Stratasys(SSYS) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2025 was $137 million, down 2.1% compared to Q3 2024, reflecting ongoing macro-driven capital equipment spending constraints [13] - GAAP gross margin was 41% for the quarter, down from 44.8% in the same period last year, while non-GAAP gross margin was 45.3%, down from 49.6% [14] - GAAP net loss for the quarter was $55.6 million, or $0.65 per diluted share, compared to a net loss of $26.6 million, or $0.37 per diluted share for the same period last year [16] - Non-GAAP net income for the quarter was $1.5 million, or $0.02 per diluted share, compared to a net income of $0.4 million, or $0.01 per diluted share in the same period last year [16] - Adjusted EBITDA was $5 million for the quarter, compared to $5.1 million in the same period last year [17] Business Line Data and Key Metrics Changes - Product revenue in Q3 was $94.1 million, flat compared to the same period last year, while service revenue was $42.9 million, down from $45.9 million [13] - Within product revenue, system revenue was $32.1 million, up from $31.7 million in the same period last year, and consumables revenue was $62 million, compared to $62.4 million last year [13] Market Data and Key Metrics Changes - The aerospace and defense sectors showed strong performance, with notable purchases from companies like Boeing and Honeywell, indicating continued confidence in the company's solutions [7][8] - The company secured significant investments from a leading U.S.-based technology company for large-scale prototyping and future production parts [9] Company Strategy and Development Direction - The long-term strategy focuses on trends reshaping manufacturing, including supply chain localization, next-generation mobility, and sustainability goals [6] - The company aims to leverage its technology to mitigate supply chain risks and address geopolitical issues, reinforcing the strategic value of localized manufacturing [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about specific verticals and applications, noting that the stability of recurring revenue streams provides a foundation for growth [20] - The company anticipates improvements in gross margin starting in Q4 2025, driven by price increases and ongoing cost reduction efforts [23][18] Other Important Information - The company ended the quarter with $255 million in cash and no debt, positioning itself well for value-enhancing opportunities [17] - A non-cash, non-recurring impairment charge of $33.9 million related to an investment in UltiMaker contributed to the larger GAAP net loss [16] Q&A Session Summary Question: Can you talk about the gross margin trajectory? - Management expects improvement in gross margin starting in Q4 2025, with continued enhancements into 2026 [23] Question: Are there significant opportunities with the social media AI company? - Management confirmed that they are focused on manufacturing use cases, particularly in aerospace and defense, and expect growth in these areas next year [25][27] Question: What is the status of production applications and sales cycles? - Management noted slight improvements in sales cycles, indicating a positive outlook for long-term opportunities [30] Question: What is the outlook for consumables revenue? - Management indicated that consumables are stable, with expectations for gradual increases as the focus shifts to high-end manufacturing applications [36] Question: How does the company view the dental opportunity? - Management expressed confidence in the dental market, highlighting recent strategic hires and partnerships that position the company well for growth [43][44]