunk) - Operating expenses consist of research and development (R&D) and selling, general and administrative (SG&A) expenses[259](index=259&type=chunk) [Results of Operations (2023 vs. 2022)](index=84&type=section&id=Results%20of%20Operations) 2023 revenues decreased **3.7%** to **$627.6 million**, gross margin stable at **42.5%**, operating expenses rose **6.3%** to **$354.6 million**, leading to wider operating and net losses Consolidated Revenues (in thousand USD) | Category | 2023 | 2022 | % Change 2023-2022 | | :------- | :--- | :--- | :----------------- | | Products | $433,741 | $452,124 | (4.1)% | | Services | $193,857 | $199,359 | (2.8)% | | **Total** | **$627,598** | **$651,483** | **(3.7)%** | - Product revenues decreased by **$18.4 million** (**4.1%**) due to longer sales cycles and MakerBot divestiture (**$18.9 million** decrease), partially offset by acquired entities and higher consumables usage (**$22.9 million** increase)[272](index=272&type=chunk) - Consumables revenues increased by **$18.5 million** (**8.2%**) due to acquired entities and higher system utilization[272](index=272&type=chunk) - Service revenues decreased by **$5.5 million** (**2.8%**) due to MakerBot divestiture and SDM business divestitures, partially offset by higher maintenance contract revenues (**4.5%** increase)[273](index=273&type=chunk) Revenues by Region (in thousand USD) | Region | 2023 | % of Total | 2022 | % of Total | | :----- | :--- | :--------- | :--- | :--------- | | Americas | $389,770 | 62.1% | $415,428 | 63.8% | | EMEA | $155,942 | 24.8% | $141,660 | 21.7% | | Asia Pacific | $81,886 | 13.0% | $94,395 | 14.5% | | **Total** | **$627,598** | **100.0%** | **$651,483** | **100.0%** | Gross Profit (in thousand USD) | Category | 2023 | 2022 | % Change | | :------- | :--- | :--- | :------- | | Products | $207,231 | $217,523 | (4.7)% | | Services | $59,793 | $58,944 | 1.4% | | **Total** | **$267,024** | **$276,467** | **(3.4)%** | Gross Profit as % of Revenues | Category | 2023 | 2022 | % Change | | :------- | :--- | :--- | :------- | | Products | 47.8% | 48.1% | (0.7)% | | Services | 30.8% | 29.6% | 4.3% | | **Total** | **42.5%** | **42.4%** | **0.3%** | Operating Expenses (in thousand USD) | Category | 2023 | 2022 | % Change | | :------- | :--- | :--- | :------- | | R&D, net | $94,425 | $92,876 | 1.7% | | SG&A | $260,179 | $240,750 | 8.1% | | **Total** | **$354,604** | **$333,626** | **6.3%** | - Operating loss increased by **53.2%** to **$87.6 million** in 2023 from **$57.2 million** in 2022[287](index=287&type=chunk) - Net loss increased to **$123.1 million** in 2023 from **$29.0 million** in 2022, primarily due to M&A-related costs, termination fees, and increased losses from associated companies[296](index=296&type=chunk) - Share in net losses of associated companies (mainly Ultimaker impairment) increased to **$32.7 million** in 2023 from **$5.7 million** in 2022[293](index=293&type=chunk) [Non-GAAP Financial Measures](index=90&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures provide a clearer view of operations by excluding non-cash and non-recurring items, supplementing GAAP for internal planning - Non-GAAP measures exclude: M&A-related expenses/gains, restructuring charges/gains, legal provisions, stock-based compensation, acquired intangible assets amortization, impairment of long-lived assets and goodwill, revaluation of investments, and corresponding tax effects[297](index=297&type=chunk) Reconciliation of GAAP and Non-GAAP Results (2023) | Metric | GAAP (in thousand USD) | Non-GAAP Adjustments (in thousand USD) | Non-GAAP (in thousand USD) | | :----- | :--------------------- | :------------------------------------- | :------------------------- | | Gross profit | $267,024 | $35,764 | $302,788 | | Operating income (loss) | $(87,580) | $100,207 | $12,627 | | Net income (loss) attributable to Stratasys Ltd. | $(123,074) | $130,783 | $7,709 | | Net income (loss) per diluted share | $(1.79) | $1.90 | $0.11 | Reconciliation of GAAP and Non-GAAP Results (2022) | Metric | GAAP (in thousand USD) | Non-GAAP Adjustments (in thousand USD) | Non-GAAP (in thousand USD) | | :----- | :--------------------- | :------------------------------------- | :------------------------- | | Gross profit | $276,467 | $36,016 | $312,483 | | Operating income (loss) | $(57,159) | $70,691 | $13,532 | | Net income (loss) attributable to Stratasys Ltd. | $(28,974) | $39,235 | $10,261 | | Net income (loss) per diluted share | $(0.44) | $0.59 | $0.15 | [Forward-looking Statements and Factors Affecting Future Results](index=93&type=section&id=Forward-looking%20Statements%20and%20Factors%20That%20May%20Affect%20Future%20Results%20of%20Operations) Refers to the cautionary note on forward-looking statements, highlighting future results are subject to market, product, demand, competition, and macroeconomic risks - Future results are affected by factors such as: ability to increase product sales, timely introduction of new products, accurate anticipation of customer demand, management of inventory, competitive factors, cost controls, litigation, IP enforcement, currency fluctuations, commodity prices, and economic conditions[303](index=303&type=chunk) [Variability of Operating Results](index=93&type=section&id=Variability%20of%20Operating%20Results) Operating results fluctuate due to product mix, pricing, and disrupted seasonality; 2024 expects sequential revenue growth but faces macroeconomic and competitive risks - Revenues and profitability vary based on product mix, average selling price, and seasonality[303](index=303&type=chunk) - Historical seasonality patterns have been disrupted since 2019; no steady demand pattern observed[303](index=303&type=chunk) - Expects sequential revenue growth in 2024, largely due to new product introductions[303](index=303&type=chunk) [Effective Corporate Tax Rate](index=93&type=section&id=Effective%20Corporate%20Tax%20Rate) Refers to Item 4.B for Israeli tax structure; 2023 losses yielded no tax benefit due to asset realization uncertainty, and tax estimates are complex - In 2023, losses were generated mainly from the Israeli parent company and its major subsidiaries, with no tax benefit recorded due to uncertain near-term asset realization[304](index=304&type=chunk) - Income tax rate computation is complex, based on laws of numerous taxing jurisdictions and requires significant judgment[90](index=90&type=chunk) [Effects of Government Regulations and Location on Our Business](index=93&type=section&id=Effects%20of%20Government%20Regulations%20and%20Location%20on%20our%20Business) Refers to Item 4.B and 3.D for discussion of Israeli governmental regulation and location effects on business, including tax and operational risks - Effects of Israeli governmental regulation and location on the business are discussed in Item 4.B ('Israeli Tax Considerations and Government Programs') and Item 3.D ('Risks related to operations in Israel')[305](index=305&type=chunk) [Inflation](index=94&type=section&id=Inflation) Inflation has not materially affected Stratasys' operations or financial condition over the past three fiscal years - Inflation has not had a material effect on operations or financial condition during the three most recent fiscal years[307](index=307&type=chunk) [Foreign Currency Transactions](index=94&type=section&id=Foreign%20Currency%20Transactions) Refers to Item 11 for discussion of foreign currency transactions and associated risks - Discussion of foreign currency transactions is provided in Item 11 ('Foreign Currency Exchange Risk')[308](index=308&type=chunk) [B. Liquidity and Capital Resources](index=94&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) Cash and equivalents decreased to **$82.9 million** in 2023 from **$150.7 million** in 2022, but the company deems liquidity adequate for the next twelve months Consolidated Statement of Cash Flows Summary (in thousand USD) | Category | 2023 | 2022 | | :------- | :--- | :--- | | Net cash used in operating activities | $(61,645) | $(75,405) | | Net cash used in investing activities | $(3,834) | $(7,213) | | Net cash used in financing activities | $(1,516) | $(2,769) | | Net change in cash, cash equivalents and restricted cash | $(67,822) | $(92,607) | | Cash, cash equivalents and restricted cash, end of year | $82,864 | $150,686 | - Cash, cash equivalents, and restricted cash decreased to **$82.9 million** as of December 31, 2023, from **$150.7 million** in 2022, mainly due to operating activities[311](index=311&type=chunk) - The company believes it has adequate cash and cash equivalents to fund ongoing operations, working capital, capital expenditures, and debt requirements for the next twelve months[318](index=318&type=chunk) - Obligations to suppliers under purchase orders amounted to approximately **$140.8 million** as of December 31, 2023, due in 2024[319](index=319&type=chunk) - Potential future contingent payments for acquisitions could reach up to **$104.4 million**[319](index=319&type=chunk) [Cash Flows from Operating Activities](index=95&type=section&id=Cash%20flows%20from%20operating%20activities) Used **$61.6 million** in operating activities in 2023, driven by net loss and negative working capital, an improvement from **$75.4 million** used in 2022 - Net cash used in operating activities was **$61.6 million** in 2023, an improvement from **$75.4 million** in 2022[312](index=312&type=chunk)[313](index=313&type=chunk) - 2023 cash usage driven by: net loss of **$123.1 million** and negative working capital changes of **$40.5 million** (increase in accounts receivables, decrease in accounts payable and other non-current liabilities)[312](index=312&type=chunk) - Partially offset by non-cash items: depreciation, amortization, and impairment charges (**$53.4 million**), stock-based compensation (**$31.6 million**)[312](index=312&type=chunk) [Cash Flows from Investing Activities](index=95&type=section&id=Cash%20flows%20from%20investing%20activities) Used **$3.8 million** in investing activities in 2023, primarily for investments and property, offset by **$97.4 million** from short-term deposits - Net cash used in investing activities was **$3.8 million** in 2023, down from **$7.2 million** in 2022[314](index=314&type=chunk)[315](index=315&type=chunk) - 2023 cash usage included: **$72.1 million** for investments in consolidated entities and **$13.6 million** for property and equipment[314](index=314&type=chunk) - Offset by: **$97.4 million** in net proceeds from short-term bank deposits[314](index=314&type=chunk) [Cash Flows from Financing Activities](index=95&type=section&id=Cash%20flows%20from%20financing%20activities) Used **$1.5 million** in financing activities in 2023, mainly for contingent acquisition payments, a decrease from **$2.8 million** in 2022 - Net cash used in financing activities was **$1.5 million** in 2023, down from **$2.8 million** in 2022[316](index=316&type=chunk) - Mainly related to contingent consideration payments for acquisitions[316](index=316&type=chunk) [Capital Resources and Capital Expenditures](index=96&type=section&id=Capital%20resources%20and%20capital%20expenditures) As of Dec 31, 2023, had **$560.1 million** in current assets and **$176.4 million** in current liabilities, deeming resources sufficient for next twelve months Capital Resources (as of Dec 31, 2023) | Metric (as of Dec 31, 2023) | Amount (in million USD) | | :-------------------------- | :---------------------- | | Total current assets | $560.1 | | Cash, cash equivalents, short-term deposits, and restricted cash | $162.9 | | Total current liabilities | $176.4 | - Most cash and cash equivalents are held in banks in Israel and the U.S[318](index=318&type=chunk) - Credit risk for accounts receivable is limited due to a large number of customers and wide geographic distribution, with mitigation through credit limits, ongoing evaluation, and credit insurance[318](index=318&type=chunk) [Additional Factors Potentially Impacting Capital Resources](index=96&type=section&id=Additional%20factors%20potentially%20impacting%20capital%20resources) Faces **$140.8 million** in 2024 purchase order obligations and up to **$104.4 million** in uncertain contingent acquisition payments - Obligations under ordinary course purchase orders totaled approximately **$140.8 million** as of December 31, 2023, all due in 2024[319](index=319&type=chunk) - Potential future contingent payments for acquisitions could reach an aggregate amount of up to **$104.4 million**, with uncertain timing and occurrence[319](index=319&type=chunk) [C. Research and Development, Patents and Licenses, Etc.](index=96&type=section&id=C.%20Research%20and%20Development,%20Patents%20and%20Licenses,%20Etc.) Refers to Item 4.B for R&D policies, including Israeli tax considerations and government programs related to R&D - Discussion of R&D policies, Israeli tax considerations, and government programs is found in Item 4.B ('Research and Development' and 'Regulation— Israeli Tax Considerations and Government Programs – Law for the Encouragement of Capital Investments')[320](index=320&type=chunk) [D. Trend Information](index=96&type=section&id=D.%20Trend%20Information) Directs readers to Item 3.D and Item 5 for comprehensive information on business trends - Trend information is discussed in Item 3.D ('Risk Factors') and Item 5 ('Operating and Financial Review and Prospects')[321](index=321&type=chunk) [E. Critical Accounting Estimates](index=96&type=section&id=E.%20Critical%20Accounting%20Estimates) Financial statements rely on critical accounting estimates for business combinations, intangibles, and goodwill, involving significant judgment and market sensitivity - Most critical accounting estimates: Business combination, Intangibles, Goodwill[324](index=324&type=chunk) - Estimates are based on management's experience and assumptions, which are subject to uncertainty and can be materially impacted by global events and macroeconomic conditions[324](index=324&type=chunk)[325](index=325&type=chunk) [Business Combination](index=97&type=section&id=Business%20combination) Allocates purchase consideration in business combinations at fair value, involving judgment for intangibles and contingent consideration; Covestro acquisition added **$21.9 million** intangibles and **$21.8 million** goodwill - Fair value of purchase consideration is allocated to acquired assets and liabilities, with excess recorded as goodwill[325](index=325&type=chunk) - Significant estimates for intangible assets include: discount rates, future expected cash flow, useful life, revenue growth rates, margins, technological obsolescence, and income tax rates[325](index=325&type=chunk) - Contingent consideration is recorded at fair value on acquisition date and revalued each period, with changes impacting consolidated statements of operations[325](index=325&type=chunk) - Completed acquisition of Covestro's AM materials business in April 2023 for **$60.5 million**, recognizing **$21.9 million** in intangible assets and **$21.8 million** in goodwill[326](index=326&type=chunk)[613](index=613&type=chunk)[617](index=617&type=chunk) [Intangibles](index=98&type=section&id=Intangibles) Identifiable definite-life intangible assets are amortized and reviewed for impairment; no impairment in 2023 or 2022, but **$30.6 million** added in 2023 - Identifiable intangible assets: developed technology, trademarks and trade names, customer relationships, and patents[329](index=329&type=chunk) - Definite-life intangible assets are amortized using the straight-line method over their estimated useful lives (e.g., **7-10** years)[329](index=329&type=chunk)[577](index=577&type=chunk) - No impairment charges were recorded for definite-life intangible assets in 2023 or 2022[329](index=329&type=chunk)[656](index=656&type=chunk) - Additional intangible assets of **$30.6 million** were recognized in 2023 from acquisitions[329](index=329&type=chunk) [Goodwill](index=98&type=section&id=Goodwill) Goodwill of **$100.0 million** as of Dec 31, 2023, is tested annually for impairment using discounted cash flow, with no impairment recorded in 2023 or 2022 - Goodwill is not amortized but tested for impairment annually or when circumstances indicate potential impairment[330](index=330&type=chunk) Goodwill Balance (in million USD) | Metric | 2023 (in million USD) | 2022 (in million USD) | | :----- | :-------------------- | :-------------------- | | Goodwill Balance (as of Dec 31) | $100.051 | $64.953 | - No goodwill impairment was recorded in 2023 or 2022[330](index=330&type=chunk)[652](index=652&type=chunk) - The 2023 annual impairment test for the Stratasys-Core reporting unit concluded that fair value exceeded carrying amount by approximately **34%**[650](index=650&type=chunk) - Key assumptions for fair value estimation: internal cash flow forecasts (**4-5** years), expected revenue growth, operating profit margins, estimated capital needs, terminal year long-term future growth, and a discount rate[650](index=650&type=chunk) [ITEM 6. Directors, Senior Management and Employees](index=99&type=section&id=ITEM%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) Details directors, senior management, and employees, covering identities, compensation, board practices, governance, and share ownership plans [A. Directors and Senior Management](index=99&type=section&id=A.%20Directors%20and%20Senior%20Management) Lists current directors and senior management, including ages, positions, and brief biographies highlighting professional experience and company roles Directors and Senior Management | Name | Age | Position | | :--- | :-- | :------- | | Dov Ofer | 69 | Chairman of the Board of Directors | | S. Scott Crump | 70 | Director | | Aris Kekedjian | 57 | Director | | John J. McEleney | 61 | Director | | David Reis | 63 | Director | | Michael Schoellhorn | 58 | Director | | Yair Seroussi | 68 | Director | | Adina Shorr | 63 | Director | | Yoav Zeif | 57 | Chief Executive Officer | | Eitan Zamir | N/A | Chief Financial Officer | - No arrangements or understandings govern the election of directors or selection of senior management, and there are no family relationships among them[341](index=341&type=chunk) [B. Compensation](index=102&type=section&id=B.%20Compensation) Details director and senior management compensation, including cash, equity, and benefits, with a summary table for top executives and committee oversight Total Compensation for All Directors and Senior Management (2023) | Category | Amount (USD) | | :------- | :----------- | | Salaries, Fees, Bonuses, Commissions, and Related Benefits Paid or Accrued | $2,178,325 | | Pension, and Retirement Other Similar Benefits Accrued | $243,393 | - Director and CEO compensation requires approval by the compensation committee, board, and shareholders[344](index=344&type=chunk) - Annual equity package for independent/non-executive directors: **$140,000** value, split **50%** RSUs (**$70,000** value) and **50%** options (**$70,000** value), vesting monthly over one year or until the next annual meeting[348](index=348&type=chunk) Summary Compensation Table for Covered Executives (2023) | Name and Principal Position | Base Salary ($) | Variable Compensation ($) | Benefit and Perquisites ($) | Total Excluding Equity-Based Compensation ($) | Equity-Based Compensation ($) | Total ($) | | :-------------------------- | :-------------- | :------------------------ | :-------------------------- | :-------------------------------------------- | :---------------------------- | :-------- | | Yoav Zeif, CEO | 569,600 | 398,720 | 252,905 | 1,221,224 | 1,909,004 | 3,130,228 | | Richard Garrity, Chief Industrial Business Unit Officer | 344,126 | 153,336 | 34,088 | 531,549 | 657,690 | 1,189,239 | | Yossi Azarzar, COO | 292,937 | 102,528 | 84,750 | 480,215 | 662,168 | 1,142,384 | | Christian Alvarez, CRO | 450,000 | 300,207 | 58,481 | 808,689 | 244,183 | 1,052,872 | | Eitan Zamir, CFO | 282,092 | 108,234 | 117,140 | 507,466 | 501,647 | 1,009,113 | [C. Board Practices](index=107&type=section&id=C.%20Board%20Practices) Board of directors manages business with **7-11** annually elected directors, exempt from Israeli external director rules, with independent Audit and Compensation Committees - Board of directors consists of **7** to **11** directors, elected annually by shareholders[357](index=357&type=chunk) - Exempt from Israeli external director requirements by complying with Nasdaq Listing Rules for independent directors[357](index=357&type=chunk) - Current board members: Dov Ofer (Chairman), S. Scott Crump, Aris Kekedjian, John J. McEleney (Compensation Committee Chairman), David Reis, Michael Schoellhorn, Yair Seroussi (Audit Committee Chairman), and Adina Shorr[357](index=357&type=chunk) - Audit Committee members: Aris Kekedjian, John McEleney, and Yair Seroussi (Chairman), all meeting Nasdaq independence requirements. Mr. Seroussi is an audit committee financial expert[363](index=363&type=chunk) - Compensation Committee members: John McEleney (Chairman), David Reis, and Adina Shorr, all meeting Nasdaq independence requirements[367](index=367&type=chunk) - Fiduciary duties of office holders include duty of care and duty of loyalty[371](index=371&type=chunk) - Extraordinary transactions with an office holder or controlling shareholder require approval from the audit committee, board, and shareholders[374](index=374&type=chunk)[377](index=377&type=chunk) - Permits exculpation, indemnification, and insurance for office holders to the fullest extent allowed by Israeli law, with D&O insurance coverage up to **$160 million**[384](index=384&type=chunk) [D. Employees](index=116&type=section&id=D.%20Employees) Had **1,980** employees globally in 2023, a slight decrease due to divestiture, with shifts in regional distribution and good employee relations Employee Count by Region | Region | 2023 | 2022 | 2021 | | :----- | :--- | :--- | :--- | | Americas | 926 | 1,098 | 1,148 | | Israel | 537 | 531 | 477 | | Europe | 371 | 302 | 269 | | Asia Pacific | 146 | 131 | 145 | | **Total** | **1,980** | **2,062** | **2,039** | Employee Count by Division | Division | 2023 | 2022 | 2021 | | :------- | :--- | :--- | :--- | | Operations and support | 607 | 620 | 689 | | Research and development | 393 | 360 | 358 | | Customer service | 281 | 241 | 264 | | Sales and marketing | 353 | 495 | 353 | | General and administrative | 346 | 346 | 375 | | **Total** | **1,980** | **2,062** | **2,039** | - The decrease in workforce in 2023 was mainly due to the divestiture of part of the SDM division[391](index=391&type=chunk) - Most employees are not party to collective bargaining agreements, but certain Israeli labor laws apply[391](index=391&type=chunk) [E. Share Ownership](index=118&type=section&id=E.%20Share%20Ownership) Details director and senior management share ownership, along with the 2022 Share Incentive Plan and Employee Share Purchase Plan for equity compensation Share Ownership by Directors and Senior Management (as of Feb 14, 2024) | Name | Number of Shares Beneficially Owned | | :--- | :---------------------------------- | | Dov Ofer | 127,968 | | S. Scott Crump | 500,633 | | John J. McEleney | 73,660 | | Aris Kekedjian | 6,085 | | David Reis | 98,938 | | Michael Schoellhorn | 33,660 | | Yair Seroussi | 68,554 | | Adina Shorr | 94,468 | | Yoav Zeif | 119,279 | - The 2022 Share Incentive Plan replaced the 2012 Plan, reserving **1,574,000** ordinary shares for issuance, with an additional **5,432,789** shares potentially available from expired/canceled 2012 Plan awards[398](index=398&type=chunk) - The 2022 Plan does not have an 'evergreen' provision for automatic share increases[398](index=398&type=chunk) - The Employee Share Purchase Plan (ESPP) allows eligible employees to purchase ordinary shares using payroll deductions at a discounted price (**85%** of the lower of the fair market value at the beginning or end of the offering period)[400](index=400&type=chunk)[403](index=403&type=chunk) Share Data for Incentive Plans (as of Dec 31, 2023) | Plan | Total Shares Reserved | Awards Granted/Purchased (Net of Cancellations) | Shares Available for Future Grants/Purchases | Awards/Shares Outstanding | | :--- | :-------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------ | | 2012 Plan | 10,000,000 | 8,534,204 | 1,465,796 | 2,684,167 | | 2022 Plan | 1,296,494 | 2,244,187 | (947,693) | 2,025,451 | | Employee Share Purchase Plan | 5,200,000 | 812,101 | 4,387,899 | 812,101 | [F. Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation](index=124&

Q4 and FY 2023 Results Speakers Dr. Yoav Zeif, CEO Eitan Zamir, CFO Yonah Lloyd, CCO & VP IR ...